Northwest Bancshares, Inc. · NASDAQ:NWBI
Northwest Bancshares — KBW Conference 2023
36 slides from Northwest Bancshares's conference presentation, Feb 16, 2023
Slide 1: KBW Conference Presenters
February 16, 2023 KBW CONFERENCE PRESENTERS Louis J. Torchio President & Chief Executive Officer William W. Harvey Jr. SEVP, Chief Operating Officer & Chief Financial Officer
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 mortgage bank
Slide 5: Key Stats – December 31, 2022
5 KEY STATS – DECEMBER 31, 2022 • Assets: $14.1bn • Loans: $10.9bn • Total Deposits: $11.5bn • Loans/Deposits: 95.25% • TCE/TA: 8.03% • CET1 Ratio: 13.04% • Total Delinquency: 0.79% • NPAs/Assets: 0.58% • ROAA: 0.94% • ROAE: 8.80% • Efficiency Ratio: 62.10% • Reserves/Loans: 1.08% • 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 • Experienced and dedicated management team. • Excellent M&A execution track record. • Consistent EPS growth with diversified revenue base. HIGH-QUALITY LOAN PORTFOLIO • Expertise in Mortgage & Home Equity augmented by controlled growth in Dea
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. • Implementing state-of-the-art loan origination system. • We’ve recently established an SBA Lending vertical, including the addition of experienced SBA credit and sale
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, CardValet,
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 $1.0 billion of annual 1-4 family mortgage loan originations. • Provides flexibility to manage our balance sheet based on economic conditions and desire to hold outstandings. • Long record of low delinquencies
Slide 16: Dealer Services
16 DEALER SERVICES • Driven by Indirect Auto and Power Sports, this business line has grown steadily in a nine-state market area with an emphasis on higher credit quality. • Long record of low delinquencies and net charge-offs. • Average FICO score over 770. • We significantly expanded the distribut
Slide 17: Trust & Investment Services
17 TRUST & INVESTMENT SERVICES • Business Solutions: Business trust revenue has remained strong over the past year as we continue to diversify our mix of both revenue and assets under management. • Personal Solutions: We continue to grow personal trust revenue through our focus on relationships, ser
Slide 18: Environmental, Social & Governance (ESG) and Diversity & Inclusion (DEI)
18 ENVIRONMENTAL, SOCIAL & GOVERNANCE (ESG) AND DIVERSITY & INCLUSION (DEI) • It is our mission to promote a workplace where all our employees can contribute, innovate, and thrive. • Newly created leadership roles for both ESG and DEI to drive our efforts across our bank and footprint. • Inclusion C
Slide 19: Defining a Distinctive M&A Culture
19 DEFINING A DISTINCTIVE M&A CULTURE
Slide 20: Our M&A Philosophy
20 M&A in current and contiguous markets remains a focus: • Knowledge of our customers and their markets is a strategic advantage. Focused credit & deposit due diligence and re-underwriting: • Dedicated and experienced team focused on due diligence and maintaining NWBI’s strong credit standard. To s
Slide 21: Northwest Bank & Branch Acquisitions
21 NORTHWEST BANK & BRANCH ACQUISITIONS (1) Assets shown as loans acquired in transaction. Company Name Completion Date Assets ($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: Northwest Has Demonstrated Strong and High-Quality Earnings Per Share Growth
23 August 2015 Acquisition of LNB Bancorp September 2016 Acquisition of First Niagara Offices March 2019 Acquisition of DonegalFinancial Services Corporation December 2009 Completion of 2nd Step Conversion Plan December 2012 Acquisition of Bert Insurance Agency November 1994 IPO Date April 2020 Acqu
Slide 24: Demonstrated Track Record of Strong and Stable Balance Sheet Growth
24 $1.6 $2.1 $3.1 $3.9 $5.2 $6.5 $6.7 $8.0 $8.0 $7.9 $9.0 $9.4 $10.5 $13.8 $14.5 $14.1 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 '95 '98 '01 '04 '07 '10 '13 '16 '19 '22 $0.2 $0.2 $0.2 $0.3 $0.4 $0.6 $0.6 $1.3 $1.2 $1.2 $1.2 $1.2 $1.4 $1.5 $1.6 $1.5 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 $1.4 $1.6
Slide 25: Steady Earnings Stream and Consistent Expense Management
25 4.28% 7.95% 8.61% 8.36% 4.72% 9.91% 8.80% 2016 2017 2018 2019 2020 2021 2022 17 (1) Non-GAAP adjustments include COVID-specific provision expense, CECL provision related to MFSF acquisition, PPP deferred origination costs and acquisition/branch optimization expense. (2) Efficiency Ratio adjusted
Slide 26: Fee Income and Revenue Mix
26 Other 14% (2) Service Charges & Fees 50%Mortgage Banking Income 4% Trust & Other Services 25% BOLI 7% Fee Income 20% Net Interest Income 80% Beginning in July 2020, the Company became subject to the Durbin amendment, reducing fee income by approximately $1.0 million per month. However, continued
Slide 27: Noninterest Expense & Efficiency Ratio
27 2018 2019 2020 2021 2022 $258.6 $281.2 $275.1 $291.9 $49.2 $4.4 $1.0 $4.2 $20.8 64.8% 64.7% 62.6% 62.1% 61.0% 2016 2017 $326.7 $3.4 66.0% $341.5 Non-Core Expense(1) Efficiency Ratio (2)Core Noninterest Expense $333.0 62.1% $7.0 2016 2017 2018 2019 2020 2021 2022 $4.0 $4.3 $4.5 $4.5 $5.3 2.8% 3.1%
Slide 28: Strong Capital Ratios
28 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 TCE/TA Leverage Ratio CET1 Risk-Based Capital Ratio Tier 1 Risk-Based Capital Ratio Total Risk-Based Capital Ratio 8.0% 10.8% 16.4% 13.0% 14.2% 10.0% 11.9% 15.8% 13.7% 15.1% 9.7% 11.9% 15.7% 13.6%
Slide 29: Loan Mix and Customer Base Evolution
29 Resi. Mtg. 32% Home Equity 12%Consumer 20% CRE 26% Commercial 10% $10.9bn NORTHWEST’S MIX OF LOANS HAS CHANGED OVER THE LAST TEN YEARS, AS THE BANK HAS CONTINUED TO CONSERVATIVELY TRANSFORM FROM A THRIFT TO A COMMERCIAL BANK CUSTOMER BASE EVOLUTION Educational Services 0.9% 2011 2022 Utilities 0.
Slide 30: Allowance for Credit Losses
30 $7,793 $8,051 $8,809 $10,581 0.73% 0.69% 0.66% 1.27% Q4 2017 Q4 2018 Q4 2019 Allowance/Loans Q4 2020 Loans $10,016 1.02% Q4 2021 $10,920 1.08% Q4 2022 NPLs Allowance/NPLs $80,185 $64,957 $72,448 $68,902 $158,802 76.0% 87.4% 76.2% 84.1% 130.0% Q4 2016 64.4% $103,417 Q4 2017 Q4 2018 Q4 2019 Q4 2020
Slide 31: Well-Prepared to Enter a Possible Credit Cycle
31 THE COMPANY IS WELL-PREPARED TO ENTER A POSSIBLE CREDIT CYCLE FROM A POSITION OF STRENGTH DUE TO CONSERVATIVE UNDERWRITING AND STRONG ASSET QUALITY. $1,051 $1,136 $1,184 $1,300 $1,541 20.8% 20.9% 31.8% Q4 2016 Q4 2017 Q4 2018 Q4 2019 Q4 2020 Capital Classified/Capital 24 $1,577 15.5% 16.5% 23.0%
Slide 32: Additional Classified Asset Information
32 25 Nonaccrual loans current $57,948 Nonaccrual loans delinquent 30 to 59 days 2,196 Nonaccrual loans delinquent 60 to 89 days 1,231 Nonaccrual loans delinquent 90 days or more 19,861 Total nonaccrual loans 81,236 90 days past due and still accruing 744 Total nonperforming loans 81,980 REO, net 41
Slide 33: Strong, Evolving Core Deposit Franchise
33 Nonint . Bearing 26% Int. Bearing Demand 23%Savings 20% Time 9% MMDA 22% Cost of Deposits: 0.12% Nonint . Bearing 11% Int. Bearing Demand 14% Savings 35% Time 40% Cost of Deposits: 0.94% 2011 Low-Cost Checking Deposits 23% NWBI HAS BEEN ABLE TO REDUCE ITS DEPOSIT COSTS MORE QUICKLY THAN MOST BANK
Slide 34: Conservative Approach Prioritizes Liquidity and Safety
34 CONSERVATIVE APPROACH PRIORITIZES LIQUIDITY AND SAFETY LOW RISK SECURITIES PORTFOLIO Note: Financial data as of December 31, 2022 $273 $236 $209 $223 $214 $238 $196 $140 $105 $458 $- $100 $200 $300 $400 $500 CMO CMBS MBS Agency Muni Corp Other AAA 22% AA 75% A 2% BBB 1% Not Rated 0% Book Value $2
Slide 35: Appendix
APPENDIX [XJ Northwest Bancshares, Inc.
Slide 36: Stock Performance and Peer Comparison
36 Source: S&P Global Market Intelligence, FactSet, Company filings. Market data as of December 31, 2022. 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