Susquehanna Bancshares (SUSQ) 8-K Susquehanna Bancshares, Inc. Announces Third Quarter 2013 Results

Exhibit 99.1

Susquehanna Bancshares, Inc. Announces Third Quarter 2013 Results

Third Quarter Highlights

• GAAP EPS of $0.24, a 20% Increase Over Third Quarter 2012
• Return on Average Tangible Equity (ROATE) of 13.67%
• Linked Quarter and Year-over-Year Loan Growth of 1.7% and 5.5%, respectively
• Continued Improvement in Credit Quality with Lower Loan Loss Provision

LITITZ, Pa.--(BUSINESS WIRE)--October 23, 2013--Susquehanna Bancshares, Inc. (Susquehanna) (NASDAQ: SUSQ) today announced that it earned net income for the third quarter ended September 30, 2013 of $44.3 million, or $0.24 per diluted share, compared to $36.7 million, or $0.20 per diluted share, for the third quarter of 2012. Net income for the first nine months of 2013 was $132.3 million, or $0.70 per diluted share, compared with $98.0 million, or $0.54 per diluted share for the same period in 2012.

“Our third quarter results showed progress on some of our key objectives, including year-over-year growth in commercial and consumer loans and continued improvement in credit quality,” said William J. Reuter, Chairman and Chief Executive Officer of Susquehanna. “However, the quarter also provided a reminder of the challenging environment we operate in, with the uptick in rates slowing volume in some of our fee-generating activities. We are also seeing an increase in certain operating expenses as we continue to make the necessary investments to succeed in the ‘new normal’ business environment.”

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

• Loans and leases increased $218.7 million or 1.7% from June 30, 2013 to $13.4 billion at September 30, 2013. Changes for the quarter in each major loan category were as follows:
  • Commercial loans decreased 0.7%.
  • Real estate – construction loans decreased 0.6%.
  • Real estate secured – residential loans increased 1.1%.
  • Real estate secured – commercial loans increased 2.0%.
  • Consumer loans increased 2.9%.
  • Leases increased 8.0%.

• Total deposits decreased $42.5 million or 0.3% from June 30, 2013 to $12.7 billion at September 30, 2013. Changes for the quarter in each major deposit category were as follows:
  • Non-interest bearing demand deposits decreased 3.1%.
  • Interest-bearing demand deposits increased 1.5%.
  • Savings deposits decreased 1.9%
  • Time deposits decreased 1.3%.

• Net interest margin declined 16 basis points to 3.72% for the third quarter of 2013, compared to 3.88% for the second quarter of 2013. The narrowing of the net interest margin was largely due to a decrease in purchase accounting benefit of 14 basis points.
• Non-interest income decreased to $41.3 million for the third quarter of 2013, compared to $49.1 million for the second quarter. The higher interest rate environment in the third quarter resulted in a reduction in mortgage banking and capital market revenues of $3.4 million. In addition, other income in the second quarter included a one-time gain of $2.3 million in claim proceeds from bank-owned life insurance.
• Non-interest expense for the third quarter of 2013 decreased to $117.7 million, compared to $119.7 million in the second quarter. A reduction in salaries and benefits by $5.0 million due to the adjustment of incentive and benefit accruals more than offset an increase in other non-interest expense items for the third quarter.
• The efficiency ratio for the third quarter of 2013 increased to 61.62%, compared to 59.57% in the second quarter.
• Non-performing assets as a percentage of loans, leases and foreclosed real estate owned decreased to 0.89% at September 30, 2013, compared to 0.94% at June 30, 2013.
• Due to continued improvement in asset quality, the provision for loan and lease losses decreased to $5.0 million compared to $12.0 million in the second quarter. Net charge-offs increased to $16.9 million, or 0.50% of average loans, compared to $9.8 million, or 0.30% of average loans, for the second quarter. As a result, the allowance for loan and lease losses was $166.7 million at September 30, 2013, representing 1.25% of total loans and leases and 164% of nonaccrual loans and leases, compared to $178.6 million at June 30, 2013, representing 1.36% of total loans and leases and 170% of nonaccrual loans and leases.

Year-over-Year Results (Third Quarter 2013 vs. Third Quarter 2012)

• Loans and leases increased $700.8 million or 5.5% from September 30 2012 to $13.4 billion at September 30, 2013. Changes for the twelve month period in each major loan category were as follows:
  • Commercial loans increased 4.8%.
  • Real estate - construction loans decreased 15.4%.
  • Real estate secured - residential loans increased 2.4%.
  • Real estate secured - commercial loans increased 4.1%.
  • Consumer loans increased 12.7%.
  • Leases increased 47.6%.

• Total deposits were generally flat at $12.7 billion at September 30, 2013, as a 2.8% increase in core deposits was offset by a 6.0% decrease in time deposits. Changes for the twelve month period in each major deposit category were as follows:
  • Non-interest-bearing demand deposits decreased 3.0%.
  • Interest-bearing demand deposits increased 4.2%.
  • Savings deposits increased 5.6%.
  • Time deposits decreased 6.0%.
• Net interest margin decreased 20 basis points to 3.72% compared to 3.92% for the third quarter of 2012.
• The efficiency ratio for the third quarter of 2013 increased to 61.62% from 58.98% in the third quarter of 2012, calculated after excluding merger related expenses and losses on the extinguishment of debt for the third quarter of 2012.
• Net charge-offs as a percentage of average loans and leases for the quarter ended September 30, 2013 was 0.50% compared to 0.62% for the third quarter of 2012. Non-performing assets as a percentage of loans, leases and foreclosed real estate was 0.89% at September 30, 2013 compared to 1.16% at September 30, 2012. The provision for loan and lease losses for the quarter ended September 30, 2013 was $5.0 million, compared to $16.0 million for the quarter ended September 30, 2012. The allowance for loan and lease losses was $166.7 million at September 30, 2013, representing 1.25% of total loans and leases and 164% of nonaccrual loans and leases, compared to $186.9 million at September 30, 2012, representing 1.47% of total loans and leases and 158% of nonaccrual loans and leases.
• Return on average assets and average tangible equity ⁽¹⁾ for the third quarter ended September 30, 2013 finished at 0.96% and 13.67%, respectively. This compared to results of 0.81% and 12.41%, for the same measurements, respectively, for the third quarter of 2012.

• Susquehanna’s capital ratios continue to exceed those required to be considered “well-capitalized” under the current regulatory requirements, with a Tier 1 common ratio of 10.41%, Tier 1 risk-weighted capital ratio of 11.52% and a total risk-weighted capital ratio of 12.92%, each as of September 30, 2013. Based on a preliminary analysis of the new capital rules approved in July 2013, management believes that Susquehanna would be fully compliant with the revised capital ratio standards as of September 30, 2013 if they were effective on that date.

⁽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.

Additional Events

• On October 16, 2013, Susquehanna’s Board of Directors declared a fourth quarter dividend of $0.08 per common share, payable November 20, 2013 to shareholders of record as of October 30, 2013.
• As indicated in prior public filings, Susquehanna closed 13 branches in the beginning of the fourth quarter of 2013 and expects to close an additional branch by year-end.

Susquehanna will broadcast its third quarter 2013 results conference call over the Internet on October 24, 2013 at 11:00 a.m. Eastern time. The conference call will include management’s discussion of third 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 Website. The event may be accessed by selecting "Investor Relations" near the bottom left of the home page and clicking on the third quarter webcast link. To listen to the live call, please go to the Website 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 Website shortly after the call concludes.

Susquehanna is a financial services holding company with assets of approximately $18.5 billion. Headquartered in Lititz, Pa., Susquehanna provides banking and financial services at 248 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 $7.8 billion in assets under management and administration. Susquehanna also operates an insurance brokerage and employee benefits company, a commercial finance company and a vehicle leasing company. Investor information may be requested through Susquehanna’s Website at www.susquehanna.net.

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

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

This release includes forward-looking statements as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various risks, uncertainties and other factors. 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)
											Nine Months Ended
											September 30,
	3Q13		2Q13		1Q13		4Q12		3Q12		2013		2012
Balance Sheet (EOP)
Investments	$	2,644,162	$	2,494,178	$	2,552,600	$	2,730,335	$	2,908,404	$	2,644,162	$	2,908,404
Loans and leases		13,376,454		13,157,762		12,999,703		12,894,741		12,675,607		13,376,454		12,675,607
Allowance for loan and lease losses		166,740		178,594		176,377		184,020		186,897		166,740		186,897
Total assets		18,481,150		18,083,039		17,967,174		18,037,667		18,106,730		18,481,150		18,106,730
Deposits		12,721,685		12,764,232		12,691,432		12,580,046		12,725,379		12,721,685		12,725,379
Other short-term borrowings		688,456		706,065		786,251		817,577		762,257		688,456		762,257
Federal Home Loan Bank borrowings		1,593,272		1,161,995		1,044,480		1,199,062		1,110,884		1,593,272		1,110,884
Other long-term debt		457,804		489,002		501,559		513,401		639,753		457,804		639,753
Shareholders' equity		2,679,348		2,644,940		2,639,489		2,595,909		2,584,682		2,679,348		2,584,682
Average Balance Sheet
Investments	$	2,584,212	$	2,503,991	$	2,603,595	$	2,764,886	$	2,811,730	$	2,563,862	$	2,688,242
Loans and leases		13,290,513		13,110,128		12,929,365		12,725,886		12,612,477		13,111,325		12,185,491
Total earning assets		15,960,228		15,720,859		15,642,309		15,604,029		15,537,037		15,775,630		14,980,513
Total assets		18,258,982		18,071,466		18,031,127		18,018,889		18,021,108		18,121,360		17,367,580
Deposits		12,794,022		12,867,874		12,640,550		12,602,430		12,588,697		12,768,046		12,139,822
Other short-term borrowings		758,079		728,497		817,816		810,517		748,841		767,911		705,916
Federal Home Loan Bank borrowings		1,285,276		1,041,577		1,155,637		1,166,765		1,072,555		1,161,305		1,046,809
Other long-term debt		475,655		496,240		508,541		560,906		727,382		493,358		695,980
Shareholders' equity		2,642,806		2,648,314		2,614,319		2,597,254		2,562,092		2,635,251		2,482,846
Income Statement
Net interest income	$	145,949	$	148,097	$	149,206	$	155,304	$	149,142	$	443,252	$	435,934
Provision for loan and lease losses		5,000		12,000		12,000		13,000		16,000		29,000		51,000
Noninterest income		41,343		49,076		42,644		43,772		43,661		133,063		122,987
Noninterest expense		117,701		119,738		117,729		125,277		122,910		355,168		364,740
Income before taxes		64,591		65,435		62,121		60,799		53,893		192,147		143,181
Provision for income taxes		20,300		19,787		19,722		17,625		17,161		59,809		45,183
Net income		44,291		45,648		42,399		43,174		36,732		132,338		97,998
Basic earnings per common share		0.24		0.24		0.23		0.23		0.20		0.71		0.54
Diluted earnings per common share		0.24		0.24		0.23		0.23		0.20		0.70		0.54
Cash dividends paid per common share		0.08		0.08		0.00		0.14		0.06		0.16		0.14
Asset Quality
Net charge-offs (NCOs)	$	16,854	$	9,784	$	19,643	$	15,877	$	19,731	$	46,280	$	52,203
Nonaccrual loans and leases	$	101,976	$	105,110	$	103,351	$	97,767	$	118,448	$	101,976	$	118,448
Foreclosed real estate		17,760		18,349		22,557		26,245		28,641		17,760		28,641
Total nonperforming assets (NPAs)	$	119,736	$	123,459	$	125,908	$	124,012	$	147,089	$	119,736	$	147,089
Restructured loans	$	69,975	$	63,822	$	65,773	$	67,775	$	56,823	$	69,975	$	56,823
Loans and leases 90 days past due		8,655		7,203		6,396		8,209		8,451		8,655		8,451

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
											Nine Months Ended
											September 30,
	3Q13		2Q13		1Q13		4Q12		3Q12		2013		2012
Credit Quality
NCOs / Average loans and leases		0.50%		0.30%		0.62%		0.50%		0.62%		0.47%		0.57%
NPAs / Loans and leases + foreclosed real estate		0.89%		0.94%		0.97%		0.96%		1.16%		0.89%		1.16%
ALLL / Nonaccrual loans and leases		163.51%		169.91%		170.66%		188.22%		157.79%		163.51%		157.79%
ALLL / Total loans and leases		1.25%		1.36%		1.36%		1.43%		1.47%		1.25%		1.47%
Profitability
Return on average assets		0.96%		1.01%		0.95%		0.95%		0.81%		0.98%		0.75%
Return on average equity		6.65%		6.91%		6.58%		6.61%		5.70%		6.71%		5.27%
Return on average tangible equity (1)		13.67%		14.30%		13.87%		14.01%		12.41%		13.95%		11.33%
Net interest margin		3.72%		3.88%		3.97%		4.06%		3.92%		3.85%		3.99%
Efficiency ratio (1)		61.62%		59.57%		60.17%		60.96%		58.98%		60.43%		60.15%
Per Share Data (EOP)
Closing share price	$	12.53	$	12.85	$	12.43	$	10.48	$	10.45	$	12.53	$	10.45
Stated book value per common share		14.31		14.14		14.13		13.92		13.86		14.31		13.86
Tangible book value per common share (1)		7.32		7.13		7.10		6.88		6.82		7.32		6.82
Price/Book Value		87.56%		90.86%		87.97%		75.31%		75.39%		87.56%		75.39%
Price/Tangible Book Value		171.17%		180.22%		175.07%		152.33%		153.23%		171.17%		153.23%
Number of outstanding shares ('000)		187,225		187,023		186,800		186,554		186,465		187,225		186,465
Capital Ratios
Tangible common ratio (1)		8.22%		8.21%		8.22%		7.94%		7.84%		8.22%		7.84%
Tier 1 common ratio		10.41%		10.41%		10.20%		9.94%		10.07%		10.41%		10.07%
Leverage ratio		9.47%		9.42%		9.23%		8.98%		8.97%		9.47%		8.97%
Tier 1 capital ratio		11.52%		11.54%		11.34%		11.08%		11.37%		11.52%		11.37%
Total risk-based capital ratio		12.92%		12.94%		12.88%		12.63%		13.14%		12.92%		13.14%

⁽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)
	September 30,			June 30,			March 31,			December 31,			September 30,
	2013			2013			2013			2012			2012
Assets
Cash and due from banks	$	377,730		$	367,902		$	291,434		$	277,042		$	380,100
Unrestricted short-term investments		30,663			30,759			38,662			39,550			24,826
Cash and cash equivalents		408,393			398,661			330,096			316,592			404,926
Interest-bearing deposits held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities		2,138			5,356			4,304			4,423			3,679
Restricted short-term investments		44,928			45,341			68,020			75,203			76,103
Securities available for sale		2,483,375			2,343,429			2,400,626			2,577,901			2,763,477
Restricted investment in bank stocks		160,787			150,749			151,974			152,434			144,927
Loans and leases, net of deferred costs and fees		13,300,309			13,005,013			12,840,305			12,728,082			12,503,737
Loans held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities		76,145			152,749			159,398			166,659			171,870
Less: Allowance for loan and lease losses		166,740			178,594			176,377			184,020			186,897
Net loans and leases		13,209,714			12,979,168			12,823,326			12,710,721			12,488,710
Premises and equipment, net		189,096			187,826			186,102			188,983			190,793
Other real estate and foreclosed assets		18,729			19,319			26,302			31,017			33,735
Accrued interest receivable		41,715			42,665			44,202			40,304			44,681
Bank-owned life insurance		449,419			451,278			450,351			450,270			448,866
Goodwill		1,275,439			1,275,439			1,275,439			1,270,359			1,268,761
Intangible assets with finite lives		33,666			35,737			38,209			41,332			44,549
Deferred income tax assets		7,921			7,999			7,594			4,685			30,682
Other assets		155,830			140,072			160,629			173,443			162,841
Total assets	$	18,481,150		$	18,083,039		$	17,967,174		$	18,037,667		$	18,106,730
Liabilities and Shareholders' Equity
Deposits	$	12,721,685		$	12,764,232		$	12,691,432		$	12,580,046		$	12,725,379
Federal Home Loan Bank short-term borrowings		1,510,000			1,070,000			948,000			1,098,000			1,000,000
Other short-term borrowings		688,456			706,065			786,251			817,577			762,257
Federal Home Loan Bank long-term borrowings		83,272			91,995			96,480			101,062			110,884
Other long-term debt		250,229			250,231			251,019			251,021			349,984
Junior subordinated debentures		154,983			154,964			154,946			154,927			171,370
Long-term debt of consolidated variable interest entities for which creditors do not have recourse to Susquehanna's general credit		52,592			83,807			95,594			107,453			118,399
Accrued interest, taxes, and expenses payable		101,040			78,211			61,265			81,808			72,060
Deferred income tax liabilities		52,214			31,694			29,694			14,475			0
Other liabilities		187,331			206,900			213,004			235,389			211,715
Total liabilities		15,801,802			15,438,099			15,327,685			15,441,758			15,522,048
Shareholders' equity:
Common stock		374,982			374,566			374,118			373,623			373,352
Treasury stock		(1,918	)		(1,875	)		(1,871	)		(1,850	)		(1,368	)
Additional paid-in capital		1,651,382			1,649,636			1,648,062			1,645,958			1,645,692
Retained earnings		717,850			688,535			657,835			615,436			598,371
Accumulated other comprehensive loss		(62,948	)		(65,922	)		(38,655	)		(37,258	)		(31,365	)
Total shareholders' equity		2,679,348			2,644,940			2,639,489			2,595,909			2,584,682
Total liabilities and shareholders' equity	$	18,481,150		$	18,083,039		$	17,967,174		$	18,037,667		$	18,106,730

Susquehanna Bancshares, Inc. 26 North Cedar Street Lititz, PA 17543
Loans and Leases and Deposits
(in thousands)
	Loans and Leases
	09/30/13		06/30/13		03/31/13		12/31/12		09/30/12
Commercial, financial, and agricultural	$	2,273,735	$	2,289,159	$	2,312,660	$	2,273,611	$	2,168,708
Real estate - construction		765,246		769,722		779,344		847,781		904,285
Real estate secured - residential		4,145,522		4,098,938		4,077,810		4,065,818		4,047,761
Real estate secured - commercial		4,109,329		4,029,454		3,971,438		3,964,608		3,947,447
Consumer		935,117		908,328		859,664		842,552		829,760
Leases		1,147,505		1,062,161		998,787		900,371		777,646
Total loans and leases	$	13,376,454	$	13,157,762	$	12,999,703	$	12,894,741	$	12,675,607
	Deposits
	09/30/13		06/30/13		03/31/13		12/31/12		09/30/12
Demand	$	1,871,461	$	1,931,874	$	1,917,719	$	1,973,664	$	1,929,529
Interest-bearing demand		5,957,982		5,868,390		5,936,099		5,829,147		5,717,663
Savings		1,065,699		1,086,184		1,077,446		1,032,293		1,009,110
Core deposits		8,895,142		8,886,448		8,931,264		8,835,104		8,656,302
Time less than $100		2,103,650		2,152,539		2,205,304		2,262,262		2,341,623
Time of $100 or more		1,722,893		1,725,245		1,554,864		1,482,680		1,727,454
Total deposits	$	12,721,685	$	12,764,232	$	12,691,432	$	12,580,046	$	12,725,379

Susquehanna Bancshares, Inc. 26 North Cedar Street Lititz, PA 17543
Supplemental Loan and Lease Data
(in thousands)
	Nonaccrual Loans and Leases
	09/30/13		06/30/13			03/31/13		12/31/12		09/30/12
Commercial, financial, and agricultural	$	10,048	$	10,810		$	9,542	$	10,464	$	10,572
Real estate - construction		16,497		13,243			18,945		14,817		22,534
Real estate secured - residential		27,878		31,945			30,372		28,440		30,740
Real estate secured - commercial		45,906		48,010			43,341		42,621		52,390
Consumer		177		40			37		43		211
Leases		1,470		1,062			1,114		1,382		2,001
Total nonaccrual loans and leases	$	101,976	$	105,110		$	103,351	$	97,767	$	118,448
	Restructured Loans
	09/30/13		06/30/13			03/31/13		12/31/12		09/30/12
Commercial, financial, and agricultural	$	9,609	$	9,200		$	14,863	$	8,744	$	7,254
Real estate - construction		331		334			937		940		943
Real estate secured - residential		26,848		23,207			20,172		23,224		20,828
Real estate secured - commercial		31,766		29,482			28,689		33,589		27,192
Consumer		1,421		1,599			1,112		1,278		606
Total restructured loans	$	69,975	$	63,822		$	65,773	$	67,775	$	56,823
	Net Charge-offs (Recoveries)
	3Q 2013		2Q 2013			1Q 2013		4Q 2012		3Q 2012
Commercial, financial, and agricultural	$	3,731	$	8,790		$	8,041	$	233	$	3,757
Real estate - construction		6,504		(555	)		4,301		3,311		2,909
Real estate secured - residential		3,524		2,006			2,362		3,738		2,470
Real estate secured - commercial		2,007		(1,241	)		3,881		6,704		9,439
Consumer		726		549			236		707		448
Leases		362		235			822		1,184		708
Total net charge-offs	$	16,854	$	9,784		$	19,643	$	15,877	$	19,731

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
	September 30,		June 30,			March 31,		December 31,			September 30,		Nine Months Ended September 30,
	2013		2013			2013		2012			2012		2013			2012
Net interest income	$	145,949	$	148,097		$	149,206	$	155,304		$	149,142	$	443,252		$	435,934
Provision for loan and lease losses		5,000		12,000			12,000		13,000			16,000		29,000			51,000
Net interest income, after provision for loan and lease losses		140,949		136,097			137,206		142,304			133,142		414,252			384,934
Noninterest Income:
Service charges on deposit accounts		9,514		9,347			8,672		9,158			9,013		27,533			25,270
Vehicle origination and servicing fees		2,907		2,407			3,354		3,746			2,470		8,668			6,620
Wealth management commissions and fees		12,606		13,289			12,390		11,882			11,923		38,285			35,823
Commissions on property and casualty insurance sales		3,872		4,360			4,542		3,749			3,158		12,774			12,145
Other commissions and fees		5,276		6,686			5,237		6,680			5,387		17,199			14,830
Income from bank-owned life insurance		1,493		1,520			1,508		1,603			1,726		4,521			4,868
Mortgage banking revenue		2,237		3,998			4,110		4,835			5,113		10,345			12,969
Net realized gain (loss) on sales of securities		2		(71	)		18		(200	)		31		(51	)		1,633
Other		3,436		7,540			2,813		2,319			4,840		13,789			8,829
Total noninterest income		41,343		49,076			42,644		43,772			43,661		133,063			122,987
Noninterest Expenses:
Salaries and employee benefits		61,879		66,888			63,034		66,865			62,236		191,801			184,718
Occupancy		11,352		11,154			11,215		11,345			11,350		33,721			33,886
Furniture and equipment		3,661		3,747			3,578		3,976			3,823		10,986			11,749
Professional and technology services		7,173		5,831			5,729		6,697			4,916		18,733			14,591
Advertising and marketing		3,092		2,369			3,203		3,029			2,947		8,664			9,288
FDIC insurance		5,421		4,541			3,798		5,264			5,275		13,760			15,222
Legal fees		1,774		1,810			1,870		2,178			2,012		5,454			5,972
Amortization of intangible assets		2,502		3,053			3,268		3,272			3,337		8,823			9,253
Vehicle lease disposal		1,193		1,313			1,290		1,361			1,401		3,796			4,981
Merger related		0		0			0		1,054			1,500		0			16,297
Loss on extinguishment of debt		0		0			0		409			5,451		0			5,451
Other		19,654		19,032			20,744		19,827			18,662		59,430			53,332
Total noninterest expenses		117,701		119,738			117,729		125,277			122,910		355,168			364,740
Income before income taxes		64,591		65,435			62,121		60,799			53,893		192,147			143,181
Provision for income taxes		20,300		19,787			19,722		17,625			17,161		59,809			45,183
Net Income	$	44,291	$	45,648		$	42,399	$	43,174		$	36,732	$	132,338		$	97,998
Earnings per common share:
Basic	$	0.24	$	0.24		$	0.23	$	0.23		$	0.20	$	0.71		$	0.54
Diluted	$	0.24	$	0.24		$	0.23	$	0.23		$	0.20	$	0.70		$	0.54
Cash dividends per common share	$	0.08	$	0.08		$	0.00	$	0.14		$	0.06	$	0.16		$	0.14
Average common shares outstanding:
Basic		187,096		186,812			186,607		186,353			186,214		186,840			181,735
Diluted		188,109		187,723			187,442		186,990			187,004		187,816			182,487

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							Nine Months Ended							Nine Months Ended
	September 30, 2013							June 30, 2013							September 30, 2012							September 30, 2013							September 30, 2012
	Average Balance			Interest			Rate (%)	Average Balance			Interest			Rate (%)	Average Balance			Interest			Rate (%)	Average Balance			Interest			Rate (%)	Average Balance			Interest			Rate (%)
Assets
Short-term investments	$	85,503		$	16		0.07	$	106,740		$	34		0.13	$	112,830		$	36		0.13	$	100,443		$	87		0.12	$	106,780		$	101		0.13
Investment securities:
Taxable(1)		2,191,743			11,937		2.16		2,107,031			10,830		2.06		2,421,414			13,434		2.21		2,166,932			34,193		2.11		2,306,402			41,277		2.39
Tax-exempt(1)(2)		392,469			5,450		5.51		396,960			5,478		5.54		390,316			5,568		5.68		396,930			16,515		5.56		381,840			16,927		5.92
Total investment securities		2,584,212			17,387		2.67		2,503,991			16,308		2.61		2,811,730			19,002		2.69		2,563,862			50,708		2.64		2,688,242			58,204		2.89
Loans and leases, (net):
Taxable(3)		12,888,591			152,275		4.69		12,690,334			156,561		4.95		12,222,031			160,532		5.23		12,695,055			465,689		4.90		11,813,477			468,563		5.30
Tax-exempt(2)(3)		401,922			5,133		5.07		419,794			5,326		5.09		390,446			5,305		5.41		416,270			15,830		5.08		372,014			15,262		5.48
Total loans and leases		13,290,513			157,408		4.70		13,110,128			161,887		4.95		12,612,477			165,837		5.23		13,111,325			481,519		4.91		12,185,491			483,825		5.30
Total interest-earning assets		15,960,228			174,811		4.35		15,720,859			178,229		4.55		15,537,037			184,875		4.73		15,775,630			532,314		4.51		14,980,513			542,130		4.83
Allowance for loan and lease losses		(177,853	)						(179,273	)						(189,406	)						(180,652	)						(190,265	)
Other non-earning assets		2,476,607							2,529,880							2,673,477							2,526,382							2,577,332
Total assets	$	18,258,982						$	18,071,466						$	18,021,108						$	18,121,360						$	17,367,580
Liabilities
Deposits:
Interest-bearing demand	$	5,936,693			3,904		0.26	$	5,983,543			4,219		0.28	$	5,537,196			4,817		0.35	$	5,938,605			12,746		0.29	$	5,336,552			15,826		0.40
Savings		1,075,734			286		0.11		1,080,427			294		0.11		1,002,981			274		0.11		1,068,446			858		0.11		979,190			936		0.13
Time		3,870,542			10,229		1.05		3,892,237			11,653		1.20		4,110,685			12,085		1.17		3,847,294			33,115		1.15		3,974,635			35,517		1.19
Other short-term borrowings		758,079			2,242		1.17		728,497			2,154		1.19		748,841			2,206		1.17		767,911			6,548		1.14		705,916			6,507		1.23
FHLB borrowings		1,285,276			4,199		1.30		1,041,577			3,754		1.45		1,072,555			3,553		1.32		1,161,305			11,626		1.34		1,046,809			9,970		1.27
Long-term debt		475,655			4,268		3.56		496,240			4,239		3.43		727,382			8,992		4.92		493,358			12,743		3.45		695,980			26,174		5.02
Total interest-bearing liabilities		13,401,979			25,128		0.74		13,222,521			26,313		0.80		13,199,640			31,927		0.96		13,276,919			77,636		0.78		12,739,082			94,930		1.00
Demand deposits		1,911,053							1,911,667							1,937,835							1,913,701							1,849,445
Other liabilities		303,144							288,964							321,541							295,489							296,207
Total liabilities		15,616,176							15,423,152							15,459,016							15,486,109							14,884,734
Equity		2,642,806							2,648,314							2,562,092							2,635,251							2,482,846
Total liabilities & shareholders' equity	$	18,258,982						$	18,071,466						$	18,021,108						$	18,121,360						$	17,367,580
Net interest income / yield on average earning assets				$	149,683		3.72				$	151,916		3.88				$	152,948		3.92				$	454,678		3.85				$	447,200		3.99
Taxable equivalent adjustment					(3,734	)						(3,819	)						(3,806	)						(11,426	)						(11,266	)
Net interest income - as reported				$	145,949						$	148,097						$	149,142						$	443,252						$	435,934

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

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
Appendix A - GAAP to Non-GAAP Reconciliation																Nine Months Ended
(Dollars and share data in thousands)																September 30,
	3Q13			2Q13			1Q13			4Q12			3Q12				2013			2012
Efficiency Ratio
Other expense	$	117,701		$	119,738		$	117,729		$	125,277		$	122,910		$	355,168		$	364,740
Less: Merger related expenses		0			0			0			(1,054	)		(1,500	)		0			(16,297	)
Loss on extinguishment of debt		0			0			0			(409	)		(5,451	)		0			(5,451	)
Noninterest operating expense (numerator)	$	117,701		$	119,738		$	117,729		$	123,814		$	115,959		$	355,168		$	342,992
Taxable-equivalent net interest income	$	149,683		$	151,916		$	153,021		$	159,332		$	152,948			454,678		$	447,200
Other income		41,343			49,076			42,644			43,772			43,661			133,063			122,987
Denominator	$	191,026		$	200,992		$	195,665		$	203,104		$	196,609		$	587,741		$	570,187
Efficiency ratio		61.62	%		59.57	%		60.17	%		60.96	%		58.98	%		60.43	%		60.15	%
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	$	2,679,348		$	2,644,940		$	2,639,489		$	2,595,909		$	2,584,682		$	2,679,348		$	2,584,682
Goodwill and other intangible assets (1)		(1,263,928	)		(1,265,016	)		(1,266,610	)		(1,263,563	)		(1,263,361	)		(1,263,928	)		(1,263,361	)
Tangible common equity (numerator)	$	1,415,420		$	1,379,924		$	1,372,879		$	1,332,346		$	1,321,321		$	1,415,420		$	1,321,321
Assets	$	18,481,150		$	18,083,039		$	17,967,174		$	18,037,667		$	18,106,730		$	18,481,150		$	18,106,730
Goodwill and other intangible assets (1)		(1,263,928	)		(1,265,016	)		(1,266,610	)		(1,263,563	)		(1,263,361	)		(1,263,928	)		(1,263,361	)
Tangible assets (denominator)	$	17,217,222		$	16,818,023		$	16,700,564		$	16,774,104		$	16,843,369		$	17,217,222		$	16,843,369
Tangible common ratio		8.22	%		8.21	%		8.22	%		7.94	%		7.84	%		8.22	%		7.84	%
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						Nine Months Ended
(Dollars and share data in thousands)						'September 30,
	3Q13	2Q13	1Q13	4Q12	3Q12	2013	2012
Return on Average Tangible Equity
Income statement data
Net income	$ 44,291	$ 45,648	$ 42,399	$ 43,174	$ 36,732	$ 132,338	$ 97,998
Amortization of intangibles, net of taxes at 35%	1,626	1,984	2,124	2,127	2,169	5,735	6,014
Net tangible income (numerator)	$ 45,917	$ 47,632	$ 44,523	$ 45,301	$ 38,901	$ 138,073	$ 104,012
Average balance sheet data
Shareholders' equity	$ 2,642,806	$ 2,648,314	$ 2,614,319	$ 2,597,254	$ 2,562,092	$ 2,635,251	$ 2,482,846
Goodwill and other intangible assets	(1,310,155)	(1,312,257)	(1,312,662)	(1,311,192)	(1,315,071)	(1,311,682)	(1,256,240)
Tangible common equity (denominator)	$ 1,332,651	$ 1,336,057	$ 1,301,657	$ 1,286,062	$ 1,247,021	$ 1,323,569	$ 1,226,606
Return on equity (GAAP basis)	6.65%	6.91%	6.58%	6.61%	5.70%	6.71%	5.27%
Effect of goodwill and other intangibles	7.02%	7.39%	7.29%	7.40%	6.71%	7.24%	6.06%
Return on average tangible equity	13.67%	14.30%	13.87%	14.01%	12.41%	13.95%	11.33%
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	$ 2,679,348	$ 2,644,940	$ 2,639,489	$ 2,595,909	$ 2,584,682	$ 2,679,348	$ 2,584,682
Goodwill and other intangible assets	(1,309,105)	(1,311,176)	(1,313,648)	(1,311,691)	(1,313,310)	(1,309,105)	(1,313,310)
Tangible common equity (numerator)	$ 1,370,243	$ 1,333,764	$ 1,325,841	$ 1,284,218	$ 1,271,372	$ 1,370,243	$ 1,271,372
Common shares outstanding (denominator)	187,225	187,023	186,800	186,554	186,465	187,225	186,465
Tangible book value per common share	$ 7.32	$ 7.13	$ 7.10	$ 6.88	$ 6.82	$ 7.32	$ 6.82
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.

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