Northwest Bancshares Q3 Revenue Hits Record as C&I Loans Grow

Northwest Bancshares, Inc. (NASDAQ: NWBI) reported record third-quarter revenue and net interest income as commercial lending expanded, particularly in specialty verticals and the middle-market portfolio. Revenue for the quarter ended September 30, 2026, rose 9.9% year over year to $184.9 million, while net interest income increased 9.5% to $149.0 million.

The bank earned diluted EPS of $0.34, compared with $0.36 in the prior quarter and $0.02 a year earlier. Adjusted diluted EPS was $0.35, down $0.02 sequentially but up $0.06 year over year. Return on average assets was 1.18%, while non-GAAP adjusted return on tangible common equity was 13.91%.

Revenue increased 2.0% from the second quarter, supported by higher average earning assets and stronger noninterest income. Net interest income rose 1.4% sequentially, although the fully taxable-equivalent net interest margin declined five basis points to 3.70%. The cost of funds increased five basis points to 2.05%, partly reflecting higher borrowings, while securities yields benefited from reinvestment at rates above those on maturing assets.

Commercial lending drives loan growth

Average loans increased $208 million, or 1.6%, from the previous quarter to $13.30 billion and were 5.8% higher year over year. Average commercial and industrial loans rose $201 million sequentially and $702 million, or 30.8%, from a year earlier, driven by growth in newer specialty verticals and middle-market lending.

Consumer loans also increased, rising $140 million from the second quarter. Those gains were partly offset by a $104 million decline in average commercial real estate loans and a $26 million decrease in residential mortgages. The total loan yield was broadly stable at 5.59%, down two basis points sequentially.

Average deposits were nearly unchanged from the second quarter at $14.14 billion but increased $844 million, or 6.3%, year over year. Money-market balances rose $74 million sequentially, while time deposits declined $83 million. The average cost of deposits increased one basis point to 1.44%. Northwest said certificates of deposit that matured during the quarter carried a weighted-average rate of 3.10%, compared with 2.97% for new volumes.

Fee income rises as expenses increase sequentially

Noninterest income grew 5.0% from the prior quarter and 11.6% year over year to $35.9 million. Service charges and fees increased 6.1% on both a sequential and annual basis, while trust and other financial-services income rose 7.0% from the second quarter and 25.7% from a year earlier. Mortgage banking income fell 50.8% sequentially and 63.8% year over year.

Noninterest expense totaled $109.0 million, up 4.5% from the prior quarter but down 18.4% year over year. The sequential increase largely reflected a roughly $3 million rise in Federal Deposit Insurance Corp. premium expense because the second quarter included a benefit related to prior-period assessment-rate changes. Merger, asset-disposition and restructuring costs declined to $238,000 from $31.3 million a year earlier.

The GAAP efficiency ratio was 58.9%, while the adjusted ratio was 57.8%, an improvement of 184 basis points from the prior-year period but 155 basis points higher than in the second quarter.

Credit indicators remain mixed

The allowance for credit losses represented 1.12% of loans, down one basis point sequentially. Annualized net charge-offs were 15 basis points, below the company’s full-year outlook range. The presentation reported a $9.1 million provision for credit losses in the quarterly summary.

Nonperforming assets increased to 0.76% of loans and other real estate owned from 0.70% in the prior quarter. However, loans at least 90 days delinquent declined to 0.36% from 0.49%, reflecting improved performance in regional and long-term healthcare portfolios and the resolution of loans in workout status.

Classified loans fell to $469 million, or 3.50% of total loans, from $524.1 million, or 3.96%, in the second quarter. Northwest attributed the decline to payoffs and upgrades. Classified nursing-home exposure decreased to 9.2% of classified loans from 17.0%, including $30 million of repayments during the quarter.

2026 outlook and risks

Northwest’s presentation maintained a framework of low- to mid-single-digit loan growth and low-single-digit deposit growth for 2026. It indicated a fourth-quarter fully taxable-equivalent net interest margin of 3.73%. The full-year outlook also included noninterest income of $125 million to $130 million, noninterest expense excluding merger costs of $420 million to $430 million, revenue of $710 million to $730 million and net charge-offs of 20 to 27 basis points. The expected tax rate was approximately 24%.

The company ended the quarter with estimated common equity Tier 1 capital of 12.2%, down four basis points sequentially. Rising interest rates also produced additional unrealized losses in the securities portfolio through accumulated other comprehensive income, despite supporting higher reinvestment yields.

Northwest identified changes in interest rates, deposit mix and funding costs, asset quality, regulation, economic conditions and cybersecurity among the factors that could affect future results. The bank also noted risks related to commercial and personal loan growth, acquired-business integration, credit-market conditions and its ability to access cost-effective funding.