National Penn Bancshares, Inc. (Nasdaq: NPBC) reported net income available to common shareholders of $26.0 million for the third quarter 2012, an increase of 16% compared to $22.4 million for the second quarter of 2012. Diluted earnings per share were $0.17, compared to $0.15 per diluted share for the second quarter of 2012. Year-to-date net income available to common shareholders also increased 16% to $73.8 million from $63.7 million for the prior year period. Diluted earnings per share were $0.49, compared to $0.42 per diluted share for the nine months ended September 30, 2011.
Return on average assets was 1.23% for the third quarter and 1.17% for the nine months ended September 30, 2012. National Penn’s capital remained strong at September 30, 2012, as the ratio of tangible common equity to tangible assets was 11.56% 1 and the tier 1 common and total capital ratios were 15.07% and 18.70%, respectively. Strong earnings and capital levels provided the basis for a cash dividend increase to $0.10 per common share in the fourth quarter of 2012.
Net interest income increased, and the net interest margin expanded to 3.50% from 3.48% in the prior quarter, benefitting from the previously announced restructuring of FHLB advances. Period-end total loans and leases increased by $46 million, while total average loans for the third quarter of 2012 were comparable to the second quarter. For the nine months ended September 30, 2012, net interest margin was 3.51%, as compared to 3.52% a year ago.
“I am very pleased with the strength of National Penn’s financial performance,” said Scott V. Fainor, president and CEO of National Penn. “We will continue to operate with a sense of urgency and accountability to provide consistent returns for our shareholders and utilize the strength of our balance sheet as a competitive advantage.”Asset quality remained strong as the level of classified loans continued to improve in the third quarter and declined by $74.2 million, or 20%, year-to-date. Net charge-offs totaled $5.1 million for the third quarter of 2012, as compared to $6.8 million in the second quarter. Annualized net charge-offs totaled 0.39% of average loans for the quarter and 0.49% for year-to-date 2012. Based in part on these metrics, the provision for loan and lease losses for the third quarter was $2.0 million, equal to the provision for the second quarter of 2012. Year-to-date provision expense totaled $6.0 million, as compared to $13.0 million of provision expense for the prior year period. At September 30, 2012, the allowance for loan and lease losses to non-performing loans was 195% and represented 2.16% of total loans and leases.