Northwest Bancshares, Inc. Announces Third Quarter 2010 Earnings and Dividend Declaration

Oct 25, 2010, 10:45 ET from Northwest Bancshares, Inc.

WARREN, Pa., Oct. 25 /PRNewswire-FirstCall/ -- Northwest Bancshares, Inc. (Nasdaq: NWBI) announced net income for the quarter ended September 30, 2010 of $15.5 million, or $0.14 per diluted share.  This represents an increase of $3.4 million over the same quarter last year when net income was $12.1 million, or $0.11 per diluted share, and a decrease of $650,000 compared to the quarter ended June 30, 2010 when net income was $16.1 million, or $0.15 per diluted share.  The annualized returns on average shareholders’ equity and average assets for the current quarter were 4.72% and 0.76% compared to 7.48% and 0.68% for the same quarter last year and 4.95% and 0.79% for the quarter ended June 30, 2010.  

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.10 per share payable on November 18, 2010, to shareholders of record as of November 4, 2010.  This represents the 64th 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 report another quarter of solid earnings despite the challenges of the current economic and interest rate environment.  During the quarter, our net interest margin improved to 3.63% from 3.47% for the prior quarter and 3.54% for the same quarter last year.  Other components of income remained relatively stable and our earnings were fairly consistent with the previous quarter.  Our financial division was successful in restructuring $695.0 million of FHLB borrowings, extending the average maturities of these borrowings by almost four years, while reducing interest cost by approximately $1.0 million annually.  Finally, we experienced strong lending and deposit growth.  Loans increased by $47.6 million for the quarter and $293.0 million year-to-date while deposits increased $40.0 million for the quarter and $144.5 million year-to-date.  Most encouraging was our growth in non-interest bearing checking accounts of $21.0 million for the quarter and $68.5 million year-to-date.”

Net interest income increased by $9.9 million, or 17.3%, to $66.7 million for the quarter ended September 30, 2010, from $56.8 million for the quarter ended September 30, 2009, which was primarily attributable to an increase in interest income from loans receivable and a decrease in the cost of deposits.  Interest income on loans receivable increased by $3.7 million, or 4.7%, to $83.4 million as the Company’s average outstanding loans increased by $400.8 million, or 7.8%.  Interest expense on deposits decreased by $5.7 million, or 24.3%, to $17.8 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 $41,000, or 0.4%, to $9.9 million for the quarter ended September 30, 2010, from $9.8 million a year ago.  As of September 30, 2010, the allowance for loan losses was $77.2 million, or 1.38% of total loans, compared to $67.8 million, or 1.32% of total loans, as of September 30, 2009.  Loans 90 days or more delinquent were $103.5 million as of September 30, 2010, compared to $117.1 million as of September 30, 2009.    

Noninterest income decreased by $157,000, or 1.1%, to $13.8 million for the quarter ended September 30, 2010, from $14.0 million for the quarter ended September 30, 2009.  The Company recorded other-than-temporary impairment on investment securities of $392,000 for the quarter ended September 30, 2010 compared to $891,000 for the comparable quarter in 2009 as the fair value of the investment portfolio has increased over the past year.  Mortgage banking income decreased from $1.3 million last year, to $752,000 for the quarter ended September 30, 2010 as a result of the Company significantly decreasing the percentage of mortgage loans that were sold into the secondary market.  Service charges and fees increased by $938,000, or 10.6%, to $9.8 million for the quarter ended September 30, 2010 primarily as a result of loan production and an increase in the types of deposit accounts which typically generate fees.  Also making a positive contribution to noninterest income was insurance commission income which increased by $662,000, or 90.6%, to $1.4 million for the quarter ended September 30, 2010 due to the acquisition of Veracity Benefits Design, Inc., an employee benefits firm specializing in services to employer and employee groups.  Partially offsetting these increases was a write-down of real estate owned, which increased to $2.0 million for the quarter ended September 30, 2010, from $62,000 for the quarter ended September 30, 2009.  This increase was primarily the result of a write-down on a parcel of property located in south Florida due to further deterioration of the market value of the property.  

Noninterest expense increased by $4.0 million, or 9.0%, to $49.0 million for the quarter ended September 30, 2010, from $45.0 million in the prior year.  This increase is primarily a result of increases in compensation and employee benefits, office operations, processing expenses and professional services.  Compensation and employee benefits expenses increased by $1.3 million, or 5.5%, to $24.6 million for the quarter ended September 30, 2010.  This increase is primarily attributable to an increase in health insurance expense and the expense of the employee stock ownership plan.  Office operations expense increased by $1.2 million, to $4.5 million for the quarter ended September 30, 2010.  This increase was entirely due to a large check kiting fraud.  Processing expenses increased by $642,000, to $5.9 million for the quarter ended September 30, 2010.  This increase is primarily due to the additional costs associated with annual software maintenance and software license fees.  Professional services increased by $458,000, to $1.1 million for the quarter ended September 30, 2010.  This increase is primarily a result of additional consulting fees related to bank compliance programs and fees associated with the restructuring of our FHLB borrowings.  

Net income for the nine-month period ended September 30, 2010 of $44.8 million, or $0.41 per diluted share, represents an increase of $13.2 million, or 41.5% compared to net income of $31.6 million, or $0.29 per diluted share, for the nine-month period ended September 30, 2009.  The annualized returns on average shareholders’ equity and average assets were 4.57% and 0.74%, respectively, for the current nine-month period compared to 6.68% and 0.60%, respectively, in the prior year.    

Founded in 1896 and headquartered in Warren, Pennsylvania, Northwest Bancshares, Inc., through its subsidiary Northwest Savings Bank, currently operates 171 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.  

Northwest Bancshares, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

(Dollars in thousands, except per share amounts)

(Unaudited)

September 30,

December 31,

Assets

2010

2009

Cash and cash equivalents

$            113,477

69,265

Interest-earning deposits in other financial institutions

561,634

1,037,893

Federal funds sold and other short-term investments

632

632

Marketable securities available-for-sale (amortized cost of $862,747 and $1,059,177)

884,158

1,067,089

Marketable securities held-to-maturity (fair value of $409,784 and $0)

399,324

-

Total cash, interest-earning deposits and marketable securities

1,959,225

2,174,879

Loans held for sale

18,020

1,164

Mortgage loans - one- to four- family

2,451,848

2,334,538

Home equity loans and lines of credit

1,102,252

1,067,584

Consumer loans

263,717

286,292

Commercial real estate loans

1,356,051

1,238,217

Commercial business loans

400,574

371,670

Total loans receivable

5,592,462

5,299,465

Allowance for loan losses

(77,245)

(70,403)

Loans receivable, net

5,515,217

5,229,062

Federal Home Loan Bank stock, at cost

63,242

63,242

Accrued interest receivable

27,590

25,780

Real estate owned, net

22,998

20,257

Premises and Equipment, net

126,999

124,316

Bank owned life insurance

131,009

128,270

Goodwill

171,682

171,363

Other intangible assets

4,419

4,678

Other assets

120,404

83,451

Total assets

$         8,142,785

8,025,298

Liabilities and Shareholders' equity

Liabilities

Noninterest-bearing demand deposits

$            555,491

487,036

Interest-bearing demand deposits

783,749

768,110

Savings deposits

1,977,249

1,744,537

Time deposits

2,452,451

2,624,741

Total deposits

5,768,940

5,624,424

Borrowed funds

876,068

897,326

Advances by borrowers for taxes and insurance

12,698

22,034

Accrued interest payable

1,725

4,493

Other liabilities

65,038

57,412

Junior subordinated debentures

103,094

103,094

Total liabilities

6,827,563

6,708,783

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, 110,806,418 shares

and 110,641,858 shares issued, respectively

1,108

1,106

Paid-in-capital

829,929

828,195

Retained earnings

520,419

508,842

Unallocated common stock of Employee Stock Ownership Plan

(28,851)

(11,651)

Accumulated other comprehensive loss

(7,383)

(9,977)

Total shareholders' equity

1,315,222

1,316,515

Total liabilities and shareholders' equity

$         8,142,785

8,025,298

Equity to assets

16.15%

16.40%

Tangible common equity to assets

14.30%

14.53%

Book value per share

$11.87

$11.90

Tangible book value per share

$10.28

$10.31

Closing market price per share

$11.18

$11.27

Full time equivalent employees

1,879

1,867

Number of banking offices

171

171

Northwest Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income - Unaudited

(Dollars in thousands, except per share amounts)

Three months ended

September 30,

June 30,

2010

2009

2010

Interest income:

Loans receivable

83,372

79,637

81,734

Mortgage-backed securities

6,534

6,580

6,706

Taxable investment securities

489

1,242

599

Tax-free investment securities

3,090

2,716

2,853

Interest-earning deposits

524

253

512

Total interest income

94,009

90,428

92,404

Interest expense:

Deposits

17,772

23,472

18,973

Borrowed funds

9,587

10,114

9,704

Total interest expense

27,359

33,586

28,677

Net interest income

66,650

56,842

63,727

Provision for loan losses

9,871

9,830

7,896

Net interest income after provision

for loan losses

56,779

47,012

55,831

Noninterest income:

Impairment losses on securities

(1,830)

(3,727)

(1,824)

Noncredit related losses on securities not expected

to be sold (recognized in other comprehensive income)

1,438

2,836

1,606

Net impairment losses

(392)

(891)

(218)

Gain on sale of investments, net

17

97

94

Service charges and fees

9,821

8,883

9,902

Trust and other financial services income

1,600

1,496

1,912

Insurance commission income

1,393

731

1,293

Loss on real estate owned, net

(2,014)

(62)

(255)

Income from bank owned life insurance

1,212

1,208

1,474

Mortgage banking income

752

1,328

29

Other operating income

1,439

1,195

1,314

Total noninterest income

13,828

13,985

15,545

Noninterest expense:

Compensation and employee benefits

24,565

23,292

24,960

Premises and occupancy costs

5,648

5,319

5,340

Office operations

4,460

3,270

2,934

Processing expenses

5,863

5,221

5,552

Marketing expenses

2,208

2,102

3,294

Federal deposit insurance premiums

2,424

2,381

2,148

Professional services

1,126

668

583

Amortization of intangible assets

725

701

759

Real estate owned expense

654

838

712

Other expense

1,375

1,195

1,875

Total noninterest expense

49,048

44,987

48,157

Income before income taxes

21,559

16,010

23,219

Income tax expense

6,068

3,956

7,078

Net income

15,491

12,054

16,141

Basic earnings per share

$            0.14

$            0.11

*

$            0.15

Diluted earnings per share

$            0.14

$            0.11

*

$            0.15

Annualized return on average equity

4.72%

7.48%

4.95%

Annualized return on average assets

0.76%

0.68%

0.79%

Basic common shares outstanding

108,340,566

109,056,008

*

108,227,678

Diluted common shares outstanding

108,914,069

109,505,921

*

108,960,333

* - Adjusted for 2.25 to 1 exchange ratio.

Northwest Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income - Unaudited

(Dollars in thousands, except per share amounts)

Nine months ended

September 30,

2010

2009

Interest income:

Loans receivable

245,852

240,400

Mortgage-backed securities

19,385

20,858

Taxable investment securities

2,086

4,138

Tax-free investment securities

8,627

8,376

Interest-earning deposits

1,601

415

Total interest income

277,551

274,187

Interest expense:

Deposits

58,149

72,555

Borrowed funds

28,991

30,418

Total interest expense

87,140

102,973

Net interest income

190,411

171,214

Provision for loan losses

26,568

27,347

Net interest income after provision

for loan losses

163,843

143,867

Noninterest income:

Impairment losses on securities

(1,994)

(12,417)

Noncredit related losses on securities not expected

to be sold (recognized in other comprehensive income)

1,287

7,236

Net impairment losses

(707)

(5,181)

Gain on sale of investments, net

2,194

377

Service charges and fees

28,625

24,867

Trust and other financial services income

5,345

4,349

Insurance commission income

3,828

2,039

Loss on real estate owned, net

(2,293)

(3,934)

Income from bank owned life insurance

3,852

3,596

Mortgage banking income

773

6,442

Other operating income

3,613

2,886

Total noninterest income

45,230

35,441

Noninterest expense:

Compensation and employee benefits

75,381

69,957

Premises and occupancy costs

16,990

16,521

Office operations

10,631

9,575

Processing expenses

17,111

15,483

Marketing expenses

6,945

5,046

Federal deposit insurance premiums

6,720

6,161

FDIC Special Assessment

-

3,288

Professional services

2,437

1,899

Amortization of intangible assets

2,266

2,371

Real estate owned expense

2,265

1,770

Other expense

5,063

4,186

Total noninterest expense

145,809

136,257

Income before income taxes

63,264

43,051

Income tax expense

18,479

11,404

Net income

44,785

31,647

Basic earnings per share

$            0.41

$            0.29

*

Diluted earnings per share

$            0.41

$            0.29

*

Annualized return on average equity

4.57%

6.68%

Annualized return on average assets

0.74%

0.60%

Basic common shares outstanding

108,299,515

109,007,874

*

Diluted common shares outstanding

108,959,585

109,338,435

*

* - Adjusted for 2.25 to 1 exchange ratio.

Northwest Bancshares, Inc. and Subsidiaries

Supplementary data - unaudited

(Dollars in thousands)

Three months ended

Nine months ended

September 30,

September 30,

2010

2009

2010

2009

Allowance for loan losses

Beginning balance

$   75,417

66,777

70,403

54,929

Provision

9,871

9,830

26,568

27,347

Charge-offs mortgage

(682)

(417)

(1,947)

(1,300)

Charge-offs consumer

(3,040)

(1,679)

(7,705)

(4,515)

Charge-offs commercial

(4,811)

(7,176)

(11,563)

(9,701)

Recoveries

490

440

1,489

1,015

Ending balance

$   77,245

67,775

77,245

67,775

Net charge-offs to average loans, annualized

0.58%

0.68%

0.48%

0.40%

September 30,

December 31,

2010

2009

2009

2008

Nonperforming loans

$ 151,217

117,138

124,626

99,203

Real estate owned, net

22,998

19,838

20,257

16,844

Nonperforming assets

$ 174,215

136,976

144,883

116,047

Nonperforming loans to total loans

2.70%

2.27%

2.35%

1.91%

Nonperforming assets to total assets

2.14%

1.92%

1.81%

1.67%

Allowance for loan losses to total loans

1.38%

1.32%

1.33%

1.06%

Allowance for loan losses to nonperforming loans

51.08%

57.86%

56.49%

55.37%

Northwest Bancshares, Inc. and Subsidiaries

Supplementary data - unaudited

(Dollars in thousands)

Loans past due schedule

(Number of loans and dollar amount of loans)

September 30,

December 31,

2010

*

2009

*

2008

*

Loans past due 30 days to 59 days:

One- to four- family residential loans

97

$     6,696

0.3%

350

$   27,998

1.2%

392

$ 32,988

1.3%

Consumer loans

993

9,874

0.7%

1,100

11,226

0.8%

1,157

11,295

0.9%

Multifamily and commercial RE loans

76

12,445

0.9%

85

16,152

1.3%

99

18,901

1.8%

Commercial business loans

55

5,130

1.3%

48

3,293

0.9%

86

7,700

2.2%

Total loans past due 30 days to 59 days

1,221

$   34,145

0.6%

1,583

$   58,669

1.1%

1,734

$ 70,884

1.4%

Loans past due 60 days to 89 days:

One- to four- family residential loans

76

$     6,505

0.3%

85

$     6,772

0.3%

101

$   7,599

0.3%

Consumer loans

413

3,679

0.3%

392

3,029

0.2%

379

2,836

0.2%

Multifamily and commercial RE loans

36

12,358

0.9%

35

5,811

0.5%

54

8,432

0.8%

Commercial business loans

36

2,304

0.6%

26

2,474

0.7%

45

3,801

1.1%

Total loans past due 60 days to 89 days

561

$   24,846

0.4%

538

$   18,086

0.3%

579

$ 22,668

0.4%

Loans past due 90 days or more:

One- to four- family residential loans

251

$   27,552

1.1%

279

$   29,373

1.3%

223

$ 20,435

0.8%

Consumer loans

600

11,936

0.9%

727

12,544

0.9%

687

9,756

0.7%

Multifamily and commercial RE loans

186

41,605

3.1%

199

49,594

4.0%

155

43,828

4.1%

Commercial business loans

104

22,431

5.6%

124

18,269

4.9%

114

25,184

7.1%

Total loans past due 90 days or more

1,141

$ 103,524

1.9%

1,329

$ 109,780

2.1%

1,179

$ 99,203

1.9%

 * - 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 September 30, 2010 - unaudited:

(Dollars in thousands)

Loans outstanding:

Mortgage

(1)

Consumer

(2)

Commercial

(3)

Total

(4)

Pennsylvania

$ 2,055,065

83.2%

1,189,160

87.1%

1,161,039

66.1%

4,405,264

78.9%

New York

146,241

5.9%

107,596

7.9%

336,060

19.1%

589,897

10.5%

Ohio

26,637

1.1%

17,947

1.3%

46,234

2.6%

90,818

1.6%

Maryland

214,710

8.7%

36,976

2.7%

170,226

9.7%

421,912

7.5%

Florida

27,215

1.1%

14,290

1.0%

43,066

2.5%

84,571

1.5%

    Total

$ 2,469,868

100.0%

1,365,969

100.0%

1,756,625

100.0%

5,592,462

100.0%

 (1) - Percentage of total mortgage loans  

 (2) - Percentage of total consumer loans  

 (3) - Percentage of total commercial loans  

 (4) - Percentage of total loans  

Loans 90 or more past due:

Mortgage

(5)

Consumer

(6)

Commercial

(7)

Total

(8)

Pennsylvania

$      18,828

0.9%

9,328

0.8%

41,854

3.6%

70,010

1.6%

New York

782

0.5%

199

0.2%

767

0.2%

1,748

0.3%

Ohio

134

0.5%

135

0.8%

219

0.5%

488

0.5%

Maryland

774

0.4%

1,029

2.8%

14,169

8.3%

15,972

3.8%

Florida

7,034

25.8%

1,245

8.7%

7,027

16.3%

15,306

18.1%

    Total

$      27,552

1.1%

11,936

0.9%

64,036

3.6%

103,524

1.9%

 (5) - Percentage of mortgage loans in that geographic area  

 (6) - Percentage of consumer loans in that geographic area  

 (7) - Percentage of commercial loans in that geographic area  

 (8) - Percentage of total loans in that geographic area  

Northwest Bancshares, Inc. and Subsidiaries

Supplementary data - unaudited

(Dollars in thousands)

Marketable securities available-for-sale as of September 30, 2010:

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

$     10,014

-

(1)

10,013

Debt issued by government sponsored enterprises:

Due in one year - five years

1,986

117

-

2,103

Due in five years - ten years

7,074

737

-

7,811

Equity securities

954

95

(93)

956

Municipal securities:

Due in one year - five years

3,099

176

-

3,275

Due in five years - ten years

35,944

1,596

-

37,540

Due after ten years

171,960

4,391

(497)

175,854

Corporate trust preferred securities:

Due in one year or less

100

-

-

100

Due in one year - five years

500

-

-

500

Due after ten years

25,530

288

(7,021)

18,797

Mortgage-backed securities:

Fixed rate pass-through

114,015

8,282

(5)

122,292

Variable rate pass-through

181,804

8,120

(24)

189,900

Fixed rate non-agency CMO

15,476

93

(1,187)

14,382

Fixed rate agency CMO

28,622

1,243

-

29,865

Variable rate non-agency CMO

6,083

150

(180)

6,053

Variable rate agency CMO

259,586

5,241

(110)

264,717

Total mortgage-backed securities

605,586

23,129

(1,506)

627,209

Total marketable securities available-for-sale

$   862,747

30,529

(9,118)

884,158

Marketable securities held-to-maturity as of September 30, 2010:

Gross

Gross

unrealized

unrealized

Amortized

holding

holding

Market

cost

gains

losses

value

Debt issued by government sponsored enterprises:

Due in one year - five years

$     26,500

84

-

26,584

Municipal securities:

Due after ten years

81,116

1,485

(31)

82,570

Mortgage-backed securities:

Fixed rate pass-through

32,168

1,012

-

33,180

Variable rate pass-through

9,996

135

-

10,131

Fixed rate agency CMO

221,772

7,306

-

229,078

Variable rate agency CMO

27,772

469

     -

28,241

Total mortgage-backed securities

291,708

8,922

     -

300,630

Total marketable securities held-to-maturity

$   399,324

10,491

(31)

409,784

Issuers of mortgage-backed securities as of September 30, 2010:

Fannie Mae

$   327,849

11,746

(123)

339,472

Ginnie Mae

264,415

9,697

(8)

274,104

Freddie Mac

258,273

10,365

(2)

268,636

Non-agency

46,757

243

(1,373)

45,627

  Total

$   897,294

32,051

(1,506)

927,839

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 September 30,

2010

2009

Average

Interest

Avg.

Average

Interest

Avg.

Balance

Yield/

Balance

Yield/

Cost

Cost

Assets:

Interest-earning assets:

  Loans receivable (a) (b) (d)

$ 5,569,014

83,753

6.00%

5,168,204

80,006

6.15%

  Mortgage-backed securities (c)

853,714

6,534

3.06%

714,548

6,580

3.68%

  Investment securities (c) (d)

378,145

5,243

5.55%

351,741

5,422

6.17%

  FHLB stock

63,242

-

-

63,143

-

-

  Other interest-earning deposits

706,829

524

0.29%

328,447

253

0.30%

Total interest-earning assets

7,570,944

96,054

5.06%

6,626,083

92,261

5.54%

Noninterest earning assets (e)

591,977

512,804

Total assets

$ 8,162,921

7,138,887

Liabilities and shareholders' equity:

Interest-bearing liabilities:

  Savings accounts

$ 1,071,708

2,203

0.82%

842,069

1,591

0.75%

  Interest-bearing demand accounts

778,597

244

0.12%

746,125

555

0.30%

  Money market accounts

903,278

1,301

0.57%

766,742

1,908

0.99%

  Certificate accounts

2,446,317

14,024

2.27%

2,578,266

19,418

2.99%

  Borrowed funds (f)

898,618

8,150

3.60%

892,081

8,665

3.85%

  Junior subordinated debentures

103,094

1,437

5.45%

103,094

1,449

5.50%

Total interest-bearing liabilities

6,201,612

27,359

1.75%

5,928,377

33,586

2.25%

Noninterest bearing liabilities

648,905

566,250

Total liabilities

6,850,517

6,494,627

Shareholders' equity

1,312,404

644,260

Total liabilities and shareholders' equity

$ 8,162,921

7,138,887

Net interest income/ Interest rate spread

68,695

3.31%

58,675

3.29%

Net interest-earning assets/ Net interest margin

$ 1,369,332

3.63%

697,706

3.54%

Ratio of interest-earning assets to

interest-bearing liabilities

1.22X

1.12X

(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.

Nine months ended September 30,

2010

2009

Average

Interest

Avg.

Average

Interest

Avg.

Balance

Yield/

Balance

Yield/

Cost

Cost

Assets:

Interest-earning assets:

  Loans receivable (a) (b) (d)

$ 5,461,244

246,941

6.05%

5,185,359

241,604

6.19%

  Mortgage-backed securities (c)

794,691

19,385

3.25%

712,593

20,858

3.90%

  Investment securities (c) (d)

371,587

15,358

5.51%

364,437

17,025

6.23%

  FHLB stock

63,242

-

-

63,143

-

-

  Other interest-earning deposits

833,157

1,601

0.25%

232,852

415

0.24%

Total interest-earning assets

7,523,921

283,285

5.04%

6,558,384

279,902

5.67%

Noninterest earning assets (e)

577,252

491,480

Total assets

$ 8,101,173

7,049,864

Liabilities and shareholders' equity:

Interest-bearing liabilities:

  Savings accounts

$ 1,022,259

6,472

0.85%

822,401

4,649

0.76%

  Interest-bearing demand accounts

772,584

962

0.17%

733,714

2,102

0.38%

  Money market accounts

881,983

4,768

0.72%

733,956

6,703

1.22%

  Certificate accounts

2,492,344

45,947

2.46%

2,526,660

59,101

3.13%

  Borrowed funds (f)

898,320

24,728

3.68%

948,981

26,020

3.67%

  Junior subordinated debentures

103,094

4,263

5.45%

106,531

4,398

5.44%

Total interest-bearing liabilities

6,170,584

87,140

1.89%

5,872,243

102,973

2.34%

Noninterest bearing liabilities

623,875

545,623

Total liabilities

6,794,459

6,417,866

Shareholders' equity

1,306,714

631,998

Total liabilities and shareholders' equity

$ 8,101,173

7,049,864

Net interest income/ Interest rate spread

196,145

3.15%

176,929

3.33%

Net interest-earning assets/ Net interest margin

$ 1,353,337

3.48%

686,141

3.60%

Ratio of interest-earning assets to

interest-bearing liabilities

1.22X

1.12X

(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

September 30, 2010

June 30, 2010

Average

Interest

Avg.

Average

Interest

Avg.

Balance

Yield/

Balance

Yield/

Cost

Cost

Assets:

Interest-earning assets:

  Loans receivable (a) (b) (d)

$ 5,569,014

83,753

6.00%

5,465,373

81,866

6.03%

  Mortgage-backed securities (c)

853,714

6,534

3.06%

792,412

6,706

3.39%

  Investment securities (c) (d)

378,145

5,243

5.55%

376,206

4,989

5.30%

  FHLB stock

63,242

-

-

63,242

-

-

  Other interest-earning deposits

706,829

524

0.29%

845,947

512

0.24%

Total interest-earning assets

7,570,944

96,054

5.06%

7,543,180

94,073

5.02%

Noninterest earning assets (e)

591,977

584,203

Total assets

$ 8,162,921

8,127,383

Liabilities and shareholders' equity:

Interest-bearing liabilities:

  Savings accounts

$ 1,071,708

2,203

0.82%

1,033,707

2,236

0.87%

  Interest-bearing demand accounts

778,597

244

0.12%

785,619

319

0.16%

  Money market accounts

903,278

1,301

0.57%

901,439

1,630

0.73%

  Certificate accounts

2,446,317

14,024

2.27%

2,470,706

14,788

2.40%

  Borrowed funds (f)

898,618

8,150

3.60%

895,650

8,283

3.71%

  Junior subordinated debentures

103,094

1,437

5.45%

103,094

1,421

5.45%

Total interest-bearing liabilities

6,201,612

27,359

1.75%

6,190,215

28,677

1.86%

Noninterest bearing liabilities

648,905

632,037

Total liabilities

6,850,517

6,822,252

Shareholders' equity

1,312,404

1,305,131

Total liabilities and shareholders' equity

$ 8,162,921

8,127,383

Net interest income/ Interest rate spread

68,695

3.31%

65,396

3.16%

Net interest-earning assets/ Net interest margin

$ 1,369,332

3.63%

1,352,965

3.47%

Ratio of interest-earning assets to

interest-bearing liabilities

1.22X

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.

SOURCE Northwest Bancshares, Inc.



RELATED LINKS

http://www.northwestsavingsbank.com