| [X]                                                   | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(D) OF                                                                                                                                                                                                                                                                                                       |
|----------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                 | THE      SECURITIES EXCHANGE ACT OF 1934                                                                                                                                                                                                                                                                                                                       |
|                                                                 |                                                                                                                                                                                                                                                                                                                                                           |
| For      the quarterly period ended:   June 30,  2008 |
|                                                                 |                                                           OR |
| [   ]                                  | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(D) OF                                                                                                                                                                                                                                                                                                      |
|                                                                 | THE      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(Address of Principal Executive      Offices) | 19512                                  |
| (Zip      Code)                                                                                       |

| Registrant’s      telephone number, including area code: (800)      822-3321 |
|------------------------------------------------------------------------------------|
|                                                                               |
| (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    X        No  ___  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                Indicate      by check mark whether the Registrant is a large accelerated filer, an      accelerated filer, or a non-accelerated filer.  See definition      of “accelerated filer and large accelerated filer” in Rule 12b-2 of the      Exchange Act.)   (Check one):                                                             |
| Large      accelerated filer  X                                                                                                                                                                                                                                                                                                                                                                                                                |          Accelerated filer ____ | Non-accelerated      filer ___ |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |   |
| Indicate      by check mark whether the registrant is a shell company (as defined in      Rule 12b-2 of the Exchange Act.)  Yes      ____   No  X                                                                                                                                                                                                                                                                               |
| Indicate      the number of shares outstanding of each of the issuer’s classes of common      stock, as of the latest practicable date.                                                                                                                                                                                                                                                                                                                      |
| Class                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Outstanding at August      6, 2008 |
| Common      Stock (no stated par value)                                                                                                                                                                                                                                                                                                                                                                                                                                 |                (No.) Shares:  79,651,478 |

----

| Part I - Financial      Information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Page          |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Item      1.  | Financial      Statements                                                                      | 3 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Item      2.  | Management’s      Discussion and Analysis of Financial Condition |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          | and      Results of Operation | 18 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Item      3.  | Quantitative      and Qualitative Disclosures About Market Risk | 30 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Item      4.  | Controls      and      Procedures                                                                      | 30 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |   |   |
| Part II - Other      Information.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Item      1.  | Legal      Proceedings                                                                      | 31 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Item      1A. | Risk      Factors | 31 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Item      2.  | Unregistered      Sales of Equity Securities and Use of Proceeds | 35 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Item      3.  | Defaults      Upon Senior      Securities                                                                      | 36 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Item      4.  | Submission      of Matters to a Vote of Security Holders | 36 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Item      5.  | Other      Information                                                                      | 37 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Item      6.  | Exhibits                                                                      | 37 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |   |   |
| Signatures                                                                                                       | 38            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |          |   |   |
| Exhibits                                                                                                         | 39            |

----

|                              |                                                                                                                  |   | Unaudited     |          |   |              |   |
|-----------------------------------|-----------------------------------------------------------------------------------------------------------------------|--------|---------------|---------------|--------|-------------------|--------|
|                              |                                                                                                                  |   | June      30, |          |   | December      31, |   |
|  (dollars      in thousands) | 2008                                                                                                                  |   |          | 2007          |   |
|                              |                                                                                                                  |   |          |          |   |              |   |
|  ASSETS                      |                                                                                                                  |   |          |          |   |
|                              | Cash      and due from banks                                                                                          |   | $             | 174,771       |   |              | $      | 104,292 |   |
|                              | Interest-bearing      deposits with banks                                                                             |   |          | 30,686        |   |              |   | 7,228 |   |
|                              |     Total      cash and cash equivalents                                                          |   |          | 205,457       |   |              |   | 111,520 |   |
|                              |                                                                                                                  |   |          |          |   |              |   |   |   |
|                              | Investment      securities held to maturity                                                                           |   |          |          |   |              |   |   |   |
|                              |         (Fair value approximates $371,788 and $247,444 for 2008 and 2007,      respectively)                |   |          | 406,653       |   |              |   | 243,595 |   |
|                              | Investment      securities available for sale, at fair value                                                          |   |          | 1,536,785     |   |              |   | 1,137,426 |   |
|                              | Loans      and leases held for sale                                                                                   |   |          | 5,269         |   |              |   | 3,823 |   |
|                              | Loans      and leases, less allowance for loan and lease losses of $81,642 and      $54,897                           |   |          |          |   |              |   |   |   |
|                              |     for      2008 and 2007, respectively                                                          |   |          | 6,046,687     |   |              |   | 3,816,533 |   |
|                              | Premises      and equipment, net                                                                                      |   |          | 105,117       |   |              |   | 61,214 |   |
|                              | Premises      held for sale                                                                                           |   |          | 4,188         |   |              |   | - |   |
|                              | Accrued      interest receivable                                                                                      |   |          | 36,269        |   |              |   | 26,430 |   |
|                              | Bank      owned life insurance                                                                                        |   |          | 190,892       |   |              |   | 102,407 |   |
|                              | Goodwill                                                                                                              |   |          | 545,460       |   |              |   | 261,552 |   |
|                              | Other      intangible assets, net                                                                                     |   |          | 40,173        |   |              |   | 16,160 |   |
|                              | Unconsolidated      investments under the equity method                                                               |   |          | 10,985        |   |              |   | 11,490 |   |
|                              | Other      assets                                                                                                     |   |          | 107,420       |   |              |   | 32,271 |   |
|                              | TOTAL      ASSETS                                                                                                     |   | $             | 9,241,355     |   |              | $      | 5,824,421 |   |
|                              |                                                                                                                  |   |          |          |   |              |   |   |   |
|  LIABILITIES                 |                                                                                                                  |   |          |          |   |              |   |   |
|                              | Deposits                                                                                                              |   |          |          |   |              |   |   |   |
|                              | Non-interest      bearing deposits                                                                                    |   | $             | 798,088       |   |              | $      | 522,716 |   |
|                              | Interest-bearing      deposits                                                                                        |   |          | 5,285,629     |   |              |   | 3,423,447 |   |
|                              | Total      deposits                                                                                                   |   |          | 6,083,717     |   |              |   | 3,946,163 |   |
|                              |                                                                                                                  |   |          |          |   |              |   |   |   |
|                              | Securities      sold under repurchase agreements and federal funds    purchased                                       |   |          | 785,564       |   |              |   | 484,223 |   |
|                              | Short-term      borrowings                                                                                            |   |          | 37,681        |   |              |   | 12,800 |   |
|                              | Long-term      borrowings                                                                                             |   |          | 1,031,530     |   |              |   | 617,183 |   |
|                              | Subordinated      debentures (Includes $64,827 and $62,676 at fair value for 2008 and 2007,      respectively)        |   |          | 142,148       |   |              |   | 139,997 |   |
|                              | Accrued      interest payable and other liabilities                                                                   |   |          | 114,320       |   |              |   | 60,108 |   |
|                              | TOTAL      LIABILITIES                                                                                                |   |          | 8,194,960     |   |              |   | 5,260,474 |   |
|                              |                                                                                                                  |   |          |          |   |              |   |   |   |
|  SHAREHOLDERS'      EQUITY   |                                                                                                                  |   |          |          |   |              |   |   |
|                              | Preferred      stock, no stated par value; authorized 1,000,000 shares, none      issued                              |   |          | -             |   |              |   | - |   |
|                              | Common      stock, no stated par value; authorized 100,000,000 shares, issued and      outstanding 2008 - 79,603,356; |   |          |          |   |              |   |   |   |
|                              |         2007 - 49,068,819;  net of shares in Treasury: 2008 - 0; 2007 -      544,061              |   |          | 978,546  |   |              |   | 491,011  |   |
|                              | Retained      earnings                                                                                                |   |          | 109,602       |   |              |   | 85,242 |   |
|                              | Accumulated      other comprehensive loss                                                                             |   |          | (41,753       | )      |              |   | (4,281 | ) |
|                              | Treasury      stock                                                                                                   |   |          | -             |   |              |   | (8,025 | ) |
|                              | TOTAL      SHAREHOLDERS' EQUITY                                                                                       |   |          | 1,046,395     |   |              |   | 563,947 |   |
|                              |                                                                                                                  |   |          |          |   |              |   |   |   |
|                              | TOTAL      LIABILITIES AND SHAREHOLDERS' EQUITY                                                                       |   | $             | 9,241,355     |   |              | $      | 5,824,421 |   |
|                              |                                                                                                                  |   |          |          |   |              |   |   |   |
|                              | The      accompanying notes are an integral part of these financial      statements.                                  |   |          |          |   |              |   |   |   |
|                              |                                                                                                                  |   |          |          |   |              |   |   |   |

----

|                                                                                                 |   | Three      Months Ended June 30, |    |   | Six      Months Ended June 30, |   |
|------------------------------------------------------------------------------------------------------|--------|----------------------------------|---------|--------|--------------------------------|--------|
| (dollars      in thousands, except per share data)                                                   |   | 2008                             |    |   | 2007                           |   |   | 2008 |   |   | 2007 |   |
|                                                                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |
| INTEREST      INCOME                                                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |
|        Loans and leases, including fees                                                         |   | $                                | 96,734  |   |                           | $      | 67,149 |   |   | $ | 185,501 |   |   | $ | 132,525 |   |
|        Investment securities                                                                    |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|            Taxable                                                          |   |                             | 14,961  |   |                           |   | 9,748 |   |   |   | 29,455 |   |   |   | 19,192 |   |
|            Tax-exempt                                                       |   |                             | 7,442   |   |                           |   | 5,893 |   |   |   | 14,451 |   |   |   | 11,415 |   |
| Federal      funds sold and deposits in banks                                                        |   |                             | 366     |   |                           |   | 61 |   |   |   | 499 |   |   |   | 112 |   |
|                Total interest income                    |   |                             | 119,503 |   |                           |   | 82,851 |   |   |   | 229,906 |   |   |   | 163,244 |   |
| INTEREST      EXPENSE                                                                                |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|        Deposits                                                                                 |   |                             | 35,696  |   |                           |   | 30,595 |   |   |   | 72,365 |   |   |   | 60,282 |   |
|        Securities sold under repurchase agreements and federal                                  |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|            funds purchased                                                  |   |                             | 5,318   |   |                           |   | 5,260 |   |   |   | 10,563 |   |   |   | 10,363 |   |
|        Short-term borrowings                                                                    |   |                             | 12      |   |                           |   | 40 |   |   |   | 41 |   |   |   | 78 |   |
|        Long-term borrowings                                                                     |   |                             | 12,199  |   |                           |   | 8,469 |   |   |   | 24,245 |   |   |   | 16,108 |   |
|           Total interest expense                                                 |   |                             | 53,225  |   |                           |   | 44,364 |   |   |   | 107,214 |   |   |   | 86,831 |   |
|             Net      interest income     |   |                             | 66,278  |   |                           |   | 38,487 |   |   |   | 122,692 |   |   |   | 76,413 |   |
|        Provision for loan and lease losses                                                      |   |                             | 3,711   |   |                           |   | 1,537 |   |   |   | 7,121 |   |   |   | 2,612 |   |
|            Net interest income after provision for loan and lease    losses |   |                             | 62,567  |   |                           |   | 36,950 |   |   |   | 115,571 |   |   |   | 73,801 |   |
| NONINTEREST      INCOME                                                                              |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|        Wealth management income                                                                 |   |                             | 8,515   |   |                           |   | 4,289 |   |   |   | 16,123 |   |   |   | 8,352 |   |
|        Service charges on deposit accounts                                                      |   |                             | 6,324   |   |                           |   | 4,314 |   |   |   | 11,585 |   |   |   | 8,412 |   |
|        Bank owned life insurance income                                                         |   |                             | 1,842   |   |                           |   | 1,915 |   |   |   | 3,422 |   |   |   | 3,388 |   |
|        Other operating income                                                                   |   |                             | 1,365   |   |                           |   | 1,791 |   |   |   | 3,190 |   |   |   | 3,853 |   |
|        Net gains on sale of investment securities                                               |   |                             | 384     |   |                           |   | 564 |   |   |   | 384 |   |   |   | 1,133 |   |
|        Mortgage banking income                                                                  |   |                             | 978     |   |                           |   | 1,110 |   |   |   | 1,569 |   |   |   | 1,986 |   |
|        Insurance commissions and fees                                                           |   |                             | 3,968   |   |                           |   | 1,487 |   |   |   | 7,774 |   |   |   | 3,687 |   |
|        Cash management and electronic banking fees                                              |   |                             | 3,715   |   |                           |   | 2,112 |   |   |   | 6,643 |   |   |   | 4,054 |   |
|        Equity in undistributed net earnings  (loss) of      unconsolidated            |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |  |   |
|           investments                                                            |   |                             | 810     |   |                           |   | 216 |   |   |   | 1,422 |   |   |   | (373 |  ) |
|              Total non-interest income                            |   |                             | 27,901  |   |                           |   | 17,798 |   |   |   | 52,112 |   |   |   | 34,492 |   |
| NONINTEREST      EXPENSE                                                                             |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|        Salaries, wages and employee benefits                                                    |   |                             | 31,300  |   |                           |   | 20,557 |   |   |   | 60,527 |   |   |   | 41,056 |   |
|        Net premises and equipment                                                               |   |                             | 9,019   |   |                           |   | 4,851 |   |   |   | 17,026 |   |   |   | 9,919 |   |
|        Advertising and marketing expenses                                                       |   |                             | 1,641   |   |                           |   | 1,001 |   |   |   | 3,074 |   |   |   | 2,116 |   |
|        Other operating expenses                                                                 |   |                             | 11,866  |   |                           |   | 7,653 |   |   |   | 22,113 |   |   |   | 14,737 |   |
|              Total non-interest expense                           |   |                             | 53,826  |   |                           |   | 34,062 |   |   |   | 102,740 |   |   |   | 67,828 |   |
|                                                                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|        Income before income taxes                                                               |   |                             | 36,642  |   |                           |   | 20,686 |   |   |   | 64,943 |   |   |   | 40,465 |   |
|        Income tax expense                                                                       |   |                             | 9,428   |   |                           |   | 4,452 |   |   |   | 16,136 |   |   |   | 8,748 |   |
|               NET INCOME                                     |   | $                                | 27,214  |   |                           | $      | 16,234 |   |   | $ | 48,807 |   |   | $ | 31,717 |   |
|                                                                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| PER      SHARE OF COMMON STOCK                                                                       |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|        Basic earnings                                                                           |   | $                                | 0.34    |   |                           | $      | 0.33 |   |   | $ | 0.67 |   |   | $ | 0.64 |   |
|        Diluted earnings                                                                         |   | $                                | 0.34    |   |                           | $      | 0.32 |   |   | $ | 0.67 |   |   | $ | 0.63 |   |
|        Dividends paid in cash                                                                   |   | $                                | 0.1700  |   |                           | $      | 0.1626 |   |   | $ | 0.3400 |   |   | $ | 0.3252 |   |
|                                                                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| The      accompanying notes are an integral part of these financial      statements.                 |   |                             |    |   |                           |   |   |   |   |   |   |   |   |
|                                                                                                 |   |                             |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                      |   |               |       |   |               |   |        |            |   |     | Accumulated |   |   |        |    |          |          |   |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|--------|--------------------|--------|-------------|-----------------|--------|----------|-------------|--------|--------|-------------|---------|---------------|---------------|--------|--------|--------|--------|
| SIX      MONTHS ENDED JUNE 30, 2008                                                                                                       |   |               |       |   |               |   |        |            |   |     | Other       |   |   |        |    |          |          |   |   |   |   |
|                                                                                                                                      |   | Common             |       |   | Retained           |   |        | Comprehensive   |   | Treasury |        |   |   |        |    | Comprehensive |          |
| (dollars      in thousands)                                                                                                               |   | Shares             |       |   | Value              |   |        | Earnings        |   |     | Loss        |   |   | Stock       |    |          | Total         |   |   | Income |   |
|                                                                                                                                      |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |
| Balance      at December 31, 2007, as previously reported                                                                                 |   |               | 49,068,819 |   |               | $      | 491,011     |            |   | $        | 85,242      |   |   | $           | (4,281  | )             |          | $      | (8,025 | )      |   | $ | 563,947 |   |   |   |   |
|         Cumulative effect of adoption of EITF 06-4                                                                              |   |               | -          |   |               |   | -           |            |   |     | (2,112      | )      |   |        | -       |          |          |   | -      |   |   |   | (2,112 | ) |   |   |   |
| Balance      at December 31, 2007, as revised                                                                                             |   |               | 49,068,819 |   |               |   | 491,011     |            |   |     | 83,130      |   |   |        | (4,281  | )             |          |   | (8,025 | )      |   |   | 561,835 |   |   |   |   |
|         Net income                                                                                                              |   |               | -          |   |               |   | -           |            |   |     | 48,807      |   |   |        | -       |          |          |   | -      |   |   |   | 48,807 |   |   | $ | 48,807 |   |
|         Cash dividends declared                                                                                                 |   |               | -          |   |               |   | -           |            |   |     | (22,335     | )      |   |        | -       |          |          |   | -      |   |   |   | (22,335 | ) |   |   |   |   |
|         Shares issued under share-based plans, net of excess tax      benefits                                                  |   |               | 619,133    |   |               |   | 3,774       |            |   |     |        |   |   |        | -       |          |          |   | 2,766  |   |   |   | 6,540 |   |   |   |   |   |
|         Share-based compensation                                                                                                |   |               | -          |   |               |   | 1,045       |            |   |     |        |   |   |        | -       |          |          |   | -      |   |   |   | 1,045 |   |   |   |   |   |
|         Shares issued for the acquisition of Christiana                                                                         |   |               | 2,732,813  |   |               |   | 43,839      |            |   |     |        |   |   |        | -       |          |          |   | -      |   |   |   | 43,839 |   |   |   |   |   |
|         Shares issued for the acquisition of KNBT                                                                               |   |               | 27,205,548 |   |               |   | 438,877     |            |   |     |        |   |   |        | -       |          |          |   | 5,623  |   |   |   | 444,500 |   |   |   |   |   |
|         Other comprehensive (loss), net of reclassificatiton adjustment                 and taxes |   |               | -          |   |               |   | -           |            |   |     |        |   |   |        | (37,472 | )             |          |   | -      |   |   |   | (37,472 | ) |   |   | (37,472 | ) |
|         Total comprehensive income                                                                                              |   |               | -          |   |               |   | -           |            |   |     |        |   |   |        | -       |          |          |   | -      |   |   |   | - |   |   | $ | 11,335 |   |
|         Treasury shares purchased                                                                                               |   |               | (22,957    | )      |               |   | -           |            |   |     |        |   |   |        | -       |          |          |   | (364   | )      |   |   | (364 | ) |   |   |   |   |
| Balance      at June 30, 2008                                                                                                             |   |               | 79,603,356 |   |               | $      | 978,546     |            |   | $        | 109,602     |   |   | $           | (41,753 | )             |          | $      | -      |   |   | $ | 1,046,395 |   |   |   |   |   |
|                                                                                                                                      |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                      |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                      |   | June      30, 2008 |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |
|                                                                                                                                      |   | Before             |       |   | Tax      (expense) |   | Net      of |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |
|                                                                                                                                      |   | Tax      Amount    |       |   | Benefit            |   |        | Tax      Amount |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |
|                                                                                                                                      |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
| Unrealized      (losses) on securities                                                                                                    |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
|   Unrealized      holding (losses) arising during period                                                                        |   | $                  | (57,265    | )      |               | $      | 20,043      |            |   | $        | (37,222     | )      |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
|   Reclassification      adjustment for gains realized in net income                                                             |   |               | 384        |   |               |   | (134        | )               |   |     | 250         |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive (loss), net                                                                                                      |   | $                  | (57,649    | )      |               | $      | 20,177      |            |   | $        | (37,472     | )      |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                      |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                      |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                      |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                      |   |               |       |   |               |   |        |            |   |     |        |   |   | Accumulated |    |          |          |   |   |   |   |   |   |   |   |   |   |
| SIX      MONTHS ENDED JUNE 30, 2007                                                                                                       |   |               |       |   |               |   |        |            |   |     |        |   |   | Other       |    |          |          |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                      |   | Common             |       |   | Retained           |   |        | Comprehensive   |   | Treasury |        |   |   |        |    |          | Comprehensive |   |
| (dollars      in thousands)                                                                                                               |   | Shares             |       |   | Value              |   |        | Earnings        |   |     | Loss        |   |   | Stock       |    |          | Total         |   |   | Income |   |
|                                                                                                                                      |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
| Balance      at December 31, 2006, as previously reported                                                                                 |   |               | 49,379,056 |   |               | $      | 467,288     |            |   | $        | 77,665      |   |   | $           | 1,861   |          |          | $      | (3,945 | )      |   | $ | 542,869 |   |   |   |   |   |
|         Cumulative effect of adoption of FAS No. 159                                                                            |   |               | -          |   |               |   | -           |            |   |     | (1,732      | )      |   |        | -       |          |          |   | -      |   |   |   | (1,732 | ) |   |   |   |   |
| Balance      at December 31, 2006, as revised                                                                                             |   |               | 49,379,056 |   |               |   | 467,288     |            |   |     | 75,933      |   |   |        | 1,861   |          |          |   | (3,945 | )      |   |   | 541,137 |   |   |   |   |   |
|         Net income                                                                                                              |   |               | -          |   |               |   | -           |            |   |     | 31,717      |   |   |        | -       |          |          |   | -      |   |   |   | 31,717 |   |   | $ | 31,717 |   |
|          Cash dividends declared                                                                                           |   |               | -          |   |               |   | -           |            |   |     | (16,102     | )      |   |        | -       |          |          |   | -      |   |   |   | (16,102 | ) |   |   |   |   |
|         Shares issued under share-based plans                                                                                   |   |               | 323,999    |   |               |   | (1,722      | )               |   |     | -           |   |   |        | -       |          |          |   | 5,840  |   |   |   | 4,118 |   |   |   |   |   |
|         Share-based compensation                                                                                                |   |               | -          |   |               |   | 1,271       |            |   |     | -           |   |   |        | -       |          |          |   | -      |   |   |   | 1,271 |   |   |   |   |   |
|         Other comprehensive (loss), net of reclassificationadjustment           and taxes              |   |               | -          |   |               |   | -           |            |   |     | -           |   |   |        | (14,054 | )             |          |   | -      |   |   |   | (14,054 | ) |   |   | (14,054 | ) |
|         Total comprehensive income                                                                                              |   |               | -          |   |               |   | -           |            |   |     | -           |   |   |        | -       |          |          |   | -      |   |   |   | - |   |   | $ | 17,663 |   |
|         Treasury shares purchased                                                                                               |   |               | (118,098   | )      |               |   | -           |            |   |     | -           |   |   |        | -       |          |          |   | (2,182 | )      |   |   | (2,182 | ) |   |   |   |   |
| Balance      at June 30, 2007                                                                                                             |   |               | 49,584,957 |   |               | $      | 466,837     |            |   | $        | 91,548      |   |   | $           | (12,193 | )             |          | $      | (287   | )      |   | $ | 545,905 |   |   |   |   |   |
|                                                                                                                                      |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                      |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                      |   | June      30, 2007 |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |
|                                                                                                                                      |   | Before             |       |   | Tax      (expense) |   | Net      of |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |
|                                                                                                                                      |   | Tax      Amount    |       |   | Benefit            |   |        | Tax      Amount |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |
| Unrealized      (losses) on securities                                                                                                    |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
|   Unrealized      holding (losses) arising during period                                                                        |   | $                  | (20,488    | )      |               | $      | 7,170       |            |   | $        | (13,318     | )      |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
|   Less:      Reclassification adjustment for gains realized in net    income                                                    |   |               | 1,133      |   |               |   | (397        | )               |   |     | 736         |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
| Other      comprehensive (loss), net                                                                                                      |   | $                  | (21,621    | )      |               | $      | 7,567       |            |   | $        | (14,054     | )      |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                      |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
| ____________________________________________________                                                                                      |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
|      The      accompanying notes are an integral part of these    statements.                                    |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                      |   |               |       |   |               |   |        |            |   |     |        |   |   |        |    |          |          |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                   |   | Six      Months Ended June 30, |          |
|--------------------------------------------------------------------------------------------------------|--------|--------------------------------|---------------|
| (dollars      in thousands)                                                                            |   | 2008                           |          |   | 2007 |   |
|                                                                                                   |   |                           |          |   |   |   |
| OPERATING      ACTIVITIES:                                                                             |   |                           |          |   |   |   |
| Net      income                                                                                        |   | $                              | 48,807        |   |   | $ | 31,717 |   |
|        Adjustments to reconcile net income to net cash provided by operating      activities:     |   |                           |          |   |   |
| Provision      for loan and lease losses                                                               |   |                           | 7,121         |   |   |   | 2,612 |   |
| Share-based      compensation expense                                                                  |   |                           | 1,045         |   |   |   | 1,271 |   |
| Depreciation      and amortization                                                                     |   |                           | 10,285        |   |   |   | 5,238 |   |
| Deferred      income tax (benefit) expense                                                             |   |                           | (582          | ) |   |   | 128 |   |
| (Accretion)      amortization  of premiums and discounts on investment      securities, net  |   |                           | (1,522        | ) |   |   | 1,982 |   |
| Investment      securities gains, net                                                                  |   |                           | (384          | ) |   |   | (1,133 | ) |
| Undistributed      net (earnings) losses of equity-method investments                                  |   |                           | (1,422        | ) |   |   | 373 |   |
| Loans      originated for resale                                                                       |   |                           | (63,049       | ) |   |   | (106,067 | ) |
| Proceeds      from sale of loans                                                                       |   |                           | 64,088        |   |   |   | 107,846 |   |
| Gain      on sale of loans, net                                                                        |   |                           | (1,039        | ) |   |   | (1,779 | ) |
| Gain      on sale of other real estate owned, net                                                      |   |                           | -             |   |   |   | (274 | ) |
| Gain      on sale of bank building(s)                                                                  |   |                           | -             |   |   |   | (170 | ) |
| Change      in fair value of subordinated debt                                                         |   |                           | 2,151         |   |   |   | (25 | ) |
| Changes      in assets and liabilities:                                                                |   |                           |          |   |   |   |   |   |
|       Decrease      (increase)  in accrued interest receivable |   |                           | 974           |   |   |   | (545 | ) |
|       (Decrease)      in accrued interest payable                        |   |                           | (3,069        | ) |   |   | (1,597 | ) |
|       (Increase)  in      other assets                         |   |                           | (30,070       | ) |   |   | (2,494 | ) |
|   Increase      (decrease) in other liabilities                                              |   |                           | 9,154         |   |   |   | (6,544 | ) |
|       Net      cash provided by operating activities                     |   |                           | 42,488        |   |   |   | 30,539 |   |
|                                                                                                   |   |                           |          |   |   |   |   |   |
| 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                                |   |                           | 7,353         |   |   |   | 4,973 |   |
| Proceeds      from sales of investment securities available for sale                                   |   |                           | 21,406        |   |   |   | 2,659 |   |
| Proceeds      from maturities of investment securities available forsale                               |   |                           | 198,719       |   |   |   | 56,961 |   |
| Purchase      of investment securities available for sale                                              |   |                           | (172,345      | ) |   |   | (134,691 | ) |
| Net      increase in loans and leases                                                                  |   |                           | (285,711      | ) |   |   | (103,151 | ) |
| Purchases      of premises and equipment                                                               |   |                           | (5,095        | ) |   |   | (8,635 | ) |
| Proceeds      from the sale of other real estate owned                                                 |   |                           | 290           |   |   |   | 1,879 |   |
| Proceeds      from sale of bank building(s)                                                            |   |                           | 635           |   |   |   | 399 |   |
|       Net      cash used in investing activities                         |   |                           | (198,322      | ) |   |   | (179,606 | ) |
|                                                                                                   |   |                           |          |   |   |   |   |   |
| CASH      FLOWS FROM FINANCING ACTIVITIES                                                              |   |                           |          |   |   |   |   |   |
| Net      increase in interest and non-interest bearing demand deposits      and                        |   |                           |          |   |   |   |   |   |
|       savings      accounts                                              |   |                           | 106,732       |   |   |   | 67,906 |   |
| Net      (decrease) in certificates of deposit                                                         |   |                           | (27,302       | ) |   |   | (67,753 | ) |
| Net      increase in securities sold under agreements to repurchase and federal      funds purchased   |   |                           | 190,996  |   |   |   | 11,340  |   |
| Net      increase (decrease) in short-term borrowings                                                  |   |                           | 22,231        |   |   |   | (1,294 | ) |
| Proceeds      from new long-term borrowings                                                            |   |                           | 150,000       |   |   |   | 400,000 |   |
| Repayments      of long-term borrowings                                                                |   |                           | (174,113      | ) |   |   | (233,041 | ) |
| Shares      issued under share-based plans                                                             |   |                           | 3,697         |   |   |   | 3,852 |   |
| Excess      tax benefits on share-based plans                                                          |   |                           | 229           |   |   |   | 266 |   |
| Purchase      of Treasury stock                                                                        |   |                           | (364          | ) |   |   | (2,182 | ) |
| Cash      dividends                                                                                    |   |                           | (22,335       | ) |   |   | (16,102 | ) |
| Net      cash provided by financing activities                                                         |   |                           | 249,771       |   |   |   | 162,992 |   |
| Net      increase in cash and cash equivalents                                                    |   |                           | 93,937        |   |   |   | 13,925 |   |
| Cash      and cash equivalents at beginning of year                                                    |   |                           | 111,520       |   |   |   | 111,203 |   |
| Cash      and cash equivalents at end of period                                                        |   | $                              | 205,457       |   |   | $ | 125,128 |   |
|                                                                                                   |   |                           |          |   |   |   |   |   |
|                                                                                                   |   |                           |          |   |   |   |   |   |
| The      accompanying notes are an integral part of these financial      statements.                   |   |                           |          |   |   |
|                                                                                                   |   |                           |          |   |   |   |   |   |
|                                                                                                   |   |                           |          |   |   |   |   |   |

----

----

|                        |                                  |                  | Balance      Sheet Acquired |      |
|-----------------------------|---------------------------------------|-----------------------|-----------------------------|-----------|
| (dollars      in thousands) |                                  | February      1, 2008 |                        |
|                        |                                  |                  |                        |      |
| Assets:                     |                                  |                  |                        |      |
|                        | Cash      and cash equivalents        |                  | $                           | 44,831    |   |
|                        | Securities                            |                  |                        | 666,064   |   |
|                        | Loans      net of loan loss allowance |                  |                        | 1,831,367 |   |
|                        | Premises      and equipement          |                  |                        | 45,851    |   |
|                        | Goodwill                              |                  |                        | 247,858   |   |
|                        | Indentifiable      Intangibles        |                  |                        | 25,265    |   |
|                        | Deferred      Taxes                   |                  |                        | 18,468    |   |
|                        | Other      assets                     |                  |                        | 99,532    |   |
| Total      Assets           |                                  | $                     | 2,979,236                   |      |
|                        |                                  |                  |                        |      |   |
| Liabilities:                |                                  |                  |                        |      |   |
|                        | Deposits                              |                  | $                           | 1,940,800 |   |
|                        | Borrowings                            |                  |                        | 548,805   |   |
|                        | Other      Liabilities                |                  |                        | 37,915    |   |
| Total      Liabilities      |                                  | $                     | 2,527,520                   |      |
|                        |                                  |                  |                        |      |   |
|                        |                                  |                  |                        |      |   |
|                        | Net      assets acquired              |                  | $                           | 451,716   |   |
|                        |                                  |                  |                        |      |   |

| (dollars      in thousands,                        |   | Pro-forma          |    |   | Pro-forma           |   |
|----------------------------------------------------|--------|--------------------|---------|--------|---------------------|--------|
| except      per share data)                        |   | June      30, 2008 |    |   | June      30, 2007* |   |
|                                               |   |               |    |   |                |   |
| Total      revenue                                 |   | $                  | 177,569 |   |                | $      | 167,388 |   |
| Non-interest      expense                          |   |               | 109,559 |   |                |   | 109,384 |   |
| Pre      tax net income                            |   |               | 68,010  |   |                |   | 58,004 |   |
| Income      tax                                    |   |               | 17,181  |   |                |   | 15,001 |   |
|    Net      income                  |   | $                  | 50,829  |   |                | $      | 43,003 |   |
|                                               |   |               |    |   |                |   |   |   |
| Pro      forma EPS:                                |   |               |    |   |                |   |   |   |
| Basic      EPS                                     |   | $                  | 0.66    |   |                | $      | 0.56 |   |
| Diluted      EPS                                   |   | $                  | 0.66    |   |                | $      | 0.56 |   |
|                                               |   |               |    |   |                |   |   |   |
| *Pro      forma results do not include Christiana. |   |               |    |   |                |
|                                               |   |               |    |   |                |   |   |   |

----

----

|                                                          |   |  Three      Months Ended June 30, |                             |
|---------------------------------------------------------------|--------|----------------------------------------|----------------------------------|
|                                                          |   | 2008                                   |                             |   | 2007 |   |
|                                                          |   | 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 available to common stockholders       |   | $                                      | 27,214                           |   |   |   | 79,514 |   |   | $ | 0.34 |   |   | $ | 16,234 |   |   |   | 49,557 |   |   | $ | 0.33 |   |
| Effect      of dilutive securities:                           |   |                                   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Options                                     |   |                                   | 0                                |   |   |   | 1,112 |   |   |   | - |   |   |   | - |   |   |   | 625 |   |   |   | (0.01 | ) |
| Diluted      earnings per share                               |   |                                   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Net income available to common stockholders |   |                                   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         plus assumed conversions                    |   | $                                      | 27,214                           |   |   |   | 80,626 |   |   | $ | 0.34 |   |   | $ | 16,234 |   |   |   | 50,182 |   |   | $ | 0.32 |   |
|                                                          |   |                                   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |                                   |  Year-to-Date      June 30, |   |
|                                                          |   | 2008                                   |                             | 2007 |   |
|                                                          |   | Net                                    |                             |   | Average |   |   |   |   |   |   | Net |   |   | Average |   |   |   |   |   |
|                                                          |   | Income                                 |                             |   | Shares |   |   | Per      Share |   |   | Income |   |   | Shares |   |   | Per      Share |   |
|                                                          |   | (numerator)                            |                             |   | (denominator) |   |   | Amount |   |   | (numerator) |   |   | (denominator) |   |   | Amount |   |
|                                                          |   |                                   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      earnings per share                                 |   |                                   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Net income available to common stockholders |   | $                                      | 48,807                           |   |   |   | 72,353 |   |   | $ | 0.67 |   |   | $ | 31,717 |   |   |   | 49,523 |   |   | $ | 0.64 |   |
| Effect      of dilutive securities:                           |   |                                   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Options                                     |   |                                   | -                                |   |   |   | 734 |   |   |   | - |   |   |   | - |   |   |   | 660 |   |   |   | (0.01 | ) |
| Diluted      earnings per share                               |   |                                   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Net income available to common stockholders |   |                                   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         plus assumed conversions                    |   | $                                      | 48,807                           |   |   |   | 73,087 |   |   | $ | 0.67 |   |   | $ | 31,717 |   |   |   | 50,183 |   |   | $ | 0.63 |   |
|                                                          |   |                                   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                            |   | As of and for the      Six Months Ended |      |
|---------------------------------|--------|-----------------------------------------|-----------|
|                            |   | June      30, 2008                      |      |
|                            |   | Community                               |      |   |   |   |   |   |   |
| (dollars      in thousands)     |   | Banking                                 |      |   | Other |   |   | Consolidated |   |
|                            |   |                                    |      |   |   |   |   |   |   |
| Total      assets               |   | $                                       | 7,963,601 |   |   | $ | 1,277,754 |   |   | $ | 9,241,355 |   |
| Total      deposits             |   |                                    | 6,083,717 |   |   |   | - |   |   |   | 6,083,717 |   |
| Net      interest income (loss) |   |                                    | 124,958   |   |   |   | (2,266 | ) |   |   | 122,692 |   |
| Total      non-interest income  |   |                                    | 30,147    |   |   |   | 21,465 |   |   |   | 52,112 |   |
| Total      non-interest expense |   |                                    | 82,917    |   |   |   | 19,823 |   |   |   | 102,740 |   |
| Net      income (loss)          |   |                                    | 49,103    |   |   |   | (296 | ) |   |   | 48,807 |   |
|                            |   |                                    |      |   |   |   |   |   |   |   |   |   |
|                            |   | As      of and for the Six Months Ended |      |
|                            |   | June      30, 2007                      |      |
|                            |   | Community                               |      |   |   |   |   |   |   |   |   |
|                            |   | Banking                                 |      |   | Other |   |   | Consolidated |   |
| Total      assets               |   | $                                       | 4,887,623 |   |   | $ | 733,547 |   |   | $ | 5,621,170 |   |
| Total      deposits             |   |                                    | 3,825,786 |   |   |   | - |   |   |   | 3,825,786 |   |
| Net      interst income (loss)  |   |                                    | 79,800    |   |   |   | (3,387 | ) |   |   | 76,413 |   |
| Total      non-interest income  |   |                                    | 21,914    |   |   |   | 12,578 |   |   |   | 34,492 |   |
| Total      non-interest expense |   |                                    | 55,821    |   |   |   | 12,007 |   |   |   | 67,828 |   |
| Net      income (loss)          |   |                                    | 33,605    |   |   |   | (1,888 | ) |   |   | 31,717 |   |

----

|                                              |   | June      30, |       |
|---------------------------------------------------|--------|---------------|------------|
| (dollars      in thousands)                       |   | 2008          |       |   | 2007 |   |
|                                              |   |          |       |   |   |   |
| Service      cost                                 |   | $             | 836,670    |   |   | $ | 801,840 |   |
| Interest      cost                                |   |          | 911,516    |   |   |   | 774,408 |   |
| Expected      return on plan assets               |   |          | (1,376,826 | ) |   |   | (1,155,660 | ) |
| Amortization      of prior service cost           |   |          | (257,918   | ) |   |   | (257,918 | ) |
| Amortization      of unrecognized net actual loss |   |          | 111,466    |   |   |   | 222,973 |   |
| Net      periodic benefit cost                    |   | $             | 224,908    |   |   | $ | 385,643 |   |

----

----

|                                               |   | As      of June 30, 2008 |    |   | As      of December 31, 2007 |    |
|----------------------------------------------------|--------|--------------------------|---------|--------|------------------------------|---------|
|                                               |   |                     |    |   | 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 |   | $                        | 226,384 |   |                         |  $ | (5,599 | ) |   |   | 5.1 |   |   |   | 6.54 | % |   |   | 4.39 | % |   | $ | 130,342 |   |   | $ | (6,660 | ) |
|         Pay variable/receive fixed       |   |                     | 226,384 |   |                         |    | (5,599 | ) |   |   | 5.1 |   |   |   | 4.39 | % |   |   | 6.54 | % |   |   | 130,342 |   |   |   | 6,660 |   |
| Total      swaps                                   |   | $                        | 452,768 |   |                         |  $ | - |   |   |   | 5.1 |   |   |   | 5.47 | % |   |   | 5.47 | % |   | $ | 260,684 |   |   | $ | - |   |
|                                               |   |                     |    |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

|                                                        |   | Quoted      Prices    |         |   | Significant    |   |   |            |   |   |          |   |
|-------------------------------------------------------------|--------|-----------------------|--------------|--------|----------------|--------|--------|-----------------|--------|--------|---------------|--------|
|                                                        |   | in      Active        |         |   | Other          |   |   | Significant     |   |   | Balance       |   |
|                                                        |   | Markets      for      |         |   | Observable     |   |   | Unobservable    |   |   | as      of    |   |
|                                                        |   | Identical      Assets |         |   | Inputs         |   |   | Inputs          |   |   | June      30, |   |
|                                                        |   | (Level      1)        |         |   | (Level      2) |   |   | (Level      3)  |   |   | 2008          |   |
| (dollars      in thousands)                                 |   |                  |         |   |           |   |   |            |   |   |          |   |
| Assets                                                      |   |                  |         |   |           |   |   |            |   |   |          |   |
|     Loans      and leases held for sale |   | $                     |  5,269  |   |           |   | $      | -          |   |   |          | $      | -  |   |   |   | $ | 5,269 |   |
|     Impaired      loans                 |   |                  | -       |   |           |   |   | -          |   |   |          |   | 18,565  |   |   |   |   | 18,565 |   |
|          Investment securities available     |   |                  |         |   |           |   |   |            |   |   |          |   |   |   |   |   |   |   |   |
|             for sale          |   |                  | 8,939   |   |           |   |   | 1,452,087  |   |   |          |   | 75,759  |   |   |   |   | 1,536,785 |   |
|     Interest      rate locks            |   |                  | -       |   |           |   |   | 518        |   |   |          |   | -  |   |   |   |   | 518 |   |
|     Interest      rate swap agreements  |   |                  | -       |   |           |   |   | (5,599     | )      |   |          |   | -  |   |   |   |   | (5,599 | ) |
|                                                        |   |                  |         |   |           |   |   |            |   |   |          |   |   |   |   |   |
| Liabilities                                                 |   |                  |         |   |           |   |   |            |   |   |          |   |   |   |   |   |
|     Subordinated      debt              |   | $                     |  64,827 |   |           |   | $      | -          |   |   |          | $      | -  |   |   |   | $ | 64,827 |   |
|     Interest      rate swap agreements  |   |                  | -       |   |           |   |   | 5,599      |   |   |          |   | -  |   |   |   |   | 5,599 |   |

| (dollars      in thousands)                                                |   | Investment      Securities |           |
|----------------------------------------------------------------------------|--------|----------------------------|----------------|
|                                                                       |   | Available for Sale         |           |
| Assets                                                                     |   |                       |           |
| Beginning      balance December 31, 2007                                   |   |                       |           |
|         Total gains/(losses) - (realized/unrealized):            |   |                       | $              | 194,047  |   |   |
|            Included in earnings                   |   |                       | -         |   |   |
|            Included in other comprehensive income |   |                       | (26,968   | ) |   |
|         Purchases, issuances, and settlements                    |   |                       | 3,147     |   |   |
|         Transfer into level 3 from KNBTand Christiana            |   |                       | 44,813    |   |   |
|         Transfer out to held to maturity                         |   |                       | (139,280  | ) |   |
| Ending      balance June 30, 2008                                          |   |                       | $              | 75,759  |   |   |
|                                                                       |   |                       |           |   |   |

----

| ·   | Trust Preferred      Pools/Collateralized Debt Obligations – During the second quarter      of 2008, CDO investments with a cost basis of $183.7 million were      reclassified from Available-For-Sale to Held-To-Maturity at a fair value      of $139.3 million, in accordance with Generally Accepted Accounting      Principles.  This demonstrates the Company’s intent to hold      these investments to maturity.  The difference of $28.9 million      between the cost basis and fair value, net of tax, remains in Other      Comprehensive Income on the Company’s Balance Sheet.  The      reclassification of these investments had no impact on capital ratios at      June 30, 2008.  The Company’s unrealized loss in this category      is related to general market conditions and the resultant lack of      liquidity in the market.  The severity of the impairments in      relation to the carrying amounts of the individual investments is      consistent with market developments.  The Company’s analysis for      each investment performed at the CUSIP level, shows that the credit      quality of the individual bonds ranges from good to      deteriorating.  Credit risk does exist and an individual issuer      in a pool could default which could affect the ultimate collectibility of      contractual amounts.  Management has reviewed, and will continue      to review, possible other-than-temporary impairment of its portfolio in      the context of the guidance provided by FSP FAS 115-1 and FAS      124-1.  Should an other-than temporary impairment charge be      necessary, the Company anticipates that this would occur on a pool-by-pool      basis and therefore the charges would be spread over time.  As      of June 30, 2008, management concluded, as a result of their review, that      other-than-temporary impairment did not exist due to the continuing      performance of the individual investments and the Company’s ability and      intent to hold these investments to recovery of fair value, which may be      maturity.  Ultimately, the quality of these CDO investments will      depend on the financial strength of the individual banks and insurance      companies who issued debt into these pools, coupled with the protections      afforded to the rated class holders within the structure of each      CDO. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Equities – The      Company’s portfolio of common stock investments consists of      mid-Atlantic-based banks and banking companies which were purchased as      long-term investments.  The unrealized loss in this category is      due to general market conditions for financial stocks, which is a sector      that is currently out of favor in the capital markets.  The      severity of the impairment in relation to the carrying amounts of the      individual investments is consistent with market      developments.  Because the Company has the ability and intent to      hold these investments until a recovery of fair value, it does not      consider these long-term investments to be other-than-temporarily impaired      at June 30, 2008. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | All Other      Investments – The unrealized losses in all other Company      investments is primarily caused by the movement of interest      rates.  The contractual terms of these investments do not permit      the issuer to settle the securities at a price less than the par value of      the investment.  Because the Company has the ability and intent      to hold these investments until a recovery of fair value, which may be      maturity, the Company does not consider those investments to be      other-than-temporarily impaired at June 30,  2008. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  (dollars      in thousands) |   | Six      Months EndedJune      30, |    |
|-----------------------------------|--------|------------------------------------|---------|
|                              |   | 2008                               |    |   | 2007 |   |
| Interest                          |   | $                                  | 110,274 |   |   | $ | 88,396 |   |
| Taxes                             |   |                               | 27,616  |   |   |   | 28,764 |   |

|  (dollars      in thousands)                                                       |   | Six      Months EndedJune      30, |    |
|-----------------------------------------------------------------------------------------|--------|------------------------------------|---------|
|                                                                                    |   | 2008                               |    |   | 2007 |   |
| Transfers      of loans to other real estate                                            |   | $                                  | 996     |   |   | $ | 626 |   |
| Non-cash      share based compensation plan transactions                                |   |                               | 2,865   |   |   |   | 2,554 |   |
| Transfer      of investment securities from Available-for-Sale to      Held-to-Maturity |   |                               | 139,280 |   |   |   | - |   |

|  (dollars      in thousands)                                                       |   | Six      Months EndedJune      30, |       |
|-----------------------------------------------------------------------------------------|--------|------------------------------------|------------|
|                                                                                    |   | 2008                               |       |   | 2007 |   |
| Details      of acquisitions:                                                           |   |                               |       |   |   |   |
|      Fair      value of assets acquired                        |   | $                                  | 3,160,123  |   |   |  $ | - |   |
|      Fair      value of liabilities assumed                    |   |                               | (2,664,059 | ) |   |   | - |   |
|      Stock      issued for acquisition                         |   |                               | (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     |   |   |  $ | - |   |

----

|                                                |   | June      30, 2008 |
|-----------------------------------------------------|--------|--------------------|
| (dollars      in thousands, percentages annualized) |   | 2008               |   |   | 2007 |   |
| Return      on average shareholders' equity         |   |               | 10.5 | % |   |   | 11.8 | % |
| Effect      of goodwill and intagibles              |   |               | 12.3 | % |   |   | 12.6 | % |
| Return      on average tangible equity              |   |               | 22.8 | % |   |   | 24.4 | % |
|                                                |   |               |   |   |   |   |   |   |
| Average      tangible equity excludes acquisition   |   |               |   |   |   |   |   |   |
| related      average goodwill and intangibles:      |   |               |   |   |   |   |   |   |
|   Average      shareholders' equity       |   | $                  | 936,549 |   |   | $ | 543,810 |   |
|   Average      goodwill andi ntangibles   |   |               | (505,498 | ) |   |   | (281,992 | ) |
|   Average      tangible equity            |   | $                  | 431,051 |   |   | $ | 261,818 |   |
|                                                |   |               |   |   |   |   |   |   |

| ·   | allowance      for loan and lease losses; |
|--------------------|-------------------------------------------|

| ·   | goodwill      impairment; |
|--------------------|---------------------------|

| ·   | deferred      tax assets, liabilities, and uncertain tax  positions; |
|--------------------|----------------------------------------------------------------------|

| ·   | share-based      compensation; and  |
|--------------------|------------------------------------------|

| ·   | fair      value measurements, including assessment of other than temporary      impairment.  |
|--------------------|---------------------------------------------------------------------------------------------------|

----

|                                                                                                              |   | Six      Months Ended June 30, |      |
|-------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|-----------|
|                                                                                                              |   | 2008                           |      |   | 2007 |   |
|                                                                                                              |   |                           |      |   | 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                                                                                       |   |                           | 23,478    |   |   |   | 498 |   |   |   | 4.27 | % |   |   | 8,347 |   |   |   | 112 |   |   |   | 2.71 | % |
| Investment      securities*                                                                                       |   |                           | 1,861,575 |   |   |   | 51,593 |   |   |   | 5.57 | % |   |   | 1,287,073 |   |   |   | 36,748 |   |   |   | 5.76 | % |
| Total      loans and leases*                                                                                      |   |                           | 5,662,108 |   |   |   | 187,300 |   |   |   | 6.65 | % |   |   | 3,669,984 |   |   |   | 133,813 |   |   |   | 7.35 | % |
| Total      earnings assets                                                                                        |   | $                              | 7,547,161 |   |   | $ | 239,391 |   |   |   | 6.38 | % |   | $ | 4,965,404 |   |   | $ | 170,673 |   |   |   | 6.93 | % |
|                                                                                                              |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities                                                                                 |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      bearing deposits                                                                                    |   | $                              | 4,961,399 |   |   | $ | 72,365 |   |   |   | 2.93 | % |   | $ | 3,271,106 |   |   | $ | 60,282 |   |   |   | 3.72 | % |
| Short-term      borowings                                                                                         |   |                           | 682,462   |   |   |   | 10,604 |   |   |   | 3.12 | % |   |   | 500,032 |   |   |   | 10,441 |   |   |   | 4.21 | % |
| Long-term      borrowings                                                                                         |   |                           | 1,099,673 |   |   |   | 24,245 |   |   |   | 4.43 | % |   |   | 629,884 |   |   |   | 16,108 |   |   |   | 5.16 | % |
| Total      interest-bearing liabilities                                                                           |   | $                              | 6,743,534 |   |   | $ | 107,214 |   |   |   | 3.20 | % |   | $ | 4,401,022 |   |   | $ | 86,831 |   |   |   | 3.98 | % |
|                                                                                                              |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST      RATE MARGIN**                                                                                       |   |                           |      |   |   | $ | 132,177 |   |   |   | 3.52 | % |   |   |   |   |   |   | 83,842 |   |   |   | 3.41 | % |
|    Tax      equivalent interest                                                                    |   |                           |      |   |   |   | (9,485 | ) |   |   | -0.25 | % |   |   |   |   |   |   | (7,429 | ) |   |   | -0.30 | % |
|    Net      interest income                                                                        |   |                           |      |   |   | $ | 122,692 |   |   |   | 3.27 | % |   |   |   |   |   | $ | 76,413 |   |   |   | 3.11 | % |
|                                                                                                              |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *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.                                                           |   |                           |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                         |   | Six Months      Ended   |   |
|------------------------------------------------------------------------------|--------|------------------------------|--------|
| (dollars      in thousands)                                                  |   | June      30, 2008 over 2007 |   |
| Increase      (decrease) due to:                                             |   | Volume                       |   |   | Rate |   |   | Total |   |
| Interest      Income:                                                        |   |                         |   |   |   |   |   |   |   |
|         Interest bearing deposits in banks and fed funds sold      |   | $                            | 401    |   |   | $ | (15 | ) |   | $ | 386 |   |
|         Investment securities                                      |   |                         | 15,952 |   |   |   | (1,107 | ) |   |   | 14,845 |   |
|         Total loans and leases                                     |   |                         | 66,882 |   |   |   | (13,395 | ) |   |   | 53,487 |   |
|               Total interest income  |   | $                            | 83,235 |   |   | $ | (14,517 | ) |   | $ | 68,718 |   |
| Interest      Expense:                                                       |   |                         |   |   |   |   |   |   |   |   |   |   |
|         Interest bearing deposits                                  |   | $                            | 26,522 |   |   | $ | (14,439 | ) |   | $ | 12,083 |   |
|         Short-term borrowings                                      |   |                         | 3,237  |   |   |   | (3,074 | ) |   |   | 163 |   |
|         Long-term borrowings                                       |   |                         | 10,616 |   |   |   | (2,479 | ) |   |   | 8,137 |   |
|               Total interest expense |   | $                            | 40,375 |   |   | $ | (19,992 | ) |   | $ | 20,383 |   |
| Increase      (decrease) in net interest income                              |   | $                            | 42,860 |   |   | $ | 5,475 |   |   | $ | 48,335 |   |
|                                                                         |   |                         |   |   |   |   |   |   |   |   |   |   |

| ·   | General      economic conditions; |
|--------------------|-----------------------------------|

| ·   | Trends      in charge-offs for each loan type; |
|--------------------|------------------------------------------------|

| ·   | The      level of nonperforming assets, including loans over 90 days delinquent and      impaired loans; |
|--------------------|----------------------------------------------------------------------------------------------------------|

| ·   | Levels      of allowance for specific classifiedassets; |
|--------------------|---------------------------------------------------------|

| ·   | 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)          |   | 6/30/2008* |   |   | 3/31/2008 * |   |   | 12/31/2007 |   |
|                                 |   |       |   |   |        |   |   |       |   |
| Specific      reserves               |   | $          | 3,068  |   |        | $      | 2,310  |       |   | $ | 613 |   |
| Allocated      reserves              |   |       | 75,368 |   |        |   | 78,708 |       |   |   | 54,162 |   |
| Unallocated      reserves            |   |       | 3,206  |   |        |   | 613    |       |   |   | 122 |   |
|                                 |   | $          | 81,642 |   |        | $      | 81,631 |       |   | $ | 54,897 |   |
|                                 |   |       |   |   |        |   |   |       |   |   |   |   |
| *      Includes Christiana and KNBT. |   |       |   |   |        |   |   |       |   |   |   |   |

|                                                                                                |   |       |      |   |        |   |      |       |   |
|-----------------------------------------------------------------------------------------------------|--------|------------|-----------|--------|-------------|--------|-----------|------------|--------|
| (dollars      in thousands)                                                                         |   | 6/30/2008* |      |   | 3/31/2008 * |   |      | 12/31/2007 |   |
|                                                                                                |   |       |      |   |        |   |      |       |   |
| Nonperforming      loans                                                                            |   | $          | 21,783    |   |        | $      | 23,818    |       |   | $ | 15,285 |   |
| Nonperforming      loans to total loans                                                             |   |       | 0.36      | %      |        |   | 0.40      | %          |   |   | 0.39 | % |
| Delinquent      loans (excluding non-performing loans)                                              |   | $          | 20,264    |   |        |   | 20,790    |       |   |   | 7,041 |   |
| Delinquent      loans to total loans                                                                |   |       | 0.33      | %      |        |   | 0.35      | %          |   |   | 0.18 | % |
| Classified      loans                                                                               |   | $          | 110,184   |   |        |   | 104,730   |       |   |   | 68,970 |   |
| Classified      loans to total loans                                                                |   |       | 1.80      | %      |        |   | 1.74      | %          |   |   | 1.78 | % |
| Tier      1 capital and ALLL                                                                        |   | $          | 723,865   |   |        |   | 704,218   |       |   |   | 454,063 |   |
| Classified      loans to tier 1 capital and ALLL                                                    |   |       | 15.22     | %      |        |   | 14.87     | %          |   |   | 15.19 | % |
| Total      loans                                                                                    |   | $          | 6,133,598 |   |        | $      | 6,012,864 |       |   | $ | 3,875,253 |   |
|                                                                                                |   |       |      |   |        |   |      |       |   |   |   |   |
| *      Includes Christiana and KNBT. Both were acquired during the first      quarter of 2008. |   |
|                                                                                                |   |       |      |   |        |   |      |       |   |   |   |   |

----

|                                                                                 |   | June      30, |      |   | December      31, |   |
|--------------------------------------------------------------------------------------|--------|---------------|-----------|--------|-------------------|--------|
| (dollars      in thousands)                                                          |   | 2008          |      |   | 2007              |   |
| Restructured      loans                                                              |   | $             | 631       |   |              | $      | - |   |
| Non-accrual      loans and leases                                                    |   |          | 18,566    |   |              |   | 15,198 |   |
| Loans      and leases past due 90 or more days as to interest      or principal |   |          | 2,586     |   |              |   | 87 |   |
|           Total non-performing loans and leases                  |   | $             | 21,783    |   |              | $      | 15,285 |   |
| Other      real estate owned                                                         |   |          | 842       |   |              |   | - |   |
|           Total nonperforming assets                             |   | $             | 22,625    |   |              | $      | 15,285 |   |
|                                                                                 |   |          |      |   |              |   |   |   |
| Total      loans and leases, including loans held for sale                           |   |          | 6,133,598 |   |              |   | 3,875,253 |   |
| Average      total loans and leases                                                  |   |          | 5,662,108 |   |              |   | 3,825,406 |   |
| Allowance      for loan and lease losses                                             |   | $             | 81,642    |   |              | $      | 54,897 |   |
|                                                                                 |   |          |      |   |              |   |   |   |
| Allowance      for loan and lease losses to:                                         |   |          |      |   |              |   |   |   |
|           Nonperforming assets                                   |   |          | 360.80    | %      |              |   | 359.20 | % |
|           Total loans and leases                                 |   |          | 1.33      | %      |              |   | 1.42 | % |
|           Average total loans and leases                         |   |          | 1.44      | %      |              |   | 1.44 | % |

----

|                                     |   | For      Six Months Ended |   |   | For      Three Months Ended |   |
|------------------------------------------|--------|---------------------------|--------|--------|-----------------------------|--------|
|   (dollars      in thousands)  |   | June      30,             |   |   | March      31,              |   |
|                                     |   | 2008                      |   |   | 2007                        |   |   | 2008 |   |   | 2007 |   |
| Net      charge-offs                     |   | $                         | 6,260  |   |                        | $      | 3,915 |   |   | $ | 3,700 |   |   | $ | 2,304 |   |
|                                     |   |                      |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Net      charge-offs (annualized) to:    |   |                      |   |   |                        |   |   |   |   |   |   |   |   |   |   |   |
| Total      loans and leases              |   |                      | 0.20   | %      |                        |   | 0.21 | % |   |   | 0.24 | % |   |   | 0.25 | % |
| Average      total loans and leases      |   |                      | 0.22   | %      |                        |   | 0.21 | % |   |   | 0.25 | % |   |   | 0.25 | % |
| Allowance      for loan and lease losses |   |                      | 15.30  | %      |                        |   | 13.85 | % |   |   | 18.13 | % |   |   | 16.17 | % |

----

| ·          | Loans      to individuals to finance the purchase of personal assets or activities      were $953.1 million or 15.5% of totalloans. |
|--------------------------------|-------------------------------------------------------------------------------------------------------------------------------------|

| ·          | Residential      mortgage loans for the purchase or financing of an individual’s private      residence were $1.06 billion or 17.2% 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.  The      Company did not originate loans considered “Alt A” or “Sub-prime” during      the quarter ended June 30, 2008.  For the quarter ending March      31, 2008, Alt A originations totaled 2.2% of the total Company’s mortgage      originations and none of these were considered Sub-prime      loans.  Alt A loans are those to borrowers who generally have      average credit scores, but higher loan-to-value ratios, up to 100% of the      cost of the property.  The Company sells Alt A loans and      Sub-prime loans, if any, to investors in the secondary market, subject to      recourse claims for a period of time for defaults related to borrower      payments and/or Company representations.  Recourse claims      year-to-date June 30, 2008 were not material to the Company’s financial      position or results of operations.  The Company did not      experience a notable increase in recourse claims during this      period.  KNBT had purchased a portfolio of residential mortgages      prior to the merger, which contained some Alt A      loans.  Approximately 6.1% of the Company’s residential mortgage      portfolio consists of these purchased Alt A  loans. |
|--------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·          | Commercial      loans were $4.12 billion or 67.3% of the total loan      portfolio.  This category includes commercial real estate,      commercial construction and commercial and industrial    loans. |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                                                                  |   | Repricing      Periods |       |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------|------------|
|                                                                                                                                  |   | Within                 |       |   | Three      Months |   |   | One      Year |   |   | Over |   |
| (dollars      in thousands)                                                                                                           |   | Three                  |       |   | Through |   |   | Through |   |   | Five |   |
|                                                                                                                                  |   | Months                 |       |   | One      Year |   |   | Five      Years |   |   | Years |   |
| Assets                                                                                                                                |   |                   |       |   |   |   |   |   |   |   |   |   |
|    Fed      Funds Sold                                                                                                 |   | $                      | -          |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|         Investment securities                                                                                               |   |                   | 402,715    |   |   |   | 210,889 |   |   |   | 625,593 |   |   |   | 858,200 |   |
|         Loans and leases (1)                                                                                                |   |                   | 2,313,956  |   |   |   | 868,777 |   |   |   | 2,112,780 |   |   |   | 805,186 |   |
|                                                                                                                                  |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities      and equity                                                                                                           |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Non-interest bearing deposits                                                                                       |   |                   | 36,934     |   |   |   | 77,565 |   |   |   | 308,580 |   |   |   | 362,110 |   |
|         Interest bearing deposits                                                                                           |   |                   | 3,585,590  |   |   |   | 1,272,070 |   |   |   | 327,796 |   |   |   | 102,124 |   |
|         Borrowed funds                                                                                                      |   |                   | 715,470    |   |   |   | 204,931 |   |   |   | 766,494 |   |   |   | 160,386 |   |
|         Subordinated debt                                                                                                   |   |                   | 106,064    |   |   |   | 36,083 |   |   |   | - |   |   |   | - |   |
|                                                                                                                                  |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           Total                                                                     |   | $                      | -          |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|                                                                                                                                  |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|         Periodic Interest sensitivity gap                                                                                   |   |                   | (1,727,387 | ) |   |   | (510,983 | ) |   |   | 1,335,503 |   |   |   | 1,038,766 |   |
|         Cumulative interest rate sensitivity gap                                                                            |   |                   | (1,727,387 | ) |   |   | (2,238,370 | ) |   |   | (902,867 | ) |   |   | 135,899 |   |
|                                                                                                                                  |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                  |   |                   |       |   |   |
|                                                                                                                                  |   |                   |       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (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 second calendar      quarter of 2008. 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    |   | $      | 962,281   |   |           |   | -18.50 | % |
| +      200 basis point rate shock    |   |   | 1,041,593 |   |           |   | -11.78 | % |
| +      100 basis point rate shock    |   |   | 1,117,578 |   |           |   | -5.34 | % |
| Static      - base case              |   |   | 1,180,643 |   |           |   | 0.00 | % |
| -      100 basis point rate shock    |   |   | 1,205,930 |   |           |   | 2.14 | % |
| -      200 basis point rate shock    |   |   | 1,183,031 |   |           |   | 0.20 | % |
| -      300 basis point rate shock    |   |   | 1,127,849 |   |           |   | -4.47 | % |

| (dollars      in thousands) |       |   |               |   |          |               |   |   |             |         |   |             |   |
|-----------------------------|------------|--------|--------------------|--------|---------------|--------------------|--------|--------|------------------|--------------|--------|------------------|--------|
|                        |       |   | June      30, 2008 |   |          | June      30, 2007 |   |
| Change      in              |       |   | $      Change in   |   |          | %      Change in   |   |   | $      Change in |         |   | %      Change in |   |
| Interest      Rates         |       |   | Net      Income    |   |          | Net      Income    |   |   | Net      Income  |         |   | Net      Income  |   |
| (in      basis points)      |       |   |               |   |          |               |   |   |             |         |   |             |   |
|                        | +      300 |   |               |   | (11,637  | )                  |   |   |             | -10.43  | %      |             |   |   | (6,922  | ) |   |   |   | -10.07  | % |   |
|                        | +      200 |   |               |   | (7,029   | )                  |   |   |             | -6.30   | %      |             |   |   | (3,490  | ) |   |   |   | -5.08  | % |   |
|                        | +      100 |   |               |   | (2,507   | )                  |   |   |             | -2.25   | %      |             |   |   | (1,521  | ) |   |   |   | -2.21  | % |   |
|                        | -      100 |   |               |   | (992     | )                  |   |   |             | -0.89   | %      |             |   |   | 2,450  |   |   |   |   | 3.57  | % |   |
|                        | -      200 |   |               |   | (9,455   | )                  |   |   |             | -8.47   | %      |             |   |   | 4,095  |   |   |   |   | 5.96  | % |   |
|                        | -      300 |   |               |   | (15,226  | )                  |   |   |             | -13.65  | %      |             |   |   | 4,989  |   |   |   |   | 7.26  | % |   |

----

|                                                           |   |   |      |   | 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 |   | $      | 39,612    |   |                         | $      | 6,093 |   |   | $ | 9,804 |   |   | $ | 6,318 |   |   | $ | 17,397 |   |
| Remaining      contractual maturities of time deposits         |   |   | 2,313,061 |   |                         |   | 1,980,667 |   |   |   | 270,622 |   |   |   | 59,918 |   |   |   | 1,854 |   |
| Loan      commitments                                          |   |   | 1,839,955 |   |                         |   | 1,024,576 |   |   |   | 178,009 |   |   |   | 64,491 |   |   |   | 572,879 |   |
| Long-term      borrowed funds                                  |   |   | 1,031,530 |   |                         |   | 131,942 |   |   |   | 265,134 |   |   |   | 113,474 |   |   |   | 520,980 |   |
| Guaranteed      prefered beneficial interests in Company's     |   |   |      |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   subordinated      debentures                       |   |   | 142,148   |   |                         |   | - |   |   |   | - |   |   |   | - |   |   |   | 142,148 |   |
| Letters      of credit                                         |   |   | 193,352   |   |                         |   | 132,218 |   |   |   | 50,775 |   |   |   | 10,359 |   |   |   | - |   |
|   Total                                              |   | $      | 5,559,658 |   |                         | $      | 3,275,496 |   |   | $ | 774,344 |   |   | $ | 254,560 |   |   | $ | 1,255,258 |   |
|                                                           |   |   |      |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                                                    |   |  Tier      1 Capital to    |   |   |  Tier      1 Capital to Risk-Weighted |   |   |  Total      Capital to Risk-Weighted |   |
|---------------------------------------------------------------------------------------------------------|--------|---------------------------------|--------|--------|--------------------------------------------|--------|--------|-------------------------------------------|--------|
|                                                                                                    |   | Average      Assets Ratio  |   |   |  Assets      Ratio                    |   |   |  Assets      Ratio                   |   |
|                                                                                                    |   | June      30,                   |   |   | Dec.      31,                              |   |   | June      30,                             |   |   | Dec.      31, |   |   | June      30, |   |   | Dec.      31, |   |
|                                                                                                    |   | 2008                            |   |   | 2007                                       |   |   | 2008                                      |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
|                                                                                                    |   |                            |   |   |                                       |   |   |                                      |   |   |   |   |   |   |   |   |   |   |
| The      Company                                                                                        |   |                            | 7.60   | %      |                                       |   | 7.76   | %                                         |   |   | 9.39 | % |   |   | 9.54 | % |   |   | 10.59 | % |   |   | 10.81 | % |
| National      Penn Bank                                                                                 |   |                            | 7.64   | %      |                                       |   | 7.29   | %                                         |   |   | 9.51 | % |   |   | 8.99 | % |   |   | 10.70 | % |   |   | 10.22 | % |
| Christiana                                                                                              |   |                            | 10.41  | %      |                                       |   | 13.77  | %                                         |   |   | 12.34 | % |   |   | 14.72 | % |   |   | 13.59 | % |   |   | 15.97 | % |
| “Well      Capitalized” institution    (under      banking regulations) |   |                            | 5.00   | %      |                                       |   | 5.00   | %                                         |   |   | 6.00 | % |   |   | 6.00 | % |   |   | 10.00 | % |   |   | 10.00 | % |

----

| ·         | The      general economy and local market conditions will likely result in modest      deposit and loan growth in the low to mid single-digit percentages during      the remainder of 2008. |
|--------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·         | The      principal challenges faced by the Company today are to grow its earnings      in light of the pressure on interest margin due to current and anticipated      interest rate levels and the competitive environment, as well as      increasing credit quality pressures.  Management seeks to      increase net interest income principally through increased volume,      including volume from mergers and acquisitions, to increase non-interest      income, especially revenues from insurance and wealth management      activities, and to contain costs.  The Company, like many of its      peers, continues to be concerned about current and near term uncertain      economic conditions, especially in the real estate market, and their      effect on its overall creditquality. |
|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

|    | • | 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.  In particular, the continued use of non-National Penn      brands may be counterproductive to National Penn’s overall branding and      marketing strategy.                                    |
|--------------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         | • | 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.                                                                                                                                                                                 |
|         | • | New      product development by new and existing competitors may be more effective,      and take place more quickly, than expected.                                                                                                                                                                                                                                                                             |
|         | • | Geographic      expansion may be more difficult, take longer, and present more operational      and management risks and challenges, than expected.                                                                                                                                                                                                                                                              |
|    | • | Business      development in newly entered geographic areas, including those entered by      mergers and acquisitions such as the Christiana and KNBT acquisitions, may      be more difficult, and take longer, than expected.                                                                                                                                                                                  |
|         | • | National      Penn may be less effective in cross-selling its various products and      services, and in utilizing web-based and other alternative delivery      systems, than expected.                                                                                                                                                                                                                         |
|         | • | Projected      business increases following completed transactions, new product      development, geographic expansion, and productivity and investment      initiatives may be lower than expected, and recovery of associated costs      may 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.  |
|         | • | Expected      synergies and cost savings from mergers and acquisitions, including the      Christiana and KNBT acquisitions, may not be fully realized or realized as      quickly as expected.                                                                                                                                                                                                                  |
|         | • | Revenues      and loan growth following mergers and acquisitions, including the      Christiana and KNBT acquisitions, may be less than expected.                                                                                                                                                                                                                                                                |
|         | • | Loan      losses, deposit attrition, operating costs, customer and key employee      losses, and business disruption following mergers and acquisitions,      including the Christiana and KNBT acquisitions, may be greater than      expected.                                                                                                                                                                 |
|         | • | Business      opportunities and strategies potentially available to National Penn after      mergers and acquisitions, including the Christiana and KNBT acquisitions,      may not be successfully or fully acted upon.                                                                                                                                                                                         |
|         | • | Costs,      difficulties or delays related to the integration of businesses or systems      of acquired companies, including Christiana, KNBT, and their respective      subsidiaries, with National Penn’s business or systems may be greater than      expected.                                                                                                                                         |
|         | • | Technological      changes, including systems conversions and integration, may be more      difficult to make or more expensive than expected or present unanticipated      operational issues.                                                                                                                                                                                                                  |

----

|         | • | Changes      made by third party software vendors in products utilized by National      Penn, including product upgrades, replacements, and withdrawal of support      for prior products,  may necessitate unscheduled product      revisions by National Penn and related unbudgeted      expenditures.                                                                                                                                                                                                              |
|--------------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         | • | Maintaining      information security, and dealing with any breach of information security,      whether by National Penn or by a third party, may be more difficult and      expensive than expected and may present operational or reputation      risks.                                                                                                                                                                                                                                                                      |
|    | • | Legislation      or regulatory changes, including without limitation, changes in laws or      regulations on competition, industry consolidation, development of      competing financial products and services, changes in accounting rules and      practices, changes in or additional customer privacy and data protection      requirements, and intensified regulatory scrutiny of National Penn and the      financial services industry in general, may adversely affect National      Penn’s costs and business.  |
|         | • | Market      volatility may continue in the securities markets, with an adverse effect      on National Penn’s securities and asset managementactivities.                                                                                                                                                                                                                                                                                                                                                                   |
|         | • | 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.                                                                                                                                  |
|         | • | A      downward movement in real estate values and sales could adversely affect      National Penn’s asset quality and earnings.                                                                                                                                                                                                                                                                                                                                                                                           |
|         | • | 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.                                                                                                                                                                                                                                                                 |
|         | • | Various      domestic or international military or terrorist activities or conflicts      may have a negative impact on National Penn’s business as well as the      foregoing and other risks.                                                                                                                                                                                                                                                                                                                            |
|         | • | 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.                                                                                                                                                                                                                                                                                                                                               |

----

|                                                                                                                                                   |   |              |   |   |            |   |   | 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 |   |              |   |   |            |   |   |                     |   |   |                    |   |
| April      1, 2008 through April 30, 2008                                                                                                              |   |              | 0      |   |            |   | N/A    |                     |   |   | 0                       |   |   |   | 627,427 |   |
|                                                                                                                                                   |   |              |   |   |            |   |   |                     |   |   |                    |   |   |   |   |   |
| May      1, 2008 through May 31, 2008                                                                                                                  |   |              | 0      |   |            |   | N/A    |                     |   |   | 0                       |   |   |   | 627,427 |   |
|                                                                                                                                                   |   |              |   |   |            |   |   |                     |   |   |                    |   |   |   |   |   |
| June      1,2008 through June 30, 2008                                                                                                                 |   |              | 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 unde National Penn's current      stock repurchase programs is 2,121,800 (as adjusted       |   |
|      for      the 3% stock dividend on September 28, 2007).                                                                   |   |              |   |   |
| 4.       National Penn's curent stock repurchase plan or program expired during the      period covered by the table.                             |   |              |   |   |            |
| 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.                                                                          |   |              |   |   |            |   |   |                     |   |   |                    |   |   |   |   |   |
|                                                                                                                                                   |   |              |   |   |            |   |   |                     |   |   |                    |   |   |   |   |   |

| Nominees                   |   | For    |       |   | Withheld |   |      | Abstentions |   |
|----------------------------|--------|--------|------------|--------|----------|--------|-----------|-------------|--------|
| Thomas      A. Beaver      |   |   | 62,370,008 |   |     |   | 1,717,177 |        |   |   | 0 |   |
| Robert      L. Byers       |   |   | 61,920,225 |   |     |   | 2,166,960 |        |   |   | 0 |   |
| Jeffrey      P. Feather    |   |   | 62,029,507 |   |     |   | 2,057,678 |        |   |   | 0 |   |
| Patricia      L. Langiotti |   |   | 61,774,954 |   |     |   | 2,312,231 |        |   |   | 0 |   |
| Natalye      Paquin        |   |   | 61,723,602 |   |     |   | 2,363,583 |        |   |   | 0 |   |

| For        | Against | Abstentions | Broker      Nonvotes |
|------------|---------|-------------|----------------------|
| 62,317,376 | 560,861 | 363,338     | 0                    |
|       |    |        |                 |

----

| For        | Against    | Abstentions | Broker      Nonvotes |
|------------|------------|-------------|----------------------|
| 20,428,251 | 27,635,200 | 1,374,184   | 13,803,940           |
|       |       |        |                 |

| 3.1    | Articles      of Incorporation, as amended, of National Penn Bancshares, Inc.      (Incorporated by reference to Exhibit 3.1 to National Penn’s Quarterly      Report on Form 10-Q for the quarter ended June 30, 2004, as filed on      August 5, 2004.)                                                |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                           |
| 3.2    | Articles      of Amendment of National Penn Bancshares, Inc. dated April 25, 2007      (Incorporated by reference to Exhibit 3.1 to National Penn’s Report on      Form 8-K dated April 25, 2007, as filed on April 25,  2007.)                                                                          |
|   |                                                                                                                                                                                                                                                                                                           |
| 3.3    | 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 28, 2007, as filed on March 1,      2007.)                                                                                |
|   |                                                                                                                                                                                                                                                                                                           |
| 4.1    | Form      of Loan Agreement between National Penn Investment Company, as Lender, and      National Penn Bancshares, Inc., as Borrower.  (Incorporated by      reference to Exhibit 4.1 to National Penn’s Report on Form 8-K dated      December 19, 2007, as filed on January 2, 2008.)  |
| 4.2    | Form      of Revolving Credit Note, executed by National Penn Bancshares, Inc.      (Incorporated by reference to Exhibit 4.2 to National Penn’s Report on      Form 8-K dated December 19, 2007, as filed on January 2,      2008.)                                                                     |
|   |                                                                                                                                                                                                                                                                                                           |
| 4.3    | Credit      Agreement dated as of March 28, 2008, between National Penn Bancshares,      Inc. and KeyBank National Association.  (Incorporated by      reference to Exhibit 4.1 to National Penn’s Report on Form 8-K dated March      28, 2008, and filed on March 31, 2008.)                 |
|   |                                                                                                                                                                                                                                                                                                           |
| 4.4    | Form      of Revolving Credit Note, executed by National Penn Bancshares, Inc.      (Incorporated by reference to Exhibit 4.2 to National Penn’s Report on      Form 8-K dated March 28, 2008, and filed on March 31,    2008.)                                                                          |
|   |                                                                                                                                                                                                                                                                                                           |
| 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)                        |
|   |                                 |                                |
|   | Dated:                               |  August      8, 2008           | By: | /s/      Glenn E. Moyer |
|   |                                 |                                |   | Name: | Glenn      E. Moyer |
|   |                                 |                                |   | Title: | President      and Chief Executive Officer |
|   |                                 |                                |   |   |   |
|   |  Dated:     |  August      8, 2008           |  By: |  /s/ Michael R.  Reinhard |
|   |                                 |                                |   | Name: | Michael      R. Reinhard  |
|   |                                 |                                |   |  Title: | Treasurer      and Chief FinancialOfficer  |

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