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EX-99.2 - EXHIBIT 99.2 - NATIONAL PENN BANCSHARES INCex99-2.htm
EXHIBIT 99.1
 
 
News Release
National Penn Bancshares, Inc. Reports
Third Quarter 2011 Results

Company Release – October 28, 2011

·  
Net income increases to 16 cents per share compared to 15 cents in the second quarter
·  
Year-to-date net income of 42 cents per share compared to 5 cents in the prior year period
·  
Continued strong performance results in ROA of 1.15%
·  
Sustained asset quality improvement
·  
Strong capital base further enhanced, provides capital management opportunities
·  
Common stock cash dividend increased to 4 cents per share

BOYERTOWN, PA., October 28, 2011 -- National Penn Bancshares, Inc. (Nasdaq: NPBC) reported net income available to common shareholders of $24.8 million, or $0.16 per diluted share, for the third quarter of 2011, compared to $23.2 million, or $0.15 per diluted share, for the second quarter of 2011 and $10.3 million, or $0.08 per diluted share, for the third quarter of 2010. Year-to-date net income available to common shareholders totaled $63.7 million, or $0.42 per diluted share, compared to $6.7 million, or $0.05 per diluted share, for the prior year period. Return on average assets increased to 1.15% for the third quarter of 2011, from 1.08% for the second quarter of 2011.

Earnings continue to enhance National Penn’s capital position providing for an increase in the common stock cash dividend to $0.04 per share in the fourth quarter of 2011 from $0.03 in the third quarter. The ratio of tangible common equity to tangible assets increased to 10.66%1, and the total risk based capital ratio increased to 18.1% at September 30, 2011.

“We are pleased to report another quarter of improved asset quality and strong financial performance,” said Scott V. Fainor, president and CEO of National Penn. “This performance allowed us to increase our cash dividend to four cents per share for the fourth quarter.  We are well-positioned to capitalize on our balance sheet strength to further enhance profitability and shareholder value.”

During the third quarter of 2011, National Penn continued to benefit from improving asset quality.   Classified loans declined 22% in 2011 and 7% during the third quarter. Nonperforming assets also declined during the quarter and totaled less than 1% of total assets at September 30, 2011.  Net charge-offs decreased by 15% on a linked-quarter basis and 67% compared to the prior year quarter.  Annualized net charge-offs totaled 0.53% of average loans for the third quarter of 2011 and totaled 0.82% for year-to-date 2011.  Continued improvement in charge-offs, classified loans and overall asset quality metrics resulted in zero provision for loan and lease losses for the third quarter compared to $3.0 million of expense for the second quarter of 2011 and $20.0 million of expense for the third quarter of 2010.  Year-to-date provision expense totaled $13.0 million, an 83% reduction compared to $77.5 million of provision expense for the nine months ended September 30, 2010.  Overall, asset quality coverage ratios remained strong as the allowance for loan and lease losses to non-performing loans increased to 196% and the allowance totaled 2.54% of total loans and leases.

For the nine months ended September 30, 2011, net interest margin was 3.52%, an increase of seven basis points as compared to the prior year period.  Net interest margin for the third quarter of 2011 was 3.46% compared to 3.53% for the second quarter of 2011, reflecting the impact of the current low interest rate environment and soft economic conditions.  Despite the competitive challenges, loan balances are comparable to the prior quarter-end excluding classified loan reductions of $28.3 million in the third quarter of 2011.
 
 
 
 
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Operating expenses totaled $55.1 million for the third quarter of 2011 and resulted in an efficiency ratio of 58.5%1 for the quarter.  Expenses remain well-controlled despite recent hiring of high-quality professionals and additional initiatives to further develop new and existing customer relationships by expanding delivery of banking, insurance, investments and trust services.

Scott V. Fainor stated “The current economic and interest rate environment presents ongoing challenges for our industry and our banking professionals.  We will continue to build on our positive momentum by remaining focused on serving our customers and on our initiatives to expand outreach to potential clients as we navigate through this period.”

Media Contact:
Catharine S. Bower, Corporate Communications
 
(610) 369-6618 or catharine.bower@nationalpenn.com
   
Investor Contact:
Michelle H. Debkowski, Investor Relations
 
(610) 369-6461 or michelle.debkowski@nationalpenn.com
 
__________
# # #
About National Penn Bancshares, Inc.:

National Penn Bancshares, Inc., with approximately $9 billion in assets, is a bank holding company based in Pennsylvania.  Headquartered in Boyertown, National Penn operates 123 branch offices comprising 122 branches in Pennsylvania and one branch in Maryland through National Penn Bank and its HomeTowne Heritage Bank, KNBT and Nittany Bank divisions.
 
National Penn’s financial services affiliates are National Penn Wealth Management, N.A., including its National Penn Investors Trust Company division; National Penn Capital Advisors, Inc.;  Institutional Advisors LLC; National Penn Insurance Services Group, Inc., including its Higgins Insurance division; and Caruso Benefits Group, Inc.

National Penn Bancshares, Inc. common stock is traded on the Nasdaq Stock Market under the symbol “NPBC”. Please visit our Web site at www.nationalpennbancshares.com to see our regularly posted material information.

1Statement Regarding Non-GAAP Financial Measures:

This release, including the attached Financial Highlights and financial data tables, contains supplemental financial information determined by methods other than in accordance with Accounting Principles Generally Accepted in the United States of America (“GAAP”).  National Penn’s management uses these non-GAAP measures in its analysis of National Penn’s performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of the following non-GAAP financial measures, which exclude the impact of the specified items, provides useful supplemental information that is essential to a proper understanding of the financial results of National Penn.
 
·  
Tangible common equity excludes goodwill and intangible assets and preferred equity. Banking and financial institution regulators also exclude goodwill and intangible assets from shareholders’ equity when assessing the capital adequacy of a financial institution. Tangible common equity provides a method to assess the company’s tangible capital trends.
 
 
 
 
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·  
Tangible book value expresses tangible common equity on a per-share basis. Tangible book value provides a method to assess the level of tangible net assets on a per-share basis.

·  
Adjusted net income excludes the effects of certain gains and losses, adjusted for applicable taxes. Adjusted net income provides a method to assess earnings performance by excluding items that management believes are not comparable among the periods presented.

·  
Efficiency ratio expresses operating expenses as a percentage of fully-taxable equivalent net interest income plus non-interest income. Operating expenses exclude items from non-interest expense that management believes are not comparable among the periods presented. Non-interest income is adjusted to also exclude items that management believes are not comparable among the periods presented. Efficiency ratio is used as a method for management to assess its operating expense level and to compare to financial institutions of varying sizes.

Management believes the use of non-GAAP measures will help readers compare National Penn’s current results to those of prior periods as presented in the accompanying Financial Highlights and financial data tables.

Cautionary Statement Regarding Forward-Looking Information:

This release contains forward-looking information about National Penn Bancshares, Inc. that is intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,’’ “project,” ”could,” “plan,’’ “goal,” “potential,” “pro forma,” “seek,” “intend,’’ or “anticipate’’ or the negative thereof or comparable terminology, and include discussions of strategy, financial projections, guidance and estimates (including their underlying assumptions), statements regarding plans, objectives, expectations or consequences of announced transactions, and statements about the future performance, operations, products and services of National Penn and its subsidiaries. National Penn cautions readers not to place undue reliance on these statements.

National Penn’s business and operations are subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any forward-looking statements. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: increased capital requirements and other requirements or actions mandated by National Penn’s regulators,  National Penn’s ability to raise capital and maintain capital levels, variations in interest rates, deterioration in the credit quality of loans, the effect of credit risk exposure, declines in the value of National Penn’s assets and the effect of any resulting impairment charges, recent and ongoing changes to the state and federal regulatory schemes under which National Penn and other financial services companies operate (including the Dodd-Frank Act and regulations adopted or to be adopted to implement that Act), competition from other financial institutions, interruptions or breaches of National Penn’s security systems, and the development and maintenance of National Penn’s information technology. These risks and others are described in greater detail in National Penn’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, as well as in National Penn’s Quarterly Reports on Form 10-Q and other documents filed by National Penn with the SEC after the date thereof. National Penn makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances occurring or existing after the date any forward-looking statement is made.
 
 
 
7

 
Financial Update for National Penn Bancshares (NPBC) for 9/30/2011
                   
                               
Unaudited, dollars in thousands except share and per share data
                       
   
As of
         
   
9/30/2011
   
6/30/2011
   
12/31/2010
             
SUMMARY BALANCE SHEET
                             
Total assets
  $ 8,611,641     $ 8,633,141     $ 8,844,620              
Investment securities and other securities
    2,373,278       2,290,568       2,259,690              
Total loans and leases
    5,161,275       5,178,926       5,326,723              
Deposits
    5,992,991       5,944,161       6,059,173              
Borrowings
    1,410,212       1,515,611       1,590,996              
Shareholders' equity
    1,164,204       1,133,513       1,137,437              
Tangible book value per common share (2)
  $ 5.86     $ 5.65     $ 5.18              
Tangible common equity / tangible assets (2)
    10.66 %     10.25 %     8.27 %            
                                     
   
Three Months Ended
Nine Months Ended
   
9/30/2011
   
6/30/2011
   
9/30/2010
   
9/30/2011
   
9/30/2010
 
EARNINGS
                                   
Total interest income
  $ 86,055     $ 87,740     $ 96,360     $ 263,153     $ 293,505  
Total interest expense
    21,638       22,745       28,670       67,771       89,913  
Net interest income
    64,417       64,995       67,690       195,382       203,592  
Provision for loan and lease losses
    -       3,000       20,000       13,000       77,500  
Net interest income after provision
                                       
  for loan and lease losses
    64,417       61,995       47,690       182,382       126,092  
Loss on sale of building
    (1,000 )     -       -       (1,000 )     -  
Loss on debt extinguishment
    (998 )     -       -       (998 )     -  
Net (losses) from fair value changes on subordinated debentures
    (506 )     (430 )     (2,606 )     (987 )     (8,324 )
Net gains on sales of investment securities
    1,022       -       -       1,022       214  
Other non-interest income
    24,623       22,818       26,083       71,676       82,674  
Goodwill impairment
    -       -       -       -       8,250  
Other non-interest expense
    55,053       54,121       57,965       166,011       173,935  
Income before income taxes
    32,505       30,262       13,202       86,084       18,471  
Income tax expense
    7,692       7,054       895       19,283       5,777  
Net income
    24,813       23,208       12,307       66,801       12,694  
Preferred dividends and accretion of preferred discount
    -       -       (2,006 )     (1,691 )     (6,016 )
Accelerated accretion from redemption of preferred stock
    -       -       -       (1,452 )     -  
Net income available to common shareholders
  $ 24,813     $ 23,208     $ 10,301     $ 63,658     $ 6,678  
                                         
PERFORMANCE RATIOS
                                       
Net interest margin
    3.46 %     3.53 %     3.42 %     3.52 %     3.45 %
Return on average assets
    1.15 %     1.08 %     0.53 %     1.03 %     0.18 %
Return on average total shareholders' equity
    8.59 %     8.37 %     4.50 %     7.77 %     1.57 %
Return on average tangible common equity (1)
    11.33 %     11.16 %     6.42 %     10.24 %     1.43 %
                                         
PER SHARE
                                       
Basic earnings available to common shareholders
  $ 0.16     $ 0.15     $ 0.08     $ 0.42     $ 0.05  
Diluted earnings available to common shareholders
    0.16       0.15       0.08       0.42       0.05  
Dividends per common share
    0.03       0.01       0.01       0.05       0.03  
Average shares - basic
    151,693,223       151,601,052       126,102,037       151,256,293       126,008,098  
Average shares - diluted
    151,927,269       151,835,402       126,255,249       151,513,773       126,179,126  
                                         
                                         
(1) RECONCILIATION TABLES FOR NON-GAAP FINANCIAL MEASURES
 
Three Months Ended
Nine Months Ended
   
9/30/2011
   
6/30/2011
   
9/30/2010
   
9/30/2011
   
9/30/2010
 
Return on average tangible common equity
                                       
Return on average shareholders' equity
    8.59 %     8.37 %     4.50 %     7.77 %     1.57 %
     Effect of preferred equity
    -       -       -0.14 %     -0.10 %     -0.61 %
     Effect of goodwill and intangibles
    2.74 %     2.79 %     2.06 %     2.57 %     0.47 %
       Return on average tangible common equity
    11.33 %     11.16 %     6.42 %     10.24 %     1.43 %
Average tangible equity:
                                       
     Average shareholders' equity
  $ 1,145,679     $ 1,112,114     $ 1,084,724     $ 1,149,458     $ 1,078,690  
     Average preferred equity
    -       -       (148,248 )     (40,251 )     (148,119 )
     Average goodwill and intangibles
    (276,439 )     (278,022 )     (299,919 )     (278,018 )     (307,142 )
     Average total tangible common equity
  $ 869,240     $ 834,092     $ 636,557     $ 831,189     $ 623,429  
                                         
Adjusted net income reconciliation
                                       
Net income available to common shareholders
  $ 24,813     $ 23,208     $ 10,301     $ 63,658     $ 6,678  
     After tax gain on pension plan curtailment
    -       -       -       -       (2,643 )
After tax unrealized fair market value loss (gain) on
                                 
          subordinated debentures
    -       -       1,694       -       5,411  
     Accelerated accretion from redemption of preferred stock
    -       -       -       1,452       -  
     BOLI tax expense
    -       -       -       -       8,081  
     Goodwill impairment
    -       -       -       -       8,250  
Adjusted net income available to common shareholders
  $ 24,813     $ 23,208     $ 11,995     $ 65,110     $ 25,777  
                                         
       Earnings per share
                                       
Net income available to common shareholders
  $ 0.16     $ 0.15     $ 0.08     $ 0.42     $ 0.05  
     After tax gain on pension plan curtailment
    -       -       -       -       (0.02 )
After tax unrealized fair market value loss (gain) on
                                 
          subordinated debentures
    -       -       0.01       -       0.04  
     Accelerated accretion from redemption of preferred stock
    -       -       -       0.01       -  
     BOLI tax expense
    -       -       -       -       0.06  
     Goodwill impairment
    -       -       -       -       0.07  
Adjusted net income available to common shareholders
  $ 0.16     $ 0.15     $ 0.09     $ 0.43     $ 0.20  
 
 
8

 
 
 
 
Financial Update for National Penn Bancshares (NPBC) for 9/30/2011
                   
                               
Unaudited, dollars in thousands except share and per share data
 
As of
 
   
9/30/2011
   
6/30/2011
   
3/31/2011
   
12/31/2010
   
9/30/2010
 
BALANCE SHEET - ASSETS
                             
Cash and due from banks
  $ 116,057     $ 105,918     $ 113,031     $ 90,283     $ 103,279  
Interest-earning deposits with banks
    422,942       513,132       392,337       612,099       609,733  
Total cash and cash equivalents
    538,999       619,050       505,368       702,382       713,012  
                                         
Investment securities available for sale, at fair value
    1,790,654       1,696,682       1,622,395       1,632,118       1,603,849  
Investment securities held to maturity
    509,773       518,578       535,488       546,957       567,740  
Other securities
    72,851       75,308       77,894       80,615       83,676  
Loans held for sale
    17,144       8,852       5,561       12,785       30,081  
                                         
Loans and leases
    5,144,131       5,170,074       5,239,585       5,313,938       5,611,749  
Allowance for loan and lease losses
    (131,073 )     (137,909 )     (142,960 )     (150,054 )     (153,475 )
Loans and leases, net
    5,013,058       5,032,165       5,096,625       5,163,884       5,458,274  
                                         
Premises and equipment, net
    100,880       103,017       103,771       105,483       108,496  
Accrued interest receivable
    33,110       31,862       34,264       33,829       36,127  
Bank owned life insurance, redeemed but not settled
    -       -       -       -       64,387  
Bank owned life insurance
    137,017       136,606       135,373       134,154       136,093  
Other real estate owned and other repossessed assets
    8,029       8,407       7,653       7,453       7,818  
Goodwill
    258,279       258,279       258,279       258,279       273,468  
Other intangible assets, net
    17,370       18,970       20,530       22,217       25,587  
Unconsolidated investments under the equity method
    11,927       12,327       12,211       11,482       12,428  
Other assets
    102,550       113,038       127,855       132,982       127,193  
TOTAL ASSETS
  $ 8,611,641     $ 8,633,141     $ 8,543,267     $ 8,844,620     $ 9,248,229  
                                         
BALANCE SHEET - LIABILITIES
                                       
Non-interest bearing deposits
  $ 833,311     $ 839,811     $ 834,321     $ 808,835     $ 815,193  
Interest bearing deposits
    5,159,680       5,104,350       5,098,695       5,250,338       5,690,284  
Total deposits
    5,992,991       5,944,161       5,933,016       6,059,173       6,505,477  
                                         
Securities sold under repurchase agreements
    640,099       738,628       696,256       734,455       752,428  
Short-term borrowings
    6,400       6,390       6,184       10,000       6,974  
Federal Home Loan Bank advances
    619,946       627,332       627,716       703,761       705,278  
Subordinated debentures
    143,767       143,261       142,831       142,780       140,731  
Accrued interest payable and other liabilities
    44,234       39,856       39,655       57,014       45,323  
TOTAL LIABILITIES
    7,447,437       7,499,628       7,445,658       7,707,183       8,156,211  
                                         
BALANCE SHEET - SHAREHOLDERS' EQUITY
                                       
Preferred stock
    -       -       -       148,441       148,310  
Common stock
    1,380,728       1,379,690       1,379,014       1,292,342       1,227,639  
Retained deficit
    (237,862 )     (258,125 )     (279,817 )     (293,940 )     (299,209 )
Accumulated other comprehensive income/(loss)
    21,338       11,948       (1,588 )     (9,406 )     15,278  
TOTAL SHAREHOLDERS' EQUITY
    1,164,204       1,133,513       1,097,609       1,137,437       1,092,018  
                                         
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  $ 8,611,641     $ 8,633,141     $ 8,543,267     $ 8,844,620     $ 9,248,229  
                                         
                                         
COMMON SHARE AND PER SHARE DATA
                                       
Book Value
  $ 7.67     $ 7.47     $ 7.24     $ 7.23     $ 7.48  
Tangible Book Value (2)
  $ 5.86     $ 5.65     $ 5.40     $ 5.18     $ 5.11  
Dividends
  $ 0.03     $ 0.01     $ 0.01     $ 0.01     $ 0.01  
Shares Outstanding (end of period, net of treasury)
    151,714,696       151,660,444       151,506,511       136,792,414       126,115,073  
       
                                         
(2) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
                         
Total shareholders' equity
  $ 1,164,204     $ 1,133,513     $ 1,097,609     $ 1,137,437     $ 1,092,018  
Total preferred shareholders' equity
    -       -       -       (148,441 )     (148,310 )
Goodwill and intangibles
    (275,649 )     (277,249 )     (278,809 )     (280,496 )     (299,055 )
Tangible common equity
  $ 888,555     $ 856,264     $ 818,800     $ 708,500     $ 644,653  
Common shares outstanding
    151,714,696       151,660,444       151,506,511       136,792,414       126,115,073  
Tangible book value per share
  $ 5.86     $ 5.65     $ 5.40     $ 5.18     $ 5.11  
                                         
Total assets
  $ 8,611,641     $ 8,633,141     $ 8,543,267     $ 8,844,620     $ 9,248,229  
Goodwill and intangibles
    (275,649 )     (277,249 )     (278,809 )     (280,496 )     (299,055 )
Tangible assets
  $ 8,335,992     $ 8,355,892     $ 8,264,458     $ 8,564,124     $ 8,949,174  
Tangible common equity/tangible assets
    10.66 %     10.25 %     9.91 %     8.27 %     7.20 %
 
 
 
 
 
 
9

 
 
Financial Update for National Penn Bancshares (NPBC) for 9/30/2011
                         
                                           
Unaudited, dollars in thousands except share and per share data
 
For the Quarter Ended
   
For the Nine Months Ended
 
   
9/30/2011
   
6/30/2011
   
3/31/2011
   
12/31/2010
   
9/30/2010
   
9/30/2011
   
9/30/2010
 
INTEREST INCOME
                                         
Loans and leases, including fees
  $ 65,795     $ 67,553     $ 69,228     $ 73,496     $ 76,227     $ 202,576     $ 232,711  
Investment securities
                                                       
Taxable
    11,591       11,552       11,357       11,272       11,157       34,500       33,712  
Tax-exempt
    8,337       8,401       8,493       8,569       8,697       25,231       26,338  
Deposits with banks
    332       234       280       408       279       846       744  
Total interest income
    86,055       87,740       89,358       93,745       96,360       263,153       293,505  
INTEREST EXPENSE
                                                       
Deposits
    9,881       10,974       11,407       13,411       15,773       32,262       50,518  
Securities sold under repurchase agreements
    2,290       2,346       2,395       2,567       2,757       7,031       8,439  
Short-term borrowings
    -       -       -       -       -       -       -  
Federal Home Loan Bank advances
    7,073       7,039       7,217       7,732       7,742       21,329       23,805  
Subordinated debentures
    2,394       2,386       2,369       2,394       2,398       7,149       7,151  
Total interest expense
    21,638       22,745       23,388       26,104       28,670       67,771       89,913  
Net interest income
    64,417       64,995       65,970       67,641       67,690       195,382       203,592  
Provision for loan and lease losses
    -       3,000       10,000       17,500       20,000       13,000       77,500  
Net interest income after provision for loan and lease losses
    64,417       61,995       55,970       50,141       47,690       182,382       126,092  
NON-INTEREST INCOME
                                                       
Wealth management income
    6,227       5,856       5,924       6,917       6,997       18,007       21,336  
Service charges on deposit accounts
    4,880       4,616       4,664       5,358       5,419       14,160       16,206  
Insurance commissions and fees
    3,406       3,520       3,221       3,423       3,499       10,147       10,909  
Cash management and electronic banking fees
    4,590       4,645       4,371       4,584       4,548       13,606       13,320  
Mortgage banking income
    1,349       1,014       1,080       2,590       2,424       3,443       4,808  
Bank owned life insurance income
    1,733       1,233       1,220       1,501       1,168       4,186       4,431  
Earnings of unconsolidated investments
    99       116       1,700       140       (41 )     1,915       659  
Gain on pension plan curtailment
    -       -       -       -       -       -       4,066  
Loss on sale of building
    (1,000 )     -       -       -       -       (1,000 )     -  
Loss on debt extinguishment
    (998 )     -       -       -       -       (998 )     -  
Other operating income
    2,339       1,818       2,055       1,638       2,381       6,212       7,885  
Net (losses) from fair value changes on subordinated debentures
    (506 )     (430 )     (51 )     (2,049 )     (2,606 )     (987 )     (8,324 )
Net gains on sales of investment securities
    1,022       -       -       -       -       1,022       214  
  Impairment losses on investment securities:
                                                 
Impairment losses on investment securities
    -       -       -       (444 )     (312 )     -       (946 )
Non credit-related losses on securities not
   expected to be sold recognized
                         
in other comprehensive loss before tax
    -       -       -       -       -       -       -  
Net impairment losses on investment securities
    -       -       -       (444 )     (312 )     -       (946 )
Total non-interest income
    23,141       22,388       24,184       23,658       23,477       69,713       74,564  
NON-INTEREST EXPENSE
                                                       
Salaries, wages and employee benefits
    30,809       30,408       31,449       31,499       31,544       92,666       91,972  
Net premises and equipment
    7,228       6,787       7,272       7,460       7,256       21,287       22,463  
Goodwill impairment
    -       -       -       -       -       -       8,250  
FDIC insurance
    2,213       2,726       3,457       3,411       3,641       8,396       11,794  
Other operating expenses
    14,803       14,200       14,659       17,123       15,524       43,662       47,706  
Total non-interest expense
    55,053       54,121       56,837       59,493       57,965       166,011       182,185  
Income before income taxes
    32,505       30,262       23,317       14,306       13,202       86,084       18,471  
Income tax expense
    7,692       7,054       4,537       5,664       895       19,283       5,777  
NET INCOME
    24,813       23,208       18,780       8,642       12,307       66,801       12,694  
Preferred dividends and accretion of preferred discount
    -       -       (1,691 )     (2,005 )     (2,006 )     (1,691 )     (6,016 )
Accelerated accretion from redemption of preferred stock
    -       -       (1,452 )     -       -       (1,452 )     -  
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
  $ 24,813     $ 23,208     $ 15,637     $ 6,637     $ 10,301     $ 63,658     $ 6,678  
                                                         
PER SHARE OF COMMON STOCK
                                                       
Basic earnings available to common shareholders
  $ 0.16     $ 0.15     $ 0.10     $ 0.05     $ 0.08     $ 0.42     $ 0.05  
Diluted earnings available to common shareholders
  $ 0.16     $ 0.15     $ 0.10     $ 0.05     $ 0.08     $ 0.42     $ 0.05  
Average Shares Basic
    151,693,223       151,601,052       150,461,063       134,380,086       126,102,037       151,256,293       126,008,098  
Average Shares Diluted
    151,927,269       151,835,402       150,765,883       134,471,788       126,255,249       151,513,773       126,179,126  
                                                         
SUPPLEMENTAL DATA (annualized, average)
                                                 
Return on Assets
    1.15 %     1.08 %     0.88 %     0.38 %     0.53 %     1.03 %     0.18 %
Return on Total Equity
    8.59 %     8.37 %     6.39 %     3.00 %     4.50 %     7.77 %     1.57 %
Return on Common Equity
    8.59 %     8.37 %     5.93 %     2.65 %     4.36 %     7.67 %     0.96 %
Return on Tangible Common Equity (1)
    11.33 %     11.16 %     8.03 %     3.76 %     6.42 %     10.24 %     1.43 %
Efficiency Ratio (3)
    58.54 %     58.25 %     59.61 %     60.36 %     58.51 %     58.81 %     58.25 %
   
                                                         
(3) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
                                 
                                                         
Efficiency Ratio Calculation
                                                       
Non-interest expense
  $ 55,053     $ 54,121     $ 56,837     $ 59,493     $ 57,965     $ 166,011     $ 182,185  
Less:
                                                       
Goodwill impairment
    -       -       -       -       -       -       8,250  
Operating expenses
  $ 55,053     $ 54,121     $ 56,837     $ 59,493     $ 57,965     $ 166,011     $ 173,935  
                                                         
Net interest income (taxable equivalent)
  $ 69,426     $ 70,087     $ 71,112     $ 72,849     $ 72,985     $ 210,625     $ 219,766  
                                                         
Non-interest income (loss)
    23,141       22,388       24,184       23,658       23,477       69,713       74,564  
Less:
                                                       
Gain on pension plan curtailment
    -       -       -       -       -       -       4,066  
Loss on sale of building
    (1,000 )     -       -       -       -       (1,000 )     -  
Loss on debt extinguishment
    (998 )     -       -       -       -       (998 )     -  
Net (losses) from fair value changes on subordinated debentures
    (506 )     (430 )     (51 )     (2,049 )     (2,606 )     (987 )     (8,324 )
Net gains on sales of investment securities
    1,022       -       -       -       -       1,022       -  
Adjusted revenue
  $ 94,049     $ 92,905     $ 95,347     $ 98,556     $ 99,068     $ 282,301     $ 298,588  
                                                         
Efficiency Ratio
    58.54 %     58.25 %     59.61 %     60.36 %     58.51 %     58.81 %     58.25 %
 
 
10

 
 
Financial Update for National Penn Bancshares (NPBC) for 9/30/2011
                         
                                           
Unaudited, dollars in thousands except share and per share data
                         
   
As of and for the Quarter Ended
   
For the Nine Months Ended
 
CHARGE-OFFS
 
9/30/2011
   
6/30/2011
   
3/31/2011
   
12/31/2010
   
9/30/2010
   
9/30/2011
   
9/30/2010
 
                                           
Loan Charge-offs
  $ 8,374     $ 10,512     $ 18,753     $ 22,456     $ 23,306     $ 37,639     $ 78,104  
Recoveries on Loans
    (1,538 )     (2,461 )     (1,659 )     (2,443 )     (2,742 )     (5,658 )     (7,808 )
Net Loan Charge-offs
  $ 6,836     $ 8,051     $ 17,094     $ 20,013     $ 20,564     $ 31,981     $ 70,296  
Net Loan Charge-offs to Average Loans (annualized)
    0.53 %     0.61 %     1.31 %     1.44 %     1.43 %     0.82 %     1.61 %
                                                         
NET CHARGE OFF DETAIL
                                                       
Commercial and Industrial Loans and Leases
  $ 1,962     $ 5,066     $ 9,319     $ 7,363     $ 2,166     $ 16,347     $ 13,040  
                                                         
Commercial Real Estate-Permanent
    83       1,242       3,946       2,903       1,655       5,271       3,524  
Commercial Real Estate-Construction
    2,637       828       873       1,973       12,899       4,338       37,653  
Total Commercial Real Estate Loans
    2,720       2,070       4,819       4,876       14,554       9,609       41,177  
                                                         
Residential Mortgages
    998       483       1,643       5,620       1,467       3,124       9,535  
Home Equity Lines and Loans
    596       833       1,158       1,280       935       2,587       2,058  
All other Consumer Loans
    560       (401 )     155       874       1,442       314       4,486  
Total Consumer Loans
    2,154       915       2,956       7,774       3,844       6,025       16,079  
                                                         
Net Loans Charged-off
  $ 6,836     $ 8,051     $ 17,094     $ 20,013     $ 20,564     $ 31,981     $ 70,296  
                                                         
   
As of
                 
ASSET QUALITY AND OTHER DATA
 
9/30/2011
   
6/30/2011
   
3/31/2011
   
12/31/2010
   
9/30/2010
                 
                                                         
Non-Accrual Commercial and Industrial Loans and Leases
  $ 29,995     $ 31,275     $ 34,122     $ 34,869     $ 29,878                  
                                                         
Non-Accrual Commercial Real Estate-Permanent
    8,314       11,879       15,407       17,821       15,510                  
Non-Accrual Commercial Real Estate-Construction
    14,549       15,844       18,012       19,392       29,866                  
Total Non-Accrual Commercial Real Estate Loans
    22,863       27,723       33,419       37,213       45,376                  
                                                         
Non-Accrual Residential Mortgages
    4,472       5,196       5,303       5,802       4,543                  
Non-Accrual Home Equity Lines and Loans
    1,763       1,527       1,965       2,133       2,008                  
All other Non-Accrual Consumer Loans
    1,907       2,062       1,810       2,094       1,845                  
Total Non-Accrual Consumer Loans
    8,142       8,785       9,078       10,029       8,396                  
                                                         
Total Non-Accrual Loans
    61,000       67,783       76,619       82,111       83,650                  
                                                         
Restructured Loans
    4,372       3,833       351       -       8,544                  
Loans 90+ Days Past Due & Still Accruing
    1,408       1,567       2,183       1,753       2,237                  
Total Non-performing Loans
    66,780       73,183       79,153       83,864       94,431                  
                                                         
Other Real Estate Owned & Repossessed Assets
    8,029       8,407       7,653       7,453       7,818                  
Total Non-performing Assets
  $ 74,809     $ 81,590     $ 86,806     $ 91,317     $ 102,249                  
                                                         
Allowance for Loan and Lease Losses
  $ 131,073     $ 137,909     $ 142,960     $ 150,054     $ 153,475                  
Allowance for Loan and Lease Losses/Non-Performing Loans
    196.3 %     188.4 %     180.6 %     178.9 %     162.5 %                
Allowance for Loan and Lease Losses/Non-Performing Assets
    175.2 %     169.0 %     164.7 %     164.3 %     150.1 %                
Provision/Charge-Offs, net
    0.0 %     37.3 %     58.5 %     87.4 %     97.3 %                
Classified Loans
  $ 374,850     $ 403,145     $ 438,275     $ 479,336     $ 498,631                  
Classified Loans/Total Loans
    7.26 %     7.78 %     8.36 %     9.00 %     8.84 %                
Delinquent Loans
  $ 28,824     $ 20,413     $ 25,342     $ 27,806     $ 33,676                  
Delinquent Loans/Total Loans
    0.56 %     0.39 %     0.48 %     0.52 %     0.60 %                
                                                         
   
As of
                 
REGULATORY CAPITAL DATA
 
9/30/2011
   
6/30/2011
   
3/31/2011
   
12/31/2010
   
9/30/2010
                 
                                                         
Tier 1 Capital
  $ 955,766     $ 922,457     $ 889,473     $ 924,143     $ 850,185                  
Tier 1 Leverage Ratio
    11.63 %     11.20 %     10.66 %     10.59 %     9.67 %                
Tier 1 Ratio (%)
    16.85 %     16.43 %     15.66 %     16.12 %     14.00 %                
Total Capital
  $ 1,026,780     $ 992,729     $ 960,459     $ 996,288     $ 926,499                  
Total Capital Ratio (%)
    18.12 %     17.68 %     16.91 %     17.38 %     15.26 %                
Total Risk-Weighted Assets
  $ 5,670,722     $ 5,615,341     $ 5,679,123     $ 5,732,730     $ 6,070,678                  
                                                         
 
 
11

 
 
Financial Update for National Penn Bancshares (NPBC) for 9/30/2011
                   
                               
Unaudited, dollars in thousands except share and per share data
                   
   
As of
 
PERIOD END BALANCES:
 
9/30/2011
   
6/30/2011
   
3/31/2011
   
12/31/2010
   
9/30/2010
 
                               
Earning Assets / Liabilities
                             
Loan Breakdown:  (Regulatory)
                             
Commercial/Industrial
  $ 813,356     $ 838,489     $ 808,118     $ 804,602     $ 878,790  
Commercial Real Estate (1)
    1,697,975       1,715,616       1,749,215       1,740,029       1,810,442  
Residential Mortgage
    1,272,478       1,295,463       1,295,014       1,294,751       1,381,117  
Real Estate Construction and Land Development
    216,250       207,643       270,584       339,242       375,341  
Home Equity
    766,299       764,467       738,629       755,829       792,496  
Consumer
    213,014       213,570       228,904       236,107       244,878  
Other Loans
    181,903       143,678       154,682       156,163       158,766  
Total Loans
    5,161,275       5,178,926       5,245,146       5,326,723       5,641,830  
                                         
Allowance for Loan and Lease Losses/Total Loans and Leases
    2.54 %     2.66 %     2.73 %     2.82 %     2.72 %
                                         
Investment Securities and Other Securities
    2,373,278       2,290,568       2,235,777       2,259,690       2,255,265  
Other Earning Assets
    422,942       513,132       392,337       612,099       609,733  
Total Earning Assets (net of loan loss reserve)
  $ 7,826,422     $ 7,844,717     $ 7,730,300     $ 8,048,458     $ 8,353,353  
(1) Includes owner occupied
                                       
                                         
Loan Breakdown: (Internal)
                                       
Commercial & Industrial Loans and Leases
                                       
  Business Purpose, Real Estate secured
  $ 892,952     $ 884,606     $ 896,521     $ 948,506     $ 987,551  
  Business Purpose, not secured by Real Estate
    927,631       913,115       888,249       886,692       953,645  
  Owner Occupied Commercial Real Estate
                                       
  - Permanent
    566,732       577,092       578,332       552,129       556,738  
  - Construction / Development
    28,927       27,003       38,775       37,196       38,902  
  Leasing
    5,796       7,125       9,054       10,437       12,230  
Total Commercial & Industrial Loans & Leases
    2,422,038       2,408,941       2,410,931       2,434,960       2,549,066  
                                         
Commercial Real Estate
                                       
   Non Owner Occupied
                                       
   - Permanent
    798,106       818,564       819,875       768,988       855,777  
   - Construction / Development
    168,537       171,063       206,924       281,056       312,086  
Total Commercial Real Estate
    966,643       989,627       1,026,799       1,050,044       1,167,863  
                                         
Consumer Loans
                                       
Residential Mortgage (personal purpose)
                                       
   Permanent
    726,486       728,430       742,423       758,301       795,420  
   Construction
    7,606       5,909       4,505       7,113       9,966  
Total Residential Mortgages
    734,092       734,339       746,928       765,414       805,386  
                                         
   Home Equity Loans and Direct Installment Loans
    362,808       388,173       415,599       423,755       446,866  
   Home Equity Lines of Credit
    394,386       367,127       325,186       321,369       332,074  
Total Home Equity Lines and Loans
    757,194       755,300       740,785       745,124       778,940  
                                         
   Private Banking Credit Lines
    112,011       119,850       139,721       150,811       159,991  
   Indirect Vehicle Loans
    126,776       125,796       121,014       131,416       133,297  
   Other
    42,521       45,073       58,968       48,954       47,287  
All Other Consumer Loans
    281,308       290,719       319,703       331,181       340,575  
Total Consumer Loans
    1,772,594       1,780,358       1,807,416       1,841,719       1,924,901  
                                         
Total Loans
  $ 5,161,275     $ 5,178,926     $ 5,245,146     $ 5,326,723     $ 5,641,830  
                                         
Deposit Breakdown:
                                       
   Savings
  $ 451,767     $ 464,055     $ 457,395     $ 438,879     $ 430,806  
   NOW Accounts
    1,311,819       1,158,161       1,128,644       1,181,850       1,294,582  
   Money Market Accounts
    1,651,185       1,631,779       1,655,115       1,664,620       1,714,771  
   CDs less than $100k
    1,213,798       1,261,026       1,433,808       1,378,060       1,512,573  
   CDs $100k or greater
    531,111       589,329       423,733       586,929       737,552  
Total Interest Bearing Deposits
    5,159,680       5,104,350       5,098,695       5,250,338       5,690,284  
   Borrowings
    1,410,212       1,515,611       1,472,987       1,590,996       1,605,411  
Total Interest Bearing Liabilities
  $ 6,569,892     $ 6,619,961     $ 6,571,682     $ 6,841,334     $ 7,295,695  
 
 
 
 
 
 
12

 
 
 
Financial Update for National Penn Bancshares (NPBC) for 9/30/2011
                                                             
                                                                                     
Unaudited, dollars in thousands except share and per share data
 
                                                             
   
Quarterly, as of
         
Nine Months, as of
 
   
9/30/2011
   
6/30/2011
   
3/31/2011
   
12/31/2010
   
9/30/2010
   
9/30/2011
   
9/30/2010
 
   
Avg Bal
   
Yield
   
Avg Bal
   
Yield
   
Avg Bal
   
Yield
   
Avg Bal
   
Yield
   
Avg Bal
   
Yield
   
Avg Bal
   
Yield
   
Avg Bal
   
Yield
 
                                                                                     
Total Loans
  $ 5,122,557       5.15 %   $ 5,228,365       5.24 %   $ 5,311,204       5.34 %   $ 5,506,513       5.35 %   $ 5,703,685       5.35 %   $ 5,220,018       5.24 %   $ 5,847,626       5.38 %
Investment Securities
    2,287,630       4.21 %     2,258,355       4.32 %     2,245,416       4.39 %     2,274,090       4.24 %     2,227,732       4.34 %     2,263,955       4.30 %     2,220,549       4.44 %
Interest Earning Deposits
    543,410       0.24 %     467,157       0.20 %     508,684       0.22 %     642,204       0.25 %     535,446       0.21 %     506,544       0.22 %     445,449       0.22 %
                                                                                                                 
Total Earning Assets
    7,953,597       4.54 %     7,953,877       4.68 %     8,065,304       4.75 %     8,422,807       4.66 %     8,466,862       4.76 %     7,990,517       4.66 %     8,513,624       4.86 %
Total Assets
    8,588,269       3.98 %     8,599,923       4.09 %     8,701,649       4.16 %     9,122,895       4.30 %     9,197,254       4.39 %     8,629,532       4.08 %     9,253,781       4.47 %
                                                                                                                 
Savings
    456,271       0.18 %     462,870       0.18 %     442,830       0.19 %     435,069       0.20 %     445,327       0.27 %     454,039       0.18 %     438,715       0.30 %
NOW Accounts
    1,211,663       0.18 %     1,188,644       0.22 %     1,148,991       0.22 %     1,265,646       0.23 %     1,203,831       0.28 %     1,183,329       0.21 %     1,171,636       0.35 %
Money Market Accounts
    1,647,975       0.59 %     1,638,733       0.60 %     1,656,059       0.59 %     1,682,091       0.60 %     1,728,823       0.82 %     1,647,559       0.59 %     1,726,401       0.88 %
CDs
    1,798,414       1.47 %     1,857,969       1.66 %     1,889,073       1.76 %     2,124,910       1.85 %     2,279,366       1.92 %     1,848,153       1.63 %     2,373,734       1.98 %
                                                                                                                 
Total Interest Bearing Deposits
    5,114,323       0.77 %     5,148,216       0.85 %     5,136,953       0.90 %     5,507,716       0.97 %     5,657,347       1.11 %     5,133,080       0.84 %     5,710,486       1.18 %
                                                                                                                 
Non-Interest Bearing Deposits
    837,953               837,635               813,704               818,330               831,484               829,853               810,235          
Total Deposits
    5,952,276       0.66 %     5,985,851       0.74 %     5,950,657       0.78 %     6,326,046       0.84 %     6,488,831       0.96 %     5,962,933       0.72 %     6,520,721       1.04 %
                                                                                                                 
Securities sold under repurchase agreements
    675,945       1.34 %     687,147       1.37 %     711,100       1.37 %     757,234       1.35 %     728,235       1.50 %     691,268       1.36 %     738,751       1.53 %
Short-term borrowings
    6,732       0.00 %     6,713       0.00 %     6,850       0.00 %     7,080       0.00 %     6,669       0.00 %     6,765       0.00 %     6,839       0.00 %
Federal Home Loan Bank advances
    623,713       4.50 %     627,525       4.50 %     651,208       4.49 %     704,670       4.35 %     706,183       4.35 %     634,048       4.50 %     732,721       4.34 %
Subordinated debentures
    143,266       6.63 %     142,836       6.70 %     142,781       6.73 %     140,753       6.75 %     138,153       6.89 %     142,963       6.69 %     136,785       6.99 %
Total Deposits and borrowings
    7,401,932       1.16 %     7,450,072       1.22 %     7,462,596       1.27 %     7,935,783       1.31 %     8,068,071       1.41 %     7,437,977       1.22 %     8,135,817       1.48 %
Total Interest Bearing Liabilities
  $ 6,563,979       1.31 %   $ 6,612,437       1.38 %   $ 6,648,892       1.43 %   $ 7,117,453       1.46 %   $ 7,236,587       1.57 %   $ 6,608,124       1.37 %   $ 7,325,582       1.64 %
                                                                                                                 
Net Yield on Earning Assets: (Margin)
      3.46 %             3.53 %             3.58 %             3.43 %             3.42 %             3.52 %             3.45 %
                                                                                                                 
Wealth Assets:
                                                                                                               
Assets under administration
  $ 4,067,918             $ 4,364,447             $ 4,057,142             $ 3,973,910             $ 10,616,931                                          
Assets under management
    2,118,076               2,247,042               2,136,596               2,092,149               2,394,916                                          
(included above)
                                                                                                               
Christiana Bank and Trust
                                                                                                               
Trust Revenues
  $ -             $ -             $ -             $ 862    
(a)
    $ 1,539                                          
                                                                                                                 
(a) Through December 3, 2010
                                                                                                               
                                                                                                                 
                                                                                                                 
 
 
 
 
 
 
13

 
 
 
Financial Update for National Penn Bancshares (NPBC) for 9/30/2011
             
                         
                         
                         
Unaudited, dollars in thousands except share and per share data
             
     
 Quarterly, as of
 
     
9/30/2011
 
6/30/2011
 
3/31/2011
 
12/31/2010
 
9/30/2010
 
STATES OF OPERATION AND BANKING OFFICES
                 
 
BY STATE (LATEST AVAILABLE DATA)
                   
                         
 
PA
                   
Total Number of Banking Offices
                 122
 
                 122
 
                 122
 
                 124
 
                 124
 
Total Number of Insured Subsidiaries
                   
 
(Bank & Thrift Subsidiaries)
                     1
 
                     1
 
                     1
 
                     1
 
                     1
 
Total Number of ATMs
                 129
 
                 131
 
                 132
 
                 133
 
                 132
 
                         
 
MD
                   
Total Number of Banking Offices
                     1
 
                     1
 
                     1
 
                     1
 
                     1
 
Total Number of Insured Subsidiaries
                   
 
(Bank & Thrift Subsidiaries)
                    -
 
                    -
 
                    -
 
                    -
 
                    -
 
Total Number of ATMs
                     1
 
                     1
 
                     1
 
                     1
 
                     1
 
                         
 
DE
                   
Total Number of Banking Offices
                    -
 
                    -
 
                    -
 
                    -
 
                     2
 
Total Number of Insured Subsidiaries
                   
 
(Bank & Thrift Subsidiaries)
                    -
 
                    -
 
                    -
 
                    -
 
                     1
 
Total Number of ATMs
                    -
 
                    -
 
                    -
 
                    -
 
                     2
 
                         
 
TOTAL
                   
Total Number of Banking Offices
                 123
 
                 123
 
                 123
 
                 125
 
                 127
 
Total Number of Insured Subsidiaries
                   
 
(Bank & Thrift Subsidiaries)
                     1
 
                     1
 
                     1
 
                     1
 
                     2
 
Total Number of ATMs
                 130
 
                 132
 
                 133
 
                 134
 
                 135
 
                         
EOP Employees (Full Time Equivalent)
             1,683
 
             1,700
 
             1,676
 
             1,728
 
             1,771
 
                         
 
 
 
 
14