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Northwest Bancshares, Inc. (NWBI)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 GAAP EPS was $0.02, reflecting $31M of merger and restructuring costs and a $20.6M Day 1 CECL provision from the Penns Woods acquisition; adjusted EPS was $0.29 with record total revenue of $168.2M and net interest margin (NIM) of 3.65% .
  • Acquisition closed July 25, adding $2.2B in assets, $1.6B in deposits, preliminary goodwill of $61M and core deposit intangibles of $48M; Board declared a $0.20 dividend payable Nov 18, representing ~6.5% yield at Sep 30 pricing .
  • Credit costs were elevated (total provision $31.2M) on Day 1 acquisition accounting; nonperforming loans rose to 1.00% of loans and classified loans increased to $527M; management reaffirmed Q4 guidance for NIM “mid-360s,” non-interest income $32–$33M, non-interest expense $102–$104M, and net charge-offs at the low end of 25–35 bps with up to $13M possible .
  • Versus Wall Street: EPS missed consensus ($0.308) by ~$0.018 and SPGI revenue missed ($166.3M vs $136.97M actual per SPGI definition); company-reported “total revenue” was $168.2M due to including non-interest income, highlighting definitional differences that investors should note [GetEstimates]* .
  • Macro tailwind: Prime rate lowered twice during Q3/Q4 start (to 7.25% on Sept 18 and 7.00% on Oct 30), supportive of deposit cost management and loan pricing dynamics going into Q4 .

*Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • NIM expanded 9 bps QoQ to 3.65% and net interest income rose $17M QoQ, driven by higher loan yields, increased earning assets, and purchase accounting accretion; CEO emphasized “record $168 million in revenue” and strong funding base .
  • Liquidity and capital robust: CFO highlighted readily available liquidity covering ~250% of uninsured deposits (net of collateralized/intercompany); CET1 ~12.3% and tangible common equity/tangible assets 8.62% .
  • Operating efficiency improved on an adjusted basis: adjusted efficiency ratio improved to 59.62% (vs 64.78% in Q3 2024), reflecting disciplined expense control despite integration investments .

What Went Wrong

  • GAAP EPS compressed to $0.02 due to $31.3M merger/restructuring charges and Day 1 CECL ($20.7M non‑PCD/unfunded), offsetting strong core trends; adjusted EPS held at $0.29 .
  • Credit normalization and acquisition inflows raised NPAs/NPLs: NPLs to total loans increased to 1.00% (from 0.91% in Q2), and classified loans rose to $527M, largely from acquired CRE exposures .
  • Non-interest expense rose 36.9% QoQ and 47.1% YoY to $133.5M (personnel +$8M QoQ; non‑personnel +$28M QoQ including $25M merger costs); near-term GAAP profitability remains sensitive to integration timing .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Total Revenue (NII + Non-Interest Income) ($USD Millions)$139.135 $150.382 $168.172
Net Interest Income ($USD Millions)$111.302 $119.444 $135.974
Non-Interest Income ($USD Millions)$27.833 $30.938 $32.198
Diluted EPS (GAAP) ($USD)$0.26 $0.26 $0.02
Diluted Adjusted EPS (Non-GAAP) ($USD)$0.26 $0.30 $0.29
Net Interest Margin %3.33% 3.56% 3.65%
Efficiency Ratio %65.24% 64.86% 79.38%
Adjusted Efficiency Ratio %64.78% 60.42% 59.62%

Non-Interest Income breakdown:

Category ($USD Thousands)Q3 2024Q2 2025Q3 2025
Gain on sale of investments— — 36
Gain on sale of SBA loans667 819 341
Service charges and fees15,932 15,797 16,911
Trust & other financial services income7,924 7,948 8,040
Mortgage banking income744 1,075 1,003
Bank-owned life insurance1,434 1,421 1,751
Other operating income1,027 3,620 3,984
Total Non-Interest Income27,833 30,938 32,198

Key KPIs:

KPIQ3 2024Q2 2025Q3 2025
Average Loan Yield %5.57% 5.55% 5.63%
Avg Cost of Interest-Bearing Deposits %2.27% 1.97% 1.99%
Average Cost of Total Deposits %1.78% 1.55% 1.55%
NPLs to Total Loans %0.69% 0.91% 1.00%
ACL to Total Loans %1.11% 1.14% 1.22%
Net Charge-Offs to Avg Loans (annualized) %0.18% 0.18% 0.29%
Uninsured Deposits excl. intercompany/collateralized ($USD Millions; % of deposits)N/A$1,547.2; 12.7% $1,944.0; 14.2%

Consensus vs Actual (SPGI definition):

MetricQ1 2025Q2 2025Q3 2025
EPS Consensus Mean ($)0.24333*0.28*0.30833*
EPS Actual ($)0.35*0.30*0.29*
Revenue Consensus Mean ($)142,158,400*148,996,330*166,325,000*
Revenue Actual ($)148,262,000*141,638,000*136,967,000*

Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin (%)Q4 2025Mid-360s Mid-360s Maintained
Non-Interest Income ($M)Q4 2025$32–$33 $32–$33 Maintained
Non-Interest Expense ($M)Q4 2025$102–$104 $102–$104 Maintained
Tax RateQ4 2025Flat to 2024 Flat to 2024 Maintained
Net Charge-Offs to Avg LoansQ4 2025Low end of 25–35 bps Low end; up to $13M possible Clarified
Purchase Accounting Accretion ($M)Q4 2025N/A$1.9 expected New
Dividend per Share ($)Q4 2025$0.20 (prior cadence) $0.20 declared; payable Nov 18 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025, Q2 2025)Current Period (Q3 2025)Trend
Net Interest Margin & Loan YieldsNIM expanded to 3.87% with loan yields at 6.00% (boosted by non-accrual recovery); deposit costs down third straight quarter NIM 3.65% (+9 bps QoQ); loan yields up to 5.63%; reinvestment raising securities yields Stable-to-improving core margin; modest volatility from PAA
Deposit Costs / Betas & MixAvg total deposit cost 1.59% in Q1; 1.55% in Q2; core deposit growth replacing brokered CDs Avg total deposit cost 1.55%; CFO estimates deposit beta in mid-20s; granular, long-tenure deposit base Favorable cost profile; competitive but manageable
Credit Quality & Classified LoansClassified loans rose to $279M in Q1 and $518M in Q2 on CRE downgrades; NPLs 0.53%→0.91% NPLs 1.00%; classified loans $527M (acquisition-driven), with legacy Northwest classified down $74M; net charge-offs annualized 0.29% Elevated near term; active resolution/payoffs in progress
Merger Integration & SynergiesPenns Woods approvals completed; conversion expected late July Conversion complete; synergies on target; CDI $48M; goodwill ~$61M; liquidity covers ~250% of uninsured deposits Executed; synergy capture underway
De Novo Expansion (Columbus, Indianapolis)Fishers (IN) opening in June; footprint expansion strategy Groundbreaking in New Albany, OH; 3 Columbus centers targeted mid-2026; recruiting underway Scaling in growth markets
Capital & LiquidityCET1 ~12.8% (Q2); TCE/TA 8.93% (Q2); securities ~13% of assets CET1 ~12.3%; TCE/TA 8.62%; liquidity coverage ~250% of uninsured deposits Strong buffers maintained
Rate Environment (Prime)N/APrime reduced to 7.25% (Sept 18) and 7.00% (Oct 30) Tailwind for deposit repricing in Q4

Management Commentary

  • CEO: “We delivered a record $168 million in revenue for the quarter… drove a strong 3Q net interest margin of 3.65% as we maintained our loan yield and low-cost, high-quality, stable funding base.”
  • CEO: “I am pleased with our first quarter of performance as a combined company… Deal synergies are as expected… the merger enhanced our balance sheet scale.”
  • CFO: “We have readily available incremental sources of liquidity that would cover approximately 250% of the company’s uninsured deposits, net of collateralized and intercompany deposits… CET1 ~12.3%.”
  • CFO: “Loan market accretion was $2.7M in Q3… expected to be $1.9M in Q4 2025… Day one non‑PCD and unfunded provision expense was $20.7M.”

Q&A Highlights

  • Loan growth outlook: Balance sheet expected to remain stable near term; pipelines “pretty good,” with national specialty verticals (sports, franchise, equipment, SBA) ~20% of C&I book driving growth; low-to-mid single digit growth targeted with 2026 guidance to come .
  • Expenses trajectory: Aim for positive operating leverage; near-term expense run-rate around guidance levels with rationalization of Penns Woods costs through 2026 .
  • Capital deployment: Comfortable with current capital levels; no major change expected; evaluate opportunities (buybacks/M&A) prudently while maintaining strong buffers .
  • Margin dynamics: Core NIM around ~3.59% with purchase accounting adding ~6 bps; expect mid-360s with quarter-to-quarter volatility tied to PAA timing .
  • Credit resolution: Classified loan paydowns ongoing; Q4 charge-offs could be up to $13M while still at low end of 25–35 bps guidance; reserves viewed adequate .

Estimates Context

  • EPS: Q3 2025 EPS consensus $0.308 vs actual $0.29 (miss), as merger costs and Day 1 CECL reduced GAAP earnings despite strong core trends [GetEstimates]* .
  • Revenue: SPGI revenue consensus $166.3M vs actual $136.97M (miss per SPGI definition). Company-reported total revenue (NII+non-interest income) was $168.17M, indicating definitional differences that can distort “revenue” comparisons for banks [GetEstimates]* .
  • Implications: With Q4 guidance reaffirmed and purchase accounting accretion moderating, consensus models may adjust for merger costs timing, credit normalization, and definitional alignment on “revenue” vs “NII+non-interest income” .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Core profitability improved: NIM up to 3.65%, net interest income +$17M QoQ; adjusted efficiency ratio down to 59.62% despite integration spending .
  • Near-term GAAP noise: $31.3M merger/restructuring and $20.7M Day 1 CECL depressed EPS to $0.02; adjusted EPS steady at $0.29 .
  • Credit watch items: NPLs to 1.00%; classified loans at $527M largely from acquired portfolios; net charge-offs annualized 0.29% with Q4 up to $13M possible, still at low end of guidance .
  • Strong liquidity/capital: Liquidity covering ~250% of uninsured deposits; CET1 ~12.3%; TCE/TA 8.62% supports strategic flexibility .
  • Growth vectors: Specialty national verticals contribute ~20% of C&I; de novo expansion in Columbus and Indianapolis underway to drive deposits and relationship growth .
  • Rate backdrop favorable: Prime lowered to 7.25% (Sept) and 7.00% (Oct), aiding deposit repricing and potential NIM stability into Q4 .
  • Actionable: Expect adjusted performance to drive narrative; monitor Q4 credit resolutions/PAA variability, expense progress, and de novo ramp. Dividend continuity ($0.20) adds yield support during integration .

Appendix: Additional Data Points

  • Day 1 acquisition impacts: Added $2.2B assets; $1.6B deposits; goodwill $61M; CDI $48M .
  • Non-interest expense drivers: Personnel +$8M QoQ; non‑personnel +$28M QoQ (merger +$25M; intangibles amortization +$2M; processing +$2M) .
  • Asset quality table highlights: ACL to NPL coverage ~122% in Q3; allowance to loans 1.22% .