What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-25 compared with 2025-02-25 · 113 added, 94 removed, 805 unchanged (20% of the section changed)

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Net interest margin (4) 3.69 % 3.26 % 3.28 %

Net interest income to noninterest expense (5), (6), (7) 1.20X 1.18x 1.24x

Noninterest expense to average assets (5), (6), (7) 2.85 % 2.56 % 2.46 %

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Noninterest income to average assets 0.84 % 0.60 % 0.80 %

Net interest income to noninterest expense (5), (6), (7) 1.18x 1.24x 1.28x

Dividend payout ratio 86.96 % 101.27 % 75.47 %

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(5) 2023 includes $6.7 million in merger, asset disposition and restructuring expense.

(6) 2023 includes $6.7 million in merger, asset disposition and restructuring expense.

(6) 2024 includes $5.8 million in merger, asset disposition and restructuring expense and a $39.4 loss on sale of investments.

(7) 2025 includes $42.8 million in merger, asset disposition and restructuring expense and $20.7 million of CECL day 1 provision expense.

(8) Excludes goodwill and other intangible assets (non-GAAP).

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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.

The following sensitivity analyses does not represent management ’ s expectations of the deterioration of our portfolios or the economic environment, but is provided as a hypothetical scenario 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, 2025 allowance for credit losses, which included a weighting of three scenarios:

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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

specified expense categories.

The guidance requires disaggregated disclosure of specified expense categories.

The guidance also requires disclosure of total selling expenses and how the Company defines selling expenses.

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The Company is currently evaluating the effect the updated guidance will have on the Company’s financial statement disclosures.

In January 2025, the FASB issued ASU 2025-01, “Income Statement — Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40).” The guidance amends the effective date of ASU 2024-03 to clarify that all public business entities are required to

adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

In September 2025, the FASB issued ASU 2025-06, "Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software”.

This ASU addresses the challenges of applying current internal-use software accounting requirements due to the evolution of software development since the original guidance was issued.

The ASU removes all references to project stages.

The amendments require an entity to start capitalizing software costs when management has authorized and committed to funding the software project, and it is probable that the project will be completed and the software will be used to perform the function intended.

The amendments in the ASU are effective for annual reporting periods beginning after December 15, 2027, and for interim reporting periods beginning after December 15, 2027.

Early adoption is permitted as of the beginning of an annual reporting period.

We do not believe this guidance will have a material impact on the Company's financial statements.

In November 2025, the FASB issued ASU 2025-08, "Financial Instruments - Credit Losses (Topic 326):

Purchased Loans".

This ASU amends the accounting for acquired loans (excluding credit cards) by expanding the scope of acquired financial assets subject to the gross-up approach under ASC 326, for assets that meet certain criteria at acquisition referred to as purchased seasoned loans.

The ASU also provides for an irrevocable accounting policy election to measure the ACL on purchased seasoned loans using the amortized cost basis, rather than unpaid principal balance, if a method other than a discounted cash flow method is utilized to estimate expected credit losses.

This guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within those annual reporting periods.

Early adoption is permitted.

This guidance will impact our Consolidated Financial Statements on a prospective basis only when loans are acquired.

In November 2025, the FASB issued ASU 2025-09.

"Derivatives and Hedging (Topic 815):

Hedge Accounting Improvements." This ASU more closely aligns hedge accounting with the economics of an entity’s risk management activities.

The revised guidance allows for individually forecasts transactions with similar risk exposure to be hedged in a group, enables the hedging of the variable price components of forecasted purchases or sales of nonfinancial assets, introduces a model for hedging interest payments on debt instruments with multiple rate options and allows a borrower to select a documented interest rate index and/or tenor without automatically discontinuing hedge accounting.

This guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within those annual reporting periods on a prospective basis.

Early adoption is permitted.

We do not believe this guidance will have a material impact on the Company's financial statements.

Other Developments

On July 4, 2025, President Trump signed into law the legislation formally titled “An Act to Provide for Reconciliation Pursuant to Title II of H.

14” and commonly referred to as the One Big Beautiful Bill Act(“the Act”).

The enactment of the Act did not have a material impact on the company's financial statements.

Acquisition of Penns Woods

On July 25, 2025, the Company completed its acquisition of Penns Woods, pursuant to the Merger Agreement.

In accordance with the Merger Agreement, the Company and Penns Woods completed the Merger.

Immediately after the Effective Time, Penns Woods’ wholly-owned subsidiary banks, Luzerne Bank, a Pennsylvania-chartered state bank, and Jersey Shore State Bank, a Pennsylvania-chartered state bank, merged with and into Northwest Bank, with Northwest Bank as the surviving bank in the subsidiary bank mergers.

Under the terms and subject to the conditions of the Merger Agreement, at the Effective Time, each share of Penns Woods’ common stock, $5.55 par value, issued and outstanding immediately prior to the Effective Time (except for Treasury Shares (as provided for in the Merger Agreement), converted, in accordance with the procedures set forth in the Merger Agreement, into a right to receive 2.385 shares of common stock, $0.01 par value, of the Company.

The Penns Woods results of operations are included in the Company’s consolidated results since the date of acquisition.

Therefore, the Company’s year to date 2025 results reflect increased levels of average balances, net interest income, and noninterest expense compared to the prior year results.

After purchase accounting fair value adjustments, the acquisition added $2.2 billion of total assets, including $1.8 billion of loans, $160 million of investments, of which $82 million were immediately sold, as well as $2.0 billion of total liabilities, primarily consisting of $1.6 billion in deposits.

The Company recorded preliminary goodwill of $63 million and core deposit intangibles of $42 million related to the acquisition.

Balance Sheet Analysis

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.

Total assets at December 31, 2025 were $16.8 billion, increasing by $2.4 billion from December 31, 2024.

This increase in assets was driven by the addition of the Penns Woods assets.

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.

Cash and cash equivalents decreased by $55 million, or 19%, to $234 million at December 31, 2025, from $288 million at December 31, 2024.

This decrease was primarily due to these funds being invested in higher yielding loans and marketable securities.

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.

Marketable securities increased to $2.3 billion at December 31, 2025 from $1.9 billion at December 31, 2024.

Available-for-sale marketable securities increased $477 million driven by the acquisition of Penns Woods which included $160 million in marketable securities, of which, $82 million were immediately sold.

Additional increases were driven by the purchase of additional securities and the improvement of our unrealized loss position.

Held-to-maturity securities decreased $67 million driven by maturities and regular monthly cash flows.

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.

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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.

Gross loans receivable increased by $1.8 billion, or 16%, to $13.0 billion at December 31, 2025, from $11.2 billion at December 31, 2024.

Our personal banking loan portfolio increased by $849 million, or 13%, to $7.2 billion at December 31, 2025 from $6.3 billion at December 31, 2024.

Commercial banking increased by $978 million, or 20%, to $5.8 billion at December 31, 2025 from $4.9 billion at December 31, 2024.

These increases are primarily driven by the Penns Woods acquisition of $1.8 billion in loans.

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

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Manufacturing & Industrial Building 5.2

Warehouse/Storage Building 4.3

Multi-use building - commercial, retail and residential 4.2

Commercial office building - owner occupied 3.2

Residential acquisition & development - 1-4 family, townhouses and apartments 3.0

Multi-use building - commercial, retail and residential 2.7

Warehouse/storage building 2.6

Multi-use building - office and warehouse 2.5

Other Medical Facility 2.2

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 44.3

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Total 100.0 %

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.

Total deposits increased by $1.8 billion, or 15%, to $13.9 billion at December 31, 2025 from $12.1 billion at December 31, 2024.

This increase was driven by the Penns Woods acquisition which resulted in an additional $1.6 billion in deposits.

As of December 31, 2025, we had $193 million of brokered deposits, which made up 7% of our time deposits and 1% o f our total deposit balance at year end.

The balance carried an average all-in co st of 4.99% and an average original term of 7.45 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.

In addition, at year end we had $941 millio n of deposits through our participation in the Intrafi Network Deposits and R&T 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 o ther member banks and Northwest receives an equal amount of deposits from other member banks.

The balance carried an average cost of 3.00%.

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(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 large st uninsured depositor, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $42.4 million, or 0.31% of total deposits, as of December 31, 2025.

Our top ten largest uninsured depositors, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $236.3 million, or 1.69% of total deposits, as of December 31, 2025.

The average uninsured deposit account balance, excluding intercompany and collateralized accounts, was $326,000 as of December 31, 2025.

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.

Borrowings increased by $246 million, or 78%, to $561 million at December 31, 2025 from $315 million at December 31, 2024.

This increase was primarily attributable to the acquired long term borrowings and additional short term borrowings to fund loan and securities growth.

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

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Total shareholders’ equity at December 31, 2025 was $1.89 billion, or $12.94 per share, an increase of $294 million, or 18.4%, from $1.60 billion, or $12.52 per share, at December 31, 2024.

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.

This increase was the result stock issued as part of our Penns Woods merger of 230 million, net income of $126 million for the year ended December 31, 2025, as well as a decrease in accumulated other comprehensive loss of $40 million due primarily to a decrease in unrealized loss in the available-for-sale investment portfolio.

These changes were partially offset by $110 million of cash dividend payments during the year ended December 31, 2025.

Comparison of Results of Operations for the Years Ended December 31, 2025 and 2024

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, 2025 was $126 million, or $0.92 per diluted share, an increase of $26 million, or 26%, from $100 million, or $0.79 per diluted share, for the year ended December 31, 2024.

The increase in net income resulted, primarily from an increase in net interest income of 90 million, or 21%, resulting primarily from an increase in interest earning assets driven by the Penns Woods acquisition.

Additionally, contributing to the increase in net income was an increase in noninterest income of $42 million, or 49%, resulting from a loss on investment sale as part of our securities portfolio restructure in the prior year.

Offsetting these increases was an increase in noninterest expense of $68 million or 18%, an increase in the provision for credit losses of $31 million, or 127%, and an increase in income taxes of $8 million or 26%.

Net income for the year ended December 31, 2025 represents a return on average equity and average assets of 7.27% and 0.82%, respectively, compared to 6.41% and 0.70% for the year ended December 31, 2024.

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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 for 2025 was $525 million, which increased $90 million compared to 2024.

Net interest income (FTE) was $529 million for 2025 and net interest margin (FTE) was 3.69%.

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.

Compared to the prior year, net interest income (FTE) increased $90 million and net interest margin (FTE) increased by forty-three basis points.

The increase in net interest income (FTE) and net interest margin (FTE) was driven by an increase in interest income resulting from an increase in average earning assets from the Penns Woods acquisition coupled with higher earning asset yields which was offset by an increase in interest expense due to an increase in the average balance interest bearing liabilities from the Penns Woods acquisitions which was slightly offset by a lower costs of funding.

Average loans receivable increased $715 million, or 6%, from the year ended December 31, 2024.

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.

This increase was driven by the acquisition of Penns Woods which resulted in an additional $1.8 billion in loans.

Interest income on loans receivable increased by $66 million, or 11%, from 2024 driven by the Penns Woods acquisition and a loan mix shift towards higher yielding commercial loans, including the accretion of loan fair value marks from the acquisition, and an interest recovery of $13.1 million on a non-accrual commercial real estate loan payoff during the first quarter of 2025.

Average investments increased 4% from the year ended December 31, 2024 driven by the Penns Woods acquisition and a targeted increase in the overall securities portfolio during the year through the reinvestment of cash flows from regular principal payments and maturities.

Interest income on investment securities increased by $13 million, or 28%, from the year ended December 31, 2024 due to the increase in the average balance of investments and the increase in yield on investments (FTE) to 2.78% for 2025.

Average deposits grew 7% from 2024 driven by an increase in average balances from the Penns Woods acquisition.

The average money market and non-interest bearing checking deposit accounts grew by $315 million and $236 million, respectively, from the year ended December 31, 2024.

Additionally, interest-bearing checking deposit accounts and savings deposit accounts grew by $158 million and $136 million, respectively.

This increase was partially offset by a $35 million decrease in time deposits balances.

Interest expense on deposits decreased by $7 million, or 3%, from 2024 primarily attributable to the decrease in the average yield paid on deposits which was partially offset by the increase in average balance of deposit accounts.

Compared to the year ended December 31, 2024, average borrowings saw a 8% decrease primarily attributable to the strategic pay-down of wholesale borrowings which was partially offset by the acquisition of long-term borrowings from Penns Woods.

The decrease in the average balance of borrowings resulted in a decrease in interest expense on borrowings by $3 million from 2024.

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Time deposits 2,722,945 98,157 3.60 % 2,758,157 119,312 4.33 % 1,913,372 60,181 3.15 %

Total interest-bearing deposits 10,015,377 198,978 1.99 % 9,442,551 205,492 2.18 % 8,801,363 105,343 1.20 %

Borrowed funds (7) 284,212 11,044 3.89 % 308,540 13,882 4.50 % 691,636 32,903 4.76 %

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(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.

(8) Average cost of deposits was 1.55%, 1.71% and 0.91%, respectively.

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

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The provision for credit losses increased by $31 million, or 127%, compared to the year ended December 31, 2024.

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.

This increase included a $29 million increase in the provision for credit losses - loans and a $2 million increase in the provision for credit losses - unfunded commitments.

This increase is due to the initial Day 1 provision from the Penns Woods merger of $21 million.

Excluding the Day 1 provision for credit losses from the acquisition, the provision for credit losses for the year ended December 31, 2025 was $36 million, which increased from the prior year end primarily due to growth within our commercial lending portfolio and an increase in net charge-offs.

The increase in our provision for unfunded commitments is due to the Penns Woods acquisition offset by a decline based on the timing of organic origination and funding of commercial construction loans and lines of credit.

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.

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Noninterest income:

Loss on sale of investments $ (39,413) (31,106) 374 % $ (8,307) (8,299) NA $ (8)

Gain/(loss) on sale of investments $ 178 39,591 (100) % $ (39,413) (31,106) 374 % $ (8,307)

Gain on sale of mortgage servicing rights — — NA — (8,305) (100) % 8,305

Gain on sale of SBA loans 3,819 2,019 112 % 1,800 1,800 NA —

Gain on sale of SBA loans 2,835 (984) (26) % 3,819 2,019 112 % 1,800

Service charges and fees 65,072 2,115 3 % 62,957 3,743 6 % 59,214

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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.

Noninterest income increased by $42 million, or 49% which was driven by a loss on sale of investments in 2024 of $39 million.

Additionally, income from bank owned life insurance increased $6 million, resulting from a large claim recognized in 2025, service charges and fees increased $2 million, or 3%, driven by commercial loan fees and deposit related fees based on customer activity in the current year.

Offsetting these increases was a decrease in other operating income of $7 million, or 31% driven by a gain on sale of Visa B shares and a gain on a low income housing tax credit investment in the prior year.

Noninterest Expense

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Professional services 13,122 (1,761) (12) % 14,883 (2,936) (16) % 17,819

Merger, asset disposition and restructuring expense 42,787 37,024 642 % 5,763 (986) (15) % 6,749

Other operating expense (1) 52,589 7,973 18 % 44,616 1,159 3 % 43,457

Total noninterest (loss)/income $ 436,296 67,759 18 % $ 368,537 16,983 5 % $ 351,554

(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.

(1) Other noninterest expense includes collections expense, marketing expense, FDIC insurance expense, amortization of intangible assets, merger, asset disposition and restructuring expense, and other expenses.

See th e “Consolidated Statements of Income” in Ite m 1.

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Noninterest expense increased $68 million, or 18%, from the year ended December 31, 2024.

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.

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.

This increase was primarily attributable to an increase in merger, asset disposition and restructuring expense of $37 million, and a $3 million increase in other operating expense that is attributable to an increase in intangible amortization expense from the Penns Woods merger.

Compensation and employee benefits expense increased $23 million, or 11%, for the year ended December 31, 2025 driven primarily by an increase in core compensation and benefits expense due to the addition of Penns Woods employees coupled with an increase in performance based incentive compensation expense.

Partially offsetting this increase was a decrease in professional services expense which decreased $2 million, or 12% from the year ended December 31, 2024.

The provision for income taxes increased by $8 million, or 26%, from the year ended December 31, 2024 primarily due to higher income before taxes.

Our effective tax rate for the year ended December 31, 2025 and December 31, 2024 was 22.6%.

Asset Quality

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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.

If the value of the property is less than the principal balance, less any prior charge offs, 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.

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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”.

At December 31, 2025, we h ad 297 loans, with an aggregate principal balance of $193 million, designated as “special mention”.

We regularly review our asset portfolio to determine whether any assets require classification in accordance with applicable regulations.

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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.

The ACL increased by $33 million, or 29%, to $150 million, or 1.15% of gross loans at December 31, 2025 from $117 million, or 1.04% of total loans, at December 31, 2024.

This increase was the result of the increase in total loans of $1.8 billion, coupled with the increase in non-performing assets and substandard loans.

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

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We also consider how the levels of non-accrual loans and 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.

Nonaccrual loans of $107 million, or 0.82% of total gross loans receivable at December 31, 2025, increased by $46 million, or 75%, from $61 million, or 0.55% of total gross loans receivable, at December 31, 2024.

This increase was primarily related to the Penns Woods acquisition.

As a percentage of average loans, net charge-offs decreased to 0.25% for the year ended December 31, 2025 compared to 0.32% due to certain commercial real estate loans that were written down to fair value prior to be transferred to held-for-sale as of December 31, 2024.

Total charge-offs related to the loan sales and transfer to loans held-for-sale was a combined $15 million for December 31, 2024.

Analysis of the Allowance for Credit Losses .

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Balance at beginning of period 116,819 125,243

ASU 2022-02 Adoption — 426

Initial allowance on loans purchased with credit deterioration 6,029 —

Provision for credit losses 56,849 27,679

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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.

At December 31, 2025, Northwest Bank had $3.4 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, 2025, as well as $1.5 billion of borrowing capacity available with the Federal Reserve Bank and $369 million with four 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.

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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.

Our net deposits increased by $1.8 billion for the year ended December 31, 2025, increased by $165 million for the year ended December 31, 2024, and increased by $515 million for the year ended December 31, 2023.

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.

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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.

The net cash flow from the receipt and repayment of borrowings was a net decrease of $148 million, $199 million, and $282 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Northwest Bancshares, Inc.

54 unchanged sentences

Collateralized borrowings (2) 8,232 — — — 8,232

Collateral received (2) 3,008 — — — 3,008

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

18 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis