Financial Performance - Northwest Bancshares, Inc. reported a net income of $33 million, or $0.26 per diluted share for Q4 2024, an increase of 13.8% from $29 million, or $0.23 per diluted share in Q4 2023[4]. - Adjusted net income (non-GAAP) for Q4 2024 was $35 million, or $0.27 per diluted share, up from $34 million, or $0.26 per diluted share in the prior quarter[5]. - The net income for the quarter ended December 31, 2024, showed an increase compared to the previous quarter, although specific figures were not disclosed[18]. - Net income for Q4 2024 was $32,750 thousand, slightly down from $29,014 thousand in Q4 2023, resulting in a basic and diluted earnings per share of $0.26[28]. - The company reported a net income of $100,278 thousand for the year ended December 31, 2024, compared to $134,957 thousand in 2023, indicating a decrease of 25.5%[31]. Interest Income and Margin - The net interest margin expanded by 9 basis points to 3.42%, driven by a $13 million increase in interest income due to redeployment into higher-yielding loans[10]. - Total interest income for Q4 2024 was $170,722 thousand, an increase from $157,388 thousand in Q4 2023, representing an 8.5% year-over-year growth[28]. - For the year ended December 31, 2024, total interest income reached $669,196 thousand, up from $587,922 thousand in 2023, reflecting a 13.8% increase[31]. - The average yield on loans improved to 5.56% for Q4 2024, up from 5.19% in Q4 2023, reflecting the impact of higher market interest rates[10]. - The yield on total interest-earning assets improved to 5.00% in 2024, up from 4.42% in 2023, an increase of 13.14%[73]. Loan and Deposit Trends - Average loans receivable decreased by 0.2% from the prior quarter to $11.20 billion, while average deposits declined by 0.6% to $12.03 billion[9]. - Total loans as of December 31, 2024, reached $11,180,014, an increase from $11,056,780 on December 31, 2023, representing a growth of approximately 1.1%[58]. - Total deposits increased to $12,144,554 as of December 31, 2024, compared to $11,979,902 a year ago, reflecting a growth of approximately 1.38%[26]. - The company reported a total loans receivable of $11,180,014 as of December 31, 2024, down from $11,406,041 a year earlier, indicating a decrease of about 1.98%[26]. - Uninsured deposits amounted to $3,131,231 thousand, accounting for 25.8% of total deposits as of December 31, 2024[40]. Credit Losses and Provisions - The total provision for credit losses increased by 239.8% to $16.6 million, primarily due to elevated charge-offs and growth in the commercial lending portfolio[12]. - Provision for credit losses on loans increased significantly to $15,549 thousand in Q4 2024 from $3,801 thousand in Q4 2023, indicating a rise in expected credit losses[28]. - The provision for credit losses for the quarter ended December 31, 2024, was $15,549 million, significantly higher than $5,727 million in the previous quarter[64]. - The ending balance of the allowance for credit losses was $116,819 million as of December 31, 2024, down from $125,813 million in the previous quarter[64]. - Net charge-offs to average loans, annualized, increased to 0.87% for the quarter ended December 31, 2024, compared to 0.18% in the previous quarter[64]. Operational Efficiency - The efficiency ratio improved to 61.8%, reflecting the company's focus on cost management and operational efficiency[3]. - The efficiency ratio for Q4 2024 improved to 61.80% from 66.93% in Q4 2023, suggesting better cost management[28]. - Efficiency ratio, excluding certain expenses, improved to 59.61% for the quarter ended December 31, 2024, down from 64.66% a year earlier[38]. Mergers and Acquisitions - Northwest Bancshares announced an agreement to acquire Penns Woods Bancorp, expected to close in Q3 2025, enhancing its market position[7]. - The company is in the process of a proposed merger with Penns Woods Bancorp, Inc., which is subject to various risks and uncertainties[20]. - The expected cost savings and revenue synergies from the proposed merger may not be fully realized within the anticipated timeframes[20]. Asset and Equity Metrics - As of December 31, 2024, total assets of Northwest Bancshares, Inc. amounted to $14,408,224, a slight decrease from $14,419,105 a year earlier[26]. - Total shareholders' equity increased to $1,596,856 thousand as of December 31, 2024, compared to $1,551,317 thousand a year earlier, reflecting a growth of 2.9%[35]. - The equity to assets ratio stood at 11.08% as of December 31, 2024, slightly up from 10.76% a year earlier[26]. - Tangible common equity to tangible assets improved to 8.65% as of December 31, 2024, up from 8.30% a year ago[35]. - The company reported a tangible book value per share of $9.51 as of December 31, 2024, up from $9.17 a year ago[35].

Core Insights - Northwest Bancshares, Inc. reported an adjusted net income of $35 million, or $0.27 per diluted share for the quarter ended December 31, 2024, reflecting a $1 million increase from the prior quarter [2] - The company declared its 121st consecutive quarterly dividend of $0.20 per share, representing an annualized dividend yield of approximately 6.1% [3] - The company announced an agreement to acquire Penns Woods Bancorp, Inc., expected to close in the third quarter of 2025, which will enhance its market position [5] Financial Performance - Net income for the quarter was $33 million, or $0.26 per diluted share, an increase from $29 million, or $0.23 per diluted share in the same quarter last year [1] - The annualized returns on average shareholders' equity and average assets for the quarter were 8.20% and 0.91%, respectively, compared to 7.64% and 0.80% for the same quarter last year [1] - The efficiency ratio improved to 61.8% [1] Income Statement Highlights - Interest income for the quarter was $170.7 million, with net interest income at $114.2 million, reflecting a 2.6% increase from the prior quarter [7] - The net interest margin expanded to 3.42%, up from 3.33% in the previous quarter [7] - Noninterest income increased to $40.1 million, a 43.9% increase from the previous quarter [12] Provision for Credit Losses - The total provision for credit losses was $16.6 million, significantly higher than $4.9 million in the prior quarter, driven by elevated charge-offs [10][11] - Net charge-offs to average loans, annualized, were 0.87% [10] Balance Sheet Highlights - Average loans receivable decreased by $47 million from the previous year, while average deposits grew by $232 million [8] - Total assets as of December 31, 2024, were $14.4 billion, with total liabilities at $12.8 billion [23] Strategic Initiatives - The company is focusing on commercial banking and deposit growth, which has led to an increase in average commercial and industrial loans [4] - The acquisition of Penns Woods Bancorp is part of the long-term growth strategy to enhance market presence [5]

Group 1 - Northwest Bancshares (NWBI) is expected to report quarterly earnings of $0.26 per share, reflecting a year-over-year increase of 8.3% [1] - Anticipated revenues for the quarter are projected to be $141.01 million, showing a 4.1% increase compared to the same quarter last year [1] - The consensus EPS estimate has remained unchanged over the last 30 days, indicating a collective reevaluation by analysts [2] Group 2 - Analysts project the 'Efficiency Ratio' to reach 64.6%, down from 66.9% a year ago [5] - The 'Net Interest Margin' is forecasted to be 3.3%, slightly up from 3.2% in the previous year [5] - The consensus for 'Average Balance - Total interest-earning assets' is $13.43 billion, unchanged from the year-ago value [5] Group 3 - 'Total noninterest (loss)/income' is expected to reach $29.37 million, compared to $29.17 million reported in the same quarter last year [6] - 'Trust and other financial services income' is projected at $8.04 million, up from $6.88 million in the previous year [6] - 'Service charges and fees' are anticipated to be $15.97 million, slightly higher than the $15.92 million reported last year [7] Group 4 - 'Net Interest Income' is forecasted to reach $111.46 million, compared to $106.30 million in the same quarter of the previous year [7] - Shares of Northwest Bancshares have seen a -1.4% change in the past month, compared to a -0.4% move of the Zacks S&P 500 composite [8] - With a Zacks Rank 1 (Strong Buy), NWBI is expected to outperform the overall market in the near future [8]

COLUMBUS, Ohio, Jan. 10, 2025 /PRNewswire/ -- Northwest Bancshares, Inc. (NASDAQ: NWBI) will host a conference call to review fourth quarter 2024 financial results on Friday, January 24 at 10:00 a.m. (EDT). The results are scheduled to be released at approximately 7:30 a.m. (EDT). The live audio webcast and presentation slides will be available on www.northwest.com under Investor Relations, Events & Presentations. Northwest will notify the public that financial results have been issued through a press rele ...

The Future Investor with Albert Anthony is an author concept launched on the Seeking Alpha platform, focusing on growing a diversified portfolio and unlocking future drivers of performance by covering stocks across multiple sectors.Albert Anthony is the pen name of a contributing analyst who has covered over +200 stocks on this platform since 2023, growing to over 1.07K followers. Based on this new article series, he is also working on a new book on Amazon to be called The Future Investor: Growing a Diversi ...

Core Viewpoint - The Zacks rating system provides a reliable method for individual investors to assess stock potential based on earnings estimate revisions, which significantly influence near-term stock price movements [1][4][13]. Company Summary: Northwest Bancshares (NWBI) - Northwest Bancshares has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook driven by an upward trend in earnings estimates [2][3]. - The expected earnings per share for the fiscal year ending December 2024 is $1.03, reflecting a decrease of 6.4% from the previous year [6]. - The Zacks Consensus Estimate for Northwest Bancshares has increased by 6.1% over the past three months, showcasing a positive trend in earnings estimates [14]. Investment Implications - The upgrade to Zacks Rank 1 places Northwest Bancshares in the top 5% of Zacks-covered stocks, suggesting potential for price appreciation in the near term [9][12]. - The Zacks Rank system has a strong historical performance, with Zacks Rank 1 stocks generating an average annual return of +25% since 1988, indicating the effectiveness of the rating system [5]. - The correlation between earnings estimate revisions and stock price movements suggests that tracking these revisions can be beneficial for investment decisions [4][13].

Core Viewpoint - Northwest Bancshares, Inc. will acquire Penns Woods Bancorp, Inc. in an all-stock transaction valued at approximately $270.4 million, enhancing its presence in North Central and Northeastern Pennsylvania [1][2]. Company Overview - Penns Woods Bancorp has approximately $2.3 billion in assets, $1.7 billion in total deposits, and $1.9 billion in total loans as of September 30, 2024 [2]. - The combined company is expected to have pro forma total assets exceeding $17 billion, positioning it among the top 100 largest banks in the nation [2]. Transaction Details - The merger will involve Northwest exchanging shares of its common stock for all outstanding shares of Penns Woods common stock, with a ratio of 2.385 shares of Northwest for each share of Penns Woods [3]. - The transaction consideration is valued at $34.44 per share of Penns Woods, representing a 139.0% multiple of tangible book value and a 12.8x multiple on LTM core earnings [3]. - The merger is expected to qualify as a tax-free reorganization, and Penns Woods shareholders will receive a dividend of approximately $0.48 per share post-merger, which is about 49% higher than their current dividend [3]. Strategic Implications - The merger is seen as a milestone in Northwest's long-term growth strategy, allowing for expansion into new markets and enhanced service delivery [4]. - The combined entity will have over 150 financial centers across four states, increasing its market presence significantly [2][4]. Financial Impact - Excluding one-time transaction costs, the merger is expected to be approximately 23% accretive to 2026 fully diluted earnings per share [5]. - Tangible book value dilution is anticipated to be around 9% at closing, with an earn-back period of under 3 years [5]. Timeline and Approvals - The transaction is expected to be completed in the third quarter of 2025, pending regulatory approvals and shareholder consent from Penns Woods [6].

[PART I FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the company's unaudited consolidated financial statements and management's discussion and analysis for the reported periods [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of Northwest Bancshares, Inc. and its subsidiaries for the quarter and nine months ended September 30, 2024, and comparative periods [Consolidated Statements of Financial Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) This statement provides a snapshot of the company's assets, liabilities, and shareholders' equity at specific points in time Consolidated Statements of Financial Condition (in thousands) | Metric | September 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :-------------------------- | :-------------------------------- | :------------------------------- | | **Assets** | | | | Cash and cash equivalents | $226,883 | $122,260 | | Marketable securities AFS | 1,111,868 | 1,043,359 | | Marketable securities HTM | 766,772 | 814,839 | | Loans receivable, net | 11,178,745 | 11,289,566 | | Total assets | $14,354,325 | $14,419,105 | | **Liabilities** | | | | Total deposits | 12,071,079 | 11,979,902 | | Borrowed funds | 204,374 | 398,895 | | Total liabilities | 12,763,000 | 12,867,788 | | **Shareholders' Equity** | | | | Total shareholders' equity | 1,591,325 | 1,551,317 | - Total assets decreased by **$65 million** to **$14.35 billion** at September 30, 2024, from **$14.42 billion** at December 31, 2023, primarily due to a decrease in net loans receivable, partially offset by an increase in cash and cash equivalents[6](index=6&type=chunk) [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) This statement details the company's revenues, expenses, and net income over specific reporting periods Consolidated Statements of Income (in thousands) | Metric (in thousands) | Quarter ended Sep 30, 2024 | Quarter ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | | :-------------------------------- | :------------------------- | :------------------------- | :----------------------------- | :----------------------------- | | Total interest income | $171,381 | $151,598 | $498,474 | $430,534 | | Total interest expense | 60,079 | 43,230 | 177,093 | 101,153 | | Net interest income | 111,302 | 108,368 | 321,381 | 329,381 | | Provision for credit losses - loans | 5,727 | 3,983 | 12,130 | 14,863 | | Total noninterest income | 27,833 | 30,888 | 46,947 | 84,654 | | Total noninterest expense | 90,767 | 87,570 | 273,211 | 260,878 | | Net income | $33,618 | $39,220 | $67,528 | $105,943 | | Basic earnings per share | $0.26 | $0.31 | $0.53 | $0.83 | | Diluted earnings per share | $0.26 | $0.31 | $0.53 | $0.83 | - Net income for Q3 2024 decreased by **$6 million (14%)** YoY to **$33.6 million**, primarily due to increased provision for credit losses and lower noninterest income, partially offset by higher net interest income and lower income tax expense[7](index=7&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) - For the nine months, net income decreased by **$38.4 million (36%)** YoY to **$67.5 million**, mainly due to a **$39 million** loss on sale of investments and decreased net interest income[7](index=7&type=chunk)[203](index=203&type=chunk)[204](index=204&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This statement presents net income and other comprehensive income items not recognized in the income statement Consolidated Statements of Comprehensive Income (in thousands) | Metric (in thousands) | Quarter ended Sep 30, 2024 | Quarter ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | | :---------------------------------------------------------------------------------- | :------------------------- | :------------------------- | :----------------------------- | :----------------------------- | | Net income | $33,618 | $39,220 | $67,528 | $105,943 | | Net unrealized holding gains/(losses) on marketable securities | 27,947 | (29,715) | 45,647 | (28,781) | | Change in fair value of interest rate swaps | (3,654) | 1,825 | (1,170) | 3,562 | | Defined benefit plan actuarial reclassification adjustments | (387) | (382) | (1,163) | (1,146) | | Other comprehensive income/(loss) | 23,906 | (28,272) | 43,314 | (26,365) | | Total comprehensive income | $57,524 | $10,948 | $110,842 | $79,578 | - Total comprehensive income significantly increased to **$57.5 million** for Q3 2024 from **$10.9 million** in Q3 2023, primarily driven by net unrealized holding gains on marketable securities in the current quarter compared to losses in the prior year[10](index=10&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) This statement outlines changes in the company's equity accounts, including net income, dividends, and other comprehensive income Consolidated Statements of Changes in Shareholders' Equity (in thousands) | Metric (in thousands) | Quarter ended Sep 30, 2024 | Quarter ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | | :-------------------------------------------------- | :------------------------- | :------------------------- | :----------------------------- | :----------------------------- | | Beginning balance at June 30 / Dec 31 | $1,556,598 | $1,511,501 | $1,551,317 | $1,491,486 | | Net income | 33,618 | 39,220 | 67,528 | 105,943 | | Other comprehensive income/(loss) | 23,906 | (28,272) | 43,314 | (26,365) | | Dividends paid | (25,479) | (25,420) | (76,369) | (76,249) | | Ending balance at September 30 | $1,591,325 | $1,498,431 | $1,591,325 | $1,498,431 | - Shareholders' equity increased by **$40 million** to **$1.59 billion** at September 30, 2024, from **$1.55 billion** at December 31, 2023[15](index=15&type=chunk)[179](index=179&type=chunk) - This increase was driven by year-to-date net income of **$68 million** and an improvement in accumulated other comprehensive loss of **$43 million**, partially offset by **$76 million** in cash dividends[15](index=15&type=chunk)[179](index=179&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This statement reports the cash generated and used by operating, investing, and financing activities Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | | :-------------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $204,642 | $47,729 | | Net cash provided by/(used in) investing activities | 99,067 | (178,256) | | Net cash (used in)/provided by financing activities | (199,086) | 153,157 | | Net increase in cash and cash equivalents | $104,623 | $22,630 | | Cash and cash equivalents at end of period | $226,883 | $161,995 | - Net cash provided by operating activities significantly increased to **$204.6 million** for the nine months ended September 30, 2024, compared to **$47.7 million** in the prior year[18](index=18&type=chunk) - Investing activities shifted from a net outflow of **$178.3 million** to a net inflow of **$99.1 million**, while financing activities changed from a net inflow of **$153.2 million** to a net outflow of **$199.1 million**[18](index=18&type=chunk) [Notes to Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes provide detailed explanations and additional information supporting the consolidated financial statements [(1) Basis of Presentation and Informational Disclosures](index=9&type=section&id=(1)%20Basis%20of%20Presentation%20and%20Informational%20Disclosures) This section outlines the company's structure, accounting principles, and recent accounting standard adoptions - **Northwest Bancshares, Inc. (NWBI)** is a Maryland corporation and bank holding company, operating **Northwest Bank**, a Pennsylvania-chartered savings bank with **141 community-banking offices** across Pennsylvania, Western New York, Eastern Ohio, and Indiana[20](index=20&type=chunk)[21](index=21&type=chunk) - The unaudited Consolidated Financial Statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions[20](index=20&type=chunk)[21](index=21&type=chunk) - The company adopted **ASU No. 2023-02** on January 1, 2024, regarding accounting for investments in tax credit structures, which did not have a **material impact** on its financial statements[23](index=23&type=chunk) [(2) Marketable Securities](index=10&type=section&id=(2)%20Marketable%20Securities) This section details the company's marketable securities portfolio, including available-for-sale and held-to-maturity classifications Marketable Securities (in thousands) | Metric (in thousands) | September 30, 2024 | December 31, 2023 | | :-------------------------------------------------- | :----------------- | :---------------- | | Total marketable securities available-for-sale | $1,111,868 | $1,043,359 | | Total marketable securities held-to-maturity | $766,772 | $814,839 | | Total marketable securities | $1,878,640 | $1,858,198 | | Gross unrealized holding losses (AFS) | $(143,954) | $(196,867) | | Gross unrealized holding losses (HTM) | $(94,131) | $(115,334) | | Total unrealized losses (AFS & HTM) | $(238,085) | $(312,201) | - The company does not believe that the **unrealized losses** on available-for-sale and held-to-maturity debt securities represent a **credit loss impairment**, as these securities are primarily issued by U.S. government agencies or government-sponsored enterprises, or are highly rated corporate/municipal debt[34](index=34&type=chunk)[35](index=35&type=chunk) - The losses are mainly due to changes in the interest rate environment, not credit quality, and the company does not intend to sell these securities before anticipated recovery[34](index=34&type=chunk)[35](index=35&type=chunk) [(3) Loans Receivable](index=14&type=section&id=(3)%20Loans%20Receivable) This section provides a detailed breakdown of the company's loan portfolio, including categories, allowances, and delinquency status Loans Receivable by Category (in thousands) | Loan Category (in thousands) | September 30, 2024 | December 31, 2023 | | :--------------------------- | :----------------- | :---------------- | | Personal Banking | $6,423,392 | $6,782,070 | | Commercial Banking | 4,881,166 | 4,632,739 | | Total loans receivable, gross| $11,304,558 | $11,414,809 | | Allowance for credit losses | (125,813) | (125,243) | | Total loans receivable, net | $11,178,745 | $11,289,566 | - Gross loans receivable decreased by **$110 million (1%)** to **$11.3 billion** at September 30, 2024[171](index=171&type=chunk) - Personal banking loans decreased by **$359 million (5%)**, while commercial banking loans increased by **$248 million (5%)**, driven by organic growth from new commercial lending verticals, particularly a **14% increase** in the C&I loan portfolio[171](index=171&type=chunk) Loan Quality Metrics (in thousands) | Metric (in thousands) | September 30, 2024 | December 31, 2023 | | :-------------------------------------------------- | :----------------- | :---------------- | | Total loans receivable | $11,304,558 | $11,414,809 | | Allowance for credit losses | 125,813 | 125,243 | | Nonaccrual loans | 76,828 | 94,384 | | Loans 90 days past due and accruing | 1,045 | 2,698 | | Total delinquency (30+ days past due) | 79,015 | 93,270 | - Nonaccrual loans decreased by **$17.5 million (18.6%)** to **$76.8 million** at September 30, 2024, from **$94.4 million** at December 31, 2023[52](index=52&type=chunk)[53](index=53&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) - Loans 90 days or more past due and accruing also decreased significantly from **$2.7 million** to **$1.0 million**[52](index=52&type=chunk)[53](index=53&type=chunk)[55](index=55&type=chunk)[56](index=56&type=chunk) [(4) Goodwill and Other Intangible Assets](index=30&type=section&id=(4)%20Goodwill%20and%20Other%20Intangible%20Assets) This section outlines the company's goodwill and other intangible assets, including amortization and impairment testing results Goodwill and Other Intangible Assets (in thousands) | Metric (in thousands) | September 30, 2024 | December 31, 2023 | | :-------------------------------- | :----------------- | :---------------- | | Core deposit intangibles - net | $3,363 | $5,290 | | Total intangible assets - net | $3,363 | $5,290 | | Goodwill | $380,997 | $380,997 | - Net core deposit intangibles decreased from **$5.29 million** to **$3.36 million**, reflecting ongoing amortization[84](index=84&type=chunk)[86](index=86&type=chunk) - Goodwill remained stable at **$381 million**, and the annual impairment test as of June 30, 2024, concluded that goodwill was **not impaired**[84](index=84&type=chunk)[86](index=86&type=chunk) [(5) Borrowed Funds](index=30&type=section&id=(5)%20Borrowed%20Funds) This section details the company's borrowed funds, including FHLB advances, collateralized borrowings, and subordinated notes Borrowed Funds (in thousands) | Borrowing Type (in thousands) | September 30, 2024 | December 31, 2023 | | :---------------------------- | :----------------- | :---------------- | | Term notes payable to FHLB | $175,000 | $175,000 | | Notes payable to FHLB | — | 163,500 | | Collateralized borrowings | 21,624 | 35,495 | | Collateral received | 7,750 | 24,900 | | Total borrowed funds | $204,374 | $398,895 | - Total borrowed funds decreased significantly to **$204.4 million** at September 30, 2024, from **$398.9 million** at December 31, 2023[87](index=87&type=chunk) - This reduction was primarily due to the pay-down of FHLB notes payable and collateralized borrowings[87](index=87&type=chunk) - The company has **$115 million** in subordinated notes outstanding (net of repurchases) and **$129.8 million** in junior subordinated debentures, which qualify as **Tier 2 capital** and are primarily floating-rate instruments tied to **SOFR**[92](index=92&type=chunk)[96](index=96&type=chunk) [(6) Guarantees](index=32&type=section&id=(6)%20Guarantees) This section describes the company's guarantees, including standby letters of credit and unsecured lines of credit - The company issues standby letters of credit, with a maximum potential future payment of **$58 million** at September 30, 2024, of which **$41 million** is fully collateralized[100](index=100&type=chunk)[101](index=101&type=chunk) - It also maintains a **$20 million** unsecured line of credit for private label credit card facilities, with **$11 million** in notional value issued and **$2 million** outstanding[100](index=100&type=chunk)[101](index=101&type=chunk) [(7) Earnings Per Share](index=32&type=section&id=(7)%20Earnings%20Per%20Share) This section presents the basic and diluted earnings per share for the reported periods Earnings Per Share (in thousands, except share data) | Metric (in thousands, except share data) | Quarter ended Sep 30, 2024 | Quarter ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | | :--------------------------------------- | :------------------------- | :------------------------- | :----------------------------- | :----------------------------- | | Net income available to common shareholders | $33,575 | $39,121 | $67,442 | $105,676 | | Weighted average common shares outstanding (Basic) | 127,206,579 | 126,767,507 | 127,015,478 | 126,629,786 | | Basic earnings per share | $0.26 | $0.31 | $0.53 | $0.83 | | Diluted earnings per share | $0.26 | $0.31 | $0.53 | $0.83 | - Basic and diluted EPS for Q3 2024 were **$0.26**, down from **$0.31** in Q3 2023[105](index=105&type=chunk) - For the nine months, EPS was **$0.53**, down from **$0.83** in the prior year, reflecting the decrease in net income[105](index=105&type=chunk) [(8) Pension and Other Post-Retirement Benefits](index=34&type=section&id=(8)%20Pension%20and%20Other%20Post-Retirement%20Benefits) This section details the company's pension and other post-retirement benefit costs and related financial impacts Pension and Other Post-Retirement Benefits (in thousands) | Metric (in thousands) | Quarter ended Sep 30, 2024 (Pension) | Quarter ended Sep 30, 2023 (Pension) | Nine months ended Sep 30, 2024 (Pension) | Nine months ended Sep 30, 2023 (Pension) | | :-------------------------------- | :----------------------------------- | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | | Service cost | $1,425 | $1,560 | $4,275 | $4,680 | | Interest cost | 2,205 | 2,245 | 6,615 | 6,735 | | Expected return on plan assets | (3,776) | (3,479) | (11,328) | (10,437) | | Net periodic cost (Pension) | $(691) | $(218) | $(2,073) | $(654) | | Net periodic cost (Other benefits)| $25 | $17 | $75 | $51 | - Net periodic pension cost increased significantly to **$(691) thousand** for Q3 2024 from **$(218) thousand** in Q3 2023, and to **$(2,073) thousand** for the nine months from **$(654) thousand** in the prior year, primarily due to changes in expected return on plan assets and interest costs[107](index=107&type=chunk)[108](index=108&type=chunk) - No funding requirement is anticipated for the year ending December 31, 2024[107](index=107&type=chunk)[108](index=108&type=chunk) [(9) Disclosures About Fair Value of Financial Instruments](index=34&type=section&id=(9)%20Disclosures%20About%20Fair%20Value%20of%20Financial%20Instruments) This section outlines the fair value hierarchy and valuation methodologies for the company's financial instruments - The company categorizes financial instruments into a **three-level fair value hierarchy** based on observability of inputs: **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (unobservable inputs)[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[119](index=119&type=chunk)[142](index=142&type=chunk) - Loans receivable and loans held-for-sale are primarily classified as **Level 3 assets** due to the use of discounted cash flow models or adjusted quoted prices for similar loans with unobservable pull-through rates[110](index=110&type=chunk)[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[119](index=119&type=chunk)[142](index=142&type=chunk) Fair Value of Financial Instruments (in thousands) | Financial Instrument (in thousands) | Carrying Amount (Sep 30, 2024) | Estimated Fair Value (Sep 30, 2024) | Level 1 | Level 2 | Level 3 | | :---------------------------------- | :----------------------------- | :---------------------------------- | :------ | :---------- | :----------- | | **Financial Assets** | | | | | | | Cash and cash equivalents | $226,883 | $226,883 | $226,883| — | — | | Securities available-for-sale | 1,111,868 | 1,111,868 | — | 1,111,868 | — | | Securities held-to-maturity | 766,772 | 672,641 | — | 672,641 | — | | Loans receivable, net | 11,169,375 | 10,494,023 | — | — | 10,494,023 | | Loans held-for-sale | 9,370 | 9,370 | — | — | 9,370 | | Total financial assets | $13,384,814 | $12,615,331 | $273,561| $1,816,481 | $10,504,066 | | **Financial Liabilities** | | | | | | | Total financial liabilities | $12,569,029 | $12,325,739 | $9,571,067| $141,786 | $2,612,886 | - For nonrecurring assets, individually assessed loans, mortgage servicing rights, and real estate owned are classified as **Level 3**, with fair values determined by appraisal or discounted cash flow analysis using significant unobservable inputs like estimated cost to sell, prepayment rates, and expected life[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) [(10) Derivative Financial Instruments](index=43&type=section&id=(10)%20Derivative%20Financial%20Instruments) This section describes the company's use of derivative instruments for managing interest rate exposure and customer needs - The company uses **interest rate swaps, caps, and foreign exchange contracts** to manage interest rate exposure and service customer needs[144](index=144&type=chunk)[145](index=145&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) - Derivatives are categorized as either **designated hedging instruments** (cash flow hedges) or **non-designated instruments** (customer swaps, interest rate lock commitments, forward commitments, risk participation agreements)[144](index=144&type=chunk)[145](index=145&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) Derivative Financial Instruments (in thousands) | Derivative Type (in thousands) | Notional Amount (Sep 30, 2024) | Fair Value (Asset) (Sep 30, 2024) | Notional Amount (Sep 30, 2024) | Fair Value (Liability) (Sep 30, 2024) | | :----------------------------- | :----------------------------- | :-------------------------------- | :----------------------------- | :------------------------------------ | | Hedging interest rate swaps | $50,000 | $90 | $125,000 | $2,085 | | Non-hedging interest rate swaps| 748,903 | 31,761 | 748,903 | 31,924 | | Foreign exchange swaps | 2,987 | 6 | 119 | 173 | | Interest rate lock commitments | 27,536 | 673 | — | — | | Forward commitments | 4,514 | 115 | — | — | | Risk participation agreements | — | — | 137,126 | 49 | | Total Derivatives | $833,940 | $32,645 | $1,011,148 | $34,231 | Derivative Income and Expense (in thousands) | Income/Expense (in thousands) | Quarter ended Sep 30, 2024 | Quarter ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | | :---------------------------- | :------------------------- | :------------------------- | :----------------------------- | :----------------------------- | | Hedging derivatives (interest expense decrease) | $732 | $627 | $2,198 | $831 | | Non-hedging swap derivatives (other income) | $(221) | $203 | $(45) | $(127) | | Non-hedging swap derivatives (mortgage banking income) | $(73) | $(221) | $135 | $(46) | [(11) Legal Proceedings](index=46&type=section&id=(11)%20Legal%20Proceedings) This section addresses the company's involvement in legal proceedings and the assessment of potential financial liabilities - The company accrues for legal proceedings when a loss is probable and estimable[154](index=154&type=chunk) - As of September 30, 2024, no pending or threatened legal proceedings are anticipated to have a **material ultimate liability** on the consolidated financial statements[154](index=154&type=chunk) [(12) Changes in Accumulated Other Comprehensive Income](index=46&type=section&id=(12)%20Changes%20in%20Accumulated%20Other%20Comprehensive%20Income) This section details the changes in accumulated other comprehensive income, including unrealized gains/losses and pension adjustments Changes in Accumulated Other Comprehensive Income (in thousands) | Component (in thousands) | Balance as of June 30, 2024 | Net other comprehensive income/(loss) (Q3 2024) | Balance as of September 30, 2024 | | :----------------------------------------------------- | :-------------------------- | :---------------------------------------------- | :------------------------------- | | Unrealized losses on securities available-for-sale | $(132,959) | $27,947 | $(105,012) | | Change in fair value of interest rate swaps | $2,110 | $(3,654) | $(1,544) | | Change in defined benefit pension plans | $765 | $(387) | $378 | | Total Accumulated Other Comprehensive Income/(Loss) | $(130,084) | $23,906 | $(106,178) | - Accumulated other comprehensive loss improved from **$(149.5) million** at December 31, 2023, to **$(106.2) million** at September 30, 2024[158](index=158&type=chunk)[159](index=159&type=chunk) - This was primarily driven by **$45.6 million** in net unrealized holding gains on marketable securities for the nine months ended September 30, 2024, compared to losses in the prior year[158](index=158&type=chunk)[159](index=159&type=chunk) [Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=48&type=section&id=Item%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial condition and operating results, including forward-looking statements, critical accounting policies, recent accounting standards, and a detailed comparison of financial performance for the quarter and nine months ended September 30, 2024, against prior periods [Forward-Looking Statements](index=48&type=section&id=Forward-Looking%20Statements) This section highlights that the document contains forward-looking statements subject to various risks and uncertainties - The document contains forward-looking statements subject to **risks and uncertainties** that could cause actual results to differ materially[161](index=161&type=chunk)[162](index=162&type=chunk) - Important factors include inflation, interest rate changes, asset quality deterioration, regulatory changes, economic conditions, cybersecurity concerns, and technological changes[161](index=161&type=chunk)[162](index=162&type=chunk) [Overview of Critical Accounting Policies Involving Estimates](index=50&type=section&id=Overview%20of%20Critical%20Accounting%20Policies%20Involving%20Estimates) This section directs readers to the company's 2023 Annual Report for an overview of critical accounting policies - For an overview of critical accounting policies involving estimates, readers are directed to Note 1 of the Notes to Consolidated Financial Statements in Item 8 of Part II of the company's **2023 Annual Report on Form 10-K**[163](index=163&type=chunk) [Recently Issued Accounting Standards](index=50&type=section&id=Recently%20Issued%20Accounting%20Standards) This section discusses recently issued accounting standards and their anticipated impact on the company's financial statements - The company is evaluating recently issued ASUs, including **ASU No. 2023-06** (Disclosure Improvements), **ASU 2023-07** (Segment Reporting), and **ASU No. 2023-09** (Improvements to Income Tax Disclosures)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) - None of these are expected to have a **material impact** on the consolidated financial statements or disclosures[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) [Comparison of Financial Condition](index=50&type=section&id=Comparison%20of%20Financial%20Condition) This section compares key financial condition metrics, including assets, liabilities, and equity, between reporting periods Comparison of Financial Condition (in millions) | Metric (in millions) | Sep 30, 2024 | Dec 31, 2023 | Change ($) | Change (%) | | :-------------------------- | :----------- | :----------- | :--------- | :--------- | | Total assets | $14,354 | $14,419 | $(65) | (0.5%) | | Cash and cash equivalents | $227 | $122 | $105 | 86% | | Total marketable securities | $1,879 | $1,858 | $21 | 1% | | Gross loans receivable | $11,305 | $11,415 | $(110) | (1%) | | Personal banking loans | $6,423 | $6,782 | $(359) | (5%) | | Commercial banking loans | $4,881 | $4,633 | $248 | 5% | | Total deposits | $12,071 | $11,980 | $91 | 1% | | Time deposits | $2,710 | $2,603 | $107 | 4% | | Noninterest-bearing deposits| $2,582 | $2,669 | $(87) | (3%) | | Total shareholders' equity | $1,591 | $1,551 | $40 | 2.6% | - The increase in commercial banking loans was driven by a **14% increase** in the commercial and industrial (C&I) loan portfolio, reflecting the success of new commercial lending verticals[171](index=171&type=chunk) - Deposit growth was primarily in time deposits (up **$107 million** or **4%**) and interest-bearing demand deposits (up **$42 million** or **2%**), while noninterest-bearing deposits decreased by **$87 million (3%)**[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - The company utilized brokered deposits (**$212 million** at **5.37% cost**) and Intrafi Network Deposits (**$697 million** at **3.91% cost**) to diversify funding[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) [Regulatory Capital](index=53&type=section&id=Regulatory%20Capital) This section presents the company's regulatory capital ratios and compliance with 'well capitalized' requirements Regulatory Capital Ratios | Capital Ratio (Northwest Bancshares, Inc.) | Sep 30, 2024 | Dec 31, 2023 | Minimum Capital Requirements (1) | Well Capitalized Requirements | | :----------------------------------------- | :----------- | :----------- | :------------------------------- | :---------------------------- | | Total capital (to risk-weighted assets) | 16.024% | 16.753% | 10.500% | 10.000% | | Tier 1 capital (to risk-weighted assets) | 13.698% | 14.463% | 8.500% | 8.000% | | CET1 capital (to risk-weighted assets) | 12.516% | 13.294% | 7.000% | 6.500% | | Tier 1 capital (leverage) (to average assets) | 10.283% | 10.841% | 4.000% | 5.000% | - Northwest Bancshares, Inc. and Northwest Bank continue to exceed all minimum regulatory capital requirements, including the capital conservation buffer, and are classified as **'well capitalized'** as of September 30, 2024[182](index=182&type=chunk)[184](index=184&type=chunk) [Regulatory Considerations](index=54&type=section&id=Regulatory%20Considerations) This section discusses recent regulatory developments, specifically the FDIC's policy statement on Bank Merger Act applications - In September 2024, the **FDIC** adopted a final policy statement on **Bank Merger Act (BMA)** applications, expanding the scope of transactions subject to approval and requiring a more rigorous evaluation process with heightened expectations for statutory factors, which will necessitate additional information in future applications[185](index=185&type=chunk) [Liquidity](index=54&type=section&id=Liquidity) This section details the company's liquidity position, including its liquidity ratio and available borrowing capacity - Northwest Bank's liquidity ratio (unencumbered available-for-sale liquid assets as a percentage of deposits and borrowings) was **11.25%** at September 30, 2024[186](index=186&type=chunk) - The company had **$3.3 billion** of additional borrowing capacity available, including **$250 million** on an overnight FHLB line of credit (unused), **$500 million** with the Federal Reserve Bank, and **$105 million** with two correspondent banks[186](index=186&type=chunk) [Dividends](index=54&type=section&id=Dividends) This section reports on cash dividends paid and the common stock dividend payout ratio for the reported periods - The company paid cash dividends of **$25 million** (**$0.20 per share**) for both Q3 2024 and Q3 2023[187](index=187&type=chunk) - The common stock dividend payout ratio for Q3 2024 was **76.9%**, up from **64.5%** in Q3 2023[187](index=187&type=chunk) - A cash dividend of **$0.20 per share** was declared on October 17, 2024, marking the **120th consecutive quarter** of cash dividends[187](index=187&type=chunk) [Nonperforming Assets](index=55&type=section&id=Nonperforming%20Assets) This section analyzes the company's nonperforming assets, including delinquent loans and real estate owned Nonperforming Assets (in thousands) | Metric (in thousands) | September 30, 2024 | December 31, 2023 | | :-------------------------------------------------- | :----------------- | :---------------- | | Total loans 90 days or more past due | $32,562 | $24,591 | | Total real estate owned (REO) | 76 | 104 | | Total loans 90 days or more past due and REO | $32,638 | $24,695 | | Nonaccrual loans - 90 days or more past due | 31,516 | 21,894 | | Nonaccrual loans - less than 90 days past due | 45,312 | 72,490 | | Loans 90 days or more past due still accruing | 1,045 | 2,698 | | Total nonperforming loans | 77,873 | 97,082 | | Total nonperforming assets | $77,949 | $97,186 | - Total nonperforming assets decreased by **$19.2 million (19.8%)** to **$77.9 million** at September 30, 2024, from **$97.2 million** at December 31, 2023[190](index=190&type=chunk) - This was primarily driven by a reduction in nonaccrual loans less than 90 days past due[190](index=190&type=chunk) - Loans 90 days or more past due increased to **$32.6 million** from **$24.6 million**, with a notable increase in commercial loans 90 days or more past due from **$2.78 million** to **$14.48 million**[190](index=190&type=chunk) [Allowance for Credit Losses](index=56&type=section&id=Allowance%20for%20Credit%20Losses) This section discusses the allowance for credit losses, its changes, and related asset quality metrics - The Allowance for Credit Losses (ACL) increased by **$0.6 million** to **$126 million**, or **1.11%** of total loans, at September 30, 2024, slightly up from **1.10%** at December 31, 2023[199](index=199&type=chunk)[227](index=227&type=chunk) - This reflects growth in the commercial lending portfolio and changes in economic forecasts[199](index=199&type=chunk)[227](index=227&type=chunk) - Total classified loans increased by **$101 million** to **$320 million** at September 30, 2024, from **$218 million** at December 31, 2023, primarily due to exposure to the **Long Term Healthcare segment** and challenges faced by some operators post-COVID[200](index=200&type=chunk)[228](index=228&type=chunk) - Nonaccrual loans decreased by **$18 million (19%)** to **$77 million** at September 30, 2024, representing **0.68%** of total loans receivable, down from **0.83%** at December 31, 2023[201](index=201&type=chunk) - Annualized net charge-offs remained low at **0.14%** for the nine months ended September 30, 2024[201](index=201&type=chunk) [Comparison of Operating Results for the Quarters Ended September 30, 2024 and 2023](index=57&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Quarters%20Ended%20September%2030%2C%202024%20and%202023) This section compares the company's operating results, including net income, EPS, and returns, for the reported quarters and nine-month periods Operating Results for Quarters Ended September 30 (in thousands) | Metric (in thousands) | Quarter ended Sep 30, 2024 | Quarter ended Sep 30, 2023 | Change ($) | Change (%) | | :-------------------- | :------------------------- | :------------------------- | :--------- | :--------- | | Net income | $33,618 | $39,220 | $(5,602) | (14%) | | Diluted EPS | $0.26 | $0.31 | $(0.05) | (16.1%) | | Return on average equity | 8.50% | 10.27% | (1.77%) | (17.2%) | | Return on average assets | 0.93% | 1.08% | (0.15%) | (13.9%) | Operating Results for Nine Months Ended September 30 (in thousands) | Metric (in thousands) | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | Change ($) | Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Net income | $67,528 | $105,943 | $(38,415) | (36%) | | Diluted EPS | $0.53 | $0.83 | $(0.30) | (36.1%) | | Return on average equity | 5.80% | 9.37% | (3.57%) | (38.1%) | | Return on average assets | 0.63% | 0.99% | (0.36%) | (36.4%) | - The decrease in net income for Q3 2024 was primarily due to a **$4 million** increase in provision for credit losses, a **$3 million** decrease in noninterest income, and a **$3 million** increase in noninterest expense, partially offset by a **$3 million** increase in net interest income and a **$2 million** decrease in income tax expense[203](index=203&type=chunk) [Net Interest Income](index=59&type=section&id=Net%20Interest%20Income) This section analyzes net interest income and net interest margin, considering changes in earning assets and funding costs Net Interest Income and Margin (FTE, in thousands) | Metric (FTE, in thousands) | Quarter ended Sep 30, 2024 | Quarter ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | | :------------------------- | :------------------------- | :------------------------- | :----------------------------- | :----------------------------- | | Net interest income (FTE) | $112,216 | $109,258 | $324,035 | $331,897 | | Net interest margin (FTE) | 3.33% | 3.23% | 3.21% | 3.32% | | Average loans receivable | $11,223,602 | $11,190,959 | $11,312,229 | $11,049,030 | | Average investments | $1,998,855 | $2,117,135 | $2,049,662 | $2,214,523 | | Average deposits | $12,539,521 | $12,606,882 | $12,851,292 | $12,738,429 | | Average borrowings | $220,677 | $643,518 | $337,427 | $740,011 | - Net interest income (FTE) for Q3 2024 increased by **$3 million (3%)** YoY to **$112.2 million**, with net interest margin (FTE) rising **10 basis points** to **3.33%**[208](index=208&type=chunk) - This was driven by higher earning asset yields, partially offset by increased interest-bearing deposit costs and a shift to higher-cost deposits[208](index=208&type=chunk) - For the nine months, net interest income (FTE) decreased by **$8 million (2%)** YoY to **$324 million**, and net interest margin (FTE) decreased by **11 basis points**[209](index=209&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - Average loans receivable increased by **$263 million (2.4%)** for the nine months, while average investments declined by **9%**[209](index=209&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - Average deposits grew by **4%**, primarily in time deposits, leading to a **139% increase** in interest expense on deposits[209](index=209&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) [Provision for Credit Losses](index=64&type=section&id=Provision%20for%20Credit%20Losses) This section analyzes the provision for credit losses, including changes related to loans and unfunded commitments Provision for Credit Losses (in thousands) | Metric (in thousands) | Quarter ended Sep 30, 2024 | Quarter ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | | :-------------------------------------------------- | :------------------------- | :------------------------- | :----------------------------- | :----------------------------- | | Provision for credit losses - loans | $5,727 | $3,983 | $12,130 | $14,863 | | Provision/(benefit) for credit losses - unfunded commitments | $(852) | $(2,981) | $(4,190) | $65 | | Total provision for credit losses | $4,875 | $1,002 | $7,940 | $14,928 | - The total provision for credit losses increased by **$3.87 million** for Q3 2024 compared to Q3 2023, driven by a **$2 million** increase in loan provisions and a **$2 million** increase in unfunded commitment provisions[225](index=225&type=chunk)[226](index=226&type=chunk) - For the nine months, the total provision decreased by **$6.99 million (47%)** YoY, primarily due to a **$4 million** decrease in unfunded commitment provisions[225](index=225&type=chunk)[226](index=226&type=chunk) - Changes in the provision are attributed to growth in the **commercial lending portfolio**, evolving **economic forecasts**, and a decline in reserves for **unfunded commitments** due to the timing of commercial construction loans and lines of credit[227](index=227&type=chunk) [Noninterest Income](index=65&type=section&id=Noninterest%20Income) This section reviews the components of noninterest income, highlighting changes in service charges, trust income, and investment gains/losses Noninterest Income (in thousands) | Metric (in thousands) | Quarter ended Sep 30, 2024 | Quarter ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | | :-------------------------------- | :------------------------- | :------------------------- | :----------------------------- | :----------------------------- | | Total noninterest income | $27,833 | $30,888 | $46,947 | $84,654 | | Loss on sale of investments | — | — | (39,413) | (8,306) | | Service charges and fees | 15,932 | 15,270 | 46,982 | 43,292 | | Trust and other financial services income | 7,924 | 7,085 | 22,617 | 20,400 | | Income from bank-owned life insurance | 1,434 | 4,561 | 4,307 | 7,134 | | Gain on sale of SBA loans | 667 | 301 | 2,997 | 1,412 | - Noninterest income for Q3 2024 decreased by **$3 million (10%)** YoY to **$27.8 million**, primarily due to a **$3 million** decline in income from bank-owned life insurance (due to death benefits received in the prior period)[232](index=232&type=chunk) - For the nine months, excluding a **$39 million** loss on sale of securities, noninterest income increased by **$2 million (2%)** YoY[232](index=232&type=chunk) - This was driven by a **$4 million (9%)** increase in service charges and fees and a **$2 million (112%)** increase in gain on sale of SBA loans[232](index=232&type=chunk) [Noninterest Expense](index=65&type=section&id=Noninterest%20Expense) This section examines the components of noninterest expense, focusing on compensation, marketing, and restructuring costs Noninterest Expense (in thousands) | Metric (in thousands) | Quarter ended Sep 30, 2024 | Quarter ended Sep 30, 2023 | Nine months ended Sep 30, 2024 | Nine months ended Sep 30, 2023 | | :-------------------------------- | :------------------------- | :------------------------- | :----------------------------- | :----------------------------- | | Total noninterest expense | $90,767 | $87,570 | $273,211 | $260,878 | | Compensation and employee benefits | 56,186 | 51,243 | 161,257 | 145,497 | | Marketing expenses | 2,004 | 2,379 | 6,563 | 8,127 | | Merger, asset disposition and restructuring expense | 43 | — | 2,913 | 4,395 | - Noninterest expense increased by **$3 million (4%)** for Q3 2024 YoY, primarily due to a **$5 million (10%)** increase in compensation and employee benefits, driven by the expansion of commercial business and related support functions, as well as increased contracted employees and benefits[237](index=237&type=chunk) - For the nine months, noninterest expense increased by **$12 million (5%)** YoY, mainly due to a **$16 million (11%)** increase in compensation and employee benefits[238](index=238&type=chunk) - This was partially offset by a **$2 million (19%)** decrease in marketing expenses and a **$1 million (34%)** decrease in merger, asset disposition, and restructuring expenses[238](index=238&type=chunk) [Income Taxes](index=67&type=section&id=Income%20Taxes) This section discusses the provision for income taxes and the anticipated effective tax rate - The provision for income taxes decreased by **$2 million** for Q3 2024 YoY and **$13 million** for the nine months YoY, primarily due to lower income before income taxes[239](index=239&type=chunk) - The anticipated effective tax rate for the year ending December 31, 2024, is between **22.0% and 24.0%**[239](index=239&type=chunk) [GAAP to Non-GAAP Reconciliations](index=68&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliations) This section provides reconciliations of GAAP to non-GAAP financial measures, such as net interest income on a fully taxable equivalent basis GAAP to Non-GAAP Reconciliations (in thousands) | Metric (in thousands) | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Nine months Sep 30, 2024 | Nine months Sep 30, 2023 | | :-------------------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | :----------------------- | :----------------------- | | Net interest income (GAAP) | $111,302 | $106,841 | $103,238 | $106,302 | $108,368 | $321,381 | $329,381 | | Plus: Taxable-equivalent adjustment | 914 | 883 | 857 | 758 | 890 | 2,654 | 2,516 | | Net interest income FTE | $112,216 | $107,724 | $104,095 | $107,060 | $109,258 | $324,035 | $331,897 | - The company provides **non-GAAP financial measures**, such as **net interest income on a fully taxable equivalent (FTE) basis**, to offer investors a clearer understanding of operating performance and facilitate peer comparisons[205](index=205&type=chunk)[241](index=241&type=chunk) - The FTE adjustment converts tax-exempt income to a taxable equivalent amount[205](index=205&type=chunk)[241](index=241&type=chunk) [Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=69&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section details the company's management of interest rate risk, a primary market risk, through strategies like matching asset and liability re-pricing periods, increasing core deposits, and using fixed-rate borrowings. It outlines the roles of the Asset/Liability Committee and the Board's Risk Management Committee in monitoring and reviewing market risks. Simulation models are used to assess the impact of interest rate shifts on net interest income, net income, and market value of equity, with established guidelines for acceptable decreases - The company manages **interest rate risk** by matching re-pricing periods of assets and liabilities, increasing core deposits, extending CD maturities, using fixed-rate borrowings, and originating short-term fixed-rate or adjustable-rate loans[244](index=244&type=chunk) - Simulation models project the impact of parallel interest rate shifts (**100, 200, 300 bps**) on net interest income, net income, and market value of equity[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk)[251](index=251&type=chunk) - For a **300 bps upward shift**, net interest income is projected to decrease by **4.8%**, net income by **11.5%**, and market value of equity by **18.3%**[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk)[251](index=251&type=chunk) - For a **300 bps downward shift**, net interest income is projected to decrease by **7.1%**, net income by **17.3%**, and market value of equity by **2.9%**[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk)[251](index=251&type=chunk) [Item 4. CONTROLS AND PROCEDURES](index=70&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of the company's disclosure controls and procedures as of September 30, 2024, and concluded they were effective. There were no material changes in internal controls over financial reporting during the period - The Principal Executive Officer and Principal Financial Officer concluded that the company's **disclosure controls and procedures** were **effective** as of September 30, 2024[252](index=252&type=chunk) - No **material changes** in internal controls over financial reporting occurred during the period covered by this report[253](index=253&type=chunk) [PART II. OTHER INFORMATION](index=70&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and equity security matters [Item 1. LEGAL PROCEEDINGS](index=70&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) The company is involved in various legal proceedings in the normal course of business. While accruals are made for probable and estimable losses, no additional liability from potential litigation is currently expected to have a material adverse effect on the financial statements - The company does not anticipate any **material adverse effect** on its financial statements from current legal proceedings, beyond amounts already accrued[254](index=254&type=chunk) [Item 1A. RISK FACTORS](index=70&type=section&id=Item%201A.%20RISK%20FACTORS) There have been no material updates or additions to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023. The company acknowledges that additional unknown or currently immaterial risks could also adversely affect its business - No **material updates or additions** to risk factors have occurred since the **2023 Annual Report on Form 10-K**[255](index=255&type=chunk) [Item 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES](index=71&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%2C%20USE%20OF%20PROCEEDS%2C%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) This section states that there were no unregistered sales of equity securities or issuer repurchases of common stock during the quarter ended September 30, 2024. A maximum of 2,261,130 shares remain available under the existing repurchase program - No shares of common stock were repurchased during the quarter ended September 30, 2024[258](index=258&type=chunk) - A maximum of **2,261,130 shares** remain available for repurchase under the program approved on December 13, 2012[258](index=258&type=chunk) [Item 3. DEFAULTS UPON SENIOR SECURITIES](index=71&type=section&id=Item%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This item is marked as 'Not applicable,' indicating no defaults upon senior securities during the reporting period [Item 4. MINE SAFETY DISCLOSURES](index=71&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This item is marked as 'Not applicable,' indicating no mine safety disclosures are required for the reporting period [Item 5. OTHER INFORMATION](index=71&type=section&id=Item%205.%20OTHER%20INFORMATION) During the three months ended September 30, 2024, no directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No directors or officers adopted or terminated any **Rule 10b5-1** or **non-Rule 10b5-1 trading arrangements** during the quarter ended September 30, 2024[259](index=259&type=chunk) [Item 6. EXHIBITS](index=72&type=section&id=Item%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO (pursuant to Sections 302 and 906 of Sarbanes-Oxley Act) and various XBRL taxonomy documents - The report includes certifications from the **Chief Executive Officer** and **Chief Financial Officer** as required by **Sections 302 and 906 of the Sarbanes-Oxley Act of 2002**[261](index=261&type=chunk)[262](index=262&type=chunk) - Various **XBRL taxonomy extension documents** (Schema, Calculation, Definition, Label, Presentation Linkbase) and the **inline XBRL formatted cover page** are filed as exhibits[263](index=263&type=chunk) [Signature](index=73&type=section&id=Signature) The report is duly signed by Louis J. Torchio, President and Chief Executive Officer, and Joseph D. Canfield Jr., Executive Vice President, Chief Accounting Officer, on November 7, 2024, certifying its submission pursuant to the Securities Exchange Act of 1934 - The report was signed by **Louis J. Torchio**, President and Chief Executive Officer, and **Joseph D. Canfield Jr.**, Executive Vice President, Chief Accounting Officer, on **November 7, 2024**[265](index=265&type=chunk)

Financial Data and Key Metrics Changes - The company reported net income of $33.6 million or $0.26 per diluted share, with a net interest margin (NIM) expansion of 13 basis points to 3.33% [9] - Noninterest income decreased by $3 million due to losses on equity method investments and lower gains on the sale of SBA loans [10] - Noninterest expense decreased by nearly 2% or approximately $2 million from the second quarter, with an efficiency ratio improving to 64.8% [15] Business Line Data and Key Metrics Changes - Commercial and industrial loans grew by 2.8% quarter-over-quarter and 25.7% year-over-year, while residential mortgages declined by $190 million or 5.5% year-over-year [11] - The commercial real estate portfolio shrank by 1% since last quarter, indicating a shift towards a more desirable loan mix [11] - Loan yields increased to 5.6%, reflecting a focus on commercial banking transformation [11] Market Data and Key Metrics Changes - Deposits remained largely flat since last quarter but grew by 3.2% year-over-year, with the cost of deposits increasing by only 2 basis points [12] - The current cost of deposits stands at 1.78%, which is competitive relative to peers [12] Company Strategy and Development Direction - The company is committed to responsible growth, both organically and through acquisitions, with a focus on enhancing performance and financial standing [6][7] - The leadership team is exploring opportunities in fast-growing markets like Columbus and Indianapolis, considering both acquisitions and de novo strategies [29][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the credit quality environment, anticipating normalization towards long-term averages for charge-offs [24] - The company expects low single-digit loan growth and flat deposits, with a focus on managing deposit costs while balancing client expectations [17] Other Important Information - The company declared a quarterly dividend of $0.20 per share to shareholders of record as of November 8, 2024 [7] - The capital position remains strong with an estimated Tier 1 capital to risk-weighted assets of 13.7% [10] Q&A Session Summary Question: Fee income guidance and future expectations - Management indicated that guidance for 2025 will be provided during the fourth quarter results in January, with expectations for a normalized level of fee income [21][22] Question: Credit quality and charge-off guidance - Management clarified that the increase in normalized net charge-off guidance reflects a long-term trend rather than a specific quarter's expectation [24][25] Question: M&A targets and strategies - The company is focused on opportunities within its four-state footprint, looking for highly accretive deals in growth markets [28][29] Question: Commercial loan growth and regional strengths - Management noted that commercial loan growth is broad-based across new verticals, with expectations for continued growth in C&I lending [32][33] Question: NIM guidance and deposit costs - Management expects deposit costs to trend down next quarter, with a reasonable pricing stance in the market [37][38] Question: Balance sheet restructuring and provisioning - No significant restructuring is planned, but management is always evaluating market opportunities [56] - Provisioning for classified loans is not expected to increase materially for the long-term healthcare portfolio [57]

Northwest Bancshares (NWBI) reported $139.14 million in revenue for the quarter ended September 2024, representing a year-over-year decline of 0.1%. EPS of $0.26 for the same period compares to $0.31 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $140.8 million, representing a surprise of -1.18%. The company has not delivered EPS surprise, with the consensus EPS estimate being $0.26. While investors scrutinize revenue and earnings changes year-over-year and how they compare wit ...