National Penn Bancshares (NPBC) 8-K National Penn Bancshares, Inc. Reports Record First Quarter Net Income

 PRESS RELEASE

Immediate

Catharine S. Bower, Communications Manager, 610-369-6618

National Penn Bancshares, Inc. Reports Record First Quarter Net Income

BOYERTOWN, Pa., April 18, 2005 -- National Penn Bancshares, Inc. (Nasdaq: NPBC), the parent company of National Penn Bank, reported first quarter 2005 net income totaling $14.01 million, or $0.40 per diluted share. Net income increased 23.2% compared to $11.37 million earned in the first quarter of 2004, and diluted earnings per share increased 8.1% compared to diluted earnings per share of $0.37 in first quarter 2004.

National Penn’s first quarter earnings produced annualized returns on average assets and average shareholders’ equity of 1.26% and 13.08%, respectively.

The following significant events have occurred since December 31, 2004:

· Record earnings in first quarter 2005 reflect in part National Penn’s increase in asset size, as compared to first quarter 2004. National Penn’s June 2004 acquisition of Peoples First, Inc. and its subsidiary, The Peoples Bank of Oxford, brought National Penn $456 million in additional assets, including $362 million in additional loans, as well as $382 million in additional deposits.

· First quarter 2005 earnings also reflect increased non-interest income. Insurance commissions and related fees increased $1.21 million, while various service charges and fees increased $1.01 million, over comparable amounts in first quarter 2004.

· On January 21, 2005, National Penn sold the operations center, located in Oxford, Chester County, Pennsylvania, that National Penn acquired in the June 2004 acquisition of Peoples First, Inc. for a gain of $922,000.

· Record first quarter 2005 earnings were achieved despite the fact that National Penn incurred in first quarter 2005 $601,000 in legal, auditing and other investigation-related expenses in the investigation of the loan fraud uncovered, and publicly disclosed, in January. After an exhaustive investigation lasting over three and one-half months, National Penn is filing a lawsuit today against a former loan officer and others, including certain customers and two additional former employees. The lawsuit seeks to recover all losses, costs and expenses arising out of the transactions examined during the investigation. National Penn is vigorously pursuing all other available avenues to recover these sums, including insurance, and is cooperating with law enforcement authorities in their investigation.

· On January 5, 2005, National Penn acquired Krombolz Agency, Inc., an insurance agency based in West Chester, PA. This is the third insurance agency acquired by National Penn since June 2004, all of which have been merged into National Penn’s insurance agency affiliate, National Penn Insurance Agency, Inc. A strategic focus for National Penn in 2005 will be to complete the integration of the operations of these acquired insurance agencies with National Penn Insurance Agency, forming a cohesive single operating unit.

· On March 22, 2005, the Office of the Comptroller of the Currency approved National Penn’s application to convert Investors Trust Company, a National Penn subsidiary, into a limited purpose national trust bank to be named National Penn Investors Trust Company. National Penn anticipates that this charter conversion will be completed in second quarter 2005. Once this process is completed, National Penn Investors Trust Company will provide a single unified entity to offer various wealth management products and services under the National Penn brand.

· National Penn’s common stock has been listed for trading on The Nasdaq Stock Market for over 20 years. Celebrating this fact, the National Penn executive management team will open The Nasdaq Stock Market for trading on April 19, 2005.

As of March 31, 2005, National Penn had total assets of $4.555 billion and total deposits of $2.970 billion. The allowance for loan and lease losses as of March 31, 2005 was $57.59 million, which represented 1.97% of total loans and leases outstanding of $2.929 billion.

Commenting on first quarter 2005, Wayne R. Weidner, National Penn Chairman and CEO, said: “First quarter 2005’s earnings of over $14 million are a new record for us. National Penn’s clear focus on its core business and core markets continues to pay off in a very real way for National Penn and its shareholders.”

Glenn E. Moyer, National Penn President, said: “We are very pleased that in first quarter 2005 National Penn has been able to continue its tradition of strong financial performance. Here at National Penn, we take great pride in our reputation as a proven and respected local financial services company, and we believe our outlook in the future remains strong.”

# # #

National Penn Bancshares, Inc. is a $4.55 billion financial services company operating 73 community offices in southeastern Pennsylvania through National Penn Bank and its FirstService Bank, HomeTowne Heritage Bank, and The Peoples Bank of Oxford Divisions. The Peoples Bank of Oxford Division also operates one community office in Cecil County, Maryland. National Penn's trust and investment management services are provided through Investors Trust Company; brokerage services are provided through National Penn Investment Services; mortgage banking activities are provided through National Penn Mortgage Company; insurance services are provided through National Penn Insurance Agency, Inc., and equipment leasing services are provided through National Penn Leasing Company. National Penn Bancshares, Inc. common stock is traded on the NASDAQ Stock Market under the symbol "NPBC." Additional information about the National Penn family is available on National Penn's Web site atwww.nationalpennbancshares.com.

This press release 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 this non-GAAP measure in its analysis of the company’s performance. This measure, annualized net income return on average tangible equity, excludes the average balance of 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 measure 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.

_________

This press release contains forward-looking statements concerning future events. Actual results could differ materially due to deteriorating economic conditions; increased competition; interest rate movements; market volatility in the securities markets; legislative or regulatory developments; merger-related synergies, savings and integration issues; technological changes; reputational risks; and other risks and uncertainties discussed in National Penn’s reports filed from time to time with the Securities and Exchange Commission, which are incorporated herein by reference. National Penn cautions you not to place undue reliance on these statements. National Penn undertakes no obligation to publicly release or update any of these statements.

National Penn Bancshares, Inc.
Contact: Gary L. Rhoads, 610-369-6341
Exchange Listing Nasdaq "NPBC"
(Dollars in thousands, except per share data)
Three Months Ended March 31,	2005			2004
STATEMENTS OF CONDITION
Total assets	$	4,554,837		$	3,567,191
Total deposits		2,969,549			2,383,441
Total loans and leases		2,928,637			2,327,463
Total shareholders' equity		426,493			328,861
Book value per share		12.34			10.80
EARNINGS
Total interest income	$	56,937		$	44,174
Total interest expense		19,951			12,749
Net interest income	$	36,986		$	31,425
Provision for loan and lease losses		750			1,763
Net interest income after provision
for loan and lease losses	$	36,236		$	29,662
Other income		13,959			10,762
Other expenses		31,093			25,521
Income before income taxes	$	19,102		$	14,903
Income taxes		5,092			3,535
Net income	$	14,010		$	11,368
Return on average assets		1.26	%		1.30	%
Return on average shareholders' equity		13.1	%		15.2	%
Return on average tangible equity		24.9	%		24.1	%
Average shares - basic		34,509,253			30,352,862
Average shares - diluted		35,322,930			31,152,097
PER SHARE
Basic earnings	$	0.41		$	0.37
Diluted earnings		0.40			0.37
Dividends paid in cash		0.20			0.19
Financial information restated to include a 5 for 4 stock split issued September 30, 2004.
(1) Reconciliation Table for Non-GAAP Financial Measure
Return on average shareholders' equity		13.1	%		15.2	%
Effect of goodwill and intangibles		11.8	%		8.9	%
Return on average tangible equity		24.9	%		24.1	%
Average tangible equity excludes acquisition related average goodwill and intangibles:
Average shareholders' equity	$	434,312		$	299,338
Average goodwill and intangibles		(205,838	)		(111,039	)
Average tangible equity		228,474			188,299

Financial Update for NATL PENN BCSHS (NPBC) FOR 3/31/05
Date: 4/15/2005
PAGE: 1 OF 7		AS OF			AS OF			AS OF
BALANCE SHEET - ASSETS ($000s)		3/31/2005			3/31/2004			12/31/2004
Cash & Cash Equivalents	$	112,847		$	86,088		$	93,894
Trading Account Securities		-			-			-
Securities Available for Sale		1,069,293			941,761			1,098,836
Held to Maturity Securities		116,663			-			90,967
Other Securities		-			-			-
Total Securities		1,185,956			941,761			1,189,803
Total Cash and Securities		1,298,803			1,027,849			1,283,697
Loans & Leases Held for Investment*		2,918,338			2,287,413			2,862,638
Loans & Leases Held for Sale*		10,299			40,050			11,801
Total Loans and Leases*		2,928,637			2,327,463			2,874,439
*Indicates data net of discount, gross of reserve
Loan Loss Reserve		(57,585	)		(50,154	)		(57,590	)
Goodwill		187,741			99,313			186,945
Other Intangibles		17,867			11,541			18,462
Total Intangible Assets		205,608			110,854			205,407
Mortgage Servicing Rights		-			-			-
Purchased Credit Card Relationships		-			-			-
Real Estate Owned & Held for Investment		-			616			-
Assets from Discontinued Operations		-			-			-
Other Assets		179,374			150,563			172,840
Total Assets	$	4,554,837		$	3,567,191		$	4,478,793
BALANCE SHEET - LIABILITIES ($000S)
Deposits	$	2,969,549		$	2,383,441		$	3,143,193
Borrowings		990,151			724,119			743,977
Trust Preferred Securities		-			-			-
Subordinated Debt		127,063			106,444			127,063
Liabilities from Discontinued Operations		-			-			-
Other Liabilities		41,581			24,326			36,435
Total Liabilities	$	4,128,344		$	3,238,330		$	4,050,668
BALANCE SHEET - EQUITY ($000s)
Redeemable Preferred Stock	$	-		$	-		$	-
Preferred Equity	$	-		$	-		$	-
Common Equity	$	426,493		$	328,861		$	428,125
MEMO ITEMS
Accumulated other comprehensive income	$	10,403		$	27,334		$	19,915
Publicly Reported Book Value Per Share (1)	$	12.34		$	10.80		$	12.41
EOP Common Shares Outstanding (excluding Treasury shares)(1)		34,556,243			30,446,048			34,510,798
Treasury Shares Held By Company (1)		94,223			17,294			87,960
Did you announce a repurchase plan during this period?		NO			NO			NO
Number of Shares to be Repurchased in Plan (1)		1,250,000			1,250,000			1,250,000
Number of Shares Repurchased During Period (1)		33,993			223,674			108,810
Average Price of Repurchased Shares (1)		24.23			26.55			27.54
(1) restated for a 5 for 4 stock split paid September 30, 2004.

Financial Update for NATL PENN BCSHS (NPBC) FOR 3/31/05
	PAGE: 2 OF 7
		FOR QUARTER			FOR QUARTER			YEAR
		ENDED			ENDED			ENDED
INCOME STATEMENT ($000s)		3/31/2005			3/31/2004			12/31/2004
Interest Income		$	56,937		$	44,174		$	198,775
Interest Expense			19,951			12,749			60,493
Net Interest Income			36,986			31,425			138,282
FTE adjustment			2,243			2,074			8,334
Net Interest Income (FTE)			39,229			33,499			146,616
Loan Loss Provision			750			1,763			4,800
Investment Securities Trans.			(37	)		(196	)		549
Nonrecurring Income			922			-			-
Nonrecurring Expense			601			-			-
Trading Account Income			-			-			-
Foreign Exchange Income			-			-			-
Trust Revenue			1,617			1,361			5,948
Service Charges on Deposits			3,791			3,415			15,230
Mortgage Banking Income			1,006			1,303			3,829
Fee Income from Investment Product Sales			581			392			1,598
Other Noninterest Income			6,079			4,487			19,620
Total Noninterest Income(excludes securities gains/losses)			13,074			10,958			46,225
Employee Comp. & Benefit Expense			18,470			14,778			64,159
Occupancy & Equipment Expense			4,431			3,954			16,451
Foreclosed Property Expense			-			-			-
Amortization of Intangibles			594			355			1,902
(Excludes Servicing and Credit Card Intangibles)
Other Noninterest Expense			6,997			6,434			34,979
Total Noninterest Exp.			30,492			25,521			117,491
Minority Interest Expense			-			-			-
Net Income Before Taxes			19,102			14,903			62,765
Tax Provision			5,092			3,535			14,851
Net Inc. from continuing operations			14,010			11,368			47,914
Net inc. from discontinued operations			-			-			-
Net Income		$	14,010		$	11,368		$	47,914
EARNINGS PER SHARE:
Basic
Net income (1)		$	0.41		$	0.37		$	1.47
Diluted
Net income (1)		$	0.40		$	0.37		$	1.44
Average Shares Basic (1)			34,509,253			30,352,862			32,637,816
Average Shares Diluted (1)			35,322,930			31,152,097			33,351,257
Dividends on Preferred Stock ($000s)		$	-		$	-		$	-
(1) restated for a 5 for 4 stock split paid September 30, 2004.

Financial Update for NATL PENN BCSHS (NPBC) FOR 3/31/05
AVERAGE BALANCE SHEET ($OOOs)
		As of			For QTR			For QTR
	PAGE: 3 of 7	3/31/2005			Ended 3/31/05			Ended 12/31/04
		(YTD AVG)			QTRLY AVG			QTRLY AVG
Total Loans (net of unearned)			2,905,920			2,905,920			2,834,453
Loan Loss Reserve			(57,851	)		(57,851	)		(58,109	)
Investment Securities (incl. trading assets)			1,193,928			1,193,928			1,115,338
Other Earning Assets			8,802			8,802			23,620
Total Earning Assets (net of loan loss reserve)			4,050,799			4,050,799			3,915,302
Total Assets			4,520,577			4,520,577			4,381,389
Savings			226,130			226,130			227,194
NOW Accounts			792,962			792,962			931,585
Money Market Accounts			638,215			638,215			652,716
Certificates			873,433			873,433			852,501
Total Int. Bearing Deposits			2,530,740			2,530,740			2,663,996
Non-Interest Bearing Deposits			504,583			504,583			517,864
Total Deposits			3,035,323			3,035,323			3,181,860
Short-Term Borrowings			642,805			642,805			385,765
Long-Term Borrowings			371,415			371,415			357,337
Total Int. Bearing Liabilities (incl. non-int bearing deposits)			4,049,543			4,049,543			3,924,962
Total Int. Bearing Liabilities			3,544,960			3,544,960			3,407,098
Total Shareholder's Equity			434,312			434,312			422,295

Financial Update for NATL PENN BCSHS (NPBC) FOR 3/31/05
	PAGE: 4 of 7
			FOR QUARTER			FOR QUARTER			FOR QUARTER			YEAR			YEAR
			ENDED			ENDED			ENDED			TO DATE			ENDED
CHARGEOFFS ($000s)			3/31/2005			3/31/2004			12/31/2004			12/31/2005			12/31/2004
Loan Chargeoffs		$	1,143		$	1,207		$	1,195		$	1,143		$	5,617
Recoveries on Loans		$	388		$	334		$	782		$	388		$	2,978
Net Loan Chargeoffs		$	755		$	873		$	413		$	755		$	2,639
			AS OF			AS OF			AS OF
ASSET QUALITY AND OTHER DATA ($000s)			3/31/2005			3/31/2004			12/31/2004
Nonaccrual Loans		$	12,237		$	11,583		$	11,103
Renegotiated Loans			-			-			-
Other Real Estate Owned			-			616			-
Total Nonperforming Assets			12,237			12,199			11,103
Loans 90+ Days Past Due & Still Accruing			973			258			870
NPAs plus Loans over 90		$	13,210		$	12,457		$	11,973
			AS OF			AS OF			AS OF
REGULATORY CAPITAL DATA ($000s)			3/31/2005			3/31/2004			12/31/2004
Tier 1 Capital		$	333,733		$	293,920		$	326,053
Tier 1 Ratio (%)			10.07	%		11.12	%		10.02	%
Total Capital (Tier 1 + Tier 2)		$	375,630		$	327,174		$	366,955
Total Capital Ratio (%)			11.33	%		12.38	%		11.27	%
Total Risk-Adjusted Assets		$	3,336,034		$	2,643,385		$	3,255,459
Tier 1 Leverage Ratio			7.79	%		9.20	%		7.86	%
			AS OF			AS OF			AS OF			YEAR
SUPPLEMENTAL DATA ($000s)			3/31/2005			3/31/2004			12/31/2004			ENDED
												12/31/2004
1-4 Family Mortgage Loans Serviced For Others		$	106,142		$	172,147		$	110,865
Propriety Mutual Fund Balances			-		$	-		$	-
(Net Asset Value in $000s)
Held to Maturity Securities (Fair Value)		$	115,013		$	-		$	90,621
Return on Avg. Assets (annualized)			1.26	%		1.30	%		0.96	%		1.20	%
Return on Avg. Equity (annualized)			13.1	%		15.2	%		9.99	%		13.2	%
Return on Avg. Tangible Equity (annualized) (1)			24.9	%		24.1	%		19.17	%		23.8	%
Common Stock Dividends (total $ in period)		$	6,903		$	5,809		$	6,910		$	25,197
EOP Employees (Full Time Equivalent)			1,135			943			1,098
(1) Reconciliation Table for Non-GAAP Financial Measure
Return on average shareholders' equity			13.1	%		15.2	%		10.0	%		13.2	%
Effect of goodwill and intangibles			11.8	%		8.9	%		9.2	%		10.6	%
Return on average tangible equity			24.9	%		24.1	%		19.2	%		23.8	%
Average tangible equity excludes acquisition related average goodwill and intangibles:
Average shareholders' equity		$	434,312		$	299,338		$	422,295		$	361,697
Average goodwill and intangibles			(205,838	)		(111,039	)		(202,226	)		(160,332	)
Average tangible equity			228,474			188,299			220,069			201,365

Financial Update for NATL PENN BCSHS (NPBC) FOR 3/31/05
PAGE: 5 of 7	AS OF		AS OF
PERIOD END BALANCES:	3/31/2005		12/31/2004
Loan Breakdown: (regulatory)
Commercial/Industrial	$	509,416	$	484,480
Commercial Real Estate		1,104,202		1,086,101
Residential Mortgage (including multi-family)		547,166		556,866
Real Estate Construction (and Land Development)		214,845		201,410
Home Equity (revolving and 2nd lien)		348,610		340,665
Consumer (Loans to Individuals)		57,999		63,843
Bank Card		-		-
Foreign		-		-
(Other)		146,399		141,074
Total Loans (net of unearned)		2,928,637		2,874,439
Investment Securities (incl. trading assets)		1,185,956		1,189,803
Other Earning Asset		5,512		8,776
Total Earning Assets (net of loan loss reserve)		4,062,519		4,015,428
Total Assets		4,554,837		4,478,793
Deposit Breakdown:
Savings		224,053		229,874
NOW Accounts		716,899		891,456
Money Market Accounts		624,641		644,014
Certificates		623,754		615,001
CDs>$100m		269,163		246,948
Foreign CDs		-		-
(as needed)		-		-
Total Int. Bearing Deposits		2,458,510		2,627,293
Non-Interest Bearing Deposits		511,039		515,900
Total Deposits		2,969,549		3,143,193
Short-Term Borrowings		739,767		514,051
Long-Term Debt		377,447		356,989
Total Int. Bearing Liabilities (incl. non-int bearing deposits)		4,086,763		4,014,233
Total Int. Bearing Liabilities		3,575,724		3,498,333
Total Stockholders Equity	$	426,493	$	428,125

Financial Update for NATL PENN BCSHS (NPBC) FOR 3/31/05
PAGE: 6 of 7
	AS OF		AS OF
PERIOD END BALANCES:	3/31/2005		12/31/2004
Loan Breakdown: (internal)
Business Purpose Loans	$	1,351,571	$	1,309,545
Residential Mortgage		287,917		294,641
Commercial Real Estate, Construction and Land Dev		975,983		961,515
Consumer (loans to Individual)		313,166		308,738
Total Loans (net of unearned)	$	2,928,637	$	2,874,439

Financial Update for NATL PENN BCSHS (NPBC) FOR 3/31/05
		PAGE 7 OF 7
BALANCE AND YIELD/COST ANALYSIS:				AS OF					AS OF
				3/31/2005					12/31/2004
					Qtr Avg Bal	Yield			Qtr Avg Bal	Yield
Total Loans (net of unearned)				$	2,905,920	6.25	%	$	2,834,453	6.10	%
Investment Securities (incl. trading assets)					1,193,928	4.88	%		1,115,338	4.87	%
Other Earning Assets					8,802	2.30	%		23,620	1.65	%
Total Earning Assets					4,108,650	5.84	%		3,973,411	5.73	%
Total Earning Assets (net of loan loss reserve)					4,050,799	5.92	%		3,915,302	5.82	%
Total Assets					4,520,577	5.31	%		4,381,389	5.20	%
Savings					226,130	0.80	%		227,194	0.74	%
NOWAccounts					792,962	1.42	%		931,585	1.44	%
Money Market Accounts					638,215	1.34	%		652,716	1.05	%
Certificates					873,433	3.07	%		852,501	2.96	%
Total Int. Bearing Deposits					2,530,740	1.92	%		2,663,996	1.77	%
Non-Interest Bearing Deposits					504,583				517,864
Total Deposits					3,035,323	1.60	%		3,181,860	1.48	%
Short-Term Borrowings					642,805	2.12	%		385,765	1.49	%
Long-Term Borrowings					371,415	5.07	%		357,337	5.12	%
Total Int. Bearing Liabilities(incl. non-int bearing deposits)					4,049,543	2.00	%		3,924,962	1.82	%
Total Int. Bearing Liabilities					3,544,960	2.28	%		3,407,098	2.09	%
Total Shareholder's Equity				$	434,312			$	422,295
Net Yield on Earning Assets (net of loan loss reserve): (Margin)						3.93	%			4.00	%
Net Yield on Earning Assets: (Margin)						3.87	%			3.94	%
STATES OF OPERATION AND BANKING OFFICES BY STATE (LATEST AVAILABLE DATA)
State	Number of Full Service Banking Offices (Domestic and in the U.S. Territories)
1. PA					73
Total Number of Banking Offices					73
Total Number of Insured Subsidiaries (Bank & Thrift Subsidiaries)					1
Total Number of ATMs					75
MD					1
Total Number of Banking Offices					1
Total Number of Insured Subsidiaries (Bank & Thrift Subsidiaries)					0
Total Number of ATMs					1
					0
Total Number of Banking Offices					0
Total Number of Insured Subsidiaries (Bank & Thrift Subsidiaries)					0
Total Number of ATMs					0
Have you restated any prior period's financial statements for a pooling of interest and/or a change in accounting principles?			N		(Y/N)
Periods Restated on this report:
Reason: