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, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 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 6, 1997
Common Stock ($1.875 par value) (No.) 10,690,192 Shares
1 of 17 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 Operation 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 ............................. 15
Item 6. Exhibits and Reports on Form 8-K .............. 16
Signature ............................................................... 17
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
NATIONAL PENN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
June 30 Dec. 31
1997 1996
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Cash and due from banks $52,559 $40,194
Interest bearing deposits in banks 2,553 1,802
Federal funds sold -- --
---------- ----------
Total cash and cash equivalents 55,112 41,996
Investment securities available for sale at market value 249,715 236,814
Loans, less allowance for loan losses of $24,006 and
$22,746 in 1997 and 1996 respectively 1,071,793 1,028,334
Other assets 54,871 50,869
---------- ----------
Total Assets $1,431,491 $1,358,013
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest bearing deposits $148,598 $145,107
Interest bearing deposits
(Includes certificates of deposit $100,000 or greater:
1997 - $125,988; 1996 - $97,115) 920,912 835,701
---------- ----------
Total Deposits 1,069,510 980,808
Securities sold under repurchase agreements
and federal funds purchased 76,141 164,996
Short-term borrowings 10,184 6,931
Long-term obligations 101,110 76,110
Guaranteed preferred beneficial interests in
Company's subordinated debentures 40,250 --
Accrued interest and other liabilities 16,371 14,447
---------- ----------
Total Liabilities 1,313,566 1,243,292
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;
authorized 20,000,000 shares; issued and outstanding
1997 - 8,020,177; 1996 - 8,002,648, net of shares
in Treasury: 1997 - 15,259; 1996 - 31,204 20,085 20,085
Additional paid-in-capital 83,268 83,707
Retained earnings 12,112 4,398
Net unrealized gains on securities available for sale 2,901 7,357
Treasury stock at cost (441) (826)
---------- ----------
Total Shareholders' Equity 117,925 114,721
---------- ----------
Total Liabilities and Shareholders' Equity $1,431,491 $1,358,013
========== ==========
</TABLE>
The acompanying notes are an integral part of these condensed financial
statements.
Note: The Balance Sheet at Dec. 31, 1996 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
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
INTEREST INCOME INTEREST INCOME
Loans including fees $25,239 $22,035 $49,623 $43,927
Deposits in banks 27 20 44 29
Federal funds sold 33 13 51 113
Investment securities 3,564 3,799 7,313 7,517
------- ------- ------- -------
Total interest income 28,863 25,867 57,031 51,586
------- ------- ------- -------
INTEREST EXPENSE INTEREST EXPENSE
Deposits 9,906 8,527 19,099 16,725
Federal funds purchased, borrowed funds and
securities sold under repurchase agreements 2,945 2,627 6,221 5,698
------- ------- ------- -------
Total interest expense 12,851 11,154 25,320 22,423
------- ------- ------- -------
Net interest income 16,012 14,713 31,711 29,163
Provision for loan losses 1,200 975 2,400 1,950
------- ------- ------- -------
Net interest income after provision
for loan losses 14,812 13,738 29,311 27,213
------- ------- ------- -------
OTHER INCOME
Trust and investment management income 687 573 1,323 1,204
Service charges on deposit accounts 1,007 810 1,961 1,593
Net gains (losses) on sale of
securities and mortgages (74) 88 842 (15)
Other 1,014 615 1,803 1,249
------- ------- ------- -------
Total other income 2,634 2,086 5,929 4,031
------- ------- ------- -------
OTHER EXPENSES OTHER EXPENSES
Salaries, wages and employee benefits 6,481 5,434 12,887 10,458
Net premises and equipment 1,786 1,593 3,726 3,397
Other operating 2,807 3,021 5,679 5,642
------- ------- ------- -------
Total other expenses 11,074 10,048 22,292 19,497
------- ------- ------- -------
Income before income taxes 6,372 5,776 12,948 11,747
Applicable income tax expense 1,987 1,783 4,029 3,639
------- ------- ------- -------
Net income $4,385 $3,993 $8,919 $8,108
======= ======= ======= =======
PER SHARE OF COMMON STOCK
Net income $0.54 $0.50 $1.11 $1.00
Dividends paid in cash 0.24 0.22 0.48 0.43
</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>
Six Months Ended June 30,
(Dollars in thousands)
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $8,919 $8,108
Adjustments to reconcile net income to net
cash provided by (used in) operating activities
Provision for loan losses 2,400 1,950
Depreciation and amortization 1,696 1,554
Net gains (losses) on sale of securities and mortgages 842 (15)
Mortgage loans originated for resale (8,068) (11,488)
Sale of mortgage loans originated for resale 8,068 11,488
Other (2,333) (3,848)
-------- --------
Net cash provided by (used in) operating activities 11,524 7,749
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of investment securities - available for sale 11,655 13,780
Proceeds from maturities of investment securities - held to maturity -- --
Proceeds from maturities of investment securities - available for sale 14,629 21,680
Purchase of investment securities - available for sale (41,488) (37,090)
Proceeds from sales of loans -- --
Net increase in loans (45,859) (40,868)
Purchases of premises & equipment (1,475) (1,658)
-------- --------
Net cash provided by (used in) investing activities (62,538) (44,156)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in:
Deposits 88,702 46,996
Repurchase agreements, fed funds & short-term borrowings (85,602) 9,224
Long-term borrowings 25,000 (15,479)
Proceeds from issuance of preferred securities 40,250 --
(Increase) decrease in treasury stock 385 483
Issuance of common stock under dividend reinvestment plan (439) 25
Cash dividends (4,166) (3,085)
-------- --------
Net cash provided by (used in) financing activities 64,130 38,164
Net increase (decrease) in cash and cash equivalents 13,116 1,757
Cash and cash equivalents at January 1 41,996 41,209
-------- --------
Cash and cash equivalents at June 30 $55,112 $42,966
======== ========
</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, 1996.
2. The results of operations for the six-month period ended June 30, 1997 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 8,013,489 and 7,994,472 for 1997 and 1996, respectively, and are computed
after giving retroactive effect to a 5% stock dividend paid on October 31, 1996.
4. On June 25, 1997, the Company's Board of Directors declared a four-for-three
stock split payable on July 31, 1997 to shareholders of record on July 15, 1997.
5. New Accounting Pronouncements - The Financial Accounting Standards Board has
issued Statement of Financial Accounting Standards No. 128, "Earnings Per
Share," which is effective for financial statements issued after December 15,
1997. Early adoption of the new standard is not permitted. The new standard
eliminates primary and fully diluted earnings per share and requires
presentation of basic and diluted earnings per share together with disclosure of
how the per share amounts were computed. The adoption of this new standard is
not expected to have a material impact on the disclosure of earnings per share
in the financial statements. The effect of adopting this new standard has not
been determined.
The Financial Accounting Standards Board has issued Statement of
Accounting Standards No 130, "Reporting Comprehensive Income," which was adopted
by the Company in June 1997 and is effective for years beginning after December
15, 1997. The new standard requires entities presenting a complete set of
financial statements to include details of comprehensive income. Comprehensive
income consists of net income or loss for the current period and income,
expenses, gains and losses that bypass the income statement and are reported
directly in a separate component of equity. The Company has not analyzed this
statement nor determined the effect on its financial statements at the present
time.
6. The Company identifies 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 balance of impaired loans was $8,226,000 at June 30, 1997,
all of which are non-accrual loans. The allowance for loan loss associated with
these impaired loans was $857,000 at June 30, 1997. The Company recognizes
income on impaired loans under the cash basis when the loans are both current
and the collateral on the loan is sufficient to cover the outstanding obligation
to the Company. If these factors do not exist, the Company will not recognize
income on such loans.
6
<PAGE>
7. On May 22, 1997, the Company issued 41.5 million of 9.00% of junior
subordinated deferrable interest debentures (the "debentures") to NPB Capital
Trust (the "Trust"), a Delaware business trust, in which the Company owns all of
the common equity. The debentures are the sole asset of the Trust. The Trust
issued $40.25 million of preferred securities to investors. The Company's
obligations under the debentures and related documents, taken together,
constitute a full and unconditional guarantee by the Company of the Trust's
obligations under the preferred securities. Although the debentures will be
treated as debt of the Company, they currently qualify for tier 1 capital
treatment in an amount up to 25% of total tier 1 capital. The preferred
securities are redeemable by the Company on or after June 30, 2002, or earlier
in the event the deduction of related interest for federal income taxes is
prohibited, treatment as tier 1 capital is no longer permitted or certain other
contingencies arise. The preferred securities must be redeemed upon maturity of
the debentures in 2027. See "Liquidity and Interest Rate Sensitivity" and
"Capital Adequacy" below.
7
<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 $1.431 billion, an increase of $73.5 million
or 5.4% over the $1.358 billion at December 31, 1996. 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 $13.1 million or 31.2% at
June 30, 1997 when compared to December 31, 1996. This increase was primarily in
cash and due from banks.
Loans increased to $1.072 billion at June 30, 1997. The increase of
$43.5 million or 4.2% compared to December 31, 1996 was primarily the result of
the investment of deposits and long-term borrowings. Loans originated for
immediate resale during the first six months of 1997 amounted to $8.1 million.
The Company's credit quality is reflected by the annualized ratio of net
charge-offs to total loans of .21% through the second quarter of 1997 versus
.14% for the year 1996, and the ratio of non-performing assets to total loans of
1.11% at June 30, 1997 compared to 1.21% at December 31 1996. Non-performing
assets, including non-accruals, loans 90 days past due, restructured loans and
other real estate owned, were $12.2 million at June 30, 1997 compared to $12.7
million at December 31, 1996. Of these amounts, non-accrual loans represented
$8.2 million and $8.7 million at June 30, 1997 and December 31, 1996,
respectively. Loans 90 days past due and still accruing interest were $3.6
million and $3.7 million at June 30, 1997 and December 31, 1996, respectively.
Other real estate owned was $305,000 and $319,000 at June 30 1997 and Decmeber
31, 1996, respectively. The Company had no restructured loans at June 30 1997 or
December 31, 1996. The allowance for loan losses to non-performing assets was
197.4% and 179.2% at June 30 1997 and December 31, 1996, respectively. As is
evident from the above amounts relative to non-performing assets, there have
been no significant changes between December 31, 1996 and June 30, 1997. The
Company has no significant exposure to energy and agricultural-related loans.
Investments, the Company's secondary use of funds, increased $12.9
million or 5.4% to $249.7 million at June 30, 1997 when compared to December 31,
1996. The increase is due to investment purchases of $41.5 million, primarily in
municipal securities, which was partially offset by investment sales and
maturities and the amortization of mortgage-backed securities.
As the primary source of funds, aggregate deposits of $1.070 billion at
June 30, 1997 increased $88.7 million or 9.0% compared to December 31, 1996. The
increase in deposits during the first six month of 1997 was primarily in
interest bearing deposits which increased $85.2 million while non-interest
bearing deposits increased $3.5 million. Certificates of deposit in excess of
$100,000 increased $28.9 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 funds totaled
$227.7 million at June 30, 1997, and $248.0
8
<PAGE>
million at December 31, 1996. The increase of $20.4 million represents the
issuance of $40.25 million in junior subordinated deferrable interest debentures
and an increase in long-term obligations of $25.0 million which was partially
offset by a decrease in short-term borrowings, primarily securities sold under
repurchase agreements and federal funds purchased.
Shareholders' equity increased slightly through June 30, 1997. 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 six months of 1997 increased
$418,000 or 12.2% compared to the cash dividends paid during the first six
months of 1996. Earnings retained during the first six months of 1997 were 56.9%
compared to 57.8% during the first six months of 1996.
RESULTS OF OPERATIONS
Net income for the quarter ended June 30, 1997 was $4.4 million, 9.8%
more than the $3.9 million reported for the same period in 1996. For the first
six months, net income reached $8.9 million, or 10.0% more than the $8.1 million
reported for the first six months of 1996. 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 $1.3 million
or 8.8% to $16.0 million during the second quarter of 1997 from $14.7 million in
the second quarter 1996. For the comparative six month period, net interest
income increased $2.5 million or 8.7% to $31.7 million from $29.2 million in
1996. 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, 1997
to March 25, 1997 was 8.25%. On March 26, 1997, the prime rate changed to 8.50%.
Interest expense during the first six months of 1997 increased $2.9 million or
12.9% compared to the prior year's first 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 and $450,000 for the first six months
of 1997 compared to the same periods in 1996. The allowance for loan and lease
losses of $24.0 million at June 30, 1997 and $22.7 million at December 31, 1996
as a percentage of total loans was 2.2% at both dates. The Company's net
charge-offs of $1,140,000 and $976,000 during the first six months of 1997 and
1996, 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 $548,000 or 26.3% during the second
quarter of 1997, as a result of increased other income of $399,000, increased
service charges on deposit accounts of
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$197,000, and increased trust and investment management income of $114,000. Year
to date, other income increased $1.9 million or 47.1% when compared to the first
six months of 1996 as a result of increased gains on sale of securities and
mortgages of $857,000, increased other income of $554,000, increased services
charges on deposit accounts of $365,000 and increased trust and investment
management income of $119,000. "Total other expenses" increased $1.0 million or
10.2% during the quarter ended June 30, 1997 and increased $2.8 million or 14.3%
for the six month period. Of this year-to-date increase, salaries, wages and
employee benefits increased $2.4 million or 23.2%, premises and equipment
increased $329,000 or 9.7%, and other operating expenses increased $37,000 or
.6%.
Income before income taxes increased by $596,000 or 10.3% compared to
the second quarter of 1996. In comparing the first six months of 1997 to 1996,
income before income taxes increased $1.2 million or 10.2%. Income taxes
increased $204,000 for the quarter and increased $390,000 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 $3.1 million from year end 1996.
Long-term borrowings increased $62.3 million during the first six months of
1997. As described in note 7 to the financial statements included herein at Item
#1, cash inflow was increased by a $40.25 million debt offering on May 22, 1997.
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.
10
<PAGE>
The following table shows separately the interest rate sensitivity of
each category of interest-earning assets and interest-bearing liabilities at
June 30, 1997:
<TABLE>
<CAPTION>
Repricing Periods (1)
Three Months One Year
Within Three Through One Through Five Over
Months Year Years Five Years
(In Thousands)
Assets
<S> <C> <C> <C> <C>
Interest-bearing deposits
at banks $ 2,553 $ - - $ - - $ - -
Investment securities 10,266 36,223 120,282 82,944
Loans and leases 305,233 148,764 453,216 164,580
Other assets 12,117 - - - - 95,313
--------- --------- ---------- ---------
330,169 184,987 573,498 342,837
--------- --------- ---------- ---------
Liabilities and equity
Noninterest-bearing deposits 148,598 - - - - - -
Interest-bearing deposits 285,110 175,019 223,026 237,757
Borrowed funds 154,159 10,000 15,110 8,166
Preferred securities - - - - - - 40,250
Other liabilities - - - - - - 16,371
Hedging instruments 80,000 - - (80,000)
Shareholders' equity - - - - - - 117,925
--------- --------- ---------- ---------
667,867 185,019 158,136 420,469
--------- --------- ---------- ---------
Interest sensitivity gap (337,698) (32) 415,362 (77,632)
--------- --------- ---------- ---------
Cumulative interest rate
sensitivity gap ($337,698) ($337,730) $ 77,632 $ - -
========= ========= ========== =========
</TABLE>
(1) Adjustable rate loans are included in the period in which interest rates are
next scheduled to adjust rather than in the period in which they are due. Fixed
rate loans are included in the period in which they are scheduled to be repaid
and are adjusted to take into account estimated prepayments based upon
assumptions estimating prepayments in the interest rate environment prevailing
during the second calendar quarter of 1997. The table assumes prepayments and
scheduled principal amortization of fixed-rate loans and mortgage-backed
securities and assumes that adjustable rate mortgages will reprice at
contractual repricing intervals. There has been no adjustment for the impact of
future commitments and loans in process.
(2) 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. While generally subject to
immediate withdrawal, management considers a portion of these accounts to be
core deposits having significantly longer effective maturities based upon the
Company's historical retention of such deposits in changing interest rate
environments. Specifically, 25.6% of these deposits are considered repriceable
within three months and 74.4% are considered repriceable in the over five years
category.
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,
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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 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 1997, with no clear indication of sustainable rising or falling rates. Given
this assumption, the Company's asset/liability strategy for 1997 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.
June 30, Dec. 31,
1997 1996
CAPITAL LEVELS
Tier 1 leverage ratio 10.56% 7.83%
Tier 1 risk-based ratio 14.06 10.82
Total risk-based ratio 15.72 12.09
CAPITAL PERFORMANCE
Return of average assets (annualized) 1.30 1.31
Return on average equity (annualized) 15.40 15.60
Earnings retained 56.90 58.50
Internal capital growth (annualized) 8.90 7.60
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,
1997, 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
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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. As described in note 7 to the
financial statements included herein at Item #1, capital ratios were increased
by a $40.25 million debt offering on May 22, 1997.
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 based
compensation plans. To date, a total of 99,229 shares have been repurchased at
an aggregate cost of $2.7 million.
Shareholders of Penncore Financial Services Corporation, Newtown, PA
have approved their merger with ML Bancorp, Inc., Villanova, PA. The Company has
20% ownership interest in Penncore and, the deal price of $36.56 per share gives
the Company an unrealized gain of approximately $1 million on this transaction.
The merger is expected to be completed in late August or early September of this
year, although no assurance can be given that it will be completed. The Company
has two remaining 20% ownership interests in de novo banks.
This report contains forward-looking statements concerning earnings,
asset quality, and other future events. Actual results could differ materially
due to, among other things, the risks and uncertainties discussed in Exhibit 99
to the Company's Report on Form 10-K for 1996, which is incorporated herein by
reference. Readers are cautioned not to place undue reliance on these
statements. The Company undertakes no obligation to publicly release or update
any of these statements.
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 1997 annual meeting (the "Meeting") of the shareholders of National
Penn Bancshares, Inc. (the "Registrant") was held on April 22, 1997. Notice of
the Meeting was mailed to shareholders of record on or about March 26, 1997,
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 I 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 Directors' Fee
Plan (proposal No.2).
(3) to act upon a proposal to approve the Registrant's Officers' and
Key Employees' Stock Compensation Plan (Proposal No. 3)
(4) to act upon a proposal to approve the Registrant's Employee Stock
Purchase Plan (proposal No.4).
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 H. Body 5,592,593 41,369 0
J. Ralph Borneman, Jr 5,590,565 43,397 0
Kenneth A. Longacre 5,593,004 40,958 0
14
<PAGE>
There was no solicitation in opposition to Proposal No. 2 to approve
the Directors' Fee 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
5,396,245 143,638 54,040 0
There was no solicitation in opposition to Proposal No. 3 to approve
the Officers' and Key Employees' Stock Compensation 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
5,228,242 250,847 114,834 0
There was no solicitation in opposition to Proposal No. 4 to approve
the Employee Stock Purchase Plan, and the Plan was approved. The number of votes
cast for or against, as well as the number of abstention and broker non-votes,
for the proposal were as follows:
For Against Abstentions Broker Non-votes
5,383,738 116,348 93,837 0
Item 5. Other Information.
On May 21, 1997, the Registrant closed the sale of $40,250,000
principal amount of Trust Preferred Securities issued by NPB Capital Trust, a
Delaware business trust, which securities are wholly and unconditionally
guaranteed by the Registrant. For further information, see footnote #7 to the
Registrant's quarterly financial statements at Part I, Item 1 hereof, and
Management's Discussion and Analysis of Financial Condition and Results of
Operations, at Part I, Item 2 hereof.
On June 25, 1997, the Registrant's Board of Directors declared a
4-for-3 stock split of the Registrant's common shares, payable July 31, 1997 to
shareholders of record July 15, 1997, and declared a cash dividend of $.21 per
share payable August 17, 1997 to shareholders of record July 31, 1997.
In June 1996, the Registrant's Board of Directors approved the
repurchase of up to 380,000 common shares of the Registrant, 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 June 30, 1997, a total of 99,229 shares have been repurchased
at an aggregate cost of $2.7 million.
15
<PAGE>
During second quarter 1997, the Registrant's banking subsidiary,
National Penn Bank (the "Bank") installed 12 new automated teller machines
("ATMs") in various convenience store and other non-branch locations in
southeastern Pennsylvania.
The Registrant anticipates that the Bank will install four new ATMs in
various locations in third quarter 1997. Two of these new ATMs are expected to
be installed in supermarket locations and two in fast-food store locations. The
Registrant also anticipates that the Bank will open a supermarket branch in the
Roxborough section of Philadelphia in early 1998.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit 3.1 - Articles of Incorporation, as amended.
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, 1997.
16
<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 14, 1997 By /s/ Wayne R. Weidner
----------------------
Wayne R. Weidner, Executive
Vice President
Dated: August 14, 1997 By /s/ Gary L. Rhoads
--------------------
Gary L. Rhoads, Principal
Financial Officer
17
ARTICLES OF INCORPORATION
OF
NATIONAL PENN BANCSHARES, INC.
(A Pennsylvania Business Corporation)
In compliance with the requirements of section 204 of the Business
Corporation Law, Act of May 5, 1933 (P.L. 364) (15 P.S. ss.1204) the
undersigned, desiring to be incorporated as a business corporation, hereby
certifies that:
FIRST. The name of the Corporation is National Penn Bancshares, Inc.
SECOND. The location and post office address of the initial registered
office of the Corporation in this Commonwealth is Philadelphia and Reading
Avenues, Boyertown, Pennsylvania 19512.
THIRD. The Corporation is incorporated under the Business Corporation Law
of the Commonwealth of Pennsylvania and shall have unlimited power to engage in
and do any lawful act concerning any or all lawful business for which
corporations may be incorporated under such Law.
FOURTH. The Corporation shall have perpetual existence.
FIFTH. The total number of shares of stock that the Corporation shall have
the authority to issue is Two Million (2,000,000) shares, all of one class
called Common Shares, each of which shall have the par value of $5.00.
SIXTH. The holder of each Common Share shall be entitled to one vote on
each matter on which shareholders of the Corporation are entitled to vote.
Shareholders shall not have the right to cumulative voting in the election of
directors.
SEVENTH. The name and post office address of the incorporator and the
number and class of shares subscribed by the incorporator is:
Number and Class
Name Address of Shares
David G. Nation 1100 PNB Building One Common Share,
Broad & Chestnut Sts. par value $5.00
Philadelphia, PA 19107
<PAGE>
IN TESTIMONY WHEREOF, the incorporator has signed and sealed these Articles
of Incorporation this 26th day of January, 1982.
/s/ David G. Nation (SEAL)
----------------------------
David G. Nation
<PAGE>
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CERTIFICATE OF INCORPORATION
Office of the Secretary of the Commonwealth
To All to Whom These Presents Shall Come, Greeting:
Whereas, Under the provisions of the Laws of the Commonwealth, the Secretary of
the Commonwealth is authorized and required to issue a "Certificate of
Incorporation" evidencing the incorporation of an entity.
Whereas, The stipulations and conditions of the Law have been fully complied
with by
NATIONAL PENN BANCSHARES, INC.
Therefore, Know Ye, That subject to the Constitution of this Commonwealth, and
under the authority of the Laws thereof, I do by these presents, which I have
caused to be sealed with the Great Seal of the Commonwealth, declare and certify
the creation, erection and incorporation of the above in deed and in law by the
name chosen hereinbefore specified.
Such corporation shall have and enjoy and shall be subject to all the
powers, duties, requirements, and restrictions, specified and enjoined in and by
the applicable laws of this Commonwealth.
Given under my Hand and the Great Seal of the
Commonwealth, at the City of Harrisburg, this 9th
day of January, in the year of our Lord one
thousand nine hundred and eighty-two and of the
Commonwealth the two hundred sixth.
/s/ William R. Davis
Secretary of the Commonwealth
<PAGE>
Applicant's Account No. _______________
DSCB:BCL-806 (Rev. 8-72)
Filing Fee: $40
AB-2
Articles of Amendment - Domestic Business Corporation
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
Filed this 12th day of
April, A.D. 1984,
Commonwealth of Pennsylvania
Department of State
/s/ William R. Davis
Secretary of the Commonwealth
In compliance with the requirements of section 806 of the Business
Corporation Law, act of May 5, 1933 (P.L. 364) (15 P.S. ss.1806), the
undersigned corporation, desiring to amend its Articles, does hereby certify
that:
1. The name of the corporation is:
National Penn Bancshares, Inc.
2. The location of its registered office in this Commonwealth is (the
Department of State is hereby authorized to correct the following statement
to conform to the records of the Department):
Philadelphia and Reading Avenues
(NUMBER) (STREET)
Boyertown Pennsylvania 19512
(CITY) (ZIP CODE)
3. The statute by or under which it was incorporated is:
Pennsylvania Business Corporation Law, Act of May 5, 1933, P.L. 364 (15 P.S.
ss.1001, et seq.)
4. The date of its incorporation is: January 28, 1982.
5. (Check, and if appropriate, complete one of the following):
[X] The meeting of the shareholders of the corporation at which the
amendment was adopted was held at the time and place and pursuant to the kind
and period of notice herein stated.
Time: The 10th day of April, 1984.
Place: Gilbertsville Fire Company, 1456 East Philadelphia Avenue,
Gilbertsville, PA
Kind and period of notice: Written notice was provided nineteen (l9) days
prior to the annual meeting at which the amendment was adopted by shareholders.
[__] The amendment was adopted by a consent in writing, setting forth the
action so taken, signed by all of the shareholders entitled to vote thereon and
filed with the Secretary of the corporation.
6. At the time of the action of shareholders:
(a) The total number of shares outstanding was:
852,174
(b) The number of shares entitled to vote was:
852,174
<PAGE>
7. In the action taken by the shareholders:
(a) The number of shares voted in favor of the amendment was:
670,372.3264
(b) The number of shares voted against the amendment was:
16,517.3157
8. The amendment adopted by the shareholders, set forth in full, is as
follows:
See Attachment "A"
IN TESTIMONY WHEREOF, the undersigned corporation has caused these Articles
of Amendment to be signed by a duly authorized officer and its corporate seal,
duly attested by another such officer, to be hereunto affixed this 10th day of
April, 1984.
NATIONAL PENN BANCSHARES, INC.
(NAME OF CORPORATION)
By: /s/ James K. Boyer
James K. Boyer
(Title: President)
Attest:
/s/ Sandra L. Spayd
Sandra L. Spayd
(Title: Secretary)
(CORPORATE SEAL)
INSTRUCTIONS FOR COMPLETION OF FORM:
A. Any necessary copies of Form DSCB:17.2 (Consent to Appropriation of Name)
or Form DSCB:17.3 (Consent to Use of Similar Name) shall accompany Articles
of Amendment effecting a change of name.
B. Any necessary governmental approvals shall accompany this form.
C. Where action is taken by partial written consent pursuant to the Articles,
the second alternate of Paragraph 5 should be modified accordingly.
D. If the shares of any class were entitled to vote as a class, the number of
shares of each class so entitled and the number of shares of all other
classes entitled to vote should be set forth in Paragraph 6(b).
E. If the shares of any class were entitled to vote as a class, the number of
shares of such class and the number of shares of all other classes voted
for and against such amendment respectively should be set forth in
Paragraphs 7(a) and 7(b).
F. BCL ss.807 (15 P.S. ss.1807) requires that the corporation shall advertise
its intention to file or the filing of Articles of Amendment. Proofs of
publication of such advertising should not be delivered to the Department,
but should be filed with the minutes of the corporation.
Page 2 of 4
<PAGE>
ATTACHMENT A
The Articles of Incorporation of National Penn Bancshares, Inc.,
Philadelphia and Reading Avenues, Boyertown, Pennsylvania 19512, are hereby
amended by adding a new ARTICLE EIGHTH to read as hereinafter set forth in full:
EIGHTH. The business and property of the Corporation will be
maintained and controlled by the Board of Directors and subject to
restrictions imposed by law, by the Articles of Incorporation or by the
By-laws, they may exercise all powers of the Corporation.
(a) The Board of Directors will consist of not less than eight
and not more than twelve directors, as determined by resolution of the
Board of Directors prior to each annual meeting of shareholders at
which directors are to be elected.
(b) At the 1984 annual meeting of shareholders and thereafter,
the directors will be divided into three classes: Class I, Class II
and Class III. Each Class shall be as nearly equal in number as
possible. If the number of Class I, Class II or Class III directors is
fixed for any term of office, it shall not be increased or decreased
during that term except by a majority vote of the Board of Directors.
In no case will a decrease in the number of directors shorten the term
of any incumbent director. The term of office of the initial Class I
directors will expire at the 1985 annual meeting of shareholders, the
term of office of the initial Class II directors will expire at the
1986 annual meeting of shareholders and the term of office of the
initial Class III directors will expire at the 1987 annual meeting of
shareholders. At each annual meeting of shareholders following such
initial classification and three-year election, the directors elected
to succeed those directors whose terms expire shall be identified as
being of the same Class and shall be elected for a three-year term of
office to expire at the third succeeding annual meeting of
shareholders and until their successors have been elected and
qualified.
(c) Any vacancy in the Board of Directors resulting from death,
resignation, retirement, disqualification, removal from office or
other cause, may be filled by the affirmative vote of a
Page 3 of 4
<PAGE>
majority of the remaining directors then in office, though less than a
quorum of the Board of Directors. Any director so elected by the Board
of Directors shall hold the office for a term expiring at the annual
meeting of shareholders at which the Class to which he has been
elected expires.
(d) Any director or the entire Board of Directors may be removed
from office at any time, with or without cause, but only by the
affirmative vote of the holders of at least two-thirds of all of the
outstanding shares of the Corporation entitled to vote for the
election of directors at a meeting of shareholders called for that
purpose.
(e) Notwithstanding anything contained in these Articles of
Incorporation to the contrary, the affirmative vote of the holders of
at least two-thirds of the outstanding shares of the Corporation then
entitled to be voted in an election of directors shall be required to
amend or repeal, or to adopt any provision inconsistent with, this
Article Eighth.
Page 4 of 4
<PAGE>
Commonwealth of Pennsylvania
Department of State
To All to Whom These Presents Shall Come, Greeting:
Whereas, In and by Article VIII of the Business Corporation Law, approved the
fifth day of May, Anno Domini one thousand nine hundred and thirty-three, P.L.
364, as amended, the Department of State is authorized and required to issue a
CERTIFICATE OF AMENDMENT
evidencing the amendment of the Articles of Incorporation of a business
corporation organized under or subject to the provisions of that Law, and
Whereas, The stipulations and conditions of that Law pertaining to the amendment
of Articles of Incorporation have been fully complied with by
NATIONAL PENN BANCSHARES, INC.
Therefore, Know Ye, That subject to the Constitution of this Commonwealth and
under the authority of the Business Corporation Law, I do by these presents,
which I have caused to be sealed with the Great Seal of the Commonwealth, extend
the rights and powers of the corporation named above, in accordance with the
terms and provisions of the Articles of Amendment presented by it to the
Department of State, with full power and authority to use and enjoy such rights
and powers, subject to all the provisions and restrictions of the Business
Corporation Law and all other applicable laws of this Commonwealth.
Given under my Hand and the Great Seal of the
Commonwealth, at the City of Harrisburg, this 12th
day of April in the year of our Lord one thousand
nine hundred and eighty-four and of the
Commonwealth the two hundred and eighth.
/s/ William R. Davis
Secretary of the Commonwealth
<PAGE>
Applicant's Account No. _______________
DSCB:BCL-806 (Rev. 8-72)
Filing Fee: $40
AB-2
Articles of Amendment - Domestic Business Corporation
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
Filed this 15th day
of April, A.D. 1986,
Commonwealth of Pennsylvania
Department of State
/s/ Robert A. Gleason, Jr.
Secretary of the Commonwealth
In compliance with the requirements of section 806 of the Business
Corporation Law, act of May 5, 1933 (P.L. 364) (15 P.S. ss.1806), the
undersigned corporation, desiring to amend its Articles, does hereby certify
that:
1. The name of the corporation is:
National Penn Bancshares, Inc.
2. The location of its registered office in this Commonwealth is (the
Department of State is hereby authorized to correct the following statement
to conform to the records of the Department):
Philadelphia and Reading Avenues
(NUMBER) (STREET)
Boyertown Pennsylvania 19512
(CITY) (ZIP CODE)
3. The statute by or under which it was incorporated is:
Pennsylvania Business Corporation Law, Act of May 5, 1933, P.L. 364, as
amended.
4. The date of its incorporation is: January 28, 1982.
5. (Check, and if appropriate, complete one of the following):
[x] The meeting of the shareholders of the corporation at which the
amendment was adopted was held at the time and place and pursuant to the kind
and period of notice herein stated.
Time: The 8th day of April, 1986.
Place: Gilbertsville Fire Company, Gilbertsville, PA
Kind and period of notice: Written notice of the meeting was mailed to
shareholders of the Company on or about March 14, 1986.
[__] The amendment was adopted by a consent in writing, setting forth the
action so taken, signed by all of the shareholders entitled to vote thereon and
filed with the Secretary of the corporation.
6. At the time of the action of shareholders:
(a) The total number of shares outstanding was:
1,046,072
(b) The number of shares entitled to vote was:
1,046,072
<PAGE>
7. In the action taken by the shareholders:
(a) The number of shares voted in favor of the amendment was:
See Exhibit "A" attached hereto.
(b) The number of shares voted against the amendment was:
See Exhibit "A" attached hereto.
8. The amendment adopted by the shareholders, set forth in full, is as
follows:
See Attachment "B" attached hereto.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these Articles
of Amendment to be signed by a duly authorized officer and its corporate seal,
duly attested by another such officer, to be hereunto affixed this 9th day of
April, 1986.
NATIONAL PENN BANCSHARES, INC.
(NAME OF CORPORATION)
By: /s/ James K. Boyer
President and Chief Executive
Officer
Attest:
/s/ Sandra L. Spayd
Secretary
(CORPORATE SEAL)
INSTRUCTIONS FOR COMPLETION OF FORM:
A. Any necessary copies of Form DSCB:17.2 (Consent to Appropriation of Name)
or Form DSCB:17.3 (Consent to Use of Similar Name) shall accompany Articles
of Amendment effecting a change of name.
B. Any necessary governmental approvals shall accompany this form.
C. Where action is taken by partial written consent pursuant to the Articles,
the second alternate of Paragraph 5 should be modified accordingly.
D. If the shares of any class were entitled to vote as a class, the number of
shares of each class so entitled and the number of shares of all other
classes entitled to vote should be set forth in Paragraph 6(b).
E. If the shares of any class were entitled to vote as a class, the number of
shares of such class and the number of shares of all other classes voted
for and against such amendment respectively should be set forth in
Paragraphs 7(a) and 7(b).
F. BCL ss.807 (15 P.S. ss.1807) requires that the corporation shall advertise
its intention to file or the filing of Articles of Amendment. Proofs of
publication of such advertising should not be delivered to the Department,
but should be filed with the minutes of the corporation.
<PAGE>
EXHIBIT "A"
1. The vote to adopt an amendment to ARTICLE FIFTH of the Company's
Articles of Incorporation was as follows:
828,022.2886 votes were cast in favor of the amendment and 22,706.1331
votes were cast against the amendment.
2. The vote to adopt an amendment to the Company's Articles of
Incorporation to add a new ARTICLE NINTH thereto was as follows:
816,677.7363 votes were cast in favor of the amendment and 33,989.7758
votes were cast against the amendment.
3. The votes to adopt an amendment to the Company's Articles of
Incorporation to add a new ARTICLE TENTH thereto was as follows:
822,747.4966 votes were cast in favor of the amendment and 26,954.3087
votes were cast against the amendment.
<PAGE>
EXHIBIT "B"
Article Fifth of the Company's Articles of Incorporation shall be amended
to read, in its entirety, as follows:
FIFTH. The total number of Common Shares that the Corporation shall have
authority to issue is 5,000,000 shares of the par value of $5.00 per share.
A new Article Ninth shall be added to the Company's Articles of
Incorporation which reads, in its entirety, as follows:
NINTH. The total number of shares of preferred stock that the Corporation shall
have authority to issue is 1,000,000 shares, without par value. The preferred
stock may be issued from time to time as a class without series, or if so
determined by the Board of Directors of the Corporation, either in whole or in
part in one or more series. There is hereby expressly granted to and vested in
the Board of Directors of the Corporation authority to fix and determine (except
as fixed and determined herein), by resolution, the voting powers, full or
limited, or no voting powers, and such designations, preferences and relative,
participating, optional or other special rights, if any, and the qualifications,
limitations or restrictions thereof, if any, including specifically, but not
limited to, the dividend rights, conversion rights, redemption rights and
liquidation preferences, if any, of any wholly unissued series of preferred
stock (or the entire class of preferred stock if none of such shares have been
issued), the number of shares constituting any such series and the terms and
conditions of the issue thereof. Prior to the issuance of any shares of
preferred stock, a statement setting forth a copy of each such resolution or
resolutions and the number of shares of preferred stock of each such class or
series shall be executed and filed in accordance with the Pennsylvania Business
Corporation Law. Unless otherwise provided in any such resolution or
resolutions, the number of shares of capital stock of any such class or series
so set forth in such resolution or resolutions may thereafter be increased or
decreased (but not below the number of shares then outstanding), by a statement
likewise executed and filed setting forth a statement that a specified increase
or decrease therein had been authorized and directed by a resolution or
resolutions likewise adopted by the Board of Directors of the Corporation. In
case the number of such shares shall be decreased, the number of shares so
specified in the statement shall resume the status they had prior to the
adoption of the first resolution or resolutions.
<PAGE>
A new Article Tenth shall be added to the Company's Articles of
Incorporation, which reads, in its entirety, as follows:
TENTH. Except as set forth below, the affirmative vote of shareholders entitled
to cast at least 80% of the votes which all shareholders of the Corporation are
entitled to cast shall be required to approve any of the following:
(a) any merger or consolidation of the Corporation with or into any
other corporation;
(b) any share exchange in which a corporation, person or entity
acquires the issued or outstanding shares of capital stock of the
Corporation pursuant to a vote of shareholders;
(c) any sale, lease, exchange or other transfer of all, or
substantially all, of the assets of the Corporation to any other
corporation, person, or entity; or
(d) any transaction similar to, or having similar effect as, any of
the foregoing transactions,
if, in any such case, as of the record date for the determination of
shareholders entitled to notice thereof and to vote thereon, such other
corporation, person or entity is the beneficial owner, directly or indirectly,
of shares of capital stock entitled to cast more than 5% of the votes which all
shareholders of the Corporation are then entitled to cast (an "Interested
Shareholder").
If any of the transactions identified above in this Article Tenth is with a
corporation, person or entity that is not an Interested Shareholder, then the
affirmative vote of shareholders entitled to cast at least a majority of the
votes which all shareholders of the Corporation are entitled to cast shall be
required to approve any of such transactions.
The Board of Directors of the Corporation shall have the power and duty to
determine, for purposes of this Article Tenth, on the basis of information known
to the Board, if and when such other corporation, person or entity is an
Interested Shareholder and if any transaction is similar to, or has a similar
effect as, any of the transactions identified above in this Article Tenth. Any
such determination shall be conclusive and binding for all purposes of this
Article Tenth. The provisions of this Article Tenth shall not apply to any
transaction which is approved in advance by a majority
<PAGE>
of the members of the Board of Directors of the Corporation who are not
affiliated with the Interested Shareholder, at a meeting duly called and held.
Notwithstanding anything contained in these Articles of Incorporation to
the contrary, the affirmative vote of shareholders entitled to cast at least 80%
of the votes which all shareholders of the Corporation are entitled to cast
thereon shall be required to amend or repeal, or to adopt any provision
inconsistent with, this Article Tenth.
<PAGE>
Commonwealth of Pennsylvania
Department of State
To All to Whom These Presents Shall Come, Greeting:
Whereas, In and by Article VIII of the Business Corporation Law, approved the
fifth day of May, Anno Domini one thousand nine hundred and thirty-three, P.L.
364, as amended, the Department of State is authorized and required to issue a
CERTIFICATE OF AMENDMENT
evidencing the amendment of the Articles of Incorporation of a business
corporation organized under or subject to the provisions of that Law, and
Whereas, The stipulations and conditions of that Law pertaining to the amendment
of Articles of Incorporation have been fully complied with by
NATIONAL PENN BANCSHARES, INC.
Therefore, Know Ye, That subject to the Constitution of this Commonwealth and
under the authority of the Business Corporation Law, I do by these presents,
which I have caused to be sealed with the Great Seal of the Commonwealth, extend
the rights and powers of the corporation named above, in accordance with the
terms and provisions of the Articles of Amendment presented by it to the
Department of State, with full power and authority to use and enjoy such rights
and powers, subject to all the provisions and restrictions of the Business
Corporation Law and all other applicable laws of this Commonwealth.
Given under my Hand and the Great Seal of the
Commonwealth, at the City of Harrisburg, this 15th
day of April in the year of our Lord one thousand
nine hundred and eighty-six and of the
Commonwealth the two hundred and tenth.
/s/ Robert A. Gleason, Jr.
Secretary of the Commonwealth
<PAGE>
Applicant's Account No. _______________
DSCB:BCL-806 (Rev. 8-72)
Filing Fee: $40
AB-2
Articles of Amendment - Domestic Business Corporation
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
Filed this 13th day of May, A.D. 1988,
Commonwealth of Pennsylvania
Department of State
/s/ James J. Haggerty
Secretary of the Commonwealth
In compliance with the requirements of section 806 of the Business
Corporation Law, act of May 5, 1933 (P.L. 364) (15 P.S. ss.1806), the
undersigned corporation, desiring to amend its Articles, does hereby certify
that:
1. The name of the corporation is: National Penn Bancshares, Inc.
2. The location of its registered office in this Commonwealth is (the
Department of State is hereby authorized to correct the following statement
to conform to the records of the Department):
Philadelphia and Reading Avenues
(NUMBER) (STREET)
Boyertown Pennsylvania 19512
(CITY) (ZIP CODE)
3. The statute by or under which it was incorporated is:
Pennsylvania Business Corporation Law, Act of May 5, 1933, P.L. 364 (15
P.S. ss.1001, et seq.)
4. The date of its incorporation is: January 28, 1982.
5. (Check, and if appropriate, complete one of the following):
[x] The meeting of the shareholders of the corporation at which the
amendment was adopted was held at the time and place and pursuant to the kind
and period of notice herein stated.
Time: The 26th day of April, 1988.
Place: Gilbertsville Fire Company, 1456 East Philadelphia Avenue,
Gilbertsville, PA
Kind and period of notice: Written notice was mailed to shareholders of the
Company on or about March 25, 1988.
[__] The amendment was adopted by a consent in writing, setting forth the
action so taken, signed by all of the shareholders entitled to vote thereon and
filed with the Secretary of the corporation.
6. At the time of the action of shareholders:
(a) The total number of shares outstanding was:
2,385,294
(b) The number of shares entitled to vote was:
2,385,294
<PAGE>
7. In the action taken by the shareholders:
(a) The number of shares voted in favor of the amendment was:
1,638,158.9860
(b) The number of shares voted against the amendment was:
21,164.3338
8. The amendment adopted by the shareholders, set forth in full, is as
follows:
Article Fifth of the Company's Articles of Incorporation shall be amended
to read, in its entirety, as follows:
FIFTH. The total number of Common Shares that the Corporation shall have
authority to issue is 10,000,000 shares of the par value of $5.00 per share.
IN TESTIMONY WHEREOF, the undersigned corporation has caused these Articles
of Amendment to be signed by a duly authorized officer and its corporate seal,
duly attested by another such officer, to be hereunto affixed this 10th day of
May, 1988.
NATIONAL PENN BANCSHARES, INC.
(NAME OF CORPORATION)
By: /s/ James K. Boyer
Chairman and Chief
Executive Officer
Attest:
/s/ Sandra L. Spayd
Secretary
(CORPORATE SEAL)
INSTRUCTIONS FOR COMPLETION OF FORM:
A. Any necessary copies of Form DSCB:17.2 (Consent to Appropriation of Name)
or Form DSCB:17.3 (Consent to Use of Similar Name) shall accompany Articles
of Amendment effecting a change of name.
B. Any necessary governmental approvals shall accompany this form.
C. Where action is taken by partial written consent pursuant to the Articles,
the second alternate of Paragraph 5 should be modified accordingly.
D. If the shares of any class were entitled to vote as a class, the number of
shares of each class so entitled and the number of shares of all other
classes entitled to vote should be set forth in Paragraph 6(b).
E. If the shares of any class were entitled to vote as a class, the number of
shares of such class and the number of shares of all other classes voted
for and against such amendment respectively should be set forth in
Paragraphs 7(a) and 7(b).
F. BCL ss.807 (15 P.S. ss.1807) requires that the corporation shall advertise
its intention to file or the filing of Articles of Amendment. Proofs of
publication of such advertising should not be delivered to the Department,
but should be filed with the minutes of the corporation.
<PAGE>
Commonwealth of Pennsylvania
Department of State
To All to Whom These Presents Shall Come, Greeting:
Whereas, In and by Article VIII of the Business Corporation Law, approved the
fifth day of May, Anno Domini one thousand nine hundred and thirty-three, P.L.
364, as amended, the Department of State is authorized and required to issue a
CERTIFICATE OF AMENDMENT
evidencing the amendment of the Articles of Incorporation of a business
corporation organized under or subject to the provisions of that Law, and
Whereas, The stipulations and conditions of that Law pertaining to the amendment
of Articles of Incorporation have been fully complied with by
NATIONAL PENN BANCSHARES, INC.
Therefore, Know Ye, That subject to the Constitution of this Commonwealth and
under the authority of the Business Corporation Law, I do by these presents,
which I have caused to be sealed with the Great Seal of the Commonwealth, extend
the rights and powers of the corporation named above, in accordance with the
terms and provisions of the Articles of Amendment presented by it to the
Department of State, with full power and authority to use and enjoy such rights
and powers, subject to all the provisions and restrictions of the Business
Corporation Law and all other applicable laws of this Commonwealth.
Given under my Hand and the Great Seal of the
Commonwealth, at the City of Harrisburg, this 13th
day of May in the year of our Lord one thousand
nine hundred and eighty-eight and of the
Commonwealth the two hundred and twelfth.
/s/ James J. Haggerty
Secretary of the Commonwealth
<PAGE>
Applicant's Account No. _______________
DSCB:BCL-602 (Rev. 8-72)
Filing Fee: $40
AB-2
Statement Affecting Class or Series of Shares - Domestic Business Corporation
COMMONWEALTH OF PENNSYLVANIA
DEPARTMENT OF STATE
CORPORATION BUREAU
Filed this 21st day of September,
A.D. 1989,
Commonwealth of Pennsylvania,
Department of State
/s/ Christopher A. Lewis
Acting Secretary of the Commonwealth
In compliance with the requirements of section 602 of the Business
Corporation Law, act of May 5, 1933 (P.L. 364) (15 P.S. ss.1602), the
undersigned corporation, desiring to state the voting rights, designations,
preferences, qualifications, privileges, limitations, options, conversion
rights, and other special rights, if any, of a class or series of a class of its
shares, hereby certifies that:
1. The name of the corporation is:
National Penn Bancshares, Inc.
2. (Check and complete one of the following):
[__] The resolution establishing and designating the class or series of
shares and fixing and determining the relative rights and preferences thereof
set forth in full, is as follows:
[x] The resolution establishing and designating the class or series of
shares and fixing and determining the relative rights and preferences thereof is
set forth in full in Exhibit A attached hereto and made a part hereof.
3. The aggregate number of shares of such class or series established and
designated by (a) such resolution, (b) all prior statements, if any, filed under
the Business Corporation Law with respect thereto, and (c) any other provision
of the Articles is 35,000 shares.
4. (Check and complete one of the following):
[x] The resolution was adopted by the Board of Directors of the corporation
at a duly called meeting held on the 23rd day of August, 1989.
<PAGE>
[__] The resolution was adopted by a consent or consents in writing dated
the _________________ day of __________, 19____, signed by all of the Directors
of the corporation and filed with the Secretary of the corporation.
IN TESTIMONY WHEREOF, the undersigned corporation has caused this statement
to be signed by a duly authorized officer and its corporate seal, duly attested
by another such officer, to be hereunto affixed this 10th day of September,
1989.
NATIONAL PENN BANCSHARES, INC.
(NAME OF CORPORATION)
By: /s/ James K. Boyer
(Title: Chairman and Chief
Executive Officer)
Attest:
/s/ Sandra L. Spayd
(Title: Secretary)
(CORPORATE SEAL)
<PAGE>
Exhibit A
TERMS OF
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
NATIONAL PENN BANCSHARES, INC.
RESOLVED that, pursuant to the authority vested in the Board of Directors
of the Corporation by the Articles of Incorporation, the Board of Directors does
hereby provide for the issue of a series of Preferred Stock, without par value,
of the Corporation, to be designated "Series A Junior Participating Preferred
Stock" (hereinafter referred to as the "Series A Preferred Stock" or "this
Series"), initially consisting of 35,000 shares, and to the extent that the
designations, powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions of the Series A Preferred Stock are
not stated and expressed in the Articles of Incorporation, does hereby fix and
herein state and express such designations, powers, preferences and relative and
other special rights and the qualifications, limitations and restrictions
thereof, as follows (all terms used herein which are defined in the Articles of
Incorporation shall be deemed to have the meanings provided therein):
1. Designation and Amount. The designation of the series of Preferred Stock
created by this resolution shall be 'Series A Junior Participating Preferred
Stock' and the number of shares constituting such Series is Thirty-Five Thousand
(35,000). Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, that no decrease shall reduce the number of
shares of Series A Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon the conversion of
any outstanding securities of the Corporation convertible into shares of this
Series.
2. Dividends.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of this Series with respect to dividends, the holders of shares of
this Series shall be entitled to receive, when and as declared by the Board
of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on April 1, July 1, October 1, and January 1 of
each year (each such date
<PAGE>
being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of this Series, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $10.00 or
(b) subject to the provision for adjustment hereinafter set forth, 100
times the aggregate per share amount of all cash dividends, and 100 times
the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in Common Shares or a
subdivision of the outstanding Common Shares (by reclassification or
otherwise), declared on the Common Shares since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of
a share of this Series. In the event the Company shall at any time after
August 23, 1989 (the "Rights Declaration Date") declare any dividend on the
Common Shares payable in Common Shares, subdivide the outstanding Common
Shares, or combine the outstanding Common Shares into a smaller number of
shares, then in each such case the amount to which holders of shares of
this Series were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of Common Shares outstanding
immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on the Series
A Preferred Stock as provided in paragraph (A) of this Section immediately
after it declares a dividend or distribution on the Common Shares (other
than a dividend payable in Common Shares); provided that, in the event no
dividend or distribution shall have been declared on the Common Shares
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per share
on Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of this Series, unless the
date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the
date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of shares of this Series
A-2
<PAGE>
entitled to receive a quarterly dividend and before such Quarterly Dividend
Payment Date, in either of which events such dividends shall begin to
accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued
but unpaid dividends shall not bear interest. Dividends paid on the shares
of this Series in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on
a share-by-share basis among all such shares at the time outstanding. The
Board of Directors may fix a record date for the determination of holders
of shares of this Series entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than days
prior to the date fixed for the payment thereof.
3. Voting Rights. The holders of shares of Series A Preferred Stock shall
have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the Common Shares payable in Common Shares, or effect a
subdivision or combination or consolidation of the outstanding Common
Shares (by reclassification or otherwise than by payment of a dividend in
Common Shares) into a greater or lesser number of Common Shares, then in
each such case the number of votes per share to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event
shall be adjusted by multiplying such number by a fraction, the numerator
of which is the number of Common Shares outstanding immediately after such
event and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other resolutions
creating a series of Preferred Stock or any similar stock, or by law, the
holders of shares of Series A Preferred Stock and the holders of Common
Shares and any other capital stock of the Corporation having general voting
rights shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled
to vote with holders of Common Shares as set forth herein) for taking any
corporate action.
A-3
<PAGE>
4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 2 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire
shares of any such junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on a
parity with the Series A Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for
A-4
<PAGE>
consideration any shares of stock of the Corporation unless the Corporation
could, under paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and cancelled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock subject to the
conditions and restrictions on issuance set forth herein, in the Articles of
Incorporation, or in any other resolutions creating a series of Preferred Stock
or any similar stock or as otherwise required by law.
6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made (A)
to the holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received $100.00 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment,
provided that the holders of shares of Series A Preferred Stock shall be
entitled to receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of Common Shares, or (B) to the holders of
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, except
distributions made ratably on the Series A Preferred Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time declare or pay any dividend on the Common Shares
payable in Common Shares, or effect a subdivision or combination or
consolidation of the outstanding Common Shares (by reclassification or otherwise
than by payment of a dividend in Common Shares) into a greater or lesser number
of Common Shares, then in each such case the aggregate amount to which holders
of shares of Series A Preferred Stock were entitled immediately prior to such
event under the proviso in clause (A) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were outstanding
immediately prior to such event.
A-5
<PAGE>
7. Consolidation, Merger, Etc. In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the Common
Shares are exchanged for or changed into other stock or securities, cash and/or
any other property, then in any such case each share of Series A Preferred Stock
shall at the same time be similarly exchanged or changed into an amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
Common Share is changed or exchanged. In the event the Corporation shall at any
time declare or pay any dividend on the Common Shares payable in Common Shares,
or effect a subdivision or combination or consolidation of the outstanding
Common Shares (by reclassification or otherwise than by payment of a dividend in
Common Shares) into a greater or lesser number of Common Shares, then in each
such case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
Common Shares outstanding immediately after such event and the denominator of
which is the number of Common Shares that were outstanding immediately prior to
such event.
8. No Redemption. The shares of Series A Preferred Stock shall not be
redeemable.
9. Rank. The Series A Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all series of any
other class of the Corporation's Preferred Stock.
10. Amendment. The Articles of Incorporation of the Corporation shall not
be amended in any manner which would materially alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
A-6
<PAGE>
Microfilm Number _________________
Entity Number 748548
Filed with the Department of State on September 23, 1992
/s/
Secretary of the Commonwealth
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 89)
In compliance with the requirements of 15 Pa.C.S. ss.1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that:
1. The name of the corporation is: NATIONAL PENN BANCSHARES, INC.
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) commercial registered office provider and the county of
venue is (the Department is hereby authorized to correct the following
address to conform to the records of the Department):
(a) Philadelphia and Reading Avenues, Boyertown, Pennsylvania 19512, Berks
Number and Street City State Zip County
(b) _________________________________________________________________________
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office provider,
the county in (b) shall be deemed the county in which the corporation is
located for venue and official publication purposes.
3. The statute by or under which it was incorporated is: Act of May 5, 1933,
P.L. 364, as amended.
4. The original date of its incorporation is: January 28, 1982
5. (Check, and if appropriate complete, one of the following):
[_] The amendment shall be effective upon filing these Articles of
Amendment in the Department of State.
[x] The amendment shall be effective on: October 1, 1992
6. (Check one of the following):
[_] The amendment was adopted by the shareholders pursuant to 15 Pa.C.S.
ss.1914(a) and (b).
[x] The amendment was adopted by the board of directors pursuant to 15
Pa.C.S. ss.1914(c).
7. (Check, and if appropriate complete, one of the following):
[_] The amendment adopted by the corporation, set forth in full, is as
follows:
[x] The amendment adopted by the corporation as set forth in full in
Exhibit A, attached hereto and made a part hereof.
<PAGE>
8. (Check if the amendment restates the Articles):
[_] The restated Articles of Incorporation supersede the original Articles
and all amendments thereto.
IN TESTIMONY WHEREOF the undersigned corporation has caused these Articles
of Amendment to be signed by a duly authorized officer thereof this 22nd day of
September, 1992.
NATIONAL PENN BANCSHARES, INC.
(Name of Corporation)
BY: /s/ Lawrence T. Jilk, Jr.
(Signature)
TITLE: President and Chief
Executive Officer
<PAGE>
EXHIBIT A
Article Fifth of the Company's Articles of Incorporation is amended to read
as follows:
FIFTH. The total number of Common Shares that the Corporation shall have
authority to issue is 20,000,000 shares of the par value of $2.50 per
share.
Upon such change becoming effective, each Common Share of the Company
issued at the time such change becomes effective (including shares then held by
the Company) shall be changed into two shares of par value of $2.50 each, all of
one class, and no change shall be made in connection therewith in the amount of
the capital accounts of the Company.
<PAGE>
Microfilm Number 9753-694
Entity Number 748548
Filed with the Department of State on July 10, 1997
/s/
Secretary of the Commonwealth
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 90)
In compliance with the requirements of 15 Pa.C.S. ss.1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that:
1. The name of the corporation is: NATIONAL PENN BANCSHARES, INC.
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registered office provider and
the county of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):
(a) PHILADELPHIA AND READING AVENUES BOYERTOWN PA 19512 BERKS
Number and Street City State Zip County
(b) c/o:______________________________________________________________________
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office provider,
the county in (b) shall be deemed the county in which the corporation is
located for venue and official publication purposes.
3. The statute by or under which it was incorporated is: ACT OF MAY 5, 1933,
P.L. 364, AS AMENDED.
4. The date of its incorporation is: JANUARY 28, 1982
5. (Check, and if appropriate complete, one of the following):
[_] The amendment shall be effective upon filing these Articles of
Amendment in the Department of State.
[x] The amendment shall be effective on: July 15, 1997 at 12:00 A.M.
6. (Check one of the following):
[_] The amendment was adopted by the shareholders (or members) pursuant to
15 Pa.C.S. ss.1914(a) and (b).
[x] The amendment was adopted by the board of directors pursuant to 15
Pa.C.S. ss.1914(c).
7. (Check, and if appropriate complete, one of the following):
[_] The amendment adopted by the corporation, set forth in full, is as
follows:
[x] The amendment adopted by the corporation is set forth in full in
Exhibit A attached hereto and made a part hereof.
<PAGE>
8. Check if the amendment restates the Articles):
[_] The restated Articles of Incorporation supersede the original Articles
and all amendments thereto.
IN TESTIMONY WHEREOF the undersigned corporation has caused these Articles
of Amendment to be signed by a duly authorized officer thereof this ____ day of
July, 1997.
NATIONAL PENN BANCSHARES, INC.
(Name of Corporation)
BY: /s/ Wayne R. Weidner
(Signature)
TITLE: Executive Vice President
<PAGE>
EXHIBIT A
Article Fifth of the Company's Articles of Incorporation is amended to read
as follows:
FIFTH. The total number of Common Shares that the Corporation shall have
authority to issue is 20,666,667 shares of the par value of $1.875 per
share.
Upon such change becoming effective, every three Common Shares of the
Company issued at the time such change becomes effective (including shares then
held by the Company) shall be changed into four shares of par value of $1.875
each, all of one class, and no change shall be made in connection therewith in
the amount of the capital accounts of the Company.
<PAGE>
Entity Number 748548
Filed with the Department of State on August 7, 1997
/s/
Secretary of the Commonwealth
ARTICLES OF AMENDMENT-DOMESTIC BUSINESS CORPORATION
DSCB:15-1915 (Rev 90)
In compliance with the requirements of 15 Pa.C.S. ss.1915 (relating to
articles of amendment), the undersigned business corporation, desiring to amend
its Articles, hereby states that:
1. The name of the corporation is: NATIONAL PENN BANCSHARES, INC.
2. The (a) address of this corporation's current registered office in this
Commonwealth or (b) name of its commercial registered office provider and
the county of venue is (the Department is hereby authorized to correct the
following information to conform to the records of the Department):
(a) PHILADELPHIA AND READING AVENUES BOYERTOWN PA 19512 BERKS
Number and Street City State Zip County
(b) c/o:______________________________________________________________________
Name of Commercial Registered Office Provider County
For a corporation represented by a commercial registered office provider,
the county in (b) shall be deemed the county in which the corporation is
located for venue and official publication purposes.
3. The statute by or under which it was incorporated is: ACT OF MAY 5, 1933,
P.L. 364, AS AMENDED.
4. The date of its incorporation is: JANUARY 28, 1982
5. (Check, and if appropriate complete, one of the following):
[x] The amendment shall be effective upon filing these Articles of
Amendment in the Department of State.
[ ] The amendment shall be effective on: ___________ at __________.
Date Hour
6. (Check one of the following):
[_] The amendment was adopted by the shareholders (or members) pursuant to
15 Pa.C.S. ss.1914(a) and (b).
[x] The amendment was adopted by the board of directors pursuant to 15
Pa.C.S. ss.1914(c).
7. (Check, and if appropriate complete, one of the following):
[_] The amendment adopted by the corporation, set forth in full, is as
follows:
[x] The amendment adopted by the corporation is set forth in full in
Exhibit A attached hereto and made a part hereof.
<PAGE>
8. Check if the amendment restates the Articles):
[_] The restated Articles of Incorporation supersede the original Articles
and all amendments thereto.
IN TESTIMONY WHEREOF the undersigned corporation has caused these Articles
of Amendment to be signed by a duly authorized officer thereof this 31st day of
July, 1997.
NATIONAL PENN BANCSHARES, INC.
(Name of Corporation)
BY: /s/ Wayne R. Weidner
(Signature)
TITLE: Executive Vice President
<PAGE>
EXHIBIT A
Article Fifth of the Company's Articles of Incorporation is amended to read
as follows:
FIFTH. The total number of Common Shares that the Corporation shall have
authority to issue is 26,666,667 shares of the par value of $1.875 per
share.
Upon such change becoming effective, every three Common Shares of the
Company issued at the time such change becomes effective (including shares then
held by the Company) shall be changed into four shares of par value of $1.875
each, all of one class, and no change shall be made in connection therewith in
the amount of the capital accounts of the Company.
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000700733
<NAME> NATIONAL PENN BANCSHARES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 52,559
<INT-BEARING-DEPOSITS> 2,553
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 249,715
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 249,715
<LOANS> 1,095,799
<ALLOWANCE> 24,006
<TOTAL-ASSETS> 1,431,491
<DEPOSITS> 1,069,510
<SHORT-TERM> 86,325
<LIABILITIES-OTHER> 16,371
<LONG-TERM> 141,360
20,085
0
<COMMON> 0
<OTHER-SE> 97,840
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<INTEREST-LOAN> 49,623
<INTEREST-INVEST> 7,313
<INTEREST-OTHER> 95
<INTEREST-TOTAL> 57,031
<INTEREST-DEPOSIT> 19,099
<INTEREST-EXPENSE> 25,320
<INTEREST-INCOME-NET> 31,711
<LOAN-LOSSES> 2,400
<SECURITIES-GAINS> 842
<EXPENSE-OTHER> 22,292
<INCOME-PRETAX> 12,948
<INCOME-PRE-EXTRAORDINARY> 8,919
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,919
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.11
<YIELD-ACTUAL> 4.99
<LOANS-NON> 8,226
<LOANS-PAST> 3,629
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 22,746
<CHARGE-OFFS> 1,585
<RECOVERIES> 445
<ALLOWANCE-CLOSE> 24,006
<ALLOWANCE-DOMESTIC> 19,656
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 4,350
</TABLE>
