Susquehanna Bancshares, Inc. Announces Full Year and Fourth Quarter Re

Susquehanna Bancshares, Inc. Announces Full Year and Fourth Quarter Results; Company Meets 2004 Organic Growth Targets, Quarter-Over-Quarter Profitability Improvements

    Business Editors/Banking Writers

    LITITZ, Pa.--(BUSINESS WIRE)--Jan. 25, 2005--Susquehanna Bancshares, Inc., (Susquehanna) (Nasdaq:SUSQ) today announced net income for the year ended December 31, 2004, was $70.2 million, or $1.60 per diluted share, compared to the $62.4 million, or $1.56 per diluted share, earned in 2003. Net income for the fourth quarter of 2004 was $19.2 million, or $0.41 per diluted share, compared to $14.0 million for the fourth quarter of 2003, or $0.35 per diluted share.

    Full Year/Fourth Quarter Financial Highlights

--	Total deposits grew 24%, rising to $5.1 billion from $4.1 billion in the fourth quarter of 2003. Excluding Patriot Bank Corp., which was acquired on June 10, 2004, and 2004 branch sales, this increase was 10%.
--	Loans and leases grew 23%, rising to $5.3 billion from $4.3 billion in the fourth quarter of 2003. Excluding Patriot this increase was 8%.
--	Total assets grew 26%, rising to $7.5 billion from $6.0 billion in the fourth quarter of 2003. Excluding Patriot this increase was 6%.
--	Credit quality remains strong, highlighted by:

-- The net charge-offs to average loans ratio remained low and improved to 0.16% for 2004 compared with 0.18% for 2003.

-- The nonperforming assets to total loans, leases and OREO ratio improved to 0.41% at December 31, 2004, from 0.65% at December 31, 2003.

    -- Fourth quarter profitability measurements improved in every
    category, highlighted by:

-- Return of average assets improvement to 1.03% as compared to 0.94% in the fourth quarter 2003.

-- Return on average tangible equity(1) increased to 15.71% from 11.72% in the fourth quarter of 2003.

--	Efficiency ratios improved both on a GAAP and non-GAAP basis, led by the efficiency ratio excluding Hann Financial Services Corp. (Hann)(1), which improved to 58% from 61% in the fourth quarter 2003.
--	Net interest margin increased to 3.67% from 3.62% in the fourth quarter of 2003.

    Total assets under management and under administration were $5.0 billion at December 31, 2004, up from $4.2 billion at December 31, 2003, representing 19% growth. Excluding Patriot this increase was 11%.
    Equity capital was $752 million at December 31, 2004, or $16.13 per share, compared to $547 million at December 31, 2003, or $13.73 per share.
    Susquehanna's fully diluted EPS guidance for 2005 is $1.70 to $1.80.

    Linked Quarter Highlights (Fourth Quarter 2004 vs. Third Quarter 2004):

    -- Deposits, excluding branch sales, increased 2% to $5.1
    billion.

    -- Loan and leases increased 2% to $5.3 billion.

    -- Net income increased 4% to $19.2 million from $18.5 million in
    the third quarter of 2004.

    -- Efficiency ratio excluding Hann(1) improved to 58% from 59% in
    the third quarter of 2004.

    -- Net interest margin improved to 3.67% from 3.63% in the third
    quarter of 2004.

    (1)A non-GAAP financial measure. The most comparable GAAP measurement for return on average tangible equity is return on average equity. The most comparable measurement for efficiency ratio excluding Hann is efficiency ratio including Hann. A reconciliation of the differences between these non-GAAP and GAAP measurements can be found at the end of this release under the heading "Supplemental Reporting of Non-GAAP Financial Measures."

    "With hard work and commitment from our employees, we met our 2004 growth targets and improved quarter over quarter profitability," said Susquehanna Chairman, President and CEO William J. Reuter. "We continue to set aggressive goals for ourselves and are working hard to strengthen our organization in 2005."
    Susquehanna's 2006 targets include a tangible return on equity of 17 percent and an efficiency ratio excluding Hann of 57 percent. The recent launch of Susquehanna's corporate-wide branding and bank realignment project should improve the company's efficiency ratio in 2005 and into 2006. The project, slated for completion in the second quarter of 2005, consolidates the company's eight banks into three and brands all bank and non-bank affiliates with the Susquehanna identity. "We already are seeing positive results, for the company and the customer, even in the initial stages of this project," said Reuter. "We anticipate even more substantial results for our customers and our shareholders as the project continues."
    Susquehanna's 2004 acquisition of Patriot Bank Corp. strengthened the company's eastern Pennsylvania presence and affirmed the company's stated intent for strategic acquisitions in high-growth markets. Reuter said Susquehanna will continue to seek small acquisitions, particularly in the wealth management arena. However, he added the company is also ready to act should an attractive bank opportunity arise.

    Additional Highlights

    -- Susquehanna launched its corporate-wide branding strategy and
    bank realignment project in October 2004. Along with a name
    and brand identity change, the company is combining its eight
    banking subsidiaries into three. The branding and realignment
    will provide customers access to more banking offices and will
    create banks of greater size allowing Susquehanna to increase
    its presence in target markets. The company anticipates an
    improvement in its efficiency ratio which should have a
    positive effect on future earnings and shareholder value.

    -- Susquehanna affiliate Susquehanna Bank PA moved into its new
    37,000 square-foot headquarters building in Manheim Township,
    Lancaster, Pa. The building houses over 60 employees from
    Susquehanna Bank's executive administration, commercial
    lending, loan underwriting and branch administration groups.
    It also houses offices of Susquehanna's wealth management
    affiliate Susquehanna Trust & Investment Company. The first
    floor of the building features a 3,200 square-foot,
    state-of-the-art, full-service branch office. This is the
    bank's first newly constructed branch since its name and brand
    change in November 2004 from Farmers First Bank to Susquehanna
    Bank PA.

    -- Susquehanna and its employees launched an internal campaign to
    aid relief efforts in the areas affected by the South Asia
    tsunami. The company distributed campaign envelopes to all of
    its 2,300 employees and board of directors in Pennsylvania,
    Maryland, New Jersey and West Virginia to collect donations to
    fund AmeriCares, the American Red Cross, Mennonite Central
    Committee and the United Way South Asia Response Fund.
    Susquehanna will match all employee donations, Dollar for
    dollar, up to $25,000. The company's goal is a collective gift
    of more than $50,000 to the campaign's relief organizations.

    -- Susquehanna was recently named a Silver Award winner in First
    Manhattan Consulting Group's (FMCG) ""Up and Comer" category
    for recent organic retail banking revenue growth. This
    recognition is based on Susquehanna's branch-based
    same-store-sales deposit growth being two to three-times
    faster than the industry average achieved by the top 150 banks
    during the past two years. FMCG's clients include 80% of the
    70 largest U.S. holding companies, major international banks
    from 22 countries, and most of the major national brokerage
    firms and leading regional brokerages, among others.

    Susquehanna announced it will broadcast its fourth quarter results conference call over the Internet on January 26, 2004, at 11 a.m. Eastern time. Investors will have the opportunity to listen to the conference call through a live broadcast at www.susquehanna.net. To listen 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, an archive will be available shortly after the call.
    Susquehanna is a financial services holding company, operating in multiple states, with assets of $7.5 billion. It provides financial services through its subsidiaries at 175 locations in the mid-Atlantic region. In addition to its current six commercial banks, Susquehanna operates a trust and investment company, an asset management company, a property and casualty insurance brokerage company, a commercial leasing company and a vehicle leasing 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 with GAAP. Susquehanna's management uses these non-GAAP measures in its analysis of the Company's 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. Additional 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 Susquehanna's 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 press release contains "forward-looking" statements as defined in the Private Securities Litigation Reform Act of 1995, regarding Susquehanna's expectations of its tangible return on equity, branding strategy and internal realignment plans and their potential impact on the company's efficiency ratios and general financial results. The conference call will include management's discussion of fourth quarter and year end 2004 results, a brief update of the auto leasing business, the branding and bank realignment projects, and may also include forward-looking information such as financial guidance and goals for 2005 and 2006. These statements are not historical facts or guarantees of future performance, events or results. Such statements involve potential risks and uncertainties, including Susquehanna's ability to increase its presence in target markets, and achieve operational and administrative efficiencies by reducing redundancies. 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.

SUMMARY FINANCIAL INFORMATION (Dollars in thousands, except per share data) Twelve Months ---------------------- 4Q04 4Q03 2004 2003 ----------- ---------- ----------- ---------- Balance Sheet (EOP) Investments $1,245,414 $988,222 $1,245,414 $988,222 Loans and leases 5,253,008 4,263,272 5,253,008 4,263,272 Allowance for loan & lease losses (ALLL) 54,093 42,672 54,093 42,672 Total assets 7,475,073 5,953,107 7,475,073 5,953,107 Deposits 5,130,682 4,134,467 5,130,682 4,134,467 Short-term borrowings 420,868 355,553 420,868 355,553 FHLB borrowings 751,220 613,850 751,220 613,850 Long-term debt 223,277 130,000 223,277 130,000 Shareholders' equity 751,694 547,382 751,694 547,382

Stated Book Value per Share 16.13 13.73 16.13 13.73 Tangible Book Value per Share 10.71 12.14 10.71 12.14

Average Balance Sheet Investments 1,272,493 1,007,239 1,193,001 1,135,705 Loans and leases 5,195,044 4,212,486 4,743,864 3,969,532 Total earning assets 6,530,531 5,308,399 6,009,270 5,182,742 Total assets 7,443,725 5,891,697 6,776,782 5,724,526 Deposits 5,156,432 4,064,984 4,753,649 3,942,279 Short-term borrowings 403,567 381,309 358,348 352,271 FHLB borrowings 725,120 596,760 640,397 587,305 Long-term debt 223,354 130,000 190,649 141,425 Shareholders' equity 744,774 541,381 654,155 538,418

Income Statement Net interest income 59,570 47,887 214,018 187,006 Loan & lease loss provision 3,430 2,677 10,020 10,222 Noninterest income 30,040 22,656 114,590 101,750 Noninterest expense 58,875 47,846 219,042 189,430 Income before taxes 27,305 20,020 99,546 89,104 Income taxes 8,056 6,006 29,366 26,731 Net income 19,249 14,014 70,180 62,373 Basic earnings per share 0.41 0.35 1.61 1.57 Diluted earnings per share 0.41 0.35 1.60 1.56 Cash dividends paid per share 0.23 0.22 0.89 0.86

Asset Quality Net charge-offs (NCO) $1,805 $1,518 $7,748 $7,221 Nonaccrual loans & leases 20,406 19,037 20,406 19,037 Restructured loans 0 5,823 0 5,823 OREO 1,340 2,893 1,340 2,893 Total nonperforming assets (NPA) 21,746 27,753 21,746 27,753 Loans & leases 90 days past due 10,217 6,538 10,217 6,538

RATIO ANALYSIS 4Q04 4Q03 2004 2003 ----------- ---------- ----------- ----------

Credit Quality NCO / Average loans & leases 0.14% 0.14% 0.16% 0.18% NPA / Loans & leases & OREO 0.41% 0.65% 0.41% 0.65% ALLL / Nonperforming loans & leases 265.08% 171.65% 265.08% 171.65% ALLL / Total loans & leases 1.03% 1.00% 1.03% 1.00%

Capital Adequacy Equity / Assets 10.06% 9.19% 10.06% 9.19% Long-term debt / Equity 29.70% 23.75% 29.70% 23.75%

Profitability Return on average assets 1.03% 0.94% 1.04% 1.09% Return on average equity 10.28% 10.27% 10.73% 11.58% Return on average tangible equity (1) 15.71% 11.72% 14.36% 13.16% Net interest margin 3.67% 3.62% 3.60% 3.65% Efficiency ratio 65.18% 67.31% 66.15% 65.09% Efficiency ratio excluding Hann (1) 57.93% 60.91% 61.09% 62.25%

(1)Supplemental Reporting of Non-GAAP Financial Measures

Susquehanna has presented a return on average tangible equity, which is a non-GAAP financial measure and is most directly comparable to the GAAP measurement of return on average equity. For purposes of computing return on average tangible equity, we have excluded the balance of intangible assets and their related amortization expense from our calculation of return on average tangible equity to allow us to review the core operating results of our company. 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 tangible equity to return on average equity is set forth below.

Return on average equity (GAAP basis) 10.28% 10.27% 10.73% 11.58% Effect of excluding average intangible assets and related amortization 5.43% 1.45% 3.63% 1.58% Return on average tangible equity 15.71% 11.72% 14.36% 13.16%

Susquehanna has presented an efficiency ratio excluding Hann, which is a non-GAAP financial measure and is most directly comparable to the GAAP presentation of 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 effects of our auto leasing subsidiary, Hann. Management believes this to be a preferred measurement because it excludes the volatility of full-term ratios, securitization gains, and residual values of Hann and provides more focused visibility into our core business activities. A reconciliation of efficiency ratio excluding Hann to efficiency ratio is set forth below.

Efficiency ratio (GAAP basis) 65.18% 67.31% 66.15% 65.09% Effect of excluding Hann 7.25% 6.40% 5.06% 2.84% Efficiency ratio excluding Hann 57.93% 60.91% 61.09% 62.25%

CONSOLIDATED BALANCE SHEETS

December 31, December 31, 2004 2003 ------------- ------------- (in thousands, except share data) Assets Cash and due from banks $160,574 $176,240 Short-term investments: Restricted 27,190 44,817 Unrestricted 31,544 34,145 ------------- ------------- Total short-term investments 58,734 78,962 ------------- ------------- Securities available for sale 1,240,945 983,882 Securities held to maturity (fair values approximate $4,469 and $4,340) 4,469 4,340 Loans and leases, net of unearned income 5,253,008 4,263,272 Less: Allowance for loan and lease losses 54,093 42,672 ------------- ------------- Net loans and leases 5,198,915 4,220,600 ------------- ------------- Premises and equipment, net 83,606 62,961 Foreclosed assets 1,340 2,893 Accrued income receivable 21,661 17,494 Bank-owned life insurance 249,691 200,555 Goodwill 240,670 59,123 Intangible assets with finite lives 11,960 4,372 Investment in and receivables from unconsolidated entities 68,384 42,717 Other assets 134,124 98,968 ------------- ------------- $7,475,073 $5,953,107 ============= =============

Liabilities and Shareholders' Equity Deposits: Demand $853,411 $724,474 Interest-bearing demand 1,765,077 1,295,593 Savings 559,530 508,889 Time 1,367,282 1,251,058 Time of $100 or more 585,382 354,453 ------------- ------------- Total deposits 5,130,682 4,134,467 Short-term borrowings 420,868 355,553 FHLB borrowings 751,220 613,850 Long-term debt 200,000 130,000 Junior subordinated debentures 23,277 0 Accrued interest, taxes, and expenses payable 41,255 35,791 Deferred taxes 114,050 104,281 Other liabilities 42,027 31,783 ------------- ------------- Total liabilities 6,723,379 5,405,725 ------------- -------------

Shareholders' equity: Common stock, $2.00 par value, 100,000,000 shares authorized; Issued: 46,592,930 at December 31, 2004, and 39,861,317 at December 31, 2003 93,186 79,723 Additional paid-in capital 226,384 66,264 Retained earnings 435,159 403,450 Accumulated other comprehensive loss, net of taxes of ($1,634) and ($1,107) (3,035) (2,055) ------------- ------------- Total shareholders' equity 751,694 547,382 ------------- ------------- $7,475,073 $5,953,107 ============= =============

CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Year Ended December 31, December 31, -------------------------------- ----------------- ------------------- (Dollars in thousands, except per share data) 2004 2003 2004 2003 -------------------------------- -------- -------- --------- --------- Interest Income: Loans and leases, including fees $78,074 $61,979 $276,864 $245,980 Securities: Taxable 11,209 8,414 40,383 36,793 Tax-exempt 499 283 1,566 1,441 Dividends 476 203 2,131 1,101 Short-term investments 272 164 815 705 -------- -------- --------- --------- Total interest income 90,530 71,043 321,759 286,020 -------- -------- --------- ---------

Interest Expense: Deposits: Interest-bearing demand 5,350 2,215 16,802 9,473 Savings 629 391 2,115 1,999 Time 13,508 11,981 49,485 51,419 Short-term borrowings 1,614 863 4,260 3,583 FHLB borrowings 6,274 5,366 22,529 22,420 Long-term debt 3,585 2,340 12,550 10,120 -------- -------- --------- --------- Total interest expense 30,960 23,156 107,741 99,014 -------- -------- --------- --------- Net interest income 59,570 47,887 214,018 187,006 Provision for loan and lease losses 3,430 2,677 10,020 10,222 -------- -------- --------- --------- Net interest income, after provision for loan and lease losses 56,140 45,210 203,998 176,784 -------- -------- --------- ---------

Noninterest Income: Service charges on deposit accounts 5,643 5,225 21,913 19,798 Vehicle origination, servicing, and securitization fees 4,208 5,012 19,783 26,132 Asset management fees 3,934 2,904 14,411 10,274 Income from fiduciary-related activities 1,972 1,392 6,232 5,783 Commissions on brokerage, life insurance and annuity sales 1,013 549 4,012 2,059 Commissions on property and casualty insurance sales 2,501 2,262 9,191 8,354 Income from bank-owned life insurance 2,411 2,024 9,105 6,963 Net gain on sale of loans and leases 2,019 872 9,645 9,700 Net gain on securities 346 0 4,683 2,110 Other 5,993 2,416 15,615 10,577 -------- -------- --------- --------- Total noninterest income 30,040 22,656 114,590 101,750 -------- -------- --------- ---------

Noninterest Expenses: Salaries and employee benefits 27,999 22,749 106,127 91,151 Occupancy 4,174 3,557 15,718 13,813 Furniture and equipment 2,384 2,258 9,059 8,712 Amortization of intangible assets 332 157 1,124 626 Vehicle residual value 1,668 1,653 5,721 6,486 Vehicle delivery and preparation 4,231 3,818 14,430 12,934 Other 18,087 13,654 66,863 55,708 -------- -------- --------- --------- Total noninterest expenses 58,875 47,846 219,042 189,430 -------- -------- --------- --------- Income before income taxes 27,305 20,020 99,546 89,104 Provision for income taxes 8,056 6,006 29,366 26,731 -------- -------- --------- --------- Net Income $19,249 $14,014 $70,180 $62,373 ======== ======== ========= =========

Earnings per share: Basic $0.41 $0.35 $1.61 $1.57 Diluted $0.41 $0.35 $1.60 $1.56 Cash dividends $0.23 $0.22 $0.89 $0.86 Average shares outstanding: Basic 46,533 39,833 43,585 39,742 Diluted 46,797 40,165 43,872 40,037

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY

Interest rates and interest differential-taxable equivalent basis ---------------------------------------------------------------------- For the Three Month For the Three Month Period Ended Period Ended December 31, 2004 December 31, 2003 ------------------------------------------- -------------------------- (Dollars in Average Rate Average Rate thousands) Balance Interest (%) Balance Interest (%) ------------------------------------------ -------------------------- Assets Short-term investments $62,994 $272 1.72 $88,674 $164 0.73 Investment securities: Taxable 1,229,112 11,685 3.78 983,574 8,617 3.48 Tax- advantaged 43,381 768 7.04 23,665 435 7.30 --------------------------- ------- ---------- -------

Total investment securities 1,272,493 12,453 3.89 1,007,239 9,052 3.57 --------------------------- ------- ---------- ------- Loans and leases, (net): Taxable 5,113,082 77,233 6.01 4,143,131 61,258 5.87 Tax- advantaged 81,962 1,294 6.28 69,355 1,109 6.35 --------------------------- ------- ---------- -------

Total loans and leases 5,195,044 78,527 6.01 4,212,486 62,367 5.87 --------------------------- ------- ---------- -------

Total interest- earning assets 6,530,531 $91,252 5.56 5,308,399 $71,584 5.35 ------- ------- Allowance for loan and lease losses (53,379) (41,926) Other non- earning assets 966,573 625,224 --------------------------- ----------

Total assets $7,443,725 $5,891,697 --------------------------- ----------

Liabilities Deposits: Interest- bearing demand $1,792,287 $5,351 1.19 $1,251,816 $2,215 0.70 Savings 570,604 629 0.44 508,749 391 0.30 Time 1,939,840 13,508 2.77 1,602,991 11,981 2.97 Short-term borrowings 403,567 1,614 1.59 381,309 863 0.90 FHLB borrowings 725,120 6,274 3.44 596,760 5,366 3.57 Long-term debt 223,354 3,585 6.39 130,000 2,340 7.14 --------------------------- ------- ---------- -------

Total interest- bearing liabilities 5,654,772 $30,961 2.18 4,471,625 $23,156 2.05 ------- ------- Demand deposits 853,701 701,428 Other liabilities 190,478 177,263 --------------------------- ----------

Total liabilities 6,698,951 5,350,316 --------------------------- ----------

Equity 744,774 541,381 --------------------------- ----------

Total liabilities & shareholders' equity $7,443,725 $5,891,697 --------------------------- ----------

Net interest income / yield on average earning assets $60,291 3.67 $48,428 3.62 ------- -------

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.

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY (continued)

Interest rates and interest differential-taxable equivalent basis ---------------------------------------------------------------------- For the Twelve Month For the Twelve Month Period Ended Period Ended December 31, 2004 December 31, 2003 ------------------------------------------- -------------------------- (Dollars in Average Rate Average Rate thousands) Balance Interest (%) Balance Interest (%) ------------------------------------------ -------------------------- Assets Short-term investments $72,405 $815 1.13 $77,505 $705 0.91 Investment securities: Taxable 1,159,860 42,513 3.67 1,104,863 37,893 3.43 Tax- advantaged 33,141 2,411 7.27 30,842 2,217 7.19 --------------------------- ------- ---------- -------

Total investment securities 1,193,001 44,924 3.77 1,135,705 40,110 3.53 --------------------------- ------- ---------- ------- Loans and leases, (net): Taxable 4,668,299 273,781 5.86 3,910,353 243,236 6.22 Tax- advantaged 75,565 4,743 6.28 59,179 4,222 7.13 --------------------------- ------- ---------- -------

Total loans and leases 4,743,864 278,524 5.87 3,969,532 247,458 6.23 --------------------------- ------- ---------- -------

Total interest- earning assets 6,009,270 $324,263 5.40 5,182,742 $288,273 5.56 -------- -------- Allowance for loan and lease losses (49,012) (40,868) Other non-earning assets 816,524 582,652 --------------------------- ----------

Total assets $6,776,782 $5,724,526 --------------------------- ----------

Liabilities Deposits: Interest- bearing demand $1,640,525 $16,803 1.02 $1,195,656 $9,473 0.79 Savings 552,950 2,115 0.38 498,157 1,999 0.40 Time 1,776,623 49,484 2.79 1,601,495 51,419 3.21 Short-term borrowings 358,348 4,261 1.19 352,271 3,582 1.02 FHLB borrowings 640,397 22,529 3.52 587,305 22,420 3.82 Long-term debt 190,649 12,550 6.58 141,425 10,120 7.16 --------------------------- ------- ---------- -------

Total interest- bearing liabilities 5,159,492 $107,742 2.09 4,376,309 $99,013 2.26 -------- -------- Demand deposits 783,551 646,971 Other liabilities 179,584 162,828 --------------------------- ----------

Total liabilities 6,122,627 5,186,108 --------------------------- ----------

Equity 654,155 538,418 --------------------------- ----------

Total liabilities & shareholders' equity $6,776,782 $5,724,526 --------------------------- ----------

Net interest income / yield on average earning assets $216,521 3.60 $189,260 3.65 -------- --------

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: December 31, December 31, 2004 2003 ----------- ----------- (in thousands) Commercial, financial, and agricultural $760,106 $621,438 Real estate - construction 741,360 549,672 Real estate secured - residential 1,611,999 1,306,371 Real estate secured - commercial 1,253,053 1,016,360 Consumer 351,846 337,989 Leases 534,644 431,442 ----------- ----------- Total loans and leases $5,253,008 $4,263,272 =========== ===========

--30--RB/ph*

CONTACT: Susquehanna Bancshares, Inc. Gregg M. Lampf, 717-625-6305 ir@susqbanc.com

KEYWORD: PENNSYLVANIA INDUSTRY KEYWORD: INSURANCE BANKING EARNINGS CONFERENCE CALLS SOURCE: Susquehanna Bancshares, Inc.

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