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 a2016-09x30xnwbixexx311.htm
EX-31.2 a2016-09x30xnwbixexx312.htm
EX-32.1 a2016-09x30xnwbixexx321.htm

Northwest Bancshares Earnings 2016-09-30

Balance SheetIncome StatementCash Flow

10-Q 1 a2016-09x30xnwbix10q.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 September 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) 101,302,855 shares outstanding as of October 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)
 
September 30,
2016
 
December 31,
2015
Assets
 

 
 

Cash and due from banks
$
107,604

 
92,263

Interest-earning deposits in other financial institutions
210,723

 
74,510

Federal funds sold and other short-term investments
2,239

 
635

Marketable securities available-for-sale (amortized cost of $879,141 and $868,956)
890,688

 
874,405

Marketable securities held-to-maturity (fair value of $23,249 and $32,552)
22,584

 
31,689

Total cash and investments
1,233,838

 
1,073,502

 
 
 
 
Personal Banking loans:
 

 
 

Residential mortgage loans held for sale
30,355

 

Residential mortgage loans
2,788,658

 
2,740,892

Home equity loans
1,349,105

 
1,187,106

Consumer loans
628,512

 
520,289

Total Personal Banking loans
4,796,630

 
4,448,287

Commercial Banking loans:
 

 
 

Commercial real estate loans
2,464,681

 
2,351,434

Commercial loans
537,255

 
422,400

Total Business Banking loans
3,001,936

 
2,773,834

Total loans
7,798,566

 
7,222,121

Allowance for loan losses
(63,246
)
 
(62,672
)
Total loans, net
7,735,320

 
7,159,449

 
 
 
 
Federal Home Loan Bank stock, at cost
7,660

 
40,903

Accrued interest receivable
21,591

 
21,072

Real estate owned, net
4,841

 
8,725

Premises and equipment, net
167,596

 
154,351

Bank owned life insurance
170,172

 
168,509

Goodwill
307,711

 
261,736

Other intangible assets
33,901

 
8,982

Other assets
31,977

 
54,670

Total assets
$
9,714,607

 
8,951,899

 
 
 
 
Liabilities and Shareholders’ Equity
 

 
 

Liabilities:
 

 
 

Noninterest-bearing checking deposits
$
1,496,574

 
1,177,256

Interest-bearing checking deposits
1,446,971

 
1,080,086

Money market deposit accounts
1,896,272

 
1,274,504

Savings deposits
1,671,539

 
1,386,017

Time deposits
1,691,447

 
1,694,718

Total deposits
8,202,803

 
6,612,581

 
 
 
 
Borrowed funds
135,891

 
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
21,616

 
33,735

Accrued interest payable
682

 
1,993

Other liabilities
79,599

 
54,207

Total liabilities
8,551,804

 
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, 101,268,648 and 101,871,737 shares issued, respectively
1,013

 
1,019

Paid-in capital
711,974

 
717,603

Retained earnings
469,459

 
489,292

Unallocated common stock of employee stock ownership plan

 
(20,216
)
Accumulated other comprehensive loss
(19,643
)
 
(24,535
)
Total shareholders’ equity
1,162,803

 
1,163,163

Total liabilities and shareholders’ equity
$
9,714,607

 
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
September 30,
 
Nine months ended
September 30,
 
2016
 
2015
 
2016
 
2015
Interest income:
 

 
 

 
 

 
 

Loans receivable
$
82,435

 
76,087

 
245,861

 
217,783

Mortgage-backed securities
2,030

 
2,230

 
6,374

 
6,522

Taxable investment securities
627

 
1,238

 
2,421

 
3,412

Tax-free investment securities
676

 
986

 
2,107

 
3,477

FHLB dividends
218

 
451

 
1,086

 
2,329

Interest-earning deposits
114

 
99

 
243

 
418

Total interest income
86,100

 
81,091

 
258,092

 
233,941

 
 
 
 
 
 
 
 
Interest expense:
 

 
 

 
 

 
 

Deposits
5,653

 
6,163

 
17,606

 
17,620

Borrowed funds
1,801

 
7,987

 
13,602

 
24,221

Total interest expense
7,454

 
14,150

 
31,208

 
41,841

 
 
 
 
 
 
 
 
Net interest income
78,646

 
66,941

 
226,884

 
192,100

Provision for loan losses
5,538

 
3,167

 
11,397

 
5,117

Net interest income after provision for loan losses
73,108

 
63,774

 
215,487

 
186,983

Noninterest income:
 

 
 

 
 

 
 

Gain on sale/ call of investments
58

 
260

 
412

 
921

Service charges and fees
11,012

 
9,945

 
31,707

 
27,832

Trust and other financial services income
3,434

 
3,062

 
9,972

 
8,932

Insurance commission income
2,541

 
2,398

 
8,023

 
7,036

Loss on real estate owned, net
(563
)
 
(246
)
 
(203
)
 
(1,833
)
Income from bank owned life insurance
1,380

 
1,166

 
4,080

 
3,087

Mortgage banking income
1,886

 
267

 
2,550

 
725

Other operating income
1,070

 
1,288

 
4,000

 
2,590

Total noninterest income
20,818

 
18,140

 
60,541

 
49,290

 
 
 
 
 
 
 
 
Noninterest expense:
 

 
 

 
 

 
 

Compensation and employee benefits
39,474

 
31,000

 
106,856

 
87,815

Premises and occupancy costs
6,094

 
6,072

 
18,906

 
18,238

Office operations
3,700

 
3,268

 
10,503

 
9,085

Collections expense
589

 
624

 
1,994

 
1,995

Processing expenses
8,844

 
8,126

 
25,430

 
22,723

Marketing expenses
2,239

 
1,691

 
6,671

 
6,857

Federal deposit insurance premiums
984

 
1,177

 
3,929

 
3,810

Professional services
1,815

 
1,529

 
5,777

 
4,973

Amortization of intangible assets
1,068

 
422

 
2,453

 
959

Real estate owned expense
206

 
471

 
812

 
1,677

Restructuring/ acquisition expense
7,183

 
7,590

 
11,204

 
8,404

FHLB prepayment penalty

 

 
36,978

 

Other expenses
2,836

 
1,834

 
10,055

 
6,114

Total noninterest expense
75,032

 
63,804

 
241,568

 
172,650

Income before income taxes
18,894

 
18,110

 
34,460

 
63,623

 
 
 
 
 
 
 
 
Federal and state income taxes expense/ (benefit)
4,697

 
5,238

 
9,287

 
19,276

 
 
 
 
 
 
 
 
Net income
$
14,197

 
12,872

 
25,173

 
44,347

 
 
 
 
 
 
 
 
Basic earnings per share
$
0.14

 
0.14

 
0.25

 
0.48

 
 
 
 
 
 
 
 
Diluted earnings per share
$
0.14

 
0.13

 
0.25

 
0.48


See accompanying notes to unaudited consolidated financial statements

2


NORTHWEST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(in thousands)
 
 
Quarter ended
September 30,
 
Nine months ended
September 30,
 
2016
 
2015
 
2016
 
2015
Net income
$
14,197

 
12,872

 
25,173

 
44,347

Other comprehensive income net of tax:
 

 
 

 
 

 
 

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

 
 

 
 

 
 

Unrealized holding gains/ (losses) net of tax of $503, $(1,520) $(2,377) and $(2,266), respectively
(785
)
 
2,379

 
3,717

 
3,543

Reclassification adjustment for (gains)/ losses included in net income, net of tax of $23, $77, $(1) and $299 respectively
(36
)
 
(120
)
 
3

 
(467
)
Net unrealized holding gains on marketable securities
(821
)
 
2,259

 
3,720

 
3,076

 
 
 
 
 
 
 
 
Change in fair value of interest rate swaps, net of tax of $(253), $(24), $(267) and $(311), respectively
471

 
45

 
497

 
577

 
 
 
 
 
 
 
 
Defined benefit plan:
 

 
 

 
 

 
 

Reclassification adjustments for prior period service costs and net losses included in net income, net of tax of $(144), $(140), $(432) and $(420), respectively
224

 
219

 
675

 
657

 
 
 
 
 
 
 
 
Other comprehensive income/ (loss)
(126
)
 
2,523

 
4,892

 
4,310

 
 
 
 
 
 
 
 
Total comprehensive income
$
14,071

 
15,395

 
30,065

 
48,657


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 September 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 June 30, 2015
94,740,749

 
$
947

 
624,321

 
487,150

 
(22,583
)
 
(21,485
)
 
1,068,350

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income:
 

 
 

 
 

 
 

 
 

 
 

 
 

Net income

 

 

 
12,872

 

 

 
12,872

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income, net of tax of $(1,607)

 

 

 

 
2,523

 

 
2,523

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income

 

 

 
12,872

 
2,523

 

 
15,395

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition of LNB Bancorp, Inc.
7,056,704

 
70

 
90,538

 

 

 

 
90,608

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercise of stock options
75,159

 
1

 
773

 

 

 

 
774

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense, including tax benefit of $25

 

 
941

 

 

 
87

 
1,028

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share repurchases
(147,500
)
 
(1
)
 
(1,843
)
 

 

 

 
(1,844
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends paid ($0.14 per share)

 

 

 
(12,974
)
 

 

 
(12,974
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance at September 30, 2015
101,725,112

 
$
1,017

 
714,730

 
487,048

 
(20,060
)
 
(21,398
)
 
1,161,337

 
Quarter ended September 30, 2016
 
 
 
 
 
 
 
 
 
 
Accumulated
Other
 
Unallocated
 
Total
 
Common Stock
 
Paid-in
 
Retained
 
Comprehensive
 
common stock
 
Shareholders’
 
Shares
 
Amount
 
Capital
 
Earnings
 
Loss
 
of ESOP
 
Equity
Beginning balance at June 30, 2016
102,472,947

 
$
1,025

 
722,980

 
470,337

 
(19,517
)
 
(19,370
)
 
1,155,455

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income:
 

 
 

 
 

 
 

 
 

 
 

 
 

Net loss

 

 

 
14,197

 

 

 
14,197

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive loss, net of tax of $129

 

 

 

 
(126
)
 

 
(126
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income/ (loss)

 

 

 
14,197

 
(126
)
 

 
14,071

 
 
 
 
 
 
 
 
 
 
 
 
 
 
ESOP loan payoff
(1,366,574
)
 
(14
)
 
(13,896
)
 

 

 
13,910

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercise of stock options
162,275

 
2

 
1,821

 

 

 

 
1,823

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense, including tax benefit of $81

 

 
1,069

 

 

 
5,460

 
6,529

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends paid ($0.15 per share)

 

 

 
(15,075
)
 

 

 
(15,075
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance at September 30, 2016
101,268,648

 
$
1,013

 
711,974

 
469,459

 
(19,643
)
 

 
1,162,803


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)
 
Nine months ended September 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

 

 

 
44,347

 

 

 
44,347

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income, net of tax of $(2,698)

 

 

 

 
4,310

 

 
4,310

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income

 

 

 
44,347

 
4,310

 

 
48,657

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition of LNB Bancorp, Inc.
7,056,704

 
70

 
90,538

 
 
 
 
 
 
 
90,608

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercise of stock options
285,905

 
3

 
2,838

 

 

 

 
2,841

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense, including tax benefit of $31
306,350

 
3

 
3,061

 

 

 
243

 
3,307

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share repurchases
(645,300
)
 
(6
)
 
(7,841
)
 

 

 

 
(7,847
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends paid ($0.42 per share)

 

 

 
(38,876
)
 

 

 
(38,876
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance at September 30, 2015
101,725,112

 
$
1,017

 
714,730

 
487,048

 
(20,060
)
 
(21,398
)
 
1,161,337

 
Nine months ended September 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

 

 

 
25,173

 

 

 
25,173

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other comprehensive income, net of tax of $(3,077)

 

 

 

 
4,892

 

 
4,892

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive income

 

 

 
25,173

 
4,892

 

 
30,065

 
 
 
 
 
 
 
 
 
 
 
 
 
 
ESOP loan payoff
(1,366,574
)
 
(14
)
 
(13,896
)
 

 

 
13,910

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercise of stock options
585,668

 
7

 
6,399

 

 

 

 
6,406

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation expense, including tax benefit of $287
323,717

 
3

 
3,618

 

 

 
6,306

 
9,927

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

 

 

 
(1,752
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends paid ($0.45 per share)

 

 

 
(45,006
)
 

 

 
(45,006
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending balance at September 30, 2016
101,268,648

 
$
1,013

 
711,974

 
469,459

 
(19,643
)
 

 
1,162,803

 
See accompanying notes to unaudited consolidated financial statements

5


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

 
 

Net Income
$
25,173

 
44,347

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

 
 

Provision for loan losses
11,397

 
5,117

Net gain on sale of assets
(2,965
)
 
(559
)
Net depreciation, amortization and accretion
9,974

 
4,791

Decrease in other assets
23,588

 
37,502

Increase/ (decrease) in other liabilities
9,003

 
(8,993
)
Net amortization on marketable securities
1,533

 
536

Noncash write-down of real estate owned
1,274

 
2,340

FHLB prepayment penalty
24,520

 

Deferred income tax benefit
(445
)
 

Origination of loans held for sale
(188,474
)
 
(371
)
Proceeds from sale of loans held for sale
158,058

 
375

Noncash compensation expense related to stock benefit plans
9,640

 
3,276

Net cash provided by operating activities
82,276

 
88,361

 
 
 
 
INVESTING ACTIVITIES:
 

 
 

Purchase of marketable securities available-for-sale
(238,673
)
 
(59,980
)
Proceeds from maturities and principal reductions of marketable securities held-to-maturity
9,097

 
56,616

Proceeds from maturities and principal reductions of marketable securities available-for-sale
227,283

 
183,822

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

 
1,227

Loan originations
(1,950,953
)
 
(1,677,913
)
Proceeds from loan maturities and principal reductions
1,849,593

 
1,432,075

Net sale/ (purchase) of Federal Home Loan Bank stock
33,243

 
(2,982
)
Proceeds from sale of real estate owned
6,557

 
10,531

Sale of real estate owned for investment, net
456

 
456

Purchase of premises and equipment
(12,485
)
 
(7,657
)
Acquisitions, net of cash received
1,118,400

 
(61,108
)
Net cash provided by/ (used in) investing activities
1,042,609

 
(124,913
)

6


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

 
 

Decrease in deposits, net
$
(52,624
)
 
(28,075
)
Proceeds from long-term borrowings

 
85,000

Repayments of long-term borrowings, including prepayment penalty
(774,863
)
 
(172,539
)
Net increase/ (decrease) in short-term borrowings
(88,773
)
 
63,480

Decrease in advances by borrowers for taxes and insurance
(15,402
)
 
(12,544
)
Cash dividends paid
(45,006
)
 
(38,876
)
Purchase of common stock for retirement
(1,752
)
 
(7,847
)
Proceeds from stock options exercised
6,406

 
2,841

Excess tax benefit from stock-based compensation
287

 
31

Net cash used in financing activities
(971,727
)
 
(108,529
)
 
 
 
 
Net increase/ (decrease) in cash and cash equivalents
$
153,158

 
(145,081
)
 
 
 
 
Cash and cash equivalents at beginning of period
$
167,408

 
240,706

Net increase/ (decrease) in cash and cash equivalents
153,158

 
(145,081
)
Cash and cash equivalents at end of period
$
320,566

 
95,625

 
 
 
 
Cash and cash equivalents:
 

 
 

Cash and due from banks
$
107,604

 
91,406

Interest-earning deposits in other financial institutions
210,723

 
3,206

Federal funds sold and other short-term investments
2,239

 
1,013

Total cash and cash equivalents
$
320,566

 
95,625

 
 
 
 
Cash paid during the period for:
 

 
 

Interest on deposits and borrowings (including interest credited to deposit accounts of $16,556 and $16,092, respectively)
$
32,519

 
40,961

Income taxes
$
4,086

 
10,731

 
 
 
 
Business acquisitions:
 

 
 

Fair value of assets acquired, excluding cash received
$
545,796

 
1,160,190

Cash paid, net
1,118,400

 
(61,108
)
Liabilities assumed
$
1,664,196

 
1,099,082

 
 
 
 
Non-cash activities:
 

 
 

Loans foreclosures and repossessions
$
2,877

 
6,742

Sale of real estate owned financed by the Company
$
1,773

 
768

 
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 176 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.

 The results of operations for the quarter and nine months ended September 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 $6.4 million and $1.0 million for the quarters ended September 30, 2016 and 2015, and $9.6 million and $3.3 million for the nine months ended September 30, 2016 and 2015, respectively, was recognized in compensation expense relating to our stock benefit plans.  At September 30, 2016 there was compensation expense of $4.3 million to be recognized for awarded but unvested stock options and $16.2 million for unvested common shares.

On September 30, 2016, the Northwest Savings Bank Employee Stock Ownership Plan ("ESOP") was terminated. As a result, 1,366,574 unallocated ESOP shares were retired to payoff the ESOP loan due to the Company. The remaining 401,356 unallocated ESOP shares were distributed into the employees' Northwest Savings Bank 401(k) Plan accounts. This distribution resulted in stock-based compensation expense of $5.5 million and $6.3 million for the quarter and nine months ended September 30, 2016, respectively.
 
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 September 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, and 2013

 


8


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 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,

9


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)
Acquisition
     
On September 9, 2016, Northwest, the wholly-owned subsidiary of the Company, completed the acquisition of 18 branches located in Erie and Niagara Counties, New York and certain related assets, and the assumption by Northwest of certain related liabilities, pursuant to the Purchase and Sale Agreement with KeyCorp, First Niagara Financial Group, Inc. (“FNFG”), and First Niagara Financial Group’s wholly-owned subsidiaries, First Niagara Bank, National Association (“First Niagara Bank”) and First Niagara Securities, Inc., dated April 28, 2016 (the “Purchase Agreement”). We also acquired certain wealth management relationships, which included approximately $450.0 million of assets under management. While the FNFG branch acquisition is considered a purchase of a business for accounting purposes, pro forma income statement information is not presented because the FNFG branch acquisition does not represent the acquisition of a business which has continuity both before and after the acquisition.

The following table shows the assets acquired, and the liabilities assumed that were recorded at fair value on the date of acquisition (in thousands): 
Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value (1) 
 
Cash and cash equivalents (2)
$
1,119,084

Loans
455,857

Core deposit intangible
25,732

Wealth Management intangible
1,143

Other assets
16,684

Total assets acquired
1,618,500

 
 
Deposits
(1,642,846
)
Other liabilities
(21,224
)
Total liabilities assumed
(1,664,070
)
Goodwill
$
45,570

(1) Preliminary estimates of fair value have been recorded.
(2) Amount is net of $76.6 million deposit premium paid to FNFG.

We estimated the fair value of loans acquired from FNFG by utilizing a methodology wherein similar loans were aggregated into pools. Cash flows for each pool were determined by estimating future credit losses and the rate of prepayments. Projected monthly cash flows were then discounted to present value based on a market rate for similar loans. There was no carryover of FNFG’s allowance for loan losses associated with the loans we acquired as the loans were initially recorded at fair value. We did not acquire any purchased credit impaired loans which would require accounting under ASC 310-30.

The $25.7 million core deposit and the $1.1 million wealth management intangible assets recognized as part of the FNFG acquisition are being amortized over their estimated useful life of approximately 11 and 7 years, respectively, using an accelerated method. The goodwill, which is not amortized for book purposes, was assigned to our Community Banking segment and is deductible for tax purposes. The fair value of savings and transaction deposit accounts acquired from FNFG was assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand. Certificates of deposit were valued by projecting out the expected cash flows based on the remaining contractual terms of the certificate of deposit. These cash flows were discounted based on a market rate for a certificate of deposit with a corresponding remaining maturity.
 
Direct costs related to the FNFG acquisition were expensed as incurred and amounted to $8.2 million for the nine months ended September 30, 2016, which includes technology and communications costs, professional services, marketing and advertising, and other noninterest expenses.

10


(3)
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
 
 
 
 
September 30, 2016
 
Banking
 
Finance
 
All other (1)
 
Consolidated
External interest income
 
$
81,597

 
4,264

 
239

 
86,100

Intersegment interest income/ expense
 
645

 

 
(645
)
 

Interest expense
 
6,338

 
645

 
471

 
7,454

Provision for loan losses
 
4,276

 
1,262

 

 
5,538

Noninterest income
 
20,424

 
372

 
22

 
20,818

Noninterest expense
 
71,932

 
2,908

 
192

 
75,032

Income tax expense (benefit)
 
5,147

 
(74
)
 
(376
)
 
4,697

Net income
 
$
14,973

 
(105
)
 
(671
)
 
14,197

Total assets
 
$
9,590,487

 
109,601

 
14,519

 
9,714,607