Northwest Bancshares, Inc.
Annual Report 2011

Plain-text annual report

trust loyalty value 2011 Summary Annual Report Northwest Savings Bank J.D. Power and Associates Celebration Warren, Pennsylvania June, 2011 “Highest Customer Satisfaction with Retail Banking in the Mid-Atlantic Region, Two Years in a Row” Building Loyalty, Trust, and Value Dear Shareholders of Northwest Bancshares, Inc., On behalf of the Board of Directors, officers, and staff of our Company, I am pleased to report on another year of progress. During 2011, we posted record earnings, realized modest loan growth, and made substantial improvement in the mix of our loans and deposits. While asset quality continues to be a challenge, we realized a meaningful reduction in nonperforming assets for the first time in three years. Investors appear to have recognized our progress as our stock continued to perform better than the bank stock index and the stock market in general. Summary Annual Report Building Loyalty, Trust, and Value During 2011, we posted record earnings, realized modest loan growth, and made substantial improvement in the mix of our loans and deposits. EARNINGS Earnings for 2011 were $64.1 million, or $.64 per share, compared to $57.5 million, or $.53 per share, in 2010. This substantial increase resulted primarily from an increase in net interest margin of $9.6 million and a $6.3 million decrease in the provision for loan losses. Partially offsetting Likewise, if we can use a significant portion of the $700 million we have in overnight funds (which is currently earning less than .25%) to fund new loans, we should realize a substantial increase in net interest income. these improvements were a decrease in noninterest STOCK PERFORMANCE income of $2.3 million and an increase in noninterest expense of $3.7 million. We began 2011 with our common shares trading at $11.78 and ended the year with a market value Net interest income improved during a time of of $12.44, an increase of 5.6%, while the S&P 500 historically low interest rates and an extremely was unchanged over that time. While we are flat yield curve. This improvement was due to pleased with the performance of the past year, we our success in achieving greater concentrations of are especially proud of the value we have given higher-yielding commercial loans and lower-cost our shareholders over our first seventeen years as a checking accounts. Noninterest income decreased public company. Since our initial public offering primarily due to the impact of regulations on in 1994, the market value of our shares has the fees we earn on deposits, while the increase increased 517%, while the NASDAQ bank index in noninterest expense related primarily to the and the S&P 500 index increased by 139% and additional expenses incurred to strengthen our 196%, respectively. regulatory compliance program. Looking ahead, our primary profitability metric We remain optimistic regarding future will continue to be return on assets with a goal increases in earnings. If credit quality continues to of attaining the greatest return from every improve, we should be able to realize a meaningful dollar of assets on our balance sheet. With that reduction in our annual loan loss provisions. accomplished, realizing an acceptable return on 2 equity becomes a matter of “right-sizing” our capital LOAN GROWTH levels by growing our balance sheet, paying cash dividends, or repurchasing shares. With common tangible equity in excess of 12.6% of assets, Northwest has significant flexibility in pursuing any or all of these alternatives in enhancing shareholder value. SHARE REPURCHASES During 2011, Northwest purchased 14,437,253 shares of our common stock at an average price of $11.96 while the tangible book value per share averaged just over $10. We estimate the premium that we paid will be recovered in approximately three years through incremental increases in earnings per share. On September 26, 2011, we announced our third stock repurchase program with a target of 4,750,000 shares. In the fourth quarter of 2011, our share repurchase program was curtailed, with only 170,000 shares purchased, because of the significant increase in the market value of our stock. We are currently evaluating stock market conditions as well as alternative uses for our excess capital and will take a calculated approach to future stock repurchases. During the current economic downturn which began in 2008, Northwest achieved overall net loan growth of $670 million, or 13.50%, significantly higher than the industry average. During that four year period, our commercial loan and commercial real estate loan portfolios grew by $616 million, or 48.3%. Due to interest rates on mortgage and home equity loans reaching historic lows, the growth of this portfolio segment was held to just $77 million, or 2.3%. Demand for consumer loans was soft during that period and we realized a net portfolio loss of $22.6 million, or 8.4%. Given the importance of loan growth to the future success of our Company, we have worked diligently over the past year to improve our lending process. These changes, once fully implemented, will expedite the loan origination process, strengthen credit underwriting, enhance business development efforts, and further our goal of being the lender-of-choice in all of our markets. We are currently evaluating stock market conditions as well as alternative uses for our excess capital and will take a calculated approach to future stock repurchases. 3 Building Loyalty, Trust, and Value Over the past four years, our checking account balances have increased by $380 million, or 35.2%, a significant achievement. DEPOSIT MIX ASSET QUALITY Northwest continued to target the growth of For the first time in over four years, we were checking accounts and checking balances in 2011. able to post a substantial decrease in loan We were able to add 5,750 net new checking delinquency while nonperforming assets and accounts, a 2.4% increase, while the balances classified assets also decreased significantly. Loans increased by $101.7 million, or 7.5%. Over the charged-off remained at an elevated level with net past four years, our checking account balances losses of $39.4 million, as many of the loans which have increased by $380 million, or 35.2%, and became troubled over the past four years were have grown from 19.5% to 25.2% of our deposits. written down or written off. In analyzing recent Given the inherent difficulty in getting customers trends in our asset quality and in reviewing the to switch their checking services from one bank to changing economic environment, we believe the another, we believe this is a significant achievement. severe credit challenges of the past four years are We commend our marketing personnel and business finally diminishing. Absent the return of weakening development teams for their efforts in making our economic conditions, we anticipate that our asset “Switch” checking campaign a great success. quality will continue to gradually improve during Deposit growth will remain an area of focus as we pursue opportunities to increase low-cost checking accounts while decreasing our reliance on certificates of deposit as a funding source. We will also remain vigilant in monitoring the impact 2012 and in the years that follow. As previously mentioned, we hope that a return to more normal credit conditions and related levels of loan loss provisions will provide healthy increases to future earnings. that the Marcellus and Utica Shale gas drilling When we look back at the last four years in search activities may have on deposit growth in an effort to of “lessons learned,” we note that about half of capitalize on emerging opportunities. our losses were incurred in Florida and Maryland, two markets where we had a small percentage of our loans but which suffered severe declines in real 4 estate values. While many of the problem loans in Pennsylvania, New York, and Ohio, we determined these markets were acquired through mergers, the our efforts should be directed at that core market remainder generally were loans that were originated where we already have a significant presence and a using sound underwriting by experienced lenders. solid reputation. Obviously, even strong internal processes cannot prevent losses in a market that suffers such a dramatic collapse in real estate values. Looking ahead, we continue to build our credit administration function with the goals of enhancing credit oversight, building a strong credit culture, and removing administrative functions from our lenders so they have more time to develop new business and meet our targets for growth. BRANCHES In 2011, we opened a new office in Brighton, New York, giving Northwest five offices in the NEW PRODUCTS AND SERVICES Substantial progress has been made over the past ten years in upgrading Northwest’s infrastructure to provide the support necessary to be a measurably larger and more sophisticated financial institution. This year we continued with that journey by adding an oil and gas consulting group to our trust and wealth management division. We also created a special website for attorneys, accountants, and landowners (oilandgashelp.com) to provide information to help them address their oil and gas related needs. This site has been well-received by the media and by current and potential customers. Rochester market. We closed offices in Pottsville, We were also pleased to add another option to Pennsylvania, and three facilities in south Florida our broad menu of business products and services, as it was decided these locations were no longer lockbox services, and we initiated a project to upgrade consistent with the goals of our strategic plan. all of our ATM machines to meet new federal Given the substantial shale gas activity we anticipate ADA guidelines and provide for the acceptance of could develop within our core footprint in deposits using digital capture technology. Substantial progress has been made over the past ten years in upgrading Northwest’s infrastructure to provide the support necessary to be a measurably larger and more sophisticated financial institution. 5 Building Loyalty, Trust, and Value We were honored again in 2011 to be ranked “Highest Customer Satisfaction with Retail Banking in the Mid-Atlantic Region” by J.D. Power and Associates. REGULATORY ISSUES RECOGNITION In July of 2011, we signed a Consent Order with We were honored again in 2011 to be ranked the FDIC which requires Northwest to develop “Highest Customer Satisfaction with Retail a stronger system to monitor compliance with Banking in the Mid-Atlantic Region” by consumer regulations. We have diligently addressed J.D. Power and Associates. Given our internal goal the items detailed in the Consent Order with the of developing exceptional customer loyalty, the goal of being released from it as soon as possible. Board of Directors and employees of our Company For the Consent Order to be removed, Northwest take great pride in our customers’ exceptionally must demonstrate over time that our strengthened high rating of how we serve them. system provides the expected level of regulatory compliance. Until that happens, it most likely will remain difficult for Northwest to obtain permission to open new offices or acquire other banks. Northwest was also named to Keefe, Bruyette & Woods’ “Bank Honor Roll” as one of the top 40 banks in the country based on our ten-year operating performance. We take special pride The changes we have made to address the Consent in this recognition because it evaluates long-term Order have been extensive, creating recurring success, a continuing focus for our organization. annual expenses of $2 to $3 million. Although this represents a significant impact to earnings, our strengthened system should position Northwest at the forefront of a regulatory movement that will soon impact all financial institutions. Accordingly, our aggressive compliance initiatives may give Northwest a competitive advantage in the years ahead. 6 CONCLUSION As we look back on the last four years of and service set as well as our infrastructure. We national economic weakness, we take note of the have never been better positioned to grow our tremendous challenges our industry faced – high franchise and capitalize on the challenges of the unemployment; historically low interest rate levels future. As a shareholder of our Company, you can combined with a flat yield curve; declining real be assured that our Board, officers, and employees estate values; weak loan demand; and increasing will continue to pursue a strategy that enhances regulatory burden. Each of these situations shareholder value. We thank you for your continued alone would cause severe stress to our nation’s support and investment in our Company. financial institutions, but we faced all of them simultaneously – a perfect storm for the banking industry. Despite these challenges, Northwest reached record levels of net income, procured $658 Sincerely, million of new common capital, strengthened our William J. Wagner balance sheet, and greatly enhanced our product President and CEO We have never been better positioned to grow our franchise and capitalize on the challenges of the future. 7 Building Loyalty, Trust, and Value Market Coverage Northwest Bancshares, Inc.’s network of offices serves communities in Pennsylvania, New York, Ohio, and Maryland. NEW YORK OHIO PENNSYLVANIA MARYLAND NORTHWEST SAVINGS BANK NORTHWEST CONSUMER DISCOUNT COMPANY 8 ASSETS in billions of dollars Growth & Performance $6.33 $6.45 $6.53 $6.66 $6.93 $8.03 $8.15 $7.96 $5.68 $4.31 Northwest has demonstrated the ability to safely grow our balance sheet... 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 ANNUAL NET INCOME in millions of dollars $56.8 $52.4 $51.5 $49.1 $48.2 $42.8 $37.9 $64.2 $57.5 $32.7 while increasing income commensurate with that growth... 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 STOCK PRICE PERFORMANCE SINCE IPO 10 8 6 4 2 0 80 70 60 50 40 30 20 10 0 600 400 200 0 total return % NWBI (+517.00%) S&P 500 (+195.77%) SNL U.S. Bank (+77.64%) -200 4 9 9 1 5 9 9 1 6 9 9 1 7 9 9 1 8 9 9 1 9 9 9 1 0 0 0 2 1 0 0 2 2 0 0 2 3 0 0 2 4 0 0 2 5 0 0 2 6 0 0 2 7 0 0 2 8 0 0 2 9 0 0 2 0 1 0 2 1 1 0 2 which the market has rewarded in the exceptional performance of our stock. 9 Building Loyalty, Trust, and Value Financial Highlights NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES in thousands, except per share and other data AT YEAR END DECEMBER 31, 2011 2010 2009 Total assets Loans receivable, net Deposits Shareholders’ equity Book value per share Closing market price per share FOR THE YEAR ENDED DECEMBER 31, Net interest income Net income Diluted earnings per share Dividends per share KEY FINANCIAL RATIOS FOR THE YEAR ENDED DECEMBER 31, Return on average shareholders’ equity Return on average assets Tangible common equity Average interest rate spread Nonperforming assets to total assets at end of period Net charge-offs as a percentage of average loans outstanding Allowance for loan losses to nonperforming loans at end of period Allowance for loan losses as a percentage of loans receivable OTHER DATA AT DECEMBER 31, Number of: Community banking locations Consumer finance offices Full time equivalent employees Registered shareholders(1) (1) Excludes shareholders who own their stock in “street name.” $7,957,705 $5,480,381 $5,780,325 $1,154,904 $11.83 $12.44 $8,148,155 $5,457,593 $5,764,336 $1,307,450 $11.85 $11.78 $8,025,298 $5,229,062 $5,624,424 $1,316,515 $11.90 $11.27 $267,269 $64,151 $0.64 $0.43 $257,641 $57,523 $0.53 $0.40 $228,657 $32,653 $0.30 $0.40 5.24% 0.80% 12.59% 3.39% 1.99% 0.72% 4.40% 0.71% 14.19% 3.19% 2.08% 0.63% 4.71% 0.46% 14.53% 3.30% 1.81% 0.51% 54.26% 51.49% 56.49% 1.28% 1.38% 1.33% 168 52 1,950 14,914 171 52 1,881 14,693 171 51 1,867 19,892 10 Corporate Profile Northwest Bancshares, Inc., a savings and loan holding company, owns and operates Northwest Savings Bank, a Pennsylvania-chartered savings bank headquartered in Warren, Pennsylvania. As of December 31, 2011, we held assets of $7.96 billion and operated 168 community banking locations and 266 Automated Teller Machines (ATMs) throughout our markets in central and western Pennsylvania, western New York, eastern Ohio, and Maryland. Summary Annual Report 11 Our primary business involves gathering funds from deposits and borrowings... SOURCES OF FUNDS Subordinated Debt 2% Money Market Deposit Accounts 14% Certificates of Deposit 34% Savings Accounts 16% Borrowed Funds 12% Checking Accounts 22% and investing those funds in loans and investment securities. INVESTMENT OF FUNDS Consumer Loans 3% Commercial Loans 5% Other Assets 7% Mortgage Loans 30% Home Equity Loans 14% Commercial Real Estate Loans 18% Cash & Investments 23% Building Loyalty, Trust, and Value Corporate Profile Our primary business involves gathering funds from deposits and borrowings and investing those funds in loans and investment securities. For 115 years, we have served our communities with an ever-expanding array of banking and investment products that meet the needs of both business and personal customers. Our Business Banking offering includes commercial loans, business deposits, cash management services, and benefits management services featuring personal attention and local decision making. Our Personal Banking offering includes mortgage, home equity, and consumer loans, and checking and other deposit products with a personal touch and a complete menu of delivery channels. We also provide comprehensive brokerage, trust, and investment management services to meet all of our customers’ financial needs. In addition to our traditional banking business, we operate a consumer finance company, Northwest Consumer Discount Company, with 52 offices in Pennsylvania. Northwest Consumer Discount Company specializes in helping customers meet their consumer credit needs. As of December 31, 2011, Northwest Consumer Discount Company had loans outstanding of $108.8 million. 12 Business Banking and Benefits Management Northwest’s goal is to provide a wide array of financial solutions to businesses utilizing products and services that are competitively priced and of the highest quality. We specialize in developing lasting relationships based on custom-tailored products and services, local decision making, and personal attention. Summary Annual Report 13 Building Loyalty, Trust, and Value Business Banking BUSINESS DEPOSITS Northwest solicits business deposits during the business lending process by requiring loan customers to maintain deposits as part of their overall relationships. Business deposits are also actively solicited by our Business Services Advisors and other members of our community banking teams from customers who may not need to borrow money. The growth of our business deposit balances is due, in no small part, to the excellence and convenience of related services which allow business customers to bank with Northwest regardless of their proximity to a branch location. Business Online Banking and Bill Pay, Business Mobile Banking, Cash Management Services, ACH Services, Merchant Services, and Express Deposit (Remote Capture) have helped to make the difference in our success. Because business deposits enhance shareholder return by providing low-cost deposits and fee income, our strategy will focus on continued growth. 14 Balances on business deposits have increased substantially... BUSINESS DEPOSIT BALANCES in millions of dollars 1,000 800 600 $665.9 $691.2 $784.5 $808.6 $855.3 400 200 0 2007 2008 2009 2010 2011 while the average cost of such deposits has decreased. COST OF BUSINESS DEPOSITS 2.0 1.5 1.0 0.5 0.0 1.93% 0.81% 0.56% 0.28% 2007 2008 2009 2010 0.17% 2011 Northwest’s mix of business deposits is diversified due to our focus on meeting the needs of all types of businesses. Interest Checking Accounts 15% Municipal Accounts 19% Business Money Market Accounts 31% Non-Interest Checking Accounts 35% Northwest’s commercial loans have grown substantially over the past five years... COMMERCIAL LOANS in millions of dollars Business Banking $1,886.0 $1,889.6 $1,695.7 $1,487.4 $1,274.1 2,000 1,500 1,000 500 0 2007 2008 2009 2010 2011 while yields have remained at attractive levels despite the low interest rate environment.... COMMERCIAL LOAN YIELDS VS. 3-YEAR TREASURY YIELD AT DECEMBER 31 6.05% 5.82% 5.73% 5.63% 7.27% 3.07% 1.70% 1.00% 1.02% 0.36% 2007 2008 2009 2010 2011 COMMERCIAL AND INDUSTRIAL LOANS COMMERCIAL REAL ESTATE LOANS Northwest has had great success in building a high- quality commercial loan portfolio utilizing local decision making and conservative lending policies. Our commercial loan portfolio provides an attractive yield, a high degree of interest sensitivity, and a manageable level of credit risk. To make informed lending decisions, Northwest draws on qualitative information: knowing our borrowers, knowing their businesses, and knowing the local market. This knowledge allows us to better assess credit risk, while successfully making loans to a wider group of businesses throughout our Northwest commercial loan yields 3-year Treasury yield local markets. and loan losses have been much lower than the industry average. LOAN LOSSES VS. INDUSTRY AVERAGE LOSSES as a % of loans We continue to believe that establishing, building, and maintaining relationships results in lasting value for our Company and our customers. 2.50% 2.55% 1.29% 1.55% 0.14% 0.59% 0.19% 0.51% 0.63% 0.72% 2007 2008 2009 2010 2011 Northwest losses Industry average losses Summary Annual Report 15 8 7 6 5 4 3 2 1 0 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Building Loyalty, Trust, and Value Benefits Management Northwest serves as trustee and manages or administers assets for employer-sponsored retirement plans for businesses, non-profits, municipalities, and corporations. Assets under management have increased steadily over the years and remain the fastest-growing part of our investment management business. Northwest also operates two employee benefits services firms, Boetger & Associates and Veracity Benefits. Boetger & Associates offers consulting, actuarial, plan design, implementation, administration, and record keeping services for pension, 401(K), ESOP, and section 125 plans. Veracity Benefits specializes in employer/employee group medical, dental, vision, life, accidental death and dismemberment, long-term disability, and travel accident plans and policies. These comprehensive lines of business provide Northwest with significant opportunities to deepen our business relationships, while providing an ongoing source of fee-related income. 16 Northwest has expanded the number of clients in recent years... # OF BENEFITS MANAGEMENT CLIENTS 1,500 1,200 900 1,226 1,119 600 697 736 770 300 0 2007 2008 2009 2010 2011 along with the number of benefit plans administered... # OF BENEFIT PLANS ADMINISTERED 1,798 1,538 778 822 864 2,000 1,500 1,000 500 0 2007 2008 2009 2010 2011 which has driven an increase in fee income from these business lines. REVENUE FROM BENEFITS MANAGEMENT in millions of dollars 10 8 6 4 2 0 $8.1 $7.3 $4.1 $4.0 $4.1 2007 2008 2009 2010 2011 Personal Banking Our Company’s goal is to deliver the highest quality personal banking products and services with maximum convenience and competitive pricing. Northwest has all the financial tools to fit the way our customers live, work, and play. Summary Annual Report 17 Building Loyalty, Trust, and Value Personal Banking Our primary focus is on developing lasting, full-service relationships that help our customers achieve their financial goals. We believe these lasting relationships will continue to provide our Company both a stable source of funding and a reliable pipeline of mortgage, home equity, and consumer loans. Our strategy of increasing the number of services per household... SERVICES PER HOUSEHOLD 2.846 2.711 2.629 2.547 3.00 2.75 2.50 2.25 2.00 2008 2009 2010 2011 and decreasing the number of single service households... Our commitment to both product development # OF SINGLE SERVICE HOUSEHOLDS and strategic, targeted marketing initiatives has combined to steadily increase the number of households we serve and the number of products and services per household. By graduating more of our customers from a single Northwest-provided product or service to a series of interconnected financial solutions that fit their needs, everyone benefits. We will continue to build on this concept with a goal of continuous improvement in the number of services per household. 96,659 94,213 88,991 84,641 100,000 90,000 80,000 70,000 60,000 2008 2009 2010 2011 creates meaningful customer relationships, reduces attrition, and improves operating performance. # OF HOUSEHOLDS 300,000 275,000 288,502 295,051 297,957 295,596 250,000 225,000 200,000 2008 2009 2010 2011 18 Northwest has had great success in recent years in procuring new checking accounts... # OF CHECKING ACCOUNTS Personal Banking 186,156 189,424 203,354 213,359 218,420 CHECKING 250,000 200,000 150,000 100,000 50,000 0 2007 2008 2009 2010 2011 while checking account balances have also increased significantly... Northwest’s checking accounts provide affordable terms, maximum convenience, and easy access. In recent years, we have aggressively targeted growth in checking accounts in an effort to lower our cost of funds and improve fee income. Furthermore, these core deposits enable us to compete for and CHECKING ACCOUNT BALANCES in millions of dollars retain loan customers. The financial lifeline for any individual, family, or business, a checking account is a key indicator of customer loyalty and predictor of new customer referrals. As such, Northwest’s success in attracting new checking customers and maintaining existing checking customers fuels the engine that drives much of our bottom line success. Our goal is to continue to acquire personal checking accounts as a means of developing and maintaining profitable, full-service relationships. $867.9 $725.6 $779.3 $592.6 $616.6 1,000 800 600 400 200 0 2007 2008 2009 2010 2011 and provided growth in checking-related fee income. CHECKING ACCOUNT FEES in millions of dollars $30.0 $31.5 $34.8 $32.3 $24.9 2007 2008 2009 2010 2011 35 30 25 20 15 10 5 0 Summary Annual Report 19 Building Loyalty, Trust, and Value Personal Banking Over the past five years, Northwest has made considerable progress in changing the mix of our deposits... OTHER DEPOSIT PRODUCTS Focused on developing and maintaining customer relationships, Northwest offers savings accounts, money market accounts, certificates of deposit, and individual retirement accounts that are competitively priced, easily understood, and convenient. These products provide Northwest a reliable source of cash to fund the origination of loans in the communities we serve. Looking ahead, we will continue to pursue a strategy that provides a lower cost of funds and less sensitivity to changes in interest rates. 20 2011 DEPOSIT MIX Money Market Accounts 17% Checking Accounts 25% Savings Accounts 19% Certificates of Deposit 39% 2006 DEPOSIT MIX Money Market Accounts 11% Checking Accounts 19% Savings Accounts 15% Certificates of Deposit 55% which has contributed to a significant decrease in cost of deposits. COST OF DEPOSITS VS. 1-YEAR TREASURY YIELD AT DECEMBER 31 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 3.34% 3.29% 2.08% 1.58% 1.13% 0.94% 0.37% 0.47% 0.29% 0.12% 2007 2008 2009 2010 2011 Cost of deposits 1-year Treasury yield The mortgage and home equity portfolios have provided an attractive and stable yield during a period of low interest rates... MORTGAGE PORTFOLIO YIELD VS. 10-YEAR TREASURY YIELD AT DECEMBER 31 Personal Banking 6 5 4 3 2 1 0 8 7 6 5 4 3 2 1 0 Mortgage yield 10-year Treasury yield MORTGAGE AND HOME EQUITY LOANS 5.96% 5.96% 5.78% 5.54% 5.27% 4.04% 3.85% 3.30% 2.25% 1.89% 2007 2008 2009 2010 2011 YIELD ON HOME EQUITY LOANS VS. 3-YEAR TREASURY YIELD AT DECEMBER 31 Northwest has a long tradition of making mortgage loans in our communities, enabling our customers to realize the American dream. These loans have proven to be a stable and secure source of income for the investment of our funds. Shorter term home equity loans offer attractive yields and enable our customers to utilize the equity Yield on home equity loans 3-year Treasury yield in their homes to make improvements, finance 6.97% 6.54% 6.15% 5.89% 5.64% 3.07% purchases, and consolidate debt. We view mortgage and home equity lending as an opportunity to obtain new customers and enhance 1.70% 1.00% 1.02% 0.36% existing relationships. Our recent implementation 2007 2008 2009 2010 2011 of specialized Mortgage Loan Officers throughout while losses have been minimal due to our conservative lending practices and low average balances. our lending footprint exemplifies our dedication to preserving our expertise and reputation. MORTGAGE & HOME EQUITY LOANS LOSSES as a % of total mortgages and home equities AVERAGE MORTGAGE BALANCE 0.25 0.20 0.15 0.10 0.05 0.00 0.08% 0.05% 0.03% 0.24% 0.24% 100,000 80,000 $83,552 $87,595 $86,700 $89,269 $87,098 60,000 40,000 20,000 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Summary Annual Report 21 Building Loyalty, Trust, and Value Personal Banking CONSUMER LOANS Northwest’s array of consumer loans enables our customers to purchase automobiles, appliances, and other consumer staples. Our consumer finance subsidiary, Northwest Consumer Discount Company, specializes in assisting customers in meeting their credit needs. Consumer loans have proven to be a stable and secure source of income. Although such credit is also offered by non-banking entities, we believe our customers enjoy the convenience and personal attention they receive at Northwest. We want to continue to grow this line of business as an outstanding source of loans that are short in duration and carry attractive yields. 22 At Northwest, we continue to retain our consumer loan portfolio even during the recent economic downturn. CONSUMER LOANS in millions of dollars $268.2 $267.5 $273.9 $255.8 $245.7 300 250 200 150 100 50 0 2007 2008 2009 2010 2011 Losses have remained at manageable levels... CONSUMER LOAN LOSSES as a % of consumer loans 1.95% 1.94% 1.81% 1.64% 1.53% 2.0 1.5 1.0 0.5 0.0 2007 2008 2009 2010 2011 and yields have remained attractive during a period of low interest rates. YIELD ON CONSUMER LOANS VS. 3-YEAR TREASURY YIELD AT DECEMBER 31 7.82% 10.81% 10.45% 10.60% 11.30% 11.57% 3.07% 1.00% 1.70% 1.02% 0.36% 2007 2008 2009 2010 2011 Yield on consumer loans 3-year Treasury yield 12 10 8 6 4 2 0 Northwest maintains an extensive network of branch offices as our primary point of contact for our customers... # OF COMMUNITY BANKING OFFICES Personal Banking 200 DELIVERY CHANNELS 150 166 167 171 171 168 100 50 0 2007 2008 2009 2010 2011 with a substantial network of ATMs... # OF ATMS OWNED AND OPERATED 272 276 287 280 266 300 280 260 240 220 200 2007 2008 2009 2010 2011 while serving more people than ever through telephone and online banking. # OF BANKLINE CALLS & ONLINE LOGINS in millions 12 10 8 6 4 2 0 11.4 10.7 9.2 9.7 8.2 2007 2008 2009 2010 2011 Northwest is committed to maintaining the highest level of customer service in our industry. To this end, we support traditional and electronic delivery channels to provide our customers access to real-time information and the ability to make transactions anywhere, anytime. We strategically review our channel offerings and staffing each year for efficiency and will continue to invest in and execute on strategies that provide customers with a rich experience and a choice of delivery channels that meet their needs, service preferences, and lifestyles. Our community banking offices are conveniently located and staffed by friendly, knowledgeable bankers trained to provide quality customer service. We operate a state-of-the-art, multi-functional call center with extended hours to serve our diverse customer base with inbound and outbound calling, email messaging, loans by telephone, and an internal help desk. Our customer care representatives are highly-trained to provide world-class service. Summary Annual Report 23 Building Loyalty, Trust, and Value Personal Banking DELIVERY CHANNELS Northwest continues to innovate and promote self-service electronic banking channels to attract new customers, reduce attrition, improve service, and lower servicing costs. Northwest customers continue to increase their use of electronic transactions... ELECTRONIC (ACH) TRANSACTIONS in millions 15.1 15.9 13.8 17.2 17.9 20 15 10 5 0 Online Banking and Bill Pay adoption and usage continue to grow for both personal and business customers, spurred by the convenience, security, and ease of use of our service. ATM and debit card usage increasingly outpaces traditional check writing, and the associated fee income from these transactions benefits Northwest more with each passing year. We continue to enhance our personal and business Mobile Banking to support our “on the go” customers and meet the demands of up-and-coming, younger customers. Going forward, we will continue to focus on the optimization 40 30 20 10 0 2007 2008 2009 2010 2011 while choosing to replace checks with debit card purchases... CHECKS PROCESSED VS. DEBIT CARD PURCHASES in millions 35.4 34.2 23.8 20.6 31.1 26.6 30.4 29.3 27.6 33.6 2007 2008 2009 2010 2011 and performance of our delivery channels to cost-effectively Checks processed Debit card purchases serve the needs and preferences of our customers. ONLINE BANKING USERS as a % of total checking accounts 56.4% 58.0% 50.8% 45.8% 39.4% 60 45 30 15 0 which has provided a substantial increase in fee income. ATM & DEBIT CARD INCOME in millions of dollars $16.6 $14.6 $11.8 $10.6 $9.2 20 15 10 5 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 24 Wealth Management Northwest has achieved significant growth in both personal assets under management and number of clients as we leverage the opportunities to develop such relationships with customers who also use our banking services. Summary Annual Report 25 Building Loyalty, Trust, and Value Wealth Management BROKERAGE, TRUST, AND INVESTMENTS Northwest has achieved significant growth in both personal assets under management and number of clients as we leverage the opportunities to expand relationships and improve fee income with customers who also use our banking services. Northwest’s Wealth Management Group is devoted Assets under management have increased significantly in recent years... PERSONAL ASSETS UNDER MANAGEMENT in millions of dollars 750 625 $639 500 $529 $558 $508 $415 375 250 2007 2008 2009 2010 2011 as has the number of clients... to providing comprehensive investment and trust NUMBER OF CLIENTS services with an emphasis on exceptional customer satisfaction. We strive to provide competitive returns under normal market conditions while preserving our customers’ assets in turbulent times and improving their financial well-being so that they may enjoy a secure future. In 2011, we announced the formation of Northwest Advisors, Inc., our new Registered Investment Advisory firm, and the extension of our annuity products. Both help our clients with a broad range of financial needs. Looking ahead, we envision significant growth in this business segment as we expand our internal capabilities to capitalize on the wealth we anticipate will be created by the expansion of natural gas exploration across much of our geographic footprint. 8,607 7,714 7,526 6,905 5,482 10,000 8,000 6,000 4,000 2,000 0 2007 2008 2009 2010 2011 which has provided a growing source of fee income. WEALTH MANAGEMENT REVENUE in millions of dollars 5 4 3 2 1 0 $4.6 $4.0 $3.3 $3.5 $3.0 2007 2008 2009 2010 2011 26 Asset Quality, Financial Data, and Investor Information Summary Annual Report 27 Building Loyalty, Trust, and Value Asset Quality Although we have witnessed some deterioration in asset quality during one of the most turbulent economic periods in history, net charge-offs have remained lower than the industry average due to: (cid:114)(cid:1)(cid:1)Historically conservative underwriting and continued vigilance with collections and delinquency follow up (cid:114)(cid:1)(cid:1)Maintaining diversification with 63% of the portfolio invested in one-to-four family residential mortgage and home equity loans where our historical loss rates have been minimal (cid:114)(cid:1)(cid:1)Diligently monitoring and managing our loan portfolio and limiting total credit exposure to single borrowers, industries, markets, or lines of business (cid:114)(cid:1)(cid:1)Limiting the majority of lending activities to borrowers located in our core markets of Pennsylvania and New York Northwest’s well-diversified loan portfolio enhances credit quality. LOAN MIX at December 31, 2011 Consumer Loans 4% Commercial Business Loans 7% Home Equity Loans 20% One-to-Four Family Residential Mortgage Loans 43% Multi-family & Commercial Loans 26% During the most recent economic downturn, nonperforming assets increased but remained much lower than industry averages. NONPERFORMING ASSETS as a % of total assets 3.36% 3.25% 1.91% 1.67% 1.81% 2.55% 2.08% 1.99% 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 0.95% 0.87% 2007 2008 2009 2010 2011 Northwest Industry average 28 80 60 40 20 0 50 40 30 20 10 0 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 LOAN LOSS RESERVES IN MILLIONS OF DOLLARS and as a % of loans Loan loss reserves Loan loss reserves as a % of loans $70.4 $76.4 $54.9 1.06% $41.8 0.86% 1.33% 1.38% $71.1 1.28% From 2007 to 2010, Northwest increased the reserve for loan losses in response to the weak economic environment. In 2011, the reserve was lowered in response to stronger economic conditions and a reduction in the number of nonperforming loans. 2007 2008 2009 2010 2011 LOAN CHARGE-OFFS/LOAN LOSS PROVISIONS in millions of dollars Charge-offs Provisions for losses $41.8 $40.5 $39.4 $34.5 $34.2 $26.4 $22.9 $8.7 $6.7 $9.7 2007 2008 2009 2010 2011 DELINQUENT LOANS AS A % OF TOTAL LOANS 30 to 90+ days 3.75% 1.93% 0.44% 1.38% 2.60% 2.25% 1.03% 0.34% 1.23% 3.57% 3.65% 2.10% 0.35% 1.12% 1.81% 0.56% 1.28% 3.16% 1.73% 0.37% 1.06% 2007 2008 2009 2010 2011 30 to 59 60 to 89 90 days or more Loan charge-offs continued to increase as the recession lengthened. The loan loss provision decreased in 2011, as Northwest credit quality improved. While the current recession has caused Northwest’s borrowers to struggle with their payment obligations, delinquency remained at manageable levels before decreasing in 2011. Summary Annual Report 29 Building Loyalty, Trust, and Value Financial Data CONDENSED CONSOLIDATED BALANCE SHEET (in thousands, except share data) AS OF DECEMBER 31, 2011 2010 ASSETS Cash and cash equivalents Marketable securities available-for-sale Marketable securities held-to-maturity Loans receivable, net of allowance for loan losses of $71,138 and $76,412 Accrued interest receivable Real estate owned, net Bank-owned life insurance Premises and equipment Goodwill and other intangible assets Federal Home Loan Bank stock, at cost Other assets TOTAL ASSETS LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits Borrowed funds Advances by borrowers for taxes and insurance Accrued interest payable Other liabilities Trust preferred securities TOTAL LIABILITIES $ 688,297 908,349 231,389 5,480,381 24,599 26,887 133,524 132,152 174,005 48,935 109,187 $ 7,957,705 $ 5,780,325 827,925 23,571 1,104 66,782 103,094 6,802,801 $ 719,111 950,683 357,922 5,457,593 26,216 20,780 132,237 128,101 175,824 60,080 119,608 $ 8,148,155 $ 5,764,336 891,293 22,868 1,716 57,398 103,094 6,840,705 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; 97,493,046 and 110,295,117 shares issued and outstanding, respectively Paid-in capital Retained earnings Unallocated common stock of Employee Stock Ownership Plan Accumulated other comprehensive loss, net TOTAL SHAREHOLDERS’ EQUITY 975 659,523 543,598 (25,966) (23,226) 1,154,904 1,103 824,164 523,089 (27,409) (13,497) 1,307,450 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 7,957,705 $ 8,148,155 30 CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except share data) YEARS ENDED DECEMBER 31, 2011 2010 2009 INTEREST INCOME: Loans Investments and interest-earning cash TOTAL INTEREST INCOME INTEREST EXPENSE: Deposits Borrowed funds TOTAL INTEREST EXPENSE Net interest income Provision for loan losses Net interest income after provision for loan losses NONINTEREST INCOME: Service charges and fees Trust and other financial services income Gain/(loss) on securities Insurance commission income Income from bank-owned life insurance Other TOTAL NONINTEREST INCOME NONINTEREST EXPENSE: Compensation and employee benefits Premises and occupancy costs Office operations Processing expenses Amortization of intangibles Marketing expenses Federal deposit insurance premiums Contribution to charitable foundation Loss on early extinguishment of debt Other TOTAL NONINTEREST EXPENSE Income before income taxes Income tax expense NET INCOME Basic earnings per share Diluted earnings per share $ 320,942 39,128 360,070 $ 328,948 41,620 370,568 $ 320,121 44,342 364,463 60,721 32,080 92,801 267,269 34,170 233,099 35,378 8,125 (579) 6,548 6,019 2,645 58,136 106,595 23,055 12,850 23,332 1,819 9,953 7,101 — — 15,522 200,227 91,008 26,857 64,151 0.64 0.64 $ $ $ 75,174 37,753 112,927 257,641 40,486 217,155 37,921 7,252 660 5,190 5,080 4,295 60,398 100,709 22,665 13,864 23,152 2,784 9,875 9,054 — — 14,405 196,508 81,045 23,522 57,523 0.53 0.53 $ $ $ 95,394 40,412 135,806 228,657 41,847 186,810 34,811 6,307 (5,694) 2,658 4,791 10,464 53,337 95,594 21,963 12,947 21,312 3,020 9,152 11,597 13,822 — 11,087 200,494 39,653 7,000 32,653 0.30 0.30 $ $ $ 31 Building Loyalty, Trust, and Value Investor Information Corporate Headquarters: Online Shareholder Access: 100 Liberty Street P.O. Box 128 Warren, Pennsylvania 16365 Telephone : (814) 726-2140 Fax : (814) 728-7716 www.northwestsavingsbank.com Annual Meeting: April 18, 2012, 11:00 a.m. The Struthers Library Theatre 302 West Third Avenue Warren, Pennsylvania 16365 Stock Listing: Northwest Bancshares, Inc. common stock is traded on the NASDAQ Global Select Market under the symbol “NWBI.” Stock Transfer, Registrar, and Dividend Disbursing Agent: Shareholder communications regarding change of address, change in registration of certificates, reporting of lost certificates and dividend checks should be directed to: American Stock Transfer and Trust Company, LLC 6201 15th Avenue, Brooklyn, New York 11219 Toll Free : (800) 937-5449 Toll Free : (877) 777-0800 Fax : (718) 236-2641 Email : info@amstock.com Web Site : www.amstock.com Registered shareholders may access their account(s) online through American Stock Transfer & Trust Company, LLC at www.amstock.com. Here you can easily initiate a number of transactions and inquiries as well as obtain important details about your holdings and general stock transfer information. (cid:114)(cid:1)(cid:1)(cid:54)(cid:81)(cid:69)(cid:66)(cid:85)(cid:70)(cid:1)(cid:90)(cid:80)(cid:86)(cid:83)(cid:1)(cid:78)(cid:66)(cid:74)(cid:77)(cid:74)(cid:79)(cid:72)(cid:1)(cid:66)(cid:69)(cid:69)(cid:83)(cid:70)(cid:84)(cid:84) (cid:114)(cid:1)(cid:1)(cid:34)(cid:68)(cid:68)(cid:70)(cid:84)(cid:84)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:1)(cid:74)(cid:79)(cid:71)(cid:80)(cid:83)(cid:78)(cid:66)(cid:85)(cid:74)(cid:80)(cid:79) (cid:114)(cid:1)(cid:1)(cid:49)(cid:83)(cid:74)(cid:79)(cid:85)(cid:1)(cid:66)(cid:1)(cid:69)(cid:86)(cid:81)(cid:77)(cid:74)(cid:68)(cid:66)(cid:85)(cid:70)(cid:1)(cid:18)(cid:17)(cid:26)(cid:26)(cid:1)(cid:85)(cid:66)(cid:89)(cid:1)(cid:71)(cid:80)(cid:83)(cid:78) (cid:114)(cid:1)(cid:1)(cid:36)(cid:80)(cid:78)(cid:67)(cid:74)(cid:79)(cid:70)(cid:16)(cid:68)(cid:80)(cid:79)(cid:84)(cid:80)(cid:77)(cid:74)(cid:69)(cid:66)(cid:85)(cid:70)(cid:1)(cid:66)(cid:68)(cid:68)(cid:80)(cid:86)(cid:79)(cid:85)(cid:84) (cid:114)(cid:1)(cid:1)(cid:51)(cid:70)(cid:82)(cid:86)(cid:70)(cid:84)(cid:85)(cid:1)(cid:66)(cid:1)(cid:83)(cid:70)(cid:81)(cid:77)(cid:66)(cid:68)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:1)(cid:69)(cid:74)(cid:87)(cid:74)(cid:69)(cid:70)(cid:79)(cid:69)(cid:1)(cid:68)(cid:73)(cid:70)(cid:68)(cid:76) (cid:114)(cid:1)(cid:1)(cid:37)(cid:80)(cid:88)(cid:79)(cid:77)(cid:80)(cid:66)(cid:69)(cid:1)(cid:84)(cid:85)(cid:80)(cid:68)(cid:76)(cid:1)(cid:85)(cid:83)(cid:66)(cid:79)(cid:84)(cid:71)(cid:70)(cid:83)(cid:1)(cid:74)(cid:79)(cid:84)(cid:85)(cid:83)(cid:86)(cid:68)(cid:85)(cid:74)(cid:80)(cid:79)(cid:84)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:71)(cid:80)(cid:83)(cid:78)(cid:84) (cid:114)(cid:1)(cid:1)(cid:38)(cid:79)(cid:83)(cid:80)(cid:77)(cid:77)(cid:1)(cid:74)(cid:79)(cid:1)(cid:69)(cid:74)(cid:83)(cid:70)(cid:68)(cid:85)(cid:1)(cid:69)(cid:70)(cid:81)(cid:80)(cid:84)(cid:74)(cid:85)(cid:1)(cid:80)(cid:71)(cid:1)(cid:69)(cid:74)(cid:87)(cid:74)(cid:69)(cid:70)(cid:79)(cid:69)(cid:84) Financial Information: The Annual Report on Form 10-K is filed with the Securities and Exchange Commission (SEC). Copies of this document and other filings, including exhibits thereto, may be obtained electronically at the SEC home page at www.sec.gov or through the Company’s website www.northwestsavingsbank.com. Copies may also be obtained, without charge, upon request by writing to the Company’s corporate headquarters. Independent Auditors: KPMG LLP Pittsburgh, Pennsylvania Securities Counsel: Luse Gorman Pomerenk & Schick, P.C. Washington, D.C. 32 Common Stock Information: Year Ended December 31, 2011 First quarter Second quarter Third quarter Fourth quarter Year Ended December 31, 2010 First quarter Second quarter Third quarter Fourth quarter High $12.59 12.67 13.36 12.93 High $12.04 12.79 12.30 11.90 Low $11.47 11.90 10.74 11.33 Low $11.15 11.10 10.55 10.24 Cash Dividends Declared $ 0.10 0.11 0.11 0.11 Cash Dividends Declared $ 0.10 0.10 0.10 0.10 Dividend Reinvestment & Direct Stock Purchase and Sale Plan: Northwest Bancshares, Inc. is pleased to offer a Dividend Reinvestment and Direct Stock Purchase and Sale Plan through American Stock Transfer & Trust Company, LLC (the “Plan Administrator”). The plan provides both existing registered shareholders and interested new investors with a convenient method to purchase shares of Northwest Bancshares, Inc. common stock. If you are already a registered shareholder or are interested in becoming one, you may access the plan material and enroll online at www.amstock.com by clicking on “Invest Online” under “Shareholder Services” or via our investor relations website at www.northwestsavingsbank.com. Alternatively, you may request a plan prospectus and enrollment application by calling American Stock Transfer & Trust Company, toll-free, at (877) 715-0499 or Northwest, toll-free, at (800) 859-1000 or (814) 728-7263. Direct Deposit of Dividends: Shareholders who do not reinvest their dividends may elect to have cash dividends directly deposited into their savings or checking account, thereby providing immediate access to funds and eliminating mail delays and lost or stolen checks. You may enroll online by accessing your shareholder account(s) at www.amstock.com or, to obtain an enrollment card, by calling the Company’s transfer agent, toll-free, at (800) 937-5449 or Northwest, toll-free, at (800) 859-1000. Investor Relations: William J. Wagner, President and Chief Executive Officer William W. Harvey, Jr., Executive Vice President and Chief Financial Officer Shareholder Relations: Ian R. Scott, Assistant Vice President, Shareholder Relations and Assistant Corporate Secretary (800) 859-1000 33 Building Loyalty, Trust, and Value Board of Directors Northwest Bancshares, Inc. and Northwest Savings Bank William J. Wagner Chairman, President, and Chief Executive Officer Northwest Bancshares, Inc. John M. Bauer Co-Chairman, Contact Technologies, Inc. Richard L. Carr Retired Superintendent, Titusville Area School District Deborah J. Chadsey* Partner, Kavinoky Cook LLP Robert G. Ferrier President, Ferrier’s True Value Hardware Dr. A. Paul King Retired President, Oral Surgery of Erie Joseph F. Long Retired Partner, KPMG LLP Treasurer, Passavant Hospital Foundation Dr. Richard E. McDowell President Emeritus, The University of Pittsburgh at Bradford John P. Meegan Executive Vice President and Chief Operating Officer, Hefren-Tillotson, Inc. Sonia M. Probst Retired Chief Executive Officer, Rouse Estate Philip M. Tredway President and Chief Executive Officer, Erie Molded Plastics, Inc. *Ms. Chadsey is a Director of Northwest Savings Bank only 34 Corporate Officers Northwest Bancshares, Inc. and Northwest Savings Bank William J. Wagner President and Chief Executive Officer Steven G. Fisher Executive Vice President, Banking Services William W. Harvey, Jr. Executive Vice President, Finance and Chief Financial Officer Timothy A. Huber Executive Vice President, Chief Lending Officer Gregory C. LaRocca Executive Vice President, Investment and Trust Services and Corporate Secretary Michael G. Smelko Executive Vice President, Chief Credit Officer Ronald B. Andzelik Senior Vice President, Compliance and Community Reinvestment Act Officer Robert Bablak, Jr. Senior Vice President, Community Banking John K. Beard Senior Vice President, Retail Investment Services John E. Hall Senior Vice President, Consumer Lending Neil R. Hoffman Senior Vice President, Commercial Lending Julia W. McTavish Senior Vice President, Chief Human Resources Officer Gerald J. Ritzert Senior Vice President, Controller Lawrence D. Neizmik Vice President, Education and Training Donald E. Reed Vice President, Treasurer David C. Stevenson Vice President, Computer Operations Eric D. Stoever Vice President, Chief Technology Officer James M. Swanson Vice President, Retail Deposit Products William C. Tarpenning Vice President, Mortgage Banking Deborah A. Vecellio Vice President, Mortgage Servicing Shawn O. Walker Vice President, Marketing Region Presidents Northwest Savings Bank Robert Bablak, Jr. Lynn S. Baker Julie A. Marasco Christopher A. Martin James E. Martin Jonathan E. Rockey Jonathan P. Scalise Maryland Eastern Pennsylvania Northwest Pennsylvania, Ohio Southwest Pennsylvania Erie, Pennsylvania Central Pennsylvania New York Richard F. Seibel Senior Vice President, Risk Management Vicki L. Stec Senior Vice President, Compliance and Bank Secrecy Officer David E. Westerburg Senior Vice President, Marketing and Operations, Chief Marketing Officer Andrew C. Young Senior Vice President, Chief Information Officer Stephen M. Bell Vice President, Facilities Michael R. DelPrince Vice President, Finance Michael A. Doherty Vice President, Credit Administration Barbara L. DeMontier Vice President, Human Resources W. Norman Ewing Vice President, Systems and Programming James G. Holding Vice President, Communications Dean C. Huya Vice President, Loss Mitigation Paul C. Lindberg Vice President, Loan Review Dorothy E. Lobdell Vice President, Mortgage Lending Edward A. Martone Vice President, Human Resources Kevin G. Mizak Vice President, Chief Auditor 35 Building Loyalty, Trust, and Value Notes 36 In addition to historical information, this report may contain certain forward-looking statements that are based on assumptions and information currently available to management, including assumptions as to changes in market interest rates. Th ese forward-looking statements are subject to various risks and uncertainties including, but not limited to, economic, regulatory, competitive, legislative, and other factors aff ecting the company and its operations. Readers are cautioned not to place undue reliance on these forward-looking statements as actual results may diff er materially from those expressed or implied. Management has no obligation to revise or update these forward-looking statements to refl ect events or circumstances that arise aft er the release of this report. 100 Liberty Street PO Box 128 Warren, Pennsylvania 16365 (814) 726-2140 www.northwestsavingsbank.com 

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