NWSB Northwest Bancorp (MM)

WARREN, Pa., April 20 /PRNewswire-FirstCall/ -- Northwest Bancorp, Inc. (NASDAQ:NWSB) announced net income for the quarter ended March 31, 2009 of $12.3 million, or $0.25 per diluted share. This represents a decrease of $320,000, or 2.5%, over the same quarter last year when net income was $12.6 million, or $0.26 per diluted share. The annualized returns on average shareholders' equity and average assets for the current quarter were 7.93% and 0.70% compared to 8.15% and 0.75% for the same quarter last year. Earnings in the current period were significantly impacted by a $2.4 million after tax write-down of a parcel of land in Florida that the Company previously acquired through foreclosure. Excluding this item, earnings for the quarter ended March 31, 2009 were $14.7 million, or $0.30 per diluted share. In making this announcement, William J. Wagner, President and CEO, noted, "We are pleased to report continued strong earnings during a period of considerable economic weakness. Our net interest margin remains exceptionally strong, fee income is increasing and our operating expenses are being controlled. We were disappointed that quarterly earnings were again negatively impacted by the write-down of an asset. As the recession grows longer and deeper, occasional problems may continue to develop with industries and borrowers that are most significantly impacted by current economic conditions. However, we have incurred minimal losses in our core markets in Pennsylvania and New York where real estate values and employment have generally faired better than national averages. Loans in those two markets represent over 88% of our portfolio. Loans 90 days or more delinquent in those two states are only 1.3% of the loans we made in those states." The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.22 per share payable on May 14, 2009, to shareholders of record as of April 30, 2009. This represents the 58th consecutive quarter in which the Company has paid a cash dividend. Net interest income increased by $9.7 million, or 20.0%, for the quarter ended March 31, 2009 compared to the same quarter last year. Net interest margin for the quarter ended March 31, 2009 was 3.71% compared to 3.24% for the quarter ended March 31, 2008. The increase in net interest margin compared to the prior year resulted primarily from an improvement in asset mix, with a greater concentration of assets invested in loans, and an improvement in funding mix, with a significant reduction in the reliance on high-cost certificates of deposit. The provision for loan losses increased by $3.5 million to $5.8 million for the quarter ended March 31, 2009 compared to $2.3 million for the same quarter last year. This increase is primarily attributable to a decline in the general economic factors used in the formulation of the reserve for loan losses along with an increase in troubled loans. Loans with payments 90 days or more delinquent have increased to $105.5 million at March 31, 2009 from $99.2 million at December 31, 2008 and $59.2 million at March 31, 2008. Net losses from loans charged-off were $3.2 million in each of the quarters ended March 31, 2009 and December 31, 2008 and were $1.4 million higher than the losses for the quarter ended March 31, 2008. Noninterest expense increased by $1.9 million, or 4.3%, to $44.3 million for the quarter ended March 31, 2009 from $42.4 million for the quarter ended March 31, 2008 primarily due to three areas. Compensation and employee benefits increased by $1.2 million, or 5.3%, as a result of normal annual merit increases and an increase in pension expense. Processing expenses increased by $1.1 million, or 26.3%, as a result of the Company's continued implementation of new technology, including the deployment of a new customer service platform. FDIC insurance expense increased by $1.1 million as a result of the FDIC's industry-wide increase in deposit insurance premiums, which became effective on January 1, 2009. Offsetting these increases in expense was a decrease in the amortization of intangible assets of $458,000, or 35.2%, and a decrease in the loss on early extinguishment of debt, which was $705,000 less than it was in 2008. The Company also announced that its Board of Directors approved a program to repurchase an additional 1,000,000 shares of the Company's publicly traded common stock. This authorization is in addition to 273,600 shares remaining to be purchased from a previously announced repurchase program. Repurchases will be subject to availability, general market conditions, the trading price of the stock, alternate uses of capital and the Company's financial performance. Repurchased shares will be held as treasury shares and will be available for general corporate purposes. Founded in 1896 and headquartered in Warren, Pennsylvania, Northwest Bancorp, Inc., through its subsidiary Northwest Savings Bank, currently operates 168 community-banking locations in Pennsylvania, New York, Ohio, Maryland and Florida. Northwest Savings Bank is a full-service financial institution offering a complete line of retail and business banking products as well as investment management and trust services. The Company also operates 49 consumer finance offices in Pennsylvania through its subsidiary, Northwest Consumer Discount Company. Northwest Bancorp, Inc.'s stock is listed on the NASDAQ Global Select Market. Additional information regarding Northwest Bancorp, Inc. can be accessed on-line at http://www.northwestsavingsbank.com/. Forward-Looking Statements - This press release may contain forward-looking statements with respect to the financial condition and results of operations of Northwest Bancorp, 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 that could result from an economic downturn; (4) changes in legislation or regulatory requirements; (5) difficulties in continuing to improve operating efficiencies; (6) difficulties in the integration of acquired businesses; and (7) increased risk associated with an increase in commercial real-estate and business loans and non-performing 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 Bancorp, Inc. and Subsidiaries Consolidated Statements of Financial Condition (Dollars in thousands, except per share amounts) March 31, December 31, Assets 2009 2008 ------ ---- ---- Cash and cash equivalents $40,963 55,815 Interest-earning deposits in other financial institutions 223,714 16,795 Federal funds sold and other short-term investments 1,043 7,312 Marketable securities available-for-sale (amortized cost of $1,078,557 and $1,144,435) 1,074,370 1,139,170 --------- --------- Total cash, interest-earning deposits and marketable securities 1,340,090 1,219,092 Loans held for sale 32,666 18,738 Mortgage loans-one-to four-family 2,390,173 2,447,506 Home equity loans 1,004,223 1,013,876 Consumer loans 294,747 289,602 Commercial real estate loans 1,101,141 1,071,182 Commercial business loans 374,756 355,917 ------- ------- Total loans receivable 5,197,706 5,196,821 Allowance for loan losses (57,487) (54,929) ------- ------- Loans receivable, net 5,140,219 5,141,892 Federal Home Loan Bank stock, at cost 63,143 63,143 Accrued interest receivable 26,910 27,252 Real estate owned, net 13,848 16,844 Premises and Equipment, net 117,092 115,842 Bank owned life insurance 124,667 123,479 Goodwill 171,363 171,363 Mortgage servicing rights 6,259 6,280 Other intangible assets 6,551 7,395 Other assets 31,709 37,659 ------ ------ Total assets $7,041,851 6,930,241 ========== ========= Liabilities and Shareholders' equity ------------------------------------ Liabilities: Noninterest-bearing demand deposits $425,272 394,011 Interest-bearing demand deposits 723,999 706,120 Savings deposits 1,545,974 1,480,620 Time deposits 2,515,769 2,457,460 --------- --------- Total deposits 5,211,014 5,038,211 Borrowed funds 994,802 1,067,945 Advances by borrowers for taxes and insurance 25,860 26,190 Accrued interest payable 5,059 5,194 Other liabilities 72,462 70,663 Junior subordinated debentures 108,249 108,254 ------- ------- Total liabilities 6,417,446 6,316,457 Shareholders' equity: Preferred stock, $0.10 par value: 50,000,000 shares authorized, no shares issued - - Common stock, $0.10 par value: 500,000,000 shares authorized, 51,251,318 and 51,244,974 issued, respectively 5,125 5,124 Paid-in-capital 218,830 218,332 Retained earnings 498,677 490,326 Accumulated other comprehensive (loss)/income (28,804) (30,575) Treasury stock of 2,742,800 and 2,742,800 shares, respectively, at cost (69,423) (69,423) -------- -------- Total shareholders' equity 624,405 613,784 ------- ------- Total liabilities and shareholders' equity $7,041,851 6,930,241 ========== ========= Equity to assets 8.87% 8.86% Tangible common equity 6.42% 6.36% Book value per share $12.87 $12.65 Closing market price per share $16.90 $21.38 Full time equivalent employees 1,859 1,860 Number of banking offices 168 167 Northwest Bancorp, Inc. and Subsidiaries Consolidated Statements of Income (Dollars in thousands, except per share amounts) Three months ended March 31, 2009 2008 ---- ---- Interest income: Loans receivable $80,871 80,889 Mortgage-backed securities 7,405 7,170 Taxable investment securities 1,546 3,849 Tax-free investment securities 2,932 2,993 Interest-earning deposits 39 1,796 -- ----- Total interest income 92,793 96,697 Interest expense: Deposits 24,637 42,830 Borrowed funds 10,189 5,557 ------ ----- Total interest expense 34,826 48,387 Net interest income 57,967 48,310 Provision for loan losses 5,781 2,294 ----- ----- Net interest income after provision for loan losses 52,186 46,016 Noninterest income: Service charges and fees 7,708 7,638 Trust and other financial services income 1,348 1,748 Insurance commission income 549 580 Loss on real estate owned, net (3,879) (87) Gain on sale of investments, net 42 903 Other-than-temporary impairment of investments - (320) Income from bank owned life insurance 1,187 1,192 Mortgage banking income 1,724 442 Non-cash recovery/(impairment) of servicing assets 90 (100) Other operating income 705 1,019 --- ----- Total noninterest income 9,474 13,015 Noninterest expense: Compensation and employee benefits 23,926 22,722 Premises and occupancy costs 5,978 5,725 Office operations 3,013 3,257 Processing expenses 5,308 4,204 Advertising 929 979 Federal deposit insurance premiums 1,890 824 Professional services 641 735 Amortization of intangible assets 844 1,302 Loss on early extinguishment of debt - 705 Other expense 1,737 1,974 ----- ----- Total noninterest expense 44,266 42,427 ------ ------ Income before income taxes 17,394 16,604 Income taxes 5,092 3,982 ----- ----- Net income $12,302 12,622 ======= ====== Basic earnings per share $0.25 $0.26 Diluted earnings per share $0.25 $0.26 Annualized return on average equity 7.93% 8.15% Annualized return on average assets 0.70% 0.75% Basic common shares outstanding 48,411,843 48,329,901 Diluted common shares outstanding 48,524,800 48,606,334 Northwest Bancorp, Inc. and Subsidiaries Supplementary data (Dollars in thousands) Three months Year ended March 31, ended December 31, 2009 2008 2008 2007 ---- ---- ---- ---- Allowance for loan losses Beginning balance $54,929 41,784 41,784 37,655 Provision 5,781 2,294 22,851 8,743 Charge-offs (3,504) (2,291) (11,610) (8,190) Recoveries 281 468 1,904 1,457 Acquisitions - - - 2,119 -- -- -- ----- Ending balance $57,487 42,255 54,929 41,784 ======= ====== ====== ====== Net charge-offs to average loans, annualized 0.25% 0.15% 0.19% 0.14% March 31, December 31, 2009 2008 2008 2007 ---- ---- ---- ---- Nonperforming loans $105,533 59,153 99,203 49,610 Real estate owned, net 13,848 9,271 16,844 8,667 ------ ----- ------ ----- Nonperforming assets $119,381 68,424 116,047 58,277 ======== ====== ======= ====== Nonperforming loans to total loans 2.05% 1.21% 1.91% 1.03% Nonperforming assets to total assets 1.70% 1.00% 1.67% 0.87% Allowance for loan losses to total loans 1.11% 0.87% 1.06% 0.86% Allowance for loan losses to nonperforming loans 54.47% 71.43% 55.37% 84.22% Reconciliation of the GAAP financial measures to non-GAAP measures: Three months ended March 31, 2009 2008 ---- ---- GAAP net income $12,302 12,622 Excluding (after-tax): (Gain) on Visa initial public offering - (409) Impairment write-down on investment securities - 195 Non-cash write-down of real estate owned 2,356 - Prepayment penalty on FHLB borrowings - 430 Valuation allowance on MSRs (55) 61 Reversal of tax reserves - (706) -- ---- Non-GAAP net income $14,603 12,193 ======= ====== Non-GAAP diluted EPS $0.30 $0.25 Non-GAAP annualized return on average equity 9.41% 7.87% Non-GAAP annualized return on average assets 0.84% 0.72% Northwest Bancorp, Inc. and Subsidiaries Supplementary data (Dollars in thousands) Loans past due schedule (Number of loans and dollar amount of loans) March 31, December 31, --------- ------------ 2009 * 2008 * ---- ---- Loans past due 30 days to 59 days: One- to four- family residential loans 307 $26,183 1.1% 392 $32,988 1.3% Consumer loans 854 10,551 0.8% 1,157 11,295 0.9% Multifamily and commercial RE loans 104 26,139 2.4% 99 18,901 1.8% Commercial business loans 72 8,887 2.4% 86 7,700 2.2% -- ----- --- -- ----- --- Total loans past due 30 days to 59 days 1,337 $71,760 1.4% 1,734 $70,884 1.4% ===== ======= === ===== ======= === Loans past due 60 days to 89 days: One- to four- family residential loans 41 $4,520 0.2% 101 $7,599 0.3% Consumer loans 284 1,981 0.2% 379 2,836 0.2% Multifamily and commercial RE loans 45 6,397 0.6% 54 8,432 0.8% Commercial business loans 31 2,000 0.5% 45 3,801 1.1% -- ----- --- -- ----- --- Total loans past due 60 days to 89 days 401 $14,898 0.3% 579 $22,668 0.4% === ======= === === ======= === Loans past due 90 days or more: One- to four- family residential loans 226 $21,004 0.9% 223 $20,435 0.8% Consumer loans 666 9,617 0.7% 687 9,756 0.7% Multifamily and commercial RE loans 180 47,779 4.3% 155 43,828 4.1% Commercial business loans 120 27,133 7.2% 114 25,184 7.1% --- ------ --- --- ------ --- Total loans past due 90 days or more 1,192 $105,533 2.0% 1,179 $99,203 1.9% ===== ======== === ===== ======= === December 31, ------------ 2007 * ---- Loans past due 30 days to 59 days: One- to four- family residential loans 361 $27,270 1.1% Consumer loans 1,331 10,550 0.8% Multifamily and commercial RE loans 88 11,331 1.3% Commercial business loans 70 9,947 3.0% -- ----- Total loans past due 30 days to 59 days 1,850 $59,098 1.2% ===== ======= Loans past due 60 days to 89 days: One- to four- family residential loans 99 $6,077 0.3% Consumer loans 437 2,676 0.2% Multifamily and commercial RE loans 41 4,984 0.6% Commercial business loans 34 2,550 0.8% -- ----- Total loans past due 60 days to 89 days 611 $16,287 0.3% === ======= Loans past due 90 days or more: One- to four- family residential loans 193 $12,542 0.5% Consumer loans 744 7,582 0.6% Multifamily and commercial RE loans 105 24,323 2.9% Commercial business loans 84 5,163 1.6% -- ----- Total loans past due 90 days or more 1,126 $49,610 1.0% ===== ======= * Represents delinquency, in dollars, divided by the respective total amount of that type of loan outstanding. Northwest Bancorp, Inc. and Subsidiaries Analysis of loan portfolio by geographic location as of March 31, 2009: (Dollars in thousands) Loans outstanding: ------------------ Mortgage (1) Consumer (2) -------- -------- Pennsylvania $2,039,087 84.2% 1,138,532 87.6% New York 134,593 5.6% 71,044 5.5% Ohio 16,164 0.7% 13,156 1.0% Maryland 162,045 6.7% 30,878 2.4% Florida 34,436 1.4% 10,950 0.8% Other 36,514 1.5% 34,410 2.6% ------ --- ------ --- Total $2,422,839 100.0% 1,298,970 100.0% ========== ===== ========= ===== Loans outstanding: ------------------ Commercial (3) Total (4) ---------- ----- Pennsylvania 941,395 63.8% 4,119,014 79.2% New York 274,054 18.7% 479,691 9.2% Ohio 5,722 0.4% 35,042 0.7% Maryland 181,705 12.3% 374,628 7.2% Florida 56,849 3.9% 102,235 2.0% Other 16,172 1.1% 87,096 1.7% ------ --- ------ --- Total 1,475,897 100.0% 5,197,706 100.0% ========= ===== ========= ===== (1) - Percentage of total mortgage loans (2) - Percentage of total consumer loans (3) - Percentage of total commercial loans (4) - Percentage of total loans Loans 90 or more past due: -------------------------- Mortgage (5) Consumer (6) -------- -------- Pennsylvania $10,638 0.5% 7,006 0.6% New York 84 0.1% 371 0.5% Ohio 108 0.7% 41 0.3% Maryland 532 0.3% 586 1.9% Florida 5,549 16.1% 1,087 9.9% Other 4,093 11.2% 526 1.5% ----- ---- --- --- Total $21,004 0.9% 9,617 0.7% ======= === ===== === Loans 90 or more past due: -------------------------- Commercial (7) Total (8) ---------- ----- Pennsylvania 41,167 4.4% 58,811 1.4% New York 1,356 0.5% 1,811 0.4% Ohio 176 3.1% 325 0.9% Maryland 9,883 5.4% 11,001 2.9% Florida 14,943 26.3% 21,579 21.1% Other 7,387 45.7% 12,006 13.8% ----- ---- ------ ---- Total 74,912 5.1% 105,533 2.0% ====== === ======= === (5) - Percentage of mortgage loans in that geographic area (6) - Percentage of consumer loans in that geographic area (7) - Percentage of commercial loans in that geographic area (8) - Percentage of total loans in that geographic area Northwest Bancorp, Inc. and Subsidiaries Supplementary data (Dollars in thousands) Marketable securities available-for-sale as of March 31, 2009: -------------------------------------------------------------- Gross Gross unrealized unrealized Amortized holding holding Market cost gains losses value ---- ----- ------ ----- Debt issued by the U.S. government and agencies: Due in one year or less $89 - (3) 86 Debt issued by government sponsored enterprises: Due in one year or less 991 24 - 1,015 Due in one year - five years 1,969 179 - 2,148 Due in five years - ten years 24,839 1,524 - 26,363 Due after ten years 64,030 4,192 (6) 68,216 Equity securities 954 228 (11) 1,171 Municipal securities: Due in one year - five years 460 1 - 461 Due in five years - ten years 40,363 771 (19) 41,115 Due after ten years 210,917 2,408 (6,967) 206,358 Corporate trust preferred securities: Due after ten years 21,082 48 (11,907) 9,223 Mortgage-backed securities: Fixed rate pass-through 176,163 7,813 (6) 183,970 Variable rate pass-through 265,437 5,908 (445) 270,900 Fixed rate CMO 55,667 742 (2,870) 53,539 Variable rate CMO 215,596 170 (5,961) 209,805 ------- --- ------ ------- Total mortgage-backed securities 712,863 14,633 (9,282) 718,214 ------- ------ ------ ------- Total marketable securities available-for-sale $1,078,557 24,008 (28,195) 1,074,370 ========== ====== ======= ========= Issuers of mortgage-backed securities as of March 31, 2009: ---------------------------------------- Fannie Mae $273,206 6,458 (1,173) 278,491 Ginnie Mae 94,282 1,707 (116) 95,873 Freddie Mac 303,462 6,468 (2,606) 307,324 Non-agency 41,913 - (5,387) 36,526 ------ -- ------ ------ Total $712,863 14,633 (9,282) 718,214 ======== ====== ====== ======= Average Balance Sheet (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. Three months ended March 31, 2009 2008 --------------------------- -------------------------- Average Interest Avg. Average Interest Avg. Balance Yield/ Balance Yield/ Cost Cost ASSETS: ------- Interest-earning assets: Loans receivable (a)(b)(d) $5,208,603 81,291 6.26% 4,858,928 81,400 6.65% Mortgage- backed securities(c) 738,132 7,405 4.01% 574,556 7,170 4.99% Investment securities(c) (d)(e) 386,097 6,057 6.28% 521,948 8,044 6.16% FHLB stock 63,143 - 0.00% 32,664 411 5.03% Other interest- earning deposits 76,937 39 0.20% 231,010 1,796 3.11% ------ -- ------- ------- ----- ---- Total interest- earning assets 6,472,912 94,792 5.87% 6,219,106 98,821 6.32% --------- ------ --------- ------ Noninterest earning assets(f) 515,476 516,356 ------- ------- TOTAL ASSETS $6,988,388 6,735,462 ========== ========= LIABILITIES AND SHAREHOLDERS' EQUITY: --------------- Interest-bearing liabilities: Savings accounts $790,467 1,453 0.75% 751,939 2,226 1.19% Interest- bearing demand accounts 709,351 806 0.46% 725,657 2,136 1.18% Money market accounts 704,752 2,523 1.45% 704,856 5,265 3.00% Certificate accounts 2,469,283 19,855 3.26% 2,995,551 33,203 4.46% Borrowed funds(g) 1,043,501 8,699 3.38% 378,191 3,903 4.15% Junior subordinated debentures 108,249 1,490 5.51% 108,312 1,654 6.04% ------- ----- ------- ----- Total interest- bearing liabilities 5,825,603 34,826 2.42% 5,664,506 48,387 3.44% Noninterest bearing liabilities 541,899 451,473 ------- ------- Total liabilities 6,367,502 6,115,979 Shareholders' equity 620,886 619,483 ------- ------- TOTAL LIABILITIES AND EQUITY $6,988,388 6,735,462 ========== ========= Net interest income/Interest rate spread 59,966 3.45% 50,434 2.88% Net interest- earning assets/ Net interest margin $647,309 3.71% 554,600 3.24% Ratio of interest- earning assets to interest-bearing liabilities 1.11X 1.10X (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 Fannie Mae and Freddie Mac stock. (f) Average balances include the effect of unrealized gains or losses on securities held as available-for-sale. (g) Average balances include FHLB borrowings, securities sold under agreements to repurchase and other borrowings. DATASOURCE: Northwest Bancorp, Inc. CONTACT: William J. Wagner, President and Chief Executive Officer, +1-814-726-2140, or William W. Harvey, Jr., Executive Vice President and Chief Financial Officer, +1-814-726-2140 Web Site: http://www.northwestsavingsbank.com/

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