Susquehanna Bancshares (SUSQ) 8-K Susquehanna Bancshares, Inc. Announces Fourth Quarter and Full Year 2011 Results

Exhibit 99.1

Susquehanna Bancshares, Inc. Announces Fourth Quarter and Full Year 2011 Results

LITITZ, Pa.--(BUSINESS WIRE)--January 25, 2012--Susquehanna Bancshares, Inc. (Susquehanna) (NASDAQ: SUSQ) today announced net income applicable to common shareholders for the fourth quarter ended December 31, 2011 was $19.1 million, or $0.12 per diluted share, compared to net income applicable to common shareholders of $9.7 million for the fourth quarter of 2010, or $0.08 per diluted share. Net income applicable to common shareholders for the year ended December 31, 2011 was $54.9 million, or $0.40 per diluted share, compared to net income applicable to common shareholders of $16.3 million, or $0.13 per diluted share, for the year ended December 31, 2010.

“The addition of Abington Bancorp in the fourth quarter significantly increased deposits and loans, but even excluding the gains from Abington we still achieved solid core deposit growth as well as our third consecutive quarter of net new loan growth,” said William J. Reuter, Susquehanna Chairman and Chief Executive Officer. “In addition, we continued our steady improvement in credit quality. During the quarter, our team focused on preparations for the acquisition of Tower Bancorp, which will occur next month, as well as positioning the company to increase internal growth rates and profitability.”

Linked Quarter Results (Fourth Quarter 2011 vs. Third Quarter 2011)

• Net Loans and Leases increased 8% to $10.4 billion compared to September 30, 2011.^*
  • Real estate secured-residential loans increased 18%.
  • Real estate-construction loans increased 7%.
  • Real estate secured-commercial increased 4%.
  • Consumer loans increased 3%.
  • Commercial loans increased 3%.
  • Leases were flat.
• Total deposits increased 8% to $10.3 billion from September 30, 2011.^*
  • Interest-bearing demand deposits increased 12%.
  • Non-interest bearing demand deposits increased 12%.
  • Savings deposits increased 10%.
  • Time deposits were flat.
  *Reflects the acquisition of Abington Bancorp on October 1, 2011.

Linked Quarter Results (Fourth Quarter 2011 vs. Third Quarter 2011, Continued)

• Net interest margin for the fourth quarter increased 1 basis point to 3.59% compared to 3.58% for the third quarter of 2011.
• Net charge-offs as a percentage of average loans and leases for the fourth quarter of 2011 were 0.95% compared to 0.96% for the third quarter of 2011. Non-performing assets as a percentage of loans, leases and foreclosed real estate were 1.88% at December 31, 2011 compared to 1.95% at September 30, 2011. The provision for loan and lease losses for the fourth quarter of 2011 was $22 million, compared to $25 million for the third quarter of 2011.
• Return on average assets and average tangible equity⁽²⁾ for the fourth quarter ended December 31, 2011 finished at 0.50% and 6.98%, respectively. This compared to results of 0.42% and 6.66% for the same measurements, respectively, for the third quarter of 2011.
• Non-core items tax-effected for the fourth quarter include the bargain purchase gain of $39.1 million offset by the debt prepayment penalty of $32.5 million, merger related costs of $8.6 million and security losses of $0.7 million. These items result in a net after-tax expense of $2.7 million.

Full Year/Fourth Quarter Financial Results:

• Net loans and leases increased 9% to $10.4 billion compared to December 31, 2010.^*
  • Real estate secured–residential loans increased 20%.
  • Consumer loans increased 20%.
  • Real estate secured–commercial loans increased 5%.
  • Commercial increased 3%.
  • Leases increased 1%.
  • Real estate construction loans decreased 5%.

• Total deposits increased 12% to $10.3 billion from December 31, 2010.^*
  • Interest-bearing demand deposits increased 22%.
  • Non-interest bearing demand deposits increased 14%.
  • Savings deposits increased 13%.
  • Time deposits were flat.

  *Reflects the acquisition of Abington Bancorp on October 1, 2011.

Net interest margin for the year decreased 7 basis points to 3.60% compared to 3.67% for 2010. For the fourth quarter 2011, net interest margin decreased 2 basis points to 3.59% compared to 3.61% for the fourth quarter of 2010.

Full Year/Fourth Quarter Financial Results (Continued):

Common equity was $2.2 billion, or $13.96 per common share at December 31, 2011, compared to $2.0 billion, or $15.27 per common share at December 31, 2010. Tangible book value per common share was $7.28 at December 31, 2011, compared to $7.18 per common share at December 31, 2010.

• Susquehanna’s regulatory capital ratios are as follows:

	At December 31, 2011	At September 30, 2011
Tangible Common Ratio(1)	8.50%	7.74%
Tier 1 Common Ratio	10.76%	9.81%
Leverage Ratio	10.73%	10.39%
Tier 1 Capital Ratio	13.65%	12.86%
Total Risk-Based Capital Ratio	15.41%	14.93 %

• Return on average assets and average tangible equity⁽²⁾ for the year ended December 31, 2011 finished at 0.38% and 6.01%, respectively. This compared to results of 0.23% and 3.69% for the same measurements, respectively, for 2010.

⁽¹⁾Includes deferred tax liability associated with intangibles of $40.7 million at December 31, 2011 and $40.3 million at September 30, 2011.

⁽²⁾A non-GAAP-based financial measure. The most comparable GAAP-based measurement for return on average tangible equity is return on average equity. A reconciliation of the differences between non-GAAP-based and GAAP-based measurements can be found at the end of this release under the heading "Supplemental Reporting of Non-GAAP-Based Financial Measures – Return on Average Tangible Equity.

Additional Event:

• Shareholders of both companies approved the merger agreement for Susquehanna’s acquisition of Tower Bancorp, Inc., and all necessary regulatory approvals have now been received. The acquisition is on schedule to be completed on February 17, 2012.

Susquehanna will broadcast its fourth quarter 2011 results conference call over the Internet on January 26, 2011 at 11:00 a.m. Eastern time. The conference call will include management’s discussion of fourth quarter and full year 2011 results. The discussion may also include forward-looking information and financial goals. Investors will have the opportunity to listen to the conference call through a live broadcast on Susquehanna’s Web site. The event may be accessed by selecting "Investor Relations" near the top right of the home page then “Overview” and clicking on the fourth 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 $15 billion. Headquartered in Lititz, Pa., Susquehanna provides banking and financial services at 241 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 $6.9 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 on 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. These statements are subject to certain risks and uncertainties including risks relating to Susquehanna’s plans to complete and integrate its pending acquisition of Tower Bancorp, Inc. and the other risks set forth in Susquehanna's filings with the Securities and Exchange Commission. Susquehanna encourages readers of this release to understand forward-looking statements to be strategic objectives rather than absolute targets of future performance. Forward-looking statements speak only as of the date they are made. Susquehanna does not intend to update publicly any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events except as required by law.

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
SUMMARY FINANCIAL INFORMATION
(Dollars in thousands, except per common share data)
						Twelve Months
	4Q11			4Q10		2011			2010
Balance Sheet (EOP)
Investments	$	2,431,515		$	2,417,611	$	2,431,515		$	2,417,611
Loans and leases		10,447,930			9,633,197		10,447,930			9,633,197
Allowance for loan & lease losses (ALLL)		188,100			191,834		188,100			191,834
Total assets		14,974,789			13,954,085		14,974,789			13,954,085
Deposits		10,290,472			9,191,207		10,290,472			9,191,207
Short-term borrowings		613,306			770,623		613,306			770,623
Federal Home Loan Bank borrowings		971,020			1,101,620		971,020			1,101,620
Other long-term debt		499,347			498,918		499,347			498,918
Shareholders' equity		2,189,628			1,984,802		2,189,628			1,984,802
Stated book value per common share		13.96			15.27		13.96			15.27
Tangible book value per common share		7.28			7.18		7.28			7.18
Average Balance Sheet
Investments	$	2,645,227		$	2,350,981	$	2,529,462		$	2,084,914
Loans and leases		10,358,071			9,608,510		9,803,863			9,799,673
Total earning assets		13,128,969			12,084,056		12,431,749			11,990,084
Total assets		15,274,808			13,984,819		14,362,778			13,899,885
Deposits		10,300,061			9,253,743		9,595,126			9,185,673
Other short-term borrowings		588,657			603,579		658,477			627,704
FHLB borrowings		1,163,229			1,104,962		1,123,801			1,056,128
Other long-term debt		666,277			712,186		684,065			713,101
Shareholders' equity		2,217,036			2,081,877		2,055,717			2,084,840
Income Statement
Net interest income	$	115,201		$	106,573	$	433,150		$	426,506
Provision for loan and lease losses		22,000			35,000		110,000			163,000
Noninterest income		71,347			39,788		182,668			152,148
Noninterest expense		162,395			95,971		460,180			382,650
Income before taxes		2,153			15,390		45,638			33,004
Provision for income taxes		(16,976	)		2,417		(9,267	)		1,157
Net income		19,129			12,973		54,905			31,847
Net income available to common shareholders		19,129			9,739		54,905			16,275
Basic earnings per common share		0.12			0.08		0.40			0.13
Diluted earnings per common share		0.12			0.08		0.40			0.13
Cash dividends paid per common share		0.03			0.01		0.08			0.04
Asset Quality
Net charge-offs (NCOs)	$	24,860		$	34,281	$	113,734		$	143,534
Nonaccrual loans & leases	$	156,478		$	196,895	$	156,478		$	196,895
Foreclosed real estate		41,050			18,489		41,050			18,489
Total nonperforming assets (NPAs)	$	197,528		$	215,384	$	197,528		$	215,384
Restructured loans	$	72,852		$	114,566	$	72,852		$	114,566
Loans & leases 90 days past due		10,077			20,588		10,077			20,588

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
					Twelve Months
RATIO ANALYSIS	4Q11		4Q10		2011		2010
Credit Quality
NCOs / Average loans & leases	0.95	%	1.42	%	1.16	%	1.46	%
NPAs / Loans & leases + foreclosed real estate	1.88	%	2.23	%	1.88	%	2.23	%
ALLL / Nonaccrual loans & leases	120.21	%	97.43	%	120.21	%	97.43	%
ALLL / Total loans & leases	1.80	%	1.99	%	1.80	%	1.99	%
Capital Adequacy
Equity / Assets	14.62	%	14.22	%	14.62	%	14.22	%
Long-term debt / Equity	22.81	%	25.14	%	22.81	%	25.14	%
Profitability
Return on average assets	0.50	%	0.37	%	0.38	%	0.23	%
Return on average equity	3.42	%	2.47	%	2.67	%	1.53	%
Return on average tangible equity (2)	6.98	%	5.59	%	6.01	%	3.69	%
Net interest margin	3.59	%	3.61	%	3.60	%	3.67	%
Efficiency ratio (1)	66.34	%	64.07	%	66.83	%	64.62	%

(1)	Excludes Net realized gain on acquisition, Merger related expenses, and Loss on extinguishment of debt
(2)	Supplemental Reporting of Non-GAAP-based Financial Measures-Return on average tangible equity

Return on average tangible equity is a non-GAAP-based financial measure calculated using non-GAAP-based amounts. The most directly comparable measure is return on average equity which is calculated using GAAP-based amounts. We calculate return on average tangible equity by excluding the balance of intangible assets and their related amortization expense from our calculation of return on average equity. Management used the return on average tangible equity in order to review our core operating results. Management believes that this is a better measure of our performance. In addition, this is consistent with the treatment by bank regulatory agencies, which excludes goodwill and other intangible assets from the calculation of risk-based capital ratios. A reconciliation of return on average equity to return on average tangible equity is set forth below.

	4Q11		4Q10		2011		2010
Return on average equity (GAAP basis)	3.42	%	2.47	%	2.67	%	1.53	%
Effect of excluding average intangible assets and related amortization	3.56	%	3.12	%	3.34	%	2.16	%
Return on average tangible equity	6.98	%	5.59	%	6.01	%	3.69	%

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
	December 31,			December 31,
	2011			2010
	(in thousands, except share data)
Assets
Cash and due from banks	$	276,384		$	200,646
Unrestricted short-term investments		55,761			52,252
Cash and cash equivalents		332,145			252,898
Interest-bearing deposits held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities		5,015			7,260
Restricted short-term investments		60,910			34,435
Securities available for sale		2,423,107			2,408,943
Securities held to maturity (fair values approximate $8,408 and $8,668)		8,408			8,668
Loans and leases, net of unearned income		10,257,161			9,417,801
Loans held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities		190,769			215,396
Less: Allowance for loan and lease losses		188,100			191,834
Net loans and leases		10,259,830			9,441,363
Premises and equipment, net		168,382			165,557
Other real estate and foreclosed assets		41,716			19,962
Accrued income receivable		36,820			36,121
Bank-owned life insurance		405,296			359,579
Goodwill		1,018,031			1,018,031
Intangible assets with finite lives		29,081			34,076
Other assets		186,048			167,192
Total assets	$	14,974,789		$	13,954,085
Liabilities and Shareholders' Equity
Deposits:
Demand	$	1,569,811		$	1,372,235
Interest-bearing demand		4,439,488			3,646,714
Savings		868,709			767,852
Time		2,157,282			2,168,503
Time of $100 or more		1,255,182			1,235,903
Total deposits		10,290,472			9,191,207
Federal Home Loan Bank short-term borrowings		900,000			300,000
Other short-term borrowings		613,306			770,623
Federal Home Loan Bank long-term borrowings		71,020			801,620
Other long-term debt		176,030			176,038
Junior subordinated debentures		323,317			322,880
Long-term debt of consolidated variable interest entities for which creditors do not have recourse to Susquehanna's general credit		157,379			207,036
Accrued interest, taxes, and expenses payable		50,670			46,449
Deferred taxes		25,827			33,729
Other liabilities		177,140			119,701
Total liabilities		12,785,161			11,969,283
Shareholders' equity:
Common stock, $2.00 par value, 400,000,000 shares authorized. Issued: 157,067,887 at December 31, 2011 and 129,965,635 at December 31, 2010		314,136			259,931
Treasury stock, at cost. 200,748 at December 31, 2011 and 0 at December 31, 2010		(1,263	)		0
Additional paid-in capital		1,397,152			1,301,042
Retained earnings		525,657			481,964
Accumulated other comprehensive loss, net of taxes of $25,863 and $32,526		(46,054	)		(58,135	)
Total shareholders' equity		2,189,628			1,984,802
Total liabilities and shareholders' equity	$	14,974,789		$	13,954,085

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2011			2010			2011			2010
	(in thousands, except per share data)
Interest Income:
Loans and leases, including fees	$	134,753		$	132,170		$	516,984		$	538,699
Securities:
Taxable		13,146			14,880			57,846			55,835
Tax-exempt		3,887			4,047			15,831			14,997
Dividends		987			1,018			3,999			3,982
Short-term investments		28			53			108			182
Total interest income		152,801			152,168			594,768			613,695
Interest Expense:
Deposits:
Interest-bearing demand and savings		5,775			5,977			22,484			23,452
Time		11,409			17,521			54,294			80,511
Federal Home Loan Bank short-term borrowings		2,955			2,352			11,376			3,101
Other short-term borrowings		2,179			1,879			8,133			4,156
Federal Home Loan Bank long-term borrowings		6,881			8,607			30,648			40,451
Other long-term debt		8,401			9,259			34,683			35,518
Total interest expense		37,600			45,595			161,618			187,189
Net interest income		115,201			106,573			433,150			426,506
Provision for loan and lease losses		22,000			35,000			110,000			163,000
Net interest income, after provision for loan and lease losses		93,201			71,573			323,150			263,506
Noninterest Income:
Service charges on deposit accounts		7,689			8,588			31,728			34,467
Vehicle origination and servicing fees		1,984			1,624			7,862			6,826
Asset management fees		6,821			7,083			28,153			28,362
Income from fiduciary-related activities		1,827			1,884			7,333			7,259
Commissions on brokerage, life insurance and annuity sales		1,697			2,041			8,202			7,567
Commissions on property and casualty insurance sales		3,638			3,160			14,047			12,030
Other commissions and fees		4,147			6,946			23,728			24,661
Income from bank-owned life insurance		1,539			1,116			4,931			4,965
Net gain on sale of loans and leases		3,324			3,605			12,747			10,918
Net realized gain on acquisition		39,143			0			39,143			0
Net realized gain (loss) on sales of securities		(706	)		2,123			3,878			13,408
Total other-than-temporary impairment, net of recoveries		(1,132	)		(839	)		(6,392	)		(4,843	)
Portion of loss (gain) recognized in other comprehensive income (before taxes)		828			8			3,028			952
Net impairment losses recognized in earnings		(304	)		(831	)		(3,364	)		(3,891	)
Other		548			2,449			4,280			5,576
Total noninterest income		71,347			39,788			182,668			152,148
Noninterest Expenses:
Salaries and employee benefits		51,515			45,563			209,235			191,806
Occupancy		9,948			9,036			37,446			35,997
Furniture and equipment		3,148			3,225			12,596			13,647
Advertising and marketing		2,846			3,730			11,470			12,606
FDIC insurance		4,219			3,480			16,602			16,763
Legal fees		2,542			2,364			9,302			8,786
Amortization of intangible assets		2,290			2,349			8,705			9,438
Vehicle lease disposal		2,851			3,448			10,584			14,543
Merger related		12,211			0			14,991			0
Loss on extinguishment of debt		50,020			0			50,020			0
Other		20,805			22,776			79,229			79,064
Total noninterest expenses		162,395			95,971			460,180			382,650
Income before income taxes		2,153			15,390			45,638			33,004
Provision for income taxes		(16,976	)		2,417			(9,267	)		1,157
Net Income		19,129			12,973			54,905			31,847
Preferred stock dividends and accretion		0			3,234			0			15,572
Net Income Available to Common Shareholders	$	19,129		$	9,739		$	54,905		$	16,275
Earnings per common share:
Basic	$	0.12		$	0.08		$	0.40		$	0.13
Diluted	$	0.12		$	0.08		$	0.40		$	0.13
Cash dividends per common share	$	0.03		$	0.01		$	0.08		$	0.04
Average common shares outstanding:
Basic		156,492			129,723			136,509			121,031
Diluted		156,802			129,760			136,876			121,069

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
Interest rates and interest differential-taxable equivalent basis
	For the Three-month Period Ended				For the Three-month Period Ended
	December 31, 2011				December 31, 2010
	Average				Average
(Dollars in thousands)	Balance		Interest	Rate (%)	Balance		Interest	Rate (%)
Assets
Short-term investments	$125,671		$28	0.09	$124,565		$53	0.17
Investment securities:
Taxable	2,253,121		14,133	2.49	1,947,974		15,899	3.24
Tax-advantaged	392,106		5,980	6.05	403,007		6,225	6.13
Total investment securities	2,645,227		20,113	3.02	2,350,981		22,124	3.73
Loans and leases, (net):
Taxable	10,027,865		131,993	5.22	9,363,080		129,863	5.50
Tax-advantaged	330,206		4,246	5.10	245,430		3,549	5.74
Total loans and leases	10,358,071		136,239	5.22	9,608,510		133,412	5.51
Total interest-earning assets	13,128,969		156,380	4.73	12,084,056		155,589	5.11
Allowance for loan and lease losses	(192,794	)			(189,099	)
Other non-earning assets	2,338,633				2,089,862
Total assets	$15,274,808				$13,984,819
Liabilities
Deposits:
Interest-bearing demand	$4,393,811		5,482	0.49	$3,638,249		5,684	0.62
Savings	875,522		293	0.13	765,389		293	0.15
Time	3,502,751		11,409	1.29	3,470,080		17,521	2.00
Other short-term borrowings	588,657		2,179	1.47	603,579		1,879	1.24
FHLB borrowings	1,163,229		9,836	3.35	1,104,962		10,959	3.93
Long-term debt	666,277		8,401	5.00	712,186		9,259	5.16
Total interest-bearing liabilities	11,190,247		37,600	1.33	10,294,445		45,595	1.76
Demand deposits	1,527,977				1,380,025
Other liabilities	339,548				228,472
Total liabilities	13,057,772				11,902,942
Equity	2,217,036				2,081,877
Total liabilities & shareholders' equity	$15,274,808				$13,984,819
Net interest income / yield on average earning assets			$118,780	3.59			$109,994	3.61

1.	Average loan balances include non accrual loans.
2.	Tax-exempt income has been adjusted to a tax-equivalent basis using a marginal tax rate of 35%.
3.	For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
Interest rates and interest differential-taxable equivalent basis
	For the Twelve-month Period Ended				For the Twelve-month Period Ended
	December 31, 2011				December 31, 2010
	Average				Average
(Dollars in thousands)	Balance		Interest	Rate (%)	Balance		Interest	Rate (%)
Assets
Short-term investments	$98,424		$108	0.11	$105,497		$182	0.17
Investment securities:
Taxable	2,129,908		61,845	2.90	1,720,263		59,818	3.48
Tax-advantaged	399,554		24,355	6.10	364,651		23,072	6.33
Total investment securities	2,529,462		86,200	3.41	2,084,914		82,890	3.98
Loans and leases, (net):
Taxable	9,492,521		505,607	5.33	9,545,296		528,570	5.54
Tax-advantaged	311,342		17,503	5.62	254,377		15,583	6.13
Total loans and leases	9,803,863		523,110	5.34	9,799,673		544,153	5.55
Total interest-earning assets	12,431,749		609,418	4.90	11,990,084		627,225	5.23
Allowance for loan and lease losses	(194,746	)			(184,304	)
Other non-earning assets	2,125,775				2,094,105
Total assets	$14,362,778				$13,899,885
Liabilities
Deposits:
Interest-bearing demand	$3,884,182		21,323	0.55	$3,481,728		22,279	0.64
Savings	815,066		1,161	0.14	766,210		1,173	0.15
Time	3,482,801		54,294	1.56	3,628,219		80,511	2.22
Other short-term borrowings	658,477		8,133	1.24	627,704		4,156	0.66
FHLB borrowings	1,123,801		42,024	3.74	1,056,128		43,552	4.12
Long-term debt	684,065		34,683	5.07	713,101		35,518	4.98
Total interest-bearing liabilities	10,648,392		161,618	1.52	10,273,090		187,189	1.82
Demand deposits	1,413,077				1,309,516
Other liabilities	245,592				232,439
Total liabilities	12,307,061				11,815,045
Equity	2,055,717				2,084,840
Total liabilities & shareholders' equity	$14,362,778				$13,899,885
Net interest income / yield on average earning assets			$447,800	3.60			$440,036	3.67

1.	Average loan balances include non accrual loans.
2.	Tax-exempt income has been adjusted to a tax-equivalent basis using a marginal tax rate of 35%.
3.	For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
Loans and Leases
(Dollars in thousands)
						Total Loans and Leases
						12/31/11				12/31/10
Commercial, financial, and agricultural						$	1,871,027			$	1,816,519
Real estate - construction							829,221				877,223
Real estate secured - residential							3,212,562				2,666,692
Real estate secured - commercial							3,136,887				2,998,176
Consumer							722,329				603,084
Leases							675,904				671,503
Total loans and leases						$	10,447,930			$	9,633,197
	Nonaccrual Loans and Leases
	12/31/11		09/30/11			06/30/11		03/31/11		12/31/10
Commercial, financial, and agricultural	$	14,385	$	14,421		$	18,219	$	19,972	$	20,012
Real estate - construction		37,727		37,487			44,305		56,446		57,779
Real estate secured - residential		41,922		41,238			51,047		55,930		50,973
Real estate secured - commercial		61,497		65,377			73,346		77,533		65,313
Consumer		0		0			0		0		1
Leases		947		1,576			3,816		3,060		2,817
Total nonaccrual loans and leases	$	156,478	$	160,099		$	190,733	$	212,941	$	196,895
	Restructured Loans
	12/31/11		09/30/11			06/30/11		03/31/11		12/31/10
Commercial, financial, and agricultural	$	12,181	$	11,820		$	14,387	$	14,999	$	15,877
Real estate - construction		3,902		0			0		298		6,125
Real estate secured - residential		17,634		13,389			12,734		9,363		11,300
Real estate secured - commercial		38,565		36,974			34,874		53,799		81,034
Consumer		570		148			148		0		230
Total restructured loans	$	72,852	$	62,331		$	62,143	$	78,459	$	114,566
	Net Charge-offs (Recoveries)
	4Q 2011		3Q 2011			2Q 2011		1Q 2011		4Q 2010
Commercial, financial, and agricultural	$	1,557	$	5,322		$	9,138	$	3,700	$	2,335
Real estate - construction		8,484		6,489			6,352		8,154		20,607
Real estate secured - residential		2,641		5,262			5,042		3,803		5,477
Real estate secured - commercial		10,897		5,612			10,467		14,442		4,132
Consumer		503		(99	)		67		2,079		366
Leases		778		746			875		1,423		1,364
Total net charge-offs	$	24,860	$	23,332		$	31,941	$	33,601	$	34,281

Susquehanna Bancshares, Inc.
Loan Credit Quality Analysis
Fourth Quarter 2011
($ Thousands)
			Pro Forma
	Susquehanna	Abington	Susquehanna	Susquehanna
	12/31/2011	9/30/2011	12/31/2011(1)	9/30/2011	$ Change	% Change
Nonaccrual	$156,478	$13,267	$143,211	$160,099	($16,888)	-10.55%
OREO	41,050	19,974	21,076	29,563	(8,487)	-28.71%
Restructured	72,852	12,866	59,986	62,331	(2,345)	-3.76%
90 days past due	10,077	2,547	7,530	13,034	(5,504)	-42.23%
		Abington	Pro Forma
	Susquehanna	Credit Mark	Susquehanna	Susquehanna
	12/31/2011	12/31/2011	12/31/2011(1)	9/30/2011
Reserve	$188,100	$25,228	$213,328	$190,960
Reserve / nonaccrual	120.21%		136.33%	119.28%
Reserve / loans	1.80%		2.04%	1.97%

(1) The unaudited pro forma loan credit quality analysis shows the impact on Susquehanna Bancshares, Inc. as of December 31, 2011, of removing the loan credit quality amounts of Abington Bancorp, Inc. as of September 30, 2011. The unaudited pro forma loan credit quality analysis also shows the impact on Susquehanna Bancshares, Inc. as of December 31, 2011, of including the estimated amount of an adjustment for credit quality incorporated into the measurement of the fair value of loans acquired in the Abington, Inc. acquisition. In preparing the unaudited pro forma information, Susquehanna Bancshares, Inc. assumed no adjustments to the historical amount of Abington's identification of its reported loan credit quality amounts as of September 30, 2011. The adjustments are made to remove the effect of the acquired loans on the analysis of loan credit quality for Susquehanna Bancshares, Inc. as of December 31, 2011.

Susquehanna Bancshares, Inc.
Loan Analysis
Fourth Quarter 2011
($ Thousands)
			Pro Forma
	Susquehanna	Abington	Susquehanna	Susquehanna
	12/31/2011	9/30/2011	12/31/2011(1)	9/30/2011	$ Change		% Change
Commercial, financial, and agricultural	$1,871,027	$16,867	$1,854,160	$1,810,664	$43,496		2.40	%
Real estate - construction	829,221	96,790	732,431	771,734	(39,303	)	-5.09	%
Real estate secured - residential	3,212,562	430,062	2,782,500	2,728,934	53,566		1.96	%
Real estate secured - commercial	3,136,887	89,693	3,047,194	3,013,787	33,407		1.11	%
Consumer	722,329	273	722,056	698,804	23,252		3.33	%
Leases	675,904	0	675,904	678,746	(2,842	)	-0.42	%
Total loans and leases	$10,447,930	$633,685	$9,814,245	$9,702,669	$111,576		1.15	%
(1) Pro forma presentation represents Susquehanna 12/31/11 balances net of Abington 9/30/11 balances.

Susquehanna Bancshares, Inc.
Deposit Analysis
Fourth Quarter 2011
($ Thousands)
			Pro Forma
	Susquehanna	Abington	Susquehanna	Susquehanna
	12/31/2011	9/30/2011	12/31/2011(1)	9/30/2011	$ Change		% Change
Demand	$1,569,811	$43,370	$1,526,441	$1,404,366	$122,075		8.69	%
Interest-bearing demand	4,439,488	325,192	4,114,296	3,964,428	149,868		3.78	%
Savings	868,709	94,493	774,216	787,536	(13,320	)	-1.69	%
Time <$100	2,157,282	196,562	1,960,720	2,024,999	(64,279	)	-3.17	%
Time>$100	1,255,182	180,396	1,074,786	1,377,302	(302,516	)	-21.96	%
Totals	$10,290,472	$840,013	$9,450,459	$9,558,631	($108,172	)	-1.13	%
(1) Pro forma presentation represents Susquehanna 12/31/11 balances net of Abington 9/30/11 balances.

Susquehanna Bancshares, Inc.
Tax Reconciliation
($ Thousands)
	4Q 2011		Year 2011
Pre-tax income(1)	$2,153		$45,638
Bargain purchase gain	(39,143	)	(39,143	)
Permanent and other differences	(9,520	)	(31,884	)
Tax loss	(46,510	)	(25,389	)
Tax rate	36.50	%	36.50	%
Tax benefit	($16,976	)	($9,267	)

(1) Pre-tax income includes the loss on extinguishment of debt and merger-related expenses.

CONTACT:
Susquehanna Bancshares, Inc.
Abram G. Koser, Vice President, Investor Relations
717-625-6305
ir@susquehanna.net