Northwest Bancshares (NWBI)

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.

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.

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).

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.

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%.

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.

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.

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.

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.

Updated: December 4, 2025 at 11:43 PM EST

When considering an investment in Northwest Bancshares, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

Northwest Bancshares falls short of our quality standards. First 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. This valuation multiple is fair, but we don’t have much confidence in the company. There are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $13.50 on the company (compared to the current share price of $12.34).