National Penn posts $283.3M loss, replaces CEO

National Penn Bancshares Inc. lost $283.3 million in the fourth quarter, replaced its chief executive, and signed an informal agreement with regulators, the Boyertown bank said today.

The loss included a $275 million noncash goodwill charge, a $47 million provision for loan losses, and a $6 million loss on the sale of $63.8 million in loans.

Effective yesterday, Scott V. Fainor took over as president and CEO, and joined the board of directors. Fainor, who came to National Penn in 2008 through the bank's purchase of Bethlehem-based KNBT Bancorp Inc., replaced Glenn Moyer.

Moyer, who had been CEO for three years, will remain as a special adviser to Fainor for two years, said the bank's chairman, Thomas A. Beaver.

In an interview, Fainor said that the bank's problems are concentrated in its $406 million portfolio of commercial real estate construction loans, most of which are to homebuilders. "That's where the concentration of the risk is," said Fainor, 48.

He said that 31 percent of those loans are at risk, with the biggest problems in southern Montgomery County, southern Bucks County, eastern Chester County and Philadelphia. "There was more growth in that region, so you can imagine there is more stress in that region," he said.

National Penn's regulatory agreement is a memorandum of understanding, which is less severe than an order. It requires the bank to slightly boost one capital ratio and maintain others "until we get these classified loans reduced," Fainor said. Classified loans are still paying, but they have an elevated risk of not paying in the future.

The memorandum does not require the bank to raise capital, chief financial officer Michael J. Hughes said.

National Penn's level of classified loans soared to $501 million on Dec. 31 from $196 million a year earlier, but the rate of growth slowed "tremendously" toward the end of the year, Fainor said. The company had $6 billion in loans at the end of the year and $9.5 billion in assets.

National Penn's shares were off 13.97 percent, or $1, at $6.16 in early trading on Nasdaq.

Other banks in the region also reported continued struggles with problem loans, particularly in construction.

For example, Susquehanna Bancshares Inc., of Lititz, Pa., said that 8.8 percent of its real estate construction loans were doubtful and were no longer accruing interest.

That category accounted for 11 percent of the bank's outstanding loans, but 44 percent of its doubtful loan total. Boenning & Scattergood Inc. analyst Matthew Schultheis slashed his estimate for Susquehanna's 2010 operating earning by half after reviewing the results.

Susquehanna, with $13.7 billion in assets, managed to eke out a $3.4 million fourth-quarter profit, but well below 2008 net income of $18.2 million.

In South Jersey, Sun Bancorp Inc. of Vineland lost $6.3 million in the fourth quarter, compared with a profit of $4.3 million the year before. Sun, with $3.6 billion in assets, recorded a loan-loss provision of $19.5 million and said its nonperforming loans more than doubled to $105.4 million.