On Friday, National Penn Bancshares (NASDAQ:NPBC) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Modeling for Buybacks
Frank Schiraldi – Sandler O’Neill: Just a couple of questions here. I wondered if you could talk a little bit about how you’re modeling for buybacks in terms of how you look at tangible book dilution and if it’s a tool that you expect to be active in with the stock at current levels?
Michael J. Hughes – Group EVP and CFO: Frank, this is Mike. As we said, I think we’ll be disciplined in our approach here. Even if you look at a total purchase at this price level, the tangible book value isn’t that great, it’s somewhere in the $0.05 range. Again, I think what we look at this currency when it gets the strength that it has, we’re hopeful we’ll see some M&A opportunities. We want to be positioned if we see some weakness in the stock to execute on the repurchase and we’ll try to do a little of each at differing price levels. But I think your point is fair that we probably won’t be aggressive in buying back at this level.
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Frank Schiraldi – Sandler O’Neill: Then Scott, I wondered if maybe you could talk a little about just what you’re seeing in general on the footprint in terms of pricing on loans and competition if it’s heating up above there?
Scott V. Fainor – President and CEO: Competition is definitely heating up. I think we stated that though at the last quarterly conference call. It’s intense around pricing. If other banks are involved in trying to look at winning business, I think they’re looking at structure and fees. From our standpoint we are competing, we are trying to shorten a sale cycle by bringing more bankers out to that perspective customer or current customer and we’re looking very closely at pricing but not on structure. We are holding structure pretty tightly and I do believe it’s going to continue to remain competitive throughout all of 2012. But we are out there, we are doing a lot of intense calling and we are going to continue to keep that intensity up throughout the year.
Frank Schiraldi – Sandler O’Neill: Is pricing out there such that there is still opportunity in both commercial real estate both owner occupied and non-owner occupied?
Scott V. Fainor – President and CEO: I believe that there is more opportunity on pricing within the commercial real estate for the risk you are taking, but that doesn’t mean that it’s not as competitive. I think that we are trying to accelerate the sales cycle by just having more of our bankers out on the street making those calls, looking for those opportunities, looking for fee income that can go along with the loan balances and the deposit accounts that we might pickup. So I have been very encouraged by the new business one, the business that is in our pipeline that we are looking to convert the close. I think we are just going to have to continue to compete extremely well and we are ready to do that.
Frank Schiraldi – Sandler O’Neill: Then just finally, I just wanted to ask Mike on, you mentioned the margin and you said the goal continues to be to keep the margin in the 350 range I believe. So is that sort of the goal for the remained of the year to keep the margin above that level on a quarterly basis?
Michael J. Hughes – Group EVP and CFO: That is the goal to keep that margin in the 350 range for the rest of the year, that’s correct.
Frank Schiraldi – Sandler O’Neill: Then, I know it’s difficult because real world going out further, but if you look at 2000 – early 2013, as you look at 2013 in a similar interest rate environment the treasury curve doesn’t move that much etcetera. What are your thoughts on the margin if you can give them?
Michael J. Hughes – Group EVP and CFO: Frank, I think a prolonged period of low rates is going to put pressure on the industry in general. But certainly from our perspective we’re not out there giving guidance out there in ’13.
Bob Ramsey – FBR: I wanted to ask a question or two about expenses. You certainly had tremendous improvement in efficiency this quarter versus the year-ago period or last quarter or two. Looks like a lot of the improvement was in that other line. I know you all high highlighted that some of that benefit was seasonal and some of it had to do with the extra $2 million last quarter. But does it move seasonally next quarter and kind of how do you think about that line as we trend through the rest of the year? What is kind of a good ballpark to have that in?
Michael J. Hughes – Group EVP and CFO: Bob, I think generally what we look at and there is movement in all those areas and the guidance that we’ve given is we look at operating expenses (until) we still believe that mid $50 million range is a good range to be. So, can it move $1 million or $2 million each side of that? I think it can.
Bob Ramsey – FBR: Then I guess I was also curious. I noticed that you all saw – I mean, it wasn’t much but you did see a slight uptick in your security yields this quarter, which seems to kind of buck the trend out there. Could you help understand what drove that?
Michael J. Hughes – Group EVP and CFO: I would say when we look at our security portfolio we’ve done a good job as far as timing of the purchases. The amortization or the prepayments in the mortgage is pretty much what it’s been. But I think there’s pressure on that portfolio and I can’t put my finger on anything that really caused us to be different than others.