Northwest Bancshares, Inc. · NASDAQ:NWBI
Northwest Bancshares — Debt Investor Presentation (September 2020)
47 slides from Northwest Bancshares's debt investor presentation, Sep 2, 2020
Slide 1: Investor Presentation September 2, 2020
Investor Presentation September 2, 2020 Exhibit 99.1
Slide 2: Forward-looking statements
The information contained in this presentation may contain forward-looking statements. When used or incorporated by reference in disclosure documents, the words “believe,” “anticipate,” “estimate,” “expect,” “project,” “target,” “goal” and similar expressions are intended to identify forward-looking
Slide 3: Disclaimers
Disclaimers Non-GAAP Financial Measures This presentation contains financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Management uses these “non-GAAP” measures in its analysis of the Company’s p
Slide 4: Terms of Planned Offering
Terms of Planned Offering YN Northwest Bancshares, Inc. , _ SEC Registered Pi Matur $100 Mition General Corporate Purposes Piper Sandler & Co.
Slide 5: Overview of Northwest Bancshares, Inc.
Overview of Northwest Bancshares, Inc.
Slide 6: Overview of Northwest Bancshares, Inc.
Named “Best bank in the Mid-Atlantic Region” Leading regional bank, based in Warren, PA, and founded in 1896 Strong footprint in Pennsylvania, Western New York, and Northeast Ohio as well as recent meaningful entry into attractive Indiana market Superior credit and risk management standards – throug
Slide 7: Franchise Highlights
Franchise Highlights Management Culture & Track Record Strong Customer Base and Well-Positioned Market Share Exceptional Financial Performance Executing Strategic Objectives Experienced and dedicated management team Excellent M&A execution track record Consistent EPS growth with diversified revenue
Slide 8: Experienced Executive Leadership Team
Experienced Executive Leadership Team Ronald J. Seiffert President and CEO 3 Years with Northwest Previous senior executive positions at Delaware County Bank & Trust, Bank One/JPMorgan Chase, and Huntington Mark T. Reitzes SEVP, Head of Commercial Banking 1 Year with Northwest Previously Commercial
Slide 9: Senior Leadership Team Overview
Senior Leadership Team Overview Top 12 officers have 356 years of collective experience, or ~30 years average experience
Slide 10: Overview of Banking Business
Overview of Banking Business Commercial Dealer Services Retail Residential mortgage and home equity loans are a core offering and continue to provide a stable return and stable asset quality. Long record of low delinquencies and net charge-offs. In 2019, we significantly expanded our residential mor
Slide 11: Overview of Fee Income Businesses
Overview of Fee Income Businesses Mortgage Insurance Services Trust & Investment Services Business Solutions: Business trust revenue has remained strong over the past year as we continue to diversify our mix of both revenue and assets under management. Personal Solutions: We continue to grow persona
Slide 12: Attractive Branch Footprint & Strong Market Share
Attractive Branch Footprint & Strong Market Share Northwest Bank has a substantial footprint in Pennsylvania, Western New York, and Northeast Ohio. Excluding money center banks and super regionals, Northwest holds a top 5 market share in 70% of all its counties. Market Share by Top Counties Source:
Slide 13: Strategic Objectives
Enhance productivity through multiple production channels in order to further drive organic growth Revenue: On-going cost optimization, including efficient use of technology Efficiency: Implement comprehensive talent acquisition/retention strategies. Maintain intimate community bank culture, while e
Slide 14: Defining a Distinctive M&A Culture
Defining a Distinctive M&A Culture 0-129-68 120-189-67 163-151-141 254-191-15 237-125-48 127-127-127 M&A in current and contiguous markets a priority: Knowledge of our customers and their markets is a strategic advantage Focused credit & deposit due diligence and re-underwriting: Dedicated and exper
Slide 15: Overview of Acquisition of MutualFirst
Overview of Acquisition of MutualFirst Geographic Fit Compatible Cultures Strategic Fit Financially Compelling Significant expansion into appealing Indiana market Indiana strategically targeted due to its growth prospects and community values consistent with NWBI’s current footprint Strong track rec
Slide 16: Customers & Communities
Customers & Communities Provided 6,200 customers with loan balances of $1.3 billion, representing 12% of outstanding principal balances, a 90-day principal and interest deferral period Complying with local, state and federal orders to contain the spread of the virus Reduced in-person branch access,
Slide 17: Financial Overview
Financial Overview
Slide 18: Historical Earnings Growth
Northwest has demonstrated strong and high quality earnings per share growth since its inception as a public company Earnings Per Share Growth 1995 – 2020 Q2 1996 – 2019 EPS CAGR: 8.2% 0-129-68 120-189-67 163-151-141 254-191-15 237-125-48 127-127-127 Historical Earnings Growth Non-GAAP Annualized No
Slide 19: Track Record of Steady Balance Sheet Growth
Track Record of Steady Balance Sheet Growth Total Assets Total Gross Loans Total Deposits Stockholder’s Equity Northwest has a demonstrated track record of strong and stable balance sheet growth since IPO Note: Financial data as of June 30, 2020 ($ in billions) ($ in billions) ($ in billions) ($ in
Slide 20: Strong Earnings Power
Strong Earnings Power ROAA Net Interest Margin Efficiency Ratio (2) ROAE Steady earnings stream and consistent expense management continue to drive profitability Non-GAAP adjustments include COVID-specific provision expense, CECL provision related to MFSF acquisition, PPP deferred origination costs
Slide 21: Fee Income
Fee Income Note: Financial data as of June 30, 2020 Includes gain on sale of investments, net gain on real estate owned, and other operating income. Calculated using annualized year-to-date results Northwest’s broad suite of fee income businesses allows for enhanced cross-sell opportunities as well
Slide 22: Northwest's Key Fee Income Businesses
Business Insurance Income ($ in millions) Northwest’s Key Fee Income Businesses Trust and Investment Services Insurance 0-129-68 120-189-67 163-151-141 254-191-15 237-125-48 127-127-127 Business Trust Personal Trust Northwest Investment Services Business Insurance Personal Insurance Revenue increase
Slide 23: Noninterest Expense
Noninterest Expense Noninterest Expense & Efficiency Ratio (1) Avg. Assets / FTE & Core NIE / Avg. Assets ($ in millions) Overview Expense growth trending well below revenue and balance sheet growth Continued focus on branch optimization efforts and technology investments The Company completed a bra
Slide 24: Net Interest Margin
Net Interest Margin Net Interest Income & Net Interest Margin Asset Yields, Liability Costs, and Net Interest Margin IRR Shocks (June 2020) The Company’s strong net interest margin is driven by its best-in-class deposit franchise and stable, low cost of deposits Overview Higher yielding asset mix -
Slide 25: Robust Capital Position
8.2% Robust Capital Position Consolidated Capital Ratios Bank-Level Capital Ratios Strong capital ratios supported by $300-500 million of capital in excess of regulatory minimum requirements Excl. PPP Excl. PPP
Slide 26: High Quality Capital Structure
High Quality Capital Structure Tier 1 Capital: $1,383.3 Tier 2 Capital: $138.2 Receives full Tier 1 Treatment Trust Preferred A Loan Loss Reserve Includes remaining adjustments to Tier 1 Risk-Based Capital Note: Financial data as of June 30, 2020; Dollars shown in millions Tangible Common Equity (¹)
Slide 27: Northwest's Customer Base Evolution
$5.7bn $10.9bn Q2’12 Q2’20 Northwest’s Customer Base Evolution Source: S&P Global Market Intelligence. Note: Financial data as of June 30, 2020 Northwest’s mix of loans has changed over the last eight years as the bank has continued to conservatively transform from a thrift to a commercial bank. New
Slide 28: Mortgage & Home Equity
LTV and FICO scores tracked for Northwest-originated loans only Note: Data as of June 30, 2020 Mortgage & Home Equity 0-129-68 120-189-67 163-151-141 254-191-15 237-125-48 127-127-127 Portfolio Overview(1) 43% of total loans outstanding Primarily conforming mortgages Approximately 75-80% of originat
Slide 29: Dealer Services
LTV and FICO scores tracked for Northwest-originated loans only The Company’s remaining consumer portfolio is predominantly credit cards and represents approximately 2% of total loans outstanding Calculated using Northwest-originated loans. Remaining portfolio is predominantly RV and boats. Note: Da
Slide 30: CRE and C&I Overview
CRE and C&I Overview 0-129-68 120-189-67 163-151-141 254-191-15 237-125-48 127-127-127 CRE Overview 30% of total loans outstanding 79% of outstanding balances had LTVs less than 80% at origination 90% of outstanding balances were for stabilized properties 29.2% of outstanding balances had COVID-19 m
Slide 31: Potentially Vulnerable COVID-19 Portfolio
Potentially Vulnerable COVID-19 Portfolio Loans Outstanding Loan Deferrals Note: Data as of June 30, 2020 The vast majority of initial deferrals are no longer under a modification program as of late August
Slide 32: Loan Approval Process
Northwest utilizes various loan origination platforms to manage and control the loan approval process within the lines of business. Each platform allows the business to ensure they are adhering to the approved policy thresholds and provides for exception tracking. Loan approval authorities are deleg
Slide 33: Allowance for Credit Losses
Allowance for Credit Losses Allowance / Loans Provision Coverage / Net Charge-offs Allowance / NPLs ($ in millions) ($ in thousands) Adoption of CECL improves and solidifies the reserve Overview Allowance for credit losses was 1.29% of gross loans as of June 30, 2020, 1.36% of total loans excluding
Slide 34: CECL Impact
CECL Impact Allowance for Credit Losses Build Allowance for Credit Losses ($ in millions) Adoption Impact: Day 1 increase in allowance of $11M Elected 5-year phase-in for regulatory purposes June 30, 2020 CECL Highlights $141M, or 1.29% of loan balances, or 1.36% of total loans excluding PPP loan ba
Slide 35: Asset Quality Summary
Asset Quality Summary NCOs / Average Loans Classified Loans / Capital (1) NPAs / Assets ($ in millions) ($ in millions) Conservative underwriting and strong asset quality have the Company well-prepared to enter the credit cycle from a position of strength Overview Non-performing assets as a percenta
Slide 36: Strong, Evolving Core Deposit Franchise
Strong, Evolving Core Deposit Franchise Source: S&P Global Market Intelligence. Financial data for peer comparison as of June 30, 2020. 0-129-68 120-189-67 163-151-141 254-191-15 237-125-48 127-127-127 Post crisis, NWBI has been able to reduce its deposit costs more quickly than most banks and impro
Slide 37: Low Risk Securities Portfolio
Low Risk Securities Portfolio Investment Portfolio Composition (1) Portfolio Cash Flows(2) Portfolio Shocks Conservative approach prioritizes liquidity and safety ($ in thousands) Note: Financial data as of June 30, 2020 Other includes asset-backed securities, SBA Loan Pools, ValuNotes/IAN Other inc
Slide 38: Holding Company & Bank Liquidity
Holding Company & Bank Liquidity The primary tool used by Northwest to measure its liquidity position is its liquidity reserve, which consists of unpledged investment securities, unused available FHLB borrowings capacity, and overnight federal funds lines The Company has no material holding company
Slide 39: Conclusions: Why is Northwest the Preferred Platform?
Long history of low-risk and diversified balance sheet, superior credit and underwriting standards Excellent stewards of capital Management and company track-record of delivering consistent superior results to all stakeholders and superior service to customers Multiple fee income channels provide at
Slide 40: Appendix
Appendix
Slide 41: Historical and Pro Forma Interest Coverage
Historical and Pro Forma Interest Coverage Assumes $100 million raised, 1.00% gross underwriting spread and $500K of one-time offering costs Assumes 50% of net proceeds are downstreamed to the Bank Non-GAAP adjustments include COVID-specific provision expense, CECL provision related to MFSF acquisit
Slide 42: Pro Forma Capital
Pro Forma Capital Pro Forma Consolidated Regulatory Capital Assumes net proceeds are reinvested into securities with 20% risk weighting Excludes goodwill and other intangible assets (non-GAAP) Note: Assumes $100 million raised ($98.5 million, net of 1.00% gross underwriting spread and $500K of one-t
Slide 43: Board of Directors
Board of Directors YN Board Member Principal Occupation Ronald J. Seifert Chairman, President & CEO, Northwest Bancshares, Inc. Timothy B. Fannin Retired Partner, Catalano Case Catalano & Fannin Robert M. Campana ‘Owner of Campana Development, President of Campana Capital Deborah J. Chadsey Partner,
Slide 44: Building A Bank For The Future
Building A Bank For The Future 0-129-68 120-189-67 163-151-141 254-191-15 237-125-48 127-127-127 Key Technology Offerings Leveraging and enhancing our technology offerings to improve customer service, supplement face-to-face interaction, and take advantage of cross-sell opportunities is a key focus
Slide 45: Five-Year Strategic Plan
Five-Year Strategic Plan 0-129-68 120-189-67 163-151-141 254-191-15 237-125-48 127-127-127 Northwest has developed a strategic five-year plan driven by key corporate initiatives that will continue to drive exceptional performance and shareholder value in 2020 and beyond. Improve productivity in comm
Slide 46: Total Shareholder Return since IPO
August 2015 Acquisition of LNB Bancorp September 2016 Acquisition of First Niagara Offices March 2019 Acquisition of Donegal Financial Services Corporation Northwest has meaningfully outperformed its peers and bank index since its IPO in 1994 while also steadily increasing the dividend Source: S&P G
Slide 47: Non-GAAP Reconciliations
Non-GAAP Reconciliations* * 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 estimated COVID-related provision, CECL provision related to the acquisition of MutualBank, PPP deferred or
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