Northwest Bancshares, Inc. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our principal business consists of collecting deposits and making loans primarily secured by various types of collateral, including real estate and other assets in the markets in which we are located. Attracting and maintaining deposits is affected by a number of factors, including interest rates paid on competing deposits and other investments offered by other financial and non-financial institutions, account maturities, fee structures, and levels of personal income and savings. Lending activities are affected by the demand for funds and thus are influenced by interest rates, the number and quality of alternative lenders and regional economic conditions. Sources of funds for lending activities include deposits, borrowings, repayments on loans, cash flows from investment and mortgage-backed securities and income provided from operations. Our earnings depend primarily on net interest income, which is the difference between interest earned on our interest-earning assets, consisting primarily of loans and investment securities, and the interest paid on interest-bearing liabilities, consisting primarily of deposits, borrowed funds, and trust-preferred securities. Net interest income is a function of our interest rate spread, which is the difference between the average yield earned on our interest-earning assets and the average rate paid on our interest-bearing liabilities, as well as a function of the average balance of interest-earning assets compared to the average balance of interest-bearing liabilities. Also contributing to our earnings is noninterest income, which consists primarily of service charges and fees on loan and deposit products and services, fees related to investment management and trust services, net gains and losses on the sale of assets, including SBA loans, and mortgage banking income. Net interest income and noninterest income are offset by provisions for credit losses, general administrative and other expenses, including employee compensation and benefits, occupancy expense and processing costs, as well as by state and federal income tax expense. Our net income was $100 million, or $0.79 per diluted share, for the year ended December 31, 2024 compared to $135 million, or $1.06 per diluted share, for the year ended December 31, 2023, and $134 million, or $1.05 per diluted share, for the year ended December 31, 2022. The provision for credit losses was $25 million for the year ended December 31, 2024 compared to $23 million for the year ended December 31, 2023, and $28 million for the year ended December 31, 2022. 39 Table of Contents Selected Financial and Other Data The summary financial information presented below is derived in part from the Company’s Consolidated Financial Statements. The following is only a summary and should be read in conjunction with the Consolidated Financial Statements and notes included elsewhere in this document. The information at December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022 is derived in part from the audited Consolidated Financial Statements that appear in this document. At December 31, 2024 2023 (In thousands) Selected Consolidated Financial Data: Total assets $ 14,408,224 14,419,105 Cash and cash equivalents 288,378 122,260 Marketable securities held-to-maturity 124,462 124,458 Marketable securities available-for-sale 120,237 182,068 Mortgage-backed securities held-to-maturity 626,124 690,381 Mortgage-backed securities available-for-sale 988,707 861,291 Loans held-for-sale 76,331 8,768 Loans receivable, net of allowance for credit losses: Residential mortgage loans 3,163,922 3,401,224 Home equity loans 1,144,551 1,222,455 Consumer loans 1,970,813 2,097,917 Commercial real estate loans 2,801,652 2,918,968 Commercial loans 1,982,257 1,640,234 Total loans receivable, net 11,063,195 11,280,798 Deposits 12,144,554 11,979,902 Borrowed funds 200,331 398,895 Subordinated debt 114,538 114,189 Shareholders’ equity 1,596,856 1,551,317 For the years ended December 31, 2024 2023 2022 (In thousands except per share data) Selected Consolidated Operating Data: Total interest income $ 669,196 587,922 448,798 Total interest expense 233,618 152,239 28,117 Net interest income 435,578 435,683 420,681 Provision for credit losses 24,505 22,874 28,315 Net interest income after provision for credit losses 411,073 412,809 392,366 Noninterest income 87,010 113,823 110,849 Noninterest expense 368,537 351,554 329,523 Income before income taxes 129,546 175,078 173,692 Income tax expense 29,268 40,121 40,026 Net income $ 100,278 134,957 133,666 Earnings per share: Basic $ 0.79 1.06 1.05 Diluted $ 0.79 1.06 1.05 40 Table of Contents At or for the year ended December 31, 2024 2023 2022 Selected Financial Ratios and Other Data: Return on average assets (1), (5), (6), (7) 0.70 % 0.95 % 0.94 % Return on average equity (2), (5), (6), (7) 6.41 % 8.94 % 8.80 % Average capital to average assets 10.87 % 10.58 % 10.71 % Capital to total assets 11.08 % 10.76 % 10.57 % Tangible common equity to tangible assets (8) 8.65 % 8.30 % 8.03 % Net interest rate spread (3) 2.66 % 2.86 % 3.11 % Net interest margin (4) 3.26 % 3.28 % 3.20 % Noninterest expense to average assets (5), (6), (7) 2.56 % 2.46 % 2.32 % Efficiency ratio (5), (6), (7) 70.52 % 63.98 % 62.00 % Noninterest income to average assets 0.60 % 0.80 % 0.78 % Net interest income to noninterest expense (5), (6), (7) 1.18x 1.24x 1.28x Dividend payout ratio 101.27 % 75.47 % 76.19 % Nonperforming loans to net loans receivable 0.56 % 0.86 % 0.76 % Nonperforming assets to total assets 0.54 % 0.67 % 0.58 % Allowance for credit losses to nonperforming loans 188.24 % 129.01 % 143.98 % Allowance for credit losses to loans receivable 1.04 % 1.10 % 1.08 % Average interest-earning assets to average interest-bearing liabilities 1.35x 1.37x 1.41x Number of banking offices 141 142 150 (1) Represents net income divided by average assets. (2) Represents net income divided by average equity. (3) Represents average yield on interest-earning assets less average cost of interest-bearing liabilities (shown on a fully taxable equivalent (“FTE”) basis). (4) Represents net interest income as a percentage of average interest-earning assets (shown on a FTE basis). (5) 2022 includes $5.6 million in merger, asset disposition and restructuring expense. (6) 2023 includes $6.7 million in merger, asset disposition and restructuring expense. (7) 2024 includes $5.8 million in merger, asset disposition and restructuring expense and a $39.4 loss on sale of investments. (8) Excludes goodwill and other intangible assets (non-GAAP). The following non-GAAP financial measures used by the Company provide information useful to investors in understanding our operating performance and trends, and facilitate comparisons with the performance of our peers. The following table summarizes the non-GAAP financial measures derived from amounts reported in the Company’s Consolidated Statements of Financial Condition. As of December 31, 2024 2023 2022 Tangible common equity to assets Total shareholders’ equity $ 1,596,856 1,551,317 1,491,486 Less: goodwill and intangible assets (383,834) (386,287) (389,557) Tangible common equity $ 1,213,022 1,165,030 1,101,929 Total assets $ 14,408,224 14,419,105 14,113,324 Less: goodwill and intangible assets (383,834) (386,287) (389,557) Tangible assets $ 14,024,390 14,032,818 13,723,767 Tangible common equity to tangible assets 8.65 % 8.30 % 8.03 % Critical Accounting Estimates Our significant accounting policies are described in Note 1 of the notes to the Consolidated Financial Statements . Certain accounting policies are important to the understanding of our financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances, including, but without limitation, changes in interest rates, performance of the economy, financial condition of borrowers and laws and regulations. The following is the accounting estimate we believe is critical. Allowance for Credit Losses. We recognize that losses will be experienced on assets and that the risk of loss varies with the type of asset, the creditworthiness of a borrower, general economic conditions and the quality of the collateral, if any. We maintain an allowance for expected lifetime losses in the loan portfolio. The allowance for credit losses represents management’s estimate of 41 Table of Contents lifetime expected losses based on all available information. The allowance for credit losses is based on management’s evaluation of relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts. The loan portfolio is reviewed regularly by management in its determination of the allowance for credit losses. The methodology for assessing the appropriateness of the allowance includes a review of historical losses, peer group comparisons, industry data and economic conditions. As an integral part of their examination process, regulatory agencies periodically review our allowance for credit losses and may require us to make additional provisions for estimated losses based upon judgments different from those of management. In establishing the allowance for credit losses, a combination of statistical models are applied to various pools of outstanding loans. We use a 24 month forecasting period and revert to historical average loss rates thereafter. Credit relationships that have been classified as substandard or doubtful and are greater than or equal to $1.0 million are reviewed by the Credit Administration department to determine if they no longer continue to demonstrate similar risk characteristics to their loan pool. If a loan no longer demonstrates similar risk characteristics to their loan pool they are removed from the pool and an individual assessment is performed. The allowance calculation is also supplemented with qualitative reserves that take into consideration the current portfolio and specific risk characteristics, such as changes in underwriting standards, portfolio mix, delinquency level, or term, as well as changes in environmental conditions, among other factors, that have occurred but are not yet reflected in the quantitative model component. Our allowance for credit losses is sensitive to a number of inputs, most notably the macroeconomic forecast assumptions as well as the reasonable and supportable forecasting periods that are incorporated in our estimate of credit losses. Therefore, as the macroeconomic environment and related forecasts change or decisions are made to shorten or lengthen the forecasting period, the allowance for credit losses may change materially. The following sensitivity analyses do not represent management ’ s expectations of the deterioration of our portfolios or the economic environment, but are provided as hypothetical scenarios to assess the sensitivity of the allowance for credit losses to changes in key inputs. We utilized a multi-scenario based macroeconomic forecast in determining the December 31, 2024 allowance for credit losses, which included a weighting of three scenarios: an upside scenario, a baseline scenario and a downside scenario. We placed the most weight on the baseline scenario, with the remaining weight split evenly between the upside and downside scenarios. If we placed 100% weighting on the downside scenario, the quantitative allowance for credit losses would have been approximately $31 million higher. Although management believes that it uses the best information available to establish the allowance for credit losses, future adjustments to the allowance for credit losses may be necessary and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for credit losses is adequate or that increases will not be necessary should the quality of assets deteriorate as a result of the factors discussed previously. Any material increase in the allowance for credit losses may adversely affect our financial condition and results of operations. The allowance is based on information known at the time of the review. Changes in factors underlying the assessment could have a material impact on the amount of the allowance that is necessary and the amount of provision to be charged against earnings. Such changes could impact future results. For further information related to our allowance for credit losses, see Note 1(f) of the notes to the Consolidated Financial Statements. Recently Issued Accounting Standards The following Accounting Standard Updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”) have not yet been adopted. In October 2023, the FASB issued ASU No. 2023-06, “Disclosure Improvements.” This ASU includes amendments on several subtopics in the FASB Accounting Standards Codification (“Codification”) to incorporate certain disclosures and presentation requirements currently residing in SEC Regulations S-X and S-K. The adoption of this ASU may lead to certain disclosures being relocated into the financial statements. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. These amendments are to be applied prospectively. If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. We do not believe this guidance will have a material impact on the Company’s financial statements. In December 2023, the FASB issued ASU No. 2023-09, “Improvements to Income Tax Disclosures.” This ASU requires additional disaggregated disclosures on entity’s effective tax rate reconciliation and additional details on income taxes paid. This guidance is effective for annual periods beginning after December 15, 2025, with early adoption permitted. This ASU is applied prospectively with the option to apply the ASU retrospectively. We do not believe this guidance will have a material impact on the Company’s financial statements. In November 2024, the FASB issued ASU 2024-03, “Income Statement-Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”. The guidance requires disaggregated disclosure of 42 Table of Contents specified expense categories. The guidance also requires disclosure of total selling expenses and how the Company defines selling expenses. The guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027. Prospective application is required, with retrospective application permitted. The Company is currently evaluating the effect the updated guidance will have on the Company’s financial statement disclosures. Balance Sheet Analysis Assets. Total assets at December 31, 2024 were flat at $14.4 billion, a decreasing slightly by $11 million from December 31, 2023. This decrease in assets was driven by decreases in personal banking loans receivable, partially offset by increases in cash and cash equivalents and commercial banking loans receivable. A discussion of significant changes follows. Cash and cash equivalents . Cash and cash equivalents increased by $166 million, or 136%, to $288 million at December 31, 2024, from $122 million at December 31, 2023. This increase was primarily due to growth in our deposits coupled with a focus on profitability and credit discipline while investing these cash flows into commercial loans. Marketable securities . Marketable securities remained flat at $1.9 billion at both December 31, 2024 and December 31, 2023. Available-for-sale marketable securities increased $66 million driven by the securities portfolio restructure in the current year, while held-to-maturity securities decreased $64 million drive by maturities and regular monthly cash flows. During the second quarter the Company restructured our security portfolio by selling 15% of available-for-sale securities during the year in order to reallocate these funds into higher interest-earning products. The following table sets forth certain information regarding the amortized cost and fair value of our available-for-sale marketable securities portfolio and mortgage-backed securities portfolio at the dates indicated. At December 31, 2024 2023 Amortized cost Fair value Amortized cost Fair value (In thousands) Residential mortgage-backed securities available-for-sale: Fixed rate pass-through $ 237,892 220,417 209,069 183,874 Variable rate pass-through 3,738 3,789 7,140 7,080 Fixed rate agency CMOs 852,648 719,833 789,842 646,787 Variable rate agency CMOs 44,740 44,668 23,965 23,550 Total residential mortgage-backed securities available-for-sale 1,139,018 988,707 1,030,016 861,291 Marketable securities available-for-sale: U.S. Government, agency and GSEs 45,411 35,509 115,755 98,911 Municipal securities 68,807 58,627 85,766 75,469 Corporate debt issues 25,429 26,101 8,466 7,688 Total marketable securities available-for-sale $ 1,278,665 1,108,944 1,240,003 1,043,359 The following table sets forth certain information regarding the amortized cost and fair value of our held-to-maturity marketable securities portfolio and mortgage-backed securities portfolio at the dates indicated. At December 31, 2024 2023 Amortized cost Fair value Amortized cost Fair value (In thousands) Residential mortgage-backed securities held-to-maturity: Fixed rate pass-through $ 132,816 112,635 147,874 127,040 Variable rate pass-through 364 365 449 450 Fixed rate agency CMOs 492,415 414,426 541,529 463,835 Variable rate agency CMOs 529 524 529 523 Total residential mortgage-backed securities held-to-maturity 626,124 527,950 690,381 591,848 Marketable securities held-to-maturity: U.S. Government and agencies 124,462 109,998 124,458 107,658 Total marketable securities held-to-maturity $ 750,586 637,948 814,839 699,506 43 Table of Contents The following table sets forth information regarding the issuers and the carrying value of our mortgage-backed securities at the dates indicated. At December 31, 2024 2023 (In thousands) Residential mortgage-backed securities: FNMA $ 443,354 568,160 GNMA 668,668 407,441 FHLMC 502,805 576,066 Other (including non-agency) 4 5 Total residential mortgage-backed securities $ 1,614,831 1,551,672 Marketable Securities Portfolio Maturities and Yields . The following table sets forth the scheduled maturities, carrying values, amortized cost, market values and weighted average yields for our marketable securities and mortgage-backed securities portfolios at December 31, 2024. The annualized weighted average yields are calculated by taking the interest of the marketable securities divided by the amortized cost. Adjustable-rate mortgage-backed securities are included in the period in which interest rates are next scheduled to adjust. One year or less More than one year to five years More than five years to ten years More than ten years Total Amortized cost Annualized weighted average yield Amortized cost Annualized weighted average yield Amortized cost Annualized weighted average yield Amortized cost Annualized weighted average yield Amortized cost Fair value Annualized weighted average yield (Dollars in thousands) Marketable securities available-for-sale: Government sponsored entities $ — — % $ 122 6.10 % $ — — % $ — — % $ 122 118 6.10 % U.S. Government and agency obligations — — % — — % — — % 45,289 1.27 % 45,289 35,391 1.27 % Municipal securities — — % 888 3.87 % 16,662 3.22 % 51,257 1.83 % 68,807 58,627 2.19 % Corporate debt issues — — % 5,485 5.30 % 19,944 7.48 % — — % 25,429 26,101 7.01 % Total marketable securities available-for-sale — — % 6,495 5.12 % 36,606 5.54 % 96,546 1.57 % 139,647 120,237 2.77 % Residential mortgage-backed securities available-for-sale: Pass-through certificates 3,738 5.96 % 459 3.27 % 79 6.04 % 237,354 4.19 % 241,630 224,206 4.22 % CMOs 44,739 5.42 % 349 1.48 % 5,549 0.96 % 846,751 2.52 % 897,388 764,501 2.65 % Total residential mortgage-backed securities available-for-sale 48,477 5.47 % 808 2.49 % 5,628 1.03 % 1,084,105 2.88 % 1,139,018 988,707 2.98 % Marketable securities held-to-maturity: U.S. Government and agency obligations — — % 124,462 1.00% — — % — — % 124,462 109,998 1.00 % Total investment securities held-to-maturity — — % 124,462 1.00% — — % — — % 124,462 109,998 1.00 % Residential mortgage-backed securities held-to-maturity: Pass-through certificates 364 4.31 % 24 2.33 % 20,184 1.31 % 112,608 1.29 % 133,180 113,000 1.30 % CMOs 529 5.40 % 19,956 0.92 % — — % 472,459 2.22 % 492,944 414,950 2.17 % Total residential mortgage-backed securities held-to-maturity 893 4.95 % 19,980 0.92 % 20,184 1.31 % 585,067 2.04 % 626,124 527,950 1.99 % Total marketable securities and mortgage-backed securities $ 49,370 5.46 % $ 151,745 1.17 % $ 62,418 3.77 % $ 1,765,718 2.53 % $ 2,029,251 1,746,892 2.54 % Further information and analysis of our investment portfolio, including tables with information related to gross unrealized gains and losses on available-for sale and held-to-maturity marketable securities and tables showing the fair value and gross unrealized losses on marketable securities aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position are located in Note 4 of the Notes to the Consolidated Financial Statements. 44 Table of Contents Loans Receivable . Gross loans receivable decreased by $226 million, or 2%, to $11.2 billion at December 31, 2024, from $11.4 billion at December 31, 2023. Our personal banking loan portfolio decreased by $451 million, or 7%, to $6.3 billion at December 31, 2024 from $6.8 billion at December 31, 2023. Cash flows from our personal banking portfolio were partially redirected to fund commercial banking growth, which increased by $225 million, or 5%, to $4.9 billion at December 31, 2024 from $4.6 billion at December 31, 2023. This represents organic loan growth resulting from the new commercial lending verticals that we implemented during the prior year. Specifically, our commercial and industrial (C&I) loan portfolio increased by $349 million, or 21% compared to December 31, 2023. Set forth below are selected data related to the composition of our loan portfolio by type of loan as of the dates indicated. At December 31, 2024 2023 Amount Percent Amount Percent (Dollars in thousands) Personal Banking: Residential mortgage loans $ 3,178,269 28.4 % $ 3,419,417 30.0 % Home equity loans 1,149,396 10.3 % 1,227,858 10.8 % Vehicle loans 1,870,843 16.7 % 2,008,601 17.6 % Consumer loans (1) 124,242 1.1 % 117,426 1.0 % Total Personal Banking 6,322,750 56.5 % 6,773,302 59.4 % Commercial Banking: Commercial real estate 2,495,726 22.3 % 2,628,457 23.1 % Commercial real estate - owner occupied 354,136 3.2 % 345,553 3.0 % Commercial loans 2,007,402 18.0 % 1,658,729 14.5 % Total Commercial Banking 4,857,264 43.5 % 4,632,739 40.6 % Total loans receivable, gross 11,180,014 100.0 % 11,406,041 100.0 % Total allowance for credit losses (116,819) (125,243) Total loans receivable, net $ 11,063,195 $ 11,280,798 (1) Consists primarily of secured and unsecured personal loans. The following table sets forth the maturity of our loan portfolio at December 31, 2024. Demand loans and loans having no stated schedule of repayments and no stated maturity are reported as due in one year or less. Adjustable and floating-rate loans are included in the period in which the contractual repayment is due or they contractually mature, if interest only, and fixed-rate loans are included in the period in which the contractual repayment is due. At December 31, 2024 (In thousands) Due in one year or less Due after one year through five years Due after five years through fifteen years Due after fifteen years Total Personal Banking: Residential mortgage loans $ 143,885 538,185 1,209,252 1,279,787 3,171,109 Home equity loans 92,592 324,528 551,015 177,307 1,145,442 Consumer loans 522,614 1,293,898 123,844 — 1,940,356 Total Personal Banking 759,091 2,156,611 1,884,111 1,457,094 6,256,907 Commercial Banking: Commercial real estate loans 678,048 1,422,338 686,684 66,509 2,853,579 Commercial loans 503,525 1,377,577 128,200 261 2,009,563 Total Commercial Banking 1,181,573 2,799,915 814,884 66,770 4,863,142 Total Loans $ 1,940,664 4,956,526 2,698,995 1,523,864 11,120,049 Net unearned income and unamortized premiums and discounts 59,965 Total loans receivable 11,180,014 45 Table of Contents The following table sets forth at December 31, 2024, the dollar amount of all fixed-rate loans due one year or more after December 31, 2024. At December 31, 2024 (In thousands) Due after one year through five years Due after five years through fifteen years Due after fifteen years Total Personal Banking: Residential mortgage loans $ 528,448 1,177,339 1,237,462 2,943,249 Home equity loans 276,251 343,488 20,361 640,100 Consumer loans 1,281,539 123,580 — 1,405,119 Total Personal Banking 2,086,238 1,644,407 1,257,823 4,988,468 Commercial Banking: Commercial real estate loans 437,327 18,642 4 455,973 Commercial loans 344,387 41,849 — 386,236 Total Commercial Banking 781,714 60,491 4 842,209 Total Loans $ 2,867,952 1,704,898 1,257,827 5,830,677 The following table sets forth at December 31, 2024, the dollar amount of all adjustable-rate loans due one year or more after December 31, 2024. Adjustable and floating-rate loans are included in the table based on the contractual due date of the loan. At December 31, 2024 (In thousands) Due after one year through five years Due after five years through fifteen years Due after fifteen years Total Personal Banking: Residential mortgage loans $ 9,737 31,913 42,325 83,975 Home equity loans 48,277 207,527 156,946 412,750 Consumer loans 12,359 264 — 12,623 Total Personal Banking 70,373 239,704 199,271 509,348 Commercial Banking: Commercial real estate loans 985,011 668,042 66,505 1,719,558 Commercial loans 1,033,190 86,351 261 1,119,802 Total Commercial Banking 2,018,201 754,393 66,766 2,839,360 Total Loans $ 2,088,574 994,097 266,037 3,348,708 46 Table of Contents The following table provides the various loan sectors in our commercial real estate portfolio at December 31, 2024: December 31, 2024 Property type Percent of portfolio Retail Building 13.4 % 5 or More Unit Dwelling 13.3 Commercial Office Building - non-owner occupied 10.5 Nursing Home 10.4 Manufacturing & Industrial Building 5.8 Warehouse/Storage Building 4.3 Multi-use building - commercial, retail and residential 4.2 Commercial office building - owner occupied 4.2 Residential acquisition & development - 1-4 family, townhouses and apartments 4.1 Multi-use building - office and warehouse 3.5 Other Medical Facility 2.9 Single Family Dwelling 2.4 Student Housing 2.4 Hotel/Motel 2.3 Agricultural Real Estate 2.2 Commercial acquisition and development 2.0 All Other Types 12.1 Total 100.0 % The following table describes our commercial real estate portfolio by state at December 31, 2024: December 31, 2024 State Percent of portfolio New York 34.4 % Pennsylvania 29.6 Ohio 18.7 Indiana 8.3 All other 9.0 Total 100.0 % Deposits . Total deposits increased by $165 million, or 1%, to $12.1 billion at December 31, 2024 from $12.0 billion at December 31, 2023. This increase was driven by a $75 million, or 3% increase in time deposits as we continued to competitively position our deposits products, a $66 million, or 3% increase in savings deposits and a $40 million or 2% increase in money market deposits. Partially offsetting these increases was a decrease in non-interest bearing deposit accounts of $48 million or 2% due to seasonality in customer deposit accounts. As of December 31, 2024, we had $201 million of brokered deposits, which made up 7% of our time deposits and 2% of our total deposit balance at year end. The balance carried an average all-in cost of 4.32% and an average original term of 12 months. These purchases were through a registered broker, as part of an Asset/Liability Committee (“ALCO”) strategy to increase and diversify funding sources. In addition, at year end we had $713 million of deposits through our participation in the Intrafi Network Deposits and FIS Insured Deposit programs. These deposits are part of a reciprocal program that allows our depositors to receive expanded FDIC insurance coverage above the insurance coverage available to our depositors at a single FDIC-insured institution, by placing multiple interest-bearing demand accounts at other member banks and Northwest receives an equal amount of deposits from other member banks. The balance carried an average cost of 3.68%. 47 Table of Contents The following table sets forth the dollar amount of deposits in the various types of accounts we offered at the dates indicated. At December 31, 2024 2023 Balance Percent (1) Rate (2) Balance Percent (1) Rate (2) (Dollars in thousands) Savings deposits $ 2,171,251 17.9 % 1.12 % $ 2,105,234 17.6 % 0.42 % Demand deposits 5,287,919 43.5 % 0.52 % 5,303,569 44.3 % 0.22 % Money market deposit accounts 2,007,739 16.5 % 1.72 % 1,968,218 16.4 % 1.26 % Time deposits: Maturing within 1 year 2,547,129 21.0 % 4.08 % 2,464,022 20.6 % 4.44 % Maturing 1 to 3 years 109,727 0.9 % 1.96 % 98,229 0.8 % 0.86 % Maturing more than 3 years 20,789 0.2 % 0.46 % 40,630 0.3 % 0.24 % Total certificates 2,677,645 22.1 % 4.46 % 2,602,881 21.7 % 2.31 % Total deposits $ 12,144,554 100.0 % 1.69 % $ 11,979,902 100.0 % 0.88 % (1) Represents percentage of total deposits. (2) Represents weighted average nominal rate at year end. The following table sets forth the dollar amount of deposits in each state by branch location as of December 31, 2024. State Balance Percent (Dollars in thousands) Pennsylvania $ 7,550,050 62.1 % New York 2,814,777 23.2 % Ohio 727,003 6.0 % Indiana 1,052,724 8.7 % Total $ 12,144,554 100.0 % The following table indicates the amount of our certificates of deposits of $250,000 or more by time remaining until maturity at December 31, 2024. Maturity period Certificates of deposit (In thousands) Three months or less $ 141,194 Over three months through six months 123,113 Over six months through twelve months 104,198 Over twelve months 5,420 Total $ 373,925 At December 31, 2024 and 2023, we had total deposits in excess of $250,000 per depositor per account ownership category (the limit for FDIC insurance) of $1.9 billion and $1.8 billion, respectively. At those dates, we had no deposits that were uninsured for any other reason. The following table provides details regarding the Company’s uninsured deposits portfolio: As of December 31, 2024 Balance Percent of total deposits Number of relationships Uninsured deposits per the Call Report (1) $ 3,131,231 25.8 % 5,233 Less intercompany deposit accounts 1,244,219 10.3 % 11 Less collateralized deposit accounts 413,479 3.4 % 224 Uninsured deposits excluding intercompany and collateralized accounts $ 1,473,533 12.1 % 4,998 (1) Uninsured deposits presented may be different from actual amounts due to titling of accounts. Our largest uninsured depositor, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $26.2 million, or 0.22% of total deposits, as of December 31, 2024. Our top ten largest uninsured depositors, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $167.4 million, or 1.38% of total deposits, as of December 31, 2024. The average uninsured deposit account balance, excluding intercompany and collateralized accounts, was $295,000 as of December 31, 2024. 48 Table of Contents Borrowings. Borrowings decreased by $198 million, or 39%, to $315 million at December 31, 2024 from $513 million at December 31, 2023. This decrease was a result of growth in lower cost deposits which enabled the paydown of FHLB advances during the year. The following table sets forth information concerning our borrowings at the dates and for the periods indicated. During the years ended December 31, 2024 2023 (Dollars in thousands) FHLB borrowings: Average balance outstanding $ 254,033 568,350 Maximum outstanding at end of any month during year 493,300 787,300 Balance outstanding at end of year 175,000 338,500 Weighted average interest rate during year 5.49 % 5.37 % Weighted average interest rate at end of year 4.64 % 5.70 % Collateralized borrowings: Average balance outstanding $ 26,061 63,694 Maximum outstanding at end of any month during year 35,278 101,059 Balance outstanding at end of year 22,323 35,495 Weighted average interest rate during year 1.71 % 1.09 % Weighted average interest rate at end of year 1.73 % 1.72 % Collateral received: Average balance outstanding $ 31,326 37,942 Maximum outstanding at end of any month during year 55,900 62,300 Balance outstanding at end of year 3,008 24,900 Weighted average interest rate during year 5.35 % 5.28 % Weighted average interest rate at end of year 4.65 % 5.26 % Subordinated borrowings: Average balance outstanding $ 114,378 114,029 Maximum outstanding at end of any month during year 114,538 114,189 Balance outstanding at end of year 114,538 114,189 Weighted average interest rate during year 4.00 % 4.00 % Weighted average interest rate at end of year 4.00 % 4.00 % Total borrowings: Average balance outstanding $ 425,798 784,015 Maximum outstanding at end of any month during year 681,027 1,009,462 Balance outstanding at end of year 314,869 513,084 Weighted average interest rate during year 4.85 % 4.82 % Weighted average interest rate at end of year 4.20 % 5.02 % Shareholders’ equity . Total shareholders’ equity at December 31, 2024 was $1.60 billion, or $12.52 per share, an increase of $46 million, or 2.9%, from $1.55 billion, or $12.20 per share, at December 31, 2023. This increase was the result of net income of $100 million for the year ended December 31, 2024, as well as a decrease in accumulated other comprehensive loss of $39 million due primarily to a decrease in unrealized loss in the available-for-sale investment portfolio. These changes were partially offset by $102 million of cash dividend payments during the year ended December 31, 2024. 49 Table of Contents Comparison of Results of Operations for the Years Ended December 31, 2024 and 2023 Net Income Net income for the year ended December 31, 2024 was $100 million, or $0.79 per diluted share, a decrease of $35 million, or 25.7%, from $135 million, or $1.06 per diluted share, for the year ended December 31, 2023. The decrease in net income resulted, primarily from a decrease in noninterest income of $27 million, or 23.6%, resulting from a loss on investment sale as part of our securities portfolio restructure. Additionally contributing to the decrease in net income was an increase in noninterest expense of $17 million or 4.8%, partially offset by a decrease in the provision for credit losses of $2 million, or 7.1%, and a decrease in income taxes of $11 million or 27.1%. Net income for the year ended December 31, 2024 represents a return on average equity and average assets of 6.41% and 0.70%, respectively, compared to 8.94% and 0.95% for the year ended December 31, 2023. A discussion of significant changes follows. Net Interest Income To make it easier to compare both the results across several periods and the yields on various types of earning assets (some taxable, some not), we present net interest income in the discussion below on a fully taxable equivalent “FTE basis” (i.e., as if all income were taxable and at the same rate). For example, $100 of tax-exempt income would be presented as $126, an amount that, if taxed at the statutory federal income tax rate of 21%, would yield $100. See the “Average Balance Sheet” for information regarding tax-equivalent adjustments and GAAP results. Net interest income for 2024 was $436 million, which remained flat compared to 2023. Net interest income (FTE) was $439 million for 2024 and net interest margin (FTE) was 3.26%. Compared to the prior year, net interest income (FTE) increased $0.2 million and net interest margin (FTE) decreased by two basis points. The increase in net interest income (FTE) and decrease in net interest margin (FTE) was driven by an increase in interest income resulting from higher earning asset yields offset by an increase in interest-bearing deposit costs and a shift in funding mix to higher cost deposits due to the higher interest rate environment. 50 Table of Contents Average loans receivable increased $185 million, or 2%, from the year ended December 31, 2023. This increase was driven by commercial loans, which grew by $433 million, as we have continued to build-out our commercial lending verticals, and commercial real estate loans, which grew by $119 million from the same period. These increases were offset partially by a $368 million decrease in personal banking loans from the year ended December 31, 2023. Interest income on loans receivable increased by $72 million, or 13%, from 2023 as the result of increases in both the average yield and the average balance on loans receivable. The average yield on loans receivable increased due to the elevated market interest rates as well as a change in mix to higher yield loan products. Average investments declined 7% from the year ended December 31, 2023 driven by the sale of investment securities during the second quarter of 2024 coupled with regular principal payments and maturities. Interest income on investment securities increased by $7 million, or 17%, from the year ended December 31, 2023 due to the increase in the average yield on investments (FTE) to 2.25% for 2024 which was partially offset by a decline in the average balance of investments for both periods. Average deposits grew 4% from 2023 driven by an increase in our average time deposits due to customer preferences for this fixed maturity product type which grew by $845 million from the year ended December 31, 2023. This increase was partially offset by a $217 million decrease in money market balances as customers shifted balances into higher yielding time deposit accounts. Interest expense on deposits increased by $100 million, or 95%, from 2023 primarily attributable to increases in both the average yield and average balance of deposit accounts as we continued competitively positioning our deposit products. Compared to the year ended December 31, 2023, average borrowings saw a 55% reduction primarily attributable to the strategic pay-down of wholesale borrowings. This decrease was made possible by a substantial increase in cash reserves, resulting from the sale of investment securities during the year, as well as a notable rise in the average balance of deposits. The decrease in the average balance of borrowings resulted in a decrease in interest expense on borrowings by $19 million from 2023. 51 Table of Contents Average Balance Sheets The following table sets forth average balance sheets, average yields, on a fully taxable equivalent basis, and average costs, and certain other information at and for the periods indicated. All average balances are daily average balances. Non-accrual loans are included in the computation of average balances. The yields set forth below include the effect of deferred fees and discounts and premiums that are amortized or accreted to interest income or expense. The effect of these fees is not considered material. The average yield for loans receivable and investment securities are calculated on a FTE basis. There were no out-of-period adjustments or other exclusions from the amounts presented in the table. For the years ended December 31, 2024 2023 2022 Average balance Interest Average yield/cost (11) Average balance Interest Average yield/cost (11) Average balance Interest Average yield/cost (11) (Dollars in thousands) Interest-earning assets: Loans receivable (includes FTE adjustments of $2,928, $2,477, and $1,954, respectively) (1), (2), (3) $ 11,285,219 618,704 5.48 % $ 11,100,118 546,136 4.92 % $ 10,318,898 409,782 3.97 % Mortgage-backed securities (4) 1,739,141 39,793 2.29 % 1,822,375 32,886 1.80 % 1,968,528 30,804 1.56 % Investment securities (includes FTE adjustments of $576, $704, and $834, respectively) (4), (5) 287,118 5,825 2.03 % 357,436 6,312 1.77 % 381,518 6,671 1.75 % FHLB stock, at cost 24,948 1,891 7.58 % 39,467 2,868 7.27 % 17,065 730 4.27 % Interest-earning deposits 126,097 6,487 5.15 % 55,998 2,901 5.11 % 567,609 3,599 0.63 % Total interest-earning assets (includes FTE adjustments of $3,504, $3,181, and $2,788, respectively) 13,462,523 672,700 5.00 % 13,375,349 591,103 4.42 % 13,253,618 451,586 3.41 % Noninterest-earning assets (6) 922,648 894,415 924,080 Total assets $ 14,385,171 $ 14,269,809 $ 14,177,698 Interest-bearing liabilities: Savings deposits $ 2,142,852 24,222 1.13 % $ 2,148,127 8,822 0.41 % $ 2,336,217 2,343 0.10 % Interest-bearing demand deposits 2,574,810 27,394 1.06 % 2,556,281 11,606 0.45 % 2,810,889 1,517 0.05 % Money market deposit accounts 1,966,732 34,564 1.76 % 2,183,583 24,734 1.13 % 2,613,422 3,377 0.13 % Time deposits 2,758,157 119,312 4.33 % 1,913,372 60,181 3.15 % 1,161,432 6,883 0.59 % Borrowed funds (7) 308,540 13,882 4.50 % 691,636 32,903 4.76 % 212,026 4,531 2.14 % Subordinated debt 114,355 4,592 4.02 % 114,002 4,592 4.03 % 117,625 4,750 4.04 % Junior subordinated debentures 129,695 9,652 7.32 % 129,434 9,401 7.14 % 129,175 4,716 3.60 % Total interest-bearing liabilities 9,995,141 233,618 2.34 % 9,736,435 152,239 1.56 % 9,380,786 28,117 0.30 % Noninterest-bearing demand deposits (8) 2,582,540 2,785,279 3,070,892 Noninterest-bearing liabilities 244,036 237,810 207,316 Total liabilities 12,821,717 12,759,524 12,658,994 Shareholders’ equity 1,563,454 1,510,285 1,518,704 Total liabilities and shareholders’ equity $ 14,385,171 $ 14,269,809 $ 14,177,698 Net interest income 439,082 438,864 423,469 Net interest rate spread (9) 2.66 % 2.86 % 3.11 % Net interest-earning assets/net interest margin (10) $ 3,467,382 3.26 % $ 3,638,959 3.28 % $ 3,872,832 3.20 % Tax equivalent adjustment 3,504 3,181 2,788 Net interest income, GAAP basis 435,578 435,683 420,681 Ratio of average interest-earning assets to average interest-bearing liabilities 1.35X 1.37X 1.41X (1) Average gross loans receivable includes loans held as available-for-sale and loans placed on nonaccrual status. (2) Interest income includes accretion/amortization of deferred loan fees/expenses, which was not material. (3) Interest income on tax-free loans is presented on a FTE basis including adjustments, as indicated. (4) Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale. (5) Interest income on tax-free investment securities is presented on a FTE basis including adjustments, as indicated. (6) Average balances include the effect of unrealized gains or losses on securities held as available-for-sale. (7) Average balances include FHLB borrowings and collateralized borrowings. (8) Average cost of deposits was 1.71%, 0.91% and 0.12%, respectively and average cost of interest-bearing deposits were 2.18%, 1.20%, and 0.16%, respectively. (9) Net interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. (10) Net interest margin represents net interest income as a percentage of average interest-earning assets. (11) Shown on a FTE basis and in consideration of applicable current federal, state and local tax rates. 52 Table of Contents Rate/Volume Analysis The following table presents, on a FTE basis, the changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities for the year ended December 31, 2024 compared to 2023 and for the year ended December 31, 2023 compared to 2022. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to: (1) changes in volume multiplied by the prior year rate; (2) changes in rate multiplied by the prior year volume; and (3) the total increase or decrease. Changes not solely attributable to rate or volume have been allocated proportionately to the change due to volume and the change due to rate. There were no out-of-period adjustments or other exclusions from the amounts presented in the table. Years ended December 31, 2024 vs. 2023 Years ended December 31, 2023 vs. 2022 Increase/(decrease) due to Total increase/(decrease) Increase/(decrease) due to Total increase/(decrease) Rate Volume Rate Volume (In thousands) Interest-earning assets: Loans receivable $ 62,421 10,147 72,568 97,916 38,438 136,354 Mortgage-backed securities 8,811 (1,904) 6,907 4,720 (2,638) 2,082 Investment securities 939 (1,426) (487) 67 (426) (359) FHLB stock, at cost 124 (1,101) (977) 510 1,628 2,138 Interest-earning deposits (27) 3,613 3,586 30,861 (31,559) (698) Total interest-earning assets 72,268 9,329 81,597 134,074 5,443 139,517 Interest-bearing liabilities: Savings deposits 15,459 (59) 15,400 7,251 (772) 6,479 Interest-bearing demand deposits 15,591 197 15,788 11,245 (1,156) 10,089 Money market deposit accounts 13,640 (3,810) 9,830 26,226 (4,869) 21,357 Time deposits 22,588 36,543 59,131 29,647 23,651 53,298 Borrowed funds (1,786) (17,235) (19,021) 5,555 22,817 28,372 Subordinated debt (14) 14 — (12) (146) (158) Junior subordinated debentures 232 19 251 4,667 18 4,685 Total interest-bearing liabilities 65,710 15,669 81,379 84,579 39,543 124,122 Net change in net interest income $ 6,558 (6,340) 218 49,495 (34,100) 15,395 Provision for Credit Losses 2020 2021 2022 2023 2024 Provision for credit losses - loans (in thousands) $ 83,975 (11,883) 17,860 18,664 27,679 Provision/(benefit) for credit losses - unfunded commitments (in thousands) 3,139 (3,905) 10,455 4,210 (3,174) Annualized net charge-offs to average loans 0.27 % 0.20 % 0.02 % 0.11 % 0.32 % The provision for credit losses increased by $2 million, or 7.1%, compared to the year ended December 31, 2023. This increase included a $9 million increase in the provision for credit losses - loans, which was partly offset by a $7 million decrease in the provision for credit losses - unfunded commitments. The changes in the provision noted above is driven by growth within our commercial lending portfolio and changes in the economic forecasts coupled with a decline in our reserves for unfunded commitments in the current period. This decline is based on the timing of origination and funding of commercial construction loans and lines of credit. During the year ended quarter December 31, 2024 the Company took several steps to de-risk our loan portfolio and reduce our levels of nonperforming, criticized and classified loans by completing two loan pool sales and transferring certain loans within our Long Term Healthcare portfolio into held for sale as of December 31, 2024. As a result we saw an elevated level of charge-offs during the year as the loans noted above were written-down to fair market value prior to sale. Total charge-offs related to the loan sales and transfer to loans held-for-sale was a combined $15 million. After completing these steps the Company saw an increase in classified loans to $272 million, or 2.44% of total loans, at December 31, 2024 f rom $219 million, or 1.91% of total loans, at December 31, 2023. The primary driver of the increase over the past year is reflective of the Company’s exposure to the Long Term Healthcare segment and the challenges a few operators have experienced post Covid. 53 Table of Contents In determining the amount of the current period provision, we considered current economic conditions, including unemployment levels, bankruptcy filings, and changes in collateral values, and assessed the impact of these factors on the quality of our loan portfolio and historical loss experience. We analyze the allowance for credit losses as described in the section entitled “Allowance for Credit Losses”. The provision that is recorded is sufficient, in our judgment, to bring this reserve to a level that reflects the current expected lifetime losses in our loan portfolio relative to loan mix, a reasonable and supportable economic forecast period and historical loss experience at December 31, 2024. Noninterest Income Breakdown of noninterest income for the year ended December 31, Change from 2023 Change from 2023 2024 Amount Percent 2023 Amount Percent 2022 Noninterest income: Loss on sale of investments $ (39,413) (31,106) 374 % $ (8,307) (8,299) NA $ (8) Gain on sale of mortgage servicing rights — (8,305) (100) % 8,305 8,305 NA — Gain on sale of SBA loans 3,819 2,019 112 % 1,800 1,800 NA — Service charges and fees 62,957 3,743 6 % 59,214 4,026 7 % 55,188 Trust and other financial services income 30,102 2,818 10 % 27,284 (481) (2) % 27,765 Income from bank-owned life insurance 6,327 (2,261) (26) % 8,588 1,459 20 % 7,129 Other operating income (1) 23,218 6,279 37 % 16,939 (3,836) (18) % 20,775 Total noninterest (loss)/income $ 87,010 (26,813) (24) % $ 113,823 2,974 3 % $ 110,849 (1) Other noninterest income includes the net gain on real estate owned, mortgage banking income, and other operating income. See the “Consolidated Statements of Income” in Item 1. Financial Statements of this report. Noninterest income decreased by $27 million, or 24% which was driven by a loss on sale of investments of $39 million; excluding the loss on sale of securities non interest income grew by $13 million, or 11%. The increase from the prior year was driven by service charges and fees, SBA loan sales and other operating income. Other operating income increased $6 million, or 37% driven by a gain on sale of Visa B shares and a gain on a low income housing tax credit investment. Service charges and fees increased $4 million, or 6%, driven by commercial loan fees and deposit related fees based on customer activity in the current year. Gains on the sales of SBA loans increased $2 million in during the current. Partially offsetting these increases was a decrease in income from bank owned life insurance of $2 million, resulting from higher death benefits received in the prior year. 54 Table of Contents Noninterest Expense Breakdown of noninterest expense for the year ended December 31, Change from 2023 Change from 2023 2024 Amount Percent 2023 Amount Percent 2022 Noninterest expense: Compensation and employee benefits $ 214,455 18,764 10 % $ 195,691 7,332 4 % $ 188,359 Premises and occupancy 29,469 318 1 % 29,151 (467) (2) % 29,618 Processing expense 59,351 664 1 % 58,687 6,191 12 % 52,496 Professional services 14,883 (2,936) (16) % 17,819 3,116 21 % 14,703 Other operating expense (1) 50,379 173 — % 50,206 5,859 13 % 44,347 Total noninterest (loss)/income $ 368,537 16,983 5 % $ 351,554 22,031 7 % $ 329,523 (1) Other noninterest expense includes collections expense, marketing expense, FDIC insurance expense, amortization of intangible assets, real estate owned expense, merger, asset disposition and restructuring expense, and other expenses. See th e “Consolidated Statements of Income” in Ite m 1. Financial Statements of this report. Noninterest expense increased $17 million, or 5%, from the year ended December 31, 2023. This increase was primarily attributable to an increase in compensation and employee benefits expense of $19 million, or 10%, for the year ended December 31, 2024 driven primarily by the build out of the commercial business and related credit, risk management, and internal audit support functions over the past year coupled with an increase in contracted employees expense and an increase in employee benefits expense. Partially offsetting this increase was a decrease in non-personnel expense related to professional services. Professional services decreased $3 million, or 16% from the year ended December 31, 2023 primarily due to the use of third-party consulting and staffing support in the prior year. Income Taxes The provision for income taxes decreased by $11 million, or 27%, from the year ended December 31, 2023 primarily due to lower income before taxes. Our effective tax rate for the year ended December 31, 2024 was 22.6% compared to 22.9% for the year ended December 31, 2023. Asset Quality We actively manage asset quality through our underwriting practices and collection procedures. Our underwriting practices are focused on balancing risk and return while our collection operations focus on diligently working with delinquent borrowers in an effort to minimize losses. Collection procedures . Our collection procedures for personal loans generally provide that at 15 days delinquent, a notice of late charges is sent and personal contact efforts are attempted by telephone to strengthen the collection process and obtain reasons for the delinquency. Also, plans to establish a payment program are developed. Personal contact efforts are continued throughout the collection process, as necessary. Generally, if a loan becomes 30 days past due, a collection letter is sent and the loan becomes subject to possible legal action if suitable arrangements for payment have not been made. In addition, the borrower is given information which provides access to consumer counseling services to the extent required by the regulations of the Department of Housing and Urban Development and other applicable authorities. When a loan continues in a delinquent status for 60 days or more, and a payment 55 Table of Contents schedule has not been developed or kept by the borrower, we may send the borrower a notice of intent to foreclose, providing for cure periods of at least 30 days. If not cured, foreclosure proceedings are initiated. Nonperforming assets . Loans are reviewed on a regular basis and are placed on nonaccrual status when, in the opinion of management, the collection of all contractual principal and/or interest is doubtful. Loans are automatically placed on nonaccrual status when either principal or interest is 90 days or more past due. Interest accrued and unpaid at the time a loan is placed on a nonaccrual status is reversed and charged against interest income. Real estate acquired as a result of foreclosure or by deed in lieu of foreclosure is classified as real estate owned until such time that it is sold. When real estate is acquired through foreclosure or by deed in lieu of foreclosure, it is recorded at the lower of the related loan balance or its fair value as determined by an appraisal, less estimated costs of disposal. If the value of the property is less than the principal balance, less any related specific credit loss reserve allocations, the difference is charged against the allowance for credit losses. Any subsequent write-down of real estate owned or loss at the time of disposition is charged against income. Nonaccrual, Past Due, Restructured Loans and Nonperforming Assets . The following table sets forth information with respect to nonperforming assets. Nonaccrual loans are those loans on which the accrual of interest has ceased. Generally, when a loan becomes 90 days past due, we fully reverse all accrued interest thereon and cease to accrue interest thereafter. Exceptions are made for loans that have contractually matured, are in the process of being modified to extend the maturity date and are otherwise current as to principal and interest, and well secured loans that are in process of collection. Loans may also be placed on nonaccrual before they reach 90 days past due if conditions exist that call into question our ability to collect all contractual principal and/or interest. Other nonperforming assets represent property acquired through foreclosure or repossession. Foreclosed property is carried at the lower of its fair value less estimated costs to sell or the principal balance of the related loan. At December 31, 2024 2023 (Dollars in thousands) Loans 90 days or more past due: Residential mortgage loans $ 4,931 7,995 Home equity loans 2,250 3,126 Vehicle loans 3,191 3,051 Consumer loans 776 927 Commercial real estate loans 7,702 6,535 Commercial real estate loans - owner occupied — 177 Commercial loans 7,335 2,780 Total loans 90 days or more past due $ 26,185 24,591 Total real estate owned (REO) $ 35 104 Total loans 90 days or more past due and REO 26,220 24,695 Total loans 90 days or more past due to net loans receivable 0.24 % 0.22 % Total loans 90 days or more past due and REO to total assets 0.18 % 0.17 % Nonperforming assets: Nonaccrual loans - loans 90 days or more past due $ 25,529 21,894 Nonaccrual loans - loans less than 90 days past due 35,872 72,490 Loans 90 days or more past due still accruing 656 2,698 Total nonperforming loans 62,057 97,082 Other nonperforming assets (1) 16,102 — Total nonperforming assets $ 78,194 97,186 (1) Other nonperforming assets includes nonaccrual loans held for sale. 56 Table of Contents Classification of Assets . Our policies, consistent with regulatory guidelines, provide for the classification of loans, or other assets including other real estate owned, considered to be of lesser quality as “substandard,” “doubtful,” or “loss” assets. An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the financial institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable”. Assets classified as “loss” are those considered “uncollectible” so that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets that do not expose the savings institution to risk sufficient to warrant classification in one of the aforementioned categories, but which possess some weaknesses, are required to be designated as “special mention”. At December 31, 2024, we ha d 130 loans, with an aggregate principal balance of $110 million, designated as “special mention”. We regularly review our asset portfolio to determine whether any assets require classification in accordance with applicable regulations. Our largest classified assets generally are also our largest nonperforming assets. The following table sets forth the aggregate amount of our classified assets at the dates indicated. At December 31, 2024 2023 (In thousands) Substandard assets $ 322,025 218,571 Doubtful assets — — Loss assets — — Total classified assets $ 322,025 218,571 Allowance for Credit Losses . Our Board of Directors has adopted an “Allowance for Credit Losses” (“ACL”) policy designed to provide management with a systematic methodology for determining and documenting the allowance for credit losses each reporting period. This methodology was developed to provide a consistent process and review procedure to ensure that the allowance for credit losses is in conformity with GAAP, our policies and procedures and other supervisory and regulatory guidelines. On an ongoing basis, the Credit Administration department, as well as loan officers and department heads, review and monitor the loan portfolio for problem loans. This portfolio monitoring includes a review of the monthly delinquency reports as well as historical comparisons and trend analysis. Personal and small business commercial loans are classified primarily by delinquency status. In addition, a meeting is held every quarter with each vertical to monitor the performance and status of commercial loans on an internal watch list. On an on-going basis, the loan officer, in conjunction with a portfolio manager, grades or classifies problem commercial loans or potential problem commercial loans based upon their knowledge of the lending relationship and other information previously accumulated. This rating is also reviewed independently by our Loan Review department on a periodic basis. Our loan grading system for problem commercial loans is consistent with industry regulatory guidelines which classifies loans as “substandard”, “doubtful” or “loss”. Loans that do not expose us to risk sufficient to warrant classification in one of the previous categories, but which possess some weaknesses, are designated as “special mention”. A “substandard” loan is any loan that is 90 days or more contractually delinquent or is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as “doubtful” have all the weaknesses inherent in those classified as “substandard” with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions or values, highly questionable and improbable. Loans classified as “loss” have all the weakness inherent in those classified as “doubtful” and are considered uncollectible. Credit relationships that have been classified as substandard or doubtful and are greater than or equal to $1.0 million are reviewed by the Credit Administration department to determine if they no longer continue to demonstrate similar risk characteristics to their loan pool. If a loan no longer demonstrates similar risk characteristics to their loan pool they are removed from the pool and an individual assessment will be performed. If it is determined that a loan needs to be individually assessed, the Credit Administration department determines the proper measure of fair value for each loan based on one of three methods: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the loan’s observable market price; or (3) the fair value of the collateral if the loan is collateral dependent, less costs of sale or disposal. If the measurement of the fair value of the loan is more or less than the amortized cost basis of the loan, the Credit Administration department adjusts the specific allowance associated with that individual loan accordingly. If a substandard or doubtful loan is not individually assessed, it is grouped with other loans that possess common characteristics for credit losses and analysis. For the purpose of calculating reserves, we have grouped our loans into seven segments: residential mortgage loans, home equity loans, vehicle loans, consumer loans, commercial real estate loans, commercial real estate loans - owner 57 Table of Contents occupied and commercial loans. The allowance for credit losses is measured using a combination of statistical models and qualitative assessments. We use a 24 month forecasting period and revert to historical average loss rates thereafter. Reversion to average loss rates takes place over twelve months. Historical average loss rates are calculated using historical data beginning in October 2009 through the current period. The credit losses for individually assessed loans along with the estimated loss for each homogeneous pool are consolidated into one summary document. This summary schedule along with the support documentation used to establish this schedule is presented to management’s Allowance for Credit Losses Committee (“ACL Committee”) monthly. The ACL Committee reviews and approves the processes and ACL documentation presented. Based on this review and discussion, the appropriate amount of ACL is estimated and any adjustments to reconcile the actual ACL with this estimate are determined. The ACL Committee also considers if any changes to the methodology are needed. In addition to the ACL Committee’s review and approval, a review is performed by the Risk Management Committee of the Board of Directors on a quarterly basis and annually by internal audit. In addition to the reviews by management’s ACL Committee and the Board of Directors’ Risk Management Committee, regulators from either the FDIC and/or the Department of Banking perform an extensive review on at least an annual basis for the adequacy of the ACL and its conformity with regulatory guidelines and pronouncements. Any recommendations or enhancements from these independent parties are considered by management and the ACL Committee and implemented accordingly. We acknowledge that this is a dynamic process and consists of factors, many of which are external and out of our control that can change frequently, rapidly and substantially. The adequacy of the ACL is based upon estimates using all the information previously discussed as well as current and known circumstances and events. There is no assurance that actual portfolio losses will not be substantially different than those that were estimated. We utilize a structured methodology each period when analyzing the adequacy of the allowance for credit losses and the related provision for credit losses, which the ACL Committee assesses regularly for appropriateness. As part of the analysis as of December 31, 2024, we considered the most recent economic conditions and forecasts available. In addition, we considered the overall trends in asset quality, reserves on individually assessed loans, historical loss rates and collateral valuations. The ACL decreased by $8 million, or 7%, to $117 million, or 1.04% of gross loans at December 31, 2024 from $125 million, or 1.10% of total loans, at December 31, 2023. This decrease was the result of the reduction in total loans of $226 million, coupled with the de-risking of our loan portfolio through the reduction of nonperforming, criticized and classified assets. Quarterly, management’s Credit Committee reviews the concentration of credit by industry and customer, lending products and activity, competition and collateral values, as well as economic conditions in general and in each of our market areas. The Credit Committee also reviews and discusses delinquency trends, nonperforming asset amounts and ACL levels and ratios compared to our peer group as well as state and national statistics. We also consider how the levels of non-accrual loans and historical charge-offs have influenced the required amount of ACL. Nonaccrual loans of $61 million, or 0.55% of total gross loans receivable at December 31, 2024, decreased by $33 million, or 35%, from $94 million, or 0.83% of total gross loans receivable, at December 31, 2023. This decrease was primarily related to current commercial real estate loans that resulted from the loan sales and loans moved to held-for-sale as of year end. As a percentage of average loans, net charge-offs increased to 0.32% for the year ended December 31, 2024 compared to 0.11% due to the loans noted above being written-down to fair value prior to the sale. Total charge-offs related to the loan sales and transfer to loans held-for-sale was a combined $15 million. 58 Table of Contents Analysis of the Allowance for Credit Losses . The following table sets forth the analysis of the allowance for credit losses for the periods indicated. Years ended December 31, 2024 2023 (Dollars in thousands) Loans receivable $ 11,180,014 11,406,041 Average loans outstanding 11,285,219 11,100,118 Allowance for credit losses Balance at beginning of period 125,243 118,036 ASU 2022-02 Adoption — 426 Provision for credit losses 27,679 18,664 Charge-offs: Residential mortgage loans (845) (1,189) Home equity loans (1,736) (852) Vehicle loans (8,809) (6,468) Consumer loans (5,929) (5,983) Commercial real estate loans (15,321) (2,298) Commercial real estate loans - owner occupied — (68) Commercial loans (14,462) (4,166) Total charge-offs (47,102) (21,024) Recoveries: Residential mortgage loans 1,472 1,636 Home equity loans 1,127 709 Vehicle loans 1,778 2,021 Consumer loans 1,591 1,206 Commercial real estate loans 3,480 2,029 Commercial real estate loans - owner occupied 38 66 Commercial loans 1,513 1,474 Total recoveries 10,999 9,141 Balance at end of period $ 116,819 125,243 Allowance for credit losses as a percentage of loans receivable 1.04 % 1.10 % Net charge-offs as a percentage of average loans outstanding: Residential mortgage loans (0.02) % (0.01) % Home equity loans 0.05 % 0.01 % Vehicle loans 0.37 % 0.22 % Consumer loans 4.04 % 4.11 % Commercial real estate loans 0.39 % 0.01 % Commercial real estate loans - owner occupied — % — % Commercial loans 0.72 % 0.20 % Total Average Loans Receivable 0.32 % 0.11 % Allowance for credit losses as a percentage of nonperforming loans 188.24 % 129.01 % Allowance for credit losses as a percentage of nonperforming assets 149.40 % 128.87 % 59 Table of Contents Allocation of Allowance for Credit Losses . The following tables set forth the allocation of the allowance for credit losses by loan category at the dates indicated. The allowance for credit losses allocated to each category is not necessarily indicative of future losses in any particular category. At December 31, 2024 2023 Amount % of total loans (1) Amount % of total loans (1) (Dollars in thousands) Balance at end of year applicable to: Residential mortgage loans $ 14,347 28.4 % $ 18,193 30.0 % Home equity loans 4,845 10.3 % 5,403 10.8 % Vehicle loans 22,389 16.7 % 26,911 17.6 % Consumer loans 1,883 1.1 % 1,199 1.0 % Commercial real estate loans 44,328 22.3 % 51,267 23.1 % Commercial real estate loans - owner occupied 3,882 3.2 % 3,775 3.0 % Commercial loans 25,145 18.0 % 18,495 14.5 % Total $ 116,819 100.0 % $ 125,243 100.0 % (1) Represents percentage of loans in each category to total loans. Liquidity and Capital Resources Northwest Bank is required to maintain a sufficient level of liquid assets, as determined by management and defined by the FDIC and reviewed for adequacy during the FDIC’s regular examinations. The FDIC, however, does not prescribe by regulation a minimum amount or percentage of liquid assets. The FDIC allows us to consider any unencumbered, available-for-sale marketable security, whose sale would not impair our capital adequacy, to be eligible for liquidity. Liquidity is monitored through the use of a standard liquidity ratio of liquid assets to borrowings plus deposits. Using this formula, Northwest Bank’s liquidity ratio was 11.73% as of December 31, 2024. We adjust our liquidity level in order to meet funding needs of deposit outflows, repayment of borrowings and loan commitments. We also adjust liquidity as appropriate to meet our asset and liability management objectives. Liquidity needs can also be met by temporarily drawing upon lines-of-credit established for such reasons. Following the first quarter of 2023 bank failures, the Federal Reserve Board established the Bank Term Funding Program (“BTFP”) as an additional source of available liquidity to support depository institutions through pledging qualifying assets as collateral. In January 2024, the Federal Reserve Board announced it will stop extending loans under the BTFP after March 11, 2024. The Bank took steps to support readiness but did not participate in the BTFP. At December 31, 2024, Northwest Bank had $3.2 billion of additional borrowing capacity available with the FHLB of Pittsburgh, including a $250 million overnight line of credit, which had no balance at December 31, 2024, as well as $555 million of borrowing capacity available with the Federal Reserve Bank and $105 million with two correspondent banks. We believe the Bank has sufficient liquidity and capital resources to meet its cash flow obligations over the next 12 months and for the foreseeable future. In addition to deposits, our primary sources of funds are the amortization and repayment of loans and mortgage-backed securities, maturities of investment securities and other short-term investments, and earnings and funds provided from operations. While scheduled principal repayments on loans and mortgage-backed securities are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rate levels, economic conditions, and competition. We manage the pricing of our deposits to maintain a desired deposit balance. In addition, we invest excess funds in short-term interest earning and other assets, which provide liquidity to meet lending requirements. There were no short-term interest-earning deposits at December 31, 2024. For additional information about our cash flows from operating, financing, and investing activities, see the Consolidated Statements of Cash Flows included in the Consolidated Financial Statements. A portion of our liquidity consists of cash and cash equivalents, which are a product of our operating, investing, and financing activities. The primary sources of cash during the current year were net income, principal repayments on loans and mortgage-backed securities and net increase in deposits. Liquidity management is both a daily and long-term function of business management. If we require funds beyond our ability to generate them internally, borrowing agreements exist with the FHLB of Pittsburgh and the Federal Reserve Bank of Cleveland, which provide an additional source of funds. At December 31, 2024, Northwest Bank had an outstanding balance of $175 million with the FHLB of Pittsburgh. We borrow from these sources to reduce interest rate risk and to provide liquidity when necessary. 60 Table of Contents At December 31, 2024, our customers had $1.3 billion of unused lines of credit available and $190 million in loan commitments. This amount does not include the unfunded portion of loans in process. Time deposits scheduled to mature in less than one year at December 31, 2024, totaled $2.5 billion. We believe that a significant portion of such deposits will remain with us. Deposits are our primary source of externally generated funds. The level of deposit inflows during any given period is heavily influenced by factors outside of our control, such as consumer savings tendencies, the general level of short-term and long-term market interest rates, as well as higher alternative yields that investors may obtain on competing investments such as money market mutual funds. Financial institutions, such as Northwest Bank, are also subject to deposit outflows. Our net deposits increased by $165 million for the year ended December 31, 2024, increased by $515 million for the year ended December 31, 2023, and decreased by $837 million for the year ended December 31, 2022. Similarly, the amount of principal repayments on loans and the amount of new loan originations is heavily influenced by the general level of market interest rates, consumer confidence and consumer spending. Funds received from loan maturities and principal payments on loans for the years ended December 31, 2024, 2023 and 2022 were $3.2 billion, $3.4 billion, and $4.0 billion, respectively. Loan originations for the years ended December 31, 2024, 2023 and 2022 were $3.3 billion, $4.2 billion, and $4.9 billion, respectively. We also sell a portion of the loans we originate as part of our mortgage banking operations, and the cash flows from such sales for the years ended December 31, 2024, 2023 and 2022 were $207 million, $204 million, and $384 million, respectively. We experience significant cash flows from our portfolio of marketable securities as principal payments are received on mortgage-backed securities and as investment securities mature or are called. Cash flows from the repayment of principal and the maturity or call of marketable securities for the years ended December 31, 2024, 2023 and 2022 were $147 million, $169 million, and $330 million, respectively. When necessary, we utilize borrowings as a source of liquidity and as a source of funds for long-term investment when market conditions permit. The net cash flow from the receipt and repayment of borrowings was a net decrease of $199 million, a net decrease of $282 million, and a net increase of $532 million for the years ended December 31, 2024, 2023 and 2022, respectively. Northwest Bancshares, Inc. is a separate legal entity from Northwest Bank and must provide for its own liquidity to pay dividends to shareholders, to repurchase its common stock and for other corporate purposes. Northwest Bancshares’ primary source of liquidity is the dividend payments it receives from Northwest Bank. During 2020, Northwest Bancshares, Inc. issued $125 million of subordinated debt. At December 31, 2024, Northwest Bancshares, Inc. (on an unconsolidated basis) had liquid assets of $239 mil lion. Other activity with respect to cash flow was the payment of cash dividends on common stock in the amount of $102 million, $102 million, and $101 million for years the ended December 31, 2024, 2023 and 2022, respectively. At December 31, 2024, stockholders’ equity totaled $1.6 billion. During 2024, our Board of Directors declared regular quarterly cash dividends totaling $0.80 per share of common stock. 61 Table of Contents Regulatory Capital Requirements. Northwest Bancshares, Inc. and Northwest Bank are required to meet minimum capital requirements and subject to “well capitalized” standards established by the Federal Reserve Board and FDIC, respectively. See “Item 1. Business—Supervision and Regulation—Federal Bank Holding Company Regulation—Capital Requirements and Prompt Corrective Action” and “Item 1. Business—Supervision and Regulation—Federal Banking Regulation—Prompt Corrective Action. At December 31, 2024, Northwest Bancshares, Inc. and Northwest Bank exceeded all regulatory minimum capital requirements and were considered to be “well capitalized”. The following table summarizes Northwest Bancshares and Northwest Bank’s total shareholders’ equity, regulatory capital, total risk-based assets, and leverage and risk-based capital ratios at the dates indicated. Northwest Bancshares, Inc. Northwest Bank At December 31, At December 31, 2024 2023 2024 2023 (Dollars in thousands) (Dollars in thousands) Total shareholders’equity (GAAP capital) $ 1,601,303 1,560,316 $ 1,595,639 1,516,850 Add: Accumulated other comprehensive loss 110,914 149,492 110,914 149,492 Add: Other deductions (11,617) (11,645) (11,617) (11,645) Less: non-qualifying intangible assets (357,799) (269,982) (353,706) (265,889) CET 1 capital 1,342,801 1,428,181 1,341,230 1,388,808 Additions to Tier 1 capital 125,845 125,585 — — Leverage or Tier 1 capital 1,468,646 1,553,766 1,341,230 1,388,808 Add: Tier 2 capital (1) 240,140 246,117 125,602 131,928 Total risk-based capital $ 1,708,786 1,799,883 $ 1,466,832 1,520,736 Average assets for leverage ratio $ 14,135,644 14,332,246 $ 14,123,417 14,322,564 Net risk-weighted assets including off-balance-sheet items $ 10,627,925 10,743,366 $ 10,618,368 10,734,057 CET 1 capital ratio 12.635 % 13.294 % 12.631 % 12.938 % Minimum requirement 4.500 % 4.500 % 4.500 % 4.500 % Leverage capital ratio 10.390 % 10.841 % 9.496 % 9.697 % Minimum requirement 4.000 % 4.000 % 4.000 % 4.000 % Total risk-based capital ratio 16.078 % 16.753 % 13.814 % 14.167 % Minimum requirement 8.000 % 8.000 % 8.000 % 8.000 % (1) Tier 2 capital consists of the allowance for credit losses, which is limited to 1.25% of total risk-weighted assets as detailed under the regulations of the FDIC, and 45% of pre-tax net unrealized gains on securities available-for-sale. Northwest Bank is also subject to capital guidelines of the Department of Banking. Although not adopted in regulation form, the Department of Banking requires 6% leverage capital and 10% total risk-based capital. See “Item 1. Business—Supervision and Regulation—Pennsylvania Savings Bank Law”. Contractual Obligations. We are obligated to make future payments according to various contracts. The following table presents the expected future payments of the contractual obligations aggregated by obligation type at December 31, 2024. Payments due Less than one year One year to less than three years Three years to less than five years Five years or greater Total (In thousands) Supplemental Executive Retirement Plan (1) $ — — — 1,113 1,113 Term notes payable to the FHLB of Pittsburgh (2) 175,000 — — — 175,000 Collateralized borrowings (2) 22,323 — — — 22,323 Collateral received (2) 3,008 — — — 3,008 Subordinated debentures (2) — — — 114,800 114,800 Junior subordinated debentures (2) — — — 129,834 129,834 Operating leases (3) 5,514 10,692 9,697 42,703 68,606 Total $ 205,845 10,692 9,697 288,450 514,684 Commitments to extend credit $ 190,094 — — — 190,094 (1) See Note 15 to the Consolidated Financial Statements, Employee Benefit Plans, for additional information. (2) See Note 11 to the Consolidated Financial Statements, Borrowed Funds, for additional information. (3) See Note 3 to the Consolidated Financial Statements, Leases, for additional information. 62 Table of Contents Impact of Inflation and Changing Prices. The Consolidated Financial Statements and notes thereto, presented elsewhere herein, have been prepared in accordance with United States generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time and due to inflation. The impact of inflation is reflected in the increased cost of our operations. Unlike most industrial companies, nearly all of our assets and liabilities are monetary. As a result, interest rates have a greater impact on our performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the price of goods and services. Off-Balance-Sheet Arrangements. As a financial services provider, we are routinely a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make. In addition, we routinely enter into commitments to purchase and sell residential mortgage loans.