NWBI - Northwest Bancshares Inc. Announces Second Quarter 2019 Earnings and Quarterly Dividend

July, 22 2019 09:00 AM Northwest Bancshares Inc.

WARREN, Pa., July 22, 2019 /PRNewswire/ -- Northwest Bancshares, Inc., (the "Company"), (NasdaqGS: NWBI) announced net income for the quarter ended June 30, 2019 of $26.4 million, or $0.25 per diluted share. This represents an increase of $84,000, or 0.3%, compared to the same quarter last year when net income was $26.3 million or $0.25 per diluted share. The annualized returns on average shareholders' equity and average assets for the quarter ended June 30, 2019 were 8.01% and 1.02% compared to 8.67% and 1.11% for the same quarter last year.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.18 per share payable on August 15, 2019 to shareholders of record as of August 1, 2019. This is the 99th consecutive quarter in which the Company has paid a cash dividend. Based on the market value of the Company's stock as of June 30, 2019, this represents an annualized dividend yield of approximately 4.09%.

In making this announcement, Ronald J. Seiffert, Chairman, President and CEO, noted, "We were extremely pleased with loan growth for both the current quarter of 1.9% and for the first six months of the year of 3.5%." Mr. Seiffert added that "despite the expected six basis point decline in our net interest margin during the quarter due to the shape of the yield curve, we believe it is very important to continue to grow and diversify our loan portfolio." He continued, "As the result of strategic investments that we made during the first half of this year, we are extremely well-positioned to focus on sales execution and operating efficiencies for the remainder of 2019. These investments included the successful integration of Union Community Bank, the implementation of nCino as our new commercial loan origination platform and Ellie Mae's Encompass as our new residential mortgage loan origination platform, as well as the staffing of our commercial and residential mortgage loan origination teams."

Net interest income increased by $8.4 million, or 10.0%, to $92.6 million for the quarter ended June 30, 2019, from $84.2 million for the quarter ended June 30, 2018, primarily due to a $12.8 million, or 14.5%, increase in interest income on loans receivable and a $1.0 million, or 31.5%, increase in interest income on mortgage-backed securities. These increases were primarily due to increases of $743.4 million, or 9.5%, and $75.0 million, or 13.2%, in the average balances of loans and mortgage-backed securities, respectively. Additionally, the average yield on loans and mortgage-backed securities increased by 21 and 37 basis points, respectively, over the prior year period. Partially offsetting this improvement was an increase in interest expense on deposits of $5.2 million, or 70.8%, due to increases in market interest rates that have occurred over the past year. The net impact of these changes caused the Company's net interest margin to increase to 3.91% for the quarter ended June 30, 2019 from 3.86% for the same quarter last year.

The provision for loan losses decreased by $682,000, or 12.8%, to $4.7 million for the quarter ended June 30, 2019, from $5.3 million for the quarter ended June 30, 2018. The provision was elevated in the prior year due primarily to the closure of the Company's consumer finance subsidiary and the runoff of the legacy portfolio. During the current quarter, net charge-offs were elevated due to an additional write down of approximately $4.0 million on a residential land development loan in our Western New York region. This write down was previously fully reserved.

Noninterest income decreased by $746,000, or 3.1%, to $23.4 million for the quarter ended June 30, 2019, from $24.1 million for the quarter ended June 30, 2018. This decrease was primarily due to a $1.1 million, or 48.7%, decline in bank owned life insurance income due to a death benefit received during the prior year. Partially offsetting this decline was an increase in service charges and fees of $431,000, or 3.3%, to $13.3 million for the current quarter compared to $12.9 million for the prior year's quarter, primarily as a result of increased customer activity from the United Community Bank ("UCB") acquisition. Additionally, there was an increase in trust and other financial services income of $394,000, or 9.7%, to $4.4 million for the quarter ended June 30, 2019, from $4.0 million for the same quarter last year primarily due to new brokerage production.

Noninterest expense increased by $7.7 million, or 11.1%, to $77.5 million for the quarter ended June 30, 2019, from $69.8 million for the quarter ended June 30, 2018. This increase resulted primarily from a $3.0 million, or 7.6%, increase in compensation and employee benefits due to both internal growth in compensation and staff as well as the addition of UCB employees. In addition, processing expenses increased by $1.1 million, or 11.2%, as we continue to invest in technology and infrastructure to meet the demands of becoming a $10.0 billion institution. Also contributing to this increase was an increase in restructuring and acquisition expense of $712,000 due to expenses incurred as part of the UCB acquisition.

Net income for the six month period ended June 30, 2019 was $51.4 million, or $0.49 per diluted share. This represents an increase of $143,000, or 0.3%, compared to the six month period ended June 30, 2018, when net income was $51.3 million, or $0.50 per diluted share. The annualized returns on average shareholders' equity and average assets for the six month period ended June 30, 2019 were 7.99% and 1.02% compared to 8.54% and 1.09% for the same period last year. This increase in net income was the result of an increase in net interest income after provision of $13.0 million, or 8.3% which was partially offset by an increase in noninterest expense of $11.7 million, or 8.5%. Contributing to the additional expense is the added cost of the Union Community Bank operations, including new marketing costs, additional processing costs associated with our new commercial and residential mortgage platforms as well as increased online banking usage fees, and the acquisition costs associated with the Union Community Bank conversion in March 2019.

Headquartered in Warren, Pennsylvania, Northwest Bancshares, Inc. is the holding company of Northwest Bank. Founded in 1896, Northwest Bank is a full-service financial institution offering a complete line of business and personal banking products, employee benefits and wealth management services, as well as the fulfillment of business and personal insurance needs. Northwest operates 172 full-service community banking offices and ten free standing drive-through facilities in Pennsylvania, New York and Ohio. Northwest Bancshares, Inc.'s common stock is listed on the NASDAQ Global Select Market ("NWBI"). Additional information regarding Northwest Bancshares, Inc. and Northwest Bank can be accessed on-line at www.northwest.com.

Forward-Looking Statements - This release may contain forward-looking statements with respect to the financial condition and results of operations of Northwest Bancshares, Inc. including, without limitations, statements relating to the earnings outlook of the Company. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements, include among others, the following possibilities: (1) changes in the interest rate environment; (2) competitive pressure among financial services companies; (3) general economic conditions including an increase in non-performing loans; (4) changes in legislation or regulatory requirements; (5) difficulties in continuing to improve operating efficiencies; (6) difficulties in the integration of acquired businesses or the ability to complete sales transactions; and (7) increased risk associated with commercial real-estate and business loans. Management has no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this release.

Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Financial Condition (Unaudited)
(Dollars in thousands, except per share amounts)


June 30, 2019

December 31, 2018

June 30, 2018
Assets





Cash and cash equivalents
$
106,988


68,789


133,045

Marketable securities available-for-sale (amortized cost of $850,248, $811,015 and $814,848, respectively)
854,765


801,450


799,878

Marketable securities held-to-maturity (fair value of $20,676, $22,446 and $25,212, respectively)
20,414


22,765


25,747

Total cash and cash equivalents and marketable securities
982,167


893,004


958,670







Residential mortgage loans
2,899,164


2,864,470


2,800,668

Home equity loans
1,314,947


1,258,422


1,276,181

Consumer loans
1,011,424


859,713


700,925

Commercial real estate loans
2,808,153


2,471,821


2,553,223

Commercial loans
703,194


597,013


611,373

Total loans receivable
8,736,882


8,051,439


7,942,370

Allowance for loan losses
(53,107)


(55,214)


(57,332)

Loans receivable, net
8,683,775


7,996,225


7,885,038







Federal Home Loan Bank stock, at cost
14,966


15,635


7,887

Accrued interest receivable
28,742


24,490


24,959

Real estate owned, net
2,070


2,498


2,722

Premises and equipment, net
148,973


143,390


146,276

Bank owned life insurance
186,870


171,079


170,791

Goodwill
344,720


307,420


307,420

Other intangible assets
24,112


19,821


22,629

Other assets
89,088


34,211


35,917

Total assets
$
10,505,483


9,607,773


9,562,309







Liabilities and shareholders' equity





Liabilities





Noninterest-bearing demand deposits
$
1,944,550


1,736,156


1,732,664

Interest-bearing demand deposits
1,670,983


1,455,460


1,485,938

Money market deposit accounts
1,784,437


1,661,623


1,686,052

Savings deposits
1,683,551


1,636,099


1,697,396

Time deposits
1,600,372


1,404,841


1,405,328

Total deposits
8,683,893


7,894,179


8,007,378







Borrowed funds
171,677


234,389


99,889

Advances by borrowers for taxes and insurance
54,507


43,298


51,640

Accrued interest payable
1,207


744


568

Other liabilities
138,854


66,312


62,741

Junior subordinated debentures
121,757


111,213


111,213

Total liabilities
9,171,895


8,350,135


8,333,429







Shareholders' equity





Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued
—


—


—

Common stock, $0.01 par value, 500,000,000 shares authorized, 106,614,607, 103,354,030, and 103,122,890 shares issued and outstanding, respectively
1,066


1,034


1,031

Paid-in-capital
798,942


745,926


739,673

Retained earnings
562,799


550,374


531,269

Accumulated other comprehensive loss
(29,219)


(39,696)


(43,093)

Total shareholders' equity
1,333,588


1,257,638


1,228,880

Total liabilities and shareholders' equity
$
10,505,483



9,607,773



9,562,309







Equity to assets
12.69
%

13.09
%

12.85
%
Tangible common equity to assets
9.52
%

10.03
%

9.74
%
Book value per share
$
12.51


12.17


11.92

Tangible book value per share
$
9.05


9.00


8.72

Closing market price per share
$
17.61


16.94


17.39

Full time equivalent employees
2,238


2,128


2,118

Number of banking offices
182


172


172

Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share amounts)


Quarter ended

June 30,

March 31,

December 31,

September 30,

June 30,

2019

2019

2018

2018

2018
Interest income:









Loans receivable
$
100,917


94,935


92,512


90,733


88,106

Mortgage-backed securities
4,280


3,965


3,942


3,572


3,254

Taxable investment securities
898


936


924


814


648

Tax-free investment securities
237


182


170


205


313

FHLB dividends
316


171


151


119


85

Interest-earning deposits
159


100


69


162


469

Total interest income
106,807


100,289


97,768


95,605


92,875











Interest expense:









Deposits
12,484


10,145


8,985


8,233


7,309

Borrowed funds
1,720


2,162


1,952


1,555


1,340

Total interest expense
14,204


12,307


10,937


9,788


8,649











Net interest income
92,603


87,982


86,831


85,817


84,226

Provision for loan losses
4,667


6,467


3,792


6,982


5,349

Net interest income after provision for loan losses
87,936


81,515


83,039


78,835


78,877











Noninterest income:









Gain/(loss) on sale of investments
29


(6)


4


—


—

Service charges and fees
13,339


12,043


12,827


13,158


12,908

Trust and other financial services income
4,444


4,195


4,246


4,254


4,050

Insurance commission income
2,145


2,178


1,906


2,046


2,090

Gain/(loss) on real estate owned, net
91


(3)


(14)


(247)


176

Income from bank owned life insurance
1,197


1,005


1,038


1,460


2,333

Mortgage banking income
188


216


213


82


77

Other operating income
1,930


2,034


3,028


1,804


2,475

Total noninterest income
23,363


21,662


23,248


22,557


24,109











Noninterest expense:









Compensation and employee benefits
42,008


38,188


39,319


37,535


39,031

Premises and occupancy costs
7,387


7,218


6,567


6,821


6,824

Office operations
3,708


3,131


3,455


3,508


3,768

Collections expense
939


308


780


483


434

Processing expenses
10,634


10,434


10,160


9,620


9,560

Marketing expenses
2,729


1,886


2,331


1,949


2,014

Federal deposit insurance premiums
681


706


637


721


671

Professional services
3,198


2,524


3,134


2,368


2,819

Amortization of intangible assets
1,760


1,447


1,346


1,462


1,520

Real estate owned expense
128


159


187


205


133

Restructuring/acquisition expense
1,105


1,926


435


186


393

Other expense
3,235


3,497


3,922


1,759


2,620

Total noninterest expense
77,512


71,424


72,273


66,617


69,787

Income before income taxes
33,787


31,753


34,014


34,775


33,199











Income tax expense
7,404


6,709


7,547


7,035


6,900

Net income
$
26,383


25,044


26,467


27,740


26,299











Basic earnings per share
$
0.25


0.24


0.26


0.27


0.26

Diluted earnings per share
$
0.25


0.24


0.26


0.27


0.25











Weighted average common shares outstanding - basic

105,233,635



103,101,789



102,479,086



102,334,954



101,870,043

Weighted average common shares outstanding - diluted

106,258,215



104,496,592



103,749,383



103,942,695



103,424,154











Annualized return on average equity
8.01
%

7.96
%

8.44
%

8.93
%

8.67
%
Annualized return on average assets
1.02
%

1.03
%

1.09
%

1.15
%

1.11
%
Annualized return on tangible common equity
10.97
%

10.74
%

11.29
%

12.07
%

11.74
%










Efficiency ratio *
64.37
%

62.07
%

64.04
%

59.95
%

62.65
%
Annualized noninterest expense to average assets *
2.88
%

2.79
%

2.91
%

2.70
%

2.87
%
* Excludes restructuring/acquisition expenses and amortization of intangible assets (non-GAAP).

Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share amounts)


Six months ended June 30,

2019

2018
Interest income:



Loans receivable
$
195,852


173,326

Mortgage-backed securities
8,245


6,267

Taxable investment securities
1,834


1,326

Tax-free investment securities
419


703

FHLB dividends
487


182

Interest-earning deposits
259


604

Total interest income
207,096


182,408





Interest expense:



Deposits
22,629


13,767

Borrowed funds
3,882


2,648

Total interest expense
26,511


16,415





Net interest income
180,585


165,993

Provision for loan losses
11,134


9,558

Net interest income after provision for loan losses
169,451


156,435





Noninterest income:



Gain on sale of investments
23


153

Service charges and fees
25,382


24,807

Trust and other financial services income
8,639


8,081

Insurance commission income
4,323


4,839

Gain/(loss) on real estate owned, net
88


(370)

Income from bank owned life insurance
2,202


3,323

Mortgage banking income
404


301

Other operating income
3,964


4,763

Total noninterest income
45,025


45,897





Noninterest expense:



Compensation and employee benefits
80,196


75,541

Premises and occupancy costs
14,605


14,131

Office operations
6,839


7,176

Collections expense
1,247


946

Processing expenses
21,068


19,266

Marketing expenses
4,615


4,154

Federal deposit insurance premiums
1,387


1,388

Professional services
5,722


5,096

Amortization of intangible assets
3,207


3,040

Real estate owned expense
287


425

Restructuring/acquisition expense
3,031


393

Other expense
6,732


5,652

Total noninterest expense
148,936


137,208

Income before income taxes
65,540


65,124





Income tax expense
14,113


13,840

Net income
$
51,427


51,284





Basic earnings per share
$
0.49


0.50

Diluted earnings per share
$
0.49


0.50





Weighted average common shares outstanding - basic

104,173,601



101,735,235

Weighted average common shares outstanding - diluted
105,382,270



103,281,120





Annualized return on average equity
7.99
%

8.54
%
Annualized return on average assets
1.02
%

1.09
%
Annualized return on tangible common equity
10.75
%

11.51
%




Efficiency ratio *
63.25
%

63.13
%
Annualized noninterest expense to average assets *
2.84
%

2.85
%
* Excludes restructuring/acquisition expenses and amortization of intangible assets (non-GAAP).

Northwest Bancshares, Inc. and Subsidiaries
Asset quality (Unaudited)
(Dollars in thousands)


June 30, 2019

March 31, 2019

December 31, 2018

September 30, 2018

June 30, 2018
Nonaccrual loans current:









Residential mortgage loans
$
432


124


264


869


669

Home equity loans
475


643


437


496


237

Consumer loans
94


76


196


126


218

Commercial real estate loans
12,605


10,520


9,947


10,905


14,814

Commercial loans
5,666


4,277


4,736


1,972


2,559

Total nonaccrual loans current
$
19,272


15,640


15,580


14,368


18,497











Nonaccrual loans delinquent 30 days to 59 days:









Residential mortgage loans
$
13


824


1,358


15


89

Home equity loans
418


160


266


333


221

Consumer loans
172


154


294


182


192

Commercial real estate loans
469


2,642


219


3,124


522

Commercial loans
45


321


23


150


51

Total nonaccrual loans delinquent 30 days to 59 days
$
1,117


4,101


2,160


3,804


1,075











Nonaccrual loans delinquent 60 days to 89 days:









Residential mortgage loans
$
910


1,323


1,262


547


668

Home equity loans
717


954


376


418


483

Consumer loans
322


683


582


464


194

Commercial real estate loans
1,426


3,588


1,260


1,872


1,682

Commercial loans
780


397


332


352


380

Total nonaccrual loans delinquent 60 days to 89 days
$
4,155


6,945


3,812


3,653


3,407











Nonaccrual loans delinquent 90 days or more:









Residential mortgage loans
$
10,617


10,781


12,965


13,154


11,822

Home equity loans
5,591


5,542


5,996


5,838


6,729

Consumer finance loans
10


—


22


39


15

Consumer loans
2,892


3,215


3,228


3,535


2,626

Commercial real estate loans
21,123


24,528


25,509


27,122


15,617

Commercial loans
2,920


2,027


3,010


2,714


2,925

Total nonaccrual loans delinquent 90 days or more
$
43,153


46,093


50,730


52,402


39,734











Total nonaccrual loans
$
67,697


72,779


72,282


74,227


62,713











Total nonaccrual loans
$
67,697


72,779


72,282


74,227


62,713

Loans 90 days past maturity and still accruing
55


166


166


195


94

Nonperforming loans
67,752


72,945


72,448


74,422


62,807

Real estate owned, net
2,070


2,345


2,498


2,486


2,722

Nonperforming assets
$
69,822


75,290


74,946


76,908


65,529











Nonaccrual troubled debt restructuring *
$
13,375


14,951


15,306


9,777


10,860

Accruing troubled debt restructuring
17,894


17,861


18,302


19,370


19,802

Total troubled debt restructuring
$
31,269


32,812


33,608


29,147


30,662











Nonperforming loans to total loans
0.78
%

0.85
%

0.90
%

0.93
%

0.79
%
Nonperforming assets to total assets
0.66
%

0.73
%

0.78
%

0.80
%

0.69
%
Allowance for loan losses to total loans
0.61
%

0.65
%

0.69
%

0.70
%

0.72
%
Allowance for loan losses to nonperforming loans
78.38
%

76.39
%

76.21
%

75.21
%

91.28
%
* Amounts included in nonperforming loans above.


Northwest Bancshares, Inc. and Subsidiaries
Loans by credit quality indicators (Unaudited)
(Dollars in thousands)

At June 30, 2019

Pass

Special mention *

Substandard **

Doubtful

Loss

Loans receivable
Personal Banking:












Residential mortgage loans

$
2,890,472


—


8,692


—


—


2,899,164

Home equity loans

1,307,887


—


7,060


—


—


1,314,947

Consumer loans

1,007,813


—


3,611


—


—


1,011,424

Total Personal Banking

5,206,172


—


19,363


—


—


5,225,535

Commercial Banking:












Commercial real estate loans

2,586,013


86,434


135,525


181


—


2,808,153

Commercial loans

621,889


38,182


42,141


982


—


703,194

Total Commercial Banking

3,207,902


124,616


177,666


1,163


—


3,511,347

Total loans

$
8,414,074


124,616


197,029


1,163


—


8,736,882














At March 31, 2019












Personal Banking:












Residential mortgage loans

$
2,858,007


—


9,154


—


—


2,867,161

Home equity loans

1,317,323


—


7,082


—


—


1,324,405

Consumer loans

926,832


—


4,230


—


—


931,062

Total Personal Banking

5,102,162


—


20,466


—


—


5,122,628

Commercial Banking:












Commercial real estate loans

2,577,176


87,053


135,080


—


—


2,799,309

Commercial loans

573,160


34,610


40,168


—


—


647,938

Total Commercial Banking

3,150,336


121,663


175,248


—


—


3,447,247

Total loans

$
8,252,498


121,663


195,714


—


—


8,569,875














At December 31, 2018












Personal Banking:












Residential mortgage loans

$
2,853,460


—


11,010


—


—


2,864,470

Home equity loans

1,251,518


—


6,904


—


—


1,258,422

Consumer loans

855,277


—


4,436


—


—


859,713

Total Personal Banking

4,960,255


—


22,350


—


—


4,982,605

Commercial Banking:












Commercial real estate loans

2,254,350


94,688


122,783


—


—


2,471,821

Commercial loans

538,762


19,281


38,970


—


—


597,013

Total Commercial Banking

2,793,112


113,969


161,753


—


—


3,068,834

Total loans

$
7,753,367


113,969


184,103


—


—


8,051,439














At September 30, 2018












Personal Banking:












Residential mortgage loans

$
2,835,806


—


11,028


—


—


2,846,834

Home equity loans

1,265,237


—


7,108


—


—


1,272,345

Consumer loans

771,555


—


4,494


—


—


776,049

Total Personal Banking

4,872,598


—


22,630


—


—


4,895,228

Commercial Banking:












Commercial real estate loans

2,283,152


53,529


181,385


—


—


2,518,066

Commercial loans

526,584


24,760


31,424


—


—


582,768

Total Commercial Banking

2,809,736


78,289


212,809


—


—


3,100,834

Total loans

$
7,682,334


78,289


235,439


—


—


7,996,062














At June 30, 2018












Personal Banking:












Residential mortgage loans

$
2,790,906


—


9,762


—


—


2,800,668

Home equity loans

1,268,884


—


7,297


—


—


1,276,181

Consumer loans

697,561


—


3,364


—


—


700,925

Total Personal Banking

4,757,351


—


20,423


—


—


4,777,774

Commercial Banking:












Commercial real estate loans

2,294,327


65,698


193,198


—


—


2,553,223

Commercial loans

554,495


18,140


38,738


—


—


611,373

Total Commercial Banking

2,848,822


83,838


231,936


—


—


3,164,596


Total loans

$
7,606,173


83,838


252,359


—


—


7,942,370

*
Includes $8.1 million, $3.4 million, $7.1 million, $9.2 million and $9.5 million of acquired loans at June 30, 2019, March 31, 2019, December 31, 2018, September 30, 2018, and June 30, 2018, respectively.
**
Includes $38.6 million, $37.8 million, $39.3 million, $45.3 million and $44.5 million of acquired loans at June 30, 2019, March 31, 2019, December 31, 2018, September 30, 2018, and June 30, 2018, respectively.

Northwest Bancshares, Inc. and Subsidiaries
Loan delinquency (Unaudited)
(Dollars in thousands)



June 30, 2019

*

March 31, 2019

*

December 31, 2018

*

September 30, 2018

*

June 30, 2018

*
(Number of loans and dollar amount of loans)






























Loans delinquent 30 days to 59 days:






























Residential mortgage loans

30


$
1,629


0.1
%

311


$
28,009


1.0
%

333


$
27,777


1.0
%

27


$
1,500


0.1
%

30


$
1,561


0.1
%
Home equity loans

148


4,573


0.3
%

195


7,626


0.6
%

233


8,649


0.7
%

184


5,673


0.4
%

184


6,383


0.5
%
Consumer finance loans

75


130


9.0
%

128


295


12.9
%

327


661


17.3
%

280


632


10.7
%

306


711


8.1
%
Consumer loans

781


7,500


0.7
%

777


7,228


0.8
%

1,073


9,447


1.1
%

984


8,408


1.1
%

901


8,855


1.3
%
Commercial real estate loans

31


2,418


0.1
%

48


28,965


1.0
%

37


5,503


0.2
%

36


5,386


0.2
%

40


5,898


0.2
%
Commercial loans

14


666


0.1
%

30


3,359


0.5
%

21


973


0.2
%

17


622


0.1
%

24


1,000


0.2
%
Total loans delinquent 30 days to 59 days

1,079


$
16,916


0.2
%

1,489


$
75,482


0.9
%

2,024


$
53,010


0.7
%

1,528


$
22,221


0.3
%

1,485


$
24,408


0.3
%































Loans delinquent 60 days to 89 days:






























Residential mortgage loans

78


$
6,264


0.2
%

29


$
2,602


0.1
%

71


$
6,425


0.2
%

61


$
4,704


0.2
%

62


$
5,847


0.2
%
Home equity loans

59


2,319


0.2
%

53


2,544


0.2
%

63


2,065


0.2
%

69


2,536


0.2
%

73


2,495


0.2
%
Consumer finance loans

25


44


3.0
%

28


47


2.1
%

86


172


4.5
%

112


234


4.0
%

127


277


3.2
%
Consumer loans

313


2,853


0.3
%

271


2,130


0.2
%

389


3,042


0.4
%

352


3,251


0.4
%

350


2,654


0.4
%
Commercial real estate loans

16


2,617


0.1
%

17


4,064


0.1
%

24


5,387


0.2
%

30


6,678


0.3
%

28


3,689


0.1
%
Commercial loans

16


1,725


0.2
%

7


738


0.1
%

8


560


0.1
%

21


1,104


0.2
%

15


926


0.2
%
Total loans delinquent 60 days to 89 days

507


$
15,822


0.2
%

405


$
12,125


0.2
%

641


$
17,651


0.2
%

645


$
18,507


0.2
%

655


$
15,888


0.2
%































Loans delinquent 90 days or more: **






























Residential mortgage loans

129


$
10,800


0.4
%

113


$
10,801


0.4
%

145


$
12,985


0.5
%

143


$
13,483


0.5
%

140


$
12,293


0.4
%
Home equity loans

136


5,591


0.4
%

155


5,542


0.4
%

161


6,037


0.5
%

150


5,838


0.5
%

154


6,768


0.5
%
Consumer finance loans

5


10


0.7
%

—


—


—
%

6


21


0.6
%

16


39


0.7
%

8


15


0.2
%
Consumer loans

705


2,898


0.3
%

764


3,221


0.3
%

432


3,233


0.4
%

766


3,541


0.5
%

302


2,633


0.4
%
Commercial real estate loans

118


21,123


0.7
%

125


24,589


0.9
%

128


25,587


1.0
%

126


27,228


1.1
%

113


15,772


0.6
%
Commercial loans

25


2,920


0.4
%

23


2,027


0.3
%

29


3,010


0.5
%

29


2,714


0.5
%

31


2,925


0.5
%
Total loans delinquent 90 days or more

1,118


$
43,342


0.5
%

1,180


$
46,180


0.6
%

901


$
50,873


0.6
%

1,230


$
52,843


0.7
%

748


$
40,406


0.5
%































Total loans delinquent

2,704


$
76,080


0.9
%

3,074


$
133,787


1.6
%

3,566


$
121,534


1.5
%

3,403


$
93,571


1.2
%

2,888


$
80,702


1.0
%
* Represents delinquency, in dollars, divided by the respective total amount of that type of loan outstanding.
** Includes purchased credit impaired loans of $190,000, $87,000, $145,000, $440,000, and $672,000 at June 30, 2019, March 31, 2019, December 31, 2018, September 30, 2018 and June 30, 2018, respectively.

Northwest Bancshares, Inc. and Subsidiaries
Allowance for loan losses (Unaudited)
(Dollars in thousands)


Quarter ended

June 30, 2019

March 31, 2019

December 31, 2018

September 30, 2018

June 30, 2018
Beginning balance
$
55,721


55,214


55,975


57,332


55,211

Provision
4,667


6,467


3,792


6,982


5,349

Charge-offs residential mortgage
(397)


(357)


(375)


(214)


(389)

Charge-offs home equity
(389)


(153)


(341)


(426)


(406)

Charge-offs consumer finance
(58)


(179)


(329)


(445)


(486)

Charge-offs consumer
(2,508)


(2,842)


(3,751)


(3,470)


(2,682)

Charge-offs commercial real estate
(4,367)


(604)


(1,538)


(4,859)


(439)

Charge-offs commercial
(1,087)


(3,270)


(824)


(985)


(491)

Recoveries
1,525


1,445


2,605


2,060


1,665

Ending balance
$
53,107


55,721


55,214


55,975


57,332











Net charge-offs to average loans, annualized
0.34
%

0.29
%

0.23
%

0.42
%

0.16
%


Six months ended June 30,

2019

2018
Beginning balance
$
55,214


56,795

Provision
11,134


9,558

Charge-offs residential mortgage
(754)


(590)

Charge-offs home equity
(542)


(1,017)

Charge-offs consumer finance
(237)


(2,039)

Charge-offs consumer
(5,350)


(5,931)

Charge-offs commercial real estate
(4,971)


(990)

Charge-offs commercial
(4,357)


(1,516)

Recoveries
2,970


3,062

Ending balance
$
53,107


57,332





Net charge-offs to average loans, annualized
0.32
%

0.23
%







June 30, 2019

Originated loans

Acquired loans

Total loans

Balance

Reserve

Balance

Reserve

Balance

Reserve
Residential mortgage loans
$
2,812,937


3,909


86,227


104


2,899,164


4,013

Home equity loans
1,041,302


2,990


273,645


344


1,314,947


3,334

Legacy consumer finance loans
1,449


266


—


—


1,449


266

Consumer loans
964,149


10,500


45,826


511


1,009,975


11,011

Personal Banking Loans
4,819,837


17,665


405,698


959


5,225,535


18,624













Commercial real estate loans
2,336,416


20,962


471,737


2,571


2,808,153


23,533

Commercial loans
639,886


9,802


63,308


1,148


703,194


10,950

Commercial Banking Loans
2,976,302


30,764


535,045


3,719


3,511,347


34,483













Total Loans
$
7,796,139


48,429


940,743


4,678


8,736,882


53,107

Northwest Bancshares, Inc. and Subsidiaries
Average balance sheet (Unaudited)
(Dollars in thousands)
The following table sets forth certain information relating to the Company's average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented. Average balances are calculated using daily averages.


Quarter ended


June 30, 2019

March 31, 2019

December 31, 2018

September 30, 2018

June 30, 2018


Average balance

Interest

Avg. yield/ cost (h)

Average balance

Interest

Avg. yield/ cost (h)

Average balance

Interest

Avg. yield/ cost (h)

Average balance

Interest

Avg. yield/ cost (h)

Average balance

Interest

Avg. yield/ cost (h)

Assets:






























Interest-earning assets:






























Residential mortgage loans
$
2,857,425


29,300


4.10
%

$
2,842,556


29,282


4.12
%

$
2,837,220


28,794


4.06
%

$
2,804,027


28,974


4.13
%

$
2,761,528


27,893


4.04
%

Home equity loans
1,319,056


17,717


5.39
%

1,265,974


16,048


5.14
%

1,264,169


15,788


4.95
%

1,272,847


15,248


4.75
%

1,281,001


15,384


4.82
%

Consumer loans
943,254


10,649


4.53
%

869,536


10,052


4.69
%

791,685


9,365


4.69
%

704,203


8,337


4.70
%

655,541


7,949


4.86
%

Consumer finance loans
1,826


87


19.06
%

2,999


139


18.54
%

4,751


220


18.52
%

7,176


343


19.12
%

10,428


516


19.79
%

Commercial real estate loans
2,801,953


35,537


5.02
%

2,560,408


30,767


4.81
%

2,492,331


29,991


4.71
%

2,540,270


29,974


4.62
%

2,518,170


29,034


4.56
%

Commercial loans
670,613


7,966


4.70
%

615,090


8,967


5.83
%

590,195


8,666


5.75
%

598,842


8,203


5.36
%

624,087


7,703


4.88
%

Total loans receivable (a) (b) (d)
8,594,127


101,256


4.73
%

8,156,563


95,255


4.74
%

7,980,351


92,824


4.61
%

7,927,365


91,079


4.56
%

7,850,755


88,479


4.52
%

Mortgage-backed securities (c)
644,887


4,280


2.65
%

604,463


3,965


2.62
%

619,105


3,942


2.55
%

598,596


3,572


2.39
%

569,893


3,255


2.28
%

Investment securities (c) (d)
226,325


1,198


2.12
%

227,312


1,167


2.05
%

227,813


1,140


2.00
%

244,346


1,074


1.76
%

235,784


1,044


1.77
%

FHLB stock, at cost
16,117


316


7.86
%

16,098


171


4.31
%

14,372


151


4.17
%

9,819


119


4.81
%

7,819


85


4.36
%

Other interest-earning deposits
20,983


159


3.00
%

14,136


100


2.83
%

10,454


68


2.55
%

26,057


162


2.43
%

103,739


469


1.79
%

Total interest-earning assets
9,502,439


107,209


4.53
%

9,018,572


100,658


4.53
%

8,852,095


98,125


4.40
%

8,806,183


96,006


4.33
%

8,767,990


93,332


4.27
%

Noninterest earning assets (e)
910,225






868,843






743,262






746,077






732,065






Total assets
$
10,412,664






$
9,887,415






$
9,595,357






$
9,552,260






$
9,500,055





































Liabilities and shareholders' equity:






























Interest-bearing liabilities:






























Savings deposits
$
1,696,715


777


0.18
%

$
1,650,947


758


0.19
%

$
1,637,400


758


0.18
%

$
1,672,990


785


0.19
%

$
1,699,168


773


0.18
%

Interest-bearing demand deposits
1,674,779


1,569


0.38
%

1,452,963


1,162


0.32
%

1,442,587


1,066


0.29
%

1,460,556


1,064


0.29
%

1,468,228


875


0.24
%

Money market deposit accounts
1,776,558


3,433


0.78
%

1,693,626


2,579


0.62
%

1,678,664


1,910


0.45
%

1,685,368


1,565


0.37
%

1,691,652


1,211


0.29
%

Time deposits
1,561,034


6,705


1.72
%

1,432,679


5,646


1.60
%

1,401,352


5,251


1.49
%

1,403,967


4,819


1.36
%

1,440,457


4,450


1.24
%

Borrowed funds (f)
147,119


413


1.13
%

257,550


1,006


1.58
%

216,975


782


1.43
%

129,523


239


0.73
%

104,415


50


0.19
%

Junior subordinated debentures
121,757


1,307


4.25
%

114,727


1,156


4.03
%

111,213


1,170


4.12
%

111,213


1,316


4.63
%

111,213


1,290


4.59
%

Total interest-bearing liabilities
6,977,962


14,204


0.82
%

6,602,492


12,307


0.76
%

6,488,191


10,937


0.67
%

6,463,617


9,788


0.60
%

6,515,133


8,649


0.53
%

Noninterest-bearing demand deposits (g)
1,888,697






1,785,158






1,750,253






1,724,427






1,676,344






Noninterest bearing liabilities
225,623






223,480






112,349






132,062






92,252






Total liabilities
9,092,282






8,611,130






8,350,793






8,320,106






8,283,729






Shareholders' equity
1,320,382






1,276,285






1,244,564






1,232,154






1,216,326






Total liabilities and shareholders' equity
$
10,412,664






$
9,887,415






$
9,595,357






$
9,552,260






$
9,500,055






Net interest income/Interest rate spread


93,005


3.71
%



88,351


3.77
%



87,188


3.73
%



86,218


3.73
%



84,683


3.74
%

Net interest-earning assets/Net interest margin
$
2,524,477




3.91
%

$
2,416,080




3.97
%

$
2,363,904




3.94
%

$
2,342,566




3.92
%

$
2,252,857




3.86
%

Ratio of interest-earning assets to interest-bearing liabilities
1.36X






1.37X






1.36X






1.36X






1.35X







(a)
Average gross loans receivable includes loans held as available-for-sale and loans placed on nonaccrual status.
(b)
Interest income includes accretion/amortization of deferred loan fees/expenses, which was not material.
(c)
Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
(d)
Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent ("FTE") basis.
(e)
Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.
(f)
Average balances include FHLB borrowings and collateralized borrowings.
(g)
Average cost of deposits were 0.58%, 0.51%, 0.45%, 0.41% and 0.37%, respectively.
(h)
Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.71%, 4.72%, 4.60%, 4.54% and 4.50%, respectively, Investment securities - 2.01%, 1.97%, 1.92%, 1.67% and 1.63%, respectively, Interest-earning assets - 4.51%, 4.51%, 4.38%, 4.31% and 4.25%, respectively. GAAP basis net interest rate spreads were 3.69%, 3.75%, 3.71%, 3.71% and 3.72%, respectively, and GAAP basis net interest margins were 3.90%, 3.96%, 3.92%, 3.90% and 3.84%, respectively.

Northwest Bancshares, Inc. and Subsidiaries
Average balance sheet (Unaudited)
(Dollars in thousands)
The following table sets forth certain information relating to the Company's average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented. Average balances are calculated using daily averages.



Six months ended June 30,


2019

2018


Average balance

Interest

Avg. yield/ cost (h)

Average balance

Interest

Avg. yield/ cost (h)

Assets:












Interest-earning assets:












Residential mortgage loans
$
2,850,031


58,582


4.11
%

$
2,758,849


55,612


4.03
%

Home equity loans
1,292,662


33,765


5.27
%

1,289,842


30,369


4.75
%

Consumer loans
906,598


20,701


4.60
%

646,666


15,451


4.82
%

Consumer finance loans
2,409


226


18.76
%

12,828


1,284


20.02
%

Commercial real estate loans
2,681,848


66,303


4.92
%

2,494,925


56,214


4.48
%

Commercial loans
643,005


16,933


5.24
%

609,752


15,070


4.92
%

Loans receivable (a) (b) (d)
8,376,553


196,510


4.73
%

7,812,862


174,000


4.49
%

Mortgage-backed securities (c)
624,786


8,245


2.64
%

564,007


6,268


2.22
%

Investment securities (c) (d)
226,815


2,364


2.08
%

245,979


2,216


1.80
%

FHLB stock
16,096


487


6.10
%

8,582


182


4.28
%

Other interest-earning deposits
16,381


259


3.14
%

68,970


604


1.74
%

Total interest-earning assets
9,260,631


207,865


4.53
%

8,700,400


183,270


4.25
%

Noninterest earning assets (e)
889,409






755,764






Total assets
$
10,150,040






$
9,456,164



















Liabilities and shareholders' equity:












Interest-bearing liabilities:












Savings deposits
$
1,673,957


1,535


0.18
%

$
1,684,909


1,522


0.18
%

Interest-bearing demand deposits
1,588,989


2,732


0.35
%

1,443,981


1,477


0.21
%

Money market deposit accounts
1,735,185


6,011


0.70
%

1,699,222


2,264


0.27
%

Time deposits
1,497,208


12,351


1.66
%

1,427,921


8,504


1.20
%

Borrowed funds (f)
202,029


1,419


1.42
%

118,743


173


0.29
%

Junior subordinated debentures
118,242


2,463


4.14
%

111,213


2,475


4.43
%

Total interest-bearing liabilities
6,815,610


26,511


0.78
%

6,485,989


16,415


0.51
%

Noninterest-bearing demand deposits (g)
1,699,496






1,641,493






Noninterest bearing liabilities
336,600






117,530






Total liabilities
8,851,706






8,245,012






Shareholders' equity
1,298,334






1,211,152






Total liabilities and shareholders' equity
$
10,150,040






$
9,456,164






Net interest income/Interest rate spread


181,354


3.75
%



166,855


3.74
%

Net interest-earning assets/Net interest margin
$
2,445,021




3.92
%

$
2,214,411




3.84
%

Ratio of interest-earning assets to interest-bearing liabilities
1.36X






1.34X







(a)
Average gross loans receivable includes loans held as available-for-sale and loans placed on nonaccrual status.
(b)
Interest income includes accretion/amortization of deferred loan fees/expenses, which was not material.
(c)
Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
(d)
Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent basis.
(e)
Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.
(f)
Average balances include FHLB borrowings and collateralized borrowings.
(g)
Average cost of deposits were 0.56% and 0.35%, respectively.
(h)
Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.71% and 4.47%, respectively, Investment securities - 1.99% and 1.65%, respectively, Interest-earning assets - 4.51% and 4.23%, respectively. GAAP basis net interest rate spreads were 3.73% and 3.72%, respectively, and GAAP basis net interest margins were 3.90% and 3.82%, respectively.

SOURCE Northwest Bancshares, Inc.

Company Name:	Northwest Bancshares Inc.
Stock Symbol:	NWBI
Market:	NASDAQ
Website:	northwest.bank

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