Second Quarter
Highlights
- GAAP Diluted EPS of $0.19
- Solid Deposit and Commercial Loan
Growth
- Strong Asset Quality
- Capital Ratios Continue to
Build
Susquehanna Bancshares, Inc. (Susquehanna) (NASDAQ: SUSQ) today
announced that it earned net income for the second quarter ended
June 30, 2015 of $35.7 million, or $0.19 per diluted share. This
compares to net income of $29.0 million, or $0.16 per diluted
share, for the first quarter of 2015 and $43.5 million, or $0.23
per diluted share, for the second quarter of 2014. Of note, the
first and second quarter of 2015 included after-tax merger related
expenses of $2.9 million and $783,000, respectively.
Linked Quarter Results (Second Quarter 2015 vs. First Quarter
2015)
- Loans and leases decreased $3.4 million
from March 31, 2015 to $13.5 billion at June 30, 2015. Changes for
the quarter in each major loan category were as follows:
- Commercial loans increased 1.6%.
- Real estate – construction loans
decreased 9.8%.
- Real estate secured – residential loans
decreased 1.6%.
- Real estate secured – commercial loans
increased 0.6%.
- Consumer loans increased 4.6%.
- Leases increased 2.8%.
- Total deposits increased $224 million
or 1.6% from March 31, 2015 to $14.0 billion at June 30, 2015.
Changes for the quarter in each major deposit category were as
follows:
- Non-interest bearing checking increased
1.7%.
- Interest-bearing checking decreased
0.5%.
- Money market deposits decreased
4.2%.
- Savings deposits increased 0.8%.
- Time deposits increased 9.1%.
- Net interest margin decreased 8 basis
points to 3.32% for the second quarter of 2015 compared to 3.40%
for the first quarter of 2015. Net interest margin (excluding
purchase accounting) (1) decreased 5 basis points to 3.26% for the
second quarter of 2015.
- Net interest income decreased to $130.6
million for the second quarter of 2015 compared to $131.6 million
for the first quarter of 2015. The increase in average earning
assets and one more day in the quarter was more than offset by a
decline in net interest margin in the second quarter of 2015
compared to the first quarter of 2015.
- Non-interest income increased to $45.3
million for the second quarter of 2015 compared to $42.3 million
for the first quarter of 2015. The second quarter benefited from
seasonally-strong service charges on deposit accounts. The second
quarter of 2015 also included a pre-tax gain from the sale of a
portion of the captive brokerage business of $2.2 million.
- Non-interest expense decreased to
$120.5 million for the second quarter of 2015 compared to $126.6
million for the first quarter of 2015. The decrease was driven by a
reduction in merger-related expenses. The second quarter of 2015
included pre-tax merger-related expenses of $1.2 million compared
to $4.4 million for the first quarter of 2015.
- The efficiency ratio (1), which
excludes merger-related expenses, decreased to 66.46% for the
second quarter of 2015 compared to 68.81% for the first quarter of
2015.
- Non-performing assets as a percentage
of loans, leases and foreclosed real estate owned decreased to
0.71% at June 30, 2015 compared to 0.73% at March 31, 2015.
- The provision for loan and lease losses
for the second quarter of 2015 decreased to $5.2 million compared
to $5.8 million for the first quarter of 2015. Net charge-offs for
the second quarter of 2015 decreased to $5.1 million, or 0.15% of
average loans and leases, compared to $7.6 million, or 0.23% of
average loans and leases, for the first quarter of 2015. As a
result, the allowance for loan and lease losses was $134.9 million
at June 30, 2015, representing 1.00% of total loans and leases and
156% of nonaccrual loans and leases compared to $134.8 million at
March 31, 2015, representing 1.00% of total loans and leases and
151% of nonaccrual loans and leases.
Second Quarter Results (Second Quarter 2015 vs. Second
Quarter 2014)
- Loans and leases decreased $182.6
million or 1.3% from June 30, 2014 to $13.5 billion at June 30,
2015. 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 2.3%.
- Real estate - construction loans
decreased 4.9%.
- Real estate secured - residential loans
decreased 2.3%.
- Real estate secured - commercial loans
decreased 2.2%.
- Consumer loans decreased 15.1%.
- Leases increased 10.0%.
- Total deposits increased $674 million
or 5.1% from June 30, 2014 to $14.0 billion as of June 30, 2015.
Changes for the twelve month period in each major deposit category
were as follows:
- Non-interest-bearing checking increased
6.1%.
- Interest-bearing checking increased
8.8%.
- Money market deposits increased
13.4%.
- Savings deposits increased 6.4%.
- Time deposits decreased 4.1%.
- Net interest margin decreased 31 basis
points to 3.32% for the second quarter of 2015 compared to 3.63%
for the second quarter of 2014. As a result, net interest income
decreased to $130.6 million for the second quarter of 2015 compared
to $141.7 million for the second quarter of 2014.
- Non-interest income was flat at $45.3
million for the second quarter of 2015 compared to the second
quarter of 2014. The second quarter of 2015 included a pre-tax gain
from the sale of a portion of the captive brokerage business of
$2.2 million.
- Non-interest expense decreased to
$120.5 million for the second quarter of 2015 compared to $125.2
million for the second quarter of 2014. The second quarter of 2015
included pre-tax merger-related expenses of $1.2 million.
- The efficiency ratio (1), which
excludes merger-related expenses, increased to 66.46% for the
second quarter of 2015 compared to 65.63% for the first quarter of
2014.
- Non-performing assets as a percentage
of loans, leases and foreclosed real estate decreased to 0.71% at
June 30, 2015 compared to 0.85% at June 30, 2014.
- The provision for loan and lease losses
increased to $5.2 million for the second quarter of 2015 compared
to $3.0 million for the second quarter of 2014. Net charge-offs as
a percentage of average loans and leases decreased to 0.15% for the
second quarter of 2015 compared to 0.34% for the second quarter of
2014. The allowance for loan and lease losses was $134.9 million at
June 30, 2015, representing 1.00% of total loans and leases and
156% of nonaccrual loans and leases, compared to $144.5 million at
June 30, 2014, representing 1.06% of total loans and leases and
137% of nonaccrual loans and leases.
- Return on average assets and average
tangible equity (1) decreased to 0.77% and 10.01%, respectively for
the second quarter of 2015 compared to 0.95% and 12.34%,
respectively for the second quarter of 2014.
- Susquehanna’s capital ratios, which
continue to exceed internal capital targets and those required to
be considered “well-capitalized” under the current regulatory
requirements, continued to build with a Tier 1 common ratio of
11.01%, Tier 1 capital ratio of 12.04%, Total risk-based capital
ratio of 13.15% and a Leverage ratio of 9.94%, each as of June 30,
2015.
(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 July 7, 2015, BB&T Corporation
(“BB&T”) announced that it received regulatory approval from
the Board of Governors of the Federal Reserve System, the Federal
Deposit Insurance Corporation and all required state regulators to
acquire Susquehanna pursuant to the Agreement and Plan of Merger,
dated as of November 11, 2014, by and between BB&T and
Susquehanna (the “Merger Agreement”). The transaction closing is
expected to be effective August 1, 2015, and systems conversion is
expected during the fourth quarter 2015.As a result, Susquehanna’s
Board of Directors does not expect to declare a dividend for the
third quarter of 2015 in order to coordinate the timing of its
payment of quarterly dividends with BB&T, as contemplated by
the Merger Agreement. Former Susquehanna shareholders will be
entitled to receive, in respect of the stock portion of the merger
consideration, any third quarter dividend declared by BB&T in
respect of its common stock, except as to any stock portion of the
merger consideration disposed of prior to the record date for any
such dividend.
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 244
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 $7.3 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
meet the closing conditions to our pending merger with BB&T
delay in closing 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
borrowing, repayment, investment and deposit practices; customer
disintermediation; the introduction, withdrawal, success and timing
of business initiatives; competitive conditions; 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.
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)
Six Months YTD 2Q15 1Q15
4Q14 3Q14 2Q14 2015
2014 Balance Sheet (EOP) Investments
$
2,738,867 $ 2,683,358 $ 2,553,655 $ 2,325,734 $ 2,324,782
$ 2,738,867 $ 2,324,782 Loans and leases
13,484,555 13,487,951 13,517,882 13,425,721 13,667,153
13,484,555 13,667,153 Allowance for loan and lease losses
(ALLL)
134,861 134,733 136,522 136,870 144,483
134,861 144,483 Total assets
18,659,693 18,697,294
18,661,390 18,583,327 18,506,626
18,659,693 18,506,626
Deposits
13,988,958 13,765,305 13,721,843 13,588,524
13,314,994
13,988,958 13,314,994 Other short-term borrowings
397,023 506,756 516,089 532,675 527,079
397,023
527,079 Federal Home Loan Bank borrowings
750,216 911,674
913,449 915,362 1,127,302
750,216 1,127,302 Other long-term
debt
321,445 321,389 351,904 356,117 360,033
321,445
360,033 Shareholders' equity
2,785,466 2,780,177 2,753,925
2,751,260 2,796,392
2,785,466 2,796,392
Average
Balance Sheet Investments
$ 2,692,333 $ 2,558,973
$ 2,431,597 $ 2,293,302 $ 2,395,690
$ 2,626,021 $
2,450,509 Loans and leases
13,458,008 13,468,346 13,438,494
13,499,686 13,589,533
13,463,148 13,582,071 Total earning
assets
16,226,272 16,118,051 15,954,179 15,872,628
16,066,177
16,172,460 16,114,489 Total assets
18,546,000 18,618,267 18,628,209 18,411,529 18,378,127
18,581,942 18,419,028 Deposits
13,837,372 13,662,357
13,653,638 13,395,247 13,131,617
13,750,348 13,003,540 Other
short-term borrowings
432,026 525,107 535,633 541,363
552,367
478,309 611,681 Federal Home Loan Bank borrowings
763,114 912,395 914,287 961,483 1,174,611
837,342
1,280,280 Other long-term debt
321,417 348,418 354,179
358,502 396,367
334,843 423,666 Shareholders' equity
2,780,436 2,761,177 2,757,933 2,775,786 2,768,665
2,700,643 2,753,315
Income Statement Net
interest income
$ 130,635 $ 131,638 $ 135,384 $
136,465 $ 141,694
$ 262,273 $ 281,758 Provision for
loan and lease losses
5,200 5,799 7,200 9,000 3,000
10,999 9,000 Noninterest income
45,295 42,312 46,588
44,617 45,349
87,607 87,438 Noninterest expense
120,517 126,590 130,470 124,411 125,225
247,107
248,257 Income before taxes
50,213 41,561 44,302 47,671
58,818
91,774 111,939 Provision for income taxes
14,473 12,536 13,978 14,203 15,324
27,009 31,283 Net
income
35,740 29,025 30,324 33,468 43,494
64,765
80,656 Basic earnings per common share
0.20 0.16 0.17 0.18
0.23
0.36 0.43 Diluted earnings per common share
0.19
0.16 0.17 0.18 0.23
0.35 0.43 Cash dividends paid per common
share
0.09 0.09 0.09 0.09 0.08
0.18 0.16
Asset Quality Net charge-offs (NCOs)
$ 5,072 $
7,588 $ 7,548 $ 16,613 $ 11,431
$ 12,660 $ 20,889
Nonaccrual loans and leases
$ 86,205 $ 89,333
$ 97,697 $ 109,506 $ 105,609
$ 86,205 $ 105,609
Foreclosed real estate
10,099 9,575
9,672 9,133 10,302
10,099 10,302
Total nonperforming assets (NPAs)
$ 96,304 $ 98,908 $
107,369 $ 118,639 $ 115,911
$ 96,304 $ 115,911
Restructured loans
$ 49,627 $ 47,850 $ 46,856 $
42,418 $ 40,938
$ 49,627 $ 40,938 Loans and leases 90
days past due
5,984 3,506 8,488 10,303 9,190
5,984
9,190
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
SUMMARY CONSOLIDATED FINANCIAL
INFORMATION(in thousands, except per share data)
Six Months YTD
2Q15
1Q15
4Q14
3Q14
2Q14
2015
2014
Credit Quality NCOs / Average loans and leases
0.15
% 0.23 % 0.22 % 0.49 % 0.34 %
0.19 % 0.31 %
NPAs / Loans and leases + foreclosed real estate
0.71
% 0.73 % 0.79 % 0.88 % 0.85 %
0.71 % 0.85 %
ALLL / Nonaccrual loans and leases
156.44 % 150.82 %
139.74 % 124.99 % 136.81 %
156.44 % 136.81 % ALLL /
Total loans and leases
1.00 % 1.00 % 1.01 % 1.02 %
1.06 %
1.00 % 1.06 %
Profitability
Return on average assets
0.77 % 0.63 % 0.65 % 0.72 %
0.95 %
0.70 % 0.88 % Return on average equity
5.16 % 4.26 % 4.36 % 4.78 % 6.30 %
4.84
% 5.91 % Return on average tangible equity (1)
10.01
% 8.41 % 8.65 % 9.41 % 12.34 %
9.71 % 11.68 %
Net interest margin
3.32 % 3.40 % 3.46 % 3.50 % 3.63
%
3.36 % 3.62 % Efficiency ratio (1)
66.46
% 68.81 % 69.73 % 67.32 % 65.63 %
67.63 %
65.90 %
Per Share Data (EOP) Closing share price
$ 14.12 $ 13.71 $ 13.43 $ 10.00 $ 10.56
$
14.12 $ 10.56 Stated book value per common share
15.27 15.25 15.13 15.17 14.90
15.27 14.90 Tangible
book value per common share (1)
8.15 8.12 7.98 7.99 7.95
8.15 7.95 Price/Book Value
92.48 % 89.88 %
88.77 % 65.90 % 70.88 %
92.48 % 70.88 %
Price/Tangible Book Value
173.25 % 168.84 % 168.30 %
125.16 % 132.83 %
173.25 % 132.83 % Number of
outstanding shares ('000)
182,427 182,256 182,039 181,310
187,706
182,427 187,706
Capital Ratios
Preliminary Preliminary Tangible common ratio (1)
8.69 % 8.63 % 8.56 % 8.58 % 8.88 %
8.69
% 8.88 % Common equity Tier 1 ratio (2)
11.01
% 10.81 % 10.95 % 10.86 % 11.03 %
11.01 %
11.03 % Tier 1 capital ratio (2)
12.04 % 11.83 %
12.00 % 11.92 % 12.07 %
12.04 % 12.07 % Total
risk-based capital ratio (2)
13.15 % 12.94 % 13.16 %
13.08 % 13.27 %
13.15 % 13.27 % Leverage ratio (2)
9.94 % 9.77 % 9.61 % 9.61 % 9.90 %
9.94
% 9.90 % (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
(2) March 31, 2015 and forward, ratios computed under Basel
III guidelines. Previous quarters computed under Basel I
guidelines.
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
June 30, March 31, December 31, September
30, June 30, 2015 2015 2014
2014 2014 Assets Cash and due from
banks
$ 402,650 $ 446,797 $ 506,304 $ 772,677 $
456,917 Unrestricted short-term investments
15,772
34,183 37,149 40,508
33,369 Cash and cash equivalents
418,422 480,980 543,453 813,185 490,286
Interest-bearing deposits held by
consolidated variable interest entities that can be used only to
settle obligations of the consolidated variable interest
entities
0 0 1,439 2,211 1,554 Restricted short-term investments
42,334 54,884 42,949 36,943 43,926 Securities available for
sale
2,630,113 2,567,988 2,438,085 2,192,615 2,183,093
Restricted investment in bank stocks
108,754 115,370 115,570
133,119 141,689 Loans and leases, net of deferred costs and fees
13,484,555 13,487,951 13,455,046 13,361,516 13,600,254
Loans held by consolidated variable
interest entities that can be used only to settle obligations of
the consolidated variable interest entities
0 0 62,836 64,205 66,899 Less: Allowance for loan and lease
losses
134,861 134,733
136,522 136,870 144,483 Net
loans and leases
13,349,694 13,353,218
13,381,360 13,288,851
13,522,670 Premises and equipment, net
158,776
162,323 167,048 168,466 169,975 Other real estate and foreclosed
assets
10,526 10,002 10,099 9,898 11,102 Accrued interest
receivable
38,142 40,151 39,249 39,899 38,878 Bank-owned
life insurance
447,841 447,659 446,676 449,199 450,318
Goodwill
1,275,439 1,275,439 1,275,439 1,275,439 1,275,439
Intangible assets with finite lives
22,786 24,240 25,575
27,163 28,579 Deferred income tax assets
7,221 7,012 7,648
6,903 7,357 Other assets
149,645
158,028 166,800 139,436
141,760 Total assets
$ 18,659,693 $
18,697,294 $ 18,661,390 $ 18,583,327 $
18,506,626
Liabilities and Shareholders' Equity
Deposits
$ 13,988,958 $ 13,765,305 $ 13,721,843 $
13,588,524 $ 13,314,994 Federal Home Loan Bank short-term
borrowings
700,000 850,000 850,000 850,000 1,050,000 Other
short-term borrowings
397,023 506,756 516,089 532,675
527,079 Federal Home Loan Bank long-term borrowings
50,216
61,674 63,449 65,362 77,302 Other long-term debt
175,212
175,214 175,217 175,219 175,222 Junior subordinated debentures
146,233 146,175 146,117 146,059 146,002
Long-term debt of consolidated variable
interest entities for which creditors do not have recourse to
Susquehanna's general credit
0 0 30,570 34,839 38,809 Accrued interest, taxes, and
expenses payable
77,534 66,791 85,075 72,044 72,664 Deferred
income tax liabilities
158,092 153,556 133,932 128,389
114,119 Other liabilities
180,959
191,646 185,173 238,956
194,043 Total liabilities
15,874,227
15,917,117 15,907,465 15,832,067
15,710,234 Shareholders' equity: Common stock
365,966 365,624 365,184 363,358 376,146 Treasury stock
(5,610 ) (5,599 ) (5,571 ) (3,100 ) (3,075 )
Additional paid-in capital
1,615,021 1,612,414 1,609,663
1,605,671 1,657,699 Retained earnings
857,441 838,109
825,471 811,462 794,864 Accumulated other comprehensive loss
(47,352 ) (30,371 ) (40,822 )
(26,131 ) (29,242 ) Total shareholders' equity
2,785,466 2,780,177 2,753,925
2,751,260 2,796,392 Total
liabilities and shareholders' equity
$ 18,659,693
$ 18,697,294 $ 18,661,390 $ 18,583,327
$ 18,506,626
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
Loans and Leases and Deposits
(in
thousands) Loans and Leases 06/30/15
03/31/15 12/31/14 09/30/14 06/30/14
Commercial, financial, and agricultural
$ 2,478,587 $
2,438,733 $ 2,430,532 $ 2,362,201 $ 2,422,931 Real estate -
construction
711,306 788,639 788,261 817,492 748,181 Real
estate secured - residential
4,084,206 4,148,908 4,194,738
4,172,943 4,178,842 Real estate secured - commercial
3,963,545 3,938,798 3,991,379 4,016,635 4,053,990 Consumer
816,794 781,083 752,975 730,687 962,618 Leases
1,430,117 1,391,790 1,359,997 1,325,763
1,300,591 Total loans and leases
$ 13,484,555
$ 13,487,951 $ 13,517,882 $ 13,425,721 $ 13,667,153
Deposits 06/30/15 03/31/15 12/31/14
09/30/14 06/30/14 Noninterest-bearing checking
$ 2,054,164 $ 2,019,931 $ 1,964,510 $ 1,958,308 $
1,935,635 Interest-bearing checking
3,138,471 3,154,347
3,169,017 3,087,166 2,883,679 Money market
3,430,109
3,580,414 3,509,192 3,297,699 3,025,430 Savings
1,208,660 1,199,154 1,143,596 1,122,232
1,136,044 Core deposits
$ 9,831,404 $
9,953,846 9,786,315 9,465,405 8,980,788 Time
less than $100
2,219,554 2,160,417 2,179,647 2,265,787
2,266,815 Time of $100 or more
1,938,000
1,651,042 1,755,881 1,857,332 2,067,391 Total
deposits
$ 13,988,958 $ 13,765,305 $ 13,721,843 $
13,588,524 $ 13,314,994
Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
Supplemental Loan and Lease Data
(in
thousands) Nonaccrual Loans and Leases 06/30/15
03/31/15 12/31/14 09/30/14 06/30/14
Commercial, financial, and agricultural
$ 20,182 $
21,749 $ 23,393 $ 23,121 $ 18,792 Real estate - construction
6,350 6,539 6,832 7,225 7,428 Real estate secured -
residential
22,428 25,420 21,858 23,653 24,740 Real estate
secured - commercial
35,866 34,421 44,980 54,484 53,687
Consumer
31 34 37 40 43 Leases
1,348
1,170 597 983 919 Total
nonaccrual loans and leases
$ 86,205 $ 89,333
$ 97,697 $ 109,506 $ 105,609
Restructured Loans 06/30/15 03/31/15
12/31/14 09/30/14 06/30/14 Commercial,
financial, and agricultural
$ 4,427 $ 4,534 $ 4,816 $
4,044 $ 4,228 Real estate - construction
1,213 1,221 315 319
322 Real estate secured - residential
17,588 16,036 20,534
20,231 18,414 Real estate secured - commercial
25,599 25,120
20,227 16,780 16,903 Consumer
800 939
964 1,044 1,071 Total
restructured loans
$ 49,627 $ 47,850 $ 46,856
$ 42,418 $ 40,938
Net Charge-offs
(Recoveries) 2Q 2015 1Q 2015 4Q 2014 3Q
2014 2Q 2014 Commercial, financial, and agricultural
$ 1,010 $ 4,121 $ 684 $ 8,069 $ 7,274 Real estate -
construction
342 35 (468 ) 776 (457 ) Real estate secured -
residential
1,369 2,918 2,949 2,549 2,453 Real estate
secured - commercial
1,123 (222 ) 3,245 3,827 730 Consumer
678 419 572 614 1,013 Leases
550 317
566 778 418 Total net
charge-offs
$ 5,072 $ 7,588 $ 7,548 $
16,613 $ 11,431
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 Six Months
Ended June 30, March 31, December 31,
September 30, June 30, June 30, 2015
2015 2014 2014 2014 2015 2014
Interest Income:
Loans and leases, including deferred costs and fees
$
139,461 $ 140,769 $ 147,157 $ 147,761 $ 148,002
$
280,230 $ 297,540 Securities: Taxable
10,451 9,609
9,302 8,459 9,104
20,060 18,752 Tax-exempt
3,140
3,276 3,339 3,383 3,439
6,416 6,940 Dividends
1,672
3,421 1,628 2,108 2,134
5,093 3,899 Short-term investments
18 24 23 24 23
42 42 Total interest income
154,742 157,099 161,449 161,735
162,702
311,841 327,173
Interest Expense: Deposits: Interest-bearing demand and
savings
5,363 5,338 5,313 4,256 4,031
10,701 7,993
Time
10,559 10,086 10,699 10,803 10,246
20,645 19,874
Federal Home Loan Bank short-term borrowings
3,430 4,544
4,455 4,554 4,597
7,974 9,218 Other short-term borrowings
1,302 1,984 2,066 2,091 2,031
3,286 4,131 Federal
Home Loan Bank long-term borrowings
194 202 210 247 243
396 488 Other long-term debt
3,259
3,307 3,322 3,319 (140 )
6,566 3,711 Total interest expense
24,107 25,461 26,065 25,270
21,008
49,568 45,415
Net
interest income 130,635 131,638 135,384 136,465 141,694
262,273 281,758 Provision for loan and lease losses
5,200 5,799 7,200 9,000
3,000
10,999 9,000
Net interest
income, after provision for loan and lease losses
125,435 125,839 128,184 127,465
138,694
251,274 272,758
Noninterest Income: Service charges on deposit accounts
8,960 8,518 9,260 9,561 9,294
17,478 18,294 Vehicle
origination and servicing fees
1,937 1,449 1,886 1,691 2,915
3,386 5,883 Wealth management commissions and fees
13,145 12,800 13,163 13,199 12,669
25,945 25,388
Commissions on property and casualty insurance sales
3,646
4,698 3,676 3,992 4,214
8,344 9,880 Other commissions and
fees
6,210 5,638 5,877 5,689 5,401
11,848 10,436
Income from bank-owned life insurance
1,706 1,853 1,537
1,634 1,672
3,559 3,309 Mortgage banking revenue
2,752 2,887 2,489 2,432 3,004
5,639 5,414 Capital
markets revenue
2,339 2,408 2,437 1,593 877
4,747
2,117 Net realized gain (loss) on sales of securities
1,013
(5 ) 125 0 3,293
1,008 3,285 Other
3,587
2,066 6,138 4,826 2,010
5,653 3,432 Total noninterest income
45,295 42,312 46,588 44,617
45,349
87,607 87,438
Noninterest Expenses: Salaries and employee benefits
66,223 67,165 74,806 68,042 68,325
133,388 133,906
Occupancy
12,047 13,970 12,262 12,089 11,914
26,017
25,761 Furniture and equipment
3,644 3,815 4,076 4,043 4,058
7,459 8,002 Professional and technology services
5,561 7,253 7,122 6,168 7,189
12,814 13,259
Advertising and marketing
3,417 2,720 3,459 3,784 3,567
6,137 7,143 FDIC insurance
4,890 4,757 4,833 5,038
4,925
9,647 10,046 Legal fees
1,439 1,537 1,918 1,699
1,656
2,976 3,183 Amortization of intangible assets
1,874 1,979 2,211 2,220 2,367
3,853 4,906 Vehicle
lease disposal
2,800 2,914 2,282 2,222 2,215
5,714
4,466 Merger related
1,204 4,432 885 0 0
5,636 0
Other
17,418 16,048 16,616
19,106 19,009
33,466
37,585 Total noninterest expenses
120,517
126,590 130,470 124,411 125,225
247,107 248,257 Income before income taxes
50,213 41,561 44,302 47,671 58,818
91,774 111,939
Provision for income taxes
14,473 12,536
13,978 14,203 15,324
27,009 31,283
Net Income $
35,740 $ 29,025 $ 30,324 $ 33,468 $ 43,494
$ 64,765 $ 80,656 Earnings per common share:
Basic
$ 0.20 $ 0.16 $ 0.17 $ 0.18 $ 0.23
$
0.36 $ 0.43 Diluted
$ 0.19 $ 0.16 $ 0.17 $
0.18 $ 0.23
$ 0.35 $ 0.43 Cash dividends per common
share
$ 0.09 $ 0.09 $ 0.09 $ 0.09 $ 0.08
$
0.18 $ 0.16 Average common shares outstanding: Basic
182,344 182,140 181,514 184,985 187,637
182,243
187,547 Diluted
183,371 183,053 182,387 185,724 188,295
183,250 188,296
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 Six Months Ended Six Months Ended
June 30, 2015 March 31, 2015 June 30, 2014
June 30, 2015 June 30, 2014 Average
Average Average Average Average
Balance Interest Rate (%)
Balance Interest Rate (%)
Balance Interest Rate (%)
Balance Interest Rate (%)
Balance Interest Rate (%) Assets
Short-term investments
$ 75,931 $ 18
0.10 $ 90,732 $ 24 0.11 $ 80,954 $ 23 0.11
$
83,291 $ 42 0.10 $ 81,909 $ 41 0.10
Investment securities: Taxable(1)
2,344,540 12,123
2.07 2,198,207 13,031 2.40 2,013,166 11,238 2.24
2,271,777 25,153 2.23 2,065,278 22,651 2.21
Tax-exempt(1)(2)
347,793 4,831
5.57 360,766 5,040 5.67
382,524 5,291 5.55
354,244 9,871 5.62
385,231 10,677 5.59 Total investment
securities
2,692,333 16,954
2.53 2,558,973 18,071
2.86 2,395,690 16,529 2.77
2,626,021 35,024 2.69
2,450,509 33,328 2.74 Loans and leases,
(net): Taxable(3)
12,981,479 135,914 4.20
13,023,814 137,407 4.28 13,154,917 144,471 4.40
13,002,529
273,321 4.24 13,145,644 290,552 4.46 Tax-exempt(2)(3)
476,529 5,457 4.59
444,532 5,171 4.72 434,616
5,432 5.01
460,619
10,629 4.65 436,427
10,752 4.97 Total loans and leases
13,458,008
141,371 4.21 13,468,346
142,578 4.29 13,589,533
149,903 4.42
13,463,148
283,950 4.25 13,582,071
301,304 4.47 Total interest-earning assets
16,226,272 158,343 3.91
16,118,051 160,673 4.04 16,066,177 166,455
4.16
16,172,460 319,016
3.98 16,114,489 334,673 4.19 Allowance for
loan and lease losses
(136,630 ) (137,475 ) (154,710
)
(137,050 ) (156,070 ) Other non-earning assets
2,456,358 2,637,691
2,466,660
2,546,532 2,460,609
Total assets
$ 18,546,000 $
18,618,267 $ 18,378,127
$ 18,581,942
$ 18,419,028 Liabilities Deposits:
Interest-bearing demand
$ 6,677,660 5,062
0.30 $ 6,749,615 5,054 0.30 $ 5,998,086 3,726 0.25
$
6,713,438 10,114 0.30 $ 6,015,217 7,400 0.25
Savings
1,205,605 301 0.10 1,172,519 285 0.10
1,134,421 305 0.11
1,189,154 587 0.10
1,117,278 592 0.11 Time
3,946,661 10,559 1.07
3,768,581 10,085 1.09 4,129,738 10,245 1.00
3,858,113
20,645 1.08 4,020,822 19,874 1.00 Other short-term
borrowings
432,026 1,302 1.21 525,107 1,983
1.53 552,367 2,030 1.47
478,309 3,286 1.39
611,681 4,131 1.36 FHLB borrowings
763,114 3,624
1.90 912,395 4,746 2.11 1,174,611 4,840 1.65
837,342
8,370 2.02 1,280,280 9,706 1.53 Long-term debt(4)
321,417 3,259 4.07
348,418 3,307 3.85 396,367
(138 ) (0.14 )
334,843
6,566 3.95 423,666 3,712
1.77 Total interest-bearing liabilities
13,346,483 24,107 0.72
13,476,635 25,460 0.77 13,385,590 21,008
0.63
13,411,199 49,568
0.75 13,468,944 45,415 0.68 Demand deposits
2,007,446 1,971,642 1,869,372
1,989,643 1,850,223
Other liabilities
411,635 408,813
354,500
410,457
346,546 Total liabilities
15,765,564
15,857,090 15,609,462
15,811,299 15,665,713 Equity
2,780,436 2,761,177
2,768,665
2,700,643 2,753,315
Total liabilities & shareholders' equity
$
18,546,000 $ 18,618,267 $ 18,378,127
$ 18,511,942 $ 18,419,028
Net interest income / yield on average
earning assets
$ 134,236 3.32 $ 135,213 3.40 $ 145,447 3.63
$ 269,448 3.36 $ 289,258 3.62 Taxable
equivalent adjustment
(3,601 ) (3,575 )
(3,753 )
(7,175 ) (7,500 ) Net
interest income - as reported
$ 130,635 $
131,638 $ 141,694
$ 262,273 $
281,758
(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
Six Months Ended (Dollars and share data in thousands)
June 30, 2Q15 1Q15 4Q14 3Q14
2Q14 2015 2014
Efficiency
Ratio
Other expense
$ 120,517 $ 126,590 $ 130,470 $ 124,411
$ 125,225
$ 247,107 $ 248,257 Less: Merger related
expenses
(1,204 ) (4,432 ) (885
) 0 0
(5,636 )
0 Noninterest operating expense (numerator)
$
119,313 $ 122,158 $ 129,585 $ 124,411
$ 125,225
$ 241,471 $ 248,257
Taxable-equivalent net interest income
$
134,236 $ 135,213 $ 139,239 $ 140,179 $ 145,447
269,448 $ 289,258 Other income
45,295
42,312 46,588 44,617
45,349
87,607 87,438
Noninterest operating income (denominator)
$
179,531 $ 177,525 $ 185,827 $ 184,796
$ 190,796
$ 357,055 $ 376,696
Efficiency ratio 66.46 %
68.81 % 69.73 % 67.32 % 65.63 %
67.63 % 65.90 % 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
$
2,785,466 $ 2,780,177 $ 2,753,925 $ 2,751,260 $ 2,796,392
$ 2,785,466 $ 2,796,392 Goodwill and other intangible
assets (1)
(1,274,455 ) (1,276,004 )
(1,265,178 ) (1,265,598 ) (1,265,846 )
(1,274,455 ) (1,265,846 ) Tangible common
equity (numerator)
$ 1,511,011 $ 1,504,173
$ 1,488,747 $ 1,485,662 $ 1,530,546
$ 1,511,011 $ 1,530,546 Assets
$ 18,659,693 $ 18,697,294 $ 18,661,390 $ 18,583,327 $
18,506,626
$ 18,659,693 $ 18,506,626 Goodwill and
other intangible assets (1)
(1,274,455 )
(1,276,004 ) (1,265,178 ) (1,265,598 )
(1,265,846 )
(1,274,455 ) (1,265,846 )
Tangible assets (denominator)
$ 17,385,238 $
17,421,290 $ 17,396,212 $ 17,317,729 $
17,240,780
$ 17,385,238 $ 17,240,780
Tangible common ratio 8.69 %
8.63 % 8.56 % 8.58 % 8.88 %
8.69 % 8.88 % 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
Six Months Ended
(Dollars and share data in thousands)
June 30,
2Q15
1Q15
4Q14
3Q14
2Q14
2015
2014
Return on Average
Tangible Equity
Income statement data Net income
$ 35,740 $ 29,025 $
30,324 $ 33,468 $ 43,494
$ 64,765 $ 80,656
Amortization of intangibles, net of taxes at 35%
1,218 1,286 1,437
1,443 1,539
2,504
3,189 Net tangible income (numerator)
$ 36,958
$ 30,311 $ 31,761 $ 34,911 $ 45,033
$ 67,269 $ 83,845 Average
balance sheet data Shareholders' equity
$ 2,780,436 $
2,761,177 $ 2,757,933 $ 2,775,786 $ 2,768,665
$
2,700,643 $ 2,753,315 Goodwill and other intangible assets
(1,298,946 ) (1,300,282 )
(1,301,750 ) (1,303,275 ) (1,304,736 )
(1,304,001 ) (1,305,513 ) Tangible common
equity (denominator)
$ 1,481,490 $ 1,460,895
$ 1,456,183 $ 1,472,511 $ 1,463,929
$ 1,396,642 $ 1,447,802 Return
on equity (GAAP basis)
5.16 % 4.26 % 4.36 % 4.78 %
6.30 %
4.84 % 5.91 % Effect of goodwill and other
intangibles
4.85 % 4.15 % 4.29 %
4.63 % 6.04 %
4.87 % 5.77
%
Return on average tangible equity 10.01
% 8.41 % 8.65 % 9.41 % 12.34 %
9.71 % 11.68 % 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
$
2,785,466 $ 2,780,177 $ 2,753,925 $ 2,751,260 $ 2,796,392
$ 2,785,466 $ 2,796,392 Goodwill and other intangible
assets
(1,298,225 ) (1,299,679 )
(1,301,014 ) (1,302,602 ) (1,304,018 )
(1,298,225 ) (1,304,018 ) Tangible common
equity (numerator)
$ 1,487,241 $ 1,480,498
$ 1,452,911 $ 1,448,658 $ 1,492,374
$ 1,487,241 $ 1,492,374 Common
shares outstanding (denominator)
182,427
182,256 182,039 181,310
187,706
182,427 187,706
Tangible book value per common share $
8.15 $ 8.12 $ 7.98 $ 7.99 $ 7.95
$ 8.15 $ 7.95 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
2Q15 1Q15 4Q14 3Q14 2Q14
Net Interest
Margin (excluding purchase accounting)
Reported net interest margin (GAAP basis)
3.32 % 3.40
% 3.46 % 3.50 % 3.63 % Adjustments for purchase accounting: Loans
and leases
-0.04 % -0.07 % -0.12 % -0.10 % -0.12 %
Deposits
-0.01 % -0.01 % -0.02 % -0.02 % -0.03 %
Borrowings
-0.01 % -0.01 % -0.01 % -0.01 % -0.10 %
Net Interest Margin (excluding purchase accounting)
3.26 % 3.31 % 3.31 % 3.37 % 3.38 % 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150715006561/en/
Susquehanna Bancshares, Inc.INVESTOR RELATIONS
CONTACT:Jason H. Weber, Director of Investor Relations(717)
626-9801orMEDIA RELATIONS CONTACT:Stephen Trapnell, Director
of Corporate Communications(717) 625-6548
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