Northwest Bancshares, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited) (in thousands, except share data) September 30, 2023 December 31, 2022 Assets Cash and cash equivalents $ 161,995 139,365 Marketable securities available-for-sale (amortized cost of $ 1,262,080 and $ 1,431,728 , respectively) 1,010,076 1,218,108 Marketable securities held-to-maturity (fair value of $ 682,681 and $ 751,384 , respectively) 830,106 881,249 Total cash and cash equivalents and marketable securities 2,002,177 2,238,722 Loans held-for-sale 10,592 9,913 Loans held for investment 11,299,681 10,910,539 Allowance for credit losses ( 124,841 ) ( 118,036 ) Loans receivable, net 11,185,432 10,802,416 FHLB stock, at cost 40,404 40,143 Accrued interest receivable 42,624 35,528 Real estate owned, net 363 413 Premises and equipment, net 138,041 145,909 Bank-owned life insurance 250,502 255,062 Goodwill 380,997 380,997 Other intangible assets, net 6,013 8,560 Other assets 315,648 205,574 Total assets $ 14,362,201 14,113,324 Liabilities and shareholders’ equity Liabilities: Noninterest-bearing demand deposits $ 2,774,291 2,993,243 Interest-bearing demand deposits 2,598,080 2,686,431 Money market deposit accounts 2,042,813 2,457,569 Savings deposits 2,116,360 2,275,020 Time deposits 2,258,338 1,052,285 Total deposits 11,789,882 11,464,548 Borrowed funds 604,587 681,166 Subordinated debt 114,102 113,840 Junior subordinated debentures 129,509 129,314 Advances by borrowers for taxes and insurance 27,653 47,613 Accrued interest payable 7,915 3,231 Other liabilities 190,122 182,126 Total liabilities 12,863,770 12,621,838 Shareholders’ equity: Preferred stock, $ 0.01 par value: 50,000,000 authorized, no shares issued — — Common stock, $ 0.01 par value: 500,000,000 shares authorized, 127,101,349 and 127,028,848 shares issued and outstanding, respectively 1,271 1,270 Additional paid-in capital 1,023,591 1,019,647 Retained earnings 671,092 641,727 Accumulated other comprehensive loss ( 197,523 ) ( 171,158 ) Total shareholders’ equity 1,498,431 1,491,486 Total liabilities and shareholders’ equity $ 14,362,201 14,113,324 See accompanying notes to unaudited Consolidated Financial Statements. 1 Table of Contents NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands, except share data) Quarter ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Interest income: Loans receivable $ 140,667 106,943 397,136 290,691 Mortgage-backed securities 8,072 8,683 24,935 22,201 Taxable investment securities 786 838 2,472 2,230 Tax-free investment securities 491 709 1,858 2,066 FHLB stock dividends 668 148 2,202 311 Interest-earning deposits 914 1,295 1,931 3,446 Total interest income 151,598 118,616 430,534 320,945 Interest expense: Deposits 31,688 3,157 64,743 10,249 Borrowed funds 11,542 2,710 36,410 7,059 Total interest expense 43,230 5,867 101,153 17,308 Net interest income 108,368 112,749 329,381 303,637 Provision for credit losses - loans 3,983 7,689 14,863 8,837 Provision for credit losses - unfunded commitments ( 2,981 ) 3,585 65 8,577 Net interest income after provision for credit losses 107,366 101,475 314,453 286,223 Noninterest income: Loss on sale of investments — ( 2 ) ( 8,306 ) ( 7 ) Gain on sale of mortgage servicing rights — — 8,305 — Gain on sale of SBA loans 301 — 1,412 — Service charges and fees 15,270 14,323 43,292 41,063 Trust and other financial services income 7,085 6,650 20,400 21,123 Gain on real estate owned, net 29 290 922 552 Income from bank-owned life insurance 4,561 1,475 7,134 5,466 Mortgage banking income 632 766 2,184 4,388 Other operating income 3,010 3,301 9,311 10,406 Total noninterest income 30,888 26,803 84,654 82,991 Noninterest expense: Compensation and employee benefits 51,243 46,711 145,497 141,701 Premises and occupancy costs 7,052 7,171 22,102 22,248 Office operations 3,398 3,229 9,208 9,774 Collections expense 551 322 1,367 1,245 Processing expenses 14,672 13,416 43,670 38,911 Marketing expenses 2,379 2,147 8,127 6,322 Federal deposit insurance premiums 2,341 1,200 6,628 3,459 Professional services 3,002 3,363 11,564 9,269 Amortization of intangible assets 795 1,047 2,546 3,345 Real estate owned expense 141 61 405 170 Merger, asset disposition and restructuring expense — — 4,395 1,374 Other expenses 1,996 321 5,369 2,929 Total noninterest expense 87,570 78,988 260,878 240,747 Income before income taxes 50,684 49,290 138,229 128,467 Federal and state income taxes expense 11,464 11,986 32,286 29,450 Net income $ 39,220 37,304 105,943 99,017 Basic earnings per share $ 0.31 0.29 0.83 0.78 Diluted earnings per share $ 0.31 0.29 0.83 0.78 See accompanying notes to unaudited Consolidated Financial Statements. 2 Table of Contents NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (Unaudited) (in thousands) Quarter ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Net income $ 39,220 37,304 105,943 99,017 Other comprehensive loss net of tax: Net unrealized holding (losses)/gains on marketable securities: Unrealized holding losses, net of tax of $ 9,140 , $ 14,705 , $ 9,603 and $ 45,555 , respectively ( 29,715 ) ( 48,387 ) ( 34,417 ) ( 153,124 ) Reclassification adjustment for losses/(gains) included in net income, net of tax of $ 0 , $ 0 , ($ 1,731 ) and $ 0 , respectively — — 5,636 ( 2 ) Net unrealized holding losses on marketable securities ( 29,715 ) ( 48,387 ) ( 28,781 ) ( 153,126 ) Change in fair value of interest rate swaps, net of tax of ($ 533 ), $ 0 , ($ 1,041 ) and $ 0 , respectively 1,825 — 3,562 — Defined benefit plan: Actuarial reclassification adjustments for prior period service costs and actuarial gains included in net income, net of tax of $ 152 , $ 50 , $ 456 and $ 151 , respectively ( 382 ) ( 131 ) ( 1,146 ) ( 393 ) Other comprehensive loss ( 28,272 ) ( 48,518 ) ( 26,365 ) ( 153,519 ) Total comprehensive income/(loss) $ 10,948 ( 11,214 ) 79,578 ( 54,502 ) See accompanying notes to unaudited Consolidated Financial Statements. 3 Table of Contents NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited) (in thousands, expect share data) Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total shareholders’ equity Common stock Quarter ended September 30, 2023 Shares Amount Beginning balance at June 30, 2023 127,088,963 $ 1,271 1,022,189 657,292 ( 169,251 ) 1,511,501 Comprehensive income: Net income — — — 39,220 — 39,220 Other comprehensive loss, net of tax of $ 8,759 — — — — ( 28,272 ) ( 28,272 ) Total comprehensive income/(loss) — — — 39,220 ( 28,272 ) 10,948 Exercise of stock options 11,523 — 112 — — 112 Stock-based compensation expense 1,779 — 1,290 — — 1,290 Stock-based compensation forfeited ( 916 ) — — — — — Dividends paid ($ 0.20 per share) — — — ( 25,420 ) — ( 25,420 ) Ending balance at September 30, 2023 127,101,349 $ 1,271 1,023,591 671,092 ( 197,523 ) 1,498,431 Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total shareholders’ equity Common stock Quarter ended September 30, 2022 Shares Amount Beginning balance at June 30, 2022 126,881,766 $ 1,269 1,015,349 620,551 ( 142,630 ) 1,494,539 Comprehensive income: Net income — — — 37,304 — 37,304 Other comprehensive loss, net of tax of $ 14,755 — — — — ( 48,518 ) ( 48,518 ) Total comprehensive income/(loss) — — — 37,304 ( 48,518 ) ( 11,214 ) Exercise of stock options 73,472 — 897 — — 897 Stock-based compensation expense — — 944 — — 944 Stock-based compensation forfeited ( 33,249 ) — ( 1 ) — — ( 1 ) Dividends paid ($ 0.20 per share) — — — ( 25,379 ) — ( 25,379 ) Ending balance at September 30, 2022 126,921,989 $ 1,269 1,017,189 632,476 ( 191,148 ) 1,459,786 See accompanying notes to unaudited Consolidated Financial Statements. 4 Table of Contents NORTHWEST BANCSHARES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited) (in thousands, expect share data) Additional paid-in capital Retained earnings Accumulated other comprehensive income/(loss) Total shareholders’ equity Common stock Nine months ended September 30, 2023 Shares Amount Beginning balance at December 31, 2022 127,028,848 $ 1,270 1,019,647 641,727 ( 171,158 ) 1,491,486 Comprehensive income: Net income — — — 105,943 — 105,943 Other comprehensive loss, net of tax of $ 7,287 — — — — ( 26,365 ) ( 26,365 ) Total comprehensive income — — — 105,943 ( 26,365 ) 79,578 Adoption of ASU No. 2022-02 — — — ( 329 ) — ( 329 ) Exercise of stock options 53,207 1 609 — — 610 Stock-based compensation expense 75,554 1 3,334 — — 3,335 Stock-based compensation forfeited ( 56,260 ) ( 1 ) 1 — — — Dividends paid ($ 0.60 per share) — — — ( 76,249 ) — ( 76,249 ) Ending balance at September 30, 2023 127,101,349 $ 1,271 1,023,591 671,092 ( 197,523 ) 1,498,431 Additional paid-in capital Retained earnings Accumulated other comprehensive income/(loss) Total shareholders’ equity Common stock Nine months ended September 30, 2022 Shares Amount Beginning balance at December 31, 2021 126,612,183 $ 1,266 1,010,405 609,529 ( 37,629 ) 1,583,571 Comprehensive income: Net income — — — 99,017 — 99,017 Other comprehensive loss, net of tax of $ 45,706 — — — — ( 153,519 ) ( 153,519 ) Total comprehensive income/(loss) — — — 99,017 ( 153,519 ) ( 54,502 ) Exercise of stock options 314,880 2 3,719 — — 3,721 Stock-based compensation expense 75,377 2 3,065 — — 3,067 Stock-based compensation forfeited ( 80,451 ) ( 1 ) — — — ( 1 ) Dividends paid ($ 0.60 per share) — — — ( 76,070 ) — ( 76,070 ) Ending balance at September 30, 2022 126,921,989 $ 1,269 1,017,189 632,476 ( 191,148 ) 1,459,786 See accompanying notes to unaudited Consolidated Financial Statements. 5 Table of Contents NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine months ended September 30, 2023 2022 Operating activities: Net income $ 105,943 99,017 Adjustments to reconcile net income to net cash provided by/(used in) operating activities: Provision for credit losses 14,928 8,837 Loss on sale of investments 8,306 — Net loss/(gain) on sale of assets 743 ( 858 ) Mortgage banking activity 5,342 ( 3,308 ) Gain on sale of SBA loans ( 1,390 ) — Gain on sale of mortgage servicing rights ( 8,305 ) — Net depreciation, amortization and accretion 16,473 3,874 Increase in other assets ( 114,158 ) ( 31,790 ) Increase in other liabilities 15,617 11,270 Net amortization on marketable securities 2,438 3,849 Noncash compensation expense related to stock benefit plans 3,335 3,066 Noncash write-down of real estate owned 37 44 Deferred income tax (benefit)/expense ( 3,610 ) 1,928 Origination of loans held-for-sale ( 137,789 ) ( 317,117 ) Proceeds from sale of loans held-for-sale 139,819 331,268 Net cash provided by operating activities 47,729 110,080 Investing activities: Purchase of marketable securities held-to-maturity — ( 212,892 ) Purchase of marketable securities available-for-sale ( 23,502 ) ( 102,178 ) Proceeds from maturities and principal reductions of marketable securities held-to-maturity 50,517 80,765 Proceeds from maturities and principal reductions of marketable securities available-for-sale 81,803 197,310 Proceeds from sale of marketable securities available-for-sale 101,229 — Proceeds from bank-owned life insurance 2,798 4,753 Loan originations ( 2,928,360 ) ( 3,464,471 ) Proceeds from sale of mortgage servicing rights 13,118 — Loan purchases — ( 371,121 ) Proceeds from loan maturities and principal reductions 2,524,676 3,110,264 Net redemptions of FHLB stock ( 261 ) ( 5,097 ) Proceeds from sale of real estate owned 1,343 1,469 Proceeds from sale of real estate owned for investment, net — 229 Purchases of premises and equipment, net ( 1,617 ) ( 613 ) Net cash used in investing activities ( 178,256 ) ( 761,582 ) 6 Table of Contents Nine months ended September 30, 2023 2022 Financing activities: Net increase/(decrease) in deposits 325,334 ( 422,773 ) Repayments of long-term borrowings — ( 10,094 ) Net (decrease)/increase in short-term borrowings ( 76,578 ) 10,943 Increase in advances by borrowers for taxes and insurance ( 19,960 ) ( 14,935 ) Cash dividends paid on common stock ( 76,249 ) ( 76,070 ) Proceeds from stock options exercised 610 3,721 Net cash provided by/(used in) financing activities 153,157 ( 509,208 ) Net increase/(decrease) in cash and cash equivalents $ 22,630 ( 1,160,710 ) Cash and cash equivalents at beginning of period $ 139,365 1,279,259 Net increase/(decrease) in cash and cash equivalents 22,630 ( 1,160,710 ) Cash and cash equivalents at end of period $ 161,995 118,549 Cash paid during the period for: Interest on deposits and borrowings (including interest credited to deposit accounts of $ 56,021 and $ 9,812 , respectively) $ 96,469 18,281 Income taxes 38,236 21,851 Non-cash activities: Loan foreclosures and repossessions $ 2,844 3,423 Sale of real estate owned financed by the Company 70 175 See accompanying notes to unaudited Consolidated Financial Statements. 7 Table of Contents NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (1) Basis of Presentation and Informational Disclosures Northwest Bancshares, Inc. (the “Company” or “NWBI”), a Maryland corporation headquartered in Columbus, Ohio, is a bank holding company regulated by the Board of Governors of the Federal Reserve System (“FRB”). The primary activity of the Company is the ownership of all of the issued and outstanding common stock of Northwest Bank, a Pennsylvania-chartered savings bank (“Northwest”). Northwest is regulated by the Federal Deposit Insurance Corporation (“FDIC”) and the Pennsylvania Department of Banking. Northwest operates 142 community-banking offices throughout Pennsylvania, Western New York, Eastern Ohio, and Indiana. The accompanying unaudited Consolidated Financial Statements include the accounts of the Company and its subsidiary, Northwest, and Northwest’s subsidiaries Northwest Capital Group, Inc., Great Northwest Corporation, and MutualFirst Interest Company, Inc. The unaudited Consolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information or footnotes required for complete annual financial statements. In the opinion of management, all adjustments necessary for the fair presentation of the Company’s financial position and results of operations have been included. The Consolidated Financial Statements have been prepared using the accounting policies described in the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 updated, as required, for any new pronouncements or changes. Certain items previously reported have been reclassified to conform to the current year’s reporting format. 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 and nine months ended September 30, 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 September 30, 2023 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 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. The Company awarded directors 33,048 restricted stock awards (“RSAs”) with a grant date fair value of $ 12.80 which fully vest one-year from the grant date. Also, the Company awarded employees 176,623 performance share units (“PSUs”) with a discounted grant date fair value of $ 10.54 . The number of PSUs earned will be based on attainment of certain performance criteria over a three-year period, with the actual number of shares issuable ranging between 0 % and 150 % of the number of PSUs granted. The PSUs have a three-year cliff vesting, from the date of grant, and any PSUs earned will be issued after the vesting period. As of September 30, 2023, we awarded discretionary grants of 178,483 RSUs with a weighted average grant date fair value of $ 10.87 . These shares vest over a two or three year period with the first vesting occurring one year from the grant date. Stock-based compensation expense of $ 1.3 million and $ 944,000 for the quarters ended September 30, 2023 and 2022, respectively, was recognized in compensation expense relating to our stock benefit plans. At September 30, 2023, there was compensation expense of $ 401,000 to be recognized for awarded but unvested stock options, $ 2.5 million for unvested restricted common shares, $ 3.7 million to be recognized for awarded but unvested RSUs, $ 193,000 to be recognized for awarded but unvested RSAs, and $ 2.1 million to be recognized for awarded but unvested PSUs. Income Taxes-Uncertain Tax Positions Accounting standards prescribe a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. A tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. We had $ 702,000 and $ 473,000 of liability for unrecognized tax benefits as of September 30, 2023 and December 31, 2022. We recognize interest accrued related to: (1) unrecognized tax benefits in other expenses and (2) refund claims in other operating income. We recognize penalties (if any) in other expenses. We are subject to audit by the Internal Revenue Service and any state in which we conduct business for the tax periods ended December 31, 2022, 2021, 2020 and 2019. 8 Table of Contents 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. 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 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 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 ASU is effective upon issuance through December 31, 2024, and can be adopted at any time during this period. During the current year, we completed our LIBOR transition plan and modified the Company’s loan and other financial instrument contracts that are impacted by the 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. There was no material impact to the Company's financial statements as a result of the transition. 9 Table of Contents (2) Marketable Securities The following table shows the portfolio of marketable securities available-for-sale at September 30, 2023 (in thousands): Amortized cost Gross unrealized holding gains Gross unrealized holding losses Fair value Debt issued by the U.S government and agencies: Due after one year through five years $ 20,000 — ( 1,750 ) 18,250 Due after ten years 50,166 — ( 11,890 ) 38,276 Debt issued by government-sponsored enterprises: Due after one year through five years 45,985 — ( 7,502 ) 38,483 Due after five years through ten years 434 — ( 11 ) 423 Municipal securities: Due after one year through five years 954 3 ( 9 ) 948 Due after five years through ten years 21,976 — ( 3,055 ) 18,921 Due after ten years 62,990 — ( 14,788 ) 48,202 Corporate debt issues: Due after five years through ten years 8,464 — ( 1,000 ) 7,464 Residential mortgage-backed securities: Fixed rate pass-through 213,849 — ( 35,305 ) 178,544 Variable rate pass-through 7,501 2 ( 169 ) 7,334 Fixed rate agency CMOs 805,086 — ( 175,985 ) 629,101 Variable rate agency CMOs 24,675 28 ( 573 ) 24,130 Total residential mortgage-backed securities 1,051,111 30 ( 212,032 ) 839,109 Total marketable securities available-for-sale $ 1,262,080 33 ( 252,037 ) 1,010,076 10 Table of Contents The following table shows the portfolio of marketable securities available-for-sale at December 31, 2022 (in thousands): Amortized cost Gross unrealized holding gains Gross unrealized holding losses Fair value Debt issued by the U.S. government and agencies: Due after one year through five years $ 20,000 — ( 1,799 ) 18,201 Due after ten years 53,152 — ( 10,761 ) 42,391 Debt issued by government-sponsored enterprises: Due after one year through five years 993 — ( 49 ) 944 Due after five years through ten years 45,814 — ( 7,557 ) 38,257 Municipal securities: Due within one year 506 — ( 1 ) 505 Due after one year through five years 986 21 ( 13 ) 994 Due after five years through ten years 36,332 — ( 2,290 ) 34,042 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: Fixed rate pass-through 227,122 35 ( 31,171 ) 195,986 Variable rate pass-through 8,837 10 ( 184 ) 8,663 Fixed rate agency CMOs 906,962 — ( 145,284 ) 761,678 Variable rate agency CMOs 27,853 31 ( 640 ) 27,244 Total residential mortgage-backed securities 1,170,774 76 ( 177,279 ) 993,571 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, 2023 (in thousands): Amortized cost Gross unrealized holding gains Gross unrealized holding losses Fair value Debt issued by government-sponsored enterprises: Due after one year through five years $ 49,471 — ( 6,830 ) 42,641 Due after five years through ten years 74,986 — ( 14,901 ) 60,085 Residential mortgage-backed securities: Fixed rate pass-through 151,411 — ( 27,070 ) 124,341 Variable rate pass-through 468 — ( 8 ) 460 Fixed rate agency CMOs 553,241 — ( 98,606 ) 454,635 Variable rate agency CMOs 529 — ( 10 ) 519 Total residential mortgage-backed securities 705,649 — ( 125,694 ) 579,955 Total marketable securities held-to-maturity $ 830,106 — ( 147,425 ) 682,681 11 Table of Contents The following table shows the portfolio of marketable securities held-to-maturity at December 31, 2022 (in thousands): Amortized cost Gross unrealized holding gains Gross unrealized holding losses Fair value Debt issued by government-sponsored enterprises: Due after one year through five years $ 29,478 — ( 3,676 ) 25,802 Due after five years through ten years 94,977 — ( 18,157 ) 76,820 Residential mortgage-backed securities: Fixed rate pass-through 163,196 — ( 24,684 ) 138,512 Variable rate pass-through 542 — ( 12 ) 530 Fixed rate agency CMOs 592,527 — ( 83,325 ) 509,202 Variable rate agency CMOs 529 — ( 11 ) 518 Total residential mortgage-backed securities 756,794 — ( 108,032 ) 648,762 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, 2023 (in thousands): Amortized cost Fair value Residential mortgage-backed securities: Due within one year $ 60 59 Due after one year through five years 25,302 23,185 Due after five years through ten years 27,837 25,424 Due after ten years 997,912 790,441 Total residential mortgage-backed securities $ 1,051,111 839,109 The following table shows the contractual maturity of our residential mortgage-backed securities held-to-maturity at September 30, 2023 (in thousands): Amortized cost Fair value Residential mortgage-backed securities: Due after one year through five years $ 20,343 17,291 Due after five years through ten years 20,225 15,484 Due after ten years 665,081 547,180 Total residential mortgage-backed securities $ 705,649 579,955 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 September 30, 2023 (in thousands): Less than 12 months 12 months or more Total Fair value Unrealized loss Fair value Unrealized loss Fair value Unrealized loss U.S. government-sponsored enterprises $ 423 ( 11 ) 197,736 ( 42,873 ) 198,159 ( 42,884 ) Municipal securities 8,412 ( 526 ) 59,233 ( 17,326 ) 67,645 ( 17,852 ) Corporate issues — — 7,464 ( 1,000 ) 7,464 ( 1,000 ) Residential mortgage-backed securities - agency 25,649 ( 1,271 ) 1,390,685 ( 336,455 ) 1,416,334 ( 337,726 ) Total $ 34,484 ( 1,808 ) 1,655,118 ( 397,654 ) 1,689,602 ( 399,462 ) 12 Table of Contents 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 December 31, 2022 (in thousands): Less than 12 months 12 months or more Total Fair value Unrealized loss Fair value Unrealized loss Fair value Unrealized loss U.S. government-sponsored enterprises $ 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 ) Residential mortgage-backed securities - agency 373,186 ( 22,796 ) 1,264,042 ( 262,515 ) 1,637,228 ( 285,311 ) 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, 2023, which were comprised of 548 individual securities, represents a credit loss impairment. All of these securities were issued by U.S. government agencies, U.S. government-sponsored enterprises, local municipalities, or represent corporate debt. The securities issued by the U.S. government agencies or U.S. government-sponsored enterprises are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. The 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 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. government agencies or U.S. government-sponsored enterprises. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. 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 September 30, 2023. The following table presents the credit quality of our held-to-maturity securities, based on the latest information available as of September 30, 2023 (in thousands). The credit ratings are sourced from nationally recognized rating agencies, which include Moody’s and S&P, and 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, 2023. AA+ Total Held-to-maturity securities (at amortized cost): Debt issued by the U.S. government-sponsored enterprises $ 124,457 124,457 Residential mortgage-backed securities 705,649 705,649 Total marketable securities held-to-maturity $ 830,106 830,106 13 Table of Contents (3) Loans Receivable The following table shows a summary of our loans receivable at amortized cost basis at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Originated (1) Acquired (2) Total Originated (1) Acquired (2) Total Personal Banking: Residential mortgage loans (3) $ 3,322,136 150,627 3,472,763 3,327,879 170,720 3,498,599 Home equity loans 1,126,675 132,090 1,258,765 1,131,641 166,033 1,297,674 Vehicle loans 1,969,029 70,670 2,039,699 1,965,385 91,398 2,056,783 Consumer loans 109,319 6,101 115,420 104,284 7,588 111,872 Total Personal Banking 6,527,159 359,488 6,886,647 6,529,189 435,739 6,964,928 Commercial Banking: Commercial real estate loans (4) 2,286,563 267,081 2,553,644 2,135,607 312,421 2,448,028 Commercial real estate loans - owner occupied 343,714 25,659 369,373 341,704 33,823 375,527 Commercial loans 1,463,159 37,450 1,500,609 1,082,914 49,055 1,131,969 Total Commercial Banking 4,093,436 330,190 4,423,626 3,560,225 395,299 3,955,524 Total loans receivable, gross 10,620,595 689,678 11,310,273 10,089,414 831,038 10,920,452 Allowance for credit losses ( 116,596 ) ( 8,245 ) ( 124,841 ) ( 107,379 ) ( 10,657 ) ( 118,036 ) Total loans receivable, net (5) $ 10,503,999 681,433 11,185,432 9,982,035 820,381 10,802,416 (1) Includes originated and loan pools purchased in an asset acquisition. (2) Includes loans subject to purchase accounting in a business combination. (3) Includes $ 10.2 million and $ 9.9 million of loans held-for-sale at September 30, 2023 and December 31, 2022, respectively. (4) Includes $ 435,000 and $ 0 of loans held-for-sale at September 30, 2023 and December 31, 2022, respectively. (5) Includes $ 71.5 million and $ 76.1 million of net unearned income, unamortized premiums and discounts and deferred fees and costs at September 30, 2023 and December 31, 2022, respectively. 14 Table of Contents The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the quarter ended September 30, 2023 (in thousands): Balance as of September 30, 2023 Current period provision Charge-offs Recoveries Balance as of June 30, 2023 Allowance for Credit Losses Personal Banking: Residential mortgage loans $ 17,090 ( 370 ) ( 171 ) 75 17,556 Home equity loans 5,044 201 ( 320 ) 161 5,002 Vehicle loans 27,226 984 ( 1,524 ) 483 27,283 Consumer loans 1,202 1,436 ( 1,561 ) 317 1,010 Total Personal Banking 50,562 2,251 ( 3,576 ) 1,036 50,851 Commercial Banking: Commercial real estate loans 48,582 ( 1,110 ) ( 484 ) 120 50,056 Commercial real estate loans - owner occupied 3,479 ( 30 ) — 11 3,498 Commercial loans 22,218 2,872 ( 1,286 ) 614 20,018 Total Commercial Banking 74,279 1,732 ( 1,770 ) 745 73,572 Total $ 124,841 3,983 ( 5,346 ) 1,781 124,423 Allowance for Credit Losses - off-balance sheet exposure Personal Banking: Residential mortgage loans $ 3 ( 1 ) — — 4 Home equity loans 67 3 — — 64 Total Personal Banking 70 2 — — 68 Commercial Banking: Commercial real estate loans 4,797 ( 2,858 ) — — 7,655 Commercial real estate loans - owner occupied 140 ( 180 ) — — 320 Commercial loans 7,971 55 — — 7,916 Total Commercial Banking 12,908 ( 2,983 ) — — 15,891 Total off-balance sheet exposure $ 12,978 ( 2,981 ) — — 15,959 15 Table of Contents The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the 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 16 Table of Contents The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the nine months ended September 30, 2023 (in thousands): Balance September 30, 2023 Current period provision Charge-offs Recoveries ASU 2022-02 Adoption Balance December 31, 2022 Allowance for Credit Losses Personal Banking: Residential mortgage loans $ 17,090 ( 2,047 ) ( 923 ) 799 — 19,261 Home equity loans 5,044 ( 705 ) ( 719 ) 566 — 5,902 Vehicle loans 27,226 7,267 ( 4,731 ) 1,631 — 23,059 Consumer loans 1,202 3,463 ( 3,860 ) 934 — 665 Total Personal Banking 50,562 7,978 ( 10,233 ) 3,930 — 48,887 Commercial Banking: Commercial real estate loans 48,582 3,587 ( 1,556 ) 1,619 426 44,506 Commercial real estate loans - owner occupied 3,479 ( 515 ) ( 68 ) 58 — 4,004 Commercial loans 22,218 3,813 ( 3,360 ) 1,126 — 20,639 Total Commercial Banking 74,279 6,885 ( 4,984 ) 2,803 426 69,149 Total $ 124,841 14,863 ( 15,217 ) 6,733 426 118,036 Allowance for Credit Losses - off-balance sheet exposure (1) Personal Banking: Residential mortgage loans $ 3 ( 1 ) — — — 4 Home equity loans 67 ( 7 ) — — — 74 Total Personal Banking 70 ( 8 ) — — — 78 Commercial Banking: Commercial real estate loans 4,797 ( 578 ) — — — 5,375 Commercial real estate loans - owner occupied 140 ( 239 ) — — — 379 Commercial loans 7,971 890 — — — 7,081 Total Commercial Banking 12,908 73 — — — 12,835 Total off-balance sheet exposure $ 12,978 65 — — — 12,913 (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. 17 Table of Contents The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the nine months ended September 30, 2022 (in thousands): Balance as of September 30, 2022 Current period provision Charge-offs Recoveries Balance as of December 31, 2021 Allowance for Credit Losses Personal Banking: Residential mortgage loans $ 17,967 11,331 ( 1,487 ) 750 7,373 Home equity loans 5,448 127 ( 1,237 ) 1,258 5,300 Vehicle loans 17,004 2,159 ( 2,517 ) 1,879 15,483 Consumer loans 825 479 ( 3,459 ) 921 2,884 Total Personal Banking 41,244 14,096 ( 8,700 ) 4,808 31,040 Commercial Banking: Commercial real estate loans 49,649 ( 6,465 ) ( 6,745 ) 8,718 54,141 Commercial real estate loans - owner occupied 4,087 167 — 37 3,883 Commercial loans 14,839 1,039 ( 1,253 ) 1,876 13,177 Total Commercial Banking 68,575 ( 5,259 ) ( 7,998 ) 10,631 71,201 Total $ 109,819 8,837 ( 16,698 ) 15,439 102,241 Allowance for Credit Losses - off-balance sheet exposure Personal Banking: Residential mortgage loans $ 4 2 — — 2 Home equity loans 74 35 — — 39 Total Personal Banking 78 37 — — 41 Commercial Banking: Commercial real estate loans 5,382 4,501 — — 881 Commercial real estate loans - owner occupied 287 145 — — 142 Commercial loans 5,288 3,894 — — 1,394 Total Commercial Banking 10,957 8,540 — — 2,417 Total off-balance sheet exposure $ 11,035 8,577 — — 2,458 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. 18 Table of Contents The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at September 30, 2023 (in thousands): Total loans receivable Allowance for credit losses Nonaccrual loans Loans 90 days past due and accruing Personal Banking: Residential mortgage loans $ 3,472,763 17,090 9,760 — Home equity loans 1,258,765 5,044 3,431 133 Vehicle loans 2,039,699 27,226 3,817 57 Consumer loans 115,420 1,202 281 500 Total Personal Banking 6,886,647 50,562 17,289 690 Commercial Banking: Commercial real estate loans 2,553,644 48,582 54,109 — Commercial real estate loans - owner occupied 369,373 3,479 1,071 — Commercial loans 1,500,609 22,218 4,185 38 Total Commercial Banking 4,423,626 74,279 59,365 38 Total $ 11,310,273 124,841 76,654 728 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): Total loans receivable Allowance for credit losses Nonaccrual loans (1) Loans 90 days past due and accruing TDRs Allowance related to TDRs Additional commitments to customers with loans classified as TDRs Personal Banking: Residential mortgage loans $ 3,498,599 19,261 7,574 — 6,279 1,069 — Home equity loans 1,297,674 5,902 4,145 — 1,470 546 — Vehicle loans 2,056,783 23,059 3,771 2 — — — Consumer loans 111,872 665 256 405 — — — Total Personal Banking 6,964,928 48,887 15,746 407 7,749 1,615 — Commercial Banking: Commercial real estate loans 2,448,028 44,506 62,239 — 31,980 638 400 Commercial real estate loans - owner occupied 375,527 4,004 624 — 94 31 — Commercial loans 1,131,969 20,639 2,627 337 858 116 4 Total Commercial Banking 3,955,524 69,149 65,490 337 32,932 785 404 Total $ 10,920,452 118,036 81,236 744 40,681 2,400 404 (1) Includes $ 29.2 million of nonaccrual TDRs. 19 Table of Contents We present the amortized cost of our loans on nonaccrual status including such loans with no allowance. The following table presents the amortized cost of our loans on nonaccrual status as of the beginning and end of the nine-month period ended September 30, 2023 (in thousands): September 30, 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 Personal Banking: Residential mortgage loans $ 7,574 9,760 — 9,760 — Home equity loans 4,145 3,262 169 3,431 133 Vehicle loans 3,771 2,838 979 3,817 57 Consumer loans 256 281 — 281 500 Total Personal Banking 15,746 16,141 1,148 17,289 690 Commercial Banking: Commercial real estate loans 62,239 21,838 32,271 54,109 — Commercial real estate loans - owner occupied 624 1,071 — 1,071 — Commercial loans 2,627 3,828 357 4,185 38 Total Commercial Banking 65,490 26,737 32,628 59,365 38 Total $ 81,236 42,878 33,776 76,654 728 During the three and nine months ended September 30, 2023, we did no t recognize any 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): December 31, 2022 Nonaccrual loans at January 1, 2022 Nonaccrual loans with an allowance Nonaccrual loans with no allowance Total nonaccrual loans at the end of the period Loans 90 days past due and accruing Personal Banking: Residential mortgage loans $ 10,402 7,574 — 7,574 — Home equity loans 5,758 3,887 258 4,145 — Vehicle loans 3,263 2,175 1,596 3,771 2 Consumer loans 675 256 — 256 405 Total Personal Banking 20,098 13,892 1,854 15,746 407 Commercial Banking: Commercial real estate loans 129,666 22,182 40,057 62,239 — Commercial real estate loans - owner occupied 1,233 624 — 624 — Commercial loans 7,474 2,024 603 2,627 337 Total Commercial Banking 138,373 24,830 40,660 65,490 337 Total $ 158,471 38,722 42,514 81,236 744 During the year ended December 31, 2022, we recognized $ 678,000 of interest income on nonaccrual and troubled debt restructuring loans. 20 Table of Contents The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of September 30, 2023 (in thousands): Real estate Total Commercial Banking: Commercial real estate loans $ 51,402 51,402 Commercial loans 160 160 Total Commercial Banking 51,562 51,562 Total $ 51,562 51,562 The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of December 31, 2022 (in thousands): Real estate Equipment Total Personal Banking: Residential mortgage loans $ 569 — 569 Home equity loans 100 — 100 Total Personal Banking 669 — 669 Commercial Banking: Commercial real estate loans 57,056 — 57,056 Commercial loans 175 210 385 Total Commercial Banking 57,231 210 57,441 Total $ 57,900 210 58,110 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 interest rate reduction. 21 Table of Contents The following table presents the amortized cost basis of loans as of September 30, 2023 that were both experiencing financial difficulty and modified during the periods indicated, 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 (dollars in thousands). For the quarter ended September 30, 2023 For the nine months ended September 30, 2023 Term extension Combination term extension and interest rate reduction Total class of financing receivable Term extension Combination term extension and interest rate reduction Total class of financing receivable Personal Banking: Residential mortgage loans $ 192 — 0.01 % 450 — 0.01 % Home equity loans 122 85 0.02 % 283 85 0.03 % Consumer loans — — — % — 3 0.00 % Total Personal Banking 314 85 0.01 % 733 88 0.01 % Commercial Banking: Commercial real estate loans — — — % 197 — 0.01 % Commercial loans 15 — 0.00 % 663 — 0.04 % Total Commercial Banking 15 — — % 860 — 0.02 % Total $ 329 85 0.00 % 1,593 88 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 periods indicated: For the quarter ended September 30, 2023 For the nine months ended September 30, 2023 Weighted-average interest rate reduction Weighted-average term extension in months Weighted-average interest rate reduction Weighted-average term extension in months Personal Banking: Residential mortgage loans — % 169 — 149 Home equity loans 5 % 112 5 % 96 Consumer loans — % — 12 % 356 Total Personal Banking 5 % 140 17 % 126 Commercial Banking: Commercial real estate loans — % — — 25 Commercial loans — % 23 — 9 Total Commercial Banking — % 23 — 13 Total loans 5 % 135 17 % 68 22 Table of Contents The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance of loans that such loans have been modified since the adoption of ASU 2022-02 (in thousands): Current 30-59 days delinquent 60-89 days delinquent 90 days or greater delinquent Personal Banking: Residential mortgage loans $ 450 — — — Home equity loans 368 — — — Consumer loans 3 — — — Total Personal Banking 821 — — — Commercial Banking: Commercial real estate loans 74 — — 123 Commercial real estate loans - owner occupied — — — — Commercial loans — 15 — 648 Total Commercial Banking 74 15 — 771 Total loans $ 895 15 — 771 A modification is considered to be in default when the loan is 90 days or more past due. The following table provides the amortized cost basis of financing receivables that had a payment default during the period and were modified since the adoption of ASU 2022-02 to borrowers experiencing financial difficulty (in thousands) : Term extension Commercial Banking: Commercial real estate loans $ 123 Commercial loans 648 Total Commercial Banking 771 Total $ 771 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. 23 Table of Contents The following tables provide a roll forward of troubled debt restructurings for the periods indicated, prior to the adoption of ASU 2022-02 (dollars in thousands): For the quarter ended September 30, 2022 For the nine months ended September 30, 2022 Number of Contracts Amount Number of Contracts Amount Beginning TDR balance: 128 $ 54,237 134 $ 30,288 New TDRs 6 221 8 25,626 Re-modified TDRs 4 977 10 1,178 Net paydowns — ( 810 ) — ( 1,609 ) Charge-offs: Residential mortgage loans — — 1 ( 3 ) Paid-off loans: Residential mortgage loans 1 ( 35 ) 2 ( 236 ) Home equity loans 1 ( 11 ) 3 ( 88 ) Commercial real estate loans 1 ( 3,349 ) 4 ( 3,718 ) Commercial real estate loans - owner occupied 1 ( 44 ) 1 ( 44 ) Commercial loans 3 ( 3,459 ) 4 ( 3,466 ) Ending TDR balance: 127 $ 46,750 127 $ 46,750 Accruing TDRs $ 16,344 $ 16,344 Nonaccrual TDRs 30,406 30,406 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 (dollars in thousands): For the quarter ended September 30, 2022 For the nine months ended September 30, 2022 Number of contracts Recorded investment at the time of modification Current recorded investment Current allowance Number of contracts Recorded investment at the time of modification Current recorded investment Current allowance Personal Banking: Residential mortgage loans 2 $ 147 144 15 2 $ 147 144 15 Home equity loans 5 160 154 23 5 160 154 23 Total Personal Banking 7 307 298 38 7 307 298 38 Commercial Banking: Commercial real estate loans 1 $ 610 609 89 5 $ 34,295 26,212 102 Commercial loans 2 332 291 20 6 3,856 294 20 Total Commercial Banking 3 942 900 109 11 38,151 26,506 122 Total 10 $ 1,249 1,198 147 18 $ 38,458 26,804 160 24 Table of Contents The following table provides information as of September 30, 2022 for TDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the quarter ended September 30, 2022, prior to the adoption of ASU 2022-02 (dollars in thousands): Type of modification Number of contracts Maturity date Total Personal Banking: Residential mortgage loans 2 $ 144 144 Home equity loans 5 154 154 Total Personal Banking 7 298 298 Commercial Banking: Commercial real estate loans 1 $ 609 609 Commercial loans 2 291 291 Total Commercial Banking 3 900 900 Total 10 $ 1,198 1,198 The following table provides information as of September 30, 2022 for TDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the nine months ended September 30, 2022, prior to the adoption of ASU 2022-02 (dollars in thousands): Type of modification Number of contracts Rate Maturity date Total Personal Banking: Residential mortgage loans 2 $ — 144 144 Home equity loans 5 — 154 154 Total Personal Banking 7 — 298 298 Commercial Banking: Commercial real estate loans 5 $ 4,166 22,046 26,212 Commercial loans 6 — 294 294 Total Commercial Banking 11 4,166 22,340 26,506 Total 18 $ 4,166 22,638 26,804 No TDRs modified within the previous twelve months of September 30, 2022 subsequently defaulted, prior to the adoption of ASU 2022-02. 25 Table of Contents The following table provides information related to the amortized cost basis of loan payment delinquencies at September 30, 2023 (in thousands): 30-59 days delinquent 60-89 days delinquent 90 days or greater delinquent Total delinquency Current Total loans receivable 90 days or greater delinquent and accruing Personal Banking: Residential mortgage loans $ 573 5,395 7,695 13,663 3,459,100 3,472,763 — Home equity loans 4,707 1,341 2,206 8,254 1,250,511 1,258,765 133 Vehicle loans 9,122 2,412 2,274 13,808 2,025,891 2,039,699 57 Consumer loans 752 295 746 1,793 113,627 115,420 500 Total Personal Banking 15,154 9,443 12,921 37,518 6,849,129 6,886,647 690 Commercial Banking: Commercial real estate loans 3,411 1,328 8,042 12,781 2,540,863 2,553,644 — Commercial real estate loans - owner occupied — 260 374 634 368,739 369,373 — Commercial loans 2,847 981 2,472 6,300 1,494,309 1,500,609 38 Total Commercial Banking 6,258 2,569 10,888 19,715 4,403,911 4,423,626 38 Total loans $ 21,412 12,012 23,809 57,233 11,253,040 11,310,273 728 The following table provides information related to the amortized cost basis of loan payment delinquencies at December 31, 2022 (in thousands): 30-59 days delinquent 60-89 days delinquent 90 days or greater delinquent Total delinquency Current Total loans receivable 90 days or greater delinquent and accruing Personal Banking: Residential mortgage loans $ 29,487 5,563 5,574 40,624 3,457,975 3,498,599 — Home equity loans 6,657 975 2,257 9,889 1,287,785 1,297,674 — Vehicle loans 8,677 2,770 2,471 13,918 2,042,865 2,056,783 2 Consumer loans 758 300 608 1,666 110,206 111,872 405 Total Personal Banking 45,579 9,608 10,910 66,097 6,898,831 6,964,928 407 Commercial Banking: Commercial real estate loans 3,947 2,377 7,589 13,913 2,434,115 2,448,028 — Commercial real estate loans - owner occupied 61 — 278 339 375,188 375,527 — Commercial loans 2,648 1,115 1,829 5,592 1,126,377 1,131,969 337 Total Commercial Banking 6,656 3,492 9,696 19,844 3,935,680 3,955,524 337 Total originated loans $ 52,235 13,100 20,606 85,941 10,834,511 10,920,452 744 26 Table of Contents Credit Quality Indicators: For Commercial Banking we categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. We analyze loans individually by classifying the loans by credit risk. Credit relationships greater than or equal to $ 1.0 million classified as special mention or substandard are reviewed quarterly for deterioration or improvement to determine if the loan is appropriately classified. We use the following definitions for risk ratings other than pass: Special Mention — Loans designated as special mention have specific, well-defined risk issues, which create a high level of uncertainty regarding the long-term viability of the business. Loans in this class are considered to have high-risk characteristics. A special mention loan exhibits material negative financial trends due to company-specific or systemic conditions. If these potential weaknesses are not mitigated, they threaten the borrower’s capacity to meet its debt obligations. Special mention loans still demonstrate sufficient financial flexibility to react to and positively address the root cause of the adverse financial trends without significant deviations from their current business strategy. Their potential weaknesses deserve our close attention and warrant enhanced monitoring. Substandard — Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. Doubtful — Loans classified as doubtful have all the weaknesses inherent in those classified as substandard. In addition, those weaknesses make collection or liquidation in full highly questionable and improbable. A loan classified as doubtful exhibits discernible loss potential, but a complete loss seems very unlikely. The possibility of a loss on a doubtful loan is high, but because of certain important and reasonably specific pending factors that may strengthen the loan, its classification as an estimated loss is deferred until a more exact status can be determined. Loss — Loans classified as loss are considered uncollectible and of such value that the continuance as a loan is not warranted. A loss classification does not mean that the loan has no recovery or salvage value; instead, it means that it is not practical or desirable to defer writing off all or a portion of a basically worthless loan even though partial recovery may be possible in the future. For Personal Banking loans a pass risk rating is maintained until they are 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, 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. 27 Table of Contents 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 September 30, 2023 (in thousands): YTD September 30, 2023 2022 2021 2020 2019 Prior Revolving loans Revolving loans converted to term loans Total loans receivable Personal Banking: Residential mortgage loans Pass $ 159,472 673,235 803,613 516,270 249,797 1,056,864 — — 3,459,251 Substandard — 1,033 260 872 336 11,011 — — 13,512 Total residential mortgage loans 159,472 674,268 803,873 517,142 250,133 1,067,875 — — 3,472,763 Residential mortgage current period charge-offs — — ( 5 ) ( 130 ) — ( 788 ) — — ( 923 ) Home equity loans Pass 65,795 104,272 110,823 153,431 98,062 210,273 469,459 42,870 1,254,985 Substandard — — — — 149 1,783 1,050 798 3,780 Total home equity loans 65,795 104,272 110,823 153,431 98,211 212,056 470,509 43,668 1,258,765 Home equity current period charge-offs — ( 53 ) ( 46 ) — ( 48 ) ( 257 ) ( 142 ) ( 173 ) ( 719 ) Vehicle loans Pass 541,270 746,225 444,934 153,264 81,931 68,201 — — 2,035,825 Substandard 320 901 1,386 247 564 456 — — 3,874 Total vehicle loans 541,590 747,126 446,320 153,511 82,495 68,657 — — 2,039,699 Vehicle current period charge-offs ( 324 ) ( 1,385 ) ( 1,425 ) ( 416 ) ( 497 ) ( 684 ) — — ( 4,731 ) Consumer loans Pass 20,061 13,137 6,361 2,485 1,727 6,201 63,801 866 114,639 Substandard 45 57 31 8 14 1 506 119 781 Total consumer loans 20,106 13,194 6,392 2,493 1,741 6,202 64,307 985 115,420 Consumer loan current period charge-offs ( 2,055 ) ( 340 ) ( 271 ) ( 116 ) ( 150 ) ( 766 ) ( 149 ) ( 13 ) ( 3,860 ) Total Personal Banking 786,963 1,538,860 1,367,408 826,577 432,580 1,354,790 534,816 44,653 6,886,647 Business Banking: Commercial real estate loans Pass 127,229 437,503 356,152 330,522 225,478 776,377 23,845 25,345 2,302,451 Special mention — 7,451 26,749 21,732 5,615 34,909 350 — 96,806 Substandard — 174 1,056 8,108 48,592 95,825 514 118 154,387 Total commercial real estate loans 127,229 445,128 383,957 360,362 279,685 907,111 24,709 25,463 2,553,644 Commercial real estate current period charge-offs — — ( 492 ) — ( 51 ) ( 1,013 ) — — ( 1,556 ) Commercial real estate loans - owner occupied Pass 17,830 50,716 48,567 14,845 44,834 148,778 2,237 2,214 330,021 Special mention — 17,631 — 1,690 — 7,808 — — 27,129 Substandard — — 122 1,344 4,736 5,308 — 713 12,223 Total commercial real estate loans - owner occupied 17,830 68,347 48,689 17,879 49,570 161,894 2,237 2,927 369,373 Commercial real estate - owner occupied current period charge-offs — — — — — ( 68 ) — — ( 68 ) Commercial loans Pass 315,190 455,098 77,266 28,754 37,787 56,731 501,722 4,285 1,476,833 Special mention 542 315 58 369 316 68 2,022 — 3,690 Substandard — 2,496 577 495 2,503 1,025 11,730 1,260 20,086 Total commercial loans 315,732 457,909 77,901 29,618 40,606 57,824 515,474 5,545 1,500,609 Commercial loans current period charge-offs — ( 1,526 ) ( 517 ) ( 430 ) ( 110 ) ( 715 ) ( 60 ) ( 2 ) ( 3,360 ) Total Business Banking 460,791 971,384 510,547 407,859 369,861 1,126,829 542,420 33,935 4,423,626 Total loans $ 1,247,754 2,510,244 1,877,955 1,234,436 802,441 2,481,619 1,077,236 78,588 11,310,273 For the nine months ended September 30, 2023, $ 13.7 million of revolving loans were converted to term loans. 28 Table of Contents The following table presents the amortized cost basis of our loan portfolio by year of origination and credit quality indicator for each portfolio segment as of December 31, 2022 (in thousands): 2022 2021 2020 2019 2018 Prior Revolving loans Revolving loans converted to term loans Total loans receivable Personal Banking: Residential mortgage loans Pass $ 659,930 837,823 546,604 265,520 131,599 1,043,394 — — 3,484,870 Substandard 422 187 474 796 531 11,319 — — 13,729 Total residential mortgage loans 660,352 838,010 547,078 266,316 132,130 1,054,713 — — 3,498,599 Home equity loans Pass 114,598 126,608 173,044 110,495 50,314 198,971 475,229 42,887 1,292,146 Substandard — 46 — 127 324 3,066 683 1,282 5,528 Total home equity loans 114,598 126,654 173,044 110,622 50,638 202,037 475,912 44,169 1,297,674 Vehicle loans Pass 966,432 611,310 227,897 135,134 70,071 42,166 — — 2,053,010 Substandard 292 1,096 667 689 657 372 — — 3,773 Total vehicle loans 966,724 612,406 228,564 135,823 70,728 42,538 — — 2,056,783 Consumer loans Pass 19,302 9,874 4,327 3,557 2,409 5,094 65,610 1,037 111,210 Substandard 24 9 37 9 3 48 432 100 662 Total consumer loans 19,326 9,883 4,364 3,566 2,412 5,142 66,042 1,137 111,872 Total Personal Banking 1,761,000 1,586,953 953,050 516,327 255,908 1,304,430 541,954 45,306 6,964,928 Business Banking: Commercial real estate loans Pass 322,050 346,355 369,868 244,188 209,500 696,628 24,954 13,314 2,226,857 Special mention — 17,216 16,782 87 1,000 15,887 157 15 51,144 Substandard — 4,561 3,617 48,879 41,521 70,384 459 606 170,027 Total commercial real estate loans 322,050 368,132 390,267 293,154 252,021 782,899 25,570 13,935 2,448,028 Commercial real estate - owner occupied Pass 62,905 51,673 17,989 49,600 43,570 123,278 2,477 1,460 352,952 Special mention 126 — 18 — 2,297 1,106 385 — 3,932 Substandard — — — 5,085 2,440 9,250 — 1,868 18,643 Total commercial real estate - owner occupied loans 63,031 51,673 18,007 54,685 48,307 133,634 2,862 3,328 375,527 Commercial loans Pass 481,797 90,320 52,833 46,966 17,250 53,107 354,402 4,032 1,100,707 Special mention 628 2,190 506 1,704 227 — 2,129 — 7,384 Substandard 1,833 603 908 2,097 1,605 735 12,941 3,156 23,878 Total commercial loans 484,258 93,113 54,247 50,767 19,082 53,842 369,472 7,188 1,131,969 Total Business Banking 869,339 512,918 462,521 398,606 319,410 970,375 397,904 24,451 3,955,524 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 For the year ended December 31, 2022, $ 20.7 million of revolving loans were converted to term loans. 29 Table of Contents (4) Goodwill and Other Intangible Assets The following table provides information for intangible assets subject to amortization at the dates indicated (in thousands): September 30, 2023 December 31, 2022 Amortizable intangible assets: Core deposit intangibles - gross $ 74,899 74,899 Less: accumulated amortization ( 68,886 ) ( 66,367 ) Core deposit intangibles - net $ 6,013 8,532 Customer and Contract intangible assets - gross $ 12,775 12,775 Less: accumulated amortization ( 12,775 ) ( 12,747 ) Customer and Contract intangible assets - net — 28 Total intangible assets - net $ 6,013 8,560 The following table shows the actual aggregate amortization expense for the quarters ended September 30, 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 September 30, 2023 $ 795 For the quarter ended September 30, 2022 1,047 For the nine months ended September 30, 2023 2,546 For the nine months ended September 30, 2022 3,345 For the year ending December 31, 2023 3,270 For the year ending December 31, 2024 2,452 For the year ending December 31, 2025 1,662 For the year ending December 31, 2026 871 For the year ending December 31, 2027 305 The following table provides information for the changes in the carrying amount of goodwill (in thousands): Total Balance at December 31, 2022 $ 380,997 Balance at September 30, 2023 $ 380,997 We performed our annual goodwill impairment test as of June 30, 2023 in accordance with ASC 350 and concluded that goodwill was not impaired. (5) Borrowed Funds (a) Borrowings Borrowed funds at September 30, 2023 and December 31, 2022 are presented in the following table: September 30, 2023 December 31, 2022 Amount Average rate Amount Average rate Term notes payable to the FHLB of Pittsburgh, due within one year $ 375,400 5.65 % $ 500,000 4.55 % Notes payable to the FHLB of Pittsburgh, due within one year 119,000 5.68 % 51,300 4.45 % Collateralized borrowings, due within one year 48,587 1.52 % 105,766 0.27 % Collateral received, due within one year 61,600 5.16 % 24,100 4.17 % Total borrowed funds $ 604,587 $ 681,166 Borrowings from the Federal Home Loan Bank (“FHLB”) of Pittsburgh, if any, are secured by our residential first mortgage and other qualifying loans. At September 30, 2023, the carrying value of these loans was $ 6.049 billion. Certain of these borrowings are subject to restrictions or penalties in the event of prepayment. The revolving line of credit with the FHLB of Pittsburgh carries a commitment of $ 250.0 million. The rate is adjusted daily by the FHLB of Pittsburgh, and any borrowings on this line may be repaid at any time without penalty. At September 30, 2023 and December 31, 2022, the balance of the revolving line of credit was $ 119.0 million and $ 51.3 million, respectively. 30 Table of Contents At September 30, 2023 and December 31, 2022, collateralized borrowings due within one year were $ 48.6 million and $ 105.8 million, respectively. These borrowings are collateralized by cash or various securities held in safekeeping by the FHLB. At September 30, 2023, the carrying value of the cash and securities used as collateral was $ 89.3 million. At September 30, 2023 and December 31, 2022, collateral received was $ 61.6 million and $ 24.1 million, respectively. This represents collateral posted to us from our derivative counterparties. At September 30, 2023 and December 31, 2022, term notes payable to the FHLB of Pittsburgh due within one year were $ 375.4 million and $ 500.0 million, respectively. The September 30, 2023 total is made up of ten advances: 400,000 at 5.72 % maturing October 2, 2023; $ 100.0 million at 5.65 % maturing October 6, 2023; $ 100.0 million at 5.65 % maturing October 13, 2023; $ 25.0 million at 5.63 % maturing October 26, 2023; $ 25.0 million at 5.66 % maturing October 31, 2023; $ 25.0 million at 5.63 % maturing November 9, 2023; $ 25.0 million at 5.65 % maturing November 13, 2023; $ 25.0 million at 5.62 % maturing November 14, 2023; $ 25.0 million at 5.63 % maturing November 21, 2023; and $ 25.0 million at 5.65 % maturing November 30, 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, 2023 and December 31, 2022, subordinated debentures, net of issuance costs, were $ 114.1 million and $ 113.8 million, respectively. (b) Trust Preferred Securities The Company has seven statutory business trusts: Northwest Bancorp Capital Trust III, a Delaware statutory business trust, Northwest Bancorp Statutory Trust IV, a Connecticut statutory business trust, LNB Trust II, a Delaware statutory business trust, Union National Capital Trust I (“UNCT I”), a Delaware statutory business trust, Union National Capital Trust II (“UNCT II”), a Delaware statutory business trust, MFBC Statutory Trust I, a Delaware statutory trust, and Universal Preferred Trust, a Delaware statutory trust (the “Trusts”). The Trusts exist solely to issue preferred securities to third parties for cash, issue common securities to the Company in exchange for capitalization of the Trusts, invest the proceeds from the sale of trust securities in an equivalent amount of debentures of the Company, and engage in other activities that are incidental to those previously listed. The Trusts have invested the proceeds of the offerings in junior subordinated deferrable interest debentures issued by the Company. The structure of these debentures mirrors the structure of the trust-preferred securities. These subordinated debentures are the sole assets of the Trusts. As the shareholders of the trust preferred securities are the primary beneficiaries of the Trusts, the Trusts are not consolidated in our financial statements. 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 (dollars in thousands). Maturity date Interest rate Capital debt securities September 30, 2023 December 31, 2022 Northwest Bancorp Capital Trust III December 30, 2035 3-month SOFR plus 1.38 % $ 50,000 $ 51,547 51,547 Northwest Bancorp Statutory Trust IV December 15, 2035 3-month SOFR plus 1.38 % 50,000 51,547 51,547 LNB Trust II June 15, 2037 3-month SOFR plus 1.48 % 7,875 8,119 8,119 Union National Capital Trust I (1) January 23, 2034 3-month SOFR plus 2.85 % 8,000 7,993 7,975 Union National Capital Trust II (1) November 23, 2034 3-month SOFR plus 2.00 % 3,000 2,789 2,768 MFBC Statutory Trust I (1) September 15, 2035 3-month SOFR plus 1.70 % 5,000 3,762 3,684 Universal Preferred Trust (1) October 7, 2035 3-month SOFR plus 1.69 % 5,000 3,752 3,674 $ 129,509 129,314 (1) Net of discounts due to the fair value adjustment made at the time of acquisition. Cash distributions on the trust securities are made on a quarterly basis to the extent interest on the debentures is received by the Trusts. We have the right to defer payment of interest on the subordinated debentures at any time, or from time-to-time, for periods not exceeding five years . If interest payments on the subordinated debentures are deferred, the distributions on the trust securities also are deferred. To date there have been no interest deferrals. Interest on the subordinated debentures and distributions on the trust securities is cumulative. Our obligation constitutes a full, irrevocable, and unconditional guarantee on a subordinated basis of the obligations of the trust under the preferred securities. 31 Table of Contents The Trusts must redeem the preferred securities when the debentures are paid at maturity or upon an earlier redemption of the debentures to the extent the debentures are redeemed. All or part of the debentures may be redeemed at any time. Also, the debentures may be redeemed at any time if existing laws or regulations, or the interpretation or application of these laws or regulations, change causing: • the interest on the debentures to no longer be deductible by the Company for federal income tax purposes; • the trusts to become subject to federal income tax or to certain other taxes or governmental charges; • the trusts to register as an investment company; or • the preferred securities to no longer qualify as Tier I capital. We may, at any time, dissolve any of the Trusts and distribute the debentures to the trust security holders, subject to receipt of any required regulatory approvals. (6) Guarantees We issue standby letters of credit in the normal course of business. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party. We are required to perform under a standby letter of credit when drawn upon by the guaranteed third party in the case of nonperformance by our customer. The credit risk associated with standby letters of credit is essentially the same as that involved in extending loans to customers and is subject to normal loan underwriting procedures. Collateral may be obtained based on management’s credit assessment of the customer. At September 30, 2023, the maximum potential amount of future payments we could be required to make under these non-recourse standby letters of credit was $ 45.9 million, of which $ 28.7 million is fully collateralized. At September 30, 2023, we had a liability which represents deferred income of $ 1.0 million 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 $ 3.4 million in notional value of credit cards have been issued. These issued credit cards had an outstanding balance of $ 578,000 at September 30, 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 correspondent bank and initiate collection from our customer as part of the existing credit facility of that customer. (7) Earnings Per Share Basic earnings per common share (“EPS”) is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period, without considering any dilutive items. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. 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, 2023 2022 2023 2022 Net income $ 39,220 37,304 105,943 99,017 Less: Dividends and undistributed earnings allocated to participating securities 99 166 267 441 Net income available to common shareholders $ 39,121 37,138 105,676 98,576 Weighted average common shares outstanding 126,767,507 126,320,706 126,629,786 126,082,217 Add: Participating shares outstanding 320,177 565,729 320,177 565,729 Total weighted average common shares and dilutive potential shares 127,087,684 126,886,435 126,949,963 126,647,946 Basic earnings per share $ 0.31 0.29 0.83 0.78 Diluted earnings per share $ 0.31 0.29 0.83 0.78 32 Table of Contents (8) Pension and Other Post-Retirement Benefits The following table sets forth the net periodic costs for the defined benefit pension plans and post-retirement healthcare plans for the periods indicated (in thousands): Quarter ended September 30, Pension benefits Other post-retirement benefits 2023 2022 2023 2022 Service cost $ 1,560 2,599 — — Interest cost 2,245 1,671 7 10 Expected return on plan assets ( 3,479 ) ( 3,864 ) — — Amortization of prior service cost ( 564 ) ( 564 ) — — Amortization of the net loss 20 381 10 2 Net periodic cost $ ( 218 ) 223 17 12 Nine months ended September 30, Pension benefits Other post-retirement benefits 2023 2022 2023 2022 Service cost $ 4,680 7,797 — — Interest cost 6,735 5,013 21 30 Expected return on plan assets ( 10,437 ) ( 11,592 ) — — Amortization of prior service cost ( 1,692 ) ( 1,692 ) — — Amortization of the net loss 60 1,143 30 6 Net periodic cost $ ( 654 ) 669 51 36 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 We are required to disclose fair value information about financial instruments whether or not recognized in the Consolidated Statement of Financial Condition. Fair value information of certain financial instruments and all nonfinancial instruments is not required to be disclosed. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. Financial assets and liabilities recognized or disclosed at fair value on a recurring basis and certain financial assets and liabilities on a non-recurring basis are accounted for using a three-level hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. This hierarchy gives the highest priority to quoted prices with readily available independent data in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable market inputs (Level 3). When various inputs for measurement fall within different levels of the fair value hierarchy, the lowest level input that has a significant impact on fair value measurement is used. Financial assets and liabilities are categorized based upon the following characteristics or inputs to the valuation techniques: • Level 1 - Financial assets and liabilities for which inputs are observable and are obtained from reliable quoted prices for identical assets or liabilities in actively traded markets. This is the most reliable fair value measurement and includes, for example, active exchange-traded equity securities. • Level 2 - Financial assets and liabilities for which values are based on quoted prices in markets that are not active or for which values are based on similar assets or liabilities that are actively traded. Level 2 also includes pricing models in which the inputs are corroborated by market data, for example, matrix pricing. • Level 3 - Financial assets and liabilities for which values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Level 3 inputs include the following: ◦ Quotes from brokers or other external sources that are not considered binding; 33 Table of Contents ◦ Quotes from brokers or other external sources where it cannot be determined that market participants would in fact transact for the asset or liability at the quoted price; and ◦ Quotes and other information from brokers or other external sources where the inputs are not deemed observable. We are responsible for the valuation process and as part of this process may use data from outside sources in establishing fair value. We perform due diligence to understand the inputs used or how the data was calculated or derived. We also corroborate the reasonableness of external inputs in the valuation process. The carrying amounts reported in the Consolidated Statement of Financial Condition approximate fair value for the following financial instruments: cash and cash equivalents, marketable securities available-for-sale, residential mortgage loans held-for-sale, accrued interest receivable, interest rate lock commitments, forward commitments, interest rate swaps, savings and checking deposits, foreign exchange swaps, risk participation agreements, and accrued interest payable. Marketable Securities Where available, market values are based on quoted market prices, dealer quotes, and prices obtained from independent pricing services. Debt Securities — available-for-sale - Generally, debt securities are valued using pricing for similar securities, recently executed transactions and other pricing models utilizing observable inputs. The valuation for most debt securities is classified as Level 2. Securities within Level 2 include corporate bonds, municipal bonds, mortgage-backed securities and U.S. government obligations. Certain debt securities which were AAA rated at purchase do not have an active market, and as such we have used an alternative method to determine the fair value of these securities. The fair value has been determined using a discounted cash flow model using market assumptions, which generally include cash flow, collateral and other market assumptions. As such, securities which otherwise would have been classified as Level 2 securities if an active market for those assets or similar assets existed are included herein as Level 3 assets. Debt Securities — held-to-maturity - The fair value of debt securities held-to-maturity is determined in the same manner as debt securities available-for-sale. Loans Receivable Loans with comparable characteristics including collateral and re-pricing structures are segregated for valuation purposes. Each loan pool is separately valued utilizing a discounted cash flow analysis. Projected monthly cash flows are discounted to present value using a market rate for comparable loans, which is not considered an exit price. Characteristics of comparable loans include remaining term, coupon interest, and estimated prepayment speeds. Delinquent loans are separately evaluated given the impact delinquency has on the projected future cash flow of the loan including the approximate discount or market rate, which is not considered an exit price. Loans Held-for-Sale The estimated fair value of loans held-for-sale is based on market bids obtained from potential buyers. FHLB Stock Due to the restrictions placed on transferability of FHLB stock, it is not practical to determine the fair value. FHLB stock is recorded at cost. Deposit Liabilities The estimated fair value of deposits with no stated maturity, which includes demand deposits, money market, and other savings accounts, is the amount payable on demand. Although market premiums paid for depository institutions reflect an additional value for these low-cost deposits, adjusting fair value for any value expected to be derived from retaining those deposits for a future period of time or from the benefit that results from the ability to fund interest-earning assets with these deposit liabilities is prohibited. The fair value estimates of deposit liabilities do not include the benefit that results from the low-cost funding provided by these deposits compared to the cost of borrowing funds in the market. Fair values for time deposits are estimated using a discounted cash flow calculation that applies contractual cost currently being offered in the existing portfolio to current market rates being offered locally for deposits of similar remaining maturities. The valuation adjustment for the portfolio consists of the present value of the difference of these two cash flows, discounted at the assumed market rate of the corresponding maturity. 34 Table of Contents Borrowed Funds Fixed rate advances are valued by comparing their contractual cost to the prevailing market cost. The carrying amount of repurchase agreements approximates their fair value. Subordinated Debentures The fair value of our subordinated debentures is calculated using the discounted cash flows at rates observable for other similarly traded liabilities. Junior Subordinated Debentures The fair value of junior subordinated debentures is calculated using the discounted cash flows at the prevailing rate of interest. Interest Rate Lock Commitments and Forward Commitments The fair value of interest rate lock commitments is based on the value of underlying loans held-for-sale which is based on quoted prices for similar loans in the secondary market. This value is then adjusted based on the probability of the loan closing (i.e., the “pull-through” amount, a significant unobservable input). The fair value of forward sale commitments is based on quoted prices from the secondary market based on the settlement date of the contracts. Cash Flow Hedges, 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 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 SOFR zero-coupon interest rates. The sum of the present value of both legs is the fair market value of the interest rate swap. These valuations have been derived from our third party vendor’s proprietary models rather than actual market quotations. The proprietary models are based upon financial principles and assumptions that we believe to be reasonable. The fair value of the foreign exchange swap is derived from proprietary models rather than actual market quotations. The proprietary models are based upon financial principles and assumptions that we believe to be reasonable. Risk participation agreements are entered into when Northwest purchases a portion of a commercial loan that has an interest rate swap. Northwest assumes credit risk on its portion of the interest rate swap should the borrower fail to pay as agreed. The value of risk participation agreements is determined based on the value of the swap after considering the credit quality, probability of default, and loss given default of the borrower. Off-Balance Sheet Financial Instruments These financial instruments generally are not sold or traded, and estimated fair values are not readily available. However, the fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements. Commitments to extend credit are generally short-term in nature and, if drawn upon, are issued under current market terms. At September 30, 2023 and December 31, 2022, there was no significant unrealized appreciation or depreciation on these financial instruments. 35 Table of Contents The following table sets forth the carrying amount and estimated fair value of our financial instruments included in the Consolidated Statement of Financial Condition at September 30, 2023 (in thousands): Carrying amount Estimated fair value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 161,995 161,995 161,995 — — Securities available-for-sale 1,010,076 1,010,076 — 1,010,076 — Securities held-to-maturity 830,106 682,681 — 682,681 — Loans receivable, net 11,174,840 10,031,968 — — 10,031,968 Loans held-for-sale 10,592 10,592 — — 10,592 Accrued interest receivable 42,624 42,624 42,624 — — Interest rate lock commitments 664 664 — — 664 Foreign exchange swaps 203 203 — 203 — Interest rate swaps designated as hedging instruments 4,603 4,603 — 4,603 — Interest rate swaps not designated as hedging instruments 57,249 57,249 — 57,249 — FHLB stock 40,404 40,404 — — — Total financial assets $ 13,333,356 12,043,059 204,619 1,754,812 10,043,224 Financial liabilities: Savings and checking deposits $ 9,531,544 9,531,544 9,531,544 — — Time deposits 2,258,338 2,250,768 — — 2,250,768 Borrowed funds 604,587 617,832 617,832 — — Subordinated debt 114,102 102,456 — 102,456 — Junior subordinated debentures 129,509 136,461 — — 136,461 Forward commitments 23 23 — 23 — Foreign exchange swaps 10 10 — 10 — Interest rate swaps not designated as hedging instruments 57,275 57,275 — 57,275 — Risk participation agreements 17 17 — 17 — Accrued interest payable 7,915 7,915 7,915 — — Total financial liabilities $ 12,703,320 12,704,301 10,157,291 159,781 2,387,229 36 Table of Contents The following table sets forth the carrying amount and estimated fair value of our financial instruments included in the Consolidated Statement of Financial Condition at December 31, 2022 (in thousands): Carrying amount Estimated fair value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 139,365 139,365 139,365 — — Securities available-for-sale 1,218,108 1,218,108 — 1,218,108 — Securities held-to-maturity 881,249 751,384 — 751,384 — Loans receivable, net 10,792,503 9,910,852 — — 9,910,852 Residential mortgage loans held-for-sale 9,913 9,913 — — 9,913 Accrued interest receivable 35,528 35,528 35,528 — — Interest rate lock commitments 559 559 — — 559 Forward commitments 128 128 — 128 — Interest rate swaps not designated as hedging instruments 26,642 26,642 — 26,642 — FHLB stock 40,143 40,143 — — — Total financial assets $ 13,144,138 12,132,622 174,893 1,996,262 9,921,324 Financial liabilities: Savings and checking accounts $ 10,412,263 10,412,263 10,412,263 — — Time deposits 1,052,285 1,059,790 — — 1,059,790 Borrowed funds 681,166 680,996 680,996 — — Subordinated debt 113,840 102,554 — 102,554 — Junior subordinated debentures 129,314 133,546 — — 133,546 Foreign exchange swaps 23 23 — 23 — Interest rate swaps not designated as hedging instruments 45,464 45,464 — 45,464 — Risk participation agreements 18 18 — 18 — Accrued interest payable 3,231 3,231 3,231 — — Total financial liabilities $ 12,437,604 12,437,885 11,096,490 148,059 1,193,336 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, 2023 and December 31, 2022. 37 Table of Contents The following table represents assets and liabilities measured at fair value on a recurring basis at September 30, 2023 (in thousands): Level 1 Level 2 Level 3 Total assets at fair value Debt securities: U.S. government and agencies $ — 56,526 — 56,526 Government-sponsored enterprises — 38,906 — 38,906 States and political subdivisions — 68,071 — 68,071 Corporate — 7,464 — 7,464 Total debt securities — 170,967 — 170,967 Residential mortgage-backed securities: GNMA — 17,073 — 17,073 FNMA — 99,874 — 99,874 FHLMC — 68,926 — 68,926 Non-agency — 5 — 5 Collateralized mortgage obligations: GNMA — 318,652 — 318,652 FNMA — 148,389 — 148,389 FHLMC — 186,190 — 186,190 Total mortgage-backed securities — 839,109 — 839,109 Interest rate lock commitments — — 664 664 Foreign exchange swaps — 203 — 203 Interest rate swaps designated as hedging instruments — 4,603 — 4,603 Interest rate swaps not designated as hedging instruments — 57,249 — 57,249 Total assets $ — 1,072,131 664 1,072,795 Forward commitments $ — 23 — 23 Foreign exchange swaps — 10 — 10 Interest rate swaps not designated as hedging instruments — 57,275 — 57,275 Risk participation agreements — 17 — 17 Total liabilities $ — 57,325 — 57,325 38 Table of Contents The following table represents assets and liabilities measured at fair value on a recurring basis at December 31, 2022 (in thousands): Level 1 Level 2 Level 3 Total assets at fair value Debt securities: U.S. government and agencies $ — 60,592 — 60,592 Government-sponsored enterprises — 39,201 — 39,201 States and political subdivisions — 111,766 — 111,766 Corporate — 12,978 — 12,978 Total debt securities — 224,537 — 224,537 Residential mortgage-backed securities: GNMA — 12,434 — 12,434 FNMA — 117,218 — 117,218 FHLMC — 74,991 — 74,991 Non-agency — 6 — 6 Collateralized mortgage obligations: GNMA — 364,553 — 364,553 FNMA — 185,588 — 185,588 FHLMC — 238,781 — 238,781 Total mortgage-backed securities — 993,571 — 993,571 Interest rate lock commitments — — 559 559 Forward commitments — 128 — 128 Interest rate swaps not designated as hedging instruments — 26,642 — 26,642 Total assets $ — 1,244,878 559 1,245,437 Foreign exchange swaps $ — 23 — 23 Interest rate swaps not designated as hedging instruments — 45,464 — 45,464 Risk participation agreements — 18 — 18 Total liabilities $ — 45,505 — 45,505 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, For the nine months ended September 30, 2023 2022 2023 2022 Beginning balance, $ 761 1,520 559 1,684 Interest rate lock commitments: Net activity ( 97 ) ( 457 ) 105 ( 621 ) Ending balance $ 664 1,063 664 1,063 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. 39 Table of Contents The following table represents the fair market measurement for only those nonrecurring assets that had a fair market value below the carrying amount as of September 30, 2023 (in thousands): Level 1 Level 2 Level 3 Total assets at fair value Loans individually assessed $ — — 13,467 13,467 Mortgage servicing rights — — 198 198 Real estate owned, net — — 363 363 Total assets $ — — 14,028 14,028 The following table represents the fair market measurement for only those nonrecurring assets that had a fair market value below the carrying amount as of December 31, 2022 (in thousands): Level 1 Level 2 Level 3 Total assets at fair value Loans individually assessed $ — — 15,416 15,416 Mortgage servicing rights — — 95 95 Real estate owned, net — — 413 413 Total assets $ — — 15,924 15,924 Individually Assessed Loans - A loan is considered to be individually assessed as described in Note 1(f) of the Notes to the Consolidated Financial Statements in Item 8 of Part II of our 2022 Annual Report on Form 10-K. 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. These assets are recorded on the date acquired at the lower of the related loan balance or fair value, less estimated disposition costs, with the fair value being determined by appraisal. Subsequently, foreclosed assets are valued at the lower of the amount recorded at acquisition date or fair value, less estimated disposition costs. We classify real estate owned as nonrecurring Level 3. The following table presents additional quantitative information about assets measured at fair value on a recurring and nonrecurring basis and for which we have utilized Level 3 inputs to determine fair value at September 30, 2023 (in thousands): Fair value Valuation techniques Significant unobservable inputs Range (weighted average) Loans individually assessed $ 13,467 Appraisal value (1) Estimated cost to sell 10.0 % Mortgage servicing rights 198 Discounted cash flow Annual service cost $ 90 Prepayment rate 6.6 % to 15.0 % ( 9.9 %) Expected life (months) 53.1 to 103.5 ( 75.8 ) Option adjusted spread 720 basis points Forward yield curve 5.44 % to 5.60 % Real estate owned, net 363 Appraisal value (1) Estimated cost to sell 15.0 % Loans held for sale 10,592 Quoted prices for similar loans in active markets adjusted by an expected pull-through rate Estimated pull-through rate 100.0 % (1) Fair value is generally determined through independent appraisals of the underlying collateral, which may include Level 3 inputs that are not identifiable, or by using the discounted cash flow method if the loan is not collateral dependent. 40 Table of Contents (10) Derivative Financial Instruments We are a party to derivative financial instruments in the normal course of business to manage our own exposure to fluctuations in interest rates and to meet the needs of our customers. The primary derivatives that we use are interest rate swaps and caps and foreign exchange contracts, which are entered into with counterparties that meet established credit standards. We believe that the credit risk inherent in all of our derivative contracts is minimal based on our credit standards and the netting and collateral provisions of the interest rate swap agreements. Derivatives Designated as Hedging Instruments As of September 30, 2023, the Company has entered into seven separate pay-fixed interest rate swaps in order to synthetically convert short-term three month FHLB advances to fixed-rate term funding with an aggregate value of $ 175 million with maturities ranging from three to five years . Our risk management objective and strategy for these interest rate swaps at such time was to reduce our exposure to variability in interest-related cash outflows attributable to changes in the USD-SOFR swap rate, the designated benchmark interest rate being hedged. Based upon our contemporaneous quantitative analysis at the inception of the interest rate swaps, we have determined these interest rate swaps qualify for hedge accounting in accordance with ASC 815, Derivatives and Hedging . Our cash flow hedges are recorded within other assets on the Consolidated Statement of Financial Condition at their estimated fair value. As long as the hedge remains highly effective, the changes in the fair value of derivatives designated, and that qualify, as cash flow hedges are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. A hedging relationship that is determined to not be highly effective no longer qualifies for hedge accounting and any gain or loss is recognized immediately into earnings. Amount reclassified into earnings are included in interest expense in the Consolidated Statement of Income. Derivatives Not Designated as Hedging Instruments We act as an interest rate or foreign exchange swap counterparty for certain commercial borrowers in the normal course of servicing our customers, which are accounted for at fair value. We manage our exposure to such interest rate or foreign exchange swaps by entering into corresponding and offsetting interest rate swaps with third parties that mirror the terms of the swaps we have with the commercial borrowers. These positions (referred to as “customer swaps”) directly offset each other and our exposure is the fair value of the derivatives due to changes in credit risk of our commercial borrowers and third parties. Customer swaps are recorded within other assets or other liabilities on the consolidated statement of financial condition at their estimated fair value. Changes to the fair value of assets and liabilities arising from these derivatives are included, net, in other operating income in the Consolidated Statement of Income. We enter into interest rate lock commitments for residential mortgage loans which commit us to lend funds to a potential borrower at a specific interest rate within a specified period of time. Interest rate lock commitments that relate to the origination of mortgage loans that will be held-for-sale are considered derivative financial instruments under applicable accounting guidance. Interest rate lock commitments on loans held-for-sale are carried at fair value in other assets on the consolidated statement of financial condition. Northwest sells loans to the secondary market on a mandatory or best efforts basis. The loans sold on a mandatory basis commit us to deliver a specific principal amount of mortgage loans to an investor at a specified price, by a specified date, or the commitment must be paired off. These forward commitments entered into on a mandatory delivery basis meet the definition of a derivative financial instrument. All closed loans to be sold on a mandatory delivery basis are classified as held-for-sale on the Consolidated Statement of Financial Condition. Changes to the fair value of the interest rate lock commitments and the forward commitments are recorded in mortgage banking income in the Consolidated Statements of Income. We enter into risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which we are a participant. The risk participation agreements provide credit protection to the financial institution should the borrower fail to perform on its interest rate derivative contract with the financial institution. These risk participation agreements are recorded within other liabilities on the Consolidated Statement of Financial Condition at their estimated fair value. Changes to the fair value of the the risk participation agreements are included in other operating income in the Consolidated Statement of Income. 41 Table of Contents The following table presents information regarding our derivative financial instruments for the periods indicated (in thousands): Asset derivatives Liability derivatives Notional amount Fair value Notional amount Fair value At September 30, 2023 Derivatives designated as hedging instruments: Interest rate swap agreements $ 175,000 4,603 — — Derivatives not designated as hedging instruments: Interest rate swap agreements 673,255 57,249 673,255 57,275 Foreign exchange swap agreements 7,393 203 760 10 Interest rate lock commitments 35,272 664 — — Forward commitments — — 6,772 23 Risk participation agreements — — 102,385 17 Total Derivatives $ 890,920 62,719 783,172 57,325 At December 31, 2022 Derivatives not designated as hedging instruments: Interest rate swap agreements $ 651,114 26,642 651,114 45,464 Foreign exchange swap agreements — — 2,328 23 Interest rate lock commitments 19,727 559 — — Forward commitments 4,909 128 — — Risk participation agreements — — 114,159 18 Total derivatives $ 675,750 27,329 767,601 45,505 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, 2023 2022 2023 2022 Hedging derivatives: Decrease in interest expense $ 627 — 831 — Non-hedging swap derivatives: Increase/(decrease) in other income $ 203 93 ( 127 ) 207 (Decrease)/increase in mortgage banking income $ ( 221 ) 809 ( 46 ) 1,131 The following table presents information regarding our derivative financial instruments designated as hedging for the quarter ended September 30, 2023 (in thousands): Notional amount Effective rate Estimated decrease to interest expense in the next twelve months Maturity date Remaining term (in months) Interest rate products: Issued May 11, 2023 $ 25,000 3.52 % $ ( 540 ) 5/11/2027 43 Issued May 12, 2023 25,000 3.54 % ( 528 ) 5/12/2028 55 Issued May 19, 2023 25,000 3.84 % ( 454 ) 11/19/2027 50 Issued May 31, 2023 25,000 4.08 % ( 400 ) 11/30/2026 38 Issued July 26, 2023 25,000 4.24 % ( 348 ) 7/26/2028 58 Issued July 31, 2023 25,000 4.36 % ( 330 ) 1/31/2028 52 Issued August 9, 2023 25,000 4.32 % ( 333 ) 8/9/2027 46 Total $ 175,000 $ ( 2,933 ) 42 Table of Contents (11) Legal Proceedings We establish accruals for legal proceedings when information related to the loss contingencies represented by those matters indicates both that a loss is probable and that the amount of loss can be reasonably estimated. As of September 30, 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. (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, 2023 Unrealized losses on securities available-for-sale Change in fair value of interest rate swaps Change in defined benefit pension plans Total Balance as of June 30, 2023 $ ( 163,272 ) 1,737 ( 7,716 ) ( 169,251 ) Other comprehensive (loss)/income before reclassification adjustments (1) (2) ( 29,715 ) 1,825 — ( 27,890 ) Amounts reclassified from accumulated other comprehensive income (3) — — ( 382 ) ( 382 ) Net other comprehensive (loss)/income ( 29,715 ) 1,825 ( 382 ) ( 28,272 ) Balance as of September 30, 2023 $ ( 192,987 ) 3,562 ( 8,098 ) ( 197,523 ) For the quarter ended September 30, 2022 Unrealized losses on securities available-for-sale Change in defined benefit pension plans Total Balance as of June 30, 2022 $ ( 117,056 ) ( 25,574 ) ( 142,630 ) Other comprehensive loss before reclassification adjustments (4) ( 48,387 ) — ( 48,387 ) Amounts reclassified from accumulated other comprehensive income (5) — ( 131 ) ( 131 ) Net other comprehensive loss ( 48,387 ) ( 131 ) ( 48,518 ) Balance as of September 30, 2022 $ ( 165,443 ) ( 25,705 ) ( 191,148 ) (1) Consists of unrealized holding losses, net of tax of $ 9,140 . (2) Change in fair value of interest rate swaps, net of tax ($ 533 ). (3) Consists of realized gains, net of tax of $ 152 . (4) Consists of unrealized holding losses, net of tax $ 14,705 . (5) Consists of realized gains, net of tax of $ 50 . 43 Table of Contents For the nine months ended September 30, 2023 Unrealized losses on securities available-for-sale Change in fair value of interest rate swaps Change in defined benefit pension plans Total Balance as of December 31, 2022 $ ( 164,206 ) — ( 6,952 ) ( 171,158 ) Other comprehensive (loss)/income before reclassification adjustments (1) (3) ( 34,417 ) 3,562 — ( 30,855 ) Amounts reclassified from accumulated other comprehensive income (2) (4) 5,636 — ( 1,146 ) 4,490 Net other comprehensive income/(loss) ( 28,781 ) 3,562 ( 1,146 ) ( 26,365 ) Balance as of September 30, 2023 $ ( 192,987 ) 3,562 ( 8,098 ) ( 197,523 ) For the nine months ended September 30, 2022 Unrealized losses on securities available-for-sale Change in defined benefit pension plans Total Balance as of December 31, 2021 $ ( 12,317 ) ( 25,312 ) ( 37,629 ) Other comprehensive loss before reclassification adjustments (5) ( 153,124 ) — ( 153,124 ) Amounts reclassified from accumulated other comprehensive income (6) (7) ( 2 ) ( 393 ) ( 395 ) Net other comprehensive loss ( 153,126 ) ( 393 ) ( 153,519 ) Balance as of September 30, 2022 $ ( 165,443 ) ( 25,705 ) ( 191,148 ) (1) Consists of unrealized holding losses, net of tax of $ 9,603 . (2) Consists of realized losses, net of tax of ($ 1,731 ). (3) Change in fair value of interest rate swaps, net of tax ($ 1,041 ). (4) Consists of realized gains, net of tax of $ 456 . (5) Consists of unrealized holding losses, net of tax $ 45,555 . (6) Consists of realized losses, net of tax $ 0 . (7) Consists of realized gains, net of tax of $ 151 . 44 Table of Contents