Northwest Bancshares, Inc. (NASDAQ:NWBI) Q4 2025 Earnings Call Transcript

Northwest Bancshares, Inc. (NASDAQ:NWBI) Q4 2025 Earnings Call Transcript January 27, 2026

Operator: Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Northwest Bancshares Fourth Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Michael Perry, Managing Director, Corporate Development and Strategy and Investor Relations. Please go ahead.

Michael Perry: Good morning, everyone, and thank you, operator. Welcome to Northwest Bancshares Fourth Quarter 2025 Earnings Call. Joining me today are Lou Torchio, President and CEO of Northwest Bancshares; Doug Schosser, our Chief Financial Officer; and T.K. Creal, our Chief Credit Officer. During this call, we will refer to information included in the supplemental fourth quarter and full year 2025 earnings presentation, which is available on our Investor Relations website. If you’d like to read our forward-looking and other related disclosures, you can find them on Slide 2. Thank you. And now I’ll hand it over to Lou.

Louis Torchio: Good morning, everyone. Thank you for joining us today to discuss our fourth quarter and 2025 full year results. I’ll let Doug take you through the specifics of our strong fourth quarter performance. I would like to take a step back and reflect on a transformational year for Northwest and how our achievements position us for continued growth in 2026. On Slide 4, you can see some of the financial highlights of 2025. We closed on a significant acquisition, drove record revenue of $655 million for the full year and continue to expand the firm’s net interest margin. Coupled with our demonstrated expense management discipline through the closing and integration of our sizable acquisition, we drove double-digit EPS growth, all while investing in the talent, technology and new financial centers and products to support our future growth prospects.

One of the high points of the year was the acquisition and successful integration of Penns Woods, bringing us into the ranks of the top 100 banks in the U.S. by assets. As well as adding 20 financial centers to our existing Pennsylvania footprint, we welcome new team members and thousands of new customers to Northwest. I’m proud of the team for a successful execution of a seamless integration at scale while maintaining our distinct Northwest culture and driving a strong core performance across the bank. We continue to transform our consumer bank, moving from branch consolidation to expansion, opening our first new financial center since 2018 in the Indianapolis, Indiana MSA, featuring our new design focused on customer hospitality. We’re building out our presence in our Columbus headquarters market with new financial centers now under development and due to open later this year in key locations across the city.

We’ve already added several new team members with strong local and business community ties to focus on building momentum in advance of opening our doors. We remain focused on excellence as an outstanding full-service neighborhood bank providing a highly personalized service. I’m proud to share that we have just been recognized by Newsweek for the third consecutive year as one of America’s best regional banks. We continue to strengthen and diversify our commercial banking business with C&I momentum of 26% year-over-year average loan growth. In 2025, we introduced a new franchise finance vertical, rounding out our nationwide business verticals, each with experienced and well-connected industry leaders, giving us a strong point of distinction in the specialty finance areas.

We also materially grew our SBA lending activity in 2025, earning a spot among the top 50 originators in the U.S. And at the year-end, we closed on a significant funding for our Columbus-based business as we grow our SBA business both locally and nationally. Our bank is relying on outstanding talent for its success. Over the past 18 months, we’ve made significant investments in executive and regional leadership, hiring accomplished executives across consumer and commercial banking, wealth management, legal and finance from numerous other respected financial institutions. We have a highly experienced leadership team in place that’s equipped to drive ongoing transformation and growth across our business. In 2025, we delivered on our commitment to our shareholders, returning more than half of our profits through a quarterly dividend of $0.20 per share.

This is the 125th consecutive quarter in which the company has paid a cash dividend. Looking ahead, I’m confident in our trajectory. For 2026, we are providing full year guidance for another record year. Doug will provide all the details on our outlook. Finally, as we have previously discussed, we have also significantly reduced our level of classified assets. 2025 was a fast paced and productive year. We’ve laid the foundation for a year of organic growth in 2026 as we maintain our focus on optimizing our operations, expanding our financial center network and delivering growth across our consumer and commercial lines of business. With that, I’ll turn it over to Doug to review fourth quarter results and provide more detail on our 2026 outlook.

Douglas Schosser: Thank you, Lou, and good morning, everyone. As Lou indicated, we are pleased with our financial performance. We delivered a strong fourth quarter, and we successfully completed all remaining merger conversion activities on time and on budget. This is the product of all the efforts of our entire team working tirelessly to deliver these results while also ensuring that our merger and conversion activities went smoothly. I am grateful to the team for their efforts. Now let’s continue on Page 5 of the earnings presentation, where I’ll walk you through the highlights of Northwest financial results for the fourth quarter. As a reminder, we closed our merger on July 25. As such, this is our first full quarter of reporting as a combined entity.

Given the overall size of this transaction, our fully completed conversion and opportunities as a combined organization, we don’t intend to disaggregate results now or in the future. Our GAAP EPS for the quarter was $0.31 per share. And on an adjusted basis, our EPS was $0.33 per share, an improvement on the prior quarter of $0.29 per share and $0.04 per share, respectively, driven by record revenue, net interest margin improvement and expense management discipline. Net interest income grew $6.2 million or 4.6% quarter-over-quarter, with net interest margin improving to 3.69%, benefiting from higher average loan yields, increased average earning assets from the acquisition and purchase accounting accretion. Noninterest income increased by $5.5 million or 17% quarter-over-quarter, driven by an increase in bank-owned life insurance income due to higher death benefit recorded in the fourth quarter, supporting a total revenue increase of $11.8 million quarter-over-quarter or 7%.

We also saw improvement in our pretax pre-provision net revenue in the fourth quarter of 2025, which increased to $66.4 million, a 92% increase from the third quarter 2025 on a GAAP basis and was $70.6 million, a 7% improvement from third quarter 2025 on an adjusted basis. And our adjusted efficiency ratio of 59.5% in the fourth quarter improved by 10 basis points quarter-over-quarter and 9 basis points year-over-year as we continue to exercise tight expense discipline. Turning to Page 6. I’ll spend a moment covering our loan balances. Average loans grew $414 million quarter-over-quarter, benefiting from a full quarter impact from the acquired balance sheet and organic loan growth. More importantly, end-of-period loans grew by $66 million in the fourth quarter, ending the year at $13 billion, laying a strong foundation for 2026 continued growth.

Our loan yield increased to 5.65% in the fourth quarter of 2025, growing by 2 basis points quarter-over-quarter, and our average commercial loans increased $162 million or 7.1% quarter-over-quarter and $509 million or 26% year-over-year. Moving to Page 7 and our deposit balances, which continue to be a source of strength and stability. Average total deposits grew by $475 million quarter-over-quarter, benefiting from the acquired balance sheet and organic growth. Our granular diversified deposit book has an average balance of $19,000 with customer deposits consisting of over 723,000 accounts with an average tenure of 12 years. Customer nonbrokered average deposits increased $507 million quarter-over-quarter, while brokered deposits decreased $32 million quarter-over-quarter.

Our cost of deposits decreased 2 basis points to 1.53%, a product of our proactive management of the overall portfolio and benefit of late year rate cuts in 2025. 43% of our CD portfolio matures within the first quarter of 2026 at a weighted average rate of 3.60%. With new volumes at anticipated lower rates, this should drive an overall decline in CD costs. Although our overall interest rate sensitivity position remains fairly neutral, our balance sheet has become slightly more asset sensitive with the continued growth in floating rate commercial loans. Turning to net interest margin on Page 8. Net interest margin increased 4 basis points to 3.69% in the fourth quarter of 2025, with purchase accounting accretion net impact equating to 4 basis points.

Turning to our securities portfolio on Page 9. We purchased $363 million of securities during the quarter, consistent with our existing portfolio risk metrics. This did not meaningfully change the portfolio’s weighted average life, which remains at 4.9 years. Our new purchases were consistent with the current composition of the portfolio as we continue to strengthen an already strong source of liquidity. Our portfolio yield continues to increase as new security purchases come on at higher yields than the runoff portfolio, yields increased 29 basis points to 3.11% in the quarter. 29% of the portfolio is held to maturity to protect tangible common equity. Turning to Page 10. Our noninterest income increased $5.6 million quarter-over-quarter, driven by an increase in bank-owned life insurance income due to higher death benefit income in the quarter.

Noninterest income decreased $2.3 million year-over-year, however, the prior year quarter included a gain on sale of Visa B shares and a gain on low-income housing tax credit investment that did not recur in 2025. Turning to Page 11. The overall expense, excluding merger and restructuring expenses, was higher quarter-over-quarter and year-over-year as the fourth quarter 2025 included a full quarter of the acquired Penns Woods operations. Compensation and benefits increased in the fourth quarter 2025 was driven by a full quarter of employees from the Penns Woods acquisition, combined with increased performance-based incentive compensation based on our strong financial performance in 2025. Additionally, adjusted efficiency ratio was 59.5% in the fourth quarter 2025, continuing the improvement in expense management over the last year.

On Page 12, you’ll see overall ACL coverage at 1.15% is down from the third quarter of 2025, driven by net charge-offs in the current period, which on an annualized basis were 40 basis points as was guided and are elevated as a result of one, $9.2 million charge-off of a student housing loan. This loan was originated more than 10 years ago, has been in workout for several years prior to it being fully resolved this quarter. As a reminder, we have no meaningful concentration in student housing in our portfolio today. Our 2025 net charge-offs of 25 basis points were at the bottom end of our full year guidance of 25 to 35 basis points. Turning to credit quality on Page 13. Our credit risk metrics are within internal expectations given the impact of the loans we acquired from the acquisition.

Our total delinquency increased from 1.10% to 1.50% quarter-over-quarter, primarily as a result of mortgage loans in the 31-day month at quarter end. Our 90-day plus delinquencies declined from 0.64% to 0.51% quarter-over-quarter and NPAs decreased by $21 million quarter-over-quarter. Taking a deeper dive into the breakdown of our credit quality on Page 14, fourth quarter 2025 continued to see a decline in classified loans as a percentage of total loans and on an absolute basis, which was caused primarily by improvements within the CRE portfolio. As we discussed on earlier calls, we remain focused on reducing our classified loan balances. Turning to Page 15, we are providing our full year outlook for 2026. We expect to see loan growth in 2026 in the low to mid-single digits and deposit growth in the low single digits.

We expect revenues to be in the range of $710 million to $730 million and net interest margin in the low 3.70s. We anticipate noninterest income in the range of $125 million to $130 million and noninterest expense to be in the $420 million to $430 million range. We anticipate net charge-offs of between 20 to 27 basis points, and we anticipate the tax rate to remain flat to 2025 rate at approximately 23%. As we continue to grow in 2026, we will manage the business and drive positive operating leverage. As a reminder, we said last quarter, we had not fully recognized all of the cost savings from the merger. We are on track and expected to achieve 100% of the cost savings in the first quarter of 2026, which is ahead of schedule. That is fully reflected in our outlook.

Now I will turn the call over to the operator, who will open up the lines for a live Q&A session.

Operator: [Operator Instructions] Your first question comes from Jeff Rulis with D.A. Davidson.

Q&A Session

Jeff Rulis: Just a follow on, Doug, I appreciate the commentary on the expenses and the cost saves. I guess looking at the full year guide, call it, the midpoint at $425 million for expenses, I guess that’s $106 million a quarter, I guess, if you just average. But typical seasonality and then is Q1 maybe a little — you start off a little heavier on that end. If you could just comment on any trend line with the expenses, that would be great.

Douglas Schosser: Yes, happy to, Jeff, and thanks for the question. So a couple of things, right? So yes, you’re right. Seasonally, you will typically see some increases in expenses in the first quarter for like FICA resets and some other things. But I still think our overall guide, you’re right in the way you think about it, right? If I’ve got the low end of the guide at about $105 million a quarter, we also would see increases typically in the second quarter for merit increases. So I think you’re right to say that the first quarter might be a little bit elevated, but I would expect overall it not to be at the same level as we were at in the fourth quarter.

Jeff Rulis: Got you. And it seemed like is some of the performance-based in Q4 a little onetime? I know that you’ve got the full quarter of Penns Woods, but is there a little bit of nonrecurring kind of performance year-end stuff in that figure?

Douglas Schosser: Yes. As you true up all your incentive plans and production plans and other things in the year-end, you’ve got a little bit of that lift in the fourth quarter as well. Correct.

Jeff Rulis: Appreciate it. And one last one, just on the margin, similar kind of question. The low 30 to 3.70% range, one, does that include accretion, assuming it does? And then two, kind of the rate assumptions underlying that?

Douglas Schosser: Yes. So it does include sort of normal contractual purchase accounting accretion. So there would be some slight variation to that when you’ve got early paydowns or payoffs. So it’s one thing to note. The other thing is we do have included in our guidance 3 rate cuts internally. Now one of them was in January. We received a rate cut that we weren’t expecting in December. So that effectively offsets it. So we would be thinking there’s going to be 2 more rate cuts between here and the end of the year. However, we are pretty neutrally positioned, drifting slightly asset sensitive, as I said in my remarks, but generally neutral. So our NIM guidance really isn’t contingent on those 2 rate cuts. We would stick to that if there were only one rate cut or no rate cuts.

Operator: Your next question comes from Tim Switzer with KBW.

Timothy Switzer: First one, a quick follow-up on the NIM and the purchase accounting. Can you clarify the overall net purchase accounting impact to NII this quarter? Because I think the slide deck referenced 4 basis points, but also $4 million. And my math on those don’t quite add up to that. And then I guess, just to clarify, is that also a good run rate going forward?

Douglas Schosser: Yes, I’m not sure on the math piece. But yes, the $4 million and the 4 basis points was effectively what we were kind of going back and recalculating all of that to. Again, I would say, generally speaking, we had pretty positive movements across the balance sheet, right? We did have a rate cut in there. So you had improvements in loan yields, small, but they were there in the margin. You had improvement or you had lower deposit costs and you also had improvements on the securities portfolio. And then you had that 4 basis points impact from purchase accounting. But again, all of those underlying metrics were driving up. Income-wise, of course, having a rate reduction in there sort of changes the income dynamic a little bit on the loan portfolio.

Timothy Switzer: I get you. Okay. But is 4 basis points a good run rate for purchase accounting, obviously dependent on prepayments and things like that?

Douglas Schosser: Yes, probably. I mean, we would have had — as we went through the fourth quarter, of course, we closed our merger in July, right? So by the time we got through the end, the first 2 quarters are a little bit bumpy because you’re still kind of catching up on everything. But the guidance would fully incorporate those contractual purchase accounting. So I think if you kind of go with the low 3.70s guidance that were provided, that would be inclusive both of normal performance as well as the impact of purchase accounting. Again, it does not assume materially different levels of prepayments.

Timothy Switzer: Okay. Got it. And then I was looking for an update. You mentioned on the call, but on your SBA business, you mentioned about recently closing funding. Could you maybe provide a little bit more details there? And then what are your growth expectations for this business going forward? And how much of that volume will you be retaining on the balance sheet versus looking to sell?

Douglas Schosser: Yes. I’ll — Lou will answer some of that, and I’ll give you some of that. First of all, one of the things that we had the opportunity to do is balance sheet a bit more of that because we had some opportunistic fee income. As the BOLI proceeds come through and we have the opportunity to not have to take as many SBA gains, we certainly did that within the quarter because obviously, those are very nice yielding loans, and we like to have them on our balance sheet. And I think as we’ve talked about before, we do, do national originations in the SBA business. But for our in-footprint clients, we tend to want to keep them on the balance sheet. And the other thing that we’ll tend to do is we’ll manage a reasonable amount of growth in fee income from the SBA business as well as balance sheeting a reasonable portion of that business.

I don’t think we want to get into the cycle where we’re booking all the gains in on that constant treadmill. So as we continue to build out the SBA vertical, we’re going to do both. We’re going to balance sheet, and we’re going to sell for gains as we kind of migrate through the process. And then again, we are really excited about the build-out of that team and the fact that we’ve now reached the top 40 in SBA volume, top 40 originators by volume.

Louis Torchio: Yes, Tim, this is Lou. Just a follow-up on Doug’s comments and your question. We really like the flexibility that this provides for us for commercial loan growth, spread income on the balance sheet with the flexibility and the lever to generate fee income. We are just now in the early innings of scaling this business. We’ve invested a lot in people, a lot in the underwriting and due diligence and portfolio management around this. And our strategy really is to capitalize on quality business nationally, but also and maybe more importantly, to focus on driving customers and customer retention in the footprint in the 4 states we operate in. So we’re going to layer this product, and we’re looking at some other SBA products into our retail franchise.

As we noted, we thought it was important to note in the call that the deal we did right here in Columbus. And so yes, we’re really, really happy with the business. We’ll be — like we are with all these businesses, we’ll scale them prudently. We’re not in a hurry to get to the top 10. So yes, really pleased with this. And most importantly, I think I’d like to drive the message that we’ve built the infrastructure to do this in a prudent manner.

Timothy Switzer: Yes. Got it. I mean the strategy makes a lot of sense to me. You touched on it, if I could have one quick follow-up. There’s been some disruption in the SBA space with the rising credit losses over the last few years and then some of the SOP changes over the summer. Where are you finding the talent you’re hiring from? And how are you going forward, making sure that you guys are as you mentioned, prudently running the business?

Louis Torchio: Yes. No, great question because it’s very important, right? So as you know, we’ve kind of remade the executive suite here over the last couple of years. And J.D. Marteau, who we formerly was GE, TD Bank and LendingClub. When he came to the firm, he had contacts that he was able to bring. So we know the management we’re bringing in. We know the performance level, and we understand what their acumen is and they have a long history of success. I wouldn’t certainly want to name firms, but I would tell you, like all businesses, we’ve gone to the best and the best of the industry and recruited from those franchise. So we’re really comfortable and have experience with the team.

Operator: Your next question comes from Daniel Tamayo with Raymond James.

Timothy DeLacey: This is Tim DeLacey on for Danny. So I just wanted to switch over maybe to the balance sheet. You had mentioned in the release, you had targeted the securities portfolio increase in the quarter. Could you maybe share some details on maybe when the timing of when the securities were purchased during the quarter and then kind of describe maybe your appetite to grow the security book relative to the asset base going forward?

Douglas Schosser: Yes. So we looked at the opportunity. So again, I think we were — keep growing our securities book a little bit because we were slightly underweighted if you sort of compare us to sort of peer banks and other things. We did take advantage of that a little bit earlier in the quarter, but not all of it. So basically mid- to late October and then there was a bit more done in November, mid- to late November. And we’ll continue to look at advantages for how do we sort of support that portfolio going forward. It’s a very nice store of liquidity for us. And also, as we’ve got an outlook for declining rates, we’ll also do things like try to prepurchase some of the securities that we see maturing within the quarter earlier in the quarter versus late to try to pick up a little bit of yield benefit there as well.

So really, I would just say it’s generally prudently managing the investment portfolio and growing it slightly just to keep it sort of in line with peers. I think we’re targeting around 17% of loans or assets into that bucket.

Timothy DeLacey: Okay. Great. And then maybe just one follow-up. CRE down this quarter. You guys obviously have the capacity to grow the portfolio going forward here. But in that low to mid-single-digit guidance for loan growth in 2026, how should we be thinking about CRE as a contributor to the loan growth this year?

Douglas Schosser: Yes. So you’re right. We do have some opportunities there given the percentage of capital that we have related to our CRE book. It takes a while to turn that flow around, but we’re definitely in the CRE business, and we continue to look for opportunities to sort of support that particular in our market. So again, it’s not one of the businesses that we’re aggressively growing nationally. But in our footprint, when there’s good developers and operators, and we have opportunities to sort of lend to those we would. Again, we also have some nonperforming assets that we — or some criticized and classified assets that we talked about that are some real estate developers. So you’re also seeing a little bit of that pressure on that overall line item.

And again, we hope that, that continues to abate as we get through next year. So again, we’re looking forward to turning that CRE business around to get it to more flat to slight growth, and that’s an opportunity that we have coming up in the next year or 2.

Operator: Your next question comes from Kyle Gierman with Hovde Group.

Kyle Gierman: I’m on for Dave Bishop. Yes. So loan growth was strong this quarter. I was wondering if you could provide some color on what segments and geographic areas are leading the way and how the pipeline is looking into the new year?

Douglas Schosser: Yes. So the pipeline is looking very good. So we’ve had a nice improvement in the portfolio actually throughout last year, and it continues into the first quarter. And I think I would say it’s a broad-based level of growth. So we continue to see kind of growth in our national verticals. Where we’re going to focus a little bit more is sort of in our 4-state footprint and in some of our businesses that we think we can continue to attract talent and develop some growth opportunities in market. But again, I would say it’s generally broad-based. There are some other things that might translate into some good business opportunities into ’26, like some of the tax changes that went through last term, including the expensing of equipment is good for our equipment finance business, the full expensing that you get on the tax benefit.

So again, everywhere that there’s some opportunities, and we like the credit profile and we like the returns that we’re getting on those loans, we’ve got people who are out there and ready to do the business.

Kyle Gierman: Awesome. And maybe a follow-up on that. Could you touch on the payoff and prepayment trends you are seeing in the quarter?

Douglas Schosser: Yes. I mean, again, we’ve been focusing on the criticized classified assets and continue to manage that down. So our — that was a pretty significant source of our paydowns. And then again, with interest rates falling, there’s going to be other clients that are going to look to refinance existing loans. Obviously, we try to participate in those credits as well, but there’s always a bit of a give and take in a rate environment that’s changing. So I would just say there was nothing in particular that we’d point out on the paydown side, just sort of normal business flows. I will say that — coming off of the year that we had focusing on the merger, now we’re kind of back to business and running the bank more completely without having that distraction. So that will also be helpful.

Operator: Your next question comes from Matthew Breese with Stephens Inc.

Matthew Breese: Just a few for me. The first thing, quick, what was the exact amount of the BOLI death benefit? I was assuming about $6.5 million.

Douglas Schosser: Yes. I think that is a pretty good assumption because it was about $6.5 million.

Matthew Breese: Okay. And then, Doug, you had talked a little bit about CD costs and upcoming maturities. I think you said 43% maturing in the first quarter. As you’re seeing the CD book kind of reprice mature, what is the blended new cost of CDs, including some of the higher cost promotional stuff? I’m just trying to get a sense for where CD costs could go near term.

Douglas Schosser: Yes. I think we’re seeing probably about a 10 basis point opportunity. Again, it’s all going to be based on competitive pressures at the time. But you’re seeing that kind of an opportunity that evolves. We also have got — so we’re not — we’ve got other savings products as well, and we’re attracting new money at times when we have some of those promotional rates, all of which is helpful. But I would say if you’re kind of thinking about that 10 to 15 basis point opportunity on kind of the reprice with the markets coming down, that’s probably fair.

Matthew Breese: Got it. And then the rest of the book, obviously, you have a lot of lower cost categories. Just given the environment, we’re hearing a lot more about competitive conditions. The core deposit book, how much more room is there to lower costs?

Douglas Schosser: Yes. I mean, again, you’re right. I think we’re seeing that as well, and we’re very focused on sort of managing kind of both the overall size of the deposit book to support growth as well as the overall cost of the book. And obviously, no one knows kind of where the rate counts — rate hikes and cycles are going to go. But I would tell you that I think what we’re seeing is you’re just seeing a little bit of a longer period of time between change in rates at the Fed and then sort of the reaction sort of the banks in general. So I think we’re kind of following that trend. So I don’t — I’m not concerned that there’s not an opportunity there, but that opportunity might just lag rate reductions by a little bit longer than it had in the past. So call it, 30, 45 days before you’re going to see sort of those rate reductions.

Matthew Breese: Got it. Okay. And then just last one is on M&A. Following the last deal, curious your appetite to participate in whole bank M&A and whether or not there’s active or ongoing or an increase in conversations?

Louis Torchio: Yes. This is Lou. I’ll take that. I think we’ve signaled in the past, and it remains true that we stay focused now on the successful accretion and driving organic growth in ’26 as a result of our acquisition. Certainly, we’re open to conversations, nothing imminent for us. We’re really focused on making sure we execute the ’26 plan and that we get the results that are correlated with the acquisition. We think it’s going to be very additive. We like our jump-off point. And we want to string together several quarters of strong results before we would entertain anything like that. Again, notwithstanding given the regulatory environment and maybe some opportunistic deals as we get further along in this year and look into ’27.

We’ll keep our options open. However, our goal is to find something that fits culturally that drives earnings and value for our shareholders and that fits into our geographic footprint. So we’re not interested really in going out of market at this point.

Operator: [Operator Instructions] Your next question comes from Manuel Navas with Piper Sandler.

Manuel Navas: Can we swing back to the NIM for a moment? Could you just talk about — the guide is pretty strong. I’m just wondering what are the drivers and progression of the NIM across the year. I hear you on the CD book repricing being a little bit more neutral. Securities yields are benefiting and loan yields are benefiting. Just kind of where does that kind of [ set ] the path across the year?

Douglas Schosser: Yes. I mean we’re not giving into kind of all that guide, but I think it’s safe to assume that we would have a slightly improving margin as you get some of the benefit of those rate cuts, which I think most people are projecting those to be later in the year, right? So that 3.70% mid or low 3.70s is pretty consistent with where we were at 3.69% for the quarter. And I think we’re working to hold on to that. The trade-off, obviously, is we also want to have asset growth. So to the extent that there’s competition out there, we’re not going to price ourselves out of that competition, but we’re not anticipating a significant downward pressure either. So I think we’re going to work to maintain that low 3.70s margin. And again, to the extent that it’s going to have any sort of slope to it, it’s going to be a little bit later in the year because you would expect to have some slightly lower funding costs that would benefit us.

Manuel Navas: I appreciate that. Another progression question. The net charge-off range is pretty solid. Kind of what are some assumptions on that progression? Or can you not get into that a bit?

Douglas Schosser: I mean, yes, I think that we have — so obviously, in the fourth quarter, and we talked about the guide last quarter, right, that $13 million, that was largely focused on — we had one significant credit that we knew we were working out, and we thought that there was going to be some loss content there. So now I think we’re back into a much more normalized flow. So again, there may be a small peak or valley in one quarter given a credit or 2 that happens, and we’re at a relatively overall low level. So you can get little spikes. But we’re not anticipating it to be anything super material. So hopefully, we’ll have that be a pretty steady charge-off rate throughout the year. And that guide is guides for this year, also harken back. We’ve kind of set our long-term guide is always that 25% to 35%. So we’re still anticipating being at the lower end of that kind of overall guide.

Manuel Navas: That’s great commentary. Switching back to loan growth for a moment. Can you talk about the mix? You spoke a little bit to CRE having some headwinds, but some building potential there. But can you just talk about the different segments and where you see the most growth? I’m guessing C&I has the biggest drivers, but just kind of speak across the loan book for this year with that low single-digit to mid-single-digit guide.

Douglas Schosser: Yes. You’ll probably get a little bit of feedback both from Lou and I on this topic, right? I think we see some opportunities kind of across the book. So whether it be in indirect or even to the extent that we can start to think about the mortgage portfolio, how we slow some of that runoff, when we look at certainly what’s going on in CRE and then when we see our national vertical. So we like the way we’re positioned to do business across all of them, and we’ll be looking to kind of just support that overall asset growth that we’re targeting that low to mid-single-digit level. So again, I don’t know that we would say it’s going to continue to be solely focused just on commercial, but certainly, we continue to have opportunity to grow commercial.

And again, we’ve kind of talked about our overall mix. We’re not targeting any specific thing. I think we’re about 45% commercial, 55% consumer. We like that. We like it anywhere kind of in that 50%, 5% plus or minus on either side. So I think we like the shape of — we like the way things are shaping up and having an inverted yield curve also is nice. So we have the opportunity to kind of blend out a little bit on the longer end of that curve and pick up some yield that way as well. But Lou?

Louis Torchio: I would concur with Doug, right? So we’re getting to the point of equilibrium where we’re getting a lot of balance in the book. If you remember a couple of years ago, we were heavy consumer with a large focus in mortgage and long on the curve. As we continue to work that down, remix the sheet, we’re nearing a 50-50. And we kind of like that both from an interest rate risk and a credit risk standpoint. We are very diversified for a firm our size in that I think that helps with the risk profile. We’re not particularly overweighted in any one business. We have a lot of different levers. We think that this year, consumer, both mortgage, home equity, our indirect will be strong. And so driving — I think we’re driving growth in our budget across all those sectors.

We really like the position we’re in. We like the flexibility that we have. And I think it’s — we’re unique in that we do have these commercial national verticals. As Doug pointed out, we have a renewed emphasis on in market, business banking, lower middle market. We have what’s recognized in the 4 states as a very, very strong consumer franchise. So — we like the diversification, and we like the ability to be able to pivot, and we are focused on growth in ’26 organically on the heels of a pretty significant acquisition that would also drive top line revenue.

Operator: There are no further questions at this time. I’ll now turn the call back over to Lou Torchio, President and Chief Executive Officer, for closing remarks.

Louis Torchio: Thank you. On behalf of the entire leadership team and the Board of Directors, thank you for joining our call this morning. I’m excited at our prospects in 2026 as we build out our consumer franchise in Columbus, Ohio, deepen relationships in our existing core markets and continue to build market share in our commercial lines of business. I look forward to speaking to you on our first quarter call in the spring.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.