NWBI - Earnings call transcript Q3 2024 | Northwest Bancshares, Inc.

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Operator

Thank you for standing by. My name is Calin. I will be your conference operator today. At this time, I would like to welcome everyone to the Northwest Bancshares, Inc. 3Q 2024 Earnings Call. Instructions]. [Operator

like President, call Chief now Canfield, to turn Vice Executive Accounting to would over the Joseph I Officer.

You may begin.

Unknown Executive

Good Welcome to Earnings thank you, Third and XXXX Call. morning, Quarter Northwest everyone, Bancshares operator.

Louis Torchio, holding Financial Officer. the Northwest Officer; Joining me TK for today President CEO our Bancshares, company our of Schosser, Douglas Creal, and Bank; and Inc., Northwest Chief Credit are Chief

updated website. on earnings will presentation today's Relations During information supplemental that note which to differ XXXX. statements forward-looking after forward-looking we our non-GAAP and This from today, may materially the refer data, release call. this our These October is statements available call, be in included presentation, XX, actual including will results statements made the Investor Please includes other measures. not

to now And I'll over it hand Lou. you. Thank

Louis Torchio

quarter-over-quarter particularly us which Thank morning, results. core delivered made. solid everyone. of Good with will This we prior near even cost clearly and for the on Doug financial expansion our are continue delivering revenue cover demonstrates with We you our commitments efficiency ratio. discuss with improvement quarterly and modest, see pleased I'm deposits that we our I'm NIM pleased returns, performance, best-in-class to rise our growth to funds. joining Though in momentarily. continued

our to proud positive on and their want these results. In Northwest I producing for position positively hard from of customers talent addition, quarters executed the years and and continue your work which to ahead. continues to results team last in the we every see security quarter, I'm communities. member focus dedication portfolio restructure and thank upcoming for

the markets. a within M&A take environment dynamic to increasingly like moment to discuss I'd our

discussions Northwest future steadfast both Northwest other commitment for our positioning advantageously with and responsible frequent bank opportunities. acquisitions. through in stated, growth, our I'm and leaders bankers are in previously investment As organically and to Board

acquisition and financial Our remains performance thereby our strengthening our our team bolstering leadership enhancing potential. standing dedicated to

$X.XX XXX past of the as quarters I'm our declare the of Directors, for to have we share pleased of Board XXXX. of of shareholders on as Finally, per behalf to dividend X, quarterly November record a

Doug Now Chief financial who Schosser, Northwest it's our will to results. pleasure us take Officer, through my Financial introduce Bank's

Douglas Schosser

everyone. Thank you, morning, good and Lou,

we in Canfield, Joe presentation, who to Before call. already as the Vice the like from President I'd recently at and Officer. of today's Accounting dive joined top welcome Chief our heard you Joe Executive Northwest

Maddigan's unable Additionally, Assistant formerly over we've for Treasurer was will named to quarter, a and X was with future Sean new Treasurer, this who's the our Moro, join call on was this departure. years He with Jeff but and been promoted firm calls. be

financial income net Page quarter per Let's share. presentation, for where of of the highlight third Northwest begin on or XXXX. earnings X diluted $XX.X results I'll We million of the $X.XX reported

X.XX%, basis by partially added basis interest points interest that XX by margin Our this points quarter loan, expanded which on recovery an net margin. aided X to for a to nonaccrual

interest pricing X.X%. We deposit continue including rate grew our originated and favorable portfolio environment. sheet, a by our due our balance was last supported year, to our increase deposits to to quarter and loans newly discipline continued our our portfolio margin across essentially same Compared the flat by loan more and see

our million of securities the loss the as repositioned $XX a on Excluding sale we sheet. balance

last second million ago strong loss some of quality sale equity and nearly year quarter. from acquisition due quarter investment, a loans X% method on income an sale or quarter. the remains slightly bank increasing Credit the of the X.XX% activity. Noninterest overall expense owned of $X coverage estate Noninterest X.XX% real from approximately past allowance decreased to a by and on from loans $X gains decreased million SBA by loss the lower acquired to on

XX.X% of estimated an capital risk-weighted assets our remains strong with Finally, position X at Tier X/XX. to capital

residential underscores delve Now our by shift and X, commercial by X.X% last year. transformation. focus into year-over-year, on Page additional last X.X% since loans This banking while since million industrial commercial declined quarter details. XX.X% grew see that our let's mortgages you'll and $XXX On or

just estate Our loan higher more since last to compared real of desirable portfolio X% commercial shrank quarter, a CRE. by share with reflecting C&I mix

steadily Our loan yields now the standing quarters, have increased last over X.X%. X at

quarter flat Moving remained Page year-over-year. largely Deposits X.X% to X. last since and up

in in of relative only modest peers. in products with lowest the our is past deposits which X stands deposit and rate Our to at growth cost by The deposits quarters. market money the savings basis best-in-class growth near of points, X.XX%, consumer occurred cost interest-bearing Most X accounts. current increased demand

growth the On from which points income Page income the funds margin, year. quarter reduced basis to improvement, XXX XX stands point at points X, funds. a X basis and tax we growth This of second interest reflecting prior our higher X.XX%, quarter from basis with our quarter X% yields consecutive lower $XXX equivalent improvement at loan same higher ended and XX the $XXX last in interest cost cover million. of point marks of now borrowings, cost We approximately net no than grew quarter the NIM and last quarter. Fully interest basis net the quarter second by a than net million

on on next We the slides. have information the few included some additional margin

to death Noninterest from decreased income XX. in XX, XXXX, Now in million insurance, life received quarter due benefits periods. September bank-owned prior $X decrease resulting moving a to income ended Slide from

the quarter, gains income SBA prior on million sale of equity $XX estate real investment, some previously Excluding sale was on due securities was a sale vacant. loss loans the largely from and loss the million of banks acquired to quarter the by that of the noninterest of loss $X part a on and last lower decreased on the method

noninterest On Slide expense. of XX, our details

reflecting nearly expenses Our for efficiency reduction ratio improved in quarter. to XX.X%, $X the a million

additional operations expect. the focused levels reductions previously We continue costs We diminishing more finding cost quality our handled firms impacting work. work reduce customers third-party on overall core the and expensive by that service to to in-source without increase of remain or

on for loan quality allowance our to charge-offs XX to slightly Page X.X%, quarter. credit net XX, with the coverage increased basis at just Regarding points

an overall slight remained performance also of improvement nonperforming of that loan with to while strong, XX-day credit saw shows total increased assets, loans loans. classified increase slightly XX Page points, XX X.XX% a basis delinquency in

showcasing markets. metro our XX a portfolio. underwriting Strong have loan commercial highlights minimal or offices us rent-controlled large issues, Slide we concentration, diverse and large metro CRE-specific has many exposure helped to avoid areas,

discuss our of the the Finally, let's for year. outlook remainder

expect responsible flat. loan on focus to We to remain commercial particularly continue the low and will C&I anticipate profitable growth in growth space, and single-digit deposits largely loan lending. We

for and expansion. manage interest allowing market costs margin will deposit modest We net client while balancing expectations pressures,

income digits of base of this grow the mid-single the to noninterest the expect by items We X/XX onetime off given quarter. some

positively third team per for growth tax and We Directors, for expenses in towards continue this to quarter Both for entire rate to taxes behalf and our you charge-offs of us are net closer the charge-offs. our thank impacting low ratio. Board efficiency the of long-term On rate normalize joining our average keep the expected and single-digit leadership quarter, morning. to the

the now live I will to the turn Q&A operator will session. facilitate who the call over

Operator

question line with from first James. Our the Tamayo Instructions] of Daniel [Operator comes Raymond

Daniel Tamayo

the Maybe income fee first, starting guidance. on just

lower losses bit the for, you it a fourth and curious, the little the I quarter mark-to-market Just then in like other. than the was number had it's looks what in looking within

guidance that million what $XX a saw talking of going in going to million $XX of the forward as per $X range is kind million, that if number we a curious if I'm quarter similar $XX million the kind given $X number XXXX you're about $X of good to in forward go or number the third million, to off still So maybe into the quarters, back get we in that's or quarter. going million -- prior

Douglas Schosser

fourth results guidance through sometime in the for we full provide We'll quarter January. when Yes. more go XXXX

So onetime now, we're of we'll guiding for a after fourth some more that quarter. losses for of had the update account that level to we guidance. just the sort you for normalized But

Daniel Tamayo

So be million fourth a clear expecting you're in the quarter? level the just similar number $X to to then,

Douglas Schosser

in -- Yes. second for you or at closer third expecting the number for after quarter the we're we after quarter to a losses. I were where adjust say secured the security would you -- adjust the

So on of pick another mid-single $X range. again, $X.X to that million rebound going up digits, you're if dollars in and couple to line to back somewhere you're million that million, going to

back like that. So something that $XX kind expect level, to we of to get that million, $XX million, should of core level

Daniel Tamayo

Okay.

say when the not from So mid-single you saying talking quarter. third about, digits, annualized, mid-single stated you're you're I digits guess,

I think a that confusion. Got may be it.

it net so then I the side, And went normalized charge-off last up your maybe right. from looks credit All Okay. like looking guess, quarter. at also, guidance

of if what some say -- that kind to And something see that's of that visibility that path you're -- of you take drove was we a kind the -- you're So because there into then towards expect you if when just thought? to trending point. getting getting there, or that, if of if if more into at range there that's term going near you that's be curious

Douglas Schosser

time. right? the more a for It's firm would period the over of a Yes. trying just We're of to charge-offs be to guide latter, normalized level long what of

in really environment quality So really, now. right we're a obviously credit good

levels. will a environment volatility X So credits do be see normalize when it at same significantly that We're expect not expect to get of and the individual -- closer these those some as going I think volatility We this you're to suggesting most banks averages. It's will we more long-term you're low thing, saying right? any different. it quarter to create in can bit are

Daniel Tamayo

the increase was terms And last of the Understood. from in guidance there? the Okay. normalized in driver what quarter,

Douglas Schosser

was would partners that normal clarification getting that think be. to just credit from I what more longer-term me as

guiding than we true. lower were little quarter, which last So is a bit that,

indicative bit single changed is of We although of Again, guide quarter. little indicative not the a it credit outlook, our higher. haven't is really trend. It's a a long-term more

are. bit getting where a little we internally more just with consistent So

more I longer-term going As towards we of you're rebalance to. bit -- add a profile that continue guiding going different as But again, expect trends, continue quarter talking little not we're I'm to commercial, a to forward. will we specific to a to

Operator

Navas comes question your D.A. of And line with from the next Davidson. Manuel

Manuel Navas

that of financial be of looking might and targets us Just remind of opportunities for? and you kind hurdles, in M&A that kind us. you intriguing Can finding size that some your you're for targets of reset geographies

Louis Torchio

Yes.

happen we really it's markets how going then us But and accretive to important most -- that standpoint. around. tune diversification for be is with thing I in the to really strategic a maybe into cost a that the What acquire. We're that or And us is. would focused market in finally, us And say a product from really it in something deal, and to in last So all, couple looks market in categories, of Indianapolis that say to like I end geography and we're sort up fall of Columbus come probably X-state our of would that the different growth opportunities similar an more first quarter, footprint. that. to

And we doing size range be and we then more billion perspective, that the the a of making strategically, stuff $X billion an think of a -- on end-market looking acquisition since is the can something something year, we're in that deal highly some past, expected the confident -- confident $X accretive. at I since executing accretive, had really haven't in on, from execute feel the what right? to Highly we'd size you COVID we

other X Indianapolis. in being evaluating in a strategic areas. branch we're fast-growing strategy, and The there into note going in is expansion We're the de month novo planning those and Columbus here markets

in to We've expand we're the de novo from looking the viability got And bankers. X in a We've already lenders. commercial markets -- capital using some of some at fastest strategy. those growth in Midwest business some the hired

we're I in the be bank CEOs. other very sure is meeting market as to our is transaction prescriptive the marketplace, very some to picking be We're out But I'm going highly careful my having conversations. going with to statement, stated So accretive. make that in and up.

Douglas Schosser

we low-cost only are add, similar deposit as well. granular And I would Manny, basis the is too, for thing looking

be deals franchise. will add within looking strengths have we'll we So to that for this that already the

Manuel Navas

kind of do have I color. you had of where where the development, you go appreciate regionally on can that next you strengthened That's that my commercial business kind into of kind commercial line question interesting and and is, leads strength to LPO about regionally? side the

Douglas Schosser

the Yes. I would expansion. commercial mean for done overall I say continues model as that we've our

about talked we've think I before. So it

some we have verticals online. So year. Several new actually this them come that have started of

have sponsor got finance. finance, sports and got a got franchise you've we corporate finance, team, So We've finance equipment finance. you've

the continue finance, So progress advance, longest our you businesses of ones, just build see mature, starting which those that see continue. equipment you're we finance to folks being as to and all to corporate get pipelines more expect term

XX% Marco, grow XX%. highly bit to anywhere he's So probable in talking from J.D. seeing to his little categories. pipelines That's a in the

as ground going more I the that And business again, businesses approved, some matter as and see start will think a are on more to leaders credit maturation getting get are teams type deals confidence just our out in longer the consistent these growth. of of to it's you're

and So those say is relatively I verticals, broad-based course to over particular verticals we it maturing to those XXXX. continue would all look of forward the across of

Manuel Navas

reason Any out stand than more others?

Douglas Schosser

any in credits of I've that of terms major that concentration or any our seen know X actual regions don't we've I opportunities approved. in

Manuel Navas

cycle? bit. And then Okay. in go fourth betas or where the that in on a your betas talk quarter? quick terms NIM. full can kind little And deposit guidance you assuming kind Just initial are the a of follow-up just initial for What of through loan of on the they

Douglas Schosser

that XXXX of say that I cut. a think we'll this rate on guidance going last Yes. our just Again, what little will margin into color be. bit terms more in will I provide

our very literally of in of go until of changes September, pricing end September. the on Some didn't XXth deposit the like

still And we have So that there Fed suspecting to some be is additional year. significant opportunity this we're cuts not going there.

again, in point the had provided. cut in that came guide we benefit up from going But to have the last in pick late the still November that changes we're XXX We cuts basis deposit cycle. some that

Manuel Navas

rates. declines? you doing like you there Do lower pushed successful deposit October? level deposit How deposit How to are an on to Has disclose? end-of-period were been cost into you Yes. back have

guidance. end-of-month an providing not we're So

quarter. growth, cost fact I continue to the that growth As rates that, low next expect we X/XX, you've that of deposit deposit as very, very costs quarter, in just went said you given seen, deposit had can this we had that trend will down

deposits with pleasantly rates We book comfortable deposit that our surprised the pricing. and with to been renewal maintain ability the this have our been in seeing we've and in

customer believe a without market we kind accordingly levels made. pricing seen of in line that result of we those reasonable significant having a changes again, with our within very base have And markets have to against So our competition. I and continue we stance our as runoff respond of price

Operator

the And of your from next Breese comes Stephens with Matthew line question Inc.

Matthew Breese

could of you a with hoping out help was couple things. me I

is what versus book pure the if on could percentage X just, meaning out first what fixed as yield break off loans is Prime? And The you and rate you a have book. for us floating total of loans, are adjustable it, the priced else, for rate that super everything

Douglas Schosser

Yes.

did go you X, deck if Slide -- percentage didn't of, into that and across give floating So index provided we they our were we on fixed our although we assets. you the rate provide off earning

and we book provided floating showing categories, react and detail it would fixed, broken mix our XX% additional of tend funding on across the So the aggregate can you down XX% side time. and those also is things how see over some to

Matthew Breese

This is great.

next, rate, expect over what it the call Do here. do go reprice the just is much months? fixed how or on you I'll any Okay. the you to have idea duration XX

Douglas Schosser

much And is estate lower that largest. largest is book pretty But again, And loans can you everybody but mortgage fixed our else, low have that's rate long tenured lower relatively book to auto duration consumer second a like real at generally well, in pretty of of residential next largest book. is look consumer assume I book going single the loan a commercial yields. again is largest that if a you sizable fixed that portfolio as rate -- the then duration. mean, a second our well, with

Matthew Breese

to comes we that's of kind high bit talk about Okay. Could recently. growth? where been levels? share expect to pace lion's basis? C&I mid- And like where Obviously, a this do you want feel continue kind Should of of percentage of digits loans of little to it single you a as the on appropriate a place you do Where pace C&I quarterly growth the of to loans? kind the total

Douglas Schosser

would of that be. Yes. where I specific target a we don't know level have that

we I amount C&I percent We've continue significant to a significant think over that business We time. runoff portfolio in the commercial in generally would some would a total. we to that C&I plan don't book made we Again, business. the have that some pretty as of estate to of investments I grow that replaced book, commercial like grow real market, to consumer loans. And more we're still significantly although that. tend we the with in like say

bulk the sort home of that by into So of run occurred. would C&I, support funding consumer just the mortgage down of tend that and equity our growth flows be will and of and commercial in natural portfolio we cash rundown as to

Louis Torchio

to right? just would balanced, ancillary while are just for percentage, we looking would C&I deposit going We're And right? us fee real deposit target under-indexed eat help add giving there I standpoint on have a what space that, we also we're is out we're that to the that in this a meaningful really that, in to for a economics us looking not be a add loans from Lou. And and What -- standpoint the space, capital. up don't to just we're the have focus grow commercial I to is deposits.

business, So looking strategy. A deposits fees, deposits gather our sponsored and number finance like full in deposit we're the of come businesses to relationships. the all with business, franchise our

and really We we So better want that want more we economic a revenue cycles. a through various strategic is want book that in balanced it's stream. loan economics, consistent

you'll but for better there, and much see results. get think think we'll results continue ultimately, equilibrium produce remixing, will the that I I So economic to it to financial us

Matthew Breese

Understood.

me. Last Okay. for X

into lines Is to fair reserve as loans assume percentage a the continue remix we Just as as it well. along to those increases C&I. of

but year-over-year, reserve goes will much kind very not I'm that metric higher? that on least at creep whether or really, curious XXX on it seen of that haven't if We

Douglas Schosser

Yes.

you're absolutely remixing, very in we're and tuned right. So with that

reserve in an built the internally, We see over the prudently. infrastructure time this will increase transition. to make we've built We

So We've risk into rating et risk in of moving software, we've we lending. risk our the from, risk-adjusted investing defense. mortgages the understand built in increased X Moody's away enterprise, the some residential returns in lines and cetera. C&I And say, we're built

of So And we've the done all number yes, there, been strategy. the that. who've part it's procured a leadership of senior

novel something us. So isn't that this is for

component understand will transition prudently I and that. think reflect we of risk so the reserve we'll -- And the

Operator

Piper question next your Schiraldi line And of Frank with from comes the Sandler.

Frank Schiraldi

continued as Doug, I You growth guys some side pretty of here. seen consumer have about commercial things. good obviously on think, talked you the And runoff

about in terms level book wondering, Just of the the third contraction we thinking in a quarter, that runoff the think is XQ. place saw XQ, about in consumer in just to reasonable

trying consumer Just can the of getting growth you ramp-up to in it fourth provide of think there the that just about side low Is terms in growth. quarter-over-quarter in And to loan of any things. kind given quarter, color single-digit further commercial?

Douglas Schosser

Yes.

So sales, third you a demand. then bit just was of recall, a lower believe, if technology level that they They vehicle couple different of general, working of I there a lower in there quite had against of there's bit matter had terms -- in in that things them overall was a and the quarter. were

we consumer to growth. looking to pricing the are book that bit some So loan more trying at little our a better and pricing with on consumer correct drive

decline see level the can slow is what ideally, modest that like that right we'd growth we're now. of so forecasting we show that So loan to overall

us. what overall I the So giving and market to is the mean, subject economy again,

bit be so growth. question. on or less that, the things guide were are and in show opportunity our so our the competitively X% your that gives answers that Hopefully, quarterly priced doing change slows an to loan to net portfolio a to is given that We runoff side negative X% us little that

Frank Schiraldi

then obviously, And good. thinking Great. overall look just credit, Yes. pretty

in and there in specific Healthcare, think stabilization just segment. increase past, quarter, classified out -- you you're called the some that -- wondered about I segment if was seeing there. last had talked and guys the You you I you in

any the in increase color sort Or of there? any internal the review if curious more just Just classified reflects quarter? in

Thomas Creal

this No, for Thanks Sure. TK, Creal. is Frank. the Yes. question,

quarterly. We that that are portfolio of reviewing majority

loan risk rating as nonperforming a are we was That reflective had said, So the asset, within that. nonperformimg that payoff, of we same that portfolio. changes noted,

transition of is seeing a to a seeing is through the developer find criticized suitor and and these it. loans classified we for that portfolio we're are is market the able what So the then exited for nonperforming

the and So do downgrades It's overall one. larger number were improving slowly couple had market loan sector then downgrades. positive a we we feel more a the the just upgrades of about of actually and

So the dollar increased. actually

Frank Schiraldi

Got you.

the the the And clarification recovery on about don't guys lastly, fourth to if guide. helpful. That's then before single-digit point, make just into on a sure I want but loan. know growth Okay. on the mentioned, make it's I just you points of to just Doug, find nonaccrual to in a I want quarter just linked NIM anyway, the interest quarter. sure, basis you low When part talk

digits So of report is $X.XX? off off number that that low single the

Douglas Schosser

No, like from why to had in up wanted $X.XX. to it'd highlight the we despite we nonaccrual the cleared books. points X That's that be we basis as income loan interest

adjust off So you and that. that of low to you do would down $X.XX then single-digit

Operator

from the comes of Daniel Scott. The Cardenas Janney with Montgomery next question line

Daniel Cardenas

question quick efforts quarter balance additional of in restructuring XXXX. thoughts into a on into any coming Just sheet or fourth terms

Douglas Schosser

current we're us. right portfolio I Yes. the and have think would anything stands. evaluating that where still -- We mean But always market the don't I opportunities give the there's planned.

of We change beginning had in our the also, I at mentioned treasurer. call, a the as right, we

expect the but you X becomes things or So anything we'll again, we'll advantageous I see for doing not or restructures eye would opportunities. should X, keep And dramatic us, next in that to it. of us if quarter think we consider terms in out an from to doing economically be

Daniel Cardenas

thinking be assumption we back Is a of these QX? then that into if up increase maybe And as just come here levels. bit credit Should a to quickly going Got and little the classified levels with -- quality goes here provisioning can't look that in good classified kind the we it. down?

Douglas Schosser

not for expect long-term portfolio. I occurred has material provisioning the provisioning health for credits the point, increases the So quarterly would care this those migrated. in At

Daniel Cardenas

how credits increase? made up many then that Wonderful. And

Douglas Schosser

loan classified the level? up Made

Daniel Cardenas

yes, about sorry that. Yes,

Douglas Schosser

and X that credits. But it were came there some Net-net, actually. in again, that out. was some went about Here

than we So had actually more upgrades downgrades.

Daniel Cardenas

concentration And any credits? geographic X Okay. those in

Douglas Schosser

No.

Daniel Cardenas

de And novos be All terms historically, period proven de question a it think novo your for history. quickly, right. long you what has do the the Columbus in in potential in or in and then Okay. takes of -- just how other breakeven kind X of guys to

Douglas Schosser

say Yes. let that. back I us come would on

So we're looking right that as specialist. at York time, team, added long-term consumer to we commented now, we PNC that last strategy Bower bank the recall you

some look talk we I opportunity to think execute us that give to through want to continue that. him to about de going and novo to strategy he's how

an So plans are taking point could talk year, we through Day the bit out point holistically. a considering some those going we of over little and Investor course which at more at about next

So more let's with we'll that ready detail a answer to that more on pass that bit now, take provide details for little right question and we'll on we're when a -- strategy.

Thomas Creal

long-term -- portfolio. Just on the health that numbers care was classified, my and just within to clarify those well, response to clarify

migrations. other follow-up total So with

Douglas Schosser

Thanks. Great.

Operator

today's there And you conference conclude questions no and at call, further may are This time. this does disconnect. now

Northwest Bancshares (NWBI) 29 Oct 242024 Q3 Earnings call transcript