10-Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

x    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2013

or

¨     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

Commission File Number 001-33872

Susquehanna Bancshares, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Pennsylvania	23-2201716
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
26 North Cedar St., Lititz, Pennsylvania	17543
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (717) 626-4721

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)

Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	x	Accelerated Filer	¨
Non-Accelerated Filer	¨  (Do not check if a smaller reporting company)	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ¨    No  x

As of April 30, 2013, there were 186,841,016 shares of the registrant’s common stock outstanding, par value $2.00 per share.

SUSQUEHANNA BANCSHARES, INC.
TABLE OF CONTENTS
			Page
PART I. FINANCIAL INFORMATION			3
	Item 1 Financial Statements (Unaudited)		3
		Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012	3
		Consolidated Statements of Income for the three months ended March 31, 2013 and 2012	4
		Consolidated Statements of Comprehensive Income for the three months ended March 31, 2013 and 2012	5
		Consolidated Statements of Cash Flows for the three months ended March 31, 2013 and 2012	6
		Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2013 and 2012	7
		Notes to Consolidated Financial Statements	8
	Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		49
	Item 3 Quantitative and Qualitative Disclosures About Market Risk		67
	Item 4 Controls and Procedures		69
PART II. OTHER INFORMATION			70
	Item 1 Legal Proceedings		70
	Item 1A Risk Factors		70
	Item 2 Unregistered Sales of Equity Securities and Use of Proceeds		70
	Item 3 Defaults Upon Senior Securities		70
	Item 4 Mine Safety Disclosures		70
	Item 5 Other Information		71
	Item 6 Exhibits		72
SIGNATURES			73
EXHIBIT INDEX			74

2

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SUSQUEHANNA BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
					March 31,		December 31,
					2013		2012
					(in thousands, except share data)
Assets
	Cash and due from banks				$	291,434	$	277,042
	Unrestricted short-term investments					38,662		39,550
			Cash and cash equivalents			330,096		316,592
	Interest-bearing deposits held by consolidated variable interest entities that can be used only to settle
		obligations of the consolidated variable interest entities				4,304		4,423
	Restricted short-term investments					68,020		75,203
	Securities available for sale					2,400,626		2,577,901
	Restricted investment in bank stocks					151,974		152,434
	Loans and leases, net of deferred costs and fees					12,840,305		12,728,082
	Loans held by consolidated variable interest entities that can be used only to settle obligations of the
		consolidated variable interest entities				159,398		166,659
			Less: Allowance for loan and lease losses			176,377		184,020
				Net loans and leases		12,823,326		12,710,721
	Premises and equipment, net					186,102		188,983
	Other real estate and foreclosed assets					26,302		31,017
	Accrued interest receivable					44,202		40,304
	Bank-owned life insurance					450,351		450,270
	Goodwill					1,275,439		1,270,359
	Intangible assets with finite lives					38,209		41,332
	Deferred income tax assets					7,594		0
	Other assets					160,629		178,128
				Total Assets	$	17,967,174	$	18,037,667
Liabilities and Shareholders’ Equity
	Deposits:
		Noninterest-bearing			$	1,917,719	$	1,973,664
		Interest-bearing				10,773,713		10,606,382
				Total deposits		12,691,432		12,580,046
	Federal Home Loan Bank short-term borrowings					948,000		1,098,000
	Other short-term borrowings					786,251		817,577
	Federal Home Loan Bank long-term borrowings					96,480		101,062
	Other long-term debt					251,019		251,021
	Junior subordinated debentures					154,946		154,927
	Long-term debt of consolidated variable interest entities for which creditors do not have recourse to
		Susquehanna’s general credit				95,594		107,453
	Accrued interest, taxes, and expenses payable					61,265		81,808
	Deferred income tax liabilities					29,694		14,475
	Other liabilities					213,004		235,389
				Total Liabilities		15,327,685		15,441,758
	Shareholders’ equity:
		Common stock, $2.00 par value, 400,000,000 shares authorized; Issued: 187,059,021 at
			March 31, 2013, and 186,811,642 at December 31, 2012			374,118		373,623
		Treasury stock, at cost, 259,393 at March 31, 2013, and 257,556 at December 31, 2012				(1,871)		(1,850)
		Additional paid-in capital				1,648,062		1,645,958
		Retained earnings				657,835		615,436
		Accumulated other comprehensive loss, net of taxes of $21,360  and $20,672, respectively				(38,655)		(37,258)
				Total Shareholders’ Equity		2,639,489		2,595,909
				Total Liabilities and Shareholders’ Equity	$	17,967,174	$	18,037,667
The accompanying notes are an integral part of these consolidated financial statements.

3

SUSQUEHANNA BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
			Three Months Ended
			March 31,
			2013		2012
			(in thousands, except per share data)
Interest Income:
	Loans and leases, including fees		$	160,344	$	148,355
	Securities:
		Taxable		10,260		12,792
		Tax-exempt		3,594		3,762
		Dividends		1,166		998
	Short-term investments			36		30
		Total interest income		175,400		165,937
Interest Expense:
	Deposits:
		Interest-bearing demand and savings		4,901		6,047
		Time		11,232		12,026
	Federal Home Loan Bank short-term borrowings			3,371		2,900
	Other short-term borrowings			2,153		2,122
	Federal Home Loan Bank long-term borrowings			301		58
	Other long-term debt			4,236		8,661
		Total interest expense		26,194		31,814
Net interest income				149,206		134,123
Provision for loan and lease losses				12,000		19,000
Net interest income, after provision for loan and lease losses				137,206		115,123
Noninterest Income:
	Service charges on deposit accounts			8,672		7,674
	Vehicle origination and servicing fees			3,354		1,924
	Wealth management commissions and fees			12,390		11,602
	Commissions on property and casualty insurance sales			4,542		5,058
	Other commissions and fees			5,237		4,643
	Income from bank-owned life insurance			1,850		1,472
	Mortgage banking revenue			4,110		3,513
	Net realized gain on sales of securities			406		385
	Total other-than-temporary impairment, net of recoveries			(680)		(2,706)
		Portion recognized in other comprehensive income (before taxes)		292		2,562
	Net impairment losses recognized in earnings			(388)		(144)
	Other			2,471		3,388
		Total noninterest income		42,644		39,515
Noninterest Expenses:
	Salaries and employee benefits			63,034		57,958
	Occupancy			11,215		10,810
	Furniture and equipment			3,578		3,617
	Professional and technology services			5,729		4,548
	Advertising and marketing			3,203		3,054
	FDIC insurance			3,798		5,178
	Legal fees			1,870		2,053
	Amortization of intangible assets			3,268		2,753
	Vehicle lease disposal			1,290		1,836
	Merger related			0		11,479
	Other			20,744		17,069
		Total noninterest expenses		117,729		120,355
Income before income taxes				62,121		34,283
Provision for (benefit from) income taxes				19,722		10,810
Net Income			$	42,399	$	23,473
Earnings per common share:
		Basic	$	0.23	$	0.14
		Diluted	$	0.23	$	0.14
Cash dividends per common share			$	0	$	0.03
Average common shares outstanding:
		Basic		186,607		171,326
		Diluted		187,442		171,973
The accompanying notes are an integral part of these consolidated financial statements.

4

SUSQUEHANNA BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Unaudited)
		Three Months Ended
		March 31,
		2013		2012
			(in thousands)
Net Income		$	42,399	$	23,473
Other comprehensive income:
	Change in unrealized gain (loss) on securities available for sale		(6,171)		1,077
	Tax effect and reclassification adjustment		2,179		(391)
			(3,992)		686
	Non-credit related unrealized loss on other-than-temporarily impaired debt securities		(292)		(2,562)
	Tax effect		107		939
			(185)		(1,623)
	Change in unrealized loss on cash flow hedges		4,405		2,804
	Tax effect		(1,609)		(1,106)
			2,796		1,698
	Adjustment to postretirement benefit obligations		(27)		0
	Tax effect		11		0
			(16)		0
Total other comprehensive income (loss)			(1,397)		761
Total comprehensive income		$	41,002	$	24,234
The accompanying notes are an integral part of these consolidated financial statements.

5

SUSQUEHANNA BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
				Three Months Ended
				March 31,
				2013		2012
					(in thousands)
Cash Flows from Operating Activities:
	Net income			$	42,399	$	23,473
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation, amortization, and accretion			13,376		11,476
		Provision for loan and lease losses			12,000		19,000
		Realized gain on available-for-sale securities, net			(18)		(241)
		Deferred income tax expense			13,618		13,778
		Gain on sale of loans and leases			(4,878)		(3,750)
		Loss (gain) on sale of foreclosed assets			225		(607)
		Loss on sale of fixed assets			280		0
		Mortgage loans originated for sale			(132,464)		(113,772)
		Proceeds from sale of mortgage loans originated for sale			150,876		119,668
		Payments received on loans and leases transferred from held for sale to held for investment, net of
			(advances) on home equity lines of credit		11,928		38,503
		Increase in cash surrender value of bank-owned life insurance			(1,296)		(1,273)
		Increase in accrued interest receivable			(3,898)		(8,866)
		(Decrease) increase in accrued interest payable			(1,246)		1,029
		Decrease in accrued expenses and taxes payable			(19,297)		(18,629)
		Other, net			9,977		(1,658)
	Net cash provided by operating activities				91,582		78,131
Cash Flows from Investing Activities:
	Net decrease in restricted short-term investments				7,302		9,564
	Activity in available-for-sale securities:
		Sales			12,770		10,350
		Maturities, repayments, and calls			154,037		163,205
		Purchases			(24,139)		(299,694)
	Net decrease in restricted investment in bank stock				460		4,059
	Net increase in loans and leases				(151,317)		(158,684)
	Purchase of bank-owned life insurance				(2,694)		(1,874)
	Proceeds from bank-owned life insurance				3,909		2,259
	Proceeds from sale of foreclosed assets				5,733		12,792
	Acquisitions				0		(2,487)
	Additions to premises and equipment, net				(878)		(1,211)
	Net cash (used in) provided by investing activities				5,183		(261,721)
Cash Flows from Financing Activities:
	Net increase in deposits				111,386		198,697
	Net (decrease) increase in other short-term borrowings				(31,326)		100,224
	Net decrease in short-term FHLB borrowings				(150,000)		(50,000)
	Repayment of long-term FHLB borrowings				(4,038)		(4,605)
	Repayment of long-term debt				(11,861)		(12,328)
	Proceeds from issuance of common stock				2,599		1,986
	Purchase of treasury stock				(21)		(15)
	Cash dividends paid				0		(4,654)
	Net cash provided by (used in) financing activities				(83,261)		229,305
Net change in cash and cash equivalents					13,504		45,715
Cash and cash equivalents at January 1					316,592		332,145
Cash and cash equivalents at March 31				$	330,096	$	377,860
Supplemental Disclosure of Cash Flow Information
	Cash paid for interest on deposits and borrowings			$	27,441	$	30,784
	Income tax refunds				24,441		809
Supplemental Schedule of Noncash Activities
	Real estate acquired in settlement of loans			$	3,511	$	11,144
	Securities purchased not settled				0		80,557
	Securities sold not settled				22,320		0
The accompanying notes are an integral part of these consolidated financial statements.

6

SUSQUEHANNA BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statements Of Changes In Shareholders’ Equity (Unaudited)
(In thousands, except share data)
												Accumulated
			Shares of					Additional				Other
			Common	Common		Treasury		Paid-in		Retained		Comprehensive
			Stock	Stock		Stock		Capital		Earnings		Income (Loss)		Total
Balance at January 1, 2012			157,067,887	$	314,136	$	(1,263)	$	1,397,152	$	525,657	$	(46,054)	$	2,189,628
	Total comprehensive income										23,473		761		24,234
	Issuance of common stock in Tower Bancorp, Inc. acquisition		30,760,933		61,522				239,883						301,405
	Issuance of common stock and share-based awards under employee
		benefit plans	229,849		459				1,527						1,986
	Treasury stock purchased						(15)								(15)
	Cash dividends paid on common stock ($0.03 per share)										(4,654)				(4,654)
Balance at March 31, 2012			188,058,669	$	376,117	$	(1,278)	$	1,638,562	$	544,476	$	(45,293)	$	2,512,584
Balance at January 1, 2013			186,811,642	$	373,623	$	(1,850)	$	1,645,958	$	615,436	$	(37,258)	$	2,595,909
	Total comprehensive income										42,399		(1,397)		41,002
	Issuance of common stock and share-based awards under employee
		benefit plans	247,379		495				2,104						2,599
	Treasury stock purchased						(21)								(21)
Balance at March 31, 2013			187,059,021	$	374,118	$	(1,871)	$	1,648,062	$	657,835	$	(38,655)	$	2,639,489
The accompanying notes are an integral part of these consolidated financial statements.

7

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

NOTE 1. Summary of Significant Accounting Policies

                The information contained in this report is unaudited.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information.  Certain prior-year amounts have been reclassified to conform to current period classifications and those reclassifications are not material to previously issued financial statements.  In the opinion of management, the information reflects all normal recurring adjustments necessary for a fair statement of results for the three months ended March 31, 2013 and 2012. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Operating results for the three-month period ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

The accounting policies of Susquehanna Bancshares, Inc. and Subsidiaries ("Susquehanna"), as applied in the consolidated interim financial statements presented herein, are substantially the same as those followed on an annual basis as presented on pages 79 through 84 of Susquehanna’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported and contingent amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting periods.  Actual results could differ significantly from those estimates.  Material estimates that are particularly susceptible to significant change relate to the estimated residual value of leases; determination of the allowance for loan and lease losses; the fair value of financial instruments, such as loans, investment securities, and derivatives; measurement and assessment of goodwill, intangible assets, and other purchase accounting related adjustments; benefit plan obligations and expenses; and income tax assets, liabilities and expenses.

Recently Adopted Accounting Guidance

In December 2011, FASB issued ASU 2011-11, Balance Sheet (Topic 210) - Disclosures about Offsetting Assets and Liabilities. This ASU requires an entity to disclose the nature of its rights of setoff and related arrangements associated with its financial instruments and derivative instruments. The objective of ASU 2011-11 is to make financial statements that are prepared under U.S. generally accepted accounting principles (“GAAP”) more comparable to those prepared under International Financial Reporting Standards. The new disclosures will give financial statement users information about both gross and net exposures. ASU 2011-11 is effective for interim and annual reporting periods beginning after January 1, 2013 and will be applied on a retrospective basis. The adoption of the amendment, in the first quarter of 2013, did not have a material impact on the financial condition or results of operations.

In July 2012, FASB issued ASU 2012-02, Intangibles – Goodwill and Other (Topic 350) – Testing Indefinite – Lived Intangible Assets for Impairment.  This ASU clarifies the assessment options and testing processes previously defined in ASU 2011-08, Intangibles – Goodwill and Other (Topic 350) – Testing Goodwill for Impairment issued in September 2011.  ASU 2012-02 is effective for interim and annual impairment tests performed for fiscal years beginning after September 15, 2012.  The adoption of this guidance, in the first quarter of 2013, did not have a material impact on results of operations or financial condition.

In January 2013, FASB issued ASU 2013-01, Balance Sheet (Topic 210) – Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities.  This ASU clarifies that the scope of Update 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, issued in December 2011.  ASU 2013-01 is effective for interim and annual reporting periods beginning on or after January 1, 2013.  The adoption of this guidance, in the first quarter of 2013, did not have a material impact on the results of operations or financial condition, however did result in an additional disclosure.  For additional information about this disclosure, refer to “Note 13.  Derivative Financial Instruments”.

In February 2013, FASB issued ASU 2013-02, Comprehensive Income (Topic 220) – Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income in Update No. 2011-12.  This ASU requires entities to disclose information regarding reclassification adjustments from accumulated other comprehensive income in their annual financial statements in a single

8

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

note or on the face of the financial statements.  ASU 2013-02 is effective for interim and annual reporting periods beginning after December 15, 2012.  The adoption of this guidance, in the first quarter of 2013, did not have a material impact on results of operations or financial condition, however did result in additional disclosures.  For more information about these disclosures, refer to Note 9.  Accumulated Other Comprehensive Income”.

NOTE 2. Acquisitions

On February 17, 2012, Susquehanna acquired all of the outstanding common stock of Tower Bancorp, Inc. (“Tower”), headquartered in Harrisburg, Pennsylvania, through the merger of Tower with and into Susquehanna. The results of operations acquired in the Tower transaction have been included in Susquehanna’s financial results since the acquisition date, February 17, 2012. Tower shareholders received, at their election, either 3.4696 shares of Susquehanna common stock, or $28.00 in cash, or some combination of shares and cash, for each share of Tower common stock held immediately prior to the effective time of the Tower merger, with $88.0 million of the aggregate merger consideration being paid in cash. A total of 30.8 million shares of Susquehanna common stock were issued in connection with the Tower merger.

The Tower transaction has been accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration transferred were recorded at estimated fair value on the acquisition date. Assets acquired totaled $2,388,122, including $1,975,488 of loans and leases (including $854,993 of commercial real estate loans, $136,979 of commercial loans and leases, and $758,803 of residential real estate loans). Liabilities assumed aggregated $2,255,413, including $2,074,372 of deposits. The transaction added $302,112 to the Susquehanna shareholders’ equity. Goodwill of $257,408, was recorded as a result of the transaction, including an adjustment of $10,547 for provisional amounts included in the previously estimated purchase price allocation.

The consideration transferred for Tower’s common equity and the amounts of acquired identifiable assets and liabilities assumed as of the acquisition date were as follows:

			February 17,
			2012
Purchase price:
	Value of:
	Common shares issued and options assumed		$	302,112
	Cash			88,005
		Total purchase price		390,117
Identifiable assets:
	Cash and due from banks			85,518
	Unrestricted short-term investments			9,171
	Securities available for sale			137,254
	Loans and leases			1,975,488
	Intangible assets			27,334
	Other assets			153,357
		Total identifiable assets		2,388,122
Identifiable Liabilities:
	Deposits			2,074,372
	Short-term borrowings			10,228
	Long-term borrowings			103,923
	Other liabilities			66,890
		Total liabilities		2,255,413
Net goodwill resulting from acquisition			$	257,408

In many cases, determining the fair value of the purchased assets and assumed liabilities required Susquehanna to estimate cash flows expected to result from those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant of these determinations related to the valuation of purchased loans.

9

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

The following is a summary of the loans purchased in the Tower transaction:
			Purchased		Purchased
			Credit		Non-		Total
			Impaired		Impaired		Purchased
			Loans		Loans		Loans
	Contractually required principal and interest at
		acquisition	$	348,889	$	2,376,071	$	2,724,960
	Contractual cash flows not expected to be collected			(127,318)		(135,736)		(263,054)
	Expected cash flows at acquisition			221,571		2,240,335		2,461,906
	Interest component of expected cash flows			(54,418)		(432,000)		(486,418)
	Basis in acquired loans at acquisition - estimated fair
		value	$	167,153	$	1,808,335	$	1,975,488

The core deposit intangible of $24,005 is being amortized using an accelerated method over a period of 10 years based upon the estimated economic benefits received.

The fair value of checking, savings and money market deposit accounts acquired from Tower was assumed to be approximately the carrying value as these accounts have no stated maturity and are payable on demand. Certificate of deposit accounts were valued as the present value of the certificates’ expected contractual payments discounted at market rates for similar certificates.

In connection with the Tower acquisition, Susquehanna incurred merger-related expenses related to personnel, occupancy and equipment, and other costs of integrating and conforming acquired operations with and into Susquehanna. Those expenses consisted largely of costs related to professional services, conversion of systems and/or integration of operations, and termination of existing contractual arrangements of Tower to purchase various services; initial marketing and promotion expenses designed to introduce Susquehanna to its new customers; travel costs; and printing, postage, supplies, and other costs of completing the transaction and commencing operations in new markets and offices. A summary of merger-related expenses included in the consolidated statement of income follows:

	Three Months Ended March 31,
	2012
	Abington		Tower		Total
Salaries and employee benefits	$	0	$	1,350	$	1,350
Consulting		66		3,949		4,015
Legal		37		733		770
Branch writeoffs		0		1,371		1,371
Net occupancy and equipment		0		2,809		2,809
All other		0		1,164		1,164
	$	103	$	11,376	$	11,479

There were no merger-related expenses incurred during the three month period ending March 31, 2013.

Pro Forma Condensed Combined Financial Information

If the Tower acquisition had been completed on January 1, 2012, total revenue, net of interest expense, would have been approximately $188.5 million for the three months ended March 31, 2012, and net income from continuing operations would have been approximately $23.6 million for the same period.

Pro forma results of operations do not include the impact of conforming certain acquiree accounting policies to Susquehanna’s policies. The pro forma financial information does not indicate the impact of possible business model changes nor does it consider any potential impacts of current market conditions or revenues, expense efficiencies, or other factors.

10

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

NOTE 3. Investment Securities

The amortized cost and fair values of investment securities at March 31, 2013 and December 31, 2012 were as follows:

				Gross		Gross
			Amortized	Unrealized		Unrealized		Fair
At March 31, 2013		Cost		Gains		Losses		Value
Available-for-Sale:
	U.S. Government agencies	$	113,328	$	808	$	0	$	114,136
	Obligations of states and political subdivisions		399,419		27,604		579		426,444
	Agency residential mortgage-backed securities		1,682,202		34,861		87		1,716,976
	Non-agency residential mortgage-backed securities		27,438		3		1,203		26,238
	Commercial mortgage-backed securities		35,619		1,275		0		36,894
	Other structured financial products		25,049		0		15,072		9,977
	Other debt securities		43,095		2,777		372		45,500
			2,326,150		67,328		17,313		2,376,165
	Other equity securities		24,188		931		658		24,461
Total available-for-sale securities		$	2,350,338	$	68,259	$	17,971	$	2,400,626
				Gross		Gross
			Amortized	Unrealized		Unrealized		Fair
At December 31, 2012		Cost		Gains		Losses		Value
Available-for-Sale:
	U.S. Government agencies	$	113,367	$	1,041	$	0	$	114,408
	Obligations of states and political subdivisions		403,487		32,585		295		435,777
	Agency residential mortgage-backed securities		1,843,511		37,104		53		1,880,562
	Non-agency residential mortgage-backed securities		29,428		2		1,980		27,450
	Commercial mortgage-backed securities		38,847		1,533		0		40,380
	Other structured financial products		25,011		0		15,461		9,550
	Other debt securities		43,076		2,643		464		45,255
			2,496,727		74,908		18,253		2,553,382
	Other equity securities		24,097		1,179		757		24,519
Total available-for-sale securities		$	2,520,824	$	76,087	$	19,010	$	2,577,901

At March 31, 2013 and December 31, 2012, investment securities with carrying values of $1,651,046 and $1,775,345, respectively, were pledged to secure public funds and for other purposes as required by law.

The amortized cost and fair value of U.S. Government agencies, obligations of states and political subdivisions, agency and non-agency residential mortgage-backed securities, commercial mortgage-backed securities, other structured financial products, other debt securities, and residential and commercial mortgage-backed securities, at March 31, 2013 and December 31, 2012, by contractual maturity, are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

11

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

			March 31, 2013				December 31, 2012
			Amortized		Fair		Amortized		Fair
			Cost		Value		Cost		Value
Securities available for sale:
	Within one year		$	8,103	$	8,175	$	8,690	$	8,781
	After one year but within five years			140,707		142,617		141,362		143,714
	After five years but within ten years			870,496		886,715		935,796		952,680
	After ten years			1,306,844		1,338,658		1,410,879		1,448,207
		Total	$	2,326,150	$	2,376,165	$	2,496,727	$	2,553,382

Gross realized gains and gross realized losses on investment securities transactions are summarized below. These gains and losses were recognized using the specific identification method and were included in noninterest income.

	Available-for-sale Securities
	Three Months Ended March 31,
	2013		2012
Gross gains	$	407	$	392
Gross losses		(1)		(7)
Other-than-temporary impairment		(388)		(144)
Net gains	$	18	$	241

The following table presents Susquehanna’s investments’ gross unrealized losses and the corresponding fair values by investment category and length of time that the securities have been in a continuous unrealized loss position, at March 31, 2013 and December 31, 2012.

March 31, 2013	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Obligations of states and political subdivisions		39,233		476		7,176		103		46,409		579
Agency residential mortgage-backed securities		16,981		87		0		0		16,981		87
Non-agency residential mortgage-backed securities		11,708		151		13,884		1,052		25,592		1,203
Other structured financial products		0		0		9,977		15,072		9,977		15,072
Other debt securities		0		0		6,623		372		6,623		372
Other equity securities		1,275		90		1,260		568		2,535		658
	$	69,197	$	804	$	38,920	$	17,167	$	108,117	$	17,971
December 31, 2012	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Obligations of states and political subdivisions		31,791		295		0		0		31,791		295
Agency residential mortgage-backed securities		11,291		53		0		0		11,291		53
Non-agency residential mortgage-backed securities		12,117		450		14,683		1,530		26,800		1,980
Other structured financial products		0		0		9,551		15,461		9,551		15,461
Other debt securities		0		0		6,518		464		6,518		464
Other equity securities		1,751		585		796		172		2,547		757
	$	56,950	$	1,383	$	31,548	$	17,627	$	88,498	$	19,010

Non-agency residential mortgage-backed securities. At March 31, 2013, Susquehanna held three securities that had unrealized losses, and were rated below investment grade. None of Susquehanna’s non-agency residential mortgage-backed securities

12

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

were backed by loans identified by the issuer as subprime or Alt-A collateral. Management has analyzed the collateral underlying these securities with respect to defaults, loan to collateral value ratios, current levels of subordination, and geographic concentrations and concluded that one of these securities is other-than-temporarily impaired.

Susquehanna recorded other-than-temporary impairment losses as presented in the following table:

Credit Losses on Non-agency Residential Mortgage-backed and Other Equity Securities for which a
Portion of an Other-than-temporary Impairment was Recognized in Other Comprehensive Income
				Three Months Ended
				March 31,
				2013		2012
	Balance - beginning of period			$	1,280	$	4,602
	Additions:
		Amount related to credit losses for which an other-than-temporary
			impairment was not previously recognized		325		0
		Additional amount related to credit losses for which an other-than-
			temporary impairment was previously recognized		63		144
	Deletions:
		Realized losses			34		0
	Balance - end of period			$	1,634	$	4,746

Susquehanna estimated the portion of loss attributable to credit using a discounted cash flow model. Susquehanna, in conjunction with a third-party financial advisory firm, assisted with the development of critical assumptions including the expected cash flows of the underlying collateral of the non-agency residential mortgage-backed securities using internal credit risk, interest rate risk, and prepayment risk models that incorporated management’s best estimate of current key assumptions, such as default rates, loss severity, and prepayment rates.  Assumptions used can vary widely from loan to loan and are influenced by such factors as loan interest rate, geographical location of the borrower, borrower characteristics, and collateral type. The distribution of underlying cash flows is determined in accordance with the security’s terms. Expected principal and interest cash flows on an other-than-temporarily impaired debt security are discounted using the effective yield of that debt security.

13

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

Based on the expected cash flows derived from the model, Susquehanna expects to recover the unrealized loss in accumulated other comprehensive income ($745 and $4,144 at March 31, 2013 and 2012, respectively). Significant assumptions used in the valuation of these other-than-temporarily impaired securities were as follows:

			Weighted-average (%)
			March 31,
			2013	2012
		Conditional repayment rate (1)	10.3%	9.9%
		Loss severity (2)	43.0%	46.6%
		Conditional default rate (3)	3.8%	6.0%
(1)	Conditional repayment rate represents a rate equal to the proportion of principal balance paid off voluntarily over a certain period of time on an annualized basis.
(2)	Loss severity rates are projected by considering collateral characteristics such as current loan-to-value, original creditworthiness of borrowers (FICO score) and geographic concentration.
(3)	Conditional default rate is an annualized rate of default on a group of mortgages, and represents the percentage of outstanding principal balances in the pool that are in default, which typically equates to the borrower being past due 60 days, 90 days, or possibly already in the foreclosure process.

Management provides input and monitors the third party valuation process of the non-agency residential mortgage-backed securities. A detailed review of the critical assumptions and inputs is performed by Susquehanna’s Corporate Investment Committee (“CIC”). Key assumptions reviewed by the CIC include prepayment assumptions, default rates, loss severity, bond waterfall payments, and the discount rate. Additionally, available market indications of similar securities are provided by Susquehanna to the third party and are given a significant weighting by the third party.

Other structured financial products. Susquehanna’s structured financial product investments are comprised of four pooled trust preferred securities which have an aggregate unrealized loss of $15,072 and $16,859 at March 31, 2013 and 2012, respectively. All of these securities are below investment grade but are of a more senior tranche of the specific issue. Susquehanna has contracted with a third-party financial advisory firm (“third party firm”) to assist in its other-than-temporary impairment analysis of its structured financial product investments. Management has assisted with the development of, and performed a detailed review of the critical assumptions. The review of the inputs for the valuation of the pooled trust preferred securities is performed by the CIC. Key aspects reviewed by CIC include the detail on non-performing financial institutions within the pools of trust preferred securities, the probability of default of the underlying institutions within the pools, the discount rate, trades of similar securities and indexes, and the weighting given to market indications. Susquehanna management believes that the valuation analysis and methodology reasonably supports the value and projected performance of the specific trust preferred securities. Management believes this valuation methodology presents an appropriate approach in the determination of other-than-temporary impairment charges in accordance with GAAP.

The third party firm uses a proprietary methodology to determine the other-than-temporary impairment of Susquehanna’s pooled trust preferred securities. Using publicly available financial information, the third party firm’s valuation analysis compares the present value of the expected base cash flows with the amortized cost basis of the trust preferred securities to determine whether Susquehanna expects to receive the entire amortized cost basis of such securities. To make this comparison, the third party firm evaluates two scenarios consisting of three phases each. The two scenarios are: (1) the first dollar loss scenario, and, (2) the expected or forecasted scenario. The three phases associated with each scenario are production of cash flows, application of the cash flows to the percent owned, and assessment of any other-than-temporary impairment.

To determine expected cash flows, the valuation analysis considers credit default rates, call options and deferrals, waterfall structure, and covenants relating to the trust preferred securities. The trust indenture documentation and the trustee reports for each specific trust preferred security issuance provides information regarding deferral rights, call options, various triggers, (including over-

14

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

collateralization triggers), and waterfall structure, which management believes is essential in determining projected base cash flows. The third party firm determines short-term default risk using ratios, including the Texas ratio, that relate to the issuers, capitalization, asset quality, profitability, and liquidity. To determine longer term default probabilities, the third party firm uses an internal scoring approach that relies on key historical financial performance ratios. Management believes that future cash flows for these securities are reasonably developed and supported.

If a collateral security is in default at the assessment date, a recovery rate specific to the issuer of the collateral security is incorporated into the expected cash flows with a twenty-four month lag in timing of receipt of those expected cash flows. The third party firm calculates a terminal default rate based upon certain key financial ratios of the active issuers in the security relative to all FDIC insured bank institutions. The active issuers of the collateral securities are summarized as a weighted average based on issue size according to status of deferral and default assumption. To enhance the analysis, the third party firm calculates the standard deviation across the issuers for each ratio and removes any issuer that falls more than three standard deviations above or below the average for that ratio. No recovery is incorporated into the expected cash flows for any issuers that exceed the terminal default rate. For issuers currently making interest payments and for those currently deferring interest payments, Susquehanna makes an estimate using publicly available financial information as to the likelihood and timing of any default, after which the estimated cash flow reflects a recovery rate specific to the issuer. Issuers of collateral securities that are currently deferring interest payments and not expected to default are assumed to continue to defer interest payments for twenty quarters, the full contractually permitted deferral, from the period of initial deferral.

In considering the amount and timing of expected cash flows on the pooled trust preferred securities, management considers the right of the issuers of the securities underlying the pooled trust preferred securities to call those collateral securities. Management assesses any projected exercise of the call option, incorporating changes in economic and market conditions and the impact of any change in timing of expected cash flows in the measurement of fair value and other-than-temporary impairment.

The discount rate applied to the projected cash flows for the specific class is calculated using a spread to the current swap curve. The swap curve gives a market participant perspective of the term structure of interest rates and on credit spreads. The determination of the discount rate used in Susquehanna’s valuation is based upon the referenced swap curve plus an additional credit spread based upon the credit rating of the class. Lower rated classes would have a wider implied credit spread. These multiple discount rates are then applied to the estimated cash flows in determining the estimated value.

15

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

	The present value of the expected cash flows for Susquehanna’s specific class and subordinate classes, as well as additional
information about the pooled trust preferred securities, are included in the following tables.
	As of March 31, 2013		Pooled Trust #1		Pooled Trust #2		Pooled Trust #3		Pooled Trust #4
	Class		B		B		B		A2L
	Class face value		$	35,000	$	58,922	$	88,670	$	45,500
	Book value		$	3,000	$	7,183	$	8,116	$	6,750
	Fair value			1,245		3,068		3,444		2,220
	Unrealized loss			(1,755)		(4,115)		(4,672)		(4,530)
	Present value of expected cash flows
		for class noted above and all
		subordinated classes (1)	$	150,775	$	178,443	$	308,449	$	147,139
	Lowest credit rating assigned		D		Ca		Ca		Ca
	Original collateral		$	623,984	$	501,470	$	700,535	$	487,680
	Performing collateral			361,842		295,080		484,731		281,600
	Actual defaults			30,000		51,580		44,000		77,100
	Actual deferrals			77,400		125,810		96,150		93,080
	Projected future defaults			61,045		53,910		47,105		42,053
	Actual defaults as a % of original
		collateral		4.8%		10.3%		6.3%		15.8%
	Actual deferrals as a % of original
		collateral (2)		12.4%		25.1%		13.7%		19.1%
	Actual defaults and deferrals as a % of
		original collateral		17.2%		35.4%		20.0%		34.9%
	Projected future defaults as a % of
		original collateral (3)		9.8%		10.8%		6.7%		8.6%
	Actual institutions deferring and
		defaulted as a % of total institutions		18.5%		37.5%		25.4%		41.8%
	Projected future defaults as a % of
		performing collateral plus
		deferrals		13.9%		12.8%		8.1%		11.2%

16

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

	As of March 31, 2012		Pooled Trust #1		Pooled Trust #2		Pooled Trust #3		Pooled Trust #4
	Class		B		B		B		A2L
	Class face value		$	35,000	$	58,363	$	87,962	$	45,500
	Book value		$	3,000	$	7,096	$	8,033	$	6,750
	Fair value			967		2,438		2,718		1,897
	Unrealized loss			(2,033)		(4,658)		(5,315)		(4,853)
	Present value of expected cash flows
		for class noted above and all
		subordinated classes (1)	$	151,043	$	171,529	$	277,791	$	142,866
	Lowest credit rating assigned		CCC-		Ca		Ca		Ca
	Original collateral		$	623,984	$	501,470	$	700,535	$	487,680
	Performing collateral			352,028		300,200		470,831		344,600
	Actual defaults			10,000		51,580		44,000		74,500
	Actual deferrals			107,400		120,690		135,150		43,080
	Projected future defaults			72,893		71,392		60,702		46,548
	Actual defaults as a % of original
		collateral		1.6%		10.3%		6.3%		15.3%
	Actual deferrals as a % of original
		collateral (2)		17.2%		24.1%		19.3%		8.8%
	Actual defaults and deferrals as a % of
		original collateral		18.8%		34.4%		25.6%		24.1%
	Projected future defaults as a % of
		original collateral (3)		11.7%		14.2%		8.7%		9.5%
	Actual institutions deferring and
		defaulted as a % of total institutions		19.4%		37.5%		30.4%		30.9%
	Projected future defaults as a % of
		performing collateral plus
		deferrals		15.9%		17.0%		10.0%		12.0%
(1)	Susquehanna determines whether it expects to recover the entire amortized cost basis by comparing the present value of the expected cash flows to be collected with the amortized cost basis. As of March 31, 2013 and 2012, the present value of the current estimated cash flows is equal to or greater than the book value of the trust preferred securities held. Consequently, there is no credit-related other-than-temporary impairment required to be recognized.
(2)	Includes current interest deferrals for the quarter for those institutions deferring as of the date of the assessment of the other-than-temporary impairment. Current deferrals are assumed to continue for twenty quarters, the full contractually permitted deferral period, if the institutions are not projected to default prior to that time.
(3)	Includes those institutions that are performing but are not projected to continue to perform and includes those institutions that are currently deferring interest that are projected to default, based upon third-party proprietary valuation methodology used to determine future defaults. Creditworthiness of each underlying issue in the collateralized debt obligation is determined using publicly available data.

17

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

NOTE 4. Loans and Leases

Originated loans and leases is defined to exclude loans purchased in business combinations since September 30, 2011, and purchased loans and leases is defined to include those loans and leases excluded from the definition of originated loans.

Loans and Leases, Net of Deferred Costs and Fees
				March 31,		December 31,
				2013		2012
	Commercial, financial, and agricultural			$	2,312,660	$	2,273,611
	Real estate - construction				779,344		847,781
	Real estate secured - residential				4,077,810		4,065,818
	Real estate secured - commercial				3,971,438		3,964,608
	Consumer				859,664		842,552
	Leases				998,787		900,371
			Total loans and leases	$	12,999,703	$	12,894,741
	Originated loans and leases			$	10,998,299	$	10,765,458
	Purchased loans and leases				2,001,404		2,129,283
			Total loans and leases	$	12,999,703	$	12,894,741
	Nonaccrual loans and leases			$	103,351	$	97,767
	Loans and leases contractually past due 90 days
		and still accruing			6,396		8,209
	Troubled debt restructurings				65,773		67,775
	Deferred origination costs, net of fees				18,149		17,763
	All overdrawn deposit accounts, reclassified
		as loans and evaluated for collectability			2,375		15,422

	A summary of our net investment in direct lease financing is presented below.
Net Investment in Direct Financing Leases
				March 31,		December 31,
				2013		2012
		Minimum lease payments receivable		$	598,443	$	568,110
		Estimated residual value of leases			481,312		409,753
		Unearned income under lease contracts			(80,968)		(77,492)
			Total leases	$	998,787	$	900,371

Susquehanna monitors the credit quality of its commercial loan portfolio using internal risk ratings. These risk ratings are consistent with established regulatory guidance. Loans with a Pass rating represent those not considered a problem credit. Special mention loans are those that have a potential weakness deserving management’s careful attention. Substandard loans are those where a well-defined weakness has been identified that may put the complete receipt of contractual cash flows at risk. Substandard loans are placed in nonaccrual status when Susquehanna believes it is no longer probable it will collect all contractual cash flows.

Susquehanna reviews the loan gradings on an annual basis or at any time management becomes aware of the potential for not collecting all contractual cash flows. Significant credits with ratings of special mention or substandard, and associated with a relationship greater than $1.0 million, are reviewed quarterly by the Loan Review committee.

Susquehanna monitors the credit quality of its retail loan portfolio based primarily on delinquency status, which is the primary factor considered in determining whether a retail loan should be classified as nonaccrual.

18

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

The following tables present Susquehanna's credit quality indicators by internally assigned grading and by payment activity at March 31, 2013 and December 31, 2012.
Credit Quality Indicators, at March 31, 2013
	Commercial Credit Exposure
		Credit-risk Profile by Internally Assigned Grade
									Real Estate -		Total
							Real Estate -		Secured -		Commercial
					Commercial		Construction (1)		Commercial (2)		Credit Exposure
Originated loans and leases
	Grade:
		Pass (3)		$	2,040,237	$	444,419	$	3,379,128	$	5,863,784
		Special mention (4)			64,458		64,428		163,602		292,488
		Substandard (5)			57,325		46,617		217,962		321,904
			Total	$	2,162,020	$	555,464	$	3,760,692	$	6,478,176
Purchased loans and leases
	Grade:
		Pass (3)		$	126,400	$	67,896	$	881,966	$	1,076,262
		Special mention (4)			6,403		13,867		90,842		111,112
		Substandard (5)			17,837		41,033		157,375		216,245
			Total	$	150,640	$	122,796	$	1,130,183	$	1,403,619
Total loans and leases
	Grade:
		Pass (3)		$	2,166,637	$	512,315	$	4,261,094	$	6,940,046
		Special mention (4)			70,861		78,295		254,444		403,600
		Substandard (5)			75,162		87,650		375,337		538,149
			Total	$	2,312,660	$	678,260	$	4,890,875	$	7,881,795
	Other Credit Exposure
		Credit-risk Profile based on Payment Activity
					Real Estate -
					Secured -						Total Other
					Residential		Consumer		Leases		Credit Exposure
Originated loans and leases
	Performing			$	2,649,622	$	849,898	$	997,487	$	4,497,007
	Nonperforming (6)				21,179		637		1,300		23,116
		Total		$	2,670,801	$	850,535	$	998,787	$	4,520,123
Purchased loans and leases
	Performing			$	577,538	$	9,126	$	0	$	586,664
	Nonperforming (6)				11,118		3		0		11,121
		Total		$	588,656	$	9,129	$	0	$	597,785
Total loans and leases
	Performing			$	3,227,160	$	859,024	$	997,487	$	5,083,671
	Nonperforming (6)				32,297		640		1,300		34,237
		Total		$	3,259,457	$	859,664	$	998,787	$	5,117,908

19

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

Credit Quality Indicators, at December 31, 2012
	Commercial Credit Exposure
		Credit-risk Profile by Internally Assigned Grade
									Real Estate -		Total
							Real Estate -		Secured -		Commercial
					Commercial		Construction (1)		Commercial (2)		Credit Exposure
Originated loans and leases
	Grade:
		Pass (3)		$	2,008,548	$	439,296	$	3,388,337	$	5,836,181
		Special mention (4)			45,733		76,852		141,817		264,402
		Substandard (5)			60,123		45,102		213,776		319,001
			Total	$	2,114,404	$	561,250	$	3,743,930	$	6,419,584
Purchased loans and leases
	Grade:
		Pass (3)		$	135,308	$	95,289	$	918,119	$	1,148,716
		Special mention (4)			7,685		34,519		82,021		124,225
		Substandard (5)			16,214		54,162		143,629		214,005
			Total	$	159,207	$	183,970	$	1,143,769	$	1,486,946
Total loans and leases
	Grade:
		Pass (3)		$	2,143,856	$	534,585	$	4,306,456	$	6,984,897
		Special mention (4)			53,418		111,371		223,838		388,627
		Substandard (5)			76,337		99,264		357,405		533,006
			Total	$	2,273,611	$	745,220	$	4,887,699	$	7,906,530
	Other Credit Exposure
		Credit-risk Profile based on Payment Activity
					Real Estate -
					Secured -						Total Other
					Residential		Consumer		Leases		Credit Exposure
Originated loans and leases
	Performing			$	2,591,349	$	830,495	$	898,781	$	4,320,625
	Nonperforming (6)				23,082		577		1,590		25,249
		Total		$	2,614,431	$	831,072	$	900,371	$	4,345,874
Purchased loans and leases
	Performing			$	618,796	$	11,469	$	0	$	630,265
	Nonperforming (6)				12,061		11		0		12,072
		Total		$	630,857	$	11,480	$	0	$	642,337
Total loans and leases
	Performing			$	3,210,145	$	841,964	$	898,781	$	4,950,890
	Nonperforming (6)				35,143		588		1,590		37,321
		Total		$	3,245,288	$	842,552	$	900,371	$	4,988,211
(1)	Includes only construction loans granted to commercial customers. Construction loans for individuals are included in Real Estate – Secured – Residential, below.
(2)	Includes loans obtained for commercial purposes that are also secured by residential real estate.
(3)	Includes loans identified as having acceptable risk, which are loans for which the possibility of loss is considered unlikely.
(4)	Includes loans considered potentially weak; however, no loss of principal or interest is anticipated.
(5)	Includes loans that are inadequately protected by the current net-worth and paying capacity of the borrower or by the collateral pledged, if any. Loss of principal or interest is considered reasonably possible or likely.
(6)	Includes loans that are on non-accrual status or past due ninety days or more.

20

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

The following tables detail the age analysis of Susquehanna's past due financing receivables as of March 31, 2013 and December 31, 2012.
Age Analysis of Past Due Financing Receivables, as of March 31, 2013
	Financing Receivables that are Accruing
												Total
		30-59 Days		60-89 Days		Greater than		Total				Financing
		Past Due		Past Due		90 Days		Past Due		Current		Receivables
Commercial		$	4,106	$	783	$	988	$	5,877	$	2,297,241	$	2,303,118
Real estate - construction			1,206		575		382		2,163		758,236		760,399
Real estate secured - residential			19,043		3,863		4,237		27,143		4,020,295		4,047,438
Real estate secured - commercial			9,687		5,427		0		15,114		3,912,983		3,928,097
Consumer			10,336		303		603		11,242		848,385		859,627
Leases			3,465		246		186		3,897		993,776		997,673
	Total	$	47,843	$	11,197	$	6,396	$	65,436	$	12,830,916	$	12,896,352
Originated loans and leases			42,585		10,557		5,490		58,632		10,846,201		10,904,833
Purchased loans and leases			5,258		640		906		6,804		1,984,715		1,991,519
	Total	$	47,843	$	11,197	$	6,396	$	65,436	$	12,830,916	$	12,896,352
	Financing Receivables that are Nonaccruing
												Total
		30-59 Days		60-89 Days		Greater than		Total				Financing
		Past Due		Past Due		90 Days		Past Due		Current		Receivables
Commercial		$	632	$	725	$	4,876	$	6,233	$	3,309	$	9,542
Real estate - construction			0		1,983		15,798		17,781		1,164		18,945
Real estate secured - residential			2,342		330		19,204		21,876		8,496		30,372
Real estate secured - commercial			3,149		1,682		28,171		33,002		10,339		43,341
Consumer			0		0		0		0		37		37
Leases			0		455		216		671		443		1,114
	Total	$	6,123	$	5,175	$	68,265	$	79,563	$	23,788	$	103,351
Originated loans and leases			5,705		4,453		63,155		73,313		20,153		93,466
Purchased loans and leases			418		722		5,110		6,250		3,635		9,885
	Total	$	6,123	$	5,175	$	68,265	$	79,563	$	23,788	$	103,351

21

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

Age Analysis of Past Due Financing Receivables, as of December 31, 2012
	Financing Receivables that are Accruing
												Total
		30-59 Days		60-89 Days		Greater than		Total				Financing
		Past Due		Past Due		90 Days		Past Due		Current		Receivables
Commercial		$	5,163	$	762	$	359	$	6,284	$	2,256,863	$	2,263,147
Real estate - construction			8,568		1,614		157		10,339		822,625		832,964
Real estate secured - residential			19,544		4,467		5,547		29,558		4,007,820		4,037,378
Real estate secured - commercial			9,623		13,746		1,394		24,763		3,897,224		3,921,987
Consumer			8,898		1,678		545		11,121		831,388		842,509
Leases			5,445		487		207		6,139		892,850		898,989
	Total	$	57,241	$	22,754	$	8,209	$	88,204	$	12,708,770	$	12,796,974
Originated loans and leases			51,679		21,471		5,720		78,870		10,596,166		10,675,036
Purchased loans and leases			5,562		1,283		2,489		9,334		2,112,604		2,121,938
	Total	$	57,241	$	22,754	$	8,209	$	88,204	$	12,708,770	$	12,796,974
	Financing Receivables that are Nonaccruing
												Total
		30-59 Days		60-89 Days		Greater than		Total				Financing
		Past Due		Past Due		90 Days		Past Due		Current		Receivables
Commercial		$	631	$	649	$	6,068	$	7,348	$	3,116	$	10,464
Real estate - construction			0		405		14,047		14,452		365		14,817
Real estate secured - residential			953		452		19,551		20,956		7,484		28,440
Real estate secured - commercial			2,483		622		30,433		33,538		9,083		42,621
Consumer			0		0		0		0		43		43
Leases			0		656		408		1,064		318		1,382
	Total	$	4,067	$	2,784	$	70,507	$	77,358	$	20,409	$	97,767
Originated loans and leases			4,067		2,379		65,830		72,276		18,146		90,422
Purchased loans and leases			0		405		4,677		5,082		2,263		7,345
	Total	$	4,067	$	2,784	$	70,507	$	77,358	$	20,409	$	97,767

22

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

The following tables provide information about Susquehanna’s impaired loans, including principal balance, recorded investment, and related specific allowance amounts at the dates indicated. Loans with no specific allowance for loan losses have adequate collateral securing their carrying value and in some circumstances have been charged down to their current carrying value based on the fair value of the collateral.

Impaired Loans at March 31, 2013
														Average
							Recorded							Recorded
					Unpaid		Investment							Investment		Interest
					Principal		in Impaired			Related		Related		in Impaired		Income
					Balance		Loans			Charge-offs		Allowance		Loans (2)		Recognized
Impaired loans without a related reserve:
	Commercial, financial, and agricultural			$	25,675	$	23,787		$	1,888			$	28,801	$	493
	Real estate - construction				24,486		17,715			6,771				17,086		131
	Real estate secured - residential				39,089		37,725			1,364				38,306		500
	Real estate secured - commercial				136,638		117,416			19,222				120,261		1,869
	Consumer				110		110			0				108		3
		Total impaired loans without a
			related reserve		225,998		196,753	(1)		29,245				204,562		2,996
Impaired loans with a related reserve:
	Commercial, financial, and agricultural				10,315		10,187			128	$	3,429		4,480		36
	Real estate - construction				25,194		10,675			14,519		732		12,762		4
	Real estate secured - residential				30,255		29,679			576		3,689		29,785		369
	Real estate secured - commercial				41,163		30,812			10,351		4,060		30,723		238
	Consumer				0		0			0		0		0		0
		Total impaired loans with a
			related reserve		106,927		81,353			25,574		11,910		77,750		647
Total impaired loans:
	Commercial, financial, and agricultural				35,990		33,974			2,016		3,429		33,281		529
	Real estate - construction				49,680		28,390			21,290		732		29,848		135
	Real estate secured - residential				69,344		67,404			1,940		3,689		68,091		869
	Real estate secured - commercial				177,801		148,228			29,573		4,060		150,984		2,107
	Consumer				110		110			0		0		108		3
			Total impaired loans	$	332,925	$	278,106		$	54,819	$	11,910	$	282,312	$	3,643
Impaired loans without a related reserve:
	Originated loans and leases			$	73,947	$	45,878		$	28,069			$	55,862	$	794
	Purchased loans and leases				152,051		150,875			1,176				148,700		2,202
		Total impaired loans without a
			related reserve		225,998		196,753			29,245				204,562		2,996
Impaired loans with a related reserve:
	Originated loans and leases				101,223		75,703			25,520	$	10,557		71,875		584
	Purchased loans and leases				5,704		5,650			54		1,353		5,875		63
		Total impaired loans with a
			related reserve		106,927		81,353			25,574		11,910		77,750		647
Total impaired loans:
	Originated loans and leases				175,170		121,581			53,589		10,557		127,737		1,378
	Purchased loans and leases (3)				157,755		156,525			1,230		1,353		154,575		2,265
			Total impaired loans	$	332,925	$	278,106		$	54,819	$	11,910	$	282,312	$	3,643
(1)	$26,401 of the $196,753 total impaired loans without a related reserve represents loans that had been written down to the fair value of the underlying collateral through direct charge-offs of $29,245.
(2)	Average recorded investment in impaired loans is calculated on a quarterly basis using daily balances.
(3)	$5,650 of the $156,525 purchased impaired loans were subsequently impaired after being acquired.

23

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

Impaired Loans at December 31, 2012
														Average
							Recorded							Recorded
					Unpaid		Investment							Investment		Interest
					Principal		in Impaired			Related		Related		in Impaired		Income
					Balance		Loans			Charge-offs		Allowance		Loans (2)		Recognized
Impaired loans without a related reserve:
	Commercial, financial, and agricultural			$	23,959	$	23,877		$	82			$	24,603	$	233
	Real estate - construction				48,394		32,717			15,677				34,223		882
	Real estate secured - residential				26,298		25,261			1,037				25,417		398
	Real estate secured - commercial				133,903		119,217			14,686				118,424		1,727
	Consumer				114		114			0				114		3
		Total impaired loans without a
			related reserve		232,668		201,186	(1)		31,482				202,781		3,243
Impaired loans with a related reserve:
	Commercial, financial, and agricultural				4,240		4,184			56	$	3,267		4,278		47
	Real estate - construction				12,894		5,577			7,317		952		5,883		237
	Real estate secured - residential				32,640		32,375			265		6,633		32,498		333
	Real estate secured - commercial				49,322		39,331			9,991		4,884		40,778		486
	Consumer				0		0			0		0		0		0
		Total impaired loans with a
			related reserve		99,096		81,467			17,629		15,736		83,437		1,103
Total impaired loans:
	Commercial, financial, and agricultural				28,199		28,061			138		3,267		28,881		280
	Real estate - construction				61,288		38,294			22,994		952		40,106		1,119
	Real estate secured - residential				58,938		57,636			1,302		6,633		57,915		731
	Real estate secured - commercial				183,225		158,548			24,677		4,884		159,202		2,213
	Consumer				114		114			0		0		114		3
			Total impaired loans	$	331,764	$	282,653		$	49,111	$	15,736	$	286,218	$	4,346
Impaired loans without a related reserve:
	Originated loans and leases			$	76,120	$	45,560		$	30,560			$	49,975	$	764
	Purchased loans and leases				156,548		155,626			922				152,806		2,479
		Total impaired loans without a
			related reserve		232,668		201,186			31,482				202,781		3,243
Impaired loans with a related reserve:
	Originated loans and leases				92,471		74,842			17,629	$	14,649		76,823		1,033
	Purchased loans and leases				6,625		6,625			0		1,087		6,614		70
		Total impaired loans with a
			related reserve		99,096		81,467			17,629		15,736		83,437		1,103
Total impaired loans:
	Originated loans and leases				168,591		120,402			48,189		14,649		126,798		1,797
	Purchased loans and leases (3)				163,173		162,251			922		1,087		159,420		2,549
			Total impaired loans	$	331,764	$	282,653		$	49,111	$	15,736	$	286,218	$	4,346
(1)	$28,658 of the $201,186 total impaired loans without a related reserve represents loans that had been written down to the fair value of the underlying collateral through direct charge-offs of $31,482.
(2)	Average recorded investment in impaired loans is calculated on a quarterly basis using daily balances.
(3)	$6,625 of the $162,251 purchased impaired loans were subsequently impaired after being acquired.

24

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

	The following table presents Troubled Debt Restructurings (TDR's), by class segment:
			March 31,		December 31,
			2013		2012
		Commercial, financial, and agricultural	$	14,863	$	8,744
		Real estate - construction		937		940
		Real estate secured - residential		20,172		23,224
		Real estate secured - commercial		28,689		33,589
		Consumer		1,112		1,278
		Total performing TDRs		65,773		67,775
		Non-performing TDRs (1)		25,808		24,603
		Total TDRs	$	91,581	$	92,378
		Performing TDRs		72%		73%
		Non-performing TDRs		28%		27%
(1)	These loans are included in the 90 day past due and non-accrual categories.

	The following table provides detail of TDR balance and activity for the periods presented:
		Three months ended
		March 31,
		2013		2012
Performing TDRs, beginning of period		$	67,775	$	72,852
	New TDR Status		17,882		14,412
	Paydowns		(2,237)		(46)
	Charge-offs post modification		(121)		0
	Transfer to nonaccrual, past due 90 days or greater		(4,830)		(4,796)
	Cured		(12,341)		(10,371)
	Other, net (1)		(355)		30
Performing TDRs, end of period		$	65,773	$	72,081
Non-performing TDRs (2), end of period		$	25,808	$	18,720
Performing TDRs			72%		79%
Non-performing TDRs			28%		21%
(1)	Includes $203 transferred to OREO in 2013.
(2)	Included in Age Analysis of Past Due Financing Receivables.

25

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

                The following tables summarize Susquehanna’s loan modification activities that were considered troubled debt restructurings for the three month periods ended March 31, 2013 and 2012.

			Recorded Investment
								Financial Effect of
				Pre-Modification		Post-Modification		Modification
			Number of	Recorded		Recorded		Recorded
Three months ended March 31, 2013			Loans	Investment		Investment		Investment(1)		Interest (2)
Troubled Debt Restructurings
	Commercial, financial, and agricultural
		Other (3)	16	$	7,493	$	7,493	$	0	$	0
	Real estate - construction
		Other (3)	1		20		20		0		0
	Real estate secured - residential
		Other (3)	59		5,412		5,412		0		0
		Combination of modification types	7		1,316		1,316		0		(128)
	Real estate secured - commercial
		Other (3)	7		1,549		1,549		0		0
		Combination of modification types	1		1,436		1,436		0		(196)
	Consumer
		Other (3)	87		656		656		0		0
	Total		178	$	17,882	$	17,882	$	0	$	(324)
Originated loans and leases			170	$	16,149	$	16,149	$	0	$	(281)
Purchased loans and leases			8		1,733		1,733		0		(43)
	Total		178	$	17,882	$	17,882	$	0	$	(324)
(1)	Financial effects impacting the recorded investment include principal payments, advances, charge-offs, and capitalized past-due amounts.
(2)	Represents the present value of interest rate concessions discounted at the effective rate of the original loan.
(3)	Bankruptcies and maturity date extensions.
					Number of		Recorded
					Loans		Investment
Troubled Debt Restructurings that Subsequently
	Defaulted during the current period
		Commercial, financial, and agricultural			5	$	653
		Real estate - construction			1		20
		Real estate secured - residential			5		404
		Real estate secured - commercial			2		341
		Consumer			18		139
		Total			31	$	1,557
Originated loans and leases					28	$	1,357
Purchased loans and leases					3		200
		Total			31	$	1,557

26

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

			Recorded Investment
								Financial Effect of
				Pre-Modification		Post-Modification		Modification
			Number of	Recorded		Recorded		Recorded
Three months ended March 31, 2012			Loans	Investment		Investment		Investment(1)		Interest (2)
Troubled Debt Restructurings
	Commercial, financial, and agricultural
		Other (3)	1	$	310	$	310	$	0	$	0
	Real estate - construction
		Other (3)	0		0		0		0		0
	Real estate secured - residential
		Other (3)	2		1,006		1,006		0		0
		Combination of modification types	8		2,434		2,434		0		6
	Real estate secured - commercial
		Other (3)	4		10,662		10,662		0		0
		Combination of modification types	0		0		0		0		0
	Consumer
		Other (3)	0		0		0		0		0
	Total		15	$	14,412	$	14,412	$	0	$	6
Originated loans and leases			7	$	2,541	$	2,541	$	0	$	(74)
Purchased loans and leases			8		11,871		11,871		0		80
	Total		15	$	14,412	$	14,412	$	0	$	6
(1)	Financial effects impacting the recorded investment include principal payments, advances, charge-offs, and capitalized past-due amounts.
(2)	Represents the present value of interest rate concessions discounted at the effective rate of the original loan.
(3)	Bankruptcies and maturity date extensions.
					Number of		Recorded
					Loans		Investment
Troubled Debt Restructurings that Subsequently
	Defaulted during the current period
		Commercial, financial, and agricultural			0	$	0
		Real estate - construction			1		908
		Real estate secured - residential			3		1,339
		Real estate secured - commercial			0		0
		Consumer			0		0
		Total			4	$	2,247
Originated loans and leases					3	$	1,339
Purchased loans and leases					1		908
		Total			4	$	2,247

27

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

The unpaid principal balance and the related carrying amount of acquired loans are as follows:
			March 31,		December 31,
			2013		2012
	Credit impaired purchased loans evaluated individually
	for incurred credit losses
	Unpaid principal balance	$	222,596	$	238,538
	Carrying amount		156,525		162,251
	Other purchased loans evaluated collectively for
	incurred credit losses
	Unpaid principal balance		1,851,539		1,976,132
	Carrying amount		1,844,879		1,967,032
	Total purchased loans
	Unpaid principal balance		2,074,135		2,214,670
	Carrying amount		2,001,404		2,129,283

The changes in accretable discount related to the purchased credit impaired loans are as follows:
		Three Months Ended
		March 31,
		2013		2012
Balance - beginning of period		$	62,868	$	4,881
	Tower acquisition		0		54,418
	Accretion to interest income		(6,570)		(2,500)
	Net reclassification from non-accretable to accretable		2,519		0
Balance - end of period		$	58,817	$	56,799

NOTE 5. Allowance for Loan and Lease Losses

In establishing the allowance for credit losses, Susquehanna estimates losses attributable to specific impaired credits identified through the credit review processes and also estimates losses inherent in other loans and leases on a collective basis. For purposes of determining the level of the allowance for credit losses, Susquehanna evaluates its loan and lease portfolio by loan type. The losses provisioned for in Susquehanna’s allowance for loan loss is determined through a loan by loan analysis of larger balance commercial and commercial real estate loans that show signs of credit deterioration and by applying loss factors to groups of loan balances based on loan type and management’s classification of such loans under the Susquehanna’s loan grading system, adjusted for qualitative considerations.  In determining the allowance for credit losses, Susquehanna utilizes an internal loan grading system for its commercial portfolio.  The internal loan grading’s are monitored by Susquehanna’s loan review department.  Additionally, loans that are part of a relationship of over $1.0 million and have a rating of substandard, special mention, and pass that are on the company’s watch list, are reviewed on a quarterly basis at Susquehanna’s Loan Quality Review Committee.  Factors considered at the Loan Quality Review meetings include the financial statements of the borrower, the borrower’s global cash flow, guarantees, and underlying collateral valuations.

28

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

An analysis of the allowance for loan and lease losses for the three months ended March 31, 2013 and 2012 are presented in the following tables:

	Three Months Ended March 31, 2013
					Real Estate		Real Estate
			Real Estate -		Secured -		Secured -
	Commercial		Construction		Residential		Commercial		Consumer		Leases		Unallocated		Total
Allowance for credit losses:
Balance at January 1, 2013	$	30,207	$	25,171	$	41,276	$	70,053	$	3,722	$	13,341	$	250	$	184,020

	Charge-offs					(10,037)		(4,763)		(3,013)		(4,603)		(558)		(1,119)		0		(24,093)
	Recoveries					1,996		462		651		722		322		297		0		4,450
	Provision					8,296		4,679		(2,372)		805		(489)		1,195		(114)		12,000
Balance at March 31, 2013					$	30,462	$	25,549	$	36,542	$	66,977	$	2,997	$	13,714	$	136	$	176,377
Balance at March 31, 2013
	Individually evaluated
		for impairment:
			Originated loans and leases		$	3,382	$	719	$	2,475	$	3,981	$	0	$	0			$	10,557
			Purchased loans and leases			47		13		1,214		79		0		0				1,353
				Total	$	3,429	$	732	$	3,689	$	4,060	$	0	$	0			$	11,910
	Collectively evaluated
		for impairment:
			Originated loans and leases		$	27,033	$	24,817	$	32,853	$	62,917	$	2,997	$	13,714	$	136	$	164,467
			Purchased loans and leases			0		0		0		0		0		0		0		0
				Total	$	27,033	$	24,817	$	32,853	$	62,917	$	2,997	$	13,714	$	136	$	164,467
Financing receivables:
Balance at March 31, 2013					$	2,312,660	$	779,344	$	4,077,810	$	3,971,438	$	859,664	$	998,787			$	12,999,703
Balance at March 31, 2013
	Individually evaluated
		for impairment:
			Originated loans and leases		$	18,015	$	17,275	$	29,108	$	57,183	$	0	$	0			$	121,581
			Purchased loans and leases			15,959		11,116		25,289		104,051		110		0				156,525
				Total	$	33,974	$	28,391	$	54,397	$	161,234	$	110	$	0			$	278,106
	Collectively evaluated
		for impairment:
			Originated loans and leases		$	2,113,397	$	637,787	$	3,150,965	$	3,125,247	$	850,534	$	998,787			$	10,876,717
			Purchased loans and leases			165,289		113,166		872,448		684,957		9,020		0				1,844,880
				Total	$	2,278,686	$	750,953	$	4,023,413	$	3,810,204	$	859,554	$	998,787			$	12,721,597

29

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

	Three Months Ended March 31, 2012
					Real Estate		Real Estate
			Real Estate -		Secured -		Secured -
	Commercial		Construction		Residential		Commercial		Consumer		Leases		Unallocated		Total
Allowance for credit losses:
Balance at January 1, 2012	$	28,567	$	36,868	$	28,839	$	78,414	$	3,297	$	10,561	$	1,554	$	188,100

	Charge-offs					(3,476)		(3,557)		(3,774)		(5,521)		(1,296)		(906)		0		(18,530)
	Recoveries					1,368		727		121		3,250		368		326		0		6,160
	Provision					7,237		55		8,519		792		1,191		2,477		(1,271)		19,000
Balance at March 31, 2012					$	33,696	$	34,093	$	33,705	$	76,935	$	3,560	$	12,458	$	283	$	194,730
Balance at March 31, 2012
	Individually evaluated
		for impairment:
			Originated loans and leases		$	7,843	$	5,037	$	3,388	$	9,827	$	205	$	0			$	26,300
			Purchased loans and leases			0		0		0		0		0		0				0
				Total	$	7,843	$	5,037	$	3,388	$	9,827	$	205	$	0			$	26,300
	Collectively evaluated
		for impairment:
			Originated loans and leases		$	25,853	$	29,056	$	30,317	$	67,108	$	3,355	$	12,458	$	283	$	168,430
			Purchased loans and leases			0		0		0		0		0		0		0		0
				Total	$	25,853	$	29,056	$	30,317	$	67,108	$	3,355	$	12,458	$	283	$	168,430
Financing receivables:
Balance at March 31, 2012					$	2,088,948	$	993,819	$	3,945,565	$	4,022,788	$	775,913	$	694,636			$	12,521,669
Balance at March 31, 2012
	Individually evaluated
		for impairment:
			Originated loans and leases		$	18,826	$	31,346	$	25,188	$	64,940	$	538	$	0			$	140,838
			Purchased loans and leases			28,456		71,174		39,771		176,451		289		0				316,141
				Total	$	47,282	$	102,520	$	64,959	$	241,391	$	827	$	0			$	456,979
	Collectively evaluated
		for impairment:
			Originated loans and leases		$	1,814,588	$	640,825	$	2,923,800	$	2,871,222	$	760,947	$	694,636			$	9,706,018
			Purchased loans and leases			227,078		250,474		956,807		910,174		14,139		0				2,358,672
				Total	$	2,041,666	$	891,299	$	3,880,607	$	3,781,396	$	775,086	$	694,636			$	12,064,690

30

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

NOTE 6. Goodwill

Goodwill is allocated to Susquehanna’s reporting units at the date the goodwill is initially recorded. Once goodwill has been allocated to the reporting units, it generally no longer retains its identification with a particular acquisition, but instead becomes identified with the reporting unit as a whole. As a result, all of the fair value of each reporting unit is available to support the value of goodwill allocated to the unit. Goodwill impairment testing is performed at the reporting unit level, one level below the business segment.

The goodwill impairment analysis is done in two steps. The first step requires a comparison of the fair value of the individual reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit is in excess of the carrying value, the related goodwill is considered not to be impaired and no further analysis is necessary. If the carrying value of the reporting unit exceeds the fair value, there is an indication of potential impairment and a second step of testing is performed to measure the amount of impairment, if any, for the reporting unit.

Susquehanna assesses goodwill for impairment on an annual basis, or more often if events or circumstances indicate that goodwill may be impaired. This assessment requires significant judgment and analysis.

Susquehanna performed its annual goodwill impairment assessments in the second quarter of 2012 and determined that the fair value of each of its reporting units exceeded its book value, and that there was no goodwill impairment.

Bank Reporting Unit

Goodwill assigned to the bank reporting unit at March 31, 2013 was $1,165,200 and at the annual assessment date of May 31, 2012 was $1,158,248. Fair value of the bank reporting unit was determined using a market approach, which uses prices and other relevant information reported for market transactions involving recent non-distressed sales of comparable financial institutions in Susquehanna’s market to value the bank reporting unit. Susquehanna considered two key ratios in measuring the fair value of the bank reporting unit: price to book and price to tangible book. The following table shows the ratios used at May 31, 2012.

	Annual
Ratio	May 31, 2012
Price to book	1.29x
Price to tangible book	1.47x

Fair value of the bank reporting unit exceeded carrying value by 5.9% at May 31, 2012. Since the fair value of the reporting unit is in excess of the carrying value, the related goodwill is considered not to be impaired and the second step in the analysis is unnecessary.

Wealth Management Reporting Unit

Goodwill assigned to the wealth management reporting unit at March 31, 2013 and at the annual assessment date of May 31, 2012 was $82,746. Fair value of the wealth management reporting unit was determined utilizing the market approach and the income approach. The market approach measures the fair value of the reporting unit using transaction multiples reported for market transactions involving comparable wealth management business. The income approach measures the fair value of the reporting unit by converting the reporting unit’s future earnings over ten years, assuming a weighted increase in the reporting unit’s revenues and a weighted increase in the reporting unit’s expenses, to a single present (discounted) amount, based on a discount rate. In keeping with a market participant’s current valuations of wealth management institutions, Susquehanna predominantly uses the income approach. The following table shows the factors used in the income approach at May 31, 2012.

	Annual
Factors	May 31, 2012
Discount rate	17.5%
Weighted-average increase in revenues	6.0%
Weighted-average increase in expenses	5.0%

31

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

Fair value of the wealth management reporting unit exceeded carrying value by 63.4% at May 31, 2012. Since the fair value of the reporting unit is in excess of the carrying value, the related goodwill is considered not to be impaired and the second step in the analysis is unnecessary.

Property and Casualty Insurance Reporting Unit

Goodwill assigned to the property and casualty insurance reporting unit at March 31, 2013 and at the annual assessment date of May 31, 2012 was $17,177. Fair value of the property and casualty insurance reporting unit was determined using the market approach, which measures the fair value of the reporting unit using recent sales of comparable property and casualty insurance companies in Susquehanna’s market. Susquehanna uses two key ratios to measure the fair value of the property and casualty insurance reporting unit: average price to book and median price to earnings. The following table shows the ratios used at May 31, 2012.

	Annual
Ratio	May 31, 2012
Average price to book	1.17X
Median price to earnings	12.1X

Fair value of the property and casualty insurance reporting unit exceeded carrying value by 205.6% at May 31, 2012. Since the fair value of the reporting unit is in excess of the carrying value, the related goodwill is considered not to be impaired and the second step in the analysis is not required.

NOTE 7.  Deposits
	Deposits consisted of the following at March 31, 2013 and December 31, 2012:
		March 31,		December 31,
		2013		2012
Noninterest-bearing:
	Demand	$	1,917,719	$	1,973,664
Interest-bearing:
	Interest-bearing demand		5,936,099		5,829,147
	Savings		1,077,446		1,032,293
	Time		2,205,304		2,262,262
	Time of $100 or more		1,554,864		1,482,680
Total deposits		$	12,691,432	$	12,580,046

NOTE 8.  Income Taxes

Our effective tax rate for the three months ended March 31, 2013 and 2012 was 31.7% and 31.5%, respectively.  The increase in the tax rate was due to a decrease in tax-advantaged income relative to total income for the first three months of 2013, as compared to the tax-advantaged income relative to total income for the first three months of 2012.  The estimated annual effective rates for the reporting periods ended March 31, 2013 and 2012 were impacted by the level of permanent differences, including tax-advantaged income, resulting in an effective rate below statutory rates for the interim reporting periods.

32

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

NOTE 9. Accumulated Other Comprehensive Loss
	The balances and changes in balances by component of accumulated other comprehensive income (loss) are shown in the
following tables:
							Unrealized				Accumulated
			Unrealized Gains (Losses) on				Gains (Losses)		Post-		Other
			Investment securities				on Cash Flow		retirement		Comprehensive
			With OTTI		All other		Hedges		Benefits		Loss
Balance at January 1, 2012			$	(2,521)	$	23,346	$	(33,402)	$	(33,477)	$	(46,054)
	Gain (loss), net of tax			(1,623)		686		1,698		0		761
Balance at March 31, 2012			$	(4,144)	$	24,032	$	(31,704)	$	(33,477)	$	(45,293)
Balance at January 1, 2013			$	(560)	$	37,242	$	(34,635)	$	(39,305)	$	(37,258)
	Other comprehensive income before
		reclassifications		(196)		(3,992)		(151)		(16)		(4,355)
	Amounts reclassified from accumulated
		other comprehensive income		11		0		2,947		0		2,958
Net current-period other comprehensive income				(185)		(3,992)		2,796		(16)		(1,397)
Balance at March 31, 2013			$	(745)	$	33,250	$	(31,839)	$	(39,321)	$	(38,655)

	The reclassifications out of accumulated other comprehensive income for the period ended March 31, 2013 are as follows:
		Amount Reclassified
		from Accumulated
Details about Accumulated Other Comprehensive		Other Comprehensive			Affected Line Item in the Statement
Income Components		Income			Where Net Income is Presented
Unrealized gains on available-for-sale securities		$	406		Net realized gain on sales of securities
			(388)		Net impairment losses recognized in earnings
			18
			(7)		Tax effect
		$	11		Net of tax
Unrealized losses on cash flow hedges
	Interest rate contracts	$	4,534	(1)	Interest expense
			(1,587)		Tax effect
		$	2,947		Net of tax
Total reclassifications		$	2,958		Net of tax
(1)	For additional information, refer to "Note 13-Derivative Financial Instruments".

33

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

NOTE 10. Pension and Other Postretirement Benefits
Components of Net Periodic Benefit Cost
	Three Months Ended March 31,
									Other Postretirement
	Pension Benefits				SERP				Benefits
	2013		2012		2013		2012		2013		2012
Service cost	$	1,333	$	1,201	$	313	$	34	$	337	$	272
Interest cost		1,794		1,776		102		75		217		201
Expected return on plan assets		(2,412)		(2,349)		0		0		0		0
Amortization of prior service cost		6		6		55		28		29		29
Amortization of transition obligation		0		0		0		0		2		28
Amortization of net actuarial (gain) or loss		757		805		56		54		42		16
Net periodic postretirement benefit cost	$	1,478	$	1,439	$	526	$	191	$	627	$	546

Employer Contributions

Susquehanna previously disclosed in its financial statements for the year ended December 31, 2012, that it expected to contribute $365 to its pension plans and $621 to its other postretirement benefit plan in 2013. As of March 31, 2013, $91 of contributions had been made to its pension plans, and $155 of contributions had been made to its other postretirement benefit plan. Susquehanna anticipates contributing an additional $274 to fund its pension plans in 2013, for a total of $365, and an additional $466 to it other postretirement benefit plan, for a total of $621.

NOTE 11. Earnings per Common Share ("EPS")
	The following tables set forth the calculation of basic and diluted EPS for the three-month periods ended March 31, 2013
and 2012.
Basic earnings per common share
		Three Months Ended March 31,
		2013		2012
Net income applicable to common shareholders		$	42,399	$	23,473
Weighted average common shares outstanding			186,607		171,326
Basic earnings per common share		$	0.23	$	0.14
Diluted earnings per common share
		Three Months Ended March 31,
		2013		2012
Net income available to common shareholders		$	42,399	$	23,473
Weighted average common shares outstanding			186,607		171,326
Dilutive potential common shares			835		647
Total diluted average common shares outstanding			187,442		171,973
Diluted earnings per common share		$	0.23	$	0.14

For the three months ended March 31, 2013 and 2012, weighted average options to purchase 1,586 and 1,991 shares, respectively, were outstanding but were not included in the computation of diluted EPS because the effect of the options would have been antidilutive for the period.

34

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

NOTE 12. Securitizations and Variable Interest Entities (“VIEs”)

In 2005 and 2006, Susquehanna entered into term securitization transactions in which it sold portfolios of home equity loans to securitization trusts. Both of the securitization trusts are VIEs, and Susquehanna is the primary beneficiary of the VIEs. The VIEs were consolidated. Susquehanna entered into these securitization transactions primarily to achieve low-cost funding for the growth of its loan and lease portfolios and to manage capital. The investors and the VIEs have no recourse to Susquehanna for failure of debtors to pay when due.

2006 Transaction

In September 2006, Susquehanna securitized $349,403 of fixed-rate home mortgage loans and variable-rate line of credit loans. Susquehanna retained the right to service the loans.

Approximately 70.5% of the variable-rate loans that were securitized included a feature that permits the borrower to convert all or a portion of the loan from a variable interest rate to a fixed interest rate. If the total principal balance of the converted loans is greater than 10% of the total outstanding balance of the portfolio, Susquehanna is required to transfer the excess converted loans from the portfolio. Based upon Susquehanna’s experience with this product, Susquehanna has concluded that the event requiring the transfer of converted loans of the VIE would be remote.

2005 Transaction

In December 2005, Susquehanna securitized $239,766 of home equity line of credit loans. Susquehanna retained the right to service the loans.

Approximately 35.4% of the loans that were securitized included a feature that permits the borrower to convert all or a portion of the loan from a variable interest rate to a fixed interest rate. If the total principal balance of the converted loans is greater than 10% of the total outstanding balance of the portfolio, Susquehanna is required to transfer the excess converted loans from the portfolio. Based upon Susquehanna’s experience with this product, Susquehanna has concluded that the event requiring the transfer of converted loans of the VIE would be remote.

The following table presents quantitative information about delinquencies, net credit losses, and components of loan and lease sales serviced by Susquehanna, including securitization transactions.
									For the Three Months
									Ended March 31,
	As of March 31,								Net Credit Losses
	Recorded Investment				Risk Assets (1)				(Recoveries)
	2013		2012		2013		2012		2013		2012
Loans and leases held in portfolio	$	12,840,305	$	12,337,688	$	130,104	$	176,445	$	19,643	$	12,370
Home equity loans held by VIEs		159,398		183,981		2,200		3,258		413		240
Leases serviced for others		0		0		0		0		0		0
Total loans and leases serviced	$	12,999,703	$	12,521,669	$	132,304	$	179,703	$	20,056	$	12,610

⁽¹⁾ Includes nonaccrual loans and leases, foreclosed real estate, and loans and leases past due 90 days and still accruing.

	Certain cash flows received from or conveyed to the VIEs associated with the securitizations are as follows:
Home Equity Loans
		Three Months Ended March 31,
		2013		2012
	Additional draws conveyed	$	5,133	$	6,013
	Servicing fees received		184		210
	Other cash flows received		1,092		1,263

35

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

NOTE 13. Derivative Financial Instruments

Risk Management Objective of Using Derivatives

Susquehanna is exposed to certain risks arising from both its business operations and economic conditions. Susquehanna manages economic risk exposures, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and through the use of derivative financial instruments. Susquehanna enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are impacted by changes in interest rates. Susquehanna’s derivative financial instruments are used to manage differences in the amount, timing, and duration of its known or expected cash payments principally those related to certain variable-rate liabilities. Susquehanna also has derivatives that are a result of a service it provides to certain qualifying customers. Susquehanna manages a matched book with respect to its derivative instruments offered as a part of this service to its customers in order to minimize its interest rate risk resulting from such transactions. All derivatives are recorded at fair value.

Derivatives may expose Susquehanna to market, credit or liquidity risks in excess of the amounts recorded on the consolidated balance sheets. Market risk of a derivative is the exposure created by potential fluctuations in interest rates and other factors and is a function of the type of derivative, the tenor and terms of the agreement, and the underlying volatility. Credit risk is the exposure to loss in the event of nonperformance by the other party to the transaction where the value of any collateral held is not adequate to cover such losses. Liquidity risk is the potential exposure that arises when the size of the derivative position may not be able to be rapidly adjusted in periods of high volatility and financial stress at a reasonable cost.

All freestanding derivatives are recorded on the balance sheet at fair value.

Cash Flow Hedges of Interest Rate Risk

Susquehanna uses interest rate derivatives to manage its exposure to interest rate movements and add stability to interest income and expense. Susquehanna primarily uses interest rate swaps as part of its interest rate risk management strategy. For example, Susquehanna may issue variable-rate debt and then enter into a receive-variable pay-fixed-rate interest rate swap with the same payment timing and notional amount to convert the interest payments to a net fixed-rate basis for all or a portion of the term of the long-term debt. As of March 31, 2013 and 2012, Susquehanna had 14 interest rate swaps, respectively for each period, with an aggregate notional amount of $1,152,298 and $1,160,778, respectively, that were designated as cash flow hedges of interest-rate risk.

Susquehanna applies hedge accounting to certain interest rate derivatives entered into for risk management purposes. To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the exposure being hedged. In addition, key aspects of achieving hedge accounting are documentation of hedging strategy and hedge effectiveness at the hedge inception and substantiating hedge effectiveness on an ongoing basis. A derivative must be highly effective in accomplishing the hedge objective of offsetting either changes in the fair value or cash flows of the hedged item for the risk being hedged. Any ineffectiveness in the hedge relationship is recognized in current earnings. The assessment of effectiveness excludes changes in the value of the hedged item that are unrelated to the risks being hedged. The effective portion of changes in the fair value of derivatives designated in a hedge relationship and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged transaction affects earnings.

Amounts recorded in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on Susquehanna’s variable-rate liabilities. During the 12 months following March 31, 2013, Susquehanna estimates that $19,784 will be reclassified as an expense to net interest income.

Non-designated Derivatives

Derivatives not designated as hedges are used to manage Susquehanna’s exposure to interest rate movements and other identified risks but do not meet the strict requirements of hedge accounting. Changes in the fair value of derivatives not designated in hedging relationships are recognized directly in earnings.

Susquehanna does not seek to apply hedge accounting to all of the derivatives involved in Susquehanna’s risk management activities, such as the interest rate derivatives entered into to offset the derivatives offered to qualifying borrowers.Susquehanna offers qualifying commercial banking customers derivatives to enable such customers to transfer, modify or reduce their interest rate risks. The credit risk associated with derivatives entered into with these customers is essentially the same as that involved in extending loans and is subject to our normal credit policies. Susquehanna actively manages the market risks from its exposure to these derivatives by

36

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

entering into offsetting derivative transactions, controls focused on pricing, and reporting of positions to senior managers to minimize its exposure resulting from such transactions.

At March 31, 2013 and 2012, Susquehanna had 231 and 95 derivative transactions, respectively, related to this program with an aggregate notional amount of $1,392,430 and $682,447, respectively. For the three-month periods ended March 31, 2013 and 2012, Susquehanna recognized a net loss of $233 and $128, respectively, related to changes in fair value of the derivatives in this program.

Credit-risk-related Contingent Features

Susquehanna has agreements with certain of its derivative counterparties that contain the following provisions:

•      if Susquehanna defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Susquehanna could also be declared in default on its derivative obligations;

•      if Susquehanna fails to maintain its status as a well/adequately capitalized institution, then the counterparty could terminate the derivative positions, and Susquehanna would be required to settle its obligations under the agreements;

•      if Susquehanna fails to maintain a specified minimum leverage ratio, then Susquehanna could be declared in default on its derivative obligations;

•      if Susquehanna’s credit rating is reduced below investment grade, then a termination event will be deemed to have occurred and Susquehanna’s counterparty would have the right, but not the obligation, to terminate all transactions under the agreement.

At March 31, 2013 and December 31, 2012, the fair value of derivatives in a net liability position, which includes any credit valuation adjustments related to these agreements, was $67,111 and $72,126, respectively. At March 31, 2013 and December 31, 2012, Susquehanna had minimum collateral posting thresholds with certain of its derivative counterparties and had posted cash collateral of $67,920 and $75,103, respectively. If Susquehanna had breached any of the above provisions at March 31, 2013, it would have been required to settle its obligations under the agreements at termination value and would have been required to pay any additional amounts due in excess of amounts previously posted as collateral with the respective counterparty.

37

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

Fair Value of Derivative Instruments
		Fair Values of Derivative Instruments
		March 31, 2013
		Asset Derivatives			Liability Derivatives
		Balance Sheet			Balance Sheet
		Location		Fair Value	Location		Fair Value
Derivatives designated as hedging instruments
	Interest rate contracts	Other assets	$	934	Other liabilities	$	46,894
Derivatives not designated as hedging instruments
	Interest rate contracts	Other assets		23,756	Other liabilities		20,217
Total derivatives			$	24,690		$	67,111
		Fair Values of Derivative Instruments
		December 31, 2012
		Asset Derivatives			Liability Derivatives
		Balance Sheet			Balance Sheet
		Location		Fair Value	Location		Fair Value
Derivatives designated as hedging instruments
	Interest rate contracts	Other assets	$	878	Other liabilities	$	51,172
Derivatives not designated as hedging instruments
	Interest rate contracts	Other assets		25,037	Other liabilities		20,954
Total derivatives			$	25,915		$	72,126

38

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

The Effect of Derivative Instruments on Comprehensive Income
Three Months Ended March 31, 2013
							Location of Loss		Amount of Loss
				Location of Loss		Amount of Loss	Recognized in		Recognized in
		Amount of Gain		Reclassified from		Reclassified from	Income		Income
Derivatives in Cash Flow		Recognized		Accumulated OCI		Accumulated OCI	(Ineffective		(Ineffective
Hedging Relationships		in OCI		into Income		into Income	Portion)		Portion)
Interest rate contracts:	$	2,796		Interest expense	$	(4,534)	Other expense	$	0
		Location of Loss		Amount of Loss
		Recognized		Recognized
Derivatives Not Designated		in Income		in Income
as Hedging Instruments		on Derivatives		on Derivatives
Interest rate contracts:		Other income	$	(232)
		Other expense		(1)
Three Months Ended March 31, 2012
							Location of Loss		Amount of Loss
				Location of Loss		Amount of Loss	Recognized in		Recognized in
		Amount of Gain		Reclassified from		Reclassified from	Income		Income
Derivatives in Cash Flow		Recognized		Accumulated OCI		Accumulated OCI	(Ineffective		(Ineffective
Hedging Relationships		in OCI		into Income		into Income	Portion)		Portion)
Interest rate contracts:	$	1,698		Interest expense	$	(4,280)	Other expense	$	0
		Location of Loss		Amount of Loss
		Recognized		Recognized
Derivatives Not Designated		in Income		in Income
as Hedging Instruments		on Derivatives		on Derivatives
Interest rate contracts:		Other income	$	(97)
		Other expense		(31)

39

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

The following table details Susquehanna’s transactions subject to an enforceable master netting arrangement or other similar agreement with counterparties:

Balance Sheet Netting Disclosure about Offsetting Assets and Liabilities
March 31, 2013
Offsetting of Financial Assets						Net Amounts
						of Assets
						Presented in
		Gross		Gross Amounts		the		Gross Amounts Not Offset in the
		Amounts of		Offset in the		Consolidated		Consolidated Balance Sheet
Description		Recognized		Consolidated		Balance		Financial		Cash Collateral
		Assets		Balance Sheet		Sheet		Instruments		Received		Net Amount
Derivatives		$	24,695	$	(5)	$	24,690	$	0	$	0	$	24,690
Offsetting of Financial Liabilities						Net Amounts
						of Liabilities
						Presented in
		Gross		Gross Amounts		the		Gross Amounts Not Offset in the
		Amounts of		Offset in the		Consolidated		Consolidated Balance Sheet
Description		Recognized		Consolidated		Balance		Financial		Cash Collateral
		Liabilities		Balance Sheet		Sheet		Instruments		Posted		Net Amount
Derivatives		$	67,111	$	0	$	67,111	$	0	$	(67,920)	$	(809)
Repurchase agreements			305,251		0		305,251		(305,251)		0		0
	Total	$	372,362	$	0	$	372,362	$	(305,251)	$	(67,920)	$	(809)

December 31, 2012
Offsetting of Financial Assets						Net Amounts
						of Assets
						Presented in
		Gross		Gross Amounts		the		Gross Amounts Not Offset in the
		Amounts of		Offset in the		Consolidated		Consolidated Balance Sheet
Description		Recognized		Consolidated		Balance		Financial		Cash Collateral
		Assets		Balance Sheet		Sheet		Instruments		Received		Net Amount
Derivatives		$	25,922	$	(7)	$	25,915	$	0	$	0	$	25,915
Offsetting of Financial Liabilities						Net Amounts
						of Liabilities
						Presented in
		Gross		Gross Amounts		the		Gross Amounts Not Offset in the
		Amounts of		Offset in the		Consolidated		Consolidated Balance Sheet
Description		Recognized		Consolidated		Balance		Financial		Cash Collateral
		Liabilities		Balance Sheet		Sheet		Instruments		Posted		Net Amount
Derivatives		$	72,126	$	0	$	72,126	$	0	$	(75,103)	$	(2,977)
Repurchase agreements			302,577		0		302,577		(302,577)		0		0
	Total	$	374,703	$	0	$	374,703	$	(302,577)	$	(75,103)	$	(2,977)

40

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

NOTE 14. Fair Value Disclosures

The accounting guidance for fair value measurements and disclosures defines fair value, establishes a framework for measuring fair value, and sets forth disclosure requirements regarding fair value measurements. This guidance applies whenever other accounting guidance requires or permits assets or liabilities to be measured at fair value. Fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or, in the absence of a principal market, in the most advantageous market for the asset or liability.

Susquehanna uses fair value measurements for the initial recording of certain assets and liabilities and periodic subsequent measurement of certain assets and liabilities on a recurring or non-recurring basis.

Fair Value Hierarchy

The accounting guidance for fair value measurements and disclosures establishes a three-level fair value hierarchy that prioritizes the inputs into the valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority, Level 1, to measurements based on quoted prices in active markets for identical assets or liabilities. The next highest priority, Level 2, is given to measurements based on observable inputs other than quoted prices in active markets for identical assets and liabilities. The lowest priority, Level 3, is given to measurements based on unobservable inputs. Assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

The accounting guidance requires the measurement of fair value to maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect Susquehanna’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

Valuation Processes and Controls over Fair Value Measurement

As part of Susquehanna’s overall valuation process, management employs processes to evaluate and validate the methodologies, techniques and inputs, including review and approval of valuation judgments, methods, models, process controls, and results. These processes are designed to help ensure that the fair value measurements and disclosures are appropriate, consistently applied, and reliable.

Valuation Methodologies and Inputs

The following is a description of Susquehanna’s valuation methodologies and more significant inputs for assets and liabilities measured at fair value. These methods may produce a fair value measurement that may not be indicative of future fair values. Furthermore, while Susquehanna believes that its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Susquehanna uses a third-party pricing service and third-party financial advisory firms in determining the fair value of its securities. Certain fair value measurements are derived from market-based pricing matrices that were developed using observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads and broker quotes. For certain other fair value measurements, when market observable data is not available due to the lack of an active market for a given security, the valuation of the security involves assistance of a third-party financial advisory firm and substantial judgment by management.

Specific valuation methodologies and inputs used in determining the fair value of each significant class of assets and liabilities follows:

Cash and due from banks and short-term investments

For those short-term instruments, the carrying amount is a reasonable estimate of fair value.

Investment securities

U.S. Government agencies: These are debt securities issued by U.S. government-sponsored entities (“GSE”). These securities are valued using market-based pricing matrices that are based on observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads and broker quotes. The investor base is broad, resulting in moderate trading

41

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

volumes and are classified as Level 2 in the fair value hierarchy. These valuations are sensitive to interest rates. As interest rates increase (decrease), the fair value of the securities will generally decrease (increase).

Obligations of states and political subdivisions: These securities are valued using market-based pricing matrices that are based on observable inputs including the structure of the bond, including call terms, cross-collateralization features, and tax-exempt features, together with MSRB reported trades, issuer spreads, material event notices and benchmark yield curves. The investor base for most issues of municipal securities is fairly broad, resulting in moderate trading volumes and are classified as Level 2 in the fair value hierarchy. These valuations are sensitive to trends in the broader municipal securities market, which includes credit risk. As market concerns associated with credit risk increase (decrease), the fair value of the securities will generally decrease (increase).

Agency residential mortgage-backed securities: These securities are valued using market-based pricing matrices that are based on observable inputs, including benchmark TBA security pricing and yield curves that were estimated based on U.S. Treasury yields and certain floating rate indices. The pricing matrices for these securities may also give consideration to pool-specific data supplied directly by the GSE. GSE collateralized mortgage obligations (“CMOs”) are valued using market-based pricing matrices that are based on observable inputs including offers, bids, reported trades, dealer quotes and market research reports, the characteristics of a specific tranche, market convention prepayment speeds and benchmark yield curves as described above. Because agency residential mortgage-backed securities are generally liquid and are valued using observable pricing in the market, they generally are classified as Level 2. As interest rates increase (decrease), the fair value of the securities will generally decrease (increase).

Non-agency mortgage-backed securities: Refer to the description in “Note 3-Investment Securities”. 

Commercial mortgage-backed securities: Commercial mortgage-backed securities are valued primarily based on the median prices from multiple pricing services. Some of the important valuation assumptions used by the pricing services include the collateral type, collateral performance, capital structure, issuer, credit enhancement, coupon, weighted average life, and interest rates, coupled with the observed spread levels on trades of similar securities. Many of these securities have significant prepayment lockout periods or penalty periods that limit the window of potential prepayment to a relatively narrow band. These securities are primarily classified as Level 2.

These valuations are sensitive to market changes, specifically changes in interest rates and credit spreads. As interest rates increase (decrease) and/or credit spreads widens (tightens), fair values will typically decrease (increase).

Other structured financial products: The significant unobservable inputs used in the fair value measurement of Susquehanna’s other structured financial products are conditional repayment rate, loss severity, and conditional default rate. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and directionally opposite change in the assumption used for repayment rate. In addition, refer to the description in “Note 3-Investment Securities”

Other debt securities: These securities consist primarily of government and corporate bonds. These securities are valued using market-based pricing matrices that are based on observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads and broker quotes. The investor base is broad, resulting in moderate trading volumes and are classified as Level 2 in the fair value hierarchy. These valuations are sensitive to interest rates. As interest rates increase (decrease), the fair value of the securities will generally decrease (increase).

Other equity securities; These securities include liquid, exchange-traded equity securities as well as thinly-traded bank stocks and trust preferred securities. The exchange-traded equities are classified in Level 1 because they are valued using quoted market prices. The thinly traded and trust preferred securities are classified in Level 2 or 3 based on the significance of market observable inputs to the overall measurement.

Restricted investments in bank stocks

Restricted investments in bank stocks consists of FRB stock, FHLB stock, and Atlantic Central Bankers Bank stock. Federal law requires a member institution of the FRB and FHLB to hold stock according to predetermined formulas. Atlantic Central Bankers Bank requires its correspondent banking institutions to hold stock as a condition of membership.  The carrying amount approximates fair value.

42

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

Loans and leases

The fair values for loans are estimated using discounted cash flow analyses, applying interest rates currently being offered for loans with similar terms and credit quality, which are indicative of orderly transactions in the current market. For commercial loans and leases, internal risk grades are used to adjust discount rates for risk migration and expected losses. For residential mortgage and other consumer loans, internal prepayment risk models are used to adjust contractual cash flows. Loans are aggregated into pools of similar terms and credit quality and discounted using benchmark-based rates. The carrying amount of accrued interest receivable approximates fair value.

Deposits

The fair values of demand, interest-bearing demand, and savings deposits are the amounts payable on demand at the balance sheet date; recognition of the inherent funding value of these instruments is not permitted. The carrying value of variable-rate time deposits approximates fair value. The fair value of fixed-rate time deposits is based upon the discounted value of future cash flows expected to be paid at maturity, using the U.S. Treasury yield curve.   The carrying amount of accrued interest payable approximates fair value.

Short-term borrowings

For those short-term instruments, the carrying amount approximates fair value.

FHLB borrowings and long-term debt

Fair values were based upon quoted rates of similar instruments issued by banking institutions with similar credit ratings. The carrying amounts of accrued interest payable approximate fair values.

Derivatives

The fair values of interest rate swaps are determined using models that use readily observable market inputs and a market standard methodology applied to the contractual terms of the derivatives, including the period to maturity and interest rate indices.

The methodology nets the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates derived from observable market interest rate curves. Susquehanna incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, Susquehanna has considered the impact of netting and any applicable credit enhancements, such as collateral postings and thresholds, mutual settlements, and guarantees.

Although Susquehanna has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives may use Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2013 and 2012, Susquehanna has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, Susquehanna has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The fair values of commitments to originate mortgage loans to be held for sale and their corresponding forward-sales agreements are estimated using the fees charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. The valuation of fixed-rate loan commitments also considers the difference between current levels of interest rates and the committed rates. These respective fair value measurements would be categorized within Level 3 of the fair value hierarchy.

For additional information regarding derivatives, refer to “Note 13 – Derivative Financial Instruments” above.

Off-balance-sheet items

The fair values of unused commitments to lend and standby letters of credit are considered to be the same as their contractual amounts.

43

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present the financial instruments carried at fair value at March 31, 2013 and December 31, 2012, on the consolidated balance sheets and by levels within the valuation hierarchy.
				Fair Value Measurements at Reporting Date Using
				Quoted Prices in		Significant
				Active Markets for		Other		Significant
				Identical		Observable		Unobservable
				Instruments		Inputs		Inputs
Description		March 31, 2013		(Level 1)		(Level 2)		(Level 3)
Assets
Available-for-sale securities:
U.S. Government Agencies	$	114,136	$	0	$	114,136	$	0
Obligations of states and political
subdivisions		426,444		0		426,444		0
Agency residential mortgage-backed
securities		1,716,976		0		1,716,976		0
Non-agency residential mortgage-
backed securities		26,238		0		646		25,592
Commercial mortgage-backed
securities		36,894		0		36,894		0
Other structured financial products		9,977		0		0		9,977
Other debt securities		45,500		0		45,500		0
Other equity securities		24,461		1,418		19,886		3,157
Derivatives: (1)
Designated as hedging instruments		934		0		934		0
Not designated as hedging
instruments		23,756		0		23,756		0
Total	$	2,425,316	$	1,418	$	2,385,172	$	38,726
Liabilities
Derivatives: (2)
Designated as hedging instruments	$	46,894	$	0	$	46,894	$	0
Not designated as hedging
instruments		20,217		0		20,217		0
Total	$	67,111	$	0	$	67,111	$	0

44

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

					Fair Value Measurements at Reporting Date Using
					Quoted Prices in		Significant
					Active Markets for		Other		Significant
					Identical		Observable		Unobservable
					Instruments		Inputs		Inputs
	Description		December 31, 2012		(Level 1)		(Level 2)		(Level 3)
	Assets
	Available-for-sale securities:
	U.S. Government Agencies	$	114,408	$	0	$	114,408	$	0
	Obligations of states and political
	subdivisions		435,777		0		435,777		0
	Agency residential mortgage-
	backed securities		1,880,562		0		1,880,562		0
	Non-agency residential mortgage-
	backed securities		27,450		0		650		26,800
	Commercial mortgage-backed
	securities		40,380		0		40,380		0
	Other structured financial products		9,550		0		0		9,550
	Other debt securities		45,255		0		45,255		0
	Other equity securities		24,519		21,266		97		3,156
	Derivatives: (1)
	Designated as hedging instruments		878		0		878		0
	Not designated as hedging
	instruments		25,037		0		25,037		0
	Total	$	2,603,816	$	21,266	$	2,543,044	$	39,506
	Liabilities
	Derivatives: (2)
	Designated as hedging instruments	$	51,172	$	0	$	51,172	$	0
	Not designated as hedging
	instruments		20,954		0		20,954		0
	Total	$	72,126	$	0	$	72,126	$	0
(1)	Included in Other assets
(2)	Included in Other liabilities

45

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

	Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs
	The following tables present roll-forwards of the balance sheet amounts for the three months ended March 31, 2013 and 2012, for financial instruments classified by Susquehanna within Level 3 of the valuation hierarchy.
			Available-for-sale Securities
							Non-
							agency
					Other		Residential
					Structured		Mortgage-
			Equity		Financial		backed
			Securities		Products		Securities		Total
	Balance at January 1, 2013	$	3,156	$	9,550	$	26,800	$	39,506
	Total gains or losses (realized/unrealized):
	Included in earnings:
	Other-than-temporary impairment (1)		0		0		(388)		(388)
	Included in other comprehensive income (before taxes)		1		427		(820)		(392)
	Balance at March 31, 2013	$	3,157	$	9,977	$	25,592	$	38,726
	Balance at January 1, 2012	$	3,430	$	13,293	$	0	$	16,723
	Total gains or losses (realized/unrealized):
	Included in earnings:
	Other-than-temporary impairment (1)		(144)		0		0		(144)
	Included in other comprehensive income (before taxes)		(96)		(5,272)		0		(5,368)
	Transfers into Level 3		0		0		20,137		20,137
	Balance at March 31, 2012	$	3,190	$	8,021	$	20,137	$	31,348
(1)	Included in noninterest income, net impairment losses recognized in earnings.

Susquehanna’s policy is to recognize transfers in and transfers out of Levels 1, 2, and 3 as of the end of a reporting period.

Assets Measured at Fair Value on a Nonrecurring Basis

Impaired loans

Impaired collateral dependent loans and other loans where the carrying value is based on the fair value of the underlying collateral less selling costs, such as residential mortgage loans charged off in accordance with regulatory guidance, are measured at fair value on a nonrecurring basis. The fair value of the underlying collateral is incorporated into the estimate of the impairment of a loan. Most of Susquehanna’s impaired collateral dependent loans are secured by real estate. The value of the real estate collateral is determined through appraisals performed by third-party, licensed appraisers. As part of Susquehanna’s overall valuation process, management evaluates these third-party appraisals to ensure that they are representative of the exit prices in Susquehanna’s principal markets. Susquehanna considers the appraisals used in its impairment analysis to be Level 3 inputs. When the value of the real estate, less estimated selling costs, is less than the principal balance of the loan, a specific reserve is established. Impaired loans are reviewed at least quarterly for additional impairment, and reserves are adjusted accordingly.

Foreclosed Assets

Other real estate property acquired through foreclosure is recorded at the lower of its carrying value or the fair value of the related real estate collateral at the transfer date, less estimated selling costs. The value of the real estate collateral is determined through appraisals performed by third party licensed appraisers. As part of Susquehanna’s overall valuation process, management evaluates these third-party appraisals to ensure that they are representative of the exit prices in Susquehanna’s principal markets. Susquehanna considers the appraisals used in its impairment analysis to be Level 3 inputs.

46

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

The following tables present assets measured at fair value on a nonrecurring basis at March 31, 2013 and December 31, 2012, on the consolidated balance sheets and by the valuation hierarchy.
				Quoted
				Prices
				in Active		Significant
				Markets for		Other		Significant
				Identical		Observable		Unobservable
				Instruments		Inputs		Inputs
Description		March 31, 2013		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	69,443	$	0	$	0	$	69,443
Foreclosed assets		22,557		0		0		22,557
	$	92,000	$	0	$	0	$	92,000
				Quoted
				Prices
				in Active		Significant
				Markets for		Other		Significant
				Identical		Observable		Unobservable
				Instruments		Inputs		Inputs
Description		December 31, 2012		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	65,731	$	0	$	0	$	65,731
Foreclosed assets		26,245		0		0		26,245
	$	91,976	$	0	$	0	$	91,976

	The following table details the quantitative information about Level 3 fair value measurements:
		Fair Value at
		March 31, 2013		Valuation		Range
Asset		(in thousands)		Technique(s)	Unobservable Input	(Weighted Average)
Non-agency residential mortgage-		$	25,592	Discounted Cash Flow	Conditional repayment rate	10.3%
	backed securities				Loss severity	43.0%
					Conditional default rate	3.8%
Other structured financial products			9,977	Discounted Cash Flow	Credit default rates, call options and deferrals, waterfall structure, and covenants.	Varies by individual security, refer to Note 3
Other equity securities			3,157	Discounted Cash Flow	Timing of cash flows from dividends and terminal value	0.2x - 1.5x
						(.9x)
Impaired loans			69,443	Discounted Cash Flow	Timing of cash flows based upon current discount rates and terminal value	1.5% - 6.9%
						(4.0%)
Foreclosed assets			22,557	Discounted Cash Flow	Third party appraisals less estimated selling costs	0.0% - 100.0%
						(25.1%)

The significant unobservable inputs used in the fair value measurement of Susquehanna’s other structured financial products are conditional repayment rate, loss severity, and conditional default rate. Significant increases (decreases) in any of those inputs in

47

Susquehanna Bancshares, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Amounts in thousands, except as noted and per share)

isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and directionally opposite change in the assumption used for repayment rate.

Additional Disclosures about Fair Value of Financial Instruments
The following table represents the carrying amounts and estimated fair values of Susquehanna's financial instruments.  The methods and assumptions used to estimate the fair value of each class of financial instruments are described above.
		March 31, 2013
		Carrying
		Amount		Fair Value		Level 1		Level 2		Level 3
	Financial assets:
	Cash and due from banks	$	291,434	$	291,434	$	291,434	$	0	$	0
	Short-term investments		110,986		110,986		0		110,986		0
	Investment securities		2,400,626		2,400,626		1,418		2,360,482		38,726
	Restricted investment in bank stocks		151,974		151,974		0		151,974		0
	Loans and leases		12,999,703		13,125,606		0		0		13,125,606
	Derivatives		24,690		24,690		0		24,690		0
	Financial liabilities:
	Deposits		12,691,432		12,694,058		0		12,694,058		0
	Short-term borrowings		786,251		786,251		0		786,251		0
	FHLB borrowings		1,044,480		1,045,777		0		1,045,777		0
	Long-term debt		501,559		503,698		0		503,698		0
	Derivatives		67,111		67,111		0		67,111		0
		December 31, 2012
		Carrying
		Amount		Fair Value		Level 1		Level 2		Level 3
	Financial assets:
	Cash and due from banks	$	277,042	$	277,042	$	277,042	$	0	$	0
	Short-term investments		119,176		119,176		0		119,176		0
	Investment securities		2,577,901		2,577,901		21,266		2,517,129		39,506
	Restricted investment in bank stocks		152,434		152,434		0		152,434		0
	Loans and leases		12,894,741		12,954,918		0		0		12,954,918
	Derivatives		25,915		25,915		0		25,915		0
	Financial liabilities:
	Deposits		12,580,046		12,544,069		0		12,544,069		0
	Short-term borrowings		817,577		817,577		0		817,577		0
	FHLB borrowings		1,199,062		1,200,358		0		1,200,358		0
	Long-term debt		513,401		512,632		0		512,632		0
	Derivatives		72,126		72,126		0		72,126		0

48

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of the significant changes in the consolidated results of operations, financial condition, and cash flows of Susquehanna Bancshares, Inc. and its subsidiaries is set forth below for the periods indicated.  Unless the context requires otherwise, the terms “Susquehanna”, “we”, “us”, and “our” refer to Susquehanna Bancshares, Inc. and its subsidiaries.

                Certain statements in this report may be considered to be "forward-looking statements" as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995, such as statements that include the words "expect," "estimate," "project," "anticipate," "should," "intend," "probability," "risk," "target," "objective" and similar expressions or variations on such expressions. In particular, this document includes forward-looking statements relating, but not limited to, general economic conditions; the impact of new regulations on our business; our potential exposures to various types of market risks, such as interest rate risk and credit risk; expectations regarding future acquisitions; whether our allowance for loan and lease losses is adequate to meet probable loan and lease losses; the expected values of assets and liabilities acquired in connection with the Tower merger; the improvement in the credit quality of our loan portfolio; our ability to maintain market share and monitor and manage our portfolios; our ability to evaluate loan guarantors; our ability to offset loan prepayment penalties through decreased interest expense on FHLB borrowings; our ability to achieve loan growth; our ability to maintain sufficient liquidity; our ability to manage credit quality; and our ability to achieve our 2013 financial goals. Such statements are subject to certain risks and uncertainties. For example, certain of the market risk disclosures are dependent on choices about essential model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market-risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual income gains and losses could materially differ from those that have been estimated. Other factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this document include, but are not limited to:

                •      adverse changes in our loan and lease portfolios and the resulting credit-risk-related losses and expenses;

                •      adverse changes in regional real estate values;

                •      interest rate fluctuations which could increase our cost of funds or decrease our yield on earning assets and therefore reduce our net interest income;

                •      decreases in our loan and lease quality and origination volume;

                •      the adequacy of loss reserves;

                •      impairment of goodwill or other assets;

                •      the loss of certain key officers, which could adversely impact our business;

                •      continued relationships with major customers;

•      the ability to continue to grow our business internally and through acquisition and successful integration of bank and non-bank entities while controlling our costs;

                •      adverse international, national and regional economic and business conditions;

                •      compliance with laws and regulatory requirements of federal and state agencies;

                •      competition from other financial institutions in originating loans, attracting deposits, and providing various financial services that may affect our profitability;

                •      the ability to hedge certain risks effectively and economically;

                •      our ability to effectively implement technology driven products and services;

                •      changes in consumer confidence, spending and savings habits relative to the bank and non-bank financial services we provide;

49

                •      changes in legal or regulatory requirements or the results of regulatory examinations that could adversely impact our business and financial condition and restrict growth;

                •      the impact of federal laws and related rules and regulations on our business operations and competitiveness;

                •      the effects of and changes in trade, monetary and fiscal policies, and laws, including interest rate

                      policies of the Federal Reserve Board;

•      the effects of and changes in the rate of Federal Deposit Insurance Corporation (“FDIC”) premiums;

       and

                •      our success in managing the risks involved in the foregoing.

                We encourage readers of this report 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. We do 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.

                The following discussion and analysis, the purpose of which is to provide investors and others with information that we believe to be necessary for an understanding of our financial condition, changes in financial condition, and results of operations, should be read in conjunction with the financial statements, notes, and other information contained in this document.

               The following information refers to Susquehanna Bancshares, Inc. and its wholly owned subsidiaries: Boston Service Company, Inc. (t/a Hann Financial Service Corporation) (“Hann”), Susquehanna Bank and subsidiaries, Valley Forge Asset Management Corp. (“VFAM”), Stratton Management Company and subsidiary (“Stratton”), and The Addis Group, LLC (“Addis”).

Availability of Information

                Our web-site address is www.susquehanna.net. We make available free of charge, through the Investor Relations section of our web site, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. We include our web-site address in this report as an inactive textual reference only.  Information contained on our website is not incorporated into and does not constitute part of this report.

Executive Overview

                Susquehanna’s management monitors the local, national, and global economies and their effects on our customers and our financial performance.  We also evaluate new regulatory changes that have been, or will be, implemented, including those as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) for their potential impact on our business.

                We feel we are well positioned to handle negative effects of changes in the economy or regulatory oversight given our strong liquidity, and capital ratios (see “Financial Conditions – Capital Adequacy”) which are well in excess of regulatory minimums to be considered “well capitalized”.

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With these factors in mind, our 2013 financial goals are as follows:
Table 1
Key Susquehanna Financial Targets
	Updated		Original
	Target		Target
Net interest margin (FTE)		3.90%		3.90%
Loan growth		5.0%		5.0%
Deposit growth		6.0%		6.0%
Noninterest income growth		8.0%		8.0%
Noninterest expense growth		-2.0%		-2.0%
Effective tax rate		31.0%		32.0%

Acquisitions

On February 17, 2012, we completed the acquisition of Tower Bancorp, Inc. (“Tower”), a Pennsylvania chartered bank holding company based in Harrisburg, Pennsylvania with approximately $2.5 billion of assets, through a merger of Tower with and into Susquehanna.  In connection with the Tower merger, Tower’s wholly-owned banking subsidiary, Graystone Tower Bank, was merged into Susquehanna’s wholly-owned banking subsidiary Susquehanna Bank, with Susquehanna Bank being the surviving institution.  The acquisition of Tower enhances Susquehanna’s footprint in Pennsylvania and Maryland.  The acquisition was accounted for under the acquisition method.

Results of Operations

Summary of First Quarter 2013 Compared to First Quarter 2012

Net income for the first quarter of 2013 was $42.4 million, an increase of $18.9 million when compared to net income of $23.5 million for the first quarter of 2012. Net interest income increased 11.2%, to $149.2 million for the first quarter of 2013, from $134.1 million for the first quarter of 2012. The provision for loan and lease losses decreased 36.8% to $12.0 million for the first quarter of 2013, from $19.0 million for the first quarter of 2012.  Noninterest income increased 7.9%, to $42.6 million for the first quarter of 2013, from $39.5 million for the first quarter of 2012.  Noninterest expenses decreased 2.2%, to $117.7 million for the first quarter of 2013, from $120.4 million for the first quarter of 2012.  Excluding merger-related expenses, non-interest expense increased $8.8 million, or 8.1%, for the first quarter of 2013, over the same period in 2012.

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	Additional information is as follows:
Table 2
Key Susquehanna Financial Measures
			Three Months Ended
			March 31,
			2013		2012
		Diluted Earnings per Common Share	$	0.23	$	0.14
		Return on Average Assets		0.95%		0.58%
		Return on Average Shareholders' Equity		6.58%		4.02%
		Return on Average Tangible Shareholders' Equity (1)		13.87%		8.36%
		Efficiency Ratio (2)		60.17%		61.39%
		Net Interest Margin		3.97%		3.94%
(1)	Supplemental Reporting of Non-GAAP-based Financial Measurements.
(2)	Adjusted for merger-related expenses.

Return on average tangible equity is a non-GAAP-based financial measure calculated using non-GAAP amounts.  The most directly related comparable measure is return on average shareholders’ equity, which is calculated using GAAP-based amounts.  We calculate return on average tangible shareholders’ equity by excluding the balance of intangible assets and their related amortization expense from our calculation of return on average shareholders’ equity.  Management uses the return on average tangible shareholders’ equity in order to evaluate its business performance relative to the tangible capital supporting the ongoing business.  Management believes that this is a better measure of our performance.  In addition, 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 shareholders’ equity to return on average tangible shareholders’ equity is set forth as part of Table 3 below.

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Table 3
Reconciliation of Non-GAAP Measures
	Three Months Ended
	March 30,
	2013		2012
Tangible Book Value per Common Share
End of period balance sheet data
Shareholders' equity	$	2,639,489	$	2,512,584
Goodwill and other intangible assets		(1,313,648)		(1,318,554)
Tangible common equity (numerator)	$	1,325,841	$	1,194,030
Common shares outstanding (denominator)		186,800		187,856
Tangible book value per common share	$	7.10	$	6.36
Return on Average Tangible Shareholders' Equity
Return on average shareholders' equity (GAAP basis)		6.58%		4.02%
Effect of excluding average intangible assets and
related amortization		7.29%		4.34%
Return on average tangible shareholders' equity		13.87%		4.38%
Efficiency Ratio
Other expense	$	117,729	$	120,355
Less: Merger related expenses		0		(11,479)
Noninterest operating expense (numerator)	$	117,729	$	108,876
Taxable-equivalent net interest income	$	153,021	$	137,837
Other income		42,644		39,515
Denominator	$	195,665	$	177,352
Efficiency ratio		60.17%		61.39%

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Table 4
Distribution of Assets, Liabilities and Shareholders' Equity (1)
Interest Rates and Interest Differential - Tax Equivalent Basis
			For the Three Month Period Ended						For the Three Month Period Ended
			March 31, 2013						March 31, 2012
			Average					Average
			Balance		Interest		Rate (%)	Balance		Interest		Rate (%)
			(Dollars in thousands)
Assets
Short-term investments			$	109,349	$	36	0.13	$	106,583	$	30	0.11
Investment securities:
		Taxable		2,202,136		11,426	2.10		2,166,578		13,790	2.56
		Tax-advantaged		401,459		5,529	5.59		380,830		5,787	6.11
	Total investment securities			2,603,595		16,955	2.64		2,547,408		19,577	3.09
Loans and leases, (net):
		Taxable		12,501,991		156,853	5.09		11,065,149		145,219	5.28
		Tax-advantaged		427,374		5,371	5.10		346,443		4,825	5.60
	Total loans and leases			12,929,365		162,224	5.09		11,411,592		150,044	5.29
Total interest-earning assets				15,642,309		179,215	4.65		14,065,583		169,651	4.85
Allowance for loan and lease losses				(184,909)					(191,305)
Other noninterest-earning assets				2,573,727					2,400,495
Total assets			$	18,031,127				$	16,274,773
Liabilities
Deposits:
Interest-bearing demand
		Interest-bearing demand	$	5,895,120	$	4,622	0.32	$	4,990,291	$	5,718	0.46
		Savings		1,048,881		279	0.11		929,499		329	0.14
		Time		3,778,086		11,232	1.21		3,746,848		12,026	1.29
Short-term borrowings				817,816		2,153	1.07		642,128		2,122	1.33
FHLB borrowings				1,155,637		3,672	1.29		985,294		2,958	1.21
Long-term debt				508,541		4,236	3.38		673,722		8,661	5.17
Total interest-bearing liabilities				13,204,081		26,194	0.80		11,967,782		31,814	1.07
Demand deposits				1,918,463					1,687,899
Other liabilities				294,264					270,766
Total liabilities				15,416,808					13,926,447
Equity				2,614,319					2,348,326
Total liabilities & shareholders' equity			$	18,031,127				$	16,274,773
Net interest income / yield on
		average earning assets				153,021	3.97				137,837	3.94
Taxable equivalent adjustment						(3,815)					(3,714)
Net interest income - as reported					$	149,206				$	134,123

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Table 5
Changes in Net Interest Income - Tax Equivalent Basis
			Three months ended March 31, 2013
			versus March 31, 2012
			Increase (Decrease)
			Due to Change in (1)
			Average		Average
			Volume		Rate		Total
		(Dollars in thousands)
Interest Income
Other short-term investments		$	1	$	5	$	6
Investment securities:
	Taxable		213		(2,577)		(2,364)
	Tax-advantaged		283		(541)		(258)
Total investment securities			496		(3,118)		(2,622)
Loans (net of unearned income):
	Taxable		17,266		(5,632)		11,634
	Tax-advantaged		1,019		(473)		546
Total loans			18,285		(6,105)		12,180
Total interest-earning assets		$	18,782	$	(9,218)	$	9,564
Interest Expense
Deposits:
	Interest-bearing demand	$	898	$	(1,994)	$	(1,096)
	Savings		37		(87)		(50)
	Time		88		(882)		(794)
Short-term borrowings			502		(471)		31
FHLB borrowings			514		200		714
Long-term debt			(1,833)		(2,592)		(4,425)
Total interest-bearing liabilities			206		(5,826)		(5,620)
Net Interest Income		$	18,576	$	(3,392)	$	15,184
(1)	Changes that are due in part to volume and in part to rate are allocated in proportion to their relationship to the amounts of changes directly to volume and rate.

Net Interest Income-Taxable Equivalent Basis

                Our major source of operating revenues is net interest income, which increased 11.2% to $149.2 million for the first quarter of 2013, as compared to $134.1 million for the same period in 2012. Net interest income as a percentage of net interest income plus noninterest income was 77.8% and 77.2%, respectively, for each of the quarters ended March 31, 2013 and March 31, 2012.

                Net interest income is the income that remains after deducting, from total income generated by earning assets, the interest expense attributable to the cost of the funds required to support earning assets. Income from earning assets includes income from loans, investment securities, and short-term investments. The amount of interest income is dependent upon many factors, including the volume of earning assets, the general level of interest rates, the dynamics of the change in interest rates, the levels of non-performing loans, and accretion of fair value adjustments on purchased loans. The cost of funds varies with the amount of funds necessary to support earning assets, the rates paid to attract and hold deposits, the rates paid on borrowed funds, amortization of core deposit intangibles, accretion of fair value adjustments on acquired deposits, and the levels of noninterest-bearing demand deposits and equity capital.

Table 4 presents average balances, taxable equivalent interest income and expense, and yields earned or paid on these assets and liabilities. For purposes of calculating taxable equivalent interest income, tax-exempt interest has been adjusted using a marginal tax rate of 35% in order to equate the yield to that of taxable interest rates.

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The increase of $15.2 million in our taxable equivalent net interest income for the first quarter of 2013, as compared to the first quarter of 2012, was primarily the result of an $1.6 billion increase in first quarter average interest-earning assets, due mainly to the Tower acquisition, versus the prior year having a greater impact than the $1.2 billion increase in average interest-bearing liabilities, due mainly to the Tower acquisition, and a 3 basis point increase in the net interest margin, which was the result of the rate paid on interest-bearing liabilities declining 27 basis points, while the yield earned on average interest-earning assets declined by only 20 basis points.  The greater decrease on interest-bearing liabilities resulted primarily from restructuring $287.1 million of long-term debt in the latter half of 2012.

                Variances do occur in the net interest margin, as an exact repricing of assets and liabilities is not possible.  A further explanation of the impact of asset and liability repricing is found in Item 3, “Quantitative and Qualitative Disclosures About Market Risk.”

Provision and Allowance for Loan and Lease Losses

The provision for loan and lease losses is the expense necessary to maintain the allowance for loan and lease losses at a level appropriate to absorb management’s estimate of probable incurred losses in the loan and lease portfolio. Our provision for loan and lease losses is based upon management’s quarterly review of the loan and lease portfolio. The purpose of the review is to assess loan quality, identify impaired loans and leases, analyze delinquencies, ascertain loan and lease growth, evaluate potential charge-offs and recoveries, and assess general economic conditions in the markets we serve.

Net charge-offs for the first quarter of 2013 increased to $19.6 million, or 0.62% of average loans and leases, when compared to net charge-offs for the first quarter of 2012 of $12.4 million, or 0.44% of average loans and leases. Nonaccrual loans declined significantly during this period, from $133.5 million at March 31, 2012 to $103.4 million at March 31, 2013. As a result, we decreased the provision for loan and lease losses from $19.0 million for the first three months of 2012 to $12.0 million for the first three months of 2013. In addition, on a linked-quarter basis, net charge-offs for the first quarter of 2013 were $19.6 million, and net charge-offs for the fourth quarter of 2012, were $15.9 million.

The allowance for loan and lease losses was 1.36% of period-end loans and leases, or $176.4 million, at March 31, 2013; 1.43% of period-end loans and leases, or $184.0 million, at December 31, 2012; and 1.56% of period-end loans and leases, or $194.7 million, at March 31, 2012. The allowance for loan and lease losses for Originated loans was 1.59% of period-end loans and leases, or $175.0 million, at March 31, 2013; 1.70% of period-end loans and leases, or $182.9 million, at December 31, 2012; and 1.98% of period-end loans and leases, or $194.7 million, at March 31, 2012.

Determining the level of the allowance for probable loan and lease losses at any given point in time is difficult, particularly during uncertain economic periods. We must make estimates using assumptions and information that is often subjective and changing rapidly. The review of the loan and lease portfolios is a continuing process in light of a changing economy and the dynamics of the banking and regulatory environment. In our opinion, the allowance for loan and lease losses is appropriate to meet probable incurred loan and lease losses at March 31, 2013. There can be no assurance, however, that we will not sustain loan and lease losses in future periods that could be greater than the size of the allowance at March 31, 2013.

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Table 6
Provision and Allowance for Loan and Lease Losses
				Three Months Ended
				March 31
				2013		2012
					(Dollars in thousands)
	Balance - beginning of period			$	184,020	$	188,100
		Additions			12,000		19,000
		Charge-offs:
			Commercial, financial, and agricultural		(10,037)		(3,476)
			Real estate - construction		(4,763)		(3,557)
			Real estate secured - residential		(3,013)		(3,774)
			Real estate secured - commercial		(4,603)		(5,521)
			Consumer		(558)		(1,296)
			Leases		(1,119)		(906)
		Total charge-offs			(24,093)		(18,530)
		Recoveries:
			Commercial, financial, and agricultural		1,996		1,368
			Real estate - construction		462		727
			Real estate secured - residential		651		121
			Real estate secured - commercial		722		3,250
			Consumer		322		368
			Leases		297		326
		Total recoveries			4,450		6,160
		Net charge-offs			(19,643)		(12,370)
	Balance - end of period			$	176,377	$	194,730
	Average loans and leases outstanding			$	12,929,365	$	11,411,592
	Period-end loans and leases				12,999,703		12,521,669
	Net charge-offs as a percentage of average loans
		and leases (annualized)			0.62%		0.44%
	Allowance as a percentage of period-end loans
		and leases			1.36%		1.56%

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Noninterest Income

     First Quarter 2013 Compared to First Quarter 2012

                Noninterest income, as a percentage of net interest income plus noninterest income, was 22.2% for the first quarter of 2013 and 22.8% for the first quarter of 2012.

                The following table presents a breakdown of Susquehanna’s noninterest income.

Table 7
Noninterest Income
						% Change
						2013
		Three Months Ended March 31,				vs.
		2013		2012		2012
		Dollars in thousands
Service charges on deposit accounts		$	8,672	$	7,674	13.0	%
Vehicle origination and servicing fees			3,354		1,924	74.3
Wealth management commissions and fees			12,390		11,602	6.8
Commissions on property and casualty insurance sales			4,542		5,058	(10.2)
Other commissions and fees			5,237		4,643	12.8
Income from bank-owned life insurance			1,850		1,472	25.7
Mortgage banking revenue			4,110		3,513	17.0
Net realized gain on sales of securities			406		385	5.5
Net impairment losses recognized in earnings			(388)		(144)	169.4
Other			2,471		3,388	(27.1)
	Total noninterest income	$	42,644	$	39,515	7.9

Noninterest income increased $3.1 million, or 7.9%, for the first quarter of 2013, as compared to the first quarter of 2012. This net increase was primarily the result of the following:

·Increased service charges on deposit accounts of $1.0 million;

·Increase vehicle origination and servicing fees of $1.4 million;

·Increased wealth management commissions and fees of $0.8 million;

Service charges on deposit accounts. The 13.0% increase is primarily the result of recognizing a full quarter, in 2013, of service charges on accounts acquired in the Tower transaction, compared to a one-half quarter in 2012.

Vehicle origination and servicing fees.  The 74.3% increase is the result of lease production at our Hann subsidiary increasing $94.3 million due to expanded territories.

Wealth management commissions and fees. The 6.8% increase primarily is the result of increased fees related to the acquisition of Tower trust accounts.

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Noninterest Expenses

     First Quarter 2013 Compared to First Quarter 2012

The following table presents a breakdown of Susquehanna’s noninterest expense.

Table 8
Noninterest Expense
						% Change
						2013
		Three Months Ended March 31,				vs.
		2013		2012		2012
			Dollars in thousands
Salaries and employee benefits		$	63,034	$	57,958	8.8	%
Occupancy			11,215		10,810	3.7
Furniture and equipment			3,578		3,617	(1.1)
Professional and technology services			5,729		4,548	26.0
Advertising and marketing			3,203		3,054	4.9
FDIC insurance			3,798		5,178	(26.7)
Legal fees			1,870		2,053	(8.9)
Amortization of intangible assets			3,268		2,753	18.7
Vehicle lease disposal			1,290		1,836	(29.7)
Other			20,744		17,069	21.5
			117,729		108,876	8.1
Merger related			0		11,479	(100.0)
	Total noninterest expenses	$	117,729	$	120,355	(2.2)

                Noninterest expenses, excluding merger-related costs, increased $8.8 million, or 8.1%, from $108.9 million for the first quarter of 2012, to $117.7 million for the first quarter of 2013. This net increase was primarily the result of:

·Increased salaries and employee benefits of $5.1 million;

·Increased other noninterest expense of $3.7 million.

Salaries and employee benefits.  The 8.8% increase is the result of recognizing a full quarter, in 2013, of salary and benefit expense on employees acquired in the Tower transaction, compared to a one-half quarter in 2012, increased incentive bonus, and annual merit increases.

Other non-interest expenses.  The 21.5% increase is primarily the result of increased expenses relating to computer software maintenance and amortization, employee welfare, operating risk loss, and Pennsylvania shares tax, due to the Tower acquisition in February 2012.

Income Taxes

Our effective tax rate for the reporting period ended March 31, 2013 was 31.7%.  Our effective tax rate for the reporting period ended March 31, 2012 was 31.5%.  The increase in tax rate was due to a decrease in tax-advantaged income relative to total income for the first three months of 2013, as compared to the tax-advantaged income relative to total income for the first three months of 2012.  The estimated annual effective rates for the reporting periods ended March 31, 2013 and March 31, 2012 were impacted by the level of permanent differences, including tax-advantaged income, resulting in an effective rate below statutory rates for the interim reporting periods.

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Financial Condition

Summary of March 31, 2013 Compared to December 31, 2012

Total assets at March 31, 2013 and December 31, 2012 were $18.0 billion. Total loans at March 31, 2013 were $13.0 billion, an increase of $0.1 billion from December 31, 2012. Total deposits at March 31, 2013 were $12.7 billion, an increase of $0.1 billion from December 31, 2012.  Total equity capital was $2.6 billion at March 31, 2013 and December 31, 2012, or $14.13 per share and $13.92 per share, respectively.  

Fair Value Measurements and the Fair Value Option for Financial Assets and Financial Liabilities

                At March 31, 2013, we had made no elections to use fair value as an alternative measurement for selected financial assets and financial liabilities not previously carried at fair value. For additional information about our financial assets and financial liabilities carried at fair value, refer to “Note 11. Fair Value Disclosures” to the financial statements appearing in Part I, Item 1, of this report.  

Securities Available for Sale

                Securities available for sale decreased 6.9%, or $177.3 million from December 31, 2012 resulting from a strategic decision not to purchase securities in the first quarter of 2013 due to the low interest rate environment and reasonable loan demand.  For additional information about our investment securities portfolio, refer to “Note 3. Investment Securities” and “Note 13. Fair Value Disclosures” to the financial statements appearing in Part I, Item 1, of this report.

Loans and Leases

                Total loans and leases increased 0.8%, or $105.0 million, from December 31, 2012 to March 31, 2013.  For additional information about our loan portfolio, refer to “Note 4. Loans and Leases”to the financial statements appearing in Part I, Item 1, of this report.

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Risk Assets
Table 9
Risk Assets
				March 31		December 31,
				2013		2012
				(Dollars in thousands)
	Non-performing assets:
		Nonaccrual loans and leases:
			Commercial, financial, and agricultural	$	9,542	$	10,464
			Real estate - construction		18,945		14,817
			Real estate secured - residential		30,372		28,440
			Real estate secured - commercial		43,341		42,621
			Consumer		37		43
			Leases		1,114		1,382
		Total nonaccrual loans and leases			103,351		97,767
		Foreclosed real estate			22,557		26,245
	Total non-performing assets			$	125,908	$	124,012
	Total non-performing assets as a percentage of period-end
		loans and leases and foreclosed real estate			0.97%		0.96%
	Allowance for loan and lease losses as a percentage of
		nonaccrual loans and leases			171%		188%
	Loans contractually past due 90 days and still accruing			$	6,396	$	8,209
	Troubled debt restructurings				65,773		67,775

One of the more significant fair value adjustments in our purchase accounting for the Tower transaction was to loans.  As of February 17, 2012, certain of the loans acquired from Tower had evidence of credit deterioration since origination, and it was probable that we would not collect all contractually required principal and interest payments.  The accounting guidance requires that acquired credit-impaired loans be recorded at fair value and prohibits carryover of the related allowance for loan losses.

The acquired credit-impaired loans were initially recognized at fair value, which incorporates the present value of amounts estimated to be collectible.  Accordingly, such acquired credit-impaired loans are not classified as nonaccrual, even though they may be contractually past due, because we expect to fully collect the fair values of such loans (that is, the new cost basis arising out of our purchase accounting).  Acquired credit-impaired loans are also not included in the disclosure of loans 90 days or more past due and still accruing interest even though certain of them are 90 days or more contractually past due.

                As a result of the application of the accounting guidance to Tower’s loan portfolios, certain credit-related ratios of the Company, including, for example, the growth rate in non-performing assets since December 31, 2012, may not necessarily be directly comparable with periods prior to the merger or with credit-related ratios of other financial institutions. 

Nonperforming assets increased from $124.0 million at December 31, 2012, to $125.9 million at March 31, 2013. Consequently, total nonperforming assets as a percentage of period-end loans and leases plus foreclosed real estate increased from 0.96% at December 31, 2012 to 0.97% at March 31, 2013, and troubled debt restructurings decreased $2.0 million, from $67.8 million at December 31, 2012 to $65.8 million at March 31, 2013.

                Of the $278.1 million of impaired loans (nonaccrual, non-consumer loan relationships greater than $0.75 million plus accruing restructured loans),  $196.8 million, or 70.8%, had no related reserve(refer to “Note 4. Loans and Leases – Impaired Loans” to the financial statements appearing in Part I, Item 1, of this report.) The determination that no related reserve for collateral-dependent loans was required was based on the net realizable value of the underlying collateral.

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At March 31, 2013, real estate – construction loans comprised only 6.0% of our total loan and lease portfolio, but accounted for 18.3% of nonaccrual loans and leases and 14.5% of our allowance for loan and lease losses. In addition, for the three-month periods  ended March 31, 2013 and 2012, this loan type accounted for 21.9%, and 22.9%, respectively, of total net charge-offs.  As a result, we consider real estate - construction loans to be higher-risk loans. Additional information about our real estate – construction loan portfolio is presented in Tables 10, 11, and 12. Categories within these tables are defined as follows:

·Construction loans – loans used to fund vertical construction for residential and non-residential structures;

·Land development loans – loans secured by land for which the approvals for site improvements have been obtained, the site improvements are in progress, or the site improvements have been completed; and

·Raw land – loans secured by land for which there are neither approvals nor site improvements.

Table 10
Construction, Land Development, and Other Land Loans - Portfolio Status
			Balance at				Past Due		Past Due				Other		Net
			March 31,		% of Total		30-89		90 Days and		Non		Internally		Charge-
Category			2013		Construction		Days		Still Accruing		Accrual		Monitored	(1)	Offs	(2)	Reserve	(3)
			(Dollars is thousands)
1-4 Family:
	Construction		$	152,342	19.6	%	0.5	%	0.0	%	3.5	%	16.2	%	1.6	%	3.7	%
	Land development			190,118	24.3		0.1		0.1		0.3		20.3		0.3		3.3
	Raw land			1,284	0.2		0.0		0.0		0.0		0.0		77.9		0.9
				343,744	44.1		0.3		0.0		1.7		18.4		2.1		3.5
All Other:
	Construction:
		Investor		190,383	24.4		0.0		0.0		3.8		9.0		3.0		2.9
		Owner-occupied		49,776	6.4		0.0		0.0		1.2		0.0		0.0		3.6
	Land development:
		Investor		145,779	18.7		0.5		0.2		3.7		27.7		1.0		3.4
		Owner-occupied		17,028	2.2		0.0		0.0		0.0		13.3		0.8		3.7
	Raw land:
		Investor		31,817	4.1		0.0		0.0		0.0		20.1		2.0		2.4
		Owner-occupied		816	0.1		8.5		0.0		0.0		0.0		0.0		0.4
				435,599	55.9		0.2		0.1		3.0		15.2		1.8		3.1
Total			$	779,343	100.0		0.2		0.1		2.4		16.6		2.0		3.3

(1)	Represents loans with initial signs of some financial weakness and potential problem loans that are on our internally monitored loan list, excluding non-accrual and
	past-due loans reflected in the prior three columns.
(2)	Represents the amount of net charge-offs in each category for the last nine months divided by the category loan balance at March 31, 2013 plus the net charge-offs.
(3)	Represents the amount of the allowance for loan and lease losses allocated to this category divided by the category loan balance at March 31, 2013.

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Table 11
Construction, Land Development, and Other Land Loans - Collateral Locations
			Balance at		Geographical Location by %
Category			March 31, 2013		Maryland		New Jersey		Pennsylvania		Other
			(Dollars in thousands)
1-4 Family:
	Construction		$	152,342	47.1	%	2.6	%	45.8	%	4.6	%
	Land development			190,118	39.8		4.1		37.3		18.8
	Raw land			1,284	0.0		21.9		78.1		0.0
				343,744	42.9		3.5		41.2		12.5
All Other:
	Construction:
		Investor		190,383	41.8		11.5		32.3		14.4
		Owner-occupied		49,776	27.1		0.8		72.1		0.0
	Land development:
		Investor		145,779	24.1		6.1		51.7		18.1
		Owner-occupied		17,028	58.4		0.0		41.6		0.0
	Raw land:
		Investor		31,817	14.1		6.5		76.4		3.0
		Owner-occupied		816	51.9		0.0		48.1		0.0
				435,599	32.8		7.6		47.0		12.6
Total			$	779,343	37.3		5.8		44.4		12.5

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Table 12
Construction, Land Development, and Other Land Loans - Portfolio Characteristics
						Global Debt
				Balance at		Coverage Ratio		Average Loan to
	Category			March 31, 2013		Less than 1.1 Times (1)		Value (current)
				(Dollars in thousands)
	1-4 Family:
		Construction		$	152,342	12.5	%	78.7	%
		Land development			190,118	16.7		69.2
		Raw land			1,284	0.0		60.2
					343,744	14.9		75.0
	All Other:
		Construction:
			Investor		190,383	19.2		86.1
			Owner-occupied		49,776	7.1		40.4
		Land development:
			Investor		145,779	24.4		77.1
			Owner-occupied		17,028	38.9		82.7
		Raw land:
			Investor		31,817	25.3		92.4
			Owner-occupied		816	0.0		85.7
					435,599	20.7		80.0
				$	779,343	17.7		77.5
(1)	Global debt coverage ratio is calculated by analyzing the combined cash flows of the borrower, its related entities, and the guarantors (if any).  The final global cash flow is divided by the global debt service for the same entities to determine the coverage ratio.

We conduct quarterly portfolio reviews of real estate – construction loan relationships in excess of $0.75 million in order to identify potential problem loans. For those loan relationships under $0.75 million, the evaluation of risk is based upon delinquency. The review of loans in excess of $0.75 million consists of:

·Determining whether the project’s economics are achievable within a time frame such that the available cash flow of this and all of the projects of the borrower/guarantor (whether financed or not financed by Susquehanna) is sufficient to pay the required payments of interest plus principal during a rolling fifteen- month projection.

·Determining, based on a review of external sources, the viability/absorption of the projects and whether they align with the borrower/guarantor’s expectations.

·Reviewing quarterly to assess whether the expectations of the borrower/guarantor and the externally supplied information on the market are aligned to determine if the previous assumptions are still valid or need to be adjusted to meet the expectations that Susquehanna be fully repaid.

During this process, we also review the liquidity of any guarantors (the secondary source for continuance of the project) to determine if their liquidity will support any extension of the project due to slower than expected absorption (units leased or sold).  If the result of any of the determinations set forth above is negative, we consider the loan to be impaired, and it is included in our evaluation of the allowance for loan and lease losses. If a loan is determined to be impaired, the net realizable value of the loan is calculated by using a current (less than one year old) appraisal, and the short fall is charged off. All partially charged-off loans become part of the calculation for the allowance for loan and lease losses.

Although our impairment and charge-off analyses take into consideration the guarantor’s demonstrated ability and willingness to service the debt, we do not carry any impaired loans at values in excess of the current appraisal due to the loan having a guarantor. Our evaluation of guarantors includes examining their financial wherewithal and their reputation and willingness to work with their

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lenders. Since the beginning of the global economic slowdown in 2007, we have consistently assessed the probability for completion of a project by determining the guarantor’s liquidity and the cash flow generated by the project based upon current absorption. 

Charge-offs are taken in the quarter that we determine that the loan is impaired and there is a probable incurred loss. We exercise our rights under the full extent of the law to pursue all assets of the borrower and guarantors.

Guarantors are required to provide us with copies of annual financial statements and tax returns, including all schedules. These financial statements and tax returns are analyzed using variables such as total debt obligation including contingent liabilities (an analysis of those contingent liabilities, the ability to service third-party debt, and whether the cash that is left will support our loan), and a review of financial statements to determine living expenses. These results are part of a fifteen-month rolling projection of the borrower’s and the guarantor’s cash flow.  With respect to a potential problem loan, the rolling fifteen-month cash flow projection requires verification of all cash or liquid investments each quarter.  In addition, we require that these statements are generally current to within one year.

We believe that we are well-equipped to evaluate the guarantors of loans. More than half of our commercial real estate borrowers have been our customers for over ten years and in the market for at least fifteen years. Most of our employee lenders have been lenders within their specific markets for fifteen or more years, and those whose experience is less than that time period are supervised by people who have the experience. Therefore, we have a strong historical perspective as to how borrowers performed in the last major recession of 1988 to 1993. For those borrowers/guarantors that do not have the history dating back to the last major recession, third-party credit checks are used to determine their history and, when appropriate, how they have performed when real estate projects have not gone as expected.

                We continue to aggressively review our portfolio, contact customers to evaluate their financial situation and where necessary, to work with them to find proactive solutions to help limit the number of loans that become delinquent or go into default. We believe that the remainder of 2013 will be challenging, with the volatility of key commodity prices continuing to impact the commercial and industrial, commercial real estate, and consumer credit segments. However, we also believe that we have the proper monitoring systems in place to recognize issues in an appropriate time frame and to minimize the effect on our earnings.

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Goodwill

The Tower transaction created $257.4 million of additional goodwill.  For additional information about goodwill, refer to “Note 2. Acquisitions” and “Note 6. Goodwill”to the financial statements appearing in Part I, Item 1, of this report.

Deposits

Total deposits increased 0.9%, or $111.4 million, from December 31, 2012 to March 31, 2013. Within this category, core deposits such as demand, interest-bearing demand, and savings increased 1.1%.

                Time deposits less than $0.1 million decreased 2.5%, or $57.0 million, from December 31, 2012 to March 31, 2013. This decrease, in part, reflects the results of our continuing plan to improve our mix of deposits by allowing high-cost, single-service certificates of deposit to run off.  However, we also want to maintain market share at appropriate levels, and we will monitor and manage this portfolio to avoid excessive runoff.  Time deposits greater than $0.1 million increased 4.9%, or $72.2 million, from December 31, 2012 to March 31, 2013.  For additional information about deposits, refer to “Note 7. Deposits” to the financial statements appearing in Part I, Item I, of this report.

Shareholders’ Equity

                On February 17, 2012, Susquehanna completed its acquisition of Tower, issuing 30.8 million shares of Susquehanna common stock, par value $2.00, in connection with the transaction.  The Tower acquisition increased total shareholders’ equity by $302.1 million.

Capital Adequacy

                Capital elements are segmented into two tiers. Tier 1 capital represents shareholders’ equity plus junior subordinated debentures, reduced by excludable intangibles. Tier 2 capital represents certain allowable long-term debt, the portion of the allowance for loan and lease losses and the allowance for credit losses on off-balance-sheet credit exposures equal to 1.25% of risk-adjusted assets, and 45% of the unrealized gain on equity securities. The sum of Tier 1 capital and Tier 2 capital is “total risk-based capital.” Tier 1 common and tangible common equity include only common equity.

                In June of 2012, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation published three Notices of Proposed Rulemaking (“NPR”) to implement aspects of Basel III, as well as to implement aspects of the Dodd-Frank Wall Street Reform Act and the Consumer Protection Act.  If the three NPRs become finalized substantially in their current form as expected, there will be changes to the calculation of risk weighted assets as well as limitations on what is permissible to include as Tier I Capital.  We expect the final rules to be promulgated before January 1, 2014, and we expect them to have implementation periods at various points over the next several years.  In addition to preparing for the impact of these rules, we are continuing to monitor the rulemaking process for any modifications or clarifications that may be made prior to finalization. In anticipation of the final rules we have redeemed some of our trust preferred and capital securities that would be affected by the rules, and we continue to investigate our options for redeeming others in the future.

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	Our capital ratios computed under the existing regulatory guidance are as follows:
Table 13
Susquehanna Capital Ratios
				Well-capitalized
			At March 31, 2013	Threshold
		Tangible Common Ratio (1)	8.22%	N/A
		Tier 1 Common Ratio	10.20%	N/A
		Leverage Ratio	9.23%	5.0%
		Tier 1 Capital Ratio	11.34%	6.0%
		Total Risk-based Capital Ratio	12.88%	10.0%
(1)	Includes deferred tax liability of $47.0 million associated with intangibles.

Recently Adopted or Issued Accounting Guidance

For information about the impact that recently adopted or issued accounting guidance will have on our financial statements, refer to “Note 1. Accounting Policies”to the financial statements appearing in Part I,   Item 1, of this report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

               The types of market risk exposures generally faced by banking entities include equity market price risk, liquidity risk, interest rate risk, foreign currency risk, and commodity price risk.

                Due to the nature of our operations, foreign currency risk is not significant to us. However, in addition to general banking risks, we have other risks that are related to vehicle leasing and asset securitizations.

                There has not been any material changes in the market risks to Susquehanna as reported in Form 10-K for the fiscal year ended December 31, 2012.

Equity Market Price Risk

                Equity market price risk is the risk related to market fluctuations of equity prices in the securities markets.  While we do not have significant equity market price risk in our investment portfolio, market price fluctuations may affect fee income generated through our asset management operations. Generally, our fee structure is based on the market value of assets being managed at specific time frames. When market values decline, our fee income also declines.

Liquidity Risk

The maintenance of adequate liquidity -- the ability to meet the cash requirements of our customers and other financial commitments -- is a fundamental aspect of our asset/liability management strategy. Our policy of diversifying our funding sources -- purchased funds, repurchase agreements, and deposit accounts -- allows us to avoid undue concentration in any single financial market and also to avoid heavy funding requirements within short periods of time. At March 31, 2013, our bank subsidiary had approximately $3.6 billion available under a collateralized line of credit with the Federal Home Loan Bank of Pittsburgh, of which $1.1 billion was outstanding at March 31, 2013. Furthermore, at March 31, 2013, we had unused federal funds lines of $1.0 billion.

                In addition, we have pledged certain auto leases, certain auto loans, certain commercial finance leases, and certain investment securities to obtain collateralized borrowing availability at the Federal Reserve’s Discount Window. At March 31, 2013, we had unused collateralized availability of $1.3 billion.

                Liquidity, however, is not entirely dependent on increasing our liability balances. Liquidity is also evaluated by taking into consideration maturing or readily marketable assets. Unrestricted short-term investments totaled $38.7 million at March 31, 2013 and represented additional sources of liquidity.

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                Management believes these sources of liquidity are sufficient to support our banking operations.

Interest Rate Risk

                 The management of interest rate risk focuses on controlling the risk to net interest income and the associated net interest margin as the result of changing market rates and spreads. Interest rate sensitivity is the matching or mismatching of the repricing and rate structure of the interest-bearing assets and liabilities. Our goal is to control risk exposure to changing rates within management’s accepted guidelines to maintain an acceptable level of risk exposure in support of consistent earnings.

We employ a variety of methods to monitor interest rate risk. These methods include basic gap analysis, which points to directional exposure, routine rate shock simulation, and evaluation of the change in economic value of equity. Board-directed guidelines have been adopted for both the rate shock simulations and economic value of equity exposure limits. By dividing the assets and liabilities into three groups, fixed rate, floating rate and those which reprice only at our discretion, strategies are developed to control the exposure to interest rate fluctuations. 

Our policy, as approved by our Board of Directors, is designed so that we experience no more than a 15% decline in net interest income and no more than a 30% decline in the economic value of equity for a 300 basis point shock (immediate change) in interest rates. The assumptions used for the interest rate shock analysis are reviewed and updated at least quarterly. Based upon the most recent interest rate shock analysis, we were within the Board’s approved guidelines at an up 300 basis point shock. At March 31, 2013, our asset/liability position was asset sensitive. 

Derivative Financial Instruments and Hedging Activities

                Our interest rate risk management strategy involves hedging the repricing characteristics of certain assets and liabilities so as to mitigate adverse effects on our net interest margin and cash flows from changes in interest rates. While we do not participate in speculative derivatives trading, we consider it prudent to use certain derivative instruments to add stability to our interest income and expense, to modify the duration of specific assets and liabilities, and to manage our exposure to interest rate movements.

                Additionally, we execute derivative instruments in the form of interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those derivatives are immediately hedged by offsetting derivative contracts, such that we minimize our net risk exposure resulting from such transactions. We do not use credit default swaps in our investment or hedging operations.

        For additional information about our derivative financial instruments, refer to “Note 13. Derivative

Financial Instruments” and “Note 14. Fair Value Disclosures” to the financial statements appearing in Part I, Item 1, of this report.

Vehicle Leasing Residual Value  Risk

              In an effort to manage the vehicle residual value risk arising from the auto leasing business of Hann and our bank subsidiary, Hann and the bank have entered into arrangements with Auto Lenders pursuant to which Hann or the bank, as applicable, effectively transferred to Auto Lenders all residual value risk of its respective auto lease portfolio, and all residual value risk on any new leases originated over the term of the applicable agreement. Auto Lenders, which was formed in 1990, is a used-vehicle remarketer with five retail locations in New Jersey and has access to various wholesale facilities throughout the country. Under these arrangements, Auto Lenders agrees to purchase the beneficial interest in all vehicles returned by the obligors at the scheduled expiration of the related leases for a purchase price equal to the stated residual value of such vehicles. Stated residual values of new leases are set in accordance with the standards approved in advance by Auto Lenders. Under a servicing agreement with Auto Lenders, Hann also agrees to make monthly guaranty payments to Auto Lenders based upon a negotiated schedule covering a five-year period.  At the end of each year, the servicing agreement may be renewed by the mutual agreement of the parties for an additional one-year term, beyond the current five-year term, subject to renegotiation of the payments for the additional year.  During the renewal process, we determine the best remarketing and/or residual guarantee alternatives for Hann and our bank subsidiary.

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Item 4. Controls and Procedures.

(a)    Evaluation of Disclosure Controls and Procedures

Susquehanna’s management, with the participation of Susquehanna’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of Susquehanna’s disclosure controls and procedures as of the end of the period covered by this report.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Susquehanna believes that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

(b)    Change in Internal Control Over Financial Reporting

                No change in Susquehanna’s internal control over financial reporting occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Susquehanna’s internal control over financial reporting.

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PART II--OTHER INFORMATION

Item 1.  Legal Proceedings. 

                Susquehanna and its subsidiaries are engaged in lines of business that are heavily regulated and involve a large volume of financial transactions with numerous customers through offices in Pennsylvania, Maryland, New Jersey and West Virginia.  Although we have developed policies and procedures to minimize the impact of legal noncompliance and other disputes, litigation presents an ongoing risk.

Overdraft Litigation 

                On July 29, 2011, Susquehanna Bank was named as a defendant in a purported class action lawsuit filed by two New Jersey customers of the bank in the United States District Court of Maryland.  The suit challenges the manner in which checking account overdraft fees were charged and the policies related to the posting order of debit card and other checking account transactions.  The suit makes claims under New Jersey’s consumer fraud act and under the common law for breach of contract, breach of the covenant of good faith and fair dealing, unconscionability, conversion and unjust enrichment. The case was transferred for pretrial proceedings to pending multi-district litigation in the U.S. District Court for the Southern District of Florida. 

                To avoid the costs, risks and uncertainties inherent in litigation and without admitting any of the allegations in the complaint, Susquehanna in good faith participated in mediation with plaintiffs’ counsel and as a result of negotiations following from the mediation, on December 20, 2012, Susquehanna and counsel for plaintiffs entered into a Summary Agreement agreeing to settle the suit for $3,650,000, subject to preliminary and final approval of the settlement and dismissal of the action with prejudice by the Court. 

                Management, after consultation with legal counsel, currently does not anticipate that the aggregate settlement amount arising out of this proceeding will have a material adverse effect on our results of operation, financial position, or cash flows.

                Other Legal Proceedings

                From time to time, Susquehanna receives subpoenas and other requests for information from various federal and state governmental and regulatory authorities in connection with certain industry-wide, company-specific or other investigations or proceedings.  Susquehanna’s policy is to be fully cooperative with such inquiries.  Susquehanna and certain of its subsidiaries have been named as defendants in various legal actions arising out of the normal course of business, including claims against entities to which Susquehanna is a successor as a result of business combinations.  In the opinion of management, the ultimate resolution of these lawsuits should not have a material adverse effect on Susquehanna’s business, consolidated financial position or results of operations.  It is possible, however, that future developments could result in an unfavorable ultimate outcome for or resolution of any one or more of the lawsuits in which Susquehanna or its subsidiaries are defendants, which may be material to Susquehanna’s results of operations for a particular quarterly reporting period.  Litigation is inherently uncertain, and management cannot make assurances that Susquehanna will prevail in any of these actions, nor can management reasonably estimate the amount of damages that Susquehanna might incur.

Item 1A. Risk Factors.

                There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

                None.

Item 4. Mine Safety Disclosures

                Not applicable.

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Item 5. Other Information.

                None.

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Item 6. Exhibits.†
The Exhibits filed as part of this report are as follows:
3.1	Amended and Restated Articles of Incorporation, dated May 6, 2011, incorporated by reference to Exhibit 3.1 to Susquehanna’s Quarterly Report on Form 10-Q, filed August 8, 2011.
3.2	Amended and Restated By-Laws, dated February 24, 2011, incorporated by reference to Exhibit 3.1 of Susquehanna’s Current Report on Form 8-K, filed March 2, 2011.
10.1	Susquehanna Bancshares, Inc. Short-Term Incentive Plan (effective as of January 1, 2013).*
10.2	Employment Agreement, effective as of June 6, 2012, between Susquehanna and Michael W. Harrington.*
31.1	Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer is filed herewith as Exhibit 31.1.
31.2	Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer is filed herewith as Exhibit 31.2.
32	Section 1350 Certifications are filed herewith as Exhibit 32.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document
†	Upon request by the SEC, the registrant agrees to furnish to the SEC a copy of any instrument with respect to unregistered long-term debt of the registrant in accordance with Item 601(b)(4)(iii)(A) of Regulation S-K promulgated under the Exchange Act.
*	Management contract or compensation plan or arrangement required to be filed or incorporated as an exhibit.

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SIGNATURES

                Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

                                                                                            SUSQUEHANNA BANCSHARES, INC.           

May 7, 2013                                                                     /s/ William J. Reuter                                                                                                                                                                                                                      William J. Reuter

                                                                                            Chairman and Chief Executive Officer

May 7, 2013                                                                     /s/ Drew K. Hostetter                                                              

                                                                                          Drew K. Hostetter

                                                                                    Executive Vice President and Chief

                                                                                            Financial Officer

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EXHIBIT INDEX
3.1	Amended and Restated Articles of Incorporation, dated May 6, 2011, incorporated by reference to Exhibit 3.1 to Susquehanna’s Quarterly Report on Form 10-Q, filed August 8, 2011.
3.2	Amended and Restated By-Laws, dated February 24, 2011, incorporated by reference to Exhibit 3.1 of Susquehanna’s Current Report on Form 8-K, filed March 2, 2011.
10.1	Susquehanna Bancshares, Inc. Short-Term Incentive Plan (effective as of January 1, 2013).*
10.2	Employment Agreement, effective as of June 6, 2012, between Susquehanna and Michael W. Harrington.*
31.1	Rule 13a-14(a)/15d-14(a) Certification by Chief Executive Officer is filed herewith as Exhibit 31.1.
31.2	Rule 13a-14(a)/15d-14(a) Certification by Chief Financial Officer is filed herewith as Exhibit 31.2.
32	Section 1350 Certifications are filed herewith as Exhibit 32.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document
†	Upon request by the SEC, the registrant agrees to furnish to the SEC a copy of any instrument with respect to unregistered long-term debt of the registrant in accordance with Item 601(b)(4)(iii)(A) of Regulation S-K promulgated under the Exchange Act.
*	Management contract or compensation plan or arrangement required to be filed or incorporated as an exhibit.

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EX-10.1

 

Exhibit 10.1

Susquehanna Bancshares, Inc.

Short-Term Incentive Plan

Introduction

Susquehanna Bancshares, Inc. (the “Company”) has adopted this Short-Term Incentive Plan (the “Plan”) to provide a vehicle to reward eligible employees for their contributions to the Company’s financial success.

Effective Date

The Plan was originally effective as of January 1, 2011 and was amended and restated effective as of January 1, 2012.  The Plan is now amended and restated effective as of January 1, 2013.  Each January 1 to December 31 period will be the “Plan Year.” The Plan will be reviewed annually by the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) to ensure proper alignment with the Company’s business objectives. The Compensation Committee retains the rights, as described below, to amend or modify the Plan at any time.

Purpose

The Plan’s objectives are to:

·Align executives, management and employees with the Company’s strategic plan and critical performance goals.

·Encourage teamwork and collaboration across all areas of the Company - our collective contributions will drive improved business results.

·Motivate and reward the achievement of core performance objectives.

·Provide payouts commensurate with Company, affiliate, region, function, unit and/or employee performance – as defined by each participating role.

·Provide competitive total compensation opportunities.

·Enable the Company to attract, motivate and retain talented employees.

·Ensure our incentives are appropriately risk-balanced (i.e., do not unintentionally motivate inappropriate risk taking).

·Provide a program that is simple and easy to understand and administer.

The Plan is intended to meet the requirements for “qualified performance-based compensation” under section 162(m) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (the “Code”) with respect to any “covered employee” of the Company, as such term is defined under section 162(m) of the Code. The Compensation Committee may, but is not required to, structure awards under the Plan to meet the requirements for “qualified performance-based compensation” under section 162(m) of the Code.

Plan Administration

The Plan has been approved by the Compensation Committee, and the Compensation Committee will administer the Plan. The Compensation Committee has the sole authority to interpret the Plan and to make or nullify any rules and procedures, as necessary, for proper administration of

the Plan. The Compensation Committee will make all final determinations regarding cash compensation paid to executive officers of the Company. Except as required by applicable law, determinations for other employees

will be made by senior management subject to review and approval by the Compensation Committee. Any determination by the Compensation Committee will be final and binding. 

Participation and Eligibility

Selected employees are eligible to participate in the Plan. Employees will be nominated by senior management to be eligible to participate in the Plan.  The Compensation Committee will approve all executive officers for participation in the Plan and will approve all other employees as recommended by management for participation in the Plan.

Unless the Compensation Committee determines otherwise, other criteria for participation in the Plan will include:

·An employee must be employed by September 30 of the Plan Year to be eligible to participate in the Plan for the Plan Year. An employee hired after September 30 of the Plan Year must wait until the next applicable Plan Year to be eligible to participate in the Plan.

·An employee must have one or more approved goals in the “MyPerformance” system as of April 30 of a Plan Year (or such other date as is set by the Compensation Committee for the Plan Year) or within 30 days after commencement of employment, if later, unless otherwise determined by the Compensation Committee.

·An employee must not be on a Performance Improvement Plan, receive a performance rating of “Meets Expectations” (or such equivalent) or better for the Plan Year, and remain in good standing throughout the Plan Year. If an employee is placed on probation during the Plan Year, any Award earned will be reduced on a pro-rata basis to reflect the time on probation.

·An employee must be current with all regulatory and compliance requirements.

·An employee generally must be an active employee as of the Award payout date to receive an Award.

For purposes of the Plan “employee” shall mean an employee of the Company or a subsidiary of the Company (including an officer or director who is also an employee), but excluding any individual (a) employed in a casual or temporary capacity (i.e., those hired for a specific job of limited duration), (b) whose terms of employment are governed by a collective bargaining agreement that does not provide for participation in the Plan, (c) any individual characterized as a “leased employee” within the meaning of section 414(n) of the Code, (d) classified by the Company as a “contractor” or “consultant,” no matter how characterized by the Internal Revenue Service, other governmental agency or a court, (e) employed as a mortgage loan originator as defined by TILA and Regulation Z, or (f) who participates in a different incentive plan sponsored by a subsidiary of the Company. Any change of characterization of an individual by any court or government agency shall have no effect upon the classification of an individual as an employee for purposes of the Plan, unless the Compensation Committee determines otherwise. Whether an employee is exempt or non-exempt shall be determined by the Company’s Human Resource Department based on the employee’s status as of the end of the Plan Year for which an Award is earned. Unless otherwise specified herein, all references to employee in the Plan shall include both exempt and non-exempt employees.

Performance Period

The performance period for the Plan is the Plan Year.

Incentive Targets

Each eligible employee will have a specified target annual cash incentive award (the “Target Award”) or will be eligible to receive a percentage of a pool created based on level of attainment of the applicable performance goals, in each case, based on his or her role at the Company. Except as required by applicable law, the Target Award for executive officers is determined by the Compensation Committee and by senior management for all other eligible employees, in each case, in their sole discretion.  Target Awards are based on competitive

practices and reflect the amount of the Award to be paid for meeting predefined performance goals at the 100% level. Target Awards will be defined as a percentage of base earnings. Base earnings includes straight time pay, and does not include overtime, commissions, bonuses, incentives, special premiums and allowances, or other non-salary items, actually earned by an eligible employee for a Plan Year, determined as of the last day of the Plan Year. This allows for an automatic conversion for part-time employees, employees who receive salary increases during the year, and employees who are employed after the start of the year.

Actual awards (“Awards”) can range from 0% to 200% of the Target Award established for an eligible employee for the Plan Year or be subject to such other cap or limitation as the Compensation Committee may set for a Plan Year, depending on performance and may be based on achievement of threshold (i.e. baseline), target and stretch (i.e. superior) performance which will be determined by the Compensation Committee; provided that for Awards intended to qualify as “qualified performance-based compensation” for purposes of section 162(m) of the Code the maximum amount payable to any covered employee under the Plan is 200% of base earnings. Performance below threshold will result in no payout.

If an employee changes his or her role or is promoted during the Plan Year, and that promotion results in a higher Target Award opportunity, he or she will be eligible for the new role’s Target Award opportunity on a pro-rata basis.

In the event of an approved leave of absence, the Target Award opportunity level for the year will be adjusted to reflect the time in active status.

Performance Goals

For each Plan Year, each eligible employee will have predefined performance goals that will be used, in part, to determine his or her Award.

There may be up to four categories of performance goals for each eligible employee:

·Corporate; 

·Division; 

·Unit; and/or

·Individual (defined for each role).

All employees will have a portion of their incentive opportunity tied to Corporate performance.

To the extent Awards are intended to qualify as “qualified performance based compensation” for purposes of section 162(m) of the Code, performance goals will be set by the Compensation Committee no later than the earlier of (i) 90 days after the beginning of the Plan Year or (ii) the date on which 25% of the Plan Year has been completed, or such other date as may be required or permitted under applicable regulations under section 162(m) of the Code and may be based on earnings or earnings growth (including but not limited to earnings per share or net income); economic profit, shareholder value added or economic value added; return on equity, assets or investment; revenues; expenses; stock price or total shareholder return; regulatory compliance; satisfactory internal or external audits; improvement of financial or credit ratings; achievement of asset quality objectives; achievement of balance sheet or income statement objectives, including, without limitation, capital and expense management; efficiency ratio; non-interest income to total revenue ratio; net interest margin; credit quality measures (including non-performing asset ratio, net charge-off ratio, and reserve coverage of non-performing loans); net operating profit; loan growth; deposit growth; non-interest income growth; market share; productivity ratios; or achievement of risk management objectives. Such performance goals may also be particular to an eligible employee or the division, department, branch, line of business, subsidiary or other unit in which the employee works, or may be based on attaining a specified absolute level of the performance goal, or a percentage increase or decrease in the performance goal compared to a pre-established target, previous

years’ results, or a designated market index or comparison group, all as determined by the Compensation Committee.

Performance targets and ranges for each corporate performance goal will be recommended by management and approved by the Compensation Committee. Target Awards may provide for differing amounts to be paid based on differing thresholds of performance. The Company will notify each eligible employee of the employee’s Target Award and the applicable performance goals for the Plan Year. The specific allocation of goals, including how the performance goals are weighted, will be determined at the discretion of the Compensation Committee and may be based on the eligible employee’s role, key area of contribution or such other factor as determined by the Compensation Committee.

For Awards intended to meet the requirements for “qualified performance-based compensation” under section 162(m) of Code, the Compensation Committee will specify in the minutes (i) each employee’s Target Award, (ii) the performance goals for each eligible employee, and (iii) how the financial calculations for the performance goals will be made, including what, if any, adjustments will be made in accordance with the Plan. The maximum dollar amount that may be paid to an eligible employee for a Plan Year is 200% of base earnings. For decisions with respect to Awards not intended to be “qualified performance-based compensation,” the Compensation Committee will have flexibility in establishing the Target Award opportunity, performance goals and Award level for each eligible employee under the Plan.

Award Levels

At the end of the Plan Year (December 31st), or as soon as practical thereafter, performance is assessed against the specific goals established at the start of the Plan Year. An eligible employee will earn an Award for the Plan Year based on the level of achievement of the performance goals established by the Compensation Committee for the Plan Year; provided that for Awards intended to qualify as “qualified performance based compensation,” the Compensation Committee may reduce (but not increase) an Award below the level determined based on the Performance Goals.  Unless the Compensation Committee determines otherwise, Awards will be interpolated based on performance between the applicable performance levels.

Payout for each goal is determined independently in arriving at the overall incentive payout. As a result, an eligible employee may not achieve baseline (threshold) performance on one goal but may still receive an Award based upon the level of attainment of other performance goals (assuming the eligible employee maintains a minimum performance rating of “satisfactory” (or such equivalent) or better).

Awards under the Plan are based on the performance results for the Plan Year. Achieving higher levels of performance above target up to stretch will increase the Plan payouts to the eligible employee. Similarly, achieving less than target performance will reduce the Plan payouts.

Adjustment to Target Awards and Performance goals

Except with respect to Awards to named executive officers that are structured to satisfy the requirements for “qualified performance based compensation” under section 162(m) of the Code, the Compensation Committee may at any time prior to the final determination of Awards change the Target Award opportunity of any eligible employee or assign a different Target Award opportunity to an eligible employee to reflect any change in the employee’s responsibility level or position during the course of the performance period.

In addition, the Compensation Committee may, but only to the extent consistent with the requirements of section 162(m) of the Code for Awards intended to meet the requirements for “qualified performance-based compensation,” at any time prior to the financial determination of Awards, change the performance goals to reflect a change in corporate capitalization, such as a stock split or stock dividend, or a corporate transaction, such as a merger, consolidation, separation, reorganization or partial or complete liquidation, or to equitably reflect the occurrence of any extraordinary event, any change in applicable accounting rules or principles, any change in the Company’s method of accounting, any change in applicable law, any change due to any merger,

consolidation, acquisition, reorganization, stock split, stock dividend, combination of shares or other changes in the Company’s corporate structure or shares, or any other change of a similar nature.

Application of Section 162(m) of the Internal Revenue Code

Awards structured to satisfy the requirements for “qualified performance based compensation” under section 162(m) of the Code will be based on performance goals, including the requirement that the achievement of the performance goals be substantially uncertain at the time they are established and that the performance goals be established in such a way that a third party with knowledge of the relevant facts could determine whether and to what extent the performance goals have been met. An Award that is designated as “qualified performance based compensation” under section 162(m) of the Code may not be awarded as an alternative to any other award that is not designated as “qualified performance based compensation,” but instead must be separate and apart from all other awards made. The Compensation Committee is authorized to reduce an Award for the Plan Year based upon its assessment of personal performance or other factors, but not to increase the Award beyond the amount determined based on achievement of the performance goals for that employee. Any reduction of an eligible employee’s Award will not result in an increase in any other eligible employee’s Award.

Incentive Award Payments

For Awards structured to satisfy the requirements for “qualified performance based compensation” under section 162(m) of the Code and for Awards to named executive officers, the Compensation Committee will certify the performance goals for the Plan Year and the Awards that will be paid by the Company to each employee following the final determination of the Company’s financial results for the Plan Year. Except as required by applicable law or as otherwise determined by the Compensation Committee, all other Awards will be approved by the Compensation Committee based on the achievement of the performance goals by the employee.

Except as provided below, and subject to the requirements of applicable law, employees who terminate during the Plan Year will not be eligible to receive an Award for that Plan Year. Further, to encourage employees to remain in the employment of the Company, except as set forth herein, an employee must be an active employee of the Company on the date the applicable portion of the Award is paid in accordance with the payment schedule set forth below.

Unless the Compensation Committee determines otherwise, Awards will be paid out to selected exempt employees in three installments following the end of the Plan Year; provided that the employee remains employed through the applicable payment date, as follows: 50% of the Award will be paid out within two and one half months following the end of the Plan Year (i.e. no later than March 15) (such actual date the “Payment Date”), 25% of the Award will be paid out on the first anniversary of the Payment Date and the remaining 25% of the Award will be paid out on the second anniversary of the Payment Date.  Payment of the installments may be subject to attainment of additional performance criteria as determined by the Compensation Committee.  All Awards to non-exempt employees will be paid as a single lump sum cash payment on the Payment Date.  Awards may be paid in cash or equity, or a combination of the two, as determined by the Compensation Committee.  If Awards are paid in equity, such Awards shall be made under the Amended and Restated Susquehanna Bancshares, Inc. 2005 Equity Compensation Plan.

If an employee ceases to be employed by the Company prior to the end of the Plan Year for which an Award may be earned due to death, disability (within the meaning of section 22(e)(3) of the Code) or on account of an early or normal retirement (as defined by Susquehanna Bancshares, Inc. Cash Balance Pension Plan), his or her Award under the Plan will be pro-rated based on actual performance for the applicable Plan Year. Such pro-rated amount will be calculated by multiplying the amount of the Award that the employee would have received had he remained employed through the end of the Plan Year by a fraction, the numerator of which is the number of completed calendar months during which the employee was employed by the Company during the Plan Year

and the denominator of which is 12. Any Award owed to the employee will be paid to the employee, or the employee’s estate, as applicable, in a lump sum on the Payment Date at the time Awards earned for the applicable Plan Year are paid under the Plan to other employees, but in any event not later than March 15 of the Plan Year following the Plan Year for which the Award was earned.

If an exempt employee ceases to be employed by the Company due to death, disability or on account of an early or normal retirement, at any time following the Payment Date but prior to one or both of the subsequent payment dates on the first or second anniversary of the Payment Date, the remaining amount of the Award not yet paid will be paid in full within 30 days following the date of the exempt employee’s death, termination due to disability or early or normal retirement, as applicable.

If a change of control (as defined the Company’s [Key Employee Severance Pay Plan/2013 Omnibus Equity Compensation Plan]) occurs prior to the end of a performance period and the eligible employee is employed on the date of the change of control, then the performance period will end on the date of the change of control and Awards under the Plan will be paid based on the greater of (i) the Company’s actual performance level achieved with respect to the performance goals as of the date of the change of control or (ii) 100% of the Target Award.

Awards will be considered taxable income to employees in the year paid and will be subject to withholding for required income and other applicable taxes.

Discretionary Awards

In addition to Awards that are designated “qualified performance-based compensation” under section 162(m) of the Code, as described above, the Compensation Committee may grant to employees such other incentive awards as the Compensation Committee deems appropriate, which may be based on Unit/Individual goals, Corporate/Company goals or such other criteria as the Compensation Committee determines. Decisions with respect to such incentive awards will be made separate and apart from the Awards intended to be “qualified performance-based compensation.”

Taxes

The Company is authorized to withhold from any payment under the Plan, amounts of withholding and other taxes due in connection with a payment made under the Plan, and to take such other action as the Compensation Committee may deem advisable to enable the Company and employees to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any payment

Application of Section 409A of the Internal Revenue Code

The Plan is intended to comply with the requirements of section 409A of the Code, and shall in all respects be administered in accordance with section 409A of the Code or an exception thereto. Notwithstanding anything in the Plan to the contrary, payments may only be made upon an event and in a manner permitted by section 409A of the Code or an exception thereto. If a payment is not made by the designated payment date under the Plan, the payment shall be made by December 31 of the calendar year in which the designated date occurs. For purposes of section 409A of the Code, all payments to be made upon an employee ceasing to be employed by, or providing service to, the Company may only be made upon the employee’s “separation from service” (within the meaning of such term under section 409A of the Code).

Notwithstanding anything in the Plan to the contrary, if an employee is a “key employee” under section 409A of the Code and payment of any amount under the Plan is required to be delayed for a period of six months after separation from service pursuant to section 409A of the Code, payment of such amount will be delayed as required by section 409A of the Code and will be paid within 10 days after the end of the six-month period. If the employee dies during such six-month period, the amounts withheld on account of section 409A of the Code

will be paid to the personal representative of the employee’s estate within 60 days after the date of the employee’s death.

Limitations on Rights Conferred under Plan

Nothing contained in the Plan or in any documents related to the Plan will confer upon any employee any right to continue as an employee or in the employ of the Company or constitute any contract or agreement of employment, or interfere in any way with the right of the Company to reduce such person’s compensation, to change the position held by such person or to terminate the employment of such employee, with or without cause, but nothing contained in this Plan or any document related thereto will affect any other contractual right of any employee. No benefit payable under, or interest in, this Plan will be transferable by an employee except by will or the laws of descent and distribution or otherwise be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge.

Plan Changes or Discontinuance

The Compensation Committee may add to, amend, modify or discontinue any of the terms or conditions of the Plan at any time; provided, however, that the Compensation Committee will not amend the Plan without shareholder approval if such approval is required by section 162(m) of the Code. The Plan must be re-approved by the Company’s shareholders no later than the first shareholders’ meeting that occurs in the fifth year following the year in which the shareholders previously approved the Plan, if additional Awards are to be paid under the Plan and if required by section 162(m) of the Code or the regulations thereunder.

Ethics, Interpretation and Clawback

If there is any ambiguity as to the meaning of any terms or provisions of this Plan or any questions as to the correct interpretation of any information contained therein, the Company’s interpretation expressed by the Compensation Committee will be final and binding.

The altering, inflating, and/or inappropriate manipulation of performance/financial results or any other infraction of recognized ethical business standards, will subject the employee to disciplinary action up to and including termination of employment. In addition, any incentive compensation as provided by this Plan to which the employee would otherwise be entitled will be revoked.

All Awards under the Plan will be subject to any compensation, clawback and recoupment policies that may be applicable to the employees of the Company, as in effect from time to time and as approved by the Board of Directors or a duly authorized committee thereof, whether or not approved before or after the effective date of the Plan.

Severability

Each provision in this Plan is severable, and if any provision is held to be invalid, illegal, or unenforceable, the validity, legality and enforceability of the remaining provisions will not, in any way, be affected or impaired thereby.

Successors and Assigns

The provisions of the Plan will be binding upon the Company and its successors and upon the employees and their legal representatives.

Governing Law

The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan, and any payment made under the Plan will be determined in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to principles of conflicts of laws, and applicable federal law.

EX-10.2

 

Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of this 7th day of May, 2012, and is effective as of June 6, 2012 (the “Effective Date”), by and between SUSQUEHANNA BANCSHARES, INC., a Pennsylvania corporation (the “Company”), and Michael W. Harrington, an adult individual whose principal residence is at 8346 Black Walnut Drive, East Amherst, NY 14051 (the “Employee”).

Background

WHEREAS, the Company desires to employ the Employee as the Executive Vice President and Treasurer of the Company, the Employee desires to be employed by the Company in such capacity;

WHEREAS, the Company and the Employee desire to enter into this Agreement to evidence the terms and conditions of the Employee’s employment with the Company as its Executive Vice President and Treasurer.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and promises contained herein, and intending to be bound hereby, the parties agree as follows:

1.Position.  The Company hereby agrees to employ the Employee and the Employee hereby agrees to commence employment with the Company, as Executive Vice President and Treasurer.

2.Duties. 

2.1The Employee agrees to assume such duties and responsibilities as may be consistent with the position of the Executive Vice President and Treasurer and as may be assigned to the Employee by the Chief Financial Officer of the Company from time to time. No change in the duties of the Employee shall in any way diminish the compensation payable to him pursuant to the provisions of Paragraph 4 hereof.

2.2The Employee agrees to devote his full time, skill, attention and energies and his best efforts to the performance of his duties under this Agreement, consistent with practices and policies established from time to time by the Company. The Employee agrees, in addition to the covenants concerning Non-Competition contained in Paragraph 11, that he shall not engage in any other business activity (including, without limitation, participation by the Employee on any unaffiliated profit or non-profit board of directors) except: (a) upon the prior written notice to and consent of the Board, or (b) solely as an investor in real or personal property, the management of which shall not

detract from the performance of his duties hereunder; provided, however, that the engagement by the Employee in any such business activity shall at all times be in conformity with the Company’s Code of Ethics, as the same may be amended or supplemented from time to time. Notwithstanding anything herein to the contrary, the Employee shall terminate any such activity upon reasonable request by the Company.

3.Period of Employment. 

3.1Unless terminated earlier pursuant to the applicable termination provisions of this Agreement, the period of employment shall commence on the Effective Date and end on the third December 31 next following the Effective Date (as the same may be extended pursuant to this Paragraph, the “Period of Employment”). If written election not to renew by either party is not received by the other party by (a) November 1 of the year of the Effective Date, or (b) November 1 any subsequent year, if this Agreement has previously been extended pursuant to this Paragraph 3, then the Period of Employment shall be automatically extended by one year.

3.2Notwithstanding anything to the contrary set forth herein, the Employment Period shall not extend beyond:

3.2.1Normal Retirement Date, or

3.2.2if a Change in Control occurs prior to the Normal Retirement Date, the later of (a) the Normal Retirement Date, or (b) the first anniversary of the Change in Control.

4.Compensation.  For all services rendered by the Employee under this Agreement, the Company shall pay to the Employee compensation as provided below:

4.1Base Salary.  The Company shall pay the Employee a minimum annual base salary at the rate of $350,000 per year in accordance with the Company’s normal payroll practices. In connection with the annual review required by Subparagraph 4.3 hereof, the Employee’s base salary shall be reviewed and in light of such review may be increased (but not decreased), taking into account any change in the Employee’s responsibilities, performance of the Employee and other pertinent factors. Payment of any increase in the Employee’s base salary (if any) shall commence no later than July 1 of the year in which the increase is granted.

4.2Bonus.  The Company may, but shall not be required to, pay to the Employee annual bonus compensation in such amount as may be determined by the appropriate board of directors or its designee within guidelines established by the Company. The Employee’s bonus (if any) for a fiscal year shall be paid to him at the time and in the form and manner provided under the terms of the applicable plan pursuant to which the bonus is awarded.  Notwithstanding any provision of this Agreement to the contrary, the Employee shall be eligible to earn a full year’s bonus for calendar year 2012 without regard to the fact that he will not be employed for the full calendar year 2012; provided that such bonus is otherwise earned in accordance with the terms of the applicable bonus plan in effect for 2012.

4.3Annual Review.  The determination of compensation payable by the Company hereunder shall be made by the Compensation Committee or its designee, which shall perform an annual review of this Agreement, the Employee’s performance with the Company, and compensation payable hereunder. The results of such review, including recommendation as to base salary adjustment and bonus (if any), shall be reported to the Company and shall be memorialized in the minutes of the meetings of the Board or held in a confidential file by the Company’s Human Resources Department.

5.Benefits. 

5.1Life Insurance and Disability Benefits. The Employee shall be entitled to group term life insurance insuring the Employee’s life during the term of employment, disability insurance coverage, and accidental death and dismemberment benefits, including death benefit, in such amounts and in such coverage as shall be consistent with the insurance coverage programs available to other salaried employees of the Company,

as the same may change from time to time. The Employee shall designate the beneficiary of such policy and benefits.

5.2Health Benefits.  The Employee shall be entitled to major medical and health insurance coverage for the Employee and his immediate family on such terms, in such amounts and in such coverage as shall be consistent with the insurance coverage programs available to other salaried employees of the Company generally, as the same may change from time to time.

5.3Other Benefits. To the extent such benefits are not specifically described or duplicated hereinabove in this Paragraph 5, the Employee shall also be entitled to participate in any and all thrift, profit sharing, pension and similar benefit plans (not including severance, change in control or other similar arrangements), now or hereafter maintained by the Company and offered by the Company to its salaried, management employees generally, as the same may change from time to time.  In addition, subject to approval by the Compensation Committee, the Employee shall be eligible to participate in the Company’s Supplemental Executive Retirement Plan, as in effect from time to time.

5.4Expenses.  Subject to such general employee expense account policies as the Company may from time to time adopt, the Company shall pay or reimburse the Employee upon presentation of vouchers or invoices for reasonable expenses incurred by the Employee in the performance of his duties in carrying out the terms and provisions of this Agreement, including, without limitation, expenses for such items as entertainment, travel, meals, hotel and similar items. In the event that any reimbursed expenses are disallowed by the Internal Revenue Service as deductions to the Company, as the case may be, the Employee shall retain such reimbursed expense amounts which the Employee shall treat and report as additional compensation and which the Company shall treat as deductible salary expense.

5.5Paid Time Off.  The Employee shall be entitled to 32 days of paid time off to be taken at times reasonably convenient to the Company and consistent with the Company’s paid time off policy.  Paid time off shall be available to the Employee immediately upon the Employee’s commencement of employment with the Company.

5.6Company Car.  The Company shall provide the Employee during his employment under this Agreement with the full time use of a car in accordance with the Company’s general policy on cars.

5.7Country Club.  During the Employee’s employment under this Agreement, the Company shall reimburse the Employee for dues (including reasonable initiation fees) associated with the Employee’s membership at one club selected by the Employee and approved by the Company.

5.8Indemnification.  To the extent permitted by law, the Company shall indemnify the Employee and hold him harmless from all liability and claims, whether meritorious or not, including the cost of defense thereof (including reasonable attorneys’ fees) which have arisen or accrued or which hereafter may arise or accrue and are based upon any act or omission which the Employee has taken or committed or hereafter may take or commit on behalf of or in connection with the Company in his official capacity, so long as the following conditions are met with respect to such claim or liability: (a) if such action was taken in the exercise of reasonable business judgment and was taken in an area within the scope of responsibility of the Employee, or (b) if not within the scope of the Employee’s responsibility, (i) at the time of such act or omission the Board had knowledge of the facts or circumstances pursuant to which such act was taken or such omission occurred and (ii) no written objection to such act or omission was duly made by the Board.

Actions taken by the Employee which are covered by this Agreement specifically include (by way of illustration), but are not limited to, (a) the payment of any salary, bonus or other compensation to any officer, director, or employee, (b) the reimbursement or payment of any expenses incurred by any such officer, director or employee, (c) the making or retention of any investments (including, without limitation, loans) by the Company, or (d) injury claims against the Company or the Employee based on negligence or other alleged tortious actions and which arise in connection with the conduct of the Company’s business.

The Employee shall indemnify the Company and hold it harmless from all liability and claims, whether meritorious or not, including the cost of the defense thereof (including reasonable attorneys’ fees) which have arisen or accrued or which hereafter may arise or accrue and are based upon acts taken without the consent or approval of the Board of Directors of the Company and which represent the Employee’s deliberate malfeasance or gross negligence.

6.Termination.  The Company may terminate the Employee’s employment without Cause (as defined below), subject to the requirements of applicable law, on account of the Employee’s Disability (as defined below), in either case, at any time, with 90 days’ advance written notice (or pay in lieu thereof). The Company may terminate the Employee’s employment for Cause at any time without notice. The Employee may terminate his employment at any time for any reason, with 90 days’ advance written notice (or such shorter notice as the Company shall then accept). Upon termination, the Employee shall be entitled only to such compensation and benefits as described in this Paragraph 6 and, if applicable, the Employee shall immediately resign his position as a member of the Board and any committee thereof, from his position as the Executive Vice President and Treasurer of the Company, and his position as a member of the board of directors of any Affiliate and any committee thereof.

6.1Termination without Cause or Resignation due to an Adverse Change. If the Employee’s employment ceases due to a termination by the Company without Cause or a resignation by the Employee due to an Adverse Change (as defined below), the Employee shall be entitled to:

6.1.1payment of all accrued and unpaid base salary through the date of such termination;

6.1.2payment for all accrued but unused vacation days;

6.1.3payment of any bonus payable with respect to a period ending prior to such termination;

6.1.4bi-weekly compensation continuation payments for a period equal to the Non-Competition Period, with each payment equal to 1/26 of the Average Annual Compensation (provided, however, that it is understood that Employee shall not participate in any benefit plans covering employees, except as specifically stated in this Paragraph 6), which amount shall be paid in regular payroll installments over the Non-Competition Period following the Employee's termination date;

6.1.5if the Employee participates in any defined benefit plan maintained by the Company or one of its Affiliates immediately before the Employee’s termination date (whether such plan is tax qualified or nonqualified), the Employee shall accrue an additional, fully vested benefit under the Company’s nonqualified pension plan (which shall be paid at the time and in the form determined under the nonqualified pension plan and shall be determined in all respects pursuant to the terms of the applicable defined benefit pension plan(s)) equal to the difference between (a) the benefit that the Employee would have accrued under all defined benefit pension plans of the Company or its Affiliates in which the Employee participated immediately before the Employee’s termination date, taking into account the compensation paid to the Employee under Subparagraph 6.1.4 as compensation for purposes of the applicable plan and increasing the Employee’s years of benefit

service under the applicable plan by the number of years in the Non-Competition Period, and (b) the actual benefit due to the Employee under all defined benefit pension plans of the Company and its Affiliated in which the Employee participated immediately before the Employee’s termination date; and

6.1.6the employee benefits listed below for the remainder of the Non-Competition Period, in the form and manner set forth below:

(a)        provided that the Employee is eligible for and timely elects COBRA continuation coverage, during the 18-month period following the Employee’s termination date, the Company will reimburse the Employee for the monthly COBRA cost of continued coverage for the Employee, and, where applicable, his spouse and dependents, paid by the Employee under the Company’s group health plan pursuant to section 4980B of the Code, less the amount that the Employee would be required to contribute for such health coverage if the Employee were an active employee of the Company (the “Monthly COBRA Costs”).  Following the foregoing 18-month period, if the Employee secures an individual policy for health coverage for himself and, where applicable, his spouse and dependents, the Company will reimburse the Employee for the monthly cost of such coverage for the period commencing on the first day following the 18-month period and ending on the last day of the Non-Competition Period; provided that the amount of the Company’s reimbursement for any month during this period will not exceed the Monthly COBRA Costs; 

(b)        a payment each month for a number of months equal to the number of months in the Non-Competition Period, equal to the monthly premium cost (less any employee portion of such premium costs) the Company would have paid for coverage for the Employee under the applicable life insurance and accidental death and dismemberment policy(ies) which insured the Employee during the term of his employment had the Employee remained employed by the Company during the Non-Competition Period; and

(c)        a payment each month for a number of months equal to the number of months in the Non-Competition Period, equal to the monthly premium cost (less any employee portion of such premium costs) the Company would have paid for coverage under the applicable disability insurance policy(ies) of the Company which insured the Employee during the term of his employment had the Employee remained employed by the Company during the Non-Competition Period.

            Except as otherwise provided  in Subparagraph 6.1, all compensation and benefits shall cease at the time of such termination and the Company shall have no further liability or obligation by reason of such termination.  The separation payments and benefits described in this Subparagraph 6.1 shall be paid (or in the case of the payments described in Subparagraphs 6.1.4 and 6.1.6 shall begin to be paid) within 60 days after the Employee’s termination date, subject to the Employee’s execution and delivery of an effective release as described below in Subparagraph 6.4. 

            Notwithstanding anything herein to the contrary, if, at the time of the Employee’s termination of employment with the Company, the Company has securities which are publicly traded on an established securities market and the Employee is a “specified employee” (as such term is defined in section 409A of the Code) and it is necessary to postpone the commencement of any payments or benefits otherwise payable under this Agreement as a result of such termination of employment to prevent any accelerated or additional tax under section 409A of the Code, then the Company shall postpone the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to the Employee) that are not otherwise paid within the  “short-term deferral exception” under Treas. Reg. §1.409A-1(b)(4) and/or the “separation pay exception” under Treas. Reg. §1.409A-1(b)(9)(iii), until the first

payroll date that occurs after the date that is six months following the Employee’s “separation of service” with the Company.  If any payments are postponed due to such requirements, such postponed amounts shall be paid in a lump sum to the Employee on the first payroll date that occurs after the date that is six months following the Employee’s “separation of service” with the Company.  If the Employee dies during the postponement period prior to the payment of postponed amount, the amounts withheld on account of section 409A of the Code shall be paid to the personal representative of the Employee’ s estate within 60 days after the date of the Employee’s death.  A “specified employee” shall mean an employee who, at any time during the 12-month period ending on the identification date, is a “specified employee” under section 409A of the Code, as determined by the Compensation Committee or its designee.  The determination of specified employees, including the number and identity of persons considered specified employees and the identification date, shall be made by the Compensation Committee or its designee in accordance with the provisions of sections 416(i) and 409A of the Code and the regulations issued thereunder.

6.2Other Terminations.  If the Employee’s employment ceases for any reason other than as described in Subparagraph 6.1, above (including, but not limited, to (a) termination by the Company for Cause, (b) as a result of the Employee’s death or termination by the Company on account of the Employee’s Disability (as defined below), (c) resignation by the Employee in the absence of an Adverse Change or (d) attainment of the Employee’s Normal Retirement Date described in Subparagraph 3.2), then the Employee shall receive payment for his accrued and unpaid base salary through the date of such cessation. All compensation and benefits shall cease at the time of such termination and, except as otherwise provided herein or in the applicable employee benefit plans of the Company, the Company shall have no further liability or obligation by reason of such termination.

6.3Claims.  Any claims for benefits under Paragraph 6 of the Agreement shall be governed by the claims procedures in the Susquehanna Bancshares, Inc. Key Employee Severance Pay Plan, as amended from time to time. However, the severance benefit provisions of this Agreement shall govern in lieu of the severance provisions of such Plan. Except as specifically provided in this Agreement, the benefits provided under this Agreement in the case of a termination shall be in lieu of those provided by the Company and its Affiliates under any other severance plans.

6.4Release.  Notwithstanding any other provision of this Agreement, any severance or termination payments or benefits herein described are conditioned on the Employee’s execution and delivery to the Company of an effective general release and non-disparagement agreement in a form prescribed by the Company and in a manner consistent with the requirements of the Older Workers Benefit Protection Act and any applicable state law.  In no event shall the timing of Employee’s execution of the general release, directly or indirectly, result in the Employee designating the calendar year of payment, and if a payment that is subject to execution of the general release could be made in more than one taxable year, payment shall be made in the later taxable year.

6.5Other Rights.  Nothing in this Agreement is intended to limit the Employee’s right to (a) payment or reimbursement for welfare benefit claims incurred prior to the cessation of his employment under any group insurance plan, policy or arrangement of the Company in accordance with the terms of such plan, policy or arrangement, (b) elect COBRA Benefits in accordance with applicable law, or (c) receive a distribution of vested accrued benefits from any employee pension benefit plan in accordance with the terms of that plan.

7.Change in Control. 

7.1Effect of a Change in Control. 

7.1.1Effect on LTI/STI Rights.  With respect to any long-term, short-term or any similar incentive program cycle in effect at the time of a Change in Control:

(a)Employee shall become fully and immediately vested in his incentive awards upon the occurrence of the Change in Control; and

(b)subject to the requirements of section 409A of the Code, such incentive awards shall be paid at target levels and shall be paid to the Employee in a single lump sum payment between January 1 and March 15 of the calendar year following the end of the incentive program cycle for which the incentive award was earned, without regard to whether Employee remains employed by the Company and without regard to the performance of Employee during those incentive program cycles.

7.1.2Effect on Pension Rights.  In the event of a termination of employment providing for payment of benefits under Subparagraph 6.1, the Employee shall accrue an additional, fully vested benefit under the Company’s nonqualified pension plan (which shall be paid at the time and in the form determined under the nonqualified pension plan and shall be determined in all respects pursuant to the terms of the applicable defined benefit pension plan(s)) equal to the difference between:

(a)the benefit that the Employee would have accrued under all defined benefit pension plans of the Company or its Affiliates in which the Employee participated immediately prior to the Change in Control (whether tax qualified or nonqualified), assuming:

(i)the Employee remained continuously employed by the Company until the third anniversary of the Change in Control,

(ii)the Employee’s compensation for purposes of calculating benefits under such defined benefit pension plan increased at a rate of four percent per year for the period of imputed service described above in Subparagraph 7.1.2(a)(i), and

(iii)the terms of all such defined benefit pension plans remained identical to those in effect immediately prior to the Change in Control; and

(b)the actual benefit due to the Employee under all defined benefit pension plans of the Company and its Affiliates in which the Employee participated immediately prior to the Change in Control.

7.1.3Effect on Restrictive Covenants.  Upon the occurrence of a Change in Control, the one year period referenced in Paragraph 11.1 shall be revised automatically to equal the greater of one year or the period extending from the date of the termination of active employment to the third anniversary of the Change in Control.

7.1.4Transition Services.  For two years following cessation of employment after any Change in Control, the Employee agrees to remain available to provide the Company with transition assistance on matters with which the Employee was involved during his employment. The Employee shall render such assistance in a timely manner on reasonable notice from the Company. The Employee shall not be entitled to any separate compensation for the services described in this Paragraph (other than reimbursement for reasonable out-of-pocket expenses actually incurred). The Company agrees to provide reasonable advance notice of the need for the Employee’s assistance and shall exercise reasonable efforts to schedule and limit such matters so as to avoid interfering with the Employee’s personal and other professional obligations.

7.2Parachute Payments. 

7.2.1Anything in this Agreement to the contrary notwithstanding, in the event that a Change in Control occurs and it shall be determined that any payment or distribution by the Company or its Affiliates to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (“Total Payments”) would otherwise exceed the amount (the “Safe Harbor Amount”) that may be received by the Employee without the imposition of an excise tax under section 4999 of Code, then the Total Payments shall be reduced to the extent, and only to the extent, necessary to assure that their aggregate present value, as determined in accordance the applicable provisions of section 280G of the Code, does not exceed the greater of the following dollar amounts (the “Benefit Limit”):

(a)        the Safe Harbor Amount, or

(b)        the greatest after-tax amount payable to the Employee after taking into account any excise tax imposed under section 4999 of the Code on the Total Payments.

7.2.2All determinations to be made under this Paragraph 7.2 shall be made by an independent public accounting firm chosen by the Company (the “Accounting Firm”).  In determining whether such Benefit Limit is exceeded, the Accounting Firm shall make a reasonable determination of the value to be assigned to the restrictive covenants in effect for the Employee pursuant to Paragraphs 8, 10 and 11 of this Agreement, and the amount of the Employee’s potential parachute payment under section 280G of the Code shall reduced by the value of those restrictive covenants to the extent consistent with section 280G of the Code.

7.2.3In the event the Internal Revenue Service notifies the Employee of an inquiry with respect to the applicability of section 280G of the Code or section 4999 of the Code to any payment by the Company or its Affiliates, or assessment of tax under section 4999 of the Code with respect to any payment by the Company or its Affiliates, the Employee shall provide notice to the Company of such inquiry or assessment within 10 days, and shall take no action with respect to such inquiry or assessment until the Company has responded thereto (provided such response is timely with respect to the inquiry or assessment). The Company shall have the right to appoint an attorney or accountant to represent the Employee with respect to such inquiry or assessment, and the Employee shall fully cooperate with such representative as a condition of the Agreement with respect to such inquiry or assessment.

7.2.4All of the fees and expenses of the Accounting Firm in performing the determinations referred to in Paragraph 7.2 shall be borne solely by the Company.

7.2.5To the extent a reduction to the Total Payments is required to be made in accordance with this Paragraph 7.2, such reduction and/or cancellation of acceleration of equity awards shall occur in the order that provides the maximum economic benefit to the Employee.  In the event that acceleration of equity awards is to be reduced, such acceleration of vesting also shall be canceled in the order that provides the maximum economic benefit to the Employee. Notwithstanding the foregoing, any reduction shall be made in a manner consistent with the requirements of section 409A of the Code and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis, but not below zero.

7.3Enforcement.  Following any Change in Control, the Company shall pay all legal fees and costs incurred by the Employee to enforce his rights under this Agreement if (a) he is required to initiate a proceeding to enforce such rights and (b) he is awarded any relief in that proceeding.

8.Confidential Information.  During the term of employment, and at any time thereafter, the Employee shall not, without the consent of a senior officer of the Company, disclose to any person, firm or corporation (except, during the term of his employment, to the extent necessary to perform his duties hereunder) any customer lists, trade secrets, reports, correspondence, mailing lists, manuals, price lists, employee lists, prospective employee lists, letters, records or any other confidential information relating to the business of the Company or any Affiliate of the Company and shall not, without the consent of a senior officer of the Company, deliver any oral address or speech or publish, or knowingly permit to be published, any written matter in any way relating to confidential information regarding the business of the Company or any Affiliate.

9.Property Rights.  The Employee agrees that all literary work, copyrightable material or other proprietary information or materials developed by the Employee during the term of this Agreement and relating to, or capable of being used or adopted for use in, the business of the Company shall inure to and be the property of the Company and must be promptly disclosed to the Company. Both during employment by the Company and thereafter, the Employee shall, at the expense of the Company, execute such documents and do such things as the Company reasonably may request to enable the Company or their nominee (i) to apply for copyright or equivalent protection in the United States, Canada and elsewhere for any literary work hereinabove referred in this Paragraph, or (ii) to be vested with any such copyright protection in the United States, Canada and elsewhere.

10.Non-Disparagement.  Upon termination of employment hereunder, the Employee shall not malign, criticize or otherwise disparage the Company, the Affiliates or their respective officers, employees or directors.

11.Non-Competition. 

11.1During the Period of Employment hereunder and then for one year following the Employee’s termination of employment for any reason

11.1.1the Employee shall not directly for himself or any third party, become engaged in any business or activity which is directly in competition with any services or financial products sold by, or any business or activity engaged in by, the Company or any of its Affiliates, including, without limitation, any business or activity engaged in by any federally or state chartered bank, savings bank, savings and loan association, trust company and/or credit union, and/or any services or financial products sold by such entities, including, without limitation, the taking and accepting of deposits, the provision of trust services, the making of loans and/or the extension of credit, brokering loans and/or leases and the provision of insurance and investment services, within a 25 mile radius of any office or facility of the Company or any of its Affiliates. This provision shall not restrict the Employee from owning or investing in publicly traded securities of financial institutions, so long as his aggregate holdings in any financial institution do not exceed 10% of the outstanding capital stock of such institution.

11.1.2the Employee shall not solicit any person who was a customer of the Company or any of its Affiliates during the period of the Employee’s employment hereunder, or solicit potential customers who are or were identified through leads developed during the course of employment with the Company, or otherwise divert or attempt to divert any existing business of the Company or any of its Affiliates within any area of 100 miles of any office or facility of the Company or any of its Affiliates.

11.1.3the Employee shall not, directly for himself or any third party, solicit, induce, recruit or cause another person in the employment of the Company or any of its Affiliates to terminate his employment for the purposes of joining, associating, or becoming employed with any business or activity which is in

competition with any services or financial products sold, or any business or activity engaged in, by the Company or any of its Affiliates.

11.2The Employee understands that in the event of a violation of any provision of this Agreement, the Company shall have the right to seek injunctive relief, in addition to any other existing rights provided in this Agreement or by operation of law, without the requirement of posting bond. The Employee understands that the Company may suspend future payments of the compensation continuation payments and benefits provided in Subparagraph 6.1, may forfeit the additional pension benefit provided under Subparagraph 7.1.2, and may seek, as a remedy, a return of any prior compensation continuation payments made under Subparagraph 6.1.4. The remedies provided in this Paragraph shall be in addition to any legal or equitable remedies existing at law or provided for in any other agreement between the Employee and the Company or any of its Affiliates, and shall not be construed as a limitation upon, or as an alternative or in lieu of, any such remedies. If any provisions of this Paragraph shall be determined by a court of competent jurisdiction to be unenforceable in part by reason of it being too great a period of time or covering too great a geographical area, it shall be in full force and effect as to that period of time or geographical area determined to be reasonable by the court.

11.3In the event of a Change in Control, the Employee acknowledges that the provisions of Paragraph 11 hereof shall extend to any offices or facilities of any business that becomes an affiliate of or successor to the Company or any of its Affiliates on account of such Change in Control and that the period specified in Subparagraph 11.1 shall be three years instead of one year.

12.Preemptive Considerations.  Notwithstanding anything to the contrary set forth herein:

12.1If the Employee is suspended and/or temporarily prohibited from participating in the conduct of the Company’s or any of its Affiliates’ affairs by a notice served under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818(e)(3) and (g)(1)) or any amendments or supplements thereto, the Company’s obligations under this Agreement shall be suspended as of the date of service unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Company may in its discretion (i) pay the Employee all or part of the compensation withheld while this Agreement’s obligations were suspended, and (ii) reinstate (in whole or in part) any of its obligations which were suspended.

12.2If the Employee is removed and/or permanently prohibited from participating in the conduct of the Company’s or its Affiliates’ affairs by an order issued under Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1818 (e)(4) or (g)(1)) or any amendments or supplements thereto, or equivalent provisions relating to a regulator with supervisory authority over the Company or its Affiliates, all obligations of the Company and its Affiliates under the contract shall terminate as of the effective date of the order, but vested rights of the parties shall not be affected.

12.3If the Company or any Affiliate is in default (as defined in Section 3(x)(1) of the Federal Deposit Insurance Act or equivalent provisions relating to a regulator with supervisory authority over the Company or its Affiliates), all obligations under this Agreement shall terminate as of the date of default, but this Subparagraph 12.3 shall not affect any vested rights of the parties.

13.Records.  Upon the termination of employment hereunder, the Employee shall deliver to the Company all correspondence, reports, customer lists, office keys, manuals, advertising brochures, sample contracts, price lists, employee lists, prospective employee lists, mailing lists, letters, records and any and all other documents pertaining to or containing information relative to the business of the Company, and the

Employee shall not remove any of such records either during the course of employment or upon the termination thereof.

The Employee understands that in the event of a violation of the provisions of this Paragraph 13, the Company shall have the right to seek injunctive relief, in addition to any other existing rights provided herein or by operation of law, without the requirement of posting bond. The remedies provided in this Paragraph 13 shall be in addition to any legal or equitable remedies existing between the Employee and the Company, and shall not be construed as a limitation upon, or as alternative or in lieu of, such remedies.

14.Survival.  Notwithstanding anything to the contrary in this Agreement, the parties agree that the Employee’s obligations under Paragraphs 8, 9, 11, and 13 of this Agreement shall continue despite the expiration of the term of this Agreement or its termination.

15.Definitions. For purposes of this Agreement: 

15.1The term “Adverse Change” shall include and be limited to (A) a significant change in the nature or scope of the Employee’s duties as set forth in the first  sentence of Paragraph 2 hereof such that the Employee has been reduced to a position of materially lesser authority, status or responsibility (provided, however, for purposes of this Subparagraph, in circumstances not involving a Change in Control, so long as the Employee remains a senior officer (which shall mean and include any officer position with the Company above the position of vice president), an Adverse Change shall not be deemed to have occurred), or the time required to be spent by the Employee 60 miles or more beyond the Company’s geographic market area shall be increased without the Employee’s consent by more than 20%, as compared to the average of the two (2) preceding years, (B) a material reduction in the Employee’s base compensation, (C) any other material and willful breach by the Company of any other provision of this Agreement, or (D) delivery by the Company of notice of its intention not to renew this Agreement; provided that Employee is willing and able to execute a new contract providing terms and conditions substantially similar to those in this Agreement and to continue providing services to the Company. 

However, none of the foregoing events or conditions shall constitute an Adverse Change unless: (x) the Employee provides the Company with written objection to the event or condition within 60 days following the occurrence thereof, (y) the Company does not reverse or otherwise cure the event or condition within 30 days of receiving that written objection, and (z) the Employee resigns his employment within 60 days following the expiration of the 30-day cure period.  If the Employee’s termination occurs after such time, the termination shall be treated as a termination other than for Adverse Change and the Employee shall not be entitled to severance benefits under this Agreement.

15.2The term “Affiliate” shall mean with respect to the Company, persons or entities controlling, controlled by or under common control with the Company.

15.3The term “Average Annual Compensation” shall mean, as of any date, the arithmetic average of the base salary and annual bonuses received by the Employee with respect to the three most recently completed calendar years; provided, however, if the Employee has compensation for less than three completed calendar years but at least two completed calendar years, Average Annual Compensation shall mean the arithmetic average of the base salary and annual bonuses received by the Employee with respect to the two most recently completed calendar years, and if the Employee has less than two completed calendar years of compensation, Average Annual Compensation shall mean base salary and annual bonus received by the Employee with respect to the most recently completed calendar year.

15.4The term “Board” shall mean the Board of Directors of the Company.

15.5The term “Cause” shall mean any of the following: (a) the Employee’s personal dishonesty; (b) the Employee’s incompetence; (c) the Employee’s willful misconduct; (d) the Employee’s breach of fiduciary duty involving personal profit; (e) the Employee’s intentional failure to perform stated duties; (f) the Employee’s willful violation of any law, rule or regulation (other than traffic violations or similar offenses); (g) the issuance of a final cease-and-desist order by a state or federal agency having jurisdiction over the Company or any entity which controls the Company to the extent such cease-and-desist order requires the termination of the Employee; or (h) a material breach by the Employee of any provision of this Agreement.

15.6The term “Change in Control” shall mean the first to occur, after the date hereof, of any of the following:

(a)if any Person is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its subsidiaries) representing 25% or more of either the then outstanding shares of stock of the Company or the combined voting power of the Company’s then outstanding securities;

(b)if during any period of 24 consecutive months during the existence of this Agreement commencing on or after the date hereof, the individuals who, at the beginning of such period, constitute the Board (the “Incumbent Directors”) cease for any reason other than death to constitute at least a majority thereof; provided that a director who was not a director at the beginning of such 24-month period shall be deemed to have satisfied such 24-month requirement (and be an Incumbent Director) if such director was elected by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors either actually (because they were directors at the beginning of such 24-month period) or by prior operation of this clause (b);

(c)the consummation of a merger or consolidation of the Company with any other corporation other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 60% of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the beneficial owner, as defined in clause (a), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its subsidiaries) representing 40% or more of either the then outstanding shares of stock of the Company or the combined voting power of the Company’s then outstanding securities; or

(d)the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company, or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 60% of the combined voting power of the voting securities of which are owned by Persons in substantially the same proportion as their ownership of the Company immediately prior to such sale.

Upon the occurrence of a Change in Control, no subsequent event or condition shall constitute a Change in Control for purposes of this Agreement, with the result that there can be no more than one Change in Control hereunder.

15.7The term “Code” shall mean the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

15.8The term “Company” shall mean the Company as hereinbefore defined or any entity succeeding to substantially all of the assets and business of the Company.

15.9The term “Compensation Committee” shall mean the Compensation Committee of the Board.

15.10The terms “COBRA” and “COBRA Benefits” shall refer to continued group health insurance benefits under sections 601-607 of the Employee Retirement Income Security Act of 1974, as amended, (29 U.S.C. part 6) Act and the regulations promulgated thereunder.

15.11The term “Disability” means a condition entitling the Employee to benefits under the Company’s long term disability plan, policy or arrangement; provided, however, that if no such plan, policy or arrangement is then maintained by the Company and applicable to the Employee, “Disability” will mean the Employee’s inability to perform his duties under this Agreement due to a mental or physical condition that can be expected to result in death or that can be expected to last (or has already lasted) for a continuous period of 180 days or more. Termination as a result of a Disability will not be construed as a termination “without Cause.”

15.12The term “Non-Competition Period” shall mean, with respect to a specified cessation of employment, the one year period following the Employee’s termination date; provided that on and after the occurrence of a Change in Control, the Non-Competition Period shall mean, with respect to a specified cessation of employment, the three year period following the Employee’s termination date.

15.13The term “Normal Retirement Date” shall mean the last business day in the calendar year in which the Employee attains the age of 65.

15.14The term “Period of Employment” shall have the meaning described in Paragraph 3.

15.15The term “Person” shall have the meaning ascribed thereto by Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), as modified and used in Sections 13(d) and 14(d) thereof (except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company, or (v) such Employee or any “group” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) which includes the Employee).

16.Miscellaneous. 

16.1Assignment.  This Agreement (including, without limitation, Paragraph 11 hereof relating to non-competition) shall be binding upon the parties hereto, the heirs and legal representatives of the Employee and the successors and assigns of the Company.

16.2Prohibited Assignment.  The Employee shall have no right to exchange, convert, encumber or dispose of the rights to receive the benefits or payments under this Agreement, which payments, benefits and rights thereto are expressly declared to be non-assignable and non-transferable.

16.3Notices. Any notice required, permitted or intended to be given under this Agreement shall be in writing and shall be deemed to have been given only if delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid to the appropriate address shown below, or such revised address as is delivered to the other party by the same means.

(a)Notices to the Company shall be sent to:

Susquehanna Bancshares, Inc.

Attn. Director of Human Resources

26 North Cedar Street P.O. Box 1000

Lititz, PA  17543-7000

(b)Notices to the Employee shall be sent to the most recent address
                                    on file with the Company.

16.4Entire Agreement.  This Agreement constitutes the entire agreement between the parties in connection with the subject matter hereof, supersedes any and all prior agreements or understandings between the parties, including the offer letter from the Company to the Employee dated May __, 2012 (other than the provisions relating to the right to receive a restricted stock grant and nonqualified stock option grant and relocation assistance), and may only be changed by agreement in writing between the parties.

16.5Construction. This Agreement shall be construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania, without application of the principles of conflicts of laws.

16.6Paragraph Headings. The Paragraph headings herein have been inserted for convenience of reference only and shall in no way modify or restrict any of the terms or provisions hereof.

16.7Section 409A of the Code.  This Agreement shall be interpreted to avoid any penalty sanctions under section 409A of the Code.  If any payment or benefit cannot be provided or made at the time specified herein without incurring sanctions under section 409A of the Code, then such benefit or payment shall be provided in full at the earliest time thereafter when such sanctions shall not be imposed.  The Employee shall be solely responsible for any tax imposed under section 409A of the Code and in no event shall the Company have any liability with respect to any tax, interest or other penalty imposed under section 409A of the Code.  For purposes of section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon the Employee’s “separation from service” (within the meaning of such term under section 409A of the Code).  In no event shall the Employee, directly or indirectly, designate the calendar year of payment, except as permitted under section 409A of the Code.  All reimbursements and in kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement shall be for expenses incurred during the Employee’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the amount of expenses eligible for reimbursement, or in kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense shall be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit.

16.8Recoupment Policy. The Employee agrees that the Employee will be subject to any compensation clawback or recoupment policies that may be applicable to Employee as an executive of the Company, as in effect from time to time and as approved by the Board or a duly authorized committee thereof, whether or not approved before or after the effective date of this Agreement.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed this Agreement the day and year first above written.

	SUSQUEHANNA BANCSHARES, INC.
Attest:	By: /s/Elizabeth E. Lytle
	Elizabeth E. Lytle
	Michael W. Harrington
Witness:
	/s/ Michael W. Harrington

EX-31.1

 

Exhibit 31.1

CERTIFICATIONS

I, William J. Reuter, certify that:

1.     I have reviewed this report on Form 10-Q of Susquehanna Bancshares, Inc.;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have been identified for the registrant’s auditors any material weaknesses in internal controls; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls. 

Date:  May 7, 2013

/s/ William J. Reuter                                                           

                                                                                                                                William J. Reuter

                                                                                                                                Chairman of the Board and Chief Executive Officer

EX-31.2

 

Exhibit 31.2

CERTIFICATIONS, continued

I, Drew K. Hostetter, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Susquehanna Bancshares, Inc.;

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have been identified for the registrant’s auditors any material weaknesses in internal controls; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

Date:  May 7, 2013

/s/ Drew K. Hostetter                                                           __

                                                                                                                                Drew K. Hostetter

                                                                                                                                Executive Vice President and Chief Financial Officer

EX-32

 

Exhibit 32

Certification by the Chief Executive Officer and Chief Financial Officer

Relating to a Periodic Report Containing Financial Statements

We, William J. Reuter, Chief Executive Officer, and Drew K. Hostetter, Chief Financial Officer, of Susquehanna Bancshares, Inc. (the “Company”), hereby certify that, based on our knowledge:

(1) The Company’s periodic report containing financial statements on Form 10-Q for the period ended March 31, 2013 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: As of May 7, 2013

CHIEF EXECUTIVE OFFICER	CHIEF FINANCIAL OFFICER
/s/ William J. Reuter William J. Reuter	/s/ Drew K. Hostetter Drew K. Hostetter

XML

Acquisitions (Summary of Merger-Related Expenses) (Detail) (Merger [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Business Acquisition [Line Items]
Salaries and employee benefits	$ 1,350
Consulting	4,015
Legal	770
Branch writeoffs	1,371
Net occupancy and equipment	2,809
All other	1,164
Total merger-related expenses	11,479
Tower [Member]
Business Acquisition [Line Items]
Salaries and employee benefits	1,350
Consulting	3,949
Legal	733
Branch writeoffs	1,371
Net occupancy and equipment	2,809
All other	1,164
Total merger-related expenses	11,376
Abington [Member]
Business Acquisition [Line Items]
Salaries and employee benefits	0
Consulting	66
Legal	37
Branch writeoffs	0
Net occupancy and equipment	0
All other	0
Total merger-related expenses	$ 103

XML

Loans and Leases (Troubled Debt Restructurings By Class Segment) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				12 Months Ended
	Mar. 31, 2013		Mar. 31, 2012		Dec. 31, 2012		Dec. 31, 2011
Financing Receivable Modifications [Line Items]
Total performing TDRs	$ 65,773				$ 67,775
TDRs [Member]
Financing Receivable Modifications [Line Items]
Total performing TDRs	65,773		72,081		67,775		72,852
Non-performing TDRs	25,808	[1],[2]	18,720	[1]	24,603	[2]
Total TDRs	91,581				92,378
Performing TDRs	72.00%		79.00%		73.00%
Non-performing TDRs	28.00%		21.00%		27.00%
Commercial, Financial, And Agricultural [Member] | TDRs [Member]
Financing Receivable Modifications [Line Items]
Total performing TDRs	14,863				8,744
Real Estate - Construction [Member] | TDRs [Member]
Financing Receivable Modifications [Line Items]
Total performing TDRs	937				940
Real Estate Secured - Residential [Member] | TDRs [Member]
Financing Receivable Modifications [Line Items]
Total performing TDRs	20,172				23,224
Real Estate Secured - Commercial [Member] | TDRs [Member]
Financing Receivable Modifications [Line Items]
Total performing TDRs	28,689				33,589
Consumer [Member] | TDRs [Member]
Financing Receivable Modifications [Line Items]
Total performing TDRs	$ 1,112				$ 1,278

[1] Included in Age Analysis of Past Due Financing Receivables.

[2] These loans are included in the 90 day past due and non-accrual categories.

XML

Loans and Leases (Loans and Leases, Net of Deferred Costs and Fees) (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Loans And Leases Receivable Net Of Deferred Costs And Fees By Type [Line Items]
Total loans and leases	$ 12,999,703	$ 12,894,741
Nonaccrual loans and leases	103,351	97,767
Loans and leases contractually past due 90 days and still accruing	6,396	8,209
Troubled Debt Restructurings	65,773	67,775
Deferred origination costs and fees	18,149	17,763
All overdrawn deposit accounts, reclassified as loans and evaluated for collectability	2,375	15,422
Commercial, Financial, And Agricultural [Member]
Loans And Leases Receivable Net Of Deferred Costs And Fees By Type [Line Items]
Total loans and leases	2,312,660	2,273,611
Real Estate - Construction [Member]
Loans And Leases Receivable Net Of Deferred Costs And Fees By Type [Line Items]
Total loans and leases	779,344	847,781
Real Estate Secured - Residential [Member]
Loans And Leases Receivable Net Of Deferred Costs And Fees By Type [Line Items]
Total loans and leases	4,077,810	4,065,818
Real Estate Secured - Commercial [Member]
Loans And Leases Receivable Net Of Deferred Costs And Fees By Type [Line Items]
Total loans and leases	3,971,438	3,964,608
Consumer [Member]
Loans And Leases Receivable Net Of Deferred Costs And Fees By Type [Line Items]
Total loans and leases	859,664	842,552
Leases [Member]
Loans And Leases Receivable Net Of Deferred Costs And Fees By Type [Line Items]
Total loans and leases	998,787	900,371
Originated Loans And Leases [Member]
Loans And Leases Receivable Net Of Deferred Costs And Fees By Type [Line Items]
Total loans and leases	10,998,299	10,765,458
Purchased Loans And Leases [Member]
Loans And Leases Receivable Net Of Deferred Costs And Fees By Type [Line Items]
Total loans and leases	$ 2,001,404	$ 2,129,283

XML

Securitizations and Variable Interest Entities ("VIEs") (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
2006 Transaction [Member]
Securitizations And Variable Interest Entities [Line Items]
Fixed-rate home mortgage loans and variable-rate line of credit loans	$ 349,403
Variable-rate loans	70.50%
Principal balance of loans, percentage	10.00%
2005 Transaction [Member]
Securitizations And Variable Interest Entities [Line Items]
Variable-rate loans	35.40%
Principal balance of loans, percentage	10.00%
Home Equity Line Of Credit Loans	$ 239,766

XML

Loans and Leases (Schedule Of Troubled Debt Restructurings Balance And Activity) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended				12 Months Ended
	Mar. 31, 2013		Mar. 31, 2012		Dec. 31, 2012
Troubled Debt Restructurings Balance And Activity [Line Items]
Performing TDRs, end of period	$ 65,773				$ 67,775
TDRs [Member]
Troubled Debt Restructurings Balance And Activity [Line Items]
Performing TDRs, beginning of period	67,775		72,852		72,852
New TDR Status	17,882		14,412
Paydowns	(2,237)		(46)
Charge-offs post modification	(121)		0
Transfer to nonaccrual, past due 90 days or greater	(4,830)		(4,796)
Cured	(12,341)		(10,371)
Other, net	(355)	[1]	30	[1]
Performing TDRs, end of period	65,773		72,081		67,775
Non-performing TDRs, end of period	25,808	[2],[3]	18,720	[2]	24,603	[3]
Performing TDRs	72.00%		79.00%		73.00%
Non-performing TDRs	28.00%		21.00%		27.00%
Transferred To OREO	$ 203

[1] Includes $203 transferred to OREO.

[2] Included in Age Analysis of Past Due Financing Receivables.

[3] These loans are included in the 90 day past due and non-accrual categories.

XML

Fair Value Disclosures (Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning Balance	$ 39,506		$ 16,723
Other-than-temporary impairment	(388)	[1]	(144)	[1]
Included in other comprehensive income (before taxes)	(392)		(5,368)
Transfers into Level III			20,137
Ending Balance	38,726		31,348
Equity Securities [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning Balance	3,156		3,430
Other-than-temporary impairment	0	[1]	(144)	[1]
Included in other comprehensive income (before taxes)	1		(96)
Transfers into Level III			0
Ending Balance	3,157		3,190
Other Structured Financial Products [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning Balance	9,550		13,293
Other-than-temporary impairment	0	[1]	0	[1]
Included in other comprehensive income (before taxes)	427		(5,272)
Transfers into Level III			0
Ending Balance	9,977		8,021
Non Agency Mortgage Backed Securities [Member]
Fair Value Assets Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Beginning Balance	26,800		0
Other-than-temporary impairment	(388)	[1]	0	[1]
Included in other comprehensive income (before taxes)	(820)		0
Transfers into Level III			20,137
Ending Balance	$ 25,592		$ 20,137

[1] Included in noninterest income, net impairment losses recognized in earnings.

XML

Investment Securities (Significant Assumptions of Other-Than-Temporarily Impaired Securities) (Detail)	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Investment [Line Items]
Conditional repayment rate	10.30%	[1]	9.90%	[1]
Loss severity	43.00%	[2]	46.60%	[2]
Conditional default rate	3.80%	[3]	6.00%	[3]

[1] Conditional repayment rate represents a rate equal to the proportion of principal balance paid off voluntarily over a certain period of time on an annualized basis.

[2] Loss severity rates are projected by considering collateral characteristics such as current loan-to-value, original creditworthiness of borrowers (FICO score) and geographic concentration.

[3] Conditional default rate is an annualized rate of default on a group of mortgages, and represents the percentage of outstanding principal balances in the pool that are in default, which typically equates to the borrower being past due 60 days, 90 days, or possibly already in the foreclosure process.

XML

Securitizations and Variable Interest Entities ("VIEs") (Tables)

3 Months Ended

Mar. 31, 2013

Schedule Of Delinquencies, Net Credit Losses, And Components Of Loan And Lease Sales

The following table presents quantitative information about delinquencies, net credit losses, and components of loan and lease sales serviced by Susquehanna, including securitization transactions.
										For the Three Months
										Ended March 31,
		As of March 31,								Net Credit Losses
		Recorded Investment				Risk Assets (1)				(Recoveries)
		2013		2012		2013		2012		2013		2012
Loans and leases held in portfolio		$	12,840,305	$	12,337,688	$	130,104	$	176,445	$	19,643	$	12,370
Home equity loans held by VIEs			159,398		183,981		2,200		3,258		413		240
Leases serviced for others			0		0		0		0		0		0
Total loans and leases serviced		$	12,999,703	$	12,521,669	$	132,304	$	179,703	$	20,056	$	12,610
(1)	Includes nonaccrual loans and leases, foreclosed real estate, and loans and leases past due 90 days and still accruing.

Schedule Of Certain Cash Flows Received From Or Conveyed To VIEs Associated With Securitizations

	Certain cash flows received from or conveyed to the VIEs associated with the securitizations are as follows:
Home Equity Loans
		Three Months Ended March 31,
		2013		2012
	Additional draws conveyed	$	5,133	$	6,013
	Servicing fees received		184		210
	Other cash flows received		1,092		1,263

XML

Fair Value Disclosures (Assets Measured at Fair Value on a Nonrecurring Basis) (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans	$ 69,443	$ 65,731
Foreclosed assets	22,557	26,245
Total Impaired loans and Foreclosed assets	92,000	91,976
Quoted Prices In Active Markets For Identical Instruments (Level 1) [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans	0	0
Foreclosed assets	0	0
Total Impaired loans and Foreclosed assets	0	0
Significant Other Observable Inputs (Level 2) [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans	0	0
Foreclosed assets	0	0
Total Impaired loans and Foreclosed assets	0	0
Significant Unobservable Inputs (Level 3) [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Impaired loans	69,443	65,731
Foreclosed assets	22,557	26,245
Total Impaired loans and Foreclosed assets	$ 92,000	$ 91,976

XML

Derivative Financial Instruments (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		3 Months Ended				3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 Not Designated As Hedging Instruments [Member] DerivativeInstruments	Mar. 31, 2012 Not Designated As Hedging Instruments [Member] DerivativeInstruments	Mar. 31, 2013 Cash Flow Hedges [Member]	Mar. 31, 2012 Cash Flow Hedges [Member]	Mar. 31, 2013 Cash Flow Hedges [Member] Interest Expense [Member]	Mar. 31, 2013 Cash Flow Hedges [Member] Interest Rate Swaps [Member] DerivativeInstruments	Mar. 31, 2012 Cash Flow Hedges [Member] Interest Rate Swaps [Member] DerivativeInstruments
Derivative [Line Items]
Aggregate notional amount designated as cash flow hedges					$ 1,152,298	$ 1,160,778
Number of derivative instruments held			231	95				14	14
Future annual time period	12 months
Estimated amount to be reclassified							19,784
Aggregate notional amount derivative			1,392,430	682,447
Net loss related to changes in fair value of derivatives			233	128
Fair value of derivatives in net liability position with credit-risk-related Contingent Features	67,111	72,126
Cash collateral posted with derivative counterparties	$ 67,920	$ 75,103

XML

Loans and Leases (Outstanding Principal Balance and the Related Carrying Amount of Acquired Loans) (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Loans Individually Evaluated For Impairment [Member]
Acquired Loans Unpaid Principal Balance And Related Carrying Amount [Line Items]
Unpaid principal balance	$ 222,596	$ 238,538
Carrying amount	156,525	162,251
Loans Collectively Evaluated For Impairment [Member]
Acquired Loans Unpaid Principal Balance And Related Carrying Amount [Line Items]
Unpaid principal balance	1,851,539	1,976,132
Carrying amount	1,844,879	1,967,032
Purchased Loan [Member]
Acquired Loans Unpaid Principal Balance And Related Carrying Amount [Line Items]
Unpaid principal balance	2,074,135	2,214,670
Carrying amount	$ 2,001,404	$ 2,129,283

XML

Derivative Financial Instruments (Balance Sheet Netting) (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Derivative [Line Items]
Asset Derivatives	$ 24,690	$ 25,915
Liability Derivatives	67,111	72,126
Offsetting Of Financial Assets [Member] | Gross Amounts Of Recognized Assets [Member]
Derivative [Line Items]
Asset Derivatives	24,695	25,922
Offsetting Of Financial Assets [Member] | Gross Amounts Offset In Consolidated Balance Sheet [Member]
Derivative [Line Items]
Asset Derivatives	(5)	(7)
Offsetting Of Financial Assets [Member] | Net Amounts Of Assets Presented In Consolidated Balance Sheet [Member]
Derivative [Line Items]
Asset Derivatives	24,690	25,915
Offsetting Of Financial Assets [Member] | Financial Instruments Gross Amounts Not Offset In Consolidated Balance Sheet [Member]
Derivative [Line Items]
Asset Derivatives	0	0
Offsetting Of Financial Assets [Member] | Cash Collateral Received Gross Amounts Not Offset In Consolidated Balance Sheet [Member]
Derivative [Line Items]
Asset Derivatives	0	0
Offsetting Of Financial Assets [Member] | Net Amount [Member]
Derivative [Line Items]
Asset Derivatives	24,690	25,915
Offsetting Of Financial Liabilities [Member] | Gross Amounts Of Recognized Liabilities [Member]
Derivative [Line Items]
Liability Derivatives	67,111	72,126
Repurchase Agreements	305,251	302,577
Total Offsetting Financial Liabilities	372,362	374,703
Offsetting Of Financial Liabilities [Member] | Gross Amounts Offset In Consolidated Balance Sheet [Member]
Derivative [Line Items]
Liability Derivatives	0	0
Repurchase Agreements	0	0
Total Offsetting Financial Liabilities	0	0
Offsetting Of Financial Liabilities [Member] | Net Amounts Of Liabilities Presented In Consolidated Balance Sheet [Member]
Derivative [Line Items]
Liability Derivatives	67,111	72,126
Repurchase Agreements	305,251	302,577
Total Offsetting Financial Liabilities	372,362	374,703
Offsetting Of Financial Liabilities [Member] | Financial Instruments Gross Amounts Not Offset In Consolidated Balance Sheet [Member]
Derivative [Line Items]
Liability Derivatives	0	0
Repurchase Agreements	(305,251)	(302,577)
Total Offsetting Financial Liabilities	(305,251)	(302,577)
Offsetting Of Financial Liabilities [Member] | Cash Collateral Posted Gross Amounts Not Offset In Consolidated Balance Sheet [Member]
Derivative [Line Items]
Liability Derivatives	(67,920)	(75,103)
Repurchase Agreements	0	0
Total Offsetting Financial Liabilities	(67,920)	(75,103)
Offsetting Of Financial Liabilities [Member] | Net Amount [Member]
Derivative [Line Items]
Liability Derivatives	(809)	(2,977)
Repurchase Agreements	0	0
Total Offsetting Financial Liabilities	$ (809)	$ (2,977)

XML

Fair Value Disclosures (Carrying Amounts and Estimated Fair Values) (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash and due from banks	$ 291,434	$ 277,042
Restricted investment in bank stocks	151,974	152,434
Loans and leases	12,823,326	12,710,721
Deposits	12,691,432	12,580,046
Derivatives	67,111	72,126
Carrying Amount [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash and due from banks	291,434	277,042
Short-term investments	110,986	119,176
Investment securities	2,400,626	2,577,901
Restricted investment in bank stocks	151,974	152,434
Loans and leases	12,999,703	12,894,741
Derivatives	24,690	25,915
Deposits	12,691,432	12,580,046
Short-term borrowings	786,251	817,577
FHLB borrowings	1,044,480	1,199,062
Long-term debt	501,559	513,401
Derivatives	67,111	72,126
Fair Value [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash and due from banks	291,434	277,042
Short-term investments	110,986	119,176
Investment securities	2,400,626	2,577,901
Restricted investment in bank stocks	151,974	152,434
Loans and leases	13,125,606	12,954,918
Derivatives	24,690	25,915
Deposits	12,694,058	12,544,069
Short-term borrowings	786,251	817,577
FHLB borrowings	1,045,777	1,200,358
Long-term debt	503,698	512,632
Derivatives	67,111	72,126
Quoted Prices In Active Markets For Identical Instruments (Level 1) [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash and due from banks	291,434	277,042
Short-term investments	0	0
Investment securities	1,418	21,266
Restricted investment in bank stocks	0	0
Loans and leases	0	0
Derivatives	0	0
Deposits	0	0
Short-term borrowings	0	0
FHLB borrowings	0	0
Long-term debt	0	0
Derivatives	0	0
Significant Other Observable Inputs (Level 2) [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash and due from banks	0	0
Short-term investments	110,986	119,176
Investment securities	2,360,482	2,517,129
Restricted investment in bank stocks	151,974	152,434
Loans and leases	0	0
Derivatives	24,690	25,915
Deposits	12,694,058	12,544,069
Short-term borrowings	786,251	817,577
FHLB borrowings	1,045,777	1,200,358
Long-term debt	503,698	512,632
Derivatives	67,111	72,126
Significant Unobservable Inputs (Level 3) [Member]
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Cash and due from banks	0	0
Short-term investments	0	0
Investment securities	38,726	39,506
Restricted investment in bank stocks	0	0
Loans and leases	13,125,606	12,954,918
Derivatives	0	0
Deposits	0	0
Short-term borrowings	0	0
FHLB borrowings	0	0
Long-term debt	0	0
Derivatives	$ 0	$ 0

XML

Fair Value Disclosures (Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Assets	$ 2,425,316		$ 2,603,816
Derivatives, Liabilities	67,111	[1]	72,126	[1]
Designated As Hedging Instrument [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivatives, Assets	934	[2]	878	[2]
Derivatives, Liabilities	46,894	[1]	51,172	[1]
Not Designated As Hedging Instruments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivatives, Assets	23,756	[2]	25,037	[2]
Derivatives, Liabilities	20,217	[1]	20,954	[1]
U.S. Government Agencies [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	114,136		114,408
Obligations Of States And Political Subdivisions [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	426,444		435,777
Agency Residential Mortgage-Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	1,716,976		1,880,562
Non-Agency Residential Mortgage-Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	26,238		27,450
Commercial Mortgage Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	36,894		40,380
Other Structured Financial Products [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	9,977		9,550
Other Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	45,500		45,255
Other Equity Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	24,461		24,519
Quoted Prices In Active Markets For Identical Instruments (Level 1) [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Assets	1,418		21,266
Derivatives, Liabilities	0	[1]	0	[1]
Quoted Prices In Active Markets For Identical Instruments (Level 1) [Member] | Designated As Hedging Instrument [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivatives, Assets	0	[2]	0	[2]
Derivatives, Liabilities	0	[1]	0	[1]
Quoted Prices In Active Markets For Identical Instruments (Level 1) [Member] | Not Designated As Hedging Instruments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivatives, Assets	0	[2]	0	[2]
Derivatives, Liabilities	0	[1]	0	[1]
Quoted Prices In Active Markets For Identical Instruments (Level 1) [Member] | U.S. Government Agencies [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	0		0
Quoted Prices In Active Markets For Identical Instruments (Level 1) [Member] | Obligations Of States And Political Subdivisions [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	0		0
Quoted Prices In Active Markets For Identical Instruments (Level 1) [Member] | Agency Residential Mortgage-Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	0		0
Quoted Prices In Active Markets For Identical Instruments (Level 1) [Member] | Non-Agency Residential Mortgage-Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	0		0
Quoted Prices In Active Markets For Identical Instruments (Level 1) [Member] | Commercial Mortgage Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	0		0
Quoted Prices In Active Markets For Identical Instruments (Level 1) [Member] | Other Structured Financial Products [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	0		0
Quoted Prices In Active Markets For Identical Instruments (Level 1) [Member] | Other Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	0		0
Quoted Prices In Active Markets For Identical Instruments (Level 1) [Member] | Other Equity Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	1,418		21,266
Significant Other Observable Inputs (Level 2) [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Assets	2,385,172		2,543,044
Derivatives, Liabilities	67,111	[1]	72,126	[1]
Significant Other Observable Inputs (Level 2) [Member] | Designated As Hedging Instrument [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivatives, Assets	934	[2]	878	[2]
Derivatives, Liabilities	46,894	[1]	51,172	[1]
Significant Other Observable Inputs (Level 2) [Member] | Not Designated As Hedging Instruments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivatives, Assets	23,756	[2]	25,037	[2]
Derivatives, Liabilities	20,217	[1]	20,954	[1]
Significant Other Observable Inputs (Level 2) [Member] | U.S. Government Agencies [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	114,136		114,408
Significant Other Observable Inputs (Level 2) [Member] | Obligations Of States And Political Subdivisions [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	426,444		435,777
Significant Other Observable Inputs (Level 2) [Member] | Agency Residential Mortgage-Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	1,716,976		1,880,562
Significant Other Observable Inputs (Level 2) [Member] | Non-Agency Residential Mortgage-Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	646		650
Significant Other Observable Inputs (Level 2) [Member] | Commercial Mortgage Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	36,894		40,380
Significant Other Observable Inputs (Level 2) [Member] | Other Structured Financial Products [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	0		0
Significant Other Observable Inputs (Level 2) [Member] | Other Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	45,500		45,255
Significant Other Observable Inputs (Level 2) [Member] | Other Equity Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	19,886		97
Significant Unobservable Inputs (Level 3) [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Total Assets	38,726		39,506
Derivatives, Liabilities	0	[1]	0	[1]
Significant Unobservable Inputs (Level 3) [Member] | Designated As Hedging Instrument [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivatives, Assets	0	[2]	0	[2]
Derivatives, Liabilities	0	[1]	0	[1]
Significant Unobservable Inputs (Level 3) [Member] | Not Designated As Hedging Instruments [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Derivatives, Assets	0	[2]	0	[2]
Derivatives, Liabilities	0	[1]	0	[1]
Significant Unobservable Inputs (Level 3) [Member] | U.S. Government Agencies [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	0		0
Significant Unobservable Inputs (Level 3) [Member] | Obligations Of States And Political Subdivisions [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	0		0
Significant Unobservable Inputs (Level 3) [Member] | Agency Residential Mortgage-Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	0		0
Significant Unobservable Inputs (Level 3) [Member] | Non-Agency Residential Mortgage-Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	25,592		26,800
Significant Unobservable Inputs (Level 3) [Member] | Commercial Mortgage Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	0		0
Significant Unobservable Inputs (Level 3) [Member] | Other Structured Financial Products [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	9,977		9,550
Significant Unobservable Inputs (Level 3) [Member] | Other Debt Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	0		0
Significant Unobservable Inputs (Level 3) [Member] | Other Equity Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale securities	$ 3,157		$ 3,156

[1] Included in Other liabilities

[2] Included in Other assets

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Securitizations and Variable Interest Entities ("VIEs") (Schedule of Delinquencies, Net Credit Losses, and Components of Loan and Lease Sales) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Securitizations And Variable Interest Entities [Line Items]
Recorded Investment	$ 12,999,703		$ 12,521,669
Risk Assets	132,304	[1]	179,703	[1]
Net Credit Losses (Recoveries)	20,056		12,610
Loans And Leases Held In Portfolio [Member]
Securitizations And Variable Interest Entities [Line Items]
Recorded Investment	12,840,305		12,337,688
Risk Assets	130,104	[1]	176,445	[1]
Net Credit Losses (Recoveries)	19,643		12,370
Home Equity Loans Held By VIEs [Member]
Securitizations And Variable Interest Entities [Line Items]
Recorded Investment	159,398		183,981
Risk Assets	2,200	[1]	3,258	[1]
Net Credit Losses (Recoveries)	413		240
Leases Serviced For Others [Member]
Securitizations And Variable Interest Entities [Line Items]
Recorded Investment	0		0
Risk Assets	0	[1]	0	[1]
Net Credit Losses (Recoveries)	$ 0		$ 0

[1] Includes nonaccrual loans and leases, foreclosed real estate, and loans and leases past due 90 days and still accruing.

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Investment Securities (Tables)

3 Months Ended

Mar. 31, 2013

Investment [Line Items]

Amortized Cost and Fair Values of Investment Securities

				Gross		Gross
			Amortized	Unrealized		Unrealized		Fair
At March 31, 2013		Cost		Gains		Losses		Value
Available-for-Sale:
	U.S. Government agencies	$	113,328	$	808	$	0	$	114,136
	Obligations of states and political subdivisions		399,419		27,604		579		426,444
	Agency residential mortgage-backed securities		1,682,202		34,861		87		1,716,976
	Non-agency residential mortgage-backed securities		27,438		3		1,203		26,238
	Commercial mortgage-backed securities		35,619		1,275		0		36,894
	Other structured financial products		25,049		0		15,072		9,977
	Other debt securities		43,095		2,777		372		45,500
			2,326,150		67,328		17,313		2,376,165
	Other equity securities		24,188		931		658		24,461
Total available-for-sale securities		$	2,350,338	$	68,259	$	17,971	$	2,400,626
				Gross		Gross
			Amortized	Unrealized		Unrealized		Fair
At December 31, 2012		Cost		Gains		Losses		Value
Available-for-Sale:
	U.S. Government agencies	$	113,367	$	1,041	$	0	$	114,408
	Obligations of states and political subdivisions		403,487		32,585		295		435,777
	Agency residential mortgage-backed securities		1,843,511		37,104		53		1,880,562
	Non-agency residential mortgage-backed securities		29,428		2		1,980		27,450
	Commercial mortgage-backed securities		38,847		1,533		0		40,380
	Other structured financial products		25,011		0		15,461		9,550
	Other debt securities		43,076		2,643		464		45,255
			2,496,727		74,908		18,253		2,553,382
	Other equity securities		24,097		1,179		757		24,519
Total available-for-sale securities		$	2,520,824	$	76,087	$	19,010	$	2,577,901

Amortized Cost and Fair Value of Total Debt Securities

			March 31, 2013				December 31, 2012
			Amortized		Fair		Amortized		Fair
			Cost		Value		Cost		Value
Securities available for sale:
	Within one year		$	8,103	$	8,175	$	8,690	$	8,781
	After one year but within five years			140,707		142,617		141,362		143,714
	After five years but within ten years			870,496		886,715		935,796		952,680
	After ten years			1,306,844		1,338,658		1,410,879		1,448,207
		Total	$	2,326,150	$	2,376,165	$	2,496,727	$	2,553,382

Gross Realized Gains and Gross Realized Losses on Available-for-Sale Securities

	Available-for-sale Securities
	Three Months Ended March 31,
	2013		2012
Gross gains	$	407	$	392
Gross losses		(1)		(7)
Other-than-temporary impairment		(388)		(144)
Net gains	$	18	$	241

Gross Unrealized Losses and Fair Values by Investment and Length of Time of Securities

March 31, 2013	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Obligations of states and political subdivisions		39,233		476		7,176		103		46,409		579
Agency residential mortgage-backed securities		16,981		87		0		0		16,981		87
Non-agency residential mortgage-backed securities		11,708		151		13,884		1,052		25,592		1,203
Other structured financial products		0		0		9,977		15,072		9,977		15,072
Other debt securities		0		0		6,623		372		6,623		372
Other equity securities		1,275		90		1,260		568		2,535		658
	$	69,197	$	804	$	38,920	$	17,167	$	108,117	$	17,971
December 31, 2012	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Obligations of states and political subdivisions		31,791		295		0		0		31,791		295
Agency residential mortgage-backed securities		11,291		53		0		0		11,291		53
Non-agency residential mortgage-backed securities		12,117		450		14,683		1,530		26,800		1,980
Other structured financial products		0		0		9,551		15,461		9,551		15,461
Other debt securities		0		0		6,518		464		6,518		464
Other equity securities		1,751		585		796		172		2,547		757
	$	56,950	$	1,383	$	31,548	$	17,627	$	88,498	$	19,010

Credit Losses on Non-Agency Residential Mortgage-Backed Securities

Credit Losses on Non-agency Residential Mortgage-backed and Other Equity Securities for which a
Portion of an Other-than-temporary Impairment was Recognized in Other Comprehensive Income
				Three Months Ended
				March 31,
				2013		2012
	Balance - beginning of period			$	1,280	$	4,602
	Additions:
		Amount related to credit losses for which an other-than-temporary
			impairment was not previously recognized		325		0
		Additional amount related to credit losses for which an other-than-
			temporary impairment was previously recognized		63		144
	Deletions:
		Realized losses			34		0
	Balance - end of period			$	1,634	$	4,746

Significant Assumptions of Other-Than-Temporarily Impaired Securities

			Weighted-average (%)
			March 31,
			2013	2012
		Conditional repayment rate (1)	10.3%	9.9%
		Loss severity (2)	43.0%	46.6%
		Conditional default rate (3)	3.8%	6.0%
(1)	Conditional repayment rate represents a rate equal to the proportion of principal balance paid off voluntarily over a certain period of time on an annualized basis.
(2)	Loss severity rates are projected by considering collateral characteristics such as current loan-to-value, original creditworthiness of borrowers (FICO score) and geographic concentration.
(3)	Conditional default rate is an annualized rate of default on a group of mortgages, and represents the percentage of outstanding principal balances in the pool that are in default, which typically equates to the borrower being past due 60 days, 90 days, or possibly already in the foreclosure process.

Present Value of Expected Cash Flows for Company's Specific Class and Subordinate Classes

	The present value of the expected cash flows for Susquehanna’s specific class and subordinate classes, as well as additional
information about the pooled trust preferred securities, are included in the following tables.
	As of March 31, 2013		Pooled Trust #1		Pooled Trust #2		Pooled Trust #3		Pooled Trust #4
	Class		B		B		B		A2L
	Class face value		$	35,000	$	58,922	$	88,670	$	45,500
	Book value		$	3,000	$	7,183	$	8,116	$	6,750
	Fair value			1,245		3,068		3,444		2,220
	Unrealized loss			(1,755)		(4,115)		(4,672)		(4,530)
	Present value of expected cash flows
		for class noted above and all
		subordinated classes (1)	$	150,775	$	178,443	$	308,449	$	147,139
	Lowest credit rating assigned		D		Ca		Ca		Ca
	Original collateral		$	623,984	$	501,470	$	700,535	$	487,680
	Performing collateral			361,842		295,080		484,731		281,600
	Actual defaults			30,000		51,580		44,000		77,100
	Actual deferrals			77,400		125,810		96,150		93,080
	Projected future defaults			61,045		53,910		47,105		42,053
	Actual defaults as a % of original
		collateral		4.8%		10.3%		6.3%		15.8%
	Actual deferrals as a % of original
		collateral (2)		12.4%		25.1%		13.7%		19.1%
	Actual defaults and deferrals as a % of
		original collateral		17.2%		35.4%		20.0%		34.9%
	Projected future defaults as a % of
		original collateral (3)		9.8%		10.8%		6.7%		8.6%
	Actual institutions deferring and
		defaulted as a % of total institutions		18.5%		37.5%		25.4%		41.8%
	Projected future defaults as a % of
		performing collateral plus
		deferrals		13.9%		12.8%		8.1%		11.2%

	As of March 31, 2012		Pooled Trust #1		Pooled Trust #2		Pooled Trust #3		Pooled Trust #4
	Class		B		B		B		A2L
	Class face value		$	35,000	$	58,363	$	87,962	$	45,500
	Book value		$	3,000	$	7,096	$	8,033	$	6,750
	Fair value			967		2,438		2,718		1,897
	Unrealized loss			(2,033)		(4,658)		(5,315)		(4,853)
	Present value of expected cash flows
		for class noted above and all
		subordinated classes (1)	$	151,043	$	171,529	$	277,791	$	142,866
	Lowest credit rating assigned		CCC-		Ca		Ca		Ca
	Original collateral		$	623,984	$	501,470	$	700,535	$	487,680
	Performing collateral			352,028		300,200		470,831		344,600
	Actual defaults			10,000		51,580		44,000		74,500
	Actual deferrals			107,400		120,690		135,150		43,080
	Projected future defaults			72,893		71,392		60,702		46,548
	Actual defaults as a % of original
		collateral		1.6%		10.3%		6.3%		15.3%
	Actual deferrals as a % of original
		collateral (2)		17.2%		24.1%		19.3%		8.8%
	Actual defaults and deferrals as a % of
		original collateral		18.8%		34.4%		25.6%		24.1%
	Projected future defaults as a % of
		original collateral (3)		11.7%		14.2%		8.7%		9.5%
	Actual institutions deferring and
		defaulted as a % of total institutions		19.4%		37.5%		30.4%		30.9%
	Projected future defaults as a % of
		performing collateral plus
		deferrals		15.9%		17.0%		10.0%		12.0%
(1)	Susquehanna determines whether it expects to recover the entire amortized cost basis by comparing the present value of the expected cash flows to be collected with the amortized cost basis. As of March 31, 2013 and 2012, the present value of the current estimated cash flows is equal to or greater than the book value of the trust preferred securities held. Consequently, there is no credit-related other-than-temporary impairment required to be recognized.
(2)	Includes current interest deferrals for the quarter for those institutions deferring as of the date of the assessment of the other-than-temporary impairment. Current deferrals are assumed to continue for twenty quarters, the full contractually permitted deferral period, if the institutions are not projected to default prior to that time.
(3)	Includes those institutions that are performing but are not projected to continue to perform and includes those institutions that are currently deferring interest that are projected to default, based upon third-party proprietary valuation methodology used to determine future defaults. Creditworthiness of each underlying issue in the collateralized debt obligation is determined using publicly available data.

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Loans & Leases (Narrative) (Detail) (USD $)	Mar. 31, 2013
Financing Receivable Recorded Investment [Line Items]
Significant Credit Rating Loans	$ 1,000,000

XML

Investment Securities (Amortized Cost and Fair Value of Total Debt Securities) (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Schedule Of Available For Sale Securities [Line Items]
Securities available for sale, Within one year - Amortized Cost	$ 8,103	$ 8,690
Securities available for sale, After one year but within five years - Amortized Cost	140,707	141,362
Securities available for sale, After five years but within ten years - Amortized Cost	870,496	935,796
Securities available for sale, After ten years - Amortized Cost	1,306,844	1,410,879
Securities available for sale - Amortized Cost	2,326,150	2,496,727
Securities available for sale, Within one year - Fair Value	8,175	8,781
Securities available for sale, After one year but within five years - Fair Value	142,617	143,714
Securities available for sale, After five years but within ten years - Fair Value	886,715	952,680
Securities available for sale, After ten years - Fair Value	1,338,658	1,448,207
Securities available for sale - Fair Value	$ 2,376,165	$ 2,553,382

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Derivative Financial Instruments (Effect of Derivative Instruments on Earnings) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Not Designated As Hedging Instruments [Member]
Derivative Instruments Gain Loss [Line Items]
Amount Of Loss Recognized In Income On Derivatives	$ 233	$ 128
Cash Flow Hedges [Member] | Interest Rate Contract [Member]
Derivative Instruments Gain Loss [Line Items]
Amount Of Gain Recognized In OCI	2,796	1,698
Interest Expense [Member] | Cash Flow Hedges [Member] | Interest Rate Contract [Member]
Derivative Instruments Gain Loss [Line Items]
Amount Of Loss Reclassified From Accumulated OCI Into Income	(4,534)	(4,280)
Other Expense [Member] | Interest Rate Contract [Member] | Not Designated As Hedging Instruments [Member]
Derivative Instruments Gain Loss [Line Items]
Amount Of Loss Recognized In Income On Derivatives	(1)	(31)
Other Expense [Member] | Cash Flow Hedges [Member] | Interest Rate Contract [Member]
Derivative Instruments Gain Loss [Line Items]
Amount Of Loss Recognized In Income (Ineffective Portion)	0	0
Other Income [Member] | Interest Rate Contract [Member] | Not Designated As Hedging Instruments [Member]
Derivative Instruments Gain Loss [Line Items]
Amount Of Loss Recognized In Income On Derivatives	$ (232)	$ (97)

XML

Acquisitions (Identifiable Assets and Liabilities Assumed) (Detail) (Tower [Member], USD $) In Thousands, unless otherwise specified	2 Months Ended
	Feb. 17, 2012
Tower [Member]
Business Acquisition [Line Items]
Value of, Common shares issued and options assumed	$ 302,112
Value of, Cash	88,005
Total purchase price	390,117
Cash and due from banks	85,518
Unrestricted short-term investments	9,171
Securities available for sale	137,254
Loans and leases	1,975,488
Intangible assets	27,334
Other assets	153,357
Total identifiable assets	2,388,122
Deposits	2,074,372
Short-term borrowings	10,228
Long-term borrowings	103,923
Other liabilities	66,890
Total liabilities	2,255,413
Net goodwill resulting from acquisition	$ 257,408

XML

Loans and Leases (Age Analysis of Past Due Financing Receivables) (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Financing Receivables That Are Accruing [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	$ 47,843	$ 57,241
60-89 Days Past Due	11,197	22,754
Greater than 90 Days	6,396	8,209
Total Past Due	65,436	88,204
Current	12,830,916	12,708,770
Total Financing Receivables,Accruing	12,896,352	12,796,974
Financing Receivables That Are Accruing [Member] | Originated Loans And Leases [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	42,585	51,679
60-89 Days Past Due	10,557	21,471
Greater than 90 Days	5,490	5,720
Total Past Due	58,632	78,870
Current	10,846,201	10,596,166
Total Financing Receivables,Accruing	10,904,833	10,675,036
Financing Receivables That Are Accruing [Member] | Purchased Loans And Leases [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	5,258	5,562
60-89 Days Past Due	640	1,283
Greater than 90 Days	906	2,489
Total Past Due	6,804	9,334
Current	1,984,715	2,112,604
Total Financing Receivables,Accruing	1,991,519	2,121,938
Financing Receivables That Are Accruing [Member] | Commercial Loan [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	4,106	5,163
60-89 Days Past Due	783	762
Greater than 90 Days	988	359
Total Past Due	5,877	6,284
Current	2,297,241	2,256,863
Total Financing Receivables,Accruing	2,303,118	2,263,147
Financing Receivables That Are Accruing [Member] | Real Estate - Construction [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	1,206	8,568
60-89 Days Past Due	575	1,614
Greater than 90 Days	382	157
Total Past Due	2,163	10,339
Current	758,236	822,625
Total Financing Receivables,Accruing	760,399	832,964
Financing Receivables That Are Accruing [Member] | Real Estate Secured - Residential [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	19,043	19,544
60-89 Days Past Due	3,863	4,467
Greater than 90 Days	4,237	5,547
Total Past Due	27,143	29,558
Current	4,020,295	4,007,820
Total Financing Receivables,Accruing	4,047,438	4,037,378
Financing Receivables That Are Accruing [Member] | Real Estate Secured - Commercial [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	9,687	9,623
60-89 Days Past Due	5,427	13,746
Greater than 90 Days	0	1,394
Total Past Due	15,114	24,763
Current	3,912,983	3,897,224
Total Financing Receivables,Accruing	3,928,097	3,921,987
Financing Receivables That Are Accruing [Member] | Consumer [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	10,336	8,898
60-89 Days Past Due	303	1,678
Greater than 90 Days	603	545
Total Past Due	11,242	11,121
Current	848,385	831,388
Total Financing Receivables,Accruing	859,627	842,509
Financing Receivables That Are Accruing [Member] | Leases [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	3,465	5,445
60-89 Days Past Due	246	487
Greater than 90 Days	186	207
Total Past Due	3,897	6,139
Current	993,776	892,850
Total Financing Receivables,Accruing	997,673	898,989
Financing Receivables That Are Nonaccruing [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	6,123	4,067
60-89 Days Past Due	5,175	2,784
Greater than 90 Days	68,265	70,507
Total Past Due	79,563	77,358
Current	23,788	20,409
Total Financing Receivables, Nonaccruing	103,351	97,767
Financing Receivables That Are Nonaccruing [Member] | Originated Loans And Leases [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	5,705	4,067
60-89 Days Past Due	4,453	2,379
Greater than 90 Days	63,155	65,830
Total Past Due	73,313	72,276
Current	20,153	18,146
Total Financing Receivables, Nonaccruing	93,466	90,422
Financing Receivables That Are Nonaccruing [Member] | Purchased Loans And Leases [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	418	0
60-89 Days Past Due	722	405
Greater than 90 Days	5,110	4,677
Total Past Due	6,250	5,082
Current	3,635	2,263
Total Financing Receivables, Nonaccruing	9,885	7,345
Financing Receivables That Are Nonaccruing [Member] | Commercial Loan [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	632	631
60-89 Days Past Due	725	649
Greater than 90 Days	4,876	6,068
Total Past Due	6,233	7,348
Current	3,309	3,116
Total Financing Receivables, Nonaccruing	9,542	10,464
Financing Receivables That Are Nonaccruing [Member] | Real Estate - Construction [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	0	0
60-89 Days Past Due	1,983	405
Greater than 90 Days	15,798	14,047
Total Past Due	17,781	14,452
Current	1,164	365
Total Financing Receivables, Nonaccruing	18,945	14,817
Financing Receivables That Are Nonaccruing [Member] | Real Estate Secured - Residential [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	2,342	953
60-89 Days Past Due	330	452
Greater than 90 Days	19,204	19,551
Total Past Due	21,876	20,956
Current	8,496	7,484
Total Financing Receivables, Nonaccruing	30,372	28,440
Financing Receivables That Are Nonaccruing [Member] | Real Estate Secured - Commercial [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	3,149	2,483
60-89 Days Past Due	1,682	622
Greater than 90 Days	28,171	30,433
Total Past Due	33,002	33,538
Current	10,339	9,083
Total Financing Receivables, Nonaccruing	43,341	42,621
Financing Receivables That Are Nonaccruing [Member] | Consumer [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
Greater than 90 Days	0	0
Total Past Due	0	0
Current	37	43
Total Financing Receivables, Nonaccruing	37	43
Financing Receivables That Are Nonaccruing [Member] | Leases [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
30-59 Days Past Due	0	0
60-89 Days Past Due	455	656
Greater than 90 Days	216	408
Total Past Due	671	1,064
Current	443	318
Total Financing Receivables, Nonaccruing	$ 1,114	$ 1,382

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Accumulated Other Comprehensive Loss (Reclassification Detail) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Accumulated Other Comprehensive Income Loss [Line Items]
Net realized gain on sales of securities	$ 406		$ 385
Net impairment losses recognized in earnings	(388)		(144)
Unrealized gains (losses) on cash flow hedges	(4,405)		(2,804)
Tax effect	1,609		1,106
Cash Flow Hedges Net Of Tax	(2,796)		(1,698)
Total Reclassifications Net Of Tax	2,958
Unrealized Gains On Available For Sale Securities [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Net realized gain on sales of securities	406
Net impairment losses recognized in earnings	(388)
Net Security Gain	18
Investment Securities Tax Expense	(7)
Investment Securities Net Of Tax	11
Unrealized Losses On Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Cash Flow Hedges Net Of Tax	(2,947)
Unrealized Losses On Cash Flow Hedges [Member] | Interest Rate Contract [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Unrealized gains (losses) on cash flow hedges	4,534	[1]
Tax effect	(1,587)
Cash Flow Hedges Net Of Tax	$ 2,947

[1] For additional information, refer to "Note 13-Derivative Financial Instruments".

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Goodwill (Key Ratios to Measure Goodwill of Bank Reporting Unit for Impairment) (Detail) (Bank Reporting Unit [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2012 Ratios	Mar. 31, 2013
Goodwill [Line Items]
Key ratios considered in measuring the fair value of the bank reporting unit	2
Goodwill	$ 1,158,248	$ 1,165,200
Fair value of the bank reporting unit exceeded carrying value	5.90%
Annual [Member]
Goodwill [Line Items]
Price to book	1.29
Price to tangible book	1.47

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Investment Securities (Present Value of Expected Cash Flows for Company's Specific Class and Subordinate Classes) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Pooled Trust #1 [Member]
Pooled Trust Preferred Securities [Line Items]
Class	B		B
Class face value	$ 35,000		$ 35,000
Book value	3,000		3,000
Fair value	1,245		967
Unrealized loss	(1,755)		(2,033)
Present value of expected cash flows for class noted above and all subordinated classes	150,775	[1]	151,043	[1]
Lowest credit rating assigned	D		CCC-
Original collateral	623,984		623,984
Performing collateral	361,842		352,028
Actual defaults	30,000		10,000
Actual deferrals	77,400		107,400
Projected future defaults	61,045		72,893
Actual defaults as a % of original collateral	4.80%		1.60%
Actual deferrals as a % of original collateral	12.40%	[2]	17.20%	[2]
Actual defaults and deferrals as a % of original collateral	17.20%		18.80%
Actual institutions deferring and defaulted as a % of total institutions	18.50%		19.40%
Projected future defaults as a % of performing collateral plus deferrals	13.90%		15.90%
Projected future defaults as a % of original collateral	9.80%	[3]	11.70%	[3]
Pooled Trust #2 [Member]
Pooled Trust Preferred Securities [Line Items]
Class	B		B
Class face value	58,922		58,363
Book value	7,183		7,096
Fair value	3,068		2,438
Unrealized loss	(4,115)		(4,658)
Present value of expected cash flows for class noted above and all subordinated classes	178,443	[1]	171,529	[1]
Lowest credit rating assigned	Ca		Ca
Original collateral	501,470		501,470
Performing collateral	295,080		300,200
Actual defaults	51,580		51,580
Actual deferrals	125,810		120,690
Projected future defaults	53,910		71,392
Actual defaults as a % of original collateral	10.30%		10.30%
Actual deferrals as a % of original collateral	25.10%	[2]	24.10%	[2]
Actual defaults and deferrals as a % of original collateral	35.40%		34.40%
Actual institutions deferring and defaulted as a % of total institutions	37.50%		37.50%
Projected future defaults as a % of performing collateral plus deferrals	12.80%		17.00%
Projected future defaults as a % of original collateral	10.80%	[3]	14.20%	[3]
Pooled Trust #3 [Member]
Pooled Trust Preferred Securities [Line Items]
Class	B		B
Class face value	88,670		87,962
Book value	8,116		8,033
Fair value	3,444		2,718
Unrealized loss	(4,672)		(5,315)
Present value of expected cash flows for class noted above and all subordinated classes	308,449	[1]	277,791	[1]
Lowest credit rating assigned	Ca		Ca
Original collateral	700,535		700,535
Performing collateral	484,731		470,831
Actual defaults	44,000		44,000
Actual deferrals	96,150		135,150
Projected future defaults	47,105		60,702
Actual defaults as a % of original collateral	6.30%		6.30%
Actual deferrals as a % of original collateral	13.70%	[2]	19.30%	[2]
Actual defaults and deferrals as a % of original collateral	20.00%		25.60%
Actual institutions deferring and defaulted as a % of total institutions	25.40%		30.40%
Projected future defaults as a % of performing collateral plus deferrals	8.10%		10.00%
Projected future defaults as a % of original collateral	6.70%	[3]	8.70%	[3]
Pooled Trust #4 [Member]
Pooled Trust Preferred Securities [Line Items]
Class	A2L		A2L
Class face value	45,500		45,500
Book value	6,750		6,750
Fair value	2,220		1,897
Unrealized loss	(4,530)		(4,853)
Present value of expected cash flows for class noted above and all subordinated classes	147,139	[1]	142,866	[1]
Lowest credit rating assigned	Ca		Ca
Original collateral	487,680		487,680
Performing collateral	281,600		344,600
Actual defaults	77,100		74,500
Actual deferrals	93,080		43,080
Projected future defaults	$ 42,053		$ 46,548
Actual defaults as a % of original collateral	15.80%		15.30%
Actual deferrals as a % of original collateral	19.10%	[2]	8.80%	[2]
Actual defaults and deferrals as a % of original collateral	34.90%		24.10%
Actual institutions deferring and defaulted as a % of total institutions	41.80%		30.90%
Projected future defaults as a % of performing collateral plus deferrals	11.20%		12.00%
Projected future defaults as a % of original collateral	8.60%	[3]	9.50%	[3]

[1] Susquehanna determines whether it expects to recover the entire amortized cost basis by comparing the present value of the expected cash flows to be collected with the amortized cost basis. As of March 31, 2013 and 2012, the present value of the current estimated cash flows is equal to or greater than the book value of the trust preferred securities held. Consequently, there is no credit-related other-than-temporary impairment required to be recognized.

[2] Includes current interest deferrals for the quarter for those institutions deferring as of the date of the assessment of the other-than-temporary impairment. Current deferrals are assumed to continue for twenty quarters, the full contractually permitted deferral period, if the institutions are not projected to default prior to that time.

[3] Includes those institutions that are performing but are not projected to continue to perform and includes those institutions that are currently deferring interest that are projected to default, based upon third-party proprietary valuation methodology used to determine future defaults. Creditworthiness of each underlying issue in the collateralized debt obligation is determined using publicly available data.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2013

Summary of Significant Accounting Policies

NOTE 1. Summary of Significant Accounting Policies

       The information contained in this report is unaudited.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information. Certain prior-year amounts have been reclassified to conform to current period classifications and those reclassifications are not material to previously issued financial statements. In the opinion of management, the information reflects all normal recurring adjustments necessary for a fair statement of results for the three months ended March 31, 2013 and 2012. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Operating results for the three-month period ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

The accounting policies of Susquehanna Bancshares, Inc. and Subsidiaries ("Susquehanna"), as applied in the consolidated interim financial statements presented herein, are substantially the same as those followed on an annual basis as presented on pages 79 through 84 of Susquehanna's Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported and contingent amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change relate to the estimated residual value of leases; determination of the allowance for loan and lease losses; the fair value of financial instruments, such as loans, investment securities, and derivatives; measurement and assessment of goodwill, intangible assets, and other purchase accounting related adjustments; benefit plan obligations and expenses; and income tax assets, liabilities and expenses.

Recently Adopted Accounting Guidance

In December 2011, FASB issued ASU 2011-11, Balance Sheet (Topic 210) - Disclosures about Offsetting Assets and Liabilities. This ASU requires an entity to disclose the nature of its rights of setoff and related arrangements associated with its financial instruments and derivative instruments. The objective of ASU 2011-11 is to make financial statements that are prepared under U.S. generally accepted accounting principles (“GAAP”) more comparable to those prepared under International Financial Reporting Standards. The new disclosures will give financial statement users information about both gross and net exposures. ASU 2011-11 is effective for interim and annual reporting periods beginning after January 1, 2013 and will be applied on a retrospective basis. The adoption of the amendment, in the first quarter of 2013, did not have a material impact on the financial condition or results of operations.

In July 2012, FASB issued ASU 2012-02, Intangibles – Goodwill and Other (Topic 350) – Testing Indefinite – Lived Intangible Assets for Impairment. This ASU clarifies the assessment options and testing processes previously defined in ASU 2011-08, Intangibles – Goodwill and Other (Topic 350) – Testing Goodwill for Impairment issued in September 2011. ASU 2012-02 is effective for interim and annual impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of this guidance, in the first quarter of 2013,did not have a material impact on results of operations or financial condition.

In January 2013, FASB issued ASU 2013-01, Balance Sheet (Topic 210) – Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This ASU clarifies that the scope of Update 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, issued in December 2011. ASU 2013-01 is effective for interim and annual reporting periods beginning on or after January 1, 2013. The adoption of this guidance, in the first quarter of 2013, did not have a material impact on the results of operations or financial condition, however did result in an additional disclosure. For additional information about this disclosure, refer to “Note 13. Derivative Financial Instruments”.

In February 2013, FASB issued ASU 2013-02, Comprehensive Income (Topic 220) – Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income in Update No. 2011-12. This ASU requires entities to disclose information regarding reclassification adjustments from accumulated other comprehensive income in their annual financial statements in a single note or on the face of the financial statements. ASU 2013-02 is effective for interim and annual reporting periods beginning after December 15, 2012. The adoption of this guidance, in the first quarter of 2013, did not have a material impact on results of operations or financial condition, however did result in additional disclosures. For more information about these disclosures, refer to Note 9. Accumulated Other Comprehensive Income”.

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Goodwill (Factors Used to Measure Goodwill in Income Approach) (Detail) (Wealth Management Reporting Unit [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	May 31, 2012	Mar. 31, 2013
Goodwill [Line Items]
Goodwill	$ 82,746	$ 82,746
Future economic benefit period, in years	10 years
Fair value of the wealth management reporting unit exceeding carrying value	63.40%
Annual [Member]
Goodwill [Line Items]
Discount rate	17.50%
Weighted-average increase in revenues	6.00%
Weighted-average increase in expenses	5.00%

XML

Investment Securities (Gross Realized Gains and Gross Realized Losses on Available-for-Sale Securities) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Schedule Of Available For Sale Securities [Line Items]
Gross gains - Available-for-sale Securities	$ 407	$ 392
Gross losses - Available-for-sale Securities	(1)	(7)
Other-than-temporary impairment - Available-for-sale Securities	(388)	(144)
Net gains - Available-for-sale Securities	$ 18	$ 241

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Deposits (Tables)

3 Months Ended

Mar. 31, 2013

Schedule Of Deposits

NOTE 7. Deposits
	Deposits consisted of the following at March 31, 2013 and December 31, 2012:
		March 31,		December 31,
		2013		2012
Noninterest-bearing:
	Demand	$	1,917,719	$	1,973,664
Interest-bearing:
	Interest-bearing demand		5,936,099		5,829,147
	Savings		1,077,446		1,032,293
	Time		2,205,304		2,262,262
	Time of $100 or more		1,554,864		1,482,680
Total deposits		$	12,691,432	$	12,580,046

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Goodwill (Tables)

3 Months Ended

Mar. 31, 2013

Goodwill [Line Items]

Key Ratios to Measure Goodwill of Bank Reporting Unit for Impairment

	Annual
Ratio	May 31, 2012
Price to book	1.29x
Price to tangible book	1.47x

Factors Used to Measure Goodwill in Income Approach

	Annual
Factors	May 31, 2012
Discount rate	17.5%
Weighted-average increase in revenues	6.0%
Weighted-average increase in expenses	5.0%

Key Ratios Used to Measure Goodwill of Property and Casualty Insurance Reporting Unit for Impairment

	Annual
Ratio	May 31, 2012
Average price to book	1.17X
Median price to earnings	12.1X

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Loans and Leases (Schedule of Modifications for Troubled Debt Restructurings) (Detail) (TDRs [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 Loans		Mar. 31, 2012 Loans
Financing Receivable Modifications [Line Items]
Number Of Loans	178		15
Pre-Modification Recorded Investment	$ 17,882		$ 14,412
Post-Modification Recorded Investment	17,882		14,412
Financial Effect Of Modification On Recorded Investment	0	[1]	0	[1]
Financial Effect Of Modification On Interest	(324)	[2]	6	[2]
Subsequently Defaulted [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	31		4
Financial Effect Of Modification On Recorded Investment	1,557		2,247
Originated Loans And Leases [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	170		7
Pre-Modification Recorded Investment	16,149		2,541
Post-Modification Recorded Investment	16,149		2,541
Financial Effect Of Modification On Recorded Investment	0	[1]	0	[1]
Financial Effect Of Modification On Interest	(281)	[2]	(74)	[2]
Originated Loans And Leases [Member] | Subsequently Defaulted [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	28		3
Financial Effect Of Modification On Recorded Investment	1,357		1,339
Purchased Loans And Leases [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	8		8
Pre-Modification Recorded Investment	1,733		11,871
Post-Modification Recorded Investment	1,733		11,871
Financial Effect Of Modification On Recorded Investment	0	[1]	0	[1]
Financial Effect Of Modification On Interest	(43)	[2]	80	[2]
Purchased Loans And Leases [Member] | Subsequently Defaulted [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	3		1
Financial Effect Of Modification On Recorded Investment	200		908
Commercial, Financial, And Agricultural [Member] | Others [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	16	[3]	1	[3]
Pre-Modification Recorded Investment	7,493	[3]	310	[3]
Post-Modification Recorded Investment	7,493	[3]	310	[3]
Financial Effect Of Modification On Recorded Investment	0	[1],[3]	0	[1],[3]
Financial Effect Of Modification On Interest	0	[2],[3]	0	[2],[3]
Commercial, Financial, And Agricultural [Member] | Subsequently Defaulted [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	5		0
Financial Effect Of Modification On Recorded Investment	653		0
Real Estate - Construction [Member] | Others [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	1	[3]	0	[3]
Pre-Modification Recorded Investment	20	[3]	0	[3]
Post-Modification Recorded Investment	20	[3]	0	[3]
Financial Effect Of Modification On Recorded Investment	0	[1],[3]	0	[1],[3]
Financial Effect Of Modification On Interest	0	[2],[3]	0	[2],[3]
Real Estate - Construction [Member] | Subsequently Defaulted [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	1		1
Financial Effect Of Modification On Recorded Investment	20		908
Real Estate Secured - Residential [Member] | Combination Of Modification Types [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	7		8
Pre-Modification Recorded Investment	1,316		2,434
Post-Modification Recorded Investment	1,316		2,434
Financial Effect Of Modification On Recorded Investment	0	[1]	0	[1]
Financial Effect Of Modification On Interest	(128)	[2]	6	[2]
Real Estate Secured - Residential [Member] | Others [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	59	[3]	2	[3]
Pre-Modification Recorded Investment	5,412	[3]	1,006	[3]
Post-Modification Recorded Investment	5,412	[3]	1,006	[3]
Financial Effect Of Modification On Recorded Investment	0	[1],[3]	0	[1],[3]
Financial Effect Of Modification On Interest	0	[2],[3]	0	[2],[3]
Real Estate Secured - Residential [Member] | Subsequently Defaulted [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	5		3
Financial Effect Of Modification On Recorded Investment	404		1,339
Real Estate Secured - Commercial [Member] | Combination Of Modification Types [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	1		0
Pre-Modification Recorded Investment	1,436		0
Post-Modification Recorded Investment	1,436		0
Financial Effect Of Modification On Recorded Investment	0	[1]	0	[1]
Financial Effect Of Modification On Interest	(196)	[2]	0	[2]
Real Estate Secured - Commercial [Member] | Others [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	7	[3]	4	[3]
Pre-Modification Recorded Investment	1,549	[3]	10,662	[3]
Post-Modification Recorded Investment	1,549	[3]	10,662	[3]
Financial Effect Of Modification On Recorded Investment	0	[1],[3]	0	[1],[3]
Financial Effect Of Modification On Interest	0	[2],[3]	0	[2],[3]
Real Estate Secured - Commercial [Member] | Subsequently Defaulted [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	2		0
Financial Effect Of Modification On Recorded Investment	341		0
Consumer [Member] | Others [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	87	[3]	0	[3]
Pre-Modification Recorded Investment	656	[3]	0	[3]
Post-Modification Recorded Investment	656	[3]	0	[3]
Financial Effect Of Modification On Recorded Investment	0	[1],[3]	0	[1],[3]
Financial Effect Of Modification On Interest	0	[2],[3]	0	[2],[3]
Consumer [Member] | Subsequently Defaulted [Member]
Financing Receivable Modifications [Line Items]
Number Of Loans	18		0
Financial Effect Of Modification On Recorded Investment	$ 139		$ 0

[1] Financial effects impacting the recorded investment include principal payments, advances, charge-offs, and capitalized past-due amounts.

[2] Represents the present value of interest rate concessions discounted at the effective rate of the original loan.

[3] Bankruptcies and maturity date extensions.

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Investment Securities (Gross Unrealized Losses and Fair Values by Investment and Length of Time Of Securities) (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Schedule Of Available For Sale Securities [Line Items]
Fair Value, Less than 12 Months	$ 69,197	$ 56,950
Unrealized Losses, Less than 12 Months	804	1,383
Fair Value, 12 Months or More	38,920	31,548
Unrealized Losses, 12 Months or More	17,167	17,627
Fair Value, Total	108,117	88,498
Unrealized Losses, Total	17,971	19,010
Obligations Of States And Political Subdivisions [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value, Less than 12 Months	39,233	31,791
Unrealized Losses, Less than 12 Months	476	295
Fair Value, 12 Months or More	7,176	0
Unrealized Losses, 12 Months or More	103	0
Fair Value, Total	46,409	31,791
Unrealized Losses, Total	579	295
Agency Residential Mortgage-Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value, Less than 12 Months	16,981	11,291
Unrealized Losses, Less than 12 Months	87	53
Fair Value, 12 Months or More	0	0
Unrealized Losses, 12 Months or More	0	0
Fair Value, Total	16,981	11,291
Unrealized Losses, Total	87	53
Non-Agency Residential Mortgage-Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value, Less than 12 Months	11,708	12,117
Unrealized Losses, Less than 12 Months	151	450
Fair Value, 12 Months or More	13,884	14,683
Unrealized Losses, 12 Months or More	1,052	1,530
Fair Value, Total	25,592	26,800
Unrealized Losses, Total	1,203	1,980
Other Structured Financial Products [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value, Less than 12 Months	0	0
Unrealized Losses, Less than 12 Months	0	0
Fair Value, 12 Months or More	9,977	9,551
Unrealized Losses, 12 Months or More	15,072	15,461
Fair Value, Total	9,977	9,551
Unrealized Losses, Total	15,072	15,461
Other Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value, Less than 12 Months	0	0
Unrealized Losses, Less than 12 Months	0	0
Fair Value, 12 Months or More	6,623	6,518
Unrealized Losses, 12 Months or More	372	464
Fair Value, Total	6,623	6,518
Unrealized Losses, Total	372	464
Other Equity Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Fair Value, Less than 12 Months	1,275	1,751
Unrealized Losses, Less than 12 Months	90	585
Fair Value, 12 Months or More	1,260	796
Unrealized Losses, 12 Months or More	568	172
Fair Value, Total	2,535	2,547
Unrealized Losses, Total	$ 658	$ 757

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2013

Schedule Of Accumulated Other Comprehensive Loss

NOTE 9. Accumulated Other Comprehensive Loss
	The balances and changes in balances by component of accumulated other comprehensive income (loss) are shown in the
following tables:
							Unrealized				Accumulated
			Unrealized Gains (Losses) on				Gains (Losses)		Post-		Other
			Investment securities				on Cash Flow		retirement		Comprehensive
			With OTTI		All other		Hedges		Benefits		Loss
Balance at January 1, 2012			$	(2,521)	$	23,346	$	(33,402)	$	(33,477)	$	(46,054)
	Gain (loss), net of tax			(1,623)		686		1,698		0		761
Balance at March 31, 2012			$	(4,144)	$	24,032	$	(31,704)	$	(33,477)	$	(45,293)
Balance at January 1, 2013			$	(560)	$	37,242	$	(34,635)	$	(39,305)	$	(37,258)
	Other comprehensive income before
		reclassifications		(196)		(3,992)		(151)		(16)		(4,355)
	Amounts reclassified from accumulated
		other comprehensive income		11		0		2,947		0		2,958
Net current-period other comprehensive income				(185)		(3,992)		2,796		(16)		(1,397)
Balance at March 31, 2013			$	(745)	$	33,250	$	(31,839)	$	(39,321)	$	(38,655)

Schedule Of Reclassifications Out Of Accumulated Other Comprehensive Income

	The reclassifications out of accumulated other comprehensive income for the period ended March 31, 2013 are as follows:
		Amount Reclassified
		from Accumulated
Details about Accumulated Other Comprehensive		Other Comprehensive			Affected Line Item in the Statement
Income Components		Income			Where Net Income is Presented
Unrealized gains on available-for-sale securities		$	406		Net realized gain on sales of securities
			(388)		Net impairment losses recognized in earnings
			18
			(7)		Tax effect
		$	11		Net of tax
Unrealized losses on cash flow hedges
	Interest rate contracts	$	4,534	(1)	Interest expense
			(1,587)		Tax effect
		$	2,947		Net of tax
Total reclassifications		$	2,958		Net of tax
(1)	For additional information, refer to "Note 13-Derivative Financial Instruments".

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Pension and Other Postretirement Benefits (Tables)

3 Months Ended

Mar. 31, 2013

Defined Benefit Plan Disclosure [Line Items]

Net Periodic Benefit Cost

NOTE 10. Pension and Other Postretirement Benefits
Components of Net Periodic Benefit Cost
	Three Months Ended March 31,
									Other Postretirement
	Pension Benefits				SERP				Benefits
	2013		2012		2013		2012		2013		2012
Service cost	$	1,333	$	1,201	$	313	$	34	$	337	$	272
Interest cost		1,794		1,776		102		75		217		201
Expected return on plan assets		(2,412)		(2,349)		0		0		0		0
Amortization of prior service cost		6		6		55		28		29		29
Amortization of transition obligation		0		0		0		0		2		28
Amortization of net actuarial (gain) or loss		757		805		56		54		42		16
Net periodic postretirement benefit cost	$	1,478	$	1,439	$	526	$	191	$	627	$	546

XML

Consolidated Statements of Changes in Shareholders' Equity (Parenthetical) (USD $)	3 Months Ended
	Mar. 31, 2012
Cash dividends paid on common stock, per share	$ 0.03

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Earnings per Share ("EPS") (Tables)

3 Months Ended

Mar. 31, 2013

Basic And Diluted Earnings Per Common Share

NOTE 11. Earnings per Common Share ("EPS")
	The following tables set forth the calculation of basic and diluted EPS for the three-month periods ended March 31, 2013
and 2012.
Basic earnings per common share
		Three Months Ended March 31,
		2013		2012
Net income applicable to common shareholders		$	42,399	$	23,473
Weighted average common shares outstanding			186,607		171,326
Basic earnings per common share		$	0.23	$	0.14
Diluted earnings per common share
		Three Months Ended March 31,
		2013		2012
Net income available to common shareholders		$	42,399	$	23,473
Weighted average common shares outstanding			186,607		171,326
Dilutive potential common shares			835		647
Total diluted average common shares outstanding			187,442		171,973
Diluted earnings per common share		$	0.23	$	0.14

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Investment Securities (Amortized Cost and Fair Values of Investment Securities) (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Schedule Of Available For Sale Securities [Line Items]
Available-for-Sale, Amortized Cost	$ 2,350,338	$ 2,520,824
Available-for-Sale, Gross Unrealized Gains	68,259	76,087
Available-for-Sale, Gross Unrealized Losses	17,971	19,010
Total available-for-sale securities, Fair Value	2,400,626	2,577,901
U.S. Government Agencies [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-Sale, Amortized Cost	113,328	113,367
Available-for-Sale, Gross Unrealized Gains	808	1,041
Available-for-Sale, Gross Unrealized Losses	0	0
Total available-for-sale securities, Fair Value	114,136	114,408
Obligations Of States And Political Subdivisions [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-Sale, Amortized Cost	399,419	403,487
Available-for-Sale, Gross Unrealized Gains	27,604	32,585
Available-for-Sale, Gross Unrealized Losses	579	295
Total available-for-sale securities, Fair Value	426,444	435,777
Agency Residential Mortgage-Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-Sale, Amortized Cost	1,682,202	1,843,511
Available-for-Sale, Gross Unrealized Gains	34,861	37,104
Available-for-Sale, Gross Unrealized Losses	87	53
Total available-for-sale securities, Fair Value	1,716,976	1,880,562
Non-Agency Residential Mortgage-Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-Sale, Amortized Cost	27,438	29,428
Available-for-Sale, Gross Unrealized Gains	3	2
Available-for-Sale, Gross Unrealized Losses	1,203	1,980
Total available-for-sale securities, Fair Value	26,238	27,450
Commercial Mortgage Backed Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-Sale, Amortized Cost	35,619	38,847
Available-for-Sale, Gross Unrealized Gains	1,275	1,533
Available-for-Sale, Gross Unrealized Losses	0	0
Total available-for-sale securities, Fair Value	36,894	40,380
Other Structured Financial Products [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-Sale, Amortized Cost	25,049	25,011
Available-for-Sale, Gross Unrealized Gains	0	0
Available-for-Sale, Gross Unrealized Losses	15,072	15,461	16,859
Total available-for-sale securities, Fair Value	9,977	9,550
Other Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-Sale, Amortized Cost	43,095	43,076
Available-for-Sale, Gross Unrealized Gains	2,777	2,643
Available-for-Sale, Gross Unrealized Losses	372	464
Total available-for-sale securities, Fair Value	45,500	45,255
Total Debt Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-Sale, Amortized Cost	2,326,150	2,496,727
Available-for-Sale, Gross Unrealized Gains	67,328	74,908
Available-for-Sale, Gross Unrealized Losses	17,313	18,253
Total available-for-sale securities, Fair Value	2,376,165	2,553,382
Other Equity Securities [Member]
Schedule Of Available For Sale Securities [Line Items]
Available-for-Sale, Amortized Cost	24,188	24,097
Available-for-Sale, Gross Unrealized Gains	931	1,179
Available-for-Sale, Gross Unrealized Losses	658	757
Total available-for-sale securities, Fair Value	$ 24,461	$ 24,519

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Loans and Leases (Impaired Loans) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2013		Dec. 31, 2012
Financing Receivable Impaired [Line Items]
Loans written down to fair value of collateral	$ 26,401		$ 28,658
Total impaired loans without a related reserve	196,753		201,186
Direct charge-offs	29,245		31,482
Subsequently Impaired Loans	5,650		6,625
Purchased Impaired Loans	156,525		162,251
Impaired Loans Without A Related Reserve [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	225,998		232,668
Recorded Investment in Impaired Loans	196,753	[1]	201,186	[2]
Related Charge-offs	29,245		31,482
Average Recorded Investment in Impaired Loans	204,562	[3]	202,781	[3]
Interest Income Recognized	2,996		3,243
Impaired Loans Without A Related Reserve [Member] | Originated Loans And Leases [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	73,947		76,120
Recorded Investment in Impaired Loans	45,878		45,560
Related Charge-offs	28,069		30,560
Average Recorded Investment in Impaired Loans	55,862	[3]	49,975	[3]
Interest Income Recognized	794		764
Impaired Loans Without A Related Reserve [Member] | Purchased Loans And Leases [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	152,051		156,548
Recorded Investment in Impaired Loans	150,875		155,626
Related Charge-offs	1,176		922
Average Recorded Investment in Impaired Loans	148,700	[3]	152,806	[3]
Interest Income Recognized	2,202		2,479
Impaired Loans Without A Related Reserve [Member] | Commercial, Financial, And Agricultural [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	25,675		23,959
Recorded Investment in Impaired Loans	23,787		23,877
Related Charge-offs	1,888		82
Average Recorded Investment in Impaired Loans	28,801	[3]	24,603	[3]
Interest Income Recognized	493		233
Impaired Loans Without A Related Reserve [Member] | Real Estate - Construction [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	24,486		48,394
Recorded Investment in Impaired Loans	17,715		32,717
Related Charge-offs	6,771		15,677
Average Recorded Investment in Impaired Loans	17,086	[3]	34,223	[3]
Interest Income Recognized	131		882
Impaired Loans Without A Related Reserve [Member] | Real Estate Secured - Residential [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	39,089		26,298
Recorded Investment in Impaired Loans	37,725		25,261
Related Charge-offs	1,364		1,037
Average Recorded Investment in Impaired Loans	38,306	[3]	25,417	[3]
Interest Income Recognized	500		398
Impaired Loans Without A Related Reserve [Member] | Real Estate Secured - Commercial [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	136,638		133,903
Recorded Investment in Impaired Loans	117,416		119,217
Related Charge-offs	19,222		14,686
Average Recorded Investment in Impaired Loans	120,261	[3]	118,424	[3]
Interest Income Recognized	1,869		1,727
Impaired Loans Without A Related Reserve [Member] | Consumer [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	110		114
Recorded Investment in Impaired Loans	110		114
Related Charge-offs	0		0
Average Recorded Investment in Impaired Loans	108	[3]	114	[3]
Interest Income Recognized	3		3
Impaired Loans With A Related Reserve [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	106,927		99,096
Recorded Investment in Impaired Loans	81,353		81,467
Related Charge-offs	25,574		17,629
Related Allowance	11,910		15,736
Average Recorded Investment in Impaired Loans	77,750	[3]	83,437	[3]
Interest Income Recognized	647		1,103
Impaired Loans With A Related Reserve [Member] | Originated Loans And Leases [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	101,223		92,471
Recorded Investment in Impaired Loans	75,703		74,842
Related Charge-offs	25,520		17,629
Related Allowance	10,557		14,649
Average Recorded Investment in Impaired Loans	71,875	[3]	76,823	[3]
Interest Income Recognized	584		1,033
Impaired Loans With A Related Reserve [Member] | Purchased Loans And Leases [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	5,704		6,625
Recorded Investment in Impaired Loans	5,650		6,625
Related Charge-offs	54		0
Related Allowance	1,353		1,087
Average Recorded Investment in Impaired Loans	5,875	[3]	6,614	[3]
Interest Income Recognized	63		70
Impaired Loans With A Related Reserve [Member] | Commercial, Financial, And Agricultural [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	10,315		4,240
Recorded Investment in Impaired Loans	10,187		4,184
Related Charge-offs	128		56
Related Allowance	3,429		3,267
Average Recorded Investment in Impaired Loans	4,480	[3]	4,278	[3]
Interest Income Recognized	36		47
Impaired Loans With A Related Reserve [Member] | Real Estate - Construction [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	25,194		12,894
Recorded Investment in Impaired Loans	10,675		5,577
Related Charge-offs	14,519		7,317
Related Allowance	732		952
Average Recorded Investment in Impaired Loans	12,762	[3]	5,883	[3]
Interest Income Recognized	4		237
Impaired Loans With A Related Reserve [Member] | Real Estate Secured - Residential [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	30,255		32,640
Recorded Investment in Impaired Loans	29,679		32,375
Related Charge-offs	576		265
Related Allowance	3,689		6,633
Average Recorded Investment in Impaired Loans	29,785	[3]	32,498	[3]
Interest Income Recognized	369		333
Impaired Loans With A Related Reserve [Member] | Real Estate Secured - Commercial [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	41,163		49,322
Recorded Investment in Impaired Loans	30,812		39,331
Related Charge-offs	10,351		9,991
Related Allowance	4,060		4,884
Average Recorded Investment in Impaired Loans	30,723	[3]	40,778	[3]
Interest Income Recognized	238		486
Impaired Loans With A Related Reserve [Member] | Consumer [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	0		0
Recorded Investment in Impaired Loans	0		0
Related Charge-offs	0		0
Related Allowance	0		0
Average Recorded Investment in Impaired Loans	0	[3]	0	[3]
Interest Income Recognized	0		0
Impaired Loans [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	332,925		331,764
Recorded Investment in Impaired Loans	278,106		282,653
Related Charge-offs	54,819		49,111
Related Allowance	11,910		15,736
Average Recorded Investment in Impaired Loans	282,312	[3]	286,218	[3]
Interest Income Recognized	3,643		4,346
Impaired Loans [Member] | Originated Loans And Leases [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	175,170		168,591
Recorded Investment in Impaired Loans	121,581		120,402
Related Charge-offs	53,589		48,189
Related Allowance	10,557		14,649
Average Recorded Investment in Impaired Loans	127,737	[3]	126,798	[3]
Interest Income Recognized	1,378		1,797
Impaired Loans [Member] | Purchased Loans And Leases [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	157,755	[4]	163,173	[5]
Recorded Investment in Impaired Loans	156,525	[4]	162,251	[5]
Related Charge-offs	1,230	[4]	922	[5]
Related Allowance	1,353	[4]	1,087	[5]
Average Recorded Investment in Impaired Loans	154,575	[3],[4]	159,420	[3],[5]
Interest Income Recognized	2,265	[4]	2,549	[5]
Impaired Loans [Member] | Commercial, Financial, And Agricultural [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	35,990		28,199
Recorded Investment in Impaired Loans	33,974		28,061
Related Charge-offs	2,016		138
Related Allowance	3,429		3,267
Average Recorded Investment in Impaired Loans	33,281	[3]	28,881	[3]
Interest Income Recognized	529		280
Impaired Loans [Member] | Real Estate - Construction [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	49,680		61,288
Recorded Investment in Impaired Loans	28,390		38,294
Related Charge-offs	21,290		22,994
Related Allowance	732		952
Average Recorded Investment in Impaired Loans	29,848	[3]	40,106	[3]
Interest Income Recognized	135		1,119
Impaired Loans [Member] | Real Estate Secured - Residential [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	69,344		58,938
Recorded Investment in Impaired Loans	67,404		57,636
Related Charge-offs	1,940		1,302
Related Allowance	3,689		6,633
Average Recorded Investment in Impaired Loans	68,091	[3]	57,915	[3]
Interest Income Recognized	869		731
Impaired Loans [Member] | Real Estate Secured - Commercial [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	177,801		183,225
Recorded Investment in Impaired Loans	148,228		158,548
Related Charge-offs	29,573		24,677
Related Allowance	4,060		4,884
Average Recorded Investment in Impaired Loans	150,984	[3]	159,202	[3]
Interest Income Recognized	2,107		2,213
Impaired Loans [Member] | Consumer [Member]
Financing Receivable Impaired [Line Items]
Unpaid Principal Balance	110		114
Recorded Investment in Impaired Loans	110		114
Related Charge-offs	0		0
Related Allowance	0		0
Average Recorded Investment in Impaired Loans	108	[3]	114	[3]
Interest Income Recognized	$ 3		$ 3

[1] $26,401 of the $196,753 total impaired loans without a related reserve represents loans that had been written down to the fair value of the underlying collateral through direct charge-offs of $29,245.

[2] $28,658 of the $201,186 total impaired loans without a related reserve represents loans that had been written down to the fair value of the underlying collateral through direct charge-offs of $31,482.

[3] Average recorded investment in impaired loans is calculated on a quarterly basis using daily balances.

[4] $5,650 of the $156,525 purchased impaired loans were subsequently impaired after being acquired.

[5] $6,625 of the $162,251 purchased impaired loans were subsequently impaired after being acquired.

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Securitizations and Variable Interest Entities ("VIEs") (Schedule of Certain Cash Flows Received from or Conveyed to VIEs Associated with Securitizations) (Detail) (Home Equity Loans [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Home Equity Loans [Member]
Securitizations And Variable Interest Entities [Line Items]
Additional draws conveyed	$ 5,133	$ 6,013
Servicing fees received	184	210
Other cash flows received	$ 1,092	$ 1,263

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Assets
Cash and due from banks	$ 291,434	$ 277,042
Unrestricted short-term investments	38,662	39,550
Cash and cash equivalents	330,096	316,592
Interest-bearing deposits held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities	4,304	4,423
Restricted short-term investments	68,020	75,203
Securities available for sale	2,400,626	2,577,901
Restricted investment in bank stocks	151,974	152,434
Loans and leases, net of deferred costs and fees	12,840,305	12,728,082
Loans held by consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities	159,398	166,659
Less: Allowance for loan and lease losses	176,377	184,020
Net loans and leases	12,823,326	12,710,721
Premises and equipment, net	186,102	188,983
Other real estate and foreclosed assets	26,302	31,017
Accrued interest receivable	44,202	40,304
Bank-owned life insurance	450,351	450,270
Goodwill	1,275,439	1,270,359
Intangible assets with finite lives	38,209	41,332
Deferred Income Tax Assets	7,594	0
Other assets	160,629	178,128
Total Assets	17,967,174	18,037,667
Deposits [Abstract]
Noninterest-bearing	1,917,719	1,973,664
Interest-bearing	10,773,713	10,606,382
Total Deposits	12,691,432	12,580,046
Federal Home Loan Bank short-term borrowings	948,000	1,098,000
Other short-term borrowings	786,251	817,577
Federal Home Loan Bank long-term borrowings	96,480	101,062
Other long-term debt	251,019	251,021
Junior subordinated debentures	154,946	154,927
Long-term debt of consolidated variable interest entities for which creditors do not have recourse to Susquehanna's general credit	95,594	107,453
Accrued interest, taxes, and expenses payable	61,265	81,808
Deferred income tax liabilities	29,694	14,475
Other liabilities	213,004	235,389
Total Liabilities	15,327,685	15,441,758
Shareholders' equity:
Common stock, $2.00 par value, 400,000,000 shares authorized; Issued: 187,059,021 at March 31, 2013, and 186,811,642 at December 31, 2012	374,118	373,623
Treasury stock, at cost. 259,393 at March 31, 2013, and 257,556 at December 31, 2012	(1,871)	(1,850)
Additional paid-in capital	1,648,062	1,645,958
Retained earnings	657,835	615,436
Accumulated other comprehensive loss, net of taxes of $21,360 and $20,672, respectively	(38,655)	(37,258)
Total Shareholders' Equity	2,639,489	2,595,909
Total Liabilities and Shareholders' Equity	$ 17,967,174	$ 18,037,667

XML

Investment Securities (Credit Losses on Non-Agency Residential Mortgage-Backed Securities) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Line Items]
Balance	$ 1,280	$ 4,602
Amount related to credit losses for which an other-than-temporary impairment was not previously recognized	325	0
Additional amount related to credit losses for which an other-than-temporary impairment was previously recognized	63	144
Realized losses	34	0
Balance	$ 1,634	$ 4,746

XML

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash Flows from Operating Activities:
Net income	$ 42,399	$ 23,473
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and accretion	13,376	11,476
Provision for loan and lease losses	12,000	19,000
Realized gain on available-for-sale securities, net	(18)	(241)
Deferred income tax expense	13,618	13,778
Gain on sale of loans and leases	(4,878)	(3,750)
Loss (gain) on sale of foreclosed assets	225	(607)
Loss on sale of fixed assets	280	0
Mortgage loans originated for sale	(132,464)	(113,772)
Proceeds from sale of mortgage loans originated for sale	150,876	119,668
Payments received on loans and leases transferred from held for sale to held for investment, net of (advances) on home equity lines of credit	11,928	38,503
Increase in cash surrender value of bank-owned life insurance	(1,296)	(1,273)
Increase in accrued interest receivable	(3,898)	(8,866)
(Decrease) increase in accrued interest payable	(1,246)	1,029
Decrease in accrued expenses and taxes payable	(19,297)	(18,629)
Other, net	9,977	(1,658)
Net cash provided by operating activities	91,582	78,131
Cash Flows from Investing Activities:
Net decrease in restricted short-term investments	7,302	9,564
Activity in available-for-sale securities:
Sales	12,770	10,350
Maturities, repayments, and calls	154,037	163,205
Purchases	(24,139)	(299,694)
Net decrease in restricted investment in bank stock	460	4,059
Net increase in loans and leases	(151,317)	(158,684)
Purchase of bank-owned life insurance	(2,694)	(1,874)
Proceeds from bank-owned life insurance	3,909	2,259
Proceeds from sale of foreclosed assets	5,733	12,792
Acquisitions	0	(2,487)
Additions to premises and equipment, net	(878)	(1,211)
Net cash (used in) provided by investing activities	5,183	(261,721)
Cash Flows from Financing Activities:
Net increase in deposits	111,386	198,697
Net (decrease) increase in other short-term borrowings	(31,326)	100,224
Net decrease in short-term FHLB borrowings	(150,000)	(50,000)
Repayment of long-term FHLB borrowings	(4,038)	(4,605)
Repayment of long-term debt	(11,861)	(12,328)
Proceeds from issuance of common stock	2,599	1,986
Purchase of treasury stock	(21)	(15)
Cash dividends paid	0	(4,654)
Net cash provided by (used in) financing activities	(83,261)	229,305
Net change in cash and cash equivalents	13,504	45,715
Cash and cash equivalents at January 1	316,592	332,145
Cash and cash equivalents at March 31	330,096	377,860
Supplemental Disclosure of Cash Flow Information
Cash paid for interest on deposits and borrowings	27,441	30,784
Income tax refunds	24,441	809
Supplemental Schedule of Noncash Activities
Real estate acquired in settlement of loans	3,511	11,144
Securities purchased not settled	0	80,557
Securities Sold Not Settled	$ 22,320	$ 0

XML

Allowance For Loan & Lease Losses (Narrative) (Detail) (USD $)	Mar. 31, 2013
Financing Receivable Allowance For Credit Losses [Line Items]
Significant Credit Rating Loans	$ 1,000,000

XML

Fair Value Disclosures (Tables)

3 Months Ended

Mar. 31, 2013

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present the financial instruments carried at fair value at March 31, 2013 and December 31, 2012, on the consolidated balance sheets and by levels within the valuation hierarchy.
				Fair Value Measurements at Reporting Date Using
				Quoted Prices in		Significant
				Active Markets for		Other		Significant
				Identical		Observable		Unobservable
				Instruments		Inputs		Inputs
Description		March 31, 2013		(Level 1)		(Level 2)		(Level 3)
Assets
Available-for-sale securities:
U.S. Government Agencies	$	114,136	$	0	$	114,136	$	0
Obligations of states and political
subdivisions		426,444		0		426,444		0
Agency residential mortgage-backed
securities		1,716,976		0		1,716,976		0
Non-agency residential mortgage-
backed securities		26,238		0		646		25,592
Commercial mortgage-backed
securities		36,894		0		36,894		0
Other structured financial products		9,977		0		0		9,977
Other debt securities		45,500		0		45,500		0
Other equity securities		24,461		1,418		19,886		3,157
Derivatives: (1)
Designated as hedging instruments		934		0		934		0
Not designated as hedging
instruments		23,756		0		23,756		0
Total	$	2,425,316	$	1,418	$	2,385,172	$	38,726
Liabilities
Derivatives: (2)
Designated as hedging instruments	$	46,894	$	0	$	46,894	$	0
Not designated as hedging
instruments		20,217		0		20,217		0
Total	$	67,111	$	0	$	67,111	$	0

					Fair Value Measurements at Reporting Date Using
					Quoted Prices in		Significant
					Active Markets for		Other		Significant
					Identical		Observable		Unobservable
					Instruments		Inputs		Inputs
	Description		December 31, 2012		(Level 1)		(Level 2)		(Level 3)
	Assets
	Available-for-sale securities:
	U.S. Government Agencies	$	114,408	$	0	$	114,408	$	0
	Obligations of states and political
	subdivisions		435,777		0		435,777		0
	Agency residential mortgage-
	backed securities		1,880,562		0		1,880,562		0
	Non-agency residential mortgage-
	backed securities		27,450		0		650		26,800
	Commercial mortgage-backed
	securities		40,380		0		40,380		0
	Other structured financial products		9,550		0		0		9,550
	Other debt securities		45,255		0		45,255		0
	Other equity securities		24,519		21,266		97		3,156
	Derivatives: (1)
	Designated as hedging instruments		878		0		878		0
	Not designated as hedging
	instruments		25,037		0		25,037		0
	Total	$	2,603,816	$	21,266	$	2,543,044	$	39,506
	Liabilities
	Derivatives: (2)
	Designated as hedging instruments	$	51,172	$	0	$	51,172	$	0
	Not designated as hedging
	instruments		20,954		0		20,954		0
	Total	$	72,126	$	0	$	72,126	$	0
(1)	Included in Other assets
(2)	Included in Other liabilities

Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs

	Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs
	The following tables present roll-forwards of the balance sheet amounts for the three months ended March 31, 2013 and 2012, for financial instruments classified by Susquehanna within Level 3 of the valuation hierarchy.
			Available-for-sale Securities
							Non-
							agency
					Other		Residential
					Structured		Mortgage-
			Equity		Financial		backed
			Securities		Products		Securities		Total
	Balance at January 1, 2013	$	3,156	$	9,550	$	26,800	$	39,506
	Total gains or losses (realized/unrealized):
	Included in earnings:
	Other-than-temporary impairment (1)		0		0		(388)		(388)
	Included in other comprehensive income (before taxes)		1		427		(820)		(392)
	Balance at March 31, 2013	$	3,157	$	9,977	$	25,592	$	38,726
	Balance at January 1, 2012	$	3,430	$	13,293	$	0	$	16,723
	Total gains or losses (realized/unrealized):
	Included in earnings:
	Other-than-temporary impairment (1)		(144)		0		0		(144)
	Included in other comprehensive income (before taxes)		(96)		(5,272)		0		(5,368)
	Transfers into Level 3		0		0		20,137		20,137
	Balance at March 31, 2012	$	3,190	$	8,021	$	20,137	$	31,348
(1)	Included in noninterest income, net impairment losses recognized in earnings.

Assets Measured at Fair Value on a Nonrecurring Basis

The following tables present assets measured at fair value on a nonrecurring basis at March 31, 2013 and December 31, 2012, on the consolidated balance sheets and by the valuation hierarchy.
				Quoted
				Prices
				in Active		Significant
				Markets for		Other		Significant
				Identical		Observable		Unobservable
				Instruments		Inputs		Inputs
Description		March 31, 2013		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	69,443	$	0	$	0	$	69,443
Foreclosed assets		22,557		0		0		22,557
	$	92,000	$	0	$	0	$	92,000
				Quoted
				Prices
				in Active		Significant
				Markets for		Other		Significant
				Identical		Observable		Unobservable
				Instruments		Inputs		Inputs
Description		December 31, 2012		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	65,731	$	0	$	0	$	65,731
Foreclosed assets		26,245		0		0		26,245
	$	91,976	$	0	$	0	$	91,976

Quantitative Information about Level 3 Fair Value Measurements

	The following table details the quantitative information about Level 3 fair value measurements:
		Fair Value at
		March 31, 2013		Valuation		Range
Asset		(in thousands)		Technique(s)	Unobservable Input	(Weighted Average)
Non-agency residential mortgage-		$	25,592	Discounted Cash Flow	Conditional repayment rate	10.3%
	backed securities				Loss severity	43.0%
					Conditional default rate	3.8%
Other structured financial products			9,977	Discounted Cash Flow	Credit default rates, call options and deferrals, waterfall structure, and covenants.	Varies by individual security, refer to Note 3
Other equity securities			3,157	Discounted Cash Flow	Timing of cash flows from dividends and terminal value	0.2x - 1.5x
						(.9x)
Impaired loans			69,443	Discounted Cash Flow	Timing of cash flows based upon current discount rates and terminal value	1.5% - 6.9%
						(4.0%)
Foreclosed assets			22,557	Discounted Cash Flow	Third party appraisals less estimated selling costs	0.0% - 100.0%
						(25.1%)

Carrying Amounts and Estimated Fair Values

Additional Disclosures about Fair Value of Financial Instruments
The following table represents the carrying amounts and estimated fair values of Susquehanna's financial instruments. The methods and assumptions used to estimate the fair value of each class of financial instruments are described above.
		March 31, 2013
		Carrying
		Amount		Fair Value		Level 1		Level 2		Level 3
	Financial assets:
	Cash and due from banks	$	291,434	$	291,434	$	291,434	$	0	$	0
	Short-term investments		110,986		110,986		0		110,986		0
	Investment securities		2,400,626		2,400,626		1,418		2,360,482		38,726
	Restricted investment in bank stocks		151,974		151,974		0		151,974		0
	Loans and leases		12,999,703		13,125,606		0		0		13,125,606
	Derivatives		24,690		24,690		0		24,690		0
	Financial liabilities:
	Deposits		12,691,432		12,694,058		0		12,694,058		0
	Short-term borrowings		786,251		786,251		0		786,251		0
	FHLB borrowings		1,044,480		1,045,777		0		1,045,777		0
	Long-term debt		501,559		503,698		0		503,698		0
	Derivatives		67,111		67,111		0		67,111		0
		December 31, 2012
		Carrying
		Amount		Fair Value		Level 1		Level 2		Level 3
	Financial assets:
	Cash and due from banks	$	277,042	$	277,042	$	277,042	$	0	$	0
	Short-term investments		119,176		119,176		0		119,176		0
	Investment securities		2,577,901		2,577,901		21,266		2,517,129		39,506
	Restricted investment in bank stocks		152,434		152,434		0		152,434		0
	Loans and leases		12,894,741		12,954,918		0		0		12,954,918
	Derivatives		25,915		25,915		0		25,915		0
	Financial liabilities:
	Deposits		12,580,046		12,544,069		0		12,544,069		0
	Short-term borrowings		817,577		817,577		0		817,577		0
	FHLB borrowings		1,199,062		1,200,358		0		1,200,358		0
	Long-term debt		513,401		512,632		0		512,632		0
	Derivatives		72,126		72,126		0		72,126		0

XML

Income Taxes (Detail)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Income Taxes [Line Items]
Effective Tax Rate	31.70%	31.50%

XML

Fair Value Disclosures

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures

NOTE 14. Fair Value Disclosures

The accounting guidance for fair value measurements and disclosures defines fair value, establishes a framework for measuring fair value, and sets forth disclosure requirements regarding fair value measurements. This guidance applies whenever other accounting guidance requires or permits assets or liabilities to be measured at fair value. Fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or, in the absence of a principal market, in the most advantageous market for the asset or liability.

Susquehanna uses fair value measurements for the initial recording of certain assets and liabilities and periodic subsequent measurement of certain assets and liabilities on a recurring or non-recurring basis.

Fair Value Hierarchy

The accounting guidance for fair value measurements and disclosures establishes a three-level fair value hierarchy that prioritizes the inputs into the valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority, Level 1, to measurements based on quoted prices in active markets for identical assets or liabilities. The next highest priority, Level 2, is given to measurements based on observable inputs other than quoted prices in active markets for identical assets and liabilities. The lowest priority, Level 3, is given to measurements based on unobservable inputs. Assets and liabilities are classified in their entirety within the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

The accounting guidance requires the measurement of fair value to maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect Susquehanna's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

Valuation Processes and Controls over Fair Value Measurement

As part of Susquehanna's overall valuation process, management employs processes to evaluate and validate the methodologies, techniques and inputs, including review and approval of valuation judgments, methods, models, process controls, and results. These processes are designed to help ensure that the fair value measurements and disclosures are appropriate, consistently applied, and reliable.

Valuation Methodologies and Inputs

The following is a description of Susquehanna's valuation methodologies and more significant inputs for assets and liabilities measured at fair value. These methods may produce a fair value measurement that may not be indicative of future fair values. Furthermore, while Susquehanna believes that its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.

Susquehanna uses a third-party pricing service and third-party financial advisory firms in determining the fair value of its securities. Certain fair value measurements are derived from market-based pricing matrices that were developed using observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads and broker quotes. For certain other fair value measurements, when market observable data is not available due to the lack of an active market for a given security, the valuation of the security involves assistance of a third-party financial advisory firm and substantial judgment by management.

Specific valuation methodologies and inputs used in determining the fair value of each significant class of assets and liabilities follows:

Cash and due from banks and short-term investments

For those short-term instruments, the carrying amount is a reasonable estimate of fair value.

Investment securities

U.S. Government agencies: These are debt securities issued by U.S. government-sponsored entities (“GSE”). These securities are valued using market-based pricing matrices that are based on observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads and broker quotes. The investor base is broad, resulting in moderate trading volumes and are classified as Level 2 in the fair value hierarchy. These valuations are sensitive to interest rates. As interest rates increase (decrease), the fair value of the securities will generally decrease (increase).

Obligations of states and political subdivisions: These securities are valued using market-based pricing matrices that are based on observable inputs including the structure of the bond, including call terms, cross-collateralization features, and tax-exempt features, together with MSRB reported trades, issuer spreads, material event notices and benchmark yield curves. The investor base for most issues of municipal securities is fairly broad, resulting in moderate trading volumes and are classified as Level 2 in the fair value hierarchy. These valuations are sensitive to trends in the broader municipal securities market, which includes credit risk. As market concerns associated with credit risk increase (decrease), the fair value of the securities will generally decrease (increase).

Agency residential mortgage-backed securities: These securities are valued using market-based pricing matrices that are based on observable inputs, including benchmark TBA security pricing and yield curves that were estimated based on U.S. Treasury yields and certain floating rate indices. The pricing matrices for these securities may also give consideration to pool-specific data supplied directly by the GSE. GSE collateralized mortgage obligations (“CMOs”) are valued using market-based pricing matrices that are based on observable inputs including offers, bids, reported trades, dealer quotes and market research reports, the characteristics of a specific tranche, market convention prepayment speeds and benchmark yield curves as described above. Because agency residential mortgage-backed securities are generally liquid and are valued using observable pricing in the market, they generally are classified as Level 2. As interest rates increase (decrease), the fair value of the securities will generally decrease (increase).

Non-agency mortgage-backed securities: Refer to the description in “Note 3-Investment Securities”.

Commercial mortgage-backed securities: Commercial mortgage-backed securities are valued primarily based on the median prices from multiple pricing services. Some of the important valuation assumptions used by the pricing services include the collateral type, collateral performance, capital structure, issuer, credit enhancement, coupon, weighted average life, and interest rates, coupled with the observed spread levels on trades of similar securities. Many of these securities have significant prepayment lockout periods or penalty periods that limit the window of potential prepayment to a relatively narrow band. These securities are primarily classified as Level 2.

These valuations are sensitive to market changes, specifically changes in interest rates and credit spreads. As interest rates increase (decrease) and/or credit spreads widens (tightens), fair values will typically decrease (increase).

Other structured financial products: The significant unobservable inputs used in the fair value measurement of Susquehanna's other structured financial products are conditional repayment rate, loss severity, and conditional default rate. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and directionally opposite change in the assumption used for repayment rate. In addition, refer to the description in “Note 3-Investment Securities”

Other debt securities: These securities consist primarily of government and corporate bonds. These securities are valued using market-based pricing matrices that are based on observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads and broker quotes. The investor base is broad, resulting in moderate trading volumes and are classified as Level 2 in the fair value hierarchy. These valuations are sensitive to interest rates. As interest rates increase (decrease), the fair value of the securities will generally decrease (increase).

Other equity securities; These securities include liquid, exchange-traded equity securities as well as thinly-traded bank stocks and trust preferred securities. The exchange-traded equities are classified in Level 1 because they are valued using quoted market prices. The thinly traded and trust preferred securities are classified in Level 2 or 3 based on the significance of market observable inputs to the overall measurement.

Restricted investments in bank stocks

Restricted investments in bank stocks consists of FRB stock, FHLB stock, and Atlantic Central Bankers Bank stock. Federal law requires a member institution of the FRB and FHLB to hold stock according to predetermined formulas. Atlantic Central Bankers Bank requires its correspondent banking institutions to hold stock as a condition of membership. The carrying amount approximates fair value.

Loans and leases

The fair values for loans are estimated using discounted cash flow analyses, applying interest rates currently being offered for loans with similar terms and credit quality, which are indicative of orderly transactions in the current market. For commercial loans and leases, internal risk grades are used to adjust discount rates for risk migration and expected losses. For residential mortgage and other consumer loans, internal prepayment risk models are used to adjust contractual cash flows. Loans are aggregated into pools of similar terms and credit quality and discounted using benchmark-based rates. The carrying amount of accrued interest receivable approximates fair value.

Deposits

The fair values of demand, interest-bearing demand, and savings deposits are the amounts payable on demand at the balance sheet date; recognition of the inherent funding value of these instruments is not permitted. The carrying value of variable-rate time deposits approximates fair value. The fair value of fixed-rate time deposits is based upon the discounted value of future cash flows expected to be paid at maturity, using the U.S. Treasury yield curve. The carrying amount of accrued interest payable approximates fair value.

Short-term borrowings

For those short-term instruments, the carrying amount approximates fair value.

FHLB borrowings and long-term debt

Fair values were based upon quoted rates of similar instruments issued by banking institutions with similar credit ratings. The carrying amounts of accrued interest payable approximate fair values.

Derivatives

The fair values of interest rate swaps are determined using models that use readily observable market inputs and a market standard methodology applied to the contractual terms of the derivatives, including the period to maturity and interest rate indices.

The methodology nets the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates derived from observable market interest rate curves. Susquehanna incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty's nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, Susquehanna has considered the impact of netting and any applicable credit enhancements, such as collateral postings and thresholds, mutual settlements, and guarantees.

Although Susquehanna has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives may use Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2013 and 2012, Susquehanna has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, Susquehanna has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

The fair values of commitments to originate mortgage loans to be held for sale and their corresponding forward-sales agreements are estimated using the fees charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. The valuation of fixed-rate loan commitments also considers the difference between current levels of interest rates and the committed rates. These respective fair value measurements would be categorized within Level 3 of the fair value hierarchy.

For additional information regarding derivatives, refer to “Note 13 – Derivative Financial Instruments” above.

Off-balance-sheet items

The fair values of unused commitments to lend and standby letters of credit are considered to be the same as their contractual amounts.

Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present the financial instruments carried at fair value at March 31, 2013 and December 31, 2012, on the consolidated balance sheets and by levels within the valuation hierarchy.
				Fair Value Measurements at Reporting Date Using
				Quoted Prices in		Significant
				Active Markets for		Other		Significant
				Identical		Observable		Unobservable
				Instruments		Inputs		Inputs
Description		March 31, 2013		(Level 1)		(Level 2)		(Level 3)
Assets
Available-for-sale securities:
U.S. Government Agencies	$	114,136	$	0	$	114,136	$	0
Obligations of states and political
subdivisions		426,444		0		426,444		0
Agency residential mortgage-backed
securities		1,716,976		0		1,716,976		0
Non-agency residential mortgage-
backed securities		26,238		0		646		25,592
Commercial mortgage-backed
securities		36,894		0		36,894		0
Other structured financial products		9,977		0		0		9,977
Other debt securities		45,500		0		45,500		0
Other equity securities		24,461		1,418		19,886		3,157
Derivatives: (1)
Designated as hedging instruments		934		0		934		0
Not designated as hedging
instruments		23,756		0		23,756		0
Total	$	2,425,316	$	1,418	$	2,385,172	$	38,726
Liabilities
Derivatives: (2)
Designated as hedging instruments	$	46,894	$	0	$	46,894	$	0
Not designated as hedging
instruments		20,217		0		20,217		0
Total	$	67,111	$	0	$	67,111	$	0

					Fair Value Measurements at Reporting Date Using
					Quoted Prices in		Significant
					Active Markets for		Other		Significant
					Identical		Observable		Unobservable
					Instruments		Inputs		Inputs
	Description		December 31, 2012		(Level 1)		(Level 2)		(Level 3)
	Assets
	Available-for-sale securities:
	U.S. Government Agencies	$	114,408	$	0	$	114,408	$	0
	Obligations of states and political
	subdivisions		435,777		0		435,777		0
	Agency residential mortgage-
	backed securities		1,880,562		0		1,880,562		0
	Non-agency residential mortgage-
	backed securities		27,450		0		650		26,800
	Commercial mortgage-backed
	securities		40,380		0		40,380		0
	Other structured financial products		9,550		0		0		9,550
	Other debt securities		45,255		0		45,255		0
	Other equity securities		24,519		21,266		97		3,156
	Derivatives: (1)
	Designated as hedging instruments		878		0		878		0
	Not designated as hedging
	instruments		25,037		0		25,037		0
	Total	$	2,603,816	$	21,266	$	2,543,044	$	39,506
	Liabilities
	Derivatives: (2)
	Designated as hedging instruments	$	51,172	$	0	$	51,172	$	0
	Not designated as hedging
	instruments		20,954		0		20,954		0
	Total	$	72,126	$	0	$	72,126	$	0
(1)	Included in Other assets
(2)	Included in Other liabilities

	Assets Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs
	The following tables present roll-forwards of the balance sheet amounts for the three months ended March 31, 2013 and 2012, for financial instruments classified by Susquehanna within Level 3 of the valuation hierarchy.
			Available-for-sale Securities
							Non-
							agency
					Other		Residential
					Structured		Mortgage-
			Equity		Financial		backed
			Securities		Products		Securities		Total
	Balance at January 1, 2013	$	3,156	$	9,550	$	26,800	$	39,506
	Total gains or losses (realized/unrealized):
	Included in earnings:
	Other-than-temporary impairment (1)		0		0		(388)		(388)
	Included in other comprehensive income (before taxes)		1		427		(820)		(392)
	Balance at March 31, 2013	$	3,157	$	9,977	$	25,592	$	38,726
	Balance at January 1, 2012	$	3,430	$	13,293	$	0	$	16,723
	Total gains or losses (realized/unrealized):
	Included in earnings:
	Other-than-temporary impairment (1)		(144)		0		0		(144)
	Included in other comprehensive income (before taxes)		(96)		(5,272)		0		(5,368)
	Transfers into Level 3		0		0		20,137		20,137
	Balance at March 31, 2012	$	3,190	$	8,021	$	20,137	$	31,348
(1)	Included in noninterest income, net impairment losses recognized in earnings.

Susquehanna's policy is to recognize transfers in and transfers out of Levels 1, 2, and 3 as of the end of a reporting period.

Assets Measured at Fair Value on a Nonrecurring Basis

Impaired loans

Impaired collateral dependent loans and other loans where the carrying value is based on the fair value of the underlying collateral less selling costs, such as residential mortgage loans charged off in accordance with regulatory guidance, are measured at fair value on a nonrecurring basis. The fair value of the underlying collateral is incorporated into the estimate of the impairment of a loan. Most of Susquehanna's impaired collateral dependent loans are secured by real estate. The value of the real estate collateral is determined through appraisals performed by third-party, licensed appraisers. As part of Susquehanna's overall valuation process, management evaluates these third-party appraisals to ensure that they are representative of the exit prices in Susquehanna's principal markets. Susquehanna considers the appraisals used in its impairment analysis to be Level 3 inputs. When the value of the real estate, less estimated selling costs, is less than the principal balance of the loan, a specific reserve is established. Impaired loans are reviewed at least quarterly for additional impairment, and reserves are adjusted accordingly.

Foreclosed Assets

Other real estate property acquired through foreclosure is recorded at the lower of its carrying value or the fair value of the related real estate collateral at the transfer date, less estimated selling costs. The value of the real estate collateral is determined through appraisals performed by third party licensed appraisers. As part of Susquehanna's overall valuation process, management evaluates these third-party appraisals to ensure that they are representative of the exit prices in Susquehanna's principal markets. Susquehanna considers the appraisals used in its impairment analysis to be Level 3 inputs.

The following tables present assets measured at fair value on a nonrecurring basis at March 31, 2013 and December 31, 2012, on the consolidated balance sheets and by the valuation hierarchy.
				Quoted
				Prices
				in Active		Significant
				Markets for		Other		Significant
				Identical		Observable		Unobservable
				Instruments		Inputs		Inputs
Description		March 31, 2013		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	69,443	$	0	$	0	$	69,443
Foreclosed assets		22,557		0		0		22,557
	$	92,000	$	0	$	0	$	92,000
				Quoted
				Prices
				in Active		Significant
				Markets for		Other		Significant
				Identical		Observable		Unobservable
				Instruments		Inputs		Inputs
Description		December 31, 2012		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	65,731	$	0	$	0	$	65,731
Foreclosed assets		26,245		0		0		26,245
	$	91,976	$	0	$	0	$	91,976

	The following table details the quantitative information about Level 3 fair value measurements:
		Fair Value at
		March 31, 2013		Valuation		Range
Asset		(in thousands)		Technique(s)	Unobservable Input	(Weighted Average)
Non-agency residential mortgage-		$	25,592	Discounted Cash Flow	Conditional repayment rate	10.3%
	backed securities				Loss severity	43.0%
					Conditional default rate	3.8%
Other structured financial products			9,977	Discounted Cash Flow	Credit default rates, call options and deferrals, waterfall structure, and covenants.	Varies by individual security, refer to Note 3
Other equity securities			3,157	Discounted Cash Flow	Timing of cash flows from dividends and terminal value	0.2x - 1.5x
						(.9x)
Impaired loans			69,443	Discounted Cash Flow	Timing of cash flows based upon current discount rates and terminal value	1.5% - 6.9%
						(4.0%)
Foreclosed assets			22,557	Discounted Cash Flow	Third party appraisals less estimated selling costs	0.0% - 100.0%
						(25.1%)

The significant unobservable inputs used in the fair value measurement of Susquehanna's other structured financial products are conditional repayment rate, loss severity, and conditional default rate. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and directionally opposite change in the assumption used for repayment rate.

Additional Disclosures about Fair Value of Financial Instruments
The following table represents the carrying amounts and estimated fair values of Susquehanna's financial instruments. The methods and assumptions used to estimate the fair value of each class of financial instruments are described above.
		March 31, 2013
		Carrying
		Amount		Fair Value		Level 1		Level 2		Level 3
	Financial assets:
	Cash and due from banks	$	291,434	$	291,434	$	291,434	$	0	$	0
	Short-term investments		110,986		110,986		0		110,986		0
	Investment securities		2,400,626		2,400,626		1,418		2,360,482		38,726
	Restricted investment in bank stocks		151,974		151,974		0		151,974		0
	Loans and leases		12,999,703		13,125,606		0		0		13,125,606
	Derivatives		24,690		24,690		0		24,690		0
	Financial liabilities:
	Deposits		12,691,432		12,694,058		0		12,694,058		0
	Short-term borrowings		786,251		786,251		0		786,251		0
	FHLB borrowings		1,044,480		1,045,777		0		1,045,777		0
	Long-term debt		501,559		503,698		0		503,698		0
	Derivatives		67,111		67,111		0		67,111		0
		December 31, 2012
		Carrying
		Amount		Fair Value		Level 1		Level 2		Level 3
	Financial assets:
	Cash and due from banks	$	277,042	$	277,042	$	277,042	$	0	$	0
	Short-term investments		119,176		119,176		0		119,176		0
	Investment securities		2,577,901		2,577,901		21,266		2,517,129		39,506
	Restricted investment in bank stocks		152,434		152,434		0		152,434		0
	Loans and leases		12,894,741		12,954,918		0		0		12,954,918
	Derivatives		25,915		25,915		0		25,915		0
	Financial liabilities:
	Deposits		12,580,046		12,544,069		0		12,544,069		0
	Short-term borrowings		817,577		817,577		0		817,577		0
	FHLB borrowings		1,199,062		1,200,358		0		1,200,358		0
	Long-term debt		513,401		512,632		0		512,632		0
	Derivatives		72,126		72,126		0		72,126		0

XML

Acquisitions (Narrative) (Detail) (Tower [Member], USD $)	2 Months Ended	3 Months Ended
	Feb. 17, 2012	Mar. 31, 2012
Business Acquisition [Line Items]
Number of shares of Susquehanna common stock for each share of common stock	3.4696
Number of shares of Susquehanna common shares issued	30,800,000
Acquisition of common stock	Feb. 17, 2012
Cash paid per share, acquisition	$ 28.00
Aggregate consideration paid in cash	$ 88,005,000
Assets acquired, total	2,388,122,000
Loans and leases	1,975,488,000
Aggregate liabilities assumed	2,255,413,000
Deposits	2,074,372,000
Transaction added to shareholders equity from acquisition	302,112,000
Net goodwill resulting from acquisition	257,408,000
Additional goodwill recorded	10,547,000
Core deposit intangible, amount to be amortized	24,005,000
Core deposit intangible amortized estimated useful life, years	10 years
Total revenue, net of interest expense		188,500,000
Net income from continuing operations		23,600,000
Real Estate Secured - Commercial [Member]
Business Acquisition [Line Items]
Loans and leases	854,993,000
Commercial Loan And Leases [Member]
Business Acquisition [Line Items]
Loans and leases	136,979,000
Residential Real Estate Loans [Member]
Business Acquisition [Line Items]
Loans and leases	$ 758,803,000

XML

Acquisitions (Tables)

3 Months Ended

Mar. 31, 2013

Business Acquisition [Line Items]

Identifiable Assets And Liabilities Assumed

			February 17,
			2012
Purchase price:
	Value of:
	Common shares issued and options assumed		$	302,112
	Cash			88,005
		Total purchase price		390,117
Identifiable assets:
	Cash and due from banks			85,518
	Unrestricted short-term investments			9,171
	Securities available for sale			137,254
	Loans and leases			1,975,488
	Intangible assets			27,334
	Other assets			153,357
		Total identifiable assets		2,388,122
Identifiable Liabilities:
	Deposits			2,074,372
	Short-term borrowings			10,228
	Long-term borrowings			103,923
	Other liabilities			66,890
		Total liabilities		2,255,413
Net goodwill resulting from acquisition			$	257,408

Summary Of Loans Purchased

The following is a summary of the loans purchased in the Tower transaction:
			Purchased		Purchased
			Credit		Non-		Total
			Impaired		Impaired		Purchased
			Loans		Loans		Loans
	Contractually required principal and interest at
		acquisition	$	348,889	$	2,376,071	$	2,724,960
	Contractual cash flows not expected to be collected			(127,318)		(135,736)		(263,054)
	Expected cash flows at acquisition			221,571		2,240,335		2,461,906
	Interest component of expected cash flows			(54,418)		(432,000)		(486,418)
	Basis in acquired loans at acquisition - estimated fair
		value	$	167,153	$	1,808,335	$	1,975,488

Summary Of Merger Related Expenses

	Three Months Ended March 31,
	2012
	Abington		Tower		Total
Salaries and employee benefits	$	0	$	1,350	$	1,350
Consulting		66		3,949		4,015
Legal		37		733		770
Branch writeoffs		0		1,371		1,371
Net occupancy and equipment		0		2,809		2,809
All other		0		1,164		1,164
	$	103	$	11,376	$	11,479

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Pension (Components Of Net Periodic Benefit Cost) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service Cost	$ 1,333	$ 1,201
Interest Cost	1,794	1,776
Expected Return On Plan Assets	(2,412)	(2,349)
Amortization Of Prior Service Cost	6	6
Amortization Of Transition Obligation	0	0
Amortization Of Net Actuarial (Gain) Or Loss	757	805
Net Periodic Postretirement Benefit Cost	1,478	1,439
Estimated Contributions, Next Fiscal Year			365
Contributions	91
Estimated Contributions, Current Fiscal Year	274
Other Postretirement Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Service Cost	337	272
Interest Cost	217	201
Expected Return On Plan Assets	0	0
Amortization Of Prior Service Cost	29	29
Amortization Of Transition Obligation	2	28
Amortization Of Net Actuarial (Gain) Or Loss	42	16
Net Periodic Postretirement Benefit Cost	627	546
Estimated Contributions, Next Fiscal Year			621
Contributions	155
Estimated Contributions, Current Fiscal Year	466
SERP [Member]
Defined Benefit Plan Disclosure [Line Items]
Service Cost	313	34
Interest Cost	102	75
Expected Return On Plan Assets	0	0
Amortization Of Prior Service Cost	55	28
Amortization Of Transition Obligation	0	0
Amortization Of Net Actuarial (Gain) Or Loss	56	54
Net Periodic Postretirement Benefit Cost	$ 526	$ 191

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Consolidated Statements of Changes in Shareholders' Equity (USD $) In Thousands, except Share data	Total	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Balance at Dec. 31, 2011	$ 2,189,628	$ 314,136	$ (1,263)	$ 1,397,152	$ 525,657	$ (46,054)
Balance, Shares at Dec. 31, 2011		157,067,887
Total comprehensive income	24,234				23,473	761
Issuance of common stock in Tower Bancorp, Inc. acquisition	301,405	61,522		239,883
Issuance of common stock in Tower Bancorp, Inc. acquisition (Shares)		30,760,933
Issuance of common stock and share-based awards under employee benefit plans (shares)		229,849
Issuance of common stock and share-based awards under employee benefit plans	1,986	459		1,527
Treasury stock purchased	(15)		(15)
Cash dividends paid on common stock	(4,654)				(4,654)
Balance at Mar. 31, 2012	2,512,584	376,117	(1,278)	1,638,562	544,476	(45,293)
Balance, Shares at Mar. 31, 2012		188,058,669
Balance at Dec. 31, 2012	2,595,909	373,623	(1,850)	1,645,958	615,436	(37,258)
Balance, Shares at Dec. 31, 2012		186,811,642
Total comprehensive income	41,002				42,399	(1,397)
Issuance of common stock and share-based awards under employee benefit plans (shares)		247,379
Issuance of common stock and share-based awards under employee benefit plans	2,599	495		2,104
Treasury stock purchased	(21)		(21)
Balance at Mar. 31, 2013	$ 2,639,489	$ 374,118	$ (1,871)	$ 1,648,062	$ 657,835	$ (38,655)
Balance, Shares at Mar. 31, 2013		187,059,021

XML

Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Common stock, par value	$ 2.00	$ 2.00
Common stock, shares authorized	400,000,000	400,000,000
Common stock, issued	187,059,021	186,811,642
Treasury stock, at cost	259,393	257,556
Accumulated other comprehensive loss, taxes	$ 21,360	$ 20,672

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Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2013

Accumulated Other Comprehensive Loss

NOTE 9. Accumulated Other Comprehensive Loss
	The balances and changes in balances by component of accumulated other comprehensive income (loss) are shown in the
following tables:
							Unrealized				Accumulated
			Unrealized Gains (Losses) on				Gains (Losses)		Post-		Other
			Investment securities				on Cash Flow		retirement		Comprehensive
			With OTTI		All other		Hedges		Benefits		Loss
Balance at January 1, 2012			$	(2,521)	$	23,346	$	(33,402)	$	(33,477)	$	(46,054)
	Gain (loss), net of tax			(1,623)		686		1,698		0		761
Balance at March 31, 2012			$	(4,144)	$	24,032	$	(31,704)	$	(33,477)	$	(45,293)
Balance at January 1, 2013			$	(560)	$	37,242	$	(34,635)	$	(39,305)	$	(37,258)
	Other comprehensive income before
		reclassifications		(196)		(3,992)		(151)		(16)		(4,355)
	Amounts reclassified from accumulated
		other comprehensive income		11		0		2,947		0		2,958
Net current-period other comprehensive income				(185)		(3,992)		2,796		(16)		(1,397)
Balance at March 31, 2013			$	(745)	$	33,250	$	(31,839)	$	(39,321)	$	(38,655)

	The reclassifications out of accumulated other comprehensive income for the period ended March 31, 2013 are as follows:
		Amount Reclassified
		from Accumulated
Details about Accumulated Other Comprehensive		Other Comprehensive			Affected Line Item in the Statement
Income Components		Income			Where Net Income is Presented
Unrealized gains on available-for-sale securities		$	406		Net realized gain on sales of securities
			(388)		Net impairment losses recognized in earnings
			18
			(7)		Tax effect
		$	11		Net of tax
Unrealized losses on cash flow hedges
	Interest rate contracts	$	4,534	(1)	Interest expense
			(1,587)		Tax effect
		$	2,947		Net of tax
Total reclassifications		$	2,958		Net of tax
(1)	For additional information, refer to "Note 13-Derivative Financial Instruments".

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2013
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Trading Symbol	SUSQ
Entity Registrant Name	SUSQUEHANNA BANCSHARES INC
Entity Central Index Key	0000700863
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	186,841,016

XML

Pension and Other Postretirement Benefits

3 Months Ended

Mar. 31, 2013

Defined Benefit Plan Disclosure [Line Items]

Pension And Other Postretirement Benefits

NOTE 10. Pension and Other Postretirement Benefits
Components of Net Periodic Benefit Cost
	Three Months Ended March 31,
									Other Postretirement
	Pension Benefits				SERP				Benefits
	2013		2012		2013		2012		2013		2012
Service cost	$	1,333	$	1,201	$	313	$	34	$	337	$	272
Interest cost		1,794		1,776		102		75		217		201
Expected return on plan assets		(2,412)		(2,349)		0		0		0		0
Amortization of prior service cost		6		6		55		28		29		29
Amortization of transition obligation		0		0		0		0		2		28
Amortization of net actuarial (gain) or loss		757		805		56		54		42		16
Net periodic postretirement benefit cost	$	1,478	$	1,439	$	526	$	191	$	627	$	546

Employer Contributions

Susquehanna previously disclosed in its financial statements for the year ended December 31, 2012, that it expected to contribute $365 to its pension plans and $621 to its other postretirement benefit plan in 2013. As of March 31, 2013, $91 of contributions had been made to its pension plans, and $155 of contributions had been made to its other postretirement benefit plan. Susquehanna anticipates contributing an additional $274 to fund its pension plans in 2013, for a total of $365, and an additional $466 to it other postretirement benefit plan, for a total of $621.

XML

Fair Value Disclosures (Quantitative Information about Level 3 Fair Value Measurements) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013
Non-Agency Residential Mortgage-Backed Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	$ 25,592
Valuation Technique(s)	Discounted Cash Flow
Conditional repayment rate	10.30%
Loss severity	43.00%
Conditional default rate	3.80%
Other Structured Financial Products [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	9,977
Valuation Technique(s)	Discounted Cash Flow
Credit default rates, call options and deferrals, waterfall structure, and covenants.	Varies by individual security, refer to Note 3
Other Equity Securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	3,157
Valuation Technique(s)	Discounted Cash Flow
Other Equity Securities [Member] | Minimum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Price to book multiple	0.2
Other Equity Securities [Member] | Maximum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Price to book multiple	1.5
Other Equity Securities [Member] | Weighted Average [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Price to book multiple	0.9
Impaired Loans [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	69,443
Valuation Technique(s)	Discounted Cash Flow
Impaired Loans [Member] | Minimum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Timing of cash flows based upon current discount rates and terminal value	1.50%
Impaired Loans [Member] | Maximum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Timing of cash flows based upon current discount rates and terminal value	6.90%
Impaired Loans [Member] | Weighted Average [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Timing of cash flows based upon current discount rates and terminal value	4.00%
Foreclosed Assets [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair Value	$ 22,557
Valuation Technique(s)	Discounted Cash Flow
Foreclosed Assets [Member] | Minimum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Third party appraisals less estimated selling costs	0.00%
Foreclosed Assets [Member] | Maximum [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Third party appraisals less estimated selling costs	100.00%
Foreclosed Assets [Member] | Weighted Average [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Third party appraisals less estimated selling costs	25.10%

XML

Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Interest Income:
Loans and leases, including fees	$ 160,344	$ 148,355
Securities:
Taxable	10,260	12,792
Tax-exempt	3,594	3,762
Dividends	1,166	998
Short-term investments	36	30
Total interest income	175,400	165,937
Deposits:
Interest-bearing demand and savings	4,901	6,047
Time	11,232	12,026
Federal Home Loan Bank short-term borrowings	3,371	2,900
Other short-term borrowings	2,153	2,122
Federal Home Loan Bank long-term borrowings	301	58
Other long-term debt	4,236	8,661
Total interest expense	26,194	31,814
Net interest income	149,206	134,123
Provision for loan and lease losses	12,000	19,000
Net interest income, after provision for loan and lease losses	137,206	115,123
Noninterest Income:
Service charges on deposit accounts	8,672	7,674
Vehicle origination and servicing fees	3,354	1,924
Wealth management commissions and fees	12,390	11,602
Commissions on property and casualty insurance sales	4,542	5,058
Other commissions and fees	5,237	4,643
Income from bank-owned life insurance	1,850	1,472
Mortgage banking revenue	4,110	3,513
Net realized gain on sales of securities	406	385
Total other-than-temporary impairment, net of recoveries	(680)	(2,706)
Portion recognized in other comprehensive income (before taxes)	292	2,562
Net impairment losses recognized in earnings	(388)	(144)
Other	2,471	3,388
Total noninterest income	42,644	39,515
Net Income	$ 42,399	$ 23,473
Earnings per common share:
Basic	$ 0.23	$ 0.14
Diluted	$ 0.23	$ 0.14
Cash dividends per common share		$ 0.03
Average common shares outstanding:
Basic	186,607	171,326
Diluted	187,442	171,973

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Loans and Leases

3 Months Ended

Mar. 31, 2013

Loans and Leases

NOTE 4. Loans and Leases

Originated loans and leases is defined to exclude loans purchased in business combinations since September 30, 2011, and purchased loans and leases is defined to include those loans and leases excluded from the definition of originated loans.

Loans and Leases, Net of Deferred Costs and Fees
				March 31,		December 31,
				2013		2012
	Commercial, financial, and agricultural			$	2,312,660	$	2,273,611
	Real estate - construction				779,344		847,781
	Real estate secured - residential				4,077,810		4,065,818
	Real estate secured - commercial				3,971,438		3,964,608
	Consumer				859,664		842,552
	Leases				998,787		900,371
			Total loans and leases	$	12,999,703	$	12,894,741
	Originated loans and leases			$	10,998,299	$	10,765,458
	Purchased loans and leases				2,001,404		2,129,283
			Total loans and leases	$	12,999,703	$	12,894,741
	Nonaccrual loans and leases			$	103,351	$	97,767
	Loans and leases contractually past due 90 days
		and still accruing			6,396		8,209
	Troubled debt restructurings				65,773		67,775
	Deferred origination costs, net of fees				18,149		17,763
	All overdrawn deposit accounts, reclassified
		as loans and evaluated for collectability			2,375		15,422

	A summary of our net investment in direct lease financing is presented below.
Net Investment in Direct Financing Leases
				March 31,		December 31,
				2013		2012
		Minimum lease payments receivable		$	598,443	$	568,110
		Estimated residual value of leases			481,312		409,753
		Unearned income under lease contracts			(80,968)		(77,492)
			Total leases	$	998,787	$	900,371

Susquehanna monitors the credit quality of its commercial loan portfolio using internal risk ratings. These risk ratings are consistent with established regulatory guidance. Loans with a Pass rating represent those not considered a problem credit. Special mention loans are those that have a potential weakness deserving management's careful attention. Substandard loans are those where a well-defined weakness has been identified that may put the complete receipt of contractual cash flows at risk. Substandard loans are placed in nonaccrual status when Susquehanna believes it is no longer probable it will collect all contractual cash flows.

Susquehanna reviews the loan gradings on an annual basis or at any time management becomes aware of the potential for not collecting all contractual cash flows. Significant credits with ratings of special mention or substandard, and associated with a relationship greater than $1.0 million, are reviewed quarterly by the Loan Review committee.

Susquehanna monitors the credit quality of its retail loan portfolio based primarily on delinquency status, which is the primary factor considered in determining whether a retail loan should be classified as nonaccrual.

The following tables present Susquehanna's credit quality indicators by internally assigned grading and by payment activity at March 31, 2013 and December 31, 2012.
Credit Quality Indicators, at March 31, 2013
	Commercial Credit Exposure
		Credit-risk Profile by Internally Assigned Grade
									Real Estate -		Total
							Real Estate -		Secured -		Commercial
					Commercial		Construction (1)		Commercial (2)		Credit Exposure
Originated loans and leases
	Grade:
		Pass (3)		$	2,040,237	$	444,419	$	3,379,128	$	5,863,784
		Special mention (4)			64,458		64,428		163,602		292,488
		Substandard (5)			57,325		46,617		217,962		321,904
			Total	$	2,162,020	$	555,464	$	3,760,692	$	6,478,176
Purchased loans and leases
	Grade:
		Pass (3)		$	126,400	$	67,896	$	881,966	$	1,076,262
		Special mention (4)			6,403		13,867		90,842		111,112
		Substandard (5)			17,837		41,033		157,375		216,245
			Total	$	150,640	$	122,796	$	1,130,183	$	1,403,619
Total loans and leases
	Grade:
		Pass (3)		$	2,166,637	$	512,315	$	4,261,094	$	6,940,046
		Special mention (4)			70,861		78,295		254,444		403,600
		Substandard (5)			75,162		87,650		375,337		538,149
			Total	$	2,312,660	$	678,260	$	4,890,875	$	7,881,795
	Other Credit Exposure
		Credit-risk Profile based on Payment Activity
					Real Estate -
					Secured -						Total Other
					Residential		Consumer		Leases		Credit Exposure
Originated loans and leases
	Performing			$	2,649,622	$	849,898	$	997,487	$	4,497,007
	Nonperforming (6)				21,179		637		1,300		23,116
		Total		$	2,670,801	$	850,535	$	998,787	$	4,520,123
Purchased loans and leases
	Performing			$	577,538	$	9,126	$	0	$	586,664
	Nonperforming (6)				11,118		3		0		11,121
		Total		$	588,656	$	9,129	$	0	$	597,785
Total loans and leases
	Performing			$	3,227,160	$	859,024	$	997,487	$	5,083,671
	Nonperforming (6)				32,297		640		1,300		34,237
		Total		$	3,259,457	$	859,664	$	998,787	$	5,117,908

Credit Quality Indicators, at December 31, 2012
	Commercial Credit Exposure
		Credit-risk Profile by Internally Assigned Grade
									Real Estate -		Total
							Real Estate -		Secured -		Commercial
					Commercial		Construction (1)		Commercial (2)		Credit Exposure
Originated loans and leases
	Grade:
		Pass (3)		$	2,008,548	$	439,296	$	3,388,337	$	5,836,181
		Special mention (4)			45,733		76,852		141,817		264,402
		Substandard (5)			60,123		45,102		213,776		319,001
			Total	$	2,114,404	$	561,250	$	3,743,930	$	6,419,584
Purchased loans and leases
	Grade:
		Pass (3)		$	135,308	$	95,289	$	918,119	$	1,148,716
		Special mention (4)			7,685		34,519		82,021		124,225
		Substandard (5)			16,214		54,162		143,629		214,005
			Total	$	159,207	$	183,970	$	1,143,769	$	1,486,946
Total loans and leases
	Grade:
		Pass (3)		$	2,143,856	$	534,585	$	4,306,456	$	6,984,897
		Special mention (4)			53,418		111,371		223,838		388,627
		Substandard (5)			76,337		99,264		357,405		533,006
			Total	$	2,273,611	$	745,220	$	4,887,699	$	7,906,530
	Other Credit Exposure
		Credit-risk Profile based on Payment Activity
					Real Estate -
					Secured -						Total Other
					Residential		Consumer		Leases		Credit Exposure
Originated loans and leases
	Performing			$	2,591,349	$	830,495	$	898,781	$	4,320,625
	Nonperforming (6)				23,082		577		1,590		25,249
		Total		$	2,614,431	$	831,072	$	900,371	$	4,345,874
Purchased loans and leases
	Performing			$	618,796	$	11,469	$	0	$	630,265
	Nonperforming (6)				12,061		11		0		12,072
		Total		$	630,857	$	11,480	$	0	$	642,337
Total loans and leases
	Performing			$	3,210,145	$	841,964	$	898,781	$	4,950,890
	Nonperforming (6)				35,143		588		1,590		37,321
		Total		$	3,245,288	$	842,552	$	900,371	$	4,988,211
(1)	Includes only construction loans granted to commercial customers. Construction loans for individuals are included in Real Estate – Secured – Residential, below.
(2)	Includes loans obtained for commercial purposes that are also secured by residential real estate.
(3)	Includes loans identified as having acceptable risk, which are loans for which the possibility of loss is considered unlikely.
(4)	Includes loans considered potentially weak; however, no loss of principal or interest is anticipated.
(5)	Includes loans that are inadequately protected by the current net-worth and paying capacity of the borrower or by the collateral pledged, if any. Loss of principal or interest is considered reasonably possible or likely.
(6)	Includes loans that are on non-accrual status or past due ninety days or more.

The following tables detail the age analysis of Susquehanna's past due financing receivables as of March 31, 2013 and December 31, 2012.
Age Analysis of Past Due Financing Receivables, as of March 31, 2013
	Financing Receivables that are Accruing
												Total
		30-59 Days		60-89 Days		Greater than		Total				Financing
		Past Due		Past Due		90 Days		Past Due		Current		Receivables
Commercial		$	4,106	$	783	$	988	$	5,877	$	2,297,241	$	2,303,118
Real estate - construction			1,206		575		382		2,163		758,236		760,399
Real estate secured - residential			19,043		3,863		4,237		27,143		4,020,295		4,047,438
Real estate secured - commercial			9,687		5,427		0		15,114		3,912,983		3,928,097
Consumer			10,336		303		603		11,242		848,385		859,627
Leases			3,465		246		186		3,897		993,776		997,673
	Total	$	47,843	$	11,197	$	6,396	$	65,436	$	12,830,916	$	12,896,352
Originated loans and leases			42,585		10,557		5,490		58,632		10,846,201		10,904,833
Purchased loans and leases			5,258		640		906		6,804		1,984,715		1,991,519
	Total	$	47,843	$	11,197	$	6,396	$	65,436	$	12,830,916	$	12,896,352
	Financing Receivables that are Nonaccruing
												Total
		30-59 Days		60-89 Days		Greater than		Total				Financing
		Past Due		Past Due		90 Days		Past Due		Current		Receivables
Commercial		$	632	$	725	$	4,876	$	6,233	$	3,309	$	9,542
Real estate - construction			0		1,983		15,798		17,781		1,164		18,945
Real estate secured - residential			2,342		330		19,204		21,876		8,496		30,372
Real estate secured - commercial			3,149		1,682		28,171		33,002		10,339		43,341
Consumer			0		0		0		0		37		37
Leases			0		455		216		671		443		1,114
	Total	$	6,123	$	5,175	$	68,265	$	79,563	$	23,788	$	103,351
Originated loans and leases			5,705		4,453		63,155		73,313		20,153		93,466
Purchased loans and leases			418		722		5,110		6,250		3,635		9,885
	Total	$	6,123	$	5,175	$	68,265	$	79,563	$	23,788	$	103,351

Age Analysis of Past Due Financing Receivables, as of December 31, 2012
	Financing Receivables that are Accruing
												Total
		30-59 Days		60-89 Days		Greater than		Total				Financing
		Past Due		Past Due		90 Days		Past Due		Current		Receivables
Commercial		$	5,163	$	762	$	359	$	6,284	$	2,256,863	$	2,263,147
Real estate - construction			8,568		1,614		157		10,339		822,625		832,964
Real estate secured - residential			19,544		4,467		5,547		29,558		4,007,820		4,037,378
Real estate secured - commercial			9,623		13,746		1,394		24,763		3,897,224		3,921,987
Consumer			8,898		1,678		545		11,121		831,388		842,509
Leases			5,445		487		207		6,139		892,850		898,989
	Total	$	57,241	$	22,754	$	8,209	$	88,204	$	12,708,770	$	12,796,974
Originated loans and leases			51,679		21,471		5,720		78,870		10,596,166		10,675,036
Purchased loans and leases			5,562		1,283		2,489		9,334		2,112,604		2,121,938
	Total	$	57,241	$	22,754	$	8,209	$	88,204	$	12,708,770	$	12,796,974
	Financing Receivables that are Nonaccruing
												Total
		30-59 Days		60-89 Days		Greater than		Total				Financing
		Past Due		Past Due		90 Days		Past Due		Current		Receivables
Commercial		$	631	$	649	$	6,068	$	7,348	$	3,116	$	10,464
Real estate - construction			0		405		14,047		14,452		365		14,817
Real estate secured - residential			953		452		19,551		20,956		7,484		28,440
Real estate secured - commercial			2,483		622		30,433		33,538		9,083		42,621
Consumer			0		0		0		0		43		43
Leases			0		656		408		1,064		318		1,382
	Total	$	4,067	$	2,784	$	70,507	$	77,358	$	20,409	$	97,767
Originated loans and leases			4,067		2,379		65,830		72,276		18,146		90,422
Purchased loans and leases			0		405		4,677		5,082		2,263		7,345
	Total	$	4,067	$	2,784	$	70,507	$	77,358	$	20,409	$	97,767

The following tables provide information about Susquehanna's impaired loans, including principal balance, recorded investment, and related specific allowance amounts at the dates indicated. Loans with no specific allowance for loan losses have adequate collateral securing their carrying value and in some circumstances have been charged down to their current carrying value based on the fair value of the collateral.

Impaired Loans at March 31, 2013
														Average
							Recorded							Recorded
					Unpaid		Investment							Investment		Interest
					Principal		in Impaired			Related		Related		in Impaired		Income
					Balance		Loans			Charge-offs		Allowance		Loans (2)		Recognized
Impaired loans without a related reserve:
	Commercial, financial, and agricultural			$	25,675	$	23,787		$	1,888			$	28,801	$	493
	Real estate - construction				24,486		17,715			6,771				17,086		131
	Real estate secured - residential				39,089		37,725			1,364				38,306		500
	Real estate secured - commercial				136,638		117,416			19,222				120,261		1,869
	Consumer				110		110			0				108		3
		Total impaired loans without a
			related reserve		225,998		196,753	(1)		29,245				204,562		2,996
Impaired loans with a related reserve:
	Commercial, financial, and agricultural				10,315		10,187			128	$	3,429		4,480		36
	Real estate - construction				25,194		10,675			14,519		732		12,762		4
	Real estate secured - residential				30,255		29,679			576		3,689		29,785		369
	Real estate secured - commercial				41,163		30,812			10,351		4,060		30,723		238
	Consumer				0		0			0		0		0		0
		Total impaired loans with a
			related reserve		106,927		81,353			25,574		11,910		77,750		647
Total impaired loans:
	Commercial, financial, and agricultural				35,990		33,974			2,016		3,429		33,281		529
	Real estate - construction				49,680		28,390			21,290		732		29,848		135
	Real estate secured - residential				69,344		67,404			1,940		3,689		68,091		869
	Real estate secured - commercial				177,801		148,228			29,573		4,060		150,984		2,107
	Consumer				110		110			0		0		108		3
			Total impaired loans	$	332,925	$	278,106		$	54,819	$	11,910	$	282,312	$	3,643
Impaired loans without a related reserve:
	Originated loans and leases			$	73,947	$	45,878		$	28,069			$	55,862	$	794
	Purchased loans and leases				152,051		150,875			1,176				148,700		2,202
		Total impaired loans without a
			related reserve		225,998		196,753			29,245				204,562		2,996
Impaired loans with a related reserve:
	Originated loans and leases				101,223		75,703			25,520	$	10,557		71,875		584
	Purchased loans and leases				5,704		5,650			54		1,353		5,875		63
		Total impaired loans with a
			related reserve		106,927		81,353			25,574		11,910		77,750		647
Total impaired loans:
	Originated loans and leases				175,170		121,581			53,589		10,557		127,737		1,378
	Purchased loans and leases (3)				157,755		156,525			1,230		1,353		154,575		2,265
			Total impaired loans	$	332,925	$	278,106		$	54,819	$	11,910	$	282,312	$	3,643
(1)	$26,401 of the $196,753 total impaired loans without a related reserve represents loans that had been written down to the fair value of the underlying collateral through direct charge-offs of $29,245.
(2)	Average recorded investment in impaired loans is calculated on a quarterly basis using daily balances.
(3)	$5,650 of the $156,525 purchased impaired loans were subsequently impaired after being acquired.

Impaired Loans at December 31, 2012
														Average
							Recorded							Recorded
					Unpaid		Investment							Investment		Interest
					Principal		in Impaired			Related		Related		in Impaired		Income
					Balance		Loans			Charge-offs		Allowance		Loans (2)		Recognized
Impaired loans without a related reserve:
	Commercial, financial, and agricultural			$	23,959	$	23,877		$	82			$	24,603	$	233
	Real estate - construction				48,394		32,717			15,677				34,223		882
	Real estate secured - residential				26,298		25,261			1,037				25,417		398
	Real estate secured - commercial				133,903		119,217			14,686				118,424		1,727
	Consumer				114		114			0				114		3
		Total impaired loans without a
			related reserve		232,668		201,186	(1)		31,482				202,781		3,243
Impaired loans with a related reserve:
	Commercial, financial, and agricultural				4,240		4,184			56	$	3,267		4,278		47
	Real estate - construction				12,894		5,577			7,317		952		5,883		237
	Real estate secured - residential				32,640		32,375			265		6,633		32,498		333
	Real estate secured - commercial				49,322		39,331			9,991		4,884		40,778		486
	Consumer				0		0			0		0		0		0
		Total impaired loans with a
			related reserve		99,096		81,467			17,629		15,736		83,437		1,103
Total impaired loans:
	Commercial, financial, and agricultural				28,199		28,061			138		3,267		28,881		280
	Real estate - construction				61,288		38,294			22,994		952		40,106		1,119
	Real estate secured - residential				58,938		57,636			1,302		6,633		57,915		731
	Real estate secured - commercial				183,225		158,548			24,677		4,884		159,202		2,213
	Consumer				114		114			0		0		114		3
			Total impaired loans	$	331,764	$	282,653		$	49,111	$	15,736	$	286,218	$	4,346
Impaired loans without a related reserve:
	Originated loans and leases			$	76,120	$	45,560		$	30,560			$	49,975	$	764
	Purchased loans and leases				156,548		155,626			922				152,806		2,479
		Total impaired loans without a
			related reserve		232,668		201,186			31,482				202,781		3,243
Impaired loans with a related reserve:
	Originated loans and leases				92,471		74,842			17,629	$	14,649		76,823		1,033
	Purchased loans and leases				6,625		6,625			0		1,087		6,614		70
		Total impaired loans with a
			related reserve		99,096		81,467			17,629		15,736		83,437		1,103
Total impaired loans:
	Originated loans and leases				168,591		120,402			48,189		14,649		126,798		1,797
	Purchased loans and leases (3)				163,173		162,251			922		1,087		159,420		2,549
			Total impaired loans	$	331,764	$	282,653		$	49,111	$	15,736	$	286,218	$	4,346
(1)	$28,658 of the $201,186 total impaired loans without a related reserve represents loans that had been written down to the fair value of the underlying collateral through direct charge-offs of $31,482.
(2)	Average recorded investment in impaired loans is calculated on a quarterly basis using daily balances.
(3)	$6,625 of the $162,251 purchased impaired loans were subsequently impaired after being acquired.

	The following table presents Troubled Debt Restructurings (TDR's), by class segment:
			March 31,		December 31,
			2013		2012
		Commercial, financial, and agricultural	$	14,863	$	8,744
		Real estate - construction		937		940
		Real estate secured - residential		20,172		23,224
		Real estate secured - commercial		28,689		33,589
		Consumer		1,112		1,278
		Total performing TDRs		65,773		67,775
		Non-performing TDRs (1)		25,808		24,603
		Total TDRs	$	91,581	$	92,378
		Performing TDRs		72%		73%
		Non-performing TDRs		28%		27%
(1)	These loans are included in the 90 day past due and non-accrual categories.

	The following table provides detail of TDR balance and activity for the periods presented:
		Three months ended
		March 31,
		2013		2012
Performing TDRs, beginning of period		$	67,775	$	72,852
	New TDR Status		17,882		14,412
	Paydowns		(2,237)		(46)
	Charge-offs post modification		(121)		0
	Transfer to nonaccrual, past due 90 days or greater		(4,830)		(4,796)
	Cured		(12,341)		(10,371)
	Other, net (1)		(355)		30
Performing TDRs, end of period		$	65,773	$	72,081
Non-performing TDRs (2), end of period		$	25,808	$	18,720
Performing TDRs			72%		79%
Non-performing TDRs			28%		21%
(1)	Includes $203 transferred to OREO in 2013.
(2)	Included in Age Analysis of Past Due Financing Receivables.

       The following tables summarize Susquehanna's loan modification activities that were considered troubled debt restructurings for the three month periods ended March 31, 2013 and 2012.

			Recorded Investment
								Financial Effect of
				Pre-Modification		Post-Modification		Modification
			Number of	Recorded		Recorded		Recorded
Three months ended March 31, 2013			Loans	Investment		Investment		Investment(1)		Interest (2)
Troubled Debt Restructurings
	Commercial, financial, and agricultural
		Other (3)	16	$	7,493	$	7,493	$	0	$	0
	Real estate - construction
		Other (3)	1		20		20		0		0
	Real estate secured - residential
		Other (3)	59		5,412		5,412		0		0
		Combination of modification types	7		1,316		1,316		0		(128)
	Real estate secured - commercial
		Other (3)	7		1,549		1,549		0		0
		Combination of modification types	1		1,436		1,436		0		(196)
	Consumer
		Other (3)	87		656		656		0		0
	Total		178	$	17,882	$	17,882	$	0	$	(324)
Originated loans and leases			170	$	16,149	$	16,149	$	0	$	(281)
Purchased loans and leases			8		1,733		1,733		0		(43)
	Total		178	$	17,882	$	17,882	$	0	$	(324)
(1)	Financial effects impacting the recorded investment include principal payments, advances, charge-offs, and capitalized past-due amounts.
(2)	Represents the present value of interest rate concessions discounted at the effective rate of the original loan.
(3)	Bankruptcies and maturity date extensions.
					Number of		Recorded
					Loans		Investment
Troubled Debt Restructurings that Subsequently
	Defaulted during the current period
		Commercial, financial, and agricultural			5	$	653
		Real estate - construction			1		20
		Real estate secured - residential			5		404
		Real estate secured - commercial			2		341
		Consumer			18		139
		Total			31	$	1,557
Originated loans and leases					28	$	1,357
Purchased loans and leases					3		200
		Total			31	$	1,557

			Recorded Investment
								Financial Effect of
				Pre-Modification		Post-Modification		Modification
			Number of	Recorded		Recorded		Recorded
Three months ended March 31, 2012			Loans	Investment		Investment		Investment(1)		Interest (2)
Troubled Debt Restructurings
	Commercial, financial, and agricultural
		Other (3)	1	$	310	$	310	$	0	$	0
	Real estate - construction
		Other (3)	0		0		0		0		0
	Real estate secured - residential
		Other (3)	2		1,006		1,006		0		0
		Combination of modification types	8		2,434		2,434		0		6
	Real estate secured - commercial
		Other (3)	4		10,662		10,662		0		0
		Combination of modification types	0		0		0		0		0
	Consumer
		Other (3)	0		0		0		0		0
	Total		15	$	14,412	$	14,412	$	0	$	6
Originated loans and leases			7	$	2,541	$	2,541	$	0	$	(74)
Purchased loans and leases			8		11,871		11,871		0		80
	Total		15	$	14,412	$	14,412	$	0	$	6
(1)	Financial effects impacting the recorded investment include principal payments, advances, charge-offs, and capitalized past-due amounts.
(2)	Represents the present value of interest rate concessions discounted at the effective rate of the original loan.
(3)	Bankruptcies and maturity date extensions.
					Number of		Recorded
					Loans		Investment
Troubled Debt Restructurings that Subsequently
	Defaulted during the current period
		Commercial, financial, and agricultural			0	$	0
		Real estate - construction			1		908
		Real estate secured - residential			3		1,339
		Real estate secured - commercial			0		0
		Consumer			0		0
		Total			4	$	2,247
Originated loans and leases					3	$	1,339
Purchased loans and leases					1		908
		Total			4	$	2,247

The unpaid principal balance and the related carrying amount of acquired loans are as follows:
			March 31,		December 31,
			2013		2012
	Credit impaired purchased loans evaluated individually
	for incurred credit losses
	Unpaid principal balance	$	222,596	$	238,538
	Carrying amount		156,525		162,251
	Other purchased loans evaluated collectively for
	incurred credit losses
	Unpaid principal balance		1,851,539		1,976,132
	Carrying amount		1,844,879		1,967,032
	Total purchased loans
	Unpaid principal balance		2,074,135		2,214,670
	Carrying amount		2,001,404		2,129,283

The changes in accretable discount related to the purchased credit impaired loans are as follows:
		Three Months Ended
		March 31,
		2013		2012
Balance - beginning of period		$	62,868	$	4,881
	Tower acquisition		0		54,418
	Accretion to interest income		(6,570)		(2,500)
	Net reclassification from non-accretable to accretable		2,519		0
Balance - end of period		$	58,817	$	56,799

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Investment Securities

3 Months Ended

Mar. 31, 2013

Investment [Line Items]

Investment Securities

NOTE3. Investment Securities

The amortized cost and fair values of investment securities at March 31, 2013 and December 31, 2012 were as follows:

				Gross		Gross
			Amortized	Unrealized		Unrealized		Fair
At March 31, 2013		Cost		Gains		Losses		Value
Available-for-Sale:
	U.S. Government agencies	$	113,328	$	808	$	0	$	114,136
	Obligations of states and political subdivisions		399,419		27,604		579		426,444
	Agency residential mortgage-backed securities		1,682,202		34,861		87		1,716,976
	Non-agency residential mortgage-backed securities		27,438		3		1,203		26,238
	Commercial mortgage-backed securities		35,619		1,275		0		36,894
	Other structured financial products		25,049		0		15,072		9,977
	Other debt securities		43,095		2,777		372		45,500
			2,326,150		67,328		17,313		2,376,165
	Other equity securities		24,188		931		658		24,461
Total available-for-sale securities		$	2,350,338	$	68,259	$	17,971	$	2,400,626
				Gross		Gross
			Amortized	Unrealized		Unrealized		Fair
At December 31, 2012		Cost		Gains		Losses		Value
Available-for-Sale:
	U.S. Government agencies	$	113,367	$	1,041	$	0	$	114,408
	Obligations of states and political subdivisions		403,487		32,585		295		435,777
	Agency residential mortgage-backed securities		1,843,511		37,104		53		1,880,562
	Non-agency residential mortgage-backed securities		29,428		2		1,980		27,450
	Commercial mortgage-backed securities		38,847		1,533		0		40,380
	Other structured financial products		25,011		0		15,461		9,550
	Other debt securities		43,076		2,643		464		45,255
			2,496,727		74,908		18,253		2,553,382
	Other equity securities		24,097		1,179		757		24,519
Total available-for-sale securities		$	2,520,824	$	76,087	$	19,010	$	2,577,901

At March 31, 2013 and December 31, 2012, investment securities with carrying values of $1,651,046and $1,775,345, respectively, were pledged to secure public funds and for other purposes as required by law.

The amortized cost and fair value of U.S. Government agencies, obligations of states and political subdivisions, agency and non-agency residential mortgage-backed securities, commercial mortgage-backed securities, other structured financial products, other debt securities, and residential and commercial mortgage-backed securities, at March 31, 2013 and December 31, 2012, by contractual maturity, are shown below. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

			March 31, 2013				December 31, 2012
			Amortized		Fair		Amortized		Fair
			Cost		Value		Cost		Value
Securities available for sale:
	Within one year		$	8,103	$	8,175	$	8,690	$	8,781
	After one year but within five years			140,707		142,617		141,362		143,714
	After five years but within ten years			870,496		886,715		935,796		952,680
	After ten years			1,306,844		1,338,658		1,410,879		1,448,207
		Total	$	2,326,150	$	2,376,165	$	2,496,727	$	2,553,382

Gross realized gains and gross realized losses on investment securities transactions are summarized below. These gains and losses were recognized using the specific identification method and were included in noninterest income.

	Available-for-sale Securities
	Three Months Ended March 31,
	2013		2012
Gross gains	$	407	$	392
Gross losses		(1)		(7)
Other-than-temporary impairment		(388)		(144)
Net gains	$	18	$	241

The following table presents Susquehanna's investments' gross unrealized losses and the corresponding fair values by investment category and length of time that the securities have been in a continuous unrealized loss position, at March 31, 2013 and December 31, 2012.

March 31, 2013	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Obligations of states and political subdivisions		39,233		476		7,176		103		46,409		579
Agency residential mortgage-backed securities		16,981		87		0		0		16,981		87
Non-agency residential mortgage-backed securities		11,708		151		13,884		1,052		25,592		1,203
Other structured financial products		0		0		9,977		15,072		9,977		15,072
Other debt securities		0		0		6,623		372		6,623		372
Other equity securities		1,275		90		1,260		568		2,535		658
	$	69,197	$	804	$	38,920	$	17,167	$	108,117	$	17,971
December 31, 2012	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Obligations of states and political subdivisions		31,791		295		0		0		31,791		295
Agency residential mortgage-backed securities		11,291		53		0		0		11,291		53
Non-agency residential mortgage-backed securities		12,117		450		14,683		1,530		26,800		1,980
Other structured financial products		0		0		9,551		15,461		9,551		15,461
Other debt securities		0		0		6,518		464		6,518		464
Other equity securities		1,751		585		796		172		2,547		757
	$	56,950	$	1,383	$	31,548	$	17,627	$	88,498	$	19,010

Non-agency residential mortgage-backed securities. At March 31, 2013, Susquehanna held three securities that had unrealized losses, and were rated below investment grade. None of Susquehanna's non-agency residential mortgage-backed securities were backed by loans identified by the issuer as subprime or Alt-A collateral. Management has analyzed the collateral underlying these securities with respect to defaults, loan to collateral value ratios, current levels of subordination, and geographic concentrations and concluded that one of these securities is other-than-temporarily impaired.

Susquehanna recorded other-than-temporary impairment losses as presented in the following table:

Credit Losses on Non-agency Residential Mortgage-backed and Other Equity Securities for which a
Portion of an Other-than-temporary Impairment was Recognized in Other Comprehensive Income
				Three Months Ended
				March 31,
				2013		2012
	Balance - beginning of period			$	1,280	$	4,602
	Additions:
		Amount related to credit losses for which an other-than-temporary
			impairment was not previously recognized		325		0
		Additional amount related to credit losses for which an other-than-
			temporary impairment was previously recognized		63		144
	Deletions:
		Realized losses			34		0
	Balance - end of period			$	1,634	$	4,746

Susquehanna estimated the portion of loss attributable to credit using a discounted cash flow model. Susquehanna, in conjunction with a third-party financial advisory firm, assisted with the development of critical assumptions including the expected cash flows of the underlying collateral of the non-agency residential mortgage-backed securities using internal credit risk, interest rate risk, and prepayment risk models that incorporated management's best estimate of current key assumptions, such as default rates, loss severity, and prepayment rates. Assumptions used can vary widely from loan to loan and are influenced by such factors as loan interest rate, geographical location of the borrower, borrower characteristics, and collateral type. The distribution of underlying cash flows is determined in accordance with the security's terms. Expected principal and interest cash flows on an other-than-temporarily impaired debt security are discounted using the effective yield of that debt security.

Based on the expected cash flows derived from the model, Susquehanna expects to recover the unrealized loss in accumulated other comprehensive income ($745 and $4,144 at March 31, 2013 and 2012, respectively). Significant assumptions used in the valuation of these other-than-temporarily impaired securities were as follows:

			Weighted-average (%)
			March 31,
			2013	2012
		Conditional repayment rate (1)	10.3%	9.9%
		Loss severity (2)	43.0%	46.6%
		Conditional default rate (3)	3.8%	6.0%
(1)	Conditional repayment rate represents a rate equal to the proportion of principal balance paid off voluntarily over a certain period of time on an annualized basis.
(2)	Loss severity rates are projected by considering collateral characteristics such as current loan-to-value, original creditworthiness of borrowers (FICO score) and geographic concentration.
(3)	Conditional default rate is an annualized rate of default on a group of mortgages, and represents the percentage of outstanding principal balances in the pool that are in default, which typically equates to the borrower being past due 60 days, 90 days, or possibly already in the foreclosure process.

Management provides input and monitors the third party valuation process of the non-agency residential mortgage-backed securities. A detailed review of the critical assumptions and inputs is performed by Susquehanna's Corporate Investment Committee (“CIC”). Key assumptions reviewed by the CIC include prepayment assumptions, default rates, loss severity, bond waterfall payments, and the discount rate. Additionally, available market indications ofsimilar securities are provided by Susquehanna to the third party and are given a significant weighting by the third party.

Other structured financial products. Susquehanna's structured financial product investments are comprised of four pooled trust preferred securities which have an aggregate unrealized loss of $15,072 and $16,859 at March 31, 2013 and 2012, respectively. All of these securities are below investment grade but are of a more senior tranche of the specific issue. Susquehanna has contracted with a third-party financial advisory firm (“third party firm”) to assist in its other-than-temporary impairment analysis of its structured financial product investments. Management has assisted with the development of, and performed a detailed review of the critical assumptions. The review of the inputs for the valuation of the pooled trust preferred securities is performed by the CIC. Key aspects reviewed by CIC include the detail on non-performing financial institutions within the pools of trust preferred securities, the probability of default of the underlying institutions within the pools, the discount rate, trades of similar securities and indexes, and the weighting given to market indications. Susquehanna management believes that the valuation analysis and methodology reasonably supports the value and projected performance of the specific trust preferred securities. Management believes this valuation methodology presents an appropriate approach in the determination of other-than-temporary impairment charges in accordance with GAAP.

The third party firm uses a proprietary methodology to determine the other-than-temporary impairment of Susquehanna's pooled trust preferred securities. Using publicly available financial information, the third party firm's valuation analysis compares the present value of the expected base cash flows with the amortized cost basis of the trust preferred securities to determine whether Susquehanna expects to receive the entire amortized cost basis of such securities. To make this comparison, the third party firm evaluates two scenarios consisting of three phases each. The two scenarios are: (1) the first dollar loss scenario, and, (2) the expected or forecasted scenario. The three phases associated with each scenario are production of cash flows, application of the cash flows to the percent owned, and assessment of any other-than-temporary impairment.

To determine expected cash flows, the valuation analysis considers credit default rates, call options and deferrals, waterfall structure, and covenants relating to the trust preferred securities. The trust indenture documentation and the trustee reports for each specific trust preferred security issuance provides information regarding deferral rights, call options, various triggers, (including over-collateralization triggers), and waterfall structure, which management believes is essential in determining projected base cash flows. The third party firm determines short-term default risk using ratios, including the Texas ratio, that relate to the issuers, capitalization, asset quality, profitability, and liquidity. To determine longer term default probabilities, the third party firm uses an internal scoring approach that relies on key historical financial performance ratios. Management believes that future cash flows for these securities are reasonably developed and supported.

If a collateral security is in default at the assessment date, a recovery rate specific to the issuer of the collateral security is incorporated into the expected cash flows with a twenty-four month lag in timing of receipt of those expected cash flows. The third party firm calculates a terminal default rate based upon certain key financial ratios of the active issuers in the security relative to all FDIC insured bank institutions. The active issuers of the collateral securities are summarized as a weighted average based on issue size according to status of deferral and default assumption. To enhance the analysis, the third party firm calculates the standard deviation across the issuers for each ratio and removes any issuer that falls more than three standard deviations above or below the average for that ratio. No recovery is incorporated into the expected cash flows for any issuers that exceed the terminal default rate. For issuers currently making interest payments and for those currently deferring interest payments, Susquehanna makes an estimate using publicly available financial information as to the likelihood and timing of any default, after which the estimated cash flow reflects a recovery rate specific to the issuer. Issuers of collateral securities that are currently deferring interest payments and not expected to default are assumed to continue to defer interest payments for twenty quarters, the full contractually permitted deferral, from the period of initial deferral.

In considering the amount and timing of expected cash flows on the pooled trust preferred securities, management considers the right of the issuers of the securities underlying the pooled trust preferred securities to call those collateral securities. Management assesses any projected exercise of the call option, incorporating changes in economic and market conditions and the impact of any change in timing of expected cash flows in the measurement of fair value and other-than-temporary impairment.

The discount rate applied to the projected cash flows for the specific class is calculated using a spread to the current swap curve. The swap curve gives a market participant perspective of the term structure of interest rates and on credit spreads. The determination of the discount rate used in Susquehanna's valuation is based upon the referenced swap curve plus an additional credit spread based upon the credit rating of the class. Lower rated classes would have a wider implied credit spread. These multiple discount rates are then applied to the estimated cash flows in determining the estimated value.

	The present value of the expected cash flows for Susquehanna’s specific class and subordinate classes, as well as additional
information about the pooled trust preferred securities, are included in the following tables.
	As of March 31, 2013		Pooled Trust #1		Pooled Trust #2		Pooled Trust #3		Pooled Trust #4
	Class		B		B		B		A2L
	Class face value		$	35,000	$	58,922	$	88,670	$	45,500
	Book value		$	3,000	$	7,183	$	8,116	$	6,750
	Fair value			1,245		3,068		3,444		2,220
	Unrealized loss			(1,755)		(4,115)		(4,672)		(4,530)
	Present value of expected cash flows
		for class noted above and all
		subordinated classes (1)	$	150,775	$	178,443	$	308,449	$	147,139
	Lowest credit rating assigned		D		Ca		Ca		Ca
	Original collateral		$	623,984	$	501,470	$	700,535	$	487,680
	Performing collateral			361,842		295,080		484,731		281,600
	Actual defaults			30,000		51,580		44,000		77,100
	Actual deferrals			77,400		125,810		96,150		93,080
	Projected future defaults			61,045		53,910		47,105		42,053
	Actual defaults as a % of original
		collateral		4.8%		10.3%		6.3%		15.8%
	Actual deferrals as a % of original
		collateral (2)		12.4%		25.1%		13.7%		19.1%
	Actual defaults and deferrals as a % of
		original collateral		17.2%		35.4%		20.0%		34.9%
	Projected future defaults as a % of
		original collateral (3)		9.8%		10.8%		6.7%		8.6%
	Actual institutions deferring and
		defaulted as a % of total institutions		18.5%		37.5%		25.4%		41.8%
	Projected future defaults as a % of
		performing collateral plus
		deferrals		13.9%		12.8%		8.1%		11.2%

	As of March 31, 2012		Pooled Trust #1		Pooled Trust #2		Pooled Trust #3		Pooled Trust #4
	Class		B		B		B		A2L
	Class face value		$	35,000	$	58,363	$	87,962	$	45,500
	Book value		$	3,000	$	7,096	$	8,033	$	6,750
	Fair value			967		2,438		2,718		1,897
	Unrealized loss			(2,033)		(4,658)		(5,315)		(4,853)
	Present value of expected cash flows
		for class noted above and all
		subordinated classes (1)	$	151,043	$	171,529	$	277,791	$	142,866
	Lowest credit rating assigned		CCC-		Ca		Ca		Ca
	Original collateral		$	623,984	$	501,470	$	700,535	$	487,680
	Performing collateral			352,028		300,200		470,831		344,600
	Actual defaults			10,000		51,580		44,000		74,500
	Actual deferrals			107,400		120,690		135,150		43,080
	Projected future defaults			72,893		71,392		60,702		46,548
	Actual defaults as a % of original
		collateral		1.6%		10.3%		6.3%		15.3%
	Actual deferrals as a % of original
		collateral (2)		17.2%		24.1%		19.3%		8.8%
	Actual defaults and deferrals as a % of
		original collateral		18.8%		34.4%		25.6%		24.1%
	Projected future defaults as a % of
		original collateral (3)		11.7%		14.2%		8.7%		9.5%
	Actual institutions deferring and
		defaulted as a % of total institutions		19.4%		37.5%		30.4%		30.9%
	Projected future defaults as a % of
		performing collateral plus
		deferrals		15.9%		17.0%		10.0%		12.0%
(1)	Susquehanna determines whether it expects to recover the entire amortized cost basis by comparing the present value of the expected cash flows to be collected with the amortized cost basis. As of March 31, 2013 and 2012, the present value of the current estimated cash flows is equal to or greater than the book value of the trust preferred securities held. Consequently, there is no credit-related other-than-temporary impairment required to be recognized.
(2)	Includes current interest deferrals for the quarter for those institutions deferring as of the date of the assessment of the other-than-temporary impairment. Current deferrals are assumed to continue for twenty quarters, the full contractually permitted deferral period, if the institutions are not projected to default prior to that time.
(3)	Includes those institutions that are performing but are not projected to continue to perform and includes those institutions that are currently deferring interest that are projected to default, based upon third-party proprietary valuation methodology used to determine future defaults. Creditworthiness of each underlying issue in the collateralized debt obligation is determined using publicly available data.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2013

Basis Of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information. Certain prior-year amounts have been reclassified to conform to current period classifications and those reclassifications are not material to previously issued financial statements. In the opinion of management, the information reflects all normal recurring adjustments necessary for a fair statement of results for the three months ended March 31, 2013 and 2012. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Operating results for the three-month period ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

The accounting policies of Susquehanna Bancshares, Inc. and Subsidiaries ("Susquehanna"), as applied in the consolidated interim financial statements presented herein, are substantially the same as those followed on an annual basis as presented on pages 79 through 84 of Susquehanna's Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

Use Of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported and contingent amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change relate to the estimated residual value of leases; determination of the allowance for loan and lease losses; the fair value of financial instruments, such as loans, investment securities, and derivatives; measurement and assessment of goodwill, intangible assets, and other purchase accounting related adjustments; benefit plan obligations and expenses; and income tax assets, liabilities and expenses.

Recently Adopted Accounting Guidance

Recently Adopted Accounting Guidance

In December 2011, FASB issued ASU 2011-11, Balance Sheet (Topic 210) - Disclosures about Offsetting Assets and Liabilities. This ASU requires an entity to disclose the nature of its rights of setoff and related arrangements associated with its financial instruments and derivative instruments. The objective of ASU 2011-11 is to make financial statements that are prepared under U.S. generally accepted accounting principles (“GAAP”) more comparable to those prepared under International Financial Reporting Standards. The new disclosures will give financial statement users information about both gross and net exposures. ASU 2011-11 is effective for interim and annual reporting periods beginning after January 1, 2013 and will be applied on a retrospective basis. The adoption of the amendment, in the first quarter of 2013, did not have a material impact on the financial condition or results of operations.

In July 2012, FASB issued ASU 2012-02, Intangibles – Goodwill and Other (Topic 350) – Testing Indefinite – Lived Intangible Assets for Impairment. This ASU clarifies the assessment options and testing processes previously defined in ASU 2011-08, Intangibles – Goodwill and Other (Topic 350) – Testing Goodwill for Impairment issued in September 2011. ASU 2012-02 is effective for interim and annual impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of this guidance, in the first quarter of 2013,did not have a material impact on results of operations or financial condition.

In January 2013, FASB issued ASU 2013-01, Balance Sheet (Topic 210) – Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This ASU clarifies that the scope of Update 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, issued in December 2011. ASU 2013-01 is effective for interim and annual reporting periods beginning on or after January 1, 2013. The adoption of this guidance, in the first quarter of 2013, did not have a material impact on the results of operations or financial condition, however did result in an additional disclosure. For additional information about this disclosure, refer to “Note 13. Derivative Financial Instruments”.

In February 2013, FASB issued ASU 2013-02, Comprehensive Income (Topic 220) – Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income in Update No. 2011-12. This ASU requires entities to disclose information regarding reclassification adjustments from accumulated other comprehensive income in their annual financial statements in a single note or on the face of the financial statements. ASU 2013-02 is effective for interim and annual reporting periods beginning after December 15, 2012. The adoption of this guidance, in the first quarter of 2013, did not have a material impact on results of operations or financial condition

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Earnings per Share ("EPS")

3 Months Ended

Mar. 31, 2013

Earnings Per Share ("EPS")

NOTE 11. Earnings per Common Share ("EPS")
	The following tables set forth the calculation of basic and diluted EPS for the three-month periods ended March 31, 2013
and 2012.
Basic earnings per common share
		Three Months Ended March 31,
		2013		2012
Net income applicable to common shareholders		$	42,399	$	23,473
Weighted average common shares outstanding			186,607		171,326
Basic earnings per common share		$	0.23	$	0.14
Diluted earnings per common share
		Three Months Ended March 31,
		2013		2012
Net income available to common shareholders		$	42,399	$	23,473
Weighted average common shares outstanding			186,607		171,326
Dilutive potential common shares			835		647
Total diluted average common shares outstanding			187,442		171,973
Diluted earnings per common share		$	0.23	$	0.14

For the three months ended March 31, 2013 and 2012, weighted average options to purchase 1,586 and 1,991 shares, respectively, were outstanding but were not included in the computation of diluted EPS because the effect of the options would have been antidilutive for the period.

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Deposits

3 Months Ended

Mar. 31, 2013

Deposits

NOTE 7. Deposits
	Deposits consisted of the following at March 31, 2013 and December 31, 2012:
		March 31,		December 31,
		2013		2012
Noninterest-bearing:
	Demand	$	1,917,719	$	1,973,664
Interest-bearing:
	Interest-bearing demand		5,936,099		5,829,147
	Savings		1,077,446		1,032,293
	Time		2,205,304		2,262,262
	Time of $100 or more		1,554,864		1,482,680
Total deposits		$	12,691,432	$	12,580,046

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Allowance For Loan & Lease Losses (Allowance For Credit Losses And Recorded Investment In Financing Receivables) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance For Credit Losses, Beginning Balance	$ 184,020	$ 188,100
Charge-Offs	(24,093)	(18,530)
Recoveries	4,450	6,160
Provision	12,000	19,000
Allowance For Credit Losses, Ending Balance	176,377	194,730
Individually evaluated for impairment	11,910	26,300
Collectively evaluated for impairment	164,467	168,430
Financing Receivables, Ending Balance	12,999,703	12,521,669
Financing receivables, Individually evaluated for impairment, Ending Balance	278,106	456,979
Financing receivables, Collectively evaluated for impairment, Ending Balance	12,721,597	12,064,690
Originated Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	10,557	26,300
Collectively evaluated for impairment	164,467	168,430
Financing receivables, Individually evaluated for impairment, Ending Balance	121,581	140,838
Financing receivables, Collectively evaluated for impairment, Ending Balance	10,876,717	9,706,018
Purchased Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	1,353	0
Collectively evaluated for impairment	0	0
Financing receivables, Individually evaluated for impairment, Ending Balance	156,525	316,141
Financing receivables, Collectively evaluated for impairment, Ending Balance	1,844,880	2,358,672
Commercial Loan [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance For Credit Losses, Beginning Balance	30,207	28,567
Charge-Offs	(10,037)	(3,476)
Recoveries	1,996	1,368
Provision	8,296	7,237
Allowance For Credit Losses, Ending Balance	30,462	33,696
Individually evaluated for impairment	3,429	7,843
Collectively evaluated for impairment	27,033	25,853
Financing Receivables, Ending Balance	2,312,660	2,088,948
Financing receivables, Individually evaluated for impairment, Ending Balance	33,974	47,282
Financing receivables, Collectively evaluated for impairment, Ending Balance	2,278,686	2,041,666
Commercial Loan [Member] | Originated Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	3,382	7,843
Collectively evaluated for impairment	27,033	25,853
Financing receivables, Individually evaluated for impairment, Ending Balance	18,015	18,826
Financing receivables, Collectively evaluated for impairment, Ending Balance	2,113,397	1,814,588
Commercial Loan [Member] | Purchased Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	47	0
Collectively evaluated for impairment	0	0
Financing receivables, Individually evaluated for impairment, Ending Balance	15,959	28,456
Financing receivables, Collectively evaluated for impairment, Ending Balance	165,289	227,078
Real Estate - Construction [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance For Credit Losses, Beginning Balance	25,171	36,868
Charge-Offs	(4,763)	(3,557)
Recoveries	462	727
Provision	4,679	55
Allowance For Credit Losses, Ending Balance	25,549	34,093
Individually evaluated for impairment	732	5,037
Collectively evaluated for impairment	24,817	29,056
Financing Receivables, Ending Balance	779,344	993,819
Financing receivables, Individually evaluated for impairment, Ending Balance	28,391	102,520
Financing receivables, Collectively evaluated for impairment, Ending Balance	750,953	891,299
Real Estate - Construction [Member] | Originated Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	719	5,037
Collectively evaluated for impairment	24,817	29,056
Financing receivables, Individually evaluated for impairment, Ending Balance	17,275	31,346
Financing receivables, Collectively evaluated for impairment, Ending Balance	637,787	640,825
Real Estate - Construction [Member] | Purchased Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	13	0
Collectively evaluated for impairment	0	0
Financing receivables, Individually evaluated for impairment, Ending Balance	11,116	71,174
Financing receivables, Collectively evaluated for impairment, Ending Balance	113,166	250,474
Real Estate Secured - Residential [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance For Credit Losses, Beginning Balance	41,276	28,839
Charge-Offs	(3,013)	(3,774)
Recoveries	651	121
Provision	(2,372)	8,519
Allowance For Credit Losses, Ending Balance	36,542	33,705
Individually evaluated for impairment	3,689	3,388
Collectively evaluated for impairment	32,853	30,317
Financing Receivables, Ending Balance	4,077,810	3,945,565
Financing receivables, Individually evaluated for impairment, Ending Balance	54,397	64,959
Financing receivables, Collectively evaluated for impairment, Ending Balance	4,023,413	3,880,607
Real Estate Secured - Residential [Member] | Originated Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	2,475	3,388
Collectively evaluated for impairment	32,853	30,317
Financing receivables, Individually evaluated for impairment, Ending Balance	29,108	25,188
Financing receivables, Collectively evaluated for impairment, Ending Balance	3,150,965	2,923,800
Real Estate Secured - Residential [Member] | Purchased Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	1,214	0
Collectively evaluated for impairment	0	0
Financing receivables, Individually evaluated for impairment, Ending Balance	25,289	39,771
Financing receivables, Collectively evaluated for impairment, Ending Balance	872,448	956,807
Real Estate Secured - Commercial [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance For Credit Losses, Beginning Balance	70,053	78,414
Charge-Offs	(4,603)	(5,521)
Recoveries	722	3,250
Provision	805	792
Allowance For Credit Losses, Ending Balance	66,977	76,935
Individually evaluated for impairment	4,060	9,827
Collectively evaluated for impairment	62,917	67,108
Financing Receivables, Ending Balance	3,971,438	4,022,788
Financing receivables, Individually evaluated for impairment, Ending Balance	161,234	241,391
Financing receivables, Collectively evaluated for impairment, Ending Balance	3,810,204	3,781,396
Real Estate Secured - Commercial [Member] | Originated Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	3,981	9,827
Collectively evaluated for impairment	62,917	67,108
Financing receivables, Individually evaluated for impairment, Ending Balance	57,183	64,940
Financing receivables, Collectively evaluated for impairment, Ending Balance	3,125,247	2,871,222
Real Estate Secured - Commercial [Member] | Purchased Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	79	0
Collectively evaluated for impairment	0	0
Financing receivables, Individually evaluated for impairment, Ending Balance	104,051	176,451
Financing receivables, Collectively evaluated for impairment, Ending Balance	684,957	910,174
Consumer [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance For Credit Losses, Beginning Balance	3,722	3,297
Charge-Offs	(558)	(1,296)
Recoveries	322	368
Provision	(489)	1,191
Allowance For Credit Losses, Ending Balance	2,997	3,560
Individually evaluated for impairment	0	205
Collectively evaluated for impairment	2,997	3,355
Financing Receivables, Ending Balance	859,664	775,913
Financing receivables, Individually evaluated for impairment, Ending Balance	110	827
Financing receivables, Collectively evaluated for impairment, Ending Balance	859,554	775,086
Consumer [Member] | Originated Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	0	205
Collectively evaluated for impairment	2,997	3,355
Financing receivables, Individually evaluated for impairment, Ending Balance	0	538
Financing receivables, Collectively evaluated for impairment, Ending Balance	850,534	760,947
Consumer [Member] | Purchased Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	0	0
Financing receivables, Individually evaluated for impairment, Ending Balance	110	289
Financing receivables, Collectively evaluated for impairment, Ending Balance	9,020	14,139
Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance For Credit Losses, Beginning Balance	13,341	10,561
Charge-Offs	(1,119)	(906)
Recoveries	297	326
Provision	1,195	2,477
Allowance For Credit Losses, Ending Balance	13,714	12,458
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	13,714	12,458
Financing Receivables, Ending Balance	998,787	694,636
Financing receivables, Individually evaluated for impairment, Ending Balance	0	0
Financing receivables, Collectively evaluated for impairment, Ending Balance	998,787	694,636
Leases [Member] | Originated Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	13,714	12,458
Financing receivables, Individually evaluated for impairment, Ending Balance	0	0
Financing receivables, Collectively evaluated for impairment, Ending Balance	998,787	694,636
Leases [Member] | Purchased Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	0	0
Financing receivables, Individually evaluated for impairment, Ending Balance	0	0
Financing receivables, Collectively evaluated for impairment, Ending Balance	0	0
Unallocated [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Allowance For Credit Losses, Beginning Balance	250	1,554
Charge-Offs	0	0
Recoveries	0	0
Provision	(114)	(1,271)
Allowance For Credit Losses, Ending Balance	136	283
Collectively evaluated for impairment	136	283
Unallocated [Member] | Originated Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Collectively evaluated for impairment	136	283
Unallocated [Member] | Purchased Loans And Leases [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Collectively evaluated for impairment	$ 0	$ 0

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Allowance For Loan & Lease Losses

3 Months Ended

Mar. 31, 2013

Allowance For Loan And Lease Losses

NOTE5. Allowance for Loan and Lease Losses

In establishing the allowance for credit losses, Susquehanna estimates losses attributable to specific impaired credits identified through the credit review processes and also estimates losses inherent in other loans and leases on a collective basis. For purposes of determining the level of the allowance for credit losses, Susquehanna evaluates its loan and lease portfolio by loan type. The losses provisioned for in Susquehanna's allowance for loan loss is determined through a loan by loan analysis of larger balance commercial and commercial real estate loans that show signs of credit deterioration and by applying loss factors to groups of loan balances based on loan type and management's classification of such loans under the Susquehanna's loan grading system, adjusted for qualitative considerations.  In determining the allowance for credit losses, Susquehanna utilizes an internal loan grading system for its commercial portfolio.  The internal loan grading's are monitored by Susquehanna's loan review department.  Additionally, loans that are part of a relationship of over $1.0 million and have a rating of substandard, special mention, and pass that are on the company's watch list, are reviewed on a quarterly basis at Susquehanna's Loan Quality Review Committee.  Factors considered at the Loan Quality Review meetings include the financial statements of the borrower, the borrower's global cash flow, guarantees, and underlying collateral valuations.

	An analysis of the allowance for loan and lease losses for the three months ended March 31, 2013 and 2012 are presented in the following tables:
					Three Months Ended March 31, 2013
									Real Estate		Real Estate
							Real Estate -		Secured -		Secured -
					Commercial		Construction		Residential		Commercial		Consumer		Leases		Unallocated		Total
Allowance for credit losses:
Balance at January 1, 2013					$	30,207	$	25,171	$	41,276	$	70,053	$	3,722	$	13,341	$	250	$	184,020
	Charge-offs					(10,037)		(4,763)		(3,013)		(4,603)		(558)		(1,119)		0		(24,093)
	Recoveries					1,996		462		651		722		322		297		0		4,450
	Provision					8,296		4,679		(2,372)		805		(489)		1,195		(114)		12,000
Balance at March 31, 2013					$	30,462	$	25,549	$	36,542	$	66,977	$	2,997	$	13,714	$	136	$	176,377
Balance at March 31, 2013
	Individually evaluated
		for impairment:
			Originated loans and leases		$	3,382	$	719	$	2,475	$	3,981	$	0	$	0			$	10,557
			Purchased loans and leases			47		13		1,214		79		0		0				1,353
				Total	$	3,429	$	732	$	3,689	$	4,060	$	0	$	0			$	11,910
	Collectively evaluated
		for impairment:
			Originated loans and leases		$	27,033	$	24,817	$	32,853	$	62,917	$	2,997	$	13,714	$	136	$	164,467
			Purchased loans and leases			0		0		0		0		0		0		0		0
				Total	$	27,033	$	24,817	$	32,853	$	62,917	$	2,997	$	13,714	$	136	$	164,467
Financing receivables:
Balance at March 31, 2013					$	2,312,660	$	779,344	$	4,077,810	$	3,971,438	$	859,664	$	998,787			$	12,999,703
Balance at March 31, 2013
	Individually evaluated
		for impairment:
			Originated loans and leases		$	18,015	$	17,275	$	29,108	$	57,183	$	0	$	0			$	121,581
			Purchased loans and leases			15,959		11,116		25,289		104,051		110		0				156,525
				Total	$	33,974	$	28,391	$	54,397	$	161,234	$	110	$	0			$	278,106
	Collectively evaluated
		for impairment:
			Originated loans and leases		$	2,113,397	$	637,787	$	3,150,965	$	3,125,247	$	850,534	$	998,787			$	10,876,717
			Purchased loans and leases			165,289		113,166		872,448		684,957		9,020		0				1,844,880
				Total	$	2,278,686	$	750,953	$	4,023,413	$	3,810,204	$	859,554	$	998,787			$	12,721,597

					Three Months Ended March 31, 2012
									Real Estate		Real Estate
							Real Estate -		Secured -		Secured -
					Commercial		Construction		Residential		Commercial		Consumer		Leases		Unallocated		Total
Allowance for credit losses:
Balance at January 1, 2012					$	28,567	$	36,868	$	28,839	$	78,414	$	3,297	$	10,561	$	1,554	$	188,100
	Charge-offs					(3,476)		(3,557)		(3,774)		(5,521)		(1,296)		(906)		0		(18,530)
	Recoveries					1,368		727		121		3,250		368		326		0		6,160
	Provision					7,237		55		8,519		792		1,191		2,477		(1,271)		19,000
Balance at March 31, 2012					$	33,696	$	34,093	$	33,705	$	76,935	$	3,560	$	12,458	$	283	$	194,730
Balance at March 31, 2012
	Individually evaluated
		for impairment:
			Originated loans and leases		$	7,843	$	5,037	$	3,388	$	9,827	$	205	$	0			$	26,300
			Purchased loans and leases			0		0		0		0		0		0				0
				Total	$	7,843	$	5,037	$	3,388	$	9,827	$	205	$	0			$	26,300
	Collectively evaluated
		for impairment:
			Originated loans and leases		$	25,853	$	29,056	$	30,317	$	67,108	$	3,355	$	12,458	$	283	$	168,430
			Purchased loans and leases			0		0		0		0		0		0		0		0
				Total	$	25,853	$	29,056	$	30,317	$	67,108	$	3,355	$	12,458	$	283	$	168,430
Financing receivables:
Balance at March 31, 2012					$	2,088,948	$	993,819	$	3,945,565	$	4,022,788	$	775,913	$	694,636			$	12,521,669
Balance at March 31, 2012
	Individually evaluated
		for impairment:
			Originated loans and leases		$	18,826	$	31,346	$	25,188	$	64,940	$	538	$	0			$	140,838
			Purchased loans and leases			28,456		71,174		39,771		176,451		289		0				316,141
				Total	$	47,282	$	102,520	$	64,959	$	241,391	$	827	$	0			$	456,979
	Collectively evaluated
		for impairment:
			Originated loans and leases		$	1,814,588	$	640,825	$	2,923,800	$	2,871,222	$	760,947	$	694,636			$	9,706,018
			Purchased loans and leases			227,078		250,474		956,807		910,174		14,139		0				2,358,672
				Total	$	2,041,666	$	891,299	$	3,880,607	$	3,781,396	$	775,086	$	694,636			$	12,064,690

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Goodwill

3 Months Ended

Mar. 31, 2013

Goodwill [Line Items]

Goodwill

NOTE 6. Goodwill

Goodwill is allocated to Susquehanna's reporting units at the date the goodwill is initially recorded. Once goodwill has been allocated to the reporting units, it generally no longer retains its identification with a particular acquisition, but instead becomes identified with the reporting unit as a whole. As a result, all of the fair value of each reporting unit is available to support the value of goodwill allocated to the unit. Goodwill impairment testing is performed at the reporting unit level, one level below the business segment.

The goodwill impairment analysis is done in two steps. The first step requires a comparison of the fair value of the individual reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit is in excess of the carrying value, the related goodwill is considered not to be impaired and no further analysis is necessary. If the carrying value of the reporting unit exceeds the fair value, there is an indication of potential impairment and a second step of testing is performed to measure the amount of impairment, if any, for the reporting unit.

Susquehanna assesses goodwill for impairment on an annual basis, or more often if events or circumstances indicate that goodwill may be impaired. This assessment requires significant judgment and analysis.

Susquehanna performed its annual goodwill impairment assessments in the second quarter of 2012 and determined that the fair value of each of its reporting units exceeded its book value, and that there was no goodwill impairment.

Bank Reporting Unit

Goodwill assigned to the bank reporting unit at March 31, 2013 was $1,165,200 and at the annual assessment date of May 31, 2012 was $1,158,248. Fair value of the bank reporting unit was determined using a market approach, which uses prices and other relevant information reported for market transactions involving recent non-distressed sales of comparable financial institutions in Susquehanna's market to value the bank reporting unit. Susquehanna considered two key ratios in measuring the fair value of the bank reporting unit: price to book and price to tangible book. The following table shows the ratios used at May 31, 2012.

	Annual
Ratio	May 31, 2012
Price to book	1.29x
Price to tangible book	1.47x

Fair value of the bank reporting unit exceeded carrying value by 5.9% at May 31, 2012. Since the fair value of the reporting unit is in excess of the carrying value, the related goodwill is considered not to be impaired and the second step in the analysis is unnecessary.

Wealth Management Reporting Unit

Goodwill assigned to the wealth management reporting unit at March 31, 2013 and at the annual assessment date of May 31, 2012 was $82,746. Fair value of the wealth management reporting unit was determined utilizing the market approach and the income approach. The market approach measures the fair value of the reporting unit using transaction multiples reported for market transactions involving comparable wealth management business. The income approach measures the fair value of the reporting unit by converting the reporting unit's future earnings over ten years, assuming a weighted increase in the reporting unit's revenues and a weighted increase in the reporting unit's expenses, to a single present (discounted) amount, based on a discount rate. In keeping with a market participant's current valuations of wealth management institutions, Susquehanna predominantly uses the income approach. The following table shows the factors used in the income approach at May 31, 2012.

	Annual
Factors	May 31, 2012
Discount rate	17.5%
Weighted-average increase in revenues	6.0%
Weighted-average increase in expenses	5.0%

Fair value of the wealth management reporting unit exceeded carrying value by 63.4% at May 31, 2012. Since the fair value of the reporting unit is in excess of the carrying value, the related goodwill is considered not to be impaired and the second step in the analysis is unnecessary.

Property and Casualty Insurance Reporting Unit

Goodwill assigned to the property and casualty insurance reporting unit atMarch 31, 2013 and at the annual assessment date of May 31, 2012 was $17,177. Fair value of the property and casualty insurance reporting unit was determined using the market approach, which measures the fair value of the reporting unit using recent sales of comparable property and casualty insurance companies in Susquehanna's market. Susquehanna uses two key ratios to measure the fair value of the property and casualty insurance reporting unit: average price to book and median price to earnings. The following table shows the ratios used at May 31, 2012.

	Annual
Ratio	May 31, 2012
Average price to book	1.17X
Median price to earnings	12.1X

Fair value of the property and casualty insurance reporting unit exceeded carrying value by 205.6% at May 31, 2012. Since the fair value of the reporting unit is in excess of the carrying value, the related goodwill is considered not to be impaired and the second step in the analysis is not required.

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Income Taxes

3 Months Ended

Mar. 31, 2013

Income Taxes

NOTE 8. Income Taxes

Our effective tax rate for the three months ended March 31, 2013and 2012 was 31.7% and 31.5%, respectively. The increase in the tax rate was due to a decrease in tax-advantaged income relative to total income for the first three months of 2013, as compared to the tax-advantaged income relative to total income for the first three months of 2012. The estimated annual effective rates for the reporting periods ended March 31, 2013 and 2012 were impacted by the level of permanent differences, including tax-advantaged income, resulting in an effective rate below statutory rates for the interim reporting periods.

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Deposits (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Deposits [Line Items]
Demand	$ 1,917,719	$ 1,973,664
Interest-Bearing Demand	5,936,099	5,829,147
Savings	1,077,446	1,032,293
Time	2,205,304	2,262,262
Time Of $100 Or More	1,554,864	1,482,680
Total Deposits	$ 12,691,432	$ 12,580,046

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Accumulated Other Comprehensive Loss (Components Of AOCI) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Loss, Beginning Balance	$ (37,258)
Amounts Reclassified From Accumulated Other Comprehensive Income	2,796	1,698
Total Reclassifications Net Of Tax	(2,958)
Accumulated Other Comprehensive Loss, Ending Balance	(38,655)
Unrealized Gains On Available For Sale Securities [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Loss, Beginning Balance	(560)	(2,521)
Gain Loss Net Of Tax		(1,623)
Other Comprehensive Income Before Reclassifications	(196)
Amounts Reclassified From Accumulated Other Comprehensive Income	11
Net Current Period Other Comprehensive Income	(185)
Accumulated Other Comprehensive Loss, Ending Balance	(745)	(4,144)
Unrealized Gains (Losses) On Investment Securities All Other [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Loss, Beginning Balance	37,242	23,346
Gain Loss Net Of Tax		686
Other Comprehensive Income Before Reclassifications	(3,992)
Amounts Reclassified From Accumulated Other Comprehensive Income	0
Net Current Period Other Comprehensive Income	(3,992)
Accumulated Other Comprehensive Loss, Ending Balance	33,250	24,032
Unrealized Losses On Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Loss, Beginning Balance	(34,635)	(33,402)
Gain Loss Net Of Tax		1,698
Other Comprehensive Income Before Reclassifications	(151)
Amounts Reclassified From Accumulated Other Comprehensive Income	2,947
Net Current Period Other Comprehensive Income	2,796
Accumulated Other Comprehensive Loss, Ending Balance	(31,839)	(31,704)
Post-Retirement Benefits [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Loss, Beginning Balance	(39,305)	(33,477)
Gain Loss Net Of Tax		0
Other Comprehensive Income Before Reclassifications	(16)
Amounts Reclassified From Accumulated Other Comprehensive Income	0
Net Current Period Other Comprehensive Income	(16)
Accumulated Other Comprehensive Loss, Ending Balance	(39,321)	(33,477)
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Loss, Beginning Balance	(37,258)	(46,054)
Gain Loss Net Of Tax		761
Other Comprehensive Income Before Reclassifications	(4,355)
Total Reclassifications Net Of Tax	2,958
Net Current Period Other Comprehensive Income	(1,397)
Accumulated Other Comprehensive Loss, Ending Balance	$ (38,655)	$ (45,293)

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Goodwill (Key Ratios Used to Measure Goodwill of Property and Casualty Insurance Reporting Unit for Impairment) (Detail) (Property And Casualty Insurance Reporting Unit [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	May 31, 2012 Ratios
Goodwill [Line Items]
Goodwill	$ 17,177	$ 17,177
Number of key ratios used		2
Fair value of the property and casualty insurance reporting unit exceeding carrying value		205.60%
Annual [Member]
Goodwill [Line Items]
Average price to book		1.17
Median price to earnings		12.1

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Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2013

Derivative [Line Items]

Fair Value Of Derivative Instruments

Fair Value of Derivative Instruments
		Fair Values of Derivative Instruments
		March 31, 2013
		Asset Derivatives			Liability Derivatives
		Balance Sheet			Balance Sheet
		Location		Fair Value	Location		Fair Value
Derivatives designated as hedging instruments
	Interest rate contracts	Other assets	$	934	Other liabilities	$	46,894
Derivatives not designated as hedging instruments
	Interest rate contracts	Other assets		23,756	Other liabilities		20,217
Total derivatives			$	24,690		$	67,111
		Fair Values of Derivative Instruments
		December 31, 2012
		Asset Derivatives			Liability Derivatives
		Balance Sheet			Balance Sheet
		Location		Fair Value	Location		Fair Value
Derivatives designated as hedging instruments
	Interest rate contracts	Other assets	$	878	Other liabilities	$	51,172
Derivatives not designated as hedging instruments
	Interest rate contracts	Other assets		25,037	Other liabilities		20,954
Total derivatives			$	25,915		$	72,126

Effect Of Derivative Instruments On Earnings

The Effect of Derivative Instruments on Comprehensive Income
Three Months Ended March 31, 2013
							Location of Loss		Amount of Loss
				Location of Loss		Amount of Loss	Recognized in		Recognized in
		Amount of Gain		Reclassified from		Reclassified from	Income		Income
Derivatives in Cash Flow		Recognized		Accumulated OCI		Accumulated OCI	(Ineffective		(Ineffective
Hedging Relationships		in OCI		into Income		into Income	Portion)		Portion)
Interest rate contracts:	$	2,796		Interest expense	$	(4,534)	Other expense	$	0
		Location of Loss		Amount of Loss
		Recognized		Recognized
Derivatives Not Designated		in Income		in Income
as Hedging Instruments		on Derivatives		on Derivatives
Interest rate contracts:		Other income	$	(232)
		Other expense		(1)
Three Months Ended March 31, 2012
							Location of Loss		Amount of Loss
				Location of Loss		Amount of Loss	Recognized in		Recognized in
		Amount of Gain		Reclassified from		Reclassified from	Income		Income
Derivatives in Cash Flow		Recognized		Accumulated OCI		Accumulated OCI	(Ineffective		(Ineffective
Hedging Relationships		in OCI		into Income		into Income	Portion)		Portion)
Interest rate contracts:	$	1,698		Interest expense	$	(4,280)	Other expense	$	0
		Location of Loss		Amount of Loss
		Recognized		Recognized
Derivatives Not Designated		in Income		in Income
as Hedging Instruments		on Derivatives		on Derivatives
Interest rate contracts:		Other income	$	(97)
		Other expense		(31)

Balance Sheet Netting

Balance Sheet Netting Disclosure about Offsetting Assets and Liabilities
March 31, 2013
Offsetting of Financial Assets						Net Amounts
						of Assets
						Presented in
		Gross		Gross Amounts		the		Gross Amounts Not Offset in the
		Amounts of		Offset in the		Consolidated		Consolidated Balance Sheet
Description		Recognized		Consolidated		Balance		Financial		Cash Collateral
		Assets		Balance Sheet		Sheet		Instruments		Received		Net Amount
Derivatives		$	24,695	$	(5)	$	24,690	$	0	$	0	$	24,690
Offsetting of Financial Liabilities						Net Amounts
						of Liabilities
						Presented in
		Gross		Gross Amounts		the		Gross Amounts Not Offset in the
		Amounts of		Offset in the		Consolidated		Consolidated Balance Sheet
Description		Recognized		Consolidated		Balance		Financial		Cash Collateral
		Liabilities		Balance Sheet		Sheet		Instruments		Posted		Net Amount
Derivatives		$	67,111	$	0	$	67,111	$	0	$	(67,920)	$	(809)
Repurchase agreements			305,251		0		305,251		(305,251)		0		0
	Total	$	372,362	$	0	$	372,362	$	(305,251)	$	(67,920)	$	(809)

December 31, 2012
Offsetting of Financial Assets						Net Amounts
						of Assets
						Presented in
		Gross		Gross Amounts		the		Gross Amounts Not Offset in the
		Amounts of		Offset in the		Consolidated		Consolidated Balance Sheet
Description		Recognized		Consolidated		Balance		Financial		Cash Collateral
		Assets		Balance Sheet		Sheet		Instruments		Received		Net Amount
Derivatives		$	25,922	$	(7)	$	25,915	$	0	$	0	$	25,915
Offsetting of Financial Liabilities						Net Amounts
						of Liabilities
						Presented in
		Gross		Gross Amounts		the		Gross Amounts Not Offset in the
		Amounts of		Offset in the		Consolidated		Consolidated Balance Sheet
Description		Recognized		Consolidated		Balance		Financial		Cash Collateral
		Liabilities		Balance Sheet		Sheet		Instruments		Posted		Net Amount
Derivatives		$	72,126	$	0	$	72,126	$	0	$	(75,103)	$	(2,977)
Repurchase agreements			302,577		0		302,577		(302,577)		0		0
	Total	$	374,703	$	0	$	374,703	$	(302,577)	$	(75,103)	$	(2,977)

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Loans and Leases (Credit Quality Indicators Credit Exposure) (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	$ 12,999,703		$ 12,894,741
Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	7,881,795		7,906,530
Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	5,117,908		4,988,211
Pass [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	6,940,046	[1]	6,984,897	[1]
Special Mention [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	403,600	[2]	388,627	[2]
Substandard [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	538,149	[3]	533,006	[3]
Performing Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	5,083,671		4,950,890
Nonperforming Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	34,237	[4]	37,321	[4]
Originated Loans And Leases [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	6,478,176		6,419,584
Originated Loans And Leases [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	4,520,123		4,345,874
Originated Loans And Leases [Member] | Pass [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	5,863,784	[1]	5,836,181	[1]
Originated Loans And Leases [Member] | Special Mention [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	292,488	[2]	264,402	[2]
Originated Loans And Leases [Member] | Substandard [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	321,904	[3]	319,001	[3]
Originated Loans And Leases [Member] | Performing Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	4,497,007		4,320,625
Originated Loans And Leases [Member] | Nonperforming Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	23,116	[4]	25,249	[4]
Purchased Loans And Leases [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	1,403,619		1,486,946
Purchased Loans And Leases [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	597,785		642,337
Purchased Loans And Leases [Member] | Pass [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	1,076,262	[1]	1,148,716	[1]
Purchased Loans And Leases [Member] | Special Mention [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	111,112	[2]	124,225	[2]
Purchased Loans And Leases [Member] | Substandard [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	216,245	[3]	214,005	[3]
Purchased Loans And Leases [Member] | Performing Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	586,664		630,265
Purchased Loans And Leases [Member] | Nonperforming Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	11,121	[4]	12,072	[4]
Commercial Loan [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	2,312,660		2,273,611
Commercial Loan [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	2,312,660		2,273,611
Commercial Loan [Member] | Pass [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	2,166,637	[1]	2,143,856	[1]
Commercial Loan [Member] | Special Mention [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	70,861	[2]	53,418	[2]
Commercial Loan [Member] | Substandard [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	75,162	[3]	76,337	[3]
Commercial Loan [Member] | Originated Loans And Leases [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	2,162,020		2,114,404
Commercial Loan [Member] | Originated Loans And Leases [Member] | Pass [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	2,040,237	[1]	2,008,548	[1]
Commercial Loan [Member] | Originated Loans And Leases [Member] | Special Mention [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	64,458	[2]	45,733	[2]
Commercial Loan [Member] | Originated Loans And Leases [Member] | Substandard [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	57,325	[3]	60,123	[3]
Commercial Loan [Member] | Purchased Loans And Leases [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	150,640		159,207
Commercial Loan [Member] | Purchased Loans And Leases [Member] | Pass [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	126,400	[1]	135,308	[1]
Commercial Loan [Member] | Purchased Loans And Leases [Member] | Special Mention [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	6,403	[2]	7,685	[2]
Commercial Loan [Member] | Purchased Loans And Leases [Member] | Substandard [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	17,837	[3]	16,214	[3]
Real Estate - Construction [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	779,344		847,781
Real Estate - Construction [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	678,260	[5]	745,220	[5]
Real Estate - Construction [Member] | Pass [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	512,315	[1],[5]	534,585	[1],[5]
Real Estate - Construction [Member] | Special Mention [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	78,295	[2],[5]	111,371	[2],[5]
Real Estate - Construction [Member] | Substandard [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	87,650	[3],[5]	99,264	[3],[5]
Real Estate - Construction [Member] | Originated Loans And Leases [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	555,464	[5]	561,250	[5]
Real Estate - Construction [Member] | Originated Loans And Leases [Member] | Pass [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	444,419	[1],[5]	439,296	[1],[5]
Real Estate - Construction [Member] | Originated Loans And Leases [Member] | Special Mention [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	64,428	[2],[5]	76,852	[2],[5]
Real Estate - Construction [Member] | Originated Loans And Leases [Member] | Substandard [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	46,617	[3],[5]	45,102	[3],[5]
Real Estate - Construction [Member] | Purchased Loans And Leases [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	122,796	[5]	183,970	[5]
Real Estate - Construction [Member] | Purchased Loans And Leases [Member] | Pass [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	67,896	[1],[5]	95,289	[1],[5]
Real Estate - Construction [Member] | Purchased Loans And Leases [Member] | Special Mention [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	13,867	[2],[5]	34,519	[2],[5]
Real Estate - Construction [Member] | Purchased Loans And Leases [Member] | Substandard [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	41,033	[3],[5]	54,162	[3],[5]
Real Estate Secured - Commercial [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	3,971,438		3,964,608
Real Estate Secured - Commercial [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	4,890,875	[6]	4,887,699	[6]
Real Estate Secured - Commercial [Member] | Pass [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	4,261,094	[1],[6]	4,306,456	[1],[6]
Real Estate Secured - Commercial [Member] | Special Mention [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	254,444	[2],[6]	223,838	[2],[6]
Real Estate Secured - Commercial [Member] | Substandard [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	375,337	[3],[6]	357,405	[3],[6]
Real Estate Secured - Commercial [Member] | Originated Loans And Leases [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	3,760,692	[6]	3,743,930	[6]
Real Estate Secured - Commercial [Member] | Originated Loans And Leases [Member] | Pass [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	3,379,128	[1],[6]	3,388,337	[1],[6]
Real Estate Secured - Commercial [Member] | Originated Loans And Leases [Member] | Special Mention [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	163,602	[2],[6]	141,817	[2],[6]
Real Estate Secured - Commercial [Member] | Originated Loans And Leases [Member] | Substandard [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	217,962	[3],[6]	213,776	[3],[6]
Real Estate Secured - Commercial [Member] | Purchased Loans And Leases [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	1,130,183	[6]	1,143,769	[6]
Real Estate Secured - Commercial [Member] | Purchased Loans And Leases [Member] | Pass [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	881,966	[1],[6]	918,119	[1],[6]
Real Estate Secured - Commercial [Member] | Purchased Loans And Leases [Member] | Special Mention [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	90,842	[2],[6]	82,021	[2],[6]
Real Estate Secured - Commercial [Member] | Purchased Loans And Leases [Member] | Substandard [Member] | Commercial Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	157,375	[3],[6]	143,629	[3],[6]
Real Estate Secured - Residential [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	4,077,810		4,065,818
Real Estate Secured - Residential [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	3,259,457		3,245,288
Real Estate Secured - Residential [Member] | Performing Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	3,227,160		3,210,145
Real Estate Secured - Residential [Member] | Nonperforming Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	32,297	[4]	35,143	[4]
Real Estate Secured - Residential [Member] | Originated Loans And Leases [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	2,670,801		2,614,431
Real Estate Secured - Residential [Member] | Originated Loans And Leases [Member] | Performing Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	2,649,622		2,591,349
Real Estate Secured - Residential [Member] | Originated Loans And Leases [Member] | Nonperforming Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	21,179	[4]	23,082	[4]
Real Estate Secured - Residential [Member] | Purchased Loans And Leases [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	588,656		630,857
Real Estate Secured - Residential [Member] | Purchased Loans And Leases [Member] | Performing Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	577,538		618,796
Real Estate Secured - Residential [Member] | Purchased Loans And Leases [Member] | Nonperforming Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	11,118	[4]	12,061	[4]
Consumer [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	859,664		842,552
Consumer [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	859,664		842,552
Consumer [Member] | Performing Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	859,024		841,964
Consumer [Member] | Nonperforming Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	640	[4]	588	[4]
Consumer [Member] | Originated Loans And Leases [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	850,535		831,072
Consumer [Member] | Originated Loans And Leases [Member] | Performing Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	849,898		830,495
Consumer [Member] | Originated Loans And Leases [Member] | Nonperforming Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	637	[4]	577	[4]
Consumer [Member] | Purchased Loans And Leases [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	9,129		11,480
Consumer [Member] | Purchased Loans And Leases [Member] | Performing Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	9,126		11,469
Consumer [Member] | Purchased Loans And Leases [Member] | Nonperforming Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	3	[4]	11	[4]
Leases [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	998,787		900,371
Leases [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	998,787		900,371
Leases [Member] | Performing Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	997,487		898,781
Leases [Member] | Nonperforming Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	1,300	[4]	1,590	[4]
Leases [Member] | Originated Loans And Leases [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	998,787		900,371
Leases [Member] | Originated Loans And Leases [Member] | Performing Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	997,487		898,781
Leases [Member] | Originated Loans And Leases [Member] | Nonperforming Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	1,300	[4]	1,590	[4]
Leases [Member] | Purchased Loans And Leases [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	0		0
Leases [Member] | Purchased Loans And Leases [Member] | Performing Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	0		0
Leases [Member] | Purchased Loans And Leases [Member] | Nonperforming Financing Receivable [Member] | Other Credit Exposure [Member]
Financing Receivable Recorded Investment [Line Items]
Credit Exposure	$ 0	[4]	$ 0	[4]

[1] Includes loans identified as having acceptable risk, which are loans for which the possibility of loss is considered unlikely.

[2] Includes loans considered potentially weak; however, no loss of principal or interest is anticipated.

[3] Includes loans that are inadequately protected by the current net-worth and paying capacity of the borrower or by the collateral pledged, if any. Loss of principal or interest is considered reasonably possible or likely.

[4] Includes loans that are on non-accrual status or past due ninety days or more.

[5] Includes only construction loans granted to commercial customers. Construction loans for individuals are included in Real Estate – Secured – Residential, below.

[6] Includes loans obtained for commercial purposes that are also secured by residential real estate.

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Derivative Financial Instruments

3 Months Ended

Mar. 31, 2013

Derivative [Line Items]

Derivative Financial Instruments

NOTE 13. Derivative Financial Instruments

Risk Management Objective of Using Derivatives

Susquehanna is exposed to certain risks arising from both its business operations and economic conditions. Susquehanna manages economic risk exposures, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities and through the use of derivative financial instruments. Susquehanna enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are impacted by changes in interest rates. Susquehanna's derivative financial instruments are used to manage differences in the amount, timing, and duration of its known or expected cash payments principally those related to certain variable-rate liabilities. Susquehanna also has derivatives that are a result of a service it provides to certain qualifying customers. Susquehanna manages a matched book with respect to its derivative instruments offered as a part of this service to its customers in order to minimize its interest rate risk resulting from such transactions. All derivatives are recorded at fair value.

Derivatives may expose Susquehanna to market, credit or liquidity risks in excess of the amounts recorded on the consolidated balance sheets. Market risk of a derivative is the exposure created by potential fluctuations in interest rates and other factors and is a function of the type of derivative, the tenor and terms of the agreement, and the underlying volatility. Credit risk is the exposure to loss in the event of nonperformance by the other party to the transaction where the value of any collateral held is not adequate to cover such losses. Liquidity risk is the potential exposure that arises when the size of the derivative position may not be able to be rapidly adjusted in periods of high volatility and financial stress at a reasonable cost.

All freestanding derivatives are recorded on the balance sheet at fair value.

Cash Flow Hedges of Interest Rate Risk

Susquehanna uses interest rate derivatives to manage its exposure to interest rate movements and add stability to interest income and expense. Susquehanna primarily uses interest rate swaps as part of its interest rate risk management strategy. For example, Susquehanna may issue variable-rate debt and then enter into a receive-variable pay-fixed-rate interest rate swap with the same payment timing and notional amount to convert the interest payments to a net fixed-rate basis for all or a portion of the term of the long-term debt. As of March 31, 2013 and 2012, Susquehanna had 14interest rate swaps, respectively for each period, with an aggregate notional amount of $1,152,298and $1,160,778, respectively, that were designated as cash flow hedges of interest-rate risk.

Susquehanna applies hedge accounting to certain interest rate derivatives entered into for risk management purposes. To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the exposure being hedged. In addition, key aspects of achieving hedge accounting are documentation of hedging strategy and hedge effectiveness at the hedge inception and substantiating hedge effectiveness on an ongoing basis. A derivative must be highly effective in accomplishing the hedge objective of offsetting either changes in the fair value or cash flows of the hedged item for the risk being hedged. Any ineffectiveness in the hedge relationship is recognized in current earnings. The assessment of effectiveness excludes changes in the value of the hedged item that are unrelated to the risks being hedged. The effective portion of changes in the fair value of derivatives designated in a hedge relationship and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged transaction affects earnings.

Amounts recorded in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on Susquehanna's variable-rate liabilities. During the 12 months following March 31, 2013, Susquehanna estimates that $19,784 will be reclassified as an expense to net interest income.

Non-designated Derivatives

Derivatives not designated as hedges are used to manage Susquehanna's exposure to interest rate movements and other identified risks but do not meet the strict requirements of hedge accounting. Changes in the fair value of derivatives not designated in hedging relationships are recognized directly in earnings.

Susquehanna does not seek to apply hedge accounting to all of the derivatives involved in Susquehanna's risk management activities, such as the interest rate derivatives entered into to offset the derivatives offered to qualifying borrowers.Susquehanna offers qualifying commercial banking customers derivatives to enable such customers to transfer, modify or reduce their interest rate risks. The credit risk associated with derivatives entered into with these customers is essentially the same as that involved in extending loans and is subject to our normal credit policies. Susquehanna actively manages the market risks from its exposure to these derivatives by entering into offsetting derivative transactions, controls focused on pricing, and reporting of positions to senior managers to minimize its exposure resulting from such transactions.

At March 31, 2013 and 2012, Susquehanna had 231and 95derivative transactions, respectively, related to this program with an aggregate notional amount of $1,392,430 and $682,447, respectively. For the three-month periods ended March 31, 2013 and 2012, Susquehanna recognized a net loss of $233and $128, respectively, related to changes in fair value of the derivatives in this program.

Credit-risk-related Contingent Features

Susquehanna has agreements with certain of its derivative counterparties that contain the following provisions:

•       if Susquehanna defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then Susquehanna could also be declared in default on its derivative obligations;

•       if Susquehanna fails to maintain its status as a well/adequately capitalized institution, then the counterparty could terminate the derivative positions, and Susquehanna would be required to settle its obligations under the agreements;

•       if Susquehanna fails to maintain a specified minimum leverage ratio, then Susquehanna could be declared in default on its derivative obligations;

•       if Susquehanna's credit rating is reduced below investment grade, then a termination event will be deemed to have occurred and Susquehanna's counterparty would have the right, but not the obligation, to terminate all transactions under the agreement.

At March 31, 2013 and December 31, 2012, the fair value of derivatives in a net liability position, which includes any credit valuation adjustments related to these agreements, was $67,111 and $72,126, respectively. At March 31, 2013and December 31, 2012, Susquehanna had minimum collateral posting thresholds with certain of its derivative counterparties and had posted cash collateral of $67,920 and $75,103, respectively. If Susquehanna had breached any of the above provisions at March 31, 2013, it would have been required to settle its obligations under the agreements at termination value and would have been required to pay any additional amounts due in excess of amounts previously posted as collateral with the respective counterparty.

Fair Value of Derivative Instruments
		Fair Values of Derivative Instruments
		March 31, 2013
		Asset Derivatives			Liability Derivatives
		Balance Sheet			Balance Sheet
		Location		Fair Value	Location		Fair Value
Derivatives designated as hedging instruments
	Interest rate contracts	Other assets	$	934	Other liabilities	$	46,894
Derivatives not designated as hedging instruments
	Interest rate contracts	Other assets		23,756	Other liabilities		20,217
Total derivatives			$	24,690		$	67,111
		Fair Values of Derivative Instruments
		December 31, 2012
		Asset Derivatives			Liability Derivatives
		Balance Sheet			Balance Sheet
		Location		Fair Value	Location		Fair Value
Derivatives designated as hedging instruments
	Interest rate contracts	Other assets	$	878	Other liabilities	$	51,172
Derivatives not designated as hedging instruments
	Interest rate contracts	Other assets		25,037	Other liabilities		20,954
Total derivatives			$	25,915		$	72,126

The Effect of Derivative Instruments on Comprehensive Income
Three Months Ended March 31, 2013
							Location of Loss		Amount of Loss
				Location of Loss		Amount of Loss	Recognized in		Recognized in
		Amount of Gain		Reclassified from		Reclassified from	Income		Income
Derivatives in Cash Flow		Recognized		Accumulated OCI		Accumulated OCI	(Ineffective		(Ineffective
Hedging Relationships		in OCI		into Income		into Income	Portion)		Portion)
Interest rate contracts:	$	2,796		Interest expense	$	(4,534)	Other expense	$	0
		Location of Loss		Amount of Loss
		Recognized		Recognized
Derivatives Not Designated		in Income		in Income
as Hedging Instruments		on Derivatives		on Derivatives
Interest rate contracts:		Other income	$	(232)
		Other expense		(1)
Three Months Ended March 31, 2012
							Location of Loss		Amount of Loss
				Location of Loss		Amount of Loss	Recognized in		Recognized in
		Amount of Gain		Reclassified from		Reclassified from	Income		Income
Derivatives in Cash Flow		Recognized		Accumulated OCI		Accumulated OCI	(Ineffective		(Ineffective
Hedging Relationships		in OCI		into Income		into Income	Portion)		Portion)
Interest rate contracts:	$	1,698		Interest expense	$	(4,280)	Other expense	$	0
		Location of Loss		Amount of Loss
		Recognized		Recognized
Derivatives Not Designated		in Income		in Income
as Hedging Instruments		on Derivatives		on Derivatives
Interest rate contracts:		Other income	$	(97)
		Other expense		(31)

The following table details Susquehanna's transactions subject to an enforceable master netting arrangement or other similar agreement with counterparties:

Balance Sheet Netting Disclosure about Offsetting Assets and Liabilities
March 31, 2013
Offsetting of Financial Assets						Net Amounts
						of Assets
						Presented in
		Gross		Gross Amounts		the		Gross Amounts Not Offset in the
		Amounts of		Offset in the		Consolidated		Consolidated Balance Sheet
Description		Recognized		Consolidated		Balance		Financial		Cash Collateral
		Assets		Balance Sheet		Sheet		Instruments		Received		Net Amount
Derivatives		$	24,695	$	(5)	$	24,690	$	0	$	0	$	24,690
Offsetting of Financial Liabilities						Net Amounts
						of Liabilities
						Presented in
		Gross		Gross Amounts		the		Gross Amounts Not Offset in the
		Amounts of		Offset in the		Consolidated		Consolidated Balance Sheet
Description		Recognized		Consolidated		Balance		Financial		Cash Collateral
		Liabilities		Balance Sheet		Sheet		Instruments		Posted		Net Amount
Derivatives		$	67,111	$	0	$	67,111	$	0	$	(67,920)	$	(809)
Repurchase agreements			305,251		0		305,251		(305,251)		0		0
	Total	$	372,362	$	0	$	372,362	$	(305,251)	$	(67,920)	$	(809)

December 31, 2012
Offsetting of Financial Assets						Net Amounts
						of Assets
						Presented in
		Gross		Gross Amounts		the		Gross Amounts Not Offset in the
		Amounts of		Offset in the		Consolidated		Consolidated Balance Sheet
Description		Recognized		Consolidated		Balance		Financial		Cash Collateral
		Assets		Balance Sheet		Sheet		Instruments		Received		Net Amount
Derivatives		$	25,922	$	(7)	$	25,915	$	0	$	0	$	25,915
Offsetting of Financial Liabilities						Net Amounts
						of Liabilities
						Presented in
		Gross		Gross Amounts		the		Gross Amounts Not Offset in the
		Amounts of		Offset in the		Consolidated		Consolidated Balance Sheet
Description		Recognized		Consolidated		Balance		Financial		Cash Collateral
		Liabilities		Balance Sheet		Sheet		Instruments		Posted		Net Amount
Derivatives		$	72,126	$	0	$	72,126	$	0	$	(75,103)	$	(2,977)
Repurchase agreements			302,577		0		302,577		(302,577)		0		0
	Total	$	374,703	$	0	$	374,703	$	(302,577)	$	(75,103)	$	(2,977)

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Loans and Leases (Tables)

3 Months Ended

Mar. 31, 2013

Loans And Leases, Net Of Deferred Costs And Fees

Loans and Leases, Net of Deferred Costs and Fees
				March 31,		December 31,
				2013		2012
	Commercial, financial, and agricultural			$	2,312,660	$	2,273,611
	Real estate - construction				779,344		847,781
	Real estate secured - residential				4,077,810		4,065,818
	Real estate secured - commercial				3,971,438		3,964,608
	Consumer				859,664		842,552
	Leases				998,787		900,371
			Total loans and leases	$	12,999,703	$	12,894,741
	Originated loans and leases			$	10,998,299	$	10,765,458
	Purchased loans and leases				2,001,404		2,129,283
			Total loans and leases	$	12,999,703	$	12,894,741
	Nonaccrual loans and leases			$	103,351	$	97,767
	Loans and leases contractually past due 90 days
		and still accruing			6,396		8,209
	Troubled debt restructurings				65,773		67,775
	Deferred origination costs, net of fees				18,149		17,763
	All overdrawn deposit accounts, reclassified
		as loans and evaluated for collectability			2,375		15,422

Net Investment In Direct Financing Leases

	A summary of our net investment in direct lease financing is presented below.
Net Investment in Direct Financing Leases
				March 31,		December 31,
				2013		2012
		Minimum lease payments receivable		$	598,443	$	568,110
		Estimated residual value of leases			481,312		409,753
		Unearned income under lease contracts			(80,968)		(77,492)
			Total leases	$	998,787	$	900,371

Credit Quality Indicators Credit Exposure

The following tables present Susquehanna's credit quality indicators by internally assigned grading and by payment activity at March 31, 2013 and December 31, 2012.
Credit Quality Indicators, at March 31, 2013
	Commercial Credit Exposure
		Credit-risk Profile by Internally Assigned Grade
									Real Estate -		Total
							Real Estate -		Secured -		Commercial
					Commercial		Construction (1)		Commercial (2)		Credit Exposure
Originated loans and leases
	Grade:
		Pass (3)		$	2,040,237	$	444,419	$	3,379,128	$	5,863,784
		Special mention (4)			64,458		64,428		163,602		292,488
		Substandard (5)			57,325		46,617		217,962		321,904
			Total	$	2,162,020	$	555,464	$	3,760,692	$	6,478,176
Purchased loans and leases
	Grade:
		Pass (3)		$	126,400	$	67,896	$	881,966	$	1,076,262
		Special mention (4)			6,403		13,867		90,842		111,112
		Substandard (5)			17,837		41,033		157,375		216,245
			Total	$	150,640	$	122,796	$	1,130,183	$	1,403,619
Total loans and leases
	Grade:
		Pass (3)		$	2,166,637	$	512,315	$	4,261,094	$	6,940,046
		Special mention (4)			70,861		78,295		254,444		403,600
		Substandard (5)			75,162		87,650		375,337		538,149
			Total	$	2,312,660	$	678,260	$	4,890,875	$	7,881,795
	Other Credit Exposure
		Credit-risk Profile based on Payment Activity
					Real Estate -
					Secured -						Total Other
					Residential		Consumer		Leases		Credit Exposure
Originated loans and leases
	Performing			$	2,649,622	$	849,898	$	997,487	$	4,497,007
	Nonperforming (6)				21,179		637		1,300		23,116
		Total		$	2,670,801	$	850,535	$	998,787	$	4,520,123
Purchased loans and leases
	Performing			$	577,538	$	9,126	$	0	$	586,664
	Nonperforming (6)				11,118		3		0		11,121
		Total		$	588,656	$	9,129	$	0	$	597,785
Total loans and leases
	Performing			$	3,227,160	$	859,024	$	997,487	$	5,083,671
	Nonperforming (6)				32,297		640		1,300		34,237
		Total		$	3,259,457	$	859,664	$	998,787	$	5,117,908

Credit Quality Indicators, at December 31, 2012
	Commercial Credit Exposure
		Credit-risk Profile by Internally Assigned Grade
									Real Estate -		Total
							Real Estate -		Secured -		Commercial
					Commercial		Construction (1)		Commercial (2)		Credit Exposure
Originated loans and leases
	Grade:
		Pass (3)		$	2,008,548	$	439,296	$	3,388,337	$	5,836,181
		Special mention (4)			45,733		76,852		141,817		264,402
		Substandard (5)			60,123		45,102		213,776		319,001
			Total	$	2,114,404	$	561,250	$	3,743,930	$	6,419,584
Purchased loans and leases
	Grade:
		Pass (3)		$	135,308	$	95,289	$	918,119	$	1,148,716
		Special mention (4)			7,685		34,519		82,021		124,225
		Substandard (5)			16,214		54,162		143,629		214,005
			Total	$	159,207	$	183,970	$	1,143,769	$	1,486,946
Total loans and leases
	Grade:
		Pass (3)		$	2,143,856	$	534,585	$	4,306,456	$	6,984,897
		Special mention (4)			53,418		111,371		223,838		388,627
		Substandard (5)			76,337		99,264		357,405		533,006
			Total	$	2,273,611	$	745,220	$	4,887,699	$	7,906,530
	Other Credit Exposure
		Credit-risk Profile based on Payment Activity
					Real Estate -
					Secured -						Total Other
					Residential		Consumer		Leases		Credit Exposure
Originated loans and leases
	Performing			$	2,591,349	$	830,495	$	898,781	$	4,320,625
	Nonperforming (6)				23,082		577		1,590		25,249
		Total		$	2,614,431	$	831,072	$	900,371	$	4,345,874
Purchased loans and leases
	Performing			$	618,796	$	11,469	$	0	$	630,265
	Nonperforming (6)				12,061		11		0		12,072
		Total		$	630,857	$	11,480	$	0	$	642,337
Total loans and leases
	Performing			$	3,210,145	$	841,964	$	898,781	$	4,950,890
	Nonperforming (6)				35,143		588		1,590		37,321
		Total		$	3,245,288	$	842,552	$	900,371	$	4,988,211
(1)	Includes only construction loans granted to commercial customers. Construction loans for individuals are included in Real Estate – Secured – Residential, below.
(2)	Includes loans obtained for commercial purposes that are also secured by residential real estate.
(3)	Includes loans identified as having acceptable risk, which are loans for which the possibility of loss is considered unlikely.
(4)	Includes loans considered potentially weak; however, no loss of principal or interest is anticipated.
(5)	Includes loans that are inadequately protected by the current net-worth and paying capacity of the borrower or by the collateral pledged, if any. Loss of principal or interest is considered reasonably possible or likely.
(6)	Includes loans that are on non-accrual status or past due ninety days or more.

Age Analysis of Past Due Financing Receivables

The following tables detail the age analysis of Susquehanna's past due financing receivables as of March 31, 2013 and December 31, 2012.
Age Analysis of Past Due Financing Receivables, as of March 31, 2013
	Financing Receivables that are Accruing
												Total
		30-59 Days		60-89 Days		Greater than		Total				Financing
		Past Due		Past Due		90 Days		Past Due		Current		Receivables
Commercial		$	4,106	$	783	$	988	$	5,877	$	2,297,241	$	2,303,118
Real estate - construction			1,206		575		382		2,163		758,236		760,399
Real estate secured - residential			19,043		3,863		4,237		27,143		4,020,295		4,047,438
Real estate secured - commercial			9,687		5,427		0		15,114		3,912,983		3,928,097
Consumer			10,336		303		603		11,242		848,385		859,627
Leases			3,465		246		186		3,897		993,776		997,673
	Total	$	47,843	$	11,197	$	6,396	$	65,436	$	12,830,916	$	12,896,352
Originated loans and leases			42,585		10,557		5,490		58,632		10,846,201		10,904,833
Purchased loans and leases			5,258		640		906		6,804		1,984,715		1,991,519
	Total	$	47,843	$	11,197	$	6,396	$	65,436	$	12,830,916	$	12,896,352
	Financing Receivables that are Nonaccruing
												Total
		30-59 Days		60-89 Days		Greater than		Total				Financing
		Past Due		Past Due		90 Days		Past Due		Current		Receivables
Commercial		$	632	$	725	$	4,876	$	6,233	$	3,309	$	9,542
Real estate - construction			0		1,983		15,798		17,781		1,164		18,945
Real estate secured - residential			2,342		330		19,204		21,876		8,496		30,372
Real estate secured - commercial			3,149		1,682		28,171		33,002		10,339		43,341
Consumer			0		0		0		0		37		37
Leases			0		455		216		671		443		1,114
	Total	$	6,123	$	5,175	$	68,265	$	79,563	$	23,788	$	103,351
Originated loans and leases			5,705		4,453		63,155		73,313		20,153		93,466
Purchased loans and leases			418		722		5,110		6,250		3,635		9,885
	Total	$	6,123	$	5,175	$	68,265	$	79,563	$	23,788	$	103,351

Age Analysis of Past Due Financing Receivables, as of December 31, 2012
	Financing Receivables that are Accruing
												Total
		30-59 Days		60-89 Days		Greater than		Total				Financing
		Past Due		Past Due		90 Days		Past Due		Current		Receivables
Commercial		$	5,163	$	762	$	359	$	6,284	$	2,256,863	$	2,263,147
Real estate - construction			8,568		1,614		157		10,339		822,625		832,964
Real estate secured - residential			19,544		4,467		5,547		29,558		4,007,820		4,037,378
Real estate secured - commercial			9,623		13,746		1,394		24,763		3,897,224		3,921,987
Consumer			8,898		1,678		545		11,121		831,388		842,509
Leases			5,445		487		207		6,139		892,850		898,989
	Total	$	57,241	$	22,754	$	8,209	$	88,204	$	12,708,770	$	12,796,974
Originated loans and leases			51,679		21,471		5,720		78,870		10,596,166		10,675,036
Purchased loans and leases			5,562		1,283		2,489		9,334		2,112,604		2,121,938
	Total	$	57,241	$	22,754	$	8,209	$	88,204	$	12,708,770	$	12,796,974
	Financing Receivables that are Nonaccruing
												Total
		30-59 Days		60-89 Days		Greater than		Total				Financing
		Past Due		Past Due		90 Days		Past Due		Current		Receivables
Commercial		$	631	$	649	$	6,068	$	7,348	$	3,116	$	10,464
Real estate - construction			0		405		14,047		14,452		365		14,817
Real estate secured - residential			953		452		19,551		20,956		7,484		28,440
Real estate secured - commercial			2,483		622		30,433		33,538		9,083		42,621
Consumer			0		0		0		0		43		43
Leases			0		656		408		1,064		318		1,382
	Total	$	4,067	$	2,784	$	70,507	$	77,358	$	20,409	$	97,767
Originated loans and leases			4,067		2,379		65,830		72,276		18,146		90,422
Purchased loans and leases			0		405		4,677		5,082		2,263		7,345
	Total	$	4,067	$	2,784	$	70,507	$	77,358	$	20,409	$	97,767

Impaired Loans

Impaired Loans at March 31, 2013
														Average
							Recorded							Recorded
					Unpaid		Investment							Investment		Interest
					Principal		in Impaired			Related		Related		in Impaired		Income
					Balance		Loans			Charge-offs		Allowance		Loans (2)		Recognized
Impaired loans without a related reserve:
	Commercial, financial, and agricultural			$	25,675	$	23,787		$	1,888			$	28,801	$	493
	Real estate - construction				24,486		17,715			6,771				17,086		131
	Real estate secured - residential				39,089		37,725			1,364				38,306		500
	Real estate secured - commercial				136,638		117,416			19,222				120,261		1,869
	Consumer				110		110			0				108		3
		Total impaired loans without a
			related reserve		225,998		196,753	(1)		29,245				204,562		2,996
Impaired loans with a related reserve:
	Commercial, financial, and agricultural				10,315		10,187			128	$	3,429		4,480		36
	Real estate - construction				25,194		10,675			14,519		732		12,762		4
	Real estate secured - residential				30,255		29,679			576		3,689		29,785		369
	Real estate secured - commercial				41,163		30,812			10,351		4,060		30,723		238
	Consumer				0		0			0		0		0		0
		Total impaired loans with a
			related reserve		106,927		81,353			25,574		11,910		77,750		647
Total impaired loans:
	Commercial, financial, and agricultural				35,990		33,974			2,016		3,429		33,281		529
	Real estate - construction				49,680		28,390			21,290		732		29,848		135
	Real estate secured - residential				69,344		67,404			1,940		3,689		68,091		869
	Real estate secured - commercial				177,801		148,228			29,573		4,060		150,984		2,107
	Consumer				110		110			0		0		108		3
			Total impaired loans	$	332,925	$	278,106		$	54,819	$	11,910	$	282,312	$	3,643
Impaired loans without a related reserve:
	Originated loans and leases			$	73,947	$	45,878		$	28,069			$	55,862	$	794
	Purchased loans and leases				152,051		150,875			1,176				148,700		2,202
		Total impaired loans without a
			related reserve		225,998		196,753			29,245				204,562		2,996
Impaired loans with a related reserve:
	Originated loans and leases				101,223		75,703			25,520	$	10,557		71,875		584
	Purchased loans and leases				5,704		5,650			54		1,353		5,875		63
		Total impaired loans with a
			related reserve		106,927		81,353			25,574		11,910		77,750		647
Total impaired loans:
	Originated loans and leases				175,170		121,581			53,589		10,557		127,737		1,378
	Purchased loans and leases (3)				157,755		156,525			1,230		1,353		154,575		2,265
			Total impaired loans	$	332,925	$	278,106		$	54,819	$	11,910	$	282,312	$	3,643
(1)	$26,401 of the $196,753 total impaired loans without a related reserve represents loans that had been written down to the fair value of the underlying collateral through direct charge-offs of $29,245.
(2)	Average recorded investment in impaired loans is calculated on a quarterly basis using daily balances.
(3)	$5,650 of the $156,525 purchased impaired loans were subsequently impaired after being acquired.

Impaired Loans at December 31, 2012
														Average
							Recorded							Recorded
					Unpaid		Investment							Investment		Interest
					Principal		in Impaired			Related		Related		in Impaired		Income
					Balance		Loans			Charge-offs		Allowance		Loans (2)		Recognized
Impaired loans without a related reserve:
	Commercial, financial, and agricultural			$	23,959	$	23,877		$	82			$	24,603	$	233
	Real estate - construction				48,394		32,717			15,677				34,223		882
	Real estate secured - residential				26,298		25,261			1,037				25,417		398
	Real estate secured - commercial				133,903		119,217			14,686				118,424		1,727
	Consumer				114		114			0				114		3
		Total impaired loans without a
			related reserve		232,668		201,186	(1)		31,482				202,781		3,243
Impaired loans with a related reserve:
	Commercial, financial, and agricultural				4,240		4,184			56	$	3,267		4,278		47
	Real estate - construction				12,894		5,577			7,317		952		5,883		237
	Real estate secured - residential				32,640		32,375			265		6,633		32,498		333
	Real estate secured - commercial				49,322		39,331			9,991		4,884		40,778		486
	Consumer				0		0			0		0		0		0
		Total impaired loans with a
			related reserve		99,096		81,467			17,629		15,736		83,437		1,103
Total impaired loans:
	Commercial, financial, and agricultural				28,199		28,061			138		3,267		28,881		280
	Real estate - construction				61,288		38,294			22,994		952		40,106		1,119
	Real estate secured - residential				58,938		57,636			1,302		6,633		57,915		731
	Real estate secured - commercial				183,225		158,548			24,677		4,884		159,202		2,213
	Consumer				114		114			0		0		114		3
			Total impaired loans	$	331,764	$	282,653		$	49,111	$	15,736	$	286,218	$	4,346
Impaired loans without a related reserve:
	Originated loans and leases			$	76,120	$	45,560		$	30,560			$	49,975	$	764
	Purchased loans and leases				156,548		155,626			922				152,806		2,479
		Total impaired loans without a
			related reserve		232,668		201,186			31,482				202,781		3,243
Impaired loans with a related reserve:
	Originated loans and leases				92,471		74,842			17,629	$	14,649		76,823		1,033
	Purchased loans and leases				6,625		6,625			0		1,087		6,614		70
		Total impaired loans with a
			related reserve		99,096		81,467			17,629		15,736		83,437		1,103
Total impaired loans:
	Originated loans and leases				168,591		120,402			48,189		14,649		126,798		1,797
	Purchased loans and leases (3)				163,173		162,251			922		1,087		159,420		2,549
			Total impaired loans	$	331,764	$	282,653		$	49,111	$	15,736	$	286,218	$	4,346
(1)	$28,658 of the $201,186 total impaired loans without a related reserve represents loans that had been written down to the fair value of the underlying collateral through direct charge-offs of $31,482.
(2)	Average recorded investment in impaired loans is calculated on a quarterly basis using daily balances.
(3)	$6,625 of the $162,251 purchased impaired loans were subsequently impaired after being acquired.

Troubled Debt Restructurings

	The following table presents Troubled Debt Restructurings (TDR's), by class segment:
			March 31,		December 31,
			2013		2012
		Commercial, financial, and agricultural	$	14,863	$	8,744
		Real estate - construction		937		940
		Real estate secured - residential		20,172		23,224
		Real estate secured - commercial		28,689		33,589
		Consumer		1,112		1,278
		Total performing TDRs		65,773		67,775
		Non-performing TDRs (1)		25,808		24,603
		Total TDRs	$	91,581	$	92,378
		Performing TDRs		72%		73%
		Non-performing TDRs		28%		27%
(1)	These loans are included in the 90 day past due and non-accrual categories.

	The following table provides detail of TDR balance and activity for the periods presented:
		Three months ended
		March 31,
		2013		2012
Performing TDRs, beginning of period		$	67,775	$	72,852
	New TDR Status		17,882		14,412
	Paydowns		(2,237)		(46)
	Charge-offs post modification		(121)		0
	Transfer to nonaccrual, past due 90 days or greater		(4,830)		(4,796)
	Cured		(12,341)		(10,371)
	Other, net (1)		(355)		30
Performing TDRs, end of period		$	65,773	$	72,081
Non-performing TDRs (2), end of period		$	25,808	$	18,720
Performing TDRs			72%		79%
Non-performing TDRs			28%		21%
(1)	Includes $203 transferred to OREO in 2013.
(2)	Included in Age Analysis of Past Due Financing Receivables.

			Recorded Investment
								Financial Effect of
				Pre-Modification		Post-Modification		Modification
			Number of	Recorded		Recorded		Recorded
Three months ended March 31, 2013			Loans	Investment		Investment		Investment(1)		Interest (2)
Troubled Debt Restructurings
	Commercial, financial, and agricultural
		Other (3)	16	$	7,493	$	7,493	$	0	$	0
	Real estate - construction
		Other (3)	1		20		20		0		0
	Real estate secured - residential
		Other (3)	59		5,412		5,412		0		0
		Combination of modification types	7		1,316		1,316		0		(128)
	Real estate secured - commercial
		Other (3)	7		1,549		1,549		0		0
		Combination of modification types	1		1,436		1,436		0		(196)
	Consumer
		Other (3)	87		656		656		0		0
	Total		178	$	17,882	$	17,882	$	0	$	(324)
Originated loans and leases			170	$	16,149	$	16,149	$	0	$	(281)
Purchased loans and leases			8		1,733		1,733		0		(43)
	Total		178	$	17,882	$	17,882	$	0	$	(324)
(1)	Financial effects impacting the recorded investment include principal payments, advances, charge-offs, and capitalized past-due amounts.
(2)	Represents the present value of interest rate concessions discounted at the effective rate of the original loan.
(3)	Bankruptcies and maturity date extensions.
					Number of		Recorded
					Loans		Investment
Troubled Debt Restructurings that Subsequently
	Defaulted during the current period
		Commercial, financial, and agricultural			5	$	653
		Real estate - construction			1		20
		Real estate secured - residential			5		404
		Real estate secured - commercial			2		341
		Consumer			18		139
		Total			31	$	1,557
Originated loans and leases					28	$	1,357
Purchased loans and leases					3		200
		Total			31	$	1,557

			Recorded Investment
								Financial Effect of
				Pre-Modification		Post-Modification		Modification
			Number of	Recorded		Recorded		Recorded
Three months ended March 31, 2012			Loans	Investment		Investment		Investment(1)		Interest (2)
Troubled Debt Restructurings
	Commercial, financial, and agricultural
		Other (3)	1	$	310	$	310	$	0	$	0
	Real estate - construction
		Other (3)	0		0		0		0		0
	Real estate secured - residential
		Other (3)	2		1,006		1,006		0		0
		Combination of modification types	8		2,434		2,434		0		6
	Real estate secured - commercial
		Other (3)	4		10,662		10,662		0		0
		Combination of modification types	0		0		0		0		0
	Consumer
		Other (3)	0		0		0		0		0
	Total		15	$	14,412	$	14,412	$	0	$	6
Originated loans and leases			7	$	2,541	$	2,541	$	0	$	(74)
Purchased loans and leases			8		11,871		11,871		0		80
	Total		15	$	14,412	$	14,412	$	0	$	6
(1)	Financial effects impacting the recorded investment include principal payments, advances, charge-offs, and capitalized past-due amounts.
(2)	Represents the present value of interest rate concessions discounted at the effective rate of the original loan.
(3)	Bankruptcies and maturity date extensions.
					Number of		Recorded
					Loans		Investment
Troubled Debt Restructurings that Subsequently
	Defaulted during the current period
		Commercial, financial, and agricultural			0	$	0
		Real estate - construction			1		908
		Real estate secured - residential			3		1,339
		Real estate secured - commercial			0		0
		Consumer			0		0
		Total			4	$	2,247
Originated loans and leases					3	$	1,339
Purchased loans and leases					1		908
		Total			4	$	2,247

Unpaid Principal Balance And The Related Carrying Amount Of Acquired Loans

The unpaid principal balance and the related carrying amount of acquired loans are as follows:
			March 31,		December 31,
			2013		2012
	Credit impaired purchased loans evaluated individually
	for incurred credit losses
	Unpaid principal balance	$	222,596	$	238,538
	Carrying amount		156,525		162,251
	Other purchased loans evaluated collectively for
	incurred credit losses
	Unpaid principal balance		1,851,539		1,976,132
	Carrying amount		1,844,879		1,967,032
	Total purchased loans
	Unpaid principal balance		2,074,135		2,214,670
	Carrying amount		2,001,404		2,129,283

Schedule Of Changes In Accretable Discount Related To The Purchased Credit Impaired Loans

The changes in accretable discount related to the purchased credit impaired loans are as follows:
		Three Months Ended
		March 31,
		2013		2012
Balance - beginning of period		$	62,868	$	4,881
	Tower acquisition		0		54,418
	Accretion to interest income		(6,570)		(2,500)
	Net reclassification from non-accretable to accretable		2,519		0
Balance - end of period		$	58,817	$	56,799

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Loans and Leases (Net Investment in Direct Financing Leases) (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Net Investment In Direct Financing Leases [Line Items]
Total leases	$ 998,787	$ 900,371
Minimum Lease Payments Receivable [Member]
Net Investment In Direct Financing Leases [Line Items]
Net Investment in Direct Financing Leases	598,443	568,110
Estimated Residual Value Of Leases [Member]
Net Investment In Direct Financing Leases [Line Items]
Net Investment in Direct Financing Leases	481,312	409,753
Unearned Income Under Lease Contracts [Member]
Net Investment In Direct Financing Leases [Line Items]
Net Investment in Direct Financing Leases	$ (80,968)	$ (77,492)

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Investment Securities (Narrative) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013 Securities	Dec. 31, 2012	Mar. 31, 2012
Investment [Line Items]
Amount of securities pledged to secure public funds and other purposes as required by law	$ 1,651,046	$ 1,775,345
Number of non-agency residential mortgage-backed securities that had unrealized losses	3
Number of non-agency residential mortgage-backed securities rated below investment grade	3
Number of non-agency residential mortgage-backed securities that have subprime or Alt-A components	0
Number of non-agency residential-mortgage backed securities with other-than-temporary impairment	1
Accumulated other comprehensive income (loss), other-than- temporarily impaired securities	745		4,144
Unrealized loss	17,971	19,010
Minimum [Member]
Investment [Line Items]
Number of days mortgage is past due related to cumulative default rate	60
Maximum [Member]
Investment [Line Items]
Number of days mortgage is past due related to cumulative default rate	90
Other Structured Financial Products [Member]
Investment [Line Items]
Unrealized loss	$ 15,072	$ 15,461	$ 16,859

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net income	$ 42,399	$ 23,473
Other comprehensive income
Change in unrealized gain (loss) on securities available for sale	(6,171)	1,077
Tax effect and reclassification adjustment	2,179	(391)
Unrealized holding gains (losses) arising during period	(3,992)	686
Non-credit related unrealized loss on other-than-temporarily impaired debt securities	(292)	(2,562)
Tax effect	107	939
Reclassification adjustment for gains (losses) included in net income	(185)	(1,623)
Change in unrealized loss on cash flow hedges	4,405	2,804
Tax effect	(1,609)	(1,106)
Change in unrealized loss on cash flow hedges	2,796	1,698
Adjustment to postretirement benefit obligations	(27)	0
Tax effect	11	0
Adjustment to postretirement benefit obligations, net of tax	(16)	0
Total other comprehensive income (loss)	(1,397)	761
Total comprehensive income	$ 41,002	$ 24,234

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Acquisitions

3 Months Ended

Mar. 31, 2013

Business Acquisition [Line Items]

Acquisitions

NOTE 2. Acquisitions

On February 17, 2012, Susquehanna acquired all of the outstanding common stock of Tower Bancorp, Inc. (“Tower”), headquartered in Harrisburg, Pennsylvania, through the merger of Tower with and into Susquehanna. The results of operations acquired in the Tower transaction have been included in Susquehanna's financial results since the acquisition date, February 17, 2012. Tower shareholders received, at their election, either 3.4696 shares of Susquehanna common stock, or $28.00 in cash, or some combination of shares and cash, for each share of Tower common stock held immediately prior to the effective time of the Tower merger, with $88.0 million of the aggregate merger consideration being paid in cash. A total of 30.8 million shares of Susquehanna common stock were issued in connection with the Tower merger.

The Tower transaction has been accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration transferred were recorded at estimated fair value on the acquisition date. Assets acquired totaled $2,388,122, including $1,975,488 of loans and leases (including $854,993 of commercial real estate loans, $136,979 of commercial loans and leases, and $758,803 of residential real estate loans). Liabilities assumed aggregated $2,255,413, including $2,074,372 of deposits. The transaction added $302,112 to the Susquehanna shareholders' equity. Goodwill of $257,408, was recorded as a result of the transaction, including an adjustment of $10,547 for provisional amounts included in the previously estimated purchase price allocation.

The consideration transferred for Tower's common equity and the amounts of acquired identifiable assets and liabilities assumed as of the acquisition date were as follows:

			February 17,
			2012
Purchase price:
	Value of:
	Common shares issued and options assumed		$	302,112
	Cash			88,005
		Total purchase price		390,117
Identifiable assets:
	Cash and due from banks			85,518
	Unrestricted short-term investments			9,171
	Securities available for sale			137,254
	Loans and leases			1,975,488
	Intangible assets			27,334
	Other assets			153,357
		Total identifiable assets		2,388,122
Identifiable Liabilities:
	Deposits			2,074,372
	Short-term borrowings			10,228
	Long-term borrowings			103,923
	Other liabilities			66,890
		Total liabilities		2,255,413
Net goodwill resulting from acquisition			$	257,408

In many cases, determining the fair value of the purchased assets and assumed liabilities required Susquehanna to estimate cash flows expected to result from those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant of these determinations related to the valuation of purchased loans.

The following is a summary of the loans purchased in the Tower transaction:
			Purchased		Purchased
			Credit		Non-		Total
			Impaired		Impaired		Purchased
			Loans		Loans		Loans
	Contractually required principal and interest at
		acquisition	$	348,889	$	2,376,071	$	2,724,960
	Contractual cash flows not expected to be collected			(127,318)		(135,736)		(263,054)
	Expected cash flows at acquisition			221,571		2,240,335		2,461,906
	Interest component of expected cash flows			(54,418)		(432,000)		(486,418)
	Basis in acquired loans at acquisition - estimated fair
		value	$	167,153	$	1,808,335	$	1,975,488

The core deposit intangible of $24,005 is being amortized using an accelerated method over a period of 10 years based upon the estimated economic benefits received.

The fair value of checking, savings and money market deposit accounts acquired from Tower was assumed to be approximately the carrying value as these accounts have no stated maturity and are payable on demand. Certificate of deposit accounts were valued as the present value of the certificates' expected contractual payments discounted at market rates for similar certificates.

In connection with theTower acquisition, Susquehanna incurred merger-related expenses related to personnel, occupancy and equipment, and other costs of integrating and conforming acquired operations with and into Susquehanna. Those expenses consisted largely of costs related to professional services, conversion of systems and/or integration of operations, and termination of existing contractual arrangements of Tower to purchase various services; initial marketing and promotion expenses designed to introduce Susquehanna to its new customers; travel costs; and printing, postage, supplies, and other costs of completing the transaction and commencing operations in new markets and offices. A summary of merger-related expenses included in the consolidated statement of income follows:

	Three Months Ended March 31,
	2012
	Abington		Tower		Total
Salaries and employee benefits	$	0	$	1,350	$	1,350
Consulting		66		3,949		4,015
Legal		37		733		770
Branch writeoffs		0		1,371		1,371
Net occupancy and equipment		0		2,809		2,809
All other		0		1,164		1,164
	$	103	$	11,376	$	11,479

There were no merger-related expenses incurred during the three month period ending March 31, 2013.

Pro Forma Condensed Combined Financial Information

If the Tower acquisition had been completed on January 1, 2012, total revenue, net of interest expense, would have been approximately $188.5 million for the threemonths ended March 31, 2012, and net income from continuing operations would have been approximately $23.6 million for the same period.

Pro forma results of operations do not include the impact of conforming certain acquiree accounting policies to Susquehanna's policies. The pro forma financial information does not indicate the impact of possible business model changes nor does it consider any potential impacts of current market conditions or revenues, expense efficiencies, or other factors.

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Loans and Leases (Schedule of Changes in Accretable Discount Related to Credit Impaired Acquired Loans) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Changes In Accretable Discount [Line Items]
Balance - beginning of period	$ 62,868	$ 4,881
Tower acquisition	0	54,418
Accretion recognized during the period	(6,570)	(2,500)
Net reclassification from non-accretable to accretable	2,519	0
Balance - end of period	$ 58,817	$ 56,799

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Earnings per Share ("EPS") ( Earnings per Share Basic and Diluted) (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Schedule Of Computation Of Basic And Diluted Earnings Per Common Share [Line Items]
Net Income Applicable To Common Shareholders	$ 42,399	$ 23,473
Average Common Shares Outstanding	186,607	171,326
Basic Earnings Per Common Share	$ 0.23	$ 0.14
Net Income Available To Common Shareholders	$ 42,399	$ 23,473
Average Common Shares Outstanding	186,607	171,326
Dilutive Potential Common Shares	835	647
Total Diluted Average Common Shares Outstanding	187,442	171,973
Diluted Earnings Per Common Share	$ 0.23	$ 0.14
Antidilutive Potential Common Stock Equivalents/Options	1,586	1,991

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Allowance For Loan & Lease Losses (Tables)

3 Months Ended

Mar. 31, 2013

Allowance For Credit Losses And Recorded Investment In Financing Receivables

	An analysis of the allowance for loan and lease losses for the three months ended March 31, 2013 and 2012 are presented in the following tables:
					Three Months Ended March 31, 2013
									Real Estate		Real Estate
							Real Estate -		Secured -		Secured -
					Commercial		Construction		Residential		Commercial		Consumer		Leases		Unallocated		Total
Allowance for credit losses:
Balance at January 1, 2013					$	30,207	$	25,171	$	41,276	$	70,053	$	3,722	$	13,341	$	250	$	184,020
	Charge-offs					(10,037)		(4,763)		(3,013)		(4,603)		(558)		(1,119)		0		(24,093)
	Recoveries					1,996		462		651		722		322		297		0		4,450
	Provision					8,296		4,679		(2,372)		805		(489)		1,195		(114)		12,000
Balance at March 31, 2013					$	30,462	$	25,549	$	36,542	$	66,977	$	2,997	$	13,714	$	136	$	176,377
Balance at March 31, 2013
	Individually evaluated
		for impairment:
			Originated loans and leases		$	3,382	$	719	$	2,475	$	3,981	$	0	$	0			$	10,557
			Purchased loans and leases			47		13		1,214		79		0		0				1,353
				Total	$	3,429	$	732	$	3,689	$	4,060	$	0	$	0			$	11,910
	Collectively evaluated
		for impairment:
			Originated loans and leases		$	27,033	$	24,817	$	32,853	$	62,917	$	2,997	$	13,714	$	136	$	164,467
			Purchased loans and leases			0		0		0		0		0		0		0		0
				Total	$	27,033	$	24,817	$	32,853	$	62,917	$	2,997	$	13,714	$	136	$	164,467
Financing receivables:
Balance at March 31, 2013					$	2,312,660	$	779,344	$	4,077,810	$	3,971,438	$	859,664	$	998,787			$	12,999,703
Balance at March 31, 2013
	Individually evaluated
		for impairment:
			Originated loans and leases		$	18,015	$	17,275	$	29,108	$	57,183	$	0	$	0			$	121,581
			Purchased loans and leases			15,959		11,116		25,289		104,051		110		0				156,525
				Total	$	33,974	$	28,391	$	54,397	$	161,234	$	110	$	0			$	278,106
	Collectively evaluated
		for impairment:
			Originated loans and leases		$	2,113,397	$	637,787	$	3,150,965	$	3,125,247	$	850,534	$	998,787			$	10,876,717
			Purchased loans and leases			165,289		113,166		872,448		684,957		9,020		0				1,844,880
				Total	$	2,278,686	$	750,953	$	4,023,413	$	3,810,204	$	859,554	$	998,787			$	12,721,597

					Three Months Ended March 31, 2012
									Real Estate		Real Estate
							Real Estate -		Secured -		Secured -
					Commercial		Construction		Residential		Commercial		Consumer		Leases		Unallocated		Total
Allowance for credit losses:
Balance at January 1, 2012					$	28,567	$	36,868	$	28,839	$	78,414	$	3,297	$	10,561	$	1,554	$	188,100
	Charge-offs					(3,476)		(3,557)		(3,774)		(5,521)		(1,296)		(906)		0		(18,530)
	Recoveries					1,368		727		121		3,250		368		326		0		6,160
	Provision					7,237		55		8,519		792		1,191		2,477		(1,271)		19,000
Balance at March 31, 2012					$	33,696	$	34,093	$	33,705	$	76,935	$	3,560	$	12,458	$	283	$	194,730
Balance at March 31, 2012
	Individually evaluated
		for impairment:
			Originated loans and leases		$	7,843	$	5,037	$	3,388	$	9,827	$	205	$	0			$	26,300
			Purchased loans and leases			0		0		0		0		0		0				0
				Total	$	7,843	$	5,037	$	3,388	$	9,827	$	205	$	0			$	26,300
	Collectively evaluated
		for impairment:
			Originated loans and leases		$	25,853	$	29,056	$	30,317	$	67,108	$	3,355	$	12,458	$	283	$	168,430
			Purchased loans and leases			0		0		0		0		0		0		0		0
				Total	$	25,853	$	29,056	$	30,317	$	67,108	$	3,355	$	12,458	$	283	$	168,430
Financing receivables:
Balance at March 31, 2012					$	2,088,948	$	993,819	$	3,945,565	$	4,022,788	$	775,913	$	694,636			$	12,521,669
Balance at March 31, 2012
	Individually evaluated
		for impairment:
			Originated loans and leases		$	18,826	$	31,346	$	25,188	$	64,940	$	538	$	0			$	140,838
			Purchased loans and leases			28,456		71,174		39,771		176,451		289		0				316,141
				Total	$	47,282	$	102,520	$	64,959	$	241,391	$	827	$	0			$	456,979
	Collectively evaluated
		for impairment:
			Originated loans and leases		$	1,814,588	$	640,825	$	2,923,800	$	2,871,222	$	760,947	$	694,636			$	9,706,018
			Purchased loans and leases			227,078		250,474		956,807		910,174		14,139		0				2,358,672
				Total	$	2,041,666	$	891,299	$	3,880,607	$	3,781,396	$	775,086	$	694,636			$	12,064,690

XML

Derivative Financial Instruments (Fair Value of Derivative Instruments) (Detail) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Derivatives Fair Value [Line Items]
Liability Derivatives	$ 67,111	$ 72,126
Asset Derivatives	24,690	25,915
Interest Rate Contract [Member] | Other Assets [Member] | Designated As Hedging Instrument [Member]
Derivatives Fair Value [Line Items]
Asset Derivatives	934	878
Interest Rate Contract [Member] | Other Assets [Member] | Not Designated As Hedging Instruments [Member]
Derivatives Fair Value [Line Items]
Asset Derivatives	23,756	25,037
Interest Rate Contract [Member] | Other Liabilities [Member] | Designated As Hedging Instrument [Member]
Derivatives Fair Value [Line Items]
Liability Derivatives	46,894	51,172
Interest Rate Contract [Member] | Other Liabilities [Member] | Not Designated As Hedging Instruments [Member]
Derivatives Fair Value [Line Items]
Liability Derivatives	$ 20,217	$ 20,954

XML

Acquisition (Summary of Loans Acquired) (Detail) (Tower [Member], USD $) In Thousands, unless otherwise specified	Feb. 17, 2012
Business Acquisition [Line Items]
Contractually required principal and interest at acquisition	$ 2,724,960
Contractual cash flows not expected to be collected	(263,054)
Expected cash flows at acquisition	2,461,906
Interest component of expected cash flows	(486,418)
Basis in acquired loans at acquisition - estimated fair value	1,975,488
Purchased Credit Impaired Loans [Member]
Business Acquisition [Line Items]
Contractually required principal and interest at acquisition	348,889
Contractual cash flows not expected to be collected	(127,318)
Expected cash flows at acquisition	221,571
Interest component of expected cash flows	(54,418)
Basis in acquired loans at acquisition - estimated fair value	167,153
Purchased Non Impaired Loans [Member]
Business Acquisition [Line Items]
Contractually required principal and interest at acquisition	2,376,071
Contractual cash flows not expected to be collected	(135,736)
Expected cash flows at acquisition	2,240,335
Interest component of expected cash flows	(432,000)
Basis in acquired loans at acquisition - estimated fair value	$ 1,808,335

XML

Securitizations and Variable Interest Entities ("VIEs")

3 Months Ended

Mar. 31, 2013

Securitizations And Variable Interest Entities ("VIEs")

NOTE 12. Securitizations and Variable Interest Entities (“VIEs”)

In 2005 and 2006, Susquehanna entered into term securitization transactions in which it sold portfolios of home equity loans to securitization trusts. Both of the securitization trusts are VIEs, and Susquehanna is the primary beneficiary of the VIEs. The VIEs were consolidated. Susquehanna entered into these securitization transactions primarily to achieve low-cost funding for the growth of its loan and lease portfolios and to manage capital. The investors and the VIEs have no recourse to Susquehanna for failure of debtors to pay when due.

2006 Transaction

In September 2006, Susquehanna securitized $349,403 of fixed-rate home mortgage loans and variable-rate line of credit loans. Susquehanna retained the right to service the loans.

Approximately 70.5% of the variable-rate loans that were securitized included a feature that permits the borrower to convert all or a portion of the loan from a variable interest rate to a fixed interest rate. If the total principal balance of the converted loans is greater than 10% of the total outstanding balance of the portfolio, Susquehanna is required to transfer the excess converted loans from the portfolio. Based upon Susquehanna's experience with this product, Susquehanna has concluded that the event requiring the transfer of converted loans of the VIE would be remote.

2005 Transaction

In December 2005, Susquehanna securitized $239,766 of home equity line of credit loans. Susquehanna retained the right to service the loans.

Approximately 35.4% of the loans that were securitized included a feature that permits the borrower to convert all or a portion of the loan from a variable interest rate to a fixed interest rate. If the total principal balance of the converted loans is greater than 10% of the total outstanding balance of the portfolio, Susquehanna is required to transfer the excess converted loans from the portfolio. Based upon Susquehanna's experience with this product, Susquehanna has concluded that the event requiring the transfer of converted loans of the VIE would be remote.

The following table presents quantitative information about delinquencies, net credit losses, and components of loan and lease sales serviced by Susquehanna, including securitization transactions.
										For the Three Months
										Ended March 31,
		As of March 31,								Net Credit Losses
		Recorded Investment				Risk Assets (1)				(Recoveries)
		2013		2012		2013		2012		2013		2012
Loans and leases held in portfolio		$	12,840,305	$	12,337,688	$	130,104	$	176,445	$	19,643	$	12,370
Home equity loans held by VIEs			159,398		183,981		2,200		3,258		413		240
Leases serviced for others			0		0		0		0		0		0
Total loans and leases serviced		$	12,999,703	$	12,521,669	$	132,304	$	179,703	$	20,056	$	12,610
(1)	Includes nonaccrual loans and leases, foreclosed real estate, and loans and leases past due 90 days and still accruing.

	Certain cash flows received from or conveyed to the VIEs associated with the securitizations are as follows:
Home Equity Loans
		Three Months Ended March 31,
		2013		2012
	Additional draws conveyed	$	5,133	$	6,013
	Servicing fees received		184		210
	Other cash flows received		1,092		1,263