Northwest Bancshares, Inc. (NWBI): what the price requires
At today's price, Northwest Bancshares, Inc. (NWBI) is priced for 9.9% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-17 · Source: https://boothcheck.com/report/NWBI
Headline
| Field | Value |
|---|---|
| Ticker | NWBI |
| Company | Northwest Bancshares, Inc. |
| Current price | $15.08/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | financials |
| Return on equity needed | 9.9% |
| Return on equity now | 6.7% |
| ROE gap | +3.2pp |
| Price-to-book | 1.16x |
Solve inputs: computed at a 9.1% cost of equity with 4% terminal growth over a 5-year stage, on common book equity (FY2026); each 1pp of cost of equity moves the implied ROE ~1.2pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | +1.64σ |
| cohort percentile (of 119 peers) | 22 |
| sustained it ~10 years at this level | 77% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by earnings-power and relative-multiple and growth-DCF value, while asset-based lands below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.53x | 3 | expensive |
| Earnings | 1.01x | 2 | expensive |
| Relative | 1.18x | 3 | expensive |
| Growth | 0.53x | 3 | justifies |
Families that justify the price: Earnings, Relative, Growth Families that call it expensive: Asset
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 4.9%); the inversion above states its own rate.
Per-Model Detail (n=11)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| Bank Fair Value (P/TBV) | — | $4.71 | 3.20x | yes | TBVPS $9.72 × 0.48x (ROE (TTM) 7.0% / CoE 9.3%, g=4.5% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption), credit 1.16% allowance/loans → ×0.93) |
| Relative Valuation | Relative | $12.81 | 1.18x | yes | P/E 11.97x (blended: static sector reference 10x + trailing (TTM) 17x), scenarios: 9.8x / 12.0x / 14.2x (bear / base = reference held flat / bull), EV/EBITDA N/Ax |
| Simple DDM | Growth | $38.03 | 0.40x | yes | DPS $0.80, g=7.0% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3% |
| Two-Stage DDM | Growth | $28.50 | 0.53x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $9.83 | 1.53x | yes | BV/sh $13.02, ROE (TTM) 7.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $8.48 | 1.78x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $12.58 | 1.20x | yes | Rev $0.5B, growth 17% (input: historical growth; tapered), Terminal P/S: 3.3x / 4.1x / 4.8x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $11.04 | 1.37x | yes | EPS $0.92, growth 1% (input: historical EPS growth), PEG=14.01 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | $16.41 | 0.92x | yes | √(22.5 × EPS $0.92 × BVPS $13.02) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $29.69 | 0.51x | yes | EPS $0.92 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | — | — | no | — |
| PEG Fair Value | Relative | $34.50 | 0.44x | yes | EPS $0.92 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $9.95 | 1.52x | yes | EPS $0.92 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).
Bullet Takeaways
- Northwest Bancshares is a regional bank that just posted record Q1 2026 net income of $51 million, up 16.3% year over year, helped by its acquisition of Penns Woods Bancorp and a steady net interest margin of 3.70%.
- The main risk is credit and the rate cycle: as a regional lender with commercial real estate exposure, the bank's earnings depend on loan losses staying low and on deposit costs not reversing the recent improvement.
- Watch capital return and the deal integration: the bank declared its 126th consecutive quarterly dividend at $0.20 and authorized a new $50 million buyback, with Penns Woods cost savings tracking ahead of plan toward full run-rate by mid-2026.
Bull Case
The counterintuitive thing about Northwest Bancshares is that a small, unglamorous community bank has been quietly compounding through one of the harder stretches for regional lenders. The signal is the dividend: the bank declared its 126th consecutive quarterly payout in Q1 2026, a run that spans multiple credit cycles and recessions. A bank does not sustain more than three decades of uninterrupted dividends by taking reckless credit risk; it does so by underwriting conservatively and managing capital with discipline, which is exactly the temperament that protects a lender when the cycle turns.
The core profitability is healthy and improving at the margin. Q1 2026 net income reached a record $51 million, up 16.3% year over year, on a net interest margin of 3.70%, and management widened that margin in part by lowering deposit costs for the third consecutive quarter even in a competitive environment. For a bank, the spread between what it earns on loans and pays on deposits is the engine, and a stable-to-rising margin while funding costs fall is the most direct evidence that the franchise is being run well.
The growth lever is acquisition, and it is working. The increase in average earning assets came largely from the Penns Woods Bancorp deal completed in the third quarter of 2025, and management reports cost savings tracking ahead of original expectations with full run-rate efficiencies expected by mid-2026. A well-integrated bank acquisition lifts both scale and efficiency, which should improve the expense ratio and support earnings as the synergies fully land. With the valuation methods supporting the price on earnings power and a new $50 million buyback alongside the dividend, the bull case is a steady, well-managed community bank trading near fair value while it digests an accretive deal.
Bear Case
Regional banking is a cyclical business dressed up as a stable one, and the cycle is where the bear case for Northwest Bancshares lives. The bank's earnings rest on two things that move with the economy: the credit quality of its loan book and the spread it earns between loans and deposits. On the first, the 10-K shows meaningful exposure to commercial real estate, describing how the "commercial real estate loan class is further segmented into smaller pools of loans with similar risk characteristics." Commercial real estate has been the pressure point for regional banks through this cycle, and a small community lender does not have the diversification of a money-center bank to absorb a regional downturn or a wave of office and retail-property stress.
On the second, the margin tailwind may be near its limit. The net interest margin of 3.70% in Q1 2026 was up slightly from the prior quarter but down from 3.87% a year earlier, and the improvement came largely from cutting deposit costs. There is a floor to how far deposit costs can fall, and in a competitive market depositors can demand higher rates, which would squeeze the spread the bank depends on. The year-over-year margin decline is the reminder that the trend has not been uniformly favorable.
The acquisition that is driving growth is also a source of risk and dilution. The share count has grown about 5% a year, partly to fund the Penns Woods deal, so existing holders own a smaller slice of the larger bank, and the projected synergies are a forecast rather than a result until the full run-rate arrives in mid-2026. Bank acquisitions can disappoint on integration, credit surprises in the acquired book, or customer attrition. The valuation methods read the stock as fairly valued rather than cheap, with the price supported by earnings power but the asset-based methods sitting above book value, so there is little margin of error: if credit costs rise or the margin compresses, the earnings that support the price give way, and a fairly valued bank can become an expensive one quickly.
Valuation
Northwest Bancshares is read the way a bank should be, on the return it earns on its capital and the quality of that return, rather than on an operating margin, and on that basis the price looks fair rather than stretched. The earnings-power, relative-multiple, and growth-based methods all support the price, landing at or near it, while only the asset-based methods read the stock as somewhat expensive relative to book value. The pattern is a value-and-earnings-supported name: the market is paying for the bank's current profitability, not for a re-rating.
What the price assumes is that the bank sustains the earnings it is now generating, anchored by a record Q1 2026 net income of $51 million and a net interest margin of 3.70%. The relevant lens for a bank is not net margin but the spread economics and the credit book behind them: the margin reflects disciplined deposit-cost management, and the loan quality is the swing factor on whether those earnings hold. Deposits and customer funding are the raw material of the business, not corporate leverage, and the standard cash-burn and coverage frames do not apply to a lender whose cash flows follow loan and deposit flows. The right comparison set is other community and regional banks, where dividend durability, efficiency, and credit quality drive the multiple.
The capital-return picture is the bank's clearest strength and bounds the downside. The 126th consecutive quarterly dividend and a new $50 million buyback show a franchise generating enough capital to return cash while funding growth, and the Penns Woods integration should lift efficiency as synergies reach full run-rate by mid-2026. The decisive variable is credit and the rate environment: the price is fair if loan losses stay contained and the margin holds. If commercial real estate stress materializes or deposit competition reverses the recent cost improvement, the earnings the price rests on decline, and the asset-based methods that already call the stock a touch rich mark the direction the price would reset.
Catalysts
The Q1 2026 report was a record on the bottom line. Net income reached $51 million, up 16.3% year over year, with diluted EPS of $0.34 and a net interest margin of 3.70%, up modestly from the prior quarter as the bank lowered deposit costs for a third consecutive quarter. The margin remained below the 3.87% of a year earlier, so the trend is one of stabilization rather than expansion, which makes the direction of deposit costs and loan yields the key thing to watch each quarter.
The Penns Woods integration is the operational catalyst. The acquisition, completed in the third quarter of 2025, drove the increase in average earning assets, and management reports cost savings tracking ahead of original expectations with full run-rate efficiencies expected by mid-2026. As those synergies fully land, the expense ratio should improve and support earnings, so the pace and completeness of that integration is a near-term driver of the profitability trajectory.
Capital return underscores management's confidence. The bank declared its 126th consecutive quarterly dividend at $0.20 per share and authorized a new $50 million share repurchase, signaling comfort with both the capital position and the earnings outlook. On the analyst side, Keefe Bruyette raised its price target to $15 from $14 while keeping a Market Perform rating, a modest upward revision that fits a fairly valued bank. The developments most likely to move the stock are credit-quality trends in the loan book, the trajectory of the net interest margin, and the realization of the Penns Woods cost savings.
Peer Cohorts (Per Segment, With Filing Citations)
Banking (reported)
- GABC (German American Bancorp, Inc.)
- (no filing in the citation store)
- HOPE (HOPE BANCORP, INC.)
- (no filing in the citation store)
- DCOM (DIME COMMUNITY BANCSHARES, INC.)
- (no filing in the citation store)
- FBNC (FIRST BANCORP)
- (no filing in the citation store)
- GBCI (GLACIER BANCORP, INC.)
- (no filing in the citation store)
- NBTB (NBT BANCORP INC)
- (no filing in the citation store)
- LOB (Live Oak Bancshares, Inc.)
- (no filing in the citation store)
- CLBK (Columbia Financial, Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Northwest Bancshares Q1 2026 results, 2026