8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 23, 2017

Northwest Bancshares, Inc.

(Exact name of registrant as specified in its charter)

Maryland	1-34582	27-0950358
(State or other jurisdiction	(Commission File No.)	(I.R.S. Employer
of incorporation)		Identification No.)

100 Liberty Street
Warren, Pennsylvania	16365
(Address of principal executive office)	(Zip code)

Registrant’s telephone number, including area code: (814) 726-2140

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

Item 2.02Results of Operations and Financial Condition

On January 23, 2017, Northwest Bancshares, Inc. issued an earnings release for the quarter ended December 31, 2016.  A copy of the release is included as exhibit 99.1 to this report and is being furnished to the SEC and shall not be deemed “filed” for any purpose.

Item 9.01Financial Statements and Exhibits

(a) Not applicable

(b) Not applicable

(c) Not applicable

(d) Exhibits

Exhibit No.	Description
99.1	Press release dated January 23, 2017

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

			NORTHWEST BANCSHARES, INC.
DATE:	January 23, 2017	By:	/s/ William W. Harvey, Jr.
			William W. Harvey, Jr.
			Chief Financial Officer

3

EX-99.1

EXHIBIT 99.1

PRESS RELEASE OF NORTHWEST BANCSHARES, INC.

EARNINGS RELEASE

FOR IMMEDIATE RELEASE

Contact:	William J. Wagner, President and Chief Executive Officer (814) 726-2140
	William W. Harvey, Jr., Senior Executive Vice President and Chief Financial Officer (814) 726-2140

Northwest Bancshares, Inc. Announces Record Fourth Quarter 2016 Earnings and Quarterly Dividend Increase

Warren, Pennsylvania — January 23, 2017

Northwest Bancshares, Inc. (NasdaqGS: NWBI) announced net income for the quarter ended December 31, 2016 of $24.5 million, or $0.24 per diluted share. This represents an increase of $8.3 million, or 51.3%, compared to the same quarter last year when net income was $16.2 million or $0.16 per diluted share. The annualized returns on average shareholders’ equity and average assets for the quarter ended December 31, 2016 were 8.37% and 1.01% compared to 5.55% and 0.73% for the same quarter last year. 

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.16 per share payable on February 16, 2017, to shareholders of record as of February 2, 2017. This represents a 6.67% increase over the prior year and is the 89th consecutive quarter in which the Company has paid a cash dividend.

In making this announcement, William J. Wagner, President and CEO, noted, "The results of the fourth quarter when compared to the previous year reflect the earnings accretion we expected from both the LNB merger and the First Niagara branch acquisition. As a result of these acquisitions our checking accounts have increased by 37% over the last two years and time deposits have decreased to less than 20% of total deposits. This change in deposit mix has increased our net interest margin from 3.53% to 3.75%. These acquisitions along with the recently announced plan to divest our three offices in Maryland better defines our footprint for the future and establishes a framework for increased revenue growth and greater efficiency."

Net interest income increased by $11.7 million, or 16.6%, to $82.9 million for the quarter ended December 31, 2016, from $71.2 million for the quarter ended December 31, 2015. This increase is due primarily to a $4.8 million, or 5.9%, increase in interest income on loans and a $6.8 million, or 84.7% decrease in interest expense on borrowed funds. The increase in loan interest income is a result of a $580.1 million increase in the average balance of the Company’s loan portfolio from the same quarter last year, while the decrease in interest expense on borrowed funds is due primarily to the payoff of Federal Home Loan Bank ("FHLB") advances with the funds received from the purchase of deposits in western New York.

     The provision for loan losses decreased by $2.5 million, or 53.3%, to $2.1 million for the quarter ended December 31, 2016, from $4.6 million for the quarter ended December 31, 2015. This decrease is due primarily to a decrease in the percentage of total loan delinquency to total loans to 1.61% at December 31, 2016 from 1.87% at December 31, 2015.

Noninterest income increased by $5.3 million, or 27.0%, to $24.8 million for the quarter ended December 31, 2016, from $19.5 million for the quarter ended December 31, 2015. Contributing to this increase was an increase in mortgage banking income of $2.1 million, which is the result of resuming the sale of mortgage loans originated by the Wholesale Lending Division. Also contributing to this increase was an increase in service charges and fees of $1.9 million, or 17.8%, which is primarily attributable to the growth in checking accounts from both acquisitions, and internal growth initiatives. Additionally, trust and other financial services income increased by $721,000, or 21.1%, due primarily to the approximately $450.0 million of wealth management assets acquired with the western New York branch purchase.

     Noninterest expense increased by $7.6 million, or 12.3%, to $68.8 million for the quarter ended December 31, 2016, from $61.2 million for the quarter ended December 31, 2015. This increase resulted primarily from a $4.6 million, or 14.3%, increase in compensation and employee benefits due primarily to the costs associated with the employees added from the 18 western New York branches. The other increases for the current quarter compared to the prior year are also primarily attributable to incremental expenses from the additional branches. Partially offsetting these increases were decreases in federal deposit insurance premiums and collection expense of $824,000 and $815,000, respectively.

Net income for the year ended December 31, 2016 was $49.7 million, or $0.49 per diluted share, which represents a decrease of $10.8 million, or 18.0%, compared to the year ended December 31, 2015, when net income was $60.5 million, or $0.64 per diluted share. The annualized returns on average shareholders’ equity and average assets for the year ended December 31, 2016 were 4.28% and 0.55%, respectively, compared to 5.49% and 0.73% for the same period last year.  This decrease is due primarily to a $37.0 million penalty incurred from the prepayment of FHLB borrowings, acquisition and restructuring expenses of $12.2 million, and ESOP termination expense of $5.1 million.

Non-GAAP net operating income for the year ended December 31, 2016, which excludes the after-tax impact of the aforementioned FHLB prepayment penalty, restructuring and acquisition expenses, and ESOP termination expenses totaling $34.7 million, was $84.3 million, or $0.84 per diluted share. This represents an increase of $17.3 million, or 25.8%, compared to the year ended December 31, 2015 with non-GAAP net operating income of $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, 2016 were 7.27% and 0.93%, respectively, compared to 6.08% and 0.80% for the same period last year.

The Company previously announced that it has entered into a purchase and assumption agreement to sell three bank branches located in the greater Baltimore, Maryland area to Shore Bancshares, Inc.'s banking subsidiary, Shore United Bank. This divestiture includes approximately $216.0 million of deposits, $147.0 million of performing loans and $40.0 million of cash. The transaction includes a deposit premium of 8.0% and based on the amounts at the time the agreement was signed Northwest anticipates recording a gain of approximately $17.0 million. The sale is expected to close during the second quarter of 2017.

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 167 full-service community banking offices and nine free standing drive-through facilities in Pennsylvania, New York, Ohio and Maryland and 49 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 Bank can be accessed on-line at www.northwest.com.

#                      #                      #

Forward-Looking Statements - This release may contain forward-looking statements with respect to the financial condition and results of operations of Northwest Bancshares, Inc. including, without limitations, statements relating to the earnings outlook of the Company. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements, include among others, the following possibilities: (1) changes in the interest rate environment; (2) competitive pressure among financial services companies; (3) general economic conditions including an increase in non-performing loans; (4) changes in legislation or regulatory requirements; (5) difficulties in continuing to improve operating efficiencies; (6) difficulties in the integration of acquired businesses; and (7) increased risk associated with commercial real-estate and business loans. Management has no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this release.

Northwest Bancshares, Inc. and Subsidiaries

Consolidated Statements of Financial Condition (Unaudited)

(Dollars in thousands, except per share amounts)

	December 31, 2016			September 30, 2016		December 31, 2015
Assets
Cash and cash equivalents	$	119,403		107,604		92,263
Interest-earning deposits in other financial institutions	266,902			210,723		74,510
Federal funds sold and other short-term investments	3,562			2,239		635
Marketable securities available-for-sale (amortized cost of $825,552, $879,141 and $868,956, respectively)	826,200			890,688		874,405
Marketable securities held-to-maturity (fair value of $20,426, $23,249 and $32,552 , respectively)	19,978			22,584		31,689
Total cash, interest-earning deposits and marketable securities	1,236,045			1,233,838		1,073,502
Residential mortgage loans held-for-sale	9,625			30,355		—
Residential mortgage loans	2,705,139			2,788,658		2,740,892
Home equity loans	1,328,772			1,349,105		1,187,106
Consumer loans	642,961			628,512		520,289
Commercial real estate loans	2,342,089			2,464,681		2,351,434
Commercial loans	528,761			537,255		422,400
Total loans receivable	7,557,347			7,798,566		7,222,121
Allowance for loan losses	(60,939		)	(63,246	)	(62,672	)
Loans receivable, net	7,496,408			7,735,320		7,159,449
Assets held-for-sale	152,528			—		—
Federal Home Loan Bank stock, at cost	7,390			7,660		40,903
Accrued interest receivable	21,699			21,591		21,072
Real estate owned, net	4,889			4,841		8,725
Premises and equipment, net	161,185			167,596		154,351
Bank owned life insurance	171,449			170,172		168,509
Goodwill	307,420			307,711		261,736
Other intangible assets	32,433			33,901		8,982
Other assets	32,194			31,977		54,670
Total assets	$	9,623,640		9,714,607		8,951,899
Liabilities and Shareholders’ equity
Liabilities
Noninterest-bearing demand deposits	$	1,448,972		1,496,574		1,177,256
Interest-bearing demand deposits	1,428,317			1,446,971		1,080,086
Money market deposit accounts	1,841,567			1,896,272		1,274,504
Savings deposits	1,622,879			1,671,539		1,386,017
Time deposits	1,540,586			1,691,447		1,694,718
Total deposits	7,882,321			8,202,803		6,612,581
Liabilities held-for-sale	215,657			—		—
Borrowed funds	142,899			135,891		975,007
Advances by borrowers for taxes and insurance	36,879			21,616		33,735
Accrued interest payable	635			682		1,993
Other liabilities	63,373			79,599		54,207
Junior subordinated debentures	111,213			111,213		111,213
Total liabilities	8,452,977			8,551,804		7,788,736
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, 101,699,406 shares, 101,268,648 shares and 101,871,737 issued and outstanding, respectively	1,017			1,013		1,019
Paid-in-capital	718,834			711,974		717,603
Retained earnings	478,803			469,459		489,292
Unallocated common stock of Employee Stock Ownership Plan	—			—		(20,216	)
Accumulated other comprehensive loss	(27,991		)	(19,643	)	(24,535	)
Total shareholders’ equity	1,170,663			1,162,803		1,163,163
Total liabilities and shareholders’ equity	$	9,623,640		9,714,607		8,951,899
Equity to assets	12.16		%	11.97	%	12.99	%
Tangible common equity to assets	8.95		%	8.76	%	10.28	%
Book value per share	$	11.51		11.48		11.42
Tangible book value per share	$	8.17		8.11		8.76
Closing market price per share	$	18.03		15.71		13.39
Full time equivalent employees	2,306			2,268		2,186
Number of banking offices	176			176		181

Northwest Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income (Unaudited)

(Dollars in thousands, except per share amounts)

	Quarter ended
	December 31,			September 30,		June 30,		March 31,		December 31,
	2016			2016		2016		2016		2015
Interest income:
Loans receivable	$	85,669		81,083		81,506		80,781		80,882
Mortgage-backed securities	2,166			2,030		2,115		2,229		2,301
Taxable investment securities	988			627		756		1,038		1,108
Tax-free investment securities	625			676		707		724		836
FHLB dividends	285			218		401		467		499
Interest-earning deposits	300			114		70		59		13
Total interest income	90,033			84,748		85,555		85,298		85,639
Interest expense:
Deposits	5,859			5,653		5,865		6,088		6,435
Borrowed funds	1,232			1,801		4,143		7,658		8,051
Total interest expense	7,091			7,454		10,008		13,746		14,486
Net interest income	82,942			77,294		75,547		71,552		71,153
Provision for loan losses	2,145			5,538		4,199		1,660		4,595
Net interest income after provision for loan losses	80,797			71,756		71,348		69,892		66,558
Noninterest income:
Gain on sale of investments	213			58		227		127		116
Service charges and fees	12,406			11,012		10,630		10,065		10,530
Trust and other financial services income	4,131			3,434		3,277		3,261		3,410
Insurance commission income	2,499			2,541		2,768		2,714		2,490
Gain/ (loss) on real estate owned, net	164			(563	)	111		249		(156		)
Income from bank owned life insurance	1,281			1,380		1,105		1,595		1,251
Mortgage banking income	2,344			1,886		446		218		208
Other operating income	1,781			1,070		1,711		1,219		1,697
Total noninterest income	24,819			20,818		20,275		19,448		19,546
Noninterest expense:
Compensation and employee benefits	36,562			38,122		33,210		33,033		32,003
Premises and occupancy costs	7,228			6,094		6,275		6,537		6,403
Office operations	4,395			3,700		3,343		3,460		3,252
Collections expense	437			589		729		676		1,252
Processing expenses	9,429			8,844		8,172		8,414		8,057
Marketing expenses	2,181			2,239		2,541		1,891		1,642
Federal deposit insurance premiums	475			984		1,442		1,503		1,299
Professional services	2,088			1,815		2,129		1,833		1,933
Amortization of intangible assets	1,806			1,068		710		675		729
Real estate owned expense	192			206		295		311		393
Restructuring/ acquisition expense	1,009			7,183		3,386		635		1,347
FHLB prepayment penalty	—			—		36,978		—		—
Other expense	2,959			2,836		2,912		4,307		2,917
Total noninterest expense	68,761			73,680		102,122		63,275		61,227
Income/(loss) before income taxes	36,855			18,894		(10,499	)	26,065		24,877
Income tax expense/ (benefit)	12,361			4,697		(3,491	)	8,081		8,684
Net income/ (loss)	$	24,494		14,197		(7,008	)	17,984		$	16,193
Basic earnings/ (loss) per share	$	0.24		0.14		(0.07	)	0.18		0.16
Diluted earnings/ (loss) per share	$	0.24		0.14		(0.07	)	0.18		0.16
Weighted average common shares outstanding - basic	100,219,370			99,602,535		99,177,609		98,889,744		98,741,393
Weighted average common shares outstanding - diluted	102,089,892			101,068,245		100,243,442		99,380,009		99,500,056
Annualized return on average equity	8.37		%	4.89	%	(2.44	)%	6.21	%	5.55		%
Annualized return on average assets	1.01		%	0.63	%	(0.32	)%	0.81	%	0.73		%
Annualized return on tangible common equity	11.73		%	6.88	%	(3.18	)%	8.03	%	7.20		%
Efficiency ratio *	61.20		%	66.69	%	63.71	%	68.09	%	65.22		%
Annualized noninterest expense to average assets *	2.73		%	2.88	%	2.76	%	2.80	%	2.63		%

* Excludes restructuring/acquisition expenses, FHLB prepayment penalty, and amortization of intangible assets (non-GAAP).

Northwest Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income (Unaudited)

(Dollars in thousands, except per share amounts)

	Year Ended December 31,
	2016				2015
Interest income:
Loans receivable	$	329,039		299	298,665
Mortgage-backed securities	8,540				8,823
Taxable investment securities	3,409				4,520
Tax-free investment securities	2,732				4,313
FHLB dividends	1,371				2,828
Interest-earning deposits	543				431
Total interest income	345,634				319,580
Interest expense:
Deposits	23,465				24,055
Borrowed funds	14,834				32,272
Total interest expense	38,299				56,327
Net interest income	307,335				263,253
Provision for loan losses	13,542				9,712
Net interest income after provision for loan losses	293,793				253,541
Noninterest income:
Gain on sale of investments	625				1,037
Service charges and fees	44,113				38,362
Trust and other financial services income	14,103				12,342
Insurance commission income	10,522				9,526
Loss on real estate owned, net	(39		)		(1,989	)
Income from bank owned life insurance	5,361				4,338
Mortgage banking income	4,894				933
Other operating income	5,781				4,287
Total noninterest income	85,360				68,836
Noninterest expense:
Compensation and employee benefits	140,927				119,818
Premises and occupancy costs	26,134				24,641
Office operations	14,898				12,337
Collections expense	2,431				3,247
Processing expenses	34,859				30,780
Marketing expenses	8,852				8,499
Federal deposit insurance premiums	4,404				5,109
Professional services	7,865				6,906
Amortization of intangible assets	4,259				1,688
Real estate owned expense	1,004				2,070
Restructuring/ acquisition expense	12,213				9,751
FHLB prepayment penalty	36,978				—
Other expense	13,014				9,031
Total noninterest expense	307,838				233,877
Income before income taxes	71,315				88,500
Income tax expense	21,648				27,960
Net income	$	49,667			60,540
Basic earnings per share	$	0.50			0.64
Diluted earnings per share	$	0.49			0.64
Weighted average common shares outstanding - basic	99,439,174				94,314,420
Weighted average common shares outstanding - diluted	100,664,688				94,829,789
Annualized return on average equity	4.28		%		5.49	%
Annualized return on average assets	0.55		%		0.73	%
Annualized return on tangible common equity	5.98		%		6.78	%
Efficiency ratio *	64.78		%		66.98	%
Annualized noninterest expense to average assets *	2.79		%		2.67	%

* Excludes restructuring/acquisition expenses, FHLB prepayment penalty, and amortization of intangible assets (non-GAAP).

Northwest Bancshares, Inc. and Subsidiaries

Reconciliation of Non-GAAP to GAAP Net Income (Unaudited)  *

(Dollars in thousands, except per share amounts)

	Quarter ended December 31,					Year ended December 31,
	2016			2015		2016		2015
Operating results (non-GAAP):
Net interest income	$	82,942		71,153		307,335		263,253
Provision for loan losses	2,145			4,595		13,542		9,712
Noninterest income	24,819			19,546		85,360		68,836
Noninterest expense	67,752			59,880		253,510		224,126
Income taxes	12,724			9,111		41,322		31,239
Net operating income (non-GAAP)	$	25,140		17,113		84,321		67,012
Diluted earnings per share (non-GAAP)	$	0.25		0.17		0.84		0.71
Average equity	$	1,164,127		1,158,304		1,159,791		1,102,671
Average assets	9,624,403			8,922,080		9,111,587		8,324,593
Annualized ROE (non-GAAP)	8.59		%	5.86	%	7.27	%	6.08	%
Annualized ROA (non-GAAP)	1.04		%	0.76	%	0.93	%	0.80	%
Reconciliation of net operating income to net income:
Net operating income (non-GAAP)	$	25,140		17,113		84,321		67,012
Nonoperating expenses, net of tax:
Restructuring/ acquisition expenses	(646		)	(920	)	(6,744	)	(6,472	)
Stock-based compensation expense - ESOP	—			—		(3,669	)	—
FHLB prepayment penalty	—			—		(24,241	)	—
Net income/ (loss) (GAAP)	$	24,494		16,193		49,667		60,540
Diluted earnings per share (GAAP)	$	0.24		0.16		0.49		0.64
Annualized ROE (GAAP)	8.37		%	5.55	%	4.28	%	5.49	%
Annualized ROA (GAAP)	1.01		%	0.73	%	0.55	%	0.73	%

 * 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, prepayment penalties, and compensation expense related to the Northwest Bank ESOP termination, net of tax benefit. The Company believes this non-GAAP presentation provides a meaningful comparison of operational performance and facilitates a more effective evaluation and comparison of results to assess performance in relation to ongoing operations.

Reconciliation of Assets and Liabilities Held-For-Sale (Unaudited) 

(Dollars in thousands)

	Balance at December 31, 2016
Assets held-for-sale:
Residential mortgage loans	$	26,406
Home equity loans	15,725
Consumer loans	522
Commercial real estate loans	101,123
Commercial loans	2,884
Total loans	146,660
Accrued interest receivable	416
Premises and equipment, net	5,452
Total assets held-for-sale	$	152,528
Liabilities held-for-sale:
Noninterest-bearing demand deposits	$	34,657
Interest-bearing demand deposits	17,181
Money market deposit accounts	45,806
Savings deposits	55,205
Time deposits	62,800
Total deposits	215,649
Accrued interest payable	8
Total liabilities held-for-sale	$	215,657

Northwest Bancshares, Inc. and Subsidiaries

Asset quality (Unaudited)

(Dollars in thousands)

	December 31, 2016			September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015
Nonaccrual loans current:
Residential mortgage loans	$	2,109		3,063		2,017		1,678		1,393
Home equity loans	1,451			1,446		1,092		1,118		1,108
Consumer loans	520			464		277		190		140
Commercial real estate loans	13,955			19,246		17,456		19,350		14,018
Commercial loans	5,361			7,299		4,462		5,923		4,604
Total nonaccrual loans current	$	23,396		31,518		25,304		28,259		21,263
Nonaccrual loans delinquent 30 days to 59 days:
Residential mortgage loans	$	1,464		344		—		1,600		430
Home equity loans	422			315		49		119		375
Consumer loans	400			211		95		164		97
Commercial real estate loans	3,478			514		151		3,371		2,192
Commercial loans	145			185		16		4		322
Total nonaccrual loans delinquent 30 days to 59 days	$	5,909		1,569		311		5,258		3,416
Nonaccrual loans delinquent 60 days to 89 days:
Residential mortgage loans	$	1,522		1,270		1,524		721		2,139
Home equity loans	440			465		366		504		389
Consumer loans	366			250		157		182		315
Commercial real estate loans	2,027			151		6,513		109		762
Commercial loans	695			319		1,748		57		110
Total nonaccrual loans delinquent 60 days to 89 days	$	5,050		2,455		10,308		1,573		3,715
Nonaccrual loans delinquent 90 days or more:
Residential mortgage loans	$	13,169		13,242		14,829		14,301		15,810
Home equity loans	5,552			5,874		5,226		5,922		5,650
Consumer loans	3,823			3,354		2,374		2,360		2,900
Commercial real estate loans	19,264			22,155		12,960		13,165		16,449
Commercial loans	3,373			6,105		4,566		3,314		2,459
Total nonaccrual loans delinquent 90 days or more	$	45,181		50,730		39,955		39,062		43,268
Total nonaccrual loans	$	79,536		86,272		75,878		74,152		71,662
Total nonaccrual loans	$	79,536		86,272		75,878		74,152		71,662
Loans 90 days past maturity and still accruing	649			103		472		894		1,334
Nonperforming loans	80,185			86,375		76,350		75,046		72,996
Real estate owned, net	4,889			4,841		4,950		6,834		8,725
Nonperforming assets	$	85,074		91,216		81,300		81,880		81,721
Nonaccrual troubled debt restructuring *	$	16,346		17,374		18,098		17,699		21,118
Accruing troubled debt restructuring	26,580			29,221		31,015		30,549		29,997
Total troubled debt restructuring	$	42,926		46,595		49,113		48,248		51,115
Nonperforming loans to total loans	1.06		%	1.11	%	1.05	%	1.03	%	1.01	%
Nonperforming assets to total assets	0.88		%	0.94	%	0.91	%	0.92	%	0.91	%
Allowance for loan losses to total loans	0.81		%	0.81	%	0.83	%	0.85	%	0.87	%
Allowance for loan losses to nonperforming loans	76.00		%	73.22	%	79.61	%	82.99	%	85.86	%

* Amounts included in nonperforming loans above.

Northwest Bancshares, Inc. and Subsidiaries

Exposure to the oil and gas industry (Unaudited)

(Dollars in thousands)

	December 31, 2016		September 30, 2016	June 30, 2016	March 31, 2016	December 31, 2015
Direct exposure to oil and gas extraction:
Outstanding balance	$	12,080	13,109	12,844	13,764	16,619
Commitments	15,318		16,511	16,542	18,450	19,576
Impaired	—		558	561	564	564
Reserve	500		511	548	594	626
Indirect exposure: *
Outstanding balance	44,602		44,781	58,399	54,465	56,659
Commitments	48,025		48,927	62,581	58,522	68,659
Impaired	—		761	611	—	—
Reserve	231		237	220	195	34
Total exposure:
Outstanding balance	56,682		57,890	71,243	68,229	73,278
Commitments	63,343		65,438	79,123	76,972	88,235
Impaired	—		1,319	1,172	564	564
Reserve	731		748	768	789	660

* Includes loans to haulers, wholesalers, and refineries.

Northwest Bancshares, Inc. and Subsidiaries

Loans by credit quality indicators (Unaudited)

(Dollars in thousands)

At December 31, 2016	Pass		Special mention  *	Substandard  **	Doubtful	Loss	Loans receivable
Personal Banking:
Residential mortgage loans	$	2,696,705	—	18,059	—	—	2,714,764
Home equity loans	1,318,998		—	9,774	—	—	1,328,772
Consumer loans	639,044		—	3,917	—	—	642,961
Total Personal Banking	4,654,747		—	31,750	—	—	4,686,497
Commercial Banking:
Commercial real estate loans	2,153,328		43,724	145,037	—	—	2,342,089
Commercial loans	469,993		17,192	41,576	—	—	528,761
Total Commercial Banking	2,623,321		60,916	186,613	—	—	2,870,850
Total loans	$	7,278,068	60,916	218,363	—	—	7,557,347
At September 30, 2016
Personal Banking:
Residential mortgage loans	$	2,800,420	—	18,593	—	—	2,819,013
Home equity loans	1,338,643		—	10,462	—	—	1,349,105
Consumer loans	624,885		—	3,627	—	—	628,512
Total Personal Banking	4,763,948		—	32,682	—	—	4,796,630
Commercial Banking:
Commercial real estate loans	2,265,816		61,763	137,088	14	—	2,464,681
Commercial loans	479,321		14,707	40,326	2,901	—	537,255
Total Commercial Banking	2,745,137		76,470	177,414	2,915	—	3,001,936
Total loans	$	7,509,085	76,470	210,096	2,915	—	7,798,566
At June 30, 2016
Personal Banking:
Residential mortgage loans	$	2,741,101	—	16,497	—	—	2,757,598
Home equity loans	1,153,010		—	9,164	—	—	1,162,174
Consumer loans	544,174		—	2,376	—	—	546,550
Total Personal Banking	4,438,285		—	28,037	—	—	4,466,322
Commercial Banking:
Commercial real estate loans	2,170,583		63,351	129,428	14	—	2,363,376
Commercial loans	408,178		15,435	38,546	3,064	—	465,223
Total Commercial Banking	2,578,761		78,786	167,974	3,078	—	2,828,599
Total loans	$	7,017,046	78,786	196,011	3,078	—	7,294,921
At March 31, 2016
Personal Banking:
Residential mortgage loans	$	2,755,325	—	13,721	—	1,317	2,770,363
Home equity loans	1,161,382		—	8,439	—	—	1,169,821
Consumer loans	523,333		—	2,204	—	—	525,537
Total Personal Banking	4,440,040		—	24,364	—	1,317	4,465,721
Commercial Banking:
Commercial real estate loans	2,167,110		63,695	130,043	15	—	2,360,863
Commercial loans	409,994		16,425	39,887	1,112	—	467,418
Total Commercial Banking	2,577,104		80,120	169,930	1,127	—	2,828,281
Total loans	$	7,017,144	80,120	194,294	1,127	1,317	7,294,002
At December 31, 2015
Personal Banking:
Residential mortgage loans	$	2,725,492	—	14,060	—	1,340	2,740,892
Home equity loans	1,178,735		—	8,371	—	—	1,187,106
Consumer loans	517,746		—	2,543	—	—	520,289
Total Personal Banking	4,421,973		—	24,974	—	1,340	4,448,287
Commercial 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 Commercial Banking	2,530,354		77,120	165,135	1,225	—	2,773,834
Total loans	$	6,952,327	77,120	190,109	1,225	1,340	7,222,121

* Includes $9.4 million $19.3 million, $7.6 million, $7.7 million, and $7.6 million of acquired loans at December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016, and December 31, 2015, respectively.

** Includes $39.1 million, $29.8 million, $25.5 million, $17.9million, and $18.6 million of acquired loans at December 31, 2016, September 30, 2016 June 31, 2016, March 31, 2016, and December 31, 2015, respectively.

Northwest Bancshares, Inc. and Subsidiaries

Loan delinquency (Unaudited)

(Dollars in thousands)

	December 31, 2016			*		September 30, 2016			*		June 30, 2016			*		March 31, 2016			*		December 31, 2015			*
(Number of loans and dollar amount of loans)
Loans delinquent 30 days to 59 days:
Residential mortgage loans	360	$	27,386	1.0	%	74	$	3,380	0.1	%	72	$	3,353	0.1	%	323	$	24,494	0.9	%	349	$	25,943	0.9	%
Home equity loans	179	6,805		0.5	%	164	4,984		0.4	%	128	4,988		0.4	%	132	5,351		0.5	%	173	5,806		0.5	%
Consumer loans	1,497	9,868		1.5	%	1,269	7,583		1.2	%	1,144	6,725		1.2	%	895	5,511		1.0	%	1,234	7,101		1.4	%
Commercial real estate loans	61	10,377		0.4	%	28	3,855		0.2	%	34	4,828		0.2	%	51	27,474		1.2	%	48	24,877		1.1	%
Commercial loans	20	1,178		0.2	%	26	1,493		0.3	%	15	533		0.1	%	26	3,133		0.7	%	31	2,868		0.7	%
Total loans delinquent 30 days to 59 days	2,117	$	55,614	0.7	%	1,561	$	21,295	0.3	%	1,393	$	20,427	0.3	%	1,427	$	65,963	0.9	%	1,835	$	66,595	0.9	%
Loans delinquent 60 days to 89 days:
Residential mortgage loans	80	$	6,227	0.2	%	76	$	6,174	0.2	%	74	$	5,633	0.2	%	21	$	1,358	—	%	100	$	7,790	0.3	%
Home equity loans	62	1,563		0.1	%	41	1,145		0.1	%	42	1,435		0.1	%	36	1,256		0.1	%	50	2,478		0.2	%
Consumer loans	636	3,609		0.6	%	532	2,673		0.4	%	514	2,247		0.4	%	379	1,803		0.3	%	521	2,521		0.5	%
Commercial real estate loans	25	4,495		0.2	%	13	1,102		—	%	16	8,765		0.4	%	11	1,081		—	%	21	8,228		0.3	%
Commercial loans	21	2,081		0.4	%	9	594		0.1	%	23	2,429		0.5	%	7	375		0.1	%	7	598		0.1	%
Total loans delinquent 60 days to 89 days	824	$	17,975			671	$	11,688	0.1	%	669	$	20,509	0.3	%	454	$	5,873	0.3	%	699	$	21,615	0.3	%
Loans delinquent 90 days or more: **
Residential mortgage loans	169	$	13,621	0.5	%	168	$	13,478	0.5	%	176	$	15,046	0.5	%	183	$	14,673	0.5	%	215	$	16,350	0.6	%
Home equity loans	155	5,756		0.4	%	137	6,022		0.4	%	124	5,422		0.5	%	120	6,200		0.5	%	143	6,112		0.5	%
Consumer loans	646	3,838		0.6	%	757	3,372		0.5	%	440	2,399		0.4	%	557	2,386		0.5	%	523	2,926		0.6	%
Commercial real estate loans	101	21,270		0.9	%	106	24,533		1.0	%	107	15,244		0.6	%	106	15,442		0.7	%	113	19,031		0.8	%
Commercial loans	37	3,520		0.7	%	28	6,249		1.2	%	32	4,709		1.0	%	34	3,456		0.7	%	25	2,599		0.6	%
Total loans delinquent 90 days or more	1,108	$	48,005	0.6	%	1,196	$	53,654	0.7	%	879	$	42,820	0.6	%	1,000	$	42,157	0.6	%	1,019	$	47,018	0.7	%
Total loans delinquent	4,049	$	121,594	1.6	%	3,428	$	86,637	1.1	%	2,941	$	83,756	1.1	%	2,881	$	113,993	1.6	%	3,553	$	135,228	1.9	%

* Represents delinquency, in dollars, divided by the respective total amount of that type of loan outstanding.

** Includes purchased credit impaired loans of $2.8 million, $2.9 million, $2.9 million, $3.1 million, and $3.7 million at December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016, and December 31, 2015 respectively.

Northwest Bancshares, Inc. and Subsidiaries

Allowance for loan losses (Unaudited)

(Dollars in thousands)

	Quarter ended
	December 31, 2016			September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015
Beginning balance	$	63,246		60,781		62,278		62,672		60,547
Provision	2,145			5,538		4,199		1,660		4,595
Charge-offs residential mortgage	(710		)	(354	)	(1,852	)	(564	)	(171	)
Charge-offs home equity	(321		)	(288	)	(946	)	(984	)	(1,097	)
Charge-offs consumer	(3,469		)	(2,701	)	(2,332	)	(2,403	)	(2,561	)
Charge-offs commercial real estate	(323		)	(789	)	(1,731	)	(897	)	(1,216	)
Charge-offs commercial	(2,489		)	(708	)	(903	)	(117	)	(508	)
Recoveries	2,860			1,767		2,068		2,911		3,083
Ending balance	$	60,939		63,246		60,781		62,278		62,672
Net charge-offs to average loans, annualized	0.23		%	0.17	%	0.31	%	0.11	%	0.14	%

	Year Ended December 31,
	2016			2015
Beginning balance	$	62,672		67,518
Provision	13,542			9,712
Charge-offs residential mortgage	(3,480		)	(1,126	)
Charge-offs home equity	(2,539		)	(2,424	)
Charge-offs consumer	(10,905		)	(8,274	)
Charge-offs commercial real estate	(3,740		)	(6,326	)
Charge-offs commercial	(4,217		)	(8,183	)
Recoveries	9,606			11,775
Ending balance	$	60,939		62,672
Net charge-offs to average loans, annualized	0.21		%	0.23	%

Northwest Bancshares, Inc. and Subsidiaries

Average balance sheet (Unaudited)

(Dollars in thousands) 

The following table sets forth certain information relating to the Company’s average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated.  Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented.  Average balances are calculated using daily averages. 

	Quarter ended
	December 31, 2016					September 30, 2016					June 30, 2016					March 31, 2016					December 31, 2015
	Average Balance		Interest	Avg. Yield/ Cost (h)		Average Balance		Interest	Avg. Yield/ Cost (h)		Average Balance		Interest	Avg. Yield/ Cost (h)		Average Balance		Interest	Avg. Yield/ Cost (h)		Average Balance		Interest	Avg. Yield/ Cost (h)
Assets:
Interest-earning assets:
Residential mortgage loans	$	2,766,693	28,165	4.07	%	$	2,739,099	27,952	4.08	%	$	2,751,601	29,089	4.23	%	$	2,739,787	29,786	4.35	%	$	2,710,811	29,227	4.31	%
Home equity loans	1,346,856		14,442	4.27	%	1,192,929		12,884	4.30	%	1,163,900		12,701	4.39	%	1,177,406		12,642	4.32	%	1,193,433		12,753	4.24	%
Consumer loans	620,294		10,083	6.47	%	554,954		8,931	6.40	%	522,745		8,697	6.69	%	510,091		8,219	6.48	%	500,175		8,805	6.98	%
Commercial real estate loans	2,467,569		27,863	4.42	%	2,394,001		26,683	4.36	%	2,356,994		26,691	4.48	%	2,349,748		25,993	4.38	%	2,331,769		25,972	4.36	%
Commercial loans	527,330		5,682	4.27	%	476,715		5,193	4.26	%	461,808		4,902	4.20	%	441,977		4,723	4.23	%	412,415		4,671	4.43	%
Total loans receivable (a) (b) (d)	7,728,742		86,235	4.44	%	7,357,698		81,643	4.41	%	7,257,048		82,080	4.55	%	7,219,009		81,363	4.53	%	7,148,603		81,428	4.52	%
Mortgage-backed securities (c)	482,707		2,166	1.79	%	440,966		2,030	1.84	%	458,398		2,115	1.85	%	488,294		2,229	1.83	%	519,736		2,301	1.77	%
Investment securities (c) (d)	401,602		1,950	1.94	%	275,718		1,667	2.42	%	313,647		1,844	2.35	%	387,460		2,151	2.22	%	427,363		2,394	2.24	%
FHLB stock	7,575		285	4.54	%	27,761		218	3.12	%	33,302		401	4.84	%	37,098		467	5.06	%	38,651		499	5.12	%
Other interest-earning deposits	325,889		300	0.36	%	91,243		114	0.49	%	63,950		70	0.43	%	43,578		59	0.54	%	40,410		13	0.13	%
Total interest-earning assets	8,946,515		90,936	4.04	%	8,193,386		85,672	4.16	%	8,126,345		86,510	4.28	%	8,175,439		86,269	4.24	%	8,174,763		86,635	4.20	%
Noninterest earning assets (e)	677,888					835,500					755,713					735,562					747,317
Total assets	$	9,624,403				$	9,028,886				$	8,882,058				$	8,911,001				$	8,922,080
Liabilities and shareholders’ equity:
Interest-bearing liabilities:
Savings deposits	$	1,668,492	771	0.18	%	$	1,485,763	744	0.20	%	$	1,440,886	837	0.23	%	$	1,405,800	865	0.25	%	$	1,378,377	871	0.25	%
Interest-bearing demand deposits	1,431,671		85	0.02	%	1,179,557		78	0.03	%	1,130,122		144	0.05	%	1,093,839		156	0.06	%	1,083,524		157	0.06	%
Money market deposit accounts	1,890,220		1,101	0.23	%	1,418,779		826	0.23	%	1,294,381		829	0.26	%	1,288,535		865	0.27	%	1,279,181		873	0.27	%
Time deposits	1,643,785		3,902	0.94	%	1,597,542		4,005	1.00	%	1,616,260		4,055	1.01	%	1,664,322		4,202	1.02	%	1,720,895		4,534	1.05	%
Borrowed funds (f)	143,540		61	0.17	%	560,407		657	0.47	%	772,225		3,017	1.57	%	899,439		6,539	2.92	%	906,574		6,730	2.95	%
Junior subordinated debentures	111,213		1,171	4.12	%	111,213		1,144	4.03	%	111,213		1,126	4.01	%	111,213		1,119	3.98	%	116,626		1,321	4.43	%
Total interest-bearing liabilities	6,888,921		7,091	0.41	%	6,353,261		7,454	0.47	%	6,365,087		10,008	0.63	%	6,463,148		13,746	0.86	%	6,485,177		14,486	0.89	%
Noninterest-bearing demand deposits (g)	1,493,528					1,243,474					1,184,786					1,161,151					1,145,276
Noninterest bearing liabilities	77,827					276,014					177,300					122,667					133,323
Total liabilities	8,460,276					7,872,749					7,727,173					7,746,966					7,763,776
Shareholders’ equity	1,164,127					1,156,137					1,154,885					1,164,035					1,158,304
Total liabilities and shareholders’ equity	$	9,624,403				$	9,028,886				$	8,882,058				$	8,911,001				$	8,922,080
Net interest income/ Interest rate spread			83,845	3.63	%			78,218	3.69	%			76,502	3.65	%			72,523	3.38	%			72,149	3.31	%
Net interest-earning assets/ Net interest margin	$	2,057,594		3.75	%	$	1,840,125		3.82	%	$	1,761,258		3.77	%	$	1,712,291		3.57	%	$	1,689,586		3.53	%
Ratio of interest-earning assets to interest-bearing liabilities	1.30X					1.29X					1.28X					1.26X					1.26X

(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) Average cost of deposits were 0.29%, 0.32%, 0.35%, 0.37% and 0.39%, respectively.

(h) Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.41%,4.38%, 4.52%, 4.50% and 4.49%, respectively, Investment securities - 1.61%, 1.89%, 1.87%, 1.82% and 1.82%, respectively, Interest-earning assets - 4.00%, 4.11%, 4.23%,, 4.20% and 4.16%, respectively. GAAP basis net interest rate spreads were 3.59%, 3.65%, 3.60%, 3.34% and 3.27%, respectively, and GAAP basis net interest margins were 3.71%, 3.77%, 3.72%, 3.55% and 3.48%, respectively.

Northwest Bancshares, Inc. and Subsidiaries

Average balance sheet (Unaudited)

(Dollars in thousands)

The following table sets forth certain information relating to the Company’s average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated.  Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented.  Average balances are calculated using daily averages.

	Year Ended December 31,
	2016					2015
	Average Balance		Interest	Avg. Yield/ Cost (h)		Average Balance		Interest	Avg. Yield/ Cost (h)
Assets:
Interest-earning assets:
Residential mortgage loans	$	2,749,314	114,991	4.18	%	$	2,601,111	114,937	4.42	%
Home equity loans	1,220,220		52,671	4.32	%	1,105,887		47,836	4.33	%
Consumer loans	552,537		35,930	6.50	%	338,364		28,770	8.50	%
Commercial real estate loans	2,392,290		107,231	4.41	%	2,024,542		92,217	4.49	%
Commercial loans	477,095		20,499	4.23	%	390,174		16,878	4.27	%
Loans receivable (a) (b) (d)	7,391,456		331,322	4.48	%	6,460,078		300,638	4.65	%
Mortgage-backed securities (c)	467,560		8,540	1.83	%	500,797		8,823	1.77	%
Investment securities (c) (d)	344,575		7,612	2.21	%	469,568		11,155	2.38	%
FHLB stock (i)	26,386		1,371	5.20	%	37,500		2,828	4.77	%
Other interest-earning deposits	100,336		543	0.53	%	179,201		431	0.24	%
Total interest-earning assets	8,330,313		349,388	4.19	%	7,647,144		323,875	4.22	%
Noninterest earning assets (e)	781,274					677,449
Total assets	$	9,111,587				$	8,324,593
Liabilities and shareholders’ equity:
Interest-bearing liabilities:
Savings deposits	$	1,500,655	3,218	0.21	%	$	1,300,102	3,387	0.26	%
Interest-bearing demand deposits	1,209,325		462	0.04	%	976,789		568	0.06	%
Money market deposit accounts	1,473,897		3,621	0.25	%	1,202,143		3,222	0.27	%
Time deposits	1,630,424		16,164	0.99	%	1,540,905		16,878	1.10	%
Borrowed funds (f)	592,581		10,274	1.73	%	925,683		27,347	2.95	%
Junior subordinated debentures	111,213		4,560	4.03	%	108,507		4,925	4.48	%
Total interest-bearing liabilities	6,518,095		38,299	0.59	%	6,054,129		56,327	0.93	%
Noninterest-bearing demand deposits (g)	1,245,320					1,001,263
Noninterest bearing liabilities	188,381					166,530
Total liabilities	7,951,796					7,221,922
Shareholders’ equity	1,159,791					1,102,671
Total liabilities and shareholders’ equity	$	9,111,587				$	8,324,593
Net interest income/ Interest rate spread			311,089	3.60	%			267,548	3.29	%
Net interest-earning assets/ Net interest margin	$	1,812,218		3.73	%	$	1,593,015		3.49	%
Ratio of interest-earning assets to interest-bearing liabilities	1.28X					1.26X

(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) Average cost of deposits were 0.33%, and 0.40%, respectively.

(h) Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.45% and 4.62%, respectively, Investment securities - 1.78% and 1.88%, respectively, Interest-earning assets - 4.15% and 4.17%, respectively. GAAP basis net interest rate spreads were 3.56% and 3.24%, respectively, and GAAP basis net interest margins were 3.69% and 3.43%, respectively.

(i) The average yield calculation excludes the $1.0 million special dividend paid in February 2015, the average yield was 7.54% with the special dividend included.