Executive Summary

Q2 2025 delivered an adjusted EPS beat but a revenue shortfall versus S&P Global consensus: Primary EPS (S&P) was $0.30 vs $0.28 consensus (+$0.02), while S&P “Revenue” was $141.6M vs $149.0M consensus (-$7.4M). Note: company-reported total revenue was $150.4M (NII + noninterest income), a definitional difference from S&P’s revenue series ; S&P estimates data marked with asterisks below are from S&P Global.
Net interest margin held strong at 3.56% (vs 3.48% ex recovery in Q1), with deposit costs declining for a fourth consecutive quarter (1.55% Q2; QoQ -4 bps), offset by the absence of a $13.1M nonaccrual interest recovery that boosted Q1 .
Credit costs rose as classified loans increased to $518M (4.57% of loans) driven by CRE downgrades (healthcare and multifamily construction), partially offset by stable total delinquency (~1.0%) and low net charge-offs (0.18% annualized) .
Penns Woods merger closed 7/25/25; management reiterated synergy targets and sees 4Q25 combined run-rate of NII $139–$141M, noninterest income $32–$33M, and noninterest expense $103–$105M (with 2026 full cost saves) .

What Went Well and What Went Wrong

What Went Well
- Net interest margin resilience with proactive funding management: NIM 3.56%; cost of deposits down to 1.55% (fourth consecutive quarterly decline) .
- Adjusted profitability and fee growth: adjusted EPS $0.30; noninterest income up 9% QoQ on higher other operating income and fees .
- Strategic execution and scale: Completed Penns Woods merger and conversion; CEO: “Closing the largest transaction in our company's history… while continuing to deliver strong operational financial performance” .
- Management tone/confidence: “We built on our strong start to the year… margin expansion and revenue growth… prudent expense control” .
What Went Wrong
- Credit classification spike: Classified loans rose to $518M (4.57% of loans) from $279M in Q1, largely CRE (healthcare, multifamily construction) and a few larger C&I names, lifting provision expense to $11.5M for loans .
- Expense pressure from M&A: Noninterest expense increased to $97.5M (+6.3% QoQ) on merger and restructuring costs .
- Reported revenue vs S&P series: Company total revenue was $150.4M (NII + noninterest income), but S&P’s “Revenue” series prints $141.6M, driving an optical revenue “miss” vs S&P consensus despite solid core drivers (definition mismatch) .

Financial Results

Overall P&L and returns (USD Millions except per-share and %):

Metric	Q4 2024	Q1 2025	Q2 2025
Diluted EPS (GAAP)	$0.26	$0.34	$0.26
Diluted EPS (Adjusted, Non-GAAP)	$0.27	$0.35	$0.30
Net Interest Income	$114.2	$127.8	$119.4
Noninterest Income	$40.1	$28.4	$30.9
Total Revenue (Company: NII + Noninterest)	$154.3	$156.2	$150.4
Net Interest Margin	3.42%	3.87%	3.56%
Efficiency Ratio (GAAP/Adj)	61.8% / 59.6%	58.7% / 57.7%	64.9% / 60.4%
Provision for Credit Losses – Total	$16.6	$7.9	$8.7
Net Charge-offs to Avg Loans (annualized)	0.87%	0.08%	0.18%
ROA / ROE (GAAP)	0.91% / 8.20%	1.22% / 10.90%	0.93% / 8.26%

Revenue components detail (USD Thousands):

Noninterest Income Components	Q4 2024	Q1 2025	Q2 2025
Service charges and fees	15,975	14,987	15,797
Trust & other financial services	7,485	7,910	7,948
Mortgage banking income	224	696	1,075
BOLI income	2,020	1,331	1,421
Other operating income	13,299	2,109	3,620

Banking KPIs and balance metrics:

KPI	Q4 2024	Q1 2025	Q2 2025
Avg Loans (USD Millions)	11,204.8	11,176.5	11,249.0
Avg Deposits (USD Millions)	12,028.4	12,088.4	12,154.0
Avg Cost of Total Deposits	1.68%	1.59%	1.55%
Nonperforming Assets / Total Assets	0.54%	0.52%	0.71%
CET1 ratio (Holdco, est.)	12.58%	12.94%	12.84%

Credit quality detail (period-end):

Credit Quality	Q4 2024	Q1 2025	Q2 2025
Classified Loans (USD Millions)	272.3	279.1	518.2
Allowance for Credit Losses / Loans	1.04%	1.09%	1.14%
Total Loans Delinquent (USD Thousands)	100,016	112,091	117,578

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net interest margin (standalone)	3Q–4Q25	N/A	Maintain ~350 bps	New/maintained outlook
Noninterest income	3Q–4Q25	N/A	~$30M per quarter	New
Noninterest expense	3Q–4Q25	N/A	$93–$95M per quarter	New
Tax rate	3Q–4Q25	N/A	Flat vs 2024	New
Net charge-offs	3Q–4Q25	N/A	$9–$11M per quarter; FY below 25–35 bps	New
4Q25 incremental PWOD impact	4Q25	N/A	NII +$20M; Noninterest income +$2M; Noninterest expense +$10M	New

Management reiterated that 2026 will reflect full cost saves; detailed numeric synergy cadence to be updated with year-end guidance .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Merger/M&A execution	Announced PWOD deal (Q4); all approvals in Q1; close targeted late July	Closed 7/25; conversion completed; Richard Grafmyre added to Board; synergy targets on/better than plan	Positive execution/scale-up
Net interest margin & deposit costs	NIM rising; deposit costs easing since Q4	NIM 3.56%; deposit cost 1.55%; funding costs improved 6 bps QoQ (FTE view)	Improving, ex Q1 one-time recovery
Credit quality/CRE	Q4 portfolio de-risking; higher provisions tied to loan sales/HFS	Classified loans up to 4.57% of loans, mainly healthcare & multifamily construction; NPAs up to 0.71% of assets	Deterioration in classifications; losses contained so far
Loan growth/mix	Strategy to remix toward C&I; steady	C&I +18.7% YoY avg; QoQ avg loans +$72M; consumer pivot opportunistic	Mix shifting to C&I; flexible consumer
Macro/tariffs	Noted competitive funding, rate backdrop in prior quarters	Management cites uncertainty (tariffs) affecting some C&I demand; deposit market less competitive	Mixed—macro uncertainty, but deposit competition easing
Footprint/branching	No new centers in years; strong pipeline	Opened first new financial center in six years (Fishers, IN); more in Columbus/Indianapolis planned	Expansion resuming

Management Commentary

CEO: “We built on our strong start to the year, with net interest margin expansion and revenue growth… exercise prudent expense control” .
CEO (on merger): “Closing the largest transaction in our company's history while continuing to deliver strong operational financial performance…” .
CFO: “We reported NIM of 3.56%… favorably compares to the prior quarter’s adjusted margin of 3.48% after excluding a 39 bps interest recovery benefit” .
CFO (forward view): “Based on our standalone second quarter performance, one would expect annualized NII of ~$480M, with further benefit from the last five months of Penns Woods…” .

Q&A Highlights

Cost saves cadence: 40% cost saves target; ~75% realized in 2025, remainder in 2026; fuller guidance to come at 4Q results .
Margin accretion & balance actions: Still working through purchase accounting; plan to sell non-core PWOD securities and pay down excess borrowings; updated guidance forthcoming .
Classified loans outlook: Management believes reserves are adequate and sees opportunities for repayments by year-end; expects progress without material losses .
Deposits: Mix shift stabilizing; consistent albeit modest growth; less competitive deposit market; PWOD adds opportunities .
Loan pricing: Commercial roll-on near ~7%; consumer broadly stable (roll-on ~ roll-off), reflecting lower rates in auto indirect .

Estimates Context

Q2 2025 (S&P Global): Primary EPS consensus $0.28 vs actual $0.30 (beat by $0.02); Revenue consensus $149.0M vs S&P “Revenue” actual $141.6M (miss by $7.4M). Company-reported total revenue was $150.4M (NII + noninterest), highlighting a definition gap with S&P’s revenue series .
Forward context: Q3 2025 Primary EPS consensus ~$0.308; Q4 2025 Primary EPS consensus ~$0.309; management targets NIM ~350 bps and introduces combined 4Q25 run-rate ranges (see Guidance) .

Values retrieved from S&P Global:

Q2 2025 Primary EPS Consensus Mean: $0.28*; Actual (S&P Primary EPS): $0.30*
Q2 2025 Revenue Consensus Mean: $148.996M*; Actual (S&P Revenue): $141.638M*
Q3 2025 Primary EPS Consensus Mean: $0.308*; Q4 2025 Primary EPS Consensus Mean: $0.309*; Q3 2025 Revenue Consensus Mean: $166.325M*; Q4 2025 Revenue Consensus Mean: $173.725M*

Key Takeaways for Investors

Core profitability intact: Excluding Q1’s nonaccrual recovery, NIM expanded sequentially (3.48% → 3.56%) with funding cost tailwinds and securities reinvestment leverage .
EPS beat vs S&P reflects operating strength; the revenue “miss” is definitional (S&P vs company total revenue). Use company-reported NII + noninterest for internal models, while anchoring market expectations to S&P conventions .
Watch credit classification normalization: Healthcare and multifamily construction drove a sharp classification increase; management expects repayment progress without material losses, but this is the focal risk into 2H25 .
Expense path: Merger/restructuring costs inflated Q2 expenses; the path to 2026 full cost saves is intact, with 4Q25 combined run-rate markers provided .
C&I momentum and deposit quality: C&I up 18.7% YoY on average; deposit costs continue to decline with a granular, insured-heavy base—supportive for spread and NIM durability .
2H25 set-up: Maintain ~~350 bps NIM, stable noninterest income (~~$30M/qtr) and expenses ($93–$95M/qtr), with PWOD accretion ramping by 4Q25; modelers should incorporate purchase accounting and portfolio repositioning effects .
Tactical catalyst: Successful PWOD integration and visible progress reducing classified exposures could re-rate risk perception; monitoring Q3/Q4 credit trends and expense capture is key .

[Press release and 8-K details: Q2 2025 results, revenue/NIM, credit, expenses, and capital]
[Q2 2025 earnings press release highlights]
[Earnings call commentary and Q&A]
[PWOD merger completion announcement]
[Prior quarters for trend: Q1 2025, Q4 2024]

Northwest Bancshares, Inc. (NWBI)·Q2 2025 Earnings Summary