Susquehanna Bancshares, Inc. Announces First Quarter 2013 Results

  Susquehanna Bancshares, Inc. Announces First Quarter 2013 Results

First Quarter Highlights

  *GAAP EPS of $0.23
  *Return on Average Tangible Equity (ROATE) of 13.87%
  *Net Interest Margin Remains Strong at 3.97%
  *Commercial Loan Activity and Core Deposit Growth Demonstrate Continued
    Momentum
  *Second Quarter Dividend Declared of $0.08 Per Share

Business Wire

LITITZ, Pa. -- April 24, 2013

Susquehanna Bancshares, Inc. (Susquehanna) (NASDAQ: SUSQ) today announced that
it earned net income for the first quarter ended March 31, 2013 of $42.4
million, or $0.23 per diluted share, compared to net income of $23.5 million
for the first quarter of 2012, or $0.14 per diluted share.

"We are encouraged by a solid start to 2013, particularly the growth and
strong pipelines in commercial loans and the success of our efforts to grow
core deposits,” said William J. Reuter, Chairman and Chief Executive Officer.
"Amid the challenges that continue to confront our industry and the economy,
our employees are building on the momentum of the past year and executing our
strategic plan to drive profitability as we seek to enhance shareholder value
and support our customers and the communities we serve.”

Linked Quarter Results (First Quarter 2013 vs. Fourth Quarter 2012)

  *Loans and leases increased $105.0 million, or 0.8%, from December 31, 2012
    to $13.0 billion at March 31, 2013, as solid growth in commercial and
    consumer loans and leases was offset by a decrease in real estate
    construction loans. Excluding real estate construction loans, loans and
    leases increased by $173.4 million, or 1.4%. Growth in lease balances was
    driven largely by market expansion in auto leasing. Growth for the quarter
    in each major loan category is as follows:

       *Commercial loans increased 1.7%.
       *Real estate – construction loans decreased 8.1%.
       *Real estate secured – residential loans increased 0.3%.
       *Real estate secured – commercial loans increased 0.2%.
       *Consumer loans increased 2.0%.
       *Leases increased 10.9%.

  *Total deposits increased $111.4 million, or 0.9%, from December 31, 2012
    to $12.7 billion as of March 31, 2013, due primarily to a 1.1% increase in
    core deposits. Growth for the quarter in each major deposit category is as
    follows:

       *Non-interest bearing demand deposits decreased 2.8%.
       *Interest-bearing demand deposits increased 1.8%.
       *Savings deposits increased 4.4%.
       *Time deposits increased 0.4%.

  *Net interest margin declined 9 basis points to 3.97% for the first quarter
    of 2013 compared to 4.06% for the fourth quarter of 2012.
  *Non-interest income declined to $42.6 million for the first quarter of
    2013, compared to $43.8 million for the fourth quarter of 2012,
    principally due to seasonality of service charges and mortgage banking
    revenue and timing of certain commissions and fees.
  *Non-interest expense for the first quarter of 2013 declined to $117.7
    million, compared to $125.3 million in the prior quarter.
  *The efficiency ratio for the first quarter of 2013 improved to 60.17%,
    compared to 60.96% for the fourth quarter of 2012, calculated after
    excluding pre-tax merger related expenses and loss on extinguishment of
    debt for the fourth quarter of 2012.
  *Net charge-offs as a percentage of average loans and leases for the
    quarter ended March 31, 2013 was 0.62% compared to 0.50% for the fourth
    quarter of 2012. Non-performing assets as a percentage of loans, leases
    and foreclosed real estate owned was stable at 0.97% at March 31, 2013
    compared to 0.96% at December 31, 2012. The provision for loan and lease
    losses for the quarter ended March 31, 2013 was $12.0 million, compared to
    $13.0 million for the quarter ended December 31, 2012. The allowance for
    loan and lease losses was $176.4 million at March 31, 2013, representing
    1.36% of total loans and leases and 171% of nonaccrual loans and leases,
    compared to $184.0 million at December 31, 2012, representing 1.43% of
    total loans and leases and 188% of nonaccrual loans and leases.

First Quarter Results (First Quarter 2013 vs. First Quarter 2012)

  *Loans and leases increased 3.8% from March 31, 2012 to $13.0 billion at
    March 31, 2013. Growth for the twelve month period in each major loan
    category was as follows:

       *Commercial loans increased 10.7%.
       *Real estate - construction loans decreased 21.6%.
       *Real estate secured - residential loans increased 3.4%.
       *Real estate secured - commercial loans decreased 1.3%.
       *Consumer loans increased 10.8%.
       *Leases increased 43.8%.

  *Total deposits increased 1.0% from March 31, 2012 to $12.7 billion at
    March 31, 2013, as core deposit growth of 5.7% was offset by an 8.6%
    decrease in time deposits. Growth for the twelve month period in each
    major deposit category was as follows:

       *Non-interest-bearing demand deposits decreased 1.5%.
       *Interest-bearing demand deposits increased 8.0%.
       *Savings deposits increased 6.9%.
       *Time deposits decreased 8.6%.

  *Net interest margin increased 3 basis points to 3.97% compared to 3.94%
    for the first quarter of 2012.
  *The efficiency ratio for the first quarter of 2013 improved to 60.17% from
    61.39% in the first quarter of 2012, calculated after excluding pre-tax
    merger related expenses for the first quarter of 2012.
  *Net charge-offs as a percentage of average loans and leases for the
    quarter ended March 31, 2013 was 0.62% compared to 0.44% for the first
    quarter of 2012. Non-performing assets as a percentage of loans, leases
    and foreclosed real estate was 0.97% at March 31, 2013 compared to 1.35%
    at March 31, 2012. The allowance for loan and lease losses was $176.4
    million at March 31, 2013, representing 1.36% of total loans and leases
    and 171% of nonaccrual loans and leases, compared to $194.7 million at
    March 31, 2012, representing 1.56% of total loans and leases and 146% of
    nonaccrual loans and leases.
  *Return on average assets and average tangible equity ^(1) for the quarter
    ended March 31, 2013 finished at 0.95% and 13.87%, respectively. This
    compared to results of 0.58% and 8.36% for the same measurements,
    respectively, for the first quarter of 2012.
  *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 8.22% and 10.20%, respectively, at March 31, 2013.

^(1) Return on average tangible 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.

^(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 April 17, 2013, Susquehanna’s board of directors declared a dividend of
    $0.08 per common share for the second quarter of 2013, payable May 20,
    2013 to shareholders of record as of April 30, 2013. This represents a
    $0.01 increase from the first quarter dividend of $0.07 per share and
    marks the 6^th increase since the first quarter of 2011.

Susquehanna will broadcast its first quarter 2013 results conference call over
the Internet on April 25, 2013 at 11:00 a.m. Eastern time. The conference call
will include management’s discussion of first quarter 2013 results. The
discussion may also include forward-looking information and financial targets.
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 first 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
approximately $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 $7.9 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; 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 CONSOLIDATED FINANCIAL INFORMATION                                       
(in thousands,
except per                     
share data)
                                                                                     
                                                                                     
                 1Q13             4Q12             3Q12             2Q12             1Q12
Balance Sheet
(EOP)
Investments      $ 2,552,600      $ 2,730,335      $ 2,908,404      $ 2,866,119      $ 2,756,836
Loans and          12,999,703       12,894,741       12,675,607       12,585,912       12,521,669
leases
Allowance for
loan and lease     176,377          184,020          186,897          190,628          194,730
losses
Total assets       17,967,174       18,037,667       18,106,730       18,040,009       17,807,026
Deposits           12,691,432       12,580,046       12,725,379       12,690,524       12,563,541
Other
short-term         786,251          817,577          762,257          648,675          723,758
borrowings
Federal Home
Loan Bank          1,044,480        1,199,062        1,110,884        1,015,724        970,673
borrowings
Other              501,559          513,401          639,753          678,282          692,059
long-term debt
Shareholders'      2,639,489        2,595,909        2,584,682        2,544,730        2,512,584
equity
                                                                                     
Average
Balance Sheet
Investments      $ 2,603,595      $ 2,764,886      $ 2,811,730      $ 2,704,232      $ 2,547,408
Loans and          12,929,365       12,725,886       12,612,477       12,527,713       11,411,592
leases
Total earning      15,642,309       15,604,029       15,537,037       15,332,806       14,065,583
assets
Total assets       18,031,127       18,018,889       18,021,108       17,799,678       16,274,773
Deposits           12,640,550       12,602,430       12,588,697       12,471,296       11,354,537
Other
short-term         817,816          810,517          748,841          726,309          642,128
borrowings
Federal Home
Loan Bank          1,155,637        1,166,765        1,072,555        1,082,293        985,294
borrowings
Other              508,541          560,906          727,382          686,492          673,722
long-term debt
Shareholders'      2,614,319        2,597,254        2,562,092        2,537,250        2,348,326
equity
                                                                                     
Income
Statement
Net interest     $ 149,206        $ 155,304        $ 149,142        $ 152,670        $ 134,123
income
Provision for
loan and lease     12,000           13,000           16,000           16,000           19,000
losses
Noninterest        42,644           43,772           43,661           39,811           39,515
income
Noninterest        117,729          125,277          122,910          121,475          120,355
expense
Income before      62,121           60,799           53,893           55,006           34,283
taxes
Provision for      19,722           17,625           17,161           17,213           10,810
income taxes
Net income         42,399           43,174           36,732           37,793           23,473
Basic earnings
per common         0.23             0.23             0.20             0.20             0.14
share
Diluted
earnings per       0.23             0.23             0.20             0.20             0.14
common share
Cash dividends
paid per           0.00             0.14             0.06             0.05             0.03
common share
                                                                                     
Asset Quality
Net
charge-offs      $ 19,643         $ 15,877         $ 19,731         $ 20,102         $ 12,370
(NCOs)
                                                                                     
Nonaccrual
loans and        $ 103,351        $ 97,767         $ 118,448        $ 127,250        $ 133,489
leases
Foreclosed        22,557         26,245         28,641         31,302         36,456     
real estate
Total
nonperforming    $ 125,908       $ 124,012       $ 147,089       $ 158,552       $ 169,945    
assets (NPAs)
                                                                                     
Restructured     $ 65,773         $ 67,775         $ 56,823         $ 66,777         $ 72,081
loans
Loans and
leases 90 days     6,396            8,209            8,451            11,203           9,758
past due
                                                                                     
                                                                                     

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
                                                                                     
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(in thousands,
except per
share data)
                                                                                     
                 1Q13             4Q12             3Q12             2Q12             1Q12
Credit Quality
NCOs / Average
loans and          0.62       %     0.50       %     0.62       %     0.65       %     0.44       %
leases
NPAs / Loans
and leases +       0.97       %     0.96       %     1.16       %     1.26       %     1.35       %
foreclosed
real estate
ALLL /
Nonaccrual         170.66     %     188.22     %     157.79     %     149.81     %     145.88     %
loans and
leases
ALLL / Total
loans and          1.36       %     1.43       %     1.47       %     1.51       %     1.56       %
leases
                                                                                     
Profitability
Return on          0.95       %     0.95       %     0.81       %     0.85       %     0.58       %
average assets
Return on          6.58       %     6.61       %     5.70       %     5.99       %     4.02       %
average equity
Return on
average            13.87      %     14.01      %     12.41      %     13.23      %     8.36       %
tangible
equity ^(1)
Net interest       3.97       %     4.06       %     3.92       %     4.10       %     3.94       %
margin
Efficiency         60.17      %     60.96      %     58.98      %     60.21      %     61.39      %
ratio ^(1)
                                                                                     
Per Share Data
(EOP)
Closing share    $ 12.43          $ 10.48          $ 10.45          $ 10.28          $ 9.88
price
Stated book
value per          14.13            13.92            13.86            13.67            13.48
common share
Tangible book
value per          7.10             6.88             6.82             6.59             6.36
common share
^(1)
Price/Book         87.97      %     75.31      %     75.39      %     75.20      %     73.29      %
Value
Price/Tangible     175.07     %     152.33     %     153.23     %     155.99     %     155.35     %
Book Value
Number of
outstanding        186,800          186,554          186,465          186,221          187,856
shares ('000)
                                                                                     
Capital Ratios
Tangible
common ratio       8.22       %     7.94       %     7.84       %     7.61       %     7.52       %
^(1)
Tier 1 common      10.20      %     9.94       %     10.07      %     9.97       %     9.83       %
ratio
Leverage ratio     9.23       %     8.98       %     8.97       %     9.95       %     10.79      %
Tier 1 capital     11.34      %     11.08      %     11.37      %     12.63      %     12.54      %
ratio
Total
risk-based         12.88      %     12.63      %     13.14      %     14.38      %     14.30      %
capital ratio
                                                                                     

       Non-GAAP based financial measures. Please refer to the calculations and
^(1)  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)
(in thousands)
                   March 31,        December 31,     September 30,   June 30,         March 31,
                    2013           2012           2012          2012           2012       
                                                                                      
Assets
Cash and due       $ 291,434        $ 277,042        $ 380,100       $ 412,282        $ 350,793
from banks
Unrestricted
short-term          38,662         39,550         24,826        31,239         27,067     
investments
Cash and cash        330,096          316,592          404,926         443,521          377,860
equivalents
Interest-bearing
deposits held by
consolidated
variable
interest
entities that
can be
used only to
settle
obligations of
the consolidated     4,304            4,423            3,679           5,485            4,932
variable
interest
entities
Restricted
short-term           68,020           75,203           76,103          67,650           60,600
investments
Securities
available for        2,400,626        2,577,901        2,763,477       2,719,186        2,620,245
sale
Restricted
investment in        151,974          152,434          144,927         146,933          136,591
bank stocks
Loans and
leases, net of       12,840,305       12,728,082       12,503,737      12,409,181       12,337,688
deferred costs
and fees
Loans held by
consolidated
variable
interest
entities that
can be used only
to settle
obligations of
the consolidated
variable             159,398          166,659          171,870         176,731          183,981
interest
entities
Less: Allowance
for loan and        176,377        184,020        186,897       190,628        194,730    
lease losses
Net loans and       12,823,326     12,710,721     12,488,710    12,395,284     12,326,939 
leases
Premises and         186,102          188,983          190,793         193,404          196,011
equipment, net
Other real
estate and           26,302           31,017           33,735          37,220           40,748
foreclosed
assets
Accrued interest     44,202           40,304           44,681          41,274           43,928
receivable
Bank-owned life      450,351          450,270          448,866         449,023          447,686
insurance
Goodwill             1,275,439        1,270,359        1,268,761       1,269,205        1,264,892
Intangible
assets with          38,209           41,332           44,549          47,831           53,662
finite lives
Deferred income      7,594            4,685            30,682          47,914           35,776
tax assets
Other assets        160,629        173,443        162,841       176,079        197,156    
Total assets       $ 17,967,174    $ 18,037,667    $ 18,106,730   $ 18,040,009    $ 17,807,026 
Liabilities and
Shareholders'
Equity
Deposits           $ 12,691,432     $ 12,580,046     $ 12,725,379    $ 12,690,524     $ 12,563,541
Federal Home
Loan Bank            948,000          1,098,000        1,000,000       900,000          850,000
short-term
borrowings
Other short-term     786,251          817,577          762,257         648,675          723,758
borrowings
Federal Home
Loan Bank            96,480           101,062          110,884         115,724          120,673
long-term
borrowings
Other long-term      251,019          251,021          349,984         200,298          200,611
debt
Junior
subordinated         154,946          154,927          171,370         346,393          346,395
debentures
Long-term debt
of consolidated
variable
interest
entities for
which creditors
do not
have recourse to
Susquehanna's        95,594           107,453          118,399         131,591          145,053
general credit
Accrued
interest, taxes,     61,265           81,808           72,060          83,102           69,787
and expenses
payable
Deferred income      29,694           14,475           0               0                0
tax liabilities
Other               213,004        235,389        211,715       378,972        274,624    
liabilities
Total               15,327,685     15,441,758     15,522,048    15,495,279     15,294,442 
liabilities
Shareholders'
equity:
Common stock         374,118          373,623          373,352         372,848          376,117
Treasury stock       (1,871     )     (1,850     )     (1,368     )    (1,282     )     (1,278     )
Additional           1,648,062        1,645,958        1,645,692       1,643,474        1,638,562
paid-in capital
Retained             657,835          615,436          598,371         572,818          544,476
earnings
Accumulated
other               (38,655    )    (37,258    )    (31,365    )   (43,128    )    (45,293    )
comprehensive
loss
Total
shareholders'       2,639,489      2,595,909      2,584,682     2,544,730      2,512,584  
equity
Total
liabilities and    $ 17,967,174    $ 18,037,667    $ 18,106,730   $ 18,040,009    $ 17,807,026 
shareholders'
equity
                                                                                      

                 
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
                                                                         
Loans and Leases
and Deposits
(in thousands)
                   Loans and Leases
                    03/31/13      12/31/12      09/30/12      06/30/12      03/31/12
Commercial,
financial, and     $ 2,312,660    $ 2,273,611    $ 2,168,708    $ 2,101,561    $ 2,088,948
agricultural
Real estate -        779,344        847,781        904,285        936,996        993,819
construction
Real estate
secured -            4,077,810      4,065,818      4,047,761      3,970,115      3,945,565
residential
Real estate
secured -            3,971,438      3,964,608      3,947,447      4,034,109      4,022,788
commercial
Consumer             859,664        842,552        829,760        805,490        775,913
Leases              998,787       900,371       777,646       737,641       694,636
Total loans and    $ 12,999,703   $ 12,894,741   $ 12,675,607   $ 12,585,912   $ 12,521,669
leases
                                                                               
                                                                               
                   Deposits
                    03/31/13      12/31/12      09/30/12      06/30/12      03/31/12
Demand             $ 1,917,719    $ 1,973,664    $ 1,929,529    $ 1,940,990    $ 1,947,525
Interest-bearing     5,936,099      5,829,147      5,717,663      5,423,198      5,496,237
demand
Savings             1,077,446     1,032,293     1,009,110     1,007,157     1,008,042
Core deposits       8,931,264     8,835,104     8,656,302     8,371,345     8,451,804
Time less than       2,205,304      2,262,262      2,341,623      2,441,902      2,527,383
$100
Time of $100 or     1,554,864     1,482,680     1,727,454     1,877,277     1,584,354
more
Total deposits     $ 12,691,432   $ 12,580,046   $ 12,725,379   $ 12,690,524   $ 12,563,541
                                                                               
                                                                               
                                                                               
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
                                                                               
Supplemental
Loan and Lease
Data
(in thousands)
                   Nonaccrual Loans and Leases
                    03/31/13      12/31/12      09/30/12      06/30/12      03/31/12
Commercial,
financial, and     $ 9,542        $ 10,464       $ 10,572       $ 16,076       $ 20,616
agricultural
Real estate -        18,945         14,817         22,534         25,985         30,644
construction
Real estate
secured -            30,372         28,440         30,740         31,723         33,137
residential
Real estate
secured -            43,341         42,621         52,390         52,296         47,423
commercial
Consumer             37             43             211            263            505
Leases              1,114         1,382         2,001         907           1,164
Total nonaccrual   $ 103,351      $ 97,767       $ 118,448      $ 127,250      $ 133,489
loans and leases
                                                                               
                                                                               
                   Restructured Loans
                    03/31/13      12/31/12      09/30/12      06/30/12      03/31/12
Commercial,
financial, and     $ 14,863       $ 8,744        $ 7,254        $ 9,130        $ 9,547
agricultural
Real estate -        937            940            943            3,979          3,980
construction
Real estate
secured -            20,172         23,224         20,828         16,494         15,167
residential
Real estate
secured -            28,689         33,589         27,192         36,671         42,883
commercial
Consumer            1,112         1,278         606           503           504
Total
restructured       $ 65,773       $ 67,775       $ 56,823       $ 66,777       $ 72,081
loans
                                                                               
                                                                               
                   Net Charge-offs (Recoveries)
                   1Q 2013        4Q 2012        3Q 2012        2Q 2012        1Q 2012
Commercial,
financial, and     $ 8,041        $ 233          $ 3,757        $ 7,145        $ 2,108
agricultural
Real estate -        4,301          3,311          2,909          4,987          2,830
construction
Real estate
secured -            2,362          3,738          2,470          2,553          3,652
residential
Real estate
secured -            3,881          6,704          9,439          4,485          2,271
commercial
Consumer             236            707            448            53             928
Leases              822           1,184         708           879           581
Total net          $ 19,643       $ 15,877       $ 19,731       $ 20,102       $ 12,370
charge-offs
                                                                               


Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
                                                                           
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands,
except per share                  
data)
                       Three Months Ended
                       March 31,     December      September    June 30,      March 31,
                                     31,           30,
                        2013        2012        2012       2012        2012    
                                                                              
Net interest income    $ 149,206     $ 155,304     $ 149,142    $ 152,670     $ 134,123
Provision for loan      12,000      13,000      16,000     16,000      19,000  
and lease losses
Net interest income,
after provision for     137,206     142,304     133,142    136,670     115,123 
loan and lease
losses
Noninterest Income:
Service charges on       8,672         9,158         9,013        8,583         7,674
deposit accounts
Vehicle origination      3,354         3,746         2,470        2,226         1,924
and servicing fees
Wealth management        12,390        11,882        11,923       12,297        11,602
commissions and fees
Commissions on
property and             4,542         3,749         3,158        3,930         5,058
casualty insurance
sales
Other commissions        5,237         6,680         5,387        4,800         4,643
and fees
Income from
bank-owned life          1,850         1,603         1,726        1,631         1,472
insurance
Mortgage banking         4,110         4,835         5,113        4,343         3,513
revenue
Net realized gain
(loss) on sales of       406           (103    )     31           1,361         385
securities
Total
other-than-temporary     (680    )     749           136          4,676         (2,706  )
impairment, net of
recoveries
Portion recognized
in other                292         (846    )    (136    )   (4,676  )    2,562   
comprehensive income
(before taxes)
Net impairment
losses recognized in     (388    )     (97     )     0            0             (144    )
earnings
Other                   2,471       2,319       4,840      640         3,388   
Total noninterest       42,644      43,772      43,661     39,811      39,515  
income
Noninterest
Expenses:
Salaries and             63,034        66,865        62,236       64,524        57,958
employee benefits
Occupancy                11,215        11,345        11,350       11,725        10,810
Furniture and            3,578         3,976         3,823        4,309         3,617
equipment
Professional and         5,729         6,697         4,916        5,127         4,548
technology services
Advertising and          3,203         3,029         2,947        3,287         3,054
marketing
FDIC insurance           3,798         5,264         5,275        4,769         5,178
Legal fees               1,870         2,178         2,012        1,907         2,053
Amortization of          3,268         3,272         3,337        3,402         2,753
intangible assets
Vehicle lease            1,290         1,361         1,401        1,745         1,836
disposal
Merger related           0             1,054         1,500        3,318         11,479
Loss on
extinguishment of        0             409           5,451        0             0
debt
Other                   20,744      19,827      18,662     17,362      17,069  
Total noninterest       117,729     125,277     122,910    121,475     120,355 
expenses
Income before income     62,121        60,799        53,893       55,006        34,283
taxes
Provision for income    19,722      17,625      17,161     17,213      10,810  
taxes
Net Income             $ 42,399     $ 43,174     $ 36,732    $ 37,793     $ 23,473  
                                                                              
Earnings per common
share:
Basic                  $ 0.23        $ 0.23        $ 0.20       $ 0.20        $ 0.14
Diluted                $ 0.23        $ 0.23        $ 0.20       $ 0.20        $ 0.14
Cash dividends per     $ 0.00        $ 0.14        $ 0.06       $ 0.05        $ 0.03
common share
Average common
shares outstanding:
Basic                    186,607       186,353       186,214      187,616       171,326
Diluted                  187,442       186,990       187,004      188,301       171,973
                                                                              

                                                                                               
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
                                                                                                                         
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
(in thousands)
Interest rates and interest differential-taxable equivalent basis
                                                                                                                                   
                    Three Months Ended                      Three Months Ended                      Three Months Ended
                    March 31, 2013                          December 31, 2012                       March 31, 2012
                    Average                                 Average                                 Average
                    Balance         Interest     Rate     Balance         Interest     Rate     Balance         Interest     Rate
                                                   (%)                                     (%)                                     (%)
Assets
Short-term          $ 109,349        $ 36          0.13     $ 113,257        $ 43          0.15     $ 106,583        $ 30          0.11
investments
Investment
securities:
Taxable^(1)           2,202,136        11,426      2.10       2,362,815        12,383      2.08       2,166,578        13,790      2.56
Tax-exempt^(1)(2)    401,459        5,529      5.59      402,071        5,591      5.53      380,830        5,787      6.11
Total investment     2,603,595      16,955     2.64      2,764,886      17,974     2.59      2,547,408      19,577     3.09
securities
Loans and leases,
(net):
Taxable^(3)           12,501,991       156,853     5.09       12,295,737       159,862     5.17       11,065,149       145,219     5.28
Tax-exempt^(2)(3)    427,374        5,371      5.10      430,149        5,914      5.47      346,443        4,825      5.60
Total loans and      12,929,365     162,224    5.09      12,725,886     165,776    5.18      11,411,592     150,044    5.29
leases
                                                                                                                                   
Total
interest-earning      15,642,309      179,215    4.65       15,604,029      183,793    4.69       14,065,583      169,651    4.85
assets
Allowance for
loan and lease        (184,909   )                            (186,695   )                            (191,305   )
losses
Other non-earning    2,573,727                             2,601,555                             2,400,495  
assets
                                                                                                                                   
Total assets        $ 18,031,127                           $ 18,018,889                           $ 16,274,773 
                                                                                                                                   
Liabilities
Deposits:
Interest-bearing    $ 5,895,120        4,622       0.32     $ 5,802,600        4,777       0.33     $ 4,990,291        5,718       0.46
demand
Savings               1,048,881        279         0.11       1,018,704        273         0.11       929,499          329         0.14
Time                  3,778,086        11,232      1.21       3,834,971        11,649      1.21       3,746,848        12,026      1.29
Other short-term      817,816          2,153       1.07       810,517          2,205       1.08       642,128          2,122       1.33
borrowings
FHLB borrowings       1,155,637        3,672       1.29       1,166,765        3,753       1.28       985,294          2,958       1.21
Long-term debt       508,541        4,236      3.38      560,906        1,804      1.28      673,722        8,661      5.17
                                                                                                                                   
Total
interest-bearing      13,204,081      26,194     0.80       13,194,463      24,461     0.74       11,967,782      31,814     1.07
liabilities
Demand deposits       1,918,463                               1,946,155                               1,687,899
Other liabilities    294,264                               281,017                               270,766    
                                                                                                                                   
Total liabilities     15,416,808                              15,421,635                              13,926,447
                                                                                                                                   
Equity               2,614,319                             2,597,254                             2,348,326  
                                                                                                                                   
Total liabilities
& shareholders'     $ 18,031,127                           $ 18,018,889                           $ 16,274,773 
equity
                                                                                                                                   
Net interest
income / yield on
average earning                      $ 153,021     3.97                      $ 159,332     4.06                      $ 137,837     3.94
assets
Taxable
equivalent                            (3,815  )                              (4,028  )                              (3,714  )
adjustment
Net interest
income - as                          $ 149,206                              $ 155,304                              $ 134,123 
reported
                                                                                                                                   

       For presentation in this table, average balances and the corresponding
^(1)  average rates for investment securities are based upon historical cost,
       adjusted for amortization of premiums and accretion of discounts.
^(2)   Tax-exempt income has been adjusted to a tax-equivalent basis using a
       marginal tax rate of 35%.
^(3)   Average loan balances include non-accrual loans.
       


Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
                                                                                    
Appendix A - GAAP to Non-GAAP
Reconciliation
(Dollars and share 
data in thousands)
                     1Q13             4Q12             3Q12             2Q12             1Q12
Efficiency Ratio
Other expense        $ 117,729        $ 125,277        $ 122,910        $ 121,475        $ 120,355
Less: Merger           0                (1,054     )     (1,500     )     (3,318     )     (11,479    )
related expenses
Loss on
extinguishment of     0              (409       )    (5,451     )    0              0          
debt
Noninterest
operating expense    $ 117,729       $ 123,814       $ 115,959       $ 118,157       $ 108,876    
(numerator)
                                                                                         
Taxable-equivalent
net interest         $ 153,021        $ 159,332        $ 152,948          156,416          137,837
income
Other income          42,644         43,772         43,661         39,811         39,515     
Denominator          $ 195,665       $ 203,104       $ 196,609       $ 196,227       $ 177,352    
Efficiency ratio      60.17      %    60.96      %    58.98      %    60.21      %    61.39      %
                                                                                         
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'        $ 2,639,489      $ 2,595,909      $ 2,584,682      $ 2,544,730      $ 2,512,584
equity
Goodwill and other
intangible assets     (1,266,610 )    (1,263,563 )    (1,263,361 )    (1,267,630 )    (1,268,582 )
^(1)
Tangible common      $ 1,372,879     $ 1,332,346     $ 1,321,321     $ 1,277,100     $ 1,244,002  
equity (numerator)
                                                                                         
Assets               $ 17,967,174     $ 18,037,667     $ 18,106,730     $ 18,040,009     $ 17,807,026
Goodwill and other
intangible assets     (1,266,610 )    (1,263,563 )    (1,263,361 )    (1,267,630 )    (1,268,582 )
^(1)
Tangible assets      $ 16,700,564    $ 16,774,104    $ 16,843,369    $ 16,772,379    $ 16,538,444 
(denominator)
Tangible common       8.22       %    7.94       %    7.84       %    7.61       %    7.52       %
ratio

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)
                1Q13             4Q12             3Q12             2Q12             1Q12
Return on
Average
Tangible
Equity
Income
statement
data
Net income      $ 42,399         $ 43,174         $ 36,732         $ 37,793         $ 23,473
Amortization
of
intangibles,     2,124          2,127          2,169          2,211          1,789      
net of taxes
at 35%
Net tangible
income          $ 44,523        $ 45,301        $ 38,901        $ 40,004        $ 25,262     
(numerator)
                                                                                    
Average
balance sheet
data
Shareholders'   $ 2,614,319      $ 2,597,254      $ 2,562,092      $ 2,537,250      $ 2,348,326
equity
Goodwill and
other            (1,312,662 )    (1,311,192 )    (1,315,071 )    (1,320,658 )    (1,132,344 )
intangible
assets
Tangible
common equity   $ 1,301,657     $ 1,286,062     $ 1,247,021     $ 1,216,592     $ 1,215,982  
(denominator)
                                                                                    
Return on
equity (GAAP      6.58       %     6.61       %     5.70       %     5.99       %     4.02       %
basis)
Effect of
goodwill and     7.29       %    7.40       %    6.71       %    7.24       %    4.34       %
other
intangibles
Return on
average          13.87      %    14.01      %    12.41      %    13.23      %    8.36       %
tangible
equity
                                                                                    
Return on average tangible 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 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'   $ 2,639,489      $ 2,595,909      $ 2,584,682      $ 2,544,730      $ 2,512,584
equity
Goodwill and
other            (1,313,648 )    (1,311,691 )    (1,313,310 )    (1,317,036 )    (1,318,554 )
intangible
assets
Tangible
common equity   $ 1,325,841     $ 1,284,218     $ 1,271,372     $ 1,227,694     $ 1,194,030  
(numerator)
                                                                                    
Common shares
outstanding      186,800        186,554        186,465        186,221        187,856    
(denominator)
                                                                                    
Tangible book
value per       $ 7.10          $ 6.88          $ 6.82          $ 6.59          $ 6.36       
common share
                                                                                    
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.


Contact:

Susquehanna Bancshares, Inc.
INVESTOR RELATIONS:
Carl D. Lundblad, Senior Vice President
717-625-6305
or
MEDIA RELATIONS:
Stephen Trapnell, Director of Corporate Communications
717-625-6548
 
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