Northwest Bancshares, Inc. Announces Third Quarter 2012 Earnings and Dividend Declaration

Oct 22, 2012, 10:37 ET from Northwest Bancshares, Inc.

WARREN, Pa., Oct. 22, 2012 /PRNewswire/ -- Northwest Bancshares, Inc. (NasdaqGS: NWBI) announced net income for the quarter ended September 30, 2012 of $15.7 million, or $0.17 per diluted share.  This represents a decrease of $1.0 million, or 6.1%, over the same quarter last year when net income was $16.7 million, or $0.17 per diluted share, and a decrease of $668,000, or 4.1%, over the quarter ended June 30, 2012 when net income was $16.4 million, or $0.17 per diluted share.  The annualized returns on average shareholders' equity and average assets for the current quarter were 5.37% and 0.78% compared to 5.62% and 0.83% for the same quarter last year and 5.63% and 0.82% for the quarter ended June 30, 2012. 

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.12 per share payable on November 15, 2012, to shareholders of record as of November 1, 2012.  This represents the 72nd consecutive quarter in which the Company has paid a cash dividend. 

In making this announcement, William J. Wagner, President and CEO, noted, "We are pleased to have maintained a stable net interest margin of approximately 3.65% over the past year despite ongoing economic uncertainty and the challenges of the prolonged low interest rate environment. Largely contributing to this success was a $177 million, or 3.2%, increase in our loan portfolio over the past nine months.  Asset quality continues to improve from the beginning of the year with loans 90 or more days delinquent at the lowest level since the second quarter of 2008 and net charge-offs for the quarter down more than 40% from the same quarter last year.  Finally, we continued to manage our excess capital position during the quarter by repurchasing 183,780 of our common shares at an average price of $12.00 per share.

Net interest income decreased by $1.0 million, or 1.5%, to $66.0 million for the quarter ended September 30, 2012, from $67.0 million for the quarter ended September 30, 2011, which was primarily attributable to a decrease in interest income from loans of $3.5 million, or 4.3%, and from investment securities of $2.3 million, or 25.7%.  Partially offsetting this decrease was a $4.8 million, or 31.8%, decrease in interest expense on deposit accounts. These changes from the previous year were primarily due to decreases in market interest rates and continued competitive pricing pressure.

The provision for loan losses decreased by $1.2 million, or 14.2%, to $6.9 million for the quarter ended September 30, 2012, from $8.1 million for the quarter ended September 30, 2011.  As of September 30, 2012, the allowance for loan losses was $71.2 million, or 1.24% of total loans, compared to $73.2 million, or 1.33% of total loans, as of September 30, 2011.  The decrease in the provision for loan losses is partially attributable to a decrease in loans that are 90 days or more delinquent to $80.4 million as of September 30, 2012, from $112.2 million as of September 30, 2011 and $84.7 million as of June 30, 2012.  Additionally, net charge-offs for the quarter ended September 30, 2012, decreased by $4.5 million, or 43.2%, to $5.8 million compared to $10.3 million in the same quarter last year.

Noninterest income increased by $425,000, or 2.9%, to $14.9 million for the quarter ended September 30, 2012, from $14.5 million for the quarter ended September 30, 2011, due primarily to an increase in mortgage banking income of $1.1 million, as an increased number of residential mortgage loans were sold at favorable pricing levels.

Noninterest expense increased by $1.9 million, or 3.8%, to $51.8 million for the quarter ended September 30, 2012, from $49.9 million for the quarter ended September 30, 2011, due primarily to an increase in compensation and employee benefits of $2.2 million.  This increase is the result of increased health insurance costs and an increase in lending and compliance personnel.  Partially offsetting this increase in compensation expense was a decrease in marketing expense of $958,000, which was due to the timing of several marketing campaigns.

Net income for the nine-month period ended September 30, 2012 of $47.2 million represents a decrease of $1.8 million, or 3.6%, compared to net income of $49.0 million for the nine-month period ended September 30, 2011.  However, diluted earnings per share increased to $0.50 from $0.48 in the previous year, as there were 7,677,525 fewer diluted average shares outstanding in 2012.  The annualized returns on average shareholders' equity and average assets were 5.42% and 0.79%, respectively, for the current nine-month period compared to 5.25% and 0.81%, respectively, in the prior year.    

Headquartered in Warren, Pennsylvania, Northwest Bancshares, Inc. is the holding company of Northwest Savings Bank.  Founded in 1896, Northwest Savings Bank is a full-service financial institution offering a complete line of business and personal banking products as well as benefits and wealth management services. Northwest operates 166 community banking offices in Pennsylvania, New York, Ohio and Maryland and 52 consumer finance offices in Pennsylvania through its subsidiary, Northwest Consumer Discount Company.  Northwest Bancshares, Inc.'s common stock is listed on the NASDAQ Global Select Market. Additional information regarding Northwest Bancshares, Inc. can be accessed on-line at www.northwestsavingsbank.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 that could result from an economic downturn; (4) changes in legislation or regulatory requirements; (5) difficulties in continuing to improve operating efficiencies; (6) difficulties in the integration of acquired businesses; and (7) increased risk associated with an increase in commercial real-estate and business loans and non-performing 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

(Dollars in thousands, except per share amounts)

(Unaudited)

September 30,

December 31,

Assets

2012

2011

Cash and cash equivalents

$              91,286

94,276

Interest-earning deposits in other financial institutions

546,149

593,388

Federal funds sold and other short-term investments

633

633

Marketable securities available-for-sale (amortized cost of $922,684 and $885,408)

951,879

908,349

Marketable securities held-to-maturity (fair value of $174,821 and $239,412)

167,739

231,389

Total cash, interest-earning deposits and marketable securities

1,757,686

1,828,035

Residential mortgage loans held for sale

14,152

967

Residential mortgage loans

2,410,124

2,396,399

Home equity loans 

1,100,879

1,084,786

Other consumer loans

235,693

245,689

Commercial real estate loans

1,560,966

1,435,767

Commercial loans

406,819

387,911

Total loans receivable

5,728,633

5,551,519

Allowance for loan losses

(71,177)

(71,138)

Loans receivable, net

5,657,456

5,480,381

Federal Home Loan Bank stock, at cost

46,834

48,935

Accrued interest receivable

25,324

24,599

Real estate owned, net

29,291

26,887

Premises and Equipment, net

135,455

132,152

Bank owned life insurance

136,871

133,524

Goodwill

171,882

171,882

Other intangible assets

1,330

2,123

Other assets

85,542

109,187

Total assets

$      8,047,671

7,957,705

Liabilities and Shareholders' equity

Liabilities

Noninterest-bearing demand deposits

$           763,839

658,560

Interest-bearing demand deposits

842,389

800,676

Savings deposits

2,256,544

2,036,272

Time deposits

1,961,984

2,284,817

Total deposits

5,824,756

5,780,325

Borrowed funds

855,552

827,925

Advances by borrowers for taxes and insurance

11,570

23,571

Accrued interest payable

1,111

1,104

Other liabilities

76,962

66,782

Junior subordinated debentures

103,094

103,094

Total liabilities

6,873,045

6,802,801

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, 97,844,382 shares

and 97,493,046 shares issued and outstanding, respectively

978

975

Paid-in-capital

661,589

659,523

Retained earnings

556,502

543,598

Unallocated common stock of Employee Stock Ownership Plan

(24,817)

(25,966)

Accumulated other comprehensive loss

(19,626)

(23,226)

Total shareholders' equity

1,174,626

1,154,904

Total liabilities and shareholders' equity

$      8,047,671

7,957,705

Equity to assets

14.60%

14.51%

Tangible common equity to assets

12.72%

12.60%

Book value per share

$                 12.00

$               11.85

Tangible book value per share

$                 10.23

$               10.06

Closing market price per share

$                 12.23

$               12.44

Full time equivalent employees

2,027

1,950

Number of banking offices

166

168

  

Northwest Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income - Unaudited

(Dollars in thousands, except per share amounts)

Quarter ended

September 30,

June 30,

2012

2011

2012

Interest income:

Loans receivable

$         77,109

80,562

77,422

Mortgage-backed securities

3,941

5,544

4,409

Taxable investment securities

577

684

435

Tax-free investment securities

2,223

2,848

2,318

Interest-earning deposits

364

393

473

Total interest income

84,214

90,031

85,057

Interest expense:

Deposits

10,207

14,958

11,184

Borrowed funds

8,013

8,061

7,912

Total interest expense

18,220

23,019

19,096

Net interest income

65,994

67,012

65,961

Provision for loan losses

6,915

8,057

4,963

Net interest income after provision

for loan losses

59,079

58,955

60,998

Noninterest income:

Impairment losses on securities

(340)

-

-

Noncredit related losses on securities not expected

to be sold (recognized in other comprehensive income)

247

-

-

Net impairment losses

(93)

-

-

Gain/ (loss) on sale of investments, net

260

152

(44)

Service charges and fees

8,772

8,499

8,702

Trust and other financial services income

2,122

2,063

2,018

Insurance commission income

1,480

1,796

1,603

Loss on real estate owned, net

(1,187)

(1,340)

(582)

Income from bank owned life insurance

1,148

1,938

1,107

Mortgage banking income

1,484

400

789

Other operating income

949

1,002

1,244

Total noninterest income

14,935

14,510

14,837

Noninterest expense:

Compensation and employee benefits

28,171

26,004

27,416

Premises and occupancy costs

5,498

5,658

5,483

Office operations

3,141

3,209

3,340

Processing expenses

6,340

5,896

6,059

Marketing expenses

1,830

2,788

3,829

Federal deposit insurance premiums

1,305

1,386

1,418

Professional services

1,939

1,238

1,500

Amortization of intangible assets

219

475

279

Real estate owned expense

832

483

571

Other expense

2,528

2,786

2,071

Total noninterest expense

51,803

49,923

51,966

Income before income taxes

22,211

23,542

23,869

Income tax expense

6,518

6,822

7,508

Net income

$           15,693

16,720

16,361

Basic earnings per share

$               0.17

0.17

0.17

Diluted earnings per share

$               0.17

0.17

0.17

Annualized return on average equity

5.37%

5.62%

5.63%

Annualized return on average assets

0.78%

0.83%

0.82%

Basic common shares outstanding

94,422,878

96,918,016

94,294,956

Diluted common shares outstanding

94,610,656

97,124,328

94,500,877

  

Northwest Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income - Unaudited

(Dollars in thousands, except per share amounts)

Nine months ended September 30,

2012

2011

Interest income:

Loans receivable

$      232,690

241,012

Mortgage-backed securities

13,041

18,373

Taxable investment securities

1,585

1,676

Tax-free investment securities

6,987

8,914

Interest-earning deposits

1,217

1,289

Total interest income

255,520

271,264

Interest expense:

Deposits

34,335

46,494

Borrowed funds

23,824

24,039

Total interest expense

58,159

70,533

Net interest income

197,361

200,731

Provision for loan losses

18,165

23,668

Net interest income after provision

for loan losses

179,196

177,063

Noninterest income:

Impairment losses on securities

(885)

(577)

Noncredit related losses on securities not expected

to be sold (recognized in other comprehensive income)

554

70

Net impairment losses

(331)

(507)

Gain on sale of investments, net

260

201

Service charges and fees

25,899

26,748

Trust and other financial services income

6,256

6,158

Insurance commission income

4,801

4,966

Loss on real estate owned, net

(2,839)

(1,960)

Income from bank owned life insurance

3,372

4,820

Mortgage banking income

2,804

887

Other operating income

3,190

2,785

Total noninterest income

43,412

44,098

Noninterest expense:

Compensation and employee benefits

83,425

81,161

Premises and occupancy costs

16,729

17,499

Office operations

9,805

9,564

Processing expenses

18,541

17,350

Marketing expenses

7,695

6,855

Federal deposit insurance premiums

4,343

6,168

Professional services

5,136

3,783

Amortization of intangible assets

793

1,445

Real estate owned expense

2,143

1,163

Other expense

6,435

6,803

Total noninterest expense

155,045

151,791

Income before income taxes

67,563

69,370

Income tax expense

20,328

20,394

Net income

$         47,235

48,976

Basic earnings per share

$               0.50

0.48

Diluted earnings per share

$               0.50

0.48

Annualized return on average equity

5.42%

5.25%

Annualized return on average assets

0.79%

0.81%

Basic common shares outstanding

94,277,362

101,866,461

Diluted common shares outstanding

94,591,402

102,268,927

  

Northwest Bancshares, Inc. and Subsidiaries

Asset quality

(Dollars in thousands)

September 30,

2012

June 30,

2012

September 30,

 2011

December 31,

2011

Non-accrual loans current:

Residential mortgage loans

$                             -

-

-

-

Home equity loans

-

-

-

-

Other consumer loans

-

-

-

-

Commercial real estate loans

18,138

16,773

17,296

13,057

Commercial loans

12,290

10,168

20,534

13,480

Total non-accrual loans current

$                   30,428

26,941

37,830

26,537

Non-accrual loans delinquent 30 days to 59 days:

Residential mortgage loans

$                             -

-

-

-

Home equity loans

-

-

-

-

Other consumer loans

-

-

-

-

Commercial real estate loans

6,404

3,230

5,557

3,274

Commercial loans

311

489

1,238

90

Total non-accrual loans delinquent 30 days to 59 days

$                     6,715

3,719

6,795

3,364

Non-accrual loans delinquent 60 days to 89 days:

Residential mortgage loans

$                             -

-

-

-

Home equity loans

-

-

-

-

Other consumer loans

-

-

-

-

Commercial real estate loans

1,860

1,600

2,052

1,560

Commercial loans

1,340

344

2,471

3,808

Total non-accrual loans delinquent 60 days to 89 days

$                     3,200

1,944

4,523

5,368

Non-accrual loans delinquent 90 days or more:

Residential mortgage loans

$                   24,476

25,336

31,705

28,221

Home equity loans

9,365

9,770

9,340

9,560

Other consumer loans

1,494

1,580

2,117

2,667

Commercial real estate loans

35,230

33,956

50,395

44,603

Commercial loans

9,864

14,008

18,670

10,785

Total non- accrual loans delinquent 90 days or more

$                   80,429

84,650

112,227

95,836

Total non-accrual loans

$                 120,772

117,254

161,375

131,105

September 30,

June 30,

September 30,

December 31,

2012

2012

2011

2011

Nonperforming loans

$                 120,772

117,254

161,375

131,105

Real estate owned, net

29,291

30,470

20,648

26,887

Nonperforming assets

$                 150,063

147,724

182,023

157,992

Non-accrual troubled debt restructuring *

$                   29,261

28,342

27,421

29,575

Accruing troubled debt restructuring

57,004

50,129

39,417

39,854

Total troubled debt restructuring

$                   86,265

78,471

66,838

69,429

Nonperforming loans to total loans

2.11%

2.07%

2.92%

2.36%

Nonperforming assets to total assets

1.86%

1.84%

2.28%

1.99%

Allowance for loan losses to total loans

1.24%

1.24%

1.33%

1.28%

Allowance for loan losses to nonperforming loans

58.94%

59.79%

45.37%

54.26%

* Amounts included in nonperforming loans above.

  

Northwest Bancshares, Inc. and Subsidiaries

Delinquency

(Dollars in thousands)

Loan delinquency schedule

(Number of loans and dollar amount of loans)

September 30,

June 30,

September 30,

December 31,

2012

*

2012

*

2011

*

2011

*

Loans delinquent 30 days to 59 days:

Residential mortgage loans

99

$        5,971

0.2%

70

$        4,470

0.2%

73

3,724

0.2%

427

$     33,671

1.4%

Home equity loans

154

5,027

0.5%

153

5,842

0.5%

178

7,125

0.7%

222

7,426

0.7%

Consumer loans

1,019

4,470

1.9%

847

3,513

1.5%

857

4,189

1.7%

903

4,854

2.0%

Commercial real estate loans

101

18,512

1.2%

58

8,149

0.5%

57

10,489

0.7%

104

10,680

0.7%

Commercial loans

22

791

0.2%

33

1,839

0.5%

40

2,690

0.7%

32

2,027

0.5%

Total loans delinquent 30 days to 59 days

1,395

$     34,771

0.6%

1,161

$     23,813

0.4%

1,205

28,217

0.5%

1,688

58,658

1.1%

Loans delinquent 60 days to 89 days:

Residential mortgage loans

83

$        7,621

0.3%

83

$        6,932

0.3%

85

7,430

0.3%

99

$        8,629

0.4%

Home equity loans

53

2,116

0.2%

72

2,824

0.3%

45

1,547

0.1%

47

1,953

0.2%

Consumer loans

383

1,424

0.6%

319

1,273

0.5%

331

1,337

0.5%

412

1,787

0.7%

Commercial real estate loans

19

2,544

0.2%

23

3,081

0.2%

19

2,471

0.2%

38

3,122

0.2%

Commercial loans

21

1,855

0.5%

16

980

0.2%

29

4,466

1.1%

25

4,958

1.3%

Total loans delinquent 60 days to 89 days

559

$     15,560

0.3%

513

$     15,090

0.3%

509

17,251

0.3%

621

20,449

0.4%

Loans delinquent 90 days or more:

Residential mortgage loans

255

$     24,476

1.0%

265

$     25,336

1.0%

274

31,705

1.3%

273

$     28,221

1.2%

Home equity loans

181

9,365

0.9%

180

9,770

0.9%

171

9,340

0.9%

177

9,560

0.9%

Consumer loans

351

1,494

0.6%

308

1,580

0.7%

407

2,117

0.9%

456

2,667

1.1%

Commercial real estate loans

133

35,230

2.3%

128

33,956

2.3%

142

50,395

3.5%

131

44,603

3.1%

Commercial loans

53

9,864

2.4%

57

14,008

3.5%

46

18,670

4.6%

66

10,785

2.8%

Total loans delinquent 90 days or more

973

$     80,429

1.4%

938

$     84,650

1.5%

1,040

112,227

2.0%

1,103

95,836

1.7%

Total loans delinquent

2,927

$  130,760

2.3%

2,612

$  123,553

2.2%

2,754

$  157,695

2.8%

3,412

$  174,943

3.2%

* - Represents delinquency, in dollars, divided by the respective total amount of that type of loan outstanding.  

  

Northwest Bancshares, Inc. and Subsidiaries

Loans by credit quality indicators as of September 30, 2012 

(Dollars in thousands)

Recorded

investment

Special

in loans

Pass

mention

Substandard

 Doubtful 

 Loss 

receivable

Personal Banking:

Residential mortgage loans

$  2,403,993

-

18,910

16

1,357

2,424,276

Home equity loans

1,091,530

-

9,349

-

-

1,100,879

Other consumer loans

234,765

-

928

-

-

235,693

Total Personal Banking

3,730,288

-

29,187

16

1,357

3,760,848

Business Banking:

Commercial real estate loans

1,327,799

81,854

147,063

4,250

-

1,560,966

Commercial loans

326,229

15,415

61,747

3,428

-

406,819

Total Business Banking

1,654,028

97,269

208,810

7,678

-

1,967,785

$  5,384,316

97,269

237,997

7,694

1,357

5,728,633

Northwest Bancshares, Inc. and Subsidiaries

Loans by credit quality indicators as of December 31, 2011

(Dollars in thousands)

Recorded

investment

Special

in loans

Pass

mention

Substandard

 Doubtful 

 Loss 

receivable

Personal Banking:

Residential mortgage loans

$  2,373,275

-

22,843

11

1,237

2,397,366

Home equity loans

1,074,512

-

10,274

-

-

1,084,786

Other consumer loans

244,491

-

1,198

-

-

245,689

Total Personal Banking

3,692,278

-

34,315

11

1,237

3,727,841

Business Banking:

Commercial real estate loans

1,211,583

75,981

144,947

3,256

-

1,435,767

Commercial loans

298,597

23,887

62,753

2,674

-

387,911

Total Business Banking

1,510,180

99,868

207,700

5,930

-

1,823,678

$  5,202,458

99,868

242,015

5,941

1,237

5,551,519

  

Northwest Bancshares, Inc. and Subsidiaries

Allowance for loan losses

(Dollars in thousands)

Quarter ended

Nine months ended

September 30, 

September 30, 

2012

2011

2012

2011

Allowance for loan losses 

Beginning balance

$  70,110

75,455

71,138

76,412

Provision

6,915

8,057

18,165

23,668

Charge-offs residential mortgage

(1,197)

(634)

(3,459)

(2,668)

Charge-offs home equity

(1,268)

(588)

(2,749)

(3,736)

Charge-offs other consumer

(1,536)

(1,307)

(4,327)

(3,816)

Charge-offs commercial real estate

(1,385)

(3,675)

(5,817)

(8,220)

Charge-offs commercial

(1,641)

(4,791)

(5,009)

(10,706)

Recoveries

1,179

691

3,235

2,274

Ending balance

$  71,177

73,208

71,177

73,208

Net charge-offs to average loans, annualized

0.41%

0.75%

0.43%

0.65%

  

Northwest Bancshares, Inc. and Subsidiaries

Municipal securities portfolio

(Dollars in thousands)

September 30, 2012

As a %

Market

 Book 

Unrealized

of book

 value 

 value 

gain

value

Municipal securities by state:

Pennsylvania

School districts

$  100,813

95,928

4,885

47.1%

General obligations                     

37,275

35,431

1,844

17.4%

Revenue bonds

4,386

4,313

73

2.1%

Total Pennsylvania

142,474

135,672

6,802

66.6%

New York

28,125

27,051

1,074

13.3%

Ohio

6,887

6,428

459

3.2%

All other states

37,898

34,653

3,245

17.0%

$  215,384

203,804

11,580

December 31, 2011

As a %

Market

 Book 

Unrealized

of book

 value 

 value 

gain

value

Municipal securities by state:

Pennsylvania

School districts

$  119,920

114,699

5,221

48.4%

General obligations

43,129

41,766

1,363

17.6%

Revenue bonds

4,717

4,709

8

2.0%

Total Pennsylvania

167,766

161,174

6,592

68.0%

New York

35,269

33,679

1,590

14.2%

Ohio

6,661

6,426

235

2.7%

All other states

38,073

35,904

2,169

15.1%

$  247,769

237,183

10,586

  

Northwest Bancshares, Inc. and Subsidiaries

Average balance sheet 

(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.

 Quarters ended September 30, 

2012

2011

 Average 

 Interest 

 Avg. 

 Average 

 Interest 

 Avg. 

 Balance 

 Yield/ 

 Balance 

 Yield/ 

 Cost (h) 

 Cost (h) 

Assets:

Interest-earning assets:

   Loans receivable (a) (b) (d)

$  5,703,380

77,698

5.43%

5,490,795

81,025

5.86%

   Mortgage-backed securities (c) 

722,368

3,941

2.18%

857,898

5,544

2.58%

   Investment securities (c) (d) 

350,081

3,997

4.57%

412,927

5,066

4.91%

   FHLB stock

46,834

12

0.10%

52,336

-

-

   Other interest-earning deposits

598,114

364

0.24%

652,958

393

0.24%

Total interest-earning assets 

7,420,777

86,012

4.62%

7,466,914

92,028

4.90%

Noninterest earning assets (e)

625,460

560,951

Total assets

$  8,046,237

8,027,865