Northwest Bancshares, Inc. Announces Record Quarterly Earnings and Increased Dividend Declaration

WARREN, Pa., April 25, 2011 /PRNewswire/ -- Northwest Bancshares, Inc. (NasdaqGS: NWBI) announced net income for the quarter ended March 31, 2011 of $17.3 million, or $0.16 per diluted share.  This represents an increase of $4.1 million, or 31.1%, over the same quarter last year when net income was $13.2 million, or $0.12 per diluted share, and an increase of $4.6 million, or 36.2%, over the quarter ended December 31, 2010 when net income was $12.7 million, or $0.12 per diluted share.  The annualized returns on average shareholders’ equity and average assets for the current quarter were 5.39% and 0.86% compared to 4.05% and 0.65% for the same quarter last year and 3.90% and 0.63% for the quarter ended December 31, 2010.  

The Company also announced that its Board of Directors declared a 10% increase in its quarterly cash dividend to $0.11 per share payable on May 19, 2011, to shareholders of record as of May 5, 2011.  This represents the 66th consecutive quarter in which the Company has paid a cash dividend and is the first increase in the dividend since June 30, 2007.  

On December 20, 2010, the Company initiated a stock repurchase program, which was announced on November 5, 2010.  The plan provides for the repurchase of up to 10%, or approximately 11,000,000 shares, of the Company’s common stock.  Through March 31, 2011 the Company has repurchased 3,173,423 shares for $38.0 million, resulting in an average purchase price of $11.96 per share.  

In making this announcement, William J. Wagner, President and CEO, noted, "We are pleased to report record quarterly financial results that are positive in almost all respects.  Our net interest margin, at 3.66%, is substantially higher than a year ago and slightly higher than the previous quarter.  Income earned from fees, commission and services remained consistent despite the legislative and regulatory issues our industry is facing.  Expenses have been tightly controlled and our provision for loan losses is the lowest it has been for eight quarters.  Deposit growth was robust, especially the growth in checking and savings deposits.  The only negative trend that occurred was a $47.4 million, or 0.9%, decrease in our loan portfolio as new loan demand was relatively weak while the competition for loan growth has become much more aggressive."

Net interest income increased by $7.0 million, or 11.7%, to $67.0 million for the quarter ended March 31, 2011, from $60.0 million for the quarter ended March 31, 2010.  The increase in net interest income was primarily the result of a decrease in interest expense on deposits of $5.3 million, or 25.0%, to $16.1 million.  This decrease resulted from changes in the mix of deposits as lower-cost demand and savings accounts grew by $252.0 million while time deposits decreased by $124.9 million.    

The provision for loan losses decreased by $1.6 million, or 17.7%, to $7.2 million for the quarter ended March 31, 2011, from $8.8 million for the quarter ended March 31, 2010.  This provision represents management’s estimate of the amount necessary to maintain the allowance for loan losses at a level required in accordance with generally accepted accounting principles.  As of March 31, 2011, the allowance for loan losses was $76.5 million, or 1.39% of total loans, compared to $74.8 million, or 1.38% of total loans, as of March 31, 2010.  Net charge-offs for the quarter ended March 31, 2011 were $7.2 million, or 0.52% of average loans on an annualized basis, compared to $4.4 million, or 0.33% of average loans on an annualized basis, in the previous year.  Contributing to the increase in charge-offs was the Company negotiating a reduced payoff for a large troubled asset.      

Noninterest income decreased by $1.6 million, or 9.7%, to $14.3 million for the quarter ended March 31, 2011, from $15.9 million for the quarter ended March 31, 2010. The decrease is attributable to the sale of approximately $55.0 million of Fannie Mae zero coupon bonds in the prior year which resulted in a gain of $2.1 million.  Partially offsetting this decrease was an increase in insurance commission income of $238,000, or 20.8%, to $1.4 million for the quarter ended March 31, 2011, from $1.1 million for the quarter ended March 31, 2010 as we continue to increase our market penetration on sales of annuities and employee benefit insurance.  All other major components of noninterest income increased slightly from the previous year.  

Noninterest expense increased by $774,000, or 1.6%, to $49.4 million for the quarter ended March 31, 2011, from $48.6 million in the prior year.  This increase is primarily a result of increases in professional services, marketing expenses and other expenses, which were partially offset by decreases in compensation and employee benefits and real estate owned expense.  Professional services expense increased by $528,000, or 72.5%, to $1.3 million for the quarter ended March 31, 2011, from $728,000 for the quarter ended March 31, 2010 as a result of outsourcing the internal audit function and incurring additional expense related to enhancing compliance management.  Marketing expenses increased by $516,000, or 35.8%, to $2.0 million as the Company continued a major campaign focused on the acquisition of checking account relationships.    

The Company previously announced that its Board of Directors authorized the closing of its three offices in southeastern Florida, which have deposits of $55.2 million and loans of $105.5 million.  The offices are expected to close on June 30, 2011.      

Founded in 1896 and headquartered in Warren, Pennsylvania, Northwest Bancshares, Inc., through its subsidiary Northwest Savings Bank, currently operates 172 community banking locations in Pennsylvania, New York, Ohio, Maryland and Florida.  Northwest Savings Bank is a full-service financial institution offering a complete line of retail and business banking products as well as investment management and trust services.  The Company also operates 52 consumer finance offices in Pennsylvania through its subsidiary, Northwest Consumer Discount Company.  Northwest Bancshares, Inc.’s 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 press 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.