NATIONAL PENN BANCSHARES INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - NATIONAL PENN BANCSHARES INC	npbc8knewsrelease102513.htm

Exhibit 99.1



	News Release

National Penn Bancshares, Inc. Reports

Third Quarter 2013 Results

Company Release - October 25, 2013


•	Quarterly net income per diluted share of $0.17


•	Strong return on assets¹ of 1.17% for the quarter


•	Quarterly net interest margin 3.49%


•	Asset quality metrics remain strong


•	Disciplined management of operating expenses continues


•	Declared dividend of ten cents per common share

BOYERTOWN, PA., October 25, 2013 -- National Penn Bancshares, Inc. (Nasdaq: NPBC) reported net income of $24.6 million, or $0.17 per diluted share, for the third quarter of 2013, compared to $25.0 million, or $0.17 per diluted share for the second quarter of 2013. Year-to-date 2013 adjusted net income¹ was $0.50 per diluted share, exclusive of the first quarter 2013 debt extinguishment and retail trust preferred redemption, compared to net income of $0.49 per diluted share, for the prior year period. Adjusted return on average assets¹ was 1.17% for the third quarter and year-to-date 2013.

“This quarter is indicative of our ongoing commitment to consistent results at a high level, despite the sluggish economy and difficult rate environment,” said Scott V. Fainor, president and CEO of National Penn. “Our team remains focused on prudently managing and positioning the Company to maximize longer-term shareholder value.”

Management’s recent and ongoing strategies to mitigate the impact of the low interest rate environment resulted in a stable net interest margin of 3.51% for the first nine months of 2013, equal to the net interest margin for the first nine months of 2012. Year-to-date 2013, the cost of interest-bearing liabilities has been reduced from 0.87% to 0.54%. Net interest margin for the third quarter of 2013 was 3.49%, compared to 3.53% in the prior quarter, while net interest income of $63.1 million for the third quarter was comparable to the prior quarter and the third quarter of 2012. Loans increased modestly in the third quarter of 2013 as trends continue to reflect management’s disciplined approach of growing quality loans, while maintaining underwriting standards and managing interest rate risk.

Favorable credit quality trends continued as classified loans declined 7% in the third quarter of 2013 and have declined 26% over the last twelve months. Net charge-offs during the quarter were 0.38% of average loans on an annualized basis. The continued strength of National Penn’s asset quality supported a modest reduction in the provision for loan losses to $1.25 million, compared to a provision of $1.5 million in the second quarter of 2013. Asset quality ratios remained strong as non-performing loans were 1.04% of total loans, and the allowance for loan loss coverage of non-performing loans was 184% at September 30, 2013.

Operating expenses¹ of $53.6 million for the third quarter were comparable to both the second quarter of 2013 and the third quarter of 2012. A continued focus on managing operating expenses¹ has resulted in operating expenses¹ increasing by less than 1% through the first nine months of 2013, compared to the prior year period. The efficiency ratio for the third quarter was 58%, compared to 57% for the linked quarter.

National Penn’s Board of Directors declared a fourth quarter 2013 cash dividend of ten cents per common share payable on November 15, 2013 to shareholders of record as of November 2, 2013. At September 30, 2013, the Company’s tier 1 common and tangible common equity¹ to tangible assets ratios were a strong 14.38% and 10.61%, respectively.

Scott V. Fainor stated, “As we close out 2013, we look forward to beginning the relocations of designated teams to our new Reading, Pennsylvania business center, and in the spring of 2014, to our new corporate headquarters in Allentown, Pennsylvania. We are on track with our plan and motivated by the opportunities these moves provide us to leverage the strategic benefits of these locations and increase employee efficiency and collaboration.”

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 $8.4 billion in assets, is a bank holding company based in Pennsylvania. Headquartered in Boyertown, National Penn Bank operates 120 branch offices comprising 119 branches in Pennsylvania and one branch in Maryland.

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

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.

•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 return on assets exclude the effects of certain gains and losses, adjusted for taxes when applicable. Adjusted net income and return on 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: 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, unanticipated costs from our corporate relocation plan, 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, 2012, 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 9/30/2013

Unaudited, dollars in thousands except share and per share data
	As of
	9/30/2013			6/30/2013			9/30/2012
SUMMARY BALANCE SHEET
Total assets	$	8,424,623		$	8,316,585		$	8,435,526
Investment securities and other securities	2,364,681			2,313,358			2,310,459
Total loans	5,282,691			5,261,296			5,256,854
Deposits	6,435,456			6,022,463			5,947,744
Borrowings	761,506			1,089,199			1,216,707
Shareholders' equity	1,131,278			1,115,758			1,214,330
Tangible book value per common share (2)	$	5.94		$	5.83		$	6.29
Tangible common equity / tangible assets (2)	10.61		%	10.55		%	11.56		%

	Three Months Ended									Nine Months Ended
	9/30/2013			6/30/2013			9/30/2012			9/30/2013				9/30/2012
EARNINGS
Total interest income	$	71,498		$	72,101		$	78,344		$	216,194			$	239,654
Total interest expense	8,386			8,847			14,790			28,204				49,083
Net interest income	63,112			63,254			63,554			187,990				190,571
Provision for loan losses	1,250			1,500			2,000			4,250				6,000
Net interest income after provision for loan losses	61,862			61,754			61,554			183,740				184,571
Net gains from fair value changes of subordinated debentures	—			—			101			2,111				936
Net gains (losses) on investment securities	7			22			—			54				(277		)
Other non-interest income	24,801			24,946			26,664			73,188				70,803
Loss on debt extinguishment	—			—			—			64,888				—
Other non-interest expense	53,603			53,153			53,339			159,190				158,048
Income before income taxes	33,067			33,569			34,980			35,015				97,985
Income tax expense	8,507			8,550			8,964			2,840				24,219
Net income	$	24,560		$	25,019		$	26,016		$	32,175			$	73,766

PERFORMANCE RATIOS
Net interest margin	3.49		%	3.53		%	3.50		%	3.51		%		3.51		%
Return on average assets	1.17		%	1.21		%	1.23		%	0.52		%		1.17		%
Adjusted return on average assets (3)	1.17		%	1.21		%	1.23		%	1.17		%		1.16		%
Return on average shareholders' equity	8.78		%	8.82		%	8.60		%	3.81		%		8.22		%
Return on average tangible common equity (1)	11.55		%	11.53		%	11.10		%	4.99		%		10.64		%
Adjusted return on average tangible common equity	11.55		%	11.53		%	11.07		%	11.31		%		10.64		%
Efficiency ratio (4)	58.16		%	57.43		%	56.26		%	58.06		%		57.36		%

PER SHARE
Basic earnings	$	0.17		$	0.17		$	0.17		$	0.22			$	0.49
Diluted earnings	0.17			0.17			0.17			0.22				0.49
Dividends	0.10			0.10			0.09			0.20			(a)	0.21
Average shares - basic	145,669,300			145,580,155			150,157,622			145,549,146				151,325,579
Average shares - diluted	146,124,821			145,997,009			150,454,749			145,976,521				151,615,435





(1) RECONCILIATION TABLES FOR NON-GAAP FINANCIAL MEASURES
	Three Months Ended									Nine Months Ended
	9/30/2013			6/30/2013			9/30/2012			9/30/2013			9/30/2012
Return on average tangible common equity
Return on average shareholders' equity	8.78		%	8.82		%	8.60		%	3.81		%	8.22		%
Effect of goodwill and intangibles	2.77		%	2.71		%	2.50		%	1.18		%	2.42		%
Return on average tangible common equity	11.55		%	11.53		%	11.10		%	4.99		%	10.64		%
Average tangible equity
Average shareholders' equity	$	1,110,081		$	1,137,659		$	1,203,072		$	1,130,070		$	1,198,422
Average goodwill and intangibles	(266,326		)	(267,264		)	(270,720		)	(267,301		)	(272,019		)
Average tangible common equity	$	843,755		$	870,395		$	932,352		$	862,769		$	926,403

Adjusted net income reconciliation
Net income	$	24,560		$	25,019		$	26,016		$	32,175		$	73,766
After tax unrealized fair value gain on subordinated debentures	—			—			(66		)	(1,372		)	(608		)
After tax loss on debt extinguishment	—			—			—			42,177			—
Adjusted net income	$	24,560		$	25,019		$	25,950		$	72,980		$	73,158

Earnings per share
Net income	$	0.17		$	0.17		$	0.17		$	0.22		$	0.49
After tax unrealized fair value gain on subordinated debentures	—			—			—			(0.01		)	—
After tax loss on debt extinguishment	—			—			—			0.29			—
Adjusted net income	$	0.17		$	0.17		$	0.17		$	0.50		$	0.49

(a) In lieu of a first quarter 2013 cash dividend, the Company paid an additional dividend of $0.10 per share in the fourth quarter of 2012



Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2013

Unaudited, dollars in thousands except share and per share data
	As of
	9/30/2013			6/30/2013			3/31/2013				12/31/2012				9/30/2012
BALANCE SHEET - ASSETS
Cash and due from banks	$	137,795		$	118,575		$	87,588			$	145,688			$	120,421
Interest-earning deposits with banks	78,895			63,193			93,024				282,440				211,943
Total cash and cash equivalents	216,690			181,768			180,612				428,128				332,364

Investment securities available-for-sale, at fair value	1,875,676			1,799,831			1,813,348				1,802,213				1,773,579
Investment securities held-to-maturity	444,898			452,275			458,041				464,166				472,884
Other securities	44,107			61,252			62,159				68,360				63,996
Loans held-for-sale	2,752			12,289			14,934				14,330				22,703

Loans	5,279,939			5,249,007			5,234,839				5,226,552				5,234,151
Allowance for loan losses	(100,763		)	(104,533		)	(107,164		)		(110,955		)		(113,542		)
Loans, net	5,179,176			5,144,474			5,127,675				5,115,597				5,120,609

Premises and equipment, net	93,871			94,673			95,592				96,334				96,349
Accrued interest receivable	27,831			28,453			29,524				28,526				31,448
Bank owned life insurance	146,906			145,670			144,452				143,242				141,991
Other real estate owned and other repossessed assets	1,569			1,899			2,729				3,029				7,174
Goodwill	258,279			258,279			258,279				258,279				258,279
Other intangible assets, net	7,656			8,470			9,533				10,614				11,852
Unconsolidated investments	9,177			8,673			9,354				11,347				11,337
Other assets	116,035			118,579			117,545				85,357				90,961
TOTAL ASSETS	$	8,424,623		$	8,316,585		$	8,323,777			$	8,529,522			$	8,435,526

BALANCE SHEET - LIABILITIES
Non-interest bearing deposits	$	1,026,546		$	942,127		$	919,783			$	891,401			$	902,295
Interest bearing deposits	5,408,910			5,080,336			5,264,277				5,044,164				5,045,449
Total deposits	6,435,456			6,022,463			6,184,060				5,935,565				5,947,744

Customer repurchase agreements	521,779			547,736			549,894				560,065				534,613
Repurchase agreements	50,000			50,000			175,000				75,000				75,000
Short-term borrowings	—			—			—				100,000				—
Federal Home Loan Bank advances (b)	112,406			414,142			119,877				464,632				462,720
Subordinated debentures	77,321			77,321			77,321				144,627				144,374
Accrued interest payable and other liabilities	96,383			89,165			80,827				88,341				56,745
TOTAL LIABILITIES	7,293,345			7,200,827			7,186,979				7,368,230				7,221,196

BALANCE SHEET - SHAREHOLDERS' EQUITY
Common stock	1,387,052			1,386,178			1,385,255				1,387,644				1,387,073
Accumulated deficit	(182,628		)	(192,623		)	(203,084		)		(185,680		)		(181,225		)
Accumulated other comprehensive (loss) income	(13,504		)	(17,189		)	15,981				24,329				28,617
Treasury stock	(59,642		)	(60,608		)	(61,354		)		(65,001		)		(20,135		)
TOTAL SHAREHOLDERS' EQUITY	1,131,278			1,115,758			1,136,798				1,161,292				1,214,330

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	8,424,623		$	8,316,585		$	8,323,777			$	8,529,522			$	8,435,526

PER SHARE DATA
Book value	$	7.76		$	7.66		$	7.81			$	8.00			$	8.09
Tangible book value (2)	$	5.94		$	5.83		$	5.97			$	6.15			$	6.29
Dividends - quarterly	$	0.10		$	0.10		$	—		(a)	$	0.20		(a)	$	0.09
Shares outstanding (end of period, net of treasury)	145,723,276			145,608,945			145,551,796				145,163,585				150,048,383





(2) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES

Total shareholders' equity	$	1,131,278		$	1,115,758		$	1,136,798		$	1,161,292		$	1,214,330
Goodwill and intangibles	(265,935		)	(266,749		)	(267,812		)	(268,893		)	(270,131		)
Tangible common equity	$	865,343		$	849,009		$	868,986		$	892,399		$	944,199
Shares outstanding	145,723,276			145,608,945			145,551,796			145,163,585			150,048,383
Tangible book value per share	$	5.94		$	5.83		$	5.97		$	6.15		$	6.29

Total assets	$	8,424,623		$	8,316,585		$	8,323,777		$	8,529,522		$	8,435,526
Goodwill and intangibles	(265,935		)	(266,749		)	(267,812		)	(268,893		)	(270,131		)
Tangible assets	$	8,158,688		$	8,049,836		$	8,055,965		$	8,260,629		$	8,165,395
Tangible common equity/tangible assets	10.61		%	10.55		%	10.79		%	10.80		%	11.56		%

(3) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES

Adjusted net income (1)	$	24,560		$	25,019		$	23,401		$	25,308		$	25,950
Average assets	$	8,310,626		$	8,326,499		$	8,298,815		$	8,440,642		$	8,386,342
Adjusted return on average assets (annualized)	1.17		%	1.21		%	1.14		%	1.19		%	1.23		%

(b) Net of unamortized prepayment fees of $65.5 million and $67.6 million at December 31, 2012 and September 30, 2012, respectively



Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2013

Unaudited, dollars in thousands except share and per share data
	For the Quarter Ended												For the Nine Months Ended
	9/30/2013		6/30/2013		3/31/2013			12/31/2012			9/30/2012		9/30/2013		9/30/2012
INTEREST INCOME
Loans, including fees	$	54,577	$	55,260	$	55,721		$	59,005		$	60,269	$	165,558	$	183,676
Investment securities
Taxable	10,105		9,795		9,685			10,050			10,525		29,585		32,675
Tax-exempt	6,768		7,005		7,114			7,233			7,402		20,887		22,819
Deposits with banks	48		41		75			886			148		164		484
Total interest income	71,498		72,101		72,595			77,174			78,344		216,194		239,654
INTEREST EXPENSE
Deposits	5,468		5,831		5,914			6,177			6,472		17,213		20,645
Customer repurchase agreements	440		460		498			510			511		1,398		1,606
Repurchase agreements	614		623		719			802			843		1,956		2,673
Short-term borrowings	—		—		41			1			—		41		—
Federal Home Loan Bank advances	1,325		1,383		2,334			4,410			5,105		5,042		18,573
Subordinated debentures	539		550		1,465			1,839			1,859		2,554		5,586
Total interest expense	8,386		8,847		10,971			13,739			14,790		28,204		49,083
Net interest income	63,112		63,254		61,624			63,435			63,554		187,990		190,571
Provision for loan losses	1,250		1,500		1,500			2,000			2,000		4,250		6,000
Net interest income after provision for loan losses	61,862		61,754		60,124			61,435			61,554		183,740		184,571
NON-INTEREST INCOME
Wealth management	6,883		6,986		6,831			6,224			6,239		20,700		18,405
Service charges on deposit accounts	3,894		3,743		3,770			4,140			4,147		11,407		11,723
Insurance commissions and fees	3,071		3,326		3,267			3,113			3,238		9,664		9,745
Cash management and electronic banking fees	4,860		4,821		4,451			4,761			4,626		14,132		13,753
Mortgage banking	1,621		2,122		1,855			2,498			2,296		5,598		5,142
Bank owned life insurance	1,260		1,239		1,228			1,326			1,319		3,727		3,783
Earnings (losses) of unconsolidated investments	661		6		(14		)	138			1,315		653		1,349
Other operating income	2,551		2,703		2,053			2,555			3,484		7,307		6,903
Net gains (losses) from fair value changes of subordinated debentures	—		—		2,111			(253		)	101		2,111		936
Net gains (losses) on sales of investment securities	7		22		25			4			—		54		(123		)
Impairment losses on investment securities:
Impairment related losses on investment securities	—		—		—			—			—		—		(154		)
Non credit-related losses on securities not expected to be sold recognized in other comprehensive income before tax	—		—		—			—			—		—		—
Net impairment losses on investment securities	—		—		—			—			—		—		(154		)
Total non-interest income	24,808		24,968		25,577			24,506			26,765		75,353		71,462
NON-INTEREST EXPENSE
Salaries, wages and employee benefits	31,704		31,247		30,873			30,789			31,555		93,824		94,170
Premises and equipment	7,724		7,511		7,491			7,396			7,226		22,726		21,428
FDIC insurance	1,404		1,494		1,213			1,162			1,259		4,111		3,734
Other operating expenses	12,771		12,901		12,857			12,915			13,299		38,529		38,716
Loss on debt extinguishment	—		—		64,888			—			—		64,888		—
Total non-interest expense	53,603		53,153		117,322			52,262			53,339		224,078		158,048
Income (loss) before income taxes	33,067		33,569		(31,621		)	33,679			34,980		35,015		97,985
Income tax expense (benefit)	8,507		8,550		(14,217		)	8,535			8,964		2,840		24,219
NET INCOME (LOSS)	$	24,560	$	25,019	$	(17,404	)	$	25,144		$	26,016	$	32,175	$	73,766




PER SHARE
Basic earnings	$	0.17		$	0.17		$	(0.12	)	$	0.17		$	0.17		$	0.22		$	0.49
Diluted earnings	$	0.17		$	0.17		$	(0.12	)	$	0.17		$	0.17		$	0.22		$	0.49
Average shares - basic	145,669,300			145,580,155			145,394,967			148,304,167			150,157,622			145,549,146			151,325,579
Average shares - diluted	146,124,821			145,997,009			145,394,967			148,610,097			150,454,749			145,976,521			151,615,435

SUPPLEMENTAL DATA (annualized, average)
Return on assets	1.17		%	1.21		%	NM			1.19		%	1.23		%	0.52		%	1.17		%
Adjusted return on assets (3)	1.17		%	1.21		%	1.14		%	1.19		%	1.23		%	1.17		%	1.16		%
Return on shareholders' equity	8.78		%	8.82		%	NM			8.33		%	8.60		%	3.81		%	8.22		%
Return on tangible common equity (1)	11.55		%	11.53		%	NM			10.74		%	11.10		%	4.99		%	10.64		%
Adjusted return on tangible common equity	11.55		%	11.53		%	10.85		%	10.81		%	11.07		%	11.31		%	10.64		%
Efficiency ratio (4)	58.16		%	57.43		%	58.61		%	56.40		%	56.26		%	58.06		%	57.36		%


(4) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES

Efficiency ratio calculation
Non-interest expense	$	53,603		$	53,153		$	117,322		$	52,262		$	53,339		$	224,078		$	158,048
Less:
Loss on debt extinguishment	—			—			64,888			—			—			64,888			—
Operating expenses	$	53,603		$	53,153		$	52,434		$	52,262		$	53,339		$	159,190		$	158,048

Net interest income (taxable equivalent)	$	67,371		$	67,610		$	66,015		$	67,909		$	68,139		$	200,996		$	204,713

Non-interest income	24,808			24,968			25,577			24,506			26,765			75,353			71,462
Less:
Net gains (losses) from fair value changes of subordinated debentures	—			—			2,111			(253		)	101			2,111			936
Net gains (losses) on investment securities	7			22			25			4			—			54			(277		)
Adjusted revenue	$	92,172		$	92,556		$	89,456		$	92,664		$	94,803		$	274,184		$	275,516

Efficiency ratio	58.16		%	57.43		%	58.61		%	56.40		%	56.26		%	58.06		%	57.36		%

"NM" - Denotes a value displayed as a percentage is not meaningful



Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2013

Unaudited, dollars in thousands except share and per share data
	For the Quarter Ended															For the Nine Months Ended
	9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012			9/30/2013			9/30/2012
CHARGE-OFFS
Loan charge-offs	$	5,774		$	5,314		$	6,382		$	5,876		$	5,993		$	17,470		$	22,622
Recoveries on loans	(754		)	(1,183		)	(1,091		)	(1,289		)	(885		)	(3,028		)	(3,524		)
Net loan charge-offs	$	5,020		$	4,131		$	5,291		$	4,587		$	5,108		$	14,442		$	19,098
Net loan charge-offs to average loans (annualized)	0.38		%	0.32		%	0.41		%	0.35		%	0.39		%	0.37		%	0.49		%

NET CHARGE-OFF DETAIL
Commercial and industrial loans	$	3,059		$	2,065		$	1,869		$	2,029		$	1,116		$	6,993		$	8,237

Commercial real estate-permanent	909			396			282			301			481			1,587			3,009
Commercial real estate-construction	(29		)	93			318			266			1,755			382			2,280
Total commercial real estate loans	880			489			600			567			2,236			1,969			5,289

Residential mortgages	209			522			1,333			988			742			2,064			1,630
Home equity lines and loans	423			903			747			515			517			2,073			2,776
All other consumer loans	449			152			742			488			497			1,343			1,166
Total consumer loans	1,081			1,577			2,822			1,991			1,756			5,480			5,572

Net loans charged-off	$	5,020		$	4,131		$	5,291		$	4,587		$	5,108		$	14,442		$	19,098

	As of
	9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012
ASSET QUALITY AND OTHER DATA
Non-accrual commercial and industrial loans	$	23,101		$	23,023		$	23,323		$	24,653		$	31,109

Non-accrual commercial real estate-permanent	3,760			5,129			5,489			2,984			3,780
Non-accrual commercial real estate-construction	5,345			5,666			6,067			5,446			5,149
Total non-accrual commercial real estate loans	9,105			10,795			11,556			8,430			8,929

Non-accrual residential mortgages	6,485			6,276			5,608			7,066			6,242
Non-accrual home equity lines and loans	4,403			4,339			4,364			3,692			3,458
All other non-accrual consumer loans	1,705			1,916			1,595			1,705			1,823
Total non-accrual consumer loans	12,593			12,531			11,567			12,463			11,523

Total non-accrual loans	44,799			46,349			46,446			45,546			51,561

Restructured loans	10,006			9,109			7,314			8,362			6,726
Total non-performing loans	54,805			55,458			53,760			53,908			58,287

Other real estate owned and repossessed assets	1,569			1,899			2,729			3,029			7,174
Total non-performing assets	56,374			57,357			56,489			56,937			65,461

Loans 90+ days past due & still accruing	2,608			2,023			2,324			2,027			2,628
Total non-performing assets and loans 90+ days past due	$	58,982		$	59,380		$	58,813		$	58,964		$	68,089

Allowance for loan losses	$	100,763		$	104,533		$	107,164		$	110,955		$	113,542
Allowance for loan losses/non-performing loans	183.9		%	188.5		%	199.3		%	205.8		%	194.8		%
Allowance for loan losses/non-performing assets and loans 90+ days past due	170.8		%	176.0		%	182.2		%	188.2		%	166.8		%
Allowance for loan losses/total loans	1.91		%	1.99		%	2.04		%	2.12		%	2.16		%
Provision/charge-offs, net	24.9		%	36.3		%	28.4		%	43.6		%	39.2		%
Classified loans	$	218,615		$	234,085		$	242,560		$	261,293		$	296,213
Classified loans/total loans	4.14		%	4.45		%	4.62		%	4.99		%	5.63		%
Delinquent loans (c)	$	22,550		$	22,512		$	24,110		$	24,048		$	23,519
Delinquent loans/total loans	0.43		%	0.43		%	0.46		%	0.46		%	0.45		%




	As of
	9/30/2013			6/30/2013			3/31/2013			12/31/2012			9/30/2012
REGULATORY CAPITAL DATA
Tier 1 Capital	$	938,040		$	924,922		$	927,397		$	982,148		$	1,024,888
Tier 1 Leverage Ratio	11.67		%	11.56		%	11.63		%	12.16		%	12.78		%
Tier 1 Ratio (%)	15.63		%	15.51		%	15.41		%	16.54		%	17.45		%
Total Capital	$	1,013,371		$	999,839		$	1,002,999		$	1,056,835		$	1,098,814
Total Capital Ratio (%)	16.89		%	16.77		%	16.67		%	17.80		%	18.70		%
Total Risk-Weighted Assets	$	6,001,065		$	5,963,754		$	6,016,630		$	5,938,708		$	5,874,448

(c) Includes loans 30-89 days past due and loans 90+ days past due and still accruing



Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2013

Unaudited, dollars in thousands except share and per share data
	As of
Earning Assets / Liabilities	9/30/2013		6/30/2013		3/31/2013		12/31/2012		9/30/2012
Loan portfolio composition (regulatory):
Commercial / industrial	$	820,669	$	861,494	$	857,728	$	868,135	$	846,484
Commercial real estate (d)	1,913,180		1,887,908		1,863,381		1,838,681		1,803,532
Residential mortgage	1,170,750		1,185,986		1,191,075		1,234,425		1,262,897
Real estate construction and land development	234,945		201,316		180,298		161,341		189,293
Home equity	786,835		778,521		776,166		782,717		776,023
Consumer	205,446		201,580		201,349		208,856		207,333
Other	150,866		144,491		179,776		146,727		171,292
Total	5,282,691		5,261,296		5,249,773		5,240,882		5,256,854

Investment securities and other securities	2,364,681		2,313,358		2,333,548		2,334,739		2,310,459
Other earning assets	78,895		63,193		93,024		282,440		211,943
Total earning assets (net of loan loss reserve)	$	7,625,504	$	7,533,314	$	7,569,181	$	7,747,106	$	7,665,714
(d) Includes owner occupied

Loan portfolio composition (internal):
Commercial & industrial
Business purpose, real estate secured	$	897,757	$	901,205	$	891,229	$	886,160	$	879,326
Business purpose, not secured by real estate	935,857		976,281		1,000,141		977,875		979,042
Owner occupied commercial real estate
Permanent	585,807		609,615		604,278		599,729		572,298
Construction / development	41,088		31,058		32,603		30,523		31,181
Leasing	392		630		1,128		1,568		2,102
Total commercial & industrial	2,460,901		2,518,789		2,529,379		2,495,855		2,463,949

Commercial real estate
Non-owner occupied
Permanent	964,510		919,080		898,519		907,760		918,511
Construction / development	181,683		153,172		145,324		125,878		140,889
Total commercial real estate	1,146,193		1,072,252		1,043,843		1,033,638		1,059,400
Total commercial	3,607,094		3,591,041		3,573,222		3,529,493		3,523,349

Consumer
Residential mortgage (personal purpose)
Permanent	642,696		640,745		649,522		666,274		683,694
Construction	9,443		7,076		6,009		5,498		6,079
Total residential mortgages	652,139		647,821		655,531		671,772		689,773

Home equity and direct installment	208,333		220,401		237,088		254,014		273,359
Home equity lines of credit	550,417		530,104		507,347		500,372		478,628
Total home equity	758,750		750,505		744,435		754,386		751,987

Private banking credit lines	98,714		98,865		99,154		103,806		103,006
Indirect vehicle loans and other	163,242		160,775		162,497		167,095		166,036
All other consumer	261,956		259,640		261,651		270,901		269,042
Total consumer	1,672,845		1,657,966		1,661,617		1,697,059		1,710,802

Loans	5,279,939		5,249,007		5,234,839		5,226,552		5,234,151

Loans held-for-sale	2,752		12,289		14,934		14,330		22,703

Total loans	$	5,282,691	$	5,261,296	$	5,249,773	$	5,240,882	$	5,256,854




Deposit composition:
Savings	$	518,430	$	527,216	$	520,223	$	493,386	$	485,283
NOW accounts	1,958,116		1,545,659		1,471,185		1,472,985		1,498,344
Money market accounts	1,639,859		1,654,442		1,647,863		1,642,803		1,600,164
Time deposits less than $100k	925,118		963,238		991,380		1,017,925		1,036,112
Time deposits $100k or greater	367,387		389,781		633,626		417,065		425,546
Total interest bearing deposits	5,408,910		5,080,336		5,264,277		5,044,164		5,045,449

Non-interest bearing deposits	1,026,546		942,127		919,783		891,401		902,295

Total deposits	$	6,435,456	$	6,022,463	$	6,184,060	$	5,935,565	$	5,947,744



Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2013

Unaudited, dollars in thousands except share and per share data
	Quarterly, as of																				Nine Months, as of
	9/30/2013				6/30/2013				3/31/2013				12/31/2012				9/30/2012				9/30/2013				9/30/2012
	Avg Bal		Yield		Avg Bal		Yield		Avg Bal		Yield		Avg Bal		Yield		Avg Bal		Yield		Avg Bal		Yield		Avg Bal		Yield

Total loans*	$	5,229,366	4.19	%	$	5,244,930	4.27	%	$	5,223,015	4.37	%	$	5,206,227	4.55	%	$	5,191,136	4.66	%	$	5,232,460	4.28	%	$	5,189,061	4.78	%
Investment securities*	2,316,066		3.51	%	2,334,594		3.53	%	2,325,225		3.60	%	2,323,243		3.63	%	2,309,646		3.77	%	2,325,262		3.55	%	2,315,694		3.91	%
Interest earning deposits	102,581		0.19	%	94,788		0.17	%	119,834		0.25	%	276,078		1.28	%	255,121		0.23	%	105,671		0.21	%	289,272		0.22	%

Total earning assets	7,648,013		3.93	%	7,674,312		4.00	%	7,668,074		4.07	%	7,805,548		4.16	%	7,755,903		4.25	%	7,663,393		4.00	%	7,794,027		4.35	%
Total assets	8,310,626				8,326,499				8,298,815				8,440,642				8,386,342				8,312,023				8,418,843

Savings	524,178		0.11	%	525,494		0.11	%	505,513		0.11	%	488,195		0.11	%	490,020		0.11	%	518,463		0.11	%	485,477		0.12	%
NOW accounts	1,732,394		0.14	%	1,543,649		0.14	%	1,439,387		0.14	%	1,463,488		0.14	%	1,402,593		0.14	%	1,572,882		0.14	%	1,328,690		0.15	%
Money market accounts	1,655,133		0.27	%	1,646,691		0.29	%	1,645,838		0.30	%	1,630,449		0.30	%	1,623,102		0.32	%	1,650,516		0.29	%	1,655,431		0.36	%
Time deposits	1,312,810		1.09	%	1,464,421		1.08	%	1,507,667		1.10	%	1,454,415		1.17	%	1,468,539		1.23	%	1,427,585		1.09	%	1,503,237		1.27	%

Total interest bearing deposits	5,224,515		0.42	%	5,180,255		0.45	%	5,098,405		0.47	%	5,036,547		0.49	%	4,984,254		0.52	%	5,169,446		0.45	%	4,972,835		0.55	%

Non-interest bearing deposits	963,625				913,311				876,700				886,858				897,017				916,936				880,556
Total deposits	6,188,140		0.35	%	6,093,566		0.38	%	5,975,105		0.40	%	5,923,405		0.41	%	5,881,271		0.44	%	6,086,382		0.38	%	5,853,391		0.47	%

Customer repurchase agreements	518,569		0.34	%	523,585		0.35	%	547,706		0.37	%	551,334		0.37	%	532,065		0.38	%	529,847		0.35	%	527,278		0.41	%
Repurchase agreements	50,000		4.87	%	63,736		3.92	%	135,454		2.15	%	75,000		4.25	%	78,370		4.28	%	82,750		3.16	%	82,774		4.31	%
Short-term borrowings	—		—	%	—		—	%	39,200		0.42	%	1,087		0.37	%	272		0.00	%	12,557		0.44	%	91		0.00	%
Federal Home Loan Bank advances (b)	277,101		1.90	%	348,814		1.59	%	262,067		3.61	%	463,397		3.79	%	496,438		4.09	%	296,417		2.27	%	562,474		4.41	%
Subordinated debentures	77,321		2.77	%	77,321		2.85	%	125,207		4.75	%	144,377		5.07	%	144,472		5.12	%	93,107		3.67	%	144,476		5.16	%
Total deposits and borrowings	7,111,131		0.47	%	7,107,022		0.50	%	7,084,739		0.63	%	7,158,600		0.76	%	7,132,888		0.82	%	7,101,060		0.53	%	7,170,484		0.91	%
Total interest bearing liabilities	$	6,147,506	0.54	%	$	6,193,711	0.57	%	$	6,208,039	0.72	%	$	6,271,742	0.87	%	$	6,235,871	0.94	%	$	6,184,124	0.61	%	$	6,289,928	1.04	%

Net interest margin (FTE)			3.49	%			3.53	%			3.49	%			3.46	%			3.50	%			3.51	%			3.51	%

Wealth assets under management	$	2,388,991			$	2,285,199			$	2,328,042			$	2,256,319			$	2,319,220

*Fully taxable equivalent ("FTE") basis, using a 35% effective tax rate



Financial Update for National Penn Bancshares, Inc. (NPBC) for 9/30/2013

Unaudited

STATES OF OPERATION AND BANKING OFFICES BY STATE (LATEST AVAILABLE DATA)

	Quarterly, as of
	9/30/2013	6/30/2013	3/31/2013	12/31/2012	9/30/2012

PA
Total number of retail branch offices	119	119	118	119	119
Total number of insured subsidiaries
(Bank & Thrift subsidiaries)	1	1	1	1	1
Total number of ATMs	124	124	124	124	124

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	120	120	119	120	120
Total number of insured subsidiaries
(Bank & Thrift subsidiaries)	1	1	1	1	1
Total number of ATMs	125	125	125	125	125

EOP employees (full-time equivalent)	1,632	1,666	1,657	1,648	1,661

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NATIONAL PENN BANCSHARES INC Reports