Brian Faran

Brian Faran inquired about Northwest Bancshares' updated thoughts on target tangible common equity (TCE) and CET1 ratios, and how the company plans to manage its capital position over the next 12-18 months. He also asked about the net interest margin (NIM) run rate, considering purchase accounting accretion volatility, and credit quality trends, specifically regarding nursing home payoffs and the potential for higher charge-offs in Q4 2025.

Answer

Douglas Schosser (CFO, Northwest Bancshares Inc) stated the company is comfortable with current capital levels, well in excess of regulatory minimums, and aims to maintain a strong capital base without targeting a massive change. Regarding NIM, Schosser clarified the core margin is around 3.59%, with purchase accounting accretion adding about 6 basis points, expecting the mid-3.60%s to be maintainable. On credit, Schosser explained the Q4 charge-off guidance was a mathematical clarification to stay within the annual range, acknowledging ongoing work on classified loans.

Brian Faran asked about Northwest Bancshares Inc.'s updated capital targets, specifically regarding the tangible common equity ratio and CET1, and how the company plans to manage its capital position over the next 12-18 months, considering buybacks, acquisitions, or maintaining excess capital. He also sought clarification on the net interest margin's core run rate, excluding purchase accounting accretion volatility, and inquired about the concentration of classified loan payoffs and the implications of the $13 million charge-off guidance for Q4 2025.

Answer

Doug Schosser, CFO, stated that Northwest Bancshares Inc. is comfortable with its strong capital levels, well in excess of regulatory minimums, and aims to maintain a robust capital base for safety and future opportunities, without setting specific public targets. He clarified that the core net interest margin, excluding the 6 basis points from purchase accounting accretion, is around 3.59%, and the company is confident in maintaining this level, with minor volatility from accretion. Regarding credit, Schosser explained the $13 million charge-off guidance was a mathematical clarification to align with full-year expectations of the low end of the 25-35 basis point range, acknowledging ongoing work on classified loans.