Northwest Bancshares, Inc. · NASDAQ:NWBI
Northwest Bancshares — KBW Investor Conference 2024
38 slides from Northwest Bancshares's conference presentation, Feb 15, 2024
Slide 1: KBW Investor Conference
February 15, 2024 KBW INVESTOR CONFERENCE
Slide 2: Cautionary Note Regarding Forward-Looking Statements
2 Cautionary Note Regarding 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 simil
Slide 3: Overview of Northwest Bancshares, Inc.
3 OVERVIEW OF NORTHWEST BANCSHARES, INC.
Slide 4: Summary
4 SUMMARY • Leading regional bank, based in Warren, PA, and founded in 1896. • Holding Company, Northwest Bancshares, Inc. (NWBI), headquartered in fast growing Columbus, OH. • Strong footprint in Pennsylvania, Western New York, Ohio, and Indiana. • Diversified fee income mix including loan and depo
Slide 5: Key Stats – December 31, 2023
5 KEY STATS – December 31, 2023 • Assets: $14.4bn • Loans: $11.4bn • Total Deposits: $12.0bn • Loans/Deposits: 95.28% • TCE/TA: 8.30% • CET1 Ratio: 12.73% • Total Delinquency: 0.82% • NPAs/Assets: 0.67% • ROAA: 0.95% • ROAE: 8.94% • Efficiency Ratio: 62.15% • Reserves/Loans: 1.10% • NCOs/Average Loa
Slide 6: A Network of Offices Across States
6 A NETWORK OF OFFICES ACROSS 4 STATES OVERVIEW OF NORTHWEST BANCSHARES, INC. Summary 4 Sum ary NASDAQ: “NWBI”
Slide 7: Recent Accolades
7 RECENT ACCOLADES OVERVIEW OF NORTHWEST BANCSHARES, INC. Summary 4 Sum ary NASDAQ: “NWBI”
Slide 8: Franchise Highlights
8 FRANCHISE HIGHLIGHTS MANAGEMENT CULTURE & TRACK RECORD • Large bank combined with long tenured management experience. • Excellent M&A execution track record. • Consistent EPS growth with diversified revenue base. HIGH-QUALITY LOAN PORTFOLIO • Expertise in Mortgage & Home Equity augmented by contro
Slide 9: Strategic Focus
9 STRATEGIC FOCUS
Slide 10: Commercial
10 COMMERCIAL • Commercial relationships continue to be a growing segment of our business as commercial loans and deposits have grown steadily. • NWBI’s Midwest/Mid-Atlantic geographies are well positioned with business growth opportunities. • Business segments include middle market and large corpor
Slide 11: Commercial (Continued)
11 COMMERCIAL (Continued) • With the continued increase in private equity and home office liquidity, we have launched a Sponsored Finance vertical to partner with these entities for their financing needs. • We continue to build on our Corporate Finance capabilities, where we not only invest in syndi
Slide 12: Business Banking/Small Business Lending
12 BUSINESS BANKING/SMALL BUSINESS LENDING • Hired industry expert to lead the business banking and small business lending efforts. • Implemented a state-of-the-art loan origination system. • We’ve recently established an SBA Lending vertical, including the addition of experienced SBA credit and sal
Slide 13: Retail/Digital
13 RETAIL/DIGITAL • We’ve been digitally transforming our bank, launching new technology (features and functionality) to improve both customer experience and our ability to grow, including: • New online and mobile banking experience with improved capabilities (Zelle, Alerts, Credit Score, CardHub, c
Slide 14: Retail/Branch Optimization
14 RETAIL/BRANCH OPTIMIZATION • Because customers are choosing more convenient ways to interact with our bank, branch traffic and transaction volumes have decreased, while usage of our digital channels, like online and mobile banking, have dramatically increased. • Because of this ongoing shift in c
Slide 15: Mortgage
15 MORTGAGE • Focused on driving fee income through our mortgage banking platform. • Over $399 million of 1-4 family mortgage loan originations as of December 31, 2023. • Provides flexibility to manage our balance sheet based on economic conditions and desire to hold outstandings. • Long record of l
Slide 16: Dealer Services
16 DEALER SERVICES • Driven by Indirect Auto and Power Sports, this business line has grown steadily in a nine-state market area with an emphasis on higher credit quality. • Long record of low delinquencies and net charge-offs. Average FICO score over 770. • We significantly expanded the distributio
Slide 17: Trust & Investment Services
17 TRUST & INVESTMENT SERVICES • Business Solutions: Business trust revenue has remained strong over the past year as we continue to diversify our mix of both revenue and assets under management. • Personal Solutions: We continue to grow personal trust revenue through our focus on relationships, ser
Slide 18: Environmental, Social & Governance (ESG) and Diversity & Inclusion (DEI)
18 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) AND DIVERSITY & INCLUSION (DEI) • It is our mission to promote a workplace where all our employees can contribute, innovate, and thrive. • Newly created leadership roles for both ESG and DEI to drive our efforts across our bank and footprint. • Inclusion C
Slide 19: Defining a Distinctive M&A Culture
19 DEFINING A DISTINCTIVE M&A CULTURE
Slide 20: Our M&A Philosophy
20 M&A in current and contiguous markets remains a focus: • Knowledge of our customers and their markets is a strategic advantage. Focused credit & deposit due diligence and re-underwriting: • Dedicated and experienced team focused on due diligence and maintaining NWBI’s strong credit standard. Supp
Slide 21: Northwest Bank & Branch Acquisitions
21 NORTHWEST BANK & BRANCH ACQUISITIONS (1) Assets shown as loans acquired in transaction. Company Name Completion Date Assets ($MM) Deposits ($MM) MutualFirst Financial 4/24/2020 $213.4 $2,046.0 $1,617.0 Donegal 3/8/2019 85.8 543.1 479.4 Key - 18 Branches 9/9/2016 NA 455.9(1) 1,642.8 LNB 8/14/2015
Slide 22: Financial Overview
22 FINANCIAL OVERVIEW
Slide 23: Historical Earnings Growth
23 $0.17 $0.13 $0.20 $0.19 $0.25 $0.25 $0.37 $0.39 $0.46 $0.49 $0.46 $0.44 $0.44 $0.30 $0.53 $0.64 $0.67 $0.73 $0.67 $0.64 $0.49 $0.92 $1.02 $1.04 $1.09 $1.21 $1.08 $1.10 August 2015 Acquisition of LNB Bancorp September 2016 Acquisition of First Niagara Offices March 2019 Acquisition of DonegalFinan
Slide 24: Track Record of Steady Balance Sheet Growth
24 $1.3 $1.6 $2.5 $3.3 $4.3 $5.2 $5.5 $5.6 $5.8 $5.7 $6.6 $7.8 $8.6 $11.6 $12.3 $11.5$12.0 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21 '23 $1.2 $1.5 $2.3 $2.9 $3.3 $4.7 $4.8 $5.3 $5.6 $5.8 $7.2 $7.8 $8.8 $10.5 $10.0 $10.9$11.4 $0.0 $2.0 $4.0 $6.
Slide 25: Earnings Stability
25 64.8% 64.7% 62.6% 62.1% 60.4% 66.8% 60.1% 62.2% 2016 2017 2018 2019 2020 2021 2022 2023 ROAA Efficiency Ratio (2) 1.02% (1) 0.97% (1) 0.98% (1) 0.55% 0.99% 1.11% 1.07% 0.58% 1.08% 0.94% 0.95% 2016 2017 2018 2019 2020 2021 2022 2023 8.29% (1) 9.07% (1) 9.26% (1) 4.28% 7.95% 8.61% 8.36% 4.72% 9.91%
Slide 26: Fee Income
26 31% 29% 29% 27% 24% 28% 34% 37% 21% 24% 26% 26% 18% 17% 16% 15% 42% 46% 44% 43% 34% 42% 46% 46%6% 1% 1% 4% 24% 13% 4% 2% 2016 2017 2018 2019 2020 2021 2022 2023 Mortgage Banking Income Fee Income (ex. Service Charges and Interchange Fees) Interchange Fees Service Charges and Other Fees 2023 Fee I
Slide 27: Noninterest Expense
27 NONINTEREST EXPENSE (1) Non-Core Expense includes merger, asset disposition and restructuring expenses, $1.4 million of accelerated compensation and employee benefits upon Mr. Seiffert passing in 2022 and FHLB prepayment penalty in 2016. (2) Efficiency Ratio adjusted to exclude gain on sale of in
Slide 28: Robust Capital Position
28 Consolidated Capital Ratios Bank- Level Capital Ratios ROBUST CAPITAL POSITION 9.7% 8.5% 8.4% 8.0% 8.3% 11.9% 10.1% 10.3% 10.8% 10.9% 13.6% 12.9% 13.7% 13.0% 12.7% 15.0% 14.1% 15.0% 14.2% 13.8% 15.7% 16.6% 17.1% 16.4% 16.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% December 31, 2019
Slide 29: Customer Base Evolution
29 Res. Mtg. 29% Home Equity 11% Consumer 19% CRE 26% Commercial 15% $11.4bn CUSTOMER BASE EVOLUTION 2023 2013 NORTHWEST’S MIX OF LOANS HAS CHANGED OVER THE LAST TEN YEARS, AS THE BANK HAS CONTINUED TO TRANSFORM FROM A THRIFT TO A COMMERCIAL BANK Res. Mtg. 43% Home Equity 18% Consumer 4% CRE 28% Com
Slide 30: Allowance for Credit Losses
30 $80,185 $64,957 $72,448 $68,902 $103,417 $158,802 $81,980 $97,082 76.0% 87.4% 76.2% 84.1% 130.0% 64.4% 144.0% 129.0% 0.0% 50.0% 100.0% 150.0% 200.0% 250.0% 300.0% Q4 2016 Q4 2017 Q4 2018 Q4 2019 Q4 2020 Q4 2021 Q4 2022 Q4 2023 NPLs Allowance/NPLs 7,557 $7,793 $8,051 $8,809 $10,581 $10,016 $10,920
Slide 31: Credit Quality: Classified Loans and NPAs
31 Classified Loans/Capital (1) ($ in millions) $1,051 $1,136 $1,184 $1,300 $1,541 $1,577 $1,635 $1,679 20.8% 20.9% 15.5% 16.5% 31.8% 23.0% 14.5% 14.1% Q4 2016 Q4 2017 Q4 2018 Q4 2019 Q4 2020 Q4 2021 Q4 2022 Q4 2023 Capital Classified/Capital $9,624 $9,364 $9,608 $10,494 $13,806 $14,502 $14,113 $14,
Slide 32: Additional Classified Loan Information
32 Rank Industry Loan Type Outstanding Relationship Balance 1 Health Care/Social Assistance CRE $25.9 2 Health Care/Social Assistance CRE 23.7 3 Real Estate/Rental/Leasing CRE 23.6 4 Accommodation/Food Services CRE 15.4 5 Health Care/Social Assistance CRE 11.1 6 Health Care/Social Assistance CRE 5.9
Slide 33: Strong, Evolving Core Deposit Franchise
33 Nonint. Bearing 22% Int. Bearing Demand 22% Savings 18% Time 22% MMDA 16% Cost of Deposits: 0.91% 2013 Low Cost Checking Deposits 29% STRONG, EVOLVING CORE DEPOSIT FRANCHISE • Great success attracting and keeping new checking account customers, while continuing to pursue lower cost deposit fundin
Slide 34: Deposits
34 Generally, deposits in excess of $250,000 are not federally insured. The following table provides details around the Company’s uninsured deposit portfolio as of December 31, 2023: Our largest uninsured depositor, excluding intercompany and collateralized deposit accounts, had an aggregate uninsur
Slide 35: Low Risk Securities Portfolio
35 AAA 29% AA 68% A 2% BBB 1% Not Rated 0% Agency 9% CMBS 24% CMO 44% MBS 16% Muni 4% Other 3% Book Value $2.1 billion LOW RISK SECURITIES PORTFOLIO $243 $211 $224 $205 $239 $195 $147 $104 $90 $382 $- $50 $100 $150 $200 $250 $300 $350 $400 $450 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033+ CMO
Slide 36: Liquidity
36 • The primary tool used by Northwest to measure its liquidity position is its strong liquidity reserve, which consists of unpledged investment securities, unused available FHLB and FRB borrowing capacity, and overnight federal funds lines. • Northwest currently has $276 million of cash and equiva
Slide 37: Appendix
APPENDIX [XJ Northwest Bancshares, Inc.
Slide 38: Total Return Performance vs. Peers
38 Source: S&P Global Market Intelligence, FactSet, Company filings. Market data as of December 31, 2023. Note: Peers include: CBU, FCF, FULT, NBTB, STBA, TMP, and WSBC. (1) Total return of the security over a period, including price appreciation and the reinvestment of dividends. August 2015 Acquis