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Susquehanna Bancshares Profit Drops On Bad Loans

The Associated Press

LITITZ, Pa. (AP) — Regional bank holding company Susquehanna Bancshares Inc. said Wednesday its first-quarter profit fell sharply as loan losses mounted.

For the three months ended March 31, Susquehanna reported net income after paying preferred dividends of nearly $1.9 million, or 2 cents per share, down from $28 million, or 33 cents per share, in the year-ago quarter. The results matched the consensus forecast of analysts surveyed by Thomson Reuters.

Susquehanna Bancshares released earnings about two weeks after announcing its first-quarter results would fall short of expectations, primarily because of an increase in its provision for bad debt. Last week, the bank said it would cut its second-quarter dividend to 5 cents per share from 26 cents in the first quarter, in a bid to save $18 million.

On Wednesday, the bank said it nearly quadrupled its loan-loss provision to $35 million from $9.8 million in the year-ago quarter due to worsening loan quality amid the recession. Net charge-offs, or loans written off as unpaid, grew to 0.7 percent of all loans and leases, compared with 0.25 percent in last year's first quarter, and 0.6 percent in last year's fourth quarter.

Susquehanna Bancshares said its net interest margin decreased to 3.4 percent in the latest quarter from 3.7 percent in the year-ago quarter.

On the positive side, total deposits rose 3 percent to $9.1 billion compared with last year's first quarter, and net loans and leases grew 10 percent to $9.8 billion.

Shares of Susquehanna fell 46 cents, or about 5 percent, to close at $8.90.

Susquehanna Bancshares is the holding company for Susquehanna Bank, which has more than 230 branches in Pennsylvania, New Jersey, Maryland and West Virginia. Susquehanna received $300 million in December under the U.S. Treasury Department's voluntary capital purchase program.