EXHIBIT 99.1
| | |
 | News Release |
National Penn Bancshares, Inc.
Reports Record 2006 Earnings
Announcement Marks 29th Year of Improved Earnings for Company
Contact: | Catharine S. Bower, Communications Manager |
| | (610) 369-6618 or csbower@natpennbank.com |
BOYERTOWN, Pa., January 23, 2007 -- National Penn Bancshares, Inc. (Nasdaq: NPBC), the parent company of National Penn Bank, today announced financial results for calendar year 2006, including the quarter ended December 31, 2006.
Net income for calendar year 2006 was a record $64.1 million, a 9.6% increase over 2005 net income of $58.5 million. On a diluted earnings per share basis, 2006 net income was $1.33 compared to $1.29 for 2005.
Net income for fourth quarter 2006 was $16.4 million, or $0.34 per diluted share, compared to net income of $15.9 million, or $0.35 per diluted share, for the same period a year ago. Included in net income for 2006 and 2005 were recoveries of $2.7 million and $3.5 million, respectively, on the 2004 fraud loss.
National Penn’s 2006 earnings produced returns on average assets and average shareholders’ equity of 1.24% and 12.64%, respectively. Return on average tangible equity was 27.06% in 2006.1
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1 Return on average tangible equity is a non-GAAP financial measure. A reconciliation of this non-GAAP financial measure to the comparable GAAP financial measure is presented in the reconciliation tables immediately following the text of this press release.
This year represents National Penn’s 29th consecutive year of increased earnings and 29th consecutive year of increased cash dividends. It also marked the 29th consecutive year of stock dividends or splits on National Penn stock. All per share information has been restated to reflect the 3% stock dividend on September 30, 2006.
The company had total assets at December 31, 2006 of $5.45 billion and total deposits of $3.83 billion. The allowance for loan and lease losses as of December 31, 2006 was $58.3 million, which represented 1.61% of total loans and leases outstanding of $3.63 billion. At December 31, 2006, National Penn was in compliance with all applicable regulatory capital requirements. National Penn and National Penn Bank each are considered “well capitalized” as defined by banking regulators.
On November 17, 2006, National Penn paid a quarterly cash dividend of $0.1675 per share to shareholders of record as of November 4, 2006. National Penn has paid cash dividends without interruption for over 130 years.
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About National Penn Bancshares, Inc.:
National Penn Bancshares, Inc. is a $5.45 billion asset financial services company operating 80 community offices in Pennsylvania through National Penn Bank and its FirstService Bank, HomeTowne Heritage Bank, Nittany 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 financial services affiliates consist of National Penn Investors Trust Company; National Penn Capital Advisors, Inc.; Vantage Investment Advisors, L. L. C.; National Penn Mortgage Company; National Penn Insurance Agency, Inc.; and 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 the company's Web site at www.nationalpennbancshares.com.
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On January 1, 2006, National Penn adopted Statement of Financial Accounting Standard (SFAS 123(R)) Share-Based Payment, requiring the expensing of our stock compensation programs based on the fair value of the awards. The impact of the adoption of SFAS 123(R) is included in the financial results for all of 2006 and all prior periods have been restated as a result of the adoption of the modified retrospective method.
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 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.
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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; 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.
Reconciliation Table for Non-GAAP Financial Measure
| | 2006 |
| Return on average shareholders’ equity | 12.64% |
| Effect of goodwill and intangibles | 14.42% |
| Return on average tangible equity | 27.06% |
| | |
Average tangible equity excludes acquisition-related average goodwill and intangibles (in millions): | |
Average shareholders’ equity | $507.1 |
| Average goodwill and intangibles | (270.2) |
| Average tangible equity | $236.9 |
| National Penn Bancshares, Inc. | | | | | | | | | |
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| Contact: Gary L. Rhoads, 610-369-6341 | | | | | | | | | |
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| Exchange Listing Nasdaq "NPBC" | | | | | | | | | |
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| (Dollars in thousands, except per share data) | | | | | | | | | |
| | | Three Months Ended December 31, | | Twelve Months Ended December 31, | |
| | | 2006 (3) | | 2005 (2)(3) | | 2006 (3) | | 2005 (2) | |
STATEMENTS OF CONDITION | | | | | | | | | |
| Total assets | | | | | | | | $ | 5,452,288 | | $ | 4,603,389 | |
| Total loans and leases | | | | | | | | | 3,631,937 | | | 3,049,808 | |
| Total deposits | | | | | | | | | 3,825,633 | | | 3,309,046 | |
| Total shareholders' equity | | | | | | | | | 542,869 | | | 447,668 | |
| Book value per share | | | | | | | | | 11.32 | | | 10.02 | |
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EARNINGS | | | | | | | | | | | | | |
| Total interest income | | $ | 79,376 | | $ | 63,448 | | $ | 302,185 | | $ | 242,586 | |
| Total interest expense | | | 42,012 | | | 26,643 | | | 148,826 | | | 93,937 | |
| Net interest income | | | 37,364 | | | 36,805 | | | 153,359 | | | 148,649 | |
| Provision for loan and lease losses | | | 840 | | | 750 | | | 2,541 | | | 3,200 | |
| Net interest income after provision | | | | | | | | | | | | | |
| for loan and lease losses | | | 36,524 | | | 36,055 | | | 150,818 | | | 145,449 | |
| Other income | | | 19,403 | | | 14,464 | | | 66,869 | | | 57,016 | |
| Other expenses | | | 34,845 | | | 30,008 | | | 133,333 | | | 125,064 | |
| Income before income taxes | | | 21,082 | | | 20,511 | | | 84,354 | | | 77,401 | |
| Income taxes | | | 4,711 | | | 4,622 | | | 20,245 | | | 18,921 | |
| Net income | | $ | 16,371 | | $ | 15,889 | | $ | 64,109 | | $ | 58,480 | |
| | | | | | | | | | | | | | |
| Return on average assets | | | 1.21 | % | | 1.39 | % | | 1.24 | % | | 1.29 | % |
| Return on average shareholders' equity | | | 12.25 | % | | 14.29 | % | | 12.64 | % | | 13.39 | % |
| Return on average tangible equity (1) | | | 26.28 | % | | 26.60 | % | | 27.06 | % | | 25.25 | % |
| Average shares - basic | | | 47,803,077 | | | 44,773,819 | | | 47,491,081 | | | 44,628,677 | |
| Average shares - diluted | | | 48,626,538 | | | 45,445,243 | | | 48,291,413 | | | 45,369,941 | |
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PER SHARE | | | | | | | | | | | | | |
| Basic earnings | | $ | 0.34 | | $ | 0.35 | | $ | 1.35 | | $ | 1.31 | |
| Diluted earnings | | | 0.34 | | | 0.35 | | | 1.33 | | | 1.29 | |
| Dividends paid in cash | | | 0.1675 | | | 0.1600 | | | 0.6500 | | | 0.6260 | |
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| (1) Reconciliation Table for Non-GAAP Financial Measure | | | | | | | | | | | | | |
| Return on average shareholders' equity | | | 12.25 | % | | 14.29 | % | | 12.64 | % | | 13.39 | % |
| Effect of goodwill and intangibles | | | 14.03 | % | | 12.31 | % | | 14.42 | % | | 11.86 | % |
| Return on average tangible equity | | | 26.28 | % | | 26.60 | % | | 27.06 | % | | 25.25 | % |
| Average tangible equity excludes acquisition related | | | | | | | | | | | | | |
| average goodwill and intangibles: | | | | | | | | | | | | | |
| Average shareholders' equity | | $ | 530,421 | | $ | 441,143 | | $ | 507,084 | | $ | 436,602 | |
| Average goodwill and intangibles | | | (283,297 | ) | | (204,154 | ) | | (270,200 | ) | | (204,975 | ) |
| Average tangible equity | | $ | 247,124 | | $ | 236,989 | | $ | 236,884 | | $ | 231,627 | |
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(2) Reflects the adoption of FAS 123(R) under the modified retrospective method. Share and per share information adjusted for a 3% stock dividend paid September 30, 2006. |
| (3) Unaudited | | | | | | | | | | | | | |
Financial Update for NATL PENN BCSHS (NPBC) FOR 12/31/06 |
Date 1/22/2007 |
PAGE: 1 OF 5
| | | | | AS OF | | AS OF | | AS OF | | AS OF | | AS OF | |
BALANCE SHEET - ASSETS ($000s) | | | | 12/31/2006 | | 9/30/2006 | | 6/30/2006 | | 3/31/2006 | | 12/31/2005 | |
| | | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | |
| Cash & Cash Equivalents | | | | | $ | 111,203 | | $ | 111,374 | | $ | 119,607 | | $ | 111,755 | | $ | 122,459 | |
| Trading Account Securities | | | | | | - | | | - | | | - | | | - | | | - | |
| Securities Available for Sale | | | | | | 1,010,897 | | | 945,598 | | | 953,784 | | | 1,003,070 | | | 941,106 | |
| Held to Maturity Securities | | | | | | 250,985 | | | 254,334 | | | 216,887 | | | 170,763 | | | 150,608 | |
| Other Securities | | | | | | - | | | - | | | - | | | - | | | - | |
| Total Securities | | | | | | 1,261,882 | | | 1,199,932 | | | 1,170,671 | | | 1,173,833 | | | 1,091,714 | |
| Total Cash and Securities | | | | | | 1,373,085 | | | 1,311,306 | | | 1,290,278 | | | 1,285,588 | | | 1,214,173 | |
| Loans & Leases Held for Investment* | | | | | | 3,613,422 | | | 3,577,068 | | | 3,485,169 | | | 3,386,911 | | | 3,031,225 | |
| Loans & Leases Held for Sale* | | | | | | 18,515 | | | 18,089 | | | 19,507 | | | 15,798 | | | 18,583 | |
| Total Loans and Leases* | | | | | | 3,631,937 | | | 3,595,157 | | | 3,504,676 | | | 3,402,709 | | | 3,049,808 | |
| *Indicates data net of unearned fees, gross of reserve | | | | | | | | | | | | | | | | | | | |
| Loan Loss Reserve | | | | | | (58,306 | ) | | (59,238 | ) | | (59,049 | ) | | (59,007 | ) | | (56,064 | ) |
| Premises and Equipment, net | | | | | | 55,231 | | | 55,600 | | | 55,863 | | | 56,090 | | | 53,158 | |
| Bank Owned Life Insurance | | | | | | 98,638 | | | 97,522 | | | 89,365 | | | 88,507 | | | 82,688 | |
| Goodwill | | | | | | 263,787 | | | 261,573 | | | 261,490 | | | 261,946 | | | 187,995 | |
| Other Intangibles | | | | | | 19,993 | | | 21,652 | | | 22,413 | | | 21,526 | | | 16,087 | |
| Total Intangible Assets | | | | | | 283,780 | | | 283,225 | | | 283,903 | | | 283,472 | | | 204,082 | |
| Mortgage Servicing Rights | | | | | | - | | | - | | | - | | | - | | | - | |
| Purchased Credit Card Relationships | | | | | | - | | | - | | | - | | | - | | | - | |
| Real Estate Owned & Held for Investment | | | | | | 1,291 | | | 1,806 | | | 242 | | | - | | | - | |
| Assets from Discontinued Operations | | | | | | - | | | - | | | - | | | - | | | - | |
| Other Assets (2) | | | | | | 66,632 | | | 62,170 | | | 60,142 | | | 54,650 | | | 55,544 | |
| Total Assets (2) | | | | | $ | 5,452,288 | | $ | 5,347,548 | �� | $ | 5,225,420 | | $ | 5,112,009 | | $ | 4,603,389 | |
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BALANCE SHEET - LIABILITIES ($000S) | | | | | | | | | | | | | | | | | | | |
| Deposits | | | | | $ | 3,825,633 | | $ | 3,772,102 | | $ | 3,786,748 | | $ | 3,616,965 | | $ | 3,309,046 | |
| Borrowings | | | | | | 878,522 | | | 854,129 | | | 726,835 | | | 786,252 | | | 677,183 | |
| Trust Preferred Securities | | | | | | - | | | - | | | - | | | - | | | - | |
| Subordinated Debt | | | | | | 142,527 | | | 142,527 | | | 142,527 | | | 142,527 | | | 127,063 | |
| Liabilities from Discontinued Operations | | | | | | - | | | - | | | - | | | - | | | - | |
| Other Liabilities | | | | | | 62,737 | | | 50,686 | | | 50,571 | | | 48,025 | | | 42,429 | |
| Total Liabilities | | | | | $ | 4,909,419 | | $ | 4,819,444 | | $ | 4,706,681 | | $ | 4,593,769 | | $ | 4,155,721 | |
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BALANCE SHEET - EQUITY ($000s) | | | | | | | | | | | | | | | | | | | |
| Redeemable Preferred Stock | | | | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | |
| Preferred Equity | | | | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | |
| Shareholders Equity (2) | | | | | $ | 542,869 | | $ | 528,104 | | $ | 518,739 | | $ | 518,240 | | $ | 447,668 | |
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MEMO ITEMS | | | | | | | | | | | | | | | | | | | |
| Accumulated other comprehensive (loss) income | | | | | $ | 1,861 | | $ | 462 | | $ | (7,784 | ) | $ | 1,552 | | $ | 3,189 | |
| Publicly Reported Book Value Per Share (1)(2) | | | | | $ | 11.32 | | $ | 11.06 | | $ | 10.78 | | $ | 10.78 | | $ | 10.02 | |
| EOP Common Shares Outstanding (excluding Treasury shares)(1) | | | | | | 47,940,831 | | | 47,730,760 | | | 48,119,272 | | | 48,061,223 | | | 44,683,244 | |
| Treasury Shares Held By Company (1) | | | | | | 203,191 | | | 425,569 | | | 27,207 | | | 27,942 | | | 283,694 | |
| Did you announce a repurchase plan during this period? | | | | | | NO | | | NO | | | NO | | | NO | | | YES | |
| Number of Shares to be Repurchased in Plans (1) | | | | | | 3,669,375 | | | 3,669,375 | | | 3,669,375 | | | 3,669,375 | | | 3,669,375 | |
| Number of Shares Repurchased During Period (1) | | | | | | 21,889 | | | 539,278 | | | 83,574 | | | 52,235 | | | 326,689 | |
| Average Price of Repurchased Shares (1) | | | | | $ | 20.30 | | $ | 19.31 | | $ | 19.61 | | $ | 19.99 | | $ | 19.48 | |
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| (1) Adjusted for a 3% stock dividend paid September 30, 2006. | | | |
| (2) Adjusted for modified retrospective method adoption under FAS123 ( R ). | | | | | | | |
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Financial Update for NATL PENN BCSHS (NPBC) FOR 12/31/06 |
| | PAGE: 2 OF 5 | |
| | | FOR QUARTER | | FOR QUARTER | | FOR QUARTER | | FOR QUARTER | | FOR QUARTER | | | | | |
| | ENDED | | ENDED | | ENDED | | ENDED | | ENDED | | YTD | | YTD | |
INCOME STATEMENT ($000s) | | 12/31/2006 | | 9/30/2006 | | 6/30/2006 | | 3/31/2006 | | 12/31/2005 | | 12/31/2006 | | 12/31/2005 | |
| | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | |
| Interest Income | | $ | 79,376 | | $ | 78,108 | | $ | 75,345 | | $ | 69,356 | | $ | 63,448 | | $ | 302,185 | | $ | 242,586 | |
| Interest Expense | | | 42,012 | | | 39,643 | | | 36,297 | | | 30,874 | | | 26,643 | | | 148,826 | | | 93,937 | |
| Net Interest Income | | | 37,364 | | | 38,465 | | | 39,048 | | | 38,482 | | | 36,805 | | | 153,359 | | | 148,649 | |
| FTE adjustment | | | 3,324 | | | 3,157 | | | 2,847 | | | 2,764 | | | 2,337 | | | 12,092 | | | 9,227 | |
| Net Interest Income (FTE) | | | 40,688 | | | 41,622 | | | 41,895 | | | 41,246 | | | 39,142 | | | 165,451 | | | 157,876 | |
| Loan Loss Provision | | | 840 | | | 561 | | | 460 | | | 680 | | | 750 | | | 2,541 | | | 3,200 | |
| Investment Securities Trans. | | | - | | | 49 | | | 444 | | | 377 | | | (235 | ) | | 870 | | | 555 | |
| Nonrecurring Income | | | 1,342 | | | 777 | | | - | | | - | | | - | | | 2,119 | | | 922 | |
| Nonrecurring Expense | | | (1,325 | ) | | (907 | ) | | 306 | | | (255 | ) | | (2,954 | ) | | (2,181 | ) | | (1,603 | ) |
| Trading Account Income | | | - | | | - | | | - | | | - | | | - | | | - | | | - | |
| Foreign Exchange Income | | | - | | | - | | | - | | | - | | | - | | | - | | | - | |
| Wealth Management Income | | | 3,785 | | | 3,515 | | | 3,519 | | | 3,222 | | | 2,349 | | | 14,041 | | | 9,076 | |
| Service Charges on Deposits | | | 4,421 | | | 4,618 | | | 4,334 | | | 4,027 | | | 4,081 | | | 17,400 | | | 16,146 | |
| Cash management and electronic banking fees | | | 2,033 | | | 2,071 | | | 2,017 | | | 2,106 | | | 2,073 | | | 8,227 | | | 7,680 | |
| Mortgage Banking Income | | | 1,029 | | | 1,047 | | | 1,156 | | | 1,021 | | | 1,356 | | | 4,253 | | | 5,366 | |
| Insurance Income | | | 1,638 | | | 1,745 | | | 1,719 | | | 1,753 | | | 1,534 | | | 6,853 | | | 6,970 | |
| Bank Owned Life Insurance Income | | | 1,116 | | | 972 | | | 858 | | | 820 | | | 803 | | | 3,766 | | | 3,447 | |
| Other Noninterest Income | | | 4,039 | | | 1,628 | | | 1,815 | | | 1,856 | | | 2,503 | | | 9,340 | | | 6,854 | |
| Total Noninterest Income(excludes securities gains/losses and non-recurring income) | | | 18,061 | | | 15,596 | | | 15,418 | | | 14,805 | | | 14,699 | | | 63,880 | | | 55,539 | |
| Employee Comp. & Benefit Expense (2) | | | 20,611 | | | 20,261 | | | 20,210 | | | 21,079 | | | 20,058 | | | 82,161 | | | 76,703 | |
| Occupancy & Equipment Expense | | | 4,663 | | | 4,403 | | | 4,403 | | | 4,313 | | | 4,642 | | | 17,783 | | | 17,652 | |
| Amortization of Intangibles | | | 773 | | | 761 | | | 741 | | | 643 | | | 594 | | | 2,918 | | | 2,374 | |
| Other Noninterest Expense | | | 10,123 | | | 7,940 | | | 7,128 | | | 7,462 | | | 7,668 | | | 32,653 | | | 29,938 | |
| Total Noninterest Exp. (excludes non-recurring expenses) (2) | | | 36,170 | | | 33,365 | | | 32,482 | | | 33,497 | | | 32,962 | | | 135,514 | | | 126,667 | |
| Minority Interest Expense | | | - | | | - | | | - | | | - | | | - | | | - | | | - | |
| Net Income Before Taxes (2) | | | 21,082 | | | 21,868 | | | 21,662 | | | 19,742 | | | 20,511 | | | 84,354 | | | 77,401 | |
| Tax Provision (2) | | | 4,711 | | | 5,244 | | | 5,578 | | | 4,712 | | | 4,622 | | | 20,245 | | | 18,921 | |
| Net Income (2) | | $ | 16,371 | | $ | 16,624 | | $ | 16,084 | | $ | 15,030 | | $ | 15,889 | | $ | 64,109 | | $ | 58,480 | |
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EARNINGS PER SHARE: | | | | | | | | | | | | | | | | | | | | | | |
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Basic | | | | | | | | | | | | | | | | | | | | | | |
| Net income (1) (2) | | $ | 0.34 | | $ | 0.35 | | $ | 0.33 | | $ | 0.32 | | $ | 0.35 | | $ | 1.35 | | $ | 1.31 | |
Diluted | | | | | | | | | | | | | | | | | | | | | | |
| Net income (1) (2) | | $ | 0.34 | | $ | 0.34 | | $ | 0.33 | | $ | 0.32 | | $ | 0.35 | | $ | 1.33 | | $ | 1.29 | |
| Average Shares Basic (1) | | | 47,803,077 | | | 47,737,218 | | | 48,089,589 | | | 46,318,334 | | | 44,773,819 | | | 47,491,081 | | | 44,628,677 | |
| Average Shares Diluted (1) | | | 48,626,538 | | | 48,555,112 | | | 48,888,091 | | | 47,223,331 | | | 45,445,243 | | | 48,291,413 | | | 45,369,941 | |
| Dividends on Preferred Stock ($000s) | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | |
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| (1) Adjusted for a 3% stock dividend paid September 30, 2006. | | | | | | | | | | | | | | | | | | | | | | |
| (2) Adjusted for modified retrospective method adoption under FAS123 ( R ). | | | | | | | | | | | | | | | | | | |
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SUPPLEMENTAL DATA ($000s) (4) | | | | | | | | | | | | | | | | | | | | | | |
| Return on Avg. Assets (annualized) | | | 1.21 | % | | 1.25 | % | | 1.25 | % | | 1.24 | % | | 1.39 | % | | 1.24 | % | | 1.29 | % |
| Return on Avg. Equity (annualized) | | | 12.25 | % | | 12.83 | % | | 12.55 | % | | 13.00 | % | | 14.29 | % | | 12.64 | % | | 13.39 | % |
| Return on Avg. Tangible Equity (annualized) (3) | | | 26.28 | % | | 28.60 | % | | 28.03 | % | | 25.43 | % | | 26.60 | % | | 27.06 | % | | 25.25 | % |
| Average Tangible Equity to Tangible Assets (5) | | | 4.87 | % | | 4.61 | % | | 4.71 | % | | 5.12 | % | | 5.48 | % | | 4.82 | % | | 5.34 | % |
| Average Realized Tangible Equity to Average Tangible Assets Ratio (6) | | | 4.84 | % | | 4.71 | % | | 4.76 | % | | 5.04 | % | | 5.35 | % | | 4.83 | % | | 5.06 | % |
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| (3) (Net income x (365/92)), divided by (average equity - average goodwill and intangibles) | | | | | | | | | | | | | | | | | | |
| (5) Average tangible equity, divided by (average assets - average goodwill and intagibles). | | | | | | | | | | | | | | | | | | |
| (6) (Average tangible equity - average AOCI), divided by average tangible assets. | | | | | | | | | | | | | | |
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| (3) (4) Reconciliation Table for Non-GAAP Financial Measure | | | | | | | | | | | | | | | | | | | | | | |
Return on average shareholders' equity | | | 12.25 | % | | 12.83 | % | | 12.55 | % | | 13.00 | % | | 14.29 | % | | 12.64 | % | | 13.39 | % |
Effect of goodwill and intangibles | | | 14.03 | % | | 15.77 | % | | 15.49 | % | | 12.43 | % | | 12.31 | % | | 14.42 | % | | 11.86 | % |
Return on average tangible equity | | | 26.28 | % | | 28.60 | % | | 28.03 | % | | 25.43 | % | | 26.60 | % | | 27.06 | % | | 25.25 | % |
| Average tangible equity excludes acquisition related average goodwill and intangibles: | | | | | | | | | | | | | | | | | |
Average shareholders' equity | | $ | 530,421 | | $ | 514,172 | | $ | 514,090 | | $ | 468,943 | | $ | 441,143 | | $ | 507,084 | | $ | 436,602 | |
Average goodwill and intangibles | | | (283,297 | ) | | (283,564 | ) | | (283,971 | ) | | (229,228 | ) | | (204,154 | ) | | (270,200 | ) | | (204,975 | ) |
Average tangible equity | | | 247,124 | | | 230,608 | | | 230,119 | | | 239,715 | | | 236,989 | | | 236,884 | | | 231,627 | |
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Financial Update for NATL PENN BCSHS (NPBC) FOR 12/31/06 |
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| | PAGE: 3 of 5 | | |
| | | FOR QUARTER | | FOR QUARTER | | FOR QUARTER | | FOR QUARTER | | FOR QUARTER | | YEAR | | YEAR | |
| | ENDED | | ENDED | | ENDED | | ENDED | | ENDED | | TO DATE | | TO DATE | |
CHARGEOFFS ($000s) | | 12/31/2006 | | 9/30/2006 | | 6/30/2006 | | 3/31/2006 | | 12/31/2005 | | 12/31/2006 | | 12/31/2005 | |
| | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | |
| Loan Chargeoffs | | $ | 2,015 | | $ | 1,518 | | $ | 1,085 | | $ | 1,239 | | $ | 1,329 | | $ | 5,857 | | $ | 7,245 | |
| Recoveries on Loans | | | (243 | ) | | (1,147 | ) | | (667 | ) | | (606 | ) | | (388 | ) | | (2,663 | ) | | (2,519 | ) |
| Net Loan Chargeoffs | | $ | 1,772 | | $ | 371 | | $ | 418 | | $ | 633 | | $ | 941 | | $ | 3,194 | | $ | 4,726 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | AS OF | | | AS OF | | | AS OF | | | AS OF | | | AS OF | | | | | | | |
ASSET QUALITY AND OTHER DATA ($000s) | | | 12/31/2006 | | | 9/30/2006 | | | 6/30/2006 | | | 3/31/2006 | | | 12/31/2005 | | | | | | | |
| | | | | | | (unaudited) | | | (unaudited) | | | (unaudited) | | | | | | | | | | |
| Nonaccrual Loans | | $ | 8,554 | | $ | 8,316 | | $ | 9,110 | | $ | 9,381 | | $ | 11,961 | | | | | | | |
| Renegotiated Loans | | | - | | | - | | | - | | | - | | | - | | | | | | | |
| Other Real Estate Owned | | | 1,291 | | | 1,806 | | | 242 | | | - | | | - | | | | | | | |
| Total Nonperforming Assets | | $ | 9,845 | | $ | 10,122 | | $ | 9,352 | | $ | 9,381 | | $ | 11,961 | | | | | | | |
| Loans 90+ Days Past Due & Still Accruing | | | 94 | | | 222 | | | 17 | | | 106 | | | 183 | | | | | | | |
| NPAs plus Loans over 90 | | $ | 9,939 | | $ | 10,344 | | $ | 9,369 | | $ | 9,487 | | $ | 12,144 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | AS OF | | | AS OF | | | AS OF | | | AS OF | | | AS OF | | | | | | | |
REGULATORY CAPITAL DATA ($000s) (1) | | | 12/31/2006 | | | 9/30/2006 | | | 6/30/2006 | | | 3/31/2006 | | | 12/31/2005 | | | | | | | |
| | | | (unaudited) | | | | | | | | | | | | | | | | | | | |
| Tier 1 Capital | | $ | 395,479 | | $ | 382,667 | | $ | 380,866 | | $ | 371,466 | | $ | 363,646 | | | | | | | |
| Tier 1 Ratio (%) | | | 9.77 | % | | 9.54 | % | | 9.72 | % | | 9.85 | % | | 10.55 | % | | | | | | |
| Total Capital (Tier 1 + Tier 2) | | $ | 449,586 | | $ | 435,973 | | $ | 432,832 | | $ | 421,954 | | $ | 409,654 | | | | | | | |
| Total Capital Ratio (%) | | | 11.11 | % | | 10.86 | % | | 11.04 | % | | 11.19 | % | | 11.88 | % | | | | | | |
| Total Risk-Adjusted Assets | | $ | 4,048,475 | | $ | 4,012,661 | | $ | 3,919,628 | | $ | 3,771,877 | | $ | 3,448,142 | | | | | | | |
| Tier 1 Leverage Ratio | | | 7.79 | % | | 7.65 | % | | 7.77 | % | | 8.77 | % | | 8.42 | % | | | | | | |
| Tangible Equity to Tangible Assets Ratio | | | 5.01 | % | | 4.84 | % | | 4.75 | % | | 4.86 | % | | 5.54 | % | | | | | | |
| Realized Tangible Equity to Tangible Assets Ratio | | | 4.98 | % | | 4.83 | % | | 4.91 | % | | 4.83 | % | | 5.46 | % | | | | | | |
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| | | | AS OF | | | AS OF | | | AS OF | | | AS OF | | | AS OF | | | | | | | |
SUPPLEMENTAL DATA ($000s) | | | 12/31/2006 | | | 9/30/2006 | | | 6/30/2006 | | | 3/31/2006 | | | 12/31/2005 | | | | | | | |
| | | | (unaudited) | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| 1-4 Family Mortgage Loans Serviced For Others | | $ | 82,086 | | $ | 48,366 | | $ | 50,065 | | $ | 52,132 | | $ | 90,761 | | | | | | | |
| Propriety Mutual Fund Balances | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - | | | | | | | |
| (Net Asset Value in $000s) | | | | | | | | | | | | | | | | | | | | | | |
| Held to Maturity Securities (Fair Value) | | $ | 249,575 | | $ | 252,841 | | $ | 210,813 | | $ | 167,845 | | $ | 147,628 | | | | | | | |
| Common Stock Dividends (total $ in period) | | $ | 8,001 | | $ | 7,645 | | $ | 7,702 | | $ | 7,692 | | $ | 7,189 | | | | | | | |
| Dividends per Common Share (2) | | $ | 0.1675 | | $ | 0.160 | | $ | 0.160 | | $ | 0.160 | | $ | 0.160 | | | | | | | |
| EOP Employees (Full Time Equivalent) | | | 1,197 | | | 1,198 | | | 1,224 | | | 1,217 | | | 1,141 | | | | | | | |
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| (1) Adjusted for modified retrospective method adoption under FAS123 ( R ). | | | | | | | | |
| (2) Adjusted for a 3% stock dividend paid September 30, 2006. | | | | | | | | | |
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Financial Update for NATL PENN BCSHS (NPBC) FOR 12/31/06 | | | | | | | | | | | | | |
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PAGE: 4 of 5 | | | | AS OF | | AS OF | | AS OF | | AS OF | | AS OF | |
PERIOD END BALANCES: | | | | 12/31/2006 | | 9/30/2006 | | 6/30/2006 | | 3/31/2006 | | 12/31/2005 | |
| | | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | |
Loan Breakdown: (REGULATORY) | | | | | | | | | | | | | |
| Commercial/Industrial | | | | | $ | 626,886 | | $ | 607,461 | | $ | 612,982 | | $ | 589,021 | | $ | 565,826 | |
| Commercial Real Estate | | | | | | 1,239,800 | | | 1,218,853 | | | 1,205,798 | | | 1,203,946 | | | 1,141,908 | |
| Residential Mortgage (including multi-family) | | | | | | 804,762 | | | 825,105 | | | 784,004 | | | 744,763 | | | 550,591 | |
| Real Estate Construction (and Land Development) | | | | | | 311,163 | | | 302,309 | | | 286,037 | | | 264,466 | | | 206,201 | |
| Home Equity (revolving and 2nd lien) | | | | | | 439,017 | | | 435,948 | | | 415,272 | | | 395,606 | | | 381,869 | |
| Consumer (Loans to Individuals) | | | | | | 56,721 | | | 55,227 | | | 52,990 | | | 61,451 | | | 60,586 | |
| Bank Card | | | | | | - | | | - | | | - | | | - | | | - | |
| Foreign | | | | | | - | | | - | | | - | | | - | | | - | |
| Other Loans | | | | | �� | 153,588 | | | 150,254 | | | 147,593 | | | 143,456 | | | 142,827 | |
| Total Loans (net of unearned) | | | | | | 3,631,937 | | | 3,595,157 | | | 3,504,676 | | | 3,402,709 | | | 3,049,808 | |
| Investment Securities (incl. trading assets) | | | | | | 1,261,882 | | | 1,199,932 | | | 1,170,671 | | | 1,173,833 | | | 1,091,714 | |
| Other Earning Asset | | | | | | 4,576 | | | 9,974 | | | 12,054 | | | 7,860 | | | 5,937 | |
| Total Earning Assets (net of loan loss reserve) | | | | | | 4,840,089 | | | 4,805,063 | | | 4,628,352 | | | 4,525,395 | | | 4,091,396 | |
| Total Assets | | | | | | 5,452,288 | | | 5,347,548 | | | 5,225,420 | | | 5,112,009 | | | 4,603,389 | |
| Deposit Breakdown: | | | | | | | | | | | | | | | | | | | |
| Savings | | | | | | 215,156 | | | 225,523 | | | 249,901 | | | 275,766 | | | 193,024 | |
| NOW Accounts | | | | | | 690,781 | | | 748,163 | | | 718,146 | | | 742,034 | | | 741,269 | |
| Money Market Accounts | | | | | | 924,804 | | | 865,238 | | | 838,199 | | | 661,031 | | | 607,063 | |
| Certificates | | | | | | 950,326 | | | 914,869 | | | 879,405 | | | 917,979 | | | 776,794 | |
| CDs>$100m | | | | | | 535,103 | | | 523,052 | | | 575,188 | | | 501,166 | | | 480,975 | |
| Foreign CDs | | | | | | - | | | - | | | - | | | - | | | - | |
| Total Int. Bearing Deposits | | | | | | 3,316,170 | | | 3,276,845 | | | 3,260,839 | | | 3,097,976 | | | 2,799,125 | |
| Non-Interest Bearing Deposits | | | | | | 509,463 | | | 495,257 | | | 525,909 | | | 518,989 | | | 509,921 | |
| Total Deposits | | | | | | 3,825,633 | | | 3,772,102 | | | 3,786,748 | | | 3,616,965 | | | 3,309,046 | |
| Short-Term Borrowings | | | | | | 417,746 | | | 641,587 | | | 494,029 | | | 538,185 | | | 428,771 | |
| Long-Term Debt | | | | | | 603,303 | | | 355,069 | | | 375,333 | | | 390,594 | | | 375,475 | |
| Total Int. Bearing Liabilities (incl. non-int bearing deposits) | | | | | | 4,846,682 | | | 4,768,758 | | | 4,656,110 | | | 4,545,744 | | | 4,113,292 | |
| Total Int. Bearing Liabilities | | | | | | 4,337,219 | | | 4,273,501 | | | 4,130,201 | | | 4,026,755 | | | 3,603,371 | |
| Total Stockholders Equity | | | | | $ | 542,869 | | $ | 528,104 | | $ | 518,739 | | $ | 518,240 | | $ | 447,668 | |
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PERIOD END BALANCES: | | | | | | | | | | | | | | | | | | | |
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| Loan Breakdown: (internal) | | | | | | | | | | | | | | | | | | | |
| Business Purpose Loans | | | | | $ | 1,437,781 | | $ | 1,408,855 | | $ | 1,408,035 | | $ | 1,419,903 | | $ | 1,391,317 | |
| Residential Mortgage | | | | | | 529,699 | | | 540,512 | | | 510,426 | | | 470,369 | | | 282,882 | |
| Commercial Real Estate, Construction and Land Dev | | | | | | 1,204,015 | | | 1,189,274 | | | 1,153,452 | | | 1,122,726 | | | 1,011,084 | |
| Consumer (loans to Individual) | | | | | | 460,432 | | | 456,516 | | | 432,762 | | | 389,711 | | | 364,525 | |
| Total Loans (net of unearned) | | | | | $ | 3,631,927 | | $ | 3,595,157 | | $ | 3,504,675 | | $ | 3,402,709 | | $ | 3,049,808 | |
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Financial Update for NATL PENN BCSHS (NPBC) FOR 12/31/06 |
| | PAGE 5 OF 5 | |
BALANCE AND YIELD/COST ANALYSIS: | | AS OF | | AS OF | | AS OF | | AS OF | | AS OF | | YTD | |
| | 12/31/2006 | | 9/30/2006 | | 6/30/2006 | | 3/31/2006 | | 12/31/2005 | | 12/31/2006 | |
| | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | | (unaudited) | |
| | Qtr Avg Bal | | Yield | | Qtr Avg Bal | | Yield | | Qtr Avg Bal | | Yield | | Qtr Avg Bal | | Yield | | Qtr Avg Bal | | Yield | | YTD Avg Bal | | Yield | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Loans (net of unearned) | | $ | 3,599,781 | | | 7.25 | % | $ | 3,547,993 | | | 7.22 | % | $ | 3,474,861 | | | 7.19 | % | $ | 3,254,237 | | | 7.04 | % | $ | 3,028,408 | | | 6.81 | % | $ | 3,470,381 | | | 7.19 | % |
| Investment Securities (incl. trading assets) | | | 1,220,595 | | | 5.44 | % | | 1,190,648 | | | 5.44 | % | | 1,171,649 | | | 5.43 | % | | 1,156,448 | | | 5.45 | % | | 1,072,424 | | | 5.08 | % | | 1,185,027 | | | 5.44 | % |
| Other Earning Assets | | | 3,940 | | | 6.35 | % | | 10,774 | | | 2.69 | % | | 12,370 | | | 1.78 | % | | 7,430 | | | 6.93 | % | | 9,350 | | | 3.78 | % | | 8,625 | | | 4.64 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Earning Assets | | | 4,824,316 | | | 6.80 | % | | 4,749,415 | | | 6.76 | % | | 4,658,880 | | | 6.73 | % | | 4,418,115 | | | 6.62 | % | | 4,110,182 | | | 6.35 | % | | 4,664,033 | | | 6.74 | % |
| Total Earning Assets (net of loan loss reserve) | | | 4,764,980 | | | 6.89 | % | | 4,689,914 | | | 6.85 | % | | 4,599,512 | | | 6.82 | % | | 4,359,620 | | | 6.71 | % | | 4,053,850 | | | 6.44 | % | | 4,604,854 | | | 6.82 | % |
| Total Assets | | | 5,360,420 | | | 6.12 | % | | 5,283,841 | | | 6.08 | % | | 5,173,171 | | | 6.06 | % | | 4,911,582 | | | 5.96 | % | | 4,529,657 | | | 5.76 | % | | 5,182,147 | | | 6.06 | % |
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| Savings | | | 223,624 | | | 1.29 | % | | 238,225 | | | 1.31 | % | | 264,990 | | | 1.32 | % | | 258,579 | | | 1.25 | % | | 197,092 | | | 0.92 | % | | 246,236 | | | 1.29 | % |
| NOWAccounts | | | 723,131 | | | 2.71 | % | | 734,504 | | | 1.68 | % | | 802,859 | | | 2.59 | % | | 739,033 | | | 2.20 | % | | 744,684 | | | 2.14 | % | | 749,796 | | | 2.30 | % |
| Money Market Accounts | | | 906,398 | | | 3.52 | % | | 854,579 | | | 4.14 | % | | 698,743 | | | 2.91 | % | | 654,767 | | | 2.55 | % | | 612,719 | | | 2.13 | % | | 779,084 | | | 3.36 | % |
| Certificates | | | 1,479,073 | | | 4.59 | % | | 1,475,237 | | | 4.44 | % | | 1,429,794 | | | 4.19 | % | | 1,318,803 | | | 3.87 | % | | 1,217,068 | | | 3.67 | % | | 1,426,301 | | | 4.29 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Int. Bearing Deposits | | | 3,332,226 | | | 3.67 | % | | 3,302,545 | | | 3.52 | % | | 3,196,386 | | | 3.27 | % | | 2,971,182 | | | 2.93 | % | | 2,771,563 | | | 2.72 | % | | 3,201,417 | | | 3.36 | % |
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| Non-Interest Bearing Deposits | | | 492,839 | | | | | | 503,751 | | | | | | 512,748 | | | | | | 504,172 | | | | | | 505,316 | | | | | | 502,167 | | | | |
| Total Deposits | | | 3,825,065 | | | 3.20 | % | | 3,806,296 | | | 3.06 | % | | 3,709,134 | | | 2.82 | % | | 3,475,354 | | | 2.51 | % | | 3,276,879 | | | 2.30 | % | | 3,703,584 | | | 2.91 | % |
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| Short-Term Borrowings | | | 432,623 | | | 3.75 | % | | 533,418 | | | 3.85 | % | | 520,330 | | | 3.96 | % | | 534,795 | | | 3.23 | % | | 389,624 | | | 2.49 | % | | 505,089 | | | 3.70 | % |
| Long-Term Borrowings | | | 515,857 | | | 5.47 | % | | 374,798 | | | 5.44 | % | | 378,625 | | | 5.38 | % | | 387,003 | | | 5.35 | % | | 375,541 | | | 5.49 | % | | 414,316 | | | 5.42 | % |
| Total Int. Bearing Liabilities(incl. non-int bearing deposits) | | | 4,773,545 | | | 3.49 | % | | 4,714,512 | | | 3.34 | % | | 4,608,089 | | | 3.16 | % | | 4,397,152 | | | 2.85 | % | | 4,042,044 | | | 2.62 | % | | 4,622,989 | | | 3.22 | % |
| Total Int. Bearing Liabilities | | | 4,280,706 | | | 3.89 | % | | 4,210,761 | | | 3.74 | % | | 4,095,341 | | | 3.55 | % | | 3,892,980 | | | 3.22 | % | | 3,536,728 | | | 2.99 | % | | 4,120,822 | | | 3.61 | % |
| Total Shareholder's Equity | | $ | 530,421 | | | | | $ | 514,172 | | | | | $ | 514,090 | | | | | $ | 468,943 | | | | | $ | 441,143 | | | | | $ | 507,095 | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Yield on Earning Assets (net of loan loss reserve): (Margin) | | | | 3.39 | % | | | | | 3.50 | % | | | | | 3.65 | % | | | | | 3.84 | % | | | | | 3.83 | % | | | | | 3.59 | % |
| Net Yield on Earning Assets: (Margin) | | | | | | 3.35 | % | | | | | 3.45 | % | | | | | 3.61 | % | | | | | 3.79 | % | | | | | 3.78 | % | | | | | 3.55 | % |
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STATES OF OPERATION AND BANKING OFFICES BY STATE (LATEST AVAILABLE DATA) | |
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| | State | Number of Full Service Banking Offices (Domestic and in the U.S. Territories) |
| | | | | | | | |
| | | PA | | | | | | | | | | | |
| Total Number of Banking Offices | | | | | | 79 | | | 79 | | | 79 | | | 78 | | | 73 | |
| Total Number of Insured Subsidiaries (Bank & Thrift Subsidiaries) | | | | | | 1 | | | 1 | | | 1 | | | 1 | | | 1 | |
| Total Number of ATMs | | | | | | 82 | | | 82 | | | 82 | | | 81 | | | 73 | |
| | | | | | | | | | | | | | | | | | | | |
| | | MD | | | | | | | | | | | | | | | | |
| Total Number of Banking Offices | | | | | | 1 | | | 1 | | | 1 | | | 1 | | | 1 | |
| Total Number of Insured Subsidiaries (Bank & Thrift Subsidiaries) | | | | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
| Total Number of ATMs | | | | | | 1 | | | 1 | | | 1 | | | 1 | | | 1 | |
| | | | | | | | | | | | | | | | | | | | |
| | | TOTAL | | | | | | | | | | | | | | | | |
| Total Number of Banking Offices | | | | | | 80 | | | 80 | | | 80 | | | 79 | | | 74 | |
| Total Number of Insured Subsidiaries (Bank & Thrift Subsidiaries) | | | | | | 1 | | | 1 | | | 1 | | | 1 | | | 1 | |
| Total Number of ATMs | | | | | | 83 | | | 83 | | | 83 | | | 82 | | | 74 | |
| | | | | | | | | | | | | | | | | | | | |
| Have you restated any prior period's financial statements for a pooling of interest and/or a change in |
| accounting principles? | YES | | | | |
| Periods Restated on this report: | | 12/31/2005 | | | | |
| Reason: | | Adjusted for modified retrospective method adoption under FAS123 ( R ). | | | | |
| | | | | | | | | |
