KNBT BANCORP INC.

KNBT BANCORP INC.

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Company Overview
KNBT Bancorp Inc. operates as the holding company for Keystone Nazareth Bank & Trust Company. The company was incorporated in 1925 and operates from its head office located in Bethlehem, Pennsylvania.
Through, Keystone Nazareth Bank & Trust Company, the company offers various financial products and services in Pennsylvania. It accepts interest-bearing and non-interest bearing checking accounts, and money market, savings, and certificate of deposit accounts. It also offers real estate loans, including one-to four-family residential, multifamily residential, commercial real estate, and construction and land development loans, commercial and industrial loans, state and political subdivision loans, and consumer loans, including home equity loans and lines of credit, and automobile and other vehicles loans. In addition, the company offers trust and wealth management services, and securities brokerage and investment advisory products and services. Further, it provides medical, life, and disability insurance, as well as commercial, property and casualty, and employee benefit lines of insurance, estate, personal trust, and investment management services, estate and financial planning services, and employee retirement benefits administration services.
KNBT Bancorp operates more than 50 branch offices in Carbon, Lehigh, Luzerne, Monroe, Northampton, and Schuylkill counties in Pennsylvania. In February 2008, KNBT Bancorp was acquired by National Penn Bancshares Inc.
Business Summary
Bank Holding & Holding Company
Description and history
KNBT is a Pennsylvania corporation headquartered in Bethlehem, Pennsylvania. The Company is a registered bank holding company for Keystone Nazareth Bank & Trust Company, a Pennsylvania-chartered savings bank that is the stock-form successor to Keystone Savings Bank upon the mutual-to-stock conversion completed in October 2003.

KNBT provides a diversified range of financial services offered principally through the Bank. In addition, KNBT offers an array of investment, insurance and employee benefit services through its nonbank subsidiaries.

KNBT is one of the largest bank holding companies with headquarters in eastern Pennsylvania. At December 31, 2005, the Company operated 58 bank branches throughout 7 counties in Northeastern Pennsylvania.

At December 31, 2005, KNBT had total assets of $3.1 billion, total gross loans of $1.5 billion, total deposits of $1.9 billion and total shareholders’ equity of $376.6 million.

For the year ended December 31, 2005, KNBT reported net income of $20.8 million compared to net income of $17.6 million for the year ended December 31, 2004, an increase of 18.3%.

During 2005, KNBT completed its acquisition of Northeast Pennsylvania Financial Corp., (‘NEPF’), a thrift holding company headquartered in Hazleton, Pennsylvania with assets of approximately $784.9 million. KNBT also completed its acquisition of Caruso Benefits Group, Inc. (‘Caruso’), a benefits management firm headquartered in Bethlehem, Pennsylvania. On February 28, 2006, KNBT acquired Paragon Group, Inc., the parent holding company for the Trust Company of Lehigh Valley, a Pennsylvania-chartered non-depository bank located in Allentown, PA.

General Development of Business

Concurrently with the mutual-to-stock conversion in October 2003, KNBT acquired, through a merger, First Colonial Group, Inc., the parent holding company for Nazareth National Bank and Trust Company, which was merged with and into the Bank in connection with the acquisition of First Colonial.

Since October 2003, KNBT has grown significantly not only in size and market reach but also in number and diversity of product offerings. At December 31, 2003, KNBT had $1.9 billion in total assets compared to total assets of $3.1 billion at December 31, 2005.

The following highlights major developments in the Company’s business since the conversion:

Oakwood Financial Corp. On November 11, 2004, KNBT acquired Oakwood Financial Corp., (‘Oakwood’) a full-service securities brokerage firm based in Allentown, Pennsylvania. The acquisition of Oakwood, now KNBT Securities, provides KNBT with a full menu of investment, insurance and securities brokerage products and services. The addition of KNBT Securities brought together the resources of a large community bank with experienced professionals of a full-service securities brokerage firm. This alliance is evidence of KNBT’s commitment to providing our clients with a full range of products and services to meet their financial goals.

Caruso Benefits Group. On April 1, 2005, KNBT acquired Caruso, a benefits management firm based in Bethlehem, Pennsylvania. Caruso specializes in benefits management with an emphasis on group medical, life, and disability insurance. The Caruso acquisition was a strategic initiative designed to enhance KNBT’s financial services by providing quality-based and cost-effective group benefit solutions. The addition of Caruso’s benefit management expertise presents KNBT an opportunity to broaden the array of services it can provide to support corporate and small business customers and their employees.

Northeast Pennsylvania Financial Corp. KNBT completed its acquisition of NEPF on May 19, 2005. NEPF was a thrift holding company headquartered in Hazleton, Pennsylvania with approximately $784.9 million in assets. The acquisition resulted in the addition of 17 full service community bank offices in five counties in northeastern Pennsylvania, expanding the Bank’s franchise into Luzerne, Schuylkill and Columbia counties and enhancing its presence in Carbon and Monroe counties. The NEPF acquisition also complemented KNBT’s strategy to grow its consumer and commercial lines of business by leveraging the opportunities presented by Higgins Insurance Associates, Inc., which previously operated as a subsidiary of NEPF providing commercial, property and casualty, and employee benefit lines of insurance.

The Trust Company of Lehigh Valley. On November 15, 2005, KNBT entered into an agreement to acquire Paragon, the parent holding company for The Trust Company of Lehigh Valley (‘TCLV’), a Pennsylvania-chartered non-depository bank located in Allentown, Pennsylvania. TCLV provides estate, personal trust and investment management services, estate and financial planning and employee retirement benefits administration and had approximately $400 million in assets under administration and management at the time of acquisition. The transaction closed on February 28, 2006.

BOYERTOWN, Pa., Feb 01, 2008 /PRNewswire-FirstCall via COMTEX/ — National Penn Bancshares, Inc. (Nasdaq: NPBC) today announced that it has completed the merger of KNBT Bancorp, Inc. with and into National Penn Bancshares, Inc. The merger is effective today at 5 p.m. In addition, KNBT’s banking subsidiary, Keystone Nazareth Bank & Trust Company, is being merged into National Penn’s banking subsidiary, National Penn Bank, effective February 2, 2008. National Penn and National Penn Bank remain headquartered in Boyertown, Pennsylvania.

As a result of the National Penn/KNBT merger, each share of KNBT common stock has been converted into the right to receive 1.03 shares of National Penn common stock. Based on this exchange ratio National Penn and KNBT shareholders immediately prior to the merger will own approximately 65% and 35% of the combined company, respectively, after the merger is complete.

Business Line
Operates as the holding company for Keystone Nazareth Bank & Trust Company
Subsidiary

Advisor

IPO date
11/2003
US SIC Code
6712
Company Address
90 Highland Avenue

City province or state postal code
BETHLEHEM,
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Fax:
Country address: UNITED STATES OF AMERICA
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