SUSQUEHANNA BANCSHARES INC - FORM 8-K - EX-99.2 - INVESTOR PRESENTATION

Attached files

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8-K - FORM 8-K - SUSQUEHANNA BANCSHARES INC	d8k.htm
EX-2.1 - AGREEMENT AND PLAN OF MERGER - SUSQUEHANNA BANCSHARES INC	dex21.htm
EX-99.1 - PRESS RELEASE - SUSQUEHANNA BANCSHARES INC	dex991.htm

Acquisition of Tower

Bancorp

June 21, 2011

Exhibit 99.2

Forward-looking statements

During the course of this presentation, we may make projections and other forward-looking

statements

including

statements

regarding

the

future

performance

Susquehanna,

the

impact of the Tower acquisition and the anticipated closing of the Abington Bancorp, Inc.

acquisition, the timing of the Tower transaction, the business plans and integration efforts

once the Tower transaction is complete, Susquehanna’s ability to expand its services and

realize growth, efficiencies and cost savings from the acquisition, the expected internal

rate of return of the Tower transaction, merger-related expenses, the impact of the

transaction on Susquehanna’s market share and capital position, the closing of certain

branch locations of Tower and Susquehanna, lack of potential obstacles regarding system

conversion,

the

future

financial

performance

Susquehanna,

and

Susquehanna’s

financial goals and business outlook for 2011. These forward-looking statements may

differ materially from actual results due to a number of risks and uncertainties. For a more

detailed description of the factors that may affect Susquehanna’s operating results, we

refer you to our filings with the Securities & Exchange Commission, including our quarterly

report

Form

10-Q

for

the

quarter

ended

March

31,

2011,

and

our

annual

report

Form

10-K for the year ended December 31, 2010. Susquehanna assumes no obligation to

update the forward-looking statements made during this presentation.

For more information, please visit our Web site at:

www.susquehanna.net

Transaction highlights

Strong Strategic

Rationale

Superior Financial

Returns

Low Risk

Acquisition of an in-market, growth oriented community bank with favorable

demographics in central and southeastern Pennsylvania with $2.2bn of deposits

Strengthens

presence

attractive

Chester

County

while

building

scale

Lancaster

and

Harrisburg

—

Top

market

Chester

County

–

wealthiest

Tremendous opportunity for deposit, loan and fee income growth

—

Attractive wealth management division, headquartered in Chester County with

$560mm AUM

—

Small business lending expertise

—

Complementary loan and deposit mix

Seasoned management team with a record of achieving growth

Deploys excess capital generated from Abington acquisition

Approximately 25% IRR

10% accretive to 2013 EPS

Tangible book value earn-back of ~5 years

Comprehensive due diligence process

In-market transaction

Proven track record of integrating acquisitions

Strong pro forma capital and balance sheet

Consideration:

Fixed exchange ratio of 3.4696x (resulting in approximately 30.8 million

shares issued based on assumed Tower outstanding shares)

Fixed cash amount of $88mm

75% stock and 25% cash¹

Implied transaction value:¹

$345mm

Implied price per share:¹

$28.69 / Premium to closing price: 41%

Board composition:

Tower receives 3 seats on the pro forma 20 member Board of Directors

(including Abington transaction), and including 1 seat on the Executive

Committee

Due diligence:

Completed

Management

Andrew Samuel (Tower CEO) will become President and Chief Revenue

Officer of Susquehanna and will be appointed to the Susquehanna Board;

Jeffrey Renninger (Tower President & COO) and Janak Amin (CEO of

Graystone Tower Bank) to assume senior management positions at

Susquehanna Bank

Required approval:

Regulatory approval required

Shareholder approval required for SUSQ and TOBC

Termination fee:

$13.5mm (reflects 4% of transaction)

Anticipated closing:

1Q 2012

Transaction overview

Based on Susquehanna stock price as of June 20, 2011; based on diluted shares of 12.0mm

Tower Bancorp overview

Headquarters

Harrisburg, PA

Branches

Total assets ($bn)

$2.6

Total deposits ($bn)

2.2

Source: SNL Financial, Tower company filings

Note: Financial data as of March 31, 2011

Financial data as of quarter prior to acquisition close date

All financial information for periods prior to March 31, 2009 represents historical financials for Graystone Financial Corp., as the accounting acquirer in the reverse merger with Tower Bancorp, Inc.;

2005 financial data reflects the period from September 2, 2005 (inception date of Graystone Tower Bank) to December 31, 2005

Chairman & CEO

Andrew Samuel

President & COO

Jeffrey Renninger

President of Graystone Tower Bank

Janak Amin

Tower

First Chester

Close date

3/31/2009

12/10/2010

Deal value

$57.8

$49.7

Total assets ($mm)

557

1,136

Total loans ($mm)

419

835

Total deposits ($mm)

421

970

Loans / deposits

92.0%

TCE / TA

8.8%

Tier I Common

11.2%

Tier I

11.9%

NCOs / average loans

0.11%

NPAs / loans + OREO

2.00%

NPLs / loans

1.83%

$38

$196

$359

$525

$1,216

$2,228

$2,300

2005

2006

2007

2008

2009

2010

2011 Q1

Organic growth

FNB Greencastle

First Chester

Overview

Executive management

Recent acquisitions¹

Balance sheet & capital ratios

Asset quality metrics

Deposit growth²

Continues Susquehanna’s expansion

into attractive markets

Continues Susquehanna’s expansion

into attractive markets

Susquehanna (222 branches)

Abington (20 branches)

Tower (49 branches)

York

Adams

Franklin

Fulton

Bedford

Allegany

Garrett

Berkeley

Washington

Carroll

Baltimore

Harford

Anne

Arundel

Atlantic

Cumberland

Burlington

Camden

Gloucester

Delaware

Chester

Montgomery

Bucks

Lehigh

Berks

Schuylkill

Luzerne

Lycoming

Northumber-

land

Snyder

Union

Centre

Cumberland

Dauphin

Lebanon

Howard

Lancaster

Philadelphia

Source: SNL Financial

Note: Shaded counties indicate those in which Susquehanna holds a top 3 market position

Susquehanna pro forma includes Tower and Abington

Projected population

change 2010-2015

2.3%

4.3%

0.5%

13.3%

13.2%

$52.7

$58.6

Projected HH income

change 2010-2015

Median HH income

2010 ($000)

SUSQ

TOBC

Pennsylvania

14.3%

$66.6

Stratton

Mgmt.

Valley

Forge

Addis

Group

Graystone

Asset Mgmt.

Susquehanna

pro

forma¹

branch

map

Susquehanna demographics

Few independent players of scale

Deposit market share in Pennsylvania

Deposits

Market

Rank

Company

Branches

($mm)

share (%)

PNC

505

$58,206

20.4%

Wells Fargo

293

37,198

13.0%

RBS

386

22,214

7.8%

Toronto-Dominion

9,632

3.4%

Susquehanna (pro forma ABBC and TOBC)

212

8,895

3.1%

Banco Santander

170

8,722

3.1%

M&T

208

8,385

2.9%

Bank of America

100

7,530

2.6%

Bank of New York Mellon

7,382

2.6%

Fulton

137

7,137

2.5%

First Niagara

148

6,909

2.4%

Susquehanna (pro forma ABBC)

166

6,646

2.3%

National Penn

128

6,365

2.2%

Northwest

142

5,019

1.8%

First Commonwealth

112

4,750

1.7%

Tower

2,248

0.8%

Independent bank deposit market share in PA, MD, NJ

Source: SNL Financial

Note: Regulatory branch and deposit data as of June 30, 2010; banks and thrifts with PA/MD/NJ deposits > 90% total deposits

Susquehanna has 3 additional branches in West Virginia

Total PA / MD / NJ

Rank

Company

Deposits

% of total deposits

Branches

Susquehanna (pro forma ABBC and TOBC)

$12.3

99%

289¹

Fulton

11.7

95%

254

Susquehanna (pro forma ABBC)

10.0

99%

240¹

F.N.B.

6.9

100%

238

National Penn

6.4

98%

130

Provident

4.9

100%

First Commonwealth

4.8

100%

115

S&T

3.3

100%

Sun

3.0

100%

Sandy Spring

2.5

96%

Tower

2.3

100%

Lakeland

2.2

100%

Kearny

2.1

100%

Metro

1.9

100%

OceanFirst

1.5

100%

Oritani

1.3

100%

Pro forma loan and deposit

composition

Pro forma loan and deposit

composition

Source: SNL Financial

Note: Regulatory data as of March 31, 2011; percentages may not add to 100.0% due to rounding

Susquehanna loan and deposit balances are pro forma for Abington transaction

Total deposits = $10,154mm

Cost of deposits = 0.95%

Retail time

22.5%

MMDA &

Savings

42.5%

Jumbo time

15.3%

Transaction

19.7%

Total deposits = $2,228mm

Cost of deposits = 0.80%

Retail time

21.5%

MMDA &

Savings

55.8%

Jumbo time

16.4%

Transaction

7.3%

Total deposits = $12,381mm

Retail time

22.3%

MMDA &

Savings

44.7%

Jumbo time

15.5%

Transaction

17.5%

Total loans = $10,292mm

Yield = 5.26%

Loans / deposits = 101%

C&D 9.0%

C&I

14.4%

Other

17.8%

Multi-family

2.6%

Total loans = $2,089mm

Yield = 5.39%

Loans / deposits = 94%

Total loans = $12,381mm

Loans / deposits = 100%

1-4 family

28.0%

CRE

28.2%

C&D 8.4%

C&I

10.7%

Other

3.8%

Multi-family

6.1%

1-4 family

31.9%

CRE

39.1%

C&D 8.9%

C&I

13.8%

Other

15.5%

Multi-family

3.2%

1-4 family

28.7%

CRE

30.0%

SUSQ¹

deposits

TOBC deposits

Pro forma deposits

SUSQ¹

loans

TOBC loans

Pro forma loans

3/31/2011

Pro forma

Current (%)

Pro forma ABBC (%)²

TOBC & ABBC (%)²

TCE / TA¹

7.7%

8.4%

7.8%

Tier I common

9.7%

10.5%

9.7%

Tier I capital

12.8%

13.5%

12.3%

Pro-forma financial impact

Superior financial returns:

IRR of approximately 25%

Immediately accretive to EPS; 10% accretive to 2013 EPS

Tangible book value earn-back in ~5 years

Strong pro-forma capital position:

Assumptions:

Cost savings of $30mm, phased in 75% in 2012 and 100% in 2013; no revenue synergies assumed

One time pre-tax costs of $63mm

Core deposit intangibles of $22mm, amortized over 10 years

Includes deferred tax liabilities associated with intangibles

Pro forma adjustments assuming SUSQ share price as of June 20, 2011

Financial impact –

cost saves

Financial impact –

cost saves

Cost savings of approximately 34% of Tower’s non-interest expense¹

Driven by consolidation of branch network of Susquehanna and Tower; approximately

25 branch closings anticipated between Susquehanna and Tower

History of deposit retention in prior acquisitions

Proven track record of delivery on cost savings

Compensation and benefits

$20.1

Occupancy

3.8

Systems and technology

2.2

Professional fees

0.9

Marketing & other

3.1

Total cost saves (pre-tax)

$30.0

One-time restructuring charge (pre-tax)

$63.0

Based on Tower’s core Q1 2011 non-interest expense annualized

($mm)

Comprehensive due diligence

completed

Comprehensive due diligence

completed

Marks taken in

previous acquisitions

Tower Bank

First Chester

Graystone

Total loans

$365

$667

$1,057

Previous credit marks

New credit marks

Gross credit marks taken

$49

$35

Gross credit marks

1.0%

6.8%

3.3%

Due diligence completed including branches,

systems, legal and credit

Comprehensive

loan

review

completed

–

$35mm

gross credit mark

Graystone legacy

—

48% of total portfolio, including majority of

loans above $1mm

—

100% coverage of substandard, non-accrual

and OAEM loans

—

58% of land and development

—

50% of CRE portfolio

Tower (fair valued as of March 2009)

—

No significant deviation from prior mark

—

71% of land and development

First Chester (fair valued as of December 2010)

—

No significant deviation from prior mark

—

74% of land and development

—

Review was slanted to substandard and OAEM

loans

$mm

%²

Cumulative losses since 12/31/2007¹

$84

5.5%

Residual credit losses post-3/31/2011

2.3%

Cumulative losses including residual credit loss

$119

7.8%

Represents cumulative charge-offs and previous credit marks taken at Graystone, Tower

and First Chester through 3/31/2011

% represents gross loans at Graystone, Tower and First Chester as of 12/31/2007

Extensive due diligence process

Summary of credit marks

Pricing metrics

Tower acquisition

Precedent transactions

Deal price per share ($)

$28.69

Implied premium

41%

24% -

57%

Price to 2012 EPS (IBES)

15.1x

Price to 2013 EPS (IBES)

12.8x

Price to tangible book value

1.5x

1.6x -

1.9x

Core deposit premium¹

9% -

14%

Memo:

Susquehanna price per share

$8.34

Note: Financial information as of March 31, 2011; based on market data as of June 20, 2011

Core

deposits

$1.9bn

excludes

time

deposits

greater

than

$100k

Precedent transactions include First Niagara/NewAlliance, People's United/Danvers, Brookline/Bank of Rhode Island and Valley/State

Abington update

On track to take advantage of tremendous deposit, loan and fee

income growth from Montgomery and Bucks counties

Employee integration meeting expectations

On target to realize 31% cost saves

Systems integration and conversion expected at close

Shareholder approval received from Susquehanna and Abington

Anticipated closing October 2011

Summary

Expands Susquehanna’s footprint into highly attractive markets and

increases scale in existing markets

Superior financial returns; significant synergy potential

Considerable opportunity for small business lending and fee income

generation by delivering on Susquehanna’s full-service platform

Gain experienced, growth oriented management team with extensive

in-market knowledge

Questions & answers

Additional information about the

merger and where to find it

Additional information about the

merger and where to find it

In connection with the proposed merger, Susquehanna will file a registration statement on Form S-4 with the

SEC, which will contain a joint proxy statement/prospectus of Susquehanna and Tower. The companies will file

with the SEC other relevant materials in connection with the merger, and will mail the joint proxy

statement/prospectus to their respective shareholders. Investors and security holders of Susquehanna and

Tower are urged to read the proxy statement/prospectus and the other relevant materials when they become

available because they will contain important information about Tower, Susquehanna and the merger.

The joint proxy statement/prospectus and other relevant materials (when they become available), and any other

documents filed by Susquehanna or Tower with the SEC, may be obtained free of charge at the SEC’s Web site

at http://www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed

with the SEC by Tower by contacting Brent Smith, Tower Bancorp, Inc., telephone: 717-724-4666 or from

Tower’s Web site at www.towerbancorp.com. Investors and security holders may obtain free copies of the

documents filed with the SEC by Susquehanna by contacting Abram G. Koser, Susquehanna Bancshares, Inc.,

26 North Cedar Street, Lititz, PA 17543, telephone: 717-626-4721 or from Susquehanna’s web site at

www.susquehanna.net.

Susquehanna, Tower and their respective directors, executive officers and certain other members of

management and employees may be deemed “participants”

in the solicitation of proxies from shareholders of

Susquehanna and Tower in favor of the merger. Information regarding the persons who may, under the rules of

the SEC, be considered participants in the solicitation of the shareholders of Susquehanna and Tower in

connection with the proposed merger will be set forth in the joint proxy statement/prospectus when it is filed

with the SEC. You can find information about the executive officers and directors of Susquehanna in its Annual

Report on Form 10-K for the year ended December 31, 2010 and in its definitive proxy statement filed with the

SEC on March 18, 2011. You can find information about Tower’s executive officers and directors in its Annual

Report on Form 10-K for the year ended December 31, 2010 and in its definitive proxy statement filed with the

SEC on April 8, 2011.

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SUSQUEHANNA BANCSHARES INC Reports

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