Fair Value Disclosures (Tables)

9 Months Ended

Sep. 30, 2014

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, 2014 and December 31, 2013, 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, 2014		(Level 1)		(Level 2)		(Level 3)
Assets
Available-for-sale securities:
	U.S. Government Agencies			$	93,716	$	0	$	93,716	$	0
	Obligations of states and political
		subdivisions			396,343		0		396,343		0
	Agency residential mortgage-backed
		securities			1,635,299		0		1,635,299		0
	Non-agency residential mortgage-
		backed securities			304		0		304		0
	Commercial mortgage-backed
		securities			5,837		0		5,837		0
	Other structured financial products				11,761		0		0		11,761
	Other debt securities				24,921		0		24,921		0
	Other equity securities				24,434		21,665		0		2,769
Derivatives: ⁽¹⁾
	Designated as hedging instruments				725		0		725		0
	Not designated as hedging
		instruments			21,614		0		21,614		0
			Total	$	2,214,954	$	21,665	$	2,178,759	$	14,530
Liabilities
Derivatives: ⁽²⁾
	Designated as hedging instruments			$	17,506	$	0	$	17,506	$	0
	Not designated as hedging
		instruments			18,162		0		18,162		0
			Total	$	35,668	$	0	$	35,668	$	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, 2013		(Level 1)		(Level 2)		(Level 3)
Assets
Available-for-sale securities:
	U.S. Government Agencies			$	110,148	$	0	$	110,148	$	0
	Obligations of states and political
		subdivisions			398,510		0		398,510		0
	Agency residential mortgage-
		backed securities			1,778,192		0		1,778,192		0
	Non-agency residential mortgage-
		backed securities			565		0		565		0
	Commercial mortgage-backed
		securities			8,734		0		8,734		0
	Other structured financial products				11,297		0		0		11,297
	Other debt securities				44,086		0		44,086		0
	Other equity securities				23,692		20,895		0		2,797
Derivatives: ⁽¹⁾
	Designated as hedging instruments				1,419		0		1,419		0
	Not designated as hedging
		instruments			22,897		0		22,897		0
			Total	$	2,399,540	$	20,895	$	2,364,551	$	14,094
Liabilities
Derivatives: ⁽²⁾
	Designated as hedging instruments			$	31,662	$	0	$	31,662	$	0
	Not designated as hedging
		instruments			18,585		0		18,585		0
			Total	$	50,247	$	0	$	50,247	$	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, 2014 and 2013, 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, 2014			$	2,803	$	11,995	$	0	$	14,798
	Included in earnings			0		0		0		0
	Realized other-than-temporary impairment			0		0		0		0
	Principal paydowns			0		(143)		0		(143)
	Included in other comprehensive income			(34)		(91)		0		(125)
Balance at September 30, 2014			$	2,769	$	11,761	$	0	$	14,530

Balance at July 1, 2013			$	2,820	$	10,506	$	24,549	$	37,875
	Included in earnings			0		0		0		0
	Realized other-than-temporary impairment			0		0		26		26
	Principal paydowns			0		(37)		(1,789)		(1,826)
	Included in other comprehensive income			1		975		236		1,212
Balance at September 30, 2013			$	2,821	$	11,444	$	23,022	$	37,287

Balance at January 1, 2014			$	2,797	$	11,297	$	0	$	14,094
	Included in earnings			0		0		0		0
	Realized other-than-temporary impairment			0		0		0		0
	Principal paydowns			0		(378)		0		(378)
	Included in other comprehensive income			(28)		842		0		814
Balance at September 30, 2014			$	2,769	$	11,761	$	0	$	14,530

Balance at January 1, 2013			$	3,156	$	9,550	$	26,800	$	39,506
	Included in earnings			(97)		0		(379)		(476)
	Realized other-than-temporary impairment			0		0		156		156
	Principal paydowns			0		(114)		(5,029)		(5,143)
	Included in other comprehensive income			(238)		2,008		1,474		3,244
Balance at September 30, 2013			$	2,821	$	11,444	$	23,022	$	37,287

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, 2014 and
December 31, 2013, 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, 2014		(Level 1)		(Level 2)		(Level 3)
	Impaired loans	$	47,441	$	0	$	0	$	47,441
	Foreclosed assets		9,133		0		0		9,133
		$	56,574	$	0	$	0	$	56,574

				Quoted
				Prices
				in Active		Significant
				Markets for		Other		Significant
				Identical		Observable		Unobservable
				Instruments		Inputs		Inputs
	Description	December 31, 2013		(Level 1)		(Level 2)		(Level 3)
	Impaired loans	$	54,216	$	0	$	0	$	54,216
	Foreclosed assets		16,555		0		0		16,555
		$	70,771	$	0	$	0	$	70,771

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, 2014		Technique(s)	Unobservable Input	(Weighted Average)

Other structured financial products ⁽¹⁾		$	11,761	Discounted Cash Flow	Credit default rates, call options and deferrals, waterfall structure, and covenants.	Varies by individual security, refer to Note 2
				Discounted Cash Flow



Other equity securities			2,769	Discounted Cash Flow	Cash flows from dividends and terminal value	0.2x - 1.2x
				Discounted Cash Flow	Cash flows from dividends and terminal value	(0.8x)

Impaired loans			47,441	Discounted Cash Flow	Cash flows based upon current discount rates and terminal value	0.6% - 13.9%
				Discounted Cash Flow		(4.0%)


Foreclosed assets			9,133	Discounted Cash Flow	Third party appraisals less estimated selling costs	0.0% - 100.0%
				Discounted Cash Flow	Third party appraisals less estimated selling costs	(38.7%)

		Fair Value at		Valuation		Range
Asset		December 31, 2013		Technique(s)	Unobservable Input	(Weighted Average)

Other structured financial products ⁽¹⁾		$	11,297	Discounted Cash Flow	Credit default rates, call options and deferrals, waterfall structure, and covenants.	Varies by individual security, refer to Note 2
				Discounted Cash Flow



Other equity securities			2,797	Discounted Cash Flow	Cash flows from dividends and terminal value	0.2x - 1.5x
				Discounted Cash Flow	Cash flows from dividends and terminal value	(0.8x)

Impaired loans			54,216	Discounted Cash Flow	Cash flows based upon current discount rates and terminal value	0.8% - 8.0%
				Discounted Cash Flow		(3.9%)


Foreclosed assets			16,555	Discounted Cash Flow	Third party appraisals less estimated selling costs	0.0% - 100.0%
				Discounted Cash Flow	Third party appraisals less estimated selling costs	(29.6%)

⁽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.

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, 2014
			Carrying
			Amount		Fair Value		Level 1		Level 2		Level 3
	Financial assets:
		Cash and due from banks	$	772,677	$	772,677	$	772,677	$	0	$	0
		Short-term investments		79,662		79,662		0		79,662		0
		Investment securities		2,192,615		2,192,615		21,665		2,156,420		14,530
		Restricted investment in bank stocks		133,119		133,119		0		133,119		0
		Loans and leases		13,425,721		13,422,747		0		0		13,422,747
		Derivatives		22,339		22,339		0		22,339		0
	Financial liabilities:
		Deposits		13,588,524		12,660,047		0		12,660,047		0
		Short-term borrowings		532,675		532,675		0		532,675		0
		FHLB borrowings		915,362		918,764		0		918,764		0
		Long-term debt		356,117		354,524		0		354,524		0
		Derivatives		35,668		35,668		0		35,668		0

			December 31, 2013
			Carrying
			Amount		Fair Value		Level 1		Level 2		Level 3
	Financial assets:
		Cash and due from banks	$	305,357	$	305,357	$	305,357	$	0	$	0
		Short-term investments		83,227		83,227		0		83,227		0
		Investment securities		2,375,224		2,375,224		20,895		2,340,235		14,094
		Restricted investment in bank stocks		158,232		158,232		0		158,232		0
		Loans and leases		13,576,086		13,463,676		0		0		13,463,676
		Derivatives		24,316		24,316		0		24,316		0
	Financial liabilities:
		Deposits		12,869,372		11,901,099		0		11,901,099		0
		Short-term borrowings		555,740		555,740		0		555,740		0
		FHLB borrowings		1,531,282		1,531,606		0		1,531,606		0
		Long-term debt		453,260		461,247		0		461,247		0
		Derivatives		50,247		50,247		0		50,247		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.

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- 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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