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

Rhea-AI Summary

Northwest Bancshares, Inc. (NWBI) reported a net income of $38.1 million for Q3 2020, reflecting a 13.9% increase from $33.4 million in Q3 2019. Diluted earnings per share were $0.30, down from $0.31. Non-GAAP net income adjusted for COVID-19 provisions was $40.1 million ($0.32 per diluted share), a 20.0% rise. Total classified loans increased 54.4% to $457.8 million, primarily due to the hospitality sector. The Board declared a $0.19 cash dividend, marking 104 consecutive quarters of dividends. Net interest income climbed 13.9% to $103.5 million. However, net interest margin decreased to 3.26% from 3.79% in the prior year.

Positive

• Net income rose by 13.9% to $38.1 million.
• Non-GAAP net income increased by 20.0% to approximately $40.1 million.
• Total net interest income increased by 13.9% to $103.5 million.
• Board declared a quarterly cash dividend of $0.19 per share.

Negative

• Net interest margin decreased to 3.26% from 3.79% year-over-year.
• Total classified loans increased by 54.4% to $457.8 million.
• Provision for credit losses rose to $6.8 million, up from $3.3 million.

WARREN, Pa., Oct. 26, 2020 /PRNewswire/ -- Northwest Bancshares, Inc., (the "Company"), (NasdaqGS: NWBI) announced net income for the quarter ended September 30, 2020 of $38.1 million, or $0.30 per diluted share.  This represents an increase of $4.6 million, or 13.9%, compared to the same quarter last year when net income was $33.4 million, or $0.31 per diluted share.  The annualized returns on average shareholders' equity and average assets for the quarter ended September 30, 2020 were 9.82% and 1.09% compared to 9.90% and 1.25% for the same quarter last year. As noted in the non-GAAP reconciliation, when adjusting for COVID-related provision expense and branch optimization related costs, non-GAAP net income was approximately $40.1 million, or $0.32 per diluted share, which would represent an increase over the same quarter in the prior year of $6.7 million, or 20.0%, and result in a return on average shareholders' equity of 10.36% and a return on average assets of 1.15%.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.19 per share payable on November 16, 2020 to shareholders of record as of November 5, 2020.  This is the 104^th consecutive quarter in which the Company has paid a cash dividend.  Based on the market value of the Company's common stock as of September 30, 2020, this represents an annualized dividend yield of approximately 8.26%.

In making this announcement, Ronald J. Seiffert, Chairman, President and CEO, noted, "We are very pleased with the many positive results in the current quarter beginning once again with strong fee income led by our mortgage banking operations.  We are also delighted to report that our credit loss provision decreased significantly from the first and second quarters, as expected, and essentially mirrored net charge-offs in the third quarter.  From a credit quality perspective, delinquencies continue to be well maintained and loans requesting payment deferrals have decreased significantly from last quarter from $1.312 billion, or 12.1% of the loan portfolio, at June 30, 2020 to just $212.7 million, or 2.0%, at September 30, 2020.  Although classified assets jumped by $161.3 million, or 54.4%, during the quarter to $457.8 million, over 45% of total classified assets are in the hotel/hospitality industry with virtually all the increase attributable to downgrades in this sector as second deferral requests were considered."

Mr. Seiffert continued, "Looking ahead, we are anxious to execute upon the initiatives we have set in motion this year including branch optimization to be completed in December, the continued implementation of our digital strategy and capitalizing on our very successful subordinated debt offering."

Net interest income increased by $12.6 million, or 13.9%, to $103.5 million for the quarter ended September 30, 2020, from $90.9 million for the quarter ended September 30, 2019, largely due to a $6.2 million, or 6.1%, increase in interest income on loans receivable.  This increase in interest income was mainly due to an increase of $2.031 billion, or 23.2%, in the average balance of loans, primarily as a result of the acquisition of MutualBank during the second quarter of 2020.  Also contributing to this increase in net interest income was a decrease of $6.1 million, or 38.0%, in total interest expense 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 0.42% for the quarter ended September 30, 2020 from 0.89% for the quarter ended September 30, 2019. Despite the overall increase in net interest income, net interest margin decreased to 3.26% for the quarter ended September 30, 2020 from 3.79% for the same quarter last year as interest earning asset yields decreased to 3.55% for the quarter ended September 30, 2020 from 4.41% for the quarter ended September 30, 2019. Contributing to the decline in asset yields was the increase in average cash balances of $762.8 million, earning just 0.11%, due to deposit growth associated with Payroll Protection Program ("PPP") loan funds and consumer stimulus checks. In addition, PPP loan balances of approximately $500 million with coupon rates of 1.00%, have negatively impacted overall interest earning asset yields.

The provision for credit losses increased by $3.5 million to $6.8 million for the quarter ended September 30, 2020, from $3.3 million for the quarter ended September 30, 2019.  During the current year, the Company adopted ASU 2016-13, referred to as Current Expected Credit Losses ("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 $1.5 million.  Finally, total classified loans have increased to $457.8 million, or 4.25% of total loans, at September 30, 2020 from $205.9 million, or 2.33% of total loans, as of September 30, 2019.

Noninterest income increased by $10.5 million, or 40.1%, to $36.7 million for the quarter ended September 30, 2020, from $26.2 million for the quarter ended September 30, 2019.  This increase was primarily due to the increase in mortgage banking income of $9.1 million to $11.1 million for the quarter ended September 30, 2020 from $1.9 million for the quarter ended September 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 $796,000, or 5.9%, increase in service charges and fees and a $767,000, or 16.6%, increase in trust and other financial services income, both primarily due to additional fee income as a result of the acquisition of MutualBank.

Noninterest expense increased by $16.3 million, or 23.1%, to $86.9 million for the quarter ended September 30, 2020, from $70.6 million for the quarter ended September 30, 2019.  This increase resulted primarily from an increase of $6.6 million, or 16.1%, in compensation and employee benefits due to both internal growth in compensation and staff as well as the addition of MutualBank employees.  Also contributing to this increase was an increase of $3.9 million, or 35.2%, in processing expenses as we continue to invest in technology and infrastructure and as activity driven utilization fees for online and mobile banking and loan origination platforms has increased.  Lastly, FDIC insurance premiums increased $2.2 million due to assessment credits received in the previous year.

The provision for income taxes decreased by $1.3 million, or 13.5%, to $8.5 million for the quarter ended September 30, 2020, from $9.8 million for the quarter ended September 30, 2019.  This decrease was due primarily to a lower annual effective tax rate as a result of the lower year-to-date income before taxes in the current year as well as a change in state tax apportionment.

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 September 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)
	September 30, 2020				December 31, 2019			September 30, 2019
Assets
Cash and cash equivalents	$	656,749			60,846			107,602
Marketable securities available-for-sale (amortized cost of $1,385,835, $815,495 and $801,465, respectively)	1,409,150				819,901			807,823
Marketable securities held-to-maturity (fair value of $16,168, $18,223 and $19,237, respectively)	15,333				18,036			18,958
Total cash and cash equivalents and marketable securities	2,081,232				898,783			934,383
Residential mortgage loans held-for-sale	25,140				7,709			8,859
Residential mortgage loans	3,118,229				2,860,418			2,887,274
Home equity loans	1,484,365				1,342,918			1,328,173
Consumer loans	1,487,083				1,125,132			1,094,293
Commercial real estate loans	3,319,743				2,754,390			2,812,839
Commercial loans	1,347,292				718,107			720,579
Total loans receivable	10,781,852				8,808,674			8,852,017
Allowance for credit losses	(140,209)				(57,941)			(52,859)
Loans receivable, net	10,641,643				8,750,733			8,799,158
Federal Home Loan Bank stock, at cost	23,171				14,740			21,401
Accrued interest receivable	36,916				25,755			27,069
Real estate owned, net	2,575				950			1,237
Premises and equipment, net	166,919				147,409			148,796
Bank-owned life insurance	252,621				189,091			187,971
Goodwill	386,044				346,103			344,720
Other intangible assets, net	21,601				23,076			22,410
Other assets	176,083				97,268			93,329
Total assets	$	13,788,805			10,493,908			10,580,474
Liabilities and shareholders' equity
Liabilities
Noninterest-bearing demand deposits	$	2,641,234			1,609,653			1,905,650
Interest-bearing demand deposits	2,663,878				1,944,108			1,678,644
Money market deposit accounts	2,396,567				1,863,998			1,828,001
Savings deposits	2,022,918				1,604,838			1,635,754
Time deposits	1,732,022				1,569,410			1,633,451
Total deposits	11,456,619				8,592,007			8,681,500
Borrowed funds	398,216				246,336			255,257
Junior subordinated debentures	128,729				121,800			121,787
Advances by borrowers for taxes and insurance	29,755				44,556			24,331
Accrued interest payable	1,002				1,142			1,314
Other liabilities	227,253				134,782			144,515
Total liabilities	12,241,574				9,140,623			9,228,704
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, 127,801,297, 106,859,088, and 106,658,067 shares issued and outstanding, respectively	1,278				1,069			1,067
Paid-in capital	1,023,827				805,750			801,382
Retained earnings	544,695				583,407			577,018
Accumulated other comprehensive loss	(22,569)				(36,941)			(27,697)
Total shareholders' equity	1,547,231				1,353,285			1,351,770
Total liabilities and shareholders' equity	$	13,788,805			10,493,908			10,580,474
Equity to assets	11.22		%		12.90	%		12.78	%
Tangible common equity to assets	8.52		%		9.72	%		9.64	%
Book value per share	$	12.11			12.66			12.67
Tangible book value per share	$	8.92			9.21			9.23
Closing market price per share	$	9.20			16.63			16.39
Full time equivalent employees	2,523				2,209			2,218
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
	September 30, 2020				June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019
Interest income:
Loans receivable	$	107,241			103,012			94,973			97,866			101,091
Mortgage-backed securities	4,652				4,038			4,175			4,237			4,188
Taxable investment securities	427				439			648			683			884
Tax-free investment securities	655				564			185			201			224
FHLB dividends	218				309			262			262			307
Interest-earning deposits	221				185			135			169			172
Total interest income	113,414				108,547			100,378			103,418			106,866
Interest expense:
Deposits	8,443				9,336			11,403			12,893			13,694
Borrowed funds	1,437				1,133			1,747			1,580			2,236
Total interest expense	9,880				10,469			13,150			14,473			15,930
Net interest income	103,534				98,078			87,228			88,945			90,936
Provision for credit losses	6,818				51,750			27,637			8,223			3,302
Net interest income after provision for credit losses	96,716				46,328			59,591			80,722			87,634
Noninterest income:
Gain/(loss) on sale of investments	(12)				(8)			181			27			—
Gain on sale of loans	—				—			1,302			908			826
Service charges and fees	14,354				13,069			15,116			14,125			13,558
Trust and other financial services income	5,376				4,823			5,001			4,517			4,609
Insurance commission income	2,331				2,395			2,372			1,858			1,887
Gain/(loss) on real estate owned, net	(32)				(97)			(91)			86			(227)
Income from bank-owned life insurance	1,576				1,248			1,036			1,121			1,095
Mortgage banking income	11,055				12,022			1,194			1,494			1,921
Other operating income	2,022				2,044			1,865			4,077			2,500
Total noninterest income	36,670				35,496			27,976			28,213			26,169
Noninterest expense:
Compensation and employee benefits	47,371				40,049			42,746			42,074			40,816
Premises and occupancy costs	8,342				7,195			7,471			7,051			7,061
Office operations	4,626				3,711			3,382			4,097			3,197
Collections expense	1,264				644			474			566			747
Processing expenses	15,042				11,680			11,142			10,263			11,122
Marketing expenses	2,147				2,047			1,507			1,010			1,373
Federal deposit insurance premiums	1,498				1,618			—			—			(702)
Professional services	3,246				2,825			2,812			3,533			3,032
Amortization of intangible assets	1,781				1,760			1,651			1,634			1,702
Real estate owned expense	111				89			95			72			119
Acquisition/branch optimization expense	1,414				9,679			2,458			1,114			23
Other expenses	27				7,866			4,873			5,157			2,106
Total noninterest expense	86,869				89,163			78,611			76,571			70,596
Income/(loss) before income taxes	46,517				(7,339)			8,956			32,364			43,207
Income tax expense/(benefit)	8,467				(1,139)			1,017			6,773			9,793
Net income/(loss)	$	38,050			(6,200)			7,939			25,591			33,414
Basic earnings per share	$	0.30			(0.05)			0.08			0.24			0.32
Diluted earnings per share	$	0.30			(0.05)			0.07			0.24			0.31
Weighted average common shares outstanding - basic	126,855,810				121,480,563			105,882,553			105,627,194			105,517,707
Weighted average common shares outstanding - diluted	126,855,810				121,480,563			106,148,247			106,306,615			106,270,544
Annualized return on average equity	9.82		%		(1.63)	%		2.37	%		7.52	%		9.90	%
Annualized return on average assets	1.09		%		(0.18)	%		0.30	%		0.97	%		1.25	%
Annualized return on tangible common equity **	13.28		%		(2.22)	%		3.28	%		10.32	%		13.46	%
Efficiency ratio *	59.68		%		58.19	%		64.67	%		63.01	%		58.81	%
Annualized noninterest expense to average assets *	2.39		%		2.30	%		2.83	%		2.80	%		2.59	%

*    Excludes acquisition/branch optimization 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)
	Nine months ended September 30,
	2020				2019
Interest income:
Loans receivable	$	305,226			296,943
Mortgage-backed securities	12,865				12,433
Taxable investment securities	1,514				2,718
Tax-free investment securities	1,404				643
FHLB dividends	789				794
Interest-earning deposits	541				431
Total interest income	322,339				313,962
Interest expense:
Deposits	29,182				36,323
Borrowed funds	4,317				6,118
Total interest expense	33,499				42,441
Net interest income	288,840				271,521
Provision for credit losses	86,205				14,436
Net interest income after provision for credit losses	202,635				257,085
Noninterest income:
Gain on sale of investments	161				23
Gain on sale of loans	1,302				826
Service charges and fees	42,539				38,940
Trust and other financial services income	15,200				13,248
Insurance commission income	7,098				6,210
Loss on real estate owned, net	(220)				(139)
Income from bank-owned life insurance	3,860				3,297
Mortgage banking income	24,271				2,325
Other operating income	5,931				6,464
Total noninterest income	100,142				71,194
Noninterest expense:
Compensation and employee benefits	130,166				121,012
Premises and occupancy costs	23,008				21,666
Office operations	11,719				10,036
Collections expense	2,382				1,994
Processing expenses	37,864				32,190
Marketing expenses	5,701				5,988
Federal deposit insurance premiums	3,116				685
Professional services	8,883				8,754
Amortization of intangible assets	5,192				4,909
Real estate owned expense	295				406
Acquisition/branch optimization expense	13,551				3,054
Other expenses	12,766				8,838
Total noninterest expense	254,643				219,532
Income before income taxes	48,134				108,747
Income tax expense	8,345				23,906
Net income	$	39,789			84,841
Basic earnings per share	$	0.34			0.81
Diluted earnings per share	$	0.34			0.80
Weighted average common shares outstanding - basic	118,088,122				104,626,560
Weighted average common shares outstanding - diluted	118,088,122				105,681,615
Annualized return on average equity	3.33		%		8.65	%
Annualized return on average assets	0.42		%		1.10	%
Annualized return on tangible common equity **	4.66		%		11.52	%
Efficiency ratio *	60.65		%		61.73	%
Annualized noninterest expense to average assets *	2.50		%		2.75	%

*    Excludes acquisition/branch optimization 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 September 30,							Nine months ended September 30,
	2020				2019			2020			2019
Operating results (non-GAAP):
Net interest income	$	103,534			90,936			288,840			271,521
Provision for credit losses	5,349				3,302			21,551			14,436
Noninterest income	36,670				26,169			100,142			71,194
Noninterest expense	85,455				70,573			243,092			216,478
Income taxes	9,274				9,799			29,682			24,761
Net operating income (non-GAAP)	$	40,126			33,431			94,657			87,040
Diluted earnings per share (non-GAAP)	$	0.32			0.31			0.80			0.82
Average equity	$	1,540,934			1,339,339			1,596,252			1,312,002
Average assets	13,903,655				10,568,279			12,590,018			10,289,453
Annualized return on average equity (non-GAAP)	10.36		%		9.90	%		7.92	%		8.87	%
Annualized return on average assets (non-GAAP)	1.15		%		1.26	%		1.00	%		1.13	%
Reconciliation of net operating income to net income:
Net operating income (non-GAAP)	$	40,126			33,431			94,657			87,040
Non-GAAP adjustments, net of tax:
COVID-related provision **	(1,058)				—			(33,462)			—
CECL provision impact due to acquisition of MutualBank	—				—			(13,089)			—
PPP deferred origination costs	—				—			3,034			—
COVID-related off balance sheet provision **	—				—			(1,594)			—
Acquisition/branch optimization expense	(1,018)				(17)			(9,757)			(2,199)
Net income (GAAP)	$	38,050			33,414			39,789			84,841
Diluted earnings per share (GAAP)	$	0.30			0.31			0.34			0.80
Annualized return on average equity (GAAP)	9.82		%		9.90	%		3.33	%		8.65	%
Annualized return on average assets (GAAP)	1.09		%		1.25	%		0.42	%		1.10	%

*

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 acquisition/branch optimization expense. The net tax effect was calculated using statutory tax rates of approximately 28.0%. 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 the Company's loan portfolio at September 30, 2020.

 

Northwest Bancshares, Inc. and Subsidiaries Regulatory Capital Requirements (Unaudited) (dollars in thousands)
	At September 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.	$	1,655,949			16.607	%		$	1,046,981			10.500	%		$	997,125			10.000	%
Northwest Bank	1,445,508				14.512	%		1,045,896				10.500	%		996,092				10.000	%
Tier 1 capital (to risk weighted assets)
Northwest Bancshares, Inc.	1,521,913				15.263	%		847,556				8.500	%		797,700				8.000	%
Northwest Bank	1,311,472				13.166	%		846,678				8.500	%		796,873				8.000	%
Common equity tier 1 capital (to risk weighted assets)
Northwest Bancshares, Inc.	1,273,896				12.776	%		697,988				7.000	%		648,131				6.500	%
Northwest Bank	1,311,472				13.166	%		697,264				7.000	%		647,460				6.500	%
Tier 1 capital (leverage)  (to average assets)
Northwest Bancshares, Inc.	1,521,913				10.977	%		554,608				4.000	%		693,260				5.000	%
Northwest Bank	1,311,472				9.522	%		550,907				4.000	%		688,634				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)
		September 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		$	34,000			176			—			34,176
Debt issued by government sponsored enterprises:
Due in less than one year		35,731				284			—			36,015
Due in one year through five years		253				4			—			257
Due in five years through ten years		69,135				170			(178)			69,127
Municipal securities:
Due in less than one year		4,241				18			—			4,259
Due in one year through five years		3,343				73			(2)			3,414
Due in five years through ten years		11,077				312			—			11,389
Due after ten years		92,530				2,930			—			95,460
Residential mortgage-backed securities:
Fixed rate pass-through		356,898				6,467			(102)			363,263
Variable rate pass-through		15,798				538			(18)			16,318
Fixed rate agency CMOs		710,620				13,035			(722)			722,933
Variable rate agency CMOs		52,209				369			(39)			52,539
Total residential mortgage-backed securities		1,135,525				20,409			(881)			1,155,053
Total marketable securities available-for-sale		$	1,385,835			24,376			(1,061)			1,409,150
Marketable securities held-to-maturity
Residential mortgage-backed securities:
Fixed rate pass-through		$	1,823			128			—			1,951
Variable rate pass-through		970				33			—			1,003
Fixed rate agency CMOs		11,936				659			—			12,595
Variable rate agency CMOs		604				15			—			619
Total residential mortgage-backed securities		15,333				835			—			16,168
Total marketable securities held-to-maturity		$	15,333			835			—			16,168

 

Northwest Bancshares, Inc. and Subsidiaries Borrowed Funds (Unaudited) (dollars in thousands)
	September 30, 2020
	Amount				Average rate
Term notes payable to the Federal Home Loan Bank (FHLB):
Payable to FHLB of Pittsburgh	$	30,000			0.40	%
Payable to the FHLB of Indianapolis acquired from MutualBank	118,107				1.70	%
Total term notes payable to the FHLB	148,107
Collateralized borrowings, due within one year	126,832				0.19	%
Subordinated debentures, net of issuance costs	$	123,277			4.00	%
Total borrowed funds *	$	398,216

*

As of September 30, 2020, the Company had $3.8 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 $103.0 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)
	September 30, 2020				June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019
Nonaccrual loans current:
Residential mortgage loans	$	1,128			413			285			72			676
Home equity loans	366				481			592			197			607
Consumer loans	234				214			77			78			68
Commercial real estate loans	22,610				30,677			14,337			9,241			7,674
Commercial loans	6,488				6,551			3,514			3,424			3,777
Total nonaccrual loans current	$	30,826			38,336			18,805			13,012			12,802
Nonaccrual loans delinquent 30 days to 59 days:
Residential mortgage loans	$	60			61			691			674			40
Home equity loans	445				247			159			224			102
Consumer loans	230				335			143			121			246
Commercial real estate loans	692				2,372			496			196			925
Commercial loans	57				—			—			55			44
Total nonaccrual loans delinquent 30 days to 59 days	$	1,484			3,015			1,489			1,270			1,357
Nonaccrual loans delinquent 60 days to 89 days:
Residential mortgage loans	$	576			1,013			218			1,048			979
Home equity loans	618				960			539			689			436
Consumer loans	781				666			488			417			426
Commercial real estate loans	2,745				163			2,096			413			536
Commercial loans	15				768			37			341			—
Total nonaccrual loans delinquent 60 days to 89 days	$	4,735			3,570			3,378			2,908			2,377
Nonaccrual loans delinquent 90 days or more:
Residential mortgage loans	$	14,750			15,369			10,457			12,682			11,722
Home equity loans	7,845				7,060			5,816			5,635			5,966
Consumer loans	5,352				6,896			3,459			3,610			3,400
Commercial real estate loans	35,496				29,729			25,342			25,014			22,292
Commercial loans	6,310				11,535			16,685			4,739			5,741
Total nonaccrual loans delinquent 90 days or more	$	69,753			70,589			61,759			51,680			49,121
Total nonaccrual loans	$	106,798			115,510			85,431			68,870			65,657
Total nonaccrual loans	$	106,798			115,510			85,431			68,870			65,657
Loans 90 days past due and still accruing	495				77			31			32			85
Nonperforming loans	107,293				115,587			85,462			68,902			65,742
Real estate owned, net	2,575				1,897			1,075			950			1,237
Nonperforming assets	$	109,868			117,484			86,537			69,852			66,979
Nonaccrual troubled debt restructuring *	$	17,120			17,562			17,375			9,043			9,138
Accruing troubled debt restructuring	17,684				17,888			15,977			22,956			21,162
Total troubled debt restructuring	$	34,804			35,450			33,352			31,999			30,300
Nonperforming loans to total loans	1.00		%		1.06	%		0.97	%		0.78	%		0.74	%
Nonperforming assets to total assets	0.80		%		0.85	%		0.81	%		0.67	%		0.63	%
Allowance for credit losses to total loans	1.30		%		1.29	%		1.05	%		0.66	%		0.60	%
Allowance for total loans excluding PPP loan balances	1.36		%		1.36	%		N/A			N/A			N/A
Allowance for credit losses to nonperforming loans	130.68		%		121.63	%		108.70	%		84.09	%		80.40	%

*	Amounts included in nonperforming loans above.

 

Northwest Bancshares, Inc. and Subsidiaries Loans by Credit Quality Indicators (Unaudited) (dollars in thousands)
At September 30, 2020		Pass				Special    mention *			Substandard **			Doubtful ***			Loss			Loans receivable
Personal Banking:
Residential mortgage loans		$	3,117,442			—			25,927			—			—			3,143,369
Home equity loans		1,471,919				—			12,446			—			—			1,484,365
Consumer loans		1,478,109				—			8,974			—			—			1,487,083
Total Personal Banking		6,067,470				—			47,347			—			—			6,114,817
Commercial Banking:
Commercial real estate loans		2,850,611				110,073			359,059			—			—			3,319,743
Commercial loans		1,255,255				40,631			51,406			—			—			1,347,292
Total Commercial Banking		4,105,866				150,704			410,465			—			—			4,667,035
Total loans		$	10,173,336			150,704			457,812			—			—			10,781,852
At June 30, 2020
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

*	Includes $34.7 million, $37.4 million, $13.1 million, $10.3 million, and $8.7 million of acquired loans at September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019, and September 30, 2019, respectively.
**	Includes $129.2 million, $108.2 million, $56.8 million, $53.1 million, and $46.6 million of acquired loans at September 30, 2020, June 30, 2020, March 31, 2020, December 31, 2019, and September 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)
	September 30, 2020							*			June 30, 2020							*			March 31, 2020							*			December 31, 2019							*			September 30, 2019							*
(Number of loans and dollar amount of loans)
Loans delinquent 30 days to 59 days:
Residential mortgage loans	17			$	736			—	%		15			$	629			—	%		358			$	32,755			1.2	%		292			$	23,296			0.8	%		21			$	1,236			—	%
Home equity loans	129			4,984				0.3	%		118			4,569				0.3	%		190			7,061				0.5	%		173			6,469				0.5	%		149			4,774				0.4	%
Consumer loans	1,078			8,586				0.6	%		629			7,199				0.5	%		953			8,774				0.7	%		960			9,208				0.8	%		864			7,597				0.7	%
Commercial real estate loans	28			5,090				0.2	%		46			14,177				0.4	%		58			12,895				0.5	%		43			7,921				0.3	%		27			5,308				0.2	%
Commercial loans	19			1,797				0.1	%		12			1,242				0.1	%		35			7,545				1.1	%		32			1,187				0.2	%		20			362				0.1	%
Total loans delinquent 30 days to 59 days	1,271			$	21,193			0.2	%		820			$	27,816			0.3	%		1,594			$	69,030			0.8	%		1,500			$	48,081			0.5	%		1,081			$	19,277			0.2	%
Loans delinquent 60 days to 89 days:
Residential mortgage loans	65			$	4,788			0.2	%		64			$	5,364			0.2	%		11			$	511			—	%		67			$	5,693			0.2	%		95			$	5,320			0.2	%
Home equity loans	56			1,860				0.1	%		59			2,326				0.2	%		65			2,652				0.2	%		66			2,405				0.2	%		66			2,103				0.2	%
Consumer loans	323			3,049				0.2	%		258			2,916				0.2	%		265			2,610				0.2	%		395			3,302				0.3	%		288			2,632				0.2	%
Commercial real estate loans	14			4,212				0.1	%		18			3,913				0.1	%		12			2,981				0.1	%		19			1,690				0.1	%		15			1,893				0.1	%
Commercial loans	7			357				—	%		15			1,151				0.1	%		10			309				—	%		17			6,403				0.9	%		10			589				0.1	%
Total loans delinquent 60 days to 89 days	465			$	14,266			0.1	%		414			$	15,670			0.1	%		363			$	9,063			0.1	%		564			$	19,493			0.2	%		474			$	12,537			0.1	%
Loans delinquent 90 days or more: **
Residential mortgage loans	168			$	14,750			0.5	%		185			$	15,369			0.5	%		129			$	10,457			0.4	%		141			$	12,775			0.4	%		138			$	11,816			0.4	%
Home equity loans	193			7,845				0.5	%		182			7,060				0.5	%		152			5,816				0.4	%		159			5,688				0.4	%		157			5,966				0.4	%
Consumer loans	696			5,847				0.4	%		709			6,896				0.5	%		445			3,459				0.3	%		590			3,611				0.3	%		398			3,401				0.3	%
Commercial real estate loans	136			35,496				1.1	%		149			29,729				0.9	%		139			25,342				0.9	%		129			25,014				0.9	%		118			22,292				0.8	%
Commercial loans	34			6,310				0.5	%		47			11,535				0.8	%		51			16,685				2.3	%		37			4,739				0.7	%		40			5,741				0.8	%
Total loans delinquent 90 days or more	1,227			$	70,248			0.7	%		1,272			$	70,589			0.7	%		916			$	61,759			0.7	%		1,056			$	51,827			0.6	%		851			$	49,216			0.6	%
Total loans delinquent	2,963			$	105,707			1.0	%		2,506			$	114,075			1.1	%		2,873			$	139,852			1.6	%		3,120			$	119,401			1.4	%		2,406			$	81,030			0.9	%

*	Represents delinquency, in dollars, divided by the respective total amount of that type of loan outstanding.
**	Includes purchased credit deteriorated loans of $20.3 million, $18.0 million, and $298,000 at September 30, 2020, June 30, 2020, and March 31, 2020, respectively, and purchased credit impaired loans of $147,000 and $95,000 at December 31, 2019, and September 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 September 30, 2020:
At September 30, 2020	30-59 days delinquent				*			60-89 days delinquent				*			90 days or greater delinquent				*			Total delinquent				*			Current				*			Total loans  receivable				*
Restaurants/bars	$	27			—	%		$	623			—	%		$	1,012			—	%		$	1,662			—	%		$	97,009			0.9	%		$	98,671			0.9	%
Hotels/hospitality	3				—	%		1,083				—	%		6,751				0.1	%		7,837				0.1	%		174,687				1.6	%		182,524				1.7	%
Gyms and fitness	—				—	%		—				—	%		5				—	%		5				—	%		5,302				—	%		5,307				—	%
Transportation	44				—	%		19				—	%		2,313				—	%		2,376				—	%		77,371				0.7	%		79,747				0.7	%
Oil and gas	7				—	%		—				—	%		23				—	%		30				—	%		11,385				0.1	%		11,415				0.1	%
Residential care facilities	—				—	%		—				—	%		—				—	%		—				—	%		233,248				2.2	%		233,248				2.2	%
Retail buildings	222				—	%		263				—	%		850				—	%		1,335				—	%		448,829				4.2	%		450,164				4.2	%
Education/student housing	—				—	%		1,427				—	%		503				—	%		1,930				—	%		144,214				1.3	%		146,144				1.4	%
Construction/development:
Education/student housing	—				—	%		—				—	%		—				—	%		—				—	%		48,175				0.4	%		48,175				0.4	%
Hotels/hospitality	—				—	%		—				—	%		—				—	%		—				—	%		25,559				0.2	%		25,559				0.2	%
Residential care facilities	—				—	%		—				—	%		—				—	%		—				—	%		36,667				0.3	%		36,667				0.3	%
All other construction/development	2,139				—	%		—				—	%		5,476				0.1	%		7,615				0.1	%		182,201				1.7	%		189,816				1.8	%
All other sectors	18,751				0.2	%		10,851				0.1	%		53,315				0.5	%		82,917				0.8	%		9,191,498				85.2	%		9,274,415				86.0	%
Total loans	$	21,193			0.2	%		$	14,266			0.1	%		$	70,248			0.7	%		$	105,707			1.0	%		$	10,676,145			99.0	%		$	10,781,852			100.0	%

*	Percent of total loans outstanding.

 

Loan deferrals The following table represents loans that entered into and are currently in a deferment offered by the Company to aid customers in the COVID-19 pandemic as of September 30, 2020. Of these loan deferrals, 297 borrowers applied for and received PPP loans totaling approximately $50.8 million:
		Balance as of June 30, 2020									Loans returned to full payment status, net of payments							Loans moved into a second deferral							New loans entered into first deferral							Balance as of September 30, 2020
		Number of loans		Outstanding principal balance				*			Number of loans			Outstanding principal balance				Number of loans			Outstanding principal balance				Number of loans			Outstanding principal balance				Number of loans			Outstanding principal balance				*
Residential mortgage loans		936		$	131,567			4.1	%		871			$	121,725			65			$	9,842			46			$	6,125			111			$	15,967			0.5	%
Home equity loans		652		42,836				3.0	%		625			40,606				27			2,230				21			1,409				48			3,639				0.2	%
Consumer loans		2,455		49,374				3.3	%		2,399			48,068				56			1,306				67			1,042				123			2,348				0.2	%
Commercial real estate loans		1,511		967,340				29.2	%		1,434			794,288				77			173,052				17			10,609				94			183,661				5.5	%
Commercial loans		652		120,999				8.9	%		635			119,029				17			1,970				11			5,115				28			7,085				0.5	%
Total loans		6,206		$	1,312,116			12.1	%		5,964			$	1,123,716			242			$	188,400			162			$	24,300			404			$	212,700	**		2.0	%

*	Percent of total loans outstanding by the respective total amount of that type of loan.
**	As of September 30, 2020, $177.9 million of loan deferrals expire in Q4 2020 and $34.8 million of loan deferrals expire in Q1 2021.  In addition, of the $212,700 total loan deferrals, $153.2 million are in the hospitality industry.

 

Northwest Bancshares, Inc. and Subsidiaries Allowance for Credit Losses (Unaudited) (dollars in thousands)
	Quarter ended
	September 30, 2020				June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019
Beginning balance	$	140,586			92,897			57,941			52,859			53,107
CECL adoption	—				—			10,792			—			—
Initial allowance on loans purchased with credit deterioration	—				8,845			—			—			—
Provision	6,818				51,750			27,637			8,223			3,302
Charge-offs residential mortgage	(129)				(38)			(343)			(222)			(190)
Charge-offs home equity	(88)				(173)			(289)			(113)			(466)
Charge-offs consumer	(3,356)				(3,191)			(3,488)			(3,142)			(3,078)
Charge-offs commercial real estate	(532)				(690)			(331)			(107)			(389)
Charge-offs commercial	(4,892)				(10,349)			(815)			(1,143)			(1,151)
Recoveries	1,802				1,535			1,793			1,586			1,724
Ending balance	$	140,209			140,586			92,897			57,941			52,859
Net charge-offs to average loans, annualized	0.27		%		0.51	%		0.16	%		0.14	%		0.16	%

 

	Nine months ended September 30,
	2020				2019
Beginning balance	$	57,941			55,214
CECL adoption	10,792				—
Initial allowance on loans purchased with credit deterioration	8,845				—
Provision	86,205				14,436
Charge-offs residential mortgage	(510)				(944)
Charge-offs home equity	(550)				(1,008)
Charge-offs consumer	(10,035)				(8,665)
Charge-offs commercial real estate	(1,553)				(5,360)
Charge-offs commercial	(16,056)				(5,508)
Recoveries	5,130				4,694
Ending balance	$	140,209			52,859
Net charge-offs to average loans, annualized	0.32		%		0.26	%

 

	September 30, 2020
	Originated loans							Acquired loans						Total loans
	Balance				Reserve			Balance			Reserve			Balance			Reserve
Residential mortgage loans	$	2,794,489			10,244			348,880			1,792			3,143,369			12,036
Home equity loans	1,169,709				7,488			314,656			2,097			1,484,365			9,585
Consumer loans	1,242,220				16,433			244,863			3,427			1,487,083			19,860
Personal Banking Loans	5,206,418				34,165			908,399			7,316			6,114,817			41,481
Commercial real estate loans	2,488,967				66,960			830,776			20,020			3,319,743			86,980
Commercial loans	1,147,492				8,455			199,800			3,293			1,347,292			11,748
Commercial Banking Loans	3,636,459				75,415			1,030,576			23,313			4,667,035			98,728
Total Loans	$	8,842,877			109,580			1,938,975			30,629			10,781,852			140,209

 

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, 2020										June 30, 2020										March 31, 2020										December 31, 2019										September 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	$	3,176,436			28,769			3.62	%		$	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	%
Home equity loans	1,479,429				13,732			3.69	%		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	%
Consumer loans	1,437,828				15,851			4.39	%		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	%
Commercial real estate loans	3,306,386				36,887			4.37	%		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	%
Commercial loans	1,377,223				12,603			3.58	%		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	%
Total loans receivable (a) (b) (d)	10,777,302				107,842			3.98	%		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	%
Mortgage-backed securities (c)	1,004,803				4,651			1.85	%		714,657				4,038			2.26	%		668,470				4,175			2.50	%		667,910				4,237			2.54	%		641,085				4,188			2.61	%
Investment securities (c) (d)	216,081				1,336			2.47	%		170,309				1,244			2.92	%		144,152				881			2.44	%		151,289				938			2.48	%		218,753				1,168			2.14	%
FHLB stock, at cost	25,595				218			3.39	%		22,192				309			5.60	%		15,931				262			6.61	%		13,400				262			7.76	%		16,302				307			7.47	%
Other interest-earning deposits	791,601				221			0.11	%		623,870				185			0.12	%		34,697				135			1.54	%		31,624				169			2.09	%		28,832				172			2.33	%
Total interest-earning assets	12,815,382				114,268			3.55	%		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	%
Noninterest-earning assets (e)	1,088,273										1,858,513										960,303										869,117										916,781
Total assets	$	13,903,655									$	13,590,131									$	10,597,471									$	10,447,710									$	10,568,279
Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings deposits	$	2,015,604			648			0.13	%		$	1,884,202			648			0.14	%		$	1,611,111			727			0.18	%		$	1,615,996			792			0.19	%		$	1,658,670			788			0.19	%
Interest-bearing demand deposits	2,680,591				763			0.11	%		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	%
Money market deposit accounts	2,347,097				1,347			0.23	%		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	%
Time deposits	1,782,350				5,685			1.27	%		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	%
Borrowed funds (f)	420,715				717			0.68	%		371,700				296			0.32	%		240,118				709			1.19	%		177,670				444			0.99	%		243,960				1,002			1.63	%
Junior subordinated debentures	128,658				720			2.19	%		127,472				837			2.60	%		121,809				1,038			3.37	%		121,796				1,136			3.65	%		121,767				1,235			3.97	%
Total interest-bearing liabilities	9,375,015				9,880			0.42	%		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	%
Noninterest-bearing demand deposits (g)	2,703,266										2,401,368										1,640,180										1,800,861										1,915,392
Noninterest-bearing liabilities	284,440										882,391										268,139										158,434										216,433
Total liabilities	12,362,721										12,061,263										9,247,362										9,097,907										9,228,940
Shareholders' equity	1,540,934										1,528,868										1,350,109										1,349,803										1,339,339
Total liabilities and shareholders' equity	$	13,903,655									$	13,590,131									$	10,597,471									$	10,447,710									$	10,568,279
Net interest income/Interest rate spread					104,388			3.13	%						98,989			3.27	%						87,619			3.48	%						89,340			3.50	%						91,332			3.52	%
Net interest-earning assets/Net interest margin	$	3,440,367						3.26	%		$	2,954,114						3.38	%		$	2,298,125						3.66	%		$	2,439,981						3.73	%		$	2,554,383						3.79	%
Ratio of interest-earning assets to interest-bearing liabilities	1.37X										1.34X										1.31X										1.34X										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, collateralized borrowings and subordinated debt.
(g)	Average cost of deposits were 0.29%, 0.35%, 0.53%, 0.59%, and 0.63%, respectively.
(h)	Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 3.96%, 4.06%, 4.35%, 4.46%, and 4.59%, respectively, Investment securities - 2.00%, 2.36%, 2.31%, 2.34%, and 2.03%, respectively, Interest-earning assets - 3.52% 3.72%, 4.19%, 4.28%, and 4.39%, respectively. GAAP basis net interest rate spreads were 3.10%, 3.24%, 3.47%, 3.48%, and 3.50%, respectively, and GAAP basis net interest margins were 3.23%, 3.34%, 3.64%, 3.71%, and 3.77%, respectively.

 

Northwest Bancshares, Inc. and Subsidiaries Average Balance Sheet (Unaudited) (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.
	Nine months ended September 30,
	2020										2019
	Average balance				Interest			Avg. yield/ cost (h)			Average balance				Interest			Avg. yield/ cost (h)
Assets
Interest-earning assets:
Residential mortgage loans	$	3,038,712			85,850			3.77	%		$	2,865,091			87,572			4.08	%
Home equity loans	1,424,580				42,340			3.97	%		1,300,537				48,868			5.02	%
Consumer loans	1,302,282				43,004			4.41	%		949,303				32,844			4.60	%
Commercial real estate loans	3,071,047				102,918			4.40	%		2,720,435				99,930			4.84	%
Commercial loans	1,084,739				32,727			3.96	%		665,867				28,724			5.69	%
Loans receivable (a) (b) (d)	9,921,360				306,839			4.13	%		8,501,233				297,938			4.69	%
Mortgage-backed securities (c)	796,739				12,865			2.15	%		630,279				12,433			2.63	%
Investment securities (c) (d)	176,991				3,461			2.61	%		224,111				3,532			2.10	%
FHLB stock, at cost	21,255				789			4.96	%		14,840				794			7.15	%
Other interest-earning deposits	483,390				541			0.15	%		20,531				431			2.77	%
Total interest-earning assets	11,399,735				324,495			3.80	%		9,390,994				315,128			4.49	%
Noninterest-earning assets (e)	1,190,283										898,459
Total assets	$	12,590,018									$	10,289,453
Liabilities and shareholders' equity
Interest-bearing liabilities:
Savings deposits	$	1,837,624			2,023			0.15	%		$	1,668,806			2,323			0.19	%
Interest-bearing demand deposits	2,342,748				2,882			0.16	%		1,611,554				4,442			0.37	%
Money market deposit accounts	2,157,212				6,035			0.37	%		1,756,251				9,784			0.74	%
Time deposits	1,691,168				18,243			1.44	%		1,538,113				19,774			1.72	%
Borrowed funds (f)	344,457				1,721			0.67	%		216,160				2,421			1.50	%
Junior subordinated debentures	125,988				2,595			2.71	%		119,417				3,698			4.08	%
Total interest-bearing liabilities	8,499,197				33,499			0.53	%		6,910,301				42,442			0.82	%
Noninterest-bearing demand deposits (g)	2,250,864										1,847,344
Noninterest-bearing liabilities	243,705										219,806
Total liabilities	10,993,766										8,977,451
Shareholders' equity	1,596,252										1,312,002
Total liabilities and shareholders' equity	$	12,590,018									$	10,289,453
Net interest income/Interest rate spread					290,996			3.27	%						272,686			3.67	%
Net interest-earning assets/Net interest margin	$	2,900,538						3.40	%		$	2,480,693						3.87	%
Ratio of interest-earning assets to interest-bearing liabilities	1.34X										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, collateralized borrowings and subordinated debt.
(g)	Average cost of deposits were 0.38% and 0.58%, respectively.
(h)	Shown on a FTE basis. GAAP basis yields were: Loans — 4.11% and 4.67%, respectively; Investment securities — 2.20% and 2.00%, respectively; Interest-earning assets — 3.78% and 4.47%, respectively. GAAP basis net interest rate spreads were 3.25% and 3.65%, respectively; and GAAP basis net interest margins were 3.38% and 3.86%, respectively.

 

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SOURCE Northwest Bancshares, Inc.