Northwest Bancshares Inc. reports loss
Northwest Bancshares Inc. announced a net loss for the quarter ended June 30, 2020, of $6.2 million, or 5 cents per diluted share.
This represents a decrease of $32.6 million, or 123.5%, compared to the same quarter last year when net income was $26.4 million or $0.25 per diluted share. The annualized returns on average shareholders’ equity and average assets for the quarter ended June 30, 2020, were negative 1.63% and negative .18% compared to 8.01% and 1.02% for the same quarter last year. As noted in the company’s non-GAAP reconciliation, when adjusting for COVID-related provision expense and acquisition-related costs, non-GAAP net income was $30.2 million, or $0.25, per diluted share, which would represent an increase over the same quarter in the prior year of $3.0 million, or 11% and result in a return on average shareholders’ equity of 7.95% and a return on average assets of .89%.
The company also announced that its Board of Directors declared a quarterly cash dividend of $0.19 per share payable on August 14, 2020, to shareholders of record as of August 6, 2020. This is the 103rd consecutive quarter in which the company has paid a cash dividend. Based on the market value of the company’s common stock as of June 30, 2020, this represents an annualized dividend yield of 7.43%.
“Obviously we are disappointed to report a loss for the quarter,” said Ronald J. Seiffert, chairman, president and CEO. “However, as we assess the reasons for this loss, there is certainly cause for optimism as we enter the second half of the year. The primary drivers behind the quarterly loss are threefold. First, COVID-related loan loss provisions driven by a deteriorated economic forecast, which we estimate accounted for approximately $21.3 million of our elevated provision expense. Second, our loan loss provision expense during the quarter was also negatively impacted by the recording of provision expense for our MutualBank acquisition of approximately $18.2 million as promulgated by ASU 2016-13, also known as CECL. CECL requires an additional estimated loan loss provision or the “double count” for certain loans when integrating an acquisition. Third, acquisition costs of $9.7 million associated with the close and integration of MutualBank during the quarter negatively affected results as well. It should be noted, however, that year-to-date acquisition costs of $12.1 million were lower than originally projected.”
Headquartered in Warren, 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. As of June 30, 2020, Northwest operated 205 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.
“Assuming the current economic environment continues to remain stable, we believe that we have adequately provided for potential future losses during the first half of the year and have been able to do so with current earnings,” Seiffert said. “In addition, as depicted in the attached non-GAAP pro forma financials, core quarterly earnings of approximately $30.2 million are strong and position us well for the remainder of the year. We are also fortunate to possess a robust capital position which has enabled us to maintain our regular quarterly cash dividend to common stock shareholders. While most of our back-office and regional headquarter personnel continue to work effectively from home out of an abundance of caution, all of our branch offices have been re-opened for business as usual and we are very pleased, once again to offer our award-winning service to our loyal customers. I am so very honored and proud to be associated with our dedicated employees, our talented management team and our engaged Board of Directors who have all risen to the occasion during these extremely challenging times. They continue to stand tall in the face of adversity to service our customers and communities.”