• Revenue: $156 million for the first quarter of 2025.
• Net Income: $43 million, a 48% increase compared to the same quarter last year.
• Earnings Per Diluted Share: $0.34, up from $0.23 in the first quarter of 2024.
• Net Interest Margin: Improved by 45 basis points to 3.87%.
• Non-Interest Income: Decreased by $11.7 million from the previous quarter.
• Non-Interest Expense: Declined by 3.8% or $4 million compared to the prior quarter.
• Pre-Tax, Pre-Provision Net Revenue: $64.5 million, a 9% improvement from the fourth quarter of 2024.
• Average Commercial Loans: Increased by $121 million or 6.2% compared to the fourth quarter.
• Loan Yields: Increased by 44 basis points to 6.0% quarter on quarter.
• Average Total Deposits: Increased by $60 million quarter over quarter.
• Cost of Deposits: Decreased by 9 basis points to 1.59%.
• Adjusted Efficiency Ratio: Improved to 57.7% from 59.6% in the prior quarter.
• Annualized Net Charge-Offs: 8 basis points for the quarter.
• Provision Expense: $8.3 million booked for the quarter.

• Warning! GuruFocus has detected 5 Warning Sign with CCK.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Northwest Bancshares Inc (NASDAQ:NWBI) reported a record net income of $43 million for the first quarter of 2025, marking a 48% increase compared to the same quarter last year.
• The company achieved a significant improvement in its net interest margin, expanding by 45 basis points to 3.87%, marking the fourth consecutive quarter of margin improvement.
• NWBI successfully increased its average commercial CNI loans by 20% over the past year, reflecting a strategic shift towards commercial lending.
• The company maintained a strong deposit base with average total deposits increasing by $60 million quarter over quarter, and a cost of deposits that remains near best in class at 1.59%.
• NWBI received all required regulatory approvals for its merger with Penz Woods Bank Corp, which is expected to close by late July, positioning the company among the top 100 banks in the United States by asset size.

Negative Points

• Non-interest income decreased by $11.7 million from the previous quarter, primarily due to the absence of gains from asset sales recorded in the fourth quarter.
• The company experienced a decline in its CRE portfolio by 3.5% and its residential mortgage and home equity portfolios by 1.9% and 1.3% respectively.
• There is significant market volatility and uncertainty over the economic outlook, which may pose challenges to NWBI's operating environment.
• The company's non-interest expenses increased by 2% compared to the first quarter of 2024, with $1.1 million attributed to merger-related costs.
• NWBI's annualized net charge-offs returned to historic levels at 8 basis points, with an $8.3 million provision expense, indicating ongoing credit risk management challenges.

Q & A Highlights

Q: Could you provide more details on the margin guidance and how potential Fed rate cuts might affect it? A: Douglas Schosser, Chief Financial Officer: We closed the quarter with a core margin of 3.48%. We expect to be at the high end of our range, leaving room for aggressive pricing. We anticipate one to two rate cuts in our guidance, and if three occur, it won't significantly change our margin outlook. We'll update guidance post-Pinewoods acquisition in the second quarter.

Q: What are the drivers behind the strong money market growth, and how do you expect deposit growth to trend? A: Douglas Schosser, Chief Financial Officer: We are transitioning CDs into more liquid products like money markets, which averaged 3.75% across the franchise. We see consistent, stable deposit growth and are opening a new branch in Fishers, Indiana, to support this.

Q: Can you provide guidance on the impact of the Pinewoods acquisition on tangible book value and purchase accounting accretion? A: Douglas Schosser, Chief Financial Officer: Rates have decreased, benefiting us in terms of portfolio marks. Our stock price has been lower, yielding a lower purchase price. However, due to volatility, we won't provide specific guidance until closer to the deal's closure.

Q: What credit trends are you observing, particularly with tariff disruptions and macroeconomic uncertainty? A: Douglas Schosser, Chief Financial Officer: It's early, but industries like manufacturing, transportation, warehousing, and hospitality could be impacted. Our exposure to these industries is about 8% of our loan portfolio, and we're monitoring the situation closely.

Q: How is the commercial loan build-out progressing, and in which categories are you gaining market share? A: Douglas Schosser, Chief Financial Officer: We're gaining share in newer verticals like sports and franchise finance. Our commercial business mix remains consistent, and we're seeing growth as employees have had more time to transition and work their books.

Q: What is the competitive landscape like, and where are you seeing the most spread compression? A: Douglas Schosser, Chief Financial Officer: The environment is competitive, with new commercial loan yields at 7.26% and roll-offs at 6.76%. We're disciplined in credit and pricing, which may naturally constrict growth.

Q: How do you view the potential for additional M&A activity in the current environment? A: Louis Torchio, President and CEO: The current environment is tepid due to stock price volatility. We're focused on internal discipline and growth but remain open to future transactions that are accretive to our revenue and shareholder value.

Q: Can you update us on your commercial loan pipelines and credit expectations? A: Douglas Schosser, Chief Financial Officer: Our pipelines are stronger than a year ago, but tariff effects may impact them. Credit expectations are hard to predict due to economic volatility, and we'll continue to operate under current methodologies.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.