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Northwest Bancshares, Inc. (NWBI)·Q1 2025 Earnings Summary

Executive Summary

  • Record first-quarter earnings with net income $43.5M and diluted EPS $0.34; adjusted EPS $0.35; revenue of ~$156.2M (+19% YoY, +1.2% QoQ) driven by 45 bps NIM expansion to 3.87% and lower funding costs; normalized NIM 3.48% excluding a $13.1M nonaccrual interest recovery .
  • Material beat vs S&P Global consensus: EPS $0.35 vs $0.24*, revenue ~$148.3M vs $142.2M*; note company-reported revenue $156.2M reflects internal definitions while S&P’s revenue basis differs (see Estimates Context) .
  • Credit metrics stable: NPAs 0.52% of assets, ACL 1.09% of loans, net charge-offs 8 bps annualized; classified loans up modestly to 2.49% of loans from 2.44% QoQ, 1.99% YoY .
  • 2025 outlook maintained (ex-Penns Woods): NIM guided 3.30–3.40%, noninterest income $124–$129M, loan growth 2–3% YoY, NCOs 25–35 bps; management now sees NIM at or above the high end if 1–3 cuts occur; quarterly dividend maintained at $0.20 .
  • Penns Woods acquisition approved by regulators and shareholders; closing and conversion expected late July 2025—scale to top-100 U.S. bank cited as forward catalyst .

What Went Well and What Went Wrong

  • What Went Well

    • NIM and revenue momentum: NIM rose to 3.87% (fourth straight quarterly improvement), driving net interest income to $127.8M; revenue +19% YoY; CFO noted a 39 bps NIM benefit from a nonaccrual interest recovery and deposit cost reductions .
    • Funding discipline: Average cost of total deposits fell 9 bps QoQ to 1.59% amid mix shift from CDs into money markets; deposit base stable with average deposits +$60M QoQ, +$200M YoY .
    • Strong tone and execution: CEO called it “record earnings for a first quarter” and “one of the best quarters in Northwest’s history,” citing focus on execution, cost control, and risk management .

  • What Went Wrong

    • Classified loans ticked up: Classified loans rose to $279M (2.49% of loans) from $272M (2.44%) QoQ, and $229M (1.99%) YoY; management attributed to a few small CRE/Business Banking credits .
    • Noninterest income normalization: Fell $11.7M QoQ as 4Q24 included a $5.9M Visa B shares gain and a $4.3M LIHTC gain; still +1.4% YoY .
    • Provision remained elevated vs prior year: Provision for credit losses $7.9M vs $3.4M in 1Q24, reflecting commercial growth and macro forecast changes (though down sharply vs 4Q24’s derisking-related provision) .

Financial Results

  • Income statement comparison (company basis)
MetricQ1 2024Q4 2024Q1 2025
Net Interest Income ($M)$103.2 $114.2 $127.8
Noninterest Income ($M)$28.0 $40.1 $28.4
Total Revenue ($M)$131.2 $154.3 $156.2
Provision for Credit Losses ($M)$3.4 $16.6 $7.9
Noninterest Expense ($M)$90.0 $95.3 $91.7
Pre-Tax Income ($M)$37.7 $42.4 $56.5
Net Income ($M)$29.2 $32.8 $43.5
Diluted EPS (GAAP)$0.23 $0.26 $0.34
Diluted EPS (Adj.)$0.23 $0.27 $0.35
  • Margin/returns and operating metrics
MetricQ1 2024Q4 2024Q1 2025
Net Interest Margin (NIM)3.10% 3.42% 3.87% (3.48% ex-recovery)
Avg. Cost of Total Deposits1.61% 1.68% 1.59%
Loan Yield (Avg.)5.33% 5.56% 6.00%
ROA (Annualized)0.81% 0.91% 1.22%
ROE (Annualized)7.57% 8.20% 10.90%
Efficiency Ratio (Adj.)67.35% 59.61% 57.70%
  • Revenue composition
Revenue ComponentsQ1 2024Q4 2024Q1 2025
Net Interest Income ($M)$103.2 $114.2 $127.8
Noninterest Income ($M)$28.0 $40.1 $28.4
Total ($M)$131.2 $154.3 $156.2
  • Credit and capital KPIs
KPIQ1 2024Q4 2024Q1 2025
NPAs / Assets0.67% 0.54% 0.52%
NPLs / Loans0.85% 0.56% 0.53%
ACL / Loans1.09% 1.04% 1.09%
Net Charge-offs (annualized)0.16% 0.87% 0.08%
Classified Loans / Loans1.99% 2.44% 2.49%
CET1 (HoldCo)—12.58% 12.94%
  • Balance sheet and deposits
MetricQ1 2024Q4 2024Q1 2025
Total Assets ($B)$14.51 $14.41 $14.45
Total Deposits ($B)$12.07 $12.14 $12.17
Uninsured Deposits (ex intercompany/collateralized)—$1.47B (12.1% of deposits) $1.54B (12.7% of deposits)
Quarterly Dividend—$0.20 $0.20

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024)Current Guidance (Q1 2025)Change
Net Interest IncomeFY 2025Increase 1–3% YoY Increase 1–3% YoY (maintained) Maintained
NIMFY 20253.30–3.40% 3.30–3.40%, “at or above the high end” bias Maintained; positive bias
Noninterest IncomeFY 2025$124–$129M $124–$129M (may be lower end) Maintained; cautious
Noninterest ExpenseFY 2025+2–4% YoY +2–4% YoY (maintained) Maintained
Net Charge-offsFY 202525–35 bps normalized 25–35 bps normalized (maintained) Maintained
AssumptionsFY 2025Low-single-digit loan & deposit growth; 1–2 cuts Loan +2–3%, deposits +1–2%; 1–2 cuts Maintained
Penns Woods2025Excluded from guide Excluded; more details post-close Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
NIM trajectoryNIM rising; 3.33% in Q3 (incl. 4 bps recovery); Q4 3.42% (incl. 6 bps recovery); guided 3.30–3.40% 3.87% (39 bps recovery); core ~3.48%; CFO sees high end or above Improving; positive bias
Deposit costs/mixCost of deposits fell 10 bps QoQ in Q4 to 1.68% Cost down to 1.59%; CDs rolling to money markets ~3.75% Easing cost; favorable mix
Loan growth mixShift to C&I; CRE flat-to-down; balanced with consumer when attractive Avg. commercial +6.2% QoQ; consumer leveraged tactically; loan yields +44 bps Mix toward C&I; selective consumer
Credit quality/CREDerisking in Q4; classified loans down in Q4; normalized NCOs targeted NPAs/NPLs at 5-qtr lows; classified +5 bps QoQ to 2.49%; healthcare monitored Stable overall; watchlist manageable
Noninterest incomeVolatile in 2024 (securities restructuring, Visa/LIHTC gains) Normalized back to ~$28M; likely lower end of range Normalizing lower
M&A (Penns Woods)Announced in Dec; expected 3Q25 close All approvals obtained; late July close target Execution on track
Macro/tariffsDiscussed probability of uncertainty into 2025 Limited early impact; ~8% portfolio potentially sensitive (manufacturing, transport, hospitality) Monitoring; early-stage

Management Commentary

  • Strategy and performance: “Record earnings for a first quarter and one of the best quarters in Northwest’s history… continued rigorous focus on execution, cost control and risk management discipline.” — CEO Louis Torchio .
  • Margin outlook: “Core margin ~3.48%… safe to assume we’ll be at the high end of the range… may deteriorate slightly with loan growth but not material… opportunity on deposits with future cuts.” — CFO Douglas Schosser .
  • Deposits/mix: “We are trying to get [maturing CDs] into more liquid products… new money market ~3.75%.” — CFO .
  • Penns Woods: “All required regulatory approvals… shareholders approved… expected to close and convert by late July 2025.” — CEO ; press release confirmation .
  • Credit discipline: “Credit risk metrics remain stable… increase in classified loans primarily driven by a few small commercial loans.” — CFO .

Q&A Highlights

  • NIM and rate cuts: Management kept formal range but expects NIM “at or above” high end with 1–2 cuts (3rd cut late-year would not change outlook materially) .
  • Deposit repricing: CD maturities redirected to money markets around 3.75%; CDs originated last year in the 4s, so remix improves deposit cost .
  • Penns Woods marks/TBV: Lower rates and stock price since announcement likely benefit loan marks and lower purchase price under fixed exchange ratio; too volatile to quantify pre-close .
  • Tariffs/macro exposure: Potential sensitivity in manufacturing, transportation/warehousing, hospitality; aggregate ~8% of loans; no notable impact yet .
  • Commercial build: Pipelines stronger YoY with verticals like sports finance and franchise finance; cautiously optimistic on pull-through .
  • Additional M&A: Open to future deals but near-term focus on execution and efficiency; ongoing CEO dialogues but environment “tepid” .

Estimates Context

  • Q1 2025 vs S&P Global consensus (company beat):
    • EPS: Actual $0.35 vs consensus $0.24; 6 estimates*.
    • Revenue: Actual ~$148.3M vs consensus ~$142.2M; 5 estimates*.
    • Note: Company-reported “total revenue” was ~$156.2M (NII + noninterest income); differences reflect S&P revenue definitions vs company presentation .
Metric (S&P Global)ConsensusActual# Estimates
Primary EPS$0.24*$0.35*6*
Revenue ($M)$142.2*$148.3*5*

Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

  • NIM inflection sustained: Core NIM now ~3.48% with a path to high-end or better of 3.30–3.40% guidance as deposit costs continue to ease—positive for NII trajectory near term .
  • Quality beat: EPS and revenue exceeded S&P Global consensus; momentum supported by loan yield expansion and proactive funding actions .
  • Credit stable post-4Q derisking: NPAs/NPLs at cycle lows; classified loans modestly higher but contained; provision normalized vs 4Q spike—supports multiple resiliency .
  • Mix shift continues: Incremental tilt to C&I with selective consumer (indirect, HE) to defend margin; CRE kept disciplined—favors earnings durability in an easing-rate backdrop .
  • 2025 guide intact with upside bias to NIM: Noninterest income likely at the lower end; expense growth contained; NCOs within normalized 25–35 bps—model estimates upward on NIM, downward on fees .
  • M&A catalyst: Penns Woods closing late July adds scale and potential positive purchase accounting marks; integration execution and updated combined guide in 2H25 are key stock catalysts .
  • Dividend supported: $0.20 quarterly dividend maintained (6.7% implied yield at 3/31/25 price) with improving profitability and strong capital (CET1 ~12.9%) .

Appendix: Additional Data Points

  • Large one-time item: $13.1M nonaccrual interest recovery in 1Q25; ex-recovery, NIM 3.48% and loan yield 5.52% .
  • Deposit granularity: Uninsured (ex intercompany/collateralized) 12.7% of deposits; largest uninsured depositor 0.24% of deposits; top-10 uninsured 1.53%—risk appears limited .
  • Dividend history: 122nd consecutive quarterly dividend declared .

Notes:

  • Company figures and commentary are sourced from the Q1 2025 8-K/press release and earnings call .
  • S&P Global consensus and actuals are as reported by S&P; definitions may differ from company “total revenue” (see table). Values with asterisks (*) retrieved from S&P Global.