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) March 31, 2024 December 31, 2023 Assets Cash and cash equivalents $ 119,319 122,260 Marketable securities available-for-sale (amortized cost of $ 1,298,108 and $ 1,240,003 , respectively) 1,094,009 1,043,359 Marketable securities held-to-maturity (fair value of $ 680,353 and $ 699,506 , respectively) 801,107 814,839 Total cash and cash equivalents and marketable securities 2,014,435 1,980,458 Loans held-for-sale 8,082 8,768 Loans held for investment 11,493,164 11,406,041 Allowance for credit losses ( 124,897 ) ( 125,243 ) Loans receivable, net 11,376,349 11,289,566 FHLB stock, at cost 30,811 30,146 Accrued interest receivable 50,680 47,353 Real estate owned, net 50 104 Premises and equipment, net 130,565 138,838 Bank-owned life insurance 252,842 251,895 Goodwill 380,997 380,997 Other intangible assets, net 4,589 5,290 Other assets 268,945 294,458 Total assets $ 14,510,263 14,419,105 Liabilities and shareholders’ equity Liabilities: Noninterest-bearing demand deposits $ 2,618,379 2,669,023 Interest-bearing demand deposits 2,557,866 2,634,546 Money market deposit accounts 1,952,537 1,968,218 Savings deposits 2,156,048 2,105,234 Time deposits 2,786,814 2,602,881 Total deposits 12,071,644 11,979,902 Borrowed funds 400,783 398,895 Subordinated debt 114,276 114,189 Junior subordinated debentures 129,639 129,574 Advances by borrowers for taxes and insurance 46,970 45,253 Accrued interest payable 17,395 13,669 Other liabilities 177,107 186,306 Total liabilities 12,957,814 12,867,788 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, 127,253,189 and 127,110,453 shares issued and outstanding, respectively 1,273 1,271 Additional paid-in capital 1,026,173 1,024,852 Retained earnings 678,427 674,686 Accumulated other comprehensive loss ( 153,424 ) ( 149,492 ) Total shareholders’ equity 1,552,449 1,551,317 Total liabilities and shareholders’ equity $ 14,510,263 14,419,105 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 March 31, 2024 2023 Interest income: Loans receivable $ 149,571 123,745 Mortgage-backed securities 7,944 8,537 Taxable investment securities 794 845 Tax-free investment securities 491 700 FHLB stock dividends 607 690 Interest-earning deposits 832 423 Total interest income 160,239 134,940 Interest expense: Deposits 47,686 11,238 Borrowed funds 9,315 11,238 Total interest expense 57,001 22,476 Net interest income 103,238 112,464 Provision for credit losses - loans 4,234 4,870 Provision for credit losses - unfunded commitments ( 799 ) 126 Net interest income after provision for credit losses 99,803 107,468 Noninterest income: Gain on sale of SBA loans 873 279 Service charges and fees 15,523 13,189 Trust and other financial services income 7,127 6,449 Gain on real estate owned, net 57 108 Income from bank-owned life insurance 1,502 1,269 Mortgage banking income 452 524 Other operating income 2,429 2,151 Total noninterest income 27,963 23,969 Noninterest expense: Compensation and employee benefits 51,540 46,604 Premises and occupancy costs 7,627 7,471 Office operations 2,767 3,010 Collections expense 336 387 Processing expenses 14,725 14,350 Marketing expenses 2,149 2,892 Federal deposit insurance premiums 3,023 2,223 Professional services 4,065 4,758 Amortization of intangible assets 701 909 Real estate owned expense 66 181 Merger, asset disposition and restructuring expense 955 2,802 Other expenses 2,070 1,863 Total noninterest expense 90,024 87,450 Income before income taxes 37,742 43,987 Federal and state income taxes expense 8,579 10,308 Net income $ 29,163 33,679 Basic earnings per share $ 0.23 0.27 Diluted earnings per share $ 0.23 0.26 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 March 31, 2024 2023 Net income $ 29,163 33,679 Other comprehensive (loss)/income net of tax: Net unrealized holding (losses)/gains on marketable securities: Unrealized holding (losses)/gains, net of tax of $ 1,758 and ($ 3,308 ), respectively ( 5,698 ) 13,017 Reclassification adjustment for losses/(gains) included in net income, net of tax of $ 0 and $ 0 , respectively — — Net unrealized holding (losses)/gains on marketable securities ( 5,698 ) 13,017 Change in fair value of interest rate swaps, net of tax of ($ 630 ) and $ 0 , respectively 2,154 — Defined benefit plan: Actuarial reclassification adjustments for prior period service costs and actuarial gains included in net income, net of tax of $ 147 and $ 152 , respectively ( 388 ) ( 382 ) Other comprehensive (loss)/income ( 3,932 ) 12,635 Total comprehensive income $ 25,231 46,314 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 March 31, 2024 Shares Amount Beginning balance at December 31, 2023 127,110,453 $ 1,271 1,024,852 674,686 ( 149,492 ) 1,551,317 Comprehensive income: Net income — — — 29,163 — 29,163 Other comprehensive loss, net of tax of $ 1,275 — — — — ( 3,932 ) ( 3,932 ) Total comprehensive income/(loss) — — — 29,163 ( 3,932 ) 25,231 Exercise of stock options 10 — 20 — — 20 Stock-based compensation expense 146,086 2 1,301 — — 1,303 Stock-based compensation forfeited ( 3,360 ) — — — — — Dividends paid ($ 0.20 per share) — — — ( 25,422 ) — ( 25,422 ) Ending balance at March 31, 2024 127,253,189 $ 1,273 1,026,173 678,427 ( 153,424 ) 1,552,449 Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total shareholders’ equity Common stock Quarter ended March 31, 2023 Shares Amount Beginning balance at December 31, 2022 127,028,848 $ 1,270 1,019,647 641,727 ( 171,158 ) 1,491,486 Comprehensive income: Net income — — — 33,679 — 33,679 Other comprehensive income, net of tax of ($ 3,157 ) — — — — 12,635 12,635 Total comprehensive income — — — 33,679 12,635 46,314 Adoption of ASU No. 2022-02 — — — ( 329 ) — ( 329 ) Exercise of stock options 38,218 1 464 — — 465 Stock-based compensation expense 33,048 — 744 — — 744 Stock-based compensation forfeited ( 34,714 ) — — — — — Dividends paid ($ 0.20 per share) — — — ( 25,405 ) — ( 25,405 ) Ending balance at March 31, 2023 127,065,400 $ 1,271 1,020,855 649,672 ( 158,523 ) 1,513,275 See accompanying notes to unaudited Consolidated Financial Statements. 4 Table of Contents NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Quarter ended March 31, 2024 2023 Operating activities: Net income $ 29,163 33,679 Adjustments to reconcile net income to net cash provided by operating activities: Provision for credit losses 3,435 4,996 Net (gain)/loss on sale of assets ( 6,023 ) 1,254 Mortgage banking activity ( 794 ) ( 179 ) Gain on sale of SBA loans ( 852 ) — Net depreciation, amortization and accretion 4,646 2,154 Decrease in other assets 33,565 6,958 Decrease in other liabilities ( 2,427 ) ( 24,494 ) Net amortization on marketable securities 625 876 Noncash compensation expense related to stock benefit plans 1,303 744 Noncash write-down of other assets 5,929 37 Origination of loans held-for-sale ( 43,052 ) ( 30,712 ) Proceeds from sale of loans held-for-sale 45,183 34,530 Net cash provided by operating activities 70,701 29,843 Investing activities: Purchase of marketable securities available-for-sale ( 79,052 ) — Proceeds from maturities and principal reductions of marketable securities held-to-maturity 13,553 15,028 Proceeds from maturities and principal reductions of marketable securities available-for-sale 20,501 28,246 Proceeds from bank-owned life insurance — 1,633 Loan originations ( 1,055,402 ) ( 923,686 ) Proceeds from loan maturities and principal reductions 962,835 748,472 Net redemptions of FHLB stock ( 665 ) ( 1,376 ) Proceeds from sale of real estate owned 114 186 (Purchases)/disposals of premises and equipment, net ( 5,471 ) 1,340 Net cash used in investing activities ( 143,587 ) ( 130,157 ) Financing activities: Net increase in deposits 91,742 72,631 Net increase in short-term borrowings 1,888 7,475 Increase in advances by borrowers for taxes and insurance 1,717 2,280 Cash dividends paid on common stock ( 25,422 ) ( 25,405 ) Proceeds from stock options exercised 20 465 Net cash provided by financing activities 69,945 57,446 Net decrease in cash and cash equivalents $ ( 2,941 ) $ ( 42,868 ) Cash and cash equivalents at beginning of period $ 122,260 139,365 Net decrease in cash and cash equivalents ( 2,941 ) ( 42,868 ) Cash and cash equivalents at end of period $ 119,319 96,497 Cash paid during the period for: Interest on deposits and borrowings (including interest credited to deposit accounts of $ 37,257 and $ 10,676 , respectively) $ 53,275 23,471 Income taxes 612 291 Non-cash activities: Loan foreclosures and repossessions $ 1,148 847 See accompanying notes to unaudited Consolidated Financial Statements. 5 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 Mutual Federal 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, 2023 updated, as required, for any new pronouncements or changes. Certain items previously reported have been reclassified to conform to the current year’s reporting format. The results of operations for the quarter ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024, or any other period. Recently Adopted Accounting Standards In March 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-02, " Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method ." This ASU allows reporting entities to elect to account for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. Entities must make an accounting policy election to apply the proportional amortization method on a tax credit-program-by-tax-credit-program basis. The ASU’s amendments also remove the specialized guidance for low-income-housing tax credit ("LIHTC") investments that are not accounted for using the proportional amortization method and instead require that those LIHTC investments be accounted for using the guidance in other accounting standards. This guidance is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. This ASU is applied on a modified retrospective or retrospective basis with the amendments to remove the specialized guidance for LIHTC also being able to be applied on a prospective basis. This guidance was adopted on January 1, 2024 and did not have a material impact to the Company's financial statements. 6 Table of Contents (2) Marketable Securities The following table shows the portfolio of marketable securities available-for-sale at March 31, 2024 (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 — ( 1,204 ) 18,796 Due after ten years 48,182 — ( 10,260 ) 37,922 Debt issued by government-sponsored enterprises: Due after one year through five years 45,987 — ( 5,819 ) 40,168 Due after five years through ten years 360 — ( 9 ) 351 Municipal securities: Due after one year through five years 4,279 14 ( 426 ) 3,867 Due after five years through ten years 27,921 47 ( 1,886 ) 26,082 Due after ten years 53,464 — ( 9,142 ) 44,322 Corporate debt issues: Due after five years through ten years 8,467 — ( 833 ) 7,634 Residential mortgage-backed securities: Fixed rate pass-through 232,854 93 ( 26,711 ) 206,236 Variable rate pass-through 6,738 12 ( 69 ) 6,681 Fixed rate agency CMOs 776,087 — ( 147,127 ) 628,960 Variable rate agency CMOs 73,769 35 ( 814 ) 72,990 Total residential mortgage-backed securities 1,089,448 140 ( 174,721 ) 914,867 Total marketable securities available-for-sale $ 1,298,108 201 ( 204,300 ) 1,094,009 7 Table of Contents The following table shows the portfolio of marketable securities available-for-sale at December 31, 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 — ( 1,135 ) 18,865 Due after ten years 49,383 — ( 9,934 ) 39,449 Debt issued by government-sponsored enterprises: Due after one year through five years 45,986 — ( 5,763 ) 40,223 Due after five years through ten years 386 — ( 12 ) 374 Municipal securities: Due after one year through five years 4,279 22 ( 427 ) 3,874 Due after five years through ten years 20,725 — ( 1,437 ) 19,288 Due after ten years 60,762 125 ( 8,580 ) 52,307 Corporate debt issues: Due after five years through ten years 8,466 — ( 778 ) 7,688 Residential mortgage-backed securities: Fixed rate pass-through 209,069 27 ( 25,222 ) 183,874 Variable rate pass-through 7,140 11 ( 71 ) 7,080 Fixed rate agency CMOs 789,842 — ( 143,055 ) 646,787 Variable rate agency CMOs 23,965 38 ( 453 ) 23,550 Total residential mortgage-backed securities 1,030,016 76 ( 168,801 ) 861,291 Total marketable securities available-for-sale $ 1,240,003 223 ( 196,867 ) 1,043,359 The following table shows the portfolio of marketable securities held-to-maturity at March 31, 2024 (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 $ 89,472 — ( 11,232 ) 78,240 Due after five years through ten years 34,987 — ( 5,877 ) 29,110 Residential mortgage-backed securities: Fixed rate pass-through 144,158 — ( 21,062 ) 123,096 Variable rate pass-through 432 1 — 433 Fixed rate agency CMOs 531,529 — ( 82,578 ) 448,951 Variable rate agency CMOs 529 — ( 6 ) 523 Total residential mortgage-backed securities 676,648 1 ( 103,646 ) 573,003 Total marketable securities held-to-maturity $ 801,107 1 ( 120,755 ) 680,353 8 Table of Contents The following table shows the portfolio of marketable securities held-to-maturity at December 31, 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 $ 69,471 — ( 8,100 ) 61,371 Due after five years through ten years 54,987 — ( 8,700 ) 46,287 Residential mortgage-backed securities: Fixed rate pass-through 147,874 — ( 20,834 ) 127,040 Variable rate pass-through 449 1 — 450 Fixed rate agency CMOs 541,529 — ( 77,694 ) 463,835 Variable rate agency CMOs 529 — ( 6 ) 523 Total residential mortgage-backed securities 690,381 1 ( 98,534 ) 591,848 Total marketable securities held-to-maturity $ 814,839 1 ( 115,334 ) 699,506 The following table shows the contractual maturity of our residential mortgage-backed securities available-for-sale at March 31, 2024 (in thousands): Amortized cost Fair value Residential mortgage-backed securities: Due within one year $ 116 116 Due after one year through five years 22,934 21,419 Due after five years through ten years 26,966 25,177 Due after ten years 1,039,432 868,155 Total residential mortgage-backed securities $ 1,089,448 914,867 The following table shows the contractual maturity of our residential mortgage-backed securities held-to-maturity at March 31, 2024 (in thousands): Amortized cost Fair value Residential mortgage-backed securities: Due in less than one year $ 38 38 Due after one year through five years 20,144 17,635 Due after five years through ten years 20,209 16,304 Due after ten years 636,257 539,026 Total residential mortgage-backed securities $ 676,648 573,003 The following table shows the fair value of and gross unrealized losses on available-for-sale investment securities and held to maturity investment securities, for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at March 31, 2024 (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 $ — — 204,587 ( 34,401 ) 204,587 ( 34,401 ) Municipal securities 498 ( 2 ) 67,691 ( 11,452 ) 68,189 ( 11,454 ) Corporate issues — — 7,634 ( 833 ) 7,634 ( 833 ) Residential mortgage-backed securities - agency 57,715 ( 855 ) 1,380,123 ( 277,512 ) 1,437,838 ( 278,367 ) Total $ 58,213 ( 857 ) 1,660,035 ( 324,198 ) 1,718,248 ( 325,055 ) 9 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, 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 $ — — 206,569 ( 33,644 ) 206,569 ( 33,644 ) Corporate debt issues — — 7,688 ( 778 ) 7,688 ( 778 ) Municipal securities 2,753 ( 81 ) 66,046 ( 10,363 ) 68,799 ( 10,444 ) Residential mortgage-backed securities - agency 17,976 ( 242 ) 1,423,707 ( 267,093 ) 1,441,683 ( 267,335 ) Total $ 20,729 ( 323 ) 1,704,010 ( 311,878 ) 1,724,739 ( 312,201 ) The Company does not believe that the available-for-sale debt securities that were in an unrealized loss position as of March 31, 2024, which were comprised of 497 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. As of March 31, 2024, t he 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 March 31, 2024. The following table presents the credit quality of our held-to-maturity securities, based on the latest information available as of March 31, 2024 (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 March 31, 2024. AA+ Total Held-to-maturity securities (at amortized cost): Debt issued by the U.S. government-sponsored enterprises $ 124,459 124,459 Residential mortgage-backed securities 676,648 676,648 Total marketable securities held-to-maturity $ 801,107 801,107 10 Table of Contents (3) Loans Receivable The following table shows a summary of our loans receivable at amortized cost basis at March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Originated (1) Acquired (2) Total Originated (1) Acquired (2) Total Personal Banking: Residential mortgage loans (3) $ 3,243,079 139,769 3,382,848 3,283,299 144,886 3,428,185 Home equity loans 1,079,671 116,936 1,196,607 1,103,410 124,448 1,227,858 Vehicle loans 1,944,752 60,104 2,004,856 1,943,540 65,061 2,008,601 Consumer loans 108,035 5,476 113,511 111,446 5,980 117,426 Total Personal Banking 6,375,537 322,285 6,697,822 6,441,695 340,375 6,782,070 Commercial Banking: Commercial real estate loans (4) 2,436,853 227,137 2,663,990 2,389,537 238,920 2,628,457 Commercial real estate loans - owner occupied 338,744 25,794 364,538 319,195 26,358 345,553 Commercial loans 1,743,656 31,240 1,774,896 1,623,481 35,248 1,658,729 Total Commercial Banking 4,519,253 284,171 4,803,424 4,332,213 300,526 4,632,739 Total loans receivable, gross 10,894,790 606,456 11,501,246 10,773,908 640,901 11,414,809 Allowance for credit losses ( 118,837 ) ( 6,060 ) ( 124,897 ) ( 118,079 ) ( 7,164 ) ( 125,243 ) Total loans receivable, net (5) $ 10,775,953 600,396 11,376,349 10,655,829 633,737 11,289,566 (1) Includes originated and loan pools purchased in an asset acquisition. (2) Includes loans subject to purchase accounting in a business combination. (3) Includes $ 8 million and $ 9 million of loans held-for-sale at March 31, 2024 and December 31, 2023, respectively. (4) Includes $ 213,000 and $ 0 of loans held-for-sale at March 31, 2024 and December 31, 2023, respectively. (5) Includes $ 68 million of net unearned income, unamortized premiums and discounts and deferred fees and costs at March 31, 2024 and December 31, 2023. 11 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 March 31, 2024 (in thousands): Balance as of March 31, 2024 Current period provision Charge-offs Recoveries Balance as of December 31, 2023 Allowance for Credit Losses Personal Banking: Residential mortgage loans $ 16,821 ( 1,399 ) ( 162 ) 189 18,193 Home equity loans 5,334 145 ( 412 ) 198 5,403 Vehicle loans 21,061 ( 3,694 ) ( 2,588 ) 432 26,911 Consumer loans 1,452 1,849 ( 1,985 ) 389 1,199 Total Personal Banking 44,668 ( 3,099 ) ( 5,147 ) 1,208 51,706 Commercial Banking: Commercial real estate loans 54,474 3,073 ( 349 ) 483 51,267 Commercial real estate loans - owner occupied 4,055 272 — 8 3,775 Commercial loans 21,700 3,988 ( 1,163 ) 380 18,495 Total Commercial Banking 80,229 7,333 ( 1,512 ) 871 73,537 Total $ 124,897 4,234 ( 6,659 ) 2,079 125,243 Allowance for Credit Losses - off-balance sheet exposure Personal Banking: Residential mortgage loans $ 1 ( 1 ) — — 2 Home equity loans 64 ( 1 ) — — 65 Total Personal Banking 65 ( 2 ) — — 67 Commercial Banking: Commercial real estate loans 6,218 71 — — 6,147 Commercial real estate loans - owner occupied 154 ( 19 ) — — 173 Commercial loans 9,887 ( 849 ) — — 10,736 Total Commercial Banking 16,259 ( 797 ) — — 17,056 Total off-balance sheet exposure $ 16,324 ( 799 ) — — 17,123 12 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 March 31, 2023 (in thousands): Balance as of March 31, 2023 Current period provision Charge-offs Recoveries ASU 2022-02 Adoption Balance as of December 31, 2022 Allowance for Credit Losses Personal Banking: Residential mortgage loans $ 19,238 ( 1 ) ( 207 ) 185 — 19,261 Home equity loans 5,481 ( 450 ) ( 164 ) 193 — 5,902 Vehicle loans 26,166 4,253 ( 1,668 ) 522 — 23,059 Consumer loans 732 796 ( 1,066 ) 337 — 665 Total Personal Banking 51,617 4,598 ( 3,105 ) 1,237 — 48,887 Commercial Banking: Commercial real estate loans 45,404 121 ( 657 ) 1,008 426 44,506 Commercial real estate loans - owner occupied 3,351 ( 674 ) — 21 — 4,004 Commercial loans 20,885 825 ( 865 ) 286 — 20,639 Total Commercial Banking 69,640 272 ( 1,522 ) 1,315 426 69,149 Total $ 121,257 4,870 ( 4,627 ) 2,552 426 118,036 Allowance for Credit Losses - off-balance sheet exposure Personal Banking: Residential mortgage loans $ 3 ( 1 ) — — — 4 Home equity loans 60 ( 14 ) — — — 74 Total Personal Banking 63 ( 15 ) — — — 78 Commercial Banking: Commercial real estate loans 5,924 549 — — — 5,375 Commercial real estate loans - owner occupied 441 62 — — — 379 Commercial loans 6,611 ( 470 ) — — — 7,081 Total Commercial Banking 12,976 141 — — — 12,835 Total off-balance sheet exposure $ 13,039 126 — — — 12,913 13 Table of Contents The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at March 31, 2024 (in thousands): Total loans receivable Allowance for credit losses Nonaccrual loans Loans 90 days past due and accruing Personal Banking: Residential mortgage loans $ 3,382,848 16,821 7,109 1,509 Home equity loans 1,196,607 5,334 4,409 1 Vehicle loans 2,004,856 21,061 4,360 59 Consumer loans 113,511 1,452 269 627 Total Personal Banking 6,697,822 44,668 16,147 2,196 Commercial Banking: Commercial real estate loans 2,663,990 54,474 73,133 — Commercial real estate loans - owner occupied 364,538 4,055 1,319 — Commercial loans 1,774,896 21,700 4,461 256 Total Commercial Banking 4,803,424 80,229 78,913 256 Total $ 11,501,246 124,897 95,060 2,452 The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at December 31, 2023 (in thousands): Total loans receivable Allowance for credit losses Nonaccrual loans Loans 90 days past due and accruing Personal Banking: Residential mortgage loans $ 3,428,185 18,193 8,727 1,671 Home equity loans 1,227,858 5,403 4,492 26 Vehicle loans 2,008,601 26,911 4,816 44 Consumer loans 117,426 1,199 229 722 Total Personal Banking 6,782,070 51,706 18,264 2,463 Commercial Banking: Commercial real estate loans 2,628,457 51,267 71,297 225 Commercial real estate loans - owner occupied 345,553 3,775 676 — Commercial loans 1,658,729 18,495 4,147 10 Total Commercial Banking 4,632,739 73,537 76,120 235 Total $ 11,414,809 125,243 94,384 2,698 14 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 quarter ended March 31, 2024 (in thousands): March 31, 2024 Nonaccrual loans at January 1, 2024 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 $ 8,727 6,703 406 7,109 1,509 Home equity loans 4,492 4,254 155 4,409 1 Vehicle loans 4,816 3,481 879 4,360 59 Consumer loans 229 269 — 269 627 Total Personal Banking 18,264 14,707 1,440 16,147 2,196 Commercial Banking: Commercial real estate loans 71,297 50,794 22,339 73,133 — Commercial real estate loans - owner occupied 676 1,319 — 1,319 — Commercial loans 4,147 4,305 156 4,461 256 Total Commercial Banking 76,120 56,418 22,495 78,913 256 Total $ 94,384 71,125 23,935 95,060 2,452 During the quarter ended March 31, 2024, 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, 2023 (in thousands): December 31, 2023 Nonaccrual loans at January 1, 2023 Nonaccrual loans with an allowance Nonaccrual loans with no allowance Total nonaccrual loans at the end of the period Loans 90 days past due and accruing Personal Banking: Residential mortgage loans $ 7,574 8,304 423 8,727 1,671 Home equity loans 4,145 4,084 408 4,492 26 Vehicle loans 3,771 4,187 629 4,816 44 Consumer loans 256 229 — 229 722 Total Personal Banking 15,746 16,804 1,460 18,264 2,463 Commercial Banking: Commercial real estate loans 62,239 47,359 23,938 71,297 225 Commercial real estate loans - owner occupied 624 676 — 676 — Commercial loans 2,627 3,996 151 4,147 10 Total Commercial Banking 65,490 52,031 24,089 76,120 235 Total $ 81,236 68,835 25,549 94,384 2,698 During the year ended December 31, 2023, we did not recognize any interest income on nonaccrual loans. 15 Table of Contents A loan is considered to be collateral dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. The following table presents the amortized cost basis of collateral-dependent loans by class of loans and collateral type as of as of March 31, 2024 (in thousands): Real estate Equipment Total Commercial Banking: Commercial real estate loans $ 66,587 1,256 67,843 Commercial loans 146 — 146 Total Commercial Banking 66,733 1,256 67,989 Total $ 66,733 1,256 67,989 The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of December 31, 2023 (in thousands): Real estate Total Commercial Banking: Commercial real estate loans $ 66,934 66,934 Commercial loans 150 150 Total Commercial Banking 67,084 67,084 Total $ 67,084 67,084 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. The following table presents the amortized cost basis of loans for the periods indicated that were both experiencing financial difficulty and modified during the respective period, 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 March 31, 2024 2023 Payment delay 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 $ 364 490 — 0.03 % 180 — 0.01 % Home equity loans — 552 84 0.05 % 110 — 0.01 % Consumer loans — — 2 — % — 3 — % Total Personal Banking 364 1,042 86 0.02 % 290 3 — % Commercial Banking: Commercial real estate loans 28,877 243 — 1.09 % 242 — 0.01 % Commercial loans — 56 10 — % 765 — 0.06 % Total Commercial Banking 28,877 299 10 0.61 % 1,007 — 0.02 % Total $ 29,241 1,341 96 0.27 % 1,297 3 0.01 % 16 Table of Contents As of March 31, 2024 and December 31, 2023, t he Company has committed to lend additional amounts totaling $ 41,000 and $ 31,000 , respectively, to the borrowers experiencing financial difficulty for which the terms of the loan have been modified. 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 March 31, 2024 2023 Weighted-average interest rate reduction Weighted-average term extension in months Weighted-average payment deferral in years Weighted-average interest rate reduction Weighted-average term extension in months Personal Banking: Residential mortgage loans — % 143 0.50 — % 147 Home equity loans 2 % 97 — — % 115 Consumer loans 12 % 356 — 12 % 356 Total Personal Banking 3 % 118 0.50 12 % 137 Commercial Banking: Commercial real estate loans — % 106 1.00 — % 24 Commercial loans 4 % 118 — — % 9 Total Commercial Banking 4 % 108 1.00 — % 13 Total loans 3 % 116 1.00 12 % 41 The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance of loans modified within the previous twelve months of March 31, 2024 : Current 30-59 days delinquent 60-89 days delinquent 90 days or greater delinquent Personal Banking: Residential mortgage loans $ 406 84 — 364 Home equity loans 616 3 — 17 Consumer loans 2 — — — Total Personal Banking 1,024 87 — 381 Commercial Banking: Commercial real estate loans 29,121 — — — Commercial loans 10 9 47 — Total Commercial Banking 29,131 9 47 — Total loans $ 30,155 96 47 381 All loans modified since the adoption of ASU 2022-02 were current on their payments as of March 31, 2023. 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 ended March 31, 2024 and were modified within the previous twelve months to borrowers experiencing financial difficulty (in thousands) : Term extension Payment delay Personal Banking: Residential mortgage loans $ — $ 364 Home equity loans 17 — Total Personal Banking 17 364 Total $ 17 $ 364 No loans modified since the adoption of ASU 2022-02 subsequently defaulted during the quarter ended March 31, 2023. 17 Table of Contents The modifications to borrowers experiencing financial distress are included in their respective portfolio segment and the current loan balance and updated loan terms are run through their respective ACL models to arrive at the quantitative portion of the ACL. Subsequent performance of the loans will be measured by delinquency status and will be captured through our ACL models or our qualitative factor assessment, as deemed appropriate. If we no longer believe the loan demonstrates similar risks to their respective portfolio segment an individual assessment will be performed. Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is written off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the allowance for credit losses is adjusted by the same amount. The following table provides information related to the amortized cost basis of loan payment delinquencies at March 31, 2024 (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 $ 38,502 70 5,813 44,385 3,338,463 3,382,848 1,509 Home equity loans 4,608 761 2,823 8,192 1,188,415 1,196,607 1 Vehicle loans 9,177 2,246 2,496 13,919 1,990,937 2,004,856 59 Consumer loans 734 299 849 1,882 111,629 113,511 627 Total Personal Banking 53,021 3,376 11,981 68,378 6,629,444 6,697,822 2,196 Commercial Banking: Commercial real estate loans 6,181 807 6,041 13,029 2,650,961 2,663,990 — Commercial real estate loans - owner occupied 215 — 890 1,105 363,433 364,538 — Commercial loans 3,091 1,284 3,421 7,796 1,767,100 1,774,896 256 Total Commercial Banking 9,487 2,091 10,352 21,930 4,781,494 4,803,424 256 Total loans $ 62,508 5,467 22,333 90,308 11,410,938 11,501,246 2,452 The following table provides information related to the amortized cost basis of loan payment delinquencies at December 31, 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 $ 30,041 7,796 7,995 45,832 3,382,353 3,428,185 1,671 Home equity loans 5,761 982 3,126 9,869 1,217,989 1,227,858 26 Vehicle loans 10,382 3,326 3,051 16,759 1,991,842 2,008,601 44 Consumer loans 829 428 927 2,184 115,242 117,426 722 Total Personal Banking 47,013 12,532 15,099 74,644 6,707,426 6,782,070 2,463 Commercial Banking: Commercial real estate loans 2,010 1,031 6,535 9,576 2,618,881 2,628,457 225 Commercial real estate loans - owner occupied 1,194 — 177 1,371 344,182 345,553 — Commercial loans 4,196 703 2,780 7,679 1,651,050 1,658,729 10 Total Commercial Banking 7,400 1,734 9,492 18,626 4,614,113 4,632,739 235 Total originated loans $ 54,413 14,266 24,591 93,270 11,321,539 11,414,809 2,698 18 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. 19 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 March 31, 2024 (in thousands): YTD March 31, 2024 2023 2022 2021 2020 Prior Revolving loans Revolving loans converted to term loans Total loans receivable Personal Banking: Residential mortgage loans Pass $ 7,577 192,489 660,443 782,217 496,755 1,230,826 — — 3,370,307 Substandard — 89 2,551 357 1,208 8,336 — — 12,541 Total residential mortgage loans 7,577 192,578 662,994 782,574 497,963 1,239,162 — — 3,382,848 Residential mortgage current period charge-offs — — — — ( 113 ) ( 49 ) — — ( 162 ) Home equity loans Pass 5,488 67,059 97,697 101,645 140,326 276,751 460,391 42,600 1,191,957 Substandard — — 98 54 197 2,027 1,086 1,188 4,650 Total home equity loans 5,488 67,059 97,795 101,699 140,523 278,778 461,477 43,788 1,196,607 Home equity current period charge-offs — — ( 35 ) ( 2 ) — ( 154 ) ( 189 ) ( 32 ) ( 412 ) Vehicle loans Pass 196,998 615,730 618,045 351,286 113,020 105,357 — — 2,000,436 Substandard — 753 1,310 1,274 257 826 — — 4,420 Total vehicle loans 196,998 616,483 619,355 352,560 113,277 106,183 — — 2,004,856 Vehicle current period charge-offs — ( 715 ) ( 664 ) ( 748 ) ( 117 ) ( 344 ) — — ( 2,588 ) Consumer loans Pass 7,204 21,506 10,028 4,627 1,667 5,099 61,766 717 112,614 Substandard — 51 63 9 — 51 622 101 897 Total consumer loans 7,204 21,557 10,091 4,636 1,667 5,150 62,388 818 113,511 Consumer loan current period charge-offs ( 13 ) ( 1,263 ) ( 139 ) ( 83 ) ( 13 ) ( 247 ) ( 206 ) ( 21 ) ( 1,985 ) Total Personal Banking 217,267 897,677 1,390,235 1,241,469 753,430 1,629,273 523,865 44,606 6,697,822 Commercial Banking: Commercial real estate loans Pass 62,822 232,766 496,664 303,781 319,596 931,515 28,002 24,423 2,399,569 Special mention — 2,831 24,683 27,294 7,111 28,946 733 — 91,598 Substandard 1,256 1,909 2,779 29,626 19,575 117,501 78 99 172,823 Total commercial real estate loans 64,078 237,506 524,126 360,701 346,282 1,077,962 28,813 24,522 2,663,990 Commercial real estate current period charge-offs — — ( 44 ) — — ( 305 ) — — ( 349 ) Commercial real estate loans - owner occupied Pass 22,976 12,903 51,065 47,955 13,886 163,028 2,171 1,304 315,288 Special mention — 13,365 2,381 1,210 1,728 20,965 — — 39,649 Substandard — — — 111 1,647 6,145 — 1,698 9,601 Total commercial real estate loans - owner occupied 22,976 26,268 53,446 49,276 17,261 190,138 2,171 3,002 364,538 Commercial real estate - owner occupied current period charge-offs — — — — — — — — — Commercial loans Pass 203,185 424,258 402,658 67,493 24,976 79,847 492,660 3,442 1,698,519 Special mention 8,019 31,014 3,860 4 298 217 9,045 4 52,461 Substandard — 8,050 3,954 886 222 3,162 3,884 3,758 23,916 Total commercial loans 211,204 463,322 410,472 68,383 25,496 83,226 505,589 7,204 1,774,896 Commercial loans current period charge-offs — ( 47 ) ( 734 ) ( 75 ) ( 175 ) ( 132 ) — — ( 1,163 ) Total Commercial Banking 298,258 727,096 988,044 478,360 389,039 1,351,326 536,573 34,728 4,803,424 Total loans $ 515,525 1,624,773 2,378,279 1,719,829 1,142,469 2,980,599 1,060,438 79,334 11,501,246 For the quarter ended March 31, 2024, $ 3 million of revolving loans were converted to term loans. 20 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, 2023 (in thousands): 2023 2022 2021 2020 2019 Prior Revolving loans Revolving loans converted to term loans Total loans receivable Personal Banking: Residential mortgage loans Pass $ 186,081 665,379 792,488 506,068 244,678 1,019,152 — — 3,413,846 Substandard — 1,581 — 1,252 311 11,195 — — 14,339 Total residential mortgage loans 186,081 666,960 792,488 507,320 244,989 1,030,347 — — 3,428,185 Residential mortgage current period charge-offs — ( 9 ) ( 5 ) ( 130 ) ( 23 ) ( 1,023 ) — — ( 1,189 ) Home equity loans Pass 71,497 100,639 106,043 146,121 94,144 197,259 463,868 43,526 1,223,097 Substandard — 236 54 197 35 1,733 1,447 1,059 4,761 Total home equity loans 71,497 100,875 106,097 146,318 94,179 198,992 465,315 44,585 1,227,858 Home equity current period charge-offs — ( 53 ) ( 46 ) — ( 48 ) ( 352 ) ( 144 ) ( 209 ) ( 852 ) Vehicle loans Pass 664,876 682,275 397,809 132,775 67,853 58,153 — — 2,003,741 Substandard 646 1,418 1,453 299 556 488 — — 4,860 Total vehicle loans 665,522 683,693 399,262 133,074 68,409 58,641 — — 2,008,601 Vehicle current period charge-offs ( 678 ) ( 1,844 ) ( 1,967 ) ( 475 ) ( 652 ) ( 853 ) — — ( 6,468 ) Consumer loans Pass 24,277 11,582 5,552 2,072 1,355 6,603 64,214 820 116,475 Substandard 55 43 19 6 6 46 726 50 951 Total consumer loans 24,332 11,625 5,571 2,078 1,361 6,649 64,940 870 117,426 Consumer loan current period charge-offs ( 3,412 ) ( 511 ) ( 390 ) ( 157 ) ( 177 ) ( 980 ) ( 317 ) ( 38 ) ( 5,983 ) Total Personal Banking 947,432 1,463,153 1,303,418 788,790 408,938 1,294,629 530,255 45,455 6,782,070 Commercial Banking: Commercial real estate loans Pass 223,335 470,762 303,873 332,620 228,382 745,244 27,583 24,804 2,356,603 Special Mention 2,819 24,735 27,871 5,365 4,053 38,665 711 — 104,219 Substandard 1,920 750 26,850 18,167 37,044 82,717 79 108 167,635 Total commercial real estate loans 228,074 496,247 358,594 356,152 269,479 866,626 28,373 24,912 2,628,457 Commercial real estate current period charge-offs ( 14 ) — ( 492 ) — ( 51 ) ( 1,741 ) — — ( 2,298 ) Commercial real estate loans - owner occupied Pass 24,725 51,986 47,655 15,984 28,614 140,175 2,378 2,390 313,907 Special Mention 1,221 120 1,218 — 14,386 2,952 — — 19,897 Substandard — — 118 1,666 4,646 4,641 — 678 11,749 Total commercial real estate loans - owner occupied 25,946 52,106 48,991 17,650 47,646 147,768 2,378 3,068 345,553 Commercial real estate - owner occupied current period charge-offs — — — — — ( 68 ) — — ( 68 ) Commercial loans Pass 482,605 430,378 73,469 26,868 34,090 54,617 531,742 4,110 1,637,879 Special Mention 508 3,671 52 299 240 26 1,882 — 6,678 Substandard — 3,015 872 356 2,361 840 4,729 1,999 14,172 Total commercial loans 483,113 437,064 74,393 27,523 36,691 55,483 538,353 6,109 1,658,729 Commercial loans current period charge-offs ( 35 ) ( 2,072 ) ( 517 ) ( 430 ) ( 205 ) ( 845 ) ( 60 ) ( 2 ) ( 4,166 ) Total Commercial Banking 737,133 985,417 481,978 401,325 353,816 1,069,877 569,104 34,089 4,632,739 Total loans $ 1,684,565 2,448,570 1,785,396 1,190,115 762,754 2,364,506 1,099,359 79,544 11,414,809 For the year ended December 31, 2023, $ 19 million of revolving loans were converted to term loans. 21 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): March 31, 2024 December 31, 2023 Amortizable intangible assets: Core deposit intangibles - gross $ 74,899 74,899 Less: accumulated amortization ( 70,310 ) ( 69,609 ) Core deposit intangibles - net $ 4,589 5,290 Total intangible assets - net $ 4,589 5,290 The following table shows the actual aggregate amortization expense for the quarters ended March 31, 2024 and 2023, as well as the estimated aggregate amortization expense, based upon current levels of intangible assets, for the current fiscal year and each of the succeeding fiscal years until the intangible assets are fully amortized (in thousands): For the quarter ended March 31, 2024 $ 701 For the quarter ended March 31, 2023 909 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, 2023 $ 380,997 Balance at March 31, 2024 $ 380,997 We performed our annual goodwill impairment test as of June 30, 2023 in accordance with ASC 350, Intangibles - Goodwill and Other, and concluded that goodwill was not impaired. (5) Borrowed Funds (a) Borrowings Borrowed funds at March 31, 2024 and December 31, 2023 are presented in the following table: March 31, 2024 December 31, 2023 Amount Average rate Amount Average rate Term notes payable to the FHLB of Pittsburgh, due within one year $ 275,000 5.65 % $ 175,000 5.71 % Notes payable to the FHLB of Pittsburgh, due within one year 55,600 5.67 % 163,500 5.70 % Collateralized borrowings, due within one year 29,882 1.62 % 35,495 1.72 % Collateral received, due within one year 40,301 5.08 % 24,900 5.26 % Total borrowed funds $ 400,783 $ 398,895 Borrowings from the Federal Home Loan Bank (“FHLB”) of Pittsburgh, if any, are secured by our residential first mortgage and other qualifying loans. At March 31, 2024, the carrying value of these loans was $ 6.0 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 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 March 31, 2024 and December 31, 2023, the balance of the revolving line of credit was $ 56 million and $ 164 million, respectively. At March 31, 2024 and December 31, 2023, collateralized borrowings due within one year were $ 30 million and $ 35 million, respectively. These borrowings are collateralized by cash or va rious securities held in safekeeping by the FHLB. At March 31, 2024, the carrying value of the cash and securities used as collateral was $ 50 million. At March 31, 2024 and December 31, 2023, collateral received was $ 40 million and $ 25 million, respectively. This represents collateral posted to us from our derivative counterparties. 22 Table of Contents At March 31, 2024 and December 31, 2023, term notes payable to the FHLB of Pittsburgh due within one year were $ 275 million and $ 175 million, respectively. The March 31, 2024 total is made up of eight advances: $ 100 million at 5.68 % maturing April 5, 2024; $ 25 million at 5.63 % maturing April 26, 2024; $ 25 million at 5.61 % maturing April 30, 2024; $ 25 million at 5.65 % maturing May 9, 2024; $ 25 million at 5.64 % maturing May 13, 2024; $ 25 million at 5.64 % maturing May 13, 2024; $ 25 million at 5.63 % maturing May 20, 2024; $ 25 million at 5.63 % maturing May 31, 2024. On September 9, 2020, the Company issued $ 125 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, 2023 the Company repurchased $ 10 million of subordinated notes leaving $ 115 million of subordinated notes outstanding. The subordinated debt issuance costs of approximately $ 2 million are being amortized over five years on a straight-line basis into interest expense. At March 31, 2024 and December 31, 2023, subordinated debentures, net of issuance costs, were $ 114 million. For the three months ended March 31, 2024 and March 31, 2023 total interest expense paid on the subordinate notes was $ 1.2 million. (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 March 31, 2024 December 31, 2023 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 8,005 7,999 Union National Capital Trust II (1) November 23, 2034 3-month SOFR plus 2.00 % 3,000 2,803 2,796 MFBC Statutory Trust I (1) September 15, 2035 3-month SOFR plus 1.70 % 5,000 3,814 3,788 Universal Preferred Trust (1) October 7, 2035 3-month SOFR plus 1.69 % 5,000 3,804 3,778 $ 128,875 129,639 129,574 (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. For each of the three month periods ended March 31, 2024 and March 31, 2023 total interest expense paid on trust preferred securities was $ 2 million. 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; 23 Table of Contents • 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 March 31, 2024, the maximum potential amount of future payments we could be required to make under these non-recourse standby letters of credit was $ 60 million, of which $ 43 million is fully collateralized. At March 31, 2024, we had a liability which represents deferred income of $ 1 million related to the standby letters of credit. In addition, we maintain a $ 10 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 $ 9 million in notional value of credit cards have been issued. These issued credit cards had an outstanding balance of $ 1 million at March 31, 2024. 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 March 31, 2024 2023 Net income $ 29,163 33,679 Less: Dividends and undistributed earnings allocated to participating securities 74 146 Net income available to common shareholders $ 29,089 33,533 Weighted average common shares outstanding 126,814,233 126,498,512 Add: Effect of common share options and other stock awards 784,738 551,751 Total weighted average common shares and dilutive potential shares 127,598,971 127,050,263 Basic earnings per share $ 0.23 0.27 Diluted earnings per share $ 0.23 0.26 24 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 March 31, Pension benefits Other post-retirement benefits 2024 2023 2024 2023 Service cost $ 1,425 1,560 — — Interest cost 2,205 2,245 15 7 Expected return on plan assets ( 3,776 ) ( 3,479 ) — — Amortization of prior service cost ( 563 ) ( 564 ) — — Amortization of the net loss 18 20 10 10 Net periodic cost $ ( 691 ) ( 218 ) 25 17 Because of the current funding status, we do not anticipate a funding requirement during the year ending December 31, 2024. (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; ◦ 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, 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. 25 Table of Contents 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. 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. 26 Table of Contents 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 March 31, 2024 and December 31, 2023, there was no significant unrealized appreciation or depreciation on these financial instruments. 27 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 March 31, 2024 (in thousands): Carrying amount Estimated fair value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 119,319 119,319 119,319 — — Securities available-for-sale 1,094,009 1,094,009 — 1,094,009 — Securities held-to-maturity 801,107 680,353 — 680,353 — Loans receivable, net 11,368,267 10,370,310 — — 10,370,310 Loans held-for-sale 8,082 8,082 — 213 7,869 Accrued interest receivable 50,680 50,680 50,680 — — Interest rate lock commitments 479 479 — — 479 Forward commitments 58 58 — 58 — Foreign exchange swaps 2 2 — 2 — Interest rate swaps designated as hedging instruments 2,300 2,300 — 2,300 — Interest rate swaps not designated as hedging instruments 45,188 45,188 — 45,188 — FHLB stock 30,811 30,811 — — — Total financial assets $ 13,520,302 12,401,591 169,999 1,822,123 10,378,658 Financial liabilities: Savings and checking deposits $ 9,284,830 9,284,830 9,284,830 — — Time deposits 2,786,814 2,333,365 — — 2,333,365 Borrowed funds 400,783 389,997 389,997 — — Subordinated debt 114,276 112,027 — 112,027 — Junior subordinated debentures 129,639 123,167 — — 123,167 Interest rate swaps not designated as hedging instruments 45,220 45,220 — 45,220 — Risk participation agreements 17 17 — 17 — Accrued interest payable 17,395 17,395 17,395 — — Total financial liabilities $ 12,778,974 12,306,018 9,692,222 157,264 2,456,532 28 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, 2023 (in thousands): Carrying amount Estimated fair value Level 1 Level 2 Level 3 Financial assets: Cash and cash equivalents $ 122,260 122,260 122,260 — — Securities available-for-sale 1,043,359 1,043,359 — 1,043,359 — Securities held-to-maturity 814,839 699,506 — 699,506 — Loans receivable, net 11,280,798 10,274,593 — — 10,274,593 Residential mortgage loans held-for-sale 8,768 8,768 — — 8,768 Accrued interest receivable 47,353 47,353 47,353 — — Interest rate lock commitments 641 641 — — 641 Forward commitments 12 12 — 12 — Interest rate swaps designated as hedging instruments 713 713 — 713 — Interest rate swaps not designated as hedging instruments 41,406 41,406 — 41,406 — FHLB stock 30,146 30,146 — — — Total financial assets $ 13,390,295 12,268,757 169,613 1,784,996 10,284,002 Financial liabilities: Savings and checking accounts $ 9,377,021 9,377,021 9,377,021 — — Time deposits 2,602,881 2,113,177 — — 2,113,177 Borrowed funds 398,895 386,446 386,446 — — Subordinated debt 114,189 109,471 — 109,471 — Junior subordinated debentures 129,574 112,159 — — 112,159 Foreign exchange swaps 291 291 — 291 — Interest rate swaps designated as hedging instruments 1,198 1,198 — 1,198 — Interest rate swaps not designated as hedging instruments 41,437 41,437 — 41,437 — Risk participation agreements 14 14 — 14 — Accrued interest payable 13,669 13,669 13,669 — — Total financial liabilities $ 12,679,169 12,154,883 9,777,136 152,411 2,225,336 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 March 31, 2024 and December 31, 2023. 29 Table of Contents The following table represents assets and liabilities measured at fair value on a recurring basis at March 31, 2024 (in thousands): Level 1 Level 2 Level 3 Total assets at fair value Debt securities: U.S. government and agencies $ — 56,718 — 56,718 Government-sponsored enterprises — 40,519 — 40,519 States and political subdivisions — 74,271 — 74,271 Corporate — 7,634 — 7,634 Total debt securities — 179,142 — 179,142 Residential mortgage-backed securities: GNMA — 31,305 — 31,305 FNMA — 98,861 — 98,861 FHLMC — 82,746 — 82,746 Non-agency — 5 — 5 Collateralized mortgage obligations: GNMA — 374,391 — 374,391 FNMA — 144,489 — 144,489 FHLMC — 183,070 — 183,070 Total mortgage-backed securities — 914,867 — 914,867 Interest rate lock commitments — — 479 479 Forward commitments — 58 — 58 Foreign exchange swaps — 2 — 2 Interest rate swaps designated as hedging instruments — 2,300 — 2,300 Interest rate swaps not designated as hedging instruments — 45,188 — 45,188 Total assets $ — 1,141,557 479 1,142,036 Interest rate swaps not designated as hedging instruments — 45,220 — 45,220 Risk participation agreements — 17 — 17 Total liabilities $ — 45,237 — 45,237 30 Table of Contents The following table represents assets and liabilities measured at fair value on a recurring basis at December 31, 2023 (in thousands): Level 1 Level 2 Level 3 Total assets at fair value Debt securities: U.S. government and agencies $ — 58,314 — 58,314 Government-sponsored enterprises — 40,597 — 40,597 States and political subdivisions — 75,469 — 75,469 Corporate — 7,688 — 7,688 Total debt securities — 182,068 — 182,068 Residential mortgage-backed securities: GNMA — 17,441 — 17,441 FNMA — 102,678 — 102,678 FHLMC — 70,830 — 70,830 Non-agency — 5 — 5 Collateralized mortgage obligations: GNMA — 331,784 — 331,784 FNMA — 148,892 — 148,892 FHLMC — 189,661 — 189,661 Total mortgage-backed securities — 861,291 — 861,291 Interest rate lock commitments — — 641 641 Forward commitments — 12 — 12 Interest rate swaps designated as hedging instruments — 713 — 713 Interest rate swaps not designated as hedging instruments — 41,406 — 41,406 Total assets $ — 1,085,490 641 1,086,131 Foreign exchange swaps $ — 291 — 291 Interest rate swaps designated as hedging instruments — 1,198 — 1,198 Interest rate swaps not designated as hedging instruments — 41,437 — 41,437 Risk participation agreements — 14 — 14 Total liabilities $ — 42,940 — 42,940 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 March 31, 2024 2023 Beginning balance, $ 641 559 Interest rate lock commitments: Net activity ( 162 ) ( 173 ) Ending balance $ 479 386 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. 31 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 March 31, 2024 (in thousands): Level 1 Level 2 Level 3 Total assets at fair value Loans individually assessed $ — — 39,123 39,123 Mortgage servicing rights — — 173 173 Real estate owned, net — — 50 50 Total assets $ — — 39,346 39,346 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, 2023 (in thousands): Level 1 Level 2 Level 3 Total assets at fair value Loans individually assessed $ — — 36,747 36,747 Mortgage servicing rights — — 133 133 Real estate owned, net — — 104 104 Total assets $ — — 36,984 36,984 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 2023 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 March 31, 2024 (in thousands): Fair value Valuation techniques Significant unobservable inputs Range (weighted average) Loans individually assessed $ 39,123 Appraisal value (1) Estimated cost to sell 10 % Mortgage servicing rights 173 Discounted cash flow Annual service cost $ 89 Prepayment rate 6.6 % to 18.2 % ( 10.7 %) Expected life (months) 51.0 to 102.3 ( 72.3 ) Option adjusted spread 729 basis points Forward yield curve 5.43 % to 5.33 % Real estate owned, net 50 Appraisal value (1) Estimated cost to sell 10 % Loans held for sale 7,869 Quoted prices for similar loans in active markets adjusted by an expected pull-through rate Estimated pull-through rate 100 % (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. 32 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 During the year-ended December 31, 2023, the Company 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. 33 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 March 31, 2024 Derivatives designated as hedging instruments: Interest rate swap agreements $ 175,000 2,300 — — Derivatives not designated as hedging instruments: Interest rate swap agreements 740,173 45,188 740,173 45,220 Foreign exchange swap agreements 2,975 2 — — Interest rate lock commitments 18,591 479 — — Forward commitments 2,713 58 — — Risk participation agreements — — 92,281 17 Total Derivatives $ 939,452 48,027 832,454 45,237 At December 31, 2023 Derivatives designated as hedging instruments: Interest rate swap agreements $ 75,000 713 100,000 1,198 Derivatives not designated as hedging instruments: Interest rate swap agreements 725,139 41,406 725,139 41,437 Foreign exchange swap agreements — — 12,278 291 Interest rate lock commitments 21,857 641 — — Forward commitments 281 12 — — Risk participation agreements — — 101,727 14 Total derivatives $ 822,277 42,772 939,144 42,940 The following table presents income or expense recognized on derivatives for the periods indicated (in thousands): For the quarter ended March 31, 2024 2023 Hedging derivatives: Decrease in interest expense $ 733 — Non-hedging swap derivatives: Increase/(decrease) in other income $ 287 ( 202 ) Decrease in mortgage banking income $ ( 115 ) ( 174 ) The following table presents information regarding our derivative financial instruments designated as hedging for the quarter ended March 31, 2024 (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 3.50 % $ ( 546 ) 5/11/2027 37 Issued May 12, 2023 25,000 3.55 % ( 534 ) 5/12/2028 49 Issued May 19, 2023 25,000 3.83 % ( 460 ) 11/19/2027 44 Issued May 31, 2023 25,000 4.03 % ( 406 ) 11/30/2026 32 Issued July 26, 2023 25,000 4.22 % ( 359 ) 7/26/2028 52 Issued July 31, 2023 25,000 4.30 % ( 336 ) 1/31/2028 46 Issued August 9, 2023 25,000 4.32 % ( 339 ) 8/9/2027 40 Total $ 175,000 $ ( 2,980 ) 34 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 March 31, 2024, 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 March 31, 2024 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, 2023 $ ( 150,659 ) ( 374 ) 1,541 ( 149,492 ) Other comprehensive (loss)/income before reclassification adjustments (1) (2) ( 5,698 ) 2,154 — ( 3,544 ) Amounts reclassified from accumulated other comprehensive income (3) — — ( 388 ) ( 388 ) Net other comprehensive (loss)/income ( 5,698 ) 2,154 ( 388 ) ( 3,932 ) Balance as of March 31, 2024 $ ( 156,357 ) 1,780 1,153 ( 153,424 ) For the quarter ended March 31, 2023 Unrealized losses on securities available-for-sale Change in defined benefit pension plans Total Balance as of December 31, 2022 $ ( 164,206 ) ( 6,952 ) ( 171,158 ) Other comprehensive income before reclassification adjustments (4) 13,017 — 13,017 Amounts reclassified from accumulated other comprehensive income (5) — ( 382 ) ( 382 ) Net other comprehensive income/(loss) 13,017 ( 382 ) 12,635 Balance as of March 31, 2023 $ ( 151,189 ) ( 7,334 ) ( 158,523 ) (1) Consists of unrealized holding losses, net of tax of $ 1,758 . (2) Change in fair value of interest rate swaps, net of tax ($ 630 ). (3) Consists of realized gains, net of tax of $ 147 . (4) Consists of unrealized holding gains, net of tax of ($ 3,308 ). (5) Consists of realized gains, net of tax of $ 152 . (13) Subsequent Events In April 2024, the Company approved and announced its intention to pursue a limited, strategic repositioning of the securities portfolio to optimize its balance sheet by liquidating lower-yielding securities in an effort to generate additional future earnings. This initiative will be accomplished through the sale of up to 15 % of the Company’s available-for-sale investment securities portfolio. The securities losses recognized will be limited to $ 40 million, equivalent to approximately $ 30 million after tax. The Company expects a yield gain of 375 to 400 basis points from the repositioning and will attempt to manage the payback period so that it will be approximately three years . The characteristics of investment securities to be sold have an average yield less than 2.00 % with a remaining maturity of greater than four years . The proceeds will be used to reduce borrowings in the short term while also opportunistically reinvesting into securities with similar risk, maturity and duration characteristics. 35 Table of Contents