National Penn Bancshares, Inc. Reports Second Quarter 2014 Results

  • Second quarter net income increases to $0.19 per diluted share, compared to $0.16 per diluted share in the prior quarter
  • Return on average assets of 1.23% for the quarter and 1.16% year-to-date
  • Strong asset quality sustained; non-performing loans continue to decline
  • Operating expenses1 remain well-controlled; second quarter efficiency ratio of 57%
  • Third quarter 2014 cash dividend of $0.10 cents per common share declared

ALLENTOWN, Pa.--()--National Penn Bancshares, Inc. (Nasdaq: NPBC) reported net income of $26.2 million, or $0.19 per diluted share, for the second quarter of 2014. Earnings per share increased 19%, or $0.03 per diluted share, compared to net income of $22.7 million, or $0.16 per diluted share in the prior quarter. Net income for the first half of 2014 was $48.9 million, or $0.35 per diluted share, as compared to adjusted net income1 of $48.4 million, or $0.33 per diluted share, in the prior year period. National Penn’s performance resulted in a return on average assets of 1.23% and 1.16% for the second quarter and first six months of 2014, respectively.

“The second quarter was another quarter of consistent, high level performance,” said Scott V. Fainor, president and CEO of National Penn. “We maintained our net interest margin, our focus on controlling operating expenses, and realized the benefit of improvement in fee income. The balance sheet remains very strong, as evidenced by our asset quality metrics and capital ratios inclusive of the repurchase of 5% of our outstanding shares in the first quarter.”

Net interest income for the second quarter of 2014 was $63.0 million, compared to $62.3 million for the first quarter of 2014, while the net interest margin for the second quarter of 2014 was stable at 3.43%, compared to 3.44% in the prior quarter. Loans grew approximately 3% since June 30, 2013, driven primarily by growth in commercial loans.

National Penn’s asset quality metrics remained strong during the quarter. Total non-performing loans declined 10% from the prior quarter and 22% since June 30, 2013. Non-performing loans were 0.80% of total loans, declining from 0.89% at March 31, 2014 and 1.05% at June 30, 2013. Classified loans have declined 26% over the last twelve months and net charge offs declined approximately $1 million compared to the prior quarter. This continued strength in asset quality was a factor in recording no provision for loan losses in the second quarter of 2014, compared to $1.3 million in the prior quarter. National Penn’s allowance for loan losses was 207% of non-performing loans at June 30, 2014, compared to 194% at March 31, 2014, and 189% at June 30, 2013.

Operating expenses1 remained well-controlled, aggregating to $52.1 million for the second quarter, compared to $52.3 million in the prior quarter, and $53.2 million in the second quarter of 2013. The efficiency ratio1 was 57% for the second quarter of 2014.

Non-interest income increased $2.9 million compared to the prior quarter. The growth in non-interest income for the second quarter included seasonal increases in banking fees, higher mortgage banking revenue, increased customer swap activity, and a $0.9 million gain on sale of non-performing loans. The first quarter of 2014 included a $0.5 million loss on an unconsolidated equity investment.

As previously announced, National Penn’s Board of Directors declared a third quarter dividend of ten cents ($0.10) per common share to shareholders of record as of Monday, August 4, 2014, payable on Friday, August 15, 2014. National Penn’s tier 1 common and tangible common equity to tangible assets ratio increased to 13.44% and 10.03%, respectively, at June 30, 2014, compared to 13.22% and 9.86%, respectively, at March 31, 2014.

“Our second quarter results once again demonstrate the commitment of our entire team to delivering on our strategic objectives,” said Scott V. Fainor. “In addition to the results we achieved for the quarter, we completed our previously announced expense reduction initiatives.” Mr. Fainor continued, “During the quarter, we were also very pleased to have signed a definitive agreement to acquire TF Financial Corporation. The transaction allows us to leverage our capital base, accrete earnings per share, and enhance franchise 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; National Penn Capital Advisors, Inc.; 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.

Additional Information About the Merger and Where to Find It:

In connection with the proposed merger transaction, National Penn has filed with the Securities and Exchange Commission a Registration Statement on Form S-4 that includes a Proxy Statement of TF Financial Corporation and a Prospectus of National Penn as well as other relevant documents concerning the proposed transaction. Shareholders are urged to read the Registration Statement and the Proxy Statement/Prospectus regarding the merger and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information.

A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about National Penn and TF Financial Corporation, may be obtained at the SEC’s Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from National Penn at www.nationalpennbancshares.com under the heading “Documents/SEC Filings” or from TF Financial Corporation by accessing TF Financial Corporation’s website at www.3rdfedbank.com under the section “Investor Relations” and under the heading “SEC Filings.”

National Penn and TF Financial Corporation and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of TF Financial Corporation in connection with the proposed merger. Information about the directors and executive officers of National Penn is set forth in the proxy statement for National Penn’s 2014 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on March 12, 2014. Information about the directors and executive officers of TF Financial Corporation is set forth in the proxy statement for TF Financial Corporation’s 2014 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on March 26, 2014. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.

         
Financial Update for National Penn Bancshares, Inc. (NPBC) for 6/30/2014
 
 
 
Unaudited, dollars in thousands except share and per share data

 

As of

6/30/2014   3/31/2014   6/30/2013
SUMMARY BALANCE SHEET            
Total assets $ 8,618,373 $ 8,557,381 $ 8,316,585
Investment securities and other securities 2,420,509 2,424,404 2,313,358
Total loans 5,406,031 5,377,727 5,261,296
Deposits 6,108,483 6,139,424 6,022,463
Borrowings 1,316,253 1,245,925 1,089,199
Shareholders' equity 1,101,408 1,082,449 1,115,758
Tangible book value per common share (2) $ 6.02 $ 5.88 $ 5.83
Tangible common equity / tangible assets (2) 10.03 % 9.86 % 10.55 %
 
Three Months Ended Six Months Ended
6/30/2014   3/31/2014   6/30/2013 6/30/2014   6/30/2013
EARNINGS                  
Total interest income $ 70,528 $ 70,133 $ 72,101 $ 140,661 $ 144,696
Total interest expense   7,577     7,844     8,847     15,421     19,818  
Net interest income 62,951 62,289 63,254 125,240 124,878
Provision for loan losses   -     1,251     1,500     1,251     3,000  
Net interest income after provision for loan losses 62,951 61,038 61,754 123,989 121,878
Net gains from fair value changes of subordinated debentures - - - - 2,111
Net gains on investment securities - 8 22 8 47
Other non-interest income 24,396 21,470 24,946 45,866 48,387
Loss on debt extinguishment - - - - 64,888
Other non-interest expense   52,114     52,337     53,153     104,451     105,587  
Income before income taxes 35,233 30,179 33,569 65,412 1,948
Income tax expense (benefit)   9,034     7,469     8,550     16,503     (5,667 )
Net income $ 26,199   $ 22,710   $ 25,019   $ 48,909   $ 7,615  
 
PERFORMANCE RATIOS                  
Net interest margin 3.43 % 3.44 % 3.53 % 3.43 % 3.51 %
Return on average assets 1.23 % 1.09 % 1.21 % 1.16 % 0.18 %
Adjusted return on average assets (3) 1.23 % 1.09 % 1.21 % 1.16 % 1.17 %
Return on average shareholders' equity 9.67 % 8.42 % 8.82 % 9.04 % 1.35 %
Return on average tangible common equity (1) 12.77 % 11.11 % 11.53 % 11.94 % 1.76 %
Adjusted return on average tangible common equity 12.77 % 11.11 % 11.53 % 11.94 % 11.19 %
Efficiency ratio (4) 57.02 % 59.60 % 57.43 % 58.28 % 58.01 %
 
PER SHARE                  
Basic earnings $ 0.19 $ 0.16 $ 0.17 $ 0.35 $ 0.05
Diluted earnings 0.19

 

0.16 0.17 0.35 0.05
Dividends 0.10 0.10 0.10 0.20 0.10 (a)
Average shares - basic 139,191,923 141,360,180 145,580,155 140,270,062 145,488,073
Average shares - diluted 139,719,980 141,877,066 145,997,009 140,792,564 145,900,726
                     
 
(1) RECONCILIATION TABLES FOR NON-GAAP FINANCIAL MEASURES
Three Months Ended Six Months Ended
6/30/2014   3/31/2014   6/30/2013 6/30/2014   6/30/2013
Return on average tangible common equity
Return on average shareholders' equity 9.67 % 8.42 % 8.82 % 9.04 % 1.35 %
Effect of goodwill and intangibles   3.10 %   2.69 %   2.71 %   2.90 %   0.41 %
Return on average tangible common equity   12.77 %   11.11 %   11.53 %   11.94 %   1.76 %
Average tangible equity
Average shareholders' equity $ 1,087,204 $ 1,093,797 $ 1,137,659 $ 1,090,482 $ 1,140,230
Average goodwill and intangibles   (264,082 )   (264,775 )   (267,264 )   (264,426 )   (267,797 )
Average tangible common equity $ 823,122   $ 829,022   $ 870,395   $ 826,056   $ 872,433  
 
Adjusted net income reconciliation
Net income $ 26,199 $ 22,710 $ 25,019 $ 48,909 $ 7,615
After tax unrealized fair value gain on subordinated debentures - - - - (1,372 )
After tax loss on debt extinguishment   -     -     -     -     42,177  
Adjusted net income $ 26,199   $ 22,710   $ 25,019   $ 48,909   $ 48,420  

 

Earnings per share
Net income $ 0.19 $ 0.16 $ 0.17 $ 0.35 $ 0.05
After tax unrealized fair value gain on subordinated debentures - - - - (0.01 )
After tax loss on debt extinguishment   -     -     -     -     0.29  
Adjusted net income $ 0.19   $ 0.16   $ 0.17   $ 0.35   $ 0.33  

 

(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 6/30/2014
 
 
 
Unaudited, dollars in thousands except share and per share data

 

As of

6/30/2014   3/31/2014   12/31/2013   9/30/2013   6/30/2013
ASSETS
Cash and due from banks $ 138,530 $ 128,991 $ 102,241 $ 137,795 $ 118,575
Interest-earning deposits with banks   73,384     55,335     181,282     78,895     63,193  
Total cash and cash equivalents 211,914 184,326 283,523 216,690 181,768
 
Investment securities available-for-sale, at fair value 1,463,479 1,442,304 1,894,107 1,875,676 1,799,831
Investment securities held-to-maturity 892,536 918,340 438,445 444,898 452,275
Other securities 64,494 63,760 63,746 44,107 61,252
Loans held-for-sale 2,275 5,171 4,951 2,752 12,289
 
Loans 5,403,756 5,372,556 5,333,268 5,279,939 5,249,007
Allowance for loan losses   (89,848 )   (93,252 )   (96,367 )   (100,763 )   (104,533 )
Loans, net 5,313,908 5,279,304 5,236,901 5,179,176 5,144,474
 
Premises and equipment, net 110,972 97,707 96,232 93,871 94,673
Accrued interest receivable 26,953 27,408 27,130 27,831 28,453
Bank owned life insurance 150,237 149,045 147,869 146,906 145,670
Other real estate owned and other repossessed assets 1,758 2,138 1,278 1,569 1,899
Goodwill 258,279 258,279 258,279 258,279 258,279
Other intangible assets, net 5,476 6,156 6,854 7,656 8,470
Unconsolidated investments 8,205 8,214 8,713 9,177 8,673
Other assets   107,887     115,229     123,820     116,035     118,579  
TOTAL ASSETS $ 8,618,373   $ 8,557,381   $ 8,591,848   $ 8,424,623   $ 8,316,585  
 
LIABILITIES

Non-interest bearing deposits

$ 1,031,271 $ 1,028,572 $ 970,051 $ 1,026,546 $ 942,127
Interest bearing deposits   5,077,212     5,110,852     5,102,527     5,408,910     5,080,336  
Total deposits 6,108,483 6,139,424 6,072,578 6,435,456 6,022,463
 
Customer repurchase agreements 587,686 561,170 551,736 521,779 547,736
Repurchase agreements 50,000 50,000 50,000 50,000 50,000
Federal Home Loan Bank advances 601,246 557,434 603,232 112,406 414,142
Subordinated debentures 77,321 77,321 77,321 77,321 77,321
Accrued interest payable and other liabilities   92,229     89,583     105,115     96,383     89,165  
TOTAL LIABILITIES   7,516,965     7,474,932     7,459,982     7,293,345     7,200,827  
 
SHAREHOLDERS' EQUITY
Common stock 1,387,304 1,386,265 1,387,966 1,387,052 1,386,178
Accumulated deficit (154,909 ) (167,191 ) (175,990 ) (182,628 ) (192,623 )
Accumulated other comprehensive loss (474 ) (5,295 ) (21,157 ) (13,504 ) (17,189 )
Treasury stock   (130,513 )   (131,330 )   (58,953 )   (59,642 )   (60,608 )
TOTAL SHAREHOLDERS' EQUITY   1,101,408     1,082,449     1,131,866     1,131,278     1,115,758  
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,618,373   $ 8,557,381   $ 8,591,848   $ 8,424,623   $ 8,316,585  
 
 
PER SHARE DATA
Book value $ 7.91 $ 7.78 $ 7.76 $ 7.76 $ 7.66
Tangible book value (2) $ 6.02 $ 5.88 $ 5.94 $ 5.94 $ 5.83
Dividends - quarterly $ 0.10 $ 0.10 $ 0.10 $ 0.10 $ 0.10
Shares outstanding (end of period, net of treasury) 139,240,318 139,145,669 145,798,751 145,723,276 145,608,945
                     
 
(2) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
 
Total shareholders' equity $ 1,101,408 $ 1,082,449 $ 1,131,866 $ 1,131,278 $ 1,115,758
Goodwill and intangibles   (263,755 )   (264,435 )   (265,133 )   (265,935 )   (266,749 )
Tangible common equity $ 837,653   $ 818,014   $ 866,733   $ 865,343   $ 849,009  
Shares outstanding 139,240,318 139,145,669 145,798,751 145,723,276 145,608,945
Tangible book value per share $ 6.02 $ 5.88 $ 5.94 $ 5.94 $ 5.83
 
Total assets $ 8,618,373 $ 8,557,381 $ 8,591,848 $ 8,424,623 $ 8,316,585
Goodwill and intangibles   (263,755 )   (264,435 )   (265,133 )   (265,935 )   (266,749 )
Tangible assets $ 8,354,618   $ 8,292,946   $ 8,326,715   $ 8,158,688   $ 8,049,836  
Tangible common equity/tangible assets 10.03 % 9.86 % 10.41 % 10.61 % 10.55 %
 
(3) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
 
Adjusted net income (1) $ 26,199 $ 22,710 $ 25,112 $ 24,560 $ 25,019
Average assets $ 8,512,845 $ 8,479,686 $ 8,385,094 $ 8,310,626 $ 8,326,499
Adjusted return on average assets (annualized) 1.23 % 1.09 % 1.19 % 1.17 % 1.21 %
 
 
Financial Update for National Penn Bancshares, Inc. (NPBC) for 6/30/2014
             
 
 
Unaudited, dollars in thousands except share and per share data
For the Quarter Ended For the Six Months Ended
6/30/2014   3/31/2014   12/31/2013   9/30/2013   6/30/2013 6/30/2014   6/30/2013
INTEREST INCOME
Loans, including fees $ 52,476 $ 52,582 $ 54,600 $ 54,577 $ 55,260 $ 105,058 $ 110,981
Investment securities
Taxable 11,694 11,121 10,912 10,105 9,795 22,815 19,480
Tax-exempt 6,329 6,404 6,534 6,768 7,005 12,733 14,119
Deposits with banks   29     26     39     48     41     55     116  
Total interest income   70,528     70,133     72,085     71,498     72,101     140,661     144,696  
INTEREST EXPENSE
Deposits 4,671 4,773 5,166 5,468 5,831 9,444 11,745
Customer repurchase agreements 400 393 407 440 460 793 958
Repurchase agreements 608 601 615 614 623 1,209 1,342
Short-term borrowings 1 - - - - 1 41
Federal Home Loan Bank advances 1,369 1,548 1,287 1,325 1,383 2,917 3,717
Subordinated debentures   528     529     538     539     550     1,057     2,015  
Total interest expense   7,577     7,844     8,013     8,386     8,847     15,421     19,818  

Net interest income

62,951 62,289 64,072 63,112 63,254 125,240 124,878
Provision for loan losses   -     1,251     1,000     1,250     1,500     1,251     3,000  
Net interest income after provision for loan losses   62,951     61,038     63,072     61,862     61,754     123,989     121,878  
NON-INTEREST INCOME
Wealth management 7,133 6,866 6,609 6,883 6,986 13,999 13,817
Service charges on deposit accounts 3,534 3,384 3,827 3,894 3,743 6,918 7,513
Insurance commissions and fees 3,209 3,597 3,028 3,071 3,326 6,806 6,593
Cash management and electronic banking fees 4,869 4,526 4,782 4,860 4,821 9,395 9,272
Mortgage banking 936 716 902 1,621 2,122 1,652 3,977
Bank owned life insurance 1,218 1,198 1,389 1,260 1,239 2,416 2,467
Earnings (losses) of unconsolidated investments (9 ) (477 ) 57 661 6 (486 ) (8 )
Gain on sale of non-performing loans 946 - - - - 946 -
Other operating income 2,560 1,660 2,120 2,551 2,703 4,220 4,756
Net gains from fair value changes of subordinated debentures - - - - - - 2,111
Net gains on sales of investment securities   -     8     -     7     22     8     47  
Total non-interest income   24,396     21,478     22,714     24,808     24,968     45,874     50,545  
NON-INTEREST EXPENSE
Salaries, wages and employee benefits 28,887 29,201 29,035 29,598 29,137 58,088 58,367
Premises and equipment 7,709 8,212 7,721 7,724 7,511 15,921 15,002
FDIC insurance 1,200 1,317 1,356 1,404 1,494 2,517 2,707
Other operating expenses 14,318 13,607 13,721 14,877 15,011 27,925 29,511
Loss on debt extinguishment - - - - - - 64,888
Corporate reorganization expense   -     -     6,000     -     -     -     -  
Total non-interest expense   52,114     52,337     57,833     53,603     53,153     104,451     170,475  
Income before income taxes 35,233 30,179 27,953 33,067 33,569 65,412 1,948
Income tax expense (benefit)   9,034     7,469     6,741     8,507     8,550     16,503     (5,667 )
NET INCOME $ 26,199   $ 22,710   $ 21,212   $ 24,560   $ 25,019   $ 48,909   $ 7,615  
 
PER SHARE
Basic earnings $ 0.19 $ 0.16 $ 0.15 $ 0.17 $ 0.17 $ 0.35 $ 0.05
Diluted earnings $ 0.19 $ 0.16 $ 0.15 $ 0.17 $ 0.17 $ 0.35 $ 0.05
Average shares - basic 139,191,923 141,360,180 145,761,496 145,669,300 145,580,155 140,270,062 145,488,073
Average shares - diluted 139,719,980 141,877,066 146,244,467 146,124,821 145,997,009 140,792,564 145,900,726
 
SUPPLEMENTAL DATA (annualized, average)
Return on assets 1.23 % 1.09 % 1.00 % 1.17 % 1.21 % 1.16 % 0.18 %
Adjusted return on assets (3) 1.23 % 1.09 % 1.19 % 1.17 % 1.21 % 1.16 % 1.17 %
Return on shareholders' equity 9.67 % 8.42 % 7.44 % 8.78 % 8.82 % 9.04 % 1.35 %
Return on tangible common equity (1) 12.77 % 11.11 % 9.72 % 11.55 % 11.53 % 11.94 % 1.76 %
Adjusted return on tangible common equity 12.77 % 11.11 % 11.51 % 11.55 % 11.53 % 11.94 % 11.19 %
Efficiency ratio (4) 57.02 % 59.60 % 57.00 % 58.16 % 57.43 % 58.28 % 58.01 %
                   

 

       
 
(4) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
 
Efficiency ratio calculation
Non-interest expense $ 52,114 $ 52,337 $ 57,833 $ 53,603 $ 53,153 $ 104,451 $ 170,475
Less:
Loss on debt extinguishment - - - - - - 64,888
Corporate reorganization expense   -     -     6,000     -     -     -     -  
Operating expenses $ 52,114   $ 52,337   $ 51,833   $ 53,603   $ 53,153   $ 104,451   $ 105,587  
 
Net interest income (taxable equivalent) $ 66,992 $ 66,351 $ 68,223 $ 67,371 $ 67,610 $ 133,343 $ 133,625
 
Non-interest income 24,396 21,478 22,714 24,808 24,968 45,874 50,545
Less:
Net gains from fair value changes of subordinated debentures - - - - - - 2,111
Net gains on investment securities   -     8     -     7     22     8     47  
Adjusted revenue $ 91,388   $ 87,821   $ 90,937   $ 92,172   $ 92,556   $ 179,209   $ 182,012  
 
Efficiency ratio 57.02 % 59.60 % 57.00 % 58.16 % 57.43 % 58.28 % 58.01 %
 
 
Financial Update for National Penn Bancshares, Inc. (NPBC) for 6/30/2014
             
 
 
Unaudited, dollars in thousands except share and per share data
 
For the Quarter Ended For the Six Months Ended
6/30/2014   3/31/2014   12/31/2013   9/30/2013   6/30/2013 6/30/2014   6/30/2013
CHARGE-OFFS
Loan charge-offs $ 5,125 $ 5,018 $ 7,523 $ 5,774 $ 5,314 $ 10,143 $ 11,696
Recoveries on loans   (1,721 )   (652 )   (2,127 )   (754 )   (1,183 )   (2,373 )   (2,274 )
Net loan charge-offs $ 3,404   $ 4,366   $ 5,396   $ 5,020   $ 4,131   $ 7,770   $ 9,422  
Net loan charge-offs to average loans (annualized) 0.25 % 0.33 % 0.41 % 0.38 % 0.32 % 0.29 % 0.36 %
 
NET CHARGE-OFF DETAIL
Commercial and industrial loans $ 2,049 $ 1,150 $ 5,157 $ 3,059 $ 2,065 $ 3,199 $ 3,934
 
Commercial real estate-permanent 599 423 (523 ) 909 396 1,022 678
Commercial real estate-construction   90     30     (167 )   (29 )   93     120     411  
Total commercial real estate loans 689 453 (690 ) 880 489 1,142 1,089
 
Residential mortgages 162 1,681 56 209 522 1,843 1,855
Home equity lines and loans 389 784 439 423 903 1,173 1,650
All other consumer loans   115     298     434     449     152     413     894  
Total consumer loans   666     2,763     929     1,081     1,577     3,429     4,399  
 
Net loans charged-off $ 3,404   $ 4,366   $ 5,396   $ 5,020   $ 4,131   $ 7,770   $ 9,422  
 

 

As of

6/30/2014   3/31/2014   12/31/2013   9/30/2013   6/30/2013
ASSET QUALITY AND OTHER DATA
Non-accrual commercial and industrial loans $ 9,641 $ 13,501 $ 14,935 $ 23,101 $ 23,023
 
Non-accrual commercial real estate-permanent 4,811 3,513 4,258 3,760 5,129
Non-accrual commercial real estate-construction   9,674     10,425     12,128     5,345     5,666  
Total non-accrual commercial real estate loans 14,485 13,938 16,386 9,105 10,795
 
Non-accrual residential mortgages 6,265 6,779 7,037 6,485 6,276
Non-accrual home equity lines and loans 3,631 4,041 4,787 4,403 4,339
All other non-accrual consumer loans   1,495     1,701     1,731     1,705     1,916  
Total non-accrual consumer loans 11,391 12,521 13,555 12,593 12,531
         
Total non-accrual loans 35,517 39,960 44,876 44,799 46,349
 
Restructured loans   7,969     8,152     7,715     10,006     9,109  
Total non-performing loans 43,486 48,112 52,591 54,805 55,458
 
Other real estate owned and repossessed assets   1,758     2,138     1,278     1,569     1,899  
Total non-performing assets 45,244 50,250 53,869 56,374 57,357
 
Loans 90+ days past due & still accruing   2,097     2,310     3,466     2,608     2,023  
Total non-performing assets and loans 90+ days past due $ 47,341   $ 52,560   $ 57,335   $ 58,982   $ 59,380  
 
Allowance for loan losses $ 89,848   $ 93,252   $ 96,367   $ 100,763   $ 104,533  
Allowance for loan losses/non-performing loans   206.6 %   193.8 %   183.2 %   183.9 %   188.5 %
Allowance for loan losses/non-performing assets and loans
90+ days past due   189.8 %   177.4 %   168.1 %   170.8 %   176.0 %
Allowance for loan losses/total loans   1.66 %   1.73 %   1.81 %   1.91 %   1.99 %
Provision/charge-offs, net   0.0 %   28.7 %   18.5 %   24.9 %   36.3 %
Classified loans $ 173,610   $ 174,465   $ 191,589   $ 218,615   $ 234,085  
Classified loans/total loans   3.21 %   3.24 %   3.59 %   4.14 %   4.45 %
Delinquent loans (b) $ 17,316   $ 16,819   $ 29,435   $ 22,550   $ 22,512  
Delinquent loans/total loans   0.32 %   0.31 %   0.55 %   0.43 %   0.43 %
 
REGULATORY CAPITAL DATA
Tier 1 Capital $ 913,126   $ 888,565   $ 941,926   $ 938,040   $ 924,922  
Tier 1 Leverage Ratio   11.09 %   10.83 %   11.63 %   11.67 %   11.56 %
Tier 1 Ratio   14.64 %   14.44 %   15.46 %   15.63 %   15.51 %
Total Capital $ 991,235   $ 965,705   $ 1,018,316   $ 1,013,371   $ 999,839  
Total Capital Ratio   15.89 %   15.69 %   16.72 %   16.89 %   16.77 %
Total Risk-Weighted Assets $ 6,237,016   $ 6,155,090   $ 6,091,183   $ 6,001,065   $ 5,963,754  
 

(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 6/30/2014
 
Unaudited, dollars in thousands except share and per share data
         
As of
Earning Assets / Liabilities 6/30/2014   3/31/2014   12/31/2013   9/30/2013   6/30/2013

Loan portfolio composition (regulatory):

Commercial / industrial $ 815,168 $ 865,533 $ 796,797 $ 820,669 $ 861,494
Commercial real estate (c) 1,993,408 1,943,744 1,926,978 1,913,180 1,887,908
Residential mortgage 1,155,551 1,161,220 1,181,020 1,170,750 1,185,986
Real estate construction and land development 242,047 243,216 256,483 234,945 201,316
Home equity 803,553 787,334 794,709 786,835 778,521
Consumer 216,478 210,395 209,729 205,446 201,580
Other   179,826   166,285   172,503   150,866   144,491
Total 5,406,031 5,377,727 5,338,219 5,282,691 5,261,296
 
 
Investment securities and other securities 2,420,509 2,424,404 2,396,298 2,364,681 2,313,358
Other earning assets   73,384   55,335   181,282   78,895   63,193
Total earning assets (net of loan loss reserve) $ 7,810,076 $ 7,764,214 $ 7,819,432 $ 7,625,504 $ 7,533,314
(c) Includes owner occupied
 

Loan portfolio composition (internal):

Commercial & industrial
Business purpose, real estate secured $ 884,697 $ 861,101 $ 885,135 $ 897,757 $ 901,205
Business purpose, not secured by real estate 968,183 1,002,296 939,121 935,857 976,281
Owner occupied commercial real estate
Permanent 590,148 593,595 589,765 585,807 609,615
Construction / development 45,924 47,505 46,415 41,088 31,058
Leasing   41   97   228   392   630
Total commercial & industrial 2,488,993 2,504,594 2,460,664 2,460,901 2,518,789
 
Commercial real estate
Non-owner occupied
Permanent 1,042,928 1,021,271 994,838 964,510 919,080
Construction / development   182,506   183,586   198,334   181,683   153,172
Total commercial real estate   1,225,434   1,204,857   1,193,172   1,146,193   1,072,252
Total commercial 3,714,427 3,709,451 3,653,836 3,607,094 3,591,041
 
Consumer
Residential mortgage (personal purpose)
Permanent 644,322 637,273 643,506 642,696 640,745
Construction   13,128   10,922   8,719   9,443   7,076
Total residential mortgages 657,450 648,195 652,225 652,139 647,821
 
Home equity and direct installment 172,785 180,996 193,089 208,333 220,401
Home equity lines of credit   591,331   572,301   569,519   550,417   530,104
Total home equity 764,116 753,297 762,608 758,750 750,505
 
Private banking credit lines 95,324 94,582 99,859 98,714 98,865
Indirect vehicle and other   172,439   167,031   164,740   163,242   160,775
All other consumer   267,763   261,613   264,599   261,956   259,640
Total consumer   1,689,329   1,663,105   1,679,432   1,672,845   1,657,966
 
Loans 5,403,756 5,372,556 5,333,268 5,279,939 5,249,007
 
Loans held-for-sale 2,275 5,171 4,951 2,752 12,289
         
Total loans $ 5,406,031 $ 5,377,727 $ 5,338,219 $ 5,282,691 $ 5,261,296
 

Deposit composition:

Savings $ 552,885 $ 547,255 $ 526,576 $ 518,430 $ 527,216
NOW accounts 1,689,381 1,667,272 1,655,425 1,958,116 1,545,659
Money market accounts 1,684,410 1,680,900 1,670,035 1,639,859 1,654,442
Time deposits less than $100k 831,390 870,921 896,700 925,118 963,238
Time deposits $100k or greater   319,146   344,504   353,791   367,387   389,781
Total interest bearing deposits 5,077,212 5,110,852 5,102,527 5,408,910 5,080,336
 
Non-interest bearing deposits   1,031,271   1,028,572   970,051   1,026,546   942,127
 
Total deposits $ 6,108,483 $ 6,139,424 $ 6,072,578 $ 6,435,456 $ 6,022,463
 
 
Financial Update for National Penn Bancshares, Inc. (NPBC) for 6/30/2014
 
Unaudited, dollars in thousands except share and per share data
 
  Quarterly, as of   Six Months, as of
6/30/2014   3/31/2014   12/31/2013   9/30/2013   6/30/2013 6/30/2014   6/30/2013
Avg Bal   Yield   Avg Bal   Yield   Avg Bal   Yield   Avg Bal   Yield   Avg Bal   Yield Avg Bal   Yield   Avg Bal   Yield
 
Total loans* $ 5,360,641 3.97 % $ 5,342,648 4.04 % $ 5,256,841 4.17 % $ 5,229,366 4.19 % $ 5,244,930 4.27 % $ 5,351,694 4.01 % $ 5,234,033 4.32 %
Investment securities* 2,414,063 3.56 % 2,409,287 3.53 % 2,375,893 3.50 % 2,316,066 3.51 % 2,334,594 3.53 % 2,411,689 3.55 % 2,329,936 3.57 %
Interest earning deposits   67,112 0.17 %   69,222 0.15 %   89,530 0.17 %   102,581 0.19 %   94,788 0.17 %   68,161 0.16 %   107,242 0.22 %
 
Total earning assets   7,841,816 3.81 %   7,821,157 3.85 %   7,722,264 3.92 %   7,648,013 3.93 %   7,674,312 4.00 %   7,831,544 3.83 %   7,671,211 4.03 %
Total assets   8,512,845   8,479,686   8,385,094   8,310,626   8,326,499   8,496,357   8,312,734
 
Savings 550,336 0.10 % 534,699 0.10 % 524,647 0.10 % 524,178 0.11 % 525,494 0.11 % 542,561 0.10 % 515,559 0.11 %
NOW accounts 1,717,629 0.14 % 1,618,547 0.13 % 1,873,519 0.14 % 1,732,394 0.14 % 1,543,649 0.14 % 1,668,362 0.14 % 1,491,805 0.14 %
Money market accounts 1,687,193 0.21 % 1,671,200 0.21 % 1,649,960 0.23 % 1,655,133 0.27 % 1,646,691 0.29 % 1,679,241 0.21 % 1,646,267 0.29 %
Time deposits   1,179,576 1.03 %   1,233,794 1.06 %   1,273,664 1.07 %   1,312,810 1.09 %   1,464,421 1.08 %   1,206,535 1.05 %   1,485,924 1.09 %
 
Total interest bearing deposits   5,134,734 0.36 %   5,058,240 0.38 %   5,321,790 0.39 %   5,224,515 0.42 %   5,180,255 0.45 %   5,096,699 0.37 %   5,139,555 0.46 %
 
Non-interest bearing deposits   1,006,120   968,129   984,037   963,625   913,311   987,230   895,107
Total deposits   6,140,854 0.31 %   6,026,369 0.32 %   6,305,827 0.33 %   6,188,140 0.35 %   6,093,566 0.38 %   6,083,929 0.31 %   6,034,662 0.39 %
 
Customer repurchase agreements 546,284 0.29 % 541,041 0.29 % 529,541 0.30 % 518,569 0.34 % 523,585 0.35 % 543,677 0.29 % 535,579 0.36 %
Repurchase agreements 50,000 4.87 % 50,000 4.87 % 50,000 4.87 % 50,000 4.87 % 63,736 3.92 % 50,000 4.87 % 99,397 2.72 %
Short-term borrowings 407 0.63 % - 0.00 % 54 0.00 % - 0.00 % - 0.00 % 204 0.63 % 18,939 0.44 %
Federal Home Loan Bank advances 521,753 1.05 % 596,818 1.05 % 190,670 2.68 % 277,101 1.90 % 348,814 1.59 % 559,078 1.05 % 306,233 2.45 %
Subordinated debentures   77,321 2.74 %   77,321 2.77 %   77,321 2.76 %   77,321 2.77 %   77,321 2.85 %   77,321 2.76 %   101,131 4.02 %
Total deposits and borrowings   7,336,619 0.41 %   7,291,549 0.44 %   7,153,413 0.44 %   7,111,131 0.47 %   7,107,022 0.50 %   7,314,209 0.43 %   7,095,941 0.56 %
Total interest bearing liabilities $ 6,330,499 0.48 % $ 6,323,420 0.50 % $ 6,169,376 0.52 % $ 6,147,506 0.54 % $ 6,193,711 0.57 % $ 6,326,979 0.49 % $ 6,200,834 0.64 %
 
Net interest margin (FTE) 3.43 % 3.44 % 3.51 % 3.49 % 3.53 % 3.43 % 3.51 %
 
Wealth assets under management $ 2,574,509 $ 2,497,185 $ 2,504,717 $ 2,388,991 $ 2,285,199
 
*Fully taxable equivalent ("FTE") basis, using a 35% effective tax rate
 
 
Financial Update for National Penn Bancshares, Inc. (NPBC) for 6/30/2014
 
Unaudited
 
STATES OF OPERATION AND BANKING OFFICES BY STATE (LATEST AVAILABLE DATA)
 
  Quarterly, as of
6/30/2014   3/31/2014   12/31/2013   9/30/2013   6/30/2013
       

PA

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

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 111 119 120 120 120
Total number of insured subsidiaries
(Bank & Thrift subsidiaries) 1 1 1 1 1
Total number of ATMs 118 124 125 125 125
 
EOP employees (full-time equivalent) 1,574 1,591 1,631 1,632 1,666
 

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