• Quarterly net income of $0.17 per common share
• Adjusted net income¹ of $0.16 per common share resulting in return on assets¹ of 1.16%
• Sustained improvement in asset quality metrics and accretion of strong capital levels
• Second quarter 2012 common stock cash dividend increased from $0.05 to $0.07 per share
• Share repurchase authorized for approximately 5% of outstanding common shares

Company Website: http://www.nationalpennbancshares.com
BOYERTOWN, Pa. -- (Business Wire)

National Penn Bancshares, Inc. (Nasdaq: NPBC) reported net income available to common shareholders of $25.3 million, or $0.17 per diluted common share, for the first quarter of 2012 compared to $20.7 million, or $0.14 per diluted common share, for the fourth quarter of 2011. Net income available to common shareholders increased 62% from $15.6 million, or $0.10 per diluted common share, for the first quarter of 2011. On an adjusted basis¹, net income for the quarter totaled $24.2 million, or $0.16 per diluted common share, consistent with the fourth quarter of 2011 and a 45% increase over the prior year period. First quarter 2012 adjusted net income¹ excluded an after-tax unrealized fair value gain on National Penn’s trust preferred securities (Nasdaq: NPBCO) of $1.1 million.

“National Penn reported another quarter of consistent earnings resulting in a strong return on assets of 1.16%¹,” said Scott V. Fainor, president and CEO of National Penn. “The strength of the balance sheet, as reflected by our asset quality metrics and capital levels, allowed for our fourth consecutive quarterly dividend increase and the previously announced share repurchase authorization. We believe these results and the continued execution of our strategic initiatives position us well for future opportunities.”

The net interest margin for the first quarter of 2012 increased 6 basis points to 3.55% from 3.49% in the prior quarter, while net interest income remained stable and totaled $63.8 million. Total loans and leases increased $13.6 million from December 31, 2011 with growth attributable to a focus on commercial lending which increased by $40.5 million, or 4.7% on an annualized basis. Total consumer loans, including residential mortgage loans, declined $26.9 million during the first quarter of 2012, primarily due to prepayments and the sale of a majority of new mortgage originations in the secondary market. The first quarter net interest margin benefitted from a reduction of higher-cost deposits, and as a result the cost of deposits decreased five basis points during the quarter to 0.51%. Deposit mix also continued to improve as transaction and savings accounts increased $297 million from March 31, 2011 and comprised 74% of total deposits compared to 69%. Additionally, the full-quarter effect of the previously announced actions taken late in the fourth quarter of 2011 to terminate certain higher-costing structured repurchase agreements contributed to the improvement in the net interest margin.

Asset quality continued to improve, as evidenced by classified loans declining $23.4 million, or 6.3%, as compared to December 31, 2011 and 21% from the prior year. The reduction in classified loans and stable net charge-offs and non-performing loans resulted in a provision for loan and lease losses of $2.0 million for the first quarter of 2012, consistent with the $2.0 million provision for the fourth quarter of 2011, and a decrease of $8.0 million from the prior year first quarter. The allowance to non-performing loans remained strong at 183% at March 31, 2012.

Capital levels were further strengthened during the first quarter of 2012, resulting in a tangible common equity to tangible assets ratio of 11.25%¹ and a total risk-based capital ratio of 18.72%. Based upon strong and improving capital levels, National Penn’s Board of Directors increased the cash dividend to $0.07 per share for the second quarter from $0.05 per share, payable on May 17, 2012 to shareholders of record on May 5, 2012. Additionally, a common stock repurchase program was announced on April 2, 2012, allowing for up to 7.5 million common shares to be repurchased, as market conditions permit, throughout the year.

Scott V. Fainor stated, “Maintaining our net interest margin and growing loans in a difficult interest rate and economic environment are terrific accomplishments for the National Penn team. Our entire team remains focused on enhancing long-term shareholder value.”

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 121 branch offices comprising 120 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; 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.
• 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 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: 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.