-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GI10Su+KHwNH6g/N85jO09+B3cdDjIzp8HeDJ5JBuULxiOKH6XV/l5YDnlx+3m/n 1h5ScrPsA/HQWEveH7RZMg== 0000950159-97-000042.txt : 19970228 0000950159-97-000042.hdr.sgml : 19970228 ACCESSION NUMBER: 0000950159-97-000042 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19970227 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL PENN BANCSHARES INC CENTRAL INDEX KEY: 0000700733 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 232215075 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 000-10957 FILM NUMBER: 97544887 BUSINESS ADDRESS: STREET 1: POST OFFICE BOX 547 CITY: BOYERTOWN STATE: PA ZIP: 19512 BUSINESS PHONE: 6103696341 MAIL ADDRESS: STREET 1: POST OFFICE BOX 547 STREET 2: POST OFFICE BOX 547 CITY: BOYERTOWN STATE: PA ZIP: 19512 10-K405/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A NO. 1 (Mark one) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [fee required], for the fiscal year ended December 31, 1995, or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [no fee required], 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, Pennsylvania 19512 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (610) 367-6001 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock ($2.50 par value) Preferred Stock Purchase Rights 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of common shares of the Registrant held by nonaffiliates, based on the closing sale price as of March 15, 1996, was $127,746,595. As of March 15, 1996, the Registrant had 7,613,865 shares of Common Stock outstanding. Portions of the following documents are incorporated by reference: the definitive Proxy Statement of the Registrant relating to the Registrant's Annual Meeting of Shareholders to be held on April 23, 1996 - - Part III. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Consolidated Balance Sheets
(Dollars in thousands) December 31, ASSETS 1995 1994 Cash and due from banks $ 39,195 $ 33,195 Interest bearing deposits in banks 2,014 964 Total cash and cash equivalents 41,209 34,159 Securities held to maturity (approximate market value of $97,459 at 1994) -- 99,229 Securities available for sale at market value 240,902 138,873 ----------- ----------- Total investment securities 240,902 238,102 Loans and leases, less allowance for loan and lease losses of $20,36 and $19,310 at 1995 and 1994, respectively 918,699 811,302 Premises and equipment 19,926 17,770 Accrued interest receivable 8,867 8,001 Investments at equity 4,827 4,677 Other assets 16,948 23,163 ----------- ----------- Total assets $ 1,251,378 $ 1,137,174 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Non-interest bearing $ 134,968 $ 121,273 Interest-bearing (Includes certificates of deposit in excess of $100: 1995 -$89,881; 1994 -$65,630) 779,922 743,367 ----------- ----------- Total deposits 914,890 864,640 Securities sold under repurchase agreements and federal funds purchased 138,550 50,274 Short-term borrowings 4,370 47,967 Long-term borrowings 71,589 77,777 Accrued interest and other liabilities 15,364 11,645 ----------- ----------- Total liabilities 1,144,763 1,052,303 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 1995 -7,594,474; 1994 - 7,495,080, net of shares in Treasury: 1995 - 47,939; 1994 - 98,779 19,106 18,083 Additional paid-in capital 57,501 57,263 Valuation adjustment for securities available for sale, net of tax 6,579 (4,011) Retained earnings 24,646 16,598 Treasury stock at cost (1,217) (3,062) ----------- ----------- Total shareholders' equity 106,615 84,871 ----------- ----------- Total liabilities and shareholders'equity $ 1,251,378 $ 1,137,174 =========== ===========
The accompanying notes are an integral part of these statements. 32 Consolidated Statements of Income
(Dollars in thousands, except per shara data) Year Ended December 31, 1995 1994 1993 INTEREST INCOME Loans and leases, including fees $ 82,776 $ 70,133 $ 60,181 Investment securities Taxable 13,735 11,766 10,129 Tax-exempt 2,319 2,256 671 Federal funds sold and securities purchased under reverse repurchase agreements 114 27 133 Deposits in banks 76 77 158 -------- -------- -------- Total interest income 99,020 84,259 71,272 -------- -------- -------- INTEREST EXPENSE Deposits 32,739 22,825 20,051 Securities sold under repurchase agreements and federal funds purchased 5,613 2,347 427 Short-term borrowings 1,078 369 124 Long-term borrowings 4,406 3,307 3,237 -------- -------- -------- Total interest expense 43,836 28,848 23,839 -------- -------- -------- Net interest income 55,184 55,411 47,433 Provision for loan and lease losses 3,200 3,200 5,145 -------- -------- -------- Net interest income after provision for loan and lease losses 51,984 52,211 42,288 -------- -------- -------- OTHER INCOME Trust income 1,811 1,422 1,250 Service charges on deposit accounts 2,748 2,560 2,075 Other service charges and fees 2,360 1,723 1,360 Net gains (losses) on sale of mortgages 388 (445) 73 Equity in undistributed net earnings of affiliates 301 149 173 -------- -------- -------- Total other income 7,608 5,409 4,931 -------- -------- -------- OTHER EXPENSES Salaries, wages and employee benefits 20,215 18,984 14,295 Net premises and equipment 6,045 5,587 3,492 FDIC assessment 1,633 1,719 1,444 Other operating 9,649 10,624 9,398 -------- -------- -------- Total other expenses 37,542 36,914 28,629 -------- -------- -------- Income before income taxes and cumulative effect of change in accounting for income taxes 22,050 20,706 18,590 Applicable income tax expense 6,668 6,057 5,782 -------- -------- -------- Income before cumulative effect of change in accounting for income taxes 15,382 14,649 12,808 Cumulative effect on prior years (to January 1, 1993) of change in accounting for income taxes -- -- 500 -------- -------- -------- Net income $ 15,382 $ 14,649 $ 13,308 ======== ======== ======== PER SHARE OF COMMON STOCK Income before cumulative effect of change in accounting for income taxes $ 2.04 $ 1.95 $ 1.71 Cumulative effect on prior years (to January 1, 1993) of change in accounting for income taxes -- -- $ 0.07 Net income $ 2.04 $ 1.95 $ 1.78 Dividends paid in cash $ 0.83 $ 0.71 $ 0.59
The accompanying notes are an integral part of these statements. 33 Consolidated Statement of Changes in Shareholders' Equity
Net Unrealized (Dollars in thousands) Gain (Loss) on Additional Securities Common Stock Paid-in Available Retained Treasury Shares Par Value Capital for Sale Earnings Stock Balance at January 1, 1993 6,286,372 $ 15,741 $ 38,666 ($ 114) $ 16,617 ($ 210) Net income -- -- -- -- 13,308 -- 7% stock dividend 444,533 1,111 15,781 -- (16,892) -- Cash dividends declared -- -- -- -- (4,632) -- Shares issued under dividend reinvestment plan 46,345 116 1,447 -- -- -- Increase in carrying value of marketable equity securities -- -- -- 114 -- -- Shares issued under stock option plan 67,269 168 828 -- -- -- Effect of treasury stock transactions 10,000 -- (37) -- -- 210 --------- ---------- ---------- ---------- ---------- ---------- Balance at December 31, 1993 6,854,519 17,136 56,685 -- 8,401 -- Net income -- -- -- -- 14,649 -- 5% stock dividend 337,613 844 -- -- (844) -- Cash dividends declared -- -- -- -- (5,608) -- Shares issued under dividend reinvestment plan 13,262 33 481 -- -- -- Net unrealized loss on securities available for sale, net of taxes -- -- -- (4,011) -- -- Shares issued under stock option plan 28,732 70 375 -- -- -- Effect of treasury stock transactions (98,779) -- (278) -- -- (3,062) --------- ---------- ---------- ---------- ---------- ---------- Balance at December 31, 1994 7,135,347 18,083 57,263 (4,011) 16,598 (3,062) Net income -- -- -- -- 15,382 -- 5% stock dividend 359,733 899 -- -- (899) -- Cash dividends declared -- -- -- -- (6,435) -- Change in unrealized gain (loss) on securities available for sale, net of taxes -- -- -- 10,590 -- -- Shares issued under stock option plan 48,554 124 775 -- -- -- Effect of treasury stock transactions 50,840 -- (537) -- -- 1,845 --------- ---------- ---------- ---------- ---------- ---------- Balance at December 31, 1995 7,594,474 $ 19,106 $ 57,501 $ 6,579 $ 24,646 ($ 1,217) ========= ========== ========== ========== ========== ==========
The accompanying notes are an integral part of these statements. (This space intentionally left blank) 34 Consolidated Statements of Cash Flows
(Dollars in thousands) Year Ended December 31, 1995 1994 1993 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 15,382 $ 14,649 $ 13,308 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan and lease losses 3,200 3,200 5,145 Depreciation and amortization 3,032 2,399 1,173 Deferred income tax benefit (371) (1,047) (996) Amortization of security discounts 512 578 529 Amortization of security premiums (589) (543) (200) Investment securities and mortgage (gains) losses, net (388) 445 (73) Mortgage loans originated for resale (11,460) (18,984) (27,262) Sale of mortgage loans originated for resale 11,460 18,984 27,262 Changes in assets and liabilities, net of effects from business acquired: Increase in accrued interest receivable (866) (1,651) (112) Increase (decrease) in interest payable 3,331 490 (114) Net (increase) decrease in other assets 4,542 (5,335) 3,161 Net increase (decrease) in other liabilities 216 1,527 (4,859) --------- --------- --------- Net cash provided by operating activities 28,001 14,712 16,962 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Cash equivalents received in excess of payments for business acquired -- -- 6,079 Proceeds from sales of investment securities available for sale 6,853 1,635 -- Proceeds from maturities of investment securities held to maturity 13,699 3,971 36,221 Proceeds from maturities of investment securities available for sale 4,014 21,806 -- Purchase of investment securities - available for sale (14,905) (126,923) (36,266) Proceeds from sale of loans -- -- 8,737 Net increase in loans (110,737) (94,646) (98,812) Purchases of premises and equipment (4,560) (6,946) (4,653) --------- --------- --------- Net cash used in investing activities (105,636) (201,103) (88,694) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase (decrease) in interest and non-interest bearing demand deposits and savings accounts (27,750) 16,786 84,746 Net increase (decrease) in certificates of deposit 78,000 99,625 (35,995) Net increase (decrease) in securities sold under agreements to repurchase and federal funds purchased 88,276 20,034 16,505 Net increase (decrease) in short-term borrowings (43,597) 35,375 6,940 Net increase (decrease) in long-term borrowings (6,188) 26,688 9,979 Issuance of common stock under dividend reinvestment and stock option plans 899 959 2,559 Effect of Treasury stock transactions 1,308 (3,340) 173 Cash dividends (6,263) (5,344) (4,405) --------- --------- --------- Net cash provided by financing activities 84,685 190,783 80,502 --------- --------- --------- Net increase in cash and cash equivalents 7,050 4,392 8,770 Cash and cash equivalents at beginning of year 34,159 29,767 20,997 --------- --------- --------- Cash and cash equivalents at end of year $ 41,209 $ 34,159 $ 29,767 ========= ========= =========
The accompanying notes are an integral part of these statements. 35 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies followed by National Penn Bancshares, Inc. (the "Company") and its wholly-owned subsidiaries, National Penn Bank (the "Bank"), Investors Trust Company ("ITC"), National Penn Investment Company and National Penn Life Insurance Company, conform with generally accepted accounting principles and with general practice within the banking industry. The Company, primarily through its Bank subsidiary, has been serving residents and businesses of southeastern Pennsylvania since 1874. The Bank, which has in excess of 40 branch locations, is a locally managed community bank providing commercial banking products, primarily loans and deposits. Trust services are provided through ITC. The Bank and ITC encounter vigorous competition for market share in the communities they serve from bank holding companies, other community banks, thrift institutions and other non-bank financial organizations such as mutual fund companies, insurance companies and brokerage companies. The Company, the Bank, and ITC are subject to regulations of certain state and federal agencies. These regulatory agencies periodically examine the Company and its subsidiaries for adherence to laws and regulations. As a consequence, the cost of doing business may be affected. PRINCIPLES OF CONSOLIDATION The accompanying financial statements include the accounts of the Company and its wholly-owned subsidiaries on a consolidated basis. Investments owned between 20% and 50% are accounted for using the equity method. All material inter-company balances have been eliminated. INVESTMENT SECURITIES Investments in securities are classified in one of two categories: held to maturity and available for sale. Debt securities that the Company has the positive intent and ability to hold to maturity are classified as held to maturity and are reported at amortized cost. As the Company does not engage in security trading, the balance of its debt securities and any equity securities are classified as available for sale. Net unrealized gains and losses for such securities, net of tax, are required to be recognized as a separate component of shareholders' equity and excluded from determination of net income. Gains or losses on disposition are based on the net proceeds and cost of the securities sold, adjusted for amortization of premiums and accretion of discounts, using the specific identification method. LOANS AND LEASES AND ALLOWANCE FOR LOAN AND LEASE LOSSES Loans and leases are stated at the amount of unpaid principal, reduced by unearned discount and an allowance for loan and lease losses. Interest on loans is calculated based upon the principal amount outstanding. The allowance for loan and lease losses is established through a provision for loan and lease losses charged as an expense. Loans and leases are charged against the allowance for loan and lease losses when management believes that the collectibility 36 of the principal is unlikely. The allowance is an amount that management believes will be adequate to absorb possible losses on existing loans and leases that may become uncollectible, based on evaluations of the collectibility of loans and leases and prior loan and lease loss experience. The evaluations take into consideration such factors as changes in the nature and volume of the loan and lease portfolio, overall portfolio quality, review of specific problem loans and leases, and current economic conditions that may affect the borrower's ability to pay. Accrual of interest is stopped on a loan or lease when management believes, after considering economic and business conditions and collection efforts, that the borrower's financial condition is such that collection of interest is doubtful. The Company adopted Statement of Financial Accounting Standards ("SFAS") 114, "Accounting by Creditors for Impairment of a Loan" as amended by SFAS 118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures" on January 1, 1995. This new standard requires that a creditor measure impairment based on the present value of expected future cash flows discounted at the loan's effective interest rate, except that as a practical expedient, a creditor may measure impairment based on a loan's observable market price, or the fair value of the collateral if the loan is collateral dependent. Regardless of the measurement method, a creditor must measure impairment based on the fair value of the collateral when the creditor determines that foreclosure is probable. SFAS 114 excludes such homogeneous loans as consumer and mortgages. The adoption of SFAS 114 on January 1, 1995 did not have a material impact on the Company's financial consolidated condition or results of operations. PREMISES AND EQUIPMENT Buildings, equipment and leasehold improvements are stated at cost less accumulated depreciation and amortization computed by the straight-line method over the estimated useful lives of the assets. The FASB issued a new standard, SFAS 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of", which provides guidance on when to recognize and how to measure impairment losses of long-lived assets and certain identifiable intangibles and how to value long-lived assets to be disposed of. The adoption of this new statement is not expected to have a material impact on the Company's consolidated financial position or results of operations. The Company is required to adopt this new standard for its year ended December 31, 1996. PENSION PLAN Net pension expense consists of service cost, interest cost, return on pension assets and amortization of unrecognized initial net assets. The Company accrues pension costs annually. INCOME TAXES Under the liability method of accounting for income taxes specified by SFAS 109, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse. Deferred tax expense is the result of changes in deferred tax assets and liabilities. The 37 principal types of differences between assets and liabilities for financial statement and tax return purposes are allowance for loan losses, deferred loan fees, and securities available for sale. The change from a previously adopted liability method to the liability method, specified by SFAS 109, of accounting for income taxes increased net earnings for 1993 by $500,000, or $.07 per share, by the cumulative effect of the change in accounting related to years prior to 1993 which were not restated. STATEMENTS OF CASH FLOWS The Company considers cash and due from banks, interest bearing deposits in banks and federal funds sold as cash equivalents for the purposes of reporting cash flows. Cash paid for interest and taxes is as follows (in thousands): Year Ended December 31 1995 1994 1993 Interest... $40,505 $28,358 $23,953 ======= ======= ======= Taxes ..... $ 7,286 $ 7,244 $ 8,226 ======= ======= ======= Non-cash transfers of investment securities from held to maturity to available for sale amounted to $85,718,000 amortized cost and $87,708,000 fair value. LOAN FEES AND RELATED COSTS The Company defers and amortizes certain origination and commitment fees, and certain direct loan origination costs over the contractual life of the related loans. This results in an adjustment of the related loan's yield. FINANCIAL INSTRUMENTS SFAS 107, "Disclosures About Fair Value of Financial Instruments," requires all entities to disclose the estimated fair value of its assets and liabilities considered to be financial instruments. Financial instruments requiring disclosure consist primarily of investment securities, loans and deposits. EARNINGS PER SHARE Earnings per share are calculated on the basis of the weighted average number of shares outstanding of 7,547,382, 7,525,100 and 7,480,740 for the years ended December 31, 1995, 1994 and 1993, respectively, after giving retroactive effect to 5% stock dividends paid on October 31, 1995 and October 31, 1994, and to a 7% stock dividend paid on October 25, 1993. All per share data included in these financial statements has been restated for the stock dividends. 38 2. INVESTMENT SECURITIES The Company classifies debt and marketable equity securities in two categories: securities available for sale and securities held to maturity. Securities available for sale are measured at fair value, with net unrealized gains and losses reported, net of tax, as a component in equity. Securities held to maturity are carried at amortized cost. The amortized cost, unrealized gains and losses and fair values of the company's securities available for sale and securities held to maturity at December 31, 1995 and 1994 are summarized as follows (in thouands):
December 31, 1995 Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value Securities available for sale U.S. Treasury and U.S. Government agencies $102,357 $ 5,522 $ 20 $107,859 State and municipal bonds 45,712 1,180 56 46,836 Other bonds 2,727 28 4 2,751 Mortgage-backed securities 63,316 1,827 114 65,029 Marketable equity securities and other 16,667 1,760 -- 18,427 -------- -------- -------- -------- Totals $230,779 $ 10,317 $ 194 $240,902 ======== ======== ======== ========
December 31, 1994 Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value Securities available for sale U.S. Treasury and U.S. Government agencies $ 39,055 $ -- $ 1,575 $ 37,480 State and municipal bonds 45,694 11 3,787 41,918 Other bonds 2,144 6 46 2,104 Mortgage-backed securities 42,527 103 1,884 40,746 Marketable equity securities and other 15,823 802 -- 16,625 -------- -------- -------- -------- Totals $145,243 $ 922 $ 7,292 $138,873 ======== ======== ======== ======== Securities held to maturity U.S. Treasury and U.S. Government agencies $ 76,607 $ 790 $ 2,057 $ 75,340 State and municipal bonds 7,388 80 324 7,144 Other bonds 1,018 -- 16 1,002 Mortgage-backed securities 14,216 195 438 13,973 -------- -------- -------- -------- Totals $ 99,229 $ 1,065 $ 2,835 $ 97,459 ======== ======== ======== ========
On November 15, 1995, the FASB issued a special report entitled "A Guide to Implementation of Statement No. 115 on Accounting for Certain Investments in Debt and Equity Securities." This guide allows enterprises to reassess the appropriateness of the classification of all securities held. A one-time reassessment can be made on one day between November 15, 1995 and December 31, 1995. Reclassifications from the held-to-maturity category that result from this one-time reassessment will not call into question the intent of an enterprise to ho other debt and equity securities to maturity in the future. Based on this special report, on December 29, 1995, the Company reclassified certain securities from the held-to-maturity category to the available-for-sale category. The transfer was made at fair value and resulted in an estimated net unrealized gain of $10,123,000 and an increase in retained earnings of $6,579,000 based on current market values. The following table lists the maturities of securities held at December 31, 1995 classified as securities available for sale at market value and securities held to maturity. Expected maturities will differ from contractu maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
Amortized Market Cost Value Due in one year or less $20,435 $20,667 Due after one year through five years 21,007 22,110 Due after five years 109,354 114,669 -------- -------- 150,796 157,446 Mortgage-backed securities 63,316 65,029 Marketable equity securities and other 16,667 18,427 -------- -------- $230,779 $240,902 ======== ========
Proceeds from the sales of investments in debt securities during 1995, 1994 and 1993 were $6,853,000, $1,635,000 and $0, respectively. Gross gains and losses realized on those sales in 1995, 1994 and 1993 were not material. As of December 31, 1995 and 1994, investment securities with a book value of $78,559,000 and $74,260,000, respectively, were pledged to secure public deposits and for other purposes as provided by law. As of December 31, 1995 and 1994, the Company did not have any marketable equity securities of any one issuer where the book value exceeded 10% of shareholders' equity. 39 3. LOANS AND LEASES Major classifications of loans and leases are as follows (in thousands):
December 31, 1995 1994 Commercial and industrial loans $ 99,765 $ 79,726 Loans for purchasing and carrying securities 478 778 Loans to financial institutions 589 821 Real estate loans: Construction and land development 42,978 31,760 Residential 526,577 472,227 Other 256,956 228,911 Loans to individuals 11,727 16,400 --------- --------- 939,070 830,623 Unearned income (5) (11) --------- --------- Total loans and leases, net of unearned income 939,065 830,612 Allowance for loan and lease losses (20,366) (19,310) --------- --------- Total loans and leases, net $ 918,699 $ 811,302 ========= =========
Loans and leases on which the accrual of interest has been discontinued or reduced amounted to approximately $7,257,000 and $9,328,000 at December 31, 1995 and 1994, respectively. If interest on these loans had been accrued, such income would have approximated $305,000 and $486,000 for 1995 and 1994, respectively. Loan balances past due 90 days or more which are not on a non-accrual status, but which management expects will eventually be paid in full, amounted to $1,764,000 and $2,114,000 at December 31, 1995 and 1994, respectively. The balance of impaired loans was $5,380,000 at December 31, 1995. The Bank has identified 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 impaired loan balance included $5,380,000 of non-accrual loans. The allowance for loan loss associated with the $5,380,000 of impaired loans was $931,000 at December 31, 1995. The average impaired loan balance was $7,368,000 in 1995 and the income recognized on impaired loans during 1995 was $528,000. The Bank's policy for interest income recognition on impaired loans is to recognize income under the accrual method. The Bank recognizes income on non-accrual 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 Bank. If these factors do not exist, the Bank will not recognize them. Changes in the allowance for loan and lease losses were as follows (in thousands):
1995 1994 1993 Balance, beginning of year $ 19,310 $ 17,909 $ 12,448 Reserves of acquired banks -- -- 2,260 Provision charged to operations 3,200 3,200 5,145 Loans and leases charged off (3,509) (3,002) (3,412) Recoveries 1,365 1,203 1,468 -------- -------- -------- Balance, end of year $ 20,366 $ 19,310 $ 17,909 ======== ======== ========
The FASB issued a new standard, SFAS No. 122, "Accounting for Mortgage Servicing Rights, an Amendment of SFAS No. 65," which requires that a mortgage banking enterprise recognize as a separate asset rights to service mortgage loans for others, however those servicing rights are acquired. In circumstances where mortgage loans are originated, separate asset rights to service mortgage loans are only recorded when the enterprise intends to sell such loans. The adoption of this new statement is not expected to have a material impact on the Company's consolidated financial position or results of operations. The Company will be required to adopt this standard for its year ended December 31, 1996. 40 4. PREMISES AND EQUIPMENT Major classifications of premises and equipment are summarized as follows (in thousnads):
Estimated December 31, Useful Life 1995 1994 Land $ 2,260 $ 2,171 Buildings 5 to 40 years 14,429 13,361 Equipment 3 to 10 years 13,118 10,345 Leasehold improvements 2 to 40 years 1,705 1,075 ------- ------ 31,512 26,952 Accumulated depreciation and amortization (11,586) (9,182) ------- ------ $ 19,926 $ 17,770 ======== ========
Depreciation and amortization expense amounted to $2,404,000, $1,821,000 and $1,173,000 for the years ended December 31, 1995, 1994 and 1993, respectively. 5. SHORT-TERM BORROWINGS Federal funds purchased and securities sold under agreements to repurchase generally mature within thirty days from the date of the transactions. Short-term borrowings consist of Treasury Tax and Loan Note Options and various other borrowings which generally have maturities of less than one year. The details of these categories are as follows (in thousands):
Year Ended December 31, 1995 1994 1993 Securities sold under repurchase agreements and federal funds purchased Balance at year end $138,550 $ 50,274 $ 30,240 Average during the year 89,509 55,569 17,204 Maximum month-end balance 138,550 89,089 30,240 Weighted average rate during the year 5.93% 4.55% 2.48% Rate at December 31 5.56% 5.28% 2.86% Short-term borrowings Balance at year end $ 4,370 $ 47,967 $ 12,592 Average during the year 18,810 5,338 4,446 Maximum month-end balance 10,286 47,967 12,592 Weighted average rate during the year 7.36% 3.47% 2.81% Rate at December 31 5.35% 6.58% 2.71%
The weighted average rates paid in aggregate on these borrowed funds for 1995, 1994 and 1993 were 6.18%, 4.46%, and 2.55%, respectively. 41 6. LONG-TERM BORROWINGS At December 31, 1995, advances from the Federal Home Loan Bank totaling $71,589,000 will mature within one to seven years and are reported as long-term borrowings. These advances had a weighted average interest rate of 6.14%. Principal payments ranging from $631,000 to $45,479,000 are due in years one through five. (This space intentionally left blank.) 42 7. PENSION AND CAPITAL ACCUMULATION PLANS The Company has a non-contributory defined benefit pension plan covering substantially all employees. The Company sponsored pension plan provides retirement benefits under pension trust agreements and under contracts with insurance companies. The benefits are based on years of service and the employee's compensation during the highest five consecutive years during the last ten years of employement. The Company's policy is to fund pension costs allowable for income tax purposes. The following table sets forth the plan's funded status and amounts recognized in the Company's consolidated balance sheets (in thousands):
December 31, Actuarial present value of benefit obligations: 1995 1994 Accumulated benefit obligation, including vested benefits of $4,084,000 and $3,054,000 at 1995 and 1994, respectively ($4,251) ($3,144) Projected benefit obligation for service rendered to date ($6,461) ($4,912) Plan assets at fair value 5,796 4,898 ------- ------- Plan assets below projected benefit obligation (665) (14) Unrecognized net (gain) loss from past experience different from that assumed and effects of changes in assumptions 184 (551) Unrecognized net obligation at January 1, 1987 being recognized over 17 years 872 981 Unrecognized prior service costs (424) (466) ------- ------- Pension liability ($ 33) ($ 50) ======= =======
Year Ended December 31, Net pension cost included the following components: 1995 1994 1993 Service cost - benefits earned during the period $ 332 $ 381 $ 302 Interest cost on projected benefit obligation 400 358 305 Actual return on plan assets (709) 108 (287) Net amortization and deferral 322 (330) 19 ----- ----- ----- Net periodic pension cost $ 345 $ 517 $ 339 ===== ===== =====
The assumed discount rate and rate of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation were 7.25% and 4.75%, respectively, in 1995, 8.25% and 5.5%, respectively, in 1994; and 6.5% and 4.0%, respectively, in 1993. The expected long-term rate of return on assets was 8.25% for 1995, 8.25% for 1994 and 6.5% for 1993. The Company has a capital accumulation and salary reduction plan under Section 401(k) of the Internal Revenue Code of 1986, as amended. Under the plan, all employees are eligible to contribute from 3% to a maximum of 10% of their annual salary with the Company matching 50% of any contribution between 3% and 7%. Matching contributions to the plan were $303,000, $285,000 and $208,000 for the years ended December 31, 1995, 1994 and 1993, respectively. (This space intentionally left blank) 43 8. INCOME TAXES The components of the income tax expense included in the consolidated statements of income, are as follows (in thousands):
Year Ended December 31, Income tax expense 1995 1994 1993 Current $ 7,039 $ 7,104 $ 6,924 Deferred federal benefit (371) (1,047) (1,142) ------- ------- ------- Applicable income tax expense $ 6,668 $ 6,057 $ 5,782 ======= ======= =======
The differences between applicable income tax expense and the amount computed by applying the statutory Federal income tax rate of 35% are as follows (in thousands):
Year Ended December 31, 1995 1994 1993 Computed tax expense at statutory rate $ 7,718 $ 7,247 $ 6,475 Increase (decrease) in taxes resulting from: Tax-exempt loan and investment income (1,076) (1,089) (563) Stock options exercised (196) (181) (564) Tax effect of unused temporary differences -- -- 337 Other, net 222 80 97 ------- ------- ------- Applicable income tax expense $ 6,668 $ 6,057 $ 5,782 ======= ======= =======
Deferred tax assets and liabilities at December 31, 1995, 1994 and 1993 consist of the following (in thousands):
1995 1994 1993 Deferred tax assets Deferred loan fees $ 896 $ 1,491 $ 1,158 Loan loss allowance 7,109 6,369 5,873 Deferred compensation 518 439 401 Loan sales valuation 120 210 210 Securities available for sale -- 2,160 -- Other real estate reserves -- -- 118 ------- ------- ------- 8,643 10,669 7,760 ------- ------- ------- Deferred tax liability Pension $ 64 $ 32 $ 61 Bad debt reserve recapture 529 773 1,018 Partnership investments 168 142 116 Acquisition adjustments 81 103 125 Mark-to-market accounting 57 86 114 Securities available for sale 3,543 -- -- Rehab credit adjustment 44 44 44 ------- ------- ------- 4,486 1,180 1,478 ------- ------- ------- Net deferred tax asset $ 4,157 $ 9,489 $ 6,282 ======= ======= =======
44 9. COMMITMENTS AND CONTINGENT LIABILITIES Future minimum payments under non-cancellable operating leases are due as follows (in thousands): Year ending December 31, 1996 $878 1997 769 1998 678 1999 560 2000 480 Remaining terms of the leases 1,564 ----- $4,929 ======
The total rental expense was approximately $1,182,000, $939,000, and $541,000 in 1995, 1994 and 1993, respectively. (This space intentionally left blank) 45 10. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK The Company is a party to financial instruments with off-balance- sheet risk in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit, standby letters of credit, and interest rate swaps. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The contract or notional amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments. The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of these instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. For interest rate swaps, the contract or notional amounts do not represent exposure to credit loss. The Company controls the credit risk of its interest rate swap agreements through credit approvals, limits, and monitoring procedures. Unless otherwise noted, the Company does not require collateral or other security to support financial instruments with credit risk. The contract or notional amounts as of December 31, 1995 and 1994 are as follows (in thousands):
1995 1994 Financial instruments whose contract amounts represent credit risk: Commitments to extend credit $105,432 $101,031 Standby letters of credit 9,048 7,793 Financial instruments whose notional or contract amounts exceed the amount of credit risk: Interest rate swap agreements 100,000 100,000
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based on management's credit evaluation. Collateral held varies but may include personal or commercial real estate, accounts receivable, inventory and equipment. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. The credit risk involved in issuing letters 46 of credit is essentially the same as that involved in extending loan facilities to customers. The extent of collateral held for those commitments at December 31, 1995 varies up to 100%; the average amount collateralized is 75%. Interest rate swap transactions generally involve the exchange of fixed and floating rate interest payment obligations without the exchange of the underlying principal amounts. The Company uses swaps as part of its asset and liability management process with the objective of hedging the relationship between money market deposits that are used to fund prime rate loans. Past experience has shown that as the prime interest rate changes, rates on money market deposits do not change with the same volatility. The interest rate swaps have the effect of converting the rates on money market deposit accounts to a more market driven floating rate typical of prime in order for the Company to recognize a more even interest rate spread on this business segment. This strategy will cause the Company to recognize, in a rising rate environment, a lower overall interest rate spread than it otherwise would have without the swaps in effect. Likewise, in a falling rate environment, the Company will recognize a larger interest rate spread than it otherwise would have without the swaps in effect. In 1995, the interest rate swaps had the effect of increasing the Company's net interest income by $1.1 million over what would have been realized had the Company not entered into the swap agreements. 11. FAIR VALUE OF FINANCIAL INSTRUMENTS SFAS 107 requires disclosure of the estimated fair value of an entity's assets and liabilities considered to be financial instruments. For the Company, as for most financial institutions, the majority of its assets and liabilities are considered to be financial instruments as defined in SFAS 107. However, many of such instruments lack an available trading market as characterized by a willing buyer and willing seller engaging in an exchange transaction. Also, it is the Company's general practice and intent to hold its financial instruments to maturity and to not engage in trading or sales activities. Therefore, the Company had to use significant estimations and present value calculations to prepare this disclosure. Changes in assumptions or methodologies used to estimate fair values may materially affect the estimated amounts. Also, management is concerned that there may not be reasonable comparability between institutions due to the wide range of permitted assumptions and methodologies in the absence of active markets. This lack of uniformity gives rise to a high degree of subjectivity in estimating financial instrument fair values. Fair values have been estimated using data that management considered the best available, and estimation methodologies deemed suitable for the pertinent category of financial instrument. The estimation methodologies and resulting fair values, and recorded carrying amounts at December 31, 1995 were as follows (in thousands): Fair value of loans and deposits with floating interest rates is generally presumed to approximate the recorded carrying amounts. Financial instruments actively traded in a secondary market have been valued using quoted available market prices. 47
Estimated Fair Carrying Value Amount At December 31, 1995 Cash and cash equivalents $ 41,209 $ 41,209 Investment securities 240,902 240,902
At December 31, 1994 Cash and cash equivalents $ 34,159 $ 34,159 Investment securities 236,332 238,102
Fair value of financial instruments with stated maturities has been estimated using present value cash flow, discounted at a rate approximating current market for similar assets and liabilities. Estimated Fair Carrying Value Amount At December 31, 1995 Deposits with stated maturities $459,144 $450,872 Short-term borrowings 142,920 142,920 Long-term borrowings 73,478 71,589 At December 31, 1994 Deposits with stated maturities $372,666 $372,872 Short-term borrowings 98,241 98,241 Long-term borrowings 75,785 77,777 Fair value of financial instrument liabilities with no stated maturities has been estimated to equal the carrying amount (the amount payable on demand), totaling $464,018 for 1995 and $491,768 for 1994. The fair value of the net loan portfolio has been estimated using present value cash flow, discounted at the treasury rate adjusted for non-interest operating costs and giving consideration to estimated prepayment risk and credit loss factors. Estimated Fair Carrying Value Amount At December 31, 1995 Net loans $953,962 $918,699 At December 31, 1994 Net Loans $814,056 $811,302 There is no material difference between the carrying amount and estimated fair value of off-balance sheet items which total $216,229,000 and $211,380,000 at year end 1995 and 1994, respectively, which are primarily comprised of interest rate swap agreements and unfunded loan commitments which are generally priced at market at the time of funding. The Company's remaining assets and liabilities are not considered financial instruments. No disclosure of the relationship value of the Company's deposits is required by SFAS 107. 48 12. SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK The Company grants commercial and residential loans to customers throughout southeastern Pennsylvania. Although the Company has a diversified loan portfolio, a substantial portion of its debtors' ability to honor their contracts is dependent upon the economic sector. 13. RELATED PARTY TRANSACTIONS Certain directors and officers of the Company and the Bank, their immediate families, and the companies with which they are associated, were customers of and have had banking transactions with the Bank in the ordinary course of business. All loans and commitments included in such transactions were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and, in the opinion of management of the Bank, do not involve more than a normal risk of collectibility or present other unfavorable features. The aggregate dollar amount of these loans was $3,893,000 and $4,496,000 at December 31, 1995 and 1994, respectively. During 1995, $787,000 of new loans were made, and repayments totaled $1,390,000. (This space intentionally left blank.) 49 14. EQUITY TRANSACTIONS The Company has an employee stock option plan for certain key employees. A total of 1,277,114 shares of common stock, restated for stock dividends and splits, have been made available for options to be granted through February 24, 1997. The Company also has a non-employee director stock option plan. Under this plan, a total of 157,500 shares of common stock, restated for stock dividends and splits, have been made available for options to be granted through January 3, 2004. Under both plans, the option price per share is equivalent to 100% of the quoted market price on the date the options were granted. These options are exercisable pursuant to vesting schedules, commencing two years and expiring ten years and one month from the date of issue. The number of unoptioned shares available for granting totaled 502,633 at the beginning of the year and 812,785 at the end of the year. At December 31, 1995, 136,882 shares are exercisable.
1995 1994 1993 Outstanding, beginning of year 576,649 450,814 382,836 Effect of stock dividends and splits 33,707 27,944 31,997 Granted 204,900 126,550 113,250 Exercised (50,118) (28,659) (77,269) Cancelled or expired (5,768) -- -- ------------ ------------ ----------- Outstanding, end of year 759,370 576,649 450,814 ============ ============ =========== Option price per share exercised $12.11-18.42 $12.72-18.70 $9.60-19.99 Outstanding, end of year $12.11-35.29 $12.72-36.99 $13.35-38.79
The Company has authorized 1,000,000 shares of preferred stock with no stated par value. Voting powers, preferences, dividend rights, conversion rights, redemption and liquidation rights, if any, may be determined by the Board of Directors in their sole discretion. There are no shares outstanding at December 31, 1995, however, shares may be issued from time to time as a class without series or either in whole or in part in one or more series if so determined by the Board of Directors. The Company has a dividend reinvestment plan available to shareholders who elect to reinvest their dividends in additional shares of the Company's common stock which may be purchased in the open market or from authorized but unissued shares. All purchases to date that have been made from authorized but unissued common shares were at a purchase price equal to the fair market value of such shares. Fair market value, for this purpose, is generally the closing sale price per common share as reported on The Nasdaq Stock Market for the date of the dividend reinvestment. The FASB issued a new standard, SFAS No. 123, "Accounting for Stock-Based Compensation," which contains a fair-value based method for valuing stock-based compensation that entities may use, which measures compensation cost at the grant date based on the fair value of the award. Compensation is then recognized over the service period, which is usually the vesting period. Alternatively, the standard permits entities to continue accounting for employee stock options and similar equity instruments under Accounting Principles Board ("APB") Opinion 25, "Accounting for Stock Issued to Employees." Entities that continue to account for stock options using APB Opinion 25 are required to make pro forma disclosures of net earnings per share, as if the fair-value based method of accounting defined in SFAS No. 123 had been applied. The Company has not determined which method it will follow in the future, but anticipates following APB Opinion 25. The Company will be required to adopt the new standard for its year ended December 31, 1996. 50 15. CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY The following is a summary of selected financial information of National Penn Bancshares, Inc., parent company only (in thousands): CONDENSED BALANCE SHEET
December 31 1995 1994 Assets Cash $ 50 $ 77 Investment in Bank subsidiary, at equity 90,993 72,802 Investment in other subsidiaries, at equity 15,627 11,834 Other assets 6 165 -------- -------- $106,676 $ 84,878 ======== ======== Liabilities and shareholders' equity Liabilities $ 61 $ 7 Shareholders' equity 106,615 84,871 -------- -------- $106,676 $ 84,878 ======== ========
CONDENSED STATEMENTS OF INCOME
Year Ended December 31, 1995 1994 1993 Income Equity in undistributed net earnings of subsidiaries $ 8,849 $ 4,691 $ 4,844 Dividends from Bank subsidiary 6,435 8,691 8,610 Dividends from other subsidiaries -- 1,267 -- Interest and other income 278 4 42 -------- -------- -------- 15,562 14,653 13,496 -------- -------- -------- Expenses Other operating expenses 127 4 267 -------- -------- -------- Income before income taxes 15,435 14,649 13,229 Applicable income tax expense (benefit) 53 -- (79) -------- -------- -------- Net income $ 15,382 $ 14,649 $ 13,308 ======== ======== ========
CONDENSED STATEMENTS OF CASH FLOWS
Year Ended December 31, 1995 1994 1993 Cash flows from operating activities Net income $ 15,382 $ 14,649 $ 13,308 Equity in undistributed net earnings of subsidiaries (8,849) (4,691) (4,844) Net (increase) decrease in other assets 159 138 85 Net increase (decrease) in other liabilities (11) 271 (113) -------- -------- -------- Net cash provided by operating activities 6,681 10,367 8,436 -------- -------- -------- Cash flows from investing activities Additional investment in subsidiaries at equity (2,480) (3,699) (6,297) -------- -------- -------- Net cash (used in) investing activities (2,480) (3,699) (6,297) -------- -------- -------- Cash flows from financing activities Proceeds from issuance of stock 899 959 2,559 Effect of Treasury stock transactions 1,308 (3,340) 173 Cash dividends (6,435) (5,344) (4,405) -------- -------- -------- Net cash (used in) financing activities (4,228) (7,725) (1,673) -------- -------- -------- Increase (decrease) in cash and cash equivalents (27) (1,057) 466 Cash and cash equivalents at beginning of year 77 1,134 668 -------- -------- -------- Cash and cash equivalents at end of year $ 50 $ 77 $ 1,134 ======== ======== ========
51 16. REGULATORY RESTRICTIONS The Bank is required to maintain average reserve balances with the Federal Reserve Bank. The average amount of those balances for the year ended December 31, 1995 was approximately $7,148,000. Dividends are paid by the Company from its assets which are mainly provided by dividends from the Bank. However, certain restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends, loans or advances. Under the restrictions in 1996, the Bank, without prior approval of bank regulators, can declare dividends to the Company totaling $14,145,000 plus additional amounts equal to the net earnings of the Bank for the period January 1, 1996 through the date of declaration less dividends previously paid in 1996. The Company is required to maintain minimum amounts of Tier 1 and total capital to "risk-weighted" assets and a minimum Tier 1 leverage ratio, as defined by banking regulators. At December 31, 1995, 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 minimum 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's actual Tier 1 and total capital ratios at December 31, 1995 were 10.97% and 12.23% respectively and the Company's Tier 1 leverage ratio was 7.59%. The Company's management believes that, under current regulations, the Company will continue to meet its minimum capital requirements in the foreseeable future. 17. SHAREHOLDER RIGHTS PLAN The Company adopted a Shareholder Rights Plan (the "Rights Plan) in 1989 to protect shareholders from attempts to acquire control of the Company at an inadequate price. Under the Rights Plan, the Company distributed a dividend of one right to purchase a unit of preferred stock on each outstanding common share of the Company. The rights are not currently exercisable or transferable, and no separate certificates evidencing such rights will be distributed, unless certain events occur. The rights expire on August 22, 1999. After the rights become exercisable, under certain circumstances, the rights (other than rights held by a 19.9% beneficial owner or an "adverse person") will entitle the holders to purchase either the Company's common shares or the common shares of the potential acquirer at a substantially reduced price. The Company is generally entitled to redeem the rights at $.001 per right at any time until the tenth business day following a public announcement that a 19.9% position has been acquired. Rights are not redeemable following an "adverse person" determination. The Rights Plan was not adopted in response to any specific effort to acquire control of the Company. The issuance of rights had no dilative effect, did not affect the Company's reported earnings per share, and was not taxable to the Company or its shareholders. 52 18. QUARTERLY FINANCIAL DATA (UNAUDITED) The following represents summarized quarterly financial data of the Company, which, in the opinion of management, reflects all adjustments (comprising only normal recurring accruals) necessary for a fair presentation. Net income per share of common stock has been restated to retroactively reflect certain stock dividends. (in thousands, except per share data)
Three Months Ended 1995 Dec. 31 Sept. 30 June 30 March 31 Interest income $ 25,880 $ 25,436 $ 24,454 $ 23,250 ======== ======== ======== ======== Net interest income $ 14,276 $ 13,899 $ 13,549 $ 13,460 ======== ======== ======== ======== Provision for loan and lease losses $ 950 $ 750 $ 750 $ 750 ======== ======== ======== ======== Net gains (losses) on sale of securities & mortgages ($ 40) $ 125 $ 47 $ 256 ======== ======== ======== ======== Income before income taxes $ 5,766 $ 5,579 $ 5,134 $ 5,571 ======== ======== ======== ======== Net income $ 4,012 $ 3,895 $ 3,558 $ 3,917 ======== ======== ======== ======== Net income per share of common stock $ 0.54 $ 0.51 $ 0.47 $ 0.52 ======== ======== ======== ========
Three Months Ended 1995 Dec. 31 Sept. 30 June 30 March 31 Interest income $ 22,672 $ 21,677 $ 20,693 $ 19,217 ======== ======== ======== ======== Net interest income $ 14,068 $ 14,137 $ 14,017 $ 13,189 ======== ======== ======== ======== Provision for loan and lease losses $ 750 $ 750 $ 950 $ 750 ======== ======== ======== ======== Net losses on sale of mortgages ($ 87) ($ 46) ($ 91) ($ 221) ======== ======== ======== ======== Income before income taxes $ 4,866 $ 5,328 $ 4,907 $ 5,605 ======== ======== ======== ======== Net income $ 3,683 $ 3,709 $ 3,454 $ 3,803 ======== ======== ======== ======== Net income per share of common stock $ 0.49 $ 0.49 $ 0.46 $ 0.51 ======== ======== ======== ========
(This space intentionally left blank) 53 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors National Penn Bancshares, Inc. We have audited the accompanying consolidated balance sheets of National Penn Bancshares, Inc. and Subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe 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 consolidated financial position of National Penn Bancshares, Inc. and Subsidiaries as of December 31, 1995 and 1994, and the consolidated results of their operations and their consolidated cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. /s/ Grant Thornton, LLP Philadelphia, Pennsylvania February 7, 1996 53A SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. NATIONAL PENN BANCSHARES, INC. (Registrant) February 26, 1997 By /s/ Lawrence T. Jilk, Jr. Lawrence T. Jilk, Jr. President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Amendment No. 1 to Report on Form 10-K has been signed below by the following persons in the capacities and on the dates indicated: Signatures Title /s/ John H. Body Director February 26, 1997 John H. Body Director February 26, 1997 J. Ralph Borneman, Jr. /s/ John J. Dau Director February 26, 1997 John J. Dau /s/ Lawrence T. Jilk, Jr. Director, President, and February 26, 1997 Lawrence T. Jilk, Jr. Chief Executive Officer (Principal Executive Officer) /s/ Patricia L. Langiotti Director February 26, 1997 Patricia L. Langiotti /s/ Kenneth A. Longacre Director February 26, 1997 Kenneth A. Longacre /s/ Randall J. Nester Director February 26, 1997 Randall J. Nester Signatures Title /s/ C. Robert Roth Director February 26, 1997 C. Robert Roth /s/ Harold C. Wegman, D.D.S. Director February 26, 1997 Harold C. Wegman, D.D.S. /s/ Wayne R. Weidner Director and Executive February 26, 1997 Wayne R. Weidner Vice President /s/ Gary L. Rhoads Treasurer (Principal February 26, 1997 Gary L. Rhoads Financial and Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----