Susquehanna Bancshares, Inc. Announces Second Quarter 2013 Results

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Susquehanna Bancshares, Inc. Announces Second Quarter 2013 Results

Second Quarter Highlights

  • GAAP EPS of $0.24
  • Strong Growth in Core Fee Income
  • Return on Average Tangible Equity (ROATE) of 14.30%; Return on Average Assets (ROA) of 1.01%
  • Continued Improvement in Credit Quality Metrics
  • Efficiency Ratio Under 60%

LITITZ, Pa.--(BUSINESS WIRE)-- Susquehanna Bancshares, Inc. (Susquehanna) (NAS: SUSQ) today announced that it earned net income for the second quarter ended June 30, 2013 of $45.6 million, or $0.24 per diluted share, compared to $37.8 million, or $0.20 per diluted share, for the second quarter of 2012. Net income for the first six months of 2013 was $88.0 million, or $0.47 per diluted share, compared with $61.3 million, or $0.34 per diluted share for the same period in 2012.


"Our second quarter results demonstrate the success of our employees in executing upon the key elements of our strategic plan. With a focus on providing exceptional service and building enduring relationships with customers, we have achieved strong growth in commercial and consumer loans, core deposits, and non-interest income during the past year," said William J. Reuter, Chairman and Chief Executive Officer of Susquehanna. "Our key profitability metrics - including return on average tangible equity, return on average assets and efficiency ratio - have all experienced significant improvement as well."

Linked Quarter Results (Second Quarter 2013 vs. First Quarter 2013)

  • Loans and leases increased $158.1 million or 1.2% from March 31, 2013 to $13.2 billion at June 30, 2013. Changes for the quarter in each major loan category were as follows:
    • Commercial loans decreased 1.0%.
    • Real estate - construction loans decreased 1.2%.
    • Real estate secured - residential loans increased 0.5%.
    • Real estate secured - commercial loans increased 1.5%.
    • Consumer loans increased 5.7%.
    • Leases increased 6.3%.
  • Total deposits increased $72.8 million or 0.6% from March 31, 2013 to $12.8 billion at June 30, 2013. Changes for the quarter in each major deposit category were as follows:
    • Non-interest bearing demand deposits increased 0.7%.
    • Interest-bearing demand deposits decreased 1.1%.
    • Savings deposits increased 0.8%
    • Time deposits increased 3.1%.
  • Net interest margin declined 9 basis points to 3.88% for the second quarter of 2013, compared to 3.97% for the first quarter of 2013.
  • Non-interest income increased to $49.1 million for the second quarter of 2013, compared to $42.6 million for the first quarter. Other non-interest income included $2.3 million in claim proceeds from bank-owned life insurance.
  • Non-interest expense for the second quarter of 2013 increased to $119.7 million, compared to $117.7 million in the prior quarter.
  • The efficiency ratio for the second quarter of 2013 improved to 59.57%, compared to 60.17% in the first quarter.
  • Net charge-offs as a percentage of average loans and leases for the quarter ended June 30, 2013 was 0.30% compared to 0.62% for the first quarter. Non-performing assets as a percentage of loans, leases and foreclosed real estate owned decreased to 0.94% at June 30, 2013, compared to 0.97% at March 31, 2013. The provision for loan and lease losses for the quarter ended June 30, 2013 was stable at $12.0 million. The allowance for loan and lease losses was $178.6 at June 30, 2013, representing 1.36% of total loans and leases and 170% of nonaccrual loans and leases, compared to $176.4 million at March 31, 2013, representing 1.36% of total loans and leases and 171% of nonaccrual loans and leases.

Second Quarter Results (Second Quarter 2013 vs. Second Quarter 2012)

  • Loans and leases increased $571.9 million or 4.5% from June 30, 2012 to $13.2 billion at June 30, 2013. Changes for the twelve month period in each major loan category were as follows:
    • Commercial loans increased 8.9%.
    • Real estate - construction loans decreased 17.9%.
    • Real estate secured - residential loans increased 3.2%.
    • Real estate secured - commercial loans were generally flat.
    • Consumer loans increased 12.8%.
    • Leases increased 44.0%.
  • Total deposits increased $73.7 million or 0.6% to $12.8 billion at June 30, 2013, as a 6.2% increase in core deposits was offset by a 10.2% decrease in time deposits. Changes for the twelve month period in each major deposit category were as follows:
    • Non-interest-bearing demand deposits decreased 0.5%.
    • Interest-bearing demand deposits increased 8.2%.
    • Savings deposits increased 7.8%.
    • Time deposits decreased 10.2%.
  • Net interest margin decreased 22 basis points to 3.88% compared to 4.10% for the second quarter of 2012.
  • The efficiency ratio for the second quarter of 2013 improved to 59.57% from 60.21% in the second quarter of 2012, calculated after excluding pre-tax merger related expenses for the second quarter of 2012.
  • Net charge-offs as a percentage of average loans and leases for the quarter ended June 30, 2013 was 0.30% compared to 0.65% for the second quarter of 2012. Non-performing assets as a percentage of loans, leases and foreclosed real estate was 0.94% at June 30, 2013 compared to 1.26% at June 30, 2012. The provision for loan and lease losses for the quarter ended June 30, 2013 was $12.0 million, compared to $16.0 million for the quarter ended June 30, 2012. The allowance for loan and lease losses was $178.6 million at June 30, 2013, representing 1.36% of total loans and leases and 170% of nonaccrual loans and leases, compared to $190.6 million at June 30, 2012, representing 1.51% of total loans and leases and 150% of nonaccrual loans and leases.
  • Return on average assets and average tangible equity (1) for the second quarter ended June 30, 2013 finished at 1.01% and 14.30%, respectively. This compared to results of 0.85% and 13.23%, for the same measurements, respectively, for the second quarter of 2012.

(1) Return on average tangible equity is a non-GAAP based financial measure. Please refer to the calculations and management's reasons for using this measure in the accompanying financial schedules.

  • Susquehanna's capital ratios continue to exceed those required to be considered "well-capitalized" under the current regulatory requirements, with a Tier 1 risk-weighted capital ratio of 11.54% and a total risk-weighted capital ratio of 12.94%, each as of June 30, 2013. On July 2, 2013, the Federal Reserve Board approved new rules related to capital adequacy as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The new rules become effective for Susquehanna on January 1, 2015, with an implementation period that stretches to 2019. Based on a preliminary analysis of the new rules, management believes that it would be fully compliant with the revised standards as of June 30, 2013 if they were effective on that date.

Additional Events

  • On July 17, 2013, Susquehanna's Board of Directors declared a third quarter dividend of $0.08 per common share, payable August 20, 2013 to shareholders of record as of July 31, 2013.

Susquehanna will broadcast its second quarter 2013 results conference call over the Internet on July 25, 2013 at 11:00 a.m. Eastern time. The conference call will include management's discussion of second quarter 2013 results. The discussion may also include forward-looking information and financial targets. Investors will have the opportunity to listen to the conference call through a live broadcast on Susquehanna's Web site. The event may be accessed by selecting "Investor Relations" near the top right of the home page then "Overview" and clicking on the second quarter webcast link. To listen to the live call, please go to the Web site at least fifteen minutes prior to the scheduled start time to download and install any necessary audio software. For those who are unable to listen to the live broadcast, an archived replay and podcast will be available on the Web site shortly after the call concludes.

Susquehanna is a financial services holding company with assets of approximately $18.1 billion. Headquartered in Lititz, Pa., Susquehanna provides banking and financial services at 261 branch locations in the mid-Atlantic region. Through Susquehanna Wealth Management, the company offers investment, fiduciary, brokerage, insurance, retirement planning, and private banking services, with approximately $7.7 billion in assets under management and administration. Susquehanna also operates an insurance brokerage and employee benefits company, a commercial finance company and a vehicle leasing company. Investor information may be requested through Susquehanna's Web site at www.susquehanna.net.

This press release contains certain financial information determined by methods other than in accordance with GAAP.Susquehanna's management uses these non-GAAP measures in its analysis of the company's performance.These non-GAAP financial measures require management to make judgments about the exclusion of certain items, and if different judgments were made, the amounts reported would be different.These measures typically exclude the effects of intangibles and related amortization and include the tax benefit associated with revenue items that are tax-exempt. Disclosures regarding these non-GAAP financial measures are included in the accompanying financial information.

The presentation of these non-GAAP financial measures is intended to supplement investors' understanding of Susquehanna's core business activities. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.

This release includes forward-looking statements as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995.Actual results and trends could differ materially from those set forth in such statements due to various risks, uncertainties and other factors.Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: ineffectiveness of Susquehanna's business strategy due to changes in current or future market conditions; the effects of competition, and of changes in laws and regulations, including industry consolidation and development of competing financial products and services; interest rate movements; changes in credit quality; deteriorating economic conditions; and other risks and uncertainties, including those detailed in Susquehanna's filings with the Securities and Exchange Commission.Susquehanna encourages readers of this release to understand forward-looking statements to be strategic objectives rather than absolute targets of future performance. Forward-looking statements speak only as of the date they are made. Susquehanna does not intend to update publicly any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events except as required by law.

       
Susquehanna Bancshares, Inc.
26 North Cedar Street

Lititz, PA 17543

 

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

(in thousands, except per share data)

Six Months Ended

June 30,

2Q131Q134Q123Q122Q1220132012
Balance Sheet (EOP)
Investments$2,494,178$2,552,600$2,730,335$2,908,404$2,866,119$2,494,178$2,866,119
Loans and leases13,157,76212,999,70312,894,74112,675,60712,585,91213,157,76212,585,912
Allowance for loan and lease losses178,594176,377184,020186,897190,628178,594190,628
Total assets18,083,03917,967,17418,037,66718,106,73018,040,00918,083,03918,040,009
Deposits12,764,23212,691,43212,580,04612,725,37912,690,52412,764,23212,690,524
Other short-term borrowings706,065786,251817,577762,257648,675706,065648,675
Federal Home Loan Bank borrowings1,161,9951,044,4801,199,0621,110,8841,015,7241,161,9951,015,724
Other long-term debt489,002501,559513,401639,753678,282489,002678,282
Shareholders' equity2,644,9402,639,4892,595,9092,584,6822,544,7302,644,9402,544,730
 
Average Balance Sheet
Investments$2,503,991$2,603,595$2,764,886$2,811,730$2,704,232$2,553,518$2,625,820
Loans and leases13,110,12812,929,36512,725,88612,612,47712,527,71313,020,24611,969,652
Total earning assets15,720,85915,642,30915,604,02915,537,03715,332,80615,681,80114,699,194
Total assets18,071,46618,031,12718,018,88918,021,10817,799,67818,051,40817,037,226
Deposits12,867,87412,640,55012,602,43012,588,69712,471,29612,754,84011,912,917
Other short-term borrowings728,497817,816810,517748,841726,309772,910684,218
Federal Home Loan Bank borrowings1,041,5771,155,6371,166,7651,072,5551,082,2931,098,2921,033,794
Other long-term debt496,240508,541560,906727,382686,492502,356680,107
Shareholders' equity2,648,3142,614,3192,597,2542,562,0922,537,2502,631,4112,442,788
 
Income Statement
Net interest income$148,097$149,206$155,304$149,142$152,670$297,303$286,792
Provision for loan and lease losses12,00012,00013,00016,00016,00024,00035,000
Noninterest income49,07642,64443,77243,66139,81191,72079,326
Noninterest expense119,738117,729125,277122,910121,475237,467241,830
Income before taxes65,43562,12160,79953,89355,006127,55689,288
Provision for income taxes19,78719,72217,62517,16117,21339,50928,022
Net income45,64842,39943,17436,73237,79388,04761,266
Basic earnings per common share0.240.230.230.200.200.470.34
Diluted earnings per common share0.240.230.230.200.200.470.34
Cash dividends paid per common share0.080.000.140.060.050.080.08
 
Asset Quality
Net charge-offs (NCOs)$9,784$19,643$15,877$19,731$20,102$29,427$32,472
 
Nonaccrual loans and leases$105,110$103,351$97,767$118,448$127,250$105,110$127,250
Foreclosed real estate 18,349 22,557 26,245 28,641 31,302 18,349 31,302
Total nonperforming assets (NPAs)$123,459$125,908$124,012$147,089$158,552$123,459$158,552
 
Restructured loans$63,822$65,773$67,775$56,823$66,777$63,822$66,777
Loans and leases 90 days past due7,2036,3968,2098,45111,2037,20311,203

 

Susquehanna Bancshares, Inc.

26 North Cedar Street

Lititz, PA 17543

       
SUMMARY CONSOLIDATED FINANCIAL INFORMATION

(in thousands, except per share data)

Six Months Ended

June 30,

2Q13

1Q13

4Q12

3Q12

2Q12

2013

2012

Credit Quality
NCOs / Average loans and leases0.30%0.62%<
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