Northwest Bancshares, Inc. Announces Second Quarter 2011 Earnings and Dividend Declaration

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Jul 25, 2011, 12:30 ET

WARREN, Pa., July 25, 2011 /PRNewswire/ -- Northwest Bancshares, Inc. (NasdaqGS: NWBI) announced net income for the quarter ended June 30, 2011 of $15.0 million, or $0.15 per diluted share. This represents a decrease of $1.1 million over the same quarter last year when net income was $16.1 million, or $0.15 per diluted share, and a decrease of $2.3 million over the quarter ended March 31, 2011 when net income was $17.3 million, or $0.16 per diluted share. The annualized returns on average shareholders’ equity and average assets for the current quarter were 4.81% and 0.74% compared to 4.95% and 0.79% for the same quarter last year and 5.39% and 0.86% for the quarter ended March 31, 2011.

The decrease in quarterly earnings when compared to the previous quarter and previous year primarily resulted from additional expense relating to the stock benefit plan that was approved by the Company’s shareholders in April, 2011. The plan was proposed in conjunction with the second-step stock conversion that was completed in December, 2009.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.11 per share payable on August 18, 2011, to shareholders of record as of August 4, 2011. This represents the 67th consecutive quarter in which the Company has paid a cash dividend.

In making this announcement, William J. Wagner, President and CEO, noted, “Absent the impact of the additional stock benefit expense, all other components of earnings exhibited favorable trends: net interest income increased $3.0 million, or 4.6%; income earned from fees, commissions and services increased $189,000; and noninterest expense increased only $1.3 million, or 2.8%. We are also pleased to report that our loan portfolio increased $2.6 million during the quarter while demand deposits grew $8.0 million. Finally, we continued to make progress on our announced stock buyback plan with the repurchase of 5,850,866 shares at an average price of $12.23 per share. To date, we have repurchased 8,986,989 of the 11,000,000 targeted shares at an average price of $12.14 per share.”

Net interest income increased by $3.0 million, or 4.6%, to $66.7 million for the quarter ended June 30, 2011, from $63.7 million for the quarter ended June 30, 2010, which was primarily attributable to a decrease in the cost of deposits. Interest expense on deposits decreased by $3.5 million, or 18.4%, to $15.5 million as a result of a decrease in market interest rates and a continued change in the mix of deposits as lower-cost transaction accounts grew more rapidly than other types of deposits.

The provision for loan losses increased by $471,000, or 6.0%, to $8.4 million for the quarter ended June 30, 2011, from $7.9 million for the quarter ended June 30, 2010. Charge-offs for the quarter ended June 30, 2011 were $9.4 million, including $3.0 million related to the exiting of a Maryland hotel credit during the quarter. As of June 30, 2011, the allowance for loan losses was $75.5 million, or 1.37% of total loans, compared to $75.4 million, or 1.36% of total loans, as of June 30, 2010. Loans 90 days or more delinquent were $115.8 million as of June 30, 2011, compared to $124.8 million as of March 31, 2011 and $107.5 million as of June 30, 2010.

Noninterest income decreased by $283,000, or 1.8%, to $15.3 million for the quarter ended June 30, 2011, from $15.5 million for the quarter ended June 30, 2010. Losses on real estate owned increased by $338,000, or 132.5%, to $593,000 for the quarter ended June 30, 2011 from $255,000 for the quarter ended June 30, 2010 as a result of write-downs on real estate owned in Maryland. Service charges and fees decreased by $581,000, or 5.9%, to $9.3 million for the quarter ended June 30, 2011 from $9.9 million for the quarter ended June 30, 2010 primarily as a result of lower deposit overdraft revenue. Other-than-temporary impairment losses on securities were $507,000 compared to $218,000 for the quarter ended June 30, 2010 related to further deterioration in the value of two investment securities. Partially offsetting these were an increase in insurance commission income, which increased by $497,000, or 38.4%, to $1.8 million for the quarter ended June 30, 2011 due to increased insurance revenues and increases in trust services income and mortgage banking income of $273,000 and $261,000, respectively.

Noninterest expense increased by $4.3 million, or 9.0%, to $52.5 million for the quarter ended June 30, 2011, from $48.2 million for the 2010 quarter. This increase is primarily a result of increases in compensation and employee benefits and professional services expenses, which were partially offset by decreases in marketing and other real estate owned expenses. Compensation and employee benefits expenses increased by $4.8 million, or 19.4%, to $29.8 million for the quarter ended June 30, 2011, primarily due to increases in health insurance expense and the aforementioned initial vesting of the stock benefit plans. In addition, full-time equivalent employees have increased by 42 since the beginning of the current year with staffing increases primarily in the areas of commercial lending, compliance and loan servicing. Professional services expenses increased by $706,000, or 121.1%, to $1.3 million for the quarter ended June 30, 2011 as a result of the outsourcing of the internal audit function and the continued engagement of regulatory compliance consultants. Marketing expense decreased by $1.2 million, or 36.0%, to $2.1 million for the quarter ended June 30, 2011 due to the timing of various campaigns and initiatives.

Net income for the six-month period ended June 30, 2011 of $32.3 million, or $0.31 per diluted share, represents an increase of $3.0 million, or 10.1% compared to net income of $29.3 million, or $0.27 per diluted share, for the six-month period ended June 30, 2010. The annualized returns on average shareholders’ equity and average assets were 5.07% and 0.79%, respectively, for the current six-month period compared to 4.49% and 0.73%, respectively, in the prior year.

Headquartered in Warren, Pennsylvania, Northwest Bancshares, Inc. is the holding company of Northwest Savings Bank. After closing our three offices in Florida as of June 30, 2011, we operate 169 community banking offices in Pennsylvania, New York, Ohio and Maryland. Northwest Savings Bank, founded in 1896, is a full-service financial institution offering a complete line of business and personal banking products as well as benefits and wealth management services. The Company also operates 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.

Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
(Dollars in thousands, except per share amounts)
			(Unaudited)
			June 30,	December 31,
Assets			2011	2010
Cash and cash equivalents			$ 80,889	40,708
Interest-earning deposits in other financial institutions			631,957	677,771
Federal funds sold and other short-term investments			633	632
Marketable securities available-for-sale (amortized cost of $1,023,829 and $945,791)			1,040,547	950,683
Marketable securities held-to-maturity (fair value of $284,685 and $354,126)			280,782	357,922
	Total cash, interest-earning deposits and marketable securities		2,034,808	2,027,716

Loans held for sale			8,035	11,376
Residential mortgage loans			2,342,904	2,386,928
Home equity loans			1,083,301	1,092,606
Consumer loans			247,182	259,123
Commercial real estate loans			1,375,090	1,350,319
Commercial loans			432,666	433,653
	Total loans receivable		5,489,178	5,534,005
Allowance for loan losses			(75,455)	(76,412)
	Loans receivable, net		5,413,723	5,457,593

Federal Home Loan Bank stock, at cost			54,222	60,080
Accrued interest receivable			25,647	26,216
Real estate owned, net			21,389	20,780
Premises and Equipment, net			126,303	128,101
Bank owned life insurance			133,358	132,237
Goodwill			171,882	171,882
Other intangible assets			2,972	3,942
Other assets			103,041	119,608
	Total assets		$ 8,087,345	8,148,155

Liabilities and Shareholders' equity
Liabilities
Noninterest-bearing demand deposits			$ 614,718	575,281
Interest-bearing demand deposits			796,482	782,257
Savings deposits			2,042,618	1,948,882
Time deposits			2,365,488	2,457,916
	Total deposits		5,819,306	5,764,336
Borrowed funds			847,450	891,293
Advances by borrowers for taxes and insurance			30,371	22,868
Accrued interest payable			1,155	1,716
Other liabilities			58,828	57,398
Junior subordinated debentures			103,094	103,094
	Total liabilities		6,860,204	6,840,705

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, 103,266,045 shares
	and 110,295,117 shares issued, respectively		1,033	1,103
Paid-in-capital			726,207	824,164
Retained earnings			533,229	523,089
Unallocated common stock of Employee Stock Ownership Plan			(26,639)	(27,409)
Accumulated other comprehensive loss			(6,689)	(13,497)
	Total shareholders' equity		1,227,141	1,307,450
	Total liabilities and shareholders' equity		$ 8,087,345	8,148,155

		Equity to assets	15.17%	16.05%
		Tangible common equity to assets	13.30%	14.19%
		Book value per share	$11.88	$11.85
		Tangible book value per share	$10.19	$10.26
		Closing market price per share	$12.58	$11.78
		Full time equivalent employees	1,923	1,881
		Number of banking offices	169	171

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

				Three months ended
				June 30,			March 31,
				2011		2010	2011
Interest income:
	Loans receivable			$79,993		81,734	$80,457
	Mortgage-backed securities			6,073		6,706	6,756
	Taxable investment securities			594		599	398
	Tax-free investment securities			2,992		2,853	3,074
	Interest-earning deposits			489		512	407
		Total interest income		90,141		92,404	91,092

Interest expense:
	Deposits			15,473		18,973	16,063
	Borrowed funds			7,989		9,704	7,989
		Total interest expense		23,462		28,677	24,052

		Net interest income		66,679		63,727	67,040
Provision for loan losses				8,367		7,896	7,244
		Net interest income after provision
		for loan losses		58,312		55,831	59,796

Noninterest income:
	Impairment losses on securities			(577)		(1,824)	-
	Noncredit related losses on securities not expected
		to be sold (recognized in other comprehensive income)		70		1,606	-
	Net impairment losses			(507)		(218)	-
	Gain on sale of investments, net			45		94	4
	Service charges and fees			9,321		9,902	8,928
	Trust and other financial services income			2,185		1,912	1,910
	Insurance commission income			1,790		1,293	1,380
	Loss on real estate owned, net			(593)		(255)	(27)
	Income from bank owned life insurance			1,716		1,474	1,166
	Mortgage banking income			290		29	197
	Other operating income			1,015		1,314	768
		Total noninterest income		15,262		15,545	14,326

Noninterest expense:
	Compensation and employee benefits			29,804	*	24,960	25,353
	Premises and occupancy costs			5,650		5,340	6,191
	Office operations			3,255		2,934	3,100
	Processing expenses			5,687		5,552	5,767
	Marketing expenses			2,108		3,294	1,959
	Federal deposit insurance premiums			2,355		2,148	2,427
	Professional services			1,289		583	1,256
	Amortization of intangible assets			333		759	637
	Real estate owned expense			249		712	431
	Other expense			1,760		1,875	2,257
		Total noninterest expense		52,490		48,157	49,378

		Income before income taxes		21,084		23,219	24,744
	Income tax expense			6,081		7,078	7,491

			Net income	$ 15,003		16,141	17,253

Basic earnings per share				$ 0.15		$ 0.15	$ 0.16

Diluted earnings per share				$ 0.15		$ 0.15	$ 0.16

Annualized return on average equity				4.81%		4.95%	5.39%
Annualized return on average assets				0.74%		0.79%	0.86%

Basic common shares outstanding				102,216,892		108,227,678	106,571,262
Diluted common shares outstanding				102,536,202		108,960,333	107,258,320

* - Includes $2.8 million of stock benefit plan expense related to awards granted in May, 2011. Approximately 40% of the awards approved by shareholders in April, 2011 were awarded in May, 2011. Awards vest over a ten year period with the first vesting occurring on the date of grant. It is anticipated that the remaining 60% of the awards will be granted over the next six years.

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

				Six months ended
				June 30,
				2011	2010
Interest income:
	Loans receivable			$160,450	162,480
	Mortgage-backed securities			12,829	12,851
	Taxable investment securities			992	1,597
	Tax-free investment securities			6,066	5,537
	Interest-earning deposits			896	1,077
		Total interest income		181,233	183,542

Interest expense:
	Deposits			31,536	40,377
	Borrowed funds			15,978	19,404
		Total interest expense		47,514	59,781

		Net interest income		133,719	123,761
Provision for loan losses				15,611	16,697
		Net interest income after provision
		for loan losses		118,108	107,064

Noninterest income:
	Impairment losses on securities			(577)	(1,921)
	Noncredit related losses on securities not expected
		to be sold (recognized in other comprehensive income)		70	1,606
	Net impairment losses			(507)	(315)
	Gain on sale of investments, net			49	2,177
	Service charges and fees			18,249	18,804
	Trust and other financial services income			4,095	3,745
	Insurance commission income			3,170	2,435
	Loss on real estate owned, net			(620)	(279)
	Income from bank owned life insurance			2,882	2,640
	Mortgage banking income			487	21
	Other operating income			1,783	2,174
		Total noninterest income		29,588	31,402

Noninterest expense:
	Compensation and employee benefits			55,157	50,816
	Premises and occupancy costs			11,841	11,342
	Office operations			6,355	6,171
	Processing expenses			11,454	11,248
	Marketing expenses			4,067	4,737
	Federal deposit insurance premiums			4,782	4,296
	Professional services			2,545	1,311
	Amortization of intangible assets			970	1,541
	Real estate owned expense			680	1,611
	Other expense			4,017	3,688
		Total noninterest expense		101,868	96,761

		Income before income taxes		45,828	41,705
	Income tax expense			13,572	12,411

			Net income	32,256	29,294

Basic earnings per share				$ 0.31	$ 0.27

Diluted earnings per share				$ 0.31	$ 0.27

Annualized return on average equity				5.07%	4.49%
Annualized return on average assets				0.79%	0.73%

Basic common shares outstanding				104,381,955	108,278,912
Diluted common shares outstanding				104,884,123	108,982,981

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

		Three months ended			Six months ended
		June 30,			June 30,
		2011	2010		2011	2010
Allowance for loan losses
	Beginning balance	$ 76,450	74,836		76,412	70,403
	Provision	8,367	7,896		15,611	16,697
	Charge-offs residential mortgage	(829)	(600)		(2,034)	(1,275)
	Charge-offs home equity	(893)	(1,120)		(3,148)	(1,721)
	Charge-offs consumer	(1,277)	(1,674)		(2,509)	(2,934)
	Charge-offs commercial real estate	(2,269)	(1,900)		(4,545)	(3,135)
	Charge-offs commercial	(4,874)	(2,518)		(5,915)	(3,617)
	Recoveries	780		497	1,583	999
	Ending balance	$ 75,455	75,417		75,455	75,417


Net charge-offs to average loans, annualized		0.68%	0.54%		0.60%	0.43%

		June 30,			December 31,
		2011	2010		2010	2009
Nonperforming loans		$ 161,115	130,329		148,391	124,626
Real estate owned, net		21,389	22,191		20,780	20,257
Nonperforming assets		$ 182,504	152,520		169,171	144,883


Nonperforming loans to total loans		2.94%	2.35%		2.68%	2.35%

Nonperforming assets to total assets		2.26%	1.87%		2.08%	1.81%

Allowance for loan losses to total loans		1.37%	1.36%		1.38%	1.33%

Allowance for loan losses to nonperforming loans		46.83%	57.87%		51.49%	56.49%

Northwest Bancshares, Inc. and Subsidiaries
Delinquency
(Dollars in thousands)



Loan delinquency schedule
	(Number of loans and dollar amount of loans)
		June 30,			December 31,
		2011		*	2010		*	2009		*
Loans delinquent 30 days to 59 days:
	Residential mortgage loans	84	$ 4,627	0.2%	427	$35,329	1.5%	350	$ 27,998	1.2%
	Home equity loans	174	$ 5,763	0.5%	230	$7,317	0.7%	177	$ 6,928	0.7%
	Consumer loans	825	3,816	1.5%	1,008	5,318	2.1%	923	4,298	1.5%
	Commercial real estate loans	58	7,902	0.6%	82	16,287	1.2%	85	16,152	1.3%
	Commercial loans	40	2,264	0.5%	48	6,590	1.5%	48	3,293	0.9%
Total loans delinquent 30 days to 59 days		1,181	$ 24,372	0.4%	1,795	$70,841	1.3%	1,583	$ 58,669	1.1%

Loans delinquent 60 days to 89 days:
	Residential mortgage loans	84	$ 8,044	0.3%	106	$9,848	0.4%	85	$ 6,772	0.3%
	Home equity loans	60	$ 2,602	0.2%	81	$3,249	0.3%	44	$ 1,603	0.2%
	Consumer loans	349	1,195	0.5%	356	1,331	0.5%	348	1,426	0.5%
	Commercial real estate loans	23	3,348	0.2%	39	14,365	1.1%	35	5,811	0.5%
	Commercial loans	22	3,887	0.9%	9	1,678	0.4%	26	2,474	0.7%
Total loans delinquent 60 days to 89 days		538	$ 19,076	0.3%	591	$30,471	0.6%	538	$ 18,086	0.3%

Loans delinquent 90 days or more:
	Residential mortgage loans	268	$ 30,594	1.3%	275	$29,751	1.2%	279	$ 29,373	1.3%
	Home equity loans	173	$ 9,069	0.8%	190	$10,263	0.9%	181	$ 9,769	0.9%
	Consumer loans	314	1,825	0.7%	374	2,565	1.0%	546	2,775	1.0%
	Commercial real estate loans	151	55,512	4.0%	181	44,965	3.3%	199	49,594	4.0%
	Commercial loans	55	18,802	4.3%	111	12,877	3.0%	124	18,269	4.9%
Total loans delinquent 90 days or more		961	$ 115,802	2.1%	1,131	$100,421	1.8%	1,329	$ 109,780	2.1%

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

Northwest Bancshares, Inc. and Subsidiaries
Analysis of loan portfolio by geographic location as of June 30, 2011 - unaudited:
(Dollars in thousands)

Loans outstanding:								Commercial
		Residential		Home				Real estate		Commercial
		mortgage	(1)	equity	(2)	Consumer	(3)	loans	(4)	loans	(5)	Total	(6)

	Pennsylvania	$ 1,915,898	81.4%	924,463	85.3%	225,296	91.2%	813,236	59.1%	279,894	64.7%	4,158,787	75.8%
	New York	158,728	6.8%	102,441	9.5%	11,317	4.6%	322,890	23.5%	63,785	14.7%	659,161	12.0%
	Ohio	20,198	0.9%	11,459	1.1%	2,804	1.1%	35,090	2.6%	8,822	2.0%	78,373	1.4%
	Maryland	180,739	7.7%	34,084	3.1%	1,414	0.6%	114,382	8.3%	22,455	5.2%	353,074	6.4%
	Florida	29,697	1.3%	8,893	0.8%	1,807	0.7%	46,301	3.4%	23,187	5.4%	109,885	2.0%
	All other	45,679	1.9%	1,961	0.2%	4,544	1.8%	43,191	3.1%	34,523	8.0%	129,898	2.4%
	Total	$ 2,350,939	100.0%	1,083,301	100.0%	247,182	100.0%	1,375,090	100.0%	432,666	100.0%	5,489,178	100.0%

	(1) - Percentage of total residential mortgage loans
	(2) - Percentage of total home equity loans
	(3) - Percentage of total consumer loans
	(4) - Percentage of total commercial real estate loans
	(5) - Percentage of total commercial loans
	(6) - Percentage of total loans

Loans 90 or more past due:								Commercial
		Residential		Home				Real estate		Commercial
		mortgage	(7)	equity	(8)	Consumer	(9)	loans	(10)	loans	(11)	Total	(12)

	Pennsylvania	$ 18,487	1.0%	6,663	0.7%	1,648	0.7%	26,022	3.2%	5,114	1.8%	57,934	1.4%
	New York	1,050	0.7%	561	0.5%	48	0.4%	7,728	2.4%	8,950	14.0%	18,337	2.8%
	Ohio	310	1.5%	54	0.5%	-	0.0%	-	0.0%	-	0.0%	364	0.5%
	Maryland	5,471	3.0%	1,352	4.0%	-	0.0%	8,447	7.4%	153	0.7%	15,423	4.4%
	Florida	4,629	15.6%	404	4.5%	5	0.3%	6,002	13.0%	4,010	17.3%	15,050	13.7%
	All other	760	1.7%	37	1.9%	8	0.2%	7,313	16.9%	576	1.7%	8,694	6.7%
	Total	$ 30,707	1.3%	9,071	0.8%	1,709	0.7%	55,512	4.0%	18,803	4.3%	115,802	2.1%

(7) - Percentage of total residential mortgage loans in that geographic area (8) - Percentage of total home equity loans in that geographic area (9) - Percentage of total consumer loans in that geographic area (10) - Percentage of total commercial real estate loans in that geographic area (11) - Percentage of total commercial loans in that geographic area (12) - Percentage of total loans in that geographic area

Northwest Bancshares, Inc. and Subsidiaries
Investment portfolio
(Dollars in thousands)

Marketable securities available-for-sale as of June 30, 2011:
			Gross	Gross
			unrealized	unrealized
		Amortized	holding	holding	Market
		cost	gains	losses	value
Debt issued by the U.S. government and agencies:
	Due in one year or less	$ 63	-	-	63

Debt issued by government sponsored enterprises:
	Due in one year or less	1,995	46	-	2,041
	Due in one year - five years	64,298	350	-	64,648
	Due in five years - ten years	35,200	612	(107)	35,705
	Due after ten years	9,952	-	(56)	9,896

Equity securities		6,218	395	(1)	6,612

Municipal securities:
	Due in one year - five years	7,122	258	-	7,380
	Due in five years - ten years	30,210	1,124	-	31,334
	Due after ten years	164,405	2,317	(1,520)	165,202

Corporate trust preferred securities:
	Due in one year or less	500	-	-	500
	Due after ten years	25,384	338	(4,933)	20,789

Mortgage-backed securities:
	Fixed rate pass-through	115,138	7,275	(6)	122,407
	Variable rate pass-through	150,022	6,837	(4)	156,855
	Fixed rate non-agency CMO	11,329	178	(639)	10,868
	Fixed rate agency CMO	135,274	3,095	(1)	138,368
	Variable rate non-agency CMO	1,577	-	(136)	1,441
	Variable rate agency CMO	265,142	1,750	(454)	266,438

	Total mortgage-backed securities	678,482	19,135	(1,240)	696,377

	Total marketable securities available-for-sale	$ 1,023,829	24,575	(7,857)	1,040,547

Marketable securities held-to-maturity as of June 30, 2011:
			Gross	Gross
			unrealized	unrealized
		Amortized	holding	holding	Market
		cost	gains	losses	value

Municipal securities:
	Due in five years - ten years	$ 1,086	16	-	1,102
	Due after ten years	76,735	477	(270)	76,942

Mortgage-backed securities:
	Fixed rate pass-through	27,564	743	-	28,307
	Variable rate pass-through	9,530	69	-	9,599
	Fixed rate agency CMO	147,066	2,614	(65)	149,615
	Variable rate agency CMO	18,801	319	-	19,120

	Total mortgage-backed securities	202,961	3,745	(65)	206,641

	Total marketable securities held-to-maturity	$ 280,782	4,238	(335)	284,685

Issuers of mortgage-backed securities as of June 30, 2011:
	Fannie Mae	$ 341,283	9,727	(200)	350,810
	Ginnie Mae	180,537	3,646	(81)	184,102
	Freddie Mac	325,235	9,318	(243)	334,310
	SBA	20,746	11	-	20,757
	Non-agency	13,642	178	(781)	13,039
	Total	$ 881,443	22,880	(1,305)	903,018

Northwest Bancshares, Inc. and Subsidiaries
Municipal Securities Portfolio
(Dollars in thousands)

			Book	As a %
			Value	of Book
			6/30/2011	Value
Municipal securities by state:
	Pennsylvania
		School districts	$135,151	48.34%
		General obligations	53,008	18.96%
		Revenue bonds	14,060	5.03%
	Total Pennsylvania		202,219	72.34%
	New York		33,927	12.14%
	Ohio		6,426	2.30%
	All other states		36,986	13.23%
			$279,558

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.

	Three months ended June 30,
	2011			2010
	Average	Interest	Avg.	Average	Interest	Avg.
	Balance		Yield/	Balance		Yield/
			Cost			Cost
Assets:
Interest-earning assets:
Loans receivable (a) (b) (d)	$ 5,484,194	80,389	5.86%	5,465,373	81,866	6.03%
Mortgage-backed securities (c)	917,748	6,073	2.65%	792,412	6,706	3.39%
Investment securities (c) (d)	392,963	5,196	5.29%	376,206	4,989	5.30%
FHLB stock	55,100	-	-	63,242	-	-
Other interest-earning deposits	705,568	489	0.27%	845,947	512	0.24%

Total interest-earning assets	7,555,573	92,147	4.87%	7,543,180	94,073	5.02%

Noninterest earning assets (e)	556,085			584,203

Total assets	$ 8,111,658			8,127,383

Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings accounts	$ 1,093,539	1,275	0.47%	1,033,707	2,236	0.87%
Interest-bearing demand accounts	813,179	246	0.12%	785,619	319	0.16%
Money market accounts	933,288	1,059	0.46%	901,439	1,630	0.73%
Certificate accounts	2,372,039	12,893	2.18%	2,470,706	14,788	2.40%
Borrowed funds (f)	841,835	6,569	3.13%	895,650	8,283	3.71%
Junior subordinated debentures	103,094	1,420	5.45%	103,094	1,421	5.45%

Total interest-bearing liabilities	6,156,974	23,462	1.53%	6,190,215	28,677	1.86%

Noninterest bearing liabilities	708,310			632,037

Total liabilities	6,865,284			6,822,252

Shareholders' equity	1,246,374			1,305,131

Total liabilities and shareholders' equity	$ 8,111,658			8,127,383

Net interest income/ Interest rate spread		68,685	3.34%		65,396	3.16%

Net interest-earning assets/ Net interest margin	$ 1,398,599		3.64%	1,352,965		3.47%

Ratio of interest-earning assets to
interest-bearing liabilities	1.23X			1.22X
(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, securities sold under agreements to repurchase and other borrowings.

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,
	2011			2010
	Average	Interest	Avg.	Average	Interest	Avg.
	Balance		Yield/	Balance		Yield/
			Cost			Cost
Assets:
Interest-earning assets:
Loans receivable (a) (b) (d)	$ 5,500,134	161,237	5.88%	5,406,464	163,188	6.07%
Mortgage-backed securities (c)	922,024	12,829	2.78%	764,690	12,851	3.36%
Investment securities (c) (d)	373,870	10,324	5.52%	367,856	10,116	5.50%
FHLB stock	56,962	-	-	63,242	-	-
Other interest-earning deposits	695,717	896	0.26%	896,321	1,077	0.24%

Total interest-earning assets	7,548,707	185,286	4.92%	7,498,573	187,232	5.02%

Noninterest earning assets (e)	574,662			576,136

Total assets	$ 8,123,369			8,074,709

Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings accounts	$ 1,078,700	2,704	0.51%	997,126	4,269	0.86%
Interest-bearing demand accounts	793,526	478	0.12%	769,531	718	0.19%
Money market accounts	924,383	2,214	0.48%	871,291	3,467	0.80%
Certificate accounts	2,401,829	26,140	2.19%	2,526,314	31,923	2.55%
Borrowed funds (f)	844,793	13,153	3.14%	898,169	16,578	3.72%
Junior subordinated debentures	103,094	2,825	5.45%	103,094	2,826	5.45%

Total interest-bearing liabilities	6,146,325	47,514	1.56%	6,165,525	59,781	1.96%

Noninterest bearing liabilities	705,098			604,859

Total liabilities	6,851,423			6,770,384

Shareholders' equity	1,271,946			1,304,325

Total liabilities and shareholders' equity	$ 8,123,369			8,074,709

Net interest income/ Interest rate spread		137,772	3.36%		127,451	3.06%

Net interest-earning assets/ Net interest margin	$ 1,402,382		3.65%	1,333,048		3.40%

Ratio of interest-earning assets to
interest-bearing liabilities	1.23X			1.22X
(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, securities sold under agreements to repurchase and other borrowings.

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.

	Three months ended			Three months ended
	June 30, 2011			March 31, 2011
	Average	Interest	Avg.	Average	Interest	Avg.
	Balance		Yield/	Balance		Yield/
			Cost			Cost
Assets:
Interest-earning assets:
Loans receivable (a) (b) (d)	$ 5,484,194	80,389	5.86%	$5,516,254	80,847	5.89%
Mortgage-backed securities (c)	917,748	6,073	2.65%	926,349	6,756	2.92%
Investment securities (c) (d)	392,963	5,196	5.29%	354,786	5,128	5.78%
FHLB stock	55,100	-	-	58,845	-	-
Other interest-earning deposits	705,568	489	0.27%	685,864	407	0.24%

Total interest-earning assets	7,555,573	92,147	4.87%	7,542,098	93,138	4.96%

Noninterest earning assets (e)	556,085			592,981

Total assets	$ 8,111,658			$8,135,079

Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings accounts	$ 1,093,539	1,275	0.47%	$1,063,696	1,429	0.55%
Interest-bearing demand accounts	813,179	246	0.12%	773,633	232	0.12%
Money market accounts	933,288	1,059	0.46%	915,768	1,155	0.51%
Certificate accounts	2,372,039	12,893	2.18%	2,431,952	13,247	2.21%
Borrowed funds (f)	841,835	6,569	3.13%	847,784	6,584	3.15%
Junior subordinated debentures	103,094	1,420	5.45%	103,094	1,405	5.45%

Total interest-bearing liabilities	6,156,974	23,462	1.53%	6,135,927	24,052	1.59%

Noninterest bearing liabilities	708,310			701,633

Total liabilities	6,865,284			6,837,560

Shareholders' equity	1,246,374			1,297,519

Total liabilities and shareholders' equity	$ 8,111,658			$8,135,079

Net interest income/ Interest rate spread		68,685	3.34%		69,086	3.37%

Net interest-earning assets/ Net interest margin	$ 1,398,599		3.64%	$1,406,171		3.66%

Ratio of interest-earning assets to
interest-bearing liabilities	1.23X			1.23X
(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, securities sold under agreements to repurchase and other borrowings.