[SUSQUEHANNA BANCSHARES, INC. LOGO]
SUSQUEHANNA
BANCSHARES, INC.
P.O. Box 1000
26 North Cedar Street
Lititz, PA 17543-1000
NEWS
FOR ADDITIONAL INFORMATION CONTACT:
Alison van Harskamp, Vice President and Director of Communications
Susquehanna Bancshares, Inc. (717) 625 6260, communications@susqbanc.com
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SUSQUEHANNA BANCSHARES, INC. ANNOUNCES FULL
YEAR/4TH QUARTER RESULTS -
GROWS DEPOSITS 10%, BANK LOANS 13% IN 2002
FOR IMMEDIATE RELEASE: LITITZ, PA, January 21, 2003:
- ----------------------------------------------------
Susquehanna Bancshares, Inc., (Susquehanna) (Nasdaq: SUSQ - news) today
announced net income for the year ended December 31, 2002, was $61.7 million, or
$1.55 per diluted share, an increase of 11% over the $55.7 million earned in
2001. Net income for the fourth quarter of 2002 increased 5% to $15.4 million,
or $0.39 per diluted share, compared to $14.7 million for the fourth quarter of
2001, or $0.37 per diluted share.
Earnings were in line with the company's forecast of $1.54 - $1.56 for the full
year. As a result of new rules under generally accepted accounting principles
adopted in 2001, goodwill amortization was discontinued in 2002. Had the new
rules been in effect in 2001, diluted earnings per share would have been $1.49
for the year, and $0.39 for fourth quarter of 2001.
Fourth quarter 2002 earnings included an increase in the loan loss provision of
$1.2 million from the third quarter, and one-time charges at Susquehanna's auto
leasing subsidiary of $1.3 million. These non-recurring charges were offset by a
$2.6 million security gain during the fourth quarter resulting from the sale of
a small-cap bank stock purchased years ago which Susquehanna no longer had a
strategic interest in holding. The increased loan loss provision was related to
charge-offs in Susquehanna's equipment leasing subsidiary's truck portfolio due
to adverse market conditions. At December 31, 2002, truck loans remaining in
that portfolio totaled less than $5 million. The auto leasing charges resulted
from a 50 basis point drop in leasing rates during the fourth quarter which
accelerated amortization by $0.8 million of certain deferred assets associated
with a like-kind exchange sale leaseback transaction made in the year 2000, and
a $0.5 million settlement made with a third-party residual-value guarantor
related to certain contractual provisions within the servicing agreement dated
September 1, 2000.
Full Year/ Fourth Quarter Financial highlights
o Deposits and loans continued on an upward trend primarily as the result
of Susquehanna's ongoing strategic retail and corporate sales initiatives.
Deposits at December 31, 2002, increased 10% over December 31, 2001, rising
from $3.5 billion to $3.8 billion year over year. Loans and leases rose to
$3.8 billion at December 31, 2002, an increase of 9% over December 31,
2001. Bank originated loans increased 13% year over year.
-1-
o Non-interest income increased 12% over the full year results reported
for December 31, 2001, rising from $84.2 million to $94.2 million in 2002.
Non-interest income for the fourth quarter of 2002 was $23.7 million, an
increase of 9% compared to $21.7 million in the fourth quarter of 2001. For
the year ended December 31, 2002, core banking contributed 52% of the total
and non-bank affiliates 48%. For the twelve months ended December 31, 2002,
non-interest income represented 33% of total revenue.
o Total assets increased 9%, rising from $5.1 billion at December 31,
2001 to $5.5 billion at December 31, 2002.
o Asset quality remained solid and within Susquehanna's 5-year historical
range. Total non-performing assets at December 31, 2002, were $21.3
million, up $2 million from the 5-year low reached on December 31, 2001.
Past due loans of 90 days or more were down to $8.2 million at December 31,
2002 compared to $11.5 million at year-end in 2001.
o On November 4, 2002, Susquehanna announced the completion of a private
placement of $75 million aggregate principal amount of 6.05% Subordinated
Notes due November 1, 2012.
"An integral part of Susquehanna's 2002 strategic plan involved improving our
core banking performance. With a focused effort on training and developing our
employees, Susquehanna's sales culture has achieved substantial results. The
execution of our plan yielded a 13% increase in bank loans, a 10% increase in
bank deposits, including a 14% increase in demand deposits, and a 6% increase in
bank-contributed, non-interest income. Additionally, we've experienced
significant increases in our cross-sell ratios," says Susquehanna Chairman,
President and CEO William J. Reuter. "Susquehanna's diluted EPS guidance is
$0.39 to $0.41 for the first quarter of 2003. Based on 2003 budget projections,
and a bias that interest rates will gradually increase during the latter part of
the year, our diluted EPS for the year 2003 is expected to be in the range of
$1.62 - $1.68."
During the fourth quarter of 2002, return on assets ("ROA") and return on equity
("ROE") finished at 1.12% and 11.60%, respectively, compared with 1.16% and
11.88%, in the fourth quarter of 2001. For the twelve month period ending
December 31, 2002, ROA and ROE were 1.17% and 12.02%, respectively, compared to
1.14% and 11.78% for the twelve month period ending December 31, 2001.
Equity capital was $534 million at December 31, 2002, or $13.47 per share,
compared to $494 million at December 31, 2001, or $12.54 per share.
-2-
Additional 2002 Highlights...
o Moody's Investor Service improved the outlook on Susquehanna's senior
debt rating of Baa1 to stable from negative on May 31, 2002.
o On June 28, 2002, Susquehanna completed its acquisition of The Addis
Group, a property and casualty insurance brokerage located in King of
Prussia, Pa. The company was acquired as part of Susquehanna's stated
strategy of broadening its product and service offerings and diversifying
its non-interest revenue generation through selectively adding non-bank
affiliates to provide an increased range of financial services to current
and potential customers within its market areas.
o On August 5, 2002, Susquehanna completed the merger of its subsidiaries
Equity Bank, Marlton NJ and Founders' Bank, Bryn Mawr, Pa. The resultant
Equity Bank provides customers in the greater Philadelphia and southern New
Jersey regions with more branch and ATM locations, expanded product and
service offerings, and, in some cases, extended hours.
o Susquehanna's largest banking affiliate, Farmers First Bank (Lititz, Pa.)
received preferred lender status by the U.S. Small Business Administration
in 2002. Farmers is the second Susquehanna affiliate to achieve preferred
lender status, awarded to the most active and expert lenders, joining
Susquehanna Bank (Baltimore, Md.) which received its designation in 2001.
o For the third consecutive year, Susquehanna was selected by Mergent as
a Dividend Achiever in 2002, one of 218 U.S. companies out of a field of
10,000. Susquehanna has increased its common stock cash dividend every year
since it was formed in 1982.
o In addition to providing public access to its quarterly earnings
conference calls by live Webcast, in 2002 Susquehanna Webcast its annual
shareholders meeting from the Hotel Hershey (PA) including a slide
presentation and remarks by CEO William J. Reuter. To enhance disclosure
and facilitate timely access to important information, the company also
posts press releases, financial reports, and SEC filings to its Website.
Susquehanna also announced it will broadcast its fourth quarter results
conference call over the Internet on January 22, 2003, at 11:00 AM Eastern time.
Investors will have the opportunity to listen to the conference call through a
live broadcast on Susquehanna's Web site, located at www.susqbanc.com. To listen
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to the live call, please go to the Investor Relations section of Susquehanna's
Web site at least fifteen minutes early to download and install any necessary
audio software. For those who cannot listen to the live broadcast, a replay will
be available shortly after the call.
-3-
Susquehanna Bancshares, Inc. is a financial holding company with assets of $5.5
billion operating in multiple states. It provides financial services through its
subsidiaries at 159 locations in the mid-Atlantic region. In addition to eight
commercial banks, Susquehanna operates a trust and investment company, an asset
management company, a property and casualty insurance brokerage company, and a
vehicle leasing company. Investor information may be requested on Susquehanna's
Web site at www.susqbanc.com.
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This press release contains "forward-looking" statements as defined in the
Private Securities Litigation Reform Act of 1995, that are based on
Susquehanna's current expectations, estimates and projections about future
events and financial trends affecting the financial condition of its business.
These statements are not historical facts or guarantees of future performance,
events or results. Such statements involve potential risks and uncertainties.
Accordingly, actual results may differ materially. Susquehanna undertakes no
obligation to publicly update or revise any forward looking statements, whether
as a result of new information, future events or otherwise.
-4-
Susquehanna Bancshares, Inc.
P.O. Box 1000
Lititz, PA 17543
SUMMARY FINANCIAL INFORMATION
(Dollars in 000s, except per share)
Twelve Months
-----------------------
Balance Sheet (EOP) 4Q02 4Q01 2002 2001
---- ---- ---- ----
Investments $1,126,407 $1,021,091 $1,126,407 $1,021,091
Loans and leases 3,830,953 3,519,498 3,830,953 3,519,498
Allowance for loan & lease losses (ALLL) 39,671 37,698 39,671 37,698
Total assets 5,544,647 5,088,954 5,544,647 5,088,954
Deposits 3,831,315 3,484,331 3,831,315 3,484,331
Short-term borrowings 266,724 169,803 266,724 169,803
FHLB borrowings 543,166 570,580 543,166 570,580
Vehicle financing 31,304 171,462 31,304 171,462
Long-term debt 180,000 105,000 180,000 105,000
Shareholders' equity 533,855 493,536 533,855 493,536
Stated Book Value per Share 13.47 12.54 13.47 12.54
Tangible Book Value per Share 11.96 11.30 11.96 11.30
Average Balance Sheet
Investments 1,070,166 994,053 1,019,330 906,156
Loans and leases 3,811,402 3,537,316 3,705,572 3,487,994
Total earning assets 4,954,673 4,626,290 4,798,059 4,482,529
Total assets 5,453,140 5,024,031 5,273,013 4,867,149
Deposits 3,814,216 3,382,454 3,642,799 3,292,733
Short-term borrowings 236,285 187,994 235,728 211,033
FHLB borrowings 543,765 567,329 544,176 446,835
Vehicle financing 51,588 240,540 103,175 293,885
Long-term debt 152,251 105,001 116,910 101,329
Shareholders' equity 527,047 490,136 513,299 472,972
Income Statement
Net interest income 47,868 44,869 187,240 172,244
Loan & lease loss provision 3,585 1,891 10,664 7,310
Other income 23,666 21,660 94,150 84,166
Other expense 45,719 43,215 181,663 167,763
Income before taxes 22,230 21,423 89,063 81,337
Income taxes 6,824 6,748 27,342 25,621
Net income 15,406 14,675 61,721 55,716
Basic earnings per share 0.39 0.37 1.56 1.42
Diluted earnings per share 0.39 0.37 1.55 1.41
Cash dividends paid per share 0.21 0.20 0.81 0.77
Susquehanna Bancshares, Inc.
P.O. Box 1000
Lititz, PA 17543
SUSQUEHANNA BANCSHARES, INC.
SUMMARY FINANCIAL INFORMATION
(Dollars in 000s, except per share)
Twelve Months
------------------------
Asset Quality 4Q02 4Q01 2002 2001
---- ---- ---- ----
Net charge-offs (NCO) $ 3,401 $ 3,064 $ 8,691 $ 7,338
Nonaccrual loans & leases 18,190 15,516 18,190 15,516
Restructured loans 0 0 0 0
OREO 3,151 3,761 3,151 3,761
Total nonperforming assets (NPA) 21,341 19,277 21,341 19,277
Loans & leases 90 days past due 8,208 11,498 8,208 11,498
RATIO ANALYSIS
Credit Quality
NCO / Ave. loans & leases 0.35% 0.34% 0.23% 0.21%
NPA / loans & leases & OREO 0.56% 0.55% 0.56% 0.55%
ALLL / Nonperforming loans 218.09% 242.96% 218.09% 242.96%
ALLL / total loans & leases 1.04% 1.07% 1.04% 1.07%
Capital Adequacy
Equity / assets 9.63% 9.70% 9.63% 9.70%
Long-term debt / equity 33.72% 21.28% 33.72% 21.28%
Profitability
Return on average assets 1.12% 1.16% 1.17% 1.14%
Return on average equity 11.60% 11.88% 12.02% 11.78%
Net interest margin 3.88% 3.91% 3.96% 3.91%
Susquehanna Bancshares, Inc.
P.O. Box 1000
Lititz, PA 17543
CONSOLIDATED BALANCE SHEETS
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December 31, December 31,
(Dollars in thousands) 2002 2001
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ASSETS
Cash and due from banks $ 156,320 $ 149,233
Short-term investments:
Restricted 30,611 41,584
Unrestricted 22,025 46,981
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Total short-term investments 52,636 88,565
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Investment securities available for sale, at fair value 1,122,230 1,019,313
Investment securities held to maturity, at amortized cost 4,177 1,778
(Fair values of $4,177 and $1,778)
Loans and leases, net of unearned income 3,830,953 3,519,498
Less: Allowance for loan and lease losses 39,671 37,698
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Net loans and leases 3,791,282 3,481,800
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Premises and equipment (net) 60,108 60,063
Accrued income receivable 20,579 21,268
Bank-owned life insurance 125,127 120,174
Goodwill 54,897 43,496
Intangible assets with finite lives 4,998 5,622
Other assets 152,293 97,642
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Total assets $5,544,647 $5,088,954
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LIABILITIES
Deposits:
Demand $ 601,272 $ 529,162
Interest-bearing demand 1,137,982 915,080
Savings 470,318 435,959
Time 1,303,918 1,322,494
Time of $100 or more 317,825 281,636
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Total deposits 3,831,315 3,484,331
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Short-term borrowings 266,724 169,803
FHLB borrowings 543,166 570,580
Vehicle financing 31,304 171,462
Long-term debt 180,000 105,000
Accrued interest, taxes, and expenses payable 36,240 36,652
Other liabilities 122,043 57,590
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Total liabilities 5,010,792 4,595,418
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SHAREHOLDERS' EQUITY
Common stock
Authorized: 100,000,000 ($2.00 par value)
Issued: 39,638,447 and 39,398,190, respectively 79,277 78,796
Surplus 62,858 57,986
Retained earnings 375,244 345,508
Accumulated other comprehensive income,
net of taxes of $8,681 and $6,928, respectively 16,476 12,009
Less: Treasury stock, (none and 54,115
common shares at cost, respectively) 0 763
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Total shareholders' equity 533,855 493,536
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Total liabilities and shareholders' equity $5,544,647 $5,088,954
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The accompanying notes are an integral part of these financial statements.
Susquehanna Bancshares, Inc.
P.O. Box 1000
Lititz, PA 17543
CONSOLIDATED STATEMENTS OF INCOME
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Three Months Ended Year Ended
December 31, December 31,
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(Dollars in thousands, except per share) 2002 2001 2002 2001
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INTEREST INCOME
Interest and fees on loans and leases $64,774 $68,414 $260,420 $283,212
Interest on investment securities: Taxable 12,809 13,635 52,497 51,247
Tax-exempt 536 747 2,445 3,297
Interest on short-term investments 304 590 1,351 3,539
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Total interest income 78,423 83,386 316,713 341,295
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INTEREST EXPENSE
Interest on deposits:
Interest-bearing demand 3,118 3,282 12,429 18,144
Savings 775 1,228 4,036 6,324
Time 15,590 19,585 66,034 84,222
Interest on short-term borrowings 739 982 3,919 7,976
Interest on FHLB borrowings 7,065 7,297 28,108 23,656
Interest on vehicle financing 528 4,135 6,211 20,886
Interest on long-term debt 2,740 2,008 8,736 7,843
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Total interest expense 30,555 38,517 129,473 169,051
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Net interest income 47,868 44,869 187,240 172,244
Provision for loan and lease losses 3,585 1,891 10,664 7,310
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Net interest income after provision for loan and lease losses 44,283 42,978 176,576 164,934
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OTHER INCOME
Service charges on deposit accounts 4,567 3,926 16,905 13,735
Vehicle origination and servicing fees 5,222 3,579 24,727 22,435
Merchant credit card fees 0 2,606 8,328 10,489
Asset management fees 2,499 2,957 9,824 9,072
Income from fiduciary-related activities 1,187 1,108 4,853 5,084
Gain on sale of loans and leases 997 636 4,626 4,198
Income from bank-owned life insurance 1,569 1,695 6,540 6,509
Commissions on insurance sales 1,850 0 3,666 0
Other operating income 3,206 4,776 11,324 11,995
Investment security gains/(losses) 2,569 377 3,357 649
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Total other income 23,666 21,660 94,150 84,166
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OTHER EXPENSES
Salaries and employee benefits 21,691 19,137 82,571 73,850
Net occupancy expense 3,244 2,933 12,522 11,498
Furniture and equipment expense 2,070 2,016 8,372 8,185
Amortization of intangible assets 157 992 639 3,645
Vehicle residual value expense 1,546 1,142 6,384 4,850
Vehicle delivery and preparation expense 3,294 2,712 9,444 6,168
Merchant credit card servicing expense 0 2,334 7,937 9,820
Other operating expenses 13,717 11,949 53,794 49,747
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Total other expenses 45,719 43,215 181,663 167,763
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Income before income taxes 22,230 21,423 89,063 81,337
Provision for income taxes 6,824 6,748 27,342 25,621
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NET INCOME $15,406 $14,675 $ 61,721 $ 55,716
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Per share information:
Basic earnings $0.39 $0.37 $1.56 $1.42
Diluted earnings $0.39 $0.37 $1.55 $1.41
Cash dividends $0.21 $0.20 $0.81 $0.77
Average shares outstanding: Basic 39,619 39,319 39,496 39,263
Diluted 39,984 39,723 39,932 39,593
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The accompanying notes are an integral part of these financial statements.
Susquehanna Bancshares, Inc.
P.O. Box 1000
Lititz, PA 17543
TABLE 1 - DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
Interest rates and interest differential - taxable equivalent basis
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For the Three Month Period Ended For the Three Month Period Ended
December 31, 2002 December 31, 2001
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Average Average
(Dollars in thousands) Balance Interest Rate (%) Balance Interest Rate (%)
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Assets
Short - term investments $73,105 $304 1.65 $94,921 $590 2.47
Investment securities:
Taxable 1,023,375 12,809 4.97 926,826 13,607 5.82
Tax - advantaged 46,791 825 7.00 67,227 1,192 7.03
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Total investment securities 1,070,166 13,634 5.05 994,053 14,799 5.91
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Loans and leases, (net):
Taxable 3,759,721 64,146 6.77 3,496,063 67,834 7.70
Tax - advantaged 51,681 966 7.42 41,253 892 8.58
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Total loans and leases 3,811,402 65,112 6.78 3,537,316 68,726 7.71
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Total interest - earning assets 4,954,673 $79,050 6.33 4,626,290 $84,115 7.21
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Allowance for loan and lease losses (39,359) (38,632)
Other non - earning assets 537,826 436,373
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Total assets $5,453,140 $5,024,031
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Liabilities
Deposits:
Interest - bearing demand $1,100,821 $3,118 1.12 $866,825 $3,282 1.50
Savings 469,259 775 0.66 428,175 1,228 1.14
Time 1,668,709 15,590 3.71 1,587,508 19,585 4.89
Short - term borrowings 236,285 739 1.24 187,994 982 2.07
FHLB borrowings 543,765 7,065 5.15 567,329 7,297 5.10
Vehicle financing 51,588 528 4.06 240,540 4,135 6.82
Long - term debt 152,251 2,740 7.14 105,001 2,008 7.59
---------- ------- ---- ---------- ------- --------
Total interest - bearing liabilities 4,222,678 $30,555 2.87 3,983,372 $38,517 3.84
---------------- ------------------
Demand deposits 575,427 499,946
Other liabilities 127,988 50,577
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Total liabilities 4,926,093 4,533,895
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Equity 527,047 490,136
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Total liabilities & shareholders' equity $5,453,140 $5,024,031
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Net interest income / yield on
average earning assets $48,495 3.88 $45,598 3.91
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For purposes of calculating yields, the average loan volume includes
non-accrual loans. For purposes of calculating yields on non-taxable interest
income, the taxable equivalent adjustment is made to equate non-taxable interest
on the same basis as taxable interest. The marginal tax rate is 35%.
Susquehanna Bancshares, Inc.
P.O. Box 1000
Lititz, PA 17543
TABLE 1 - DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
Interest rates and interest differential - taxable equivalent basis
- ---------------------------------------------------------------------------------------------------------------------
For the Twelve Month Period Ended For the Twelve Month Period Ended
December 31, 2002 December 31, 2001
--------------------------------- ----------------------------------
Average Average
(Dollars in thousands) Balance Interest Rate(%) Balance Interest Rate(%)
- -------------------------------------------------------------------------------- -----------------------------------
Assets
Short - term investments $ 73,157 $ 1,351 1.85 $ 88,379 $ 3,539 4.00
Investment securities:
Taxable 966,156 52,497 5.43 834,066 51,219 6.14
Tax - advantaged 53,174 3,762 7.07 72,090 5,115 7.10
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Total investment securities 1,019,330 56,259 5.52 906,156 56,334 6.22
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Loans and leases, (net):
Taxable 3,657,342 257,977 7.05 3,444,049 280,730 8.15
Tax - advantaged 48,230 3,758 7.79 43,945 3,820 8.69
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Total loans and leases 3,705,572 261,735 7.06 3,487,994 284,550 8.16
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Total interest - earning assets 4,798,059 $ 319,345 6.66 4,482,529 $ 344,423 7.68
---------------------- ---------------------
Allowance for loan and lease losses (39,193) (38,409)
Other non - earning assets 514,147 423,029
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Total assets $ 5,273,013 $ 4,867,149
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Liabilities
Deposits:
Interest - bearing demand $ 991,096 $ 12,429 1.25 $ 824,950 $ 18,144 2.20
Savings 461,947 4,036 0.87 420,818 6,324 1.50
Time 1,643,785 66,034 4.02 1,568,646 84,222 5.37
Short - term borrowings 235,728 3,919 1.66 211,033 7,976 3.78
FHLB borrowings 544,176 28,108 5.17 446,835 23,656 5.29
Vehicle financing 103,175 6,211 6.02 293,885 20,886 7.11
Long - term debt 116,910 8,736 7.47 101,329 7,843 7.74
----------- ----------- ---- ----------- ----------- ----
Total interest - bearing liabilities 4,096,817 $ 129,473 3.16 3,867,496 $ 169,051 4.37
---------------------- ---------------------
Demand deposits 545,971 468,319
Other liabilities 116,926 58,362
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Total liabilities 4,759,714 4,394,177
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Equity 513,299 472,972
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Total liabilities & shareholders' equity $ 5,273,013 $ 4,867,149
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Net interest income / yield on
average earning assets $ 189,872 3.96 $ 175,372 3.91
---------------------- ---------------------
For purposes of calculating loan yields, the average loan volume includes
non-accrual loans. For purposes of calculating yields on non-taxable interest
income, the taxable equivalent adjustment is made to equate non-taxable interest
on the same baisis as taxable interest. The marginal tax rate is 35%.
LOANS AND LEASES
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Loans and leases,net of unearned income at December 31, 2002 and December 31, 2001, were as follows:
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December 31, December 31,
2002 2001
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Commercial, financial, and agricultural $478,181 $434,780
Real estate - construction 456,663 359,445
Real estate - secured residential 1,246,939 1,140,678
Real estate secured - commercial 988,633 822,416
Consumer 343,537 325,170
Leases 317,000 437,009
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Total loans and leases $3,830,953 $3,519,498
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