Fourth Quarter
Highlights
- GAAP EPS of $0.17
- Solid Commercial Loan and Core
Deposit Growth
- Strong Asset Quality
- Capital Ratios Continue to
Build
The board of directors of Susquehanna Bancshares, Inc.
(“Susquehanna”) (NASDAQ: SUSQ) has declared a first quarter
dividend of $0.09 per common share, payable on February 20, 2015 to
shareholders of record on February 2, 2015.
In addition, Susquehanna announced that it earned net income for
the fourth quarter ended December 31, 2014 of $30.3 million, or
$0.17 per diluted share, compared to $33.5 million, or $0.18 per
diluted share, and $41.3 million, or $0.22 per diluted share, for
the third quarter of 2014 and fourth quarter of 2013, respectively.
Net income for the year ended 2014 was $144.4 million, or $0.78 per
diluted share, compared with $173.7 million, or $0.92 per diluted
share for the same period in 2013.
Linked Quarter Results (Fourth Quarter 2014 vs. Third Quarter
2014)
- Loans and leases increased $92.2
million or 0.7% from September 30, 2014 to $13.5 billion at
December 31, 2014. Changes for the quarter in each major loan
category were as follows:
- Commercial loans increased 2.9%.
- Real estate – construction loans
decreased 3.6%.
- Real estate secured – residential loans
increased 0.5%.
- Real estate secured – commercial loans
decreased 0.6%.
- Consumer loans increased 3.1%.
- Leases increased 2.6%.
- Total deposits increased $133.3 million
or 1.0% from September 30, 2014 to $13.7 billion at December 31,
2014. Changes for the quarter in each major deposit category were
as follows:
- Non-interest bearing checking increased
0.3%.
- Interest-bearing checking increased
2.7%.
- Money market deposits increased
6.4%.
- Savings deposits increased 1.9%.
- Time deposits decreased 4.5%.
- Net interest margin decreased 4 basis
points to 3.46% for the fourth quarter of 2014 compared to 3.50%
for the third quarter of 2014. Net interest margin (excluding
purchase accounting) (1) decreased 6 basis points to 3.31% for the
fourth quarter of 2014 compared to 3.37% for the third quarter of
2014. The decrease in the net interest margin was driven by the
reinvestment of cash from the prior quarter’s retail auto loan
securitization and, to a lesser extent, an increase in funding
costs.
- Net interest income decreased to $135.4
million for the fourth quarter of 2014 compared to $136.5 million
for the third quarter of 2014. The increase in average earning
assets was more than offset by a decline in net interest margin
resulting in a linked quarter decline in net interest income.
- Non-interest income increased to $46.6
million for the fourth quarter of 2014 compared to $44.6 million
for the third quarter of 2014. Solid performance in capital markets
and seasonally-strong SBA loan sales contributed to the linked
quarter increase.
- Non-interest expense increased to
$130.5 million for the fourth quarter of 2014 compared to $124.4
million for the third quarter of 2014. The primary driver of the
increase was a stronger than anticipated fourth quarter results
that resulted in additional incentive compensation expense.
- The efficiency ratio (1) increased to
70.21% for the fourth quarter of 2014 compared to 67.32% for the
third quarter of 2014.
- Non-performing assets as a percentage
of loans, leases and foreclosed real estate owned decreased to
0.79% at December 31, 2014 compared to 0.88% at September 30,
2014.
- The provision for loan and lease losses
for the fourth quarter of 2014 decreased to $7.2 million compared
to $9.0 million for the third quarter of 2014. Net charge-offs for
the fourth quarter of 2014 decreased to $7.5 million, or 0.22% of
average loans and leases, compared to $16.6 million, or 0.49% of
average loans and leases, for the third quarter of 2014. As a
result, the allowance for loan and lease losses was $136.5 million
at December 31, 2014, representing 1.01% of total loans and leases
and 140% of nonaccrual loans and leases compared to $136.9 million
at September 30, 2014, representing 1.02% of total loans and leases
and 125% of nonaccrual loans and leases.
Full Year Results (2014 vs. 2013)
- Loans and leases decreased $58.2
million or 0.4% from December 31, 2013 to $13.5 billion at December
31, 2014. In August 2014, Susquehanna and its wholly-owned
subsidiary Susquehanna Bank sold approximately $255.8 million of
retail auto loans in an off-balance sheet securitization that
previously were included in the Consumer loans category. Changes
for the twelve month period in each major loan category were as
follows:
- Commercial loans increased 1.5%.
- Real estate - construction loans
increased 7.1%.
- Real estate secured - residential loans
decreased 0.2%.
- Real estate secured - commercial loans
decreased 1.9%.
- Consumer loans decreased 21.0%.
- Leases increased 11.6%.
- Total deposits increased $852.5 million
or 6.6% from December 31, 2013 to $13.7 billion as of December 31,
2014. Changes for the twelve month period in each major deposit
category were as follows:
- Non-interest-bearing checking increased
2.7%.
- Interest-bearing checking increased
8.9%.
- Money market deposits increased
11.6%.
- Savings deposits increased 6.1%.
- Time deposits increased 2.9%.
- Net interest margin decreased 24 basis
points to 3.55% for 2014 compared to 3.79% for 2013.Net interest
income decreased to $553.6 million for 2014 compared to $585.9
million for 2013. The sustained low rate environment pressured the
net interest margin as existing loans repriced lower and new
originations came on at lower rates than the existing loan
portfolio.
- Non-interest income decreased to $178.6
million for 2014 compared to $183.7 million for 2013. The decrease
was attributed to the sustained low rate environment negatively
impacting our rate sensitive businesses, such as mortgage
banking.
- Non-interest expense increased to
$503.1 million for 2014 compared to $490.8 million for 2013. The
increase was driven by an increase in salaries and employee
benefits, partly due to the increase in FTEs as a result of
increased regulatory and compliance requirements.
- The efficiency ratio (1) increased to
67.21% for 2014 compared to 62.55% for 2013.
- Non-performing assets as a percentage
of loans, leases and foreclosed real estate decreased to 0.79% at
December 31, 2014 compared to 0.86% at December 31, 2013.
- The provision for loan and lease losses
decreased to $25.2 million for 2014 compared to $31.0 million for
2013. Net charge-offs as a percentage of average loans and leases
decreased to 0.33% for 2014 compared to 0.44% for 2013. The
allowance for loan and lease losses was $136.5 million at December
31, 2014, representing 1.01% of total loans and leases and 140% of
nonaccrual loans and leases, compared to $157.6 million at December
31, 2013, representing 1.16% of total loans and leases and 156% of
nonaccrual loans and leases.
- Return on average assets and average
tangible equity (1) decreased to 0.78% and 10.34%, respectively for
2014 compared to 0.95% and 13.57%, respectively for 2013.
- 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 10.95%, Tier 1 capital
ratio of 12.00%, Total risk-based capital ratio of 13.16% and a
Leverage ratio of 9.60%, each as of December 31, 2014.
(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
- On November 12, 2014, BB&T
Corporation (“BB&T”) and Susquehanna announced the signing of a
definitive agreement and plan of merger under which BB&T will
acquire Susquehanna through the merger of Susquehanna with and into
BB&T, with BB&T surviving the merger, in a cash and stock
transaction for total consideration valued at approximately $2.5
billion.
- Subject to the satisfaction or waiver
of the closing conditions contained in the merger agreement,
including the approval of the merger agreement by Susquehanna
shareholders and the receipt of required regulatory approvals,
BB&T and Susquehanna expect that the merger will be completed
during the second half of 2015. However, it is possible that
factors outside the control of both companies, including whether or
when the required regulatory approvals will be received, could
result in the merger being completed at a different time or not at
all.
Susquehanna is a financial services holding company with total
assets of approximately $18.7 billion. Headquartered in Lititz,
Pa., Susquehanna provides banking and financial services at 245
branch locations in the mid-Atlantic region. Through Susquehanna
Wealth Management, Susquehanna offers investment, fiduciary,
brokerage, insurance, retirement planning, and private banking
services, with approximately $7.9 billion in assets under
management and administration. Susquehanna also operates an
insurance brokerage and employee benefits company, a commercial
finance company, a vehicle leasing company, a mortgage division,
and a settlement services 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 words or expressions. The risks,
uncertainties and other factors that could cause actual results and
experience to differ materially from forward-looking statements or
historical performance include, but are not limited to, the
following: ineffectiveness of Susquehanna’s business strategy due
to internal or external factors, including changes in current or
future market conditions; the effects of competition, ability to
obtain regulatory approvals and meet other closing conditions to
the merger, including approval by Susquehanna shareholders on the
expected terms and schedule; delay in closing the merger;
difficulties and delays in integrating the Susquehanna business or
fully realizing cost savings and other benefits; business
disruption following the merger; changes in asset quality and
credit risk; the inability to sustain revenue and earnings growth;
changes in interest rates and capital markets; inflation; customer
acceptance of BB&T products and services; customer borrowing,
repayment, investment and deposit practices; customer
disintermediation; the introduction, withdrawal, success and timing
of business initiatives; competitive conditions; the inability to
realize cost savings or revenues or to implement integration plans
and other consequences associated with mergers, acquisitions and
divestitures; economic conditions; and the impact, extent and
timing of technological changes, capital management activities, and
other actions of the Federal Reserve Board, and legislative and
regulatory actions and reforms; and the other factors detailed in
Susquehanna’s and BB&T’s filings with the Securities and
Exchange Commission (“SEC”). 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.
Important Additional Information and Where to Find It
In connection with the proposed merger, BB&T has filed with
the SEC a Registration Statement on Form S-4 that includes a Proxy
Statement of Susquehanna and a Prospectus of BB&T, as well as
other relevant documents concerning the proposed transaction. This
communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. SHAREHOLDERS OF SUSQUEHANNA ARE URGED TO READ
THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS
REGARDING THE MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION.
A free copy of the Proxy Statement/Prospectus, as well as other
filings containing information about BB&T and Susquehanna, may
be obtained at the SEC’s Internet site (http://www.sec.gov). You
will also be able to obtain these documents, free of charge, from
BB&T at www.bbt.com under the heading “About” and then under
the heading “Investor Relations” and then under “BB&T
Corporation SEC Filings” or from Susquehanna by accessing
Susquehanna’s website at www.susquehanna.net under the heading
“Investor Relations” and then under “SEC Filings”. Copies of the
Proxy Statement/Prospectus can also be obtained, free of charge, by
directing a request to BB&T Corporation, 150 South Stratford
Road, Suite 300, Winston-Salem, North Carolina 27104, Attention:
Shareholder Services, Telephone: (336) 733-3065 or to Susquehanna
Bancshares, Inc., 26 North Cedar Street, Lititz, Pennsylvania
17543, Attention: Jason H. Weber, Senior Vice President and
Director of Investor Relations, Telephone (717) 626-9801. In
addition, Susquehanna uses its Investor Relations website and
social media outlets as channels of distribution of material
company information. Such information is accessible on
Susquehanna’s Investor Relations website, as well as on
Susquehanna’s Facebook page and through its Twitter account and
LinkedIn account.
Susquehanna and certain of its directors and executive officers
may be deemed to be participants in the solicitation of proxies
from the shareholders of Susquehanna in connection with the
proposed merger. Information about the directors and executive
officers of Susquehanna and their ownership of Susquehanna common
stock is set forth in the proxy statement for Susquehanna’s 2014
annual meeting of shareholders, as filed with the SEC on Schedule
14A on March 21, 2014. Additional information regarding the
interests of those participants and other persons who may be deemed
participants in the transaction may be obtained by reading the
Proxy Statement/Prospectus regarding the proposed merger when it
becomes available. Free copies of this document may be obtained as
described in the preceding paragraph.
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
SUMMARY CONSOLIDATED FINANCIAL INFORMATION (in
thousands, except per share data)
Twelve Months YTD 4Q14 3Q14 2Q14
1Q14 4Q13 2014 2013 Balance Sheet
(EOP) Investments
$ 2,553,655 $ 2,325,734 $
2,324,782 $ 2,445,322 $ 2,533,456
$ 2,553,655 $
2,533,456 Loans and leases
13,517,882 13,425,721 13,667,153
13,575,295 13,576,086
13,517,882 13,576,086 Allowance for
loan and lease losses (ALLL)
136,522 136,870 144,483 154,150
157,608
136,522 157,608 Total assets
18,661,390
18,583,327 18,506,626 18,439,682 18,473,489
18,661,390
18,473,489 Deposits
13,721,843 13,588,524 13,314,994
13,079,523 12,869,372
13,721,843 12,869,372 Other short-term
borrowings
516,089 532,675 527,079 584,664 555,740
516,089 555,740 Federal Home Loan Bank borrowings
913,449 915,362 1,127,302 1,229,296 1,531,282
913,449
1,531,282 Other long-term debt
351,904 356,117 360,033
448,521 453,260
351,904 453,260 Shareholders' equity
2,753,925 2,751,260 2,796,392 2,755,199 2,717,587
2,753,925 2,717,587
Average Balance Sheet
Investments
$ 2,431,597 $ 2,293,302 $ 2,395,690 $
2,505,937 $ 2,616,807
$ 2,406,117 $ 2,577,207 Loans
and leases
13,438,494 13,499,686 13,589,533 13,574,526
13,421,474
13,525,116 13,189,499 Total earning assets
15,954,179 15,872,628 16,066,177 16,162,210 16,124,369
16,013,119 15,863,531 Total assets
18,628,209
18,411,529 18,378,127 18,411,873 18,437,954
18,468,693
18,201,159 Deposits
13,653,638 13,395,247 13,131,617
12,874,040 12,806,503
13,266,132 12,777,738 Other short-term
borrowings
535,633 541,363 552,367 671,653 671,923
575,894 743,718 Federal Home Loan Bank borrowings
914,287 961,483 1,174,611 1,387,124 1,502,120
1,107,675 1,247,209 Other long-term debt
354,179
358,502 396,367 451,267 455,787
389,727 483,888
Shareholders' equity
2,757,933 2,775,786 2,768,665 2,726,465
2,679,242
2,760,143 2,646,339
Income Statement
Net interest income
$ 135,384 $ 136,465 $ 141,694 $
140,064 $ 142,688
$ 553,607 $ 585,940 Provision for
loan and lease losses
7,200 9,000 3,000 6,000 2,000
25,200 31,000 Noninterest income
46,588 44,617 45,349
42,089 50,666
178,643 183,729 Noninterest expense
130,470 124,411 125,225 123,032 135,672
503,138
490,840 Income before taxes
44,302 47,671 58,818 53,121
55,682
203,912 247,829 Provision for income taxes
13,978 14,203 15,324 15,959 14,341
59,464 74,150 Net
income
30,324 33,468 43,494 37,162 41,341
144,448
173,679 Basic earnings per common share
0.17 0.18 0.23 0.20
0.22
0.78 0.93 Diluted earnings per common share
0.17
0.18 0.23 0.20 0.22
0.78 0.92 Cash dividends paid per common
share
0.09 0.09 0.08 0.08 0.08
0.34 0.24
Asset Quality Net charge-offs (NCOs)
$ 7,548 $
16,613 $ 11,431 $ 9,458 $ 11,132
$ 45,050 $ 57,412
Nonaccrual loans and leases
$ 97,697 $ 109,506
$ 105,609 $ 108,408 $ 100,815
$ 97,697 $ 100,815
Foreclosed real estate
9,672 9,133
10,302 11,980 16,555
9,672
16,555 Total nonperforming assets (NPAs)
$ 107,369 $
118,639 $ 115,911 $ 120,388 $ 117,370
$ 107,369 $
117,370 Restructured loans
$ 46,856 $ 42,418 $
40,938 $ 39,555 $ 72,133
$ 46,856 $ 72,133 Loans and
leases 90 days past due
8,488 10,303 9,190 9,328 9,757
8,488 9,757
Credit Quality NCOs / Average
loans and leases
0.22% 0.49% 0.34% 0.28% 0.33%
0.33%
0.44% NPAs / Loans and leases + foreclosed real estate
0.79%
0.88% 0.85% 0.89% 0.86%
0.79% 0.86% ALLL / Nonaccrual loans
and leases
139.74% 124.99% 136.81% 142.19% 156.33%
139.74% 156.33% ALLL / Total loans and leases
1.01%
1.02% 1.06% 1.14% 1.16%
1.01% 1.16%
Profitability Return on average assets
0.65% 0.72%
0.95% 0.82% 0.89%
0.78% 0.95% Return on average equity
4.36% 4.78% 6.30% 5.53% 6.12%
5.23% 6.56% Return on
average tangible equity (1)
8.65% 9.41% 12.34% 11.08% 12.49%
10.34% 13.57% Net interest margin
3.46% 3.50% 3.63%
3.61% 3.60%
3.55% 3.79% Efficiency ratio (1)
70.21%
67.32% 65.63% 66.18% 68.84%
67.21% 62.55%
Per
Share Data (EOP) Closing share price
$ 13.43 $
10.00 $ 10.56 $ 11.37 $ 12.84
$ 13.43 $ 12.84 Stated
book value per common share
15.13 15.17 14.90 14.69 14.50
15.13 14.50 Tangible book value per common share (1)
7.98 7.99 7.95 7.73 7.52
7.98 7.52 Price/Book Value
88.77% 65.90% 70.88% 77.41% 88.52%
88.77% 88.52%
Price/Tangible Book Value
168.30% 125.16% 132.83% 147.09%
170.74%
168.30% 170.74% Number of outstanding shares ('000)
182,039 181,310 187,706 187,590 187,363
182,039
187,363
Capital Ratios Tangible common ratio (1)
8.56% 8.58% 8.88% 8.67% 8.44%
8.56% 8.44% Tier 1
common ratio
10.95% 10.86% 11.03% 10.84% 10.60%
10.95% 10.60% Leverage ratio
9.60% 9.61% 9.90% 9.72%
9.55%
9.60% 9.55% Tier 1 capital ratio
12.00% 11.92%
12.07% 11.95% 11.71%
12.00% 11.71% Total risk-based capital
ratio
13.16% 13.08% 13.27% 13.23% 13.04%
13.16%
13.04% (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,
2014 2014 2014 2014 2013
Assets
Cash and due from banks
$ 506,304 $ 772,677 $ 456,917
$ 389,793 $ 305,357 Unrestricted short-term investments
37,149 40,508 33,369
24,768 37,967 Cash and cash equivalents
543,453 813,185 490,286 414,561 343,324
Interest-bearing deposits held by
consolidated variable interest entities that can be used only to
settle obligations of the consolidated variable interest
entities
1,439 2,211 1,554 1,689 2,347 Restricted short-term
investments
42,949 36,943 43,926 42,993 42,913 Securities
available for sale
2,438,085 2,192,615 2,183,093 2,299,235
2,375,224 Restricted investment in bank stocks
115,570
133,119 141,689 146,087 158,232 Loans and leases, net of deferred
costs and fees
13,455,046 13,361,516 13,600,254 13,505,746
13,503,392
Loans held by consolidated variable
interest entities that can be used only to settle obligations of
the consolidated variable interest entities
62,836 64,205 66,899 69,549 72,694 Less: Allowance for loan
and lease losses
136,522 136,870
144,483 154,150 157,608
Net loans and leases
13,381,360
13,288,851 13,522,670 13,421,145
13,418,478 Premises and equipment, net
167,048
168,466 169,975 170,349 173,542 Other real estate and foreclosed
assets
10,099 9,898 11,102 12,943 17,573 Accrued interest
receivable
39,249 39,899 38,878 41,594 41,690 Bank-owned
life insurance
446,676 449,199 450,318 449,778 449,320
Goodwill
1,275,439 1,275,439 1,275,439 1,275,439 1,275,439
Intangible assets with finite lives
25,575 27,163 28,579
30,303 32,262 Deferred income tax assets
7,648 6,903 7,357
5,216 6,472 Other assets
166,800
139,436 141,760 128,350
136,673 Total assets
$ 18,661,390 $
18,583,327 $ 18,506,626 $ 18,439,682 $
18,473,489
Liabilities and Shareholders' Equity
Deposits
$ 13,721,843 $ 13,588,524 $ 13,314,994 $
13,079,523 $ 12,869,372 Federal Home Loan Bank short-term
borrowings
850,000 850,000 1,050,000 1,150,000 1,450,000
Other short-term borrowings
516,089 532,675 527,079 584,664
555,740 Federal Home Loan Bank long-term borrowings
63,449
65,362 77,302 79,296 81,282 Other long-term debt
175,217
175,219 175,222 250,224 250,227 Junior subordinated debentures
146,117 146,059 146,002 155,022 155,002
Long-term debt of consolidated variable
interest entities for which creditors do not have recourse to
Susquehanna's general credit
30,570 34,839 38,809 43,275 48,031 Accrued interest, taxes,
and expenses payable
85,075 72,044 72,664 69,404 82,150
Deferred income tax liabilities
133,932 128,389 114,119
75,911 70,308 Other liabilities
185,173
238,956 194,043 197,164
193,790 Total liabilities
15,907,465
15,832,067 15,710,234 15,684,483
15,755,902 Shareholders' equity: Common stock
365,184 363,358 376,146 375,845 375,353 Treasury stock
(5,571 ) (3,100 ) (3,075 ) (2,735 ) (2,531 )
Additional paid-in capital
1,609,663 1,605,671 1,657,699
1,654,357 1,652,116 Retained earnings
825,471 811,462
794,864 766,381 744,215 Accumulated other comprehensive loss
(40,822 ) (26,131 ) (29,242 )
(38,649 ) (51,566 ) Total shareholders' equity
2,753,925 2,751,260 2,796,392
2,755,199 2,717,587 Total
liabilities and shareholders' equity
$ 18,661,390
$ 18,583,327 $ 18,506,626 $ 18,439,682
$ 18,473,489
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
Loans and Leases and Deposits
(in thousands) Loans and Leases
12/31/14 09/30/14 06/30/14 03/31/14
12/31/13 Commercial, financial, and agricultural
$
2,430,532 $ 2,362,201 $ 2,422,931 $ 2,411,851 $ 2,394,847
Real estate - construction
788,261 817,492 748,181 714,291
735,877 Real estate secured - residential
4,194,738
4,172,943 4,178,842 4,178,505 4,204,430 Real estate secured -
commercial
3,991,379 4,016,635 4,053,990 4,041,989 4,068,816
Consumer
752,975 730,687 962,618 955,577 953,000 Leases
1,359,997 1,325,763 1,300,591
1,273,082 1,219,116 Total loans
and leases
$ 13,517,882 $ 13,425,721 $
13,667,153 $ 13,575,295 $ 13,576,086
Deposits 12/31/14 09/30/14
06/30/14 03/31/14 12/31/13 Noninterest-bearing
checking
$ 1,964,510 $ 1,958,308 $ 1,935,635 $
1,880,284 $ 1,913,526 Interest-bearing checking
3,169,017
3,087,166 2,883,679 2,908,507 2,909,376 Money market
3,509,192 3,297,699 3,025,430 3,184,719 3,144,106 Savings
1,143,596 1,122,232 1,136,044
1,132,850 1,077,923 Core
deposits
9,786,315 9,465,405
8,980,788 9,106,360 9,044,931
Time less than $100
2,179,647 2,265,787 2,266,815 2,166,207
2,113,209 Time of $100 or more
1,755,881
1,857,332 2,067,391 1,806,956
1,711,232 Total deposits
$ 13,721,843
$ 13,588,524 $ 13,314,994 $ 13,079,523 $
12,869,372
Supplemental Loan and Lease
Data (in thousands) Nonaccrual Loans and Leases
12/31/14 09/30/14 06/30/14 03/31/14
12/31/13 Commercial, financial, and agricultural
$
23,393 $ 23,121 $ 18,792 $ 24,529 $ 16,827 Real estate -
construction
6,832 7,225 7,428 11,695 13,230 Real estate
secured - residential
21,858 23,653 24,740 23,189 23,365
Real estate secured - commercial
44,980 54,484 53,687 47,950
46,147 Consumer
37 40 43 46 47 Leases
597
983 919 999 1,199
Total nonaccrual loans and leases
$ 97,697
$ 109,506 $ 105,609 $ 108,408 $ 100,815
Restructured Loans 12/31/14
09/30/14 06/30/14 03/31/14 12/31/13
Commercial, financial, and agricultural
$ 4,816 $
4,044 $ 4,228 $ 5,264 $ 6,885 Real estate - construction
315
319 322 325 615 Real estate secured - residential
20,534
20,231 18,414 16,168 31,623 Real estate secured - commercial
20,227 16,780 16,903 16,681 31,295 Consumer
964 1,044 1,071 1,117
1,715 Total restructured loans
$
46,856 $ 42,418 $ 40,938 $ 39,555 $
72,133
Net Charge-offs (Recoveries)
4Q 2014 3Q 2014 2Q 2014 1Q 2014 4Q
2013 Commercial, financial, and agricultural
$
684 $ 8,069 $ 7,274 $ 3,182 $ (480 ) Real estate -
construction
(468 ) 776 (457 ) (91 ) (3,312 ) Real
estate secured - residential
2,949 2,549 2,453 2,796 2,724
Real estate secured - commercial
3,245 3,827 730 2,134
11,060 Consumer
572 614 1,013 855 330 Leases
566 778 418 582
810 Total net charge-offs
$ 7,548
$ 16,613 $ 11,431 $ 9,458 $ 11,132
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, 2014 2014 2014 2014
2013 2014 2013 Interest
Income: Loans and leases, including deferred costs and fees
$ 147,157 $ 147,761 $ 148,002 $ 149,538 $ 151,907
$ 592,458 $ 627,833 Securities: Taxable
9,302
8,459 9,104 9,648 10,406
36,513 40,990 Tax-exempt
3,339 3,383 3,439 3,501 3,511
13,662 14,193 Dividends
1,628 2,108 2,134 1,765 1,649
7,635 5,258 Short-term
investments
23 24 23 19
21
89 108 Total
interest income
161,449 161,735 162,702
164,471 167,494
650,357 688,382
Interest Expense:
Deposits: Interest-bearing demand and savings
5,313 4,256
4,031 3,962 4,202
17,562 17,806 Time
10,699 10,803
10,246 9,628 9,597
41,376 42,712 Federal Home Loan Bank
short-term borrowings
4,455 4,554 4,597 4,621 4,449
18,227 15,187 Other short-term borrowings
2,066 2,091
2,031 2,100 2,146
8,288 8,694 Federal Home Loan Bank
long-term borrowings
210 247 243 245 254
945 1,142
Other long-term debt
3,322 3,319 (140 )
3,851 4,158
10,352
16,901 Total interest expense
26,065
25,270 21,008 24,407 24,806
96,750 102,442
Net interest
income 135,384 136,465 141,694 140,064 142,688
553,607 585,940 Provision for loan and lease losses
7,200 9,000 3,000 6,000
2,000
25,200 31,000
Net interest income, after provision for loan and lease
losses 128,184 127,465 138,694
134,064 140,688
528,407 554,940
Noninterest Income:
Service charges on deposit accounts
9,260 9,561 9,294 9,000
9,456
37,115 36,989 Vehicle origination and servicing fees
1,886 1,691 2,915 2,968 3,057
9,460 11,725 Wealth
management commissions and fees
13,163 13,199 12,669 12,719
13,048
51,750 51,333 Commissions on property and casualty
insurance sales
3,676 3,992 4,214 5,666 4,023
17,548
16,797 Other commissions and fees
5,877 5,689 5,401 5,035
5,077
22,002 18,991 Income from bank-owned life insurance
1,537 1,634 1,672 1,637 1,492
6,480 6,013 Mortgage
banking revenue
2,489 2,432 3,004 2,410 2,483
10,335
12,828 Capital markets revenue
2,437 1,593 877 1,240 3,216
6,147 7,485 Net realized gain (loss) on sales of securities
125 0 3,293 (8 ) (1,343 )
3,410 (1,394 ) Realized
gain on sale of branch properties
0 0 0 0 4,945
0
4,945 Other
6,138 4,826 2,010
1,422 5,212
14,396
18,017 Total noninterest income
46,588
44,617 45,349 42,089 50,666
178,643 183,729
Noninterest
Expenses: Salaries and employee benefits
74,806 68,042
68,325 65,581 70,837
276,754 262,638 Occupancy
12,262
12,089 11,914 13,847 11,727
50,112 45,448 Furniture and
equipment
4,076 4,043 4,058 3,944 3,865
16,121 14,851
Professional and technology services
7,122 6,168 7,189 6,070
6,404
26,549 25,137 Advertising and marketing
3,459
3,784 3,567 3,576 3,618
14,386 12,054 FDIC insurance
4,833 5,038 4,925 5,121 6,118
19,917 19,878 Legal
fees
1,918 1,699 1,656 1,527 1,968
6,800 7,422
Amortization of intangible assets
2,211 2,220 2,367 2,539
2,803
9,337 11,626 Vehicle lease disposal
2,282 2,222
2,215 2,251 1,216
8,970 5,012 Merger related
885 0 0
0 0
885 0 Branch consolidation costs
0 0 0 0 6,603
0 6,603 Other
16,616 19,106
19,009 18,576 20,513
73,307 80,171 Total noninterest expenses
130,470 124,411 125,225
123,032 135,672
503,138
490,840 Income before income taxes
44,302 47,671
58,818 53,121 55,682
203,912 247,829 Provision for income
taxes
13,978 14,203 15,324
15,959 14,341
59,464
74,150
Net Income $ 30,324 $
33,468 $ 43,494 $ 37,162 $ 41,341
$
144,448 $ 173,679 Earnings per common share:
Basic
$ 0.17 $ 0.18 $ 0.23 $ 0.20 $ 0.22
$
0.78 $ 0.93 Diluted
$ 0.17 $ 0.18 $ 0.23 $
0.20 $ 0.22
$ 0.78 $ 0.92 Cash dividends per common
share
$ 0.09 $ 0.09 $ 0.08 $ 0.08 $ 0.08
$
0.34 $ 0.24 Average common shares outstanding: Basic
181,514 184,985 187,637 187,455 187,186
185,380
186,927 Diluted
182,387 185,724 188,295 188,378 188,078
186,258 187,835
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS'
EQUITY (in thousands) Interest rates and interest
differential-taxable equivalent basis
Three Months Ended Three Months Ended
Three Months Ended Twelve Months Ended Twelve
Months Ended December 31, 2014 September 30, 2014
December 31, 2013 December 31, 2014 December 31,
2013 Average Average Average
Average Average Balance Interest
Rate (%) Balance Interest
Rate (%) Balance Interest
Rate (%) Balance Interest
Rate (%) Balance Interest
Rate (%) Assets Short-term investments
$
84,088 $ 23 0.11 $ 79,640 $ 24 0.12 $
86,088 $ 20 0.09
$ 81,886 $ 89
0.11 $ 96,825 $ 108 0.11 Investment securities: Taxable(1)
2,060,163 10,930 2.10 1,915,888 10,567 2.19
2,227,191 12,055 2.15
2,026,334 44,147 2.18
2,182,121 46,248 2.12 Tax-exempt(1)(2)
371,434
5,135 5.48 377,414
5,205 5.47 389,616 5,403 5.50
379,783 21,018
5.53 395,086 21,835 5.53 Total
investment securities
2,431,597
16,065 2.62 2,293,302
15,772 2.73 2,616,807 17,458
2.65
2,406,117 65,165
2.71 2,577,207 68,083 2.64 Loans
and leases, (net): Taxable(3)
13,011,088 143,336
4.37 13,067,543 144,248 4.38 13,003,680 148,469 4.53
13,092,042 578,135 4.42 12,772,845 614,158
4.81 Tax-exempt(2)(3)
427,406
5,880 5.46 432,143 5,405
4.96 417,794 5,289 5.02
433,074 22,037 5.09
416,654 21,038 5.05 Total loans and
leases
13,438,494 149,216
4.41 13,499,686 149,653 4.40
13,421,474 153,758 4.55
13,525,116 600,172 4.44
13,189,499 635,196 4.82 Total
interest-earning assets
15,954,179 165,304
4.11 15,872,628 165,449 4.14 16,124,369
171,236 4.21
16,013,119 665,426
4.16 15,863,531 703,387 4.43 Allowance
for loan and lease losses
(137,293 ) (144,674 )
(165,298 )
(148,465 ) (176,782 ) Other non-earning
assets
2,811,323 2,683,575
2,478,883
2,604,039
2,514,410 Total assets
$ 18,628,209
$ 18,411,529 $ 18,437,954
$
18,468,693 $ 18,201,159 Liabilities
Deposits: Interest-bearing demand
$ 6,558,482
5,025 0.30 $ 6,165,175 3,970 0.26 $ 6,058,107 3,915
0.26
$ 6,189,947 16,397 0.26 $
5,968,726 16,661 0.28 Savings
1,134,827 288
0.10 1,131,551 286 0.10 1,075,598 286 0.11
1,125,299
1,166 0.10 1,070,248 1,144 0.11 Time
3,984,083
10,699 1.07 4,133,949 10,803 1.04 3,791,625 9,597
1.00
4,040,076 41,375 1.02 3,833,262 42,713
1.11 Other short-term borrowings
535,633 2,066
1.53 541,363 2,091 1.53 671,923 2,146 1.27
575,894
8,288 1.44 743,718 8,695 1.17 FHLB borrowings
914,287 4,666 2.02 961,483 4,801 1.98
1,502,120 4,704 1.24
1,107,675 19,173 1.73
1,247,209 16,329 1.31 Long-term debt(4)
354,179
3,321 3.72 358,502
3,319 3.67 455,787 4,158
3.62
389,727 10,351
2.66 483,888 16,900 3.49
Total interest-bearing liabilities
13,481,491
26,065 0.77 13,292,023 25,270
0.75 13,555,160 24,806 0.73
13,428,618
96,750 0.72 13,347,051 102,442
0.77 Demand deposits
1,976,246 1,964,572 1,881,173
1,910,810 1,905,502 Other liabilities
412,539
379,148 322,379
369,122 302,267 Total
liabilities
15,870,276 15,635,743 15,758,712
15,708,550 15,554,820 Equity
2,757,933
2,775,786 2,679,242
2,760,143 2,646,339 Total
liabilities & shareholders' equity
$ 18,628,209
$ 18,411,529 $ 18,437,954
$
18,468,693 $ 18,201,159
Net interest income / yield on average
earning assets
$ 139,239 3.46 $ 140,179 3.50 $ 146,430 3.60
$ 568,676 3.55 $ 600,945 3.79 Taxable
equivalent adjustment
(3,855 ) (3,714 )
(3,742 )
(15,069 ) (15,005 ) Net
interest income - as reported
$ 135,384 $
136,465 $ 142,688
$ 553,607 $
585,940
(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.
(4)
Includes $3.7 million purchase accounting
adjustment on redemption of junior subordinated debt in second
quarter of 2014.
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
Appendix A - GAAP to Non-GAAP
Reconciliation Twelve Months Ended (Dollars and share
data in thousands)
December 4Q14 3Q14
2Q14 1Q14 4Q13 2014 2013
Efficiency
Ratio
Other expense
$ 130,470 $ 124,411 $ 125,225 $ 123,032
$ 135,672
$ 503,138 $ 490,840 Less: Merger related
expenses
0 0 0
0 0
(885
)
0 Noninterest operating expense (numerator)
$
130,470 $ 124,411 $ 125,225 $ 123,032
$ 135,672
$ 502,253 $ 490,840
Taxable-equivalent net interest income
$
139,239 $ 140,179 $ 145,447 $ 143,813 $ 146,430
568,676 $ 600,945 Other income
46,588
44,617 45,349 42,089
50,666
178,643 183,729
Noninterest operating income (denominator)
$
185,827 $ 184,796 $ 190,796 $ 185,902
$ 197,096
$ 747,319 $ 784,674
Efficiency ratio 70.21 %
67.32 % 65.63 % 66.18 % 68.84 %
67.21 % 62.55 % 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
$
2,753,925 $ 2,751,260 $ 2,796,392 $ 2,755,199 $ 2,717,587
$ 2,753,925 $ 2,717,587 Goodwill and other intangible
assets (1)
(1,265,178 ) (1,265,598 )
(1,265,846 ) (1,266,403 ) (1,264,839 )
(1,265,178 ) (1,264,839 ) Tangible common
equity (numerator)
$ 1,488,747 $ 1,485,662
$ 1,530,546 $ 1,488,796 $ 1,452,748
$ 1,488,747 $ 1,452,748 Assets
$ 18,661,390 $ 18,583,327 $ 18,506,626 $ 18,439,682 $
18,473,489
$ 18,661,390 $ 18,473,489 Goodwill and
other intangible assets (1)
(1,265,178 )
(1,265,598 ) (1,265,846 ) (1,266,403 )
(1,264,839 )
(1,265,178 ) (1,264,839 )
Tangible assets (denominator)
$ 17,396,212 $
17,317,729 $ 17,240,780 $ 17,173,279 $
17,208,650
$ 17,396,212 $ 17,208,650
Tangible common ratio 8.56 %
8.58 % 8.88 % 8.67 % 8.44 %
8.56 % 8.44 % 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
Return on Average
Tangible Equity
Income statement data Net income
$ 30,324 $ 33,468 $
43,494 $ 37,162 $ 41,341
$ 144,448 $ 173,679
Amortization of intangibles, net of taxes at 35%
1,437 1,443 1,539
1,650 1,822
6,069
7,557 Net tangible income (numerator)
$ 31,761
$ 34,911 $ 45,033 $ 38,812 $ 43,163
$ 150,517 $ 181,236
Average balance sheet data Shareholders' equity
$
2,757,933 $ 2,775,786 $ 2,768,665 $ 2,726,465 $ 2,679,242
$ 2,760,143 $ 2,646,339 Goodwill and other intangible
assets
(1,301,750 ) (1,303,275 )
(1,304,736 ) (1,306,298 ) (1,308,690 )
(1,304,001 ) (1,310,928 ) Tangible common
equity (denominator)
$ 1,456,183 $ 1,472,511
$ 1,463,929 $ 1,420,167 $ 1,370,552
$ 1,456,142 $ 1,335,411 Return
on equity (GAAP basis)
4.36 % 4.78 % 6.30 % 5.53 %
6.12 %
5.23 % 6.56 % Effect of goodwill and other
intangibles
4.29 % 4.63 % 6.04 %
5.55 % 6.37 %
5.11 % 7.01
%
Return on average tangible equity 8.65
% 9.41 % 12.34 % 11.08 % 12.49 %
10.34 % 13.57 % 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
$
2,753,925 $ 2,751,260 $ 2,796,392 $ 2,755,199 $ 2,717,587
$ 2,753,925 $ 2,717,587 Goodwill and other intangible
assets
(1,301,014 ) (1,302,602 )
(1,304,018 ) (1,305,742 ) (1,307,701 )
(1,301,014 ) (1,307,701 ) Tangible common
equity (numerator)
$ 1,452,911 $ 1,448,658
$ 1,492,374 $ 1,449,457 $ 1,409,886
$ 1,452,911 $ 1,409,886 Common
shares outstanding (denominator)
182,039
181,310 187,706 187,590
187,363
182,039 187,363
Tangible book value per common share $
7.98 $ 7.99 $ 7.95 $ 7.73 $ 7.52
$ 7.98 $ 7.52 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 4Q14 3Q14 2Q14
1Q14 4Q13
Net Interest
Margin (excluding purchase accounting)
Reported net interest margin (GAAP basis)
3.46 % 3.50
% 3.63 % 3.61 % 3.60 % Adjustments for purchase accounting: Loans
and leases
-0.12 % -0.10 % -0.12 % -0.17 % -0.11 %
Deposits
-0.02 % -0.02 % -0.03 % -0.03 % -0.03 %
Borrowings
-0.01 % -0.01 % -0.10 % -0.01 % -0.01 %
Net Interest Margin (excluding purchase
accounting)
3.31 % 3.37 % 3.38 % 3.40 % 3.45 % 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.
Susquehanna Bancshares, Inc.INVESTOR RELATIONS
CONTACT:Jason H. Weber, Director of Investor
Relations717-626-9801orMEDIA RELATIONS CONTACT:Stephen
Trapnell, Director of Corporate Communications717-625-6548
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