Northwest Bancshares, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) (in thousands, except share data) September 30, 2022 December 31, 2021 Assets Cash and cash equivalents $ 118,549 1,279,259 Marketable securities available-for-sale (amortized cost of $ 1,466,883 and $ 1,565,002 , respectively) 1,251,791 1,548,592 Marketable securities held-to-maturity (fair value of $ 771,238 and $ 751,513 , respectively) 899,411 768,154 Total cash and cash equivalents and marketable securities 2,269,751 3,596,005 Loans held-for-sale 15,834 25,056 Loans held for investment 10,725,691 9,991,336 Allowance for credit losses ( 109,819 ) ( 102,241 ) Loans receivable, net 10,631,706 9,914,151 FHLB stock, at cost 19,281 14,184 Accrued interest receivable 29,536 25,599 Real estate owned, net 450 873 Premises and equipment, net 146,173 156,524 Bank-owned life insurance 255,015 256,213 Goodwill 380,997 380,997 Other intangible assets, net 9,491 12,836 Other assets 210,744 144,126 Total assets $ 13,953,144 14,501,508 Liabilities and shareholders’ equity Liabilities: Noninterest-bearing demand deposits $ 3,094,120 3,099,526 Interest-bearing demand deposits 2,812,730 2,940,442 Money market deposit accounts 2,577,013 2,629,882 Savings deposits 2,327,419 2,303,760 Time deposits 1,067,110 1,327,555 Total deposits 11,878,392 12,301,165 Borrowed funds 150,036 139,093 Subordinated debt 113,753 123,575 Junior subordinated debentures 129,249 129,054 Advances by borrowers for taxes and insurance 29,647 44,582 Accrued interest payable 831 1,804 Other liabilities 191,450 178,664 Total liabilities 12,493,358 12,917,937 Shareholders’ equity: Preferred stock, $ 0.01 par value: 50,000,000 authorized, no shares issued — — Common stock, $ 0.01 par value: 500,000,000 shares authorized, 126,921,989 and 126,612,183 shares issued and outstanding, respectively 1,269 1,266 Additional paid-in capital 1,017,189 1,010,405 Retained earnings 632,476 609,529 Accumulated other comprehensive loss ( 191,148 ) ( 37,629 ) Total shareholders’ equity 1,459,786 1,583,571 Total liabilities and shareholders’ equity $ 13,953,144 14,501,508 See accompanying notes to unaudited Consolidated Financial Statements. 1 Table of Contents NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands, except share data) Quarter ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Interest income: Loans receivable $ 106,943 97,475 290,691 295,048 Mortgage-backed securities 8,683 5,840 22,201 15,720 Taxable investment securities 838 649 2,230 1,976 Tax-free investment securities 709 628 2,066 1,797 FHLB stock dividends 148 71 311 325 Interest-earning deposits 1,295 352 3,446 727 Total interest income 118,616 105,015 320,945 315,593 Interest expense: Deposits 3,157 4,540 10,249 14,827 Borrowed funds 2,710 2,056 7,059 6,160 Total interest expense 5,867 6,596 17,308 20,987 Net interest income 112,749 98,419 303,637 294,606 Provision for credit losses 7,689 ( 4,354 ) 8,837 ( 9,974 ) Net interest income after provision for credit losses 105,060 102,773 294,800 304,580 Noninterest income: Loss on sale of investments ( 2 ) ( 46 ) ( 7 ) ( 172 ) Service charges and fees 14,323 13,199 41,063 38,337 Trust and other financial services income 6,650 7,182 21,123 21,101 Insurance commission income — 44 — 3,633 Gain on real estate owned, net 290 247 552 371 Income from bank-owned life insurance 1,475 1,332 5,466 4,707 Mortgage banking income 766 3,941 4,388 13,772 Gain on sale of insurance business — — — 25,327 Other operating income 3,301 3,287 10,406 8,771 Total noninterest income 26,803 29,186 82,991 115,847 Noninterest expense: Compensation and employee benefits 46,711 49,063 141,701 145,196 Premises and occupancy costs 7,171 7,745 22,248 23,969 Office operations 3,229 4,143 9,774 10,625 Collections expense 322 411 1,245 1,330 Processing expenses 13,416 13,517 38,911 42,124 Marketing expenses 2,147 2,102 6,322 6,183 Federal deposit insurance premiums 1,200 1,184 3,459 3,844 Professional services 3,363 4,295 9,269 13,108 Amortization of intangible assets 1,047 1,321 3,345 4,348 Real estate owned expense 61 94 170 254 Merger, asset disposition and restructuring expense — — 1,374 641 Other expenses 3,906 2,227 11,506 7,003 Total noninterest expense 82,573 86,102 249,324 258,625 Income before income taxes 49,290 45,857 128,467 161,802 Federal and state income taxes expense 11,986 10,794 29,450 37,535 Net income $ 37,304 35,063 99,017 124,267 Basic earnings per share $ 0.29 0.28 0.78 0.98 Diluted earnings per share $ 0.29 0.27 0.78 0.97 See accompanying notes to unaudited Consolidated Financial Statements. 2 Table of Contents NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (in thousands) Quarter ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Net income $ 37,304 35,063 99,017 124,267 Other comprehensive income net of tax: 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 ) Reclassification adjustment for gains included in net income, net of tax of $ 0 , $ 24 , $ 0 , and $ 89 , respectively — ( 69 ) ( 2 ) ( 280 ) Net unrealized holding losses on marketable securities ( 48,387 ) ( 6,524 ) ( 153,126 ) ( 19,834 ) Defined benefit plan: Actuarial reclassification adjustments for prior period service costs and actuarial (gains)/losses included in net income, net of tax of $ 50 , ($ 128 ), $ 151 , and ($ 386 ), respectively ( 131 ) 333 ( 393 ) 1,000 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. 3 Table of Contents NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited) (in thousands, expect share data) Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total shareholders’ equity Common stock 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: Net income — — — 37,304 — 37,304 Other comprehensive loss, net of tax of $ 14,755 — — — — ( 48,518 ) ( 48,518 ) Total comprehensive income/(loss) — — — 37,304 ( 48,518 ) ( 11,214 ) Exercise of stock options 73,472 — 897 — — 897 Stock-based compensation expense — — 944 — — 944 Stock-based compensation forfeited ( 33,249 ) — ( 1 ) — — ( 1 ) Dividends paid ($ 0.20 per share) — — — ( 25,379 ) — ( 25,379 ) 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 Common stock 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 loss, net of tax of $ 1,972 — — — — ( 6,191 ) ( 6,191 ) Total comprehensive income/(loss) — — — 35,063 ( 6,191 ) 28,872 Exercise of stock options 57,142 — 688 — — 688 Stock-based compensation expense 1,139 — 1,046 — — 1,046 Share repurchases ( 1,425,120 ) ( 14 ) ( 18,809 ) — — ( 18,823 ) Stock-based compensation forfeited ( 19,702 ) — — — — — Dividends paid ($ 0.20 per share) — — — ( 25,376 ) — ( 25,376 ) 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 Table of Contents NORTHWEST BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited) (in thousands, expect share data) Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total shareholders’ equity Common stock 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 Comprehensive income: Net income — — — 99,017 — 99,017 Other comprehensive loss, net of tax of $ 45,706 — — — — ( 153,519 ) ( 153,519 ) Total comprehensive income/(loss) — — — 99,017 ( 153,519 ) ( 54,502 ) Exercise of stock options 314,880 2 3,719 — — 3,721 Stock-based compensation expense 75,377 2 3,065 — — 3,067 Stock-based compensation forfeited ( 80,451 ) ( 1 ) — — — ( 1 ) Dividends paid ($ 0.60 per share) — — — ( 76,070 ) — ( 76,070 ) 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 Common stock 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 Comprehensive income: Net income — — — 124,267 — 124,267 Other comprehensive loss, net of tax of $ 6,515 — — — — ( 18,834 ) ( 18,834 ) Total comprehensive income/(loss) — — — 124,267 ( 18,834 ) 105,433 Exercise of stock options 1,043,487 10 12,711 — — 12,721 Stock-based compensation expense 323,824 3 3,722 — — 3,725 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 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. 5 Table of Contents NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine months ended September 30, 2022 2021 Operating activities: Net income $ 99,017 124,267 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 8,837 ( 9,974 ) Net gain on sale of assets ( 858 ) ( 970 ) Mortgage banking activity ( 3,308 ) ( 17,321 ) Gain on sale of insurance business — ( 25,327 ) Net depreciation, amortization and accretion 3,874 ( 271 ) (Increase)/decrease in other assets ( 31,790 ) 19,248 Increase/(decrease) in other liabilities 11,270 ( 10,545 ) Net amortization on marketable securities 3,849 5,830 Noncash compensation expense related to stock benefit plans 3,066 3,725 Noncash write-down of real estate owned 44 173 Deferred income tax expense 1,928 1,889 Origination of loans held-for-sale ( 317,117 ) ( 605,947 ) Proceeds from sale of loans held-for-sale 331,268 652,770 Net cash provided by operating activities 110,080 137,547 Investing activities: Purchase of marketable securities held-to-maturity ( 212,892 ) ( 479,165 ) Purchase of marketable securities available-for-sale ( 102,178 ) ( 619,987 ) Proceeds from maturities and principal reductions of marketable securities held-to-maturity 80,765 38,974 Proceeds from maturities and principal reductions of marketable securities available-for-sale 197,310 341,121 Proceeds from sale of marketable securities available-for-sale — 62,127 Proceeds from bank-owned life insurance 4,753 3,984 Loan originations ( 3,464,471 ) ( 3,063,998 ) Loan purchases ( 371,121 ) — Proceeds from loan maturities and principal reductions 3,110,264 3,413,907 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 Purchases of premises and equipment, net ( 613 ) ( 3,728 ) Proceeds from the sale of insurance business — 28,238 Net cash used in investing activities ( 761,582 ) ( 268,677 ) 6 Table of Contents NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued) (in thousands) Nine months ended September 30, 2022 2021 Financing activities: Net (decrease)/increase in deposits $ ( 422,773 ) 622,980 Repayments of long-term borrowings ( 10,094 ) ( 22,105 ) Net increase/(decrease) in short-term borrowings 10,943 ( 11,165 ) Increase in advances by borrowers for taxes and insurance ( 14,935 ) ( 18,279 ) Cash dividends paid on common stock ( 76,070 ) ( 74,960 ) Purchase of common stock for retirement — ( 23,854 ) Proceeds from stock options exercised 3,721 12,721 Net cash (used in)/provided by financing activities ( 509,208 ) 485,338 Net (decrease)/increase in cash and cash equivalents $ ( 1,160,710 ) 354,208 Cash and cash equivalents at beginning of period $ 1,279,259 736,277 Net (decrease)/increase in cash and cash equivalents ( 1,160,710 ) 354,208 Cash and cash equivalents at end of period $ 118,549 1,090,485 Cash paid during the period for: Interest on deposits and borrowings (including interest credited to deposit accounts of $ 9,812 and $ 14,631 , respectively) $ 18,281 22,452 Income taxes 21,851 28,961 Non-cash activities: Loan foreclosures and repossessions $ 3,423 3,848 Sale of real estate owned financed by the Company 175 54 See accompanying notes to unaudited Consolidated Financial Statements. 7 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) Basis of Presentation and Informational Disclosures Northwest Bancshares, Inc. (the “Company” or “NWBI”), a Maryland corporation headquartered in Columbus, Ohio, is a bank holding company regulated by the Board of Governors of the Federal Reserve System (“FRB”). The primary activity of the Company is the ownership of all of the issued and outstanding common stock of Northwest Bank, a Pennsylvania-chartered savings bank (“Northwest”). Northwest is regulated by the Federal Deposit Insurance Corporation (“FDIC”) and the Pennsylvania Department of Banking. Northwest operates 150 community-banking offices throughout Pennsylvania, Western New York, Eastern Ohio, and Indiana. The accompanying unaudited Consolidated Financial Statements include the accounts of the Company and its subsidiary, Northwest, and Northwest’s subsidiaries Northwest Capital Group, Inc., Great Northwest Corporation, and MutualFirst Interest Company, Inc. The unaudited Consolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information or footnotes required for complete annual financial statements. In the opinion of management, all adjustments necessary for the fair presentation of the Company’s financial position and results of operations have been included. 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 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. The change in segmentation was driven by underlying collateral types, and the loans continue to share similar risk characteristics. 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 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. Stock-Based Compensation On May 18, 2022, the Company awarded employees 150,027 restricted stock units (“RSUs”) with a weighted average discounted grant date fair value of $ 11.00 . The RSUs vest over a three-year period with the first vesting occurring one year from the grant date. The Company awarded directors 41,206 restricted stock awards (“RSAs”) with a grant date fair value of $ 12.55 which fully vest one-year from the grant date. Also, the Company awarded employees 150,027 performance share units (“PSUs”) with a discounted grant date fair value of $ 10.26 . 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 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. 8 Table of Contents Income Taxes-Uncertain Tax Positions Accounting standards prescribe a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. A tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable, based on its technical merits. 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 liability for unrecognized tax benefits as of both September 30, 2022 and December 31, 2021. We recognize interest accrued related to: (1) unrecognized tax benefits in other expenses and (2) refund claims in other operating income. We recognize penalties (if any) in other expenses. We are subject to audit by the Internal Revenue Service and any state in which we conduct business for the tax periods ended December 31, 2021, 2020, 2019 and 2018. (2) Marketable Securities The following table shows the portfolio of marketable securities available-for-sale at September 30, 2022 (in thousands): Amortized cost Gross unrealized holding gains Gross unrealized holding losses Fair value Debt issued by the U.S government and agencies: 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 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 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 after five years through ten years 13,551 — ( 411 ) 13,140 Residential mortgage-backed securities: Fixed rate pass-through 233,394 14 ( 34,557 ) 198,851 Variable rate pass-through 9,341 25 ( 117 ) 9,249 Fixed rate agency CMOs 932,668 1 ( 137,752 ) 794,917 Variable rate agency CMOs 28,970 45 ( 573 ) 28,442 Total residential mortgage-backed securities 1,204,373 85 ( 172,999 ) 1,031,459 Total marketable securities available-for-sale $ 1,466,883 93 ( 215,185 ) 1,251,791 9 Table of Contents The following table shows the portfolio of marketable securities available-for-sale at December 31, 2021 (in thousands): Amortized cost Gross unrealized holding gains Gross unrealized holding losses Fair value Debt issued by the U.S. government and agencies: 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 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 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 Residential mortgage-backed securities: Fixed rate pass-through 265,604 2,389 ( 2,525 ) 265,468 Variable rate pass-through 11,306 294 ( 9 ) 11,591 Fixed rate agency CMOs 997,680 2,284 ( 18,965 ) 980,999 Variable rate agency CMOs 39,695 224 ( 62 ) 39,857 Total residential mortgage-backed securities 1,314,285 5,191 ( 21,561 ) 1,297,915 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 September 30, 2022 (in thousands): Amortized cost Gross unrealized holding gains Gross unrealized holding losses Fair value Debt issued by the U.S. government and agencies: 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: Fixed rate pass-through 167,016 — ( 26,701 ) 140,315 Variable rate pass-through 574 — ( 7 ) 567 Fixed rate agency CMOs 606,808 — ( 79,373 ) 527,435 Variable rate agency CMOs 559 1 ( 2 ) 558 Total residential mortgage-backed securities 774,957 1 ( 106,083 ) 668,875 Total marketable securities held-to-maturity $ 899,411 1 ( 128,174 ) 771,238 10 Table of Contents The following table shows the portfolio of marketable securities held-to-maturity at December 31, 2021 (in thousands): Amortized cost Gross unrealized holding gains Gross unrealized holding losses Fair value Debt issued by the U.S. government and agencies: 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: Fixed rate pass-through 183,092 58 ( 2,161 ) 180,989 Variable rate pass-through 667 24 — 691 Fixed rate agency CMOs 459,345 251 ( 10,011 ) 449,585 Variable rate agency CMOs 599 17 — 616 Total residential mortgage-backed securities 643,703 350 ( 12,172 ) 631,881 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 September 30, 2022 (in thousands): Amortized cost Fair value Residential mortgage-backed securities: 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 Due after ten years 998,724 847,713 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 September 30, 2022 (in thousands): Amortized cost Fair value Residential mortgage-backed securities: Due after one year through five years $ 20,705 17,551 Due after five years through ten years 168,546 141,707 Due after ten years 585,706 509,617 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 September 30, 2022 (in thousands): Less than 12 months 12 months or more Total Fair value Unrealized loss Fair value Unrealized loss Fair value Unrealized loss U.S. government-sponsored enterprises $ 19,905 ( 1,989 ) 183,474 ( 40,182 ) 203,379 ( 42,171 ) Municipal securities 87,699 ( 14,160 ) 17,671 ( 7,535 ) 105,370 ( 21,695 ) Corporate debt issues 13,140 ( 411 ) — — 13,140 ( 411 ) Residential mortgage-backed securities - agency 624,780 ( 61,296 ) 1,069,396 ( 217,786 ) 1,694,176 ( 279,082 ) Total $ 745,524 ( 77,856 ) 1,270,541 ( 265,503 ) 2,016,065 ( 343,359 ) 11 Table of Contents 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 December 31, 2021 (in thousands): Less than 12 months 12 months or more Total Fair value Unrealized loss Fair value Unrealized loss Fair value Unrealized loss U.S. government-sponsored enterprises $ 132,782 ( 3,504 ) 106,160 ( 4,673 ) 238,942 ( 8,177 ) Municipal securities 25,118 ( 336 ) — — 25,118 ( 336 ) Residential mortgage-backed securities - agency 1,428,582 ( 26,516 ) 184,389 ( 7,217 ) 1,612,971 ( 33,733 ) 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 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, local municipalities, or represent corporate debt. The securities issued by the U.S. government agencies or U.S. government-sponsored enterprises are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. The corporate debt issues and securities issued by local municipalities were all highly rated by major rating agencies and have no history of credit losses. The unrealized losses were primarily attributable to changes in the interest rate environment and not due to the credit quality of these investment securities. The Company does not have the intent to sell these investment securities and it is likely that we will not be required to sell these securities before their anticipated recovery, which may be at maturity. All of the Company ’ s held-to-maturity debt securities are issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities are either explicitly or implicitly guaranteed by the U.S. 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 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 September 30, 2022. AA+ Total Held-to-maturity securities (at amortized cost): Debt issued by the U.S. government-sponsored enterprises $ 124,454 124,454 Residential mortgage-backed securities 774,957 774,957 Total marketable securities held-to-maturity $ 899,411 899,411 12 Table of Contents (3) Loans Receivable 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 Personal Banking: Residential mortgage loans (3) $ 3,225,348 176,550 3,401,898 2,783,459 211,161 2,994,620 Home equity loans 1,110,401 174,588 1,284,989 1,107,202 212,729 1,319,931 Vehicle loans 1,907,210 99,987 2,007,197 1,384,246 99,985 1,484,231 Consumer loans 100,831 8,210 109,041 307,961 46,556 354,517 Total Personal Banking 6,343,790 459,335 6,803,125 5,582,868 570,431 6,153,299 Commercial Banking: Commercial real estate loans 2,101,684 327,222 2,428,906 2,202,027 423,454 2,625,481 Commercial real estate loans - owner occupied 344,504 39,420 383,924 321,253 68,750 390,003 Commercial loans 1,072,857 52,713 1,125,570 765,877 81,732 847,609 Total Commercial Banking 3,519,045 419,355 3,938,400 3,289,157 573,936 3,863,093 Total loans receivable, gross 9,862,835 878,690 10,741,525 8,872,025 1,144,367 10,016,392 Allowance for credit losses ( 97,738 ) ( 12,081 ) ( 109,819 ) ( 86,750 ) ( 15,491 ) ( 102,241 ) Total loans receivable, net (4) $ 9,765,097 866,609 10,631,706 8,785,275 1,128,876 9,914,151 (1) Includes originated and purchased loan pools purchased in an asset acquisition. (2) Includes loans subject to purchase accounting in a business combination. (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. 13 Table of Contents 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 Personal Banking: Residential mortgage loans $ 17,967 1,646 ( 166 ) 329 16,158 Home equity loans 5,448 341 ( 535 ) 410 5,232 Vehicle loans 17,004 1,576 ( 936 ) 626 15,738 Consumer loans 825 1,170 ( 1,405 ) 281 779 Total Personal Banking 41,244 4,733 ( 3,042 ) 1,646 37,907 Commercial Banking: Commercial real estate loans 49,649 5,117 ( 1,329 ) 6,220 39,641 Commercial real estate loans - owner occupied 4,087 ( 34 ) — 26 4,095 Commercial loans 14,839 ( 2,127 ) ( 243 ) 497 16,712 Total Commercial Banking 68,575 2,956 ( 1,572 ) 6,743 60,448 Total $ 109,819 7,689 ( 4,614 ) 8,389 98,355 Allowance for Credit Losses - off-balance sheet exposure Personal Banking: Residential mortgage loans $ 4 ( 2 ) — — 6 Home equity loans 74 10 — — 64 Total Personal Banking 78 8 — — 70 Commercial Banking: Commercial real estate loans 5,382 1,919 — — 3,463 Commercial real estate loans - owner occupied 287 ( 41 ) — — 328 Commercial loans 5,288 1,699 — — 3,589 Total Commercial Banking 10,957 3,577 — — 7,380 Total off-balance sheet exposure $ 11,035 3,585 — — 7,450 14 Table of Contents 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 Personal Banking: Residential mortgage loans $ 7,987 1,939 ( 1,263 ) 64 7,247 Home equity loans 6,293 291 ( 1,474 ) 237 7,239 Vehicle loans 12,457 82 ( 1,112 ) 599 12,888 Consumer loans 3,074 949 ( 1,036 ) 360 2,801 Total Personal Banking 29,811 3,261 ( 4,885 ) 1,260 30,175 Commercial Banking: Commercial real estate loans 58,451 ( 5,103 ) ( 1,581 ) 555 64,580 Commercial real estate loans - owner occupied 3,246 ( 1,487 ) — 4 4,729 Commercial loans 18,259 ( 1,025 ) ( 412 ) 1,850 17,846 Total Commercial Banking 79,956 ( 7,615 ) ( 1,993 ) 2,409 87,155 Total $ 109,767 ( 4,354 ) ( 6,878 ) 3,669 117,330 Allowance for Credit Losses - off-balance sheet exposure Personal Banking: Residential mortgage loans $ 2 — — — 2 Home equity loans 40 ( 2 ) — — 42 Total Personal Banking 42 ( 2 ) — — 44 Commercial Banking: Commercial real estate loans 2,647 715 — — 1,932 Commercial real estate loans - owner occupied 140 ( 41 ) — — 181 Commercial loans 1,333 101 — — 1,232 Total Commercial Banking 4,120 775 — — 3,345 Total off-balance sheet exposure $ 4,162 773 — — 3,389 15 Table of Contents 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 Personal Banking: Residential mortgage loans $ 17,967 11,331 ( 1,487 ) 750 7,373 Home equity loans 5,448 127 ( 1,237 ) 1,258 5,300 Vehicle loans 17,004 2,159 ( 2,517 ) 1,879 15,483 Consumer loans 825 479 ( 3,459 ) 921 2,884 Total Personal Banking 41,244 14,096 ( 8,700 ) 4,808 31,040 Commercial Banking: Commercial real estate loans 49,649 ( 6,465 ) ( 6,745 ) 8,718 54,141 Commercial real estate loans - owner occupied 4,087 167 — 37 3,883 Commercial loans 14,839 1,039 ( 1,253 ) 1,876 13,177 Total Commercial Banking 68,575 ( 5,259 ) ( 7,998 ) 10,631 71,201 Total $ 109,819 8,837 ( 16,698 ) 15,439 102,241 Allowance for Credit Losses - off-balance sheet exposure Personal Banking: Residential mortgage loans $ 4 2 — — 2 Home equity loans 74 35 — — 39 Total Personal Banking 78 37 — — 41 Commercial Banking: Commercial real estate loans 5,382 4,501 — — 881 Commercial real estate loans - owner occupied 287 145 — — 142 Commercial loans 5,288 3,894 — — 1,394 Total Commercial Banking 10,957 8,540 — — 2,417 Total off-balance sheet exposure $ 11,035 8,577 — — 2,458 16 Table of Contents 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, 2021 (in thousands): Balance as of September 30, 2021 Current period provision Charge-offs Recoveries Balance as of December 31, 2020 Allowance for Credit Losses Personal Banking: Residential mortgage loans $ 7,987 3,269 ( 2,888 ) 340 7,266 Home equity loans 6,293 1,892 ( 2,081 ) 490 5,992 Vehicle loans 12,457 ( 341 ) ( 4,017 ) 1,990 14,825 Consumer loans 3,074 2,291 ( 3,135 ) 1,047 2,871 Total Personal Banking 29,811 7,111 ( 12,121 ) 3,867 30,954 Commercial Banking: Commercial real estate loans 58,451 ( 12,859 ) ( 9,281 ) 1,210 79,381 Commercial real estate loans - owner occupied 3,246 ( 6,391 ) ( 890 ) 9 10,518 Commercial loans 18,259 2,165 ( 1,627 ) 4,147 13,574 Total Commercial Banking 79,956 ( 17,085 ) ( 11,798 ) 5,366 103,473 Total $ 109,767 ( 9,974 ) ( 23,919 ) 9,233 134,427 Allowance for Credit Losses - off-balance sheet exposure Personal Banking: Residential mortgage loans $ 2 — — — 2 Home equity loans 40 5 — — 35 Total Personal Banking 42 5 — — 37 Commercial Banking: Commercial real estate loans 2,647 ( 802 ) — — 3,449 Commercial real estate loans - owner occupied 140 ( 186 ) — — 326 Commercial loans 1,333 ( 1,218 ) — — 2,551 Total Commercial Banking 4,120 ( 2,206 ) — — 6,326 Total off-balance sheet exposure $ 4,162 ( 2,201 ) — — 6,363 17 Table of Contents 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): Total loans receivable Allowance for credit losses Nonaccrual loans (1) Loans 90 days past due and accruing TDRs Allowance related to TDRs Additional commitments to customers with loans classified as TDRs Personal Banking: Residential mortgage loans $ 3,401,898 17,967 7,816 — 6,040 1,032 — Home equity loans 1,284,989 5,448 3,685 — 1,584 657 — Vehicle loans 2,007,197 17,004 3,235 — — — — Consumer loans 109,041 825 166 357 — — — Total Personal Banking 6,803,125 41,244 14,902 357 7,624 1,689 — Commercial Banking: Commercial real estate loans 2,428,906 49,649 65,298 — 37,993 678 10 Commercial real estate loans - owner occupied 383,924 4,087 619 — 96 18 — Commercial loans 1,125,570 14,839 2,808 — 1,037 157 400 Total Commercial Banking 3,938,400 68,575 68,725 — 39,126 853 410 Total $ 10,741,525 109,819 83,627 357 46,750 2,542 410 (1) Includes $ 30.4 million of nonaccrual TDRs. The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at December 31, 2021 (in thousands): Total loans receivable Allowance for credit losses Nonaccrual loans (1) Loans 90 days past due and accruing TDRs Allowance related to TDRs Additional commitments to customers with loans classified as TDRs Personal Banking: Residential mortgage loans $ 2,994,620 7,373 10,402 — 6,749 1,442 — Home equity loans 1,319,931 5,300 5,758 — 1,781 718 — Vehicle loans 1,484,231 15,483 3,263 — — — — Consumer loans 354,517 2,884 675 331 — — — Total Personal Banking 6,153,299 31,040 20,098 331 8,530 2,160 — Commercial Banking: Commercial real estate loans 2,625,481 54,141 129,666 — 17,025 2,024 400 Commercial real estate loans - owner occupied 390,003 3,883 1,233 — 159 24 — Commercial loans 847,609 13,177 7,474 — 4,574 609 60 Total Commercial Banking 3,863,093 71,201 138,373 — 21,758 2,657 460 Total $ 10,016,392 102,241 158,471 331 30,288 4,817 460 (1) Includes $ 17.2 million of nonaccrual TDRs. 18 Table of Contents 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 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 Personal Banking: Residential mortgage loans $ 10,402 7,816 — 7,816 — Home equity loans 5,758 3,489 196 3,685 — Vehicle loans 3,263 1,891 1,344 3,235 — Consumer loans 675 166 — 166 357 Total Personal Banking 20,098 13,362 1,540 14,902 357 Commercial Banking: Commercial real estate loans 129,666 27,690 37,608 65,298 — Commercial real estate loans - owner occupied 1,233 619 — 619 — Commercial loans 7,474 2,030 778 2,808 — Total Commercial Banking 138,373 30,339 38,386 68,725 — Total $ 158,471 43,701 39,926 83,627 357 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): December 31, 2021 Nonaccrual loans at January 1, 2021 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 Personal Banking: Residential mortgage loans $ 15,924 10,402 — 10,402 — Home equity loans 9,123 5,551 207 5,758 — Vehicle loans 5,533 3,251 12 3,263 — Consumer loans 1,031 674 1 675 331 Total Personal Banking 31,611 19,878 220 20,098 331 Commercial Banking: Commercial real estate loans 44,092 65,529 64,137 129,666 — Commercial real estate loans - owner occupied 3,642 1,233 — 1,233 — Commercial loans 23,487 3,941 3,533 7,474 — Total Commercial Banking 71,221 70,703 67,670 138,373 — Total $ 102,832 90,581 67,890 158,471 331 During the year ended December 31, 2021, we recognized $ 803,000 of interest income on nonaccrual and troubled debt restructuring loans. 19 Table of Contents 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 Personal Banking: Residential mortgage loans $ 572 — 572 Home equity loans 99 — 99 Total Personal Banking 671 — 671 Commercial Banking: Commercial real estate loans 63,834 — 63,834 Commercial loans 432 1,122 1,554 Total Commercial Banking 64,266 1,122 65,388 Total $ 64,937 1,122 66,059 The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of December 31, 2021 (in thousands): Real estate Equipment Total Personal Banking: Residential mortgage loans $ 580 — 580 Home equity loans 99 — 99 Total Personal Banking 679 — 679 Commercial Banking: Commercial real estate loans 119,825 1,705 121,530 Commercial loans 3,973 1,926 5,899 Total Commercial Banking 123,798 3,631 127,429 Total $ 124,477 3,631 128,108 20 Table of Contents Our loan portfolios include loans that have been modified in a TDR, where concessions have been granted to borrowers who have experienced financial difficulties. These concessions typically result from our loss mitigation activities and could include: extending the note’s maturity date, permitting interest only payments, reducing the interest rate to a rate lower than current market rates for new debt with similar risk, reducing the principal payment, principal forbearance or other actions. These concessions are applicable to all loan segments and classes. Certain TDRs are classified as nonperforming at the time of restructuring and may be returned to performing status after considering the borrower’s sustained repayment performance for a period of at least six months. When we modify loans in a TDR, we evaluate any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, the loan’s observable market price or the current fair value of the collateral, less selling costs, for collateral dependent loans. If we determine that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premiums or discounts), impairment is recognized through an allowance estimate or a charge-off to the allowance. In periods subsequent to modification, we evaluate all TDRs, including those that have payment defaults, for possible impairment in accordance with ASC 310-10. As a result, loans modified in a TDR may have the financial effect of increasing the specific allowance associated with the loan. Loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a TDR subsequently default, we evaluate the loan for possible further impairment. The allowance may be increased, adjustments may be made in the allocation of the allowance, partial charge-offs may be taken to further write-down the carrying value of the loan, or the loan may be charged-off completely. In March 2020 and August 2020, joint statements were issued by federal and state regulatory agencies, after consultation with the FASB, to clarify that short-term loan modifications are not TDRs if made on a good-faith basis in response to COVID-19 to borrowers who were current prior to any relief. Under this guidance, six months is provided as an example of short-term, and current is defined as less than 30 days past due at the time the modification program is implemented. The guidance also provides that these modified loans generally will not be classified as nonaccrual during the term of the modification. For borrowers who are 30 days or more past due when enrolling in a loan modification program related to the COVID-19 pandemic, we evaluate the loan modifications under our existing TDR framework, and where such a loan modification would result in a concession to a borrower experiencing financial difficulty, the loan will be accounted for as a TDR and will generally not accrue interest. This TDR relief under the CARES Act was extended by the Consolidated Appropriations Act, 2021 (“CAA”), signed into law on December 27, 2020. Under the CAA, such relief will continue until the earlier of 60 days after the date the COVID-19 national emergency comes to an end or January 1, 2022. Certain loan modifications made during the prior year were done in accordance with Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus. Accordingly, these loans were not categorized as TDRs. 21 Table of Contents The following tables provide a roll forward of troubled debt restructurings for the periods indicated (dollars in thousands): For the quarter ended September 30, 2022 2021 Number of contracts Amount Number of contracts Amount Beginning TDR balance: 128 $ 54,237 158 $ 27,431 New TDRs 6 221 3 345 Re-modified TDRs 4 977 3 4,490 Net paydowns — ( 810 ) — ( 4,702 ) Charge-offs: 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: Residential mortgage loans 1 ( 35 ) 5 ( 307 ) Home equity loans 1 ( 11 ) 4 ( 122 ) Commercial real estate loans 1 ( 3,349 ) 4 ( 287 ) Commercial real estate loans - owner occupied 1 ( 44 ) — — Commercial loans 3 ( 3,459 ) — — Ending TDR balance: 127 $ 46,750 139 $ 26,522 Accruing TDRs $ 16,344 $ 13,664 Nonaccrual TDRs 30,406 12,858 For the nine months ended September 30, 2022 2021 Number of contracts Amount Number of contracts Amount Beginning TDR balance: 134 $ 30,288 170 $ 32,135 New TDRs 8 25,626 5 2,608 Re-modified TDRs 10 1,178 8 5,701 Net paydowns — ( 1,609 ) — ( 8,713 ) Charge-offs: 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: Residential mortgage loans 2 ( 236 ) 9 ( 1,033 ) Home equity loans 3 ( 88 ) 5 ( 133 ) Commercial real estate loans 4 ( 3,718 ) 9 ( 2,973 ) Commercial real estate loans - owner occupied 1 ( 44 ) 1 ( 47 ) Commercial loans 4 ( 3,466 ) 3 ( 697 ) Ending TDR balance: 127 $ 46,750 139 $ 26,522 Accruing TDRs $ 16,344 $ 13,664 Nonaccrual TDRs 30,406 12,858 22 Table of Contents 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 Number of contracts Recorded investment at the time of modification Current recorded investment Current allowance Number of contracts Recorded investment at the time of modification Current recorded investment Current allowance 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: Commercial real estate loans 1 610 609 89 5 34,295 26,212 102 Commercial loans 2 332 291 20 6 3,856 294 20 Total Commercial Banking 3 942 900 109 11 38,151 26,506 122 Total 10 $ 1,249 1,198 147 18 $ 38,458 26,804 160 For the quarter ended September 30, 2021 For the nine months ended September 30, 2021 Number of contracts Recorded investment at the time of modification Current recorded investment Current allowance Number of contracts Recorded investment at the time of modification Current recorded investment Current allowance Personal Banking: Residential mortgage loans — $ — — — 1 $ 125 115 16 Home equity loans 2 153 36 17 3 156 36 17 Total Personal Banking 2 153 36 17 4 281 151 33 Commercial Banking: Commercial real estate loans 3 4,840 4,490 65 6 6,723 5,586 207 Commercial loans 1 330 309 — 3 2,726 2,572 — Total Commercial Banking 4 5,170 4,799 65 9 9,449 8,158 207 Total 6 $ 5,323 4,835 82 13 $ 9,730 8,309 240 23 Table of Contents 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 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: Commercial real estate loans 1 609 609 Commercial loans 2 291 291 Total Commercial Banking 3 900 900 Total 10 1,198 1,198 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 Payment Maturity date Total Personal Banking: Home equity loans 2 $ — 30 6 36 Total Personal Banking 2 — 30 6 36 Commercial Banking: Commercial real estate loans 3 378 — 4,112 4,490 Commercial loans 1 — — 309 309 Total Commercial Banking 4 378 — 4,421 4,799 Total 6 $ 378 30 4,427 4,835 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 nine months ended September 30, 2022 (in thousands): 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: Commercial real estate loans 5 4,166 22,046 26,212 Commercial loans 6 — 294 294 Total Commercial Banking 11 4,166 22,340 26,506 Total 18 $ 4,166 22,638 26,804 24 Table of Contents 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 nine months ended September 30, 2021 (in thousands): Type of modification Number of contracts Rate Payment Maturity date Other Total Personal Banking: Residential mortgage loans 1 $ 115 — — — 115 Home equity loans 3 — 30 6 — 36 Total Personal Banking 4 115 30 6 — 151 Commercial Banking: Commercial real estate loans 6 378 — 5,136 72 5,586 Commercial loans 3 — — 2,572 — 2,572 Total Commercial Banking 9 378 — 7,708 72 8,158 Total 13 $ 493 30 7,714 72 8,309 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: Number of contracts Recorded investment at the time of modification Current recorded investment Current allowance Commercial Banking: Commercial real estate loans 3 $ 4,167 3,951 2 Total Commercial Banking 3 4,167 3,951 2 Total 3 $ 4,167 3,951 2 The following table provides information related to the amortized cost basis of loan payment delinquencies at September 30, 2022 (in thousands): 30-59 days delinquent 60-89 days delinquent 90 days or greater delinquent Total delinquency Current Total loans receivable 90 days or greater delinquent and accruing Personal Banking: Residential mortgage loans $ 1,052 4,320 5,544 10,916 3,390,982 3,401,898 — Home equity loans 3,278 1,227 1,779 6,284 1,278,705 1,284,989 — Vehicle loans 6,086 2,322 1,935 10,343 1,996,854 2,007,197 — Consumer loans 460 341 453 1,254 107,787 109,041 357 Total Personal Banking 10,876 8,210 9,711 28,797 6,774,328 6,803,125 357 Commercial Banking: Commercial real estate loans 929 1,648 8,558 11,135 2,417,771 2,428,906 — Commercial real estate loans - owner occupied 403 93 263 759 383,165 383,924 — Commercial loans 2,582 808 638 4,028 1,121,542 1,125,570 — Total Commercial Banking 3,914 2,549 9,459 15,922 3,922,478 3,938,400 — Total loans $ 14,790 10,759 19,170 44,719 10,696,806 10,741,525 357 25 Table of Contents The following table provides information related to the amortized cost basis of loan payment delinquencies at December 31, 2021 (in thousands): 30-59 days delinquent 60-89 days delinquent 90 days or greater delinquent Total delinquency Current Total loans receivable 90 days or greater delinquent and accruing Personal Banking: Residential mortgage loans $ 20,567 5,433 7,641 33,641 2,960,979 2,994,620 — Home equity loans 3,153 949 4,262 8,364 1,311,567 1,319,931 — Vehicle loans 5,331 1,487 1,635 8,453 1,475,778 1,484,231 — Consumer loans 1,205 519 765 2,489 352,028 354,517 331 Total Personal Banking 30,256 8,388 14,303 52,947 6,100,352 6,153,299 331 Commercial Banking: Commercial real estate loans 16,938 699 23,489 41,126 2,584,355 2,625,481 — Commercial real estate loans - owner occupied 127 70 574 771 389,232 390,003 — Commercial loans 193 727 1,105 2,025 845,584 847,609 — Total Commercial Banking 17,258 1,496 25,168 43,922 3,819,171 3,863,093 — Total originated loans $ 47,514 9,884 39,471 96,869 9,919,523 10,016,392 331 Credit Quality Indicators: For Commercial Banking we categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. We analyze loans individually by classifying the loans by credit risk. Credit relationships greater than or equal to $ 1.0 million classified as special mention or substandard are reviewed quarterly for deterioration or improvement to determine if the loan is appropriately classified. We use the following definitions for risk ratings other than pass: Special Mention — Loans designated as special mention have specific, well-defined risk issues, which create a high level of uncertainty regarding the long-term viability of the business. Loans in this class are considered to have high-risk characteristics. A special mention loan exhibits material negative financial trends due to company-specific or systemic conditions. If these potential weaknesses are not mitigated, they threaten the borrower’s capacity to meet its debt obligations. Special mention loans still demonstrate sufficient financial flexibility to react to and positively address the root cause of the adverse financial trends without significant deviations from their current business strategy. Their potential weaknesses deserve our close attention and warrant enhanced monitoring. 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. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. Doubtful — Loans classified as doubtful have all the weaknesses inherent in those classified as substandard. In addition, those weaknesses make collection or liquidation in full highly questionable and improbable. A loan classified as doubtful exhibits discernible loss potential, but a complete loss seems very unlikely. The possibility of a loss on a doubtful loan is high, but because of certain important and reasonably specific pending factors that may strengthen the loan, its classification as an estimated loss is deferred until a more exact status can be determined. Loss — Loans classified as loss are considered uncollectible and of such value that the continuance as a loan is not warranted. A loss classification does not mean that the loan has no recovery or salvage value; instead, it means that it is not practical or desirable to defer writing off all or a portion of a basically worthless loan even though partial recovery may be possible in the future. For Personal Banking loans a pass risk rating is maintained until they are greater than 90 days past due, and risk rating reclassification is based primarily on past due status of the loan. The risk rating categories can generally be described by the following groupings: Pass — Loans classified as pass are homogeneous loans that are less than 90 days past due from the required payment date at month-end. 26 Table of Contents Substandard — Loans classified as substandard are homogeneous loans that are greater than 90 days past due from the required payment date at month-end, loans classified as TDRs or homogenous retail loans that are greater than 180 days past due from the required payment date at month-end that has been written down to the value of underlying collateral, less costs to sell. Doubtful — Loans classified as doubtful are homogeneous loans that are greater than 180 days past due from the required payment date at month-end and not written down to the value of underlying collateral. 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 September 30, 2022 (in thousands): YTD September 30, 2022 2021 2020 2019 2018 Prior Revolving loans Revolving loans converted to term loans Total loans receivable Personal Banking: Residential mortgage loans Pass $ 496,721 841,725 557,403 271,096 136,426 1,084,797 — — 3,388,168 Substandard — 224 310 351 709 12,136 — — 13,730 Total residential mortgage loans 496,721 841,949 557,713 271,447 137,135 1,096,933 — — 3,401,898 Home equity loans Pass 99,288 132,418 180,140 115,548 52,827 214,833 443,136 41,778 1,279,968 Substandard — 47 26 62 382 3,075 579 850 5,021 Total home equity loans 99,288 132,465 180,166 115,610 53,209 217,908 443,715 42,628 1,284,989 Vehicle loans Pass 791,768 670,925 254,957 156,151 82,807 47,352 — — 2,003,960 Substandard 214 969 503 656 541 354 — — 3,237 Total vehicle loans 791,982 671,894 255,460 156,807 83,348 47,706 — — 2,007,197 Consumer loans Pass 14,944 11,232 5,066 4,313 3,002 5,631 63,134 1,196 108,518 Substandard — 8 6 4 5 52 405 43 523 Total consumer loans 14,944 11,240 5,072 4,317 3,007 5,683 63,539 1,239 109,041 Total Personal Banking 1,402,935 1,657,548 998,411 548,181 276,699 1,368,230 507,254 43,867 6,803,125 Business Banking: Commercial real estate loans Pass 238,090 353,748 395,986 255,223 214,146 740,333 26,992 7,447 2,231,965 Special mention — 787 1,350 20,784 1,015 7,244 111 15 31,306 Substandard — 95 7,066 26,833 42,783 87,511 489 858 165,635 Total commercial real estate loans 238,090 354,630 404,402 302,840 257,944 835,088 27,592 8,320 2,428,906 Commercial real estate loans - owner occupied Pass 53,373 62,701 18,001 51,376 46,512 121,462 2,703 1,555 357,683 Special mention — — — — 1,673 501 1,204 — 3,378 Substandard — — — 5,379 2,509 13,002 59 1,914 22,863 Total commercial real estate loans - owner occupied 53,373 62,701 18,001 56,755 50,694 134,965 3,966 3,469 383,924 Commercial loans Pass 451,388 102,258 58,114 50,237 18,805 60,839 349,086 4,103 1,094,830 Special mention 144 209 275 1,282 193 — 1,901 — 4,004 Substandard 540 291 1,088 2,338 1,825 1,356 12,791 6,507 26,736 Total commercial loans 452,072 102,758 59,477 53,857 20,823 62,195 363,778 10,610 1,125,570 Total Business Banking 743,535 520,089 481,880 413,452 329,461 1,032,248 395,336 22,399 3,938,400 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 nine months ended September 30, 2022, $ 13.4 million of revolving loans were converted to term loans. 27 Table of Contents 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): 2021 2020 2019 2018 2017 Prior Revolving loans Revolving loans converted to term loans Total loans receivable Personal Banking: Residential mortgage loans Pass $ 644,862 602,429 304,275 156,639 171,240 1,098,635 — — 2,978,080 Substandard 138 489 377 538 882 14,116 — — 16,540 Total residential mortgage loans 645,000 602,918 304,652 157,177 172,122 1,112,751 — — 2,994,620 Home equity loans Pass 150,847 210,224 138,661 65,011 61,692 209,959 435,660 40,766 1,312,820 Substandard — — 441 60 455 3,820 1,275 1,060 7,111 Total home equity loans 150,847 210,224 139,102 65,071 62,147 213,779 436,935 41,826 1,319,931 Vehicle loans Pass 801,084 292,804 205,653 119,304 34,546 27,576 — — 1,480,967 Substandard 387 365 1,141 745 379 247 — — 3,264 Total vehicle loans 801,471 293,169 206,794 120,049 34,925 27,823 — — 1,484,231 Consumer loans Pass 117,856 81,266 47,195 20,595 9,794 12,202 63,025 1,578 353,511 Substandard 213 161 105 64 26 50 357 30 1,006 Total consumer loans 118,069 81,427 47,300 20,659 9,820 12,252 63,382 1,608 354,517 Total Personal Banking 1,715,387 1,187,738 697,848 362,956 279,014 1,366,605 500,317 43,434 6,153,299 Business Banking: Commercial real estate loans Pass 306,689 433,219 335,541 263,524 221,450 683,537 26,288 10,179 2,280,427 Special mention 803 1,808 52,513 3,296 1,394 8,529 729 23 69,095 Substandard — 34,153 44,712 46,045 56,077 89,311 492 5,169 275,959 Total commercial real estate loans 307,492 469,180 432,766 312,865 278,921 781,377 27,509 15,371 2,625,481 Commercial real estate - owner occupied Pass 69,084 19,452 51,997 60,824 57,676 94,687 2,822 2,707 359,249 Special mention — — — 769 1,959 1,444 856 — 5,028 Substandard — — 3,575 2,887 7,840 10,602 — 822 25,726 Total commercial real estate - owner occupied loans 69,084 19,452 55,572 64,480 67,475 106,733 3,678 3,529 390,003 Commercial loans Pass 224,367 110,171 73,276 27,668 20,748 76,987 262,805 12,301 808,323 Special mention 197 661 812 1,195 50 581 2,234 — 5,730 Substandard 329 4,767 5,102 4,437 1,529 2,116 6,667 8,609 33,556 Total commercial loans 224,893 115,599 79,190 33,300 22,327 79,684 271,706 20,910 847,609 Total Business Banking 601,469 604,231 567,528 410,645 368,723 967,794 302,893 39,810 3,863,093 Total loans $ 2,316,856 1,791,969 1,265,376 773,601 647,737 2,334,399 803,210 83,244 10,016,392 During the year ended December 31, 2021, $ 27.3 million of revolving loans were converted to term loans. 28 Table of Contents (4) Goodwill and Other Intangible Assets The following table provides information for intangible assets subject to amortization at the dates indicated (in thousands): September 30, 2022 December 31, 2021 Amortizable intangible assets: Core deposit intangibles - gross $ 74,899 74,899 Less: accumulated amortization ( 65,446 ) ( 62,158 ) Core deposit intangibles - net $ 9,453 12,741 Customer and Contract intangible assets - gross $ 12,775 12,775 Customer list intangible assets disposed of due to sale of insurance business — ( 1,547 ) Less: accumulated amortization ( 12,737 ) ( 11,133 ) Customer and Contract intangible assets - net 38 95 Total intangible assets - net $ 9,491 12,836 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 For the year ending December 31, 2023 3,270 For the year ending December 31, 2024 2,452 For the year ending December 31, 2025 1,662 For the year ending December 31, 2026 871 For the year ending December 31, 2027 304 The following table provides information for the changes in the carrying amount of goodwill (in thousands): Total Balance at December 31, 2020 $ 382,279 Purchase accounting adjustment 77 Goodwill disposed of due to sale of insurance business ( 1,359 ) Balance at December 31, 2021 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. 29 Table of Contents (5) Borrowed Funds (a) Borrowings 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 % Collateral received, due within one year 39,821 3.08 % — — Total borrowed funds $ 150,036 $ 139,093 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. The revolving line of credit with the FHLB of Pittsburgh carries a commitment of $ 250.0 million. The rate is adjusted daily by the FHLB of Pittsburgh, and any borrowings on this line may be repaid at any time without penalty. 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 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. On September 9, 2020, the Company issued $ 125.0 million of 4.00 % fixed-to-floating rate subordinated notes with a maturity date of September 15, 2030. The subordinated notes, which qualify as Tier 2 capital, bear interest at an annual rate of 4.00 %, payable semi-annually in arrears commencing on March 15, 2021, and a floating rate of interest equivalent to the 3-month Secured Overnight Financing Rate (“SOFR”) plus 3.89 % payable quarterly in arrears commencing on December 15, 2025. 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 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 The Company has seven statutory business trusts: Northwest Bancorp Capital Trust III, a Delaware statutory business trust, Northwest Bancorp Statutory Trust IV, a Connecticut statutory business trust, LNB Trust II, a Delaware statutory business trust, Union National Capital Trust I (“UNCT I”), a Delaware statutory business trust, Union National Capital Trust II (“UNCT II”), a Delaware statutory business trust, MFBC Statutory Trust I, a Delaware statutory trust, and Universal Preferred Trust, a Delaware statutory trust (the “Trusts”). The Trusts exist solely to issue preferred securities to third parties for cash, issue common securities to the Company in exchange for capitalization of the Trusts, invest the proceeds from the sale of trust securities in an equivalent amount of debentures of the Company, and engage in other activities that are incidental to those previously listed. The Trusts have invested the proceeds of the offerings in junior subordinated deferrable interest debentures issued by the Company. The structure of these debentures mirrors the structure of the trust-preferred securities. These subordinated debentures are the sole assets of the Trusts. As the shareholders of the trust preferred securities are the primary beneficiaries of the Trusts, the Trusts are not consolidated in our financial statements. 30 Table of Contents 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 September 30, 2022 December 31, 2021 Northwest Bancorp Capital Trust III December 30, 2035 3-month LIBOR plus 1.38 % $ 50,000 $ 51,547 51,547 Northwest Bancorp Statutory Trust IV December 15, 2035 3-month LIBOR plus 1.38 % 50,000 51,547 51,547 LNB Trust II June 15, 2037 3-month LIBOR plus 1.48 % 7,875 8,119 8,119 UNCT I (1) January 23, 2034 3-month LIBOR plus 2.85 % 8,000 7,968 7,950 UNCT II (1) November 23, 2034 3-month LIBOR plus 2.00 % 3,000 2,762 2,741 MFBC Statutory Trust I (1) September 15, 2035 3-month LIBOR plus 1.70 % 5,000 3,658 3,580 Universal Preferred Trust (1) October 7, 2035 3-month LIBOR plus 1.69 % 5,000 3,648 3,570 $ 129,249 129,054 (1) Net of discounts due to the fair value adjustment made at the time of acquisition. Cash distributions on the trust securities are made on a quarterly basis to the extent interest on the debentures is received by the Trusts. We have the right to defer payment of interest on the subordinated debentures at any time, or from time-to-time, for periods not exceeding five years . If interest payments on the subordinated debentures are deferred, the distributions on the trust securities also are deferred. To date there have been no interest deferrals. Interest on the subordinated debentures and distributions on the trust securities is cumulative. Our obligation constitutes a full, irrevocable, and unconditional guarantee on a subordinated basis of the obligations of the trust under the preferred securities. The Trusts must redeem the preferred securities when the debentures are paid at maturity or upon an earlier redemption of the debentures to the extent the debentures are redeemed. All or part of the debentures may be redeemed at any time. Also, the debentures may be redeemed at any time if existing laws or regulations, or the interpretation or application of these laws or regulations, change causing: • the interest on the debentures to no longer be deductible by the Company for federal income tax purposes; • the trusts to become subject to federal income tax or to certain other taxes or governmental charges; • the trusts to register as an investment company; or • the preferred securities to no longer qualify as Tier I capital. We may, at any time, dissolve any of the Trusts and distribute the debentures to the trust security holders, subject to receipt of any required regulatory approvals. (6) Guarantees We issue standby letters of credit in the normal course of business. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party. We are required to perform under a standby letter of credit when drawn upon by the guaranteed third party in the case of nonperformance by our customer. The credit risk associated with standby letters of credit is essentially the same as that involved in extending loans to customers and is subject to normal loan underwriting procedures. Collateral may be obtained based on management’s credit assessment of the customer. 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 Basic earnings per common share (“EPS”) is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period, without considering any dilutive items. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. 31 Table of Contents The following table sets forth the computation of basic and diluted EPS (in thousands, except share data and per share amounts): Quarter ended September 30, Nine months ended September 30, 2022 2021 2022 2021 Net income $ 37,304 35,063 99,017 124,267 Less: Dividends and undistributed earnings allocated to participating securities 166 237 441 841 Net income available to common shareholders $ 37,138 34,826 98,576 123,426 Weighted average common shares outstanding 126,320,706 126,111,774 126,082,217 126,333,290 Add: Participating shares outstanding 565,729 856,206 565,729 856,206 Total weighted average common shares and dilutive potential shares 126,886,435 126,967,980 126,647,946 127,189,496 Basic earnings per share $ 0.29 0.28 0.78 0.98 Diluted earnings per share $ 0.29 0.27 0.78 0.97 (8) Pension and Other Post-Retirement Benefits 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 September 30, Pension benefits Other post-retirement benefits 2022 2021 2022 2021 Service cost $ 2,599 2,860 — — Interest cost 1,671 1,517 10 4 Expected return on plan assets ( 3,864 ) ( 3,464 ) — — Amortization of prior service cost ( 564 ) ( 580 ) — — Amortization of the net loss 381 1,038 2 3 Net periodic cost $ 223 1,371 12 7 Nine months ended September 30, Pension benefits Other post-retirement benefits 2022 2021 2022 2021 Service cost $ 7,797 8,580 — — Interest cost 5,013 4,552 30 13 Expected return on plan assets ( 11,592 ) ( 10,394 ) — — Amortization of prior service cost ( 1,692 ) ( 1,741 ) — — Amortization of the net loss 1,143 3,117 6 10 Net periodic cost $ 669 4,114 36 23 We anticipate making a contribution to our defined benefit pension plan between $ 0 and $ 2.0 million during the year ending December 31, 2022. (9) Disclosures About Fair Value of Financial Instruments We are required to disclose fair value information about financial instruments whether or not recognized in the Consolidated Statement of Financial Condition. Fair value information of certain financial instruments and all nonfinancial instruments is not required to be disclosed. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. 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 32 Table of Contents 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. Financial assets and liabilities are categorized based upon the following characteristics or inputs to the valuation techniques: • Level 1 - Financial assets and liabilities for which inputs are observable and are obtained from reliable quoted prices for identical assets or liabilities in actively traded markets. This is the most reliable fair value measurement and includes, for example, active exchange-traded equity securities. • Level 2 - Financial assets and liabilities for which values are based on quoted prices in markets that are not active or for which values are based on similar assets or liabilities that are actively traded. Level 2 also includes pricing models in which the inputs are corroborated by market data, for example, matrix pricing. • Level 3 - Financial assets and liabilities for which values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Level 3 inputs include the following: ◦ Quotes from brokers or other external sources that are not considered binding; ◦ Quotes from brokers or other external sources where it cannot be determined that market participants would in fact transact for the asset or liability at the quoted price; and ◦ Quotes and other information from brokers or other external sources where the inputs are not deemed observable. We are responsible for the valuation process and as part of this process may use data from outside sources in establishing fair value. We perform due diligence to understand the inputs used or how the data was calculated or derived. We also corroborate the reasonableness of external inputs in the valuation process. 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, foreign exchange swaps, risk participation agreements, and accrued interest payable. Marketable Securities Where available, market values are based on quoted market prices, dealer quotes, and prices obtained from independent pricing services. Debt Securities — available-for-sale - Generally, debt securities are valued using pricing for similar securities, recently executed transactions and other pricing models utilizing observable inputs. The valuation for most debt securities is classified as Level 2. Securities within Level 2 include corporate bonds, municipal bonds, mortgage-backed securities and U.S. government obligations. Certain debt securities which were AAA rated at purchase do not have an active market and as such we have used an alternative method to determine the fair value of these securities. The fair value has been determined using a discounted cash flow model using market assumptions, which generally include cash flow, collateral and other market assumptions. As such, securities which otherwise would have been classified as Level 2 securities if an active market for those assets or similar assets existed are included herein as Level 3 assets. Debt Securities — held-to-maturity - The fair value of debt securities held-to-maturity is determined in the same manner as debt securities available-for-sale. Loans Receivable Loans with comparable characteristics including collateral and re-pricing structures are segregated for valuation purposes. Each loan pool is separately valued utilizing a discounted cash flow analysis. Projected monthly cash flows are discounted to present value using a market rate for comparable loans, which is not considered an exit price. Characteristics of comparable loans include remaining term, coupon interest, and estimated prepayment speeds. Delinquent loans are separately evaluated given the impact delinquency has on the projected future cash flow of the loan including the approximate discount or market rate, which is not considered an exit price. Loans Held-for-Sale The estimated fair value of loans held-for-sale is based on market bids obtained from potential buyers. 33 Table of Contents FHLB Stock 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 The estimated fair value of deposits with no stated maturity, which includes demand deposits, money market, and other savings accounts, is the amount payable on demand. Although market premiums paid for depository institutions reflect an additional value for these low-cost deposits, adjusting fair value for any value expected to be derived from retaining those deposits for a future period of time or from the benefit that results from the ability to fund interest-earning assets with these deposit liabilities is prohibited. The fair value estimates of deposit liabilities do not include the benefit that results from the low-cost funding provided by these deposits compared to the cost of borrowing funds in the market. Fair values for time deposits are estimated using a discounted cash flow calculation that applies contractual cost currently being offered in the existing portfolio to current market rates being offered locally for deposits of similar remaining maturities. The valuation adjustment for the portfolio consists of the present value of the difference of these two cash flows, discounted at the assumed market rate of the corresponding maturity. Borrowed Funds Fixed rate advances are valued by comparing their contractual cost to the prevailing market cost. The carrying amount of repurchase agreements approximates their fair value. Subordinated Debentures The fair value of our subordinated debentures is calculated using the discounted cash flows at rates observable for other similarly traded liabilities. Junior Subordinated Debentures The fair value of junior subordinated debentures is calculated using the discounted cash flows at the prevailing rate of interest. Interest Rate Lock Commitments and Forward Commitments The fair value of interest rate lock commitments is based on the value of underlying loans held-for-sale which is based on quoted prices for similar loans in the secondary market. This value is then adjusted based on the probability of the loan closing (i.e., the “pull-through” amount, a significant unobservable input). The fair value of forward sale commitments is based on quoted prices from the secondary market based on the settlement date of the contracts. Interest Rate and Foreign Exchange Swap Agreements and Risk Participation Agreements The fair value of interest rate swaps is based upon the present value of the expected future cash flows using the LIBOR swap curve, the basis for the underlying interest rate. To price interest rate swaps, cash flows are first projected for each payment date using the fixed rate for the fixed side of the swap and the forward rates for the floating side of the swap. These swap cash flows are then discounted to time zero using LIBOR zero-coupon interest rates. The sum of the present value of both legs is the fair market value of the interest rate swap. These valuations have been derived from our third party vendor’s proprietary models rather than actual market quotations. The proprietary models are based upon financial principles and assumptions that we believe to be reasonable. The fair value of the foreign exchange swap is derived from proprietary models rather than actual market quotations. The proprietary models are based upon financial principles and assumptions we believe to be reasonable. Risk participation agreements are entered into when Northwest purchases a portion of a commercial loan that has an interest rate swap. Northwest assumes credit risk on its portion of the interest rate swap should the borrower fail to pay as agreed. The value of risk participation agreements is determined based on the value of the swap after considering the credit quality, probability of default, and loss given default of the borrower. Off-Balance Sheet Financial Instruments These financial instruments generally are not sold or traded, and estimated fair values are not readily available. However, the fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements. Commitments to extend credit are generally short-term in nature and, if drawn upon, are issued under current market terms. At September 30, 2022 and December 31, 2021, there was no significant unrealized appreciation or depreciation on these financial instruments. 34 Table of Contents 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): Carrying amount Estimated fair value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 118,549 118,549 118,549 — — Securities available-for-sale 1,251,791 1,251,791 — 1,251,791 — Securities held-to-maturity 899,411 771,238 — 771,238 — Loans receivable, net 10,615,872 9,639,188 — — 9,639,188 Residential mortgage loans held-for-sale 15,834 15,834 — — 15,834 Accrued interest receivable 29,536 29,536 29,536 — — Interest rate lock commitments 1,063 1,063 — — 1,063 Foreign exchange swaps 38 38 — 38 — Interest rate swaps not designated as hedging instruments 50,295 50,295 — 50,295 — FHLB stock 19,281 19,281 — — — Total financial assets $ 13,001,670 11,896,813 148,085 2,073,362 9,656,085 Financial liabilities: Savings and checking deposits $ 10,811,282 10,811,282 10,811,282 — — Time deposits 1,067,110 1,069,395 — — 1,069,395 Borrowed funds 150,036 149,914 149,914 — — Subordinated debt 113,753 103,312 — 103,312 — 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 — Risk participation agreements 25 25 — 25 — Accrued interest payable 831 831 831 — — Total financial liabilities $ 12,322,729 12,302,677 10,962,027 153,780 1,186,870 35 Table of Contents 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 December 31, 2021 (in thousands): Carrying amount Estimated fair value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 1,279,259 1,279,259 1,279,259 — — Securities available-for-sale 1,548,592 1,548,592 — 1,548,592 — Securities held-to-maturity 768,154 751,513 — 751,513 — Loans receivable, net 9,889,095 9,648,825 — — 9,648,825 Residential mortgage loans held-for-sale 25,056 25,056 — — 25,056 Accrued interest receivable 25,599 25,599 25,599 — — Interest rate lock commitments 1,684 1,684 — — 1,684 Forward commitments 371 371 — 371 — Interest rate swaps not designated as hedging instruments 31,254 31,254 — 31,254 — FHLB stock 14,184 14,184 — — — Total financial assets $ 13,583,248 13,326,337 1,304,858 2,331,730 9,675,565 Financial liabilities: Savings and checking accounts $ 10,973,610 10,973,610 10,973,610 — — Time deposits 1,327,555 1,339,308 — — 1,339,308 Borrowed funds 139,093 139,093 139,093 — — Subordinated debt 123,575 129,138 — 129,138 — Junior subordinated debentures 129,054 120,083 — — 120,083 Foreign exchange swaps 341 341 — 341 — Interest rate swaps not designated as hedging instruments 31,357 31,357 — 31,357 — Risk participation agreements 60 60 — 60 — Accrued interest payable 1,804 1,804 1,804 — — Total financial liabilities $ 12,726,449 12,734,794 11,114,507 160,896 1,459,391 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 September 30, 2022 and December 31, 2021. 36 Table of Contents 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 at fair value Debt securities: U.S. government and agencies $ — 61,925 — 61,925 Government-sponsored enterprises — 39,091 — 39,091 States and political subdivisions — 106,176 — 106,176 Corporate — 13,140 — 13,140 Total debt securities — 220,332 — 220,332 Residential mortgage-backed securities: GNMA — 12,768 — 12,768 FNMA — 119,202 — 119,202 FHLMC — 76,124 — 76,124 Non-agency — 6 — 6 Collateralized mortgage obligations: GNMA — 379,420 — 379,420 FNMA — 194,850 — 194,850 FHLMC — 249,089 — 249,089 Total mortgage-backed securities — 1,031,459 — 1,031,459 Interest rate lock commitments — — 1,063 1,063 Foreign exchange swaps — 38 — 38 Interest rate swaps not designated as hedging instruments — 50,295 — 50,295 Total assets $ — 1,302,124 1,063 1,303,187 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 Total liabilities $ — 50,468 — 50,468 37 Table of Contents The following table represents assets and liabilities measured at fair value on a recurring basis at December 31, 2021 (in thousands): Level 1 Level 2 Level 3 Total assets at fair value Debt securities: U.S. government and agencies $ — 75,891 — 75,891 Government-sponsored enterprises — 46,085 — 46,085 States and political subdivisions — 128,701 — 128,701 Total debt securities — 250,677 — 250,677 Residential mortgage-backed securities: GNMA — 16,510 — 16,510 FNMA — 160,063 — 160,063 FHLMC — 100,055 — 100,055 Non-agency — 431 — 431 Collateralized mortgage obligations: GNMA — 492,328 — 492,328 FNMA — 269,060 — 269,060 FHLMC — 259,468 — 259,468 Total mortgage-backed securities — 1,297,915 — 1,297,915 Interest rate lock commitments — — 1,684 1,684 Forward commitments — 371 — 371 Interest rate swaps not designated as hedging instruments — 31,254 — 31,254 Total assets $ — 1,580,217 1,684 1,581,901 Foreign exchange swaps $ — 341 — 341 Interest rate swaps not designated as hedging instruments — 31,357 — 31,357 Risk participation agreements — 60 — 60 Total liabilities $ — 31,758 — 31,758 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 September 30, Nine months ended September 30, 2022 2022 2021 2022 2021 Beginning balance $ 1,520 3,608 1,684 6,465 Interest rate lock commitments: Net activity ( 457 ) ( 471 ) ( 621 ) ( 3,328 ) Ending balance $ 1,063 3,137 1,063 3,137 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. 38 Table of Contents 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 at fair value Loans individually assessed $ — — 21,173 21,173 Mortgage servicing rights — — 82 82 Real estate owned, net — — 450 450 Total assets $ — — 21,705 21,705 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 December 31, 2021 (in thousands): Level 1 Level 2 Level 3 Total assets at fair value Loans individually assessed $ — — 46,968 46,968 Mortgage servicing rights — — 380 380 Real estate owned, net — — 873 873 Total assets $ — — 48,221 48,221 Individually Assessed Loans - A loan is considered to be individually assessed as described in Note 1(f) of the Notes to the Consolidated Financial Statements in Item 8 of Part II of our 2021 Annual Report on Form 10-K. We classify loans individually assessed as nonrecurring Level 3. Real Estate Owned - Real estate owned is comprised of property acquired through foreclosure or voluntarily conveyed by borrowers. These assets are recorded on the date acquired at the lower of the related loan balance or fair value, less estimated disposition costs, with the fair value being determined by appraisal. Subsequently, foreclosed assets are valued at the lower of the amount recorded at acquisition date or fair value, less estimated disposition costs. 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 September 30, 2022 (in thousands): Fair value Valuation techniques Significant unobservable inputs Range (weighted average) Loans individually assessed $ 21,173 Appraisal value (1) Estimated cost to sell 10.0 % 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 % Loans held for sale 15,834 Quoted prices for similar loans in active markets adjusted by an expected pull-through rate Estimated pull-through rate 100.0 % (1) Fair value is generally determined through independent appraisals of the underlying collateral, which may include Level 3 inputs that are not identifiable, or by using the discounted cash flow method if the loan is not collateral dependent. (10) Derivative Financial Instruments We are a party to derivative financial instruments in the normal course of business to manage our own exposure to fluctuations in interest rates and to meet the needs of our customers. The primary derivatives that we use are interest rate swaps and caps and foreign exchange contracts, which are entered into with counterparties that meet established credit standards. We believe that the credit risk inherent in all of our derivative contracts is minimal based on our credit standards and the netting and collateral provisions of the interest rate swap agreements. 39 Table of Contents Derivatives Not Designated as Hedging Instruments We act as an interest rate or foreign exchange swap counterparty for certain commercial borrowers in the normal course of servicing our customers, which are accounted for at fair value. We manage our exposure to such interest rate or foreign exchange swaps by entering into corresponding and offsetting interest rate swaps with third parties that mirror the terms of the swaps we have with the commercial borrowers. These positions (referred to as “customer swaps”) directly offset each other, and our exposure is the fair value of the derivatives due to changes in credit risk of our commercial borrowers and third parties. 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. 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. Interest rate lock commitments that relate to the origination of mortgage loans that will be held-for-sale are considered derivative financial instruments under applicable accounting guidance. Interest rate lock commitments on loans held-for-sale are carried at fair value in other assets on the consolidated statement of financial condition. Northwest sells loans to the secondary market on a mandatory or best efforts basis. The loans sold on a mandatory basis commit us to deliver a specific principal amount of mortgage loans to an investor at a specified price, by a specified date, or the commitment must be paired off. These forward commitments entered into on a mandatory delivery basis meet the definition of a derivative financial instrument. All closed loans to be sold on a mandatory delivery basis are classified as held-for-sale on the Consolidated Statement of Financial Condition. Changes to the fair value of the interest rate lock commitments and the forward commitments are recorded in mortgage banking income in the Consolidated Statements of Income. We enter into risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which we are a participant. The risk participation agreements provide credit protection to the financial institution should the borrower fail to perform on its interest rate derivative contract with the financial institution. The following table presents information regarding our derivative financial instruments for the periods indicated (in thousands): Asset derivatives Liability derivatives Notional amount Fair value Notional amount Fair value At September 30, 2022 Derivatives not designated as hedging instruments: Interest rate swap agreements $ 659,480 50,295 659,480 50,295 Foreign exchange swap agreements 1,218 38 959 9 Interest rate lock commitments 38,880 1,063 — — Forward commitments — — 5,578 139 Risk participation agreements — — 114,796 25 Total Derivatives $ 699,578 51,396 780,813 50,468 At December 31, 2021 Derivatives not designated as hedging instruments: Interest rate swap agreements $ 644,997 31,254 644,997 31,357 Foreign exchange swap agreements — — 17,124 341 Interest rate lock commitments 67,473 1,684 — — Forward commitments 14,484 371 — — Risk participation agreements — — 93,135 60 Total derivatives $ 726,954 33,309 755,256 31,758 The following table presents income or expense recognized on derivatives for the periods indicated (in thousands): For the quarter ended September 30, For the nine months ended September 30, 2022 2021 2022 2021 Non-hedging swap derivatives: Increase in other income $ 93 590 207 1,087 Increase in mortgage banking income 809 345 1,131 3,915 40 Table of Contents (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 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. Due to the inherent subjectivity of assessments and unpredictability of outcomes of legal proceedings, any amounts accrued may not represent the ultimate loss to us from legal proceedings. During the year ended December 31, 2018, Northwest and our subsidiary, The Bert Company (doing business as Northwest Insurance Services) (“NWIS”), were involved in a lawsuit against, among others, First National Bank of Pennsylvania (“FNB”) and their insurance subsidiary, First National Insurance Agency, LLC (“FNIA”). 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 September 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 September 30, 2022 Unrealized losses on securities available-for-sale Change in defined benefit pension plans Total Balance as of June 30, 2022 $ ( 117,056 ) ( 25,574 ) ( 142,630 ) Other comprehensive loss before reclassification adjustments (1) ( 48,387 ) — ( 48,387 ) Amounts reclassified from accumulated other comprehensive income (2) — ( 131 ) ( 131 ) Net other comprehensive loss ( 48,387 ) ( 131 ) ( 48,518 ) Balance as of September 30, 2022 $ ( 165,443 ) ( 25,705 ) ( 191,148 ) For the quarter ended September 30, 2021 Unrealized gains/(losses) on securities available-for-sale Change in defined benefit pension plans Total Balance as of June 30, 2021 $ 3,533 ( 49,725 ) ( 46,192 ) Other comprehensive loss before reclassification adjustments (3) ( 6,455 ) — ( 6,455 ) Amounts reclassified from accumulated other comprehensive income (4) (5) ( 69 ) 333 264 Net other comprehensive income ( 6,524 ) 333 ( 6,191 ) 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 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 ). 41 Table of Contents For the nine months ended September 30, 2022 Unrealized losses on securities available-for-sale Change in defined benefit pension plans Total Balance as of December 31, 2021 $ ( 12,317 ) ( 25,312 ) ( 37,629 ) Other comprehensive loss before reclassification adjustments (1) ( 153,124 ) — ( 153,124 ) Amounts reclassified from accumulated other comprehensive income (2) (3) ( 2 ) ( 393 ) ( 395 ) Net other comprehensive loss ( 153,126 ) ( 393 ) ( 153,519 ) Balance as of September 30, 2022 $ ( 165,443 ) ( 25,705 ) ( 191,148 ) For the nine months ended September 30, 2021 Unrealized gains/(losses) on securities available-for-sale Change in defined benefit pension plans Total Balance as of December 31, 2020 $ 16,843 ( 50,392 ) ( 33,549 ) 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 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 . (2) Consists of realized gains, net of tax of $ 0 . (3) Consists of realized gains, net of tax of $ 151 . (4) Consists of unrealized holding losses, net of tax $ 6,812 . (5) Consists of realized gains, net of tax $ 89 . (6) Consists of realized losses, net of tax of $( 386 ). 42 Table of Contents