<TABLE>
                                   Consolidated Balance Sheets
                                    December 31, 1995 and 1994
<CAPTION>
(In Thousands, Except Share Data)

ASSETS						    		    	                          	    1995	    	    1994
<S>	   	                                           <C>          <C>
Cash and due from banks							                    	$   6,055	  	$   7,123
Interest-bearing deposits in banks							                416          177

   Total cash and cash equivalents                     6,471        7,300  					

Investment securities:
	Obligations of U.S. government agencies		    	   	   73,358   	   72,882
 Obligations of states and political subdivisions		   26,523 		    19,340
 0ther securities				              		            	     7,244        7,780   		  
    
    Total investment securities				               		 107,125  		  100,002			   

Loans (net of unearned income and fees of
       $5,542 and $5,179 in 1995 and 1994,
        respectively)					                        	  201,635     	186,956 
 	Less:  Allowance for possible loan losses		   	     (2,191)      (1,999) 
 
   Net loans						                                	  199,444	     184,957  

Bank premises and equipment, net				    	    	  	      4,247  		    3,538      
Accrued interest and other assets							               2,339		      3,964		
 

  Total assets                                    		$319,626     $299,761

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
	Noninterest-bearing					              	         		$  20,247    $  22,354
	Interest-bearing                                		  176,345		    160,806		  

   Total deposits                                    196,592      183,160

Short-term borrowings			           			            	   15,526       34,702
Other borrowed funds						                        	   68,613       50,972
Accrued interest and other liabilities			       		     2,875        2,173 		  

   Total liabilities				                          		 283,606	     271,007

Stockholders' equity:
	Common stock, par value $1.25 per share;
 authorized 20,000,000 shares, issued 3,241,757
 in 1995 and 2,811,858 in 1994	                  	     4,053        3,515  
    	Additional paid-in capital	   				          		   25,563   		  15,212 
    	Retained earnings			 	                      	     6,417       13,932
    	Unrealized gains (losses) on investment
       securities, net                           	     1,396	      (2,496) 
     Less:  Treasury stock at cost, 47,509 shares
       in 1995 and 1994         	                	    (1,409)      (1,409)

   Total stockholders' equity                         36,020       28,754
		  
  	Total liabilities and stockholders' equity     		$319,626     $299,761

See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
                         Consolidated Statements of Income
                   Years Ended December 31, 1995, 1994, and 1993
<CAPTION>

(In Thousands, Except Net Income Per Share)				      1995		    1994		    1993  	
<S>                                                <C>        <C>       <C>
Interest income:											
     	Interest and fees on loans					             	$17,890    $14,724  	$13,655
     	Interest on federal funds sold					    	        	-         -            1
      Interest and dividends on investments:
      		U.S. government and agency obligations			    4,649      4,383     4,641
       	Obligations of states and political
          subdivisions		                             1,360 	    1,105	    1,062
     	 	Other securities	                   				       418        449	      641
        Interest on deposits in banks and 
          other financial institutions	                122          5	       13

            			Total interest income			          	  24,439     20,666	   20,013

Interest expense:
     	Interest on deposits							                    7,376	     5,709	    6,239
     	Interest on short-term borrowings			    		       978	     1,060	      413
     	Interest on other borrowed funds					          3,733	     2,198	    2,318	
		
              	Total interest expense		        			  12,087	     8,967	    8,970	

Net interest income	            						              12,352	     11,699   11,043
Provision for possible loan losses					        	       360         360      540	
           
            			Net interest income after
                provision for possible loan 
                losses			                         	 11,992	     11,339 	 10,503	

Other operating income:
	     Service charges on deposit accounts		   			      515	        467	     418
      Trust income							  	                           252         216      216
	     Other income			                          		      644         480      617
	     Net securities gains                             130	         65	     131
      Income from insurance subsidiary	         	      255 	       341       -

               Total other operating income	      	  1,796       1,569    1,382	

Other operating expenses:
     	Salaries and employee benefits              	  3,251	      3,137    3,166	
     	Net occupancy expenses					                      373		       368		    387
    		Furniture and equipment expenses		       			     387	        428      580
      Other expenses					          	                 1,739		     1,885		  1,911
      Expenses of insurance subsidiary		               234 	       306      -	

               Total other operating expenses        5,984       6,124     6,044

            			Income before income tax provision 	  7,804		     6,784     5,841
               Income tax provision                  2,154       1,870     1,590
            
     		       	Net income                        $   5,650    $ 4,914   $ 4,251

            			Net income per share				          $    1.77     $  1.54   $  1.32

See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>

                 Consolidated Statements of Changes in Stockholders' Equity
                       Years Ended December 31, 1995, 1994, and 1993
<CAPTION>    

(In Thousands, Except Per Share Data)                             								     
                                                                   Unrealized
                                                                      Gains
                                                                   (Losses) on 
                                        Additional		                Investment                    Total 
                 			        	 Common      Paid-In	      Retained    Securities,    Treasury 	  Stockholders'
 			           	              Stock       Capital	      Earnings        Net          Stock        Equity         
<S>                          <C>         <C>            <C>         <C>           <C>            <C>          
Balance, December 31, 1992	  $1,996	     $ 8,080        $16,566     $    -        $(1,013)       $25,629

Net income			                   -		          -            4,251          -            -            4,251

Stock dividend issued	     	    258		      5,722         (5,980)         -            -               - 

Cash dividends declared,			 		
     $.42 per share		            -		         -           (1,360)         -                        (1,360)

Cumulative effect of accounting 
  for certain investments in
  debt and equity securities     -           -		            -	         1,634          -            1,634

Treasury stock acquired at cost  -  		       - 	            -            -          (396)           (396)

Balance, December 31, 1993	   2,254 	     13,802         13,477        1,634      (1,409)         29,758

Net income			                    -		         -	           4,914	        	-           -             4,914

Stock issued:
  Stock dividend and split    1,260		      1,407	        (2,667)	       	-	          -               -
  Employee benefit plans          1		          3		           -           -	          -                 4								

Cash dividends declared,
  $.55 per share                 -		         -	          (1,792)        	-           -            (1,792)

Unrealized losses on 
  investment securities, net     -           -	         	   -          (4,130)       -            (4,130)

Balance, December 31, 1994	   3,515	     	15,212         13,932        (2,496)	   (1,409)         28,754

Net income			                    -		         -	           5,650           -          -	            5,650

Stock issued:
  Stock dividend	          	    535		     10,313	       (10,848)          - 	        -	               -
  Employee benefit plans	         3		         38		           -		          -          -                41    

Cash dividends declared,
  $.72 per share                 -		         -	          (2,317)	        	-          -            (2,317)

Unrealized gains on
  investment securities, net     -           -               -   	      3,892        -             3,892

Balance, December 31, 1995  	$4,053    		$25,563         $6,417        $1,396	   $(1,409)        $36,020

See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
<TABLE>
                               Consolidated Statements of Cash Flows
                           Years Ended December 31, 1995, 1994, and 1993
<CAPTION>

(In Thousands)							          	         1995        1994        1993
<S>                                    <C>         <C>         <C>
Cash flows from operating activities:
	  Net income					              			    $  5,650    $ 4,914    	$ 4,251
	  Adjustments to reconcile net
    income to net cash provided by 
    operating activities:
	    Provision for possible loan losses     360        360	  	     540
    	Provision for depreciation             315        385   	     504
	   	Deferred income taxes                  (92)      (188)       (138)                
   		Net securities gains				    	         (130)       (65)	 	    (131)
     Gain on sale of bank premises and
       equipment		                           - 	        (4)         -       
    	(Increase) decrease in accrued
       interest and other assets		         (289)   	  (636)   	  1,166
   		Increase (decrease) in accrued 
       interest and other liabilities       702        813        (196)   	
			
      Net cash provided by operating
           activities		                   6,516	     5,579       5,996

Cash flows from investing activities:
  	Proceeds from sales of investment
    securities				                        4,383  	     249         692
   Proceeds from maturities of
    investment securities			             18,925      27,307    	40,602  
  	Purchases of investment securities   (24,403)    (22,441)   (60,466) 
  	Loans sold								                     3,577       3,967	  	  8,764
   Net increase in loan originations
    less principal repayments	         	(18,424)    (23,544)   (28,088)
  	Capital expenditure	                  (1,024)        (89)      (251)
  	Proceeds from sales of bank premises
    and equipment		                         -   	        92 		      -                      			

   			Net cash used in investing
        activities          		         	(16,966)    (14,459)   (38,747)

Cash flows from financing activities:
  	Net increase (decrease) in deposit
     accounts				                        13,432       3,797     (2,584)
   Net increase (decrease) in short-term
     borrowings	                        (19,176)	     4,270     21,176
  	Proceeds from other borrowed funds  	 34,400      12,600     37,619 
   Repayments of other borrowed funds   (16,759)     (8,534)   (22,500)
	  Cash dividends paid						             (2,317)     (1,792)    (1,360)
	  Treasury stock acquired						            -     	      -        (396)
	  Proceeds from sale of stock for
     employee benefits program		             41           4         - 

   			Net cash provided by financing
        activities	                       9,621      10,345      31,955    	

Net increase (decrease) in cash
  and cash equivalents			              	   (829)      1,465     	  (796)

Cash and cash equivalents at beginning 
  of year			                              7,300       5,835       6,631 	

Cash and cash equivalents at end
  of year                             	$  6,471     $ 7,300      $5,835


Supplemental disclosure of cash flow information:

   	Interest paid							                $11,646     $ 8,671     $  8,884

   	Income taxes paid						             $ 2,175     $ 2,110     $  1,636

See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
                        Notes to Consolidated Financial Statements
                             December 31, 1995, 1994 and 1993

1.  Summary of Significant Accounting Policies		   
   The accounting and financial reporting policies of SUN BANCORP, INC. and
subsidiaries (SUN) conform with generally accepted accounting principles and
with general practice within the financial institution industry.  Certain
prior year amounts have been reclassified to conform to current year
classifications.  The following is a description of the more significant of
those policies:		

Nature of Operations		
 		SUN provides a full range of banking services to individual and corporate 
customers through the six offices of its subsidiary in central Pennsylvania's
Snyder, Union, and Northumberland counties.  These three counties have 
diversified economies with an emphasis on manufacturing.  SUN's primary 
deposit products are interest-bearing checking and savings accounts, and	  
certificates of deposits.  Its primary lending products are single	family 
residential loans, secured consumer loans, and secured loans to small 
businesses.	 
					
Basis of Consolidation
    The consolidated financial statements include the accounts	of SUN
BANCORP, INC., the parent company, and its wholly-owned subsidiaries, Sun 
Bank (Bank), doing business	as Snyder County Trust Company and Watsontown
Bank, and Pennsylvania SUN Life Insurance Company.  All significant inter-
company balances and transactions have been eliminated in consolidation. 							

Use of Estimates					     		    
    In preparing the financial statements in accordance with	generally 
accepted accounting principles, management is	required to make estimates
and assumptions that affect the reported amounts of assets and liabilities 
and disclosure of contingent assets and liabilities as of the date of the
balance sheet and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ significantly from those
estimates.
    Material estimates that are particularly susceptible to	significant
change in the near term relate to the determination of the allowance for
possible loan losses.  In connection with the determination of the allowance
for possible loan losses, management obtains independent appraisals for
significant properties.	
    A majority of SUN's loan portfolio consists of single-family residential
loans in the counties of Snyder, Union and Northumberland.  The regional
economy depends heavily on the manufacturing industry, which is currently
stable.  Real estate prices in the market are also stable.  Accordingly,
the ultimate collectibility of a substantial portion of SUN's loan	portfolio
is susceptible to changes in local market conditions.
    Management believes that the allowance for possible loan losses is 
adequate.  While management uses available information to recognize losses
on loans, future additions to the allowance may be necessary based on
changes in economic conditions.  In addition, regulatory agencies, as an
integral part of their examination process, periodically review SUN's
allowance for possible loan losses.  Such agencies may require SUN to 
recognize additions to the allowance based on their judgments about 
information available to them at the time of their examination.  Because of
these factors, it is reasonably possible that the allowance for possible
loan losses may change materially in the near term.
<PAGE>

Investment Securities
     On December 31, 1993, SUN adopted the provisions of Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investment in 
Debt and Equity Securities," for accounting and reporting for investment
securities.  In accordance with SFAS No. 115, such investments are accounted
for as follows:
     Held-to-Maturity Securities-includes debt securities that SUN has the 
positive intent and ability to hold to maturity and are reported at amortized
cost.
     Trading Securities-includes debt and equity securities bought and held
principally for the purpose of selling them in the near term.  Such securities
are reported at fair value.
     Available-for-Sale Securities-includes debt and equity securities not
classified as either held-to-maturity securities or trading securities.  Such
securities are reported at fair value, with unrealized gains and losses, net
of taxes, excluded from earnings and reported as a separate component of
stockholders' equity.  All of SUN's securities are classified as available-
for-sale at December 31, 1995 and 1994.
     The cumulative effect of the adoption of SFAS No. 115 as of December 15, 
1993 resulted in an increase in stockholders' equity of $1,634,000 (unrealized
gain on available-for-sale securities of $2,477,000 less estimated income tax
effect of $843,000)
     The fair value of instruments, except certain state and municipal securi-
ties, is estimated based on bid prices published in financial newspapers or
bid quotations received from securities dealers.  The fair value of certain
state and municipal securities is not readily available through market sources
other than dealer quotations, so fair value estimates are based on quoted
market prices of similar instruments, adjusted for differences between the
quoted instruments and the instruments being valued.
     Realized gains and losses on the sale of investment securities are computed
on the basis of specific identification of the adjusted carrying value of each
security.

Loans
     Interest income on loans is recognized on the accrual basis based upon the 
principal amount outstanding.  Interest income is not accrued when, in the 
opinion of management, its collectibility is doubtful.  When a loan is designat-
ed as nonaccrual, any accrued interest receivable is generally charged against
current earnings.  The placement of a loan on the nonaccrual basis for revenue
recognition does not necessarily imply a potential charge-off of principal.
     Loan fees and cost of loan origination are deferred and recognized over the
life of the loan as a component of interest income using the interest method.

Impaired Loans
    On January 1, 1995, SUN adopted the provisions of Statment of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of a
Loan," as amended by Statement No. 118, "Accounting by Creditors for Impairment
of a Loan-Income Recognition and Disclosures."  The new standards require
certain impaired loans to be reported at the present value of expected future
cash flows using the loan's effective interest rate, or at the fair value of
the collateral if the loan is collateral dependent.  The adoption of the 
standards did not have a material impact on SUN's financial position or results
of operations for the year ended December 31, 1995.
<PAGE>

Allowance For Possible Loan Losses
    The allowance for possible loan losses is established through a
provision for possible loan losses charged to expense.  The	allowance for 
possible loan losses is based on management's	judgment of an amount that 
is adequate to absorb possible losses in the existing portfolio.  In 
evaluating the portfolio, management takes into consideration numerous
factors, including current economic conditions, prior loan loss experience,
the composition of the portfolio, off-balance sheet risk, and management's
estimate of anticipated loan losses.

Foreclosed Assets Held For Sale			
     Foreclosed assets, all of which are held for sale, are carried
at the lower of cost or fair value of the assets less estimated selling
costs.
     At December 31, 1995 and 1994, SUN did not have any foreclosed assets 
held for sale.

Bank Premises and Equipment				
     Bank premises and equipment are stated at cost less accumulated 
depreciation.  Repair and maintenance expenditures which extend the useful
life of an asset are capitalized and other repair expenditures are expensed
as incurred.
     When premises or equipment are retired or sold, the remaining	cost 
and accumulated depreciation are removed from the	accounts and any gain or 
loss is credited or charged to income.	 Depreciation expense is computed
on the straight-line method.		
	 
Employee Benefit Plan					
     SUN maintains and funds a defined contribution benefit plan which covers
substantially all eligible employees.  The cost of the plan is charged to 
operating expense annually as benefit costs	are incurred.  SUN has also
established a nonqualified Supplemental Retirement Plan for selected key
employees.
<PAGE>

Income Taxes				
     Provision for deferred income taxes is made as a result of temporary
differences in financial reporting and income tax mehtods of accounting.
These differences relate primarily to depreciation of bank premises and 
equipment, certain securities income, income	for loan fees, allowance for
possible loan losses, and pension expense.		
     In 1993, SUN implemented Statement of Financial Accounting	Standards
(SFAS) No. 109, "Accounting for Income Taxes".  SFAS No. 109 requires an
asset and liability approach for accounting and reporting for income taxes.
The adoption of SFAS No. 109 as of January 1, 1993 did not have an impact
on either the financial condition or results of operation of SUN.	   	

Net Income Per Share
     Net income pr share is computed based on the weighted average number of
shares of stock outstanding during the year, adjusted in each reporting 
period to give retroactive effect to the stock dividends paid in the second
quarter of 1993, 1994 and 1995 and the 10% stock dividend paid in the fourth
quarter of 1993 and 1995, as well as the three-for-two stock split in the
form of a 50% stock dividend in the fourth quarter of 1994.  Such weighted
average share computations give effect to treasury stock transactions.  The
weighted average number of shares used in the net income per share computations
for the years ended December 31, 1995, 1994, and 1993 were 3,194,248, 3,193,282
and 3,213,495 respectively.  All references in the accompanying financial
statements to per share amounts for prior years have been restated to reflect
the above-mentioned stock dividends and stock split.

Off-Balance Sheet Financial Instruments
     In the ordinary course of business, SUN has entered into off-balance sheet
financial instruments consisting of commitments to extend credit and standby
letters of credit.  Such financial instruments are recorded in the financial
statments when they become payable.

Cash Flows
     SUN utilizes the net reporting of cash receipts and cash payments for 
certain deposit and lending activities.  Cash equivalents include cash and
due from banks and interest-bearing deposits in banks.  Generally, federal
funds are purchased and sold for one-day periods.

Derivative Financial Instruments
     SUN has no derivative financial instruments requiring separate disclosure
under SFAS No. 119, "Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments".

Trust Assets and Income
     Assets held by SUN in a fiduciary or agency capacity for its customers are
not included in the consolidated financial statements since such items are not
assets of SUN.  Trust income is reported on a cash basis, which is not 
materially different from the accrual basis.
<PAGE>

2.  Restrictions on Cash and Due from Bank Accounts
     SUN is required to maintain reserves in the form of cash and balances with
the Federal Reserve Bank against its deposit liabilities.  The average of such
reserves for the periods which included December 31, 1995 and 1994 was approx-
imately $1,263,000 and $1,287,000 respectively.
     Deposits with any one financial institution are insured up to $100,000.  
SUN could maintain cash and cash equivalents with certain other financial
institutions in excess of the insured amount.

               Notes to Consolidated Financial Statements
<TABLE>
3.  Investment Securities
  The amortized cost and estimated fair value of investment securities at
  December 31, 1995 and 1994 were as follows:
<CAPTION>
(In Thousands)							                            	December 31, 1995
 
               								             Gross       		Gross        Estimated   
                                  Amortized    Unrealized     Unrealized      Fair
                                     Cost         Gains         Losses       Value
<S>                                <C>           <C>            <C>          <C>  
Available-for-Sale securities:
 Obligations of U.S. government 
  agencies	  	                     $73,425	      $  548         $ (615)      $73,358
 Obligations of states and
  political subdivisions	           25,113	       1,423            (13)       26,523
 Corporate debt securities			          242          -                -           242

 Total debt securities              98,780        1,971           (628)      100,123          

 Equity securities                   6,230          795            (23)        7,002

  Total investment securities     $105,010	      $2,766         $ (651)     $107,125

 
   	                                  								 December 31, 1994
(In Thousands)
               								                           Gross	         	Gross	        Estimated					
                          	       Amortized    Unrealized       Unrealized        Fair
						                               Cost         Gains   	      	Losses          Value           

Available-for-Sale securities:
 Obligations of U. S. government
  agencies	                        $ 76,254       $  18          $(3,390)       $ 72,882	
 Obligations of states and
  political subdivisions	            19,851	     	  245             (756)         19,340
 Corporate debt securities            1,503          -               (11)          1,492
			
 Total debt securities               97,608	        263           (4,157)         93,714

 Equity securities                    6,177	        274             (163)	         6,288

	 Total investment securities      $103,785       $ 537	          $(4,320)      $100,002
</TABLE>
<TABLE>
The amortized cost and estimated fair value of SUN's securities at December
31, 1995 and 1994, by contractual maturity, are shown below.  Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without prepayment penalties.
<CAPTION>

(In Thousands)					            December 31, 1995           December 31, 1994     	

                                 								Estimated	                   		 Estimated
				    		                   Amortized	     Fair		         Amortized        Fair			
					                          Cost        Value		           Cost          Value  
<S>                           <C>         <C>                 <C>           <C>     
Available-for-Sale securities:			
 Due in one year or less			   $   90      $   90              $  562        $  577
 Due after one year through
  five years		                   830         859		             2,835		       2,819			
 Due after five years through
  ten years		                 11,984	    	12,231                  75		          91
 Due after ten years          24,118      25,478		            16,379        15,853                              	
						
                              37,022	     38,658	             19,851		      19,340			

 Equity securities					        6,230		     7,002 		            6,177		       6,288	       		
 Mortgage-backed securities		 61,516      61,223 	           	76,254		      72,882			
 Corporate debt securities		     242         242	              1,503         1,492			
	
Total investment securities $105,010    $107,125  	         $103,785      $100,002
</TABLE>
<PAGE>

                           Notes to Consolidated Financial Statements
<TABLE>
Proceeds from sales of investment securities were as follows:
<CAPTION>

(In Thousands)			              					          1995	        	1994	        	1993		
<S>                                         <C>            <C>            <C>
Debt securities                             $4,229         $  -           $358		
Equity securities							                 	     154		         249		         334		

	Total proceeds	                      						$4,383	        	$249	        	$692		
</TABLE>
<TABLE>
Gains and losses from sales of investment securities were as follows:
<CAPTION>
(In Thousands)						                      	 	 1995		        1994		       1993
<S>                                          <C>           <C>          <C>
Debt securities:
  Gross gains                                $ 119         $  -         $  8		
  Gross losses                                 (49)		         -   	        -  	

   	Total debt securities gains					    	       70		          -		          8		
Equity securities, net							                   60		         65		        123		

   	Net securities gains				              		$  130         $ 65         $131
</TABLE>
  Securities with a carrying value of $26,000,000 and $27,600,000 were pledged
to secure public deposits, trust deposits, securities sold under agreements 
to repurchase and	other items required by law at December 31, 1995 and 1994,
respectively.
  There is no concentration of investments that exceed 10% of stockholders' 
equity for any individual issuer, excluding those guaranteed by the U.S. govern-
ment or its agencies.
<TABLE>
4.  Loans
The composition of the loan portfolio at December 31, 1995 and 1994 is
  as follows:
<CAPTION>
	
	                                     						 			 December 31
(In Thousands)							   	                   1995		    		    1994	
<S>                                      <C>             <C> 	
Real estate loans			               					 $149,475     			$140,341
Agricultural loans							                     724             665 
Commercial and industrial loans						      25,713			       20,703		
Loans to individuals							                31,205          30,384	
Other loans								                            60  			         42			

            Total loans        	 						   207,177     			 192,135

Less: Unearned income on loans             (5,074)			      (4,679)	            
      Deferred loan fees							              (468)  		       (500)
    
          		Net 				                				 $201,635         $186,956			
</TABLE>
<TABLE>
Transactions in the allowance for possible loan losses were as follows:
<CAPTION>
 							
	                                          		Years Ended December 31
(In Thousands)	    						                  	1995      1994		      1993
<S>                                        <C>       <C>         <C>
Balance, beginning of year                 $1,999    $1,732	     $1,353

Loans charged off							                      176		     110		       242		
Recoveries of loans previously charged off			   8	       17		        81		

Net loans charged off							                  168		      93         161		
Provision for possible loan losses						      360		     360		       540		

Balance, end of year				                			$2,191	  	$1,999	    	$1,732		
</TABLE>
<PAGE>
      
  Most of SUN's business activity is with customers located	within its
defined market area.  The loan portfolio is well diversified.  As of
December 31, 1995 and 1994, SUN had loans in the modular home industry
in the amount of $4,783,000 and $5,027,000, respectively.  Loans in the
automobile industry amounted to $8,155,000 and $5,715,000 at the same times,
respectively.  These loans are generally secured by assets and are	expected
to be repaid from cash flow or proceeds from the sale of assets of the
borrower.  SUN has not experienced any significant losses on loans to
borrowers in these industries.  Although SUN has a diversified loan port-
folio, a substantial portion of its debtors' ability to honor their con-
tracts is dependent on the economic conditions in its market area.
  At December 31, 1995, SUN did not have any materially impaired or nonaccrual
loans and it had $148,000 in restructured loans that yielded a current market
rate at the time of restructuring.  Nonaccrual and restructured loans
amounted to $338,000 at December 31, 1994.  Interest income which would have
been recognized on all nonaccrual and restructured loans outstanding in 1994
and 1993 was approximately $7,880 and $1,400, respectively.

                 Notes to Consolidated Financial Statements
<TABLE>
The following is a summary of the past due and nonaccrual loans as of
  December 31, 1995 and 1994:
<CAPTION>

(In Thousands)							                             Past Due
                            	   Past Due	          90 Days
December 31, 1995              30-89 Days          or More         Nonaccrual
<S>                              <C>               <C>               <C>
Real estate loans             			$3,880			         $1,391        	  	$  -
Loans to individuals						        1,283               341			            -
Commercial and all other loans		    563               257               -	

          	Total        	   					$5,726		         	$1,989			         $  -	

December 31, 1994										

Real estate loans			         				$3,117        		 	$  394			         $  43
Loans to individuals						          949			             65	    		         -
Commercial and all other loans				  513                29	     		      120	

          	Total						          	$4,579		          $  488             $163
</TABLE>
<TABLE>
5.  Bank Premises and Equipment
Bank premises and equipment at December 31, 1995 and 1994 consisted of
   the following:
<CAPTION>
 
	                                        										December 31
(In Thousands)								                         	1995   			   1994
<S>                                            <C>          <C>
Land                                    							$1,000       $  515
Bank premises									                          4,262			     3,904		
Furniture and equipment								                 2,330        2,149											
                               
                                              	 7,592		   	  6,568		

Less:  Accumulated depreciation				         			(3,345)			   (3,030)		

       		Bank premises and equipment, net	 				$4,247       $3,538		

</TABLE>
Depreciation charged to income was $315,000, $385,000 and $504,000 for 1995,
  1994 and 1993, respectively.

<TABLE>
6.  Deposits
  Included in interest-bearing deposits are certificates of deposit and other
time deposits issued in amounts of $100,000 or more.  These deposits and
their remaining maturities are as follows:
<CAPTION>

(In Thousands)						                          				December 31
									                                     	 1995  			   1994			
<S>                                          <C>          <C>
Three months or less			 				                 $  3,486			  $ 4,588		
Three through six months								                1,259			    1,773		
Six through twelve months							                3,533       1,742		
Over twelve months								                      6,124			    2,289			

 		Total							                               $14,402	  		$10,392		
</TABLE>

  The interest paid on such deposits amounted to approximately $691,000 in 
1995, $541,000 in 1994 and $724,000 in 1993.
<PAGE>
                 Notes to Consolidated Financial Statements
<TABLE>
7.  Borrowed Funds
  SUN's borrowed funds as of December 31, 1995 and 1994 include the following:
<CAPTION>				
                                            	December 31, 1995
(In Thousands)								
								                                            	 		  Maximum
								                                     	Average	 	   Amount	
								                                     Interest    Outstanding    Average	    Average
					                                     				Rate At		    At Any        Amount	   Interest							
                                Balance      Year End     Month End   Outstanding     Rate
<S>                            <C>             <C>        <C>          <C>            <C> 
Short-Term Borrowings:
Flexline (1)				             		$  9,445		      6.05%    		$  30,840	    $11,886	      6.16%
Securities sold under
 agreements to repurchase         6,081		      3.83%		       10,578	      6,412	      4.29%

Other Borrowed Funds:
Federal Home Loan Bank of
 Pittsburgh advances (2)				     68,000		      5.87%		       70,600	     62,573       5.81%
Treasury Tax and Loan Note
 Option (3)                         613		      5.16%          3,500	      1,213	      5.81%

		Total Borrowed Funds	       		$84,139		      5.74%	     	$115,518	    $82,084	      5.74%



                                          										December 31, 1994
(In Thousands)
											
Short-Term Borrowings:
Flexline			                 				$28,144        6.61%	       	$28,144  		$18,654	      4.58%
Securities sold under
 agreementsto repurchase          6,558		      4.22%		         8,289		    6,819	      3.05%

Other Borrowed Funds:
Federal Home Loan Bank of
 Pittsburgh advances             49,700        5.38%		        50,000		   42,755	      5.04%
Treasury Tax and Loan Note
 Option			                        1,272		      5.21%		         2,305		    1,142	      3.84%

		Total Borrowed Funds		       	$85,674	  	    5.69%		       $88,738   	$69,370       4.70%

(1) 	SUN utilizes Flexline, a line of credit with the Federal Home Loan Bank
     (FHLB) of Pittsburgh, as a source of funds.  At December 	31, 1995, the
     total amount available on this line was approximately 10% of assets or
     $31,963,000, less $9,445,000 in current	borrowings.

(2) 	FHLB of Pittsburgh advances represent variable and fixed rate loans with
     stated maturities as follows:
     (In Thousands)

     Variable rate at 5.8872%, maturity 1996             $ 5,000
     Variable rate at 5.9375%, maturity 1997             $ 2,000
	    Variable rate at 5.8625%, maturity 1998		         	 $ 5,600
	    Fixed rates between 4.23% and 6.77%, maturity 1996 	$29,900
   	 Fixed rates between 5.50% and 7.20%, maturity 1997	 $16,000
   	 Fixed rates between 5.23% and 5.46%, maturity 1998 	$ 5,500
     Fixed rate of 6.40%, maturity 2000			      	        $ 2,000
   	 Fixed rates between 7.80% and 7.88%, maturity 2002 	$ 2,000
 	     
        Total				                                     			$68,000

    	All FHLB advances are collateralized by SUN's investment in FHLB stock,
     mortgage-backed securities and first mortgage loans.  

(3) 	Borrowings on the Treasury Tax and Loan Note Option represent tax funds
     deposited and held until the U.S. Treasury calls the	balance.  The 
     maximum amount available to borrow through the Note Option is $3,500,000.
</TABLE>
<PAGE>

                Notes to Consolidated Financial Statements
8.  Estimated Fair Value of Financial Instruments		
  Statement of Financial Accounting Standards (SFAS) No. 107,"Disclosures
about Fair Value of Financial Instruments", requires that SUN disclose
estimated fair values for its financial instruments.  Fair value estimates
are made at a specific point in time, based on relevant market information
and information about the financial instrument.  These estimates do not 
reflect any premium	or discount that could result from offering for sale at
one time SUN's entire holdings of a particular financial instrument.		Because
no market exists for a significant portion of SUN's financial instruments,
fair value estimates are based on judgments regarding future expected loss
experience, current economic conditions, risk characteristics of various
financial instruments and other factors.  These estimates are subjective in
nature and involve uncertainties and matters of significant judgment and	
therefore cannot be determined with precision.  Changes in	assumptions can 
significantly affect the estimates.
  Estimated fair values have been determined by SUN using historical data
and an estimation methodology suitable for each category of financial
instruments.  The estimated fair value of SUN's investment securities is
described in Note 3.  The fair value estimates, methods and assumptions are
set forth below for SUN's other financial instruments.					
 Cash and due from banks:
  The carrying amounts for cash and due from banks approximate fair value 
because they mature in 90 days or less and do not present unanticipated credit
concerns.

 Loans:
  Fair values are estimated for portfolios of loans with similar financial
characteristics.  Loans are segregated by type such as real estate, agri-
cultural, commercial and industrial, loans to individuals and other loans.
  The fair value of performing loans is calculated by discounting scheduled cash
flows through the estimated maturity using estimated market discount rates
the credit and interest rate risk inherent in the loan.  The estimate of 
maturity is based on SUN's historical experience with repayments for each
loan classification, modified, as required, by an estimate of the effect of
current economic and lending conditions.
  Fair value for significant nonperforming loans is based on recent external
appraisals.  If appraisals are not available, estimated cash flows are dis-
counted using a rate commensurate with the risk associated with the estimated
cash flows.  Assumptions regarding credit risk, cash flows, and discount
rates are judgmentally determined using available market information.
<TABLE>
The following table presents information for loans:
<CAPTION>                       
                       				 			      December 31, 1995    	      		December 31, 1994		
					                             	Book       	Estimated         Book	       Estimated   
(In Thousands)					               	Value	     	Fair Value       Value        Fair Value  							
<S>                              <C>            <C>           <C>             <C>    
Real estate                      $148,938       $149,642      $139,815        $135,229
Agricultural						                    724            716           665	            559
Commercial and industrial				      25,729         25,763	       20,725          21,075
Loans to individuals			      		    26,184         26,520        25,709          23,750	
Other							                           60	            60            42	             42		                                     
	
       Total loans 		          		$201,635      	$202,701      $186,956        $180,655
</TABLE>
Deposits:
  The fair value of deposits with no stated maturity, such as noninterest-
bearing demand deposits, NOW accounts, savings deposits, and Insured Money
Market Accounts, is equal to the amount payable on demand as of December 31,
1995 and 1994.  The fair value of time deposits is based on the discounted 
value of contractual cash flows.  The discount rate is estimated using the
rates currently being offered for deposits of similar remaining maturities.
<TABLE>
						                        	December 31, 1995		         December 31, 1994		
							                      Book         Estimated      Book 	       Estimated  
(In Thousands)						         Value       Fair Value      Value	       Fair Value
<S>                        <C>             <C>         <C>             <C>                   
Noninterest-bearing demand
  deposits			              $ 20,247	       $ 20,247	  	$ 22,354	       $ 22,354
Interest-bearing deposits:
 	NOW accounts					          31,102          31,102      32,225		        32,225
Savings deposits					        28,136          28,136      29,974		        29,974	
	Insured Money Market 
  Accounts			                 6,653           6,653       6,361		         6,361
	Time deposits					         110,454         108,257      92,246          89,759
  		
	  	Total deposits				     $196,592	       $194,395    $183,160        $180,673
</TABLE>
<PAGE>
                       Notes to Consolidated Financial Statements

    The fair value estimates do not include the benefit that results from the
low-cost funding provided by the deposit liabilities compared to the cost of
borrowing funds in the market, commonly referred to as the core deposit
intangible.

Borrowed funds:
     Rates currently available to SUN for borrowed funds with similar terms and
remaining maturities are used to estimate the fair value of existing borrowed
funds.
<TABLE>
<CAPTION>             
   						                		    December 31, 1995		          December 31, 1994	
								                                    Estimated                 Estimated
                              Book            Fair         Book         Fair
(In Thousands)                Value	         Value         Value       Value         
<S>                          <C>            <C>          <C>          <C>
Short-term borrowings        $15,526	       $15,526     	$34,702      $34,702	
Other borrowed funds					     68,613	        68,910	    	 50,972	   	  48,738		

	Total borrowed funds		      $84,139	       $84,436	    	$85,674	     $83,440		
</TABLE>
   
 Commitments to Extend Credit, Standby Letters of Credit and	Financial 
   Guarantees Written:					
    There is no material difference between the notional amount	and the
estimated fair value of off-balance sheet items which total $35,150,000 and are
primarily comprised of unfunded loan commitments which are generally priced at
market at the time of funding.

9.  Common Stock Plans
     In 1994, the shareholders of SUN BANCORP, INC. approved the adoption of
three common stock plans for employees and directors. The 1994 Stock 
Incentive Plan, which is administered by a	disinterested committee of the
Board of Directors, has allocated 291,060 shares of common stock for key
officers and other management employees in the form of qualified	options, 
non-qualified options, stock appreciation rights and/or restrictive stock.
The number of shares granted under this plan was 34,816 in 1995 and 57,152 
in 1994. In 1995, the purchase price per share at which the granted shares 
are exercisable was $25.00.  In 1994, the purchase prices per share were
$19.62 and $17.89.   	
     The 1994 Independent Directors Stock Option Plan allows for 30,016 
shares of common stock to be granted	to non-employee directors.  The number of
shares granted under this plan was 5,889 in 1995 and 6,342 in 1994.  The 
purchase price per share at which the granted shares are exercisable was $20.38
in 1995 and $17.38 in 1994.  Options for the 1994 Stock Incentive Plan and the
1994 Independent Directors Stock Option Plan expire ten years after the date
of grant.  During 1995 and 1994, no granted options for either plan were
exercised.
     The 1994 Employee Stock Purchase Plan has allocated 90,956 shares of common
stock for all employees at an option price per share that is not less that 90%
of the fair market value per share on the date of exercise.  Each option will
expire no later than five years from the date of grant.  The Plan will termi-
nate on the tenth anniversary of teh effective date of the grant.
		
<TABLE>
The following table provides data related to the 1994 Employee Stock
 Purchase Plan:

<CAPTION>
          Shares        Shares      Expired     Granted Shares    Range of Price on
Year	     Granted      Exercised     Shares       Outstanding      Shares Exercised
<S>	       <C>           <C>          <C>           <C>            <C>  
1995       9,972	        1,970		      780	          14,654         $19.80 - $22.05
1994       7,876           220	     	 224	           7,432			      $16.75 - $17.92
</TABLE>
     SUN has an optional dividend reinvestment plan for all	shareholders in
which additional shares of common stock may be purchased with reinvested
dividends and optional cash payments.  The shares are purchased in the open
market with the price being equal to the fair market value of the common stock
on the date of purchase by SUN.

10.  Employee Benefit Plans
    SUN provides a defined contribution pension plan that covers	sub-
stantially all employees.  SUN's contributions to this plan are	based on 
employee contributions and compensation.  In addition to the defined
contribution plan, SUN provides supplemental payments to certain key
employees upon retirement.
    SUN's contributions to the defined contribution plan for the years
ended December 31, 1995, 1994 and 1993 were $201,000, $170,000 and $163,000, 
respectively.  Additionally, the amount charged to expense under the 
supplemental payment agreement for the same periods was $32,000, $40,000 and
$56,000, respectively.
<PAGE>
                     Notes to Consolidated Financial Statements
<TABLE>
11.  Income Taxes
    The following temporary differences gave rise to a deferred tax asset
at December 31, 1995 and 1994:  
<CAPTION>
									                         		          Years Ended December 31
(In Thousands)
	                                     											1995 		       1994
<S>                                              <C>          <C>
Deferred tax assets:
	Allowance for possible loan losses					     			 $513  	      $ 448
	Loan fees and costs									                     147  		       148	
	Pension expense										                         54    	       43  
 Depreciation					                       					     44   		       45	
	Other										                             	     43 	          20
	Unrealized losses on investment securities		       -      	  1,286
		
        Total						                         				 $801	       $1,990		

Deferred tax liabilities:									
	Unrealized gains on investment securities					 $ 719        $  -	
 Other                                              5  		       -	

      		Total					                           		 $ 724        $  -    		

              Deferred tax asset, net           $  77        $1,990													
</TABLE>
<TABLE>
SUN's income tax provision for 1995, 1994 and 1993 consists of the following:
<CAPTION>

                                  											Years Ended December 31
(In Thousands)							                    		 1995 		    1994		       1993
<S>                                        <C>        <C>          <C> 
Current payable								                   	$2,246	   	$2,058	     	$1,728
Deferred income tax benefit							            (92)		    (188)	   	   (138)

 	Income tax provision                     $2,154     $1,870	     	$1,590		
</TABLE>
<TABLE>
	    The following is a reconciliation between the actual income tax expense
and the amount of income taxes which would have been recognized at the
federal statutory rate:
<CAPTION>	
                                           							Years Ended December 31
                                     						 1995		     		1994         		1993	  
(In Thousands)													
			                                    Amount  Rate   Amount 	Rate    Amount  Rate	              
<S>                                    <C>     <C>    <C>     <C>     <C>     <C>
Federal income tax at statutory rate	  $2,653	 34.0%  $2,307  34.0%  	$1,986  34.0%
Tax-exempt income			                     (471) (6.0)   	(407) (6.0)     (387)	(6.6)  
Other items                               (28)  (.4) 	   (30)  (.4)	      (9)  (.2)			
		
  Income tax provision                	$2,154		27.6%		$1,870  27.6%  $ 1,590	 27.2%
</TABLE>
<PAGE>

                         Notes to Consolidated Financial Statements
<TABLE>
12.  Related Party Transactions
    Certain executive officers, corporate directors or companies	in which
they have 10 percent or more beneficial ownership were indebted to SUN.
    A summary of loan activity with officers, directors, stockholders and
associates of such persons is listed below:
<CAPTION>
(In Thousands)		                     		Beginning	    New	                  Other		  Ending
                                 					  Balance  	  Loans	   Repayments   Changes		Balance
<S>                                     <C>        <C>      <C>           <C>      <C>  
10 Directors, 7 Executive Officers 1995	$11,642	  	$4,925	 	$(6,364)	    	$ 489		  $10,692
10 Directors, 8 Executive Officers 1994  10,778     4,345		  (3,879)		      398		   11,642
 9 Directors, 5 Executive Officers 1993   7,019     3,792		  (1,547)		    1,514		   10,778
</TABLE>

    The above transactions were made in the ordinary course of business on
substantially the same terms, including interest rates and collateral, as 
those prevailing at the time for comparable transactions with other persons
and do not involve more than normal risks of collectibility.

13.  Off-Balance Sheet Risk
    SUN is a party to financial instruments with off-balance	sheet risk in
the normal course of business to meet the financing needs of its customers. 
These financial instruments include commitments to extend credit and standby
letters of credit. Those instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amount recognized	in the
balance sheet.
    Exposure to credit loss in the event of nonperformance by	the other party
to the financial instrument for commitments to extend credit and standby
letters of credit is represented by the contractual amount of those in-
struments.  SUN uses the same credit policies in making commitments and
conditional obligations as it does for on-balance sheet instruments.			
    Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition	established in the contract. 
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee.  Since many of the commitments
are expected to expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements.  Evaluation of
each customer's creditworthiness is done on a case-by-case basis.  The amount
of collateral obtained if deemed necessary upon extension of credit is based
on management's credit evaluation of the customer.  Collateral held varies
but may include accounts receivable, inventory, property, plant and equipment,
and income-producing commercial properties.  At December 31, 1995 and 1994,
commitments to extend credit totaled $33,784,000 and $34,825,000, respectively.
     Standby letters of credit are conditional commitments issued to guarantee
the performance of a customer to a third party.  Those guarantees are primarily 
issued to support public and private borrowing arrangements, including com-
mercial paper, bond financing, and similar transactions.  The term of the 
letters of credit varies from one month to 24 months and may have renewal 
features.  The credit risk involved in issuing letters of credit is essentially
the same as that involved in extending loans to customers.  SUN holds collateral
supporting those commitments for which collateral is deemed necessary.  At
December 31, 1995 and 1994, standby letters of credit totaled $1,366,000 and
$1,490,000, respectively.
<PAGE>

14.  Regulatory Matters
    Various regulatory agencies require banks and bank holding	companies to
maintain a leverage ratio of core capital to total assets at a prescribed
level, currently 3.0%  In addition, bank	regulators have issued risk-based
capital guidelines.   Under such guidelines, minimum ratios of core capital
and total qualifying capital as a percentage of risk-weighted assets and	
certain off-balance sheet items of 4.0% and 8.0%, respectively, are required
at December 31, 1995.
    At December 31, 1995, SUN met all capital requirements.	Core capital was 
$36,020,000 or 11.27% of total assets and	18.47% of total risk-weighted 
assets, while total qualifying	capital was approximately $38,211,000 or
19.59% of total risk-weighted assets.
    Banking regulations limit the amount of dividends that may be paid to SUN
by the Bank without prior approval of the Bank regulatory agencies.  Retained
earnings against which dividends may be paid without prior approval of the
banking regulators amounted to approximately $26,691,000 for Sun Bank at 
December 31, 1995, subject to the minimum capital ratio requirements noted
above.
     The Bank is subject to regulatory restrictions which limit its ability to
loan funds to SUN.  At December 31, 1995, the maximum amount available to loan
approximated 10% of consolidated net assets.
<PAGE>

                     Notes to Consolidated Financial Statements
<TABLE>
15.  Condensed Financial Information - Parent Company Only

 
                               SUN BANCORP, INC.
                           CONDENSED BALANCE SHEETS
                          DECEMBER 31, 1995 AND 1994

<CAPTION>
(In Thousands)							                	                  1995       1994		
<S>                                                    <C>         <C>
Assets:
	Cash								                                          $     7    	$     5    		
	Investment securities						                               595 		      458  	
	Note receivable - net							                                6    	     12
	Accounts receivable					                                		 17 		        5
	Investment in subsidiaries				                	        35,404      28,256		
	Prepaid taxes							         	                            -            31		

     			Total assets					                              $36,029	   	$28,767	


Liabilities: 
	Accounts payable							                               $     4		   $    13       	
	Income tax payable                                          5		        - 	                    

     			Total liabilities					                               9          13


Stockholders' Equity:						      	
	Common stock						          	                           4,053		     3,515
	Surplus							                                         25,563	  	  15,212		
 Retained earnings                                       7,765	  	  11,479       
 Unrealized gains (losses) on 
   investment securities, net                             	 48	        (43)
 Treasury stock                                         (1,409)     (1,409)

     			Total stockholders' equity                      36,020  		  28,754		

     			Total liabilities and stockholders' equity		   $36,029   		$28,767                     
</TABLE>
<PAGE>
                       Notes to Consolidated Financial Statements
<TABLE>
                                     SUN BANCORP, INC.
                              CONDENSED STATEMENTS OF INCOME
                        Years Ended December 31, 1995, 1994 and 1993
<CAPTION>


(In Thousands)				                		  1995			        1994	      		  1993		
<S>                                  <C>            <C>            <C>
Income:
	Dividend income		                			$2,340		      	$1,814			      $2,063		
	Interest and other income				           67			          89		    	     109			
		
   Total income				                   2,407 			      1,903			       2,172			

Expenses:
	Stationery and printing				             15     		      14			          16	
	Professional fees				            	      22			          37		           33
 Other expenses               					      80 			         72             69

 		Total expenses				                   117		          123            118			

Income before income taxes and
  equity in undistributed earnings 
  of subsidiaries				               	 2,290		       	1,780		     	  2,054			

Income tax benefit			                   (13)            (7) 			       -   	     
 
Income before equity in undistributed
  earnings of subsidiaries				      	 2,303		        1,787          2,054				 

Equity in undistributed earnings of 
  subsidiaries	                       3,347		        3,127          2,197			

  		Net income			                    $5,650		       $4,914         $4,251		
</TABLE>
<PAGE>

                           Notes to Consolidated Financial Statements
<TABLE>

                                     SUN BANCORP, INC.
                           CONDENSED STATEMENTS OF CASH FLOWS
                      Years Ended December 31, 1995, 1994 and 1993
<CAPTION>

(In Thousands)
											                                      1995		       1994	       1993
<S>                                            <C>           <C>         <C> 
Cash flows from operating activities:
	Net income									                           $5,650	       $4,914	     $4,251
	Adjustments to reconcile net income to net
	 cash provided by operating activities:
	Equity in undistributed net income of 
  subsidiaries			                              (3,347)	      (3,127)	    (2,197)
	Gain from insurance contract						               -             (60)        -
	Deferred income taxes                            (45)           21         -           
 Realized net security losses						               -     		        1         -
 (Increase) decrease in accounts receivable			    (12)            6		        (1)
	(Increase) decrease in prepaid taxes              31           (19)         (1)
	Increase (decrease) in liabilities     				       (4) 	          9	         (6)
	(Decrease) in provision for possible loan losses  (1)           (2)	        (1)

 			Net cash provided by operating activities		 2,272         1,743	      2,045

Cash flows from investing activities:
	Proceeds from sales of investment securities     -              81      	   -	 
 Proceeds from insurance contract						           -		           315          -
	Principal collected on note receivable					        6	           10           4
	Purchases of investment securities						         -		          (365)       (303)

 			Net cash provided by (used in) investing
        activities		                                6		          41        (299)

Cash flows from financing activities:
	Cash dividends							                        	(2,317)	    	 (1,792)     (1,360)
	Treasury stock acquired					              		      -		           -	        (396)
	Proceeds from sale of stock for employee
   benefit program			                              41		           4	         -

 			Net cash used in financing activities			   (2,276)     	 (1,788)     (1,756)

Net increase (decrease) in cash and cash
  equivalents                                       2            (4)        (10)

Cash and cash equivalents at beginning of year	     5 	           9     	    19

Cash and cash equivalents at end of year			  	$     7       $     5        $  9
</TABLE>


    No interest or income taxes were paid by the parent company during the years
1995, 1994  or 1993.
<PAGE>

                        Notes to Consolidated Financial Statements
<TABLE>
16.  Consolidated Quarterly Financial Data (Unaudited)
<CAPTION>

(Dollars in Thousands, Except Per Share Data)

   		1995			            1st Qtr.	 	2nd Qtr.	 	3rd Qtr. 		4th Qtr.		   Total	
<S>                      <C>        <C>        <C>        <C>        <C> 
Interest income		      		$5,771		   $6,117	  	 $6,243	   	$6,308     $24,439
Interest expense				      2,764		    3,055		    3,111		    3,157		    12,087

Net interest income			    3,007		    3,062  		  3,132	  	  3,151	  	  12,352
Provision for possible
 loan losses		             (120)		    (120)		     (60)	      (60)       (360)
Other operating income		    413	       404		      442		      537		     1,796
Other operating expenses (1,526)    (1,635)	   (1,339)    (1,484)     (5,984)

Income before income
 taxes                    1,774      1,711      2,175		    2,144		     7,804
Income tax provision			    (484)		    (458)		    (612)		    (600)		   (2,154)

Net income	           			$1,290	   	$1,253	   	$1,563		   $1,544   	 $ 5,650

Net income per share		  	$  .40    	$  .39 	  	$  .50     $  .48     $  1.77

   		1994
 
Interest income      				$4,983   		$5,015	   	$5,126	   	$5,542   		$20,666		
Interest expense				      2,127 		   2,123		    2,217		    2,500		     8,967

Net interest income			    2,856		    2,892		    2,909		    3,042	  	  11,699
Provision for possible 
 loan losses	         	     (90)		     (90)		     (90)		     (90)		     (360)
Other operating income		    298        513        350		      408		     1,569	
Other operating expenses  (1,443)   (1,666)		  (1,479)		  (1,536)		   (6,124)

Income before income taxes 1,621     1,649		    1,690		    1,824		     6,784
Income tax provision		      (451)		   (469)      (451)		    (499)		   (1,870)

Net income				            $1,170	  	$1,180	   	$1,239	   	$1,325     $ 4,914	

Net income per share		   	$  .36    $  .37     $  .39     $  .42     $  1.54



   		1993

Interest income	       			$4,841	  	$4,965		   $5,029		   $5,178    	$20,013
Interest expense				       2,207		   2,212		    2,218		    2,333		     8,970

Net interest income			     2,634		   2,753	  	  2,811		    2,845		    11,043
Provision for possible 
 loan losses		              (105)		   (123)		   (153)		     (159)       (540)
Other operating income			    313		     302 		    388		       379		     1,382
Other operating expenses	 (1,495)   (1,572)	 	(1,490)		   (1,487)	    (6,044)

Income before income taxes 1,347     1,360		   1,556    		 1,578	 	    5,841
Income tax provision		      (361)     (368)		   (429)       (432)		   (1,590)

Net income			            	$  986	  	$  992   	$1,127    		$1,146   		$ 4,251

Net income per share		   	$  .31    $  .31    $  .35      $  .35     $  1.32
</TABLE>


               Report of Independent Certified Public Accountants

	To the Stockholders and Board of Directors of SUN BANCORP, INC.

	    We have audited the accompanying consolidated balance sheets of SUN
BANCORP, INC.	and subsidiaries ("SUN") as of December 31, 1995 and 1994, and 
the related consolidated statements of income, changes in stockholders' 
equity and cash flows for each of the three	years in the period ended
December 31, 1995.  These financial statements are the responsibility 
of SUN's management.  Our responsibility is to express an opinion on
these financial statements based on our audits.  
	    We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about	whether the financial statements are free
of material misstatement.  An audit includes examining,	on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and signi-
ficant estimates made by	management, as well as evaluating the overall
financial statement presentation. We believe that	our audits provide a
reasonable basis for our	opinion.
     In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the financial position of SUN
BANCORP, INC. and subsidiaries as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for each of the three years in 
the period ended December 31, 1995, in conformity with generally accepted 
accounting principles. 
	    As discussed in Note 1 to the consolidated financial statements, in 1993
SUN changed its method of accounting for investment securities by adopting
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" and changed its method of account-
ing for income taxes by adopting Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes."



                          /s/ PARENTE, RANDOLPH, OLANDO, CAREY & ASSOCIATES




Williamsport, Pennsylvania

January 19, 1996
<PAGE>

                             Five Year Financial Highlights
<TABLE>
                             Five Year Financial Highlights
                                Selected Financial Data

					                             	1995		     1994	      1993	     1992      1991    
<S>                              <C>        <C>        <C>       <C>       <C>
Balance Sheet Data (In Thousands)			
Assets					                      $319,626	 	$299,761  	$288,662 	$250,175 	$211,518
Deposits				                      196,592    183,160    179,363   181,947	  170,625
Loans					                        199,444		  184,957    165,740   146,956   137,368
Investment securities			          107,125		  100,002	   111,311	   89,531  	 60,730
Stockholders' equity			            36,020		   28,754     29,758	   25,629	   23,661
Average equity			                  32,025		   29,697     27,004    24,706	   22,723
Average assets				                309,623		  285,177	   270,504	  231,065	  202,824	

Earnings Data (In Thousands)
Interest income			              $  24,439		 $ 20,666	  $ 20,013 	$ 18,737  $ 18,481
Interest expense			                12,087		    8,967      8,970     9,070	   10,554

Net interest income			            	12,352		   11,699     11,043     9,667     7,927
Provision for possible loan losses		  360 	      360	       540       420       228
Net interest income after provision
  for possible loan losses         11,992	    11,339     10,503     9,247	    7,699
Other operating income			           1,796 	    1,569      1,382	    1,206     1,072
Other operating expenses		       	  5,984	     6,124      6,044	    5,969     5,683

Income before income tax provision  7,804      6,784	     5,841     4,484     3,088

Income tax provision				            2,154		    1,870      1,590     1,142	      655

Net income					                     5,650		    4,914      4,251     3,342     2,433
Dividends declared		            		  2,317		    1,792      1,360     1,005       816

Ratios
Return on average assets		       	   1.83%	     1.72%      1.57%     1.45%	    1.20%
Return on average equity			         17.64%	    16.55%	    15.74%	   13.53%	   10.71%
Equity to assets (year end)			      11.27%	     9.59%	    10.31%	   10.24%	   11.19%
Loans to deposits (year end)		    	101.45%    100.98%     92.40%	   80.77%	   80.51%
Loans to assets (year end)	     		  62.40%	    61.70%	    57.42%    58.74%    64.94%    
Dividend payout (percentage
  of net income)	                   41.01%	    36.47%     31.99%	   30.07%	   33.54%


Per Share Data
Net income per share			         $    1.77    $    1.54   $    1.32   $    1.03  $     .74
Cash dividends per share		      $     .72    $     .55   $     .42   $     .31  $     .25
Book value per share			         $   11.28    $    9.00   $    9.32   $    7.95  $    7.24
Average shares outstanding		    3,194,248    3,193,282   3,213,495   3,256,126  3,270,468
Approximate number of 
 stockholders                       1,337        1,163       1,089       1,027      1,047
</TABLE>
<PAGE>
                            Management's Discussion and Analysis

BACKGROUND
     SUN BANCORP, INC. (SUN) is a one bank holding company whose principal 
subsidiary is Sun Bank.  In 1993, SUN's two subsidiary banks merged to create
one bank with the legal title Sun Bank; however, the banks retained their 
trade nemes of Snyder County Trust Company and Watsontown Bank.  SUN also owns
a captive insurance company, the Pennsylvania SUN Life Insurance Company, that
provides credit life and disability insurance to Sun Bank's credit customers.
In 1995, SUN entered into a limited partnership with the Susquehanna Valley
Development Group, Inc.  The partnership was formed for the purpose of building
owning and operating an affordable elderly apartment complex in Union County 
known as Mifflin Place Associates.  SUN operates six branch banking offices and
one trust services office in its principal market area of Snyder, Union and
Northumberland Counties.  At December 31, 1995, SUN had 101 full-time equiva-
lent employees.

ANALYSIS OF OPERATIONS
Summary
     SUN achieved record earnings for the year ending December 31, 1995.  Net
income reached $5,650,000 in 1995, representing a $736,000 or 15% increase
over the $4,914,000 recorded in 1994.  Earnings per share also reached record
levels at $1.77 compared to the $1.54 earned in 1994.  This strong earnings
performance is further reflected through a solid 1.83% return on average assets
and a 17.64% return on average equity.  At December 31, 1994, these ratios were
1.72% and 16.55%, respectively.

Net Interest Income
     A bank's profitability is primarily determined by its net interest income,
which is the difference between the income earned on earning assets and the
interest paid on interest-bearing liabilities such as deposits and borrowed
funds.  Net interest income is also measured as a percentage of earning assets
known as the net interest margin.
     SUN's net interest income rose $785,000 or 6.32% in 1995 and increased
$681,000 or 5.80% in 1994 due primarily to an increase in interest-earning
assets during both years.  Interest rates started moving upward during the
second quarter of 1994 and steadily increased throughout the remainder of 
the year into early 1995.  Rates remained relatively stable throughout 1995 with
a slight decrease in the middle and end of the year.  In 1995, interest income
rose $3,905,000 or 18.26% as interest expense increased $3,120,000 or 34.79%.
The effect of the upward movement in rates throughout 1994 is reflected in the
higher rates received on earning assets in 1995 as well as the increase in 
rates paid on deposits and borrowed funds.  SUN's management feels that 
effective asset/liability management can absorb the effects of a changing
interest enviornment.
<PAGE>

Balance Sheet
     Average assets grew $24,446,000 or 8.57% from $285,177,000 in 1994 to
$309,623,000 in 1995.  Average loans grew $21,389,000 or 12.21% as loan demand
remained strong throughout 1995.  Average investments remained basically un-
changed from $100,658,000 in 1994 to $100,630,000 in 1995.  However, the
makeup of the investment portfolio changed slightly as principal paydowns
from mortgage-backed securitis were used to fund tax-free municipal bond
purchases instead on being reinvested into mortgage-backed securities.  This
was done to take advantage of the prevailing higher rates on tax-free bonds.
The yield on total earning assets rose 64 basis points from 7.75% in 1994 to 
8.39% in 1995.  Yields in each of the earning asset categories showed in-
creases reflecting the effect of rising rates throughout 1994.
     In 1994, SUN's average assets rose $14,673,000 or 5.42% from $270,504,000
in 1993 to $285,177,000 in 1994.  Average loans grew $17,085,000 or 10.81% as
average investments showed a slight decrease of $954,000 or less than 1%  The
yield on earning assets dropped 21 basis points in 1994 as a result of the 
sharp increase in the volume of new mortgage loans going on the books at com-
petitive market rates coupled with the existing variable rate loan portfolio
repricing with prior period carryovers.
     In 1995, SUN's average interest-bearing liabilities rose $20,974,000 or 
8.94% from $234,482,000 in 1994 to $255,456,000 in 1995.  Total average
deposits grew $8,260,000 or 5.00% as time deposits increased $13,506,000 or
14.98%.  In 1995, SUN offered an attractive 20-month certificate of deposit
which accounted for much of the growth.  The other deposit categories showed
decreases as some of those monies were transferred to time deposits as
consumers started seeking higher yielding deposits.  Short-term borrowings,
mainly overnight borrowings from the Federal Home Loan Bank (FHLB) of Pitts-
burgh, dropped $7,175,000 or 28.17% as other borrowed funds, primarily term
advances from the FHLB, showed a sharp increase of $19,889,000 or 45.31%.  Some
of the overnight borrowings were converted to term advances to control the
interest rate risk.  The remaining increase in other borrowed funds was used
to fund loan growth.  It is management's and the Board of Director's intent to
recognize the highest possible spread between its funding sources and earning
assets through prudent asset/liability management.
     The interest paid on deposits in 1995 rose $1,667,000 or 29.20% as the
rates paid increased 79 basis points from 3.46% in 1994 to 4.25% in 1995.  The
rates paid on short-term borrowings and other borrowed funds rose 104 basis 
points from 4.70% in 1994 to 5.74% in 1995.  This increase in the cost of funds
is a result of the prevailing interest rate enviornment. 
     In 1994, average interest-bearing deposits remained stable at $165,112,000
compared to $164,299,000 in 1993.  Short-term borrowings increased $12,478,000
or 96.02% as other borrowed funds dropped $3,545,000 or 7.47%.
<PAGE>

                        Management's Discussion and Analysis
<TABLE>
AVERAGE BALANCE AND NET INTEREST INCOME ANALYSIS
  The table below presents an analysis of the composition of average balances
and net interest income on a fully taxable equivalent basis.
<CAPTION>              	  
                                        1995	     	                 1994              	    		    1993		     
				                          Average			                  Average	              	    Averag	
(In Thousands)		              Balance  Interest  Rate     Balance  Interest  Rate    Balance   Interest   Rate
<S>                          <C>        <C>      <C>     <C>       <C>       <C>     <C>       <C>        <C>    
ASSETS
Interest-earning assets:
	Interest-bearing deposits   $  2,118   $   122  5.76%   $    121  $      5  4.13%   $   428   $     13   3.04%
	Loans (net of unearned	    
	     income) (1) (2)	        196,538    18,037	 9.18	    175,149    14,863  8.49    158,064     13,797   8.73
	Investments:Taxable           78,821 	   5,066	 6.43	     82,661     4,832  5.85     85,390      5,282   6.19
		           Tax-exempt (2)    21,809    	2,060  9.45	     17,997     1,680  9.33     16,222      1,609   9.92
	Federal funds sold              	-     	   -     -  	          3       -     -           11          1   3.00

Total interest-earning assets 299,286    25,285  8.39	    275,931    21,380  7.75    260,115     20,702   7.96

Noninterest-earning assets:
	Cash and due from banks        5,789                       5,754		                    5,503
	Bank premises
    & equipment                 3,513       			             3,725		                    4,094
	Accrued interest and
	     other assets	             3,538                       2,015		                    2,547
	Less:  Allowance for
	        loan losses		         (2,145)			                  (1,891)		                  (1,545)			   
 Unamortized loan fees           (358)		                     (357)		                    (210)

Total assets		               $309,623                    $285,177                  	$270,504

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
	NOWs and Super NOWs         $ 31,407       630  	2.01   $ 32,554       661  2.03   $ 30,725    749  2.44
	Insured Money Market
	     Accounts		                8,459       287   3.39     10,591       288  2.72     10,934    305  2.79
	Savings deposits              29,829       670   2.25     31,796       729  2.29     29,338    810  2.76
	Time deposits	               103,677     5,789   5.58     90,171     4,031  4.47     93,302  4,375  4.69
	Short-term borrowings         18,298       978   5.50     25,473     1,062  4.17     12,995    413  3.18
	Other borrowed funds          63,786     3,733   5.81     43,897     2,196  5.00     47,442  2,318  4.89

Total interest-bearing
  liabilities	                255,456    12,087   4.73    234,482     8,967  3.82    224,736  8,970  3.99

Noninterest-bearing liabilities
     and stockholders' equity:
	Demand deposits               19,704	                     19,786		                   17,115   	
	Accrued interest and
   other liabilities            2,438			                    1,212		                    1,649			
	Stockholders' equity          32,025                      29,697		                   27,004			     

Total liabilities and
  stockholders' equity       $309,623                    $285,177			                $270,504

Interest rate spread				                          3.66% 	   		               3.93%			                3.97%

Net interest income/margin	            $ 13,198   4.41%             $12,413  4.50%          $11,732  4.51%

(1)  Average loan balances include non-accrual loans and interest income
     includes fees on loans.
(2)  Yields on tax-exempt loans and investments have been adjusted to a fully
     taxable equivalent basis using the federal income tax rate of 34%.
</TABLE>

                            Management's Discussion and Analysis
<TABLE>
VOLUME AND RATE ANALYSIS
    Changes in interest income and interest expense can result from variances
in both volume and rates.  The following table shows an analysis of the 
effect of volume and rate variances on taxable-equivalent interest income, 
interest expense, and net interest income.
<CAPTION>
						                        1995 Compared to 1994	           1994 Compared to 1993
(In Thousands)					            Increase (Decrease)              Increase (Decrease)       

                       						Volume	    Rate      Net          Volume    Rate     Net
<S>                         <C>        <C>      <C>           <C>       <C>      <C>   
Interest earned on:
	Interest-bearing deposits		$   82     $   35   $  117        $   (9)   $    1   $   (8)
 Loans					                  1,816	     1,358    3,174         1,492      (426)   1,066	
	Investments:  
	     Taxable		               (225)       459      234          (169)     (281)    (450)
      Tax-exempt		             356         24      380  	        176      (105)      71	
	Federal funds sold			          -          -        -   	         (1)       -        (1)	

 		Total interest-earning
      assets                 2,029      1,876    3,905         1,489      (811)     678

Interest paid on:
	NOWs and Super NOWs		         (23)        (8)     (31)           45       (133)    (88)
	Insured Money Market Accounts (58)        57       (1)          (10)        (7)    (17)
 Savings deposits              (45)       (14)     (59) 	         68       (149)    (81)
	Time deposits                 604      1,154    1,758          (151)      (193)   (344)
	Short-term borrowings			     (299)       244      (84)          397        252     649
	Other borrowed funds			       994        514    1,537          (173)        51    (122)

 		Total interest-bearing 
     liabilities	            1,173      1,947    3,120           176       (179)     (3)

Net interest income			     	$  856     $  (71)  $  785        $1,313      $(632)   $681
</TABLE>
    Income on tax-exempt loans and investments have been adjusted to a fully 
taxable equivalent basis using the federal income tax rate of 34%.
<PAGE>

                            Management's Discussion and Analysis
<TABLE>
ANALYSIS OF CHANGES IN INCOME AND EXPENSE
     The table below presents an analysis of the comparative changes in income
and expense relating to the consoldiated income statements for the period's
indicated.  The table also reflects the changes in average volume of assets
and liablilites as it relates to income and expense.  The tax-exempt income is
not shown on a tax-equivalent basis.
<CAPTION>
(In Thousands)
                               1995 Compared to 1994                       1994 Compared to 1993
                        Average    Volumes       Income/Expense      Average     Volumes      Income/Expense
           		        		$ Change   % Change    $ Change  % Change    $ Change    % Change   $ Change  % Change
<S>                    <C>         <C>           <C>        <C>       <C>          <C>       <C>        <C>       
Loans (net of unearned	     
  income)             	$21,389       12.21%      $3,166     21.50%    $17,085      10.81%    $ 1,069    7.83%
Investment securities      (28)       (.03)         490      8.25    	   (954)      (.94)       (407)  (6.42)
Money market  
 investments        	    1,994    1,608.06          117  2,340.00        (315)    (71.75)         (9)  (64.29)

	Total interest-	
   earning assets     	$23,355        8.46%      $3,773     18.26%    $15,816       6.08%     $  653     3.26%

NOWs and			
 Super NOWs           	$(1,147)      (3.52)%     $  (31)    (4.69)%   $ 1,829       5.95%     $  (88)  (11.75)%
Insured Money Market
 Accounts               (2,132)     (20.13)          (1)     (.35) 	     (343)     (3.14)        (17)   (5.57)
Savings deposits		      (1,967)      (6.19)         (59)    (8.09)      2,458       8.38         (81)    (.10)	
Time deposits		       	 13,506       14.98        1,758     43.61      (3,131)     (3.36)       (344)   (7.86)
Short-term borrowings   (7,175)     (28.17)         (84)    (7.91)     12,478      96.02         649   157.14
Other borrowed funds		  19,889       45.31        1,537     69.99 	    (3,545)     (7.47)       (122)   (5.26)	

	Total interest-bearing
   liabilities	        $20,974        8.94%      $3,120     34.79% 	  $ 9,746       4.34%      $  (3)    (.03)%

Net interest income					                            653      5.58                		      	       656     5.94
Provision for possible loan losses			                -        -                 	 		            (180)  (33.33)

Net interest income after provision for
   possible loan losses                             653      5.76                                836     7.96

Trust income					                                    36     16.67                                 -       -
Service charges and other income			                 212     22.39                                (88)   (8.50)          
Net securities gains					                            65    100.00   				                         (66)  (50.38)	
Income from insurance subsidiary                    (86)   (25.22)                               341   100.00
	 
  Total other operating income			                   227     14.47                                187    13.53

Salaries and employee benefits			           	       114      3.63         		                   	 (29)    (.92)	
Net occupancy and equipment expenses			             (36)    (4.52)           		                 (171)  (17.68)
Other expenses				   		                            (146)    (7.75)                               (26)   (1.36)
Expenses of insurance subsidiary                    (72)   (23.53)          		                   306   100.00
	
  Total other operating expenses			                (140)    (2.29)                                80     1.32

Income before income tax provision		              1,020     15.04                                943    16.14

Income tax provision					                           284     15.19                                280    17.61

Net income					                              	   $  736     14.98%                            		$663    15.60%        						
</TABLE>
<PAGE>

                                     Management's Discussion and Analysis

OTHER OPERATING INCOME
      SUN's total other operating income rose $227,000 or 14.47% in 1995. 
Positive growth was recognized in each income category except the income
from the insurance subsidiary.  Service charges on deposit accounts grew
$48,000 or 10.28% due to an increase in the number of accounts and general
increases in related account fees.  Trust income rose $36,000 or 16.67% as
a result of an increase in number of accounts as well as the balances held
in trust.  Other income increased $164,000 or 34.17% in 1995.  SUN recog-
nized $27,000 in net gains from the sale of other real estate owned and 
$62,000 in proceeds from an insurance contract relating to the termination
of its defined benefit pension plan in 1990.  Net security gains amounted
to $130,000 in 1995, up $65,000 from the gains realized in 1994.  In early
1995, SUN sold several state and municipal bonds with call dates within one
to two years and purchased like instruments with five year call dates to 
take advantage of the interest rate cycle.  These trades netted $70,000 in
gains with the other $60,000 coming from sales of equity securities.  SUN
recognizes the need to find additional sources of income to enhance its profit
performance.  However, sales from the investment portfolio are not used as a
strategy to increase income at the expense of liquidity.
     In 1994, SUN's total other operating income increased $187,000 or 13.53%.  
SUN's insurance subsidiary became fully operational in 1994 which contributed 
to the increase.  Service charges on deposit accounts rose $49,000 or 11.72%
as other income dropped $137,000 or 22.20% due to a sharp decline in fee 
income generated from loan sales as loans granted in 1994 that would have
normally been sold were kept in-house.  Security gains amounted to $65,000
from the sale of equity securities.
<TABLE>
     The table below illustrates the changes in other operating income for the
years ended December 31, 1995, 1994, and 1993.
<CAPTION>


(In Thousands)		                	  		1995    % Change		   1994   	% Change		  1993	
<S>                                 <C>       <C>       <C>       <C>       <C> 
Service charges on deposit accounts $  515	    10.28%	  	$  467	   11.72% 	  $  418
Trust income				                     	 252	    16.67			     216      -          216	
Other income					                      644	    34.17			     480   (22.20)       617	
Net securities gains			              	 130	   100.00         65	  (50.38)       131
Income from insurance subsidiary     	 255    (25.22)			    341   100.00         - 
 
  Total other operating income      $1,796     14.47%   	$1,569    13.53%    $1,382	
</TABLE>
OTHER OPERATING EXPENSES
     SUN has always been committed to controlling its operating expenses in an
effort to maximize profits.  In 1995, SUN's total other operating expenses de-
creased $140,000 or 2.29% with general declines or minimal increases in each of
the expense categories.  Salaries and employee benefits increased $114,000 or 
3.63% due to normal salary adjustments.  Net occupancy expenses rose $5,000 or
1.36% as furniture and equipment expenses dropped $41,000 or 9.58%.  In late
1995, SUN purchased three future branch locations.  The effect of the costs to
prepare these sites for operation will be recognized in 1996.  Additionally, SUN
will be purchasing and installing new computer hardware and software throughout
1996 in an effor to enhance our competitive position and to be prepared to offer
the products and services demanded in today's rapidly changing technology-based
marketplace.
     In September 1995, SUN received a $117,000 refund from the Federal Deposit
Insurance Corporation (FDIC) representing an adjustment to its deposit insurance
premiums for the second and third quarters of 1995.  The reduced FDIC premium
paid in the fourth quarter of 1995 along with the refund contributed to SUN's
other operating expenses falling $146,000 or 7.75%.  Due to the restructuring
of the payment of FDIC premiums, SUN will pay the minimum annual assessment
rate of $2,000 in 1996 as a result of its well-capitalized status.
     In 1994, total other operating expenses rose $80,000 or 1.32% which in-
cluded the expenses of the insurance subsidiary for the first time.  Excluding
the expenses of the insurance subsidiary, total other operating expenses
actually decreased $226,000 or 3.74%.  The consolidation of operations of the
Watsontown Bank with Snyder County Trust Company in late 1993 contributed to
the decrease in costs as economies of scale were recognized in several aspects
of operations.
<TABLE>
    The table below illustrates the changes in other operating expenses for
the years ended December 31, 1995, 1994 and 1993.
<CAPTION>

(In Thousands)					                1995	   % Change     	 1994    % Change	    1993
<S>                               <C>      <C>           <C>       <C>        <C>  
Salaries and employee benefits	  	$3,251     3.63%	      $3,137      (.92)%   $3,166
Net occupancy expenses			            373	    1.36		         368     (4.91)       387
Furniture and equipment expenses		   387	   (9.58)          428    (26.21)       580	
Other expenses					                1,739    (7.75)        1,885     (1.36)     1,911
Expenses of insurance subsidiary	    234   (23.53)          306    100.00        -        	

	Total other operating expenses	  $5,984    (2.29)		     $6,124	     1.32%	   $6,044	
</TABLE>

                               Management's Discussion and Analysis

INVESTMENT PORTFOLIO
     SUN's total portfolio has always been classified as Available-for-Sale, 
which means it is reported at fair value with unrealized gains or losses, net
of taxes, reported as a separate component of stockholders' equity.  In 1995,
SUN had an unrealized net gain on investment securities of $2,115,000, com-
pared to an unrealized loss of $3,783,000 in 1994.  The majority of SUN's
portfolio is comprised of fixed-rate mortgage-backed securities that have
monthly principal and interest paydowns.  As these paydowns are received, the
funds are generally being reinvested into higher-yielding loans and other
securities.  Management believes this sound strategy continues to reflect
positively on profits.  There are no single-issuer concentrations in muni-
cipal securities.  SUN does not have any derivataive financial instruments
that require separate disclosure as defined in Statement of Financial
Accounting Standards No. 119.
<TABLE>
     The following table shows the actual maturity distribution of investment
securities at December 31, 1995.  
<CAPTION>
(In Thousands)
		                     Within           After One But             After Five But	       After		
			                   One Year	       Within Five Years         Within Ten Years     Ten Years	             Total
			
			            Amortized              Amortized                Amortized            Amortized          Amortized
			              Cost        Yield      Cost       Yield         Cost       Yield     Cost    Yield      Cost       Yield
<S>              <C>         <C>       <C>         <C>          <C>         <C>       <C>      <C>       <C>         <C>
Obligations
 of U.S. government
 agencies        $ 38        4.66%     $   614     6.13%        $28,811     6.64%     $43,962  6.39%     $73,425     6.49%
Obligations of
 states and political
 subdivisions (1)  90        7.91          830    10.70              75    13.64       24,118  9.27       25,113     9.33
Corporate debt
 securities        -          -            242     5.71             -        -            -      -           242     5.71
	
   Total	       	$128       6.95%       $1,686     8.32%        $28,886     6.66%     $68,080  7.41%     $98,780     7.21%

Equity securities (2)											                                                                           6,230

Total investment securities										                                                                   $105,010     6.78%

(1)  The federal income tax rate of 34% was used to adjust the income to a 
     taxable equivalent basis.
(2)  Equity securities have no stated maturity and the related dividend
     income has no stated rate.
</TABLE>
<TABLE>
     The amortized cost, unrealized gains and losses, and estimated fair
value of investment securities at December 31, 1995 and 1994 were as follows:
<CAPTION>
(In Thousands)
                                 					       1995					                          
 
          		         Amortized	   Unrealized    Unrealized    Estimated        
                        Cost	        Gains         Losses     Fair Value    
<S>                  <C>          <C>              <C>        <C>               
Obligations of  
  U.S. government
  agencies           $73,425     $    548         $(615)      $ 73,358  
Obligations of states
  and political
  subdivisions	       25,113         1,423          (13)        26,523     
Corporate debt
  securities		           242           -             -             242    
Equity securities      6,230           795          (23)         7,002         

    Total           $105,010        $2,766        $(651)      $107,125   


                                            1994

Obligations of
  U.S. government
  agencies          $ 76,254        $   18        $(3,390)    $ 72,882
Obligations of states
  and political
  subdivisions        19,851           245           (756)      19,340 
Corporate debt
  securities           1,503            -             (11)       1,492
Equity securities      6,177           274           (163)       6,288

    Total           $103,785        $  537        $(4,320)    $100,002
</TABLE>
<PAGE>
                    Management's Discussion and Analysis
LOAN PORTFOLIO
    Loan demand continued to be strong in 1995 as total loans increased
$14,679,000 or 7.85% from $186,956,000 in 1994 to $201,635,000 in 1995. 
Much of this growth occurred in the real estate mortgage portfolio as these
loans rose $9,626,000 or 7.12%.  SUN prides itself on its position as a
residential lender in the community.  Commercial and industrial loans grew
$5,010,000 or 24.20% and loans to individuals remained basically unchanged
at $26,131,000.  In 1994, SUN's total loans increased $19,484,000 or 11.63%
with most of the growth occurring in the real estate portfolio.  Loans to
individuals rose $3,541,000 or 15.98% and commercial and industrial loans
remained level at $20,703,000.
    The loan portfolio is carefully analyzed on a routine basis to ensure
the asset quality remains strong.  Real estate loans account for 74% of the
portfolio and these loans are generally well-secured with minimal credit risk.
Lending activities are concentrated within SUN's market area of Snyder, Union 
and Northumberland counties; therefore, it does not have any foreign loans
nor does it engage in lease financing.  Management believes the loan portfolio
is adequately diversified and there are no concentrations exceeding 10% of
total loans.
<TABLE>
    The following table identifies the composition of the loan portfolio,
net of unearned income, for the five years ending December 31, 1995.     
<CAPTION>

(In Thousands)
                                1995		      1994        1993		      1992	      	1991
<S>                          <C>         <C>         <C>         <C>         <C>	
Real estate-Construction		   $  4,729 	  $  5,221    $  5,341    $  3,152    $  2,411
Real estate-Mortgage				      144,746   	 135,120     118,798     106,779      96,236
Agricultural loans				            724   	     665         740       1,128       1,245
Commercial and industrial 
 loans		                       25,713      20,703      20,761	     19,467	     22,365
Loans to individuals				       26,131  	   25,705      22,164      18,052      16,367
Other loans					                   60          42	         36	         33         164
Deferred loan fees				           (468)       (500)       (368)       (302)       (256)

  	Total loans			           	$201,635    $186,956    $167,472    $148,309    $138,532
</TABLE>
<TABLE>
	
   The following tables set forth the loan maturities and interest rate
sensitivity of commercial and industrial, agricultural and other loans,
and real estate-construction loans as of December 31, 1995.  These tables
represent gross loan balances.
<CAPTION>
(In Thousands)		            	  	 Within		     After One But         After		
			                             One Year    Within Five Years    Five Years     Total 
<S>                             <C>                <C>             <C>         <C>
Commercial and industrial,
 agricultural and other loans		 $20,193 		         $1,086		        $5,218     	$26,497
Real estate - construction	 	     4,729		            	-              	-     		   4,729

  	Total                     			$24,922		          $1,086	   	     $5,218     	$31,226

</TABLE>
<TABLE>
<CAPTION>
                                           Interest Rate Sensitivity

                                 						  Fixed     Variable
						                                   Rate        Rate        Total
<S>                                   <C>          <C>          <C>
Due within one year		               		$  7,604	    $17,378	     $24,982
Due after one year				                   6,244         -		        6,244	

	Total  			                          		$13,848    	$17,378     	$31,226
</TABLE>
<PAGE>

                               Management's Discussion and Analysis

NONPERFORMING LOANS
    Nonperforming loans include nonaccrual, past due and restructured loans.
SUN's policy is to place a loan in a nonaccrual status when management
concludes the collection of interest income appears doubtful.  Interest on
loans classified as nonaccrual is recognized as it is received.  Past due 
loans are loans contractually past due 90 days or more as to interest or
principal payments and are still accruing interest.  Restructured loans are
those whose terms have been renegotiated to provide a reduction or deferral
of interest and/or principal because of a deterioration in the financial 
position of the borrower.
     Management continually reviews the loan portfolio to identify and
control the number of nonperforming loans.  A detailed analysis of 
significant size loans is done annually by the Compliance and Credit 
Review Department which operates independently of the Loan Department.
This review is designed to identify any potential credit risk and to offer
suggestions on ways to avoid those credits becoming nonperforming loans in
the future.
     At December 31, 1995, total nonperforming loans amounted to $2,137,000
or 1.06% of total loans.  Although nonperforming loans are higher in 1995
in comparison to previous years, when compared to its peer groups, SUN's 
asset quality is comparable.  Much of this increase in nonperforming loans
is a direct result of the loan growth that has occurred in the last few
years.  At December 31, 1995, management was not aware of any potential 
credit problems of borrowers which would result in classifying such loans
as nonperforming.
<TABLE>
    The following table presents information on nonaccrual, past due and
restructured loans for the five years ending December 31, 1995.
<CAPTION>

(In Thousands)			            	  1995      1994      1993		    1992		     1991		
<S>                           <C>         <C>       <C>      <C>       <C>
Nonaccrual loans		           	$    0    		$163	    	$ 28	   	$1,010	  	$  959		
Loans past due 90 days or more	1,989 	  	  488	   	  286		      567	  	   312		
Restructured loans		             148    	  175		      10		       30		     146		

	Total nonperforming loans   	$2,137	    	$826	    	$324	   	$1,607	   $1,417
</TABLE>

ALLOWANCE FOR POSSIBLE LOAN LOSSES
    Losses on loans are charged against the allowance in the period in which
they have been determined to be uncollectible.  Recoveries of loans pre-
viously charged off are credited to the allowance as they are received.
    A quarterly review of the allowance for possible loan losses is done to
determine the collectibility of certain loans based on the Compliance and 
Credit Review's analysis and management's assumptions as to the ability of
the borrower to service the loan.  During this review, it is also decided
when certain loans would be charged off and if additions to the allowance
are necessary.  At December 31, 1995, management deems the allowance to be
adequate; however, future additions may be necessary based on economic, market
or other unforeseeable conditions.  Although managment makes its best estimate
as to the additions to the allowance, there can be no assurance that future
material additions may not be needed.
    The allocation of the allowance for possible loan losses is also based
on historical data, the composition of the portfolio, possible future losses
and current economic conditions.  The allocation is judgmental and is subject
to variations depending on economic market conditions affecting specific
loan categories.
<PAGE>
<TABLE>
    The following tables present the allocation of the allowance for possible
loan losses and the changes in the allowance for the five years ending
December 31, 1995.
<CAPTION>
(In Thousands)	           	 1995	               1994		               1993              1992               1991
			                   % of		              %	 of                  % of                 % of	              % of             
                   Allowance   Total	   Allowance    Total    Allowance   Total    Allowance   Total   Allowance  Total
<S>                 <C>       <C>        <C>         <C>       <C>        <C>        <C>       <C>      <C>       <C>       
Real estate		
  loans             $  631    73.87%     $  279      74.80%    $  208     73.91%     $ 520     73.92%   $  309    71.02%
Agricultural
  loans               		-       .36          -         .36  	      -        .44         -        .76        -       .92
Commercial
  and industrial
  loans              1,080    12.76       1,093      11.07      1,203     12.40        607     13.13        811   16.14
Loans to
  individuals          480    12.99   	     627      13.74        321     13.23        226     12.17         44   11.81
Other loans	           	-      	.02          -         .03 	       -        .02         -        .02          -     .11             

  Total allowance
    for possible
    loan losses	    $2,191   100.00%     $1,999     100.00%    $1,732    100.00%    $1,353    100.00%    $1,164  100.00%
</TABLE>
<TABLE>

                                     Management's Discussion and Analysis

(In Thousands)						                       1995      1994 	    1993     1992	    1991
<S>                                      <C>        <C>       <C>      <C>      <C>
Balance of allowance for possible 
  loan losses at January 1               $1,999    	$1,732    $1,353   $1,164	  $1,285
Loans charged off:
	 Real estate loans				                      50        -		       126	      80       23
  Commercial and industrial loans	           37         37	       64		    144		    311
 	Loans to individuals				                   89         73        52	      58		     37		
	  
  	Total loans charged off			               176        110		     242		    282		    371		

Recoveries of loans previously
  charged off:
	 Real estate loans		                		       2		        -	        -        -        3
 	Commercial and industrial loans		           5	         4 		      50       9		     14
	 Loans to individuals				                    1         13 		      31		    42 		     5	

 		Total recoveries of loans charged off	     8 		      17		       81		    51 		    22

Net loans charged off					                  168	        93	 	     161		   231 		   349 		

Provision for possible loan losses		    	   360    		  360		      540		   420 		   228 	

Balance at December 31			                $2,191     $1,999 		  $1,732 	$1,353 	 $1,164
	               
Ratios:
 	Net charge-offs to average loans		        .09%       .05% 		    .10%	   .16% 	   .26%

  Allowance for possible loan losses
  to total loans at December 31			         1.09%      1.07% 		   1.03%	   .91% 		  .84%	

  Allowance for possible loan losses
  to total nonperforming loans           102.53%    242.01%    534.57%  84.19%   82.15%
</TABLE>
<PAGE>
                                  Management's Discussion and Analysis

DEPOSITS AND BORROWED FUNDS
     At December 31, 1995, SUN's total deposits were $196,592,000 compared to
$183,160,000 at December 31, 1994, representing a 7.33% increase.  Time 
deposits grew $18,208,000 or 19.74% as consumers started to switch from low-
yielding checking and savings accounts to longer-term higher-yielding
certificates of deposit.  Consequently, the balances held in checking and
savings accounts dropped.  SUN continues to obtain and maintain deposits by
offering new and attractive deposit products while remaining interest rate
competitive.  In 1994, total deposits increased $3,797,000 or 2.12%  At that
time, depositors invested their funds in overnight checking and savings accounts
because of the uncertainty of interest rates.
     SUN continued to actively utilize the credit products of the FHLB of 
Pittsburgh in 1995.  At year-end, overnight borrowings on the Flexline line
of credit amounted to $9,445,000.  The $68,000,000 in term advances at year
-end included $12,600,000 in variable rate advances that reprice quarterly
and $55,400,000 in fixed rate advances with maturities ranging from January 
2, 1996 to May 29, 2002.  All of these borrowings are collateralized by SUN's
investment in FHLB stock, mortgage-backed securities and first mortgage loans.
Other sources of funds include several business customers' cash management
accounts, classified as securities sold under agreements to repurchase, and
the Treasury Tax and Loan Note Option.  The current market rates of both
deposits and borrowings are continually monitored and analyzed to determine
the best funding source.
<TABLE>

    The following tables summarize the changes in deposit balances and
related information for the periods indicated.
<CAPTION>

(In Thousands)
                                							           % of		     	% Change from
							                              1995         Total			      Prior Year
<S>                               <C>             <C>            <C>
Demand deposits		            	 		 $ 20,247		       10.30%	         (9.43)%
NOW accounts					                   31,102	       	15.82			        (3.48)
Insured Money Market Accounts			     6,653      		  3.38			         4.59
Savings deposits					               28,136		       14.31 			       (6.13)
Time Certificates of Deposits of
   $100,000 or more 	               13,748		        6.99			        39.52
Other time deposits				     	       96,706	        49.20	  		      17.37

	Total deposits              					$196,592	       100.00% 	        7.33%


								                                           % of	    		% Change from
(In Thousands)					                  1994	         Total			     Prior Year 	

Demand deposits   				            $ 22,354        		12.20%	       16.43%
NOW accounts					                   32,225	        	17.59			       5.44
Insured Money Market Accounts			     6,361        		 3.47			     (30.53)
Savings deposits					               29,974        		16.36			       2.30
Time Certificates of Deposits of
   $100,000 or more	                 9,854		         5.38			      (32.49)
Other time deposits					            82,392        		45.00			        7.64

 Total deposits				              	$183,160	        100.00%          2.12%
</TABLE>
<PAGE>

                             Management's Discussion and Analysis

LIQUIDITY AND INTEREST RATE SENSITIVITY

    SUN's liquidity is dependent upon its ability to convert assets to cash
or acquire alternative sources of funds to meet customers' cash withdrawal 
needs and borrowers' credit needs.  SUN's primary sources of liquidity are
cash and due from banks, monthly principal and interest payments on mortgage-
backed securities, and other short-term investment securities.  Additional
sources of funds include the Flexline overnight line of credit through the 
FHLB of Pittsburgh as well as term advances through the FHLB.  At December 31,
1995, SUN had approximately $39,000,000 in unused funds available through
the Federal Home Loan Bank.  Management believes its liquidity sources are
adequate to meet its daily operating needs.
     Closely related to liquidity is monitoring the interest rate sensitivity
of SUN's assets and liabilities to achieve stability in the net interest
margin.  Interest rate sensitivity analysis involves controlling the timing
of interest changes in order to maximize earnings.  In an asset sensitive
gap position, assets will reprice faster than liabilities, which is conducive
to a rising interest rate environment.  Conversely, in a declining interest
rate environment, it is more beneficial to be in a liability sensitive gap
position.  SUN's objective in interest rate sensitivity analysis is to adjust
its gap position when needed to increase earnings.
<TABLE>
    The following table presents SUN's interest rate sensitivity position at
December 31, 1995.
<CAPTION>

                                                                								     After One
								                                                         181-365	    But Within 	    After
(In Thousands)			                       0-90 Days	  91-180Days     Days	     Five Years 	  Five Years 	  Total
<S>                                    <C>         <C>           <C>         <C>           <C>          <C>                         
Assets:
  Interest-bearing deposits		               416		       -		          -	         	-            		-       $    416	
  Investment securities		                 9,125      14,036        11,980      54,590        17,394      107,125
  Loans			                               43,700      22,737        34,526      63,680        34,801      199,444
  Other noninterest-earning assets	         -           -            -            -          12,641       12,641

	  	Total assets	                        53,241      36,773        46,506     118,270        64,836     $319,626

Liabilities and Stockholders' Equity:
  Interest-bearing deposits	             31,341      24,217        28,932      43,295        48,560     $176,345
  Short-term borrowings		                15,526         -            -            -             -         15,526
  Other borrowed funds		                 24,213      10,700         8,200      23,500         2,000       68,613
  Other noninterest-bearing liabilities	    -           -            -            -          23,122       23,122
  Stockholders' equity		                    -           -            -            -          36,020       36,020
                          
  		Total liabilities and  
      stockholders' equity               71,080      34,917        37,132      66,795       109,702     $319,626 
	     
Interest Sensitivity Gap:		
    By period			                       $(17,839)   $  1,856       $ 9,374     $51,475      $(44,866)        -	

    Cumulative			                      $(17,839)   $(15,983)      $(6,609)    $44,866          -            -
</TABLE>
<PAGE>
                             Management's Discussion and Analysis

CAPITAL ADEQUACY
     SUN's management understands the importance of adequate capitalization
as it relates to stockholder confidence and regulatory compliance. Currently,
as well as in the past, SUN is a well-capitalized organization.  This point 
is further emphasized in the following table which illustrates SUN's capital 
ratios significantly exceeding the regulatory minimum standards.
     Stockholders' equity increased $7,266,000 or 25.27% in 1995.  As pre-
viously discussed, unrealized gains or losses, net of taxes, on available-
for-sale securities are reflected as an adjustment to capital under SFAS No.
115.  At December 31, 1995, SUN had an unrealized gain of $1,396,000 and a
$2,496,000 unrealized loss in 1994 which resulted in a $3,892,000 increase
in capital.  During 1995, SUN paid $2,317,000 in cash dividends as well as a
5% and 10% stock dividend.  SUN is committed to providing its shareholders
with the highest return on their investment while remaining a safe and sound
organization.  Management is not aware of any events or regulatory restrictions
in the foreseeable future that, if implemented, would have a material effect
on the capital position or earnings.
<TABLE>
     
     The following table compares SUN's capital ratios at December 31, 1995 
and 1994 to the regulatory minimums.
<CAPTION>
                            									Regulatory		          December 31
									                             Minimum		          1995		     1994
<S>                                     <C>             <C>         <C>
Core capital ratio (1)							           4.00%		         18.47%	   	 15.64%	
Risk-based capital ratio (2)						      8.00%	          19.59       16.73 	
Leverage ratio (3)							               3.00%	        		11.27        9.59 
		
(1)  Core capital (stockholders' equity) divided by risk-weighted assets
(2)  Total capital (stockholders' equity plus the allowance for possible
     loan losses) divided by risk-weighted assets
(3)  Core capital divided by total assets
</TABLE>

FORWARD OUTLOOK
    The performance of a bank is affected more by changes in interest rates
than by inflation; therefore, the effect of inflation is normally not as
significant as it is on other businesses and industries.  During periods of
high inflation, the money supply usually increases and banks normally 
experience above average growth in assets, loans, and deposits.  A bank's 
operating expenses will usually increase during inflationary times as the
prices of goods and services increase.
    A bank's performance is also affected during recessionary periods.  In
times of recession, a bank usually experiences a tightening on its earning
assets and on its profits.  A recession is usually an indicator of higher
unemployment rates, which could mean an increase in the number of non-
performing loans because of continued layoffs and other deteriorations of
consumers' financial conditions.
     SUN's management and the Board of Directors are looking forward to
meeting the many challenges that 1996 is expected to bring.  Our branch bank-
ing operations will be expanded and our internal data processing capabilities
will be enhanced with the purchase of new computer hardware and software.  As
these changes are implemented throughout the year, the effect on operating
expenses in 1996 is estimated to be approximately $235,000.  SUN feels these
efforts are necessary in order to enhance our competitive position and to be
prepared to offer the products and services demanded in today's rapidly
changing marketplace.  A portion of these costs will be offset by the drastic
reduction in FDIC premiums a previously mentioned.  In 1995, SUN paid $214,000
in FDIC premiums which will be reduced to $2,000 in 1996 with the restructuring
of the insurance fund.
     SUN is committed to remaining a community-based organization and intends
to recognize continued growth in its consumer, mortgage and commercial loan
portfolios while obtaining and maintaining a strong core deposit base.
     Statement of Financial Accounting Standards No. 122, "Accounting for
Mortgage Servicing Rights," was issued in May 1995 applicable to fiscal years
beginning after December 15, 1995.  The Statement requires recognition as
separate assets rights to service mortgage loans for others, however those
servicing rights are acquired.  In October 1995, Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation," was
issued.  This pronouncement requires the disclosure of compensation cost based
on the estimated fair value of stock options at grant date using a pricing 
model.  The provisions of this statement must be adopted for fiscal years
beginning after December 15, 1995 applicable to all awards granted during the
fiscal year the provisions are first applied.  The adoption of both of these
statements in 1996 will not have a material effect on SUN's financial state-
ments.  At the time of this writing, SUN was not aware of any pending pro-
nouncements that would have a material impact on the results of operations.
A routine examination of the Bank in 1995 by the Pennsylvania Department of
Banking resulted in no significant findings and no impact is anticipated on
current or future operations.
<PAGE>

                             Stockholder Information
<TABLE>
Common Stock Market Prices and Dividends Per Share
    The common stock of SUN BANCORP, INC. is traded publicly on the NASDAQ
national market system under the symbol SUBI.  The high and low bid informa-
tion does not include retail mark-ups or mark-downs or any commission to the
broker-dealer.   
<CAPTION>	  
       	   	    		                1995				                               1994       	         	 	

              	      Bid Information   Cash Dividends       Bid Information   Cash Dividends
            		       High        Low    Declared (1) 		     High        Low    Declared (1)
<S>                 <C>        <C>         <C>            <C>          <C>        <C>
Quarter Ended

March 31		          $20.09   	 $18.81      $.156 	    	    $19.75	     $18.41	    $.126
June 30		            21.15      19.02       .173  		        20.67       18.09      .138
September 30		       21.15      20.25       .182     	      21.67	      19.33      .143
December 31          28.25      20.48       .21  		         22.50       21.50      .147

(1)  Cash dividends declared are adjusted for the 5% stock dividend that
     occurred in June of 1995 and the 10% stock dividend in December 1995.  
</TABLE>