Northwest Bancshares, Inc. Annual Report 2011

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FY2011 Annual Report · Northwest Bancshares, Inc.

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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

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.

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

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.

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.

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.

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

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

600

400

200

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.

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

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

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.

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

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.

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

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

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

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.

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

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

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

$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

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

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

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

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

Summary Annual Report

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.

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

Mortgage yield

10-year Treasury yield

MORTGAGE AND HOME EQUITY LOANS

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

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011

Summary Annual Report

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.

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

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

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

168

100

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

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

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

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

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%

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

2007

2008

2009

2010

2011

2007

2008

2009

2010

2011

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

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

2007

2008

2009

2010

2011

which has provided a growing source
of fee income.

WEALTH MANAGEMENT REVENUE
in millions of dollars

$4.6

$4.0

$3.3

$3.5

$3.0

2007

2008

2009

2010

2011

Asset Quality, Financial Data, and
Investor Information

Summary Annual Report

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

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

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

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

$
$

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.

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

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

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

Building Loyalty, Trust, and Value

Notes

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