|   |   |  x                                                                       |      QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
|--------|--------|-------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|
|   |   | SECURITIES      EXCHANGE ACT OF 1934                                          |
|   |   |                                                                          |
|   |   | For      the quarterly period ended March 31,      2009                       |
|   |   | OR                                                                            |
|   |   |  o                                                                       |           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE      |
|   |   | SECURITIES      EXCHANGE ACT OF 1934                                          |
|   |   |                                                                          |
|   |   | For      the transition period from ________________ to      ________________ |

| 000-22537-01(Commission      File Number)              |
|--------------------------------------------------------|
|                                                   |
| NATIONAL      PENN BANCSHARES, INC.                    |
| (Exact      Name of Registrant as Specified inCharter) |

| Pennsylvania                                        | 23-2215075                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |
|-----------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| (State      or Other Jurisdiction of Incorporation) | (IRS      Employer Identification No.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |
|                                                | Philadelphia      and Reading Avenues,                                                   Boyertown, PA  19512                                                      (Address of Principal Executive Offices) |   |

| (800)      822-3321                                                                |
|------------------------------------------------------------------------------------|
| Registrant’s      telephone number, including area code                      |
|                                                                               |
| (Former      Name or Former Address, if Changed Since Last Report):  N/A |

|   | Indicate      by check mark whether the registrant (1) has filed all reports required to      be filed by Section 13 or 15(d) of the Securities Exchange      Act of 1934 during the preceding 12 months (or for such shorter      period that the registrant was required to file such reports),      and (2) has been subject to such filing requirements for the past 90      days.      Yes xNo  o                                                                                                                                                                                                                                          |   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   | Indicate      by check mark whether the registrant has submitted electronically and      posted on its corporate Web site, if any, every Interactive      Data File required to be submitted and posted pursuant to Rule 405 of      Regulation S-T during the preceding 12 months (or      for such shorter period that the registrant was required to submit and      post such files).      Yes      o    No      o                                                                                                                                                                                                                     |
|   | Indicate      by check mark whether the registrant is a large accelerated filer, an      accelerated filer, a non-accelerated filer or a smaller reporting      company.  See the definitions of “large accelerated filer,”      “accelerated filer” and “smaller reporting company” in Rule      12b-2 of the Exchange Act.                                                                                                                                                                                                                                                                                               |
|   |     Large      accelerated filer x                                                                                                        Accelerated filer  o |
|   |                  Non-accelerated filer   o (Do not check if a      smaller reporting      company)                     Smaller reporting company o                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Indicate      by check mark whether the registrant is a shell company (as defined in      Rule 12b-2 of the Exchange Act).Yes oNo  x                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Indicate      the number of shares outstanding of each of the issuer's classes of common      stock, as of the latest practicabledate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

| Class                                  |   | Outstanding at May 5,    2009 |
|----------------------------------------|--------|------------------------------------|
| Common      Stock, no stated par value |   |         83,983,442shares |

----

| Part I - Financial    Information. | Page          |
|------------------------------------|---------------|
|                               |          |   |   |
|                               | Item      1.  | Financial      Statements | 3 |
|                               |          |   |   |
|                               | Item      2.  | Management’s      Discussion and Analysis of |   |
|                               |          | Financial      Condition and Results of Operation | 21 |
|                               |          |   |   |
|                               | Item      3.  | Quantitative      and Qualitative Disclosures About |   |
|                               |          | Market      Risk | 34 |
|                               |          |   |   |
|                               | Item      4.  | Controls      and Procedures | 35 |
|                               |          |   |   |
| Part II - Other      Information.  |          |
|                               |          |   |   |
|                               | Item      1.  | Legal      Proceedings | 36 |
|                               |          |   |   |
|                               | Item      1A. | Risk      Factors | 36 |
|                               |          |   |   |
|                               | Item      2.  | Unregistered      Sales of Equity Securities |   |
|                               |          | and      Use of Proceeds | 42 |
|                               |          |   |   |
|                               | Item      3.  | Defaults      Upon Senior Securities | 42  |
|                               |          |   |   |
|                               | Item      4.  | Submission      of Matters to a Vote of |   |
|                               |          | Security      Holders | 42 |
|                               |          |   |   |
|                               | Item      5.  | Other      Information | 42 |
|                               |          |   |   |
|                               | Item      6.  | Exhibits | 43 |
|                               |          |   |   |
| Signatures                         | 44            |
|                               |          |   |   |
| Exhibits                           | 45            |

----

|                                                                                                   |   | Unaudited      |      |   |              |   |
|--------------------------------------------------------------------------------------------------------|--------|----------------|-----------|--------|-------------------|--------|
| (dollars      in thousands)                                                                            |   | March      31, |      |   | December      31, |   |
|                                                                                                   |   | 2009           |      |   | 2008              |   |
| ASSETS                                                                                                 |   |           |      |   |              |   |
| Cash      and due from banks                                                                           |   | $              | 349,402   |   |              | $      | 156,884 |   |
| Interest-bearing      deposits with banks                                                              |   |           | 39,622    |   |              |   | 38,946 |   |
| Total      cash and cash equivalents                                                                   |   |           | 389,024   |   |              |   | 195,830 |   |
|                                                                                                   |   |           |      |   |              |   |   |   |
| Investment      securities held to maturity                                                            |   |           |      |   |              |   |   |   |
| (Fair      value $271,423 and $284,608 for 2009 and 2008,    respectively)                             |   |           | 299,645   |   |              |   | 326,090 |   |
| Investment      securities available for sale, at fair value                                           |   |           | 1,614,393 |   |              |   | 1,593,799 |   |
| Loans      and leases held for sale                                                                    |   |           | 17,806    |   |              |   | 3,605 |   |
| Loans      and leases, less allowance for loan and lease losses of $86,273 and      $84,006            |   |           |      |   |              |
| for      2009 and 2008, respectively                                                                   |   |           | 6,260,973 |   |              |   | 6,228,263 |   |
| Premises      and equipment, net                                                                       |   |           | 116,885   |   |              |   | 119,924 |   |
| Premises      held for sale                                                                            |   |           | 812       |   |              |   | 3,768 |   |
| Accrued      interest receivable                                                                       |   |           | 36,587    |   |              |   | 37,127 |   |
| Bank      owned life insurance                                                                         |   |           | 194,883   |   |              |   | 193,811 |   |
| Goodwill                                                                                               |   |           | 556,031   |   |              |   | 558,252 |   |
| Other      intangible assets, net                                                                      |   |           | 35,557    |   |              |   | 37,496 |   |
| Unconsolidated      investments under the equity method                                                |   |           | 12,966    |   |              |   | 11,874 |   |
| Other      assets                                                                                      |   |           | 97,480    |   |              |   | 93,592 |   |
| TOTAL      ASSETS                                                                                      |   | $              | 9,633,042 |   |              | $      | 9,403,431 |   |
|                                                                                                   |   |           |      |   |              |   |   |   |
| LIABILITIES                                                                                            |   |           |      |   |              |   |   |   |
| Non-interest      bearing deposits                                                                     |   | $              | 730,814   |   |              | $      | 793,269 |   |
| Interest      bearing deposits                                                                         |   |           | 5,929,420 |   |              |   | 5,596,617 |   |
| Total      deposits                                                                                    |   |           | 6,660,234 |   |              |   | 6,389,886 |   |
|                                                                                                   |   |           |      |   |              |   |   |   |
| Securities      sold under repurchase agreements and federal funds    purchased                        |   |           | 645,942   |   |              |   | 640,905 |   |
| Short-term      borrowings                                                                             |   |           | 7,863     |   |              |   | 10,402 |   |
| Long-term      borrowings                                                                              |   |           | 930,879   |   |              |   | 955,983 |   |
| Subordinated      debentures                                                                           |   |           |      |   |              |   |   |   |
| ($52,556      and $50,659 at fair value for 2009 and 2008, respectively)                               |   |           | 129,877   |   |              |   | 127,980 |   |
| Accrued      interest payable and other liabilities                                                    |   |           | 82,145    |   |              |   | 98,280 |   |
| TOTAL      LIABILITIES                                                                                 |   |           | 8,456,940 |   |              |   | 8,223,436 |   |
|                                                                                                   |   |           |      |   |              |   |   |   |
| SHAREHOLDERS'      EQUITY                                                                              |   |           |      |   |              |   |   |   |
| Preferred      stock, no stated par value; authorized 1,000,000 shares, Series      A-none issued |   |           |      |   |              |
| Series      B, $1,000 liquidation preference, 5% cumulative; 150,000 shares      issued                |   |
| and      outstanding as of 3/31/09 and 12/31/08                                                        |   |           | 144,297   |   |              |   | 144,076 |   |
| Common      stock, no stated par value; authorized 100,000,000 shares, issued      and                 |   |           |      |   |              |
| outstanding      2009 - 83,005,701; 2008 - 80,731,751                                                  |   |           | 1,019,548 |   |              |   | 1,003,110 |   |
| Retained      earnings                                                                                 |   |           | 65,765    |   |              |   | 65,194 |   |
| Accumulated      other comprehensive loss                                                              |   |           | (53,508   | )      |              |   | (32,385 | ) |
| TOTAL      SHAREHOLDERS' EQUITY                                                                        |   |           | 1,176,102 |   |              |   | 1,179,995 |   |
|                                                                                                   |   |           |      |   |              |   |   |   |
| TOTAL      LIABILITIES AND SHAREHOLDERS' EQUITY                                                        |   | $              | 9,633,042 |   |              | $      | 9,403,431 |   |
|                                                                                                   |   |           |      |   |              |   |   |   |
| The      accompanying notes are an integral part of these financial      statements.                   |   |           |      |   |              |   |   |   |
|                                                                                                   |   |           |      |   |              |   |   |   |

----

| (dollars      in thousands, except per share data)                                                        |   | Three      Months Ended March 31, |        |
|-----------------------------------------------------------------------------------------------------------|--------|-----------------------------------|-------------|
|                                                                                                      |   | 2009                              |        |   | 2008 |   |
| INTEREST      INCOME                                                                                      |   |                              |        |   |   |   |
| Loans      and leases, including fees                                                                     |   | $                                 | 84,968      |   |   | $ | 88,767 |   |
| Investment      securities                                                                                |   |                              |        |   |   |   |   |   |
| Taxable                                                                                                   |   |                              | 11,614      |   |   |   | 14,494 |   |
| Tax-exempt                                                                                                |   |                              | 9,347       |   |   |   | 7,009 |   |
| Federal      funds sold and deposits in banks                                                             |   |                              | 22          |   |   |   | 133 |   |
| Total      interest income                                                                                |   |                              | 105,951     |   |   |   | 110,403 |   |
| INTEREST      EXPENSE                                                                                     |   |                              |        |   |   |   |   |   |
| Deposits                                                                                                  |   |                              | 31,664      |   |   |   | 36,669 |   |
| Securities      sold under repurchase agreements and federal                                              |   |                              |        |   |   |   |   |   |
| funds      purchased                                                                                      |   |                              | 3,615       |   |   |   | 5,245 |   |
| Short-term      borrowings                                                                                |   |                              | -           |   |   |   | 29 |   |
| Long-term      borrowings                                                                                 |   |                              | 12,042      |   |   |   | 12,046 |   |
| Total      interest expense                                                                               |   |                              | 47,321      |   |   |   | 53,989 |   |
| Net      interest income                                                                                  |   |                              | 58,630      |   |   |   | 56,414 |   |
| Provision      for loan and lease losses                                                                  |   |                              | 17,525      |   |   |   | 3,410 |   |
| Net      interest income after provision for loan and lease losses                                        |   |                              | 41,105      |   |   |   | 53,004 |   |
| NON-INTEREST      INCOME                                                                                  |   |                              |        |   |   |   |   |   |
| Wealth      management income                                                                             |   |                              | 6,615       |   |   |   | 7,608 |   |
| Service      charges on deposit accounts                                                                  |   |                              | 5,800       |   |   |   | 5,261 |   |
| Bank      owned life insurance income                                                                     |   |                              | 1,072       |   |   |   | 1,580 |   |
| Other      operating income                                                                               |   |                              | 2,578       |   |   |   | 2,837 |   |
| Net      losses from fair value changes                                                                   |   |                              | (1,898      | ) |   |   | (1,012 | ) |
| Net      losses on sale of  investment securities                                               |   |                              | (2,284      | ) |   |   | - |   |
| IMPAIRMENT      LOSSES ON INVESTMENT SECURITIES:                                                          |   |                              |        |   |   |   |   |   |
|          Impairment      losses on investment securities     |   |                              | (26,595     | ) |   |   | - |   |
| Non      credit-related losses on securities not expected to besold                                       |   |
|               recognized in other comprehensive income before tax |   |                              | 18,810      |   |   |   | - |   |
| Net      impairment losses on investment securities                                                       |   |                              | (7,785      | ) |   |   | - |   |
|                                                                                                      |   |                              |        |   |   |   |   |   |
| Mortgage      banking income                                                                              |   |                              | 2,420       |   |   |   | 591 |   |
| Insurance      commissions and fees                                                                       |   |                              | 3,957       |   |   |   | 3,806 |   |
| Cash      management and electronic banking fees                                                          |   |                              | 3,648       |   |   |   | 2,928 |   |
| Equity      in undistributed net earnings of unconsolidated                                               |   |                              |        |   |   |   |   |   |
| investments                                                                                               |   |                              | 1,091       |   |   |   | 612 |   |
| Total      non-interest income                                                                            |   |                              | 15,214      |   |   |   | 24,211 |   |
| NON-INTEREST      EXPENSE                                                                                 |   |                              |        |   |   |   |   |   |
| Salaries,      wages and employee benefits                                                                |   |                              | 32,017      |   |   |   | 29,230 |   |
| Net      premises and equipment                                                                           |   |                              | 8,598       |   |   |   | 8,007 |   |
| Advertising      and marketing expenses                                                                   |   |                              | 1,855       |   |   |   | 1,433 |   |
| Other      operating expenses                                                                             |   |                              | 14,223      |   |   |   | 10,244 |   |
| Total      non-interest expense                                                                           |   |                              | 56,693      |   |   |   | 48,914 |   |
| Income      before income taxes                                                                           |   |                              | (374        | ) |   |   | 28,301 |   |
| Income      tax (benefit) expense                                                                         |   |                              | (4,173      | ) |   |   | 6,708 |   |
| NET      INCOME                                                                                           |   |                              | 3,799       |   |   |   | 21,593 |   |
| Preferred      dividends/accretion of preferred discount                                                  |   |                              | (2,054      | ) |   |   | - |   |
|               NET INCOME AVAILABLE TO COMMON SHAREHOLDERS    |   |  $                           | 1,745  |   |   |  $ | 21,593  |   |
|                                                                                                      |   |                              |        |   |
| PER      SHARE OF COMMON STOCK                                                                            |   |                              |        |   |   |   |   |   |
| Basic      earnings                                                                                       |   | $                                 | 0.05        |   |   | $ | 0.33 |   |
| Basic      earnings available to common shareholders                                                      |   | $                                 | 0.02        |   |   | $ | 0.33 |   |
| Diluted      earnings                                                                                     |   | $                                 | 0.05        |   |   | $ | 0.33 |   |
| Diluted      earnings available to common shareholders                                                    |   | $                                 | 0.02        |   |   | $ | 0.33 |   |
| Dividends      paid in cash                                                                               |   | $                                 | 0.17        |   |   | $ | 0.17 |   |
|                                                                                                      |   |                              |        |   |   |   |   |   |
|                                                                                                      |   |                              |        |   |   |   |   |   |
| The      accompanying notes are an integral part of these financial      statements.                      |   |

----

| (dollars      in thousands, except share data)                                                                                                    |   |   |       |   |      |   |      |          | Accumulated |   |          |   |   |               |    |   |   |   |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|-----------|--------|-----------|---------------|-------------|--------|---------------|--------|--------|--------------------|---------|--------|--------|--------|---------|
|                                                                                                                                              |   |   |       |   |      |   |      | Series      B |        |   |          |   |   | Other              |    |   |   |   |    |   |   |   |   |   |
|                                                                                                                                              |   | Common |       |   | Preferred |   |      | Retained      |        |   | Comprehensive |   |   | Treasury           |    |   |   |   |    | Comprehensive |   |
|                                                                                                                                              |   | Shares |       |   | Value     |   |      | Stock         |        |   | Earnings      |   |   | Income      (Loss) |    |   | Stock  |   |    | Total |   |   | Income |   |
|                                                                                                                                              |   |   |       |   |      |   |      |          |        |   |          |   |   |               |    |
| Balance      at December 31, 2008, as previously reported                                                                                         |   |   | 80,731,751 |   |      | $      | 1,003,110 |          |        | $      | 144,076       |   |   | $                  | 65,194  |   |   | $      | (32,385 | ) |   | $ | - |   |   | $ | 1,179,995 |   |   |   |   |
| Cumulative      effect of adoption of FSP FAS 115-2                                                                                               |   |   |       |   |      |   |      |          |        |   |          |   |   |               | 12,407  |   |   |   | (12,407 | ) |   |   |   |   |   |   | - |   |   |   |   |
| Balance      at December 31, 2008, as revised                                                                                                     |   |   | 80,731,751 |   |      |   | 1,003,110 |          |        |   | 144,076       |   |   |               | 77,601  |   |   |   | (44,792 | ) |   |   | - |   |   |   | 1,179,995 |   |   |   |   |
| Net      income                                                                                                                                   |   |   | -          |   |      |   | -         |          |        |   | -             |   |   |               | 3,799   |   |   |   | -       |   |   |   | - |   |   |   | 3,799 |   |   | $ | 3,799 |   |
| Dividends      declared and accrued                                                                                                               |   |   | -          |   |      |   | -         |          |        |   | -             |   |   |               | (15,635 | )      |   |   | -       |   |   |   | - |   |   |   | (15,635 | ) |   |   |   |   |
| Shares      issued under share-based plans, net of excess tax benefits                                                                            |   |   | 228,193    |   |      |   | 105       |          |        |   | -             |   |   |               | -       |   |   |   | -       |   |   |   | - |   |   |   | 105 |   |   |   |   |   |
| Share-based      compensation                                                                                                                     |   |   | -          |   |      |   | 438       |          |        |   | -             |   |   |               | -       |   |   |   | -       |   |   |   | - |   |   |   | 438 |   |   |   |   |   |
| Dividends      reinvested                                                                                                                         |   |   | 897,486    |   |      |   | 5,937     |          |        |   | -             |   |   |               | -       |   |   |   | -       |   |   |   | - |   |   |   | 5,937 |   |   |   |   |   |
| Shares      issued from optional cash                                                                                                             |   |   | 1,148,271  |   |      |   | 10,179    |          |        |   | -             |   |   |               | -       |   |   |   | -       |   |   |   | - |   |   |   | 10,179 |   |   |   |   |   |
| Amortization      of preferred discount                                                                                                           |   |   | -          |   |      |   | (221      | )             |        |   | 221           |   |   |               | -       |   |   |   | -       |   |   |   | - |   |   |   | - |   |   |   |   |   |
| Other      comprehensive income (loss), net of reclassification adjustment and      taxes                                                         |   |   | -          |   |      |   | -         |          |        |   | -             |   |   |               | -       |   |   |   | 3,510   |   |   |   | - |   |   |   | 3,510 |   |   |   | 3,510 |   |
| Other      comprehensive (loss), related to securities for which other than temporary      impairment has been recognized in earnings, net of tax |   |   | -          |   |      |   | -         |          |        |   | -             |   |   |               | -       |   |   |   | (12,226 | ) |   |   | - |   |   |   | (12,226 | ) |   |   | (12,226 | ) |
| Total      comprehensive income                                                                                                                   |   |   | -          |   |      |   | -         |          |        |   | -             |   |   |               | -       |   |   |   |    |   |   |   | - |   |   |   | - |   |   | $ | (4,917 | ) |
| Treasury      shares purchased                                                                                                                    |   |   | -          |   |      |   | -         |          |        |   | -             |   |   |               | -       |   |   |   |    |   |   |   | - |   |   |   | - |   |   |   |   |   |
| Balance      at March 31, 2009                                                                                                                    |   |   | 83,005,701 |   |      | $      | 1,019,548 |          |        | $      | 144,297       |   |   | $                  | 65,765  |   |   | $      | (53,508 | ) |   | $ | - |   |   | $ | 1,176,102 |   |   |   |   |   |

|                                                                               |   | March      31, 2009 |    |   |               |   |   |
|------------------------------------------------------------------------------------|--------|---------------------|---------|--------|--------------------|--------|--------|
|                                                                               |   | Before      Tax     |    |   | Tax      (expense) |   |   | Net      of Tax |   |   |   |   |   |
|                                                                               |   | Amount              |    |   | Benefit            |   |   | Amount |   |   |   |   |   |
| Unrealized      losses on securities                                               |   |                |    |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized      holding (losses) arising during period                             |   | $                   | (11,125 | )      |               | $      | 3,894  |   |   | $ | (7,231 | ) |   |   |   |   |
| Less:      reclassification adjustment of gains/losses realized in net      income |   |                | (2,284  | )      |               |   | 799    |   |   |   | (1,485 | ) |   |   |   |   |
| Other      comprehensive loss, net                                                 |   | $                   | (13,409 | )      |               | $      | 4,693  |   |   | $ | (8,716 | ) |   |   |   |   |
|                                                                               |   |                |    |   |               |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                    |   |   |       |   |      |   |    |     |   |          |          |   |   |               |   |   |   |   |    |   |          |   |   |   |   |   |      |   |   |   |    |   |
|------------------------------------------------------------------------------------|--------|--------|------------|--------|-----------|--------|---------|----------|--------|---------------|---------------|--------|--------|--------------------|--------|--------|--------|--------|---------|--------|---------------|--------|--------|--------|--------|--------|-----------|--------|--------|--------|---------|--------|
| (dollars      in thousands, except share data)                                     |   |   |       |   |      |   |    |     |   |          | Accumulated   |   |   |               |   |   |   |   |    |   |          |   |   |   |
|                                                                               |   |   |       |   |      |   |    |     |   | Series      B |          |   |   |               |   |   | Other  |   |    |   |          |   |   |   |   |   |      |   |   |   |
|                                                                               |   | Common |       |   | Preferred |   |    | Retained |   |          | Comprehensive |   |   | Treasury           |   |   |   |   |    |   | Comprehensive |   |
|                                                                               |   | Shares |       |   | Value     |   |    | Stock    |   |          | Earnings      |   |   | Income      (Loss) |   |   | Stock  |   |    | Total  |          |   | Income |   |
|                                                                               |   |   |       |   |      |   |    |     |   |          |          |   |   |               |   |   |   |   |    |   |          |   |   |   |   |   |      |   |   |   |    |   |
| Balance      at December 31, 2007                                                  |   |   | 49,068,819 |   |      |   | 491,011 |     |   |          | -             |   |   |               | 83,091 |   |   |   | (4,281  | )      |          |   | (8,025 | )      |   |   | 561,796   |   |   |   |    |   |
|                                                                               |   |   |       |   |      |   |    |     |   |          |          |   |   |               |   |   |   |   |    |   |          |   |   |   |   |   |      |   |   |   |    |   |
| Net      income                                                                    |   |   | -          |   |      |   | -       |     |   |          | -             |   |   |               | 21,593 |   |   |   | -       |   |          |   | -      |   |   |   | 21,593    |   |   | $      | 21,593  |   |
| Cash      dividends declared                                                       |   |   | -          |   |      |   | -       |     |   |          | -             |   |   |               | (8,825 | )      |   |   | -       |   |          |   | -      |   |   |   | (8,825    | )      |   |   |    |   |
| Shares      issued under share-based plans, net of excess tax benefits             |   |   | 426,511    |   |      |   | 1,276   |     |   |          | -             |   |   |               | -      |   |   |   | -       |   |          |   | 2,685  |   |   |   | 3,961     |   |   |   |    |   |
| Share-based      compensation                                                      |   |   | -          |   |      |   | 505     |     |   |          | -             |   |   |               | -      |   |   |   | -       |   |          |   | -      |   |   |   | 505       |   |   |   |    |   |
| Shares      issued for acquisition of:                                             |   |   |       |   |      |   |    |     |   |          |          |   |   |               |   |   |   |   |    |   |          |   |   |   |   |   |      |   |   |   |    |   |
|  -      Christiana Bank & Trust Company                                   |   |   | 2,732,813  |   |      |   | 43,839  |     |   |          | -             |   |   |               | -      |   |   |   | -       |   |          |   | -      |   |   |   | 43,839    |   |   |   |    |   |
|  -      KNBT Bancorp, Inc.                                                    |   |   | 27,205,548 |   |      |   | 439,112 |     |   |          | -             |   |   |               | -      |   |   |   | -       |   |          |   | 5,623  |   |   |   | 444,735   |   |   |   |    |   |
| Other      comprehensive (loss), net of reclassification adjustment and      taxes |   |   | -          |   |      |   | -       |     |   |          | -             |   |   |               | -      |   |   |   | (21,204 | )      |          |   | -      |   |   |   | (21,204   | )      |   |   | (21,204 | )      |
| Total      comprehensive income                                                    |   |   | -          |   |      |   | -       |     |   |          | -             |   |   |               | -      |   |   |   | -       |   |          |   | -      |   |   |   | -         |   |   | $      | 389     |   |
| Treasury      shares purchased                                                     |   |   | (22,957    | )      |      |   | -       |     |   |          | -             |   |   |               | -      |   |   |   | -       |   |          |   | (364   | )      |   |   | (364      | )      |   |   |    |   |
| Balance      at March 31, 2008                                                     |   |   | 79,410,734 |   |      | $      | 975,744 |     |   |          | -             |   |   | $                  | 95,859 |   |   | $      | (25,485 | )      |          | $      | (81    | )      |   | $      | 1,046,037 |   |   |   |    |   |

|                                                                  |   | March      31, 2008 |    |   |               |   |   |            |   |   |    |   |
|-----------------------------------------------------------------------|--------|---------------------|---------|--------|--------------------|--------|--------|-----------------|--------|--------|---------|--------|
|                                                                  |   | Before      Tax     |    |   | Tax      (expense) |   |   | Net      of Tax |   |   |    |   |   |   |   |   |   |   |
|                                                                  |   | Amount              |    |   | Benefit            |   |   | Amount          |   |   |    |   |   |   |   |   |   |   |
| Unrealized      losses on securities                                  |   |                |    |   |               |   |   |            |   |   |    |   |   |   |   |   |   |   |   |   |   |
| Unrealized      holding (losses) arising during period                |   | $                   | (32,622 | )      |               | $      | 11,418 |            |   | $      | (21,204 | )      |   |   |   |   |   |   |   |   |   |
| Less:      reclassification adjustment of gains realized in netincome |   |                | -       |   |               |   | -      |            |   |   | -       |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive loss, net                                    |   | $                   | (32,622 | )      |               | $      | 11,418 |            |   | $      | (21,204 | )      |   |   |   |   |   |   |   |   |   |

----

| (Dollars      in thousands)                                                                    |   | Three      Months Ended March      31, |     |
|------------------------------------------------------------------------------------------------|--------|---------------------------------------------|----------|
|                                                                                           |   | 2009                                        |     |   | 2008 |   |
| CASH      FLOWS FROM OPERATING ACTIVITIES                                                      |   |                                        |     |   |   |   |
| Net      income                                                                                |   | $                                           | 3,799    |   |   | $ | 21,593 |   |
| Adjustments      to reconcile net income to net                                                |   |                                        |     |   |   |   |   |   |
|  cash      provided by operating activities:                                              |   |                                        |     |   |   |   |   |   |
| Provision      for loan and lease losses                                                       |   |                                        | 17,525   |   |   |   | 3,410 |   |
| Share-based      compensation expense                                                          |   |                                        | 438      |   |   |   | 505 |   |
| Depreciation      and amortization                                                             |   |                                        | 4,597    |   |   |   | 4,621 |   |
| Deferred      income tax benefit                                                               |   |                                        | (93      | ) |   |   | (498 | ) |
| (Accretion)      amortization of premiums and discounts on                                     |   |                                        |     |   |   |   |   |   |
|        investment      securities, net                      |   |                                        | (584     | ) |   |   | 667 |   |
| Investment      securities loss (gain), net                                                    |   |                                        | 2,284    |   |   |   | - |   |
| Undistributed      net earnings of equity-method investments                                   |   |                                        | (1,091   | ) |   |   | (612 | ) |
| Loans      originated for resale                                                               |   |                                        | (93,289  | ) |   |   | (37,337 | ) |
| Proceeds      from sale of loans                                                               |   |                                        | 80,644   |   |   |   | 37,817 |   |
| Gain      on sale of loans, net                                                                |   |                                        | (1,556   | ) |   |   | (480 | ) |
| Change      in fair value of subordinated debt                                                 |   |                                        | 1,898    |   |   |   | 1,012 |   |
| Non      cash loss on recognition of impairment of securities                                  |   |                                        | 7,785    |   |   |   | - |   |
| Bank-owned      life insurance income                                                          |   |                                        | (1,072   | ) |   |   | (1,580 | ) |
| Changes      in assets and liabilities:                                                        |   |                                        |     |   |   |   |   |   |
| Decrease      in accrued interest receivable                                                   |   |                                        | 540      |   |   |   | 1,491 |   |
| (Decrease)      increase  in accrued interest payable                                |   |                                        | 1,116    |   |   |   | (158 | ) |
| (Increase)  decrease      in other assets                                            |   |                                        | 1,555    |   |   |   | (31,827 | ) |
| (Decrease)  increase      in other liabilities                                       |   |                                        | (16,878  | ) |   |   | 16,047 |   |
|         Net      cash provided by operating activities |   |                                        | 7,618    |   |   |   | 14,671 |   |
|                                                                                           |   |                                        |     |   |   |   |   |   |
| CASH      FLOWS FROM INVESTING ACTIVITIES                                                      |   |                                        |     |   |   |   |   |   |
| Cash      equivalents received in excess of cash paid for business      acquired               |   |                                        | -        |   |   |   | 36,426 |   |
| Proceeds      from maturities of investment securities held to maturity                        |   |                                        | 6,225    |   |   |   | 3,169 |   |
| Purchase      of investment securities held to maturity                                        |   |                                        | -        |   |   |   | - |   |
| Proceeds      from sales of investment securities available for sale                           |   |                                        | 16,761   |   |   |   | 10,050 |   |
| Proceeds      from maturities of investment securities available forsale                       |   |                                        | 82,052   |   |   |   | 110,717 |   |
| Purchase      of investment securities available for sale                                      |   |                                        | (121,990 | ) |   |   | (43,176 | ) |
| Net      increase in loans and leases                                                          |   |                                        | (50,428  | ) |   |   | (159,980 | ) |
| Purchases      of premises and equipment                                                       |   |                                        | (254     | ) |   |   | (5,510 | ) |
| Proceeds      from the sale of other real estate owned                                         |   |                                        | 40       |   |   |   | - |   |
| Proceeds      from sale of bank building                                                       |   |                                        | 2,550    |   |   |   | - |   |
|         Net      cash used in investing activities     |   |                                        | (65,044  | ) |   |   | (48,304 | ) |
|                                                                                           |   |                                        |     |   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES                                                      |   |                                        |     |   |   |   |   |   |
| Net      increase  in interest and non-interest                                      |   |                                        |     |   |   |   |   |   |
|     bearing      demand deposits and savings accounts                      |   |                                        | 42,592   |   |   |   | 92,842 |   |
| Net  increase      in certificates of deposit                                        |   |                                        | 227,756  |   |   |   | 6,486 |   |
| Net      increase in securities sold under                                                     |   |                                        |     |   |   |   |   |   |
|     agreements      to repurchase and federal funds purchased              |   |                                        | 5,037    |   |   |   | 48,165 |   |
| Net      increase (decrease) in short-term borrowings                                          |   |                                        | (2,539   | ) |   |   | 20,398 |   |
| Proceeds      from  long-term borrowings                                             |   |                                        | -        |   |   |   | 100,000 |   |
| Repayments      of long-term borrowings                                                        |   |                                        | (24,647  | ) |   |   | (134,754 | ) |
| Shares      issued under share-based plans                                                     |   |                                        | 124      |   |   |   | 2,663 |   |
| Excess      tax (loss) benefit on share-based plans                                            |   |                                        | (18      | ) |   |   | 146 |   |
| Issuance      of shares under dividend reinvestment and optional cash                          |   |                                        | 16,115   |   |   |   | 1,011 |   |
| Purchase      of Treasury stock                                                                |   |                                        | -        |   |   |   | (364 | ) |
| Cash      dividends                                                                            |   |                                        | (13,800  | ) |   |   | (8,825 | ) |
|         Net      cash provided by financing activities |   |                                        | 250,620  |   |   |   | 127,768 |   |
|         Net      increase in cash and cash equivalents |   |                                        | 193,194  |   |   |   | 94,135 |   |
| Cash      and cash equivalents at beginning of year                                            |   |                                        | 195,830  |   |   |   | 111,520 |   |
| Cash      and cash equivalents at end of period                                                |   | $                                           | 389,024  |   |   | $ | 205,655 |   |
|                                                                                           |   |                                        |     |   |   |   |   |   |
| The      accompanying notes are an integral part of these    statements.                       |   |                                        |     |   |   |   |   |   |

----

----

|                                                       |   | March      31, 2009          |      |
|------------------------------------------------------------|--------|------------------------------|-----------|
| (dollars      in thousand)                                 |   | Amortized                    |      |   | Gross      unrealized |   |   | Gross      unrealized |   |   | Fair |   |
|                                                       |   | cost                         |      |   | gains |   |   | losses |   |   | value |   |
| Available for Sale                                         |   |                         |      |   |   |   |   |   |   |   |   |   |
| U.S.      Government agency securities                     |   | $                            | 3,584     |   |   | $ | 209 |   |   | $ | - |   |   | $ | 3,793 |   |
| State      and municipal bonds                             |   |                         | 650,159   |   |   |   | 6,787 |   |   |   | (26,435 | ) |   |   | 630,511 |   |
| Mortgage-backed      securities                            |   |                         | 886,217   |   |   |   | 18,496 |   |   |   | (6,036 | ) |   |   | 898,677 |   |
| Marketable      equity and other securities                |   |                         | 87,103    |   |   |   | 441 |   |   |   | (6,132 | ) |   |   | 81,412 |   |
|    Total                                    |   | $                            | 1,627,063 |   |   | $ | 25,933 |   |   | $ | (38,603 | ) |   | $ | 1,614,393 |   |
|                                                       |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held to Maturity                                           |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury securities                              |   | $                            | 357       |   |   | $ | 13 |   |   | $ | - |   |   | $ | 370 |   |
| State      and municipal bonds                             |   |                         | 185,816   |   |   |   | 1,109 |   |   |   | (8,346 | ) |   |   | 178,579 |   |
| Mortgage-backed      securities                            |   |                         | 68,009    |   |   |   | 1,421 |   |   |   | (136 | ) |   |   | 69,294 |   |
| Trust      Preferred Pools/Collateralized Debt Obligations |   |                         | 45,463    |   |   |   | 1,773 |   |   |   | (24,056 | ) |   |   | 23,180 |   |
|    Total                                    |   | $                            | 299,645   |   |   | $ | 4,316 |   |   | $ | (32,538 | ) |   | $ | 271,423 |   |
|                                                       |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                       |   | December      31, 2008  |      |
| (dollars      in thousand)                                 |   | Amortized                    |      |   | Gross      unrealized |   |   | Gross      unrealized |   |   | Fair |   |
|                                                       |   | cost                         |      |   | gains |   |   | losses |   |   | value |   |
| Available for Sale                                         |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury securities                              |   | $                            | 19,999    |   |   | $ | - |   |   | $ | (2 | ) |   | $ | 19,997 |   |
| U.S.      Government agency securities                     |   |                         | 20,785    |   |   |   | 294 |   |   |   | - |   |   |   | 21,079 |   |
| State      and municipal bonds                             |   |                         | 656,417   |   |   |   | 7,412 |   |   |   | (21,168 | ) |   |   | 642,661 |   |
| Mortgage-backed      securities                            |   |                         | 821,462   |   |   |   | 14,150 |   |   |   | (10,059 | ) |   |   | 825,553 |   |
| Trust      Preferred Pools/Collateralized Debt Obligations |   |                         | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Marketable      equity and other securities                |   |                         | 87,090    |   |   |   | 1,933 |   |   |   | (4,514 | ) |   |   | 84,509 |   |
|    Total                                    |   | $                            | 1,605,753 |   |   | $ | 23,789 |   |   | $ | (35,743 | ) |   | $ | 1,593,799 |   |
|                                                       |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Held to Maturity                                           |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Treasury securities                              |   | $                            | 359       |   |   | $ | 15 |   |   | $ | - |   |   | $ | 374 |   |
| State      and municipal bonds                             |   |                         | 185,774   |   |   |   | 1,558 |   |   |   | (5,652 | ) |   |   | 181,680 |   |
| Mortgage-backed      securities                            |   |                         | 74,066    |   |   |   | 1,565 |   |   |   | (128 | ) |   |   | 75,503 |   |
| Trust      Preferred Pools/Collateralized Debt Obligations |   |                         | 65,891    |   |   |   | 3,559 |   |   |   | (42,399 | ) |   |   | 27,051 |   |
|   Total                                          |   | $                            | 326,090   |   |   | $ | 6,697 |   |   | $ | (48,179 | ) |   | $ | 284,608 |   |
|                                                       |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                      |   |        |   |   | Less      than 12 months |   |    | 12      months or longer |   |   | Total   |   |
|-------------------------------------------|--------|-------------|--------|--------|--------------------------|--------|---------|--------------------------|--------|--------|---------|--------|
|                                      |   | No.      of |   |   | Fair                     |   |    | Unrealized               |   |   | Fair    |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| (dollars      in thousands)               |   | Securities  |   |   | Value                    |   |    | Losses                   |   |   | Value   |   |   | Losses |   |   | Value |   |   | Losses |   |
| State      and municipal bonds            |   |        | 855    |   |                     | $      | 434,662 |                     |   | $      | (24,466 | )      |   | $ | 75,450 |   |   | $ | (9,496 | ) |   | $ | 510,112 |   |   | $ | (33,962 | ) |
| State      and municipal bonds (taxable)  |   |        | 11     |   |                     |   | 11,159  |                     |   |   | (691    | )      |   |   | 373 |   |   |   | (128 | ) |   |   | 11,532 |   |   |   | (819 | ) |
| Mortgage-backed      securities/          |   |        |   |   |                     |   |    |                     |   |   |    |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   | - |   |
| Collateralized      Mortgage Obligations  |   |        | 104    |   |                     |   | 21,661  |                     |   |   | (432    | )      |   |   | 106,325 |   |   |   | (5,740 | ) |   |   | 127,986 |   |   |   | (6,172 | ) |
| Trust      Preferred Pools/Collateralized |   |        |   |   |                     |   |    |                     |   |   |    |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   | - |   |
| Debt      Obligations                     |   |        | 9      |   |                     |   | -       |                     |   |   | -       |   |   |   | 4,653 |   |   |   | (24,056 | ) |   |   | 4,653 |   |   |   | (24,056 | ) |
| Total      debt securities                |   |        | 979    |   |                     |   | 467,482 |                     |   |   | (25,589 | )      |   |   | 186,801 |   |   |   | (39,420 | ) |   |   | 654,283 |   |   |   | (65,009 | ) |
| Marketable      equity securities         |   |        | 31     |   |                     |   | 7,239   |                     |   |   | (1,631  | )      |   |   | 4,264 |   |   |   | (4,501 | ) |   |   | 11,503 |   |   |   | (6,132 | ) |
| Total                                     |   |        | 1,010  |   |                     | $      | 474,721 |                     |   | $      | (27,220 | )      |   | $ | 191,065 |   |   | $ | (43,921 | ) |   | $ | 665,786 |   |   | $ | (71,141 | ) |

|                                      |   |        |   |   | Less      than 12 months |   |    | 12      months or longer |   |   | Total   |   |
|-------------------------------------------|--------|-------------|--------|--------|--------------------------|--------|---------|--------------------------|--------|--------|---------|--------|
|                                      |   | No.      of |   |   | Fair                     |   |    | Unrealized               |   |   | Fair    |   |   | Unrealized |   |   | Fair |   |   | Unrealized |   |
| (dollars      in thousands)               |   | Securities  |   |   | Value                    |   |    | Losses                   |   |   | Value   |   |   | Losses |   |   | Value |   |   | Losses |   |
| U.      S. Treasury securities            |   |             | 3      |   |                     | $      | 19,997  |                     |   | $      | (2      | )      |   | $ | - |   |   | $ | - |   |   | $ | 19,997 |   |   | $ | (2 | ) |
| State      and municipal bonds            |   |        | 687    |   |                     |   | 385,739 |                     |   |   | (20,229 | )      |   |   | 40,251 |   |   |   | (5,617 | ) |   |   | 425,990 |   |   |   | (25,846 | ) |
| State      and municipal bonds (taxable)  |   |        | 12     |   |                     |   | 13,888  |                     |   |   | (974    | )      |   |   | - |   |   |   | - |   |   |   | 13,888 |   |   |   | (974 | ) |
| Mortgage-backed      securities/          |   |        |   |   |                     |   |    |                     |   |   |    |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   | - |   |
| Collateralized      Mortgage Obligations  |   |        | 140    |   |                     |   | 206,437 |                     |   |   | (10,141 | )      |   |   | 2,628 |   |   |   | (46 | ) |   |   | 209,065 |   |   |   | (10,187 | ) |
| Trust      Preferred Pools/Collateralized |   |        |   |   |                     |   |    |                     |   |   |    |   |   |   |   |   |   |   |   |   |   |   | - |   |   |   | - |   |
| Debt      Obligations                     |   |        | 22     |   |                     |   | 10,627  |                     |   |   | (14,028 | )      |   |   | 11,211 |   |   |   | (28,371 | ) |   |   | 21,838 |   |   |   | (42,399 | ) |
| Total      debt securities                |   |        | 864    |   |                     |   | 636,688 |                     |   |   | (45,374 | )      |   |   | 54,090 |   |   |   | (34,034 | ) |   |   | 690,778 |   |   |   | (79,408 | ) |
| Marketable      equity securities         |   |        | 26     |   |                     |   | 6,005   |                     |   |   | (1,035  | )      |   |   | 4,899 |   |   |   | (3,479 | ) |   |   | 10,904 |   |   |   | (4,514 | ) |
| Total                                     |   |             | 890    |   |                     | $      | 642,693 |                     |   | $      | (46,409 | )      |   | $ | 58,989 |   |   | $ | (37,513 | ) |   | $ | 701,682 |   |   | $ | (83,922 | ) |
|                                      |   |        |   |   |                     |   |    |                     |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (dollars      in thousands) |   | Non      credit-related |   |
|-----------------------------|--------|-------------------------|--------|
|                        |   | OTTI                    |   |
| Beginning      Balance      |   | $                       | 19,087 |   |
| Additions                   |   |                    | 18,810 |   |
| Reductions                  |   |                    | -      |   |
| Ending      Balance         |   | $                       | 37,897 |   |
|                        |   |                    |   |   |

----

| ·  | Detailed      credit and structural evaluation for each piece of collateral in the      Collateralized Debt Obligations (“CDO”)                                                                                                                                                                                                    |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·  | Collateral      performance projections for each piece of collateral in the CDO (default,      recovery and prepayment/amortization probabilities)                                                                                                                                                                                             |
| ·  | Terms      of the CDO structure as established in the indenture:1. the      cash flow waterfall (for both principal and interest)2. overcollateralization      and interest coverage tests3. events      of default/liquidation4. mandatory      auction call5. optional      redemption6. hedge      agreement  |
| ·  | Discounted      cash flow modeling                                                                                                                                                                                                                                                                                                             |

| ·  | The      length of time and the extent to which the fair value has been less than      the amortized cost basis |
|--------------|-----------------------------------------------------------------------------------------------------------------|
| ·  | Adverse      conditions specifically related to the security, industry, or geographic      area                 |
| ·  | Historical      and implied volatility of the fair value of thesecurity                                         |
| ·  | Credit      risk concentrations                                                                                 |
| ·  | Failure      of the issuer to make scheduled interest or principal    payments                                  |
| ·  | Amount      of principal expected to be recovered by statedmaturity                                             |
| ·  | Ratings      changes of the security                                                                            |
| ·  | Performance      of bond collateral                                                                             |
| ·  | Recoveries      or additional declines in fair value subsequent to the balance sheet      date.                 |

| ·  | While      three bonds are expected to receive 100% of their contractual cash flow by      the stated maturity,  the Company also considered that issuers      of these bonds failed to make scheduled interest payments in the first      quarter 2009, as well as the percentage of collateral in default or      deferral.  Considering these factors, the Company applied      judgment and established that for bonds expected to receive 100% of their      contractual cash flow by the stated maturity, it was reasonable to      recognize a credit loss amounting to 10% to 20% of the amortized cost to      allow for risk in the cash flows and to attribute the remaining OTTI to      the noncredit portion.                                                                                                                                                                                  |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·  | Two      bonds are not expected to receive 100% of their contractual cash flow by      the stated maturity.  For both of these bonds, the issuer failed      to make scheduled interest payments in the first quarter 2009 and the      percentage of collateral in default or deferral was higher than the three      bonds above.  Based on the results of cash flow modeling, one of      these bonds is projected to receive 8.7% of total principal by stated      maturity.  Based on all the relevant information, the Company      applied judgment and attributed 100% of the OTTI to credit.  The      other bond is projected to receive 46% of principal by stated      maturity.  Based on all relevant information for this bond, the      Company applied judgment and attributed 37.7% of the OTTI to credit and      the remainder to the noncredit portion.  |

----

----

|                                |   |  Three      Months EndedMarch 31, |   |
|-------------------------------------|--------|----------------------------------------|--------|
|                                |   | 2009                                   |   |   | 2008 |   |
|                                |   | Net                                    |   |   | Average |   |   |   |   |   | Net |   |   | Average |   |   |   |   |
| (dollars      in thousands,         |   | Income                                 |   |   | Shares |   |   | Per      Share |   |   | Income |   |   | Shares |   |   | Per      Share |   |
| except      per share data)         |   | (numerator)                            |   |   | (denominator) |   |   | Amount |   |   | (numerator) |   |   | (denominator) |   |   | Amount |   |
|                                |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      earnings per share       |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income                     |   | $                                      | 3,799  |   |   |   | 81,498 |   |   | $ | 0.05 |   |   | $ | 21,593 |   |   |   | 65,191 |   |   | $ | 0.33 |   |
| Effect      of dilutive securities: |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Options                             |   |                                   | -      |   |   |   | 393 |   |   |   | - |   |   |   | - |   |   |   | 709 |   |   |   | - |   |
|                                |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted      earnings per share     |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income available to        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common      shareholders            |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| plus      assumed conversions       |   |                                   | 3,799  |   |   |   | 81,891 |   |   |   | 0.05 |   |   |   | 21,593 |   |   |   | 65,900 |   |   |   | 0.33 |   |
|                                |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Preferred      stock dividends      |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and      accretion of discount      |   |                                   | (2,054 | ) |   |   |   |   |   |   |   |   |   |   | - |   |   |   |   |   |   |   |   |   |
|                                |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      income available to        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| common      shareholders            |   | $                                      | 1,745  |   |   |   | 81,891 |   |   | $ | 0.02 |   |   | $ | 21,593 |   |   |   | 65,900 |   |   | $ | 0.33 |   |
|                                |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                            |   | As      of and for the Three Months Ended |      |
|---------------------------------|--------|-------------------------------------------|-----------|
|                            |   | March      31, 2009                       |      |
|                            |   | Community                                 |      |   |   |   |   |   |   |
| (dollars      in thousands)     |   | Banking                                   |      |   | Other |   |   | Consolidated |   |
|                            |   |                                      |      |   |   |   |   |   |   |
| Total      assets               |   | $                                         | 9,554,619 |   |   | $ | 78,423 |   |   | $ | 9,633,042 |   |
| Total      deposits             |   |                                      | 6,660,234 |   |   |   | - |   |   |   | 6,660,234 |   |
| Net      interest income (loss) |   |                                      | 60,605    |   |   |   | (1,975 | ) |   |   | 58,630 |   |
| Total      non-interest income  |   |                                      | 7,041     |   |   |   | 8,173 |   |   |   | 15,214 |   |
| Total      non-interest expense |   |                                      | 48,377    |   |   |   | 8,316 |   |   |   | 56,693 |   |
| Net      income (loss)          |   |                                      | 5,330     |   |   |   | (1,531 | ) |   |   | 3,799 |   |
|                            |   |                                      |      |   |   |   |   |   |   |   |   |   |
|                            |   | As      of and for the Three Months Ended |      |
|                            |   | March      31, 2008                  |      |
|                            |   | Community                                 |      |   |   |   |   |   |   |   |   |
| (dollars      in thousands)     |   | Banking                                   |      |   | Other |   |   | Consolidated |   |
| Total      assets               |   | $                                         | 9,054,348 |   |   | $ | 53,766 |   |   | $ | 9,108,114 |   |
| Total      deposits             |   |                                      | 6,103,567 |   |   |   | - |   |   |   | 6,103,567 |   |
| Net      interest income (loss) |   |                                      | 57,730    |   |   |   | (1,316 | ) |   |   | 56,414 |   |
| Total      non-interest income  |   |                                      | 13,409    |   |   |   | 10,802 |   |   |   | 24,211 |   |
| Total      non-interest expense |   |                                      | 39,310    |   |   |   | 9,604 |   |   |   | 48,914 |   |
| Net      income (loss)          |   |                                      | 21,750    |   |   |   | (157 | ) |   |   | 21,593 |   |
|                            |   |                                      |      |   |   |   |   |   |   |   |   |   |

----

|                                              |   | Three      Months Ended March 31, |   |
|---------------------------------------------------|--------|-----------------------------------|--------|
| (dollars      in thousands)                       |   | 2009                              |   |   | 2008 |   |
|                                              |   |                              |   |   |   |   |
| Service      cost                                 |   | $                                 | 720    |   |   | $ | 418 |   |
| Interest      cost                                |   |                              | 509    |   |   |   | 456 |   |
| Expected      return on plan assets               |   |                              | (566   | ) |   |   | (689 | ) |
| Amortization      of prior service cost           |   |                              | (129   | ) |   |   | (129 | ) |
| Amortization      of unrecognized net actual loss |   |                              | 341    |   |   |   | 56 |   |
| Net      periodic benefit cost                    |   | $                                 | 875    |   |   | $ | 112 |   |
|                                              |   |                              |   |   |   |   |   |   |

----

----

|                                  |   | As      of March 31, 2009 |    |   | As      of December 31, 2008 |   |
|---------------------------------------|--------|---------------------------|---------|--------|------------------------------|--------|
|                                  |   |                      |    |   | Estimated                    |   | Weighted-Average |   |   |   |   |   | Estimated |   |
|                                  |   | Notional                  |    |   | Fair                         |   | Years      to |   |   | Receive |   |   | Pay |   |   | Notional |   |   | Fair |   |
| (dollars      in thousands)           |   | Amount                    |    |   | Value                        |   | Maturity |   |   | Rate |   |   | Rate |   |   | Amount |   |   | Value |   |
|                                  |   |                      |    |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      rate swap agreements:   |   |                      |    |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Pay      fixed/receive variable swaps |   | $                         | 352,365 |   |                         | $      | (31,982 | ) |   | 5.00 |   |   |   | 2.0 | % |   |   | 5.5 | % |   | $ | 332,600 |   |   | $ | (33,362 | ) |
| Pay      variable/receive fixed       |   |                      | 277,365 |   |                         |   | 28,642 |   |   | 6.00 |   |   |   | 6.2 | % |   |   | 2.3 | % |   |   | 257,601 |   |   |   | 30,124 |   |
| Total      swaps                      |   | $                         | 629,730 |   |                         | $      | (3,340 | ) |   | 5.40 |   |   |   | 3.8 | % |   |   | 4.1 | % |   | $ | 590,201 |   |   | $ | (3,238 | ) |
|                                  |   |                      |    |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

|                                           |   | Quoted      Prices in Active Markets for Identical Assets |    |   | Significant      Other Observable Inputs |   |      | Significant      Unobservable Inputs |   |   | Balanceas      of March      31, |   |
|------------------------------------------------|--------|-----------------------------------------------------------|---------|--------|------------------------------------------|--------|-----------|--------------------------------------|--------|--------|---------------------------------------|--------|
|                                           |   | (Level      1)                                            |    |   | (Level      2)                           |   |      | (Level      3)                       |   |   | 2009                                  |   |
| (dollars in      thousands)               |   |                                                      |    |   |                                     |   |      |                                 |   |   |                                  |   |
| March      31, 2009                            |   |                                                      |    |   |                                     |   |      |                                 |   |   |                                  |   |
| Assets                                         |   |                                                      |    |   |                                     |   |      |                                 |   |   |                                  |   |
| Investment      securities, available for sale |   | $                                                         | 5,239   |   |                                     | $      | 1,535,812 |                                 |   | $      | 73,342                                |   |   | $ | 1,614,393 |   |
| Interest      rate locks                       |   |                                                      |  - |   |                                     |   | 1,012     |                                 |   |   |  -                               |   |   |   | 1,012 |   |
| Interest      rate swap agreements             |   |                                                      |  - |   |                                     |   | 28,642    |                                 |   |   |  -                               |   |   |   | 28,642 |   |
|                                           |   |                                                      |    |   |                                     |   |      |                                 |   |   |                                  |   |   |   |   |   |
| Liabilities                                    |   |                                                      |    |   |                                     |   |      |                                 |   |   |                                  |   |   |   |   |   |
| Subordinated      debt                         |   | $                                                         | 52,556  |   |                                     | $      | -         |                                 |   | $      | -                                     |   |   | $ | 52,556 |   |
| Interest      rate swap agreements             |   |                                                      | -       |   |                                     |   | 31,982    |                                 |   |   | -                                     |   |   |   | 31,982 |   |
|                                           |   |                                                      |    |   |                                     |   |      |                                 |   |   |                                  |   |   |   |   |   |
|                                           |   | Quoted      Prices                                        |    |   | Significant                              |   |      |                                 |   |   |                                  |   |   |   |
|                                           |   | in      Active                                            |    |   | Other                                    |   |      | Significant                          |   |   | Balance                               |   |
|                                           |   | Markets      for                                          |    |   | Observable                               |   |      | Unobservable                         |   |   | as      of                            |   |
|                                           |   | Identical      Assets                                     |    |   | Inputs                                   |   |      | Inputs                               |   |   | December      31,                     |   |
|                                           |   | (Level      1)                                            |    |   | (Level      2)                           |   |      | (Level      3)                       |   |   | 2008                                  |   |
| (dollars      in thousands)                    |   |                                                      |    |   |                                     |   |      |                                 |   |   |                                  |   |   |   |   |   |
| December      31, 2008                         |   |                                                      |    |   |                                     |   |      |                                 |   |   |                                  |   |   |   |   |   |
| Assets                                         |   |                                                      |    |   |                                     |   |      |                                 |   |   |                                  |   |   |   |   |   |
| Investment      securities, available for sale |   | $                                                         | 27,397  |   |                                     | $      | 1,492,702 |                                 |   | $      | 73,700                                |   |   | $ | 1,593,799 |   |
| Interest      rate locks                       |   |                                                      | -       |   |                                     |   | 369       |                                 |   |   | -                                     |   |   |   | 369 |   |
| Interest      rate swap agreements             |   |                                                      | -       |   |                                     |   | 30,124    |                                 |   |   | -                                     |   |   |   | 30,124 |   |
|                                           |   |                                                      |    |   |                                     |   |      |                                 |   |   |                                  |   |   |   |   |   |
| Liabilities                                    |   |                                                      |    |   |                                     |   |      |                                 |   |   |                                  |   |   |   |   |   |
| Subordinated      debt                         |   | $                                                         | 50,659  |   |                                     | $      | -         |                                 |   | $      | -                                     |   |   | $ | 50,659 |   |
| Interest      rate swap agreements             |   |                                                      | -       |   |                                     |   | 33,362    |                                 |   |   | -                                     |   |   |   | 33,362 |   |

|                                                |   | March      31, 2009     |   |   | December      31, 2008  |   |
|-----------------------------------------------------|--------|-------------------------|--------|--------|-------------------------|--------|
|                                                |   | Investment              |   |   | Investment              |   |
|                                                |   | Securities              |   |   | Securities              |   |
| (dollars      in thousands)                         |   | Available      for Sale |   |   | Available      for Sale |   |
| Assets                                              |   |                    |   |   |                    |   |
| Beginning      Balance                              |   | $                       | 73,700 |   |                    | $      | 194,047 |   |
| Total      gains/(losses) - (realized/unrealized):  |   |                    |   |   |                    |   |   |   |
| Included      in other comprehensive income/(loss)  |   |                    | (358   | )      |                    |   | (29,027 | ) |
| Purchases,      issuances, and settlements          |   |                    | -      |   |                    |   | 3,147 |   |
| Transfer      into Level 3 from KNBT and Christiana |   |                    | -      |   |                    |   | 44,813 |   |
| Transfer      out to held to maturity               |   |                    | -      |   |                    |   | (139,280 | ) |
| Ending      balance                                 |   | $                       | 73,342 |   |                    | $      | 73,700 |   |

----

|                                |   | Quoted      Prices    |   |   | Significant    |   |   |           |   |   |              |   |
|-------------------------------------|--------|-----------------------|--------|--------|----------------|--------|--------|----------------|--------|--------|-------------------|--------|
|                                |   | in      Active        |   |   | Other          |   |   | Significant    |   |   | Balance           |   |
| (dollars      in thousands)         |   | Markets      for      |   |   | Observable     |   |   | Unobservable   |   |   | as      of        |   |
| March      31, 2009                 |   | Identical      Assets |   |   | Inputs         |   |   | Inputs         |   |   | March      31,    |   |
|                                |   | (Level      1)        |   |   | (Level      2) |   |   | (Level      3) |   |   | 2009              |   |
| Loans      and leases held for sale |   | $                     | 17,806 |   |           | $      | -      |           |   | $      | -                 |   |   | $ | 17,806 |   |
| Impaired      loans, net            |   |                  | -      |   |           |   | -      |           |   |   | 57,088            |   |   |   | 57,088 |   |
|                                |   |                  |   |   |           |   |   |           |   |   |              |   |   |   |   |   |
|                                |   |                  |   |   |           |   |   |           |   |   |              |   |   |   |   |   |
|                                |   |                  |   |   |           |   |   |           |   |   |              |   |   |   |   |   |
|                                |   | Quoted      Prices    |   |   | Significant    |   |   |           |   |   |              |   |   |   |
|                                |   | in      Active        |   |   | Other          |   |   | Significant    |   |   | Balance           |   |
| (dollars      in thousands)         |   | Markets      for      |   |   | Observable     |   |   | Unobservable   |   |   | as      of        |   |
| December      31,2008               |   | Identical      Assets |   |   | Inputs         |   |   | Inputs         |   |   | December      31, |   |
|                                |   | (Level      1)        |   |   | (Level      2) |   |   | (Level      3) |   |   | 2008              |   |
| Loans      and leases held for sale |   | $                     | 3,605  |   |           | $      | -      |           |   | $      | -                 |   |   | $ | 3,605 |   |
| Impaired      loans, net            |   |                  | -      |   |           |   | -      |           |   |   | 27,510            |   |   |   | 27,510 |   |
|                                |   |                  |   |   |           |   |   |           |   |   |              |   |   |   |   |   |

----

|                                          |                                                           |      |
|-----------------------------------------------|----------------------------------------------------------------|-----------|
|                                          |              March 31, 2009 |      |   |         December 31, 2008 |   |
|                                          | Carrying                                                       |      | Estimated |   |   | Carrying |   |   | Estimated |   |
| (dollars      in thousands)                   | Amount                                                         |      | Fair      Value |   |   | Amount |   |   | Fair      Value |   |
| Cash      and cash equivalents                | $                                                              | 389,024   |   | $ | 389,024 |   |   | $ | 195,830 |   |   | $ | 195,830 |   |
| Investment      securities available for sale |                                                           | 1,614,393 |   |   | 1,614,393 |   |   |   | 1,593,799 |   |   |   | 1,593,799 |   |
| Investment      securities held to maturity   |                                                           | 299,645   |   |   | 271,423 |   |   |   | 326,090 |   |   |   | 284,608 |   |

|                                           |                                                                 |
|------------------------------------------------|----------------------------------------------------------------------|
|                                           |               March 31, 2009 |            December 31, 2008 |
|                                           | Carrying                                                             | Estimated | Carrying | Estimated |
| (dollars      in thousands)                    | Amount                                                               | Fair      Value | Amount | Fair      Value |
|                                           |                                                                 |   |   |   |
| Net      loans (excluding loans held for sale) |  $  6,260,973                                         |  $  6,166,744 |  $  6,228,263 |  $  6,212,367 |

|                                                             |   |                       |      |
|------------------------------------------------------------------|--------|----------------------------|-----------|
|                                                             |   |        March 31, 2009 |      |   |      December 31,      2008 |   |
|                                                             |   | Carrying                   |      |   | Estimated |   |   | Carrying |   |   | Estimated |   |
|                                                             |   | Amount                     |      |   | Fair      Value |   |   | Amount |   |   | Fair      Value |   |
| (dollars      in thousands)                                      |   |                       |      |   |   |   |   |   |   |   |   |   |
| Deposits      with stated maturities                             |   | $                          | 2,860,002 |   |   | $ | 2,869,486 |   |   | $ | 2,636,713 |   |   | $ | 2,675,644 |   |
| Repurchase      agreements, federal funds                        |   |                       |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     purchased      and short-term borrowings |   |                       | 653,805   |   |   |   | 653,805 |   |   |   | 651,307 |   |   |   | 651,307 |   |
| Long-term      borrowings                                        |   |                       | 930,789   |   |   |   | 1,026,669 |   |   |   | 955,983 |   |   |   | 1,022,885 |   |
| Subordinated      debt                                           |   |                       | 129,877   |   |   |   | 129,877 |   |   |   | 127,980 |   |   |   | 127,980 |   |

----

|                        |   | Three      Months Ended |   |
|-----------------------------|--------|-------------------------|--------|
|                        |   | March      31,          |   |
| (dollars      in thousands) |   | 2009                    |   |   | 2008 |   |
| Interest                    |   | $                       | 46,205 |   |   | $ | 68,544 |   |
| Taxes                       |   |                    | -      |   |   |   | 17,622 |   |

|                                                     |   | Three      Months Ended |   |
|----------------------------------------------------------|--------|-------------------------|--------|
| (dollars      in thousands)                              |   | March      31,          |   |
|                                                     |   | 2009                    |   |   | 2008 |   |
| Transfers      of loans to other real estate             |   | $                       | 281    |   |   | $ | 191 |   |
| Other      than temporary impairment investments         |   |                    | 26,595 |   |   |   | - |   |
| Dividends      accrued not paid on preferred stock       |   |                    | 1,834  |   |   |   | - |   |
| Non-cash      share based compensation plan transactions |   |                    | -      |   |   |   | 1,152 |   |

|                                                      |   | Three      Months Ended |   |
|-----------------------------------------------------------|--------|-------------------------|--------|
|                                                      |   | March      31,          |   |
| (dollars      in thousands)                               |   | 2009                    |   |   | 2008 |   |
| Details      of acquisition:                              |   |                    |   |   |   |   |
| Fair      value of assets acquired                        |   | $                       | -      |   |   |  $ | 3,160,123 |   |
| Fair      value of liabilities assumed                    |   |                    | -      |   |   |   | (2,664,059 | ) |
| Stock      issued for acquisitions                        |   |                    | -      |   |   |   | (484,574 | ) |
| Cash      paid for acquisitions                           |   |                    | -      |   |   |   | 11,490 |   |
| Cash      and cash equivalents acquired with acquisitions |   |                    | -      |   |   |   | 47,916 |   |
| Cash      equivalents received in excess of cash          |   |                    |   |   |   |   |   |   |
| paid      for businesses acquired                         |   | $                       | -      |   |   |  $ | 36,426 |   |
|                                                      |   |                    |   |   |   |   |   |   |

| ·  | allowance      for loan and lease losses;                                                       |
|--------------|-------------------------------------------------------------------------------------------------|
| ·  | goodwill      impairment;                                                                       |
| ·  | deferred      tax assets, liabilities, and uncertain tax positions;                             |
| ·  | fair      value measurements, including assessment of other-than-temporary      impairment; and |
| ·  | Business      combinations.                                                                     |

----

----

|                                                    |   | Three      Months Ended |   |
|---------------------------------------------------------|--------|-------------------------|--------|
| (dollars      in thousands)                             |   | March      31, 2009     |   |   | March      31,2008 |   |
| Net      Income                                         |   | $                       | 1,745  |   |   | $ | 21,593 |   |
| After      tax unrealized fair market value gain on NPB |   |                    |   |   |   |   |   |   |
| Capital      Trust II Preferred Securities              |   |                    | 1,234  |   |   |   | 658 |   |
| After      tax other than temporary impairment charge   |   |                    |   |   |   |   |   |   |
| on  investments                               |   |                    | 5,060  |   |   |   | - |   |
| Core      net income                                    |   | $                       | 8,039  |   |   | $ | 22,251 |   |
|                                                    |   |                    |   |   |   |   |   |   |
| Diluted      earnings per share                         |   | $                       | 0.02   |   |   | $ | 0.33 |   |
| After      tax unrealized fair market value gain on NPB |   |                    |   |   |   |   |   |   |
| Capital      Trust II Preferred Securities              |   |                    | 0.02   |   |   |   | 0.01 |   |
| After      tax other than temporary impairment charge   |   |                    |   |   |   |   |   |   |
| on      investments                                     |   |                    | 0.06   |   |   |   | - |   |
| Core      diluted earnings per share                    |   | $                       | 0.10   |   |   | $ | 0.34 |   |
|                                                    |   |                    |   |   |   |   |   |   |

|                                                  |  Three      Months Ended March 31, |
|-------------------------------------------------------|-----------------------------------------|
| (dollars      in thousands, percentages annualized)   |                                    | 2009 |   |   | 2008 |   |
| Return      on average shareholders' equity           |                                    |   | 1.31 | % |   |   | 10.54 | % |
| Effect      of goodwill and intagibles                |                                    |   | 1.33 | % |   |   | 11.30 | % |
| Return      on average tangible equity                |                                    |   | 2.64 | % |   |   | 21.84 | % |
|                                                  |                                    |   |   |   |   |   |   |   |
| Average      tangible equity excludes acquisition     |                                    |   |   |   |   |   |   |   |
| related      average goodwill and intangibles:        |                                    |   |   |   |   |   |   |   |
| Average      shareholders' equity                     |                                    | $ | 1,176,494 |   |   | $ | 823,757 |   |
| Average      goodwill and intangibles                 |                                    |   | (592,816 | ) |   |   | (426,039 | ) |
| Average      tangible equity                          |                                    | $ | 583,678 |   |   | $ | 397,718 |   |
| Average      common equity                            |                                    |   | 1,031,883 |   |   |   | 823,757 | * |
| Average      tangible common equity                   |                                    |   | 439,067 |   |   |   | 397,718 |   |
| *      No preferred stock was issued as of March 2008 |                                    |   |   |   |   |
|                                                  |                                    |   |   |   |   |   |   |   |

----

| ·  | Loans      to individuals to finance the purchase of personal assets or activities      were $974.5 million or 15.3% of total loans, substantially collateralized      by residential real estate.                                                                                                                                                                                                       |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·  | Residential      mortgage loans for the purchase or financing of an individual’s private      residence were $1.04 billion or 16.4% of total loans. The Company’s      residential mortgage loan portfolio consists substantially of      “prime/agency” loans, which are based on 80% of appraised value and are      made to borrowers with average or better credit ratings.  |
| ·  | Commercial      loans were $4.35 billion or 68.3% of the total loan portfolio. This      category includes commercial real estate, commercial construction and      commercial and industrial loans.                                                                                                                                                                                                          |

| ·  | General      economic conditions;                                                                                                  |
|--------------|------------------------------------------------------------------------------------------------------------------------------------|
| ·  | Trends      in charge-offs for each loan type;                                                                                     |
| ·  | The      level of delinquent and nonperforming assets, including loans over 90 days      delinquent and impaired loans;            |
| ·  | A      review of portfolio concentration of any type, either customer, industry      loan type, collateral or risk grade;      and |
| ·  | Levels      of criticized loans.                                                                                                   |

| (dollars      in thousands) |   | 3/31/2009 |   |   | 12/31/2008 |   |   | 12/31/2007 |   |   | 12/31/2006 |   |   | 12/31/2005 |   |
|-----------------------------|--------|-----------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
|                        |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |
| Specific      reserves      |   | $         | 3,400  |   |       | $      | 5,086  |       |   | $      | 613        |   |   | $          | 1,307  |   |   | $ | 1,716 |   |
| Allocated      reserves     |   |      | 81,558 |   |       |   | 72,368 |       |   |   | 54,162     |   |   |       | 56,787 |   |   |   | 52,189 |   |
| Unallocated      reserves   |   |      | 1,315  |   |       |   | 6,552  |       |   |   | 122        |   |   |       | 212    |   |   |   | 2,159 |   |
|                        |   | $         | 86,273 |   |       | $      | 84,006 |       |   | $      | 54,897     |   |   | $          | 58,306 |   |   | $ | 56,064 |   |
|                        |   |      |   |   |       |   |   |       |   |   |       |   |   |       |   |   |   |   |   |   |

----

| (dollars      in thousands)                     |   | 3/31/2009 |      |   | 12/31/2008 |   |      | 12/31/2007 |   |   | 12/31/2006 |   |   | 12/31/2005 |      |
|-------------------------------------------------|--------|-----------|-----------|--------|------------|--------|-----------|------------|--------|--------|------------|--------|--------|------------|-----------|
|                                            |   |      |      |   |       |   |      |       |   |   |       |   |   |       |      |
| Nonperforming      loans                        |   | $         | 63,144    |   |       | $      | 35,586    |       |   | $      | 15,285     |   |   | $          | 8,648     |   |   | $ | 12,144 |   |
| Nonperforming      loans to total loans         |   |      | 0.99      | %      |       |   | 0.56      | %          |   |   | 0.39       | %      |   |       | 0.24      | % |   |   | 0.40 | % |
| Delinquent      loans                           |   | $         | 28,542    |   |       | $      | 20,782    |       |   | $      | 7,041      |   |   | $          | 8,196     |   |   | $ | 3,399 |   |
| Delinquent      loans to total loans            |   |      | 0.45      | %      |       |   | 0.33      | %          |   |   | 0.18       | %      |   |       | 0.23      | % |   |   | 0.11 | % |
| Classified      loans                           |   | $         | 263,332   |   |       | $      | 196,349   |       |   | $      | 68,970     |   |   | $          | 66,390    |   |   | $ | 74,756 |   |
| Classified      loans to total loans            |   |      | 4.14      | %      |       |   | 3.11      | %          |   |   | 1.78       | %      |   |       | 1.83      | % |   |   | 2.45 | % |
| Tier      1 capital and ALLL                    |   | $         | 850,699   |   |       | $      | 825,628   |       |   | $      | 454,063    |   |   | $          | 423,390   |   |   | $ | 374,478 |   |
| Classified      loans to tier 1capital and ALLL |   |      | 30.95     | %      |       |   | 23.78     | %          |   |   | 15.19      | %      |   |       | 15.68     | % |   |   | 19.96 | % |
| Total      gross loans                          |   | $         | 6,365,053 |   |       | $      | 6,315,874 |       |   | $      | 3,875,253  |   |   | $          | 3,631,937 |   |   | $ | 3,049,808 |   |

----

| (dollars      in thousands)                                     |   | March      31, |      |    |   | December      31, |   |
|-----------------------------------------------------------------|--------|----------------|-----------|---------|--------|-------------------|--------|
|                                                            |   | 2009           |      |    |   | 2008              |   |
| Restructured      loans                                         |   | $              | 614       |    |   |              | $      | 623 |   |
| Nonaccrual      loans and leases                                |   |           | 59,871    |    |   |              |   | 31,972 |   |
| Loans      past due 90 or more days as to interest or principal |   |           | 2,659     |    |   |              |   | 2,991 |   |
|    Total      non-performing loans               |   |           | 63,144    |    |   |              |   | 35,586 |   |
| Other      real estate owned                                    |   |           | 1,862     |    |   |              |   | 1,552 |   |
|    Total      non-performing assets              |   | $              | 65,006    |    |   |              | $      | 37,138 |   |
|                                                            |   |           |      |    |   |              |   |   |   |
| Total      loans and leases, including loans held for sale      |   | $              | 6,365,053 |    |   |              | $      | 6,315,874 |   |
|                                                            |   |           |      |    |   |              |   |   |   |
| Average      total loans and leases                             |   | $              | 6,366,859 |    |   |              | $      | 5,936,805 |   |
|                                                            |   |           |      |    |   |              |   |   |   |
| Allowance      for loan and lease losses                        |   | $              | 86,273    |    |   |              | $      | 84,006 |   |
|                                                            |   |           |      |    |   |              |   |   |   |
| Allowance      for loan and lease losses to:                    |   |           |      |    |   |              |   |   |   |
|    Non-performing      assets                    |   |           | 132.72    |  % |   |              |   | 226.20 | % |
|    Total      loans and leases                   |   |           | 1.36      |  % |   |              |   | 1.33 | % |
|    Average      total loans and leases           |   |           | 1.36      |  % |   |              |   | 1.42 | % |
|                                                            |   |           |      |    |   |              |   |   |   |

----

|                                     |   | For      Three Months Ended |   |
|------------------------------------------|--------|-----------------------------|--------|
| (dollars      in thousands)              |   | March      31,              |   |
|                                     |   | 2009                        |   |   | 2008 |   |
| Net      charge-offs                     |   | $                           | 15,258 |   |   | $ | 2,561 |   |
|                                     |   |                        |   |   |   |   |   |   |
| Net      charge-offs (annualized) to:    |   |                        |   |   |   |   |   |   |
| Total      loans and leases              |   |                        | 0.96   | % |   |   | 0.17 | % |
| Average      total loans and leases      |   |                        | 0.96   | % |   |   | 0.19 | % |
| Allowance      for loan and lease losses |   |                        | 70.70  | % |   |   | 12.55 | % |
|                                     |   |                        |   |   |   |   |   |   |

----

|                                                                                                                           |   | Three      Months Ended March 31, |      |
|--------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                                                                                           |   | 2009                         |      |   | 2008 |   |
|                                                                                                                           |   |                              |      |   | Interest |   |   | Average |   |   |   |   |   | Interest |   |   | Average |   |
|                                                                                                                           |   | Average                           |      |   | Income/ |   |   | Yield/ |   |   | Average |   |   | Income/ |   |   | Yield/ |   |
| (dollars      in thousands)                                                                                                    |   | Balance                           |      |   | Expense |   |   | Rate |   |   | Balance |   |   | Expense |   |   | Rate |   |
| Interest-earning      assets                                                                                                   |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      bearing balances with banks                                                                                      |   |                              |      |   |   |   |  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| and      federal funds sold                                                                                                    |   | $                                 | 36,666    |   |   | $ | 22 |   |   |   | 0.24 |  % |   | $ | 24,148 |   |   | $ | 133 |   |   |   | 2.22 | % |
| Investment      securities*                                                                                                    |   |                              | 1,946,768 |   |   |   | 25,855 |   |   |   | 5.39 | % |   |   | 1,802,951 |   |   |   | 25,245 |   |   |   | 5.63 | % |
| Total      loans and leases*                                                                                                   |   |                              | 6,366,859 |   |   |   | 85,870 |   |   |   | 5.47 | % |   |   | 5,296,371 |   |   |   | 89,611 |   |   |   | 6.80 | % |
| Total      earnings assets                                                                                                     |   | $                                 | 8,350,293 |   |   | $ | 111,747 |   |   |   | 5.43 | % |   | $ | 7,123,470 |   |   | $ | 114,989 |   |   |   | 6.49 | % |
|                                                                                                                           |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities                                                                                              |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      bearing deposits                                                                                                 |   | $                                 | 5,738,813 |   |   | $ | 31,665 |   |   |   | 2.24 | % |   | $ | 4,674,323 |   |   | $ | 36,669 |   |   |   | 3.16 | % |
| Short-term      borowings                                                                                                      |   |                              | 670,436   |   |   |   | 3,615 |   |   |   | 2.19 | % |   |   | 643,958 |   |   |   | 5,274 |   |   |   | 3.29 | % |
| Long-term      borrowings                                                                                                      |   |                              | 1,072,044 |   |   |   | 12,042 |   |   |   | 4.56 | % |   |   | 1,049,870 |   |   |   | 12,046 |   |   |   | 4.61 | % |
| Total      interest-bearing liabilities                                                                                        |   | $                                 | 7,481,293 |   |   | $ | 47,322 |   |   |   | 2.57 | % |   | $ | 6,368,151 |   |   | $ | 53,989 |   |   |   | 3.41 | % |
|                                                                                                                           |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST      RATE MARGIN**                                                                                                    |   |                              |      |   |   | $ | 64,425 |   |   |   | 3.13 | % |   |   |   |   |   | $ | 61,000 |   |   |   | 3.44 | % |
| Tax      equivalent interest                                                                                                   |   |                              |      |   |   |   | (5,795 | ) |   |   | -0.28 | % |   |   |   |   |   |   | (4,586 | ) |   |   | -0.27 | % |
| Net      interest income                                                                                                       |   |                              |      |   |   | $ | 58,630 |   |   |   | 2.85 | % |   |   |   |   |   | $ | 56,414 |   |   |   | 3.17 | % |
|                                                                                                                           |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        *   Full taxable equivalent basis, using a 35% effective tax      rate.                                  |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **        Represents the difference between interest earned and interest paid,      divided by total earning assets. |   |
| Loans      outstanding, net of unearned income, include non-accruing      loans.                                               |   |                              |      |   |   |   |   |   |   |   |   |   |   |
| Fee      income included.                                                                                                      |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                           |   |                              |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                       |   | Three      Months Ended       |   |
|------------------------------------------------------------|--------|-------------------------------|--------|
| (dollars      in thousands)                                |   | March      31, 2009 over 2008 |   |
| Increase      (decrease) due to:                           |   | Volume                        |   |   | Rate |   |   | Total |   |
| Interest      Income:                                      |   |                          |   |   |   |   |   |   |   |
| Interest      bearing deposits in banks and fed funds sold |   | $                             | 74     |   |   | $ | (176 | ) |   |   | (102 | ) |
| Investment      securities                                 |   |                          | 2,014  |   |   |   | (1,404 | ) |   |   | 610 |   |
| Total      loans and leases                                |   |                          | 18,112 |   |   |   | (21,852 | ) |   |   | (3,740 | ) |
| Total      interest income                                 |   | $                             | 20,200 |   |   | $ | (23,432 | ) |   | $ | (3,232 | ) |
| Interest      Expense:                                     |   |                          |   |   |   |   |   |   |   |   |   |   |
| Interest      bearing deposits                             |   | $                             | 8,349  |   |   | $ | (13,345 | ) |   | $ | (4,996 | ) |
| Short-term      borrowings                                 |   |                          | 217    |   |   |   | (1,875 | ) |   |   | (1,658 | ) |
| Long-term      borrowings                                  |   |                          | 254    |   |   |   | (258 | ) |   |   | (4 | ) |
| Total      interest expense                                |   | $                             | 8,820  |   |   | $ | (15,478 | ) |   | $ | (6,658 | ) |
| Increase      (decrease) in net interest income            |   | $                             | 11,380 |   |   | $ | (7,954 | ) |   | $ | 3,426 |   |
|                                                       |   |                          |   |   |   |   |   |   |   |   |   |   |

----

----

----

|                               |                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                  |                                                                                                                                  |                                                                                                                            | Repricing      Periods                                                                                                          |                                         |
|------------------------------------|--------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------|
|                               |                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                  |                                                                                                                                  | Three      Months                                                                                                               | One      Year                                                                                                                   |                                         |   |
|                               |                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                  | Within                                                                                                                                | Through                                                                                                                         | Through                                                                                                                         | Over                                         |   |
| (dollars      in thousands)        | Three      Months              | One      Year                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Five      Years                                                                                                                       | 5      Years                                                                                                                          | Total                                                                                                                           |
| Interest-earning      assets:      |                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                  |                                                                                                                                  |                                                                                                                            |
|                               | Interest      bearing deposits |  $        39,622                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  $                  -                  |  $                  -                  |  $                  -            |  $       39,622                                                                         |
|                               | Federal      funds sold        |                       -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                       - |                       - |                      - |                      - |
|                               | Investment      securities     |          234,779                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |          246,230                                                                         |          550,713                                                                         |         994,418                                                                         |      2,026,140                                                                                         |
|                               | Loans      and Leases (1)      |       2,592,842                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |          875,365                                                                         |      2,032,924                                                                                               |         863,921                                                                         |      6,365,052                                                                                         |
|                               |                           | Total      interest-earning assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  $   2,867,243                                                                                                    |  $  1,121,595                                                                                                          |  $  2,583,637                                                                                                    |  $  1,858,339                                                                                                    |  $      8,430,814                       |
|                               |                           | Cumulative      total interest-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                  |                                                                                                                                  |                                                                                                                            |                                                                                                                            |                                         |
|                               |                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | earning      assets                                                                                                                   |  $   2,867,243                                                                                                    |  $  3,988,838                                                                                                    |  $  6,572,475                                                                                                    |  $  8,430,814                 |  $      8,430,814 |
| Interest      bearing liabilities: |                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                  |                                                                                                                                  |                                                                                                                            |
|                               | Interest      bearing deposits |  $   3,602,221                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  $  1,859,492                                                                                                          |  $     465,134                                                                                          |  $          2,572                                                        |  $      5,929,419                                                                                                          |
|                               | Borrowed      funds            |          518,520                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |          155,367                                                                         |          343,337                                                                         |         567,370                                                                         |      1,584,594                                                                                         |
|                               | Subordinated      debt         |            77,321                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                       - |                       - |            52,556                                                        |         129,877                                                                         |
|                               |                           | Total      interest-bearing                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                  |                                                                                                                                  |                                                                                                                            |                                                                                                                            |                                         |
|                               |                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | liabilities                                                                                                                           |  $   4,198,062                                                                                                    |  $  2,014,859                                                                                                    |  $     808,471                                                                                    |  $     622,498 |  $      7,643,890 |
|                               |                           | Cumulative      total interest-                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                  |                                                                                                                                  |                                                                                                                            |                                                                                                                            |                                         |
|                               |                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | bearing      liabilities                                                                                                              |  $   4,198,062                                                                                                    |  $  6,212,921                                                                                                    |  $  7,021,392                                                                                                    |  $  7,643,890                 |  $      7,643,890 |
| Interest-earning      assets       |                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                  |                                                                                                                                  |                                                                                                                            |
|                               | less      interest bearing     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                  |                                                                                                                                  |                                                                                                                            |                                                                                                                            |
|                               | liabilities                    |  $      (1,330,819)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  $   (893,264)                                                                                                    |  $  1,775,166                                                                                                          |  $  1,235,841                                                                                                    |  $     786,924                                                                                    |
| Cumulative      interest-rate      |                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                  |                                                                                                                                  |                                                                                                                            |
|                               | sensitivity      gap           |  $      (1,330,819)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  $(2,224,083)                                                                                                                    |  $   (448,917)                                                                                                    |  $     786,924                                                                                    |                                                                                                                            |
|                               |                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                  |                                                                                                                                  |                                                                                                                            |                                                                                                                            |                                         |   |
|                               | (1)                            | Adjustable rate      loans are included in the period in which interest rates are next      scheduled to adjust rather than in the period      in which they are due. Fixed rate loans are included in the period in      which they are scheduled to be repaid and      are adjusted to take into account estimated prepayments based upon      assumptions estimating the expected prepayments      in the interest rate environment prevailing during the first calendar      quarter of 2009. The table assumes prepayments      and scheduled principal amortization of fixed rate loans and      mortgage-backed securities, and assumes      that adjustable-rate mortgages will reprice at contractual repricing      intervals. There has been no adjustment for      the impact of future commitments and loans in      process. |

----

| (dollars      in thousands)       |   |   |      |   |           |   |
|-----------------------------------|--------|--------|-----------|--------|----------------|--------|
|                              |   |   |      |   | %      Change  |   |
| MVPE                              |   |   |      |   | from           |   |
| Change      in Interest Rate      |   | Amount |      |   | Base      Case |   |
| Rate      Scenario                |   |   |      |   |           |   |
| +      300 basis point rate shock |   | $      | 1,054,931 |   |           |   | -18.63 | % |
| +      200 basis point rate shock |   |   | 1,142,884 |   |           |   | -11.85 | % |
| +      100 basis point rate shock |   |   | 1,229,067 |   |           |   | -5.20 | % |
|    base      case  |   |   | 1,296,528 |   |           |   |   |   |
| -      100 basis point rate shock |   |   | 1,339,940 |   |           |   | 3.35 | % |
| -      200 basis point rate shock |   |   | 1,376,232 |   |           |   | 6.15 | % |
| -      300 basis point rate shock |   |   | 1,443,471 |   |           |   | 11.33 | % |
|                              |   |   |      |   |           |   |   |   |

| (dollars      in thousands) |   |   |                |   |   |                |   |   |            |
|-----------------------------|--------|--------|---------------------|--------|--------|---------------------|--------|--------|-----------------|
|                        |   |   | March      31, 2009 |   |   | March      31, 2008 |   |
| Change      in              |   |   | Change      in      |   |   | Change      in      |   |   | Change      in  |   |   | Change      in |   |
| Interest      Rates         |   |   | Net      Income     |   |   | Net      Income     |   |   | Net      Income |   |   | Net      Income |   |
| (in      basis points)      |   |   |                |   |   |                |   |   |            |   |   |   |   |
| +      300                  |   |   | $                   | 328    |   |                |   | 0.54   | %               |   | $ | (917 | ) |   |   | -0.86 | % |
| +      200                  |   |   |                | (140   | )      |                |   | -0.23  | %               |   |   | 138 |   |   |   | 0.13 | % |
| +      100                  |   |   |                | (1,330 | )      |                |   | -2.20  | %               |   |   | 682 |   |   |   | 0.64 | % |
| -      100                  |   |   |                | 1,035  |   |                |   | 1.71   | %               |   |   | (6,683 | ) |   |   | -6.23 | % |
| -      200                  |   |   |                | 1,023  |   |                |   | 1.69   | %               |   |   | (14,310 | ) |   |   | -13.34 | % |
| -      300                  |   |   |                | (171   | )      |                |   | -0.28  | %               |   |   | (20,963 | ) |   |   | -19.55 | % |

----

|                                                           |                                                         |   |      |      |          | Payments      Due by Period: |      |
|----------------------------------------------------------------|--------------------------------------------------------------|--------|-----------|-----------|---------------|------------------------------|-----------|
|                                                           |                                                         |   |      |      |          |                         |      |   | After      one |   |   | After      three |   |   |   |   |
|                                                           |                                                         |   |      |      |          | Less      Than               |      |   | year      to |   |   | years      to |   |   | More      Than |   |
| (dollars      in thousands)                                    |                                                         | Total  |      |      | One      Year |                         |      | three      years |   |   | five      years |   |   | 5      Years |   |
|                                                           |                                                         |   |      |      |          |                         |      |   |   |   |   |   |   |   |   |   |
| Minimum      annual rentals or non-cancelable operating leases |                                                         | $      | 42,237    |      |          | $                            | 6,580     |   |   | $ | 10,221 |   |   | $ | 6,958 |   |   | $ | 18,478 |   |
| Remaining      contractual maturities of time deposits         |                                                         |   | 2,860,002 |      |          |                         | 2,393,569 |   |   |   | 418,337 |   |   |   | 46,287 |   |   |   | 1,809 |   |
| Loan      commitments                                          |                                                         |   | 1,743,339 |      |          |                         | 991,758   |   |   |   | 169,041 |   |   |   | 38,965 |   |   |   | 543,575 |   |
| Long-term      borrowed funds                                  |                                                         |   | 930,789   |      |          |                         | 804,708   |   |   |   | 88,688 |   |   |   | 25,000 |   |   |   | 12,393 |   |
| Guaranteed      preferred beneficial interests in Company's    |                                                         |   |      |      |          |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   subordinated      debentures                     |   |      | 129,877   |          |                         |      | - |   |   |   | - |   |   |   | - |   |   |   | 129,877 |   |
| Letters      of credit                                         |                                                         |   | 179,085   |      |          |                         | 133,107   |   |   |   | 35,590 |   |   |   | 10,388 |   |   |   | - |   |
| Dividends      on Preferred Stock*                             |                                                         |   | 103,125   |      |          |                         | 7,500     |   |   |   | 15,000 |   |   |   | 16,500 |   |   |   | 64,125 |   |
|                                                           | Total                                                        |   | $         | 5,988,454 |          |                         | $         | 4,337,222 |   |   | $ | 736,877 |   |   | $ | 144,098 |   |   | $ | 770,257 |   |
|                                                           |                                                         |   |      |      |          |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *                                                              | Term      is unlimited; assumed 10 year term for this table. |   |      |      |          |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |                                                         |   |      |      |          |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                |   | Tier      1 Capital to    |   |   | Tier      1 Capital to Risk- |   |   | Total      Capital to Risk- |   |
|-------------------------------------|--------|---------------------------|--------|--------|------------------------------|--------|--------|-----------------------------|--------|
|                                |   | Average      Assets Ratio |   |   | Weighted      Assets Ratio   |   |   | Weighted      Assets Ratio  |   |
|                                |   | March      31,            |   |   | Dec.      31,                |   |   | March      31,              |   |   | Dec.      31, |   |   | March      31, |   |   | Dec.      31, |   |
|                                |   | 2009                      |   |   | 2008                         |   |   | 2009                        |   |   | 2008 |   |   | 2009 |   |   | 2008 |   |
|                                |   |                      |   |   |                         |   |   |                        |   |   |   |   |   |   |   |   |   |   |
| The      Company                    |   |                      | 8.62   | %      |                         |   | 8.50   | %                           |   |   | 10.44 | % |   |   | 10.65 | % |   |   | 11.61 | % |   |   | 11.85 | % |
| National      Penn Bank             |   |                      | 7.90   | %      |                         |   | 7.90   | %                           |   |   | 9.59 | % |   |   | 10.00 | % |   |   | 10.76 | % |   |   | 11.19 | % |
| Christiana                          |   |                      | 9.00   | %      |                         |   | 10.20  | %                           |   |   | 11.41 | % |   |   | 11.82 | % |   |   | 12.66 | % |   |   | 13.07 | % |
| "Well      Capitalized" institution |   |                      | 5.00   | %      |                         |   | 5.00   | %                           |   |   | 6.00 | % |   |   | 6.00 | % |   |   | 10.00 | % |   |   | 10.00 | % |
|                                |   |                      |   |   |                         |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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g andmaintaining effective disclosure controls and procedures.  Disclosurecontrols and procedures are defined in Securities and Exchange Commission Rule13a-15(e) as controls and other procedures of an issuer that are designed toensure that information required to be disclosed by the issuer in the reportsthat it files or submits under the Securities Exchange Act of 1934 is recorded,processed, summarized and reported within the time periods required by the SEC’srules and forms.  Disclosure controls and procedures include, withoutlimitation, controls and procedures designed to ensure that information requiredto be disclosed by an issuer in the reports that it files or submits under theAct is accumulated and communicated to the issuer’s management, including itsprincipal executive and principal financial officers, or persons performingsimilar functions, as appropriate to allow timely decisions regarding requireddisclosure.  For National Penn, these reports are its annual reportson Form 10-K, its quarterly reports on Form 10-Q, and its current reports onForm 8-K.  

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security breaches ofNational Penn’s information systems could damage the Company’s reputation,result in a loss of customer business and data, subject the Company toadditional regulatory scrutiny, or expose the Company to civil litigation andpossible financial liability, any of which could have a material adverse effecton the Company’s financial condition and results of operations.

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----

|    | · | National      Penn’s branding and marketing initiatives may not be effective in building      name recognition and customer awareness of National Penn’s products and      services.                                                                                                                                                                                                                |
|--------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                            |
|         | · | National      Penn may be unable to differentiate itself from its competitors by a      higher level of customer service, as intended by its business strategy and      other marketing initiatives.                                                                                                                                                                                                            |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                            |
|         | · | Expansion      of National Penn’s product and service offerings may take longer, and may      meet with more effective competitive resistance from others already      offering such products and services, than      expected.  Additionally, new product development by new and      existing competitors may be more effective, and take place more quickly,      than expected.             |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                            |
|    | · | Business      development in newly entered geographic areas may be more difficult,      present more operational and management risks and challenges, and take      longer, than expected.                                                                                                                                                                                                                      |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                            |
|         | · | National      Penn may be unable to attract, motivate, and/or retain key executives and      other key personnel due to intense competition for such persons or      otherwise.                                                                                                                                                                                                                                 |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                            |
|         | · | Growth      and profitability of National Penn’s non-interest income or fee income may      be less than expected.                                                                                                                                                                                                                                                                                        |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                            |
|         | · | General      economic or business conditions, either nationally or in the regions in      which National Penn does business, may deteriorate or be less favorable      than expected, resulting in, among other things, a deterioration in credit      quality, a reduced demand for credit, or a decision by National Penn to      reevaluate staffing levels or to divest one or more lines of      business. |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                            |
|         | · | In      the current environment of increased investor activism, including hedge      fund investment policies and practices, shareholder concerns or actions      due to stock price changes of financial service companies may require      increased management/board attention, efforts and commitments, deferring      or decreasing the focus on business development and      operations.                 |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                            |
|         | · | The      current stresses in the financial markets may inhibit National      Penn's ability to access the capital markets or obtain financing on      favorable terms.                                                                                                                                                                                                                                |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                            |
|         | · | Repurchase      obligations with respect to real estate mortgages sold in the secondary      market could adversely affect National Penn’s earnings.                                                                                                                                                                                                                                                      |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                            |
|         | · | Changes      in consumer spending and savings habits could adversely affect National      Penn’s business.                                                                                                                                                                                                                                                                                                |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                            |
|         | · | Negative      publicity with respect to any National Penn product or service, employee,      director or other associated individual or entity whether legally      justified or not, could adversely affect National Penn’s reputation and      business.                                                                                                                                                |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                            |
|         | · | National      Penn may be unable to successfully manage the foregoing and other risks      and to achieve its current short-term and long-term business plans and      objectives.                                                                                                                                                                                                                              |
|         |   |                                                                                                                                                                                                                                                                                                                                                                                                            |

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|                                                                                                                                                                   |   |              |   |    |            |   |                     | Total      Number of  |                  | Maximum      Number     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|---------|-----------------|--------|--------------------------|-----------------------|-----------------------|-------------------------|
|                                                                                                                                                                   |   |              |   |    |            |   |                     | Shares      Purchased |                  | of      Shares that may |
|                                                                                                                                                                   |   | Total      Number |   | Average |            |   | as      Part of Publicly |                  | yet      be Purchased |
|                                                                                                                                                                   |   | of Shares    |   |    | Price      Paid |   | Announced      Plans     |                  | Under      the Plans  |
|                                                                                                                                                                   |   | Purchased         |   | Share   |            |   | or      Programs         |                  |                  | or      Programs        |   |
| Period                                                                                                                                                                 |   |              |   |    |            |   |                     |                  |                  |                    |   |   |
| January      1, 2009 through January 31, 2009                                                                                                                          |   |              | 0      |    |            |   | N/A                      |                  |                  |                    | 0 |   |   |   | 627,427 |   |
|                                                                                                                                                                   |   |              |   |    |            |   |                     |                  |                  |                    |   |   |   |   |   |   |
| February      1, 2009 through February 28, 2009                                                                                                                        |   |              | 0      |    |            |   | N/A                      |                  |                  |                    | 0 |   |   |   | 627,427 |   |
|                                                                                                                                                                   |   |              |   |    |            |   |                     |                  |                  |                    |   |   |   |   |   |   |
| March      1, 2009 through March 31, 2009                                                                                                                              |   |              | 0      |    |            |   | N/A                      |                  |                  |                    | 0 |   |   |   | 627,427 |   |
|                                                                                                                                                                   |   |              |   |    |            |   |                     |                  |                  |                    |   |   |   |   |   |   |
| 1. Transactions      are reported as of settlement dates.                                                                                                         |   |              |   |    |            |   |                     |                  |                  |
| 2. National      Penn's current stock repurchase program was approved by its Board of      Directors and announced on December 22, 2005.                          |
| 3. The      number of shares approved for repurchase under National Penn's current      stock repurchase programs is 2,121,800.                                   |
| 4. National      Penn's current stock repurchase plan has no expiration    date.                                                                                  |   |              |   |    |            |
| 5. No      National Penn stock repurchase plan or program expired during the period      covered by the table.                                                    |
| 6. National      Penn has no stock repurchase plan or program that it has determined to      terminate prior to expiration or under which it                      |
|     does      not intend to make further purchases. However, National Penn is not      permitted to repurchase shares under its current stock |
|     repurchase      plan until the earlier of December 12, 2011 or the date on which the US      Treasury no longer holds National Penn's          |
|         senior preferred stock.                                                                                                                              |   |              |   |    |            |   |                     |                  |                  |                    |   |   |   |   |   |   |

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| 3.1    | Articles      of Incorporation, as amended and restated, of National Penn Bancshares,      Inc. (Incorporated by reference to Exhibit 3.1 to National Penn’s Report      on Form 8-K dated April 21, 2009, as filed on April 24,    2009.)                                                   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                               |
| 3.2    | Bylaws,      as amended, of National Penn Bancshares, Inc. (Incorporated by reference      to Exhibit 3.1 to National Penn’s Report on Form 8-K dated February 25,      2009, as filed on February 25, 2009.)                                                                                |
|   |                                                                                                                                                                                                                                                                                               |
| 10.1   | National      Penn Bancshares, Inc. Executive Incentive Plan – Performance Goals – Plan      Year 2009* (Incorporated by reference to Exhibit 10.1 to National Penn’s      Report on Form 8-K dated February 23, 2009, as filed on February 27,      2009.)                      |
|   |                                                                                                                                                                                                                                                                                               |
| 10.2   | Directors’      Fee Plan, as amended (Incorporated by reference to Exhibit 10.2 to      National Penn’s Report on Form 8-K dated February 23, 2009, as filed      on  February      27, 2009.)                                                                               |
|   |                                                                                                                                                                                                                                                                                               |
| 10.3   | Form      of Stock Option Agreement (Incorporated by reference to Exhibit 10.3 to      National Penn’s Report on Form 8-K dated February 23, 2009, as filed on      February      27, 2009.)                                                                                                 |
|   |                                                                                                                                                                                                                                                                                               |
| 10.4   | Director      Fee Schedule.* (Incorporated by reference to Exhibit 10.6 to National      Penn’s Report on Form 8-K dated February 23, 2009, as filed on February      27, 2009.)                                                                                                             |
|   |                                                                                                                                                                                                                                                                                               |
| 10.5   | Form      of Performance-Based Restricted Stock Agreement.*                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                               |
| 10.6   | Form      of Service-Based Restricted Stock Agreement.*                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                               |
| 10.7   | Form      of Restricted Stock Unit Agreement for restricted stock unit grants to      non-employee directors.*                                                                                                                                                                                |
| 31.1   | Certification      of President and Chief Executive Officer of National Penn Bancshares,      Inc., pursuant to Commission Rule 13a-14(a) and Section 302 of the      Sarbanes-Oxley Act of 2002.                                                                                                  |
|   |                                                                                                                                                                                                                                                                                               |
| 31.2   | Certification      of Treasurer and Chief Financial Officer of National Penn Bancshares,      Inc.,pursuant to Commission Rule 13a-14(a) and Section 302 of the      Sarbanes-Oxley Act of 2002.                                                                                              |
| 32.1   | Certification      of President and Chief Executive Officer of National Penn Bancshares,      Inc., pursuant to Commission Rule 13a-14(b) and 18 U.S.C. Section 1350, as      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of      2002.  (Furnished, not filed.)           |
|   |                                                                                                                                                                                                                                                                                               |
| 32.2   | Certification      of  Treasurer and Chief Financial Officer of National Penn      Bancshares, Inc., pursuant to Commission Rule 13a-14(b) and 18 U.S.C.      Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act      of 2002.  (Furnished, notfiled.) |

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|        |                   | NATIONAL      PENN BANCSHARES, INC. |
|-------------|------------------------|-------------------------------------|
|        |                   | (Registrant)                        |
|        |                   |                                |
| Date:  | May      8, 2009       |                                | By: | /s/      Glenn E. Moyer |
|        |                   |                                |   | Name: | Glenn      E. Moyer |
|        |                   |                                |   | Title: | President      and CEO |
|        |                   |                                |   |   |   |
| Date:  |  May      8, 2009 |                                | By: | /s/      Michael R. Reinhard |
|        |                   |                                |   | Name: | Michael      R. Reinhard |
|        |                   |                                |   | Title: | Treasurer      and Chief FinancialOfficer |

----