Financial Performance - Net interest income after provision for credit losses increased to $107,211 thousand for the quarter ended June 30, 2024, compared to $99,619 thousand for the same period in 2023, an increase of 7.99%[6] - Net income for the quarter ended June 30, 2024, was $4,747 thousand, a decrease of 85.64% compared to $33,044 thousand for the same quarter in 2023[6] - Basic earnings per share decreased to $0.04 for the quarter ended June 30, 2024, down from $0.26 in the same quarter of 2023[6] - Total comprehensive income for the quarter ended June 30, 2024, was $28,087,000, an increase of 25.5% from $22,316,000 in the same quarter of 2023[8] - For the six months ended June 30, 2024, net income was $33,910,000, down 49.1% from $66,723,000 for the same period in 2023[8] - The total comprehensive income for the six months ended June 30, 2024, was $53,318,000, a decrease of 22.3% from $68,630,000 for the same period in 2023[8] Asset and Liability Management - Total assets decreased to $14,385,553 thousand as of June 30, 2024, from $14,419,105 thousand at December 31, 2023, representing a decline of 0.23%[5] - Total liabilities decreased slightly to $12,828,955 thousand as of June 30, 2024, from $12,867,788 thousand at December 31, 2023, a decline of 0.30%[5] - Total deposits increased to $12,087,379 thousand as of June 30, 2024, from $11,979,902 thousand at December 31, 2023, marking a growth of 0.90%[5] - Total loans receivable increased to $11,354,364 thousand as of June 30, 2024, compared to $11,414,809 thousand as of December 31, 2023, reflecting a slight decrease of 0.5%[34] - Total shareholders' equity as of June 30, 2024, was $1,556,598,000, an increase from $1,511,501,000 at the end of June 30, 2023[10] Credit Quality and Losses - Provision for credit losses on loans was $2,169 thousand for the quarter ended June 30, 2024, compared to $6,010 thousand in the same quarter of 2023, indicating a decrease of 63.88%[6] - The allowance for credit losses stood at $125,070 thousand as of June 30, 2024, with a current period provision of $6,403 thousand[40] - Nonaccrual loans in Personal Banking totaled $18,264 million, with 90 days past due and accruing loans at 2,463[46] - Total loans 90 days or more past due decreased to $20,490,000 as of June 30, 2024, from $24,591,000 at December 31, 2023, reflecting improved asset quality[165] - Total nonperforming loans increased to $104,670,000 as of June 30, 2024, compared to $97,082,000 at December 31, 2023[165] Noninterest Income and Expenses - Noninterest income showed a loss of $8,849 thousand for the quarter ended June 30, 2024, compared to a gain of $29,797 thousand in the same quarter of 2023[6] - Total noninterest expense increased to $92,420 thousand for the quarter ended June 30, 2024, compared to $85,858 thousand in the same quarter of 2023, an increase of 7.63%[6] - Noninterest expense increased by $7 million, or 8%, to $54 million for the quarter ended June 30, 2024, from $48 million for the same quarter in 2023, primarily due to an increase in compensation and employee benefits[200] - For the six months ended June 30, 2024, noninterest expense increased by $9 million, or 5%, to $182 million from $173 million for the same period in 2023[202] Marketable Securities and Investments - Total marketable securities available-for-sale amounted to $1,202,354, with a fair value of $1,029,191 after accounting for gross unrealized losses of $(173,647)[21] - The company reported unrealized holding losses on marketable securities of $3,391,000 for the quarter ended June 30, 2024, compared to losses of $17,719,000 in the same quarter of 2023[8] - The company reported a fair value of $1,627,195 for available-for-sale investment securities, with total unrealized losses of $294,563[28] - The company reported a fair value of $1,418,730 for mortgage-backed securities - agency, with unrealized losses totaling $256,696[28] Loans and Financing - Personal Banking loans totaled $6,584,612 thousand as of June 30, 2024, down from $6,782,070 thousand at the end of 2023, representing a decrease of 2.9%[34] - Commercial Banking loans rose to $4,769,752 thousand as of June 30, 2024, compared to $4,632,739 thousand as of December 31, 2023, indicating an increase of 3.0%[34] - The company modified loans for borrowers in financial distress, with multiple types of concessions granted during the reporting period[53] - Total loans receivable as of June 30, 2024, amounted to $11,354,364 thousand, a decrease from $12,191,860 thousand in 2023, representing a decline of approximately 6.8%[74] Capital and Dividends - Cash dividends paid during the quarters ended June 30, 2024, and 2023 were $25 million, with a dividend payout ratio of 500.0% for June 30, 2024[163] - The company declared a cash dividend of $0.20 per share on July 18, 2024, marking the 119th consecutive quarter of cash dividends[163] - Total shareholders' equity remained stable at $1.6 billion, or $12.23 per share, with year-to-date earnings of $34 million[157] Future Outlook and Strategy - Future outlook includes a commitment to enhancing user data analytics and expanding market presence through targeted strategies and potential acquisitions[74] - The company continues to monitor and manage its loan portfolio effectively, with a strategic emphasis on reducing charge-offs and improving overall asset quality[74]

Financial Data and Key Metrics Changes - The company reported a net income of $5 million or $0.04 per diluted share, with adjusted EPS at $0.27, exceeding analyst consensus by $0.05 [77] - Net interest margin (NIM) improved to 320 basis points, a 10 basis point increase from the previous quarter, reflecting reduced borrowings and higher loan yields [65][62] - Non-interest income grew by 9% or $2.6 million quarter-over-quarter, excluding losses from securities restructuring [5][4] Business Line Data and Key Metrics Changes - Commercial and industrial loans grew by 3.2% since last quarter and 33.4% year-over-year, while residential mortgages declined by $143 million or 4.1% [79] - The average overall portfolio yield increased to 2.45%, up from 1.96% at the end of the first quarter [63] - The cost of deposits rose by 15 basis points to 1.76%, the lowest increase in five quarters [4] Market Data and Key Metrics Changes - The company experienced a 1.6% growth in deposits since the last quarter and a 5.8% increase year-over-year [4] - The commercial real estate (CRE) concentration ratio stood at 168% [35] - The allowance for loans coverage increased slightly to 1.10% with net charge-offs at just 7 basis points for the quarter [80] Company Strategy and Development Direction - The company is focused on organic growth and optimizing its operations while considering acquisitions in contiguous states [21][25] - New commercial lending verticals have been established, including sponsor finance and equipment finance, which are showing promising early results [59] - The company aims to maintain a disciplined approach to loan pricing and deposit management to support NIM expansion [67][62] Management's Comments on Operating Environment and Future Outlook - Management noted that credit performance remains strong despite a slight increase in nonperforming assets, indicating a stable overall credit quality [15] - The company anticipates low-single-digit loan growth and flat deposit levels, with a focus on managing deposit costs [67] - Management expressed confidence in the positive changes to the securities portfolio, expecting strong positioning for future quarters [60] Other Important Information - The company declared a quarterly dividend of $0.20 per share to shareholders of record as of August 2, 2024 [10] - The restructuring of the securities portfolio involved selling $314 million or 15% of the portfolio at a loss of $39.4 million, with reinvestments yielding an average of 6% [63][76] Q&A Session Summary Question: What are the expectations for loan growth and credit quality? - Management indicated that loan growth was muted due to a focus on improving loan yields, with expectations for low-single-digit growth in the commercial space [62][67] Question: Can you provide details on the securities restructuring impact? - The restructuring had a positive impact on NIM, with an anticipated incremental benefit of 4 to 5 basis points expected in Q3 [17][91] Question: What is the company's approach to M&A opportunities? - The company is actively considering acquisitions to expand into higher-growth markets while being selective to ensure strategic alignment [21][25] Question: How does the company plan to manage deposit costs? - Management plans to keep deposit maturities short and take advantage of opportunities to reprice as market rates decline [48][67] Question: What is the current status of the commercial loan portfolio? - The commercial loan portfolio is seeing a mix shift towards C&I loans, with a focus on maintaining adequate margins on new loans [64][79]

Financial Highlights - Total assets reached $144 billion[2] - Total loans amounted to $114 billion[2] - Total deposits were $121 billion[2] - Return on average assets (ROAA) was 013%[2] - Return on average equity (ROAE) was 124%[2] - Diluted earnings per share (EPS) stood at $004[2] - Net interest margin (NIM) was 320%[2] Securities Portfolio Restructure - $314 million par value of securities were sold (15% of portfolio) at a pre-tax loss of $394 million[5] - Proceeds from the sale were $276 million[5] - $258 million has been reinvested into available-for-sale (AFS) securities at a yield of 600%[5] - The expected yield on fully reinvested funds is 617%[5] Loan Portfolio - Average loans increased by 02% quarter-over-quarter[8] - Average commercial loans increased by $55 million compared to the first quarter of 2024, a 32% increase[8] - Residential and home equity portfolios declined by 15% and 17% respectively[8] - Total loans grew by $24 million or 02%[71] Deposit Balances - Average total deposits grew by 16% quarter-over-quarter and 58% versus the second quarter of 2023[76] - Average balances in demand deposits were $2596 million, a 11% increase quarter-over-quarter but an 80% decrease year-over-year[12] - Time deposits increased by $135 million quarter-over-quarter (48%) and $1067 million year-over-year (604%)[12] Net Interest Income and Margin - Net interest income increased by 3%[17] - Net interest margin (NIM) expanded to 320% from 310% in the previous quarter[17] Non-Interest Income - There was a loss of $88 million, including a $394 million loss on the sale of investment securities[20] - Excluding the loss from the sale of securities, non-interest income increased by $26 million quarter-over-quarter, a 9% increase[20] - Gain on sale of SBA loans grew by 67% compared to the previous quarter[20] Non-Interest Expense - Total non-interest expense increased by 27%, or $2396 thousand[23] - Compensation and employee benefits increased by 39%, or $1991 thousand[23] - Merger, asset disposition, and restructuring expenses increased by 1005%, or $960 thousand[23] Credit Quality - Overall allowance for loan losses (ALLL) coverage remained strong at 110%[25] - Net charge-offs of 7 basis points reflect increased recoveries in the quarter[25]

Core Viewpoint - Northwest Bancshares reported revenues of $97.99 million for the quarter ended June 2024, which was a 26.75% miss compared to the Zacks Consensus Estimate and a decline from $138.35 million year-over-year [1] Financial Performance - The company is expected to post quarterly earnings of $0.41 per share, reflecting a year-over-year decrease of 14.6%, with the consensus EPS estimate revised 2.4% lower in the last 30 days [3] - The actual quarterly earnings reported were $0.27 per share, surpassing the Zacks Consensus Estimate of $0.23 per share, consistent with earnings of $0.27 per share from the previous year [10] - The company has exceeded consensus EPS estimates two times over the last four quarters [14] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.23 on revenues of $136.36 million, and for the current fiscal year, it is $0.92 on revenues of $539.76 million [6] - The stock has gained approximately 6.7% since the beginning of the year, compared to a 16.7% increase in the S&P 500 [11] - The Zacks Rank for Northwest Bancshares is currently 3 (Hold), indicating expected performance in line with the market in the near future [12] Industry Context - The Financial - Savings and Loan industry is currently ranked in the bottom 31% of over 250 Zacks industries, suggesting that the outlook for the industry could significantly impact the stock's performance [15]

Financial Performance - Net income for the quarter ended June 30, 2024, was $4,747 thousand, a decline of 83.7% compared to $33,044 thousand in the same quarter last year[17]. - Net income for the quarter ended June 30, 2024, was $29,163 million, slightly up from $33,044 million in the same quarter last year, showing a decrease of 11.7%[34]. - Adjusted net operating income (non-GAAP) for the quarter was $34,503 thousand, up from $29,851 thousand year-over-year[38]. - Net income for the quarter ended June 30, 2024, was $5 million, a decrease of $28 million compared to the same quarter last year[66]. Interest Income and Expense - Total interest income for the quarter ended June 30, 2024, was $166,854 million, an increase from $143,996 million in the same quarter last year, representing a growth of 15.8%[34]. - Total interest expense for the quarter ended June 30, 2024, was $60,013 million, compared to $35,447 million in the same quarter last year, reflecting an increase of 69.4%[34]. - Net interest income was reported at $107,724 million with an interest rate spread of 2.58%[62]. - The net interest margin expanded by 10 basis points to 3.20%[68]. Deposits and Loans - Total deposits increased to $11,979,902, up from $11,789,882 in the previous quarter, representing a growth of 1.6%[5]. - Total loans receivable decreased slightly to $11,354,364 thousand from $11,414,809 thousand, a decline of 0.5%[31]. - Total deposits as of June 30, 2024, amounted to $12,087,379, with an average deposit account balance of $17,000[44]. - Average loans receivable increased by $303 million year-over-year, reaching $11,368,749, driven by a $631 million growth in the commercial banking portfolio[46]. Non-Interest Income and Expenses - Noninterest income showed a loss of $8,849 thousand for the quarter, primarily due to a $39,413 thousand loss on the sale of investment securities[14]. - Total noninterest expense for the quarter ended June 30, 2024, was $92,420 million, up from $85,858 million in the same quarter last year, indicating an increase of 7.5%[34]. - Noninterest expense, excluding amortization and merger, asset disposition and restructuring expenses was $89,870 for the latest quarter, up from $88,368 in the previous quarter[1]. Asset Quality - Total nonaccrual loans increased to $102,159 thousand as of June 30, 2024, up from $95,060 thousand in the previous quarter, representing an increase of 1.15%[11]. - Nonperforming loans to total loans ratio rose to 0.92% from 0.85% in the previous quarter, indicating a slight deterioration in loan quality[11]. - The allowance for credit losses to total loans remained stable at 1.10% for the quarter ended June 30, 2024[11]. - Classified loans slightly increased to $257 million, or 2.26% of total loans, compared to $214 million, or 1.90% a year earlier[13]. Capital Ratios - Total capital to risk-weighted assets for Northwest Bancshares, Inc. is $1,784,604, representing a ratio of 16.674%[25]. - Tier 1 capital to risk-weighted assets for Northwest Bancshares, Inc. is $1,536,552, with a ratio of 14.356%[25]. - Common equity tier 1 capital to risk-weighted assets for Northwest Bancshares, Inc. is $1,410,837, equating to a ratio of 13.182%[25]. - Tier 1 capital (leverage) to average assets for Northwest Bancshares, Inc. is 10.654%[25]. Employee and Office Metrics - Full-time equivalent employees decreased to 1,991 from 2,098, a reduction of 5.1%[31]. - The number of banking offices decreased to 139 from 142, indicating a contraction in physical presence[31]. Market Performance - The closing market price per share decreased to $11.55 from $12.48, a decline of 7.4%[31]. - Book value per share rose to $12.23 from $12.20, indicating a slight increase[31]. - Tangible book value per share increased to $9.20 from $8.84 year-over-year[38]. Efficiency Metrics - The efficiency ratio for the quarter ended June 30, 2024, was 68.62%, compared to 62.06% in the same quarter last year, indicating a decline in operational efficiency[34]. - The efficiency ratio, excluding certain losses and gains, improved to 65.41% from 67.35% in the previous quarter[41].

Core Viewpoint - The company reported a significant decline in net income for the quarter ended June 30, 2024, primarily due to a loss on the sale of investments and restructuring expenses, despite an increase in adjusted net operating income and strong performance in the commercial banking sector [15][17]. Financial Performance - The adjusted net operating income was $35 million, or $0.27 per diluted share, for the quarter ended June 30, 2024, representing an increase of $1 million from the same quarter last year [15]. - Net income for the same quarter was $4.7 million, or $0.04 per diluted share, a decrease of $28 million compared to the same quarter last year [15][17]. - The annualized return on average equity was 1.24% and on average assets was 0.13% for the quarter, down from 8.72% and 0.93% respectively in the same quarter last year [15][17]. Noninterest Income and Expenses - Noninterest income showed a loss of $8.8 million, significantly impacted by a $39 million loss on the sale of investment securities [17]. - Total noninterest expense increased to $92.4 million, driven by a $6 million rise in personnel expenses related to the expansion of the commercial business [17]. Loan and Deposit Growth - Average loans receivable increased by $303 million year-over-year, with a notable $631 million growth in the commercial banking portfolio [15]. - Average deposits grew by $666 million from the same quarter last year, primarily due to a $1.1 billion increase in average time deposits [15]. Securities Portfolio Restructuring - The company repositioned its securities portfolio by selling 15% of its investment securities, resulting in a pre-tax loss of $39 million [15]. - Proceeds from the sale were used to repay short-term borrowings, and the company expects to recover the loss over the next three years [15]. Dividend Declaration - The Board of Directors declared a quarterly cash dividend of $0.20 per share, marking the 119th consecutive quarter of dividend payments [15].

Company Overview - Northwest Bancshares, Inc. is headquartered in Columbus, Ohio and serves as the bank holding company for Northwest Bank, which was founded in 1896. The bank offers a comprehensive range of business and personal banking products, employee benefits, and wealth management services [2] - Currently, Northwest operates 131 full-service financial centers and eight free-standing drive-through facilities across Pennsylvania, New York, Ohio, and Indiana. The company's common stock is listed on the NASDAQ Global Select Market under the ticker symbol "NWBI" [2] Upcoming Financial Events - Northwest will host a conference call to review its second-quarter 2024 financial results on July 23, 2024, at 9:00 a.m. (EDT), with results expected to be released at approximately 7:00 a.m. (EDT) on the same day [3] - The live audio webcast and presentation slides for the conference call will be accessible on the company's Investor Relations page [3] Communication of Financial Results - The company will announce its financial results through its social media channels, including @NWSB on X and Northwest Bank on LinkedIn, as well as via a press release distributed through PR Newswire [4] - Earnings results will also be filed with the Securities and Exchange Commission (SEC) on a Form 8-K, which will be available on the SEC website [4]

Core Viewpoint - Northwest Bancshares is expected to experience a decline in earnings due to margin pressure, but mid-single-digit loan growth will provide some support to the bottom line. The earnings per share (EPS) is projected to decrease by 13% year-over-year to $0.92 in 2024, followed by a modest increase of 2.2% to $0.94 in 2025. The stock is considered undervalued, and a buy rating is recommended due to a high dividend yield and potential price correction [11]. Financial Position - Net Loans are projected to grow from $10,802 million in FY22 to $12,282 million by FY25, reflecting a growth rate of 4.5% in FY25 [4]. - The net interest margin has declined for four consecutive quarters, with a drop of six basis points in Q1 2024. It is expected to remain stable before a rate cut late this year, with further declines anticipated in 2025 [4][5]. - Net interest income is expected to fall by 3.8% year-over-year in 2024, before rising by 2.5% in 2025 [6]. Loan Portfolio and Growth - The loan portfolio grew by 0.8% in Q1 2024, and it is anticipated that loan growth will match last year's performance, with a projected growth of 1.1% per quarter until the end of 2025 [12][13]. - Vehicle loans represent 17% of the total loan portfolio, which poses a higher credit risk compared to real estate loans. However, exposure to office loans is limited, keeping overall risk at a low to moderate level [8]. Dividend and Capital Position - The quarterly dividend has been maintained at $0.20 per share since Q2 2021, resulting in a dividend yield of 6.9%. The projected payout ratio is 86.8% for 2024 and 84.9% for 2025, which is considered sustainable [9]. - The total capital-to-risk-weighted assets ratio stands at 15.95%, significantly above the regulatory requirement, indicating a strong capital position [9]. Valuation and Price Target - The average price-to-tangible-book (P/TB) ratio over the last three years is 1.45, suggesting a target price of $13.4 for the end of 2024, which implies a 16.0% upside from the current market price [17]. - The average price-to-earnings (P/E) ratio indicates a target price of $10.9 for the end of 2024, suggesting a 5.1% downside from the current market price. A combined target price of $12.2 implies a 5.4% upside, leading to a total expected return of 12.4% when including the dividend yield [17].

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for Northwest Bancshares, Inc. as of March 31, 2024, show total assets of **$14.51 billion**, a slight increase from **$14.42 billion** at year-end 2023, and Q1 2024 net income of **$29.16 million**, down from **$33.68 million** in Q1 2023 Consolidated Statements of Financial Condition (in thousands) | | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total assets** | $14,510,263 | $14,419,105 | | **Loans receivable, net** | $11,376,349 | $11,289,566 | | **Total deposits** | $12,071,644 | $11,979,902 | | **Total liabilities** | $12,957,814 | $12,867,788 | | **Total shareholders' equity** | $1,552,449 | $1,551,317 | Consolidated Statements of Income (in thousands) | | Quarter ended March 31, 2024 | Quarter ended March 31, 2023 | | :--- | :--- | :--- | | **Net interest income** | $103,238 | $112,464 | | **Provision for credit losses - loans** | $4,234 | $4,870 | | **Total noninterest income** | $27,963 | $23,969 | | **Total noninterest expense** | $90,024 | $87,450 | | **Net income** | $29,163 | $33,679 | | **Diluted earnings per share** | $0.23 | $0.26 | Consolidated Statements of Cash Flows (in thousands) | | Quarter ended March 31, 2024 | Quarter ended March 31, 2023 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $70,701 | $29,843 | | **Net cash used in investing activities** | $(143,587) | $(130,157) | | **Net cash provided by financing activities** | $69,945 | $57,446 | | **Net decrease in cash and cash equivalents** | $(2,941) | $(42,868) | [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, marketable securities, loans, credit losses, goodwill, borrowed funds, derivatives, and a subsequent event involving a strategic securities portfolio repositioning - The company's marketable securities portfolio totaled **$1.9 billion**, with available-for-sale securities at a fair value of **$1.09 billion** and held-to-maturity securities at an amortized cost of **$801 million** as of March 31, 2024[23](index=23&type=chunk)[24](index=24&type=chunk) - Total gross loans receivable were **$11.5 billion** at March 31, 2024, with Personal Banking loans comprising **$6.7 billion** and Commercial Banking loans comprising **$4.8 billion**[32](index=32&type=chunk) - The allowance for credit losses on loans was **$124.9 million** as of March 31, 2024, a slight decrease from **$125.2 million** at year-end 2023, with the provision for credit losses for Q1 2024 at **$4.2 million**[35](index=35&type=chunk) - In April 2024, the Company announced a plan to reposition its securities portfolio by selling up to **15%** of its available-for-sale securities, expecting to recognize losses up to **$40 million** (**$30 million** after-tax) to reinvest proceeds at higher yields[122](index=122&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the Q1 2024 net income decrease to lower net interest income from higher deposit costs, while total assets grew slightly due to organic commercial loan growth, maintaining strong capital ratios - Total assets increased by **$91 million** (**1%**) to **$14.5 billion** at March 31, 2024, primarily due to organic growth in commercial loans[129](index=129&type=chunk)[131](index=131&type=chunk) - Net income for Q1 2024 was **$29 million**, a **13%** decrease from **$34 million** in Q1 2023, mainly due to a **$9 million** (**8%**) drop in net interest income[160](index=160&type=chunk) - Net interest margin (FTE) decreased by **36 basis points** to **3.10%** compared to Q1 2023, reflecting higher interest-bearing deposit costs and a shift in funding mix[163](index=163&type=chunk) - The company maintained capital ratios well above the 'well capitalized' requirements, with a CET1 capital ratio of **12.63%** at the holding company level as of March 31, 2024[142](index=142&type=chunk) [Comparison of Financial Condition](index=43&type=section&id=Comparison%20of%20Financial%20Condition) Total assets grew to **$14.5 billion** as of March 31, 2024, driven by increased gross loans, especially commercial, and a rise in total deposits with a notable shift towards higher-cost time deposits - Gross loans receivable increased by **$86 million**, or **1%**, to **$11.5 billion**, driven by a **$170 million** (**4%**) growth in the commercial banking portfolio, with Commercial and Industrial (C&I) loans specifically increasing by **$116 million**, or **7%**[131](index=131&type=chunk) - Total deposits increased by **$92 million**, or **1%**, to **$12.1 billion**, driven by a **$184 million** (**7%**) increase in time deposits, partially offset by a **$127 million** (**2%**) decrease in demand deposit accounts as customers shifted to higher-yielding products[133](index=133&type=chunk) Uninsured Deposits as of March 31, 2024 (in thousands) | Category | Balance | Percent of total deposits | Number of relationships | | :--- | :--- | :--- | :--- | | Uninsured deposits per Call Report | $2,806,650 | 23.25% | 4,965 | | Less intercompany deposit accounts | $1,019,792 | 8.45% | 12 | | Less collateralized deposit accounts | $408,083 | 3.38% | 255 | | **Uninsured deposits (excluding intercompany/collateralized)** | **$1,378,775** | **11.42%** | **4,698** | [Comparison of Operating Results](index=51&type=section&id=Comparison%20of%20Operating%20Results) Q1 2024 net income decreased by **$5 million** to **$29 million**, primarily due to an **8%** drop in net interest income as interest expense surged **154%**, partially offset by a **17%** increase in noninterest income - Net interest income (FTE) decreased by **$9 million** to **$104 million** in Q1 2024 compared to Q1 2023, with the net interest margin compressing by **36 basis points** to **3.10%**[163](index=163&type=chunk) - Interest expense on deposits surged by **$36 million** from the prior-year quarter, driven by higher rates and a shift in deposit mix towards time deposits[168](index=168&type=chunk) - The provision for credit losses decreased by **$2 million** (**31%**) from Q1 2023, reflecting changes in economic forecasts and the timing of commercial loan funding[180](index=180&type=chunk) - Noninterest income increased by **$4 million** (**17%**), primarily due to a **$2 million** rise in service charges and fees[185](index=185&type=chunk) - Noninterest expense increased by **$3 million** (**3%**), mainly from a **$5 million** (**11%**) increase in compensation and employee benefits, partially offset by a **$2 million** decrease in merger and restructuring expenses[188](index=188&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company manages interest rate risk via a simulation model, projecting a **200 basis point** upward shift would decrease net income by **8.9%** over one year, remaining within established risk tolerance Simulated Impact of Parallel Shift in Interest Rates over 12 Months | Parallel shift in interest rates | +100 bps | +200 bps | +300 bps | -100 bps | -200 bps | -300 bps | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Projected % change in net income** | (4.0)% | (8.9)% | (13.8)% | (3.4)% | (15.1)% | (28.4)% | | **Projected % change in market value of equity** | (8.1)% | (16.5)% | (24.5)% | 6.6% | 8.7% | 8.1% | - The company has established guidelines for interest rate risk, stating that for a **200 bps** shift, estimated net income may not decrease by more than **20%** and the market value of equity may not decrease by more than **30%**[194](index=194&type=chunk)[195](index=195&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[198](index=198&type=chunk) - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[199](index=199&type=chunk) [PART II OTHER INFORMATION](index=57&type=section&id=PART%20II%20OTHER%20INFORMATION) [Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various claims in the normal course of business, with management not anticipating material adverse effects on consolidated financial statements from pending or threatened legal proceedings - The company believes that any potential liability from ongoing legal proceedings, beyond what is already accrued, will not materially impact its financial statements[200](index=200&type=chunk) [Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) No material updates or additions to the risk factors previously disclosed in the company's 2023 Annual Report on Form 10-K have occurred - No material changes to the risk factors disclosed in the 2023 Form 10-K have occurred[201](index=201&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase common stock during Q1 2024, with **2,261,130** shares remaining available under the existing repurchase program that has no expiration date - No shares of common stock were repurchased during Q1 2024[203](index=203&type=chunk) - A maximum of **2,261,130** shares remain authorized for repurchase under the current program, which was approved on December 13, 2012[203](index=203&type=chunk) [Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including an employment agreement and CEO/CFO certifications pursuant to the Sarbanes-Oxley Act, along with XBRL data files - Key exhibits filed include an employment agreement for Douglas M. Schosser and CEO/CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act[209](index=209&type=chunk)

Financial Performance - Net income for Q1 2024 was $29 million, or $0.23 per diluted share, a decrease of 13% from $34 million, or $0.26 per diluted share in Q1 2023[3]. - Net income for Q1 2024 was $29,163 thousand, down from $33,679 thousand in Q1 2023, representing a decline of 13.5%[24]. - Net income for the quarter ended March 31, 2024, was $29,163 thousand, slightly up from $29,014 thousand in the previous quarter[31]. - Basic earnings per share remained stable at $0.23 for Q1 2024, unchanged from Q4 2023[24]. - The annualized return on average equity for Q1 2024 was 7.57%, down from 9.11% in Q1 2023[27]. - The annualized return on average tangible common equity was 10.08% for the quarter ended March 31, 2024, down from 10.28% in the previous quarter[31]. - The efficiency ratio for Q1 2024 was 68.62%, compared to 64.10% in Q1 2023, indicating a decrease in operational efficiency[24]. Income and Expenses - Interest income rose by 18.7% to $160.24 million, while interest expense surged by 153.6% to $57.00 million, leading to a net interest margin decrease to 3.10%[11][12]. - Noninterest income increased by 16.7% to $27.96 million, primarily due to higher service charges and fees, and a significant gain on the sale of SBA loans[14][15]. - Total noninterest expense increased by 2.9% to $90.02 million, driven by a rise in personnel expenses related to the expansion of the commercial business[16]. - Total noninterest income for Q1 2024 was $29,169 thousand, compared to $23,969 thousand in Q1 2023, marking an increase of 21.5%[24]. Loans and Deposits - Average loans receivable increased by 4.2% to $11.35 billion, driven by a $553 million growth in commercial loans[7][8]. - Total loans as of March 31, 2024, amounted to $11,501,246, an increase from $11,414,809 as of December 31, 2023, representing a growth of 0.76%[51]. - Total deposits rose to $12,071,644 thousand, an increase of 4.63% from $11,537,179 thousand in the same quarter last year[22]. - Average deposits grew by 4.2% to $11.89 billion, with a $1.404 billion increase in average time deposits[9]. - The average deposit account balance was $17,000 as of March 31, 2024[35]. Credit Quality - The provision for credit losses decreased by 31.2% to $3.44 million, reflecting improvements in economic forecasts and a decline in reserves for unfunded commitments[13]. - The company reported a provision for credit losses of $4,234 thousand for Q1 2024, compared to $4,870 thousand in Q1 2023, indicating improved credit quality[24]. - The allowance for credit losses to total loans was 1.09% as of March 31, 2024, indicating a slight decrease from 1.10% in the previous quarter[49]. - Nonaccrual loans totaled $95,060,000 as of March 31, 2024, reflecting an increase from $94,384,000 in the previous quarter[49]. - The total delinquent loans decreased to $90,308, or 0.8% of total loans, as of March 31, 2024, compared to $93,270, or 0.8%, as of December 31, 2023[54]. Capital and Assets - Total assets increased to $14,510,263 thousand as of March 31, 2024, compared to $14,193,816 thousand a year earlier, reflecting a growth of 2.23%[22]. - Total shareholders' equity increased to $1,552,449 thousand as of March 31, 2024, compared to $1,513,275 thousand a year earlier, reflecting a growth of 2.58%[28]. - The total capital to risk-weighted assets ratio was 15.951% for Northwest Bancshares, Inc. as of March 31, 2024, exceeding the minimum requirement of 10.500%[39]. Securities and Investments - The company plans to reposition its securities portfolio by liquidating up to 15% of lower-yielding securities, expecting a yield pickup of 375-400 basis points[5][6]. - As of March 31, 2024, total marketable securities available-for-sale amounted to $1,298,108,000, with gross unrealized holding losses of $204,300,000[42]. - The total marketable securities held-to-maturity were valued at $801,107,000, with gross unrealized holding losses of $120,755,000[42]. Borrowings - Average borrowed funds decreased significantly by 36.5% to $469.70 million, attributed to a strategic pay down of wholesale borrowings[10]. - The total borrowed funds as of March 31, 2024, were $644,698,000, with an average interest rate of 5.58%[45]. - The company had $3.3 billion of additional borrowing capacity available with the FHLB of Pittsburgh as of March 31, 2024[45]. Future Outlook - The company plans to continue focusing on expanding its commercial loan portfolio and enhancing its interest-earning asset base in the upcoming quarters[62].