Net income at Northwest Bancshares Inc. is down $5 million in the third quarter of 2024 compared to the third quarter of 2023.

The company, headquartered in Columbus, Ohio, finished the quarter with net income of $34 million. Net income was $39 million in the third quarter of 2023. But bank officials note net income increased from the second quarter of 2024 ($5 million).

Average loans receivable increased $33 million in the third quarter of 2024 compared to the third quarter of 2023 largely driven by the company’s commercial banking portfolio, which grew by $456 million in total, including a $372 million increase in its commercial and industrial portfolio as Northwest continues to build out its commercial lending business. That increase was offset by a decline in Northwest’s personal banking portfolio, which decreased by $423 million as cash flows were reinvested in commercial portfolios. Compared to the second quarter of 2024, average loans receivable decreased by $145 million. Growth was muted in the quarter as Northwest reinvests cash flows from the personal banking portfolio and focus on profitability and credit discipline.

Average investments declined $118 million from the quarter ended Sept. 30, 2023 and $22 million from the quarter ended June 30, 2024. The decline from the prior year was driven by the investment portfolio restructure which occurred in the second quarter and from lack of reinvestment of cash flow over the past year. The decline in average investments from the prior quarter is expected to be temporary as current quarter purchases occurred later in the quarter. This is evident as ending balances increased $28 million from the prior quarter end.

Average deposits grew $377 million from the quarter ended September 30, 2023, driven by a $666 million increase in the bank’s average time deposits as it repositioned deposit products over the last year. This increase was partially offset by a decrease in money market balances as customers shifted balances into higher yielding time deposit accounts. Compared to the second quarter of 2024, average deposits grew $10 million, driven by a $12 million increase in average interest-bearing checking deposits.

Average borrowings saw a significant reduction of $423 million compared to the quarter end September 30, 2023 and $103 million compared to the quarter ended June 30, 2024. The decrease in average borrowings is primarily attributable to the strategic pay-down of wholesale borrowings. This decrease was made possible by the restructuring of the bank’s investment portfolio as well as a substantial increase in cash reserves resulting from the increase in the average balance of deposits.

“Our performance this quarter demonstrates the strength and resilience of our business model,” said Louis J. Torchio, Northwest Bancshares Inc. president and CEO”We’ve delivered solid results that underscore our expanding earnings power, driven in large part by improvements in our net interest margin. This positive trajectory reflects our team’s dedication to operational excellence and strategic growth initiatives.”

The total provision for credit losses for the quarter ended Sept. 30, 2024 was $4.9 million primarily driven by growth within our commercial lending portfolio and changes in the economic forecasts coupled with a decline in our reserves for unfunded commitments in the current period. This decline is based on the timing of origination and funding of commercial construction loans and lines of credit.

Additionally, the company saw an increase in classified loans to $320 million, or 2.83% of total loans, at September 30, 2024 from $209 million, or 1.84% of total loans, at September 30, 2023 and $257 million, or 2.26% of total loans, at June 30, 2024. The primary driver of the increase over the past year and quarter is reflective of the company’s exposure to the long-term healthcare segment and the challenges a few operators have experienced post-COVID.

“As we look ahead, we remain committed to creating long-term value for our shareholders. I’m pleased to announce that for the 120th consecutive quarter, we will be returning our earnings to our shareholders through a $0.20 per share dividend,” Torchio said. “This consistency in shareholder returns is a testament to our financial stability, performance and our unwavering focus on delivering sustainable growth. We enter the next quarter with confidence, buoyed by our strong performance and the ongoing optimization of our business operations. Our team remains focused on capitalizing on market opportunities while maintaining prudent risk management practices. Northwest is well-positioned to continue driving value for our shareholders, clients and communities in the quarters to come.”