NWBI Financial Analysis

Analysis Date: 1/27/2025

Business Model

Northwest Bancshares generates revenue primarily through net interest income from loans and deposits, as well as noninterest income from fees and services

Revenue Sources

• Net interest income (72% of revenue): Generated from loans and investments minus deposit and borrowing costs
• Noninterest income (28% of revenue): Service charges, trust fees, gains on sales of assets, and other fee income

Income Statement Analysis

• Net interest income increased 2.6% QoQ due to NIM expansion to 3.42%
• Noninterest income up 43.9% QoQ driven by gains on Visa B shares and LIHTC investment
• Provision expense increased significantly due to loan sales and transfers to held-for-sale

Balance Sheet Analysis

• Total assets increased slightly by 0.4% QoQ to $14.4B
• Loans decreased 1% QoQ as company focuses on portfolio remix
• Deposits grew 0.6% QoQ showing stable funding base

Cash Flow Analysis

• Strong operating cash flows supported by core earnings
• Deposit growth funded loan growth with minimal reliance on borrowings

Capital Allocation

Company maintains strong capital position with CET1 ratio of 12.58%. Declared $0.20 quarterly dividend, marking 121st consecutive quarterly dividend payment.

Management Commentary

Pleased with Q4 earnings demonstrating success of business model focused on strategic growth

Entered 2025 with momentum from NIM improvement and efficiency ratio gains

Taking proactive steps to de-risk loan portfolio through strategic sales

Overall Sentiment: Positive and confident about strategic direction while maintaining prudent risk management

Recommendation

Rating: Buy

Reason for Rating: Improving fundamentals and proactive risk management support positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/27/2025, 10:21:53 AM