Susquehanna Bancshares, Inc. Announces First Quarter 2012 Results

First Quarter Highlights

• GAAP EPS of $0.14 Including Merger-Related Expenses
• Net Interest Margin Increase to 3.94%
• Significant Improvement in Credit Quality Metrics
• Organic Growth in Loans and Core Deposits
• Efficiency Ratio Improves to 61.39%
• Second Quarter Dividend Increase to $0.05 Per Share

LITITZ, Pa.--(BUSINESS WIRE)--Susquehanna Bancshares, Inc. (Susquehanna) (NASDAQ: SUSQ) today announced net income applicable to common shareholders for the first quarter ended March 31, 2012 of $23.5 million, or $0.14 per diluted share, compared to net income applicable to common shareholders of $9.8 million for the first quarter of 2011, or $0.08 per diluted share.

“Following the successful completion of the Tower Bancorp, Inc. acquisition in the middle of the first quarter, our energies are focused on executing our relationship-based community banking strategy,” stated William J. Reuter, Chairman and Chief Executive Officer. “We are pleased with the significant progress made during the first quarter toward achieving our strategic objectives for 2012, including continuing our strong progress in improving credit quality; successfully integrating the team and operations from Tower Bancorp; growing loans, deposits and revenues; and increasing profitability and shareholder dividends.”

First Quarter Financial Results:

• Loans and leases, net of unearned income, increased 30.3% from March 31, 2011 to $12.5 billion at March 31, 2012.
  • Growth in loans and leases consisted of:
    • $633.7 million acquired through the acquisition of Abington Bancorp, Inc.;
    • $2.0 billion acquired through the Tower acquisition; and
    • $323.2 million of internally-generated loan growth, resulting in internal growth in loans and leases of 3.4% for the trailing four quarters.
  • Commercial loans increased 16.1% from March 31, 2011.
  • Real estate - construction loans increased 20.5% from March 31, 2011.
  • Real estate secured - residential loans increased 46.7% from March 31, 2011
  • Real estate secured - commercial loans increased 34.8% from March 31, 2011.
  • Consumer loans increased 23.9% from March 31, 2011.
  • Leases increased 1.5% from March 31, 2011.
• Total deposits increased 35.4% from March 31, 2011 to $12.6 billion at March 31, 2012.
  • Growth in total deposits consisted of:
    • $840.0 million of deposits assumed in the Abington acquisition;
    • $2.0 billion of deposits assumed in the Tower acquisition; and
    • $411.2 million in organic deposit growth, resulting in organic deposit growth of 4.4% for the trailing four quarters.
  • Non-interest-bearing demand deposits increased 40.4% from March 31, 2011.
  • Interest-bearing demand deposits increased 49.8% from March 31, 2011.
  • Savings deposits increased 26.2% from March 31, 2011.
  • Time deposits increased 20% from March 31, 2011.

• Net interest margin increased 31 basis points to 3.94% compared to 3.63% for the first quarter of 2011, driven by the balance sheet restructuring in the fourth quarter, purchase accounting in connection with the Tower acquisition, the addition of the Tower deposit and loan portfolios and continued core reduction in funding costs at Susquehanna.
• Non-core items for the first quarter of 2012 were after-tax merger related expenses of $7.9 million.
• The efficiency ratio for the first quarter of 2012 improved to 61.39% from 65.28% in the first quarter of 2011, in each case calculated after excluding pre-tax merger related expenses.

First Quarter Financial Results (Continued):

• Net charge-offs as a percentage of average loans and leases for the quarter ended March 31, 2012 was 0.44% compared to 1.42% for the first quarter of 2011. Non-performing assets as a percentage of loans, leases and foreclosed real estate was 1.35% at March 31, 2012 compared to 2.49% at March 31, 2011. The provision for loan losses for the quarter ended March 31, 2012 was $19.0 million, compared to $35.0 million for the quarter ended March 31, 2011. The allowance for loan and leases losses was $194.7 million at March 31, 2012, representing 1.56% of total loans and leases and 146% of nonaccrual loans and leases, compared to $193.2 million at March 31, 2011, representing 2.01% of total loans and leases and 91% of nonaccrual loans and leases.
• Return on average assets and average tangible equity ⁽¹⁾ for the first quarter ended March 31, 2012 finished at 0.58% and 8.36%, respectively. This compared to results of 0.28% and 4.86% for the same measurements, respectively, for the first quarter of 2011.
• Susquehanna’s regulatory capital ratios are as follows:

	At March 31, 2012	Preliminary Minimum Basel III Requirements
Tangible Common Ratio^(2)	7.65%	N/A
Tier 1 Common Ratio	9.96%	7.0 %
Leverage Ratio	10.74%	4.0 %
Tier 1 Capital Ratio	12.47%	8.5 %
Total Risk-Based Capital Ratio	14.45%	10.5 %

⁽¹⁾ A non-GAAP-based financial measure. The most comparable GAAP-based measurement for return on average tangible equity is return on average equity. A reconciliation of the differences between non-GAAP-based and GAAP-based measurements can be found at the end of this release under the heading "Supplemental Reporting of Non-GAAP-Based Financial Measures."

⁽²⁾ Includes deferred tax liability associated with intangibles of $50.0 million

Linked Quarter Results (First Quarter 2012 vs. Fourth Quarter 2011)

• Loans and leases, net of unearned income, increased 19.8% from December 31, 2011 to $12.5 billion at March 31, 2012.
  • Growth in loans and leases consisted of:
    • $2.0 billion acquired through the Tower acquisition; and
    • $117 million of internally generated loan growth, resulting in internal growth in loans and leases of 1.1% for the quarter.
  • Commercial loans increased 11.6% from December 31, 2011, or 4.3% if the acquired Tower loans are excluded.
  • Real estate construction loans increased 19.9% from December 31, 2011, or declined 5.4% if the acquired Tower loans are excluded.
  • Real estate secured – residential loans increased 22.8% from December 31, 2011, or decreased 0.5% if the acquired Tower loans are excluded.
  • Real estate secured – commercial loans increased 28.2% from December 31, 2011, or 1.2% if the acquired Tower loans are excluded.
  • Consumer loans increased 7.4% from December 31, 2011, or 5.5% if the acquired Tower loans are excluded.
  • Leases increased 2.8% from December 31, 2011.

• Total deposits increased 22.1% from December 31, 2011 to $12.6 billion at March 31, 2012.
  • Growth in total deposits consisted of:
    • $2.0 billion of deposits assumed in the Tower acquisition; and
    • $241.6 million of organic deposit growth, resulting in organic deposit growth of 2.3% for the quarter.
  • Non-interest bearing demand deposits increased 24.1% from December 31, 2011, or 0.8% if the Tower deposits are excluded.
  • Interest-bearing demand deposits increased 23.8% from December 31, 2011, or 4.2% if the Tower deposits are excluded.
  • Savings deposits increased 16.0% from December 31, 2011, or 3.8% if the Tower deposits are excluded.
  • Time deposits increased 20.5% from December 31, 2011, or 0.3% excluding the Tower deposits.

• Net interest margin increased 35 basis points to 3.94% compared to 3.59% for the fourth quarter of 2011, driven by the balance sheet restructuring in the fourth quarter, purchase accounting in connection with the Tower acquisition, the addition of the Tower deposit and loan portfolios and continued core reduction in funding costs at Susquehanna.
• The efficiency ratio for the first quarter of 2012 improved to 61.39% from 66.34% for the fourth quarter of 2011, in each case calculated after excluding pre-tax merger related income and expenses.
• Net charge-offs as a percentage of average loans and leases for the quarter ended March 31, 2012 was 0.44% compared to 0.95% for the fourth quarter of 2011. Non-performing assets as a percentage of loans, leases and foreclosed real estate owned decreased 53 basis points from December 31, 2011 to 1.35% at March 31, 2012.

Additional Events:

• On February 17, 2012, Susquehanna completed the acquisition of Tower Bancorp, Inc., creating Pennsylvania’s largest community bank and expanding Susquehanna’s branch network into State College and Fulton and Lebanon counties in Pennsylvania, in addition to enhancing Susquehanna’s existing presence in key markets in central and southeastern Pennsylvania as well as Maryland. In connection with the merger, Andrew Samuel, former Chairman and Chief Executive Officer of Tower, assumed the role of President and Chief Revenue Officer of Susquehanna.
• On April 18, 2012, Susquehanna’s Board of Directors declared a second quarter dividend of $0.05 per common share, payable May 18, 2012 to shareholders of record as of May 1, 2012. This represents a $0.02 increase from the first quarter dividend of $0.03 per share.

Susquehanna will broadcast its first quarter 2012 results conference call over the Internet on April 26, 2012 at 11:00 a.m. Eastern time. The conference call will include management’s discussion of first 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 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 greater than $17.5 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; inability to achieve merger-related synergies; difficulties in integrating distinct business operations, including information technology difficulties; 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
(Dollars in thousands, except per common share data)
	1Q12		4Q11			1Q11
Balance Sheet (EOP)
Investments	$	2,756,836	$	2,423,107		$	2,470,969
Loans and leases		12,521,669		10,447,930			9,607,998
Allowance for loan & lease losses (ALLL)		194,730		188,100			193,233
Total assets		17,826,301		14,974,789			13,951,525
Deposits		12,563,541		10,290,472			9,280,857
Short-term borrowings		723,758		613,306			609,284
Federal Home Loan Bank borrowings		970,673		971,020			1,091,125
Other long-term debt		692,059		499,347			694,398
Shareholders' equity		2,531,859		2,189,628			1,999,492
Stated book value per common share		13.48		13.96			15.38
Tangible book value per common share		6.46		7.28			7.31
Average Balance Sheet
Investments	$	2,547,408	$	2,645,227		$	2,477,775
Loans and leases		11,411,592		10,358,071			9,584,098
Total earning assets		14,065,583		13,128,969			12,141,223
Total assets		16,274,773		15,274,808			13,965,750
Deposits		11,354,537		10,300,061			9,242,855
Other short-term borrowings		642,128		588,657			747,763
FHLB borrowings		985,294		1,163,229			1,100,358
Other long-term debt		673,722		666,277			700,526
Shareholders' equity		2,348,326		2,217,036			1,983,560
Income Statement
Net interest income	$	134,123	$	115,201		$	105,023
Provision for loan and lease losses		19,000		22,000			35,000
Noninterest income		39,515		71,347			37,467
Noninterest expense		120,355		162,395			95,883
Income before taxes		34,283		2,153			11,607
Provision for income taxes		10,810		(16,976	)		1,846
Net income		23,473		19,129			9,761
Basic earnings per common share		0.14		0.12			0.08
Diluted earnings per common share		0.14		0.12			0.08
Cash dividends paid per common share		0.03		0.03			0.01
Asset Quality
Net charge-offs (NCOs)	$	12,370	$	24,860		$	33,601
Nonaccrual loans & leases	$	133,489	$	156,478		$	212,941
Foreclosed real estate		36,456		41,050			26,739
Total nonperforming assets (NPAs)	$	169,945	$	197,528		$	239,680
Restructured loans	$	72,081	$	72,852		$	78,459
Loans & leases 90 days past due		9,758		10,077			10,278

Susquehanna Bancshares, Inc. 26 North Cedar Street Lititz, PA 17543
RATIO ANALYSIS	1Q12		4Q11		1Q11
Credit Quality
NCOs / Average loans & leases	0.44	%	0.95	%	1.42	%
NPAs / Loans & leases + foreclosed real estate	1.35	%	1.88	%	2.49	%
ALLL / Nonaccrual loans & leases	145.88	%	120.21	%	90.74	%
ALLL / Total loans & leases	1.56	%	1.80	%	2.01	%
Capital Adequacy
Equity / Assets	14.20	%	14.62	%	14.33	%
Long-term debt / Equity	27.33	%	22.81	%	34.73	%
Profitability
Return on average assets	0.58	%	0.50	%	0.28	%
Return on average equity	4.02	%	3.42	%	2.00	%
Return on average tangible equity (2)	8.36	%	6.98	%	4.86	%
Net interest margin	3.94	%	3.59	%	3.63	%
Efficiency ratio (1)	61.39	%	66.34	%	65.28	%

(1) Excludes Net realized gain on acquisition, Merger related expenses, and Loss on extinguishment of debt

(2) Supplemental Reporting of Non-GAAP-based Financial Measures-Return on average tangible equity

Return on average tangible equity is a non-GAAP-based financial measure calculated using non-GAAP-based amounts. The most directly comparable measure is return on average equity which is calculated using GAAP-based amounts. 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. A reconciliation of return on average equity to return on average tangible equity is set forth below.

	1Q12		4Q11		1Q11
Return on average equity (GAAP basis)	4.02	%	3.42	%	2.00	%
Effect of excluding average intangible assets and related amortization	4.34	%	3.56	%	2.86	%
Return on average tangible equity	8.36	%	6.98	%	4.86	%

Susquehanna Bancshares, Inc. 26 North Cedar Street Lititz, PA 17543
	CONSOLIDATED BALANCE SHEETS (UNAUDITED)
				March 31,			December 31,			March 31,
				2012			2011			2011
				(in thousands, except share data)
Assets
	Cash and due from banks			$	350,793		$	276,384		$	191,207
	Unrestricted short-term investments				27,067			55,761			24,635
	Cash and cash equivalents				377,860			332,145			215,842
	Interest-bearing deposits held by consolidated variable interest entities that can be
		used only to settle obligations of the consolidated variable interest entities			4,932			5,015			5,168
	Restricted short-term investments				60,600			60,910			28,260
	Securities available for sale				2,620,245			2,295,034			2,349,383
	Restricted investment in bank stocks				136,591			128,073			121,586
	Loans and leases, net of unearned income				12,337,688			10,257,161			9,397,786
	Loans held by consolidated variable interest entities that can be used only to settle
		obligations of the consolidated variable interest entities			183,981			190,769			210,212
	Less: Allowance for loan and lease losses				194,730			188,100			193,233
			Net loans and leases		12,326,939			10,259,830			9,414,765
	Premises and equipment, net				196,011			168,382			165,747
	Other real estate and foreclosed assets				40,748			41,716			28,212
	Accrued income receivable				43,928			36,820			36,741
	Bank-owned life insurance				447,686			405,296			360,312
	Goodwill				1,264,892			1,018,031			1,018,031
	Intangible assets with finite lives				53,662			29,081			31,912
	Deferred taxes				35,776			6,344			4,828
	Other assets				216,431			188,112			170,738
			Total assets	$	17,826,301		$	14,974,789		$	13,951,525
Liabilities and Shareholders' Equity
	Deposits:
	Demand			$	1,947,525		$	1,569,811		$	1,387,130
	Interest-bearing demand				5,496,237			4,439,488			3,669,322
	Savings				1,008,042			868,709			798,979
	Time				2,527,383			2,157,282			2,074,648
	Time of $100 or more				1,584,354			1,255,182			1,350,778
			Total deposits		12,563,541			10,290,472			9,280,857
	Federal Home Loan Bank short-term borrowings				850,000			900,000			375,000
	Other short-term borrowings				723,758			613,306			609,284
	Federal Home Loan Bank long-term borrowings				120,673			71,020			716,125
	Other long-term debt				197,027			176,030			176,036
	Junior subordinated debentures				349,979			323,317			323,030
	Long-term debt of consolidated variable interest entities for which creditors do not
		have recourse to Susquehanna's general credit			145,053			157,379			195,332
	Accrued interest, taxes, and expenses payable				69,787			50,670			47,703
	Deferred taxes				0			25,827			39,906
	Other liabilities				274,624			177,140			188,760
			Total liabilities		15,294,442			12,785,161			11,952,033
	Shareholders' equity:
	Common stock, $2.00 par value, 400,000,000 shares authorized. Issued:
		188,058,669 at March 31, 2012; 157,067,887 at December 31, 2011:
		and 129,975,635 at March 31, 2011			376,117			314,136			259,951
	Treasury stock, at cost. 202,485 at March 31, 2012; 200,748 at December 31, 2011:
		and 2,527 at March 31, 2011			(1,278	)		(1,263	)		(24	)
	Additional paid-in capital				1,657,837			1,397,152			1,295,979
	Retained earnings				544,476			525,657			490,425
	Accumulated other comprehensive loss, net of taxes of $25,305; $25,863; and $26,109				(45,293	)		(46,054	)		(46,839	)
			Total shareholders' equity		2,531,859			2,189,628			1,999,492
			Total liabilities and shareholders' equity	$	17,826,301		$	14,974,789		$	13,951,525

Susquehanna Bancshares, Inc. 26 North Cedar Street Lititz, PA 17543
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
		Three Months Ended
		March 31,
		2012			2011
		(in thousands, except per share data)
Interest Income:
Loans and leases, including fees		$	148,355		$	126,799
Securities:
	Taxable		12,792			15,681
	Tax-exempt		3,762			3,951
	Dividends		998			1,022
Short-term investments			30			28
	Total interest income		165,937			147,481
Interest Expense:
Deposits:
	Interest-bearing demand and savings		6,047			5,812
	Time		12,026			15,181
Federal Home Loan Bank short-term borrowings			2,900			2,308
Other short-term borrowings			2,122			1,897
Federal Home Loan Bank long-term borrowings			58			8,084
Other long-term debt			8,661			9,176
	Total interest expense		31,814			42,458
Net interest income			134,123			105,023
Provision for loan and lease losses			19,000			35,000
Net interest income, after provision for loan and lease losses			115,123			70,023
Noninterest Income:
Service charges on deposit accounts			7,674			7,756
Vehicle origination and servicing fees			1,924			1,904
Asset management fees			7,073			7,161
Income from fiduciary-related activities			2,622			1,834
Commissions on brokerage, life insurance and annuity sales			1,907			2,255
Commissions on property and casualty insurance sales			5,058			3,985
Other commissions and fees			4,643			5,987
Income from bank-owned life insurance			1,472			1,106
Net gain on sale of loans and leases			3,750			4,051
Net realized gain (loss) on sales of securities			385			1,869
Total other-than-temporary impairment, net of recoveries			(2,706	)		(2,372	)
Portion of recognized in other comprehensive income
	(before taxes)		2,562			140
Net impairment losses recognized in earnings			(144	)		(2,232	)
Other			3,151			1,791
	Total noninterest income		39,515			37,467
Noninterest Expenses:
Salaries and employee benefits			57,958			50,992
Occupancy			10,810			9,655
Furniture and equipment			3,617			3,066
Advertising and marketing			3,054			2,347
FDIC insurance			5,178			3,381
Legal fees			2,053			2,074
Amortization of intangible assets			2,753			2,163
Vehicle lease disposal			1,836			2,437
Merger related			11,479			535
Other			21,617			19,233
	Total noninterest expenses		120,355			95,883
Income before income taxes			34,283			11,607
Provision for income taxes			10,810			1,846
Net Income		$	23,473		$	9,761
Earnings per common share:
	Basic	$	0.14		$	0.08
	Diluted	$	0.14		$	0.08
Cash dividends per common share		$	0.03		$	0.01
Average common shares outstanding:
	Basic		171,326			129,727
	Diluted		171,973			129,796

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
	For the Three-month Period Ended						For the Three-month Period Ended
	March 31, 2012						March 31, 2011
	Average						Average
(Dollars in thousands)	Balance			Interest		Rate (%)	Balance			Interest		Rate (%)
Assets
Short-term investments	$	106,583		$	30	0.11	$	79,350		$	28	0.14
Investment securities:
Taxable		2,166,578			13,790	2.56		2,079,482			16,703	3.26
Tax-advantaged		380,830			5,787	6.11		398,293			6,078	6.19
Total investment securities		2,547,408			19,577	3.09		2,477,775			22,781	3.73
Loans and leases, (net):
Taxable		11,065,149			145,219	5.28		9,291,685			124,108	5.42
Tax-advantaged		346,443			4,825	5.60		292,413			4,141	5.74
Total loans and leases		11,411,592			150,044	5.29		9,584,098			128,249	5.43
Total interest-earning assets		14,065,583			169,651	4.85		12,141,223			151,058	5.05
Allowance for loan and lease losses		(191,305	)					(191,213	)
Other non-earning assets		2,400,495						2,015,740
Total assets	$	16,274,773					$	13,965,750
Liabilities
Deposits:
Interest-bearing demand	$	4,990,291			5,718	0.46	$	3,686,930			5,519	0.61
Savings		929,499			329	0.14		780,484			293	0.15
Time		3,746,848			12,026	1.29		3,435,868			15,181	1.79
Other short-term borrowings		642,128			2,122	1.33		747,763			1,897	1.03
FHLB borrowings		985,294			2,958	1.21		1,100,358			10,392	3.83
Long-term debt		673,722			8,661	5.17		700,526			9,176	5.31
Total interest-bearing liabilities		11,967,782			31,814	1.07		10,451,929			42,458	1.65
Demand deposits		1,687,899						1,339,573
Other liabilities		270,766						190,688
Total liabilities		13,926,447						11,982,190
Equity		2,348,326						1,983,560
Total liabilities & shareholders' equity	$	16,274,773					$	13,965,750
Net interest income / yield on
average earning assets				$	137,837	3.94				$	108,600	3.63

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
Loans and Leases
(Dollars in thousands)
			Total Loans and Leases
				03/31/12		12/31/11		03/31/11
Commercial, financial, and agricultural			$	2,088,948	$	1,871,027		$	1,798,986
Real estate - construction				993,819		829,221			824,680
Real estate secured - residential				3,945,565		3,212,562			2,689,467
Real estate secured - commercial				4,022,788		3,136,887			2,984,262
Consumer				775,913		722,329			626,504
Leases				694,636		675,904			684,099
Total loans and leases			$	12,521,669	$	10,447,930		$	9,607,998
	Nonaccrual Loans and Leases
	03/31/12			12/31/11		09/30/11		06/30/11		03/31/11
Commercial, financial, and agricultural	$	20,616	$	14,385	$	14,421		$	18,219	$	19,972
Real estate - construction		30,644		37,727		37,487			44,305		56,446
Real estate secured - residential		33,137		41,922		41,238			51,047		55,930
Real estate secured - commercial		47,423		61,497		65,377			73,346		77,533
Consumer		505		0		0			0		0
Leases		1,164		947		1,576			3,816		3,060
Total nonaccrual loans and leases	$	133,489	$	156,478	$	160,099		$	190,733	$	212,941
	Restructured Loans
	03/31/12			12/31/11		09/30/11		06/30/11		03/31/11
Commercial, financial, and agricultural	$	9,547	$	12,181	$	11,820		$	14,387	$	14,999
Real estate - construction		3,980		3,902		0			0		298
Real estate secured - residential		15,167		17,634		13,389			12,734		9,363
Real estate secured - commercial		42,883		38,565		36,974			34,874		53,799
Consumer		504		570		148			148		0
Total restructured loans	$	72,081	$	72,852	$	62,331		$	62,143	$	78,459
	Net Charge-offs (Recoveries)
	1Q 2012		4Q 2011		3Q 2011			2Q 2011		1Q 2011
Commercial, financial, and agricultural	$	2,108	$	1,557	$	5,322		$	9,138	$	3,700
Real estate - construction		2,830		8,484		6,489			6,352		8,154
Real estate secured - residential		3,652		2,641		5,262			5,042		3,803
Real estate secured - commercial		2,271		10,897		5,612			10,467		14,442
Consumer		928		503		(99	)		67		2,079
Leases		581		778		746			875		1,423
Total net charge-offs	$	12,370	$	24,860	$	23,332		$	31,941	$	33,601

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
Loan Analysis
First Quarter 2012
($ Thousands)
					Pro Forma
	Susquehanna		Tower		Susquehanna		Susquehanna
	3/31/2012		2/17/2012		3/31/2012^(1)		12/31/2011		$ Change			% Change
Commercial	$	2,088,948.0	$	137,636.5	$	1,951,311.5	$	1,871,027.0	$	80,284.5		4.29	%
Construction		993,819		209,472		784,347		829,221		(44,874	)	-5.41	%
R/E - Residential		3,945,565		748,015		3,197,550		3,212,562		(15,012	)	-0.47	%
R/E- Commercial		4,022,788		847,739		3,175,049		3,136,887		38,162		1.22	%
Consumer		775,913		13,894		762,019		722,329		39,690		5.49	%
Leases		694,636		-		694,636		675,904		18,732		2.77	%
Total	$	12,521,669	$	1,956,756	$	10,564,913	$	10,447,930	$	116,983		1.12	%
(1) Pro forma presentation represents Susquehanna 3/31/2012 balances net of Tower 2/17/2012 balances.

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
Deposit Analysis
First Quarter 2012
($ Thousands)
					Pro Forma
	Susquehanna		Tower		Susquehanna		Susquehanna
	3/31/2012		2/17/2012		3/31/2012^(1)		12/31/2011		$ Change			% Change
Demand	$	1,947,525	$	365,748	$	1,581,777	$	1,569,811	$	11,966		0.76	%
Interest-Bearing Demand		5,496,237		871,026		4,625,211		4,439,488		185,723		4.18	%
Savings		1,008,042		106,409		901,633		868,709		32,924		3.79	%
Time<100		2,527,383		420,953		2,106,430		2,157,282		(50,852	)	-2.36	%
Time>100		1,584,354		267,319		1,317,035		1,255,182		61,853		4.93	%
Total	$	12,563,541	$	2,031,455	$	10,532,086	$	10,290,472	$	241,614		2.35	%
(1) Pro forma presentation represents Susquehanna 3/31/2012 balances net of Tower 2/17/2012 balances.