Fair Value Disclosures (Tables)

9 Months Ended

Sep. 30, 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 September 30, 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				September 30, 2013		(Level 1)		(Level 2)		(Level 3)
Assets
Available-for-sale securities:
	U.S. Government Agencies			$	85,193	$	0	$	85,193	$	0
	Obligations of states and political
		subdivisions			401,278		0		401,278		0
	Agency residential mortgage-backed
		securities			1,884,810		0		1,884,810		0
	Non-agency residential mortgage-
		backed securities			23,596		0		574		23,022
	Commercial mortgage-backed
		securities			10,492		0		10,492		0
	Other structured financial products				11,444		0		0		11,444
	Other debt securities				42,829		0		42,829		0
	Other equity securities				23,733		20,912		0		2,821
Derivatives: ⁽¹⁾
	Designated as hedging instruments				1,457		0		1,457		0
	Not designated as hedging
		instruments			21,479		0		21,479		0
			Total	$	2,506,311	$	20,912	$	2,448,112	$	37,287
Liabilities
Derivatives: ⁽²⁾
	Designated as hedging instruments			$	36,209	$	0	$	36,209	$	0
	Not designated as hedging
		instruments			18,503		0		18,503		0
			Total	$	54,712	$	0	$	54,712	$	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 and nine month periods ended September
30, 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 July 1, 2013				$	2,820	$	10,506	$	24,549	$	37,875
	Total gains or losses (realized/unrealized):
		Included in earnings:
			Other-than-temporary impairment ⁽¹⁾		0		0		0		0
		Included in other comprehensive income (before taxes)			1		938		(1,527)		(588)
Balance at September 30, 2013				$	2,821	$	11,444	$	23,022	$	37,287

Balance at July 1, 2012				$	3,159	$	8,462	$	4,288	$	15,909
	Total gains or losses (realized/unrealized):
		Included in earnings:
			Other-than-temporary impairment ⁽¹⁾		0		0		0		0
		Included in other comprehensive income (before taxes)			1		(70)		(201)		(270)
	Sales				0		0		0		0
Balance at September 30, 2012				$	3,160	$	8,392	$	4,087	$	15,639

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⁾		(97)		0		(388)		(485)
		Included in other comprehensive income (before taxes)			(238)		1,894		(3,390)		(1,734)
Balance at September 30, 2013				$	2,821	$	11,444	$	23,022	$	37,287

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		3,092		2,948
		Included in other comprehensive income (before taxes)			(126)		(4,901)		(360)		(5,387)
	Sales				0		0		(18,782)		(18,782)
	Transfers into Level III				0		0		20,137		20,137
Balance at September 30, 2012				$	3,160	$	8,392	$	4,087	$	15,639

⁽¹⁾	Included in noninterest income, net realized gain on sale of securities.

Assets Measured at Fair Value on a Nonrecurring Basis

	The following tables present assets measured at fair value on a nonrecurring basis at September 30, 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	September 30, 2013		(Level 1)		(Level 2)		(Level 3)
	Impaired loans	$	73,649	$	0	$	0	$	73,649
	Foreclosed assets		17,760		0		0		17,760
		$	91,409	$	0	$	0	$	91,409

				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		Valuation		Range
Asset		September 30, 2013		Technique(s)	Unobservable Input	(Weighted Average)

Non-agency residential mortgage-				Discounted Cash Flow	Conditional repayment rate	10.6%
	backed securities	$	23,022	Discounted Cash Flow	Loss severity	37.8%
					Conditional default rate	3.6%

Other structured financial products			11,444	Discounted Cash Flow	Credit default rates, call options and deferrals, waterfall structure, and covenants.	Varies by individual security, refer to Note 3
				Discounted Cash Flow



Other equity securities			2,821	Discounted Cash Flow	Cash flows from dividends and terminal value	0.2x - 1.5x
				Discounted Cash Flow	Cash flows from dividends and terminal value	(.8x)

Impaired loans			73,649	Discounted Cash Flow	Cash flows based upon current discount rates and terminal value	0.9% - 8.1%
				Discounted Cash Flow		(3.7%)


Foreclosed assets			17,760	Discounted Cash Flow	Third party appraisals less estimated selling costs	0.0% - 100.0%
				Discounted Cash Flow	Third party appraisals less estimated selling costs	(28.0%)

		Fair Value at		Valuation		Range
Asset		December 31, 2012		Technique(s)	Unobservable Input	(Weighted Average)

Non-agency residential mortgage-				Discounted Cash Flow	Conditional repayment rate	10.4%
	backed securities	$	26,800	Discounted Cash Flow	Loss severity	43.8%
					Conditional default rate	3.6%

Other structured financial products			9,550	Discounted Cash Flow	Credit default rates, call options and deferrals, waterfall structure, and covenants.	Varies by individual security, refer to Note 3
				Discounted Cash Flow



Other equity securities			3,156	Discounted Cash Flow	Cash flows from dividends and terminal value	0.2x - 1.5x
				Discounted Cash Flow	Cash flows from dividends and terminal value	(0.9x)

Impaired loans			65,731	Discounted Cash Flow	Cash flows based upon current discount rates and terminal value	2.9% - 5.6%
				Discounted Cash Flow		(4.2%)


Foreclosed assets			26,245	Discounted Cash Flow	Third party appraisals less estimated selling costs	0.0% - 100.0%
				Discounted Cash Flow	Third party appraisals less estimated selling costs	(24.0%)

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.

			September 30, 2013
			Carrying
			Amount		Fair Value		Level 1		Level 2		Level 3
	Financial assets:
		Cash and due from banks	$	377,730	$	377,730	$	377,730	$	0	$	0
		Short-term investments		77,729		77,729		0		77,729		0
		Investment securities		2,483,375		2,483,375		20,912		2,425,176		37,287
		Restricted investment in bank stocks		160,787		160,787		0		160,787		0
		Loans and leases		13,376,454		13,477,467		0		0		13,477,467
		Derivatives		22,936		22,936		0		22,936		0
	Financial liabilities:
		Deposits		12,721,685		12,702,818		0		12,702,818		0
		Short-term borrowings		688,456		688,456		0		688,456		0
		FHLB borrowings		1,593,272		1,593,362		0		1,593,362		0
		Long-term debt		457,804		463,940		0		463,940		0
		Derivatives		54,712		54,712		0		54,712		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

- Definition

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

+ References+ Details

- Definition

Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.

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