National Penn Bancshares, Inc. (Nasdaq: NPBC) reported net income available to common shareholders of $98.9 million, or $0.66 per diluted common share, for the year ended December 31, 2012, a 17% increase compared to net income available to common shareholders of $84.4 million, or $0.56 per diluted common share, for 2011. For the fourth quarter of 2012, diluted earnings per common share were $0.17 compared to $0.14 per diluted common share for the fourth quarter of 2011.
“With a return on average assets of 1.19%, the fourth quarter was another strong quarter, consistent with our solid performance for the year,” said Scott Fainor, president and CEO of National Penn. “Our ability to maintain our net interest margin in an unprecedented low interest rate environment, coupled with the continuation of exceptional asset quality metrics and our focused efforts on expense control, enabled us to deliver these positive results.”
Asset quality remained strong as the level of classified assets continued to improve, declining $34.9 million or 12% in the fourth quarter 2012 and $109 million or 29% during the year. Non-performing loans declined during 2012 by 20%, and the ratio of net loan charge-offs to average loans improved to 0.46% in 2012 from 0.74% in 2011. These trends resulted in a provision for loan losses of $8.0 million for 2012, compared to $15.0 million for 2011. At December 31, 2012, the allowance for loan and lease losses was 206% of non-performing loans and 2.12% of total loans and leases.
Strategies undertaken to address the low interest rate environment resulted in a stable net interest margin throughout 2012. Net interest margin for the full year 2012 was 3.50%, compared to 3.52% in 2011, and was 3.46% in the fourth quarter of 2012, as compared to 3.50% in the previous quarter. Net interest income for 2012 and 2011 totaled $254 million and $260 million, respectively. During 2012, commercial loans grew by approximately 3%. A reduction in asset yields was mitigated by initiatives throughout the year to improve the mix and cost of interest-bearing liabilities. These initiatives contributed to an improvement in overall funding costs of 32 basis points during the year.