8-K
Northwest Bancshares, Inc. (NWBI)
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): January 25, 2021
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 January 25, 2021, Northwest Bancshares, Inc. issued an earnings release for the quarter ended December 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 January 25, 2021 |
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: | January 25, 2021 | By: | /s/ William W. Harvey, Jr. |
| William W. Harvey, Jr. | |||
| Chief Financial Officer |
Document
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 Fourth Quarter 2020 Earnings and Quarterly Dividend
Warren, Pennsylvania — January 25, 2021
Northwest Bancshares, Inc., (the "Company"), (NasdaqGS: NWBI) announced net income for the quarter ended December 31, 2020 of $35.1 million, or $0.28 per diluted share. This represents an increase of $9.5 million, or 37.0%, compared to the same quarter last year when net income was $25.6 million, or $0.24 per diluted share. The annualized returns on average shareholders’ equity and average assets for the quarter ended December 31, 2020 were 9.00% and 1.01% compared to 7.52% and 0.97% 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 February 15, 2021 to shareholders of record as of February 4, 2021. This is the 105th consecutive quarter in which the Company has paid a cash dividend. Ronald J. Seiffert, Chairman, President and CEO, added, "We are extremely proud that we were able to maintain our dividend throughout 2020 despite the challenges of COVID-19 on bank earnings. Based on the current market value of the Company's stock, this represents an annualized dividend yield of approximately 5.50%, which continues to be among the highest in our peer group."
Mr. Seiffert continued, “When looking back over a very challenging 2020, I am amazed at what our team accomplished during the midst of COVID-19. We successfully adopted CECL in the first quarter followed closely by the close and conversion of MutualBank on April 24th, the largest acquisition in the company’s history. We also completed a very successful $125 million sub-debt offering in September. This additional liquidity and capital at the holding company allowed us to resume our existing five million share common stock buyback program, of which we successfully repurchased approximately 760,000 shares in the fourth quarter at an average price of $12.20. Finally, we completed our branch optimization program which resulted in the consolidation of 43 offices in December 2020. In addition to all of these initiatives, we will be launching our digital strategy this year which will significantly enhance our online banking capabilities and streamline our account opening processes. We want to give our customers the same award winning experience online as they are accustomed to receiving in our branch offices. In addition, we are expanding our capabilities in mortgage banking to all of our markets and expanding our geographic footprint for dealer services' indirect auto and power sports lending. We have acquired talent to enhance our treasury management services, added resources to our corporate finance capabilities, created a healthcare vertical with a dedicated subject matter expert and will be opening a Loan Production Office in the greater Philadelphia market with the addition of a team of capable middle market bankers. As rewarding as 2020 was, we are even more optimistic about 2021."
Net interest income increased by $13.9 million, or 15.7%, to $102.9 million for the quarter ended December 31, 2020, from $88.9 million for the quarter ended December 31, 2019, primarily due to a $7.8 million, or 8.0%, increase in interest income on loans receivable and a $6.2 million, or 47.9%, decrease in interest expense on deposits. The increase in interest income was primarily due to an increase of $1.935 billion, or 22.2%, in the average balance of loans which more than offset the decline experienced from a reduction in the yield on loans to 3.97% for the quarter ended December 31, 2020 from 4.47% for the same quarter last year. The decrease in interest expense was primarily due to a decrease in our interest-bearing cost of deposits to 0.30% for the quarter ended December 31, 2020 from 0.75% for the quarter ended December 31, 2019 which was partially offset by the growth in the average balance of interest-bearing deposits by $1.991 billion, or 29.1%. The net impact of these changes caused the Company's net interest margin to decrease to 3.26% for the quarter ended December 31, 2020 from 3.73% for the same quarter last year.
The provision for credit losses decreased by $10.5 million, or 127.1%, due to a release of the allowance for credit losses of $2.2 million for the quarter ended December 31, 2020, compared to an expense of $8.2 million for the quarter ended December 31, 2019. This decrease in the provision was primarily the result of improvements in the economic forecasts.
Noninterest income increased by $3.9 million, or 13.9%, to $32.1 million for the quarter ended December 31, 2020, from $28.2 million for the quarter ended December 31, 2019. This increase was primarily due to the increase in mortgage banking income of $5.6 million to $7.1 million for the quarter ended December 31, 2020 from $1.5 million for the quarter ended December 31, 2019. Our successful mortgage banking income was the result of continued efforts to expand our secondary market sales capabilities over the past year, as well as an interest rate environment conducive to refinance activity and attractive secondary market pricing. Also contributing to this increase was a $1.2 million, or 26.7%, increase in trust and other financial services income due to additional fee income received as a result of the acquisition of MutualBank. Partially offsetting these increases was a decrease in other operating income of $1.4 million, or 34.9%, due to a decline in swap fee income as well as a decrease of service charges and fees of $1.1 million, or 7.4%, primarily as a result of the fee income cap of the Durbin amendment on debit card interchange revenue which took effect for Northwest on July 1, 2020.
Noninterest expense increased by $16.3 million, or 21.3%, to $92.8 million for the quarter ended December 31, 2020, from $76.6 million for the quarter ended December 31, 2019. This increase primarily resulted from a $6.1 million increase in acquisition and branch optimization expense due to expenses incurred as part of the branch optimization initiative that occurred during December. In addition, compensation and employee benefits increased $6.1 million, or 14.6%, due to internal growth of compensation and staff as well as the addition of MutualBank employees. Also contributing to this increase was an increase in processing expenses of $1.9 million, or 18.7%, 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, federal deposit insurance premiums increased $1.7 million due to assessment credits received in the previous year.
Net income for the year ended December 31, 2020 was $74.9 million, or $0.62 per diluted share. This represents a decrease of $35.6 million, or 32.2%, compared to the year ended December 31, 2019, when net income was $110.4 million, or $1.04 per diluted share. The annualized returns on average shareholders' equity and average assets for the year ended December 31, 2020 were 4.72% and 0.58% compared to 8.36% and 1.07% for the prior year. This decrease in net income was the result of an increase in provision for credit losses of $61.3 million primarily as a result of COVID-19 and the expected impact on the allowance for credit losses as well as the acquisition of MutualBank and the required provision associated with the adoption of ASU 2016-13, Current Expected Credit Losses ("CECL"). In addition, noninterest expense increased by $51.4 million, or 17.4%, primarily as a result of the additional operating expenses of MutualBank as well as the one-time costs associated with acquisitions and branch optimization costs which increased $16.6 million for the year. Partially offsetting these factors was an increase in net interest income over the prior year of $31.3 million, or 8.7%, due to balance sheet growth during the year as well as a $32.9 million, or 33.1%, increase in fee income highlighted by a $27.6 million increase in mortgage banking income.
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 December 31, 2020, Northwest operates 162 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; and (7) increased risk associated with commercial real-estate and business loans. Management has no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this release.
Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Financial Condition (Unaudited)
(dollars in thousands, except per share amounts)
| December 31,<br>2020 | September 30,<br>2020 | December 31,<br>2019 | |||||
|---|---|---|---|---|---|---|---|
| Assets | |||||||
| Cash and cash equivalents | $ | 736,277 | 656,749 | 60,846 | |||
| Marketable securities available-for-sale (amortized cost of $1,375,685, $1,385,835 and $815,495, respectively) | 1,398,941 | 1,409,150 | 819,901 | ||||
| Marketable securities held-to-maturity (fair value of $179,666, $16,168 and $18,223, respectively) | 178,887 | 15,333 | 18,036 | ||||
| Total cash and cash equivalents and marketable securities | 2,314,105 | 2,081,232 | 898,783 | ||||
| Residential mortgage loans held-for-sale | 58,786 | 25,140 | 7,709 | ||||
| Residential mortgage loans | 3,009,335 | 3,118,229 | 2,860,418 | ||||
| Home equity loans | 1,467,736 | 1,484,365 | 1,342,918 | ||||
| Consumer loans | 1,507,993 | 1,487,083 | 1,125,132 | ||||
| Commercial real estate loans | 3,345,889 | 3,319,743 | 2,754,390 | ||||
| Commercial loans | 1,191,110 | 1,347,292 | 718,107 | ||||
| Total loans receivable | 10,580,849 | 10,781,852 | 8,808,674 | ||||
| Allowance for credit losses | (134,427) | (140,209) | (57,941) | ||||
| Loans receivable, net | 10,446,422 | 10,641,643 | 8,750,733 | ||||
| Federal Home Loan Bank stock, at cost | 21,748 | 23,171 | 14,740 | ||||
| Accrued interest receivable | 35,554 | 36,916 | 25,755 | ||||
| Real estate owned, net | 2,232 | 2,575 | 950 | ||||
| Premises and equipment, net | 161,538 | 166,919 | 147,409 | ||||
| Bank-owned life insurance | 253,951 | 252,621 | 189,091 | ||||
| Goodwill | 382,279 | 386,044 | 346,103 | ||||
| Other intangible assets, net | 19,936 | 21,601 | 23,076 | ||||
| Other assets | 168,503 | 176,083 | 97,268 | ||||
| Total assets | $ | 13,806,268 | 13,788,805 | 10,493,908 | |||
| Liabilities and shareholders’ equity | |||||||
| Liabilities | |||||||
| Noninterest-bearing demand deposits | $ | 2,716,224 | 2,641,234 | 1,609,653 | |||
| Interest-bearing demand deposits | 2,755,950 | 2,663,878 | 1,944,108 | ||||
| Money market deposit accounts | 2,437,539 | 2,396,567 | 1,863,998 | ||||
| Savings deposits | 2,047,424 | 2,022,918 | 1,604,838 | ||||
| Time deposits | 1,642,096 | 1,732,022 | 1,569,410 | ||||
| Total deposits | 11,599,233 | 11,456,619 | 8,592,007 | ||||
| Borrowed funds | 283,044 | 398,216 | 246,336 | ||||
| Junior subordinated debentures | 128,794 | 128,729 | 121,800 | ||||
| Advances by borrowers for taxes and insurance | 45,230 | 29,755 | 44,556 | ||||
| Accrued interest payable | 2,054 | 1,002 | 1,142 | ||||
| Other liabilities | 209,210 | 227,253 | 134,782 | ||||
| Total liabilities | 12,267,565 | 12,241,574 | 9,140,623 | ||||
| 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, 127,019,452, 127,801,297, and 106,859,088 shares issued and outstanding, respectively | 1,270 | 1,278 | 1,069 | ||||
| Paid-in capital | 1,015,502 | 1,023,827 | 805,750 | ||||
| Retained earnings | 555,480 | 544,695 | 583,407 | ||||
| Accumulated other comprehensive loss | (33,549) | (22,569) | (36,941) | ||||
| Total shareholders’ equity | 1,538,703 | 1,547,231 | 1,353,285 | ||||
| Total liabilities and shareholders’ equity | $ | 13,806,268 | 13,788,805 | 10,493,908 | |||
| Equity to assets | 11.14 | % | 11.22 | % | 12.90 | % | |
| Tangible common equity to assets | 8.48 | % | 8.52 | % | 9.72 | % | |
| Book value per share | $ | 12.11 | 12.11 | 12.66 | |||
| Tangible book value per share | $ | 8.95 | 8.92 | 9.21 | |||
| Closing market price per share | $ | 12.74 | 9.20 | 16.63 | |||
| Full time equivalent employees | 2,421 | 2,523 | 2,209 | ||||
| Number of banking offices | 170 | 213 | 181 |
Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income/(Loss) (Unaudited)
(dollars in thousands, except per share amounts)
| Quarter ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2020 | September 30, 2020 | June 30,<br>2020 | March 31, 2020 | December 31, 2019 | |||||||
| Interest income: | |||||||||||
| Loans receivable | $ | 105,681 | 107,241 | 103,012 | 94,973 | 97,866 | |||||
| Mortgage-backed securities | 4,551 | 4,652 | 4,038 | 4,175 | 4,237 | ||||||
| Taxable investment securities | 471 | 427 | 439 | 648 | 683 | ||||||
| Tax-free investment securities | 656 | 655 | 564 | 185 | 201 | ||||||
| FHLB dividends | 192 | 218 | 309 | 262 | 262 | ||||||
| Interest-earning deposits | 178 | 221 | 185 | 135 | 169 | ||||||
| Total interest income | 111,729 | 113,414 | 108,547 | 100,378 | 103,418 | ||||||
| Interest expense: | |||||||||||
| Deposits | 6,714 | 8,443 | 9,336 | 11,403 | 12,893 | ||||||
| Borrowed funds | 2,127 | 1,437 | 1,133 | 1,747 | 1,580 | ||||||
| Total interest expense | 8,841 | 9,880 | 10,469 | 13,150 | 14,473 | ||||||
| Net interest income | 102,888 | 103,534 | 98,078 | 87,228 | 88,945 | ||||||
| Provision for credit losses | (2,230) | 6,818 | 51,750 | 27,637 | 8,223 | ||||||
| Net interest income after provision for credit losses | 105,118 | 96,716 | 46,328 | 59,591 | 80,722 | ||||||
| Noninterest income: | |||||||||||
| Gain/(loss) on sale of investments | 75 | (12) | (8) | 181 | 27 | ||||||
| Gain on sale of loans | — | — | — | 1,302 | 908 | ||||||
| Service charges and fees | 13,074 | 14,354 | 13,069 | 15,116 | 14,125 | ||||||
| Trust and other financial services income | 5,722 | 5,376 | 4,823 | 5,001 | 4,517 | ||||||
| Insurance commission income | 2,034 | 2,331 | 2,395 | 2,372 | 1,858 | ||||||
| Gain/(loss) on real estate owned, net | 114 | (32) | (97) | (91) | 86 | ||||||
| Income from bank-owned life insurance | 1,330 | 1,576 | 1,248 | 1,036 | 1,121 | ||||||
| Mortgage banking income | 7,120 | 11,055 | 12,022 | 1,194 | 1,494 | ||||||
| Other operating income | 2,654 | 2,022 | 2,044 | 1,865 | 4,077 | ||||||
| Total noninterest income | 32,123 | 36,670 | 35,496 | 27,976 | 28,213 | ||||||
| Noninterest expense: | |||||||||||
| Compensation and employee benefits | 48,209 | 47,371 | 40,049 | 42,746 | 42,074 | ||||||
| Premises and occupancy costs | 7,614 | 8,342 | 7,195 | 7,471 | 7,051 | ||||||
| Office operations | 4,009 | 4,626 | 3,711 | 3,382 | 4,097 | ||||||
| Collections expense | 893 | 1,264 | 644 | 474 | 566 | ||||||
| Processing expenses | 12,186 | 15,042 | 11,680 | 11,142 | 10,263 | ||||||
| Marketing expenses | 1,994 | 2,147 | 2,047 | 1,507 | 1,010 | ||||||
| Federal deposit insurance premiums | 1,651 | 1,498 | 1,618 | — | — | ||||||
| Professional services | 3,599 | 3,246 | 2,825 | 2,812 | 3,533 | ||||||
| Amortization of intangible assets | 1,664 | 1,781 | 1,760 | 1,651 | 1,634 | ||||||
| Real estate owned expense | 64 | 111 | 89 | 95 | 72 | ||||||
| Acquisition/branch optimization expense | 7,238 | 1,414 | 9,679 | 2,458 | 1,114 | ||||||
| Other expenses | 3,728 | 27 | 7,866 | 4,873 | 5,157 | ||||||
| Total noninterest expense | 92,849 | 86,869 | 89,163 | 78,611 | 76,571 | ||||||
| Income/(loss) before income taxes | 44,392 | 46,517 | (7,339) | 8,956 | 32,364 | ||||||
| Income tax expense/(benefit) | 9,327 | 8,467 | (1,139) | 1,017 | 6,773 | ||||||
| Net income/(loss) | $ | 35,065 | 38,050 | (6,200) | 7,939 | 25,591 | |||||
| Basic earnings/(loss) per share | $ | 0.28 | 0.30 | (0.05) | 0.08 | 0.24 | |||||
| Diluted earnings/(loss) per share | $ | 0.28 | 0.30 | (0.05) | 0.07 | 0.24 | |||||
| Weighted average common shares outstanding - basic | 126,713,429 | 126,855,810 | 121,480,563 | 105,882,553 | 105,627,194 | ||||||
| Weighted average common shares outstanding - diluted | 126,728,602 | 126,855,810 | 121,480,563 | 106,148,247 | 106,306,615 | ||||||
| Annualized return on average equity | 9.00 | % | 9.82 | % | (1.63) | % | 2.37 | % | 7.52 | % | |
| Annualized return on average assets | 1.01 | % | 1.09 | % | (0.18) | % | 0.30 | % | 0.97 | % | |
| Annualized return on tangible common equity ** | 12.27 | % | 13.28 | % | (2.22) | % | 3.28 | % | 10.32 | % | |
| Efficiency ratio * | 62.18 | % | 59.68 | % | 58.19 | % | 64.67 | % | 63.01 | % | |
| Annualized noninterest expense to average assets * | 2.42 | % | 2.39 | % | 2.30 | % | 2.83 | % | 2.80 | % |
* 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)
| Year ended December 31, | |||||
|---|---|---|---|---|---|
| 2020 | 2019 | ||||
| Interest income: | |||||
| Loans receivable | $ | 410,907 | 394,809 | ||
| Mortgage-backed securities | 17,416 | 16,670 | |||
| Taxable investment securities | 1,985 | 3,401 | |||
| Tax-free investment securities | 2,060 | 844 | |||
| FHLB dividends | 981 | 1,056 | |||
| Interest-earning deposits | 719 | 600 | |||
| Total interest income | 434,068 | 417,380 | |||
| Interest expense: | |||||
| Deposits | 35,896 | 49,216 | |||
| Borrowed funds | 6,444 | 7,698 | |||
| Total interest expense | 42,340 | 56,914 | |||
| Net interest income | 391,728 | 360,466 | |||
| Provision for credit losses | 83,975 | 22,659 | |||
| Net interest income after provision for credit losses | 307,753 | 337,807 | |||
| Noninterest income: | |||||
| Gain on sale of investments | 236 | 50 | |||
| Gain on sale of loans | 1,302 | 1,734 | |||
| Service charges and fees | 55,613 | 53,065 | |||
| Trust and other financial services income | 20,922 | 17,765 | |||
| Insurance commission income | 9,132 | 8,068 | |||
| Loss on real estate owned, net | (106) | (53) | |||
| Income from bank-owned life insurance | 5,190 | 4,418 | |||
| Mortgage banking income | 31,391 | 3,819 | |||
| Other operating income | 8,585 | 10,541 | |||
| Total noninterest income | 132,265 | 99,407 | |||
| Noninterest expense: | |||||
| Compensation and employee benefits | 178,375 | 163,086 | |||
| Premises and occupancy costs | 30,622 | 28,717 | |||
| Office operations | 15,728 | 14,133 | |||
| Collections expense | 3,275 | 2,560 | |||
| Processing expenses | 50,050 | 42,453 | |||
| Marketing expenses | 7,695 | 6,998 | |||
| Federal deposit insurance premiums | 4,767 | 685 | |||
| Professional services | 12,482 | 12,287 | |||
| Amortization of intangible assets | 6,856 | 6,543 | |||
| Real estate owned expense | 359 | 478 | |||
| Acquisition/branch optimization expense | 20,789 | 4,168 | |||
| Other expenses | 16,494 | 13,995 | |||
| Total noninterest expense | 347,492 | 296,103 | |||
| Income before income taxes | 92,526 | 141,111 | |||
| Income tax expense | 17,672 | 30,679 | |||
| Net income | $ | 74,854 | 110,432 | ||
| Basic earnings per share | $ | 0.62 | 1.05 | ||
| Diluted earnings per share | $ | 0.62 | 1.04 | ||
| Weighted average common shares outstanding - basic | 120,244,474 | 104,878,774 | |||
| Weighted average common shares outstanding - diluted | 120,244,474 | 105,839,149 | |||
| Return on average equity | 4.72 | % | 8.36 | % | |
| Return on average assets | 0.58 | % | 1.07 | % | |
| Return on tangible common equity ** | 6.59 | % | 11.22 | % | |
| Efficiency ratio * | 61.04 | % | 62.06 | % | |
| Noninterest expense to average assets * | 2.48 | % | 2.76 | % |
* 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 December 31, | Year ended December 31, | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | ||||||
| Operating results (non-GAAP): | |||||||||
| Net interest income | $ | 102,888 | 88,945 | 391,728 | 360,466 | ||||
| Provision for credit losses | 2,647 | 8,223 | 24,198 | 22,659 | |||||
| Noninterest income | 32,123 | 28,213 | 132,265 | 99,407 | |||||
| Noninterest expense | 85,611 | 75,457 | 328,703 | 291,935 | |||||
| Income taxes | 9,988 | 7,085 | 39,670 | 31,846 | |||||
| Net operating income (non-GAAP) | $ | 36,765 | 26,393 | 131,422 | 113,433 | ||||
| Diluted earnings per share (non-GAAP) | $ | 0.29 | 0.25 | 1.09 | 1.07 | ||||
| Average equity | $ | 1,550,481 | 1,349,803 | 1,584,747 | 1,321,452 | ||||
| Average assets | 13,791,854 | 10,447,710 | 12,892,120 | 10,329,017 | |||||
| Annualized return on average equity (non-GAAP) | 9.43 | % | 7.76 | % | 8.29 | % | 8.58 | % | |
| Annualized return on average assets (non-GAAP) | 1.06 | % | 1.00 | % | 1.02 | % | 1.10 | % | |
| Reconciliation of net operating income to net income: | |||||||||
| Net operating income (non-GAAP) | $ | 36,765 | 26,393 | 131,422 | 113,433 | ||||
| Non-GAAP adjustments, net of tax: | |||||||||
| COVID-related provision ** | 3,511 | — | (29,951) | — | |||||
| 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 | (5,211) | (802) | (14,968) | (3,001) | |||||
| Net income (GAAP) | $ | 35,065 | 25,591 | 74,854 | 110,432 | ||||
| Diluted earnings per share (GAAP) | $ | 0.28 | 0.24 | 0.62 | 1.04 | ||||
| Annualized return on average equity (GAAP) | 9.00 | % | 7.52 | % | 4.72 | % | 8.36 | % | |
| Annualized return on average assets (GAAP) | 1.01 | % | 0.97 | % | 0.58 | % | 1.07 | % |
* 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 December 31, 2020.
Northwest Bancshares, Inc. and Subsidiaries
Regulatory Capital Requirements (Unaudited)
(dollars in thousands)
| At December 31, 2020 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Actual | Minimum capital<br>requirements (1) | Well capitalized<br>requirements | ||||||||||
| Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||
| Total capital (to risk weighted assets) | ||||||||||||
| Northwest Bancshares, Inc. | $ | 1,654,208 | 16.641 | % | $ | 1,043,790 | 10.500 | % | $ | 994,086 | 10.000 | % |
| Northwest Bank | 1,478,320 | 14.886 | % | 1,042,751 | 10.500 | % | 993,096 | 10.000 | % | |||
| Tier 1 capital (to risk weighted assets) | ||||||||||||
| Northwest Bancshares, Inc. | 1,406,320 | 14.147 | % | 844,973 | 8.500 | % | 795,268 | 8.000 | % | |||
| Northwest Bank | 1,354,027 | 13.634 | % | 844,132 | 8.500 | % | 794,477 | 8.000 | % | |||
| Common equity tier 1 capital (to risk weighted assets) | ||||||||||||
| Northwest Bancshares, Inc. | 1,281,515 | 12.891 | % | 695,860 | 7.000 | % | 646,156 | 6.500 | % | |||
| Northwest Bank | 1,354,027 | 13.634 | % | 695,167 | 7.000 | % | 645,513 | 6.500 | % | |||
| Tier 1 capital (leverage) (to average assets) | ||||||||||||
| Northwest Bancshares, Inc. | 1,406,320 | 10.145 | % | 554,501 | 4.000 | % | 693,126 | 5.000 | % | |||
| Northwest Bank | 1,354,027 | 9.903 | % | 546,905 | 4.000 | % | 683,631 | 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)
| At December 31, 2020 | |||||
|---|---|---|---|---|---|
| Marketable securities available-for-sale | Amortized cost | Gross unrealized<br>holding gains | Gross unrealized<br>holding losses | Fair value | |
| Debt issued by the U.S. government and agencies: | |||||
| Due after ten years | $ | 40,761 | 211 | (55) | 40,917 |
| Debt issued by government sponsored enterprises: | |||||
| Due in less than one year | 24,976 | 159 | — | 25,135 | |
| Due in one year through five years | 238 | 3 | — | 241 | |
| Due in five years through ten years | 68,973 | 238 | (80) | 69,131 | |
| Municipal securities: | |||||
| Due in less than one year | 4,008 | 14 | — | 4,022 | |
| Due in one year through five years | 2,803 | 63 | (2) | 2,864 | |
| Due in five years through ten years | 16,045 | 429 | (5) | 16,469 | |
| Due after ten years | 89,778 | 3,752 | (72) | 93,458 | |
| Residential mortgage-backed securities: | |||||
| Fixed rate pass-through | 339,406 | 7,125 | (86) | 346,445 | |
| Variable rate pass-through | 14,778 | 431 | (20) | 15,189 | |
| Fixed rate agency CMOs | 723,586 | 11,758 | (1,093) | 734,251 | |
| Variable rate agency CMOs | 50,333 | 519 | (33) | 50,819 | |
| Total residential mortgage-backed securities | 1,128,103 | 19,833 | (1,232) | 1,146,704 | |
| Total marketable securities available-for-sale | $ | 1,375,685 | 24,702 | (1,446) | 1,398,941 |
| Marketable securities held-to-maturity | |||||
| Debt issued by the U.S. government and agencies: | |||||
| Due in five years through ten years | $ | 67,990 | 12 | (123) | 67,879 |
| Residential mortgage-backed securities: | |||||
| Fixed rate pass-through | 22,039 | 135 | — | 22,174 | |
| Variable rate pass-through | 919 | 30 | — | 949 | |
| Fixed rate agency CMOs | 87,335 | 712 | (2) | 88,045 | |
| Variable rate agency CMOs | 604 | 15 | — | 619 | |
| Total residential mortgage-backed securities | 110,897 | 892 | (2) | 111,787 | |
| Total marketable securities held-to-maturity | $ | 178,887 | 904 | (125) | 179,666 |
Northwest Bancshares, Inc. and Subsidiaries
Borrowed Funds (Unaudited)
(dollars in thousands)
| At December 31, 2020 | ||||
|---|---|---|---|---|
| Amount | Average rate | |||
| Term notes payable to the Federal Home Loan Bank (FHLB): | ||||
| Payable to the FHLB of Indianapolis acquired from MutualBank | $ | 22,054 | 1.92 | % |
| Total term notes payable to the FHLB | 22,054 | |||
| Collateralized borrowings, due within one year | 137,661 | 0.19 | % | |
| Subordinated debentures, net of issuance costs | 123,329 | 4.00 | % | |
| Total borrowed funds * | $ | 283,044 |
* As of December 31, 2020, the Company had $3.9 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 $95.4 million of borrowing capacity available with the Federal Reserve Bank and $110.0 million of borrowing capacity with three correspondent banks.
Northwest Bancshares, Inc. and Subsidiaries
Asset Quality (Unaudited)
(dollars in thousands)
| December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | December 31,<br>2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Nonaccrual loans current: | |||||||||||
| Residential mortgage loans | $ | 21 | 1,128 | 413 | 285 | 72 | |||||
| Home equity loans | 154 | 366 | 481 | 592 | 197 | ||||||
| Consumer loans | 207 | 234 | 214 | 77 | 78 | ||||||
| Commercial real estate loans | 20,317 | 22,610 | 30,677 | 14,337 | 9,241 | ||||||
| Commercial loans | 16,027 | 6,488 | 6,551 | 3,514 | 3,424 | ||||||
| Total nonaccrual loans current | $ | 36,726 | 30,826 | 38,336 | 18,805 | 13,012 | |||||
| Nonaccrual loans delinquent 30 days to 59 days: | |||||||||||
| Residential mortgage loans | $ | 647 | 60 | 61 | 691 | 674 | |||||
| Home equity loans | 338 | 445 | 247 | 159 | 224 | ||||||
| Consumer loans | 301 | 230 | 335 | 143 | 121 | ||||||
| Commercial real estate loans | 1,416 | 692 | 2,372 | 496 | 196 | ||||||
| Commercial loans | 87 | 57 | — | — | 55 | ||||||
| Total nonaccrual loans delinquent 30 days to 59 days | $ | 2,789 | 1,484 | 3,015 | 1,489 | 1,270 | |||||
| Nonaccrual loans delinquent 60 days to 89 days: | |||||||||||
| Residential mortgage loans | $ | 767 | 576 | 1,013 | 218 | 1,048 | |||||
| Home equity loans | 190 | 618 | 960 | 539 | 689 | ||||||
| Consumer loans | 583 | 781 | 666 | 488 | 417 | ||||||
| Commercial real estate loans | 714 | 2,745 | 163 | 2,096 | 413 | ||||||
| Commercial loans | 48 | 15 | 768 | 37 | 341 | ||||||
| Total nonaccrual loans delinquent 60 days to 89 days | $ | 2,302 | 4,735 | 3,570 | 3,378 | 2,908 | |||||
| Nonaccrual loans delinquent 90 days or more: | |||||||||||
| Residential mortgage loans | $ | 14,489 | 14,750 | 15,369 | 10,457 | 12,682 | |||||
| Home equity loans | 8,441 | 7,845 | 7,060 | 5,816 | 5,635 | ||||||
| Consumer loans | 5,473 | 5,352 | 6,896 | 3,459 | 3,610 | ||||||
| Commercial real estate loans | 25,287 | 35,496 | 29,729 | 25,342 | 25,014 | ||||||
| Commercial loans | 7,325 | 6,310 | 11,535 | 16,685 | 4,739 | ||||||
| Total nonaccrual loans delinquent 90 days or more | $ | 61,015 | 69,753 | 70,589 | 61,759 | 51,680 | |||||
| Total nonaccrual loans | $ | 102,832 | 106,798 | 115,510 | 85,431 | 68,870 | |||||
| Total nonaccrual loans | $ | 102,832 | 106,798 | 115,510 | 85,431 | 68,870 | |||||
| Loans 90 days past maturity and still accruing | 585 | 495 | 77 | 31 | 32 | ||||||
| Nonperforming loans | 103,417 | 107,293 | 115,587 | 85,462 | 68,902 | ||||||
| Real estate owned, net | 2,232 | 2,575 | 1,897 | 1,075 | 950 | ||||||
| Nonperforming assets | $ | 105,649 | 109,868 | 117,484 | 86,537 | 69,852 | |||||
| Nonaccrual troubled debt restructuring * | $ | 10,704 | 17,120 | 17,562 | 17,375 | 9,043 | |||||
| Accruing troubled debt restructuring | 21,431 | 17,684 | 17,888 | 15,977 | 22,956 | ||||||
| Total troubled debt restructuring | $ | 32,135 | 34,804 | 35,450 | 33,352 | 31,999 | |||||
| Nonperforming loans to total loans | 0.98 | % | 1.00 | % | 1.06 | % | 0.97 | % | 0.78 | % | |
| Nonperforming assets to total assets | 0.77 | % | 0.80 | % | 0.85 | % | 0.81 | % | 0.67 | % | |
| Allowance for credit losses to total loans | 1.27 | % | 1.30 | % | 1.29 | % | 1.05 | % | 0.66 | % | |
| Allowance for total loans excluding PPP loan balance | 1.32 | % | 1.36 | % | 1.36 | % | N/A | N/A | |||
| Allowance for credit losses to nonperforming loans | 129.99 | % | 130.68 | % | 121.63 | % | 108.70 | % | 84.09 | % |
* Amounts included in nonperforming loans above.
Northwest Bancshares, Inc. and Subsidiaries
Loans by Credit Quality Indicators (Unaudited)
(dollars in thousands)
| At December 31, 2020 | Pass | Special<br> mention* | Substandard** | Doubtful*** | Loss | Loans<br>receivable | |
|---|---|---|---|---|---|---|---|
| Personal Banking: | |||||||
| Residential mortgage loans | $ | 3,042,544 | — | 25,577 | — | — | 3,068,121 |
| Home equity loans | 1,455,474 | — | 12,262 | — | — | 1,467,736 | |
| Consumer loans | 1,499,004 | — | 8,989 | — | — | 1,507,993 | |
| Total Personal Banking | 5,997,022 | — | 46,828 | — | — | 6,043,850 | |
| Commercial Banking: | |||||||
| Commercial real estate loans | 2,852,705 | 108,021 | 385,163 | — | — | 3,345,889 | |
| Commercial loans | 1,092,498 | 41,278 | 57,334 | — | — | 1,191,110 | |
| Total Commercial Banking | 3,945,203 | 149,299 | 442,497 | — | — | 4,536,999 | |
| Total loans | $ | 9,942,225 | 149,299 | 489,325 | — | — | 10,580,849 |
| At September 30, 2020 | |||||||
| 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 |
* Includes $31.3 million, $34.7 million, $37.4 million, $13.1 million, and $10.3 million of acquired loans at December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019, respectively.
** Includes $153.2 million, $129.2 million, $108.2 million, $56.8 million, and $53.1 million of acquired loans at December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020, and December 31, 2019, respectively.
*** Includes $1.1 million of acquired loans at June 30, 2020.
Northwest Bancshares, Inc. and Subsidiaries
Loan Delinquency (Unaudited)
(dollars in thousands)
| December 31,<br>2020 | * | September 30, 2020 | * | June 30,<br>2020 | * | March 31,<br>2020 | * | December 31,<br>2019 | * | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Number of loans and dollar amount of loans) | |||||||||||||||||||||||||
| Loans delinquent 30 days to 59 days: | |||||||||||||||||||||||||
| Residential mortgage loans | 315 | $ | 28,797 | 0.9 | % | 17 | $ | 736 | — | % | 15 | $ | 629 | — | % | 358 | $ | 32,755 | 1.2 | % | 292 | $ | 23,296 | 0.8 | % |
| Home equity loans | 138 | 4,763 | 0.3 | % | 129 | 4,984 | 0.3 | % | 118 | 4,569 | 0.3 | % | 190 | 7,061 | 0.5 | % | 173 | 6,469 | 0.5 | % | |||||
| Consumer loans | 1,279 | 10,574 | 0.7 | % | 1,078 | 8,586 | 0.6 | % | 629 | 7,199 | 0.5 | % | 953 | 8,774 | 0.7 | % | 960 | 9,208 | 0.8 | % | |||||
| Commercial real estate loans | 43 | 10,923 | 0.3 | % | 28 | 5,090 | 0.2 | % | 46 | 14,177 | 0.4 | % | 58 | 12,895 | 0.5 | % | 43 | 7,921 | 0.3 | % | |||||
| Commercial loans | 37 | 6,405 | 0.5 | % | 19 | 1,797 | 0.1 | % | 12 | 1,242 | 0.1 | % | 35 | 7,545 | 1.1 | % | 32 | 1,187 | 0.2 | % | |||||
| Total loans delinquent 30 days to 59 days | 1,812 | $ | 61,462 | 0.6 | % | 1,271 | $ | 21,193 | 0.2 | % | 820 | $ | 27,816 | 0.3 | % | 1,594 | $ | 69,030 | 0.8 | % | 1,500 | $ | 48,081 | 0.5 | % |
| Loans delinquent 60 days to 89 days: | |||||||||||||||||||||||||
| Residential mortgage loans | 84 | $ | 5,083 | 0.2 | % | 65 | $ | 4,788 | 0.2 | % | 64 | $ | 5,364 | 0.2 | % | 11 | $ | 511 | — | % | 67 | $ | 5,693 | 0.2 | % |
| Home equity loans | 47 | 1,656 | 0.1 | % | 56 | 1,860 | 0.1 | % | 59 | 2,326 | 0.2 | % | 65 | 2,652 | 0.2 | % | 66 | 2,405 | 0.2 | % | |||||
| Consumer loans | 322 | 2,742 | 0.2 | % | 323 | 3,049 | 0.2 | % | 258 | 2,916 | 0.2 | % | 265 | 2,610 | 0.2 | % | 395 | 3,302 | 0.3 | % | |||||
| Commercial real estate loans | 11 | 1,615 | — | % | 14 | 4,212 | 0.1 | % | 18 | 3,913 | 0.1 | % | 12 | 2,981 | 0.1 | % | 19 | 1,690 | 0.1 | % | |||||
| Commercial loans | 10 | 864 | 0.1 | % | 7 | 357 | — | % | 15 | 1,151 | 0.1 | % | 10 | 309 | — | % | 17 | 6,403 | 0.9 | % | |||||
| Total loans delinquent 60 days to 89 days | 474 | $ | 11,960 | 0.1 | % | 465 | $ | 14,266 | 0.1 | % | 414 | $ | 15,670 | 0.1 | % | 363 | $ | 9,063 | 0.1 | % | 564 | $ | 19,493 | 0.2 | % |
| Loans delinquent 90 days or more: ** | |||||||||||||||||||||||||
| Residential mortgage loans | 168 | $ | 14,489 | 0.5 | % | 168 | $ | 14,750 | 0.5 | % | 185 | $ | 15,369 | 0.5 | % | 129 | $ | 10,457 | 0.4 | % | 141 | $ | 12,775 | 0.4 | % |
| Home equity loans | 207 | 8,441 | 0.6 | % | 193 | 7,845 | 0.5 | % | 182 | 7,060 | 0.5 | % | 152 | 5,816 | 0.4 | % | 159 | 5,688 | 0.4 | % | |||||
| Consumer loans | 720 | 6,058 | 0.4 | % | 696 | 5,847 | 0.4 | % | 709 | 6,896 | 0.5 | % | 445 | 3,459 | 0.3 | % | 590 | 3,611 | 0.3 | % | |||||
| Commercial real estate loans | 119 | 25,287 | 0.8 | % | 136 | 35,496 | 1.1 | % | 149 | 29,729 | 0.9 | % | 139 | 25,342 | 0.9 | % | 129 | 25,014 | 0.9 | % | |||||
| Commercial loans | 37 | 7,325 | 0.6 | % | 34 | 6,310 | 0.5 | % | 47 | 11,535 | 0.8 | % | 51 | 16,685 | 0.2 | % | 37 | 4,739 | 0.7 | % | |||||
| Total loans delinquent 90 days or more | 1,251 | $ | 61,600 | 0.6 | % | 1,227 | $ | 70,248 | 0.7 | % | 1,272 | $ | 70,589 | 0.7 | % | 916 | $ | 61,759 | 0.7 | % | 1,056 | $ | 51,827 | 0.6 | % |
| Total loans delinquent | 3,537 | $ | 135,022 | 1.3 | % | 2,963 | $ | 105,707 | 1.0 | % | 2,506 | $ | 114,075 | 1.1 | % | 2,873 | $ | 139,852 | 1.6 | % | 3,120 | $ | 119,401 | 1.4 | % |
* Represents delinquency, in dollars, divided by the respective total amount of that type of loan outstanding.
** Includes purchased credit deteriorated loans of $6.6 million, $20.3 million, $18.0 million, and $298,000 at December 31, 2020, September 30, 2020, June 30, 2020, March 31, 2020, respectively, and purchased credit impaired loans of $147,000 at December 31, 2019.
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 December 31, 2020:
| At December 31, 2020 | 30-59 days <br>delinquent | * | 60-89 days <br>delinquent | * | 90 days <br>or greater <br>delinquent | * | Total<br>delinquent | * | Current | * | Total <br>loans<br> receivable | * | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Restaurants/bars | $ | 417 | — | % | $ | 276 | — | % | $ | 754 | — | % | $ | 1,447 | — | % | $ | 91,703 | 0.9 | % | $ | 93,150 | 0.9 | % |
| Hotels/hospitality | — | — | % | — | — | % | 1,074 | — | % | 1,074 | — | % | 177,016 | 1.7 | % | 178,090 | 1.7 | % | ||||||
| Gyms and fitness | — | — | % | — | — | % | — | — | % | — | — | % | 4,113 | — | % | 4,113 | — | % | ||||||
| Transportation | 33 | — | % | 43 | — | % | 431 | — | % | 507 | — | % | 72,786 | 0.7 | % | 73,293 | 0.7 | % | ||||||
| Oil and gas | — | — | % | — | — | % | 7 | — | % | 7 | — | % | 10,083 | 0.1 | % | 10,090 | 0.1 | % | ||||||
| Residential care facilities | — | — | % | — | — | % | 500 | — | % | 500 | — | % | 246,221 | 2.3 | % | 246,721 | 2.3 | % | ||||||
| Retail buildings | 1,072 | — | % | — | — | % | 520 | — | % | 1,592 | — | % | 443,275 | 4.2 | % | 444,867 | 4.2 | % | ||||||
| Education/student housing | — | — | % | — | — | % | 1,872 | — | % | 1,872 | — | % | 139,790 | 1.3 | % | 141,662 | 1.3 | % | ||||||
| Construction/development: | ||||||||||||||||||||||||
| Education/student housing | — | — | % | — | — | % | — | — | % | — | — | % | 51,675 | 0.5 | % | 51,675 | 0.5 | % | ||||||
| Hotels/hospitality | — | — | % | — | — | % | — | — | % | — | — | % | 25,633 | 0.2 | % | 25,633 | 0.2 | % | ||||||
| Residential care facilities | — | — | % | — | — | % | — | — | % | — | — | % | 37,604 | 0.4 | % | 37,604 | 0.4 | % | ||||||
| All other construction/development | 268 | — | % | — | — | % | 5,465 | 0.1 | % | 5,733 | 0.1 | % | 183,947 | 1.7 | % | 189,680 | 1.8 | % | ||||||
| All other sectors | 59,672 | 0.6 | % | 11,641 | 0.1 | % | 50,977 | 0.5 | % | 122,290 | 1.2 | % | 8,961,981 | 84.7 | % | 9,084,271 | 85.9 | % | ||||||
| Total loans | $ | 61,462 | 0.6 | % | $ | 11,960 | 0.1 | % | $ | 61,600 | 0.6 | % | $ | 135,022 | 1.3 | % | $ | 10,445,827 | 98.7 | % | $ | 10,580,849 | 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 December 31, 2020. Of these loan deferrals, 257 borrowers applied for and received PPP loans totaling approximately $39.9 million:
| Balance as of <br>September 30, 2020 | Loans returned to full payment status, net of payments | New loans entered into <br>first deferral | Balance as of <br>December 31, 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 | * | ||||||||||
| Residential mortgage loans | 111 | $ | 15,967 | 0.5 | % | 90 | $ | 12,914 | 22 | $ | 3,389 | 43 | $ | 6,442 | 0.2 | % | |||
| Home equity loans | 48 | 3,639 | 0.2 | % | 37 | 2,536 | 30 | 1,512 | 41 | 2,615 | 0.2 | % | |||||||
| Consumer loans | 123 | 2,348 | 0.2 | % | 102 | 1,950 | 62 | 901 | 83 | 1,299 | 0.1 | % | |||||||
| Commercial real estate loans | 94 | 183,661 | 5.5 | % | 71 | 68,855 | 11 | 3,406 | 34 | 118,212 | 3.5 | % | |||||||
| Commercial loans | 28 | 7,085 | 0.5 | % | 14 | 6,071 | 8 | 318 | 22 | 1,332 | 0.1 | % | |||||||
| Total loans | 404 | $ | 212,700 | 2.0 | % | 314 | $ | 92,326 | 133 | $ | 9,526 | 223 | $ | 129,900 | ** | 1.2 | % |
* Percent of total loans outstanding by the respective total amount of that type of loan.
** As of December 31, 2020, first loan deferrals totaled $9.5 million, second loan deferrals totaled $67.5 million, and third loan deferrals totaled $52.9 million. $91.9 million of loan deferrals expire in Q1 2021 and $38.0 million of loan deferrals expire in Q2 2021. In addition, of the $129.9 million total loan deferrals, $108.7 million are in the hospitality industry.
Northwest Bancshares, Inc. and Subsidiaries
Allowance for Credit Losses (Unaudited)
(dollars in thousands)
| Quarter ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31,<br>2020 | September 30,<br>2020 | June 30,<br>2020 | March 31,<br>2020 | December 31,<br>2019 | |||||||
| Beginning balance | $ | 140,209 | 140,586 | 92,897 | 57,941 | 52,859 | |||||
| CECL adoption | — | — | — | 10,792 | — | ||||||
| Initial allowance on loans purchased with credit deterioration | — | — | 8,845 | — | — | ||||||
| Provision | (2,230) | 6,818 | 51,750 | 27,637 | 8,223 | ||||||
| Charge-offs residential mortgage | (407) | (129) | (38) | (343) | (222) | ||||||
| Charge-offs home equity | (58) | (88) | (173) | (289) | (113) | ||||||
| Charge-offs consumer | (2,623) | (3,356) | (3,191) | (3,488) | (3,142) | ||||||
| Charge-offs commercial real estate | (2,770) | (532) | (690) | (331) | (107) | ||||||
| Charge-offs commercial | (156) | (4,892) | (10,349) | (815) | (1,143) | ||||||
| Recoveries | 2,462 | 1,802 | 1,535 | 1,793 | 1,586 | ||||||
| Ending balance | $ | 134,427 | 140,209 | 140,586 | 92,897 | 57,941 | |||||
| Net charge-offs to average loans, annualized | 0.13 | % | 0.27 | % | 0.51 | % | 0.16 | % | 0.14 | % | |
| Year ended December 31, | |||||||||||
| --- | --- | --- | --- | --- | --- | ||||||
| 2020 | 2019 | ||||||||||
| Beginning balance | $ | 57,941 | 55,214 | ||||||||
| CECL adoption | 10,792 | — | |||||||||
| Initial allowance on loans purchased with credit deterioration | 8,845 | — | |||||||||
| Provision | 83,975 | 22,659 | |||||||||
| Charge-offs residential mortgage | (917) | (1,166) | |||||||||
| Charge-offs home equity | (608) | (1,121) | |||||||||
| Charge-offs consumer | (12,658) | (11,807) | |||||||||
| Charge-offs commercial real estate | (4,323) | (5,467) | |||||||||
| Charge-offs commercial | (16,212) | (6,651) | |||||||||
| Recoveries | 7,592 | 6,280 | |||||||||
| Ending balance | $ | 134,427 | 57,941 | ||||||||
| Net charge-offs to average loans | 0.27 | % | 0.23 | % | |||||||
| December 31, 2020 | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | ||||
| Originated loans | Acquired loans | Total loans | |||||||||
| Balance | Reserve | Balance | Reserve | Balance | Reserve | ||||||
| Residential mortgage loans | $ | 2,753,593 | 6,049 | 314,528 | 1,217 | 3,068,121 | 7,266 | ||||
| Home equity loans | 1,175,703 | 4,579 | 292,033 | 1,413 | 1,467,736 | 5,992 | |||||
| Consumer loans | 1,283,106 | 14,949 | 224,887 | 2,747 | 1,507,993 | 17,696 | |||||
| Personal Banking Loans | 5,212,402 | 25,577 | 831,448 | 5,377 | 6,043,850 | 30,954 | |||||
| Commercial real estate loans | 2,567,124 | 70,707 | 778,765 | 19,192 | 3,345,889 | 89,899 | |||||
| Commercial loans | 1,019,482 | 6,590 | 171,628 | 6,984 | 1,191,110 | 13,574 | |||||
| Commercial Banking Loans | 3,586,606 | 77,297 | 950,393 | 26,176 | 4,536,999 | 103,473 | |||||
| Total Loans | $ | 8,799,008 | 102,874 | 1,781,841 | 31,553 | 10,580,849 | 134,427 |
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 | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | |||||||||||||||||||||
| 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) | Average<br>balance | Interest | Avg.<br>yield/<br>cost (h) | |||||||||||
| Assets: | |||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||
| Residential mortgage loans | $ | 3,089,916 | 27,503 | 3.56 | % | $ | 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 | % |
| Home equity loans | 1,472,527 | 13,535 | 3.66 | % | 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 | % | |||||
| Consumer loans | 1,444,860 | 15,874 | 4.37 | % | 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 | % | |||||
| Commercial real estate loans | 3,317,418 | 37,965 | 4.48 | % | 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 | % | |||||
| Commercial loans | 1,325,047 | 11,414 | 3.37 | % | 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 | % | |||||
| Total loans receivable (a) (b) (d) | 10,649,768 | 106,291 | 3.97 | % | 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 | % | |||||
| Mortgage-backed securities (c) | 1,166,739 | 4,551 | 1.56 | % | 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 | % | |||||
| Investment securities (c) (d) | 252,898 | 1,380 | 2.18 | % | 216,081 | 1,336 | 2.47 | % | 170,309 | 1,244 | 2.92 | % | 144,152 | 881 | 2.44 | % | 151,289 | 938 | 2.48 | % | |||||
| FHLB stock, at cost | 23,346 | 192 | 3.27 | % | 25,595 | 218 | 3.39 | % | 22,192 | 309 | 5.60 | % | 15,931 | 262 | 6.61 | % | 13,400 | 262 | 7.76 | % | |||||
| Other interest-earning deposits | 632,494 | 178 | 0.11 | % | 791,601 | 221 | 0.11 | % | 623,870 | 185 | 0.12 | % | 34,697 | 135 | 1.54 | % | 31,624 | 169 | 2.09 | % | |||||
| Total interest-earning assets | 12,725,245 | 112,592 | 3.52 | % | 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 | % | |||||
| Noninterest-earning assets (e) | 1,066,609 | 1,088,273 | 1,858,513 | 960,303 | 869,117 | ||||||||||||||||||||
| Total assets | $ | 13,791,854 | $ | 13,903,655 | $ | 13,590,131 | $ | 10,597,471 | $ | 10,447,710 | |||||||||||||||
| Liabilities and shareholders’ equity: | |||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||
| Savings deposits | $ | 2,028,155 | 617 | 0.12 | % | $ | 2,015,604 | 648 | 0.13 | % | $ | 1,884,202 | 648 | 0.14 | % | $ | 1,611,111 | 727 | 0.18 | % | $ | 1,615,996 | 792 | 0.19 | % |
| Interest-bearing demand deposits | 2,699,515 | 476 | 0.07 | % | 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 | % | |||||
| Money market deposit accounts | 2,426,513 | 960 | 0.16 | % | 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 | % | |||||
| Time deposits | 1,676,094 | 4,660 | 1.11 | % | 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 | % | |||||
| Borrowed funds (f) | 352,392 | 1,469 | 1.66 | % | 420,715 | 717 | 0.68 | % | 371,700 | 296 | 0.32 | % | 240,118 | 709 | 1.19 | % | 177,670 | 444 | 0.99 | % | |||||
| Junior subordinated debentures | 128,752 | 659 | 2.00 | % | 128,658 | 720 | 2.19 | % | 127,472 | 837 | 2.60 | % | 121,809 | 1,038 | 3.37 | % | 121,796 | 1,136 | 3.65 | % | |||||
| Total interest-bearing liabilities | 9,311,421 | 8,841 | 0.38 | % | 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 | % | |||||
| Noninterest-bearing demand deposits (g) | 2,675,986 | 2,703,266 | 2,401,368 | 1,640,180 | 1,800,861 | ||||||||||||||||||||
| Noninterest-bearing liabilities | 253,966 | 284,440 | 882,391 | 268,139 | 158,434 | ||||||||||||||||||||
| Total liabilities | 12,241,373 | 12,362,721 | 12,061,263 | 9,247,362 | 9,097,907 | ||||||||||||||||||||
| Shareholders’ equity | 1,550,481 | 1,540,934 | 1,528,868 | 1,350,109 | 1,349,803 | ||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 13,791,854 | $ | 13,903,655 | $ | 13,590,131 | $ | 10,597,471 | $ | 10,447,710 | |||||||||||||||
| Net interest income/Interest rate spread | 103,751 | 3.14 | % | 104,388 | 3.13 | % | 98,989 | 3.27 | % | 87,619 | 3.48 | % | 89,340 | 3.50 | % | ||||||||||
| Net interest-earning assets/Net interest margin | $ | 3,413,824 | 3.26 | % | $ | 3,440,367 | 3.26 | % | $ | 2,954,114 | 3.38 | % | $ | 2,298,125 | 3.66 | % | $ | 2,439,981 | 3.73 | % | |||||
| Ratio of interest-earning assets to interest-bearing liabilities | 1.37X | 1.37X | 1.34X | 1.31X | 1.34X |
(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 0.23%, 0.29%, 0.35%, 0.53%, and 0.59%, respectively.
(h) Shown on a FTE basis. GAAP basis yields for the periods indicated were — Loans: 3.94%, 3.96%, 4.06%, 4.35%, and 4.46%, respectively, Investment securities: 1.78%, 2.00%, 2.36%, 2.31%, and 2.34%, respectively, Interest-earning assets: 3.48%, 3.52%, 3.72%, 4.19%, and 4.28%, respectively. GAAP basis net interest rate spreads were 3.11%, 3.10%, 3.24%, 3.47%, and 3.48%, respectively, and GAAP basis net interest margins were 3.23%, 3.23%, 3.34%, 3.64%, and 3.71%, respectively.
Northwest Bancshares, Inc. and Subsidiaries
Average Balance Sheet (Unaudited)
(dollars in thousands)
The following table sets forth certain information relating to the Company’s average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented. Average balances are calculated using daily averages.
| Year ended December 31, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||||||
| 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 | $ | 3,051,582 | 113,353 | 3.71 | % | $ | 2,860,765 | 115,583 | 4.04 | % |
| Home equity loans | 1,436,632 | 55,875 | 3.89 | % | 1,308,908 | 64,222 | 4.91 | % | ||
| Consumer loans | 1,338,120 | 58,878 | 4.40 | % | 980,623 | 44,859 | 4.57 | % | ||
| Commercial real estate loans | 3,132,976 | 140,883 | 4.42 | % | 2,725,792 | 132,915 | 4.81 | % | ||
| Commercial loans | 1,145,143 | 44,142 | 3.79 | % | 678,866 | 38,565 | 5.60 | % | ||
| Loans receivable (a) (b) (d) | 10,104,453 | 413,131 | 4.09 | % | 8,554,954 | 396,144 | 4.63 | % | ||
| Mortgage-backed securities (c) | 889,744 | 17,416 | 1.96 | % | 639,764 | 16,670 | 2.61 | % | ||
| Investment securities (c) (d) | 196,071 | 4,841 | 2.47 | % | 205,757 | 4,470 | 2.17 | % | ||
| FHLB stock, at cost | 21,781 | 981 | 4.50 | % | 14,477 | 1,056 | 7.29 | % | ||
| Other interest-earning deposits | 520,666 | 719 | 0.14 | % | 23,305 | 600 | 2.54 | % | ||
| Total interest-earning assets | 11,732,715 | 437,088 | 3.73 | % | 9,438,257 | 418,940 | 4.44 | % | ||
| Noninterest-earning assets (e) | 1,159,405 | 890,760 | ||||||||
| Total assets | $ | 12,892,120 | $ | 10,329,017 | ||||||
| Liabilities and shareholders’ equity: | ||||||||||
| Interest-bearing liabilities: | ||||||||||
| Savings deposits | $ | 1,885,517 | 2,640 | 0.14 | % | $ | 1,655,495 | 3,115 | 0.19 | % |
| Interest-bearing demand deposits | 2,432,427 | 3,358 | 0.14 | % | 1,651,393 | 6,012 | 0.36 | % | ||
| Money market deposit accounts | 2,224,904 | 6,995 | 0.31 | % | 1,778,661 | 13,010 | 0.73 | % | ||
| Time deposits | 1,687,381 | 22,903 | 1.36 | % | 1,555,726 | 27,079 | 1.74 | % | ||
| Borrowed funds (f) | 346,442 | 3,190 | 0.92 | % | 206,458 | 2,865 | 1.39 | % | ||
| Junior subordinated debentures | 126,683 | 3,254 | 2.53 | % | 120,012 | 4,833 | 3.97 | % | ||
| Total interest-bearing liabilities | 8,703,354 | 42,340 | 0.49 | % | 6,967,745 | 56,914 | 0.82 | % | ||
| Noninterest-bearing demand deposits (g) | 2,357,725 | 1,835,622 | ||||||||
| Noninterest-bearing liabilities | 246,294 | 204,198 | ||||||||
| Total liabilities | 11,307,373 | 9,007,565 | ||||||||
| Shareholders’ equity | 1,584,747 | 1,321,452 | ||||||||
| Total liabilities and shareholders’ equity | $ | 12,892,120 | $ | 10,329,017 | ||||||
| Net interest income/Interest rate spread | 394,748 | 3.24 | % | 362,026 | 3.62 | % | ||||
| Net interest-earning assets/Net interest margin | $ | 3,029,361 | 3.36 | % | $ | 2,470,512 | 3.84 | % | ||
| Ratio of interest-earning assets to interest-bearing liabilities | 1.35X | 1.35X |
(a) Average gross loans receivable includes loans held as available-for-sale and loans placed on nonaccrual status.
(b) Interest income includes accretion/amortization of deferred loan fees/expenses, which was not material.
(c) Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
(d) Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent basis.
(e) Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.
(f) Average balances include FHLB borrowings, collateralized borrowings, and subordinated debt.
(g) Average cost of deposits were 0.34% and 0.58%, respectively.
(h) Shown on a FTE basis. GAAP basis yields for the periods indicated were — Loans: 4.07% and 4.61%, respectively, Investment securities: 2.06% and 2.06%, respectively, Interest-earning assets: 3.70% and 4.42%, respectively. GAAP basis net interest rate spreads were 3.21% and 3.61%, respectively, and GAAP basis net interest margins were 3.34% and 3.82%, respectively.
16