Northwest Bancshares(NWBI) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported record revenue of $655 million for the full year 2025, with GAAP EPS for Q4 at $0.31 and adjusted EPS at $0.33, reflecting a quarter-over-quarter improvement from $0.29 and $0.04 respectively [3][11] - Net interest income grew by $6.2 million or 4.6% quarter-over-quarter, with net interest margin improving to 3.69% [11][15] - Non-interest income increased by $5.5 million or 17% quarter-over-quarter, contributing to a total revenue increase of $11.8 million or 7% [11][12] Business Line Data and Key Metrics Changes - Average loans grew by $414 million quarter-over-quarter, with end-of-period loans increasing by $66 million, totaling $13 billion [12][13] - Commercial loans increased by $162 million or 7.1% quarter-over-quarter and $509 million or 26% year-over-year [13] - The company introduced a new franchise finance vertical and significantly grew its SBA lending activity, ranking among the top 50 originators in the U.S. [6] Market Data and Key Metrics Changes - Average total deposits grew by $475 million quarter-over-quarter, with customer non-brokered average deposits increasing by $507 million [14] - The average balance of customer deposits is $19,000, with over 723,000 accounts and an average tenure of 12 years [14] - The cost of deposits decreased by 2 basis points to 1.53% [14] Company Strategy and Development Direction - The company aims for continued growth in 2026, focusing on optimizing operations, expanding its financial center network, and enhancing consumer and commercial lines of business [7][20] - The successful integration of the Penns Woods acquisition has positioned the company among the top 100 banks in the U.S. by assets [4] - The company is committed to maintaining a strong core performance while investing in talent, technology, and new financial centers [3][5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory for 2026, providing guidance for revenues between $710 million and $730 million and net interest margin in the low 3.70s [20] - The company anticipates loan growth in the low-to-mid single digits and deposit growth in the low single digits for 2026 [20] - Management noted a significant reduction in classified assets and a focus on organic growth [7][20] Other Important Information - The company returned more than half of its profits to shareholders through a quarterly dividend of $0.20 per share, marking the 125th consecutive quarter of cash dividends [7] - The adjusted efficiency ratio improved to 59.5% in Q4, reflecting tight expense management [12][17] Q&A Session Summary Question: Can you comment on the trend line with expenses? - Management acknowledged typical seasonal increases in expenses in Q1 but expects overall expenses to be lower than Q4 levels [25][26] Question: Is there a non-recurring performance in Q4 figures? - Management confirmed that there was a lift in Q4 due to year-end true-ups of incentive plans [27] Question: Does the NIM guidance include accretion? - Management confirmed that the NIM guidance includes normal contractual purchase accounting accretion and is not heavily dependent on anticipated rate cuts [28][29] Question: Can you provide details on the SBA business funding? - Management indicated a balanced approach to retaining SBA loans on the balance sheet while also generating fee income [41][45] Question: What is the appetite for M&A following the last deal? - Management stated a focus on executing the 2026 plan and organic growth, with openness to future M&A opportunities that fit culturally and geographically [80][81]