Susquehanna Bancshares, Inc.
) fourth-quarter 2013 operating earnings came in at 22 cents per
share, beating the Zacks Consensus Estimate by a penny. However,
this compared unfavorably with the year-ago earnings of 23 cents.
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For 2013, the company reported earnings of 92 cents per share
that beat the Zacks Consensus Estimate by a penny. This was
higher than 77 cents earned in the prior year.
Results were driven by a rise in non-interest income and lower
provision for loan losses. Further, strong capital ratios and a
better asset quality were the other positives. However, lower
interest income and increased expenses were headwinds for the
Tax equivalent net income was $41.3 million, compared with $43.2
million in the prior-year quarter. For 2013, net income was
$173.7 million, up 23% year over year.
Performance in Detail
Susquehanna Bancshares' total revenue came in at $193.4 million,
down 3.0% from the prior-year quarter. Further, it surpassed the
Zacks Consensus Estimate of $191.0 million.
For 2013, total revenue came in at $769.7 million, up 2% year
Net interest income declined 8% year over year to $142.7 million.
Moreover, net interest margin declined 46 basis points from the
prior-year quarter to 3.60%.
Non-interest income increased 16% from the prior-year quarter to
$50.7 million. The increase reflects a rise in service charges on
deposit accounts, wealth management commissions and fees, other
commissions and fees as well as realized gain on sale of branch
Non-interest expense increased 8% year over year to $135.7
million. The rise was primarily attributable to increase in
salaries and employee benefits expenses, advertising expenses,
occupancy costs, FDIC insurance costs and branch consolidation
Asset quality exhibited a marked improvement during the quarter
with total nonperforming assets decreasing 5% on a year-over-year
basis to $117.3 million.
Annualized net charge offs as a percentage of average loans and
leases came in at 0.33%, down from 0.50% in the year-ago period.
Likewise, provision for credit losses declined 85% from the
prior-year quarter to $2 million. Moreover, allowance for loan
and lease losses decreased 14% year over year to $157.6 million.
Loans and Deposits
As of Dec 31, 2013, Susquehanna's total loans were $13.6 billion,
up 4% from the previous-year quarter. Total deposits were $12.9
billion, up 2% from the prior-year quarter.
The company's capital ratios remained strong in the quarter. As
of Dec 31, 2013, Tier 1 common ratio rose to 10.58% from 9.94% in
the year-ago quarter. Tier 1 capital ratio was 11.68%, up from
11.08% at the end of the prior-year quarter.
Susquehanna's consistent organic growth, improving credit quality
and a strong balance sheet are impressive. However, mounting
expenses, the prevailing low interest rate environment and a
stringent regulatory landscape remain major near-term concerns.
The company currently carries a Zacks Rank #3 (Hold).
However, other Northeast banks that look promising include
Webster Financial Corp.
Boston Private Financial Holdings, Inc.
Community Bank System Inc.
). All of these have a Zacks Rank #2 (Buy).