• Net Income: $33 million or $0.26 per diluted share.
• Net Interest Margin: Expanded by 13 basis points to 3.42%.
• Deposit Balances Growth: Increased by 8% compared to the fourth quarter a year ago.
• Noninterest Income: Increased by $12 million for the quarter.
• Noninterest Expense: Increased by 5% or approximately $3 million from the third quarter.
• Allowance Coverage: Decreased to 1.04% of loans from 1.11% last quarter.
• Tier 1 Capital Ratio: Estimated at 13.8% as of December 31.
• Commercial and Industrial Loans Growth: Increased by 6.2% since last quarter and 23.5% year-over-year.
• Residential Mortgages Decline: Decreased by 6.6% since last year.
• Cost of Deposits: Stands at 1.68%, down 10 basis points from the third quarter.
• Efficiency Ratio: Improved to 59.5%.
• Nonperforming Assets: Held steady at 0.54%.
• Classified Loans: Decreased to 2.44% of total loans.

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Release Date: January 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Northwest Bancshares Inc (NASDAQ:NWBI) reported a net income of $33 million or $0.26 per diluted share for the fourth quarter of 2024.
• The net interest margin expanded by 13 basis points to 3.42%, indicating improved financial performance.
• Deposit balances grew by 8% compared to the fourth quarter a year ago, with a decrease in the cost of funds.
• The company announced an agreement to acquire Penns Woods Bancorp, expected to be completed in the third quarter of 2025, marking its largest merger to date.
• Credit quality remained strong with a decrease in classified loans and an improvement in the coverage ratio on nonperforming loans.

Negative Points

• Noninterest expense increased by 5% or approximately $3 million from the third quarter.
• The residential mortgage portfolio declined by 6.6% since last year, indicating a shift away from this segment.
• Noninterest income included one-time gains, such as a $6 million gain on the sale of shares, which may not be sustainable.
• The commercial real estate portfolio shrank by 0.4% since last quarter, reflecting a cautious approach in this segment.
• The allowance coverage decreased to 1.04% of loans from 1.11% last quarter, which could indicate a potential risk if credit conditions worsen.

Q & A Highlights

Q: Can you clarify if the noninterest income outlook excludes the impact of Penns Woods and what's driving that growth? A: Yes, all guidance excludes the impact from Penns Woods. We are focused on driving better and more consistent fee income performance strategically within the firm. This includes transparency about our fee income targets due to unique items like securities restructuring.

Q: How have recent rate movements affected your expected tangible book value dilution and purchase accounting with the Penns Woods acquisition? A: We are not providing updated guidance on the Penns Woods acquisition until closer to the closing date, as these factors will change with our stock price fluctuations.

Q: After cleaning up the credit book, can you update us on the health care portfolio's credit quality and any other areas of concern? A: Most stress in the long-term health care portfolio has been addressed. We expect to execute transactions to remove certain credits from our books in the first quarter. We have no concerns in other sectors and are entering the year in a stable position.

Q: What is the outlook for loan growth, particularly in the commercial sector, and how does it affect net loan growth? A: We see decent pipeline strength in commercial loans and expect a more constructive environment in 2025. We aim for balanced growth, focusing on commercial and consumer loans, and anticipate picking up momentum later in the year.

Q: What are your expectations for loan and deposit betas, and do you foresee an upward bias to the net interest margin (NIM) given the yield curve? A: We see opportunities to benefit from the current rate environment and yield curve. We aim to maintain loan yields and improve margins by focusing on good pricing and terms. We expect continued margin growth in the $3.30 to $3.40 range, even with potential rate cuts.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.