Spotting Winners: Northwest Bancshares (NASDAQ:NWBI) And Thrifts & Mortgage Finance Stocks In Q3

Let’s dig into the relative performance of WaFd Bank and its peers as we unravel the now-completed Q3 thrifts & mortgage finance earnings season.

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 15 thrifts & mortgage finance stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 4.7% while next quarter’s revenue guidance was 2.4% below.

In light of this news, share prices of the companies have held steady as they are up 2.8% on average since the latest earnings results.

Weakest Q3: WaFd Bank

Founded in 1917 and rebranded from Washington Federal in 2023, 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 $187.2 million, flat year on year. This print fell short of analysts’ expectations by 1.7%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ net interest income and EPS estimates.

Interestingly, the stock is up 18.6% since reporting and currently trades at $33.02.

Read our full report on WaFd Bank here, it’s free for active Edge members.

Best Q3: Ellington Financial

Operating under the guidance of Ellington Management Group, a respected name in structured credit markets, Ellington Financial 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 $82.76 million, up 23.6% year on year, outperforming analysts’ expectations by 4.9%. The business had an exceptional quarter with a beat of analysts’ EPS estimates and a solid beat of analysts’ revenue estimates.

However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $13.74.

Flagstar Financial

Tracing its roots back to 1859 and rebranded from New York Community Bancorp in 2024, Flagstar Financial is a bank holding company that offers commercial and consumer banking services, with specialties in multi-family lending, mortgage originations, and warehouse lending.

Flagstar Financial reported revenues of $497 million, down 23.1% year on year, falling short of analysts’ expectations by 3.7%. It was a softer quarter as it posted a significant miss of analysts’ revenue estimates and a slight miss of analysts’ net interest income estimates.

Interestingly, the stock is up 11.9% since the results and currently trades at $12.93.

Read our full analysis of Flagstar Financial’s results here.

Arbor Realty Trust

With roots dating back to 2003 and a focus on the stability of multifamily housing, Arbor Realty Trust is a specialized lender that provides financing solutions for multifamily and commercial real estate while also originating and servicing government-backed mortgage loans.

Arbor Realty Trust reported revenues of $112.4 million, down 28.2% year on year. This print lagged analysts' expectations by 25.8%. Taking a step back, it was a mixed quarter as it also produced a beat of analysts’ EPS estimates but a significant miss of analysts’ revenue estimates.

Arbor Realty Trust had the weakest performance against analyst estimates and slowest revenue growth among its peers. The stock is down 33.3% since reporting and currently trades at $7.70.

Read our full, actionable report on Arbor Realty Trust here, it’s free for active Edge members.

Annaly Capital Management

Operating as a real estate investment trust since 1996 with a focus on generating income from interest rate spreads, Annaly Capital Management is a diversified capital manager that invests in agency mortgage-backed securities, residential mortgage loans, and mortgage servicing rights.

Annaly Capital Management reported revenues of $885.6 million, up 637% year on year. This result beat analysts’ expectations by 7.2%. More broadly, it was a mixed quarter as it also recorded a solid beat of analysts’ revenue estimates but a significant miss of analysts’ net interest income estimates.

Annaly Capital Management scored the fastest revenue growth among its peers. The stock is up 7.8% since reporting and currently trades at $22.97.

Read our full, actionable report on Annaly Capital Management here, it’s free for active Edge members.

What Happened?

Shares of real estate investment trust Arbor Realty Trust fell 2.3% in the afternoon session after Piper Sandler lowered its price target on the stock to $8.00 from $10.00. 

The firm kept its "Underweight" rating on the shares. This action followed other recent negative analyst sentiment surrounding the company. In the previous weeks, Keefe, Bruyette & Woods had downgraded the stock to "Underperform" from "Market Perform" and also lowered its price target. Furthermore, JP Morgan had also reduced its price target, contributing to a pattern of cautious assessments from financial analysts regarding the stock's prospects.

What Is The Market Telling Us

Arbor Realty Trust’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The previous big move we wrote about was 7 days ago when the stock dropped 4.5% on the news that an analyst at Keefe, Bruyette & Woods downgraded the stock to "Underperform" from "Market Perform" and lowered the price target. 

The downgrade came from analyst Jade Rahmani. In addition to the new rating, the firm also significantly cut its price target for the company's shares. The price target was lowered by 22.73%, moving from $11.00 down to $8.50. Such rating changes from financial analysts can influence investor sentiment and often lead to shifts in a stock's price as the market reacts to the more cautious outlook.

Arbor Realty Trust is down 43.4% since the beginning of the year, and at $7.80 per share, it is trading 44.4% below its 52-week high of $14.03 from December 2024. Investors who bought $1,000 worth of Arbor Realty Trust’s shares 5 years ago would now be looking at an investment worth $559.18.

While the S&P 500 is up 13.1% since June 2025, Ellington Financial (currently trading at $13.64 per share) has lagged behind, posting a return of 6.2%. This might have investors contemplating their next move.

Is there a buying opportunity in Ellington Financial, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free for active Edge members.

Why Do We Think Ellington Financial Will Underperform?

We're cautious about Ellington Financial. Here are three reasons you should be careful with EFC and a stock we'd rather own.

1. EPS Barely Growing

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Ellington Financial’s EPS grew at a weak 1.6% compounded annual growth rate over the last five years, lower than its 14.8% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

2. Declining TBVPS Reflects Erosion of Asset Value

For banks, tangible book value per share (TBVPS) is a crucial metric that measures the actual value of shareholders’ equity, stripping out goodwill and other intangible assets that may not be recoverable in a worst-case scenario.

To the detriment of investors, Ellington Financial’s TBVPS declined at a 3.4% annual clip over the last two years.

3. Previous Growth Initiatives Haven’t Impressed

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Ellington Financial has averaged an ROE of 7.9%, uninspiring for a company operating in a sector where the average shakes out around 7.5%.

Final Judgment

Ellington Financial doesn’t pass our quality test. With its shares underperforming the market lately, the stock trades at 1× forward P/B (or $13.64 per share). This valuation tells us it’s a bit of a market darling with a lot of good news priced in - you can find more timely opportunities elsewhere. We’d suggest looking at one of our top digital advertising picks.

What Happened?

Shares of real estate investment trust Arbor Realty Trust fell 4.5% in the afternoon session after an analyst at Keefe, Bruyette & Woods downgraded the stock to "Underperform" from "Market Perform" and lowered the price target. 

The downgrade came from analyst Jade Rahmani. In addition to the new rating, the firm also significantly cut its price target for the company's shares. The price target was lowered by 22.73%, moving from $11.00 down to $8.50. Such rating changes from financial analysts can influence investor sentiment and often lead to shifts in a stock's price as the market reacts to the more cautious outlook.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Arbor Realty Trust? Access our full analysis report here.

What Is The Market Telling Us

Arbor Realty Trust’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was about 2 months ago when the stock dropped 15% on the news that the company reported disappointing third-quarter 2025 results that missed Wall Street's top-line expectations. 

The company generated revenue of $112.4 million, a 28.2% year-over-year decline and well below analysts' consensus estimate of $151.4 million. The miss was even more pronounced in its core lending operations, as net interest income plummeted 56.9% from the prior year to $38.27 million, falling 47% short of expectations. While Arbor's GAAP earnings of $0.20 per share narrowly beat forecasts, the figure was down significantly from $0.31 in the same quarter last year. Overall, the market's sharp negative reaction suggested investors were focused on the steep deterioration in revenue and income rather than the minor earnings beat.

Arbor Realty Trust is down 38.5% since the beginning of the year, and at $8.48 per share, it is trading 41.2% below its 52-week high of $14.41 from December 2024. Investors who bought $1,000 worth of Arbor Realty Trust’s shares 5 years ago would now be looking at an investment worth $589.36.