Northwest Bancshares Q1 2025: Unpacking Contradictions in Loan Growth, Tariff Management, and Competitive Pressures

Loan growth assumptions and pipeline growth, management of industries impacted by tariffs, loan growth expectations, deposit cost pressures and competitive environment, and pipelines and loan growth expectations are the key contradictions discussed in Northwest Bancshares' latest 2025Q1 earnings call.



Strong Financial Performance in Q1 2025:
- Northwest Bancshares reported net income of $43 million, a 48% increase year-on-year, with earnings per diluted share at $0.34.
- The growth was driven by strategic shifts towards commercial lending, improved net interest margin, and efficient cost control.

Deposit Gathering and Margin Improvement:
- The company saw a 1.7% increase in average total deposits, with a cost of deposits decreasing by 9 basis points to 1.59%.
- This improvement in deposit gathering and a reduction in cost of funds led to a 45 basis points increase in the net interest margin to 3.87%.

Commercial Lending Growth:
- Average commercial C&I loans increased by 20% in the last year and 6.2% in the past quarter.
- The growth is part of the company's strategic shift towards commercial lending, driven by increased demand and disciplined pricing.

Credit Quality and Risk Management:
- Northwest Bancshares achieved an annualized net charge-off rate of 8 basis points, a significant improvement from the previous quarter.
- This improvement was due to derisking actions and prudent risk management, including the sale of certain loans, reducing classified loans by 5 basis points.

Merger and Acquisition Activity:
- The merger with Penns Woods Bancorp is expected to close by late July, positioning Northwest in the top 100 banks by asset size.
- This acquisition is anticipated to enhance scale and drive sustainable forward momentum, with a strong cultural fit between the organizations.