Member News

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

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

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

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

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

The provision for credit losses increased by $3.5 million to $6.8 million for the quarter ended September 30, 2020, from $3.3 million for the quarter ended September 30, 2019.  During the current year, the Company adopted ASU 2016-13, referred to as Current Expected Credit Losses ("CECL"), which requires that all financial assets measured at amortized cost be presented at the net amount expected to be collected inclusive of the entity's current estimate of all lifetime expected credit losses.  In addition, the estimated economic impact of COVID-19 caused us to increase our provision expense for the quarter by approximately $1.5 million.  Finally, total classified loans have increased to $457.8 million, or 4.25% of total loans, at September 30, 2020 from $205.9 million, or 2.33% of total loans, as of September 30, 2019.

Noninterest income increased by $10.5 million, or 40.1%, to $36.7 million for the quarter ended September 30, 2020, from $26.2 million for the quarter ended September 30, 2019.  This increase was primarily due to the increase in mortgage banking income of $9.1 million to $11.1 million for the quarter ended September 30, 2020 from $1.9 million for the quarter ended September 30, 2019. This increase was due to continued efforts to expand our secondary market sales capabilities over the last year, as well as an interest rate environment conducive to refinance activity and attractive secondary market pricing. In addition, there was a $796,000, or 5.9%, increase in service charges and fees and a $767,000, or 16.6%, increase in trust and other financial services income, both primarily due to additional fee income as a result of the acquisition of MutualBank.

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

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

Headquartered in Warren, Pennsylvania, Northwest Bancshares, Inc. is the holding company of Northwest Bank. Founded in 1896, Northwest Bank is a full-service financial institution offering a complete line of business and personal banking products, employee benefits and wealth management services, as well as the fulfillment of business and personal insurance needs. As of September 30, 2020, Northwest operated 205 full-service community banking offices and eight free standing drive-through facilities in Pennsylvania, New York, Ohio and Indiana. Northwest Bancshares, Inc.’s common stock is listed on the NASDAQ Global Select Market (“NWBI”). Additional information regarding Northwest Bancshares, Inc. and Northwest Bank can be accessed on-line at www.northwest.com.