National Penn Bancshares in Allentown, Pa., said its second-quarter profit improved as increased real estate lending offset higher expenses.

The $9.6 billion-asset company's net income rose 3.8% to $27.2 million, or 19 cents per share, from a year earlier. That met the average estimate of analysts polled by Bloomberg.

Net interest income rose 6.2% to $66.8 million. Total loans rose 14% to $6.1 billion. Commercial real estate, National Penn's largest lending category, rose 14% to $2.3 billion. Residential mortgage, the second-largest category, rose 27% to $1.5 billion. The net interest margin compressed 19 basis points to 3.24%.

Fee income rose 1.2% to $24.7 million as higher mortgage banking revenue, cash management and electronic banking fees and bank-owned life insurance offset lower wealth management fees.

Noninterest expense rose 3.5% to $53.9 million on higher costs for salaries, premises and equipment and FDIC insurance.

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