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, 1996
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, 1996
Common Stock ($2.50 par value) (No.) 7,602,881 Shares
Page 1 of 16 pages
<PAGE>
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 ................7
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 ............................15
Signatures .................................................................16
2
<PAGE>
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) 1996 1995
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Cash and due from banks $42,048 $39,195
Interest bearing deposits in banks 918 2,014
Federal funds sold --- ---
---------- ----------
Total cash and cash equivalents 42,966 41,209
Securities available for sale at market value 237,293 240,902
Loans, net of unearned discount 978,957 939,065
Less allowance for possible loan losses (21,340) (20,366)
---------- ----------
Net Loans 957,617 918,699
Other assets 54,107 50,568
---------- ----------
Total Assets $1,291,983 $1,251,378
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing deposits $139,077 $134,968
Interest bearing deposits
(Includes certificates of deposit in excess of $100:
1996 - $96,730; 1995 - $89,881) 822,809 779,922
---------- ----------
Total Deposits 961,886 914,890
Securities sold under repurchase agreements
and federal funds purchased 143,251 138,550
Short-term borrowings 8,893 4,370
Long-term obligations 56,110 71,589
Accrued interest and other liabilities 15,355 15,364
---------- ----------
Total Liabilities 1,185,495 1,144,763
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; 7,646,614
shares issued and 7,618,381 shares
outstanding at June 30, 1996; 7,642,413
shares issued and 7,594,474 shares outstanding
at December 31, 1995 19,106 19,106
Additional paid-in-capital 57,526 57,501
Retained earnings 29,250 24,646
Valuation adjustment for securities available for sale, net of tax 1,340 6,579
Treasury stock (28,233 shares at cost at June 30, 1996 and
47,939 shares at cost at December 31, 1995) (734) (1,217)
---------- ----------
Total Shareholders' Equity 106,488 106,615
---------- ----------
Total Liabilities and Shareholders' Equity $1,291,983 $1,251,378
========== ==========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
Note: The Balance Sheet at Dec. 31, 1995 has been derived from the audited
financial statements at that date.
3
<PAGE>
<TABLE>
<CAPTION>
NATIONAL PENN BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Three Months Ended Six Months Ended
(Dollars in thousands, except per share data) June 30 June 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans including fees $ 22,035 $ 20,445 $ 43,927 $ 39,703
Deposits in banks 20 15 29 30
Federal funds sold 13 3 113 5
Investment securities 3,799 3,991 7,517 7,966
-------- -------- -------- --------
Total interest income 25,867 24,454 51,586 47,704
-------- -------- -------- --------
INTEREST EXPENSE
Deposits 8,527 8,470 16,725 15,873
Federal funds purchased, borrowed funds and
securities sold under repurchase agreements 2,627 2,435 5,698 4,822
-------- -------- -------- --------
Total interest expense 11,154 10,905 22,423 20,695
-------- -------- -------- --------
Net interest income 14,713 13,549 29,163 27,009
Provision for loan losses 975 750 1,950 1,500
-------- -------- -------- --------
Net interest income after provision
for loan losses 13,738 12,799 27,213 25,509
-------- -------- -------- --------
OTHER INCOME
Trust Services 573 424 1,204 848
Service charges on deposit accounts 810 657 1,593 1,297
Net gains (losses) on sale of securities and mortgages 88 47 (15) 303
Other 615 497 1,249 1,245
-------- -------- -------- --------
Total other income 2,086 1,625 4,031 3,693
-------- -------- -------- --------
OTHER EXPENSES
Salaries, wages and employee benefits 5,434 4,869 10,458 9,850
Net premises and equipment 1,593 1,330 3,397 2,719
Other operating 3,021 3,091 5,642 5,928
-------- -------- -------- --------
Total other expenses 10,048 9,290 19,497 18,497
-------- -------- -------- --------
Income before income taxes 5,776 5,134 11,747 10,705
Applicable income tax expense 1,783 1,576 3,639 3,230
-------- -------- -------- --------
Net income 3,993 3,558 $ 8,108 $ 7,475
======== ======== ======== ========
PER SHARE OF COMMON STOCK
Net income $ 0.52 $ 0.47 $ 1.06 $ 0.99
Dividends paid in cash 0.23 0.20 0.45 0.40
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
4
<PAGE>
<TABLE>
<CAPTION>
NATIONAL PENN BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
(Dollars in thousands)
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 8,108 $ 7,475
Adjustments to reconcile net income to net
cash provided by (used in) operating activities
Provision for loan losses 1,950 1,500
Depreciation and amortization 1,554 1,304
Net gains (losses) on sale of securities and mortgages (15) 303
Mortgage loans originated for resale (11,488) (4,935)
Sale of mortgage loans originated for resale 11,488 4,935
Other (3,848) 5,475
-------- --------
Net cash provided by (used in) operating activities 7,749 16,057
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of investment securities - available for sale 13,780 6,578
Proceeds from maturities of investment securities - held to maturity -- 3,032
Proceeds from maturities of investment securities - available for sale 21,680 91
Purchase of investment securities - available for sale (37,090) (14,905)
Proceeds from sales of loans -- --
Net increase in loans (40,868) (60,797)
Purchases of premises & equipment (1,658) (1,957)
-------- --------
Net cash provided by (used in) investing activities (44,156) (67,958)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in:
Deposits 46,996 44,100
Repurchase agreements, fed funds & short-term borrowings 9,224 32,188
Long-term borrowings (15,479) (4,999)
(Increase) decrease in treasury stock 483 738
Issuance of common stock under dividend reinvestment plan 25 --
Cash dividends (3,085) (3,085)
-------- --------
Net cash provided by (used in) financing activities 38,164 68,942
Net increase (decrease) in cash and cash equivalents 1,757 17,041
Cash and cash equivalents at January 1 41,209 34,159
-------- --------
Cash and cash equivalents at June 30 $ 42,966 $ 51,200
======== ========
</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, 1995.
2. The results of operations for the six-month period ended June 30, 1996 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 7,615,481 and 7,547,382 for 1996 and 1995, respectively, and are computed
after giving retroactive effect to a 5% stock dividend paid on October 31, 1995.
4. On July 24, 1996, the Company's Board of Directors declared a 5% stock
dividend payable on October 31, 1996 to shareholders of record on September 27,
1996.
6
<PAGE>
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 $1.292 billion, an increase of $40.6 million or
3.2% over the $1.251 billion at December 31, 1995. 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 $1.8 million or 4.3% at June 30,
1996 when compared to December 31, 1995. This increase was primarily in cash and
due from banks which was partially offset by lower interest bearing deposits in
banks.
Loans increased to $979.0 million at June 30, 1996. The increase of $39.9
million or 4.2% compared to December 31, 1995 was primarily the result of the
investment of deposits and securities sold under agreements to repurchase. Loans
originated for immediate resale during the first six months of the year amounted
to $11.5 million. The Company's credit quality is reflected by the annualized
ratio of net charge-offs to total loans of .10% through the second quarter and
the level of non-accrual loans to total loans of .89% at June 30, 1996. The
Company has no significant exposure to energy and agricultural-related loans.
Non-accrual loans at December 31, 1995 were .77% of total loans.
Investments, the Company's secondary use of funds, decreased $3.6 million
or 1.5% to 237.3 million at June 30, 1996 when compared to December 31, 1995.
The decrease is due to calls and maturities of securities and the sale and
amortization of mortgage-backed securities, partially offset by investment
purchases of $37.1 million.
As the primary source of funds, aggregate deposits of $961.9 million at
June 30, 1996 increased $47.0 million or 5.1% compared to December 31, 1995. The
increase in deposits during the first six months of 1996 was primarily in
interest bearing deposits which increased $42.9 million while non-interest
bearing deposits increased $4.1 million. Certificates of deposit in excess of
$100,000 increased $6.8 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 aggregate, these funds totaled
$208.3 million at June 30, 1996, and $214.5 million at December 31,
7
<PAGE>
1995. The decrease of $6.3 million represents a shift from long-term obligations
to short-term borrowings, primarily securities sold under repurchase agreements
and federal funds purchased.
Shareholders' equity decreased slightly through June 30, 1996. This
decrease was due the change in valuation adjustment for securities available for
sale, which represents the accounting treatment required under Statement of
Financial Accounting Standards 115, "Accounting for Certain Investments in Debt
and Equity Securities," applied to the decrease in market value of the Company's
investment portfolio. Cash dividends paid during the first six months of 1996
increased $420,000 or 14.0% compared to the cash dividends paid during the first
six months of 1995. Earnings retained during the first six months of 1996 were
57.8% compared to 59.8% during the first six months of 1995.
RESULTS OF OPERATIONS
Net income for the quarter ended June 30, 1996 was $3.9 million, 12.2% more
than the $3.6 million reported for the same period in 1995. For the first six
months, net income reached $8.1 million, or 8.5% more than the $7.5 million
reported for the first six months of 1995. 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 increased $1.2 million or
8.6% to $14.7 million during the second quarter of 1996 from $13.5 million in
the second quarter 1995. For the comparative six month period, net interest
income increased $2.2 million or 8.0% to $29.2 million from $27.0 million in
1995. 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, 1996
to January 31, 1996 was 8.50%. On February 1, 1996, the prime rate changed to
8.25%. Interest expense during the first six months of 1996 increased $1.7
million or 8.3% 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 increased
$225,000 for the second quarter
8
<PAGE>
and $450,000 first six months of 1996 compared to the same periods in 1995. The
allowance for loan and lease losses of $21.3 million at June 30, 1996 and $20.4
December 31, 1995 as a percentage of total loans was 2.2% at both dates. The
Company's net charge-offs of $976,000 and $1,475,000 during the first six months
of 1996 and 1995, respectively, continue to be comparable to those of the
Company's peers, as reported in the Bank Holding Company Performance Report.
"Total other income" increased $461,000 or 28.4% during the second quarter
of 1996, as a result of service charges on deposit accounts of $153,000, trust
income of $149,000 and other income of $118,000. Year to date, other income
increased $338,000 or 9.2% when compared to the first six months of 1995 as a
result of service charges on deposit accounts of $356,000 and trust income of
$296,000 which were partially offset by losses on sale of securities and
mortgages of $318,000. "Total other expenses" increased $758,000 or 8.2% during
the quarter ended June 30, 1996 and increased $1,000,000 or 5.4% for the six
month period. Of this year-to-date increase, premises and equipment increased
$678,000 or 2.5% and salaries, wages and employee benefits increased $608,000 or
6.2% due primarily to higher staffing levels.
Income before income taxes increased by $642,000 or 12.5% compared to the
second quarter of 1995. In comparing the first six months of 1996 to 1995,
income before income taxes increased $42,000 or .4%. Income taxes increased
$207,000 for the quarter and increased $409,000 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 $56.2 million from year end 1995. Long-term
borrowings decreased $15.5 million during the first six months of 1996.
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.
9
<PAGE>
The following table shows separately the interest rate sensitivity of each
category of interest-earning assets and interest-bearing liabilities at June 30,
1996:
<TABLE>
<CAPTION>
Repricing Periods (1)
One Year
Within Through Over
One Year Five Years Five Years
(In Thousands)
<S> <C> <C> <C>
Assets
Interest-bearing deposits
at banks $ 918 $ -- $ --
Investment securities 27,554 94,546 115,193
Loans and leases 406,382 401,409 171,166
Other assets 7,711 -- 88,444
--------- --------- ---------
442,565 495,955 374,803
--------- --------- ---------
Liabilities and equity
Noninterest-bearing deposits 139,077 -- --
Interest-bearing deposits 422,000 168,208 232,601
Borrowed funds 181,968 3,610 22,676
Other liabilities -- -- 36,695
Hedging instruments 90,000 (80,000) (10,000)
Shareholders' equity -- -- 106,488
--------- --------- ---------
833,045 91,818 388,460
--------- --------- ---------
Interest sensitivity gap (390,480) 404,137 (13,657)
--------- --------- ---------
Cumulative interest rate
sensitivity gap ($390,480) $ 13,657 $ --
========= ========= =========
<FN>
(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.
</FN>
</TABLE>
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
10
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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
1996, with no clear indication of sustainable rising or falling rates. Given
this assumption, the Company's asset/liability strategy for 1996 is to maintain
a 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,
1996 1995
CAPITAL LEVELS
Tier 1 leverage ratio 7.79% 7.59%
Tier 1 risk-based ratio 11.10 10.97
Total risk-based ratio 12.37 12.23
CAPITAL PERFORMANCE
Return on average assets(annualized) 1.29 1.30
Return on average equity(annualized) 15.00 16.30
Earnings retained 57.80 59.30
Internal capital growth(annualized) 8.79 25.60
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,
1996, 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
11
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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 June 1996, the Company's Board of Directors approved the repurchase of
up to 380,000 shares of its common stock from time to time in open market or
negotiated transactions. Repurchased shares will be used for general corporate
purposes, including the Company's dividend reinvestment plan and stock option
plans. To date, a total of 15,500 shares have been repurchased at an aggregate
cost of $415,000.
The Company anticipates that in the remainder of 1996 the Bank will open
four new supermarket branches as well as one new full service branch, the
opening of which will coincide with the closing of two nearby branches. The
Company does not expect these new branches to start contributing to profits
until 1997 or beyond; 1996 earnings may be somewhat negatively impacted by the
initial costs of these new operations.
On January 1, 1996 the FDIC reduced insurance premiums that financial
institutions pay on commercial bank deposits to zero from the previous rate of
$.04 per hundred dollars of deposits in effect since May 1, 1995. The Company
continues to pay $.23 per hundred dollars of deposits on approximately $225
million of deposits at branches acquired from Sellersville Savings and Loan
Association and Central Pennsylvania Savings Association. In order for the rate
on these deposits to also be lowered, there is still a chance that in 1996 the
Company will have to pay a onetime assessment of between $1 million and $2
million to help recapitalize the Savings Association Insurance Fund ("SAIF")
segment of the FDIC. A late July 1996 proposal from Congress' House Banking
Committee would include utilizing Federal Reserve surplus reserves toward annual
interest costs of Financing Corporation bonds. This would somewhat reduce the
potential future annual FDIC insurance costs of commercial banks, assuming they
would be responsible for Financing Corporation bond interest, but would not
reduce the potential onetime SAIF recapitalization fee. The Company cannot
predict if
12
<PAGE>
this or any other legislation will be enacted, but expects that any legislation
recapitalizing SAIF will likely impose additional deposit insurance costs on the
Company attributable to its acquired SAIF-insured deposits. These costs may have
a material adverse effect on the Company's earnings when incurred.
13
<PAGE>
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 1996 annual meeting (the "Meeting") of the shreholders of National Penn
Bancshares, Inc. (the "Registrant") was held on April 23, 1996. Notice of the
Meeting was mailed to shareholders of record on or about March 22, 1996,
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 to elect four Class III directors to hold office for
three years from the date of election and until their successors are elected and
qualified.
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:
<TABLE>
<CAPTION>
Abstentions and
Nominee For Withheld Broker Non-Votes
<S> <C> <C> <C>
Patricia L. Langiotti 5,424,049 33,066 0
Randall J. Nester 5,419,112 38,003 0
Harold C. Wegman, D.D.S. 5,428,418 28,697 0
Wayne R. Weidner 5,428,444 28,671 0
</TABLE>
Item 5. Other Information.
In May and then in July 1996, the Registrant's banking subsidiary, National
Penn Bank (the "Bank"), opened its fifth and sixth full-service supermarket
branches in the Clemen's Market, Exton (Chester County) and Redner's Market,
Trexlertown (Lehigh County), Pennsylvania.
The Registrant anticipates that in the remainder of 1996 the Bank will open
four more supermarket branches, located in Perkasie (Bucks County), Dorneyville
(Lehigh County), Coopersburg (Lehigh County), and Emaus (Lehigh County). The
Bank intends to close its branch at East Penn Plaza, Emaus, when the new
supermarket branch in Emaus opens.
14
<PAGE>
The Registrant also anticipates that the Bank will open a full service
branch in Lansdale (Montgomery County) in September 1996. At that time, the Bank
expects to close its current branches in Kulpsville (Montgomery County) and West
Point (Montgomery County).
On May 1, 1996, the Bank closed its Mt. Airy (Philadelphia) branch.
On June 26, 1996, The Registrant's Board of Directors approved the
repurchase of up to 380,000 shares of its common stock to be used for general
corporate purposes, including the Registrant's dividend reinvestment plan and
stock option plans. The stock repurchase plan authorizes the Registrant to make
repurchases from time to time in open market or privately negotiated
transactions. A prior repurchase program of 200,000 shares authorized in
February 1994 has been completed.
On July 24, 1996, the Registrant declared a 5% stock dividend payable on
October 31, 1996 to shareholders of record as of the close of business on
September 27, 1996.
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, 1996.
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 9, 1996 By /s/ Wayne R. Weidner
---------------------
Wayne R. Weidner, Executive
Vice President
Dated: August 9, 1996 By /s/ Gary L. Rhoads
-------------------
Gary L. Rhoads, Principal
Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000700733
<NAME> NATIONAL PENN BANCSHARES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 42,048
<INT-BEARING-DEPOSITS> 918
<FED-FUNDS-SOLD> 0
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0
0
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</TABLE>
