National Penn Bancshares, Inc. (Nasdaq: NPBC) reported net income of $24.6 million, or $0.17 per diluted share, for the third quarter of 2013, compared to $25.0 million, or $0.17 per diluted share for the second quarter of 2013. Year-to-date 2013 adjusted net income 1 was $0.50 per diluted share, exclusive of the first quarter 2013 debt extinguishment and retail trust preferred redemption, compared to net income of $0.49 per diluted share, for the prior year period. Adjusted return on average assets 1 was 1.17% for the third quarter and year-to-date 2013.
“This quarter is indicative of our ongoing commitment to consistent results at a high level, despite the sluggish economy and difficult rate environment,” said Scott V. Fainor, president and CEO of National Penn. “Our team remains focused on prudently managing and positioning the Company to maximize longer-term shareholder value.”
Management’s recent and ongoing strategies to mitigate the impact of the low interest rate environment resulted in a stable net interest margin of 3.51% for the first nine months of 2013, equal to the net interest margin for the first nine months of 2012. Year-to-date 2013, the cost of interest-bearing liabilities has been reduced from 0.87% to 0.54%. Net interest margin for the third quarter of 2013 was 3.49%, compared to 3.53% in the prior quarter, while net interest income of $63.1 million for the third quarter was comparable to the prior quarter and the third quarter of 2012. Loans increased modestly in the third quarter of 2013 as trends continue to reflect management’s disciplined approach of growing quality loans, while maintaining underwriting standards and managing interest rate risk.
Favorable credit quality trends continued as classified loans declined 7% in the third quarter of 2013 and have declined 26% over the last twelve months. Net charge-offs during the quarter were 0.38% of average loans on an annualized basis. The continued strength of National Penn’s asset quality supported a modest reduction in the provision for loan losses to $1.25 million, compared to a provision of $1.5 million in the second quarter of 2013. Asset quality ratios remained strong as non-performing loans were 1.04% of total loans, and the allowance for loan loss coverage of non-performing loans was 184% at September 30, 2013.