Northwest Bancshares, Inc. Announces Second Quarter 2020 Earnings and Quarterly Dividend
07/27/2020 - 09:24 AM
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.