Northwest Bancshares, Inc.
Annual Report 2015

Plain-text annual report

2015 SUMMARY ANNUAL R EPO RT Message to Shareholders William J. Wagner – Chairman, President and CEO Over the 20 years of our history as a public company, it seems like the message to shareholders each year began by noting that Northwest experienced another year of significant challenge and considerable success. The 2015 calendar year was no exception. Our success was highlighted by the acquisition of LNB Bancorp, Inc. and Lorain National Bank, the largest acquisition in the history of our company. However, the integration of this diverse $1.2 billion commercial banking institution also presented our biggest challenge for the year as it utilized significant resources. However, despite this additional workload, we were able to post core earnings that were considerably better than the prior year, while making substantial progress in addressing critical initiatives targeted to improve revenues, enhance efficiency and strengthen the management of risk. Earnings and Shareholder Value Net income for 2015 was $60.5 million, a decrease of $1.5 million over the previous year when net income was $62.0 million. However, the current year was greatly impacted by acquisition expenses from the LNB merger, of approximately $6.0 million, after tax. Excluding these expenses, net income was $67.0 million, providing a return on average assets and average equity of 0.80% and 6.08%, respectively. The improvement in core income over the previous year was primarily driven by a $10.6 million decrease in the provision for loan losses, as credit quality continued to improve in 2015. Given the continued growth in earnings and our robust capital position, the Board of Directors elected to increase the quarterly dividend payment again in 2015 to $0.14 with total dividends of $0.56 per share paid during the year. We are pleased to note that these payments provided Northwest’s shareholders with a dividend yield that exceeded 4%. Also contributing value to our shareholders was an increase in the market value of Northwest’s common shares, which improved by $0.86, or 6%, during 2015. Going forward, our Board and management team remain focused on improving profitability metrics while effectively managing our capital position. Capital will be deployed to support organic growth, pursue acquisitions that provide acceptable earnings accretion and a reasonable dilution recovery period, repurchase shares at reasonable pricing levels and to pay dividends on common shares. Acquisition of LNB Bancorp, Inc. Production and Revenue Growth The acquisition of LNB Bancorp, Inc. and Lorain National Bank, which was completed on August 14, 2015, contributed assets of $1.2 billion and a network of 21 retail offices. Deposits at these offices averaged in excess of $45.0 million, and were generally much larger and of higher quality than those of offices we acquired in the past. The merger also enhanced Northwest’s balance sheet as LNB provided a favorable mix of both loan and deposit accounts. Finally, we were pleased with the significant talent we acquired as a result of this merger and have enjoyed having these Ohio bankers as part of the Northwest family. The LNB franchise provides a solid foundation for our company’s future in northeastern Ohio. We remain optimistic regarding opportunities for growth in this major metropolitan market, which in most respects mirrors the core markets in western Pennsylvania and western New York where we have experienced considerable success. With the full transition of LNB’s operations now complete, we were pleased to note in our earnings release for the fourth quarter of 2015, the first full quarter of operations following the LNB merger, that Northwest indeed had realized the earnings accretion originally projected for this transaction. We would be remiss not to recognize the tremendous effort on the part of our conversion team, who logged thousands of miles and spent hundreds of nights away from home. Their unwavering devotion to this project made the integration a major success. To achieve net loan growth of $304.1 million, our lending and credit personnel had to originate over $2.3 billion of new loans. 2 In August of 2014, we announced an organization-wide restructuring plan designed to align all Northwest personnel with our three principal strategic initiatives: production and revenue growth, improvement in operational efficiency and the effective management of risk. As part of this plan, the responsibility for production and revenue enhancement was assigned to Steven Fisher, our Chief Revenue Officer. William Harvey, Chief Financial Officer, was assigned responsibility for driving efficiency and improving profitability, while the responsibility for risk management remained administratively with me as Chief Executive Officer but also with a direct reporting line to our Board of Directors. In the first full year of operations under this new structure, the Production and Revenue Division achieved considerable success in increasing both loans and checking accounts, the primary focus of our production efforts. Although the U.S. economy continued to demonstrate tepid growth throughout 2015, Northwest’s loan portfolio, exclusive of the LNB acquisition, increased by $304.1 million, or 5%. To achieve this level of growth, our lending and credit personnel had to originate over $2.3 billion of new loans as the cash flow from loan payoffs and principal payments decreased loan balances by $2.0 billion. Similar success was achieved in acquiring checking accounts, as we opened 23,483 new business and personal accounts while checking balances increased by $163.5 million, or 9%. The success we achieved in this area contributed greatly to the consistency in our net interest margin, which averaged 3.49% in 2015 compared to 3.47% last year despite the continued challenges of operating in an extended low-rate environment. Finally, many members of our management team worked diligently this past year to develop a plan to refresh the Northwest brand and better establish our institution as a full-service commercial bank, while shedding the long-standing image of Northwest as a limited service thrift institution. With this change, which is scheduled to be implemented in mid-year 2016, we will shorten the name of our bank from “Northwest Savings Bank” to “Northwest Bank” and introduce a new logo and color scheme that better reflects Northwest’s focus and capabilities. As we look ahead, the Production and Revenue Division will strive to continue to improve the coordinated business development effort in all of our geographic regions under the leadership of our seven regional presidents. We believe this regional approach to attracting new customers while strengthening existing relationships provides a competitive advantage in each of their markets. Profitability and Efficiency In its first full year of operation, the Profitability and Efficiency Division completed a variety of initiatives designed to cut costs and improve the earnings of our institution. The first major project initiated by this division was to modernize our retail mortgage and home equity lending process. This new process, which continues to be refined, utilizes the consistency and efficiency of a staff of centralized, or virtual, lenders equipped with the latest technological advances to provide Northwest’s customers a higher level of satisfaction and greatly improved turnaround times. If they choose, customers can obtain a mortgage loan from the comfort of their own home through a fully-automated and paperless process. Although we continue to diversify our loan mix, residential mortgage and equity loans remain an important component of our product offering, and we are driven to be recognized as the best mortgage lender in all of our markets. We also advanced an initiative in 2015 to optimize the efficiency of our branch network. Northwest operates 181 offices across four states. This network evolved through a combination of new office openings, branch purchases and whole bank acquisitions. Because of this multifaceted growth strategy, our office network does not effectively and efficiently serve our markets. In addition to this challenge, we witnessed a significant change in recent years as to the delivery channels our customers prefer when accessing their financial products and services. As Northwest introduced new delivery alternatives such as online and mobile banking, our customers enthusiastically embraced these new technologies which they deemed to be more convenient than an office visit. Accordingly, over the past five years the volume of transactions in our offices decreased by 25%, with a 10% drop in the last year alone. Recognizing these trends and an opportunity to improve efficiency, in 2015 we consolidated offices in Greenville, Pennsylvania and Erie, Pennsylvania. We also spent countless hours analyzing our entire office network to identify other potential consolidations. However, while striving for efficiency, we never lost sight of our long-standing focus on customers and employees, and the need to maintain an acceptable market presence and a level of service that meets our customers’ needs. The plan that was developed was announced on January 25, 2016 in conjunction with our annual earnings release. As noted at that time, we plan to consolidate 24 of our offices into nearby Northwest locations by mid-year 2016, while converting two full-service offices to drive-up facilities. The expense associated with these consolidations will be approximately $5.0 million with annual expense savings going forward anticipated to be between $5.0 and $6.0 million. Looking ahead, our Profitability and Efficiency Division will continue to delve into all areas of operations to identify opportunities to streamline processes, reduce expenses and improve the profitability of our company. We also advanced an initiative in 2015 to optimize the efficiency of our branch network. 3 Asset Quality Enhancement of Risk Management Although asset quality has been of lesser concern for bank investors in recent years, our management team continues to work diligently to improve the quality of our loan portfolio and reduce the level of nonperforming assets. We experienced great success with that endeavor again this year as nonperforming assets returned to levels not experienced since before the Great Recession. We also recognize that banks with strong credit cultures typically provide better shareholder returns and trade at comparably higher multiples. With this in mind, we worked diligently in 2015 to develop a plan to improve our commercial lending and credit processes, with a focus on enhanced loan origination and a more refined and consistent credit culture. Our new processes assign shared responsibility for credit quality to the lending and credit functions while ensuring that the lending and credit functions remain attentive to the needs of our customers and communities. This process was recently communicated to all lending and credit personnel, who embraced the change with great enthusiasm. We look forward to realizing future progress towards our goal to become the best commercial lending institution in all of our markets. We continue to work diligently to improve our enterprise risk management program with a goal of meeting the requirements of a $10.0 billion bank. In this regard, we launched significant projects during 2015 to address the management of vendor risk, interest rate risk, liquidity risk and credit risk. We also developed a plan to address regulatory requirements for capital stress testing, which will become effective if our assets eclipse $10.0 billion as mandated by the Dodd-Frank Act. We estimate that this project will take approximately two years to complete and that the annual expense to perform such tests will approximate $2.0 million. The Risk Management Committee of Northwest’s Board of Directors continues to play an active role in monitoring the risk management position of our institution. We believe that this continues to be one of the most important functions of the Board as we strive to protect shareholder value. On behalf of our Board of Directors and the employees of Northwest Bancshares, Inc., I thank you for your continued support of our company. We look forward to continued success with our mission to provide loyalty, trust and value to our employees, customers, communities and shareholders. Sincerely, William J. Wagner Chairman, President and CEO We worked diligently in 2015 to develop a plan to improve our commercial lending and credit processes, with a focus on enhanced loan origination and a more refined and consistent credit culture. 4 Market Coverage A network of offices across four states NY OH MD Northwest Bank office network Northwest Consumer Discount Company office network PA 5 Financial Highlights Northwest Bancshares, Inc. and subsidiaries In thousands, except per share and other data AT YEAR END DECEMBER 31, 2015 2014 2013 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 $ 8,951,899 $ 7,775,033 $ 7,879,859 $ 7,159,449 $ 5,922,373 $ 5,734,943 $ 6,612,581 $ 5,632,542 $ 5,668,879 $ 1,163,163 $ 1,062,647 $ 1,155,185 $11.42 $13.39 $11.22 $12.53 $12.26 $14.78 $ 263,253 $ 248,840 $ 251,935 $ 60,540 $ 61,962 $ 66,559 $ 0.64 $ 0.56 $ 0.67 $ 1.62 $ 0.73 $ 0.50 KEY FINANCIAL RATIOS FOR THE YEAR ENDED DECEMBER 31, Return on average shareholders’ equity (1) Return on average assets (1) 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 6.08% 0.80% 10.28% 3.29% 0.91% 0.23% 5.69% 0.79% 11.64% 3.27% 1.25% 0.41% Allowance for loan losses to nonperforming loans at end of period 85.86% 84.35% Allowance for loan losses as a percentage of loans receivable 0.87% 1.13% OTHER DATA AT DECEMBER 31, Number of: Community banking locations Consumer finance offices Full time equivalent employees Registered shareholders (2) 181 51 2,186 14,363 162 51 2,042 13,756 5.87% 0.84% 12.70% 3.31% 1.60% 0.36% 66.12% 1.23% 165 50 2,043 13,994 (1) 2015 amounts exclude the after-tax impact of $9.8 million of acquisition expenses. (2) Excludes shareholders who own their stock in “street name.” 6 Growth and Performance Northwest has maintained a steady balance sheet and income during a period of economic challenge while providing shareholders with an exceptional return on their investment. Assets in billions of dollars 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Annual Net Income in millions of dollars 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Common Stock Information Stock Price Performance Since IPO in total return % (Source: SNL Financial) 2015 High Low 1Q 2Q 3Q 4Q $12.62 $11.52 $13.03 $11.71 $13.21 $14.11 $12.32 $12.55 Div $0.14 $0.14 $0.14 $0.14 2014 High Low Div 1Q 2Q 3Q 4Q $15.07 $13.66 $0.23 $15.11 $12.77 $13.86 $11.99 $13.30 $11.86 $1.13 $0.13 $0.13 1,400 1,200 1,000 800 600 400 200 0 -200 +1,241.65% NWBI S&P 500 +557.46% SNL U.S. Bank +414.64% 1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 7 $8.95$7.78$7.88$7.94$7.96$8.15$8.03$6.93$6.66$6.53$60.5$62.0$66.6$63.4$64.2$57.5$32.7$48.2$49.1$51.5Corporate Profile Northwest Bancshares, Inc. Northwest Bancshares, Inc. is a holding company that owns and operates Northwest Bank, a Pennsylvania-chartered bank headquartered in Warren, Pennsylvania. As of December 31, 2015, we held assets of $8.95 billion and operated 181 community banking locations and 284 ATMs across Pennsylvania, New York, Ohio and Maryland. Our primary business involves gathering funds from deposits and borrowings and investing them in loans and investment securities. For 120 years, we have served our communities by meeting the diverse financial needs of individuals, families, organizations and businesses seeking to bank, borrow, invest, insure and plan their futures. Northwest's sources of funds and mix of loans and investments are well-balanced and diversified. Source of Funds Investment of Funds Checking Accounts Certificates of Deposit Savings Accounts Money Market Accounts Borrowed Funds Subordinated Debt 29% 22% 18% 17% 13% 1% Mortgage Loans Commercial Real Estate Home Equity Loans Cash and Investments Other Assets Consumer Loans Commercial Loans 31% 26% 13% 12% 7% 6% 5% 8 5%7%13%26%12%31%6%17%18%13%29%22%1%Business Solutions Working together to drive success We have products and services to compete with any bank and experts who are passionate about pinpointing opportunities and solutions. We help customers find what they need and want – guiding them down the right path to make their business better. When they succeed, we succeed. No matter the size, industry or mission, we build relationships that last by working together to meet their goals. We provide the level of advice and direction expected from a trusted financial partner. Bank Borrow Invest Insure Plan 9 Business Solutions Loans and Deposits Northwest commercial loans and deposits have grown substantially, while yields and costs have drifted lower due to the low interest rate environment. Our business deposit mix is diversified as we continue to meet the needs of all types of businesses. Commercial Loans in millions of dollars Business Deposit Balances in millions of dollars 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Commercial Loan Yields Cost of Business Deposits 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Commercial Loan Losses as a % of commercial loans Business Deposit Mix 44% 44% of business deposits were in non-interest checking accounts Money Market Interest Checking Municipal 30% 13% 13% 2011 2012 2013 2014 2015 10 13%30%44%13%0.59%0.94%0.38%0.43%0.72%$1,405.2$1,205.5$1,073.4$1,017.6$855.34.30%4.46%4.61%5.25%5.63%0.11%0.13%0.14%0.12%0.17%$2,962.0$2,294.5$2,102.8$2,048.6$1,889.6Investment Management, Retirement and Insurance Services We dramatically increased assets under management and administration in recent years, fueling an increase in fee income from business investment management and retirement services accounts. Our business insurance lines have also provided a significant boost to fee income. Business Assets Under Management in millions of dollars Business Asset Mix as a % of total business assets under management 96% of business investment assets were in trust accounts Investment Advisory 4% 96% 2011 2012 2013 2014 2015 Business Investment Management and Retirement Services Revenue in millions of dollars Business Investment Management and Retirement Services Revenue Mix as a % of total business revenue 62% 62% of business investment revenue came from trust accounts Retirement Services Investment Advisory 35% 3% 2011 2012 2013 2014 2015 Business Insurance Revenue in millions of dollars Business Insurance Revenue Mix as a % of total business insurance revenue 71% 71% of business insurance revenue came from employee benefits accounts Property and Casualty 29% 2011 2012 2013 2014 2015 11 $7.3$7.0$6.4$3.7$3.371%29%96%4%$6.6$6.2$5.5$4.5$4.235%62%3%$1,168.0$1,142.2$1,046.8$808.9$718.7Personal Solutions More choices, guidance and convenience For 120 years, we’ve been a trusted bank in our communities. And while we’ve grown, our hometown approach hasn't changed. We’re proud to be friends, neighbors – long-term partners who provide caring, personalized service to help our customers achieve better living through better banking. As clear-eyed advisors looking out for their best interests, we deliver everything they need to bank when, where and how they want. We're proud to be a community bank – a local place for saving and borrowing, investing and insuring, a resource to help customers make good financial decisions as they travel down life’s path. Bank Borrow Invest Insure Plan 12 Deposits We take pride in relationship banking and meeting all of our customers' needs. In 2015, we welcomed a substantial number of new households with the acquisition of Lorain National Bank. We continue to have great success in attracting and keeping new checking account customers, while checking account balances and fee income continue to grow. Number of Households Number of Checking Accounts 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Services Per Household Checking Account Balances in millions of dollars 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Savings Account Balances in millions of dollars Checking Account Fees in millions of dollars 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 13 $33.7$32.0$31.2$31.5$32.3253,717229,020223,139222,427218,420$1,325.6$1,035.9$963.6$935.0$867.9$2,660.5$2,388.4$2,359.5$2,271.3$2,036.3337,904289,185288,747292,397295,5962.9873.0562.9412.9082.846Personal Solutions Loans Mortgage and home equity loans continue to provide a solid yield during a period of low interest rates, while mortgage and home equity losses have returned to historic norms. Our consumer loan portfolio grew dramatically in 2015 with the acquisition of Lorain National Bank (LNB), while consumer loan losses dropped substantially. The consumer loan yield also decreased significantly due to the nature of the LNB portfolio. Mortgage Portfolio Yield Consumer Loans in millions of dollars 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Home Equity Portfolio Yield Consumer Loan Portfolio Yield 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 Mortgage and Home Equity Loan Losses as a % of total mortgages and home equities Consumer Loan Losses as a % of consumer loans 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 14 6.86%10.76%11.62%11.98%11.57%0.09%0.11%0.13%0.24%0.24%$510.6$242.7$228.3$228.4$245.74.54%4.72%4.89%5.27%5.64%4.26%4.43%4.53%4.83%5.27%2.20%2.65%2.65%2.20%1.64%Investment Management and Insurance Personal assets under management and administration as well as brokerage have grown significantly in recent years as we have had success in attracting and keeping new customers – leading to a growing source of fee income. Personal Assets Under Management in millions of dollars Personal Asset Mix as a % of total personal assets under management 39% 39% of personal investment assets were in trust accounts Investment Advisory Brokerage 33% 28% 2011 2012 2013 2014 2015 Personal Investment Management Revenue in millions of dollars Personal Investment Management Revenue Mix as a % of total personal revenue 40% 40% of personal investment revenue came from trust accounts Investment Advisory Brokerage 38% 22% 2011 2012 2013 2014 2015 Personal Insurance Revenue in thousands of dollars Personal Insurance Revenue Mix as a % of total personal insurance revenue 79% of personal insurance revenue came from property and casualty policies Health and Life Insurance 21% 79% 2013 2014 2015 15 38%40%22%28%39%33%79%21%$576.5$469.3$352.2$7.3$7.5$5.1$4.7$4.6$959.1$849.8$706.4$702.7$639.3 Financial Data Condensed consolidated balance sheet In thousands, except share data ASSETS Cash and cash equivalents Marketable securities available-for-sale Marketable securities held-to-maturity AS OF DECEMBER 31, 2015 2014 $ 167,408 $ 240,706 874,405 31,689 912,371 103,695 Loans receivable, net of allowance for loan losses of $62,672 and $67,518 7,159,449 5,922,373 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 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; 101,871,737 and 94,721,453 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 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 16 21,072 8,725 168,509 154,351 270,718 40,903 54,670 18,623 16,759 144,362 143,909 178,356 33,293 60,586 $ 8,951,899 $ 7,775,033 $ 6,612,581 $ 5,632,542 975,007 33,735 1,993 54,207 111,213 888,109 30,507 936 57,198 103,094 7,788,736 6,712,386 — 1,019 717,603 489,292 (20,216) (24,535) — 947 626,134 481,577 (21,641) (24,370) 1,163,163 1,062,647 $ 8,951,899 $ 7,775,033 Condensed consolidated statements of income 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 YEARS ENDED DECEMBER 31, 2015 2014 2013 $ 298,665 $ 282,050 $ 286,977 20,915 319,580 24,055 32,272 56,327 263,253 9,712 253,541 38,362 12,342 1,037 9,526 4,338 3,231 23,377 305,427 25,322 31,265 56,587 248,840 20,314 228,526 36,383 12,369 4,930 8,760 4,191 4,133 26,120 313,097 29,279 31,883 61,162 251,935 18,519 233,416 35,884 9,330 5,405 8,635 5,197 2,025 TOTAL NONINTEREST INCOME 68,836 70,766 66,476 NONINTEREST EXPENSE: Compensation and employee benefits Premises and occupancy costs Office operations Processing expenses Amortization of intangibles Marketing expenses Federal deposit insurance premiums Acquisition expenses Other TOTAL NONINTEREST EXPENSE Income before income taxes Income tax expense NET INCOME Basic earnings per share Diluted earnings per share 119,818 24,641 15,584 30,780 1,688 8,499 5,109 9,751 18,007 233,877 88,500 27,960 115,967 23,455 14,721 26,671 1,323 8,213 5,193 394 19,598 215,535 83,757 21,795 112,190 23,182 14,454 25,548 1,210 6,284 5,600 – 18,666 207,134 93,070 26,199 $ 60,540 $ 61,962 $ 66,559 $ 0.64 $ 0.64 $ 0.68 $ 0.67 $ 0.73 $ 0.73 17 Directors and Officers Northwest Bancshares, Inc. and Northwest Bank Board of Directors William J. Wagner Chairman, President and Chief Executive Officer Northwest Bancshares, Inc. Robert M. Campana President Campana Capital Deborah J. Chadsey Attorney and Partner Kavinoky Cook LLP Corporate Officers William J. Wagner President and Chief Executive Officer Timothy B. Fannin Retired Partner Catalano, Case, Catalano & Clark-Radzieta, LLP Timothy M. Hunter President and Chief Executive Officer McInnes Rolled Rings and Erie Bronze & Aluminum Company Dr. A. Paul King Retired President Oral Surgery of Erie Dr. Richard E. McDowell President Emeritus The University of Pittsburgh at Bradford William F. McKnight Controller, Interstate Chemical Company 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. Andrew C. Young Executive Vice President Chief Information Officer William C. Tarpenning Senior Vice President Mortgage Banking Michael A. Doherty Vice President Commercial Loan Administration Steven G. Fisher Senior Executive Vice President Chief Revenue Officer Ronald B. Andzelik Senior Vice President Chief Compliance Officer C. Forrest Tefft Senior Vice President Corporate Finance Lending W. Norman Ewing Vice President Systems and Programming William W. Harvey, Jr. Senior Executive Vice President Chief Financial Officer Neil A. Aquino, Jr. Senior Vice President Commercial Real Estate Lending Shawn O. Walker Senior Vice President Chief Marketing Officer Michael W. Bickerton Executive Vice President Commercial Lending Richard K. Laws Executive Vice President Chief Counsel Corporate Secretary Julia W. McTavish Executive Vice President Chief Human Resources Officer Gerald J. Ritzert Executive Vice President Corporate Controller Michael G. Smelko Executive Vice President Chief Credit Officer Thomas J. Townsend Executive Vice President Chief Risk Officer David E. Westerburg Executive Vice President Chief Operations Officer Region Presidents Nancy J. May Eastern Pennsylvania and Maryland 18 Douglas H. Bert Senior Vice President Insurance Services Don J. Boetger Senior Vice President Retirement Services William M. Guthrie Senior Vice President Investment Management John E. Hall Senior Vice President Consumer Lending Pamela L. Balas Vice President Mortgage Banking Stephen M. Bell Vice President Facilities Thomas K. Creal Vice President Credit Administration Steven M. Crissey Vice President Human Resources Neil R. Hoffman Senior Vice President Commercial/Industrial Lending Michael R. DelPrince Vice President Accounting D. Kirk Jacobson Senior Vice President Small Business Lending Kevin G. Mizak Senior Vice President Chief Auditor Vicki L. Stec Senior Vice President Bank Secrecy Officer Barbara L. DeMontier Vice President Human Resources Christina D. Dinger Vice President Process Improvement/ Program Management Dean C. Huya Vice President Loss Mitigation Julie K. Johnson Vice President Loan Servicing Kimberly A. Johnson Vice President Electronic Banking Dorothy E. Lobdell Vice President Mortgage Banking Edward A. Martone Vice President Human Resources Donald E. Reed Vice President Treasurer Melody Schott Vice President Office Services Eric D. Stoever Vice President Chief Technology Officer James M. Swanson Vice President Deposit Operations Julie A. Marasco Northwest Pennsylvania Christopher A. Martin Southwest Pennsylvania James E. Martin Erie, Pennsylvania Kevin W. Nelson Ohio Jonathan E. Rockey Central Pennsylvania Jonathan P. Scalise New York Investor Information Corporate Headquarters Financial Information 100 Liberty Street PO Box 128 Warren, Pennsylvania 16365 Telephone: (814) 726-2140 Fax: (814) 728-7716 northwest.com Annual Meeting April 20, 2016, 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 amstock.com Online Shareholder Access Registered shareholders can access their account(s) online through American Stock Transfer & Trust Company, LLC at 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. • Update your mailing address • Access account information • Print a duplicate 1099 tax form • Combine/consolidate accounts • Request a replacement dividend check • Download stock transfer instructions and forms • Enroll in direct deposit of dividends Independent Auditors KPMG LLP, Pittsburgh, Pennsylvania Securities Counsel Luse Gorman, P.C., Washington, D.C. 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 sec.gov or through the Company’s website, northwest.com. Copies may also be obtained, without charge, upon request by writing to the Company’s corporate headquarters. Dividend Reinvestment and 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 amstock.com by clicking on “Invest Online” under “Shareholder Services” or from our investor relations website at northwest.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 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 Chairman, President and Chief Executive Officer William W. Harvey, Jr. Senior Executive Vice President and Chief Financial Officer Shareholder Relations Ian R. Scott Assistant Vice President, Shareholder Relations and Assistant Corporate Secretary (800) 859-1000 19 It's a new brand day. As our customers and our industry evolve, we must evolve. It's about more than just a new look. It's a chance to further everyone's understanding of who we are and where we are going. After 120 years, our new visual identity marks the beginning of the next chapter to distinguish Northwest in the minds of consumers and signals our renewed purpose of delivering on the promise of better banking – in the straightforward, reliable way that people and businesses want today. Our refreshed logo takes the best elements of our brand heritage – the Northwest green and familiar chiclet – and transforms them for a new era. At its most basic level, our new look is a visual statement honoring our history and reflecting an identity that stands for simplicity, honesty and passion in a category rife with confusion, disclaimers and frustration. It's a cleaner, more contemporary design with the familiar name Northwest – a prominent and reassuring symbol of strength, stability and trust in the hearts and minds of our employees, customers, communities and shareholders. Our new brand is a sign that Northwest is keeping up with the times, and changing in new and exciting ways. The best is yet to come. 20 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. These forward-looking statements are subject to various risks and uncertainties including, but not limited to, economic, regulatory, competitive, legislative and other factors affecting the company and its operations. Readers are cautioned not to place undue reliance on these forward-looking statements, as actual results may differ materially from those expressed or implied. Management has no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the release of this report. ©2016 Northwest Bancshares, Inc. 100 Liberty Street PO Box 128 Warren, Pennsylvania 16365 (814) 726-2140 northwest.com 

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