New York, March 15, 2012 -- The following release represents Moody's Investors Service's summary credit
opinion on Susquehanna Bancshares, Inc. and includes certain
regulatory disclosures regarding its ratings. This release does
not constitute any change in Moody's ratings or rating rationale for Susquehanna
Bancshares, Inc and its affiliates.
Moody's current ratings on Susquehanna Bancshares, Inc. and
its affiliates are:
Subordinate (domestic currency) ratings of Ba1
Senior Unsecured Shelf (domestic currency) ratings of (P)Baa3
Subordinate Shelf (domestic currency) ratings of (P)Ba1
Junior Subordinate Shelf (domestic currency)ratings of (P)Ba2
Preferred Shelf (domestic currency) ratings of (P)Ba2
Preferred shelf -- PS2 (domestic currency) ratings of (P)Ba3
Susquehanna Bank
Long Term Issuer rating of Baa2
Long Term Bank Deposits (domestic currency) ratings of Baa2
Long Term Other Senior Obligations ratings of Baa2
Bank Financial Strength ratings of C-
Short Term Bank Deposits (domestic currency) ratings of P-2
Short Term Other Senior Obligations ratings of P-2
Susquehanna Capital I
BACKED Preferred Stock (domestic currency) ratings of Ba2; (hyb)
Susquehanna Capital II
BACKED Preferred Stock (domestic currency) ratings of Ba2; (hyb)
BACKED Preferred Shelf (domestic currency) ratings of (P)Ba2
Susquehanna Capital III
BACKED Preferred Shelf (domestic currency) ratings of (P)Ba2
Susquehanna Capital IV
BACKED Preferred Shelf (domestic currency)ratings of (P)Ba2
RATING RATIONALE
Moody's assigns a stand-alone Bank Financial Strength Rating (BFSR)
of C- to Susquehanna Bank, the principal operating subsidiary
of Susquehanna Bancshares, Inc., which maps to a baseline
credit assessment of Baa2. Moody's assessment of the probability
of systemic support being extended to Susquehanna in the event it is needed
is zero. With no expectation of external support, the long-term
deposit rating is Baa2, the same as the baseline credit assessment.
The ratings reflect Susquehanna's good community banking franchise in
its primary markets which helps to support the company's ample liquidity.
The ratings also incorporate Susquehanna's sizable CRE exposure,
which represented 2.8 times adjusted tangible common equity (TCE)
at June 30, 2011, the bank's less than robust profitability
and an efficiency ratio that is on the high end relative to similarly
rated peers. Contributing factors included its expansion strategy
through mostly acquisitions in addition to higher operating costs associated
with the bank's auto leasing business and wealth management, and
higher loan servicing costs associated with handling Susquehanna's problem
assets.
Rating Outlook
The outlook is stable which reflects our view that Susquehanna has sufficient
capital to withstand an even more stressed economic environment,
which mitigates downward pressure on the ratings in the intermediate-term.
What Could Change the Rating - Up
Upward pressure on the ratings could result from a reduced CRE concentration
and demonstration of consistently superior core profitability while maintaining
good asset quality.
What Could Change the Rating - Down
Given Susquehanna's sizable exposure to CRE, particularly residential
construction, a downgrade would result from Moody's expectation
that Susquehanna's capital position could erode from significant additional
credit charges to be taken. A sustained weakening of core earnings
could also lead to a rating downgrade.
The methodologies used in these ratings were Bank Financial Strength Ratings:
Global Methodology published in February 2007, Incorporation of
Joint-Default Analysis into Moody's Bank Ratings: A
Refined Methodology published in March 2007, and Moody's Guidelines
for Rating Bank Hybrid Securities and Subordinate Debt published in November
2009. Please see the Credit Policy page on www.moodys.com
for a copy of these methodologies.
REGULATORY DISCLOSURES
Although these credit ratings have been issued in a non-EU country
which has not been recognized as endorsable at this date, the credit
ratings are deemed "EU qualified by extension" and may still
be used by financial institutions for regulatory purposes until 30 April
2012. Further information on the EU endorsement status and on the
Moody's office that has issued a particular Credit Rating is available
on www.moodys.com.
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides relevant regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides relevant regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Information sources used to prepare each of the ratings are the following:
parties involved in the ratings, public information, and confidential
and proprietary Moody's Investors Service information.
Moody's considers the quality of information available on the rated
entities, obligations or credits satisfactory for the purposes of
issuing these ratings.
Moody's adopts all necessary measures so that the information it
uses in assigning the ratings is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%)
and for (B) further information regarding certain affiliations that may
exist between directors of MCO and rated entities as well as (C) the names
of entities that hold ratings from MIS that have also publicly reported
to the SEC an ownership interest in MCO of more than 5%.
A member of the board of directors of this rated entity may also be a
member of the board of directors of a shareholder of Moody's Corporation;
however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating
Process page on www.moodys.com for further information on
the meaning of each rating category and the definition of default and
recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history. The date on
which some ratings were first released goes back to a time before Moody's
ratings were fully digitized and accurate data may not be available.
Consequently, Moody's provides a date that it believes is
the most reliable and accurate based on the information that is available
to it. Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has
issued the rating.
Thuy Nguyen
Analyst
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Robert Young
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's Disclosures on Credit Rating of Susquehanna Bancshares, Inc.
