<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended September 30, 1999
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
----------------- ----------------
Commission File Number 0-23817
-------
Northwest Bancorp, Inc.
--------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2900888
---------------- --------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Liberty Street at Second Avenue, Warren Pennsylvania 16365
- ---------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(814) 726-2140
--------------
(Registrant's telephone number, including area code)
Not applicable
-----------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Common Stock (.10 par value) 47,356,993 shares outstanding as of September
30, 1999.
<PAGE>
NORTHWEST BANCORP, INC. AND SUBSIDIARIES
INDEX
PART I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of
September 30, 1999 (Unaudited) and June 30, 1999 1
Consolidated Statements of Income for the three months
ended September 30, 1999 and 1998 (Unaudited) 2
Consolidated Statements of Changes in Shareholders' Equity for
the three months ended September 30, 1999 and 1998 (Unaudited) 3
Consolidated Statements of Cash Flows for the three months
ended September 30, 1999 and 1998 (Unaudited) 4
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 19
PART II OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
Signature 22
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
NORTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(DOLLARS IN THOUSANDS)
SEPTEMBER 30, JUNE 30,
ASSETS 1999 (UNAUDITED) 1999
- ----------------------------------------------- --------------- ------------
CASH AND CASH EQUIVALENTS $ 114,801 75,325
INTEREST-EARNING DEPOSITS IN OTHER FINANCIAL
INSTITUTIONS 6,094 8,928
MARKETABLE SECURITIES AVAILABLE-FOR-SALE
(AMORTIZED COST OF $428,335 AND $350,339) 427,437 352,780
MARKETABLE SECURITIES HELD-TO-MATURITY (MARKET
VALUE OF $243,581 AND $250,351) 251,244 253,864
----------- -----------
TOTAL CASH, INTEREST-EARNING DEPOSITS AND
MARKETABLE SECURITIES 799,576 690,897
LOANS RECEIVABLE, NET OF ALLOWANCE FOR ESTIMATED
LOSSES OF $16,756 AND $16,773 2,405,978 2,285,238
ACCRUED INTEREST RECEIVABLE 15,892 14,548
REAL ESTATE OWNED, NET 2,656 3,383
PREMISES AND EQUIPMENT, NET 38,706 35,463
GOODWILL AND OTHER INTANGIBLES 58,440 39,328
OTHER ASSETS 11,924 11,050
----------- -----------
TOTAL ASSETS $ 3,333,172 3,079,907
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- -----------------------------------------------
LIABILITIES:
DEPOSITS $ 2,782,846 2,463,711
BORROWED FUNDS 287,705 348,915
ADVANCES BY BORROWERS FOR TAXES AND INSURANCE 9,127 18,954
ACCRUED INTEREST PAYABLE 4,901 3,698
OTHER LIABILITIES 13,693 10,972
----------- -----------
TOTAL LIABILITIES 3,098,272 2,846,250
SHAREHOLDERS' EQUITY:
COMMON STOCK, $.10 PAR VALUE: 100,000,000 SHARES
AUTHORIZED, 47,356,993 AND 47,355,073 ISSUED
AND OUTSTANDING, RESPECTIVELY 4,736 4,736
PAID-IN CAPITAL 70,385 70,374
RETAINED EARNINGS 161,843 157,745
ACCUMULATED OTHER COMPREHENSIVE INCOME:
NET UNREALIZED GAIN ON SECURITIES AVAILABLE-
FOR-SALE, NET OF INCOME TAXES (888) 1,978
UNEARNED EMPLOYEE STOCK OWNERSHIP PLAN SHARES (561) (561)
UNEARNED RECOGNITION AND RETENTION PLAN SHARES (615) (615)
----------- -----------
234,900 233,657
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,333,172 3,079,907
=========== ===========
See accompanying notes to unaudited consolidated financial statements
1
<PAGE>
NORTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS
ENDED SEPTEMBER 30,
1999 1998
-------- --------
INTEREST INCOME:
LOANS RECEIVABLE $ 46,555 40,923
MORTGAGE-BACKED SECURITIES 6,062 4,592
TAXABLE INVESTMENT SECURITIES 2,929 3,050
TAX-FREE INVESTMENT SECURITIES 1,031 488
INTEREST-EARNING DEPOSITS 247 145
-------- --------
TOTAL INTEREST INCOME 56,824 49,198
INTEREST EXPENSE:
DEPOSITS 26,462 23,339
BORROWED FUNDS 5,188 4,396
-------- --------
TOTAL INTEREST EXPENSE 31,650 27,735
NET INTEREST INCOME 25,174 21,463
PROVISION FOR LOAN LOSSES 624 790
-------- --------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 24,550 20,673
NONINTEREST INCOME:
LOAN FEES AND SERVICE CHARGES 358 294
SERVICE CHARGES ON DEPOSIT ACCOUNTS 1,228 714
GAIN ON SALE OF MARKETABLE SECURITIES, NET 36 46
LOSS ON SALE OF LOANS, NET (7) (153)
GAIN ON SALE OF REAL ESTATE OWNED, NET 25 92
OTHER OPERATING INCOME 718 783
-------- --------
TOTAL NONINTEREST INCOME 2,358 1,776
NONINTEREST EXPENSE:
COMPENSATION AND EMPLOYEE BENEFITS 9,524 8,160
PREMISES AND OCCUPANCY COSTS 2,115 1,584
OFFICE OPERATIONS 1,179 985
FEDERAL INSURANCE PREMIUMS 295 277
DATA PROCESSING 674 430
CHECK PROCESSING AND ATM EXPENSE 803 535
BANK SERVICE CHARGES 288 310
ADVERTISING 498 313
LEGAL, AUDIT AND PROFESSIONAL SERVICES 292 258
REAL ESTATE OWNED EXPENSE 191 185
AMORTIZATION OF INTANGIBLES 1,104 634
OTHER EXPENSES 479 447
-------- --------
TOTAL NONINTEREST EXPENSE 17,442 14,118
INCOME BEFORE INCOME TAXES 9,466 8,331
FEDERAL AND STATE INCOME TAXES 3,473 3,324
MINORITY INTEREST IN NET LOSS OF
SUBSIDIARY 0 3
-------- --------
NET INCOME $ 5,993 5,010
======== ========
BASIC EARNINGS PER SHARE $ 0.13 0.11
======== ========
DILUTED EARNINGS PER SHARE $ 0.13 0.11
======== ========
See accompanying notes to unaudited consolidated financial statements.
2
<PAGE>
NORTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Common Stock
-------------------------- Paid-in Retained
Shares Amount Capital Earnings
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Beginning balance at June 30, 1998 46,840,970 $ 4,684 67,248 145,259
Comprehensive income:
Net income - - - 5,010
Change in unrealized gain on securities,
net of tax and reclassification adjustment - - - -
---------- ---------- ---------- ----------
Total comprehensive income - - - 5,010
Exercise of stock options 23,650 2 128 -
ESOP shares released - - - -
RRP shares released - - - -
Dividends declared - - - (1,875)
---------- ---------- ---------- ----------
Ending balance at September 30, 1998 46,864,620 $ 4,686 67,376 148,394
========== ========== ========== ==========
<CAPTION>
Accum. Unearned Unearned
Other Employee Recognition
Compre- Stock and Total
hensive Ownership Retention Shareholders'
Income Plan Shares Plan Shares Equity
---------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Beginning balance at June 30, 1998 3,371 (1,412) (1,271) 217,879
Comprehensive income:
Net income - - - 5,010
Change in unrealized gain on securities,
net of tax and reclassification adjustment 709 - - 709
---------- ---------- --------- ----------
Total comprehensive income 709 - - 5,719
Exercise of stock options - - - 130
ESOP shares released - - - 0
RRP shares released - - - 0
Dividends declared - - - (1,875)
---------- ---------- --------- ----------
Ending balance at September 30, 1998 4,080 (1,412) (1,271) 221,853
========== ========== ========= ==========
<CAPTION>
Common Stock
-------------------------- Paid-in Retained
Shares Amount Capital Earnings
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Beginning balance at June 30, 1999 47,355,073 $ 4,736 70,374 157,745
Comprehensive income:
Net income - - - 5,993
Change in unrealized gain on securities,
net of tax and reclassification adjustment - - - -
---------- ---------- ---------- ----------
Total comprehensive income - - - 5,993
Exercise of stock options 1,920 - 11 -
ESOP shares released - - - -
RRP shares released - - - -
Dividends declared - - - (1,895)
---------- ---------- ---------- ----------
Ending balance at September 30, 1999 47,356,993 $ 4,736 70,385 161,843
========== ========== ========== ==========
<CAPTION>
Accum. Unearned Unearned
Other Employee Recognition
Compre- Stock and Total
hensive Ownership Retention Shareholders'
Income Plan Shares Plan Shares Equity
---------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Beginning balance at June 30, 1999 1,978 (561) (615) 233,657
Comprehensive income:
Net income - - - 5,993
Change in unrealized gain on securities,
net of tax and reclassification adjustment (2,866) - - (2,866)
---------- ---------- ---------- ----------
Total comprehensive income (2,866) - - 3,127
Exercise of stock options - - - 11
ESOP shares released - - - 0
RRP shares released - - - 0
Dividends declared - - - (1,895)
---------- ---------- ---------- ----------
Ending balance at September 30, 1999 (888) (561) (615) 234,900
========== ========== ========== ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
3
<PAGE>
NORTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
9/30/99 9/30/98
-------------- --------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $ 5,993 5,010
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 624 790
Net loss (gain) on sales of assets (54) 15
Purchase of marketable securities, trading - (5,284)
Proceeds from sale of marketable securities, trading 8,822 5,330
Amortization of goodwill and other intangible assets 1,104 634
Net depreciation, amortization and accretion 1,138 451
Decrease (increase) in other assets (72) 694
Increase (decrease) in other liabilities 2,394 1,823
Accretion of discounts on marketable securities (111) (34)
Noncash compensation expense related to
stock benefit plans 378 716
Other - 226
---------- ----------
Net cash provided by operating activities 20,216 10,371
INVESTING ACTIVITIES:
Purchase of marketable securities held-to-maturity (8,475) (1,000)
Purchase of marketable securities available-for-sale (105,718) (1,761)
Proceeds from maturities and principal reductions
of marketable securities held-to-maturity 11,154 7,009
Proceeds from maturities and principal reductions
of marketable securities available-for-sale 6,052 13,228
Proceeds from sales of marketable securities,
available-for-sale 15,059 -
Loan originations (188,347) (222,898)
Proceeds from loan maturities and principal reductions 113,212 116,232
Proceeds from loan sales - 3,976
Purchase of Federal Home Loan Bank Stock (3,112) (1,064)
Proceeds from sale of real estate owned 1,012 553
Net (purchase) sale of real estate owned for investment - (343)
Purchase of premises and equipment (3,134) (962)
Acquisitions, net of cash received 203,319 (4,970)
---------- ----------
Net cash provided (used) by investing activities $ 41,022 (92,000)
</TABLE>
<PAGE>
NORTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(DOLLARS IN THOUSANDS)
Three Months Three Months
Ended Ended
9/30/99 9/30/98
---------- -------------
FINANCING ACTIVITIES:
Increase in deposits, net $ 48,325 59,382
Proceeds from long-term borrowings 9,578 85,624
Repayments of long-term borrowings (5,621) (49,312)
Net increase (decrease) in short-term borrowings (65,167) 11,422
Decrease in advances by borrowers for
taxes and insurance (9,827) (7,043)
Cash dividends paid (1,895) (1,875)
Proceeds from options exercised 11 130
--------- ----------
Net cash provided (used) by financing activities (24,596) 98,328
Net increase in cash and cash equivalents $ 36,642 16,699
========= ==========
Cash and cash equivalents at beginning of period $ 84,253 59,395
Net increase in cash and cash equivalents 36,642 16,699
--------- ----------
Cash and cash equivalents at end of period $ 120,895 76,094
========= ==========
Cash paid during the period for:
Interest on deposits and borrowings (including
interest credited to deposit accounts of
$20,555 and $16,347, respectively) $ 31,523 26,504
========= ==========
Income taxes $ 563 1,898
========= ==========
Business acquisitions:
Fair value of assets acquired $ 68,643 3,057
Cash received (paid) 203,319 (4,970)
Minority interest - 1,913
--------- ----------
Liabilities assumed $ 271,962 0
========= ==========
Non-cash activites:
Loans transferred to real estate owned $ 419 426
========= ==========
Sale of real estate owned financed by the
Company $ 144 89
========= ==========
See accompanying notes to unaudited consolidated financial statements
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements have been prepared
in accordance with instructions for form 10-Q and, accordingly, do not include
information for footnotes necessary for a complete presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments,
consisting of normal recurring adjustments, have been included which are
necessary for a fair presentation of financial position and results of
operations. The consolidated statements have been prepared using the accounting
policies described in the financial statements included in Northwest Bancorp,
Inc.'s Annual Report and Form 10-K for the fiscal year ended June 30, 1999.
Certain items previously reported have been reclassified to conform with the
current period's reporting format. The results of operations for the three
months ended September 30, 1999 are not necessarily indicative of the results
that may be expected for the entire year.
(2) Principles of Consolidation
---------------------------
The accompanying unaudited consolidated financial statements include the
accounts of Northwest Bancorp, Inc. and its wholly owned subsidiaries, Northwest
Savings Bank, Jamestown Savings Bank, Northwest Consumer Discount Company,
Northwest Finance Company, Northwest Financial Services, Inc., Northwest Capital
Group, Inc., Rid Fed, Inc. and Great Northwest Corporation. All significant
intercompany items have been eliminated.
(3) Accounting Developments
-----------------------
In March 1998, the American Institute of Certified Public Accountants (AICPA)
released Statement of Position No. 98-1 ("SOP 98-1") "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use." SOP 98-1 requires
the capitalization of certain costs incurred in connection with developing or
obtaining software for internal use, that otherwise may have been expensed.
This statement is effective for fiscal years beginning after December 15, 1998
and restatement of prior year financial information is not permitted. Adoption
of this statement is not expected to have a material effect on the Company's
financial position or results of operations.
In June 1998, the FASB released SFAS 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and
reporting standards for derivative instruments and hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. The accounting for changes in the fair value of a derivative
(that is, gains and losses)
6
<PAGE>
depends on the intended use of the derivative and the resulting designation.
This statement was to be effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. This effective date was changed, however, in June
1999, when the FASB issued SFAS 137 "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement 133 - an
Amendment of FASB Statement 133", which delays the adoption of FASB Statement
133 until the first quarter of the Company's fiscal year 2001. The Company does
not expect this statement to have a material effect on the financial statements.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward-Looking Statements
- --------------------------
In addition to historical information, this document may contain certain
forward-looking statements, as defined in the Securities and Exchange Act of
1934, as amended, and the regulations thereunder. These forward-looking
statements contained herein are subject to certain risks and uncertainties that
could cause actual results to differ materially from those expressed or implied
in the forward-looking statements. Important factors that might cause such a
difference include, but are not limited to, economic, regulatory and other
factors as discussed herein. Readers are cautioned not to place undue reliance
on these forward-looking statements, as they reflect management's analysis only
as of the date of this report. The Company has no obligation to revise or
update these forward-looking statements to reflect events or circumstances that
arise after the date of this report.
Discussion of Financial Condition Changes from June 30, 1999 to September 30,
- -----------------------------------------------------------------------------
1999
- ----
Assets
- ------
At September 30, 1999, the Company had total assets of $3.333 billion, an
increase of approximately $253.3 million, or 8.2%, from $3.080 billion at June
30, 1999. This increase was funded primarily by a $319.1 million increase in
deposits and net income of $6.0 million which was partially offset by a $61.2
million decrease in borrowed funds.
Cash and cash equivalents, interest-earning deposits and marketable securities
totaled $799.6 million at September 30, 1999, an increase of $108.7 million, or
15.7%, from $690.9 million at June 30, 1999 as the Company invested a
substantial percentage of the deposits received from office acquisitions in
these types of assets. Net loans receivable increased by $120.7 million, or
5.3%, to $2.406 billion at September 30, 1999 from $2.285 billion at June 30,
1999 as the Company continued to experience strong loan demand in its markets.
Goodwill and other intangibles increased by $19.1 million, or 48.6%, to $58.4
million at September 30, 1999 from $39.3 million at June 30, 1999 as the Company
recorded goodwill in acquiring eight full-service offices with deposits of
$270.8 million.
Liabilities
- -----------
Deposits increased by $319.1 million, or 12.9%, to $2.783 billion at September
30, 1999 from $2.464 billion at June 30, 1999. This increase resulted primarily
from the purchase of eight full-service offices with deposits of $270.8 million
and normal internal deposit growth. Borrowed funds decreased by $61.2 million,
or 17.5%, to $287.7 million at September 30, 1999 from $348.9 million at June
30, 1999 as the Company utilized a portion of its deposit growth to repay
borrowed funds. Advances by borrowers for taxes and insurance decreased by $9.8
million, or
8
<PAGE>
51.8%, to $9.1 million at September 30, 1999 from $18.9 million at June 30,
1999. This decrease typically occurs in the third calendar quarter of each year
as real estate taxes are paid for a substantial number of the Company's mortgage
customers.
Capital Resources and Liquidity
- -------------------------------
Total capital at September 30, 1999 was $234.9 million, an increase of $1.2
million, or .5%, from $233.7 million at June 30, 1999. This increase was
primarily attributable to net income for the three month period of $6.0 million
which was partially offset by the declaration of common stock dividends of $1.9
million. Also offsetting this increase in capital was a $2.9 million decrease
in the net unrealized gain on securities available-for-sale as a result of the
decrease in the market value of fixed-rate securities during a period of rising
interest rates.
- ---------------
The Company and its subsidiaries are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory - and possibly
additional discretionary - actions by the regulators that, if undertaken, could
have a direct material effect on the Company's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Company must meet specific capital guidelines that involve
quantitative measures of the Company's assets, liabilities and certain off-
balance sheet items as calculated under regulatory accounting practices. The
Company's capital amounts and classification are also subject to qualitative
judgements by the regulators about components, risk weightings and other
factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company to maintain minimum amounts and ratios (set forth in the
table below) of Total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital to average assets (as
defined).
9
<PAGE>
As of September 30, 1999, all regulatory capital requirements were exceeded. The
actual, required, and well capitalized levels as of September 30, 1999 and June
30, 1999 are as follows: (dollars in thousands)
<TABLE>
<CAPTION>
September 30, 1999
Minimum Capital Well Capitalized
Actual Requirements Requirements
- -------------------------------------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to risk weighted assets):
- -------------------------------------------------------------------------------------------------------------
Northwest Bancorp, Inc. $191,834 10.91% $140,652 8.00% $175,815 10.00%
- -------------------------------------------------------------------------------------------------------------
Northwest Savings Bank $180,505 10.52% $137,161 8.00% $171,451 10.00%
- -------------------------------------------------------------------------------------------------------------
Jamestown Savings Bank $7,700 17.51% $3,518 8.00% $4,397 10.00%
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Tier 1 Capital (to risk weighted assets):
- -------------------------------------------------------------------------------------------------------------
Northwest Bancorp, Inc. $175,078 9.96% $70,326 4.00% $105,489 6.00%
- -------------------------------------------------------------------------------------------------------------
Northwest Savings Bank $163,052 9.51% $68,581 4.00% $102,871 6.00%
- -------------------------------------------------------------------------------------------------------------
Jamestown Savings Bank $7,324 16.66% $1,759 4.00% $2,638 6.00%
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Tier 1 Capital (core) (to average assets):
- -------------------------------------------------------------------------------------------------------------
Northwest Bancorp, Inc. $175,078 5.54% $94,794 3.00%* $157,991 5.00%
- -------------------------------------------------------------------------------------------------------------
Northwest Savings Bank $163,052 5.31% $92,073 3.00%* $153,455 5.00%
- -------------------------------------------------------------------------------------------------------------
Jamestown Savings Bank $7,324 8.58% $2,560 3.00%* $4,266 5.00%
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
June 30, 1999
Minimum Capital Well Capitalized
Actual Requirements Requirements
- -------------------------------------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to risk weighted assets):
- -------------------------------------------------------------------------------------------------------------
Northwest Bancorp, Inc. $208,047 12.67% $131,384 8.00% $164,230 10.00%
- -------------------------------------------------------------------------------------------------------------
Northwest Savings Bank $195,730 12.24% $127,951 8.00% $159,939 10.00%
- -------------------------------------------------------------------------------------------------------------
Jamestown Savings Bank $7,450 18.51% $3,219 8.00% $4,024 10.00%
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Tier 1 Capital (to risk weighted assets):
- -------------------------------------------------------------------------------------------------------------
Northwest Bancorp, Inc. $190,036 11.57% $65,692 4.00% $98,538 6.00%
- -------------------------------------------------------------------------------------------------------------
Northwest Savings Bank $178,068 11.13% $63,976 4.00% $95,963 6.00%
- -------------------------------------------------------------------------------------------------------------
Jamestown Savings Bank $7,101 17.65% $1,610 4.00% $2,414 6.00%
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Tier 1 Capital (core) (to average assets):
- -------------------------------------------------------------------------------------------------------------
Northwest Bancorp, Inc. $190,036 6.30% $90,475 3.00%* $150,791 5.00%
- -------------------------------------------------------------------------------------------------------------
Northwest Savings Bank $178,068 6.16% $86,704 3.00%* $144,507 5.00%
- -------------------------------------------------------------------------------------------------------------
Jamestown Savings Bank $7,101 8.91% $2,390 3.00%* $3,984 5.00%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
* The FDIC has indicated that the most highly rated institutions which meet
certain criteria will be required to maintain a ratio of 3%, and all other
institutions will be required to maintain an additional capital cushion of 100
to 200 basis points. As of September 30, 1999, the Company had not been advised
of any additional requirements in this regard.
The Company is required to maintain a sufficient level of liquid assets, as
determined by management and defined and reviewed for adequacy by the FDIC
during their regular examinations. The Company's internal liquidity requirement
is based upon liquid assets as a percentage of deposits and borrowings
("liquidity ratio"). The Company has always maintained a level of liquid assets
in excess of regulatory and internal requirements, and the liquidity ratio at
September 30, 1999 was 25.4%. The Company adjusts its liquidity levels in order
to meet funding needs for deposit outflows, payment of real estate taxes and
insurance on mortgage loan escrow accounts, repayment of borrowings, when
applicable, and loan commitments.
11
<PAGE>
Nonperforming Assets
- --------------------
The following table sets forth information with respect to the Company's
nonperforming assets. Nonaccrual loans are those loans on which the accrual of
interest has ceased. Loans are placed on nonaccrual status when they are more
than 90 days contractually delinquent. Other nonperforming assets represent
property acquired by the Company through foreclosure or repossession.
Foreclosed property is carried at the lower of its fair value or the principal
balance of the related loan. Nonperforming assets decreased $3.5 million, or
17.9%, to $16.0 million at September 30, 1999 from $19.5 million at June 30,
1999. Management believes that these low levels of nonperforming assets are
attributable to stringent credit policies, sustained collection procedures and
overall strong economic conditions.
(Dollars in Thousands)
<TABLE>
<CAPTION>
Loans accounted for on a nonaccrual basis: September 30, 1999 June 30, 1999
- ----------------------------------------------------------------------------------
<S> <C> <C>
One-to-four family residential loans $ 8,043 $ 8,623
- ----------------------------------------------------------------------------------
Multifamily and commercial real estate loans 2,372 2,141
- ----------------------------------------------------------------------------------
Consumer loans 2,729 2,202
- ----------------------------------------------------------------------------------
Commercial business loans 225 3,150
- ----------------------------------------------------------------------------------
Total $13,369 $16,116
- ----------------------------------------------------------------------------------
Total nonperforming loans as a percentage of
net loans receivable .56% .71%
- ----------------------------------------------------------------------------------
Total real estate acquired through
foreclosure and other real estate owned $ 2,656 $ 3,383
- ----------------------------------------------------------------------------------
Total nonperforming assets $16,025 $19,499
- ----------------------------------------------------------------------------------
Total nonperforming assets as a percentage
of total assets .48% .63%
- ----------------------------------------------------------------------------------
</TABLE>
Comparison of Operating Results for the Three Months Ended September 30, 1999
- -----------------------------------------------------------------------------
and 1998
- --------
General
- -------
Net income for the three months ended September 30, 1999 was $6.0 million, or
$.13 per share, an increase of $1.0 million, or 20.0%, from $5.0 million, or
$.11 per share, during the same period last year. This increase in net income
resulted primarily from a $3.7 million increase in
12
<PAGE>
net interest income and a $582,000 increase in noninterest income which were
partially offset by a $3.3 million increase in noninterest expense.
Net Interest Income
- -------------------
For the three months ended September 30, 1999, total interest income increased
by $7.6 million, or 15.4%, to $56.8 million compared to $49.2 million for the
three months ended September 30, 1998. This increase resulted primarily from a
$496.0 million, or 19.9%, increase in average interest earning assets to $2.989
billion for the three months ended September 30, 1999 from $2.493 billion for
the three months ended September 30, 1998. Partially offsetting this increase
in average balance was a decrease in the yield on average interest earning
assets to 7.67% for the three months ended September 30, 1999 from 7.93% for the
same period last year. The substantial growth in average interest earning assets
was primarily due to the investment of funds received from the acquisition of
offices over the last twelve months with deposits of approximately $520.8
million combined with continued strong internal growth in the Company's existing
franchise. The decrease in the overall yield on interest earning assets
resulted primarily from a substantial percentage of the Company's loan portfolio
being refinanced since September of 1998 in an effort by borrowers to reduce
their interest rates.
Interest income on loans receivable increased by $5.7 million, or 13.9%, to
$46.6 million for the quarter ended September 30, 1999 compared to $40.9 million
during the same quarter last year. This increase resulted primarily from a
$367.4 million, or 18.8%, increase in average loans outstanding to $2.326
billion for the quarter ended September 30, 1999 from $1.959 billion for the
same quarter last year. Loan balances increased because of strong loan demand
throughout the Company's market area. Partially offsetting this increase in
loans receivable was a decrease in the yield on average loans to 8.00% for the
quarter ended September 30, 1999 from 8.36% for the comparable period last year.
This decrease in average yield resulted primarily from a substantial percentage
of the Company's loans refinancing since September of 1998 in an effort by
borrowers to lower their interest rates.
Interest income on mortgage-backed securities increased by $1.5 million, or
32.6%, to $6.1 million for the three months ended September 30,1999 from $4.6
million for the same period last year. This increase resulted from a $92.2
million, or 30.7%, increase in the average balance of mortgage-backed securities
to $392.3 million for the three months ended September 30, 1999 from $300.1
million for the three months ended September 30, 1998 combined with an increase
in the average yield to 6.18% from 6.12% for the same quarter last year. The
average balance increased primarily because of the investment of deposits from
branch acquisitions. The average yield on mortgage-backed securities increased
slightly primarily as a result of the purchase of approximately $75.0 million of
fixed rate mortgage-backed pass-through securities in the last three months with
an average yield of 7.17%.
Interest income on investment securities increased by $611,000, or 17.2%, on a
taxable equivalent basis to $4.2 million for the three months ended September
30, 1999 from $3.5 million for the
13
<PAGE>
three months ended September 30, 1998. An increase in the average balance of
investment securities of $37.9 million, or 19.5%, to $232.7 million for the
three months ended September 30, 1999 from $194.8 million for the three months
ended September 30, 1998 was partially offset by a decrease in the average yield
to 7.15% for the quarter ended September 30, 1999 from 7.29% for the same
quarter last year. The increase in average balance was primarily due to the
investment of a percentage of the Company's deposit growth. The decrease in
average yield resulted primarily from the purchase of securities over the last
twelve months that have a lower yield than other securities in the Company's
investment portfolio.
Interest income on interest-earning deposits increased by $102,000, or 70.3%, to
$247,000 for the three months ended September 30, 1999 from $145,000 for the
three months ended September 30, 1998. A decrease in the average balance of
interest-earning deposits of $7.0 million, or 27.3%, to $18.6 million for the
three months ended September 30, 1999 from $25.6 million for the three months
ended September 30, 1998 was more than offset by an increase in the average
yield to 5.30% from 2.27% for the same quarter in the prior year. The change in
the average yield is dependant upon the timing as to when the Company begins to
earn interest.
Interest expense increased by $4.0 million, or 14.4%, to $31.7 million for the
three months ended September 30, 1999 from $27.7 million for the three months
ended September 30, 1998. This increase resulted primarily from an increase of
$502.6 million, or 21.5%, in the average balance of interest-bearing liabilities
to $2.840 billion for the quarter ended September 30, 1999 from $2.337 billion
for the quarter ended September 30, 1998. Partially offsetting this increase in
balance was a decrease in the average cost of interest-bearing liabilities to
4.46% for the quarter ended September 30, 1999 from 4.75% for the comparable
period last year. The increase in average interest-bearing liabilities resulted
primarily from an increase of $430.5 million, or 21.3%, in the average balance
of deposits, attributed primarily to the office acquisitions over the last
twelve months which contributed average deposits of approximately $295.0
million. Also contributing to the growth of interest-bearing liabilities was an
increase of $72.2 million, or 23.2%, in average borrowed funds to $384.0 million
for the quarter ended September 30, 1999 from $311.8 million for the quarter
ended September 30, 1998. The increase in borrowed funds consisted primarily of
borrowings from the Federal Home Loan Bank which were used to fund increases in
the loan and investment portfolios in an effort to enhance net interest income.
The decrease in the average cost of funds resulted primarily from a decrease in
market rates in general which effectively lowered the interest rates paid for
certificates of deposits, savings accounts, checking accounts and borrowed
funds.
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $3.7 million, or 17.2%, to $25.2 million for
the three months ended September 30, 1999 compared to $21.5 million for the
three months ended September 30, 1998.
14
<PAGE>
Provision for Loan Losses
- -------------------------
The provision for loan losses decreased by $166,000, or 21.0%, to $624,000 for
the quarter ended September 30, 1999 from $790,000 for the quarter ended
September 30,1998. Provisions for estimated losses on the loan portfolios are
charged to earnings in an amount sufficient, in management's judgement, to cover
anticipated losses based upon the inherent risk in the Company's loan portfolio,
current economic conditions and historical trends.
Noninterest Income
- ------------------
Noninterest income increased by $582,000, or 32.8%, to $2.4 million for the
three months ended September 30, 1999 from $1.8 million for the three months
ended September 30, 1998. This increase can be primarily attributed to
additional service fee income of approximately $350,000 associated with the
growth in the loan portfolio and deposit relationships. In addition, a new
source of income from surcharges for foreign ATM transactions contributed
approximately $140,000 and additional transaction fee income as a result of
increased usage of debit cards by customers contributed approximately $100,000
to the increase in noninterest income over the prior year.
Noninterest Expense
- -------------------
Noninterest expense increased by $3.3 million, or 23.4%, to $17.4 million for
the three months ended September 30, 1999 from $14.1 million for the three
months ended September 30, 1998. This increase resulted primarily from expected
increases associated with the substantial growth in the Company's retail network
over the past twelve months. Since September 30, 1998, the Company opened or
acquired 30 full service banking facilities which represents approximately a 40%
increase in the Company's branch office network.
As a result of the Company's substantial growth along with normal inflationary
increases in costs, all expense categories increased for the three months ended
September 30, 1999 when compared to the previous year. Compensation and
employee benefit expense increased by $1.3 million, or 15.9%, to $9.5 million;
premises and occupancy costs increased by $531,000, or 33.5%, to $2.1 million;
and other expenses increased by $1.0 million, or 27.0%, to $4.7 million. In
addition, as a result of recording goodwill of $20.4 million relating to the
acquisition of eight offices with deposits, the expense for amortization of
intangibles increased by $470,000, or 74.1%, to $1.1 million for the quarter
ended September 30, 1999 from $634,000 in the previous year.
Income Taxes
- ------------
The provision for income taxes for the three months ended September 30, 1999
increased by $149,000, or 4.5%, to $3.5 million compared to $3.3 million for the
same period last year. This increase was primarily due to an increase in income
before tax of $1.2 million, or 14.5%, offset by a lower effective tax rate of
36.7% for the three months ended September 30, 1999 compared
15
<PAGE>
to 39.9% for the same period in the prior year. This decrease in the effective
tax rate was due to an increased emphasis on investing in tax exempt assets.
Year 2000
- ---------
The Company has devoted substantial resources to address the possible impact of
issues relating to the year 2000 ("Y2K") on the Company and its operations. In
1997, after several years of assessing the potential problems, the Company
adopted a formal plan addressing the Y2K issue.
The Company's most critical operating system is its core application processing
system and the Company addressed this mission critical area by converting to a
new core application processing system in November of 1998. The Company
recently completed its testing of this core application system and has deemed it
to be fully compliant for year 2000 processing. The approximate cost of this
conversion was $3,000,000. Approximately $1.5 million of these costs were
expenses recorded in the quarters ending December 31, 1998 and March 31, 1999.
The remaining costs have been capitalized and will be expensed over various
periods in accordance with the Company's depreciation policy.
Other than the core application conversion, costs relating to Y2K issues are not
expected to be material and are not expected to have a material effect on the
results of operations of the Company.
The Company is continuously monitoring relationships with material third
parties, including large deposit and loan customers, to assess the progress of
their Y2K efforts. It is possible that the Company could be negatively impacted
in the year 2000 because external parties have not successfully addressed their
Y2K issues. Although the effects of such third party problems are not known,
the Company does not foresee any problems which will be material in nature. To
mitigate its exposure to the failure of third parties, the Company is actively
designing a contingency plan which will allow it to continue services in the
event unforeseeable external factors disrupt normal operations in the year 2000.
However, there can be no assurance that any contingency plans will completely
mitigate the effects of any such failure.
16
<PAGE>
Average Balance Sheet
(Dollars in Thousands)
The following table sets forth certain information relating to the Company's
average balance sheet and reflects the average yield on assets and average cost
of liabilities for the periods indicated. Such yields and costs are derived by
dividing income or expense by the average balance of assets or liabilities,
respectively, for the periods presented. Average balances are calculated using
monthly averages.
<TABLE>
<CAPTION>
Three Months Ended September 30,
1999 1998
- -----------------------------------------------------------------------------------------------------------------------
AVERAGE. INTEREST AVG AVERAGE INTEREST AVG.
BALANCE YIELD/ BALANCE YIELD
COST /COST
- -----------------------------------------------------------------------------------------------------------------------
ASSETS:
- -------
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets:
Loans receivable (a) (b) $2,326,396 $46,555 8.00% $1,959,032 $40,923 8.36%
Mortgage-backed securities (c) $392,328 $6,062 6.18% $300,127 $4,592 6.12%
Investment securities (c) (d) (e) $232,653 $4,160 7.15% $194,826 $3,549 7.29%
FHLB stock $19,318 $331 6.85% $13,710 $240 7.00%
Other interest earning deposits $18,631 $247 5.30% $25,589 $145 2.27%
------- ---- ----- ------- ---- -----
Total interest earning assets $2,989,326 $57,355 7.67% $2,493,284 $49,449 7.93%
Noninterest earning asset (f) $183,632 $130,197
-------- --------
TOTAL ASSETS $3,172,958 $2,623,481
========== ==========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY:
- -------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest bearing liabilities:
Savings accounts $415,530 $3,411 3.28% $327,763 $2,831 3.45%
Now accounts $350,647 $1,336 1.52% $293,527 $1,152 1.57%
Money market demand accounts $168,593 $1,553 3.68% $114,565 $1,059 3.70%
Certificate accounts $1,520,973 $20,162 5.30% $1,289,380 $18,297 5.68%
Borrowed funds (g) $383,986 $5,188 5.40% $311,841 $4,396 5.64%
-------- ------ ----- -------- ------ -----
Total interest bearing liabilities $2,839,729 $31,650 4.46% $2,337,076 $27,735 4.75%
Noninterest bearing liabilities $98,602 $65,737
------- -------
Total liabilities $2,938,331 $2,402,813
Minority interest in subsidiary $0 $957
Shareholders' equity $234,627 $219,711
-------- --------
TOTAL LIABILITIES AND EQUITY $3,172,958 $2,623,481
========== ==========
Net interest income/Interest rate spread $25,705 3.21% $21,714 3.18%
Net interest earning assets/Net $149,597 3.44% $156,208 3.48%
interest margin
Ratio of interest earning assets to
interest bearing liabilities 1.05 X 1.07 X
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Average gross loans receivable includes loans held as available-for-sale
and loans placed on nonaccrual status.
(b) Interest income includes accretion/amortization of deferred loan
fees/expenses.
(c) Interest income on marketable securities does not include market value
adjustments for securities available-for-sale.
(d) Interest income on tax-free investment securities is presented on a taxable
equivalent basis.
(e) Average balances include FNMA and FHLMC stock.
(f) Average balances include the effect of unrealized gains or losses on
securities held as available-for-sale.
(g) Average balances include FHLB borrowings, securities sold under agreements
to repurchase and other borrowings.
17
<PAGE>
Rate/Volume Analysis
(Dollars in Thousands)
The following tables represent the extent to which changes in interest rates and
changes in the volume of interest-earning assets and interest-bearing
liabilities have affected the Company's interest income and interest expense
during the periods indicated. Information is provided in each category with
respect to (i) changes attributable to changes in volume (changes in volume
multiplied by prior rate), (ii) changes attributable to changes in rate (changes
in rate multiplied by prior volume), (iii) changes in rate-volume (changes in
rate multiplied by changes in volume), and (iv) the net change.
Three months ended September 30, 1999 and 1998
<TABLE>
<CAPTION>
Rate Volume Rate/ Net
Volume Change
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest earning assets:
Loans receivable ($1,720) $7,674 ($322) $5,632
Mortgage-backed securities $45 $1,411 $14 $1,470
Investment securities ($65) $689 ($13) $611
FHLB stock ($5) $98 ($2) $91
Other interest earning deposits $194 ($39) ($53) $102
-------- ------ ------ ------
Total interest earning assets ($1,551) $9,833 ($376) $7,906
Interest bearing liabilities:
Savings accounts ($140) $758 ($38) $580
Now accounts ($34) $224 ($6) $184
Money market demand accounts ($4) $499 ($1) $494
Certificate accounts ($1,205) $3,286 ($216) $1,865
Borrowed funds ($183) $1,017 ($42) $792
-------- ------ ------ ------
Total interest bearing liabilities ($1,566) $5,784 ($303) $3,915
Net change in interest income $15 $4,049 ($73) $3,991
======== ====== ====== ======
</TABLE>
18
<PAGE>
ITEM 3. MARKET RISK
As a bank holding company, the Company's primary market risk is interest rate
risk. Interest rate risk is the sensitivity of net interest income to
variations in interest rates over a specified time period. This sensitivity
results from differences in the time periods in which interest rate sensitive
assets and liabilities mature or reprice. The Company attempts to control
interest rate risk by matching, within acceptable limits, the repricing periods
of its assets and liabilities. Because the Company's interest sensitive
liabilities typically have repricing periods or maturities of short duration,
the Company has attempted to shorten the maturities of its assets by emphasizing
the origination of short-term, fixed-rate consumer loans, one-to-four family
residential mortgage loans with terms of fifteen years or less and adjustable
rate mortgage loans, consumer loans and commercial loans. In addition, the
Company has purchased shorter term or adjustable-rate investment securities and
adjustable-rate mortgage-backed securities.
The Company has a Risk Management Committee comprised of certain members of the
Board of Directors which meets quarterly and reviews interest rate risks and
trends, the Company's interest sensitivity position, the Company's liquidity
position and the market value of the Company's investment portfolio.
In an effort to assess market risk, the Company utilizes a simulation model to
determine the effect of immediate incremental increases and decreases in
interest rates on net interest income and the market value of the Company's
equity. Certain assumptions are made regarding loan prepayments and decay rates
of passbook and NOW accounts. Because it is difficult to accurately project the
market reaction of depositors and borrowers, the effects of actual changes in
interest on these assumptions may differ from simulated results. The Company
has established the following guidelines for assessing interest rate risk:
Net interest margin simulation. Given a parallel shift of 2% in interest rates,
the estimated net interest margin may not change by more than 30% within a one-
year period.
Market value of equity simulation. The market value of the Company's equity is
the present value of the Company's assets and liabilities. Given a parallel
shift of 2% in interest rates, the market value of equity may not decrease by
more than 50% of total shareholders' equity.
The following table illustrates the simulated impact of a 1% or 2% upward or
downward movement in interest rates on net income, return on average equity,
earnings per share and market value of equity. This analysis was prepared
assuming that interest-earning asset levels at September 30, 1999 remain
constant. The impact of the rate movements was computed by simulating the
effect of an immediate and sustained shift in interest rates over a twelve month
period from the September 30, 1999 levels.
19
<PAGE>
<TABLE>
<CAPTION>
Increase Decrease
------------------ ---------------
Parallel shift in interest rates over the next 12 months 1.0% 2.0% 1.0% 2.0%
------- ------- ----- -----
<S> <C> <C> <C> <C>
Projected percentage increase/(decrease) in net income 3.6% 7.1% (6.2%) (12.6%)
Projected increase/(decrease) in return on average equity 0.4% 0.7% (0.6%) (1.3%)
Projected increase/(decrease) in earnings per share $.02 $.04 ($.03) ($.06)
Projected percentage increase/(decrease) in market value of equity (15.6%) (34.0%) 16.5% 20.6%
</TABLE>
The figures included in the table above represent projections which were
computed based upon certain assumptions including prepayment rates and decay
rates which cannot be accurately predicted. There are no assurances that these
assumptions and the resultant impact on the Company's financial ratios will
approximate the figures presented above.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
Northwest Savings Bank and Northwest Bancorp MHC, along with unrelated parties,
have been named as defendants in a class action lawsuit filed in the Allegheny
County Court of Common Pleas. This lawsuit is brought on behalf of purchasers of
common stock in the Bank's initial public offering which was completed in
November 1994. The complaint alleges that the defendants breached their
contractual obligations and fiduciary duties by carrying out the offering at a
price that allegedly was not justified by market and financial conditions. The
defendants previously obtained the dismissal of a lawsuit brought by the same
counsel in federal court making similar allegations under federal law.
Management intends to vigorously defend against this action.
The Company and its subsidiaries are subject to a number of other asserted and
unasserted claims encountered in the normal course of business. Management
believes that the aggregate liability, if any, that may result from such
potential litigation will not have a material adverse effect on the Company's
financial statements.
Item 2. Changes in Securities
- -----------------------------
Not applicable.
Item 3. Defaults Upon Senior Securities
- ---------------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
Not applicable.
20
<PAGE>
Item 5. Other Information
- -------------------------
Stock Purchase
- --------------
On September 13, 1999, the Board of Trustees of Northwest Bancorp MHC announced
that it would purchase up to 500,000, of the outstanding publicly traded shares
of Northwest Bancorp, Inc. Following this announcement Northwest Bancorp MHC
purchased 5,000 shares via open market transactions. As a result, at September
30, 1999, Northwest Bancorp MHC owned 72.3% of the outstanding shares of
Northwest Bancorp, Inc.
Business Combinations
- ---------------------
In September 1999, the Company acquired eight retail office facilities located
in Western Pennsylvania from PNC Bank Corp. This acquisition included
approximately $270 million in deposits, $47 million in consumer and business
loans and the related office facilities and equipment. The acquisition was
accounted for using the purchase method of accounting
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibit No. 11 Statement re: computation of per share earnings
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
September 30,1999 September 30,1998
----------------- -----------------
<S> <C> <C>
Net income applicable to common stock $ 5,992,595 $ 5,009,533
Weighted-average common shares outstanding 47,248,627 46,559,719
----------- -----------
Basic earnings per share $ 0.13 $ 0.11
=========== ===========
Weighted-average common shares outstanding 47,248,627 46,559,719
Common stock equivalents due to effect of stock options 377,251 612,985
----------- -----------
Total weighted-average common shares and equivalents 47,625,878 47,172,704
Diluted earnings per share $ 0.13 $ 0.11
=========== ===========
</TABLE>
Exhibit No. 27 Financial Data Schedule attached
(b) No Form 8-K reports were filed during the quarter
21
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
NORTHWEST BANCORP, INC.
Date: November 12, 1999 By: /s/ William J. Wagner
----------------- ----------------------------------------------
William J. Wagner
Chief Financial Officer and Chief Operating
Officer
(Chief Financial and Accounting Officer and
Duly Authorized Representative)
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 114,801
<INT-BEARING-DEPOSITS> 6,094
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 427,437
<INVESTMENTS-CARRYING> 251,244
<INVESTMENTS-MARKET> 243,581
<LOANS> 2,405,978
<ALLOWANCE> 16,756
<TOTAL-ASSETS> 3,333,172
<DEPOSITS> 2,782,846
<SHORT-TERM> 128,188
<LIABILITIES-OTHER> 27,721
<LONG-TERM> 159,517
0
0
<COMMON> 4,736
<OTHER-SE> 230,164
<TOTAL-LIABILITIES-AND-EQUITY> 3,333,172
<INTEREST-LOAN> 46,555
<INTEREST-INVEST> 10,022
<INTEREST-OTHER> 247
<INTEREST-TOTAL> 56,824
<INTEREST-DEPOSIT> 26,462
<INTEREST-EXPENSE> 31,650
<INTEREST-INCOME-NET> 25,174
<LOAN-LOSSES> 624
<SECURITIES-GAINS> 36
<EXPENSE-OTHER> 17,442
<INCOME-PRETAX> 9,466
<INCOME-PRE-EXTRAORDINARY> 9,466
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,993
<EPS-BASIC> 0.13
<EPS-DILUTED> 0.13
<YIELD-ACTUAL> 7.67
<LOANS-NON> 13,369
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 16,773
<CHARGE-OFFS> 819
<RECOVERIES> 178
<ALLOWANCE-CLOSE> 16,756
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 16,756
</TABLE>
