On July 23, 2024, Northwest Bancshares Inc (NWBI, Financial) released its 8-K filing for the second quarter of 2024. Northwest Bancshares Inc is a stockholding company for Northwest Bank, a community-oriented financial institution offering personal and business banking solutions, investment management, trust services, and insurance products. The bank's loan portfolio includes residential mortgages, home equity loans, commercial real estate loans, and commercial loans. Net interest income is the company's primary revenue contributor.
Performance Overview
Northwest Bancshares Inc reported a net income of $5 million, or $0.04 per diluted share, for Q2 2024. This represents a significant decline from the $33 million, or $0.26 per diluted share, reported in the same quarter last year, and a decrease from the $29 million, or $0.23 per diluted share, in the prior quarter. The company's adjusted net operating income was $35 million, or $0.27 per diluted share, excluding a $28 million loss on the sale of investments and $1 million in restructuring expenses.
Key Financial Metrics
The net interest margin expanded by 10 basis points to 3.20%, reflecting a strategic repositioning of the company's security portfolio. Average loans receivable increased by 2.7% year-over-year to $11.37 billion, driven by a $631 million growth in the commercial banking portfolio. Average deposits grew by 5.8% to $12.09 billion, while average borrowed funds decreased by 61.4% to $323 million.
| Metric | Q2 2024 | Q1 2024 | Q2 2023 | Change (Q2 2024 vs. Q1 2024) | Change (Q2 2024 vs. Q2 2023) |
|---|---|---|---|---|---|
| Average Loans Receivable | $11,368,749 | $11,345,308 | $11,065,660 | 0.2% | 2.7% |
| Average Investments | $2,021,347 | $2,051,058 | $2,233,987 | (1.4%) | (9.5%) |
| Average Deposits | $12,086,362 | $11,887,954 | $11,420,702 | 1.7% | 5.8% |
| Average Borrowed Funds | $323,191 | $469,697 | $837,358 | (31.2%) | (61.4%) |
Income Statement Highlights
Interest income for Q2 2024 was $166.85 million, a 15.9% increase from the same quarter last year. However, interest expense also rose significantly by 69.3% to $60.01 million, resulting in a net interest income of $106.84 million, a slight decrease of 1.6% year-over-year. The net interest margin decreased to 3.20% from 3.28% in Q2 2023.
Noninterest Income and Expense
Noninterest income showed a loss of $8.85 million, primarily due to a $39 million loss on the sale of investment securities. Excluding this loss, noninterest income grew by 3% year-over-year. Noninterest expense increased by 7.6% to $92.42 million, driven by higher personnel expenses related to the expansion of the commercial business and support functions.
Credit Quality and Provisions
The total provision for credit losses was a credit of $0.4 million, reflecting improvements in economic forecasts and a decline in reserves for unfunded commitments. Classified loans increased slightly to $257 million, or 2.26% of total loans, from $214 million, or 1.90%, in the same quarter last year.
Dividend and Strategic Initiatives
The Board of Directors declared a quarterly cash dividend of $0.20 per share, marking the 119th consecutive quarterly dividend. The company also completed a strategic repositioning of its security portfolio, selling 15% of its investment securities and using the proceeds to repay short-term borrowings. This move is expected to yield a higher return over the next three years.
"Our core earnings this quarter reflect our commitment to responsible growth, with particularly strong performance in our commercial division. I’m especially proud of the flawless execution of our previously announced securities restructuring, which has yielded results surpassing our initial projections," said Louis J. Torchio, President and CEO.
For more detailed information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Northwest Bancshares Inc for further details.
