• Quarterly adjusted net income1 of $0.16 per share, reported net income of $0.14 per share
  • Full-year adjusted net income1 of $0.59 per share resulting in adjusted ROA1 of 1.05%
  • Solid asset quality metrics sustained and capital levels further enhanced
  • 2012 first quarter common stock cash dividend increased to $0.05 per share

BOYERTOWN, Pa.--(BUSINESS WIRE)-- National Penn Bancshares, Inc. (Nasdaq: NPBC) reported net income available to common shareholders of $20.7 million, or $0.14 per diluted common share, for the fourth quarter of 2011, compared to a net income available to common shareholders of $6.6 million, or $0.05 per diluted common share, for the fourth quarter of 2010. On an adjusted basis1, net income for the quarter totaled $23.2 million, or $0.16 per diluted common share, compared to $13.5 million, or $0.10 per diluted common share, for the fourth quarter of 2010. Fourth quarter 2011 adjusted net income¹ excludes an after-tax unrealized fair value adjustment on National Penn's trust preferred securities (Nasdaq:NPBCO) of $1.0 million and after-tax reorganization expenses of $1.4 million. For the year ended December 31, 2011, diluted earnings per common share were $0.56, while adjusted earnings per common share1 were $0.59, compared to $0.10 and $0.30, respectively, for 2010.

"Enhanced profitability in 2011 supplemented an already strong capital base and further strengthened our financial position," said Scott Fainor, president and CEO of National Penn. "I am proud of our team, which has remained focused on achieving our strategic goals and on sustaining improvement in asset quality metrics. The strength of our balance sheet is a competitive advantage that has been recognized by Forbes Magazine which recently ranked National Penn 15th of the 100 largest banks on its list of America's Best Banks2."

Asset quality in 2011 improved steadily and remained strong relative to peers with all key measures improving from 2010 levels. During 2011, classified loans declined by 23%, total non-performing assets declined by 16%, and the ratio of net loan charge-offs to average loans improved to 0.74% from 1.57%. These asset quality trends resulted in a provision for loan losses of $15.0 million for 2011, compared to $95.0 million for 2010. While the provision declined, the allowance for loan and lease losses to non-performing loans remained strong at 184% at December 31, 2011, compared to 179% at year-end 2010.

Actions taken to maintain the net interest margin in a prolonged low interest rate environment, including managed reductions in higher-cost deposits, improvements in deposit mix and balance sheet restructuring initiatives, resulted in a relatively stable net interest margin throughout 2011.

Net interest margin for the full year 2011 was 3.52%, compared to 3.45% in 2010 and was 3.49% in the fourth quarter of 2011, as compared to 3.46% in the previous quarter.

Despite the increased costs of regulatory compliance, National Penn's operating expenses remained well-controlled throughout 2011. Operating expenses1 totaled $55.2 million in the fourth quarter and $221 million for the full year. Compared to 2010, expenses were relatively flat and resulted in an efficiency ratio of 59.03%1 for 2011.

Internal generation of capital and the benefit of the previously announced Warburg Pincus investment increased the tangible common equity to tangible assets ratio to 11.04% from 8.27% at period-end 2010. The total risk based capital ratio at December 31, 2011 was 18.38% compared to 17.38% at December 31, 2010.

The strength of these fundamentals provided the basis for an increase in the common stock cash dividend to $0.05 per share for the first quarter of 2012, payable on February 17, 2012 to shareholders of record on February 4, 2012.

Scott Fainor stated, "Given the accomplishments of 2011, National Penn is a clean, strong and efficient company positioned for growth. Three consecutive common stock dividend increases, combined with our strong fundamentals and financial performance, resulted in improved returns to our shareholders."

About National Penn Bancshares, Inc.:

National Penn Bancshares, Inc., with approximately $8.5 billion in assets, is a bank holding company based in Pennsylvania. Headquartered in Boyertown, National Penn operates 122 branch offices comprising 121 branches in Pennsylvania and one branch in Maryland through National Penn Bank and its HomeTowne Heritage Bank, 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 to see our regularly posted material information.

1Statement 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 adjusted to also 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: increased capital requirements and other requirements or actions mandated by National Penn's regulators,National Penn's ability to raise capital and maintain capital levels, variations in interest rates, deterioration in the credit quality of loans, the effect of credit risk exposure, declines in the value of National Penn's assets and the effect of any resulting impairment charges, 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), competition from other financial institutions, interruptions or breaches of National Penn's security systems, and the development and maintenance of National Penn's information technology. 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, 2010, 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.

2 Forbes December 2011 "America's Best and Worst Banks."

Financial Update for National Penn Bancshares (NPBC) for 12/31/2011
Unaudited, dollars in thousands except share and per share data
As of
12/31/2011 9/30/2011 12/31/2010
SUMMARY BALANCE SHEET
Total assets $ 8,486,281 $ 8,611,641 $ 8,844,620
Investment securities and other securities 2,314,111 2,373,278 2,259,690
Total loans and leases 5,188,101 5,161,275 5,326,723
Deposits 5,874,819 5,992,991 6,059,173
Borrowings 1,370,399 1,410,212 1,590,996
Shareholders' equity 1,180,687 1,164,204 1,137,437
Tangible book value per common share (2) $ 5.97 $ 5.86 $ 5.18
Tangible common equity / tangible assets (2)

11.04

%

10.66 % 8.27 %
Three Months Ended Twelve Months Ended
12/31/2011 9/30/2011 12/31/2010 12/31/2011 12/31/2010
EARNINGS
Total interest income $ 83,681 $ 86,055 $ 93,745 $ 346,834 $ 387,249
Total interest expense 19,160 21,638 26,104 86,931 116,017
Net interest income 64,521 64,417 67,641 259,903 271,232
Provision for loan and lease losses 2,000 - 17,500 15,000 95,000
Net interest income after provision for loan and lease losses 62,521 64,417 50,141 244,903 176,232
Loss on sale of building - (1,000 ) - (1,000 ) -
Net (losses) from fair value changes on subordinated debentures (1,543 ) (506 ) (2,049 ) (2,530 ) (10,373 )
Loss on debt extinguishment (1,635 ) (998 ) - (2,633 ) -
Net gains on sales of investment securities 1,697 1,022 - 2,719 214
Other non-interest income 22,978 24,623 25,707 94,654 108,381
Goodwill impairment - - - - 8,250
Corporate reorganization expense 2,200 - - 2,200 -
Other non-interest expense 55,186 55,053 59,493 221,197 233,426
Income before income taxes 26,632 32,505 14,306 112,716 32,778
Income tax expense 5,889 7,692 5,664 25,172 11,441
Net income 20,743 24,813 8,642 87,544 21,337
Preferred dividends and accretion of preferred discount - - (2,005 ) (1,691 ) (8,021 )
Accelerated accretion from redemption of preferred stock - - - (1,452 ) -
Net income available to common shareholders $ 20,743 $ 24,813 $ 6,637 $ 84,401 $ 13,316
PERFORMANCE RATIOS
Net interest margin 3.49 % 3.46 % 3.43 % 3.52 % 3.45 %
Return on average assets 0.97 % 1.15 % 0.38 % 1.02 % 0.23 %
Return on average total shareholders' equity 7.02 % 8.59 % 3.00 % 7.58 % 1.95 %
Return on average tangible common equity (1) 9.17 % 11.33 % 3.76 % 9.95 % 2.07 %
PER SHARE
Basic earnings available to common shareholders $ 0.14 $ 0.16 $ 0.05 $ 0.56 $ 0.10
Diluted earnings available to common shareholders 0.14 0.16 0.05 0.56 0.10
Dividends per common share 0.04 0.03 0.01 0.09 0.04
Average shares - basic 151,773,327 151,693,223 134,380,086 151,386,614 128,118,298
Average shares - diluted 152,068,706 151,927,269 134,471,788 151,653,646 128,186,651
(1) RECONCILIATION TABLES FOR NON-GAAP FINANCIAL MEASURES Three Months Ended Twelve Months Ended
12/31/2011 9/30/2011 12/31/2010 12/31/2011 12/31/2010
Return on average tangible common equity
Return on average shareholders' equity 7.02 % 8.59 % 3.00 % 7.58 % 1.95 %
Effect of preferred equity - - -0.35 % -0.08 % -0.54 %
Effect of goodwill and intangibles 2.15 % 2.74 % 1.11 % 2.45 % 0.66 %
Return on average tangible common equity 9.17 % 11.33 % 3.76 % 9.95 % 2.07 %
Average tangible equity:
Average shareholders' equity $ 1,172,273 $ 1,145,679 $ 1,141,979 $ 1,155,209 $ 1,094,642
Average preferred equity - - (148,377 ) (30,106 ) (148,184 )
Average goodwill and intangibles (274,827 ) (276,439 ) (292,855 ) (277,214 ) (303,541 )
Average total tangible common equity $ 897,446 $ 869,240 $ 700,747 $ 847,889 $ 642,917
Adjusted net income reconciliation
Net income available to common shareholders $ 20,743 $ 24,813 $ 6,637 $ 84,401 $ 13,316
After tax gain on pension plan curtailment - - - - (2,643 )

After tax unrealized fair market value loss on subordinated debentures

1,003 - 1,332 1,645 6,743
Corporate reorganization expense 1,430 - - 1,430 -
Accelerated accretion from redemption of preferred stock - - - 1,452 -
Tax expense from sale of Christiana - - 5,486 - 5,486
BOLI tax expense - - - - 8,081
Goodwill impairment - - - - 8,250
Adjusted net income available to common shareholders $ 23,176 $ 24,813 $ 13,455 $ 88,928 $ 39,233
Earnings per share
Net income available to common shareholders $ 0.14 $ 0.16 $ 0.05 $ 0.56 $ 0.10
After tax gain on pension plan curtailment - - - - (0.02 )

After tax unrealized fair market value loss on subordinated debentures

0.01 - 0.01 0.01 0.05
Corporate reorganization expense 0.01 - - 0.01 -
Accelerated accretion from redemption of preferred stock - - - 0.01 -
Tax expense from sale of Christiana - - 0.04 - 0.05
BOLI tax expense - - - - 0.06
Goodwill impairment - - - - 0.06
Adjusted net income available to common shareholders $ 0.16 $ 0.16 $ 0.10 $ 0.59 $ 0.30
Financial Update for National Penn Bancshares (NPBC) for 12/31/2011
Unaudited, dollars in thousands except share and per share data As of
12/31/2011 9/30/2011 6/30/2011 3/31/2011 12/31/2010
BALANCE SHEET - ASSETS
Cash and due from banks $ 129,637 $ 116,057 $ 105,918 $ 113,031 $ 90,283
Interest-earning deposits with banks 321,885 422,942 513,132 392,337 612,099
Total cash and cash equivalents 451,522 538,999 619,050 505,368 702,382
Investment securities available for sale, at fair value 1,747,019 1,790,654 1,696,682 1,622,395 1,632,118
Investment securities held to maturity 496,574 509,773 518,578 535,488 546,957
Other securities 70,518 72,851 75,308 77,894 80,615
Loans held for sale 12,216 17,144 8,852 5,561 12,785
Loans and leases 5,175,885 5,144,131 5,170,074 5,239,585 5,313,938
Allowance for loan and lease losses (126,640 ) (131,073 ) (137,909 ) (142,960 ) (150,054 )
Loans and leases, net 5,049,245 5,013,058 5,032,165 5,096,625 5,163,884
Premises and equipment, net 96,198 100,880 103,017 103,771 105,483
Accrued interest receivable 30,991 33,110 31,862 34,264 33,829
Bank owned life insurance 138,274 137,017 136,606 135,373 134,154
Other real estate owned and other repossessed assets 7,716 8,029 8,407 7,653 7,453
Goodwill 258,279 258,279 258,279 258,279 258,279
Other intangible assets, net 15,770 17,370 18,970 20,530 22,217
Unconsolidated investments under the equity method 12,173 11,927 12,327 12,211 11,482
Other assets 99,786 102,550 113,038 127,855 132,982
TOTAL ASSETS $ 8,486,281 $ 8,611,641 $ 8,633,141 $ 8,543,267 $ 8,844,620
BALANCE SHEET - LIABILITIES
Non-interest bearing deposits $ 863,703 $ 833,311 $ 839,811 $ 834,321 $ 808,835
Interest bearing deposits 5,011,116 5,159,680 5,104,350 5,098,695 5,250,338
Total deposits 5,874,819 5,992,991 5,944,161 5,933,016 6,059,173
Customer repurchase agreements 523,978 500,099 573,628 531,256 569,455
Structured repurchase agreements 85,000 140,000 165,000 165,000 165,000
Short-term borrowings - 6,400 6,390 6,184 10,000
Federal Home Loan Bank advances 616,111 619,946 627,332 627,716 703,761
Subordinated debentures 145,310 143,767 143,261 142,831 142,780
Accrued interest payable and other liabilities 60,376 44,234 39,856 39,655 57,014
TOTAL LIABILITIES 7,305,594 7,447,437 7,499,628 7,445,658 7,707,183
BALANCE SHEET - SHAREHOLDERS' EQUITY
Preferred stock - - - - 148,441
Common stock 1,383,082 1,380,728 1,379,690 1,379,014 1,292,342
Retained deficit (223,189 ) (237,862 ) (258,125 ) (279,817 ) (293,940 )
Accumulated other comprehensive income/(loss) 20,794 21,338 11,948 (1,588 ) (9,406 )
TOTAL SHAREHOLDERS' EQUITY 1,180,687 1,164,204 1,133,513 1,097,609 1,137,437
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,486,281 $ 8,611,641 $ 8,633,141 $ 8,543,267 $ 8,844,620
COMMON SHARE AND PER SHARE DATA
Book Value $ 7.77 $ 7.67 $ 7.47 $ 7.24 $ 7.23
Tangible Book Value (2) $ 5.97 $ 5.86 $ 5.65 $ 5.40 $ 5.18
Dividends $ 0.04 $ 0.03 $ 0.01 $ 0.01 $ 0.01
Shares Outstanding (end of period, net of treasury) 151,883,036 151,714,696 151,660,444 151,506,511 136,792,414
(2) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
Total shareholders' equity $ 1,180,687 $ 1,164,204 $ 1,133,513 $ 1,097,609 $ 1,137,437
Total preferred shareholders' equity - - - - (148,441 )
Goodwill and intangibles (274,049 ) (275,649 ) (277,249 ) (278,809 ) (280,496 )
Tangible common equity $ 906,638 $ 888,555 $ 856,264 $ 818,800 $ 708,500
Common shares outstanding 151,883,036 151,714,696 151,660,444 151,506,511 136,792,414
Tangible book value per share $ 5.97 $ 5.86 $ 5.65 $ 5.40 $ 5.18
Total assets $ 8,486,281 $ 8,611,641 $ 8,633,141 $ 8,543,267 $ 8,844,620
Goodwill and intangibles (274,049 ) (275,649 ) (277,249 ) (278,809 ) (280,496 )
Tangible assets $ 8,212,232 $ 8,335,992 $ 8,355,892 $ 8,264,458 $ 8,564,124
Tangible common equity/tangible assets 11.04 % 10.66 % 10.25 % 9.91 % 8.27 %
Financial Update for National Penn Bancshares (NPBC) for 12/31/2011
Unaudited, dollars in thousands except share and per share data For the Quarter Ended For the Twelve Months Ended
12/31/2011 9/30/2011 6/30/2011 3/31/2011 12/31/2010 12/31/2011 12/31/2010
INTEREST INCOME
Loans and leases, including fees $ 64,040 $ 65,795 $ 67,553 $ 69,228 $ 73,496 $ 266,616 $ 306,207
Investment securities
Taxable 11,310 11,591 11,552 11,357 11,272 45,810 44,984
Tax-exempt 8,076 8,337 8,401 8,493 8,569 33,307 34,906
Deposits with banks 255 332 234 280 408 1,101 1,152
Total interest income 83,681 86,055 87,740 89,358 93,745 346,834 387,249
INTEREST EXPENSE
Deposits 8,272 9,881 10,974 11,407 13,411 40,534 63,929
Customer repurchase agreements 556 593 645 712 847 2,506 4,180
Structured repurchase agreements 1,316 1,697 1,701 1,683 1,720 6,397 6,826
Short-term borrowings - - - - - - -
Federal Home Loan Bank advances 6,987 7,073 7,039 7,217 7,732 28,316 31,537
Subordinated debentures 2,029 2,394 2,386 2,369 2,394 9,178 9,545
Total interest expense 19,160 21,638 22,745 23,388 26,104 86,931 116,017
Net interest income 64,521 64,417 64,995 65,970 67,641 259,903 271,232
Provision for loan and lease losses 2,000 - 3,000 10,000 17,500 15,000 95,000
Net interest income after provision for loan and lease losses 62,521 64,417 61,995 55,970 50,141 244,903 176,232
NON-INTEREST INCOME
Wealth management income 5,616 6,227 5,856 5,924 6,917 23,623 28,253
Service charges on deposit accounts 4,608 4,880 4,616 4,664 5,358 18,768 21,564
Insurance commissions and fees 3,107 3,406 3,520 3,221 3,423 13,254 14,332
Cash management and electronic banking fees 4,613 4,590 4,645 4,371 4,584 18,219 17,904
Mortgage banking income 1,481 1,349 1,014 1,080 2,590 4,924 7,398
Bank owned life insurance income 1,288 1,733 1,233 1,220 1,501 5,474 5,932
Earnings of unconsolidated investments 246 99 116 1,700 140 2,161 799
Other operating income 2,019 2,339 1,818 2,055 1,638 8,231 9,523
Gain on pension plan curtailment - - - - - - 4,066
Loss on sale of building - (1,000 ) - - - (1,000 ) -
Net (losses) from fair value changes on subordinated debentures (1,543 ) (506 ) (430 ) (51 ) (2,049 ) (2,530 ) (10,373 )
Loss on debt extinguishment (1,635 ) (998 ) - - - (2,633 ) -
Net gains on sales of investment securities 1,697 1,022 - - - 2,719 214
Impairment losses on investment securities:
Impairment losses on investment securities - - - - (444 ) - (1,390 )

Non credit-related losses on securities not expected to be sold recognized in other comprehensive loss before tax

- - - - - - -
Net impairment losses on investment securities - - - - (444 ) - (1,390 )
Total non-interest income 21,497 23,141 22,388 24,184 23,658 91,210 98,222
NON-INTEREST EXPENSE
Salaries, wages and employee benefits 29,598 30,809 30,408 31,449 31,499 122,264 123,471
Net premises and equipment 7,652 7,228 6,787 7,272 7,460 28,939 29,923
FDIC insurance 1,442 2,213 2,726 3,457 3,411 9,838 15,205
Corporate reorganization expense 2,200 - - - - 2,200 -
Goodwill impairment - - - - - - 8,250
Other operating expenses 16,494 14,803 14,200 14,659 17,123 60,156 64,827
Total non-interest expense 57,386 55,053 54,121 56,837 59,493 223,397 241,676
Income before income taxes 26,632 32,505 30,262 23,317 14,306 112,716 32,778
Income tax expense 5,889 7,692 7,054 4,537 5,664 25,172 11,441
NET INCOME 20,743 24,813 23,208 18,780 8,642 87,544 21,337
Preferred dividends and accretion of preferred discount - - - (1,691 ) (2,005 ) (1,691 ) (8,021 )
Accelerated accretion from redemption of preferred stock - - - (1,452 ) - (1,452 ) -
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 20,743 $ 24,813 $ 23,208 $ 15,637 $ 6,637 $ 84,401 $ 13,316
PER SHARE OF COMMON STOCK
Basic earnings available to common shareholders $ 0.14 $ 0.16 $ 0.15 $ 0.10 $ 0.05 $ 0.56 $ 0.10
Diluted earnings available to common shareholders $ 0.14 $ 0.16 $ 0.15 $ 0.10 $ 0.05 $ 0.56 $ 0.10
Average Shares Basic 151,773,327 151,693,223 151,601,052 150,461,063 134,380,086 151,386,614 128,118,298
Average Shares Diluted 152,068,706 151,927,269 151,835,402 150,765,883 134,471,788 151,653,646 128,186,651
SUPPLEMENTAL DATA (annualized, average)
Return on Assets 0.97 % 1.15 % 1.08 % 0.88 % 0.38 % 1.02 % 0.23 %
Return on Total Equity 7.02 % 8.59 % 8.37 % 6.39 % 3.00 % 7.58 % 1.95 %
Return on Common Equity 7.02 % 8.59 % 8.37 % 5.93 % 2.65 % 7.50 % 1.41 %
Return on Tangible Common Equity (1) 9.17 % 11.33 % 11.16 % 8.03 % 3.76 % 9.95 % 2.07 %
Efficiency Ratio (3) 59.73 % 58.54 % 58.25 % 59.61 % 60.36 % 59.03 % 58.78 %
(3) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
Efficiency Ratio Calculation
Non-interest expense $ 57,386 $ 55,053 $ 54,121 $ 56,837 $ 59,493 $ 223,397 $ 241,676
Less:
Corporate reorganization expense 2,200 - - - - 2,200 -
Goodwill impairment - - - - - - 8,250
Operating expenses $ 55,186 $ 55,053 $ 54,121 $ 56,837 $ 59,493 $ 221,197 $ 233,426
Net interest income (taxable equivalent) $ 69,409 $ 69,426 $ 70,087 $ 71,112 $ 72,849 $ 280,034 $ 292,615
Non-interest income (loss) 21,497 23,141 22,388 24,184 23,658 91,210 98,222
Less:
Gain on pension plan curtailment - - - - - - 4,066
Loss on sale of building - (1,000 ) - - - (1,000 ) -
Loss on debt extinguishment (1,635 ) (998 ) - - - (2,633 ) -
Net (losses) from fair value changes on subordinated debentures (1,543 ) (506 ) (430 ) (51 ) (2,049 ) (2,530 ) (10,373 )
Net gains on sales of investment securities 1,697 1,022 - - - 2,719 -
Adjusted revenue $ 92,387 $ 94,049 $ 92,905 $ 95,347 $ 98,556 $ 374,688 $ 397,144
Efficiency Ratio 59.73 % 58.54 % 58.25 % 59.61 % 60.36 % 59.03 % 58.78 %
Financial Update for National Penn Bancshares (NPBC) for 12/31/2011
Unaudited, dollars in thousands except share and per share data
As of and for the Quarter Ended For the Twelve Months Ended
CHARGE-OFFS 12/31/2011 9/30/2011 6/30/2011 3/31/2011 12/31/2010 12/31/2011 12/31/2010
Loan Charge-offs $ 9,896 $ 8,374 $ 10,512 $ 18,753 $ 22,456 $ 47,535 $ 100,560
Recoveries on Loans (3,463 ) (1,538 ) (2,461 ) (1,659 ) (2,443 ) (9,121 ) (10,251 )
Net Loan Charge-offs $ 6,433 $ 6,836 $ 8,051 $ 17,094 $ 20,013 $ 38,414 $ 90,309
Net Loan Charge-offs to Average Loans (annualized) 0.50 % 0.53 % 0.61 % 1.31 % 1.44 % 0.74 % 1.57 %
NET CHARGE OFF DETAIL
Commercial and Industrial Loans and Leases $ 2,648 $ 1,962 $ 5,066 $ 9,319 $ 7,363 $ 18,995 $ 20,402
Commercial Real Estate-Permanent 517 83 1,242 3,946 2,903 5,788 6,427
Commercial Real Estate-Construction (1,337 ) 2,637 828 873 1,973 3,001 39,626
Total Commercial Real Estate Loans (820 ) 2,720 2,070 4,819 4,876 8,789 46,053
Residential Mortgages 993 998 483 1,643 5,620 4,117 15,156
Home Equity Lines and Loans 2,429 596 833 1,158 1,280 5,016 3,338
All other Consumer Loans 1,183 560 (401 ) 155 874 1,497 5,360
Total Consumer Loans 4,605 2,154 915 2,956 7,774 10,630 23,854
Net Loans Charged-off $ 6,433 $ 6,836 $ 8,051 $ 17,094 $ 20,013 $ 38,414 $ 90,309
As of
ASSET QUALITY AND OTHER DATA 12/31/2011 9/30/2011 6/30/2011 3/31/2011 12/31/2010
Non-Accrual Commercial and Industrial Loans and Leases $ 31,081 $ 29,995 $ 31,275 $ 34,122 $ 34,869
Non-Accrual Commercial Real Estate-Permanent 7,403 8,314 11,879 15,407 17,821
Non-Accrual Commercial Real Estate-Construction 12,218 14,549 15,844 18,012 19,392
Total Non-Accrual Commercial Real Estate Loans 19,621 22,863 27,723 33,419 37,213
Non-Accrual Residential Mortgages 4,504 4,472 5,196 5,303 5,802
Non-Accrual Home Equity Lines and Loans 3,046 1,763 1,527 1,965 2,133
All other Non-Accrual Consumer Loans 3,176 1,907 2,062 1,810 2,094
Total Non-Accrual Consumer Loans 10,726 8,142 8,785 9,078 10,029
Total Non-Accrual Loans 61,428 61,000 67,783 76,619 82,111
Restructured Loans 5,548 4,372 3,833 351 -
Loans 90+ Days Past Due & Still Accruing 2,010 1,408 1,567 2,183 1,753
Total Non-performing Loans 68,986 66,780 73,183 79,153 83,864
Other Real Estate Owned & Repossessed Assets 7,716 8,029 8,407 7,653 7,453
Total Non-performing Assets $ 76,702 $ 74,809 $ 81,590 $ 86,806 $ 91,317
Allowance for Loan and Lease Losses $ 126,640 $ 131,073 $ 137,909 $ 142,960 $ 150,054
Allowance for Loan and Lease Losses/Non-Performing Loans 183.6 % 196.3 % 188.4 % 180.6 % 178.9 %
Allowance for Loan and Lease Losses/Non-Performing Assets 165.1 % 175.2 % 169.0 % 164.7 % 164.3 %
Provision/Charge-Offs, net 31.1 % 0.0 % 37.3 % 58.5 % 87.4 %
Classified Loans $ 370,439 $ 374,850 $ 403,145 $ 438,275 $ 479,336
Classified Loans/Total Loans and Leases 7.14 % 7.26 % 7.78 % 8.36 % 9.00 %
Delinquent Loans $ 24,801 $ 28,824 $ 20,413 $ 25,342 $ 27,806
Delinquent Loans/Total Loans and Leases 0.48 % 0.56 % 0.39 % 0.48 % 0.52 %
As of
REGULATORY CAPITAL DATA 12/31/2011 9/30/2011 6/30/2011 3/31/2011 12/31/2010
Tier 1 Capital $ 978,302 $ 955,766 $ 922,457 $ 889,473 $ 924,143
Tier 1 Leverage Ratio 12.00 % 11.63 % 11.20 % 10.66 % 10.59 %
Tier 1 Ratio (%) 17.12 % 16.85 % 16.43 % 15.66 % 16.12 %
Total Capital $ 1,050,417 $ 1,027,393 $ 992,729 $ 960,459 $ 996,288
Total Capital Ratio (%) 18.38 % 18.12 % 17.68 % 16.91 % 17.38 %
Total Risk-Weighted Assets $ 5,714,643 $ 5,670,722 $ 5,615,341 $ 5,679,123 $ 5,732,730
Financial Update for National Penn Bancshares (NPBC) for 12/31/2011
Unaudited, dollars in thousands except share and per share data
As of
PERIOD END BALANCES: 12/31/2011 9/30/2011 6/30/2011 3/31/2011 12/31/2010
Earning Assets / Liabilities

Loan Breakdown: (Regulatory)

Commercial/Industrial $ 833,534 $ 813,356 $ 838,489 $ 808,118 $ 804,602
Commercial Real Estate (1) 1,737,383 1,697,975 1,715,616 1,749,215 1,740,029
Residential Mortgage 1,270,896 1,272,478 1,295,463 1,295,014 1,294,751
Real Estate Construction and Land Development 212,306 216,250 207,643 270,584 339,242
Home Equity 771,792 766,299 764,467 738,629 755,829
Consumer 209,082 213,014 213,570 228,904 236,107
Other Loans 153,108 181,903 143,678 154,682 156,163
Total Loans 5,188,101 5,161,275 5,178,926 5,245,146 5,326,723
Allowance for Loan and Lease Losses/Total Loans and Leases 2.44 % 2.54 % 2.66 % 2.73 % 2.82 %
Investment Securities and Other Securities 2,314,111 2,373,278 2,290,568 2,235,777 2,259,690
Other Earning Assets 321,885 422,942 513,132 392,337 612,099
Total Earning Assets (net of loan loss reserve) $ 7,697,457 $ 7,826,422 $ 7,844,717 $ 7,730,300 $ 8,048,458
(1) Includes owner occupied

Loan Breakdown: (Internal)

Commercial & Industrial Loans and Leases
Business Purpose, Real Estate secured $ 895,028 $ 892,952 $ 884,606 $ 896,521 $ 948,506
Business Purpose, not secured by Real Estate 919,720 927,631 913,115 888,249 886,692
Owner Occupied Commercial Real Estate
- Permanent 563,963 566,732 577,092 578,332 552,129
- Construction / Development 36,631 28,927 27,003 38,775 37,196
Leasing 4,685 5,796 7,125 9,054 10,437
Total Commercial & Industrial Loans & Leases 2,420,027 2,422,038 2,408,941 2,410,931 2,434,960
Commercial Real Estate
Non Owner Occupied
- Permanent 855,524 798,106 818,564 819,875 768,988
- Construction / Development 156,064 168,537 171,063 206,924 281,056
Total Commercial Real Estate 1,011,588 966,643 989,627 1,026,799 1,050,044
Consumer Loans
Residential Mortgage (personal purpose)
Permanent 704,655 709,342 719,578 736,862 745,516
Construction 5,667 7,606 5,909 4,505 7,113
Total Residential Mortgages 710,322 716,948 725,487 741,367 752,629
Home Equity Loans and Direct Installment Loans 337,242 362,808 388,173 415,599 423,755
Home Equity Lines of Credit 410,316 394,386 367,127 325,186 321,369
Total Home Equity Lines and Loans 747,558 757,194 755,300 740,785 745,124
Private Banking Credit Lines 121,296 112,011 119,850 139,721 150,811
Indirect Vehicle Loans and Other 165,094 169,297 170,869 179,982 180,370
All Other Consumer Loans 286,390 281,308 290,719 319,703 331,181
Total Consumer Loans 1,744,270 1,755,450 1,771,506 1,801,855 1,828,934
Loans and Leases 5,175,885 5,144,131 5,170,074 5,239,585 5,313,938
Loans Held for Sale 12,216 17,144 8,852 5,561 12,785
Total Loans and Leases $ 5,188,101 $ 5,161,275 $ 5,178,926 $ 5,245,146 $ 5,326,723

Deposit Breakdown:

Savings $ 454,003 $ 451,767 $ 464,055 $ 457,395 $ 438,879
NOW Accounts 1,293,148 1,311,819 1,158,161 1,128,644 1,181,850
Money Market Accounts 1,686,909 1,651,185 1,631,779 1,655,115 1,664,620
CDs less than $100k 1,138,908 1,213,798 1,261,026 1,433,808 1,378,060
CDs $100k or greater 438,148 531,111 589,329 423,733 586,929
Total Interest Bearing Deposits 5,011,116 5,159,680 5,104,350 5,098,695 5,250,338
Non-Interest Bearing Deposits 863,703 833,311 839,811 834,321 808,835
Total Deposits $ 5,874,819 $ 5,992,991 $ 5,944,161 $ 5,933,016 $ 6,059,173
Financial Update for National Penn Bancshares (NPBC) for 12/31/2011
Unaudited, dollars in thousands except share and per share data
Quarterly, as of Twelve Months, as of
12/31/2011 9/30/2011 6/30/2011 3/31/2011 12/31/2010 12/31/2011 12/31/2010
Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield
Total Loans $ 5,149,546 4.99 % $ 5,122,557 5.15 % $ 5,228,365 5.24 % $ 5,311,204 5.34 % $ 5,506,513 5.35 % $ 5,202,255 5.18 % $ 5,761,647 5.37 %
Investment Securities 2,355,178 3.97 % 2,287,630 4.21 % 2,258,355 4.32 % 2,245,416 4.39 % 2,274,090 4.24 % 2,286,948 4.22 % 2,234,045 4.39 %
Interest Earning Deposits 390,228 0.26 % 543,410 0.24 % 467,157 0.20 % 508,684 0.22 % 642,204 0.25 % 477,226 0.23 % 495,042 0.23 %
Total Earning Assets 7,894,952 4.45 % 7,953,597 4.54 % 7,953,877 4.68 % 8,065,304 4.75 % 8,422,807 4.66 % 7,966,429 4.61 % 8,490,734 4.81 %
Total Assets 8,525,271 3.89 % 8,588,269 3.98 % 8,599,923 4.09 % 8,701,649 4.16 % 9,122,895 4.30 % 8,603,252 4.03 % 9,220,791 4.43 %
Savings 454,688 0.15 % 456,271 0.18 % 462,870 0.18 % 442,830 0.19 % 435,069 0.20 % 454,203 0.18 % 437,796 0.27 %
NOW Accounts 1,269,670 0.17 % 1,211,663 0.18 % 1,188,644 0.22 % 1,148,991 0.22 % 1,265,646 0.23 % 1,205,092 0.20 % 1,195,331 0.32 %
Money Market Accounts 1,669,090 0.44 % 1,647,975 0.59 % 1,638,733 0.60 % 1,656,059 0.59 % 1,682,091 0.60 % 1,652,986 0.55 % 1,715,233 0.81 %
CDs 1,668,098 1.36 % 1,798,414 1.47 % 1,857,969 1.66 % 1,889,073 1.76 % 2,124,910 1.85 % 1,802,769 1.57 % 2,311,017 1.95 %
Total Interest Bearing Deposits 5,061,546 0.65 % 5,114,323 0.77 % 5,148,216 0.85 % 5,136,953 0.90 % 5,507,716 0.97 % 5,115,050 0.79 % 5,659,377 1.13 %
Non-Interest Bearing Deposits 835,699 837,953 837,635 813,704 818,330 831,326 812,275
Total Deposits 5,897,245 0.56 % 5,952,276 0.66 % 5,985,851 0.74 % 5,950,657 0.78 % 6,326,046 0.84 % 5,946,376 0.68 % 6,471,652 0.99 %
Customer repurchase agreements 514,961 0.43 % 512,847 0.46 % 522,147 0.50 % 546,100 0.53 % 592,234 0.57 % 523,898 0.48 % 578,409 0.72 %
Structured repurchase agreements 128,968 4.05 % 163,098 4.13 % 165,000 4.13 % 165,000 4.14 % 165,000 4.14 % 155,438 4.12 % 165,000 4.14 %
Short-term borrowings 6,638 0.00 % 6,732 0.00 % 6,713 0.00 % 6,850 0.00 % 7,080 0.00 % 6,733 0.00 % 6,900 0.00 %
Federal Home Loan Bank advances 616,411 4.50 % 623,713 4.50 % 627,525 4.50 % 651,208 4.49 % 704,670 4.35 % 629,603 4.50 % 725,651 4.35 %
Subordinated debentures 143,800 5.60 % 143,266 6.63 % 142,836 6.70 % 142,781 6.73 % 140,753 6.75 % 143,174 6.41 % 137,785 6.93 %
Total Deposits and borrowings 7,308,023 1.04 % 7,401,932 1.16 % 7,450,072 1.22 % 7,462,596 1.27 % 7,935,783 1.31 % 7,405,222 1.17 % 8,085,397 1.43 %
Total Interest Bearing Liabilities $ 6,472,324 1.17 % $ 6,563,979 1.31 % $ 6,612,437 1.38 % $ 6,648,892 1.43 % $ 7,117,453 1.46 % $ 6,573,896 1.32 % 7,273,122 1.60 %
Net Yield on Earning Assets: (Margin) 3.49 % 3.46 % 3.53 % 3.58 % 3.43 % 3.52 % 3.45 %
Wealth Assets:
Assets under administration $ 4,197,612 $ 4,067,918 $ 4,364,447 $ 4,057,142 $ 3,973,910
Assets under management 2,141,737 2,118,076 2,247,042 2,136,596 2,092,149
(included above)
Christiana Bank and Trust
Trust Revenues $ - $ - $ - $ - $

862

(a)

$ - $ 5,563

(a)

(a) Through December 3, 2010
Financial Update for National Penn Bancshares (NPBC) for 12/31/2011
Unaudited, dollars in thousands except share and per share data
Quarterly, as of
12/31/2011 9/30/2011 6/30/2011 3/31/2011 12/31/2010
STATES OF OPERATION AND BANKING OFFICES
BY STATE (LATEST AVAILABLE DATA)

PA

Total Number of Banking Offices 121 122 122 122 124
Total Number of Insured Subsidiaries
(Bank & Thrift Subsidiaries) 1 1 1 1 1
Total Number of ATMs 128 129 131 132 133

MD

Total Number of Banking 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 Banking Offices 122 123 123 123 125
Total Number of Insured Subsidiaries
(Bank & Thrift Subsidiaries) 1 1 1 1 1
Total Number of ATMs 129 130 132 133 134
EOP Employees (Full Time Equivalent) 1,688 1,683 1,700 1,676 1,728

National Penn Bancshares, Inc.
Media Contact:
Catharine S.
610-369-6618
catharine.bower@nationalpenn.com
or
Investor Contact:
Michelle H. Debkowski, Investor Relations
610-369-6461
michelle.debkowski@nationalpenn.com

Source: National Penn Bancshares, Inc.

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