Northwest Bancshares, Inc. Announces Second Quarter 2020 Earnings and Quarterly Dividend

Rhea-AI Summary

Northwest Bancshares reported a net loss of $6.2 million for Q2 2020, translating to $(0.05) per diluted share, a stark decline of 123.5% year-over-year. The loss is attributed primarily to COVID-related loan loss provisions of $21.3 million and $18.2 million from the MutualBank acquisition. Despite the loss, non-GAAP net income, adjusting for these factors, was $30.2 million, up 11.0% from last year. The company declared a quarterly cash dividend of $0.19 per share, marking its 103rd consecutive payout, with a yield of about 7.43%. Net interest income rose to $98.1 million, yet net interest margin decreased to 3.38%.

Positive

• Non-GAAP net income at $30.2 million shows an 11.0% increase year-over-year.
• Net interest income increased by $5.5 million to $98.1 million.
• Dividends maintained at $0.19 per share, representing a 7.43% annualized yield.

Negative

• Net loss of $6.2 million indicates a significant downturn from Q2 2019's net income of $26.4 million.
• Total provision for loan losses surged to $51.8 million, an increase of $47.1 million from the prior year.
• Net interest margin declined from 3.91% to 3.38%, reflecting decreased asset yields.

WARREN, Pa., July 27, 2020 /PRNewswire/ -- Northwest Bancshares, Inc., (the "Company"), (NasdaqGS: NWBI) announced a net loss for the quarter ended June 30, 2020 of $6.2 million, or $(0.05) per diluted share.  This represents a decrease of $32.6 million, or 123.5%, compared to the same quarter last year when net income was $26.4 million or $0.25 per diluted share.  The annualized returns on average shareholders' equity and average assets for the quarter ended June 30, 2020 were (1.63)% and (0.18)% compared to 8.01% and 1.02% for the same quarter last year. As noted in our non-GAAP reconciliation, when adjusting for COVID-related provision expense and acquisition-related costs, non-GAAP net income was approximately $30.2 million, or $0.25, per diluted share, which would represent an increase over the same quarter in the prior year of $3.0 million, or 11.0%, and result in a return on average shareholders' equity of 7.95% and a return on average assets of 0.89%.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.19 per share payable on August 14, 2020 to shareholders of record as of August 6, 2020.  This is the 103rd consecutive quarter in which the Company has paid a cash dividend.  Based on the market value of the Company's common stock as of June 30, 2020, this represents an annualized dividend yield of approximately 7.43%.

In making this announcement, Ronald J. Seiffert, Chairman, President and CEO, noted, "Obviously we are disappointed to report a loss for the quarter. However, as we assess the reasons for this loss, there is certainly cause for optimism as we enter the second half of the year. The primary drivers behind the quarterly loss are threefold. First, COVID-related loan loss provisions driven by a deteriorated economic forecast, which we estimate accounted for approximately $21.3 million of our elevated provision expense.  Second, our loan loss provision expense during the quarter was also negatively impacted by the recording of provision expense for our MutualBank acquisition of approximately $18.2 million as promulgated by ASU 2016-13, also known as CECL. CECL requires an additional estimated loan loss provision or the "double count" for certain loans when integrating an acquisition. Third, acquisition costs of $9.7 million associated with the close and integration of MutualBank during the quarter negatively affected results as well. It should be noted, however, that year-to-date acquisition costs of $12.1 million were lower than originally projected."

Mr. Seiffert continued, "Assuming the current economic environment continues to remain stable, we believe that we have adequately provided for potential future losses during the first half of the year and have been able to do so with current earnings. In addition, as depicted in the attached non-GAAP pro forma financials, core quarterly earnings of approximately $30.2 million are strong and position us well for the remainder of the year. We are also fortunate to possess a robust capital position which has enabled us to maintain our regular quarterly cash dividend to common stock shareholders."

Mr. Seiffert concluded, "While most of our back-office and regional headquarter personnel continue to work effectively from home out of an abundance of caution, all of our branch offices have been  re-opened for business as usual and we are very pleased, once again to offer our award-winning service to our loyal customers. I am so very honored and proud to be associated with our dedicated employees, our talented management team and our engaged Board of Directors who have all risen to the occasion during these extremely challenging times. They continue to stand tall in the face of adversity to service our customers and communities."

Net interest income increased by $5.5 million, or 5.9%, to $98.1 million for the quarter ended June 30, 2020, from $92.6 million for the quarter ended June 30, 2019, primarily due to a $3.1 million, or 25.2%, decrease in interest expense on deposits as well as a $587,000, or 34.1%, decrease in interest expense on borrowed funds.  This decrease in interest expense was due to a decline in market interest rates when compared to the prior year, resulting in a decrease in the cost of our interest-bearing liabilities to 0.48% for the quarter ended June 30, 2020 from 0.82% for the quarter ended June 30, 2019.  Also contributing to the increase in net interest income was a $2.1 million, or 2.1%, increase in interest income on loans receivable primarily due to an increase of $1.606 billion, or 18.7%, in the average balance of loans as a result of the acquisition of MutualBank on April 24, 2020. Despite the overall increase in net interest income due primarily to balance sheet growth, the net interest margin decreased to 3.38% for the quarter ended June 30, 2020 from 3.91% for the same quarter last year as interest earning asset yields decreased to 3.75% for the quarter ended June 30, 2020 from 4.53% for the quarter ended June 30, 2019. Contributing to the decline in asset yields, was the increase in average cash balances of $602.9 million, earning just 0.12%, due to deposit growth associated with Payroll Protection Program ("PPP") loan funds and consumer stimulus checks. In addition, PPP loan balances of approximately $450.0 million with coupon rates of 1.00%, has negatively impacted overall interest earning asset yields.

The provision for loan losses increased by $47.1 million to $51.8 million for the quarter ended June 30, 2020, from $4.7 million for the quarter ended June 30, 2019.  During the current year, the Company adopted CECL, which requires that all financial assets measured at amortized cost be presented at the net amount expected to be collected inclusive of the entity's current estimate of all lifetime expected credit losses. In addition, the estimated economic impact of COVID-19 caused us to increase our provision expense for the quarter by approximately $21.3 million and provision expense for the integration of MutualBank loans amounted to approximately $18.2 million.  

Noninterest income increased by $12.1 million, or 51.9%, to $35.5 million for the quarter ended June 30, 2020, from $23.4 million for the quarter ended June 30, 2019.  This increase was primarily due to the increase in mortgage banking income of $11.8 million to $12.0 million for the quarter ended June 30, 2020 from $188,000 for the quarter ended June 30, 2019. This increase was due to continued efforts to expand our secondary market sales capabilities over the last year, as well as an interest rate environment conducive to refinance activity and attractive secondary market pricing. In addition, there was a $379,000 increase, or 8.5%, in trust and other financial services income primarily due to additional trust fee income in our Indiana region as a result of the acquisition of MutualBank.

Noninterest expense increased by $11.7 million, or 15.0%, to $89.2 million for the quarter ended June 30, 2020, from $77.5 million for the quarter ended June 30, 2019.  This increase resulted primarily from an increase in acquisition expense of $8.6 million over the prior year, due to expenses incurred as a result of the acquisition of MutualBank on April 24, 2020.  Also contributing to the increase was a $4.6 million increase in other expenses primarily due to the reserve for unfunded commitments during the second quarter of 2020 as a result of an increase in unfunded commitments and the estimated economic impact of COVID-19.  Partially offsetting this increase was a decrease of $2.0 million, or 4.7%, in compensation and employee benefits primarily due to an increase in deferred loan costs directly related to the origination of PPP loans during the current quarter. 

The provision for income taxes decreased by $8.5 million, or 115.4%, to $(1.1) million for the quarter ended June 30, 2020, from $7.4 million for the quarter ended June 30, 2019.  This decrease was due primarily to the decrease in net income before taxes by $41.1 million, or 121.7%.

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. As of June 30, 2020, Northwest operated 205 full-service community banking offices and eight free standing drive-through facilities in Pennsylvania, New York, Ohio and Indiana. 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 or the ability to complete sales transactions; (7) increased risk associated with commercial real-estate and business loans; and (8) the effect of any pandemic, including COVID-19, war or act of terrorism.  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)
	June 30, 2020				December 31, 2019			June 30, 2019
Assets
Cash and cash equivalents	$	837,227			60,846			106,988
Marketable securities available-for-sale (amortized cost of $1,176,258, $815,495 and $850,248, respectively)	1,198,792				819,901			854,765
Marketable securities held-to-maturity (fair value of $17,245, $18,223 and $20,676, respectively)	16,415				18,036			20,414
Total cash and cash equivalents and marketable securities	2,052,434				898,783			982,167
Residential mortgage loans held-for-sale	34,118				7,709			—
Residential mortgage loans	3,188,637				2,860,418			2,899,164
Home equity loans	1,450,370				1,342,918			1,314,947
Consumer loans	1,518,119				1,125,132			1,011,424
Commercial real estate loans	3,308,824				2,754,390			2,808,153
Commercial loans	1,358,719				718,107			703,194
Total loans receivable	10,858,787				8,808,674			8,736,882
Allowance for credit losses	(140,586)				(57,941)			(53,107)
Loans receivable, net	10,718,201				8,750,733			8,683,775
Federal Home Loan Bank stock, at cost	25,542				14,740			14,966
Accrued interest receivable	40,510				25,755			28,742
Real estate owned, net	1,897				950			2,070
Premises and equipment, net	166,966				147,409			148,973
Bank-owned life insurance	251,897				189,091			186,870
Goodwill	386,044				346,103			344,720
Other intangible assets, net	23,381				23,076			24,112
Other assets	178,212				97,268			89,088
Total assets	$	13,845,084			10,493,908			10,505,483
Liabilities and shareholders' equity
Liabilities
Noninterest-bearing demand deposits	$	2,686,487			1,609,653			1,944,550
Interest-bearing demand deposits	2,632,310				1,944,108			1,670,983
Money market deposit accounts	2,327,286				1,863,998			1,784,437
Savings deposits	1,993,761				1,604,838			1,683,551
Time deposits	1,823,097				1,569,410			1,600,372
Total deposits	11,462,941				8,592,007			8,683,893
Borrowed funds	440,079				246,336			171,677
Junior subordinated debentures	128,630				121,800			121,757
Advances by borrowers for taxes and insurance	58,559				44,556			54,507
Accrued interest payable	1,389				1,142			1,207
Other liabilities	222,637				134,782			138,854
Total liabilities	12,314,235				9,140,623			9,171,895
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, 127,838,400, 106,859,088, and 106,614,607 shares issued and outstanding, respectively	1,278				1,069			1,066
Paid-in capital	1,023,083				805,750			798,942
Retained earnings	530,928				583,407			562,799
Accumulated other comprehensive loss	(24,440)				(36,941)			(29,219)
Total shareholders' equity	1,530,849				1,353,285			1,333,588
Total liabilities and shareholders' equity	$	13,845,084			10,493,908			10,505,483
Equity to assets	11.06		%		12.90	%		12.69	%
Tangible common equity to assets	8.35		%		9.72	%		9.52	%
Book value per share	$	11.97			12.66			12.51
Tangible book value per share	$	8.77			9.21			9.05
Closing market price per share	$	10.23			16.63			17.61
Full time equivalent employees	2,518				2,209			2,238
Number of banking offices	213				181			182

 

Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
(dollars in thousands, except per share amounts)
	Quarter ended
	June 30, 2020				March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
Interest income:
Loans receivable	$	103,012			94,973			97,866			101,091			100,917
Mortgage-backed securities	4,038				4,175			4,237			4,188			4,280
Taxable investment securities	439				648			683			884			898
Tax-free investment securities	564				185			201			224			237
FHLB dividends	309				262			262			307			316
Interest-earning deposits	185				135			169			172			159
Total interest income	108,547				100,378			103,418			106,866			106,807
Interest expense:
Deposits	9,336				11,403			12,893			13,694			12,484
Borrowed funds	1,133				1,747			1,580			2,236			1,720
Total interest expense	10,469				13,150			14,473			15,930			14,204
Net interest income	98,078				87,228			88,945			90,936			92,603
Provision for credit losses	51,750				27,637			8,223			3,302			4,667
Net interest income after provision for credit losses	46,328				59,591			80,722			87,634			87,936
Noninterest income:
Gain/(loss) on sale of investments	(8)				181			27			—			29
Gain on sale of loans	—				1,302			908			826			—
Service charges and fees	13,069				15,116			14,125			13,558			13,339
Trust and other financial services income	4,823				5,001			4,517			4,609			4,444
Insurance commission income	2,395				2,372			1,858			1,887			2,145
Gain/(loss) on real estate owned, net	(97)				(91)			86			(227)			91
Income from bank-owned life insurance	1,248				1,036			1,121			1,095			1,197
Mortgage banking income	12,022				1,194			1,494			1,921			188
Other operating income	2,044				1,865			4,077			2,500			1,930
Total noninterest income	35,496				27,976			28,213			26,169			23,363
Noninterest expense:
Compensation and employee benefits	40,049				42,746			42,074			40,816			42,008
Premises and occupancy costs	7,195				7,471			7,051			7,061			7,387
Office operations	3,711				3,382			4,097			3,197			3,708
Collections expense	644				474			566			747			939
Processing expenses	11,680				11,142			10,263			11,122			10,634
Marketing expenses	2,047				1,507			1,010			1,373			2,729
Federal deposit insurance premiums	1,618				—			—			(702)			681
Professional services	2,825				2,812			3,533			3,032			3,198
Amortization of intangible assets	1,760				1,651			1,634			1,702			1,760
Real estate owned expense	89				95			72			119			128
Restructuring/acquisition expense	9,679				2,458			1,114			23			1,105
Other expenses	7,866				4,873			5,157			2,106			3,235
Total noninterest expense	89,163				78,611			76,571			70,596			77,512
Income/(loss) before income taxes	(7,339)				8,956			32,364			43,207			33,787
Income tax expense/(benefit)	(1,139)				1,017			6,773			9,793			7,404
Net income/(loss)	(6,200)				7,939			25,591			33,414			26,383
Basic earnings per share	$	(0.05)			0.08			0.24			0.32			0.25
Diluted earnings per share	$	(0.05)			0.07			0.24			0.31			0.25
Weighted average common shares outstanding - basic	121,480,563				105,882,553			105,627,194			105,517,707			105,233,635
Weighted average common shares outstanding - diluted	121,480,563				106,148,247			106,306,615			106,270,544			106,258,215
Annualized return on average equity	(1.63)		%		2.37	%		7.52	%		9.90	%		8.01	%
Annualized return on average assets	(0.18)		%		0.30	%		0.97	%		1.25	%		1.02	%
Annualized return on tangible common equity **	(2.22)		%		3.28	%		10.32	%		13.46	%		10.97	%
Efficiency ratio *	58.19		%		64.67	%		63.01	%		58.81	%		64.37	%
Annualized noninterest expense to average assets *	2.30		%		2.83	%		2.80	%		2.59	%		2.88	%
*    Excludes restructuring/acquisition expenses and amortization of intangible assets (non-GAAP).
**   Excludes goodwill and other intangible assets (non-GAAP).

 

Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
(dollars in thousands, except per share amounts)
	Six months ended June 30,
	2020				2019
Interest income:
Loans receivable	$	197,985			195,852
Mortgage-backed securities	8,213				8,245
Taxable investment securities	1,087				1,834
Tax-free investment securities	749				419
FHLB dividends	571				487
Interest-earning deposits	320				259
Total interest income	208,925				207,096
Interest expense:
Deposits	20,739				22,629
Borrowed funds	2,880				3,882
Total interest expense	23,619				26,511
Net interest income	185,306				180,585
Provision for credit losses	79,387				11,134
Net interest income after provision for credit losses	105,919				169,451
Noninterest income:
Gain on sale of investments	173				23
Gain on sale of loans	1,302				—
Service charges and fees	28,185				25,382
Trust and other financial services income	9,824				8,639
Insurance commission income	4,767				4,323
Gain/(loss) on real estate owned, net	(188)				88
Income from bank-owned life insurance	2,284				2,202
Mortgage banking income	13,216				404
Other operating income	3,909				3,964
Total noninterest income	63,472				45,025
Noninterest expense:
Compensation and employee benefits	82,795				80,196
Premises and occupancy costs	14,666				14,605
Office operations	7,093				6,839
Collections expense	1,118				1,247
Processing expenses	22,822				21,068
Marketing expenses	3,554				4,615
Federal deposit insurance premiums	1,618				1,387
Professional services	5,637				5,722
Amortization of intangible assets	3,411				3,207
Real estate owned expense	184				287
Restructuring/acquisition expense	12,137				3,031
Other expenses	12,739				6,732
Total noninterest expense	167,774				148,936
Income before income taxes	1,617				65,540
Income tax expense/(benefit)	(122)				14,113
Net income	$	1,739			51,427
Basic earnings per share	$	0.02			0.49
Diluted earnings per share	$	0.02			0.49
Weighted average common shares outstanding - basic	113,672,131				104,173,601
Weighted average common shares outstanding - diluted	113,774,339				105,382,270
Annualized return on average equity	0.24		%		7.99	%
Annualized return on average assets	0.03		%		1.02	%
Annualized return on tangible common equity **	0.31		%		10.75	%
Efficiency ratio *	61.19		%		63.25	%
Annualized noninterest expense to average assets *	2.53		%		2.84	%
*    Excludes restructuring/acquisition expenses and amortization of intangible assets (non-GAAP).
**   Excludes goodwill and other 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 June 30,							Six months ended June 30,
	2020				2019			2020			2019
Operating results (non-GAAP):
Net interest income	$	98,078			92,603			185,306			180,585
Provision for credit losses	12,279				4,667			16,203			11,134
Noninterest income	35,496				23,363			63,472			45,025
Noninterest expense	83,368				76,407			157,637			145,905
Income taxes	7,708				7,657			14,216			14,807
Net operating income (non-GAAP)	$	30,219			27,235			60,722			53,764
Diluted earnings per share (non-GAAP)	$	0.25			0.26			0.53			0.51
Average equity	$	1,528,868			1,320,382			1,439,489			1,298,334
Average assets	13,590,131				10,412,664			12,093,801			10,150,040
Annualized return on average equity (non-GAAP)	7.95		%		8.27	%		8.48	%		8.35	%
Annualized return on average assets (non-GAAP)	0.89		%		1.05	%		1.01	%		1.07	%
Reconciliation of net operating income to net income:
Net operating income (non-GAAP)	$	30,219			27,235			60,722			53,764
Non-GAAP adjustments, net of tax:
COVID-related provision **	(17,121)				—			(36,189)			—
CECL provision impact due to acquisition of MutualBank	(14,618)				—			(14,618)			—
PPP deferred origination costs	3,389				—			3,389			—
COVID-related off balance sheet provision **	(266)				—			(1,780)			—
Restructuring/acquisition expense	(7,803)				(852)			(9,785)			(2,337)
Net income/(loss) (GAAP)	$	(6,200)			26,383			1,739			51,427
Diluted earnings per share (GAAP)	$	(0.05)			0.25			0.02			0.49
Annualized return on average equity (GAAP)	(1.63)		%		8.01	%		0.24	%		7.99	%
Annualized return on average assets (GAAP)	(0.18)		%		1.02	%		0.03	%		1.02	%

*

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 estimated COVID-related provision, CECL provision related to the acquisition of MutualBank, PPP deferred origination costs, estimated COVID-related off balance sheet provision and restructuring/acquisition expense.  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.

**

To arrive at the non-COVID related provision estimates, the Company applied Moody's forecast scenarios prior to the onset of COVID-19 to our loan portfolio at June 30, 2020.

 

Northwest Bancshares, Inc. and Subsidiaries
Regulatory capital requirements (Unaudited)
(dollars in thousands)
	At June 30, 2020
	Actual							Minimum capital requirements (1)							Well capitalized requirements
	Amount				Ratio			Amount				Ratio			Amount				Ratio
Total capital (to risk weighted assets)
Northwest Bancshares, Inc.	$	1,521,506			14.454	%		$	1,105,299			10.500	%		$	1,052,666			10.000	%
Northwest Bank	1,409,018				13.397	%		1,104,346				10.500	%		1,051,759				10.000	%
Tier 1 capital (to risk weighted assets)
Northwest Bancshares, Inc.	1,383,261				13.141	%		894,766				8.500	%		842,133				8.000	%
Northwest Bank	1,270,773				12.082	%		893,995				8.500	%		841,407				8.000	%
Common equity tier 1 capital (to risk weighted assets)
Northwest Bancshares, Inc.	1,258,620				11.957	%		736,866				7.000	%		684,233				6.500	%
Northwest Bank	1,270,773				12.082	%		736,231				7.000	%		683,643				6.500	%
Tier 1 capital (leverage)  (to average assets)
Northwest Bancshares, Inc.	1,383,261				10.488	%		527,571				4.000	%		659,464				5.000	%
Northwest Bank	1,270,773				9.680	%		525,093				4.000	%		656,366				5.000	%

(1)

Amounts and ratios include the capital conservation buffer of 2.5%, which does not apply to Tier 1 capital to average assets (leverage ratio). For further information related to the capital conservation buffer, see "Item 1. Business - Supervision and Regulation" of our 2019 Annual Report on Form 10-K.

 

Northwest Bancshares, Inc. and Subsidiaries
Marketable securities (Unaudited)
(dollars in thousands)
		June 30, 2020
Marketable securities available-for-sale		Amortized cost				Gross unrealized holding gains			Gross unrealized holding losses			Fair value
Debt issued by the U.S. government and agencies:
Due after ten years		$	10,000			112			—			10,112
Debt issued by government sponsored enterprises:
Due in less than one year		35,751				228			—			35,979
Due in one year through five years		25,225				292			—			25,517
Due in five years through ten years		13,302				134			(93)			13,343
Municipal securities:
Due in less than one year		3,634				5			—			3,639
Due in one year through five years		4,005				95			(3)			4,097
Due in five years through ten years		8,489				228			—			8,717
Due after ten years		96,640				2,785			(7)			99,418
Residential mortgage-backed securities:
Fixed rate pass-through		324,026				5,782			(230)			329,578
Variable rate pass-through		17,190				585			(14)			17,761
Fixed rate agency CMOs		586,290				13,320			(788)			598,822
Variable rate agency CMOs		51,706				165			(62)			51,809
Total residential mortgage-backed securities		979,212				19,852			(1,094)			997,970
Total marketable securities available-for-sale		$	1,176,258			23,731			(1,197)			1,198,792
Marketable securities held-to-maturity
Residential mortgage-backed securities:
Fixed rate pass-through		$	1,969			126			—			2,095
Variable rate pass-through		1,058				38			—			1,096
Fixed rate agency CMOs		12,784				658			—			13,442
Variable rate agency CMOs		604				8			—			612
Total residential mortgage-backed securities		16,415				830			—			17,245
Total marketable securities held-to-maturity		$	16,415			830			—			17,245

 

Northwest Bancshares, Inc. and Subsidiaries
Borrowed funds (Unaudited)
(dollars in thousands)
	June 30, 2020
	Amount				Average rate
Term notes payable to the Federal Home Loan Bank (FHLB):
Payable to FHLB of Pittsburgh	$	100,000			0.48	%
Payable to the FHLB of Indianapolis acquired from MutualBank	200,481				1.65	%
Total term notes payable to the FHLB	300,481
Collateralized borrowings, due within one year	139,598				0.29	%
Total borrowed funds *	$	440,079

*

As of June 30, 2020, the Company had $3.1 billion of additional borrowing capacity available with the Federal Home Loan Bank of Pittsburgh, including a $250.0 million overnight line of credit, which had no balance, as well as $110.1 million of borrowing capacity available with the Federal Reserve Bank and $110.0 million with three correspondent banks.

 

Northwest Bancshares, Inc. and Subsidiaries
Asset quality (Unaudited)
(dollars in thousands)
	June 30, 2020				March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
Nonaccrual loans current:
Residential mortgage loans	$	413			285			72			676			432
Home equity loans	481				592			197			607			475
Consumer loans	214				77			78			68			94
Commercial real estate loans	30,677				14,337			9,241			7,674			12,605
Commercial loans	6,551				3,514			3,424			3,777			5,666
Total nonaccrual loans current	$	38,336			18,805			13,012			12,802			19,272
Nonaccrual loans delinquent 30 days to 59 days:
Residential mortgage loans	$	61			691			674			40			13
Home equity loans	247				159			224			102			418
Consumer loans	335				143			121			246			172
Commercial real estate loans	2,372				496			196			925			469
Commercial loans	—				—			55			44			45
Total nonaccrual loans delinquent 30 days to 59 days	$	3,015			1,489			1,270			1,357			1,117
Nonaccrual loans delinquent 60 days to 89 days:
Residential mortgage loans	$	1,013			218			1,048			979			910
Home equity loans	960				539			689			436			717
Consumer loans	666				488			417			426			322
Commercial real estate loans	163				2,096			413			536			1,426
Commercial loans	768				37			341			—			780
Total nonaccrual loans delinquent 60 days to 89 days	$	3,570			3,378			2,908			2,377			4,155
Nonaccrual loans delinquent 90 days or more:
Residential mortgage loans	$	15,369			10,457			12,682			11,722			10,617
Home equity loans	7,060				5,816			5,635			5,966			5,591
Consumer loans	6,896				3,459			3,610			3,400			2,902
Commercial real estate loans	29,729				25,342			25,014			22,292			21,123
Commercial loans	11,535				16,685			4,739			5,741			2,920
Total nonaccrual loans delinquent 90 days or more	$	70,589			61,759			51,680			49,121			43,153
Total nonaccrual loans	$	115,510			85,431			68,870			65,657			67,697
Total nonaccrual loans	$	115,510			85,431			68,870			65,657			67,697
Loans 90 days past maturity and still accruing	77				31			32			85			55
Nonperforming loans	115,587				85,462			68,902			65,742			67,752
Real estate owned, net	1,897				1,075			950			1,237			2,070
Nonperforming assets	$	117,484			86,537			69,852			66,979			69,822
Nonaccrual troubled debt restructuring *	$	17,562			17,375			9,043			9,138			13,375
Accruing troubled debt restructuring	17,888				15,977			22,956			21,162			17,894
Total troubled debt restructuring	$	35,450			33,352			31,999			30,300			31,269
Nonperforming loans to total loans	1.06		%		0.97	%		0.78	%		0.74	%		0.78	%
Nonperforming assets to total assets	0.85		%		0.81	%		0.67	%		0.63	%		0.66	%
Allowance for credit losses to total loans	1.29		%		1.05	%		0.66	%		0.60	%		0.61	%
Allowance for total loans excluding PPP loan balances	1.36		%		N/A			N/A			N/A			N/A
Allowance for credit losses to nonperforming loans	121.63		%		108.70	%		84.09	%		80.40	%		78.38	%
*    Amounts included in nonperforming loans above.

 

Northwest Bancshares, Inc. and Subsidiaries
Loans by credit quality indicators (Unaudited)
(dollars in thousands)
At June 30, 2020		Pass				Special    mention *			Substandard **			Doubtful ***			Loss			Loans receivable
Personal Banking:
Residential mortgage loans		$	3,196,304			—			26,451			—			—			3,222,755
Home equity loans		1,438,339				—			12,031			—			—			1,450,370
Consumer loans		1,508,129				—			9,990			—			—			1,518,119
Total Personal Banking		6,142,772				—			48,472			—			—			6,191,244
Commercial Banking:
Commercial real estate loans		3,034,984				72,755			199,993			1,092			—			3,308,824
Commercial loans		1,270,279				41,458			42,692			4,290			—			1,358,719
Total Commercial Banking		4,305,263				114,213			242,685			5,382			—			4,667,543
Total loans		$	10,448,035			114,213			291,157			5,382			—			10,858,787
At March 31, 2020
Personal Banking:
Residential mortgage loans		$	2,830,596			—			7,690			—			—			2,838,286
Home equity loans		1,345,052				—			8,211			—			—			1,353,263
Consumer loans		1,174,067				—			3,988			—			—			1,178,055
Total Personal Banking		5,349,715				—			19,889			—			—			5,369,604
Commercial Banking:
Commercial real estate loans		2,537,736				73,967			143,765			—			—			2,755,468
Commercial loans		618,267				43,071			50,464			—			—			711,802
Total Commercial Banking		3,156,003				117,038			194,229			—			—			3,467,270
Total loans		$	8,505,718			117,038			214,118			—			—			8,836,874
At December 31, 2019
Personal Banking:
Residential mortgage loans		$	2,858,582			—			9,545			—			—			2,868,127
Home equity loans		1,336,111				—			6,807			—			—			1,342,918
Consumer loans		1,120,732				—			4,400			—			—			1,125,132
Total Personal Banking		5,315,425				—			20,752			—			—			5,336,177
Commercial Banking:
Commercial real estate loans		2,538,816				80,570			135,004			—			—			2,754,390
Commercial loans		616,983				42,380			58,744			—			—			718,107
Total Commercial Banking		3,155,799				122,950			193,748			—			—			3,472,497
Total loans		$	8,471,224			122,950			214,500			—			—			8,808,674
At September 30, 2019
Personal Banking:
Residential mortgage loans		$	2,887,077			—			9,056			—			—			2,896,133
Home equity loans		1,320,930				—			7,243			—			—			1,328,173
Consumer loans		1,090,030				—			4,263			—			—			1,094,293
Total Personal Banking		5,298,037				—			20,562			—			—			5,318,599
Commercial Banking:
Commercial real estate loans		2,601,025				69,380			142,253			181			—			2,812,839
Commercial loans		639,998				37,666			42,800			115			—			720,579
Total Commercial Banking		3,241,023				107,046			185,053			296			—			3,533,418
Total loans		$	8,539,060			107,046			205,615			296			—			8,852,017
At June 30, 2019
Personal Banking:
Residential mortgage loans		$	2,890,472			—			8,692			—			—			2,899,164
Home equity loans		1,307,887				—			7,060			—			—			1,314,947
Consumer loans		1,007,813				—			3,611			—			—			1,011,424
Total Personal Banking		5,206,172				—			19,363			—			—			5,225,535
Commercial Banking:
Commercial real estate loans		2,586,013				86,434			135,525			181			—			2,808,153
Commercial loans		621,889				38,182			42,141			982			—			703,194
Total Commercial Banking		3,207,902				124,616			177,666			1,163			—			3,511,347
Total loans		$	8,414,074			124,616			197,029			1,163			—			8,736,882

*	Includes $37.4 million, $13.1 million, $10.3 million, $8.7 million, and $8.1 million of acquired loans at June 30, 2020, March 31, 2020, December 31, 2019, September 30, 2019, and June 30, 2019, respectively.
**	Includes $108.2 million, $56.8 million, $53.1 million, $46.6 million, and $38.6 million of acquired loans at June 30, 2020, March 31, 2020, December 31, 2019, September 30, 2019, and June 30, 2019, respectively.
***	Includes $1.1 million of acquired loans at June 30, 2020.

 

Northwest Bancshares, Inc. and Subsidiaries
Loan delinquency (Unaudited)
(dollars in thousands)
	June 30, 2020							*			March 31, 2020							*			December 31, 2019							*			September 30,  2019							*			June 30, 2019							*
(Number of loans and dollar amount of loans)
Loans delinquent 30 days to 59 days:
Residential mortgage loans	15			$	629			—	%		358			$	32,755			1.2	%		292			$	23,296			0.8	%		21			$	1,236			—	%		30			$	1,629			0.1	%
Home equity loans	118			4,569				0.3	%		190			7,061				0.5	%		173			6,469				0.5	%		149			4,774				0.4	%		148			4,573				0.3	%
Consumer loans	629			7,199				0.5	%		953			8,774				0.7	%		960			9,208				0.8	%		864			7,597				0.7	%		856			7,630				0.7	%
Commercial real estate loans	46			14,177				0.4	%		58			12,895				0.5	%		43			7,921				0.3	%		27			5,308				0.2	%		31			2,418				0.1	%
Commercial loans	12			1,242				0.1	%		35			7,545				1.1	%		32			1,187				0.2	%		20			362				0.1	%		14			666				0.1	%
Total loans delinquent 30 days to 59 days	820			$	27,816			0.3	%		1,594			$	69,030			0.8	%		1,500			$	48,081			0.5	%		1,081			$	19,277			0.2	%		1,079			$	16,916			0.2	%
Loans delinquent 60 days to 89 days:
Residential mortgage loans	64			$	5,364			0.2	%		11			$	511			—	%		67			$	5,693			0.2	%		95			$	5,320			0.2	%		78			$	6,264			0.2	%
Home equity loans	59			2,326				0.2	%		65			2,652				0.2	%		66			2,405				0.2	%		66			2,103				0.2	%		59			2,319				0.2	%
Consumer loans	258			2,916				0.2	%		265			2,610				0.2	%		395			3,302				0.3	%		288			2,632				0.2	%		338			2,897				0.3	%
Commercial real estate loans	18			3,913				0.1	%		12			2,981				0.1	%		19			1,690				0.1	%		15			1,893				0.1	%		16			2,617				0.1	%
Commercial loans	15			1,151				0.1	%		10			309				—	%		17			6,403				0.9	%		10			589				0.1	%		16			1,725				0.2	%
Total loans delinquent 60 days to 89 days	414			$	15,670			0.1	%		363			$	9,063			0.1	%		564			$	19,493			0.2	%		474			$	12,537			0.1	%		507			$	15,822			0.2	%
Loans delinquent 90 days or more: **
Residential mortgage loans	185			$	15,369			0.5	%		129			$	10,457			0.4	%		141			$	12,775			0.4	%		138			$	11,816			0.4	%		129			$	10,800			0.4	%
Home equity loans	182			7,060				0.5	%		152			5,816				0.4	%		159			5,688				0.4	%		157			5,966				0.4	%		136			5,591				0.4	%
Consumer loans	709			6,896				0.5	%		445			3,459				0.3	%		590			3,611				0.3	%		398			3,401				0.3	%		710			2,908				0.3	%
Commercial real estate loans	149			29,729				0.9	%		139			25,342				0.9	%		129			25,014				0.9	%		118			22,292				0.8	%		118			21,123				0.7	%
Commercial loans	47			11,535				0.8	%		51			16,685				2.3	%		37			4,739				0.7	%		40			5,741				0.8	%		25			2,920				0.4	%
Total loans delinquent 90 days or more	1,272			$	70,589			0.7	%		916			$	61,759			0.7	%		1,056			$	51,827			0.6	%		851			$	49,216			0.6	%		1,118			$	43,342			0.5	%
Total loans delinquent	2,506			$	114,075			1.1	%		2,873			$	139,852			1.6	%		3,120			$	119,401			1.4	%		2,406			$	81,030			0.9	%		2,704			$	76,080			0.9	%

*	Represents delinquency, in dollars, divided by the respective total amount of that type of loan outstanding.
**	Includes purchased credit deteriorated loans of $18.0 million at June 30, 2020 and $298,000 at March 31, 2020, and purchased credit impaired loans of $147,000, $95,000, and $190,000 at December 31, 2019, September 30, 2019, and June 30, 2019, respectively.

 

Northwest Bancshares, Inc. and Subsidiaries
Analysis of loan portfolio by loan sector (Unaudited)
(dollars in thousands)
Loans outstanding
The following table provides delinquency information for various loan sectors in our portfolio that are potentially vulnerable to the COVID-19 pandemic impacts at June 30, 2020:
At June 30, 2020	30-59 days delinquent				*			60-89 days delinquent				*			90 days or greater delinquent				*			Total delinquent				*			Current				*			Total loans  receivable				*
Restaurants/bars	$	1,052			—	%		$	—			—	%		$	171			—	%		$	1,223			—	%		$	96,211			0.9	%		$	97,434			0.9	%
Hotels/hospitality	3,368				—	%		—				—	%		—				—	%		3,368				—	%		183,232				1.7	%		186,600				1.7	%
Gyms and fitness	—				—	%		—				—	%		—				—	%		—				—	%		5,385				—	%		5,385				—	%
Transportation	20				—	%		—				—	%		3,353				—	%		3,373				—	%		61,485				0.6	%		64,858				0.6	%
Oil and gas	—				—	%		—				—	%		296				—	%		296				—	%		11,139				0.1	%		11,435				0.1	%
Residential care facilities	—				—	%		—				—	%		—				—	%		—				—	%		228,412				2.1	%		228,412				2.1	%
Retail buildings	600				—	%		291				—	%		786				—	%		1,677				—	%		441,355				4.1	%		443,032				4.1	%
Education/student housing	—				—	%		—				—	%		503				—	%		503				—	%		143,306				1.3	%		143,809				1.3	%
Construction/development:
Education/student housing	—				—	%		—				—	%		—				—	%		—				—	%		33,520				0.3	%		33,520				0.3	%
Hotels/hospitality	—				—	%		—				—	%		—				—	%		—				—	%		25,514				0.2	%		25,514				0.2	%
Residential care facilities	—				—	%		—				—	%		—				—	%		—				—	%		35,861				0.3	%		35,861				0.3	%
All other construction/development	2,650				—	%		351				—	%		5,587				0.1	%		8,588				0.1	%		193,589				1.8	%		202,177				1.9	%
All other sectors	20,126				0.2	%		15,028				0.1	%		59,893				0.6	%		95,047				0.9	%		9,285,703				85.5	%		9,380,750				86.4	%
Total loans	$	27,816			0.3	%		$	15,670			0.1	%		$	70,589			0.7	%		$	114,075			1.1	%		$	10,744,712			98.9	%		$	10,858,787			100.0	%
*     Percent of total loans outstanding.

 

Loan deferrals
The following table represents loans that entered into various deferments offered by the Company to aid customers in the COVID-19 pandemic. The loan balances are as of June 30, 2020, however, the approval of the deferral occurred prior and was executed by the Company by June 30, 2020. Of these loan deferrals, 303 borrowers applied for and received PPP loans totaling approximately $51.8 million:
	Total loan deferrals									Second request deferrals approved
At June 30, 2020	Number of loans		Outstanding principal balance				**			Number of loans		Outstanding principal balance				**
Residential mortgage loans	936		$	131,567			4.1	%		10		$	1,660			0.1	%
Home equity loans	652		42,836				3.0	%		11		786				0.1	%
Consumer loans	2,455		49,374				3.3	%		128		3,033				0.2	%
Commercial real estate loans	1,511		967,340				29.2	%		5		2,323				0.1	%
Commercial loans	652		120,999				8.9	%		5		630				—	%
Total loans	6,206		$	1,312,116			12.1	%		159		$	8,432			0.1	%
**   Percent of total loan type outstanding.

 

Northwest Bancshares, Inc. and Subsidiaries
Allowance for credit losses (Unaudited)
(dollars in thousands)
	Quarter ended
	June 30, 2020				March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
Beginning balance	$	92,897			57,941			52,859			53,107			55,721
CECL adoption	—				10,792			—			—			—
Initial allowance on loans purchased with credit deterioration	8,845				—			—			—			—
Provision	51,750				27,637			8,223			3,302			4,667
Charge-offs residential mortgage	(38)				(343)			(222)			(190)			(397)
Charge-offs home equity	(173)				(289)			(113)			(466)			(389)
Charge-offs consumer	(3,191)				(3,488)			(3,142)			(3,078)			(2,566)
Charge-offs commercial real estate	(690)				(331)			(107)			(389)			(4,367)
Charge-offs commercial	(10,349)				(815)			(1,143)			(1,151)			(1,087)
Recoveries	1,535				1,793			1,586			1,724			1,525
Ending balance	$	140,586			92,897			57,941			52,859			53,107
Net charge-offs to average loans, annualized	0.51		%		0.16	%		0.14	%		0.16	%		0.34	%

 

	Six months ended June 30,
	2020				2019
Beginning balance	$	57,941			55,214
CECL adoption	10,792				—
Initial allowance on loans purchased with credit deterioration	8,845				—
Provision	79,387				11,134
Charge-offs residential mortgage	(381)				(754)
Charge-offs home equity	(462)				(542)
Charge-offs consumer	(6,679)				(5,587)
Charge-offs commercial real estate	(1,021)				(4,971)
Charge-offs commercial	(11,164)				(4,357)
Recoveries	3,328				2,970
Ending balance	$	140,586			53,107
Net charge-offs to average loans, annualized	0.35		%		0.34	%

 

	June 30, 2020
	Originated loans							Acquired loans						Total loans
	Balance				Reserve			Balance			Reserve			Balance			Reserve
Residential mortgage loans	$	2,840,430			9,846			382,325			1,862			3,222,755			11,708
Home equity loans	1,153,969				7,272			296,401			2,091			1,450,370			9,363
Consumer loans	1,207,050				12,794			311,069			3,547			1,518,119			16,341
Personal Banking Loans	5,201,449				29,912			989,795			7,500			6,191,244			37,412
Commercial real estate loans	2,422,605				63,654			886,219			24,006			3,308,824			87,660
Commercial loans	1,140,714				12,497			218,005			3,017			1,358,719			15,514
Commercial Banking Loans	3,563,319				76,151			1,104,224			27,023			4,667,543			103,174
Total Loans	$	8,764,768			106,063			2,094,019			34,523			10,858,787			140,586

 

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
	June 30, 2020										March 31, 2020										December 31, 2019										September 30, 2019										June 30, 2019
	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	$	3,092,392			29,019			3.75	%		$	2,845,483			28,062			3.94	%		$	2,847,932			28,011			3.93	%		$	2,894,716			28,991			4.01	%		$	2,857,425			29,300			4.10	%
Home equity loans	1,415,091				13,806			3.92	%		1,345,059				14,801			4.43	%		1,333,748				15,354			4.57	%		1,316,033				16,131			4.86	%		1,319,056				17,717			5.39	%
Consumer loans	1,375,130				14,993			4.39	%		1,123,336				12,160			4.35	%		1,073,565				12,016			4.44	%		1,028,579				11,916			4.60	%		945,080				10,736			4.57	%
Commercial real estate loans	3,156,749				34,595			4.34	%		2,747,419				31,437			4.53	%		2,741,687				32,985			4.71	%		2,796,351				34,441			4.82	%		2,801,953				35,537			5.02	%
Commercial loans	1,161,228				11,269			3.84	%		712,621				8,856			4.92	%		717,438				9,841			5.37	%		710,847				9,949			5.48	%		670,613				7,966			4.70	%
Total loans receivable (a) (b) (d)	10,200,590				103,682			4.09	%		8,773,918				95,316			4.37	%		8,714,370				98,207			4.47	%		8,746,526				101,428			4.60	%		8,594,127				101,256			4.73	%
Mortgage-backed securities (c)	714,657				4,038			2.26	%		668,470				4,175			2.50	%		667,910				4,237			2.54	%		641,085				4,188			2.61	%		644,887				4,280			2.65	%
Investment securities (c) (d)	170,309				1,244			2.92	%		144,152				881			2.44	%		151,289				938			2.48	%		218,753				1,168			2.14	%		226,325				1,198			2.12	%
FHLB stock, at cost	22,192				309			5.60	%		15,931				262			6.61	%		13,400				262			7.76	%		16,302				307			7.47	%		16,117				316			7.86	%
Other interest-earning deposits	623,870				185			0.12	%		34,697				135			1.54	%		31,624				169			2.09	%		28,832				172			2.33	%		20,983				159			3.00	%
Total interest-earning assets	11,731,618				109,458			3.75	%		9,637,168				100,769			4.21	%		9,578,593				103,813			4.30	%		9,651,498				107,263			4.41	%		9,502,439				107,209			4.53	%
Noninterest-earning assets (e)	1,858,513										960,303										869,117										916,781										910,225
Total assets	$	13,590,131									$	10,597,471									$	10,447,710									$	10,568,279									$	10,412,664
Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings deposits	$	1,884,202			648			0.14	%		$	1,611,111			727			0.18	%		$	1,615,996			792			0.19	%		$	1,658,670			788			0.19	%		$	1,696,715			777			0.18	%
Interest-bearing demand deposits	2,428,060				812			0.13	%		1,915,871				1,307			0.27	%		1,769,623				1,570			0.35	%		1,655,952				1,711			0.41	%		1,674,779				1,569			0.38	%
Money market deposit accounts	2,204,810				1,600			0.29	%		1,921,243				3,088			0.65	%		1,845,535				3,226			0.69	%		1,798,175				3,772			0.83	%		1,776,558				3,433			0.78	%
Time deposits	1,761,260				6,276			1.43	%		1,528,891				6,281			1.65	%		1,607,992				7,305			1.80	%		1,618,591				7,423			1.82	%		1,561,034				6,705			1.72	%
Borrowed funds (f)	371,700				296			0.32	%		240,118				709			1.19	%		177,670				444			0.99	%		243,960				1,002			1.63	%		147,119				413			1.13	%
Junior subordinated debentures	127,472				837			2.60	%		121,809				1,038			3.37	%		121,796				1,136			3.65	%		121,767				1,235			3.97	%		121,757				1,307			4.25	%
Total interest-bearing liabilities	8,777,504				10,469			0.48	%		7,339,043				13,150			0.72	%		7,138,612				14,473			0.80	%		7,097,115				15,931			0.89	%		6,977,962				14,204			0.82	%
Noninterest-bearing demand deposits (g)	2,401,368										1,640,180										1,800,861										1,915,392										1,888,697
Noninterest-bearing liabilities	882,391										268,139										158,434										216,433										225,623
Total liabilities	12,061,263										9,247,362										9,097,907										9,228,940										9,092,282
Shareholders' equity	1,528,868										1,350,109										1,349,803										1,339,339										1,320,382
Total liabilities and shareholders' equity	$	13,590,131									$	10,597,471									$	10,447,710									$	10,568,279									$	10,412,664
Net interest income/Interest rate spread					98,989			3.27	%						87,619			3.48	%						89,340			3.50	%						91,332			3.52	%						93,005			3.71	%
Net interest-earning assets/Net interest margin	$	2,954,114						3.38	%		$	2,298,125						3.66	%		$	2,439,981						3.73	%		$	2,554,383						3.79	%		$	2,524,477						3.91	%
Ratio of interest-earning assets to interest- bearing liabilities	1.34X										1.31X										1.34X										1.36X										1.36X

(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 ("FTE") 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%, 0.53%, 0.59%, 0.63%, and 0.58%, respectively.
(h)	Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.06%, 4.35%, 4.46%, 4.59%, and 4.71%, respectively, Investment securities - 2.36%, 2.31%, 2.34%, 2.03%, and 2.01%, respectively, Interest-earning assets - 3.72%, 4.19%, 4.28%, 4.39%, and 4.51%, respectively. GAAP basis net interest rate spreads were 3.24%, 3.47%, 3.48%, 3.50%, and 3.69%, respectively, and GAAP basis net interest margins were 3.34%, 3.64%, 3.71%, 3.77%, and 3.90%, respectively.

 

Average Balance Sheet
(in thousands)
The following table sets forth certain information relating to the Company's average balance sheet and reflects the average yield on interest-earning assets and average cost of interest-bearing 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,
	2020										2019
	Average balance				Interest			Avg. yield/ cost (h)			Average balance				Interest			Avg. yield/ cost (h)
Assets
Interest-earning assets:
Residential mortgage loans	$	2,969,096			57,081			3.85	%		$	2,850,031			58,582			4.11	%
Home equity loans	1,380,076				28,607			4.17	%		1,292,662				33,765			5.27	%
Consumer loans	1,249,233				27,153			4.37	%		909,007				20,927			4.64	%
Commercial real estate loans	2,952,084				66,032			4.42	%		2,681,848				66,303			4.92	%
Commercial loans	936,924				20,124			4.25	%		643,005				16,933			5.24	%
Loans receivable (a) (b) (d)	9,487,413				198,997			4.22	%		8,376,553				196,510			4.73	%
Mortgage-backed securities (c)	691,564				8,213			2.38	%		624,786				8,245			2.64	%
Investment securities (c) (d)	157,231				2,125			2.70	%		226,815				2,364			2.08	%
FHLB stock, at cost	19,062				571			6.02	%		16,096				487			6.10	%
Other interest-earning deposits	329,284				320			0.19	%		16,381				259			3.14	%
Total interest-earning assets	10,684,554				210,226			3.96	%		9,260,631				207,865			4.53	%
Noninterest-earning assets (e)	1,409,247										889,409
Total assets	$	12,093,801									$	10,150,040
Liabilities and shareholders' equity
Interest-bearing liabilities:
Savings deposits	$	1,747,656			1,375			0.16	%		$	1,673,957			1,535			0.18	%
Interest-bearing demand deposits	2,171,970				2,119			0.20	%		1,588,989				2,732			0.35	%
Money market deposit accounts	2,061,226				4,688			0.46	%		1,735,185				6,011			0.70	%
Time deposits	1,645,077				12,557			1.54	%		1,497,208				12,351			1.66	%
Borrowed funds (f)	305,910				1,005			0.66	%		202,029				1,419			1.42	%
Junior subordinated debentures	124,638				1,875			2.98	%		118,242				2,463			4.14	%
Total interest-bearing liabilities	8,056,477				23,619			0.59	%		6,815,610				26,511			0.78	%
Noninterest-bearing demand deposits (g)	2,022,177										1,699,496
Noninterest-bearing liabilities	575,658										336,600
Total liabilities	10,654,312										8,851,706
Shareholders' equity	1,439,489										1,298,334
Total liabilities and shareholders' equity	$	12,093,801									$	10,150,040
Net interest income/Interest rate spread					186,607			3.37	%						181,354			3.75	%
Net interest-earning assets/Net interest margin	$	2,628,077						3.49	%		$	2,445,021						3.92	%
Ratio of interest-earning assets to interest- bearing liabilities	1.33X										1.36X

(a)	Average gross loans 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 were 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 ("FTE") 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 0.43% and 0.56%, respectively.
(h)	Shown on a FTE basis. GAAP basis yields were: loans — 4.20% and 4.71%, respectively; investment securities — 2.34% and 1.99%, respectively; interest-earning assets — 3.93% and 4.51%, respectively. GAAP basis net interest rate spreads were 3.34% and 3.73%, respectively; and GAAP basis net interest margins were 3.47% and 3.90%, respectively.

 

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SOURCE Northwest Bancshares, Inc.

FAQ

What were Northwest Bancshares' earnings for Q2 2020?

Northwest Bancshares reported a net loss of $6.2 million, or $(0.05) per diluted share for Q2 2020.

How has COVID-19 affected Northwest Bancshares' financials?

COVID-related provisions contributed $21.3 million to the quarterly loss, increasing total provision for loan losses to $51.8 million.

What dividend did Northwest Bancshares declare in Q2 2020?

The company declared a quarterly cash dividend of $0.19 per share, its 103rd consecutive dividend.

What is the financial outlook for Northwest Bancshares following the Q2 report?

While reporting a loss, the company remains optimistic due to strong non-GAAP earnings and a robust capital position.