NORTHWEST BANCSHARES INC.

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Northwest Bancshares, Inc. Announces Third Quarter 2017 Earnings and Quarterly Dividend

PR Newswire

WARREN, Pa., Oct. 23, 2017

WARREN, Pa., Oct. 23, 2017 /PRNewswire/ -- Northwest Bancshares, Inc. (NasdaqGS: NWBI) announced net income for the quarter ended September 30, 2017 of $23.6 million, or $0.23 per diluted share. This represents an increase of $9.4 million, or 66.2%, compared to the same quarter last year when net income was $14.2 million or $0.14 per diluted share. The annualized returns on average shareholders' equity and average assets for the quarter ended September 30, 2017 were 7.81% and 0.99% compared to 4.89% and 0.63% for the same quarter last year.

Northwest Bank

Net income in the prior year period was negatively impacted by an additional $4.3 million, after tax, of restructuring costs associated with the acquisition of 18 offices in western New York, as well as $3.1 million, after tax, of expenses related to the termination of the Northwest Bank Employee Stock Ownership Plan ("ESOP"). Adjusting both quarters for non-core items, net income for the quarter ended September 30, 2017 was $24.4 million, or $0.24 per diluted share, an increase of $2.8 million, or 13.2%, compared to net income of $21.6 million, or $0.21 per diluted share in the previous year. For more information, see "Reconciliation of Non-GAAP to GAAP Net Income" within this press release.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.16 per share payable on November 16, 2017 to shareholders of record as of November 2, 2017. This is the 92nd consecutive quarter in which the Company has paid a cash dividend. Based on the market value of the Company's stock as of September 30, 2017, this dividend represents an annualized yield of approximately 3.7%.

In making this announcement, William J. Wagner, President and CEO, noted, "We are pleased to report normalized earnings this quarter following a two year period during which earnings were impacted by significant restructuring activity. This restructuring included the acquisition of LNB Bancorp, Inc. in August 2015, the consolidation of 24 offices in April 2016, the acquisition of 18 offices in the western New York market in September 2016, the sale of our Maryland region in May 2017 and finally the closure of Northwest Consumer Discount Company in July 2017. These restructuring initiatives have greatly streamline our operation, resulting in a product and service set that enhances Northwest's ability to successfully compete within our chosen markets as a mid-sized community bank. With that, we were encouraged to see that our efficiency ratio decreased to 60.9% in the current quarter compared to 69.1% in the quarter which last preceded the restructuring initiatives."

Net interest income increased by $5.9 million, or 7.7%, to $83.2 million for the quarter ended September 30, 2017, from $77.3 million for the quarter ended September 30, 2016. This increase is due primarily to a $4.3 million, or 5.3%, increase in interest income on loans receivable as a result of a $308.7 million, or 4.2%, increase in average loans receivable from the prior year period. Also contributing to the increase in net interest income was a $1.2 million, or 36.5%, increase in interest income on investment securities as a result of redirecting excess cash to higher yielding assets.

Despite higher provisions being required for consumer loans in the current quarter, which were directly related to the closure of the Company's consumer finance subsidiary, the provision for loan losses decreased by $2.5 million, or 45.3%, to $3.0 million for the quarter ended September 30, 2017, from $5.5 million for the quarter ended September 30, 2016. Nonaccrual loans decreased to $73.3 million, or 0.9% of total loans, at September 30, 2017 from $86.3 million, or 1.1% of total loans, at September 30, 2016.

Noninterest income increased by $3.8 million, or 18.1%, to $24.6 million for the quarter ended September 30, 2017, from $20.8 million for the quarter ended September 30, 2016. Contributing to this increase were increases in service charges and fees of $1.7 million, or 15.5%, which is attributable to the growth in checking accounts, and trust and other financial services income of $1.4 million, or 39.6%, due primarily to growth in assets under management.

Noninterest expense decreased by $4.9 million, or 6.6%, to $68.8 million for the quarter ended September 30, 2017, from $73.7 million for the quarter ended September 30, 2016. This decrease is comprised primarily of decreases in restructuring and acquisition expense of $5.8 million, or 80.5%, due to the September 2016 acquisition of 18 offices, and in compensation and employee benefits of $2.1 million, or 5.5%, due to the closure of the Company's consumer finance subsidiary in the current quarter, as well as $5.1 million of expense recorded in the prior year related to termination of the ESOP. Partially offsetting these improvements were increases in premises and occupancy costs of $857,000, processing expenses of $806,000, and amortization of intangible assets of $623,000, due primarily to the previously mentioned acquisition of offices.

Net income for the nine-month period ended September 30, 2017 was $72.3 million, or $0.71 per diluted share. This represents an increase of $47.1 million, or 187.3%, compared to the nine-month period ended September 30, 2016, when net income was $25.2 million, or $0.25 per diluted share. The annualized returns on average shareholders' equity and average assets for the nine-month period ended September 30, 2017 were 8.16% and 1.01% compared to 2.90% and 0.38% for the same period last year. In addition to the aforementioned items impacting the quarter, net income for the nine-month period ended September 30, 2017 was significantly enhanced by the second quarter sale of the Company's three Maryland offices at a profit of $17.2 million and an increase in net interest income of $22.2 million, or 9.9%, due primarily to the loans received with the acquisition previously discussed. Additionally, earnings for the nine-month period ended September 30, 2016 were negatively impacted by a penalty of $37.0 million relating to the prepayment of $700.0 million of long-term, fixed-rate Federal Home Loan Bank borrowings and the $5.1 million cost associated with the termination of Northwest Bank's ESOP.

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 bank operates 164 full-service community banking offices and nine free standing drive-through facilities in Pennsylvania, New York, and Ohio. 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.bank.

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 or the ability to complete sales transactions; 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)

	September 30, 2017			December 31, 2016			September 30, 2016
Assets
Cash and cash equivalents	$	104,372		119,403			107,604
Interest-earning deposits in other financial institutions	60,662			266,902			210,723
Federal funds sold and other short-term investments	642			3,562			2,239
Marketable securities available-for-sale (amortized cost of $867,311, $825,552 and $879,141, respectively)	869,481			826,200			890,688
Marketable securities held-to-maturity (fair value of $32,282, $20,426 and $23,249, respectively)	31,961			19,978			22,584
Total cash, interest-earning deposits and marketable securities	1,067,118			1,236,045			1,233,838

Residential mortgage loans held for sale	1,382			9,625			30,355
Residential mortgage loans	2,741,844			2,688,541			2,771,576
Home equity loans	1,313,435			1,345,370			1,366,187
Consumer loans	673,920			642,961			628,512
Commercial real estate loans	2,398,886			2,342,089			2,464,681
Commercial loans	596,671			528,761			537,255
Total loans receivable	7,726,138			7,557,347			7,798,566
Allowance for loan losses	(56,927)			(60,939)			(63,246)
Loans receivable, net	7,669,211			7,496,408			7,735,320

Assets held-for-sale	—			152,528			—
Federal Home Loan Bank stock, at cost	7,984			7,390			7,660
Accrued interest receivable	22,802			21,699			21,591
Real estate owned, net	5,462			4,889			4,841
Premises and Equipment, net	152,761			161,185			167,596
Bank owned life insurance	173,096			171,449			170,172
Goodwill	307,420			307,420			307,711
Other intangible assets	27,244			32,433			33,901
Other assets	26,716			32,194			31,977
Total assets	$	9,459,814		9,623,640			9,714,607

Liabilities and Shareholders' equity
Liabilities
Noninterest-bearing demand deposits	$	1,625,189		1,448,972			1,496,574
Interest-bearing demand deposits	1,451,818			1,428,317			1,446,971
Money market deposit accounts	1,759,395			1,841,567			1,896,272
Savings deposits	1,669,782			1,622,879			1,671,539
Time deposits	1,435,861			1,540,586			1,691,447
Total deposits	7,942,045			7,882,321			8,202,803

Liabilities held-for-sale	—			215,657			—
Borrowed funds	115,388			142,899			135,891
Advances by borrowers for taxes and insurance	21,864			36,879			21,616
Accrued interest payable	518			635			682
Other liabilities	62,939			63,373			79,599
Junior subordinated debentures	111,213			111,213			111,213
Total liabilities	8,253,967			8,452,977			8,551,804

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, 102,565,667 shares, 101,699,406 shares and 101,268,648 issued and outstanding, respectively	1,026			1,017			1,013
Paid-in-capital	728,163			718,834			711,974
Retained earnings	502,265			478,803			469,459
Accumulated other comprehensive loss	(25,607)			(27,991)			(19,643)
Total shareholders' equity	1,205,847			1,170,663			1,162,803
Total liabilities and shareholders' equity	$	9,459,814			9,623,640			9,714,607

Equity to assets	12.75		%	12.16		%	11.97		%
Tangible common equity to assets	9.55		%	8.95		%	8.76		%
Book value per share	$	11.76		11.51			11.48
Tangible book value per share	$	8.49		8.17			8.11
Closing market price per share	$	17.27		18.03			15.71
Full time equivalent employees	2,137			2,306			2,268
Number of banking offices	173			176			176

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

	Quarter ended
	September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016

Interest income:
Loans receivable	$	85,373		84,714			82,751			85,669			81,083
Mortgage-backed securities	3,118			2,987			2,222			2,166			2,030
Taxable investment securities	957			981			1,006			988			627
Tax-free investment securities	476			529			569			625			676
FHLB dividends	63			50			59			285			218
Interest-earning deposits	244			536			660			300			114
Total interest income	90,231			89,797			87,267			90,033			84,748

Interest expense:
Deposits	5,795			5,826			5,465			5,859			5,653
Borrowed funds	1,199			1,240			1,225			1,232			1,801
Total interest expense	6,994			7,066			6,690			7,091			7,454

Net interest income	83,237			82,731			80,577			82,942			77,294
Provision for loan losses	3,027			5,562			4,637			2,145			5,538
Net interest income after provision for loan losses	80,210			77,169			75,940			80,797			71,756

Noninterest income:
Gain on sale of investments	1,497			3			17			213			58
Service charges and fees	12,724			12,749			11,717			12,406			11,012
Trust and other financial services income	4,793			4,600			4,304			4,131			3,434
Insurance commission income	1,992			2,353			2,794			2,499			2,541
Gain/ (loss) on real estate owned, net	(193)			(230)			(67)			164			(563)
Income from bank owned life insurance	1,078			1,652			1,068			1,281			1,380
Mortgage banking income	519			434			240			2,344			1,886
Gain on sale of offices	—			17,186			—			—			—
Other operating income	2,184			2,730			1,431			1,781			1,070
Total noninterest income	24,594			41,477			21,504			24,819			20,818

Noninterest expense:
Compensation and employee benefits	36,039			37,658			37,755			36,562			38,122
Premises and occupancy costs	6,951			7,103			7,516			7,228			6,094
Office operations	3,939			4,170			4,222			4,395			3,700
Collections expense	568			553			549			437			589
Processing expenses	9,650			9,639			9,909			9,429			8,844
Marketing expenses	2,488			2,846			2,148			2,181			2,239
Federal deposit insurance premiums	771			856			1,167			475			984
Professional services	2,321			2,452			2,575			2,088			1,815
Amortization of intangible assets	1,691			1,749			1,749			1,806			1,068
Real estate owned expense	310			217			282			192			206
Restructuring/ acquisition expense	1,398			2,634			223			1,009			7,183
Other expense	2,673			3,385			3,551			2,959			2,836
Total noninterest expense	68,799			73,262			71,646			68,761			73,680
Income/ (loss) before income taxes	36,005			45,384			25,798			36,855			18,894

Income tax expense/ (benefit)	12,414			14,402			8,052			12,361			4,697
Net income/ (loss)	$	23,591		30,982			17,746			24,494			14,197

Basic earnings/ (loss) per share	$	0.23		0.31			0.18			0.24			0.14
Diluted earnings/ (loss) per share	$	0.23		0.30			0.17			0.24			0.14

Weighted average common shares outstanding - basic		101,163,534			100,950,772			100,653,277			100,219,370			99,602,535
Weighted average common shares outstanding - diluted		102,564,476			102,449,693			102,480,549			100,089,892			101,068,245

Annualized return on average equity	7.81		%	10.48		%	6.15		%	8.37		%	4.89		%
Annualized return on average assets	0.99		%	1.30		%	0.75		%	1.01		%	0.63		%
Annualized return on tangible common equity	10.74		%	14.44		%	8.57		%	11.73		%	6.88		%

Efficiency ratio *	60.94		%	64.36		%	68.25		%	61.20		%	66.69		%
Annualized noninterest expense to average assets *	2.76		%	2.89		%	2.94		%	2.73		%	2.88		%

* Excludes gain on sale of offices and 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)

	Nine months ended September 30,
	2017			2016
Interest income:
Loans receivable	$	252,838		243,370
Mortgage-backed securities	8,327			6,374
Taxable investment securities	2,944			2,421
Tax-free investment securities	1,574			2,107
FHLB dividends	172			1,086
Interest-earning deposits	1,440			243
Total interest income	267,295			255,601

Interest expense:
Deposits	17,086			17,606
Borrowed funds	3,664			13,602
Total interest expense	20,750			31,208

Net interest income	246,545			224,393
Provision for loan losses	13,226			11,397
Net interest income after provision for loan losses	233,319			212,996

Noninterest income:
Gain on sale of investments	1,517			412
Service charges and fees	37,190			31,707
Trust and other financial services income	13,697			9,972
Insurance commission income	7,139			8,023
Gain/(loss) on real estate owned, net	(490)			(203)
Income from bank owned life insurance	3,798			4,080
Mortgage banking income	1,193			2,550
Gain on sale of offices	17,186			—
Other operating income	6,345			4,000
Total noninterest income	87,575			60,541

Noninterest expense:
Compensation and employee benefits	111,452			104,365
Premises and occupancy costs	21,570			18,906
Office operations	12,331			10,503
Collections expense	1,670			1,994
Processing expenses	29,198			25,430
Marketing expenses	7,482			6,671
Federal deposit insurance premiums	2,794			3,929
Professional services	7,348			5,777
Amortization of intangible assets	5,189			2,453
Real estate owned expense	809			812
Restructuring/ acquisition expense	4,255			11,204
FHLB prepayment penalty	—			36,978
Other expense	9,609			10,055
Total noninterest expense	213,707			239,077
Income before income taxes	107,187			34,460

Income tax expense	34,868			9,287
Net income	$	72,319		25,173

Basic earnings per share	$	0.72		0.25
Diluted earnings per share	$	0.71		0.25

Weighted average common shares outstanding - basic		100,921,322			99,224,565
Weighted average common shares outstanding - diluted		102,538,342			100,233,507

Annualized return on average equity	8.16		%	2.90		%
Annualized return on average assets	1.01		%	0.38		%
Annualized return on tangible common equity	11.10		%	4.05		%

Efficiency ratio *	64.45		%	66.14		%
Annualized noninterest expense to average assets *	2.86		%	2.82		%

* Excludes gain on sale of offices and 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 September 30,						Nine months ended September 30,
	2017			2016			2017			2016
Operating results (non-GAAP):
Net interest income	$	83,237		77,294			246,545			224,393
Provision for loan losses	3,027			5,538			13,226			11,397
Noninterest income	24,594			20,818			70,389			60,541
Noninterest expense	67,401			61,360			209,452			185,758
Income taxes	12,973			9,625			29,696			30,616
Net operating income (non-GAAP)	$	24,430		21,589			64,560			57,163
Diluted earnings per share (non-GAAP)	$	0.24		0.21			0.63			0.57

Average equity	$	1,198,417			1,156,137			1,184,560			1,158,346
Average assets	9,460,877			9,028,886			9,540,432			8,940,648

Annualized ROE (non-GAAP)	8.09		%	7.43		%	7.29		%	6.59		%
Annualized ROA (non-GAAP)	1.02		%	0.95		%	0.90		%	0.85		%

Reconciliation of net operating income to net income:
Net operating income (non-GAAP)	$	24,430		21,589			64,560			57,163
Nonoperating income/ expenses, net of tax:
Gain on sale of offices	—			—			10,311			—
Restructuring/ acquisition expenses	(839)			(4,311)			(2,552)			(6,723)
Stock-based compensation expense – ESOP termination	—			(3,081)			—			(3,081)
FHLB prepayment penalty	—			—			—			(22,186)
Net income/ (loss) (GAAP)	$	23,591		14,197			72,319			25,173
Diluted earnings per share (GAAP)	$	0.23		0.14			0.71			0.25

Annualized ROE (GAAP)	7.81		%	4.89		%	8.16		%	2.90		%
Annualized ROA (GAAP)	0.99		%	0.63		%	1.01		%	0.38		%

* 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 certain income and expenses net of tax benefit and cost. The net tax effect was calculated using statutory tax rates of approximately 40.0%. 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.

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

	September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016
Nonaccrual loans current:
Residential mortgage loans	$	318		841			1,864			2,109			3,063
Home equity loans	439			158			1,244			1,451			1,446
Legacy consumer finance loans	1			—			—			—			—
Consumer loans	259			379			633			520			464
Commercial real estate loans	10,646			16,189			13,347			13,955			19,246
Commercial loans	4,098			5,262			5,335			5,361			7,299
Total nonaccrual loans current	$	15,761			22,829			22,423			23,396			31,518

Nonaccrual loans delinquent 30 days to 59 days:
Residential mortgage loans	$	200		181			1,001			1,464			344
Home equity loans	466			164			328			422			315
Legacy consumer finance loans	—			—			—			—			—
Consumer loans	200			169			218			400			211
Commercial real estate loans	597			474			1,970			3,478			514
Commercial loans	—			32			328			145			185
Total nonaccrual loans delinquent 30 days to 59 days	$	1,463		1,020			3,845			5,909			1,569

Nonaccrual loans delinquent 60 days to 89 days:
Residential mortgage loans	$	892		896			704			1,522			1,270
Home equity loans	499			326			408			440			465
Legacy consumer finance loans	—			—			—			—			—
Consumer loans	405			342			242			366			250
Commercial real estate loans	5,895			2,233			540			2,027			151
Commercial loans	3			—			23			695			319
Total nonaccrual loans delinquent 60 days to 89 days	$	7,694		3,797			1,917			5,050			2,455

Nonaccrual loans delinquent 90 days or more:
Residential mortgage loans	$	11,785		11,637			11,911			13,169			13,242
Home equity loans	6,295			5,744			6,194			5,552			5,874
Legacy consumer finance loans	332			536			471			743			800
Consumer loans	3,244			2,273			2,888			3,080			2,554
Commercial real estate loans	22,583			21,295			20,897			19,264			22,155
Commercial loans	4,177			3,642			2,744			3,373			6,105
Total nonaccrual loans delinquent 90 days or more	$	48,416		45,127			45,105			45,181			50,730

Total nonaccrual loans	$	73,334		72,773			73,290			79,536			86,272

Total nonaccrual loans	$	73,334		72,773			73,290			79,536			86,272
Loans 90 days past maturity and still accruing	398			182			265			649			103
Nonperforming loans	73,732			72,955			73,555			80,185			86,375
Real estate owned, net	5,462			6,030			6,242			4,889			4,841
Nonperforming assets	$	79,194		78,985			79,797			85,074			91,216

Nonaccrual troubled debt restructuring *	$	17,809		17,873			18,273			16,346			17,374
Accruing troubled debt restructuring	20,660			23,987			25,305			26,580			29,221
Total troubled debt restructuring	$	38,469		41,860			43,578			42,926			46,595

Nonperforming loans to total loans	0.95		%	0.95		%	0.97		%	1.06		%	1.11		%
Nonperforming assets to total assets	0.84		%	0.83		%	0.82		%	0.88		%	0.94		%
Allowance for loan losses to total loans	0.74		%	0.82		%	0.81		%	0.81		%	0.81		%
Allowance for loan losses to nonperforming loans	77.16		%	86.20		%	83.07		%	76.00		%	73.22		%

* Amounts included in nonperforming loans above.

Northwest Bancshares, Inc. and Subsidiaries
Loans by Credit Quality Indicators (Unaudited)
(Dollars in thousands)

At September 30, 2017	Pass		Special mention *		Substandard **		Doubtful		Loss		Loans receivable
Personal Banking:
Residential mortgage loans	$	2,725,060	—		18,166		—		—		2,743,226
Home equity loans	1,302,036		—		11,399		—		—		1,313,435
Consumer loans	669,532		—		4,388		—		—		673,920
Total Personal Banking	4,696,628		—		33,953		—		—		4,730,581
Commercial Banking:
Commercial real estate loans	2,196,510		56,118		146,258		—		—		2,398,886
Commercial loans	526,824		18,924		50,923		—		—		596,671
Total Commercial Banking	2,723,334		75,042		197,181		—		—		2,995,557
Total loans	$	7,419,962	75,042		231,134		—		—		7,726,138

At June 30, 2017
Personal Banking:
Residential mortgage loans	$	2,718,866	—		16,916		—		—		2,735,782
Home equity loans	1,307,022		—		8,699		—		—		1,315,721
Consumer loans	655,149		—		2,976		—		—		658,125
Total Personal Banking	4,681,037		—		28,591		—		—		4,709,628
Commercial Banking:
Commercial real estate loans	2,178,996		67,826		149,841		—		—		2,396,663
Commercial loans	521,520		10,269		48,657		—		—		580,446
Total Commercial Banking	2,700,516		78,095		198,498		—		—		2,977,109
Total loans	$	7,381,553	78,095		227,089		—		—		7,686,737

At March 31, 2017
Personal Banking:
Residential mortgage loans	$	2,673,678	—		16,866		—		—		2,690,544
Home equity loans	1,311,707		—		9,212		—		—		1,320,919
Consumer loans	639,574		—		3,531		—		—		643,105
Total Personal Banking	4,624,959		—		29,609		—		—		4,654,568
Commercial Banking:
Commercial real estate loans	2,187,545		48,189		142,740		—		—		2,378,474
Commercial loans	474,662		12,226		43,158		—		—		530,046
Total Commercial Banking	2,662,207		60,415		185,898		—		—		2,908,520
Total loans	$	7,287,166	60,415		215,507		—		—		7,563,088

At December 30, 2016
Personal Banking:
Residential mortgage loans	$	2,680,107	—		18,059		—		—		2,698,166
Home equity loans	1,335,596		—		9,774		—		—		1,345,370
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	$	2,783,338	—		18,593		—		—		2,801,931
Home equity loans	1,355,725		—		10,462		—		—		1,366,187
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

* Includes $8.9 million $9.7 million, $12.4 million, $9.4 million, and $19.3 million of acquired loans at September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016, respectively.
** Includes $48.2 million, $44.8 million, $45.3 million, $39.1 million, and $29.8 million of acquired loans at September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016, respectively.

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

	September 30, 2017			*		June 30, 2017			*		March 31, 2017			*		December 30, 2016			*		September 30, 2016			*
(Number of loans and dollar amount of loans)
Loans delinquent 30 days to 59 days:
Residential mortgage loans	44	$	2,771	0.1	%	64	$	2,893	0.1	%	280	$	22,254	0.8	%	360	$	27,386	1.0	%	74	$	3,380	0.1	%
Home equity loans	191	7,330		0.6	%	111	4,058		0.3	%	125	4,586		0.4	%	179	6,805		0.5	%	164	4,984		0.4	%
Legacy consumer finance loans	1,045	3,065		11.4	%	581	1,785		4.1	%	308	947		1.8	%	410	1,255		2.1	%	472	1,566		2.6	%
Consumer loans	1,119	9,510		1.5	%	818	6,793		1.1	%	714	6,210		1.1	%	1,087	8,613		1.5	%	797	6,017		1.1	%
Commercial real estate loans	27	5,753		0.2	%	38	4,629		0.2	%	60	9,364		0.4	%	61	10,377		0.4	%	28	3,855		0.2	%
Commercial loans	16	746		0.1	%	20	1,378		0.2	%	29	2,304		0.4	%	20	1,178		0.2	%	26	1,493		0.3	%
Total loans delinquent 30 days to 59 days	2,442	$	29,175	0.4	%	1,632	$	21,536	0.3	%	1,516	$	45,665	0.6	%	2,117	$	55,614	0.7	%	1,561	$	21,295	0.3	%

Loans delinquent 60 days to 89 days:
Residential mortgage loans	84	$	7,196	0.3	%	72	$	6,320	0.2	%	28	$	1,594	0.1	%	80	$	6,227	0.2	%	76	$	6,174	0.2	%
Home equity loans	73	2,390		0.2	%	44	1,522		0.1	%	36	1,145		0.1	%	62	1,563		0.1	%	41	1,145		0.1	%
Legacy consumer finance loans	831	2,190		8.1	%	276	759		1.7	%	164	475		0.9	%	235	766		1.3	%	236	729		1.2	%
Consumer loans	473	3,283		0.5	%	347	2,475		0.4	%	266	1,766		0.3	%	401	2,843		0.5	%	296	1,944		0.3	%
Commercial real estate loans	22	7,666		0.3	%	14	3,368		0.1	%	19	3,034		0.1	%	25	4,495		0.2	%	13	1,102		—	%
Commercial loans	9	196		—	%	9	199		—	%	10	499		0.1	%	21	2,081		0.4	%	9	594		0.1	%
Total loans delinquent 60 days to 89 days	1,492	$	22,921	0.3	%	762	$	14,643	0.2	%	523	$	8,513	0.1	%	824	$	17,975	0.2	%	671	$	11,688	0.1	%

Loans delinquent 90 days or more: **
Residential mortgage loans	143	$	12,190	0.4	%	145	$	12,053	0.4	%	139	$	12,326	0.5	%	169	$	13,621	0.5	%	168	$	13,478	0.5	%
Home equity loans	150	6,397		0.5	%	126	5,800		0.4	%	143	6,258		0.5	%	155	5,756		0.4	%	137	6,022		0.4	%
Legacy consumer finance loans	124	332		1.2	%	188	536		1.2	%	169	471		0.9	%	228	743		1.2	%	242	800		1.3	%
Consumer loans	428	3,254		0.5	%	299	2,285		0.4	%	363	2,901		0.5	%	418	3,095		0.5	%	515	2,572		0.5	%
Commercial real estate loans	113	23,310		1.0	%	108	22,044		0.9	%	106	23,009		1.0	%	101	21,270		0.9	%	106	24,533		1.0	%
Commercial loans	45	4,177		0.7	%	39	3,642		0.6	%	39	2,744		0.5	%	37	3,520		0.7	%	28	6,249		1.2	%
Total loans delinquent 90 days or more	1,003	$	49,660	0.6	%	905	$	46,360	0.6	%	959	$	47,709	0.6	%	1,108	$	48,005	0.6	%	1,196	$	53,654	0.7	%

Total loans delinquent	4,937	$	101,756	1.3	%	3,299	$	82,539	1.1	%	2,998	$	101,887	1.3	%	4,049	$	121,594	1.5	%	3,428	$	86,637	1.1	%

* Represents delinquency, in dollars, divided by the respective total amount of that class of loan outstanding.
** Includes purchased credit impaired loans of $1.2 million, $1.2 million, $2.6 million, $2.8 million, and $2.9 million at September 30, 2017, June 30, 2017, March 31, 2017, December 31, 2016, and September 30, 2016, respectively.

Northwest Bancshares, Inc. and Subsidiaries
Allowance for Loan Losses (Unaudited)
(Dollars in thousands)

			Quarter ended
			September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016
Beginning balance			$	62,885		61,104			60,939			63,246			60,781
Provision			3,027			5,562			4,637			2,145			5,538
Charge-offs residential mortgage			(215)			(372)			(290)			(710)			(354)
Charge-offs home equity			(528)			(689)			(649)			(321)			(288)
Charge-offs legacy consumer finance			(3,891)			(782)			(796)			(1,003)			(835)
Charge-offs consumer			(3,002)			(2,735)			(2,864)			(2,466)			(1,866)
Charge-offs commercial real estate			(1,901)			(329)			(474)			(323)			(789)
Charge-offs commercial			(509)			(929)			(1,267)			(2,489)			(708)
Recoveries			1,061			2,055			1,868			2,860			1,767
Ending balance			$	56,927			62,885			61,104			60,939			63,246

Net charge-offs to average loans, annualized			0.47		%	0.20		%	0.23		%	0.23		%	0.17		%


												Nine months ended September 30,
												2017			2016
Beginning balance												$	60,939		62,672
Provision												13,226			11,397
Charge-offs residential mortgage												(877)			(2,770)
Charge-offs home equity												(1,866)			(2,218)
Charge-offs legacy consumer finance												(5,469)			(2,321)
Charge-offs consumer												(8,601)			(5,115)
Charge-offs commercial real estate												(2,704)			(3,417)
Charge-offs commercial												(2,705)			(1,728)
Recoveries												4,984			6,746
Ending balance												$	56,927			63,246

Net charge-offs to average loans, annualized												0.30		%	0.20		%


	September 30, 2017
	Originated loans					Acquired loans						Total loans
	Balance		Reserve			Balance			Reserve			Balance			Reserve
Residential mortgage loans	$	2,623,763	3,986			119,463			77			2,743,226			4,063
Home equity loans	1,045,152		3,295			268,283			748			1,313,435			4,043
Legacy consumer finance loans	26,892		4,876			—			—			26,892			4,876
Consumer loans	534,618		7,383			112,410			594			647,028			7,977
Personal Banking Loans	4,230,425		19,540			500,156			1,419			4,730,581			20,959

Commercial real estate loans	2,089,383		20,174			309,503			3,301			2,398,886			23,475
Commercial loans	528,231		11,131			68,440			1,362			596,671			12,493
Commercial Banking Loans	2,617,614		31,305			377,943			4,663			2,995,557			35,968

Total Loans	$	6,848,039		50,845			878,099			6,082			7,726,138			56,927

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
	September 30, 2017						June 30, 2017						March 31, 2017						December 31, 2016						September 30, 2016
	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	$	2,732,546	28,279		4.14	%	$	2,721,445	28,245		4.15	%	$	2,718,904	27,309		4.02	%	$	2,766,693	28,165		4.07	%	$	2,739,099	27,952		4.08	%
Home equity loans	1,299,473		14,694		4.49	%	1,311,274		14,344		4.39	%	1,332,647		14,201		4.32	%	1,346,856		14,442		4.27	%	1,192,929		12,884		4.30	%
Consumer loans	617,754		7,627		4.90	%	595,170		7,405		4.99	%	580,836		7,219		5.04	%	571,108		7,580		5.28	%	504,376		6,267		4.94	%
Legacy consumer finance loans	33,469		1,433		17.13	%	40,945		2,110		20.61	%	46,452		2,482		21.37	%	49,186		2,503		20.36	%	50,578		2,664		21.07	%
Commercial real estate loans	2,389,969		27,234		4.46	%	2,430,594		27,071		4.41	%	2,456,070		26,562		4.33	%	2,467,569		27,863		4.42	%	2,394,001		26,683		4.36	%
Commercial loans	593,143		6,659		4.39	%	554,506		6,087		4.34	%	522,847		5,515		4.22	%	527,330		5,682		4.27	%	476,715		5,193		4.26	%
Total loans receivable (a) (b) (d)	7,666,354		85,926		4.45	%	7,653,934		85,262		4.47	%	7,657,756		83,288		4.41	%	7,728,742		86,235		4.44	%	7,357,698		81,643		4.41	%
Mortgage-backed securities (c)	607,454		3,118		2.05	%	592,917		2,987		2.02	%	471,674		2,222		1.88	%	482,707		2,166		1.79	%	440,966		2,030		1.84	%
Investment securities (c) (d)	352,813		1,690		1.92	%	372,398		1,796		1.93	%	377,819		1,881		1.99	%	401,602		1,950		1.94	%	275,718		1,667		2.42	%
FHLB stock	7,748		63		3.23	%	7,602		50		2.64	%	7,305		59		3.28	%	7,575		285		4.54	%	27,761		218		3.12	%
Other interest-earning deposits	71,482		243		1.33	%	208,141		536		1.02	%	294,391		660		0.90	%	325,889		300		0.36	%	91,243		114		0.49	%
Total interest-earning assets	8,705,851		91,040		4.15	%	8,834,992		90,631		4.11	%	8,808,945		88,110		4.06	%	8,946,515		90,936		4.04	%	8,193,386		85,672		4.16	%
Noninterest earning assets (e)	755,026						716,913						799,569						677,888						835,500
Total assets	$	9,460,877					$	9,551,905					$	9,608,514					$	9,624,403					$	9,028,886

Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings deposits	$	1,681,777	776		0.18	%	$	1,714,290	768		0.18	%	$	1,702,528	755		0.18	%	$	1,668,492	771		0.18	%	$	1,485,763	744		0.20	%
Interest-bearing demand deposits	1,435,143		297		0.08	%	1,451,787		283		0.08	%	1,422,284		116		0.03	%	1,431,671		85		0.02	%	1,179,557		78		0.03	%
Money market deposit accounts	1,789,082		1,048		0.23	%	1,839,693		1,064		0.23	%	1,879,292		1,074		0.23	%	1,890,220		1,101		0.23	%	1,418,779		826		0.23	%
Time deposits	1,449,830		3,674		1.01	%	1,518,650		3,711		0.98	%	1,573,574		3,520		0.91	%	1,643,785		3,902		0.94	%	1,597,542		4,005		1.00	%
Borrowed funds (f)	106,282		49		0.18	%	126,685		55		0.17	%	136,872		58		0.17	%	143,540		61		0.17	%	560,407		657		0.47	%
Junior subordinated debentures	111,213		1,150		4.05	%	111,213		1,185		4.22	%	111,213		1,167		4.20	%	111,213		1,171		4.12	%	111,213		1,144		4.03	%
Total interest-bearing liabilities	6,573,327		6,994		0.42	%	6,762,318		7,066		0.42	%	6,825,763		6,690		0.40	%	6,888,921		7,091		0.41	%	6,353,261		7,454		0.47	%
Noninterest-bearing demand deposits (g)	1,573,112						1,544,953						1,506,268						1,493,528						1,243,474
Noninterest bearing liabilities	116,021						59,277						106,578						77,827						276,014
Total liabilities	8,262,460						8,366,548						8,438,609						8,460,276						7,872,749
Shareholders' equity	1,198,417						1,185,357						1,169,905						1,164,127						1,156,137
Total liabilities and shareholders' equity	$	9,460,877					$	9,551,905					$	9,608,514					$	9,624,403					$	9,028,886
Net interest income/ Interest rate spread				84,046	3.73	%				83,565	3.69	%				81,420	3.66	%				83,845	3.63	%				78,218	3.69	%
Net interest-earning assets/ Net interest margin	$	2,132,524			3.86	%	$	2,072,674			3.78	%	$	1,983,182			3.75	%	$	2,057,594			3.75	%	$	1,840,125			3.82	%
Ratio of interest-earning assets to interest-bearing liabilities	1.32X						1.31X						1.29X						1.30X						1.29X

(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%, 0.29%, 0.27%, 0.29% and 0.32%, respectively.
(h) Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.42%, 4.44%, 4.38%, 4.41% and 4.38%, respectively, Investment securities - 1.62%, 1.62%, 1.67%, 1.61% and 1.89%, respectively, Interest-earning assets - 4.11%, 4.08%, 4.02%, 4.00% and 4.11%, respectively. GAAP basis net interest rate spreads were 3.69%, 3.66%, 3.62%, 3.59% and 3.65%, respectively, and GAAP basis net interest margins were 3.82%, 3.75%, 3.71%, 3.71% and 3.77%, 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.

	Nine months ended September 30,
	2017						2016
	Average balance		Interest		Avg. yield/ cost (h)		Average balance		Interest		Avg. yield/ cost (h)
Assets:
Interest-earning assets:
Residential mortgage loans	$	2,724,348	83,833		4.10	%	$	2,743,480	86,826		4.22	%
Home equity loans	1,314,344		43,239		4.40	%	1,178,133		38,229		4.33	%
Consumer loans	598,056		22,251		4.97	%	477,814		17,768		4.97	%
Legacy consumer finance loans	40,241		6,025		19.96	%	51,542		8,080		20.90	%
Commercial real estate loans	2,425,302		80,867		4.40	%	2,367,014		79,367		4.41	%
Commercial loans	560,677		18,260		4.29	%	460,228		14,817		4.23	%
Loans receivable (a) (b) (d)	7,662,968		254,475		4.44	%	7,278,211		245,087		4.50	%
Mortgage-backed securities (c)	557,846		8,327		1.99	%	462,474		6,374		1.84	%
Investment securities (c) (d)	367,585		5,366		1.95	%	325,427		5,662		2.32	%
FHLB stock	7,553		172		3.04	%	32,702		1,086		4.44	%
Other interest-earning deposits	201,643		1,440		0.94	%	57,996		243		0.55	%
Total interest-earning assets	8,797,595		269,780		4.10	%	8,156,810		258,452		4.23	%
Noninterest earning assets (e)	742,837						783,838
Total assets	$	9,540,432					$	8,940,648

Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings deposits	$	1,699,455	2,300		0.18	%	$	1,444,302	2,446		0.23	%
Interest-bearing demand deposits	1,436,442		696		0.06	%	1,134,669		378		0.04	%
Money market deposit accounts	1,835,638		3,186		0.23	%	1,334,158		2,520		0.25	%
Time deposits	1,513,565		10,904		0.96	%	1,625,936		12,262		1.01	%
Borrowed funds (f)	123,168		161		0.17	%	743,353		10,213		1.84	%
Junior subordinated debentures	111,213		3,503		4.15	%	111,213		3,389		4.00	%
Total interest-bearing liabilities	6,719,481		20,750		0.41	%	6,393,631		31,208		0.65	%
Noninterest-bearing demand deposits (g)	1,541,845						1,196,737
Noninterest bearing liabilities	94,546						191,934
Total liabilities	8,355,872						7,782,302
Shareholders' equity	1,184,560						1,158,346
Total liabilities and shareholders' equity	$	9,540,432					$	8,940,648
Net interest income/ Interest rate spread				249,030	3.69	%				227,244	3.58	%
Net interest-earning assets/ Net interest margin	$	2,078,114			3.77	%	$	1,763,179			3.71	%
Ratio of interest-earning assets to interest-bearing liabilities	1.31X						1.28X

(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 0.28%, and 0.35%, respectively.
(h) Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.41% and 4.47%, respectively, Investment securities - 1.64% and 1.86%, respectively, Interest-earning assets - 4.06% and 4.19%, respectively. GAAP basis net interest rate spreads were 3.65% and 3.53%, respectively, and GAAP basis net interest margins were 3.74% and 3.67%, respectively.

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SOURCE Northwest Bancshares, Inc.

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Lastest analyses : NORTHWEST BANCSHARES INC.