ITEM 1 - BUSINESS 	 SUN BANCORP, INC. (SUN) is a holding company incorporated under the laws of Pennsylvania and registered under the Bank Holding Company Act of 1956, as amended, on November 26, 1982. SUN acquired the Snyder County Trust Company in June 1983 and The Watsontown National Bank in November 1987. On December 1, 1993, the two banks merged into one bank under the legal title of Sun Bank (Bank). The banks continue to do business as Snyder County Trust Company, Incorporated as Sun Bank and Watsontown Bank, Incorporated as Sun Bank. SUN also owns the Pennsylvania SUN Life Insurance Company, a credit life and disability insurance company formed in 1993. In 1995, SUN entered into a limited partnership with the Susquehanna Valley Development Group, Inc. for the purpose of building, owning and operating an affordable elderly apartment complex in Mifflinburg, PA. As part of the agreement, SUN is able to recognize tax credits from this economic development project. 		 	Sun Bank, a state-chartered bank regulated by Pennsylvania Banking Law, provides full service commercial and retail banking services primarily in central Pennsylvania. Sun Bank operates six banking offices and one trust services office serving Snyder, Union, Northumberland and Lycoming Counties. At December 31, 1995, Sun Bank had total assets of $318,659,000 and total stock- holders' equity of $35,190,000. Net income for 1995 was $5,629,000. 	 	The Bank offers a wide range of services including demand deposit accounts, savings accounts, Christmas and all-purpose clubs, time certificates of deposit, and individual retirement accounts, as well as commercial loans, consumer loans, mortgage loans, and safe deposit services. The Bank also operates a trust department that provides full fiduciary services. Also, eight Automated Teller Machines (ATMs) throughout the service area provide 24-hour banking service. Sun Bank's activities are such that the loss of one single customer or a few customers would not have a material adverse effect on its operations. Additionally, the Bank's business is not seasonal in nature nor does it engage in foreign transactions. The majority of the loan portfolio is comprised of residential real estate loans and consumer loans which generally are low-risk. The Bank's deposits are insured by the Federal Deposit In- surance Corporation (FDIC) in the amount allowed by law.
	The Pennsylvania SUN Life Insurance Company provides credit life and dis- ability insurance to Sun Bank's credit customers. Pennsylvania SUN Life is subject to supervision and regulation by the Arizona Department of Insurance, the Insurance Department of the Commonwealth of Pennsylvania, and the Board of Governors of the Federal Reserve Bank. At December 31, 1995, Pennsylvania SUN Life had total assets of $446,000 and total stockholders' equity of $213,000. Net income for 1995 was $23,000.
	Competition continues to heighten in the financial services industry not only among banks but with savings and loan associations, credit unions, discount brokerage firms, insurance companies, and other nonbank financial service providers. Changing regulatory and economic conditions affect SUN's ability to compete effectively in its market area. Most of the competition is centered around the setting of interest rates to be charged on loans and rates paid on deposits, fees on deposit accounts and customer service. SUN's management feels it competes effectively in its market area.
	SUN is subject to regulation and supervision by the Board of Governors of the Federal Reserve Bank and the Pennsylvania Department of Banking. SUN files quarterly and annual reports with the Federal Reserve Bank (FRB) of Phila- delphia and periodic on-site exams of SUN are done by the FRB. Regular exam- inations of the Bank are conducted by the FDIC and the Pennsylvania Department of Banking. 	 SUN and the Pennsylvania SUN Life Insurance Company do not have any employees. At December 31, 1995, the Bank employed 113 persons. The Bank offers a variety of benefit programs and feels its relationship with its employees is good.
ITEM 2
ITEM 2 - PROPERTIES
	SUN's corporate office is located in Sun Bank's main banking office. SUN owns all of its properties with the exception of an off-site ATM, Item 8 listed below, which is rented from Weis Markets, Inc., Sunbury, Pennsylvania. In 1995, SUN purchased parcels of land in Northumberland and Liverpool for the purpose of building branches on these sites in the future. The branch in Northumberland is scheduled to be in operation in the fall of 1996. SUN also purchased an existing branch location in Shamokin Dam formerly owned by Swineford National Bank. This site will be replacing our current branch office in Shamokin Dam in April 1997. All properties are in good condition and adequate for the bank's purposes. The following is a list of the banking offices, the addresses, and a brief description of each office.
	Office				 Address				 Description 1. Main		 	2-16 South Market Street Brick structure 	 			Selinsgrove, Pennsylvania 17870
2. Shamokin Dam	 	Routes 11 & 15				 	Brick structure 	 			Shamokin Dam, Pennsylvania 17876
3. New Berlin	 	Market & Plum Streets			 	Brick structure 		 		New Berlin, Pennsylvania 17855
4. Sunbury			 11 South Second Street		 		Brick structure 			 	Sunbury, Pennsylvania 17801
5. Middleburg		 Route 522 & Dock Hill Road			 	Brick structure 			 	Middleburg, Pennsylvania 17842
6. Trust Division	 100 West Pine Street				 	Brick structure 				Selinsgrove, Pennsylvania 17870
7. Automated Teller	 	108 West Pine Street					 Brick structure Machine			 Selinsgrove, Pennsylvania 17870		
8. Automated Teller		 700 North Broad Street		 		Brick structure Machine		 	Selinsgrove, Pennsylvania 17870
9. Watsontown	 	300 Main Street			 		Brick structure 				 Watsontown, Pennsylvania 17777
10. Northumberland	 	96 Duke Street				 	Land 			 	Northumberland, Pennsylvania 17857
11. Liverpool	 		Rts. 11 & 15 South Land 				 Liverpool, Pennsylvania 17045
12. Shamokin Dam		 200 S. Susquehanna Trail				 Brick structure 				 Shamokin Dam, Pennsylvania 17876
ITEM 3
ITEM 3 - LEGAL PROCEEDINGS
	Various legal actions arise against the Corporation in the normal course of business. In the opinion of management and counsel, when such actions currently pending or threatened have been resolved, they should not have a material adverse effect on the business or financial condition of the Corporation.
ITEM 4
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 	Not applicable
PART II
ITEM 5
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED 	 	 	 SECURITY HOLDER MATTERS
	On April 1993, the common stock of SUN BANCORP, INC. began trading publicly on the NASDAQ national market system under the symbol SUBI. Prior to this date, the stock was not traded on an established stock exchange; however, it was traded on the over-the-counter market. As of March 7, 1996, SUN had approx- imately 1,348 holders of its common stock.
	The payment of dividends by SUN is at the discretion of the Board of Directors and to the extent funds are legally available for that purpose. SUN may not pay dividends in any year in excess of the total of the current year's net income and the retained net income of the prior two years without the approval of the Federal Reserve Bank. Additionally, bank regulations limit the amount of dividends that may be paid to SUN by the subsidiary bank without prior approval from the regulatory agencies.
	Additional stock information is incorporated by reference to Stockholder Information found on page 36 of the 1995 Annual Report to Stockholders.
ITEM 6
ITEM 6 - SELECTED FINANCIAL DATA
	This item is incorporated by reference to information under the heading Five Year Financial Highlights on page 23 of the 1995 Annual Report to Stockholders.
ITEM 7
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 	 AND RESULTS OF OPERATIONS
	This item is incorporated by reference to Management's Discussion and Analysis on pages 24 through 35 of the 1995 Annual Report to Stockholders.
ITEM 8
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
	This item is incorporated by reference to the Consolidated Financial State- ments, Notes to Consolidated Financial Statements and Report of Independent Certified Public Accountants set forth on pages 4 through 22 of the 1995 Annual Report to Stockholders.
ITEM 9
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON 		 	 ACCOUNTING AND FINANCIAL DISCLOSURE
	None
PART III
ITEM 10
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
	Information concerning directors and executive officers of the Registrant is incorporated herein by reference to Board of Directors on page 6 of the Cor- poration's 1996 Proxy Statement.
	Information regarding disclosure of delinquent filers pursuant to Item 405 of Regulation 5-K is incorporated herein by reference to Compliance with Securities and Exchange Act on page 20 of the Corporation's 1996 Proxy Statement.
ITEM 11
ITEM 11 - EXECUTIVE COMPENSATION
	Information relating to management remuneration and compensation is incor- porated herein by reference to Executive Compensation and Other Information on page 13 of the 1996 Proxy Statement.
ITEM 12
ITEM 12 - SECURITY OWNERSHIP OR CERTAIN BENEFICIAL OWNERS AND 		 	 MANAGEMENT
	This information is incorporated by reference to Security Ownership of Directors and Executive Officers of the Corporation on page 11 of the 1996 Proxy Statement.
ITEM 13
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
	This information is incorporated by reference to footnote 12 on page 17 of the 1995 Annual Report to Stockholders and under the heading of Transactions with Management on page 20 of the 1996 Proxy Statement.
PART IV
ITEM 14
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON 		 	 FORM 8-K
(a) (1) The following consolidated financial statements and report of in- dependent certified public accounts of SUN BANCORP, INC. and subsidiaries included in the Annual Report to Stockholders for the year ended December 31, 1995 are incorporated by 		 	 reference in Part II, Item 8:
	 Consolidated Balance Sheets - December 31, 1995 and 1994
	 Consolidated Statements of Income - Years Ended December 31, 1995, 1994 and 1993
	 Consolidated Statements of Stockholders' Equity - Years Ended December 31, 1995, 1994 and 1993
	 Consolidated Statements of Cash Flows - Years Ended December 31, 1995, 1994 and 1993
	 Notes to Consolidated Financial Statements
	 Report of Independent Certified Public Accountants
(2) All schedules applicable to the Registrant are shown in the re- spective financial statements or the notes thereto. Financial statement schedules not included are omitted because the information is not required under the related instructions or it is inappli- cable.
(3) Exhibits 		 3(i) The Articles of Incorporation of the Corporation are in- corporated herein by reference to Exhibit 3 to the Corporation's Annual Report on Form 10-K for the year ended December 31, 1993 (Commission File Number 0-14745).
	 3(ii) The By-Laws, as amended and restated, are incorporated herein by reference to Exhibit 3 to the Corporation's Annual Report on Form 10-K for the year ended December 31, 1993 (Commission File Number 0-14745).
	 13 Annual Report to Stockholders of SUN BANCORP, INC. for the year ended December 31, 1995 is filed herewith. Such report, except for those portions thereof which are expressly incorporated by reference herein, is furnished 	 		 for information of the Securities and Exchange Commission only and it is not considered "filed" as part of the Form 10-K filing.
22 Subsidiaries of the Registrant are filed herewith.
23 Published Report Regarding Matters Submitted To Vote Of Security Holders is filed herewith, the 1996 Proxy Statement of SUN BANCORP, INC.
(b) 	No reports on Form 8-K were required to be filed during the fourth quarter of 1995.
(c) 	Exhibits - the required exhibits are included under Item 14(a) (3) of the Form 10-K.
(d) 	Financial statement schedules are omitted because the required informa- tion is not applicable or is included elsewhere herein. 	
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, SUN BANCORP, INC. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
							 SUN BANCORP, INC.	 							 (Registrant)		
						By: 	/s/ Fred W. Kelly, Jr. 							 President & Chief Executive Officer
						Date:	 3/25/96
Name Date
/s/ Fred W. Kelly, Jr. 3/25/96 President, Chief Executive Officer and Director
/s/ Jeffrey E. Hoyt 3/25/96 Vice President, Principal Financial Officer and Chief Acccounting Officer
/s/ Max E. Bingaman 3/25/96 Director
/s/ Raymond C. Bowen 3/25/96 Director
/s/ David R. Dieck 3/25/96 Director
/s/ Louis A. Eaton 3/25/96 Director
/s/ Dr. Robert E. Funk 3/25/96 Director
/s/ Robert A. Hormell 3/25/96 Director
/s/ George F. Keller 3/25/96 Director
/s/ Lehman B. Mengel 3/25/96 Director
/s/ Marlin T. Sierer 3/25/96 Director
/s/ Jerry A. Soper 3/25/96 Director
/s/ Dennis J. Van 3/25/96 Director