National Penn Bancshares, Inc. Reports Fourth Quarter and Full Year 2012 Results

National Penn Bancshares, Inc. Reports Fourth Quarter and Full Year 2012 Results

  • Full-year net income increases 17% to $0.66 per common share from $0.56 for the prior year
  • Quarterly net income of $0.17 per share resulting in return on assets of 1.19%
  • Strong asset quality metrics further enhanced
  • 7.5 million common share repurchase program completed

BOYERTOWN, Pa.--(BUSINESS WIRE)-- National Penn Bancshares, Inc. (NAS: NPBC) reported net income available to common shareholders of $98.9 million, or $0.66 per diluted common share, for the year ended December 31, 2012, a 17% increase compared to net income available to common shareholders of $84.4 million, or $0.56 per diluted common share, for 2011. For the fourth quarter of 2012, diluted earnings per common share were $0.17 compared to $0.14 per diluted common share for the fourth quarter of 2011.

"With a return on average assets of 1.19%, the fourth quarter was another strong quarter, consistent with our solid performance for the year," said Scott Fainor, president and CEO of National Penn. "Our ability to maintain our net interest margin in an unprecedented low interest rate environment, coupled with the continuation of exceptional asset quality metrics and our focused efforts on expense control, enabled us to deliver these positive results."


Asset quality remained strong as the level of classified assets continued to improve, declining $34.9 million or 12% in the fourth quarter 2012 and $109 million or 29% during the year. Non-performing loans declined during 2012 by 20%, and the ratio of net loan charge-offs to average loans improved to 0.46% in 2012 from 0.74% in 2011. These trends resulted in a provision for loan losses of $8.0 million for 2012, compared to $15.0 million for 2011. At December 31, 2012, the allowance for loan and lease losses was 206% of non-performing loans and 2.12% of total loans and leases.

Strategies undertaken to address the low interest rate environment resulted in a stable net interest margin throughout 2012. Net interest margin for the full year 2012 was 3.50%, compared to 3.52% in 2011, and was 3.46% in the fourth quarter of 2012, as compared to 3.50% in the previous quarter. Net interest income for 2012 and 2011 totaled $254 million and $260 million, respectively. During 2012, commercial loans grew by approximately 3%. A reduction in asset yields was mitigated by initiatives throughout the year to improve the mix and cost of interest-bearing liabilities. These initiatives contributed to an improvement in overall funding costs of 32 basis points during the year.

Despite the economic and regulatory environment, total fee income from banking, wealth and insurance operations increased slightly in 2012. National Penn's operating expenses1 were well-controlled throughout 2012, declining 5% from 2011 levels. The efficiency ratio1 improved to 57.12% for 2012 from 59.03% for the prior year.

During the fourth quarter, National Penn repurchased five million common shares, completing the previously announced 7.5 million share repurchase program. Additionally, the Board of Directors declared a quarterly cash dividend of ten cents per common share for the first quarter of 2013. In order to return capital to shareholders in a tax effective manner, the cash dividend was paid on December 28, 2012 to shareholders of record as of December 13, 2012.

Scott Fainor stated, "We believe our Company is well positioned for the future based upon the strength of our balance sheet. Classified loans declined 45% over the last two years. We also successfully completed the repurchase of approximately 5% of our outstanding shares, while capital levels remained strong with a tier 1 common ratio of 14.19%. The majority of our capital management initiatives, including the stock repurchase, a quarterly dividend increase in each quarter of 2012, and the advance payment of our first quarter 2013 dividend were funded by the strong earnings of 2012."

About National Penn Bancshares, Inc.:

National Penn Bancshares, Inc., with approximately $8.5 billion in assets, is a bank holding company based in Pennsylvania. Headquartered in Boyertown, National Penn operates 120 branch offices comprising 119 branches in Pennsylvania and one branch in Maryland through National Penn Bank and its 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; 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.

1

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 returns 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: 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), deterioration in the credit quality of loans, the effect of credit risk exposure, 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, National Penn's ability to raise capital and maintain capital levels, increases in operating costs (including those mandated by National Penn's regulators), competition for personnel and from other financial institutions, variations in interest rates, interruptions or breaches of National Penn's security systems, the development and maintenance of National Penn's information technology, the ability of National Penn and its subsidiaries to pay dividends, 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, 2011, 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 12/31/2012
 
Unaudited, dollars in thousands except share and per share data
 
As of
  12/31/2012           9/30/2012           12/31/2011  
SUMMARY BALANCE SHEET                    
Total assets $ 8,529,522 $ 8,435,526 $ 8,486,281
Investment securities and other securities 2,334,739 2,310,459 2,314,111
Total loans and leases 5,240,882 5,256,854 5,188,101
Deposits 5,935,565 5,947,744 5,874,819
Borrowings 1,344,324 1,216,707 1,370,399
Shareholders' equity 1,161,292 1,214,330 1,180,687
Tangible book value per common share (2) $ 6.15 $ 6.29 $ 5.97
Tangible common equity / tangible assets (2) 10.80 % 11.56 % 11.04 %
 
Three Months Ended Twelve Months Ended
  12/31/2012           9/30/2012           12/31/2011     12/31/2012           12/31/2011  
EARNINGS                              
Total interest income $ 77,174 $ 78,344 $ 83,681 $ 316,828 $ 346,834
Total interest expense   13,739           14,790           19,160     62,822           86,931  
Net interest income 63,435 63,554 64,521 254,006 259,903
Provision for loan and lease losses   2,000           2,000           2,000     8,000           15,000  
Net interest income after provision for loan and lease losses 61,435 61,554 62,521 246,006 244,903
Loss on sale of building - - - - (1,000 )
Loss on debt extinguishment - - (1,635 ) - (2,633 )
Net (losses) gains from fair value changes on subordinated debentures (253 ) 101 (1,543 ) 683 (2,530 )
Net gains (losses) on investment securities 4 - 1,697 (273 ) 2,719
Corporate reorganization expense - - 2,200 - 2,200
Other non-interest income 24,755 26,664 22,978 95,558 94,654
Other non-interest expense   52,262           53,339           55,186     210,310           221,197  
Income before income taxes 33,679 34,980 26,632 131,664 112,716
Income tax expense   8,535           8,964           5,889     32,754           25,172  
Net income   25,144           26,016           20,743     98,910           87,544  
Preferred dividends and accretion of preferred discount - - - - (1,691 )
Accelerated accretion from redemption of preferred stock   -           -           -     -           (1,452 )
Net income available to common shareholders $ 25,144         $ 26,016         $ 20,743   $ 98,910         $ 84,401  
 
PERFORMANCE RATIOS                              
Net interest margin 3.46 % 3.50 % 3.49 % 3.50 % 3.52 %
Return on average assets 1.19 % 1.23 % 0.97 % 1.17 % 1.02 %
Adjusted return on average assets (3) 1.19 % 1.23 % 1.08 % 1.17 % 1.03 %
Return on average total shareholders' equity 8.33 % 8.60 % 7.02 % 8.25 % 7.58 %
Return on average tangible common equity (1) 10.74 % 11.10 % 9.17 % 10.66 % 9.95 %
Efficiency ratio (4) 56.40 % 56.26 % 59.73 % 57.12 % 59.03 %
 
PER SHARE                              
Basic earnings available to common shareholders $ 0.17 $ 0.17 $ 0.14 $ 0.66 $ 0.56
Diluted earnings available to common shareholders 0.17 0.17 0.14 0.66 0.56
Dividends per common share 0.20 (a) 0.09 0.04 0.41 (a) 0.09
Average shares - basic 148,304,167 150,157,622 151,773,327 150,566,098 151,386,614
Average shares - diluted 148,610,097 150,454,749

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