Northwest Bancshares, Inc.
Annual Report 2019

Plain-text annual report

SUMMARY ANNUAL REPORT Building for the Future A Message to Shareholders from Ronald J. Seiffert, Chairman, President & CEO In last year’s Message to Shareholders, I shared with you that in 2018 we launched a comprehensive strategic planning process which included the engagement of 26 separate departments within our company. Each of the departments were tasked to develop a new five-year plan for their area of responsibility and to identify key initiatives that, when effectively executed, would contribute materially to achieving the company’s overall corporate objectives. Our corporate objectives include enhancing shareholder value through revenue and production growth, improving efficiency and profitability, mergers and acquisitions, effective risk management and talent acquisition, development and retention. I am very pleased to report to you that in 2019 all key initiatives that were identified through this process were either completed or substantially completed during the year as follows: • We successfully closed and converted our merger with Union Community Bank in Lancaster County, Pennsylvania on March 8, 2019 with minimal customer and employee disruption; • On October 29, 2019, we announced our merger with MutualFirst, a $2.2 billion bank located in Muncie, Indiana, with an expected close date of April 24, 2020; • During the fourth quarter of 2019, we announced the acquisition of Sundahl & Co. Insurance, a property and casualty insurance agency located in Bradford, Pennsylvania, which closed December 2019; • We successfully launched new sales incentive plans for our commercial, consumer, small business and residential mortgage calling officers; • We significantly expanded our residential mortgage capability through the development of a new, state-of-the-art residential mortgage loan origination platform and the development of a broader array of mortgage products (including FHA, VA and USDA). In addition, we introduced new mortgage loan officers (MLOs) into our Cleveland, Ohio and Buffalo, New York metropolitan markets. In order to support the growth generated by these initiatives, we opened a new 8,500 square foot residential mortgage fulfillment center in Columbus, Ohio in April of 2019; • We developed and implemented a new, state- of-the-art commercial loan origination system, making it easier and more efficient to originate commercial loans and track them from origination throughout the life of the loan; • We centralized the monitoring of commercial construction loans and commercial loans secured by accounts receivable and inventory to enhance risk management and to create more efficiencies; • We significantly expanded the distribution of our power sports lending capability to dealerships from Pennsylvania into our other nine-state auto dealer loan markets. In addition, we developed a new, streamlined loan funding process, which reduced the funding times for auto loans from 3-5 days to 24 hours or less; • We engaged an outside firm to assist us in developing analytics tools and a market- driven database to develop more effective and measurable product, price and marketing strategies for our consumer deposit customers. One of the initial deliverables of this initiative was the introduction of our new Affinity checking products suite in November of 2019; • We developed a comprehensive playbook outlining the bank’s treasury management product offerings and business development strategies for our commercial customers. In addition, we introduced new treasury management products and developed real-time 1 tracking of the production of commercial deposits and treasury management fees by our commercial banking officers and treasury management advisors; • We fully deployed financial advisors throughout our footprint from our Northwest Investment Services business; • We developed an initial pathway forward for our digital bank strategy and identified specific investments and deliverables for 2020. The strategy will continue to focus on how we first service and support our existing 450,000 customer households in an easy, simple and fast manner, while providing an exceptional customer experience; • We developed comprehensive and sophisticated systems and processes to fully adhere to the new Current Expected Credit Loss (CECL) requirements; • We continue to enhance the risk oversight capabilities of our model risk management and third-party risk management processes; • We developed a number of employee-related initiatives focused on enhancing our ability to attract, develop and retain employees, including better and more frequent communication, competitive overall compensation, providing for a more flexible work/life balance and providing more effective performance management tools; and, • We developed a comprehensive succession management program which included a senior management mentoring program for high- potential employees; The successful execution of the above initiatives contributed significantly to our 2019 financial performance. For the fiscal year ending December 31, 2019, the company generated record net income of $110.4 million, which represented a 4.7% increase over the previous year despite the significant headwinds caused by declining interest rates and a flat yield curve over the course of the year. As a result of this performance, for the 101st consecutive quarter, our Board of Directors declared a quarterly dividend at year-end, representing a 5.6% increase over the prior year and an annualized dividend yield of 4.57%. Noninterest income experienced exceptional growth for the year, growing by $7.7 million or 8.4% across almost all categories. Our mortgage banking operation is beginning to contribute to earnings in a meaningful way, brokerage investment revenue increased by over 7% and recent changes in our philosophy around fee structures for our deposit products in the fourth quarter will significantly benefit us in 2020. From a balance sheet perspective, loans grew $757.2 million, or 9.4%, with approximately half of this growth contributed by the Union Community Bank acquisition and the other half from internal, organic growth. We were also able to fund half of our loan growth entirely with internal deposit growth. Our credit quality remained sound, our liquidity position remained good and our capital ratios remained strong in 2019, as reflected by our tier 1 capital ratio of 15.00%. 2020 Focus Although we were very pleased with the overall performance of the company in 2019, we recognize there remains plenty of room for improvement. In October of 2019, management of the company presented to our Board of Directors our refreshed strategic plan which included a number of new key initiatives which will drive enhanced financial performance in 2020. These key initiatives for 2020 include the following: • Successfully close and convert MutualBank on April 24, 2020; • Continue to explore merger opportunities within our defined target market with a goal to announce one new bank acquisition during 2020; • Fully implement EVOLVE, Northwest’s customer experience initiative, to move the company away from a product-driven strategy to a relationship strategy focused on the financial wellness of our customers and placing them at the center of everything we do; • Develop a comprehensive retail branch optimization strategy focused on reaching and servicing our customers in a more effective and efficient manner; • Enhance our deposit product solutions for our business customers to include providing advice through self-service tools, resources and readily- accessible human resources; • Expand the deployment of mortgage loan officers (MLOs) to include our Pennsylvania metropolitan markets of Pittsburgh, Lancaster, Erie and our new Indiana region; • Continue to evaluate the geographic expansion of our dealer services auto and power sports business; • Explore new commercial loan products to include potentially new verticals (e.g., healthcare) and new bolt-on acquisitions (e.g., equipment finance) with a focus on expanding our capabilities in our C&I loan business; 2 • Continue to implement our digital bank strategy with a primary focus of serving our existing 450,000 customer relationships in an easier, faster and more efficient manner- while providing an exceptional customer experience; • Continue to establish capabilities to collect, aggregate and interpret data to enhance business processes and decisioning; • Continue to enhance risk management oversight to include commercial lending (as credits become larger and more complex), model risk management and third party risk management; • Fully implement key initiatives identified by our focused efforts on talent acquisition, development and retention to address the war on talent that exists in our industry. These include enhanced communication; work/life balance; total compensation and training, mentoring and professional development to enhance our performance management culture; • Identify and execute initiatives to continue to support diversity and inclusion in our workforce and in our customer base (e.g., women-owned and minority-owned businesses); Through the effective execution of the above initiatives in 2020, we are highly confident that we will build upon our historically-strong financial performance and, in turn, enhance shareholder value. Phillip M. Tredway Retirement On April 22, 2020, following 13 years of distinguished service, Phillip M. Tredway will retire as our lead director and as a board member of both Northwest Bank and Northwest Bancshares, Inc. Phil is President and Chief Executive Officer of Erie Molded Plastics, Inc., located in Erie, Pennsylvania. He also serves on the Pittsburgh Region Advisory Board of the Federal Reserve Bank of Cleveland and is a past chairman and board member of the Manufacturers and Business Association of Erie as well as a past board member and treasurer of Erie Community Foundation. Phil was appointed to the board of Northwest Bank in October of 2006 and to the board of Northwest Bancshares, Inc. in April of 2007. In May of 2014, Phil was appointed lead director of both boards. Under Phil’s strong leadership, in 2015 and 2016 Northwest completed two of its largest mergers (Lorain National Bank in Ohio and the acquisition of 18 offices in greater Buffalo from First Niagara Bank). In 2019, Phil witnessed the merger with Union Community Bank located in Lancaster County, Pennsylvania, and the announcement of the merger with MutualFirst of Muncie, Indiana—the largest acquisition to date in our history. Under Phil’s steady management and leadership approach, the bank has consistently grown its earnings, safely grown its balance sheet, significantly expanded its menu of products and services and increased its level of sophistication and capability as we transitioned from a former thrift institution to a full-service commercial bank. However, Phil’s greatest contribution to the bank has been the character, integrity and wisdom that he exhibited day in and day out as he approached his leadership duties as our lead director. The bank has been extremely fortunate and blessed to have had Phil Tredway serve on our board, and he will truly be missed. Conclusion We are pleased with the financial performance of Northwest Bank in 2019 and over the course of our 123-year history. We are very proud of our consistent historical operating earnings and our balance sheet is strong with sufficient capital to grow organically, continue to make acquisitions and mitigate potential risks associated with future downturns in the economy. We feel strongly that, as a large community bank, we are big enough to provide all the products and services necessary to compete effectively with any financial institution in our marketplace, but small enough to deliver those products and services in a more customer-oriented and community-oriented manner. We believe that we have developed, and are in the process of executing, a very compelling five-year strategic plan that will drive exceptional performance and shareholder value in 2020 and beyond. However, we believe that our greatest strength is our people. We have exceptional employees who are extremely dedicated to the company, to our customers and to the communities we serve. On behalf of our Board of Directors and our 2,200 employees, I wish to thank our shareholders for your confidence in our company and for your continued support! Sincerely, Ronald J. Seiffert Chairman, President and CEO 3 Corporate Profile Northwest Bancshares, Inc. Northwest Bancshares, Inc. is a federally- chartered savings and loan holding company that owns and operates Northwest Bank, a Pennsylvania-chartered savings bank headquartered in Warren, Pennsylvania. For more than 123 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. As of December 31, 2019, we held assets of $10.49 billion, 172 full-service community banking locations, nine free-standing drive through locations and 218 ATMs across Pennsylvania, New York and Ohio. Our primary business involves gathering funds from deposits and borrowings and investing them in loans and investment securities. Source of Funds Investment of Funds Checking Accounts Money Market Accounts Savings Accounts Certificates of Deposit Borrowed Funds Subordinated Debt 40% 21% 18% 17% 3% 1% Mortgage Loans Commercial Real Estate Home Equity Loans Consumer Loans Cash and Investments Commercial Loans 30% 28% 14% 12% 9% 7% 4 7%9%12%14%28%30%17%18%21%40%Northwest's sources of funds and mix of loans and investments have changed considerably over the years as we have strived to transform from a thrift to commercial bank. Loan Growth and Mix in billions of dollars $9 1-4 Family Residential Mortgages Home Equity Loans Consumer Loans Commercial Real Estate Commercial and Industrial $6 $3 $0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Deposit Growth and Mix in billions of dollars $9 Savings Accounts Checking Accounts Money Market Accounts Certificates of Deposit $6 $3 $0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 5 Financial Highlights Northwest Bancshares, Inc. and subsidiaries In thousands, except per share and other data AT YEAR END DECEMBER 31, 2019 2018 2017 Total assets Loans receivable, net Deposits Shareholders’ equity Book value per share Tangible book value per share Closing market price per share FOR THE YEAR ENDED DECEMBER 31, Net interest income Net income Non-GAAP net income Diluted earnings per share Non-GAAP earnings per share Dividends per share $ 10,493,908 $ 9,607,773 $ 9,363,934 8,750,733 7,996,225 7,736,614 8,592,007 7,894,179 7,826,989 1,353,285 1,257,638 1,207,724 12.66 9.21 16.63 12.17 9.00 16.94 11.79 8.54 16.73 $ 360,466 $ 338,641 $ 330,785 110,432 105,491 110,432 105,491 1.04 1.04 0.72 8.36% 1.07% 9.72% 3.62% 0.67% 0.23% 1.02 1.02 0.68 8.61% 1.11% 10.03% 3.73% 0.78% 0.28% 76.21% 0.69% 94,467 83,735 0.92 0.83 0.64 7.04% 0.88% 9.68% 3.72% 0.75% 0.31% 87.43% 0.73% 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 Allowance for loan losses to nonperforming loans at end of period 84.09% Allowance for loan losses as a percentage of loans receivable 0.66% OTHER DATA AT DECEMBER 31, Full-service community banking locations 172 162 162 Average deposits per full-service location (2) $ 49,954 $ 48,730 $ 48,315 Full-time equivalent employees Registered shareholders (3) 2,209 2,128 2,106 12,532 13,068 13,209 (1) Excludes after-tax impact of restructuring and acquisition expenses of $2.7 million for 2017 as well as a gain on the sale of offices of $10.3 million and the benefit from the Tax Cuts and Jobs Act of 2017 of $3.1 million for 2017. (2) In thousands. (3) Excludes shareholders who own their stock in “street name.” 6 Growth and Performance Assets in billions of dollars Assets Over the years, we've developed platforms and processes to prepare us to cross $10 billion in assets. We look forward to continued balance sheet growth, organically and through acquisitions. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Annual Net Income in millions of dollars $83.7 $60.5 $49.7 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Diluted earnings per share in dollars Net income Profitability has steadily increased over the past three years as a result of our acquisition initiatives and focus on revenue growth and operating efficiency. Earnings per share Over the years, we've successfully completed acquisitions while still increasing earnings per share. Common Stock Information Stock Price Performance Since IPO in total return % (Source: SNL Financial) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2019 High Low Div 1Q $18.68 $16.51 $0.18 2Q $17.72 $16.77 $0.18 3Q $17.70 $15.59 $0.18 4Q $17.53 $16.14 $0.18 2018 High Low Div 1Q $17.35 $16.11 $0.17 2Q $18.12 $16.21 $0.17 3Q $18.51 $17.32 $0.17 4Q $17.93 $15.52 $0.17 900 650 400 150 -100 NWBI S&P 500 +737.27% +593.82% SNL U.S. Bank +354.07% SNL U.S. Thrift +260.48% 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 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 7 $110.4$105.5$94.5$49.7$60.5$62.0$66.6$63.4$64.2$57.5$83.7$82.3$67.0$83.7$82.3$67.0$83.7$82.3$67.0$10.49$9.61$9.36$9.62$8.95$7.78$7.88$7.94$7.96$8.15$1.04$1.02$0.92$0.49$0.64$0.67$0.73$0.68$0.64$0.53Market Coverage A network of offices across three states. In 2020, we look forward to welcoming 36 full-service offices across the State of Indiana to our growing footprint through our merger with MutualBank. 8 Increasing the value of you. Always having your back. That's our front and center. Being a great banking partner isn't just having the products and services our customers want. Helping you gain financial confidence is a constant effort that everyone at Northwest takes seriously—and personally. So, whether you need an answer to a quick question or important advice about a major decision, we're never more than a click, call or in-person visit away. It's that approach to relationships that drives everything we do—and helps increase the value of you. 9 Business Solutions A greater degree of confidence. Your business is a labor of love, but it doesn't have to be hard work to find a great banking partner. The Northwest 360 team is an extension of yours, seeing your business from all angles, mapping out a plan to accomplish your goals and getting you what you need—from treasury management and financing to insurance and benefits. With our help, your business gets smarter—and your focus stays where it belongs. 10 Business Solutions Loans and Deposits Commercial relationships continue to be a growing segment of our business as commercial loans and deposits have grown substantially over the past five years. Yields and costs have started to increase due to the changing interest rate environment, but our interest spread remains attractive. Our business deposit mix continues to improve as we meet the needs of all types of businesses. Commercial Loans in billions of dollars Business Deposit Balances in billions of dollars 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Commercial Loan Yields Cost of Business Deposits 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Commercial Loan Losses as a % of commercial loans Business Deposit Mix 2015 2016 2017 2018 2019 48% 48% of business deposits were in non-interest bearing checking accounts Money Market Accounts Municipal Accounts 25% 15% Interest Checking Accounts 12% 11 15%25%48%12%0.32%0.32%0.24%0.26%0.49%$2.098$1.919$1.701$1.705$1.4055.00%4.72%4.41%4.37%4.44%0.34%0.34%0.19%0.08%0.11%$3.472$3.069$3.233$3.071$2.962Business Solutions Trust Services Business trust revenue has remained strong over the past year as we continue to diversify our mix of both revenue and assets under management. Business Trust Assets Under Management in millions of dollars Business Trust Asset Mix as a % of total business assets under management 81% 81% of business trust assets were in retirement plans Endowments/Foundations 13% Investment Management Trusts 5% 1% 2015 2016 2017 2018 2019 Business Trust Revenue in millions of dollars Business Trust Revenue Mix as a % of total business revenue 73% 73% of business trust revenue came from retirement plans Endowments/Foundations 16% Investment Management Trusts 9% 2% 2015 2016 2017 2018 2019 Business investments, employee retirement plans and succession plans play an enormous role in the health of a business. That's where our trust officers shine. 12 13%81%$4.3$4.3$4.2$4.0$3.99%16%73%2%$1,446.5$1,239.1$1,337.7$1,222.7$1,123.6Insurance Services Through Northwest Insurance Services, we complete our full-service business offer with a personal approach to property and casualty insurance and employee benefits, which significantly boosts fee income. Business Insurance Revenue in millions of dollars Business Insurance Revenue Mix as a % of total business insurance revenue 77% 77% of business insurance revenue came from employee benefits accounts Property and Casualty 23% 2015 2016 2017 2018 2019 Northwest Insurance Services advisors work with businesses as an extension of their team—from plan evaluation and implementation to employee education and administration. 13 $7.7$8.1$8.2$8.2$7.377%23%Personal Solutions Increasing the value of you. At Northwest, we believe artificial intelligence works best when combined with actual intelligence. So behind every product, tool and app we offer are friendly, helpful banking experts who are genuinely happy to take care of you. The way we see it, a bank is the sum of its products and people, and a great bank uses the power of both to increase the value of you. 14 Deposits We pride ourselves in the relationships we've built meeting our customers' needs. We continue to have great success attracting and keeping new checking account customers, and look forward to serving them for years to come as we deepen those relationships. Number of Households Number of Checking Accounts 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Services Per Household Checking Account Balances in billions of dollars 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Savings and Insured Money Fund Deposit Balances in billions of dollars Checking Account Fees in millions of dollars 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 (1) In 2017, services per household declined as we welcomed former Northwest Consumer Discount Company single-service loan customers to the bank. 15 $49.6$46.2$44.2$38.7$33.7325,869313,864310,993311,141253,717$1.971$1.838$1.797$1.749$1.326$3.096$2.960$3.041$3.168$2.325421,896401,727393,070372,502318,0912.9752.8472.8533.0272.970Personal Solutions Loans Mortgage and home equity loans are a core offering and continue to provide a stable return. Consumer loans have grown substantially in recent years with an emphasis on higher credit quality. Mortgage Portfolio Yield Consumer Loans in millions of dollars 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Home Equity Portfolio Yield Consumer Loan Portfolio Yield 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Mortgage and Home Equity Loan Losses as a % of total mortgages and home equity loans Consumer Loan Losses as a % of consumer loans 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 16 (1) Excludes consumer finance loans from Northwest Consumer Discount Company. 4.57%4.95%5.98%6.50%8.50%0.05%0.07%0.08%0.15%0.09%$1,125.0$859.7$657.3$631.3$510.64.91%4.80%4.45%4.32%4.33%4.04%4.06%4.11%4.18%4.42%1.08%1.91%1.87%1.73%1.62%Trust Services We continue to grow personal trust revenue through our focus on relationships, service and customized investment management solutions. Personal Trust Assets Under Management in millions of dollars Personal Trust Asset Mix as a % of total personal assets under management 74% of trust assets were in investment management accounts Trusts 26% 74% 2015 2016 2017 2018 2019 Personal Trust Revenue in millions of dollars Personal Trust Revenue Mix as a % of total personal revenue 65% of trust revenue came from investment management accounts Trusts 35% 65% 2015 2016 2017 2018 2019 Our experienced team of trust officers help ensure customer assets are protected— and their legacies are fulfilled. 17 65%35%74%26%$3.9$3.8$3.6$3.5$3.1$404.0$364.9$403.0$393.2$372.0 Personal Solutions Northwest Investment Services Personal assets under management and revenue continued to grow in 2019 as a result of strong sales, a growing economy and territory redesign accompanied by targeting hiring of talent. Personal Assets Under Management in millions of dollars Personal Asset Mix as a % of total personal assets under management 35% 35% of personal investment assets were in brokerage accounts Advisory Annuity 34% 31% 2015 2016 2017 2018 2019 Personal Investment Management Revenue in millions of dollars Personal Investment Management Revenue Mix as a % of total personal revenue 57% 57% of personal investment revenue came from advisory accounts Annuity Brokerage 26% 17% 2015 2016 2017 2018 2019 18 26%57%17%34%35%31%$10.8$9.7$9.1$5.2$4.2$1,727.3$1,440.6$1,487.1$1,274.9$587.1Insurance Services We've acquired a number of insurance companies across our footprint over the past few years, which has allowed us to not only expand our service area, but also add experienced, talented insurance representatives to our team. Personal Insurance Revenue in thousands of dollars Personal Insurance Revenue Mix as a % of total personal insurance revenue 70% 70% of personal insurance revenue came from property and casualty policies Health, Life and Disability Insurance 30% 2015 2016 2017 2018 2019 19 $1,140.5$1,215.4$1,209.2$901.1$576.570%30% 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, 2019 2018 $ 60,846 $ 68,789 819,901 801,450 18,036 22,765 Loans receivable, net of allowance for loan losses of $57,941 and $55,214 8,750,733 7,996,225 Federal Home Loan Bank stock, at cost Accrued interest receivable Real estate owned, net Premises and equipment Bank-owned life insurance Goodwill and other intangible assets Other assets TOTAL ASSETS LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits Borrowed funds Junior subordiated debentures Advances by borrowers for taxes and insurance Accrued interest payable Other liabilities TOTAL LIABILITIES 14,740 25,755 950 15,635 24,490 2,498 147,409 143,390 189,091 171,079 369,179 97,268 327,241 34,211 $ 10,493,908 $ 9,607,773 $ 8,592,007 $ 7,894,179 246,336 234,389 121,800 111,213 44,556 1,142 43,298 744 134,782 66,312 9,140,623 8,350,135 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; 106,859,088 and 103,354,030 shares issued and outstanding, respectively Paid-in capital Retained earnings Accumulated other comprehensive loss TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 1,069 1,034 805,750 583,407 745,926 550,374 (36,941) (39,696) 1,353,285 1,257,638 $ 10,493,908 $ 9,607,773 20 Condensed consolidated statements of income In thousands, except per share data 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 YEARS ENDED DECEMBER 31, 2019 2018 2017 $ 394,809 $ 356,571 $ 339,992 22,571 19,210 18,864 417,380 375,781 358,856 49,216 30,985 23,057 7,698 6,155 5,014 56,914 37,140 28,071 360,466 338,641 330,785 22,659 20,332 19,751 NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 337,807 318,309 311,034 NONINTEREST INCOME: Gain on sale of investments Gain on sale of loans Service charges and fees Trust and other financial services income Insurance commission income Income from bank-owned life insurance Other (1) TOTAL NONINTEREST INCOME NONINTEREST EXPENSE: Compensation and employee benefits Premises and occupany costs Office operations Collections expense Processing expenses Marketing expenses Federal deposit insurance premiums Amortization of intangible assets Restructuring/acquisition expense Other TOTAL NONINTEREST EXPENSE Income before income taxes Income tax expense NET INCOME Basic earnings per share Diluted earnings per share 50 1,734 157 — 1,148 — 53,065 50,792 49,717 17,765 16,581 17,987 8,068 4,418 14,307 8,791 5,821 9,560 9,013 6,093 26,522 99,407 91,702 110,480 163,086 152,395 152,296 28,717 14,133 27,519 28,863 14,139 16,342 2,560 2,209 2,849 42,453 39,046 39,086 6,998 685 6,543 4,168 8,434 2,746 5,848 1,014 9,607 3,518 6,764 4,419 26,760 22,748 21,859 296,103 276,098 285,603 141,111 133,913 135,911 30,679 28,422 41,444 $ 110,432 $ 105,491 $ 94,467 $ 1.05 $ 1.04 $ 1.03 $ 1.02 $ 0.94 $ 0.92 (1) Includes gain on the sale of Maryland offices of $17,186 in 2017. 21 Directors and Officers Board of Directors Ronald J. Seiffert Chairman, President and CEO Northwest Bancshares, Inc. Robert M. Campana President Campana Capital Deborah J. Chadsey Attorney and Partner Kavinoky Cook LLP Timothy B. Fannin Retired Partner Catalano, Case, Catalano & Clark-Radzieta, LLP Corporate Officers Timothy M. Hunter President and CEO McInnes Rolled Rings, Erie Bronze & Aluminum Company Sonia M. Probst Retired CEO Rouse Estate Philip M. Tredway President and CEO Erie Molded Plastics, Inc. David M. Tullio* President Custom Engineering Company William F. McKnight Controller Interstate Chemical Company John P. Meegan Executive Vice President and COO Hefren-Tillotson, Inc. Mark A. Paup President and CEO Zippo Manufacturing, W.R. Case and Sons Cutlery Company Ronald J. Seiffert President Chief Executive Officer Michael W. Bickerton Executive Vice President Commercial Lending Mark T. Reitzes Executive Vice President Commercial Banking Steven G. Fisher Senior Executive Vice President Chief Innovation Officer John J. Golding Executive Vice President Consumer and Business Banking Louis J. Torchio Executive Vice President Retail Lending William W. Harvey, Jr. Senior Executive Vice President Chief Financial Officer Richard K. Laws Executive Vice President Chief Counsel/Corporate Secretary Shawn O. Walker Executive Vice President Chief Marketing Officer Ronald B. Andzelik Executive Vice President Chief Risk Officer Julia W. McTavish Executive Vice President Chief Human Resources Officer Scott J. Watson Executive Vice President Chief Information and Operations Officer 22 *Northwest Bank Board Member only. Corporate Officers Neil A. Aquino, Jr. Senior Vice President Commercial Banking Barbara L. DeMontier Senior Vice President Human Resources Kevin G. Mizak Senior Vice President Chief Auditor John K. Beard Senior Vice President Northwest Investment Services Christina D. Dinger Senior Vice President Enterprise Project Management Melody Schott Senior Vice President Support Services Stephen M. Bell Senior Vice President Corporate Real Estate Douglas H. Bert Senior Vice President Insurance Services Kevin S. Carpenter Senior Vice President Retail Lending Michele D. Cavalier Senior Vice President Senior Trust Officer James M. Colestro Senior Vice President Retail Lending Thomas K. Creal IV Senior Vice President Credit Administration Steven M. Crissey Senior Vice President Human Resources Region Presidents Richard C. Hamister New York Julie Fallon Hughes Southwest Pennsylvania Julie A. Marasco Northwest Pennsylvania James E. Martin Erie, Pennsylvania Kelli M. Griffin Senior Vice President Customer Experience John E. Hall Senior Vice President Dealer Services Heidi Schwab Senior Vice President Shared Services Vicki L. Stec Senior Vice President Bank Secrecy Officer Neil R. Hoffman Senior Vice President Commercial/Industrial Lending Eric D. Stoever Senior Vice President Chief Technology Officer D. Kirk Jacobson Senior Vice President Small Business Lending Raymond R. Learn Senior Vice President Chief Compliance Officer Dorothy E. Lobdell Senior Vice President Retail Lending Operations Jeffrey J. Maddigan Senior Vice President Treasurer James M. Swanson Senior Vice President Deposit Products/Treasury Management William C. Tarpenning Senior Vice President Retail Lending C. Forrest Tefft Senior Vice President Corporate Finance Lending Jeffrey R. White Senior Vice President Controller Nancy J. May Eastern Pennsylvania Kevin W. Nelson Ohio Jonathan E. Rockey Central Pennsylvania 23 Investor Information Corporate Headquarters Financial Information 100 Liberty Street PO Box 128 Warren, Pennsylvania 16365 Telephone: (814) 726-2140 Fax: (814) 728-7716 www.northwest.com Annual Meeting April 22, 2020, 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 stock registration, 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: 1-800-937-5449 Toll Free: 1-877-715-0499 Email: help@astfinancial.com www.astfinancial.com Online Shareholder Access Registered shareholders can securely manage their account(s) online through American Stock Transfer & Trust Company, LLC at www.astfinancial.com by clicking “Login”, “Individuals” and “Shareholder Central”. Here you can easily obtain important details about your holdings and general stock transfer information, as well as initiate a number of transactions and inquiries including the following: • Update your mailing address • 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 www.sec.gov or through the company’s website, www.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 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 materials and enroll online at www.astfinancial.com by clicking on “Login”, “Individuals” and “Invest Online” or from our investor relations website at www.northwest. com. Alternatively, you may request a plan prospectus and enrollment application by calling American Stock Transfer & Trust Company, toll-free, at 1-877-715-0499 or Northwest, toll-free, at 1-800-859-1000 or (814) 728-7263. Direct Deposit of Dividends Registered 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.astfinancial.com or, to obtain an enrollment card, by calling American Stock Transfer & Trust Company, toll-free, at 1-877-715-0449 or Northwest, toll-free, at 1-800-859-1000 or (814) 728-7263. Investor Relations Ronald J. Seiffert Chairman, President and Chief Executive Officer William W. Harvey, Jr. Senior Executive Vice President and Chief Financial Officer Shareholder Relations Jacqueline N. Snell Assistant Vice President, Assistant Controller 24 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. ©2020 Northwest Bancshares, Inc. 100 Liberty Street PO Box 128 Warren, Pennsylvania 16365 (814) 726-2140 northwest.com 

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