National Penn Bancshares Inc. Reports Operating Results (10-Q)
National Penn Bancshares Inc. has a market cap of $1.28 billion; its shares were traded at around $8.47 with a P/E ratio of 18.5 and P/S ratio of 2.6. The dividend yield of National Penn Bancshares Inc. stocks is 1.9%.
Highlight of Business Operations:Proactive management of lower quality credits, the divestiture of Christiana in 2010 and disciplined deposit pricing resulted in a decrease to earning assets for 2011 as compared to the prior year to date period. For the third quarter of 2011, earning assets of $8.0 billion were comparable to the second quarter of 2011. Net interest income totaled $64.4 million for the third quarter of 2011 and $195 million for the nine months ended September 30, 2011. For the nine months ended September 30, 2011, deposit management efforts mitigated the decline of earning assets which caused seven basis points of net interest margin expansion to 3.52%, as compared to 3.45% in for the nine months ended September 30, 2010. However, the current low interest rate environment and competitive pressures on asset yields could not be totally offset by deposit initiatives in the third quarter of 2011, and the net interest margin was 3.46%, compared to 3.53% for the second quarter of 2011.
Other non-interest income expanded modestly on a linked-quarter basis due to life insurance proceeds, increased mortgage banking income, and increased wealth management fees. Year to date 2011 other non-interest income totaled $71.7 million compared to $82.7 million in 2010; which included $4.7 million of revenue from Christiana, which was divested in December 2010, and a gain of $4.1 million from the curtailment of the Company s pension plan during the first quarter of 2010.
Overall, average earning assets declined to $8.0 billion as a result of the divestiture of Christiana and management s focus on improving deposit mix by managing high cost, non-relationship based wholesale and time deposit customers. At September 30, 2011, transaction, savings and money market accounts comprised 71% of deposits compared to 65% at September 30, 2010. Time deposits declined $505 million to $1.7 billion at September 30, 2011, including approximately $35 million of time deposits at Christiana. The improvement in mix combined with disciplined deposit pricing reduced the cost of deposits by 32 basis points to 0.72% for the nine months ended September 30, 2011.
Interest expense decreased by 24.6%, or $22.1 million, and totaled $67.8 million for the nine months ended September 30, 2011. The improvement in interest expense mitigated the effect of decreasing asset yields, but managed reductions to earning assets resulted in a 10.3%, or $30.4 million, decrease to interest income ($31.3 million on a FTE basis), which totaled $263 million for the year to date 2011. Net interest income for the nine months ended September 30, 2011, was $195 million, a decrease of $8.2 million, or 4.0%, compared to $204 million for the prior year period. The net interest margin for the nine months ended September 30, 2011 expanded seven basis points to 3.52% from 3.45% in the prior year period.
Exclusive of Christiana s divestiture in December 2010, wealth management income increased $1.4 million due to increased commission income on retail investment product sales. As reported, wealth management income decreased by $3.3 million, to $18.0 million for the nine months ended September 30, 2011, as Christiana contributed $4.7 million of wealth management income during the nine months ended September 30, 2010.
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