Susquehanna Bancshares, Inc. Announces Fourth Quarter And Full Year 2012 Results

Susquehanna Bancshares, Inc. (Susquehanna) (NASDAQ: SUSQ) today announced that it earned net income for the fourth quarter ended December 31, 2012 of $43.2 million, or $0.23 per diluted share, compared to net income of $19.1 million for the fourth quarter of 2011, or $0.12 per diluted share. Net income for the year ended December 31, 2012 was $141.2 million, or $0.77 per diluted share, compared with $54.9 million, or $0.40 per diluted share for the year ended December 31, 2011.

“We established some ambitious goals for 2012,” said William J. Reuter, Chairman and Chief Executive Officer. “These results demonstrate the remarkable success of our teams in achieving our objectives for the year -- integrating the customers, employees and markets we acquired in the Abington and Tower mergers, continuing strong improvement in credit quality, growing loans, deposits and revenues, and improving core profitability and shareholder return.”

Mr. Reuter continued, “We are excited about the opportunity to build on this success in 2013 and beyond as we pursue our mission to help customers achieve their financial goals, deliver a superior return for our shareholders and build the economic strength of our communities.”

Linked Quarter Results (Fourth Quarter 2012 vs. Third Quarter 2012)
  • Loans and leases increased $219.1 million, or 1.7%, from September 30, 2012 to $12.9 billion at December 31, 2012, as significant growth in commercial loans and leases was offset by a decrease in real estate construction loans. Growth in lease balances was driven largely by increased auto leasing demand. Growth for the quarter in each major category is as follows:
    • Commercial loans increased 4.8%.
    • Real estate – construction loans decreased 6.2%.
    • Real estate secured – residential loans increased 0.4%.
    • Real estate secured – commercial loans increased 0.4%.
    • Consumer loans increased 1.5%.
    • Leases increased 15.8%.
  • Total deposits declined $145.3 million to $12.6 billion as of December 31, 2012, as a 2.1% increase in core deposits was offset by a decrease in time deposits. Growth for the quarter in each major category is as follows:
    • Non-interest bearing demand deposits increased 2.3%.
    • Interest-bearing demand deposits increased 1.9%.
    • Savings deposits increased 2.3%.
    • Time deposits decreased 8.0%.
  • Net interest margin increased 14 basis points to 4.06% for the fourth quarter of 2012 compared to 3.92% for the third quarter of 2012.
  • Non-interest income increased slightly to $43.8 million for the fourth quarter of 2012.
  • Non-interest expense for the fourth quarter of 2012 increased to $125.3 million, including pre-tax merger related expenses of $1.1 million and a $409 thousand expense relating to the early redemption of $15.5 million in certain trust preferred securities. An increase in salary and benefit expenses related principally to $4.0 million, pre-tax, in additional bonus accruals triggered by reaching the upper tier of corporate financial performance goals for 2012. Additionally, other expenses include $2.2 million, pre-tax, for settlement of litigation.
  • The efficiency ratio for the fourth quarter of 2012 was 60.96%, compared to 58.98% for the third quarter of 2012, in each case calculated after excluding pre-tax merger related expenses and loss on extinguishment of debt. This increase resulted from the additional bonus expense and litigation expense described above.
  • Net charge-offs as a percentage of average loans and leases for the quarter ended December 31, 2012 was 0.50% compared to 0.62% for the third quarter of 2012. Non-performing assets as a percentage of loans, leases and foreclosed real estate owned decreased 20 basis points from September 30, 2012 to 0.96% at December 31, 2012. The provision for loan and lease losses for the quarter ended December 31, 2012 was $13.0 million, compared to $16.0 million for the quarter ended September 30, 2012. The allowance for loan and lease losses was $184.0 million at December 31, 2012, representing 1.43% of total loans and leases and 188% of nonaccrual loans and leases, compared to $186.9 million at September 30, 2012, representing 1.47% of total loans and leases and 158% of nonaccrual loans and leases.

Fourth Quarter/Full Year Results (2012 vs. 2011)
  • Loans and leases increased 23.4% from December 31, 2011 to $12.9 billion at December 31, 2012.
    • Growth in loans and leases consisted of:
      • $2.0 billion acquired through the acquisition of Tower Bancorp, Inc. (“Tower”) on February 17, 2012; and
      • $471.3 million of internally-generated net loan growth, resulting in organic growth in loans and leases of 4.5% for the year ended December 31, 2012.
    • Commercial loans increased 21.5%.
    • Real estate - construction loans increased 2.2%.
    • Real estate secured - residential loans increased 26.6%.
    • Real estate secured - commercial loans increased 26.4%.
    • Consumer loans increased 16.6%.
    • Leases increased 33.2%.
  • Total deposits increased 22.2% from December 31, 2011 to $12.6 billion at December 31, 2012.
    • Growth in total deposits consisted of:
      • $2.1 billion of deposits assumed in the Tower acquisition; and
      • $215.2 million in organic deposit growth, resulting in organic deposit growth of 2.1% for the year ended December 31, 2012.
    • Excluding $1.3 billion in core deposits assumed in the Tower acquisition, core deposits increased by $675.4 million representing organic core deposit growth of 9.8% for the year ended December 31, 2012.
    • Non-interest-bearing demand deposits increased 25.7%.
    • Interest-bearing demand deposits increased 31.3%.
    • Savings deposits increased 18.8%.
    • Time deposits increased 9.7%.
  • Net interest margin increased 47 basis points to 4.06% compared to 3.59% for the fourth quarter of 2011, driven primarily by the balance sheet restructuring in the fourth quarter of 2011, redemption of trust preferred securities in the third quarter of 2012 and the benefits of the Tower acquisition. For the year ended December 31, 2012, the net interest margin was 4.01%, compared with 3.60% for the year ended December 31, 2011.
  • The efficiency ratio for the fourth quarter of 2012 improved to 60.96% from 66.34% in the fourth quarter of 2011, in each case calculated after excluding pre-tax merger related expenses, bargain purchase gain, and loss on extinguishment of debt. For the year ended December 31, 2012, the efficiency ratio was 60.37%, compared with 66.83% for the year ended December 31, 2011.
  • Net charge-offs as a percentage of average loans and leases for the quarter ended December 31, 2012 was 0.50% compared to 0.95% for the fourth quarter of 2011. For the year ended December 31, 2012, net charge-offs represented 0.55% of average loans and leases, compared to 1.16% for the year ended December 31, 2011. Non-performing assets as a percentage of loans, leases and foreclosed real estate was 0.96% at December 31, 2012 compared to 1.88% at December 31, 2011. The allowance for loan and lease losses was $184.0 million at December 31, 2012, representing 1.43% of total loans and leases and 188% of nonaccrual loans and leases, compared to $188.1 million at December 31, 2011, representing 1.80% of total loans and leases and 120% of nonaccrual loans and leases.
  • Return on average assets and average tangible equity (1) for the fourth quarter ended December 31, 2012 finished at 0.95% and 14.01%, respectively. This compared to results of 0.50% and 6.98% for the same measurements, respectively, for the fourth quarter of 2011.
  • Return on average assets and average tangible equity (1) for the year ended December 31, 2012 finished at 0.81% and 12.03%, respectively. This compared to results of 0.38% and 6.01% for the same measurements, respectively, for the year ended December 31, 2011.
  • 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 7.94% and 9.94%, respectively, at December 31, 2012.

(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 December 11, 2012, Susquehanna’s board of directors declared a dividend of $0.07 per common share for the first quarter of 2013, payment of which was accelerated and paid December 31, 2012 to shareholders of record December 21, 2012.
  • On December 13, 2012, Susquehanna redeemed $15.5 million of trust preferred securities originally issued by Patriot Bank Corp., with an effective rate of 9.5%.

Susquehanna will broadcast its fourth quarter 2012 results conference call over the Internet on January 24, 2013 at 11:00 a.m. Eastern time. The conference call will include management’s discussion of fourth quarter and full year 2012 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 fourth 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 $7.6 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)
 
Twelve Months YTD
4Q12 3Q12 2Q12 1Q12 4Q11 2012 2011
Balance Sheet (EOP)
Investments $ 2,730,335 $ 2,908,404 $ 2,866,119 $ 2,756,836 $ 2,423,107 $ 2,730,335 $ 2,423,107
Loans and leases 12,894,741 12,675,607 12,585,912 12,521,669 10,447,930 12,894,741 10,447,930
Allowance for loan and lease losses 184,020 186,897 190,628 194,730 188,100 184,020 188,100
Total assets 18,037,667 18,106,730 18,040,009 17,807,026 14,974,789 18,037,667 14,974,789
Deposits 12,580,046 12,725,379 12,690,524 12,563,541 10,290,472 12,580,046 10,290,472
Other short-term borrowings 817,577 762,257 648,675 723,758 613,306 817,577 613,306
Federal Home Loan Bank borrowings 1,199,062 1,110,884 1,015,724 970,673 971,020 1,199,062 971,020
Other long-term debt 513,401 639,753 678,282 692,059 656,726 513,401 656,726
Shareholders' equity 2,595,909 2,584,682 2,544,730 2,512,584 2,189,628 2,595,909 2,189,628
 
Average Balance Sheet
Investments $ 2,764,886 $ 2,811,730 $ 2,704,232 $ 2,547,408 $ 2,645,227 $ 2,707,508 $ 2,529,462
Loans and leases 12,725,886 12,612,477 12,527,713 11,411,592 10,358,071 12,321,328 9,803,863
Total earning assets 15,604,029 15,537,037 15,332,806 14,065,583 13,128,969 15,137,244 12,431,749
Total assets 18,018,889 18,021,108 17,799,678 16,274,773 15,274,808 17,531,297 14,362,778
Deposits 12,602,430 12,588,697 12,471,296 11,354,537 10,300,061 12,256,107 9,595,126
Other short-term borrowings 810,517 748,841 726,309 642,128 588,657 732,209 658,477
Federal Home Loan Bank borrowings 1,166,765 1,072,555 1,082,293 985,294 1,163,229 1,076,962 1,123,801
Other long-term debt 560,906 727,382 686,492 673,722 666,277 662,027 684,065
Shareholders' equity 2,597,254 2,562,092 2,537,250 2,348,326 2,217,036 2,511,604 2,055,717
 
Income Statement
Net interest income $ 155,304 $ 149,142 $ 152,670 $ 134,123 $ 115,201 $ 591,238 $ 433,150
Provision for loan and lease losses 13,000 16,000 16,000 19,000 22,000 64,000 110,000
Noninterest income 43,772 43,661 39,811 39,515 71,347 166,759 182,668
Noninterest expense 125,277 122,910 121,475 120,355 162,395 490,017 460,180
Income before taxes 60,799 53,893 55,006 34,283 2,153 203,980 45,638
Provision for income taxes 17,625 17,161 17,213 10,810 (16,976 ) 62,808 (9,267 )
Net income 43,174 36,732 37,793 23,473 19,129 141,172 54,905
Basic earnings per common share 0.23 0.20 0.20 0.14 0.12 0.77 0.40
Diluted earnings per common share 0.23 0.20 0.20 0.14 0.12 0.77 0.40
Cash dividends paid per common share 0.14 0.06 0.05 0.03 0.03 0.28 0.08
 
Asset Quality
Net charge-offs (NCOs) $ 15,877 $ 19,731 $ 20,102 $ 12,370 $ 24,860 $ 68,080 $ 113,734
 
Nonaccrual loans and leases $ 97,767 $ 118,448 $ 127,250 $ 133,489 $ 156,478 $ 97,767 $ 156,478
Foreclosed real estate   26,245   28,641   31,302   36,456   41,050     26,245   41,050  
Total nonperforming assets (NPAs) $ 124,012 $ 147,089 $ 158,552 $ 169,945 $ 197,528   $ 124,012 $ 197,528  
 
Restructured loans $ 67,775 $ 56,823 $ 66,777 $ 72,081 $ 72,852 $ 67,775 $ 72,852
Loans and leases 90 days past due 8,209 8,451 11,203 9,758 10,077 8,209 10,077
 

             

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA 17543
 
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
 
Twelve Months YTD
4Q12 3Q12 2Q12 1Q12 4Q11 2012 2011
 
Credit Quality
NCOs / Average loans and leases 0.50 % 0.62 % 0.65 % 0.44 % 0.95 % 0.55 % 1.16 %
NPAs / Loans and leases + foreclosed real estate 0.96 % 1.16 % 1.26 % 1.35 % 1.88 % 0.96 % 1.88 %
ALLL / Nonaccrual loans and leases 188.22 % 157.79 % 149.81 % 145.88 % 120.21 % 188.22 % 120.21 %
ALLL / Total loans and leases 1.43 % 1.47 % 1.51 % 1.56 % 1.80 % 1.43 % 1.80 %
 
Profitability
Return on average assets 0.95 % 0.81 % 0.85 % 0.58 % 0.50 % 0.81 % 0.38 %
Return on average equity 6.61 % 5.70 % 5.99 % 4.02 % 3.42 % 5.62 % 2.67 %
Return on average tangible equity (1) 14.01 % 12.41 % 13.23 % 8.36 % 6.98 % 12.03 % 6.01 %
Net interest margin 4.06 % 3.92 % 4.10 % 3.94 % 3.59 % 4.01 % 3.60 %
Efficiency ratio (1) 60.96 % 58.98 % 60.21 % 61.39 % 66.34 % 60.37 % 66.83 %
 
Per Share Data (EOP)
Closing share price $ 10.48 $ 10.45 $ 10.28 $ 9.88 $ 8.38 $ 10.48 $ 8.38
Stated book value per common share 13.92 13.86 13.67 13.48 13.96 13.92 13.96
Tangible book value per common share (1) 6.88 6.82 6.59 6.36 7.28 6.88 7.28
Price/Book Value 75.31 % 75.39 % 75.20 % 73.29 % 60.03 % 75.31 % 60.03 %
Price/Tangible Book Value 152.33 % 153.23 % 155.99 % 155.35 % 115.11 % 152.33 % 115.11 %
Number of outstanding shares ('000) 186,554 186,465 186,221 187,856 156,867 186,554 156,867
 
Capital Ratios
Tangible common ratio (1) 7.94 % 7.84 % 7.61 % 7.52 % 8.50 % 7.94 % 8.50 %
Tier 1 common ratio 9.94 % 10.07 % 9.97 % 9.83 % 10.76 % 9.94 % 10.76 %
Leverage ratio 8.98 % 8.97 % 9.95 % 10.79 % 10.73 % 8.98 % 10.73 %
Tier 1 capital ratio 11.08 % 11.37 % 12.63 % 12.54 % 13.65 % 11.08 % 13.65 %
Total risk-based capital ratio 12.63 % 13.14 % 14.38 % 14.30 % 15.41 % 12.63 % 15.41 %
 

(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)
(in thousands)

December 31,
September 30, June 30, March 31, December 31,
2012 2012 2012 2012 2011
 
Assets
Cash and due from banks $ 277,042 $ 380,100 $ 412,282 $ 350,793 $ 276,384
Unrestricted short-term investments   39,550     24,826     31,239     27,067     55,761  
Cash and cash equivalents 316,592 404,926 443,521 377,860 332,145

Interest-bearing deposits held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities
4,423 3,679 5,485 4,932 5,015

Restricted short-term investments
75,203 76,103 67,650 60,600 60,910
Securities available for sale 2,577,901 2,763,477 2,719,186 2,620,245 2,295,034
Restricted investment in bank stocks 152,434 144,927 146,933 136,591 128,073
Loans and leases, net of deferred costs and fees 12,728,082 12,503,737 12,409,181 12,337,688 10,257,161

Loans held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities
166,659 171,870 176,731 183,981 190,769

Less: Allowance for loan and lease losses
  184,020     186,897     190,628     194,730     188,100  

                    Net loans and leases
  12,710,721     12,488,710     12,395,284     12,326,939     10,259,830  
Premises and equipment, net 188,983 190,793 193,404 196,011 168,382
Other real estate and foreclosed assets 31,017 33,735 37,220 40,748 41,716
Accrued interest receivable 40,304 44,681 41,274 43,928 36,820
Bank-owned life insurance 450,270 448,866 449,023 447,686 405,296
Goodwill 1,270,359 1,268,761 1,269,205 1,264,892 1,018,031
Intangible assets with finite lives 41,332 44,549 47,831 53,662 29,081
Deferred income tax assets 4,685 30,682 47,914 35,776 6,344
Other assets   173,443     162,841     176,079     197,156     188,112  

                    Total assets
$ 18,037,667   $ 18,106,730   $ 18,040,009   $ 17,807,026   $ 14,974,789  
Liabilities and Shareholders' Equity
Deposits $ 12,580,046 $ 12,725,379 $ 12,690,524 $ 12,563,541 $ 10,290,472
Federal Home Loan Bank short-term borrowings 1,098,000 1,000,000 900,000 850,000 900,000
Other short-term borrowings 817,577 762,257 648,675 723,758 613,306
Federal Home Loan Bank long-term borrowings 101,062 110,884 115,724 120,673 71,020
Other long-term debt 251,021 349,984 200,298 200,611 176,030
Junior subordinated debentures 154,927 171,370 346,393 346,395 323,317

Long-term debt of consolidated variable interest entities for which creditors do not have recourse to Susquehanna's general credit
107,453 118,399 131,591 145,053 157,379
Accrued interest, taxes, and expenses payable 81,808 72,060 83,102 69,787 50,670
Deferred income tax liabilities 14,475 0 0 0 25,827
Other liabilities   235,389     211,715     378,972     274,624     177,140  

                    Total liabilities
  15,441,758     15,522,048     15,495,279     15,294,442     12,785,161  
Shareholders' equity:
Common stock 373,623 373,352 372,848 376,117 314,136
Treasury stock (1,850 ) (1,368 ) (1,282 ) (1,278 ) (1,263 )
Additional paid-in capital 1,645,958 1,645,692 1,643,474 1,638,562 1,397,152
Retained earnings 615,436 598,371 572,818 544,476 525,657
Accumulated other comprehensive loss   (37,258 )   (31,365 )   (43,128 )   (45,293 )   (46,054 )

                    Total shareholders' equity
  2,595,909     2,584,682     2,544,730     2,512,584     2,189,628  

                    Total liabilities and shareholders' equity
$ 18,037,667   $ 18,106,730   $ 18,040,009   $ 17,807,026   $ 14,974,789  

 

 

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA 17543
         
Loans and Leases and Deposits
(in thousands)
Loans and Leases
  12/31/12   09/30/12   06/30/12   03/31/12   12/31/11
Commercial, financial, and agricultural $ 2,273,611 $ 2,168,708 $ 2,101,561 $ 2,088,948 $ 1,871,027
Real estate - construction 847,781 904,285 936,996 993,819 829,221
Real estate secured - residential 4,065,818 4,047,761 3,970,115 3,945,565 3,212,562
Real estate secured - commercial 3,964,608 3,947,447 4,034,109 4,022,788 3,136,887
Consumer 842,552 829,760 805,490 775,913 722,329
Leases   900,371   777,646   737,641   694,636   675,904
Total loans and leases $ 12,894,741 $ 12,675,607 $ 12,585,912 $ 12,521,669 $ 10,447,930
 
 
Deposits
  12/31/12   09/30/12   06/30/12   03/31/12   12/31/11
Demand $ 1,973,664 $ 1,929,529 $ 1,940,990 $ 1,947,525 $ 1,569,811
Interest-bearing demand 5,829,147 5,717,663 5,423,198 5,496,237 4,439,488
Savings   1,032,293   1,009,110   1,007,157   1,008,042   868,709
Core deposits 8,835,104 8,656,302 8,371,345 8,451,804 6,878,008
Time less than $100 2,262,262 2,341,623 2,441,902 2,527,383 2,157,282
Time of $100 or more   1,482,680   1,727,454   1,877,277   1,584,354   1,255,182
Total deposits $ 12,580,046 $ 12,725,379 $ 12,690,524 $ 12,563,541 $ 10,290,472
 

 

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA 17543
         
Supplemental Loan and Lease Data
(in thousands)
Nonaccrual Loans and Leases
  12/31/12   09/30/12   06/30/12   03/31/12   12/31/11
Commercial, financial, and agricultural $ 10,464 $ 10,572 $ 16,076 $ 20,616 $ 14,385
Real estate - construction 14,817 22,534 25,985 30,644 37,727
Real estate secured - residential 28,440 30,740 31,723 33,137 41,922
Real estate secured - commercial 42,621 52,390 52,296 47,423 61,497
Consumer 43 211 263 505 0
Leases   1,382   2,001   907   1,164   947
Total nonaccrual loans and leases $ 97,767 $ 118,448 $ 127,250 $ 133,489 $ 156,478
 
 
Restructured Loans
  12/31/12   09/30/12   06/30/12   03/31/12   12/31/11
Commercial, financial, and agricultural $ 8,744 $ 7,254 $ 9,130 $ 9,547 $ 12,181
Real estate - construction 940 943 3,979 3,980 3,902
Real estate secured - residential 23,224 20,828 16,494 15,167 17,634
Real estate secured - commercial 33,589 27,192 36,671 42,883 38,565
Consumer   1,278   606   503   504   570
Total restructured loans $ 67,775 $ 56,823 $ 66,777 $ 72,081 $ 72,852
 
 
Net Charge-offs (Recoveries)
4Q 2012 3Q 2012 2Q 2012 1Q 2012 4Q 2011
Commercial, financial, and agricultural $ 233 $ 3,757 $ 7,145 $ 2,108 $ 1,557
Real estate - construction 3,311 2,909 4,987 2,830 8,484
Real estate secured - residential 3,738 2,470 2,553 3,652 2,641
Real estate secured - commercial 6,704 9,439 4,485 2,271 10,897
Consumer 707 448 53 928 503
Leases   1,184   708   879   581   778
Total net charge-offs $ 15,877 $ 19,731 $ 20,102 $ 12,370 $ 24,860
 

 

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

Twelve Months Ended
December 31,   September 30,   June 30, March 31, December 31, December 31,
2012 2012 2012 2012 2011 2012 2011
 
Net interest income $ 155,304 $ 149,142 $ 152,670 $ 134,123 $ 115,201 $ 591,238 $ 433,150
Provision for loan and lease losses   13,000     16,000     16,000     19,000     22,000     64,000     110,000  
Net interest income, after provision for loan and lease losses   142,304     133,142     136,670     115,123     93,201     527,238     323,150  
Noninterest Income:
Service charges on deposit accounts 9,158 9,013 8,583 7,674 7,689 34,428 31,728
Vehicle origination and servicing fees 3,746 2,470 2,226 1,924 1,984 10,366 7,862
Asset management fees 7,340 7,366 7,359 7,073 6,821 29,138 28,153
Income from fiduciary-related activities 2,619 2,485 2,539 2,622 1,827 10,266 7,333
Commissions on brokerage, life insurance and annuity sales 1,923 2,072 2,399 1,907 1,697 8,301 8,202
Commissions on property and casualty insurance sales 3,749 3,158 3,930 5,058 3,638 15,894 14,047
Other commissions and fees 6,680 5,387 4,800 4,643 4,147 21,510 23,728
Income from bank-owned life insurance 1,603 1,726 1,631 1,472 1,539 6,471 4,931
Net gain on sale of loans and leases 6,160 5,938 4,396 3,750 3,324 20,244 12,747
Net realized gain on acquisition 0 0 0 0 39,143 0 39,143
Net realized gain (loss) on sales of securities (103 ) 31 1,361 385 (706 ) 1,674 3,878
Total other-than-temporary impairment, net of recoveries 749 136 4,676 (2,706 ) (1,132 ) 2,855 (6,392 )

Portion of recognized in other comprehensive income (before taxes)
  (846 )   (136 )   (4,676 )   2,562     828     (3,096 )   3,028  
Net impairment losses recognized in earnings (97 ) 0 0 (144 ) (304 ) (241 ) (3,364 )
Other   994     4,015     587     3,151     548     8,708     4,280  
Total noninterest income   43,772     43,661     39,811     39,515     71,347     166,759     182,668  
Noninterest Expenses:
Salaries and employee benefits 66,865 62,236 64,524 57,958 51,515 251,583 209,235
Occupancy 11,345 11,350 11,725 10,810 9,948 45,231 37,446
Furniture and equipment 3,976 3,823 4,309 3,617 3,148 15,725 12,596
Advertising and marketing 3,029 2,947 3,287 3,054 2,846 12,317 11,470
FDIC insurance 5,264 5,275 4,769 5,178 4,219 20,486 16,602
Legal fees 2,178 2,012 1,907 2,053 2,542 8,150 9,302
Amortization of intangible assets 3,272 3,337 3,402 2,753 2,290 12,525 8,705
Vehicle lease disposal 1,361 1,401 1,745 1,836 2,851 6,342 10,584
Merger related 1,054 1,500 3,318 11,479 12,211 17,351 14,991
Loss on extinguishment of debt 409 5,451 0 0 50,020 5,860 50,020
Other   26,524     23,578     22,489     21,617     20,805     94,447     79,229  
Total noninterest expenses   125,277     122,910     121,475     120,355     162,395     490,017     460,180  
Income before income taxes 60,799 53,893 55,006 34,283 2,153 203,980 45,638
Provision (benefit) for income taxes   17,625     17,161     17,213     10,810     (16,976 )   62,808     (9,267 )
Net Income $ 43,174   $ 36,732   $ 37,793   $ 23,473   $ 19,129   $ 141,172   $ 54,905  
 
Earnings per common share:
Basic $ 0.23 $ 0.20 $ 0.20 $ 0.14 $ 0.12 $ 0.77 $ 0.40
Diluted $ 0.23 $ 0.20 $ 0.20 $ 0.14 $ 0.12 $ 0.77 $ 0.40
Cash dividends per common share $ 0.14 $ 0.06 $ 0.05 $ 0.03 $ 0.03 $ 0.28 $ 0.08
Average common shares outstanding:
Basic 186,353 186,214 187,616 171,326 156,492 182,896 136,509
Diluted 186,990 187,004 188,301 171,973 156,802 183,578 136,876
 

                             

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA 17543
 

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
(Dollars in thousands)
Interest rates and interest differential-taxable equivalent basis
 
Three Months Ended Three Months Ended Three Months Ended Twelve Months Ended Twelve Months Ended
December 31, 2012 September 30, 2012 December 31, 2011 December 31, 2012 December 31, 2011
Average Average Average Average Average
Balance   Interest   Rate (%) Balance   Interest  

Rate (%)
Balance   Interest   Rate (%) Balance   Interest   Rate (%) Balance   Interest   Rate (%)
Assets
Short-term investments $ 113,257 $ 43 0.15 $ 112,830 $ 36 0.13 $ 125,671 $ 28 0.09 $ 108,408 $ 143 0.13 $ 98,424 $ 108 0.11
Investment securities:
Taxable 2,362,815 12,383 2.08 2,421,414 13,434 2.21 2,253,121 14,133 2.49 2,320,582 53,659 2.31 2,129,908 61,845 2.90
Tax-exempt   402,071     5,591   5.53   390,316     5,568   5.68   392,106     5,980   6.05   386,926     22,518   5.82   399,554     24,355   6.10
Total investment securities   2,764,886     17,974   2.59   2,811,730     19,002   2.69   2,645,227     20,113   3.02   2,707,508     76,177   2.81   2,529,462     86,200   3.41
Loans and leases, (net):
Taxable 12,295,737 159,862 5.17 12,222,031 160,532 5.23 10,027,865 131,993 5.22 11,934,701 628,426 5.27 9,492,521 505,607 5.33
Tax-exempt   430,149     5,914   5.47  

390,446
    5,305   5.41   330,206     4,246   5.10   386,627     21,175   5.48   311,342     17,503   5.62
Total loans and leases   12,725,886     165,776   5.18   12,612,477     165,837   5.23   10,358,071     136,239   5.22   12,321,328     649,601   5.27   9,803,863     523,110   5.34
 
Total interest-earning assets 15,604,029   183,793   4.69 15,537,037   184,875   4.73 13,128,969   156,380   4.73 15,137,244   725,921   4.80 12,431,749   609,418   4.90
Allowance for loan and lease losses (186,695 ) (189,406 ) (192,794 ) (189,368 ) (194,746 )
Other non-earning assets   2,601,555     2,673,477     2,338,633     2,583,421     2,125,775  
 
Total assets $ 18,018,889   $ 18,021,108   $ 15,274,808   $ 17,531,297   $ 14,362,778  
 
Liabilities
Deposits:
Interest-bearing demand $ 5,802,600 4,777 0.33 $ 5,537,196 4,817 0.35 $ 4,393,811 5,482 0.49 $ 5,453,701 20,603 0.38 $ 3,884,182 21,323 0.55
Savings 1,018,704 273 0.11 1,002,981 274 0.11 875,522 293 0.13 989,123 1,208 0.12 815,066 1,161 0.14
Time 3,834,971 11,649 1.21 4,110,685 12,085 1.17 3,502,751 11,409 1.29 3,939,528 47,168 1.20 3,482,801 54,294 1.56
Other short-term borrowings 810,517 2,205 1.08 748,841 2,206 1.17 588,657 2,179 1.47 732,209 8,711 1.19 658,477 8,133 1.24
FHLB borrowings 1,166,765 3,753 1.28 1,072,555 3,553 1.32 1,163,229 9,836 3.35 1,076,962 13,723 1.27 1,123,801 42,024 3.74
Long-term debt   560,906     1,804   1.28   727,382     8,992   4.92   666,277     8,401   5.00   662,027     27,979   4.23   684,065     34,683   5.07
 
Total interest-bearing liabilities 13,194,463   24,461   0.74 13,199,640   31,927   0.96 11,190,247   37,600   1.33 12,853,550   119,392   0.93 10,648,392   161,618   1.52
Demand deposits 1,946,155 1,937,835 1,527,977 1,873,755 1,413,077
Other liabilities   281,017     321,541     339,548     292,388     245,592  
 
Total liabilities 15,421,635 15,459,016 13,057,772 15,019,693 12,307,061
 
Equity   2,597,254     2,562,092     2,217,036     2,511,604     2,055,717  
 
Total liabilities & shareholders' equity $ 18,018,889   $ 18,021,108   $ 15,274,808   $ 17,531,297   $ 14,362,778  

 

Net interest income / yield on average earning assets
$ 159,332 4.06 $ 152,948 3.92 $ 118,780 3.59 $ 606,529 4.01 $ 447,800 3.60
Taxable equivalent adjustment   (4,028 )   (3,806 )   (3,579 )   (15,291 )   (14,650 )
Net interest income - as reported $ 155,304   $ 149,142   $ 115,201   $ 591,238   $ 433,150  
 

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) Twelve Months Ended
4Q12 3Q12 2Q12 1Q12 4Q11 2012 2011

Efficiency Ratio
Other expense $ 125,277 $ 122,910 $ 121,475 $ 120,355 $ 162,395 $ 490,017 $ 460,180
Less: Merger related expenses (1,054 ) (1,500 ) (3,318 ) (11,479 ) (12,211 ) (17,351 ) (14,991 )
Loss on extinguishment of debt   (409 )   (5,451 )   0     0     (50,020 )   (5,860 )   (50,020 )
Noninterest operating expense (numerator) $ 123,814   $ 115,959   $ 118,157   $ 108,876   $ 100,164   $ 466,806   $ 395,169  
 
Taxable-equivalent net interest income $ 159,332 $ 152,948 156,416 137,837 118,780 606,529 447,800
Other income 43,772 43,661 39,811 39,515 71,347 166,759 182,668
Less: Net realized gain on acquisition   0     0     0     0     (39,143 )   0     (39,143 )
Denominator $ 203,104   $ 196,609   $ 196,227   $ 177,352   $ 150,984   $ 773,288   $ 591,325  
Efficiency ratio   60.96 %   58.98 %   60.21 %   61.39 %   66.34 %   60.37 %   66.83 %
 
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 $ 2,595,909 $ 2,584,682 $ 2,544,730 $ 2,512,584 $ 2,189,628 $ 2,595,909 $ 2,189,628
Goodwill and other intangible assets (1)   (1,263,563 )   (1,263,361 )   (1,267,630 )   (1,268,582 )   (1,006,412 )   (1,263,563 )   (1,006,412 )
Tangible common equity (numerator) $ 1,332,346   $ 1,321,321   $ 1,277,100   $ 1,244,002   $ 1,183,216   $ 1,332,346   $ 1,183,216  
 
Assets $ 18,037,667 $ 18,106,730 $ 18,040,009 $ 17,807,026 $ 14,974,789 $ 18,037,667 $ 14,974,789
Goodwill and other intangible assets (1)   (1,263,563 )   (1,263,361 )   (1,267,630 )   (1,268,582 )   (1,047,112 )   (1,263,563 )   (1,047,112 )
Tangible assets (denominator) $ 16,774,104   $ 16,843,369   $ 16,772,379   $ 16,538,444   $ 13,927,677   $ 16,774,104   $ 13,927,677  
Tangible common ratio   7.94 %   7.84 %   7.61 %   7.52 %   8.50 %   7.94 %   8.50 %
 

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)

Twelve Months Ended

Return on Average Tangible Equity

4Q12

3Q12

2Q12

1Q12

4Q11

2012

2011
Income statement data
Net income $ 43,174 $ 36,732 $ 37,793 $ 23,473 $ 19,129 $ 141,172 $ 54,905
Amortization of intangibles, net of taxes at 35%   2,127     2,169     2,211     1,789     1,489     8,141     5,658  
Net tangible income (numerator) $ 45,301   $ 38,901   $ 40,004   $ 25,262   $ 20,618   $ 149,313   $ 60,563  
 
Average balance sheet data
Shareholders' equity $ 2,597,254 $ 2,562,092 $ 2,537,250 $ 2,348,326 $ 2,217,036 $ 2,511,604 $ 2,055,717
Goodwill and other intangible assets   (1,311,192 )   (1,315,071 )   (1,320,658 )   (1,132,344 )   (1,045,580 )   (1,270,053 )   (1,048,014 )
Tangible common equity (denominator) $ 1,286,062   $ 1,247,021   $ 1,216,592   $ 1,215,982   $ 1,171,456   $ 1,241,551   $ 1,007,703  
 
Return on equity (GAAP basis) 6.61 % 5.70 % 5.99 % 4.02 % 3.42 % 5.62 % 2.67 %
Effect of goodwill and other intangibles   7.40 %   6.71 %   7.24 %   4.34 %   3.56 %   6.41 %   3.34 %
Return on average tangible equity   14.01 %   12.41 %   13.23 %   8.36 %   6.98 %   12.03 %   6.01 %
 
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' equity $ 2,595,909 $ 2,584,682 $ 2,544,730 $ 2,512,584 $ 2,189,628 $ 2,595,909 $ 2,189,628
Goodwill and other intangible assets   (1,311,691 )   (1,313,310 )   (1,317,036 )   (1,318,554 )   (1,047,112 )   (1,311,691 )   (1,047,112 )
Tangible common equity (numerator) $ 1,284,218   $ 1,271,372   $ 1,227,694   $ 1,194,030   $ 1,142,516   $ 1,284,218   $ 1,142,516  
 
Common shares outstanding (denominator)   186,554     186,465     186,221     187,856     156,867     186,554     156,867  
 
Tangible book value per common share $ 6.88   $ 6.82   $ 6.59   $ 6.36   $ 7.28   $ 6.88   $ 7.28  
 
 
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.

Copyright Business Wire 2010

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