National Penn Bancshares, Inc. Reports Fourth Quarter and Full Year 2015 Results

National Penn Bancshares, Inc. (Nasdaq: NPBC) reported net income of $28.9 million, or $0.20 per diluted share, for the fourth quarter of 2015, compared to net income of $27.9 million, or $0.20 per diluted share, in the prior quarter. Exclusive of merger-related expenses, adjusted net income for the quarter was $29.6 million, or $0.21 per share, compared to $29.2 million or $0.21 per share, in the third quarter. Net income for the year was $110.7 million, or $0.78 per diluted share, while adjusted net income was $112.8 million, or $0.80 per share, compared to adjusted net income of $100.8 million, or $0.71 per diluted share, for 2014. Adjusted return on average assets, exclusive of merger-related costs, remained strong at 1.22% and 1.18% for the fourth quarter and full year 2015, respectively.

“In the fourth quarter we continued to deliver consistent, high level performance,” said Scott V. Fainor, president and CEO of National Penn. “Additionally, we are pleased to have obtained all requisite approvals for our merger with BB&T in a relatively short time frame, reflecting the quality of both organizations.”

Net Interest Margin and Loan Growth

Net interest income was $66.6 million in the fourth quarter and net interest margin was 3.16% compared to $67.9 million and 3.25%, respectively, in the third quarter. For 2015, the net interest margin of 3.25% was consistent with our expectations, but declined from 3.40% in 2014 due to the prolonged period of low interest rates. Net interest income was $270.0 million in 2015 compared to $257.1 million in 2014, reflecting a 9% increase in average earning assets primarily related to the full year impact of the TF Financial transaction which closed on October 24, 2014. Total loans outstanding of $6.2 billion was relatively flat during the year, and was impacted by our strategy to sell long-term fixed rate residential mortgage loans throughout the year.

Asset Quality

Asset quality trends remained strong in the fourth quarter and throughout 2015. Non-performing loans declined 6% in the quarter and 29% for the year while classified loans declined 6% and 28% for the quarter and year, respectively. Net charge-offs in the quarter were $1.6 million or 0.10% of average total loans (annualized) and the ratio of allowance for loan losses to non-performing loans increased to 188% at December 31, 2015 as compared to 186% at September 30, 2015 and 153% at December 31, 2014. As a result of the continuing improvement in asset quality and the refining of our processes, including the allocation of previously unallocated reserves, a negative provision for loan losses of $2.5 million was recorded in the quarter compared to provision expense of $1.0 million in the previous quarter.

Other Income and Operating Expenses

Exclusive of non-core items, which include a $1.0 million loss on an unconsolidated equity investment in the fourth quarter of 2015 and certain bank owned life insurance income in the prior quarter, non-interest income was relatively flat at $23.5 million.

Non-interest expenses remain very well-controlled at $52.3 million for the quarter, including $1.1 million of merger-related costs. Excluding merger-related costs, non-interest expenses for 2015 were $212.1 million compared to $208.4 million in 2014, an increase of 1.8%, inclusive of the acquisition of TF Financial in the fourth quarter of 2014. The efficiency ratio was 55.25% for the fourth quarter and 55.79% for the year.

Capital

National Penn’s Board of Directors declared a first quarter 2016 dividend of eleven cents ($0.11) per common share to shareholders of record as of Monday, February 8, 2016, payable on Wednesday, February 17, 2016. At December 31, 2015, capital remained strong as National Penn’s tier 1 common and tangible common equity to tangible assets ratios were 12.43% and 9.18%, respectively.

“As previously announced, we anticipate the closing of the transaction with BB&T to be completed on or about April 1, 2016 with systems conversion mid-2016,” said Scott V. Fainor. “We look forward to our affiliation with BB&T which will broaden the products and services we offer our customers and continue our commitment to the communities we serve.”

About National Penn Bancshares, Inc.:

National Penn Bancshares, Inc., with approximately $9.6 billion in assets, is a bank holding company headquartered in Allentown, Pennsylvania. National Penn Bank operates 124 branch offices throughout Pennsylvania, New Jersey and Maryland.

National Penn’s financial services affiliates and divisions include its National Penn Investors Trust Company division; Institutional Advisors LLC; and National Penn Insurance Services 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.

Statement 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 U.S. generally accepted accounting principles (“GAAP”). National Penn’s management uses these non-GAAP measures in its analysis of National Penn’s performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of the following non-GAAP financial measures, which exclude the impact of the specified items, provides useful supplemental information that is essential to a proper understanding of the financial results of National Penn.

  • Tangible common equity excludes goodwill and intangible assets and preferred equity. Banking and financial institution regulators also exclude goodwill and intangible assets from shareholders’ equity when assessing the capital adequacy of a financial institution. Tangible common equity provides a method to assess the Company’s tangible capital trends.
  • Tangible book value expresses tangible common equity on a per share basis. Tangible book value provides a method to assess the level of tangible net assets on a per share basis.
  • Adjusted net income and adjusted return on average assets exclude the effects of certain gains and losses, adjusted for taxes when applicable. Adjusted net income and adjusted return on average assets provide methods to assess earnings performance by excluding items that management believes are not comparable among the periods presented.
  • Efficiency ratio expresses operating expenses as a percentage of fully-taxable equivalent net interest income plus non-interest income. Operating expenses exclude items from non-interest expense that management believes are not comparable among the periods presented. Non-interest income is also adjusted to exclude items that management believes are not comparable among the periods presented. Efficiency ratio is used as a method for management to assess its operating expense level and to compare to financial institutions of varying sizes.

Management believes the use of non-GAAP measures will help readers compare National Penn’s current results to those of prior periods as presented in the accompanying Financial Highlights and financial data tables.

Cautionary Statement Regarding Forward-Looking Information

This release contains forward-looking information about National Penn Bancshares, Inc. that is intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,’’ “project,” ”could,” “plan,’’ “goal,” “potential,” “pro forma,” “seek,” “intend,’’ or “anticipate’’ or the negative thereof or comparable terminology, and include discussions of strategy, financial projections, guidance and estimates (including their underlying assumptions), statements regarding plans, objectives, expectations or consequences of announced transactions, and statements about the future performance, operations, products and services of National Penn and its subsidiaries. National Penn cautions readers not to place undue reliance on these statements.

National Penn’s business and operations are subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any forward-looking statements. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: Risks, uncertainties and other factors relating to the merger of National Penn with and into BB&T Corporation, including the ability to meet closing conditions to the merger, delay in closing the merger, difficult conditions in the capital markets and the economy generally, regulatory requirements or other actions mandated by National Penn’s regulators, recent and ongoing changes to the state and federal regulatory schemes under which National Penn and other financial services companies operate (including the Dodd-Frank Act and regulations adopted or to be adopted to implement that Act), delayed improvement in the credit quality of loans, the effect of credit risk exposure, the ability to strategically manage our capital position and to raise capital, allowance for loan losses may prove inadequate, variations in interest rates, the geographic concentration of National Penn’s operations, declines in the value of National Penn’s assets and the effect of any resulting impairment charges, competition for personnel and from other financial institutions, interruptions or breaches of National Penn’s security systems, the development and maintenance of National Penn’s information technology, potential dilution of National Penn’s shareholders, the ability of National Penn and its subsidiaries to pay dividends, severe weather and natural disasters, and the nature and frequency of litigation and other similar proceedings to which National Penn may be a party. 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, 2014, 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.

Financial Update for National Penn Bancshares, Inc. (NPBC) for 12/31/2015
Unaudited, dollars in thousands except share and per share data
As of
12/31/20159/30/201512/31/2014
SUMMARY BALANCE SHEET
Total assets $ 9,598,902 $ 9,587,459 $ 9,750,865
Investment securities and other securities 2,503,081 2,503,203 2,519,215
Total loans 6,205,199 6,168,528 6,146,457
Deposits 6,704,936 6,959,275 6,729,745
Borrowings 1,629,689 1,359,657 1,720,404
Shareholders' equity 1,161,557 1,158,423 1,188,639
Tangible book value per common share (2) $ 6.08 $ 6.05 $ 5.96
Tangible common equity / tangible assets (2) 9.18 % 9.15 % 9.30 %
Three Months EndedTwelve Months Ended
12/31/20159/30/201512/31/201412/31/201512/31/2014
EARNINGS
Total interest income $ 75,428 $ 76,529 $ 75,990 $ 304,468 $ 288,019
Total interest expense 8,812 8,662 8,346 34,468 30,905
Net interest income 66,616 67,867 67,644 270,000 257,114
Provision for loan losses (2,500 ) 1,000 3,500 500 5,751
Net interest income after provision for loan losses 69,116 66,867 64,144 269,500 251,363
Net gains on investment securities - - 13 - 21
Other non-interest income 22,527 25,026 23,417 95,170 92,154
Merger related expenses 1,121 1,840 2,878 2,961 2,878
Other non-interest expense 51,220 52,377 51,836 212,139 208,445
Income before income taxes 39,302 37,676 32,860 149,570 132,215
Income tax expense 10,452 9,800 8,383 38,879 33,509
Net income $ 28,850 $ 27,876 $ 24,477 $ 110,691 $ 98,706
PERFORMANCE RATIOS
Net interest margin 3.16 % 3.25 % 3.33 % 3.25 % 3.40 %
Return on average assets 1.19 % 1.16 % 1.05 % 1.16 % 1.13 %
Adjusted return on average assets (3) 1.22 % 1.22 % 1.14 % 1.18 % 1.16 %
Return on average shareholders' equity 9.91 % 9.69 % 8.30 % 9.68 % 8.86 %
Return on average tangible common equity (1) 13.53 % 13.30 % 11.09 % 13.28 % 11.72 %
Adjusted return on average tangible common equity 13.87 % 13.94 % 12.02 % 13.53 % 11.97 %
Efficiency ratio (4) 55.25 % 54.23 % 54.53 % 55.79 % 57.06 %
PER SHARE
Basic earnings $ 0.21 $ 0.20 $ 0.17 $ 0.79 $ 0.70
Diluted earnings 0.20 0.20 0.17 0.78 0.70
Adjusted diluted earnings 0.21 0.21 0.18 0.80 0.71
Dividends 0.11 0.11 0.11 0.44 0.41
Average shares - basic 140,320,082 140,235,094 145,277,964 140,889,264 141,281,690
Average shares - diluted 141,048,622 140,916,194 145,850,861 141,549,226 141,823,607
(1) RECONCILIATION TABLES FOR NON-GAAP FINANCIAL MEASURES
Three Months EndedTwelve Months Ended
12/31/20159/30/201512/31/201412/31/201512/31/2014
Return on average tangible common equity
Return on average shareholders' equity 9.91 % 9.69 % 8.30 % 9.68 % 8.86 %
Effect of goodwill and intangibles 3.62 % 3.61 % 2.79 % 3.60 % 2.86 %
Return on average tangible common equity 13.53 % 13.30 % 11.09 % 13.28 % 11.72 %
Average tangible equity
Average shareholders' equity $ 1,155,465 $ 1,141,586 $ 1,169,815 $ 1,143,792 $ 1,113,535
Average goodwill and intangibles (309,339 ) (309,969 ) (294,238 ) (310,176 ) (271,684 )
Average tangible common equity $ 846,126 $ 831,617 $ 875,577 $ 833,616 $ 841,851
Financial Update for National Penn Bancshares, Inc. (NPBC) for 12/31/2015
Unaudited, dollars in thousands except share and per share data
As of
12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014
ASSETS
Cash and due from banks $ 104,407 $ 101,975 $ 120,010 $ 102,500 $ 110,784
Interest-earning deposits with banks 99,689 119,616 118,375 131,166 303,055
Total cash and cash equivalents 204,096 221,591 238,385 233,666 413,839
Investment securities available-for-sale, at fair value 1,668,829 1,641,230 1,598,351 1,585,671 1,530,661
Investment securities held-to-maturity 768,634 807,574 842,192 884,211 921,042
Other securities 65,618 54,399 67,072 67,288 67,512
Loans held-for-sale 10,000 6,239 9,693 11,239 4,178
Loans 6,195,199 6,162,289 6,158,788 6,120,205 6,142,279
Allowance for loan losses (79,045 ) (83,148 ) (84,816 ) (89,729 ) (90,675 )
Loans, net 6,116,154 6,079,141 6,073,972 6,030,476 6,051,604
Premises and equipment, net 106,209 109,181 111,353 113,217 116,414
Accrued interest receivable 29,030 29,697 29,066 30,018 29,491
Bank owned life insurance 197,908 196,643 199,656 198,123 171,775
Other real estate owned and other repossessed assets 4,596 4,719 5,186 5,474 4,867
Goodwill 302,940 302,940 302,940 302,940 302,244
Other intangible assets, net 6,101 6,725 7,353 7,985 8,757
Unconsolidated investments 7,575 8,552 8,582 8,101 8,124
Other assets 111,212 118,828 110,513 119,545 120,357
TOTAL ASSETS $ 9,598,902 $ 9,587,459 $ 9,604,314 $ 9,597,954 $ 9,750,865
LIABILITIES
Non-interest bearing deposits $ 1,185,936 $ 1,169,922 $ 1,200,631 $ 1,142,192 $ 1,085,158
Interest bearing deposits 5,519,000 5,789,353 5,532,853 5,555,070 5,644,587
Total deposits 6,704,936 6,959,275 6,733,484 6,697,262 6,729,745
Customer repurchase agreements 593,540 573,986 539,850 603,880 607,705
Federal Home Loan Bank advances and other borrowings 833,828 583,350 889,366 854,375 910,378
Senior long-term debt 125,000 125,000 125,000 125,000 125,000
Subordinated debentures 77,321 77,321 77,321 77,321 77,321
Accrued interest payable and other liabilities 102,720 110,104 101,615 109,021 112,077
TOTAL LIABILITIES 8,437,345 8,429,036 8,466,636 8,466,859 8,562,226
SHAREHOLDERS' EQUITY
Common stock 1,391,151 1,389,602 1,388,341 1,387,136 1,390,130
Accumulated deficit (87,043 ) (100,459 ) (112,913 ) (124,740 ) (135,246 )
Accumulated other comprehensive loss (17,891 ) (5,727 ) (11,686 ) (3,989 ) (10,991 )
Treasury stock (124,660 ) (124,993 ) (126,064 ) (127,312 ) (55,254 )
TOTAL SHAREHOLDERS' EQUITY 1,161,557 1,158,423 1,137,678 1,131,095 1,188,639
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 9,598,902 $ 9,587,459 $ 9,604,314 $ 9,597,954 $ 9,750,865
PER SHARE DATA
Book value $ 8.28 $ 8.26 $ 8.12 $ 8.08 $ 8.08
Tangible book value (2) $ 6.08 $ 6.05 $ 5.90 $ 5.86 $ 5.96
Dividends - quarterly $ 0.11 $ 0.11 $ 0.11 $ 0.11 $ 0.11
Shares outstanding (end of period, net of treasury) 140,308,640 140,283,395 140,184,234 140,068,761 147,136,084
(2) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
Total shareholders' equity $ 1,161,557 $ 1,158,423 $ 1,137,678 $ 1,131,095 $ 1,188,639
Goodwill and intangibles (309,041 ) (309,665 ) (310,293 ) (310,925 ) (311,001 )
Tangible common equity $ 852,516 $ 848,758 $ 827,385 $ 820,170 $ 877,638
Shares outstanding 140,308,640 140,283,395 140,184,234 140,068,761 147,136,084
Tangible book value per share $ 6.08 $ 6.05 $ 5.90 $ 5.86 $ 5.96
Total assets $ 9,598,902 $ 9,587,459 $ 9,604,314 $ 9,597,954 $ 9,750,865
Goodwill and intangibles (309,041 ) (309,665 ) (310,293 ) (310,925 ) (311,001 )
Tangible assets $ 9,289,861 $ 9,277,794 $ 9,294,021 $ 9,287,029 $ 9,439,864
Tangible common equity/tangible assets 9.18 % 9.15 % 8.90 % 8.83 % 9.30 %
Financial Update for National Penn Bancshares, Inc. (NPBC) for 12/31/2015
Unaudited, dollars in thousands except share and per share data
For the Quarter Ended For the Twelve Months Ended
12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014 12/31/2015 12/31/2014
INTEREST INCOME
Loans, including fees $ 58,610 $ 59,735 $ 58,077 $ 58,424 $ 58,532 $ 234,846 $ 217,447
Investment securities
Taxable 11,462 11,180 11,457 12,512 11,273 46,611 45,453
Tax-exempt 5,298 5,577 5,843 6,120 6,129 22,838 24,976
Deposits with banks 58 37 40 38 56 173 143
Total interest income 75,428 76,529 75,417 77,094 75,990 304,468 288,019
INTEREST EXPENSE
Deposits 4,770 4,740 4,618 4,521 4,616 18,649 18,543
Customer repurchase agreements 418 403 402 405 432 1,628 1,624
Repurchase agreements - - - - - - 1,406
Federal Home Loan Bank advances and other borrowings 1,704 1,606 1,659 1,593 1,398 6,562 5,613
Senior long-term debt 1,366 1,366 1,366 1,366 1,365 5,464 1,592
Subordinated debentures 554 547 537 527 535 2,165 2,127
Total interest expense 8,812 8,662 8,582 8,412 8,346 34,468 30,905
Net interest income 66,616 67,867 66,835 68,682 67,644 270,000 257,114
Provision for loan losses (2,500 ) 1,000 1,000 1,000 3,500 500 5,751
Net interest income after provision for loan losses 69,116 66,867 65,835 67,682 64,144 269,500 251,363
NON-INTEREST INCOME
Wealth management 6,480 6,654 6,854 6,650 7,123 26,638 28,067
Service charges on deposit accounts 3,415 3,468 3,328 3,307 3,725 13,518 14,469
Insurance commissions and fees 3,009 3,128 3,219 3,182 2,979 12,538 12,814
Cash management and electronic banking fees 5,089 5,068 5,153 4,714 4,951 20,024 19,066
Mortgage banking 1,178 1,617 1,652 1,374 1,213 5,821 3,852
Bank owned life insurance 1,750 2,746 1,563 1,374 1,341 7,433 4,995
Earnings (losses) of unconsolidated investments (977 ) 133 589 - (43 ) (255 ) (549 )
Gain on sale of non-performing loans - - - - - - 946
Other operating income 2,583 2,212 2,329 2,329 2,128 9,453 8,494
Net gains on sales of investment securities - - - - 13 - 21
Total non-interest income 22,527 25,026 24,687 22,930 23,430 95,170 92,175
NON-INTEREST EXPENSE
Salaries, wages and employee benefits 28,400 29,570 30,123 29,998 27,836 118,091 115,579
Premises and equipment 8,147 8,189 8,508 9,147 8,254 33,991 31,944
FDIC insurance 1,280 1,220 1,313 1,458 1,344 5,271 5,001
Other operating expenses 13,393 13,398 14,016 13,979 14,402 54,786 55,921
Merger related expenses 1,121 1,840 - - 2,878 2,961 2,878
Total non-interest expense 52,341 54,217 53,960 54,582 54,714 215,100 211,323
Income before income taxes 39,302 37,676 36,562 36,030 32,860 149,570 132,215
Income tax expense 10,452 9,800 9,324 9,303 8,383 38,879 33,509
NET INCOME $ 28,850 $ 27,876 $ 27,238 $ 26,727 $ 24,477 $ 110,691 $ 98,706
PER SHARE
Basic earnings $ 0.21 $ 0.20 $ 0.19 $ 0.19 $ 0.17 $ 0.79 $ 0.70
Diluted earnings $ 0.20 $ 0.20 $ 0.19 $ 0.19 $ 0.17 $ 0.78 $ 0.70
Adjusted diluted earnings $ 0.21 $ 0.21 $ 0.19 $ 0.19 $ 0.18 $ 0.80 $ 0.71
Average shares - basic 140,320,082 140,235,094 140,126,314 142,911,230 145,277,964 140,889,264 141,281,690
Average shares - diluted 141,048,622 140,916,194 140,752,713 143,513,420 145,850,861 141,549,226 141,823,607
SUPPLEMENTAL DATA (annualized, average)
Return on assets 1.19 % 1.16 % 1.14 % 1.14 % 1.05 % 1.16 % 1.13 %
Adjusted return on assets (3) 1.22 % 1.22 % 1.14 % 1.14 % 1.14 % 1.18 % 1.16 %
Return on shareholders' equity 9.91 % 9.69 % 9.66 % 9.45 % 8.30 % 9.68 % 8.86 %
Return on tangible common equity (1) 13.53 % 13.30 % 13.32 % 12.96 % 11.09 % 13.28 % 11.72 %
Adjusted return on tangible common equity 13.87 % 13.94 % 13.32 % 12.96 % 12.02 % 13.53 % 11.97 %
Efficiency ratio (4) 55.25 % 54.23 % 56.59 % 57.10 % 54.53 % 55.79 % 57.06 %
(3) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
Adjusted net income reconciliation
Net income $ 28,850 $ 27,876 $ 27,238 $ 26,727 $ 24,477 $ 110,691 $ 98,706
After tax merger related expenses 729 1,350 - - 2,054 2,079 2,054
Adjusted net income $ 29,579 $ 29,226 $ 27,238 $ 26,727 $ 26,531 $ 112,770 $ 100,760
Adjusted diluted earnings per share reconciliation
Diluted earnings per share $ 0.20 $ 0.20 $ 0.19 $ 0.19 $ 0.17 $ 0.78 $ 0.70
After tax merger related expenses 0.01 0.01 - - 0.01 0.02 0.01
Adjusted diluted earnings per share $ 0.21 $ 0.21 $ 0.19 $ 0.19 $ 0.18 $ 0.80 $ 0.71
Adjusted net income $ 29,579 $ 29,226 $ 27,238 $ 26,727 $ 26,531 $ 112,770 $ 100,760
Average assets $ 9,615,022 $ 9,526,850 $ 9,544,673 $ 9,524,279 $ 9,269,113 $ 9,552,884 $ 8,709,629
Adjusted return on average assets (annualized) 1.22 % 1.22 % 1.14 % 1.14 % 1.14 % 1.18 % 1.16 %
(4) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
Efficiency ratio calculation
Non-interest expense $ 52,341 $ 54,217 $ 53,960 $ 54,582 $ 54,714 $ 215,100 $ 211,323
Less:
Merger related expenses 1,121 1,840 - - 2,878 2,961 2,878
Operating expenses $ 51,220 $ 52,377 $ 53,960 $ 54,582 $ 51,836 $ 212,139 $ 208,445
Net interest income (taxable equivalent) $ 70,187 $ 71,563 $ 70,660 $ 72,654 $ 71,641 $ 285,064 $ 273,150
Non-interest income 22,527 25,026 24,687 22,930 23,430 95,170 92,175
Less:
Net gains on investment securities - - - - 13 - 21
Adjusted revenue $ 92,714 $ 96,589 $ 95,347 $ 95,584 $ 95,058 $ 380,234 $ 365,304
Efficiency ratio 55.25 % 54.23 % 56.59 % 57.10 % 54.53 % 55.79 % 57.06 %
Financial Update for National Penn Bancshares, Inc. (NPBC) for 12/31/2015
Unaudited, dollars in thousands except share and per share data
For the Quarter Ended For the Twelve Months Ended
12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014 12/31/2015 12/31/2014
CHARGE-OFFS
Loan charge-offs $ 3,131 $ 4,418 $ 7,789 $ 3,074 $ 3,781 $ 18,412 $ 17,021
Recoveries on loans (1,528 ) (1,750 ) (1,876 ) (1,128 ) (2,029 ) (6,282 ) (5,578 )
Net loan charge-offs $ 1,603 $ 2,668 $ 5,913 $ 1,946 $ 1,752 $ 12,130 $ 11,443
Net loan charge-offs to average total loans (annualized) 0.10 % 0.17 % 0.39 % 0.13 % 0.12 % 0.20 % 0.21 %
NET CHARGE-OFF DETAIL
Commercial and industrial loans $ (602 ) $ 1,444 $ 4,874 $ 422 $ (537 ) $ 6,138 $ 2,681
Commercial real estate-permanent 96 (58 ) (308 ) 601 245 331 2,339
Commercial real estate-construction 264 (196 ) (92 ) (95 ) (628 ) (119 ) (729 )
Total commercial real estate loans 360 (254 ) (400 ) 506 (383 ) 212 1,610
Residential mortgages 670 598 70 248 1,139 1,586 3,120
Home equity lines and loans 375 407 1,064 230 723 2,076 2,251
All other consumer loans 800 473 305 540 810 2,118 1,781
Total consumer loans 1,845 1,478 1,439 1,018 2,672 5,780 7,152
Net loans charged-off $ 1,603 $ 2,668 $ 5,913 $ 1,946 $ 1,752 $ 12,130 $ 11,443
As of
12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014
ASSET QUALITY AND OTHER DATA
Non-accrual commercial and industrial loans $ 5,136 $ 6,234 $ 8,923 $ 21,107 $ 21,931
Non-accrual commercial real estate-permanent 6,041 7,068 7,160 6,781 7,915
Non-accrual commercial real estate-construction 5,257 8,504 8,443 8,204 8,113
Total non-accrual commercial real estate loans 11,298 15,572 15,603 14,985 16,028
Non-accrual residential mortgages 10,360 8,171 8,307 8,326 7,706
Non-accrual home equity lines and loans 4,652 4,234 4,027 3,762 3,426
All other non-accrual consumer loans 1,181 1,387 1,387 1,458 1,746
Total non-accrual consumer loans 16,193 13,792 13,721 13,546 12,878
Total non-accrual loans 32,627 35,598 38,247 49,638 50,837
Restructured loans 9,317 9,047 8,792 8,557 8,255
Total non-performing loans 41,944 44,645 47,039 58,195 59,092
Acquired other real estate owned 3,450 3,450 3,450 3,450 3,675
Other real estate owned and repossessed assets 1,146 1,269 1,736 2,024 1,192
Total other real estate owned and repossessed assets 4,596 4,719 5,186 5,474 4,867
Total non-performing assets 46,540 49,364 52,225 63,669 63,959
Loans 90+ days past due & still accruing 1,707 1,752 1,903 2,230 2,183
Total non-performing assets and loans 90+ days past due $ 48,247 $ 51,116 $ 54,128 $ 65,899 $ 66,142
Allowance for loan losses $ 79,045 $ 83,148 $ 84,816 $ 89,729 $ 90,675
Allowance for loan losses/non-performing loans 188.5 % 186.2 % 180.3 % 154.2 % 153.4 %

Allowance for loan losses/non-performing assets and loans 90+ days past due (excluding acquired other real estate owned)

176.5 % 174.4 % 167.4 % 143.7 % 145.2 %

Allowance for loan losses/non-performing assets and loans 90+ days past due

163.8 % 162.7 % 156.7 % 136.2 % 137.1 %
Allowance for loan losses/total originated loans 1.37 % 1.46 % 1.50 % 1.61 % 1.63 %
Allowance for loan losses/total loans 1.27 % 1.35 % 1.37 % 1.46 % 1.48 %
Provision/charge-offs, net -156.0 % 37.5 % 16.9 % 51.4 % 199.8 %
Originated classified loans $ 117,621 $ 124,438 $ 124,837 $ 142,892 $ 153,255
Acquired classified loans 326 1,121 2,671 1,715 9,534
Total classified loans $ 117,947 $ 125,559 $ 127,508 $ 144,607 $ 162,789
Originated classified loans/total originated loans 2.04 % 2.19 % 2.21 % 2.56 % 2.75 %
Total classified loans/total loans 1.90 % 2.04 % 2.07 % 2.36 % 2.65 %
Delinquent loans (a) $ 20,263 $ 21,293 $ 16,943 $ 15,968 $ 22,300
Delinquent loans/total loans 0.33 % 0.35 % 0.27 % 0.26 % 0.36 %
Non-performing loans/total loans 0.68 % 0.72 % 0.76 % 0.95 % 0.96 %
REGULATORY CAPITAL DATA (b)
Tier 1 capital $ 947,051 $ 925,046 $ 906,281 $ 887,854 $ 963,629
Common equity tier 1 capital 873,262 855,130 838,602 822,511
Total capital 1,026,096 1,008,194 991,097 976,043 1,050,295
Risk-weighted assets 7,026,916 6,969,855 6,953,013 7,053,656 6,929,235
Tier 1 leverage ratio 10.19 % 10.06 % 9.85 % 9.67 % 10.78 %
Tier 1 ratio 13.48 % 13.27 % 13.03 % 12.59 % 13.91 %
Common equity tier 1 ratio 12.43 % 12.27 % 12.06 % 11.66 %
Total capital ratio 14.60 % 14.47 % 14.25 % 13.84 % 15.16 %
(a) Includes loans 30-89 days past due and loans 90+ days past due and still accruing

(b) 2015 Regulatory Capital Data calculated in accordance with BASEL III

Financial Update for National Penn Bancshares, Inc. (NPBC) for 12/31/2015
Unaudited, dollars in thousands except share and per share data
As of
Earning Assets / Liabilities 12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014

Loan portfolio composition (regulatory):

Commercial / industrial $ 862,892 $ 875,974 $ 890,890 $ 895,356 $ 852,804
Commercial real estate (c) 2,289,691 2,293,076 2,281,023 2,186,626 2,172,858
Residential mortgage 1,453,390 1,464,554 1,471,769 1,508,968 1,550,378
Real estate construction and land development 215,756 200,645 188,473 229,428 261,916
Home equity 880,980 876,219 874,386 867,784 875,903
Consumer 257,792 253,711 246,645 238,320 239,807
Other 244,698 204,349 215,295 204,962 192,791
Total 6,205,199 6,168,528 6,168,481 6,131,444 6,146,457
Investment securities and other securities 2,503,081 2,503,203 2,507,615 2,537,170 2,519,215
Other earning assets 99,689 119,616 118,375 131,166 303,055
Total earning assets (net of loan loss reserve) $ 8,728,924 $ 8,708,199 $ 8,709,655 $ 8,710,051 $ 8,878,052

Loan portfolio composition (internal):

Commercial & industrial
Business purpose, real estate secured $ 939,424 $ 940,869 $ 922,413 $ 918,985 $ 929,999
Business purpose, not secured by real estate 1,055,847 1,030,537 1,054,746 1,046,875 995,051
Commercial real estate (owner occupied)
Permanent 663,577 654,178 658,457 635,880 623,712
Construction / development 36,299 39,119 35,006 53,635 51,105
Total commercial & industrial 2,695,147 2,664,703 2,670,622 2,655,375 2,599,867
Commercial real estate (non-owner occupied)
Permanent 1,290,072 1,291,107 1,291,059 1,226,847 1,229,318
Construction / development 148,533 145,975 137,351 169,271 203,542
Total commercial real estate 1,438,605 1,437,082 1,428,410 1,396,118 1,432,860
Total commercial 4,133,752 4,101,785 4,099,032 4,051,493 4,032,727
Consumer
Residential mortgage (personal purpose)
Permanent 850,214 852,672 856,976 869,562 893,732
Construction 11,150 9,851 10,192 15,384 14,625
Total residential mortgages 861,364 862,523 867,168 884,946 908,357
Home equity and direct installment 197,433 210,455 223,573 239,903 253,358
Home equity lines of credit 709,781 693,674 679,754 661,368 660,472
Total home equity 907,214 904,129 903,327 901,271 913,830
Private banking credit lines 86,133 87,556 90,946 90,919 96,689
Indirect vehicle and other 206,736 206,296 198,315 191,576 190,676
All other consumer 292,869 293,852 289,261 282,495 287,365
Total consumer 2,061,447 2,060,504 2,059,756 2,068,712 2,109,552
Loans 6,195,199 6,162,289 6,158,788 6,120,205 6,142,279
Loans held-for-sale 10,000 6,239 9,693 11,239 4,178
Total loans $ 6,205,199 $ 6,168,528 $ 6,168,481 $ 6,131,444 $ 6,146,457

Deposit composition:

Savings $ 722,413 $ 711,544 $ 722,051 $ 711,375 $ 678,294
NOW accounts 1,939,388 2,166,339 1,886,405 1,880,649 1,913,399
Money market accounts 1,718,791 1,746,808 1,734,059 1,755,276 1,827,233
Time deposits less than $100k 820,616 838,417 859,472 872,906 891,964
Time deposits $100k or greater 317,792 326,245 330,866 334,864 333,697
Total interest bearing deposits 5,519,000 5,789,353 5,532,853 5,555,070 5,644,587
Non-interest bearing deposits 1,185,936 1,169,922 1,200,631 1,142,192 1,085,158
Total deposits $ 6,704,936 $ 6,959,275 $ 6,733,484 $ 6,697,262 $ 6,729,745
(c) Includes owner occupied
Financial Update for National Penn Bancshares, Inc. (NPBC) for 12/31/2015
Unaudited, dollars in thousands except share and per share data
Quarterly, as of Twelve Months, as of
12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014 12/31/2015 12/31/2014
Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield Avg Bal Yield
Total loans* $ 6,196,517 3.80% $ 6,144,998 3.90% $ 6,146,507 3.83% $ 6,131,280 3.91% $ 5,932,806 3.96% $ 6,154,977 3.86% $ 5,511,872 3.99%
Investment securities* 2,513,273 3.10% 2,498,640 3.14% 2,515,825 3.26% 2,529,343 3.52% 2,470,862 3.32% 2,514,183 3.25% 2,423,876 3.46%
Interest earning deposits 115,537 0.20% 91,720 0.16% 92,867 0.17% 97,917 0.16% 124,710 0.18% 99,537 0.17% 86,737 0.16%
Total earning assets 8,825,327 3.55% 8,735,358 3.64% 8,755,199 3.63% 8,758,540 3.75% 8,528,378 3.72% 8,768,697 3.64% 8,022,485 3.79%
Total assets 9,615,022 9,526,850 9,544,673 9,524,279 9,269,113 9,552,884 8,709,629
Savings 714,568 0.10% 716,540 0.10% 714,135 0.10% 693,482 0.11% 638,913 0.10% 709,758 0.10% 568,618 0.10%
NOW accounts 2,058,188 0.14% 2,012,605 0.14% 1,908,400 0.14% 1,864,261 0.14% 1,987,346 0.15% 1,961,537 0.14% 1,793,436 0.14%
Money market accounts 1,722,411 0.22% 1,746,975 0.22% 1,761,906 0.22% 1,836,268 0.22% 1,788,019 0.22% 1,766,524 0.22% 1,707,194 0.22%
Time deposits 1,152,866 0.99% 1,174,011 0.97% 1,199,076 0.94% 1,210,270 0.90% 1,210,685 0.88% 1,183,871 0.95% 1,188,923 0.98%
Total interest bearing deposits 5,648,033 0.34% 5,650,131 0.33% 5,583,517 0.33% 5,604,281 0.33% 5,624,963 0.33% 5,621,690 0.33% 5,258,171 0.35%
Non-interest bearing deposits 1,183,005 1,179,132 1,143,551 1,091,409 1,078,218 1,149,606 1,014,758
Total deposits 6,831,038 0.28% 6,829,263 0.28% 6,727,068 0.28% 6,695,690 0.27% 6,703,181 0.27% 6,771,296 0.28% 6,272,929 0.30%
Customer repurchase agreements 570,780 0.29% 551,603 0.29% 556,813 0.29% 568,750 0.29% 589,944 0.29% 561,963 0.29% 555,954 0.29%
Repurchase agreements - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% - 0.00% 28,836 4.87%
Federal Home Loan Bank advances and other borrowings 743,910 0.91% 702,424 0.91% 824,456 0.81% 805,516 0.80% 503,081 1.10% 768,725 0.85% 531,522 1.06%
Senior long-term debt 125,000 4.34% 125,000 4.34% 125,000 4.38% 125,000 4.43% 125,000 4.33% 125,000 4.37% 36,644 4.34%
Subordinated debentures 77,321 2.84% 77,321 2.81% 77,321 2.79% 77,321 2.76% 77,321 2.75% 77,321 2.80% 77,321 2.75%
Total deposits and borrowings 8,348,049 0.42% 8,285,611 0.41% 8,310,658 0.41% 8,272,277 0.41% 7,998,527 0.41% 8,304,305 0.42% 7,503,206 0.41%
Total interest bearing liabilities $ 7,165,044 0.49% $ 7,106,479 0.48% $ 7,167,107 0.48% $ 7,180,868 0.48% $ 6,920,309 0.48% $ 7,154,699 0.48% $ 6,488,448 0.48%
Net interest margin (FTE) 3.16% 3.25% 3.24% 3.36% 3.33% 3.25% 3.40%
Wealth assets under management, at period end $ 2,532,685 $ 2,517,888 $ 2,587,907 $ 2,609,834 $ 2,501,015
*Fully taxable equivalent ("FTE") basis, using a 35% statutory tax rate
Financial Update for National Penn Bancshares, Inc. (NPBC) for 12/31/2015
Unaudited
STATES OF OPERATION AND BANKING OFFICES BY STATE (LATEST AVAILABLE DATA)
Quarterly, as of
12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014

PA

Total number of retail branch offices 116 116 116 119 119
Total number of insured subsidiaries
(Bank & Thrift subsidiaries) 1 1 1 1 1
Total number of ATMs 127 127 126 128 127

NJ

Total number of retail branch offices 7 7 7 7 7
Total number of insured subsidiaries
(Bank & Thrift subsidiaries) - - - - -
Total number of ATMs 6 6 6 6 6

MD

Total number of retail branch offices 1 1 1 1 1
Total number of insured subsidiaries
(Bank & Thrift subsidiaries) - - - - -
Total number of ATMs 1 1 1 1 1

TOTAL

Total number of retail branch offices 124 124 124 127 127
Total number of insured subsidiaries
(Bank & Thrift subsidiaries) 1 1 1 1 1
Total number of ATMs 134 134 133 135 134
EOP employees (full-time equivalent) 1,519 1,548 1,573 1,596 1,658

Contacts:

National Penn Bancshares, Inc.
Investor Contact:
Michael J. Hughes, 484-709-3305
michael.hughes@nationalpenn.com
or
Media Contact:
Jacklyn Bingaman, 610-674-1325
jacklyn.bingaman@nationalpenn.com

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