What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-24 compared with 2022-02-25 · 175 added, 142 removed, 723 unchanged (30% of the section changed)

9 unchanged sentences

Our net income was $133.7 million, or $1.05 per diluted share, for the year ended December 31, 2022 compared to $154.3 million, or $1.21 per diluted share, for the year ended December 31, 2021, and $74.9 million, or $0.62 per diluted share, for the year ended December 31, 2020.

The provision for credit losses was a credit of $11.9 million for the year ended December 31, 2021 compared to a provision expense of $84.0 million for the year ended December 31, 2020 and a provision expense of $22.7 million for the year ended December 31, 2019.

The provision for credit losses was $17.9 million for the year ended December 31, 2022 compared to a provision credit of $11.9 million for the year ended December 31, 2021 and a provision expense of $84.0 million for the year ended December 31, 2020.

Selected Financial and Other Data

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(4) Represents net interest income as a percentage of average interest-earning assets (shown on a FTE basis).

(5) 2019 includes $4.2 million restructuring/acquisition expense.

(6) 2020 includes $20.8 million acquisition/branch optimization expense, $41.6 million estimated provision for credit losses related to COVID-19 and $18.2 million

estimated provision for credit losses related to the effect of CECL on the acquisition of MutualBank.

(5) 2020 includes $20.8 million acquisition/branch optimization expense, $41.6 million estimated provision for credit losses related to COVID-19 and $18.2 million estimated provision for credit losses related to the effect of CECL on the acquisition of MutualBank.

(6) 2021 includes $3.5 million in merger, asset disposition and restructuring expense.

(7) 2021 includes $25.3 million gain on sale of insurance business.

(8) 2022 includes $5.6 million in merger, assets disposition and restructuring expense.

Critical Accounting Estimates

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In establishing the allowance for credit losses, a combination of statistical models are applied to various pools of outstanding loans.

We use a twenty-four month forecasting period and revert to historical average loss rates thereafter.

We use a 24 month forecasting period and revert to historical average loss rates thereafter.

Credit relationships that have been classified as substandard or doubtful and are greater than or equal to $1.0 million are reviewed by the Credit Administration department to determine if they no longer continue to demonstrate similar risk characteristics to their loan pool.

If a loan no longer demonstrates similar risk characteristics to their loan pool they are removed from the pool and an individual assessment will be performed.

term, as well as changes in environmental conditions, among other factors, that have occurred but are not yet reflected in the quantitative model component.

The allowance calculation is also supplemented with qualitative reserves that takes into consideration the current portfolio and specific risk characteristics, such as changes in underwriting standards, portfolio mix, delinquency level, or term, as well as changes in environmental conditions, among other factors, that have occurred but are not yet reflected in the quantitative model component.

Our allowance for credit losses is sensitive to a number of inputs, most notably the macroeconomic forecast assumptions as well as the reasonable and supportable forecasting periods that are incorporated in our estimate of credit losses.

6 unchanged sentences

These forecasts revert to our long-term historical average loss rate after a 24 month forecasting period.

If we shortened the forecasting period to twelve months and reverted to our long-term historical loss rate thereafter, the quantitative allowance for credit losses would have been approximately $ 833,000 higher .

Although management believes that it uses the best information available to establish the allowance for credit losses, future adjustments to the allowance for credit losses may be necessary and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations.

7 unchanged sentences

The following Accounting Standard Updates (“ASU”) issued by the FASB have not yet been adopted.

In March 2020, the FASB issued ASU No.

2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting”.

This ASU provides temporary optional guidance to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates.

In March 2020, the FASB issued Accounting Standards Update (“ASU”) No.

2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides temporary optional guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates.

The guidance provides expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met.

The amendments primarily include contract modifications and hedge accounting, as well as providing a one-time election for the sale or transfer of debt securities classified as held-to-maturity.

This guidance is effective March 12, 2020 through December 31, 2022.

We are currently in the process of evaluating the amendments and determining the impact on our financial statements.

This guidance was effective as of March 12, 2020 through December 31, 2022.

In December 2022, the FASB issued ASU No.

2022-06, “ Reference Rate Reform (Topic 848):

Deferral of the Sunset Date to Topic 848 ” .

This guidance extends the guidance of ASU 2022-04 from December 31, 2022 to December 31, 2024.

In January 2021, the FASB issued ASU No.

2021-01, “Reference Rate Reform”.

This ASU provides amendments, which are elective, and apply to all entities that have derivative instruments that use an interest rate for margining, discounting or contract price alignment of certain derivative instruments that are modified as a result of the reference rate reform.

This guidance is effective as of the date of issuance through December 31, 2022.

We are currently in the process of evaluating the amendments and determining the impact on our financial statements.

2021-01, “Reference Rate Reform.” This ASU provides amendments, which are elective, and apply to all entities that have derivative instruments that use an interest rate for margining, discounting or contract price alignment of certain derivative instruments that are modified as a result of the reference rate reform.

We established a cross-functional working group to manage the LIBOR transition.

A transition plan was created to identify and modify the Company’s loan and other financial instrument contracts that are impacted by LIBOR transition.

The Company chose the Secured Overnight Financing Rate (“SOFR”) as its alternative replacement for LIBOR on both back-to-back swaps and variable rate loans.

We have not offered LIBOR for any new contracts since December 31, 2021.

We are continuing to evaluate the amendments on our financial statements, with no material impacts expected, and execute on our transition plan.

In March 2022, the FASB issued ASU No.

2022-02, “Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings (“TDR”) and Vintage Disclosure.” This ASU eliminates the accounting guidance for troubled debt restructurings, while enhancing disclosure requirements for certain loan modifications when a borrower is experiencing financial difficulty.

This ASU also requires the disclosure of current period gross write-offs by year for origination for financing receivables.

This guidance is effective for annual periods beginning after December 15, 2022, including interim periods within those years, with early adoption permitted.

This ASU is applied prospectively to modifications and write-offs beginning on the first day of the fiscal year of adoption.

An entity may elect to adopt a modified retrospective transition method on the recognition and measurement of the TDR guidance.

We do not believe this guidance will have a material impact on the Company’s financial statements, but will result in additional disclosures.

Balance Sheet Analysis

Total assets at December 31, 2021 were $14.502 billion, an increase of $695.2 million, or 5.0%, from $13.806 billion at December 31, 2020.

This increase in assets was due to an increase in both marketable securities and total cash and cash equivalents.

Total assets at December 31, 2022 were $14.113 billion, a decrease of $388.2 million, or 2.7%, from $14.502 billion at December 31, 2021.

This decrease in assets was driven by a decrease in both marketable securities and total cash and cash equivalents.

A discussion of significant changes follows.

Cash and cash equivalents .

Cash and cash equivalents increased by $543.0 million to $1.279 billion at December 31, 2021, from $736.3 million at December 31, 2020.

This increase was primarily due to the increase in customer deposit balances associated with consumer stimulus checks and loan funds from the Paycheck Protection Program (“PPP”).

Cash and cash equivalents decreased by $1.140 billion, or 89.1%, to $139.4 million at December 31, 2022, from $1.279 billion at December 31, 2021.

This decrease was primarily driven by organic loan growth and deposit outflow, described in further detail below, as well as the purchase of three small business equipment finance loan pools totaling $182.8 million and two one- to four-family jumbo mortgage loan packages totaling $188.3 million during the year ended December 31, 2022.

Marketable securities .

Marketable securities increased by $738.9 million, or 46.8%, to $2.317 billion at December 31, 2021, from $1.578 billion at December 31, 2020.

This increase was primarily a result of investing excess cash generated by deposits within our held-to-maturity portfolio.

Marketable securities decreased by $217.4 million, or 9.4%, to $2.099 billion at December 31, 2022, from $2.317 billion at December 31, 2021.

This decrease was driven primarily by the rising interest rate environment which negatively impacted the fair market value of our available-for-sale portfolio.

Additionally, the maturity and monthly cash flow of marketable securities was redeployed into higher interest-earning loan products.

The following table sets forth certain information regarding the amortized cost and fair value of our available-for-sale marketable securities portfolio and mortgage-backed securities portfolio at the dates indicated.

11 unchanged sentences

Municipal securities 127,455 111,766 125,457 128,701

Corporate debt issues 13,540 12,978 — —

Total marketable securities available-for-sale $ 1,431,728 1,218,108 1,565,002 1,548,592

44 unchanged sentences

Municipal securities 506 2.43 % 986 3.50 % 36,332 2.21 % 89,631 2.17 % 127,455 111,766 2.20 %

Corporate debt issues — — % — — % 13,540 4.68 % — — % 13,540 12,978 4.68 %

Total marketable securities available-for-sale 506 2.43 % 21,979 1.42 % 95,686 2.01 % 142,783 1.84 % 260,954 224,537 1.87 %

8 unchanged sentences

agency obligations — — % 29,478 0.98% 94,977 1.01 % — — % 124,455 102,622 1.00 %

Total investment securities held-to-maturity — — % 29,478 0.98% 94,977 1.01 % — — % 124,455 102,622 1.00 %

Residential mortgage-backed securities held-to-maturity:

6 unchanged sentences

Loans Receivable .

Net loans receivable decreased by $532.3 million, or 5.1%, to $9.914 billion at December 31, 2021, from $10.446 billion at December 31, 2020.

This decrease was due primarily to loan paydowns and payoffs outpacing new originations across all of our loan portfolios with the exception of our consumer loan portfolio which increased $330.8 million, or 21.9%, to $1.839 billion at December 31, 2021 from $1.508 billion at December 31, 2020.

Gross loans receivable increased by $904.1 million, or 9.0%, to $10.920 billion at December 31, 2022, from $10.016 billion at December 31, 2021.

This increase was due to organic loan growth as well as the purchases of small business equipment finance and one- to four-family jumbo mortgage loan pools during the year.

Our personal banking loan portfolio increased by $811.6 million, or 13.2%, to $6.965 billion at December 31, 2022 from $6.153 billion at December 31, 2021.

Continued growth in our consumer indirect auto loans and fewer sales of residential mortgages into the secondary market contributed to the increase in total loans receivable.

In addition, our commercial loan portfolio increased by $92.4 million, or 2.4%, to $3.956 billion at December 31, 2022 from $3.863 billion at December 31, 2021.

Set forth below are selected data related to the composition of our loan portfolio by type of loan as of the dates indicated.

At December 31,

2021 2020 2019

Amount Percent Amount Percent Amount Percent

Amount Percent Amount Percent

(Dollars in thousands)

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Demand loans and loans having no stated schedule of repayments and no stated maturity are reported as due in one year or less.

Adjustable and floating-rate loans are included in the period in which they contractually mature, and fixed-rate loans are included in the period in which the contractual repayment is due.

Adjustable and floating-rate loans are included in the period in which the contractual repayment is due or they contractually mature, if interest only, and fixed-rate loans are included in the period in which the contractual repayment is due.

At December 31, 2022 (In thousands) Due in one year or less Due after

13 unchanged sentences

Total Loans Receivable $ 10,920,452

The following table sets forth at December 31, 2021, the dollar amount of all fixed-rate and adjustable-rate loans due one year or more after December 31, 2021.

The following table sets forth at December 31, 2022, the dollar amount of all fixed-rate loans due one year or more after December 31, 2022.

At December 31, 2022 (In thousands) Due after

five years Due after

fifteen years Due after fifteen years Total

Personal Banking:

Residential mortgage loans $ 543,387 1,261,709 1,490,086 3,295,182

Home equity loans 305,535 425,300 38,364 769,199

Consumer loans 1,417,142 210,747 — 1,627,889

Total Personal Banking 2,266,064 1,897,756 1,528,450 5,692,270

Commercial Banking:

Commercial real estate loans 396,133 63,708 439 460,280

Commercial loans 290,078 31,334 3,420 324,832

Total Commercial Banking 686,211 95,042 3,859 785,112

Total Loans $ 2,952,275 1,992,798 1,532,309 6,477,382

The following table sets forth at December 31, 2022, the dollar amount of all adjustable-rate loans due one year or more after December 31, 2022.

Adjustable and floating-rate loans are included in the table based on the contractual due date of the loan.

At December 31, 2021 (In thousands) Fixed Adjustable Total

At December 31, 2022 (In thousands) Due after

five years Due after

fifteen years Due after fifteen years Total

Personal Banking:

7 unchanged sentences

Total Commercial Banking 1,184,902 942,537 298,935 2,426,374

Total $ 5,757,854 2,762,931 8,520,785

Total deposits increased by $701.9 million, or 6.1%, to $12.301 billion at December 31, 2021 from $11.599 billion at December 31, 2020.

This increase was primarily due to an increase in noninterest-bearing demand deposits of $383.3 million, or 14.1%, to $3.100 billion at December 31, 2021 from $2.716 billion at December 31, 2020 and an increase in savings deposits of $256.3 million, or 12.5%, to $2.304 billion at December 31, 2021 from $2.047 billion at December 31, 2020.

In addition, money market deposit accounts increased by $192.3 million, or 7.9%, to $2.630 billion at December 31, 2021 from $2.438 billion at December 31, 2020 and interest-bearing demand deposits increased by $184.5 million, or 6.7%, to $2.940 billion at December 31, 2021 from $2.756 billion at December 31, 2020.

These deposit account increases were the result of both consumer stimulus checks and PPP loan funds as well as consumer saving trends.

Partially offsetting these increases, time deposits decreased by $314.5 million, or 19.2%, as customer trends have moved funds from term products to checking and savings accounts.

Total Loans $ 1,220,922 1,024,289 690,133 2,935,344

Total deposits decreased by $836.6 million, or 6.8%, to $11.465 billion at December 31, 2022 from $12.301 billion at December 31, 2021.

This decrease was primarily due to decreases in time and demand deposit accounts of $635.6 million, or 8.6%, as well as a decrease in money market deposit accounts by $172.3 million, or 6.6%.

We believe these decreases were primarily the result of customer spending activity returning to pre-pandemic levels at a time when inflationary pressures have caused higher prices and government stimulus programs have ended.

The following table sets forth the dollar amount of deposits in the various types of accounts we offered at the dates indicated.

29 unchanged sentences

Total $ 108,323

At December 31, 2021 and 2020, we had deposits in excess of $250,000 (the limit for FDIC insurance) of $123.7 million and $181.7 million, respectively.

At December 31, 2022 and 2021, we had deposits in excess of $250,000 (the limit for FDIC insurance) of $4.031 billion and $4.194 billion, respectively.

At those dates, we had no deposits that were uninsured for any other reason.

Borrowings decreased by $20.4 million, or 7.2%, to $262.7 million at December 31, 2021 from $283.0 million at December 31, 2020.

This decrease was a result of $22.0 million of term notes payable to the FHLB maturing during the current year.

Borrowings increased by $532.3 million, or 202.7%, to $795.0 million at December 31, 2022 from $262.7 million at December 31, 2021.

This increase was a result of securing $551.3 million of notes payable to the FHLB during the current year.

The following table sets forth information concerning our borrowings at the dates and for the periods indicated.

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Weighted average interest rate at end of year 0.27 % 0.19 %

Collateral received:

Average balance outstanding $ 14,104 —

Maximum outstanding at end of any month during year 42,824 —

Balance outstanding at end of year 24,100 —

Weighted average interest rate during year 2.62 % — %

Weighted average interest rate at end of year 4.17 % — %

Subordinated borrowings:

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Shareholders’ equity .

Total shareholders’ equity at December 31, 2021 was $1.584 billion, an increase of $44.9 million, or 2.9%, from $1.539 billion at December 31, 2020.

This increase in equity was primarily the result of net income for the year ended December 31, 2021 of $154.3 million.

This increase was partially offset by the payment of cash dividends of $100.3 million for the year ended December 31, 2021.

Total shareholders’ equity at December 31, 2022 was $1.491 billion, or $11.74 per share, a decrease of $92.1 million, or 5.8%, from $1.584 billion, or $12.51 per share, at December 31, 2021.

This decrease in equity was primarily the result of an increase in accumulated other comprehensive loss of $151.9 million due to an increase in unrealized losses in the available-for-sale investment portfolio as a result of rising interest rates, as well as the payment of cash dividends of $101.5 million during the year ended December 31, 2022.

These decreases were partially offset by net income of $133.7 million for the year ended December 31, 2022.

Comparison of Results of Operations for the Years Ended December 31, 2022 and 2021

Net income for the year ended December 31, 2022 was $133.7 million, or $1.05 per diluted share, a decrease of $20.7 million, or 13.4%, from $154.3 million, or $1.21 per diluted share, for the year ended December 31, 2021.

The decrease in net income resulted from an increase in the provision for credit losses of $29.7 million, or 250.3%, and a decrease in noninterest income of $32.0 million, or 22.4%.

Partially offsetting these unfavorable variances was an increase in net interest income of $29.4 million, or 7.5%, a decrease in income tax expense of $6.8 million, or 14.5%, and a decrease in noninterest expense of $4.9 million, or 1.4%.

Net income for the year ended December 31, 2022 represents returns on average equity and average assets of 8.80% and 0.94%, respectively, compared to 9.91% and 1.08% for the year ended December 31, 2021.

A discussion of significant changes follows.

Interest Income.

Total interest income increased by $30.3 million, or 7.2%, to $448.8 million for the year ended December 31, 2022 from $418.5 million for the year ended December 31, 2021.

This increase is the result of increases in the average yield on interest-earning assets as well as the average balance of interest-earning assets, and specifically the change in our interest-earning asset mix.

The average yield earned on interest-earning assets increased to 3.39% for the year ended December 31, 2022 from 3.16% for the year ended December 31, 2021 due to the rising interest rate environment.

The average balance of interest-earning assets increased by $17.6 million, or 0.1%, to $13.254 billion for the year ended December 31, 2022 from $13.236 billion for the year ended December 31, 2021.

Interest income on loans receivable increased by $17.5 million, or 4.5%, to $407.8 million for the year ended December 31, 2022 from $390.3 million for the year ended December 31, 2021.

This increase in interest income on loans receivable is due to increases in the average yield on loans receivable as well as the average balance of loans receivable.

The average yield earned on loans receivable increased to 3.95% for the year ended December 31, 2022 from 3.81% for the year ended December 31, 2021 primarily due to the increase in market interest rates.

The average balance of loans receivable increased $79.3 million, or 0.8%, to $10.319 billion for the year ended December 31, 2022 from $10.240 billion for the year ended December 31, 2021 driven mainly by growth in our retail portfolio as commercial Paycheck Protection Program ( “ PPP”) loans continued to payoff.

Interest income on mortgage-backed securities increased by $9.3 million, or 43.5%, to $30.8 million for the year ended December 31, 2022 from $21.5 million for the year ended December 31, 2021.

This increase is attributed to increases in both the average yield of mortgage-backed securities and the average balance.

The average yield on mortgage-backed securities increased to 1.56% for the year ended December 31, 2022 from 1.26% for the year ended December 31, 2021 due to the purchase of fixed-rate mortgage-backed securities with yields higher than the existing portfolio.

Additionally, the average balance of mortgage-backed securities increased by $264.5 million, or 15.5%, to $1.969 billion for the year ended December 31, 2022 from $1.704 billion for the year ended December 31, 2021.

This increase was primarily a result of additional purchases as we deployed interest-earning deposits into higher yielding investments throughout 2022.

Interest income on investment securities increased by $736,000, or 14.4%, to $5.8 million for the year ended December 31, 2022 from $5.1 million for the year ended December 31, 2021.

This increase is primarily the result of an increase in the average balance of investment securities of $30.7 million, or 8.8%, to $381.5 million for the year ended December 31, 2022 from $350.8 million for the year ended December 31, 2021.

Additionally, the average yield on investment securities increased to 1.53% for the year ended December 31, 2022 from 1.45% for the year ended December 31, 2021.

Dividends on FHLB stock increased by $323,000, or 79.4%, to $730,000 for the year ended December 31, 2022 from $407,000 for the year ended December 31, 2021.

This increase is the result of an increase in the average yield on FHLB stock to 4.27% for the year ended December 31, 2022 from 2.01% for the year ended December 31, 2021 as the FHLB of Pittsburgh increased dividend rates on required stock holdings in relation to higher market interest rates.

Partially offsetting this increase was a decrease in the average balance of FHLB stock of $3.2 million, or 15.6%, to $17.1 million for the year ended December 31, 2022 from $20.2 million for the year ended December 31, 2021.

Required FHLB stock holdings fluctuate with, among other things, the utilization of our borrowing capacity as well as capital requirements established by the FHLB.

Interest income on interest-earning deposits increased by $2.4 million, or 201.4%, to $3.6 million for the year ended December 31, 2022 from $1.2 million for the year ended December 31, 2021.

This increase is attributable to an increase in the average yield on interest-earning deposits to 0.63% for the year ended December 31, 2022 from 0.13% for the year ended December 31, 2021, as a result of increases in the targeted federal funds rate by the Federal Reserve.

This was partially offset by a decrease in the average balance of interest-earning deposits by $353.8 million, or 38.4%, to $567.6 million for the year ended December 31, 2022 from $921.4 million for the year ended December 31, 2021 as we deployed funds into higher yielding loans and investments.

Interest Expense.

Interest expense increased by $871,000, or 3.2%, to $28.1 million for the year ended December 31, 2022 from $27.2 million for the year ended December 31, 2021 due to an increase in the average cost of interest-bearing liabilities to 0.30% for the year ended December 31, 2022 from 0.29% for the year ended December 31, 2021.

This increase was due to increases in the interest rates paid on borrowed funds and junior subordinated debentures in response to increases in market interest rates.

Partially offsetting these increases was a decrease in the average balance of interest-bearing liabilities of $120.5 million, or 1.3%, to $9.381 billion for the year ended December 31, 2022 from $9.501 billion for the year ended December 31, 2021.

This decrease in average balance was driven by a decrease in average deposits by $191.7 million, or 2.1%, as customers utilized funds for higher inflationary purchases and searched for higher alternative yields.

Net Interest Income.

Net interest income increased by $29.4 million, or 7.5%, to $420.7 million for the year ended December 31, 2022 from $391.3 million for the year ended December 31, 2021.

This increase was attributable to the factors discussed above, specifically the increase in interest income which was partially offset by the increase in interest expense on borrowed funds.

Our interest rate spread increased to 3.09% for the year ended December 31, 2022 from 2.88% for the year ended December 31, 2021, and our net interest margin increased to 3.17% for the year ended December 31, 2022 from 2.96% for the year ended December 31, 2021 due to the change in market rates as well as the change in our interest-earning asset mix.

Provision for Credit Losses.

We analyze the allowance for credit losses as described in No te 1(f) of the Notes to the Consolidated Financial Statements.

The provision for credit losses increased by $29.7 million, or 250.3%, to a provision expense of $17.9 million for the year ended December 31, 2022 compared to a provision credit of $11.9 million for the year ended December 31, 2021.

The current period provision was driven primarily by growth within our loan portfolio as well as a deterioration in the most recent economic forecasts reflected in our allowance for credit loss models, including a reduction in home and used vehicle values.

The negative provision in the prior year was driven by the improvements in the economic forecasts compared to the uncertainty that existed in 2020 for industries impacted by COVID-19.

Total classified loans decreased by $126.9 million, or 34.9%, to $236.2 million at December 31, 2022 from $363.2 million at December 31, 2021.

In addition, net charge-offs to average loans decreased to 0.02% for the year ended December 31, 2022 from 0.20% for the year ended December 31, 2021.

In determining the amount of the current period provision, we considered current economic conditions, including unemployment levels, bankruptcy filings, and changes in collateral values, and assessed the impact of these factors on the quality of our loan portfolio and historical loss experience.

We analyze the allowance for credit losses as described in the section entitled “Allowance for Credit Losses”.

The provision that is recorded is sufficient, in our judgment, to bring this reserve to a level that reflects the current expected lifetime losses in our loan portfolio relative to loan mix, a reasonable and supportable economic forecast period and historical loss experience at December 31, 2022.

Noninterest Income.

Noninterest income decreased by $32.0 million, or 22.4%, to $110.8 million for the year ended December 31, 2022 from $142.9 million for the year ended December 31, 2021.

This decrease was primarily driven by the sale of our insurance business on April 30, 2021, resulting in a $25.3 million pre-tax gain during the prior year.

This insurance business sale in the prior year also resulted in a decrease in insurance commission income of $3.6 million from the year ended December 31, 2021.

Also contributing to this decrease was a decrease in mortgage banking income of $11.0 million, or 69.4%, to $4.9 million for the year ended December 31, 2022 from $15.9 million for the year ended December 31, 2021, due primarily to the volatile interest rate environment causing unfavorable pricing in the secondary market, as well as a slowdown in mortgage loan activity in general.

Partially offsetting these decreases were increases in service charges and fees, other operating income, and income from bank-owned life insurance.

Service charges and fees increased $3.4 million, or 6.5%, to $55.2 million for the year ended December 31, 2022 from $51.8 million for the year ended December 31, 2021 due to increased customer activity in 2022 after COVID-19 restricted behavior in the prior year.

Other operating income increased $3.3 million, or 28.0%, to $15.3 million for the year ended December 31, 2022 from $12.0 million for the year ended December 31, 2022, resulting from gains on the sale of branch buildings associated with the previously announced branch consolidations and improvements in other fee income.

Lastly, income from bank-owned life insurance increased $1.1 million, or 17.8%, to $7.1 million for the year ended December 31, 2022 from $6.1 million for the year ended December 31, 2021 due to additional death benefits received during the current year.

Noninterest Expense.

Noninterest expense decreased by $4.9 million, or 1.4%, to $340.0 million for the year ended December 31, 2022 from $344.9 million for the year ended December 31, 2021 due to decreases across the majority of expense categories.

Compensation and employee benefits decreased $5.5 million, or 2.9%, to $188.4 million for the year ended December 31, 2022 from $193.9 million for the year ended December 31, 2021, despite recognizing approximately $1.4 million of additional expense related to the acceleration of compensation and stock benefits upon the passing of our former Chief Executive Officer.

This decrease in compensation and employee benefits, as well as a $1.5 million, or 4.7%, decrease in premises and occupancy costs, to $29.6 million for the year ended December 31, 2022 from $31.1 million for the year ended December 31, 2021, was driven primarily by the branch consolidations completed in April 2022.

Processing expenses decreased $3.3 million, or 5.9%, to $52.5 million for the year ended December 31, 2022 from $55.8 million for the year ended December 31, 2021, due to the prior year investment in technology and infrastructure.

Professional services decreased $2.9 million, or 16.6%, to $14.7 million for the year ended December 31, 2022 from $17.6 million for the year ended December 31, 2021 primarily due to the utilization of third-party experts to assist with our digital strategy rollout during the prior year.

Lastly, amortization of intangible assets decreased $1.3 million, or 23.0%, to $4.3 million for the year ended December 31, 2022 compared to $5.6 million for the year ended December 31, 2021 due to previously acquired intangbile assets being fully amortized.

These decreases were partially offset by an increase in other expenses of $7.3 million, or 87.9%, to $15.7 million for the year ended December 31, 2022 from $8.3 million for the year ended December 31, 2021 primarily due to the increase in the reserve for unfunded commitments associated with the origination of loans with current off-balance sheet exposure.

We experienced an increase of $2.2 million, or 62.7%, in merger, asset disposition and restructuring expense to $5.6 million for the year ended December 31, 2022 from $3.5 million for the year ended December 31, 2021 due to severance and fixed asset charges related to the branch and personnel optimization to be completed during the first quarter of 2023.

Income Taxes.

The provision for income taxes decreased by $6.8 million, or 14.5%, to $40.0 million for the year ended December 31, 2022 from $46.8 million for the year ended December 31, 2021.

This decrease in income tax expense is primarily due to the $27.4 million, or 13.6%, decrease in pretax income to $173.7 million for the year ended December 31, 2022 from $201.1 million for the year ended December 31, 2021.

In addition, our effective tax rate for the year ended December 31, 2022 was 23.0% compared to 23.3% for the year ended December 31, 2021.

Comparison of Results of Operations for the Years Ended December 31, 2021 and 2020

Net income for the year ended December 31, 2021 was $154.3 million, or $1.21 per diluted share, an increase of $79.5 million, or 106.2%, from $74.9 million, or $0.62 per diluted share, for the year ended December 31, 2020.

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The prior year was significantly impacted by the onset of COVID-19 and the uncertainty surrounding the possible negative effect on loan commitments and undrawn lines of credit.

Partially offsetting these decreases was an increase in compensation and employee benefits of $15.5 million, or 8.7%, to $193.9 million for the year ended December 31, 2021 from $178.4 million for the year ended December 31, 2020 primarily due to increases in health insurance and other benefits costs, regular merit expense and the addition of MutualBank and other strategic personnel.

Partially offsetting these decreases was an increase in compensation and employee benefits of $15.5 million, or 8.7%, to $193.9 million for the year ended December 31, 2021 from $178.4

million for the year ended December 31, 2020 primarily due to increases in health insurance and other benefits costs, regular merit expense and the addition of MutualBank and other strategic personnel.

Additionally, processing expenses increased $5.7 million, or 11.4%, to $55.8 million for the year ended December 31, 2021 from $50.1 million for the year ended December 31, 2020, as we continue to invest in technology and infrastructure as well as increases in activity-driven utilization fees for ATM, check card and online and mobile banking.

Lastly, professional service expense increased $5.1 million, or 41.2%, to $17.6 million for the year ended

December 31, 2021 from $12.5 million for the year ended December 31, 2020 primarily due to the utilization of third-party experts to assist with our digital strategy rollout.

Lastly, professional service expense increased $5.1 million, or 41.2%, to $17.6 million for the year ended December 31, 2021 from $12.5 million for the year ended December 31, 2020 primarily due to the utilization of third-party experts to assist with our digital strategy rollout.

Income Taxes.

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In addition, our effective tax rate for the year ended December 31, 2021 was 23.3% compared to 19.1% for the year ended December 31, 2020.

Comparison of Results of Operations for the Years Ended December 31, 2020 and 2019

Net income for the year ended December 31, 2020 was $74.9 million, or $0.62 per diluted share, a decrease of $35.6 million, or 32.2%, from $110.4 million, or $1.04 per diluted share, for the year ended December 31, 2019.

The decrease in net income resulted from an increase in provision for credit losses of $61.3 million, or 270.6%, and an increase in noninterest expense of $51.4 million, or 17.4%.

Partially offsetting these increases were an increase in noninterest income of $32.9 million, or 33.1%, an increase in net interest income of $31.3 million, or 8.7%, and a decrease in income tax expense of $13.0 million, or 42.4%.

Net income for the year ended December 31, 2020 represents returns on average equity and average assets of 4.72% and 0.58%, respectively, compared to 8.36% and 1.07% for the year ended December 31, 2019.

A discussion of significant changes follows.

Interest Income.

Total interest income increased by $16.7 million, or 4.0%, to $434.1 million for the year ended December 31, 2020 from $417.4 million for the year ended December 31, 2019.

This increase is the result of an increase in the average balance of interest-earning assets of $2.294 billion, or 24.3%, to $11.733 billion for the year ended December 31, 2020 from $9.438 billion for the year ended December 31, 2019.

Partially offsetting this increase in average balances was a decrease in the average yield on interest-earning assets to 3.70% for the year ended December 31, 2020 from 4.42% for the year ended December 31, 2019.

This decrease in average yield is attributed to a decline in overall market interest rates.

Interest income on loans receivable increased by $16.1 million, or 4.1%, to $410.9 million for the year ended December 31, 2020 from $394.8 million for the year ended December 31, 2019.

This increase in interest income on loans receivable is attributed to the increase in the average balance on loans receivable.

The average balance increased by $1.549 billion, or 18.1%, to $10.104 billion for the year ended December 31, 2020 from $8.555 billion for the year ended December 31, 2019.

This increase is due primarily to the addition of $1.517 billion, at fair value, of loans related to the MutualBank acquisition and organic loan growth of $255.2 million.

Contributing to this organic loan growth was the origination of approximately $500.0 million of PPP loans.

Included in loan interest income for the year ended December 31, 2020 is $3.1 million of accretion related to MutualBank loan purchase accounting and $5.7 million of accretion related to PPP fees, net of origination costs.

Partially offsetting this increase in average balances was a decrease in the average yield on loans receivable to 4.07% for the year ended December 31, 2020 from 4.61% for the year ended December 31, 2019 primarily due to the decrease in market interest rates.

Interest income on mortgage-backed securities increased by $746,000, or 4.5%, to $17.4 million for the year ended December 31, 2020 from $16.7 million for the year ended December 31, 2019.

This increase is the result of an increase in the average balance of mortgage-backed securities by $250.0 million, or 39.1%, to $889.7 million for the year ended December 31, 2020 from $639.8 million for the year ended December 31, 2019.

This increase was primarily a result of investment securities received as part of the MutualBank acquisition as well as additional purchases utilizing excess cash from deposit growth during the current year.

Partially offsetting this increase was a decrease in the average yield on mortgage-backed securities to 1.96% for the year ended December 31, 2020 from 2.61% for the year ended December 31, 2019.

This decrease in yield was partially due to the assumption of mortgage-backed securities from MutualBank with market yields lower than the existing Northwest portfolio due to mark-to-market purchase accounting adjustments.

In addition, new security purchases were made at lower yields due to decreases in market interest rates.

Interest income on investment securities remained relatively flat, decreasing by $200,000, or 4.7%, to $4.0 million for the year ended December 31, 2020 from $4.2 million for the year ended December 31, 2019.

This decrease is the result of a decrease in the average balance of investment securities of $9.7 million, or 4.7%, to $196.1 million for the year ended December 31, 2020 from $205.8 million for the year ended December 31, 2019, which was primarily due to the maturity or call of government agency securities.

The average yield on investment securities remained flat at 2.06% for the years ended December 31, 2020 and December 31, 2019.

Dividends on FHLB stock decreased by $75,000, or 7.1%, to $981,000 for the year ended December 31, 2020 from $1.1 million for the year ended December 31, 2019.

This decrease is the result of decreases in the average yield on FHLB stock which decreased to 4.50% for the year ended December 31, 2020 from 7.29% for the year ended December 31, 2019.

The FHLB of Pittsburgh recently decreased yields on required stock holdings in reaction to lower market interest rates.

Slightly offsetting this

decrease was an increase in the average balance on FHLB stock by $7.3 million, or 50.5%, to $21.8 million for the year ended December 31, 2020 from $14.5 million for the year ended December 31, 2019 primarily due to FHLB stock acquired and retained from MutualBank.

Required FHLB stock holdings fluctuate with, among other things, the utilization of our borrowing capacity as well as capital requirements established by the FHLB.

Interest income on interest-earning deposits increased by $119,000, or 19.8%, to $719,000 for the year ended December 31, 2020 from $600,000 for the year ended December 31, 2019.

This increase is attributable to an increase in the average balance of interest-earning deposits.

The average balance increased by $497.4 million to $520.7 million for the year ended December 31, 2020 from $23.3 million for the year ended December 31, 2019 due to excess liquidity from recent deposit inflows.

Partially offsetting this increase was a decrease in the average yield on interesting-earning deposits to 0.14% for the year ended December 31, 2020 from 2.54% for the year ended December 31, 2019, as a result of the Federal Reserve decreasing their targeted federal funds rate.

Interest Expense .

Interest expense decreased by $14.6 million, or 25.6%, to $42.3 million for the year ended December 31, 2020 from $56.9 million for the year ended December 31, 2019.

This decrease in interest expense was primarily due to the decline in the average cost of interest-bearing liabilities which decreased to 0.49% for the year ended December 31, 2020 from 0.82% for the year ended December 31, 2019.

This decrease resulted from decreases in the interest rates paid on deposits and borrowed funds in response to decreases in market interest rates.

Partially offsetting this decrease was an increase in the average balance of interest bearing liabilities by $1.736 billion, or 24.9%, to $8.703 billion for the year ended December 31, 2020 from $6.968 billion for the year ended December 31, 2019.

This increase in average balance resulted from both internal growth in deposits and borrowings as well as the addition of $1.617 billion of deposits and $232.2 million of borrowed funds from the acquisition of MutualBank.

Net Interest Income .

Net interest income increased by $31.3 million, or 8.7%, to $391.7 million for the year ended December 31, 2020 from $360.5 million for the year ended December 31, 2019.

This increase is attributable to the factors discussed above.

Despite the overall increase in net interest income due primarily to balance sheet growth, our interest rate spread decreased to 3.21% for the year ended December 31, 2020 from 3.61% for the year ended December 31, 2019 and our net interest margin also decreased to 3.34% for the year ended December 31, 2020 from 3.82% for the year ended December 31, 2019 primarily due to declining interest-earning asset yields.

Contributing to the decline in asset yields was an increase in average cash balances of $497.4 million, earning just 0.14%, due to deposit growth associated with PPP loan funds and consumer stimulus checks.

Provision for Credit Losses.

We analyze the allowance for credit losses as described in Note 1(f) of the notes to the Consolidated Financial Statements.

The provision for credit losses increased by $61.3 million to $84.0 million for the year ended December 31, 2020 from $22.7 million for the year ended December 31, 2019.

During the current year, the Company adopted ASU 2016-13, (“CECL”), which requires that all financial assets measured at amortized cost be presented at the net amount expected to be collected inclusive of the Company’s current estimate of all lifetime expected credit losses.

The economic impact of COVID-19, in combination with CECL, including the purchase accounting impact from MutualBank, caused the increase in the provision for the year.

In determining the amount of the current period provision, we considered current economic conditions, including unemployment levels, bankruptcy filings, and changes in real estate values, and assessed the impact of these factors on the quality of our loan portfolio and historical loss experience.

We analyze the allowance for credit losses as described in the section entitled “Allowance for Credit Losses”.

The provision that was recorded is sufficient, in our judgment, to bring this reserve to a level that reflects the current expected lifetime losses in our loan portfolio relative to loan mix, a reasonable and supportable economic forecast period and historical loss experience at December 31, 2020.

Noninterest Income.

Noninterest income increased by $32.9 million, or 33.1%, to $132.3 million for the year ended December 31, 2020 from $99.4 million for the year ended December 31, 2019.

This increase is primarily attributable to a $27.6 million increase in mortgage banking income to $31.4 million for the year ended December 31, 2020 from $3.8 million for the year ended December 31, 2019 due to continued efforts to expand our secondary market sales capabilities over the last year, as well as an interest rate environment conducive to refinance activity and attractive secondary market pricing.

In addition, trust and other financial services income increased by $3.2 million, or 17.8%, to $20.9 million for the year ended December 31, 2020 from $17.8 million for the year ended December 31, 2019, as well as an increase of $2.5 million, or 4.8%, in service charges and fees to $55.6 million for the year ended December 31, 2020 from $53.1 million for the year ended December 31, 2019, both due primarily to additional fee income as a result of the MutualBank acquisition.

Noninterest Expense.

Noninterest expense increased by $51.4 million, or 17.4%, to $347.5 million for the year ended December 31, 2020 from $296.1 million for the year ended December 31, 2019.

All noninterest expense categories, with the exception of real estate owned expense, increased compared to last year.

The largest drivers of the overall increase were an increase of $16.6 million in acquisition and branch optimization expenses to $20.8 million for the year ended December 31, 2020 from $4.2 million for the year ended December 31, 2019 due to expenses incurred as part of the MutualBank acquisition as well as expenses incurred as part of the branch optimization initiative that occurred during December.

In addition, compensation and employee benefits expense

increased by $15.3 million, or 9.4%, to $178.4 million for the year ended December 31, 2020 from $163.1 million for the year ended December 31, 2019, due to internal growth in compensation and staff as well as the addition of MutualBank employees.

Also contributing to the increase was an increase in processing expenses of $7.6 million, or 17.9%, to $50.1 million for the year ended December 31, 2020 from $42.5 million for the year ended December 31, 2019, primarily due to our continued efforts to invest in technology and infrastructure as well as improvements to our mortgage and commercial loan origination platforms.

Additionally, FDIC premiums increased by $4.1 million to $4.8 million for the year ended December 31, 2020 from $685,000 for the year ended December 31, 2019 due to assessment credits received in the prior year.

Income Taxes.

The provision for income taxes decreased by $13.0 million, or 42.4%, to $17.7 million for the year ended December 31, 2020 from $30.7 million for the year ended December 31, 2019.

This decrease in income tax expense is primarily due to the $48.6 million, or 34.4%, decrease in pretax income to $92.5 million for the year ended December 31, 2020 from $141.1 million for

the year ended December 31, 2019.

In addition, our effective tax rate for the year ended December 31, 2020 was 19.1% compared to 21.7% for the year ended December 31, 2019.

Asset Quality

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Allowance for Credit Losses .

We adopted CECL on January 1, 2020, as further described in Note 1.

Our Board of Directors has adopted an “Allowance for Credit Losses” (“ACL”) policy designed to provide management with a systematic methodology for determining and documenting the allowance for credit losses each reporting period.

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If the measurement of the fair value of the loan is more or less than the amortized cost basis of the loan, the Credit Administration department adjusts the specific allowance associated with that individual loan accordingly.

If a substandard or doubtful loan is not grouped with other loans that possess common characteristics for evaluation and analysis, it is considered individually for impairment.

If a substandard or doubtful loan is not individually assessed, it is grouped with other loans that possess common characteristics for credit losses and analysis.

For the purpose of calculating reserves, we have grouped our loans into seven segments:

residential mortgage loans, home equity loans, vehicle loans, consumer loans, commercial real estate loans, commercial real estate loans - owner occupied and commercial loans.

The allowance for credit losses is measured using a combination of statistical models.

The allowance for credit losses is measured using a combination of statistical models and qualitative assessments.

We use a twenty four month forecasting period and revert to historical average loss rates thereafter.

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In addition to the ACL Committee’s review and approval, a review is performed by the Risk Management Committee of the Board of Directors on a quarterly basis and annually by internal audit.

In addition to the reviews by management’s ACL Committee and the Board of Directors’ Risk Management Committee, regulators from the FDIC and the Pennsylvania Department of Banking perform an extensive review on at least an annual basis for the adequacy of the ACL and its conformity with regulatory guidelines and pronouncements.

In addition to the reviews by management’s ACL Committee and the Board of Directors’ Risk Management Committee, regulators from either the FDIC and/or the Pennsylvania Department of Banking and Securities perform an extensive review on at least an annual basis for the adequacy of the ACL and its conformity with regulatory guidelines and pronouncements.

Any recommendations or enhancements from these independent parties are considered by management and the ACL Committee and implemented accordingly.

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We utilize a structured methodology each period when analyzing the adequacy of the allowance for credit losses and the related provision for credit losses, which the ACL Committee assesses regularly for appropriateness.

As part of the analysis as of December 31, 2021, we considered the most recent economic conditions and forecasts available which incorporated the impact of COVID-19.

As part of the analysis as of December 31, 2022, we considered the most recent economic conditions and forecasts available.

In addition, we considered the overall trends in asset quality, reserves on individually assessed loans, historical loss rates and collateral valuations.

The ACL decreased by $32.2 million, or 23.9%, to $102.2 million, or 1.02% of gross loans at December 31, 2021 from $134.4 million, or 1.27% of total loans, at December 31, 2020 .

During 2020 our allowance increased $8.8 million as a result of recording the initial allowance on the purchased credit deteriorated loans acquired from MutualBank.

The non-purchased credit deteriorated loans acquired from MutualBank resulted in a credit mark of $28.1 million and an additional allowance of $18.2 million, as required by CECL.

The estimated economic impact of COVID-19 caused us to increase our provision for credit loss expense by approximately $41.6 million for the year ended December 31, 2020.

Throughout 2021, we were able to release those credit loss reserves that were previously built up as the economic forecasts improved as well as our overall credit quality.

The ACL increased by $15.8 million, or 15.4%, to $118.0 million, or 1.08% of gross loans at December 31, 2022 from $102.2 million, or 1.02% of total loans, at December 31, 2021 .

During 2021, we were able to release credit loss reserves that we had previously built up as a result of

the estimated economic impact of COVID-19.

Throughout 2022, we have again seen a deterioration in economic forecasts, specifically including a reduction in home and used vehicle sales.

These forecasts, in addition to organic loan growth, as well as the previously noted loan purchases, contributed to the increase in ACL in the current year.

Quarterly, management’s Credit Committee reviews the concentration of credit by industry and customer, lending products and activity, competition and collateral values, as well as economic conditions in general and in each of our market areas.

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We also consider how the levels of non-accrual loans and h istorical charge-offs have influenced the required amount of ACL.

Nonaccrual loans of $158.5 million, or 1.59% of total gross loans receivable at December 31, 2021, increased by $55.6 million, or 54.1%, from $102.8 million, or 0.98% of total gross loans receivable, at December 31, 2020.

This increase was primarily related to loans within the hospitality industry that were placed on nonaccrual after the end of their deferral periods.

Nonaccrual loans of $81.2 million, or 0.74% of total gross loans receivable at December 31, 2022, decreased by $77.2 million, or 48.7%, from $158.5 million, or 1.59% of total gross loans receivable, at December 31, 2021.

This decrease was primarily related to upgrades to loans within our commercial real estate portfolio.

As a percentage of average loans, net charge-offs decreased to 0.02% for the year ended December 31, 2022 compared to 0.20% for the year ended December 31, 2021.

The decrease in net charge-offs was largely due to a $9.1 million charge-off on one commercial loan which was previously downgraded and reserved for in 2020 prior to the onset of COVID-19.

Analysis of the Allowance for Credit Losses .

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Balance at beginning of period 102,241 134,427

CECL adoption — 10,792

Initial allowance on loans purchased with credit deterioration — 8,845

Provision for credit losses 17,860 (11,883)

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The yields set forth below include the effect of deferred fees and discounts and premiums that are amortized or accreted to interest income or expense.

The effect of these fees is not considered material.

The average yield for loans receivable and investment securities are calculated on a FTE basis.

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(7) Average balances include FHLB borrowings and collateralized borrowings.

(8) On September 9, 2020, the Company issued $125.0 million of 4.00% fixed-to-floating rate subordinated notes with a maturity of September 15, 2030.

(9) Average cost of deposits were 0.16%, 0.34% and 0.58%, respectively.

(8) Average cost of deposits was 0.12%, 0.16% and 0.34%, respectively.

(9) Net interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.

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Liquidity needs can also be met by temporarily drawing upon lines-of-credit established for such reasons.

At December 31, 2021, Northwest Bank had $3.613 billion of additional borrowing capacity available with the FHLB of Pittsburgh, including a $250.0 million overnight line of credit, which had no balance at December 31, 2021, as well as $101.0 million of borrowing capacity available with the Federal Reserve Bank and $110.0 million with three correspondent banks.

At December 31, 2022, Northwest Bank had $3.091 billion of additional borrowing capacity available with the FHLB of Pittsburgh, including a $250.0 million overnight line of credit, which had a balance of $51.3 million at December 31, 2022, as well as $96.0 million of borrowing capacity available with the Federal Reserve Bank and $105.0 million with two correspondent banks.

In addition to deposits, our primary sources of funds are the amortization and repayment of loans and mortgage-backed securities, maturities of investment securities and other short-term investments, and earnings and funds provided from operations.

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In addition, we invest excess funds in short-term interest earning and other assets, which provide liquidity to meet lending requirements.

Short-term interest-earning deposits amounted to $1.211 billion at December 31, 2021.

Short-term interest-earning deposits amounted to $33.8 million at December 31, 2022.

For additional information about our cash flows from operating, financing, and investing activities, see the Consolidated Statements of Cash Flows included in the Consolidated Financial Statements.

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If we require funds beyond our ability to generate them internally, borrowing agreements exist with the FHLB of Pittsburgh and the Federal Reserve Bank of Cleveland, which provide an additional source of funds.

At December 31, 2021, Northwest Bank had no outstanding advances with the FHLB of Pittsburgh.

At December 31, 2022, Northwest Bank had an outstanding balance of $551.3 million with the FHLB of Pittsburgh.

We borrow from these sources to reduce interest rate risk and to provide liquidity when necessary.

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Financial institutions, such as Northwest Bank, are also subject to deposit outflows.

Our net deposits increased by $701.9 million for the year ended December 31, 2021, increased by $3.007 billion for the year ended December 31, 2020 and increased by $697.8 million for the year ended December 31, 2019.

Our net deposits decreased by $836.6 million for the year ended December 31, 2022, increased by $701.9 million for the year ended December 31, 2021 and increased by $3.007 billion for the year ended December 31, 2020.

Similarly, the amount of principal repayments on loans and the amount of new loan originations is heavily influenced by the general level of market interest rates, consumer confidence and consumer spending.

Funds received from loan maturities and principal payments on loans for the years ended December 31, 2021, 2020 and 2019 were $4.490 billion, $4.384 billion and $3.275 billion, respectively.

Funds received from loan maturities and principal payments on loans for the years ended December 31, 2022, 2021 and 2020 were $4.047 billion, $4.490 billion, $4.384 billion, respectively.

Loan originations for the years ended December 31, 2022, 2021 and 2020 were $4.948 billion, $4.715 billion, and $5.386 billion, respectively.

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We experience significant cash flows from our portfolio of marketable securities as principal payments are received on mortgage-backed securities and as investment securities mature or are called.

Cash flow from the repayment of principal and the maturity or call of marketable securities for the years ended December 31, 2021, 2020 and 2019 were $517.9 million, $396.3 million and $245.8 million, respectively.

Cash flows from the repayment of principal and the maturity or call of marketable securities for the years ended December 31, 2022, 2021 and 2020 were $330.4 million, $517.9 million, and $396.3 million, respectively.

When necessary, we utilize borrowings as a source of liquidity and as a source of funds for long-term investment when market conditions permit.

The net cash flow from the receipt and repayment of borrowings was a net decrease of $20.7 million , a net decrease of $192.4 million and a net increase of $11.9 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The net cash flow from the receipt and repayment of borrowings was a net increase of $532.0 million, a net decrease of $20.7 million, and a net decrease of $192.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Northwest Bancshares, Inc.

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Total shareholders’equity (GAAP capital)

$ 1,562,610 1,714,817

Accumulated other comprehensive loss 159,511 25,980

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Supplemental Executive Retirement Plan (1) $ — — — 1,140 1,140

Term notes payable to the FHLB of Pittsburgh (2) 551,300 — — — 551,300

Collateralized borrowings (2) 105,766 — — — 105,766

Collateral received (2) 24,100 — — — 24,100

Subordinated debentures (2) — — — 114,800 114,800

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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 7. Management’s Discussion and Analysis