Northwest Bancshares Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tim Switzer - Keefe, Bruyette & Woods, Inc - Analyst : Hey, good morning. Thank you for taking my questions. We really appreciate you guys doing the conference call and the updated presentation and guidance. It's great.

Question: Tim Switzer - Keefe, Bruyette & Woods, Inc - Analyst : My first question is on the timing and impact of the securities restructuring. It seems like from the presentation, it maybe had up to a 13 basis point impact on the margin this quarter. Could you guys maybe provide some details on the timing of it over the course of the quarter? And then what's the impact we should expect in Q3?

Question: Tim Switzer - Keefe, Bruyette & Woods, Inc - Analyst : An incremental 4 to 5 basis points in Q3?

Question: Tim Switzer - Keefe, Bruyette & Woods, Inc - Analyst : Okay. And is that the guide --

Question: Tim Switzer - Keefe, Bruyette & Woods, Inc - Analyst : Okay. And should we assume some incremental NIM expansion on like a core basis on top of that in Q3 and Q4? Or is that going to be the primary driver?

Question: Tim Switzer - Keefe, Bruyette & Woods, Inc - Analyst : Okay, great. And then if I could ask a follow-up, clarifying exactly what's intended in the guidance. On the non-interest income and expense side, you're guiding to low single-digit growth off of the adjusted base per quarter. Do we take like the average in the first half of the year and just add low single-digit growth on top of that? Or is it low single-digit growth in Q3 relative to Q2 and then low single-digit growth in Q4 relative to Q3?

Question: Tim Switzer - Keefe, Bruyette & Woods, Inc - Analyst : Got you. Okay, that's very clear. I'll get back in the queue. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 23, 2024 / 1:00PM, NWBI.OQ - Q2 2024 Northwest Bancshares Inc Earnings Call

Question: Tim DeLacey - Raymond James - Analyst : Hey, good morning, guys. This is Tim DeLacey, filling in for Danny. I'll echo the comments. Thanks for hosting the call and taking my questions this morning. First quarter in a while here where commercial growth was not very strong. And you alluded to the comment on keeping the loan yields advantageous for you. Can you talk about if that reflects maybe a change in the competitive dynamics, potential entrants in the markets? And then perhaps, as a follow-up, can you talk to how current pipelines are comparatively to the last few quarters in that commercial portfolio? Thanks.

Question: Tim DeLacey - Raymond James - Analyst : Great. I appreciate that color there. Then maybe switching over to credit. Cost, it remained over low for the quarter. I did see the non-accruals pickup in the commercial, and you didn't specifically mention that one-single credit. Is there any detail that you can provide on that from an industry vertical and then maybe the trends you're seeing overall in that portfolio?

Question: Tim DeLacey - Raymond James - Analyst : Okay, great. That's all that I had today, guys. Thanks for taking my questions. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 23, 2024 / 1:00PM, NWBI.OQ - Q2 2024 Northwest Bancshares Inc Earnings Call

Question: Frank Schiraldi - Piper Sandler & Co. - Analyst : Good morning.

Question: Frank Schiraldi - Piper Sandler & Co. - Analyst : Just first on expenses. Just want to make sure I heard you correctly. So when we're looking at the guidance, you talked to low single-digit growth. So that's low single-digit growth in the back half of the year annualized off of normalized 2Q numbers? Is that just saying in a different way, is that the right way to think about it?

Question: Frank Schiraldi - Piper Sandler & Co. - Analyst : Got you. Okay. And then just switching gears as a follow-up. Just the macro picture seems to improve a bit, certainly at least stabilized and bank stocks, certainly reacted positively over the last month or so. So just wondering your thoughts if the -- your appetites change at all for M&A, your updated thoughts there on opportunities in the near-term.

Question: Frank Schiraldi - Piper Sandler & Co. - Analyst : And then just in terms of geography, would it be -- if there is some expansion, would you still expect that to be contiguous expansion? And any thoughts on most attractive geographies as you look out at the potential for M&A?

Question: Frank Schiraldi - Piper Sandler & Co. - Analyst : Great, thanks for the color.

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : Hey, good morning, guys. Just some follow-up on the margin. What kind of rate cut assumptions are baked, if any are baked into your margin guidance?

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : Okay. And then so for every 25 basis points, what kind of cuts, what kind of impact does that have on the margin? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 23, 2024 / 1:00PM, NWBI.OQ - Q2 2024 Northwest Bancshares Inc Earnings Call

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : Okay, great. Thank you. And then what was your CRE ratio, concentration ratio look like at quarter-end?

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : I'm just kind of looking for the regulatory number that everybody is looking at right now.

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : Yeah, sure. No problem. And then on the operating expense side, thanks for the color there as well. I know there's been some branch rationalization exercises that you guys have gone through. Is that pretty much done? Or could we maybe expect to see a few more branch closures here in the second half of the year?

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : Right. So then I think about expenses, then our technology investment is really going to be the biggest growth driver here on a go-forward basis?

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : Okay, great. Thanks. That's all I had for right now.

Question: David Mirochnick - Stephens Inc. - Analyst : Hey, good morning. This is David on for Matt Breese.

Question: David Mirochnick - Stephens Inc. - Analyst : I was wondering if you guys could talk on the loan book. Just in terms if you guys know what percent of the book is pure floating rate as and will reprice within three months? And then just maybe what those are tied to?

Question: David Mirochnick - Stephens Inc. - Analyst : Great. And then is it safe to assume those are tied to prime or [SOFR], maybe 200 or 250 spread?

Question: David Mirochnick - Stephens Inc. - Analyst : Great. And then by chance, do you have the yield on maybe the difference in the yield of the floating book and the yield on the fixed rate book?

Question: David Mirochnick - Stephens Inc. - Analyst : No worries. And then, I guess, just switching over to deposits, sorry, if I missed it. Did you guys talk about maybe your expectations on where you think PDAs will kind of settle out? And maybe in terms are you being more selective now and kind of looking at running off higher-cost deposits, as you guys kind of mentioned looking at funding costs?

Question: David Mirochnick - Stephens Inc. - Analyst : Great. I appreciate that. And then last would just be if there's any kind of color you can give, maybe thoughts on the provision going forward. And will the reserve maybe keep ticking higher if you see any pressure in the C&I space?

Question: David Mirochnick - Stephens Inc. - Analyst : Got it. I appreciate it. Those are all my questions. Thanks for the time.

Question: Manuel Navas - D.A. Davidson & Co. - Analyst : Hey, good morning. So on the loan growth, I appreciate some of the commentary. Do you have the actual runoff that was this quarter that you had to fight against on the commercial side, I feel like a balance number?

Question: Manuel Navas - D.A. Davidson & Co. - Analyst : Okay. And then you talked about pipelines being very similar, which are on the commercial side has been strong for a while. What specific lines are doing best? Is there any that you're starting to move away from because you are opening up a number of different business lines? Just wondering if you're at the point you're winnowing any of them, or are all still performing excellently and still all ramping up? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 23, 2024 / 1:00PM, NWBI.OQ - Q2 2024 Northwest Bancshares Inc Earnings Call

Question: Manuel Navas - D.A. Davidson & Co. - Analyst : No, I appreciate that. And any specific lines that you're calling out -- oh, go ahead, I'm sorry.

Question: Manuel Navas - D.A. Davidson & Co. - Analyst : I appreciate the commentary. Do you have any insight on new loan yields in the pipeline on the commercial side?

Question: Manuel Navas - D.A. Davidson & Co. - Analyst : Thank you. Thanks, guys. I'll step back into the queue.