Susquehanna Bancshares (SUSQ) 8-K Susquehanna Bancshares, Inc. Announces First Quarter 2015 Results

Exhibit 99.1

Susquehanna Bancshares, Inc. Announces First Quarter 2015 Results

First Quarter Highlights

• GAAP EPS of $0.16, Inclusive of $0.02 Merger-Related Expenses
• Stable Net Interest Margin, Excluding Purchase Accounting
• Solid Core Deposit Growth
• Strong Asset Quality
• Modest Impact From New Capital Rule

LITITZ, Pa.--(BUSINESS WIRE)--April 22, 2015--Susquehanna Bancshares, Inc. (Susquehanna) (NASDAQ: SUSQ) today announced that it earned net income for the first quarter ended March 31, 2015 of $29.0 million, or $0.16 per diluted share, which included after-tax merger related expenses of $2.9 million or $0.02 per diluted share. This compares to net income of $30.3 million, or $0.17 per diluted share, for the fourth quarter of 2014 and $37.2 million, or $0.20 per diluted share, for the first quarter of 2014.

Linked Quarter Results (First Quarter 2015 vs. Fourth Quarter 2014)

• Loans and leases decreased $29.9 million or 0.2% from December 31, 2014 to $13.5 billion at March 31, 2015. Changes for the quarter in each major loan category were as follows:
  • Commercial loans increased 0.3%.
  • Real estate – construction loans remained essentially flat.
  • Real estate secured – residential loans decreased 1.1%.
  • Real estate secured – commercial loans decreased 1.3%.
  • Consumer loans increased 3.7%.
  • Leases increased 2.3%.
• Total deposits increased $43.5 million or 0.3% from December 31, 2014 to $13.8 billion at March 31, 2015. Changes for the quarter in each major deposit category were as follows:
  • Non-interest bearing checking increased 2.8%.
  • Interest-bearing checking decreased 0.5%.
  • Money market deposits increased 2.0%.
  • Savings deposits increased 4.9%.
  • Time deposits decreased 3.2%.

• Net interest margin decreased 6 basis points to 3.40% for the first quarter of 2015 compared to 3.46% for the fourth quarter of 2014. Net interest margin (excluding purchase accounting) ⁽¹⁾ was flat at 3.31% for the first quarter of 2015. The decrease in the net interest margin was driven by a reduction in purchase accounting amortization.
• Net interest income decreased to $131.6 million for the first quarter of 2015 compared to $135.4 million for the fourth quarter of 2014. The increase in average earning assets was more than offset by a decline in net interest margin and two fewer days in the first quarter of 2015 compared to the fourth quarter of 2014.
• Non-interest income decreased to $42.3 million for the first quarter of 2015 compared to $46.6 million for the fourth quarter of 2014. The fourth quarter benefited from seasonally-strong SBA loan sales, gains on the sale of foreclosed real estate and interchange volume incentives. In other non-interest income categories, solid performance in mortgage and insurance offset weaker performance in auto leasing and deposit services.
• Non-interest expense decreased to $126.6 million for the first quarter of 2015 compared to $130.5 million for the fourth quarter of 2014. The decrease was driven by a reduction in incentive compensation expense, which is typically the highest in the fourth quarter. The first quarter of 2015 included pre-tax merger-related expenses of $4.4 million.
• The efficiency ratio ⁽¹⁾, which excludes merger-related expenses, decreased to 68.81% for the first quarter of 2015 compared to 69.73% for the fourth quarter of 2014.
• Non-performing assets as a percentage of loans, leases and foreclosed real estate owned decreased to 0.73% at March 31, 2015 compared to 0.79% at December 31, 2014.
• The provision for loan and lease losses for the first quarter of 2015 decreased to $5.8 million compared to $7.2 million for the fourth quarter of 2014. Net charge-offs for the first quarter of 2015 increased slightly to $7.6 million, or 0.23% of average loans and leases, compared to $7.5 million, or 0.22% of average loans and leases, for the fourth quarter of 2014. As a result, the allowance for loan and lease losses was $134.7 million at March 31, 2015, representing 1.00% of total loans and leases and 151% of nonaccrual loans and leases compared to $136.5 million at December 31, 2014, representing 1.01% of total loans and leases and 140% of nonaccrual loans and leases.

First Quarter Results (First Quarter 2015 vs. First Quarter 2014)

• Loans and leases decreased $87.3 million or 0.6% from March 31, 2014 to $13.5 billion at March 31, 2015. In August 2014, Susquehanna and its wholly-owned subsidiary Susquehanna Bank sold approximately $255.8 million of retail auto loans in an off-balance sheet securitization that previously were included in the Consumer loans category. Changes for the twelve month period in each major loan category were as follows:
  • Commercial loans increased 1.1%.
  • Real estate - construction loans increased 10.4%.
  • Real estate secured - residential loans decreased 0.7%.
  • Real estate secured - commercial loans decreased 2.6%.
  • Consumer loans decreased 18.3%.
  • Leases increased 9.3%.

• Total deposits increased $685.8 million or 5.2% from March 31, 2014 to $13.8 billion as of March 31, 2015. Changes for the twelve month period in each major deposit category were as follows:
  • Non-interest-bearing checking increased 7.4%.
  • Interest-bearing checking increased 8.5%.
  • Money market deposits increased 12.4%.
  • Savings deposits increased 5.9%.
  • Time deposits decreased 4.1%.
• Net interest margin decreased 21 basis points to 3.40% for the first quarter of 2015 compared to 3.61% for the first quarter of 2014 while average earning assets declined slightly. As a result, net interest income decreased to $131.6 million for the first quarter of 2015 compared to $140.1 million for the first quarter of 2014. The sustained low rate environment reduced the net interest margin as existing loans repriced lower and new originations came on at lower rates than the existing loan portfolio.
• Non-interest income increased slightly to $42.3 million for the first quarter of 2015 compared to $42.1 million for the first quarter of 2014.
• Non-interest expense increased to $126.6 million for the first quarter of 2015 compared to $123.0 million for the first quarter of 2014. The first quarter of 2015 included pre-tax merger-related expenses of $4.4 million.
• The efficiency ratio ⁽¹⁾, which excludes merger-related expenses, increased to 68.81% for the first quarter of 2015 compared to 66.18% for the first quarter of 2014.
• Non-performing assets as a percentage of loans, leases and foreclosed real estate decreased to 0.73% at March 31, 2015 compared to 0.89% at March 31, 2014.
• The provision for loan and lease losses decreased to $5.8 million for the first quarter of 2015 compared to $6.0 million for the first quarter of 2014. Net charge-offs as a percentage of average loans and leases decreased to 0.23% for the first quarter of 2015 compared to 0.28% for the first quarter of 2014. The allowance for loan and lease losses was $134.7 million at March 31, 2015, representing 1.00% of total loans and leases and 151% of nonaccrual loans and leases, compared to $154.2 million at March 31, 2014, representing 1.14% of total loans and leases and 142% of nonaccrual loans and leases.
• Return on average assets and average tangible equity ⁽¹⁾ decreased to 0.63% and 8.41%, respectively for the first quarter of 2015 compared to 0.82% and 11.08%, respectively for the first quarter of 2014.
• The new capital rules had a modest impact on Susquehanna’s capital ratios, which 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 10.82%, Tier 1 capital ratio of 11.84%, Total risk-based capital ratio of 12.95% and a Leverage ratio of 9.77%, each as of March 31, 2015.

(1) Non-GAAP based financial measure. Please refer to the calculations and management’s reasons for using this measure in the accompanying financial schedules

Additional Events

• On April 15, 2015, Susquehanna’s Board of Directors declared a second quarter dividend of $0.09 per common share, payable May 20, 2015 to shareholders of record as of April 30, 2015.
• On March 13, 2015 Susquehanna shareholders voted to approve the agreement and plan of merger under which Susquehanna will merge with and into BB&T Corporation (“BB&T”). Completion of the merger is subject to customary closing conditions, including receipt of necessary regulatory approvals. Upon completion of the merger, which is expected to occur in the second half of 2015, Susquehanna shareholders will receive 0.253 shares of BB&T common stock and $4.05 in cash for each share of Susquehanna common stock.

Susquehanna is a financial services holding company with total assets of approximately $18.7 billion. Headquartered in Lititz, Pa., Susquehanna provides banking and financial services at 245 branch locations in the mid-Atlantic region. Through Susquehanna Wealth Management, Susquehanna offers investment, fiduciary, brokerage, insurance, retirement planning, and private banking services, with approximately $7.9 billion in assets under management and administration. Susquehanna also operates an insurance brokerage and employee benefits company, a commercial finance company, a vehicle leasing company, a mortgage division, and a settlement services company. Investor information may be requested through Susquehanna’s Website at www.susquehanna.net.

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

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

This release includes forward-looking statements as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995. Actual results and trends could differ materially from those set forth in such statements due to various risks, uncertainties and other factors. Forward-looking statements can be identified by words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “continue,” “remain,” “will,” “should,” “may,” “plans,” “estimates,” and similar words or expressions. The risks, uncertainties and other factors that could cause actual results and experience to differ materially from forward-looking statements or historical performance include, but are not limited to, the following: ineffectiveness of Susquehanna’s business strategy due to internal or external factors, including changes in current or future market conditions; the effects of competition; ability to obtain regulatory approvals and meet other closing conditions to our pending merger with BB&T delay in closing the merger; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and other actions of the Federal Reserve Board, and legislative and regulatory actions and reforms; and the other factors detailed in Susquehanna’s and BB&T’s filings with the Securities and Exchange Commission. Susquehanna encourages readers of this release to understand forward-looking statements to be strategic objectives rather than absolute targets of future performance. Forward-looking statements speak only as of the date they are made. Susquehanna does not intend to update publicly any forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events except as required by law.

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share data)
	1Q15			4Q14			3Q14			2Q14			1Q14
Balance Sheet (EOP)
Investments	$	2,683,358		$	2,553,655		$	2,325,734		$	2,324,782		$	2,445,322
Loans and leases		13,487,951			13,517,882			13,425,721			13,667,153			13,575,295
Allowance for loan and lease losses (ALLL)		134,733			136,522			136,870			144,483			154,150
Total assets		18,697,294			18,661,390			18,583,327			18,506,626			18,439,682
Deposits		13,765,305			13,721,843			13,588,524			13,314,994			13,079,523
Other short-term borrowings		506,756			516,089			532,675			527,079			584,664
Federal Home Loan Bank borrowings		911,674			913,449			915,362			1,127,302			1,229,296
Other long-term debt		321,389			351,904			356,117			360,033			448,521
Shareholders' equity		2,780,177			2,753,925			2,751,260			2,796,392			2,755,199
Average Balance Sheet
Investments	$	2,558,973		$	2,431,597		$	2,293,302		$	2,395,690		$	2,505,937
Loans and leases		13,468,346			13,438,494			13,499,686			13,589,533			13,574,526
Total earning assets		16,118,051			15,954,179			15,872,628			16,066,177			16,162,210
Total assets		18,618,267			18,628,209			18,411,529			18,378,127			18,411,873
Deposits		13,662,357			13,653,638			13,395,247			13,131,617			12,874,040
Other short-term borrowings		525,107			535,633			541,363			552,367			671,653
Federal Home Loan Bank borrowings		912,395			914,287			961,483			1,174,611			1,387,124
Other long-term debt		348,418			354,179			358,502			396,367			451,267
Shareholders' equity		2,761,177			2,757,933			2,775,786			2,768,665			2,726,465
Income Statement
Net interest income	$	131,638		$	135,384		$	136,465		$	141,694		$	140,064
Provision for loan and lease losses		5,799			7,200			9,000			3,000			6,000
Noninterest income		42,312			46,588			44,617			45,349			42,089
Noninterest expense		126,590			130,470			124,411			125,225			123,032
Income before taxes		41,561			44,302			47,671			58,818			53,121
Provision for income taxes		12,536			13,978			14,203			15,324			15,959
Net income		29,025			30,324			33,468			43,494			37,162
Basic earnings per common share		0.16			0.17			0.18			0.23			0.20
Diluted earnings per common share		0.16			0.17			0.18			0.23			0.20
Cash dividends paid per common share		0.09			0.09			0.09			0.08			0.08
Asset Quality
Net charge-offs (NCOs)	$	7,588		$	7,548		$	16,613		$	11,431		$	9,458
Nonaccrual loans and leases	$	89,333		$	97,697		$	109,506		$	105,609		$	108,408
Foreclosed real estate		9,575			9,672			9,133			10,302			11,980
Total nonperforming assets (NPAs)	$	98,908		$	107,369		$	118,639		$	115,911		$	120,388
Restructured loans	$	47,850		$	46,856		$	42,418		$	40,938		$	39,555
Loans and leases 90 days past due		3,506			8,488			10,303			9,190			9,328
Credit Quality
NCOs / Average loans and leases		0.23	%		0.22	%		0.49	%		0.34	%		0.28	%
NPAs / Loans and leases + foreclosed real estate		0.73	%		0.79	%		0.88	%		0.85	%		0.89	%
ALLL / Nonaccrual loans and leases		150.82	%		139.74	%		124.99	%		136.81	%		142.19	%
ALLL / Total loans and leases		1.00	%		1.01	%		1.02	%		1.06	%		1.14	%
Profitability
Return on average assets		0.63	%		0.65	%		0.72	%		0.95	%		0.82	%
Return on average equity		4.26	%		4.36	%		4.78	%		6.30	%		5.53	%
Return on average tangible equity (1)		8.41	%		8.65	%		9.41	%		12.34	%		11.08	%
Net interest margin		3.40	%		3.46	%		3.50	%		3.63	%		3.61	%
Efficiency ratio (1)		68.81	%		69.73	%		67.32	%		65.63	%		66.18	%
Per Share Data (EOP)
Closing share price	$	13.71		$	13.43		$	10.00		$	10.56		$	11.37
Stated book value per common share		15.25			15.13			15.17			14.90			14.69
Tangible book value per common share (1)		8.12			7.98			7.99			7.95			7.73
Price/Book Value		89.88	%		88.77	%		65.90	%		70.88	%		77.41	%
Price/Tangible Book Value		168.84	%		168.30	%		125.16	%		132.83	%		147.09	%
Number of outstanding shares ('000)		182,256			182,039			181,310			187,706			187,590
Capital Ratios
Tangible common ratio (1)		8.63	%		8.56	%		8.58	%		8.88	%		8.67	%
Common equity Tier 1 ratio (2)		10.82	%		10.95	%		10.86	%		11.03	%		10.84	%
Tier 1 capital ratio (2)		11.84	%		12.00	%		11.92	%		12.07	%		11.95	%
Total risk-based capital ratio (2)		12.95	%		13.16	%		13.08	%		13.27	%		13.23	%
Leverage ratio (2)		9.77	%		9.61	%		9.61	%		9.90	%		9.72	%

⁽¹⁾ Non-GAAP based financial measures. Please refer to the calculations and management's reasons for using these measures in Appendix A - GAAP to Non-GAAP Reconciliation

⁽²⁾ March 31, 2015 ratios computed under Basel III guidelines. Previous quarters computed under Basel I guidelines.

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands)
			March 31,			December 31,			September 30,			June 30,			March 31,
			2015			2014			2014			2014			2014
Assets
	Cash and due from banks		$	446,797		$	506,304		$	772,677		$	456,917		$	389,793
	Unrestricted short-term investments			34,183			37,149			40,508			33,369			24,768
	Cash and cash equivalents			480,980			543,453			813,185			490,286			414,561
	Interest-bearing deposits held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities			0			1,439			2,211			1,554			1,689
	Restricted short-term investments			54,884			42,949			36,943			43,926			42,993
	Securities available for sale			2,567,988			2,438,085			2,192,615			2,183,093			2,299,235
	Restricted investment in bank stocks			115,370			115,570			133,119			141,689			146,087
	Loans and leases, net of deferred costs and fees			13,487,951			13,455,046			13,361,516			13,600,254			13,505,746
	Loans held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities			0			62,836			64,205			66,899			69,549
	Less: Allowance for loan and lease losses			134,733			136,522			136,870			144,483			154,150
		Net loans and leases		13,353,218			13,381,360			13,288,851			13,522,670			13,421,145
	Premises and equipment, net			162,323			167,048			168,466			169,975			170,349
	Other real estate and foreclosed assets			10,002			10,099			9,898			11,102			12,943
	Accrued interest receivable			40,151			39,249			39,899			38,878			41,594
	Bank-owned life insurance			447,659			446,676			449,199			450,318			449,778
	Goodwill			1,275,439			1,275,439			1,275,439			1,275,439			1,275,439
	Intangible assets with finite lives			24,240			25,575			27,163			28,579			30,303
	Deferred income tax assets			7,012			7,648			6,903			7,357			5,216
	Other assets			158,028			166,800			139,436			141,760			128,350
		Total assets	$	18,697,294		$	18,661,390		$	18,583,327		$	18,506,626		$	18,439,682
Liabilities and Shareholders' Equity
	Deposits		$	13,765,305		$	13,721,843		$	13,588,524		$	13,314,994		$	13,079,523
	Federal Home Loan Bank short-term borrowings			850,000			850,000			850,000			1,050,000			1,150,000
	Other short-term borrowings			506,756			516,089			532,675			527,079			584,664
	Federal Home Loan Bank long-term borrowings			61,674			63,449			65,362			77,302			79,296
	Other long-term debt			175,214			175,217			175,219			175,222			250,224
	Junior subordinated debentures			146,175			146,117			146,059			146,002			155,022
	Long-term debt of consolidated variable interest entities for which creditors do not have recourse to Susquehanna's general credit			0			30,570			34,839			38,809			43,275
	Accrued interest, taxes, and expenses payable			66,791			85,075			72,044			72,664			69,404
	Deferred income tax liabilities			153,556			133,932			128,389			114,119			75,911
	Other liabilities			191,646			185,173			238,956			194,043			197,164
		Total liabilities		15,917,117			15,907,465			15,832,067			15,710,234			15,684,483
	Shareholders' equity:
	Common stock			365,624			365,184			363,358			376,146			375,845
	Treasury stock			(5,599	)		(5,571	)		(3,100	)		(3,075	)		(2,735	)
	Additional paid-in capital			1,612,414			1,609,663			1,605,671			1,657,699			1,654,357
	Retained earnings			838,109			825,471			811,462			794,864			766,381
	Accumulated other comprehensive loss			(30,371	)		(40,822	)		(26,131	)		(29,242	)		(38,649	)
		Total shareholders' equity		2,780,177			2,753,925			2,751,260			2,796,392			2,755,199
		Total liabilities and shareholders' equity	$	18,697,294		$	18,661,390		$	18,583,327		$	18,506,626		$	18,439,682

Susquehanna Bancshares, Inc.
26 North Cedar Street
Lititz, PA 17543
Loans and Leases and Deposits
(in thousands)
	Loans and Leases
	03/31/15			12/31/14			09/30/14		06/30/14			03/31/14
Commercial, financial, and agricultural	$	2,438,733		$	2,430,532		$	2,362,201	$	2,422,931		$	2,411,851
Real estate - construction		788,639			788,261			817,492		748,181			714,291
Real estate secured - residential		4,148,908			4,194,738			4,172,943		4,178,842			4,178,505
Real estate secured - commercial		3,938,798			3,991,379			4,016,635		4,053,990			4,041,989
Consumer		781,083			752,975			730,687		962,618			955,577
Leases		1,391,790			1,359,997			1,325,763		1,300,591			1,273,082
Total loans and leases	$	13,487,951		$	13,517,882		$	13,425,721	$	13,667,153		$	13,575,295
	Deposits
	03/31/15			12/31/14			09/30/14		06/30/14			03/31/14
Noninterest-bearing checking	$	2,019,931		$	1,964,510		$	1,958,308	$	1,935,635		$	1,880,284
Interest-bearing checking		3,154,347			3,169,017			3,087,166		2,883,679			2,908,507
Money market		3,580,414			3,509,192			3,297,699		3,025,430			3,184,719
Savings		1,199,154			1,143,596			1,122,232		1,136,044			1,132,850
Core deposits	$	9,953,846			9,786,315			9,465,405		8,980,788			9,106,360
Time less than $100		2,160,417			2,179,647			2,265,787		2,266,815			2,166,207
Time of $100 or more		1,651,042			1,755,881			1,857,332		2,067,391			1,806,956
Total deposits	$	13,765,305		$	13,721,843		$	13,588,524	$	13,314,994		$	13,079,523
Supplemental Loan and Lease Data
(in thousands)
	Nonaccrual Loans and Leases
	03/31/15			12/31/14			09/30/14		06/30/14			03/31/14
Commercial, financial, and agricultural	$	21,749		$	23,393		$	23,121	$	18,792		$	24,529
Real estate - construction		6,539			6,832			7,225		7,428			11,695
Real estate secured - residential		25,420			21,858			23,653		24,740			23,189
Real estate secured - commercial		34,421			44,980			54,484		53,687			47,950
Consumer		34			37			40		43			46
Leases		1,170			597			983		919			999
Total nonaccrual loans and leases	$	89,333		$	97,697		$	109,506	$	105,609		$	108,408
	Restructured Loans
	03/31/15			12/31/14			09/30/14		06/30/14			03/31/14
Commercial, financial, and agricultural	$	4,534		$	4,816		$	4,044	$	4,228		$	5,264
Real estate - construction		1,221			315			319		322			325
Real estate secured - residential		16,036			20,534			20,231		18,414			16,168
Real estate secured - commercial		25,120			20,227			16,780		16,903			16,681
Consumer		939			964			1,044		1,071			1,117
Total restructured loans	$	47,850		$	46,856		$	42,418	$	40,938		$	39,555
	Net Charge-offs (Recoveries)
	1Q 2015			4Q 2014			3Q 2014		2Q 2014			1Q 2014
Commercial, financial, and agricultural	$	4,121		$	684		$	8,069	$	7,274		$	3,182
Real estate - construction		35			(468	)		776		(457	)		(91	)
Real estate secured - residential		2,918			2,949			2,549		2,453			2,796
Real estate secured - commercial		(222	)		3,245			3,827		730			2,134
Consumer		419			572			614		1,013			855
Leases		317			566			778		418			582
Total net charge-offs	$	7,588		$	7,548		$	16,613	$	11,431		$	9,458

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,
		2015			2014		2014		2014			2014
Interest Income:
Loans and leases, including deferred costs and fees		$	140,769		$	147,157	$	147,761	$	148,002		$	149,538
Securities:
	Taxable		9,609			9,302		8,459		9,104			9,648
	Tax-exempt		3,276			3,339		3,383		3,439			3,501
	Dividends		3,421			1,628		2,108		2,134			1,765
Short-term investments			24			23		24		23			19
	Total interest income		157,099			161,449		161,735		162,702			164,471
Interest Expense:
Deposits:
	Interest-bearing demand and savings		5,338			5,313		4,256		4,031			3,962
	Time		10,086			10,699		10,803		10,246			9,628
Federal Home Loan Bank short-term borrowings			4,544			4,455		4,554		4,597			4,621
Other short-term borrowings			1,984			2,066		2,091		2,031			2,100
Federal Home Loan Bank long-term borrowings			202			210		247		243			245
Other long-term debt			3,307			3,322		3,319		(140	)		3,851
	Total interest expense		25,461			26,065		25,270		21,008			24,407
Net interest income			131,638			135,384		136,465		141,694			140,064
Provision for loan and lease losses			5,799			7,200		9,000		3,000			6,000
Net interest income, after provision for loan and lease losses			125,839			128,184		127,465		138,694			134,064
Noninterest Income:
Service charges on deposit accounts			8,518			9,260		9,561		9,294			9,000
Vehicle origination and servicing fees			1,449			1,886		1,691		2,915			2,968
Wealth management commissions and fees			12,800			13,163		13,199		12,669			12,719
Commissions on property and casualty insurance sales			4,698			3,676		3,992		4,214			5,666
Other commissions and fees			5,638			5,877		5,689		5,401			5,035
Income from bank-owned life insurance			1,853			1,537		1,634		1,672			1,637
Mortgage banking revenue			2,887			2,489		2,432		3,004			2,410
Capital markets revenue			2,408			2,437		1,593		877			1,240
Net realized gain (loss) on sales of securities			(5	)		125		0		3,293			(8	)
Other			2,066			6,138		4,826		2,010			1,422
	Total noninterest income		42,312			46,588		44,617		45,349			42,089
Noninterest Expenses:
Salaries and employee benefits			67,165			74,806		68,042		68,325			65,581
Occupancy			13,970			12,262		12,089		11,914			13,847
Furniture and equipment			3,815			4,076		4,043		4,058			3,944
Professional and technology services			7,253			7,122		6,168		7,189			6,070
Advertising and marketing			2,720			3,459		3,784		3,567			3,576
FDIC insurance			4,757			4,833		5,038		4,925			5,121
Legal fees			1,537			1,918		1,699		1,656			1,527
Amortization of intangible assets			1,979			2,211		2,220		2,367			2,539
Vehicle lease disposal			2,914			2,282		2,222		2,215			2,251
Merger related			4,432			885		0		0			0
Other			16,048			16,616		19,106		19,009			18,576
	Total noninterest expenses		126,590			130,470		124,411		125,225			123,032
Income before income taxes			41,561			44,302		47,671		58,818			53,121
Provision for income taxes			12,536			13,978		14,203		15,324			15,959
Net Income		$	29,025		$	30,324	$	33,468	$	43,494		$	37,162
Earnings per common share:
	Basic	$	0.16		$	0.17	$	0.18	$	0.23		$	0.20
	Diluted	$	0.16		$	0.17	$	0.18	$	0.23		$	0.20
Cash dividends per common share		$	0.09		$	0.09	$	0.09	$	0.08		$	0.08
Average common shares outstanding:
	Basic		182,140			181,514		184,985		187,637			187,455
	Diluted		183,053			182,387		185,724		188,295			188,378

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, 2015							December 31, 2014							March 31, 2014
	Average							Average							Average
	Balance			Interest			Rate (%)	Balance			Interest			Rate (%)	Balance			Interest			Rate (%)
Assets
Short-term investments	$	90,732		$	24		0.11	$	84,088		$	23		0.11	$	81,747		$	19		0.09
Investment securities:
Taxable(1)		2,198,207			13,031		2.40		2,060,163			10,930		2.10		2,117,969			11,413		2.19
Tax-exempt(1)(2)		360,766			5,040		5.67		371,434			5,135		5.48		387,968			5,388		5.63
Total investment securities		2,558,973			18,071		2.86		2,431,597			16,065		2.62		2,505,937			16,801		2.72
Loans and leases, (net):
Taxable(3)		13,023,814			137,407		4.28		13,011,088			143,336		4.37		13,136,268			146,080		4.51
Tax-exempt(2)(3)		444,532			5,171		4.72		427,406			5,880		5.46		438,258			5,320		4.92
Total loans and leases		13,468,346			142,578		4.29		13,438,494			149,216		4.41		13,574,526			151,400		4.52
Total interest-earning assets		16,118,051			160,673		4.04		15,954,179			165,304		4.11		16,162,210			168,220		4.22
Allowance for loan and lease losses		(137,475	)						(137,293	)						(157,444	)
Other non-earning assets		2,637,691							2,811,323							2,407,107
Total assets	$	18,618,267						$	18,628,209						$	18,411,873
Liabilities
Deposits:
Interest-bearing demand	$	6,749,615			5,054		0.30	$	6,558,482			5,025		0.30	$	6,032,537			3,674		0.25
Savings		1,172,519			285		0.10		1,134,827			288		0.10		1,099,944			287		0.11
Time		3,768,581			10,085		1.09		3,984,083			10,699		1.07		3,910,698			9,630		1.00
Other short-term borrowings		525,107			1,983		1.53		535,633			2,066		1.53		671,653			2,101		1.27
FHLB borrowings		912,395			4,746		2.11		914,287			4,666		2.02		1,387,124			4,866		1.42
Long-term debt(4)		348,418			3,307		3.85		354,179			3,321		3.72		451,267			3,849		3.46
Total interest-bearing liabilities		13,476,635			25,460		0.77		13,481,491			26,065		0.77		13,553,223			24,407		0.73
Demand deposits		1,971,642							1,976,246							1,830,861
Other liabilities		408,813							412,539							301,324
Total liabilities		15,857,090							15,870,276							15,685,408
Equity		2,761,177							2,757,933							2,726,465
Total liabilities & shareholders' equity	$	18,618,267						$	18,628,209						$	18,411,873
Net interest income / yield on average earning assets				$	135,213		3.40				$	139,239		3.46				$	143,813		3.61
Taxable equivalent adjustment					(3,575	)						(3,855	)						(3,749	)
Net interest income - as reported				$	131,638						$	135,384						$	140,064

(1)	For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(2)	Tax-exempt income has been adjusted to a tax-equivalent basis using a marginal tax rate of 35%.
(3)	Average loan balances include non-accrual loans.
(4)	Includes $3.7 million purchase accounting adjustment on redemption of junior subordinated debt in second quarter of 2014.

Susquehanna Bancshares, Inc. 26 North Cedar Street Lititz, PA 17543
Appendix A - GAAP to Non-GAAP Reconciliation
(Dollars and share data in thousands)
	1Q15			4Q14			3Q14			2Q14			1Q14
Efficiency Ratio
Other expense	$	126,590		$	130,470		$	124,411		$	125,225		$	123,032
Less: Merger related expenses		(4,432	)		(885	)		0			0			0
Noninterest operating expense (numerator)	$	122,158		$	129,585		$	124,411		$	125,225		$	123,032
Taxable-equivalent net interest income	$	135,213		$	139,239		$	140,179		$	145,447		$	143,813
Other income		42,312			46,588			44,617			45,349			42,089
Noninterest operating income (denominator)	$	177,525		$	185,827		$	184,796		$	190,796		$	185,902
Efficiency ratio		68.81	%		69.73	%		67.32	%		65.63	%		66.18	%
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	$	2,780,177		$	2,753,925		$	2,751,260		$	2,796,392		$	2,755,199
Goodwill and other intangible assets (1)		(1,276,004	)		(1,265,178	)		(1,265,598	)		(1,265,846	)		(1,266,403	)
Tangible common equity (numerator)	$	1,504,173		$	1,488,747		$	1,485,662		$	1,530,546		$	1,488,796
Assets	$	18,697,294		$	18,661,390		$	18,583,327		$	18,506,626		$	18,439,682
Goodwill and other intangible assets (1)		(1,276,004	)		(1,265,178	)		(1,265,598	)		(1,265,846	)		(1,266,403	)
Tangible assets (denominator)	$	17,421,290		$	17,396,212		$	17,317,729		$	17,240,780		$	17,173,279
Tangible common ratio		8.63	%		8.56	%		8.58	%		8.88	%		8.67	%
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
Return on Average Tangible Equity
Income statement data
Net income	$	29,025		$	30,324		$	33,468		$	43,494		$	37,162
Amortization of intangibles, net of taxes at 35%		1,286			1,437			1,443			1,539			1,650
Net tangible income (numerator)	$	30,311		$	31,761		$	34,911		$	45,033		$	38,812
Average balance sheet data
Shareholders' equity	$	2,761,177		$	2,757,933		$	2,775,786		$	2,768,665		$	2,726,465
Goodwill and other intangible assets		(1,300,282	)		(1,301,750	)		(1,303,275	)		(1,304,736	)		(1,306,298	)
Tangible common equity (denominator)	$	1,460,895		$	1,456,183		$	1,472,511		$	1,463,929		$	1,420,167
Return on equity (GAAP basis)		4.26	%		4.36	%		4.78	%		6.30	%		5.53	%
Effect of goodwill and other intangibles		4.15	%		4.29	%		4.63	%		6.04	%		5.55	%
Return on average tangible equity		8.41	%		8.65	%		9.41	%		12.34	%		11.08	%
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	$	2,780,177		$	2,753,925		$	2,751,260		$	2,796,392		$	2,755,199
Goodwill and other intangible assets		(1,299,679	)		(1,301,014	)		(1,302,602	)		(1,304,018	)		(1,305,742	)
Tangible common equity (numerator)	$	1,480,498		$	1,452,911		$	1,448,658		$	1,492,374		$	1,449,457
Common shares outstanding (denominator)		182,256			182,039			181,310			187,706			187,590
Tangible book value per common share	$	8.12		$	7.98		$	7.99		$	7.95		$	7.73
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
	1Q15		4Q14		3Q14		2Q14		1Q14
Net Interest Margin (excluding purchase accounting)
Reported net interest margin (GAAP basis)	3.40	%	3.46	%	3.50	%	3.63	%	3.61	%
Adjustments for purchase accounting:
Loans and leases	-0.07	%	-0.12	%	-0.10	%	-0.12	%	-0.17	%
Deposits	-0.01	%	-0.02	%	-0.02	%	-0.03	%	-0.03	%
Borrowings	-0.01	%	-0.01	%	-0.01	%	-0.10	%	-0.01	%
Net Interest Margin (excluding purchase accounting)	3.31	%	3.31	%	3.37	%	3.38	%	3.40	%

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