Susquehanna Bancshares, Inc. Announces First Quarter Results.LITITZ, Pa. -- Susquehanna Susquehanna (səskwĭhăn`ə), river, 444 mi (715 km) long, rising in Otsego Lake, at Cooperstown, N.Y., and zigzagging SE and SW through E central Pa. to Chesapeake Bay near Havre de Grace, Md. Bancshares, Inc., (Susquehanna) (Nasdaq:SUSQ) today announced net income for the first quarter of 2006 was $17.7 million, or $0.38 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to $15.4 million, or $0.33 per diluted share, for the first quarter of 2005. First Quarter Financial Highlights:
-- Net loans and leases, net of securitizations, grew 7% from
March 31, 2005.
-- Real estate construction loans increased 29% to $1,013
million at March 31, 2006.
-- Commercial loans increased 7% to $858 million at March 31,
2006.
-- Total deposits grew 5% to $5.4 billion at March 31, 2006.
Excluding sold branches, deposits grew 6% compared to the
first quarter of 2005.
-- Demand deposits grew 4% to $903 million at March 31, 2006.
-- Net interest margin increased 5 basis points to 3.76% compared
to 3.71% in the first quarter of 2005.
-- Net charge-offs as a percentage of average loans and leases
were 0.19% at March 31, 2006, compared to 0.29% at March 31,
2005. Non-performing assets as a percentage of loans, leases
and other real estate owned remained at 0.42% for the same
period.
-- Wealth management fee income increased 4% to $7.4 million from
$7.1 million in the first quarter of 2005. Commission income
from property and casualty insurance sales increased 32% to
$4.3 million from $3.3 million for the same period.
Linked Quarter Highlights (First Quarter 2006 vs. Fourth Quarter 2005)
-- Net loans and leases, net of securitizations, grew 3% from
December 31, 2005.
-- Real estate construction loans increased 8% from December
31, 2005.
-- Commercial loans grew 3% from December 31, 2005.
-- Total deposits grew 1% from December 31, 2005.
-- Net interest margin decreased 3 basis points to 3.76% from
3.79% in the fourth quarter of 2005.
Return on average assets and average tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. equity* for the first quarter of 2006 finished at 0.96% and 13.83%, respectively. This compared to the first quarter of 2005 with 0.83% and 12.85%, for the same measurements, respectively. Efficiency ratio excluding Hann Hann may refer to:
*A non-GAAP-based financial measure. The most comparable GAAP-based measurement for return on average tangible equity is return on average equity. The most comparable GAAP-based measurement for efficiency ratio excluding auto leasing is efficiency ratio including auto leasing. A reconciliation of the differences between these non-GAAP-based and GAAP-based measurements can be found at the end of this release under the heading "Supplemental Reporting of Non-GAAP-Based Financial Measures." Equity capital was $785 million at March 31, 2006, or $16.72 per share, compared to $746 million at March 31, 2005, or $16.00 per share. Additional Activity:
-- On April 21, Susquehanna completed its acquisition of Minotola
National Bank, based in Vineland, N.J. Minotola's 14 branches
in southern New Jersey became part of Susquehanna Patriot
Bank, the Marlton, N.J.-based affiliate of Susquehanna
Bancshares. With the merger, Susquehanna Patriot Bank includes
51 branches in New Jersey and eastern Pennsylvania. The
acquisition significantly enhances Susquehanna's presence in
the New Jersey market, increasing the bank's New Jersey
deposits to approximately $1.2 billion.
-- Mergent, Inc., a global provider of business and financial
information, has selected Susquehanna as one of its Dividend
Achievers(TM) for 2006. This is the seventh consecutive year
Susquehanna has been on the list, which recognizes companies
that have increased dividends to shareholders for 10 or more
consecutive years. This year, just 3 percent of all U.S.
publicly-listed companies met the criteria. Mergent's Dividend
Achievers companies have been the basis for a number of
investment products introduced in the past 18 months. The
products include two PowerShares Exchange Traded Funds, four
closed-end funds and one open-end fund sponsored by BlackRock.
"Our first quarter results demonstrate that 2006 is off to a positive start," said Chairman, President and Chief Executive Officer William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack J. Reuter Reu·ter , Baron Paul Julius von 1816-1899. German-born British journalist who founded (1848) Reuter's, one of the first international news agencies. . "Our core bank numbers show strong increases in loans and our non-bank affiliates continue to deliver solid increases in non-interest income. Additionally, we are proud of our recent acquisition and are pleased to welcome Minotola customers into the Susquehanna family." Susquehanna will broadcast its first quarter results conference call over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the on April 26, 2006 at 11:00 a.m. Eastern time. The conference call will include management's discussion of first quarter results and may include forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information such as matters affecting financial metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. guidance. Investors will have the opportunity to listen to the conference call through a live broadcast on Susquehanna's Web site, located at www.susquehanna.net. To listen to the live call, please go to the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of Susquehanna's Web site at least fifteen minutes prior to the broadcast to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. For those who are unable to listen to the live broadcast, an archive (1) A file that contains one or more compressed files. Most archive formats are also capable of storing folders in order to reconstruct the file/folder relationship when decompressed. See archive formats. will be available on the Web site shortly after the call concludes. Susquehanna is a financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. holding company, operating in multiple states, with assets of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $8 billion including the acquisition of Minotola National Bank. Headquartered in Lititz, PA, the company provides financial services through its subsidiaries at 167 branch locations in the mid-Atlantic Adj. 1. mid-Atlantic - of a region of the United States generally including Delaware; Maryland; Virginia; and usually New York; Pennsylvania; New Jersey; "mid-Atlantic states" middle Atlantic region, which includes the new Minotola Region. In addition to three commercial banks, Susquehanna operates a trust and investment company, an asset management company, an insurance brokerage BROKERAGE, contracts. The trade or occupation of a broker; the commissions paid to a broker for his services. and employee benefits company, a commercial leasing company and a vehicle leasing Vehicle leasing refers to leasing the use of a motor vehicle for a fixed or indefinite period of time. It is commonly offered by dealers as an alternative to vehicle purchase. company. Investor information may be requested on Susquehanna's Web site at www.susquehanna.net. This press release contains certain financial information determined by methods other than in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . Susquehanna's management uses these non-GAAP-based measures in its analysis of the Company's performance. These non-GAAP-based financial measures require management to make judgments about the exclusion exclusion /ex·clu·sion/ (eks-kloo´zhun) 1. a shutting out or elimination. 2. surgical isolation of a part, as of a segment of intestine, without removal from the body. of certain items, and if different judgments were made, the amounts reported would be different. These measures typically exclude the effects of intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. and related amortization and include the tax benefit associated with revenue items that are tax-exempt tax-ex·empt adj. 1. Not subject to taxation, as the capital or income of a philanthropic organization. 2. Producing interest that is exempt from income tax: tax-exempt bonds. n. . Disclosures regarding these non-GAAP-based financial measures are included in the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. financial information. The presentation of these non-GAAP-based financial measures is intended to supplement investors' understanding of Susquehanna's core business activities. These non-GAAP-based disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP-based performance measures which may be presented by other companies. This press release contains "forward-looking" statements as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , whether as a result of new information, future events or otherwise.
SUMMARY FINANCIAL INFORMATION
(Dollars in thousands, except per share data)
1Q06 1Q05
----------- -----------
Balance Sheet (EOP)
Investments $1,211,028 $1,233,718
Loans and leases 5,042,755 4,990,889
Allowance for loan & lease losses (ALLL) 53,999 53,127
Total assets 7,378,067 7,253,296
Deposits 5,355,616 5,106,065
Short-term borrowings 193,825 398,521
FHLB borrowings 622,674 625,393
Long-term debt 172,647 173,196
Shareholders' equity 784,613 746,089
Stated Book Value per Share 16.72 16.00
Tangible Book Value per Share 11.30 10.52
Average Balance Sheet
Investments 1,191,812 1,245,288
Loans and leases 5,237,026 5,267,378
Total earning assets 6,501,290 6,569,960
Total assets 7,443,309 7,486,675
Deposits 5,275,245 5,157,399
Short-term borrowings 307,122 394,445
FHLB borrowings 692,962 807,935
Long-term debt 172,732 190,457
Shareholders' equity 781,148 748,140
Income Statement
Net interest income 59,737 59,412
Loan & lease loss provision 2,675 2,750
Noninterest income 29,850 27,970
Noninterest expense 60,957 62,080
Income before taxes 25,955 22,552
Income taxes 8,254 7,149
Net income 17,701 15,403
Basic earnings per share 0.38 0.33
Diluted earnings per share 0.38 0.33
Cash dividends paid per share 0.24 0.23
Asset Quality
Net charge-offs (NCO) $2,390 $3,716
Nonaccrual loans & leases 16,355 19,085
Restructured loans 2,393 0
OREO 2,596 1,949
Total nonperforming assets (NPA) 21,344 21,034
Loans & leases 90 days past due 6,100 10,018
RATIO ANALYSIS 1Q06 1Q05
----------- -----------
Credit Quality
NCO / Average loans & leases 0.19% 0.29%
NPA / Loans & leases & OREO 0.42% 0.42%
ALLL / Nonperforming loans & leases 288.03% 278.37%
ALLL / Total loans & leases 1.07% 1.06%
Capital Adequacy
Equity / Assets 10.63% 10.29%
Long-term debt / Equity 22.00% 23.21%
Profitability
Return on average assets 0.96% 0.83%
Return on average equity 9.19% 8.35%
Return on average tangible equity (1) 13.83% 12.85%
Net interest margin 3.76% 3.71%
Efficiency ratio 67.67% 70.47%
Efficiency ratio excluding Hann (1) 61.88% 61.28%
(1) Supplemental Reporting of Non-GAAP-Based Financial Measures
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. A reconciliation of return
on average equity to return on average tangible equity is set forth
below.
Return on average equity (GAAP basis) 9.19% 8.35%
Effect of excluding average intangible assets
and related amortization 4.64% 4.50%
Return on average tangible equity 13.83% 12.85%
Efficiency ratio excluding Hann is a non-GAAP-based financial measure
calculated using non-GAAP-based amounts. The most directly comparable
GAAP-based measure is the efficiency ratio. We measure our efficiency
ratio by dividing noninterest expenses by the sum of net interest
income, on a FTE basis, and noninterest income. The presentation of an
efficiency ratio excluding Hann is computed as the efficiency ratio
excluding the effect of our auto leasing subsidiary, Hann Financial.
Management believes this to be a preferred measure because it excludes
the volatility of vehicle residual values and vehicle delivery and
preparation expense of Hann and provides better visibility into our
core business activities. A reconciliation of efficiency ratio to
efficiency ratio excluding Hann is set forth below.
Efficiency ratio (GAAP basis) 67.67% 70.47%
Effect of excluding Hann 5.79% 9.19%
Efficiency ratio excluding Hann 61.88% 61.28%
CONSOLIDATED BALANCE SHEETS
March 31, Dec. 31, March 31,
2006 2005 2005
----------- ----------- -----------
(in thousands, except share data)
Assets
Cash and due
from banks $175,838 $196,557 $173,427
Short-term investments:
Restricted 27,979 26,336 27,045
Unrestricted 64,517 69,948 32,166
----------- ----------- -----------
Total short-term
investments 92,496 96,284 59,211
----------- ----------- -----------
Securities available for sale 1,204,698 1,147,862 1,227,119
Securities held to maturity
(fair values approximate
$6,330, $6,399, and $6,599) 6,330 6,399 6,599
Loans and leases, net of
unearned income 5,042,755 5,218,659 4,990,889
Less: Allowance for loan and
lease losses 53,999 53,714 53,127
----------- ----------- -----------
Net loans and leases 4,988,756 5,164,945 4,937,762
----------- ----------- -----------
Premises and equipment, net 88,862 88,058 87,729
Foreclosed assets 2,596 2,620 1,949
Accrued income receivable 25,491 24,223 22,799
Bank-owned life insurance 259,326 257,289 251,907
Goodwill 242,976 242,718 242,533
Intangible assets with finite
lives 11,135 11,574 12,922
Investment in and receivables
from unconsolidated entities 153,546 104,069 112,205
Other assets 126,017 123,409 117,134
----------- ----------- -----------
$7,378,067 $7,466,007 $7,253,296
=========== =========== ===========
Liabilities and Shareholders'
Equity
Deposits:
Demand $902,816 $918,854 $870,302
Interest-bearing demand 1,755,688 1,774,759 1,680,066
Savings 449,310 458,906 565,449
Time 1,473,661 1,381,959 1,350,168
Time of $100 or more 774,141 774,709 640,080
----------- ----------- -----------
Total deposits 5,355,616 5,309,187 5,106,065
Short-term borrowings 193,825 307,523 398,521
FHLB borrowings 622,674 668,666 625,393
Long-term debt 150,000 150,000 150,000
Junior subordinated debentures 22,647 22,777 23,196
Accrued interest, taxes, and
expenses payable 56,033 49,836 52,483
Deferred taxes 129,123 131,789 105,925
Other liabilities 63,536 45,759 45,624
----------- ----------- -----------
Total liabilities 6,593,454 6,685,537 6,507,207
----------- ----------- -----------
Shareholders' equity:
Common stock, $2.00 par
value, 100,000,000 shares
authorized; Issued:
46,927,699 at March 31,
2006; 46,853,193 at December
31, 2005; and 46,623,122 at
March 31, 2005 93,855 93,706 93,246
Additional paid-in capital 232,401 231,085 226,863
Unearned restricted stock (186) 0 0
Retained earnings 477,740 471,290 439,844
Accumulated other
comprehensive loss, net of
taxes of $(10,361);
$(8,406); and $(7,465) (19,197) (15,611) (13,864)
Total shareholders' equity 784,613 780,470 746,089
----------- ----------- -----------
$7,378,067 $7,466,007 $7,253,296
=========== =========== ===========
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
March 31,
---------------------------------------------- ----------------------
(In thousands, except per share data) 2006 2005
---------------------------------------------- ---------- ----------
Interest Income:
Loans and leases, including fees $91,364 $79,855
Securities:
Taxable 10,847 10,630
Tax-exempt 176 481
Dividends 837 632
Short-term investments 738 304
---------- ----------
Total interest income 103,962 91,902
---------- ----------
Interest Expense:
Deposits:
Interest-bearing demand 10,617 5,442
Savings 622 603
Time 20,341 14,153
Short-term borrowings 2,718 1,917
FHLB borrowings 7,453 7,496
Long-term debt 2,474 2,879
---------- ----------
Total interest expense 44,225 32,490
---------- ----------
Net interest income 59,737 59,412
Provision for loan and lease losses 2,675 2,750
---------- ----------
Net interest income, after provision for loan
and lease losses 57,062 56,662
---------- ----------
Noninterest Income:
Service charges on deposit accounts 5,055 4,963
Vehicle origination, servicing, and
securitization fees 4,005 3,202
Asset management fees 4,768 4,384
Income from fiduciary-related activities 1,494 1,481
Commissions on brokerage, life insurance
and annuity sales 1,100 1,218
Commissions on property and casualty
insurance sales 4,348 3,296
Income from bank-owned life insurance 2,168 2,272
Net gain on sale of loans and leases 3,292 3,698
Net (loss) gain on securities (64) 121
Other 3,684 3,335
---------- ----------
Total noninterest income 29,850 27,970
---------- ----------
Noninterest Expenses:
Salaries and employee benefits 29,974 29,282
Occupancy 5,149 5,039
Furniture and equipment 2,485 2,348
Amortization of intangible assets 425 364
Vehicle residual value 902 2,804
Vehicle delivery and preparation 2,489 3,436
Other 19,533 18,807
---------- ----------
Total noninterest expenses 60,957 62,080
---------- ----------
Income before income taxes 25,955 22,552
Provision for income taxes 8,254 7,149
---------- ----------
Net Income $17,701 $15,403
========== ==========
Earnings per share:
Basic $0.38 $0.33
Diluted $0.38 $0.33
Cash dividends $0.24 $0.23
Average shares outstanding:
Basic 46,874 46,609
Diluted 47,029 46,825
DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY
Interest rates and interest differential-taxable equivalent basis
For the For the
Three Month Period Ended Three Month Period Ended
March 31, 2006 March 31, 2005
--------------------------- --------------------------
(Dollars in Average Rate Average Rate
thousands) Balance Interest (%) Balance Interest (%)
--------------- --------------------------- --------------------------
Assets
Short-term
investments $72,452 $738 4.13 $57,294 $304 2.15
Investment
securities:
Taxable 1,174,068 11,685 4.04 1,203,399 11,262 3.80
Tax-
advantaged 17,744 269 6.15 41,889 740 7.16
----------- --------- ----------- --------
Total
investment
securities 1,191,812 11,954 4.07 1,245,288 12,002 3.91
----------- --------- ----------- --------
Loans and
leases, (net):
Taxable 5,168,004 90,616 7.11 5,182,080 79,008 6.18
Tax-
advantaged 69,022 1,151 6.76 85,298 1,303 6.20
----------- --------- ----------- --------
Total loans
and leases 5,237,026 91,767 7.11 5,267,378 80,311 6.18
----------- --------- ----------- --------
Total interest-
earning assets 6,501,290 $104,459 6.52 6,569,960 $92,617 5.72
--------- --------
Allowance for
loan and lease
losses (54,388) (53,841)
Other non-
earning assets 996,407 970,556
----------- -----------
Total assets $7,443,309 $7,486,675
=========== ===========
Liabilities
Deposits:
Interest-
bearing
demand $1,745,682 $10,617 2.47 $1,738,757 $5,442 1.27
Savings 450,149 622 0.56 562,487 603 0.43
Time 2,209,693 20,341 3.73 1,986,594 14,153 2.89
Short-term
borrowings 307,122 2,718 3.59 394,445 1,917 1.97
FHLB borrowings 692,962 7,453 4.36 807,935 7,496 3.76
Long-term debt 172,732 2,474 5.81 190,457 2,879 6.13
----------- --------- ----------- --------
Total interest-
bearing
liabilities 5,578,340 $44,225 3.22 5,680,675 $32,490 2.32
--------- --------
Demand deposits 869,721 869,561
Other
liabilities 214,100 188,299
----------- -----------
Total
liabilities 6,662,161 6,738,535
Equity 781,148 748,140
----------- -----------
Total
liabilities &
shareholders'
equity $7,443,309 $7,486,675
=========== ===========
Net interest
income / yield
on average
earning assets $60,234 3.76 $60,127 3.71
========= ========
1. Average loan balances include non accrual loans.
2. Tax-exempt income has been adjusted to a tax-equivalent basis using
a marginal tax rate of 35%.
3. 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.
LOANS AND LEASES
Loans and leases, net of unearned income, were as follows:
March 31, December 31, March 31,
2006 2005 2005
------------ ------------ ------------
(in thousands)
Commercial, financial, and
agricultural $857,788 $832,695 $802,525
Real estate - construction 1,013,137 934,601 784,320
Real estate
secured - residential 1,346,389 1,355,513 1,602,225
Real estate
secured - commercial 1,276,681 1,257,860 1,249,933
Consumer 315,751 319,925 338,922
Leases 233,009 518,065 212,964
------------ ------------ ------------
Total loans and leases $5,042,755 $5,218,659 $4,990,889
============ ============ ============
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