Northwest Bancshares (NWBI) 8-K Northwest Bancshares, Inc. Announces Second Quarter 2012 Earnings and Dividend Declaration

EXHIBIT 99.1

PRESS RELEASE OF NORTHWEST BANCSHARES, INC.

EARNINGS RELEASE

FOR IMMEDIATE RELEASE

Contact:	William J. Wagner, President and Chief Executive Officer (814) 726-2140
	William W. Harvey, Jr., Executive Vice President and Chief Financial Officer (814) 726-2140

Northwest Bancshares, Inc. Announces Second Quarter 2012 Earnings and Dividend Declaration

Warren, Pennsylvania — July 23, 2012

Northwest Bancshares, Inc. (NasdaqGS: NWBI) announced net income for the quarter ended June 30, 2012 of $16.4 million, or $0.17 per diluted share.  This represents an increase of $1.4 million, or 9.1%, over the same quarter last year when net income was $15.0 million, or $0.15 per diluted share, and an increase of $1.2 million, or 7.8%, over the quarter ended March 31, 2012 when net income was $15.2 million, or $0.16 per diluted share.  The annualized returns on average shareholders’ equity and average assets for the current quarter were 5.63% and 0.82% compared to 4.81% and 0.74% for the same quarter last year and 5.29% and 0.76% for the quarter ended March 31, 2012.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.12 per share payable on August 16, 2012, to shareholders of record as of August 2, 2012.  This represents the 71st consecutive quarter in which the Company has paid a cash dividend.

In making this announcement, William J. Wagner, President and CEO, noted, “In the most recent quarter we continued to see many positive trends in our operations. We were pleased with the stability of our margin despite the continued challenges of the interest rate environment and competitive pricing pressures.  During the quarter we experienced net loan growth of approximately $65 million, while asset quality continued to improve.  Delinquent and non-accrual loans at the end of the quarter were at the lowest levels since the second quarter of 2008.  Finally, through the hard work and dedication of our Board of Directors and employees in strengthening our compliance management system, we were pleased to announce the termination of the FDIC Consent Order on July 6, 2012.”

Net interest income decreased by $718,000, or 1.1%, to $66.0 million for the quarter ended June 30, 2012, from $66.7 million for the quarter ended June 30, 2011, which was primarily attributable to a decrease in interest income from loans of $2.6 million, or 3.2%, and from investment securities of $2.5 million, or 25.9%.  Partially offsetting this decrease was a $4.3 million, or 27.7% decrease in interest expense on deposit accounts. These changes from the previous year were primarily due to decreases in market interest rates.

The provision for loan losses decreased by $3.4 million, or 40.7%, to $5.0 million for the quarter ended June 30, 2012, from $8.4 million for the quarter ended June 30, 2011.  As of June 30, 2012, the allowance for loan losses was $70.1 million, or 1.24% of total loans, compared to $75.5 million, or 1.37% of total loans, as of June 30, 2011.  Loans 90 days or more delinquent decreased to $84.7 million as of June 30, 2012, compared to $90.2 million as of March 31, 2012 and $115.8 million as of June 30, 2011.  Net charge-offs for the quarter ended June 30, 2012 were $7.8 million, or 0.55% of average loans on an annualized basis, compared to $9.4 million, or 0.68% of average loans on an annualized basis, in the same quarter last year.

Noninterest income decreased by $425,000, or 2.8%, to $14.8 million for the quarter ended June 30, 2012, from $15.3 million for the quarter ended June 30, 2011, due primarily to a decrease in service charges and fees of $619,000.  This decrease is primarily attributable to changes in overdraft fees assessed on transactional deposit accounts.

Noninterest expense decreased by $524,000, or 1.0%, to $52.0 million for the quarter ended June 30, 2012, from $52.5 million for the quarter ended June 30, 2011, due primarily to a decrease in compensation and employee benefits of $2.3 million.  This decrease is primarily the result of a relatively high level of stock benefits being granted in the previous year. Partially offsetting this decrease was an increase in marketing expense of $1.7 million, which was due to the timing of several campaigns designed to increase lending activity and promote brand awareness.

Net income for the six-month period ended June 30, 2012 of $31.5 million, or $0.33 per diluted share, represents a decrease of $714,000, or 2.2% compared to net income of $32.3 million, or $0.31 per diluted share, for the six-month period ended June 30, 2011.  The annualized returns on average shareholders’ equity and average assets were 5.44% and 0.79%, respectively, for the current six-month period compared to 5.07% and 0.79%, respectively, in the prior year.

Headquartered in Warren, Pennsylvania, Northwest Bancshares, Inc. is the holding company of Northwest Savings Bank.  Founded in 1896, Northwest Savings Bank is a full-service financial institution offering a complete line of business and personal banking products as well as benefits and wealth management services. Northwest operates 167 community banking offices in Pennsylvania, New York, Ohio and Maryland and 52 consumer finance offices in Pennsylvania through its subsidiary, Northwest Consumer Discount Company.  Northwest Bancshares, Inc.’s common stock is listed on the NASDAQ Global Select Market.  Additional information regarding Northwest Bancshares, Inc. can be accessed on-line at www.northwestsavingsbank.com.

#                              #                              #

Forward-Looking Statements - This press release may contain forward-looking statements with respect to the financial condition and results of operations of Northwest Bancshares, Inc. including, without limitations, statements relating to the earnings outlook of the Company. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements, include among others, the following possibilities: (1) changes in the interest rate environment; (2) competitive pressure among financial services companies; (3) general economic conditions including an increase in non-performing loans that could result from an economic downturn; (4) changes in legislation or regulatory requirements; (5) difficulties in continuing to improve operating efficiencies; (6) difficulties in the integration of acquired businesses; and (7) increased risk associated with an increase in commercial real-estate and business loans and non-performing loans.  Management has no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this release.

Northwest Bancshares, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

(Dollars in thousands, except per share amounts)

	(Unaudited)
	June 30,			December 31,
	2012			2011
Assets
Cash and cash equivalents	$	82,295		94,276
Interest-earning deposits in other financial institutions	638,940			593,388
Federal funds sold and other short-term investments	633			633
Marketable securities available-for-sale (amortized cost of $874,048 and $885,408)	900,643			908,349
Marketable securities held-to-maturity (fair value of $187,043 and $239,412)	180,134			231,389
Total cash, interest-earning deposits and marketable securities	1,802,645			1,828,035
Loans held for sale	12,800			967
Residental mortgage loans	2,418,756			2,396,399
Home equity loans	1,102,936			1,084,786
Other consumer loans	240,992			245,689
Commercial real estate loans	1,494,781			1,435,767
Commercial loans	399,470			387,911
Total loans receivable	5,669,735			5,551,519
Allowance for loan losses	(70,110		)	(71,138		)
Loans receivable, net	5,599,625			5,480,381
Federal Home Loan Bank stock, at cost	46,834			48,935
Accrued interest receivable	23,871			24,599
Real estate owned, net	30,470			26,887
Premises and Equipment, net	135,004			132,152
Bank owned life insurance	135,722			133,524
Goodwill	171,882			171,882
Other intangible assets	1,549			2,123
Other assets	90,394			109,187
Total assets	$	8,037,996		7,957,705
Liabilities and Shareholders’ equity
Liabilities
Noninterest-bearing demand deposits	$	732,200		658,560
Interest-bearing demand deposits	845,209			800,676
Savings deposits	2,195,095			2,036,272
Time deposits	2,033,366			2,284,817
Total deposits	5,805,870			5,780,325
Borrowed funds	853,114			827,925
Advances by borrowers for taxes and insurance	32,324			23,571
Accrued interest payable	1,242			1,104
Other liabilities	73,210			66,782
Junior subordinated debentures	103,094			103,094
Total liabilities	6,868,854			6,802,801
Shareholders’ equity
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares issued	—			—
Common stock, $0.01 par value: 500,000,000 shares authorized, 97,880,874 shares and 97,493,046 shares issued, respectively	979			975
Paid-in-capital	662,183			659,523
Retained earnings	552,278			543,598
Unallocated common stock of Employee Stock Ownership Plan	(25,192		)	(25,966		)
Accumulated other comprehensive loss	(21,106		)	(23,226		)
Total shareholders’ equity	1,169,142			1,154,904
Total liabilities and shareholders’ equity	$	8,037,996		7,957,705
Equity to assets	14.54		%	14.51		%
Tangible common equity to assets	12.66		%	12.60		%
Book value per share	$	11.94		$	11.85
Tangible book value per share	$	10.17		$	10.06
Closing market price per share	$	11.71		$	12.44
Full time equivalent employees	2,018			1,950
Number of banking offices	167			168

Northwest Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income - Unaudited

(Dollars in thousands, except per share amounts)

	Quarter months ended
	June 30,					March 31,
	2012			2011		2012
Interest income:
Loans receivable	$	77,422		79,993		78,159
Mortgage-backed securities	4,409			6,073		4,691
Taxable investment securities	435			594		573
Tax-free investment securities	2,318			2,992		2,446
Interest-earning deposits	473			489		380
Total interest income	85,057			90,141		86,249
Interest expense:
Deposits	11,184			15,473		12,944
Borrowed funds	7,912			7,989		7,899
Total interest expense	19,096			23,462		20,843
Net interest income	65,961			66,679		65,406
Provision for loan losses	4,963			8,367		6,287
Net interest income after provision for loan losses	60,998			58,312		59,119
Noninterest income:
Impairment losses on securities	—			(577	)	(545	)
Noncredit related losses on securities not expected to be sold (recognized in other comprehensive income)	—			70		307
Net impairment losses	—			(507	)	(238	)
Gain/ (loss) on sale of investments, net	(44		)	45		44
Service charges and fees	8,702			9,321		8,425
Trust and other financial services income	2,018			2,185		2,116
Insurance commission income	1,603			1,790		1,718
Loss on real estate owned, net	(582		)	(593	)	(1,070	)
Income from bank owned life insurance	1,107			1,716		1,117
Mortgage banking income	789			290		531
Other operating income	1,244			1,015		997
Total noninterest income	14,837			15,262		13,640
Noninterest expense:
Compensation and employee benefits	27,416			29,658		27,838
Premises and occupancy costs	5,483			5,650		5,748
Office operations	3,340			3,255		3,324
Processing expenses	6,059			5,687		6,142
Marketing expenses	3,829			2,108		2,036
Federal deposit insurance premiums	1,418			2,355		1,620
Professional services	1,500			1,289		1,697
Amortization of intangible assets	279			479		295
Real estate owned expense	571			249		740
Other expense	2,071			1,760		1,836
Total noninterest expense	51,966			52,490		51,276
Income before income taxes	23,869			21,084		21,483
Income tax expense	7,508			6,081		6,302
Net income	$	16,361		15,003		15,181
Basic earnings per share	$	0.17		0.15		0.16
Diluted earnings per share	$	0.17		0.15		0.16
Annualized return on average equity	5.63		%	4.81	%	5.29	%
Annualized return on average assets	0.82		%	0.74	%	0.76	%
Basic common shares outstanding	94,294,956			102,216,892		94,115,522
Diluted common shares outstanding	94,500,877			102,536,202		94,665,333

Northwest Bancshares, Inc. and Subsidiaries

Consolidated Statements of Income - Unaudited

(Dollars in thousands, except per share amounts)

	Six months ended
	June 30,
	2012			2011
Interest income:
Loans receivable	$	155,581		160,450
Mortgage-backed securities	9,100			12,829
Taxable investment securities	1,008			992
Tax-free investment securities	4,764			6,066
Interest-earning deposits	853			896
Total interest income	171,306			181,233
Interest expense:
Deposits	24,128			31,536
Borrowed funds	15,811			15,978
Total interest expense	39,939			47,514
Net interest income	131,367			133,719
Provision for loan losses	11,250			15,611
Net interest income after provision for loan losses	120,117			118,108
Noninterest income:
Impairment losses on securities	(545		)	(577		)
Noncredit related losses on securities not expected to be sold (recognized in other comprehensive income)	307			70
Net impairment losses	(238		)	(507		)
Gain on sale of investments, net	—			49
Service charges and fees	17,127			18,249
Trust and other financial services income	4,134			4,095
Insurance commission income	3,321			3,170
Loss on real estate owned, net	(1,652		)	(620		)
Income from bank owned life insurance	2,224			2,882
Mortgage banking income	1,320			487
Other operating income	2,241			1,783
Total noninterest income	28,477			29,588
Noninterest expense:
Compensation and employee benefits	55,254			55,157
Premises and occupancy costs	11,231			11,841
Office operations	6,664			6,355
Processing expenses	12,201			11,454
Marketing expenses	5,865			4,067
Federal deposit insurance premiums	3,038			4,782
Professional services	3,197			2,545
Amortization of intangible assets	574			970
Real estate owned expense	1,311			680
Other expense	3,907			4,017
Total noninterest expense	103,242			101,868
Income before income taxes	45,352			45,828
Income tax expense	13,810			13,572
Net income	$	31,542		32,256
Basic earnings per share	$	0.33		$	0.31
Diluted earnings per share	$	0.33		$	0.31
Annualized return on average equity	5.44		%	5.07		%
Annualized return on average assets	0.79		%	0.79		%
Basic common shares outstanding	94,205,239			104,381,955
Diluted common shares outstanding	94,583,105			104,884,123

Northwest Bancshares, Inc. and Subsidiaries

Asset quality

(Dollars in thousands)

	June 30, 2012		March 31, 2012	June 30, 2011	December 31, 2011
Non-accrual loans current:
Residential mortgage loans	$	—	—	—	—
Home equity loans	—		—	—	—
Other consumer loans	—		—	—	—
Commercial real estate loans	16,773		18,462	13,572	13,057
Commercial loans	10,168		4,232	26,542	13,480
Total non-accrual loans current	$	26,941	22,694	40,114	26,537
Non-accrual loans delinquent 30 days to 59 days:
Residential mortgage loans	$	—	—	—	—
Home equity loans	—		—	—	—
Other consumer loans	—		—	—	—
Commercial real estate loans	3,230		3,068	2,809	3,274
Commercial loans	489		6,258	312	90
Total non-accrual loans delinquent 30 days to 59 days	$	3,719	9,326	3,121	3,364
Non-accrual loans delinquent 60 days to 89 days:
Residential mortgage loans	$	—	—	—	—
Home equity loans	—		—	—	—
Other consumer loans	—		—	—	—
Commercial real estate loans	1,600		2,269	1,385	1,560
Commercial loans	344		534	693	3,808
Total non-accrual loans delinquent 60 days to 89 days	$	1,944	2,803	2,078	5,368
Non-accrual loans delinquent 90 days or more:
Residential mortgage loans	$	25,336	28,696	30,594	28,221
Home equity loans	9,770		9,100	9,069	9,560
Other consumer loans	1,580		1,983	1,825	2,667
Commercial real estate loans	33,956		34,601	55,512	44,603
Commercial loans	14,008		15,810	18,802	10,785
Total non- accrual loans delinquent 90 days or more	$	84,650	90,190	115,802	95,836
Total non-accrual loans	$	117,254	125,013	161,115	131,105

	June 30,			March 31,		June 30,		December 31,
	2012			2012		2011		2011
Nonperforming loans	$	117,254		125,013		161,115		131,105
Real estate owned, net	30,470			28,895		21,389		26,887
Nonperforming assets	$	147,724		153,908		182,504		157,992
Non-accrual troubled debt restructuring *	$	28,342		29,606		39,962		29,575
Accruing troubled debt restructuring	50,129			37,697		19,984		39,854
Total troubled debt restructuring	$	78,471		67,303		59,946		69,429
Nonperforming loans to total loans	2.07		%	2.23	%	2.94	%	2.36	%
Nonperforming assets to total assets	1.84		%	1.91	%	2.26	%	1.99	%
Allowance for loan losses to total loans	1.24		%	1.30	%	1.37	%	1.28	%
Allowance for loan losses to nonperforming loans	59.79		%	58.35	%	46.83	%	54.26	%

* Amounts included in nonperforming loans above.

Northwest Bancshares, Inc. and Subsidiaries

Delinquency

(Dollars in thousands)

Loan delinquency schedule

(Number of loans and dollar amount of loans)

	June 30,					March 31,					June 30,					December 31,
	2012			*		2012			*		2011			*		2011			*
Loans delinquent 30 days to 59 days:
Residential mortgage loans	70	$	4,470	0.2	%	366	$	29,414	1.2	%	84	4,627		0.2	%	427	$	33,671	1.4	%
Home equity loans	153	5,842		0.5	%	201	7,086		0.7	%	174	5,763		0.5	%	222	7,426		0.7	%
Consumer loans	847	3,513		1.5	%	647	2,854		1.2	%	825	3,816		1.5	%	903	4,854		2.0	%
Commercial real estate loans	58	8,149		0.5	%	77	9,275		0.6	%	58	7,902		0.6	%	104	10,680		0.7	%
Commercial loans	33	1,839		0.5	%	29	7,069		1.7	%	40	2,264		0.5	%	32	2,027		0.5	%
Total loans delinquent 30 days to 59 days	1,161	$	23,813	0.4	%	1,320	55,698		1.0	%	1,181	24,372		0.4	%	1,688	58,658		1.1	%
Loans delinquent 60 days to 89 days:
Residential mortgage loans	83	$	6,932	0.3	%	22	$	1,466	0.1	%	84	8,044		0.3	%	99	$	8,629	0.4	%
Home equity loans	72	2,824		0.3	%	50	2,313		0.2	%	60	2,602		0.2	%	47	1,953		0.2	%
Consumer loans	319	1,273		0.5	%	262	1,083		0.5	%	349	1,195		0.5	%	412	1,787		0.7	%
Commercial real estate loans	23	3,081		0.2	%	27	3,203		0.2	%	23	3,348		0.2	%	38	3,122		0.2	%
Commercial loans	16	980		0.2	%	16	1,376		0.3	%	22	3,887		0.9	%	25	4,958		1.3	%
Total loans delinquent 60 days to 89 days	513	$	15,090	0.3	%	377	9,441		0.2	%	538	19,076		0.3	%	621	20,449		0.4	%
Loans delinquent 90 days or more:
Residential mortgage loans	265	$	25,336	1.0	%	275	$	28,696	1.2	%	268	30,594		1.3	%	273	$	28,221	1.2	%
Home equity loans	180	9,770		0.9	%	167	9,100		0.9	%	173	9,069		0.8	%	177	9,560		0.9	%
Consumer loans	308	1,580		0.7	%	348	1,983		0.8	%	314	1,825		0.7	%	456	2,667		1.1	%
Commercial real estate loans	128	33,956		2.3	%	120	34,601		2.3	%	151	55,512		4.0	%	131	44,603		3.1	%
Commercial loans	57	14,008		3.5	%	56	15,810		3.9	%	55	18,802		4.3	%	66	10,785		2.8	%
Total loans delinquent 90 days or more	938	$	84,650	1.5	%	966	90,190		1.6	%	961	115,802		2.1	%	1,103	95,836		1.7	%
Total loans delinquent	2,612	$	123,553	2.2	%	2,663	$	155,329	2.8	%	2,680	$	159,250	2.8	%	3,412	$	174,943	3.2	%

* - Represents delinquency, in dollars, divided by the respective total amount of that type of loan outstanding.

Northwest Bancshares, Inc. and Subsidiaries

Criticized loans as of June 30, 2012 - unaudited:

(Dollars in thousands)

							Recorded
							investment
			Special				in loans
	Pass		mention	Substandard	Doubtful	Loss	receivable
Personal Banking:
Residential mortgage loans	$	2,412,020	—	18,477	22	1,037	2,431,556
Home equity loans	1,093,023		—	9,913	—	—	1,102,936
Other consumer loans	240,180		—	812	—	—	240,992
Total Personal Banking	3,745,223		—	29,202	22	1,037	3,775,484
Business Banking:
Commercial real estate loans	1,278,665		64,985	149,363	1,768	—	1,494,781
Commercial loans	313,741		14,685	70,540	504	—	399,470
Total Business Banking	1,592,406		79,670	219,903	2,272	—	1,894,251
	$	5,337,629	79,670	249,105	2,294	1,037	5,669,735

Northwest Bancshares, Inc. and Subsidiaries

Allowance for loan losses

(Dollars in thousands)

	Quarter months ended					Six months ended
	June 30,					June 30,
	2012			2011		2012		2011
Allowance for loan losses
Beginning balance	$	72,941		76,450		71,138		76,412
Provision	4,963			8,367		11,250		15,611
Charge-offs residential mortgage	(1,219		)	(829	)	(2,262	)	(2,034	)
Charge-offs home equity	(589		)	(893	)	(1,481	)	(3,148	)
Charge-offs other consumer	(1,504		)	(1,277	)	(2,791	)	(2,509	)
Charge-offs commercial real estate	(2,959		)	(2,269	)	(4,432	)	(4,545	)
Charge-offs commercial	(2,719		)	(4,874	)	(3,368	)	(5,915	)
Recoveries	1,196			780		2,056		1,583
Ending balance	$	70,110		75,455		70,110		75,455
Net charge-offs to average loans, annualized	0.55		%	0.68	%	0.44	%	0.60	%

Northwest Bancshares, Inc. and Subsidiaries

Municipal Securities Portfolio

(Dollars in thousands)

	Market		Book	Unrealized	As a %
	value		value	gain/ (loss)	of book
	6/30/2012		6/30/2012	6/30/2012	value
Municipal securities by state:
Pennsylvania
School districts	$	105,282	100,796	4,486	47.6	%
General obligations	38,776		37,332	1,444	17.6	%
Revenue bonds	4,755		4,710	45	2.2	%
Total Pennsylvania	148,813		142,838	5,975	67.5	%
New York	28,907		27,786	1,121	13.1	%
Ohio	6,784		6,427	357	3.0	%
All other states	37,524		34,644	2,880	16.4	%
	$	222,028	211,695	10,333

Average Balance Sheet - unaudited

(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 daily averages.

	Quarters ended June 30,
	2012					2011
				Avg.				Avg.
	Average			Yield/		Average		Yield/
	Balance		Interest	Cost (h)		Balance	Interest	Cost (h)
Assets:
Interest-earning assets:
Loans receivable (a) (b) (d)	$	5,627,459	77,981	5.54	%	5,484,194	80,389	5.86	%
Mortgage-backed securities (c)	761,616		4,409	2.32	%	917,748	6,073	2.65	%
Investment securities (c) (d)	311,087		4,001	5.14	%	392,963	5,196	5.29	%
FHLB stock	46,916		25	0.21	%	55,100	—	—
Other interest-earning deposits	679,217		473	0.28	%	705,568	489	0.27	%
Total interest-earning assets	7,426,295		86,889	4.68	%	7,555,573	92,147	4.87	%
Noninterest earning assets (e)	592,004					556,085
Total assets	$	8,018,299				8,111,658
Liabilities and shareholders’ equity:
Interest-bearing liabilities:
Savings accounts	$	1,146,989	1,034	0.36	%	1,093,539	1,275	0.47	%
Interest-bearing demand accounts	831,414		240	0.12	%	813,179	246	0.12	%
Money market accounts	1,021,485		878	0.35	%	933,288	1,059	0.46	%
Certificate accounts	2,088,538		9,032	1.74	%	2,372,039	12,893	2.18	%
Borrowed funds (f)	846,244		6,490	3.08	%	841,835	6,569	3.13	%
Junior subordinated debentures	103,094		1,422	5.46	%	103,094	1,420	5.45	%
Total interest-bearing liabilities	6,037,764		19,096	1.27	%	6,156,974	23,462	1.53	%
Noninterest bearing liabilities (g)	817,118					708,310
Total liabilities	6,854,882					6,865,284
Shareholders’ equity	1,163,417					1,246,374
Total liabilities and shareholders’ equity	$	8,018,299				8,111,658
Net interest income/ Interest rate spread			67,793	3.41	%		68,685	3.34	%
Net interest-earning assets/ Net interest margin	$	1,388,531		3.65	%	1,398,599		3.64	%
Ratio of interest-earning assets to interest-bearing liabilities	1.23X					1.23X

(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, which was not material.
(c)	Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
(d)	Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent basis.
(e)	Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.
(f)	Average balances include FHLB borrowings, securities sold under agreements to repurchase and other borrowings.
(g)	Average balances include non-interest bearing demand deposits (checking accounts).
(h)	Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 5.50% and 5.83%, respectively, Investment securities - 3.54% and 3.65%, respectively, Interest-earning assets - 4.58% and 4.80%, respectively. GAAP basis net interest rate spreads were 3.31% and 3.27%, respectively, and GAAP basis net interest margins were 3.55% and 3.53%, respectively.

Average Balance Sheet - unaudited

(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 daily averages.

	Six months ended June 30,
	2012					2011
				Avg.				Avg.
	Average			Yield/		Average		Yield/
	Balance		Interest	Cost (h)		Balance	Interest	Cost (h)
Assets:
Interest-earning assets:
Loans receivable (a) (b) (d)	$	5,603,311	156,673	5.61	%	5,500,134	161,237	5.88	%
Mortgage-backed securities (c)	754,285		9,100	2.41	%	922,024	12,829	2.78	%
Investment securities (c) (d)	327,074		8,337	5.10	%	373,870	10,324	5.52	%
FHLB stock	47,581		25	0.11	%	56,962	—	—
Other interest-earning deposits	668,982		853	0.25	%	695,717	896	0.26	%
Total interest-earning assets	7,401,233		174,988	4.74	%	7,548,707	185,286	4.92	%
Noninterest earning assets (e)	603,822					574,662
Total assets	$	8,005,055				8,123,369
Liabilities and shareholders’ equity:
Interest-bearing liabilities:
Savings accounts	$	1,123,651	2,140	0.38	%	1,078,700	2,704	0.51	%
Interest-bearing demand accounts	808,675		467	0.12	%	793,526	478	0.12	%
Money market accounts	998,840		1,843	0.37	%	924,383	2,214	0.48	%
Certificate accounts	2,162,679		19,678	1.83	%	2,401,829	26,140	2.19	%
Borrowed funds (f)	840,043		12,967	3.10	%	844,793	13,153	3.14	%
Junior subordinated debentures	103,094		2,844	5.46	%	103,094	2,825	5.45	%
Total interest-bearing liabilities	6,036,982		39,939	1.33	%	6,146,325	47,514	1.56	%
Noninterest bearing liabilities (g)	809,138					705,098
Total liabilities	6,846,120					6,851,423
Shareholders’ equity	1,158,935					1,271,946
Total liabilities and shareholders’ equity	$	8,005,055				8,123,369
Net interest income/ Interest rate spread			135,049	3.41	%		137,772	3.36	%
Net interest-earning assets/ Net interest margin	$	1,364,251		3.65	%	1,402,382		3.65	%
Ratio of interest-earning assets to interest-bearing liabilities	1.23X					1.23X

(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, which was not material.
(c)	Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
(d)	Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent basis.
(e)	Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.
(f)	Average balances include FHLB borrowings, securities sold under agreements to repurchase and other borrowings.
(g)	Average balances include non-interest bearing demand deposits (checking accounts).
(h)	Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 5.57% and 5.85%, respectively, Investment securities - 3.53% and 3.78%, respectively, Interest-earning assets - 4.64% and 4.81%, respectively. GAAP basis net interest rate spreads were 3.31% and 3.25%, respectively, and GAAP basis net interest margins were 3.55% and 3.54%, respectively.

Average Balance Sheet - unaudited

(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 daily averages.

	Quarter ended					Quarter ended
	June 30, 2012					March 31, 2012
				Avg.				Avg.
	Average			Yield/		Average		Yield/
	Balance		Interest	Cost (h)		Balance	Interest	Cost (h)
Assets:
Interest-earning assets:
Loans receivable (a) (b) (d)	$	5,627,459	77,981	5.54	%	5,579,071	78,691	5.67	%
Mortgage-backed securities (c)	761,616		4,409	2.32	%	746,954	4,691	2.51	%
Investment securities (c) (d)	311,087		4,001	5.14	%	343,059	4,336	5.06	%
FHLB stock	46,916		25	0.21	%	48,246	—	—
Other interest-earning deposits	679,217		473	0.28	%	658,747	380	0.23	%
Total interest-earning assets	7,426,295		86,889	4.68	%	7,376,077	88,098	4.80	%
Noninterest earning assets (e)	592,004					615,734
Total assets	$	8,018,299				7,991,811
Liabilities and shareholders’ equity:
Interest-bearing liabilities:
Savings accounts	$	1,146,989	1,034	0.36	%	1,100,312	1,106	0.40	%
Interest-bearing demand accounts	831,414		240	0.12	%	785,935	227	0.12	%
Money market accounts	1,021,485		878	0.35	%	976,194	965	0.40	%
Certificate accounts	2,088,538		9,032	1.74	%	2,236,823	10,646	1.91	%
Borrowed funds (f)	846,244		6,490	3.08	%	833,843	6,477	3.12	%
Junior subordinated debentures	103,094		1,422	5.46	%	103,094	1,422	5.46	%
Total interest-bearing liabilities	6,037,764		19,096	1.27	%	6,036,201	20,843	1.38	%
Noninterest bearing liabilities (g)	817,118					801,157
Total liabilities	6,854,882					6,837,358
Shareholders’ equity	1,163,417					1,154,453
Total liabilities and shareholders’ equity	$	8,018,299				7,991,811
Net interest income/ Interest rate spread			67,793	3.41	%		67,255	3.42	%
Net interest-earning assets/ Net interest margin	$	1,388,531		3.65	%	1,339,876		3.65	%
Ratio of interest-earning assets to interest-bearing liabilities	1.23X					1.22X

(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, which was not material.
(c)	Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
(d)	Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent basis.
(e)	Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.
(f)	Average balances include FHLB borrowings, securities sold under agreements to repurchase and other borrowings.
(g)	Average balances include non-interest bearing demand deposits (checking accounts).
(h)	Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans - 5.50% and 5.63%, respectively, Investment securities - 3.54% and 3.52%, respectively, Interest-earning assets - 4.58% and 4.70%, respectively. GAAP basis net interest rate spreads were 3.31% and 3.31%, respectively, and GAAP basis net interest margins were 3.55% and 3.55%, respectively.