KBRA Affirms Ratings for Northwest Bancshares, Inc.

KBRA affirms the senior unsecured debt rating of BBB+, the subordinated debt rating of BBB, and the short-term debt rating of K2 for Columbus, Ohio-based Northwest Bancshares, Inc. (NASDAQ: NWBI) (“the company”). In addition, KBRA affirms the deposit and senior unsecured debt ratings of A-, the subordinated debt rating of BBB+, and short-term deposit and debt ratings of K2 for the subsidiary bank, Northwest Bank. The Outlook for all long-term ratings is Stable.

Key Credit Considerations

NWBI’s durable, low-cost, and granular deposit franchise remains a key strength of the company. NWBI continues to benefit from a largely retail and relationship-based deposit base across primarily secondary, or more rural, markets with less price-sensitive consumers. This has enabled the company to sustain comparatively low funding costs through various interest rate cycles, with total deposit costs tracking among the lowest of KBRA-rated banks at 1.43% in 2Q26. However, NWBI’s relatively larger concentration in fixed-rate conventional residential mortgages has historically contributed to somewhat lower loan yields than peers. Management has focused on gradually remixing the balance sheet toward higher-yielding assets, particularly C&I loans supported by the company’s national business lines. This, combined with continued deposit repricing and higher securities yields, has supported steady NIM expansion, with the margin improving 55 bps from its 2Q24 trough to 3.75% in 2Q26. Prospectively, we expect the margin to remain relatively stable, as continued benefits from deposit and securities repricing are counterbalanced by competitive loan and deposit pricing. Additionally, noninterest income remains a solid contributor to earnings, representing approximately 20% of total revenue and supported by durable fee income from investment management and trust services.

Credit quality remains manageable, though classified loans remain elevated relative to peers at 3.96% of total loans at 2Q26, reflecting both acquired Penn Woods Bancorp, Inc. (closed 3Q25) credits and continued challenges within the healthcare portfolio following elevated deterioration post-Covid. Management continues to work through the healthcare portfolio, which has declined to ~8% of CRE loans at 2Q26 from ~11% in the prior-year period. Nonetheless, overall loss content remains well contained, with the company having largely outperformed peers through the GFC and recording a peak NCO ratio of just 0.7% in 2011. We recognize, however, that the portfolio has evolved since then, with a greater weighting toward commercial lending, and therefore, somewhat different loss characteristics than NWBI’s historically more residential-focused balance sheet. NWBI has also historically managed capital conservatively, with a CET1 ratio of 12.2% as of 2Q26. We expect capital metrics to remain broadly in line with current levels, which, together with earnings and loan loss reserves, provide ample loss-absorbing capacity.

Rating Sensitivities

A rating upgrade is not expected over the medium term, though continued scale and geographic expansion while maintaining solid earnings performance and sound credit quality may have positive rating implications over time. Conversely, aggressive capital management resulting in capital levels deteriorating to beyond peer levels, and/or outsized credit losses impacting profitability could result in negative rating action.

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