Susquehanna Bancshares, Inc. Announces Third Quarter Results

Susquehanna Bancshares, Inc. (Susquehanna) (NASDAQ:SUSQ) today announced net income for the third quarter of 2008 was $6.4 million, or $0.07 per diluted share, compared to $19.9 million, or $0.38 per diluted share, for the third quarter 2007. Net income for the first nine months of 2008 was $63.6 million, or $0.74 per diluted share, compared to $50.4 million, or $0.97 per diluted share, for the first nine months of 2007.

Included in Susquehanna’s third quarter 2008 financial results were several previously announced charges that affected earnings for the quarter:

Equity capital was $1.7 billion at September 30, 2008, or $19.69 per share, compared to $942 million, or $18.05 per share, at September 30, 2007.

Return on average assets and average tangible equity⁽¹⁾ for the third quarter of 2008 finished at 0.19% and 5.21%, respectively. This compared to results of 0.93% and 13.83% for the same measurements, respectively, for the third quarter of 2007.

⁽¹⁾A non-GAAP-based financial measure. The most comparable GAAP-based measurement for return on average tangible equity is return on average equity. A reconciliation of the differences between 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."

Additional Activity:

On October 10, 2008, Susquehanna completed the consolidation of its three banking subsidiaries into a single commercial bank. This step created a single network of more than 230 branches in Pennsylvania, New Jersey, Maryland and West Virginia where customers can complete any banking transactions. In addition to providing more flexible, convenient service for customers, it increases internal efficiencies for the bank. As previously reported, the move is expected to yield $20 million in annual expense reduction in 2009.

"Although several charges impacted our results for the third quarter, the fundamentals of our banking operations remain strong. We continued to see good loan growth in the quarter, and our competitive pricing brought additional deposits into our bank,” said William J. Reuter, Chairman and Chief Executive Officer of Susquehanna Bancshares, Inc.

"There is no question that we’re in the midst of a period of unprecedented volatility in the financial services industry, and Susquehanna has felt the impact of this turmoil in the broader markets,” Reuter said. "However, times like these present opportunities as well as challenges. Susquehanna is a well-capitalized institution with a track record of more than 100 years of service to our communities, through good and bad economic cycles. We believe this is a strong selling point for customers seeking a solid financial services partner, and our employees are working to build relationships with new customers, as well as strengthen those that we already have.”

Susquehanna will broadcast its third quarter 2008 results conference call over the Internet on October 23, 2008 at 11:00 a.m. Eastern time. The conference call will include management’s discussion of third quarter 2008 results. The discussion 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 Susquehanna’s Web site. The event may be accessed by selecting "Investor Relations" near the top right of the home page then "Overview” and clicking on the third quarter webcast link. To listen to the live call, please go to the Web site at least fifteen 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 Web site shortly after the call concludes.

Susquehanna Bancshares, Inc. is a financial services holding company with assets of approximately $14 billion. Headquartered in Lititz, Pa., the company provides banking and financial services at more than 230 branch locations in the mid-Atlantic region. Through Susquehanna Wealth Management, the company offers investment, fiduciary, brokerage, insurance, retirement planning, and private banking services, with approximately $6 billion in assets under management and administration. Susquehanna also operates an insurance brokerage and employee benefits company, a commercial finance 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. 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 release includes forward-looking statements as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995. In particular, this release includes forward-looking statements regarding Susquehanna’s expected annualized expense reductions as a result of restructuring. These statements are subject to certain risks and uncertainties including risks relating to Susquehanna’s ability to execute its plan of restructuring, its ability to estimate third party expenses, its ability to motivate and retain key members of the restructuring team, adverse customer reaction to the bank consolidation, changes in the regulatory environment, unforeseen actions taken by regulators and the other risks set forth in Susquehanna’s filings with the Securities and Exchange Commission. As a result, actual results may differ materially from the forward-looking statements in this release. 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.