Susquehanna Bancshares (SUSQ) 8-K Susquehanna Bancshares, Inc. Announces First Quarter 2014 Results

Exhibit 99.1

Susquehanna Bancshares, Inc. Announces First Quarter 2014 Results

First Quarter Highlights

• GAAP EPS of $0.20
• Linked Quarter Commercial Loan and Deposit Growth
• Reduced Expenses Lowers Efficiency Ratio
• Capital Ratios Continue to Build

LITITZ, Pa.--(BUSINESS WIRE)--April 23, 2014--Susquehanna Bancshares, Inc. (Susquehanna) (NASDAQ: SUSQ) today announced that it earned net income for the first quarter ended March 31, 2014 of $37.2 million, or $0.20 per diluted share, compared to $41.3 million, or $0.22 per diluted share, for the fourth quarter of 2013 and $42.4 million, or $0.23 per diluted share, for the first quarter of 2013.

“First quarter results were affected by the competitive lending environment and an overall slowdown in business activity due to the harsh winter weather throughout the Mid-Atlantic region,” said William J. Reuter, Susquehanna Bancshares Chairman and Chief Executive Officer. “Nevertheless, we made solid progress on key initiatives, including deposit growth and adding commercial loans and leases to our loan portfolio.”

Linked Quarter Results (First Quarter 2014 vs. Fourth Quarter 2013)

• Loans and leases were essentially flat on a linked-quarter basis, ending the first quarter of 2014 at $13.6 billion. Changes for the quarter in each major loan category were as follows:
  • Commercial loans increased 0.7%.
  • Real estate – construction loans decreased 2.9%.
  • Real estate secured – residential loans decreased 0.6%.
  • Real estate secured – commercial loans decreased 0.7%.
  • Consumer loans increased 0.3%.
  • Leases increased 4.4%.

• Total deposits increased $210.2 million or 1.6% from December 31, 2013 to $13.1 billion at March 31, 2014. Changes for the quarter in each major deposit category were as follows:
  • Non-interest bearing demand deposits decreased 1.7%.
  • Interest-bearing demand deposits were essentially flat.
  • Money market deposits increased 1.3%.
  • Savings deposits increased 5.1%.
  • Time deposits increased 3.9%.

• Net interest margin increased 1 basis point to 3.61% for the first quarter of 2014 compared to 3.60% for the fourth quarter of 2013. Net interest margin (excluding purchase accounting) ⁽¹⁾ declined 5 basis points to 3.40% for the first quarter of 2014 compared to 3.45% for the fourth quarter of 2013.
• Non-interest income decreased to $42.1 million for the first quarter of 2014 compared to $50.7 million for the fourth quarter of 2013. The fourth quarter of 2013 included a gain on sale of branch properties of $5.0 million related to the sale leaseback transaction completed in December 2013.
• Non-interest expense decreased to $123.0 million for the first quarter of 2014 compared to $135.7 million in the fourth quarter of 2013. The fourth quarter of 2013 included branch consolidation costs of $6.6 million and additional incentive compensation expense due to a stronger than anticipated fourth quarter, particularly in commercial loan growth.

• The efficiency ratio ⁽¹⁾ decreased to 66.18% for the first quarter of 2014 compared to 68.84% in the fourth quarter of 2013. The primary drivers of the decrease were lower salary and benefit expenses in the first quarter of 2014, and the fact that the first quarter of 2014 did not include branch consolidation costs or a gain on sale of branch properties, which both impacted the fourth quarter of 2013.
• Non-performing assets as a percentage of loans, leases and foreclosed real estate owned increased slightly to 0.89% at March 31, 2014 compared to 0.86% at December 31, 2013. Loans classified as Troubled Debt Restructurings (“TDR”) declined from $72.1 million at December 31, 2013 to $39.5 million at March 31, 2014, a decline of $32.6 million. Approximately $28.1 million of this decline was due to our annual assessment where TDR loans that have performed in accordance with the new terms for six consecutive months, are in a current status, reflected a market rate of interest at the time of the restructuring, and cross over a year end are considered cured and are no longer classified as TDR loans.
• The provision for loan and lease losses in the first quarter increased to $6.0 million compared to $2.0 million in the fourth quarter of 2013. Net charge-offs for the first quarter decreased to $9.5 million, or 0.28% of average loans, compared to $11.1 million, or 0.33% of average loans, for the fourth quarter of 2013. As a result, the allowance for loan and lease losses was $154.2 million at March 31, 2014, representing 1.14% of total loans and leases and 142% of nonaccrual loans and leases compared to $157.6 million at December 31, 2013, representing 1.16% of total loans and leases and 156% of nonaccrual loans and leases.

First Quarter Results (First Quarter 2014 vs. First Quarter 2013)

• Loans and leases increased $575.6 million or 4.4% from March 31, 2013 to $13.6 billion at March 31, 2014. Changes for the twelve month period in each major loan category were as follows:
  • Commercial loans increased 4.3%.
  • Real estate - construction loans decreased 8.3%.
  • Real estate secured - residential loans increased 2.5%.
  • Real estate secured - commercial loans increased 1.8%.
  • Consumer loans increased 11.2%.
  • Leases increased 27.5%.

• Total deposits increased $388.1 million or 3.1% from March 31, 2013 to $13.1 billion as of March 31, 2014. Changes for the twelve month period in each major deposit category were as follows:
  • Non-interest-bearing demand deposits decreased 2.0%.
  • Interest-bearing demand deposits increased 4.8%.
  • Money market deposits increased 0.8%
  • Savings deposits increased 5.1%.
  • Time deposits increased 5.7%.

• Net interest margin decreased 36 basis points to 3.61% compared to 3.97% for the first quarter of 2013. Net interest margin (excluding purchase accounting) ⁽¹⁾ declined 22 basis points to 3.40% compared to 3.62% for the first quarter of 2013.
• Non-interest income decreased to $42.1 million compared to $42.6 million in the first quarter of 2013.
• Non-interest expense increased to $123.0 million compared to $117.7 million in the first quarter of 2013.
• The efficiency ratio ⁽¹⁾ increased to 66.18% compared to 60.17% in the first quarter of 2013.
• Non-performing assets as a percentage of loans, leases and foreclosed real estate decreased to 0.89% compared to 0.97% at March 31, 2013. The provision for loan and lease losses decreased to $6.0 million compared to $12.0 million for the first quarter of 2013. Net charge-offs as a percentage of average loans and leases decreased to 0.28% compared to 0.62% for the first quarter of 2013. The allowance for loan and lease losses was $154.2 million, representing 1.14% of total loans and leases and 142% 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.
• Return on average assets and average tangible equity ⁽¹⁾ decreased to 0.82% and 11.08%, respectively compared to 0.95% and 13.87%, respectively for the first quarter of 2013.
• Susquehanna’s capital ratios continue to exceed internal capital targets and those required to be considered “well-capitalized” under the current regulatory requirements, with a Tier 1 common ratio of 10.84%, Tier 1 risk-weighted capital ratio of 11.95%, Total risk-weighted capital ratio of 13.23% and a Leverage ratio of 9.72%, each as of March 31, 2014. 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 March 31, 2014 if they had been effective on that date.

⁽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 April 16, 2014, Susquehanna’s Board of Directors declared a second quarter dividend of $0.08 per common share, payable May 20, 2014 to shareholders of record as of May 1, 2014.

Susquehanna will broadcast its first quarter 2014 conference call over the Internet on April 24, 2014, at 11:00 a.m. Eastern time. The conference call will include management’s discussion of first quarter 2014 financial results. The discussion may also include forward-looking statements relating to customer relationship strategies; 2014 performance; capital management; loan and deposit volume and growth; fee income activities and revenues; and the impact of purchase accounting benefit on financial results. 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 of the home page and clicking on the first quarter webcast link. To listen to the live call, please go to the website at least 15 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 $18.4 billion. Headquartered in Lititz, Pa., Susquehanna provides banking and financial services at 245 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 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 references to future periods; however, such words are not the exclusive means of identifying such statements. The 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, including industry consolidation and development of competing financial products and services; the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; interest rate movements; changes in credit quality; deteriorating economic conditions; other risks and uncertainties; our success at managing the risks involved in the foregoing items; and the other factors 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)
	1Q14		4Q13		3Q13		2Q13		1Q13
Balance Sheet (EOP)
Investments	$	2,445,322	$	2,533,456	$	2,644,162	$	2,494,178	$	2,552,600
Loans and leases		13,575,295		13,576,086		13,376,454		13,157,762		12,999,703
Allowance for loan and lease losses		154,150		157,608		166,740		178,594		176,377
Total assets		18,439,682		18,473,489		18,481,150		18,083,039		17,967,174
Deposits		13,079,523		12,869,372		12,721,685		12,764,232		12,691,432
Other short-term borrowings		584,664		555,740		688,456		706,065		786,251
Federal Home Loan Bank borrowings		1,229,296		1,531,282		1,593,272		1,161,995		1,044,480
Other long-term debt		448,521		453,260		457,804		489,002		501,559
Shareholders' equity		2,755,199		2,717,587		2,679,348		2,644,940		2,639,489
Average Balance Sheet
Investments	$	2,505,937	$	2,616,807	$	2,584,212	$	2,503,991	$	2,603,595
Loans and leases		13,574,526		13,421,474		13,290,513		13,110,128		12,929,365
Total earning assets		16,162,210		16,124,369		15,960,228		15,720,859		15,642,309
Total assets		18,411,873		18,437,954		18,258,982		18,071,466		18,031,127
Deposits		12,874,040		12,806,503		12,794,022		12,867,874		12,640,550
Other short-term borrowings		671,653		671,923		758,079		728,497		817,816
Federal Home Loan Bank borrowings		1,387,124		1,502,120		1,285,276		1,041,577		1,155,637
Other long-term debt		451,267		455,787		475,655		496,240		508,541
Shareholders' equity		2,726,465		2,679,242		2,642,806		2,648,314		2,614,319
Income Statement
Net interest income	$	140,064	$	142,688	$	145,949	$	148,097	$	149,206
Provision for loan and lease losses		6,000		2,000		5,000		12,000		12,000
Noninterest income		42,089		50,666		41,343		49,076		42,644
Noninterest expense		123,032		135,672		117,701		119,738		117,729
Income before taxes		53,121		55,682		64,591		65,435		62,121
Provision for income taxes		15,959		14,341		20,300		19,787		19,722
Net income		37,162		41,341		44,291		45,648		42,399
Basic earnings per common share		0.20		0.22		0.24		0.24		0.23
Diluted earnings per common share		0.20		0.22		0.24		0.24		0.23
Cash dividends paid per common share		0.08		0.08		0.08		0.08		0.00
Asset Quality
Net charge-offs (NCOs)	$	9,458	$	11,132	$	16,854	$	9,784	$	19,643
Nonaccrual loans and leases	$	108,408	$	100,815	$	101,976	$	105,110	$	103,351
Foreclosed real estate		11,980		16,555		17,760		18,349		22,557
Total nonperforming assets (NPAs)	$	120,388	$	117,370	$	119,736	$	123,459	$	125,908

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
	1Q14			4Q13			3Q13			2Q13			1Q13
Restructured loans	$	39,555		$	72,133		$	69,975		$	63,822		$	65,773
Loans and leases 90 days past due		9,328			9,757			8,655			7,203			6,396
Credit Quality
NCOs / Average loans and leases		0.28	%		0.33	%		0.50	%		0.30	%		0.62	%
NPAs / Loans and leases + foreclosed real estate		0.89	%		0.86	%		0.89	%		0.94	%		0.97	%
ALLL / Nonaccrual loans and leases		142.19	%		156.33	%		163.51	%		169.91	%		170.66	%
ALLL / Total loans and leases		1.14	%		1.16	%		1.25	%		1.36	%		1.36	%
Profitability
Return on average assets		0.82	%		0.89	%		0.96	%		1.01	%		0.95	%
Return on average equity		5.53	%		6.12	%		6.65	%		6.91	%		6.58	%
Return on average tangible equity (1)		11.08	%		12.49	%		13.67	%		14.30	%		13.87	%
Net interest margin		3.61	%		3.60	%		3.72	%		3.88	%		3.97	%
Efficiency ratio (1)		66.18	%		68.84	%		61.62	%		59.57	%		60.17	%
Per Share Data (EOP)
Closing share price	$	11.37		$	12.84		$	12.53		$	12.85		$	12.43
Stated book value per common share		14.69			14.50			14.31			14.14			14.13
Tangible book value per common share (1)		7.73			7.52			7.32			7.13			7.10
Price/Book Value		77.41	%		88.52	%		87.56	%		90.86	%		87.97	%
Price/Tangible Book Value		147.09	%		170.74	%		171.17	%		180.22	%		175.07	%
Number of outstanding shares ('000)		187,590			187,363			187,225			187,023			186,800
Capital Ratios
Tangible common ratio (1)		8.67	%		8.44	%		8.22	%		8.21	%		8.22	%
Tier 1 common ratio		10.84	%		10.60	%		10.41	%		10.41	%		10.20	%
Leverage ratio		9.72	%		9.55	%		9.47	%		9.42	%		9.23	%
Tier 1 capital ratio		11.95	%		11.71	%		11.52	%		11.54	%		11.34	%
Total risk-based capital ratio		13.23	%		13.04	%		12.92	%		12.94	%		12.88	%

⁽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)
	March 31,			December 31,			September 30,			June 30,			March 31,
		2014			2013			2013			2013			2013
Assets
Cash and due from banks	$	389,793		$	305,357		$	377,730		$	367,902		$	291,434
Unrestricted short-term investments		24,768			37,967			30,663			30,759			38,662
Cash and cash equivalents		414,561			343,324			408,393			398,661			330,096
Interest-bearing deposits held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities		1,689			2,347			2,138			5,356			4,304
Restricted short-term investments		42,993			42,913			44,928			45,341			68,020
Securities available for sale		2,299,235			2,375,224			2,483,375			2,343,429			2,400,626
Restricted investment in bank stocks		146,087			158,232			160,787			150,749			151,974
Loans and leases, net of deferred costs and fees		13,505,746			13,503,392			13,300,309			13,005,013			12,840,305
Loans held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities		69,549			72,694			76,145			152,749			159,398
Less: Allowance for loan and lease losses		154,150			157,608			166,740			178,594			176,377
Net loans and leases		13,421,145			13,418,478			13,209,714			12,979,168			12,823,326
Premises and equipment, net		170,349			173,542			189,096			187,826			186,102
Other real estate and foreclosed assets		12,943			17,573			18,729			19,319			26,302
Accrued interest receivable		41,594			41,690			41,715			42,665			44,202
Bank-owned life insurance		449,778			449,320			449,419			451,278			450,351
Goodwill		1,275,439			1,275,439			1,275,439			1,275,439			1,275,439
Intangible assets with finite lives		30,303			32,262			33,666			35,737			38,209
Deferred income tax assets		5,216			6,472			7,921			7,999			7,594
Other assets		128,350			136,673			155,830			140,072			160,629
Total assets	$	18,439,682		$	18,473,489		$	18,481,150		$	18,083,039		$	17,967,174
Liabilities and Shareholders' Equity
Deposits	$	13,079,523		$	12,869,372		$	12,721,685		$	12,764,232		$	12,691,432
Federal Home Loan Bank short-term borrowings		1,150,000			1,450,000			1,510,000			1,070,000			948,000
Other short-term borrowings		584,664			555,740			688,456			706,065			786,251
Federal Home Loan Bank long-term borrowings		79,296			81,282			83,272			91,995			96,480
Other long-term debt		250,224			250,227			250,229			250,231			251,019
Junior subordinated debentures		155,022			155,002			154,983			154,964			154,946
Long-term debt of consolidated variable interest entities for which creditors do not have recourse to Susquehanna's general credit		43,275			48,031			52,592			83,807			95,594
Accrued interest, taxes, and expenses payable		69,404			82,150			101,040			78,211			61,265
Deferred income tax liabilities		75,911			70,308			52,214			31,694			29,694
Other liabilities		197,164			193,790			187,331			206,900			213,004
Total liabilities		15,684,483			15,755,902			15,801,802			15,438,099			15,327,685
Shareholders' equity:
Common stock		375,845			375,353			374,982			374,566			374,118
Treasury stock		(2,735	)		(2,531	)		(1,918	)		(1,875	)		(1,871	)
Additional paid-in capital		1,654,357			1,652,116			1,651,382			1,649,636			1,648,062
Retained earnings		766,381			744,215			717,850			688,535			657,835
Accumulated other comprehensive loss		(38,649	)		(51,566	)		(62,948	)		(65,922	)		(38,655	)
Total shareholders' equity		2,755,199			2,717,587			2,679,348			2,644,940			2,639,489
Total liabilities and shareholders' equity	$	18,439,682		$	18,473,489		$	18,481,150		$	18,083,039		$	17,967,174

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
Loans and Leases and Deposits
(in thousands)
	Loans and Leases
	03/31/14		12/31/13		09/30/13		06/30/13		03/31/13
Commercial, financial, and agricultural	$	2,411,851	$	2,394,847	$	2,273,735	$	2,289,159	$	2,312,660
Real estate - construction		714,291		735,877		765,246		769,722		779,344
Real estate secured - residential		4,178,505		4,204,430		4,145,522		4,098,938		4,077,810
Real estate secured - commercial		4,041,989		4,068,816		4,109,329		4,029,454		3,971,438
Consumer		955,577		953,000		935,117		908,328		859,664
Leases		1,273,082		1,219,116		1,147,505		1,062,161		998,787
Total loans and leases	$	13,575,295	$	13,576,086	$	13,376,454	$	13,157,762	$	12,999,703
	Deposits
	03/31/14		12/31/13		09/30/13		06/30/13		03/31/13
Non-interest bearing checking	$	1,880,284	$	1,913,526	$	1,871,461	$	1,931,874	$	1,917,719
Interest-bearing checking		2,908,507		2,909,376		2,895,027		2,766,831		2,775,454
Money market		3,184,719		3,144,106		3,062,955		3,101,559		3,160,645
Savings		1,132,850		1,077,923		1,065,699		1,086,184		1,077,446
Core deposits		9,106,360		9,044,931		8,895,142		8,886,448		8,931,264
Time less than $100		2,166,207		2,113,209		2,103,650		2,152,539		2,205,304
Time of $100 or more		1,806,956		1,711,232		1,722,893		1,725,245		1,554,864
Total deposits	$	13,079,523	$	12,869,372	$	12,721,685	$	12,764,232	$	12,691,432

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
Supplemental Loan and Lease Data
(in thousands)
	Nonaccrual Loans and Leases
		03/31/14			12/31/13			09/30/13		06/30/13		03/31/13
Commercial, financial, and agricultural	$	24,529		$	16,827		$	10,048	$	10,810		$	9,542
Real estate - construction		11,695			13,230			16,497		13,243			18,945
Real estate secured - residential		23,189			23,365			27,878		31,945			30,372
Real estate secured - commercial		47,950			46,147			45,906		48,010			43,341
Consumer		46			47			177		40			37
Leases		999			1,199			1,470		1,062			1,114
Total nonaccrual loans and leases	$	108,408		$	100,815		$	101,976	$	105,110		$	103,351
	Restructured Loans
		03/31/14			12/31/13			09/30/13		06/30/13		03/31/13
Commercial, financial, and agricultural	$	5,264		$	6,885		$	9,609	$	9,200		$	14,863
Real estate - construction		325			615			331		334			937
Real estate secured - residential		16,168			31,623			26,848		23,207			20,172
Real estate secured - commercial		16,681			31,295			31,766		29,482			28,689
Consumer		1,117			1,715			1,421		1,599			1,112
Total restructured loans	$	39,555		$	72,133		$	69,975	$	63,822		$	65,773
	Net Charge-offs (Recoveries)
	1Q 2014			4Q 2013			3Q 2013		2Q 2013			1Q 2013
Commercial, financial, and agricultural	$	3,182		$	(480	)	$	3,731	$	8,790		$	8,041
Real estate - construction		(91	)		(3,312	)		6,504		(555	)		4,301
Real estate secured - residential		2,796			2,724			3,524		2,006			2,362
Real estate secured - commercial		2,134			11,060			2,007		(1,241	)		3,881
Consumer		855			330			726		549			236
Leases		582			810			362		235			822
Total net charge-offs	$	9,458		$	11,132		$	16,854	$	9,784		$	19,643

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
	March 31,			December 31,			September 30,		June 30,			March 31,
		2014			2013		2013			2013		2013
Net interest income	$	140,064		$	142,688		$	145,949	$	148,097		$	149,206
Provision for loan and lease losses		6,000			2,000			5,000		12,000			12,000
Net interest income, after provision for loan and lease losses		134,064			140,688			140,949		136,097			137,206
Noninterest Income:
Service charges on deposit accounts		9,000			9,456			9,514		9,347			8,672
Vehicle origination and servicing fees		2,968			3,057			2,907		2,407			3,354
Wealth management commissions and fees		12,719			13,048			12,606		13,289			12,390
Commissions on property and casualty insurance sales		5,666			4,023			3,872		4,360			4,542
Other commissions and fees		5,035			5,077			4,885		4,727			4,328
Income from bank-owned life insurance		1,637			1,492			1,493		1,520			1,508
Mortgage banking revenue		2,410			2,483			2,237		3,998			4,110
Capital markets revenue		1,240			3,216			111		3,256			902
Net realized gain (loss) on sales of securities		(8	)		(1,343	)		2		(71	)		18
Realized gain on sale of branch properties		0			4,945			0		0			0
Other		1,422			5,212			3,716		6,243			2,820
Total noninterest income		42,089			50,666			41,343		49,076			42,644
Noninterest Expenses:
Salaries and employee benefits		65,581			70,837			61,879		66,888			62,614
Occupancy		13,847			11,727			11,352		11,154			11,215
Furniture and equipment		3,944			3,865			3,661		3,747			3,578
Professional and technology services		6,070			6,404			7,173		5,831			5,729
Advertising and marketing		3,576			3,618			3,319		2,465			3,300
FDIC insurance		5,121			6,118			5,421		4,541			3,798
Legal fees		1,527			1,968			1,774		1,810			1,870
Amortization of intangible assets		2,539			2,803			2,502		3,053			3,268
Vehicle lease disposal		2,251			1,216			1,193		1,313			1,290
Branch consolidation costs		0			6,603			0		0			0
Other		18,576			20,513			19,427		18,936			21,067
Total noninterest expenses		123,032			135,672			117,701		119,738			117,729
Income before income taxes		53,121			55,682			64,591		65,435			62,121
Provision for income taxes		15,959			14,341			20,300		19,787			19,722
Net Income	$	37,162		$	41,341		$	44,291	$	45,648		$	42,399
Earnings per common share:
Basic	$	0.20		$	0.22		$	0.24	$	0.24		$	0.23
Diluted	$	0.20		$	0.22		$	0.24	$	0.24		$	0.23
Cash dividends per common share	$	0.08		$	0.08		$	0.08	$	0.08		$	0.00
Average common shares outstanding:
Basic		187,455			187,186			187,096		186,812			186,607
Diluted		188,378			188,078			188,109		187,723			187,442

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
	March 31, 2014							December 31, 2013							March 31, 2013
	Average							Average							Average
	Balance			Interest			Rate (%)	Balance			Interest			Rate (%)	Balance			Interest			Rate (%)
Assets
Short-term investments	$	81,747		$	19		0.09	$	86,088		$	20		0.09	$	109,349		$	36		0.13
Investment securities:
Taxable(1)		2,117,969			11,413		2.19		2,227,191			12,055		2.15		2,202,136			11,426		2.10
Tax-exempt(1)(2)		387,968			5,388		5.63		389,616			5,403		5.50		401,459			5,529		5.59
Total investment securities		2,505,937			16,801		2.72		2,616,807			17,458		2.65		2,603,595			16,955		2.64
Loans and leases, (net):
Taxable(3)		13,136,268			146,080		4.51		13,003,680			148,469		4.53		12,501,991			156,853		5.09
Tax-exempt(2)(3)		438,258			5,320		4.92		417,794			5,289		5.02		427,374			5,371		5.10
Total loans and leases		13,574,526			151,400		4.52		13,421,474			153,758		4.55		12,929,365			162,224		5.09
Total interest-earning assets		16,162,210			168,220		4.22		16,124,369			171,236		4.21		15,642,309			179,215		4.65
Allowance for loan and lease losses		(157,444	)						(165,298	)						(184,909	)
Other non-earning assets		2,407,107							2,478,883							2,573,727
Total assets	$	18,411,873						$	18,437,954						$	18,031,127
Liabilities
Deposits:
Interest-bearing demand	$	6,032,537			3,674		0.25	$	6,058,107			3,915		0.26	$	5,895,120			4,622		0.32
Savings		1,099,944			287		0.11		1,075,598			286		0.11		1,048,881			279		0.11
Time		3,910,698			9,630		1.00		3,791,625			9,597		1.00		3,778,086			11,232		1.21
Other short-term borrowings		671,653			2,101		1.27		671,923			2,146		1.27		817,816			2,153		1.07
FHLB borrowings		1,387,124			4,866		1.42		1,502,120			4,704		1.24		1,155,637			3,672		1.29
Long-term debt		451,267			3,849		3.46		455,787			4,158		3.62		508,541			4,236		3.38
Total interest-bearing liabilities		13,553,223			24,407		0.73		13,555,160			24,806		0.73		13,204,081			26,194		0.80
Demand deposits		1,830,861							1,881,173							1,918,463
Other liabilities		301,324							322,379							294,264
Total liabilities		15,685,408							15,758,712							15,416,808
Equity		2,726,465							2,679,242							2,614,319
Total liabilities & shareholders' equity	$	18,411,873						$	18,437,954						$	18,031,127
Net interest income / yield on average earning assets				$	143,813		3.61				$	146,430		3.60				$	153,021		3.97
Taxable equivalent adjustment					(3,749	)						(3,742	)						(3,815	)
Net interest income - as reported				$	140,064						$	142,688						$	149,206

(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
(Dollars and share data in thousands)
	1Q14			4Q13			3Q13			2Q13			1Q13
Efficiency Ratio
Other expense	$	123,032		$	135,672		$	117,701		$	119,738		$	117,729
Noninterest operating expense (numerator)	$	123,032		$	135,672		$	117,701		$	119,738		$	117,729
Taxable-equivalent net interest income	$	143,813		$	146,430		$	149,683		$	151,916		$	153,021
Other income		42,089			50,666			41,343			49,076			42,644
Noninterest operating income (denominator)	$	185,902		$	197,096		$	191,026		$	200,992		$	195,665
Efficiency ratio		66.18	%		68.84	%		61.62	%		59.57	%		60.17	%
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	$	2,755,199		$	2,717,587		$	2,679,348		$	2,644,940		$	2,639,489
Goodwill and other intangible assets (1)		(1,266,403	)		(1,264,839	)		(1,263,928	)		(1,265,016	)		(1,266,610	)
Tangible common equity (numerator)	$	1,488,796		$	1,452,748		$	1,415,420		$	1,379,924		$	1,372,879
Assets	$	18,439,682		$	18,473,489		$	18,481,150		$	18,083,039		$	17,967,174
Goodwill and other intangible assets (1)		(1,266,403	)		(1,264,839	)		(1,263,928	)		(1,265,016	)		(1,266,610	)
Tangible assets (denominator)	$	17,173,279		$	17,208,650		$	17,217,222		$	16,818,023		$	16,700,564
Tangible common ratio		8.67	%		8.44	%		8.22	%		8.21	%		8.22	%
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
(Dollars and share data in thousands)
	1Q14			4Q13			3Q13			2Q13			1Q13
Return on Average Tangible Equity
Income statement data
Net income	$	37,162		$	41,341		$	44,291		$	45,648		$	42,399
Amortization of intangibles, net of taxes at 35%		1,650			1,822			1,626			1,984			2,124
Net tangible income (numerator)	$	38,812		$	43,163		$	45,917		$	47,632		$	44,523
Average balance sheet data
Shareholders' equity	$	2,726,465		$	2,679,242		$	2,642,806		$	2,648,314		$	2,614,319
Goodwill and other intangible assets		(1,306,298	)		(1,308,690	)		(1,310,155	)		(1,312,257	)		(1,312,662	)
Tangible common equity (denominator)	$	1,420,167		$	1,370,552		$	1,332,651		$	1,336,057		$	1,301,657
Return on equity (GAAP basis)		5.53	%		6.12	%		6.65	%		6.91	%		6.58	%
Effect of goodwill and other intangibles		5.55	%		6.37	%		7.02	%		7.39	%		7.29	%
Return on average tangible equity		11.08	%		12.49	%		13.67	%		14.30	%		13.87	%
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	$	2,755,199		$	2,717,587		$	2,679,348		$	2,644,940		$	2,639,489
Goodwill and other intangible assets		(1,305,742	)		(1,307,701	)		(1,309,105	)		(1,311,176	)		(1,313,648	)
Tangible common equity (numerator)	$	1,449,457		$	1,409,886		$	1,370,243		$	1,333,764		$	1,325,841
Common shares outstanding (denominator)		187,590			187,363			187,225			187,023			186,800
Tangible book value per common share	$	7.73		$	7.52		$	7.32		$	7.13		$	7.10
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
	1Q14	4Q13	3Q13	2Q13	1Q13
Net Interest Margin (excluding purchase accounting)
Reported net interest margin (GAAP basis)	3.61%	3.60%	3.72%	3.88%	3.97%
Adjustments for purchase accounting:
Loans and leases	-0.17%	-0.11%	-0.13%	-0.27%	-0.27%
Deposits	-0.03%	-0.03%	-0.04%	-0.06%	-0.07%
Borrowings	-0.01%	-0.01%	-0.01%	-0.01%	-0.01%
Net Interest Margin (excluding purchase accounting)	3.40%	3.45%	3.54%	3.54%	3.62%
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.

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