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National Penn Bancshares 10-Q 2009 UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
TABLE OF
CONTENTS
2
Item
1. Financial Statements
NATIONAL
PENN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
3
NATIONAL
PENN BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME
4
NATIONAL
PENN BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
______________________________________
The
accompanying notes are an integral part of these financial
statements.
5
NATIONAL
PENN BANCSHARES, INC. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
The
accompanying notes are an integral part of these statements.
6
NOTES TO
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS
OF
PRESENTATION
The accompanying unaudited consolidated
financial statements were prepared in accordance with instructions to Form 10-Q,
and therefore, do not include information or footnotes necessary for a complete
presentation of financial position, results of operations and cash flows in
conformity with accounting principles generally accepted in the
United States (“GAAP”). However, all normal, recurring adjustments
that, in the opinion of management, are necessary for a fair presentation of
these financial statements have been included. These financial
statements should be read in conjunction with the audited consolidated financial
statements and the notes thereto for National Penn Bancshares, Inc. (the
“Company” or “National Penn”) for the year ended December 31, 2008,
which are included in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2008 (the “Form 10-K”). The results for the
interim periods presented are not necessarily indicative of the results that may
be expected for the year ending December 31, 2009.
The Company has prepared its
accompanying consolidated financial statements in accordance with GAAP as
applicable to the financial services industry. Certain amounts in
prior years are reclassified for comparability to the current year’s
presentation. Such reclassifications, when applicable, have no effect
on net income (loss). The consolidated financial statements include
the balances of the Company and its wholly owned subsidiaries, including
National Penn Bank (“National Penn Bank”) and Christiana Bank & Trust
Company (“Christiana”). All material intercompany balances and
transactions have been eliminated in consolidation. References to the
Company include all the Company’s subsidiaries unless otherwise
noted.
Christiana’s results are included in
the Company’s financial results from the date of acquisition, January 4, 2008.
The Company acquired KNBT Bancorp, Inc. (“KNBT”) on February 1,
2008. KNBT’s results are included in the Company’s financial results
from the date of acquisition.
7
2. INVESTMENT
SECURITIES
The amortized cost, gross unrealized
gains and losses, and fair values of the Company’s investment securities are
summarized as follows:
In 2009 and 2008, all sales of
investments – including bonds with unrealized gains or unrealized losses – are
characterized as portfolio management to accomplish the
following: reduce credit exposure to a class of assets; rotate out of
a sector; sell lower yielding bonds and re-deploy the proceeds into higher
yielding bonds to take advantage of changing rates at the time of the sale;
improve portfolio yield; or to realize the tax benefit. The net
effect of these sales was $3.1 million loss year-to-date 2009.
During second quarter 2009 the Company
re-categorized approximately $252 million, in state and municipal bonds from
Available-for-Sale to Held-to-Maturity, in order to mitigate the decrease in
fair value of these long-term securities in a rising rate environment, and the
corresponding decrease to capital. There was no unrealized gain or loss on these
securities at the date of re-categorization.
8
The table below indicates the length of
time individual securities have been in a continuous unrealized loss position at
September 30, 2009:
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