Northwest Bancshares, Inc. Announces First Quarter 2025 net income of $43 million, or $0.34 per diluted share

Net interest margin expands 45 basis points to 3.87% our 4th consecutive quarter of improved margin

All regulatory and shareholder approvals received for Penns Woods merger

Total revenue grew 19% from first quarter 2024

3rd consecutive quarter of reduced costs of funds

Credit quality remains stable with nonperforming assets at 0.52% of total assets

COLUMBUS, Ohio, April 28, 2025 -- Northwest Bancshares, Inc., (the "Company"), (Nasdaq: NWBI) announced net income for the quarter ended March 31, 2025 of $43 million, or $0.34 per diluted share. This represents an increase of $14 million compared to the same quarter last year, when net income was $29 million, or $0.23 per diluted share, and an increase of $11 million compared to the prior quarter, when net income was $33 million, or $0.26 per diluted share. The annualized returns on average shareholders' equity and average assets for the quarter ended March 31, 2025 were 10.90% and 1.22% compared to 7.57% and 0.81% for the same quarter last year and 8.20% and 0.91% from the prior quarter. 

Compared to adjusted net income (non-GAAP) of $35 million, or $0.27, per diluted share in the prior quarter, adjusted net income (non-GAAP) increased by $9 million to $44 million, or $0.35, per diluted share for the quarter ended March 31, 2025. This increase was driven by a $14 million increase in net interest income impacted by a large non-accrual interest income recovery. The adjusted annualized returns on average shareholders' equity (non-GAAP) and average assets (non-GAAP) for the quarter ended March 31, 2025 were 11.11% and 1.25% compared to 8.71% and 0.97% for the prior quarter.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.20 per share payable on May 20, 2025 to shareholders of record as of May 8, 2025. This is the 122^th consecutive quarter in which the Company has paid a cash dividend. Based on the market value of the Company's common stock as of March 31, 2025, this represents an annualized dividend yield of approximately 6.7%.

Louis J. Torchio, President and CEO, Northwest Bancshares commented, "Our strong performance, with record earnings for a first quarter and one of the best quarters in Northwest's history, is a result of the Northwest team's continued rigorous focus on execution, and cost control and risk management discipline. We continue to enhance our capabilities, expand our footprint, and provide personalized services and expertise to our consumers, companies, and the communities we serve."  

"Despite the unpredictable operating environment, I remain confident and excited about Northwest's prospects for the year ahead. We continue to focus on managing the factors within our control, such as serving our core customers and communities, building on our strong and stable financial foundations, maintaining prudent cost control and risk management discipline, and executing to plan on our financial close and systems conversion for the Penns Woods acquisition by late July 2025. We are well prepared to capitalize on opportunities aligned with our strategy for sustainable, responsible, and profitable growth, when and where they arise in the coming months."

Balance Sheet Highlights

• Average loans receivable decreased $169 million from the quarter ended March 31, 2024 driven by our personal banking portfolio, which decreased by $388 million as cash flows from this portfolio were reinvested in our commercial portfolios.  This was partially offset by growth in our commercial banking portfolio, which grew by $219 million in total, including a $339 million increase in our commercial and industrial portfolio as we have continued to build-out our commercial lending verticals. Compared to the fourth quarter of 2024, average loans receivable decreased by $28 million. Growth was muted in the quarter as we continue to reinvest cash flows from our personal banking portfolio and focus on profitability and credit discipline.
• Average investments declined $14 million from the quarter ended March 31, 2024 and increased $3 million from the quarter ended December 31, 2024. The decline from the prior year was driven by the investment portfolio restructure which occurred in the second quarter of 2024 as a portion of the proceeds from the investment sale were used to reduce outstanding borrowings. The growth in average investments from the prior quarter was due to an increase in net portfolio purchases during the quarter to reach a normalized percentage of total assets for liquidity purposes.
• Average deposits grew $200 million from the quarter ended March 31, 2024 and $60 million from the quarter ended December 31, 2024. The growth in both periods was driven by an increase in both money market and saving account balances partly due to customers shifting funds to these competitively priced products as their time deposits matured. These  increases were partially offset by a decrease in brokered time deposit balances as growth in core deposits provided sufficient funding.
• Average borrowings decreased $246 million compared to the quarter end March 31, 2024 and increased $2 million compared to the quarter ended December 31, 2024. The decrease in average borrowings from the prior year is primarily attributable to the strategic pay-down of wholesale borrowings with the proceeds from our investment portfolio restructuring in the second quarter of 2024. 

Income Statement Highlights

Compared to the quarter ended March 31, 2024, net interest income increased $25 million and net interest margin increased to 3.87% from 3.10% for the quarter ended March 31, 2024. This increase in net interest income resulted primarily from:

• A $20 million increase in interest income that was the result of higher average yields, partly offset by lower average earning assets. The average yield on loans improved to 6.00% for the quarter ended March 31, 2025 from 5.33% for the quarter ended March 31, 2024. This increase was driven by a loan mix shift towards  higher yielding commercial loans and also includes an interest recovery of $13.1 million on a non-accrual commercial loan payoff during the quarter ended March 31, 2025. Excluding this interest recovery, the yield on loans for the quarter ended March 31, 2025 was 5.52% and the net interest margin was 3.48%. The average yields on investments increased due to a portfolio restructuring completed in the second quarter of 2024.
• A $4 million decrease in interest expense as the result of a decline in the average balance of borrowings and higher cost brokered CDs that was accomplished by growth in core deposits. The cost of interest-bearing liabilities decreased to 2.15% for the quarter ended March 31, 2025 from 2.28% for the quarter ended March 31, 2024.

Compared to the quarter ended December 31, 2024, net interest income increased $14 million and net interest margin increased to 3.87% for the quarter ended March 31, 2025 from 3.42% for the quarter ended December 31, 2024. This increase in net interest income resulted from the following:

• A $10 million increase in interest income driven by higher interest income on loans receivable and investments as average yield increased compared to the prior quarter. The average yield on loans improved to 6.00% from 5.56% and average investment yields increased to 2.62% from 2.57% for the quarter ended December 31, 2024. The increase in loan yields was impacted by non-accrual interest recoveries in both the current and prior quarter, partially offset by the full impact of fourth quarter 2024 rate cuts. 
• A $4 million decrease in interest expense driven by lower interest expense on deposits as average cost declined compared to the prior quarter to 2.02% from 2.14% for the quarter ended December 31, 2024.

The total provision for credit losses for the quarter ended March 31, 2025 was $8 million primarily driven by growth within our commercial lending portfolio and changes in the economic forecasts. Total provision for credit losses for the quarter ended December 31, 2024 was $17 million as the result of steps taken to de-risk our loan portfolio and reduce our levels of nonperforming, criticized and classified loans by completing two loan pool sales and transferring certain loans within our Long Term Healthcare portfolio into held for sale. As a result we saw an elevated level of charge-offs during the fourth quarter as the loans noted above were written-down to fair market value prior to sale. Total charge-offs related to the loan sales and transfer to loans held-for-sale was a combined $15 million.

The Company saw an increase in classified loans to $279 million, or 2.49% of total loans, at March 31, 2025 from $229 million, or 1.99% of total loans, at March 31, 2024 and $272 million, or 2.44% of total loans, at December 31, 2024. 

Noninterest income remained flat from the quarter ended March 31, 2024 and decreased by $12 million from the quarter ended December 31, 2024, due primarily to a decrease in other operating income driven by a gain on sale of Visa B shares and a gain on a low income housing tax credit investment that occurred in the quarter ended December 31, 2024.

Noninterest expense increased from the quarter ended March 31, 2024 due to a $3 million increase in personnel expenses driven by an increase in incentive compensation and an increase in medical expenses, which was partially offset by a decrease in non-personnel expense of $1 million  due to the decline in professional services fees. 

Compared to the quarter ended December 31, 2024, noninterest expense decreased due to a decrease in non-personnel expense of $5 million due to restructuring expenses in the prior quarter and a decrease in processing expense due to technology investments in the prior period. 

The provision for income taxes increased by $4 million from the quarter ended March 31, 2024 and increased $3 million from the quarter ended December 31, 2024 primarily due to the quarterly change in income before income taxes.

Net income increased from the quarter ended March 31, 2024 and December 31, 2024 due to the factors discussed above.

Headquartered in Columbus, Ohio, Northwest Bancshares, Inc. is the bank holding company of Northwest Bank. Founded in 1896 Northwest Bank is a full-service financial institution offering a complete line of business and personal banking products, as well as employee benefits and wealth management services. As of March 31, 2025, Northwest operated 130 full-service financial centers and eleven free standing drive-up facilities in Pennsylvania, New York, Ohio and Indiana. Northwest Bancshares, Inc.'s common stock is listed on The Nasdaq Stock Market LLC ("NWBI"). Additional information regarding Northwest Bancshares, Inc. and Northwest Bank can be accessed online at www.northwest.com.

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Forward-Looking Statements - This release may contain forward-looking statements with respect to the financial condition and results of operations of Northwest Bancshares, Inc. including, without limitation, statements relating to the earnings outlook of the Company. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) changes in the interest rate environment; (2) competitive pressure among financial services companies; (3) general economic conditions including inflation and an increase in non-performing loans; (4) changes in legislation or regulatory requirements; (5) difficulties in continuing to improve operating efficiencies; (6) difficulties in the integration of acquired businesses or the ability to complete sales transactions; (7) increased risk associated with commercial real-estate and business loans; (8) changes in liquidity, including the size and composition of our deposit portfolio; (9) reduction in the value of our goodwill and other intangible assets; and (10) the effect of any pandemic, war or act of terrorism. This release also contains forward-looking statements with respect to the proposed merger between the Company and Penns Woods Bancorp, Inc. ("Penns Woods") including, without limitation, statements with respect to the expected timing of the proposed merger. Such statements are subject to numerous assumptions, risks, and uncertainties. Actual results could differ materially from those contained or implied by such statements for a variety of factors including, without limitation: the proposed merger may not be consummated within the anticipated time period or at all.  Management has no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this release, except as required by law.

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