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| 8-K - 8-K - Northwest Bancshares, Inc. | a2018-04x19nwbi8kcover.htm |
“NWBI”
NASDAQGS
Market Price - $16.73 as of 12/31/17
April 18, 2018
Exhibit 99.1
Forward Looking Statements
• This presentation contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,”
“anticipate,” “plan,” “seek,” “expect” and words of similar meaning. These forward-looking statements include, but are not limited to:
• statements of our goals, intentions and expectations;
• statements regarding our business plans, prospects, growth and operating strategies;
• statements regarding the asset quality of our loan and investment portfolios; and
• estimates of our risks and future costs and benefits.
• These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject
to assumptions with respect to future business strategies and decisions that are subject to change..
• The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-
looking statements:
• changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;
• general economic conditions, either nationally or in our market areas, that are worse than expected;
• competition among depository and other financial institutions;
• inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments;
• adverse changes in the securities markets;
• our ability to enter new markets successfully and capitalize on growth opportunities;
• our ability to successfully integrate acquired entities, if any;
• changes in consumer spending, borrowing and savings habits;
• changes in our organization, compensation and benefit plans;
• our ability to continue to increase and manage our commercial and residential real estate, multi-family, and commercial and industrial loans;
• possible impairments of securities held by us, including those issued by government entities and government sponsored enterprises;
• the level of future deposit premium assessments;
• the impact of the current recession on our loan portfolio (including cash flow and collateral values), investment portfolio, customers and capital
market activities;
• the impact of the current governmental effort to restructure the U.S. financial and regulatory system;
• changes in the financial performance and/or condition of our borrowers; and
• the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Securities and
• Exchange Commission, the Public Company Accounting Oversight Board, the Financial Accounting Standards Board and other accounting
standard setters.
• Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking
statements.
2
Corporate Profile and Overview
• 172 full service retail banking locations
• 2,106 full-time equivalent employees
• Total assets of $9.36 billion
• Net loans of $7.74 billion
• Deposits of $7.83 billion
• Tangible shareholders’ equity of $875 million
• 102.4 million shares outstanding
Market Capitalization
• Market capitalization of $1.7 billion*
4
* Based on a market price $16.50 per share.
HISTORIC PERFORMANCE
Asset Growth
6
$1.9 $2.1
$2.6
$3.1
$3.4
$3.9
$4.3
$5.2
$5.8
$6.3 $6.4 $6.5
$6.7 $6.9
$8.0 $8.1 $8.0 $7.9 $7.9 $7.8
$9.0
$9.6 $9.4
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
6
/3
0
/1
9
9
6
6
/3
0
/1
9
9
7
6
/3
0
/1
9
9
8
6
/3
0
/1
9
9
9
6
/3
0
/2
0
0
0
6
/3
0
/2
0
0
1
6
/3
0
/2
0
0
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6
/3
0
/2
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0
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/3
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/2
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/3
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/2
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/3
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/2
0
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1
2
/3
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/2
0
0
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1
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/3
1
/2
0
0
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2
/3
1
/2
0
0
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1
2
/3
1
/2
0
0
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1
2
/3
1
/2
0
1
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/3
1
/2
0
1
1
1
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/3
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/2
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/3
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/2
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/3
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/2
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/2
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/3
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/2
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7
Leveraging &
Focus
Strategy
Leveraging strategy
Diversification &
Profitability Improvement
Strategy
Asset Growth
Loan Growth and Mix
$0
$1,000,000,000
$2,000,000,000
$3,000,000,000
$4,000,000,000
$5,000,000,000
$6,000,000,000
$7,000,000,000
$8,000,000,000
$9,000,000,000
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
200
5
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
1-4 Family Residential Mortgages Home Equity Loans
Consumer Loans Commercial Real Estate
Commercial and Industrial
6
7%
31%
9%
17%
36%
Deposit Growth and Mix
$0
$1,000,000,000
$2,000,000,000
$3,000,000,000
$4,000,000,000
$5,000,000,000
$6,000,000,000
$7,000,000,000
$8,000,000,000
$9,000,000,000
199519971999200120032005200720092011201320152017
Savings Accounts Checking Accounts
Money Market Accounts Certificates of Deposit
8
18%
22%
39%
21%
Net Income
(in millions of dollars)
$16.3
$18.1
$20.4
$22.2
$23.9
$30.9 $31.4
$37.9
$40.0
$48.9
$57.8
$53.0 $53.5
$58.9
$48.5
$61.1
$64.2 $63.6
$66.6
$62.0
$67.0
$82.3
$83.7
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
$90.0
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
Excluding Gains and Losses on Sale of Assets, Write-Down on Assets, Amortization
of Intangibles, Acquisition Expenses and Loss on Extinguishment of Debt
9
Earnings Per Share
(Adjusted for Stock Splits and 2.25x Second-step Conversion)
$0.13
$0.20 $0.19
$0.25 $0.25
$0.37
$0.39
$0.46
$0.49
$0.46
$0.44 $0.44
$0.30
$0.53
$0.64
$0.68
$0.73
$0.67
$0.71
$0.82 $0.83
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90
1
9
9
7
1
9
9
8
199
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
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1
0
2
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1
1
2
0
1
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201
3
2
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2
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7
10
Excluding Gains and Losses on Sale of Assets, Write-Down on Assets, Amortization
of Intangibles, Acquisition Expenses and Loss on Extinguishment of Debt
HIGHLIGHTS FOR 2017
Highlights for 2017
Shareholder Value
• Excluding the elevated loan losses of approximately $6 million, or $4 million
after tax which resulted from the closure of our consumer finance subsidiary,
income for the year was $88.7 million, a 7.8% increase over the previous year.
• The market value of Northwest shares decreased $1.30, or 7.2% in 2017
following a 35% increase in 2016.
• The combined return (including dividends) on Northwest shares in 2017 was a
loss of 3.7%, following an increase of almost 40% in 2016.
• Sold three Maryland offices for a $17 million profit ($10.3 million after tax).
Annual expense savings will be approximately $4.0 million after tax. Annual
net income forfeited will be approximately $1.5 million.
• Closed our consumer finance subsidiary. Annual expense savings will be
approximately $13 million. Annual net income forfeited is approximately
$500,000.
• Divested our retirement services business with annual expenses of $2.5
million. No loss of net income.
12
STOCK PERFORMANCE AND
DIVIDEND PAYOUTS
Growth in Assets and Income
$2.1
$2.6
$3.1
$3.4
$3.9
$4.3
$5.2
$5.8
$6.4 $6.5
$6.7
$6.9
$8.0 $8.1 $8.0 $7.9 $7.9 $7.8
$9.0
$9.6
$9.4
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
$90.0
$100.0
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
Assets Income
Assets Net Income
Growth in Assets and Earnings per Share
$2.1
$2.6
$3.1
$3.4
$3.9
$4.3
$5.2
$5.8
$6.4 $6.5
$6.7
$6.9
$8.0 $8.1 $8.0 $7.9 $7.9 $7.8
$9.0
$9.6
$9.4
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.70
$0.80
$0.90
$1.00
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
Asset Growth Earnings Per Share
Assets EPS
Annual Dividends Per Share
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
$1.60
$1.80
1
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Current Dividend Yield - $.68/$16.50 = 4.12%
16
Price Performance Since IPO
COMPARISON OF CUMULATIVE TOTAL RETURN SINCE IPO IN 1994
Among Northwest Bancshares, Inc., the NASDAQ Composite
Index and the NASDAQ Bank Index
Priorities for Deployment of Capital
1. Fund internal (organic) loan and deposit growth
2. Maintain an attractive dividend yield
3. Buying back our shares when the economics are
sound
4. Fund acquisition of other banks or branches of other
banks – when they can be completed without
significantly diluting tangible book value per share and
when the earn back period is within acceptable
parameters
18
Introduction of Ronald J. Seiffert
President and Chief Operating Officer
Initial Observations and Impressions
• Bank’s size and reputation
• Historical financial performance
• Transformational changes
• Effective integrator of acquisitions
• Quality of bank personnel
• Strong culture driven by community bank values
• Community engagement
• Platform built for growth and success
DIVISION UPDATE
Steven G. Fisher, Chief Revenue Officer
Production and Revenue Team Highlights 2017
• Significant growth in …
• Total loan production which exceeded $2.0 billion in 2017 versus $1.5 billion in
2016 with loans increasing $236 million or 3.1%
• Retail and business checking account balances which increased by $176 million
or 6.1% from the previous year. Checking accounts now represent 39% of our
deposit mix. This increase was supported by the opening of 21,000 new
personal checking accounts and 3,700 new business checking accounts.
• As a result of the growth in loans and checking, our net interest margin increased
from 3.73% to 3.82%
• Implemented a new customer relationship management tool, “Northwest Connect”,
to track and integrate the business development efforts of all production personnel.
• Trust assets under management and administration increased 8.6% to $1.3 billion.
• Revenues from assets under the management and administration of our Financial
Advisors increased by 86.9% over the previous year
• Insurance Services gross revenue increased by 6.6%.
Production and Revenue Team Highlights 2017
• Successfully divested the administration and actuarial portion of our retirement services
business while retaining the investment management responsibilities for the plans’ assets.
• Acquired over 10,000 new consumer households and 3,700 new business customers.
• The pull through rate of referrals to applications on mortgage and equity loans improved to
93.7% and 95.1% respectively.
• We continued a meaningful shift in the mix of our commercial loan originations in favor of
commercial and industrial loans.
• Our Corporate Finance team executed the successful syndication of a $75 million credit
facility for an existing business customer in our footprint, with seven banks participating in
the credit.
• We originated Small Business loans at a rate 2.5x greater than the previous year.
Produced the third highest number of loans in the SBA’s Pittsburgh Region and received
the “Bronze Award”.
• Consolidated $1.3 billion of Financial Advisor assets under management and
administration onto a single broker dealer platform powered by LPL financial.
• Launched a new website www.northwest.com to support the Northwest brand,
improving customer experience and broaden our reach.
DIVISION UPDATE
William W. Harvey, Jr., Chief Financial Officer
24
2017* 2016** 2015*** 2014 2013 2012 2011
A Net Income (000’s) $83,735 $82,264 $67,012 $61,962 $66,559 $63,560 $64,151
B Asset Yield 4.14% 4.19% 4.22% 4.24% 4.35% 4.65% 4.90%
C Cost of Funds 0.42% 0.59% 0.93% 0.97% 1.03% 1.25% 1.52%
D Net Interest Margin 3.82% 3.73% 3.49% 3.47% 3.52% 3.63% 3.66%
E Return on Average Assets 0.88% 0.90% 0.80% 0.79% 0.84% 0.79% 0.80%
F Return on Average Equity 7.04% 7.09% 6.08% 5.69% 5.87% 5.48% 5.24%
G Earnings per Share, diluted (EPS) $0.83 $0.82 $0.71 $0.68 $0.73 $0.68 $0.64
H Dividends per Share $0.64 $0.60 $0.56 $1.62 $0.50 $0.60 $0.43
I Closing Market Price $16.73 $18.03 $13.39 $12.53 $14.78 $12.14 $12.44
J Tangible Book Value (TBV)/Share $8.52 $8.17 $8.76 $9.34 $10.38 $10.14 $10.06
K Market Price/TBV 1.96x 2.21x 1.53x 1.34x 1.42x 1.20x 1.24x
L Market Price/EPS 20.16x 21.99x 18.86x 18.70x 20.25x 17.85x 19.44x
M Loans/Deposits 99.6% 95.9% 109.2% 106.3% 102.4% 98.9% 96.0%
N # of Offices 172 176 181 162 165 165 168
L Deposits/Office (000’s) $45.5 $44.8 $36.5 $34.8 $34.4 $34.9 $34.4
Financial Metrics
* Excludes the $17.2 million ($10.3 million after tax) gain on sale of three Maryland offices, $4.4 million ($2.6 million after tax) of
restructuring charges related primarily to the closure of our consumer finance subsidiary, and a $3.1 tax benefit related to the tax cuts
and Jobs Act of 2017.
** Excludes $12.2 million ($7.3 million after tax) of restructuring and acquisition expenses related to the branch consolidation and First
Niagara branch purchase, $37.0 million ($22.2 million after tax) FHLB borrowing prepayment penalty and $5.1 million ($3.1 million after
tax) of ESOP termination expense.
***Excludes $9.7 million ($6.5 million after tax) of acquisition expense related to Lorain National Bank.
Q1, 2018 Balance Sheet
March 31, December 31,
2018 2017 $ Change % Change
Total cash and marketable securities 977,843 899,923 77,920 8.7%
Mortgage loans - one- to four- family 2,772,148 2,776,203 (4,055) (0.1%)
Home equity loans and lines of credit 1,288,361 1,310,355 (21,994) (1.7%)
Consumer loans 686,038 671,389 14,649 2.2%
Commercial real estate loans 2,512,257 2,454,726 57,531 2.3%
Commercial business loans 623,463 580,736 42,727 7.4%
A Total loans receivable 7,882,267 7,793,409 88,858 1.1%
Allowance for loan losses (55,211) (56,795) 1,584 (2.8%)
Loans receivable, net 7,827,056 7,736,614 90,442 1.2%
Other assets 715,963 727,397 (11,434) (1.6%)
B Total assets 9,520,862$ 9,363,934$ 156,928 1.7%
Noninterest-bearing demand deposits 1,679,853$ 1,610,409$ 69,444 4.3%
Interest-bearing demand deposits 1,476,177 1,442,928 33,249 2.3%
Money market demand accounts 1,707,837 1,707,450 387 0.0%
Savings deposits 1,701,022 1,653,579 47,443 2.9%
Time deposits 1,420,600 1,412,623 7,977 0.6%
C Total deposits 7,985,489 7,826,989 158,500 2.0%
Other liabilities 320,236 329,221 (8,985) (2.7%)
Total liabilities 8,305,725 8,156,210 149,515 1.8%
Total shareholders' equity 1,215,254 1,207,724 7,530 0.6%
Total liabilities and shareholders' equity 9,520,979$ 9,363,934$ 157,045 1.7%
Equity to assets 12.76% 12.90% (13) bp
Tangible common equity to assets 9.62% 9.68% (7) bp
Book value per share $11.84 $11.79 0.05 0.4%
D Tangible book value per share (TBV) $8.61 $8.54 0.07 0.8%
E Closing market price per share $16.56 $16.73 (0.17) (1.0%)
F Multiple of Market Value to TBV 1.92 x 1.96 x (0.04) (1.8%)
G Multiple of Market Value to EPS 16.56 x 20.16 x (3.60) (17.8%)
Full Time Equivalent employees 2,105 2,106 (1) (0.0%)
Number of banking offices 172 172 - 0.0%
Liabilities and Shareholders' equity
Assets
Liabilities
From prior year
(Dollars in thousands, except per share amounts)
Q1, 2018 Income Statement
Dec. 31,
$ Change % Change 2018 2017 2017 $ Change % Change
Total interest income 2,266 2.6% 89,533 87,267 91,561 (2,028) (2.2%)
Total interest expense 1,076 16.1% 7,766 6,690 7,321 445 6.1%
Net interest income 1,190 1.5% 81,767 80,577 84,240 (2,473) (2.9%)
Provision for loan losses (428) (9.2%) 4,209 4,637 6,525 (2,316) (35.5%)
A Net interest income after provision
for loan losses 1,618 2.1% 77,558 75,940 77,715 (157) (0.2%)
Total noninterest income 284 1.3% 21,788 21,504 22,905 (1,117) (4.9%)
B Total noninterest expense (4,225) (5.9%) 67,421 71,646 71,896 (4,475) (6.2%)
Income/ (loss) before income taxes 6,127 23.7% 31,925 25,798 28,724 3,201 11.1%
Income tax expense/ (benefit) (1,112) (13.8%) 6,940 8,052 6,576 364 5.5%
C Net income 7,239 40.8% 24,985$ $17,746 22,148$ 2,837 12.8%
Basic earnings per share 0.07 39.5% 0.25$ 0.18$ 0.22$ 0.03 12.5%
D Diluted earnings per share 0.07 39.9% 0.24$ 0.17$ 0.22$ 0.03 12.3%
E Annualized return on average equity 225 bp 8.40% 6.15% 7.31% 109 bp
Annualized return on tangible common equity 294 bp 11.60% 8.66% 10.13% 147 bp
F Annualized return on average assets 33 bp 1.08% 0.75% 0.94% 14 bp
* Annualized noninterest expense to average assets (10) bp 2.84% 2.94% 2.97% (13) bp
* Efficiency ratio (453) bp 63.73% 68.27% 65.25% (152) bp
* Excludes restructuring/acquisition expenses, FHLB prepayment penalty, amortization expense, gain on sale of investments, and gain on sale of branches.
Linked QuarterYear Over Year March 31,
Three months ended
(Dollars in thousands, except per share amounts)
STRATEGIC DIRECTION
Strategic Direction
Critical Issues
• Will there be meaningful regulatory reform?
• Enhancing shareholder value
• Enhancing production volume and revenue growth
• Improving profitability and efficiency
• Management of capital
• Acquisition, retention and development of talent
• Maintaining effective risk management oversight
• Crossing the $10 billion threshold
• Acquisitions will be pursued when they enhance our franchise and
provide value to our shareholders.
29