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Susquehanna Bancshares, Inc. Announces Third Quarter 2012 Results

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LITITZ, Pa.--(BUSINESS WIRE)--

Susquehanna Bancshares, Inc. (Susquehanna) (NASDAQ: SUSQ) today announced that it earned net income for the third quarter ended September 30, 2012 of $36.7 million, or $0.20 per diluted share, compared to net income of $15.0 million for the third quarter of 2011, or $0.12 per diluted share. Net income for the first nine months of 2012 was $98.0 million, or $0.54 per diluted share, compared with $35.8 million, or $0.28 per diluted share for the first nine months of 2011.

"Our focus on executing our strategic objectives is evident in these strong third quarter results," said William J. Reuter, Chairman and Chief Executive Officer. "Loan and deposit growth and credit quality continue to trend in the right direction, and we are seeing positive momentum in revenue activity across all business lines, all leading to improved core profitability and shareholder return.”

Linked Quarter Results (Third Quarter 2012 vs. Second Quarter 2012)

  • Loans and leases increased $89.7 million, or 0.7%, from June 30, 2012 to $12.7 billion at September 30, 2012, as significant growth in commercial loans, consumer loans and leases was offset by decreases in real estate construction and commercial real estate loans.
    • Excluding real estate construction loans, loans and leases increased by $122.4 million, or 1.1%.
    • Commercial loans increased 3.2%.
    • Real estate – construction loans decreased 3.5%.
    • Real estate secured – residential loans increased 2.0%.
    • Real estate secured – commercial loans decreased 2.1%.
    • Consumer loans increased 3.0%.
    • Leases increased 5.4%.

  • Total deposits remained generally flat, growing $34.9 million to $12.7 billion as of September 30, 2012, as a 3.4% increase in core deposits was offset by a decrease in time deposits.

    • Non-interest bearing demand deposits decreased 0.6%.
    • Interest-bearing demand deposits increased 5.4 %.
    • Savings deposits were generally flat.
    • Time deposits decreased 5.8%.


  • Non-core items for the third quarter of 2012 were merger related expenses and loss on extinguishment of debt, totaling $4.5 million, after tax. During the third quarter, Susquehanna completed the redemption of $175 million in certain trust preferred securities, funded with available cash and proceeds from a $150 million offering of senior notes also completed during the quarter. In connection with the redemptions, Susquehanna incurred losses on the extinguishment of debt due to the write-off of capitalized debt issuance costs.
  • Net interest margin decreased 18 basis points to 3.92% compared to 4.10% for the second quarter of 2012, resulting principally from the impact of purchase accounting in connection with the acquisition of Tower Bancorp, Inc. (“Tower”).
  • Non-interest income increased to $43.7 million for the third quarter of 2012. The $3.9 million increase was driven by an 18% increase in mortgage banking revenue and increased gains from the sale of SBA loans, as well as a gain on the sale of other real estate owned of $2.0 million and an increase in deposit service fees.
  • Non-interest expense for the third quarter of 2012 increased to $122.9 million, including pre-tax merger related expenses of $1.5 million and loss on extinguishment of debt of $5.5 million.

Linked Quarter Results (Third Quarter 2012 vs. Second Quarter 2012) (Continued)

  • The efficiency ratio for the third quarter of 2012 improved to 58.98% from 60.21% for the second quarter of 2012, in each case calculated after excluding pre-tax merger related expenses and loss on extinguishment of debt.
  • Net charge-offs as a percentage of average loans and leases for the quarter ended September 30, 2012 was 0.62% compared to 0.65% for the second quarter of 2012. Non-performing assets as a percentage of loans, leases and foreclosed real estate owned decreased 10 basis points from June 30, 2012 to 1.16% at September 30, 2012. The provision for loan and lease losses for the quarter ended September 30, 2012 was $16.0 million, unchanged from the quarter ended June 30, 2012. The allowance for loan and lease losses was $186.9 million at September 30, 2012, representing 1.47% of total loans and leases and 158% of nonaccrual loans and leases, compared to $190.6 million at June 30, 2012, representing 1.51% of total loans and leases and 150% of nonaccrual loans and leases.

Third Quarter Results (Third Quarter 2012 vs. Third Quarter 2011)

  • Loans and leases increased 30.6% from September 30, 2011 to $12.7 billion at September 30, 2012.

    • Growth in loans and leases consisted of:

      • $630.3 million acquired through the acquisition of Abington Bancorp, Inc. (“Abington”);
      • $2.0 billion acquired through the acquisition of Tower; and
      • $367.6 million of internally-generated net loan growth, resulting in internal growth in loans and leases of 3.8% for the trailing four quarters.


    • Commercial loans increased 19.8%.
    • Real estate - construction loans increased 17.2%.
    • Real estate secured - residential loans increased 48.3%.
    • Real estate secured - commercial loans increased 31.0%.
    • Consumer loans increased 18.7%.
    • Leases increased 14.6%.


Third Quarter Results (Third Quarter 2012 vs. Third Quarter 2011) (Continued)

  • Total deposits increased 33.1% from September 30, 2011 to $12.7 billion at September 30, 2012.

    • Growth in total deposits consisted of:

      • $857.3 million of deposits assumed in the Abington acquisition;
      • $2.1 billion of deposits assumed in the Tower acquisition; and
      • $235.5 million in organic deposit growth, resulting in organic deposit growth of 2.5% for the trailing four quarters.


    • Non-interest-bearing demand deposits increased 37.4%.
    • Interest-bearing demand deposits increased 44.2%.
    • Savings deposits increased 28.1%.
    • Time deposits increased 19.6%.


  • Net interest margin increased 34 basis points to 3.92% compared to 3.58% for the third quarter of 2011, driven primarily by the balance sheet restructuring in the fourth quarter of 2011 and purchase accounting in connection with the Tower acquisition.
  • The efficiency ratio for the third quarter of 2012 improved to 58.98% from 67.44% in the third quarter of 2011, in each case calculated after excluding pre-tax merger related expenses and loss on extinguishment of debt.
  • Net charge-offs as a percentage of average loans and leases for the quarter ended September 30, 2012 was 0.62% compared to 0.96% for the third quarter of 2011. Non-performing assets as a percentage of loans, leases and foreclosed real estate was 1.16% at September 30, 2012 compared to 1.95% at September 30, 2011. The provision for loan and lease losses for the quarter ended September 30, 2012 was $16.0 million, compared to $25.0 million for the quarter ended September 30, 2011. The allowance for loan and lease losses was $186.9 million at September 30, 2012, representing 1.47% of total loans and leases and 158% of nonaccrual loans and leases, compared to $191.0 million at September 30, 2011, representing 1.97% of total loans and leases and 119% of nonaccrual loans and leases.
  • Return on average assets and average tangible shareholders' equity (1) for the third quarter ended September 30, 2012 finished at 0.81% and 12.41%, respectively. This compared to results of 0.42% and 6.66% for the same measurements, respectively, for the third quarter of 2011.
  • Return on average assets and average tangible shareholders' equity (1) for the first nine months of 2012 finished at 0.75% and 11.33%, respectively. This compared to results of 0.34% and 5.61% for the same measurements, respectively, for the first nine months of 2011.

(1) Return on average tangible shareholders' equity is a non-GAAP based financial measure. Please refer to the calculations and management's reasons for using this measure in the accompanying financial schedules.

Third Quarter Results (Third Quarter 2012 vs. Third Quarter 2011)(Continued)

  • Susquehanna's capital ratios continue to exceed management's minimum targets, which are generally maintained at 100 basis points over proposed Basel III minimums, including the conservation buffers. The company's tangible common ratio(2) and Tier 1 common to risk-weighted assets ratio were 7.84% and 10.07%, respectively, at September 30, 2012.

(2) The tangible common ratio is a non-GAAP based financial measure. Please refer to the calculations and management's reasons for using this measure in the accompanying financial schedules.

Additional Events

  • On October 15, 2012, Susquehanna redeemed $21.0 million in 9.0% subordinated notes originally issued by Tower Bancorp, Inc., at 100% of the principal amount plus accrued and unpaid interest.
  • On October 17, 2012, Susquehanna's board of directors declared a fourth quarter dividend of $0.07 per common share, payable November 20, 2012 to shareholders of record as of October 30, 2012. This represents a $0.01 increase from the third quarter dividend of $0.06 per share and marks the 5th increase since the first quarter of 2011.

Susquehanna will broadcast its third quarter 2012 results conference call over the Internet on October 25, 2012 at 11:00 a.m. Eastern time. The conference call will include management's discussion of third quarter 2012 results. The discussion may also include forward-looking information and financial goals, including updates of previously disclosed financial goals. Investors will have the opportunity to listen to the conference call through a live broadcast on Susquehanna's Web site. The event may be accessed by selecting "Investor Relations" near the top right of the home page then “Overview” and clicking on the third quarter webcast link. To listen to the live call, please go to the Web site at least fifteen minutes prior to the scheduled start time to download and install any necessary audio software. For those who are unable to listen to the live broadcast, an archived replay and podcast will be available on the Web site shortly after the call concludes.

Susquehanna is a financial services holding company with assets of more than $18 billion. Headquartered in Lititz, Pa., Susquehanna provides banking and financial services at 261 branch locations in the mid-Atlantic region. Through Susquehanna Wealth Management, the company offers investment, fiduciary, brokerage, insurance, retirement planning, and private banking services, with approximately $7.8 billion in assets under management and administration. Susquehanna also operates an insurance brokerage and employee benefits company, a commercial finance company and a vehicle leasing company. Investor information may be requested through Susquehanna's Web site at www.susquehanna.net.

This press release contains certain financial information determined by methods other than in accordance with GAAP. Susquehanna's management uses these non-GAAP measures in its analysis of the company's performance. These non-GAAP financial measures require management to make judgments about the exclusion of certain items, and if different judgments were made, the amounts reported would be different. These measures typically exclude the effects of intangibles and related amortization and include the tax benefit associated with revenue items that are tax-exempt. Disclosures regarding these non-GAAP financial measures are included in the accompanying financial information.

The presentation of these non-GAAP financial measures is intended to supplement investors' understanding of Susquehanna's core business activities. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.

This release includes forward-looking statements as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various risks, uncertainties and other factors. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: ineffectiveness of Susquehanna's business strategy due to changes in current or future market conditions; the effects of competition, and of changes in laws and regulations, including industry consolidation and development of competing financial products and services; interest rate movements; changes in credit quality; inability to achieve merger-related synergies; difficulties in integrating distinct business operations; and deteriorating economic conditions, and other risks and uncertainties, including those detailed in Susquehanna's filings with the Securities and Exchange Commission. Susquehanna encourages readers of this release to understand forward-looking statements to be strategic objectives rather than absolute targets of future performance. Forward-looking statements speak only as of the date they are made. Susquehanna does not intend to update publicly any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events except as required by law.

 

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA 17543

           
SUMMARY FINANCIAL INFORMATION
(in thousands, except per common share data)
 
Nine Months YTD
3Q12 2Q12 1Q12 4Q11 3Q11 2012 2011
Balance Sheet (EOP)
Investments $ 2,908,404 $ 2,866,119 $ 2,756,836 $ 2,423,107 $ 2,691,287 $ 2,908,404 $ 2,691,287
Loans and leases 12,675,607 12,585,912 12,521,669 10,447,930 9,702,669 12,675,607 9,702,669
Allowance for loan and lease losses (ALLL) 186,897 190,628 194,730 188,100 190,960 186,897 190,960
Total assets 18,106,730 18,040,009 17,807,026 14,974,789 14,365,229 18,106,730 14,365,229
Deposits 12,725,379 12,690,524 12,563,541 10,290,472 9,558,631 12,725,379 9,558,631
Short-term borrowings 762,257 648,675 723,758 613,306 551,245 762,257 551,245
Federal Home Loan Bank (FHLB) borrowings 1,110,884 1,015,724 970,673 971,020 1,115,026 1,110,884 1,115,026
Other long-term debt 639,753 678,282 692,059 656,726 672,162 639,753 672,162
Shareholders' equity 2,584,682 2,544,730 2,512,584 2,189,628 2,035,845 2,584,682 2,035,845
 
Average Balance Sheet
Investments $ 2,811,730 $ 2,704,232 $ 2,547,408 $ 2,645,227 $ 2,520,008 $ 2,688,242 $ 2,490,449
Loans and leases 12,612,477 12,527,713 11,411,592 10,358,071 9,646,189 12,185,491 9,617,097
Total earning assets 15,537,037 15,332,806 14,065,583 13,128,969 12,275,793 14,980,513 12,196,788
Total assets 18,021,108 17,799,678 16,274,773 15,274,808 14,162,662 17,367,580 14,055,428
Deposits 12,588,697 12,471,296 11,354,537 10,300,061 9,485,411 12,139,822 9,357,564
Other short-term borrowings 748,841 726,309 642,128 588,657 631,679 705,916 682,007
Federal Home Loan Bank (FHLB) borrowings 1,072,555 1,082,293 985,294 1,163,229 1,115,262 1,046,809 1,110,513
Other long-term debt 727,382 686,492 673,722 666,277 679,316 695,980 690,061
Shareholders' equity 2,562,092 2,537,250 2,348,326 2,217,036 2,019,706 2,482,846 2,001,353
 
Income Statement
Net interest income $ 149,142 $ 152,670 $ 134,123 $ 115,201 $ 106,839 $ 435,934 $ 317,949
Provision for loan and lease losses 16,000 16,000 19,000 22,000 25,000 51,000 88,000
Noninterest income 43,661 39,811 39,515 71,347 36,800 122,987 111,321
Noninterest expense 122,910 121,475 120,355 162,395 100,745 364,740 297,785
Income before taxes 53,893 55,006 34,283 2,153 17,894 143,181 43,485
Provision for income taxes 17,161 17,213 10,810 (16,976 ) 2,934 45,183 7,709
Net income 36,732 37,793 23,473 19,129 14,960 97,998 35,776
Basic earnings per common share 0.20 0.20 0.14 0.12 0.12 0.54 0.28
Diluted earnings per common share 0.20 0.20 0.14 0.12 0.12 0.54 0.28
Cash dividends paid per common share 0.06 0.05 0.03 0.03 0.02 0.14 0.05
 
Asset Quality
Net charge-offs (NCOs) $ 19,731 $ 20,102 $ 12,370 $ 24,860 $ 23,332 $ 52,203 $ 88,874
 
Nonaccrual loans and leases $ 118,448 $ 127,250 $ 133,489 $ 156,478 $ 160,099 $ 118,448 $ 160,099
Foreclosed real estate   28,641   31,302   36,456   41,050     29,563   28,641   29,563
Total nonperforming assets (NPAs) $ 147,089 $ 158,552 $ 169,945 $ 197,528   $ 189,662 $ 147,089 $ 189,662
 
Restructured loans $ 56,823 $ 66,777 $ 72,081 $ 72,852 $ 62,331 $ 56,823 $ 62,331
Loans and leases 90 days past due 8,451 11,203 9,758 10,077 13,034 8,451 13,034
 

 

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA 17543

           

SUMMARY FINANCIAL INFORMATION

(in thousands, except per common share data)

Nine Months YTD

3Q12

2Q12

1Q12

4Q11

3Q11

2012

 

2011

 
Credit Quality
NCOs / Average loans and leases

0.62

%

0.65 % 0.44 % 0.95 % 0.96 % 0.57 % 1.24 %
NPAs / Loans and leases + foreclosed real estate 1.16 % 1.26 % 1.35 % 1.88 % 1.95 % 1.16 % 1.95 %
ALLL / Nonaccrual loans and leases 157.79 % 149.81 % 145.88 % 120.21 % 119.28 % 157.79 % 119.28 %
ALLL / Total loans and leases 1.47 % 1.51 % 1.56 % 1.80 % 1.97 % 1.47 % 1.97 %
 
Profitability
Return on average assets 0.81 % 0.85 % 0.58 % 0.50 % 0.42 % 0.75 % 0.34 %
Return on average shareholders' equity 5.70 % 5.99 % 4.02 % 3.42 % 2.94 % 5.27 % 2.39 %
Return on average tangible shareholders' equity (1) 12.41 % 13.23 % 8.36 % 6.98 % 6.66 % 11.33 % 5.61 %
Net interest margin 3.92 % 4.10 % 3.94 % 3.59 % 3.58 % 3.99 % 3.61 %
Efficiency ratio (1) 58.98 % 60.21 % 61.39 % 66.34 % 67.44 % 60.15 % 66.99 %
 
Per Share Data (EOP)
Share price $ 10.45 $ 10.28 $ 9.88 $ 8.38 $ 5.46 $ 10.45 $ 5.46
Stated book value per common share 13.86 13.67 13.48 13.96 15.65 13.86 15.65
Tangible book value per common share (1) 6.82 6.59 6.36 7.28 7.61 6.82 7.61
Price/Book Value 75.39 % 75.20 % 73.29 % 60.03 % 34.89 % 75.39 % 34.89 %
Price/Tangible Book Value 153.23 % 155.99 % 155.35 % 115.11 % 71.75 % 153.23 % 71.75 %
Number of outstanding shares ('000) 186,465 186,221 187,856 156,867 130,110 186,465 130,110
 
Capital Ratios
Tangible common ratio (1) 7.84 % 7.61 % 7.52 % 8.50 % 7.74 % 7.84 % 7.74 %
Tier 1 common ratio 10.07 % 9.97 % 9.83 % 10.76 % 9.81 % 10.07 % 9.81 %
Leverage ratio 8.97 % 9.95 % 10.79 % 10.73 % 10.39 % 8.97 % 10.39 %
Tier 1 capital ratio 11.37 % 12.63 % 12.54 % 13.65 % 12.86 % 11.37 % 12.86 %
Total risk-based capital ratio 13.14 % 14.38 % 14.30 % 15.41 % 14.93 % 13.14 % 14.93 %
 

(1) Non-GAAP based financial measures. Please refer to the calculations and management's reasons for using these measures in Appendix A - GAAP to Non-GAAP Reconciliation

 
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
       
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
September 30, June 30, March 31, December 31, September 30
2012 2012 2012 2011 2011
(in thousands, except share data)
Assets
Cash and due from banks $ 380,100 $ 412,282 $ 350,793 $ 276,384 $ 254,074
Unrestricted short-term investments   24,826     31,239     27,067     55,761     31,040  
Cash and cash equivalents 404,926 443,521 377,860 332,145 285,114

Interest-bearing deposits held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities

3,679 5,485 4,932 5,015 4,878
Restricted short-term investments 76,103 67,650 60,600 60,910 68,290
Securities available for sale 2,763,477 2,719,186 2,620,245 2,295,034 2,567,800
Restricted investment in bank stocks 144,927 146,933 136,591 128,073 123,487
Loans and leases, net of deferred costs and fees 12,503,737 12,409,181 12,337,688 10,257,161 9,503,538

Loans held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities

171,870 176,731 183,981 190,769 199,131
Less: Allowance for loan and lease losses   186,897     190,628     194,730     188,100     190,960  
Net loans and leases   12,488,710     12,395,284     12,326,939     10,259,830     9,511,709  
Premises and equipment, net 190,793 193,404 196,011 168,382 163,992
Other real estate and foreclosed assets 33,735 37,220 40,748 41,716 31,036
Accrued interest receivable 44,681 41,274 43,928 36,820 35,358
Bank-owned life insurance 448,866 449,023 447,686 405,296 359,908
Goodwill 1,268,761 1,269,205 1,264,892 1,018,031 1,018,031
Intangible assets with finite lives 44,549 47,831 53,662 29,081 27,661
Deferred income tax assets 30,682 47,914 35,776 6,344 5,147
Other assets   162,841     176,079     197,156     188,112     162,818  
Total assets $ 18,106,730   $ 18,040,009   $ 17,807,026   $ 14,974,789   $ 14,365,229  
Liabilities and Shareholders' Equity
Deposits $ 12,725,379 $ 12,690,524 $ 12,563,541 $ 10,290,472 $ 9,558,631
Federal Home Loan Bank short-term borrowings 1,000,000 900,000 850,000 900,000 400,000
Other short-term borrowings 762,257 648,675 723,758 613,306 551,245
Federal Home Loan Bank long-term borrowings 110,884 115,724 120,673 71,020 715,026
Other long-term debt 349,984 200,298 200,611 176,030 176,032
Junior subordinated debentures 171,370 346,393 346,395 323,317 323,221

Long-term debt of consolidated variable interest entities for which creditors do not have recourse to Susquehanna's general credit

118,399 131,591 145,053 157,379 172,909
Accrued interest, taxes, and expenses payable 72,060 83,102 69,787 50,670 47,841
Deferred income tax liabilities 0 0 0 25,827 48,620
Other liabilities   211,715     378,972     274,624     177,140     335,859  
Total liabilities   15,522,048     15,495,279     15,294,442     12,785,161     12,329,384  
Shareholders' equity:
Common stock 373,352 372,848 376,117 314,136 260,231
Treasury stock (1,368 ) (1,282 ) (1,278 ) (1,263 ) (39 )
Additional paid-in capital 1,645,692 1,643,474 1,638,562 1,397,152 1,298,607
Retained earnings 598,371 572,818 544,476 525,657 511,239
Accumulated other comprehensive loss   (31,365 )   (43,128 )   (45,293 )   (46,054 )   (34,193 )
Total shareholders' equity   2,584,682     2,544,730     2,512,584     2,189,628     2,035,845  
Total liabilities and shareholders' equity $ 18,106,730   $ 18,040,009   $ 17,807,026   $ 14,974,789   $ 14,365,229  
 

 
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
         
Loans and Leases and Deposits
(in thousands)
Loans and Leases
09/30/12 06/30/12 03/31/12 12/31/11 09/30/11
Commercial, financial, and agricultural $ 2,168,708 $ 2,101,561 $ 2,088,948 $ 1,871,027 $ 1,810,664
Real estate - construction 904,285 936,996 993,819 829,221 771,734
Real estate secured - residential 4,047,761 3,970,115 3,945,565 3,212,562 2,728,934
Real estate secured - commercial 3,947,447 4,034,109 4,022,788 3,136,887 3,013,787
Consumer 829,760 805,490 775,913 722,329 698,804
Leases   777,646   737,641   694,636   675,904   678,746
Total loans and leases $ 12,675,607 $ 12,585,912 $ 12,521,669 $ 10,447,930 $ 9,702,669
 
 
Deposits
09/30/12 06/30/12 03/31/12 12/31/11 09/30/11
Demand $ 1,929,529 $ 1,940,990 $ 1,947,525 $ 1,569,811 $ 1,404,366
Interest-bearing demand 5,717,663 5,423,198 5,496,237 4,439,488 3,964,428
Savings 1,009,110 1,007,157 1,008,042 868,709 787,536
Time less than $100 2,341,623 2,441,902 2,527,383 2,157,282 2,024,999
Time of $100 or more   1,727,454   1,877,277   1,584,354   1,255,182   1,377,302
Total deposits $ 12,725,379 $ 12,690,524 $ 12,563,541 $ 10,290,472 $ 9,558,631
 

 
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
         
Supplemental Loan and Lease Data
(in thousands)
Nonaccrual Loans and Leases
09/30/12 06/30/12 03/31/12 12/31/11 09/30/11
Commercial, financial, and agricultural $ 10,572 $ 16,076 $ 20,616 $ 14,385 $ 14,421
Real estate - construction 22,534 25,985 30,644 37,727 37,487
Real estate secured - residential 30,740 31,723 33,137 41,922 41,238
Real estate secured - commercial 52,390 52,296 47,423 61,497 65,377
Consumer 211 263 505 0 0
Leases   2,001   907   1,164   947   1,576  
Total nonaccrual loans and leases $ 118,448 $ 127,250 $ 133,489 $ 156,478 $ 160,099  
 
 
Restructured Loans
09/30/12 06/30/12 03/31/12 12/31/11 09/30/11
Commercial, financial, and agricultural $ 7,254 $ 9,130 $ 9,547 $ 12,181 $ 11,820
Real estate - construction 943 3,979 3,980 3,902 0
Real estate secured - residential 20,828 16,494 15,167 17,634 13,389
Real estate secured - commercial 27,192 36,671 42,883 38,565 36,974
Consumer   606   503   504   570   148  
Total restructured loans $ 56,823 $ 66,777 $ 72,081 $ 72,852 $ 62,331  
 
 
Net Charge-offs (Recoveries)
3Q 2012 2Q 2012 1Q 2012 4Q 2011 3Q 2011
Commercial, financial, and agricultural $ 3,757 $ 7,145 $ 2,108 $ 1,557 $ 5,322
Real estate - construction 2,909 4,987 2,830 8,484 6,489
Real estate secured - residential 2,470 2,553 3,652 2,641 5,262
Real estate secured - commercial 9,439 4,485 2,271 10,897 5,612
Consumer 448 53 928 503 (99 )
Leases   708   879   581   778   746  
Total net charge-offs $ 19,731 $ 20,102 $ 12,370 $ 24,860 $ 23,332  
 

             

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA 17543

 
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended

 

September 30, June 30, March 31, December 31, September 30,

Nine Months Ended
September 30,

2012 2012 2012 2011 2011 2012 2011
(in thousands, except per share data)
Net interest income $ 149,142 $ 152,670 $ 134,123 $ 115,201 $ 106,839 $ 435,934 $ 317,949
Provision for loan and lease losses   16,000     16,000     19,000     22,000     25,000     51,000     88,000  
Net interest income, after provision for loan and lease losses   133,142     136,670     115,123     93,201     81,839     384,934     229,949  
Noninterest Income:
Service charges on deposit accounts 9,013 8,583 7,674 7,689 8,206 25,270 24,039
Vehicle origination and servicing fees 2,470 2,226 1,924 1,984 1,979 6,620 5,878
Asset management fees 7,366 7,359 7,073 6,821 7,046 21,798 21,332
Income from fiduciary-related activities 2,485 2,539 2,622 1,827 1,819 7,647 5,507
Commissions on brokerage, life insurance and annuity sales 2,072 2,399 1,907 1,697 1,894 6,378 6,504
Commissions on property and casualty insurance sales 3,158 3,930 5,058 3,638 2,956 12,145 10,409
Other commissions and fees 5,387 4,800 4,643 4,147 7,075 14,830 19,581
Income from bank-owned life insurance 1,726 1,631 1,472 1,539 1,136 4,868 3,392
Net gain on sale of loans and leases 5,938 4,396 3,750 3,324 2,953 14,084 9,423
Net realized gain on acquisition 0 0 0 39,143 0 0 0
Net realized gain (loss) on sales of securities 31 1,361 385 (706 ) 1,653 1,777 4,584
Total other-than-temporary impairment, net of recoveries 136 4,676 (2,706 ) (1,132 ) (894 ) 2,106 (5,260 )

Portion of recognized in other comprehensive income (before taxes)

(136 ) (4,676 ) 2,562 828 679 (2,250 ) 2,200
Net impairment losses recognized in earnings 0 0 (144 ) (304 ) (215 ) (144 ) (3,060 )
Other   4,015     587     3,151     548     298     7,714     3,732  
Total noninterest income   43,661     39,811     39,515     71,347     36,800     122,987     111,321  
Noninterest Expenses:
Salaries and employee benefits 62,236 64,524 57,958 51,515 53,315 184,718 157,719
Occupancy 11,350 11,725 10,810 9,948 8,982 33,886 27,499
Furniture and equipment 3,823 4,309 3,617 3,148 3,143 11,749 9,448
Advertising and marketing 2,947 3,287 3,054 2,846 3,138 9,288 8,624
FDIC insurance 5,275 4,769 5,178 4,219 3,596 15,222 12,383
Legal fees 2,012 1,907 2,053 2,542 2,823 5,972 6,759
Amortization of intangible assets 3,337 3,402 2,753 2,290 2,118 9,253 6,415
Vehicle lease disposal 1,401 1,745 1,836 2,851 2,676 4,981 7,733
Merger related 1,500 3,318 11,479 12,211 1,293 16,297 2,780
Loss on extinguishment of debt 5,451 0 0 50,020 0 5,451 0
Other   23,578     22,489     21,617     20,805     19,661     67,923     58,425  
Total noninterest expenses   122,910     121,475     120,355     162,395     100,745     364,740     297,785  
Income before income taxes 53,893 55,006 34,283 2,153 17,894 143,181 43,485
Provision (benefit) for income taxes   17,161     17,213     10,810     (16,976 )   2,934     45,183     7,709  
Net Income $ 36,732   $ 37,793   $ 23,473   $ 19,129   $ 14,960   $ 97,998   $ 35,776  
 
Earnings per common share:
Basic $ 0.20 $ 0.20 $ 0.14 $ 0.12 $ 0.12 $ 0.54 $ 0.28
Diluted $ 0.20 $ 0.20 $ 0.14 $ 0.12 $ 0.12 $ 0.54 $ 0.28
Cash dividends per common share $ 0.06 $ 0.05 $ 0.03 $ 0.03 $ 0.02 $ 0.14 $ 0.05
Average common shares outstanding:
Basic 186,214 187,616 171,326 156,492 129,837 181,735 129,775
Diluted 187,004 188,301 171,973 156,802 129,895 182,487 129,846
 

 

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA 17543

       

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY

 

Interest rates and interest differential-taxable equivalent basis

 
Three Months Ended Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
September 30, 2012 June 30, 2012 September 30, 2011 September 30, 2012 September 30, 2011
(Dollars in thousands) Average
Balance
  Interest   Rate (%) Average
Balance
  Interest   Rate (%) Average
Balance
  Interest   Rate (%) Average
Balance
  Interest   Rate (%) Average
Balance
  Interest   Rate (%)
Assets                    
Short-term investments $ 112,830 $ 36 0.13 $ 100,861 $ 35 0.14 $ 109,596 $ 29 0.10 $ 106,780 $ 101 0.13 $ 89,242 $ 80 0.12
Investment securities:
Taxable 2,421,414 13,434 2.21 2,329,950 14,054 2.43 2,120,258 14,988 2.80 2,306,402 41,277 2.39 2,088,386 47,712 3.05
Tax-exempt   390,316     5,568   5.68   374,282     5,571   5.99   399,750     6,089   6.04   381,840     16,927   5.92   402,063     18,375   6.11
Total investment securities   2,811,730     19,002   2.69   2,704,232     19,625   2.92   2,520,008     21,077   3.32   2,688,242     58,204   2.89   2,490,449     66,087   3.55
Loans and leases, (net):
Taxable 12,222,031 160,532 5.23 12,148,763 162,812 5.39 9,329,138 125,083 5.32 11,813,477 468,563 5.30 9,312,112 373,614 5.36
Tax-exempt   390,446     5,305   5.41   378,950     5,134   5.45   317,051     4,848   6.07   372,014     15,262   5.48   304,985     13,257   5.81
Total loans and leases   12,612,477     165,837   5.23   12,527,713     167,946   5.39   9,646,189     129,931   5.34   12,185,491     483,825   5.30   9,617,097     386,871   5.38
 
Total interest-earning assets 15,537,037   184,875   4.73 15,332,806   187,606   4.92 12,275,793   151,037   4.88 14,980,513   542,130   4.83 12,196,788   453,038   4.97
Allowance for loan and lease losses (189,406 ) (190,095 ) (193,986 ) (190,265 ) (195,404 )
Other non-earning assets   2,673,477     2,656,967     2,080,855     2,577,332     2,054,044  
 
Total assets $ 18,021,108   $ 17,799,678   $ 14,162,662   $ 17,367,580   $ 14,055,428  
 
Liabilities
Deposits:
Interest-bearing demand $ 5,537,196 4,817 0.35 $ 5,479,962 5,292 0.39 $ 3,796,621 4,999 0.52 $ 5,336,552 15,826 0.40 $ 3,712,438 15,842 0.57
Savings 1,002,981 274 0.11 1,004,829 332 0.13 796,735 275 0.14 979,190 936 0.13 794,693 869 0.15
Time 4,110,685 12,085 1.17 4,064,876 11,406 1.13 3,490,946 13,595 1.55 3,974,635 35,517 1.19 3,476,077 42,884 1.65
Other short-term borrowings 748,841 2,206 1.17 726,309 2,179 1.21 631,679 2,220 1.39 705,916 6,507 1.23 682,007 5,954 1.17
FHLB borrowings 1,072,555 3,553 1.32 1,082,293 3,459 1.29 1,115,262 10,967 3.90 1,046,809 9,970 1.27 1,110,513 32,188 3.88
Long-term debt   727,382     8,992   4.92   686,492     8,522   4.99   679,316     8,313   4.86   695,980     26,174   5.02   690,061     26,281   5.09
 
Total interest-bearing liabilities 13,199,640   31,927   0.96 13,044,761   31,190   0.96 10,510,559   40,369   1.52 12,739,082   94,930   1.00 10,465,789   124,018   1.58
Demand deposits 1,937,835 1,921,629 1,401,109 1,849,445 1,374,356
Other liabilities   321,541     296,038     231,288     296,207     213,930  
 
Total liabilities 15,459,016 15,262,428 12,142,956 14,884,734 12,054,075
 
Equity   2,562,092     2,537,250     2,019,706     2,482,846     2,001,353  
 
Total liabilities & shareholders' equity $ 18,021,108   $ 17,799,678   $ 14,162,662   $ 17,367,580   $ 14,055,428  
 

Net interest income / yield on average earning assets

$ 152,948 3.92 $ 156,416 4.10 $ 110,668 3.58 $ 447,200 3.99 $ 329,020 3.61
Taxable equivalent adjustment   (3,806 )   (3,746 )   (3,829 )   (11,266 )   (11,071 )
Net interest income - as reported $ 149,142   $ 152,670   $ 106,839   $ 435,934   $ 317,949  
 
1. Average loan balances include non accrual loans.
2. Tax-exempt income has been adjusted to a tax-equivalent basis using a marginal tax rate of 35%.

3. For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.

 

 

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA 17543

           
Appendix A - GAAP to Non-GAAP Reconciliation
(Dollars and share data in thousands) Nine Months
  3Q12 2Q12 1Q12 4Q11 3Q11 2012 2011

Efficiency Ratio

Other expense $ 122,910 $ 121,475 $ 120,355 $ 162,395 $ 100,745 $ 364,740 $ 297,785
Less: Merger related expenses (1,500 ) (3,318 ) (11,479 ) (12,211 ) (1,293 ) (16,297 ) (2,780 )
Loss on extinguishment of debt   (5,451 )   0     0     (50,020 )   0     (5,451 )   0  
Noninterest operating expense (numerator) $ 115,959   $ 118,157   $ 108,876   $ 100,164   $ 99,452   $ 342,992   $ 295,005  
 
Taxable-equivalent net interest income $ 152,948 156,416 137,837 118,780 110,668 447,200 329,020
Other income 43,661 39,811 39,515 71,347 36,800 122,987 111,321
Less: Net realized gain on acquisition   0     0     0     (39,143 )   0     0     0  
Denominator $ 196,609   $ 196,227   $ 177,352   $ 150,984   $ 147,468   $ 570,187   $ 440,341  
Efficiency ratio   58.98 %   60.21 %   61.39 %   66.34 %   67.44 %   60.15 %   66.99 %
 
The efficiency ratio is a non-GAAP based financial measure. Management excludes merger-related expenses and certain other selected items when calculating this ratio, which is used to measure the relationship of operating expenses to revenues.
 
 

Tangible Common Ratio

End of period balance sheet data
Shareholders' equity $ 2,584,682 $ 2,544,730 $ 2,512,584 $ 2,189,628 $ 2,035,845 $ 2,584,682 $ 2,035,845
Goodwill and other intangible assets (1)   (1,263,361 )   (1,267,630 )   (1,268,582 )   (1,006,412 )   (1,005,368 )   (1,263,361 )   (1,005,368 )
Tangible common equity (numerator) $ 1,321,321   $ 1,277,100   $ 1,244,002   $ 1,183,216   $ 1,030,477   $ 1,321,321   $ 1,030,477  
 
Assets $ 18,106,730 $ 18,040,009 $ 17,807,026 $ 14,974,789 $ 14,365,229 $ 18,106,730 $ 14,365,229
Goodwill and other intangible assets (1)   (1,263,361 )   (1,267,630 )   (1,268,582 )   (1,047,112 )   (1,045,692 )   (1,263,361 )   (1,045,692 )
Tangible assets (denominator) $ 16,843,369   $ 16,772,379   $ 16,538,444   $ 13,927,677   $ 13,319,537   $ 16,843,369   $ 13,319,537  
Tangible common ratio   7.84 %   7.61 %   7.52 %   8.50 %   7.74 %   7.84 %   7.74 %
 

The tangible common ratio is a non-GAAP based financial measure using non-GAAP based amounts. The most directly comparable GAAP-based measure is the ratio of common shareholders' equity to total assets. In order to calculate tangible common shareholders equity and assets, our management subtracts the intangible assets from both the common shareholders' equity and total assets. Tangible common equity is then divided by the tangible assets to arrive at the ratio. Management uses the ratio to assess the strength of our capital position.

 
 
(1) Net of applicable deferred income taxes
 

             

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA 17543

 
Appendix A - GAAP to Non-GAAP Reconciliation
(Dollars and share data in thousands) Nine Months
3Q12 2Q12 1Q12 4Q11 3Q11 2012 2011

Return on Average Tangible Shareholders' Equity

Income statement data
Net income $ 36,732 $ 37,793 $ 23,473 $ 19,129 $ 14,960 $ 97,998 $ 35,776
Amortization of intangibles, net of taxes at 35%   2,169     2,211     1,789     1,489     1,377     6,014     4,170  
Net tangible income (numerator) $ 38,901   $ 40,004   $ 25,262   $ 20,618   $ 16,337   $ 104,012   $ 39,946  
 
Average balance sheet data
Shareholders' equity $ 2,562,092 $ 2,537,250 $ 2,348,326 $ 2,217,036 $ 2,019,706 $ 2,482,846 $ 2,001,353
Goodwill and other intangible assets   (1,315,071 )   (1,320,658 )   (1,132,344 )   (1,045,580 )   (1,046,719 )   (1,256,240 )   (1,048,834 )
Tangible common equity (denominator) $ 1,247,021   $ 1,216,592   $ 1,215,982   $ 1,171,456   $ 972,987   $ 1,226,606   $ 952,519  
 
Return on equity (GAAP basis) 5.70 % 5.99 % 4.02 % 3.42 % 2.94 % 5.27 % 2.39 %
Effect of goodwill and other intangibles   6.71 %   7.24 %   4.34 %   3.56 %   3.72 %   6.06 %   3.22 %
Return on average tangible shareholders' equity   12.41 %   13.23 %   8.36 %   6.98 %   6.66 %   11.33 %   5.61 %
 
Return on average tangible shareholders' equity is a non-GAAP based financial measure calculated using non-GAAP based amounts. The most directly comparable GAAP-based measure is return on average equity. We calculate return on average tangible shareholders' equity by excluding the balance of intangible assets and their related amortization expense from our calculation of return on average equity. Management uses the return on average tangible equity in order to review our core operating results. Management believes that this is a better measure of our performance. In addition, this is consistent with the treatment by bank regulatory agencies, which excludes goodwill and other intangible assets from the calculation of risk-based capital ratios.
 
 

Tangible Book Value per Common Share

End of period balance sheet data
Shareholders' equity $ 2,584,682 $ 2,544,730 $ 2,512,584 $ 2,189,628 $ 2,035,845 $ 2,584,682 $ 2,035,845
Goodwill and other intangible assets   (1,313,310 )   (1,317,036 )   (1,318,554 )   (1,047,112 )   (1,045,692 )   (1,313,310 )   (1,045,692 )
Tangible common equity (numerator) $ 1,271,372   $ 1,227,694   $ 1,194,030   $ 1,142,516   $ 990,153   $ 1,271,372   $ 990,153  
 
Common shares outstanding (denominator)   186,465     186,221     187,856     156,867     130,110     186,465     130,110  
 
Tangible book value per common share $ 6.82   $ 6.59   $ 6.36   $ 7.28   $ 7.61   $ 6.82   $ 7.61  
 
 
Tangible book value per share is a non-GAAP based financial measure calculated using non-GAAP based amounts. The most directly comparable GAAP based measure is book value per share. In order to calculate tangible book value per share, we divide tangible common equity, which is a non-GAAP based measure calculated as common shareholders' equity less intangible assets, by the number of shares of common stock outstanding. In contrast, book value per share is calculated by dividing total common shareholders' equity by the number of shares of common stock outstanding. Management uses tangible book value per share to assess our capital position and ratios.
 

Susquehanna Bancshares, Inc.
INVESTOR RELATIONS CONTACT:
Carl D. Lundblad, Senior Vice President
(717) 625-6207
or
MEDIA RELATIONS CONTACT:
Stephen Trapnell, Director of Communication Strategies
(717) 625-6548






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