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: September, 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 November 11, 1996
Common Stock ($2.50 par value) (No.) 7,609,067 Shares
Page 1 of 15 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 ........................................13
Item 2. Changes in Securities ....................................13
Item 3. Defaults Upon Senior Securities ..........................13
Item 4. Submission of Matters to a Vote of
Security Holders .......................................13
Item 5. Other Information ........................................13
Item 6. Exhibits and Reports on Form 8-K .........................14
Signatures..................................................................15
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NATIONAL PENN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
Sept. 30 Dec. 31
(Dollars in thousands, except per share data) 1996 1995
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Cash and due from banks $ 41,679 $ 39,195
Interest bearing deposits in banks 1,460 2,014
----------- -----------
Total cash and cash equivalents $ 43,139 41,209
Securities available for sale at market value 241,814 240,902
Loans, net of unearned discount 1,011,332 939,065
Less allowance for possible loan losses (22,178) (20,366)
----------- -----------
Net Loans 989,154 918,699
Other assets 53,671 50,568
----------- -----------
Total Assets $ 1,327,778 $ 1,251,378
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing deposits $ 135,917 $ 134,968
Interest bearing deposits
(Includes certificates of deposit in excess of $100:
1996 - $95,803; 1995 - $89,881) 835,653 779,922
----------- -----------
Total Deposits 971,570 914,890
Securities sold under repurchase agreements
and federal funds purchased 187,231 138,550
Short-term borrowings 8,790 4,370
Long-term obligations 36,110 71,589
Accrued interest and other liabilities 14,840 15,364
----------- -----------
Total Liabilities 1,218,541 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; 7,648,177 shares
issued and 7,617,067 shares outstanding at
September 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 57,550 57,501
Retained earnings 31,787 24,646
Valuation adjustment for securities available for sale, net of tax 1,622 6,579
Treasury stock (31,110 shares at cost at September 30, 1996 and
47,939 shares at cost at December 31, 1995) (828) (1,217)
----------- -----------
Total Shareholders' Equity 109,237 106,615
----------- -----------
Total Liabilities and Shareholders' Equity $ 1,327,778 $ 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>
NATIONAL PENN BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(Dollars in thousands, except per share data) September 30 September 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans including fees $ 23,196 $ 21,214 $ 67,123 $ 60,917
Deposits in banks 15 21 44 51
Federal funds sold 47 105 160 110
Investment securities 3,893 4,096 11,410 12,062
-------- -------- -------- --------
Total interest income 27,151 25,436 78,737 73,140
-------- -------- -------- --------
INTEREST EXPENSE
Deposits 8,675 8,381 25,400 24,254
Federal funds purchased, borrowed funds and
securities sold under repurchase agreements 3,052 3,156 8,750 7,978
-------- -------- -------- --------
Total interest expense 11,727 11,537 34,150 32,232
-------- -------- -------- --------
Net interest income 15,424 13,899 44,587 40,908
Provision for loan losses 975 750 2,925 2,250
-------- -------- -------- --------
Net interest income after provision
for loan losses 14,449 13,149 41,662 38,658
-------- -------- -------- --------
OTHER INCOME
Trust Services 548 481 1,752 1,329
Service charges on deposit accounts 885 685 2,478 1,982
Net gains (losses) on sale of securities and mortgages (57) 125 (72) 428
Other 978 855 2,227 2,100
-------- -------- -------- --------
Total other income 2,354 2,146 6,385 5,839
-------- -------- -------- --------
OTHER EXPENSES
Salaries, wages and employee benefits 5,703 5,015 16,161 14,865
Net premises and equipment 1,726 1,617 5,123 4,336
Other operating 3,216 3,084 8,858 9,012
-------- -------- -------- --------
Total other expenses 10,645 9,716 30,142 28,213
-------- -------- -------- --------
Income before income taxes 6,158 5,579 17,905 16,284
Applicable income tax expense 1,872 1,684 5,511 4,914
-------- -------- -------- --------
Net income $ 4,286 $ 3,895 $ 12,394 $ 11,370
======== ======== ======== ========
PER SHARE OF COMMON STOCK
Net income $ 0.57 $ 0.52 $ 1.63 $ 1.51
Dividends paid in cash 0.23 0.21 0.68 0.61
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
4
<PAGE>
NATIONAL PENN BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended September 30,
(Dollars in thousands)
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 12,394 $ 11,370
Adjustments to reconcile net income to net
cash provided by (used in) operating activities
Provision for loan and lease losses 2,925 2,250
Depreciation and amortization 2,406 2,166
Net gains (losses) on sale of securities and mortgages (72) 428
Mortgage loans originated for resale (16,045) (7,046)
Sale of mortgage loans originated for resale 16,045 7,046
Other (3,892) 7,235
-------- --------
Net cash provided by operating activities 13,761 23,449
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of investment securities - available for sale 30,034 6,578
Proceeds from maturities of investment securities - held to maturity -- 8,375
Proceeds from maturities of investment securities - available for sale 18,873 740
Purchase of investment securities available for sale (54,776) (14,905)
Proceeds from sales of loans -- --
Net increase in loans (73,380) (86,441)
Purchases of premises & equipment (2,070) (3,731)
-------- --------
Net cash (used in) investing activities (81,319) (89,384)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in:
Deposits 56,680 40,830
Repurchase agreements, fed funds & short-term borrowings 53,101 37,758
Long-term borrowings & subordinated capital note (35,479) (5,999)
Decrease in treasury stock 389 1,336
Issuance of common stock under dividend reinvestment plan 49 110
Cash dividends (5,252) (4,670)
-------- --------
Net cash provided by financing activities 69,488 69,365
Net increase in cash and cash equivalents 1,930 3,430
Cash and cash equivalents at January 1 41,209 34,159
-------- --------
Cash and cash equivalents at September 30 $ 43,139 $ 37,589
======== ========
</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 consolidated 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 nine-month period ended September 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 7,614,139 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 $1.328 billion, an increase of $76.4 million or
6.1% 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 $1.9 million or 4.7% at September
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 $1.011 billion at September 30, 1996. The increase of
$72.3 million or 7.7% 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 nine 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 .15% through the third
quarter and the level of non-accrual loans to total loans of 1.20% at September
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, increased $.9 million or
.38% to $241.8 million at September 30, 1996 when compared to December 31, 1995.
The small increase is due to investment purchases of $54.8 million, which is
offset by calls and maturities of securities and the sale and amortization of
mortgage-backed securities.
As the primary source of funds, aggregate deposits of $971.6 million at
September 30, 1996 increased $56.7 million or 6.2% compared to December 31,
1995. The increase in deposits during the first nine months of 1996 was
primarily in interest bearing deposits which increased $55.7 million while
non-interest bearing deposits increased $.9 million. Certificates of deposit in
excess of $100,000 increased $5.9 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
7
<PAGE>
funds totaled $232.1 million at September 30, 1996, and $214.5 million at
December 31, 1995. The increase of $17.6 million is due to the large increase in
total loans.
Shareholders' equity increased slightly through September 30, 1996. This
increase was due to an increase in earnings retained offset by a decrease in 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 nine months of 1996 increased
$582,000 or 12.5% compared to the cash dividends paid during the first nine
months of 1995. Earnings retained during the first nine months of 1996 were
57.6% compared to 58.9% during the first nine months of 1995.
RESULTS OF OPERATIONS
Net income for the quarter ended September 30, 1996 was $4.3 million, 10.0%
more than the $3.9 million reported for the same period in 1995. For the first
nine months, net income reached $12.4 million, or 9.0% more than the $11.4
million reported for the first nine 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 $1.5 million or
11.0% to $15.4 million during the third quarter of 1996 from $13.9 million in
the third quarter 1995. For the comparative nine month period, net interest
income increased $3.7 million or 9.0% to $44.6 million from $40.9 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 nine months of 1996 increased $1.9
million or 6.0% compared to the prior year's nine 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 third quarter
8
<PAGE>
and $657,000 first nine months of 1996 compared to the same periods in 1995. The
allowance for the loan and lease losses of $22.2 million at September 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 $1,113,000 and $1,867,000 during the
first nine 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 $208,000 or 9.7% during the third quarter of
1996, as a result of service charges on deposit accounts of $200,000, trust
income of $67,000, and other income of $123,000 offset by securities and
mortgage losses of $182,000. Year to date, other income increased $546,000 or
9.4% when compared to the first nine months of 1995 as a result of service
charges on deposit accounts of $423,000 and trust income of $496,000 which were
partially offset by losses on sale of securities and mortgages of $500,000.
"Total other expenses" increased $929,000 or 9.6% during the quarter ended
September 30, 1996 and increased $1,929,000 or 6.8% for the nine month period.
Of this year-to-date increase, premises and equipment increased $787,000 or
18.2% and salaries, wages and employee benefits increased $1,296,000 or 8.7% due
primarily to higher staffing levels. Other operating expenses were affected in
the third quarter of 1996 by the one-time pre-tax assessment of $1,175,000 to
help recapitalize the Savings Association Insurance Fund ("SAIF") segment of the
FDIC. As a result, FDIC insurance premiums on SAIF deposits will now be reduced
in future quarters.
Income before income taxes increased by $579,000 or 10.4% compared to the
third quarter of 1995. In comparing the first nine months of 1996 to 1995,
income before income taxes increased $1,621,000 or 9.95%. Income taxes increased
$188,000 for the quarter and increased $597,000 the nine 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 $109.8 million from year end 1995. Long-term
borrowings decreased $35.5 million during the first nine 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
9
<PAGE>
assets and liabilities in the existing portfolio that are subject to repricing
in a future time period.
The following table shows separately the interest rate sensitivity of each
category of interest-earning assets and interest-bearing liabilities at
September 30, 1996:
<TABLE>
<CAPTION>
Repricing Periods (1)
One Year Through
Within one Year five Years Over Five Years
(in thousands)
<S> <C> <C> <C>
Assets
Interest-bearing deposits at
banks $ 1,460 $ --- $ ---
Investment securities 25,428 107,416 108,970
Loans and leases 431,514 414,691 165,127
Other assets 3,693 -- 91,657
--------- --------- ---------
462,095 522,107 365,754
--------- --------- ---------
Liabilities and equity
Noninterest-bearing deposits 135,917 -- --
Interest-bearing deposits 420,633 181,619 233,401
Borrowed funds 194,349 15,110 22,672
Other liabilities -- -- 37,018
Hedging instruments 100,000 (100,000) --
Shareholder's equity -- -- 109,237
--------- --------- ---------
850,899 96,729 402,328
--------- --------- ---------
Interest sensitivity gap (388,804) 425,378 (36,574)
--------- --------- ---------
Cumulative interest rate
sensitivity gap ($388,804) $ 36,574 $ ---
========= ========= =========
<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
10
<PAGE>
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
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 exceed
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.
<TABLE>
<CAPTION>
September 30, December 31,
1996 1996
<S> <C> <C>
CAPITAL LEVELS
Tier 1 leverage ratio 8.02% 7.59%
Tier 1 risked-based ratio 11.29 10.97
Total risked-based ratio 12.55 12.23
CAPITAL PERFORMANCE
Return on average assets (annualized) 1.30 1.30
Return on average equity (annualized) 15.32 16.30
Earnings retained 57.62 59.30
Internal capital growth 8.93 25.60
</TABLE>
11
<PAGE>
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 September
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 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 30,000 shares have been repurchased at an aggregate
cost of $799,000.
The Company anticipates that in the remainder of 1996 the Bank will open
three new supermarket 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.
Prior to November 30, 1996 the Company will be required to remit $1,175,000
to the FDIC as its one-time assessment to help recapitalize the Savings
Association Insurance Fund ("SAIF") segment of the FDIC. This amount has been
fully expensed and accrued as of September 30, 1996 and will therefore have no
additional impact on the Company's earnings. As a result of this assessment on
approximately $225 million of deposits at branches acquired from Sellersville
Savings and Loan Association and Central Pennsylvania Savings Association,
future FDIC insurance premiums on these deposits will be reduced to an annual
rate comparable to the rate on commercial bank deposits.
12
<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.
None.
Item 5. Other Information.
In August 1996, the Registrant's banking subsidiary, National Penn Bank
(the "Bank"), opened its seventh full-service supermarket branch in the Clemen's
Market, Perkasie(Bucks County) Pennsylvania. The Registrant anticipates that in
the remainder of 1996 the Bank will open three more supermarket branches,
Dorneyville (Lehigh County), Coopersburg (Lehigh County), and Emaus Avenue,
Allentown (Lehigh County). The Bank intends to close its branch at Emaus Avenue,
Allentown, following the opening of the new supermarket branch on Emaus Avenue.
In September 1996, the Bank opened a full service branch in Lansdale
(Montgomery County). The Bank intends to close its branches in Kulpsville
(Montgomery County) and West Point ( Montgomery County) in November 1996.
In September 1996, the Bank relocated its Reading Loan Center from 45
Park Road North, Wyomissing, Pennsylvania to 1100 Berkshire Boulevard,
Wyomissing, Pennsylvania. In December 1996 the Bank will close its office at 951
Rohrerstown Road, Lancaster, Pennsylvania.
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. At September 30, 1996, 30,000 shares have been repurchased under
this repurchase program at an aggregate cost of $799,000. A prior repurchase
program of 200,000 shares authorized in February 1994 was completed June 1996.
On October 31, 1996, the Registrant paid a 5% stock dividend to
shareholders of record as of the close of business on September 27, 1996.
<PAGE>
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 September 30, 1996.
14
<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: November 12, 1996 By /s/ Wayne R. Weidner
---------------------
Wayne R. Weidner, Executive
Vice President
Dated: November 12, 1996 By /s/ Gary L. Rhoads
-------------------
Gary L. Rhoads, Principal
Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000700733
<NAME> NATIONAL PENN BANCSHARES, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 41,679
<INT-BEARING-DEPOSITS> 1,460
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 241,814
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,011,332
<ALLOWANCE> 22,178
<TOTAL-ASSETS> 1,327,778
<DEPOSITS> 971,570
<SHORT-TERM> 196,021
<LIABILITIES-OTHER> 14,840
<LONG-TERM> 36,110
19,106
0
<COMMON> 0
<OTHER-SE> 90,131
<TOTAL-LIABILITIES-AND-EQUITY> 1,327,778
<INTEREST-LOAN> 67,123
<INTEREST-INVEST> 11,410
<INTEREST-OTHER> 204
<INTEREST-TOTAL> 78,737
<INTEREST-DEPOSIT> 25,400
<INTEREST-EXPENSE> 34,150
<INTEREST-INCOME-NET> 44,587
<LOAN-LOSSES> 2,925
<SECURITIES-GAINS> (72)
<EXPENSE-OTHER> 30,142
<INCOME-PRETAX> 17,905
<INCOME-PRE-EXTRAORDINARY> 12,394
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,394
<EPS-PRIMARY> 1.63
<EPS-DILUTED> 1.63
<YIELD-ACTUAL> 5.00
<LOANS-NON> 9,056
<LOANS-PAST> 3,008
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 20,366
<CHARGE-OFFS> 1,824
<RECOVERIES> 711
<ALLOWANCE-CLOSE> 22,178
<ALLOWANCE-DOMESTIC> 16,564
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 5,614
</TABLE>