EXHIBIT 99.2
Non-GAAP Financial Measure -
Return on Average Tangible Equity
Return on average tangible equity is supplemental financial information determined by a method other than in accordance with accounting principles generally accepted in the United Stated of America (“GAAP”). National Penn’s management uses this non-GAAP measure in its analysis of National Penn’s performance. Annualized net income return on average tangible equity excludes the average balance of acquisition-related goodwill and intangibles in determining average tangible shareholders’ equity. Banking and financial institution regulators also exclude goodwill and intangibles from shareholders' equity when assessing the capital adequacy of a financial institution. Management believes the presentation of this financial measure excluding the impact of these items provides useful supplemental information that is essential to a proper understanding of the financial results of National Penn, as it provides a method to assess management’s success in utilizing the company’s tangible capital. This disclosure should not be viewed as a substitute for results determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.
The following table reconciles this non-GAAP performance measure to the GAAP performance measure, return on average shareholders’ equity (dollars in thousands).
Reconciliation Table for Non-GAAP Financial Measure |
| | Dec. 31, 2000 | Dec. 31, 2001 | | Dec. 31, 2002 | Dec. 31, 2003 | Dec. 31, 2004 |
| Return on average shareholders' equity | 17.30% | 16.80% | | 17.36% | 16.20% | 13.20% |
| Effect of goodwill and intangibles | 2.16% | 1.55% | | 1.90% | 5.42% | 10.60% |
| Return on average tangible equity | 19.46% | 18.40% | | 19.26% | 21.62% | 23.80% |
