Northwest Bancshares (NWBI)
We wouldn’t recommend Northwest Bancshares. Its sales have underperformed and its low returns on capital show it has few growth opportunities.― StockStory Analyst Team
1. News
2. Summary
Why We Think Northwest Bancshares Will Underperform
Founded in 1896 and operating across Pennsylvania, New York, Ohio, and Indiana, Northwest Bancshares (NASDAQ:NWBI) is a bank holding company that operates Northwest Bank, providing personal and business banking, investment management, and trust services.
- Muted 1% annual tangible book value per share growth over the last five years shows its capital generation lagged behind its banking peers
- Incremental sales over the last two years were less profitable as its 2.5% annual earnings per share growth lagged its revenue gains
- 5.7% annual net interest income growth over the last five years was slower than its banking peers
Northwest Bancshares falls below our quality standards. Better businesses are for sale in the market.
Why There Are Better Opportunities Than Northwest Bancshares
Northwest Bancshares’s stock price of $12.75 implies a valuation ratio of 1x forward P/B. Northwest Bancshares’s valuation may seem like a bargain, especially when stacked up against other banking companies. We remind you that you often get what you pay for, though.
Cheap stocks can look like a great deal at first glance, but they can be value traps. They often have less earnings power, meaning there is more reliance on a re-rating to generate good returns - an unlikely scenario for low-quality companies.
3. Northwest Bancshares (NWBI) Research Report: Q3 CY2025 Update
Regional banking company Northwest Bancshares (NASDAQ:NWBI) reported revenue ahead of Wall Street’s expectations in Q3 CY2025, with sales up 20.9% year on year to $168.2 million. Its non-GAAP profit of $0.29 per share was 5.9% below analysts’ consensus estimates.
Northwest Bancshares (NWBI) Q3 CY2025 Highlights:
- Net Interest Income: $136 million vs analyst estimates of $132.7 million (22.2% year-on-year growth, 2.5% beat)
- Net Interest Margin: 3.7% vs analyst estimates of 3.5% (11.8 basis point beat)
- Revenue: $168.2 million vs analyst estimates of $164.6 million (20.9% year-on-year growth, 2.2% beat)
- Efficiency Ratio: 79.4% vs analyst estimates of 61.1% (1,829.2 basis point miss)
- Adjusted EPS: $0.29 vs analyst expectations of $0.31 (5.9% miss)
- Tangible Book Value per Share: $9.37 vs analyst estimates of $9.18 (1.1% year-on-year decline, 2.1% beat)
- Market Capitalization: $1.84 billion
Company Overview
Founded in 1896 and operating across Pennsylvania, New York, Ohio, and Indiana, Northwest Bancshares (NASDAQ:NWBI) is a bank holding company that operates Northwest Bank, providing personal and business banking, investment management, and trust services.
Northwest Bancshares operates primarily through its subsidiary, Northwest Bank, offering a comprehensive range of financial products and services. The bank's lending portfolio includes residential mortgages, home equity loans, commercial real estate financing, and business loans. For individual customers, Northwest provides everyday banking services like checking and savings accounts, along with personal loans and credit cards. Business clients can access commercial lending, deposit accounts, and cash management solutions.
A typical customer might be a family in western Pennsylvania securing a 30-year fixed-rate mortgage for their first home, or a small manufacturing business in Ohio obtaining financing to purchase new equipment. The bank also serves commercial real estate developers funding multi-family housing projects or retail establishments.
Northwest generates revenue primarily through interest income on loans and investments, as well as fees from various banking services. The company's business model follows traditional banking principles—collecting deposits from customers and using those funds to make loans at higher interest rates than what it pays depositors.
The bank maintains a significant physical presence with community banking offices throughout its four-state footprint, focusing on markets with diverse economies driven by healthcare, education, service businesses, and manufacturing. Northwest has expanded its geographic reach primarily through acquisitions, allowing it to serve customers across various economic regions while maintaining its community banking approach.
4. Thrifts & Mortgage Finance
Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.
Northwest Bancshares competes with other regional banks operating in its market areas, including PNC Financial Services (NYSE:PNC), KeyCorp (NYSE:KEY), and F.N.B. Corporation (NYSE:FNB), as well as national banks like JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC).
5. Sales Growth
Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income. Unfortunately, Northwest Bancshares’s 4.2% annualized revenue growth over the last five years was mediocre. This was below our standard for the banking sector and is a tough starting point for our analysis.
Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Northwest Bancshares’s annualized revenue growth of 5.5% over the last two years is above its five-year trend, suggesting some bright spots. 
Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.
This quarter, Northwest Bancshares reported robust year-on-year revenue growth of 20.9%, and its $168.2 million of revenue topped Wall Street estimates by 2.2%.
Net interest income made up 78.7% of the company’s total revenue during the last five years, meaning lending operations are Northwest Bancshares’s largest source of revenue.
While banks generate revenue from multiple sources, investors view net interest income as the cornerstone - its predictable, recurring characteristics stand in sharp contrast to the volatility of non-interest income.
6. Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Northwest Bancshares’s decent 5.7% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
Although it performed well, Northwest Bancshares’s two-year annual EPS growth of 2.5% lower than its 5.5% two-year revenue growth.
We can take a deeper look into Northwest Bancshares’s earnings to better understand the drivers of its performance. A two-year view shows Northwest Bancshares has diluted its shareholders, growing its share count by 4.4%. This has led to lower per share earnings. Taxes can also affect EPS but don’t tell us as much about a company’s fundamentals. 
In Q3, Northwest Bancshares reported adjusted EPS of $0.29, up from $0.26 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates, but we care more about long-term adjusted EPS growth than short-term movements. Over the next 12 months, Wall Street expects Northwest Bancshares’s full-year EPS of $1.21 to grow 6.3%.
7. Tangible Book Value Per Share (TBVPS)
Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.
This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.
Northwest Bancshares’s TBVPS was flat over the last five years. However, TBVPS growth has accelerated recently, growing by 3.5% annually over the last two years from $8.74 to $9.37 per share.
Over the next 12 months, Consensus estimates call for Northwest Bancshares’s TBVPS to grow by 3.6% to $9.71, paltry growth rate.
8. Balance Sheet Assessment
Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.
Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.
This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.
New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.
Over the last two years, Northwest Bancshares has averaged a Tier 1 capital ratio of 12.7%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.
9. Return on Equity
Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.
Over the last five years, Northwest Bancshares has averaged an ROE of 8.3%, respectable for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired.
10. Key Takeaways from Northwest Bancshares’s Q3 Results
It was encouraging to see Northwest Bancshares beat analysts’ net interest income expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its EPS missed. Overall, this was a softer quarter. The stock traded down 3.3% to $12.09 immediately after reporting.
11. Is Now The Time To Buy Northwest Bancshares?
Updated: December 3, 2025 at 11:18 PM EST
We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Northwest Bancshares, you should also grasp the company’s longer-term business quality and valuation.
Northwest Bancshares doesn’t pass our quality test. To kick things off, its revenue growth was weak over the last five years. And while its expanding net interest margin shows its loan book is becoming more profitable, the downside is its TBVPS growth was weak over the last five years. On top of that, its net interest income growth was weak over the last five years.
Northwest Bancshares’s P/B ratio based on the next 12 months is 1x. While this valuation is fair, the upside isn’t great compared to the potential downside. There are better investments elsewhere.
Wall Street analysts have a consensus one-year price target of $13.50 on the company (compared to the current share price of $12.75).