This follows locally based National Penn's June 27 agreement toacquire Greenville, DE-based Christiana Bank & Trust Co. forabout $56.5million in a transaction that is expected to close in early2008. Under the agreement with KNBT, that company's locations willretain their names and National Penn's branches in Lehigh andNorthampton counties will be rebranded under the KNBT name. Thereare now three such National Penn locations in Northampton and sixin Lehigh County.

National Penn has slightly more than $5.6 billion in assets, andKNBT has $2.9 billion. The merger will make National Penn the fifthlargest Pennsylvania-based bank holding company. It now operatesunder five divisions and identities: National Penn Bank,FirstService Bank, HomeTowne Heritage Bank, Nittany Bank andPeoples Bank of Oxford. As with previous National Pennacquisitions, the two Christiana locations, one each in Greenvilleand Wilmington, DE, will retain the Christiana flag.

The boards of National Penn and KNBT have approved the merger,which is subject to approval by the Federal Reserve Board, theOffice of the Comptroller of the Currency and shareholders of bothcompanies. Under the terms, current National Penn shareholders willown approximately 65% of the combined companies, and current KNBTshareholders will own 35%.