Northwest Bancshares, Inc. Announces Fourth Quarter 2021 Earnings and Quarterly Dividend

COLUMBUS, Ohio, Jan. 24, 2022 /PRNewswire/ -- Northwest Bancshares, Inc., (the "Company"), (NasdaqGS: NWBI) announced net income for the quarter ended December 31, 2021 of $30.1 million, or $0.24 per diluted share. This represents a decrease of $5.0 million, or 14.3%, compared to the same quarter last year when net income was $35.1 million, or $0.28 per diluted share. The annualized returns on average shareholders' equity and average assets for the quarter ended December 31, 2021 were 7.65% and 0.82% compared to 9.00% and 1.01% for the same quarter last year.

(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 February 14, 2022 to shareholders of record as of February 3, 2022. This is the 109th consecutive quarter in which the Company has paid a cash dividend. Based on the market value of the Company's common stock as of December 31, 2021, this represents an annualized dividend yield of approximately 5.6%.

Ronald J. Seiffert, Chairman, President and CEO, added, "Earnings were enhanced this year due to the release of credit loss reserves throughout 2021 including this quarter. These reserves had been previously built up as a result of the uncertainties created by COVID-19. We are also very pleased that non-performing and classified assets as well as our delinquencies continued to trend downward in 2021 and that our expenses remained well-contained heading into 2022. Although yields stabilized in 2021, our net interest spread and net interest margin both declined due to our current excess liquidity position."

Mr. Seiffert continued, "Our overall in-branch transaction volumes once again declined in 2021 as our customers continued to migrate towards our digital banking experience. As a result, we have decided to further optimize our branch network by consolidating 12% of our branch offices in April of 2022. This effort, coupled with other efficiency measures, generated $2.8 million in severance and restructuring costs in the fourth quarter with an additional $3.5 million expected to be recognized in the first quarter of 2022. This overall initiative is anticipated to generate approximately $8.0 million in annual operating expense savings beginning in the second quarter of 2022."

Net interest income decreased by $6.2 million, or 6.1%, to $96.7 million for the quarter ended December 31, 2021, from $102.9 million for the quarter ended December 31, 2020, due to a $10.4 million, or 9.8%, decrease in interest income on loans receivable. The decrease in interest income on loans was due to a decrease of $616.7 million, or 5.8%, in the average balance of loans in addition to a reduction in the yield on loans to 3.79% for the quarter ended December 31, 2021 from 3.97% for the same quarter last year. Partially offsetting this decrease was a decrease in interest expense on deposits of $2.4 million, or 36.0%, primarily due to a decrease in our cost of interest-bearing liabilities to 0.26% for the quarter ended December 31, 2021 from 0.38% for the quarter ended December 31, 2020 as market interest rates continued to decline over the past year. Partially offsetting the decline in deposit interest rates was growth in the average balance of interest-bearing liabilities of $266.9 million, or 2.9%. The net impact of these changes caused the Company's net interest margin to decrease to 2.89% for the quarter ended December 31, 2021 from 3.26% for the same quarter last year.

The provision for credit losses experienced a net credit of $1.9 million for the quarter ended December 31, 2021, compared to a credit of $2.2 million for the quarter ended December 31, 2020. This credit to provision expense was primarily the result of improvements in the economic forecasts and our overall improvement in credit quality. Total classified loans decreased by $126.2 million, or 25.8%, to $363.2 million for the quarter ended December 31, 2021 from $489.3 million for the quarter ended December 31, 2020.

Noninterest income decreased by $5.1 million, or 15.8%, to $27.0 million for the quarter ended December 31, 2021 from $32.1 million for the quarter ended December 31, 2020. This decrease was primarily due to the decrease in mortgage banking income of $5.0 million, or 70.2%, to $2.1 million for the quarter ended December 31, 2021 from $7.1 million for the quarter ended December 31, 2020. This decrease in mortgage banking income reflects the continued impact of less favorable pricing in the secondary market. In addition, there was a decrease in insurance commission income of $2.0 million, or 100.0%. Partially offsetting these decreases was an increase in trust and brokerage income as growth in both customer accounts and market gains contributed to a $1.1 million, or 19.2%, increase over the prior year.

Noninterest expense decreased $6.6 million, or 7.1%, to $86.3 million for the quarter ended December 31, 2021, from $92.8 million for the quarter ended December 31, 2020. This decrease primarily resulted from a $4.4 million, or 61.1%, decrease in merger, asset disposition and restructuring expense to $2.8 million for the quarter ended December 31, 2021 from $7.2 million for the quarter ended December 31, 2020 due to both periods incurring expenses as part of branch optimization initiatives. In addition, other expenses decreased $2.4 million, or 63.9%, to $1.3 million for the quarter ended December 31, 2021 from $3.7 million for the quarter ended December 31, 2020 primarily due to a reduction in the unfunded loan loss reserve associated with improving credit trends for construction loans and undrawn lines of credit in the current year. Slightly offsetting this decrease was an increase in processing expenses of $1.5 million, or 11.9%, to $13.6 million for the quarter ended December 31, 2021 from $12.2 million for the quarter ended December 31, 2020 as we continue to invest in technology and infrastructure and as activity driven utilization fees for online and mobile banking and loan origination platforms have increased.

Net income for the year ended December 31, 2021 was $154.3 million, or $1.21 per diluted share. This represents an increase of $79.5 million, or 106.2%, compared to the year ended December 31, 2020, when net income was $74.9 million, or $0.62 per diluted share. The annualized returns on average shareholders' equity and average assets for the year ended December 31, 2021 were 9.91% and 1.08% compared to 4.72% and 0.58% for the prior year. This increase in net income was the result of a decrease in provision for credit losses of $95.9 million primarily as a result of releasing reserves built up in the prior year due to the uncertainties around the impact of COVID-19. In addition, there was a $10.6 million, or 8.0%, increase in non-interest income largely due to the $25.3 million gain recognized on the sale of the insurance business in the second quarter of 2021, partially offset by a $15.5 million decrease in mortgage banking income which, as previously noted, is due to the impact of less favorable pricing in the secondary market. In addition, noninterest expense decreased $2.6 million, or 0.7%, primarily driven by acquisition and branch optimization costs in the prior year which were partially offset by MutualBank related increases in compensation as well as increased cost associated with our digital strategy rollout.

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, employee benefits and wealth management services. As of December 31, 2021, Northwest operates 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; 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, 2021		September 30, 2021		December 31, 2020
Assets
Cash and cash equivalents	$ 1,279,259		1,090,485		736,277
Marketable securities available-for-sale (amortized cost of $1,565,002, $1,587,105 and $1,375,685, respectively)	1,548,592		1,583,715		1,398,941
Marketable securities held-to-maturity (fair value of $751,513, $609,777 and $179,666, respectively)	768,154		618,395		178,887
Total cash and cash equivalents and marketable securities	3,596,005		3,292,595		2,314,105
Residential mortgage loans held-for-sale	25,056		27,411		58,786
Residential mortgage loans	2,969,564		2,962,110		3,009,335
Home equity loans	1,319,931		1,350,348		1,467,736
Consumer loans	1,838,748		1,816,836		1,507,993
Commercial real estate loans	3,015,484		3,162,551		3,345,889
Commercial loans	847,609		879,712		1,191,110
Total loans receivable	10,016,392		10,198,968		10,580,849
Allowance for credit losses	(102,241)		(109,767)		(134,427)
Loans receivable, net	9,914,151		10,089,201		10,446,422
FHLB stock, at cost	14,184		14,567		21,748
Accrued interest receivable	25,599		26,995		35,554
Real estate owned, net	873		809		2,232
Premises and equipment, net	156,524		155,740		161,538
Bank-owned life insurance	256,213		254,871		253,951
Goodwill	380,997		380,997		382,279
Other intangible assets, net	12,836		14,041		19,936
Other assets	144,126		159,419		168,503
Total assets	$ 14,501,508		14,389,235		13,806,268
Liabilities and shareholders' equity
Liabilities
Noninterest-bearing demand deposits	$ 3,099,526		3,052,115		2,716,224
Interest-bearing demand deposits	2,940,442		2,926,351		2,755,950
Money market deposit accounts	2,629,882		2,584,424		2,437,539
Savings deposits	2,303,760		2,271,496		2,047,424
Time deposits	1,327,555		1,387,827		1,642,096
Total deposits	12,301,165		12,222,213		11,599,233
Borrowed funds	139,093		126,496		159,715
Subordinated debt	123,575		123,486		123,329
Junior subordinated debentures	129,054		128,989		128,794
Advances by borrowers for taxes and insurance	44,582		26,951		45,230
Accrued interest payable	1,804		589		2,054
Other liabilities	178,664		198,743		209,210
Total liabilities	12,917,937		12,827,467		12,267,565
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, 126,612,183, 126,521,344, and 127,019,452 shares issued and outstanding, respectively	1,266		1,265		1,270
Additional paid-in capital	1,010,405		1,008,099		1,015,502
Retained earnings	609,529		604,787		555,480
Accumulated other comprehensive loss	(37,629)		(52,383)		(33,549)
Total shareholders' equity	1,583,571		1,561,768		1,538,703
Total liabilities and shareholders' equity	$ 14,501,508		14,389,235		13,806,268
Equity to assets	10.92 %		10.85 %		11.14 %
Tangible common equity to assets*	8.43 %		8.34 %		8.48 %
Book value per share	$ 12.51		12.34		12.11
Tangible book value per share*	$ 9.40		9.22		8.95
Closing market price per share	$ 14.16		13.28		12.74
Full time equivalent employees	2,332		2,404		2,421
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
	December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020
Interest income:
Loans receivable	$ 95,295		97,475		95,255		102,318		105,681
Mortgage-backed securities	5,743		5,840		5,680		4,200		4,551
Taxable investment securities	640		649		693		634		471
Tax-free investment securities	688		628		594		575		656
FHLB stock dividends	82		71		138		116		192
Interest-earning deposits	467		352		192		183		178
Total interest income	102,915		105,015		102,552		108,026		111,729
Interest expense:
Deposits	4,295		4,540		4,773		5,514		6,714
Borrowed funds	1,964		2,056		2,050		2,054		2,127
Total interest expense	6,259		6,596		6,823		7,568		8,841
Net interest income	96,656		98,419		95,729		100,458		102,888
Provision for credit losses	(1,909)		(4,354)		—		(5,620)		(2,230)
Net interest income after provision for credit losses	98,565		102,773		95,729		106,078		105,118
Noninterest income:
Gain/(loss) on sale of investments	(4)		(46)		(105)		(21)		75
Service charges and fees	13,500		13,199		12,744		12,394		13,074
Trust and other financial services income	6,820		7,182		7,435		6,484		5,722
Insurance commission income	—		44		1,043		2,546		2,034
Gain/(loss) on real estate owned, net	71		247		166		(42)		114
Income from bank-owned life insurance	1,343		1,332		1,639		1,736		1,330
Mortgage banking income	2,120		3,941		3,811		6,020		7,120
Gain on sale of insurance business	—		—		25,327		—		—
Other operating income	3,192		3,287		2,648		2,836		2,654
Total noninterest income	27,042		29,186		54,708		31,953		32,123
Noninterest expense:
Compensation and employee benefits	48,691		49,063		48,894		47,239		48,209
Premises and occupancy costs	7,104		7,745		7,410		8,814		7,614
Office operations	3,144		4,143		3,317		3,165		4,009
Collections expense	602		411		303		616		893
Processing expenses	13,639		13,517		15,151		13,456		12,186
Marketing expenses	2,054		2,102		2,101		1,980		1,994
Federal deposit insurance premiums	1,131		1,184		1,353		1,307		1,651
Professional services	4,513		4,295		4,231		4,582		3,599
Amortization of intangible assets	1,205		1,321		1,433		1,594		1,664
Real estate owned expense	44		94		85		75		64
Merger, asset disposition and restructuring expense	2,812		—		632		9		7,238
Other expenses	1,346		2,227		1,422		3,354		3,728
Total noninterest expense	86,285		86,102		86,332		86,191		92,849
Income before income taxes	39,322		45,857		64,105		51,840		44,392
Income tax expense	9,266		10,794		15,138		11,603		9,327
Net income	$ 30,056		35,063		48,967		40,237		35,065
Basic earnings per share	$ 0.24		0.28		0.38		0.32		0.28
Diluted earnings per share	$ 0.24		0.27		0.38		0.32		0.28
Annualized return on average equity	7.65 %		8.86 %		12.58 %		10.61 %		9.00 %
Annualized return on average assets	0.82 %		0.97 %		1.37 %		1.17 %		1.01 %
Annualized return on tangible common equity *	10.02 %		11.92 %		16.66 %		14.31 %		12.27 %
Efficiency ratio **	66.51 %		66.44 %		67.35 %		63.88 %		62.18 %
Annualized noninterest expense to average assets ***	2.25 %		2.33 %		2.35 %		2.45 %		2.42 %

*	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
Consolidated Statements of Income (Unaudited)
(dollars in thousands, except per share amounts)
	Year ended December 31,
	2021		2020
Interest income:
Loans receivable	$ 390,343		410,907
Mortgage-backed securities	21,463		17,416
Taxable investment securities	2,616		1,985
Tax-free investment securities	2,485		2,060
FHLB dividends	407		981
Interest-earning deposits	1,194		719
Total interest income	418,508		434,068
Interest expense:
Deposits	19,122		35,896
Borrowed funds	8,124		6,444
Total interest expense	27,246		42,340
Net interest income	391,262		391,728
Provision for credit losses	(11,883)		83,975
Net interest income after provision for credit losses	403,145		307,753
Noninterest income:
Gain/(loss) on sale of investments	(176)		236
Gain on sale of loans	—		1,302
Service charges and fees	51,837		55,613
Trust and other financial services income	27,921		20,922
Insurance commission income	3,633		9,132
Gain/(loss) on real estate owned, net	442		(106)
Income from bank-owned life insurance	6,050		5,190
Mortgage banking income	15,892		31,391
Gain on sale of insurance business	25,327		—
Other operating income	11,963		8,585
Total noninterest income	142,889		132,265
Noninterest expense:
Compensation and employee benefits	193,887		178,375
Premises and occupancy costs	31,073		30,622
Office operations	13,769		15,728
Collections expense	1,932		3,275
Processing expenses	55,763		50,050
Marketing expenses	8,237		7,695
Federal deposit insurance premiums	4,975		4,767
Professional services	17,621		12,482
Amortization of intangible assets	5,553		6,856
Real estate owned expense	298		359
Merger, asset disposition and restructuring expense	3,453		20,789
Other expenses	8,349		16,494
Total noninterest expense	344,910		347,492
Income before income taxes	201,124		92,526
Income tax expense	46,801		17,672
Net income	$ 154,323		74,854
Basic earnings per share	$ 1.22		0.62
Diluted earnings per share	$ 1.21		0.62
Annualized return on average equity	9.91 %		4.72 %
Annualized return on average assets	1.08 %		0.58 %
Annualized return on tangible common equity *	12.97 %		6.59 %
Efficiency ratio **	66.02 %		61.04 %
Annualized noninterest expense to average asset...

2.35 %

2.48 %

*	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)
	December 31, 2021		September 30, 2021		June 30, 2021		March 31, 2021		December 31, 2020
Nonaccrual loans current: