As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the thrifts & mortgage finance industry, including Northwest Bancshares (NASDAQ:NWBI) and its peers.
Thrifts & Mortgage Finance institutions operate by accepting deposits and extending loans primarily for residential mortgages, earning revenue through interest rate spreads (difference between lending rates and borrowing costs) and origination fees. The industry benefits from demographic tailwinds as millennials enter prime homebuying age, technological advancements streamlining the loan approval process, and potential interest rate stabilization improving affordability. However, significant headwinds include net interest margin compression during rate volatility, increased competition from fintech disruptors offering digital-first experiences, mounting regulatory compliance costs, and potential housing market corrections that could impact loan portfolios and default rates.
The 19 thrifts & mortgage finance stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 26.9% while next quarter’s revenue guidance was 0.7% above.
In light of this news, share prices of the companies have held steady as they are up 4.1% on average since the latest earnings results.
Northwest Bancshares (NASDAQ:NWBI)
Founded in 1896 and operating across Pennsylvania, New York, Ohio, and Indiana, Northwest Bancshares (NASDAQ:NWBI) is a bank holding company that operates Northwest Bank, providing personal and business banking, investment management, and trust services.
Northwest Bancshares reported revenues of $150.4 million, up 9.4% year on year. This print exceeded analysts’ expectations by 1.6%. Overall, it was a satisfactory quarter for the company with a narrow beat of analysts’ net interest income estimates but tangible book value per share in line with analysts’ estimates.
Louis J. Torchio, President and CEO, Northwest Bancshares commented, "I am pleased with our performance in the second quarter of 2025, as we continue to execute our strategy, delivering on our commitment to sustainable, responsible and profitable growth. Overall, we built on our strong start to the year, with net interest margin expansion and revenue growth, and we continued to exercise prudent expense control, resulting in further improvements in our efficiency ratio.
The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $12.45.
Is now the time to buy Northwest Bancshares? Access our full analysis of the earnings results here, it’s free.
Best Q2: Ellington Financial (NYSE:EFC)
Operating under the guidance of Ellington Management Group, a respected name in structured credit markets, Ellington Financial (NYSE:EFC) acquires and manages a diverse portfolio of mortgage-related, consumer-related, and other financial assets to generate returns for investors.
Ellington Financial reported revenues of $92.54 million, up 1.5% year on year, outperforming analysts’ expectations by 11.5%. The business had a stunning quarter with a solid beat of analysts’ tangible book value per share and EPS estimates.
The market seems content with the results as the stock is up 4.5% since reporting. It currently trades at $13.24.
Is now the time to buy Ellington Financial? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Franklin BSP Realty Trust (NYSE:FBRT)
Operating as a specialized real estate investment trust (REIT) with roots dating back to 2012, Franklin BSP Realty Trust (NYSE:FBRT) originates and manages a diversified portfolio of commercial real estate debt investments secured by properties in the United States and abroad.
Franklin BSP Realty Trust reported revenues of $50.78 million, up 171% year on year, falling short of analysts’ expectations by 8.9%. It was a disappointing quarter as it posted a significant miss of analysts’ net interest income and EPS estimates.
Interestingly, the stock is up 8.7% since the results and currently trades at $10.97.
Read our full analysis of Franklin BSP Realty Trust’s results here.
WaFd Bank (NASDAQ:WAFD)
Founded in 1917 and rebranded from Washington Federal in 2023, WaFd (NASDAQ:WAFD) is a bank holding company that provides lending, deposit services, and insurance through its Washington Federal Bank subsidiary across eight western states.
WaFd Bank reported revenues of $186.3 million, down 4.2% year on year. This print topped analysts’ expectations by 1.8%. It was a strong quarter as it also recorded a beat of analysts’ EPS estimates and a narrow beat of analysts’ net interest income estimates.
The stock is flat since reporting and currently trades at $29.90.
Read our full, actionable report on WaFd Bank here, it’s free.
PennyMac Financial Services (NYSE:PFSI)
Founded during the 2008 financial crisis to help address the mortgage market meltdown, PennyMac Financial Services (NYSE:PFSI) is a specialty financial services company that originates, services, and manages investments related to residential mortgage loans in the United States.
PennyMac Financial Services reported revenues of $444.7 million, up 9.5% year on year. This number lagged analysts' expectations by 19.8%. In spite of that, it was a strong quarter as it logged a beat of analysts’ EPS estimates and an impressive beat of analysts’ net interest income estimates.
The stock is up 18% since reporting and currently trades at $123.17.
Read our full, actionable report on PennyMac Financial Services here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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