What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-05 compared with 2026-05-07 · 168 added, 100 removed, 363 unchanged (42% of the section changed)

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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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Overview of Critical Accounting Policies Involving Estimates

Please refer to Note 1 of the Notes to Consolidated Financial Statements in Item 8 of Part II of our 2025 Annual Report on Form 10-K.

Please refer to Note 1 of the Notes to Consolidated Financial Statements in Item 8 of Part II of our 2025 Annual Report on Form 10-K and Note 1 “Basis of Presentation and Informational Disclosures” within this Item 1 of this Quarterly Report for more information.

Recently Issued Accounting Standards

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We do not believe this guidance will 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):

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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.

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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 first quarter 2026 results reflect increased levels of average balances, net interest income, and noninterest expense compared to the first quarter 2025 results.

Therefore, the Company’s second quarter 2026 results reflect increased levels of average balances, net interest income, and noninterest expense compared to the second 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 $63 million and core deposit intangibles of $42 million related to the acquisition.

The Company recorded goodwill of $64 million and core deposit intangibles of $42 million related to the acquisition.

Comparison of Financial Condition

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

Total assets at June 30, 2026 were $17.2 billion, an increase of $441 million from December 31, 2025.

A discussion of significant changes follows.

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.

Cash and cash equivalents increased by $15 million, or 6%, to $248 million at June 30, 2026, from $234 million at December 31, 2025 due to growth in our deposits and borrowings exceeding the growth in loans and securities.

Total marketable securities increased to $2.5 billion at June 30, 2026, increasing by $190 million, or 8%, from December 31, 2025.

Available-for-sale securities increased by $243 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 $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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Held-to-maturity securities declined $53 million, driven by maturities and recurring monthly cash flows.

Gross loans receivable was $13.2 billion at June 30, 2026, increasing $222 million from December 31, 2025.

This increase is attributed to net growth of commercial and industrial (C&I) and vehicle loans.

Our total personal banking loan portfolio increased by $170 million, to $7.3 billion at June 30, 2026, while our total commercial banking loans increased by $52 million, to $5.9 billion at June 30, 2026.

The following table provides the various loan sectors in our commercial real estate portfolio at June 30, 2026:

Property type Percent of portfolio

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Single family dwelling 5.8

2-4 family 4.3

Residential acquisition & development - 1-4 family, townhouses and apartments 4.5

2-4 family 4.3

Warehouse/storage building 3.9

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Other medical facility 2.3

Hotel/motel 2.2

Multi-use building - commercial, retail and residential 2.3

Hotel/motel 2.2

All other 18.4

Total 100.0 %

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

The following table describes the collateral of our commercial real estate portfolio by state at June 30, 2026:

State Percent of portfolio

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Total 100.0 %

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.

Total deposits increased by $219 million, to $14.2 billion at June 30, 2026, from $13.9 billion at December 31, 2025.

This increase was driven primarily by an increase in the balance of money market and savings deposits of $226 million and $93 million, respectively, partly due to customers shifting funds to these products as their time deposits matured.

This is partially offset by a decrease in interest-bearing checking and time deposits of $79 million and $89 million, respectively.

As of June 30, 2026, we had $236 million of brokered deposits, which made up 9% 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 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.

In addition, we had $901 million and $941 million of deposits through our participation in the IntraFi Network Deposits and R&T Insured Deposit programs as of June 30, 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 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.

The balance carried an average cost of 3.03% as of June 30, 2026 and 3.00% as of December 31, 2025.

At June 30, 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 March 31, 2026

As of June 30, 2026

Balance Percent of

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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 $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.

Our largest uninsured depositor, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $185 million, or 1.3% of total deposits, as of June 30, 2026.

Our top ten largest uninsured depositors, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $404 million, or 2.9%, of total deposits, as of June 30, 2026.

The average uninsured deposit account balance, excluding intercompany and collateralized accounts, was $344,187 as of June 30, 2026.

Total shareholders’ equity increased to $1.9 billion, or $13.17 per share, at June 30, 2026 compared to $12.94 per share at December 31, 2025, increasing by $37 million in the current year.

The increase was the result of year-to-date earnings of $104 million, partially offset by $59 million of cash dividend payments and an increase in accumulated other comprehensive loss of $12 million, or 17%, 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 March 31, 2026

At June 30, 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 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 March 31, 2026 was 21.89% compared to 18.44% as of December 31, 2025.

Northwest Bank’s liquidity ratio at June 30, 2026 was 23.56% 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.

At June 30, 2026, Northwest had $4.3 billion of additional borrowing capacity available with the FHLB, including $250 million on an overnight line of credit, which had a drawn balance of $227 million as of June 30, 2026, as well as $1.9 billion of borrowing capacity available with the Federal Reserve Bank and $419 million with five correspondent banks.

We paid $29 million in cash dividends during the quarter ended June 30, 2026 compared to $26 million for the quarter ended June 30, 2025.

The common stock dividend payout ratio (dividends declared per share divided by net income per diluted share) for the quarters ended June 30, 2026 and 2025 was 55.6% and 76.9%, respectively, on dividends of $0.20 per share.

On July 22, 2026, the Board of Directors declared a cash dividend of $0.20 per share payable on August 18, 2026 to shareholders of record as of August 6, 2026.

This represents the 127 th consecutive quarter we have paid a cash dividend.

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Foreclosed property is carried at the lower of its fair value less estimated costs to sell or the principal balance of the related loan.

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March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

(in thousands)

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On an on-going basis, the loan officer, in conjunction with a portfolio manager, grades or classifies problem commercial loans or potential problem commercial loans based upon their knowledge of the lending relationship and other information previously accumulated.

This rating is also reviewed independently by our Loan Review department on a periodic basis.

These rating are periodically reviewed by our Credit Risk Review department as part of a targeted risk-based review program.

Our loan grading system for problem commercial loans is consistent with industry regulatory guidelines which classifies loans as “substandard”, “doubtful” or “loss”.

Loans that do not expose us to risk sufficient to warrant classification in one of the previous categories, but which possess some weaknesses, are designated as “special mention”.

A “substandard” loan is any loan that is 90 days or more contractually delinquent or is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.

Loans that do not expose us to risk sufficient to warrant classification in one of the previous categories, but which possess potential weaknesses, are designated as “special mention”.

A “substandard” loan is any loan that has well defined weaknesses, is 90 days or more contractually delinquent or is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.

Loans classified as “doubtful” have all the weaknesses inherent in those classified as “substandard” with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions or values, highly questionable and improbable.

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

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

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loss rates takes place over twelve months.

Reversion to average loss rates takes place over twelve months.

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

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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 March 31, 2026, 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 June 30, 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 $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.

The ACL decreased by $1 million to $149 million, or 1.13% of total loans at June 30, 2026, which is a slight decrease from 1.15% at December 31, 2025.

This decrease was primarily driven by our loan portfolio mix.

The provision for credit losses for the quarter ended June 30, 2026 was $7 million, driven by growth in our commercial lending portfolio, including unfunded commitments, compared to $9 million for the quarter ended June 30, 2025.

Total classified loans increased by $71 million to $524 million at June 30, 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 $26 million and $44 million, respectively.

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

The increase in classified loans was driven by acquired loans to borrowers whose updated financial statements indicated financial deterioration.

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 $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.

Nonaccrual loans of $91 million at June 30, 2026 decreased by $16 million, or 15%, from $107 million at December 31, 2025, or 0.69% of total loans receivable as of June 30, 2026 and 0.82% of total loans receivable as of December 31, 2025.

As a percentage of average loans, annualized net charge-offs were 0.15% for the three months ended June 30, 2026 compared to 0.25% for the year ended December 31, 2025.

Comparison of Operating Results for the Quarters Ended June 30, 2026 and 2025

The following chart provides a reconciliation of net income from the quarter ended June 30, 2025 to the quarter ended June 30, 2026 (dollars in thousands):

Net income for the quarter ended June 30, 2026 was $54 million, or $0.36 per diluted share, an increase of $20 million, or 59%, from net income of $34 million, or $0.26 per diluted share, for the quarter ended June 30, 2025.

This increase in net income resulted primarily from an increase in net interest income of $27 million which was driven by the increase in interest income on loans receivable of $28 million.

This was offset by an increase in noninterest expense of $7 million which was driven by an increase in compensation and employee benefits and processing expenses of $8 million and $4 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.

Net income for the quarter ended June 30, 2026 represents annualized returns on average equity and average assets of 11.20% and 1.27%, respectively, compared to 8.26% and 0.93% 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 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.

Net interest income for the second quarter of 2026 was $147 million which increased $27 million, or 23%, from the second quarter of 2025.

Net interest income (FTE) was $148 million for the quarter ended June 30, 2026 and net interest margin (FTE) was 3.75%.

Compared to the same quarter of the prior year, net interest income (FTE) increased $27 million and net interest margin (FTE) increased by nineteen basis points.

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

Average loans receivable increased $1.8 billion, or 16%, from the quarter ended June 30, 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 $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.

Interest income on loans receivable increased by $28 million, or 18%, from the same quarter in the prior year, driven by the Penns Woods acquisition and a loan mix shift towards higher yielding commercial loans.

Average investments increased 23% from the second 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 $7 million, or 50%, from the quarter ended June 30, 2025.

The increase is due to the increase in the average balance of investments and the increase in average yield on investments (FTE) to 3.27% for the quarter ended June 30, 2026.

Average deposits grew 16% from the quarter ended June 30, 2025 driven by deposits acquired from the Penns Woods merger.

Our average money market, interest-bearing checking, and time deposit accounts grew by $608 million, $364 million, $283 million respectively, from the quarter ended June 30, 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 June 30, 2025, primarily attributable to an increase in average balance of deposits partially offset by lower cost of funds.

Compared to the quarter ended June 30, 2025, average borrowings saw an 82% 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 of $3 million from the quarter ended March 31, 2025.

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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 June 30, 2025.

Average Balance Sheet

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Average balances are calculated using daily averages.

Quarter ended March 31,

Quarter ended June 30,

balance Interest Avg.

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Commercial real estate loans 3,131,545 49,291 6.23 % 2,836,757 43,457 6.06 %

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

Commercial and industrial loans 2,779,969 45,753 6.51 % 2,102,115 37,287 7.02 %

Loans receivable (a) (b) (d) (includes FTE adjustments of $656 and $721, respectively) 13,094,235 183,125 5.61 % 11,248,954 155,635 5.55 %

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(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.

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

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(h) Annualized.

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Rate/Volume Analysis

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

For the quarter ended March 31, 2026 vs.

For the quarter ended June 30, 2026 vs.

Increase/(decrease) due to Total

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Net change in net interest income (FTE) $ 6,637 20,814 27,451

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

Six months ended June 30,

balance Interest Avg.

cost (h) Average

balance Interest Avg.

Interest-earning assets:

Residential mortgage loans $ 3,054,223 60,815 3.98 % $ 3,123,353 60,372 3.87 %

Home equity loans 1,497,606 43,310 5.83 % 1,142,708 32,429 5.72 %

Consumer loans 2,594,507 70,334 5.47 % 2,011,012 54,921 5.51 %

Commercial real estate loans 3,236,260 100,628 6.18 % 2,858,064 99,973 6.96 %

Commercial and industrial loans 2,706,468 89,250 6.56 % 2,077,799 73,299 7.02 %

Loans receivable (a) (b) (d) (includes FTE adjustments of $1,319 and $1,442, respectively) 13,089,064 364,337 5.61 % 11,212,936 320,994 5.77 %

Mortgage-backed securities (c) 2,190,996 35,023 3.20 % 1,781,959 23,884 2.68 %

Investment securities (c) (d) (includes FTE adjustments of $382 and $313, respectively) 308,480 5,218 3.38 % 264,945 3,269 2.47 %

FHLB stock, at cost 35,313 1,506 8.60 % 19,342 684 7.13 %

Other interest-earning deposits 140,934 2,307 3.26 % 231,914 5,089 4.36 %

Total interest-earning assets (includes FTE adjustments of $1,701 and $1,755, respectively) 15,764,787 408,391 5.22 % 13,511,096 353,920 5.28 %

Noninterest-earning assets (e) 1,083,506 924,426

Total assets $ 16,848,293 $ 14,435,522

Liabilities and shareholders’ equity

Interest-bearing liabilities:

Savings deposits $ 2,421,847 12,603 1.05 % $ 2,203,289 12,973 1.19 %

Interest-bearing demand deposits 2,986,607 17,163 1.16 % 2,601,604 14,255 1.10 %

Money market deposit accounts 2,669,291 24,851 1.88 % 2,102,124 18,964 1.82 %

Time deposits 2,924,445 46,850 3.23 % 2,614,238 47,959 3.70 %

Total interesting-bearing deposits (g) 11,002,190 101,467 1.86 % 9,521,255 94,151 1.99 %

Borrowed funds (f) 391,835 7,615 3.92 % 216,189 4,252 3.97 %

Subordinated debentures 114,800 4,405 7.63 % 114,618 2,296 4.01 %

Junior subordinated debentures 130,151 3,783 5.78 % 129,889 4,204 6.44 %

Total interest-bearing liabilities 11,638,976 117,270 2.03 % 9,981,951 104,903 2.12 %

Noninterest-bearing demand deposits (g) 3,088,330 2,600,113

Noninterest-bearing liabilities 217,964 227,116

Total liabilities 14,945,270 12,809,180

Shareholders’ equity 1,903,023 1,626,342

Total liabilities and shareholders’ equity $ 16,848,293 $ 14,435,522

Net interest income (FTE)/Interest rate spread (FTE) (d) 291,121 3.19 % 249,017 3.16 %

Net interest-earning assets/Net interest margin (FTE) $ 4,125,811 3.72 % $ 3,529,145 3.72 %

Tax equivalent adjustment (d) 1,701 1,755

Net interest income, GAAP basis 289,420 247,262

Ratio of interest-earning assets to interest-bearing liabilities 1.35X 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 and fair value marks, 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 1.45% and 1.57%, respectively.

(h) Annualized.

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 six months ended June 30, 2026 vs.

Increase/(decrease) due to Total

increase/(decrease)

Interest-earning assets:

Loans receivable $ (8,879) 52,222 43,343

Mortgage-backed securities 4,601 6,538 11,139

Investment securities 1,213 736 1,949

FHLB stock, at cost 135 687 822

Other interest-earning deposits (1,313) (1,469) (2,782)

Total interest-earning assets (4,243) 58,714 54,471

Interest-bearing liabilities:

Savings deposits (1,508) 1,138 (370)

Interest-bearing demand deposits 696 2,212 2,908

Money market deposit accounts 607 5,280 5,887

Time deposits (6,079) 4,970 (1,109)

Borrowed funds (51) 3,414 3,363

Subordinated debt 2,102 7 2,109

Junior subordinated debentures (428) 7 (421)

Total interest-bearing liabilities (4,661) 17,028 12,367

Net change in net interest income (FTE) $ 418 41,686 42,104

Provision for Credit Losses

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Annualized net charge-offs to average loans 0.18 % 0.29 % 0.40 % 0.16 % 0.15 %

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 provision for credit losses decreased by $2 million from the quarter ended June 30, 2025.

This decrease included a $7 million decrease in the provision for credit losses - loans, as well as a $5 million increase in the provision for credit losses - unfunded commitments.

The current year provision was driven by growth in our commercial lending portfolio.

The prior year provision for credit losses - loans was driven by downgrades within our commercial real estate portfolio offset by changes in the economic forecasts.

This increase in provision for unfunded was due to an increase in timing of undrawn commitments and increased uncertainty in the economic outlook.

Additionally, the Company saw an increase in classified loans to $524 million, or 3.96% of total loans, at June 30, 2026 from $518 million, or 4.57% of total loans, at June 30, 2025 and $498 million, or 3.81% of total loans, at March 31, 2026.

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.

The increase from the prior quarter was due to changes in our commercial real estate portfolio.

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 March 31, 2026.

Table of Content s

Noninterest Income

2 unchanged sentences

Financial Statements of this report.

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 income for the quarter ended June 30, 2026 was $34 million, an increase of $3 million from the quarter ended June 30, 2025, and an increase of $8 million from the six months ended June 30, 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 trust and other financial services income driven by an increase in our wealth management business.

Noninterest Expense

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Financial Statements of this report.

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.

Noninterest expense increased by $7 million, or 7%, from the quarter ended June 30, 2025 and $19 million, or 10% from the six months ended June 30, 2025.

The increase from the prior year quarter was primarily attributable an increase in compensation and employee benefits expense of $8 million, or 15%, to $63 million for the quarter ended June 30, 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 $4 million for the quarter ended June 30, 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.

This was partially offset by a decrease in acquisition expenses of $6 million and a decrease in FDIC insurance premiums of $3 million related to prior period assessment rate changes.

The increase from the six months ended June 30, 2025 was driven by an increase in compensation and employee benefits expense of $12 million, an increase in processing expense of $7 million and an increase in amortization in intangible expense of $3 million.

These increases were offset by a decrease in acquisition expenses of $6 million and FDIC insurance premiums of $2 million.

These fluctuations were driven by the same reasons noted above.

The provision for income taxes increased by $6 million from the quarter ended June 30, 2025 and $9 million for the six months ended June 30, 2025.

These increases were driven by higher income before taxes, primarily resulting from increased interest income associated with the acquisition, which expanded our 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.

Table of Content s

GAAP to Non-GAAP Reconciliations

2 unchanged sentences

Quarter ended

2026 March 31,

2026 December 31,

1 unchanged sentence

2025 June 30,

2025 March 31,

Net interest income fully tax equivalent (FTE)

2 unchanged sentences

Net interest income FTE 147,773 143,348 143,201 136,944 120,322

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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