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Warburg Pincus to invest USD150m in National Penn Bancshares

Private equity firm Warburg Pincus has agreed to invest USD150m in National Penn Bancshares through a direct purchase of newly issued common stock at USD6.05 per share, approximating the average closing price of the stock over the last 30 days. 

The initial investment of USD63.3m will be funded within ten days, with the remainder of the investment to be made after receipt of regulatory approvals, which are anticipated in the fourth quarter of 2010.

"We are excited to have Warburg Pincus join us as a significant shareholder, with its longstanding record of successful investing in the financial services industry and deep understanding of the banking sector," says Scott V. Fainor, president and chief executive of National Penn. "We believe the incremental capital will accelerate our ability to repay the US Treasury for its TARP investment in us, enhance our ability to serve our customers and communities, and further differentiate National Penn from others in the industry as economic conditions improve.”
 
All of National Penn’s capital ratios are improved by the Warburg Pincus investment, with the tangible common equity ratio increasing from 7.0 per cent at 30 June 2010 to more than 8.7 per cent pro forma for the investment and the total risk-based capital ratio increasing from 14.9 per cent at 30 June 2010 to more than 18 per cent. 

Assuming TARP is repaid, the tangible common equity ratio is approximately 8.9 per cent and the total risk-based capital ratio of approximately 15.7 per cent remains well above regulatory requirements.

As part of the transaction, Michael E. Martin, managing director and co-head of Warburg Pincus’ financial services group, will join National Penn’s board of directors, upon the second closing, to serve for an initial term through April 2013. 

Martin says: "We are pleased to have the opportunity to partner with National Penn and its talented management team. Our extensive due diligence has confirmed National Penn’s strong financial condition and vibrant regional banking franchise. With the regional banking sector, and National Penn’s markets in particular, ripe for consolidation, we believe that National Penn is well-positioned to take advantage of market opportunities and has the right management team to lead and direct its growth."

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