FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from:______________________ to _____________________
Commission file number: 0-10957
NATIONAL PENN BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2215075
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Philadelphia and Reading Avenues, Boyertown, PA 19512
(Address of principal executive offices) (Zip Code)
(610) 367-6001
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at August 5, 1995
Common Stock ($2.50 par value) (No.) 7,187,314 Shares
Page 1 of 16 pages
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TABLE OF CONTENTS
Part I - Financial Information. Page
Item 1. Financial Statements ..............................3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations .....8
Part II - Other Information.
Item 1. Legal Proceedings ................................14
Item 2. Changes in Securities ............................14
Item 3. Defaults Upon Senior Securities ..................14
Item 4. Submission of Matters to a Vote of
Security Holders .................................14
Item 5. Other Information ................................14
Item 6. Exhibits and Reports on Form 8-K .................14
Signatures ..................................................................16
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
NATIONAL PENN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET June 30 Dec. 31
(Dollars in thousands, except per share data) 1995 1994
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Cash and due from banks $ 35,609 $ 33,195
Interest bearing deposits in banks 10,591 964
Federal funds sold 5,000 --
----------- -----------
Total cash and cash equivalents 51,200 34,159
Securities held to maturity
(approximate market of $93,397 and
$97,459 at 1995 and 1994, respectively) 91,149 99,229
Securities available for sale at market value 157,964 138,873
----------- -----------
Total Investment Securities 249,113 238,102
Loans, net of unearned discount 889,934 830,612
Less allowance for possible loan losses (19,335) (19,310)
----------- -----------
Net Loans 870,599 811,302
Other assets 49,960 53,611
----------- -----------
Total Assets $ 1,220,872 $ 1,137,174
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing deposits $ 125,239 $ 121,273
Interest bearing deposits
(Includes certificates of deposit in excess of $100:
1995 - $90,702; 1994 - $65,630) 783,501 743,367
----------- -----------
Total Deposits 908,740 864,640
Securities sold under repurchase agreements
and federal funds purchased 124,848 50,274
Short-term borrowings 5,581 47,967
Long-term obligations 72,778 77,777
Accrued interest and other liabilities 13,401 11,645
----------- -----------
Total Liabilities 1,125,348 1,052,303
Commitments and contingent liabilities -- --
Shareholders' equity
Preferred stock, no stated par value;
authorized 1,000,000 shares, none issued -- --
Common stock, par value $2.50 per share;
20,000,000 shares authorized; 7,268,450
shares issued and 7,187,314 shares
outstanding at June 30, 1995; 7,234,126
shares issued and 7,135,347 shares
outstanding at December 31, 1994 18,084 18,083
Additional paid-in-capital 56,979 57,263
Retained earnings 20,989 16,598
Valuation adjustment for securities available
for sale, net of tax 1,796 (4,011)
Treasury stock (81,136 shares at cost at June 30, 1995
and 98,779 shares at cost at December 31, 1994) (2,324) (3,062)
----------- -----------
Total Shareholders' Equity 95,524 84,871
----------- -----------
Total Liabilities and Shareholders' Equity $ 1,220,872 $ 1,137,174
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
Note: The Balance Sheet at Dec. 31, 1994 has been derived from the financial
statements at that date.
3
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NATIONAL PENN BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
(Dollars in thousands, except per share data) June 30 June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans including fees $ 20,445 $ 17,233 $ 39,703 $ 33,608
Deposits in banks 15 24 30 56
Federal funds sold 3 9 5 14
Investment securities 3,991 3,427 7,966 6,232
-------- -------- -------- --------
Total interest income 24,454 20,693 47,704 39,910
-------- -------- -------- --------
INTEREST EXPENSE
Deposits 8,470 5,398 15,873 10,193
Federal funds purchased, borrowed funds and
securities sold under repurchase agreements 2,435 1,278 4,822 2,511
-------- -------- -------- --------
Total interest expense 10,905 6,676 20,695 12,704
-------- -------- -------- --------
Net interest income 13,549 14,017 27,009 27,206
Provision for loan losses 750 950 1,500 1,700
-------- -------- -------- --------
Net interest income after provision
for loan losses 12,799 13,067 25,509 25,506
-------- -------- -------- --------
OTHER INCOME
Trust Services 424 351 848 676
Service charges on deposit accounts 657 640 1,297 1,286
Net gains (losses) on sale of securities and mortgages 47 (91) 303 (312)
Other 497 590 1,245 986
-------- -------- -------- --------
Total other income 1,625 1,490 3,693 2,636
-------- -------- -------- --------
OTHER EXPENSES
Salaries, wages and employee benefits 4,869 4,697 9,850 8,950
Net premises and equipment 1,330 1,524 2,719 2,721
Other operating 3,091 3,429 5,928 5,959
-------- -------- -------- --------
Total other expenses 9,290 9,650 18,497 17,630
-------- -------- -------- --------
Income before income taxes 5,134 4,907 10,705 10,512
Applicable income tax expense 1,576 1,453 3,230 3,255
-------- -------- -------- --------
Net income 3,558 3,454 $ 7,475 $ 7,257
======== ======== ======== ========
PER SHARE OF COMMON STOCK
Net income $ 0.49 $ 0.48 $ 1.04 $ 1.01
Dividends paid in cash 0.21 0.18 0.42 0.35
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
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NATIONAL PENN BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended June 30,
(Dollars in thousands)
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 7,475 $ 7,257
Adjustments to reconcile net income to net
cash provided by (used in) operating activities
Provision for loan losses 1,500 1,700
Depreciation and amortization 1,304 1,091
Net gains (losses) on sale of securities and mortgages 303 (312)
Mortgage loans originated for resale (4,935) (13,422)
Sale of mortgage loans originated for resale 4,935 13,422
Other 5,475 (5,674)
--------- ---------
Net cash provided by (used in) operating activities 16,057 4,062
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of investment securities - available for sale 6,578 --
Proceeds from maturities of investment securities -
held to maturity 3,032 18,689
Proceeds from maturities of investment securities -
available for sale 91
Purchase of investment securities - available for sale (14,905) (99,680)
Proceeds from sales of loans -- 8,737
Net increase in loans (60,797) (50,837)
Purchases of premises & equipment (1,957) (4,228)
--------- ---------
Net cash provided by (used in) investing activities (67,958) (127,319)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in:
Deposits 44,100 123,787
Repurchase agreements, fed funds & short-term borrowings 32,188 15,963
Long-term borrowings & subordinated capital note (4,999) (3,500)
(Increase) decrease in treasury stock 738 (653)
Issuance of common stock under dividend reinvestment plan -- 777
Cash dividends (3,085) (2,674)
--------- ---------
Net cash provided by (used in) financing activities 68,942 133,700
Net increase (decrease) in cash and cash equivalents 17,041 10,443
Cash and cash equivalents at January 1 34,159 29,767
--------- ---------
Cash and cash equivalents at June 30 $ 51,200 $ 40,210
========= =========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
5
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. The financial information included herein is unaudited;
however, such information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management, necessary to a
fair statement of the results for the interim periods. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1994.
2. The results of operations for the six-month period ended June 30, 1995 are
not necessarily indicative of the results to be expected for the full year.
3. Per share data are based on the weighted average number of shares outstanding
of 7,165,367 and 7,165,367 for 1995 and 1994, respectively, and are computed
after giving retroactive effect to a 5% stock dividend paid on October 31, 1994.
4. On July 26, 1995, the Company's Board of Directors declared a 5% stock
dividend payable on October 31, 1995 to shareholders of record on September 29,
1995.
5. On January 1, 1995 the Company adopted Statement of Financial Accounting
Standards (SFAS) NO. 114, "Accounting for Creditors for Impairment of a Loan,"
as amended by SFAS No. 118, "Accounting for Creditors for Impairment of a Loan -
Income Recognition and Disclosures." SFAS No. 114 requires that a creditor
measure impairment based on the present value of expected future cash flows
discounted at the loan's effective interest rate, except that as a practical
expedient, a creditor may measure impairment based on a loan's observable market
price, or the fair value of collateral if the loan is collateral dependent.
Regardless of the measurement method, a creditor must measure impairment based
on the fair value of the collateral when the creditor determines that
foreclosure is probable. SFAS No. 118 allows creditors to use existing methods
for recognizing interest income on impaired loans.
The Company has identified a loan as impaired when it is probable that
interest and principal will not be collected according to the contractual terms
of the loan agreement. The accrual of interest is discontinued in such loans and
no income is recognized until all recorded amounts of interest and principal are
recovered in full.
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<PAGE>
Loan impairment is measured by estimating the expected future cash
flows and discounting them at the respective effective interest rate or by
valuing the underlying collateral. The recorded investment in these loans and
the valuation for credit losses related to loan impairment are as follows:
June 30,
1995
Principal amount of impaired loans $7,249,000
Accrued interest --
Deferred loan costs --
----------
7,249,000
Less valuation allowance 1,193,000
----------
$6,056,000
==========
On January 1, 1995 a valuation for credit losses related to impaired
loans was established. The activity in this allowance for the six months ending
June 30, 1995 is as follows:
Valuation allowance at beginning of period $ 1,913,000
Provision for loan impairment 586,000
Direct charge-offs (855,000)
Recoveries 269,000
-----------
Valuation allowance at end of period $ 1,193,000
Total cash collected on impaired loans during the six months ended June
30, 1995 was $742,000, of which $269,000 was credited to the principal balance
outstanding on such loans and $473,000 was recognized as interest income.
Interest that would have been accrued on impaired loans during the first six
months of 1995 was $326,000. Interest income recognized during the first six
months of 1995 was $473,000.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis is intended to assist in
understanding and evaluating the major changes in the financial condition and
earnings performance of the Company with a primary focus on an analysis of
operating results.
FINANCIAL CONDITION
Total assets increased to $1.221 billion, an increase of $83.7 million
or 7.4% over the $1.137 billion at December 31, 1994. This increase is reflected
primarily in the loan category, the result of the investment of deposits, the
Company's primary source of funds.
Total cash and cash equivalents increased $17.0 million or 49.9% at
June 30, 1995 when compared to December 31, 1994. This increase was due to an
increase in due from banks and federal funds sold.
Loans increased to $889.9 million at June 30, 1995. The increase of
$59.3 million or 7.1% compared to December 31, 1994 was primarily the result of
the investment of deposits. Loans originated for immediate resale during the
first six months of the year amounted to $4.9 million. The Company's credit
quality is reflected by the annualized ratio of net charge-offs to average total
loans of .35% for the second quarter and the level of non-performing loans to
total loans of 1.63% at June 30, 1995. The Company has no significant exposure
to energy and agricultural- related loans. Non-performing loans at December 31,
1994 were 1.12% of total loans.
Investments, the Company's secondary use of funds, increased $11.0
million or 4.6% to $249.1 million at June 30, 1995 when compared to December 31,
1994. The increase was primarily in Mortgage-Backed Securities.
As the primary source of funds, aggregate deposits of $908.7 million at
June 30, 1995 increased $44.1 million or 5.1% compared to December 31, 1994.
There was a shift in deposit mix during the first six months of 1995 as interest
bearing deposits increased $40.1 million while non-interest bearing deposits
increased $4.0 million. Certificates of deposit in excess of $100,000 increased
$25.1 million. In addition to deposits, earning assets are funded to some extent
through purchased funds and borrowings. These include securities sold under
repurchase agreements, federal funds purchased, short-term borrowings and
long-term debt obligations. In the aggregate, these funds totaled $203.2 million
at June 30, 1995, a $27.2 million or 15.4% increase compared to $176.0 million
December 31, 1994. The increase is reflected in short-term
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obligations, primarily securities sold under repurchase agreement and federal
funds purchased.
Shareholders' equity increased $10.6 million or 12.6% at June 30, 1995
to $95.5 million compared to the $84.9 million at December 31, 1994. This
increase was due to the retention of earnings and the change in valuation
adjustment for securities available for sale. Cash dividends paid during the
first six months of 1995 increased $467,000 or 18.4% compared to the cash
dividends paid during the first six months of 1994. Earnings retained during the
first six months of 1995 were 59.8% compared to 65.1% during the first six
months of 1994.
RESULTS OF OPERATIONS
Net income for the quarter ended June 30, 1995 was $3.6 million, 3.0%
more than the $3.5 million reported for the same period in 1994. For the first
six months, net income reached $7.5 million, or 3.0% more than the $7.3 million
reported for the first six months of 1994. The Company's performance has been
and will continue to be in part influenced by the strength of the economy and
conditions in the real estate market.
Net interest income is the difference between interest income on assets
and interest expense on liabilities. Net interest income decreased $.5 million
or 3.3% to $13.5 million during the second quarter of 1995 from $14.0 million in
the second quarter 1994. For the comparative six month period, net interest
income remained constant. The increase in interest income is a result of growth
in loan outstandings and higher rates on loans that was partially offset by
growth in deposits and higher rates on deposits and borrowings. Interest rate
risk is a major concern in forecasting earnings potential. The Company's prime
rate from January 1, 1995 to January 31, 1995 was 8.50%. On February 1, 1995,
the prime rate changed to 9.0%. The Company's prime rate was 6.0% from January 1
through March 23, 1994. From March 24 to April 18, 1994, the prime rate was
6.25%. From April 19 to May 17, 1994, the prime rate was 6.75%. On May 18, 1994,
the prime rate changed to 7.25%. Interest expense during the first six months of
1995 increased $8.0 million or 62.9% compared to the prior year's six months.
Despite the current rate environment, the cost of attracting and holding
deposited funds is an ever-increasing expense in the banking industry. These
increases are the real costs of deposit accumulation and retention, including
FDIC insurance costs and branch overhead expenses. Such costs are necessary for
continued growth and to maintain and increase market share of available
deposits.
The provision for loan and lease losses is determined by periodic
reviews of loan quality, current economic conditions, loss experience and loan
growth. Based on these factors, the provision for loan and lease losses
decreased $200,000 for both the second
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quarter and the first six months of 1995 compared to the same periods in 1994.
The allowance for loan and lease losses of $19.3 million at June 30, 1995 and
December 31, 1994 as a percentage of total loans was 2.2% and 2.3%,
respectively. The Company's net charge-offs of $1,475,000 and $1,350,000 during
the first six months of 1995 and 1994, respectively, continues to be comparable
to that of the Company's peers, as reported in the Bank Holding Company
Performance Report.
"Total other income" increased $135,000 or 9.1% during the second
quarter of 1995, as a result of gains on the sale of securities and mortgages of
$138,000, trust income of $73,000 and service charges on deposit accounts of
$17,000. Year to date, other income increased $1,057,000 or 40.1% when compared
to the first six months of 1994 as a result of gains on the sale of securities
and mortgages of $615,000, other income of $259,000, trust income of $172.000
and service charges on deposit accounts 0f $11,000. "Total other expenses"
decreased $360,000 or 3.7% during the quarter ended June 30, 1995 and increased
$867,000 or 4.9% for the six months period. Of this year-to-date increase,
salaries and benefits increased $900,000 or 10.1% due to higher staffing levels
and the opening of two supermarket branches in 1995.
Income before income taxes increased by $227,000 or 4.6% compared to
the second quarter of 1994. In comparing the first six months of 1995 to 1994,
income before income taxes increased $193,000 or 1.8%. Income taxes increased
$123,000 for the quarter and decreased $25,000 the six month period.
LIQUIDITY AND INTEREST RATE SENSITIVITY
The primary functions of asset/liability management are to assure
adequate liquidity and maintain an appropriate balance between interest-earning
assets and interest-bearing liabilities. Liquidity management involves the
ability to meet the cash flow requirements of customers who may be either
depositors wanting to withdraw funds or borrowers needing assurance that
sufficient funds will be available to meet their credit needs. Funding affecting
short-term liquidity, including deposits, repurchase agreements, fed funds
purchased, and short-term borrowings, increased $76.3 million from year end
1994. Long-term borrowings decreased $5.0 million during the first six months of
1995.
The goal of interest rate sensitivity management is to avoid
fluctuating net interest margins, and to enhance consistent growth of net
interest income through periods of changing interest rates. Such sensitivity is
measured as the difference in the volume of assets and liabilities in the
existing portfolio that are subject to repricing in a future time period.
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The following table shows separately the interest rate sensitivity of
each category of interest-earning assets and interest-bearing liabilities at
June 30, 1995:
Repricing Periods (1)
One Year
Within Through Over
One Year Five Years Five Years
(In Thousands)
Assets
Interest-bearing deposits
at banks $ 10,591 $ -- $ --
Investment securities 59,197 65,222 124,694
Loans and leases 369,196 354,331 166,407
Other assets 9,319 -- 81,250
--------- --------- ---------
448,303 419,553 372,351
--------- --------- ---------
Liabilities and equity
Noninterest-bearing deposits 125,239 -- --
Interest-bearing deposits 303,125 234,401 245,975
Borrowed funds 177,097 13,610 12,500
Other liabilities -- -- 32,736
Hedging instruments 100,000 (90,000) (10,000)
Shareholders' equity -- -- 95,524
--------- --------- ---------
705,461 158,011 376,735
--------- --------- ---------
Interest sensitivity gap (257,158) 261,542 (4,384)
--------- --------- ---------
Cumulative interest rate
sensitivity gap ($257,158) $ 4,384 $ --
========= ========= =========
(1) Savings and NOW deposits are scheduled for repricing based on
historical deposit decay rate analyses, as well as historical moving
averages of run-off for the Company's deposits in these categories.
Interest rate sensitivity is a function of the repricing
characteristics of the Company's assets and liabilities. These characteristics
include the volume of assets and liabilities repricing, the timing of the
repricing, and the relative levels of repricing. Attempting to minimize the
interest rate sensitivity gaps is a continual challenge in a changing rate
environment. Based on the Company's gap position as reflected in the above
table, current accepted theory would indicate that net interest income would
increase in a falling rate environment and would decrease in a rising rate
environment. An interest rate gap table does not, however, present a complete
picture of the impact of interest rate changes on net interest income. First,
changes in the general level of interest rates do not affect all categories of
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assets and liabilities equally or simultaneously. Second, assets and liabilities
which can contractually reprice within the same period may not, in fact, reprice
at the same time or to the same extent. Third, the table represents a one-day
position; variations occur daily as the Company adjusts its interest sensitivity
throughout the year. Fourth, assumptions must be made to construct such a table.
For example, non-interest bearing deposits are assigned a repricing interval
within one year, although history indicates a significant amount of these
deposits will not move into interest bearing categories regardless of the
general level of interest rates. Finally, the repricing distribution of interest
sensitive assets may not be indicative of the liquidity of those assets.
The Company anticipates volatile interest rate levels for the remainder
of 1995, with no clear indication of sustainable rising or falling rates. Given
this assumption, the Company's asset/liability strategy for 1995 is to move
toward a smaller negative gap (interest-bearing liabilities subject to repricing
equal interest-earning assets subject to repricing) for periods up to a year.
The impact of a volatile interest rate environment on net interest income is not
expected to be significant to the Company's results of operations. Effective
monitoring of these interest sensitivity gaps is the priority of the Company's
asset/liability management committee.
CAPITAL ADEQUACY
The following table sets forth certain capital performance ratios.
June 30, Dec. 31,
1995 1994
CAPITAL LEVELS
Tier 1 leverage ratio 7.39% 7.35%
Tier 1 risk-based ratio 10.74 10.85
Total risk-based ratio 12.01 12.11
CAPITAL PERFORMANCE
Return on average assets(annualized) 1.30 1.41
Return on average equity(annualized) 16.70 17.30
Earnings retained 59.80 63.50
Internal capital growth(annualized) 10.54 11.32
The Company's capital ratios above compare favorably to the minimum
required amounts of Tier 1 and total capital to "risk- weighted" assets and the
minimum Tier 1 leverage ratio, as defined by banking regulators. At June 30,
1995, the Company was required to have minimum Tier 1 and total capital ratios
of 4.0% and 8.0%, respectively, and a minimum Tier 1 leverage ratio of 3.0%. In
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order for the Company to be considered "well capitalized", as defined by banking
regulators, the Company must have Tier 1 and total capital ratios of 6.0% and
10.0%, respectively, and a minimum Tier 1 leverage ratio of 5.0%. The Company
currently meets the criteria for a well capitalized institution, and management
believes that, under current regulations, the Company will continue to meet its
minimum capital requirements in the foreseeable future. At present, the Company
has no commitments for significant capital expenditures.
The Company is not under any agreement with regulatory authorities nor
is the Company aware of any current recommendations by the regulatory
authorities which, if such recommendations were implemented, would have a
material effect on liquidity, capital resources or operations of the Company.
FUTURE OUTLOOK
In February 1994, the Company's Board of Directors approved the
repurchase of up to 200,000 shares of its common stock in open market or
negotiated transactions. To date, a total of 160,000 shares have been
repurchased at an aggregate cost of $4,942,000.
On March 1, 1995, the Company opened its first supermarket branch
banking facility in Muhlenberg, PA. The second supermarket branch was opened on
May 3, 1995 in Schnecksville, PA. The Company considers supermarket branches to
be a strategic delivery system for banks in the future and anticipates opening
three more during the remainder of 1995.
The Company will continue its work on the installation of platform
automation during 1995. Through platform automation, the Company expects to
increase efficiencies and re-focus its efforts to improve productivity, in order
to provide faster and improved service to our customers, at the same time
reducing costs to contrubute to improved profitability. The platform automation
project may lead to in excess of $1 million in capital expenditures.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to Vote of Security Holders.
The 1995 annual meeting (the "Meeting") of the shareholders of National
Penn Bancshares, Inc. (the "Registrant") was held on April 25, 1995. Notice of
the Meeting was mailed to shareholders of record on or about March 24, 1995,
together with proxy solicitation materials prepared in accordance with Section
14(a) of the Securities Exchange Act of 1934, as amended, and the regulations
promulgated thereunder.
The Meeting was held for the following purposes:
(1) to elect three Class II directors to hold office for three years
from the date of election and until their successors are elected and qualified
(Proposal No. 1); and
(2) to act upon a proposal to approve the Registrant's Non-Employee
Directors' Stock option Plan (Proposal No. 2).
There was no solicitation in opposition to the nominees of the Board of
Directors for election to the Board of Directors and all such nominees were
elected. The number of votes cast for or withheld, as well as the number of
abstentions and broker non-votes for each of the nominees for election to the
Board of Directors were as follows:
Abstentions and
Nominee For Withheld Broker Non-Votes
John J. Dau 5,787,189 28,710 0
Lawrence T. Jilk, Jr. 5,783,200 32,699 0
C. Robert Roth 5,782,859 33,040 0
There was no solicitation in opposition to Proposal No. 2 to approve
the Registrant's Non-Employee Director's Stock Option Plan, and the Plan was
approved. The number of votes cast for or against as well as the number of
abstentions and broker non-votes, for the proposal were as follows:
For Against Abstentions Broker Non-votes
4,988,568 668,418 158,913 0
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Item 5. Other Information.
On May 8, 1995, the Registrant's banking subsidiary, National Penn
Bank, formed a new banking division, 1st Main Line Bank, located in Paoli,
Pennsylvania. 1st Main Line Bank initially opened a loan production office in
the Paoli Plaza. On August 2, 1995, the Comptroller of the Currency approved an
application for a full-service branch at this location.
National Penn Bank opened a full-service supermarket branch in the
King's Market, Schnecksville (Lehigh County) on May 3, 1995, and in the Weis
Market, Cedar Crest (Lehigh County) on July 31, 1995. National Penn Bank closed
its Fairview Village branch (Montgomery County) on June 18, 1995.
In February 1994, the Registrant's Board of Directors approved the
repurchase of up to 200,000 shares of its common stock in open market or
negotiated transactions. At June 30, 1995, a total of 160,000 shares have been
repurchased at an aggregate cost of $4,942,000.
On July 26, 1995, the Registrant declared a 5% stock dividend payable
on October 31, 1995 to shareholders of record as of the close of business on
September 29, 1995.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K. The Registrant did not file any Reports on
Form 8-K during the quarterly period ended June 30, 1995.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Registrant has caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
NATIONAL PENN BANCSHARES, INC.
(Registrant)
Dated: August 7, 1995 By /s/ Lawrence T. Jilk, Jr.
--------------------------
Lawrence T. Jilk, Jr., President
and Chief Executive Officer
Dated: August 7, 1995 By /s/ Gary L. Rhoads
-------------------
Gary L. Rhoads, Principal
Financial Officer
16
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