Northwest Bancshares, Inc. Announces Fourth Quarter 2022 Earnings and Quarterly Dividend

Rhea-AI Summary

Northwest Bancshares, Inc. (NWBI) reported a net income of $34.6 million for Q4 2022, a 15.3% increase from the previous year, translating to $0.27 per diluted share. The net interest margin improved to 3.57% from 2.89% due to higher interest rates and an effective asset mix. The Board declared a quarterly cash dividend of $0.20 per share, marking 113 consecutive quarters of dividends. However, the provision for credit losses rose to $9.0 million, reflecting economic concerns. Overall, net income for 2022 was $133.7 million, a 13.4% decline from 2021, primarily due to increased credit loss provisions and decreased noninterest income.

Positive

• Net income for Q4 2022 increased by 15.3% to $34.6 million.
• Quarterly cash dividend of $0.20 represents a 5.7% annualized yield.
• Net interest income rose by 21.1% to $117.0 million.
• Improvement in asset quality with classified loans decreasing by 34.9%.

Negative

• Net income for 2022 decreased by 13.4% to $133.7 million.
• Provision for credit losses increased by $10.9 million due to economic deterioration.
• Decline in noninterest income by 22.4% largely due to reduced mortgage banking income.

COLUMBUS, Ohio, Jan. 23, 2023 /PRNewswire/ -- Northwest Bancshares, Inc., (the "Company"), (NasdaqGS: NWBI) announced net income for the quarter ended December 31, 2022 of $34.6 million, or $0.27 per diluted share.  This represents an increase of $4.6 million, or 15.3%, compared to the same quarter last year, when net income was $30.1 million, or $0.24 per diluted share.  The annualized returns on average shareholders' equity and average assets for the quarter ended December 31, 2022 were 9.38% and 0.98% compared to 7.65% and 0.82% for the quarter ended December 31, 2021.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.20 per share payable on February 14, 2023 to shareholders of record as of February 2, 2023. This is the 113^th consecutive quarter in which the Company has paid a cash dividend. Based on the market value of the Company's common stock as of December 31, 2022, this represents an annualized dividend yield of approximately 5.7%.

Louis J. Torchio, President and CEO, added, "We were very pleased with our organic loan growth this quarter of $178.9 million, or 1.7%, spread across all loan categories. In addition, our net interest margin expanded by 15 basis points to 3.57%, and asset quality metrics remain solid.  We have also taken additional measures to reduce expenses and improve our efficiency.  We recently announced the further optimization of eight offices within our branch network to be completed in April 2023.  In-branch activity continues to slow as customers prefer to transact through online and mobile channels.  In addition, we have re-aligned our workforce to correspond with our strategic direction as a commercial bank, further streamlining our operations.  These efforts generated $4.2 million of severance and restructuring costs in the fourth quarter with an additional $3.2 million expected to be recognized in the first quarter of 2023."

Mr. Torchio continued, "These necessary measures will reduce our overall workforce by approximately 12% and generate approximately $16.0 million in annual operating expense savings beginning in the second quarter of 2023. These operating expense savings are expected to be reinvested in the Company's strategic initiatives during 2023, focused on shifting our balance sheet mix and continuing our journey as a full-service commercial bank. This shift includes further buildout of our core middle market C&I strategy throughout our footprint with full relationship banking, including enhanced treasury management services. In addition, we will further scale small business lending with particular focus on Small Business Administration (SBA) financing and secondary market sales, as well as the recent addition of our new equipment finance team with specialty finance expertise throughout the east coast"

Net interest income increased by $20.4 million, or 21.1%, to $117.0 million for the quarter ended December 31, 2022, from $96.7 million for the quarter ended December 31, 2021.  This increase in net interest income is due to both the increase in market interest rates and the change in our interest-earning asset mix. Cash in interest-earning deposits was redeployed into higher yielding loans and investments, which, along with higher market interest rates, caused the yield on interest-earning assets to increase to 3.89% for the quarter ended December 31, 2022 from 3.05% for the quarter ended December 31, 2021.  This increase in yield was partially offset by an increase in the cost of interest-bearing liabilities, which increased to 0.46% for the quarter ended December 31, 2022 from 0.26% for the quarter ended December 31, 2021.  The net effect of the changes in interest rates and average balances was an increase in the Company's net interest margin to 3.57% for the quarter ended December 31, 2022, from 2.89% for the same quarter last year.

The provision for credit losses increased by $10.9 million, reflecting an expense of $9.0 million for the current quarter ended December 31, 2022 compared to a provision credit of $1.9 million for the quarter ended December 31, 2021.  This increase was primarily due to growth within our loan portfolio during the current year in conjunction with forecasted economic deterioration reflected in our allowance for credit loss models, including a reduction in home and used vehicle values.  The Company continued to experience improvement in asset quality as classified loans decreased by $126.9 million, or 34.9%, to $236.2 million, or 2.2% of total loans, at December 31, 2022, from $363.2 million, or 3.6% of total loans, at December 31, 2021.  Total delinquent loans also decreased to $85.9 million, or 0.8% of loans receivable, at December 31, 2022 from $96.9 million, or 1.0% of loans receivable, at December 31, 2021. In addition, the Company experienced net charge-offs during the current quarter of $806,000, or 0.03% on an annualized basis, compared to net charge-offs of $5.6 million, or 0.22% on an annualized basis, during the same quarter last year, for an overall net improvement of $4.8 million.

Noninterest income increased by $816,000, or 3.0%, to $27.9 million for the quarter ended December 31, 2022, from $27.0 million for the quarter ended December 31, 2021. This increase was primarily due to an increase in our other operating income of $1.7 million, or 53.5%, to $4.9 million for the quarter ended December 31, 2022 from $3.2 million for the quarter ended December 31, 2021. This increase was primarily the result of gains from the sale of branch buildings associated with the previously announced branch consolidations and improvements in other fee income. Partially offsetting this increase was a decline in mortgage banking income of $1.6 million, or 77.5%, to $477,000 for the quarter ended December 31, 2022 from $2.1 million for the quarter ended December 31, 2021. This decrease reflects the impact of less favorable pricing in the secondary market, due primarily to the volatile interest rate environment, as well as a decrease in mortgage volumes primarily due to higher market interest rates.

Noninterest expense increased by $4.4 million, or 5.1%, to $90.7 million for the quarter ended December 31, 2022 from $86.3 million for the quarter ended December 31, 2021. This increase was primarily due to an increase in other expenses of $2.8 million, or 210.5%, and an increase in merger, asset disposition and restructuring expenses of $1.4 million, or 50.9%. The increase in other expense was primarily due to an increase in our unfunded loan loss reserve associated with the origination of loans with current off-balance sheet exposure. The increase in merger, asset disposition and restructuring expense was a result of severance and fixed asset charges related to the branch optimization and personnel reduction, as previously noted.

The provision for income taxes increased by $1.3 million, or 14.1%, to $10.6 million for the quarter ended December 31, 2022 from $9.3 million for the quarter ended December 31, 2021 due primarily to an increase in income before taxes in the current quarter.

Net income for the year ended December 31, 2022 was $133.7 million, or $1.05 per diluted share. This represents a decrease of $20.7 million, or 13.4%, compared to the year ended December 31, 2021, when net income was $154.3 million, or $1.21 per diluted share. The annualized returns on average shareholders' equity and average assets for the year ended December 31, 2022 were 8.80% and 0.94% compared to 9.91% and 1.08% for the prior year. This decrease in net income was the result of an increase in provision for credit losses of $29.7 million, primarily as a result of the provision credit in 2021 related to the release of reserves built-up during COVID-19. In addition, noninterest income decreased by $32.0 million, or 22.4%, largely due to the $25.3 million gain recognized on the sale of the insurance business in the second quarter of 2021.  Also contributing to the decline in noninterest income was an $11.0 million reduction in mortgage banking income due to the volatile interest rate environment causing unfavorable pricing in the secondary market and a slowdown in mortgage loan activity in general.  Partially offsetting these unfavorable variances was an increase in net interest income by $29.4 million, or 7.5%, to $420.7 million for the year ended December 31, 2022 from $391.3 million for the year ended December 31, 2021.  This increase in net interest income was due primarily to an increase in the yield on interest-earning assets to 3.41% for the year ended December 31, 2022 from 3.18% for the year ended December 31, 2021, as well as an increase in the average balance of interest earning assets by $17.6 million.  Lastly, noninterest expense decreased by $4.9 million, or 1.4%, to $340.0 million for the year ended December 31, 2022 from $344.9 million for the year ended December 31, 2021 despite an increase in merger, asset disposition and restructuring expense of $2.2 million, or 62.7%, related to the branch and personnel optimization expense and an increase in other expenses of $7.3 million related primarily to the buildup of credit loss reserves for unfunded loans with off balance sheet exposure.

Headquartered in Columbus, Ohio, Northwest Bancshares, Inc. is the bank holding company of Northwest Bank. Founded in 1896 and headquartered in Warren, Pennsylvania, Northwest Bank is a full-service financial institution offering a complete line of business and personal banking products, as well as treasury management solutions and wealth management services. As of December 31, 2022, Northwest operated 142 full-service community banking offices and eight free standing drive-through facilities in Pennsylvania, New York, Ohio and Indiana. The common stock of Northwest Bancshares, Inc. is listed on the NASDAQ Global Select Market ("NWBI"). Additional information regarding Northwest Bancshares, Inc. and Northwest Bank can be accessed on-line at www.northwest.com.

Forward-Looking Statements - This release may contain forward-looking statements with respect to the financial condition and results of operations of Northwest Bancshares, Inc. including, without limitations, statements relating to the earnings outlook of the Company. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements, include among others, the following possibilities: (1) changes in the interest rate environment; (2) competitive pressure among financial services companies; (3) general economic conditions including inflation and an increase in non-performing loans; (4) changes in legislation or regulatory requirements; (5) difficulties in continuing to improve operating efficiencies; (6) difficulties in the integration of acquired businesses or the ability to complete sales transactions; (7) increased risk associated with commercial real-estate and business loans; and (8) the effect of any pandemic, including COVID-19, war or act of terrorism.  Management has no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this release.

 

Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Financial Condition (Unaudited)
(dollars in thousands, except per share amounts)
	December 31, 2022		September 30, 2022		December 31, 2021
Assets
Cash and cash equivalents	$       139,365		118,549		1,279,259
Marketable securities available-for-sale (amortized cost of $1,431,728, $1,466,883 and $1,565,002, respectively)	1,218,108		1,251,791		1,548,592
Marketable securities held-to-maturity (fair value of $751,384, $771,238 and $751,513, respectively)	881,249		899,411		768,154
Total cash and cash equivalents and marketable securities	2,238,722		2,269,751		3,596,005
Residential mortgage loans held-for-sale	9,913		15,834		25,056
Residential mortgage loans	3,488,686		3,386,064		2,969,564
Home equity loans	1,297,674		1,284,989		1,319,931
Consumer loans	2,168,655		2,116,238		1,838,748
Commercial real estate loans	2,823,555		2,812,830		3,015,484
Commercial loans	1,131,969		1,125,570		847,609
Total loans receivable	10,920,452		10,741,525		10,016,392
Allowance for credit losses	(118,036)		(109,819)		(102,241)
Loans receivable, net	10,802,416		10,631,706		9,914,151
FHLB stock, at cost	40,143		19,281		14,184
Accrued interest receivable	35,528		29,536		25,599
Real estate owned, net	413		450		873
Premises and equipment, net	145,909		146,173		156,524
Bank-owned life insurance	255,062		255,015		256,213
Goodwill	380,997		380,997		380,997
Other intangible assets, net	8,560		9,491		12,836
Other assets	205,574		210,744		144,126
Total assets	$   14,113,324		13,953,144		14,501,508
Liabilities and shareholders' equity
Liabilities
Noninterest-bearing demand deposits	$     2,993,243		3,094,120		3,099,526
Interest-bearing demand deposits	2,686,431		2,812,730		2,940,442
Money market deposit accounts	2,457,569		2,577,013		2,629,882
Savings deposits	2,275,020		2,327,419		2,303,760
Time deposits	1,052,285		1,067,110		1,327,555
Total deposits	11,464,548		11,878,392		12,301,165
Borrowed funds	681,166		150,036		139,093
Subordinated debt	113,840		113,753		123,575
Junior subordinated debentures	129,314		129,249		129,054
Advances by borrowers for taxes and insurance	47,613		29,647		44,582
Accrued interest payable	3,231		831		1,804
Other liabilities	182,126		191,450		178,664
Total liabilities	12,621,838		12,493,358		12,917,937
Shareholders' equity
Preferred stock, $0.01 par value: 50,000,000 shares authorized, no shares issued	—		—		—
Common stock, $0.01 par value: 500,000,000 shares authorized, 127,028,848, 126,921,989 and 126,612,183 shares issued and outstanding, respectively	1,270		1,269		1,266
Additional paid-in capital	1,019,647		1,017,189		1,010,405
Retained earnings	641,727		632,476		609,529
Accumulated other comprehensive loss	(171,158)		(191,148)		(37,629)
Total shareholders' equity	1,491,486		1,459,786		1,583,571
Total liabilities and shareholders' equity	$   14,113,324		13,953,144		14,501,508
Equity to assets	10.57 %		10.46 %		10.92 %
Tangible common equity to assets*	8.03 %		7.88 %		8.43 %
Book value per share	$           11.74		11.50		12.51
Tangible book value per share*	$             8.67		8.42		9.40
Closing market price per share	$           13.98		13.51		14.16
Full time equivalent employees	2,160		2,191		2,332
Number of banking offices	150		150		170

*	Excludes goodwill and other intangible assets (non-GAAP).

 

Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
(dollars in thousands, except per share amounts)
	Quarter ended
	December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021
Interest income:
Loans receivable	$     117,137		106,943		95,574		88,174		95,295
Mortgage-backed securities	8,603		8,683		7,158		6,360		5,743
Taxable investment securities	840		838		715		677		640
Tax-free investment securities	701		709		683		674		688
FHLB stock dividends	419		148		82		81		82
Interest-earning deposits	153		1,295		1,684		467		467
Total interest income	127,853		118,616		105,896		96,433		102,915
Interest expense:
Deposits	3,871		3,157		3,341		3,751		4,295
Borrowed funds	6,938		2,710		2,290		2,059		1,964
Total interest expense	10,809		5,867		5,631		5,810		6,259
Net interest income	117,044		112,749		100,265		90,623		96,656
Provision for credit losses	9,023		7,689		2,629		(1,481)		(1,909)
Net interest income after provision for credit losses	108,021		105,060		97,636		92,104		98,565
Noninterest income:
Loss on sale of investments	(1)		(2)		(3)		(2)		(4)
Service charges and fees	14,125		14,323		13,673		13,067		13,500
Trust and other financial services income	6,642		6,650		7,461		7,012		6,820
Gain/(loss) on real estate owned, net	51		290		291		(29)		71
Income from bank-owned life insurance	1,663		1,475		2,008		1,983		1,343
Mortgage banking income	477		766		2,157		1,465		2,120
Other operating income	4,901		3,301		4,861		2,244		3,192
Total noninterest income	27,858		26,803		30,448		25,740		27,042
Noninterest expense:
Compensation and employee benefits	46,658		46,711		48,073		46,917		48,691
Premises and occupancy costs	7,370		7,171		7,280		7,797		7,104
Office operations	3,544		3,229		3,162		3,383		3,144
Collections expense	563		322		403		520		602
Processing expenses	13,585		13,416		12,947		12,548		13,639
Marketing expenses	2,773		2,147		2,047		2,128		2,054
Federal deposit insurance premiums	1,319		1,200		1,130		1,129		1,131
Professional services	5,434		3,363		3,333		2,573		4,513
Amortization of intangible assets	932		1,047		1,115		1,183		1,205
Real estate owned expense	53		61		72		37		44
Merger, asset disposition and restructuring expense	4,243		—		—		1,374		2,812
Other expenses	4,180		3,906		5,245		2,355		1,346
Total noninterest expense	90,654		82,573		84,807		81,944		86,285
Income before income taxes	45,225		49,290		43,277		35,900		39,322
Income tax expense	10,576		11,986		9,851		7,613		9,266
Net income	$       34,649		37,304		33,426		28,287		30,056
Basic earnings per share	$          0.27		0.29		0.26		0.22		0.24
Diluted earnings per share	$          0.27		0.29		0.26		0.22		0.24
Annualized return on average equity	9.38 %		9.84 %		8.90 %		7.17 %		7.65 %
Annualized return on average assets	0.98 %		1.05 %		0.94 %		0.80 %		0.82 %
Annualized return on tangible common equity *	12.48 %		13.84 %		12.16 %		10.14 %		10.02 %
Efficiency ratio **	58.99 %		58.42 %		64.03 %		68.22 %		66.51 %
Annualized noninterest expense to average assets ***	2.43 %		2.30 %		2.35 %		2.23 %		2.25 %

*	Excludes goodwill and other intangible assets (non-GAAP).
**	Excludes gain on sale of insurance business, amortization of intangible assets and merger, asset disposition and restructuring expenses (non-GAAP).
***	Excludes amortization of intangible assets and merger, asset disposition and restructuring expenses (non-GAAP).

 

Northwest Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
(dollars in thousands, except per share amounts)
	Year ended December 31,
	2022		2021
Interest income:
Loans receivable	$           407,828		390,343
Mortgage-backed securities	30,804		21,463
Taxable investment securities	3,070		2,616
Tax-free investment securities	2,767		2,485
FHLB stock dividends	730		407
Interest-earning deposits	3,599		1,194
Total interest income	448,798		418,508
Interest expense:
Deposits	14,120		19,122
Borrowed funds	13,997		8,124
Total interest expense	28,117		27,246
Net interest income	420,681		391,262
Provision for credit losses	17,860		(11,883)
Net interest income after provision for credit losses	402,821		403,145
Noninterest income:
Loss on sale of investments	(8)		(176)
Service charges and fees	55,188		51,837
Trust and other financial services income	27,765		27,921
Insurance commission income	—		3,633
Gain on real estate owned, net	603		442
Income from bank-owned life insurance	7,129		6,050
Mortgage banking income	4,865		15,892
Gain on sale of insurance business	—		25,327
Other operating income	15,307		11,963
Total noninterest income	110,849		142,889
Noninterest expense:
Compensation and employee benefits	188,359		193,887
Premises and occupancy costs	29,618		31,073
Office operations	13,318		13,769
Collections expense	1,808		1,932
Processing expenses	52,496		55,763
Marketing expenses	9,095		8,237
Federal deposit insurance premiums	4,778		4,975
Professional services	14,703		17,621
Amortization of intangible assets	4,277		5,553
Real estate owned expense	223		298
Merger, asset disposition and restructuring expense	5,617		3,453
Other expenses	15,686		8,349
Total noninterest expense	339,978		344,910
Income before income taxes	173,692		201,124
Income tax expense	40,026		46,801
Net income	$           133,666		154,323
Basic earnings per share	$                 1.05		1.22
Diluted earnings per share	$                 1.05		1.21
Return on average equity	8.80 %		9.91 %
Return on average assets	0.94 %		1.08 %
Return on tangible common equity *	12.13 %		12.97 %
Efficiency ratio **	62.10 %		66.02 %
Noninterest expense to average assets ***	2.33 %		2.35 %

*	Excludes goodwill and other intangible assets (non-GAAP).
**	Excludes gain on sale of insurance business, amortization of intangible assets and merger, asset disposition and restructuring expenses (non-GAAP).
***	Excludes amortization of intangible assets and merger, asset disposition and restructuring expenses (non-GAAP).

 

Northwest Bancshares, Inc. and Subsidiaries
Reconciliation of Non-GAAP to GAAP Net Income (Unaudited) *
(dollars in thousands, except per share amounts)
	Quarter ended December 31,				Year ended December 31,
	2022		2021		2022		2021
Operating results (non-GAAP):
Net interest income	$              117,044		96,656		420,681		391,262
Provision for credit losses	9,023		(1,909)		17,860		(11,883)
Noninterest income	27,858		27,042		110,849		117,562
Noninterest expense	86,411		83,473		334,361		341,457
Income taxes	11,764		10,053		41,599		40,676
Net operating income (non-GAAP)	$                37,704		32,081		137,710		138,574
Diluted earnings per share (non-GAAP)	$                    0.30		0.25		1.08		1.08
Average equity	$           1,465,285		1,559,627		1,518,704		1,557,582
Average assets	13,983,100		14,474,091		14,177,698		14,308,334
Annualized return on average equity (non-GAAP)	10.21 %		8.16 %		9.07 %		8.90 %
Annualized return on average assets (non-GAAP)	1.07 %		0.88 %		0.97 %		0.97 %
Reconciliation of net operating income to net income:
Net operating income (non-GAAP)	$                37,704		32,081		137,710		138,574
Non-GAAP adjustments, net of tax:
Gain on sale of insurance business	—		—		—		18,235
Merger/asset disposition expense	(3,055)		(2,025)		(4,044)		(2,486)
Net income (GAAP)	$                34,649		30,056		133,666		154,323
Diluted earnings per share (GAAP)	$                    0.27		0.24		1.05		1.21
Annualized return on average equity (GAAP)	9.38 %		7.65 %		8.80 %		9.91 %
Annualized return on average assets (GAAP)	0.98 %		0.82 %		0.94 %		1.08 %

*

The table summarizes the Company's results from operations on a GAAP basis and on an operating (non-GAAP) basis for the periods indicated. Operating results exclude the gain on the sale of our insurance business and merger, asset disposition and restructuring expense. The net tax effect was calculated using statutory tax rates of approximately 28.0%. The Company believes this non-GAAP presentation provides a meaningful comparison of operational performance and facilitates a more effective evaluation and comparison of results to assess performance in relation to ongoing operations.

 

Northwest Bancshares, Inc. and Subsidiaries
Asset Quality (Unaudited)
(dollars in thousands)
	December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021
Nonaccrual loans current:
Residential mortgage loans	$           1,496		2,186		1,970		1,884		1,354
Home equity loans	1,418		1,158		1,337		1,376		1,212
Consumer loans	836		833		976		1,148		1,336
Commercial real estate loans	53,303		56,193		60,537		79,810		106,233
Commercial loans	895		1,801		5,270		6,060		6,098
Total nonaccrual loans current	$         57,948		62,171		70,090		90,278		116,233
Nonaccrual loans delinquent 30 days to 59 days:
Residential mortgage loans	$              473		54		2		760		244
Home equity loans	180		316		172		195		223
Consumer loans	178		155		158		190		241
Commercial real estate loans	1,220		55		911		333		239
Commercial loans	145		237		358		4		53
Total nonaccrual loans delinquent 30 days to 59 days	$           2,196		817		1,601		1,482		1,000
Nonaccrual loans delinquent 60 days to 89 days:
Residential mortgage loans	$                31		32		199		830		1,163
Home equity loans	290		432		566		371		61
Consumer loans	341		382		226		280		292
Commercial real estate loans	473		848		630		—		364
Commercial loans	96		132		73		—		218
Total nonaccrual loans delinquent 60 days to 89 days	$           1,231		1,826		1,694		1,481		2,098
Nonaccrual loans delinquent 90 days or more:
Residential mortgage loans	$           5,574		5,544		5,445		3,976		7,641
Home equity loans	2,257		1,779		2,081		2,968		4,262
Consumer loans	2,672		2,031		1,942		1,782		2,069
Commercial real estate loans	7,867		8,821		14,949		21,399		24,063
Commercial loans	1,491		638		583		795		1,105
Total nonaccrual loans delinquent 90 days or more	$         19,861		18,813		25,000		30,920		39,140
Total nonaccrual loans	$         81,236		83,627		98,385		124,161		158,471
Total nonaccrual loans	$         81,236		83,627		98,385		124,161		158,471
Loans 90 days past due and still accruing	744		357		379		420		331
Nonperforming loans	81,980		83,984		98,764		124,581		158,802
Real estate owned, net	413		450		1,205		929		873
Nonperforming assets	$         82,393		84,434		99,969		125,510		159,675
Nonaccrual troubled debt restructuring *	$         29,239		30,406		37,647		16,015		17,216
Accruing troubled debt restructuring	11,442		16,344		16,590		12,686		13,072
Total troubled debt restructuring	$         40,681		46,750		54,237		28,701		30,288
Nonperforming loans to total loans	0.75 %		0.78 %		0.95 %		1.23 %		1.59 %
Nonperforming assets to total assets	0.58 %		0.61 %		0.71 %		0.87 %		1.10 %
Allowance for credit losses to total loans	1.08 %		1.02 %		0.94 %		0.98 %		1.02 %
Allowance for total loans excluding PPP loan balances	1.08 %		1.02 %		0.95 %		0.98 %		1.03 %
Allowance for credit losses to nonperforming loans	143.98 %		130.76 %		99.59 %		79.70 %		64.38 %

*	Amounts included in nonperforming loans above.

 

Northwest Bancshares, Inc. and Subsidiaries
Loans by Credit Quality Indicators (Unaudited)
(dollars in thousands)
At December 31, 2022		Pass		Special    mention *		Substandard **		Doubtful		Loss		Loans receivable
Personal Banking:
Residential mortgage loans		$       3,484,870		—		13,729		—		—		3,498,599
Home equity loans		1,292,146		—		5,528		—		—		1,297,674
Consumer loans		2,164,220		—		4,435		—		—		2,168,655
Total Personal Banking		6,941,236		—		23,692		—		—		6,964,928
Commercial Banking:
Commercial real estate loans		2,579,809		55,076		188,670		—		—		2,823,555
Commercial loans		1,100,707		7,384		23,878		—		—		1,131,969
Total Commercial Banking		3,680,516		62,460		212,548		—		—		3,955,524
Total loans		$     10,621,752		62,460		236,240		—		—		10,920,452
At September 30, 2022
Personal Banking:
Residential mortgage loans		$       3,388,168		—		13,730		—		—		3,401,898
Home equity loans		1,279,968		—		5,021		—		—		1,284,989
Consumer loans		2,112,478		—		3,760		—		—		2,116,238
Total Personal Banking		6,780,614		—		22,511		—		—		6,803,125
Commercial Banking:
Commercial real estate loans		2,589,648		34,684		188,498		—		—		2,812,830
Commercial loans		1,094,830		4,004		26,736		—		—		1,125,570
Total Commercial Banking		3,684,478		38,688		215,234		—		—		3,938,400
Total loans		$     10,465,092		38,688		237,745		—		—		10,741,525
At June 30, 2022
Personal Banking:
Residential mortgage loans		$       3,273,117		—		13,658		—		—		3,286,775
Home equity loans		1,275,124		—		5,368		—		—		1,280,492
Consumer loans		1,998,863		—		3,682		—		—		2,002,545
Total Personal Banking		6,547,104		—		22,708		—		—		6,569,812
Commercial Banking:
Commercial real estate loans		2,600,207		51,540		224,429		—		—		2,876,176
Commercial loans		954,129		2,468		30,239		—		—		986,836
Total Commercial Banking		3,554,336		54,008		254,668		—		—		3,863,012
Total loans		$     10,101,440		54,008		277,376		—		—		10,432,824
At March 31, 2022
Personal Banking:
Residential mortgage loans		$       3,108,366		—		13,523		—		—		3,121,889
Home equity loans		1,280,342		—		6,178		—		—		1,286,520
Consumer loans		1,892,162		—		3,819		—		—		1,895,981
Total Personal Banking		6,280,870		—		23,520		—		—		6,304,390
Commercial Banking:
Commercial real estate loans		2,633,808		62,091		263,994		—		—		2,959,893
Commercial loans		839,125		3,277		32,349		—		—		874,751
Total Commercial Banking		3,472,933		65,368		296,343		—		—		3,834,644
Total loans		$       9,753,803		65,368		319,863		—		—		10,139,034
At December 31, 2021
Personal Banking:
Residential mortgage loans		$       2,978,080		—		16,540		—		—		2,994,620
Home equity loans		1,312,820		—		7,111		—		—		1,319,931
Consumer loans		1,834,478		—		4,270		—		—		1,838,748
Total Personal Banking		6,125,378		—		27,921		—		—		6,153,299
Commercial Banking:
Commercial real estate loans		2,639,676		74,123		301,685		—		—		3,015,484
Commercial loans		808,323		5,730		33,556		—		—		847,609
Total Commercial Banking		3,447,999		79,853		335,241		—		—		3,863,093
Total loans		$       9,573,377		79,853		363,162		—		—		10,016,392

*	Includes $7.4 million, $4.5 million, $7.4 million, $4.4 million, and $14.9 million of acquired loans at December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, respectively.
**	Includes $39.1 million, $51.4 million, $59.3 million, $71.9 million, and $81.5 million of acquired loans at December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, respectively.

 

Northwest Bancshares, Inc. and Subsidiaries
Loan Delinquency (Unaudited)
(dollars in thousands)
	December 31, 2022				*		September 30, 2022				*		June 30, 2022				*		March 31, 2022				*		December 31, 2021				*
(Number of loans and dollar amount of loans)
Loans delinquent 30 days to 59 days:
Residential mortgage loans	304		$  29,487		0.8 %		26		$   1,052		— %		20		$      785		— %		281		$  24,057		0.8 %		277		$  20,567		0.7 %
Home equity loans	145		6,657		0.5 %		88		3,278		0.3 %		107		3,664		0.3 %		105		3,867		0.3 %		112		3,153		0.2 %
Consumer loans	737		9,435		0.4 %		549		6,546		0.3 %		563		6,898		0.3 %		523		6,043		0.3 %		589		6,536		0.4 %
Commercial real estate loans	29		4,008		0.1 %		13		1,332		— %		26		2,701		0.1 %		25		3,643		0.1 %		17		17,065		0.6 %
Commercial loans	51		2,648		0.2 %		48		2,582		0.2 %		24		1,486		0.2 %		16		1,268		0.1 %		12		193		— %
Total loans delinquent 30 days to 59 days	1,266		$  52,235		0.5 %		724		$  14,790		0.1 %		740		$  15,534		0.1 %		950		$  38,878		0.4 %		1,007		$  47,514		0.5 %
Loans delinquent 60 days to 89 days:
Residential mortgage loans	65		$   5,563		0.2 %		51		$   4,320		0.1 %		61		$   5,941		0.2 %		24		$   1,950		0.1 %		59		$   5,433		0.2 %
Home equity loans	29		975		0.1 %		36		1,227		0.1 %		28		952		0.1 %		28		1,138		0.1 %		30		949		0.1 %
Consumer loans	255		3,070		0.1 %		223		2,663		0.1 %		178		1,460		0.1 %		159		1,839		0.1 %		195		2,006		0.1 %
Commercial real estate loans	16		2,377		0.1 %		13		1,741		0.1 %		9		1,472		0.1 %		1		112		— %		5		769		— %
Commercial loans	24		1,115		0.1 %		14		808		0.1 %		6		341		— %		3		103		— %		10		727		0.1 %
Total loans delinquent 60 days to 89 days	389		$  13,100		0.1 %		337		$  10,759		0.1 %		282		$  10,166		0.1 %		215		$   5,142		0.1 %		299		$   9,884		0.1 %
Loans delinquent 90 days or more: **
Residential mortgage loans	65		$   5,574		0.2 %		64		$   5,544		0.2 %		63		$   5,445		0.2 %		47		$   3,976		0.1 %		87		$   7,641		0.3 %
Home equity loans	68		2,257		0.2 %		65		1,779		0.1 %		69		2,081		0.2 %		91		2,968		0.2 %		105		4,262		0.3 %
Consumer loans	334		3,079		0.1 %		289		2,388		0.1 %		286		2,321		0.1 %		287		2,202		0.1 %		296		2,400		0.1 %
Commercial real estate loans	19		7,867		0.3 %		22		8,821		0.3 %		31		14,949		0.5 %		41		21,399		0.7 %		52		24,063		0.8 %
Commercial loans	15		1,829		0.2 %		11		638		0.1 %		10		583		0.1 %		10		795		0.1 %		8		1,105		0.1 %
Total loans delinquent 90 days or more	501		$  20,606		0.2 %		451		$  19,170		0.2 %		459		$  25,379		0.2 %		476		$  31,340		0.3 %		548		$  39,471		0.4 %
Total loans delinquent	2,156		$  85,941		0.8 %		1,512		$  44,719		0.4 %		1,481		$  51,079		0.5 %		1,641		$  75,360		0.7 %		1,854		$  96,869		1.0 %

*	Represents delinquency, in dollars, divided by the respective total amount of that type of loan outstanding.
**	Includes purchased credit deteriorated loans of $1.7 million, $783,000, $6.3 million, $7.1 million, and $7.3 million at December 31, 2022, September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, respectively.

 

Northwest Bancshares, Inc. and Subsidiaries
Allowance for Credit Losses (Unaudited)
(dollars in thousands)
	Quarter ended
	December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021
Beginning balance	$      109,819		98,355		99,295		102,241		109,767
Provision	9,023		7,689		2,629		(1,481)		(1,909)
Charge-offs residential mortgage	(546)		(166)		(138)		(1,183)		(784)
Charge-offs home equity	(232)		(535)		(255)		(447)		(1,299)
Charge-offs consumer	(2,430)		(2,341)		(1,912)		(1,723)		(2,897)
Charge-offs commercial real estate	(621)		(1,329)		(4,392)		(1,024)		(2,652)
Charge-offs commercial	(404)		(243)		(329)		(681)		(2,586)
Recoveries	3,427		8,389		3,457		3,593		4,601
Ending balance	$      118,036		109,819		98,355		99,295		102,241
Net (recoveries)/charge-offs to average loans, annualized	0.03 %		(0.14) %		0.14 %		0.06 %		0.22 %

 

	Year ended December 31,
	2022		2021
Beginning balance	$                    102,241		134,427
Provision	17,860		(11,883)
Charge-offs residential mortgage	(2,033)		(3,672)
Charge-offs home equity	(1,469)		(3,380)
Charge-offs consumer	(8,406)		(10,049)
Charge-offs commercial real estate	(7,366)		(12,823)
Charge-offs commercial	(1,657)		(4,213)
Recoveries	18,866		13,834
Ending balance	$                    118,036		102,241
Net charge-offs to average loans	0.02 %		0.20 %

                 

Northwest Bancshares, Inc. and Subsidiaries
Average Balance Sheet (Unaudited)
(dollars in thousands)
The following table sets forth certain information relating to the Company's average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented.  Average balances are calculated using daily averages.
	Quarter ended
	December 31, 2022						September 30, 2022						June 30, 2022						March 31, 2022						December 31, 2021
	Average balance		Interest		Avg. yield/ cost (h)		Average balance		Interest		Avg. yield/ cost (h)		Average balance		Interest		Avg. yield/ cost (h)		Average balance		Interest		Avg. yield/ cost (h)		Average balance		Interest		Avg. yield/ cost (h)
Assets:
Interest-earning assets:
Residential mortgage loans	$  3,439,401		30,974		3.60 %		$  3,331,173		29,414		3.53 %		$  3,171,469		27,327		3.45 %		$  2,980,788		25,542		3.43 %		$  2,977,942		25,269		3.39 %
Home equity loans	1,282,733		15,264		4.72 %		1,274,918		13,658		4.25 %		1,277,440		11,961		3.76 %		1,293,986		11,472		3.60 %		1,328,553		11,750		3.51 %
Consumer loans	2,069,207		19,709		3.78 %		1,981,754		17,256		3.45 %		1,880,769		15,777		3.36 %		1,799,037		14,907		3.36 %		1,756,620		15,514		3.50 %
Commercial real estate loans	2,822,008		35,428		4.91 %		2,842,597		34,158		4.70 %		2,915,750		31,844		4.32 %		3,000,204		29,757		3.97 %		3,113,924		34,062		4.28 %
Commercial loans	1,113,178		16,315		5.74 %		1,050,124		12,978		4.84 %		912,454		9,090		3.94 %		824,770		6,897		3.34 %		855,998		9,154		4.18 %
Total loans receivable (a) (b) (d)	10,726,527		117,690		4.35 %		10,480,566		107,464		4.07 %		10,157,882		95,999		3.79 %		9,898,785		88,575		3.63 %		10,033,037		95,749		3.79 %
Mortgage-backed securities (c)	1,956,167		8,603		1.76 %		2,019,715		8,683		1.72 %		1,952,375		7,158		1.47 %		1,945,173		6,360		1.31 %		1,894,683		5,743		1.21 %
Investment securities (c) (d)	386,468		1,753		1.81 %		388,755		1,762		1.81 %		376,935		1,590		1.69 %		373,694		1,540		1.65 %		358,558		1,535		1.71 %
FHLB stock, at cost	26,827		419		6.19 %		14,028		148		4.19 %		13,428		82		2.44 %		13,870		81		2.38 %		14,459		82		2.25 %
Other interest-earning deposits	9,990		153		5.99 %		253,192		1,295		2.00 %		846,142		1,684		0.79 %		1,218,960		467		0.15 %		1,168,449		467		0.16 %
Total interest-earning assets	13,105,979		128,618		3.89 %		13,156,256		119,352		3.60 %		13,346,762		106,513		3.20 %		13,450,482		97,023		2.93 %		13,469,186		103,576		3.05 %
Noninterest-earning assets (e)	877,121						896,663						909,943						973,092						1,004,905
Total assets	$   13,983,100						$   14,052,919						$   14,256,705						$   14,423,574						$   14,474,091
Liabilities and shareholders' equity:
Interest-bearing liabilities:
Savings deposits	$  2,298,451		585		0.10 %		$  2,350,248		594		0.10 %		$  2,361,919		589		0.10 %		$  2,334,494		592		0.10 %		$  2,282,606		622		0.11 %
Interest-bearing demand deposits	2,718,360		509		0.07 %		2,794,338		360		0.05 %		2,857,336		310		0.04 %		2,875,430		321		0.05 %		2,933,466		411		0.06 %
Money market deposit accounts	2,512,892		1,310		0.21 %		2,620,850		692		0.10 %		2,653,467		668		0.10 %		2,668,105		653		0.10 %		2,618,177		656		0.10 %
Time deposits	1,024,895		1,467		0.57 %		1,110,906		1,511		0.54 %		1,220,815		1,774		0.58 %		1,292,608		2,185		0.69 %		1,356,513		2,606		0.76 %
Borrowed funds (f)	451,369		3,967		3.49 %		127,073		239		0.75 %		123,749		167		0.54 %		135,289		158		0.47 %		135,038		159		0.47 %
Subordinated debt	113,783		1,148		4.04 %		113,695		1,149		4.04 %		119,563		1,203		4.03 %		123,608		1,250		4.05 %		123,514		1,180		3.82 %
Junior subordinated debentures	129,271		1,823		5.52 %		129,207		1,322		4.00 %		129,142		920		2.82 %		129,077		651		2.02 %		129,012		625		1.89 %
Total interest-bearing liabilities	9,249,021		10,809		0.46 %		9,246,317		5,867		0.25 %		9,465,991		5,631		0.24 %		9,558,611		5,810		0.25 %		9,578,326		6,259		0.26 %
Noninterest-bearing demand deposits (g)	3,039,000						3,093,490						3,090,372						3,060,698						3,093,518
Noninterest-bearing liabilities	229,794						209,486						193,510						203,537						242,620
Total liabilities	12,517,815						12,549,293						12,749,873						12,822,846						12,914,464
Shareholders' equity	1,465,285						1,503,626						1,506,832						1,600,728						1,559,627
Total liabilities and shareholders' equity	$   13,983,100						$   14,052,919						$   14,256,705						$   14,423,574						$   14,474,091
Net interest income/Interest rate spread			117,809		3.43 %				113,485		3.35 %				100,882		2.96 %				91,213		2.68 %				97,317		2.79 %
Net interest-earning assets/Net interest margin	$  3,856,958				3.57 %		$  3,909,939				3.42 %		$  3,880,771				3.07 %		$  3,891,871				2.75 %		$  3,890,860				2.89 %
Ratio of interest-earning assets to interest-bearing liabilities	1.42X						1.42X						1.41X						1.41X						1.41X

(a)	Average gross loans receivable includes loans held as available-for-sale and loans placed on nonaccrual status.
(b)	Interest income includes accretion/amortization of deferred loan fees/expenses, which was not material.
(c)	Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
(d)	Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent ("FTE") basis.
(e)	Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.
(f)	Average balances include FHLB borrowings and collateralized borrowings.
(g)	Average cost of deposits were 0.13%, 0.11%, 0.11%, 0.12%, and 0.14%, respectively.
(h)	Shown on a FTE basis. GAAP basis yields for the periods indicated were: Loans — 4.33%, 4.05%, 3.77%, 3.61%, and 3.77%, respectively, Investment securities — 1.59%, 1.59%, 1.48%, 1.45%, and 1.48%, respectively, Interest-earning assets — 3.87%, 3.58%, 3.18%, 2.91%, and 3.03%, respectively. GAAP basis net interest rate spreads were 3.41%, 3.33%, 2.94%, 2.66%, and 2.77%, respectively, and GAAP basis net interest margins were 3.54%, 3.40%, 3.05%, 2.73%, and 2.87%, respectively.

                

Northwest Bancshares, Inc. and Subsidiaries
Average Balance Sheet (Unaudited)
(in thousands)
The following table sets forth certain information relating to the Company's average balance sheet and reflects the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.  Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented.  Average balances are calculated using daily averages.
	Year ended December 31,
	2022						2021
	Average balance		Interest		Avg. yield/ cost (h)		Average balance		Interest		Avg. yield/ cost (h)
Assets
Interest-earning assets:
Residential mortgage loans	$     3,232,487		113,256		3.50 %		$     2,969,939		102,642		3.46 %
Home equity loans	1,282,218		52,707		4.11 %		1,374,038		48,789		3.55 %
Consumer loans	1,933,557		67,296		3.48 %		1,635,613		60,854		3.72 %
Commercial real estate loans	2,894,508		131,230		4.47 %		3,222,272		141,186		4.32 %
Commercial loans	976,128		45,293		4.58 %		1,037,758		38,794		3.69 %
Loans receivable (a) (b) (d)	10,318,898		409,782		3.97 %		10,239,620		392,265		3.83 %
Mortgage-backed securities (c)	1,968,528		30,804		1.56 %		1,704,006		21,463		1.26 %
Investment securities (c) (d)	381,518		6,671		1.75 %		350,806		5,848		1.67 %
FHLB stock, at cost	17,065		730		4.27 %		20,229		407		2.01 %
Other interest-earning deposits	567,609		3,599		0.63 %		921,360		1,194		0.13 %
Total interest-earning assets	13,253,618		451,586		3.41 %		13,236,021		421,177		3.18 %
Noninterest-earning assets (e)	924,080						1,072,313
Total assets	$   14,177,698						$   14,308,334
Liabilities and shareholders' equity
Interest-bearing liabilities:
Savings deposits	$     2,336,217		2,343		0.10 %		$     2,232,454		2,440		0.11 %
Interest-bearing demand deposits	2,810,889		1,517		0.05 %		2,862,677		1,660		0.06 %
Money market deposit accounts	2,613,422		3,377		0.13 %		2,554,975		2,570		0.10 %
Time deposits	1,161,432		6,883		0.59 %		1,463,522		12,452		0.85 %
Borrowed funds (f)	212,026		4,531		2.14 %		135,285		616		0.46 %
Subordinated debt	117,625		4,750		4.04 %		123,457		4,980		4.03 %
Junior subordinated debentures	129,175		4,716		3.60 %		128,915		2,528		1.93 %
Total interest-bearing liabilities	9,380,786		28,117		0.30 %		9,501,285		27,246		0.29 %
Noninterest-bearing demand deposits (g)	3,070,892						2,999,392
Noninterest-bearing liabilities	207,316						250,075
Total liabilities	12,658,994						12,750,752
Shareholders' equity	1,518,704						1,557,582
Total liabilities and shareholders' equity	$   14,177,698						$   14,308,334
Net interest income/Interest rate spread			423,469		3.11 %				393,931		2.89 %
Net interest-earning assets/Net interest margin	$     3,872,832				3.20 %		$     3,734,736				2.98 %
Ratio of interest-earning assets to interest-bearing liabilities	1.41X						1.39X

(a)	Average gross loans receivable includes loans held as available-for-sale and loans placed on nonaccrual status.
(b)	Interest income includes accretion/amortization of deferred loan fees/expenses, which were not material.
(c)	Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
(d)	Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent ("FTE") basis.
(e)	Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.
(f)	Average balances include FHLB borrowings and collateralized borrowings.
(g)	Average cost of deposits were 0.12% and 0.16%, respectively.
(h)	Shown on a FTE basis. GAAP basis yields were: Loans — 3.95% and 3.81%, respectively; Investment securities — 1.53% and 1.45%, respectively; Interest-earning assets — 3.39% and 3.16%, respectively. GAAP basis net interest rate spreads were 3.09% and 2.88%, respectively; and GAAP basis net interest margins were 3.17% and 2.96%, respectively.

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/northwest-bancshares-inc-announces-fourth-quarter-2022-earnings-and-quarterly-dividend-301727347.html

SOURCE Northwest Bancshares, Inc.

FAQ

What were NWBI's Q4 2022 earnings results?

NWBI reported a net income of $34.6 million, or $0.27 per diluted share, an increase of 15.3% compared to the same quarter last year.

What is the annual dividend yield for NWBI?

The annualized dividend yield for NWBI is approximately 5.7%, based on the quarterly cash dividend of $0.20.

How did NWBI's net interest income change in Q4 2022?

Net interest income increased by 21.1% to $117.0 million for Q4 2022.

What is the status of NWBI's asset quality?

As of December 31, 2022, NWBI experienced a 34.9% decrease in classified loans, indicating improved asset quality.

What contributed to the decline in NWBI's net income for 2022?

The decline in net income for 2022 was primarily driven by an increase in provisions for credit losses and a decrease in noninterest income.