National Penn Bancshares (NPBC) 8-K National Penn Bancshares, Inc. Reports

EXHIBIT 99.1

  News Release

National Penn Bancshares, Inc. Reports

Third Quarter 2011 Results

Company Release – October 28, 2011

·   Net income increases to 16 cents per share compared to 15 cents in the second quarter

·   Year-to-date net income of 42 cents per share compared to 5 cents in the prior year period

·   Continued strong performance results in ROA of 1.15%

·   Sustained asset quality improvement

·   Strong capital base further enhanced, provides capital management opportunities

·   Common stock cash dividend increased to 4 cents per share

BOYERTOWN, PA., October 28, 2011 -- National Penn Bancshares, Inc. (Nasdaq: NPBC) reported net income available to common shareholders of $24.8 million, or $0.16 per diluted share, for the third quarter of 2011, compared to $23.2 million, or $0.15 per diluted share, for the second quarter of 2011 and $10.3 million, or $0.08 per diluted share, for the third quarter of 2010. Year-to-date net income available to common shareholders totaled $63.7 million, or $0.42 per diluted share, compared to $6.7 million, or $0.05 per diluted share, for the prior year period. Return on average assets increased to 1.15% for the third quarter of 2011, from 1.08% for the second quarter of 2011.

Earnings continue to enhance National Penn’s capital position providing for an increase in the common stock cash dividend to $0.04 per share in the fourth quarter of 2011 from $0.03 in the third quarter. The ratio of tangible common equity to tangible assets increased to 10.66%1, and the total risk based capital ratio increased to 18.1% at September 30, 2011.

“We are pleased to report another quarter of improved asset quality and strong financial performance,” said Scott V. Fainor, president and CEO of National Penn. “This performance allowed us to increase our cash dividend to four cents per share for the fourth quarter.  We are well-positioned to capitalize on our balance sheet strength to further enhance profitability and shareholder value.”

During the third quarter of 2011, National Penn continued to benefit from improving asset quality.   Classified loans declined 22% in 2011 and 7% during the third quarter. Nonperforming assets also declined during the quarter and totaled less than 1% of total assets at September 30, 2011.  Net charge-offs decreased by 15% on a linked-quarter basis and 67% compared to the prior year quarter.  Annualized net charge-offs totaled 0.53% of average loans for the third quarter of 2011 and totaled 0.82% for year-to-date 2011.  Continued improvement in charge-offs, classified loans and overall asset quality metrics resulted in zero provision for loan and lease losses for the third quarter compared to $3.0 million of expense for the second quarter of 2011 and $20.0 million of expense for the third quarter of 2010.  Year-to-date provision expense totaled $13.0 million, an 83% reduction compared to $77.5 million of provision expense for the nine months ended September 30, 2010.  Overall, asset quality coverage ratios remained strong as the allowance for loan and lease losses to non-performing loans increased to 196% and the allowance totaled 2.54% of total loans and leases.

For the nine months ended September 30, 2011, net interest margin was 3.52%, an increase of seven basis points as compared to the prior year period.  Net interest margin for the third quarter of 2011 was 3.46% compared to 3.53% for the second quarter of 2011, reflecting the impact of the current low interest rate environment and soft economic conditions.  Despite the competitive challenges, loan balances are comparable to the prior quarter-end excluding classified loan reductions of $28.3 million in the third quarter of 2011.

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Operating expenses totaled $55.1 million for the third quarter of 2011 and resulted in an efficiency ratio of 58.5%1 for the quarter.  Expenses remain well-controlled despite recent hiring of high-quality professionals and additional initiatives to further develop new and existing customer relationships by expanding delivery of banking, insurance, investments and trust services.

Scott V. Fainor stated “The current economic and interest rate environment presents ongoing challenges for our industry and our banking professionals.  We will continue to build on our positive momentum by remaining focused on serving our customers and on our initiatives to expand outreach to potential clients as we navigate through this period.”

Media Contact:	Catharine S. Bower, Corporate Communications
	(610) 369-6618 or catharine.bower@nationalpenn.com
Investor Contact:	Michelle H. Debkowski, Investor Relations
	(610) 369-6461 or michelle.debkowski@nationalpenn.com

__________

# # #

About National Penn Bancshares, Inc.:

National Penn Bancshares, Inc., with approximately $9 billion in assets, is a bank holding company based in Pennsylvania.  Headquartered in Boyertown, National Penn operates 123 branch offices comprising 122 branches in Pennsylvania and one branch in Maryland through National Penn Bank and its HomeTowne Heritage Bank, KNBT and Nittany Bank divisions.

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; National Penn Insurance Services Group, Inc., including its Higgins Insurance division; and Caruso Benefits Group, Inc.

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.

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·   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 excludes the effects of certain gains and losses, adjusted for applicable taxes. Adjusted net income provides a method 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 adjusted to also 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: increased capital requirements and other requirements or actions mandated by National Penn’s regulators,  National Penn’s ability to raise capital and maintain capital levels, variations in interest rates, deterioration in the credit quality of loans, the effect of credit risk exposure, declines in the value of National Penn’s assets and the effect of any resulting impairment charges, 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), competition from other financial institutions, interruptions or breaches of National Penn’s security systems, and the development and maintenance of National Penn’s information technology. 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, 2010, 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.

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Financial Update for National Penn Bancshares (NPBC) for 9/30/2011
Unaudited, dollars in thousands except share and per share data
	As of
	9/30/2011			6/30/2011			12/31/2010
SUMMARY BALANCE SHEET
Total assets	$	8,611,641		$	8,633,141		$	8,844,620
Investment securities and other securities		2,373,278			2,290,568			2,259,690
Total loans and leases		5,161,275			5,178,926			5,326,723
Deposits		5,992,991			5,944,161			6,059,173
Borrowings		1,410,212			1,515,611			1,590,996
Shareholders' equity		1,164,204			1,133,513			1,137,437
Tangible book value per common share (2)	$	5.86		$	5.65		$	5.18
Tangible common equity / tangible assets (2)		10.66	%		10.25	%		8.27	%
	Three Months Ended									Nine Months Ended
	9/30/2011			6/30/2011			9/30/2010			9/30/2011			9/30/2010
EARNINGS
Total interest income	$	86,055		$	87,740		$	96,360		$	263,153		$	293,505
Total interest expense		21,638			22,745			28,670			67,771			89,913
Net interest income		64,417			64,995			67,690			195,382			203,592
Provision for loan and lease losses		-			3,000			20,000			13,000			77,500
Net interest income after provision
for loan and lease losses		64,417			61,995			47,690			182,382			126,092
Loss on sale of building		(1,000	)		-			-			(1,000	)		-
Loss on debt extinguishment		(998	)		-			-			(998	)		-
Net (losses) from fair value changes on subordinated debentures		(506	)		(430	)		(2,606	)		(987	)		(8,324	)
Net gains on sales of investment securities		1,022			-			-			1,022			214
Other non-interest income		24,623			22,818			26,083			71,676			82,674
Goodwill impairment		-			-			-			-			8,250
Other non-interest expense		55,053			54,121			57,965			166,011			173,935
Income before income taxes		32,505			30,262			13,202			86,084			18,471
Income tax expense		7,692			7,054			895			19,283			5,777
Net income		24,813			23,208			12,307			66,801			12,694
Preferred dividends and accretion of preferred discount		-			-			(2,006	)		(1,691	)		(6,016	)
Accelerated accretion from redemption of preferred stock		-			-			-			(1,452	)		-
Net income available to common shareholders	$	24,813		$	23,208		$	10,301		$	63,658		$	6,678
PERFORMANCE RATIOS
Net interest margin		3.46	%		3.53	%		3.42	%		3.52	%		3.45	%
Return on average assets		1.15	%		1.08	%		0.53	%		1.03	%		0.18	%
Return on average total shareholders' equity		8.59	%		8.37	%		4.50	%		7.77	%		1.57	%
Return on average tangible common equity (1)		11.33	%		11.16	%		6.42	%		10.24	%		1.43	%
PER SHARE
Basic earnings available to common shareholders	$	0.16		$	0.15		$	0.08		$	0.42		$	0.05
Diluted earnings available to common shareholders		0.16			0.15			0.08			0.42			0.05
Dividends per common share		0.03			0.01			0.01			0.05			0.03
Average shares - basic		151,693,223			151,601,052			126,102,037			151,256,293			126,008,098
Average shares - diluted		151,927,269			151,835,402			126,255,249			151,513,773			126,179,126
(1) RECONCILIATION TABLES FOR NON-GAAP FINANCIAL MEASURES	Three Months Ended									Nine Months Ended
	9/30/2011			6/30/2011			9/30/2010			9/30/2011			9/30/2010
Return on average tangible common equity
Return on average shareholders' equity		8.59	%		8.37	%		4.50	%		7.77	%		1.57	%
Effect of preferred equity		-			-			-0.14	%		-0.10	%		-0.61	%
Effect of goodwill and intangibles		2.74	%		2.79	%		2.06	%		2.57	%		0.47	%
Return on average tangible common equity		11.33	%		11.16	%		6.42	%		10.24	%		1.43	%
Average tangible equity:
Average shareholders' equity	$	1,145,679		$	1,112,114		$	1,084,724		$	1,149,458		$	1,078,690
Average preferred equity		-			-			(148,248	)		(40,251	)		(148,119	)
Average goodwill and intangibles		(276,439	)		(278,022	)		(299,919	)		(278,018	)		(307,142	)
Average total tangible common equity	$	869,240		$	834,092		$	636,557		$	831,189		$	623,429
Adjusted net income reconciliation
Net income available to common shareholders	$	24,813		$	23,208		$	10,301		$	63,658		$	6,678
After tax gain on pension plan curtailment		-			-			-			-			(2,643	)
After tax unrealized fair market value loss (gain) on
subordinated debentures		-			-			1,694			-			5,411
Accelerated accretion from redemption of preferred stock		-			-			-			1,452			-
BOLI tax expense		-			-			-			-			8,081
Goodwill impairment		-			-			-			-			8,250
Adjusted net income available to common shareholders	$	24,813		$	23,208		$	11,995		$	65,110		$	25,777
Earnings per share
Net income available to common shareholders	$	0.16		$	0.15		$	0.08		$	0.42		$	0.05
After tax gain on pension plan curtailment		-			-			-			-			(0.02	)
After tax unrealized fair market value loss (gain) on
subordinated debentures		-			-			0.01			-			0.04
Accelerated accretion from redemption of preferred stock		-			-			-			0.01			-
BOLI tax expense		-			-			-			-			0.06
Goodwill impairment		-			-			-			-			0.07
Adjusted net income available to common shareholders	$	0.16		$	0.15		$	0.09		$	0.43		$	0.20

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Financial Update for National Penn Bancshares (NPBC) for 9/30/2011
Unaudited, dollars in thousands except share and per share data	As of
	9/30/2011			6/30/2011			3/31/2011			12/31/2010			9/30/2010
BALANCE SHEET - ASSETS
Cash and due from banks	$	116,057		$	105,918		$	113,031		$	90,283		$	103,279
Interest-earning deposits with banks		422,942			513,132			392,337			612,099			609,733
Total cash and cash equivalents		538,999			619,050			505,368			702,382			713,012
Investment securities available for sale, at fair value		1,790,654			1,696,682			1,622,395			1,632,118			1,603,849
Investment securities held to maturity		509,773			518,578			535,488			546,957			567,740
Other securities		72,851			75,308			77,894			80,615			83,676
Loans held for sale		17,144			8,852			5,561			12,785			30,081
Loans and leases		5,144,131			5,170,074			5,239,585			5,313,938			5,611,749
Allowance for loan and lease losses		(131,073	)		(137,909	)		(142,960	)		(150,054	)		(153,475	)
Loans and leases, net		5,013,058			5,032,165			5,096,625			5,163,884			5,458,274
Premises and equipment, net		100,880			103,017			103,771			105,483			108,496
Accrued interest receivable		33,110			31,862			34,264			33,829			36,127
Bank owned life insurance, redeemed but not settled		-			-			-			-			64,387
Bank owned life insurance		137,017			136,606			135,373			134,154			136,093
Other real estate owned and other repossessed assets		8,029			8,407			7,653			7,453			7,818
Goodwill		258,279			258,279			258,279			258,279			273,468
Other intangible assets, net		17,370			18,970			20,530			22,217			25,587
Unconsolidated investments under the equity method		11,927			12,327			12,211			11,482			12,428
Other assets		102,550			113,038			127,855			132,982			127,193
TOTAL ASSETS	$	8,611,641		$	8,633,141		$	8,543,267		$	8,844,620		$	9,248,229
BALANCE SHEET - LIABILITIES
Non-interest bearing deposits	$	833,311		$	839,811		$	834,321		$	808,835		$	815,193
Interest bearing deposits		5,159,680			5,104,350			5,098,695			5,250,338			5,690,284
Total deposits		5,992,991			5,944,161			5,933,016			6,059,173			6,505,477
Securities sold under repurchase agreements		640,099			738,628			696,256			734,455			752,428
Short-term borrowings		6,400			6,390			6,184			10,000			6,974
Federal Home Loan Bank advances		619,946			627,332			627,716			703,761			705,278
Subordinated debentures		143,767			143,261			142,831			142,780			140,731
Accrued interest payable and other liabilities		44,234			39,856			39,655			57,014			45,323
TOTAL LIABILITIES		7,447,437			7,499,628			7,445,658			7,707,183			8,156,211
BALANCE SHEET - SHAREHOLDERS' EQUITY
Preferred stock		-			-			-			148,441			148,310
Common stock		1,380,728			1,379,690			1,379,014			1,292,342			1,227,639
Retained deficit		(237,862	)		(258,125	)		(279,817	)		(293,940	)		(299,209	)
Accumulated other comprehensive income/(loss)		21,338			11,948			(1,588	)		(9,406	)		15,278
TOTAL SHAREHOLDERS' EQUITY		1,164,204			1,133,513			1,097,609			1,137,437			1,092,018
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	8,611,641		$	8,633,141		$	8,543,267		$	8,844,620		$	9,248,229
COMMON SHARE AND PER SHARE DATA
Book Value	$	7.67		$	7.47		$	7.24		$	7.23		$	7.48
Tangible Book Value (2)	$	5.86		$	5.65		$	5.40		$	5.18		$	5.11
Dividends	$	0.03		$	0.01		$	0.01		$	0.01		$	0.01
Shares Outstanding (end of period, net of treasury)		151,714,696			151,660,444			151,506,511			136,792,414			126,115,073
(2) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
Total shareholders' equity	$	1,164,204		$	1,133,513		$	1,097,609		$	1,137,437		$	1,092,018
Total preferred shareholders' equity		-			-			-			(148,441	)		(148,310	)
Goodwill and intangibles		(275,649	)		(277,249	)		(278,809	)		(280,496	)		(299,055	)
Tangible common equity	$	888,555		$	856,264		$	818,800		$	708,500		$	644,653
Common shares outstanding		151,714,696			151,660,444			151,506,511			136,792,414			126,115,073
Tangible book value per share	$	5.86		$	5.65		$	5.40		$	5.18		$	5.11
Total assets	$	8,611,641		$	8,633,141		$	8,543,267		$	8,844,620		$	9,248,229
Goodwill and intangibles		(275,649	)		(277,249	)		(278,809	)		(280,496	)		(299,055	)
Tangible assets	$	8,335,992		$	8,355,892		$	8,264,458		$	8,564,124		$	8,949,174
Tangible common equity/tangible assets		10.66	%		10.25	%		9.91	%		8.27	%		7.20	%

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Financial Update for National Penn Bancshares (NPBC) for 9/30/2011
Unaudited, dollars in thousands except share and per share data	For the Quarter Ended															For the Nine Months Ended
	9/30/2011			6/30/2011			3/31/2011			12/31/2010			9/30/2010			9/30/2011			9/30/2010
INTEREST INCOME
Loans and leases, including fees	$	65,795		$	67,553		$	69,228		$	73,496		$	76,227		$	202,576		$	232,711
Investment securities
Taxable		11,591			11,552			11,357			11,272			11,157			34,500			33,712
Tax-exempt		8,337			8,401			8,493			8,569			8,697			25,231			26,338
Deposits with banks		332			234			280			408			279			846			744
Total interest income		86,055			87,740			89,358			93,745			96,360			263,153			293,505
INTEREST EXPENSE
Deposits		9,881			10,974			11,407			13,411			15,773			32,262			50,518
Securities sold under repurchase agreements		2,290			2,346			2,395			2,567			2,757			7,031			8,439
Short-term borrowings		-			-			-			-			-			-			-
Federal Home Loan Bank advances		7,073			7,039			7,217			7,732			7,742			21,329			23,805
Subordinated debentures		2,394			2,386			2,369			2,394			2,398			7,149			7,151
Total interest expense		21,638			22,745			23,388			26,104			28,670			67,771			89,913
Net interest income		64,417			64,995			65,970			67,641			67,690			195,382			203,592
Provision for loan and lease losses		-			3,000			10,000			17,500			20,000			13,000			77,500
Net interest income after provision for loan and lease losses		64,417			61,995			55,970			50,141			47,690			182,382			126,092
NON-INTEREST INCOME
Wealth management income		6,227			5,856			5,924			6,917			6,997			18,007			21,336
Service charges on deposit accounts		4,880			4,616			4,664			5,358			5,419			14,160			16,206
Insurance commissions and fees		3,406			3,520			3,221			3,423			3,499			10,147			10,909
Cash management and electronic banking fees		4,590			4,645			4,371			4,584			4,548			13,606			13,320
Mortgage banking income		1,349			1,014			1,080			2,590			2,424			3,443			4,808
Bank owned life insurance income		1,733			1,233			1,220			1,501			1,168			4,186			4,431
Earnings of unconsolidated investments		99			116			1,700			140			(41	)		1,915			659
Gain on pension plan curtailment		-			-			-			-			-			-			4,066
Loss on sale of building		(1,000	)		-			-			-			-			(1,000	)		-
Loss on debt extinguishment		(998	)		-			-			-			-			(998	)		-
Other operating income		2,339			1,818			2,055			1,638			2,381			6,212			7,885
Net (losses) from fair value changes on subordinated debentures		(506	)		(430	)		(51	)		(2,049	)		(2,606	)		(987	)		(8,324	)
Net gains on sales of investment securities		1,022			-			-			-			-			1,022			214
Impairment losses on investment securities:
Impairment losses on investment securities		-			-			-			(444	)		(312	)		-			(946	)
Non credit-related losses on securities not    expected to be sold recognized
in other comprehensive loss before tax		-			-			-			-			-			-			-
Net impairment losses on investment securities		-			-			-			(444	)		(312	)		-			(946	)
Total non-interest income		23,141			22,388			24,184			23,658			23,477			69,713			74,564
NON-INTEREST EXPENSE
Salaries, wages and employee benefits		30,809			30,408			31,449			31,499			31,544			92,666			91,972
Net premises and equipment		7,228			6,787			7,272			7,460			7,256			21,287			22,463
Goodwill impairment		-			-			-			-			-			-			8,250
FDIC insurance		2,213			2,726			3,457			3,411			3,641			8,396			11,794
Other operating expenses		14,803			14,200			14,659			17,123			15,524			43,662			47,706
Total non-interest expense		55,053			54,121			56,837			59,493			57,965			166,011			182,185
Income before income taxes		32,505			30,262			23,317			14,306			13,202			86,084			18,471
Income tax expense		7,692			7,054			4,537			5,664			895			19,283			5,777
NET INCOME		24,813			23,208			18,780			8,642			12,307			66,801			12,694
Preferred dividends and accretion of preferred discount		-			-			(1,691	)		(2,005	)		(2,006	)		(1,691	)		(6,016	)
Accelerated accretion from redemption of preferred stock		-			-			(1,452	)		-			-			(1,452	)		-
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS	$	24,813		$	23,208		$	15,637		$	6,637		$	10,301		$	63,658		$	6,678
PER SHARE OF COMMON STOCK
Basic earnings available to common shareholders	$	0.16		$	0.15		$	0.10		$	0.05		$	0.08		$	0.42		$	0.05
Diluted earnings available to common shareholders	$	0.16		$	0.15		$	0.10		$	0.05		$	0.08		$	0.42		$	0.05
Average Shares Basic		151,693,223			151,601,052			150,461,063			134,380,086			126,102,037			151,256,293			126,008,098
Average Shares Diluted		151,927,269			151,835,402			150,765,883			134,471,788			126,255,249			151,513,773			126,179,126
SUPPLEMENTAL DATA (annualized, average)
Return on Assets		1.15	%		1.08	%		0.88	%		0.38	%		0.53	%		1.03	%		0.18	%
Return on Total Equity		8.59	%		8.37	%		6.39	%		3.00	%		4.50	%		7.77	%		1.57	%
Return on Common Equity		8.59	%		8.37	%		5.93	%		2.65	%		4.36	%		7.67	%		0.96	%
Return on Tangible Common Equity (1)		11.33	%		11.16	%		8.03	%		3.76	%		6.42	%		10.24	%		1.43	%
Efficiency Ratio (3)		58.54	%		58.25	%		59.61	%		60.36	%		58.51	%		58.81	%		58.25	%
(3) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
Efficiency Ratio Calculation
Non-interest expense	$	55,053		$	54,121		$	56,837		$	59,493		$	57,965		$	166,011		$	182,185
Less:
Goodwill impairment		-			-			-			-			-			-			8,250
Operating expenses	$	55,053		$	54,121		$	56,837		$	59,493		$	57,965		$	166,011		$	173,935
Net interest income (taxable equivalent)	$	69,426		$	70,087		$	71,112		$	72,849		$	72,985		$	210,625		$	219,766
Non-interest income (loss)		23,141			22,388			24,184			23,658			23,477			69,713			74,564
Less:
Gain on pension plan curtailment		-			-			-			-			-			-			4,066
Loss on sale of building		(1,000	)		-			-			-			-			(1,000	)		-
Loss on debt extinguishment		(998	)		-			-			-			-			(998	)		-
Net (losses) from fair value changes on subordinated debentures		(506	)		(430	)		(51	)		(2,049	)		(2,606	)		(987	)		(8,324	)
Net gains on sales of investment securities		1,022			-			-			-			-			1,022			-
Adjusted revenue	$	94,049		$	92,905		$	95,347		$	98,556		$	99,068		$	282,301		$	298,588
Efficiency Ratio		58.54	%		58.25	%		59.61	%		60.36	%		58.51	%		58.81	%		58.25	%

10

Financial Update for National Penn Bancshares (NPBC) for 9/30/2011
Unaudited, dollars in thousands except share and per share data
	As of and for the Quarter Ended															For the Nine Months Ended
CHARGE-OFFS	9/30/2011			6/30/2011			3/31/2011			12/31/2010			9/30/2010			9/30/2011			9/30/2010
Loan Charge-offs	$	8,374		$	10,512		$	18,753		$	22,456		$	23,306		$	37,639		$	78,104
Recoveries on Loans		(1,538	)		(2,461	)		(1,659	)		(2,443	)		(2,742	)		(5,658	)		(7,808	)
Net Loan Charge-offs	$	6,836		$	8,051		$	17,094		$	20,013		$	20,564		$	31,981		$	70,296
Net Loan Charge-offs to Average Loans (annualized)		0.53	%		0.61	%		1.31	%		1.44	%		1.43	%		0.82	%		1.61	%
NET CHARGE OFF DETAIL
Commercial and Industrial Loans and Leases	$	1,962		$	5,066		$	9,319		$	7,363		$	2,166		$	16,347		$	13,040
Commercial Real Estate-Permanent		83			1,242			3,946			2,903			1,655			5,271			3,524
Commercial Real Estate-Construction		2,637			828			873			1,973			12,899			4,338			37,653
Total Commercial Real Estate Loans		2,720			2,070			4,819			4,876			14,554			9,609			41,177
Residential Mortgages		998			483			1,643			5,620			1,467			3,124			9,535
Home Equity Lines and Loans		596			833			1,158			1,280			935			2,587			2,058
All other Consumer Loans		560			(401	)		155			874			1,442			314			4,486
Total Consumer Loans		2,154			915			2,956			7,774			3,844			6,025			16,079
Net Loans Charged-off	$	6,836		$	8,051		$	17,094		$	20,013		$	20,564		$	31,981		$	70,296
	As of
ASSET QUALITY AND OTHER DATA	9/30/2011			6/30/2011			3/31/2011			12/31/2010			9/30/2010
Non-Accrual Commercial and Industrial Loans and Leases	$	29,995		$	31,275		$	34,122		$	34,869		$	29,878
Non-Accrual Commercial Real Estate-Permanent		8,314			11,879			15,407			17,821			15,510
Non-Accrual Commercial Real Estate-Construction		14,549			15,844			18,012			19,392			29,866
Total Non-Accrual Commercial Real Estate Loans		22,863			27,723			33,419			37,213			45,376
Non-Accrual Residential Mortgages		4,472			5,196			5,303			5,802			4,543
Non-Accrual Home Equity Lines and Loans		1,763			1,527			1,965			2,133			2,008
All other Non-Accrual Consumer Loans		1,907			2,062			1,810			2,094			1,845
Total Non-Accrual Consumer Loans		8,142			8,785			9,078			10,029			8,396
Total Non-Accrual Loans		61,000			67,783			76,619			82,111			83,650
Restructured Loans		4,372			3,833			351			-			8,544
Loans 90+ Days Past Due & Still Accruing		1,408			1,567			2,183			1,753			2,237
Total Non-performing Loans		66,780			73,183			79,153			83,864			94,431
Other Real Estate Owned & Repossessed Assets		8,029			8,407			7,653			7,453			7,818
Total Non-performing Assets	$	74,809		$	81,590		$	86,806		$	91,317		$	102,249
Allowance for Loan and Lease Losses	$	131,073		$	137,909		$	142,960		$	150,054		$	153,475
Allowance for Loan and Lease Losses/Non-Performing Loans		196.3	%		188.4	%		180.6	%		178.9	%		162.5	%
Allowance for Loan and Lease Losses/Non-Performing Assets		175.2	%		169.0	%		164.7	%		164.3	%		150.1	%
Provision/Charge-Offs, net		0.0	%		37.3	%		58.5	%		87.4	%		97.3	%
Classified Loans	$	374,850		$	403,145		$	438,275		$	479,336		$	498,631
Classified Loans/Total Loans		7.26	%		7.78	%		8.36	%		9.00	%		8.84	%
Delinquent Loans	$	28,824		$	20,413		$	25,342		$	27,806		$	33,676
Delinquent Loans/Total Loans		0.56	%		0.39	%		0.48	%		0.52	%		0.60	%
	As of
REGULATORY CAPITAL DATA	9/30/2011			6/30/2011			3/31/2011			12/31/2010			9/30/2010
Tier 1 Capital	$	955,766		$	922,457		$	889,473		$	924,143		$	850,185
Tier 1 Leverage Ratio		11.63	%		11.20	%		10.66	%		10.59	%		9.67	%
Tier 1 Ratio (%)		16.85	%		16.43	%		15.66	%		16.12	%		14.00	%
Total Capital	$	1,026,780		$	992,729		$	960,459		$	996,288		$	926,499
Total Capital Ratio (%)		18.12	%		17.68	%		16.91	%		17.38	%		15.26	%
Total Risk-Weighted Assets	$	5,670,722		$	5,615,341		$	5,679,123		$	5,732,730		$	6,070,678

11

Financial Update for National Penn Bancshares (NPBC) for 9/30/2011
Unaudited, dollars in thousands except share and per share data
	As of
PERIOD END BALANCES:	9/30/2011			6/30/2011			3/31/2011			12/31/2010			9/30/2010
Earning Assets / Liabilities
Loan Breakdown:  (Regulatory)
Commercial/Industrial	$	813,356		$	838,489		$	808,118		$	804,602		$	878,790
Commercial Real Estate (1)		1,697,975			1,715,616			1,749,215			1,740,029			1,810,442
Residential Mortgage		1,272,478			1,295,463			1,295,014			1,294,751			1,381,117
Real Estate Construction and Land Development		216,250			207,643			270,584			339,242			375,341
Home Equity		766,299			764,467			738,629			755,829			792,496
Consumer		213,014			213,570			228,904			236,107			244,878
Other Loans		181,903			143,678			154,682			156,163			158,766
Total Loans		5,161,275			5,178,926			5,245,146			5,326,723			5,641,830
Allowance for Loan and Lease Losses/Total Loans and Leases		2.54	%		2.66	%		2.73	%		2.82	%		2.72	%
Investment Securities and Other Securities		2,373,278			2,290,568			2,235,777			2,259,690			2,255,265
Other Earning Assets		422,942			513,132			392,337			612,099			609,733
Total Earning Assets (net of loan loss reserve)	$	7,826,422		$	7,844,717		$	7,730,300		$	8,048,458		$	8,353,353
(1) Includes owner occupied
Loan Breakdown: (Internal)
Commercial & Industrial Loans and Leases
Business Purpose, Real Estate secured	$	892,952		$	884,606		$	896,521		$	948,506		$	987,551
Business Purpose, not secured by Real Estate		927,631			913,115			888,249			886,692			953,645
Owner Occupied Commercial Real Estate
- Permanent		566,732			577,092			578,332			552,129			556,738
- Construction / Development		28,927			27,003			38,775			37,196			38,902
Leasing		5,796			7,125			9,054			10,437			12,230
Total Commercial & Industrial Loans & Leases		2,422,038			2,408,941			2,410,931			2,434,960			2,549,066
Commercial Real Estate
Non Owner Occupied
- Permanent		798,106			818,564			819,875			768,988			855,777
- Construction / Development		168,537			171,063			206,924			281,056			312,086
Total Commercial Real Estate		966,643			989,627			1,026,799			1,050,044			1,167,863
Consumer Loans
Residential Mortgage (personal purpose)
Permanent		726,486			728,430			742,423			758,301			795,420
Construction		7,606			5,909			4,505			7,113			9,966
Total Residential Mortgages		734,092			734,339			746,928			765,414			805,386
Home Equity Loans and Direct Installment Loans		362,808			388,173			415,599			423,755			446,866
Home Equity Lines of Credit		394,386			367,127			325,186			321,369			332,074
Total Home Equity Lines and Loans		757,194			755,300			740,785			745,124			778,940
Private Banking Credit Lines		112,011			119,850			139,721			150,811			159,991
Indirect Vehicle Loans		126,776			125,796			121,014			131,416			133,297
Other		42,521			45,073			58,968			48,954			47,287
All Other Consumer Loans		281,308			290,719			319,703			331,181			340,575
Total Consumer Loans		1,772,594			1,780,358			1,807,416			1,841,719			1,924,901
Total Loans	$	5,161,275		$	5,178,926		$	5,245,146		$	5,326,723		$	5,641,830
Deposit Breakdown:
Savings	$	451,767		$	464,055		$	457,395		$	438,879		$	430,806
NOW Accounts		1,311,819			1,158,161			1,128,644			1,181,850			1,294,582
Money Market Accounts		1,651,185			1,631,779			1,655,115			1,664,620			1,714,771
CDs less than $100k		1,213,798			1,261,026			1,433,808			1,378,060			1,512,573
CDs $100k or greater		531,111			589,329			423,733			586,929			737,552
Total Interest Bearing Deposits		5,159,680			5,104,350			5,098,695			5,250,338			5,690,284
Borrowings		1,410,212			1,515,611			1,472,987			1,590,996			1,605,411
Total Interest Bearing Liabilities	$	6,569,892		$	6,619,961		$	6,571,682		$	6,841,334		$	7,295,695

12

Financial Update for National Penn Bancshares (NPBC) for 9/30/2011
Unaudited, dollars in thousands except share and per share data
	Quarterly, as of																									Nine Months, as of
	9/30/2011					6/30/2011					3/31/2011					12/31/2010					9/30/2010					9/30/2011					9/30/2010
	Avg Bal		Yield			Avg Bal		Yield			Avg Bal		Yield			Avg Bal		Yield			Avg Bal		Yield			Avg Bal		Yield			Avg Bal		Yield
Total Loans	$	5,122,557		5.15	%	$	5,228,365		5.24	%	$	5,311,204		5.34	%	$	5,506,513		5.35	%	$	5,703,685		5.35	%	$	5,220,018		5.24	%	$	5,847,626		5.38	%
Investment Securities		2,287,630		4.21	%		2,258,355		4.32	%		2,245,416		4.39	%		2,274,090		4.24	%		2,227,732		4.34	%		2,263,955		4.30	%		2,220,549		4.44	%
Interest Earning Deposits		543,410		0.24	%		467,157		0.20	%		508,684		0.22	%		642,204		0.25	%		535,446		0.21	%		506,544		0.22	%		445,449		0.22	%
Total Earning Assets		7,953,597		4.54	%		7,953,877		4.68	%		8,065,304		4.75	%		8,422,807		4.66	%		8,466,862		4.76	%		7,990,517		4.66	%		8,513,624		4.86	%
Total Assets		8,588,269		3.98	%		8,599,923		4.09	%		8,701,649		4.16	%		9,122,895		4.30	%		9,197,254		4.39	%		8,629,532		4.08	%		9,253,781		4.47	%
Savings		456,271		0.18	%		462,870		0.18	%		442,830		0.19	%		435,069		0.20	%		445,327		0.27	%		454,039		0.18	%		438,715		0.30	%
NOW Accounts		1,211,663		0.18	%		1,188,644		0.22	%		1,148,991		0.22	%		1,265,646		0.23	%		1,203,831		0.28	%		1,183,329		0.21	%		1,171,636		0.35	%
Money Market Accounts		1,647,975		0.59	%		1,638,733		0.60	%		1,656,059		0.59	%		1,682,091		0.60	%		1,728,823		0.82	%		1,647,559		0.59	%		1,726,401		0.88	%
CDs		1,798,414		1.47	%		1,857,969		1.66	%		1,889,073		1.76	%		2,124,910		1.85	%		2,279,366		1.92	%		1,848,153		1.63	%		2,373,734		1.98	%
Total Interest Bearing Deposits		5,114,323		0.77	%		5,148,216		0.85	%		5,136,953		0.90	%		5,507,716		0.97	%		5,657,347		1.11	%		5,133,080		0.84	%		5,710,486		1.18	%
Non-Interest Bearing Deposits		837,953					837,635					813,704					818,330					831,484					829,853					810,235
Total Deposits		5,952,276		0.66	%		5,985,851		0.74	%		5,950,657		0.78	%		6,326,046		0.84	%		6,488,831		0.96	%		5,962,933		0.72	%		6,520,721		1.04	%
Securities sold under repurchase agreements		675,945		1.34	%		687,147		1.37	%		711,100		1.37	%		757,234		1.35	%		728,235		1.50	%		691,268		1.36	%		738,751		1.53	%
Short-term borrowings		6,732		0.00	%		6,713		0.00	%		6,850		0.00	%		7,080		0.00	%		6,669		0.00	%		6,765		0.00	%		6,839		0.00	%
Federal Home Loan Bank advances		623,713		4.50	%		627,525		4.50	%		651,208		4.49	%		704,670		4.35	%		706,183		4.35	%		634,048		4.50	%		732,721		4.34	%
Subordinated debentures		143,266		6.63	%		142,836		6.70	%		142,781		6.73	%		140,753		6.75	%		138,153		6.89	%		142,963		6.69	%		136,785		6.99	%
Total Deposits and borrowings		7,401,932		1.16	%		7,450,072		1.22	%		7,462,596		1.27	%		7,935,783		1.31	%		8,068,071		1.41	%		7,437,977		1.22	%		8,135,817		1.48	%
Total Interest Bearing Liabilities	$	6,563,979		1.31	%	$	6,612,437		1.38	%	$	6,648,892		1.43	%	$	7,117,453		1.46	%	$	7,236,587		1.57	%	$	6,608,124		1.37	%	$	7,325,582		1.64	%
Net Yield on Earning Assets: (Margin)				3.46	%				3.53	%				3.58	%				3.43	%				3.42	%				3.52	%				3.45	%
Wealth Assets:
Assets under administration	$	4,067,918				$	4,364,447				$	4,057,142				$	3,973,910				$	10,616,931
Assets under management		2,118,076					2,247,042					2,136,596					2,092,149					2,394,916
(included above)
Christiana Bank and Trust
Trust Revenues	$	-				$	-				$	-				$	862	(a)			$	1,539
(a) Through December 3, 2010

13

Financial Update for National Penn Bancshares (NPBC) for 9/30/2011
Unaudited, dollars in thousands except share and per share data
		Quarterly, as of
		9/30/2011	6/30/2011	3/31/2011	12/31/2010	9/30/2010
STATES OF OPERATION AND BANKING OFFICES
	BY STATE (LATEST AVAILABLE DATA)
	PA
Total Number of Banking Offices		122	122	122	124	124
Total Number of Insured Subsidiaries
	(Bank & Thrift Subsidiaries)	1	1	1	1	1
Total Number of ATMs		129	131	132	133	132
	MD
Total Number of Banking Offices		1	1	1	1	1
Total Number of Insured Subsidiaries
	(Bank & Thrift Subsidiaries)	-	-	-	-	-
Total Number of ATMs		1	1	1	1	1
	DE
Total Number of Banking Offices		-	-	-	-	2
Total Number of Insured Subsidiaries
	(Bank & Thrift Subsidiaries)	-	-	-	-	1
Total Number of ATMs		-	-	-	-	2
	TOTAL
Total Number of Banking Offices		123	123	123	125	127
Total Number of Insured Subsidiaries
	(Bank & Thrift Subsidiaries)	1	1	1	1	2
Total Number of ATMs		130	132	133	134	135
EOP Employees (Full Time Equivalent)		1,683	1,700	1,676	1,728	1,771

14