Susquehanna Bancshares, Inc. Announces Fourth Quarter and Full Year 2013 Results

Fourth Quarter Highlights

  • Strong Fee Income Drives GAAP EPS of $0.22
  • Linked Quarter Commercial Loan Growth of 5.3%
  • Linked Quarter Core Deposit Growth of 1.7%
  • Continued Improvement in Credit Quality with Lower Loan Loss Provision

LITITZ, Pa.--()--Susquehanna Bancshares, Inc. (Susquehanna) (NASDAQ: SUSQ) today announced that it earned net income for the fourth quarter ended December 31, 2013 of $41.3 million, or $0.22 per diluted share, compared to $43.2 million, or $0.23 per diluted share, for the fourth quarter of 2012. Net income for the year ended 2013 was $173.7 million, or $0.92 per diluted share, compared with $141.2 million, or $0.77 per diluted share for the same period in 2012.

“2013 was a year of many accomplishments, including the achievement of record earnings,” said William J. Reuter, Chairman and Chief Executive Officer of Susquehanna. “In acknowledgment of the transformation occurring in our industry and our position as a top 50 bank, we are in the midst of a multi-year strategy to strengthen our focus on building enduring relationships with customers and structure an organization that is optimally positioned to compete in the future. The investments in people, processes and systems needed to secure this position are ongoing and vital given the dynamic nature of our business.”

Linked Quarter Results (Fourth Quarter 2013 vs. Third Quarter 2013)

  • Loans and leases increased $199.6 million or 1.5% from September 30, 2013 to $13.6 billion at December 31, 2013. Changes for the quarter in each major loan category were as follows:
    • Commercial loans increased 5.3%.
    • Real estate – construction loans decreased 3.8%.
    • Real estate secured – residential loans increased 1.4%.
    • Real estate secured – commercial loans decreased 1.0%.
    • Consumer loans increased 1.9%.
    • Leases increased 6.2%.
  • Total deposits increased $147.7 million or 1.2% from September 30, 2013 to $12.9 billion at December 31, 2013. Changes for the quarter in each major deposit category were as follows:
    • Non-interest bearing demand deposits increased 2.2%.
    • Interest-bearing demand deposits increased 1.6%.
    • Savings deposits increased 1.1%.
    • Time deposits decreased 0.1%.
  • Net interest margin declined 12 basis points to 3.60% for the fourth quarter of 2013, compared to 3.72% for the third quarter of 2013. Net interest margin (excluding purchase accounting) (1) declined 9 basis points to 3.45% for the fourth quarter of 2013, compared to 3.54% for the third quarter of 2013.
  • Non-interest income increased to $50.7 million for the fourth quarter of 2013, compared to $41.3 million for the third quarter. The fourth quarter included a gain on sale of branch properties of $5.0 million related to the sale leaseback transaction completed in December 2013. Solid performance in fee income activities, especially capital markets, also contributed to the linked quarter increase.
  • Non-interest expense for the fourth quarter of 2013 increased to $135.7 million, compared to $117.7 million in the third quarter. The fourth quarter included branch consolidation costs of $6.6 million. The primary driver of the remaining increase was stronger than anticipated fourth quarter results, particularly in commercial loan growth, that resulted in additional incentive compensation expense. Additionally, in the third quarter there was an adjustment in benefits accrual which reduced expenses.
  • The efficiency ratio (1) for the fourth quarter of 2013 increased to 68.84%, compared to 61.62% in the third quarter. The primary drivers of the increase were higher salary and benefit expenses and branch consolidation costs partially offset by a gain on sale of branch properties.
  • Non-performing assets as a percentage of loans, leases and foreclosed real estate owned decreased to 0.86% at December 31, 2013, compared to 0.89% at September 30, 2013. Due to continued improvement in asset quality, the provision for loan and lease losses in the fourth quarter decreased to $2.0 million compared to $5.0 million in the third quarter. Net charge-offs for the fourth quarter decreased to $11.1 million, or 0.33% of average loans, compared to $16.9 million, or 0.50% of average loans, for the third quarter. As a result, the allowance for loan and lease losses was $157.6 million at December 31, 2013, representing 1.16% of total loans and leases and 156% of nonaccrual loans and leases, compared to $166.7 million at September 30, 2013, representing 1.25% of total loans and leases and 164% of nonaccrual loans and leases.

Full Year Results (2013 vs. 2012)

  • Loans and leases increased $681.3 million or 5.3% from December 31, 2012 to $13.6 billion at December 31, 2013. Changes for the twelve month period in each major loan category were as follows:
    • Commercial loans increased 5.3%.
    • Real estate - construction loans decreased 13.2%.
    • Real estate secured - residential loans increased 3.4%.
    • Real estate secured - commercial loans increased 2.6%.
    • Consumer loans increased 13.1%.
    • Leases increased 35.4%.
  • Total deposits increased $289.3 million or 2.3% from December 31, 2012 to $12.9 billion as of December 31, 2013. Changes for the twelve month period in each major deposit category were as follows:
    • Non-interest-bearing demand deposits decreased 3.0%.
    • Interest-bearing demand deposits increased 3.8%.
    • Savings deposits increased 4.4%.
    • Time deposits increased 2.1%.
  • Net interest margin decreased 22 basis points to 3.79% compared to 4.01% for 2012. Net interest margin (excluding purchase accounting) (1) declined 16 basis points to 3.53% in 2013, compared to 3.69% for 2012.
  • Non-interest income increased to $183.7 million in 2013, compared to $166.8 million in 2012. Full year 2013 included a gain on sale of branch properties of $5.0 million related to the sale leaseback transaction completed in December 2013.
  • Non-interest expense was $490.8 million in 2013, compared to $490.0 million in 2012.
  • The efficiency ratio (1) for 2013 increased to 62.55% from 60.37% in 2012, calculated after excluding merger related expenses and losses on the extinguishment of debt in 2012.
  • Net charge-offs as a percentage of average loans and leases for 2013 was 0.44% compared to 0.55% for 2012. Non-performing assets as a percentage of loans, leases and foreclosed real estate was 0.86% at December 31, 2013 compared to 0.96% at December 31, 2012. The provision for loan and lease losses for 2013 was $31.0 million, compared to $64.0 million for 2012. The allowance for loan and lease losses was $157.6 million at December 31, 2013, representing 1.16% of total loans and leases and 156% 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.
  • Return on average assets and average tangible equity (1) for 2013 finished at 0.95% and 13.57%, respectively. This compared to results of 0.81% and 12.03%, for the same measurements, respectively, for 2012.
  • Susquehanna’s capital ratios continue to exceed internal capital targets and those required to be considered “well-capitalized” under the current regulatory requirements, with a Tier 1 common ratio of 10.58%, Tier 1 risk-weighted capital ratio of 11.68%, Total risk-weighted capital ratio of 13.01% and a Leverage ratio of 9.54%, each as of December 31, 2013. Based on a preliminary analysis of the new capital rules approved in July 2013, management believes that Susquehanna would be fully compliant with the revised capital ratio standards as of December 31, 2013 if they were effective on that date.

(1) 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

  • As a result of the issuance of an interim final rule (“IFR”) published by federal regulatory agencies on January 14, 2014, Susquehanna’s trust preferred securities (“TruPS”) collateralized debt obligations will remain permissible holdings under the final rule adopted under Section 619 of the Dodd-Frank Act (commonly referred to as the “Volcker Rule”) and the IFR because they were invested primarily in 'qualifying TruPS collateral.'
  • On December 23, 2013, Susquehanna Bank closed the sale of a portfolio of 30 of its branch bank properties. The aggregate sale price was $57.1 million with proceeds received of $54.2 million, net of closing costs and pre-paid rent. Contemporaneous with the sale, Susquehanna Bank entered into long-term lease agreements pursuant to which Susquehanna Bank will lease back the properties. The transaction was reported on a Form 8-K dated December 23, 2013, which was filed with the Securities and Exchange Commission on December 26, 2013.
  • On January 15, 2014, Susquehanna’s Board of Directors declared a first quarter dividend of $0.08 per common share, payable February 20, 2014 to shareholders of record as of January 30, 2014.

Susquehanna will broadcast its fourth quarter and full year 2013 results conference call over the Internet on January 23, 2014, at 11:00 a.m. Eastern time. The conference call will include management’s discussion of fourth quarter and full year 2013 financial results. The discussion may also include forward-looking statements relating to customer relationship strategies; 2014 performance; loan and deposit volume and growth; fee income activities and revenues; and the impact of purchase accounting benefit on financial results. Investors will have the opportunity to listen to the conference call through a live broadcast on Susquehanna’s website. The event may be accessed by selecting "Investor Relations" near the bottom of the home page and clicking on the fourth quarter webcast link. To listen to the live call, please go to the website at least 15 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 website shortly after the call concludes.

Susquehanna is a financial services holding company with assets of approximately $18.5 billion. Headquartered in Lititz, Pa., Susquehanna provides banking and financial services at 245 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 Website 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. Forward-looking statements can be identified by words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “continue,” “remain,” “will,” “should,” “may,” “plans,” “estimates,” and similar references to future periods; however, such words are not the exclusive means of identifying such statements. The 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, including industry consolidation and development of competing financial products and services; the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; interest rate movements; changes in credit quality; deteriorating economic conditions; other risks and uncertainties; our success at managing the risks involved in the foregoing items; and the other factors 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
4Q13 3Q13 2Q13 1Q13 4Q12 2013 2012
Balance Sheet (EOP)
Investments $ 2,533,456 $ 2,644,162 $ 2,494,178 $ 2,552,600 $ 2,730,335 $ 2,533,456 $ 2,730,335
Loans and leases 13,576,086 13,376,454 13,157,762 12,999,703 12,894,741 13,576,086 12,894,741
Allowance for loan and lease losses 157,608 166,740 178,594 176,377 184,020 157,608 184,020
Total assets 18,473,489 18,481,150 18,083,039 17,967,174 18,037,667 18,473,489 18,037,667
Deposits 12,869,372 12,721,685 12,764,232 12,691,432 12,580,046 12,869,372 12,580,046
Other short-term borrowings 555,740 688,456 706,065 786,251 817,577 555,740 817,577
Federal Home Loan Bank borrowings 1,531,282 1,593,272 1,161,995 1,044,480 1,199,062 1,531,282 1,199,062
Other long-term debt 453,260 457,804 489,002 501,559 513,401 453,260 513,401
Shareholders' equity 2,717,587 2,679,348 2,644,940 2,639,489 2,595,909 2,717,587 2,595,909
 
Average Balance Sheet
Investments $ 2,616,807 $ 2,584,212 $ 2,503,991 $ 2,603,595 $ 2,764,886 $ 2,577,207 $ 2,707,508
Loans and leases 13,421,474 13,290,513 13,110,128 12,929,365 12,725,886 13,189,499 12,321,328
Total earning assets 16,124,369 15,960,228 15,720,859 15,642,309 15,604,029 15,863,531 15,137,244
Total assets 18,437,954 18,258,982 18,071,466 18,031,127 18,018,889 18,201,159 17,531,297
Deposits 12,806,503 12,794,022 12,867,874 12,640,550 12,602,430 12,777,738 12,256,107
Other short-term borrowings 671,923 758,079 728,497 817,816 810,517 743,718 732,209
Federal Home Loan Bank borrowings 1,502,120 1,285,276 1,041,577 1,155,637 1,166,765 1,247,209 1,076,962
Other long-term debt 455,787 475,655 496,240 508,541 560,906 483,888 662,027
Shareholders' equity 2,679,242 2,642,806 2,648,314 2,614,319 2,597,254 2,646,339 2,511,604
 
Income Statement
Net interest income $ 142,688 $ 145,949 $ 148,097 $ 149,206 $ 155,304 $ 585,940 $ 591,238
Provision for loan and lease losses 2,000 5,000 12,000 12,000 13,000 31,000 64,000
Noninterest income 50,666 41,343 49,076 42,644 43,772 183,729 166,759
Noninterest expense 135,672 117,701 119,738 117,729 125,277 490,840 490,017
Income before taxes 55,682 64,591 65,435 62,121 60,799 247,829 203,980
Provision for income taxes 14,341 20,300 19,787 19,722 17,625 74,150 62,808
Net income 41,341 44,291 45,648 42,399 43,174 173,679 141,172
Basic earnings per common share 0.22 0.24 0.24 0.23 0.23 0.93 0.77
Diluted earnings per common share 0.22 0.24 0.24 0.23 0.23 0.92 0.77
Cash dividends paid per common share 0.08 0.08 0.08 0.00 0.14 0.24 0.28
 
Asset Quality
Net charge-offs (NCOs) $ 11,132 $ 16,854 $ 9,784 $ 19,643 $ 15,877 $ 57,412 $ 68,080
 
Nonaccrual loans and leases $ 100,815 $ 101,976 $ 105,110 $ 103,351 $ 97,767 $ 100,815 $ 97,767
Foreclosed real estate   16,555   17,760   18,349   22,557   26,245   16,555   26,245
Total nonperforming assets (NPAs) $ 117,370 $ 119,736 $ 123,459 $ 125,908 $ 124,012 $ 117,370 $ 124,012
 
Restructured loans $ 72,133 $ 69,975 $ 63,822 $ 65,773 $ 67,775 $ 72,133 $ 67,775
Loans and leases 90 days past due 9,757 8,655 7,203 6,396 8,209 9,757 8,209

 

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA 17543

 
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)              
 
Twelve Months YTD
4Q13 3Q13 2Q13 1Q13 4Q12 2013 2012
Credit Quality
NCOs / Average loans and leases 0.33% 0.50% 0.30% 0.62% 0.50% 0.44% 0.55%
NPAs / Loans and leases + foreclosed real estate 0.86% 0.89% 0.94% 0.97% 0.96% 0.86% 0.96%
ALLL / Nonaccrual loans and leases 156.33% 163.51% 169.91% 170.66% 188.22% 156.33% 188.22%
ALLL / Total loans and leases 1.16% 1.25% 1.36% 1.36% 1.43% 1.16% 1.43%
 
Profitability
Return on average assets 0.89% 0.96% 1.01% 0.95% 0.95% 0.95% 0.81%
Return on average equity 6.12% 6.65% 6.91% 6.58% 6.61% 6.56% 5.62%
Return on average tangible equity (1) 12.49% 13.67% 14.30% 13.87% 14.01% 13.57% 12.03%
Net interest margin 3.60% 3.72% 3.88% 3.97% 4.06% 3.79% 4.01%
Efficiency ratio (1) 68.84% 61.62% 59.57% 60.17% 60.96% 62.55% 60.37%
 
Per Share Data (EOP)
Closing share price $ 12.84 $ 12.53 $ 12.85 $ 12.43 $ 10.48 $ 12.84 $ 10.48
Stated book value per common share 14.50 14.31 14.14 14.13 13.92 14.50 13.92
Tangible book value per common share (1) 7.52 7.32 7.13 7.10 6.88 7.52 6.88
Price/Book Value 88.52% 87.56% 90.86% 87.97% 75.31% 88.52% 75.31%
Price/Tangible Book Value 170.74% 171.17% 180.22% 175.07% 152.33% 170.74% 152.33%
Number of outstanding shares ('000) 187,363 187,225 187,023 186,800 186,554 187,363 186,554
 
Capital Ratios
Tangible common ratio (1) 8.44% 8.22% 8.21% 8.22% 7.94% 8.44% 7.94%
Tier 1 common ratio 10.58% 10.41% 10.41% 10.20% 9.94% 10.58% 9.94%
Leverage ratio 9.54% 9.47% 9.42% 9.23% 8.98% 9.54% 8.98%
Tier 1 capital ratio 11.68% 11.52% 11.54% 11.34% 11.08% 11.68% 11.08%
Total risk-based capital ratio 13.01% 12.92% 12.94% 12.88% 12.63% 13.01% 12.63%
 

(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 September 30, June 30, March 31, December 31,
  2013     2013     2013     2013     2012  
 
Assets
Cash and due from banks $ 305,357 $ 377,730 $ 367,902 $ 291,434 $ 277,042
Unrestricted short-term investments   37,967     30,663     30,759     38,662     39,550  
Cash and cash equivalents 343,324 408,393 398,661 330,096 316,592
Interest-bearing deposits held by consolidated variable interest entities that can be
used only to settle obligations of the consolidated variable interest entities 2,347 2,138 5,356 4,304 4,423
Restricted short-term investments 42,913 44,928 45,341 68,020 75,203
Securities available for sale 2,375,224 2,483,375 2,343,429 2,400,626 2,577,901
Restricted investment in bank stocks 158,232 160,787 150,749 151,974 152,434
Loans and leases, net of deferred costs and fees 13,503,392 13,300,309 13,005,013 12,840,305 12,728,082
Loans held by consolidated variable interest entities that can be used only to settle
obligations of the consolidated variable interest entities 72,694 76,145 152,749 159,398 166,659
Less: Allowance for loan and lease losses   157,608     166,740     178,594     176,377     184,020  
Net loans and leases   13,418,478     13,209,714     12,979,168     12,823,326     12,710,721  
Premises and equipment, net 173,542 189,096 187,826 186,102 188,983
Other real estate and foreclosed assets 17,573 18,729 19,319 26,302 31,017
Accrued interest receivable 41,690 41,715 42,665 44,202 40,304
Bank-owned life insurance 449,320 449,419 451,278 450,351 450,270
Goodwill 1,275,439 1,275,439 1,275,439 1,275,439 1,270,359
Intangible assets with finite lives 32,262 33,666 35,737 38,209 41,332
Deferred income tax assets 6,472 7,921 7,999 7,594 4,685
Other assets   136,673     155,830     140,072     160,629     173,443  
Total assets $ 18,473,489   $ 18,481,150   $ 18,083,039   $ 17,967,174   $ 18,037,667  
Liabilities and Shareholders' Equity
Deposits $ 12,869,372 $ 12,721,685 $ 12,764,232 $ 12,691,432 $ 12,580,046
Federal Home Loan Bank short-term borrowings 1,450,000 1,510,000 1,070,000 948,000 1,098,000
Other short-term borrowings 555,740 688,456 706,065 786,251 817,577
Federal Home Loan Bank long-term borrowings 81,282 83,272 91,995 96,480 101,062
Other long-term debt 250,227 250,229 250,231 251,019 251,021
Junior subordinated debentures 155,002 154,983 154,964 154,946 154,927
Long-term debt of consolidated variable interest entities for which creditors do not
have recourse to Susquehanna's general credit 48,031 52,592 83,807 95,594 107,453
Accrued interest, taxes, and expenses payable 82,150 101,040 78,211 61,265 81,808
Deferred income tax liabilities 70,308 52,214 31,694 29,694 14,475
Other liabilities   193,790     187,331     206,900     213,004     235,389  
Total liabilities   15,755,902     15,801,802     15,438,099     15,327,685     15,441,758  
Shareholders' equity:
Common stock 375,353 374,982 374,566 374,118 373,623
Treasury stock (2,531 ) (1,918 ) (1,875 ) (1,871 ) (1,850 )
Additional paid-in capital 1,652,116 1,651,382 1,649,636 1,648,062 1,645,958
Retained earnings 744,215 717,850 688,535 657,835 615,436
Accumulated other comprehensive loss   (51,566 )   (62,948 )   (65,922 )   (38,655 )   (37,258 )
Total shareholders' equity   2,717,587     2,679,348     2,644,940     2,639,489     2,595,909  
Total liabilities and shareholders' equity $ 18,473,489   $ 18,481,150   $ 18,083,039   $ 17,967,174   $ 18,037,667  

 

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA 17543

         
Loans and Leases and Deposits
(in thousands)
Loans and Leases
12/31/13 09/30/13 06/30/13 03/31/13 12/31/12
Commercial, financial, and agricultural $ 2,394,847 $ 2,273,735 $ 2,289,159 $ 2,312,660 $ 2,273,611
Real estate - construction 735,877 765,246 769,722 779,344 847,781
Real estate secured - residential 4,204,430 4,145,522 4,098,938 4,077,810 4,065,818
Real estate secured - commercial 4,068,816 4,109,329 4,029,454 3,971,438 3,964,608
Consumer 953,000 935,117 908,328 859,664 842,552
Leases   1,219,116   1,147,505   1,062,161   998,787   900,371
Total loans and leases $ 13,576,086 $ 13,376,454 $ 13,157,762 $ 12,999,703 $ 12,894,741
 
 
Deposits
12/31/13 09/30/13 06/30/13 03/31/13 12/31/12
Demand $ 1,913,526 $ 1,871,461 $ 1,931,874 $ 1,917,719 $ 1,973,664
Interest-bearing demand 6,053,482 5,957,982 5,868,390 5,936,099 5,829,147
Savings   1,077,923   1,065,699   1,086,184   1,077,446   1,032,293
Core deposits   9,044,931   8,895,142   8,886,448   8,931,264   8,835,104
Time less than $100 2,113,209 2,103,650 2,152,539 2,205,304 2,262,262
Time of $100 or more   1,711,232   1,722,893   1,725,245   1,554,864   1,482,680
Total deposits $ 12,869,372 $ 12,721,685 $ 12,764,232 $ 12,691,432 $ 12,580,046
 

         

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA 17543

 
Supplemental Loan and Lease Data
(in thousands)
Nonaccrual Loans and Leases
12/31/13 09/30/13 06/30/13 03/31/13 12/31/12
Commercial, financial, and agricultural $ 16,827 $ 10,048 $ 10,810 $ 9,542 $ 10,464
Real estate - construction 13,230 16,497 13,243 18,945 14,817
Real estate secured - residential 23,365 27,878 31,945 30,372 28,440
Real estate secured - commercial 46,147 45,906 48,010 43,341 42,621
Consumer 47 177 40 37 43
Leases   1,199     1,470   1,062     1,114   1,382
Total nonaccrual loans and leases $ 100,815   $ 101,976 $ 105,110   $ 103,351 $ 97,767
 
 
Restructured Loans
12/31/13 09/30/13 06/30/13 03/31/13 12/31/12
Commercial, financial, and agricultural $ 6,885 $ 9,609 $ 9,200 $ 14,863 $ 8,744
Real estate - construction 615 331 334 937 940
Real estate secured - residential 31,623 26,848 23,207 20,172 23,224
Real estate secured - commercial 31,295 31,766 29,482 28,689 33,589
Consumer   1,715     1,421   1,599     1,112   1,278
Total restructured loans $ 72,133   $ 69,975 $ 63,822   $ 65,773 $ 67,775
 
 
Net Charge-offs (Recoveries)
4Q 2013 3Q 2013 2Q 2013 1Q 2013 4Q 2012
Commercial, financial, and agricultural $ (480 ) $ 3,731 $ 8,790 $ 8,041 $ 233
Real estate - construction (3,312 ) 6,504 (555 ) 4,301 3,311
Real estate secured - residential 2,724 3,524 2,006 2,362 3,738
Real estate secured - commercial 11,060 2,007 (1,241 ) 3,881 6,704
Consumer 330 726 549 236 707
Leases   810     362   235     822   1,184
Total net charge-offs $ 11,132   $ 16,854 $ 9,784   $ 19,643 $ 15,877

 

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,
2013 2013 2013 2013 2012 2013 2012
 
Net interest income $ 142,688 $ 145,949 $ 148,097 $ 149,206 $ 155,304 585,940 591,238
Provision for loan and lease losses   2,000     5,000   12,000     12,000   13,000     31,000     64,000
Net interest income, after provision for loan and lease losses   140,688     140,949   136,097     137,206   142,304     554,940     527,238
Noninterest Income:
Service charges on deposit accounts 9,456 9,514 9,347 8,672 9,158 36,989 34,428
Vehicle origination and servicing fees 3,057 2,907 2,407 3,354 3,746 11,725 10,366
Wealth management commissions and fees 13,048 12,606 13,289 12,390 11,882 51,333 47,705
Commissions on property and casualty insurance sales 4,023 3,872 4,360 4,542 3,749 16,797 15,894
Other commissions and fees 7,577 5,276 6,686 5,237 6,680 24,776 21,510
Income from bank-owned life insurance 1,492 1,493 1,520 1,508 1,603 6,013 6,471
Mortgage banking revenue 2,483 2,237 3,998 4,110 4,835 12,828 17,805
Net realized gain (loss) on sales of securities (1,343 ) 2 (71 ) 18 (200 ) (1,394 ) 1,433
Realized gain on sale of branch properties 4,945 0 0 0 0 4,945 0
Other   5,928     3,436   7,540     2,813   2,319     19,717     11,147
Total noninterest income   50,666     41,343   49,076     42,644   43,772     183,729     166,759
Noninterest Expenses:
Salaries and employee benefits 70,837 61,879 66,888 63,034 66,865 262,638 251,583
Occupancy 11,727 11,352 11,154 11,215 11,345 45,448 45,231
Furniture and equipment 3,865 3,661 3,747 3,578 3,976 14,851 15,725
Professional and technology services 6,404 7,173 5,831 5,729 6,697 25,137 26,166
Advertising and marketing 3,390 3,092 2,369 3,203 3,029 12,054 12,317
FDIC insurance 6,118 5,421 4,541 3,798 5,264 19,878 20,486
Legal fees 1,968 1,774 1,810 1,870 2,178 7,422 8,150
Amortization of intangible assets 2,803 2,502 3,053 3,268 3,272 11,626 12,525
Vehicle lease disposal 1,216 1,193 1,313 1,290 1,361 5,012 6,342
Merger related 0 0 0 0 1,054 0 17,351
Loss on extinguishment of debt 0 0 0 0 409 0 5,860
Branch consolidation costs 6,603 0 0 0 0 6,603 0
Other   20,741     19,654   19,032     20,744   19,827     80,171     68,281
Total noninterest expenses   135,672     117,701   119,738     117,729   125,277     490,840     490,017
Income before income taxes 55,682 64,591 65,435 62,121 60,799 247,829 203,980
Provision for income taxes   14,341     20,300   19,787     19,722   17,625     74,150     62,808
Net Income $ 41,341   $ 44,291 $ 45,648   $ 42,399 $ 43,174   $ 173,679   $ 141,172
 
Earnings per common share:
Basic $ 0.22 $ 0.24 $ 0.24 $ 0.23 $ 0.23 $ 0.93 $ 0.77
Diluted $ 0.22 $ 0.24 $ 0.24 $ 0.23 $ 0.23 $ 0.92 $ 0.77
Cash dividends per common share $ 0.08 $ 0.08 $ 0.08 $ 0.00 $ 0.14 $ 0.24 $ 0.28
Average common shares outstanding:
Basic 187,186 187,096 186,812 186,607 186,353 186,927 182,896
Diluted 188,078 188,109 187,723 187,442 186,990 187,835 183,578
 

 

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 Twelve Months Ended Twelve Months Ended
December 31, 2013 September 30, 2013 December 31, 2013 December 31, 2012
Average Average Average Average
Balance     Interest     Rate (%) Balance     Interest     Rate (%) Balance     Interest     Rate (%) Balance     Interest     Rate (%)
Assets
Short-term investments $ 86,088 $ 20 0.09 $ 85,503 $ 16 0.07 $ 96,825 $ 108 0.11 $ 108,408 $ 144 0.13
Investment securities:
Taxable(1) 2,227,191 12,055 2.15 2,191,743 11,937 2.16 2,182,121 46,248 2.12 2,320,582 53,659 2.31
Tax-exempt(1)(2)   389,616     5,403   5.50   392,469     5,450   5.51   395,086     21,835   5.53   386,926     22,518   5.82
Total investment securities   2,616,807     17,458   2.65   2,584,212     17,387   2.67   2,577,207     68,083   2.64   2,707,508     76,177   2.81
Loans and leases, (net):
Taxable(3) 13,003,680 148,469 4.53 12,888,591 152,275 4.69 12,772,845 614,158 4.81 11,934,701 628,426 5.27
Tax-exempt(2)(3)   417,794     5,289   5.02   401,922     5,133   5.07   416,654     21,038   5.05   386,627     21,175   5.48
Total loans and leases   13,421,474     153,758   4.55   13,290,513     157,408   4.70   13,189,499     635,196   4.82   12,321,328     649,601   5.27
 
Total interest-earning assets 16,124,369   171,236   4.21 15,960,228   174,811   4.35 15,863,531   703,387   4.43 15,137,244   725,922   4.80
Allowance for loan and lease losses (165,298 ) (177,853 ) (176,782 ) (189,368 )
Other non-earning assets   2,478,883     2,476,607     2,514,410     2,583,421  
 
Total assets $ 18,437,954   $ 18,258,982   $ 18,201,159   $ 17,531,297  
 
Liabilities
Deposits:
Interest-bearing demand $ 6,058,107 3,915 0.26 $ 5,936,693 3,904 0.26 $ 5,968,726 16,661 0.28 $ 5,453,701 20,603 0.38
Savings 1,075,598 286 0.11 1,075,734 286 0.11 1,070,248 1,144 0.11 989,123 1,208 0.12
Time 3,791,625 9,597 1.00 3,870,542 10,229 1.05 3,833,262 42,713 1.11 3,939,528 47,168 1.20
Other short-term borrowings 671,923 2,146 1.27 758,079 2,242 1.17 743,718 8,695 1.17 732,209 8,711 1.19
FHLB borrowings 1,502,120 4,704 1.24 1,285,276 4,199 1.30 1,247,209 16,329 1.31 1,076,962 13,723 1.27
Long-term debt   455,787     4,158   3.62   475,655     4,268   3.56   483,888     16,900   3.49   662,027     27,979   4.23
 
Total interest-bearing liabilities 13,555,160   24,806   0.73 13,401,979   25,128   0.74 13,347,051   102,442   0.77 12,853,550   119,392   0.93
Demand deposits 1,881,173 1,911,053 1,905,502 1,873,755
Other liabilities   322,379     303,144     302,267     292,388  
 
Total liabilities 15,758,712 15,616,176 15,554,820 15,019,693
 
Equity   2,679,242     2,642,806     2,646,339     2,511,604  
 
Total liabilities & shareholders' equity $ 18,437,954   $ 18,258,982   $ 18,201,159   $ 17,531,297  
 

Net interest income / yield on average earning assets

$ 146,430 3.60 $ 149,683 3.72 $ 600,945 3.79 $ 606,530 4.01
Taxable equivalent adjustment   (3,742 )   (3,734 )   (15,005 )   (15,292 )
Net interest income - as reported $ 142,688   $ 145,949   $ 585,940   $ 591,238  

 

(1)

  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.
 

(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     12 Months Ended
(Dollars and share data in thousands)                     December 31,
4Q13 3Q13 2Q13 1Q13 4Q12 2013     2012

Efficiency Ratio

Other expense $ 135,672 $ 117,701 $ 119,738 $ 117,729 $ 125,277 $ 490,840 $ 490,017
Less: Merger related expenses 0 0 0 0 (1,054 ) 0 (17,351 )
Loss on extinguishment of debt   0     0     0     0     (409 )   0     (5,860 )
Noninterest operating expense (numerator) $ 135,672   $ 117,701   $ 119,738   $ 117,729   $ 123,814   $ 490,840   $ 466,806  
 
Taxable-equivalent net interest income $ 146,430 $ 149,683 $ 151,916 $ 153,021 $ 159,332 600,945 $ 606,530
Other income   50,666     41,343     49,076     42,644     43,772     183,729     166,759  

Noninterest operating income (denominator)

$ 197,096   $ 191,026   $ 200,992   $ 195,665   $ 203,104   $ 784,674   $ 773,289  
Efficiency ratio   68.84 %   61.62 %   59.57 %   60.17 %   60.96 %   62.55 %   60.37 %
 
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 $ 2,717,587 $ 2,679,348 $ 2,644,940 $ 2,639,489 $ 2,595,909 $ 2,717,587 $ 2,595,909
Goodwill and other intangible assets (1)   (1,264,839 )   (1,263,928 )   (1,265,016 )   (1,266,610 )   (1,263,563 )   (1,264,839 )   (1,263,563 )
Tangible common equity (numerator) $ 1,452,748   $ 1,415,420   $ 1,379,924   $ 1,372,879   $ 1,332,346   $ 1,452,748   $ 1,332,346  
 
Assets $ 18,473,489 $ 18,481,150 $ 18,083,039 $ 17,967,174 $ 18,037,667 $ 18,473,489 $ 18,037,667
Goodwill and other intangible assets (1)   (1,264,839 )   (1,263,928 )   (1,265,016 )   (1,266,610 )   (1,263,563 )   (1,264,839 )   (1,263,563 )

Tangible assets (denominator)

$ 17,208,650   $ 17,217,222   $ 16,818,023   $ 16,700,564   $ 16,774,104   $ 17,208,650   $ 16,774,104  
Tangible common ratio   8.44 %   8.22 %   8.21 %   8.22 %   7.94 %   8.44 %   7.94 %
 

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

12 Months Ended

(Dollars and share data in thousands)

December 31,

4Q13

3Q13

2Q13

1Q13

4Q12

2013

2012

Return on Average Tangible Equity

Income statement data
Net income $ 41,341 $ 44,291 $ 45,648 $ 42,399 $ 43,174 $ 173,679 $ 141,172
Amortization of intangibles, net of taxes at 35%   1,822     1,626     1,984     2,124     2,127     7,557     8,141  
Net tangible income (numerator) $ 43,163   $ 45,917   $ 47,632   $ 44,523   $ 45,301   $ 181,236   $ 149,313  
 
Average balance sheet data
Shareholders' equity $ 2,679,242 $ 2,642,806 $ 2,648,314 $ 2,614,319 $ 2,597,254 $ 2,646,339 $ 2,511,604
Goodwill and other intangible assets   (1,308,690 )   (1,310,155 )   (1,312,257 )   (1,312,662 )   (1,311,192 )   (1,310,928 )   (1,270,053 )
Tangible common equity (denominator) $ 1,370,552   $ 1,332,651   $ 1,336,057   $ 1,301,657   $ 1,286,062   $ 1,335,411   $ 1,241,551  
 
Return on equity (GAAP basis) 6.12 % 6.65 % 6.91 % 6.58 % 6.61 % 6.56 % 5.62 %
Effect of goodwill and other intangibles   6.37 %   7.02 %   7.39 %   7.29 %   7.40 %   7.01 %   6.41 %
Return on average tangible equity   12.49 %   13.67 %   14.30 %   13.87 %   14.01 %   13.57 %   12.03 %
 

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 $ 2,717,587 $ 2,679,348 $ 2,644,940 $ 2,639,489 $ 2,595,909 $ 2,717,587 $ 2,595,909
Goodwill and other intangible assets   (1,307,701 )   (1,309,105 )   (1,311,176 )   (1,313,648 )   (1,311,691 )   (1,307,701 )   (1,311,691 )
Tangible common equity (numerator) $ 1,409,886   $ 1,370,243   $ 1,333,764   $ 1,325,841   $ 1,284,218   $ 1,409,886   $ 1,284,218  
 
Common shares outstanding (denominator)   187,363     187,225     187,023     186,800     186,554     187,363     186,554  
 
Tangible book value per common share $ 7.52   $ 7.32   $ 7.13   $ 7.10   $ 6.88   $ 7.52   $ 6.88  
 
Tangible book value per share is a non-GAAP based financial measure calculated using non-GAAP based amounts. The most directly comparable GAAP based measure is book value per share. In order to calculate tangible book value per share, we divide tangible common equity, which is a non-GAAP based measure calculated as common shareholders’ equity less intangible assets, by the number of shares of common stock outstanding. In contrast, book value per share is calculated by dividing total common shareholders’ equity by the number of shares of common stock outstanding. Management uses tangible book value per share to assess our capital position and ratios.
 

 

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA   17543

 
                       
Appendix A - GAAP to Non-GAAP Reconciliation Twelve Months Ended
December 31,
4Q13 3Q13 2Q13 1Q13 4Q12 2013     2012

Net Interest Margin (excluding purchase accounting)

Reported net interest margin (GAAP basis) 3.60 % 3.72 % 3.88 % 3.97 % 4.06 % 3.79 % 4.01 %
Adjustments for purchase accounting:
Loans and leases -0.11 % -0.13 % -0.27 % -0.27 % -0.23 % -0.20 % -0.17 %
Deposits -0.03 % -0.04 % -0.06 % -0.07 % -0.08 % -0.05 % -0.11 %
Borrowings -0.01 % -0.01 % -0.01 % -0.01 % -0.09 % -0.01 % -0.04 %
Net Interest Margin (excluding purchase accounting) 3.45 % 3.54 % 3.54 % 3.62 % 3.66 % 3.53 % 3.69 %
 
 
Net interest margin (excluding purchase accounting) is a non-GAAP based financial measure using non-GAAP based amounts. The most directly comparable GAAP based measure is net interest margin. In order to calculate net interest margin (excluding purchase accounting) we subtract the effects of amortizing/accreting purchase accounting valuation amounts from net interest income, and divide the remainder by average earning assets. Our management uses net interest margin (excluding purchase accounting) to measure and monitor the impact of the current economic environment on our net interest income and believes that this measure is more representative of our ongoing earnings power because it excludes the effect of valuation variables used to arrive at the acquisition fair value recorded on the acquisition date. We believe this non-GAAP measure, when taken together with the corresponding GAAP measure, provides meaningful supplemental information to investors regarding our performance. However, this non-GAAP measure should be considered in addition to, and not as a substitute for or preferable to, net interest margin prepared in accordance with GAAP.
 

Contacts

Susquehanna Bancshares, Inc.
INVESTOR RELATIONS CONTACT:
Jason H. Weber, Director of Investor Relations
717-626-9801
or
MEDIA RELATIONS CONTACT:
Stephen Trapnell, Director of Corporate Communications
717-625-6548

Release Summary

Susquehanna Bancshares, Inc. Announces Fourth Quarter and Full Year 2013 Results

Contacts

Susquehanna Bancshares, Inc.
INVESTOR RELATIONS CONTACT:
Jason H. Weber, Director of Investor Relations
717-626-9801
or
MEDIA RELATIONS CONTACT:
Stephen Trapnell, Director of Corporate Communications
717-625-6548