Goodwill

9 Months Ended

Sep. 30, 2011

Goodwill [Abstract]

Goodwill

NOTE 5. Goodwill

Susquehanna assesses goodwill for impairment on an annual basis, or more often if events or circumstances indicate that there may be an impairment. This assessment, which requires significant judgment and analysis, involves discounted cash flows and market-price multiples of non-distressed financial institutions.

Susquehanna performed its annual goodwill impairment assessments in the second quarter of 2011 and determined that the fair value of each of its reporting units exceeded its book value, and that there was no goodwill impairment. However, taking into consideration the new qualitative indicators for testing goodwill for impairment (as put forth in the revised standard issued by FASB in September 2011) and current market conditions, Susquehanna decided that it would be prudent to perform an interim assessment of its bank reporting unit's goodwill at September 30, 2011.

Bank Reporting Unit

Goodwill assigned to the bank reporting unit at both September 30, 2011 and May 31, 2011 was $915,421. Fair value of the bank reporting unit was determined utilizing the market multiples approach, which measures the value of the reporting unit using information pertaining to recent non-distressed sales of financial institutions in Susquehanna's market. Susquehanna considered two key ratios to measure goodwill of the bank reporting unit for impairment: price to book and price to tangible book. In keeping with the investment community's current valuations of financial institutions, Susquehanna gave no consideration to the price to earnings ratio. The following table shows the ratios used at September 30, 2011 and May 31, 2011.

	Interim		Annual
Ratio	September 30, 2011		May 31, 2011
Price to book		1.36X		1.36X
Price to tangible book		1.60X		1.60X

Fair value of the bank reporting unit exceeded carrying value by 13.8% at September 30, 2011 and by 13.0% at May 31, 2011.

Wealth Management Reporting Unit

Goodwill assigned to the wealth management reporting unit at both May 31, 2011 and 2010 was $82,746. Fair value of the wealth management reporting unit was determined utilizing the "market multiples" approach and the "income" approach. The income approach measures the value of the reporting unit based on a discount rate to determine the present value of the reporting unit's future economic benefit over ten years, assuming a weighted increase in the reporting unit's revenues and a weighted increase in the reporting unit's expenses. In keeping with the investment community'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, 2011 and 2010.

	Annual			Annual
Factor	May 31, 2011			May 31, 2010
Discount rate		17.5	%		17.5	%
Weighted-average increase in revenues		6.0	%		6.0	%
Weighted-average increase in expenses		5.0	%		5.0	%

Fair value of the wealth management reporting unit exceeded carrying value by 59.7% at May 31, 2011 and by 53.6% at May 31, 2010.

Property and Casualty Insurance Reporting Unit

Goodwill assigned to the property and casualty insurance reporting unit at both May 31, 2011 and 2010 was $17,177. Fair value of the property and casualty insurance reporting unit was determined utilizing the market multiples approach, which measures the value of the reporting unit using recent sales of property and casualty insurance companies in Susquehanna's market. Susquehanna uses two key ratios to measure goodwill of the property and casualty insurance reporting unit for impairment: average price to book and median price to earnings. The following table shows the ratios used at May 31, 2011 and 2010.

	Annual		Annual
Ratio	May 31, 2011		May 31, 2010
Average price to book		1.23X		1.06X
Median price to earnings		13.8X		8.5X

Fair value of the property and casualty insurance reporting unit exceeded carrying value by 48.4% at May 31, 2011 and by 33.9% at May 31, 2010.