11-K 1 npb11k.htm NATIONAL PENN BANCSHARES National Penn Bancshares
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________

FORM 11-K
 
[ X]    ANNUAL REPORT PURSUANT TO SECTION 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2005
 
OR
 
[ ]    TRANSITION REPORT PURSUANT TO SECTION 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: ___________ to _________________
 
000-22537-01
(Commission File Number)
 
NATIONAL PENN BANCSHARES, INC.
CAPITAL ACCUMULATION PLAN
(Full title of the plan)
 
NATIONAL PENN BANCSHARES, INC.
P. O. Box 547
Philadelphia and Reading Avenues,
Boyertown, PA 19512
 
(Name of issuer of the securities held pursuant
to the plan and the address of its principal executive office)
 
Notices and communications from the Securities and Exchange Commission relating to this Report should be forwarded to:
 
 
National Penn Bancshares, Inc.
Philadelphia and Reading Avenues - P. O. Box 547
Boyertown, Pennsylvania 19512
 
Attention: Gary L. Rhoads
Chief Financial Officer
 
With copies to:
 
H. Anderson Ellsworth, Esquire
Senior Vice President and Securities Counsel
National Penn Bank
P. O. Box 547
Boyertown, Pennsylvania 19512
 
 
1
 
NATIONAL PENN BANCSHARES, INC.
 
FORM 11-K
 
TABLE OF CONTENTS

 
Page 
   
Report of Independent Registered Public Accounting Firm
3
   
Financial Statements:
  
   
Statements of Net Assets Available for Plan Benefits
4
   
Statement of Changes in Net Assets Available for Plan Benefits
5
   
Notes to Financial Statements
6
   
Supplemental Information (1)
13
Line 4i.    Schedule of Assets (Held at Year End)
14
Line 4i.        Schedule of Assets (Acquired and Disposed of Within Year)
15
Line 4j.    Schedule of Reportable (5%) Transactions
16
   
Signatures
17
   
Exhibits
18
Exhibit 23   Consent of Independent Registered Public Accounting Firm
19
 

(1)      
All other schedules required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because there is no information to report.

2

REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Administrative Committee
National Penn Bancshares, Inc. Capital Accumulation Plan

We have audited the accompanying statements of net assets available for plan benefits of the National Penn Bancshares, Inc. Capital Accumulation Plan (the Plan) as of December 31, 2005 and 2004, and the related statement of changes in net assets available for plan benefits for the year ended December 31, 2005. These financial statements are the responsibility of the Plan Administrator. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the National Penn Bancshares, Inc. Capital Accumulation Plan as of December 31, 2005 and 2004, and the changes in net assets available for plan benefits for the year ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America.

Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets (Held at Year End) and the Schedule of Reportable (5%) Transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan’s management. These supplemental schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ GRANT THORNTON LLP
 


Philadelphia, Pennsylvania
June 26, 2006

3
 

NATIONAL PENN BANCSHARES, INC.
CAPITAL ACCUMULATION PLAN 

FINANCIAL STATEMENTS
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS

   
 December 31
  
   
2005
  
 2004
  
ASSETS
           
     Investments
  
$
50,881,430
  
$
50,219,370
  
     Contributions receivable
    
100,060
    
3,148
  
     Other receivables
    
7,841
    
0
  
     Cash and cash equivalents
    
93,312
    
2,811,694
  
   
$
51,082,643
  
$
53,034,212
  
               
LIABILITIES
              
     Other
    
11,530
    
3,321,406
 
     Total liabilities
    
11,530
    
3,321,406
  
     Net assets available for plan benefits
  
$
51,071,113
  
$
49,712,806
  
               

The accompanying notes are an integral part of this statement.



4


STATEMENT OF CHANGES IN NET ASSETS
AVAILABLE FOR PLAN BENEFITS
 
   
Year Ended
  
   
December 31, 2005
  
Additions
      
Additions to net assets attributed to investment income (loss)
      
       
Net depreciation in fair value of investments
  
$
(1,886,816
)
Interest and dividend income
    
1,739,005
  
Total investment loss
    
(147,811
)
         
Contributions
        
     Employer
    
1,286,481
  
     Participants
    
3,474,102
  
     Rollovers
    
498,408
  
Total contributions
    
5,258,991
  
Total additions
    
5,111,180
  
         
Deductions
        
Benefits paid to participants
    
(3,731,726
)
Other
    
(21,147
)
Total deductions
    
(3,752,873
)
         
NET INCREASE
    
1,358,307
  
         
Net assets available for plan benefits
        
Beginning of year
    
49,712,806
  
         
End of year
  
$
51,071,113
  

The accompanying notes are an integral part of this statement.

5

NATIONAL PENN BANCSHARES, INC.
CAPITAL ACCUMULATION PLAN

NOTES TO FINANCIAL STATEMENTS
December 31, 2005 and 2004

NOTE A - DESCRIPTION OF THE PLAN

The following description of the National Penn Bancshares, Inc. Capital Accumulation Plan (the Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.

1. General

 
The Plan is a defined contribution plan covering substantially all employees of National Penn Bancshares, Inc. and its direct and indirect subsidiaries with employees (collectively, the Company). It is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

On January 25, 2006, the Plan was amended to designate persons eligible for participation in the Plan on the first day of the month following 30 days of employment, and to define that for newly-eligible employees, enrollment at 1% of base compensation will be automatic, subject to an “opt-out” procedure.

2. Contributions

 
Participants may make contributions of pretax compensation, as defined in the Plan, subject to applicable limits under the Internal Revenue Code. The Company makes a matching contribution to the Plan equal to 50% of a participant’s salary reduction contribution up to 7% of compensation for the Plan year. The matching contribution is made in cash and is invested based upon each participant’s investment choice.

On March 16, 2006, the Plan was amended to revise the allocation of the discretionary profit sharing contribution provided for in the January 25, 2006 amendment (described below) from an equal percentage of compensation for all employees to the following three-tier allocation: first, an equal percentage, not to exceed 1%, of compensation through $100,000; second, an equal percentage not to exceed 1%, of compensation over $100,000 to the dollar limit ($220,000); and third, an equal percentage of all compensation.

On January 25, 2006, the Plan was amended to provide for a discretionary profit sharing contribution to be allocated among eligible employees with the intention to provide, in the first three years, that each participant will receive a minimum contribution of 1% of his or her base compensation (up to a maximum compensation amount of $100,000).

3. Participant Accounts

Each participant’s account is credited with the participant’s contributions and allocations of (a) the Company’s contributions and (b) Plan net earnings. Forfeitures of terminated participants’ non-vested accounts are used to reduce the Company’s contributions. At December 31, 2005, forfeited non-vested amounts totaled approximately $21,000. The benefits to which a participant is entitled are the benefits that can be provided from the participants’ vested accounts.
 

 
6

NATIONAL PENN BANCSHARES, INC.
CAPITAL ACCUMULATION PLAN

NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2005 and 2004

NOTE A - DESCRIPTION OF THE PLAN - Continued

4. Vesting

 
Participants are 100% vested in their accounts derived from salary reduction contributions. Vesting in accounts derived from Company contributions is based on years of service. Participants are vested at a rate of 25% for each of the first two years of service and 50% after the third year of service. A participant is 100% vested after three years of credited service.

5. Payment of Benefits

 
On termination of service, benefits are payable in a lump sum equal to the value of the participant’s account. If a participant’s employment with the Company is terminated for any reason other than death, disability or retirement and their account balance does not exceed $5,000, the Plan will automatically distribute a lump-sum payment to the participant. If their account balance is greater than $5,000, the participant has the option of receiving a lump-sum payment or maintaining their account balance with the Plan for an annual fee.

6. Loans to Participants

 
The trustee may make loans from the Plan to participants in accordance with the Plan document. All loans to participants are considered earmarked investments of the borrowing participant and bear reasonable rates of interest. Participants may borrow up to 50% of their vested balance up to $50,000. All loans are to be repaid within five years unless the loan is used to acquire a principal residence, in which case the term may be longer.

On May 17, 2005, the Plan was amended to increase the number of loans a participant may receive from the participant’s Plan account from one to two.


NOTE B - SUMMARY OF ACCOUNTING POLICIES

A summary of the Plan’s significant accounting policies consistently applied in the preparation of the accompanying financial statements follows.

1. Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.


7



NATIONAL PENN BANCSHARES, INC.
CAPITAL ACCUMULATION PLAN

NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2005 and 2004

NOTE B - SUMMARY OF ACCOUNTING POLICIES - Continued

2. Cash and Cash Equivalents

 
The Plan considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

3. Investment Valuation and Income Recognition

 
The Plan’s investments are stated at fair value except for loan receivables which are valued at cost which approximates fair value. Shares of registered investment companies are valued at quoted market prices which represent the net asset value of shares held by the Plan at year-end. Interests in common/collective trust funds are stated at estimated fair value as provided by the trustee. National Penn Bancshares, Inc. common stock is valued at its quoted market price.

The change in fair value of assets during the year is measured by the difference between the fair value at year-end and the fair value at the beginning of the year and is reflected in the statements of changes in net assets available for benefits as net appreciation in fair value of investments.

On May 17, 2005, the Plan was amended (a) to transfer Plan administration from a monthly valuation basis to a daily valuation basis, effective July 1, 2005, (b) to change the “default investment” for those participants in the Plan who fail to make an election, and (c) to comply with the “automatic rollover rules” of Section 401(a)(31)(B) of the Internal Revenue Code of 1986, as amended.

The purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend basis.

4. Payment of Benefits

 
Benefits are recorded when paid.

5. Risks and Uncertainties

The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefit.


8


NATIONAL PENN BANCSHARES, INC.
CAPITAL ACCUMULATION PLAN

NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2005 and 2004

NOTE C - INVESTMENTS

The following table presents the fair value of investments representing 5% or more of the Plan’s net assets.

FAIR VALUE OF INVESTMENTS

   
December 31,
  
   
2005
  
2004
  
Investments at fair value as determined by quoted
          
     market price or net asset value:
          
     National Penn Bancshares, Inc. Common Stock
  
$
16,354,158
  
$
18,331,109
  
Registered investment companies:
              
    Income Fund of America R5 Fund
    
5,229,637
    
5,466,547
  
    Investment Company of America R5 Fund
    
4,981,856
    
4,946,152
  
    Ariel Appreciation Fund
    
4,598,533
    
-
  
    PIMCO Total Return lII ADM Fund
    
3,039,065
    
-
  
    Fidelity International Discovery Fund
    
2,590,691
    
-
  
    Fidelity Spartan 500 Index Fund
    
6,075,133
    
-
  
Other
    
7,012,552
    
3,712,219
  
     
49,881,625
    
32,456,027
  
Investments at estimated fair value:
              
Common/collective trust funds:
              
    Diversified Managers Equity Fund
    
-
    
3,676,308
  
    Income Fund
    
-
    
2,951,892
  
    Equity Fund
    
-
    
3,219,231
  
    Mid-Cap Equity Fund
    
-
    
3,500,672
  
    Other
    
-
    
1,138,118
  
Participant loans
    
999,805
    
668,266
  
Short-term investments
    
-
    
2,608,856
  
     
999,805
    
17,763,343
  
   
$
50,881,430
  
$
50,219,370
  

On August 25, 2005, the Company’s Board of Directors declared a five-for-four stock split of the Company’s common stock, distributable to shareholders of record on September 9, 2005, and which was distributed on September 30, 2005.

On August 25, 2004, the Company’s Board of Directors declared a five-for-four split of the Company’s common stock, distributable to shareholders of record as of September 10, 2004, which was distributed on September 30, 2004.



9

 
NATIONAL PENN BANCSHARES, INC.
CAPITAL ACCUMULATION PLAN

NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2005 and 2004

NOTE C - INVESTMENTS - Continued

For the year ended December 31, 2005, the Plan’s investments (including realized and unrealized gains and (losses) appreciated (depreciated) in value as follows:

Registered investment companies
  
$
545,094
  
Common/collective trust fund
    
209,971
  
National Penn Bancshares, Inc. common stock
    
(2,641,881
)
   
$
(1,886,816
)
         

NOTE D - RELATED PARTY TRANSACTIONS

 
For the period January 1, 2005 through June 30, 2005 and for the year ended December 31, 2004, certain Plan investments were interests in common/collective trust funds managed by National Penn Investors Trust Company, an indirect subsidiary of National Penn Bancshares, Inc. National Penn Investors Trust Company is the trustee as defined by the Plan document and therefore these transactions were party-in-interest transactions. The Plan paid no fees to National Penn Investors Trust Company for investment management, trustee, or other services.

Effective July 1, 2005, custodial responsibilities for the Plan were transferred from National Penn Investors Trust Company to AST Trust Company, an unaffiliated trust company. The Plan’s participation in all common/collective trust funds managed by National Penn Investors Trust Company was terminated at that time.

Participants were given the option to direct the reallocation of their accounts among the new investment choices or allow the trustee to transfer their investment balances to the comparable new investment choice according to a defined allocation.

Investment choices under the Plan currently consist of National Penn Bancshares, Inc. common stock, and certain open-end mutual funds, including equity funds, fixed income funds, lifestyle funds, and a balanced fund, stable value fund and money market fund.

NOTE E - PLAN TERMINATION

 
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts.



10

 
NATIONAL PENN BANCSHARES, INC.
CAPITAL ACCUMULATION PLAN

NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2005 and 2004

NOTE F - INCOME TAX STATUS

 
The Internal Revenue Service has determined and informed the Company by a letter dated May 14, 2003, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (the Code). Although the Plan has been amended since receiving the determination letter, the Plan administrator and the Plan’s tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Code.

NOTE G - PLAN MERGERS

 
Effective January 26, 2006, National Penn Bancshares, Inc. acquired Nittany Financial Corp., parent company of Nittany Bank. On May 8, 2006, the Plan was amended to permit employees of Nittany Financial Corp. and its subsidiaries to participate in the Plan as of  April 6, 2006. The Company anticipates merging the net assets of the Nittany Bank 401(k) Profit Sharing Plan into the Plan in 2006.

 
Effective June 10, 2004, National Penn Bancshares, Inc. acquired Peoples First, Inc., parent company of The Peoples Bank of Oxford. The Company merged the net assets of The Peoples Bank of Oxford 401(k) Retirement Plan of $4,751,000 into the Plan on December 10, 2004.
 
 
Effective December 12, 2003, National Penn Bancshares, Inc. acquired HomeTowne Heritage Bank. The Company merged the net assets of the HomeTowne Heritage Bank 401(k) Plan of $534,000 into the Plan on February 12, 2004.

 
Effective February 25, 2003, National Penn Bancshares, Inc. acquired FirstService Bank. The Company merged the net assets of $1,719,000 for FirstService Bank 401(k) Profit Sharing Plan into the Plan on August 9, 2004.
 
 
NOTE H - RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500

The following is a reconciliation of net assets available for benefits per the financial statement for the year ended December 31, 2005, to Form 5500:

Net assets available for benefits per the financial statements
  
$
51,071,113
  
Amounts allocated to withdrawing participants
    
(45,480
)
Net assets available for benefits per the Form 5500
  
$
51,025,633
  


11




NATIONAL PENN BANCSHARES, INC.
CAPITAL ACCUMULATION PLAN

NOTES TO FINANCIAL STATEMENTS - CONTINUED
December 31, 2005 and 2004

The following is a reconciliation of benefits paid to participants per the financial statements for the year ended December 31, 2005, to Form 5500:

Benefits paid to participants per the financial statements
  
$
3,731,726
  
Add: Amounts allocated to withdrawing participants at December 31, 2005
    
45,480
  
Benefits paid to participants per Form 5500
  
$
3,777,206
  

Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, 2005, but not yet paid as of that date.




12

NATIONAL PENN BANCSHARES, INC.
CAPITAL ACCUMULATION PLAN

SUPPLEMENTAL INFORMATION

13


NATIONAL PENN BANCSHARES, INC.
CAPITAL ACCUMULATION PLAN
EIN 23-2215075
Plan No. 001

Schedule H, line 4i - Schedule of Assets (Held at Year End)
 December 31, 2005

(a)
(b) Identity of issue, borrower,
lessor or similar party
(c) Description of investment, including maturity date, rate of interest, collateral, par or maturity value
(d) Cost
(e) Current value
         
*
National Penn Bank 401(k) Cash Accts
Cash Account
93,312
93,312
         
*
National Penn Bancshares, Inc.
Common Stock - 858,486 shares
18,225,471
16,354,158
         
 
ABN AMRO/TAMRO Small Cap Fund-N
Open-Ended Mutual Fund-7,338 shares
117,384
118,725
         
 
Income Fund of America R5 Fund
Open-Ended Mutual Fund-288,930 shares
5,297,475
5,229,637
 
Ariel Appreciation Fund
Open-Ended Mutual Fund-98,428 shares
4,747,131
4,598,533
 
Excelsior Value & Restructuring Fund
Open-Ended Mutual Fund-30,642 shares
1,354,332
1,415,062
 
Harbor Capital Appreciation Fund - Institutional
Open-Ended Mutual Fund-37,238 shares
1,100,475
1,216,192
 
Investment Company of America R5 Fund
Open-Ended Mutual Fund-158,911 shares
4,887,812
4,981,856
 
Gartmore Morley Stable Value Retirement Fund
Open-Ended Mutual Fund-62,725 shares
1,205,014
1,226,106
 
PIMCO Total Return lII ADM Fund
Open-Ended Mutual Fund-327,485 shares
3,108,472
3,039,065
 
Fidelity Cash Reserves
Open-Ended Mutual Fund-1,585,228 shares
1,585,228
1,585,228
 
Fidelity Freedom 2010 Fund
Open-Ended Mutual Fund-8,606 shares
119,786
120,915
 
Fidelity Freedom 2020 Fund
 
Open-Ended Mutual Fund-70,826 shares
1,015,348
1,041,857
 
Fidelity Freedom 2030 Fund
Open-Ended Mutual Fund-12,140 shares
174,886
182,336
 
Fidelity Freedom 2040 Fund
Open-Ended Mutual Fund-12,019 shares
102,021
106,131
 
Fidelity International Discovery Fund
Open-Ended Mutual Fund-81,829 shares
2,348,399
2,590,691
 
Fidelity Spartan 500 Index Fund
Open-Ended Mutual Fund-70,625 shares
5,862,178
6,075,133
*
Participant loans
Interest rates range from 4.18% to 11.5%
999,805
999,805
   
Loans mature through 2035
    
     
$52,344,529
$50,974,742
*Party-in-interest


14

NATIONAL PENN BANCSHARES, INC.
CAPITAL ACCUMULATION PLAN
EIN 23-2215075
Plan No. 001

Schedule H, line 4i - Schedule of Assets (Acquired and Disposed of Within Year)
 December 31, 2005

 
(a) Identity of issue, borrower, lessor or similar party
(b) Description of investment including maturity date, rate of interest, collateral, par, or maturity value
(c)
Costs of acquisitions
(d) Proceeds of dispositions
       
*NPITC Diversified Managers Equity Fund
Common/Collective Trust Fund
$ 286,500
$ 3,964,014
*NPITC Income Fund
Common/Collective Trust Fund
152,207
3,177,890
*NPITC Equity Fund
Common/Collective Trust Fund
134,710
3,305,519
*NPITC Mid-Cap Equity Fund
Common/Collective Trust Fund
68,271
3,706,351
*NPITC Fiduciary Reserve Fund
Common/Collective Trust Fund
112,608
1,246,366
Vanguard 500
Open-Ended Mutual Fund
224,732
2,727,791
Artisan
Open-Ended Mutual Fund
129,144
1,281,849
American Income Fd Amer-R5
Open-Ended Mutual Fund
234,588
5,728,804
American Funds Investment Co of America R5
Open-Ended Mutual Fund
296,142
5,236,202
       
Total Investments
  
$1,638,901
$30,374,786

*Party-in-interest 

15


NATIONAL PENN BANCSHARES, INC.
CAPITAL ACCUMULATION PLAN

EIN 23-2215075
Plan No. 001

Schedule H, Line 4j - Schedule of Reportable (5%) Transactions
Year Ended December 31, 2005

(a)
Identity of party involved
(b)
Description of asset
(c)
Purchase price
(d)
Selling price
(g)
Cost of asset
(h)
Current value of asset on transaction date
(i)
Net gain or (loss)
Category (i) Transactions:
*NPITC Diversified Managers Equity Fund
Common / collective trust fund
-
$3,959,457
$3,941,655
$3,959,457
$17,802
*NPITC Income Fund
Common / collective trust fund
-
3,132,185
3,046,479
3,132,185
85,706
*NPITC Equity Fund
Common / collective trust fund
-
3,237,174
3,270,629
3,237,174
(33,455)
*NPITC Mid-Cap Equity Fund
Common / collective trust fund
-
3,592,912
3,437,722
3,592,912
155,190
Vanguard 500
Open-ended mutual fund
-
2,685,408
2,692,180
2,685,408
(6,772)
Income Fund of America R5 Fund
Open-ended mutual fund
-
5,260,998
5,290,645
5,260,998
(29,647)
Investment Company of America R5 Fund
Open-ended mutual fund
-
5,138,287
5,128,262
5,138,287
10,025
Income Fund of America R5 Fund
Open-ended mutual fund
5,148,907
-
5,148,907
5,148,907
-
Investment Company of America R5 Fund
Open-ended mutual fund
4,994,613
-
4,994,613
4,994,613
-
Ariel Appreciation Fund
Open-ended mutual fund
3,569,347
-
3,569,347
3,569,347
-
PIMCO Total Return lII ADM Fund
Open-ended mutual fund
3,112,299
-
3,112,299
3,112,299
-
Fidelity Spartan 500 Index Fund
Open-ended mutual fund
5,848,226
-
5,848,226
5,848,226
-
Category (iii) Series of Transactions:
Fidelity International Discovery Fund
Open-ended mutual fund
2,603,466
-
2,603,466
2,603,466
-

* Party-in-interest
Columns (e) - lease rentals, and (f) - expense incurred with transaction are not presented as this information is not applicable for 2005.

16
 
SIGNATURES

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned, hereunto duly authorized, in the Borough of Boyertown, Commonwealth of Pennsylvania, on this 29th day of June, 2006.
   
 
NATIONAL PENN BANCSHARES, INC.
 
CAPITAL ACCUMULATION PLAN
   
 
By National Penn Bancshares, Inc.,
 
as Plan Administrator
   
   
 
By /s/ Wayne R. Weidner
 
Wayne R. Weidner,
 
Chairman and Chief Executive Officer

17
 
EXHIBIT INDEX



Exhibit No.

23  Consent of Grant Thornton LLP.
 
 
18