Earnings Call Transcript - NWBI Q4 2025

Operator, Operator

Thank you for joining us. My name is Carly, and I will be your conference operator. I would like to welcome everyone to the Northwest Bancshares Fourth Quarter 2025 Earnings Call. I will now turn the call over to Michael Perry, Managing Director of Corporate Development and Strategy and Investor Relations. Please proceed.

Michael Perry, Managing Director, Corporate Development and Strategy and Investor Relations

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.

Lou Torchio, President and CEO

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, Chief Financial Officer

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 and 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, our 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 the 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.

Operator, Operator

Now I will turn the call over to the operator, who will open up the lines for a live Q&A session. Your first question comes from Jeff Rulis with D.A. Davidson.

Jeff Rulis, Analyst

Just a follow-up, Doug, I appreciate your comments on the expenses and the cost savings. Looking at the full year guide, the midpoint is $425 million for expenses, which averages to about $106 million per quarter. Considering typical seasonality, is Q1 perhaps starting off a bit heavier in that regard? If you could provide any insights on the expense trend, that would be helpful.

Douglas Schosser, Chief Financial Officer

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, Analyst

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, Chief Financial Officer

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, Analyst

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, Chief Financial Officer

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, Operator

Your next question comes from Tim Switzer with KBW.

Timothy Switzer, Analyst

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, Chief Financial Officer

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, Analyst

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, Chief Financial Officer

Yes, probably. As we went through the fourth quarter, we closed our merger in July. By the end, the first two quarters were a bit bumpy as we were still catching up. However, the guidance would fully account for those contractual purchase accounting elements. If you consider the low 3.70s guidance provided, it would take into account both normal performance and the impact of purchase accounting. It does not assume significantly different levels of prepayments.

Timothy Switzer, Analyst

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, Chief Financial Officer

Yes, I'll let Lou answer some of that, and I'll provide additional information. First, we had the chance to improve our balance sheet since we received some opportunistic fee income. As the BOLI proceeds came in, we were able to limit our reliance on SBA gains during the quarter because those are attractive loans that we prefer to retain on our balance sheet. As we've discussed previously, we conduct national originations in the SBA sector. However, for our local clients, we prefer to keep those loans on our balance sheet. Additionally, we aim to manage a moderate growth in fee income from the SBA business while also retaining a reasonable portion of that business. We do not want to fall into the trap of constantly booking all gains. As we develop our SBA vertical, we will continue to balance sheet and sell for gains as we progress. We are really excited about the growth of that team and are proud to have reached the top 40 in SBA volume among originators.

Lou Torchio, President and CEO

Yes, Tim, this is Lou. I want to follow up on Doug's comments and your question. We appreciate the flexibility this offers us for commercial loan growth, earning spread income while also having the capacity to generate fee income. We're just beginning to scale this business, having invested heavily in our team, underwriting, due diligence, and portfolio management. Our strategy is to focus on securing quality business nationwide, but more importantly, we want to enhance customer acquisition and retention in the four states where we operate. We're planning to incorporate this product along with other SBA products into our retail franchise. As mentioned, we find it significant to highlight the recent deal we completed here in Columbus. Overall, we are very pleased with this business. As with all our operations, we will scale them carefully, without rushing to be in the top 10. Most importantly, I want to emphasize that we've established the infrastructure to do this responsibly.

Timothy Switzer, Analyst

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?

Lou Torchio, President and CEO

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 Lending Club, 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 franchises. So we're really comfortable and have experience with the team.

Operator, Operator

Your next question comes from Daniel Tamayo with Raymond James.

Timothy DeLacey, Analyst

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, Chief Financial Officer

We assessed the opportunity and decided to grow our securities portfolio a bit since we were slightly underweight compared to peer banks. We did take some action earlier in the quarter, specifically in mid- to late October, and continued to make more purchases in mid- to late November. We will keep looking for opportunities to support this portfolio moving forward, as it provides a solid source of liquidity. With the expectation of declining rates, we also plan to pre-purchase some securities set to mature within the quarter earlier on to gain a slight yield advantage. Overall, we're focused on prudently managing and slightly growing our investment portfolio to align it with our peers, aiming for around 17% of our loans or assets in this category.

Timothy DeLacey, Analyst

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, Chief Financial Officer

Yes, you're correct. We do have opportunities considering the capital percentage related to our commercial real estate portfolio. It takes time to transition that flow, but we are actively involved in the CRE sector and are looking for ways to support it in our market. While we are not aggressively expanding nationally in this area, we are open to lending to strong developers and operators within our region. Additionally, we have some nonperforming assets and classified assets connected to real estate developers, which puts some pressure on that overall line item. We anticipate that the situation will improve as we move through next year. Consequently, we are optimistic about seeing a turnaround in our CRE business, aiming for it to stabilize or achieve slight growth, presenting us with opportunities in the next year or two.

Operator, Operator

Your next question comes from Kyle Gierman with Hovde Group.

Kyle Gierman, Analyst

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, Chief Financial Officer

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. 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, Analyst

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, Chief Financial Officer

Yes. We've been concentrating on managing classified assets and have made progress in reducing them. This has been a significant factor in our paydowns. Additionally, with interest rates decreasing, we anticipate that some clients will look to refinance their existing loans. We aim to engage in these opportunities, though there is always some give and take in a fluctuating rate environment. I wouldn't highlight anything unusual regarding paydowns; it's just typical business activity. Coming off a year focused on the merger, we are now fully concentrating on running the bank without that distraction, which will also be beneficial.

Operator, Operator

Your next question comes from Matthew Breese with Stephens Inc.

Matthew Breese, Analyst

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, Chief Financial Officer

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

Matthew Breese, Analyst

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, Chief Financial Officer

Yes, I believe there is likely an opportunity of around 10 basis points. This will largely depend on the competitive environment at that time. We see this type of opportunity developing. Additionally, we have other savings products and we are drawing in new funds, especially during periods when we offer promotional rates, which is beneficial. If you're considering a 10 to 15 basis point adjustment based on the market's decline, that seems reasonable.

Matthew Breese, Analyst

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, Chief Financial Officer

Yes, I agree with you. We are also observing that trend, and we are very focused on managing both the total size of our deposit book to support growth and the overall cost of that book. Nobody can accurately predict the direction of interest rates and cycles, but what we are seeing is a longer delay between changes in the Federal Reserve's rates and the subsequent reactions from banks. We are aligned with that trend. Therefore, I am not worried about the opportunities available; however, it seems that those opportunities may take a little longer to materialize following rate reductions than in the past. I would estimate about 30 to 45 days before we start seeing those reductions.

Matthew Breese, Analyst

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?

Lou Torchio, President and CEO

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

Your next question comes from Manuel Navas with Piper Sandler.

Manuel Navas, Analyst

Can we return to the net interest margin for a moment? Could you discuss the guidance, which seems quite strong? I'm curious about the factors influencing the net interest margin throughout the year. I understand that the repricing of the CD book is somewhat neutral. It sounds like the yields on securities and loans are both improving. How do you see this setting the course for the year?

Douglas Schosser, Chief Financial Officer

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, Analyst

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, Chief Financial Officer

Yes, I believe we have a clearer understanding now. In the fourth quarter, we discussed the guidance from the previous quarter, which indicated $13 million focused on a significant credit we were resolving, and we anticipated some loss associated with it. Currently, we are returning to a more consistent flow. There may be minor fluctuations in one quarter due to a credit or two, but overall we are seeing a relatively stable low level. Thus, while we might experience minor spikes, we do not expect anything substantial. Our goal is to maintain a steady charge-off rate throughout the year. The guidance for this year also reflects our long-term expectation, which is typically between 25% to 35%. We are still projecting to remain at the lower end of that range.

Manuel Navas, Analyst

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, Chief Financial Officer

Yes, Lou and I will likely provide some insights on this topic. We see various opportunities throughout our portfolio, including both indirect loans and the mortgage portfolio, where we plan to manage the runoff. Considering the situation in commercial real estate and our national vertical, we believe we are well-positioned to conduct business in all areas. Our focus remains on supporting overall asset growth at a low to mid-single-digit rate. While we won't exclusively focus on commercial loans, we still see prospects for growth in this segment. As for our overall portfolio mix, we are approximately 45% commercial and 55% consumer, which we find favorable, ideally within a range of 50% plus or minus 5%. We're pleased with how things are developing, and having an inverted yield curve is advantageous as it allows us to enhance yields by extending our investments along the longer end of the curve.

Lou Torchio, President and CEO

I agree with Doug. We are reaching a point of balance in our portfolio. A couple of years ago, we were heavily focused on consumer loans, particularly mortgages, and were long on the curve. As we have worked to diversify our holdings, we are approaching a 50-50 split, which we find favorable from both interest rate and credit risk perspectives. For a firm of our size, our diversification enhances our risk profile. We are not overly concentrated in any single area and have various options available. We anticipate strong performance this year from our consumer segments, including mortgages, home equity, and indirect lending, contributing to growth across these sectors. We value our current position and the flexibility it provides. We believe we are unique in having these commercial national verticals, and, as Doug highlighted, we are placing renewed emphasis on in-market business banking for the lower middle market. Our strong consumer franchise across four states reinforces our diversification strategy, allowing us to pivot effectively. We are focused on organic growth in 2026, following a significant acquisition that will boost our top line revenue.

Operator, 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.

Lou Torchio, President and CEO

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, Operator

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