Question-and-Answer Session
Michelle Debkowski
Thank you Glenn. We had a few questions presented during the webcast and Mike I’ll begin to direct these questions to you. We had a few questions on our other incomes for the quarter; specifically can you address any non-recurring or unusual items in the other income line?
Mike Reinhard
Yes Michelle. There was a fair market value adjustment to NPB Capital Trust II as we mentioned during the presentation. The amount of this adjustment was approximately $775,000 after tax. This amount was partially offset by new unusual negative items including severance of approximately $163,000 after tax, generated by a realignment of the company’s senior management structure, as well as a $200,000 after tax negative impact on the company’s tax expense during the third quarter, related to FIN 48.
Michelle Debkowski
Mike, why did long-term borrowings increase as much as it did in the third quarter?
Mike Reinhard
Actually, long-term borrowings remained the same as the end of the second quarter 2007; however the average balance of long term borrowings during the third quarter 2007 was higher than the average balance during second quarter 2007 due to borrowings increasing during the second quarter.
Michelle Debkowski
Mike, we have received a couple of questions on the impact of the federal reserve rate cut on National Penn, specifically can you discuss your interest rate sensitivity and will the fed interest rate cut last month help improve your margin?
Mike Reinhard
We expect no major change in margin due to the fed rate cut as we remain relatively matched from an interest rate sensitivity standpoint and we see no easing in the competitive environment in which we operate.
Michelle Debkowski
Glenn I’ll address this next question to you. Please discuss the local economy and your anticipated long-term growth.
Glenn Moyer
Michelle, I’ll talk about that in two parts. First of all a general view of the local economy. We are fortunate to have our core market areas in some of the most economically strong areas in the mid-Atlantic region. I think the economy that we enjoy is well diversified and in decent condition. The growth seems to be slow but I do not believe at this point that I would not buy into the talk of being in a recession. And we expect that slow growth approach to be with us for the remainder of the year and into the early part of ?08.
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