DBRS Comments on Susquehanna Bancshares, Inc.’s Earnings Update – Senior at BBB (high)

DBRS has today commented on Susquehanna Bancshares, Inc.’s (Susquehanna or the Company) announcement that the Company expects Q2 2009 earnings to be below market expectations. DBRS rates Susquehanna’s Issuer & Senior Debt at BBB (high) with a Stable trend.

Susquehanna announced that increased loan loss provisioning, higher FDIC expenses, consolidation charges and an other than temporarily impairment (OTTI) charge would cause earnings to fall below market expectations. The incremental $15 million increase in the provision compared to Q1 2009 and the other charges total approximately $25 million. While these items will likely result in a quarterly loss, DBRS does not deem the loss to be material enough to trigger a rating action at this time. DBRS notes that this is potentially the first quarterly loss for Susquehanna since the current recession began and DBRS believes that the Company’s income before provisions and taxes (IBPT), loan loss reserve and capital is sufficient to cope with potential losses over the short-term. That being said, DBRS would view favorably a further reduction in the dividend to conserve capital or any action that would raise common equity.

The Company reports actual earnings on July 22, 2009 followed by a conference call on July 23, 2009. Once more detailed information becomes available, DBRS will provide a more detailed update regarding the Company’s ratings.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodologies are Rating Banks and Bank Holding Companies Operating in the United States, and Enhanced Methodology for Bank Ratings – Intrinsic and Support Assessments which can be found on our website under Methodologies.

This is a Corporate (Financial Institutions) rating.