Exhibit 99.1
The following information will be disclosed by Susquehanna in a proposed
private placement of subordinated notes.
As a financial holding company with operations in multiple states, our
strategy has been to manage our subsidiaries on a local community basis and to
allow each subsidiary operating in different markets to retain its name and
board of directors. We believe that this strategy differentiates us from other
large competitors because it enables our subsidiaries greater flexibility to
better serve their markets and increase responsiveness to the needs of local
customers. We continue, however, to implement consolidations in selected lines
of business, operations and support functions in order to achieve greater
economies of scale and cost savings. We also provide our banking subsidiaries
guidance in the areas of credit policy and administration, risk assessment,
investment advisory administration, strategic planning, investment portfolio
management, asset liability management, liquidity management and other financial
and administrative services.
Our bank subsidiaries operate as an extensive branch network and maintain a
strong market presence in our primary markets. As of June 30, 2002, core
deposits funded 76% of our lending and investing activities. The chart below
reflects the total assets, loans and deposits of our banking operations in each
of our primary markets:
Percent Percent Percent
Assets of Total Loans of Total Deposits of Total
------ -------- ----- -------- -------- --------
(dollars in millions)
Central Pennsylvania ....................... $2,009 40.3% $1,445 40.5% $1,456 40.0%
Suburban Philadelphia and Southern New
Jersey ..................................... 626 12.6 407 11.4 530 14.5
Suburban Baltimore and Central Maryland .... 1,144 23.0 928 26.0 742 20.4
Western Maryland and Southwestern
Pennsylvania ............................... 1,200 24.1 789 22.1 915 25.1
------ ----- ------ ----- ------ -----
Total .................................... $4,979 100.0% $3,569 100.0% $3,643 100.0%
====== ===== ====== ===== ====== =====
We are managed from a long-term perspective with financial objectives that
emphasize loan quality, balance sheet liquidity and earnings stability.
Consistent with this approach, we emphasize a low-risk loan portfolio derived
from our local markets. In addition, we focus on not having any portion of our
business dependent upon a single customer or limited group of customers or a
substantial portion of our loans or investments concentrated within a single
industry or a group of related industries. Our net charge-offs over the past
five years have averaged 0.20% of total loans and leases.
As of June 30, 2002, our total loans and leases (net) in dollars and by
percentage were as follows:
(dollars in millions)
Commercial, financial and agricultural ... $ 452 12.1%
Real estate - construction ............... 408 10.9
Real estate secured - residential ........ 1,178 31.5
Real estate secured - commercial ......... 941 25.2
Consumer ................................. 339 9.1
Leases ................................... 419 11.2
-------- -----
Total loans and leases .............. $ 3,737 100.0%
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Also as of June 30, 2002, we held $1.0 billion in investment securities
with an average life of less than two years, including U.S. Treasuries, U.S.
government agency securities and mortgage-backed securities.
The following table sets forth information, for the six months ended June
30, 2002, regarding our bank subsidiaries and our non-bank subsidiaries that as
of June 30, 2002 had annualized revenues in excess of $5.0 million:
Percent Percent Percent
Subsidiary Assets of Total Revenues/(1)/ of Total Net Income of Total
- ---------- ------ -------- -------- -------- ---------- --------
(dollars in thousands)
Central Pennsylvania:
Farmers First Bank ............ $1,387,130 26.3% $ 32,355 23.4% $ 10,703 35.2%
First Susquehanna Bank &
Trust ...................... 333,734 6.3 7,594 5.5 1,885 6.2
WNB Bank ...................... 287,723 5.4 7,526 5.4 2,606 8.6
Suburban Philadelphia and
Southern New Jersey:
Equity Bank/(2)/ .............. 626,003 11.9 20,415 14.7 3,928 12.9
Suburban Baltimore and Central
Maryland:
Susquehanna Bank .......... 1,143,821 21.7 19,402 14.1 4,203 13.8
Western Maryland and
Southwestern Pennsylvania:
Farmers and Merchants Bank &
Trust ...................... 774,833 14.7 17,798 12.9 3,849 12.6
Citizens Bank of Southern
Pennsylvania ............... 230,091 4.4 5,135 3.7 1,097 3.6
First American Bank of
Pennsylvania ............... 194,706 3.7 4,206 3.0 1,076 3.6
Non-Bank Subsidiaries:
Susquehanna Trust &
Investment Company ......... 2,638 -- 2,651 1.9 102 0.3
Valley Forge Asset
Management Corp ............ 20,583 0.4 4,301 3.1 705 2.3
Boston Service Company, Inc.
(t/a Hann Financial
Service Corp.) ............. 476,705 9.0 17,044 12.3 2,713 8.9
The Addis Group, Inc./(3)/ .... 22,001 0.4 -- -- -- --
Consolidation adjustments
and other non-bank
subsidiaries ............... (222,711) 4.2 -- -- (2,428) 8.0
---------- ----- ---------- ----- ----------- -----
TOTAL .................... $5,277,257 100.0% $ 138,427 100.0% $ 30,439 100.0%
========== ===== ========== ===== =========== =====
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/(1)/ Revenue equals net interest income and other income.
/(2)/ Includes the results of our subsidiary Founders' Bank, which was merged
into Equity Bank on August 2, 2002.
/(3)/ The Addis Group, Inc. was acquired on June 28, 2002. Accordingly no
revenues or income are recorded on this schedule.
Adverse economic and business conditions in our market area may have an adverse
effect on our earnings.
Substantially all of our business is with customers located within
Pennsylvania, Maryland and New Jersey. Generally, we make loans to small to
mid-sized businesses whose success depends on the regional economy. These
businesses generally have fewer financial resources in terms of capital or
borrowing capacity than larger entities. Adverse economic and business
conditions in our market area could reduce our growth rate, affect our
borrowers' ability to repay their loans and, consequently, adversely affect our
financial condition and performance. For example, a loss of market confidence in
vehicle leasing paper could have a negative effect on our vehicle leasing
subsidiary's ability to fund future vehicle lease originations. If this should
occur, our vehicle leasing subsidiary's revenues and earnings would be adversely
affected. Further, we place substantial reliance on real estate as collateral
for our loan portfolio. A sharp downturn in real estate values in our market
area could leave many of our loans inadequately collateralized. If we are
required to liquidate the collateral securing a loan to satisfy the debt during
a period of reduced real estate values, our earnings could be adversely
affected.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
As of / For the As of / For the
Six Months Ended June 30, Year Ended December 31,
------------------------- ---------------------------------------------
2002 2001 2001 2000 1999 1998 1997
---- ---- ---- ---- ---- ---- ----
Earnings to Fixed Charges:
Excluding Interest on Deposits... 2.7x 2.3x 2.3x 2.1x 1.9x 2.1x 2.6x
Including Interest on Deposits... 1.7 1.4 1.5 1.4 1.4 1.4 1.4
For purposes of computing the above ratios, earnings represent net income
from continuing operations plus total taxes based on income and fixed charges.
Fixed charges, excluding interest on deposits, include interest expense (other
than on deposits), one third (the proportion deemed representative of the
interest factor) of rents, net of income from subleases and capitalized
interest. Fixed charges, including interest on deposits, include all interest
expense, one third (the proportion deemed representative of the interest factor)
of rents, net of income from subleases and capitalized interest.