National Penn Bancshares, Inc. Reports Third Quarter 2014 Results

  • Cash dividend increased 10% to $0.11 cents per common share for the fourth quarter 2014
  • Strong performance results in quarterly net income of $0.18 per share and return on average assets of 1.17%
  • Continued balance sheet strength evidenced by sustained strong asset quality and capital levels
  • Loan growth accelerates in the quarter
  • Strategic initiatives enhance holding company liquidity
  • TF Financial acquisition closing scheduled for today

ALLENTOWN, Pa.--()--National Penn Bancshares, Inc. (Nasdaq: NPBC) reported net income of $25.3 million, or $0.18 per diluted share, for the third quarter of 2014, compared to net income of $26.2 million, or $0.19 per diluted share, in the prior quarter. Net income for the first nine months of 2014 was $74.2 million, or $0.53 per diluted share, compared to adjusted net income1 of $73.0 million, or $0.50 per diluted share, in the prior year period. Return on average assets remained strong at 1.17% and 1.16% for the third quarter and first nine months of 2014, respectively.

“Our results for the third quarter continue to reflect the consistency and quality of our operating performance,” said Scott V. Fainor, president and CEO of National Penn. “In addition to maintaining our strong asset quality metrics and stable expense levels, our continued focus on growing the loan portfolio resulted in 5% annualized loan growth during the quarter.”

Net interest income for the third quarter of 2014 was $64.2 million, compared to $63.0 million in the prior quarter. Net interest margin for the third quarter was 3.43% and consistent with the margin for the second quarter. Loans grew approximately 5% on an annualized basis during the quarter, comprised of increases in both the commercial and consumer loan portfolios.

Asset quality continues to be a highlight of National Penn’s performance as asset quality metrics remained strong during the third quarter of 2014, and as compared to the prior year period. Classified loans totaling $170 million at the end of the third quarter of 2014 continued to decline and have decreased 22% over the last twelve months. The ratio of annualized net charge-offs to average total loans was 0.14% for the third quarter of 2014, compared to 0.25% for the second quarter of 2014, and 0.38% for the third quarter of 2013. National Penn recorded a provision for loan losses in the third quarter of 2014 of $1.0 million, compared to no provision in the prior quarter. National Penn’s coverage of non-performing loans was 207% at September 30, 2014, comparable to the ratio at June 30, 2014.

Non-interest income was relatively constant, totaling $22.9 million for the third quarter of 2014, compared to $24.4 million for the prior quarter. The second quarter of 2014 included a $0.9 million gain on sale of non-performing loans.

Expenses continue to be well-managed, resulting in an efficiency ratio1 of 57%. Total expenses for the third quarter of 2014 were $52.2 million, comparable to prior quarter expenses of $52.1 million, and $53.6 million for the third quarter of 2013. Operating expenses1 for the year-to-date period ending September 30, 2014 declined 1.6% compared to the prior year period.

As previously announced, National Penn’s Board of Directors increased the fourth quarter dividend by 10% to eleven cents ($0.11) per common share to shareholders of record as of Monday, November 3, 2014, payable on Monday, November 17, 2014. National Penn’s tier 1 common and tangible common equity to tangible assets ratios increased to 13.57% and 10.09% at September 30, 2014, respectively, compared to 13.44% and 10.03%, respectively, at June 30, 2014.

“During the quarter, we completed a $125 million debt offering and, subsequent to regulatory approval, returned $100 million of capital from the bank, enhancing our holding company liquidity and strategic positioning for capital management initiatives such as the ten percent increase in the cash dividend this quarter and future acquisition activity,” said Scott V. Fainor. “As previously reported, we expect to close on the acquisition of TF Financial Corporation today and complete all systems conversions and signage changes throughout this weekend. We are thrilled to have TF Financial join National Penn and are excited by the opportunities this merger presents for further enhancing franchise and shareholder value.”

About National Penn Bancshares, Inc.

National Penn Bancshares, Inc., with approximately $8.6 billion in assets, is a bank holding company headquartered in Allentown, Pennsylvania. National Penn Bank operates 111 branch offices comprising 110 branches in Pennsylvania and one branch in Maryland.

National Penn’s financial services affiliates are National Penn Wealth Management, N.A., including its National Penn Investors Trust Company division; Institutional Advisors LLC; and National Penn Insurance Services Group, Inc., including its Higgins Insurance and Caruso Benefits Group divisions.

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.

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 adjusted return on average assets exclude the effects of certain gains and losses, adjusted for taxes when applicable. Adjusted net income and adjusted return on average assets 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: difficult conditions in the capital markets and the economy generally, 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), delayed improvement in the credit quality of loans, the effect of credit risk exposure, the ability to strategically manage our capital position and to raise capital, allowance for loan losses may prove inadequate, variations in interest rates, unanticipated costs from our corporate relocation plan, 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, competition for personnel and from other financial institutions, interruptions or breaches of National Penn’s security systems, the development and maintenance of National Penn’s information technology, potential dilution of National Penn’s shareholders, the ability of National Penn and its subsidiaries to pay dividends, severe weather and natural disasters, and the nature and frequency of litigation and other similar proceedings to which National Penn may be a party. Additional risks, uncertainties and other factors relating to the proposed acquisition of TF Financial Corporation include, but are not limited to: expected benefits may not materialize in the timeframe expected or at all, or may be more costly to achieve; the transaction may not be timely completed, if at all; the parties are unable to successfully implement integration strategies; and diversion of management time on merger-related issues. 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, 2013, 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 9/30/2014
         
 
Unaudited, dollars in thousands except share and per share data
As of
9/30/2014   6/30/2014   9/30/2013
SUMMARY BALANCE SHEET            
Total assets $ 8,631,602 $ 8,618,373 $ 8,424,623
Investment securities and other securities 2,381,751 2,420,509 2,364,681
Total loans 5,469,842 5,406,031 5,282,691
Deposits 6,287,936 6,108,483 6,435,456
Borrowings 1,140,368 1,316,253 761,506
Shareholders' equity 1,107,184 1,101,408 1,131,278
Tangible book value per common share (2) $ 6.06 $ 6.02 $ 5.94
Tangible common equity / tangible assets (2) 10.09 % 10.03 % 10.61 %
 
Three Months Ended Nine Months Ended
9/30/2014   6/30/2014   9/30/2013 9/30/2014   9/30/2013
EARNINGS                  
Total interest income $ 71,368 $ 70,528 $ 71,498 $ 212,029 $ 216,194
Total interest expense   7,138     7,577     8,386     22,559     28,204  
Net interest income 64,230 62,951 63,112 189,470 187,990
Provision for loan losses   1,000     -     1,250     2,251     4,250  
Net interest income after provision for loan losses 63,230 62,951 61,862 187,219 183,740
Net gains from fair value changes of subordinated debentures - - - - 2,111
Net gains on investment securities - - 7 8 54
Other non-interest income 22,871 24,396 24,801 68,737 73,188
Loss on debt extinguishment - - - - 64,888
Other non-interest expense   52,158     52,114     53,603     156,609     159,190  
Income before income taxes 33,943 35,233 33,067 99,355 35,015
Income tax expense (benefit)   8,623     9,034     8,507     25,126     2,840  
Net income $ 25,320   $ 26,199   $ 24,560   $ 74,229   $ 32,175  
 
PERFORMANCE RATIOS                  
Net interest margin 3.43 % 3.43 % 3.49 % 3.43 % 3.51 %
Return on average assets 1.17 % 1.23 % 1.17 % 1.16 % 0.52 %
Adjusted return on average assets (3) 1.17 % 1.23 % 1.17 % 1.16 % 1.17 %
Return on average shareholders' equity 9.11 % 9.67 % 8.78 % 9.07 % 3.81 %
Return on average tangible common equity (1) 11.97 % 12.77 % 11.55 % 11.95 % 4.99 %
Adjusted return on average tangible common equity 11.97 % 12.77 % 11.55 % 11.95 % 11.31 %
Efficiency ratio (4) 57.29 % 57.02 % 58.16 % 57.95 % 58.06 %
 
PER SHARE                  
Basic earnings $ 0.18 $ 0.19 $ 0.17 $ 0.53 $ 0.22
Diluted earnings 0.18 0.19 0.17 0.53 0.22
Dividends 0.10 0.10 0.10 0.30 0.20 (a)
Average shares - basic 139,275,683 139,191,923 145,669,300 139,934,960 145,549,146
Average shares - diluted 139,825,134 139,719,980 146,124,821 140,466,437 145,976,521
                     
 
(1) RECONCILIATION TABLES FOR NON-GAAP FINANCIAL MEASURES
Three Months Ended Nine Months Ended
9/30/2014   6/30/2014   9/30/2013 9/30/2014   9/30/2013
Return on average tangible common equity
Return on average shareholders' equity 9.11 % 9.67 % 8.78 % 9.07 % 3.81 %
Effect of goodwill and intangibles   2.86 %   3.10 %   2.77 %   2.88 %   1.18 %
Return on average tangible common equity   11.97 %   12.77 %   11.55 %   11.95 %   4.99 %
Average tangible equity
Average shareholders' equity $ 1,102,608 $ 1,087,204 $ 1,110,081 $ 1,094,569 $ 1,130,070
Average goodwill and intangibles   (263,410 )   (264,082 )   (266,326 )   (264,084 )   (267,301 )
Average tangible common equity $ 839,198   $ 823,122   $ 843,755   $ 830,485   $ 862,769  
 
Adjusted net income reconciliation
Net income $ 25,320 $ 26,199 $ 24,560 $ 74,229 $ 32,175
After tax unrealized fair value gain on subordinated debentures - - - - (1,372 )
After tax loss on debt extinguishment   -     -     -     -     42,177  
Adjusted net income $ 25,320   $ 26,199   $ 24,560   $ 74,229   $ 72,980  

 

Earnings per share
Net income $ 0.18 $ 0.19 $ 0.17 $ 0.53 $ 0.22
After tax unrealized fair value gain on subordinated debentures - - - - (0.01 )
After tax loss on debt extinguishment   -     -     -     -     0.29  
Adjusted net income $ 0.18   $ 0.19   $ 0.17   $ 0.53   $ 0.50  
 
(a) In lieu of a first quarter 2013 cash dividend, the Company paid an additional dividend of $0.10 per share in the fourth quarter of 2012
       
Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2014
 
 
Unaudited, dollars in thousands except share and per share data
As of
  9/30/2014       6/30/2014       3/31/2014       12/31/2013       9/30/2013  
ASSETS
Cash and due from banks $ 96,856 $ 138,530 $ 128,991 $ 102,241 $ 137,795
Interest-earning deposits with banks   98,512     73,384     55,335     181,282     78,895  
Total cash and cash equivalents 195,368 211,914 184,326 283,523 216,690
 
Investment securities available-for-sale, at fair value 1,461,586 1,463,479 1,442,304 1,894,107 1,875,676
Investment securities held-to-maturity 864,234 892,536 918,340 438,445 444,898
Other securities 55,931 64,494 63,760 63,746 44,107
Loans held-for-sale 3,890 2,275 5,171 4,951 2,752
 
Loans 5,465,952 5,403,756 5,372,556 5,333,268 5,279,939
Allowance for loan losses   (88,927 )   (89,848 )   (93,252 )   (96,367 )   (100,763 )
Loans, net 5,377,025 5,313,908 5,279,304 5,236,901 5,179,176
 
Premises and equipment, net 110,392 110,972 97,707 96,232 93,871
Accrued interest receivable 27,839 26,953 27,408 27,130 27,831
Bank owned life insurance 151,443 150,237 149,045 147,869 146,906
Other real estate owned and other repossessed assets 1,561 1,758 2,138 1,278 1,569
Goodwill 258,279 258,279 258,279 258,279 258,279
Other intangible assets, net 4,803 5,476 6,156 6,854 7,656
Unconsolidated investments 8,167 8,205 8,214 8,713 9,177
Other assets   111,084     107,887     115,229     123,820     116,035  
TOTAL ASSETS $ 8,631,602   $ 8,618,373   $ 8,557,381   $ 8,591,848   $ 8,424,623  
 
LIABILITIES
Non-interest bearing deposits $ 990,438 $ 1,031,271 $ 1,028,572 $ 970,051 $ 1,026,546
Interest bearing deposits   5,297,498     5,077,212     5,110,852     5,102,527     5,408,910  
Total deposits 6,287,936 6,108,483 6,139,424 6,072,578 6,435,456
 
Customer repurchase agreements 580,290 587,686 561,170 551,736 521,779
Repurchase agreements - 50,000 50,000 50,000 50,000
Federal Home Loan Bank advances 359,155 601,246 557,434 603,232 112,406
Senior long-term debt 123,602 - - - -
Subordinated debentures 77,321 77,321 77,321 77,321 77,321
Accrued interest payable and other liabilities   96,114     92,229     89,583     105,115     96,383  
TOTAL LIABILITIES   7,524,418     7,516,965     7,474,932     7,459,982     7,293,345  
 
SHAREHOLDERS' EQUITY
Common stock 1,388,513 1,387,304 1,386,265 1,387,966 1,387,052
Accumulated deficit (143,514 ) (154,909 ) (167,191 ) (175,990 ) (182,628 )
Accumulated other comprehensive loss (7,922 ) (474 ) (5,295 ) (21,157 ) (13,504 )
Treasury stock   (129,893 )   (130,513 )   (131,330 )   (58,953 )   (59,642 )
TOTAL SHAREHOLDERS' EQUITY   1,107,184     1,101,408     1,082,449     1,131,866     1,131,278  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,631,602   $ 8,618,373   $ 8,557,381   $ 8,591,848   $ 8,424,623  
 
 
PER SHARE DATA
Book value $ 7.95 $ 7.91 $ 7.78 $ 7.76 $ 7.76
Tangible book value (2) $ 6.06 $ 6.02 $ 5.88 $ 5.94 $ 5.94
Dividends - quarterly $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10
Shares outstanding (end of period, net of treasury) 139,305,117 139,240,318 139,145,669 145,798,751 145,723,276
                     
 
(2) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
 
Total shareholders' equity $ 1,107,184 $ 1,101,408 $ 1,082,449 $ 1,131,866 $ 1,131,278
Goodwill and intangibles   (263,082 )   (263,755 )   (264,435 )   (265,133 )   (265,935 )
Tangible common equity $ 844,102   $ 837,653   $ 818,014   $ 866,733   $ 865,343  
Shares outstanding 139,305,117 139,240,318 139,145,669 145,798,751 145,723,276
Tangible book value per share $ 6.06 $ 6.02 $ 5.88 $ 5.94 $ 5.94
 
Total assets $ 8,631,602 $ 8,618,373 $ 8,557,381 $ 8,591,848 $ 8,424,623
Goodwill and intangibles   (263,082 )   (263,755 )   (264,435 )   (265,133 )   (265,935 )
Tangible assets $ 8,368,520   $ 8,354,618   $ 8,292,946   $ 8,326,715   $ 8,158,688  
Tangible common equity/tangible assets 10.09 % 10.03 % 9.86 % 10.41 % 10.61 %
 
(3) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
 
Adjusted net income (1) $ 25,320 $ 26,199 $ 22,710 $ 25,112 $ 24,560
Average assets $ 8,569,557 $ 8,512,845 $ 8,479,686 $ 8,385,094 $ 8,310,626
Adjusted return on average assets (annualized) 1.17 % 1.23 % 1.09 % 1.19 % 1.17 %
         
Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2014
   
 
Unaudited, dollars in thousands except share and per share data
For the Quarter Ended For the Nine Months Ended
  9/30/2014       6/30/2014       3/31/2014       12/31/2013       9/30/2013     9/30/2014       9/30/2013  
INTEREST INCOME
Loans, including fees $ 53,857 $ 52,476 $ 52,582 $ 54,600 $ 54,577 $ 158,915 $ 165,558
Investment securities
Taxable 11,365 11,694 11,121 10,912 10,105 34,180 29,585
Tax-exempt 6,114 6,329 6,404 6,534 6,768 18,847 20,887
Deposits with banks   32     29     26     39     48     87     164  
Total interest income   71,368     70,528     70,133     72,085     71,498     212,029     216,194  
INTEREST EXPENSE
Deposits 4,483 4,671 4,773 5,166 5,468 13,927 17,213
Customer repurchase agreements 399 400 393 407 440 1,192 1,398
Repurchase agreements 197 608 601 615 614 1,406 1,956
Short-term borrowings - 1 - - - 1 41
Federal Home Loan Bank advances 1,297 1,369 1,548 1,287 1,325 4,214 5,042
Senior long-term debt 227 - - - - 227 -
Subordinated debentures   535     528     529     538     539     1,592     2,554  
Total interest expense   7,138     7,577     7,844     8,013     8,386     22,559     28,204  
Net interest income 64,230 62,951 62,289 64,072 63,112 189,470 187,990
Provision for loan losses   1,000     -     1,251     1,000     1,250     2,251     4,250  
Net interest income after provision for loan losses   63,230     62,951     61,038     63,072     61,862     187,219     183,740  
NON-INTEREST INCOME
Wealth management 6,945 7,133 6,866 6,609 6,883 20,944 20,700
Service charges on deposit accounts 3,826 3,534 3,384 3,827 3,894 10,744 11,407
Insurance commissions and fees 3,029 3,209 3,597 3,028 3,071 9,835 9,664
Cash management and electronic banking fees 4,720 4,869 4,526 4,782 4,860 14,115 14,132
Mortgage banking 987 936 716 902 1,621 2,639 5,598
Bank owned life insurance 1,238 1,218 1,198 1,389 1,260 3,654 3,727
Earnings (losses) of unconsolidated investments (20 ) (9 ) (477 ) 57 661 (506 ) 653
Gain on sale of non-performing loans - 946 - - - 946 -
Other operating income 2,146 2,560 1,660 2,120 2,551 6,366 7,307
Net gains from fair value changes of subordinated debentures - - - - - - 2,111
Net gains on sales of investment securities   -     -     8     -     7     8     54  
Total non-interest income   22,871     24,396     21,478     22,714     24,808     68,745     75,353  
NON-INTEREST EXPENSE
Salaries, wages and employee benefits 29,655 28,887 29,201 29,035 29,598 87,743 87,965
Premises and equipment 7,769 7,709 8,212 7,721 7,724 23,690 22,726
FDIC insurance 1,140 1,200 1,317 1,356 1,404 3,657 4,111
Other operating expenses 13,594 14,318 13,607 13,721 14,877 41,519 44,388
Loss on debt extinguishment - - - - - - 64,888
Corporate reorganization expense   -     -     -     6,000     -     -     -  
Total non-interest expense   52,158     52,114     52,337     57,833     53,603     156,609     224,078  
Income before income taxes 33,943 35,233 30,179 27,953 33,067 99,355 35,015
Income tax expense (benefit)   8,623     9,034     7,469     6,741     8,507     25,126     2,840  
NET INCOME $ 25,320   $ 26,199   $ 22,710   $ 21,212   $ 24,560   $ 74,229   $ 32,175  
 
PER SHARE
Basic earnings $ 0.18 $ 0.19 $ 0.16 $ 0.15 $ 0.17 $ 0.53 $ 0.22
Diluted earnings $ 0.18 $ 0.19 $ 0.16 $ 0.15 $ 0.17 $ 0.53 $ 0.22
Average shares - basic 139,275,683 139,191,923 141,360,180 145,761,496 145,669,300 139,934,960 145,549,146
Average shares - diluted 139,825,134 139,719,980 141,877,066 146,244,467 146,124,821 140,466,437 145,976,521
 
SUPPLEMENTAL DATA (annualized, average)
Return on assets 1.17 % 1.23 % 1.09 % 1.00 % 1.17 % 1.16 % 0.52 %
Adjusted return on assets (3) 1.17 % 1.23 % 1.09 % 1.19 % 1.17 % 1.16 % 1.17 %
Return on shareholders' equity 9.11 % 9.67 % 8.42 % 7.44 % 8.78 % 9.07 % 3.81 %
Return on tangible common equity (1) 11.97 % 12.77 % 11.11 % 9.72 % 11.55 % 11.95 % 4.99 %
Adjusted return on tangible common equity 11.97 % 12.77 % 11.11 % 11.51 % 11.55 % 11.95 % 11.31 %
Efficiency ratio (4) 57.29 % 57.02 % 59.60 % 57.00 % 58.16 % 57.95 % 58.06 %
                             
 
(4) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
 
Efficiency ratio calculation
Non-interest expense $ 52,158 $ 52,114 $ 52,337 $ 57,833 $ 53,603 $ 156,609 $ 224,078
Less:
Loss on debt extinguishment - - - - - - 64,888
Corporate reorganization expense   -     -     -     6,000     -     -     -  
Operating expenses $ 52,158   $ 52,114   $ 52,337   $ 51,833   $ 53,603   $ 156,609   $ 159,190  
 
Net interest income (taxable equivalent) $ 68,166 $ 66,992 $ 66,351 $ 68,223 $ 67,371 $ 201,509 $ 200,996
 
Non-interest income 22,871 24,396 21,478 22,714 24,808 68,745 75,353
Less:
Net gains from fair value changes of subordinated debentures - - - - - - 2,111
Net gains on investment securities   -     -     8     -     7     8     54  
Adjusted revenue $ 91,037   $ 91,388   $ 87,821   $ 90,937   $ 92,172   $ 270,246   $ 274,184  
 
Efficiency ratio 57.29 % 57.02 % 59.60 % 57.00 % 58.16 % 57.95 % 58.06 %
         
Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2014
   
 
Unaudited, dollars in thousands except share and per share data
 
For the Quarter Ended For the Nine Months Ended
  9/30/2014       6/30/2014       3/31/2014       12/31/2013       9/30/2013     9/30/2014       9/30/2013  
CHARGE-OFFS
Loan charge-offs $ 3,097 $ 5,125 $ 5,018 $ 7,523 $ 5,774 $ 13,240 $ 17,470
Recoveries on loans   (1,176 )   (1,721 )   (652 )   (2,127 )   (754 )   (3,549 )   (3,028 )
Net loan charge-offs $ 1,921   $ 3,404   $ 4,366   $ 5,396   $ 5,020   $ 9,691   $ 14,442  
Net loan charge-offs to average total loans (annualized) 0.14 % 0.25 % 0.33 % 0.41 % 0.38 % 0.24 % 0.37 %
 
NET CHARGE-OFF DETAIL
Commercial and industrial loans $ 19 $ 2,049 $ 1,150 $ 5,157 $ 3,059 $ 3,218 $ 6,993
 
Commercial real estate-permanent 1,072 599 423 (523 ) 909 2,094 1,587
Commercial real estate-construction   (221 )   90     30     (167 )   (29 )   (101 )   382  
Total commercial real estate loans 851 689 453 (690 ) 880 1,993 1,969
 
Residential mortgages 138 162 1,681 56 209 1,981 2,064
Home equity lines and loans 355 389 784 439 423 1,528 2,073
All other consumer loans   558     115     298     434     449     971     1,343  
Total consumer loans   1,051     666     2,763     929     1,081     4,480     5,480  
 
Net loans charged-off $ 1,921   $ 3,404   $ 4,366   $ 5,396   $ 5,020   $ 9,691   $ 14,442  
 
As of
  9/30/2014       6/30/2014       3/31/2014       12/31/2013       9/30/2013  
ASSET QUALITY AND OTHER DATA
Non-accrual commercial and industrial loans $ 11,205 $ 9,641 $ 13,501 $ 14,935 $ 23,101
 
Non-accrual commercial real estate-permanent 2,887 4,811 3,513 4,258 3,760
Non-accrual commercial real estate-construction   8,547     9,674     10,425     12,128     5,345  
Total non-accrual commercial real estate loans 11,434 14,485 13,938 16,386 9,105
 
Non-accrual residential mortgages 6,803 6,265 6,779 7,037 6,485
Non-accrual home equity lines and loans 3,961 3,631 4,041 4,787 4,403
All other non-accrual consumer loans   1,467     1,495     1,701     1,731     1,705  
Total non-accrual consumer loans 12,231 11,391 12,521 13,555 12,593
         
Total non-accrual loans 34,870 35,517 39,960 44,876 44,799
 
Restructured loans   7,996     7,969     8,152     7,715     10,006  
Total non-performing loans 42,866 43,486 48,112 52,591 54,805
 
Other real estate owned and repossessed assets   1,561     1,758     2,138     1,278     1,569  
Total non-performing assets 44,427 45,244 50,250 53,869 56,374
 
Loans 90+ days past due & still accruing   2,961     2,097     2,310     3,466     2,608  
Total non-performing assets and loans 90+ days past due $ 47,388   $ 47,341   $ 52,560   $ 57,335   $ 58,982  
 
Allowance for loan losses $ 88,927   $ 89,848   $ 93,252   $ 96,367   $ 100,763  
Allowance for loan losses/non-performing loans   207.5 %   206.6 %   193.8 %   183.2 %   183.9 %
Allowance for loan losses/non-performing assets and loans
90+ days past due   187.7 %   189.8 %   177.4 %   168.1 %   170.8 %
Allowance for loan losses/total loans   1.63 %   1.66 %   1.73 %   1.81 %   1.91 %
Provision/charge-offs, net   52.1 %   0.0 %   28.7 %   18.5 %   24.9 %
Classified loans $ 169,790   $ 173,610   $ 174,465   $ 191,589   $ 218,615  
Classified loans/total loans   3.10 %   3.21 %   3.24 %   3.59 %   4.14 %
Delinquent loans (b) $ 20,171   $ 17,316   $ 16,819   $ 29,435   $ 22,550  
Delinquent loans/total loans   0.37 %   0.32 %   0.31 %   0.55 %   0.43 %
Non-performing loans/total loans   0.78 %   0.80 %   0.89 %   0.99 %   1.04 %
 
REGULATORY CAPITAL DATA
Tier 1 Capital $ 927,023   $ 913,126   $ 888,565   $ 941,926   $ 938,040  
Tier 1 Leverage Ratio   11.18 %   11.09 %   10.83 %   11.63 %   11.67 %
Tier 1 Ratio   14.77 %   14.64 %   14.44 %   15.46 %   15.63 %
Total Capital $ 1,005,629   $ 991,235   $ 965,705   $ 1,018,316   $ 1,013,371  
Total Capital Ratio   16.02 %   15.89 %   15.69 %   16.72 %   16.89 %
Total Risk-Weighted Assets $ 6,278,140   $ 6,237,016   $ 6,155,090   $ 6,091,183   $ 6,001,065  
 
(b) 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 9/30/2014
 
 
Unaudited, dollars in thousands except share and per share data
As of
Earning Assets / Liabilities   9/30/2014     6/30/2014     3/31/2014     12/31/2013     9/30/2013  

Loan portfolio composition (regulatory):

Commercial / industrial $ 804,283 $ 815,168 $ 865,533 $ 796,797 $ 820,669
Commercial real estate (c) 1,994,773 1,993,408 1,943,744 1,926,978 1,913,180
Residential mortgage 1,181,503 1,155,551 1,161,220 1,181,020 1,170,750
Real estate construction and land development 260,054 242,047 243,216 256,483 234,945
Home equity 817,723 803,553 787,334 794,709 786,835
Consumer 224,614 216,478 210,395 209,729 205,446
Other   186,892   179,826   166,285   172,503   150,866  
Total 5,469,842 5,406,031 5,377,727 5,338,219 5,282,691
 
 
Investment securities and other securities 2,381,751 2,420,509 2,424,404 2,396,298 2,364,681
Other earning assets   98,512   73,384   55,335   181,282   78,895  
Total earning assets (net of loan loss reserve) $ 7,861,178 $ 7,810,076 $ 7,764,214 $ 7,819,432 $ 7,625,504  
(c) Includes owner occupied
 

Loan portfolio composition (internal):

Commercial & industrial
Business purpose, real estate secured $ 897,812 $ 884,697 $ 861,101 $ 885,135 $ 897,757
Business purpose, not secured by real estate 944,207 968,183 1,002,296 939,121 935,857
Owner occupied commercial real estate
Permanent 566,007 590,148 593,595 589,765 585,807
Construction / development 49,826 45,924 47,505 46,415 41,088
Leasing   18   41   97   228   392  
Total commercial & industrial 2,457,870 2,488,993 2,504,594 2,460,664 2,460,901
 
Commercial real estate
Non-owner occupied
Permanent 1,086,346 1,042,928 1,021,271 994,838 964,510
Construction / development   208,728   182,506   183,586   198,334   181,683  
Total commercial real estate   1,295,074   1,225,434   1,204,857   1,193,172   1,146,193  
Total commercial 3,752,944 3,714,427 3,709,451 3,653,836 3,607,094
 
Consumer
Residential mortgage (personal purpose)
Permanent 644,919 644,322 637,273 643,506 642,696
Construction   16,004   13,128   10,922   8,719   9,443  
Total residential mortgages 660,923 657,450 648,195 652,225 652,139
 
Home equity and direct installment 162,188 172,785 180,996 193,089 208,333
Home equity lines of credit   614,298   591,331   572,301   569,519   550,417  
Total home equity 776,486 764,116 753,297 762,608 758,750
 
Private banking credit lines 95,049 95,324 94,582 99,859 98,714
Indirect vehicle and other   180,550   172,439   167,031   164,740   163,242  
All other consumer   275,599   267,763   261,613   264,599   261,956  
Total consumer   1,713,008   1,689,329   1,663,105   1,679,432   1,672,845  
 
Loans 5,465,952 5,403,756 5,372,556 5,333,268 5,279,939
 
Loans held-for-sale 3,890 2,275 5,171 4,951 2,752
           
Total loans $ 5,469,842 $ 5,406,031 $ 5,377,727 $ 5,338,219 $ 5,282,691  
 

Deposit composition:

Savings $ 544,625 $ 552,885 $ 547,255 $ 526,576 $ 518,430
NOW accounts 1,981,608 1,689,381 1,667,272 1,655,425 1,958,116
Money market accounts 1,658,815 1,684,410 1,680,900 1,670,035 1,639,859
Time deposits less than $100k 797,535 831,390 870,921 896,700 925,118
Time deposits $100k or greater   314,915   319,146   344,504   353,791   367,387  
Total interest bearing deposits 5,297,498 5,077,212 5,110,852 5,102,527 5,408,910
 
Non-interest bearing deposits   990,438   1,031,271   1,028,572   970,051   1,026,546  
 
Total deposits $ 6,287,936 $ 6,108,483 $ 6,139,424 $ 6,072,578 $ 6,435,456  
                     
Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2014
     
 
Unaudited, dollars in thousands except share and per share data
Quarterly, as of Nine Months, as of
9/30/2014   6/30/2014   3/31/2014   12/31/2013   9/30/2013 9/30/2014   9/30/2013
Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield
 
Total loans* $ 5,406,073 4.00 % $ 5,360,641 3.97 % $ 5,342,648 4.04 % $ 5,256,841 4.17 % $ 5,229,366 4.19 % $ 5,370,019 4.00 % $ 5,232,460 4.28 %
Investment securities* 2,400,867 3.43 % 2,414,063 3.56 % 2,409,287 3.53 % 2,375,893 3.50 % 2,316,066 3.51 % 2,408,042 3.51 % 2,325,262 3.55 %
Interest earning deposits   85,310 0.15 %   67,112 0.17 %   69,222 0.15 %   89,530 0.17 %   102,581 0.19 %   73,940 0.16 %   105,671 0.21 %
 
Total earning assets   7,892,250 3.79 %   7,841,816 3.81 %   7,821,157 3.85 %   7,722,264 3.92 %   7,648,013 3.93 %   7,852,001 3.82 %   7,663,393 4.00 %
Total assets   8,569,557   8,512,845   8,479,686   8,385,094   8,310,626   8,521,025   8,312,023
 
Savings 549,589 0.10 % 550,336 0.10 % 534,699 0.10 % 524,647 0.10 % 524,178 0.11 % 544,929 0.10 % 518,463 0.11 %
NOW accounts 1,845,595 0.15 % 1,717,629 0.14 % 1,618,547 0.13 % 1,873,519 0.14 % 1,732,394 0.14 % 1,728,089 0.14 % 1,572,882 0.14 %
Money market accounts 1,681,361 0.22 % 1,687,193 0.21 % 1,671,200 0.21 % 1,649,960 0.23 % 1,655,133 0.27 % 1,679,955 0.22 % 1,650,516 0.29 %
Time deposits   1,132,513 0.96 %   1,179,576 1.03 %   1,233,794 1.06 %   1,273,664 1.07 %   1,312,810 1.09 %   1,181,590 1.02 %   1,427,585 1.09 %
 
Total interest bearing deposits   5,209,058 0.34 %   5,134,734 0.36 %   5,058,240 0.38 %   5,321,790 0.39 %   5,224,515 0.42 %   5,134,563 0.36 %   5,169,446 0.45 %
 
Non-interest bearing deposits   1,005,457   1,006,120   968,129   984,037   963,625   993,372   916,936
Total deposits   6,214,515 0.29 %   6,140,854 0.31 %   6,026,369 0.32 %   6,305,827 0.33 %   6,188,140 0.35 %   6,127,935 0.30 %   6,086,382 0.38 %
 
Customer repurchase agreements 546,119 0.29 % 546,284 0.29 % 541,041 0.29 % 529,541 0.30 % 518,569 0.34 % 544,500 0.29 % 529,847 0.35 %
Repurchase agreements 16,032 4.87 % 50,000 4.87 % 50,000 4.87 % 50,000 4.87 % 50,000 4.87 % 38,553 4.87 % 82,750 3.16 %
Short-term borrowings - 0.00 % 407 0.63 % - 0.00 % 54 0.00 % - 0.00 % 136 0.63 % 12,557 0.44 %
Federal Home Loan Bank advances 505,349 1.02 % 521,753 1.05 % 596,818 1.05 % 190,670 2.68 % 277,101 1.90 % 540,972 1.04 % 296,417 2.27 %
Senior long-term debt 20,204 4.46 % - 0.00 % - 0.00 % - 0.00 % - 0.00 % 6,808 4.46 % - 0.00 %
Subordinated debentures   77,321 2.75 %   77,321 2.74 %   77,321 2.77 %   77,321 2.76 %   77,321 2.77 %   77,321 2.75 %   93,107 3.67 %
Total deposits and borrowings   7,379,540 0.38 %   7,336,619 0.41 %   7,291,549 0.44 %   7,153,413 0.44 %   7,111,131 0.47 %   7,336,225 0.41 %   7,101,060 0.53 %
Total interest bearing liabilities $ 6,374,083 0.44 % $ 6,330,499 0.48 % $ 6,323,420 0.50 % $ 6,169,376 0.52 % $ 6,147,506 0.54 % $ 6,342,853 0.48 % $ 6,184,124 0.61 %
 
Net interest margin (FTE) 3.43 % 3.43 % 3.44 % 3.51 % 3.49 % 3.43 % 3.51 %
 
Wealth assets under management, at period end $ 2,411,463 $ 2,574,509 $ 2,497,185 $ 2,504,717 $ 2,388,991
 
*Fully taxable equivalent ("FTE") basis, using a 35% effective tax rate
     
Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2014
   
Unaudited
 
STATES OF OPERATION AND BANKING OFFICES BY STATE (LATEST AVAILABLE DATA)
 
Quarterly, as of
9/30/2014   6/30/2014   3/31/2014   12/31/2013   9/30/2013
 

PA

Total number of retail branch offices 110 110 118 119 119
Total number of insured subsidiaries
(Bank & Thrift subsidiaries) 1 1 1 1 1
Total number of ATMs 120 117 123 124 124
 

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 111 111 119 120 120
Total number of insured subsidiaries
(Bank & Thrift subsidiaries) 1 1 1 1 1
Total number of ATMs 121 118 124 125 125
 
EOP employees (full-time equivalent) 1,549 1,574 1,591 1,631 1,632

Contacts

National Penn Bancshares, Inc.
Media Contact:
Jacklyn Bingaman, Marketing
610-674-1325
jacklyn.bingaman@nationalpenn.com
or
Investor Contact:
Michelle H. Debkowski, Investor Relations
484-709-3255
michelle.debkowski@nationalpenn.com

Contacts

National Penn Bancshares, Inc.
Media Contact:
Jacklyn Bingaman, Marketing
610-674-1325
jacklyn.bingaman@nationalpenn.com
or
Investor Contact:
Michelle H. Debkowski, Investor Relations
484-709-3255
michelle.debkowski@nationalpenn.com