8-K
Northwest Bancshares, Inc. (NWBI)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 29, 2024
Northwest Bancshares, Inc.
(Exact name of registrant as specified in its charter)
| Maryland | 001-34582 | 27-0950358 | |
|---|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File No.) | (I.R.S. Employer Identification No.) | |
| 3 Easton Oval Suite 500 | Columbus | Ohio | 43219 |
| --- | --- | --- | --- |
| (Address of principal executive office) | (Zip code) |
(814) 726-2140
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, 0.01 Par Value | NWBI | NASDAQ Stock Market, LLC |
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))
Indicate by a check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
☐ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange act. ☐
Item 2.02 Results of Operations and Financial Condition
On October 29, 2024, Northwest Bancshares, Inc. issued a press release announcing its financial results for the three and nine month period ended September 30, 2024 (the "Press Release"), and posted on its website its third quarter 2024 supplemental earnings release presentation (the "Supplemental Earnings Release Presentation"). The Press Release and Supplemental Earnings Release Presentation are being furnished as Exhibit 99.1 and Exhibit 99.2, respectively.
The information in the preceding paragraph, as well as Exhibit 99.1 and Exhibit 99.2 referenced therein, is being furnished to the SEC and shall not be deemed “filed” for any purpose.
Item 9.01 Financial Statements and Exhibits
(a) Not applicable
(b) Not applicable
(c) Not applicable
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press release dated October 29, 2024 |
| 99.2 | Supplemental Earnings Release Presentation reviewed during the conference call |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| NORTHWEST BANCSHARES, INC. | |||
|---|---|---|---|
| Date: | October 29, 2024 | By: | /s/ Douglas M. Schosser |
| Douglas M. Schosser | |||
| Chief Financial Officer |
Document
EXHIBIT 99.1
PRESS RELEASE OF NORTHWEST BANCSHARES, INC.
EARNINGS RELEASE
FOR IMMEDIATE RELEASE
| Contact: | Louis J. Torchio, President and Chief Executive Officer |
|---|---|
| Douglas M. Schosser, Chief Financial Officer (814) 726-2140 |
Northwest Bancshares, Inc. Announces Third Quarter 2024 net income of $34 million,
or $0.26 per diluted share
Net interest margin expands 13 basis points to 3.33%, inclusive of 4bps from an interest recovery
Average deposits grew $10 million while cost of funds remained stable
Noninterest expense declines $2 million due to disciplined expense management
120th consecutive quarterly dividend of $0.20 per share declared
Columbus, Ohio — October 29, 2024
Northwest Bancshares, Inc., (the “Company”), (NasdaqGS: NWBI) announced net income for the quarter ended September 30, 2024 of $34 million, or $0.26 per diluted share. This represents a decrease of $5 million compared to the same quarter last year, when net income was $39 million, or $0.31 per diluted share, and an increase of $29 million compared to the prior quarter, when net income was $5 million, or $0.04 per diluted share. The annualized returns on average shareholders’ equity and average assets for the quarter ended September 30, 2024 were 8.50% and 0.93% compared to 10.27% and 1.08% for the same quarter last year and 1.24% and 0.13% from the prior quarter.
Compared to adjusted net operating income (non-GAAP) of $35 million, or $0.27, per diluted share in the prior quarter, adjusted net operating income (non-GAAP) decreased by $1 million to $34 million, or $0.26, per diluted share for the quarter ended September 30, 2024. This decrease was driven by an increase in provision expense which was $5 million for the quarter ended September 30, 2024 compared to $(0.4) million for the quarter ended June 30, 2024. The adjusted annualized returns on average shareholders’ equity (non-GAAP) and average assets (non-GAAP) for the quarter ended September 30, 2024 were 8.51% and 0.93% compared to 9.00% and 0.96% for prior quarter.
The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.20 per share payable on November 18, 2024 to shareholders of record as of November 8, 2024. This is the 120th consecutive quarter in which the Company has paid a cash dividend. Based on the market value of the Company’s common stock as of September 30, 2024, this represents an annualized dividend yield of approximately 6.0%.
Louis J. Torchio, President and CEO, added, “Our performance this quarter demonstrates the strength and resilience of our business model. We’ve delivered solid results that underscore our expanding earnings power, driven in large part by improvements in our net interest margin. This positive trajectory reflects our team’s dedication to operational excellence and strategic growth initiatives.”
“As we look ahead, we remain committed to creating long-term value for our shareholders. I’m pleased to announce that for the 120th consecutive quarter, we will be returning our earnings to our shareholders through a $0.20 per share dividend. This consistency in shareholder returns is a testament to our financial stability, performance and our unwavering focus on delivering sustainable growth. We enter the next quarter with confidence, buoyed by our strong performance and the ongoing optimization of our business operations. Our team remains focused on capitalizing on market opportunities while maintaining prudent risk management practices. Northwest is well-positioned to continue driving value for our shareholders, clients and communities in the quarters to come.”
Balance Sheet Highlights
| Dollars in thousands | Change 3Q24 vs. | |||||||
|---|---|---|---|---|---|---|---|---|
| 3Q24 | 2Q24 | 3Q23 | 2Q24 | 3Q23 | ||||
| Average loans receivable | $ | 11,223,602 | 11,368,749 | 11,190,959 | (1.3) | % | 0.3 | % |
| Average investments | 1,998,855 | 2,021,347 | 2,117,135 | (1.1) | % | (5.6) | % | |
| Average deposits | 12,096,811 | 12,086,362 | 11,719,866 | 0.1 | % | 3.2 | % | |
| Average borrowed funds | 220,677 | 323,191 | 643,518 | (31.7) | % | (65.7) | % |
•Average loans receivable increased $33 million from the quarter ended September 30, 2023 driven by our commercial banking portfolio, which grew by $456 million in total, including a $372 million increase in our commercial and industrial portfolio as we have continued to build-out our commercial lending verticals. This was offset by a decline in our personal banking portfolio, which decreased by $423 million as cash flows from this portfolio were reinvested in our commercial portfolios. Compared to the second quarter of 2024, average loans receivable decreased by $145 million. Growth was muted in the quarter as we continue to reinvest cash flows from our personal banking portfolio and focus on profitability and credit discipline.
•Average investments declined $118 million from the quarter ended September 30, 2023 and $22 million from the quarter ended June 30, 2024. The decline from the prior year was driven by the investment portfolio restructure which occurred in the second quarter and from lack of reinvestment of cash flow over the past year. The decline in average investments from the prior quarter is expected to be temporary as current quarter purchases occurred later in the quarter. This is evident as ending balances increased $28 million from the prior quarter end.
•Average deposits grew $377 million from the quarter ended September 30, 2023, driven by a $666 million increase in our average time deposits as we competitively positioned our deposit products over the last year. This increase was partially offset by a decrease in money market balances as customers shifted balances into higher yielding time deposit accounts. Compared to the second quarter of 2024, average deposits grew $10 million, driven by a $12 million increase in our average interest-bearing checking deposits. This increase was partially offset by a decrease in time deposits.
•Average borrowings saw a significant reduction of $423 million compared to the quarter end September 30, 2023 and $103 million compared to the quarter ended June 30, 2024. The decrease in average borrowings is primarily attributable to the strategic pay-down of wholesale borrowings. This decrease was made possible by the restructuring of our investment portfolio as well as a substantial increase in cash reserves resulting from the notable rise in the average balance of deposits noted above.
Income Statement Highlights
| Dollars in thousands | Change 3Q24 vs. | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 3Q24 | 2Q24 | 3Q23 | 2Q24 | 3Q23 | |||||||
| Interest income | $ | 171,381 | 166,854 | 151,598 | 2.7 | % | 13.0 | % | |||
| Interest expense | 60,079 | 60,013 | 43,230 | 0.1 | % | 39.0 | % | ||||
| Net interest income | $ | 111,302 | 106,841 | 108,368 | 4.2 | % | 2.7 | % | |||
| Net interest margin | 3.33 | % | 3.20 | % | 3.23 | % |
Compared to the quarter ended September 30, 2023, net interest income increased $3 million and net interest margin increased to 3.33% from 3.23% for the quarter ended September 30, 2023. This increase in net interest income resulted primarily from:
•A $20 million increase in interest income that was the result of cash and marketable securities being redeployed into higher yielding loans. Driven by higher market interest rates, the average yield on loans improved to 5.57% for the quarter ended September 30, 2024 from 5.01% for the quarter ended September 30, 2023. This increase includes a one-time interest recovery of $1.3 million on a commercial loan payoff. Excluding this interest recovery, the adjusted yield on loans for the quarter ended September 30, 2024 was 5.53% and the adjusted net interest margin was 3.29%
•A $17 million increase in interest expense as the result of higher costs of deposits due to the higher interest rate environment and competitive pressure for liquidity. The cost of interest-bearing liabilities increased to 2.39% for the quarter ended September 30, 2024 from 1.74% for the quarter ended September 30, 2023.
Compared to the quarter ended June 30, 2024, net interest income increased $4 million and net interest margin increased to 3.33% for the quarter ended September 30, 2024 from 3.20% for the quarter ended June 30, 2024. This increase in net interest income resulted from the following:
•A $5 million increase in interest income driven by higher interest income on loans receivable and investments as average yield increased compared to the prior quarter. The average yield on loans improved to 5.57% from 5.47% and average investment yields increased to 2.48% from 2.13% for the quarter ended June 30, 2024.
| Dollars in thousands | Change 3Q24 vs. | |||||||
|---|---|---|---|---|---|---|---|---|
| 3Q24 | 2Q24 | 3Q23 | 2Q24 | 3Q23 | ||||
| Provision for credit losses - loans | $ | 5,727 | 2,169 | 3,983 | 164.0 | % | 43.8 | % |
| Provision for credit losses - unfunded commitments | (852) | (2,539) | (2,981) | (66.4) | % | (71.4) | % | |
| Total provision for credit losses expense | $ | 4,875 | (370) | 1,002 | (1417.6) | % | 386.5 | % |
The total provision for credit losses for the quarter ended September 30, 2024 was $4.9 million primarily driven by growth within our commercial lending portfolio and changes in the economic forecasts coupled with a decline in our reserves for unfunded commitments in the current period. This decline is based on the timing of origination and funding of commercial construction loans and lines of credit.
Additionally, the Company saw an increase in classified loans to $320 million, or 2.83% of total loans, at September 30, 2024 from $209 million, or 1.84% of total loans, at September 30, 2023 and $257 million, or 2.26% of total loans, at June 30, 2024. The primary driver of the increase over the past year and quarter is reflective of the Company’s exposure to the Long Term Healthcare segment and the challenges a few operators have experienced post Covid.
| Dollars in thousands | Change 3Q24 vs. | |||||||
|---|---|---|---|---|---|---|---|---|
| 3Q24 | 2Q24 | 3Q23 | 2Q24 | 3Q23 | ||||
| Noninterest income: | ||||||||
| Loss on sale of investments | $ | — | (39,413) | — | NA | NA | ||
| Gain on sale of SBA loans | 667 | 1,457 | 301 | (54.2) | % | 121.6 | % | |
| Service charges and fees | 15,932 | 15,527 | 15,270 | 2.6 | % | 4.3 | % | |
| Trust and other financial services income | 7,924 | 7,566 | 7,085 | 4.7 | % | 11.8 | % | |
| Gain on real estate owned, net | 105 | 487 | 29 | (78.4) | % | 262.1 | % | |
| Income from bank-owned life insurance | 1,434 | 1,371 | 4,561 | 4.6 | % | (68.6) | % | |
| Mortgage banking income | 744 | 901 | 632 | (17.4) | % | 17.7 | % | |
| Other operating income | 1,027 | 3,255 | 3,010 | (68.4) | % | (65.9) | % | |
| Total noninterest income/(loss) | $ | 27,833 | (8,849) | 30,888 | (414.5) | % | (9.9) | % |
Noninterest income decreased from the quarter ended September 30, 2023 due to a decrease in income from bank-owned life insurance of $3 million as a result of death benefits received in the prior period. Compared to the quarter ended June 30, 2024, excluding the loss on sale of securities of $39 million, noninterest income decreased by $3 million due to a loss on an equity method investment, lower gain on sale of SBA loans and loss on the sale of buildings during the quarter.
| Dollars in thousands | Change 3Q24 vs. | |||||||
|---|---|---|---|---|---|---|---|---|
| 3Q24 | 2Q24 | 3Q23 | 2Q24 | 3Q23 | ||||
| Noninterest expense: | ||||||||
| Personnel expense | $ | 56,186 | 53,531 | 51,243 | 5.0 | % | 9.6 | % |
| Non-personnel expense | 34,581 | 38,889 | 36,327 | (11.1) | % | (4.8) | % | |
| Total noninterest expense | $ | 90,767 | 92,420 | 87,570 | (1.8) | % | 3.7 | % |
Noninterest expense increased from the quarter ended September 30, 2023 due to a $5 million increase in personnel expenses driven by the build-out of the commercial business and related credit, risk management and internal audit support functions over the past year coupled with an increase in contracted employees utilized during the quarter and an increase in medical expenses.
Compared to the quarter ended June 30, 2024, noninterest expense decreased due to a $3 million increase in personnel expense driven by additional contracted employees utilized during the quarter and an increase in medical expenses, which were more than offset by a decrease in non-personnel expense of $4 million due to restructuring expenses in the prior quarter and a decrease in fraud losses.
| Dollars in thousands | Change 3Q24 vs. | |||||||
|---|---|---|---|---|---|---|---|---|
| 3Q24 | 2Q24 | 3Q23 | 2Q24 | 3Q23 | ||||
| Income before income taxes | $ | 43,493 | 5,942 | 50,684 | 632.0 | % | (14.2) | % |
| Income tax expense | 9,875 | 1,195 | 11,464 | 726.4 | % | (13.9) | % | |
| Net income | $ | 33,618 | 4,747 | 39,220 | 608.2 | % | (14.3) | % |
The provision for income taxes decreased by $2 million from the quarter ended September 30, 2023 and increased $9 million from the quarter ended June 30, 2024 primarily due to the quarterly change in income before income taxes.
Net income decreased from the quarter ended September 30, 2023, due to the factors discussed above, and increased from the quarter ended June 30, 2024 due to loss on sale of investments from the prior period balance sheet restructuring as well as the additional factors discussed above.
Headquartered in Columbus, Ohio, Northwest Bancshares, Inc. is the bank holding company of Northwest Bank. Founded in 1896 Northwest Bank is a full-service financial institution offering a complete line of business and personal banking products, as well as employee benefits and wealth management services. As of September 30, 2024, Northwest operated 130 full-service financial centers and eleven free standing drive-up facilities in Pennsylvania, New York, Ohio and Indiana. Northwest Bancshares, Inc.’s common stock is listed on The Nasdaq Stock Market LLC (“NWBI”). Additional information regarding Northwest Bancshares, Inc. and Northwest Bank can be accessed online at www.northwest.com.
# # #
Forward-Looking Statements - This 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 inflation and an increase in non-performing loans; (4) changes in legislation or regulatory requirements; (5) difficulties in continuing to improve operating efficiencies; (6) difficulties in the integration of acquired businesses or the ability to complete sales transactions; (7) increased risk associated with commercial real-estate and business loans; (8) changes in liquidity, including the size and composition of our deposit portfolio; (9) reduction in the value of our goodwill and other intangible assets; and (10) the effect of any pandemic, war or act of terrorism. 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, except as required by law.
Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Financial Condition (Unaudited)
(dollars in thousands, except per share amounts)
| September 30,<br>2024 | December 31,<br>2023 | September 30,<br>2023 | |||||
|---|---|---|---|---|---|---|---|
| Assets | |||||||
| Cash and cash equivalents | $ | 226,883 | 122,260 | 161,995 | |||
| Marketable securities available-for-sale (amortized cost of $1,248,104, $1,240,003 and $1,262,080, respectively) | 1,111,868 | 1,043,359 | 1,010,076 | ||||
| Marketable securities held-to-maturity (fair value of $672,641, $699,506 and $682,681, respectively) | 766,772 | 814,839 | 830,106 | ||||
| Total cash and cash equivalents and marketable securities | 2,105,523 | 1,980,458 | 2,002,177 | ||||
| Loans held-for-sale | 9,370 | 8,768 | 10,592 | ||||
| Residential mortgage loans | 3,248,788 | 3,419,417 | 3,462,606 | ||||
| Home equity loans | 1,167,202 | 1,227,858 | 1,258,765 | ||||
| Consumer loans | 1,998,032 | 2,126,027 | 2,155,119 | ||||
| Commercial real estate loans | 2,994,379 | 2,974,010 | 2,922,582 | ||||
| Commercial loans | 1,886,787 | 1,658,729 | 1,500,609 | ||||
| Total loans receivable | 11,304,558 | 11,414,809 | 11,310,273 | ||||
| Allowance for credit losses | (125,813) | (125,243) | (124,841) | ||||
| Loans receivable, net | 11,178,745 | 11,289,566 | 11,185,432 | ||||
| FHLB stock, at cost | 21,223 | 30,146 | 40,404 | ||||
| Accrued interest receivable | 46,678 | 47,353 | 42,624 | ||||
| Real estate owned, net | 76 | 104 | 363 | ||||
| Premises and equipment, net | 126,391 | 138,838 | 138,041 | ||||
| Bank-owned life insurance | 255,324 | 251,895 | 250,502 | ||||
| Goodwill | 380,997 | 380,997 | 380,997 | ||||
| Other intangible assets, net | 3,363 | 5,290 | 6,013 | ||||
| Other assets | 236,005 | 294,458 | 315,648 | ||||
| Total assets | $ | 14,354,325 | 14,419,105 | 14,362,201 | |||
| Liabilities and shareholders’ equity | |||||||
| Liabilities | |||||||
| Noninterest-bearing demand deposits | $ | 2,581,769 | 2,669,023 | 2,774,291 | |||
| Interest-bearing demand deposits | 2,676,779 | 2,634,546 | 2,598,080 | ||||
| Money market deposit accounts | 1,956,747 | 1,968,218 | 2,042,813 | ||||
| Savings deposits | 2,145,735 | 2,105,234 | 2,116,360 | ||||
| Time deposits | 2,710,049 | 2,602,881 | 2,258,338 | ||||
| Total deposits | 12,071,079 | 11,979,902 | 11,789,882 | ||||
| Borrowed funds | 204,374 | 398,895 | 604,587 | ||||
| Subordinated debt | 114,451 | 114,189 | 114,102 | ||||
| Junior subordinated debentures | 129,769 | 129,574 | 129,509 | ||||
| Advances by borrowers for taxes and insurance | 24,700 | 45,253 | 27,653 | ||||
| Accrued interest payable | 15,125 | 13,669 | 7,915 | ||||
| Other liabilities | 203,502 | 186,306 | 190,122 | ||||
| Total liabilities | 12,763,000 | 12,867,788 | 12,863,770 | ||||
| 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, 127,400,199, 127,110,453 and 127,101,349 shares issued and outstanding, respectively | 1,274 | 1,271 | 1,271 | ||||
| Additional paid-in capital | 1,030,384 | 1,024,852 | 1,023,591 | ||||
| Retained earnings | 665,845 | 674,686 | 671,092 | ||||
| Accumulated other comprehensive loss | (106,178) | (149,492) | (197,523) | ||||
| Total shareholders’ equity | 1,591,325 | 1,551,317 | 1,498,431 | ||||
| Total liabilities and shareholders’ equity | $ | 14,354,325 | 14,419,105 | 14,362,201 | |||
| Equity to assets | 11.09 | % | 10.76 | % | 10.43 | % | |
| Tangible common equity to tangible assets* | 8.64 | % | 8.30 | % | 7.95 | % | |
| Book value per share | $ | 12.49 | 12.20 | 11.79 | |||
| Tangible book value per share* | $ | 9.47 | 9.17 | 8.74 | |||
| Closing market price per share | $ | 13.38 | 12.48 | 10.23 | |||
| Full time equivalent employees | 1,975 | 2,098 | 2,084 | ||||
| Number of banking offices | 141 | 142 | 142 |
* Excludes goodwill and other intangible assets (non-GAAP). See reconciliation of non-GAAP financial measures for additional information relating to these items.
Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
(dollars in thousands, except per share amounts)
| Quarter ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2024 | June 30,<br>2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | |||||||
| Interest income: | |||||||||||
| Loans receivable | $ | 156,413 | 153,954 | 149,571 | 146,523 | 140,667 | |||||
| Mortgage-backed securities | 10,908 | 9,426 | 7,944 | 7,951 | 8,072 | ||||||
| Taxable investment securities | 842 | 728 | 794 | 786 | 786 | ||||||
| Tax-free investment securities | 512 | 457 | 491 | 492 | 491 | ||||||
| FHLB stock dividends | 394 | 498 | 607 | 666 | 668 | ||||||
| Interest-earning deposits | 2,312 | 1,791 | 832 | 970 | 914 | ||||||
| Total interest income | 171,381 | 166,854 | 160,239 | 157,388 | 151,598 | ||||||
| Interest expense: | |||||||||||
| Deposits | 54,198 | 52,754 | 47,686 | 40,600 | 31,688 | ||||||
| Borrowed funds | 5,881 | 7,259 | 9,315 | 10,486 | 11,542 | ||||||
| Total interest expense | 60,079 | 60,013 | 57,001 | 51,086 | 43,230 | ||||||
| Net interest income | 111,302 | 106,841 | 103,238 | 106,302 | 108,368 | ||||||
| Provision for credit losses - loans | 5,727 | 2,169 | 4,234 | 3,801 | 3,983 | ||||||
| Provision for credit losses - unfunded commitments | (852) | (2,539) | (799) | 4,145 | (2,981) | ||||||
| Net interest income after provision for credit losses | 106,427 | 107,211 | 99,803 | 98,356 | 107,366 | ||||||
| Noninterest income: | |||||||||||
| Loss on sale of investments | — | (39,413) | — | (1) | — | ||||||
| Gain on sale of SBA loans | 667 | 1,457 | 873 | 388 | 301 | ||||||
| Gain on sale of loans | — | — | — | 726 | — | ||||||
| Service charges and fees | 15,932 | 15,527 | 15,523 | 15,922 | 15,270 | ||||||
| Trust and other financial services income | 7,924 | 7,566 | 7,127 | 6,884 | 7,085 | ||||||
| Gain on real estate owned, net | 105 | 487 | 57 | 1,084 | 29 | ||||||
| Income from bank-owned life insurance | 1,434 | 1,371 | 1,502 | 1,454 | 4,561 | ||||||
| Mortgage banking income | 744 | 901 | 452 | 247 | 632 | ||||||
| Other operating income | 1,027 | 3,255 | 2,429 | 2,465 | 3,010 | ||||||
| Total noninterest income/(loss) | 27,833 | (8,849) | 27,963 | 29,169 | 30,888 | ||||||
| Noninterest expense: | |||||||||||
| Compensation and employee benefits | 56,186 | 53,531 | 51,540 | 50,194 | 51,243 | ||||||
| Premises and occupancy costs | 7,115 | 7,464 | 7,627 | 7,049 | 7,052 | ||||||
| Office operations | 2,811 | 3,819 | 2,767 | 3,747 | 3,398 | ||||||
| Collections expense | 474 | 406 | 336 | 328 | 551 | ||||||
| Processing expenses | 14,570 | 14,695 | 14,725 | 15,017 | 14,672 | ||||||
| Marketing expenses | 2,004 | 2,410 | 2,149 | 1,317 | 2,379 | ||||||
| Federal deposit insurance premiums | 2,763 | 2,865 | 3,023 | 2,643 | 2,341 | ||||||
| Professional services | 3,302 | 3,728 | 4,065 | 6,255 | 3,002 | ||||||
| Amortization of intangible assets | 590 | 635 | 701 | 724 | 795 | ||||||
| Real estate owned expense | 23 | 57 | 66 | 51 | 141 | ||||||
| Merger, asset disposition and restructuring expense | 43 | 1,915 | 955 | 2,354 | — | ||||||
| Other expenses | 886 | 895 | 2,070 | 997 | 1,996 | ||||||
| Total noninterest expense | 90,767 | 92,420 | 90,024 | 90,676 | 87,570 | ||||||
| Income before income taxes | 43,493 | 5,942 | 37,742 | 36,849 | 50,684 | ||||||
| Income tax expense | 9,875 | 1,195 | 8,579 | 7,835 | 11,464 | ||||||
| Net income | $ | 33,618 | 4,747 | 29,163 | 29,014 | 39,220 | |||||
| Basic earnings per share | $ | 0.26 | 0.04 | 0.23 | 0.23 | 0.31 | |||||
| Diluted earnings per share | $ | 0.26 | 0.04 | 0.23 | 0.23 | 0.31 | |||||
| Annualized return on average equity | 8.50 | % | 1.24 | % | 7.57 | % | 7.64 | % | 10.27 | % | |
| Annualized return on average assets | 0.93 | % | 0.13 | % | 0.81 | % | 0.80 | % | 1.08 | % | |
| Annualized return on average tangible common equity * | 11.26 | % | 1.65 | % | 10.08 | % | 10.28 | % | 13.80 | % | |
| Efficiency ratio | 65.24 | % | 94.31 | % | 68.62 | % | 66.93 | % | 62.88 | % | |
| Efficiency ratio, excluding certain items ** | 64.78 | % | 65.41 | % | 67.35 | % | 64.66 | % | 62.31 | % | |
| Annualized noninterest expense to average assets | 2.52 | % | 2.57 | % | 2.51 | % | 2.51 | % | 2.42 | % | |
| Annualized noninterest expense to average assets, excluding certain items** | 2.50 | % | 2.50 | % | 2.47 | % | 2.43 | % | 2.39 | % |
* Excludes goodwill and other intangible assets (non-GAAP). See reconciliation of non-GAAP financial measures for additional information relating to these items.
** Excludes loss on sale of investments, amortization of intangible assets and merger, asset disposition and restructuring expenses (non-GAAP). See reconciliation of non-GAAP financial measures for additional information relating to these items.
Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
(dollars in thousands, except per share amounts)
| Nine months ended September 30, | |||||
|---|---|---|---|---|---|
| 2024 | 2023 | ||||
| Interest income: | |||||
| Loans receivable | $ | 459,938 | 397,136 | ||
| Mortgage-backed securities | 28,278 | 24,935 | |||
| Taxable investment securities | 2,364 | 2,472 | |||
| Tax-free investment securities | 1,460 | 1,858 | |||
| FHLB stock dividends | 1,499 | 2,202 | |||
| Interest-earning deposits | 4,935 | 1,931 | |||
| Total interest income | 498,474 | 430,534 | |||
| Interest expense: | |||||
| Deposits | 154,638 | 64,743 | |||
| Borrowed funds | 22,455 | 36,410 | |||
| Total interest expense | 177,093 | 101,153 | |||
| Net interest income | 321,381 | 329,381 | |||
| Provision for credit losses - loans | 12,130 | 14,863 | |||
| Provision for credit losses - unfunded commitments | (4,190) | 65 | |||
| Net interest income after provision for credit losses | 313,441 | 314,453 | |||
| Noninterest income: | |||||
| Loss on sale of investments | (39,413) | (8,306) | |||
| Gain on sale of mortgage servicing rights | — | 8,305 | |||
| Gain on sale of SBA loans | 2,997 | 1,412 | |||
| Service charges and fees | 46,982 | 43,292 | |||
| Trust and other financial services income | 22,617 | 20,400 | |||
| Gain on real estate owned, net | 649 | 922 | |||
| Income from bank-owned life insurance | 4,307 | 7,134 | |||
| Mortgage banking income | 2,097 | 2,184 | |||
| Other operating income | 6,711 | 9,311 | |||
| Total noninterest income | 46,947 | 84,654 | |||
| Noninterest expense: | |||||
| Compensation and employee benefits | 161,257 | 145,497 | |||
| Premises and occupancy costs | 22,206 | 22,102 | |||
| Office operations | 9,397 | 9,208 | |||
| Collections expense | 1,216 | 1,367 | |||
| Processing expenses | 43,990 | 43,670 | |||
| Marketing expenses | 6,563 | 8,127 | |||
| Federal deposit insurance premiums | 8,651 | 6,628 | |||
| Professional services | 11,095 | 11,564 | |||
| Amortization of intangible assets | 1,926 | 2,546 | |||
| Real estate owned expense | 146 | 405 | |||
| Merger, asset disposition and restructuring expense | 2,913 | 4,395 | |||
| Other expenses | 3,851 | 5,369 | |||
| Total noninterest expense | 273,211 | 260,878 | |||
| Income before income taxes | 87,177 | 138,229 | |||
| Income tax expense | 19,649 | 32,286 | |||
| Net income | $ | 67,528 | 105,943 | ||
| Basic earnings per share | $ | 0.53 | 0.83 | ||
| Diluted earnings per share | $ | 0.53 | 0.83 | ||
| Annualized return on average equity | 5.80 | % | 9.37 | % | |
| Annualized return on average assets | 0.63 | % | 0.99 | % | |
| Annualized return on tangible common equity * | 7.71 | % | 12.61 | % | |
| Efficiency ratio | 74.18 | % | 63.01 | % | |
| Efficiency ratio, excluding certain items ** | 65.82 | % | 61.33 | % | |
| Annualized noninterest expense to average assets | 2.53 | % | 2.45 | % | |
| Annualized noninterest expense to average assets, excluding certain items ** | 2.49 | % | 2.38 | % |
* Excludes goodwill and other intangible assets (non-GAAP). See reconciliation of non-GAAP financial measures for additional information relating to these items.
** Excludes loss on sale of investments, gain on sale of mortgage servicing rights, amortization of intangible assets and merger, asset disposition and restructuring expenses (non-GAAP). See reconciliation of non-GAAP financial measures for additional information relating to these items.
Northwest Bancshares, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures (Unaudited) *
(dollars in thousands, except per share amounts)
| Quarter ended | Nine months ended September 30, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2024 | June 30,<br>2024 | September 30, 2023 | 2024 | 2023 | |||||||
| Reconciliation of net income to adjusted net operating income: | |||||||||||
| Net income (GAAP) | $ | 33,618 | 4,747 | 39,220 | 67,528 | 105,943 | |||||
| Non-GAAP adjustments | |||||||||||
| Add: merger, asset disposition and restructuring expense | 43 | 1,915 | — | 2,913 | 4,395 | ||||||
| Add: loss on the sale of investments | — | 39,413 | — | 39,413 | 8,306 | ||||||
| Less: gain on sale of mortgage servicing rights | — | — | — | — | (8,305) | ||||||
| Less: tax benefit of non-GAAP adjustments | (12) | (11,572) | — | (11,851) | (1,231) | ||||||
| Adjusted net operating income (non-GAAP) | $ | 33,649 | 34,503 | 39,220 | 98,003 | 109,108 | |||||
| Diluted earnings per share (GAAP) | $ | 0.26 | 0.04 | 0.31 | 0.53 | 0.83 | |||||
| Diluted adjusted operating earnings per share (non-GAAP) | $ | 0.26 | 0.27 | 0.31 | 0.77 | 0.86 | |||||
| Average equity | $ | 1,572,897 | 1,541,434 | 1,515,287 | 1,554,800 | 1,511,428 | |||||
| Average assets | 14,351,669 | 14,458,592 | 14,379,323 | 14,406,092 | 14,249,857 | ||||||
| Annualized return on average equity (GAAP) | 8.50 | % | 1.24 | % | 10.27 | % | 5.80 | % | 9.37 | % | |
| Annualized return on average assets (GAAP) | 0.93 | % | 0.13 | % | 1.08 | % | 0.63 | % | 0.99 | % | |
| Annualized return on average equity, excluding merger, asset disposition and restructuring expense, loss on the sale of investments and gain on sale of mortgage servicing rights, net of tax (non-GAAP) | 8.51 | % | 9.00 | % | 10.27 | % | 8.42 | % | 9.65 | % | |
| Annualized return on average assets, excluding merger, asset disposition and restructuring expense, loss on sale of investments, and gain on sale of mortgage servicing rights, net of tax (non-GAAP) | 0.93 | % | 0.96 | % | 1.08 | % | 0.91 | % | 1.02 | % |
The following non-GAAP financial measures used by the Company provide information useful to investors in understanding our operating performance and trends, and facilitate comparisons with the performance of our peers. The following table summarizes the non-GAAP financial measures derived from amounts reported in the Company’s Consolidated Statements of Financial Condition.
| September 30,<br>2024 | December 31,<br>2023 | September 30,<br>2023 | |||||
|---|---|---|---|---|---|---|---|
| Tangible common equity to assets | |||||||
| Total shareholders’ equity | $ | 1,591,325 | 1,551,317 | 1,498,431 | |||
| Less: goodwill and intangible assets | (384,360) | (386,287) | (387,010) | ||||
| Tangible common equity | $ | 1,206,965 | 1,165,030 | 1,111,421 | |||
| Total assets | $ | 14,354,325 | 14,419,105 | 14,362,201 | |||
| Less: goodwill and intangible assets | (384,360) | (386,287) | (387,010) | ||||
| Tangible assets | $ | 13,969,965 | 14,032,818 | 13,975,191 | |||
| Tangible common equity to tangible assets | 8.64 | % | 8.30 | % | 7.95 | % | |
| Tangible common equity to tangible assets, including unrealized losses on held-to-maturity investments | |||||||
| Tangible common equity | $ | 1,206,965 | 1,165,030 | 1,111,421 | |||
| Less: unrealized losses on held to maturity investments | (94,131) | (115,334) | (147,425) | ||||
| Add: deferred taxes on unrealized losses on held to maturity investments | 26,357 | 32,294 | 41,279 | ||||
| Tangible common equity, including unrealized losses on held-to-maturity investments | $ | 1,139,191 | 1,081,990 | 1,005,275 | |||
| Tangible assets | $ | 13,969,965 | 14,032,818 | 13,975,191 | |||
| Tangible common equity to tangible assets, including unrealized losses on held-to-maturity investments | 8.15 | % | 7.71 | % | 7.19 | % | |
| Tangible book value per share | |||||||
| Tangible common equity | $ | 1,206,965 | 1,165,030 | 1,111,421 | |||
| Common shares outstanding | 127,400,199 | 127,110,453 | 127,101,349 | ||||
| Tangible book value per share | 9.47 | 9.17 | 8.74 |
Northwest Bancshares, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures (Unaudited) *
(dollars in thousands, except per share amounts)
The following table summarizes the non-GAAP financial measures derived from amounts reported in the Company’s Consolidated Statements of Income.
| Quarter ended | Nine months ended September 30, | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br>2024 | June 30,<br>2024 | March 31,<br>2024 | December 31,<br>2023 | September 30,<br>2023 | 2024 | 2023 | |||||||||
| Annualized return on average tangible common equity | |||||||||||||||
| Net income | $ | 33,618 | 4,747 | 29,163 | 29,014 | 39,220 | 67,528 | 105,943 | |||||||
| Average shareholders’ equity | 1,572,897 | 1,541,434 | 1,549,870 | 1,506,895 | 1,515,287 | 1,554,800 | 1,511,428 | ||||||||
| Less: average goodwill and intangible assets | (384,730) | (385,364) | (386,038) | (386,761) | (387,523) | (385,375) | (388,365) | ||||||||
| Average tangible common equity | $ | 1,188,167 | 1,156,070 | 1,163,832 | 1,120,134 | 1,127,764 | 1,169,425 | 1,123,063 | |||||||
| Annualized return on average tangible common equity | 11.26 | % | 1.65 | % | 10.08 | % | 10.28 | % | 13.80 | % | 7.71 | % | 12.61 | % | |
| Efficiency ratio, excluding loss on the sale of investments, gain on the sale of mortgage servicing rights, amortization and merger, asset disposition and restructuring expenses | |||||||||||||||
| Non-interest expense | $ | 90,767 | 92,420 | 90,024 | 90,676 | 87,570 | 273,211 | 260,878 | |||||||
| Less: amortization expense | (590) | (635) | (701) | (724) | (795) | (1,926) | (2,546) | ||||||||
| Less: merger, asset disposition and restructuring expenses | (43) | (1,915) | (955) | (2,354) | — | (2,913) | (4,395) | ||||||||
| Non-interest expense, excluding amortization and merger, assets disposition and restructuring expenses | $ | 90,134 | 89,870 | 88,368 | 87,598 | 86,775 | 268,372 | 253,937 | |||||||
| Net interest income | $ | 111,302 | 106,841 | 103,238 | 106,302 | 108,368 | 321,381 | 329,381 | |||||||
| Non-interest income | 27,833 | (8,849) | 27,963 | 29,169 | 30,888 | 46,947 | 84,654 | ||||||||
| Add: loss on the sale of investments | — | 39,413 | — | 1 | — | 39,413 | 8,306 | ||||||||
| Less: gain on sale of mortgage servicing rights | — | — | — | — | — | — | (8,305) | ||||||||
| Net interest income plus non-interest income, excluding loss on sale of investments and gain on sale of mortgage servicing rights | $ | 139,135 | 137,405 | 131,201 | 135,472 | 139,256 | 407,741 | 414,036 | |||||||
| Efficiency ratio, excluding loss on sale of investments, gain on sale of mortgage servicing rights, amortization and merger, asset disposition and restructuring expenses | 64.78 | % | 65.41 | % | 67.35 | % | 64.66 | % | 62.31 | % | 65.82 | % | 61.33 | % | |
| Annualized non-interest expense to average assets, excluding amortization and merger, asset disposition and restructuring expense | |||||||||||||||
| Non-interest expense excluding amortization and merger, asset disposition and restructuring expenses | $ | 90,134 | 89,870 | 88,368 | 87,598 | 86,775 | 268,372 | 253,937 | |||||||
| Average assets | 14,351,669 | 14,458,592 | 14,408,612 | 14,329,020 | 14,379,323 | 14,406,092 | 14,249,857 | ||||||||
| Annualized non-interest expense to average assets, excluding amortization and merger, asset disposition and restructuring expense | 2.50 | % | 2.50 | % | 2.47 | % | 2.43 | % | 2.39 | % | 2.49 | % | 2.38 | % |
* The table summarizes the Company’s results from operations on a GAAP basis and on an operating (non-GAAP) basis for the periods indicated. Operating results exclude merger, asset disposition and restructuring expense, loss on sale of investments and gain on sale of mortgage servicing rights. The net tax effect was calculated using statutory tax rates of approximately 28.0%. The Company believes this non-GAAP presentation provides a meaningful comparison of operational performance and facilitates a more effective evaluation and comparison of results to assess performance in relation to ongoing operations.
Northwest Bancshares, Inc. and Subsidiaries
Deposits (Unaudited)
(dollars in thousands)
Generally, deposits in excess of $250,000 are not federally insured. The following table provides details regarding the Company’s uninsured deposits portfolio:
| As of September 30, 2024 | |||||
|---|---|---|---|---|---|
| Balance | Percent of <br>total deposits | Number of <br>relationships | |||
| Uninsured deposits per the Call Report (1) | $ | 3,097,247 | 25.7 | % | 5,234 |
| Less intercompany deposit accounts | 1,201,625 | 10.0 | % | 12 | |
| Less collateralized deposit accounts | 480,039 | 4.0 | % | 262 | |
| Uninsured deposits excluding intercompany and collateralized accounts | $ | 1,415,583 | 11.7 | % | 4,960 |
(1) Uninsured deposits presented may be different from actual amounts due to titling of accounts.
Our largest uninsured depositor, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $19.6 million, or 0.16% of total deposits, as of September 30, 2024. Our top ten largest uninsured depositors, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $103 million, or 0.85% of total deposits, as of September 30, 2024. The average uninsured deposit account balance, excluding intercompany and collateralized accounts, was $285,000 as of September 30, 2024.
The following table provides additional details for the Company’s deposit portfolio:
| As of September 30, 2024 | |||||
|---|---|---|---|---|---|
| Balance | Percent of <br>total deposits | Number of <br>accounts | |||
| Personal noninterest bearing demand deposits | $ | 1,316,845 | 10.9 | % | 286,061 |
| Business noninterest bearing demand deposits | 1,264,924 | 10.5 | % | 43,284 | |
| Personal interest-bearing demand deposits | 1,340,668 | 11.1 | % | 56,490 | |
| Business interest-bearing demand deposits | 1,336,111 | 11.0 | % | 7,688 | |
| Personal money market deposits | 1,394,904 | 11.6 | % | 24,735 | |
| Business money market deposits | 561,843 | 4.6 | % | 2,738 | |
| Savings deposits | 2,145,735 | 17.8 | % | 183,941 | |
| Time deposits | 2,710,049 | 22.5 | % | 81,728 | |
| Total deposits | $ | 12,071,079 | 100.0 | % | 686,665 |
Our average deposit account balance as of September 30, 2024 was $18,000. The Company’s insured cash sweep deposit balance was $487 million as of September 30, 2024.
The following table provides additional details regarding the Company’s deposit portfolio over time:
| 3/31/2023 | 6/30/2023 | 9/30/2023 | 12/31/2023 | 3/31/2024 | 6/30/2024 | 9/30/2024 | ||
|---|---|---|---|---|---|---|---|---|
| Personal noninterest bearing demand deposits | $ | 1,428,232 | 1,397,167 | 1,375,144 | 1,357,875 | 1,369,294 | 1,350,520 | 1,316,845 |
| Business noninterest bearing demand deposits | 1,467,860 | 1,423,396 | 1,399,147 | 1,311,148 | 1,249,085 | 1,231,179 | 1,264,924 | |
| Personal interest-bearing demand deposits | 1,627,546 | 1,535,254 | 1,477,617 | 1,464,058 | 1,427,140 | 1,396,825 | 1,340,668 | |
| Business interest-bearing demand deposits | 466,105 | 624,252 | 689,914 | 812,433 | 805,069 | 815,358 | 955,120 | |
| Municipal demand deposits | 447,852 | 418,147 | 430,549 | 358,055 | 325,657 | 353,567 | 380,991 | |
| Personal money market deposits | 1,626,614 | 1,511,652 | 1,463,689 | 1,435,939 | 1,393,532 | 1,390,162 | 1,394,904 | |
| Business money market deposits | 701,436 | 642,601 | 579,124 | 532,279 | 559,005 | 574,679 | 561,843 | |
| Savings deposits | 2,194,743 | 2,120,215 | 2,116,360 | 2,105,234 | 2,156,048 | 2,148,727 | 2,145,735 | |
| Time deposits | 1,576,791 | 1,989,711 | 2,258,338 | 2,602,881 | 2,786,814 | 2,826,362 | 2,710,049 | |
| Total deposits | $ | 11,537,179 | 11,662,395 | 11,789,882 | 11,979,902 | 12,071,644 | 12,087,379 | 12,071,079 |
Northwest Bancshares, Inc. and Subsidiaries
Regulatory Capital Requirements (Unaudited)
(dollars in thousands)
| At September 30, 2024 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Actual (1) | Minimum capital<br>requirements (2) | Well capitalized<br>requirements | ||||||||||
| Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||
| Total capital (to risk weighted assets) | ||||||||||||
| Northwest Bancshares, Inc. | $ | 1,705,283 | 16.024 | % | $ | 1,117,392 | 10.500 | % | $ | 1,064,183 | 10.000 | % |
| Northwest Bank | 1,460,909 | 13.740 | % | 1,116,384 | 10.500 | % | 1,063,223 | 10.000 | % | |||
| Tier 1 capital (to risk weighted assets) | ||||||||||||
| Northwest Bancshares, Inc. | 1,457,698 | 13.698 | % | 904,555 | 8.500 | % | 851,346 | 8.000 | % | |||
| Northwest Bank | 1,327,894 | 12.489 | % | 903,739 | 8.500 | % | 850,578 | 8.000 | % | |||
| Common equity tier 1 capital (to risk weighted assets) | ||||||||||||
| Northwest Bancshares, Inc. | 1,331,918 | 12.516 | % | 744,928 | 7.000 | % | 691,719 | 6.500 | % | |||
| Northwest Bank | 1,327,894 | 12.489 | % | 744,256 | 7.000 | % | 691,095 | 6.500 | % | |||
| Tier 1 capital (leverage) (to average assets) | ||||||||||||
| Northwest Bancshares, Inc. | 1,457,698 | 10.283 | % | 567,025 | 4.000 | % | 708,782 | 5.000 | % | |||
| Northwest Bank | 1,327,894 | 9.374 | % | 566,633 | 4.000 | % | 708,292 | 5.000 | % |
(1) September 30, 2024 figures are estimated.
(2) Amounts and ratios include the capital conservation buffer of 2.5%, which does not apply to Tier 1 capital to average assets (leverage ratio). For further information related to the capital conservation buffer, see “Item 1. Business - Supervision and Regulation” of our 2023 Annual Report on Form 10-K.
Northwest Bancshares, Inc. and Subsidiaries
Marketable Securities (Unaudited)
(dollars in thousands)
| September 30, 2024 | ||||||
|---|---|---|---|---|---|---|
| Marketable securities available-for-sale | Amortized cost | Gross unrealized<br>holding gains | Gross unrealized<br>holding losses | Fair value | Weighted average duration | |
| Debt issued by the U.S. government and agencies: | ||||||
| Due after ten years | $ | 46,292 | — | (8,497) | 37,795 | 6.05 |
| Debt issued by government sponsored enterprises: | ||||||
| Due after one year through five years | 136 | — | (4) | 132 | 0.87 | |
| Municipal securities: | ||||||
| Due after one year through five years | 884 | 18 | (2) | 900 | 1.72 | |
| Due after five years through ten years | 15,729 | 277 | (1,382) | 14,624 | 7.57 | |
| Due after ten years | 52,244 | 288 | (6,971) | 45,561 | 10.37 | |
| Corporate debt issues: | ||||||
| Due after five years through ten years | 25,396 | 307 | (867) | 24,836 | 5.38 | |
| Mortgage-backed agency securities: | ||||||
| Fixed rate pass-through | 222,573 | 2,926 | (12,641) | 212,858 | 6.26 | |
| Variable rate pass-through | 3,905 | 57 | (4) | 3,958 | 4.01 | |
| Fixed rate agency CMOs | 835,445 | 3,801 | (113,373) | 725,873 | 5.22 | |
| Variable rate agency CMOs | 45,500 | 44 | (213) | 45,331 | 7.68 | |
| Total mortgage-backed agency securities | 1,107,423 | 6,828 | (126,231) | 988,020 | 5.55 | |
| Total marketable securities available-for-sale | $ | 1,248,104 | 7,718 | (143,954) | 1,111,868 | 5.79 |
| Marketable securities held-to-maturity | ||||||
| Government sponsored | ||||||
| Due after one year through five years | $ | 109,460 | — | (10,520) | 98,940 | 3.65 |
| Due after five years through ten years | 15,000 | — | (1,923) | 13,077 | 5.04 | |
| Mortgage-backed agency securities: | ||||||
| Fixed rate pass-through | 136,439 | — | (16,184) | 120,255 | 4.76 | |
| Variable rate pass-through | 387 | — | — | 387 | 3.00 | |
| Fixed rate agency CMOs | 504,957 | — | (65,502) | 439,455 | 5.66 | |
| Variable rate agency CMOs | 529 | — | (2) | 527 | 5.01 | |
| Total mortgage-backed agency securities | 642,312 | — | (81,688) | 560,624 | 5.47 | |
| Total marketable securities held-to-maturity | $ | 766,772 | — | (94,131) | 672,641 | 5.20 |
Northwest Bancshares, Inc. and Subsidiaries
Borrowed Funds (Unaudited)
(dollars in thousands)
| September 30, 2024 | ||||
|---|---|---|---|---|
| Amount | Average rate | |||
| Term notes payable to the FHLB of Pittsburgh, due within one year | $ | 175,000 | 5.15 | % |
| Collateralized borrowings, due within one year | 21,624 | 1.59 | % | |
| Collateral received, due within one year | 7,750 | 5.72 | % | |
| Subordinated debentures, net of issuance costs | 114,451 | 4.28 | % | |
| Junior subordinated debentures | 129,769 | 7.49 | % | |
| Total borrowed funds * | $ | 448,594 | 5.44 | % |
* As of September 30, 2024, the Company had $3.3 billion of additional borrowing capacity available with the FHLB of Pittsburgh, including a $250 million overnight line of credit, which has no balance as of September 30, 2024, as well as $500 million of borrowing capacity available with the Federal Reserve Bank and $105 million with two correspondent banks.
Northwest Bancshares, Inc. and Subsidiaries
Analysis of Loan Portfolio by Loan Sector (Unaudited)
Commercial real estate loans outstanding
The following table provides the various loan sectors in our commercial real estate portfolio at September 30, 2024:
| Property type | Percent of portfolio | |
|---|---|---|
| 5 or more unit dwelling | 16.6 | % |
| Retail Building | 11.5 | |
| Nursing Home | 11.2 | |
| Commercial office building - non-owner occupied | 8.9 | |
| Manufacturing & industrial building | 5.4 | |
| Warehouse/storage building | 5.1 | |
| Residential acquisition & development - 1-4 family, townhouses and apartments | 4.3 | |
| Commercial office building - owner occupied | 4.0 | |
| Multi-use building - commercial, retail and residential | 3.9 | |
| Multi-use building - office and warehouse | 3.1 | |
| Other medical facility | 3.0 | |
| Single family dwelling | 2.6 | |
| Student housing | 2.1 | |
| Hotel/motel | 2.1 | |
| Agricultural real estate | 2.0 | |
| All other | 14.2 | |
| Total | 100.0 | % |
The following table describes the collateral of our commercial real estate portfolio by state at September 30, 2024:
| State | Percent of portfolio | |
|---|---|---|
| New York | 33.9 | % |
| Pennsylvania | 29.3 | |
| Ohio | 19.8 | |
| Indiana | 8.9 | |
| All other | 8.1 | |
| Total | 100.0 | % |
Northwest Bancshares, Inc. and Subsidiaries
Asset Quality (Unaudited)
(dollars in thousands)
| September 30,<br>2024 | June 30,<br>2024 | March 31,<br>2024 | December 31,<br>2023 | September 30,<br>2023 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Nonaccrual loans current: | |||||||||||
| Residential mortgage loans | $ | 1,585 | 1,563 | 1,351 | 959 | 1,951 | |||||
| Home equity loans | 1,239 | 1,088 | 974 | 871 | 947 | ||||||
| Consumer loans | 1,229 | 1,268 | 1,295 | 1,051 | 1,049 | ||||||
| Commercial real estate loans | 36,735 | 66,181 | 66,895 | 64,603 | 44,639 | ||||||
| Commercial loans | 1,922 | 788 | 934 | 1,182 | 1,369 | ||||||
| Total nonaccrual loans current | $ | 42,710 | 70,888 | 71,449 | 68,666 | 49,955 | |||||
| Nonaccrual loans delinquent 30 days to 59 days: | |||||||||||
| Residential mortgage loans | $ | 37 | 100 | 1,454 | 933 | 48 | |||||
| Home equity loans | 157 | 260 | 125 | 174 | 92 | ||||||
| Consumer loans | 227 | 305 | 294 | 225 | 274 | ||||||
| Commercial real estate loans | 362 | 699 | 574 | 51 | 1,913 | ||||||
| Commercial loans | 444 | 183 | 161 | 139 | 90 | ||||||
| Total nonaccrual loans delinquent 30 days to 59 days | $ | 1,227 | 1,547 | 2,608 | 1,522 | 2,417 | |||||
| Nonaccrual loans delinquent 60 days to 89 days: | |||||||||||
| Residential mortgage loans | $ | 549 | 578 | — | 511 | 66 | |||||
| Home equity loans | 87 | 234 | 488 | 347 | 319 | ||||||
| Consumer loans | 484 | 603 | 381 | 557 | 312 | ||||||
| Commercial real estate loans | 207 | 2,243 | 52 | 831 | 212 | ||||||
| Commercial loans | 48 | 8,088 | 201 | 56 | 291 | ||||||
| Total nonaccrual loans delinquent 60 days to 89 days | $ | 1,375 | 11,746 | 1,122 | 2,302 | 1,200 | |||||
| Nonaccrual loans delinquent 90 days or more: | |||||||||||
| Residential mortgage loans | $ | 5,370 | 4,162 | 4,304 | 6,324 | 7,695 | |||||
| Home equity loans | 2,558 | 2,473 | 2,822 | 3,100 | 2,073 | ||||||
| Consumer loans | 3,265 | 2,433 | 2,659 | 3,212 | 2,463 | ||||||
| Commercial real estate loans | 6,167 | 5,849 | 6,931 | 6,488 | 8,416 | ||||||
| Commercial loans | 14,156 | 3,061 | 3,165 | 2,770 | 2,435 | ||||||
| Total nonaccrual loans delinquent 90 days or more | $ | 31,516 | 17,978 | 19,881 | 21,894 | 23,082 | |||||
| Total nonaccrual loans | $ | 76,828 | 102,159 | 95,060 | 94,384 | 76,654 | |||||
| Total nonaccrual loans | $ | 76,828 | 102,159 | 95,060 | 94,384 | 76,654 | |||||
| Loans 90 days past due and still accruing | 1,045 | 2,511 | 2,452 | 2,698 | 728 | ||||||
| Nonperforming loans | 77,873 | 104,670 | 97,512 | 97,082 | 77,382 | ||||||
| Real estate owned, net | 76 | 74 | 50 | 104 | 363 | ||||||
| Nonperforming assets | $ | 77,949 | 104,744 | 97,562 | 97,186 | 77,745 | |||||
| Nonperforming loans to total loans | 0.69 | % | 0.92 | % | 0.85 | % | 0.85 | % | 0.68 | % | |
| Nonperforming assets to total assets | 0.54 | % | 0.73 | % | 0.67 | % | 0.67 | % | 0.54 | % | |
| Allowance for credit losses to total loans | 1.11 | % | 1.10 | % | 1.09 | % | 1.10 | % | 1.10 | % | |
| Allowance for credit losses to nonperforming loans | 161.56 | % | 119.49 | % | 128.08 | % | 129.01 | % | 161.33 | % |
Northwest Bancshares, Inc. and Subsidiaries
Loans by Credit Quality Indicators (Unaudited)
(dollars in thousands)
| At September 30, 2024 | Pass | Special<br> mention * | Substandard ** | Doubtful | Loss | Loans<br>receivable | |
|---|---|---|---|---|---|---|---|
| Personal Banking: | |||||||
| Residential mortgage loans | $ | 3,246,727 | — | 11,431 | — | — | 3,258,158 |
| Home equity loans | 1,162,951 | — | 4,251 | — | — | 1,167,202 | |
| Consumer loans | 1,992,110 | — | 5,922 | — | — | 1,998,032 | |
| Total Personal Banking | 6,401,788 | — | 21,604 | — | — | 6,423,392 | |
| Commercial Banking: | |||||||
| Commercial real estate loans | 2,634,987 | 87,693 | 271,699 | — | — | 2,994,379 | |
| Commercial loans | 1,808,433 | 51,714 | 26,640 | — | — | 1,886,787 | |
| Total Commercial Banking | 4,443,420 | 139,407 | 298,339 | — | — | 4,881,166 | |
| Total loans | $ | 10,845,208 | 139,407 | 319,943 | — | — | 11,304,558 |
| At June 30, 2024 | |||||||
| Personal Banking: | |||||||
| Residential mortgage loans | $ | 3,312,368 | — | 11,700 | — | — | 3,324,068 |
| Home equity loans | 1,176,187 | — | 4,299 | — | — | 1,180,486 | |
| Consumer loans | 2,074,869 | — | 5,189 | — | — | 2,080,058 | |
| Total Personal Banking | 6,563,424 | — | 21,188 | — | — | 6,584,612 | |
| Commercial Banking: | |||||||
| Commercial real estate loans | 2,682,766 | 130,879 | 213,993 | — | — | 3,027,638 | |
| Commercial loans | 1,673,052 | 47,400 | 21,662 | — | — | 1,742,114 | |
| Total Commercial Banking | 4,355,818 | 178,279 | 235,655 | — | — | 4,769,752 | |
| Total loans | $ | 10,919,242 | 178,279 | 256,843 | — | — | 11,354,364 |
| At March 31, 2024 | |||||||
| Personal Banking: | |||||||
| Residential mortgage loans | $ | 3,370,307 | — | 12,541 | — | — | 3,382,848 |
| Home equity loans | 1,191,957 | — | 4,650 | — | — | 1,196,607 | |
| Consumer loans | 2,113,050 | — | 5,317 | — | — | 2,118,367 | |
| Total Personal Banking | 6,675,314 | — | 22,508 | — | — | 6,697,822 | |
| Commercial Banking: | |||||||
| Commercial real estate loans | 2,714,857 | 131,247 | 182,424 | — | — | 3,028,528 | |
| Commercial loans | 1,698,519 | 52,461 | 23,916 | — | — | 1,774,896 | |
| Total Commercial Banking | 4,413,376 | 183,708 | 206,340 | — | — | 4,803,424 | |
| Total loans | $ | 11,088,690 | 183,708 | 228,848 | — | — | 11,501,246 |
| At December 31, 2023 | |||||||
| Personal Banking: | |||||||
| Residential mortgage loans | $ | 3,413,846 | — | 14,339 | — | — | 3,428,185 |
| Home equity loans | 1,223,097 | — | 4,761 | — | — | 1,227,858 | |
| Consumer loans | 2,120,216 | — | 5,811 | — | — | 2,126,027 | |
| Total Personal Banking | 6,757,159 | — | 24,911 | — | — | 6,782,070 | |
| Commercial Banking: | |||||||
| Commercial real estate loans | 2,670,510 | 124,116 | 179,384 | — | — | 2,974,010 | |
| Commercial loans | 1,637,879 | 6,678 | 14,172 | — | — | 1,658,729 | |
| Total Commercial Banking | 4,308,389 | 130,794 | 193,556 | — | — | 4,632,739 | |
| Total loans | $ | 11,065,548 | 130,794 | 218,467 | — | — | 11,414,809 |
| At September 30, 2023 | |||||||
| Personal Banking: | |||||||
| Residential mortgage loans | $ | 3,459,251 | — | 13,512 | — | — | 3,472,763 |
| Home equity loans | 1,254,985 | — | 3,780 | — | — | 1,258,765 | |
| Consumer loans | 2,150,464 | — | 4,655 | — | — | 2,155,119 | |
| Total Personal Banking | 6,864,700 | — | 21,947 | — | — | 6,886,647 | |
| Commercial Banking: | |||||||
| Commercial real estate loans | 2,632,472 | 123,935 | 166,610 | — | — | 2,923,017 | |
| Commercial loans | 1,476,833 | 3,690 | 20,086 | — | — | 1,500,609 | |
| Total Commercial Banking | 4,109,305 | 127,625 | 186,696 | — | — | 4,423,626 | |
| Total loans | $ | 10,974,005 | 127,625 | 208,643 | — | — | 11,310,273 |
* Includes $2.9 million, $2.5 million, $2.4 million, $7.8 million, and $6.9 million of acquired loans at September 30, 2024, June 30, 2024, March 31, 2024, December 31, 2023, and September 30, 2023, respectively.
** Includes $26.0 million, $24.3 million, $27.2 million, $20.3 million, and $28.9 million of acquired loans at September 30, 2024, June 30, 2024, March 31, 2024, December 31, 2023, and September 30, 2023, respectively.
Northwest Bancshares, Inc. and Subsidiaries
Loan Delinquency (Unaudited)
(dollars in thousands)
| September 30,<br>2024 | * | June 30,<br>2024 | * | March 31,<br>2024 | * | December 31,<br>2023 | * | September 30,<br>2023 | * | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Number of loans and dollar amount of loans) | |||||||||||||||||||||||||
| Loans delinquent 30 days to 59 days: | |||||||||||||||||||||||||
| Residential mortgage loans | 16 | $ | 685 | — | % | 12 | $ | 616 | — | % | 351 | $ | 38,502 | 1.1 | % | 307 | $ | 30,041 | 0.9 | % | 6 | $ | 573 | — | % |
| Home equity loans | 112 | 3,907 | 0.3 | % | 104 | 3,771 | 0.3 | % | 113 | 4,608 | 0.4 | % | 121 | 5,761 | 0.5 | % | 112 | 4,707 | 0.4 | % | |||||
| Consumer loans | 801 | 10,777 | 0.5 | % | 742 | 10,372 | 0.5 | % | 737 | 9,911 | 0.5 | % | 896 | 11,211 | 0.5 | % | 733 | 9,874 | 0.5 | % | |||||
| Commercial real estate loans | 21 | 5,919 | 0.2 | % | 21 | 4,310 | 0.1 | % | 25 | 6,396 | 0.2 | % | 23 | 3,204 | 0.1 | % | 22 | 3,411 | 0.1 | % | |||||
| Commercial loans | 34 | 3,260 | 0.2 | % | 59 | 4,366 | 0.3 | % | 62 | 3,091 | 0.2 | % | 59 | 4,196 | 0.3 | % | 52 | 2,847 | 0.2 | % | |||||
| Total loans delinquent 30 days to 59 days | 984 | $ | 24,548 | 0.2 | % | 938 | $ | 23,435 | 0.2 | % | 1,288 | $ | 62,508 | 0.5 | % | 1,406 | $ | 54,413 | 0.5 | % | 925 | $ | 21,412 | 0.2 | % |
| Loans delinquent 60 days to 89 days: | |||||||||||||||||||||||||
| Residential mortgage loans | 75 | $ | 9,027 | 0.3 | % | 70 | $ | 8,223 | 0.2 | % | 3 | $ | 70 | — | % | 69 | $ | 7,796 | 0.2 | % | 56 | $ | 5,395 | 0.2 | % |
| Home equity loans | 27 | 882 | 0.1 | % | 35 | 1,065 | 0.1 | % | 26 | 761 | 0.1 | % | 37 | 982 | 0.1 | % | 40 | 1,341 | 0.1 | % | |||||
| Consumer loans | 296 | 3,600 | 0.2 | % | 295 | 3,198 | 0.2 | % | 231 | 2,545 | 0.1 | % | 322 | 3,754 | 0.2 | % | 236 | 2,707 | 0.1 | % | |||||
| Commercial real estate loans | 11 | 7,643 | 0.3 | % | 9 | 3,155 | 0.1 | % | 5 | 807 | — | % | 9 | 1,031 | — | % | 13 | 1,588 | 0.1 | % | |||||
| Commercial loans | 19 | 753 | — | % | 22 | 8,732 | 0.5 | % | 27 | 1,284 | 0.1 | % | 16 | 703 | — | % | 15 | 981 | 0.1 | % | |||||
| Total loans delinquent 60 days to 89 days | 428 | $ | 21,905 | 0.2 | % | 431 | $ | 24,373 | 0.2 | % | 292 | $ | 5,467 | — | % | 453 | $ | 14,266 | 0.1 | % | 360 | $ | 12,012 | 0.1 | % |
| Loans delinquent 90 days or more: ** | |||||||||||||||||||||||||
| Residential mortgage loans | 52 | $ | 5,370 | 0.2 | % | 53 | $ | 5,553 | 0.2 | % | 50 | $ | 5,813 | 0.2 | % | 70 | $ | 7,995 | 0.2 | % | 79 | $ | 7,695 | 0.2 | % |
| Home equity loans | 67 | 2,558 | 0.2 | % | 51 | 2,506 | 0.2 | % | 71 | 2,823 | 0.2 | % | 81 | 3,126 | 0.3 | % | 73 | 2,206 | 0.2 | % | |||||
| Consumer loans | 402 | 3,983 | 0.2 | % | 358 | 3,012 | 0.1 | % | 398 | 3,345 | 0.2 | % | 440 | 3,978 | 0.2 | % | 357 | 3,020 | 0.1 | % | |||||
| Commercial real estate loans | 13 | 6,167 | 0.2 | % | 19 | 6,034 | 0.2 | % | 22 | 6,931 | 0.2 | % | 27 | 6,712 | 0.2 | % | 27 | 8,416 | 0.3 | % | |||||
| Commercial loans | 85 | 14,484 | 0.8 | % | 72 | 3,385 | 0.2 | % | 62 | 3,421 | 0.2 | % | 53 | 2,780 | 0.2 | % | 39 | 2,472 | 0.2 | % | |||||
| Total loans delinquent 90 days or more | 619 | $ | 32,562 | 0.3 | % | 553 | $ | 20,490 | 0.2 | % | 603 | $ | 22,333 | 0.2 | % | 671 | $ | 24,591 | 0.2 | % | 575 | $ | 23,809 | 0.2 | % |
| Total loans delinquent | 2,031 | $ | 79,015 | 0.7 | % | 1,922 | $ | 68,298 | 0.6 | % | 2,183 | $ | 90,308 | 0.8 | % | 2,530 | $ | 93,270 | 0.8 | % | 1,860 | $ | 57,233 | 0.5 | % |
* Represents delinquency, in dollars, divided by the respective total amount of that type of loan outstanding.
** Includes purchased credit deteriorated loans of $0.2 million, $0.1 million, $0.4 million, $0.6 million, and $1.4 million at September 30, 2024, June 30, 2024, March 31, 2024, December 31, 2023, and September 30, 2023, respectively.
Northwest Bancshares, Inc. and Subsidiaries
Allowance for Credit Losses (Unaudited)
(dollars in thousands)
| Quarter ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30,<br>2024 | June 30,<br>2024 | March 31,<br>2024 | December 31,<br>2023 | September 30,<br>2023 | |||||||
| Beginning balance | $ | 125,070 | 124,897 | 125,243 | 124,841 | 124,423 | |||||
| Provision | 5,727 | 2,169 | 4,234 | 3,801 | 3,983 | ||||||
| Charge-offs residential mortgage | (255) | (252) | (162) | (266) | (171) | ||||||
| Charge-offs home equity | (890) | (237) | (412) | (133) | (320) | ||||||
| Charge-offs consumer | (3,560) | (2,561) | (4,573) | (3,860) | (3,085) | ||||||
| Charge-offs commercial real estate | (475) | (500) | (349) | (742) | (484) | ||||||
| Charge-offs commercial | (1,580) | (1,319) | (1,163) | (806) | (1,286) | ||||||
| Recoveries | 1,776 | 2,873 | 2,079 | 2,408 | 1,781 | ||||||
| Ending balance | $ | 125,813 | 125,070 | 124,897 | 125,243 | 124,841 | |||||
| Net charge-offs to average loans, annualized | 0.18 | % | 0.07 | % | 0.16 | % | 0.12 | % | 0.13 | % | |
| Nine months ended September 30, | |||||||||||
| --- | --- | --- | --- | --- | --- | ||||||
| 2024 | 2023 | ||||||||||
| Beginning balance | $ | 125,243 | 118,036 | ||||||||
| ASU 2022-02 Adoption | — | 426 | |||||||||
| Provision | 12,130 | 14,863 | |||||||||
| Charge-offs residential mortgage | (669) | (923) | |||||||||
| Charge-offs home equity | (1,539) | (719) | |||||||||
| Charge-offs consumer | (10,694) | (8,591) | |||||||||
| Charge-offs commercial real estate | (1,324) | (1,624) | |||||||||
| Charge-offs commercial | (4,062) | (3,360) | |||||||||
| Recoveries | 6,728 | 6,733 | |||||||||
| Ending balance | $ | 125,813 | 124,841 | ||||||||
| Net charge-offs to average loans, annualized | 0.14 | % | 0.10 | % |
Northwest Bancshares, Inc. and Subsidiaries
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 | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| September 30, 2024 | June 30, 2024 | March 31, 2024 | December 31, 2023 | September 30, 2023 | |||||||||||||||||||||
| Average<br>balance | Interest | Avg. yield/ cost | Average<br>balance | Interest | Avg.<br>yield/<br>cost | Average<br>balance | Interest | Avg.<br>yield/<br>cost | Average<br>balance | Interest | Avg.<br>yield/<br>cost | Average<br>balance | Interest | Avg.<br>yield/<br>cost | |||||||||||
| Assets: | |||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||
| Residential mortgage loans | $ | 3,286,316 | 31,537 | 3.84 | % | $ | 3,342,749 | 32,182 | 3.85 | % | $ | 3,392,524 | 32,674 | 3.85 | % | $ | 3,442,308 | 32,739 | 3.80 | % | $ | 3,476,446 | 32,596 | 3.75 | % |
| Home equity loans | 1,166,866 | 17,296 | 5.90 | % | 1,183,497 | 17,303 | 5.88 | % | 1,205,273 | 17,294 | 5.77 | % | 1,238,420 | 17,590 | 5.64 | % | 1,264,134 | 17,435 | 5.47 | % | |||||
| Consumer loans | 1,955,988 | 26,034 | 5.29 | % | 2,048,396 | 26,334 | 5.17 | % | 2,033,620 | 25,033 | 4.95 | % | 2,055,783 | 24,667 | 4.76 | % | 2,092,023 | 23,521 | 4.46 | % | |||||
| Commercial real estate loans | 2,995,032 | 47,473 | 6.31 | % | 3,023,762 | 45,658 | 5.97 | % | 2,999,224 | 43,425 | 5.73 | % | 2,950,589 | 43,337 | 5.75 | % | 2,911,145 | 41,611 | 5.59 | % | |||||
| Commercial loans | 1,819,400 | 34,837 | 7.62 | % | 1,770,345 | 33,229 | 7.43 | % | 1,714,667 | 31,857 | 7.35 | % | 1,564,617 | 28,801 | 7.20 | % | 1,447,211 | 26,239 | 7.09 | % | |||||
| Total loans receivable (a) (b) (d) | 11,223,602 | 157,177 | 5.57 | % | 11,368,749 | 154,706 | 5.47 | % | 11,345,308 | 150,283 | 5.33 | % | 11,251,717 | 147,134 | 5.19 | % | 11,190,959 | 141,402 | 5.01 | % | |||||
| Mortgage-backed securities (c) | 1,735,728 | 10,908 | 2.51 | % | 1,734,085 | 9,426 | 2.17 | % | 1,717,306 | 7,944 | 1.85 | % | 1,741,687 | 7,951 | 1.83 | % | 1,781,010 | 8,072 | 1.81 | % | |||||
| Investment securities (c) (d) | 263,127 | 1,504 | 2.29 | % | 287,262 | 1,316 | 1.83 | % | 333,752 | 1,430 | 1.71 | % | 335,121 | 1,425 | 1.70 | % | 336,125 | 1,431 | 1.70 | % | |||||
| FHLB stock, at cost | 20,849 | 394 | 7.51 | % | 25,544 | 498 | 7.84 | % | 32,249 | 607 | 7.57 | % | 35,082 | 665 | 7.52 | % | 37,722 | 668 | 7.03 | % | |||||
| Other interest-earning deposits | 173,770 | 2,312 | 5.29 | % | 135,520 | 1,791 | 5.23 | % | 61,666 | 832 | 5.34 | % | 71,987 | 970 | 5.27 | % | 67,143 | 915 | 5.33 | % | |||||
| Total interest-earning assets | 13,417,076 | 172,295 | 5.11 | % | 13,551,160 | 167,737 | 4.98 | % | 13,490,281 | 161,096 | 4.80 | % | 13,435,594 | 158,145 | 4.67 | % | 13,412,959 | 152,488 | 4.51 | % | |||||
| Noninterest-earning assets (e) | 934,593 | 907,432 | 918,331 | 893,426 | 966,364 | ||||||||||||||||||||
| Total assets | $ | 14,351,669 | $ | 14,458,592 | $ | 14,408,612 | $ | 14,329,020 | $ | 14,379,323 | |||||||||||||||
| Liabilities and shareholders’ equity: | |||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||
| Savings deposits (g) | $ | 2,151,933 | 6,680 | 1.23 | % | $ | 2,144,278 | 5,957 | 1.12 | % | $ | 2,122,035 | 5,036 | 0.95 | % | $ | 2,102,320 | 4,045 | 0.76 | % | $ | 2,116,759 | 2,695 | 0.51 | % |
| Interest-bearing demand deposits (g) | 2,567,682 | 7,452 | 1.15 | % | 2,555,863 | 6,646 | 1.05 | % | 2,538,823 | 5,402 | 0.86 | % | 2,573,634 | 4,921 | 0.76 | % | 2,569,229 | 4,086 | 0.63 | % | |||||
| Money market deposit accounts (g) | 1,966,684 | 9,170 | 1.85 | % | 1,957,990 | 8,601 | 1.77 | % | 1,961,332 | 7,913 | 1.62 | % | 1,997,116 | 7,446 | 1.48 | % | 2,112,228 | 6,772 | 1.27 | % | |||||
| Time deposits (g) | 2,830,737 | 30,896 | 4.34 | % | 2,832,720 | 31,550 | 4.48 | % | 2,697,983 | 29,335 | 4.37 | % | 2,447,335 | 24,187 | 3.92 | % | 2,164,559 | 18,136 | 3.32 | % | |||||
| Borrowed funds (f) | 220,677 | 2,266 | 4.09 | % | 323,191 | 3,662 | 4.56 | % | 469,697 | 5,708 | 4.89 | % | 548,089 | 6,826 | 4.94 | % | 643,518 | 7,937 | 4.89 | % | |||||
| Subordinated debt | 114,396 | 1,148 | 4.01 | % | 114,308 | 1,148 | 4.02 | % | 114,225 | 1,148 | 4.02 | % | 114,134 | 1,148 | 4.02 | % | 114,045 | 1,148 | 4.03 | % | |||||
| Junior subordinated debentures | 129,727 | 2,467 | 7.56 | % | 129,663 | 2,449 | 7.47 | % | 129,597 | 2,459 | 7.51 | % | 129,532 | 2,512 | 7.59 | % | 129,466 | 2,456 | 7.42 | % | |||||
| Total interest-bearing liabilities | 9,981,836 | 60,079 | 2.39 | % | 10,058,013 | 60,013 | 2.40 | % | 10,033,692 | 57,001 | 2.28 | % | 9,912,160 | 51,085 | 2.04 | % | 9,849,804 | 43,230 | 1.74 | % | |||||
| Noninterest-bearing demand deposits (g) | 2,579,775 | 2,595,511 | 2,567,781 | 2,675,788 | 2,757,091 | ||||||||||||||||||||
| Noninterest-bearing liabilities | 217,161 | 263,634 | 257,269 | 234,177 | 257,141 | ||||||||||||||||||||
| Total liabilities | 12,778,772 | 12,917,158 | 12,858,742 | 12,822,125 | 12,864,036 | ||||||||||||||||||||
| Shareholders’ equity | 1,572,897 | 1,541,434 | 1,549,870 | 1,506,895 | 1,515,287 | ||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 14,351,669 | $ | 14,458,592 | $ | 14,408,612 | $ | 14,329,020 | $ | 14,379,323 | |||||||||||||||
| Net interest income/Interest rate spread FTE | 112,216 | 2.72 | % | 107,724 | 2.58 | % | 104,095 | 2.52 | % | 107,060 | 2.63 | % | 109,258 | 2.77 | % | ||||||||||
| Net interest-earning assets/Net interest margin FTE | $ | 3,435,240 | 3.33 | % | $ | 3,493,147 | 3.20 | % | $ | 3,456,589 | 3.10 | % | $ | 3,523,434 | 3.16 | % | $ | 3,563,155 | 3.23 | % | |||||
| Tax equivalent adjustment (d) | 914 | 883 | 857 | 758 | 890 | ||||||||||||||||||||
| Net interest income, GAAP basis | 111,302 | 106,841 | 103,238 | 106,302 | 108,368 | ||||||||||||||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 1.34X | 1.35X | 1.34X | 1.36X | 1.36X |
(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 (“FTE”) 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 and collateralized borrowings.
(g) Average cost of deposits were 1.78%, 1.76%, 1.61%, 1.37%, and 1.07%, respectively, and average cost of Interest-bearing deposits were 2.27%, 2.24%, 2.06%, 1.77%, and 1.40%, respectively.
Northwest Bancshares, Inc. and Subsidiaries
Average Balance Sheet (Unaudited)
(in thousands)
The following table sets forth certain information relating to the Company’s average balance sheet and reflects the average yield on interest-earning assets and average cost of interest-bearing 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.
| Nine months ended September 30, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||||||
| Average<br>balance | Interest | Avg.<br>yield/<br>cost (h) | Average<br>balance | Interest | Avg.<br>yield/<br>cost (h) | |||||
| Assets | ||||||||||
| Interest-earning assets: | ||||||||||
| Residential mortgage loans | $ | 3,340,332 | 96,392 | 3.85 | % | $ | 3,485,130 | 97,090 | 3.71 | % |
| Home equity loans | 1,185,145 | 51,893 | 5.85 | % | 1,273,878 | 50,467 | 5.30 | % | ||
| Consumer loans | 2,012,461 | 77,401 | 5.14 | % | 2,119,717 | 66,977 | 4.22 | % | ||
| Commercial real estate loans | 3,005,966 | 136,556 | 6.07 | % | 2,857,555 | 117,074 | 5.40 | % | ||
| Commercial loans | 1,768,325 | 99,923 | 7.55 | % | 1,312,750 | 67,465 | 6.78 | % | ||
| Loans receivable (a) (b) (d) | 11,312,229 | 462,165 | 5.46 | % | 11,049,030 | 399,073 | 4.83 | % | ||
| Mortgage-backed securities (c) | 1,729,064 | 28,278 | 2.18 | % | 1,849,567 | 24,935 | 1.80 | % | ||
| Investment securities (c) (d) | 294,598 | 4,251 | 1.92 | % | 364,956 | 4,909 | 1.79 | % | ||
| FHLB stock, at cost | 26,195 | 1,499 | 7.64 | % | 40,945 | 2,202 | 7.19 | % | ||
| Other interest-earning deposits | 124,037 | 4,935 | 5.31 | % | 64,560 | 1,931 | 4.00 | % | ||
| Total interest-earning assets | 13,486,123 | 501,128 | 4.96 | % | 13,369,058 | 433,050 | 4.33 | % | ||
| Noninterest-earning assets (e) | 919,969 | 880,799 | ||||||||
| Total assets | $ | 14,406,092 | $ | 14,249,857 | ||||||
| Liabilities and shareholders’ equity | ||||||||||
| Interest-bearing liabilities: | ||||||||||
| Savings deposits (g) | $ | 2,139,461 | 17,673 | 1.10 | % | $ | 2,163,564 | 4,777 | 0.30 | % |
| Interest-bearing demand deposits (g) | 2,554,172 | 19,501 | 1.02 | % | 2,550,433 | 6,684 | 0.35 | % | ||
| Money market deposit accounts (g) | 1,962,019 | 25,684 | 1.75 | % | 2,246,422 | 17,289 | 1.03 | % | ||
| Time deposits (g) | 2,787,306 | 91,780 | 4.40 | % | 1,733,428 | 35,993 | 2.78 | % | ||
| Borrowed funds (f) | 337,427 | 11,636 | 4.61 | % | 740,011 | 26,077 | 4.71 | % | ||
| Subordinated debt | 114,310 | 3,444 | 4.02 | % | 113,958 | 3,444 | 4.03 | % | ||
| Junior subordinated debentures | 129,662 | 7,375 | 7.60 | % | 129,401 | 6,889 | 7.02 | % | ||
| Total interest-bearing liabilities | 10,024,357 | 177,093 | 2.36 | % | 9,677,217 | 101,153 | 1.40 | % | ||
| Noninterest-bearing demand deposits (g) | 2,581,018 | 2,822,178 | ||||||||
| Noninterest-bearing liabilities | 245,917 | 239,034 | ||||||||
| Total liabilities | 12,851,292 | 12,738,429 | ||||||||
| Shareholders’ equity | 1,554,800 | 1,511,428 | ||||||||
| Total liabilities and shareholders’ equity | $ | 14,406,092 | $ | 14,249,857 | ||||||
| Net interest income/Interest rate spread | 324,035 | 2.60 | % | 331,897 | 2.93 | % | ||||
| Net interest-earning assets/Net interest margin | $ | 3,461,766 | 3.21 | % | $ | 3,691,841 | 3.32 | % | ||
| Tax equivalent adjustment (d) | 2,654 | 2,516 | ||||||||
| Net interest income, GAAP basis | 321,381 | 329,381 | ||||||||
| Ratio of interest-earning assets to interest-bearing liabilities | 1.35X | 1.38X |
(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 were 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 (“FTE”) 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 and collateralized borrowings.
(g)Average cost of deposits were 1.72% and 0.75%, respectively and average cost of Interest-bearing deposits were 2.19% and 1.00%, respectively.
20
nwbiq324earningspresenta
Third Quarter 2024 Earnings Conference Call October 29, 2024 Louis J. Torchio T.K. Creal President and Chief Executive Officer Chief Credit Officer Douglas M. Schosser Joseph D. Canfield Chief Financial Officer Chief Accounting Officer
Forward-looking Statements and Additional Information The information contained in this presentation may contain forward-looking statements. When used or incorporated by reference in disclosure documents, the words “believe,” “anticipate,” “estimate,” “expect,” “project,” “target,” “goal” and similar expressions are intended to identify forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Exchange Act of 1934. These forward-looking statements include but are not limited to: statements of our goals, intentions and expectations; statements regarding our business plans, prospects, growth and operating strategies; statements regarding the quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits. These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Such forward-looking statements are subject to certain risks, uncertainties and assumptions, including but not limited to the following: inflation and changes in the interest rate environment that reduce our margins, our loan origination, or the fair value of financial instruments; changes in asset quality, including increases in default rates on loans and higher levels of nonperforming loans and loan charge-offs generally; changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements; changes in federal, state, or local tax laws and tax rates; general economic conditions, either nationally or in our market areas, that are different than expected, including inflationary or recessionary pressures; adverse changes in the securities and credit markets; cyber-security concerns, including an interruption or breach in the security of our website or other information systems; technological changes that may be more difficult or expensive than expected; changes in liquidity, including the size and composition of our deposit portfolio, and the percentage of uninsured deposits in the portfolio; the ability of third-party providers to perform their obligations to us; competition among depository and other financial institutions, including with respect to deposit gathering, service charges and fees; our ability to enter new markets successfully and capitalize on growth opportunities; our ability to manage our internal growth and our ability to successfully integrate acquired entities, businesses or branch offices; changes in consumer spending, borrowing and savings habits; our ability to continue to increase and manage our commercial and personal loans; possible impairments of securities held by us, including those issued by government entities and government sponsored enterprises; changes in the value of our goodwill or other intangible assets; the impact of the economy on our loan portfolio (including cash flow and collateral values), investment portfolio, customers and capital market activities; our ability to receive regulatory approvals for proposed transactions or new lines of business; the effects of any federal government shutdown or the inability of the federal government to manage debt limits; changes in the financial performance and/or condition of our borrowers; the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Securities and Exchange Commission, the Public Company Accounting Oversight Board, the Financial Accounting Standards Board (“FASB”) and other accounting standard setters; changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses; our ability to access cost-effective funding; the effect of global or national war, conflict, or terrorism; our ability to manage market risk, credit risk and operational risk; the disruption to local, regional, national and global economic activity caused by infectious disease outbreaks, and the significant impact that any such outbreaks may have on our growth, operations and earnings; the effects of natural disasters and extreme weather events; changes in our ability to continue to pay dividends, either at current rates or at all; our ability to retain key employees; and our compensation expense associated with equity allocated or awarded to our employees. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected or projected. These and other risk factors are more fully described in this presentation and in the Northwest Bancshares, Inc. (the “Company”) Annual Report on Form 10-K for the year ended December 31, 2023 under the section entitled "Item 1A - Risk Factors," and from time to time in other filings made by the Company with the SEC. These forward-looking statements speak only at the date of the presentation. The Company expressly disclaims any obligation to publicly release any updates or revisions to reflect any change in the Company’s expectations with regard to any change in events, conditions or circumstances on which any such statement is based. Use of Non-GAAP Financial Measures This presentation contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management uses these “non-GAAP” measures in its analysis of the Company’s performance. Management believes these non-GAAP financial measures allow for better comparability of period-to-period operating performance. Additionally, the Company believes this information is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. See the end of this presentation for reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures where applicable. 2
3 FOUNDED 1896 TOTAL ASSETS $14.4B TOTAL DEPOSITS $12.1B TOTAL LOANS $11.3B FINANCIAL CENTERS 130 ROA 0.93% ROTCE 11.3%(1) NIM 3.33% Northwest Bancshares At-A-Glance Diluted EPS $0.26 For the quarter ended September 30, 2024 (1) Non-GAAP measure- see slides 17-19 for reconciliation
3Q 2024 Highlights: Balance Sheet Management results in Solid Performance 4 Balance Sheet Net Interest Margin Noninterest Income Noninterest Expense Credit Quality • Loan growth muted with focus on re-mixing portfolio and profitable growth • Average commercial loans increased 3% QoQ and 26% YoY • Average deposits flat QoQ and up 3% YoY • Improved 13 bps due to higher average loan and security yields, 4bps due to a nonaccrual loan payoff in 3Q • Cost of funds decreased 1bp due to lower average borrowings • Increase of $37 million QoQ, 2Q24 included a $39.4 million loss on sale of investment securities • Excluding realized loss, 9% decrease QoQ led by lower SBA sale gains • 2% decrease vs 2Q24 driven by decrease in office expense and restructuring costs • Partially offset by increase in personnel expenses • Non-performing assets remains well controlled • Overall ALLL coverage of 1.11% and $5.7 million provision expense for loan losses
6.83 6.74 6.63 6.57 6.41 4.36 4.52 4.71 4.79 4.81 5.01% 5.19% 5.33% 5.47% 5.57% 4.30% 4.80% 5.30% 5.80% 6.30% - 2.00 4.00 6.00 8.00 10.00 12.00 3Q23 4Q23 1Q24 2Q24 3Q24 Personal Banking Loans Commercial Loans Loan Yield 11,369 (56) (17) (92) (29) 49 11,224 2Q24 Residential Home Equity Consumer CRE Commercial 3Q24 10,700 10,800 10,900 11,000 11,100 11,200 11,300 11,400 11,500 Loan Balances 5 3Q24 vs. 2Q24 3Q24 vs. 3Q23 Average balances ($ Millions) 3Q24 Change $ Change % Change $ Change % Residential mortgage 3,287 -56 -1.7% -190 -5.5% Home equity 1,167 -17 -1.4% -97 -7.7% Consumer 1,956 -92 -4.5% -136 -6.5% Commercial real estate 2,995 -29 -1.0% 84 2.9% Commercial 1,819 49 2.8% 372 25.7% Total Loans 11,224 -145 -1.3% 33 0.3% Change in Loan Mix • Average loans decreased 1.3% QoQ ,portfolio mix continued to become more commercial weighted • Company focused on profitable growth to drive margin expansion • Average commercial loans increased $49 million compared to 2Q24, or 2.8% despite some significant payoffs • Commercial growth funded through declines in residential mortgage and consumer portfolios, down 1.7% and 4.5% Summary Comments Loan Mix Change Loans declined $145MM or -1.3% +3% $ m illi on s $ bi llio ns Combined Loan Average Balances
Deposit Balances 6 3Q24 vs. 2Q24 3Q24 vs. 3Q23 Average balances ($ Millions) 3Q24 Change $ Change % Change $ Change % Demand 2,580 -16 -0.6% -177 -6.4% Interest-bearing Demand 2,567 12 0.5% -2 -0.1% Money Market 1,967 9 0.4% -145 -6.9% Savings 2,152 8 0.4% 35 1.7% Time 2,831 -2 -0.1% 666 30.8% Total Deposits 12,097 11 0.1% 377 3.2% Change in Deposit Mix Deposit Growth and Cost of Deposits • Deposit balances remained strong as average total deposits were stable QoQ and grew 3.2% versus 3Q23 • Customer (non-brokered) average deposits grew $120 million QoQ while brokered deposits decreased $110 million QoQ • The pace of volumes into higher-cost CDs and high-yield savings products is continuing to slow • Cost of deposits increased 2 bps QoQ, the lowest in the past six quarters Summary Comments Deposit Mix Change $ m illi on s $ m illi on s 12,086 (16) (2) 8 9 12 12,097 2Q24 Demand Time Savings Money Market Int-bearing demand 3Q24 12,000 12,020 12,040 12,060 12,080 12,100 12,120 7,443 7,352 7,229 7,296 7,299 4,277 4,444 4,659 4,791 4,798 11,720 11,796 11,888 12,086 12,097 1.07% 1.37% 1.61% 1.76% 1.78% -0.30% 0.20% 0.70% 1.20% 1.70% 2.20% 2.70% 3.20% 3.70% - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 3Q23 4Q23 1Q24 2Q24 3Q24 Demand and Savings Time and Money Market Total Cost of Deposits
(4) 4 6 7 333 320 2Q24 Deposits Borrowings Investments Loans 3Q24 280 290 300 310 320 330 340 8,963 9,120 9,320 9,491 9,517 887 792 714 567 465 1.74% 2.04% 2.28% 2.40% 2.39% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 8,000 8,500 9,000 9,500 10,000 10,500 3Q23 4Q23 1Q24 2Q24 3Q24 Interest Bearing Deposits Borrowings Cost of Funds % 109.3 107.1 104.1 107.7 112.2 3.23 3.16 3.10 3.20 3.33 2.95 3.15 3.35 3.55 3.75 100.0 102.0 104.0 106.0 108.0 110.0 112.0 114.0 3Q23 4Q23 1Q24 2Q24 3Q24 Net Intererst Income NIM% Net Interest Income (FTE) and NIM Trends $ m illi on s Net Interest Margin 7 • Net interest income increased 4% with NIM expanding to 3.33% from 3.20% in the previous quarter, with 4bps of the increase due to a non-accrual loan payoff in 3Q • Increased loan yields from growth and repricing, including the non- accrual loan payoff, drove a 13 bps increase in interest earning assets • Total cost of funds decreased 1 bps as lower average borrowing balances at market rates offset higher average deposit rates. • Average borrowing balances decreased $102 million QoQ $ m illi on s Summary Comments B ps Drivers of Net Interest Margin (FTE) Change $108 ($1) $1 $2 $2 $112 Net FTE Interest Income ($MM) Cost of Funds
Earning Asset & Funding Mix 8 Funding MixEarning Asset Mix Ending balances ($ Millions) 3Q24 Total % Fixed % Floating % Periodic % Securities 1,879 14% 96% 0% 4% Residential mortgage 3,249 25% 97% 2% 1% Home equity 1,167 9% 64% 36% 0% Consumer 1,998 15% 97% 3% 0% Commercial real estate 2,994 23% 25% 45% 30% Commercial 1,887 14% 27% 70% 3% Total 13,174 100% 68% 24% 8% Ending balances ($ Millions) 3Q24 Total % < 1 Year > 1 Year Demand 2,582 21% 100% 0% Interest-bearing Demand 2,677 22% 100% 0% Money Market 1,957 16% 100% 0% Savings 2,146 17% 99% 1% Time 2,710 22% 96% 4% Borrowings 449 2% 61% 39% Total 12,521 100% 98% 2% • Growth in Commercial Loans is gradually increasing floating % of total earning assets • Consumer loans are fixed but with shorter duration (vehicle loans) • Granular diversified deposit book, average balance of $18,000 • Customer deposits consists of 687K accounts with an average tenure of 12.2 years • Time Deposits have very short duration allowing for benefit of lower rates to impact net interest expense.
HTM, 38% AFS, 62% Municipal 4% Treasury/Agency 8% Corporate 1% Agency MBS 18% Agency CMO 69% 1,987 (11) (1) 1 8 32 2,016 2Q24 Agency MBS Treasury/Agency Municipal Corporate Agency CMO 3Q24 1,800 1,850 1,900 1,950 2,000 2,050 2,100 Securities Portfolio 9 • Achieved previously announced securities portfolio restructure metrics • Payback period of ~3 years from the restructure remain unchanged • Securities portfolio yield increased 10bps to 2.55% in the quarter • Portfolio effective duration is 5.6 years • 38% of portfolio is HTM to protect capital Summary Comments 2.55% 2.45% Securities Book Yield Securities Portfolio QoQ change Securities Portfolio $ m illi on s Amortized Cost Securities Classification
30.9 29.2 28.0 -8.9 27.8 30.9 29.2 28.0 30.6 27.8 (20.00) (10.00) - 10.00 20.00 30.00 40.00 3Q23 4Q23 1Q24 2Q24 3Q24 Total Non-interest Income Total Non-intereince income - adjusted* Noninterest Income 10 • Excluding 2Q24 $39.4 million loss on the sale of investment securities, noninterest income decreased $2.7 million QoQ • Continued grow in Service charges and Trust income were offset by lower gain on sale of SBA loans and a MTM loss on equity method investment in 3Q24 • Noninterest income decreased $3.1MM vs 3Q23 driven by a BOLI claim benefit in 2023 Summary Comments Noninterest Income Trend $ m illi on s $ in thousands 3Q24 vs. 2Q24 3Q24 vs. 3Q23 Non-interest Income 3Q24 Change $ Change % Change $ Change % Service charges and fees 15,932 405 2.6% 662 4.3% Trust and other financial services 7,924 358 4.7% 839 11.8% Other operating income 1,027 -2,228 -68.4% -1,983 -65.9% Gain on sale loans 667 -790 -54.2% 366 121.6% Bank-owned life insurance 1,434 63 4.6% -3,127 -68.6% Mortgage banking income 744 -157 -17.4% 112 17.7% Gain on real estate owned, net 105 -382 -78.4% 76 262.1% Gain / (Loss) on Sale Investments 0 39,413 100.0% 0 NA Total Non-interest Income 27,833 36,682 414.5% -3,055 -9.9% Total Noninterest Income - Adjusted* 27,833 -2,731 -8.9% - 3,055 -9.9% * Excludes Gain / (Loss) on Sale MSR and Gain / (Loss) on Sale Investments
51.2 50.2 51.5 53.5 56.2 36.3 38.1 37.5 37.0 34.2 - 2.4 1.0 1.9 0.4 87.5 90.7 90.0 92.4 90.8 62.3% 64.7% 67.4% 65.4% 64.8% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 140.0% 160.0% 180.0% 200.0% - 20.0 40.0 60.0 80.0 100.0 120.0 3Q23 4Q23 1Q24 2Q24 3Q24 Personnel Non-personnel Restructuring Efficiency Ratio Noninterest Expense 11 • Disciplined expense management led to a QoQ 1.8% decrease in expenses • Compensation and benefits growth vs 2Q24 attributed to additional temporary contracted employees, YoY increase due to buildout of Commercial Business and related support functions • Office operations decrease reflects a decrease in fraud losses Summary Comments Expense Mix and Efficiency Trend $ m illi on s * Non-GAAP financial measure; See "Use of non-GAAP Financial Measures” and Non-GAAP reconciliations herein. $ in thousands 3Q24 vs. 2Q24 3Q24 vs 3Q23 Non-interest Expense 3Q24 Change $ Change % Change $ Change % Compensation and employee benefits 56,186 2,655 5.0% 4,943 9.6% Processing expenses 14,570 -125 -0.9% -102 -0.7% Premises and occupancy costs 7,115 -349 -4.7% 63 0.9% Office operations 2,811 -1,008 -26.4% -587 -17.3% Professional services 3,302 -426 -11.4% 300 10.0% Federal deposit insurance premiums 2,763 -102 -3.6% 422 18.0% Marketing expenses 2,004 -406 -16.8% -375 -15.8% Merger, asset disposition and restructuring expense 43 -1,872 -97.8% 43 NA Other 1,973 -20 -1.0% -1,510 -43.4 Total Non-interest Expense 90,767 -1,653 -1.8% 3,197 3.7% 3Q23 4Q23 1Q24 2Q24 3Q24 Efficiency Ratio 62.9% 66.9% 68.6% 94.3% 65.2% Efficiency Ratio* 62.3% 64.7% 67.4% 65.4% 64.8%
125.1 (5.0) 5.7 125.8 2Q24 Net Charge-offs Provision 3Q24 90.0 95.0 100.0 105.0 110.0 115.0 120.0 125.0 130.0 Allowance for Credit Losses 12 $ m illi on s • Overall ALLL coverage remains strong, increasing to 1.11% • Net charge-offs of 18 bps increased vs 2Q24 that were lower due to recoveries in that quarter • $5.7 million provision expense for loan losses based on CECL modeling Summary Comments Allowance Quarter-over-Quarter Change Total Loans and Allowance $ m illi on s Net Charge-offs and Provision $ m illi on s 1.11% 1.10% Allowance to Loans 11,310 11,415 11,501 11,354 11,305 1.10% 1.10% 1.09% 1.10% 1.11% 1.00% 1.10% 1.20% 1.30% 1.40% 11,000 11,100 11,200 11,300 11,400 11,500 11,600 3Q23 4Q23 1Q24 2Q24 3Q24 Loan Balances Allowance to Loans 4.0 3.8 4.2 2.2 5.7 0.13% 0.12% 0.16% 0.07% 0.18% 0.00% 0.06% 0.12% 0.18% 0.24% 0.30% 0.36% 0.42% 0.48% - 1.0 2.0 3.0 4.0 5.0 6.0 7.0 3Q23 4Q23 1Q24 2Q24 3Q24 Provision for Credit Losses - Loans Net Charge-offs to Average Loans
208.6 218.5 228.8 256.8 319.9 1.84% 1.91% 1.99% 2.26% 2.83% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% (10.0) 40.0 90.0 140.0 190.0 240.0 290.0 340.0 3Q23 4Q23 1Q24 2Q24 3Q24 Classified Loans Classified Loans to Total Loans Credit Quality 13 $ m illi on s • Disciplined underwriting focus has resulted in credit risk metrics remaining steady and below pre-pandemic as well as national levels • Non-performing assets improved due to pay-off of a commercial credit during the quarter • 3Q24 increase in classified assets is reflective of the long-term health care segment exposure Summary Comments Non-Performing Assets 30 Day Loan Delinquency $ m illi on s Classified Loans $ m illi on s 57.2 93.3 90.3 68.3 79.0 0.50% 0.79% 0.76% 0.59% 0.70% -0.10% 0.40% 0.90% 1.40% - 20.0 40.0 60.0 80.0 100.0 3Q23 4Q23 1Q24 2Q24 3Q24 Delinquent Loans Delinquency Percentage 78 97 98 105 78 0.54% 0.67% 0.67% 0.73% 0.54% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 0 20 40 60 80 100 120 3Q23 4Q23 1Q24 2Q24 3Q24 Nonperformaing Assets Percent of Total Loans
Nursing Home 25% Other Non RE Collateral… Commercial Office Building… 5 or More Unit Dwelling 8% Retail Building 7% Other Medical Facility 6% All Others ~20 other property types 35% Commercial/CRE Loan Distribution 14 • Diverse portfolio has allowed Northwest to avoid material industry issues; Immaterial large metro office or rent controlled multi- family concentrations • Health care sector is a focus, see detail on slide 16 • Maturity and interest rate rollover risk is not significant Classified Loan by Collateral Type Commercial Commitments By IndustrySummary Comments Real Estate and Rental and Leasing 35.6% Manufacturing 11.2% Health Care and Social Assistance 10.3% Construction 4.9% Retail Trade 4.7% All Others ~20 other industries 33.3% $6.4B 47% of Total Loan Commitments $320MM 2.8% of Total Loan Outstandings
5 or More Unit Dwelling 14% Retail Building 13% Nursing Home 12% Commercial Office Building NonOwner Occupied 10% Manufacturing & Industrial Building 6% All Others ~30 other property types 46% $3.1B 27% of Total Loan Outstandings Commercial Real Estate Concentration 15 • $362MM in exposure of which 22% is classified with no material delinquency • Portfolio is well diversified geographically - $105MM Ohio - $85MM New York - $63MM Pennsylvania - $27MM Indiana • While there is elevated risk in the industry due to inflation effects on particularly personnel expenses and interest rates, industry occupancy has returned to pre-pandemic levels. • Reimbursement rates from Medicare/Medicaid are finally catching up with inflation. • Market appetite exists from an M&A perspective providing exit options Regulatory CRE Concentration 167% of T1+ACL Property Type Commercial Office Geographic Diversification CBSA Commitment Buffalo NY $119,413,759 Harrisburg PA $40,453,928 Rochester NY $37,465,764 New York NY $28,631,665 Cleveland OH $24,569,468 Total 250,534,584
2024 Outlook 16 $ in Millions 1Q24 2Q24 3Q24 4Q24 Guidance Average Loans 11,345 11,369 11,224 Profitability and credit discipline keeps growth in low single digits per quarter Average Deposits 11,888 12,086 12,097 Stable deposit balances expected through managed cost Net Interest Margin 3.10% 3.20% *3.33% Low single digit margin expansion expected vs 3Q Noninterest Income 28.0 -8.8 27.8 Mid single digit growth off 3Q level Noninterest Expense 90.0 92.4 90.8 Low single digit growth off adjusted base per quarter Effective Tax Rate 22.7% 20.1% 22.7% Expected to be consistent with 3Q rate Net charge-offs 0.16% 0.07% 0.18% Trend towards normalized net charge-off (25bps- 35bps) Note: Low single digits is 0 – 2%, Mid single digit is 3%-6%, High single digit is 7%-9% *-3Q net interest margin included 4bps positive impact from non-accrual loan payoff
Non-GAAP Reconciliation 17*Dollars in thousands, except per share amounts
Non-GAAP Reconciliation – Continued 18 *Dollars in thousands