What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-11-10 · 129 added, 222 removed, 334 unchanged (51% of the section changed)

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Department of Treasury and the Federal Reserve Board;

• trade disputes, barriers to trade or the emergence of trade restrictions and the resulting impacts on market volatility and global trade;

• growing fiscal deficits;

• potential recession or slowing of growth in the U.S., Europe and other regions;

• developments in the Middle East;

• adverse changes in the securities and credit markets;

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• changes in the financial performance and/or condition of our borrowers;

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• the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, as well as the Securities and Exchange Commission, the Public Company Accounting Oversight Board, the Financial Accounting Standards Board (“FASB”) and other accounting standard setters;

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• the effect of global or national war, conflict, or terrorism;

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• our ability to manage market risk, credit risk and operational risk;

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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, 2024, 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):

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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.

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.

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

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

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

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.

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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 forecasted 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.

Acquisition of Penns Woods

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

Therefore, the Company’s third quarter and year to date 2025 results reflect increased levels of average balances, net interest income, and noninterest expense compared to the prior quarter and 2024 results.

Therefore, the Company’s first quarter 2026 results reflect increased levels of average balances, net interest income, and noninterest expense compared to the first quarter 2025 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 $57 million and core deposit intangibles of $48 million re lated to the acquisition.

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

Comparison of Financial Condition

Total assets at September 30, 2025 were $16.4 billion, an increase of $2.0 billion from December 31, 2024.

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

Total assets at March 31, 2026 were $16.9 billion, an increase of $140 million from December 31, 2025.

A discussion of significant changes follows.

Cash and cash equivalents decreased by $10 million, or 3%, to $279 million at September 30, 2025, from $288 million at December 31, 2024 due to these funds being invested into higher yielding loans and marketable securities.

Total marketable securities increased to $2.0 billion at September 30, 2025, increasing by $114 million, or 6%, from December 31, 2024.

Available-for-sale securities increased by $162 million, this was driven by the acquisition of Penns Woods which included $160 million is 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.

Cash and cash equivalents increased by $53 million, or 23%, to $287 million at March 31, 2026, from $234 million at December 31, 2025 due to growth in our deposits exceeding the growth in loans and securities.

Total marketable securities increased to $2.4 billion at March 31, 2026, increasing by $124 million, or 5%, from December 31, 2025.

Available-for-sale securities increased by $161 million, this was driven by the purchase of additional securities.

Held-to-maturity securities decreased $37 million, driven by maturities and regular monthly cash flows.

Gross loans receivable was $12.9 billion at September 30, 2025, increasing $1.8 billion from December 31, 2024.

This increase is attributed to the Penns Woods acquisition of $1.8 billion in loans.

Our personal banking loan portfolio increased by $810 million, to $7.1 billion at September 30, 2025 while our commercial banking loans increased by $951 million, to $5.8 billion at September 30, 2025.

The following table provides the various loan sectors in our commercial real estate portfolio at September 30, 2025:

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Gross loans receivable was $13.1 billion at March 31, 2026, increasing $49 million from December 31, 2025.

This increase is attributed to net growth of C&I and vehicle loans.

Our total personal banking loan portfolio increased by $20 million, to $7.2 billion at March 31, 2026 while our total commercial banking loans increased by $28 million, to $5.9 billion at March 31, 2026.

The following table provides the various loan sectors in our commercial real estate portfolio at March 31, 2026:

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Property type Percent of portfolio

5 or more unit dwelling 10.3 %

Retail Building 12.6 %

Nursing Home 7.6

5 or more unit dwelling 11.8

Commercial office building - non-owner occupied 8.1

Nursing Home 7.8

Manufacturing & industrial building 7.0

Single family dwelling 5.7

2-4 family 4.3

Residential acquisition & development - 1-4 family, townhouses and apartments 4.2

Warehouse/storage building 4.2

Commercial office building - owner occupied 3.5

Multi-use building - commercial, retail and residential 2.8

Multi-use building - office and warehouse 2.9

Student housing 2.4

Other medical facility 2.4

Residential acquisition & development - 1-4 family, townhouses and apartments 2.7

Hotel/motel 2.2

Single family dwelling 1.7

Student housing 1.7

Agricultural real estate 1.5

2-4 family 1.2

Commercial acquisition and development 1.6

Multi-use building - commercial, retail and residential 2.2

All other 18.7

Total 100.0 %

The following table describes the collateral of our commercial real estate portfolio by state at September 30, 2025:

The following table describes the collateral of our commercial real estate portfolio by state at March 31, 2026:

State Percent of portfolio

New York 24.7 %

Pennsylvania 47.5 %

New York 24.3

New Jersey 1.6

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Total 100.0 %

Total deposits increased by $1.6 billion, to $13.7 billion at September 30, 2025 from $12.1 billion at December 31, 2024.

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

As of September 30, 2025, we ha d $115 million of brokered deposits, which made up 4% of our time deposits and 1% of our total deposit balance at quarter end.

Total deposits increased by $270 million, to $14.2 billion at March 31, 2026 from $13.9 billion at December 31, 2025.

This increase was driven primarily by an increase in the balance of money market, savings deposits and time deposits of $194 million, $78 million and $58 million, respectively.

This is partially offset by a decrease in interest-bearing checking deposits of $58 million.

As of March 31, 2026, we had $306 million of brokered deposits, which made up 10% of our time deposits and 2% of our total deposit balance at quarter end.

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

The balance carried an avera ge all-in cost of 4.18% and 4.32% as of September 30, 2025 and December 31, 2024, respectively and an average original term of 12 months.

These deposits were purchased through a registered broker, as part of an Asset/Liability Committee (“ALCO”) strategy to increase and diversify funding sources.

In addition, we had $795 million and had $713 million of deposits t hrough our participation in the IntraFi Network Deposits and FIS Insured Deposit programs as of September 30, 2025 and December 31, 2024, respectively .

The brokered deposits had an average original term of 7 and 8.5 months, respectively.

In addition, we had $903 million and $941 million of deposits through our participation in the IntraFi Network Deposits and R&T Insured Deposit programs as of March 31, 2026 and December 31, 2025, respectively.

These deposits are part of a reciprocal program that allows our depositors to receive expanded FDIC coverage by placing multiple interest-bearing demand accounts at other member banks and Northwest Bank receives an equal amount of deposits from other member banks.

The balance carried an average cost of 3.34% as of September 30, 2025 and 3.68% as of December 31, 2024.

At September 30, 2025 and December 31, 2024, we had total deposits in excess of $250,000 (the limit for FDIC insurance) of $1.9 billion.

The balance carried an average cost of 2.85% as of March 31, 2026 and 3.00% as of December 31, 2025.

At March 31, 2026 and December 31, 2025, we had total deposits in excess of $250,000 (the limit for FDIC insurance) of $2.1 billion and $1.9 billion, respectively.

At those dates, we had no deposits that were uninsured for any other reason.

The following table presents details regarding the Company's uninsured deposits portfolio:

As of September 30, 2025

As of March 31, 2026

Balance Percent of

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(1) Uninsured deposits presented may be different from actual amounts due to titling of accounts.

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Our largest uninsured depositor, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $39 million, or 0.28% of total deposits, as of September 30, 2025.

Our top ten largest uninsured depositors, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $198 million, or 1.45%, of total deposits, as of September 30, 2025.

The average uninsured deposit account balance, excluding intercompany and collateralized accounts, was $323,353 as of September 30, 2025.

Total shareholders’ equity increased to $1.9 billion, or $12.70 per share, at September 30, 2025 compared to $12.52 per share at December 31, 2024, increasing by $259 million in the current year, primarily driven by the issuance of common stock in connection with the Penns Woods acquisition.

The additional increase was the result of the an improvement in accumulated other comprehensive loss of $24 million, or 21%, primarily due to a decrease in unrealized losses in the available-for-sale investment portfolio, partially offset by 81 million of cash dividend payments for the nine months ended September 30, 2025.

Our largest uninsured depositor, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $134 million, or 0.95% of total deposits, as of March 31, 2026.

Our top ten largest uninsured depositors, excluding

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intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $358 million, or 2.53%, of total deposits, as of March 31, 2026.

The average uninsured deposit account balance, excluding intercompany and collateralized accounts, was $336,335 as of March 31, 2026.

Total shareholders’ equity increased to $1.9 billion, or $13.02 per share, at March 31, 2026 compared to $12.94 per share at December 31, 2025, increasing by $14 million in the current year.

The increase was the result of year-to-date earnings of $51 million, partially offset by a $29 million of cash dividend payment and an increase in accumulated other comprehensive loss of $8 million, or 12%, due to an increase in unrealized loss in the available-for-sale investment portfolio.

Regulatory Capital

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Capital requirements are presented in the tables below (dollars in thousands).

At September 30, 2025

At March 31, 2026

Actual Minimum capital requirements (1) Well capitalized requirements (2)

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(2) Reflects the well-capitalized standard applicable to Northwest Bank and the well-capitalized standard applicable to the Company under the Federal Reserve Board’s Regulation Y.

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At December 31, 2025

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Northwest Bank 1,580,217 9.77 % 647,141 4.00 % 808,926 5.00 %

(1) We elected to temporarily delay the estimated impact of current expected credit losses ("CECL") on regulatory capital in accordance with a rule of the Federal Reserve Board and other U.S.

banking agencies for a two-year deferral period, followed by a three-year transition period which began January 1, 2022.

As of December 31, 2024, 75% of the impact of the CECL deferral was phased, while the impact of the CECL deferral was fully phased in as of June 30, 2025.

(1) Amounts and ratios include the capital conservation buffer of 2.5%, which does not apply to Tier 1 capital to average assets (leverage ratio).

(2) Reflects the well-capitalized standard applicable to Northwest Bank and the well-capitalized standard applicable to the Company under the Federal Reserve Board’s Regulation Y.

Regulatory Considerations

It is uncertain how the rapid changes initiated by the Trump administration will impact our business going forward.

These include the impact of tariffs, immigration reform, and changes at the agencies that regulate us, including the modification, rescission, withdrawal or changes to the approach and enforcement of rules and guidance relating to us.

Northwest Bank is required to maintain a sufficient level of liquid assets, as determined by management and reviewed for adequacy by the FDIC and the Pennsylvania Department of Banking and Securities during their regular examinations.

Northwest frequently monitors its liquidity position primarily using the ratio of unencumbered available-for-sale liquid assets as a percentage of deposits and borrowings (“liquidity ratio”).

Northwest Bank’s liquidity ratio at September 30, 2025 was 12.95%.

No rthwest Bank adjusts liquidity levels in order to meet funding needs for deposit outflows, payment of real estate taxes and insurance on mortgage loan escrow accounts, repayment of borrowings and loan commitments.

At September 30, 2025, Northwest had $3.7 billion of additional borrowing capacity available with the FHLB, including $250 million on an overnight line of credit, which had no balance as of September 30, 2025, as well as $795 million of borrowing capacity available with the Federal Reserve Bank and $369 million with four correspondent banks.

We paid $29 million in cash dividends during the quarter ended September 30, 2025 compared to $25 million for the quarter ended June 30, 2024.

The common stock dividend payout ratio (dividends declared per share divided by net income per diluted share) for the quarters ended September 30, 2025 and 2024 was 1000.0% and 76.9% on dividends of $0.20 per share.

On October 16, 2025, the Board of Directors declared a cash dividend of $0.20 per share payable on November 18, 2025 to shareholders of record as of November 6, 2025.

Northwest Bank’s liquidity ratio at March 31, 2026 was 21.89% compared to 18.44% as of December 31, 2025.

Northwest Bank adjusts liquidity levels in order to meet funding needs for deposit outflows, payment of real estate taxes and insurance on mortgage loan escrow accounts, repayment of borrowings and loan commitments.

At March 31, 2026, Northwest had $4.4 billion of additional borrowing capacity available with the FHLB, including $250 million on an overnight line of credit, which had no balance as of March 31, 2026, as well as $1.7 billion of borrowing capacity available with the Federal Reserve Bank and $369 million with four correspondent banks.

We paid $29 million in cash dividends during the quarter ended March 31, 2026 compared to $26 million for the quarter ended March 31, 2025.

The common stock dividend payout ratio (dividends declared per share divided by net income per diluted share) for the quarters ended March 31, 2026 and 2025 was 58.8% on dividends of $0.20 per share.

On April 22, 2026, the Board of Directors declared a cash dividend of $0.20 per share payable on May 20, 2026 to shareholders of record as of May 7, 2026.

This represents the 126 th consecutive quarter we have paid a cash dividend.

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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 the 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

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contractual interest.

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 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.

September 30, 2025 December 31, 2024

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March 31, 2026 December 31, 2025

(in thousands)

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Commercial real estate - owner occupied 986 1,022

Commercial loans 9,490 7,335

Commercial and industrial loans 11,266 16,269

Total loans 90 days or more past due $ 43,840 66,400

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Total nonperforming loans 91,486 107,929

Other nonperforming assets (1) — 16,102

Total nonperforming assets $ 91,551 $ 108,005

Total nonaccrual loans to total loans 0.70 % 0.82 %

(1) Other nonperforming assets includes nonaccrual loans held for sale.

Allowance for Credit Losses

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For the purpose of calculating reserves, we have grouped our loans into seven segments:

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mortgage loans, home equity loans, vehicle loans, consumer loans, commercial real estate loans, commercial real estate loans - owner occupied and commercial loans.

residential mortgage loans, home equity loans, vehicle loans, consumer loans, commercial real estate loans, commercial real estate loans - owner occupied and commercial loans.

The allowance for credit losses is measured using a combination of statistical models and qualitative assessments.

We use a twenty four month forecasting period and revert to historical average loss rates thereafter.

Reversion to average loss rates takes place over twelve months.

Reversion to average

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loss rates takes place over twelve months.

Historical average loss rates are calculated using historical data beginning in October 2009 through the current period.

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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 September 30, 2025, we considered the most recent economic conditions and forecasts available which incorporated the impact of material recent economic events.

As part of the analysis as of March 31, 2026, we considered the most recent economic conditions and forecasts available which incorporated the impact of material recent economic events.

In addition, we considered the overall trends in asset quality, reserves on individually assessed loans, historical loss rates and collateral valuations.

The ACL increased by $41 million to $157 million, or 1.22% of total loans at September 30, 2025, up from 1.04% at December 31, 2024.

This increase was primarily driven by the Day 1 initial provision from the Penns Woods acquisition of $20.6 million.

Excluding the Day 1 provision for credit losses from the acquisition, the provision for credit losses for the quarter ended September 30, 2025 was $10.5 million, which increased compared to the prior year primarily due to an increase in net charge offs coupled with an increase due to individually assessed loans.

Total classified loans increased by $255 million to $527 million at September 30, 2025 compared to $272 million at December 31, 2024.

This increase was driven by changes in our commercial real estate portfolio which increased $141 million.

The increase in classified loans was driven by the Penns Woods acquisition, the remaining long-term healthcare portfolio being returned to held for investment, construction projects with lease up rates lower than projected and a few larger C&I borrowers whose performance deteriorated during the year.

The ACL increased by $167 thousand to $150 million, or 1.15% of total loans at March 31, 2026, consistent with 1.15% at December 31, 2025.

This increase was primarily driven by the increase in the balance of total loans.

The provision for credit losses for the quarter ended March 31, 2026 was $4 million, driven by growth in our commercial lending portfolio and increased uncertainty in the economic outlook, compared to $8 million for the quarter ended March 31, 2025.

Total classified loans increased by $44 million to $498 million at March 31, 2026 compared to $453 million at December 31, 2025.

This increase was driven by net increases in our C&I and commercial real estate portfolios which increased $30 million and $15 million, respectively.

The increase in classified loans was driven primarily by receipt of updated financials and borrowers whose performance deteriorated during the quarter.

We also consider how the levels of nonaccrual loans and historical charge-offs have influenced the required amount of allowance for credit losses.

Nonaccrual loans of $128 million at September 30, 2025 increased by $67 million, or 109%, from $61 million at December 31, 2024, or 0.99% of total loans receivable as of September 30, 2025 and 0.55% of total loans receivable as of December 31, 2024.

As a percentage of average loans, annualized net charge-offs were 0.29% for the three months ended September 30, 2025 compared to 0.32% for the year ended December 31, 2024 which included a $15 million write-down on certain loans to fair value before they were transferred to held for sale.

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Comparison of Operating Results for the Quarters Ended September 30, 2025 and 2024

The following chart provides a reconciliation of net income from the quarter ended September 30, 2024 to the quarter ended September 30, 2025 (dollars in thousands):

Net income for the quarter ended September 30, 2025 was $3 million, or $0.02 per diluted share, a decrease of $31 million, or 91%, from net income of $34 million, or $0.26 per diluted share, for the quarter ended September 30, 2024.

This decrease in net income resulted primarily from an increase in noninterest expense of $43 million which was driven by the increase in acquisition expense of $31 million and compensation and employee benefits of $7 million.

This was offset by an increase in net interest income of $25 million which was driven by an increase in income on loans receivable of $21 million.

Net income for the quarter ended September 30, 2025 represents annualized returns on average equity and average assets of 0.69% and 0.08%, respectively, compared to 8.50% and 0.93% for the same quarter last year.

Nonaccrual loans of $91 million at March 31, 2026 decreased by $16 million, or 15%, from $107 million at December 31, 2025, or 0.70% of total loans receivable as of March 31, 2026 and 0.82% of total loans receivable as of December 31, 2025.

As a percentage of average loans, annualized net charge-offs were 0.16% for the three months ended March 31, 2026 compared to 0.25% for the year ended December 31, 2025.

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Comparison of Operating Results for the Quarters Ended March 31, 2026 and 2025

The following chart provides a reconciliation of net income from the quarter ended March 31, 2025 to the quarter ended March 31, 2026 (dollars in thousands):

Net income for the quarter ended March 31, 2026 was $51 million, or $0.34 per diluted share, an increase of $7 million, or 16%, from net income of $43 million, or $0.34 per diluted share, for the quarter ended March 31, 2025.

This increase in net income resulted primarily from an increase in net interest income of $15 million which was driven by the increase in interest income on loans receivable of $16 million.

This was offset by an increase in noninterest expense of $12 million which was driven by an increase in compensation and employee benefits and processing expenses of $4 million and $3 million, respectively.

Net income for the quarter ended March 31, 2026 represents annualized returns on average equity and average assets of 10.86% and 1.22%, respectively, compared to 10.90% and 1.22% for the same quarter last year.

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).

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Net Interest Income

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Net interest income for the third quarter of 2025 was $136 million which increased $25 million, or 22%, from the third quarter of 2024.

Net interest income (FTE) was $137 million for the quarter ended September 30, 2025 and net interest margin (FTE) was 3.65%.

Compared to the same quarter of the prior year, net interest income (FTE) increased $25 million and net interest margin (FTE) increased by thirty-two basis points.

The increase in net interest income (FTE) and net interest margin (FTE) was driven by an increase in interest income resulting from higher earning asset yields, coupled with a decrease in interest expense due to decline in the average balance of borrowings and higher cost brokered CD.

For the nine months ended September 30, 2025 , net interest income (FTE) was $386 million , an increase of $62 million , or 19% from the same period last year.

Net interest margin increased by forty-eight basis points.

Similar to the quarterly fluctuations noted above, the increase in net interest income (FTE) included increases in interest income driven by higher interest-earning asset yields, including a $13.1 million non-accrual interest recovery in the first quarter of 2025, and balances, partially offset by lower interest-bearing liability costs and balances.

Average loans receivable increased $1.3 billion, or 12%, from the quarter ended September 30, 2024.

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Net interest income for the first quarter of 2026 was $142 million which increased $15 million, or 11%, from the first quarter of 2025.

Net interest income (FTE) was $143 million for the quarter ended March 31, 2026 and net interest margin (FTE) was 3.70%.

Compared to the same quarter of the prior year, net interest income (FTE) increased $15 million and net interest margin (FTE) decreased by seventeen basis points.

The increase in net interest income (FTE) was primarily driven by a higher average balance of earnings assets and interest bearing liabilities acquired from the Penns Woods acquisition.

The decrease in net interest margin (FTE) was driven by a $13.1 million non-accrual loan interest recovery in the first quarter of 2025.

Average loans receivable increased $1.9 billion, or 17%, from the quarter ended March 31, 2025.

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 $21 million, or 14%, from the same quarter in the prior year, and by $37 million, or 8%, from the same nine-month period in the prior year, driven by the Penns Woods acqusition and a loan mix shift towards higher yielding commercial loan s 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 6% from the third quarter of 2024 driven by the Penns Woods acquisition and the reinvestment of cash flows from regular principal payments and maturities.

Interest income on investment securities increased by $2 million, or 19%, from the quarter ended September 30, 2024 and increased $9 million, or 29%, for the nine months ended September 30, 2024.

The increase is due to the increase in the average balance of investment and the increase in yield on investments (FTE) to 2.81% for the quarter ended September 30, 2025 and 2.71% for the nine months ended September 30, 2025.

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Average deposits grew 10% from the quarter ended September 30, 2024 driven by an increase in average balances from the Penns Woods merger.

Our average money market and interest-bearing checking deposit accounts grew by $426 million and $215 million, respectively, from the quarter ended September 30, 2024 partly due to acquisition and customers shifting funds to these competitively priced products as their time deposits matured .

These increases were partially offset by a decrease in time deposits of $12 million.

Interest expense on deposits decreased by $2 million, or 4% from the quarter ended September 30, 2024, and by $9 million, or 6% from the nine months ended September 30, 2024, primarily attributable to decrease in average yield paid on deposits which was partially offset by an increase in average balance of deposit accounts.

Compared to the quarter ended September 30, 2024, average borrowings saw a 57% increase.

Interest income on loans receivable increased by $16 million, or 10%, from the same quarter in the prior year, driven by the Penns Woods acquisition and a loan mix shift towards higher yielding commercial loans which was partially offset by 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 21% from the first quarter of 2025 driven by the Penns Woods acquisition and a targeted increase in the overall securities portfolio.

Interest income on investment securities increased by $6 million, or 47%, from the quarter ended March 31, 2025.

The increase is due to the increase in the average balance of investments and the increase in average yield on investments (FTE) to 3.17% for the quarter ended March 31, 2026.

Average deposits grew 16% from the quarter ended March 31, 2025 driven by deposits acquired from the Penns Woods merger.

Our average money market, interest-bearing checking, and time deposit accounts grew by $526 million, $406 million, $338 million respectively, from the quarter ended March 31, 2025 partly due to acquisition and higher use of brokered CDs.

Interest expense on deposits increased by $4 million, or 8% from the quarter ended March 31, 2025, primarily attributable to an increase in average balance of deposits partially offset by lower cost of funds.

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Compared to the quarter ended March 31, 2025, average borrowings saw a 81% increase.

This increase was attributable to the acquisition of long-term borrowings from Penns Woods.

The increase in the average balance of borrowings resulted in an increase in interest expense on borrowings by $1 million from the quarter ended September 30, 2024.

Interest expense decreased $5 million from the nine months ended September 30, 2024 from the strategic pay-down of wholesale borrowings with the proceeds from our investment portfolio restructuring in the second quarter of 2024.

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The increase in the average balance of borrowings resulted in an increase in interest expense on borrowings of $3 million from the quarter ended March 31, 2025.

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Average Balance Sheet

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Average balances are calculated using daily averages.

Quarter ended September 30,

Quarter ended March 31,

balance Interest Avg.

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Commercial real estate loans 3,342,140 51,337 6.14 % 2,879,607 56,508 7.85 %

Commercial loans 2,278,859 41,519 7.13 % 1,819,400 34,837 7.62 %

Commercial and industrial 2,632,150 43,497 6.61 % 2,053,213 36,012 7.02 %

Loans receivable (a) (b) (d) (includes FTE adjustments of $663 and $713, respectively) 13,083,837 181,212 5.62 % 11,176,516 165,351 6.00 %

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(h) Annualized.

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Rate/Volume Analysis

(in thousands)

The following table represents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected interest income (FTE) and interest expense during the periods indicated.

Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) net change.

Changes that cannot be attributed to either rate or volume have been allocated to both rate and volume.

For the quarter ended September 30, 2025 vs.

Increase/(decrease) due to Total

increase/(decrease)

Interest-earning assets:

Loans receivable $ 2,201 19,097 21,298

Mortgage-backed securities 1,238 522 1,760

Investment securities 374 275 649

FHLB stock, at cost 53 205 258

Other interest-earning deposits (512) (100) (612)

Total interest-earning assets 3,354 19,999 23,353

Interest-bearing liabilities:

Savings deposits (546) 545 (1)

Interest-bearing demand deposits 168 638 806

Money market deposit accounts 516 2,099 2,615

Time deposits (5,628) (110) (5,738)

Borrowed funds (128) 1,228 1,100

Subordinated debt 183 4 187

Junior subordinated debentures (348) 4 (344)

Total interest-bearing liabilities (5,783) 4,408 (1,375)

Net change in net interest income (FTE) $ 9,137 15,591 24,728

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Average Balance Sheet

(in thousands)

The following table sets forth certain information relating to the Company’s average balance sheet and reflects the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.

Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented.

Average balances are calculated using daily averages

Nine months ended September 30,

balance Interest Avg.

cost (h) Average

balance Interest Avg.

Interest-earning assets:

Residential mortgage loans $ 3,135,705 91,758 3.90 % $ 3,340,332 96,392 3.85 %

Home equity loans 1,236,733 53,509 5.78 % 1,185,145 51,893 5.85 %

Consumer loans 2,118,568 87,650 5.53 % 2,012,461 77,401 5.14 %

Commercial real estate loans 3,033,193 151,726 6.60 % 3,005,966 136,556 6.07 %

Commercial loans 2,145,555 114,818 7.06 % 1,768,325 99,923 7.55 %

Loans receivable (a) (b) (d) (includes FTE adjustments of $2,186 and $2,227, respectively) 11,669,754 499,461 5.72 % 11,312,229 462,165 5.46 %

Mortgage-backed securities (c) 1,791,479 36,552 2.72 % 1,729,064 28,278 2.18 %

Investment securities (c) (d) (includes FTE adjustments of $529 and $427, respectively) 277,338 5,420 2.61 % 294,598 4,251 1.92 %

FHLB stock, at cost 23,080 1,336 7.74 % 26,195 1,499 7.64 %

Other interest-earning deposits 209,320 6,789 4.28 % 124,037 4,935 5.31 %

Total interest-earning assets (includes FTE adjustments of $2,715 and $2,654, respectively) 13,970,971 549,558 5.26 % 13,486,123 501,128 4.96 %

Noninterest-earning assets (e) 972,376 919,969

Total assets $ 14,943,347 $ 14,406,092

Liabilities and shareholders’ equity

Interest-bearing liabilities:

Savings deposits $ 2,250,418 19,653 1.17 % $ 2,139,461 17,673 1.10 %

Interest-bearing demand deposits 2,662,521 22,513 1.13 % 2,554,172 19,501 1.02 %

Money market deposit accounts 2,200,063 30,748 1.87 % 1,962,019 25,684 1.75 %

Time deposits 2,683,081 73,117 3.64 % 2,787,306 91,780 4.40 %

Total interesting-bearing deposits (g) 9,796,083 146,031 1.99 % 9,442,958 154,638 2.19 %

Borrowed funds (f) 260,392 7,618 3.91 % 337,427 11,636 4.61 %

Subordinated debentures 114,661 3,631 4.22 % 114,310 3,444 4.02 %

Junior subordinated debentures 129,922 6,327 6.42 % 129,662 7,375 7.60 %

Total interest-bearing liabilities 10,301,058 163,607 2.12 % 10,024,357 177,093 2.36 %

Noninterest-bearing demand deposits (g) 2,721,350 2,581,018

Noninterest-bearing liabilities 232,909 245,917

Total liabilities 13,255,317 12,851,292

Shareholders’ equity 1,688,030 1,554,800

Total liabilities and shareholders’ equity $ 14,943,347 $ 14,406,092

Net interest income (FTE)/Interest rate spread (FTE) (d) 385,951 3.14 % 324,035 2.60 %

Net interest-earning assets/Net interest margin (FTE) $ 3,669,913 3.69 % $ 3,461,766 3.21 %

Tax equivalent adjustment (d) 2,715 2,654

Net interest income, GAAP basis 383,236 321,381

Ratio of interest-earning assets to interest-bearing liabilities 1.36X 1.35X

(a) Average gross loans includes loans held as available-for-sale and loans placed on nonaccrual status.

(b) Interest income includes accretion/amortization of deferred loan fees/expenses, which were not material.

(d) Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent (“FTE”) basis.

We believe this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts.

(e) Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.

(f) Average balances include FHLB borrowings and collateralized borrowings.

(g) Average cost of deposits were 1.56% and 1.72%, respectively.

(h) Annualized.

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Rate/Volume Analysis

3 unchanged sentences

Changes that cannot be attributed to either rate or volume have been allocated to both rate and volume.

For the nine months ended September 30, 2025 vs.

For the quarter ended March 31, 2026 vs.

Increase/(decrease) due to Total

22 unchanged sentences

Annualized net charge-offs to average loans 0.08 % 0.18 % 0.29 % 0.40 % 0.16 %

The provision for credit losses increased by $26 million from the quarter ended September 30, 2024.

This increase included a $26 million increase in the provision for credit losses - loans, as well as a $0.7 million increase in the provision for credit losses - unfunded commitments.

This increase is due to the initial Day 1 provision from the Penns Woods acquisition of $20.6 million.

Excluding the Day 1 provision for credit losses from the acquisition, the provision for credit losses for the quarter ended September 30, 2025 was $10.5 million, which increased compared to the prior year and the prior quarter primarily due to an increase in net charge offs coupled with an increase due to individually assessed loans.

The increase in our provision for unfunded commitments in the current period 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.

Additionally, the Company saw an increase in classified loans to $527 million, or 4.07% of total loans, at September 30, 2025 from $320 million, or 2.83% of total loans, at September 30, 2024 and $518 million, or 4.57% of total loans, at June 30, 2025.

This increase was driven by changes in our commercial real estate portfolio which increased $141 million from the prior year.

from the prior quarter was primarily due to classified loans acquired in the Penns Woods acquisition which were partially offset by improvements in our legacy loan portfolio.

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The provision for credit losses decreased by $4 million from the quarter ended March 31, 2025.

This decrease included a $3 million decrease in the provision for credit losses - loans, as well as a $0.2 million decrease in the provision for credit losses - unfunded commitments.

This decrease is provision for unfunded was due to the timing of organic origination and funding of commercial construction loans and lines of credit which was partially offset by increased uncertainty in the economic outlook.

Additionally, the Company saw an increase in classified loans to $498 million, or 3.81% of total loans, at March 31, 2026 from $279 million, or 2.49% of total loans, at March 31, 2025 and $453 million, or 3.49% of total loans, at December 31, 2025.

The increase from the prior year was primarily due to classified loans acquired in the Penns Woods acquisition.

The increase from the prior quarter was due to receipt of updated financials and borrowers whose performance deteriorated during the quarter.

In determining the amount of the current period provision, we considered current and forecasted economic conditions, including but not limited to improvements in unemployment levels, expected economic growth, bankruptcy filings, and changes in real estate values and 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 appropriate, 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 September 30, 2025.

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Noninterest Income

(a) Other noninterest income includes the net gain on real estate owned, mortgage banking income, and other operating income.

(a) Other noninterest income includes gain on sale of investments, gain on real estate owned, net, mortgage banking income, and other operating income.

See the "Consolidated Statements of Income" in Item 1.

Financial Statements of this report.

Noninterest income for the quarter ended September 30, 2025 was $32 million, an increase of $4 million from the quarter ended September 30, 2024, driven by an increase in other operating income from a gain on equity method investments during the current quarter compared to a loss on equity method investments and the sale of a building during the prior year.

From the nine months ended September 30, 2024 noninterest income increased $45 million which was driven by the loss on sale in investments that occurred in the second quarter of 2024 .

Excluding the loss on sale of securities, noninterest income increased $5 million, or 6%, from the nine months ended September 30, 2024, driven by growth within our trust and other financial services operations.

Noninterest income for the quarter ended March 31, 2026 was $33 million, an increase of $4 million from the quarter ended March 31, 2025, driven by an increase in service charges and fees driven by deposit related fees based on customer activity related to the Penns Woods acquisition and other operating income driven by a gain on equity method investments during the current quarter.

Noninterest Expense

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

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

See the "Consolidated Statements of Income" in Item 1.

Financial Statements of this report.

Noninterest expense increased by $43 million, or 47%, from the quarter ended September 30, 2024 and $50 million, or 18% from the nine months ended September 30, 2024.

The increase from the prior year quarter was primarily attributable to the increase in merger and restructuring expenses of $31 million for the quarter ended September 30, 2025, which is driven by the Penns Woods acquisition and an increase in c ompensation and employee benefits expense of $7 million, or 12%, to $63 million for the quarter ended

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September 30, 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.

Additionally, there was a $1 million in amortization of intangible expense related to the acquisition.

The increase from the nine months ended September 30, 2024 was driven by an increase in merger and restructuring expenses of $36 million, driven by the Penns Woods acquisition and an increase in compensation and employee benefits expense of $12 million or 7% driven primarily by the same factors discussed above.

The provision for income taxes decreased by $10 million from the quarter ended September 30, 2024 due to lower income before taxes caused by the large acquisition expense in during the third quarter.

The provision for income taxes increased by $4 million from the nine months ended September 30, 2024 primarily due to higher income before income taxes from the loss on sale in investments that occurred in the second quarter of 2024 .

Noninterest expense increased by $12 million, or 13%, from the quarter ended March 31, 2025.

The increase from the prior year quarter was primarily attributable an increase in compensation and employee benefits expense of $4 million, or 7%, to $58 million for the quarter ended March 31, 2026 driven by an increase in core compensation and benefits expense due to the addition of Penns Woods employees.

Additional increases included an increase in processing expenses of $3 million for the quarter ended March 31, 2026, due to the addition of the Penns Woods branches to our footprint and an increase of $2 million in amortization of intangible expense related to the acquisition.

The provision for income taxes increased by $3 million from the quarter ended March 31, 2025 due to higher income before taxes as the result of an increase in interest income due to the acquisition resulting in a larger loan portfolio.

The provision for income taxes is primarily driven by changes in our current period income before taxes.

We anticipate our effective tax rate to be between 23.0% and 25.0% for the year ending December 31, 2026.

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GAAP to Non-GAAP Reconciliations

2 unchanged sentences

Quarter ended

2026 December 31,

2025 September 30,

1 unchanged sentence

2025 March 31,

2025 December 31,

2024 September 30,

Net interest income fully tax equivalent (FTE)

2 unchanged sentences

Net interest income FTE 143,348 143,201 136,944 120,322 128,685

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis