National Penn Bancshares, Inc. Reports Third Quarter 2012 Results

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.

The current interest rate environment enhanced non-interest income in the third quarter of 2012 due to an increase in customer interest rate swap and mortgage activity. Total operating expenses continued to be well controlled and resulted in an efficiency ratio of 56.3% 1 for the quarter, compared to 58.4% in the prior quarter.

Scott V. Fainor stated “The increasingly positive trends in the difficult current economic environment are a result of the dedication of National Penn’s team. Our consistent performance and continued returns of capital through share repurchases and dividend increases evidence our commitment to enhancing long term shareholder value.”

About National Penn Bancshares, Inc.:

National Penn Bancshares, Inc., with approximately $8.4 billion in assets, is a bank holding company based in Pennsylvania. Headquartered in Boyertown, National Penn operates 120 branch offices comprising 119 branches in Pennsylvania and one branch in Maryland through National Penn Bank and its 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.

1 Statement 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.
  • 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 and return on assets exclude the effects of certain gains and losses, adjusted for taxes when applicable. Adjusted net income and returns provide methods 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 also adjusted to 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: regulatory requirements or other actions mandated by National Penn’s regulators, 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), deterioration in the credit quality of loans, the effect of credit risk exposure, the geographic concentration of National Penn’s operations, declines in the value of National Penn’s assets and the effect of any resulting impairment charges, National Penn’s ability to raise capital and maintain capital levels, increases in operating costs (including those mandated by National Penn’s regulators), competition for personnel and from other financial institutions, variations in interest rates, interruptions or breaches of National Penn’s security systems, the development and maintenance of National Penn’s information technology, the ability of National Penn and its subsidiaries to pay dividends, and the nature and frequency of litigation and other similar proceedings to which National Penn may be a party. 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, 2011, 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.
 
Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2012
         
Unaudited, dollars in thousands except share and per share data
 
As of
9/30/2012   6/30/2012   9/30/2011
SUMMARY BALANCE SHEET            
Total assets $ 8,435,526 $ 8,395,864 $ 8,611,641
Investment securities and other securities 2,310,459 2,316,894 2,373,278
Total loans and leases 5,256,854 5,210,767 5,161,275
Deposits 5,947,744 5,845,543 5,992,991
Borrowings 1,216,707 1,298,477 1,410,212
Shareholders' equity 1,214,330 1,199,760 1,164,204
Tangible book value per common share (2) $ 6.29 $ 6.18 $ 5.86
Tangible common equity / tangible assets (2) 11.56 % 11.43 % 10.66 %
 
Three Months Ended Nine Months Ended
9/30/2012   6/30/2012   9/30/2011 9/30/2012   9/30/2011
EARNINGS                  
Total interest income $ 78,344 $ 79,896 $ 86,055 $ 239,654 $ 263,153
Total interest expense   14,790       16,697       21,638     49,083       67,771  
Net interest income 63,554 63,199 64,417 190,571 195,382
Provision for loan and lease losses   2,000       2,000       -     6,000       13,000  
Net interest income after provision for loan and lease losses 61,554 61,199 64,417 184,571 182,382
Loss on sale of building - - (1,000 ) - (1,000 )
Loss on debt extinguishment - - (998 ) - (998 )
Net gains (losses) from fair value changes on subordinated debentures 101 (810 ) (506 ) 936 (987 )
Net (losses) gains on investment securities - (277 ) 1,022 (277 ) 1,022
Other non-interest income 26,664 21,543 24,623 70,803 71,676
Other non-interest expense   53,339       52,269       55,053     158,048       166,011  
Income before income taxes 34,980 29,386 32,505 97,985 86,084
Income tax expense   8,964       6,938       7,692     24,219       19,283  
Net income   26,016       22,448       24,813     73,766       66,801  
Preferred dividends and accretion of preferred discount - - - - (1,691 )
Accelerated accretion from redemption of preferred stock   -       -       -     -       (1,452 )
Net income available to common shareholders $ 26,016     $ 22,448     $ 24,813   $ 73,766     $ 63,658  
 
PERFORMANCE RATIOS                  
Net interest margin 3.50 % 3.48 % 3.46 % 3.51 % 3.52 %
Return on average assets 1.23 % 1.07 % 1.15 % 1.17 % 1.03 %
Adjusted return on average assets (3) 1.23 % 1.09 % 1.15 % 1.16 % 1.02 %
Return on average total shareholders' equity 8.60 % 7.50 % 8.59 % 8.22 % 7.77 %
Return on average tangible common equity (1) 11.10 % 9.69 % 11.33 % 10.64 % 10.24 %
Efficiency ratio (4) 56.26 % 58.42 % 58.54 % 57.36 % 58.81 %
 
PER SHARE                  
Basic earnings available to common shareholders $ 0.17 $ 0.15 $ 0.16 $ 0.49 $ 0.42
Diluted earnings available to common shareholders 0.17 0.15 0.16 0.49 0.42
Dividends per common share 0.09 0.07 0.03 0.21 0.05
Average shares - basic 150,157,622 151,732,402 151,693,223 151,325,579 151,256,293
Average shares - diluted 150,454,749 152,011,995 151,927,269 151,615,435 151,513,773
                     
 
(1) RECONCILIATION TABLES FOR NON-GAAP FINANCIAL MEASURES
 
Three Months Ended Nine Months Ended
9/30/2012   6/30/2012   9/30/2011 9/30/2012   9/30/2011
Return on average tangible common equity
Return on average shareholders' equity 8.60 % 7.50 % 8.59 % 8.22 % 7.77 %
Effect of preferred equity - % - % - % - % (0.10 )%
Effect of goodwill and intangibles   2.50 %   2.19 %   2.74 %   2.42 %   2.57 %
Return on average tangible common equity   11.10 %   9.69 %   11.33 %   10.64 %   10.24 %
Average tangible equity:
Average shareholders' equity $ 1,203,072 $ 1,203,757 $ 1,145,679 $ 1,198,422 $ 1,149,458
Average preferred equity - - - - (40,251 )
Average goodwill and intangibles   (270,720 )   (271,990 )   (276,439 )   (272,019 )   (278,018 )
Average total tangible common equity $ 932,352   $ 931,767   $ 869,240   $ 926,403   $ 831,189  
 
Adjusted net income reconciliation
Net income available to common shareholders $ 26,016 $ 22,448 $ 24,813 $ 73,766 $ 63,658
After tax unrealized fair market (gain) loss on subordinated debentures (66 ) 527 329 (608 ) 642
Accelerated accretion from redemption of preferred stock   -     -     -     -     1,452  
Adjusted net income available to common shareholders $ 25,950   $ 22,975   $ 25,142   $ 73,158   $ 65,752  
 
Earnings per share
Net income available to common shareholders $ 0.17 $ 0.15 $ 0.16 $ 0.49 $ 0.42
After tax unrealized fair value (gain) loss on subordinated debentures - - - - -
Accelerated accretion from redemption of preferred stock   -     -     -     -     0.01  
Adjusted net income available to common shareholders $ 0.17   $ 0.15   $ 0.16   $ 0.49   $ 0.43  
   
Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2012
     
Unaudited, dollars in thousands except share and per share data
 
As of
9/30/2012   6/30/2012   3/31/2012   12/31/2011   9/30/2011
BALANCE SHEET - ASSETS
Cash and due from banks $ 120,421 $ 115,564 $ 108,752 $ 129,637 $ 116,057
Interest-earning deposits with banks   211,943     221,419     344,427     321,885     422,942  
Total cash and cash equivalents 332,364 336,983 453,179 451,522 538,999
 
 
Investment securities available-for-sale, at fair value 1,773,579 1,769,359 1,779,613 1,747,019 1,790,654
Investment securities held-to-maturity 472,884 481,341 487,507 496,574 509,773
Other securities 63,996 66,194 68,301 70,518 72,851
Loans held-for-sale 22,703 16,908 16,909 12,216 17,144
 
Loans and leases 5,234,151 5,193,859 5,184,747 5,175,885 5,144,131
Allowance for loan and lease losses   (113,542 )   (116,650 )   (121,452 )   (126,640 )   (131,073 )
Loans and leases, net 5,120,609 5,077,209 5,063,295 5,049,245 5,013,058
 
Premises and equipment, net 96,349 96,566 95,937 96,198 100,880
Accrued interest receivable 31,448 30,511 31,241 30,991 33,110
Bank owned life insurance 141,991 140,747 139,507 138,274 137,017
Other real estate owned and other repossessed assets 7,174 7,201 7,647 7,716 8,029
Goodwill 258,279 258,279 258,279 258,279 258,279
Other intangible assets, net 11,852 13,085 14,408 15,770 17,370
Unconsolidated investments 11,337 10,109 11,699 12,173 11,927
Other assets   90,961     91,372     96,513     99,786     102,550  
TOTAL ASSETS $ 8,435,526   $ 8,395,864   $ 8,524,035   $ 8,486,281   $ 8,611,641  
 
BALANCE SHEET - LIABILITIES
Non-interest bearing deposits $ 902,295 $ 903,766 $ 884,025 $ 863,703 $ 833,311
Interest bearing deposits   5,045,449     4,941,777     5,004,358     5,011,116     5,159,680  
Total deposits 5,947,744 5,845,543 5,888,383 5,874,819 5,992,991
 
Customer repurchase agreements 534,613 533,389 542,706 523,978 500,099
Structured repurchase agreements 75,000 85,000 85,000 85,000 140,000
Short-term borrowings - - - - 6,400
Federal Home Loan Bank advances, net of prepayment fees incurred 462,720 535,613 615,863 616,111 619,946
Subordinated debentures 144,374 144,475 143,666 145,310 143,767
Accrued interest payable and other liabilities   56,745     52,084     47,587     60,376     44,234  
TOTAL LIABILITIES   7,221,196     7,196,104     7,323,205     7,305,594     7,447,437  
 
BALANCE SHEET - SHAREHOLDERS' EQUITY
Common stock 1,387,073 1,386,177 1,384,657 1,383,082 1,380,728
Accumulated deficit (181,225 ) (193,715 ) (205,497 ) (223,189 ) (237,862 )
Accumulated other comprehensive income 28,617 25,435 21,670 20,794 21,338
Treasury stock   (20,135 )   (18,137 )   -     -     -  
TOTAL SHAREHOLDERS' EQUITY   1,214,330     1,199,760     1,200,830     1,180,687     1,164,204  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,435,526   $ 8,395,864   $ 8,524,035   $ 8,486,281   $ 8,611,641  
 
 
COMMON SHARE AND PER SHARE DATA
Book value $ 8.09 $ 7.98 $ 7.88 $ 7.77 $ 7.67
Tangible book value (2) $ 6.29 $ 6.18 $ 6.09 $ 5.97 $ 5.86
Dividends $ 0.09 $ 0.07 $ 0.05 $ 0.04 $ 0.03
Shares outstanding (end of period, net of treasury) 150,048,383 150,258,232 152,295,895 151,883,036 151,714,696
                     
 
(2) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
 
Total shareholders' equity $ 1,214,330 $ 1,199,760 $ 1,200,830 $ 1,180,687 $ 1,164,204
Goodwill and intangibles   (270,131 )   (271,364 )   (272,687 )   (274,049 )   (275,649 )
Tangible common equity $ 944,199   $ 928,396   $ 928,143   $ 906,638   $ 888,555  
Common shares outstanding 150,048,383 150,258,232 152,295,895 151,883,036 151,714,696
Tangible book value per share $ 6.29 $ 6.18 $ 6.09 $ 5.97 $ 5.86
 
Total assets $ 8,435,526 $ 8,395,864 $ 8,524,035 $ 8,486,281 $ 8,611,641
Goodwill and intangibles   (270,131 )   (271,364 )   (272,687 )   (274,049 )   (275,649 )
Tangible assets $ 8,165,395   $ 8,124,500   $ 8,251,348   $ 8,212,232   $ 8,335,992  
Tangible common equity/tangible assets 11.56 % 11.43 % 11.25 % 11.04 % 10.66 %
 
(3) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
 
Adjusted net income available to common shareholders (1) $ 25,950 $ 22,975 $ 24,233 $ 23,176 $ 24,813
Average assets $ 8,386,342 $ 8,473,164 $ 8,397,381 $ 8,525,271 $ 8,588,269
Adjusted return on average assets (annualized) 1.23 % 1.09 % 1.16 % 1.08 % 1.15 %
       
Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2012
     
Unaudited, dollars in thousands except share and per share data
 
For the Quarter Ended For the Nine Months Ended
9/30/2012   6/30/2012   3/31/2012   12/31/2011   9/30/2011 9/30/2012   9/30/2011
INTEREST INCOME
Loans and leases, including fees $ 60,269 $ 61,116 $ 62,291 $ 64,040 $ 65,795 $ 183,676 $ 202,576
Investment securities
Taxable 10,525 10,941 11,209 11,310 11,591 32,675 34,500
Tax-exempt 7,402 7,636 7,781 8,076 8,337 22,819 25,231
Deposits with banks   148     203     133     255     332     484     846  
Total interest income   78,344     79,896     81,414     83,681     86,055     239,654     263,153  
INTEREST EXPENSE
Deposits 6,472 6,879 7,294 8,272 9,881 20,645 32,262
Customer repurchase agreements 511 545 550 556 593 1,606 1,950
Structured repurchase agreements 843 915 915 1,316 1,697 2,673 5,081
Short-term borrowings - - - - - - -
Federal Home Loan Bank advances 5,105 6,501 6,967 6,987 7,073 18,573 21,329
Subordinated debentures   1,859     1,857     1,870     2,029     2,394     5,586     7,149  
Total interest expense   14,790     16,697     17,596     19,160     21,638     49,083     67,771  
Net interest income 63,554 63,199 63,818 64,521 64,417 190,571 195,382
Provision for loan and lease losses   2,000     2,000     2,000     2,000     -     6,000     13,000  
Net interest income after provision for loan and lease losses   61,554     61,199     61,818     62,521     64,417     184,571     182,382  
NON-INTEREST INCOME
Wealth management income 6,239 6,005 6,161 5,616 6,227 18,405 18,007
Service charges on deposit accounts 4,147 3,753 3,823 4,608 4,880 11,723 14,160
Insurance commissions and fees 3,238 3,211 3,296 3,107 3,406 9,745 10,147
Cash management and electronic banking fees 4,626 4,707 4,420 4,613 4,590 13,753 13,606
Mortgage banking income 2,296 1,511 1,335 1,481 1,349 5,142 3,443
Bank owned life insurance income 1,319 1,255 1,209 1,288 1,733 3,783 4,186
Earnings (losses) of unconsolidated investments 1,315 108 (74 ) 246 99 1,349 1,915
Other operating income 3,484 993 2,426 2,019 2,339 6,903 6,212
Loss on sale of building - - - - (1,000 ) - (1,000 )
Net gains (losses) from fair value changes on subordinated debentures 101 (810 ) 1,645 (1,543 ) (506 ) 936 (987 )
Loss on debt extinguishment - - - (1,635 ) (998 ) - (998 )
Net (losses) gains on sales of investment securities - (123 ) - 1,697 1,022 (123 ) 1,022
Impairment losses on investment securities:
Impairment related losses on investment securities - (154 ) - - - (154 ) -
Non credit-related losses on securities not expected to be sold recognized in other comprehensive loss before tax   -     -     -     -     -     -     -  
Net impairment losses on investment securities   -     (154 )   -     -     -     (154 )   -  
Total non-interest income   26,765     20,456     24,241     21,497     23,141     71,462     69,713  
NON-INTEREST EXPENSE
Salaries, wages and employee benefits 31,555 31,234 31,381 29,598 30,809 94,170 92,666
Premises and equipment 7,226 7,349 6,853 7,652 7,228 21,428 21,287
FDIC insurance 1,259 1,211 1,264 1,442 2,213 3,734 8,396
Corporate reorganization expense - - - 2,200 - - -
Other operating expenses   13,299     12,475     12,942     16,494     14,803     38,716     43,662  
Total non-interest expense   53,339     52,269     52,440     57,386     55,053     158,048     166,011  
Income before income taxes 34,980 29,386 33,619 26,632 32,505 97,985 86,084
Income tax expense   8,964     6,938     8,317     5,889     7,692     24,219     19,283  
NET INCOME   26,016     22,448     25,302     20,743     24,813     73,766     66,801  
Preferred dividends and accretion of preferred discount - - - - - - (1,691 )
Accelerated accretion from redemption of preferred stock   -     -     -     -     -     -     (1,452 )
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 26,016   $ 22,448   $ 25,302   $ 20,743   $ 24,813   $ 73,766   $ 63,658  
 
PER SHARE OF COMMON STOCK
Basic earnings available to common shareholders $ 0.17 $ 0.15 $ 0.17 $ 0.14 $ 0.16 $ 0.49 $ 0.42
Diluted earnings available to common shareholders $ 0.17 $ 0.15 $ 0.17 $ 0.14 $ 0.16 $ 0.49 $ 0.42
Average shares - basic 150,157,622 151,732,402 152,099,546 151,773,327 151,693,223 151,325,579 151,256,293
Average shares - diluted 150,454,749 152,011,995 152,392,315 152,068,706 151,927,269 151,615,435 151,513,773
 
SUPPLEMENTAL DATA (annualized, average)
Return on assets 1.23 % 1.07 % 1.21 % 0.97 % 1.15 % 1.17 % 1.03 %
Adjusted return on assets (3) 1.23 % 1.09 % 1.16 % 1.08 % 1.15 % 1.16 % 1.02 %
Return on total equity 8.60 % 7.50 % 8.56 % 7.02 % 8.59 % 8.22 % 7.77 %
Return on common equity 8.60 % 7.50 % 8.56 % 7.02 % 8.59 % 8.22 % 7.67 %
Return on tangible common equity (1) 11.10 % 9.69 % 11.12 % 9.17 % 11.33 % 10.64 % 10.24 %
Efficiency ratio (4) 56.26 % 58.42 % 57.47 % 59.73 % 58.54 % 57.36 % 58.81 %
                             
 
(4) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
 
Efficiency Ratio Calculation
Non-interest expense $ 53,339 $ 52,269 $ 52,440 $ 57,386 $ 55,053 $ 158,048 $ 166,011
Less:
Corporate reorganization expense   -     -     -     2,200     -     -     -  
Operating expenses $ 53,339   $ 52,269   $ 52,440   $ 55,186   $ 55,053   $ 158,048   $ 166,011  
 
Net interest income (taxable equivalent) $ 68,139 $ 67,929 $ 68,645 $ 69,409 $ 69,426 $ 204,713 $ 210,625
 
Non-interest income 26,765 20,456 24,241 21,497 23,141 71,462 69,713
Less:
Loss on sale of building - - - - (1,000 ) - (1,000 )
Loss on debt extinguishment - - - (1,635 ) (998 ) - (998 )
Net gains (losses) from fair value changes on subordinated debentures 101 (810 ) 1,645 (1,543 ) (506 ) 936 (987 )
Net (losses) gains on investment securities   -     (277 )   -     1,697     1,022     (277 )   1,022  
Adjusted revenue $ 94,803   $ 89,472   $ 91,241   $ 92,387   $ 94,049   $ 275,516   $ 282,301  
 
Efficiency Ratio   56.26 %   58.42 %   57.47 %   59.73 %   58.54 %   57.36 %   58.81 %
         
Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2012
   
Unaudited, dollars in thousands except share and per share data
 
For the Quarter Ended For the Nine Months Ended
CHARGE-OFFS 9/30/2012   6/30/2012   3/31/2012   12/31/2011   9/30/2011 9/30/2012   9/30/2011
 
Loan charge-offs $ 5,993   $ 7,907   $ 8,722   $ 9,896   $ 8,374   $ 22,622   $ 37,639  
Recoveries on loans   (885 )   (1,105 )   (1,534 )   (3,463 )   (1,538 )   (3,524 )   (5,658 )
Net loan charge-offs $ 5,108   $ 6,802   $ 7,188   $ 6,433   $ 6,836   $ 19,098   $ 31,981  
Net loan charge-offs to average loans (annualized)   0.39 %   0.53 %   0.56 %   0.50 %   0.53 %   0.49 %   0.82 %
 
NET CHARGE-OFF DETAIL
Commercial and industrial loans and leases $ 1,116 $ 5,196 $ 1,925 $ 2,648 $ 1,962 $ 8,237 $ 16,347
 
Commercial real estate-permanent 481 595 1,933 517 83 3,009 5,271
Commercial real estate-construction   1,755     (148 )   673     (1,337 )   2,637     2,280     4,338  
Total commercial real estate loans 2,236 447 2,606 (820 ) 2,720 5,289 9,609
 
Residential mortgages 742 328 560 993 998 1,630 3,124
Home equity lines and loans 517 404 1,855 2,429 596 2,776 2,587
All other consumer loans   497     427     242     1,183     560     1,166     314  
Total consumer loans   1,756     1,159     2,657     4,605     2,154     5,572     6,025  
 
Net loans charged-off $ 5,108   $ 6,802   $ 7,188   $ 6,433   $ 6,836   $ 19,098   $ 31,981  
 
As of
ASSET QUALITY AND OTHER DATA 9/30/2012   6/30/2012   3/31/2012   12/31/2011   9/30/2011
 
Non-accrual commercial and industrial loans and leases $ 31,109 $ 33,984 $ 32,485 $ 31,081 $ 29,995
 
Non-accrual commercial real estate-permanent 3,780 2,999 5,156 7,403 8,314
Non-accrual commercial real estate-construction   5,149     6,959     14,336     12,218     14,549  
Total non-accrual commercial real estate loans 8,929 9,958 19,492 19,621 22,863
 
Non-accrual residential mortgages 6,242 4,301 4,077 4,504 4,472
Non-accrual home equity lines and loans 3,458 2,555 2,110 3,046 1,763
All other non-accrual consumer loans   1,823     1,753     1,695     3,176     1,907  
Total non-accrual consumer loans 11,523 8,609 7,882 10,726 8,142
         
Total non-accrual loans 51,561 52,551 59,859 61,428 61,000
 
Restructured loans   6,726     6,468     6,506     5,548     4,372  
Total non-performing loans 58,287 59,019 66,365 66,976 65,372
 
Other real estate owned and repossessed assets   7,174     7,201     7,647     7,716     8,029  
Total non-performing assets   65,461     66,220     74,012     74,692     73,401  
 
Loans 90+ days past due & still accruing   2,628     3,426     1,588     2,010     1,408  
Total non-performing assets and loans 90+ days past due $ 68,089   $ 69,646   $ 75,600   $ 76,702   $ 74,809  
         
Allowance for loan and lease losses $ 113,542   $ 116,650   $ 121,452   $ 126,640   $ 131,073  
Allowance for loan and lease losses/non-performing loans   194.8 %   197.6 %   183.0 %   189.1 %   200.5 %
Allowance for loan and lease losses/non-performing assets and loans 90+ days past due   166.8 %   167.5 %   160.7 %   165.1 %   175.2 %
Allowance for loan and lease losses/total loans and leases   2.16 %   2.24 %   2.33 %   2.44 %   2.54 %
Provision/charge-offs, net   39.2 %   29.4 %   27.8 %   31.1 %   - %
Classified loans $ 296,213   $ 301,542   $ 347,033   $ 370,439   $ 374,850  
Classified loans/total loans and leases   5.63 %   5.79 %   6.67 %   7.14 %   7.26 %
Delinquent loans (a) $ 23,519   $ 24,144   $ 24,068   $ 24,801   $ 28,824  
Delinquent loans/total loans and leases   0.45 %   0.46 %   0.46 %   0.48 %   0.56 %
 
 
As of
REGULATORY CAPITAL DATA 9/30/2012   6/30/2012   3/31/2012   12/31/2011   9/30/2011
 
Tier 1 Capital $ 1,024,888   $ 1,008,052   $ 1,005,009   $ 978,302   $ 955,766  
Tier 1 Leverage Ratio   12.78 %   12.44 %   12.53 %   12.00 %   11.63 %
Tier 1 Ratio (%)   17.45 %   17.45 %   17.46 %   17.12 %   16.85 %
Total Capital $ 1,098,814   $ 1,080,807   $ 1,077,587   $ 1,050,417   $ 1,027,393  
Total Capital Ratio (%)   18.70 %   18.71 %   18.72 %   18.38 %   18.12 %
Total Risk-Weighted Assets $ 5,874,448   $ 5,776,537   $ 5,757,306   $ 5,714,643   $ 5,670,722  
 
(a) Includes loans 30-89 days past due and loans 90+ days past due and still accruing
     
Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2012
   
Unaudited, dollars in thousands except share and per share data
 
As of
PERIOD END BALANCES: 9/30/2012   6/30/2012   3/31/2012   12/31/2011   9/30/2011
 
Earning Assets / Liabilities

Loan portfolio composition (regulatory):
Commercial / industrial $ 846,484 $ 856,237 $ 853,379 $ 833,534 $ 813,356
Commercial real estate (a) 1,803,532 1,759,792 1,753,986 1,737,383 1,697,975
Residential mortgage 1,262,897 1,262,633 1,269,505 1,270,896 1,272,478
Real estate construction and land development 189,293 194,942 210,976 212,306 216,250
Home equity 776,023 765,902 756,803 771,792 766,299
Consumer 207,333 207,999 210,069 209,082 213,014
Other loans   171,292   163,262   146,938   153,108   181,903
Total loans 5,256,854 5,210,767 5,201,656 5,188,101 5,161,275
 
Investment securities and other securities 2,310,459 2,316,894 2,335,421 2,314,111 2,373,278
Other earning assets   211,943   221,419   344,427   321,885   422,942
Total earning assets (net of loan loss reserve) $ 7,665,714 $ 7,632,430 $ 7,760,052 $ 7,697,457 $ 7,826,422
(a) Includes owner occupied
 

Loan portfolio composition (internal):
Commercial & industrial loans and leases
Business purpose, real estate secured $ 879,326 $ 879,413 $ 864,284 $ 895,028 $ 892,952
Business purpose, not secured by real estate 979,042 975,852 963,641 919,720 927,631
Owner occupied commercial real estate
Permanent 572,298 572,686 572,103 563,963 566,732
Construction / development 31,181 36,451 38,546 36,631 28,927
Leasing   2,102   2,670   3,330   4,685   5,796
Total commercial & industrial loans and leases 2,463,949 2,467,072 2,441,904 2,420,027 2,422,038
 
Commercial real estate
Non-owner occupied
Permanent 918,511 874,570 878,499 855,524 798,106
Construction / development   140,889   140,751   151,697   156,064   168,537
Total commercial real estate 1,059,400 1,015,321 1,030,196 1,011,588 966,643
 
Consumer loans
Residential mortgage (personal purpose)
Permanent 683,694 688,171 686,974 704,655 709,342
Construction   6,079   6,806   7,835   5,667   7,606
Total residential mortgages 689,773 694,977 694,809 710,322 716,948
 
Home equity loans and direct installment loans 273,359 291,383 315,419 337,242 362,808
Home equity lines of credit   478,628   452,599   421,897   410,316   394,386
Total home equity lines and loans 751,987 743,982 737,316 747,558 757,194
 
Private banking credit lines 103,006 107,398 114,667 121,296 112,011
Indirect vehicle loans and other   166,036   165,109   165,855   165,094   169,297
All other consumer loans   269,042   272,507   280,522   286,390   281,308
Total consumer loans   1,710,802   1,711,466   1,712,647   1,744,270   1,755,450
 
Loans and leases 5,234,151 5,193,859 5,184,747 5,175,885 5,144,131
 
Loans held-for-sale 22,703 16,908 16,909 12,216 17,144
         
Total loans and leases $ 5,256,854 $ 5,210,767 $ 5,201,656 $ 5,188,101 $ 5,161,275
 

Deposit composition:
Savings $ 485,283 $ 497,640 $ 495,191 $ 454,003 $ 451,767
NOW accounts 1,498,344 1,317,399 1,294,591 1,293,148 1,311,819
Money market accounts 1,600,164 1,641,947 1,698,427 1,686,909 1,651,185
CDs less than $100k 1,036,112 1,063,688 1,089,601 1,138,908 1,213,798
CDs $100k or greater   425,546   421,103   426,548   438,148   531,111
Total interest bearing deposits   5,045,449   4,941,777   5,004,358   5,011,116   5,159,680
 
Non-interest bearing deposits   902,295   903,766   884,025   863,703   833,311
 
Total deposits $ 5,947,744 $ 5,845,543 $ 5,888,383 $ 5,874,819 $ 5,992,991
                 
Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2012
         
Unaudited, dollars in thousands except share and per share data
 
Quarterly, as of Nine Months, as of
9/30/2012   6/30/2012   3/31/2012   12/31/2011   9/30/2011 9/30/2012   9/30/2011
Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield
 
Total loans* $ 5,191,136 4.66 % $ 5,196,803 4.78 % $ 5,179,220 4.89 % $ 5,149,546 4.99 % $ 5,122,557 5.15 % $ 5,189,061 4.78 % $ 5,220,018 5.24 %
Investment securities* 2,309,646 3.77 % 2,319,392 3.93 % 2,318,109 4.02 % 2,355,178 3.97 % 2,287,630 4.21 % 2,315,694 3.91 % 2,263,955 4.30 %
Interest earning deposits   255,121 0.23 %   334,935 0.24 %   278,140 0.19 %   390,228 0.26 %   543,410 0.24 %   289,272 0.22 %   506,544 0.22 %
 
Total earning assets   7,755,903 4.25 %   7,851,130 4.34 %   7,775,469 4.46 %   7,894,952 4.45 %   7,953,597 4.54 %   7,794,027 4.35 %   7,990,517 4.66 %
Total assets   8,386,342   8,473,164   8,397,381   8,525,271   8,588,269   8,418,843   8,629,532
 
Savings 490,020 0.11 % 494,800 0.12 % 471,562 0.13 % 454,688 0.15 % 456,271 0.18 % 485,477 0.12 % 454,039 0.18 %
NOW accounts 1,402,593 0.14 % 1,343,961 0.15 % 1,238,704 0.15 % 1,269,670 0.17 % 1,211,663 0.18 % 1,328,690 0.15 % 1,183,329 0.21 %
Money market accounts 1,623,102 0.32 % 1,664,315 0.37 % 1,679,232 0.40 % 1,669,090 0.44 % 1,647,975 0.59 % 1,655,431 0.36 % 1,647,559 0.59 %
CDs   1,468,539 1.23 %   1,499,016 1.27 %   1,542,539 1.31 %   1,668,098 1.36 %   1,798,414 1.47 %   1,503,237 1.27 %   1,848,153 1.63 %
 
Total interest bearing deposits   4,984,254 0.52 %   5,002,092 0.55 %   4,932,037 0.59 %   5,061,546 0.65 %   5,114,323 0.77 %   4,972,835 0.55 %   5,133,080 0.84 %
 
Non-interest bearing deposits   897,017   891,739   852,730   835,699   837,953   880,556   829,853
Total deposits   5,881,271 0.44 %   5,893,831 0.47 %   5,784,767 0.51 %   5,897,245 0.56 %   5,952,276 0.66 %   5,853,391 0.47 %   5,962,933 0.72 %
 
Customer repurchase agreements 532,065 0.38 % 525,142 0.42 % 524,575 0.42 % 514,961 0.43 % 512,847 0.46 % 527,278 0.41 % 526,909 0.49 %
Structured repurchase agreements 78,370 4.28 % 85,000 4.33 % 85,000 4.33 % 128,968 4.05 % 163,098 4.13 % 82,774 4.31 % 164,359 4.13 %
Short-term borrowings 272 - % - - % - - % 6,638 - % 6,732 - % 91 - % 6,765 - %
Federal Home Loan Bank advances, net of prepayment fees incurred 496,438 4.09 % 575,725 4.54 % 615,983 4.55 % 616,411 4.50 % 623,713 4.50 % 562,474 4.41 % 634,048 4.50 %
Subordinated debentures   144,472 5.12 %   143,683 5.20 %   145,274 5.18 %   143,800 5.60 %   143,266 6.63 %   144,476 5.16 %   142,963 6.69 %
Total deposits and borrowings   7,132,888 0.82 %   7,223,381 0.93 %   7,155,599 0.99 %   7,308,023 1.04 %   7,401,932 1.16 %   7,170,484 0.91 %   7,437,977 1.22 %
Total interest bearing liabilities $ 6,235,871 0.94 % $ 6,331,642 1.06 % $ 6,302,869 1.12 % $ 6,472,324 1.17 % $ 6,563,979 1.31 % $ 6,289,928 1.04 % $ 6,608,124 1.37 %
 
Net interest margin (FTE) 3.50 % 3.48 % 3.55 % 3.49 % 3.46 % 3.51 % 3.52 %
 
Wealth assets:
Assets under administration $ 4,500,843 $ 4,361,134 $ 4,382,922 $ 4,197,612 $ 4,067,918
Assets under management 2,319,220 2,284,489 2,269,351 2,141,737 2,118,076
(included above)
 
*Fully taxable equivalent ("FTE") basis, using a 35% effective tax rate.
 
Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2012
 
         
 
Unaudited
Quarterly, as of
9/30/2012   6/30/2012   3/31/2012   12/31/2011   9/30/2011
STATES OF OPERATION AND BANKING OFFICES
BY STATE (LATEST AVAILABLE DATA)
 

PA
Total number of retail branch offices 119 120 120 121 122
Total number of insured subsidiaries
(Bank & Thrift subsidiaries) 1 1 1 1 1
Total number of ATMs 124 122 122 128 129
 

MD
Total number of retail branch offices 1 1 1 1 1
Total number of insured subsidiaries
(Bank & Thrift subsidiaries) - - - - -
Total number of ATMs 1 1 1 1 1
 

TOTAL
Total number of retail branch offices 120 121 121 122 123
Total number of insured subsidiaries
(Bank & Thrift subsidiaries) 1 1 1 1 1
Total number of ATMs 125 123 123 129 130
 
EOP employees (full-time equivalent) 1,661 1,690 1,681 1,688 1,683

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