National Penn Bancshares, Inc. (Nasdaq: NPBC) reported net income of $22.7 million, or $0.16 per diluted share, for the first quarter of 2014, compared to $21.2 million or $0.15 per diluted share in the fourth quarter of 2013 which included a non-recurring charge related to previously announced expense reduction initiatives. Adjusted net income 1 for the fourth quarter was $25.1 million, or $0.17 per diluted share. Return on average assets for the first quarter of 2014 was 1.09%.
“During the quarter, the strength of our balance sheet allowed us to consummate the repurchase of approximately five percent of our outstanding shares,” said Scott V. Fainor, president and CEO of National Penn. “We are also pleased to report once again consistent, high-level performance achieved by our Company for the first quarter of 2014.”
The net interest margin for the first quarter of 2014 was 3.44%, compared to 3.51% in the prior quarter which benefitted from the impact of a loan prepayment which improved the prior quarter margin by approximately five basis points. Average loans increased $85.8 million or 6.6% on an annualized basis, driven by growth in commercial loans, while loan quality continued to improve in the quarter.
During the first quarter, National Penn continued to benefit from strong asset quality as non-performing assets decreased 6.7% and classified loans decreased 8.9% from the prior quarter. Over the last twelve months, non-performing assets decreased 11.0%, while classified loans decreased 28.1%. Further reflective of the strength of National Penn’s credit quality profile, non-performing loans were 0.89% of total loans and the allowance for loan loss as a percentage of non-performing loans was 194% at March 31, 2014. The provision for the quarter remained relatively consistent at $1.3 million, reflective of modest loan growth and continued strength in asset quality.Operating expenses 1 during the first quarter remained stable at $52.3 million, compared to $51.8 million in the prior quarter exclusive of a restructuring charge. Our disciplined approach resulted in operating expenses 1 remaining relatively flat from the same period in 2013. During the first quarter, non-interest income decreased $1.2 million, primarily as a result of seasonality, coupled with a $0.5 million loss on an unconsolidated equity investment. As previously announced, National Penn’s Board of Directors declared a second quarter dividend of ten cents per common share to shareholders of record as of Saturday, May 3, 2014, payable on Friday, May 16, 2014. The dividend declaration was supported by National Penn’s continued strong capital levels as the tier 1 common and tangible common equity to tangible assets ratios were 13.22% and 9.86%, respectively at March 31, 2014.