SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 11, 2000
-------------
NATIONAL PENN BANCSHARES, INC.
-----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 0-10957 23-2215075
------------------------------------------------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Ident. No.)
Philadelphia and Reading Avenues, Boyertown, PA 19512
-----------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (215) 367-6001
--------------
N/A
------------------------------------------------------------------
(Former name or former address, if changed since last report)
1
<PAGE>
Item 5. Other Events.
----------------------
Panasia Bank
On July 11, 2000, National Penn Bancshares, Inc., a Pennsylvania
corporation and registered bank holding company with approximately $2.3 billion
in assets ("NPB"), acquired Panasia Bank, a New Jersey state bank ("Panasia"),
pursuant to an Agreement dated February 14, 2000 (the "Acquisition Agreement"),
between NPB and Panasia (the "Acquisition"). As a result, NPB became a two- bank
holding company, owning both National Penn Bank ("NPBank") and Panasia. Panasia
has approximately $110 million in assets and operates three bank offices in
northern New Jersey and a loan production office in Flushing, Queens, New York.
Immediately prior to completion of the Acquisition, there were 664,783
shares of Panasia common stock issued and outstanding. On the effective date of
the Acquisition, each outstanding share of Panasia common stock was
automatically converted into the right to receive $29 in cash. The Acquisition
was treated as a "purchase" for financial accounting purposes.
Immediately prior to completion of the Acquisition, there were stock
options outstanding and exercisable for 39,000 shares of Panasia common stock.
On the effective date of the Acquisition, each such option was automatically
converted into the right to receive cash in an amount equal to the difference
between $29 and the exercise price of the option multiplied by the number of
shares of Panasia stock covered by that option.
The aggregate consideration paid by NPB in consummation of the
Acquisition was $20,004,707. Principally in order to finance the Acquisition,
NPB borrowed $21 million from The Northern Trust Company pursuant to a Loan
Agreement dated July 11, 2000. The loan is to be repaid in quarterly
installments of principal of $1,312,500 each, over a four-year period, together
with interest on the unpaid principal balance of the loan, at a floating rate,
as set forth in the Loan Agreement. The loan is unsecured.
The foregoing summary of the Acquisition does not purport to be
complete and is qualified in its entirety by reference to the Acquisition
Agreement, which is filed herein as Exhibit 2.1. A copy of NPB's press release
dated July 11, 2000, is filed herein as Exhibit 99.1.
Community Independent Bank, Inc.
On July 23, 2000, NPB and Community Independent Bank, Inc. ("CIB")
entered into an Agreement (the "Merger Agreement") which provides, among other
things, for the merger of CIB with and into NPB, with NPB surviving the merger
(the "Merger"). CIB is a Pennsylvania corporation and registered bank holding
company which
2
<PAGE>
owns Bernville Bank, N.A. ("BBank"). BBank has approximately $110 million in
assets and operates four community bank offices in Berks County, Pennsylvania.
The Merger Agreement provides for the exchange of nine-tenths (9/10)
share of NPB common stock for each share of CIB common stock outstanding on the
effective date of the Merger. As of July 23, 2000, there are 700,327 shares of
CIB common stock outstanding. If the price of NPB common stock were to decline
to less than $17 per share during the 20 trading day period ending on the
trading day 31 days before the date of the CIB shareholders' meeting, and that
decline were to exceed by 15% the decline in an index of stock prices of a group
of comparable Pennsylvania bank holding companies over the same time period, CIB
could terminate the Agreement unless NPB chose to increase the exchange ratio to
ninety-five hundredths (95/100) share for each CIB share. Otherwise, the
exchange ratio is fixed.
The Merger Agreement provides for the issuance of stock options for NPB
common stock in substitution for stock options for CIB common stock, to the
extent the CIB stock options remain outstanding on the closing date. The
substitute options would reflect the final exchange ratio and otherwise be on
the same terms and conditions as the CIB options. There are options outstanding
for 22,600 shares of CIB common stock.
The Merger is intended to be a tax-free exchange for CIB shareholders
to the extent they receive shares of NPB common stock and a "pooling of
interests" for financial accounting purposes. NPB and CIB anticipate that
closing of the Merger will occur early in the first quarter of 2001.
The Merger is subject to a number of conditions, including approval by
the Board of Governors of the Federal Reserve System and the Pennsylvania
Department of Banking and approval by shareholders of CIB. CIB shareholder
approval will require the affirmative vote of a majority of the votes cast by
all shareholders entitled to vote on the Merger.
All directors of CIB (collectively holding approximately 7.8% of the
outstanding shares of CIB common stock) have agreed to vote in favor of the
Merger.
In connection with the Merger Agreement, NPB and CIB entered into a
Stock Option Agreement in which CIB granted to NPB the right, under certain
circumstances, to purchase up to 139,200 shares of CIB common stock (equal to
19.9% of CIB's common stock outstanding on July 23, 2000) at a price per share
of $10.
Upon completion of the Merger, NPB intends to merge BBank with and into
NPBank, with NPBank surviving such merger. BBank would become part of NPBank's
Berks County Division.
3
<PAGE>
One member of CIB's Board of Directors is to be mutually selected to
become a member of NPB's Board of Directors, and that person and another
mutually-selected person are to become members of the Board of Directors of
NPBank. All current members of the CIB Board of Directors are to become members
of NPBank's Berks County Division Board.
The foregoing description of the Merger Agreement does not purport to
be complete and is qualified in its entirety by reference to the Merger
Agreement, which is filed herein as Exhibit 2.2. A copy of NPB's press release
dated July 24, 2000, is filed herein as Exhibit 99.2.
Effective July 23, 2000, NPB rescinded its stock repurchase program,
and CIB terminated its Dividend Reinvestment Plan.
The merger is expected to be accretive to National Penn's earnings in
2002. There are a variety of factors that could cause the actual results to
differ materially from this forward-looking statement. These include, but are
not limited to:
(1) expected cost savings from the Merger, including reductions in
interest and non-interest expense, may not be fully realized or realized within
the expected time-frame;
(2) revenues following the Merger may be lower than expected, or loan
losses, deposit attrition, operating costs, customer losses or business
disruption following the Merger may be greater than expected;
(3) commercial loan growth following the Merger may be lower than
expected;
(4) competitive pressures among banking and non-banking organizations
may increase significantly;
(5) costs, difficulties or delays related to the integration of the
businesses or systems of NPB and CIB may be greater or longer than expected;
(6) changes in the interest rate environment may reduce interest
margins;
(7) general economic or business conditions, either nationally or in
the region in which the combined company will be doing business, may be less
favorable than expected, resulting in, among other things, a deterioration in
credit quality or a reduced demand for credit;
(8) legislation or regulatory changes may adversely affect the
businesses in which the combined company would be engaged; and
4
<PAGE>
(9) changes may occur in the securities markets.
Additional information with respect to factors that may cause actual
results to differ materially from those contemplated by such forward-looking
statements is included in NPB's annual report on Form 10-K for 1999 and NPB's
quarterly report on Form 10-Q for 1st quarter 2000, and may be included in
subsequent reports filed by NPB with the Securities and Exchange Commission.
Item 7. Financial Statements and Exhibits.
-------------------------------------------
(c) Exhibits.
---------
2.1 - Agreement dated February 14, 2000, between National
Penn Bancshares, Inc. and Panasia Bank.
(Incorporated by reference to Exhibit 2.2 to NPB's
annual report on Form 10-K for 1999.)
2.2 - Agreement dated July 23, 2000, between National
Penn Bancshares, Inc. and Community Independent
Bank, Inc. (Schedules are omitted pursuant to
Regulation S-K, Item 601(b)(2); the Registrant
agrees to furnish a copy of such schedules to the
Securities and Exchange Commission upon request.)
4.1 - Term Loan Agreement dated July 11, 2000, between
National Penn Bancshares, Inc. and The Northern
Trust Company. (Omitted pursuant to Regulation S-K,
Item 601(b)(4)(iii); the Registrant agrees to
furnish a copy of such agreement to the Securities
and Exchange Commission upon request.)
99.1 - Press Release dated July 11, 2000, of National Penn
Bancshares, Inc.
99.2 - Press Release dated July 23, 2000, of National Penn
Bancshares, Inc.
5
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONAL PENN BANCSHARES, INC.
By /s/ Lawrence T. Jilk, Jr.
--------------------------
Name: Lawrence T. Jilk, Jr.
Title: Chairman & Chief Executive Officer
Dated: July 27, 2000
6
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
2.1 Agreement dated February 14, 2000, between
National Penn Bancshares, Inc. and Panasia
Bank. (Incorporated by reference to Exhibit
2.2 to NPB's annual report on Form 10-K for
1999.)
2.2 Agreement dated July 23, 2000, between
National Penn Bancshares, Inc. and Community
Independent Bank, Inc. (Schedules are omitted
pursuant to Regulation S-K, Item 601(b)(2);
the Registrant agrees to furnish a copy of
such schedules to the Securities and Exchange
Commission upon request.)
4.1 Term Loan Agreement dated July 11, 2000,
between National Penn Bancshares, Inc. and The
Northern Trust Company. (Omitted pursuant to
Regulation S-K, Item 601(b)(4)(iii); the
Registrant agrees to furnish a copy of such
agreement to the Securities and Exchange
Commission upon request.)
99.1 Press Release dated July 11, 2000, of National
Penn Bancshares, Inc.
99.2 Press Release dated July 24, 2000, of National
Penn Bancshares, Inc.
7
