NWBI - Earnings call transcript Q4 2024 | Northwest Bancshares, Inc.

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Operator

Good morning, thank you for joining us, and welcome to Northwest Bancshares Fourth Quarter 2024 Earnings Call. This session is being recorded, and playback will be available on our Investor Relations website. [Operator Instructions].

Now I would like to introduce Michael Perry, who recently joined Northwest as Managing Director of Corporate Strategy and Development and Investor Relations.

Michael Perry

Good morning, everyone, and thank you, operator. Fourth Earnings Bancshares Northwest to Quarter Call. XXXX Welcome great to here. be It's

our President are Chief of Morrow, Creal, today me Officer. and Chief Financial and Credit our Louis Sean our Joining Schosser, Torchio, CEO TK Doug Northwest Officer; Treasurer; Bancshares;

refer we available supplemental is information included our Investor Relations During earnings will in presentation, release this to call, which on the website.

and X. If you'd on you Slide can disclosures, like to other read find related our forward-looking them

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

Louis Torchio

to as discuss on efficiency returns growth, Good net quarterly maintaining Thanks gathering demonstrate quarter, in funding our morning, well will continues to delivering joining our and stable focus us In last we that core sustainable solid everyone. pleased cover near base. I'm commitment delivered to and our particular, cost to improvement report funds, our as Doug quarter, strong in our to performance, company-wide with This deposit in for that results. fourth our we ratio. which are continue we financial momentarily. on of significant maintain while we're saw a best-in-class we to interest happy the thanks margin a

to as our and success team. Northwest customers thank each company's their as risk able to on All our dedication the I were loans, we want further to hard day classified work eliminate talent, the to addition, In of middle by them results can us for forth their put from helping communities. sheet. balance continued attributed the reduce these be our and well thought focus

organically commitment in to Northwest, at reported, and As we have steadfast are our responsible acquisition. both through growth, we

an we acquire one of and in the going quarter, that last agreement to This expected marks Woods third us to nation. the milestone the year. Northwest's largest we I'm banks long-term Bancorp. sometime Pennsylvania connects our franchise announced entered is that that, in This of quarter XXX completed It is will transaction further in another report this to be to Penns our and merger With date make largest strategy. top into

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

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

Douglas Schosser

everyone. Thank morning, you, and Lou, good

dive like to presentation, comment the we Before into I'd Michael of addition on today's Perry.

addition of as strategy, We're team. our planning In company's helping and the and contact also extensive point strategic knowledge to Michael and to lead add experience the to a M&A process primary investment to serving his Northwest Michael our function, Relations us our excited community. fulfill will Investor really

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

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

our focus a We to to increase on rate appropriate deposit discipline loans and environment. on pricing our due to continued continue play on margin portfolio pricing favorable our originated our our see more

Compared were balances portfolio year, to quarter flat. our same the essentially last loan

credit gain expense decreased year becomes ago to $X the see funds commercial increased or compared which low-income we quarter the X% million shares includes a quarter investment. the from approximately house X% a related mix a cost as increased do balances $XX of quarter. and Noninterest in last loans increased and weighted. the $X in savings million gain even products of for portfolio the tax we improvement third declined. our sale Deposit and saw So by volumes on further vis-a-vis as the million tranche commercially million Noninterest grew of income the fourth our $X by higher-yielding to more a

coverage quality derisking transfer strong quarter actions and the X.XX% loans quarter, including taken of of sale can within from X.XX% a books. last the overall year the in from allowance decreasing be certain to with and our to attributed Credit loans part remained ago. This

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

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

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

Our X.X%. at loan yields remained quarter steady this

Moving end of X. grown the strong remained in through Deposits to end XXXX. having the X% XXXX, Page of

During the deposits and interest-bearing on On demand be margin, fourth products peers. from the while at cost benefits results from interest margin decrease the points months. points rates basis XX the relative has quarter an in quarter A lower stands savings with point interest the in at our net higher still nonaccrual down up normalized Included net our was last recognized again, basis the X.XX% growth loan Page and now quarter. X.XX%. continue a fourth cost quarter higher that full to to of was current short-term interest stands basis X.XX%, of and paid added near deposit products in the recovery last margin X, would best-in-class X.XX, of quarter, The about a to interest the slow. which we off X occurred quarter. we in cost Most XX covered in more in third yield volumes

ended a of in from cost reduced quarter X.XX%, and higher of last net reflecting income with interest to from net quarter quarter. marks quarter grew tax a million this growth This of last million early our second approximately We quarter. improvement yields loan by cost consecutive $XXX the interest borrowings, $XXX a reduction income of funds significant funds. the X% The equivalent our

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

the from credit Noninterest an million by housing $XX.X shares those low income XX. mentioned that Now the earlier. increased I included moving of driven quarter sale in previous tax to and the increase operating income other B Slide income

year the to Slide our income the loans. loans on $XX saw of sale expense. prior noninterest trust SBA BOLI of a growth continued of partially ago, offset details sale higher increase sale an in Compared of income, noninterest as lower REO on and gains our a result income, million gain XX on and in properties gains non-SBA by we

reflect ratio on expenses adjusted improved efficiency to operations service. impacting Our core continued managing our customer without or sacrificing focus XX.X%

basis basis recorded allowance exclude taken to our decreased be on including quality our our loans X.X% at coverage impacts of points. activities points the the quarter. impacts, those XX, XX to If just Regarding credit within derisking Page would net with charge-offs charge-offs XX we

recorded increased quarter. have metro to loan Strong that X.XX% Classified XX overall slight XXX% loans remained commercial our exposure loans shows XX diverse in XXX% our at markets. to XX large office basis concentration to or we strong us CRE-specific credit portfolio. and nonperforming loan holding with decreased ratio steady minimal a increase the assets X.X%, highlights while third loans rent-controlled issues, underwriting showcasing points. Page Slide of avoid performance helped saw a and delinquencies coverage XX-day total nonperforming on from many has

momentum. have entered XXXX, With the significant XXXX of with success we

XX. I'd on like guidance, which XXXX to can review our be Slide found

anticipate the expansion. manage interest space, commercial on client single-digit loan growth deposit continue particularly still for allowing margin We loan focus in and growth market while continued costs expectations to profitable responsible low modest lending. balancing will and deposit C&I We and will preferences, net

$XXX million range noninterest of income the be year. full the to in to expect We for million $XXX

in as operating low will keep We we balance leverage XXXX and creating expense long-term digits focus our in growth to expense investments. our shift single the growth and positive

as net normalized and normalize range XX charge-offs will in net our expected tax XX basis XXXX rate tax points, our of our our remain are Both remain rate will and to to charge-offs within unchanged.

On recently the entire from of morning. Directors, acquisition the impact the announced our and behalf joining Woods. any for excludes this guidance thank of of team Board you leadership call Pens Our

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

Operator

Instructions]. [Operator

Please ahead. from Tim Your first of with KBW. go line comes question Switzer the

Timothy Switzer

detailed impact the there? Penns and provided We quick what's you real noninterest growth Does you that driving income the outlook. Can in here. of slide for that Woods the the exclude appreciate guide deck clarify also

Douglas Schosser

Yes.

guidance within the strategically from driving and income Woods, Penns are fee focused of income we fee providing the better on impact performance we're consistent firm. excludes the performance All and more

that's So of generate course we'll be that able year. the that to an through activity expectation type the of

through that guide many with securities fee we income to we like I restructure because think were year little bit more fee were we income. rolling things of unique a where also be transparent targeting this had provided we numerical only wanted the a that so

Timothy Switzer

Penns dilution? we extreme last you the talk first, value rate Wood, so. the you doing that's been maybe how it's No, accounting Can the I Yes. about, have appreciate NII or And with yield that. book think over with if about guess, I the super outlook movements curve. then most pretty change tangible you And month recently the of what's expected as helpful. in the changed, purchase expected

Douglas Schosser

guidance of intending our acquisition date with stock Pens changes closer get price. the constantly stock know, we're that you because our not change Yes, updated will to on much we to all provide in closing until as the with

Timothy Switzer

quality health on looks Okay. some in is, seeing can cleaning like more anything care here, And outside seeing about book that update you cautious the the you're any up portfolio? give consumer an I like? And what credit remaining then, have the you other book the portfolio, that of of last maybe the credit in areas question after us or are what's

Douglas Schosser

Yes.

stress So with we care I transactions. the I in that the these transactions. with most some saw everyone, health remind will of the think of we moved we dealt long-term portfolio

execute of Some we expect off the get first the of held for to the a would are books transaction over sale, course in to fully us quarter. credits the

to some the were transactions, that So pretty concerns we're we the the book show feel position, we tried number in the we of year derisking within projecting. charge-off a range normalized that rest those in like particular would we sectors entering just don't of in normalized provide have stable that absent have to also any and any been

Operator

comes of Daniel Your the ahead. Raymond go next Tamayo James. line with question from Please

Daniel Tamayo

morning. Good

my on So just the I side. first question, growth guess loan

You talked for year. digits about, the a I think, single low

that's of commercial other could or what the of strong you is bit? commercial really side, momentum Or talk if you're reductions the how Maybe strong number if on thinking certainly had just loan net the growth kind side. still driver then a terms portfolios? in in just You've out you're seeing the it of little and in about momentum CRE about segmented

Douglas Schosser

Yes.

at for So commercial. pipeline decent strength pipelines in are our looking right we now

constructive all and of changes administration we as that all of be there's down in that environment little different in XXXX more to settles going bit. So a feel a the

us. for that, that thinking to be we're a positive So going is net

of when advantage take will to opportunities also loans grow themselves. present opportunities We consumer those

try obviously, So to we're going in continue going we're general, to to focus, commercial. on

growth We also for year. some guided this expense

will build-out hiring continue commercial to just allow develop well commercial that additional verticals we've We in the for in to talked as the about. some

I to some of generate just opportunity say, overall take again, that business looking commercial when to of we be would the good portfolios available returns next the approach more advantage and us. think for them, consumer the year. and or So balanced I in portfolios for we'll expect have generally a either we

for that's So some modest sheet guide the next of of year. reflective overall balance

Daniel Tamayo

Got it. sense. makes That

slower and the total rate. moving basis XXXX, and potentially the think or growth growth of little a faster in a bit be percentage maybe you year going normalized percentage what So more on than little a bit rate could year maybe a bit that towards next can end mid a loan it you little into then growth loan above it's

Douglas Schosser

take will, that along the all again, when Like right? the when right? market, mean, sale the of pricing and we that will accommodate are good growth can't but we're going advantage I we exactly consumer good there's events we've slow way, Yes. certainly and these we So opportunities you all for them And to have and sure example, are be. will We're there we do come. have to when deal with fluctuations loans. down, weather both on when them. allows car to to It take to on commercial still terms going market been those the making be there, get as it focused advantage,

growing growth margin the we really just we're on margin. working aren't that sure significant overall are taking produce yields that of a making and levels not going the and But maintaining improving to rates out by at stable loan

Louis Torchio

states on as Danny, add renewed middle X the, verticals presence. retail right? what strategy maturation we it's we're to the well the we the have just core a have focus have calls and market prior in lower So the Lou. I going that discussed of would as franchise on intact, middle we that we've prior the market, meetings is call

point so the the year, as of be may about year to gathering we to up to bit a in pick start steam in little your franchise. on we're And deposit a it focus while slower a have well part as, looking the latter our commercial continued

will that become we well. evident the year along so And through as move more as

that as And focused we're pointed completely Doug it's out, not commercial. on

on really So late notwithstanding, sheet segment. mortgages off. that long We'll these in that balance the have consumer opportunities some have we and the we're are running

well. And growth balanced so that we'll for look area as in

Daniel Tamayo

just maybe and here the X you've of years. on that your Slide on I'm the securities X X Terrific. last just one, guess looking duration I one direct got book. at

in might see little that margin XXXX, our benefit So of bit I'm of drag what's overall remains a on terms kind the from the off a NIM perspective. rolling obviously, you just where book of some in year curious this

Douglas Schosser

it turn that I'll have I we to he any wants over are into on specifics if mean, rolling flows are highlight Yes. to off. Sean, higher-yielding securities. reinvesting he cash things

advantage of ours, our continue would consider focus probably it a If that would is opportunistic there to an that opportunity would drag and investment securities something something the be will will that's of is not over to return that that course be the in next a that. base up -- of reposition, But that core part help that strategies year time. -- be or again, year. versus over we take of So

looking answer we to continue Does higher reinvesting it we advance. we'll executing opportunity, would generally closer have that we're if be flows speaking, question? at the the we'll And as portfolio. of in that little get of as cash a time, last talk from at strength to get I one certainly maintaining did and we we obviously as those, size bit So and about say, your it, rates. But

Operator

Inc. the of Breese Matthew Your Stephens, with line next question from comes

Matthew Breese

to real many been CRE back lower if your book we that have some of And present just you've with similar kind of there's estate second. into looked of wanted pulled of as lot back. the a curious I 'XX? concentration lot situations space A touch peers the if of higher for you spreads yields thinking kind have in on your peers commercial them a CRE as nibbling concentrations, of there? any is in And kind been that in of and yields I'm sort growth a if and see at themselves change might

Douglas Schosser

Yes.

a where to don't a go we're I grow that we I take to to risk that off focus specifically come deals. -- so on we loan that the materially advantage suggests said is run planning I are have materially that necessarily that I hurdles think think firm. mean those specific don't going our that deals and either. senior to from have of real profiles, appropriate estate has the book have deals committee, there it is. then good and commercial out But through target largest it ours see do -- and When we're it

flows little T.K. interest we good discipline in. the balance little us there that that bit So focus and shaping has we're would But also. I But we'll some you give through us variable And on think the space. would just generally C&I book again, the up deals good to a that jump dynamics to you how like of. take opportunities add, our business are on natural to liking commercial more rate income if expect when credit them. sheet do to the advantage opportunities in real and we're again, anything taking do deals, of speaking, bit is advantage estate continue can to different net and a get the

Thomas Creal

appropriate appropriate opportunities. the being It's about obviously to find balance into to comments. space we We're those opportunities. No. want if the that lean just really strategic have when We sheet we

Matthew Breese

portion loan is it flattish a year. statement? for the perspective, So that from to of fair that our consider Is fair portfolio the

Douglas Schosser

Yes.

Matthew Breese

the And could expectations there's then NIM, also And to the exit into hoping you given around bias And XXXX, I do and as an betas seen the if certainly you for sloping was than loan the actually for is you this couple last curve upward a expectations year? shape deposit one think of with improving, go not the in yield years. more ideal an just you environment yield curve? upward we've of

Douglas Schosser

right? current Yes, rate environment be So curve, a that I we agree would the current the around sort about into my start. place given to of might earlier rate opportunity how think definitely to comments good lean consumer and there's

in CDs grow those to the be the strongest. going the to the consumer opportunity rate relatively the that year come half get issuing or as over of opportunity Those time. a a mature. be and had little year. until think the book issuing deposit rates when advantage the a to first credits We are that in of of take portfolio our down going to less, have about CDs profile pause Similarly, good they amount we in might We of bit as are We those are later. take priced

of continued cuts we rate lot And to that's provide to margin and naturally, the then bit don't that a $X.XX being we're $X.XX And to is yield of why little additional going our curve on just longer our of deposits uploading benefits. and a And have growth lending guiding the shorter a in sort with to that end range. be our little tend bit outlook. in

and in through pretty parameters the able say would pretty cuts the much being if to We with base mean two in -- environment even comfortable position. a manage those come. will we'd we're we're it rate that I in have two, think and I be the don't of I know didn't if come, that I necessarily worse

Matthew Breese

it. Got

last the me. you Maybe to out little guide. the help the settle a given one and/or us you where the expect bit could then in And shift the I for net portfolio. reserve Okay. with out loan mix appreciate charge-off provision the

Douglas Schosser

else begin to expect Yes. losses -- the you all We increases it us credit future to the But go. take credit CECL that because, we I models sort know, if provide I'm as in some speak loans, you way. you going is provision, similar losses. but expectations amount equal. we're not as would going on increases where slight for to in see should that being the to provision to projecting loan just some sheet for to in look see we'll expect balance growth a of have growth should of to that because environment at

Operator

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

Daniel Cardenas

quick provision you a say increase, results. a on guess, fourth When follow-up 'XX, Just that's the comment. looking quarter that I the for we're slight excluding

Douglas Schosser

growth, we're see would if you impact reserving, of a wouldn't you year, of the of have transactions. we kind as it Yes, X.X of Yes. -- that be percent loans of expect if level kind would but excluding general growth, consistent that, of with loan levels stay of at the the at those end if to

Daniel Cardenas

Perfect.

you. you. Got Got Okay.

front, to Okay. you opportunistically. are your is on would looking the on done? in deal where capital what buy until of back the And thoughts stock market then guys you deployment handcuffed be in kind buybacks here XXXX Or

Douglas Schosser

Yes.

for dividend with priorities, priority but have -- out the earnings opportunities needed of that growth. support And I our having support incremental pretty is think Like going to we're shareholders, return we strategic look and for think our any we've end if then last, up not look counted that then to we M&A. category. we #X we then buybacks back we'll opportunities to go for that an we been there. the we to And in to right. opportunities capital our about to those have organic deploy consistent

and So been to will continue that be consistent consistent. has

So given where wouldn't is, contemplated the near ratio intermediate payout really are I dividend our say or in future. buybacks

Operator

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

Unknown Analyst

to seeing you about competition? pushback on that drop, Frank. the in the what is curious any in or as I you're rates a deposit with regard helpful. This be any as had pressure maybe base. pressure continue markets or different guys deposit Any any Are calling question you Dave on experiencing guys costs color would for to

Douglas Schosser

other tend reaction kind we we I think good, we in the are, competitively in operate rates mean less right? many very significant things. the not generally. for REITs And had had And markets, acquisition priced market. or very pushback I Yes. everywhere we're intense have top in that that of We quartile strong at have to still markets and we've competitively products

So phenomena. experiencing we're not say I would that

Operator

I will turn call [Operator for remarks. back to closing Instructions]. over the Doug now Schosser

Douglas Schosser

Well, you. next Northwest thanks, appreciate taking back the in we call, and quarter. will your time you Again, come us with on everybody. and Thank Great. interest to we

Operator

for and that call. you today's Ladies Thank gentlemen, all concludes joining.

You may now disconnect.

Northwest Bancshares (NWBI) 24 Jan 252024 Q4 Earnings call transcript