Columbus, Ohio — October 23, 2023

 

Northwest Bancshares, Inc., (the “Company”), (NasdaqGS: NWBI) announced net income for the quarter ended September 30, 2023 of $39.2 million, or $0.31 per diluted share. This represents an increase of $1.9 million, or 5.1%, compared to the same quarter last year, when net income was $37.3 million, or $0.29 per diluted share. The annualized returns on average shareholders’ equity and average assets for the quarter ended September 30, 2023 were 10.27% and 1.08% compared to 9.84% and 1.05% for the same quarter last year.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.20 per share payable on November 14, 2023 to shareholders of record as of November 2, 2023. This is the 116th 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, 2023, this represents an annualized dividend yield of approximately 7.8%.

 

Louis J. Torchio, President and CEO, added, “Despite the economic, liquidity and interest rate headwinds, we are very pleased with current quarter results including strong net income of $39.2 million, or $0.31 per share. While net interest margins are still a challenge for the industry, we are encouraged by our decline of just five basis points during the quarter. Expenses were higher as we continue to hire the talent and build out the infrastructure necessary to propel the organization to a higher level of performance. Finally, asset quality remains positively resilient and overall stable.”

Mr. Torchio continued, “We continue to execute upon our strategic direction of transforming our organization into a more innovative and proactive commercial institution. Our year-to-date commercial loan growth of $480.0 million, or 12.1%, has pushed our overall commercial loan mix from 36% of total loans at the beginning of the year to over 39% at September 30. In addition, noninterest income represented over 22% of total revenue in the current quarter compared to just 19% during the same quarter last year. From a funding perspective, our deposit base remains strong and stable, and we have the advantage of being able to redirect cashflows from investment securities, mortgage loans and consumer loans to continue to grow more profitable commercial relationships.”

Net interest income decreased by $4.4 million, or 3.9%, to $108.4 million for the quarter ended September 30, 2023, from $112.7 million for the quarter ended September 30, 2022. This decrease in net interest income resulted primarily from a $37.4 million increase in interest expense as result of increases in both the average balance and average cost of interest-bearing liabilities. The average balance of interest-bearing liabilities increased $603.5 million, or 6.5%, to $9.850 billion for the quarter ended September 30, 2023 from $9.246 billion for the quarter ended September 30, 2022, driven by an increase in time deposits and borrowed funds. In addition, the cost of interest-bearing liabilities increased to 1.74% for the quarter ended September 30, 2023 from 0.25% for the quarter ended September 30, 2022 due to higher market interest rates. Partially offsetting this increase in interest expense was a $33.0 million increase in interest income. Cash and marketable securities were redeployed into higher yielding loans, which, along with higher market interest rates, caused the yield on interest-earning assets to increase to 4.51% for the quarter ended September 30, 2023 from 3.60% for the quarter ended September 30, 2022. Interest income on loans receivable increased $33.7 million, or 31.5%, due to an increase of $710.4 million, or 6.8%, in the average balance of loans in addition to an increase in the yield on loans to 5.01% for the quarter ended September 30, 2023 from 4.07% for the quarter ended September 30, 2022. The net effect of these changes in interest rates and average balances was a decrease in the Company's net interest margin to 3.23% for the quarter ended September 30, 2023 from 3.42% for the same quarter last year.

The provision for credit losses decreased by $10.3 million, or 91.1%, to $1.0 million for the current quarter ended September 30, 2023 from $11.3 million for the quarter ended September 30, 2022. Economic forecasts continued to improve and the Company continued to experience decreases in classified loans by $29.1 million, or 12.2%, to $208.6 million, or 1.84% of total loans, at September 30, 2023 from $237.7 million, or 2.21% of total loans, at September 30, 2022.

     

Noninterest income increased by $4.1 million, or 15.2%, to $30.9 million for the quarter ended September 30, 2023, from $26.8 million for the quarter ended September 30, 2022. This increase was primarily due to an increase in bank owned life insurance income of $3.1 million, or 209.2%, to $4.6 million for the quarter ended September 30, 2023 from $1.5 million for the quarter ended September 30, 2022 as a result of death benefits received in the current period.

Noninterest expense increased by $8.6 million, or 10.9%, to $87.6 million for the quarter ended September 30, 2023 from $79.0 million for the quarter ended September 30, 2022. This increase primarily resulted from a $4.5 million, or 9.7%, increase in compensation and employee benefits to $51.2 million for the quarter ended September 30, 2023, from $46.7 million for the quarter ended September 30, 2022 driven by increases in salaries and benefits over the past twelve months. Other expenses increased $1.7 million to $2.0 million for the quarter ended September 30, 2023, from $321,000 for the quarter ended September 30, 2022 due to an increase in employee relocation and other expenses. Processing expenses increased $1.3 million, or 9.4%, to $14.7 million for the quarter ended September 30, 2023, from $13.4 million for the quarter ended September 30, 2022 due to the implementation of additional third-party software programs. Lastly, FDIC insurance premiums increased $1.1 million, or 95.1%, to $2.3 million for the quarter ended September 30, 2023 from $1.2 million for the quarter ended September 30, 2022 due to an increase in the deposit insurance assessment rate beginning in the first quarter of 2023.

The provision for income taxes decreased by $522,000, or 4.4%, to $11.5 million for the quarter ended September 30, 2023 from $12.0 million for the quarter ended September 30, 2022 due primarily to a decrease in our effective tax rate in the current year related to BOLI tax benefits.

Headquartered in Columbus, Ohio, Northwest Bancshares, Inc. is the bank holding company of Northwest Bank. Founded in 1896 and headquartered in Warren, Pennsylvania, 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, 2023, Northwest operated 134 full-service community banking offices and eight free standing drive-through facilities in Pennsylvania, New York, Ohio and Indiana. Northwest Bancshares, Inc.’s common stock is listed on the NASDAQ Global Select Market (“NWBI”). Additional information regarding Northwest Bancshares, Inc. and Northwest Bank can be accessed on-line at www.northwest.com.

 

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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, including COVID-19, 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.

(1)     Reclassified from other expenses for periods prior to March 31, 2023. Respective ratios updated for reclassification.

**    Excludes 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.

(1)    Reclassified from other expenses for periods prior to March 31, 2023. Respective ratios updated for reclassification.

**    Excludes 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.

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.

The following table summarizes the non-GAAP financial measures derived from amounts reported in the Company's Consolidated Statements of Income.

*    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. 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.

Generally, deposits in excess of $250,000 are not federally insured. The following table provides details regarding the Company’s uninsured deposits portfolio:

(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 $25.8 million, or 0.22% of total deposits, as of September 30, 2023. Our top ten largest uninsured depositors, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $117.0 million, or 0.99% of total deposits, as of September 30, 2023. The average uninsured deposit account balance, excluding intercompany and collateralized accounts, was $305,000 as of September 30, 2023.

The following table provides additional details over the Company’s deposit portfolio:

Our average deposit account balance as of September 30, 2023 was $16,500. The Company’s insured cash sweep deposit balance was $265.3 million as of September 30, 2023.

The following table provides additional details regarding the Company’s deposit portfolio over time:

*    As of September 30, 2023, the Company had $3.1 billion of additional borrowing capacity available with the FHLB of Pittsburgh, including a $250.0 million overnight line of credit, which had a $119.0 million drawn balance, as well as $302.0 million of borrowing capacity available with the Federal Reserve Bank and $105.0 million with two correspondent banks.

The following table provides the various loan sectors in our commercial real estate portfolio at September 30, 2023:

The following table describes our commercial real estate portfolio by state at September 30, 2023:

*    Includes $6.9 million, $4.9 million, $7.4 million, $7.4 million, and $4.5 million of acquired loans at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, and September 30, 2022, respectively.

**    Includes $28.9 million, $31.2 million, $31.9 million, $39.1 million, and $51.4 million of acquired loans at September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022, and September 30, 2022, respectively.