Northwest Bancshares, Inc. announces First Quarter 2019 Earnings and Quarterly Dividend

Northwest Bancshares, Inc., (the “Company”), (NasdaqGS: NWBI) announced net income for the quarter ended March 31, 2019, of $25.0 million, or $0.24 per diluted share. This represents an increase of $59,000, or 0.2%, compared to the same quarter last year when net income was also $25.0 million or $0.24 per diluted share. The annualized returns on average shareholders’ equity and average assets for the quarter ended March 31, 2019, were 7.96% and 1.03% compared to 8.40% and 1.08% for the same quarter last year. Earnings during the current quarter were impacted by $1.9 million of expense associated with the acquisition and integration of Union Community Bank (“UCB”) on March 8, 2019. Excluding these costs, net income was approximately $26.4 million, or $0.25 per diluted share.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.18 per share payable on May 16, 2019, to shareholders of record as of May 2, 2019. This is the 98th consecutive quarter in which the Company has paid a cash dividend. Based on the market value of the Company’s stock as of March 31, 2019, this represents an annualized dividend yield of approximately 4.25%.

In making this announcement, Ronald J. Seiffert, Chairman, President, and CEO, noted, “We are very pleased to report the successful integration of Union Community Bank with Northwest Bank, which occurred on March 8, 2019. Union Community brings $537.9 million of assets, including approximately $408.0 million of loans, almost $480 million of deposits and 14,700 new households. In addition to this accomplishment, our internal loan growth exceeded $110.5 million, or almost 1.4%, for the quarter. This loan growth was funded entirely with internal deposit growth which increased $219.0 million, or 2.8%, during the first quarter. Lastly, we continue to be pleased with the expansion of our net interest margin, which increased to 3.97% despite the market interest rate challenges of a flattening yield curve.”

Net interest income increased by $6.2 million, or 7.6%, to $88.0 million for the quarter ended March 31, 2019, from $81.8 million for the quarter ended March 31, 2018, primarily due to a $9.7 million, or 11.4%, increase in interest income on loans receivable and a $952,000, or 31.6%, increase in interest income on mortgage-backed securities. These increases were primarily due to increases of $382.0 million, or 4.9%, and $46.4 million, or 8.3%, in the average balances of loans and mortgage-backed securities, respectively. Additionally, the average yield on loans and mortgage-backed securities increased by 28 and 46 basis points, respectively, over the prior year. Partially offsetting this improvement was an increase in interest expense on deposits of $3.7 million, or 57.1%, due to the recent increases in market interest rates. The net impact of these changes caused the Company’s net interest margin to increase to 3.97% for the quarter ended March 31, 2019, from 3.86% for the same quarter last year.

The provision for loan losses increased by $2.3 million, or 53.6%, to $6.5 million for the quarter ended March 31, 2019, from $4.2 million for the quarter ended March 31, 2018. This increase is due primarily to elevated charge-offs during the quarter primarily as a result of one commercial loan that was charged down by approximately $2.6 million.

Noninterest income decreased by $126,000, or 0.6%, to $21.7 million for the quarter ended March 31, 2019, from $21.8 million for the quarter ended March 31, 2018. This decrease was primarily due to a $571,000, or 20.8%, decline in insurance commission income primarily as a result of the loss of certain contingent bonus commissions due to a change in related laws impacting the current quarter. Partially offsetting this decline was a decrease in loss on real estate owned of $543,000, or 99.5%, to $3,000 for the current quarter compared to $546,000 for the prior year’s quarter, primarily as a result of the sale of one commercial property at a net loss of $265,000 during the first quarter of 2018.

Noninterest expense increased by $4.0 million, or 5.9%, to $71.4 million for the quarter ended March 31, 2019, from $67.4 million for the quarter ended March 31, 2018. This increase resulted primarily from a $1.7 million, or 4.6%, increase in compensation and employee benefits due to both internal growth in compensation and staff as well as the addition of UCB employees. In addition, processing expenses increased by $728,000, or 7.5%, as we continue to invest in technology and infrastructure to meet the demands of becoming a $10.0 billion institution. Also contributing to this increase was an increase in restructuring and acquisition expense of $1.9 million due to expenses incurred as part of the UCB acquisition. 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 172 full-service community banking offices and ten freestanding 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 online at www.northwest.com.

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