What changed in this filing

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Item 1. Business

2023-02-24 compared with 2022-02-25 · 73 added, 81 removed, 420 unchanged (27% of the section changed)

Northwest Bancshares, Inc.

Northwest Bancshares, Inc., a Maryland corporation, was incorporated in September 2009 to be the successor corporation to Northwest Bancorp, Inc., the former stock holding company for Northwest Bank, upon completion of the mutual-to-stock conversion of Northwest Bancorp, MHC.

Northwest Bancshares, Inc., a Maryland corporation, was incorporated in 2009 to be the successor corporation to Northwest Bancorp, Inc., the former stock holding company for Northwest Bank, upon completion of the mutual-to-stock conversion of Northwest Bancorp, MHC.

The terms “Northwest”, “the Company”, “we”, “us” and “our” refer to Northwest Bancshares, Inc., unless indicated otherwise by the context.

The conversion was completed December 18, 2009 when the Company sold 68,878,267 shares of common stock at $10.00 per share in the related offering.

The conversion was completed in 2009 when the Company sold 68,878,267 shares of common stock at $10.00 per share in the related offering.

Concurrent with the completion of the offering, shares of Northwest Bancorp, Inc.

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Pennsylvania Market Area .

Our retail branch network of 100 community banking offices within the state of Pennsylvania encompasses 28 counties.

Our retail branch network of 88 community banking offices within the Commonwealth of Pennsylvania encompasses 25 counties.

Our western Pennsylvania market has a diverse economy driven by healthcare and education industries, service businesses, technology companies and small manufacturing operations.

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The household income growth rate in Pennsylvania of 11.7%, is projected to be slightly below the national average growth rates during the next five years of 13.4%.

As of December 31, 2021, the market’s unemployment rate was 3.82%, slightly lower than the state of Pennsylvania rate of 4.0% and the national average of 3.9%.

As of September 30, 2021, the House Price Index for the last four quarters in the state of Pennsylvania increased by 14.67%, compared to an increase in the national average of 4.2%.

Nationally, foreclosures have receded from their record highs to the lowest levels since the fourth quarter of 2006.

As of December 31, 2022, the market’s unemployment rate was 3.3%, slightly lower than the Commonwealth of Pennsylvania rate of 3.9% and the same as the national average of 3.3%.

As of September 30, 2022, the most recent date for which data is available, the House Price Index for the last four quarters in the state of Pennsylvania increased by 9.6%, compared to an increase in the national average of 12.4%.

As of September 30, 2022, the foreclosure rate for mortgage loans on one-to-four unit residential properties in the state of Pennsylvania was one in every 1,973 housing units, compared to the national average of one in every 1,517 housing units.

Western New York Market Area .

Our retail branch network of 31 community banking offices in New York encompasses five counties in the western portion of the state.

Our retail branch network of 28 community banking offices in New York encompasses four counties in the western portion of the state.

This market has a diverse economy driven by healthcare and education industries, service businesses, technology companies and small manufacturing operations.

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This area has experienced a decrease in population between 2010 and 2022, of 3.0%.

The median household income for our Indiana market is $56,661 as of December 31, 2021, compared to the national median income level of $72,465.

The median household income for our Indiana market increased 1.4% over the last year to $57,439 as of December 31, 2022, compared to the national median income level of $73,503.

As of December 31, 2022, the unemployment rate for our Indiana market was 3.0%, compared to the national average of 3.3%.

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Whenever possible, our fixed-rate residential mortgages are originated and underwritten according to secondary mortgage market guidelines in order to manage credit risk, as well as interest rate risk and liquidity risk.

Our adjustable-rate residential mortgage loans offer initial interest rate adjustment periods of five and seven years, terms up to 30 years and adjustments based on changes in designated market indices.

Regulations limit the amount that a savings bank may lend relative to appraised values of real estate securing the loans, as determined by an appraisal at the time of loan origination.

Our adjustable-rate residential mortgage loans offer initial interest rate adjustment periods of five, seven, and ten years, terms up to 30 years and adjustments based on changes in designated market indices.

Regulations limit the amount that a bank may lend relative to appraised values of real estate securing the loans, as determined by an appraisal at the time of loan origination.

Such regulations permit a maximum loan-to-value of 95% for residential properties and 80% for all other real estate secured loans.

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Limited special financing programs allow for insured loans with loan-to-value ratios of up to 97%, and uninsured loans with loan-to-value ratios up to 100%.

The appraisal process is managed by Northwest Appraisal Services, and appraisals are performed by in-house appraiser staff or by appraisers deemed qualified by our chief appraiser.

The appraisal process is managed by Northwest Appraisal Services, and appraisals are performed by our in-house appraiser staff or by appraisers deemed qualified by our Residential Appraising Manager.

We require fire and casualty insurance, as well as a title guaranty regarding good title, on all properties securing our residential mortgage loans.

We also require flood insurance for loans secured by properties located within special flood hazard areas.

Included in our $2.970 billion portfolio of residential mortgage loans are construction loans of $61.5 million, or 0.6% of our gross loan portfolio.

Included in our $3.489 billion portfolio of residential mortgage loans as of December 31, 2022 are construction loans of $36.9 million, or 0.3% of our gross loan portfolio.

We offer fixed-rate and adjustable-rate residential construction-to-permanent loans primarily for the construction of owner-occupied one-to four-family residences in our market area to builders or owners who have a contract for construction.

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At the end of the construction period, repayment terms convert to fully amortizing payments, with both principal and interest due monthly.

Construction lending generally involves a greater degree of credit risk than permanent residential mortgage lending, as repayment of construction loans is often dependent upon the successful completion of construction projects.

Construction delays or the inability of borrowers to sell

properties once construction is completed may impair borrowers’ ability to repay loans.

Construction lending generally involves a greater degree of credit risk than permanent residential mortgage lending, as repayment of

construction loans is often dependent upon the successful completion of construction projects.

Construction delays or the inability of borrowers to sell properties once construction is completed may impair borrowers’ ability to repay loans.

Private mortgage insurance is required for construction loans with loan-to-value ratios in excess of 80%, and the maximum loan-to-value ratio for construction loans is 95% of the lower of cost to build or as-completed appraised value.

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Our multi-family commercial real estate loans are secured by multi-family residences, such as rental properties, student housing, and senior living facilities.

Our commercial real estate loans are secured by nonresidential properties such as hotels, commercial offices, medical buildings, manufacturing facilities and retail establishments.

Our other commercial real estate loans are secured by nonresidential properties such as hotels, commercial offices, medical buildings, manufacturing facilities and retail establishments.

At December 31, 2022, a significant portion of our multi-family commercial real estate and commercial real estate loans were secured by properties located within our market area.

Our largest commercial relationship with an aggregate total exposure of $129.5 million as of December 31, 2021, comprised of student housing, medical, senior housing, office, industrial, retail, aerospace and transportation engineering, the largest of which is $37.6 million of the total exposure attributed to multi-family residential.

Our largest commercial relationship with an aggregate total exposure of $123.4 million as of December 31, 2022, is comprised of multi-family residential, commercial office, hotel, retail buildings, and student housing, the largest of which is $36.6 million of the total exposure secured by retail buildings.

This relationship is also our largest commercial real estate loan relationship as of December 31, 2022, of which $121.6 million is attributed to commercial real estate loans.

All loans were performing in accordance with their terms as of December 31, 2022.

Our largest commercial real estate loan relationship as of December 31, 2021 had an aggregate total exposure of $127.7 million, of which $ 125.6 million was comprised of commercial real estate loans.

These loans are secured by retail space, office space, hotels, self-storage, restaurant, and a charter school.

All the loans in this relationship are performing in accordance with their agreed upon terms as of December 31, 2021.

Multi-family commercial and commercial real estate loans are offered with both adjustable and fixed interest rates.

The terms of each multi-family residential and commercial real estate loan are negotiated on a case-by-case basis.

We generally originate multi-

family commercial and commercial real estate loans in amounts up to 80% of the appraised value of the property collateralizing the loan.

We generally originate multi-family commercial and commercial real estate loans in amounts up to 80% of the appraised value of the property collateralizing the loan.

At December 31, 2022, commercial real estate loans totaled $2.825 billion, or 26.1% of gross loans.

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We offer commercial loans to finance various activities in our market area, some of which are secured in part by additional real estate collateral.

At December 31, 2021, our largest commercial loan relationship had an aggregate total exposure of $49.4 million, and was secured by a sports franchise.

This loan was performing in accordance with their agreed upon terms as of December 31, 2021.

At December 31, 2022, our largest commercial loan relationship had an aggregate total exposure of $75.5 million, and operates in the internet, cable and phone space.

These loans were performing in accordance with their agreed upon terms as of December 31, 2022.

Commercial business loans are offered with both fixed and adjustable interest rates.

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We strive to obtain personal guarantees from the borrower or a third party as a condition to originating commercial loans.

At December 31, 2021, commercial loans totaled $861.7 million, or 8.6% of gross loans.

At December 31, 2022, commercial loans totaled $1.133 billion, or 10.4% of gross loans.

Loan Originations, Solicitation, Processing and Commitments.

Upon receiving a retail loan application, we obtain a credit report and verification of employment to confirm specific information relating to the applicant’s employment, income, and credit standing.

Upon receiving a retail loan application, we obtain a credit report and may verify employment to confirm specific information relating to the applicant’s employment, income, and credit standing.

In the case of a real estate loan, either an in-house appraiser, or an approved external appraiser, appraises the real estate intended to secure the proposed loan.

For certain home equity loans we may use an approved alternative valuation such as an assessed value or Affordable Market Value (AMV).

For certain home equity loans we may use an approved alternative valuation such as an assessed value or Automated Value Model (AVM).

A loan underwriter checks the loan document file for accuracy and completeness and verifies the information provided.

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Deferred loan fees and costs are recognized as part of interest income immediately upon prepayment or the sale of the related loan.

At December 31, 2021, we had $53.5 million of net deferred loan origination fees.

At December 31, 2022, we had

$81.3 million of net deferred loan origination fees.

Loan origination fees vary with the volume and type of loans and commitments originated and purchased, principal repayments, and competitive conditions in the marketplace.

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Loans-to-One Borrower .

As of December 31, 2021, the largest aggregate amount loaned to one borrower, or related borrowers, totaled $129.5 million in exposure and was secured by student housing, medical space, senior housing, office space, industrial, aerospace and transportation engineering and retail space.

Our second largest lending relationship totaled $127.7 million in exposure and was secured by student housing, retail space, office space and commercial development.

As of December 31, 2022, the largest aggregate amount loaned to one borrower, or related borrowers, totaled $123.4 million in exposure and was secured by student housing, retail space, office space and commercial development.

Our second largest lending relationship totaled $90.6 million in exposure and was secured by student housing, medical space, senior housing, office space, industrial, aerospace, and transportation engineering and retail space.

Our third largest commercial relationship totaled $75.9 million in exposure and was secured by a hotel, retail space, office space, multi-family, a charter school, self-storage, and a restaurant.

Our fourth largest commercial relationship totaled $82.3 million in exposure and was secured by hotels, senior housing, and office space.

Our fifth largest commercial relationship totaled $49.4 million in exposure and was secured by a sports franchise.

Our fourth largest commercial relationship totaled $75.5 million in exposure and was secured by accounts receivable, information systems, property, and equipment.

Our fifth largest commercial relationship totaled $65.0 million in exposure and was secured by accounts receivable, inventory, manufacturing property and equipment.

All of these loans were performing in accordance with their terms at December 31, 2022.

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All purchase and sale transactions are reported to the Board of Directors on a monthly basis.

Our investment policy does not permit the purchase of complex securities and derivatives as defined in federal banking regulations and other high-risk securities, nor does it permit additional investments in non-agency mortgage-backed securities, pooled trust preferred securities, or single issuer trust preferred securities.

Our investment policy does not permit the purchase of complex securities and derivatives as defined in federal banking regulations and other high-risk securities, nor does it permit additional investments in pooled trust preferred securities, or single issuer trust preferred securities.

At the time of purchase, we designate a security as either held-to-maturity or available-for-sale based upon our ability and intentions.

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We accept brokered deposits through the CDARS program, but generally do not solicit funds outside our market area.

As of December 31, 2021, we had deposits through the CDARS program with an aggregate balance of $2.9 million.

In addition, we acquired brokered certificates

of deposit in the MutualBank transaction that have yet to mature.

The deposits have a balance of $11.4 million as of December 31, 2021.

As of December 31, 2022, we had deposits through the CDARS program with an aggregate balance of $200,000.

In addition, we acquired brokered certificates of deposit in our MutualBank acquisition transaction that have yet to mature.

Those deposits have a balance of $4.2 million as of

December 31, 2022.

Deposit account terms vary according to the minimum balance required, the period of time during which the funds must remain on deposit, and the interest rate, among other factors.

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We may utilize borrowings to supplement our supply of lendable funds and to meet deposit withdrawal requirements.

Borrowings from the FHLB of Pittsburgh and Indianapolis typically are collateralized by a portion of our real estate loans.

In addition to the FHLB, we have borrowing facilities with the Federal Reserve Bank, three correspondent banks and we borrow funds, in the form of corporate repurchase agreements, from municipalities, corporations and school districts.

Northwest Bank is a member of the FHLB of Pittsburgh and Indianapolis.

Borrowings from the FHLB of Pittsburgh typically are collateralized by a portion of our real estate loans.

In addition to the FHLB, we have borrowing facilities with the Federal Reserve Bank, two correspondent banks and we borrow funds, in the form of corporate repurchase agreements, from municipalities, corporations and school districts.

Northwest Bank is a member of the FHLB of Pittsburgh.

The FHLB functions as a central bank providing credit for Northwest Bank and other member financial institutions.

As a member, Northwest Bank is required to own capital stock in the FHLB of Pittsburgh and Indianapolis and is authorized to apply for borrowings on the security of certain of its real estate loans, provided certain standards related to creditworthiness have been met.

As a member, Northwest Bank is required to own capital stock in the FHLB of Pittsburgh and is authorized to apply for borrowings on the security of certain of its real estate loans, provided certain standards related to creditworthiness have been met.

Borrowings are made pursuant to several different programs.

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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 Term Secured Overnight Financing Rate ( “ SOFR”) plus 3.89% payable quarterly in arrears commencing on December 15, 2025.

During the year-ended December 31, 2022 the Company repurchased $10.2 million of subordinated notes leaving $114.8 million of subordinated notes outstanding.

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

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At December 31, 2022, Northwest Bancshares, Inc.’s investment in the Trusts totaled $4.0 million, and the Trusts had assets of $129.3 million, net of discounts due to fair value adjustments made at the time of acquisition of Union Community Bank and MutualFirst Financial, Inc.

At December 31, 2021, Northwest Bank had five active wholly-owned subsidiaries;

Great Northwest Corporation, Allegheny Services, Inc., Northwest Capital Group, Inc., Mutual Federal Interest Corporation, and Northwest Settlement Agency, LLC.

At December 31, 2022, Northwest Bank had four active wholly-owned subsidiaries;

Great Northwest Corporation, Northwest Capital Group, Inc., Mutual Federal Interest Corporation, and Northwest Settlement Agency, LLC.

For financial reporting purposes all of these companies are included in the Consolidated Financial Statements of Northwest Bancshares, Inc.

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For the year ended December 31, 2022, Great Northwest Corporation had net income of $ 430,000, generated primarily from federal low-income housing tax credits.

Allegheny Services, Inc.

is a Delaware investment company that holds mortgage loans originated through our wholesale lending operation as well as municipal bonds.

At December 31, 2021, Northwest Bank had an equity investment in Allegheny Services, Inc.

of $872.1 million, and for the year ended December 31, 2021, Allegheny Services, Inc.

had net income of $ 14.5 million.

Northwest Capital Group, Inc.’s principal activity is to own, operate and ultimately divest of properties that were acquired in foreclosure.

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Mutual Federal Interest Corporation, which is a Nevada corporation, holds and manages a portion of the Northwest Bank investment portfolio and consumer closed-end first mortgage loans.

At December 31, 2021, Northwest Bank had an equity investment in Mutual Federal Interest Corporation of $498.5 million.

At December 31, 2022, Northwest Bank had an equity investment in Mutual Federal Interest Corporation of $1.510 billion.

For the year ended December 31, 2022, Mutual Federal Interest Corporation had net income of $31.9 million.

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Northwest Bank strategically ceased operating several business lines in prior periods.

The Bert Company (doing business as Northwest Insurance Services, which was sold April 30, 2021) was an employee benefits and property and casualty insurance agency specializing in commercial and personal insurance as well as retirement benefit plans.

Allegheny Services, Inc.

(which ceased operations and became inactive during the first quarter of 2022), was a Delaware investment company that held mortgage loans originated through our wholesale lending operation as well as municipal bonds.

At December 31, 2022, Northwest Bank had an equity investment in Allegheny Services, Inc.

of $876.2 million.

The Bert Company (doing business as Northwest Insurance Services), was an employee benefits and property and casualty insurance agency specializing in commercial and personal insurance as well as retirement benefit plans and was sold during the second quarter of 2021.

At December 31, 2022, Northwest Bank had an equity investment of $28.8 million in The Bert Company.

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None of our employees are represented by a collective bargaining group.

As a community bank, our reputation is an extremely valuable and important component of our business.

As a community-based bank, our reputation is an extremely valuable and important component of our business.

We strive to conduct our business in a manner that enhances our reputation.

This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve, delivering superior service to our customers and caring about our customers and associates.

This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve.

Inclusion and Diversity.

We believe that an environment where all employees can contribute, innovate and thrive is key to our success in the future.

With the goal of continuing to deliver an inclusive and diverse environment at Northwest, we have developed the Northwest Inclusion Council which consists of senior advisors and leaders throughout our Company’s footprint.

This council is focused on engaging our entire employee population and leveraging their diverse talents and perspectives to uphold our Company’s core values.

At Northwest Bank, we know that in order to succeed, we must create and maintain an environment where all employees, no matter their background or role, can contribute, innovate and thrive.

We established the Northwest Inclusion Council to foster a workplace where we all feel accepted, safe, seen and heard.

Led by senior advisors and leaders from throughout our company’s footprint, the Inclusion Council is focused on engaging our entire employee population and leveraging their diverse talents and perspectives, most significantly through our newly-formed Employee Resources Groups (ERGs).

Workforce Health and Safety.

The health and safety of our employees, their families and the communities we serve is our top priority.

In order to maintain safety in the workplace, Northwest Bank has an inclusive Safety Committee that includes various levels of positions up through senior leadership.

The committee was established in order to encourage employee involvement and highlight the importance of safety in the workplace.

The COVID-19 pandemic presented an unpredictable and challenging environment across the globe.

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Our compensation program is designed to attract and retain talented individuals to support our business objectives and achieve our strategic goals.

We provide employees with compensation packages that include base salaries, and if eligible, incentive compensation, annual bonuses and incentive stock benefits.

In addition, we also offer employees a 401(k) Plan with an employer match contribution, medical, dental, disability, life, wellness plan, employee assistance plan, paid time off, flexible spending accounts, and voluntary benefits.

We provide employees with compensation packages that include base salaries, and if eligible, incentive compensation, annual bonuses, and equity incentives.

In addition, we also offer employees a 401(k) Plan with an employer match contribution, medical, dental, vision, disability, life, wellness plan, employee assistance plan, flexible work arrangement, paid time off, flexible spending accounts, and voluntary benefits.

SUPERVISION AND REGULATION

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Any change in these laws or regulations, whether by the Department of Banking or the FDIC, could have a material adverse impact on the Company, Northwest Bank and their respective operations.

Additionally, when the consolidated assets of a financial institution and its holding company exceed $10 billion, the financial institution becomes subject to additional statutory and regulatory requirements that will result in additional costs.

Additionally, when the consolidated assets of a financial institution and its holding company exceed $10 billion, such as is the case with us, the financial institution becomes subject to additional statutory and regulatory requirements that will result in additional costs.

This includes enhanced risk management and corporate governance processes, and examination for compliance with federal financial consumer protection laws by the Consumer Financial Protection Bureau (“CFPB”) rather than the FDIC.

As of December 31, 2021, our consolidated assets were $14.502 billion.

Set forth below is a brief description of certain regulatory requirements that are applicable to Northwest Bank and Northwest Bancshares, Inc.

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A Pennsylvania savings bank may locate or change the location of its principal place of business and establish an office anywhere in, or adjacent to, Pennsylvania, with the prior approval of the Department of Banking.

The Banking Code delegates extensive rulemaking power and administrative discretion to the Department of Banking in its supervision and regulation of state-chartered savings banks.

The Banking Code delegates extensive rule making power and administrative discretion to the Department of Banking in its supervision and regulation of state-chartered savings banks.

Although the Department of Banking may accept the examinations and reports of the FDIC in lieu of its own examination, the current practice is for the Department of Banking to conduct joint examinations with the FDIC.

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Under certain circumstances, for instance well qualified customers or customers with multiple individually qualified projects, this limit may be exceeded subject to the approval of the Senior Loan Committee.

December 31, 2021 we had ten credit relationships that were equal to or exceeded our $30.0 million internal limit for individual borrower and two credit relationships that were equal to or exceeded the $100.0 million internal limit for Aggregate Credit Exposure.

December 31, 2022 we had 19 credit relationships that were equal to or exceeded our $30.0 million internal limit for individual borrower and one credit relationship that was equal to or exceeded the $100.0 million internal limit for Aggregate Credit Exposure.

The Company’s ability to pay dividends depends, to a large extent, upon Northwest Bank’s ability to pay dividends to the Company.

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Assessments for institutions with $10 billion or more of assets are primarily based on a scorecard approach by the FDIC, including factors such as examination ratings and modeling measuring the institution’s ability to withstand asset-related and funding-related stress and potential loss to the DIF should the bank fail.

The assessment range (inclusive of possible adjustments specified by the regulations) for institutions with greater than $10 billion of total assets is 1.5 to 40 basis points.

The assessment range (inclusive of possible adjustments specified by the regulations) for institutions with greater than $10 billion of total assets was 1.5 to 40 basis points effective through December 31, 2022.

The FDIC has authority to increase insurance assessments and adopted a final rule in October 2022 to increase initial base deposit insurance assessment rates by two basis points beginning in the first quarterly assessment period of 2023.

As a result, effective January 1, 2023, assessment rates for institutions of the Bank’s size will range from 2.5 to 42 basis points.

Insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged or is engaging in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC or written agreement entered into with the FDIC.

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Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt.

Also included in Tier 2 capital is the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income, up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.

Also included in Tier 2 capital is the allowance for credit losses limited to a maximum of 1.25% of risk-weighted assets and, for institutions that have exercised an opt-out election regarding the treatment of Accumulated Other Comprehensive Income, up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market values.

Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations.

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In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.

The following table shows the Basel III regulatory capital levels that must be maintained to avoid limitations on capital distributions and discretionary bonus payments, effective January 1, 2019.

January 1, 2019

The following table shows the Basel III regulatory capital levels that must be maintained to avoid limitations on capital distributions and discretionary bonus payments.

Common equity Tier 1 ratio plus capital conservation buffer 7.000 %

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The Federal Home Loan Bank System provides a central credit facility primarily for member institutions.

As a member of the Federal Home Loan Bank of Pittsburgh and the Federal Home Loan Bank of Indianapolis, Northwest Bank is required to acquire and hold share of capital stock in the Federal Home Loan Bank in specified amounts.

As a member of the Federal Home Loan Bank of Pittsburgh, Northwest Bank is required to acquire and hold share of capital stock in the Federal Home Loan Bank in specified amounts.

As of December 31, 2022, Northwest Bank was in compliance with this requirement.

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Holding Company Regulation

Prior to March 31, 2021, Northwest Bancshares, Inc.

was regulated as a savings and loan holding company within the meaning of the Home Owners’ Loan Act of 1933, as amended (“HOLA”).

Federal law allows a state savings bank, such as Northwest Bank, to elect to be treated as a savings association, provided that it qualifies as a “Qualified Thrift Lender”.

Such election results in its holding company being regulated as a savings and loan holding company by the Federal Reserve Board rather than as a bank holding company.

Northwest Bank had previously made the Section 10(1) election, but revoked the election effective March 31, 2021.

Therefore, as of such date, Northwest Bancshares, Inc.

is regulated by the Federal Reserve Board as a bank holding company within the meaning of the Bank Holding Company Act of 1956, as amended (“Bank Holding Company Act”).

As a bank holding company, Northwest Bancshares, Inc.

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Federal law prohibits a bank holding company, including Northwest Bancshares, Inc., from acquiring, directly or indirectly, more than 5% of a class of voting securities of, or all or substantially all of the assets of, another bank or bank holding company, without prior written approval of the Federal Reserve Board.

In evaluating applications by bank holding companies to acquire banks,

the Federal Reserve Board considers, among other factors, the financial and managerial resources and future prospects of the parties, the effect of the acquisition on the risk to the DIF, the convenience and needs of the community, competitive factors and compliance with anti-money laundering laws.

In evaluating applications by bank holding companies to acquire banks, the Federal Reserve Board considers, among other factors, the financial and managerial resources and future prospects of the parties, the effect of the acquisition on the risk to the DIF, the convenience and needs of the community, competitive factors and compliance with anti-money laundering laws.

Bank holding companies with greater than $3 billion in total consolidated assets are subject to consolidated regulatory capital requirements identical to those applicable to the subsidiary depository institutions.

As is the case with institutions themselves, the capital conservation buffer was phased in between 2016 and 2019.

Northwest Bancshares, Inc.

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Control, as defined under the Bank Holding Company Act, means ownership, control or power to vote 25% or more of any class of voting stock, control in any manner over the election of a majority of the company’s directors, or a determination by the regulator that the acquirer has the power to exercise, directly or indirectly, a controlling influence over the management or policies of the company.

The Federal Reserve Board adopted a final rule, effective September 30, 2020, that revised its framework for determining whether a company, under the Bank Holding Company Act, exercises a “controlling influence” over a bank or a bank holding company.

The Federal Reserve Board adopted a final rule in 2020 that revised its framework for determining whether a company, under the Bank Holding Company Act, exercises a “controlling influence” over a bank or a bank holding company.

The Federal Reserve Board’s final rule applies to questions of control under the Bank Holding Company Act but does not extend to the Change in Bank Control Act.

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The resulting deferred tax liabilities and assets are adjusted to reflect changes in tax laws.

On December 22, 2017, H.R.1, commonly known as the Tax Cuts and Jobs Act (the “Act”), was signed into law.

The Act includes many provisions that affect our income tax expense, including reducing our federal tax rate from 35.0% to 21.0% effective January 1, 2018.

As a result of the rate reduction, we were required to re-measure, through income tax expense in the period of enactment, our deferred tax assets and liabilities using the enacted rate at which we expect them to be recovered or settled.

The re-measurement of our net deferred tax liability resulted in a 2017 income tax benefit of $3.1 million.

Inflation Reduction Act of 2022.

The Inflation Reduction Act, which was signed into law on August 16, 2022, among other things, implements a new alternative minimum tax of 15% on corporations with profits in excess of $1 billion, a 1% excise tax on stock repurchases, and several tax incentives to promote clean energy and climate initiatives.

These provisions are effective beginning January 1, 2023.

State Taxation .

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The subsidiaries of Northwest Bank are subject to a Pennsylvania corporate net income tax and are also subject to other applicable taxes in the states where they conduct business.

We are subject to routine audits of our tax returns by the Internal Revenue Service as well as all states in which we conduct business.

We are subject to audit by the Internal Revenue Service for the tax periods ended after December 31, 2018 and generally subject to audit by any state in which we conduct business for the tax periods ended after December 31, 2018.

We are under audit by the state of New York for tax years 2016 through 2018.

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

What changed 10-K

Item 1. Business