Equibles

8-K

Northwest Bancshares, Inc. (NWBI)

8-K 2020-04-27 For: 2020-04-27
View Original
Added on April 04, 2026

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):   April 27, 2020

Northwest Bancshares, Inc.

(Exact name of registrant as specified in its charter)

Maryland 001-34582 27-0950358
(State or other jurisdiction of incorporation) (Commission File No.) (I.R.S. Employer Identification No.)
100 Liberty Street Warren Pennsylvania 16365
--- --- --- ---
(Address of principal executive office) (Zip code)

(814) 726-2140

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading symbol(s) Name of each exchange on which registered
Common Stock, 0.01 Par Value NWBI NASDAQ Stock Market, LLC

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

Indicate by a check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange act. ☐

Item 2.02                                           Results of Operations and Financial Condition

On April 27, 2020, Northwest Bancshares, Inc. issued an earnings release for the quarter ended March 31, 2020.  A copy of the release is included as exhibit 99.1 to this report and is being furnished to the SEC and shall not be deemed “filed” for any purpose.

Item 9.01                                           Financial Statements and Exhibits

(a)                                 Not applicable

(b)                                 Not applicable

(c)                                  Not applicable

(d)                                 Exhibits

Exhibit No. Description
99.1 Press release dated April 27, 2020

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

NORTHWEST BANCSHARES, INC.
Date: April 27, 2020 By: /s/ William W. Harvey, Jr.
William W. Harvey, Jr.
Chief Financial Officer 
		Exhibit

EXHIBIT 99.1

PRESS RELEASE OF NORTHWEST BANCSHARES, INC.

EARNINGS RELEASE

FOR IMMEDIATE RELEASE

Contact: Ronald J. Seiffert, Chairman, President and Chief Executive Officer (814) 726-2140
William W. Harvey, Jr., Senior Executive Vice President and Chief Financial Officer (814) 726-2140

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

Warren, Pennsylvania — April 27, 2020

Northwest Bancshares, Inc., (the "Company"), (NasdaqGS: NWBI) announced net income for the quarter ended March 31, 2020 of $7.9 million, or $0.07 per diluted share. This represents a decrease of $17.1 million, or 68.3%, compared to the same quarter last year when net income was $25.0 million or $0.24 per diluted share. The annualized returns on average shareholders’ equity and average assets for the quarter ended March 31, 2020 were 2.37% and 0.30% compared to 7.96% and 1.03% for the same quarter last year.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.19 per share payable on May 15, 2020 to shareholders of record as of May 7, 2020.  This is the 102nd consecutive quarter in which the Company has paid a cash dividend. Based on the market value of the Company's stock as of March 31, 2020, this represents an annualized dividend yield of approximately 6.57%.

In making this announcement, Ronald J. Seiffert, Chairman, President and CEO, noted, "It goes without saying that we are operating in unprecedented times that were impossible to predict just two months ago. Similar to all individuals and businesses, we are trying to react to the daily challenges driven by the pandemic, the government mandates and the recommendations of healthcare professionals while balancing the needs and expectations of our families, employees, customers, communities and shareholders. To that end, we have taken every measure and precaution to protect our employees while continuing to service our customers. At the same time, we are being very mindful of the fiduciary responsibility that we have to our shareholders."

Employees and Families - First, we have made a commitment to our employees, our most important and valuable asset, that we will continue to provide full pay and benefits throughout this crisis. With the many stressors and distractions that they face on a daily basis, we want our employees to focus on servicing our customers without worrying about their own financial situation.

We have limited our branch service model to drive-through only in order to reduce direct contact between our employees and customers. Our customers may also schedule a meeting within the office through our online/website portal or take advantage of the significant investment that we have made in technology through use of our alternative delivery channels. We have also closed a number of our offices that do not have drive-through capabilities and have reduced the number of employees servicing each office so that their hours can be reduced to accommodate their obligations at home.

In addition to the above, we have provided gloves, masks and protective goggles to our front-line employees and we are currently installing teller shields in all of our offices for added precaution when branches re-open and lobby traffic resumes.

Finally, we have established remote capabilities for our trust, brokerage, insurance, and lending representatives to work from home. Approximately 75% of our back-office and regional headquarter personnel are working virtually as well.

Customers - In order to provide relief to our customers in these unprecedented times, we have provided a number of fee concessions and changes to our lending programs. For example, we have waived minimum deposit balance fees, ATM fees and time deposit early withdrawal fees to ease customer access to their funds. In addition, we have approved over 4,500 requests for loan payment deferrals representing almost $1.0 billion in loan obligations.

Communities and businesses - Through the tireless efforts of our dedicated employees, we quickly established a system and process to accept over 3,500 Payroll Protection Program (PPP) loan applications for $430 million, of which approximately 30% were accepted by the SBA before the current program funding was exhausted. We also stand ready to submit the remaining applications to the SBA and to implement the Main Street loan program once the rules are published and implemented.

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Shareholders - While earnings were greatly impacted in the first quarter due to CECL and the potential impact of COVID-19, we are well positioned to weather this storm similar to our financial condition during the great recession in 2008. We are addressing this crisis from a position of strength. Our capital position is robust with our common equity tier 1 capital at $1.113 billion or 13.3%, total delinquencies are low at $139.9 million, or 1.6% of total loans, and real estate owned balances continue to be at historically low levels at approximately $1.0 million. Our liquidity position is ample with 10% of our on-balance sheet assets in cash and investments of which 95% of our investments are backed by GSE’s. In addition, we have over $3.0 billion of borrowing capacity with the FHLB of Pittsburgh.

Mr. Seiffert continued, "Despite the adversity caused by COVID-19, our team was able to successfully close and convert the merger with MutualBank this past weekend. We are so happy to welcome 348 new employees into the Northwest family and look forward to servicing 70,333 more households from our 36 full-service offices in Indiana.

Mr. Seiffert concluded, "I am so very proud of our employees, management team and our Board of Directors who have all risen to the occasion during these extremely challenging times and have stood tall in the face of adversity to service our customers and communities."

Net interest income decreased by $754,000, or 0.9%, to $87.2 million for the quarter ended March 31, 2020, from $88.0 million for the quarter ended March 31, 2019, primarily due to a $1.3 million, or 12.4%, increase in interest expense on deposits. This increase was primarily due to an increase of $746.9 million in the average balance of interest-bearing deposits. Partially offsetting this decrease was a $415,000, or 19.2%, decrease in interest expense on borrowed funds due to a decline in market interest rates when compared to the prior year. The net impact of these changes caused the Company's net interest margin to decrease to 3.66% for the quarter ended March 31, 2020 from 3.97% for the same quarter last year.

The provision for loan losses increased by $21.2 million, or 327.4%, to $27.6 million for the quarter ended March 31, 2020, from $6.5 million for the quarter ended March 31, 2019. During the current quarter, 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. Due to the adoption of CECL, our allowance for loan losses, reserve for unfunded commitments and equity were negatively impacted by $10.8 million, $2.3 million and $9.6 million, respectively. In addition, the estimated economic impact of COVID-19 caused us to increase our provision expense for the quarter by approximately $23 million.

Noninterest income increased by $6.3 million, or 29.1%, to $28.0 million for the quarter ended March 31, 2020, from $21.7 million for the quarter ended March 31, 2019.  This increase was primarily due to a $3.1 million, or 25.5%, increase in service charges and fees due to a change in fee structure initiated in the fourth quarter of 2019. We also recognized a gain of $1.3 million in the current quarter on the sale of approximately $49.5 million of one- to four-family mortgage loans from our portfolio. We chose to sell these loans as they were identified as most likely to refinance due to declining market interest rates and we redeployed the proceeds into shorter duration consumer and commercial loans at an equivalent yield. Also contributing to the increase was an increase in our mortgage banking income of almost $1.0 million due to continued efforts to expand our secondary market sales capabilities. In addition, there was an increase in trust and other financial services income of $806,000, or 19.2%, primarily due to new brokerage production.

Noninterest expense increased by $7.2 million, or 10.1%, to $78.6 million for the quarter ended March 31, 2020, from $71.4 million for the quarter ended March 31, 2019. This increase resulted primarily from a $4.6 million, or 11.9%, increase in compensation and employee benefits due to both internal growth in compensation and staff as well as the addition of Union Community Bank employees at the beginning of March last year. In addition, acquisition expense increased by $532,000, or 27.6%, due to expenses incurred to date as a result of the acquisition of MutualFirst Financial, Inc. and processing expenses increased by $708,000, or 6.8%, as we continue to invest in technology and infrastructure. Partially offsetting this increase was a decrease in federal deposit insurance premiums of $706,000 due to the usage of the remaining assessment credit received during the quarter as a result of the deposit insurance fund becoming fully funded.

The provision for income taxes decreased by $5.7 million, or 84.8%, to $1.0 million for the quarter ended March 31, 2020, from $6.7 million for the quarter ended March 31, 2019. This decrease was due primarily to the decrease in net income before taxes by $22.8 million, or 71.8%. In addition, due to the expansion of net operating loss carryback capabilities, a $764,000 benefit was recognized in order to increase the deferred tax asset associated with carrying back losses acquired through prior mergers to years with higher statutory income tax rates.

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

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March 31, 2020, Northwest operated 170 full-service community banking offices and eight free standing drive-through facilities in Pennsylvania, New York and Ohio.  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.

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Northwest Bancshares, Inc. and Subsidiaries

Consolidated Statements of Financial Condition (Unaudited)

(dollars in thousands, except per share amounts)

March 31, <br>2020 December 31, <br>2019 March 31, <br>2019
Assets
Cash and cash equivalents $ 276,454 60,846 92,923
Marketable securities available-for-sale (amortized cost of $749,703, $815,495 and $845,989, respectively) 765,579 819,901 842,657
Marketable securities held-to-maturity (fair value of $17,968, $18,223 and $21,597, respectively) 17,208 18,036 21,671
Total cash and cash equivalents and marketable securities 1,059,241 898,783 957,251
Residential mortgage loans held-for-sale 6,426 7,709 —
Residential mortgage loans 2,831,860 2,860,418 2,867,161
Home equity loans 1,353,263 1,342,918 1,324,405
Consumer loans 1,178,055 1,125,132 931,062
Commercial real estate loans 2,755,468 2,754,390 2,799,309
Commercial loans 711,802 718,107 647,938
Total loans receivable 8,836,874 8,808,674 8,569,875
Allowance for loan losses (92,897 ) (57,941 ) (55,721 )
Loans receivable, net 8,743,977 8,750,733 8,514,154
Federal Home Loan Bank stock, at cost 13,131 14,740 12,533
Accrued interest receivable 25,531 25,755 28,107
Real estate owned, net 1,075 950 2,345
Premises and equipment, net 147,427 147,409 149,623
Bank-owned life insurance 190,127 189,091 186,251
Goodwill 346,103 346,103 344,720
Other intangible assets 21,425 23,076 25,872
Other assets 133,159 97,268 76,232
Total assets $ 10,681,196 10,493,908 10,297,088
Liabilities and shareholders’ equity
Liabilities
Noninterest-bearing demand deposits $ 1,736,622 1,609,653 1,992,126
Interest-bearing demand deposits 1,975,830 1,944,108 1,583,049
Money market deposit accounts 1,946,113 1,863,998 1,778,806
Savings deposits 1,640,414 1,604,838 1,711,216
Time deposits 1,493,756 1,569,410 1,527,327
Total deposits 8,792,735 8,592,007 8,592,524
Borrowed funds 191,599 246,336 114,081
Junior subordinated debentures 121,813 121,800 121,757
Advances by borrowers for taxes and insurance 47,154 44,556 44,905
Accrued interest payable 834 1,142 1,111
Other liabilities 185,269 134,782 106,434
Total liabilities 9,339,404 9,140,623 8,980,812
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, 106,933,483, 106,859,088, and 106,220,030 shares issued and outstanding, respectively 1,069 1,069 1,062
Paid-in capital 808,250 805,750 795,044
Retained earnings 561,380 583,407 555,205
Accumulated other comprehensive loss (28,907 ) (36,941 ) (35,035 )
Total shareholders’ equity 1,341,792 1,353,285 1,316,276
Total liabilities and shareholders’ equity $ 10,681,196 10,493,908 10,297,088
Equity to assets 12.56 % 12.90 % 12.78 %
Tangible common equity to assets 9.45 % 9.72 % 9.53 %
Book value per share $ 12.55 12.66 12.39
Tangible book value per share $ 9.11 9.21 8.90
Closing market price per share $ 11.57 16.63 16.97
Full time equivalent employees 2,223 2,209 2,205
Number of banking offices 178 181 182

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Northwest Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income (Unaudited)

(dollars in thousands, except per share amounts)

Quarter ended
March 31, 2020 December 31, 2019 September 30, 2019 June 30, <br>2019 March 31, 2019
Interest income:
Loans receivable $ 94,973 97,866 101,091 100,917 94,935
Mortgage-backed securities 4,175 4,237 4,188 4,280 3,965
Taxable investment securities 648 683 884 898 936
Tax-free investment securities 185 201 224 237 182
FHLB dividends 262 262 307 316 171
Interest-earning deposits 135 169 172 159 100
Total interest income 100,378 103,418 106,866 106,807 100,289
Interest expense:
Deposits 11,403 12,893 13,694 12,484 10,145
Borrowed funds 1,747 1,580 2,236 1,720 2,162
Total interest expense 13,150 14,473 15,930 14,204 12,307
Net interest income 87,228 88,945 90,936 92,603 87,982
Provision for loan losses 27,637 8,223 3,302 4,667 6,467
Net interest income after provision for loan losses 59,591 80,722 87,634 87,936 81,515
Noninterest income:
Gain/(loss) on sale of investments 181 27 — 29 (6 )
Gain on sale of loans 1,302 908 826 — —
Service charges and fees 15,116 14,125 13,558 13,339 12,043
Trust and other financial services income 5,001 4,517 4,609 4,444 4,195
Insurance commission income 2,372 1,858 1,887 2,145 2,178
Gain/(loss) on real estate owned, net (91 ) 86 (227 ) 91 (3 )
Income from bank-owned life insurance 1,035 1,121 1,095 1,197 1,005
Mortgage banking income 1,194 1,494 1,921 188 216
Other operating income 1,866 4,077 2,500 1,930 2,034
Total noninterest income 27,976 28,213 26,169 23,363 21,662
Noninterest expense:
Compensation and employee benefits 42,746 42,074 40,816 42,008 38,188
Premises and occupancy costs 7,471 7,051 7,061 7,387 7,218
Office operations 3,382 4,097 3,197 3,708 3,131
Collections expense 474 566 747 939 308
Processing expenses 11,142 10,263 11,122 10,634 10,434
Marketing expenses 1,507 1,010 1,373 2,729 1,886
Federal deposit insurance premiums — — (702 ) 681 706
Professional services 2,812 3,533 3,032 3,198 2,524
Amortization of intangible assets 1,651 1,634 1,702 1,760 1,447
Real estate owned expense 95 72 119 128 159
Restructuring/acquisition expense 2,458 1,114 23 1,105 1,926
Other expenses 4,873 5,157 2,106 3,235 3,497
Total noninterest expense 78,611 76,571 70,596 77,512 71,424
Income before income taxes 8,956 32,364 43,207 33,787 31,753
Income tax expense 1,017 6,773 9,793 7,404 6,709
Net income $ 7,939 25,591 33,414 26,383 25,044
Basic earnings per share $ 0.08 0.24 0.32 0.25 0.24
Diluted earnings per share $ 0.07 0.24 0.31 0.25 0.24
Weighted average common shares outstanding - basic 105,882,553 105,627,194 105,517,707 105,233,635 103,101,789
Weighted average common shares outstanding - diluted 106,148,247 106,306,615 106,270,544 106,258,215 104,496,592
Annualized return on average equity 2.37 % 7.52 % 9.90 % 8.01 % 7.96 %
Annualized return on average assets 0.30 % 0.97 % 1.25 % 1.02 % 1.03 %
Annualized return on tangible common equity ** 3.28 % 10.32 % 13.46 % 10.97 % 10.74 %
Efficiency ratio * 64.67 % 63.01 % 58.81 % 64.37 % 62.07 %
Annualized noninterest expense to average assets * 2.83 % 2.80 % 2.59 % 2.88 % 2.79 %
* Excludes restructuring/acquisition expenses and amortization of intangible assets (non-GAAP).
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** Excludes goodwill and other intangible assets (non-GAAP).

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Northwest Bancshares, Inc. and Subsidiaries

Regulatory capital requirements (Unaudited)

(dollars in thousands)

At March 31, 2020
Actual Minimum capital<br><br>requirements (1) Well capitalized<br><br>requirements
Amount Ratio Amount Ratio Amount Ratio
Total capital (to risk weighted assets)
Northwest Bancshares, Inc. $ 1,314,848 15.680 % $ 880,472 10.500 % $ 838,545 10.000 %
Northwest Bank 1,185,210 14.148 % 879,618 10.500 % 837,732 10.000 %
Tier 1 capital (to risk weighted assets)
Northwest Bancshares, Inc. 1,231,345 14.684 % 712,763 8.500 % 670,836 8.000 %
Northwest Bank 1,097,002 13.095 % 712,072 8.500 % 670,185 8.000 %
CET 1 capital (to risk weighted assets)
Northwest Bancshares, Inc. 1,113,211 13.276 % 586,982 7.000 % 545,054 6.500 %
Northwest Bank 1,097,002 13.095 % 586,412 7.000 % 544,525 6.500 %
Tier 1 capital (leverage) (to average assets)
Northwest Bancshares, Inc. 1,231,345 11.675 % 421,871 4.000 % 527,338 5.000 %
Northwest Bank 1,097,002 10.550 % 415,919 4.000 % 519,899 5.000 %

(1) Amounts and ratios include the fully phased in capital conservation buffer of 2.5% with the exception of Tier 1 capital to average assets. 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.

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Northwest Bancshares, Inc. and Subsidiaries

Marketable securities (Unaudited)

(dollars in thousands)

March 31, 2020
Marketable securities available-for-sale Amortized cost Gross unrealized<br><br>holding gains Gross unrealized<br><br>holding losses Fair value
Debt issued by government sponsored enterprises:
Due in less than one year $ 50,761 475 — 51,236
Due in one year through five years 25,227 284 — 25,511
Due in five years through ten years 3,411 114 (103 ) 3,422
Municipal securities:
Due in less than one year 812 3 — 815
Due in one year through five years 2,897 68 — 2,965
Due in five years through ten years 8,903 178 — 9,081
Due after ten years 31,400 436 — 31,836
Residential mortgage-backed securities:
Fixed rate pass-through 130,729 4,453 (10 ) 135,172
Variable rate pass-through 18,025 403 (8 ) 18,420
Fixed rate agency CMOs 423,625 10,447 (60 ) 434,012
Variable rate agency CMOs 53,913 62 (866 ) 53,109
Total residential mortgage-backed securities 626,292 15,365 (944 ) 640,713
Total marketable securities available-for-sale $ 749,703 16,923 (1,047 ) 765,579
Marketable securities held-to-maturity
Residential mortgage-backed securities:
Fixed rate pass-through $ 2,096 113 — 2,209
Variable rate pass-through 1,119 15 — 1,134
Fixed rate agency CMOs 13,389 639 — 14,028
Variable rate agency CMOs 604 1 (8 ) 597
Total residential mortgage-backed securities 17,208 768 (8 ) 17,968
Total marketable securities held-to-maturity $ 17,208 768 (8 ) 17,968

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Northwest Bancshares, Inc. and Subsidiaries

Borrowed funds (Unaudited)

(dollars in thousands)

March 31, 2020
Amount Average rate
Term notes payable to the FHLB of Pittsburgh:
Due within one year $ 100,000 0.74% *
Total term notes payable to FHLB of Pittsburgh 100,000
Collateralized borrowings, due within one year 91,599 0.30 %
Total borrowed funds ** $ 191,599

* Represents four fixed rate advances: $30.0 million at 0.91% maturing June 16, 2020; $25.0 million at 0.70% maturing June 22, 2020; $25.0 million at 0.70% maturing June 22, 2020; and $20.0 million at 0.59% maturing June 26, 2020.

** As of March 31, 2020, the Company had $3.3 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 $36.6 million of borrowing capacity available with the Federal Reserve Bank and $110.0 million with three correspondent banks.

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Northwest Bancshares, Inc. and Subsidiaries

Asset quality (Unaudited)

(dollars in thousands)

March 31, <br>2020 December 31, <br>2019 September 30, <br>2019 June 30, <br>2019 March 31, <br>2019
Nonaccrual loans current:
Residential mortgage loans $ 285 72 676 432 124
Home equity loans 592 197 607 475 643
Consumer loans 77 78 68 94 76
Commercial real estate loans 14,337 9,241 7,674 12,605 10,520
Commercial loans 3,514 3,424 3,777 5,666 4,277
Total nonaccrual loans current $ 18,805 13,012 12,802 19,272 15,640
Nonaccrual loans delinquent 30 days to 59 days:
Residential mortgage loans $ 691 674 40 13 824
Home equity loans 159 224 102 418 160
Consumer loans 143 121 246 172 154
Commercial real estate loans 496 196 925 469 2,642
Commercial loans — 55 44 45 321
Total nonaccrual loans delinquent 30 days to 59 days $ 1,489 1,270 1,357 1,117 4,101
Nonaccrual loans delinquent 60 days to 89 days:
Residential mortgage loans $ 218 1,048 979 910 1,323
Home equity loans 539 689 436 717 954
Consumer loans 488 417 426 322 683
Commercial real estate loans 2,096 413 536 1,426 3,588
Commercial loans 37 341 — 780 397
Total nonaccrual loans delinquent 60 days to 89 days $ 3,378 2,908 2,377 4,155 6,945
Nonaccrual loans delinquent 90 days or more:
Residential mortgage loans $ 10,457 12,682 11,722 10,617 10,781
Home equity loans 5,816 5,635 5,966 5,591 5,542
Consumer loans 3,459 3,610 3,400 2,902 3,215
Commercial real estate loans 25,342 25,014 22,292 21,123 24,528
Commercial loans 16,685 4,739 5,741 2,920 2,027
Total nonaccrual loans delinquent 90 days or more $ 61,759 51,680 49,121 43,153 46,093
Total nonaccrual loans $ 85,431 68,870 65,657 67,697 72,779
Total nonaccrual loans $ 85,431 68,870 65,657 67,697 72,779
Loans 90 days past maturity and still accruing 31 32 85 55 166
Nonperforming loans 85,462 68,902 65,742 67,752 72,945
Real estate owned, net 1,075 950 1,237 2,070 2,345
Nonperforming assets $ 86,537 69,852 66,979 69,822 75,290
Nonaccrual troubled debt restructuring * $ 17,375 9,043 9,138 13,375 14,951
Accruing troubled debt restructuring 15,977 22,956 21,162 17,894 17,861
Total troubled debt restructuring $ 33,352 31,999 30,300 31,269 32,812
Nonperforming loans to total loans 0.97 % 0.78 % 0.74 % 0.78 % 0.85 %
Nonperforming assets to total assets 0.81 % 0.67 % 0.63 % 0.66 % 0.73 %
Allowance for loan losses to total loans 1.05 % 0.66 % 0.60 % 0.61 % 0.65 %
Allowance for loan losses to nonperforming loans 108.70 % 84.09 % 80.40 % 78.38 % 76.39 %
* Amounts included in nonperforming loans above.
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Northwest Bancshares, Inc. and Subsidiaries

Loans by credit quality indicators (Unaudited)

(dollars in thousands)

At March 31, 2020 Pass Special<br><br>mention * Substandard<br><br>** Doubtful Loss Loans<br><br>receivable
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
At March 31, 2019
Personal Banking:
Residential mortgage loans $ 2,858,007 — 9,154 — — 2,867,161
Home equity loans 1,317,323 — 7,082 — — 1,324,405
Consumer loans 926,832 — 4,230 — — 931,062
Total Personal Banking 5,102,162 — 20,466 — — 5,122,628
Commercial Banking:
Commercial real estate loans 2,577,176 87,053 135,080 — — 2,799,309
Commercial loans 573,160 34,610 40,168 — — 647,938
Total Commercial Banking 3,150,336 121,663 175,248 — — 3,447,247
Total loans $ 8,252,498 121,663 195,714 — — 8,569,875
* Includes $13.1 million, $10.3 million, $8.7 million, $8.1 million, and $3.4 million of acquired loans at March 31, 2020, December 31, 2019, September 30, 2019, December 31, 2019, and March 31, 2019, respectively.
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** Includes $56.8 million, $53.1 million, $46.6 million, $38.6 million, and $37.8 million of acquired loans at March 31, 2020, December 31, 2019, September 30, 2019, December 31, 2019, and March 31, 2019, respectively.
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10

Northwest Bancshares, Inc. and Subsidiaries

Loan delinquency (Unaudited)

(dollars in thousands)

March 31, <br>2020 * December 31, 2019 * September 30, 2019 * June 30, 2019 * March 31, 2019 *
(Number of loans and dollar amount of loans)
Loans delinquent 30 days to 59 days:
Residential mortgage loans 358 $ 32,755 1.2 % 292 $ 23,296 0.8 % 21 $ 1,236 — % 30 $ 1,629 0.1 % 311 $ 28,009 1.0 %
Home equity loans 190 7,061 0.5 % 173 6,469 0.5 % 149 4,774 0.4 % 148 4,573 0.3 % 195 7,626 0.6 %
Consumer loans 953 8,774 0.7 % 960 9,208 0.8 % 864 7,597 0.7 % 856 7,630 0.7 % 905 7,523 0.8 %
Commercial real estate loans 58 12,895 0.5 % 43 7,921 0.3 % 27 5,308 0.2 % 31 2,418 0.1 % 48 28,965 1.0 %
Commercial loans 35 7,545 1.1 % 32 1,187 0.2 % 20 362 0.1 % 14 666 0.1 % 30 3,359 0.5 %
Total loans delinquent 30 days to 59 days 1,594 $ 69,030 0.8 % 1,500 $ 48,081 0.5 % 1,081 $ 19,277 0.2 % 1,079 $ 16,916 0.2 % 1,489 $ 75,482 0.9 %
Loans delinquent 60 days to 89 days:
Residential mortgage loans 11 $ 511 — % 67 $ 5,693 0.2 % 95 $ 5,320 0.2 % 78 $ 6,264 0.2 % 29 $ 2,602 0.1 %
Home equity loans 65 2,652 0.2 % 66 2,405 0.2 % 66 2,103 0.2 % 59 2,319 0.2 % 53 2,544 0.2 %
Consumer loans 265 2,610 0.2 % 395 3,302 0.3 % 288 2,632 0.2 % 338 2,897 0.3 % 299 2,177 0.2 %
Commercial real estate loans 12 2,981 0.1 % 19 1,690 0.1 % 15 1,893 0.1 % 16 2,617 0.1 % 17 4,064 0.1 %
Commercial loans 10 309 — % 17 6,403 0.9 % 10 589 0.1 % 16 1,725 0.2 % 7 738 0.1 %
Total loans delinquent 60 days to 89 days 363 $ 9,063 0.1 % 564 $ 19,493 0.2 % 474 $ 12,537 0.1 % 507 $ 15,822 0.2 % 405 $ 12,125 0.2 %
Loans delinquent 90 days or more: **
Residential mortgage loans 129 $ 10,457 0.4 % 141 $ 12,775 0.4 % 138 $ 11,816 0.4 % 129 $ 10,800 0.4 % 113 $ 10,801 0.4 %
Home equity loans 152 5,816 0.4 % 159 5,688 0.4 % 157 5,966 0.4 % 136 5,591 0.4 % 155 5,542 0.4 %
Consumer loans 445 3,459 0.3 % 590 3,611 0.3 % 398 3,401 0.3 % 710 2,908 0.3 % 764 3,221 0.3 %
Commercial real estate loans 139 25,342 0.9 % 129 25,014 0.9 % 118 22,292 0.8 % 118 21,123 0.7 % 125 24,589 0.9 %
Commercial loans 51 16,685 2.3 % 37 4,739 0.7 % 40 5,741 0.8 % 25 2,920 0.4 % 23 2,027 0.3 %
Total loans delinquent 90 days or more 916 $ 61,759 0.7 % 1,056 $ 51,827 0.6 % 851 $ 49,216 0.6 % 1,118 $ 43,342 0.5 % 1,180 $ 46,180 0.6 %
Total loans delinquent 2,873 $ 139,852 1.6 % 3,120 $ 119,401 1.4 % 2,406 $ 81,030 0.9 % 2,704 $ 76,080 0.9 % 3,074 $ 133,787 1.6 %
* Represents delinquency, in dollars, divided by the respective total amount of that type of loan outstanding.
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** Includes purchased credit deteriorated loans of $298,000 at March 31, 2020, and purchased credit impaired loans of $147,000, $95,000, $190,000, and $87,000 at December 31, 2019, September 30, 2019, June 30, 2019, and March 31, 2019, respectively.
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11

Northwest Bancshares, Inc. and Subsidiaries

Analysis of loan portfolio by loan sector (Unaudited)

(dollars in thousands)

Loans outstanding

At March 31, 2020 30-59 days<br><br>delinquent * 60-89 days<br><br>delinquent * 90 days<br><br>or greater<br><br>delinquent * Total<br><br>delinquent * Current * Total<br><br>loans<br><br>receivable *
Restaurants/bars $ 47 — % $ — — % $ 116 — % $ 163 — % $ 46,058 0.5 % $ 46,221 0.5 %
Hotels/hospitality — — % — — % — — % — — % 183,697 2.1 % 183,697 2.1 %
Gyms and fitness 109 — % 59 — % — — % 168 — % 3,931 — % 4,099 — %
Transportation — — % — — % 5,094 0.1 % 5,094 0.1 % 11,145 0.1 % 16,239 0.2 %
Oil and gas 130 — % — — % 1,781 — % 1,911 — % 22,091 0.2 % 24,002 0.3 %
Residential care facilities — — % — — % — — % — — % 192,264 2.2 % 192,264 2.2 %
Education 4,151 — % — — % 506 — % 4,657 — % 35,751 0.4 % 40,408 0.4 %
All other sectors 64,593 0.8 % 9,004 0.1 % 54,262 0.6 % 127,859 1.5 % 8,202,085 92.8 % 8,329,944 94.3 %
Total loans $ 69,030 0.8 % $ 9,063 0.1 % $ 61,759 0.7 % $ 139,852 1.6 % $ 8,697,022 98.4 % $ 8,836,874 100.0 %

* Percent of total loans outstanding.

Loan deferrals

At March 31, 2020 # of Loans Outstanding principal balance
Residential mortgage loans 640 $ 96,839
Home equity loans 533 33,521
Consumer loans 1,803 33,443
Commercial real estate loans 1,041 736,688
Commercial loans 542 85,483
Total loans * 4,559 $ 985,974

* Represents loans that entered into an optional 90 day deferral period offered by the Company to aid customers during the COVID-19 pandemic. The loan balances reflected are as of March 31, 2020, however, the approval of the deferral occurred during the month of April 2020.

12

Northwest Bancshares, Inc. and Subsidiaries

Allowance for loan losses (Unaudited)

(dollars in thousands)

Quarter ended
March 31, <br>2020 December 31, <br>2019 September 30, <br>2019 June 30, <br>2019 March 31, <br>2019
Beginning balance $ 57,941 52,859 53,107 55,721 55,214
CECL adoption 10,792 — — — —
Provision 27,637 8,223 3,302 4,667 6,467
Charge-offs residential mortgage (343 ) (222 ) (190 ) (397 ) (357 )
Charge-offs home equity (289 ) (113 ) (466 ) (389 ) (153 )
Charge-offs consumer (3,488 ) (3,142 ) (3,078 ) (2,566 ) (3,021 )
Charge-offs commercial real estate (331 ) (107 ) (389 ) (4,367 ) (604 )
Charge-offs commercial (815 ) (1,143 ) (1,151 ) (1,087 ) (3,270 )
Recoveries 1,793 1,586 1,724 1,525 1,445
Ending balance $ 92,897 57,941 52,859 53,107 55,721
Net charge-offs to average loans, annualized 0.16 % 0.14 % 0.16 % 0.34 % 0.29 %
March 31, 2020
--- --- --- --- --- --- --- ---
Originated loans Acquired loans Total loans
Balance Reserve Balance Reserve Balance Reserve
Residential mortgage loans $ 2,762,248 10,299 76,038 374 2,838,286 10,673
Home equity loans 1,121,979 8,497 231,284 1,288 1,353,263 9,785
Consumer loans 1,163,689 16,962 14,366 198 1,178,055 17,160
Personal Banking Loans 5,047,916 35,758 321,688 1,860 5,369,604 37,618
Commercial real estate loans 2,374,451 30,628 381,017 7,128 2,755,468 37,756
Commercial loans 658,161 16,045 53,641 1,478 711,802 17,523
Commercial Banking Loans 3,032,612 46,673 434,658 8,606 3,467,270 55,279
Total Loans $ 8,080,528 82,431 756,346 10,466 8,836,874 92,897

13

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
March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019
Average<br><br>balance Interest Avg.<br><br>yield/<br><br>cost (h) Average<br>balance Interest Avg.<br>yield/<br>cost (h) Average<br>balance Interest Avg.<br>yield/<br>cost (h) Average<br>balance Interest Avg.<br>yield/<br>cost (h) Average<br>balance Interest Avg.<br>yield/<br>cost (h)
Assets:
Interest-earning assets:
Residential mortgage loans $ 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 % $ 2,842,556 29,282 4.12 %
Home equity loans 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 % 1,265,974 16,048 5.14 %
Consumer loans 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 % 872,535 10,191 4.74 %
Commercial real estate loans 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 % 2,560,408 30,767 4.81 %
Commercial loans 712,621 8,856 4.92 % 717,438 9,841 5.37 % 710,847 9,949 5.48 % 670,613 7,966 4.70 % 615,090 8,967 5.83 %
Total loans receivable (a) (b) (d) 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 % 8,156,563 95,255 4.74 %
Mortgage-backed securities (c) 668,470 4,175 2.50 % 667,910 4,237 2.54 % 641,085 4,188 2.61 % 644,887 4,280 2.65 % 604,463 3,965 2.62 %
Investment securities (c) (d) 144,152 881 2.44 % 151,289 938 2.48 % 218,753 1,168 2.14 % 226,325 1,198 2.12 % 227,312 1,167 2.05 %
FHLB stock, at cost 15,931 262 6.61 % 13,400 262 7.76 % 16,302 307 7.47 % 16,117 316 7.86 % 16,098 171 4.31 %
Other interest-earning deposits 34,697 135 1.54 % 31,624 169 2.09 % 28,832 172 2.33 % 20,983 159 3.00 % 14,136 100 2.83 %
Total interest-earning assets 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 % 9,018,572 100,658 4.53 %
Noninterest earning assets (e) 960,303 869,117 916,781 910,225 868,843
Total assets $ 10,597,471 $ 10,447,710 $ 10,568,279 $ 10,412,664 $ 9,887,415
Liabilities and shareholders’ equity:
Interest-bearing liabilities:
Savings deposits $ 1,611,111 727 0.18 % $ 1,615,996 792 0.19 % $ 1,658,670 788 0.19 % $ 1,696,715 777 0.18 % $ 1,650,947 758 0.19 %
Interest-bearing demand deposits 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 % 1,452,963 1,162 0.32 %
Money market deposit accounts 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 % 1,693,626 2,579 0.62 %
Time deposits 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 % 1,432,679 5,646 1.60 %
Borrowed funds (f) 240,118 709 1.19 % 177,670 444 0.99 % 243,960 1,002 1.63 % 147,119 413 1.13 % 257,550 1,006 1.58 %
Junior subordinated debentures 121,809 1,038 3.37 % 121,796 1,136 3.65 % 121,767 1,235 3.97 % 121,757 1,307 4.25 % 114,727 1,156 4.03 %
Total interest-bearing liabilities 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 % 6,602,492 12,307 0.76 %
Noninterest-bearing demand deposits (g) 1,640,180 1,800,861 1,915,392 1,888,697 1,785,158
Noninterest bearing liabilities 268,139 158,434 216,433 225,623 223,480
Total liabilities 9,247,362 9,097,907 9,228,940 9,092,282 8,611,130
Shareholders’ equity 1,350,109 1,349,803 1,339,339 1,320,382 1,276,285
Total liabilities and shareholders’ equity $ 10,597,471 $ 10,447,710 $ 10,568,279 $ 10,412,664 $ 9,887,415
Net interest income/Interest rate spread 87,619 3.48 % 89,340 3.50 % 91,332 3.52 % 93,005 3.71 % 88,351 3.77 %
Net interest-earning assets/Net interest margin $ 2,298,125 3.66 % $ 2,439,981 3.73 % $ 2,554,383 3.79 % $ 2,524,477 3.91 % $ 2,416,080 3.97 %
Ratio of interest-earning assets to interest-bearing liabilities 1.31X 1.34X 1.36X 1.36X 1.37X
(a) Average gross loans receivable includes loans held as available-for-sale and loans placed on nonaccrual status.
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(b) Interest income includes accretion/amortization of deferred loan fees/expenses, which was not material.
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(c) Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
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(d) Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent ("FTE") basis.
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(e) Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.
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(f) Average balances include FHLB borrowings and collateralized borrowings.
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(g) Average cost of deposits were 0.53%, 0.59%, 0.63%, 0.58%, and 0.51%, respectively.
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(h) Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.35%, 4.46%, 4.59%, 4.71%, and 4.72%, respectively, Investment securities - 2.31%, 2.34%, 2.03%, 2.01%, and 1.97%, respectively, Interest-earning assets - 4.19%, 4.28%, 4.39%, 4.51%, and 4.51%, respectively. GAAP basis net interest rate spreads were 3.47%, 3.48%, 3.50%, 3.69%, and 3.75%, respectively, and GAAP basis net interest margins were 3.64%, 3.71%, 3.77%, 3.90%, and 3.96%, respectively.
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14

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