What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-04 compared with 2022-08-05 · 197 added, 168 removed, 1235 unchanged (23% of the section changed)

4 unchanged sentences

(in thousands, except share data)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Cash and cash equivalents $ 118,549 1,279,259

46 unchanged sentences

(in thousands, except share data)

Quarter ended June 30, Six months ended June 30,

Quarter ended September 30, Nine months ended September 30,

2022 2021 2022 2021

55 unchanged sentences

(in thousands)

Quarter ended June 30, Six months ended June 30,

Quarter ended September 30, Nine months ended September 30,

2022 2021 2022 2021

1 unchanged sentence

Other comprehensive income net of tax:

Net unrealized holding gains/(losses) on marketable securities:

Unrealized holding gains/(losses), net of tax of $ 11,973 , ($ 1,245 ), $ 30,850 , and $ 4,736 , respectively

Net unrealized holding losses on marketable securities:

Unrealized holding losses, net of tax of $ 14,705 , $ 2,076 , $ 45,555 , and $ 6,812 , respectively

( 48,387 ) ( 6,455 ) ( 153,124 ) ( 19,554 )

1 unchanged sentence

— ( 69 ) ( 2 ) ( 280 )

Net unrealized holding gains/(losses) on marketable securities ( 39,955 ) 4,186 ( 104,739 ) ( 13,310 )

Net unrealized holding losses on marketable securities ( 48,387 ) ( 6,524 ) ( 153,126 ) ( 19,834 )

Defined benefit plan:

1 unchanged sentence

( 131 ) 333 ( 393 ) 1,000

Other comprehensive (loss)/income ( 40,086 ) 4,520 ( 105,001 ) ( 12,643 )

Total comprehensive (loss)/income $ ( 6,660 ) 53,487 ( 43,288 ) 76,561

Other comprehensive loss ( 48,518 ) ( 6,191 ) ( 153,519 ) ( 18,834 )

Total comprehensive income/(loss) $ ( 11,214 ) 28,872 ( 54,502 ) 105,433

See accompanying notes to unaudited Consolidated Financial Statements.

5 unchanged sentences

other comprehensive loss Total shareholders’ equity

Quarter ended June 30, 2022 Shares Amount

Beginning balance at March 31, 2022 126,686,373 $ 1,267 1,012,308 612,481 ( 102,544 ) 1,523,512

Quarter ended September 30, 2022 Shares Amount

Beginning balance at June 30, 2022 126,881,766 $ 1,269 1,015,349 620,551 ( 142,630 ) 1,494,539

Comprehensive income:

8 unchanged sentences

— — — ( 25,379 ) — ( 25,379 )

Ending balance at June 30, 2022 126,881,766 $ 1,269 1,015,349 620,551 ( 142,630 ) 1,494,539

Ending balance at September 30, 2022 126,921,989 $ 1,269 1,017,189 632,476 ( 191,148 ) 1,459,786

Additional paid-in capital Retained earnings Accumulated

other comprehensive income/(loss) Total shareholders’ equity

Quarter ended June 30, 2021 Shares Amount

Beginning balance at March 31, 2021 127,222,648 $ 1,272 1,018,822 571,612 ( 50,712 ) 1,540,994

other comprehensive loss Total shareholders’ equity

Quarter ended September 30, 2021 Shares Amount

Beginning balance at June 30, 2021 127,907,885 $ 1,279 1,025,174 595,100 ( 46,192 ) 1,575,361

Comprehensive income:

Net income — — — 35,063 — 35,063

Other comprehensive income, net of tax of ($ 1,331 )

Other comprehensive loss, net of tax of $ 1,972

— — — — ( 6,191 ) ( 6,191 )

Total comprehensive income — — — 48,967 4,520 53,487

Total comprehensive income/(loss) — — — 35,063 ( 6,191 ) 28,872

Exercise of stock options 57,142 — 688 — — 688

4 unchanged sentences

— — — ( 25,376 ) — ( 25,376 )

Ending balance at June 30, 2021 127,907,885 $ 1,279 1,025,174 595,100 ( 46,192 ) 1,575,361

Ending balance at September 30, 2021 126,521,344 $ 1,265 1,008,099 604,787 ( 52,383 ) 1,561,768

See accompanying notes to unaudited Consolidated Financial Statements.

4 unchanged sentences

other comprehensive loss Total shareholders’ equity

Six months ended June 30, 2022 Shares Amount

Nine months ended September 30, 2022 Shares Amount

Beginning balance at December 31, 2021 126,612,183 $ 1,266 1,010,405 609,529 ( 37,629 ) 1,583,571

9 unchanged sentences

— — — ( 76,070 ) — ( 76,070 )

Ending balance at June 30, 2022 126,881,766 $ 1,269 1,015,349 620,551 ( 142,630 ) 1,494,539

Ending balance at September 30, 2022 126,921,989 $ 1,269 1,017,189 632,476 ( 191,148 ) 1,459,786

Additional paid-in capital Retained earnings Accumulated

other comprehensive loss Total shareholders’ equity

Six months ended June 30, 2021 Shares Amount

Nine months ended September 30, 2021 Shares Amount

Beginning balance at December 31, 2020 127,019,452 $ 1,270 1,015,502 555,480 ( 33,549 ) 1,538,703

6 unchanged sentences

Stock-based compensation expense 323,824 3 3,722 — — 3,725

Stock-based compensation forfeited ( 32,585 ) — — — — —

Share repurchases ( 1,813,132 ) ( 18 ) ( 23,836 ) — — ( 23,854 )

Stock-based compensation forfeited ( 52,287 ) — — — — —

Dividends paid ($ 0.59 per share)

— — — ( 74,960 ) — ( 74,960 )

Ending balance at June 30, 2021 127,907,885 $ 1,279 1,025,174 595,100 ( 46,192 ) 1,575,361

Ending balance at September 30, 2021 126,521,344 $ 1,265 1,008,099 604,787 ( 52,383 ) 1,561,768

See accompanying notes to unaudited Consolidated Financial Statements.

3 unchanged sentences

(in thousands)

Six months ended June 30,

Nine months ended September 30,

Operating activities:

7 unchanged sentences

(Increase)/decrease in other assets ( 31,790 ) 19,248

Decrease in other liabilities ( 16,891 ) ( 18,261 )

Increase/(decrease) in other liabilities 11,270 ( 10,545 )

Net amortization on marketable securities 3,849 5,830

15 unchanged sentences

Proceeds from loan maturities and principal reductions 3,110,264 3,413,907

Net proceeds/(redemptions) of FHLB stock 822 ( 1,539 )

Net (redemptions)/proceeds of FHLB stock ( 5,097 ) 7,181

Proceeds from sale of real estate owned 1,469 2,440

Proceeds from sale of real estate owned for investment 229 229

Disposals/(purchases) of premises and equipment, net 1,687 ( 1,005 )

Purchases of premises and equipment, net ( 613 ) ( 3,728 )

Proceeds from the sale of insurance business — 28,238

4 unchanged sentences

(in thousands)

Six months ended June 30,

Nine months ended September 30,

Financing activities:

1 unchanged sentence

Repayments of long-term borrowings ( 10,094 ) ( 22,105 )

Net decrease in short-term borrowings ( 8,603 ) ( 3,785 )

Net increase/(decrease) in short-term borrowings 10,943 ( 11,165 )

Increase in advances by borrowers for taxes and insurance ( 14,935 ) ( 18,279 )

27 unchanged sentences

The Consolidated Financial Statements have been prepared using the accounting policies described in the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 updated, as required, for any new pronouncements or changes.

Certain items previously reported have been reclassified to conform to the current year’s reporting format.

The results of operations for the quarter ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, or any other period.

Allowance for Credit Losses and Provision for Credit Losses Update

During the quarter-ended June 30, 2022, the Bank implemented a new model to calculate the allowance for credit losses on our vehicle loan portfolio.

During the nine months ended September 30, 2022, the Bank implemented a new model to calculate the allowance for credit losses on our vehicle loan portfolio.

Additionally, as part of the process, we re-assessed our loan segmentation and loans that were previously included in our consumer loan portfolio were moved into our vehicle loan portfolio.

1 unchanged sentence

The allowance for credit losses within the vehicle loan portfolio is calculated using a non-discounted cash flow model developed by an external third-party.

Monthly probabilities of default and prepayment are estimated for each loan, along with estimates of exposure at default and loss given default.

Monthly probabilities of default and prepayments are estimated for each loan, along with estimates of exposure at default and loss given default.

The model utilizes loan, borrower, and collateral characteristics, and macroeconomic data as inputs.

Certain items previously reported have been reclassified to conform to the current year’s reporting format.

The results of operations for the quarter ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, or any other period.

Stock-Based Compensation

4 unchanged sentences

The number of PSUs earned will be based on attainment of certain performance criteria over a three-year period, with the actual number of shares issuable ranging between 0 % and 150 % of the number of PSUs granted.

The PSUs have a three-year cliff vesting, from the date of grant, and any PSU's earned will be issued after the vesting period.

Stock-based compensation expense of $ 1.4 million and $ 1.7 million for the quarters ended June 30, 2022 and 2021, respectively, was recognized in compensation expense relating to our stock benefit plans.

At June 30, 2022, there was compensation expense of $ 1.1 million to be recognized for awarded but unvested stock options, $ 6.6 million for unvested restricted common shares, $ 1.3 million to be recognized for awarded but unvested RSUs, $ 420,000 to be recognized for awarded but unvested RSAs, and $ 1.3 million to be recognized for awarded but unvested PSUs.

The PSUs have a three-year cliff vesting, from the date of grant, and any PSUs earned will be issued after the vesting period.

Stock-based compensation expense of $ 944,000 and $ 1.0 million for the quarters ended September 30, 2022 and 2021, respectively, and $ 3.1 million and $ 3.7 million for the nine months ended September 30, 2022 and 2021, respectively, was recognized in compensation expense relating to our stock benefit plans.

At September 30, 2022, there was compensation expense of $ 1.0 million to be recognized for awarded but unvested stock options, $ 6.0 million for unvested restricted common shares, $ 1.2 million to be recognized for awarded but unvested RSUs, $ 300,000 to be recognized for awarded but unvested RSAs, and $ 1.2 million to be recognized for awarded but unvested PSUs.

Income Taxes-Uncertain Tax Positions

2 unchanged sentences

The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information.

We had a $ 241,000 and $ 336,000 liability for unrecognized tax benefits as of June 30, 2022 and 2021, respectively.

We had a $ 241,000 liability for unrecognized tax benefits as of both September 30, 2022 and December 31, 2021.

We recognize interest accrued related to:

3 unchanged sentences

(2) Marketable Securities

The following table shows the portfolio of marketable securities available-for-sale at June 30, 2022 (in thousands):

The following table shows the portfolio of marketable securities available-for-sale at September 30, 2022 (in thousands):

Debt issued by the U.S government and agencies:

Due in one year through five years $ 20,000 — ( 1,147 ) 18,853

Due after one year through five years $ 20,000 — ( 1,921 ) 18,079

Due after ten years 54,213 — ( 10,367 ) 43,846

Debt issued by government-sponsored enterprises:

Due in one year through five years 992 — ( 12 ) 980

Due in five years through ten years 46,019 — ( 5,735 ) 40,284

Due after one year through five years 993 — ( 53 ) 940

Due after five years through ten years 45,890 — ( 7,739 ) 38,151

Municipal securities:

Due in less than one year 723 1 — 724

Due in one year through five years 1,174 6 ( 19 ) 1,161

Due in five years through ten years 32,974 25 ( 1,640 ) 31,359

Due within one year 509 — ( 2 ) 507

Due after one year through five years 618 — ( 15 ) 603

Due after five years through ten years 33,945 8 ( 3,272 ) 30,681

Due after ten years 92,791 — ( 18,406 ) 74,385

Corporate debt issues:

Due in five years through ten years 13,564 8 ( 62 ) 13,510

Due after five years through ten years 13,551 — ( 411 ) 13,140

Residential mortgage-backed securities:

8 unchanged sentences

government and agencies:

Due in one year through five years $ 20,000 — ( 68 ) 19,932

Due after one year through five years $ 20,000 — ( 68 ) 19,932

Due after ten years 57,681 — ( 1,722 ) 55,959

Debt issued by government-sponsored enterprises:

Due in less than one year 177 — — 177

Due in one year through five years 991 73 — 1,064

Due in five years through ten years 46,411 1 ( 1,568 ) 44,844

Due within one year 177 — — 177

Due after one year through five years 991 73 — 1,064

Due after five years through ten years 46,411 1 ( 1,568 ) 44,844

Municipal securities:

Due in less than one year 946 13 — 959

Due in one year through five years 1,261 22 ( 3 ) 1,280

Due in five years through ten years 23,692 661 ( 146 ) 24,207

Due within one year 946 13 — 959

Due after one year through five years 1,261 22 ( 3 ) 1,280

Due after five years through ten years 23,692 661 ( 146 ) 24,207

Due after ten years 99,558 2,884 ( 187 ) 102,255

6 unchanged sentences

Total marketable securities available-for-sale $ 1,565,002 8,845 ( 25,255 ) 1,548,592

The following table shows the portfolio of marketable securities held-to-maturity at June 30, 2022 (in thousands):

The following table shows the portfolio of marketable securities held-to-maturity at September 30, 2022 (in thousands):

Debt issued by the U.S.

government and agencies:

Due in one year through five years $ 16,477 — ( 1,214 ) 15,263

Due in five years through ten years 107,975 — ( 15,547 ) 92,428

Due after one year through five years $ 16,478 — ( 1,739 ) 14,739

Due after five years through ten years 107,976 — ( 20,352 ) 87,624

Residential mortgage-backed securities:

8 unchanged sentences

government and agencies:

Due in one through five years $ 16,478 — ( 206 ) 16,272

Due in five years through ten years 107,973 — ( 4,613 ) 103,360

Due after one year through five years $ 16,478 — ( 206 ) 16,272

Due after five years through ten years 107,973 — ( 4,613 ) 103,360

Residential mortgage-backed securities:

5 unchanged sentences

Total marketable securities held-to-maturity $ 768,154 350 ( 16,991 ) 751,513

The following table shows the contractual maturity of our residential mortgage-backed securities available-for-sale at June 30, 2022 (in thousands):

The following table shows the contractual maturity of our residential mortgage-backed securities available-for-sale at September 30, 2022 (in thousands):

Residential mortgage-backed securities:

Due in less than one year $ 142 142

Due in one year through five years 44,173 42,250

Due within one year $ 254 252

Due after one year through five years 49,435 46,268

Due after five years through ten years 155,960 137,226

1 unchanged sentence

Total residential mortgage-backed securities $ 1,204,373 1,031,459

The following table shows the contractual maturity of our residential mortgage-backed securities held-to-maturity at June 30, 2022 (in thousands):

The following table shows the contractual maturity of our residential mortgage-backed securities held-to-maturity at September 30, 2022 (in thousands):

Residential mortgage-backed securities:

Due in one year through five years $ 20,792 18,371

Due after one year through five years $ 20,705 17,551

Due after five years through ten years 168,546 141,707

1 unchanged sentence

Total residential mortgage-backed securities $ 774,957 668,875

The following table shows the fair value of and gross unrealized losses on marketable securities, for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at June 30, 2022 (in thousands):

Less than 12 months 12 months or more Total

16 unchanged sentences

Total $ 1,586,482 ( 30,356 ) 290,549 ( 11,890 ) 1,877,031 ( 42,246 )

The Company does not believe that the available-for-sale debt securities that were in an unrealized loss position as of June 30, 2022, which were comprised of 583 individual securities, represents a credit loss impairment.

The Company does not believe that the available-for-sale debt securities that were in an unrealized loss position as of September 30, 2022, which were comprised of 664 individual securities, represents a credit loss impairment.

All of these securities were issued by U.S.

government agencies, U.S.

government-sponsored enterprises, corporate debt or local municipalities.

government-sponsored enterprises, local municipalities, or represent corporate debt.

The securities issued by the U.S.

10 unchanged sentences

government, are highly rated by major rating agencies and have a long history of no credit losses.

Therefore, the Company did not record an allowance for credit losses for these securities as of June 30, 2022.

The following table presents the credit quality of our held-to-maturity securities, based on the latest information available as of June 30, 2022 (in thousands).

Therefore, the Company did not record an allowance for credit losses for these securities as of September 30, 2022.

The following table presents the credit quality of our held-to-maturity securities, based on the latest information available as of September 30, 2022 (in thousands).

The credit ratings are sourced from nationally recognized rating agencies, which include Moody’s and S&P, or when credit ratings cannot be sourced from the agencies, they are presented based on asset type.

All of our held-to-maturity securities were current in their payment of principal and interest as of June 30, 2022.

All of our held-to-maturity securities were current in their payment of principal and interest as of September 30, 2022.

Held-to-maturity securities (at amortized cost):

4 unchanged sentences

(3) Loans Receivable

The following table shows a summary of our loans receivable at amortized cost basis at June 30, 2022 and December 31, 2021 (in thousands):

June 30, 2022 December 31, 2021

The following table shows a summary of our loans receivable at amortized cost basis at September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022 December 31, 2021

Originated (1) Acquired (2) Total Originated (1) Acquired (2) Total

15 unchanged sentences

(2) Includes loans subject to purchase accounting in a business combination.

(3) Includes fair value of $ 31.2 million and $ 25.1 million of loans held-for-sale at June 30, 2022 and December 31, 2021, respectively.

(4) Includes $ 67.0 million and $ 62.8 million of net unearned income, unamortized premiums and discounts and deferred fees and costs at June 30, 2022 and December 31, 2021, respectively.

During the six months ended June 30, 2022, the Company purchased a total of $ 115.8 million small business equipment finance loan pools and a total of $ 188.3 million one- to four-family jumbo mortgage loan pools.

The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the quarter ended June 30, 2022 (in thousands):

Balance as of June 30, 2022 Current period provision Charge-offs Recoveries Balance as of March 31, 2022

(3) Includes fair value of $ 15.8 million and $ 25.1 million of loans held-for-sale at September 30, 2022 and December 31, 2021, respectively.

(4) Includes $ 74.3 million and $ 62.8 million of net unearned income, unamortized premiums and discounts and deferred fees and costs at September 30, 2022 and December 31, 2021, respectively.

During the nine months ended September 30, 2022, the Company purchased a total of $ 182.8 million small business equipment finance loan pools and a total of $ 188.3 million one- to four-family jumbo mortgage loan pools.

The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the quarter ended September 30, 2022 (in thousands):

Balance as of September 30, 2022 Current period provision Charge-offs Recoveries Balance as of June 30, 2022

Allowance for Credit Losses

22 unchanged sentences

Total off-balance sheet exposure $ 11,035 3,585 — — 7,450

The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the quarter ended June 30, 2021 (in thousands):

Balance as of June 30, 2021 Current period provision Charge-offs Recoveries Balance as of March 31, 2021

The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the quarter ended September 30, 2021 (in thousands):

Balance as of September 30, 2021 Current period provision Charge-offs Recoveries Balance as of June 30, 2021

Allowance for Credit Losses

22 unchanged sentences

Total off-balance sheet exposure $ 4,162 773 — — 3,389

The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the six months ended June 30, 2022 (in thousands):

Balance as of June 30, 2022 Current period provision Charge-offs Recoveries Balance as of December 31, 2021

The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the nine months ended September 30, 2022 (in thousands):

Balance as of September 30, 2022 Current period provision Charge-offs Recoveries Balance as of December 31, 2021

Allowance for Credit Losses

22 unchanged sentences

Total off-balance sheet exposure $ 11,035 8,577 — — 2,458

The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the six months ended June 30, 2021 (in thousands):

Balance as of June 30, 2021 Current

Balance as of September 30, 2021 Current

period provision Charge-offs Recoveries Balance as of December 31, 2020

23 unchanged sentences

Total off-balance sheet exposure $ 4,162 ( 2,201 ) — — 6,363

The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at June 30, 2022 (in thousands):

The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at September 30, 2022 (in thousands):

receivable Allowance for

36 unchanged sentences

We present the amortized cost of our loans on nonaccrual status including such loans with no allowance.

The following table presents the amortized cost of our loans on nonaccrual status as of the beginning and end of the period ended June 30, 2022 (in thousands):

June 30, 2022

The following table presents the amortized cost of our loans on nonaccrual status as of the beginning and end of the period ended September 30, 2022 (in thousands):

September 30, 2022

Nonaccrual loans at January 1, 2022 Nonaccrual loans with an allowance Nonaccrual loans with no allowance Total nonaccrual loans at the end of the period Loans 90 days past due and accruing

11 unchanged sentences

Total $ 158,471 43,701 39,926 83,627 357

During the three and six months ended June 30, 2022, we recognized $ 137,000 and $ 290,000 of interest income on nonaccrual and troubled debt restructuring loans.

During the three and nine months ended September 30, 2022, we recognized $ 197,000 and $ 487,000 of interest income on nonaccrual and troubled debt restructuring loans.

The following table presents the amortized cost of our loans on nonaccrual status as of the year ended December 31, 2021 (in thousands):

14 unchanged sentences

During the year ended December 31, 2021, we recognized $ 803,000 of interest income on nonaccrual and troubled debt restructuring loans.

The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of June 30, 2022 (in thousands):

The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of September 30, 2022 (in thousands):

Real estate Equipment Total

39 unchanged sentences

Accordingly, these loans were not categorized as TDRs.

The following table provides a roll forward of troubled debt restructurings for the periods indicated (dollars in thousands):

For the quarter ended June 30,

The following tables provide a roll forward of troubled debt restructurings for the periods indicated (dollars in thousands):

For the quarter ended September 30,

contracts Amount Number of

5 unchanged sentences

Net paydowns — ( 810 ) — ( 4,702 )

Home equity loans — — 1 ( 29 )

Commercial real estate loans — — 2 ( 53 )

Commercial real estate loans - owner occupied — — 1 ( 105 )

Commercial loans — — 5 ( 139 )

Paid-off loans:

2 unchanged sentences

Commercial real estate loans 1 ( 3,349 ) 4 ( 287 )

Commercial real estate loans - owner occupied 1 ( 44 ) — —

Commercial loans 3 ( 3,459 ) — —

3 unchanged sentences

Nonaccrual TDRs 30,406 12,858

For the six months ended June 30,

For the nine months ended September 30,

contracts Amount Number of

6 unchanged sentences

Residential mortgage loans 1 ( 3 ) — —

Home equity loans — — 1 ( 29 )

Commercial real estate loans — — 2 ( 53 )

Commercial real estate loans - owner occupied — — 1 ( 105 )

Commercial loans — — 5 ( 139 )

Paid-off loans:

8 unchanged sentences

Nonaccrual TDRs 30,406 12,858

The following table provides information related to TDRs (including re-modified TDRs) by portfolio segment and by class of financing receivable during the periods indicated (in thousands):

For the quarter ended June 30, 2022 For the six months ended June 30, 2022

The following tables provide information related to TDRs (including re-modified TDRs) by portfolio segment and by class of financing receivable during the periods indicated (in thousands):

For the quarter ended September 30, 2022 For the nine months ended September 30, 2022

contracts Recorded

7 unchanged sentences

investment Current

Personal Banking:

Residential mortgage loans 2 $ 147 144 15 2 $ 147 144 15

Home equity loans 5 160 154 23 5 160 154 23

Total Personal Banking 7 307 298 38 7 307 298 38

Commercial Banking:

3 unchanged sentences

Total 10 $ 1,249 1,198 147 18 $ 38,458 26,804 160

For the quarter ended June 30, 2021 For the six months ended June 30, 2021

For the quarter ended September 30, 2021 For the nine months ended September 30, 2021

contracts Recorded

16 unchanged sentences

Total 6 $ 5,323 4,835 82 13 $ 9,730 8,309 240

The following table provides information as of June 30, 2022 for TDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the quarter ended June 30, 2022 (in thousands):

The following table provides information as of September 30, 2022 for TDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the quarter ended September 30, 2022 (in thousands):

Type of modification

Number of contracts Rate Maturity date Total

Number of contracts Maturity date Total

Personal Banking:

Residential mortgage loans

Home equity loans 5 154 154

Total Personal Banking 7 298 298

Commercial Banking:

3 unchanged sentences

Total 10 1,198 1,198

The following table provides information as of June 30, 2021 for TDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the quarter ended June 30, 2021 (in thousands):

The following table provides information as of September 30, 2021 for TDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the quarter ended September 30, 2021 (in thousands):

Type of modification

Number of contracts Rate Maturity date Total

Number of contracts Rate Payment Maturity date Total

Personal Banking:

Home equity loans 2 $ — 30 6 36

Total Personal Banking 2 — 30 6 36

Commercial Banking:

3 unchanged sentences

Total 6 $ 378 30 4,427 4,835

Type of modification

Number of contracts Rate Maturity date Total

Personal Banking:

Residential mortgage loans 2 $ — 144 144

Home equity loans 5 — 154 154

Total Personal Banking 7 — 298 298

Commercial Banking:

3 unchanged sentences

Total 18 $ 4,166 22,638 26,804

Type of modification

Number of contracts Rate Maturity date Other Total

Number of contracts Rate Payment Maturity date Other Total

Personal Banking:

7 unchanged sentences

Total 13 $ 493 30 7,714 72 8,309

The following table provides information related to troubled debt restructurings modified within the previous twelve months of June 30, 2022 that subsequently defaulted:

contracts Recorded

at the time of

modification Current

investment Current

Commercial Banking:

Commercial real estate loans 1 $ 4,167 3,823 —

Total Commercial Banking 1 4,167 3,823 —

Total 1 $ 4,167 3,823 —

The following table provides information related to troubled debt restructurings modified within the previous twelve months of June 30, 2021 that subsequently defaulted:

No TDRs modified within the previous twelve months of September 30, 2022 subsequently defaulted.

The following table provides information related to troubled debt restructurings modified within the previous twelve months of September 30, 2021 that subsequently defaulted:

contracts Recorded

6 unchanged sentences

Total 3 $ 4,167 3,951 2

The following table provides information related to the amortized cost basis of loan payment delinquencies at June 30, 2022 (in thousands):

The following table provides information related to the amortized cost basis of loan payment delinquencies at September 30, 2022 (in thousands):

delinquent 60-89 days

51 unchanged sentences

Substandard — Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any.

Loans so classified have a well-defined weakness or weaknesses that jeopardize the

liquidation of the debt.

Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.

They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.

12 unchanged sentences

These loans are generally charged-off in the month in which the 180 day period elapses.

The following table presents the amortized cost basis of our loan portfolio by year of origination and credit quality indicator for each portfolio segment as of June 30, 2022 (in thousands):

YTD June 30, 2022 2021 2020 2019 2018 Prior Revolving loans Revolving loans converted to term loans Total loans

The following table presents the amortized cost basis of our loan portfolio by year of origination and credit quality indicator for each portfolio segment as of September 30, 2022 (in thousands):

YTD September 30, 2022 2021 2020 2019 2018 Prior Revolving loans Revolving loans converted to term loans Total loans

Personal Banking:

34 unchanged sentences

Total loans $ 2,146,470 2,177,637 1,480,291 961,633 606,160 2,400,478 902,590 66,266 10,741,525

During the six months ended June 30, 2022, $ 9.2 million of revolving loans were converted to term loans.

During the nine months ended September 30, 2022, $ 13.4 million of revolving loans were converted to term loans.

The following table presents the amortized cost basis of our loan portfolio by year of origination and credit quality indicator for each portfolio segment as of December 31, 2021 (in thousands):

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The following table provides information for intangible assets subject to amortization at the dates indicated (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Amortizable intangible assets:

7 unchanged sentences

Total intangible assets - net $ 9,491 12,836

The following table shows the actual aggregate amortization expense for the quarters and six months ended June 30, 2022 and 2021, as well as the estimated aggregate amortization expense, based upon current levels of intangible assets, for the current fiscal year and each of the five succeeding fiscal years (in thousands):

For the quarter ended June 30, 2022 $ 1,115

For the quarter ended June 30, 2021 1,433

For the six months ended June 30, 2022 2,298

For the six months ended June 30, 2021 3,027

The following table shows the actual aggregate amortization expense for the quarters and nine months ended September 30, 2022 and 2021, as well as the estimated aggregate amortization expense, based upon current levels of intangible assets, for the current fiscal year and each of the five succeeding fiscal years (in thousands):

For the quarter ended September 30, 2022 $ 1,047

For the quarter ended September 30, 2021 1,321

For the nine months ended September 30, 2022 3,345

For the nine months ended September 30, 2021 4,348

For the year ending December 31, 2022 4,277

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Balance at December 31, 2021 380,997

Balance at June 30, 2022 $ 380,997

Balance at September 30, 2022 $ 380,997

We performed our annual goodwill impairment test as of June 30, 2022 in accordance with ASC 350 and concluded that goodwill was not impaired.

As of September 30, 2022, there were no events or changes in circumstances that would cause us to update that goodwill impairment test and we have concluded there is no impairment of goodwill.

(5) Borrowed Funds

(a) Borrowings

Borrowed funds at June 30, 2022 and December 31, 2021 are presented in the following table:

June 30, 2022 December 31, 2021

Borrowed funds at September 30, 2022 and December 31, 2021 are presented in the following table:

September 30, 2022 December 31, 2021

Amount Average rate Amount Average rate

Note payable to the FHLB of Pittsburgh, due within one year $ 11,900 3.11 % $ — — %

Collateralized borrowings, due within one year 98,315 0.18 % 139,093 0.19 %

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Total borrowed funds $ 150,036 $ 139,093

Borrowings from the Federal Home Loan Banks (“FHLB”) of Pittsburgh and Indianapolis, if any, are secured by our residential first mortgage and other qualifying loans.

Borrowings from the Federal Home Loan Bank (“FHLB”) of Pittsburgh, if any, are secured by our residential first mortgage and other qualifying loans.

Certain of these borrowings are subject to restrictions or penalties in the event of prepayment.

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The rate is adjusted daily by the FHLB of Pittsburgh, and any borrowings on this line may be repaid at any time without penalty.

The revolving line of credit had no balance as of June 30, 2022 and December 31, 2021.

At June 30, 2022 and December 31, 2021, collateralized borrowings due within one year were $ 117.4 million and $ 139.1 million, respectively.

At September 30, 2022 and December 31, 2021, the balance of the revolving line of credit was $ 11.9 million and $ 0 , respectively.

At September 30, 2022 and December 31, 2021, collateralized borrowings due within one year were $ 98.3 million and $ 139.1 million, respectively.

These borrowings are collateralized by cash or various securities held in safekeeping by the FHLB.

At June 30, 2022 and December 31, 2021, collateral received was $ 13.1 million and $ 0 , respectively.

At September 30, 2022 and December 31, 2021, collateral received was $ 39.8 million and $ 0 , respectively.

This represents collateral posted to us from our derivative counterparties.

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The subordinated debt issuance costs of approximately $ 1.8 million are being amortized over five years on a straight-line basis into interest expense.

At June 30, 2022 and December 31, 2021, subordinated debentures, net of issuance costs, were $ 113.7 million and $ 123.6 million, respectively.

At September 30, 2022 and December 31, 2021, subordinated debentures, net of issuance costs, were $ 113.8 million and $ 123.6 million, respectively.

(b) Trust Preferred Securities

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The following table sets forth a summary of the cumulative trust preferred securities and the junior subordinated debt held by the Trust as of the date listed.

Maturity date Interest rate Capital debt securities June 30, 2022 December 31, 2021

Maturity date Interest rate Capital debt securities September 30, 2022 December 31, 2021

Northwest Bancorp Capital Trust III December 30, 2035 3-month LIBOR plus 1.38 %

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Collateral may be obtained based on management’s credit assessment of the customer.

At June 30, 2022, the maximum potential amount of future payments we could be required to make under these non-recourse standby letters of credit was $ 46.5 million, of which $ 36.8 million is fully collateralized.

At June 30, 2022, we had a liability which represents deferred income of $ 685,000 related to the standby letters of credit.

At September 30, 2022, the maximum potential amount of future payments we could be required to make under these non-recourse standby letters of credit was $ 47.8 million, of which $ 37.6 million is fully collateralized.

At September 30, 2022, we had a liability which represents deferred income of $ 710,000 related to the standby letters of credit.

In addition, we maintain a $ 5.0 million credit limit with a correspondent bank for private label credit card facilities for certain existing commercial clients of the Bank, of which $ 727,000 of the credit limit was allocated to credit cards that have been issued.

These issued credit cards had an outstanding balance of $ 62,000 at September 30, 2022.

The clients of the Bank are responsible for repaying any balances due on these credit cards directly to the correspondent bank;

however, if the customer fails to repay their balance, the Bank could be required to satisfy the obligation to the correspondent bank and initiate collection from our customer as part of the existing credit facility of that customer.

(7) Earnings Per Share

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The following table sets forth the computation of basic and diluted EPS (in thousands, except share data and per share amounts):

Quarter ended June 30, Six months ended June 30,

Quarter ended September 30, Nine months ended September 30,

2022 2021 2022 2021

9 unchanged sentences

The following table sets forth the net periodic costs for the defined benefit pension plans and post-retirement healthcare plans for the periods indicated (in thousands):

Quarter ended June 30,

Quarter ended September 30,

Pension benefits Other post-retirement benefits

6 unchanged sentences

Net periodic cost $ 223 1,371 12 7

Six months ended June 30,

Nine months ended September 30,

Pension benefits Other post-retirement benefits

12 unchanged sentences

Financial assets and liabilities recognized or disclosed at fair value on a recurring basis and certain financial assets and liabilities on a non-recurring basis are accounted for using a three-level hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable.

This hierarchy gives the highest priority to quoted prices with readily available independent data in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable market inputs (Level 3).

inputs (Level 3).

When various inputs for measurement fall within different levels of the fair value hierarchy, the lowest level input that has a significant impact on fair value measurement is used.

13 unchanged sentences

The carrying amounts reported in the Consolidated Statement of Financial Condition approximate fair value for the following financial instruments:

cash and cash equivalents, marketable securities available-for-sale, residential mortgage loans held-for-sale, accrued interest receivable, interest rate lock commitments, forward commitments, interest rate swaps, savings and checking deposits, borrowed funds, foreign exchange swaps, risk participation agreements, and accrued interest payable.

cash and cash equivalents, marketable securities available-for-sale, residential mortgage loans held-for-sale, accrued interest receivable, interest rate lock commitments, forward commitments, interest rate swaps, savings and checking deposits, foreign exchange swaps, risk participation agreements, and accrued interest payable.

Marketable Securities

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Due to the restrictions placed on transferability of FHLB stock, it is not practical to determine the fair value.

FHLB stock is recorded at cost.

Deposit Liabilities

31 unchanged sentences

Commitments to extend credit are generally short-term in nature and, if drawn upon, are issued under current market terms.

At June 30, 2022 and December 31, 2021, there was no significant unrealized appreciation or depreciation on these financial instruments.

The following table sets forth the carrying amount and estimated fair value of our financial instruments included in the Consolidated Statement of Financial Condition at June 30, 2022 (in thousands):

At September 30, 2022 and December 31, 2021, there was no significant unrealized appreciation or depreciation on these financial instruments.

The following table sets forth the carrying amount and estimated fair value of our financial instruments included in the Consolidated Statement of Financial Condition at September 30, 2022 (in thousands):

amount Estimated

8 unchanged sentences

Interest rate lock commitments 1,063 1,063 — — 1,063

Forward commitments 213 213 — 213 —

Foreign exchange swaps 38 38 — 38 —

8 unchanged sentences

Junior subordinated debentures 129,249 117,475 — — 117,475

Forward commitments 139 139 — 139 —

Foreign exchange swaps 9 9 — 9 —

Interest rate swaps not designated as hedging instruments 50,295 50,295 — 50,295 —

29 unchanged sentences

Fair value estimates are made at a point-in-time, based on relevant market data and information about the instrument.

The methods and assumptions detailed above were used in estimating the fair value of financial instruments at both June 30, 2022 and December 31, 2021.

The following table represents assets and liabilities measured at fair value on a recurring basis at June 30, 2022 (in thousands):

The methods and assumptions detailed above were used in estimating the fair value of financial instruments at both September 30, 2022 and December 31, 2021.

The following table represents assets and liabilities measured at fair value on a recurring basis at September 30, 2022 (in thousands):

Level 1 Level 2 Level 3 Total assets

17 unchanged sentences

Interest rate lock commitments — — 1,063 1,063

Forward commitments — 213 213

Foreign exchange swaps — 38 — 38

2 unchanged sentences

Interest rate swaps not designated as hedging instruments — 50,295 — 50,295

Foreign exchange swaps — 9 — 9

Forward commitments — 139 — 139

Risk participation agreements — 25 — 25

27 unchanged sentences

The following table presents the changes in Level 3 assets and liabilities measured at fair value on a recurring basis (in thousands):

For the quarter ended June 30, Six months ended June 30, 2022

For the quarter ended September 30, Nine months ended September 30, 2022

2022 2021 2022 2021

4 unchanged sentences

Certain assets and liabilities are measured at fair value on a nonrecurring basis after initial recognition such as loans held-for-sale, loans individually assessed, real estate owned, and mortgage servicing rights.

The following table represents the fair market measurement for only those nonrecurring assets that had a fair market value below the carrying amount as of June 30, 2022 (in thousands):

The following table represents the fair market measurement for only those nonrecurring assets that had a fair market value below the carrying amount as of September 30, 2022 (in thousands):

Level 1 Level 2 Level 3 Total assets

1 unchanged sentence

Loans individually assessed $ — — 21,173 21,173

Mortgage servicing rights — — 82 82

Real estate owned, net — — 450 450

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We classify real estate owned as nonrecurring Level 3.

The following table presents additional quantitative information about assets measured at fair value on a recurring and nonrecurring basis and for which we have utilized Level 3 inputs to determine fair value at June 30, 2022 (in thousands):

Fair value Valuation techniques Significant

2 unchanged sentences

Discounted cash flow Discount rate 6.47 % to 14.56 % ( 8.28 %)

Mortgage servicing rights 82 Discounted cash flow Annual service cost $ 85

Prepayment rate 7.0 % to 15.1 % ( 9.5 %)

Expected life (months) 56.7 to 101.7 (75.7)

Option adjusted spread 650 basis points

Forward yield curve 2.56 % to 4.16 %

Real estate owned, net 450 Appraisal value (1) Estimated cost to sell 10.0 %

10 unchanged sentences

Customer swaps are recorded within other assets or other liabilities on the consolidated statement of financial condition at their estimated fair value.

Changes to the

fair value of assets and liabilities arising from these derivatives are included, net, in other operating income in the Consolidated Statement of Income.

Changes to the fair value of assets and liabilities arising from these derivatives are included, net, in other operating income in the Consolidated Statement of Income.

We enter into interest rate lock commitments for residential mortgage loans which commit us to lend funds to a potential borrower at a specific interest rate within a specified period of time.

11 unchanged sentences

Notional amount Fair value Notional amount Fair value

At June 30, 2022

At September 30, 2022

Derivatives not designated as hedging instruments:

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The following table presents income or expense recognized on derivatives for the periods indicated (in thousands):

For the quarter ended June 30, For the six months ended June 30,

For the quarter ended September 30, For the nine months ended September 30,

2022 2021 2022 2021

Non-hedging swap derivatives:

Increase/(decrease) in other income $ 53 ( 26 ) 114 498

(Decrease)/increase in mortgage banking income ( 96 ) 1,510 322 3,570

Increase in other income $ 93 590 207 1,087

Increase in mortgage banking income 809 345 1,131 3,915

(11) Legal Proceedings

We establish accruals for legal proceedings when information related to the loss contingencies represented by those matters indicates both that a loss is probable and that the amount of loss can be reasonably estimated.

As of June 30, 2022, we do not anticipate that the aggregate ultimate liability arising out of any pending or threatened legal proceedings will be material to our Consolidated Financial Statements.

As of September 30, 2022, we do not anticipate that the aggregate ultimate liability arising out of any pending or threatened legal proceedings will be material to our Consolidated Financial Statements.

Any such accruals are adjusted thereafter as appropriate to reflect changes in circumstances.

2 unchanged sentences

All counterclaims against Northwest were discontinued and, in December 2018, a verdict was rendered in favor of NWIS on several of its claims.

Post-trial proceedings have continued throughout the current year and, due to the inherent uncertainties with respect to these proceedings, we have not accrued any awards associated with this verdict within our Consolidated Financial Statements as of June 30, 2022.

(12) Changes in Accumulated Other Comprehensive Income

The following tables show the changes in accumulated other comprehensive income by component for the periods indicated (in thousands):

For the quarter ended June 30, 2022

For the quarter ended September 30, 2022

on securities

2 unchanged sentences

pension plans Total

Balance as of March 31, 2022 $ ( 77,101 ) ( 25,443 ) ( 102,544 )

Balance as of June 30, 2022 $ ( 117,056 ) ( 25,574 ) ( 142,630 )

Other comprehensive loss before reclassification adjustments (1) ( 48,387 ) — ( 48,387 )

1 unchanged sentence

Net other comprehensive loss ( 48,387 ) ( 131 ) ( 48,518 )

Balance as of June 30, 2022 $ ( 117,056 ) ( 25,574 ) ( 142,630 )

For the quarter ended June 30, 2021

Balance as of September 30, 2022 $ ( 165,443 ) ( 25,705 ) ( 191,148 )

For the quarter ended September 30, 2021

gains/(losses)

3 unchanged sentences

pension plans Total

Balance as of March 31, 2021 $ ( 653 ) ( 50,059 ) ( 50,712 )

Balance as of June 30, 2021 $ 3,533 ( 49,725 ) ( 46,192 )

Other comprehensive loss before reclassification adjustments (3) ( 6,455 ) — ( 6,455 )

1 unchanged sentence

Net other comprehensive income ( 6,524 ) 333 ( 6,191 )

Balance as of June 30, 2021 $ 3,533 ( 49,725 ) ( 46,192 )

Balance as of September 30, 2021 $ ( 2,991 ) ( 49,392 ) ( 52,383 )

(1) Consists of unrealized holding losses, net of tax of $ 14,705 .

(2) Consists of realized gains, net of tax of $ 50 .

(3) Consists of realized gains, net of tax of $ 51 .

(4) Consists of unrealized holding gains, net of tax ($ 1,245 ).

(3) Consists of unrealized holding losses, net of tax $ 2,076 .

(4) Consists of realized gains, net of tax $ 24 .

(5) Consists of realized losses, net of tax of ($ 128 ).

For the six months ended June 30, 2022

gains/(losses)

For the nine months ended September 30, 2022

on securities

6 unchanged sentences

Net other comprehensive loss ( 153,126 ) ( 393 ) ( 153,519 )

Balance as of June 30, 2022 $ ( 117,056 ) ( 25,574 ) ( 142,630 )

For the six months ended June 30, 2021

Balance as of September 30, 2022 $ ( 165,443 ) ( 25,705 ) ( 191,148 )

For the nine months ended September 30, 2021

gains/(losses)

on securities

3 unchanged sentences

Balance as of December 31, 2020 $ 16,843 ( 50,392 ) ( 33,549 )

Other comprehensive income/(loss) before reclassification adjustments (4) ( 13,099 ) — ( 13,099 )

Other comprehensive loss before reclassification adjustments (4) ( 19,554 ) — ( 19,554 )

Amounts reclassified from accumulated other comprehensive income (5) (6) ( 280 ) 1,000 720

Net other comprehensive (loss)/income ( 13,310 ) 667 ( 12,643 )

Balance as of June 30, 2021 $ 3,533 ( 49,725 ) ( 46,192 )

Net other comprehensive income/(loss) ( 19,834 ) 1,000 ( 18,834 )

Balance as of September 30, 2021 $ ( 2,991 ) ( 49,392 ) ( 52,383 )

(1) Consists of unrealized holding losses, net of tax of $ 45,555 .

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements