National Penn Bancshares, Inc. Reports Fourth Quarter 2010 Results

National Penn Bancshares, Inc. (Nasdaq: NPBC) reported net income available to common shareholders of $6.6 million, or $0.05 per diluted common share, for the fourth quarter of 2010 compared to a net income of $10.3 million, or $0.08 per diluted common share, for the third quarter 2010. On an adjusted basis¹, net income totaled $13.5 million, or $0.10 per diluted common share, which represents an increase of 12% from the third quarter of 2010. Fourth quarter adjusted net income¹ excludes the impact of an after-tax unrealized fair value adjustment on National Penn’s traded trust preferred securities (Nasdaq: NPBCO) of $1.3 million and the previously announced tax expense of $5.5 million related to the divestiture of Christiana Bank & Trust. This tax expense was a non-cash charge and did not impact regulatory capital ratios. For the year ended December 31, 2010 diluted earnings per common share were $0.10 while adjusted earnings per common share were $0.30.

"The fourth quarter and full year 2010 results continue to demonstrate the improving profitability trends of National Penn and are indicative of the strength of our balance sheet,” said Scott Fainor, president and CEO of National Penn. "The strategic initiatives of divesting Christiana Bank & Trust and finalizing the $150 million Warburg Pincus investment position National Penn well for the future.”

Fundamental operating performance remained strong as the net interest margin and the efficiency ratio were comparable to previous quarters. The balance sheet contracted by approximately 2% during the quarter, exclusive of the divestiture of Christiana, as disciplined deposit pricing reduced the cost of deposits by 12 basis points through reductions in higher cost time deposits. Loan balances, exclusive of Christiana, declined by $200 million despite $292 million in new originations due to soft loan demand in this economic environment and a planned reduction in classified credits.

Asset quality trends continued to improve for the fourth consecutive quarter. Non-performing loans declined by 11% and classified loans declined by 4%. Despite a reduction in the provision for loan losses, the loan loss reserve to non-performing loans increased to 179%.

The strength of the balance sheet is apparent not only in loan loss reserve levels but also indicated by National Penn’s capital levels. Tangible common equity to tangible assets was 8.27% and risk based capital ratio was 17.38% at December 31, 2010. Pro forma for the Warburg Pincus investment, tangible common equity to tangible assets is 9.18% and the risk based capital ratio is 18.86%. These capital and reserve levels should provide National Penn an ability to accelerate the repayment of TARP.

National Penn’s Board of Directors approved a first quarter cash dividend of $0.01 per share, payable on February 17, 2011 to shareholders of record on February 6, 2010, consistent with the $0.01 per share paid in the previous quarter.

Scott Fainor stated, "I am proud of the efforts of our employees in achieving our strategic initiatives of improving asset quality, enhancing capital levels and improving earnings of National Penn as we focused on reducing risk. As we look forward, we will stay focused on these initiatives as we continue efforts to grow despite the current economic environment.”

About National Penn Bancshares, Inc.:

National Penn Bancshares, Inc., with approximately $9 billion in assets, is a bank holding company based in Pennsylvania. Headquartered in Boyertown, National Penn operates 124 community banking offices in Pennsylvania and one office in Maryland through National Penn Bank and its HomeTowne Heritage Bank, KNBT and Nittany Bank divisions.

National Penn’s financial services affiliates consist of National Penn Wealth Management, N.A., including its National Penn Investors Trust Company division; National Penn Capital Advisors, Inc.; Institutional Advisors LLC; National Penn Insurance Services Group, Inc., including its Higgins Insurance division; and Caruso Benefits Group, Inc.

National Penn Bancshares, Inc. common stock is traded on the Nasdaq Stock Market under the symbol "NPBC”. Please visit our Web site at www.nationalpennbancshares.com to see our regularly posted material information.

Statement Regarding Non-GAAP Financial Measures:

This release, including the attached Financial Highlights and financial data tables, contains supplemental financial information determined by methods other than in accordance with Accounting Principles Generally Accepted in the United States of America ("GAAP”). National Penn’s management uses these non-GAAP measures in its analysis of National Penn’s performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of the following non-GAAP financial measures, which exclude the impact of the specified items, provides useful supplemental information that is essential to a proper understanding of the financial results of National Penn.

• Annualized return on average tangible common equity excludes the average balance of acquisition-related goodwill and intangible assets and the average balance of preferred equity in determining average tangible shareholders’ equity. Annualized return on average tangible equity provides a method to assess management’s success in utilizing the company’s tangible common capital.
• Tangible book value excludes from total equity goodwill, intangible assets and preferred stock. Banking and financial institution regulators also exclude goodwill and intangible assets from shareholders’ equity when assessing the capital adequacy of a financial institution. Tangible book value provides a method to assess the level of tangible net assets on a per share basis.
• Adjusted net income excludes the effects of certain gains and losses, adjusted for applicable taxes. Adjusted net income provides a method to assess earnings performance by excluding items that management believes are not comparable among the periods presented.
• Efficiency ratio expresses operating expenses as a percentage of fully-taxable equivalent net interest income plus non-interest income. Operating expenses exclude items from non-interest expense that management believes are not comparable among the periods presented. Non-interest income is adjusted to also exclude items that management believes are not comparable among the periods presented. Efficiency ratio is used as a method for management to assess its operating expense level and to compare to financial institutions of varying sizes.

Management believes the use of non-GAAP measures will help readers compare National Penn’s current results to those of prior periods as presented in the accompanying Financial Highlights and financial data tables.

Cautionary Statement Regarding Forward-Looking Information:

This release contains forward-looking information about National Penn Bancshares, Inc. that is intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe,” "expect,” "may,” "will,” "should,” "project,” ”could,” "plan,” "goal,” "potential,” "pro forma,” "seek,” "intend,” or "anticipate” or the negative thereof or comparable terminology, and include discussions of strategy, financial projections, guidance and estimates (including their underlying assumptions), statements regarding plans, objectives, expectations or consequences of announced transactions, and statements about the future performance, operations, products and services of National Penn and its subsidiaries. National Penn cautions readers not to place undue reliance on these statements.

National Penn’s business and operations, as well as its business and operations following the completion of transactions described in this release, are subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any forward-looking statements. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the following: increased capital requirements and other requirements or actions mandated by National Penn’s regulators, National Penn’s inability to meet the requirements of the memorandum of understanding or the individual minimum capital ratio requirements issued by its primary regulator, National Penn’s inability to successfully implement its "self-improvement plan”, National Penn’s ability to raise capital and maintain capital levels, variations in interest rates, deterioration in the credit quality of loans, the effect of credit risk exposure, declines in the value of National Penn’s assets and the effect of any resulting impairment charges, recent and ongoing changes to the state and federal regulatory schemes under which National Penn and other financial services companies operate (including the recently passed Dodd-Frank Act and regulations to be adopted to implement that Act), competition from other financial institutions, interruptions or breaches of National Penn’s security systems, and the development and maintenance of National Penn’s information technology. These risks and others are described in greater detail in National Penn’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, as well as in National Penn’s Quarterly Reports on Form 10-Q and other documents filed by National Penn with the SEC after the date thereof. National Penn makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances occurring or existing after the date any forward-looking statement is made.

¹ Adjusted net income, as used throughout this release, is a non-GAAP financial measure. Please refer to the Statement Regarding Non-GAAP Financial Measures and the attached Financial Highlights and financial data tables for additional information on this measure and a reconciliation of this measure to net income available to common shareholders, the most comparable GAAP measure.

Financial Update for National Penn Bancshares (NPBC) for 12/31/2010
Exchange Listing Nasdaq "NPBC"
Financial Highlights
Unaudited, numbers in thousands except share and per share data
																			Christiana
				12/31/2010				9/30/2010			% Change					12/31/2009				9/30/2010
SUMMARY BALANCE SHEET
Total assets			$	8,844,620			$	9,248,229			-4.36	%			$	9,483,910			$	199,447
Investment securities and other securities				2,259,690				2,255,265			0.20	%				2,180,541				3,252
Total loans and leases				5,326,723				5,641,830			-5.59	%				6,024,501				115,233
Deposits				6,059,173				6,505,477			-6.86	%				6,738,852				161,309
Borrowings				1,590,996				1,605,411			-0.90	%				1,633,434				-
Shareholders' equity				1,137,437				1,092,018			4.16	%				1,069,468
Tangible book value per common share			$	5.18			$	5.11			1.37	%			$	4.84
Tangible common equity / tangible assets				8.27	%			7.20	%							6.64	%
			Three Months Ended												Twelve Months Ended December 31,
				12/31/2010				9/30/2010			% Change (a)					2010				2009			% Change (a)
EARNINGS
Total interest income			$	93,745			$	96,360			-2.71	%			$	387,249			$	421,143			-8.05	%
Total interest expense				26,104				28,670			-8.95	%				116,017				168,634			-31.20	%
Net interest income				67,641				67,690			-0.07	%				271,232				252,509			7.41	%
Provision for loan and lease losses				17,500				20,000			-12.50	%				95,000				154,025			-38.32	%
Net interest income after provision for loan and lease losses				50,141				47,690			5.14	%				176,232				98,484			78.94	%
Net (losses) gains from fair value changes				(2,049	)			(2,606	)		21.37	%				(10,373	)			(4,427	)		NM
Loss on CDO investments				-				-			0.00	%				-				(99,887	)		NM
Other non-interest income				25,707				26,083			-1.44	%				108,595				102,794			5.64	%
Goodwill impairment				-				-			0.00	%				8,250				275,000			NM
Other non-interest expense				59,493				57,965			2.64	%				233,426				233,616			-0.08	%
Income (loss) before income taxes				14,306				13,202			8.36	%				32,778				(411,652	)		NM
Income tax expense (benefit)				5,664				895			NM					11,441				(63,613	)		NM
Net income (loss)				8,642				12,307			-29.78	%				21,337				(348,039	)		NM
Preferred dividends and accretion of preferred discount				(2,005	)			(2,006	)		0.05	%				(8,021	)			(8,340	)		3.82	%
Net income (loss) available to common shareholders			$	6,637			$	10,301			-35.57	%			$	13,316			$	(356,379	)		NM
PERFORMANCE RATIOS
Net interest margin				3.43	%			3.42	%							3.45	%			3.18	%
Return on average assets				0.38	%			0.53	%							0.23	%			NM
Return on average total shareholders' equity				3.00	%			4.50	%							1.95	%			NM
Return on average tangible common equity (1)				3.76	%			6.42	%							2.07	%			NM
PER SHARE
Basic earnings (loss) available to common shareholders			$	0.05			$	0.08							$	0.10			$	(3.61	)
Diluted earnings (loss) available to common shareholders				0.05				0.08								0.10				(3.61	)
Dividends per common share				0.01				0.01								0.04				0.28
Average shares - basic				134,380,086				126,102,037								128,118,298				98,818,526
Average shares - diluted				134,471,788				126,255,249								128,186,651				98,818,526
(1) RECONCILIATION TABLES FOR NON-GAAP FINANCIAL MEASURES			Three Months Ended												Twelve Month Ended
				12/31/2010				9/30/2010								12/31/2010				12/31/2009
Return on average tangible common equity
Return on average shareholders' equity				3.00	%			4.50	%							1.95	%			NM
Effect of preferred equity				-0.35	%			-0.14	%							-0.54	%			NM
Effect of goodwill and intangibles				1.11	%			2.06	%							0.66	%			NM
Return on average tangible common equity				3.76	%			6.42	%							2.07	%			NM
Average tangible equity:
Average shareholders' equity			$	1,141,979			$	1,084,724							$	1,094,642			$	1,246,537
Average preferred equity				(148,377	)			(148,248	)							(148,184	)			(144,631	)
Average goodwill and intangibles				(292,855	)			(299,919	)							(303,541	)			(589,133	)
Average total tangible common equity			$	700,747			$	636,557							$	642,917			$	512,773
Adjusted net income reconciliation
Net income (loss) available to common shareholders			$	6,637			$	10,301							$	13,316			$	(356,379	)
After tax gain on pension plan curtailment				-				-								(2,643	)			-
After tax unrealized fair market value loss (gain) on NPB Capital Trust II Preferred Securities				1,332				1,694								6,743				2,878
After tax loss on investment securities				-				-								-				1,858
After tax other than temporary impairment charge on CDO investment				-				-								-				66,164
After tax insurance proceeds				-				-								-				(2,618	)
After tax FDIC special assessment				-				-								-				3,006
After tax (gain) loss on sale of wealth unit				-				-								-				(797	)
After tax loss (gain) on sale of SNC loans				-				-								-				3,921
After tax SERP accrual				-				-								-				1,300
Tax expense from sale of Christiana				5,486				-								5,486				-
BOLI tax expense				-				-								8,081				-
Goodwill impairment				-				-								8,250				275,000
Adjusted net income available to common shareholders			$	13,455			$	11,995							$	39,233			$	(5,667	)
Earnings per share
Net income (loss) available to common shareholders			$	0.05			$	0.08							$	0.10			$	(3.61	)
After tax gain on pension plan curtailment				-				-								(0.02	)			-
After tax unrealized fair market value loss (gain) on NPB Capital Trust II Preferred Securities				0.01				0.01								0.05				0.03
After tax loss on investment securities				-				-								-				0.02
After tax other than temporary impairment charge on CDO investment				-				-								-				0.67
After tax insurance proceeds				-				-								-				(0.03	)
After tax FDIC special assessment				-				-								-				0.03
After tax (gain) loss on sale of wealth unit				-				-								-				(0.01	)
After tax loss (gain) on sale of SNC loans				-				-								-				0.04
After tax SERP accrual				-				-								-				0.01
Tax expense from sale of Christiana				0.04				-								0.05				-
BOLI tax expense				-				-								0.06				-
Goodwill impairment				-				-								0.06				2.78
Adjusted net income available to common shareholders			$	0.10			$	0.09							$	0.30			$	(0.06	)
(a) Changes greater than 100% are expressed as not meaningful or "NM"

Financial Update for National Penn Bancshares (NPBC) for 12/31/2010
Unaudited, numbers in thousands except share and per share data				As of
					12/31/2010				9/30/2010				6/30/2010				3/31/2010				12/31/2009
BALANCE SHEET - ASSETS
Cash and due from banks				$	90,283			$	103,279			$	106,059			$	103,666			$	106,722
Interest-earning deposits with banks					612,099				609,733				496,282				239,757				496,535
Total cash and cash equivalents					702,382				713,012				602,341				343,423				603,257
Investment securities available for sale, at fair value					1,632,118				1,603,849				1,554,349				1,569,062				1,499,667
Investment securities held to maturity					546,957				567,740				579,572				591,315				601,923
Other securities					80,615				83,676				83,676				83,676				78,951
Loans held for sale					12,785				30,081				15,944				6,561				18,028
Loans and leases					5,313,938				5,611,749				5,740,291				5,908,658				6,006,472
Allowance for loan and lease losses					(150,054	)			(153,475	)			(154,039	)			(153,850	)			(146,271	)
Loans and leases, net					5,163,884				5,458,274				5,586,252				5,754,808				5,860,201
Premises and equipment, net					105,483				108,496				109,792				112,376				113,556
Accrued interest receivable					33,829				36,127				35,745				37,175				36,565
Bank owned life insurance, redeemed but not settled					-				64,387				64,387				-				-
Bank owned life insurance					134,154				136,093				134,925				198,392				198,131
Other real estate owned and other repossessed assets					7,453				7,818				8,974				2,386				4,208
Goodwill					258,279				273,468				273,468				281,718				281,623
Other intangible assets, net					22,217				25,587				27,360				29,130				30,943
Unconsolidated investments under the equity method					11,482				12,428				12,736				12,842				12,821
Other assets					132,982				127,193				132,606				148,897				144,036
TOTAL ASSETS				$	8,844,620			$	9,248,229			$	9,222,127			$	9,171,761			$	9,483,910
BALANCE SHEET - LIABILITIES
Non-interest bearing deposits				$	808,835			$	815,193			$	834,297			$	800,467			$	753,650
Interest bearing deposits					5,250,338				5,690,284				5,661,908				5,610,897				5,985,202
Total deposits					6,059,173				6,505,477				6,496,205				6,411,364				6,738,852
Securities sold under repurchase agreements					734,455				752,428				752,314				758,828				737,323
Short-term borrowings					10,000				6,974				7,000				7,165				6,900
Federal Home Loan Bank advances					703,761				705,278				706,784				743,781				756,803
Subordinated debentures					142,780				140,731				138,125				139,668				132,407
Accrued interest payable and other liabilities					57,014				45,323				44,811				40,167				42,157
TOTAL LIABILITIES					7,707,183				8,156,211				8,145,239				8,100,973				8,414,442
BALANCE SHEET - SHAREHOLDERS' EQUITY
Preferred stock					148,441				148,310				148,180				148,050				147,920
Common stock					1,292,342				1,227,639				1,227,354				1,226,481				1,225,635
Retained deficit					(293,940	)			(299,209	)			(308,252	)			(301,459	)			(302,120	)
Accumulated other comprehensive income/(loss)					(9,406	)			15,278				9,606				(2,284	)			(1,967	)
TOTAL SHAREHOLDERS' EQUITY					1,137,437				1,092,018				1,076,888				1,070,788				1,069,468
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY				$	8,844,620			$	9,248,229			$	9,222,127			$	9,171,761			$	9,483,910
COMMON SHARE AND PER SHARE DATA
Book Value				$	7.23			$	7.48			$	7.37			$	7.32			$	7.33
Tangible Book Value (2)				$	5.18			$	5.11			$	4.98			$	4.86			$	4.84
Dividends				$	0.01			$	0.01			$	0.01			$	0.01			$	0.01
Shares Outstanding (end of period, net of treasury)					136,792,414				126,115,073				126,064,075				126,004,409				125,713,668
(2) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
Total shareholders' equity				$	1,137,437			$	1,092,018			$	1,076,888			$	1,070,788			$	1,069,468
Total preferred shareholders' equity					(148,441	)			(148,310	)			(148,180	)			(148,050	)			(147,920	)
Goodwill and intangibles					(280,496	)			(299,055	)			(300,828	)			(310,848	)			(312,566	)
Tangible common equity				$	708,500			$	644,653			$	627,880			$	611,890			$	608,982
Common shares outstanding					136,792,414				126,115,073				126,064,075				126,004,409				125,713,668
Tangible book value per share				$	5.18			$	5.11			$	4.98			$	4.86			$	4.84

Financial Update for National Penn Bancshares (NPBC) for 12/31/2010
Unaudited, numbers in thousands except share and per share data		For the Quarter Ended																				For the Twelve Months Ended
			12/31/2010				9/30/2010				6/30/2010				3/31/2010				12/31/2009				12/31/2010				12/31/2009
INTEREST INCOME
Loans and leases, including fees		$	73,496			$	76,227			$	77,830			$	78,654			$	82,927			$	306,207			$	336,787
Investment securities
Taxable			11,272				11,157				11,457				11,098				11,871				44,984				47,077
Tax-exempt			8,569				8,697				8,803				8,838				8,946				34,906				36,649
Federal funds sold and deposits in banks			408				279				218				247				204				1,152				630
Total interest income			93,745				96,360				98,308				98,837				103,948				387,249				421,143
INTEREST EXPENSE
Deposits			13,411				15,773				16,464				18,281				22,844				63,929				110,935
Securities sold under repurchase agreements			2,567				2,757				2,808				2,874				3,049				11,006				12,666
FHLB advances and subordinated debentures			10,126				10,140				10,393				10,423				10,610				41,082				45,033
Total interest expense			26,104				28,670				29,665				31,578				36,503				116,017				168,634
Net interest income			67,641				67,690				68,643				67,259				67,445				271,232				252,509
Provision for loan and lease losses			17,500				20,000				25,000				32,500				47,000				95,000				154,025
Net interest income after provision for loan and lease losses			50,141				47,690				43,643				34,759				20,445				176,232				98,484
NON-INTEREST INCOME
Wealth management income			6,917				6,997				7,238				7,101				7,406				28,253				28,923
Service charges on deposit accounts			5,358				5,419				5,446				5,341				6,141				21,564				24,259
Insurance commissions and fees			3,423				3,499				3,639				3,771				3,970				14,332				15,714
Cash management and electronic banking fees			4,584				4,548				4,614				4,158				4,237				17,904				15,921
Mortgage banking income			2,590				2,424				1,231				1,153				1,337				7,398				8,475
Bank owned life insurance income			1,501				1,168				1,280				1,983				1,441				5,932				4,919
Equity in undistributed net earnings of unconsolidated investments			140				(41	)			537				163				1,706				799				2,586
Gain on pension plan curtailment			-				-				-				4,066				-				4,066				-
Other operating income			1,638				2,381				2,771				2,733				(1,783	)			9,523				6,758
Net (losses) gains from fair value changes			(2,049	)			(2,606	)			1,543				(7,261	)			3,669				(10,373	)			(4,427	)
Net (losses) gains on sales of investment securities			-				-				214				-				290				214				(2,857	)
Impairment losses on investment securities:
Impairment losses on investment securities			(444	)			(312	)			-				(634	)			(2,166	)			(1,390	)			(127,812	)
Non credit-related losses on securities not expected to be sold recognized in other comprehensive loss before tax			-				-				-				-				-				-				26,021
Net impairment losses on investment securities			(444	)			(312	)			-				(634	)			(2,166	)			(1,390	)			(101,791	)
Total non-interest income (loss)			23,658				23,477				28,513				22,574				26,248				98,222				(1,520	)
NON-INTEREST EXPENSE
Salaries, wages and employee benefits			31,499				31,544				30,999				29,429				30,864				123,471				125,635
Net premises and equipment			7,460				7,256				7,209				7,998				7,962				29,923				31,999
Advertising and marketing expenses			997				982				1,762				1,609				2,442				5,350				7,436
Fraud recovery			-				-				-				-				-				-				(4,028	)
Goodwill impairment			-				-				8,250				-				275,000				8,250				275,000
FDIC insurance			3,411				3,641				4,056				4,097				3,910				15,205				14,915
Other operating expenses			16,126				14,542				14,287				14,524				16,941				59,477				57,659
Total non-interest expense			59,493				57,965				66,563				57,657				337,119				241,676				508,616
Income (loss) before income taxes			14,306				13,202				5,593				(324	)			(290,426	)			32,778				(411,652	)
Income tax expense (benefit)			5,664				895				9,132				(4,250	)			(9,227	)			11,441				(63,613	)
NET INCOME (LOSS)			8,642				12,307				(3,539	)			3,926				(281,199	)			21,337				(348,039	)
Preferred dividends and accretion of preferred discount			(2,005	)			(2,006	)			(2,005	)			(2,005	)			(2,095	)			(8,021	)			(8,340	)
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS		$	6,637			$	10,301			$	(5,544	)		$	1,921			$	(283,294	)		$	13,316			$	(356,379	)
PER SHARE OF COMMON STOCK
Basic earnings (loss) available to common shareholders		$	0.05			$	0.08			$	(0.04	)		$	0.02			$	(2.25	)		$	0.10			$	(3.61	)
Diluted earnings (loss) available to common shareholders		$	0.05			$	0.08			$	(0.04	)		$	0.02			$	(2.25	)		$	0.10			$	(3.61	)
Average Shares Basic			134,380,086				126,102,037				126,045,667				125,875,061				125,697,822				128,118,298				98,818,526
Average Shares Diluted			134,471,788				126,255,249				126,045,667				126,039,112				125,697,822				128,186,651				98,818,526
SUPPLEMENTAL DATA (annualized, average) (b)
Return on Assets			0.38	%			0.53	%			NM				0.17	%			NM				0.23	%			NM
Return on Total Equity			3.00	%			4.50	%			NM				1.48	%			NM				1.95	%			NM
Return on Common Equity			2.65	%			4.36	%			NM				0.84	%			NM				1.41	%			NM
Return on Tangible Equity (1)			3.76	%			6.42	%			NM				1.27	%			NM				2.07	%			NM
Efficiency Ratio (3)			60.36	%			58.51	%			57.72	%			58.54	%			58.79	%			58.78	%			59.61	%
(3) RECONCILIATION TABLE FOR NON-GAAP FINANCIAL MEASURES
Efficiency Ratio Calculation
Non-interest expense		$	59,493			$	57,965			$	66,563			$	57,657			$	337,119			$	241,676			$	508,616
Less:
Fraud recovery			-				-				-				-				-				-				(4,028	)
Goodwill impairment			-				-				8,250				-				275,000				8,250				275,000
FDIC Special Assessment			-				-				-				-				-				-				4,625
SERP accrual			-				-				-				-				2,000				-				2,000
Operating expenses		$	59,493			$	57,965			$	58,313			$	57,657			$	60,119			$	233,426			$	231,019
Net interest income (taxable equivalent)		$	72,849			$	72,985			$	74,055			$	72,727			$	73,007			$	292,615			$	275,192
Non-interest income (loss)			23,658				23,477				28,513				22,574				26,248				98,222				(1,520	)
Less:
Gain on pension plan curtailment			-				-				-				4,066				-				4,066				-
Securities loss / impairment / CDO loss			-				-				-				-				(1,876	)			-				(104,648	)
Net (losses) gains from fair value changes			(2,049	)			(2,606	)			1,543				(7,261	)			3,669				(10,373	)			(4,427	)
Loss on sale of SNC loans			-				-				-				-				(6,032	)			-				(6,032	)
Gain on sale of wealth unit			-				-				-				-				1,226				-				1,226
Adjusted revenue		$	98,556			$	99,068			$	101,025			$	98,496			$	102,268			$	397,144			$	387,553
Efficiency Ratio			60.36	%			58.51	%			57.72	%			58.54	%			58.79	%			58.78	%			59.61	%
(b) Ratios less than 0% are expressed as not meaningful or "NM"

Financial Update for National Penn Bancshares (NPBC) for 12/31/2010
Unaudited, numbers in thousands except share and per share data
		As of and for the Quarter Ended																				For the Twelve Months Ended
CHARGE-OFFS			12/31/2010				9/30/2010				6/30/2010				3/31/2010				12/31/2009				12/31/2010				12/31/2009
Loan Charge-offs		$	22,456			$	23,306			$	27,316			$	27,482			$	28,524			$	100,560			$	101,529
Recoveries on Loans			(2,443	)			(2,742	)			(2,505	)			(2,561	)			(2,305	)			(10,251	)			(9,769	)
Net Loan Charge-offs		$	20,013			$	20,564			$	24,811			$	24,921			$	26,219			$	90,309			$	91,760
Net Loan Charge-offs to Average Loans (annualized)			1.44	%			1.43	%			1.70	%			1.69	%			1.69	%			1.57	%			1.46	%
NET CHARGE OFF ASSETS-DETAIL
Commercial, Financial and Agricultural		$	(7,266	)		$	(2,166	)		$	(8,608	)		$	(2,162	)		$	(11,529	)		$	(20,202	)		$	(44,736	)
Real Estate-Permanent			(2,903	)			(1,655	)			(1,510	)			(359	)			(8,522	)			(6,427	)			(14,030	)
Real Estate-Construction			(1,973	)			(12,899	)			(6,327	)			(18,427	)			(3,493	)			(39,626	)			(17,600	)
Leases			(96	)			(1	)			(5	)			(98	)			(38	)			(200	)			(381	)
Residential Mortgages			(5,621	)			(1,467	)			(5,368	)			(2,700	)			(1,089	)			(15,156	)			(3,492	)
Consumer			(2,038	)			(2,169	)			(2,902	)			(1,086	)			(1,322	)			(8,195	)			(10,878	)
Overdraft			(116	)			(207	)			(91	)			(89	)			(226	)			(503	)			(643	)
Net Loans Charged-off		$	(20,013	)		$	(20,564	)		$	(24,811	)		$	(24,921	)		$	(26,219	)		$	(90,309	)		$	(91,760	)
		As of
ASSET QUALITY AND OTHER DATA			12/31/2010				9/30/2010				6/30/2010				3/31/2010				12/31/2009
Nonaccrual Loans		$	82,111			$	83,650			$	88,875			$	111,064			$	122,516
Restructured Loans			-				8,544				7,324				6,653				576
Loans 90+ Days Past Due & Still Accruing			1,753				2,237				2,997				2,651				2,694
Total Non-performing Loans		$	83,864			$	94,431			$	99,196			$	120,368			$	125,786
Other Real Estate Owned & Repossessed Assets			7,453				7,818				8,974				2,386				4,208
Total Non-performing Assets		$	91,317			$	102,249			$	108,170			$	122,754			$	129,994
Allowance for Loan and Lease Losses		$	150,054			$	153,475			$	154,039			$	153,850			$	146,271
Allowance for Loan and Lease Losses/Non-Performing Loans			178.9	%			162.5	%			155.3	%			127.8	%			116.3	%
Allowance for Loan and Lease Losses/Non-Performing Assets			164.3	%			150.1	%			142.4	%			125.3	%			112.5	%
Provision/Charge-Offs, net			87.4	%			97.3	%			100.8	%			130.4	%			179.3	%
Classified Loans		$	479,336			$	498,631			$	512,628			$	532,048			$	501,485
Classified Loans/Total Loans			9.00	%			8.84	%			8.91	%			8.99	%			8.32	%
Delinquent Loans		$	27,807			$	33,676			$	33,171			$	31,891			$	28,158
Delinquent Loans/Total Loans			0.52	%			0.60	%			0.58	%			0.54	%			0.47	%
NON PERFORMING ASSETS-DETAIL
Commercial, Financial and Agricultural		$	34,197			$	29,227			$	33,712			$	38,455			$	40,618
Real Estate-Permanent			24,079				21,769				18,958				14,823				19,277
Real Estate-Construction			20,048				30,522				35,728				40,622				46,832
Leases			684				651				468				580				396
Residential Mortgages			5,802				13,396				11,422				18,368				12,800
Consumer			4,227				3,853				4,227				6,691				6,842
Loans Past Due 90+Days			1,753				2,237				2,997				2,651				2,694
Total Other Repossessed Assets			527				594				658				564				535
Total Non-performing Assets + Loans 90 Days Past Due		$	91,317			$	102,249			$	108,170			$	122,754			$	129,994
		As of
REGULATORY CAPITAL DATA			12/31/2010				9/30/2010				6/30/2010				3/31/2010				12/31/2009
Tier 1 Capital		$	924,143			$	850,185			$	833,526			$	810,119			$	809,218
Tier 1 Leverage Ratio			10.59	%			9.67	%			9.41	%			9.06	%			8.88	%
Tier 1 Ratio (%)			16.12	%			14.00	%			13.64	%			12.88	%			12.66	%
Total Capital		$	996,288			$	926,499			$	910,857			$	889,675			$	889,966
Total Capital Ratio (%)			17.38	%			15.26	%			14.91	%			14.15	%			13.92	%
Total Risk-Weighted Assets		$	5,732,730			$	6,070,678			$	6,109,763			$	6,289,618			$	6,394,468

Financial Update for National Penn Bancshares (NPBC) for 12/31/2010
Unaudited, numbers in thousands except share and per share data
		As of
PERIOD END BALANCES:		12/31/2010				9/30/2010				6/30/2010				3/31/2010				12/31/2009
Earning Assets / Liabilities
Loan Breakdown: (Regulatory)
Commercial/Industrial		$	804,602			$	878,790			$	925,661			$	972,132			$	985,357
Commercial Real Estate (4)			1,653,063				1,810,442				1,804,073				1,852,838				1,833,069
Residential Mortgage			1,294,751				1,381,117				1,412,218				1,398,640				1,430,027
Real Estate Construction and Land Development			426,208				375,341				404,292				463,833				534,315
Home Equity			755,829				792,496				800,378				800,394				806,556
Consumer			236,107				244,878				247,113				251,611				252,028
Other Loans			156,163				158,766				162,500				175,771				183,148
Total Loans			5,326,723				5,641,830				5,756,235				5,915,219				6,024,500
Allowance for Loan and Lease Losses/Total Loans and Leases			2.82%				2.72%				2.68%				2.60%				2.43%
Investment Securities and Other Securities			2,259,690				2,255,265				2,217,597				2,244,053				2,180,541
Other Earning Assets			612,099				609,733				496,282				239,757				496,535
Total Earning Assets (net of loan loss reserve)		$	8,048,458			$	8,353,353			$	8,316,075			$	8,245,178			$	8,555,305
(4) Includes owner occupied
Loan Breakdown: (Internal)
Commercial Real Estate
Non Owner Occupied
- Permanent		$	768,988			$	855,777			$	868,405			$	865,003			$	831,127
- Construction / Development			281,056				312,086				335,799				365,641				406,331
Commercial & Industrial
Business Purpose, Real Estate secured			948,506				987,551				991,075				1,024,362				1,052,096
Business Purpose, not secured by Real Estate			886,692				953,645				1,005,189				1,075,058				1,091,578
Owner Occupied Commercial Real Estate
- Permanent			552,129				556,738				556,201				570,659				589,455
- Construction / Development			37,196				38,902				38,858				42,122				52,710
Leasing			10,437				12,230				13,810				15,942				17,304
Residential Mortgage (personal purpose)
Permanent			758,301				795,420				813,042				822,373				833,721
Construction			7,113				9,966				10,925				10,486				12,275
Retail
Home Equity Loans and Direct Installment Loans			423,755				446,866				458,803				466,611				487,793
Home Equity Lines of Credit			321,369				332,074				317,469				303,246				297,652
Private Banking Credit Lines			150,811				159,991				163,526				167,954				171,582
Indirect Vehicle Loans			131,416				133,297				136,177				138,536				141,829
Other			48,954				47,287				46,956				47,226				39,047
Total Loans		$	5,326,723			$	5,641,830			$	5,756,235			$	5,915,219			$	6,024,500
Deposit Breakdown:
Savings		$	438,879			$	430,806			$	455,061			$	433,669			$	414,886
NOW Accounts			1,181,850				1,294,582				1,130,026				1,114,539				1,284,143
Money Market Accounts			1,664,620				1,714,771				1,763,631				1,724,852				1,675,369
CDs $100k or less			1,378,060				1,512,573				1,543,947				1,565,238				1,607,148
CDs greater than $100k			586,929				737,552				769,243				772,599				1,003,656
Total Interest Bearing Deposits			5,250,338				5,690,284				5,661,908				5,610,897				5,985,202
Borrowings			1,590,996				1,605,411				1,604,223				1,649,442				1,633,433
Total Interest Bearing Liabilities		$	6,841,334			$	7,295,695			$	7,266,131			$	7,260,339			$	7,618,635

Financial Update for National Penn Bancshares (NPBC) for 12/31/2010
Unaudited, numbers in thousands except share and per share data
		Quarterly, as of																																								Twelve Months, as of
		12/31/2010								9/30/2010								6/30/2010								3/31/2010								12/31/2009								12/31/2010								12/31/2009
		Avg Bal				Yield				Avg Bal				Yield				Avg Bal				Yield				Avg Bal				Yield				Avg Bal				Yield				Avg Bal				Yield				Avg Bal				Yield
Total Loans (net of unearned)		$	5,506,513			5.35	%			$	5,703,685			5.35	%			$	5,856,738			5.39	%			$	5,985,554			5.39	%			$	6,137,362			5.42	%			$	5,761,647			5.37	%			$	6,286,831			5.41	%
Investment Securities			2,274,090			4.24	%				2,227,732			4.34	%				2,248,560			4.43	%				2,184,886			4.56	%				2,244,878			4.51	%				2,234,045			4.39	%				2,083,933			4.94	%
Interest Earning Deposits and
Fed Funds Sold			642,204			0.25	%				535,446			0.21	%				388,434			0.23	%				411,100			0.24	%				410,679			0.22	%				495,042			0.23	%				284,855			0.22	%
Total Earning Assets			8,422,807			4.66	%				8,466,862			4.76	%				8,493,732			4.90	%				8,581,540			4.93	%				8,792,919			4.94	%				8,490,734			4.81	%				8,655,619			5.13	%
Total Assets			9,122,895			4.30	%				9,197,254			4.39	%				9,228,295			4.51	%				9,337,334			4.53	%				9,775,612			4.45	%				9,220,791			4.43	%				9,686,673			4.58	%
Savings			435,069			0.20	%				445,327			0.27	%				446,347			0.29	%				421,503			0.33	%				405,132			0.33	%				437,796			0.27	%				390,028			0.31	%
NOW Accounts			1,265,646			0.23	%				1,203,831			0.28	%				1,156,191			0.35	%				1,170,886			0.43	%				1,212,744			0.56	%				1,195,331			0.32	%				1,115,747			0.69	%
Money Market Accounts			1,682,091			0.60	%				1,728,823			0.82	%				1,726,437			0.87	%				1,710,084			0.97	%				1,704,247			1.11	%				1,715,233			0.81	%				1,693,218			1.27	%
CDs			2,124,910			1.85	%				2,279,366			1.92	%				2,322,483			1.97	%				2,522,020			2.03	%				2,730,493			2.34	%				2,311,017			1.95	%				2,802,915			2.87	%
Total Interest Bearing Deposits			5,507,716			0.97	%				5,657,347			1.11	%				5,651,458			1.17	%				5,824,493			1.27	%				6,052,616			1.50	%				5,659,377			1.13	%				6,001,908			1.85	%
Non-Interest Bearing Deposits			818,330								831,484								831,119								767,398								741,254								812,275								731,122
Total Deposits			6,326,046			0.84	%				6,488,831			0.96	%				6,482,577			1.02	%				6,591,891			1.12	%				6,793,870			1.34	%				6,471,652			0.99	%				6,733,030			1.65	%
Short-Term Borrowings			764,314			1.33	%				734,904			1.49	%				752,907			1.50	%				749,114			1.56	%				694,000			1.74	%				750,309			1.47	%				660,825			1.92	%
Long-Term Borrowings			845,423			4.75	%				844,336			4.76	%				879,339			4.74	%				885,293			4.77	%				904,083			4.66	%				863,436			4.76	%				978,889			4.60	%
Total Interest Bearing Liabilities
(including non-interest bearing deposits)			7,935,783			1.31	%				8,068,071			1.41	%				8,114,823			1.47	%				8,226,298			1.56	%				8,391,953			1.73	%				8,085,397			1.43	%				8,372,744			2.01	%
Total Interest Bearing Liabilities		$	7,117,453			1.46	%			$	7,236,587			1.57	%			$	7,283,704			1.63	%			$	7,458,900			1.72	%			$	7,650,699			1.89	%			$	7,273,122			1.60	%				7,641,622			2.21	%
Net Yield on Earning Assets: (Margin)						3.43	%							3.42	%							3.50	%							3.44	%							3.29	%							3.45	%							3.18	%
Wealth Assets:
Assets under administration		$	3,973,910							$	10,616,931							$	9,942,778							$	9,229,435							$	8,989,419
Assets under management			2,092,149								2,394,916								2,252,299								2,285,178								2,199,946
(included above)
Christiana Bank and Trust
Trust Revenues		$	862			(c)				$	1,539							$	1,607							$	1,555							$	1,870
(c) Through December 3, 2010

Financial Update for National Penn Bancshares (NPBC) for 12/31/2010
Unaudited, numbers in thousands except share and per share data
		Quarterly, as of
		12/31/2010		9/30/2010		6/30/2010		3/31/2010		12/31/2009
STATES OF OPERATION AND BANKING OFFICES
BY STATE (LATEST AVAILABLE DATA)
PA
Total Number of Banking Offices		124		124		124		124		124
Total Number of Insured Subsidiaries
(Bank & Thrift Subsidiaries)		1		1		1		1		1
Total Number of ATMs		133		132		133		133		133
MD
Total Number of Banking Offices		1		1		1		1		1
Total Number of Insured Subsidiaries
(Bank & Thrift Subsidiaries)		-		-		-		-		-
Total Number of ATMs		1		1		1		1		1
DE
Total Number of Banking Offices		-		2		2		2		2
Total Number of Insured Subsidiaries
(Bank & Thrift Subsidiaries)		-		1		1		1		1
Total Number of ATMs		-		2		2		2		2
TOTAL
Total Number of Banking Offices		125		127		127		127		127
Total Number of Insured Subsidiaries
(Bank & Thrift Subsidiaries)		1		2		2		2		2
Total Number of ATMs		134		135		136		136		136
EOP Employees (Full Time Equivalent)		1,728		1,771		1,792		1,753		1,756