Susquehanna Bancshares (SUSQ) 8-K During the course of this presentation, we may make projections and other

Susquehanna Bancshares, Inc.

Investor Presentation

3rd Quarter 2012

Exhibit 99.1

Forward-Looking Statements

Forward-Looking Statements

During the course of this presentation, we may make projections and other

forward-looking statements regarding priorities and strategic objectives

of

Susquehanna Bancshares, Inc., as well as projected capital ratios, efficiency

ratios, net income and earnings. We encourage investors to understand

forward-looking statements to be strategic objectives rather than absolute

targets of future performance.   We wish to caution you that these forward-

looking statements may differ materially from actual results due

to a number of

risks and uncertainties.  For a more detailed description of the

factors that may

affect Susquehanna’s operating results, we refer you to our filings with the

Securities & Exchange Commission, including our annual report on

Form 10-K

for the year ended December 31, 2011 and Form 10-Q for the quarter ended

June 30, 2012. Susquehanna assumes no obligation to update the forward-

looking statements made during this presentation.

For more information, please visit our Web site at:

www.susquehanna.net

2

Susquehanna Profile

Susquehanna Profile

Corporate Overview

Super-Community Bank  headquartered in

Lititz, PA

261 banking offices concentrated in Central

PA, Western MD, and Philadelphia and

Baltimore MSAs

35

th

largest U.S. commercial bank by assets

Experienced management team with extensive

market knowledge

Franchise is a diversified mix of consumer and

business customers, products and revenue

sources

Non-bank affiliates offering products and

services in:

Wealth management

Insurance brokerage and employee benefits

Commercial finance

Vehicle leasing

Selected Data as of 9/30/2012 

Assets:

$18.1 billion

Deposits:

$12.7 billion

Loans & Leases:

$12.7 billion

Assets under management

$7.8 billion

and administration:

Market Cap:

>$1.9 billion

Average daily volume (3 months)

>1 million shares

Institutional ownership

> 70%                   

Dividend yield

2.68%*

*Based on 4Q12 dividend of $.07 per share

3

Main Street Banking

The Susquehanna Way

Main Street Banking

The Susquehanna Way

4

Personalized customer service of a local community bank,

backed by the lending capacity and diverse product

offerings of a regional financial services company

Regional banking model where customers have access to

local decision makers

A focus on building enduring relationships

Culture of excellence and exceeding customer expectations

Successful Acquisitions of

Abington (2011) and Tower (2012)

Successful Acquisitions of

Abington (2011) and Tower (2012)

Successfully converted 200,000 + accounts

Transitioned or consolidated 69 branches

Converted $2.6 billion in loans, $2.9 billion in deposits and $443 million in

assets under administration

Achieved desired cost savings of $58 million

Added critical mass to the Philadelphia metro market

Strengthened core central Pennsylvania market, increasing deposit market

share to 9.0% from 7.6%¹

and improved market share rank to 5

from 6

Strategically reorganized into regional banking model with 12 regions

reporting through 3 market CEO’s

5

1

FDIC Deposit Market Share Report for the 16 counties comprising Susquehanna’s Pennsylvania Market.  6/30/11 versus 6/30/12

th

th

Premier Mid-Atlantic Franchise

Premier Mid-Atlantic Franchise

Branch Density in Diverse and Attractive Markets

6

Strategically located

franchise with close

proximity to major

metro areas and key

East Coast

transportation hubs

Regional leadership

teams within three

markets provide

local community

banking approach

unmatched by

national and

multi-national

competitors

Pennsylvania Market

Delaware Valley Market

Maryland Market

Community Banking Opportunities

Community Banking Opportunities

Source: SNL Financial

Note: Regulatory branch and deposit data as of June 30, 2012; banks and thrifts with deposits in counties SUSQ operates in PA/NJ/MD/WV

Traditional branches only, as defined by SNL

7

Rank

Institution

Branch Count

Total Deposits

in Market

($000)

Total Market

Share (%)

1

Wells Fargo & Co.

373

41,021,142

15.3%

2

PNC Financial Services Group Inc.

357

27,078,388

10.1%

3

Bank of America Corp.

224

25,599,340

9.5%

4

M&T Bank Corp.

292

23,873,751

8.9%

5

Toronto-Dominion Bank

164

19,136,622

7.1%

6

Royal Bank of Scotland Group Plc

177

17,058,543

6.3%

7

Susquehanna Bancshares Inc.

262

12,569,634

4.7%

8

Fulton Financial Corp.

187

9,428,543

3.5%

9

Banco Santander SA

176

8,654,240

3.2%

10

National Penn Bancshares Inc.

110

5,622,573

2.1%

11

BB&T Corp.

68

4,051,430

1.5%

12

Beneficial Mutual Bancorp Inc. (MHC)

61

3,645,268

1.4%

13

First Niagara Financial Group Inc.

63

2,684,122

1.0%

14

Metro Bancorp Inc.

33

2,106,159

0.8%

15

Citigroup Inc.

26

2,015,670

0.8%

Total

(1-15)

2,573

204,545,425

76.1%

Total

(1-248)

3,970

268,686,154

100.0%

Deposit Market Share: Counties of Operation

Uniquely positioned as the largest

locally based community bank

Top 3 market share in 12

counties

Top 5 market share in half the

MSAs where we do business

1

st

overall in market share,

excluding companies with

assets greater than $100B

Increased share in 14 out of

22 MSAs from 2011 to 2012

Significant opportunities exist

to gain market share

Critical Mass in Attractive Markets

Critical Mass in Attractive Markets

8

Susquehanna Bank Market¹

Pennsylvania

Delaware

Valley

Maryland

Branches

124

71

66

Loans as % of total²

45%

27%

28%

Deposits as % of total²

44%

30%

26%

Deposit market share (rank)³

2012

9.0%

(5

)

2.7%

(8

)

4.5%

(6

)

2011

7.6%

(6

)

1.3%

(9

)

3.8%

(6

)

2007

3.9%

(9

)

1.2%

(12

)

4.2%

(7

)

Pennsylvania Market

Foundation for growth with stable

commercial and retail banking base

providing ample deposits.

Home to distribution hubs for global retailers,

manufacturers and distributors serving

Northeast and Mid-Atlantic markets.

Delaware Valley Market

Includes Philadelphia and the state’s four

most-affluent counties.

4

Growth opportunities fueled by world-leading

education, health care and research

institutions.

Maryland Market

Includes Baltimore and four of the nation’s

45 most-affluent counties including no. 5,

Howard County.

4

Growth opportunities fueled by world-leading

education, health care and research

institutions, as well as major federal

agencies and contractors.

1  

The 16 counties comprising the company’s Pennsylvania Market, the 10 counties comprising the company’s Delaware Valley Market and the 13 counties

comprising the company’s Maryland Market are listed in the “Additional Materials” slides at the conclusion of this presentation

2

Company data as of 9/30/12.  Percentages based on internal company  commercial and retail market allocations.  Excludes leases and tax free loans and brokered and inter-company deposits.  

3

FDIC June 30 deposit market share data as reported by SNL Financial for the counties comprising each of the company’s three markets.

4

U.S. Census Bureau’s American Community Survey of median household income by county

th

th

th

th

th

th

th

th

th

HOME MARKET:

METRO GROWTH MARKETS:

Central PA

5

Philadelphia

6

Baltimore

7

2007

Today

Today

Today

Total Deposits

$55.5 B

$65.3 B

18% Growth

$128.5 B

$63.0 B

in Current Market

1

SUSQ Deposits

$2.2 B

$5.9 B

170% Growth

$3.0 B

$1.2 B

Rank/Market Share

#9 / 3.9%

#5 / 9.0%

#8 / 2.4%

#7 / 1.9%

Primary Competitors

PNC, M&T, Fulton

TD, RBS,

PNC

M&T, PNC, BB&T

Median Household Income

$50,976

$58,051

$62,687

Estimated Household Income

19.7%

23.1%

22.8%

Growth from 2011-2016

2

Population

3.6 M

3.7 M

3.5% Growth

5.3 M

2.7 M

Estimated Population

3.1%

1.8%

2.3%

Growth from 2011-2016

3

# of Businesses with

135,105

222,902

102,402

< $10M in Sales

4

Market Growth and Opportunity

Market Growth and Opportunity

9

1 

Source: FDIC Deposit Market Share Report

2

Source: SNL, ESRI.  Household Income data reported for Philadelphia and Baltimore metro markets represents Philadelphia-Camden-Wilmington and Baltimore-Towson MSAs, respectively

3

Source: SNL, ESRI

4

Source: The Nielsen Company

5 

16 counties comprising Susquehanna’s Pennsylvania Market

6

Philadelphia Metro = Bucks, Burlington, Camden, Chester, Delaware, Gloucester, Montgomery and Philadelphia counties

7

Baltimore Metro = Anne Arundel, Baltimore, Baltimore (City), Carroll, Harford and Howard counties

2

Organic Growth Supported by

Strategic Acquisitions

Organic Growth Supported by

Strategic Acquisitions

10

Assets ($ millions)

Deposit Composition

Deposit Composition

11

$8.9 Billion

$12.7 Billion

Total Deposits 12/31/2007

Total Deposits 9/30/2012

Successfully decreasing reliance on time deposit funding

Organic growth supported by acquisitions

Opportunity to further increase core deposits and manage deposit costs

Demand

Deposits,

14%

Interest-

bearing

demand,

32%

Savings,

8%

Time of

$100K or

more, 15%

Time <

$100K, 31%

Organic Core Deposit CAGR: 

7.21%

Demand

Deposits,

15%

Interest-

bearing

demand,

45%

Savings,

8%

Time of

$100K or

more, 14%

Time <

$100K, 18%

Loan Composition

Loan Composition

12

$8.8 Billion

$12.7 Billion

Organic Loan CAGR:  

4.93%

Total Loans 12/31/2007

Total Loans 9/30/2012

Decreased construction exposure

Organic and acquisitive growth

Opportunity to grow C&I and consumer loans

Asset Quality

Asset Quality

13

Quarterly Loan and Lease

Originations

($ in Millions)

Quarterly Loan and Lease

Originations

($ in Millions)

Loan and Lease Activity Trends

Continued origination growth with diverse mix

Overall loan originations are up 37% from 3Q 2011

14

3rd  Quarter 2012 Highlights

3rd  Quarter 2012 Highlights

GAAP EPS of $0.20

•

Includes merger related expenses and loss on extinguishment of debt

Core deposit growth of 3.4%

Steady organic loan growth

•

Commercial loans increase 3.2%; Consumer loans increase 3.0%

•

Organic loan growth of 3.8% YOY

Efficiency ratio below 60%

Continued improvement in credit quality metrics

•

NPA’s declined to 1.16% of loans, leases and foreclosed real estate

•

Strong coverage ratio with allowance representing 158% of nonaccrual loans and leases

Increased dividend to $0.07 per share

•

Fifth dividend increase since 1Q2011

15

Net Income

($000s)

Net Income

($000s)

16

Net Interest Margin

Net Interest Margin

17

Efficiency Ratio*

Efficiency Ratio*

18

*Efficiency ratio excludes net realized gain on acquisition, merger related expenses and loss on extinguishment of debt.  Please refer to the calculations on the

slides titled “Non-GAAP Reconciliation” at the conclusion of this presentation.

Capital Ratios

Capital Ratios

9/30/2012

Proposed

Minimum Basel III

Requirements¹

Management

Minimum

Targets

Tangible Common Equity²

7.84%

N/A

7.50%

Tier 1 Common/RWA

10.07%

7.00%

8.00%

Tier 1 Leverage

8.97%

4.00%

6.00%

Tier 1 Risk-Based

11.37%

8.50%

9.50%

Total Risk-Based

13.00%

10.50%

11.50%

Capital Planning Priorities

Support continued organic growth

Position for changing regulatory landscape

Increase quarterly cash dividends to shareholders

Consider strategic M&A opportunities

1

Including proposed conservation buffers

2

The tangible common equity ratio is a non-GAAP based financial measure.  Please refer to the calculations and management’s reasons for using this measure on the slide titled “Non-

GAAP

Reconciliation”

at

the

conclusion

of

this

presentation.

19

Strategic Objectives for 2012

Strategic Objectives for 2012

20

Shareholder Return

Shareholder Return

21

*

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 on the slide titled “Non-GAAP

Reconciliation”

at

the

conclusion

of

this

presentation.

Improving Results

Return on Average Tangible Equity*

Investment Merits

Investment Merits

Attractive markets with opportunities for growth

•

Some of the best markets in the Mid-Atlantic region

Diverse loan portfolio with improving asset quality trends

Proven ability to operate efficiently

•

Target sub-60% efficiency ratio achieved in 3Q2012

Well positioned for organic and strategic growth

opportunities

Capacity to compete as a super-regional financial

company yet deliver community bank service

22

Questions

Additional Materials

3

Quarter 2012 Financial Highlights

3

Quarter 2012 Financial Highlights

(Dollars in thousands, except earning per share data)

9/30/2012

6/30/2012

9/30/2011

Balance Sheet:

Loans and Leases

12,675,607

$ 

12,585,912

$ 

9,702,669

$ 

Deposits

12,725,379

$ 

12,690,524

$ 

9,558,631

$ 

Income Statement:

Net interest income

149,142

$      

152,670

$      

106,839

$    

Pre-tax pre-provision income

69,893

$    ��   

71,006

$        

42,894

$      

Provision for loan and lease losses

16,000

$        

16,000

$        

25,000

$      

GAAP Net Income

36,732

$        

37,793

$        

14,960

$      

GAAP EPS

0.20

$            

0.20

$            

0.12

$          

Quarterly Performance Highlights

25

rd

Deposit Mix & Cost by Product

Deposit Mix & Cost by Product

$ in millions

Avg Bal QTR

INT % QTR

Demand

   1,401

0.00%

   1,528

0.00%

   1,688

0.00%

1,922

0.00%

1,938

0.00%

Interest Bearing Demand

   3,797

0.52%

   4,394

0.49%

   4,990

0.46%

5,480

0.39%

5,537

0.35%

Savings

      797

0.14%

      876

0.13%

      930

0.14%

1,005

0.13%

1,003

0.11%

Certificates of Deposits

   3,491

1.55%

   3,503

1.29%

   3,747

1.29%

4,065

1.13%

4,111

1.17%

Total Interest-Bearing Deposits

   8,085

0.93%

   8,773

0.77%

   9,667

0.75%

10,550

0.65%

10,651

0.64%

Core Deposits/Total

Loans(excluding VIE)/Deposits

99.0%

1Q12

98.7%

67.0%

98.9%

3Q12

67.3%

98.8%

3Q11

4Q11

66.0%

63.2%

99.6%

2Q12

67.4%

26

Borrowing Mix & Cost

Borrowing Mix & Cost

27

$ in millions

Avg Bal QTR

INT % QTR (excludes SWAP expense)

Short-Term Borrowings

589

0.30%

0.27%

726 0.29%

0.28%

FHLB Advances

2.44%

0.21%

0.33%

0.35%

Long Term Debt

666

4.93%

5.11%

686 4.93%

4.85%

Total Borrowings

2,418

2.60%

1.66%

2,494 1.58%

1.62%

Off Balance Sheet Swap Impact

675

0.75%

0.74%

675 0.70%

0.69%

Total Borrowing Cost

Avg Borrowings / Avg Total

Assets

2.40%

2Q12

2.28%

14.0%

1Q12

3Q12

2.31%

14.1%

3Q11

4Q11

17.1%

15.8%

14.1%

3.35%

632

0.32%

1,115

2.90%

2,426

2.75%

675

0.76%

3.51%

642

985

2,301

675

4.78%

674

1,082

749

1,073

675

2,549

727

1,163

679

Quarterly Loan and Lease

Originations

Quarterly Loan and Lease

Originations

Average Balance*               

($ in Millions)

Balance

Originations

   Balance

Originations

  Balance

Originations

  Balance

Originations

  Balance

Originations

Commercial

1,531

154

1,587

150

1,708

115

1,847

206

1,870

167

Real Estate - Const & Land

728

63

812

92

863

95

936

74

899

101

Real Estate - 1-4 Family Res

1,413

55

1,818

77

2,033

68

2,262

101

2,279

86

Real Estate - Commercial

3,264

108

3,348

132

3,872

191

4,350

110

4,315

121

Real Estate - HELOC

842

68

908

65

1,013

52

1,128

88

1,169

93

Tax-Free

317

7

330

7

346

53

379

22

390

55

Consumer Loans

685

109

709

97

736

96

764

116

794

110

Commercial Leases

285

51

282

82

287

76

306

79

299

81

Consumer Leases

380

42

370

43

367

43

376

65

424

86

VIE

201

-

193

-

187

-

180

-

173

-

Total

9,646

$ 

657

$          

10,357

$ 

745

$          

11,412

$ 

789

$          

12,528

$

862

$          

12,612

$ 

900

$          

3Q12

2Q12

1Q12

4Q11

3Q11

28

*By collateral type

Loan Mix & Yield

Loan Mix & Yield

$ in millions

Avg Bal QTR*

INT % QTR

Commercial

   1,531

5.38%

    1,587

5.31%

     1,708

5.24%

    1,847

5.43%

   1,870

5.31%

Real Estate - Const & Land

      728

4.74%

        812

4.95%

        863

5.60%

       936

5.66%

       899

5.64%

Real Estate - 1-4 Family Res

   1,413

5.81%

    1,818

5.22%

     2,033

5.27%

    2,262

5.26%

   2,279

5.03%

Real Estate - Commercial

   3,264

5.47%

    3,348

5.45%

     3,872

5.46%

    4,350

5.78%

   4,315

5.60%

Real Estate - HELOC

      842

3.60%

        908

3.83%

     1,013

3.98%

    1,128

3.81%

   1,169

3.82%

Tax-Free

      317

6.06%

        330

5.11%

        346

5.60%

       379

5.45%

       390

5.40%

Consumer Loans

      685

5.61%

        709

5.48%

        736

5.33%

       764

5.21%

       794

5.02%

Commercial Leases

      285

7.92%

        282

7.90%

        287

7.98%

       306

7.72%

       299

7.48%

Consumer Leases

      380

4.90%

        370

4.75%

        367

4.73%

       376

4.60%

       424

4.30%

VIE

      201

4.58%

        193

4.54%

        187

4.47%

       180

4.46%

       173

4.42%

Total Loans

   9,646

5.34%

  10,357

5.22%

   11,412

5.29%

5.33%

5.23%

3Q12

2Q12

1Q12

3Q11

4Q11

29

*By collateral type

12,528

12,612

CRE and Construction Composition

CRE and Construction Composition

30

Asset Quality

($ in Millions)

Asset Quality

($ in Millions)

($ in million)

3Q11

4Q11

1Q12

2Q12

3Q12

NPL's Beginning of Period

190.7

$  

160.1

$  

156.5

$  

133.5

$

127.3

$

New NonAccruals

20.4

$    

43.8

$    

22.3

$     

34.5

$  

17.3

$  

Cure/Exits/Other

(27.4)

$   

(10.1)

$   

(28.8)

$   

(16.8)

$ 

(6.2)

$   

Gross Charge-Offs

(16.2)

$   

(25.6)

$   

(11.0)

$   

(17.3)

$ 

(15.8)

$ 

Transfer to OREO

(7.5)

$     

(11.7)

$   

(5.5)

$      

(6.6)

$   

(4.2)

$   

NPL's End of Period

160.0

$  

156.5

$  

133.5

$  

127.3

$

118.4

$

31

Asset Quality

($ in Millions)

Asset Quality

($ in Millions)

32

*Legacy Susquehanna

Investment Securities

Investment Securities

$ in millions

EOP Balance

QTR Yield

Total Investment Securities

$2,691

$2,423

$2,757

$2,866

$2,908

Duration (years)

3.6

3.5

3.6

3.6

3.6

Yield

3.32%

3.02%

3.09%

2.92%

2.69%

Unrealized Gain/(Loss)

$42.0

$32.3

$30.8

$40.8

$61.9

3Q12

2Q12

3Q11

4Q11

1Q12

33

Earnings Drivers

Earnings Drivers

($000)

3Q11

4Q11

1Q12

2Q12

3Q12

Avg. interest-earning assets

12,275,793

13,128,969

14,065,583

15,332,806

15,537,037

Net interest margin (FTE)

3.58%

3.59%

3.94%

4.10%

3.92%

Net interest income

106,839

115,201

134,123

152,670

149,142

Noninterest income

36,800

32,204*

39,515

39,811

43,661

Total revenue

143,639

147,405

173,638

192,481

192,803

Noninterest expense

99,452*

100,164*

108,876*

118,157*

115,959*

Pre-tax, pre-provision income

44,187*

47,241*

64,762*

74,324*

76,844*

Provision for loan losses

25,000

22,000

19,000

16,000

16,000

Pre-tax income

19,187*

25,241*

45,762*

58,324*

60,844*

* Core: Excludes merger-related expenses, net gain on acquisition and loss on extinguishment of debt

2012 Financial Targets

FTE margin

3.98%

Loan growth

23%

Deposit growth

24%

Non-interest income growth

-10%

Non-interest expense growth

0%

Tax rate

31%

reported

numbers

and

not

core

numbers.

These

percentages

do

not

include

any

one-time

merger-related costs or loss on extinguishment of debt in 2012.

34

The growth percentages included in these financial targets are based  upon 2011

Note

:

Susquehanna Bank Markets

Susquehanna Bank Markets

35

Pennsylvania Market:

Adams, PA

Berks, PA

Centre, PA

Cumberland, PA

Dauphin, PA

Lancaster, PA

Lebanon, PA

Lehigh, PA

Luzerne, PA

Lycoming, PA

Northampton, PA

Northumberland, PA

Schuylkill, PA

Snyder, PA

Union, PA

York, PA

Maryland Market:

Allegany, MD

Anne Arundel, MD

Baltimore, MD

Baltimore City, MD

Bedford, PA

Berkley, WV

Carroll, MD

Franklin, PA

Fulton, PA

Garrett, MD

Hartford, MD

Howard, MD

Washington, MD

Delaware Valley Market:

Atlantic, NJ

Bucks, PA

Burlington, NJ

Camden, NJ

Chester, PA

Cumberland, NJ

Delaware, PA

Gloucester, NJ

Montgomery, PA

Philadelphia, PA

Non-GAAP Reconciliation

(Dollars and share data in thousands)

Non-GAAP Reconciliation

(Dollars and share data in thousands)

36

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

3Q12

2Q12

1Q12

4Q11

3Q11

End of period balance sheet data

Shareholders' equity

2,584,682

$ 

2,544,730

$ 

2,512,584

$ 

2,189,628

$ 

2,035,845

$ 

Goodwill and other intangible assets

(1)

(1,263,361)

(1,267,630)

(1,268,582)

(1,006,412)

(1,005,368)

Tangible common equity (numerator)

1,321,321

$ 

1,277,100

$ 

1,244,002

$ 

1,183,216

$ 

1,030,477

$ 

Assets

18,106,730

$

18,040,009

$

17,807,026

$

14,974,789

$

14,365,229

$

Goodwill and other intangible assets

(1)

(1,263,361)

(1,267,630)

(1,268,582)

(1,047,112)

(1,045,692)

Tangible assets (denominator)

16,843,369

$

16,772,379

$

16,538,444

$

13,927,677

$

13,319,537

$

Tangible common ratio

7.84%

7.61%

7.52%

8.50%

7.74%

(1)

Net of applicable deferred income taxes

3Q12

2Q12

1Q12

4Q11

3Q11

Efficiency Ratio

Other expense

122,910

$    

121,475

$    

120,355

$    

162,395

$    

100,745

$    

Less: Merger related expenses

(1,500)

(3,318)

(11,479)

(12,211)

(1,293)

Loss on extinguishment of debt

(5,451)

0

0

(50,020)

0

Noninterest operating expense (numerator)

115,959

$    

118,157

$    

108,876

$    

100,164

$    

99,452

$      

Taxable-equivalent net interest income

152,948

$    

156,416

137,837

118,780

110,668

Other income

43,661

39,811

39,515

71,347

36,800

Less: Net realized gain on acquisition

0

0

0

(39,143)

0

Denominator

196,609

$    

196,227

$    

177,352

$    

150,984

$    

147,468

$    

Efficiency ratio

58.98%

60.21%

61.39%

66.34%

67.44%

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 assts.  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.

Non-GAAP Reconciliation

(Dollars and share data in thousands)

Non-GAAP Reconciliation

(Dollars and share data in thousands)

37

Income statement data

Net income

36,732

$           

37,793

$       

23,473

$       

19,129

$       

14,960

$       

Amortization of intangibles, net of taxes at 35%

2,169

2,211

1,789

1,489

1,377

Net tangible income (numerator)

38,901

$           

40,004

$       

25,262

$       

20,618

$       

16,337

$       

Average balance sheet data

Shareholders' equity

2,562,092

$      

2,537,250

$  

2,348,326

$  

2,217,036

$  

2,019,706

$  

Goodwill and other intangible assets

(1,315,071)

(1,320,658)

(1,132,344)

(1,045,580)

(1,046,719)

Tangible common equity (denominator)

1,247,021

$      

1,216,592

$  

1,215,982

$  

1,171,456

$  

972,987

$     

Return on equity (GAAP basis)

5.70%

5.99%

4.02%

3.42%

2.94%

Effect of goodwill and other intangibles

6.71%

7.24%

4.34%

3.56%

3.72%

12.41%

13.23%

8.36%

6.98%

6.66%

3Q12

2Q12

1Q12

4Q11

3Q11

Return

on

Average

Tangible

Shareholders’

Equity

Return on average tangible shareholders' equity

Return on average tangible shareholders’ 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 shareholders’ 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.