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Northwest Bancshares, Inc. Announces First Quarter 2022 Earnings and Quarterly Dividend

·14 min read

COLUMBUS, Ohio, April 25, 2022 /PRNewswire/ -- Northwest Bancshares, Inc., (the "Company"), (NasdaqGS: NWBI) announced net income for the quarter ended March 31, 2022 of $28.3 million, or $0.22 per diluted share. This represents a decrease of $12.0 million, or 29.7%, compared to the same quarter last year, when net income was $40.2 million, or $0.32 per diluted share. The annualized returns on average shareholders' equity and average assets for the quarter ended March 31, 2022 were 7.17% and 0.80% compared to 10.61% and 1.17% for the same quarter last year.

(PRNewsfoto/Northwest Bancshares, Inc.)
(PRNewsfoto/Northwest Bancshares, Inc.)

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.20 per share payable on May 16, 2022 to shareholders of record as of May 5, 2022. This is the 110th consecutive quarter in which the Company has paid a cash dividend. Based on the market value of the Company's common stock as of March 31, 2022, this represents an annualized dividend yield of approximately 5.9%.

Ronald J. Seiffert, Chairman, President and CEO, added, "During the quarter we successfully deployed a portion of our liquidity by purchasing two separate loan packages to augment our own loan production and to capitalize on higher market yields. These purchases included a $72 million small business equipment finance pool and a $138 million one- to four-family jumbo mortgage package. We are also very pleased to report a continued favorable trend in expense management over the past five quarters which will be further enhanced by the previously announced consolidation of another 20 branches in early April with expected annual expense savings of approximately $8.0 million. Asset quality metrics also continue to improve from March of last year with nonperforming and classified assets declining by $100.4 million and $147.9 million, respectively, and total delinquency and net charge-offs falling below pre-pandemic levels."

Mr. Seiffert continued "During the quarter our net interest income and net interest margin were once again impacted by the low interest rate environment and excess balance sheet liquidity, but we are encouraged by the recent increase in interest rates by the Federal Reserve with market expectations of more rate increases throughout the remainder of the year."

Net interest income decreased by $9.8 million, or 9.8%, to $90.6 million for the quarter ended March 31, 2022, from $100.5 million for the quarter ended March 31, 2021, due to a $14.1 million, or 13.8%, decrease in interest income on loans receivable. This decrease in interest income on loans was due to a decrease of $507.7 million, or 4.9%, in the average balance of loans in addition to a reduction in the yield on loans to 3.63% for the quarter ended March 31, 2022 from 4.01% for the quarter ended March 31, 2021. Also, contributing to the reduction in yield and interest income on loans, was PPP fee accretion of just $1.2 million during the current quarter compared to $4.8 million in the same quarter last year. Partially offsetting this decrease in interest income was a decrease in interest expense on deposits of $1.8 million, or 32.0%, primarily due to a decrease in our cost of our interest-bearing liabilities to 0.25% for the quarter ended March 31, 2022 from 0.33% for the quarter ended March 31, 2021 as a result of low market interest rates over the past year. Partially offsetting the decline in deposit interest rates was growth in the average balance of interest-bearing liabilities of $180.2 million, or 1.9%. The net effect of these changes, as well as the continued build of excess liquidity, caused the Company's net interest margin to decrease to 2.75% for the quarter ended March 31, 2022 from 3.18% for the same quarter last year.

The Company continued to experience improvement in asset quality as classified loans decreased by $147.9 million, or 31.6%, to $319.9 million, or 3.15% of total loans, at March 31, 2022 from $467.7 million, or 4.51% of total loans, at March 31, 2021. Total delinquent loans also decreased to $75.4 million, or just 0.74% of loans receivable, at March 31, 2022 from $122.8 million, or 1.18% of gross loans, at March 31, 2021. In addition, net charge-offs were just 0.06% during the current quarter compared to 0.19% during the same quarter last year. As a result of these improvements in asset quality, the Company once again recognized a negative provision for credit losses of $1.5 million for the quarter ended March 31, 2022 compared to a $5.6 million credit for the quarter ended March 31, 2021.

Noninterest income decreased by $6.2 million, or 19.4%, to $25.7 million for the quarter ended March 31, 2022, from $32.0 million for the quarter ended March 31, 2021. This decrease was primarily due to a decrease in mortgage banking income of $4.6 million, or 75.7%, to $1.5 million for the quarter ended March 31, 2022 from $6.0 million for the quarter ended March 31, 2021. This decrease reflects the impact of less favorable pricing in the secondary market. In addition, there was a decrease in insurance commission income of $2.5 million, or 100.0% from the quarter ended March 31, 2021 due to the sale of the insurance business during the second quarter of 2021.

Noninterest expense decreased by $4.2 million, or 4.9%, to $81.9 million for the quarter ended March 31, 2022 from $86.2 million for the quarter ended March 31, 2021. This decrease primarily resulted from a $2.0 million, or 43.8%, decrease in professional services to $2.6 million for the quarter ended March 31, 2022 from $4.6 million for the quarter ended March 31, 2021 due to the use of third-party experts to recruit talent and assist with our digital strategy rollout in the prior year. Also contributing to this favorable variance was a decrease of $1.0 million, or 11.5%, in premises and occupancy costs to $7.8 million for the quarter ended March 31, 2022 from $8.8 million for the quarter ended March 31, 2021 due primarily to the cost savings from the prior year's branch optimization initiative. Lastly, other expense decreased $1.0 million, or 29.8%, to $2.4 million for the quarter ended March 31, 2022 from $3.4 million for the quarter ended March 31, 2021 due to the increase in the discount rate used to calculate our pension liability and related pension expense. Partially offsetting these decreases was an increase in merger, asset disposition and restructuring expense of $1.4 million for the quarter ended March 31, 2022 due to the branch optimization initiative announced during the fourth quarter of 2021.

The provision for income taxes decreased by $4.0 million, or 34.4%, to $7.6 million for the quarter ended March 31, 2022 from $11.6 million for the quarter ended March 31, 2021 due primarily to a decrease in income before taxes in the current year.

Headquartered in Columbus, Ohio, Northwest Bancshares, Inc. is the bank holding company of Northwest Bank. Founded in 1896 and headquartered in Warren, Pennsylvania, Northwest Bank is a full-service financial institution offering a complete line of business and personal banking products, as well as employee benefits and wealth management services. As of March 31, 2022, Northwest operated 162 full-service community banking offices and eight free standing drive-through facilities in Pennsylvania, New York, Ohio and Indiana. Northwest Bancshares, Inc.'s common stock is listed on the NASDAQ Global Select Market ("NWBI"). Additional information regarding Northwest Bancshares, Inc. and Northwest Bank can be accessed on-line at www.northwest.com.

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; (7) increased risk associated with commercial real-estate and business loans; and (8) the effect of any pandemic, including COVID-19, war or act of terrorism. 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)



March 31,

2022


December 31,

2021


March 31,

2021


Assets







Cash and cash equivalents

$ 1,161,006


1,279,259


979,290


Marketable securities available-for-sale (amortized cost of $1,542,170, $1,565,002 and $1,430,352, respectively)

1,442,098


1,548,592


1,430,131


Marketable securities held-to-maturity (fair value of $677,376, $751,513 and $593,232, respectively)

737,730


768,154


604,284


Total cash and cash equivalents and marketable securities

3,340,834


3,596,005


3,013,705


Residential mortgage loans held-for-sale

19,272


25,056


46,270


Residential mortgage loans

3,102,617


2,969,564


2,925,408


Home equity loans

1,286,520


1,319,931


1,407,524


Consumer loans

1,895,981


1,838,748


1,554,355


Commercial real estate loans

2,959,893


3,015,484


3,289,436


Commercial loans

874,751


847,609


1,145,047


Total loans receivable

10,139,034


10,016,392


10,368,040


Allowance for credit losses

(99,295)


(102,241)


(123,997)


Loans receivable, net

10,039,739


9,914,151


10,244,043


FHLB stock, at cost

13,318


14,184


21,861


Accrued interest receivable

26,268


25,599


28,732


Real estate owned, net

929


873


1,738


Premises and equipment, net

149,970


156,524


158,784


Bank-owned life insurance

254,109


256,213


252,599


Goodwill

380,997


380,997


382,356


Other intangible assets, net

11,654


12,836


18,342


Other assets

155,585


144,126


148,196


Total assets

$ 14,373,403


14,501,508


14,270,356


Liabilities and shareholders' equity







Liabilities








Noninterest-bearing demand deposits

$ 3,128,849


3,099,526


3,000,019


Interest-bearing demand deposits

2,891,622


2,940,442


2,826,461


Money market deposit accounts

2,680,613


2,629,882


2,521,881


Savings deposits

2,367,438


2,303,760


2,229,214


Time deposits

1,251,878


1,327,555


1,535,519


Total deposits

12,320,400


12,301,165


12,113,094


Borrowed funds

121,436


139,093


253,617


Subordinated debt

123,670


123,575



Junior subordinated debentures

129,119


129,054


128,859


Advances by borrowers for taxes and insurance

44,022


44,582


44,024


Accrued interest payable

563


1,804


659


Other liabilities

110,681


178,664


189,109


Total liabilities

12,849,891


12,917,937


12,729,362


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, 126,686,373, 126,612,183 and 127,222,648 shares issued and outstanding, respectively

1,267


1,266


1,272


Additional paid-in capital

1,012,308


1,010,405


1,018,822


Retained earnings

612,481


609,529


571,612


Accumulated other comprehensive loss

(102,544)


(37,629)


(50,712)


Total shareholders' equity

1,523,512


1,583,571


1,540,994


Total liabilities and shareholders' equity

$ 14,373,403


14,501,508


14,270,356


Equity to assets

10.60 %


10.92 %


10.80 %


Tangible common equity to assets*

8.09 %


8.43 %


8.22 %


Book value per share

$ 12.03


12.51


12.11


Tangible book value per share*

$ 8.93


9.40


8.96


Closing market price per share

$ 13.51


14.16


14.45


Full time equivalent employees

2,268


2,332


2,443


Number of banking offices

170


170


170












* Excludes goodwill and other intangible assets (non-GAAP).



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



Quarter ended


March 31,
2022


December 31,
2021


September 30,
2021


June 30,
2021


March 31,
2021






Interest income:










Loans receivable

$ 88,174


95,295


97,475


95,255


102,318

Mortgage-backed securities

6,360


5,743


5,840


5,680


4,200

Taxable investment securities

677


640


649


693


634

Tax-free investment securities

674


688


628


594


575

FHLB stock dividends

81


82


71


138


116

Interest-earning deposits

467


467


352


192


183

Total interest income

96,433


102,915


105,015


102,552


108,026

Interest expense:










Deposits

3,751


4,295


4,540


4,773


5,514

Borrowed funds

2,059


1,964


2,056


2,050


2,054

Total interest expense

5,810


6,259


6,596


6,823


7,568

Net interest income

90,623


96,656


98,419


95,729


100,458

Provision for credit losses

(1,481)


(1,909)


(4,354)



(5,620)

Net interest income after provision for credit losses

92,104


98,565


102,773


95,729


106,078

Noninterest income:










Loss on sale of investments

(2)


(4)


(46)


(105)


(21)

Service charges and fees

13,067


13,500


13,199


12,744


12,394

Trust and other financial services income

7,012


6,820


7,182


7,435


6,484

Insurance commission income



44


1,043


2,546

Gain/(loss) on real estate owned, net

(29)


71


247


166


(42)

Income from bank-owned life insurance

1,983


1,343


1,332


1,639


1,736

Mortgage banking income

1,465


2,120


3,941


3,811


6,020

Gain on sale of insurance business




25,327


Other operating income

2,244


3,192


3,287


2,648


2,836

Total noninterest income

25,740


27,042


29,186


54,708


31,953

Noninterest expense:










Compensation and employee benefits

46,917


48,691


49,063


48,894


47,239

Premises and occupancy costs

7,797


7,104


7,745


7,410


8,814

Office operations

3,383


3,144


4,143


3,317


3,165

Collections expense

520


602


411


303


616

Processing expenses

12,548


13,639


13,517


15,151


13,456

Marketing expenses

2,128


2,054


2,102


2,101


1,980

Federal deposit insurance premiums

1,129


1,131


1,184


1,353


1,307

Professional services

2,573


4,513


4,295


4,231


4,582

Amortization of intangible assets

1,183


1,205


1,321


1,433


1,594

Real estate owned expense

37


44


94


85


75

Merger, asset disposition and restructuring expense

1,374


2,812



632


9

Other expenses

2,355


1,346


2,227


1,422


3,354

Total noninterest expense

81,944


86,285


86,102


86,332


86,191

Income before income taxes

35,900


39,322


45,857


64,105


51,840

Income tax expense

7,613


9,266


10,794


15,138


11,603

Net income

$ 28,287


30,056


35,063


48,967


40,237











Basic earnings per share

$ 0.22


0.24


0.28


0.38


0.32

Diluted earnings per share

$ 0.22


0.24


0.27


0.38


0.32











Annualized return on average equity

7.17 %


7.65 %


8.86 %


12.58 %


10.61 %

Annualized return on average assets

0.80 %


0.82 %


0.97 %


1.37 %


1.17 %

Annualized return on tangible common equity *

10.14 %


10.02 %


11.92 %


16.66 %


14.31 %











Efficiency ratio **

68.22 %


66.51 %


66.44 %


67.35 %


63.88 %

Annualized noninterest expense to average assets ***

2.23 %


2.25 %


2.33 %


2.35 %


2.45 %

* Excludes goodwill and other intangible assets (non-GAAP).

** Excludes gain on sale of insurance business, amortization of intangible assets and merger, asset disposition and restructuring expenses (non-GAAP).

*** Excludes amortization of intangible assets and merger, asset disposition and restructuring expenses (non-GAAP).

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



March 31,
2022


December 31,
2021


September 30,
2021


June 30,
2021


March 31,
2021

Nonaccrual loans current:










Residential mortgage loans

$ 1,884


1,354


2,015


189


164

Home equity loans

1,376