Northwest Bancshares, Inc. Announces Fourth Quarter 2015 Earnings and Increase in Quarterly Dividend

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By: Northwest Bancshares, Inc. via PR Newswire

January 25, 2016 at 16:01 PM EST

Northwest Bancshares, Inc. Announces Fourth Quarter 2015 Earnings and Increase in Quarterly Dividend

WARREN, Penn., Jan. 25, 2016 /PRNewswire/ -- Northwest Bancshares, Inc. (NasdaqGS: NWBI) announced net income for the quarter ended December 31, 2015 of $16.2 million, or $0.16 per diluted share. This represents a decrease of $1.1 million, or 6.6%, compared to the same quarter last year when net income was $17.3 million, or $0.19 per diluted share. The annualized returns on average shareholders' equity and average assets for the quarter ended December 31, 2015 were 5.83% and 0.77% compared to 6.42% and 0.88% for the same quarter last year. Earnings for the current quarter include acquisition expenses of $1.3 million relating to the merger of LNB Bancorp, Inc. ("LNB") on August 14, 2015. Excluding the after-tax impact of these expenses, non-GAAP net operating income for the quarter was $17.1 million, or $0.17 per diluted share. The non-GAAP annualized returns on average shareholders' equity and average assets for the quarter ended December 31, 2015 were 6.16% and 0.82%.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.15 per share payable on February 18, 2016, to shareholders of record as of February 4, 2016. This represents a 7.1% increase over the prior quarter and is the 85th consecutive quarter in which the Company has paid a cash dividend.

In making this announcement, William J. Wagner, President and CEO, noted, "2015 was an exciting year for Northwest as we completed the largest acquisition in the history of our company and with that, established a solid foundation for future growth in northeastern Ohio. Our fourth quarter earnings demonstrate the significant impact that this franchise will have on Northwest's core earnings. We also were pleased to continue to realize solid internal growth in our areas of primary focus, with loans growing by 5% and checking balances increasing by 10%. Looking ahead, we will continue to pursue strategies to strengthen our balance sheet by diversifying our loan and deposit mixes while also pursuing opportunities to enhance efficiency in all areas of operations."

Net interest income increased by $8.6 million, or 13.7%, to $71.2 million for the quarter ended December 31, 2015, from $62.6 million for the quarter ended December 31, 2014. This increase was due primarily to an increase in interest income on loans receivable of $9.7 million, or 13.6%, as a result of internal loan growth of $304.1 million over the prior year, while the LNB acquisition provided net loans of $928.1 million. Partially offsetting this increase was a decrease in interest received on tax-free investment securities of $631,000 and an increase in interest expense of $504,000 due primarily to the addition of $1.034 billion in deposits from the LNB acquisition.

The provision for loan losses increased by $3.5 million to $4.6 million for the quarter ended December 31, 2015, from $1.1 million for the quarter ended December 31, 2014. This increase is due primarily to the prior year provision being one of the lowest quarterly provisions over the past seven years. Asset quality improved compared to last year as classified loans decreased $24.4 million, or 11.2%, and total nonaccrual loans decreased $8.1 million, or 10.2%.

Noninterest income increased by $2.3 million, or 13.5%, to $19.5 million for the quarter ended December 31, 2015, from $17.2 million for the quarter ended December 31, 2014. This improvement is due primarily to an increase in service charges and fees of $1.2 million, or 13.6%. This increase was attributable to additional fees earned from the continued growth in checking accounts, as well as from the additional loan and deposit accounts provided by the LNB acquisition. Additionally, other operating income increased by $892,000, or 110.8%, due primarily to recoveries on loans acquired from LNB.

Noninterest expense increased by $6.0 million, or 10.9%, to $61.2 million for the quarter ended December 31, 2015, from $55.2 million for the quarter ended December 31, 2014. This increase was due primarily to a $1.3 million, or 19.9%, increase in processing expenses, due primarily to technology upgrades and the additional costs associated with the 21 offices acquired during the third quarter. Acquisition expense and premises and occupancy costs increased by $953,000 and $887,000, respectively, as a result of LNB merger and the costs associated with the acquired properties.

Income tax expense increased by $2.5 million, or 40.3%, to $8.7 million for the quarter ended December 31, 2015 from $6.2 million for the quarter ended December 31, 2014. This increase relates to the increase in net income before tax and the uncertainty of Pennsylvania's Education Improvement Tax credit program. Due to this uncertainty, the Company did not participate in the program during the current year.

Net income for the year ended December 31, 2015 of $60.5 million represents a decrease of $1.5 million, or 2.3%, compared to net income of $62.0 million for the year ended December 31, 2014. This decrease in annual earnings was due to $9.8 million of acquisition expenses, a $3.9 million, or 3.3%, increase in compensation and employee benefits as a result of the LNB acquisition, a $4.1 million, or 15.4%, increase in processing expense due primarily to recent technology upgrades, and a $6.2 million increase in income tax expense due primarily to a decrease in interest income from tax-free municipal bonds, as well as lower state tax credits. These factors were partially offset by a $14.4 million, or 5.8%, increase in net interest income and a $10.6 million, or 52.2%, decrease in the provision for loan losses. Diluted earnings per share for the year ended December 31, 2015 decreased to $0.64 per share from $0.67 per share last year. The annualized returns on average shareholders' equity and average assets were 5.49% and 0.73%, respectively, for the current year compared to 5.69% and 0.79%, respectively, in the prior year. Excluding the after-tax impact of $9.8 million of acquisition expenses, non-GAAP net operating income for the year was $67.0 million, or $0.71 per diluted share. The non-GAAP annualized returns on average shareholders' equity and average assets for the year ended December 31, 2015 were 6.08% and 0.80%.

The Company also announced plans to optimize its office network. In recent years, the Company has invested heavily in alternative delivery channels such as online and mobile banking, depository ATMs, and automated telephone banking which enables customers to transact business outside of the branch and beyond normal business hours. As a result, the number of transactions conducted in offices has significantly decreased over the past several years and has created an opportunity to improve operating efficiency. Based on these changes in customer preferences, the Company expects by mid-year 2016 to consolidate 24 of its offices into nearby locations and convert two full-service offices into drive-up only facilities. Expenses associated with these changes are expected to be approximately $5.0 million, which will be incurred during the first half of 2016, and the annual reduction in pre-tax operating expenses beginning in 2017 is expected to be between $5.0 million and $6.0 million.

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. Northwest operates 176 full-service community banking offices in Pennsylvania, New York, Ohio and Maryland, five free standing drive-up facilities in Pennsylvania, and 51 consumer finance offices in Pennsylvania through its subsidiary, Northwest Consumer Discount Company. Northwest Bancshares, Inc.'s common stock is listed on the NASDAQ Global Select Market ("NWBI"). Additional information regarding Northwest Bancshares, Inc. and Northwest Savings Bank can be accessed on-line at www.northwestsavingsbank.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; 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
(Dollars in thousands, except per share amounts)

	December 31,			December 31,
Assets	2015			2014
Cash and cash equivalents	$	92,263		87,401
Interest-earning deposits in other financial institutions	74,510			152,671
Federal funds sold and other short-term investments	635			634
Marketable securities available-for-sale (amortized cost of $868,956 and $906,702)	874,405			912,371
Marketable securities held-to-maturity (fair value of $32,552 and $106,292)	31,689			103,695
Total cash, interest-earning deposits and marketable securities	1,073,502			1,256,772

Residential mortgage loans	2,750,564			2,521,456
Home equity loans	1,187,106			1,066,131
Other consumer loans	510,617			242,744
Commercial real estate loans	2,351,434			1,801,184
Commercial loans	422,400			358,376
Total loans receivable	7,222,121			5,989,891
Allowance for loan losses	(62,672)			(67,518)
Loans receivable, net	7,159,449			5,922,373

Federal Home Loan Bank stock, at cost	40,903			33,293
Accrued interest receivable	21,072			18,623
Real estate owned, net	8,725			16,759
Premises and Equipment, net	154,351			143,909
Bank owned life insurance	168,509			144,362
Goodwill	261,736			175,323
Other intangible assets	8,982			3,033
Other assets	54,670			60,586
Total assets	$	8,951,899		7,775,033

Liabilities and Shareholders' equity
Liabilities
Noninterest-bearing demand deposits	$	1,177,256		$	891,248
Interest-bearing demand deposits	1,080,086			874,623
Money market deposit accounts	1,274,504			1,179,070
Savings deposits	1,386,017			1,209,287
Time deposits	1,694,718			1,478,314
Total deposits	6,612,581			5,632,542
Borrowed funds	975,007			888,109
Advances by borrowers for taxes and insurance	33,735			30,507
Accrued interest payable	1,993			936
Other liabilities	54,207			57,198
Junior subordinated debentures	111,213			103,094
Total liabilities	7,788,736			6,712,386

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, 101,871,737 shares and 94,721,453 shares issued and outstanding, respectively	1,019			947
Paid-in-capital	717,603			626,134
Retained earnings	489,292			481,577
Unallocated common stock of Employee Stock Ownership Plan	(20,216)			(21,641)
Accumulated other comprehensive loss	(24,535)			(24,370)
Total shareholders' equity	1,163,163			1,062,647
Total liabilities and shareholders' equity	$	8,951,899		7,775,033

Equity to assets	12.99		%	13.67		%
Tangible common equity to assets	10.28		%	11.64		%
Book value per share	$	11.42		11.22
Tangible book value per share	$	8.76		9.34
Closing market price per share	$	13.39		12.53
Full time equivalent employees	2,186			2,042
Number of banking offices	181			162

Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)

	Quarter ended
	December 31,						September 30,
	2015			2014			2015
Interest income:
Loans receivable	$	80,882		$	71,182		76,087
Mortgage-backed securities	2,301			2,357			2,230
Taxable investment securities	1,108			1,032			1,238
Tax-free investment securities	836			1,467			986
FHLB dividends	499			383			451
Interest-earning deposits	13			164			99
Total interest income	85,639			76,585			81,091

Interest expense:
Deposits	6,435			6,106			6,163
Borrowed funds	8,051			7,876			7,987
Total interest expense	14,486			13,982			14,150

Net interest income	71,153			62,603			66,941
Provision for loan losses	4,595			1,078			3,167
Net interest income after provision for loan losses	66,558			61,525			63,774

Gain on sale of investments	116			381			260
Service charges and fees	10,530			9,268			9,945
Trust and other financial services income	3,410			3,291			3,062
Insurance commission income	2,490			2,181			2,398
Loss on real estate owned, net	(156)			(30)			(246)
Income from bank owned life insurance	1,251			1,057			1,166
Mortgage banking income	208			269			267
Other operating income	1,697			805			1,288
Total noninterest income	19,546			17,222			18,140

Noninterest expense:
Compensation and employee benefits	32,003			31,405			31,000
Premises and occupancy costs	6,403			5,516			6,072
Office operations	4,504			3,677			3,892
Processing expenses	8,057			6,720			8,126
Marketing expenses	1,642			1,434			1,691
Federal deposit insurance premiums	1,299			1,316			1,177
Professional services	1,933			1,970			1,529
Amortization of intangible assets	729			331			422
Real estate owned expense	393			406			471
Acquisition expense	1,347			394			7,590
Other expense	2,917			2,043			1,834
Total noninterest expense	61,227			55,212			63,804

Income before income taxes	24,877			23,535			18,110
Income tax expense	8,684			6,190			5,238

Net income	$	16,193		$	17,345		12,872

Basic earnings per share	$	0.16		$	0.19		0.14

Diluted earnings per share	$	0.16		$	0.19		0.13

Annualized return on average equity	5.83		%	6.42		%	4.54	%
Annualized return on average assets	0.77		%	0.88		%	0.59	%

Basic common shares outstanding	98,741,393			91,741,487			95,256,807
Diluted common shares outstanding	99,500,056			92,103,069			95,825,798

Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)

	Year ended December 31,
	2015			2014
Interest income:
Loans receivable	$	298,665		282,050
Mortgage-backed securities	8,823			10,320
Taxable investment securities	4,520			4,130
Tax-free investment securities	4,313			6,281
FHLB dividends	2,828			1,809
Interest-earning deposits	431			837
Total interest income	319,580			305,427

Interest expense:
Deposits	24,055			25,322
Borrowed funds	32,272			31,265
Total interest expense	56,327			56,587

Net interest income	263,253			248,840
Provision for loan losses	9,712			20,314
Net interest income after provision for loan losses	253,541			228,526

Noninterest income:
Gain on sale of investments	1,037			4,930
Service charges and fees	38,362			36,383
Trust and other financial services income	12,342			12,369
Insurance commission income	9,526			8,760
Loss on real estate owned, net	(1,989)			(967)
Income from bank owned life insurance	4,338			4,191
Mortgage banking income	933			1,022
Other operating income	4,287			4,078
Total noninterest income	68,836			70,766

Noninterest expense:
Compensation and employee benefits	119,818			115,967
Premises and occupancy costs	24,641			23,455
Office operations	15,584			14,721
Processing expenses	30,780			26,671
Marketing expenses	8,499			8,213
Federal deposit insurance premiums	5,109			5,193
Professional services	6,906			7,661
Amortization of intangible assets	1,688			1,323
Real estate owned expense	2,070			2,140
Acquisition expense	9,751			394
Other expense	9,031			9,797
Total noninterest expense	233,877			215,535

Income before income taxes	88,500			83,757
Income tax expense	27,960			21,795

Net income	$	60,540		61,962

Basic earnings per share	$	0.64		0.68

Diluted earnings per share	$	0.64		0.67

Annualized return on average equity	5.49		%	5.69	%
Annualized return on average assets	0.73		%	0.79	%

Basic common shares outstanding	94,314,420			91,535,298
Diluted common shares outstanding	94,829,789			92,274,997

Northwest Bancshares, Inc. and Subsidiaries
Reconciliation of Non-GAAP to GAAP Net Income *
(Dollars in thousands, except per share amounts)

	Quarter ended			Year ended
	December 31,			December 31,
	2015		2014	2015	2014
Operating results (non-GAAP):
Net interest income	$	71,153	62,603	263,253	248,840
Provision for loan losses	4,595		1,078	9,712	20,314
Noninterest income	19,546		17,222	68,836	70,766
Noninterest expense	59,880		55,212	224,126	215,535
Income taxes	9,111		6,190	31,239	21,795
Net operating income (non-GAAP)	$	17,113	17,345	67,012	61,962

Diluted earnings per share (non-GAAP)	$	0.17	0.19	0.71	0.67

Reconciliation of net operating income to net income:	$	17,113	17,345	67,012	61,962
Net operating income (non-GAAP)
Non-operating expenses, net of tax:
Acquisition expenses, net of tax benefit	(920)		—	(6,472)	—
Net income (GAAP)	$	16,193	17,345	60,540	61,962

Diluted earnings per share (GAAP)	$	0.16	0.19	0.64	0.67

* - 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 acquisition expenses, net of tax benefit. The Company believe 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.

Northwest Bancshares, Inc. and Subsidiaries
Asset quality
(Dollars in thousands)

	December 31, 2015			December 31, 2014		December 31, 2013		December 31, 2012
Nonaccrual loans current:
Residential mortgage loans	$	1,393		1,169		1,361		797
Home equity loans	1,108			1,527		835		635
Other consumer loans	140			88		98		44
Commercial real estate loans	14,018			23,703		17,866		24,960
Commercial loans	4,604			5,917		13,357		5,424
Total nonaccrual loans current	$	21,263		32,404		33,517		31,860

Nonaccrual loans delinquent 30 days to 59 days:
Residential mortgage loans	$	430		1,545		427		—
Home equity loans	375			712		404		—
Other consumer loans	97			48		15		—
Commercial real estate loans	2,192			1,128		3,468		5,549
Commercial loans	322			9		7,650		2,002
Total nonaccrual loans delinquent 30 days to 59 days	$	3,416		3,442		11,964		7,551

Nonaccrual loans delinquent 60 days to 89 days:
Residential mortgage loans	$	2,139		784		864		—
Home equity loans	389			724		280		—
Other consumer loans	315			234		87		—
Commercial real estate loans	762			763		2,036		2,802
Commercial loans	110			131		716		9,652
Total nonaccrual loans delinquent 60 days to 89 days	$	3,715		2,636		3,983		12,454

Nonaccrual loans delinquent 90 days or more:
Residential mortgage loans	$	15,810		17,696		24,625		24,286
Home equity loans	5,650			6,606		8,344		8,479
Other consumer loans	2,900			2,450		2,057		1,936
Commercial real estate loans	16,449			10,215		18,433		24,550
Commercial loans	2,459			4,359		4,298		9,096
Total nonaccrual loans delinquent 90 days or more	$	43,268		41,326		57,757		68,347

Total nonaccrual loans	$	71,662		79,808		107,221		120,212

	December 31, 2015			December 31, 2014		December 31, 2013		December 31, 2012
Nonaccrual loans	$	71,662		79,808		107,221		120,212
Loans 90 days past maturity and still accruing	1,334			235		690		1,698
Nonperforming loans	72,996			80,043		107,911		121,910
Real estate owned, net	8,725			16,759		18,203		26,165
Nonperforming assets	$	81,721		96,802		126,114		148,075

Nonaccrual troubled debt restructuring *	$	21,118		24,459		28,889		41,166
Accruing troubled debt restructuring	29,997			37,329		50,277		48,278
Total troubled debt restructuring	$	51,115		61,788		79,166		89,444

Nonperforming loans to total loans	1.01		%	1.34	%	1.86	%	2.14	%

Nonperforming assets to total assets	0.91		%	1.25	%	1.60	%	1.86	%

Allowance for loan losses to total loans	0.87		%	1.13	%	1.23	%	1.28	%

Allowance for loan losses to nonperforming loans	85.86		%	84.35	%	66.12	%	60.06	%

* Amounts included in nonperforming loans above.

Northwest Bancshares, Inc. and Subsidiaries
Loans by credit quality indicators as of December 31, 2015
(Dollars in thousands)

	Pass		Special mention *	Substandard **	Doubtful	Loss	Recorded investment in loans receivable
Personal Banking:
Residential mortgage loans	$	2,735,164	—	14,060	—	1,340	2,750,564
Home equity loans	1,178,735		—	8,371	—	—	1,187,106
Other consumer loans	508,074		—	2,543	—	—	510,617
Total Personal Banking	4,421,973		—	24,974	—	1,340	4,448,287

Business Banking:
Commercial real estate loans	2,170,951		53,390	126,978	115	—	2,351,434
Commercial loans	359,403		23,730	38,157	1,110	—	422,400
Total Business Banking	2,530,354		77,120	165,135	1,225	—	2,773,834

	$	6,952,327	77,120	190,109	1,225	1,340	7,222,121

* - Includes $7.6 million of acquired loans.
** - Includes $18.6 million of acquired loans.

Northwest Bancshares, Inc. and Subsidiaries
Loans by credit quality indicators as of December 31, 2014
(Dollars in thousands)

	Pass		Special mention	Substandard	Doubtful	Loss	Recorded investment in loans receivable
Personal Banking:
Residential mortgage loans	$	2,507,269	—	12,763	—	1,424	2,521,456
Home equity loans	1,059,525		—	6,606	—	—	1,066,131
Other consumer loans	240,947		—	1,797	—	—	242,744
Total Personal Banking	3,807,741		—	21,166	—	1,424	3,830,331

Business Banking:
Commercial real estate loans	1,570,649		36,908	145,502	505	—	1,753,564
Commercial loans	333,854		23,690	46,280	2,172	—	405,996
Total Business Banking	1,904,503		60,598	191,782	2,677	—	2,159,560

	$	5,712,244	60,598	212,948	2,677	1,424	5,989,891

Northwest Bancshares, Inc. and Subsidiaries
Delinquency
(Dollars in thousands)


Loan delinquency schedule
(Number of loans and dollar amount of loans)

	December 31, 2015			*		December 31, 2014			*		December 31, 2013			*		December 31, 2012			*
Loans delinquent 30 days to 59 days:
Residential mortgage loans	349	$	25,943	0.9	%	377	$	27,443	1.1	%	374	$	27,486	1.1	%	430	$	32,921	1.4	%
Home equity loans	173	5,806		0.5	%	161	5,752		0.5	%	213	6,946		0.6	%	224	6,534		0.6	%
Consumer loans	1,234	7,101		1.4	%	1,193	5,572		2.3	%	1,010	4,515		2.0	%	1,122	5,456		2.4	%
Commercial real estate loans	48	24,877		1.1	%	56	4,956		0.3	%	73	8,449		0.5	%	87	13,001		0.8	%
Commercial loans	31	2,868		0.7	%	26	2,262		0.6	%	34	9,243		2.3	%	41	3,233		0.8	%
Total loans delinquent 30 days to 59 days	1,835	$	66,595	0.9	%	1,813	$	45,985	0.8	%	1,704	$	56,639	1.0	%	1,904	$	61,145	1.1	%

Loans delinquent 60 days to 89 days:
Residential mortgage loans	100	$	7,790	0.3	%	100	$	6,970	0.3	%	103	$	7,568	0.3	%	100	$	9,387	0.4	%
Home equity loans	50	2,478		0.2	%	49	1,672		0.2	%	67	2,243		0.2	%	65	1,977		0.2	%
Consumer loans	521	2,521		0.5	%	525	2,435		1.0	%	507	1,866		0.8	%	448	1,830		0.8	%
Commercial real estate loans	21	8,228		0.3	%	21	2,038		0.1	%	35	3,968		0.2	%	33	4,596		0.3	%
Commercial loans	7	598		0.1	%	4	209		0.1	%	16	1,555		0.4	%	17	10,158		2.6	%
Total loans delinquent 60 days to 89 days	699	$	21,615	0.3	%	699	$	13,324	0.2	%	728	$	17,200	0.3	%	663	$	27,948	0.5	%

Loans delinquent 90 days or more: **
Residential mortgage loans	215	$	16,350	0.6	%	225	$	17,696	0.7	%	273	$	24,625	1.0	%	266	$	24,286	1.0	%
Home equity loans	143	6,112		0.5	%	139	6,606		0.6	%	171	8,344		0.8	%	175	8,479		0.8	%
Consumer loans	523	2,926		0.6	%	539	2,450		1.0	%	470	2,057		0.9	%	427	1,936		0.8	%
Commercial real estate loans	113	19,031		0.8	%	102	10,215		0.6	%	124	18,433		1.1	%	146	24,550		1.5	%
Commercial loans	25	2,599		0.6	%	25	4,359		1.1	%	31	4,298		1.1	%	61	9,096		2.3	%
Total loans delinquent 90 days or more	1,019	$	47,018	0.7	%	1,030	$	41,326	0.7	%	1,069	$	57,757	1.0	%	1,075	$	68,347	1.2	%

Total loans delinquent	3,553	$	135,228	1.9	%	3,542	$	100,635	1.7	%	3,501	$	131,596	2.3	%	3,642	$	157,440	2.8	%

* - Represents delinquency, in dollars, divided by the respective total amount of that type of loan outstanding.
** - Includes $3.7 million of purchased credit impaired loans.

Northwest Bancshares, Inc. and Subsidiaries
Allowance for loan losses
(Dollars in thousands)

	Quarter ended December 31,					Year ended December 31,
	2015			2014		2015		2014
Allowance for loan losses
Beginning balance	$	60,547		71,650		67,518		71,348
Provision	4,595			1,078		9,712		20,314
Charge-offs residential mortgage	(171)			(487)		(1,126)		(2,181)
Charge-offs home equity	(1,097)			(493)		(2,424)		(1,783)
Charge-offs other consumer	(2,561)			(1,813)		(8,274)		(6,423)
Charge-offs commercial real estate	(1,216)			(2,931)		(6,326)		(8,422)
Charge-offs commercial	(508)			(1,070)		(8,183)		(11,936)
Recoveries	3,083			1,584		11,775		6,601
Ending balance	$	62,672		67,518		62,672		67,518

Net charge-offs to average loans, annualized	0.14		%	0.35	%	0.23	%	0.41	%

Northwest Bancshares, Inc. and Subsidiaries
Average balance sheet
(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,
	2015						2014
					Avg.						Avg.
	Average Balance			Interest	Yield/ Cost (g)		Average Balance			Interest	Yield/ Cost (g)
Assets:
Interest-earning assets:
Loans receivable (a) (b) (d)	$	7,148,603		81,428	4.52	%	$	5,961,303		71,669	4.77	%
Mortgage-backed securities (c)	519,736			2,301	1.77	%	536,990			2,357	1.76	%
Investment securities (c) (d)	427,363			2,394	2.24	%	495,554			3,289	2.65	%
FHLB stock	38,651			499	5.12	%	36,315			383	4.22	%
Other interest-earning deposits	40,410			13	0.13	%	251,229			164	0.26	%

Total interest-earning assets	8,174,763			86,635	4.20	%	7,281,391			77,862	4.28	%

Noninterest earning assets (e)	747,317						546,946

Total assets	$	8,922,080					$	7,828,337

Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings deposits	$	1,378,377		871	0.25	%	$	1,209,117		828	0.27	%
Interest-bearing demand deposits	1,083,524			157	0.06	%	884,542			147	0.07	%
Money market deposit accounts	1,279,181			873	0.27	%	1,182,041			797	0.27	%
Time deposits	1,720,895			4,534	1.05	%	1,506,526			4,334	1.14	%
Borrowed funds (f)	906,574			6,730	2.95	%	894,509			6,694	2.97	%
Junior subordinated debentures	116,626			1,321	4.43	%	103,094			1,182	4.49	%

Total interest-bearing liabilities	6,485,177			14,486	0.89	%	5,779,829			13,982	0.96	%

Noninterest-bearing demand deposits	1,145,276						897,082
Noninterest bearing liabilities	133,323						79,850

Total liabilities	7,763,776						6,756,761

Shareholders' equity	1,158,304						1,071,576

Total liabilities and shareholders' equity	$	8,922,080					$	7,828,337

Net interest income/ Interest rate spread				72,149	3.31	%				63,880	3.32	%

Net interest-earning assets/ Net interest margin	$	1,689,586			3.53	%	$	1,501,562			3.51	%

Ratio of interest-earning assets to interest- bearing liabilities	1.26		X				1.26		X


(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 and collateralized borrowings.
(g)	Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.49% and 4.74%, respectively, Investment securities - 1.82% and 2.02%, respectively, Interest-earning assets - 4.16% and 4.21%, respectively. GAAP basis net interest rate spreads were 3.27% and 3.25%, respectively, and GAAP basis net interest margins were 3.48% and 3.44%, respectively.

Northwest Bancshares, Inc. and Subsidiaries
Average balance sheet
(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,
	2015						2014
					Avg.						Avg.
	Average Balance			Interest	Yield/ Cost (g)		Average Balance			Interest	Yield/ Cost (g)
Assets:
Interest-earning assets:
Loans receivable (a) (b) (d)	$	6,460,078		300,638	4.65	%	$	5,883,244		284,107	4.83	%
Mortgage-backed securities (c)	500,797			8,823	1.76	%	581,906			10,320	1.77	%
Investment securities (c) (d)	469,568			11,155	2.38	%	499,718			13,792	2.76	%
FHLB stock (h)	37,500			1,788	4.77	%	41,975			1,809	4.33	%
Other interest-earning deposits	179,201			431	0.24	%	325,201			837	0.25	%

Total interest-earning assets	7,647,144			322,835	4.22	%	7,332,044			310,865	4.24	%

Noninterest earning assets (e)	677,449						561,107

Total assets	$	8,324,593					$	7,893,151

Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings deposits	$	1,300,102		3,387	0.26	%	$	1,221,304		3,286	0.27	%
Interest-bearing demand deposits	976,789			568	0.06	%	882,980			587	0.07	%
Money market deposit accounts	1,202,143			3,222	0.27	%	1,181,235			3,174	0.27	%
Time deposits	1,540,905			16,878	1.10	%	1,575,595			18,275	1.16	%
Borrowed funds (f)	925,683			27,347	2.95	%	881,118			26,574	3.02	%
Junior subordinated debentures	108,507			4,925	4.48	%	103,094			4,691	4.49	%

Total interest-bearing liabilities	6,054,129			56,327	0.93	%	5,845,326			56,587	0.97	%

Noninterest-bearing demand deposits	1,001,263						864,322
Noninterest bearing liabilities	166,530						94,298

Total liabilities	7,221,922						6,803,946

Shareholders' equity	1,102,671						1,089,205

Total liabilities and shareholders' equity	$	8,324,593					$	7,893,151

Net interest income/ Interest rate spread				266,508	3.29	%				254,278	3.27	%

Net interest-earning assets/ Net interest margin	$	1,593,015			3.49	%	$	1,486,718			3.47	%

Ratio of interest-earning assets to interest- bearing liabilities	1.26		X				1.25		X


(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 and collateralized borrowings.
(g)	Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.62% and 4.79%, respectively, Investment securities - 1.88% and 2.08%, respectively, Interest-earning assets - 4.17% and 4.17%, respectively. GAAP basis net interest rate spreads were 3.24% and 3.20%, respectively, and GAAP basis net interest margins were 3.43% and 3.39%, respectively.
(h)	Excludes $1.0 million special dividend paid in February 2015 from the average yield calculation.

Northwest Bancshares, Inc. and Subsidiaries
Average balance sheet
(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, 2015						Quarter ended September 30, 2015
					Avg.						Avg.
	Average Balance			Interest	Yield/ Cost (g)		Average Balance			Interest	Yield/ Cost (g)
Assets:
Interest-earning assets:
Loans receivable (a) (b) (d)	$	7,148,603		81,428	4.52	%	$	6,584,664		76,583	4.61	%
Mortgage-backed securities (c)	519,736			2,301	1.77	%	498,757			2,230	1.79	%
Investment securities (c) (d)	427,363			2,394	2.24	%	482,666			2,754	2.28	%
FHLB stock	38,651			499	5.12	%	39,552			451	4.52	%
Other interest-earning deposits	40,410			13	0.13	%	162,041			99	0.24	%

Total interest-earning assets	8,174,763			86,635	4.20	%	7,767,680			82,117	4.19	%

Noninterest earning assets (e)	747,317						846,439

Total assets	$	8,922,080					$	8,614,119

Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings deposits	$	1,378,377		871	0.25	%	$	1,324,620		865	0.26	%
Interest-bearing demand deposits	1,083,524			157	0.06	%	1,022,585			149	0.06	%
Money market deposit accounts	1,279,181			873	0.27	%	1,217,122			825	0.27	%
Time deposits	1,720,895			4,534	1.05	%	1,577,159			4,324	1.09	%
Borrowed funds (f)	906,574			6,730	2.95	%	906,410			6,713	2.94	%
Junior subordinated debentures	116,626			1,321	4.43	%	111,213			1,274	4.48	%

Total interest-bearing liabilities	6,485,177			14,486	0.89	%	6,159,109			14,150	0.91	%

Noninterest-bearing demand deposits	1,145,276						1,054,270
Noninterest bearing liabilities	133,323						275,435

Total liabilities	7,763,776						7,488,814

Shareholders' equity	1,158,304						1,125,305

Total liabilities and shareholders' equity	$	8,922,080					$	8,614,119

Net interest income/ Interest rate spread				72,149	3.31	%				67,967	3.28	%

Net interest-earning assets/ Net interest margin	$	1,689,586			3.53	%	$	1,608,571			3.50	%

Ratio of interest-earning assets to interest- bearing liabilities	1.26		X				1.26		X


(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 and collateralized borrowings.
(g)	Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.49% and 4.58%, respectively, Investment securities - 1.82% and 1.84%, respectively, Interest-earning assets - 4.16% and 4.14%, respectively. GAAP basis net interest rate spreads were 3.27% and 3.23%, respectively, and GAAP basis net interest margins were 3.48% and 3.45%, respectively.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/northwest-bancshares-inc-announces-fourth-quarter-2015-earnings-and-increase-in-quarterly-dividend-300209129.html

SOURCE Northwest Bancshares, Inc.

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