CEO of Northwest Addresses Banking Crisis in Annual Shareholder Letter
April 06 2009 - 2:49PM
PR Newswire (US)
WARREN, Pa., April 6 /PRNewswire-FirstCall/ -- Calling the year
ended December 31, 2008 a turbulent period for all financial
institutions and one of the most challenging periods he has
witnessed in a banking career of thirty years, William J. Wagner,
President and Chief Executive Officer of Northwest Bancorp, Inc.
(NASDAQ:NWSB), the parent company of Northwest Savings Bank, summed
up 2008 by saying, "While our industry struggles to navigate the
current stormy seas, the outlook for Northwest Bancorp, Inc.
remains bright." His remarks came at the start of the letter to
shareholders in the Annual Report for 2008 that the company
recently released. In speaking about the Annual Report, Mr. Wagner
pointed out three vital areas of concern. In today's economy, he
noted that earnings, capital, and asset quality are considered the
three most important indicators of any financial institution's
health. It is a pleasure, he said, to report that Northwest is
healthy. Northwest reached record levels for core earnings during
2008. When computing core earnings, gains and losses on the sale of
assets, noncash losses in the market value of assets and the amount
by which the provision for loan losses exceeds actual loan
charge-offs are removed. Without these non-core items, core
earnings in 2008 were $62.9 million or $1.29 per share compared to
$52.7 million or $1.07 per share for 2007. The most significant
contributor to this improvement was a sizable increase in net
interest margin, which averaged 3.57% in 2008 versus 3.10% in 2007.
This improvement resulted from the bank's continued efforts to
improve its loan mix and to decrease its cost of funds. Northwest
improved its loan mix by increasing its commercial loans by $251
million, yet the local bank remains a premier originator of
mortgage, home equity and consumer loans. Its cost of funds dropped
dramatically with the re-pricing of $2.5 billion of certificates of
deposit and a change in its funding mix as it moved to increase
long-term borrowings. Capital, Mr. Wagner said, typically consists
of common stock, preferred stock, retained earnings, and certain
types of subordinated debt. In assessing capital adequacy,
regulators and investors subtract intangible assets from total
capital to determine a bank's "tangible" capital. Given this
definition, Northwest had capital of $543 million at December 31,
2008 and a ratio of tangible capital to assets of 8.05%, an
extremely healthy ratio. Asset quality challenged the entire
financial industry in 2008, yet asset quality remains strong at
Northwest Bancorp, Inc. With loan delinquency increasing roughly
parallel with the increase in the financial industry as a whole,
Northwest enjoyed a highly favorable loan loss ratio, far below
that of the rest of the industry. Thanks to stringent underwriting
guidelines and diligent lending oversight, Northwest's ratio of net
losses to average loans was only .19% in the fourth quarter of 2008
compared to a national average of 1.19% for all banks. Earnings,
capital, and asset quality can show the fiscal strength of a
financial company, Mr. Wagner concluded. Northwest is blessed with
human strength as well. He ended his remarks by stating, "We have a
seasoned and dedicated team...All Northwest employees understand
the goals of our Company and share the vision of making Northwest
the most highly-respected provider of financial services in our
markets." The entire text of the 2008 Annual Report for Northwest
Savings Bank may be found at http://www.northwestsavingsbank.com/.
Northwest Bancorp, Inc. is the parent bank of Northwest Savings
Bank, a community bank that holds $7 billion in assets and operates
167 banking locations in Pennsylvania, Ohio, New York, Maryland and
Florida. Its stock trades on the Nasdaq Global Market under the
symbol NWSB. DATASOURCE: Northwest Bancorp, Inc. CONTACT: Jim
Holding, Vice President, Communications of Northwest Bancorp, Inc.,
+1-814-728-7670 Web Site: http://www.northwestsavingsbank.com/
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