Northwest Bancshares(US:NWBI)2025-05-06 19:39PART I FINANCIAL INFORMATION This section details the company's unaudited consolidated financial statements and management's analysis of financial performance Financial Statements This section presents the unaudited consolidated financial statements, including balance sheets, income, and cash flow statements, reflecting financial growth Consolidated Statements of Financial Condition Total assets increased to $14.45 billion, driven by growth in cash and net loans, with deposits and shareholders' equity also rising Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $14,453,727 | $14,408,224 | $45,503 | 0.3% | | Loans receivable, net | $11,093,636 | $11,063,195 | $30,441 | 0.3% | | Total Deposits | $12,174,156 | $12,144,554 | $29,602 | 0.2% | | Total Liabilities | $12,824,772 | $12,811,368 | $13,404 | 0.1% | | Total Shareholders' Equity | $1,628,955 | $1,596,856 | $32,099 | 2.0% | Consolidated Statements of Income Net income significantly increased to $43.5 million for Q1 2025, primarily driven by a substantial rise in net interest income Quarterly Income Statement Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $127,818 | $103,238 | $24,580 | 23.8% | | Provision for credit losses - loans | $8,256 | $4,234 | $4,022 | 95.0% | | Noninterest Income | $28,355 | $27,963 | $392 | 1.4% | | Noninterest Expense | $91,737 | $90,024 | $1,713 | 1.9% | | Net Income | $43,458 | $29,163 | $14,295 | 49.0% | | Diluted EPS | $0.34 | $0.23 | $0.11 | 47.8% | Consolidated Statements of Cash Flows Net cash from operating activities significantly increased, while investing activities used less cash, resulting in higher cash and equivalents Cash Flow Summary (in thousands) | Activity | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $107,612 | $70,701 | | Net cash used in investing activities | ($45,936) | ($143,587) | | Net cash provided by financing activities | $3,149 | $69,945 | | Net increase/(decrease) in cash | $64,825 | ($2,941) | Notes to Consolidated Financial Statements Detailed notes disclose accounting policies, financial statement line items, and significant subsequent events, including merger approval - The company's marketable securities portfolio, totaling $1.9 billion, consists of available-for-sale ($1.15 billion) and held-to-maturity ($0.74 billion) securities. Unrealized losses on these securities are primarily attributed to changes in the interest rate environment, not credit quality deterioration212224 - The total loan portfolio was $11.2 billion, with Personal Banking loans at $6.3 billion and Commercial Banking loans at $4.9 billion. The allowance for credit losses (ACL) stood at $122.8 million as of March 31, 202528 - The company utilizes various derivative instruments, primarily interest rate swaps, to manage interest rate risk and for customer accommodation. As of March 31, 2025, the notional amount of derivatives designated as hedging instruments was $175 million101102108 - All regulatory and shareholder approvals for the merger with Penns Woods Bancorp, Inc. have been received. The merger is expected to close in the third quarter of 2025120 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and operating results, highlighting net income growth, asset expansion, and strong capital adequacy Comparison of Financial Condition Total assets increased to $14.5 billion, driven by growth in cash and gross loans, with deposits and equity also rising - Total assets grew by $46 million to $14.5 billion, primarily from increased cash and loans132 - Gross loans increased by $36 million, with the commercial and industrial (C&I) portfolio growing by $72 million (4%) since December 31, 2024, reflecting success in new commercial lending verticals135 - Total deposits rose by $30 million, with a shift from time deposits (down $81 million) to money market (up $117 million) and savings accounts (up $51 million)137 - As of March 31, 2025, uninsured deposits, excluding intercompany and collateralized accounts, were $1.54 billion, representing 12.7% of total deposits140 Regulatory Capital The company and Northwest Bank continue to exceed all regulatory capital requirements, maintaining a 'well-capitalized' status Regulatory Capital Ratios (Company) | Ratio | March 31, 2025 | Minimum Requirement (with buffer) | Well Capitalized Requirement | | :--- | :--- | :--- | :--- | | CET1 Capital Ratio | 12.94% | 7.00% | N/A | | Tier 1 Capital Ratio | 14.13% | 8.50% | 6.00% | | Total Capital Ratio | 16.46% | 10.50% | 10.00% | | Tier 1 Leverage Ratio | 10.51% | 4.00% | N/A | Nonperforming Assets Total nonperforming assets decreased to $75.5 million, with nonaccrual loans also declining, indicating improved asset quality Nonperforming Assets (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total nonperforming loans | $59,353 | $62,057 | | Other nonperforming assets | $16,102 | $16,102 | | Total nonperforming assets | $75,535 | $78,194 | | Nonaccrual loans to total loans | 0.52% | 0.55% | Comparison of Operating Results for Q1 2025 and Q1 2024 Net income for Q1 2025 significantly increased by 49%, driven by a substantial rise in net interest income and improved return on equity - Net income increased by $14 million (49%) YoY, with diluted EPS rising from $0.23 to $0.34168 - Net interest income (FTE) increased by $25 million, and net interest margin (FTE) expanded by 77 basis points to 3.87%, driven by higher earning asset yields and an interest recovery of $13.1 million on a non-accrual loan payoff172174 - The provision for credit losses increased by $4 million from Q1 2024, reflecting growth in the commercial loan portfolio and changes in economic forecasts186 - Noninterest expense rose by $2 million (2%), mainly due to a $3 million increase in compensation and benefits, partially offset by a $1 million decrease in professional services197 Quantitative and Qualitative Disclosures about Market Risk The company manages interest rate risk through simulations, projecting the impact of rate changes on net income and equity value Simulated Impact of Interest Rate Shifts over 12 Months | Parallel Shift in Interest Rates | Projected % Change in Net Income | Projected % Change in Market Value of Equity | | :--- | :--- | :--- | | +300 bps | (7.9)% | (14.8)% | | +200 bps | (4.9)% | (9.7)% | | +100 bps | (2.0)% | (4.6)% | | -100 bps | (2.5)% | 2.7% | | -200 bps | (14.4)% | 2.1% | | -300 bps | (20.6)% | 2.6% | Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - 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 report209 - No material changes were made to the internal controls over financial reporting during the quarter210 PART II OTHER INFORMATION This section provides additional information, including legal proceedings, risk factors, equity sales, and other disclosures Legal Proceedings The company does not anticipate any material adverse effects from pending or threatened legal proceedings on its financial statements - The company does not expect any pending legal proceedings to have a material adverse effect on its financial statements211 Risk Factors No material updates or additions to the previously disclosed risk factors were reported for the quarter - No material changes to risk factors were reported for the quarter212 Unregistered Sales of Equity Securities and Use of Proceeds No shares were repurchased under the company's stock repurchase program during the quarter, with shares remaining available - No shares of common stock were repurchased during the quarter ended March 31, 2025213 - There are 2,261,130 shares remaining that can be purchased under the current stock repurchase program, which has no expiration date213 Other Information No directors or officers adopted or terminated any Rule 10b5-1 trading arrangements during the first quarter of 2025 - No directors or officers adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended March 31, 2025216 Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files