Northwest Bancshares Inc Q3 2024 Earnings Call Transcript

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

Question: Daniel Tamo - Raymond James - Analyst : Hey, good morning, everyone. Thanks for taking my questions. Maybe first, just starting on the, on the fee income guidance. Just curious, it looks like it's a little bit lower number than what I was looking for. And then you had the, the losses in the, in the mark to market in the, in the fourth quarter within the other. So I'm curious if that is still a good number kind of going forward that, that million given. You're, you're talking about the guidance off of the, the $27 million, $27 8 million number in the third quarter. Going forward is, is kind of we get into 2025 or if that's going to go back to a, a number similar to what we saw in prior quarters, maybe in the two or $3 million range per quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 1:00PM, NWBI.OQ - Q3 2024 Northwest Bancshares Inc Earnings Call

Question: Daniel Tamo - Raymond James - Analyst : So just to be clear then that you're, you're expecting a number similar to the $1 million number level in the fourth quarter.

Question: Daniel Tamo - Raymond James - Analyst : Okay? So, when you say mid-single digits, you're not saying annualized, you're talking about like a stated mid-single digit in the third quarter, I think that that may be a confusion. Got it. Okay. All right. Thank you. And then also, I guess maybe looking at the credit side so looks like you your normalized net charge off guidance went up from last quarter. So curious kind of what, what drove that, that thought and then if there was if there was visibility into kind of the path of getting there, if that, you know, if you're, when you say you're getting trending towards that, if that's because you see something near term that's going to take you into that range or if that's more of a you know, just we expect to be there at some point.

Question: Daniel Tamo - Raymond James - Analyst : Okay. Understood. And, and in terms of the increase in the in the normalized guidance from last quarter, what was the driver there?

Question: Daniel Tamo - Raymond James - Analyst : Understood. All right, thanks Doug, appreciate all the color.

Question: Manuel Navas - D.A. Davidson & Co. - Analyst : Hey, can you remind us some of your targets in M&A kind of financial hurdles, geographies that you might be finding in intriguing and size of targets and opportunities that you're looking for? Just kind of reset that for us.

Question: Manuel Navas - D.A. Davidson & Co. - Analyst : Good. Yeah. So, you know, we as similar to last quarter, I would, I would say that. You know, 1st, 1st of all, you know, we're, we're focused on market in our four state footprints. And the opportunities that, that come up to us really fall into a couple different categories. You know, sort of an in market deal, something that probably looks more like the geography in, in Columbus and Indianapolis growth markets that, that we happen to be in and around. And then, and finally, maybe, maybe strategic from a product or, or diversification standpoint. But I would say that, you know, the most important thing for us is really, how creative it is, what it's going to cost us to acquire. We're, we're, we're really in tune with that. And then I think, you know, strategically, you know, some of the in market stuff is since, you know, we haven't really had an acquisition, you know, since the COVID era, we, you know, we'd be looking at doing something that, that we're confident we can execute on, right, highly creative a size from a size perspective, more of what you expected in the past the $1 billion to $3 billion range. And something that we feel highly confident in executing on making the deal creative. The, the other note there is, is you know, in the, in the two fast growing markets being Columbus and Indianapolis, we're going into strategic planning here in a month and you know, we're evaluating de Novo strategy, branch expansion in those areas. We've already hired some commercial lenders. We've got some business bankers and we're looking at the of, of using some capital to expand in those in the two fastest growth markets in the Midwest from a De Novo strategy. So, you know, the, as, as I stated in my statement, the market's picking up, I'm out in the marketplace meeting with other bank CEOs. We're having some conversations but we're going to be very prescriptive and, and very careful to make sure that our, our transaction is going to be highly an agreed.

Question: Manuel Navas - D.A. Davidson & Co. - Analyst : I appreciate that color. That's interesting about the LPO development that leads to kind of my, my next question is, can you go into where you had strength on the commercial side, kind of by business line and regionally and a and kind of where, where do you have strengthened commercial regionally?

Question: Manuel Navas - D.A. Davidson & Co. - Analyst : Any regions stand out more than others?

Question: Manuel Navas - D.A. Davidson & Co. - Analyst : Okay. And then just a quick follow up on the, then what are you kind of assuming in terms of initial deposit data in your guidance or initial loan data for the fourth quarter and, and where can they go for the full cycle? Just kind of talk through that a little bit.

Question: Manuel Navas - D.A. Davidson & Co. - Analyst : How successful were you to lower deposit rates. Do you have like an end of period deposit costs level to disclose. How are you doing into October has been, has it been pushed back on deposit declines? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 1:00PM, NWBI.OQ - Q3 2024 Northwest Bancshares Inc Earnings Call

Question: Manuel Navas - D.A. Davidson & Co. - Analyst : I, really appreciate the discussion. Thank you.

Question: Matthew Breese - Stephens Inc. - Analyst : Hey, good morning, morning,

Question: Matthew Breese - Stephens Inc. - Analyst : I was hoping you could help me out with a couple of things and the first one is just, could you break out for us? What, what pure floating rate loans are as a percentage of total loans meaning priced off. So, for prime. If you. Have it. What the yield is on that book versus you know, everything else, the adjustable and fixed rate book.

Question: Matthew Breese - Stephens Inc. - Analyst : Oh, this is great. Thank you. Okay, I'll just go here. Do you have any idea on the fixed rate, what the duration is or how much you expect to reprice over the next 12 months? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 1:00PM, NWBI.OQ - Q3 2024 Northwest Bancshares Inc Earnings Call

Question: Matthew Breese - Stephens Inc. - Analyst : Okay. Could you talk a little bit about the pace of C&I growth. Obviously, that's, that's kind of in the line share of where growth has come from recently. Should we expect this kind of pace to continue, you know, kind of mid to high single digits on a quarterly basis? And, and where do you want to bring C&I loans to as a percentage of total loans? Where do you feel like the appropriate level is?

Question: Matthew Breese - Stephens Inc. - Analyst : Understood. Okay. Last one for me just, you know, along those lines as we continue to remix into C&I is it fair to assume the reserve as a percentage of loans increases as well? We haven't seen it really, at least on that metric very much year over year. But I'm curious as time goes on whether or not that, that 111 reserves will, will hire.

Question: Matthew Breese - Stephens Inc. - Analyst : Got it. That's all I had. Thank you for taking my questions.

Question: Frank Schiraldi - Piper Sandler & Co. - Analyst : Morning. You guys have obviously seen some pretty good commercial growth here. And I think Doug and she talked about continued run off on the consumer side of things. Just wondering, just thinking about 4Q is the level we saw in terms of run off in the consumer book in the third quarter. Is that a reasonable place to think about contraction in 4Q? You know, just trying to think about getting to that low single digit loan growth in the fourth quarter, given, given the consumer side of things. You know, is a further ramp up in commercial and any color you can just kind of provide there in terms of quarter over quarter growth. Thanks.

Question: Frank Schiraldi - Piper Sandler & Co. - Analyst : Yeah, that's great. And then just thinking, you know, credit obviously overall look pretty good. You had the increase in in classified and you called out specific segment their health care. And I just wondered if there was, you know, I think in the past you guys last quarter talked about some stabilization you're seeing in that segment, just curious if the increase in classified reflects any sort of internal review in the quarter or just any more color there. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 1:00PM, NWBI.OQ - Q3 2024 Northwest Bancshares Inc Earnings Call

Question: Frank Schiraldi - Piper Sandler & Co. - Analyst : Got you. Okay. That's helpful. And then just lastly just want to make sure just clarification on part of the guide. When you guys talk about the low single digit growth in, in them link quarter into the, into the fourth quarter. I just want to make sure; you know, I don't know if it's too fine a point, but anyway, you mentioned Doug the four basis points on the interest recovery on the non-accrual loan. So, is that, is that low single digits off of the report number off that 333?

Question: Frank Schiraldi - Piper Sandler & Co. - Analyst : Great. Okay, I appreciate it. Thank you.

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : Excuse me. Good morning, guys.

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : Just a quick question in terms of thoughts on any additional balance sheet restructuring efforts coming into fourth quarter or into 2025.

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : Equipment, got it. and then with, just going back to credit quality here quickly and the increase in the classified levels, it should we be thinking that maybe provisioning goes up a little bit, if these classified levels can't come down, is that kind of a good assumption here as we look into Q4?

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : Okay, wonderful. And then how many, how many credits made up, made up that increase.

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : Yes, sir. Sorry about that.

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : Okay. Any, any geographic concentration in those five credits?

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : All right. And then quickly, just one other question in terms of potential De Novo in, in Columbus and in, in the how, how long do you guys think it takes or historically, what is, what has proven to be a kind of the breakeven period for De Novo? And you know, in your history? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 1:00PM, NWBI.OQ - Q3 2024 Northwest Bancshares Inc Earnings Call

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : Okay. So--.

Question: Daniel Cardenas - Janney Montgomery Scott LLC - Analyst : Right? No, perfect, perfect. All right. That, that'll do it for me. I'll step back right now. Thank you.