Northwest Bancshares, Inc. Announces Third Quarter 2014 Earnings and Dividend Declaration

WARREN, Pa., Oct. 17, 2014 /PRNewswire/ -- Northwest Bancshares, Inc. (NasdaqGS: NWBI) announced net income for the quarter ended September 30, 2014 of $17.3 million, or $0.19 per diluted share. This represents a decrease of $235,000, or 1.3%, compared to the same quarter last year when net income was $17.6 million, or $0.19 per diluted share, and an increase of $4.6 million, or 36.8%, compared to the quarter ended June 30, 2014 when net income was $12.7 million, or $0.14 per diluted share. The annualized returns on average shareholders' equity and average assets for the quarter ended September 30, 2014 were 6.43% and 0.87% compared to 6.18% and 0.88% for the same quarter last year and 4.77% and 0.64% for the quarter ended June 30, 2014.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.13 per share payable on November 10, 2014, to shareholders of record as of October 27, 2014. This represents the 80^th consecutive quarter in which the Company has paid a cash dividend.

In making this announcement, William J. Wagner, President and CEO, noted, "We are pleased to report more normal earnings this quarter following a second quarter report that was below expectations. The substantial increase in earnings over the previous quarter resulted almost entirely from continued improvement in credit quality which provided an opportunity to reduce the quarterly provision for loan losses by $4.8 million. All other major components of income remained consistent with the previous quarter. Looking ahead we remain focused on improving shareholder returns by enhancing production and increasing revenues while improving efficiency and controlling operating expense."

Net interest income decreased by $565,000, or 0.9%, to $61.9 million for the quarter ended September 30, 2014, from $62.5 million for the quarter ended September 30, 2013. Interest income on loans receivable and investment securities decreased by $1.6 million from the prior year which was partially offset by a $1.1 million decrease in interest paid on deposit accounts and borrowed funds. These changes from the previous year were due primarily to the continued low level of market interest rates.

The provision for loan losses decreased by $1.5 million, or 30.6%, to $3.5 million for the quarter ended September 30, 2014, from $5.0 million for the quarter ended September 30, 2013. This decrease is due primarily to the improvement in overall asset quality with loans 90 days or more delinquent decreasing $12.6 million, or 21.5%, and total nonaccrual loans decreasing $33.1 million, or 26.9%, compared to a year ago. Additionally, classified loans and troubled debt restructurings decreased by $35.6 million and $17.5 million, respectively, over the past year

Noninterest income increased by $2.1 million, or 12.9%, to $18.2 million for the quarter ended September 30, 2014, from $16.1 million for the quarter ended September 30, 2013. This increase is due primarily to increases in gain on sale of investments of $743,000 and an increase in other operating income of $787,000, as a result of an increase in the dividends paid on Federal Home Loan Bank stock. Additionally, trust and other financial services income increased by $596,000, due primarily to the acquisition of Evans Capital Management, Inc. on January 1, 2014.

Noninterest expense increased by $3.1 million, or 6.1%, to $53.4 million for the quarter ended September 30, 2014, from $50.3 million for the quarter ended September 30, 2013. This increase was due primarily to a $1.2 million increase in marketing expense relating to an ongoing effort to promote the acquisition of home equity loans and checking accounts. Processing expense increased by $687,000 and professional services increased by $523,000, due primarily to amortization of software upgrades made during the past two years and compliance related consulting engagements designed to enhance and strengthen our compliance management system.

Net income for the nine-month period ended September 30, 2014 of $44.6 million represents a decrease of $1.6 million, or 3.4%, compared to net income of $46.2 million for the nine-month period ended September 30, 2013. Diluted earnings per share for the nine-month period ended September 30, 2014 decreased to $0.48 per share from $0.51 per share in the same period last year. The annualized returns on average shareholders' equity and average assets were 5.44% and 0.75%, respectively, for the current nine-month period compared to 5.46% and 0.78%, respectively, in the prior year.

Headquartered in Warren, Pennsylvania, Northwest Bancshares, Inc. is the holding company of Northwest Savings Bank. Founded in 1896, Northwest Savings 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 164 community banking offices in Pennsylvania, New York, Ohio and Maryland and 50 consumer finance offices in Pennsylvania through its subsidiary, Northwest Consumer Discount Company. Northwest Bancshares, Inc.'s common stock is listed on the NASDAQ Global Select Market ("NWBI"). Additional information regarding Northwest Bancshares, Inc. and Northwest Savings Bank can be accessed on-line at www.northwestsavingsbank.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; and (7) increased risk associated with an increase in 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
(Dollars in thousands, except per share amounts)
			(Unaudited)
			September 30,	December 31,
Assets			2014	2013
Cash and cash equivalents			$ 83,994	98,122
Interest-earning deposits in other financial institutions			209,161	293,149
Federal funds sold and other short-term investments			634	634
Marketable securities available-for-sale (amortized cost of $928,644 and $1,022,078)			930,913	1,016,767
Marketable securities held-to-maturity (fair value of $113,322 and $124,061)			110,214	121,366
	Total cash, interest-earning deposits and marketable securities		1,334,916	1,530,038

Residential mortgage loans held for sale			-	221
Residential mortgage loans			2,511,272	2,482,783
Home equity loans			1,071,540	1,083,939
Other consumer loans			238,653	228,348
Commercial real estate loans			1,732,234	1,608,399
Commercial loans			403,402	402,601
	Total loans receivable		5,957,101	5,806,291
Allowance for loan losses			(71,650)	(71,348)
	Loans receivable, net		5,885,451	5,734,943

Federal Home Loan Bank stock, at cost			43,985	43,715
Accrued interest receivable			19,505	19,152
Real estate owned, net			15,007	18,203
Premises and Equipment, net			144,759	146,139
Bank owned life insurance			143,306	140,172
Goodwill and other intangible assets			176,169	174,644
Other intangible assets			3,364	2,319
Other assets			60,464	70,715
	Total assets		$ 7,826,926	7,880,040

Liabilities and Shareholders' equity
Liabilities
Noninterest-bearing demand deposits			$ 884,804	789,135
Interest-bearing demand deposits			895,280	852,809
Money market deposit accounts			1,180,540	1,167,954
Savings deposits			1,214,284	1,191,584
Time deposits			1,532,815	1,667,397
	Total deposits		5,707,723	5,668,879
Borrowed funds			878,448	881,645
Advances by borrowers for taxes and insurance			16,267	26,669
Accrued interest payable			880	888
Other liabilities			43,793	43,499
Junior subordinated debentures			103,094	103,094
	Total liabilities		6,750,205	6,724,674

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, 94,994,819 shares
	and 94,243,713 shares issued and outstanding, respectively		950	943
Paid-in-capital			627,748	619,678
Retained earnings			476,484	569,728
Unallocated common stock of Employee Stock Ownership Plan			(21,798)	(23,083)
Accumulated other comprehensive loss			(6,663)	(11,900)
	Total shareholders' equity		1,076,721	1,155,366
	Total liabilities and shareholders' equity		$ 7,826,926	7,880,040

		Equity to assets	13.76%	14.66%
		Tangible common equity to assets	11.73%	12.70%
		Book value per share	$ 11.33	12.26
		Tangible book value per share	$ 9.44	10.38
		Closing market price per share	$ 12.10	14.78
		Full time equivalent employees	2,044	2,043
		Number of banking offices	164	165

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

				Quarter ended
				September 30,		June 30,
				2014	2013	2014
Interest income:
	Loans receivable			$ 70,820	71,422	70,726
	Mortgage-backed securities			2,504	3,113	2,666
	Taxable investment securities			1,004	1,030	1,014
	Tax-free investment securities			1,561	1,912	1,598
	Interest-earning deposits			187	253	286
		Total interest income		76,076	77,730	76,290

Interest expense:
	Deposits			6,305	7,150	6,421
	Borrowed funds			7,882	8,126	7,793
		Total interest expense		14,187	15,276	14,214

		Net interest income		61,889	62,454	62,076
Provision for loan losses				3,466	4,992	8,285
		Net interest income after provision
		for loan losses		58,423	57,462	53,791

Noninterest income:
	Gain on sale of investments			852	109	349
	Service charges and fees			9,665	9,282	9,042
	Trust and other financial services income			2,976	2,380	3,055
	Insurance commission income			1,778	2,019	2,237
	Loss on real estate owned, net			(240)	(111)	(562)
	Income from bank owned life insurance			1,083	1,178	1,050
	Mortgage banking income			239	203	265
	Other operating income			1,836	1,049	1,688
		Total noninterest income		18,189	16,109	17,124

Noninterest expense:
	Compensation and employee benefits			28,047	27,629	28,543
	Premises and occupancy costs			5,642	5,633	5,740
	Office operations			3,419	3,497	3,868
	Processing expenses			6,723	6,036	6,639
	Marketing expenses			2,211	1,032	2,931
	Federal deposit insurance premiums			1,242	1,377	1,338
	Professional services			1,854	1,331	1,775
	Amortization of intangible assets			330	291	331
	Real estate owned expense			636	681	459
	Other expense			3,250	2,770	2,182
		Total noninterest expense		53,354	50,277	53,806

		Income before income taxes		23,258	23,294	17,109
	Income tax expense			5,926	5,727	4,435

			Net income	$ 17,332	17,567	12,674

Basic earnings per share				$ 0.19	0.19	0.14

Diluted earnings per share				$ 0.19	0.19	0.14

Annualized return on average equity				6.43%	6.18%	4.77%
Annualized return on average assets				0.87%	0.88%	0.64%

Basic common shares outstanding				91,745,512	90,760,402	91,491,654
Diluted common shares outstanding				92,118,154	91,824,384	92,531,142

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

				Nine months ended
				September 30,
				2014	2013
Interest income:
	Loans receivable			$ 210,868	216,113
	Mortgage-backed securities			7,963	9,862
	Taxable investment securities			3,098	2,969
	Tax-free investment securities			4,814	6,069
	Interest-earning deposits			673	844
		Total interest income		227,416	235,857

Interest expense:
	Deposits			19,216	22,368
	Borrowed funds			23,389	23,989
		Total interest expense		42,605	46,357

		Net interest income		184,811	189,500
Provision for loan losses				19,236	17,555
		Net interest income after provision
		for loan losses		165,575	171,945

Noninterest income:
	Gain on sale of investments			4,549	229
	Service charges and fees			27,115	27,010
	Trust and other financial services income			9,078	6,847
	Insurance commission income			6,579	6,504
	Loss on real estate owned, net			(937)	(2,526)
	Income from bank owned life insurance			3,134	3,351
	Mortgage banking income			753	1,395
	Other operating income			4,699	3,090
		Total noninterest income		54,970	45,900

Noninterest expense:
	Compensation and employee benefits			84,562	83,715
	Premises and occupancy costs			17,939	17,530
	Office operations			11,044	10,631
	Processing expenses			19,951	19,279
	Marketing expenses			6,779	5,025
	Federal deposit insurance premiums			3,877	4,239
	Professional services			5,691	4,223
	Amortization of intangible assets			992	988
	Real estate owned expense			1,734	1,880
	Other expense			7,754	7,044
		Total noninterest expense		160,323	154,554

		Income before income taxes		60,222	63,291
	Income tax expense			15,605	17,104

			Net income	$ 44,617	46,187

Basic earnings per share				$ 0.49	0.51

Diluted earnings per share				$ 0.48	0.51

Annualized return on average equity				5.44%	5.46%
Annualized return on average assets				0.75%	0.78%

Basic common shares outstanding				91,465,986	90,530,417
Diluted common shares outstanding				92,333,110	91,210,040

Northwest Bancshares, Inc. and Subsidiaries
Asset quality
(Dollars in thousands)

		September 30, 2014	June 30, 2014	September 30, 2013	December 31, 2013

Nonaccrual loans current:
	Residential mortgage loans	$ 1,645	1,112	1,500	1,361
	Home equity loans	1,542	1,682	808	835
	Other consumer loans	108	112	81	98
	Commercial real estate loans	24,193	27,905	30,505	17,866
	Commercial loans	9,775	7,524	22,779	13,357
Total nonaccrual loans current		$ 37,263	38,335	55,673	33,517

Nonaccrual loans delinquent 30 days to 59 days:
	Residential mortgage loans	$ 27	107	339	427
	Home equity loans	355	75	183	404
	Other consumer loans	149	60	33	15
	Commercial real estate loans	2,059	3,788	3,198	3,468
	Commercial loans	485	162	366	7,650
Total nonaccrual loans delinquent 30 days to 59 days		$ 3,075	4,192	4,119	11,964

Nonaccrual loans delinquent 60 days to 89 days:
	Residential mortgage loans	$ 782	936	1,131	864
	Home equity loans	585	274	255	280
	Other consumer loans	52	40	111	87
	Commercial real estate loans	1,476	1,584	2,534	2,036
	Commercial loans	660	122	572	716
Total nonaccrual loans delinquent 60 days to 89 days		$ 3,555	2,956	4,603	3,983

Nonaccrual loans delinquent 90 days or more:
	Residential mortgage loans	$ 20,318	21,994	25,002	24,625
	Home equity loans	6,802	7,810	8,959	8,344
	Other consumer loans	2,099	1,966	1,848	2,057
	Commercial real estate loans	13,552	15,290	16,282	18,433
	Commercial loans	3,162	4,214	6,413	4,298
Total nonaccrual loans delinquent 90 days or more		$ 45,933	51,274	58,504	57,757

Total nonaccrual loans		$ 89,826	96,757	122,899	107,221


		September 30,	June 30,	September 30,	December 31,
		2014	2014	2013	2013

Nonaccrual loans		$ 89,826	96,757	122,899	107,221
Loans 90 days past maturity and still accruing		390	271	809	690
Nonperforming loans		90,216	97,028	123,708	107,911
Real estate owned, net		15,007	14,915	20,173	18,203
Nonperforming assets		$ 105,223	111,943	143,881	126,114

Nonaccrual troubled debt restructuring *		$ 21,871	23,949	37,519	28,889
Accruing troubled debt restructuring		39,995	39,844	41,871	50,277
Total troubled debt restructuring		$ 61,866	63,793	79,390	79,166

Nonperforming loans to total loans		1.51%	1.65%	2.16%	1.86%

Nonperforming assets to total assets		1.34%	1.42%	1.82%	1.60%

Allowance for loan losses to total loans		1.20%	1.21%	1.32%	1.23%

Allowance for loan losses to nonperforming loans		79.42%	73.63%	61.33%	66.12%

* Amounts included in nonperforming loans above.

Northwest Bancshares, Inc. and Subsidiaries
Delinquency
(Dollars in thousands)


Loan delinquency schedule
	(Number of loans and dollar amount of loans)
		September 30,			June 30,			September 30,			December 31,
		2014		*	2014		*	2013		*	2013		*
Loans delinquent 30 days to 59 days:
	Residential mortgage loans	79	$ 4,241	0.2%	71	$ 3,842	0.2%	87	$ 4,391	0.2%	374	$ 27,486	1.1%
	Home equity loans	151	5,856	0.5%	123	4,193	0.4%	140	4,161	0.4%	213	6,946	0.6%
	Consumer loans	1,105	5,076	2.1%	953	4,355	1.9%	992	4,193	1.9%	1,010	4,515	2.0%
	Commercial real estate loans	69	5,888	0.3%	79	8,247	0.5%	73	6,536	0.4%	73	8,449	0.5%
	Commercial loans	22	1,413	0.4%	35	1,146	0.3%	28	1,059	0.3%	34	9,243	2.3%
Total loans delinquent 30 days to 59 days		1,426	$ 22,474	0.4%	1,261	$ 21,783	0.4%	1,320	20,340	0.4%	1,704	$ 56,639	1.0%

Loans delinquent 60 days to 89 days:
	Residential mortgage loans	87	$ 6,558	0.3%	81	$ 6,024	0.2%	87	$ 6,360	0.3%	103	$ 7,568	0.3%
	Home equity loans	54	1,727	0.2%	45	1,210	0.1%	56	2,193	0.2%	67	2,243	0.2%
	Consumer loans	467	1,958	0.8%	363	1,454	0.6%	412	1,646	0.7%	507	1,866	0.8%
	Commercial real estate loans	31	2,762	0.2%	31	2,267	0.1%	29	3,692	0.2%	35	3,968	0.2%
	Commercial loans	13	970	0.2%	16	709	0.2%	15	1,242	0.3%	16	1,555	0.4%
Total loans delinquent 60 days to 89 days		652	$ 13,975	0.2%	536	$ 11,664	0.2%	599	15,133	0.3%	728	$ 17,200	0.3%

Loans delinquent 90 days or more:
	Residential mortgage loans	251	$ 20,319	0.8%	251	$ 21,994	0.9%	265	$ 25,002	1.0%	273	$ 24,625	1.0%
	Home equity loans	159	6,802	0.6%	168	7,810	0.7%	203	8,959	0.8%	171	8,344	0.8%
	Consumer loans	465	2,098	0.9%	412	1,966	0.9%	401	1,848	0.8%	470	2,057	0.9%
	Commercial real estate loans	110	13,552	0.8%	118	15,290	1.0%	134	16,282	1.0%	124	18,433	1.1%
	Commercial loans	25	3,162	0.8%	34	4,214	1.0%	50	6,413	1.6%	31	4,298	1.1%
Total loans delinquent 90 days or more		1,010	$ 45,933	0.8%	983	$ 51,274	0.9%	1,053	58,504	1.0%	1,069	$ 57,757	1.0%

Total loans delinquent		3,088	$ 82,382	1.4%	2,780	$ 84,721	1.5%	2,972	$ 93,977	1.6%	3,501	$ 131,596	2.3%

	* - Represents delinquency, in dollars, divided by the respective total amount of that type of loan outstanding.

Northwest Bancshares, Inc. and Subsidiaries
Loans by credit quality indicators as of September 30, 2014
(Dollars in thousands)

								Recorded
								investment
				Special				in loans
			Pass	mention	Substandard	Doubtful	Loss	receivable
Personal Banking:
		Residential mortgage loans	$ 2,494,746	-	15,102	-	1,424	2,511,272
		Home equity loans	1,064,738	-	6,802	-	-	1,071,540
		Other consumer loans	237,134	-	1,519	-	-	238,653
	Total Personal Banking		3,796,618	-	23,423	-	1,424	3,821,465

Business Banking:
		Commercial real estate loans	1,545,245	40,655	144,244	2,090	-	1,732,234
		Commercial loans	350,377	14,391	35,343	3,291	-	403,402
	Total Business Banking		1,895,622	55,046	179,587	5,381	-	2,135,636

			$ 5,692,240	55,046	203,010	5,381	1,424	5,957,101


Northwest Bancshares, Inc. and Subsidiaries
Loans by credit quality indicators as of December 31, 2013
(Dollars in thousands)

								Recorded
								investment
				Special				in loans
			Pass	mention	Substandard	Doubtful	Loss	receivable
Personal Banking:
		Residential mortgage loans	$ 2,464,057	-	17,626	-	1,321	2,483,004
		Home equity loans	1,075,595	-	8,344	-	-	1,083,939
		Other consumer loans	226,922	-	1,426	-	-	228,348
	Total Personal Banking		3,766,574	-	27,396	-	1,321	3,795,291

Business Banking:
		Commercial real estate loans	1,398,652	46,557	161,906	1,284	-	1,608,399
		Commercial loans	345,612	12,045	43,040	1,904	-	402,601
	Total Business Banking		1,744,264	58,602	204,946	3,188	-	2,011,000

			$ 5,510,838	58,602	232,342	3,188	1,321	5,806,291

Northwest Bancshares, Inc. and Subsidiaries
Allowance for loan losses
(Dollars in thousands)

		Quarter ended		Nine months ended
		September 30,		September 30,
		2014	2013	2014	2013
Allowance for loan losses
	Beginning balance	$ 71,442	72,590	71,348	73,219
	Provision	3,466	4,992	19,236	17,555
	Charge-offs residential mortgage	(352)	(546)	(1,694)	(2,002)
	Charge-offs home equity	(325)	(213)	(1,290)	(1,388)
	Charge-offs other consumer	(1,446)	(1,675)	(4,612)	(4,359)
	Charge-offs commercial real estate	(2,199)	(1,048)	(5,709)	(7,734)
	Charge-offs commercial	(360)	(463)	(10,646)	(3,685)
	Recoveries	1,424	2,228	5,017	4,259
	Ending balance	$ 71,650	75,865	71,650	75,865


Net charge-offs to average loans, annualized		0.22%	0.12%	0.43%	0.35%

Northwest Bancshares, Inc. and Subsidiaries
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.

	Quarter ended September 30,
	2014			2013
	Average	Interest	Avg.	Average	Interest	Avg.
	Balance		Yield/	Balance		Yield/
			Cost (g)			Cost (g)
Assets:
Interest-earning assets:
Loans receivable (a) (b) (d)	$ 5,912,890	71,306	4.78%	$ 5,703,527	71,993	5.01%
Mortgage-backed securities (c)	569,482	2,504	1.76%	701,510	3,113	1.78%
Investment securities (c) (d)	488,893	3,405	2.79%	545,005	3,972	2.92%
FHLB stock	43,986	452	4.11%	47,650	120	1.01%
Other interest-earning deposits	323,447	187	0.23%	376,699	253	0.26%

Total interest-earning assets	7,338,698	77,854	4.24%	7,374,391	79,451	4.31%

Noninterest earning assets (e)	537,065			551,760

Total assets	$ 7,875,763			$ 7,926,151

Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings deposits	$ 1,228,105	834	0.27%	$ 1,209,726	882	0.29%
Interest-bearing demand deposits	899,231	152	0.07%	854,600	144	0.07%
Money market deposit accounts	1,187,024	802	0.27%	1,144,522	768	0.27%
Time deposits	1,553,867	4,517	1.15%	1,735,898	5,356	1.22%
Borrowed funds (f)	876,034	6,700	3.03%	864,315	6,690	3.07%
Junior subordinated debentures	103,094	1,182	4.49%	103,094	1,436	5.45%

Total interest-bearing liabilities	5,847,355	14,187	0.96%	5,912,155	15,276	1.03%

Noninterest-bearing demand deposits	891,842			794,411
Noninterest bearing liabilities	66,432			91,385

Total liabilities	6,805,629			6,797,951

Shareholders' equity	1,070,134			1,128,200

Total liabilities and shareholders' equity	$ 7,875,763			$ 7,926,151

Net interest income/ Interest rate spread		63,667	3.28%		64,175	3.28%

Net interest-earning assets/ Net interest margin	$ 1,491,343		3.47%	$ 1,462,236		3.48%

Ratio of interest-earning assets to
interest-bearing liabilities	1.26X			1.25X

(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 the effect of unrealized gains or losses on securities held as available-for-sale.
(f) Average balances include FHLB borrowings and collateralized borrowings.
(g) Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.75% and 4.97%, respectively, Investment securities - 2.10% and 2.16%, respectively, Interest-earning assets - 4.17% and 4.22%, respectively. GAAP basis net interest rate spreads were 3.21% and 3.19%, respectively, and GAAP basis net interest margins were 3.40% and 3.39%, respectively.

Northwest Bancshares, Inc. and Subsidiaries
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.



	Nine months ended September 30,
	2014			2013
	Average	Interest	Avg.	Average	Interest	Avg.
	Balance		Yield/	Balance		Yield/
			Cost (g)			Cost (g)
Assets:
Interest-earning assets:
Loans receivable (a) (b) (d)	$ 5,856,940	212,437	4.85%	$ 5,655,512	217,799	5.15%
Mortgage-backed securities (c)	597,042	7,963	1.78%	717,785	9,862	1.83%
Investment securities (c) (d)	501,120	10,504	2.79%	515,751	12,307	3.18%
FHLB stock	43,882	1,425	4.33%	47,545	191	0.54%
Other interest-earning deposits	352,370	673	0.25%	428,395	844	0.26%

Total interest-earning assets	7,351,354	233,002	4.23%	7,364,988	241,003	4.36%

Noninterest earning assets (e)	563,902			574,423

Total assets	$ 7,915,256			$ 7,939,411

Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings deposits	$ 1,225,411	2,459	0.27%	$ 1,200,106	2,676	0.30%
Interest-bearing demand deposits	882,465	440	0.07%	856,269	433	0.07%
Money market deposit accounts	1,181,056	2,376	0.27%	1,124,572	2,258	0.27%
Time deposits	1,598,870	13,941	1.17%	1,791,819	17,001	1.27%
Borrowed funds (f)	876,606	19,880	3.03%	861,465	19,728	3.06%
Junior subordinated debentures	103,094	3,509	4.49%	103,094	4,261	5.45%

Total interest-bearing liabilities	5,867,502	42,605	0.97%	5,937,325	46,357	1.04%

Noninterest-bearing demand deposits	853,294			776,087
Noninterest bearing liabilities	98,877			94,651

Total liabilities	6,819,673			6,808,063

Shareholders' equity	1,095,583			1,131,348

Total liabilities and shareholders' equity	$ 7,915,256			$ 7,939,411

Net interest income/ Interest rate spread		190,397	3.26%		194,646	3.32%

Net interest-earning assets/ Net interest margin	$ 1,483,852		3.45%	$ 1,427,663		3.52%

Ratio of interest-earning assets to
interest-bearing liabilities	1.25X			1.24X

(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 the effect of unrealized gains or losses on securities held as available-for-sale.
(f) Average balances include FHLB borrowings and collateralized borrowings.
(g) Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.81% and 5.11%, respectively, Investment securities - 2.11% and 2.34%, respectively, Interest-earning assets - 4.15% and 4.27%, respectively. GAAP basis net interest rate spreads were 3.18% and 3.23%, respectively, and GAAP basis net interest margins were 3.38% and 3.43%, respectively.

Northwest Bancshares, Inc. and Subsidiaries
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.



	Quarter ended			Quarter ended
	September 30, 2014			June 30, 2014
	Average	Interest	Avg.	Average	Interest	Avg.
	Balance		Yield/	Balance		Yield/
			Cost (g)			Cost (g)
Assets:
Interest-earning assets:
Loans receivable (a) (b) (d)	$ 5,912,890	71,306	4.78%	$ 5,833,540	71,266	4.90%
Mortgage-backed securities (c)	569,482	2,504	1.76%	601,066	2,666	1.77%
Investment securities (c) (d)	488,893	3,405	2.79%	507,315	3,472	2.74%
FHLB stock	43,986	452	4.11%	43,944	697	6.34%
Other interest-earning deposits	323,447	187	0.23%	424,434	286	0.27%

Total interest-earning assets	7,338,698	77,854	4.24%	7,410,299	78,387	4.23%

Noninterest earning assets (e)	537,065			529,095

Total assets	$ 7,875,763			$ 7,939,394

Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings deposits	$ 1,228,105	834	0.27%	$ 1,239,563	821	0.27%
Interest-bearing demand deposits	899,231	152	0.07%	896,014	149	0.07%
Money market deposit accounts	1,187,024	802	0.27%	1,182,542	792	0.27%
Time deposits	1,553,867	4,517	1.15%	1,598,523	4,659	1.17%
Borrowed funds (f)	876,034	6,700	3.03%	872,653	6,623	3.04%
Junior subordinated debentures	103,094	1,182	4.49%	103,094	1,170	4.49%

Total interest-bearing liabilities	5,847,355	14,187	0.96%	5,892,389	14,214	0.97%

Noninterest-bearing demand deposits	891,842			852,253
Noninterest bearing liabilities	66,432			128,072

Total liabilities	6,805,629			6,872,714

Shareholders' equity	1,070,134			1,066,680

Total liabilities and shareholders' equity	$ 7,875,763			$ 7,939,394

Net interest income/ Interest rate spread		63,667	3.28%		64,173	3.26%

Net interest-earning assets/ Net interest margin	$ 1,491,343		3.47%	$ 1,517,910		3.46%

Ratio of interest-earning assets to
interest-bearing liabilities	1.26X			1.26X

(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 the effect of unrealized gains or losses on securities held as available-for-sale.
(f) Average balances include FHLB borrowings and collateralized borrowings.
(g) Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 4.75% and 4.86%, respectively, Investment securities - 2.10% and 2.06%, respectively, Interest-earning assets - 4.17% and 4.17%, respectively. GAAP basis net interest rate spreads were 3.21% and 3.20%, respectively, and GAAP basis net interest margins were 3.40% and 3.39%, respectively.