Company Quick10K Filing
Northwest Bancshares
10-Q 2020-03-31 Filed 2020-05-11
10-K 2019-12-31 Filed 2020-03-02
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-08
10-Q 2019-03-31 Filed 2019-05-09
10-K 2018-12-31 Filed 2019-03-01
10-Q 2018-09-30 Filed 2018-11-08
10-Q 2018-06-30 Filed 2018-08-08
10-Q 2018-03-31 Filed 2018-05-10
10-K 2017-12-31 Filed 2018-03-01
10-Q 2017-09-30 Filed 2017-11-09
10-Q 2017-06-30 Filed 2017-08-09
10-Q 2017-03-31 Filed 2017-05-10
10-K 2016-12-31 Filed 2017-03-01
10-Q 2016-09-30 Filed 2016-11-09
10-Q 2016-06-30 Filed 2016-08-09
10-Q 2016-03-31 Filed 2016-05-10
10-K 2015-12-31 Filed 2016-02-29
10-Q 2015-09-30 Filed 2015-11-09
10-Q 2015-06-30 Filed 2015-08-10
10-Q 2015-03-31 Filed 2015-05-11
10-K 2014-12-31 Filed 2015-02-27
10-Q 2014-09-30 Filed 2014-11-07
10-Q 2014-06-30 Filed 2014-08-08
10-Q 2014-03-31 Filed 2014-05-09
10-K 2013-12-31 Filed 2014-02-28
10-Q 2013-09-30 Filed 2013-11-08
10-Q 2013-06-30 Filed 2013-08-09
10-Q 2013-03-31 Filed 2013-05-10
10-K 2012-12-31 Filed 2013-03-01
10-Q 2012-09-30 Filed 2012-11-05
10-Q 2012-06-30 Filed 2012-08-03
10-Q 2012-03-31 Filed 2012-05-08
10-K 2011-12-31 Filed 2012-02-29
10-Q 2011-09-30 Filed 2011-11-08
10-Q 2011-06-30 Filed 2011-08-09
10-Q 2011-03-31 Filed 2011-05-10
10-K 2010-12-31 Filed 2011-03-01
10-Q 2010-09-30 Filed 2010-11-09
10-Q 2010-06-30 Filed 2010-08-05
10-Q 2010-03-31 Filed 2010-05-10
10-K 2009-12-31 Filed 2010-03-16
8-K 2020-04-27
8-K 2020-04-24
8-K 2020-04-22
8-K 2020-04-07
8-K 2020-03-27
8-K 2020-02-13
8-K 2020-01-27
8-K 2019-11-26
8-K 2019-10-29
8-K 2019-10-21
8-K 2019-08-07
8-K 2019-07-22
8-K 2019-04-24
8-K 2019-04-17
8-K 2019-04-17
8-K 2019-03-22
8-K 2019-03-08
8-K 2019-01-22
8-K 2018-11-30
8-K 2018-10-22
8-K 2018-10-16
8-K 2018-09-19
8-K 2018-07-23
8-K 2018-07-18
8-K 2018-06-22
8-K 2018-06-11
8-K 2018-05-14
8-K 2018-04-18
8-K 2018-04-18
8-K 2018-03-21
8-K 2018-02-05
8-K 2018-01-22

NWBI 10Q Quarterly Report

Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 a2016-06x30xnwbixexx311.htm
EX-31.2 a2016-06x30xnwbixexx312.htm
EX-32.1 a2016-06x30xnwbixexx321.htm

Northwest Bancshares Earnings 2016-06-30

Balance SheetIncome StatementCash Flow

10-Q 1 a2016-06x30xnwbix10q.htm 10-Q Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
x      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarterly period ended June 30, 2016
 
or
 
o         Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from                  to                  
 
Commission File Number 001-34582
 
NORTHWEST BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
 
Maryland
 
27-0950358
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
100 Liberty Street, Warren, Pennsylvania
 
16365
(Address of principal executive offices)
 
(Zip Code)
 
(814) 726-2140
(Registrant’s telephone number, including area code)
 
 
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):
 
Large Accelerated Filer x Accelerated Filer o Non-Accelerated Filer o Smaller reporting company o
 
Indicate by check mark whether the registrant is a Shell Company (as defined in Rule 12b-2 of the Exchange Act).Yes o No x
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
 
Common Stock ($0.01 par value) 102,518,588 shares outstanding as of July 31, 2016

 


NORTHWEST BANCSHARES, INC.
INDEX
 
 
 
 
 
PAGE
PART I
 
FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Certifications
 
 





ITEM 1. FINANCIAL STATEMENTS
 
NORTHWEST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(in thousands, except share data)
 
June 30,
2016
 
December 31,
2015
Assets
 

 
 

Cash and due from banks
$
87,711

 
92,263

Interest-earning deposits in other financial institutions
223,084

 
74,510

Federal funds sold and other short-term investments
636

 
635

Marketable securities available-for-sale (amortized cost of $692,403 and $868,956)
705,297

 
874,405

Marketable securities held-to-maturity (fair value of $25,978 and $32,552)
25,144

 
31,689

Total cash and investments
1,041,872

 
1,073,502

 
 
 
 
Personal Banking loans:
 

 
 

Residential mortgage loans held for sale
39,942

 

Residential mortgage loans
2,717,656

 
2,750,564

Home equity loans
1,162,174

 
1,187,106

Consumer loans
546,550

 
510,617

Total Personal Banking loans
4,466,322

 
4,448,287

Commercial Banking loans:
 

 
 

Commercial real estate loans
2,363,376

 
2,351,434

Commercial loans
465,223

 
422,400

Total Business Banking loans
2,828,599

 
2,773,834

Total loans
7,294,921

 
7,222,121

Allowance for loan losses
(60,781
)
 
(62,672
)
Total loans, net
7,234,140

 
7,159,449

 
 
 
 
Federal Home Loan Bank stock, at cost
40,321

 
40,903

Accrued interest receivable
20,713

 
21,072

Real estate owned, net
4,950

 
8,725

Premises and equipment, net
151,643

 
154,351

Bank owned life insurance
169,616

 
168,509

Goodwill
262,140

 
261,736

Other intangible assets
8,095

 
8,982

Other assets
30,485

 
54,670

Total assets
$
8,963,975

 
8,951,899

 
 
 
 
Liabilities and Shareholders’ Equity
 

 
 

Liabilities:
 

 
 

Noninterest-bearing checking deposits
$
1,189,032

 
1,177,256

Interest-bearing checking deposits
1,110,607

 
1,080,086

Money market deposit accounts
1,295,127

 
1,274,504

Savings deposits
1,444,947

 
1,386,017

Time deposits
1,596,288

 
1,694,718

Total deposits
6,636,001

 
6,612,581

 
 
 
 
Borrowed funds
959,969

 
975,007

Junior subordinated deferrable interest debentures held by trusts that issued guaranteed capital debt securities
111,213

 
111,213

Advances by borrowers for taxes and insurance
45,288

 
33,735

Accrued interest payable
737

 
1,993

Other liabilities
55,312

 
54,207

Total liabilities
7,808,520

 
7,788,736

 
 
 
 
Shareholders’ equity:
 

 
 

Preferred stock, $0.01 par value: 50,000,000 authorized, no shares issued

 

Common stock, $0.01 par value: 500,000,000 shares authorized, 102,472,947 and 101,871,737 shares issued, respectively
1,025

 
1,019

Paid-in capital
722,980

 
717,603

Retained earnings
470,337

 
489,292

Unallocated common stock of employee stock ownership plan
(19,370
)
 
(20,216
)
Accumulated other comprehensive loss
(19,517
)
 
(24,535
)
Total shareholders’ equity
1,155,455

 
1,163,163

Total liabilities and shareholders’ equity
$
8,963,975

 
8,951,899


See accompanying notes to unaudited consolidated financial statements

1


NORTHWEST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except per share data) 
 
Quarter ended
June 30,
 
Six months ended
June 30,
 
2016
 
2015
 
2016
 
2015
Interest income:
 

 
 

 
 

 
 

Loans receivable
$
82,645

 
70,985

 
163,426

 
141,696

Mortgage-backed securities
2,115

 
2,058

 
4,344

 
4,292

Taxable investment securities
756

 
1,129

 
1,794

 
2,174

Tax-free investment securities
707

 
1,143

 
1,431

 
2,491

FHLB dividends
401

 
475

 
868

 
1,878

Interest-earning deposits
70

 
180

 
129

 
319

Total interest income
86,694

 
75,970

 
171,992

 
152,850

 
 
 
 
 
 
 
 
Interest expense:
 

 
 

 
 

 
 

Deposits
5,865

 
5,691

 
11,953

 
11,457

Borrowed funds
4,143

 
8,101

 
11,801

 
16,234

Total interest expense
10,008

 
13,792

 
23,754

 
27,691

 
 
 
 
 
 
 
 
Net interest income
76,686

 
62,178

 
148,238

 
125,159

Provision for loan losses
4,199

 
1,050

 
5,859

 
1,950

Net interest income after provision for loan losses
72,487

 
61,128

 
142,379

 
123,209

Noninterest income:
 

 
 

 
 

 
 

Gain on sale/ call of investments
227

 
566

 
354

 
661

Service charges and fees
10,630

 
9,228

 
20,695

 
17,887

Trust and other financial services income
3,277

 
3,094

 
6,538

 
5,870

Insurance commission income
2,768

 
2,210

 
5,482

 
4,638

Gain/ (loss) on real estate owned, net
111

 
(541
)
 
360

 
(1,587
)
Income from bank owned life insurance
1,105

 
1,008

 
2,700

 
1,921

Mortgage banking income
446

 
218

 
664

 
458

Other operating income
1,711

 
742

 
2,930

 
1,302

Total noninterest income
20,275

 
16,525

 
39,723

 
31,150

 
 
 
 
 
 
 
 
Noninterest expense:
 

 
 

 
 

 
 

Compensation and employee benefits
34,349

 
28,920

 
67,382

 
56,815

Premises and occupancy costs
6,275

 
5,899

 
12,812

 
12,166

Office operations
3,343

 
2,905

 
6,803

 
5,817

Collections expense
729

 
603

 
1,405

 
1,371

Processing expenses
8,172

 
7,392

 
16,586

 
14,597

Marketing expenses
2,541

 
3,190

 
4,432

 
5,166

Federal deposit insurance premiums
1,442

 
1,286

 
2,945

 
2,633

Professional services
2,129

 
1,652

 
3,962

 
3,444

Amortization of intangible assets
710

 
269

 
1,385

 
537

Real estate owned expense
295

 
514

 
606

 
1,206

Restructuring/ acquisition expense
3,386

 
467

 
4,021

 
814

FHLB prepayment penalty
36,978

 

 
36,978

 

Other expenses
2,912

 
2,038

 
7,219

 
4,280

Total noninterest expense
103,261

 
55,135

 
166,536

 
108,846

Income/ (loss) before income taxes
(10,499
)
 
22,518

 
15,566

 
45,513

 
 
 
 
 
 
 
 
Federal and state income taxes expense/ (benefit)
(3,491
)
 
7,213

 
4,590

 
14,038

 
 
 
 
 
 
 
 
Net income/ (loss)
$
(7,008
)
 
15,305

 
10,976

 
31,475

 
 
 
 
 
 
 
 
Basic earnings/ (loss) per share
$
(0.07
)
 
0.17

 
0.11

 
0.34

 
 
 
 
 
 
 
 
Diluted earnings per share
$
(0.07
)
 
0.17

 
0.11

 
0.34


See accompanying notes to unaudited consolidated financial statements

2


NORTHWEST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(in thousands)
 
 
Quarter ended
June 30,
 
Six months ended
June 30,
 
2016
 
2015
 
2016
 
2015
Net income/ (loss)
$
(7,008
)
 
15,305

 
10,976

 
31,475

Other comprehensive income net of tax:
 

 
 

 
 

 
 

Net unrealized holding gains/ (losses) on marketable securities:
 

 
 

 
 

 
 

Unrealized holding gains/ (losses) net of tax of $(659), $1,139, $(2,879) and $(746), respectively
1,027

 
(1,788
)
 
4,502

 
1,164

Reclassification adjustment for (gains)/ losses included in net income, net of tax of $(14), $179, $(25) and $222 respectively
22

 
(279
)
 
39

 
(347
)
Net unrealized holding gains on marketable securities
1,049

 
(2,067
)
 
4,541

 
817

 
 
 
 
 
 
 
 
Change in fair value of interest rate swaps, net of tax of $(90), $(263), $(14) and $(287), respectively
166

 
488

 
26

 
532

 
 
 
 
 
 
 
 
Defined benefit plan:
 

 
 

 
 

 
 

Reclassification adjustments for prior period service costs and net losses included in net income, net of tax of $(144), $(140), $(288) and $(280), respectively
226

 
219

 
451

 
438

 
 
 
 
 
 
 
 
Other comprehensive income/ (loss)
1,441

 
(1,360
)
 
5,018

 
1,787

 
 
 
 
 
 
 
 
Total comprehensive income/ (loss)
$
(5,567
)
 
13,945

 
15,994

 
33,262


See accompanying notes to unaudited consolidated financial statements


3


NORTHWEST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
(dollars in thousands, expect share data)
 
Quarter ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
Accumulated
Other
 
Unallocated
 
Total
 
Common Stock
 
Paid-in
 
Retained
 
Comprehensive
 
common stock
 
Shareholders’
 
Shares
 
Amount
 
Capital
 
Earnings
 
Loss
 
of ESOP
 
Equity
Beginning balance at March 31, 2015
94,553,350

 
$
946

 
624,584

 
484,774

 
(21,223
)
 
(21,565
)
 
1,067,516

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income:
 

 
 

 
 

 
 

 
 

 
 

 
 

Net income

 

 

 
15,305

 

 

 
15,305

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive loss, net of tax of $915

 

 

 

 
(1,360
)
 

 
(1,360
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income/ (loss)

 

 

 
15,305

 
(1,360
)
 

 
13,945

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercise of stock options
60,849

 

 
632

 

 

 

 
632

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense, including tax benefit of $6
306,350

 
3

 
1,316

 

 

 
80

 
1,399

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share repurchases
(179,800
)
 
(2
)
 
(2,211
)
 

 

 

 
(2,213
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends paid ($0.14 per share)

 

 

 
(12,929
)
 

 

 
(12,929
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance at June 30, 2015
94,740,749

 
$
947

 
624,321

 
487,150

 
(22,583
)
 
(21,485
)
 
1,068,350

 
Quarter ended June 30, 2016
 
 
 
 
 
 
 
 
 
 
Accumulated
Other
 
Unallocated
 
Total
 
Common Stock
 
Paid-in
 
Retained
 
Comprehensive
 
common stock
 
Shareholders’
 
Shares
 
Amount
 
Capital
 
Earnings
 
Income/ (loss)
 
of ESOP
 
Equity
Beginning balance at March 31, 2016
101,848,509

 
$
1,018

 
718,027

 
492,316

 
(20,958
)
 
(19,815
)
 
1,170,588

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income:
 

 
 

 
 

 
 

 
 

 
 

 
 

Net loss

 

 

 
(7,008
)
 

 

 
(7,008
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income, net of tax of $(907)

 

 

 

 
1,441

 

 
1,441

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income/ (loss)

 

 

 
(7,008
)
 
1,441

 

 
(5,567
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercise of stock options
300,721

 
4

 
3,262

 

 

 

 
3,266

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense, including tax benefit of $187
323,717

 
3

 
1,691

 

 

 
445

 
2,139

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends paid ($0.15 per share)

 

 

 
(14,971
)
 

 

 
(14,971
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending Balance at June 30, 2016
102,472,947

 
$
1,025

 
722,980

 
470,337

 
(19,517
)
 
(19,370
)
 
1,155,455


See accompanying notes to unaudited consolidated financial statements


4


NORTHWEST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
(dollars in thousands, expect share data)
 
Six months ended June 30, 2015
 
 
 
 
 
 
 
 
 
 
Accumulated
Other
 
Unallocated
 
Total
 
Common Stock
 
Paid-in
 
Retained
 
Comprehensive
 
common stock
 
Shareholders’
 
Shares
 
Amount
 
Capital
 
Earnings
 
Income/ (loss)
 
of ESOP
 
Equity
Beginning balance at December 31, 2014
94,721,453

 
$
947

 
626,134

 
481,577

 
(24,370
)
 
(21,641
)
 
1,062,647

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income:
 

 
 

 
 

 
 

 
 

 
 

 
 

Net income

 

 

 
31,475

 

 

 
31,475

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income, net of tax of $(1,091)

 

 

 

 
1,787

 

 
1,787

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income

 

 

 
31,475

 
1,787

 

 
33,262

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercise of stock options
210,746

 
2

 
2,065

 

 

 

 
2,067

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense, including tax benefit of $23
306,350

 
3

 
2,120

 

 

 
156

 
2,279

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share repurchases
(497,800
)
 
(5
)
 
(5,998
)
 

 

 

 
(6,003
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends paid ($0.28 per share)

 

 

 
(25,902
)
 

 

 
(25,902
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance at June 30, 2015
94,740,749

 
$
947

 
624,321

 
487,150

 
(22,583
)
 
(21,485
)
 
1,068,350

 
Six months ended June 30, 2016
 
 
 
 
 
 
 
 
 
 
Accumulated
Other
 
Unallocated
 
Total
 
Common Stock
 
Paid-in
 
Retained
 
Comprehensive
 
common stock
 
Shareholders’
 
Shares
 
Amount
 
Capital
 
Earnings
 
Income/ (loss)
 
of ESOP
 
Equity
Beginning balance at December 31, 2015
101,871,737

 
$
1,019

 
717,603

 
489,292

 
(24,535
)
 
(20,216
)
 
1,163,163

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income:
 

 
 

 
 

 
 

 
 

 
 

 
 

Net income

 

 

 
10,976

 

 

 
10,976

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income, net of tax of $(3,206)

 

 

 

 
5,018

 

 
5,018

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income

 

 

 
10,976

 
5,018

 

 
15,994

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercise of stock options
423,393

 
5

 
4,578

 

 

 

 
4,583

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense, including tax benefit of $206
323,717

 
3

 
2,549

 

 

 
846

 
3,398

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share repurchases
(145,900
)
 
(2
)
 
(1,750
)
 

 

 

 
(1,752
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends paid ($0.30 per share)

 

 

 
(29,931
)
 

 

 
(29,931
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance at June 30, 2016
102,472,947

 
$
1,025

 
722,980

 
470,337

 
(19,517
)
 
(19,370
)
 
1,155,455

 
See accompanying notes to unaudited consolidated financial statements

5


NORTHWEST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
 
 
Six months ended
June 30,
 
2016
 
2015
OPERATING ACTIVITIES:
 

 
 

Net Income
$
10,976

 
31,475

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Provision for loan losses
5,859

 
1,950

Net gain on sale of assets
(2,127
)
 
(311
)
Net depreciation, amortization and accretion
5,332

 
2,571

Decrease in other assets
23,505

 
11,233

Increase in other liabilities
2,284

 
1,169

Net amortization on marketable securities
1,035

 
173

Noncash write-down of real estate owned
927

 
1,927

FHLB prepayment penalty
24,520

 

Deferred income tax benefit
(650
)
 

Origination of loans held for sale
(114,140
)
 
(221
)
Proceeds from sale of loans held for sale
74,042

 
224

Noncash compensation expense related to stock benefit plans
3,192

 
2,256

Net cash provided by operating activities
34,755

 
52,446

 
 
 
 
INVESTING ACTIVITIES:
 

 
 

Purchase of marketable securities available-for-sale
(2,000
)
 
(59,980
)
Proceeds from maturities and principal reductions of marketable securities held-to-maturity
6,544

 
42,409

Proceeds from maturities and principal reductions of marketable securities available-for-sale
177,781

 
111,630

Proceeds from sale of marketable securities available-for-sale
91

 
1,214

Loan originations
(1,221,930
)
 
(996,253
)
Proceeds from loan maturities and principal reductions
1,182,305

 
850,823

Net sale/ (purchase) of Federal Home Loan Bank stock
582

 
(4,773
)
Proceeds from sale of real estate owned
5,989

 
5,704

Sale of real estate owned for investment, net
304

 
304

Purchase of premises and equipment
(8,235
)
 
(5,172
)
Acquisitions, net of cash received
(684
)
 
(438
)
Net cash provided by/ (used in) investing activities
140,747

 
(54,532
)

6


NORTHWEST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued)
(in thousands)
 
 
 
Six months ended
June 30,
 
2016
 
2015
FINANCING ACTIVITIES:
 

 
 

Increase in deposits, net
$
23,420

 
61,940

Proceeds from long-term borrowings

 
85,000

Repayments of long-term borrowings, including prepayment penalty
(774,546
)
 
(50,026
)
Net increase/ (decrease) in short-term borrowings
734,988

 
(24,027
)
Increase in advances by borrowers for taxes and insurance
11,553

 
11,256

Cash dividends paid
(29,931
)
 
(25,902
)
Purchase of common stock for retirement
(1,752
)
 
(6,003
)
Proceeds from stock options exercised
4,583

 
2,067

Excess tax benefit from stock-based compensation
206

 
23

Net cash provided by/ (used in) financing activities
(31,479
)
 
54,328

 
 
 
 
Net increase in cash and cash equivalents
$
144,023

 
52,242

 
 
 
 
Cash and cash equivalents at beginning of period
$
167,408

 
240,706

Net increase in cash and cash equivalents
144,023

 
52,242

Cash and cash equivalents at end of period
$
311,431

 
292,948

 
 
 
 
Cash and cash equivalents:
 

 
 

Cash and due from banks
$
87,711

 
84,000

Interest-earning deposits in other financial institutions
223,084

 
208,311

Federal funds sold and other short-term investments
636

 
637

Total cash and cash equivalents
$
311,431

 
292,948

 
 
 
 
Cash paid during the period for:
 

 
 

Interest on deposits and borrowings (including interest credited to deposit accounts of $11,335 and $10,508, respectively)
$
25,010

 
27,325

Income taxes
$
1,502

 
4,823

 
 
 
 
Business acquisitions:
 

 
 

Fair value of assets acquired
$
810

 
438

Cash paid, net
(684
)
 
(438
)
Liabilities assumed
$
126

 

 
 
 
 
Non-cash activities:
 

 
 

Loans foreclosures and repossessions
$
1,854

 
5,012

Sale of real estate owned financed by the Company
$
1,260

 
174

 
See accompanying notes to unaudited consolidated financial statements


7


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Unaudited
 
(1)
Basis of Presentation and Informational Disclosures
 
Northwest Bancshares, Inc. (the “Company”) or (“NWBI”), a Maryland corporation headquartered in Warren, Pennsylvania, is a savings and loan holding company regulated by the Board of Governors of the Federal Reserve System. The primary activity of the Company is the ownership of all of the issued and outstanding common stock of Northwest Bank, a Pennsylvania-chartered savings bank (“Northwest”).  Northwest is regulated by the FDIC and the Pennsylvania Department of Banking. Northwest operates 157 community-banking offices throughout Pennsylvania, western New York, eastern Ohio and Maryland.
 
The accompanying unaudited consolidated financial statements include the accounts of the Company and its subsidiary, Northwest, and Northwest’s subsidiaries Northwest Settlement Agency, LLC, Northwest Consumer Discount Company, Northwest Financial Services, Inc., Northwest Advisors, Inc., Northwest Capital Group, Inc., Allegheny Services, Inc., Great Northwest Corporation, Boetger & Associates, Inc. and The Bert Company. The unaudited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information or footnotes required for complete annual financial statements.  In the opinion of management, all adjustments necessary for the fair presentation of the Company’s financial position and results of operations have been included.  The consolidated statements have been prepared using the accounting policies described in the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 updated, as required, for any new pronouncements or changes.
 
Certain items previously reported have been reclassified to conform to the current year’s reporting format.

During the quarter ended June 30, 2016, we identified and corrected an error that arose in prior periods related to the amortization of certain deferred loan fees related to letters of credit, which had the impact of understating our interest income. We have assessed the materiality of these corrections of errors and concluded, based on qualitative and quantitative considerations, that the adjustments are not material to the financial statements as a whole. As a result, $1.1 million of deferred loan fees were recognized in loan interest income for the quarter and six months ended June 30, 2016. For the quarter and six months ended June 30, 2015 loan interest income would have increased by $53,000 and $98,000, respectively, income tax expense would have increased by $21,000 and $38,000, respectively, and net income would have increased by $32,000 and $60,000, respectively.
 
The results of operations for the quarter and six months ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016, or any other period.
 
Stock-Based Compensation
 
On May 18, 2016, we awarded employees 660,600 stock options and directors 64,800 stock options with an exercise price of $14.15 and grant date fair value of $1.52 per stock option.  On May 18, 2016, we also awarded employees 310,160 restricted common shares and directors 24,300 restricted common shares with a grant date fair value of $14.51.  Awarded stock options and common shares vest over a ten-year period with the first vesting occurring on the grant date. Stock-based compensation expense of $1.9 million and $1.4 million for the quarters ended June 30, 2016 and 2015, and $3.2 million and $2.3 million for the six months ended June 30, 2016 and 2015, respectively, was recognized in compensation expense relating to our stock benefit plans.  At June 30, 2016 there was compensation expense of $4.6 million to be recognized for awarded but unvested stock options and $17.0 million for unvested common shares.
 
Income Taxes- Uncertain Tax Positions
 
Accounting standards prescribe a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return.  A tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable, based on its technical merits.  The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information.  At June 30, 2016 we had no liability for unrecognized tax benefits.
 
We recognize interest accrued related to: (1) unrecognized tax benefits in other expenses and (2) refund claims in other operating income.  We recognize penalties (if any) in other expenses. We are subject to audit by the Internal Revenue Service and any state in which we conduct business for the tax periods ended December 31, 2015, 2014, 2013 and 2012.  We are currently under

8


audit by the state of New York for the tax periods ended December 31, 2014, 2013, 2012 and 2011. At June 30, 2016 we have accrued $219,000 for the payment of interest and penalties related to this audit.
 
Impact of New Accounting Standards
 
In May 2014 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-9, “Revenue from Contracts with Customers (Topic 606)”. This guidance supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The core principle of this guidance requires an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and provides five steps to be analyzed to accomplish the core principle. This guidance is effective retrospectively for annual reporting periods beginning after December 15, 2017, including interim periods within those years and early adoption is not permitted.  We are currently evaluating the impact this standard will have on our results of operations and financial position.

In January 2016 the FASB issued ASU 2016-01, “Financial Instruments-Overall (Subtopic 825-10)”. This guidance requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. Additionally, this guidance requires entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes and eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently evaluating the impact this standard will have on our results of operations and financial position.

In February 2016 the FASB issued ASU 2016-2, “Leases”. This guidance requires a lessee to recognize in the statement of financial condition a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the term of the lease. Optional periods should only be recognized if the lessee is reasonably certain to exercise the option. For leases with a term of twelve months or less, the lessee is permitted not to recognize lease assets and lease liabilities and should recognize lease expense for such leases generally on a straight-line basis over the term of the lease. This guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those years and early adoption is permitted. We are currently evaluating the impact this standard will have on our results of operations and financial position.
 
In March 2016 the FASB issued ASU 2016-08, “Principal Versus Agent Considerations”. This guidance clarifies the implementation guidance on principal versus agent considerations of ASU 2014-09 "Revenue from Contracts with Customers (Topic 606)". When another party is involved in providing goods or services to a customer, an entity is required to determine whether the nature of its promise is to provide the specified good or service itself (that is, the entity is a principal) or to arrange for that good or service to be provided by the other party (that is, the entity is an agent). When (or as) an entity that is a principal satisfies a performance obligation, the entity recognizes revenue in the gross amount of consideration to which it expects to be entitled in exchange for the specified good or service transferred to the customer. When (or as) an entity that is an agent satisfies a performance obligation, the entity recognizes revenue in the amount of any fee or commission to which it expects to be entitled in exchange for arranging for the specified good or service to be provided by the other party. This guidance is effective retrospectively for annual reporting periods beginning after December 15, 2017, including interim periods within those years and early adoption is not permitted.  We are currently evaluating the impact this standard will have on our results of operations and financial position.

In March 2016 the FASB issued ASU 2016-09, “Improvements to Employee Share-based Payment Accounting”. This guidance is part of the FASB's Simplification Initiative and simplifies the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those years and early adoption is permitted. We do not expect that this standard will have a material impact on our results of operations or financial position.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326)-Measurement of Credit Losses on Financial Instruments, which eliminates the probable initial recognition threshold for credit losses requiring, instead, that all financial assets (or group of 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. This guidance also applies to certain off-balance-sheet credit exposures such as unfunded commitments and non-derivative financial guarantees. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) in order to present the net carrying value at the amount expected to be collected on the financial asset. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The income statement under this guidance will reflect the initial

9


recognition of current expected credit losses for newly recognized assets, as well as any increases or decreases of expected credit losses that have occurred during the period. This guidance retains many currently-existing disclosures related to the credit quality of an entity’s assets and the related allowance for credit losses amended to reflect the change to an expected credit loss methodology, as well as enhanced disclosures to provide information to users at a more disaggregated level. Upon adoption, ASU 2016-13 provides for a modified retrospective transition by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is effective, except for debt securities for which an other-than-temporary impairment has previously been recognized. For these debt securities, a prospective transition is provided in order to maintain the same amortized cost prior to and subsequent to the effective date of the ASU. This guidance is effective for annual reporting periods beginning after December 15, 2019, and interim periods within those annual periods with early adoption permitted for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. We are currently evaluating the impact this standard will have on our results of operations and financial position.

 
(2)
Business Segments
 
We operate in two reportable business segments: Community Banking and Consumer Finance.  The Community Banking segment provides services traditionally offered by full-service community banks, including business and personal deposit accounts and business and personal loans, as well as insurance, brokerage and investment management and trust services.  The Consumer Finance segment, which is comprised of Northwest Consumer Discount Company, a subsidiary of Northwest, operates 51 offices in Pennsylvania and offers personal installment loans for a variety of consumer and real estate products.  This activity is funded primarily through an intercompany borrowing relationship with Allegheny Services, Inc., a subsidiary of Northwest.  Net income is the primary measure used by management to measure segment performance.  The following tables provide financial information for these reportable segments.  The “All Other” column represents the parent company and elimination entries necessary to reconcile to the consolidated amounts presented in the financial statements.

At or for the quarter ended (in thousands): 
 
 
Community
 
Consumer
 
 
 
 
June 30, 2016
 
Banking
 
Finance
 
All other (1)
 
Consolidated
External interest income
 
$
82,137

 
4,324

 
233

 
86,694

Intersegment interest income/ expense
 
631

 

 
(631
)
 

Interest expense
 
8,924

 
631

 
453

 
10,008

Provision for loan losses
 
3,365

 
834

 

 
4,199

Noninterest income
 
19,848

 
400

 
27

 
20,275

Noninterest expense
 
100,079

 
2,878

 
304

 
103,261

Income tax expense (benefit)
 
(3,245
)
 
158

 
(404
)
 
(3,491
)
Net income
 
$
(6,507
)
 
223

 
(724
)
 
(7,008
)
Total assets
 
$
8,839,334

 
108,282

 
16,359

 
8,963,975

 
 
 
Community
 
Consumer
 
 
 
 
June 30, 2015
 
Banking
 
Finance
 
All other (1)
 
Consolidated
External interest income
 
$
71,273

 
4,492

 
205

 
75,970

Intersegment interest income/ expense
 
582

 

 
(582
)
 

Interest expense
 
12,781

 
582

 
429

 
13,792

Provision for loan losses
 
850

 
200

 

 
1,050

Noninterest income
 
16,080

 
411

 
34

 
16,525

Noninterest expense
 
51,682

 
3,081

 
372

 
55,135

Income tax expense (benefit)
 
7,183

 
434

 
(404
)
 
7,213

Net income
 
$
15,439

 
606

 
(740
)
 
15,305

Total assets
 
$
7,740,273

 
108,348

 
15,889

 
7,864,510

(1)
Eliminations consist of intercompany loans, interest income and interest expense.


10


At or for the six months ended (in thousands): 
 
 
Community
 
Consumer
 
 
 
 
June 30, 2016
 
Banking
 
Finance
 
All other (1)
 
Consolidated
External interest income
 
$
162,975

 
8,567

 
450

 
171,992

Intersegment interest income
 
1,273

 

 
(1,273
)
 

Interest expense
 
21,605

 
1,273

 
876

 
23,754

Provision for loan losses