Northwest Bancshares, Inc. Announces Third Quarter 2016 Earnings and Quarterly Dividend

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Oct 24, 2016, 11:53 ET

WARREN, Pa., Oct. 24, 2016 /PRNewswire/ -- Northwest Bancshares, Inc. (NasdaqGS: NWBI) announced net income for the quarter ended September 30, 2016 of $14.2 million, or $0.14 per diluted share. This represents an increase of $1.3 million compared to the same quarter last year when net income was $12.9 million or $0.13 per diluted share. The annualized returns on average shareholders' equity and average assets for the quarter ended September 30, 2016 were 4.89% and 0.63% compared to 4.54% and 0.59% for the same quarter last year.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.15 per share payable on November 17, 2016, to shareholders of record as of November 3, 2016. This is the 88th consecutive quarter in which the Company has paid a cash dividend. Based on the current market value of the Company's stock, this represents an annualized dividend yield of approximately 3.8%.

Earnings for the current quarter include acquisition costs of $7.2 million related to the September 9, 2016 purchase of 18 branches from First Niagara Bank, and $5.1 million of stock-based compensation costs associated with the termination of the Northwest Savings Bank Employee Stock Ownership Plan ("ESOP"). Excluding the after-tax impact of these expenses totaling $8.3 million, non-GAAP net operating income for the quarter ended September 30, 2016 was $22.5 million, or $0.22 per diluted share, compared to non-GAAP net operating income of $17.9 million, or $0.19 per diluted share in the same quarter last year. The non-GAAP annualized returns on average shareholders' equity and average assets for the quarter ended September 30, 2016 were 7.74% and 0.99% compared to 6.30% and 0.82% in the previous year. The aforementioned termination of the ESOP includes the cancellation of approximately 1,367,000 shares of common stock as of September 30, 2016.

In making this announcement, William J. Wagner, President and CEO, noted, "The $4.6 million, or 26%, increase in non-GAAP quarterly earnings over the previous year primarily reflects the impact of the merger of Lorain National Bank, which occurred in August 2015, and the refinancing of $700.0 million of fixed-rate FHLB advances, which occurred in May 2016. Since the purchase of the Buffalo branches occurred late in the current quarter, there was limited impact on earnings. However, we anticipate the full impact from this transaction to be realized in the fourth quarter of 2016."

Net interest income increased by $11.7 million, or 17.5%, to $78.6 million for the quarter ended September 30, 2016, from $66.9 million for the quarter ended September 30, 2015. This increase is due primarily to a $6.3 million, or 8.3%, increase in interest income on loans as a result of a $647.0 million increase in the Company's loan portfolio from a year ago. Also contributing to the increase in net interest income was a $6.2 million decrease in interest expense on borrowed funds due primarily to the payoff of Federal Home Loan Bank ("FHLB") advances with the funds received by assuming the deposits from the First Niagara branch purchase. Additionally, interest paid on deposits decreased by $510,000 for the quarter due primarily to the change in deposit mix. Partially offsetting these improvements was a $1.1 million decrease in interest income on investment securities as the portfolio decreased due to the cash flow from these securities being used to fund loan growth. As a result of these changes, the Company's net interest margin increased to 3.88% for the quarter ended September 30, 2016 from 3.50% for the same quarter last year.

The provision for loan losses increased by $2.3 million, or 74.9%, to $5.5 million for the quarter ended September 30, 2016, from $3.2 million for the quarter ended September 30, 2015. This increase is due primarily to the downgrade of four commercial banking relationships requiring an additional $1.9 million of combined reserves. However, overall credit quality remained steady while classified loans to total loans decreased to 2.73% at September 30, 2016 from 2.81% at September 30, 2015 and total loan delinquency to total loans decreased to 1.11% at September 30, 2016 from 1.20% at September 30, 2015.

Noninterest income increased by $2.7 million, or 14.8%, to $20.8 million for the quarter ended September 30, 2016, from $18.1 million for the quarter ended September 30, 2015. Contributing to this increase was an increase in mortgage banking income of $1.6 million, or 606.4%, which is the result of resuming the sale of mortgage loans originated by the Wholesale Lending Division. Additionally, service charges and fees increased by $1.1 million, or 10.7%, which is attributable to the growth in checking accounts from both the LNB Bancorp, Inc. ("LNB") acquisition and internal growth initiatives. As was previously announced, the Company's insurance subsidiary signed an agreement of its intentions to acquire an insurance agency in Warren, Pennsylvania on November 1, 2016 which is anticipated to provide approximately $500,000 of additional annual insurance commission revenue.

Noninterest expense increased by $11.2 million, or 17.6%, to $75.0 million for the quarter ended September 30, 2016, from $63.8 million for the quarter ended September 30, 2015. This increase resulted primarily from an $8.4 million, or 27.3%, increase in compensation and employee benefits due to the costs associated with the termination of the ESOP and the employees added from recent acquisitions. The other increases for the current quarter compared to the prior year are primarily attributable to incremental expenses from the LNB acquisition.

Net income for the nine month period ended September 30, 2016 was $25.2 million, or $0.25 per diluted share. This represents a decrease of $19.1 million, or 43.2%, compared to the nine month period ended September 30, 2015, when net income was $44.3 million, or $0.48 per diluted share. The annualized returns on average shareholders' equity and average assets for the nine month period ended September 30, 2016 were 2.90% and 0.38% compared to 5.47% and 0.73% for the same period last year. This decrease is due primarily to a $37.0 million penalty incurred from the prepayment of FHLB borrowings, acquisition and restructuring expenses of $11.2 million, and ESOP expense of $5.1 million. Offsetting these items which negatively impacted net income was a $34.8 million, or 18.1%, increase in net interest income.

Non-GAAP net operating income for the nine month period ended September 30, 2016, which excludes the after-tax impact of the aforementioned FHLB prepayment penalty, restructuring and acquisition expenses, and ESOP costs totaling $34.0 million, was $59.2 million, or $0.59 per diluted share. This represents an increase of $9.3 million, or 18.6%, compared to the nine month period ended September 30, 2015 with non-GAAP net operating income of $49.9 million, or $0.54 per diluted share. The non-GAAP annualized returns on average shareholders' equity and average assets for the nine month period ended September 30, 2016 were 6.82% and 0.88% compared to 6.15% and 0.82% for the same period last year.

Headquartered in Warren, Pennsylvania, Northwest Bancshares, Inc. is the holding company of Northwest Bank. Founded in 1896, Northwest Bank is a full-service financial institution offering a complete line of business and personal banking products, employee benefits and wealth management services, as well as the fulfillment of business and personal insurance needs. Northwest operates 167 full-service community banking offices and nine free standing drive-through facilities in Pennsylvania, New York, Ohio and Maryland and 51 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 ("NWBI"). Additional information regarding Northwest Bancshares, Inc. and Northwest Bank can be accessed on-line at www.northwest.com.

Forward-Looking Statements - This release may contain forward-looking statements with respect to the financial condition and results of operations of Northwest Bancshares, Inc. including, without limitations, statements relating to the earnings outlook of the Company. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements, include among others, the following possibilities: (1) changes in the interest rate environment; (2) competitive pressure among financial services companies; (3) general economic conditions including an increase in non-performing loans; (4) changes in legislation or regulatory requirements; (5) difficulties in continuing to improve operating efficiencies; (6) difficulties in the integration of acquired businesses; and (7) increased risk associated with commercial real-estate and business loans. Management has no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this release.

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

	September 30, 2016			December 31, 2015		September 30, 2015
Assets
Cash and cash equivalents	$	107,604		92,263		91,406
Interest-earning deposits in other financial institutions	210,723			74,510		3,206
Federal funds sold and other short-term investments	2,239			635		1,013
Marketable securities available-for-sale (amortized cost of $879,141, $868,956 and $965,965, respectively)	890,688			874,405		976,677
Marketable securities held-to-maturity (fair value of $23,249, $32,552 and $48,511, respectively)	22,584			31,689		47,299
Total cash, interest-earning deposits and marketable securities	1,233,838			1,073,502		1,119,601

Residential mortgage loans held for sale	30,355			—		—
Residential mortgage loans	2,788,658			2,740,892		2,712,537
Home equity loans	1,349,105			1,187,106		1,203,190
Consumer loans	628,512			520,289		494,714
Commercial real estate loans	2,464,681			2,351,434		2,330,864
Commercial loans	537,255			422,400		410,308
Total loans receivable	7,798,566			7,222,121		7,151,613
Allowance for loan losses	(63,246)			(62,672)		(60,547)
Loans receivable, net	7,735,320			7,159,449		7,091,066

Federal Home Loan Bank stock, at cost	7,660			40,903		40,115
Accrued interest receivable	21,591			21,072		22,098
Real estate owned, net	4,841			8,725		10,391
Premises and Equipment, net	167,596			154,351		153,841
Bank owned life insurance	170,172			168,509		167,258
Goodwill	307,711			261,736		261,319
Other intangible assets	33,901			8,982		9,712
Other assets	31,977			54,670		59,507
Total assets	$	9,714,607		8,951,899		8,934,908

Liabilities and Shareholders' equity
Liabilities
Noninterest-bearing demand deposits	$	1,496,574		1,177,256		1,127,864
Interest-bearing demand deposits	1,446,971			1,080,086		1,097,969
Money market deposit accounts	1,896,272			1,274,504		1,277,878
Savings deposits	1,671,539			1,386,017		1,378,958
Time deposits	1,691,447			1,694,718		1,762,073
Total deposits	8,202,803			6,612,581		6,644,742

Borrowed funds	135,891			975,007		927,219
Advances by borrowers for taxes and insurance	21,616			33,735		18,216
Accrued interest payable	682			1,993		1,816
Other liabilities	79,599			54,207		62,246
Junior subordinated debentures	111,213			111,213		119,332
Total liabilities	8,551,804			7,788,736		7,773,571

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, 101,268,648 shares, 101,871,737 shares and 101,725,112 issued and outstanding, respectively	1,013			1,019		1,017
Paid-in-capital	711,974			717,603		714,730
Retained earnings	469,459			489,292		487,048
Unallocated common stock of Employee Stock Ownership Plan	—			(20,216)		(21,398)
Accumulated other comprehensive loss	(19,643)			(24,535)		(20,060)
Total shareholders' equity	1,162,803			1,163,163		1,161,337
Total liabilities and shareholders' equity	$	9,714,607		8,951,899		8,934,908

Equity to assets	11.97		%	12.99	%	13.00	%
Tangible common equity to assets	8.76		%	10.28	%	10.31	%
Book value per share	$	11.48		11.42		11.42
Tangible book value per share	$	8.11		8.76		8.78
Closing market price per share	$	15.71		13.39		13.00
Full time equivalent employees	2,268			2,186		2,209
Number of banking offices	176			181		182

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

	Quarter ended
	September 30,			June 30,		March 31,		December 31,		September 30,
	2016			2016		2016		2015		2015
Interest income:
Loans receivable	$	82,435		82,645		80,781		80,882		76,087
Mortgage-backed securities	2,030			2,115		2,229		2,301		2,230
Taxable investment securities	627			756		1,038		1,108		1,238
Tax-free investment securities	676			707		724		836		986
FHLB dividends	218			401		467		499		451
Interest-earning deposits	114			70		59		13		99
Total interest income	86,100			86,694		85,298		85,639		81,091

Interest expense:
Deposits	5,653			5,865		6,088		6,435		6,163
Borrowed funds	1,801			4,143		7,658		8,051		7,987
Total interest expense	7,454			10,008		13,746		14,486		14,150

Net interest income	78,646			76,686		71,552		71,153		66,941
Provision for loan losses	5,538			4,199		1,660		4,595		3,167
Net interest income after provision for loan losses	73,108			72,487		69,892		66,558		63,774

Noninterest income:
Gain on sale of investments	58			227		127		116		260
Service charges and fees	11,012			10,630		10,065		10,530		9,945
Trust and other financial services income	3,434			3,277		3,261		3,410		3,062
Insurance commission income	2,541			2,768		2,714		2,490		2,398
Gain/ (loss) on real estate owned, net	(563)			111		249		(156)		(246)
Income from bank owned life insurance	1,380			1,105		1,595		1,251		1,166
Mortgage banking income	1,886			446		218		208		267
Other operating income	1,070			1,711		1,219		1,697		1,288
Total noninterest income	20,818			20,275		19,448		19,546		18,140

Noninterest expense:
Compensation and employee benefits	39,474			34,349		33,033		32,003		31,000
Premises and occupancy costs	6,094			6,275		6,537		6,403		6,072
Office operations	3,700			3,343		3,460		3,252		3,268
Collections expense	589			729		676		1,252		624
Processing expenses	8,844			8,172		8,414		8,057		8,126
Marketing expenses	2,239			2,541		1,891		1,642		1,691
Federal deposit insurance premiums	984			1,442		1,503		1,299		1,177
Professional services	1,815			2,129		1,833		1,933		1,529
Amortization of intangible assets	1,068			710		675		729		422
Real estate owned expense	206			295		311		393		471
Restructuring/ acquisition expense	7,183			3,386		635		1,347		7,590
FHLB prepayment penalty	—			36,978		—		—		—
Other expense	2,836			2,912		4,307		2,917		1,834
Total noninterest expense	75,032			103,261		63,275		61,227		63,804
Income/(loss) before income taxes	18,894			(10,499)		26,065		24,877		18,110

Income tax expense/ (benefit)	4,697			(3,491)		8,081		8,684		5,238
Net income/ (loss)	$	14,197		(7,008)		17,984		16,193		12,872

Basic earnings/ (loss) per share	$	0.14		(0.07)		0.18		0.16		0.14
Diluted earnings/ (loss) per share	$	0.14		(0.07)		0.18		0.16		0.13

Weighted average common shares outstanding - basic	99,587,630			99,177,609		98,889,744		98,741,393		95,256,807
Weighted average common shares outstanding - diluted	101,053,340			100,243,442		99,380,009		99,500,056		95,825,798

Annualized return on average equity	4.89		%	(2.44)%		6.21	%	5.55	%	4.54	%
Annualized return on average assets	0.63		%	(0.32)%		0.81	%	0.73	%	0.59	%
Annualized return on tangible common equity	6.88		%	(3.18)%		8.03	%	7.20	%	5.72	%

Efficiency ratio *	67.14		%	64.14	%	68.09	%	65.22	%	65.58	%
Annualized noninterest expense to average assets *	2.94		%	2.82	%	2.80	%	2.63	%	2.57	%

*	Excludes restructuring/acquisition expenses, FHLB prepayment penalty, and amortization of intangible assets (non-GAAP).

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

	Nine months ended September 30,
	2016			2015
Interest income:
Loans receivable	$	245,861		217,783
Mortgage-backed securities	6,374			6,522
Taxable investment securities	2,421			3,412
Tax-free investment securities	2,107			3,477
FHLB dividends	1,086			2,329
Interest-earning deposits	243			418
Total interest income	258,092			233,941

Interest expense:
Deposits	17,606			17,620
Borrowed funds	13,602			24,221
Total interest expense	31,208			41,841

Net interest income	226,884			192,100
Provision for loan losses	11,397			5,117
Net interest income after provision for loan losses	215,487			186,983

Noninterest income:
Gain on sale of investments	412			921
Service charges and fees	31,707			27,832
Trust and other financial services income	9,972			8,932
Insurance commission income	8,023			7,036
Loss on real estate owned, net	(203)			(1,833)
Income from bank owned life insurance	4,080			3,087
Mortgage banking income	2,550			725
Other operating income	4,000			2,590
Total noninterest income	60,541			49,290

Noninterest expense:
Compensation and employee benefits	106,856			87,815
Premises and occupancy costs	18,906			18,238
Office operations	10,503			9,085
Collections expense	1,994			1,995
Processing expenses	25,430			22,723
Marketing expenses	6,671			6,857
Federal deposit insurance premiums	3,929			3,810
Professional services	5,777			4,973
Amortization of intangible assets	2,453			959
Real estate owned expense	812			1,677
Restructuring/ acquisition expense	11,204			8,404
FHLB prepayment penalty	36,978			—
Other expense	10,055			6,114
Total noninterest expense	241,568			172,650
Income before income taxes	34,460			63,623

Income tax expense	9,287			19,276
Net income	$	25,173		44,347

Basic earnings per share	$	0.25		0.48
Diluted earnings per share	$	0.25		0.48

Weighted average common shares outstanding - basic	99,219,560			92,822,720
Weighted average common shares outstanding - diluted	100,228,503			93,256,099

Annualized return on average equity	2.90		%	5.47	%
Annualized return on average assets	0.38		%	0.73	%
Annualized return on tangible common equity	4.09		%	6.64	%

Efficiency ratio *	66.43		%	67.64	%
Annualized noninterest expense to average assets *	2.85		%	2.69	%


*	Excludes restructuring/acquisition expenses, FHLB prepayment penalty, and amortization of intangible assets (non-GAAP).

Northwest Bancshares, Inc. and Subsidiaries Reconciliation of Non-GAAP to GAAP Net Income (Unaudited) * (Dollars in thousands, except per share amounts)

	Quarter ended September 30,					Nine months ended September 30,
	2016			2015		2016		2015
Operating results (non-GAAP):
Net interest income	$	78,646		66,941		226,884		192,100
Provision for loan losses	5,538			3,167		11,397		5,117
Noninterest income	20,818			18,140		60,541		49,290
Noninterest expense	62,712			56,214		188,249		164,246
Income taxes	8,710			7,844		28,598		22,128
Net operating income (non-GAAP)	$	22,504		17,856		59,181		49,899
Diluted earnings per share (non-GAAP)	$	0.22		0.19		0.59		0.54

Average equity	$	1,156,137		1,125,305		1,158,346		1,084,126
Average assets	9,028,886			8,614,119		8,940,648		8,125,431
Annualized ROE (non-GAAP)	7.74		%	6.30	%	6.82	%	6.15	%
Annualized ROA (non-GAAP)	0.99		%	0.82	%	0.88	%	0.82	%

Reconciliation of net operating income to net income:
Net operating income (non-GAAP)	$	22,504		17,856		59,181		49,899
Nonoperating expenses, net of tax:
Restructuring/ acquisition expenses	(4,638)			(4,984)		(6,098)		(5,522)
Stock-based compensation expense - ESOP	(3,669)			—		(3,669)		—
FHLB prepayment penalty	—			—		(24,241)		—
Net income/ (loss) (GAAP)	$	14,197		12,872		25,173		44,377
Diluted earnings per share (GAAP)	$	0.14		0.13		0.25		0.48

Annualized ROE (GAAP)	4.89		%	4.54	%	2.90	%	5.47	%
Annualized ROA (GAAP)	0.63		%	0.59	%	0.38	%	0.73	%

The table summarizes the Company's results from operations on a GAAP basis and on an operating (non-GAAP) basis for the periods indicated. Operating results exclude acquisition expenses and prepayment penalties, net of tax benefit. The Company believes this non-GAAP presentation provides a meaningful comparison of operational performance and facilitates a more effective evaluation and comparison of results to assess performance in relation to ongoing operations.

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

	September 30, 2016			June 30, 2016		March 31, 2016		December 31, 2015		September 30, 2015
Nonaccrual loans current:
Residential mortgage loans	$	3,063		2,017		1,678		1,393		1,900
Home equity loans	1,446			1,092		1,118		1,108		1,471
Consumer loans	464			277		190		140		251
Commercial real estate loans	19,246			17,456		19,350		14,018		19,602
Commercial loans	7,299			4,462		5,923		4,604		4,877
Total nonaccrual loans current	$	31,518		25,304		28,259		21,263		28,101

Nonaccrual loans delinquent 30 days to 59 days:
Residential mortgage loans	$	344		—		1,600		430		—
Home equity loans	315			49		119		375		392
Consumer loans	211			95		164		97		155
Commercial real estate loans	514			151		3,371		2,192		359
Commercial loans	185			16		4		322		131
Total nonaccrual loans delinquent 30 days to 59 days	$	1,569		311		5,258		3,416		1,037

Nonaccrual loans delinquent 60 days to 89 days:
Residential mortgage loans	$	1,270		1,524		721		2,139		1,097
Home equity loans	465			366		504		389		260
Consumer loans	250			157		182		315		156
Commercial real estate loans	151			6,513		109		762		416
Commercial loans	319			1,748		57		110		11
Total nonaccrual loans delinquent 60 days to 89 days	$	2,455		10,308		1,573		3,715		1,940

Nonaccrual loans delinquent 90 days or more:
Residential mortgage loans	$	13,242		14,829		14,301		15,810		16,510
Home equity loans	5,874			5,226		5,922		5,650		4,546
Consumer loans	3,354			2,374		2,360		2,900		3,132
Commercial real estate loans	22,155			12,960		13,165		16,449		10,565
Commercial loans	6,105			4,566		3,314		2,459		2,074
Total nonaccrual loans delinquent 90 days or more	$	50,730		39,955		39,062		43,268		36,827

Total nonaccrual loans	$	86,272		75,878		74,152		71,662		67,905

Total nonaccrual loans	$	86,272		75,878		74,152		71,662		67,905
Loans 90 days past maturity and still accruing	103			472		894		1,334		680
Nonperforming loans	86,375			76,350		75,046		72,996		68,585
Real estate owned, net	4,841			4,950		6,834		8,725		10,391
Nonperforming assets	$	91,216		81,300		81,880		81,721		78,976

Nonaccrual troubled debt restructuring *	$	17,374		18,098		17,699		21,118		23,184
Accruing troubled debt restructuring	29,221			31,015		30,549		29,997		26,154
Total troubled debt restructuring	$	46,595		49,113		48,248		51,115		49,338

Nonperforming loans to total loans	1.11		%	1.05	%	1.03	%	1.01	%	0.96	%
Nonperforming assets to total assets	0.94		%	0.91	%	0.92	%	0.91	%	0.88	%
Allowance for loan losses to total loans	0.81		%	0.83	%	0.85	%	0.87	%	0.85	%
Allowance for loan losses to nonperforming loans	73.22		%	79.61	%	82.99	%	85.86	%	94.54	%

*	Amounts included in nonperforming loans above.

Northwest Bancshares, Inc. and Subsidiaries Exposure to the oil and gas industry (Unaudited) (Dollars in thousands)
	September 30, 2016		June 30, 2016	March 31, 2016	December 31, 2015	September 30, 2015
Direct exposure to oil and gas extraction:
Outstanding balance	$	13,109	12,844	13,764	16,619	17,209
Commitments	16,511		16,542	18,450	19,576	20,127
Impaired	558		561	564	564	564
Reserve	511		548	594	626	749

Indirect exposure: *
Outstanding balance	44,781		58,399	54,465	56,659	57,805
Commitments	48,927		62,581	58,522	68,659	79,226
Impaired	761		611	—	—	—
Reserve	237		220	195	34	150

Total exposure:
Outstanding balance	57,890		71,243	68,229	73,278	75,014
Commitments	65,438		79,123	76,972	88,235	99,353
Impaired	1,319		1,172	564	564	564
Reserve	748		768	789	660	899

*	Includes loans to haulers, wholesalers, and refineries.

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

At September 30, 2016	Pass		Special mention *	Substandard **	Doubtful	Loss	Loans receivable
Personal Banking:
Residential mortgage loans	$	2,800,420	—	18,593	—	—	2,819,013
Home equity loans	1,338,643		—	10,462	—	—	1,349,105
Consumer loans	624,885		—	3,627	—	—	628,512
Total Personal Banking	4,763,948		—	32,682	—	—	4,796,630
Commercial Banking:
Commercial real estate loans	2,265,816		61,763	137,088	14	—	2,464,681
Commercial loans	479,321		14,707	40,326	2,901	—	537,255
Total Commercial Banking	2,745,137		76,470	177,414	2,915	—	3,001,936
Total loans	$	7,509,085	76,470	210,096	2,915	—	7,798,566

At June 30, 2016
Personal Banking:
Residential mortgage loans	$	2,741,101	—	16,497	—	—	2,757,598
Home equity loans	1,153,010		—	9,164	—	—	1,162,174
Consumer loans	544,174		—	2,376	—	—	546,550
Total Personal Banking	4,438,285		—	28,037	—	—	4,466,322
Commercial Banking:
Commercial real estate loans	2,170,583		63,351	129,428	14	—	2,363,376
Commercial loans	408,178		15,435	38,546	3,064	—	465,223
Total Commercial Banking	2,578,761		78,786	167,974	3,078	—	2,828,599
Total loans	$	7,017,046	78,786	196,011	3,078	—	7,294,921

At March 31, 2016
Personal Banking:
Residential mortgage loans	$	2,755,325	—	13,721	—	1,317	2,770,363
Home equity loans	1,161,382		—	8,439	—	—	1,169,821
Consumer loans	523,333		—	2,204	—	—	525,537
Total Personal Banking	4,440,040		—	24,364	—	1,317	4,465,721
Commercial Banking:
Commercial real estate loans	2,167,110		63,695	130,043	15	—	2,360,863
Commercial loans	409,994		16,425	39,887	1,112	—	467,418
Total Commercial Banking	2,577,104		80,120	169,930	1,127	—	2,828,281
Total loans	$	7,017,144	80,120	194,294	1,127	1,317	7,294,002

At December 31, 2015
Personal Banking:
Residential mortgage loans	$	2,725,492	—	14,060	—	1,340	2,740,892
Home equity loans	1,178,735		—	8,371	—	—	1,187,106
Consumer loans	517,746		—	2,543	—	—	520,289
Total Personal Banking	4,421,973		—	24,974	—	1,340	4,448,287
Commercial Banking:
Commercial real estate loans	2,170,951		53,390	126,978	115	—	2,351,434
Commercial loans	359,403		23,730	38,157	1,110	—	422,400
Total Commercial Banking	2,530,354		77,120	165,135	1,225	—	2,773,834
Total loans	$	6,952,327	77,120	190,109	1,225	1,340	7,222,121

At September 30, 2015
Personal Banking:
Residential mortgage loans	$	2,699,670	—	11,512	—	1,355	2,712,537
Home equity loans	1,198,779		—	4,411	—	—	1,203,190
Consumer loans	492,023		—	2,691	—	—	494,714
Total Personal Banking	4,390,472		—	18,614	—	1,355	4,410,441
Commercial Banking:
Commercial real estate loans	2,154,439		33,339	143,086	—	—	2,330,864
Commercial loans	353,366		19,364	37,413	165	—	410,308
Total Commercial Banking	2,507,805		52,703	180,499	165	—	2,741,172
Total loans	$	6,898,277	52,703	199,113	165	1,355	7,151,613

*	Includes $19.3 million $7.6 million, $7.7 million, $7.6 million, and $533,000 of acquired loans at September 30, 2016, June 30, 2016, March 31, 2016, December 31, 2015, and September 30, 2015, respectively.
**	Includes $29.8 million, $25.5 million, $17.9 million, $18.6 million, and $18.5 million of acquired loans at September 30, 2016, June 30, 2016 March 31, 2016, December 31, 2015, and September 30, 2015, respectively.

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

	September 30, 2016			*		June 30, 2016			*		March 31, 2016			*		December 31, 2015			*		September 30, 2015		*
(Number of loans and dollar amount of loans)
Loans delinquent 30 days to 59 days:
Residential mortgage loans	74	$	3,380	0.1	%	72	$	3,353	0.1	%	323	$	24,494	0.9	%	349	$	25,943	0.9	%	75	3,644	0.1	%
Home equity loans	164	4,984		0.4	%	128	4,988		0.4	%	132	5,351		0.5	%	173	5,806		0.5	%	149	5,770	0.5	%
Consumer loans	1,269	7,583		1.2	%	1,144	6,725		1.2	%	895	5,511		1.0	%	1,234	7,101		1.4	%	1,214	6,324	1.3	%
Commercial real estate loans	28	3,855		0.2	%	34	4,828		0.2	%	51	27,474		1.2	%	48	24,877		1.1	%	55	7,463	0.3	%
Commercial loans	26	1,493		0.3	%	15	533		0.1	%	26	3,133		0.7	%	31	2,868		0.7	%	21	1,379	0.3	%
Total loans delinquent 30 days to 59 days	1,561	$	21,295	0.3	%	1,393	$	20,427	0.3	%	1,427	$	65,963	0.9	%	1,835	$	66,595	0.9	%	1,514	24,580	0.3	%

Loans delinquent 60 days to 89 days:
Residential mortgage loans	76	$	6,174	0.2	%	74	$	5,633	0.2	%	21	$	1,358	—	%	100	$	7,790	0.3	%	83	5,193	0.2	%
Home equity loans	41	1,145		0.1	%	42	1,435		0.1	%	36	1,256		0.1	%	50	2,478		0.2	%	52	1,716	0.1	%
Consumer loans	532	2,673		0.4	%	514	2,247		0.4	%	379	1,803		0.3	%	521	2,521		0.5	%	512	2,593	0.5	%
Commercial real estate loans	13	1,102		—	%	16	8,765		0.4	%	11	1,081		—	%	21	8,228		0.3	%	28	8,368	0.4	%
Commercial loans	9	594		0.1	%	23	2,429		0.5	%	7	375		0.1	%	7	598		0.1	%	8	401	0.1	%
Total loans delinquent 60 days to 89 days	671	$	11,688	0.1	%	669	$	20,509	0.3	%	454	$	5,873	0.1	%	699	$	21,615	0.3	%	683	18,271	0.3	%

Loans delinquent 90 days or more: **
Residential mortgage loans	168	$	13,478	0.5	%	176	$	15,046	0.5	%	183	$	14,673	0.5	%	215	$	16,350	0.6	%	204	17,209	0.6	%
Home equity loans	137	6,022		0.4	%	124	5,422		0.5	%	120	6,200		0.5	%	143	6,112		0.5	%	136	5,554	0.5	%
Consumer loans	757	3,372		0.5	%	440	2,399		0.4	%	557	2,386		0.5	%	523	2,926		0.6	%	570	3,156	0.6	%
Commercial real estate loans	106	24,533		1.0	%	107	15,244		0.6	%	106	15,442		0.7	%	113	19,031		0.8	%	95	14,898	0.6	%
Commercial loans	28	6,249		1.2	%	32	4,709		1.0	%	34	3,456		0.7	%	25	2,599		0.6	%	23	2,319	0.6	%
Total loans delinquent 90 days or more	1,196	$	53,654	0.7	%	879	$	42,820	0.6	%	1,000	$	42,157	0.6	%	1,019	$	47,018	0.7	%	1,028	43,136	0.6	%

Total loans delinquent	3,428	$	86,637	1.1	%	2,941	$	83,756	1.1	%	2,881	$	113,993	1.6	%	3,553	$	135,228	1.9	%	3,225	85,987	1.2	%

*	Represents delinquency, in dollars, divided by the respective total amount of that type of loan outstanding.
**	Includes purchased credit impaired loans of $2.9 million, $2.9 million, $3.1 million, $3.7 million, and $6.3 million at September 30, 2016, June 30, 2016, March 31, 2016, December 31, 2015, and September 30, 2015, respectively.

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

	Quarter ended
	September 30, 2016			June 30, 2016		March 31, 2016		December 31, 2015		September 30, 2015
Beginning balance	$	60,781		62,278		62,672		60,547		59,057
Provision	5,538			4,199		1,660		4,595		3,167
Charge-offs residential mortgage	(354)			(1,852)		(564)		(171)		(342)
Charge-offs home equity	(288)			(946)		(984)		(1,097)		(443)
Charge-offs consumer	(2,701)			(2,332)		(2,403)		(2,561)		(2,014)
Charge-offs commercial real estate	(789)			(1,731)		(897)		(1,216)		(558)
Charge-offs commercial	(708)			(903)		(117)		(508)		(595)
Recoveries	1,767			2,068		2,911		3,083		2,275
Ending balance	$	63,246		60,781		62,278		62,672		60,547

Net charge-offs to average loans, annualized	0.17		%	0.31	%	0.11	%	0.14	%	0.10	%

	Nine months ended September 30,
	2016			2015
Beginning balance	$	62,672		67,518
Provision	11,397			5,117
Charge-offs residential mortgage	(2,770)			(955)
Charge-offs home equity	(2,218)			(1,327)
Charge-offs consumer	(7,436)			(5,713)
Charge-offs commercial real estate	(3,417)			(5,110)
Charge-offs commercial	(1,728)			(7,675)
Recoveries	6,746			8,692
Ending balance	$	63,246		60,547

Net charge-offs to average loans, annualized	0.20		%	0.26	%

Northwest Bancshares, Inc. and Subsidiaries Average balance sheet (Unaudited) (Dollars in thousands)

The following table sets forth certain information relating to the Company's average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented. Average balances are calculated using daily averages.

	Quarter ended
	September 30, 2016					June 30, 2016					March 31, 2016					December 31, 2015					September 30, 2015
	Average Balance		Interest	Avg. Yield/ Cost (h)		Average Balance		Interest	Avg. Yield/ Cost (h)		Average Balance		Interest	Avg. Yield/ Cost (h)		Average Balance		Interest	Avg. Yield/ Cost (h)		Average Balance		Interest	Avg. Yield/ Cost (h)
Assets:
Interest-earning assets:
Residential mortgage loans	$	2,739,099	29,304	4.28	%	$	2,751,601	30,228	4.39	%	$	2,739,787	29,786	4.35	%	$	2,710,811	29,227	4.31	%	$	2,632,199	29,060	4.42	%
Home equity loans	1,192,929		12,884	4.30	%	1,163,900		12,701	4.39	%	1,177,406		12,642	4.32	%	1,193,433		12,753	4.24	%	1,114,931		12,208	4.34	%
Consumer loans	554,954		8,931	6.40	%	522,745		8,697	6.69	%	510,091		8,219	6.48	%	500,175		8,805	6.98	%	364,378		7,146	7.78	%
Commercial real estate loans	2,394,001		26,683	4.36	%	2,356,994		26,691	4.48	%	2,349,748		25,993	4.38	%	2,331,769		25,972	4.36	%	2,100,463		24,061	4.48	%
Commercial loans	476,715		5,193	4.26	%	461,808		4,902	4.20	%	441,977		4,723	4.23	%	412,415		4,671	4.43	%	372,693		4,108	4.31	%
Total loans receivable (a) (b) (d)	7,357,698		82,995	4.49	%	7,257,048		83,219	4.61	%	7,219,009		81,363	4.53	%	7,148,603		81,428	4.52	%	6,584,664		76,583	4.66	%
Mortgage-backed securities (c)	440,966		2,030	1.84	%	458,398		2,115	1.85	%	488,294		2,229	1.83	%	519,736		2,301	1.77	%	498,757		2,230	1.79	%
Investment securities (c) (d)	275,718		1,667	2.42	%	313,647		1,844	2.35	%	387,460		2,151	2.22	%	427,363		2,394	2.24	%	482,666		2,754	2.28	%
FHLB stock	27,761		218	3.12	%	33,302		401	4.84	%	37,098		467	5.06	%	38,651		499	5.12	%	39,552		451	4.52	%
Other interest-earning deposits	91,243		114	0.49	%	63,950		70	0.43	%	43,578		59	0.54	%	40,410		13	0.13	%	162,041		99	0.24	%
Total interest-earning assets	8,193,386		87,024	4.23	%	8,126,345		87,649	4.34	%	8,175,439		86,269	4.24	%	8,174,763		86,635	4.20	%	7,767,680		82,117	4.24	%
Noninterest earning assets (e)	835,500					755,713					735,562					747,317					846,439
Total assets	$	9,028,886				$	8,882,058				$	8,911,001				$	8,922,080				$	8,614,119

Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings deposits	$	1,485,763	744	0.20	%	$	1,440,886	837	0.23	%	$	1,405,800	865	0.25	%	$	1,378,377	871	0.25	%	$	1,324,620	865	0.26	%
Interest-bearing demand deposits	1,179,557		78	0.03	%	1,130,122		144	0.05	%	1,093,839		156	0.06	%	1,083,524		157	0.06	%	1,022,585		149	0.06	%
Money market deposit accounts	1,418,779		826	0.23	%	1,294,381		829	0.26	%	1,288,535		865	0.27	%	1,279,181		873	0.27	%	1,217,122		825	0.27	%
Time deposits	1,597,542		4,005	1.00	%	1,616,260		4,055	1.01	%	1,664,322		4,202	1.02	%	1,720,895		4,534	1.05	%	1,577,159		4,324	1.09	%
Borrowed funds (f)	560,407		657	0.47	%	772,225		3,017	1.57	%	899,439		6,539	2.92	%	906,574		6,730	2.95	%	906,410		6,713	2.94	%
Junior subordinated debentures	111,213		1,144	4.03	%	111,213		1,126	4.01	%	111,213		1,119	3.98	%	116,626		1,321	4.43	%	111,213		1,274	4.48	%
Total interest-bearing liabilities	6,353,261		7,454	0.47	%	6,365,087		10,008	0.63	%	6,463,148		13,746	0.86	%	6,485,177		14,486	0.89	%	6,159,109		14,150	0.91	%
Noninterest-bearing demand deposits (g)	1,243,474					1,184,786					1,161,151					1,145,276					1,054,270
Noninterest bearing liabilities	276,014					177,300					122,667					133,323					275,435
Total liabilities	7,872,749					7,727,173					7,746,966					7,763,776					7,488,814
Shareholders' equity	1,156,137					1,154,885					1,164,035					1,158,304					1,125,305
Total liabilities and shareholders' equity	$	9,028,886				$	8,882,058				$	8,911,001				$	8,922,080				$	8,614,119
Net interest income/ Interest rate spread			79,570	3.76	%			77,641	3.71	%			72,523	3.38	%			72,149	3.31	%			67,967	3.33	%
Net interest-earning assets/ Net interest margin	$	1,840,125		3.88	%	$	1,761,258		3.82	%	$	1,712,291		3.57	%	$	1,689,586		3.53	%	$	1,608,571		3.50	%
Ratio of interest-earning assets to interest-bearing liabilities	1.29X					1.28X					1.26X					1.26X					1.26X

(a)	Average gross loans receivable includes loans held as available-for-sale and loans placed on nonaccrual status.
(b)	Interest income includes accretion/ amortization of deferred loan fees/ expenses, which was not material.
(c)	Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
(d)	Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent basis.
(e)	Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.
(f)	Average balances include FHLB borrowings and collateralized borrowings.
(g)	Average cost of deposits were 0.32%, 0.35%, 0.37%, 0.39% and 0.39%, respectively.
(h)	Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.46%, 4.58%, 4.50%, 4.49% and 4.63%, respectively, Investment securities - 1.89%, 1.87%, 1.82%, 1.82% and 1.84%, respectively, Interest-earning assets - 4.18%, 4.29%, 4.20%, 4.16% and 4.19%, respectively. GAAP basis net interest rate spreads were 3.71%, 3.66%, 3.34%, 3.27% and 3.28%, respectively, and GAAP basis net interest margins were 3.84%, 3.77%, 3.55%, 3.48% and 3.45%, respectively.

Northwest Bancshares, Inc. and Subsidiaries Average balance sheet (Unaudited) (Dollars in thousands)

The following table sets forth certain information relating to the Company's average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented. Average balances are calculated using daily averages.

	Nine months ended September 30,
	2016					2015
	Average Balance		Interest	Avg. Yield/ Cost (h)		Average Balance		Interest	Avg. Yield/ Cost (h)
Assets:
Interest-earning assets:
Residential mortgage loans	$	2,743,480	89,317	4.34	%	$	2,564,143	85,710	4.46	%
Home equity loans	1,178,133		38,229	4.33	%	1,076,385		35,083	4.36	%
Consumer loans	529,356		25,848	6.52	%	283,835		19,965	9.40	%
Commercial real estate loans	2,367,014		79,367	4.41	%	1,921,007		66,245	4.55	%
Commercial loans	460,228		14,817	4.23	%	382,679		12,207	4.21	%
Loans receivable (a) (b) (d)	7,278,211		247,578	4.54	%	6,228,049		219,210	4.71	%
Mortgage-backed securities (c)	462,474		6,374	1.84	%	494,416		6,522	1.76	%
Investment securities (c) (d)	325,427		5,662	2.32	%	483,792		8,761	2.41	%
FHLB stock (i)	32,702		1,086	4.44	%	37,112		2,329	4.64	%
Other interest-earning deposits	57,996		243	0.55	%	217,232		418	0.25	%
Total interest-earning assets	8,156,810		260,943	4.27	%	7,460,601		237,240	4.23	%
Noninterest earning assets (e)	783,838					664,830
Total assets	$	8,940,648				$	8,125,431

Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings deposits	$	1,444,302	2,446	0.23	%	$	1,273,724	2,516	0.26	%
Interest-bearing demand deposits	1,134,669		378	0.04	%	1,025,896		411	0.06	%
Money market deposit accounts	1,334,158		2,520	0.25	%	1,176,446		2,349	0.27	%
Time deposits	1,625,936		12,262	1.01	%	1,395,165		12,344	1.11	%
Borrowed funds (f)	743,353		10,213	1.84	%	932,123		20,617	2.96	%
Junior subordinated debentures	111,213		3,389	4.00	%	105,800		3,604	4.49	%
Total interest-bearing liabilities	6,393,631		31,208	0.65	%	5,909,154		41,841	0.95	%
Noninterest-bearing demand deposits (g)	1,196,737					975,904
Noninterest bearing liabilities	191,934					156,247
Total liabilities	7,782,302					7,041,305
Shareholders' equity	1,158,346					1,084,126
Total liabilities and shareholders' equity	$	8,940,648				$	8,125,431
Net interest income/ Interest rate spread			229,735	3.62	%			195,399	3.28	%
Net interest-earning assets/ Net interest margin	$	1,763,179		3.76	%	$	1,551,447		3.47	%
Ratio of interest-earning assets to interest-bearing liabilities	1.28X					1.26X

(a)	Average gross loans receivable includes loans held as available-for-sale and loans placed on nonaccrual status.
(b)	Interest income includes accretion/ amortization of deferred loan fees/ expenses, which was not material.
(c)	Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
(d)	Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent basis.
(e)	Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.
(f)	Average balances include FHLB borrowings and collateralized borrowings.
(g)	Average cost of deposits were 0.35%, and 0.40%, respectively.
(h)	Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.51% and 4.68%, respectively, Investment securities - 1.86% and 1.90%, respectively, Interest-earning assets - 4.23% and 4.17%, respectively. GAAP basis net interest rate spreads were 3.57% and 3.22%, respectively, and GAAP basis net interest margins were 3.71% and 3.41%, respectively.
(i)	The average yield calculation excludes the $1.0 million special dividend paid in February 2015, the average yield was 8.39% with the special dividend included.