New York, June 25, 2014 -- Moody's Investors Service placed the long-term ratings of Susquehanna
Bancshares, Inc. and its lead bank subsidiary, Susquehanna
Bank on review for upgrade. Susquehanna Bancshares is rated Baa3
for senior debt. Susquehanna Bank has a long-term bank deposit
rating of Baa2 and a standalone bank financial strength rating of C-,
mapping to a standalone baseline credit assessment of baa2. The
Prime-2 short-term rating and the C- standalone bank
financial strength rating of Susquehanna Bank were affirmed and are not
on review.
On Review for Upgrade:
..Issuer: Susquehanna Bancshares, Inc.
....Preferred Shelf, Placed on Review
for Upgrade, currently (P)Ba2
....Non-Cumulative Preferred Shelf,
Placed on Review for Upgrade, currently (P)Ba3
....Subordinate Shelf, Placed on Review
for Upgrade, currently (P)Ba1
....Senior Unsecured Shelf, Placed on
Review for Upgrade, currently (P)Baa3
....Senior Unsecured Regular Bond/Debenture,
on Review for Upgrade, currently Baa3
..Issuer: Susquehanna Bank
.... Issuer Rating, Placed on Review
for Upgrade, currently Baa2
....OSO Senior Unsecured OSO Rating,
Placed on Review for Upgrade, currently Baa2
....Senior Unsecured Deposit Rating,
Placed on Review for Upgrade, currently Baa2
..Issuer: Susquehanna Capital I
....Pref. Stock Preferred Stock,
Placed on Review for Upgrade, currently Ba2 (hyb)
..Issuer: Susquehanna Capital II
....Pref. Stock Preferred Stock,
Placed on Review for Upgrade, currently Ba2 (hyb)
Outlook Actions:
..Issuer: Susquehanna Bancshares, Inc.
....Outlook, Changed To Rating Under
Review From Positive
..Issuer: Susquehanna Bank
....Outlook, Changed To Rating Under
Review From Positive(m)
..Issuer: Susquehanna Capital I
....Outlook, Changed To Rating Under
Review From Positive
..Issuer: Susquehanna Capital II
....Outlook, Changed To Rating Under
Review From Positive
Affirmations:
..Issuer: Susquehanna Bank
.... Bank Financial Strength Rating,
Affirmed C-
.... OSO Rating, Affirmed P-2
.... Deposit Rating, Affirmed P-2
RATINGS RATIONALE
Moody's said that Susquehanna's credit performance,
specifically its asset quality indicators, has been better than
expected. Its strong long-term performance demonstrates
its consistent risk discipline, particularly in the face of its
sizable commercial real estate (CRE) concentration, which management
has reduced noticeably. At its peak, CRE was 4.5 times
its tangible common equity at 30 September 2009, compared to its
current 2.4 times. Although this credit record was supported
by a more favorable local real estate market, it was also a product
of prudent underwriting and credit management, said Moody's.
Susquehanna -- like the US banking industry -- is facing earnings
pressures because its net interest margin is contracting from low short-term
interest rates, encouraging loan growth. Given this backdrop,
Moody's said that the review will focus on management's ability
to maintain its credit discipline and its underwriting standards as opposed
to reaching for loan growth to provide a near-term offset to earnings
stresses. Areas of special focus will be the commercial and industrial
lending, CRE, and auto financing portfolios. The review
will also focus on Susquehanna's capital and funding plans.
The principal methodology used in this rating was Global Banks published
in May 2013. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain 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 certain 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 certain 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.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
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.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Thuy Nguyen
Asst Vice President - 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 Franklyn 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 places Susquehanna on review for upgrade (senior at Baa3)