What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-05 compared with 2022-11-04 · 220 added, 422 removed, 1010 unchanged (39% of the section changed)

4 unchanged sentences

(in thousands, except share data)

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Cash and cash equivalents $ 96,497 139,365

46 unchanged sentences

(in thousands, except share data)

Quarter ended September 30, Nine months ended September 30,

2022 2021 2022 2021

Quarter ended March 31,

Interest income:

11 unchanged sentences

Total interest expense

5,867 6,596 17,308 20,987

Net interest income

112,464 90,623

Provision for credit losses 7,689 ( 4,354 ) 8,837 ( 9,974 )

Provision for credit losses - loans 4,870 ( 1,481 )

Provision for credit losses - unfunded commitments 126 1,596

Net interest income after provision for credit losses

4 unchanged sentences

Trust and other financial services income 6,449 7,012

Insurance commission income — 44 — 3,633

Gain on real estate owned, net 290 247 552 371

Gain/(loss) on real estate owned, net 108 ( 29 )

Income from bank-owned life insurance 1,269 1,983

Mortgage banking income 524 1,465

Gain on sale of insurance business — — — 25,327

Other operating income 2,430 2,244

26 unchanged sentences

(in thousands)

Quarter ended September 30, Nine months ended September 30,

2022 2021 2022 2021

Quarter ended March 31,

Net income $ 33,679 28,287

Other comprehensive income net of tax:

Net unrealized holding losses on marketable securities:

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

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

Reclassification adjustment for gains included in net income, net of tax of $ 0 , $ 24 , $ 0 , and $ 89 , respectively

Other comprehensive income/(loss) net of tax:

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

Unrealized holding gains/(losses), net of tax of ($ 3,308 ) and $ 18,877 , respectively

13,017 ( 64,783 )

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

Reclassification adjustment for gains/(losses) included in net income, net of tax of $ 0 and $ 0 , respectively

Net unrealized holding gains/(losses) on marketable securities 13,017 ( 64,784 )

Defined benefit plan:

Actuarial reclassification adjustments for prior period service costs and actuarial (gains)/losses included in net income, net of tax of $ 50 , ($ 128 ), $ 151 , and ($ 386 ), respectively

Actuarial reclassification adjustments for prior period service costs and actuarial gains included in net income, net of tax of $ 152 and $ 50 , respectively

( 382 ) ( 131 )

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

Other comprehensive income/(loss) 12,635 ( 64,915 )

Total comprehensive income/(loss) $ 46,314 ( 36,628 )

5 unchanged sentences

Additional paid-in capital Retained earnings Accumulated

other comprehensive loss Total shareholders’ equity

Quarter ended September 30, 2022 Shares Amount

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

Comprehensive income:

Net income — — — 37,304 — 37,304

Other comprehensive loss, net of tax of $ 14,755

— — — — ( 48,518 ) ( 48,518 )

Total comprehensive income/(loss) — — — 37,304 ( 48,518 ) ( 11,214 )

Exercise of stock options 73,472 — 897 — — 897

Stock-based compensation expense — — 944 — — 944

Stock-based compensation forfeited ( 33,249 ) — ( 1 ) — — ( 1 )

Dividends paid ($ 0.20 per share)

— — — ( 25,379 ) — ( 25,379 )

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

Additional paid-in capital Retained earnings Accumulated

other comprehensive loss Total shareholders’ equity

Quarter ended September 30, 2021 Shares Amount

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

Comprehensive income:

Net income — — — 35,063 — 35,063

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

— — — — ( 6,191 ) ( 6,191 )

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

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

Stock-based compensation expense 1,139 — 1,046 — — 1,046

Share repurchases ( 1,425,120 ) ( 14 ) ( 18,809 ) — — ( 18,823 )

Stock-based compensation forfeited ( 19,702 ) — — — — —

Dividends paid ($ 0.20 per share)

— — — ( 25,376 ) — ( 25,376 )

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

See accompanying notes to unaudited Consolidated Financial Statements.

NORTHWEST BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

(in thousands, expect share data)

Additional paid-in capital Retained earnings Accumulated

other comprehensive loss Total shareholders’ equity

Nine months ended September 30, 2022 Shares Amount

other comprehensive income/(loss) Total shareholders’ equity

Quarter ended March 31, 2023 Shares Amount

Beginning balance at December 31, 2022 127,028,848 $ 1,270 1,019,647 641,727 ( 171,158 ) 1,491,486

1 unchanged sentence

Net income — — — 33,679 — 33,679

Other comprehensive loss, net of tax of $ 45,706

Other comprehensive income, net of tax of ($ 3,157 )

— — — — 12,635 12,635

Total comprehensive income/(loss) — — — 99,017 ( 153,519 ) ( 54,502 )

Total comprehensive income — — — 33,679 12,635 46,314

Adoption of ASU No.

2022-02 — — — ( 329 ) — ( 329 )

Exercise of stock options 38,218 1 464 — — 465

3 unchanged sentences

— — — ( 25,405 ) — ( 25,405 )

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

Ending balance at March 31, 2023 127,065,400 $ 1,271 1,020,855 649,672 ( 158,523 ) 1,513,275

Additional paid-in capital Retained earnings Accumulated

other comprehensive loss Total shareholders’ equity

Nine months ended September 30, 2021 Shares Amount

Quarter ended March 31, 2022 Shares Amount

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

6 unchanged sentences

Stock-based compensation expense 10,222 — 699 — — 699

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

Stock-based compensation forfeited ( 37,645 ) — — — — —

1 unchanged sentence

— — — ( 25,335 ) — ( 25,335 )

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

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

See accompanying notes to unaudited Consolidated Financial Statements.

3 unchanged sentences

(in thousands)

Nine months ended September 30,

Quarter ended March 31,

Operating activities:

Net income $ 33,679 28,287

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by/(used in) operating activities:

Provision for credit losses 4,996 115

Net gain on sale of assets ( 858 ) ( 970 )

Net loss on sale of assets 1,254 780

Mortgage banking activity ( 179 ) 677

Gain on sale of insurance business — ( 25,327 )

Net depreciation, amortization and accretion 2,154 3,595

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

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

Decrease/(increase) in other assets 6,958 ( 30,666 )

Decrease in other liabilities ( 24,494 ) ( 33,221 )

Net amortization on marketable securities 876 1,505

1 unchanged sentence

Noncash write-down of real estate owned 37 29

Deferred income tax expense 1,928 1,889

Origination of loans held-for-sale ( 30,712 ) ( 104,535 )

Proceeds from sale of loans held-for-sale 34,530 110,278

Net cash provided by operating activities 110,080 137,547

Net cash provided by/(used in) operating activities 29,843 ( 22,457 )

Investing activities:

Purchase of marketable securities held-to-maturity ( 212,892 ) ( 479,165 )

Purchase of marketable securities available-for-sale — ( 61,640 )

1 unchanged sentence

Proceeds from maturities and principal reductions of marketable securities available-for-sale 28,246 83,295

Proceeds from sale of marketable securities available-for-sale — 62,127

Proceeds from bank-owned life insurance 1,633 1,354

4 unchanged sentences

Proceeds from sale of real estate owned 186 —

Proceeds from sale of real estate owned for investment 229 229

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

Proceeds from the sale of insurance business — 28,238

Proceeds from sale of real estate owned for investment, net — 76

Disposals of premises and equipment, net 1,340 329

Net cash used in investing activities ( 130,157 ) ( 72,684 )

3 unchanged sentences

(in thousands)

Nine months ended September 30,

Three months ended March 31,

Financing activities:

Net (decrease)/increase in deposits $ ( 422,773 ) 622,980

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

Net increase in deposits $ 72,631 19,235

Net increase/(decrease) in short-term borrowings 7,475 ( 17,657 )

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

Increase/(decrease) in advances by borrowers for taxes and insurance 2,280 ( 560 )

Cash dividends paid on common stock ( 25,405 ) ( 25,335 )

Purchase of common stock for retirement — ( 23,854 )

Proceeds from stock options exercised 465 1,205

Net cash (used in)/provided by financing activities ( 509,208 ) 485,338

Net (decrease)/increase in cash and cash equivalents $ ( 1,160,710 ) 354,208

Net cash provided by/(used in) financing activities 57,446 ( 23,112 )

Net decrease in cash and cash equivalents $ ( 42,868 ) ( 118,253 )

Cash and cash equivalents at beginning of period $ 139,365 1,279,259

Net (decrease)/increase in cash and cash equivalents ( 1,160,710 ) 354,208

Net decrease in cash and cash equivalents ( 42,868 ) ( 118,253 )

Cash and cash equivalents at end of period $ 96,497 1,161,006

5 unchanged sentences

Loan foreclosures and repossessions $ 847 1,142

Sale of real estate owned financed by the Company 175 54

See accompanying notes to unaudited Consolidated Financial Statements.

12 unchanged sentences

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

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

Allowance for Credit Losses and Provision for Credit Losses Update

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

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

The change in segmentation was driven by underlying collateral types, and the loans continue to share similar risk characteristics.

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

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

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

These reclassifications had no effect on the reported results of operations.

An adjustment has been made to the Consolidated Statements of Income and Consolidated Statements of Cash Flows for the quarter ended March 31, 2022, to reclassify the provision for credit losses - unfunded commitments, previously presented in other expense, to provide additional transparency to financial statement users.

The results of operations for the quarter ended are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, or any other period.

Stock-Based Compensation

On May 18, 2022, the Company awarded employees 150,027 restricted stock units (“RSUs”) with a weighted average discounted grant date fair value of $ 11.00 .

On March 15, 2023, the Company awarded employees 176,623 restricted stock units (“RSUs”) with a weighted average discounted grant date fair value of $ 11.28 .

The RSUs vest over a three-year period with the first vesting occurring one year from the grant date.

3 unchanged sentences

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

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

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

During the quarter ended March 31, 2023, we awarded discretionary grants of 112,021 RSUs with a weighted average grant date fair value of $ 11.41 .

These shares vest over a two or three years period with the first vesting occurring one year from the grant date.

Stock-based compensation expense of $ 744,000 and $ 699,000 for the quarters ended March 31, 2023 and 2022, respectively, was recognized in compensation expense relating to our stock benefit plans.

At March 31, 2023, there was compensation expense of $ 643,000 to be recognized for awarded but unvested stock options, $ 3.4 million for unvested restricted common shares, $ 4.3 million to be recognized for awarded but unvested RSUs, $ 470,000 to be recognized for awarded but unvested RSAs, and $ 2.7 million to be recognized for awarded but unvested PSUs.

Income Taxes-Uncertain Tax Positions

2 unchanged sentences

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

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

We had $ 473,000 of liability for unrecognized tax benefits as of both March 31, 2023 and December 31, 2022.

We recognize interest accrued related to:

2 unchanged sentences

We are subject to audit by the Internal Revenue Service and any state in which we conduct business for the tax periods ended December 31, 2022, 2021, 2020 and 2019.

Recently Adopted Accounting Standards

In March 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

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

Troubled Debt Restructurings and Vintage Disclosure.” This ASU eliminates the accounting guidance for troubled debt restructurings ("TDRs"), 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 adopted ASU 2022-02 using a modified retrospective transition approach related to the recognition and measurement of the TDR guidance and on a prospective basis for modification and write-offs.

As a result, the Company was not required to adjust its comparative period financial information for effects of the standard or make the new required ASU 2022-02 disclosure for periods before the date of adoption (i.e.

January 1, 2023).

This change did not have a material effect on our consolidated financial statements.

(2) Marketable Securities

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

The following table shows the portfolio of marketable securities available-for-sale at March 31, 2023 (in thousands):

Debt issued by the U.S government and agencies:

24 unchanged sentences

Debt issued by government-sponsored enterprises:

Due within one year 177 — — 177

Due after one year through five years 993 — ( 49 ) 944

5 unchanged sentences

Due after ten years 89,631 8 ( 13,414 ) 76,225

Corporate debt issues:

Due after five years through ten years 13,540 — ( 562 ) 12,978

Residential mortgage-backed securities:

5 unchanged sentences

Total marketable securities available-for-sale $ 1,431,728 105 ( 213,725 ) 1,218,108

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

Debt issued by the U.S.

government and agencies:

The following table shows the portfolio of marketable securities held-to-maturity at March 31, 2023 (in thousands):

Debt issued by government-sponsored enterprises:

Due after one year through five years $ 29,477 — ( 3,131 ) 26,346

8 unchanged sentences

The following table shows the portfolio of marketable securities held-to-maturity at December 31, 2022 (in thousands):

Debt issued by the U.S.

government and agencies:

Debt issued by government-sponsored enterprises:

Due after one year through five years $ 29,478 — ( 3,676 ) 25,802

7 unchanged sentences

Total marketable securities held-to-maturity $ 881,249 — ( 129,865 ) 751,384

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

The following table shows the contractual maturity of our residential mortgage-backed securities available-for-sale at March 31, 2023 (in thousands):

Residential mortgage-backed securities:

4 unchanged sentences

Total residential mortgage-backed securities $ 1,143,406 976,970

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

The following table shows the contractual maturity of our residential mortgage-backed securities held-to-maturity at March 31, 2023 (in thousands):

Residential mortgage-backed securities:

3 unchanged sentences

Total residential mortgage-backed securities $ 741,567 644,581

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

The following table shows the fair value of and gross unrealized losses on available for sale investment securities and held to maturity investment securities, for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at March 31, 2023 (in thousands):

Less than 12 months 12 months or more Total

4 unchanged sentences

Municipal securities 7,623 ( 166 ) 100,054 ( 12,517 ) 107,677 ( 12,683 )

Corporate debt issues 13,140 ( 411 ) — — 13,140 ( 411 )

Corporate issues 12,570 ( 958 ) — — 12,570 ( 958 )

Residential mortgage-backed securities - agency 245,143 ( 7,650 ) 1,371,351 ( 255,860 ) 1,616,494 ( 263,510 )

Total $ 265,930 ( 8,780 ) 1,677,870 ( 304,439 ) 1,943,800 ( 313,219 )

Less than 12 months 12 months or more Total

3 unchanged sentences

government-sponsored enterprises $ 1,735 ( 82 ) 200,679 ( 41,917 ) 202,414 ( 41,999 )

Corporate debt issues 12,979 ( 562 ) — — 12,979 ( 562 )

Municipal securities 60,676 ( 4,047 ) 44,493 ( 11,671 ) 105,169 ( 15,718 )

1 unchanged sentence

Total $ 448,576 ( 27,487 ) 1,509,214 ( 316,103 ) 1,957,790 ( 343,590 )

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

The Company does not believe that the available-for-sale debt securities that were in an unrealized loss position as of March 31, 2023, which were comprised of 632 individual securities, represents a credit loss impairment.

All of these securities were issued by U.S.

5 unchanged sentences

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

The corporate debt issues and securities issued by local municipalities were all highly rated by major rating agencies and have no history of credit losses.

The securities issued by local municipalities and the corporate debt issues were all highly rated by major rating agencies and have no history of credit losses.

The unrealized losses were primarily attributable to changes in the interest rate environment and not due to the credit quality of these investment securities.

The Company does not have the intent to sell these investment securities and it is likely that we will not be required to sell these securities before their anticipated recovery, which may be at maturity.

The Company does not have the intent to sell these investment securities and it is more likely than not that we will not be required to sell these securities before their anticipated recovery, which may be at maturity.

All of the Company ’ s held-to-maturity debt securities are issued by U.S.

3 unchanged sentences

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

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

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

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

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

The decline in fair value of the held-to-maturity debt securities were primarily attributable to changes in the interest rate environment and not due to the credit quality of these investment securities, therefore, the Company did not record an allowance for credit losses for these securities as of March 31, 2023.

The following table presents the credit quality of our held-to-maturity securities, based on the latest information available as of March 31, 2023 (in thousands).

The credit ratings are sourced from nationally recognized rating agencies, which include Moody’s and S&P, they are presented based on asset type.

All of our held-to-maturity securities were current in their payment of principal and interest as of March 31, 2023.

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

4 unchanged sentences

(3) Loans Receivable

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

September 30, 2022 December 31, 2021

The following table shows a summary of our loans receivable at amortized cost basis at March 31, 2023 and December 31, 2022 (in thousands):

March 31, 2023 December 31, 2022

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

13 unchanged sentences

Total loans receivable, net (5) $ 10,209,209 761,805 10,971,014 9,982,035 820,381 10,802,416

(1) Includes originated and purchased loan pools purchased in an asset acquisition.

(1) Includes originated and loan pools purchased in an asset acquisition.

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

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

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

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

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

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

Allowance for Credit Losses

Personal Banking:

Residential mortgage loans $ 17,967 1,646 ( 166 ) 329 16,158

Home equity loans 5,448 341 ( 535 ) 410 5,232

Vehicle loans 17,004 1,576 ( 936 ) 626 15,738

Consumer loans 825 1,170 ( 1,405 ) 281 779

Total Personal Banking 41,244 4,733 ( 3,042 ) 1,646 37,907

Commercial Banking:

Commercial real estate loans 49,649 5,117 ( 1,329 ) 6,220 39,641

Commercial real estate loans - owner occupied 4,087 ( 34 ) — 26 4,095

Commercial loans 14,839 ( 2,127 ) ( 243 ) 497 16,712

Total Commercial Banking 68,575 2,956 ( 1,572 ) 6,743 60,448

Total $ 109,819 7,689 ( 4,614 ) 8,389 98,355

Allowance for Credit Losses - off-balance sheet exposure

Personal Banking:

Residential mortgage loans $ 4 ( 2 ) — — 6

Home equity loans 74 10 — — 64

Total Personal Banking 78 8 — — 70

Commercial Banking:

Commercial real estate loans 5,382 1,919 — — 3,463

Commercial real estate loans - owner occupied 287 ( 41 ) — — 328

Commercial loans 5,288 1,699 — — 3,589

Total Commercial Banking 10,957 3,577 — — 7,380

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

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

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

Allowance for Credit Losses

Personal Banking:

Residential mortgage loans $ 7,987 1,939 ( 1,263 ) 64 7,247

Home equity loans 6,293 291 ( 1,474 ) 237 7,239

Vehicle loans 12,457 82 ( 1,112 ) 599 12,888

Consumer loans 3,074 949 ( 1,036 ) 360 2,801

Total Personal Banking 29,811 3,261 ( 4,885 ) 1,260 30,175

Commercial Banking:

Commercial real estate loans 58,451 ( 5,103 ) ( 1,581 ) 555 64,580

Commercial real estate loans - owner occupied 3,246 ( 1,487 ) — 4 4,729

Commercial loans 18,259 ( 1,025 ) ( 412 ) 1,850 17,846

Total Commercial Banking 79,956 ( 7,615 ) ( 1,993 ) 2,409 87,155

Total $ 109,767 ( 4,354 ) ( 6,878 ) 3,669 117,330

Allowance for Credit Losses - off-balance sheet exposure

Personal Banking:

Residential mortgage loans $ 2 — — — 2

Home equity loans 40 ( 2 ) — — 42

Total Personal Banking 42 ( 2 ) — — 44

Commercial Banking:

Commercial real estate loans 2,647 715 — — 1,932

Commercial real estate loans - owner occupied 140 ( 41 ) — — 181

Commercial loans 1,333 101 — — 1,232

Total Commercial Banking 4,120 775 — — 3,345

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

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

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

(3) Includes $ 6.4 million and $ 9.9 million of loans held-for-sale at March 31, 2023 and December 31, 2022, respectively.

(4) Includes $ 619,000 and $ 0 of loans held-for-sale at March 31, 2023 and December 31, 2022, respectively.

(5) Includes $ 78.3 million and $ 76.1 million of net unearned income, unamortized premiums and discounts and deferred fees and costs at March 31, 2023 and December 31, 2022, respectively.

The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the quarter ended March 31, 2023 (in thousands):

Balance as of March 31, 2023 Current period provision Charge-offs Recoveries ASU 2022-02 Adoption Balance as of December 31, 2022

Allowance for Credit Losses

22 unchanged sentences

Total off-balance sheet exposure $ 13,039 126 — — — 12,913

Balance as of September 30, 2021 Current

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

(1) The table above has been revised to reflect the correct ending balance for total off-balance-sheet exposure at December 31, 2022.

We evaluated the effect of the revision, both qualitatively and quantitatively, and concluded that the impact of the revision was not material.

The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the quarter ended March 31, 2022 (in thousands):

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

Allowance for Credit Losses

22 unchanged sentences

Total off-balance sheet exposure $ 4,054 1,596 — — 2,458

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

During the quarter ended March 31, 2022, the Company purchased a $ 72.7 million small business equipment finance loan pool and a $ 138.1 million one- to four-family jumbo mortgage loan pool.

The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at March 31, 2023 (in thousands):

receivable Allowance for

credit losses Nonaccrual

loans (1) Loans 90 days past due and accruing TDRs Allowance

TDRs Additional

classified as

loans Loans 90 days past due and accruing

Personal Banking:

10 unchanged sentences

Total $ 11,092,271 121,257 78,609 652

(1) Includes $ 30.4 million of nonaccrual TDRs.

The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at December 31, 2021 (in thousands):

The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at December 31, 2022, prior to the adoption of ASU 2022-02 (in thousands):

receivable Allowance for

17 unchanged sentences

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

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

September 30, 2022

The following table presents the amortized cost of our loans on nonaccrual status as of the beginning and end of the quarter ended March 31, 2023 (in thousands):

March 31, 2023

Nonaccrual loans at January 1, 2023 Nonaccrual loans with an allowance Nonaccrual loans with no allowance Total nonaccrual loans at the end of the period Loans 90 days past due and accruing

11 unchanged sentences

Total $ 81,236 38,682 39,927 78,609 652

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

During the quarter ended March 31, 2023, we did no t recognize interest income on nonaccrual loans.

The following table presents the amortized cost of our loans on nonaccrual status as of the year ended December 31, 2022 (in thousands):

14 unchanged sentences

During the year ended December 31, 2022, we recognized $ 678,000 of interest income on nonaccrual and troubled debt restructuring loans.

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

The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of March 31, 2023 (in thousands):

Real estate Equipment Total

Personal Banking:

Residential mortgage loans $ 572 — 572

Home equity loans 99 — 99

Total Personal Banking 671 — 671

Commercial Banking:

14 unchanged sentences

Total $ 57,900 210 58,110

Our loan portfolios include loans that have been modified in a TDR, where concessions have been granted to borrowers who have experienced financial difficulties.

These concessions typically result from our loss mitigation activities and could include:

extending the note’s maturity date, permitting interest only payments, reducing the interest rate to a rate lower than current market rates for new debt with similar risk, reducing the principal payment, principal forbearance or other actions.

These concessions are applicable to all loan segments and classes.

Certain TDRs are classified as nonperforming at the time of restructuring and may be returned to performing status after considering the borrower’s sustained repayment performance for a period of at least six months.

When we modify loans in a TDR, we evaluate any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, the loan’s observable market price or the current fair value of the collateral, less selling costs, for collateral dependent loans.

If we determine that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premiums or discounts), impairment is recognized through an allowance estimate or a charge-off to the allowance.

In periods subsequent to modification, we evaluate all TDRs, including those that have payment defaults, for possible impairment in accordance with ASC 310-10.

As a result, loans modified in a TDR may have the financial effect of increasing the specific allowance associated with the loan.

Loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default.

If loans modified in a TDR subsequently default, we evaluate the loan for possible further impairment.

The allowance may be increased, adjustments may be made in the allocation of the allowance, partial charge-offs may be taken to further write-down the carrying value of the loan, or the loan may be charged-off completely.

In March 2020 and August 2020, joint statements were issued by federal and state regulatory agencies, after consultation with the FASB, to clarify that short-term loan modifications are not TDRs if made on a good-faith basis in response to COVID-19 to borrowers who were current prior to any relief.

Under this guidance, six months is provided as an example of short-term, and current is defined as less than 30 days past due at the time the modification program is implemented.

The guidance also provides that these modified loans generally will not be classified as nonaccrual during the term of the modification.

For borrowers who are 30 days or more past due when enrolling in a loan modification program related to the COVID-19 pandemic, we evaluate the loan modifications under our existing TDR framework, and where such a loan modification would result in a concession to a borrower experiencing financial difficulty, the loan will be accounted for as a TDR and will generally not accrue interest.

This TDR relief under the CARES Act was extended by the Consolidated Appropriations Act, 2021 (“CAA”), signed into law on December 27, 2020.

Under the CAA, such relief will continue until the earlier of 60 days after the date the COVID-19 national emergency comes to an end or January 1, 2022.

Certain loan modifications made during the prior year were done in accordance with Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus.

Accordingly, these loans were not categorized as TDRs.

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

For the quarter ended September 30,

contracts Amount Number of

contracts Amount

Beginning TDR balance:

Occasionally, the Company modifies loans to borrowers in financial distress by providing principal forgiveness, term extensions, an other-than-insignificant payment delay, or interest rate reduction.

When principal forgiveness is provided, the amount of forgiveness is charged off against the allowance for credit losses.

In some cases, the Company provides multiple types of concessions to one loan.

Typically, one type of concession, such as a term extension, is granted initially.

If the borrower continues to experience financial difficulty, another concession, such as principal forgiveness, may be granted.

For loans included in the "combination" columns below, multiple types of modifications have been made on the same loan within the current reporting period.

The combination is at least two of the following:

a term extension, principal forgiveness, an other-than-insignificant payment delay, and/or an interset rate reduction.

The following table presents the amortized cost basis of loans as of March 31, 2023 that were both experiencing financial difficulty and modified during the quarter ended March 31, 2023, by class and by type of modification.

The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financial receivable is also presented below.

Term extension Combination term extension and interest rate reduction Total class of financing receivable

Personal Banking:

Residential mortgage loans

$ 180 — 0.01 %

New TDRs 6 221 3 345

Re-modified TDRs 4 977 3 4,490

Net paydowns — ( 810 ) — ( 4,702 )

Home equity loans 110 — 0.01 %

Consumer loans

Total Personal Banking 290 3 — %

Commercial Banking:

Commercial real estate loans 242 — 0.01 %

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

Commercial loans 765 — 0.06 %

Paid-off loans:

Total Commercial Banking 1,007 — 0.02 %

Total $ 1,297 3 0.01 %

The Company has committed to lend additional amounts totaling $ 31,000 to the borrowers included in the previous table.

The following table presents the effect of the loan modifications presented above to borrowers experiencing financial difficulty for the quarter ended March 31, 2023:

Weighted-average interest rate reduction Weighted-average term extension in months

Personal Banking:

Residential mortgage loans — % 147

Home equity loans — % 115

Consumer loans 12 % 356

Total Personal Banking 12 % 137

Commercial Banking:

Commercial real estate loans — % 24

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

Commercial loans — % 9

Ending TDR balance:

127 $ 46,750 139 $ 26,522

Accruing TDRs $ 16,344 $ 13,664

Nonaccrual TDRs 30,406 12,858

For the nine months ended September 30,

contracts Amount Number of

Total Commercial Banking — % 13

Total loans 12 % 41

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

All loans modified since the adoption of ASU 2022-02 are current on their payments as of March 31, 2023.

No loans modified since the adoption of ASU 2022-02 subsequently defaulted during the quarter ended March 31, 2023.

The modifications to borrowers experiencing financial distress are included in their respective portfolio segment and the current loan balance and updated loan terms are run through their respective ACL models to arrive at the quantitative portion of the ACL.

Subsequent performance of the loans will be measured by delinquency status and will be captured through our ACL models or our qualitative factor assessment, as deemed appropriate.

If we no longer believe the loan demonstrates similar risks to their respective portfolio segment an individual assessment will be performed.

Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off.

Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount.

The following table provides a roll forward of troubled debt restructurings for the period indicated, prior to the adoption of ASU 2022-02 (dollars in thousands):

For the quarter ended March 31, 2022

contracts Amount

Beginning TDR balance:

134 $ 30,288 170 $ 32,135

New TDRs 8 25,626 5 2,608

Re-modified TDRs 1 202

1 unchanged sentence

Residential mortgage loans 1 ( 3 )

Home equity loans — — 1 ( 29 )

Commercial real estate loans — — 2 ( 53 )

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

Commercial loans — — 5 ( 139 )

Paid-off loans:

2 unchanged sentences

Commercial real estate loans 1 ( 289 )

Commercial real estate loans - owner occupied 1 ( 44 ) 1 ( 47 )

Commercial loans 4 ( 3,466 ) 3 ( 697 )

Ending TDR balance:

127 $ 46,750 139 $ 26,522

Accruing TDRs $ 12,686

Nonaccrual TDRs 16,015

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

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

contracts Recorded

at the time of

modification Current

investment Current

allowance Number of

contracts Recorded

at the time of

modification Current

investment Current

Personal Banking:

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

Home equity loans 5 160 154 23 5 160 154 23

Total Personal Banking 7 307 298 38 7 307 298 38

Commercial Banking:

Commercial real estate loans 1 610 609 89 5 34,295 26,212 102

Commercial loans 2 332 291 20 6 3,856 294 20

Total Commercial Banking 3 942 900 109 11 38,151 26,506 122

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

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

contracts Recorded

at the time of

modification Current

investment Current

allowance Number of

The following table provides information related to TDRs (including re-modified TDRs) by portfolio segment and by class of financing receivable during the periods indicated, prior to the adoption of ASU 2022-02 (in thousands):

For the quarter ended March 31, 2022

contracts Recorded

2 unchanged sentences

investment Current

Personal Banking:

Residential mortgage loans — $ — — — 1 $ 125 115 16

Home equity loans 2 153 36 17 3 156 36 17

Total Personal Banking 2 153 36 17 4 281 151 33

Commercial Banking:

Commercial real estate loans 1 $ 330 202 11

Commercial loans 1 330 309 — 3 2,726 2,572 —

Total Commercial Banking 1 330 202 11

Total 1 $ 330 202 11

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

The following table provides information as of March 31, 2022 for TDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the quarter ended March 31, 2022, prior to the adoption of ASU 2022-02 (in thousands):

Type of modification

Number of contracts Maturity date Total

Personal Banking:

Residential mortgage loans

Home equity loans 5 154 154

Total Personal Banking 7 298 298

Commercial Banking:

Commercial real estate loans 1 $ 202 202

Commercial loans 2 291 291

Total Commercial Banking 1 202 202

Total 1 $ 202 202

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

Type of modification

Number of contracts Rate Payment Maturity date Total

Personal Banking:

Home equity loans 2 $ — 30 6 36

Total Personal Banking 2 — 30 6 36

Commercial Banking:

Commercial real estate loans 3 378 — 4,112 4,490

Commercial loans 1 — — 309 309

Total Commercial Banking 4 378 — 4,421 4,799

Total 6 $ 378 30 4,427 4,835

Type of modification

Number of contracts Rate Maturity date Total

Personal Banking:

Residential mortgage loans 2 $ — 144 144

Home equity loans 5 — 154 154

Total Personal Banking 7 — 298 298

Commercial Banking:

Commercial real estate loans 5 4,166 22,046 26,212

Commercial loans 6 — 294 294

Total Commercial Banking 11 4,166 22,340 26,506

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

Type of modification

Number of contracts Rate Payment Maturity date Other Total

Personal Banking:

Residential mortgage loans 1 $ 115 — — — 115

Home equity loans 3 — 30 6 — 36

Total Personal Banking 4 115 30 6 — 151

Commercial Banking:

Commercial real estate loans 6 378 — 5,136 72 5,586

Commercial loans 3 — — 2,572 — 2,572

Total Commercial Banking 9 378 — 7,708 72 8,158

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

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

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

The following table provides information related to troubled debt restructurings modified within the previous twelve months of March 31, 2022 that subsequently defaulted, prior to the adoption of ASU 2022-02:

contracts Recorded

6 unchanged sentences

Total 1 $ 4,167 3,823 —

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

The following table provides information related to the amortized cost basis of loan payment delinquencies at March 31, 2023 (in thousands):

delinquent 60-89 days

60 unchanged sentences

instead, it means that it is not practical or desirable to defer writing off all or a portion of a basically worthless loan even though partial recovery may be possible in the future.

For Personal Banking loans a pass risk rating is maintained until they are greater than 90 days past due, and risk rating reclassification is based primarily on past due status of the loan.

For Personal Banking loans a pass risk rating is maintained until they are 90 days or greater past due, and risk rating reclassification is based primarily on past due status of the loan.

The risk rating categories can generally be described by the following groupings:

Pass — Loans classified as pass are homogeneous loans that are less than 90 days past due from the required payment date at month-end.

Substandard — Loans classified as substandard are homogeneous loans that are greater than 90 days past due from the required payment date at month-end, loans classified as TDRs or homogenous retail loans that are greater than 180 days past due from the required payment date at month-end that has been written down to the value of underlying collateral, less costs to sell.

Substandard — Loans classified as substandard are homogeneous loans that are greater than 90 days past due from the required payment date at month-end, or homogenous retail loans that are greater than 180 days past due from the required payment date at month-end that has been written down to the value of underlying collateral, less costs to sell.

Doubtful — Loans classified as doubtful are homogeneous loans that are greater than 180 days past due from the required payment date at month-end and not written down to the value of underlying collateral.

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

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

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

The following table presents the amortized cost basis of our loan portfolio by year of origination and credit quality indicator and the current period charge-offs by year of origination for each portfolio segment as of March 31, 2023 (in thousands):

YTD March 31, 2023 2022 2021 2020 2019 Prior Revolving loans Revolving loans converted to term loans Total loans

Personal Banking:

3 unchanged sentences

Total residential mortgage loans 51,579 678,388 830,550 537,864 261,865 1,145,219 — — 3,505,465

Residential mortgage current period charge-offs — — ( 5 ) ( 130 ) — ( 72 ) — — ( 207 )

Home equity loans

2 unchanged sentences

Total home equity loans 26,357 112,294 121,813 166,377 106,730 240,008 464,445 43,522 1,281,546

Home equity current period charge-offs — ( 14 ) ( 46 ) — ( 4 ) ( 100 ) — — ( 164 )

Vehicle loans

2 unchanged sentences

Total vehicle loans 260,159 896,205 552,758 201,184 116,216 95,280 — — 2,121,802

Vehicle current period charge-offs ( 139 ) ( 459 ) ( 502 ) ( 151 ) ( 136 ) ( 281 ) — — ( 1,668 )

Consumer loans

2 unchanged sentences

Total consumer loans 6,861 17,195 8,599 3,646 2,847 7,108 63,040 1,035 110,331

Consumer loan current period charge-offs ( 546 ) ( 79 ) ( 56 ) ( 49 ) ( 69 ) ( 267 ) — — ( 1,066 )

Total Personal Banking 344,956 1,704,082 1,513,720 909,071 487,658 1,487,615 527,485 44,557 7,019,144

5 unchanged sentences

Total commercial real estate loans 26,079 356,787 377,193 386,118 290,218 992,471 25,543 14,631 2,469,040

Commercial real estate current period charge-offs — — ( 45 ) — ( 51 ) ( 561 ) — — ( 657 )

Commercial real estate loans - owner occupied

3 unchanged sentences

Total commercial real estate loans - owner occupied 1,196 61,117 49,100 16,520 51,764 172,691 2,653 3,023 358,064

Commercial real estate - owner occupied current period charge-offs — — — — — — — — —

Commercial loans

3 unchanged sentences

Total commercial loans 126,336 468,358 88,477 35,340 46,972 68,605 404,844 7,091 1,246,023

Commercial loans current period charge-offs — ( 147 ) ( 268 ) ( 180 ) — ( 270 ) — — ( 865 )

Total Business Banking 153,611 886,262 514,770 437,978 388,954 1,233,767 433,040 24,745 4,073,127

Total loans $ 498,567 2,590,344 2,028,490 1,347,049 876,612 2,721,382 960,525 69,302 11,092,271

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

For the quarter ended March 31, 2023, $ 4.9 million of revolving loans were converted to term loans.

The following table presents the amortized cost basis of our loan portfolio by year of origination and credit quality indicator for each portfolio segment as of December 31, 2022 (in thousands):

36 unchanged sentences

Total loans $ 2,630,339 2,099,871 1,415,571 914,933 575,318 2,274,805 939,858 69,757 10,920,452

During the year ended December 31, 2021, $ 27.3 million of revolving loans were converted to term loans.

For the year ended December 31, 2022, $ 20.7 million of revolving loans were converted to term loans.

(4) Goodwill and Other Intangible Assets

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Amortizable intangible assets:

3 unchanged sentences

Customer and Contract intangible assets - gross $ 12,775 12,775

Customer list intangible assets disposed of due to sale of insurance business — ( 1,547 )

accumulated amortization ( 12,758 ) ( 12,747 )

1 unchanged sentence

Total intangible assets - net $ 7,651 8,560

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

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

For the quarter ended September 30, 2021 1,321

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

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

For the year ending December 31, 2022 4,277

The following table shows the actual aggregate amortization expense for the quarters ended March 31, 2023 and 2022, as well as the estimated aggregate amortization expense, based upon current levels of intangible assets, for the current fiscal year and each of the five succeeding fiscal years (in thousands):

For the quarter ended March 31, 2023 $ 909

For the quarter ended March 31, 2022 1,183

For the year ending December 31, 2023 3,270

5 unchanged sentences

Balance at December 31, 2022 $ 380,997

Purchase accounting adjustment 77

Goodwill disposed of due to sale of insurance business ( 1,359 )

Balance at December 31, 2021 380,997

Balance at September 30, 2022 $ 380,997

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

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

Balance at March 31, 2023 $ 380,997

We performed our annual goodwill impairment test as of June 30, 2022 in accordance with ASC 350, as updated by ASU 2017-04 (“Step 0”), and concluded that goodwill was not impaired.

As of March 31, 2023, there were no events or changes in circumstances that would cause us to update that goodwill impairment test and we have concluded there is no impairment of goodwill.

(5) Borrowed Funds

(a) Borrowings

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

September 30, 2022 December 31, 2021

Borrowed funds at March 31, 2023 and December 31, 2022 are presented in the following table:

March 31, 2023 December 31, 2022

Amount Average rate Amount Average rate

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

Term notes payable to the FHLB of Pittsburgh, due within one year $ 403,000 5.17 % $ 500,000 4.55 %

Notes payable to the FHLB of Pittsburgh, due within one year 183,700 5.15 % 51,300 4.45 %

Collateralized borrowings, due within one year 83,290 1.16 % 105,766 0.27 %

5 unchanged sentences

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

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

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

At March 31, 2023 and December 31, 2022, the balance of the revolving line of credit was $ 183.7 million and $ 51.3 million, respectively.

At March 31, 2023 and December 31, 2022, collateralized borrowings due within one year were $ 83.3 million and $ 105.8 million, respectively.

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

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

At March 31, 2023 and December 31, 2022, collateral received was $ 18.7 million and $ 24.1 million, respectively.

This represents collateral posted to us from our derivative counterparties.

At March 31, 2023 and December 31, 2022, term notes payable to the FHLB of Pittsburgh due within one year were $ 403.0 million and $ 500.0 million, respectively.

The March 31, 2023 total is made up of five advances:

$ 3.0 million at 5.20 % maturing April 3, 2023;

$ 100.0 million at 5.27 % maturing April 7, 2023;

$ 100.0 million at 5.15 % maturing April 14, 2023;

$ 100.0 million at 5.15 % maturing April 21, 2023;

and $ 100.0 million at 5.13 % maturing April 28, 2023.

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

The subordinated notes, which qualify as Tier 2 capital, bear interest at an annual rate of 4.00 %, payable semi-annually in arrears commencing on March 15, 2021, and a floating rate of interest equivalent to the 3-month Secured Overnight Financing Rate (“SOFR”) plus 3.89 % payable quarterly in arrears commencing on December 15, 2025.

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.

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

At March 31, 2023 and December 31, 2022, subordinated debentures, net of issuance costs, were $ 113.9 million and $ 113.8 million, respectively.

(b) Trust Preferred Securities

7 unchanged sentences

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

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

Maturity date Interest rate Capital debt securities March 31, 2023 December 31, 2022

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

4 unchanged sentences

7,875 8,119 8,119

UNCT I (1) January 23, 2034 3-month LIBOR plus 2.85 %

Union National Capital Trust I (1) January 23, 2034 3-month LIBOR plus 2.85 %

8,000 7,981 7,975

UNCT II (1) November 23, 2034 3-month LIBOR plus 2.00 %

Union National Capital Trust II (1) November 23, 2034 3-month LIBOR plus 2.00 %

3,000 2,775 2,768

26 unchanged sentences

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

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

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

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

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

At March 31, 2023, the maximum potential amount of future payments we could be required to make under these non-recourse standby letters of credit was $ 44.8 million, of which $ 31.2 million is fully collateralized.

At March 31, 2023, we had a liability which represents deferred income of $ 917,000 related to the standby letters of credit.

In addition, we maintain a $ 5.0 million unsecured line of credit with a correspondent bank for private label credit card facilities for certain existing commercial clients of the Bank, of which $ 1.1 million in notional value of credit cards have been issued.

These issued credit cards had an outstanding balance of $ 125,000 at March 31, 2023.

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

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

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

(7) Earnings Per Share

2 unchanged sentences

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

Quarter ended September 30, Nine months ended September 30,

2022 2021 2022 2021

Quarter ended March 31,

Net income $ 33,679 28,287

8 unchanged sentences

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

Quarter ended September 30,

Pension benefits Other post-retirement benefits

2022 2021 2022 2021

Service cost $ 2,599 2,860 — —

Interest cost 1,671 1,517 10 4

Expected return on plan assets ( 3,864 ) ( 3,464 ) — —

Amortization of prior service cost ( 564 ) ( 580 ) — —

Amortization of the net loss 381 1,038 2 3

Net periodic cost $ 223 1,371 12 7

Nine months ended September 30,

Quarter ended March 31,

Pension benefits Other post-retirement benefits

6 unchanged sentences

Net periodic cost $ ( 218 ) 223 17 12

We anticipate making a contribution to our defined benefit pension plan between $ 0 and $ 2.0 million during the year ending December 31, 2022.

Because of the current funding status, we do not anticipate a funding requirement during the year ending December 31, 2023.

(9) Disclosures About Fair Value of Financial Instruments

3 unchanged sentences

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

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

inputs (Level 3).

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

52 unchanged sentences

Interest Rate and Foreign Exchange Swap Agreements and Risk Participation Agreements

The fair value of interest rate swaps is based upon the present value of the expected future cash flows using the LIBOR swap curve, the basis for the underlying interest rate.

The fair value of interest rate swaps is based upon the present value of the expected future cash flows using the SOFR discount curve, the basis for the underlying interest rate.

To price interest rate swaps, cash flows are first projected for each payment date using the fixed rate for the fixed side of the swap and the forward rates for the floating side of the swap.

These swap cash flows are then discounted to time zero using LIBOR zero-coupon interest rates.

These swap cash flows are then discounted to time zero using SOFR zero-coupon interest rates.

The sum of the present value of both legs is the fair market value of the interest rate swap.

10 unchanged sentences

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

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

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

At March 31, 2023 and December 31, 2022, there was no significant unrealized appreciation or depreciation on these financial instruments.

The following table sets forth the carrying amount and estimated fair value of our financial instruments included in the Consolidated Statement of Financial Condition at March 31, 2023 (in thousands):

amount Estimated

5 unchanged sentences

Loans receivable, net 10,964,008 10,001,275 — — 10,001,275

Residential mortgage loans held-for-sale 15,834 15,834 — — 15,834

Loans held-for-sale 7,006 7,077 — 690 6,387

Accrued interest receivable 36,177 36,177 36,177 — —

Interest rate lock commitments 386 386 — — 386

Forward commitments 126 126 — 126 —

Foreign exchange swaps 1 1 — 1 —

8 unchanged sentences

Junior subordinated debentures 129,379 139,492 — — 139,492

Forward commitments 139 139 — 139 —

Foreign exchange swaps 53 53 — 53 —

30 unchanged sentences

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

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

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

The methods and assumptions detailed above were used in estimating the fair value of financial instruments at both March 31, 2023 and December 31, 2022.

The following table represents assets and liabilities measured at fair value on a recurring basis at March 31, 2023 (in thousands):

Level 1 Level 2 Level 3 Total assets

17 unchanged sentences

Interest rate lock commitments — — 386 386

Forward commitments — 126 — 126

Foreign exchange swaps — 1 — 1

1 unchanged sentence

Total assets $ — 1,227,001 386 1,227,387

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

Foreign exchange swaps — 53 — 53

Forward commitments — 139 — 139

Interest rate swaps not designated as hedging instruments — 35,968 — 35,968

Risk participation agreements — 12 — 12

7 unchanged sentences

States and political subdivisions — 111,766 — 111,766

Corporate — 12,978 — 12,978

Total debt securities — 224,537 — 224,537

18 unchanged sentences

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

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

2022 2021 2022 2021

Beginning balance $ 1,520 3,608 1,684 6,465

For the quarter ended March 31,

Beginning balance January 1, $ 559 1,684

Interest rate lock commitments:

2 unchanged sentences

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

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

The following table represents the fair market measurement for only those nonrecurring assets that had a fair market value below the carrying amount as of March 31, 2023 (in thousands):

Level 1 Level 2 Level 3 Total assets

13 unchanged sentences

We classify loans individually assessed as nonrecurring Level 3.

Mortgage servicing rights - Mortgage servicing rights represent the value of servicing residential mortgage loans, when the mortgage loans have been sold into the secondary market and the associated servicing has been retained.

The value is determined through a discounted cash flow analysis, which uses interest rates, prepayment speeds and delinquency rate assumptions as inputs.

All of these assumptions require a significant degree of management judgment.

Servicing rights and the related mortgage loans are segregated into categories or homogeneous pools based upon common characteristics.

Adjustments are only made when the estimated discounted future cash flows are less than the carrying value, as determined by individual pool.

As such, mortgage servicing rights are classified as nonrecurring Level 3.

Real Estate Owned - Real estate owned is comprised of property acquired through foreclosure or voluntarily conveyed by borrowers.

2 unchanged sentences

We classify real estate owned as nonrecurring Level 3.

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

Fair value Valuation techniques Significant

1 unchanged sentence

Loans individually assessed $ 13,467 Appraisal value (1) Estimated cost to sell 10.0 %

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

Mortgage servicing rights 105 Discounted cash flow Annual service cost $ 86

29 unchanged sentences

Notional amount Fair value Notional amount Fair value

At September 30, 2022

At March 31, 2023

Derivatives not designated as hedging instruments:

14 unchanged sentences

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

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

2022 2021 2022 2021

For the quarter ended March 31,

Non-hedging swap derivatives:

Increase in other income $ 93 590 207 1,087

(Decrease)/increase in other income $ ( 202 ) 61

Increase in mortgage banking income 174 418

1 unchanged sentence

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

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

As of March 31, 2023, we do not anticipate that the aggregate ultimate liability arising out of any pending or threatened legal proceedings will be material to our Consolidated Financial Statements.

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

Due to the inherent subjectivity of assessments and unpredictability of outcomes of legal proceedings, any amounts accrued may not represent the ultimate loss to us from legal proceedings.

During the year ended December 31, 2018, Northwest and our subsidiary, The Bert Company (doing business as Northwest Insurance Services) (“NWIS”), were involved in a lawsuit against, among others, First National Bank of Pennsylvania (“FNB”) and their insurance subsidiary, First National Insurance Agency, LLC (“FNIA”).

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

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

(12) Changes in Accumulated Other Comprehensive Income

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

For the quarter ended September 30, 2022

on securities

available-for-sale Change in

defined benefit

pension plans Total

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

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

Amounts reclassified from accumulated other comprehensive income (2) — ( 131 ) ( 131 )

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

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

For the quarter ended September 30, 2021

gains/(losses)

on securities

available-for-sale Change in

defined benefit

pension plans Total

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

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

Amounts reclassified from accumulated other comprehensive income (4) (5) ( 69 ) 333 264

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

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

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

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

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

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

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

For the nine months ended September 30, 2022

For the quarter ended March 31, 2023

on securities

3 unchanged sentences

Balance as of December 31, 2022 $ ( 164,206 ) ( 6,952 ) ( 171,158 )

Other comprehensive loss before reclassification adjustments (1) ( 153,124 ) — ( 153,124 )

Other comprehensive income before reclassification adjustments (1) 13,017 — 13,017

Amounts reclassified from accumulated other comprehensive income (2) — ( 382 ) ( 382 )

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

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

For the nine months ended September 30, 2021

Net other comprehensive income 13,017 ( 382 ) 12,635

Balance as of March 31, 2023 $ ( 151,189 ) ( 7,334 ) ( 158,523 )

For the quarter ended March 31, 2022

gains/(losses)

6 unchanged sentences

Amounts reclassified from accumulated other comprehensive income (4) (5) ( 1 ) ( 131 ) ( 132 )

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

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

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

(2) Consists of realized gains, net of tax of $ 0 .

Net other comprehensive (loss)/income ( 64,784 ) ( 131 ) ( 64,915 )

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

(1) Consists of unrealized holding gains, net of tax of ($ 3,308 ).

(2) Consists of realized gains, net of tax of $ 152 .

1 unchanged sentence

(4) Consists of realized gains, net of tax $ 0 .

(6) Consists of realized losses, net of tax of $( 386 ).

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

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

What changed 10-Q

Item 1. Financial Statements