Columbus, Ohio — October 30, 2024
Northwest Bancshares, Inc., 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
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
total deposits
|
|
Number of
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
total deposits
|
|
Number of
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
|
