Regional banking company Northwest Bancshares (NASDAQ: NWBI) announced better-than-expected revenue 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.

Is now the time to buy NWBI? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Northwest Bancshares saw a negative market reaction following its third quarter results, despite delivering strong year-on-year revenue growth. Management attributed this performance to the successful integration of the Penns Woods merger, which expanded its branch footprint and customer base. CEO Louis Torchio emphasized that the merger synergies, including cost savings and operational integration, were on track or ahead of expectations. Additionally, the company benefited from higher net interest income and continued commercial loan growth, but also faced merger-related expenses and a modest increase in loan delinquencies due to administrative issues from the conversion process.

Looking ahead, Northwest Bancshares’ guidance centers on maintaining its improved net interest margin, further realizing cost savings from the Penns Woods merger, and advancing its de novo branch expansion in high-growth markets like Columbus and Indianapolis. CFO Douglas Schosser noted that volatility in purchase accounting accretion could affect net interest margin in the near term. Management expects to achieve full cost synergies from the merger by mid-2026 and is focused on managing credit quality and deposit growth. Torchio stated, “We expect to open additional new financial centers in key locations in the high-growth Columbus and Indianapolis markets.”

Key Insights from Management’s Remarks

Management credited the quarter’s revenue growth to the Penns Woods merger, targeted market expansion, and disciplined cost controls, while addressing challenges from merger-related expenses and credit quality monitoring.

• Penns Woods merger integration: The largest acquisition in Northwest’s history contributed to a significant increase in assets, deposits, and loan balances, with management reporting that all operational and customer conversions were completed on schedule.

• De novo branch expansion: The company broke ground on its first financial center in Columbus, Ohio, and continues to scale in Indianapolis, aiming to open multiple new locations in high-growth markets to drive future deposit and loan growth.

• Commercial banking transformation: Northwest’s ongoing focus on commercial and specialty lending verticals drove over 25% year-over-year growth in commercial and industrial loans, supported by investments in new talent and business lines such as SBA lending.

• Efficiency improvements and cost controls: The adjusted efficiency ratio improved 80 basis points sequentially, underpinned by merger synergies and ongoing expense management, even as performance-based compensation and integration costs rose.

• Credit quality focus: Management highlighted tight risk controls, stating there was no direct exposure to recent high-profile regional bank credit issues. Most increases in classified loans were tied to the acquired portfolio, and legacy classified loans declined substantially as targeted payoffs occurred.

Drivers of Future Performance

Northwest Bancshares’ outlook is driven by merger-related cost savings, expansion into new markets, and maintaining prudent credit risk management amid a shifting rate environment.

• Realization of cost synergies: Management expects to fully achieve merger-related cost savings by mid-2026, with ongoing opportunities to streamline operations and enhance scale. This is projected to support operating leverage and profitability going forward.

• Branch network growth: The company plans to open additional de novo branches in Columbus and Indianapolis, focusing on local deposit gathering and business development. This expansion is expected to drive organic growth but will also require continued investment in talent and infrastructure.

• Credit and margin management: With net interest margin benefiting from higher loan yields and funding cost management, leadership cautioned that future NIM may be volatile due to purchase accounting dynamics and rate changes. Credit quality remains a priority, with targeted reductions in criticized and classified loans expected to provide additional balance sheet flexibility.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the pace and impact of de novo branch openings in Columbus and Indianapolis, (2) the achievement of remaining cost synergies from the Penns Woods integration, and (3) ongoing progress in reducing criticized and classified loans. Additionally, we will track management’s ability to sustain net interest margin improvements and maintain disciplined expense management.

Northwest Bancshares currently trades at $12.06, down from $12.51 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).

Our Favorite Stocks Right Now

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.