Form 8-K SUSQUEHANNA BANCSHARES For: Oct 22

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934


Date of report (Date of earliest event reported): October 22, 2014


SUSQUEHANNA BANCSHARES, INC.
(Exact Name of Registrant Specified in Charter)

Registrants telephone number, including area code: (717) 626-4721


Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):

� Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

� Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

� Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

� Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The registrant issued a press release on October 22, 2014, announcing its results of operations for the third quarter 2014, which release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.

The information in this Form 8-K and the Exhibit attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Exchange Act of 1933, except as shall be expressly set forth by specific reference in such filing.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX

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Exhibit 99.1

Susquehanna Bancshares, Inc. Announces Third Quarter 2014 Results

Third Quarter Highlights

• GAAP EPS of $0.18
• Solid Core Deposit Growth
• Non-Interest Expenses Down Linked Quarter
• Realigned Retail and Small Business Operations and Regional Footprint
• Increased Dividend and Executed Share Repurchase Program

LITITZ, Pa.--(BUSINESS WIRE)--October 22, 2014--Susquehanna Bancshares, Inc. (Susquehanna) (NASDAQ: SUSQ) today announced that it earned net income for the third quarter ended September 30, 2014 of $33.5 million, or $0.18 per diluted share, compared to $43.5 million, or $0.23 per diluted share, for the second quarter of 2014 and $44.3 million, or $0.24 per diluted share, for the third quarter of 2013.

Despite a challenging economic and financial environment, we were able to achieve solid core deposit growth, improve our balance sheet positioning, and return capital to shareholders, said William J. Reuter, Susquehannas Chairman and Chief Executive Officer. In addition, we launched an initiative that will realign our bank to improve efficiency and create a more consistent management structure for our teams focused on sales and the customer experience in the retail, small business and commercial banking segments.

Linked Quarter Results (Third Quarter 2014 vs. Second Quarter 2014)

• Loans and leases decreased $241.4 million or 1.8% from June 30, 2014 to $13.4 billion at September 30, 2014. During the third quarter of 2014, Susquehanna and its wholly-owned subsidiary Susquehanna Bank sold approximately $255.8 million of retail loans from the Consumer loans category. Changes for the quarter in each major loan category were as follows:
  • Commercial loans decreased 2.5%.
  • Real estate  construction loans increased 9.3%.
  • Real estate secured  residential loans decreased 0.1%.
  • Real estate secured  commercial loans decreased 0.9%.
  • Consumer loans decreased 24.1%.
  • Leases increased 1.9%.
• Total deposits increased $273.5 million or 2.1% from June 30, 2014 to $13.6 billion at September 30, 2014. Changes for the quarter in each major deposit category were as follows:
  • Non-interest bearing checking increased 1.2%.
  • Interest-bearing checking increased 7.1%.
  • Money market deposits increased 9.0%.
  • Savings deposits decreased 1.2%.
  • Time deposits decreased 4.9%.
• Primarily as a result of the loan sale and growth in the deposit portfolio, the loan to deposit ratio decreased to 98.8% for the third quarter of 2014 compared to 102.6% for the second quarter of 2014.
• Net interest margin decreased 13 basis points to 3.50% for the third quarter of 2014 compared to 3.63% for the second quarter of 2014. The second quarter of 2014 included a 9 basis point gain from the redemption of a trust preferred security. Net interest margin (excluding purchase accounting) ⁽¹⁾ declined 1 basis points to 3.37% for the third quarter of 2014 compared to 3.38% for the second quarter of 2014.
  
  In the fourth quarter of 2014, management expects the net interest margin (excluding purchase accounting) ⁽¹⁾ to decline 3 to 5 basis points.

• Non-interest income decreased to $44.6 million for the third quarter of 2014 compared to $45.3 million for the second quarter of 2014. The third quarter of 2014 included a $2.6 million gain related to the loan sale while the second quarter of 2014 included a net realized gain on sale of investment securities of $3.3 million.
  
  Excluding the gain related to the loan sale in the third quarter of 2014, management expects noninterest income to increase modestly in the fourth quarter of 2014.

• Non-interest expense decreased to $124.4 million for the third quarter of 2014 compared to $125.2 million in the second quarter of 2014. The third quarter of 2014 included a $1.6 million expense related to employee severance for the organizational realignment within our small business and retail operations.
  
  Management expects non-interest expenses to increase modestly in the fourth quarter of 2014.

• The efficiency ratio ⁽¹⁾ increased to 67.32% for the third quarter of 2014 compared to 65.63% in the second quarter of 2014.
• Non-performing assets as a percentage of loans, leases and foreclosed real estate owned increased to 0.88% at September 30, 2014 compared to 0.85% at June 30, 2014.
• The provision for loan and lease losses in the third quarter increased to $9.0 million compared to $3.0 million in the second quarter of 2014. Net charge-offs for the third quarter increased to $16.6 million, or 0.49% of average loans and leases, compared to $11.4 million, or 0.34% of average loans and leases, for the second quarter of 2014. As a result, the allowance for loan and lease losses was $136.9 million at September 30, 2014, representing 1.02% of total loans and leases and 125% of nonaccrual loans and leases compared to $144.5 million at June 30, 2014, representing 1.06% of total loans and leases and 137% of nonaccrual loans and leases.

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

• Loans and leases increased $49.3 million or 0.4% from September 30, 2013 to $13.4 billion at September 30, 2014. During the third quarter of 2014, Susquehanna and its wholly-owned subsidiary Susquehanna Bank sold approximately $255.8 million of retail loans from the Consumer loans category. Changes for the twelve month period in each major loan category were as follows:
  • Commercial loans increased 3.9%.
  • Real estate - construction loans increased 6.8%.
  • Real estate secured - residential loans increased 0.7%.
  • Real estate secured - commercial loans decreased 2.3%.
  • Consumer loans decreased 21.9%.
  • Leases increased 15.5%.
• Total deposits increased $866.8 million or 6.8% from September 30, 2013 to $13.6 billion as of September 30, 2014. Changes for the twelve month period in each major deposit category were as follows:
  • Non-interest-bearing checking increased 4.6%.
  • Interest-bearing checking increased 6.6%.
  • Money market deposits increased 7.7%.
  • Savings deposits increased 5.3%.
  • Time deposits increased 7.8%.
• Primarily as a result of the loan sale and growth in the deposit portfolio, the loan to deposit ratio decreased to 98.8% for the third quarter of 2014 compared to 105.1% for the third quarter of 2013.
• Net interest margin decreased 22 basis points to 3.50% compared to 3.72% for the third quarter of 2013. Net interest margin (excluding purchase accounting) ⁽¹⁾ declined 17 basis points to 3.37% compared to 3.54% for the third quarter of 2013.
• Non-interest income increased to $44.6 million compared to $41.3 million in the third quarter of 2013. The third quarter of 2014 included a $2.6 million gain related to the loan sale.
• Non-interest expense increased to $124.4 million compared to $117.7 million in the third quarter of 2013. The third quarter of 2014 included a $1.6 million expense related to employee severance for the organizational realignment within our small business and retail operations while the third quarter of 2013 included a reduction in salaries and benefits by $5.0 million due to the adjustment of incentive and benefit accruals.
• The efficiency ratio ⁽¹⁾ increased to 67.32% compared to 61.62% in the third quarter of 2013.
• Non-performing assets as a percentage of loans, leases and foreclosed real estate decreased to 0.88% compared to 0.89% at September 30, 2013.
• The provision for loan and lease losses increased to $9.0 million compared to $5.0 million for the third quarter of 2013. Net charge-offs as a percentage of average loans and leases decreased to 0.49% compared to 0.50% for the third quarter of 2013. The allowance for loan and lease losses was $136.9 million, representing 1.02% of total loans and leases and 125% of nonaccrual loans and leases, compared to $166.7 million at September 30, 2013, representing 1.25% of total loans and leases and 164% of nonaccrual loans and leases.
• Return on average assets and average tangible equity ⁽¹⁾ decreased to 0.72% and 9.41%, respectively compared to 0.96% and 13.67%, respectively for the third quarter of 2013.
• Susquehannas capital ratios continue to exceed internal capital targets and those required to be considered well-capitalized under the current regulatory requirements, with a Tier 1 common ratio of 10.86%, Tier 1 capital ratio of 11.92%, Total risk-based capital ratio of 13.08% and a Leverage ratio of 9.61%, each as of September 30, 2014. Based on a preliminary analysis of the new capital rules approved in July 2013, management believes that Susquehanna would be fully compliant with the revised capital ratio standards as of September 30, 2014 if they had been effective on that date.
  
  ⁽¹⁾ Non-GAAP based financial measure. Please refer to the calculations and managements reasons for using this measure in the accompanying financial schedules

Additional Events

• On August 14, 2014, Susquehanna and its wholly-owned subsidiary Susquehanna Bank completed an off-balance sheet securitization of approximately $255.8 million of indirect retail installment contracts secured by new and used automobiles, light-duty trucks and vans.
• On August 21, 2014, Moodys Investor Service upgraded the long-term ratings of Susquehanna, including its senior debt rating from Baa3 to Baa2.
• On October 15, 2014, Susquehannas Board of Directors declared a third quarter dividend of $0.09 per common share, payable on November 20, 2014 to shareholders of record on October 30, 2014.
• During the third quarter of 2014, Susquehanna repurchased approximately 6.5 million shares of common stock, completing its outstanding share repurchase program on October 1, 2014.

Susquehanna will broadcast its third quarter 2014 conference call over the Internet on October 23, 2014, at 11:00 a.m. Eastern time. The conference call will include managements discussion of third quarter 2014 financial results and may also include forward-looking information and financial goals. Investors will have the opportunity to listen to the conference call through a live broadcast on Susquehannas website. The event may be accessed by selecting Investor Relations near the bottom of the home page or go directly to http://ir.susquehanna.net. At the site, please click on the third quarter webcast link. To listen to the live call, please go to the website at least 15 minutes prior to the scheduled start time to download and install any necessary audio software. For those who are unable to listen to the live broadcast, an archived replay and podcast will be available on the website shortly after the call concludes.

Susquehanna is a financial services holding company with total assets of approximately $18.6 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 $7.6 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 Susquehannas Website at www.susquehanna.net.

This press release contains certain financial information determined by methods other than in accordance with GAAP. Susquehannas management uses these non-GAAP measures in its analysis of the companys 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 Susquehannas 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 from those projected include, but are not limited to, the following: ineffectiveness of Susquehannas business strategy due to internal or external factors, including changes in current or future market conditions; the effects of competition, including industry consolidation and development of competing financial products and services; the costs and effects of legal and regulatory developments including the resolution of legal proceedings or regulatory or other governmental inquiries and the results of regulatory examinations or reviews; interest rate movements; changes in credit quality; deteriorating economic conditions; market or other events adversely affecting our ability to conduct off-balance transactions; inability to successfully execute Susquehanna's initiatives and planned and proposed organizational, process and technology improvements; other risks and uncertainties; our success at managing the risks involved in the foregoing items; and the other factors detailed in Susquehannas 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.

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