Northwest Bancshares, Inc.NWBI
Northwest Bancshares, Inc. Income Taxes Disclosure
Income Taxes
Total income tax was allocated for the years ended December 31, 2025, 2024 and 2023 as follows
| Years ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Income tax expense | $ | 36,777 | 29,268 | 40,121 | |||||||||||||
| Shareholders’ equity for unrealized gain/(loss) on securities available-for-sale | 11,002 | 6,513 | 3,429 | ||||||||||||||
| Shareholders’ equity for pension adjustment | 3,059 | 6,304 | 3,354 | ||||||||||||||
| Shareholders’ equity for swap fair value adjustment | (676) | 448 | (110) | ||||||||||||||
| Unallocated income tax | $ | 50,162 | 42,533 | 46,794 | |||||||||||||
Income tax expense applicable to income before taxes consists of:
| Years ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Current tax provision/(benefit): | |||||||||||||||||
| Federal | $ | 34,528 | 20,022 | 36,599 | |||||||||||||
| State | 8,674 | 6,443 | 8,442 | ||||||||||||||
| Total current tax provision/(benefit) | 43,202 | 26,465 | 45,041 | ||||||||||||||
| Deferred tax provision/(benefit): | |||||||||||||||||
| Federal | (6,688) | 2,315 | (5,267) | ||||||||||||||
| State | 263 | 488 | 347 | ||||||||||||||
| Total deferred tax provision/(benefit) | (6,425) | 2,803 | (4,920) | ||||||||||||||
| Total income tax expense/(benefit) | |||||||||||||||||
| Federal | 27,840 | 22,337 | 31,332 | ||||||||||||||
| State | 8,937 | 6,931 | 8,789 | ||||||||||||||
| Total income tax expense | $ | 36,777 | 29,268 | 40,121 | |||||||||||||
We did not have any income tax expense (benefit) in foreign jurisdictions for the years ended December 31, 2025, 2024 and 2023.
Income taxes paid in the current period in accordance with ASU 2023-09 for the year ended December 31, 2025 is as follows:
| Years ended December 31, | |||||
| 2025 | |||||
| Federal | $ | 32,500 | |||
| State and local: | |||||
| Pennsylvania | 5,200 | ||||
| Other | 2,858 | ||||
| Foreign | — | ||||
| Total | $ | 40,558 | |||
A reconciliation of the expected federal statutory income tax rate to the effective rate in accordance with ASU 2023-09 for the year ended December 31, 2025 is as follows:
| Years ended December 31, 2025 | |||||||||||
| Amount | Percentage of Pretax Income | ||||||||||
| Tax computed at the statutory federal rate | $ | 34,186 | 21.0 | % | |||||||
| State income taxes, net of federal benefit (a) | 7,060 | 4.3 | % | ||||||||
| Tax credits | |||||||||||
| Low income housing tax credits (b) | (153) | (0.1) | % | ||||||||
| Nontaxable or nondeductible items | |||||||||||
| Tax-exempt interest income, net of disallowed interest | (2,191) | (1.3) | % | ||||||||
| Bank-owned life insurance | (2,643) | (1.6) | % | ||||||||
| Other | 1,332 | 0.8 | % | ||||||||
| Changes in unrecognized tax benefits | 112 | 0.1 | % | ||||||||
| Other adjustments | |||||||||||
| Dividends on stock plans | (636) | (0.4) | % | ||||||||
| Other | (290) | (0.2) | % | ||||||||
| Provision for income taxes | $ | 36,777 | 22.6 | % | |||||||
(a) State taxes in Pennsylvania make up the majority (greater than 50%) of the tax effect in this category.
(b) Tax credits are net of associated investment impacts, such as proportional amortization and tax benefits of flow through losses.
A reconciliation of the expected federal statutory income tax rate to the effective rate before the adoption of ASU 2023-09, expressed as a percentage of pretax income for the year ended December 31, 2024 and 2023, is as follows:
| Years ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Expected tax rate | 21.0 | % | 21.0 | % | |||||||
| Tax-exempt interest income | (1.8) | % | (1.2) | % | |||||||
| State income tax, net of federal benefit | 4.3 | % | 4.0 | % | |||||||
| Bank-owned life insurance | (1.0) | % | (1.0) | % | |||||||
| Stock-based compensation | — | % | — | % | |||||||
| Dividends on stock plans | (0.5) | % | (0.4) | % | |||||||
| Low income housing and historic tax credits | — | % | — | % | |||||||
| Other | 0.6 | % | 0.5 | % | |||||||
| Effective tax rate | 22.6 | % | 22.9 | % | |||||||
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2025 and 2024 are presented below:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Deferred compensation expense | $ | 6,820 | 3,761 | ||||||||
| Allowance for credit losses | 34,002 | 26,497 | |||||||||
| Other reserves | 3,528 | 3,909 | |||||||||
| Stock benefit plans | 2,961 | 1,950 | |||||||||
| Unrealized loss on the fair value of securities available-for-sale | 28,470 | 39,473 | |||||||||
| Lease liability | 11,363 | 11,253 | |||||||||
| Purchase accounting | 7,727 | 816 | |||||||||
| Net operating loss | 256 | 534 | |||||||||
| Other | 2,370 | 2,625 | |||||||||
| Total deferred tax assets | 97,497 | 90,818 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Pension expense | 10,186 | 7,243 | |||||||||
| Intangible assets | 19,700 | 18,858 | |||||||||
| Fixed assets | 3,555 | 3,891 | |||||||||
| Net deferred loan costs | 1,004 | 2,213 | |||||||||
| Right of use asset | 10,126 | 10,404 | |||||||||
| Pension and post-retirement benefits | 9,948 | 6,890 | |||||||||
| Other | 2,135 | 2,811 | |||||||||
| Total deferred tax liabilities | 56,654 | 52,310 | |||||||||
| Net deferred tax asset | $ | 40,843 | 38,508 | ||||||||
We have $14 million of Indiana net operating loss carryovers subject to annual limitation as Indiana conforms to the Internal Revenue Code Section 382 at December 31, 2025 and $20 million as of December 31, 2024. The carryovers begin to expire in 2026. Due to limitation, we do not currently expect to realize $8 million of the Indiana net operating loss carryover for both December 31, 2025 and 2024. This is netted against the net operating loss deferred tax asset in the preceding table.
The holding company has net operating loss carryforwards with the state of Pennsylvania of $169 million as of December 31, 2025 and $102 million as of December 31, 2024. The company has recorded a full valuation allowance against these carryforward attributes of Northwest Bancshares Inc. as it is not expected to realize these losses given the profitability of Northwest Bancshares for Pennsylvania tax purposes. The valuation allowance is netted against the net operating loss in the preceding table.
We recorded $0.2 million a valuation allowance against state deferred tax assets of a Northwest subsidiary since the subsidiary is not expected to utilize its deferred tax assets in the foreseeable future. This valuation allowance is netted against the net operating loss in the preceding table.
Other than stated above, we have determined that no valuation allowance is necessary for the deferred tax assets because it is more likely than not that these assets will be realized through future reversals of existing temporary differences and through future taxable income. We will continue to review the criteria related to the recognition of deferred tax assets on a regular basis.
We utilize a comprehensive approach to recognize, measure, present and disclose in our financial statements uncertain tax positions that the company has taken or expects to take on a tax return. We recognize interest accrued and penalties (if any) related to unrecognized tax benefits in income tax expense. The accrual for interest and penalties was not material for all years presented.
The following table presents changes in unrecognized tax benefits at December 31, 2025, 2024 and 2023:
We are subject to routine audits of our tax returns by the Internal Revenue Service as well as all states in which we conduct business. We are subject to audit by the Internal Revenue Service for the tax periods ended after December 31, 2021 and generally subject to audit by any state in which we conduct business for the tax periods ended after December 31, 2021.| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Unrecognized tax benefits: | |||||||||||||||||
| Balance, beginning of year | $ | 1,124 | 1,080 | 473 | |||||||||||||
| Increases related to prior year tax positions | 101 | 104 | 623 | ||||||||||||||
| Decreases related to prior year tax positions | (76) | (92) | (74) | ||||||||||||||
| Increases related to current year tax positions | 99 | 32 | 58 | ||||||||||||||
| Balance, end of year | $ | 1,248 | 1,124 | 1,080 | |||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 29, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.