NWSB Northwest Bancorp (MM)

WARREN, Pa., Jan. 26 /PRNewswire-FirstCall/ -- Northwest Bancorp, Inc. (NASDAQ:NWSB) announced net income for the quarter ended December 31, 2008 of $11.3 million, or $0.23 per diluted share. This represents a decrease of $4.6 million, or 29.1%, over the same quarter last year when net income was $15.9 million, or $0.33 per diluted share. The annualized returns on average shareholders' equity and average assets for the current quarter were 7.27% and 0.65% compared to 10.54% and 0.95% for the same quarter last year. Earnings in both periods were significantly impacted by the following items the Company considers to be non-core: gains on the sale of investment securities, non-cash market value losses on investment securities, non-cash market value losses on its mortgage servicing asset and the amount the loan loss provision exceeds net loan charge-offs. After adjusting for these non-core items, earnings for the quarter ended December 31, 2008 were $17.9 million, or $0.37 per diluted share, compared to $14.5 million, or $0.30 per diluted share, for the quarter ended December 31, 2007. Net income for the year ended December 31, 2008 of $48.2 million, or $0.99 per diluted share, represents a decrease of $926,000, or 1.9% compared to net income of $49.1 million, or $0.99 per diluted share, for the year ended December 31, 2007. The annualized returns on average shareholders' equity and average assets were 7.75% and 0.70%, respectively, for the current year compared to 8.18% and 0.73%, respectively, for the prior year. Adjusting earnings for previously discussed non-core items, net income was $62.9 million, or $1.29 per diluted share, in 2008 compared to $52.7 million, or $1.07 per diluted share, in 2007. In making this announcement, William J. Wagner, President and CEO, noted, "We are pleased to report that our core earnings remain strong despite the challenges the banking industry is facing. Our net interest margin continued to increase in the most recent quarter in response to our continued efforts in managing our balance sheet. We are disappointed that current market conditions and the requirements for market value accounting have created non-cash reductions in the carrying values of several of our assets. However, since we have both the intent and the ability to continue to hold these assets until maturity, the losses in their current market values may eventually be recovered." The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.22 per share payable on February 19, 2009 to shareholders of record as of February 5, 2009. Net interest income increased by $11.7 million, or 24.4%, for the quarter ended December 31, 2008 compared to the same quarter last year and increased by $2.0 million, or 3.4%, compared to the quarter ended September 30, 2008. Net interest margin for the quarter ended December 31, 2008 was 3.83% compared to 3.21% for the quarter ended December 31, 2007 and 3.70% for the quarter ended September 30, 2008. The increases in net interest income and net interest margin resulted primarily from a substantial decrease in the cost of deposits, which was partially offset by a decrease in the yield on loans. The provision for loan losses increased by $7.7 million to $10.2 million for the quarter ended December 31, 2008 compared to $2.5 million for the same quarter last year. This increase is primarily attributable to one large commercial real estate loan in Florida and a decline in the general economic factors used in the formulation of the reserve for loan losses. Loans 90 days or more past due have increased $14.2 million, or 16.7%, to $99.2 million at December 31, 2008 from $85.0 million at September 30, 2008. Net loans charged-off were $3.2 million for the quarter ended December 31, 2008 and were $888,000 higher than those for the quarter ended September 30, 2008 and $800,000 higher than the same period a year ago. Mr. Wagner also noted, "The continued weakness in certain sectors of the economy continue to negatively impact loan delinquency. We continue to closely monitor our loan portfolio and manage troubled credits in an effort to minimize our losses. As a result, our actual losses have remained relatively low. Net charge-offs for 2008 were only $9.7 million or 0.19% of average loans." Noninterest expense increased by $4.9 million, or 12.6%, to $43.5 million for the quarter ended December 31, 2008 from $38.6 million for the quarter ended December 31, 2007. Compensation and employee benefits increased by $2.0 million, or 9.3%, and processing expenses increased by $944,000, or 24.1%, as a result of the Company's continued expansion of fee generating products and services. Advertising increased by $1.4 million, or 256.6%, as a result of the Company's ongoing efforts to promote its customer loyalty and rewards program. FDIC insurance expense increased by $853,000 over the previous year as the Company utilized credits in the previous year to offset assessments. Comparing the current quarter to the three-months ended September 30, 2008, noninterest expense increased $735,000, or 1.7%. Founded in 1896 and headquartered in Warren, Pennsylvania, Northwest Bancorp, Inc., through its subsidiary Northwest Savings Bank, currently operates 167 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) December 31, December 31, Assets 2008 2007 ------ ---- ---- Cash and cash equivalents $55,815 75,905 Interest-earning deposits in other financial institutions 16,795 153,160 Federal funds sold and other short-term investments 7,312 1,551 Marketable securities available-for-sale (amortized cost of $1,144,435 and $1,125,426) 1,139,170 1,133,367 --------- --------- Total cash, interest- earning deposits and marketable securities 1,219,092 1,363,983 Loans held for sale 18,738 28,412 Mortgage loans - one- to four- family 2,447,506 2,386,506 Home equity loans 1,013,876 973,161 Consumer loans 289,602 272,867 Commercial real estate loans 1,071,182 845,397 Commercial business loans 355,917 331,063 ------- ------- Total loans receivable 5,196,821 4,837,406 Allowance for loan losses (54,929) (41,784) ------- ------- Loans receivable, net 5,141,892 4,795,622 Federal Home Loan Bank stock, at cost 63,143 31,304 Accrued interest receivable 27,252 27,084 Real estate owned, net 16,844 8,667 Premises and Equipment, net 115,842 110,894 Bank owned life insurance 123,479 118,682 Goodwill 171,363 171,614 Mortgage servicing rights 6,280 8,955 Other intangible assets 7,395 11,782 Other assets 37,659 14,929 ------ ------ Total assets $6,930,241 6,663,516 ========== ========= Liabilities and Shareholders' equity --------------------- Liabilities: Noninterest-bearing demand deposits $394,011 361,102 Interest-bearing demand deposits 706,120 717,991 Savings deposits 1,480,620 1,426,545 Time deposits 2,457,460 3,036,696 --------- --------- Total deposits 5,038,211 5,542,334 Borrowed funds 1,067,945 339,115 Advances by borrowers for taxes and insurance 26,190 24,159 Accrued interest payable 5,194 4,356 Other liabilities 70,663 32,354 Junior subordinated debentures 108,254 108,320 ------- ------- Total liabilities 6,316,457 6,050,638 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, 51,244,974 and 51,191,109 issued, respectively 5,124 5,119 Paid-in-capital 218,332 214,606 Retained earnings 490,326 458,425 Accumulated other comprehensive (loss)/ income (30,575) 816 Treasury stock of 2,742,800 and 2,610,800 shares, respectively, at cost (69,423) (66,088) ------- ------- Total shareholders' equity 613,784 612,878 ------- ------- Total liabilities and shareholders' equity $6,930,241 6,663,516 ========== ========= Equity to assets 8.86% 9.20% Book value per share $12.65 $12.62 Closing market price per share $21.38 $26.57 Full time equivalent employees 1,860 1,805 Number of banking offices 167 166 Northwest Bancorp, Inc. and Subsidiaries Consolidated Statements of Income (Dollars in thousands, except per share amounts) Three months ended Year ended December 31, December 31, 2008 2007 2008 2007 ---- ---- ---- ---- Interest income: Loans receivable $83,161 82,731 327,128 315,570 Mortgage-backed securities 8,830 6,993 34,694 29,385 Taxable investment securities 2,102 6,523 11,828 30,583 Tax-free investment securities 3,032 3,078 12,253 12,626 Interest-earning deposits 42 729 2,756 7,867 -- --- ----- ----- Total interest income 97,167 100,054 388,659 396,031 Interest expense: Deposits 27,259 46,370 137,061 186,540 Borrowed funds 10,405 5,862 32,232 24,475 ------ ----- ------ ------ Total interest expense 37,664 52,232 169,293 211,015 Net interest income 59,503 47,822 219,366 185,016 Provision for loan losses 10,212 2,522 22,851 8,743 ------ ----- ------ ----- Net interest income after provision for loan losses 49,291 45,300 196,515 176,273 Noninterest income: Service charges and fees 8,337 7,978 32,432 27,754 Trust and other financial services income 1,491 1,705 6,718 6,223 Insurance commission income 619 712 2,376 2,705 Gain on sale of loans, net - 94 - 728 Gain/ (loss) on sale of real estate owned, net 11 (91) (428) (83) Gain on sale of investments, net 2,199 4,958 6,037 4,598 Other-than- temporary impairment of investments (3,653) (1,900) (16,004) (8,052) Income from bank owned life insurance 1,213 1,160 4,797 4,460 Mortgage banking income 12 644 665 1,578 Non-cash impairment of MSRs (2,330) (90) (2,165) 65 Other operating income 1,366 750 4,324 3,046 ----- --- ----- ----- Total noninterest income 9,265 15,920 38,752 43,022 Noninterest expense: Compensation and employee benefits 23,408 21,421 91,129 84,217 Premises and occupancy costs 5,400 5,276 21,924 21,375 Office operations 3,185 3,167 13,237 12,788 Processing expenses 4,861 3,917 18,652 15,019 Advertising 1,915 537 5,500 3,742 Federal deposit insurance premiums 1,020 167 3,884 663 Professional services 668 743 2,582 2,778 Amortization of intangible assets 848 1,306 4,387 4,499 Loss on early extinguishment of debt - - 705 - Other expense 2,169 2,074 8,128 7,661 ----- ----- ----- ----- Total noninterest expense 43,474 38,608 170,128 152,742 ------ ------ ------- ------- Income before income taxes 15,082 22,612 65,139 66,553 Income taxes 3,798 6,698 16,968 17,456 ----- ----- ------ ------ Net income $11,284 15,914 48,171 49,097 ======= ====== ====== ====== Basic earnings per share $0.23 $0.33 $1.00 $1.00 Diluted earnings per share $0.23 $0.33 $0.99 $0.99 Annualized return on average equity 7.27% 10.54% 7.75% 8.18% Annualized return on average assets 0.65% 0.95% 0.70% 0.73% Basic common shares outstanding 48,388,260 48,486,394 48,362,510 49,040,617 Diluted common shares outstanding 48,598,473 48,830,692 48,598,424 49,354,161 Northwest Bancorp, Inc. and Subsidiaries Supplementary data (Dollars in thousands) Three months ended Year ended December 31, December 31, 2008 2007 2008 2007 ---- ---- ---- ---- Allowance for loan losses Beginning balance $47,924 41,669 41,784 37,655 Provision 10,212 2,522 22,851 8,743 Charge-offs (3,496) (2,765) (11,610) (8,190) Recoveries 289 358 1,904 1,457 Acquisitions - - - 2,119 ------ ------ ------ ----- Ending balance $54,929 41,784 54,929 41,784 ======= ====== ====== ====== Net charge-offs to average loans, annualized 0.25% 0.20% 0.19% 0.14% December 31, December 31, 2008 2007 2006 2005 ---- ---- ---- ---- Nonperforming loans $99,203 49,610 40,525 43,016 Real estate owned, net 16,844 8,667 6,653 4,872 ------ ----- ----- ----- Nonperforming assets $116,047 58,277 47,178 47,888 ======== ====== ====== ====== Nonperforming loans to total loans 1.91% 1.03% 0.91% 0.92% Nonperforming assets to total assets 1.67% 0.87% 0.72% 0.74% Allowance for loan losses to total loans 1.06% 0.86% 0.85% 0.72% Allowance for loan losses to nonperforming loans 55.37% 84.22% 92.92% 77.70% Reconciliation of the GAAP financial measures to non-GAAP measures: Three months ended Year ended December 31, December 31, 2008 2007 2008 2007 ---- ---- ---- ---- GAAP net income $11,284 15,914 48,171 49,097 Excluding (after-tax): (Gain) on Visa initial public offering (46) - (455) - (Gain) on sale of investment securities (1,341) (3,024) (3,683) (2,805) Impairment write-down on investment securities 2,228 1,159 9,762 4,912 Visa litigation reserve 46 305 46 305 Prepayment penalty on FHLB borrowings - - 430 - Excess provision over net charge- offs 4,273 70 8,018 1,226 Valuation allowance on MSRs 1,421 55 1,321 (40) Reversal of tax reserves - - (706) - - - ---- - Non-GAAP net income $17,865 14,479 62,904 52,695 ======= ====== ====== ====== Non-GAAP diluted EPS $0.37 $0.30 $1.29 $1.07 Non-GAAP annualized return on average equity 11.50% 9.59% 10.13% 8.78% Non-GAAP annualized return on average assets 1.03% 0.87% 0.92% 0.79% Northwest Bancorp, Inc. and Subsidiaries Supplementary data (Dollars in thousands) Loans past due schedule (Number of loans and dollar amount of loans) December 31, ------------ 2008 * 2007 * ---- ---- Loans past due 30 days to 59 days: One- to four- family residential loans 392 $32,988 1.3% 361 $27,270 1.1% Consumer loans 1,157 11,295 0.9% 1,331 10,550 0.8% Multifamily and commercial RE loans 99 18,901 1.8% 88 11,331 1.3% Commercial business loans 86 7,700 2.2% 70 9,947 3.0% -- ----- --- -- ----- --- Total loans past due 30 days to 59 days 1,734 $70,884 1.4% 1,850 $59,098 1.2% ===== ======= === ===== ======= === Loans past due 60 days to 89 days: One- to four- family residential loans 101 $7,599 0.3% 99 $6,077 0.3% Consumer loans 379 2,836 0.2% 437 2,676 0.2% Multifamily and commercial RE loans 54 8,432 0.8% 41 4,984 0.6% Commercial business loans 45 3,801 1.1% 34 2,550 0.8% -- ----- --- -- ----- --- Total loans past due 60 days to 89 days 579 $22,668 0.4% 611 $16,287 0.3% === ======= === === ======= === Loans past due 90 days or more: One- to four- family residential loans 223 $20,435 0.8% 193 $12,542 0.5% Consumer loans 687 9,756 0.7% 744 7,582 0.6% Multifamily and commercial RE loans 155 43,828 4.1% 105 24,323 2.9% Commercial business loans 114 25,184 7.1% 84 5,163 1.6% --- ------ --- -- ----- --- Total loans past due 90 days or more 1,179 $99,203 1.9% 1,126 $49,610 1.0% ===== ======= === ===== ======= === December 31, ------------ 2006 * ---- Loans past due 30 days to 59 days: One- to four- family residential loans 352 $24,078 1.0% Consumer loans 950 9,096 0.8% Multifamily and commercial RE loans 68 7,975 1.1% Commercial business loans 60 4,325 2.0% -- ----- --- Total loans past due 30 days to 59 days 1,430 $45,474 1.0% ===== ======= === Loans past due 60 days to 89 days: One- to four- family residential loans 93 $5,970 0.2% Consumer loans 276 2,833 0.2% Multifamily and commercial RE loans 26 3,846 0.6% Commercial business loans 16 501 0.2% -- --- --- Total loans past due 60 days to 89 days 411 $13,150 0.3% === ======= === Loans past due 90 days or more: One- to four- family residential loans 188 $10,334 0.4% Consumer loans 586 4,578 0.4% Multifamily and commercial RE loans 75 18,982 2.7% Commercial business loans 45 6,631 3.1% -- ----- --- Total loans past due 90 days or more 894 $40,525 0.9% === ======= === * - 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 December 31, 2008: (Dollars in thousands) Loans outstanding: ------------------ Mortgage (1) Consumer (2) -------- -------- Pennsylvania $2,078,312 84.3% 1,149,447 88.2% New York 134,119 5.4% 71,012 5.4% Ohio 23,714 1.0% 12,621 1.0% Maryland 166,011 6.7% 31,331 2.4% Florida 34,839 1.4% 9,730 0.7% Other 29,249 1.2% 29,337 2.3% ------ --- ------ --- Total $2,466,244 100.0% 1,303,478 100.0% ========== ===== ========= ===== Commercial (3) Total (4) ---------- ----- Pennsylvania 899,596 63.0% 4,127,355 79.4% New York 267,439 18.8% 472,570 9.1% Ohio 5,417 0.4% 41,752 0.8% Maryland 181,292 12.7% 378,634 7.3% Florida 55,533 3.9% 100,102 1.9% Other 17,822 1.2% 76,408 1.5% ------ --- ------ --- Total 1,427,099 100.0% 5,196,821 100.0% ========= ===== ========= ===== (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) Commercial (7) Total (8) -------- -------- ---------- ----- Pennsylvania $11,560 0.6% 7,626 0.7% 34,572 3.8% 53,758 1.3% New York 529 0.4% 469 0.7% 1,459 0.5% 2,457 0.5% Ohio 108 0.5% 41 0.3% 127 2.3% 276 0.7% Maryland 508 0.3% 512 1.6% 10,525 5.8% 11,545 3.0% Florida 4,387 12.6% 757 7.8% 14,942 26.9% 20,086 20.1% Other 3,343 11.4% 351 1.2% 7,387 41.4% 11,081 14.5% ----- ---- --- --- ----- ---- ------ ---- Total $20,435 0.8% 9,756 0.7% 69,012 4.8% 99,203 1.9% ======= === ===== === ====== === ====== === (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 December 31, 2008: ----------------------------------------------------------------- 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 $91 - (3) 88 Debt issued by government sponsored enterprises: Due in one year or less 2,985 50 - 3,035 Due in one year - five years 2,962 208 - 3,170 Due in five years - ten years 30,352 2,066 - 32,418 Due after ten years 61,494 8,712 (9) 70,197 Equity securities 954 160 - 1,114 Municipal securities: Due in one year - five years 460 1 - 461 Due in five years - ten years 43,160 822 (86) 43,896 Due after ten years 224,996 2,707 (4,512) 223,191 Corporate trust preferred securities: Due after ten years 25,165 214 (9,418) 15,961 Mortgage-backed securities: Fixed rate pass-through 186,659 6,447 (7) 193,099 Variable rate pass- through 276,121 3,136 (2,074) 277,183 Fixed rate CMO 60,119 445 (3,084) 57,480 Variable rate CMO 228,917 48 (11,088) 217,877 ------- -- ------- ------- Total mortgage-backed securities 751,816 10,076 (16,253) 745,639 ------- ------ ------- ------- Total marketable securities available- for-sale $1,144,435 25,016 (30,281) 1,139,170 ========== ====== ======= ========= Issuers of mortgage-backed securities as of December 31, 2008: -------------------------------------------------------------- Fannie Mae $286,596 4,483 (2,997) 288,082 Ginnie Mae 99,288 1,178 (1,112) 99,354 Freddie Mac 322,374 4,415 (6,492) 320,297 Non-agency 43,558 - (5,652) 37,906 ------ - ------ ------ Total $751,816 10,076 (16,253) 745,639 ======== ====== ======= ======= 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 December 31, 2008 ----------------- Average Interest Avg. Balance Yield/ Cost ASSETS: ------- Interest-earning assets: Loans receivable (a) (b) (d) $5,161,835 83,554 6.42% Mortgage-backed securities (c) 761,155 8,830 4.64% Investment securities (c) (d) (e) 421,417 6,452 6.12% FHLB stock 60,969 314 2.06% Other interest-earning deposits 18,846 42 0.87% ------ -- Total interest-earning assets 6,424,222 99,192 6.13% Noninterest earning assets (f) 496,051 ------- TOTAL ASSETS $6,920,273 ========== LIABILITIES AND SHAREHOLDERS' EQUITY: ------------------------------------- Interest-bearing liabilities: Savings accounts $779,238 2,272 1.16% Interest-bearing demand accounts 722,807 1,305 0.72% Money market accounts 708,655 2,976 1.67% Certificate accounts 2,452,075 20,706 3.35% Borrowed funds (g) 1,009,931 9,013 3.54% Junior subordinated debentures 108,260 1,392 5.03% ------- ----- Total interest-bearing liabilities 5,780,966 37,664 2.58% Noninterest bearing liabilities 518,031 ------- Total liabilities 6,298,997 Shareholders' equity 621,276 ------- TOTAL LIABILITIES AND EQUITY $6,920,273 ========== Net interest income/ Interest rate spread 61,528 3.55% Net interest-earning assets/ Net interest margin $643,256 3.83% Ratio of interest-earning assets to interest-bearing liabilities 1.11X Three months ended December 31, 2007 ----------------- Average Interest Avg. Balance Yield/ Cost ASSETS: ------- Interest-earning assets: Loans receivable (a) (b) (d) 4,833,537 83,147 6.82% Mortgage-backed securities (c) 549,050 6,993 5.09% Investment securities (c) (d) (e) 732,265 10,764 5.88% FHLB stock 32,697 494 6.04% Other interest-earning deposits 66,123 729 4.31% ------ --- Total interest-earning assets 6,213,672 102,127 6.53% Noninterest earning assets (f) 473,056 ------- TOTAL ASSETS 6,686,728 ========= LIABILITIES AND SHAREHOLDERS' EQUITY: ------------------------------------- Interest-bearing liabilities: Savings accounts 755,354 2,297 1.21% Interest-bearing demand accounts 712,967 2,532 1.41% Money market accounts 663,556 6,128 3.66% Certificate accounts 3,058,449 35,413 4.59% Borrowed funds (g) 357,502 3,988 4.43% Junior subordinated debentures 108,325 1,874 6.77% ------- ----- Total interest-bearing liabilities 5,656,153 52,232 3.66% Noninterest bearing liabilities 426,361 ------- Total liabilities 6,082,514 Shareholders' equity 604,214 ------- TOTAL LIABILITIES AND EQUITY 6,686,728 ========= Net interest income/ Interest rate spread 49,895 2.87% Net interest-earning assets/ Net interest margin 557,519 3.21% Ratio of interest-earning assets to interest-bearing liabilities 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. 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. Year ended December 31, 2008 ----------------- Average Interest Avg. Balance Yield/ Cost ASSETS: ------- Interest-earning assets: Loans receivable (a) (b) (d) $5,016,694 328,687 6.50% Mortgage-backed securities (c) 732,281 34,694 4.74% Investment securities (c) (d) (e) 478,933 29,250 6.11% FHLB stock 48,167 1,428 2.96% Other interest-earning deposits 104,895 2,756 2.59% ------- ----- Total interest-earning assets 6,380,970 396,815 6.18% Noninterest earning assets (f) 488,579 ------- TOTAL ASSETS $6,869,549 ========== LIABILITIES AND SHAREHOLDERS' EQUITY: ------------------------------------- Interest-bearing liabilities: Savings accounts $778,341 9,159 1.18% Interest-bearing demand accounts 732,097 6,434 0.88% Money market accounts 720,713 14,726 2.04% Certificate accounts 2,716,815 106,742 3.93% Borrowed funds (g) 718,657 26,893 3.74% Junior subordinated debentures 108,287 5,339 4.86% ------- ----- Total interest-bearing liabilities 5,774,910 169,293 2.93% Noninterest bearing liabilities 473,410 ------- Total liabilities 6,248,320 Shareholders' equity 621,229 ------- TOTAL LIABILITIES AND EQUITY $6,869,549 ========== Net interest income/ Interest rate spread 227,522 3.25% Net interest-earning assets/ Net interest margin $606,060 3.57% Ratio of interest-earning assets to interest-bearing liabilities 1.10X Year ended December 31, 2007 ----------------- Average Interest Avg. Balance Yield/ Cost ASSETS: ------- Interest-earning assets: Loans receivable (a) (b) (d) 4,660,693 317,321 6.78% Mortgage-backed securities (c) 584,053 29,385 5.03% Investment securities (c) (d) (e) 820,337 47,990 5.85% FHLB stock 33,348 2,017 6.05% Other interest-earning deposits 150,665 7,867 5.15% ------- ----- Total interest-earning assets 6,249,096 404,580 6.45% Noninterest earning assets (f) 453,922 ------- TOTAL ASSETS 6,703,018 ========= LIABILITIES AND SHAREHOLDERS' EQUITY: ------------------------------------- Interest-bearing liabilities: Savings accounts 793,172 10,909 1.38% Interest-bearing demand accounts 698,585 11,038 1.58% Money market accounts 637,983 23,551 3.69% Certificate accounts 3,076,693 141,042 4.58% Borrowed funds (g) 381,262 17,225 4.52% Junior subordinated debentures 105,850 7,250 6.76% ------- ----- Total interest-bearing liabilities 5,693,545 211,015 3.71% Noninterest bearing liabilities 409,096 ------- Total liabilities 6,102,641 Shareholders' equity 600,377 ------- TOTAL LIABILITIES AND EQUITY 6,703,018 ========= Net interest income/ Interest rate spread 193,565 2.74% Net interest-earning assets/ Net interest margin 555,551 3.10% Ratio of interest-earning assets to interest-bearing liabilities 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, both of Northwest Bancorp, Inc. Web Site: http://www.northwestsavingsbank.com/

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