Northwest Bancshares, Inc. Announces Fourth Quarter 2019 Earnings and Quarterly Dividend Increase

News provided by

Jan 27, 2020, 09:00 ET

WARREN, Pa., Jan. 27, 2020 /PRNewswire/ -- Northwest Bancshares, Inc., (the "Company"), (NasdaqGS: NWBI) announced net income for the quarter ended December 31, 2019 of $25.6 million, or $0.24 per diluted share. This represents a decrease of $876,000, or 3.3%, compared to the same quarter last year when net income was $26.5 million or $0.26 per diluted share. The annualized returns on average shareholders' equity and average assets for the quarter ended December 31, 2019 were 7.52% and 0.97% compared to 8.44% and 1.09% for the same quarter last year.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.19 per share payable on February 14, 2020 to shareholders of record as of February 6, 2020. This is the 101st consecutive quarter in which the Company has paid a cash dividend and represents a 5.6% increase over the prior year. Based on the market value of the Company's stock as of December 31, 2019, this represents an annualized dividend yield of approximately 4.57%.

In making this announcement, Ronald J. Seiffert, Chairman, President and CEO, noted, "While the fourth quarter was negatively impacted by a loan loss provision for a recently classified C&I loan, costs associated with litigation settlements as well as a continued decline in net interest margin as expected, overall we were very pleased with our annual 2019 results. Annual net income of $110.4 million, or $1.04 per diluted share, exceeded the prior year net income of $105.5 million, or $1.02 per diluted share, by $4.9 million or almost 5.0%. For the year, loans grew $757.2 million, or 9.4%, with approximately half of this growth coming from the Union Community Bank acquisition and the other half coming from internal growth. In addition, we were able to fund this growth almost entirely with internal deposit growth. Noninterest income experienced exceptional growth for the year of $7.7 million, or 8.4%, across almost all categories. Our mortgage banking operation is beginning to contribute in a meaningful way, brokerage investment revenue increased by over 7% and recent changes in the fourth quarter in our fees and fee income philosophy will benefit us going into 2020. Finally, we look forward to welcoming the MutualBank employees and customers in April along with their $2.1 billion balance sheet and expected earnings accretion."

Net interest income increased by $2.1 million, or 2.4%, to $88.9 million for the quarter ended December 31, 2019, from $86.8 million for the quarter ended December 31, 2018, primarily due to a $5.4 million, or 5.8%, increase in interest income on loans receivable. This increase was primarily due to an increase of $734.0 million, or 9.2%, in the average balance of loans. Partially offsetting this improvement was an increase in interest expense on deposits of $3.9 million, or 43.5%, due to elevated market interest rates when compared to the prior year, resulting in an increase in the cost of our interest-bearing liabilities to 0.80% for the quarter ended December 31, 2019 from 0.67% for the quarter ended December 31, 2018. The net impact of these changes caused the Company's net interest margin to decrease to 3.73% for the quarter ended December 31, 2019 from 3.94% for the same quarter last year.

The provision for loan losses increased by $4.4 million, or 116.9%, to $8.2 million for the quarter ended December 31, 2019, from $3.8 million for the quarter ended December 31, 2018. The provision increased in the current quarter due to the downgrade of an $11.5 million commercial loan resulting in a loan loss reserve on this relationship of approximately $7.4 million.

Noninterest income increased by $5.0 million, or 21.4%, to $28.2 million for the quarter ended December 31, 2019, from $23.2 million for the quarter ended December 31, 2018. This increase was due to a $1.3 million, or 10.1%, increase in service charges and fees as a result of additional fees collected on deposit accounts due to a recent change in fee structure, a $1.3 million increase in mortgage banking income as a result of expanding our secondary market sales capabilities and a $1.0 million, or 34.6%, increase in other operating income from increases in interest rate swap fee income. In addition, we recognized a gain of $908,000 in the current quarter on the sale of approximately $52.2 million of one-to-four family mortgage loans from our portfolio. Consistent with our strategy in the third quarter of 2019, we chose to sell these loans as they were identified as most likely to refinance due to declining market interest rates and we redeployed the proceeds into shorter duration consumer and commercial loans at an equivalent yield.

Noninterest expense increased by $4.3 million, or 5.9%, to $76.6 million for the quarter ended December 31, 2019, from $72.3 million for the quarter ended December 31, 2018. This increase resulted from a $2.8 million, or 7.0%, increase in compensation and employee benefits due to both internal growth in compensation and staff as well as the addition of Union Community Bank ("UCB") employees. Also contributing to this increase was an increase in other expenses of $1.2 million, or 31.5%, primarily related to an increase in litigation accruals and an increase in acquisition expense of $679,000 due to initial expenses incurred as a result of the recently announced acquisition of MutualFirst Financial, Inc. Partially offsetting this increase was a decrease in marketing expenses of $1.3 million due primarily to our debit card reward program being discontinued and a decrease in federal deposit premiums of $637,000 due to an assessment credit received during the quarter as a result of the deposit insurance fund becoming fully funded.

Net income for the year ended December 31, 2019 was $110.4 million, or $1.04 per diluted share. This represents an increase of $4.9 million, or 4.7%, compared to the year ended December 31, 2018, when net income was $105.5 million, or $1.02 per diluted share. The annualized returns on average shareholders' equity and average assets for the year ended December 31, 2019 were 8.36% and 1.07% compared to 8.61% and 1.11% for the prior year. This increase in net income was the result of an increase in net interest income after provision of $19.5 million, or 6.1%, and an increase in noninterest income of $7.7 million, or 8.4%. These increases were partially offset by an increase in noninterest expense of $20.0 million, or 7.2%. Contributing to the additional expense is the added cost of UCB operations, including additional compensation 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 UCB conversion in March 2019 and the initial costs incurred for the pending MutualFirst Financial, Inc. acquisition scheduled to close in the second quarter of 2020.

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 nine 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)

	December 31, 2019			September 30, 2019		December 31, 2018
Assets
Cash and cash equivalents	$	60,846		107,602		68,789
Marketable securities available-for-sale (amortized cost of $815,495, $801,465 and $811,015, respectively)	819,901			807,823		801,450
Marketable securities held-to-maturity (fair value of $18,223, $19,237 and $22,446, respectively)	18,036			18,958		22,765
Total cash and cash equivalents and marketable securities	898,783			934,383		893,004

Residential mortgage loans held-for-sale	7,709			8,859		—
Residential mortgage loans	2,860,418			2,887,274		2,864,470
Home equity loans	1,342,918			1,328,173		1,258,422
Consumer loans	1,125,132			1,094,293		859,713
Commercial real estate loans	2,754,390			2,812,839		2,471,821
Commercial loans	718,107			720,579		597,013
Total loans receivable	8,808,674			8,852,017		8,051,439
Allowance for loan losses	(57,941)			(52,859)		(55,214)
Loans receivable, net	8,750,733			8,799,158		7,996,225

Federal Home Loan Bank stock, at cost	14,740			21,401		15,635
Accrued interest receivable	25,755			27,069		24,490
Real estate owned, net	950			1,237		2,498
Premises and equipment, net	147,409			148,796		143,390
Bank-owned life insurance	189,091			187,971		171,079
Goodwill	346,103			344,720		307,420
Other intangible assets	23,076			22,410		19,821
Other assets	97,268			93,329		34,211
Total assets	$	10,493,908		10,580,474		9,607,773
Liabilities and shareholders' equity
Liabilities
Noninterest-bearing demand deposits	$	1,609,653		1,905,650		1,736,156
Interest-bearing demand deposits	1,944,108			1,678,644		1,455,460
Money market deposit accounts	1,863,998			1,828,001		1,661,623
Savings deposits	1,604,838			1,635,754		1,636,099
Time deposits	1,569,410			1,633,451		1,404,841
Total deposits	8,592,007			8,681,500		7,894,179

Borrowed funds	246,336			255,257		234,389
Junior subordinated debentures	121,800			121,787		111,213
Advances by borrowers for taxes and insurance	44,556			24,331		43,298
Accrued interest payable	1,142			1,314		744
Other liabilities	134,782			144,515		66,312
Total liabilities	9,140,623			9,228,704		8,350,135
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, 106,859,088, 106,658,067, and 103,354,030 shares issued and outstanding, respectively	1,069			1,067		1,034
Paid-in capital	805,750			801,382		745,926
Retained earnings	583,407			577,018		550,374
Accumulated other comprehensive loss	(36,941)			(27,697)		(39,696)
Total shareholders' equity	1,353,285			1,351,770		1,257,638
Total liabilities and shareholders' equity	$	10,493,908		10,580,474		9,607,773

Equity to assets	12.90		%	12.78	%	13.09	%
Tangible common equity to assets	9.72		%	9.64	%	10.03	%
Book value per share	$	12.66		12.67		12.17
Tangible book value per share	$	9.21		9.23		9.00
Closing market price per share	$	16.63		16.39		16.94
Full time equivalent employees	2,209			2,218		2,128
Number of banking offices	181			182		172

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

	Quarter ended
	December 31, 2019			September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018
	December 31, 2019			September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018
Interest income:
Loans receivable	$	97,866		101,091		100,917		94,935		92,512
Mortgage-backed securities	4,237			4,188		4,280		3,965		3,942
Taxable investment securities	683			884		898		936		924
Tax-free investment securities	201			224		237		182		170
FHLB dividends	262			307		316		171		151
Interest-earning deposits	169			172		159		100		69
Total interest income	103,418			106,866		106,807		100,289		97,768
Interest expense:
Deposits	12,893			13,694		12,484		10,145		8,985
Borrowed funds	1,580			2,236		1,720		2,162		1,952
Total interest expense	14,473			15,930		14,204		12,307		10,937
Net interest income	88,945			90,936		92,603		87,982		86,831
Provision for loan losses	8,223			3,302		4,667		6,467		3,792
Net interest income after provision for loan losses	80,722			87,634		87,936		81,515		83,039
Noninterest income:
Gain/(loss) on sale of investments	27			—		29		(6)		4
Gain on sale of loans	908			826		—		—		—
Service charges and fees	14,125			13,558		13,339		12,043		12,827
Trust and other financial services income	4,517			4,609		4,444		4,195		4,246
Insurance commission income	1,858			1,887		2,145		2,178		1,906
Gain/(loss) on real estate owned, net	86			(227)		91		(3)		(14)
Income from bank owned life insurance	1,121			1,095		1,197		1,005		1,038
Mortgage banking income	1,494			1,921		188		216		213
Other operating income	4,077			2,500		1,930		2,034		3,028
Total noninterest income	28,213			26,169		23,363		21,662		23,248
Noninterest expense:
Compensation and employee benefits	42,074			40,816		42,008		38,188		39,319
Premises and occupancy costs	7,051			7,061		7,387		7,218		6,567
Office operations	4,097			3,197		3,708		3,131		3,455
Collections expense	566			747		939		308		780
Processing expenses	10,263			11,122		10,634		10,434		10,160
Marketing expenses	1,010			1,373		2,729		1,886		2,331
Federal deposit insurance premiums	—			(702)		681		706		637
Professional services	3,533			3,032		3,198		2,524		3,134
Amortization of intangible assets	1,634			1,702		1,760		1,447		1,346
Real estate owned expense	72			119		128		159		187
Restructuring/acquisition expense	1,114			23		1,105		1,926		435
Other expenses	5,157			2,106		3,235		3,497		3,922
Total noninterest expense	76,571			70,596		77,512		71,424		72,273
Income before income taxes	32,364			43,207		33,787		31,753		34,014
Income tax expense	6,773			9,793		7,404		6,709		7,547
Net income	$	25,591		33,414		26,383		25,044		26,467

Basic earnings per share	$	0.24		0.32		0.25		0.24		0.26
Diluted earnings per share	$	0.24		0.31		0.25		0.24		0.26

Weighted average common shares outstanding - basic	105,627,194			105,517,707		105,233,635		103,101,789		102,479,086
Weighted average common shares outstanding - diluted	106,306,615			106,270,544		106,258,215		104,496,592		103,749,383

Annualized return on average equity	7.52		%	9.90	%	8.01	%	7.96	%	8.44	%
Annualized return on average assets	0.97		%	1.25	%	1.02	%	1.03	%	1.09	%
Annualized return on tangible common equity**	10.32		%	13.46	%	10.97	%	10.74	%	11.29	%

Efficiency ratio *	63.01		%	58.81	%	64.37	%	62.07	%	64.04	%
Annualized noninterest expense to average assets *	2.80		%	2.59	%	2.88	%	2.79	%	2.91	%

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

Excludes goodwill and other intangible assets (non-GAAP).

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

	Year ended December 31,
	2019			2018
Interest income:
Loans receivable	$	394,809		356,571
Mortgage-backed securities	16,670			13,781
Taxable investment securities	3,401			3,064
Tax-free investment securities	844			1,078
FHLB dividends	1,056			452
Interest-earning deposits	600			835
Total interest income	417,380			375,781
Interest expense:
Deposits	49,216			30,985
Borrowed funds	7,698			6,155
Total interest expense	56,914			37,140
Net interest income	360,466			338,641
Provision for loan losses	22,659			20,332
Net interest income after provision for loan losses	337,807			318,309
Noninterest income:
Gain on sale of investments	50			157
Gain on sale of loans	1,734			—
Service charges and fees	53,065			50,792
Trust and other financial services income	17,765			16,581
Insurance commission income	8,068			8,791
Loss on real estate owned, net	(53)			(631)
Income from bank owned life insurance	4,418			5,821
Mortgage banking income	3,819			596
Other operating income	10,541			9,595
Total noninterest income	99,407			91,702
Noninterest expense:
Compensation and employee benefits	163,086			152,395
Premises and occupancy costs	28,717			27,519
Office operations	14,133			14,139
Collections expense	2,560			2,209
Processing expenses	42,453			39,046
Marketing expenses	6,998			8,434
Federal deposit insurance premiums	685			2,746
Professional services	12,287			10,598
Amortization of intangible assets	6,543			5,848
Real estate owned expense	478			817
Restructuring/acquisition expense	4,168			1,014
Other expenses	13,995			11,333
Total noninterest expense	296,103			276,098
Income before income taxes	141,111			133,913
Income tax expense	30,679			28,422
Net income	$	110,432		105,491

Basic earnings per share	$	1.05		1.03
Diluted earnings per share	$	1.04		1.02

Weighted average common shares outstanding - basic	104,878,774			102,073,888
Weighted average common shares outstanding - diluted	105,839,149			103,565,901

Return on average equity	8.36		%	8.61	%
Return on average assets	1.07		%	1.11	%
Return on tangible common equity**	11.22		%	11.34	%

Efficiency ratio *	62.06		%	62.56	%
Annualized noninterest expense to average assets *	2.76		%	2.83	%


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

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

	December 31, 2019			September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018
Nonaccrual loans current:
Residential mortgage loans	$	72		676		432		124		264
Home equity loans	197			607		475		643		437
Consumer loans	78			68		94		76		196
Commercial real estate loans	9,241			7,674		12,605		10,520		9,947
Commercial loans	3,424			3,777		5,666		4,277		4,736
Total nonaccrual loans current	$	13,012		12,802		19,272		15,640		15,580
Nonaccrual loans delinquent 30 days to 59 days:
Residential mortgage loans	$	674		40		13		824		1,358
Home equity loans	224			102		418		160		266
Consumer loans	121			246		172		154		294
Commercial real estate loans	196			925		469		2,642		219
Commercial loans	55			44		45		321		23
Total nonaccrual loans delinquent 30 days to 59 days	$	1,270		1,357		1,117		4,101		2,160
Nonaccrual loans delinquent 60 days to 89 days:
Residential mortgage loans	$	1,048		979		910		1,323		1,262
Home equity loans	689			436		717		954		376
Consumer loans	417			426		322		683		582
Commercial real estate loans	413			536		1,426		3,588		1,260
Commercial loans	341			—		780		397		332
Total nonaccrual loans delinquent 60 days to 89 days	$	2,908		2,377		4,155		6,945		3,812
Nonaccrual loans delinquent 90 days or more:
Residential mortgage loans	$	12,682		11,722		10,617		10,781		12,965
Home equity loans	5,635			5,966		5,591		5,542		5,996
Consumer finance loans	1			1		10		—		22
Consumer loans	3,609			3,399		2,892		3,215		3,228
Commercial real estate loans	25,014			22,292		21,123		24,528		25,509
Commercial loans	4,739			5,741		2,920		2,027		3,010
Total nonaccrual loans delinquent 90 days or more	$	51,680		49,121		43,153		46,093		50,730
Total nonaccrual loans	$	68,870		65,657		67,697		72,779		72,282
Total nonaccrual loans	$	68,870		65,657		67,697		72,779		72,282
Loans 90 days past maturity and still accruing	32			85		55		166		166
Nonperforming loans	68,902			65,742		67,752		72,945		72,448
Real estate owned, net	950			1,237		2,070		2,345		2,498
Nonperforming assets	$	69,852		66,979		69,822		75,290		74,946
Nonaccrual troubled debt restructuring *	$	9,043		9,138		13,375		14,951		15,306
Accruing troubled debt restructuring	22,956			21,162		17,894		17,861		18,302
Total troubled debt restructuring	$	31,999		30,300		31,269		32,812		33,608

Nonperforming loans to total loans	0.78		%	0.74	%	0.78	%	0.85	%	0.90	%
Nonperforming assets to total assets	0.67		%	0.63	%	0.66	%	0.73	%	0.78	%
Allowance for loan losses to total loans	0.66		%	0.60	%	0.61	%	0.65	%	0.69	%
Allowance for loan losses to nonperforming loans	84.09		%	80.40	%	78.38	%	76.39	%	76.21	%


*	Amounts included in nonperforming loans above.

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

At December 31, 2019	Pass		Special mention*	Substandard**	Doubtful	Loss	Loans receivable
Personal Banking:
Residential mortgage loans	$	2,858,582	—	9,545	—	—	2,868,127
Home equity loans	1,336,111		—	6,807	—	—	1,342,918
Consumer loans	1,120,732		—	4,400	—	—	1,125,132
Total Personal Banking	5,315,425		—	20,752	—	—	5,336,177
Commercial Banking:
Commercial real estate loans	2,538,816		80,570	135,004	—	—	2,754,390
Commercial loans	616,983		42,380	58,744	—	—	718,107
Total Commercial Banking	3,155,799		122,950	193,748	—	—	3,472,497
Total loans	$	8,471,224	122,950	214,500	—	—	8,808,674
At September 30, 2019
Personal Banking:
Residential mortgage loans	$	2,887,077	—	9,056	—	—	2,896,133
Home equity loans	1,320,930		—	7,243	—	—	1,328,173
Consumer loans	1,090,030		—	4,263	—	—	1,094,293
Total Personal Banking	5,298,037		—	20,562	—	—	5,318,599
Commercial Banking:
Commercial real estate loans	2,601,025		69,380	142,253	181	—	2,812,839
Commercial loans	639,998		37,666	42,800	115	—	720,579
Total Commercial Banking	3,241,023		107,046	185,053	296	—	3,533,418
Total loans	$	8,539,060	107,046	205,615	296	—	8,852,017
At June 30, 2019
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


*	Includes $10.3 million, $8.7 million, $8.1 million, $3.4 million, and $7.1 million of acquired loans at December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, respectively.
**	Includes $53.1 million, $46.6 million, $38.6 million, $37.8 million, and $39.3 million of acquired loans at December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, respectively.

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

	December 31, 2019			*		September 30, 2019			*		June 30, 2019			*		March 31, 2019			*		December 31, 2018			*
(Number of loans and dollar amount of loans)
Loans delinquent 30 days to 59 days:
Residential mortgage loans	292	$	23,296	0.8	%	21	$	1,236	—	%	30	$	1,629	0.1	%	311	$	28,009	1.0	%	333	$	27,777	1.0	%
Home equity loans	173	6,469		0.5	%	149	4,774		0.4	%	148	4,573		0.3	%	195	7,626		0.6	%	233	8,649		0.7	%
Consumer finance loans	32	63		12.4	%	43	98		11.2	%	75	130		9.0	%	128	295		12.9	%	327	661		17.3	%
Consumer loans	928	9,145		0.8	%	821	7,499		0.7	%	781	7,500		0.7	%	777	7,228		0.8	%	1,073	9,447		1.1	%
Commercial real estate loans	43	7,921		0.3	%	27	5,308		0.2	%	31	2,418		0.1	%	48	28,965		1.0	%	37	5,503		0.2	%
Commercial loans	32	1,187		0.2	%	20	362		0.1	%	14	666		0.1	%	30	3,359		0.5	%	21	973		0.2	%
Total loans delinquent 30 days to 59 days	1,500	$	48,081	0.5	%	1,081	$	19,277	0.2	%	1,079	$	16,916	0.2	%	1,489	$	75,482	0.9	%	2,024	$	53,010	0.7	%

Loans delinquent 60 days to 89 days:
Residential mortgage loans	67	$	5,693	0.2	%	95	$	5,320	0.2	%	78	$	6,264	0.2	%	29	$	2,602	0.1	%	71	$	6,425	0.2	%
Home equity loans	66	2,405		0.2	%	66	2,103		0.2	%	59	2,319		0.2	%	53	2,544		0.2	%	63	2,065		0.2	%
Consumer finance loans	16	35		6.8	%	21	43		4.9	%	25	44		3.0	%	28	47		2.1	%	86	172		4.5	%
Consumer loans	379	3,267		0.3	%	267	2,589		0.2	%	313	2,853		0.3	%	271	2,130		0.2	%	389	3,042		0.4	%
Commercial real estate loans	19	1,690		0.1	%	15	1,893		0.1	%	16	2,617		0.1	%	17	4,064		0.1	%	24	5,387		0.2	%
Commercial loans	17	6,403		0.9	%	10	589		0.1	%	16	1,725		0.2	%	7	738		0.1	%	8	560		0.1	%
Total loans delinquent 60 days to 89 days	564	$	19,493	0.2	%	474	$	12,537	0.1	%	507	$	15,822	0.2	%	405	$	12,125	0.2	%	641	$	17,651	0.2	%

Loans delinquent 90 days or more: **
Residential mortgage loans	141	$	12,775	0.4	%	138	$	11,816	0.4	%	129	$	10,800	0.4	%	113	$	10,801	0.4	%	145	$	12,985	0.5	%
Home equity loans	159	5,688		0.4	%	157	5,966		0.4	%	136	5,591		0.4	%	155	5,542		0.4	%	161	6,037		0.5	%
Consumer finance loans	8	1		0.2	%	9	1		0.1	%	5	10		0.7	%	—	—		—	%	6	21		0.6	%
Consumer loans	582	3,610		0.3	%	389	3,400		0.3	%	705	2,898		0.3	%	764	3,221		0.3	%	432	3,233		0.4	%
Commercial real estate loans	129	25,014		0.9	%	118	22,292		0.8	%	118	21,123		0.7	%	125	24,589		0.9	%	128	25,587		1.0	%
Commercial loans	37	4,739		0.7	%	40	5,741		0.8	%	25	2,920		0.4	%	23	2,027		0.3	%	29	3,010		0.5	%
Total loans delinquent 90 days or more	1,056	$	51,827	0.6	%	851	$	49,216	0.6	%	1,118	$	43,342	0.5	%	1,180	$	46,180	0.6	%	901	$	50,873	0.6	%

Total loans delinquent	3,120	$	119,401	1.4	%	2,406	$	81,030	0.9	%	2,704	$	76,080	0.9	%	3,074	$	133,787	1.6	%	3,566	$	121,534	1.5	%


*	Represents delinquency, in dollars, divided by the respective total amount of that type of loan outstanding.
**	Includes purchased credit impaired loans of $147,000, $95,000, $190,000, $87,000, and $145,000 at December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019, and December 31, 2018, respectively.

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

	Quarter ended
	December 31, 2019			September 30, 2019		June 30, 2019		March 31, 2019		December 31, 2018
Beginning balance	$	52,859		53,107		55,721		55,214		55,975
Provision	8,223			3,302		4,667		6,467		3,792
Charge-offs residential mortgage	(222)			(190)		(397)		(357)		(375)
Charge-offs home equity	(113)			(466)		(389)		(153)		(341)
Charge-offs consumer finance	(24)			(59)		(58)		(179)		(329)
Charge-offs consumer	(3,118)			(3,019)		(2,508)		(2,842)		(3,751)
Charge-offs commercial real estate	(107)			(389)		(4,367)		(604)		(1,538)
Charge-offs commercial	(1,143)			(1,151)		(1,087)		(3,270)		(824)
Recoveries	1,586			1,724		1,525		1,445		2,605
Ending balance	$	57,941		52,859		53,107		55,721		55,214
Net charge-offs to average loans, annualized	0.14		%	0.16	%	0.34	%	0.29	%	0.23	%

	Year ended December 31,
	2019			2018
Beginning balance	$	55,214		56,795
Provision	22,659			20,332
Charge-offs residential mortgage	(1,166)			(1,179)
Charge-offs home equity	(1,121)			(1,785)
Charge-offs consumer finance	(320)			(2,813)
Charge-offs consumer	(11,487)			(13,152)
Charge-offs commercial real estate	(5,467)			(7,387)
Charge-offs commercial	(6,651)			(3,325)
Recoveries	6,280			7,728
Ending balance	$	57,941		55,214
Net charge-offs to average loans	0.23		%	0.28	%

	December 31, 2019
	Originated loans			Acquired loans		Total loans
	Balance		Reserve	Balance	Reserve	Balance	Reserve
Residential mortgage loans	$	2,785,189	2,463	82,938	111	2,868,127	2,574
Home equity loans	1,099,514		2,830	243,404	359	1,342,918	3,189
Consumer finance loans	509		76	—	—	509	76
Consumer loans	1,088,638		11,979	35,985	538	1,124,623	12,517
Personal Banking Loans	4,973,850		17,348	362,327	1,008	5,336,177	18,356
Commercial real estate loans	2,349,048		17,292	405,342	4,296	2,754,390	21,588
Commercial loans	664,159		16,799	53,948	1,198	718,107	17,997
Commercial Banking Loans	3,013,207		34,091	459,290	5,494	3,472,497	39,585
Total Loans	$	7,987,057	51,439	821,617	6,502	8,808,674	57,941

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
	December 31, 2019					September 30, 2019					June 30, 2019					March 31, 2019					December 31, 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	$	2,847,932	28,011	3.93	%	$	2,894,716	28,991	4.01	%	$	2,857,425	29,300	4.10	%	$	2,842,556	29,282	4.12	%	$	2,837,220	28,794	4.06	%
Home equity loans	1,333,748		15,354	4.57	%	1,316,033		16,131	4.86	%	1,319,056		17,717	5.39	%	1,265,974		16,048	5.14	%	1,264,169		15,788	4.95	%
Consumer finance loans	668		32	19.16	%	1,128		55	19.50	%	1,826		87	19.06	%	2,999		139	18.54	%	4,751		220	18.52	%
Consumer loans	1,072,897		11,984	4.43	%	1,027,451		11,861	4.58	%	943,254		10,649	4.53	%	869,536		10,052	4.69	%	791,685		9,365	4.69	%
Commercial real estate loans	2,741,687		32,985	4.71	%	2,796,351		34,441	4.82	%	2,801,953		35,537	5.02	%	2,560,408		30,767	4.81	%	2,492,331		29,991	4.71	%
Commercial loans	717,438		9,841	5.37	%	710,847		9,949	5.48	%	670,613		7,966	4.70	%	615,090		8,967	5.83	%	590,195		8,666	5.75	%
Total loans receivable (a) (b) (d)	8,714,370		98,207	4.47	%	8,746,526		101,428	4.60	%	8,594,127		101,256	4.73	%	8,156,563		95,255	4.74	%	7,980,351		92,824	4.61	%
Mortgage-backed securities (c)	667,910		4,237	2.54	%	641,085		4,188	2.61	%	644,887		4,280	2.65	%	604,463		3,965	2.62	%	619,105		3,942	2.55	%
Investment securities (c) (d)	151,289		938	2.48	%	218,753		1,168	2.14	%	226,325		1,198	2.12	%	227,312		1,167	2.05	%	227,813		1,140	2.00	%
FHLB stock, at cost	13,400		262	7.76	%	16,302		307	7.47	%	16,117		316	7.86	%	16,098		171	4.31	%	14,372		151	4.17	%
Other interest-earning deposits	31,624		169	2.09	%	28,832		172	2.33	%	20,983		159	3.00	%	14,136		100	2.83	%	10,454		68	2.55	%
Total interest-earning assets	9,578,593		103,813	4.30	%	9,651,498		107,263	4.41	%	9,502,439		107,209	4.53	%	9,018,572		100,658	4.53	%	8,852,095		98,125	4.40	%
Noninterest earning assets (e)	869,117					916,781					910,225					868,843					743,262
Total assets	$	10,447,710				$	10,568,279				$	10,412,664				$	9,887,415				$	9,595,357
Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings deposits	$	1,615,996	792	0.19	%	$	1,658,670	788	0.19	%	$	1,696,715	777	0.18	%	$	1,650,947	758	0.19	%	$	1,637,400	758	0.18	%
Interest-bearing demand deposits	1,769,623		1,570	0.35	%	1,655,952		1,711	0.41	%	1,674,779		1,569	0.38	%	1,452,963		1,162	0.32	%	1,442,587		1,066	0.29	%
Money market deposit accounts	1,845,535		3,226	0.69	%	1,798,175		3,772	0.83	%	1,776,558		3,433	0.78	%	1,693,626		2,579	0.62	%	1,678,664		1,910	0.45	%
Time deposits	1,607,992		7,305	1.80	%	1,618,591		7,423	1.82	%	1,561,034		6,705	1.72	%	1,432,679		5,646	1.60	%	1,401,352		5,251	1.49	%
Borrowed funds (f)	177,670		444	0.99	%	243,960		1,002	1.63	%	147,119		413	1.13	%	257,550		1,006	1.58	%	216,975		782	1.43	%
Junior subordinated debentures	121,796		1,136	3.65	%	121,767		1,235	3.97	%	121,757		1,307	4.25	%	114,727		1,156	4.03	%	111,213		1,170	4.12	%
Total interest-bearing liabilities	7,138,612		14,473	0.80	%	7,097,115		15,931	0.89	%	6,977,962		14,204	0.82	%	6,602,492		12,307	0.76	%	6,488,191		10,937	0.67	%
Noninterest-bearing demand deposits (g)	1,800,861					1,915,392					1,888,697					1,785,158					1,750,253
Noninterest bearing liabilities	158,434					216,433					225,623					223,480					112,349
Total liabilities	9,097,907					9,228,940					9,092,282					8,611,130					8,350,793
Shareholders' equity	1,349,803					1,339,339					1,320,382					1,276,285					1,244,564
Total liabilities and shareholders' equity	$	10,447,710				$	10,568,279				$	10,412,664				$	9,887,415				$	9,595,357
Net interest income/Interest rate spread			89,340	3.50	%			91,332	3.52	%			93,005	3.71	%			88,351	3.77	%			87,188	3.73	%
Net interest-earning assets/Net interest margin	$	2,439,981		3.73	%	$	2,554,383		3.79	%	$	2,524,477		3.91	%	$	2,416,080		3.97	%	$	2,363,904		3.94	%
Ratio of interest-earning assets to interest-bearing liabilities	1.34X					1.36X					1.36X					1.37X					1.36X


(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 0.59%, 0.63%, 0.58%, 0.51%, and 0.45%, respectively.
(h)	Shown on a FTE basis. GAAP basis yields for the periods indicated were — Loans: 4.46%, 4.59%, 4.71%, 4.72%, and 4.60%, respectively, Investment securities: 2.34%, 2.03%, 2.01%, 1.97%, and 1.92%, respectively, Interest-earning assets: 4.28%, 4.39%, 4.51%, 4.51%, and 4.38%, respectively. GAAP basis net interest rate spreads were 3.48%, 3.50%, 3.69%, 3.75%, and 3.71%, respectively, and GAAP basis net interest margins were 3.71%, 3.77%, 3.90%, 3.96%, and 3.92%, 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.

	Year ended December 31,
	2019					2018
	Average balance		Interest	Avg. yield/ cost (h)		Average balance		Interest	Avg. yield/ cost (h)
Assets:
Interest-earning assets:
Residential mortgage loans	$	2,860,765	115,583	4.04	%	$	2,789,990	113,379	4.06	%
Home equity loans	1,308,908		64,222	4.91	%	1,279,087		61,405	4.80	%
Consumer finance loans	1,648		314	19.05	%	9,367		1,847	19.72	%
Consumer loans	978,975		44,545	4.55	%	697,722		33,153	4.75	%
Commercial real estate loans	2,725,792		132,915	4.81	%	2,505,701		116,180	4.57	%
Commercial loans	678,866		38,565	5.60	%	602,077		31,939	5.23	%
Loans receivable (a) (b) (d)	8,554,954		396,144	4.63	%	7,883,944		357,903	4.54	%
Mortgage-backed securities (c)	639,764		16,670	2.61	%	586,613		13,781	2.35	%
Investment securities (c) (d)	205,757		4,470	2.17	%	240,989		4,429	1.84	%
FHLB stock	14,477		1,056	7.29	%	10,354		452	4.37	%
Other interest-earning deposits	23,305		600	2.54	%	41,079		835	2.00	%
Total interest-earning assets	9,438,257		418,940	4.44	%	8,762,979		377,400	4.30	%
Noninterest earning assets (e)	890,760					752,007
Total assets	$	10,329,017				$	9,514,986
Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings deposits	$	1,655,495	3,115	0.19	%	$	1,669,930	3,064	0.18	%
Interest-bearing demand deposits	1,651,393		6,012	0.36	%	1,447,809		3,607	0.25	%
Money market deposit accounts	1,778,661		13,010	0.73	%	1,690,481		5,740	0.34	%
Time deposits	1,555,726		27,079	1.74	%	1,415,187		18,574	1.31	%
Borrowed funds (f)	206,458		2,865	1.39	%	146,220		1,194	0.82	%
Junior subordinated debentures	120,012		4,833	3.97	%	111,213		4,961	4.40	%
Total interest-bearing liabilities	6,967,745		56,914	0.82	%	6,480,840		37,140	0.57	%
Noninterest-bearing demand deposits (g)	1,835,622					1,710,841
Noninterest bearing liabilities	204,198					98,550
Total liabilities	9,007,565					8,290,231
Shareholders' equity	1,321,452					1,224,755
Total liabilities and shareholders' equity	$	10,329,017				$	9,514,986
Net interest income/Interest rate spread			362,026	3.62	%			340,260	3.73	%
Net interest-earning assets/Net interest margin	$	2,470,512		3.84	%	$	2,282,139		3.88	%
Ratio of interest-earning assets to interest-bearing liabilities	1.35X					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 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% and 0.39%, respectively.
(h)	Shown on a FTE basis. GAAP basis yields for the periods indicated were — Loans: 4.61% and 4.52%, respectively, Investment securities: 2.06% and 1.72%, respectively, Interest-earning assets: 4.42% and 4.29%, respectively. GAAP basis net interest rate spreads were 3.61% and 3.72%, respectively, and GAAP basis net interest margins were 3.82% and 3.86%, respectively.