Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
 
x☒Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended SeptemberJune 30, 20172022
 OR
or
o☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from  to  
Commission File Number 001-34582
 
NORTHWEST BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
MarylandMaryland27-0950358
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
100 Liberty Street, Warren, Pennsylvania3 Easton Oval16365
Suite 500
Columbus
Ohio
43219
(Address of principal executive offices)Principal Executive Offices)(Zip Code)
 
(814) 726-2140
(Registrant’s telephone number, including area code)

Not applicable
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, 0.01 Par ValueNWBINASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x☒ No o☐
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x☒ No o☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
 
x☒Large accelerated filer    o☐Accelerated filer
o☐Non-accelerated filer     (Do not check if a smaller reporting company)                                 o☐    Smaller reporting company
o☐    Emerging growth company


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐
 
Indicate by check mark whether the registrant is a Shell Company (as defined in Rule 12b-2 of the Exchange Act).Yes o No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Common Stock ($0.01 par value) 102,620,425, 126,876,036 shares outstanding as of OctoberJuly 31, 2017

2022.
Table of Contents

NORTHWEST BANCSHARES, INC.
INDEXTable of Contents
 
PAGE
PART IFINANCIAL INFORMATION
1
2
3
4
5
Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30 2017, 2022 and 20162021 (Unaudited)
6
8
4745
6160
6361
6361
6361
6362
6462
6462
6462
6463
6564
Certifications





Table of Contents
ITEMItem 1.        FINANCIAL STATEMENTS
 
NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(in thousands, except share data)
 September 30,
2017		 December 31,
2016
Assets 
  
Cash and due from banks$104,372
 119,403
Interest-earning deposits in other financial institutions60,662
 266,902
Federal funds sold and other short-term investments642
 3,562
Marketable securities available-for-sale (amortized cost of $867,311 and $825,552)869,481
 826,200
Marketable securities held-to-maturity (fair value of $32,282 and $20,426)31,961
 19,978
Total cash and investments1,067,118
 1,236,045
    
Personal Banking loans: 
  
Residential mortgage loans held-for-sale1,382
 9,625
Residential mortgage loans2,741,844
 2,688,541
Home equity loans1,313,435
 1,345,370
Consumer loans673,920
 642,961
Total Personal Banking loans4,730,581
 4,686,497
Commercial Banking loans: 
  
Commercial real estate loans2,398,886
 2,342,089
Commercial loans596,671
 528,761
Total Commercial Banking loans2,995,557
 2,870,850
Total loans7,726,138
 7,557,347
Allowance for loan losses(56,927) (60,939)
Total loans, net7,669,211
 7,496,408
    
Assets held-for-sale—
 152,528
Federal Home Loan Bank stock, at cost7,984
 7,390
Accrued interest receivable22,802
 21,699
Real estate owned, net5,462
 4,889
Premises and equipment, net152,761
 161,185
Bank owned life insurance173,096
 171,449
Goodwill307,420
 307,420
Other intangible assets27,244
 32,433
Other assets26,716
 32,194
Total assets$9,459,814
 9,623,640
    
Liabilities and Shareholders’ Equity 
  
Liabilities: 
  
Noninterest-bearing checking deposits$1,625,189
 1,448,972
Interest-bearing checking deposits1,451,818
 1,428,317
Money market deposit accounts1,759,395
 1,841,567
Savings deposits1,669,782
 1,622,879
Time deposits1,435,861
 1,540,586
Total deposits7,942,045
 7,882,321
    
Liabilities held-for-sale—
 215,657
Borrowed funds115,388
 142,899
Junior subordinated deferrable interest debentures held by trusts that issued guaranteed capital debt securities111,213
 111,213
Advances by borrowers for taxes and insurance21,864
 36,879
Accrued interest payable518
 635
Other liabilities62,939
 63,373
Total liabilities8,253,967
 8,452,977
    
Shareholders’ equity: 
  
Preferred stock, $0.01 par value: 50,000,000 authorized, no shares issued—
 —
Common stock, $0.01 par value: 500,000,000 shares authorized, 102,565,667 and 101,699,406 shares issued, respectively1,026
 1,017
Paid-in capital728,163
 718,834
Retained earnings502,265
 478,803
Accumulated other comprehensive loss(25,607) (27,991)
Total shareholders’ equity1,205,847
 1,170,663
Total liabilities and shareholders’ equity$9,459,814
 9,623,640
June 30, 2022December 31, 2021
Assets  
Cash and cash equivalents$504,532 1,279,259 
Marketable securities available-for-sale (amortized cost of $1,516,743 and $1,565,002, respectively)1,364,743 1,548,592 
Marketable securities held-to-maturity (fair value of $835,565 and $751,513, respectively)923,180 768,154 
Total cash and cash equivalents and marketable securities2,792,455 3,596,005 
Loans held-for-sale31,153 25,056 
Loans held for investment10,401,671 9,991,336 
Allowance for credit losses(98,355)(102,241)
Loans receivable, net10,334,469 9,914,151 
FHLB stock, at cost13,362 14,184 
Accrued interest receivable27,708 25,599 
Real estate owned, net1,205 873 
Premises and equipment, net146,869 156,524 
Bank-owned life insurance254,109 256,213 
Goodwill380,997 380,997 
Other intangible assets, net10,538 12,836 
Other assets192,983 144,126 
Total assets$14,154,695 14,501,508 
Liabilities and shareholders’ equity  
Liabilities:  
Noninterest-bearing demand deposits$3,058,249 3,099,526 
Interest-bearing demand deposits2,858,691 2,940,442 
Money market deposit accounts2,631,712 2,629,882 
Savings deposits2,362,725 2,303,760 
Time deposits1,155,878 1,327,555 
Total deposits12,067,255 12,301,165 
Borrowed funds130,490 139,093 
Subordinated debt113,666 123,575 
Junior subordinated debentures129,184 129,054 
Advances by borrowers for taxes and insurance55,622 44,582 
Accrued interest payable1,725 1,804 
Other liabilities162,214 178,664 
Total liabilities12,660,156 12,917,937 
Shareholders’ equity:  
Preferred stock, $0.01 par value: 50,000,000 authorized, no shares issued— — 
Common stock, $0.01 par value: 500,000,000 shares authorized, 126,881,766 and 126,612,183 shares issued and outstanding, respectively1,269 1,266 
Additional paid-in capital1,015,349 1,010,405 
Retained earnings620,551 609,529 
Accumulated other comprehensive loss(142,630)(37,629)
Total shareholders’ equity1,494,539 1,583,571 
Total liabilities and shareholders’ equity$14,154,695 14,501,508 
See accompanying notes to unaudited consolidated financial statements

Consolidated Financial Statements.

1
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NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except per share data)
Quarter ended
September 30,		 Nine months ended
September 30,		Quarter ended June 30,Six months ended June 30,
2017 2016 2017 2016 2022202120222021
Interest income: 
  
  
  
Interest income:    
Loans receivable$85,373
 81,083
 252,838
 243,370
Loans receivable$95,574 95,255 183,748 197,573 
Mortgage-backed securities3,118
 2,030
 8,327
 6,374
Mortgage-backed securities7,158 5,680 13,518 9,880 
Taxable investment securities957
 627
 2,944
 2,421
Taxable investment securities715 693 1,392 1,327 
Tax-free investment securities476
 676
 1,574
 2,107
Tax-free investment securities683 594 1,357 1,169 
FHLB dividends63
 218
 172
 1,086
FHLB stock dividendsFHLB stock dividends82 138 163 254 
Interest-earning deposits244
 114
 1,440
 243
Interest-earning deposits1,684 192 2,151 375 
Total interest income90,231
 84,748
 267,295
 255,601
Total interest income105,896 102,552 202,329 210,578 
Interest expense: 
  
  
  
Interest expense:    
Deposits5,795
 5,653
 17,086
 17,606
Deposits3,341 4,773 7,092 10,287 
Borrowed funds1,199
 1,801
 3,664
 13,602
Borrowed funds2,290 2,050 4,349 4,104 
Total interest expense6,994
 7,454
 20,750
 31,208
Total interest expense5,631 6,823 11,441 14,391 
Net interest income83,237
 77,294
 246,545
 224,393
Net interest income100,265 95,729 190,888 196,187 
Provision for loan losses3,027
 5,538
 13,226
 11,397
Net interest income after provision for loan losses80,210
 71,756
 233,319
 212,996
Provision for credit lossesProvision for credit losses2,629 — 1,148 (5,620)
Net interest income after provision for credit lossesNet interest income after provision for credit losses97,636 95,729 189,740 201,807 
Noninterest income: 
  
  
  
Noninterest income:    
Gain on sale of investments1,497
 58
 1,517
 412
Loss on sale of investmentsLoss on sale of investments(3)(105)(5)(126)
Service charges and fees12,724
 11,012
 37,190
 31,707
Service charges and fees13,673 12,744 26,740 25,138 
Trust and other financial services income4,793
 3,434
 13,697
 9,972
Trust and other financial services income7,461 7,435 14,473 13,919 
Insurance commission income1,992
 2,541
 7,139
 8,023
Insurance commission income— 1,043 — 3,589 
Gain/ (loss) on real estate owned, net(193) (563) (490) (203)
Income from bank owned life insurance1,078
 1,380
 3,798
 4,080
Gain on real estate owned, netGain on real estate owned, net291 166 262 124 
Income from bank-owned life insuranceIncome from bank-owned life insurance2,008 1,639 3,991 3,375 
Mortgage banking income519
 1,886
 1,193
 2,550
Mortgage banking income2,157 3,811 3,622 9,831 
Gain on sale of offices—
 —
 17,186
 —
Gain on sale of insurance businessGain on sale of insurance business— 25,327 — 25,327 
Other operating income2,184
 1,070
 6,345
 4,000
Other operating income4,861 2,648 7,105 5,484 
Total noninterest income24,594
 20,818
 87,575
 60,541
Total noninterest income30,448 54,708 56,188 86,661 
Noninterest expense: 
  
  
  
Noninterest expense:    
Compensation and employee benefits36,039
 38,122
 111,452
 104,365
Compensation and employee benefits48,073 48,894 94,990 96,133 
Premises and occupancy costs6,951
 6,094
 21,570
 18,906
Premises and occupancy costs7,280 7,410 15,077 16,224 
Office operations3,939
 3,700
 12,331
 10,503
Office operations3,162 3,317 6,545 6,482 
Collections expense568
 589
 1,670
 1,994
Collections expense403 303 923 919 
Processing expenses9,650
 8,844
 29,198
 25,430
Processing expenses12,947 15,151 25,495 28,607 
Marketing expenses2,488
 2,239
 7,482
 6,671
Marketing expenses2,047 2,101 4,175 4,081 
Federal deposit insurance premiums771
 984
 2,794
 3,929
Federal deposit insurance premiums1,130 1,353 2,259 2,660 
Professional services2,321
 1,815
 7,348
 5,777
Professional services3,333 4,231 5,906 8,813 
Amortization of intangible assets1,691
 1,068
 5,189
 2,453
Amortization of intangible assets1,115 1,433 2,298 3,027 
Real estate owned expense310
 206
 809
 812
Real estate owned expense72 85 109 160 
Restructuring/ acquisition expense1,398
 7,183
 4,255
 11,204
FHLB prepayment penalty—
 —
 —
 36,978
Merger, asset disposition and restructuring expenseMerger, asset disposition and restructuring expense— 632 1,374 641 
Other expenses2,673
 2,836
 9,609
 10,055
Other expenses5,245 1,422 7,600 4,776 
Total noninterest expense68,799
 73,680
 213,707
 239,077
Total noninterest expense84,807 86,332 166,751 172,523 
Income before income taxes36,005
 18,894
 107,187
 34,460
Income before income taxes43,277 64,105 79,177 115,945 
Federal and state income taxes expense12,414
 4,697
 34,868
 9,287
Federal and state income taxes expense9,851 15,138 17,464 26,741 
Net income$23,591
 14,197
 72,319
 25,173
Net income$33,426 48,967 61,713 89,204 
Basic earnings per share$0.23
 0.14
 0.72
 0.25
Basic earnings per share$0.26 0.38 0.49 0.70 
Diluted earnings per share$0.23
 0.14
 0.71
 0.25
Diluted earnings per share$0.26 0.38 0.49 0.70 
See accompanying notes to unaudited consolidated financial statements

Consolidated Financial Statements.

2
Table of Contents

NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(in thousands)

 Quarter ended
September 30,		 Nine months ended
September 30,
 2017 2016 2017 2016
Net income$23,591
 14,197
 72,319
 25,173
Other comprehensive income net of tax: 
  
  
  
Net unrealized holding gains/ (losses) on marketable securities: 
  
  
  
Unrealized holding gains/ (losses) net of tax of $164, $503, $(995), and $(2,377), respectively(264) (785) 1,684
 3,717
Reclassification adjustment for (gains)/ losses included in net income, net of tax of $369, $23, $416, and $(1), respectively(674) (36) (741) 3
Net unrealized holding gains/ (losses) on marketable securities(938) (821) 943
 3,720
        
Change in fair value of interest rate swaps, net of tax of $(138), $(253), $(419), and $(267), respectively258
 471
 779
 497
        
Defined benefit plan: 
  
  
  
Reclassification adjustment for prior period service costs included in net income, net of tax of $(153), $(144), $(460), and $(432), respectively221
 224
 662
 675
        
Other comprehensive income/(loss)(459) (126) 2,384
 4,892
        
Total comprehensive income$23,132
 14,071
 74,703
 30,065

Quarter ended June 30,Six months ended June 30,
 2022202120222021
Net income$33,426 48,967 61,713 89,204 
Other comprehensive income net of tax:    
Net unrealized holding gains/(losses) on marketable securities:    
Unrealized holding gains/(losses), net of tax of $11,973, ($1,245), $30,850, and $4,736, respectively(39,954)4,322 (104,737)(13,099)
Reclassification adjustment for gains included in net income, net of tax of $0, $43, $0, and $65, respectively(1)(136)(2)(211)
Net unrealized holding gains/(losses) on marketable securities(39,955)4,186 (104,739)(13,310)
Defined benefit plan:    
Actuarial reclassification adjustments for prior period service costs and actuarial (gains)/losses included in net income, net of tax of $51, ($128), $101, and ($258), respectively(131)334 (262)667 
Other comprehensive (loss)/income(40,086)4,520 (105,001)(12,643)
Total comprehensive (loss)/income$(6,660)53,487 (43,288)76,561 
See accompanying notes to unaudited consolidated financial statementsConsolidated Financial Statements.




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NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
(in thousands, expect share data)
Additional paid-in capitalRetained earningsAccumulated
other comprehensive loss		Total shareholders’ equity
 Common stock
Quarter ended June 30, 2022SharesAmount
Beginning balance at March 31, 2022126,686,373 $1,267 1,012,308 612,481 (102,544)1,523,512 
Comprehensive income:      
Net income— — — 33,426 — 33,426 
Other comprehensive loss, net of tax of $12,024— — — — (40,086)(40,086)
Total comprehensive income/(loss)— — — 33,426 (40,086)(6,660)
Exercise of stock options139,795 1 1,618 — — 1,619 
Stock-based compensation expense65,155 2 1,422 — — 1,424 
Stock-based compensation forfeited(9,557)(1)1 — — — 
Dividends paid ($0.20 per share)— — — (25,356)— (25,356)
Ending balance at June 30, 2022126,881,766 $1,269 1,015,349 620,551 (142,630)1,494,539 

Additional paid-in capitalRetained earningsAccumulated
other comprehensive income/(loss)		Total shareholders’ equity
 Common stock
Quarter ended June 30, 2021SharesAmount
Beginning balance at March 31, 2021127,222,648 $1,272 1,018,822 571,612 (50,712)1,540,994 
Comprehensive income:      
Net income— — — 48,967 — 48,967 
Other comprehensive income, net of tax of ($1,331)— — — — 4,520 4,520 
Total comprehensive income— — — 48,967 4,520 53,487 
Exercise of stock options418,916 4 5,102 — — 5,106 
Stock-based compensation expense320,755 3 1,715 — — 1,718 
Share repurchases(34,460)— (465)— — (465)
Stock-based compensation forfeited(19,974)— — — — — 
Dividends paid ($0.20 per share)— — — (25,479)— (25,479)
Ending balance at June 30, 2021127,907,885 $1,279 1,025,174 595,100 (46,192)1,575,361 
See accompanying notes to unaudited Consolidated Financial Statements.

4
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NORTHWEST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
(dollars in thousands, expect share data)
Additional paid-in capitalRetained earningsAccumulated
other comprehensive loss		Total shareholders’ equity
 Common stock
Six months ended June 30, 2022SharesAmount
Beginning balance at December 31, 2021126,612,183 $1,266 1,010,405 609,529 (37,629)1,583,571 
Comprehensive income:      
Net income— — — 61,713 — 61,713 
Other comprehensive loss, net of tax of $30,951— — — — (105,001)(105,001)
Total comprehensive income/(loss)— — — 61,713 (105,001)(43,288)
Exercise of stock options241,408 2 2,822 — — 2,824 
Stock-based compensation expense75,377 2 2,121 — — 2,123 
Stock-based compensation forfeited(47,202)(1)1 — — — 
Dividends paid ($0.40 per share)— — — (50,691)— (50,691)
Ending balance at June 30, 2022126,881,766 $1,269 1,015,349 620,551 (142,630)1,494,539 
Quarter ended September 30, 2016

         
Accumulated
Other
 Unallocated Total
 Common Stock Paid-in Retained Comprehensive common stock Shareholders’
 Shares Amount Capital Earnings Income/ (Loss) of ESOP Equity
Balance at June 30, 2016102,472,947
 $1,025
 722,980
 470,337
 (19,517) (19,370) 1,155,455
              
Comprehensive income: 
  
  
  
  
  
  
Net income—
 —
 —
 14,197
 —
 —
 14,197
              
Other comprehensive loss, net of tax of $129—
 —
 —
 —
 (126) —
 (126)
              
Total comprehensive income/(loss)—
 —
 —
 14,197
 (126) —
 14,071
              
ESOP loan payoff(1,366,574) (14) (13,896) —
 —
 13,910
 —
              
Exercise of stock options162,275
 2
 1,821
 —
 —
 —
 1,823
              
Stock-based compensation expense, including tax benefit of $81—
 —
 1,069
 —
 —
 5,460
 6,529
              
Dividends paid ($0.15 per share)—
 —
 —
 (15,075) —
 —
 (15,075)
              
Balance at September 30, 2016101,268,648
 $1,013
 711,974
 469,459
 (19,643) —
 1,162,803

Quarter ended September 30, 2017
         
Accumulated
Other
 Total
 Common Stock Paid-in Retained Comprehensive Shareholders’
 Shares Amount Capital Earnings Income/ (Loss) Equity
Balance at June 30, 2017102,478,146
 $1,025
 726,036
 495,017
 (25,148) 1,196,930
            
Comprehensive income: 
  
  
  
  
  
Net income—
 —
 —
 23,591
 —
 23,591
            
Other comprehensive loss, net of tax of $242—
 —
 —
 —
 (459) (459)
            
Total comprehensive income/ (loss)—
 —
 —
 23,591
 (459) 23,132
            
Exercise of stock options87,521
 1
 1,033
 —
 —
 1,034
            
Stock-based compensation expense—
 —
 1,094
 —
 —
 1,094
            
Dividends paid ($0.16 per share)—
 —
 —
 (16,343) —
 (16,343)
            
Balance at September 30, 2017102,565,667
 $1,026
 728,163
 502,265
 (25,607) 1,205,847

Additional paid-in capitalRetained earningsAccumulated
other comprehensive loss		Total shareholders’ equity
 Common stock
Six months ended June 30, 2021SharesAmount
Beginning balance at December 31, 2020127,019,452 $1,270 1,015,502 555,480 (33,549)1,538,703 
Comprehensive income:      
Net income— — — 89,204 — 89,204 
Other comprehensive loss, net of tax of $4,543— — — — (12,643)(12,643)
Total comprehensive income/(loss)— — — 89,204 (12,643)76,561 
Exercise of stock options986,345 10 12,023 — — 12,033 
Stock-based compensation expense322,685 3 2,676 — — 2,679 
Stock-based compensation forfeited(32,585)— — — — — 
Share repurchases(388,012)(4)(5,027)— — (5,031)
Dividends paid ($0.39 per share)— — — (49,584)— (49,584)
Ending balance at June 30, 2021127,907,885 $1,279 1,025,174 595,100 (46,192)1,575,361 
See accompanying notes to unaudited consolidated financial statementsConsolidated Financial Statements.



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NORTHWEST BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
(dollars in thousands, expect share data)
Nine Months Ended September 30, 2016
         
Accumulated
Other
 Unallocated Total
 Common Stock Paid-in Retained Comprehensive common stock Shareholders’
 Shares Amount Capital Earnings Income/ (Loss) of ESOP Equity
Beginning balance at December 31, 2015101,871,737
 $1,019
 717,603
 489,292
 (24,535) (20,216) 1,163,163
              
Comprehensive income: 
  
  
  
  
  
  
Net income—
 —
 —
 25,173
 —
 —
 25,173
              
Other comprehensive income, net of tax of $(3,077)—
 —
 —
 —
 4,892
 —
 4,892
              
Total comprehensive income—
 —
 —
 25,173
 4,892
 —
 30,065
              
ESOP loan payoff(1,366,574) (14) (13,896) —
 —
 13,910
 —
              
Exercise of stock options585,668
 7
 6,399
 —
 —
 —
 6,406
              
Stock-based compensation expense, including tax benefit of $287323,717
 3
 3,618
 —
 —
 6,306
 9,927
              
Share repurchases(145,900) (2) (1,750) —
 —
 —
 (1,752)
              
Dividends paid ($0.45 per share)—
 —
 —
 (45,006) —
 —
 (45,006)
              
Ending balance at September 30, 2016101,268,648
 $1,013
 711,974
 469,459
 (19,643) —
 1,162,803
Nine Months Ended September 30, 2017
         
Accumulated
Other
 Total
 Common Stock Paid-in Retained Comprehensive Shareholders’
 Shares Amount Capital Earnings Income/ (Loss) Equity
Beginning balance at December 31, 2016101,699,406
 $1,017
 718,834
 478,803
 (27,991) 1,170,663
            
Comprehensive income: 
  
  
  
  
  
Net income—
 —
 —
 72,319
 —
 72,319
            
Other comprehensive income, net of tax of $(1,458)—
 —
 —
 —
 2,384
 2,384
            
Total comprehensive income—
 —
 —
 72,319
 2,384
 74,703
            
Exercise of stock options488,211
 5
 5,611
 —
 —
 5,616
            
Stock-based compensation expense378,050
 4
 3,718
 —
 —
 3,722
            
Dividends paid ($0.48 per share)—
 —
 —
 (48,857) —
 (48,857)
            
Ending balance at September 30, 2017102,565,667
 $1,026
 728,163
 502,265
 (25,607) 1,205,847
See accompanying notes to unaudited consolidated financial statements


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NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
Six months ended June 30,
 20222021
Operating activities:  
Net income$61,713 89,204 
Adjustments to reconcile net income to net cash provided by operating activities:  
Provision for credit losses1,148 (5,620)
Net gain on sale of assets(625)(570)
Mortgage banking activity(2,660)(13,818)
Gain on sale of insurance business— (25,327)
Net depreciation, amortization and accretion2,860 3,058 
(Increase)/decrease in other assets(23,489)26,603 
Decrease in other liabilities(16,891)(18,261)
Net amortization on marketable securities2,783 4,040 
Noncash compensation expense related to stock benefit plans2,123 2,679 
Noncash write-down of real estate owned41 128 
Deferred income tax expense2,256 900 
Origination of loans held-for-sale(225,091)(420,530)
Proceeds from sale of loans held-for-sale222,662 462,522 
Net cash provided by operating activities26,830 105,008 
Investing activities:  
Purchase of marketable securities held-to-maturity(212,892)(479,165)
Purchase of marketable securities available-for-sale(102,178)(509,499)
Proceeds from maturities and principal reductions of marketable securities held-to-maturity57,254 18,261 
Proceeds from maturities and principal reductions of marketable securities available-for-sale148,260 225,823 
Proceeds from sale of marketable securities available-for-sale— 61,748 
Proceeds from bank-owned life insurance2,553 3,984 
Loan originations(2,158,246)(2,056,750)
Loan purchases(304,163)— 
Proceeds from loan maturities and principal reductions2,054,203 2,292,701 
Net proceeds/(redemptions) of FHLB stock822 (1,539)
Proceeds from sale of real estate owned424 1,431 
Proceeds from sale of real estate owned for investment153 153 
Disposals/(purchases) of premises and equipment, net1,687 (1,005)
Proceeds from the sale of insurance business— 28,238 
Net cash used in investing activities(512,123)(415,619)
 Nine months ended
September 30,
 2017 2016
OPERATING ACTIVITIES: 
  
Net Income$72,319
 25,173
Adjustments to reconcile net income to net cash provided by operating activities: 
  
Provision for loan losses13,226
 11,397
Net gain on sale of assets(1,443) (2,965)
Net gain on sale of offices(17,186) —
Net depreciation, amortization and accretion10,951
 9,974
Decrease in other assets22,518
 23,588
Increase in other liabilities1,761
 9,003
Net amortization on marketable securities1,535
 1,533
Noncash write-down of real estate owned980
 1,274
FHLB prepayment penalty—
 24,520
Deferred income tax benefit—
 (445)
Origination of loans held for sale(59,401) (188,474)
Proceeds from sale of loans held for sale68,041
 158,058
Noncash compensation expense related to stock benefit plans3,722
 9,640
Net cash provided by operating activities117,023
 82,276
    
INVESTING ACTIVITIES: 
  
Purchase of marketable securities held-to-maturity(23,621) —
Purchase of marketable securities available-for-sale(210,111) (238,673)
Proceeds from maturities and principal reductions of marketable securities held-to-maturity11,625
 9,097
Proceeds from maturities and principal reductions of marketable securities available-for-sale144,846
 227,283
Proceeds from sale of marketable securities available-for-sale23,501
 91
Loan originations(2,050,885) (1,950,953)
Proceeds from loan maturities and principal reductions2,002,816
 1,849,593
Net (purchase)/ sale of Federal Home Loan Bank stock(594) 33,243
Proceeds from sale of real estate owned3,687
 6,557
Sale of real estate owned for investment, net456
 456
Net purchase of premises and equipment(1,242) (12,485)
Acquisitions, net of cash received—
 1,118,400
Net cash provided by/ (used in) investing activities(99,522) 1,042,609


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NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued)
(in thousands)
 Nine months ended
September 30,
 2017 2016
FINANCING ACTIVITIES: 
  
Decrease in deposits, net$(155,925) (52,624)
Repayments of long-term borrowings, including prepayment penalty—
 (774,863)
Net increase/ (decrease) in short-term borrowings(27,511) (88,773)
Decrease in advances by borrowers for taxes and insurance(15,015) (15,402)
Cash dividends paid(48,857) (45,006)
Purchase of common stock for retirement—
 (1,752)
Proceeds from stock options exercised5,616
 6,406
Excess tax benefit from stock-based compensation—
 287
Net cash used in financing activities(241,692) (971,727)
    
Net increase/ (decrease) in cash and cash equivalents$(224,191) 153,158
    
Cash and cash equivalents at beginning of period$389,867
 167,408
Net increase/ (decrease) in cash and cash equivalents(224,191) 153,158
Cash and cash equivalents at end of period$165,676
 320,566
    
Cash and cash equivalents: 
  
Cash and due from banks$104,372
 107,604
Interest-earning deposits in other financial institutions60,662
 210,723
Federal funds sold and other short-term investments642
 2,239
Total cash and cash equivalents$165,676
 320,566
    
Cash paid during the period for: 
  
Interest on deposits and borrowings (including interest credited to deposit accounts of $16,644 and $16,556, respectively)$20,875
 32,519
Income taxes$20,705
 4,086
    
Business acquisitions: 
  
Fair value of assets acquired, excluding cash received$—
 545,796
Cash paid, net—
 1,118,400
Liabilities assumed$—
 1,664,196
    
Non-cash activities: 
  
Loan foreclosures and repossessions$4,750
 2,877
Sale of real estate owned financed by the Company$1,810
 1,773
Six months ended June 30,
 20222021
Financing activities:  
Net (decrease)/increase in deposits$(233,910)491,475 
Repayments of long-term borrowings(10,094)(22,000)
Net decrease in short-term borrowings(8,603)(3,785)
Increase in advances by borrowers for taxes and insurance11,040 8,378 
Cash dividends paid on common stock(50,691)(49,584)
Purchase of common stock for retirement— (5,031)
Proceeds from stock options exercised2,824 12,033 
Net cash (used in)/provided by financing activities(289,434)431,486 
Net (decrease)/increase in cash and cash equivalents$(774,727)120,875 
Cash and cash equivalents at beginning of period$1,279,259 736,277 
Net (decrease)/increase in cash and cash equivalents(774,727)120,875 
Cash and cash equivalents at end of period$504,532 857,152 
Cash paid during the period for:  
Interest on deposits and borrowings (including interest credited to deposit accounts of $6,943 and $10,295, respectively)$11,520 14,625 
Income taxes11,581 20,601 
Non-cash activities:  
Loan foreclosures and repossessions$2,591 2,831 
Sale of real estate owned financed by the Company— 54 
See accompanying notes to unaudited consolidated financial statementsConsolidated Financial Statements.




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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Unaudited(Unaudited)
 
(1)Basis of Presentation and Informational Disclosures
(1)    Basis of Presentation and Informational Disclosures
 
Northwest Bancshares, Inc. (the “Company”) or (“NWBI”“NWBI”), a Maryland corporation headquartered in Warren, Pennsylvania,Columbus, Ohio, is a savings and loanbank holding company regulated by the Board of Governors of the Federal Reserve System.System (“FRB”). The primary activity of the Company is the ownership of all of the issued and outstanding common stock of Northwest Bank, a Pennsylvania-chartered savings bank (“Northwest”). Northwest is regulated by the FDICFederal Deposit Insurance Corporation (“FDIC”) and the Pennsylvania Department of Banking. Northwest operates 173150 community-banking offices throughout Pennsylvania, westernWestern New York, Eastern Ohio, and eastern Ohio.Indiana.
 
The accompanying unaudited consolidated financial statementsConsolidated Financial Statements include the accounts of the Company and its subsidiary, Northwest, and Northwest’s subsidiaries Northwest Settlement Agency, LLC, Northwest Consumer Discount Company, Northwest Financial Services, Inc., Northwest Advisors, Inc., Northwest Capital Group, Inc., Allegheny Services, Inc., Great Northwest Corporation, Boetger & Associates,and MutualFirst Interest Company, Inc. and The Bert Company. The unaudited consolidated financial statementsConsolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information or footnotes required for complete annual financial statements. In the opinion of management, all adjustments necessary for the fair presentation of the Company’s financial position and results of operations have been included. The consolidated statementsConsolidated Financial Statements have been prepared using the accounting policies described in the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20162021 updated, as required, for any new pronouncements or changes.

Allowance for Credit Losses and Provision for Credit Losses Update

During the quarter-ended June 30, 2022, the Bank implemented a new model to calculate the allowance for credit losses on our vehicle loan portfolio. Additionally, as part of the process we re-assessed our loan segmentation and loans that were previously included in our consumer loan portfolio were moved into our vehicle loan portfolio. The change in segmentation was driven by underlying collateral types and the loans continue to share similar risk characteristics.

The allowance for credit losses within the vehicle loan portfolio is calculated using a non-discounted cash flow model developed by an external third-party. Monthly probabilities of default and prepayment are estimated for each loan, along with estimates of exposure at default and loss given default. The model utilizes loan, borrower, and collateral characteristics, and macroeconomic data as inputs.
Certain items previously reported have been reclassified to conform to the current year’s reporting format.


The results of operations for the quarter and nine months ended SeptemberJune 30, 20172022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017,2022, or any other period.
 
Stock-Based Compensation
 
On May 17, 2017,18, 2022, the Company grantedawarded employees 754,210150,027 restricted stock options and directors 64,800 stock optionsunits (“RSUs”) with an exercise price of $15.57 anda weighted average discounted grant date fair value of $1.55 per$11.00. The RSUs vest over a three-year period with the first vesting occurring one year from the grant date. The Company awarded directors 41,206 restricted stock option, and the Company granted employees 353,750 restricted common shares and directors 24,300 restricted common sharesawards (“RSAs”) with a grant date fair value of $15.24.  Granted stock options and common shares$12.55 which fully vest one-year from the grant date. Also, the Company awarded employees 150,027 performance share units (“PSUs”) with a discounted grant date fair value of $10.26. The number of PSUs earned will be based on attainment of certain performance criteria over a ten-yearthree-year period, with the firstactual number of shares issuable ranging between 0% and 150% of the number of PSUs granted. The PSUs have a three-year cliff vesting, occurring onfrom the date of grant, date.and any PSU's earned will be issued after the vesting period. Stock-based compensation expense of $1.1$1.4 million and $6.4$1.7 million for the quarters ended SeptemberJune 30, 20172022 and 2016, and $3.7 million and $9.6 million for the nine months ended September 30, 2017 and 2016 ,2021, respectively, was recognized in compensation expense relating to our stock benefit plans. At SeptemberJune 30, 20172022, there was compensation expense of $4.4$1.1 million to be recognized for awarded but unvested stock options, and $17.7$6.6 million for unvested restricted common shares.shares, $1.3 million to be recognized for awarded but unvested RSUs, $420,000 to be recognized for awarded but unvested RSAs, and $1.3 million to be recognized for awarded but unvested PSUs.


Income Taxes- UncertainTaxes-Uncertain Tax Positions
 
Accounting standards prescribe a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. A tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. At September 30, 2017 the CompanyWe had noa $241,000 and $336,000 liability for unrecognized tax benefits.benefits as of June 30, 2022 and 2021, respectively.
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The Company recognizesWe recognize interest accrued related to: (1) unrecognized tax benefits in other expenses and (2) refund claims in other operating income, andincome. We recognize penalties (if any) in other expenses. We are subject to audit by the Internal Revenue Service and any state in which we conduct business for the tax periods ended December 31, 2016, 2015, and 2014.

Impact of New Accounting Standards
In May 2014 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-9, “Revenue from Contracts with Customers (Topic 606)”. This guidance supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The core principle of this guidance requires an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services and provides five steps to be analyzed to accomplish the core principle. This guidance is effective retrospectively for annual reporting periods beginning after December 15, 2017, including interim periods within those years and early adoption is not permitted. Our revenue is comprised of net interest income on financial


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assets and financial liabilities, which is explicitly excluded from the scope of ASU 2014-09, and non-interest income. With respect to non-interest income we are substantially complete with our overall assessment of revenue streams and reviewing of related contracts potentially affected by the ASU, including service charges and fees, trust and other financial services income, insurance commission income, and other operating income. Our assessment suggests that adoption of this ASU should not materially change the method in which we currently recognize revenue for these revenue streams. We are also substantially complete with our evaluation of certain costs related to these revenue streams to determine whether such costs should be presented as expenses or contra-revenue (i.e., gross vs. net). In addition, we are evaluating the ASU’s expanded disclosure requirements. We plan to adopt ASU No. 2014-09 on January 1, 2018 utilizing the modified retrospective approach with a cumulative effect adjustment to opening retained earnings, if such adjustment is deemed to be material.

In February 2016 the FASB issued ASU 2016-2, “Leases”. This guidance requires a lessee to recognize in the statement of financial condition a liability to make lease payments and a right-of-use asset representing the right to use the underlying asset for the term of the lease. Optional periods should only be recognized if the lessee is reasonably certain to exercise the option. For leases with a term of twelve months or less, the lessee is permitted not to recognize lease assets and lease liabilities and should recognize lease expense for such leases generally on a straight-line basis over the term of the lease. This guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those years and early adoption is permitted. We are currently evaluating the impact this standard will have on our results of operations and financial position.

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326)-Measurement of Credit Losses on Financial Instruments", which eliminates the probable initial recognition threshold for credit losses requiring, instead, that all financial assets (or group of financial assets) measured at amortized cost be presented at the net amount expected to be collected inclusive of the entity’s current estimate of all lifetime expected credit losses. This guidance also applies to certain off-balance-sheet credit exposures such as unfunded commitments and non-derivative financial guarantees. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) in order to present the net carrying value at the amount expected to be collected on the financial asset. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The income statement under this guidance will reflect the initial recognition of current expected credit losses for newly recognized assets, as well as any increases or decreases of expected credit losses that have occurred during the period. This guidance retains many currently-existing disclosures related to the credit quality of an entity’s assets and the related allowance for credit losses amended to reflect the change to an expected credit loss methodology, as well as enhanced disclosures to provide information to users at a more disaggregated level. Upon adoption, ASU 2016-13 provides for a modified retrospective transition by means of a cumulative-effect adjustment to equity as of the beginning of the period in which the guidance is effective, except for debt securities for which an other-than-temporary impairment has previously been recognized. For these debt securities, a prospective transition is provided in order to maintain the same amortized cost prior to and subsequent to the effective date of the ASU. This guidance is effective for annual reporting periods beginning after December 15,2021, 2020, 2019 and interim periods within those annual periods with early adoption permitted for fiscal years beginning after December 15, 2018, and interim periods within those annual periods. Management created a formal working group to govern the implementation of these amendments consisting of key stakeholders from finance, risk, and accounting. We are currently in the process of designing current expected credit loss estimation methodologies and systems, and collecting data to be able to comply with the standard. We are also evaluating the effect this standard will have on our results of operations, financial position and related disclosures. The impact of the ASU will depend upon the state of the economy and the nature of our portfolios at the date of adoption.2018.


In January 2017 the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment". This guidance eliminates the requirement to determine the fair value of individual assets and liabilities of a reporting unit to measure goodwill impairment. Under this guidance goodwill impairment testing will be performed by comparing the fair value of the reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. This guidance is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019, and should be applied on a prospective basis. We are currently evaluating the impact this standard will have on our results of operations and financial position.


In March 2017, the FASB issued ASU No. 2017-07, “Compensation Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Costs and Net Periodic Postretirement Benefit Costs". This guidance provides financial statement users with clearer and disaggregated information related to the components of net periodic benefit cost and improve transparency of the presentation of net periodic benefit cost in the financial statements. This guidance is effective for annual and interim periods beginning after December 15, 2017. Early adoption is permitted and this guidance should be applied retrospectively. We are currently evaluating the impact this standard will have on our results of operations and financial position.



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 In March 2017 the FASB issued ASU 2017-08, "Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities". This guidance shortens the amortization period for certain callable debt securities held at a premium to the earliest call date from the maturity date. This guidance is effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted in any interim period. We are currently evaluating the impact this standard will have on our results of operations and financial position.

(2)Business Segments
We previously operated in two reportable business segments: Community Banking and Consumer Finance. The Community Banking segment provides services traditionally offered by full-service community banks, including business and personal deposit accounts and business and personal loans, as well as insurance, brokerage and investment management and trust services. The Consumer Finance segment, which was comprised of Northwest Consumer Discount Company ("NCDC"), a subsidiary of Northwest offered personal installment loans for a variety of consumer and real estate products. This activity was funded primarily through an intercompany borrowing relationship with Allegheny Services, Inc., a subsidiary of Northwest. All NCDC offices were closed on July 14, 2017. Net income is the primary measure used by management to measure segment performance. The following tables provide financial information for these reportable segments.  The “All Other” column represents the parent company and elimination entries necessary to reconcile to the consolidated amounts presented in the financial statements.

At or for the quarter ended (in thousands): 
  Community Consumer    
September 30, 2017 Banking Finance All other (1) Consolidated
External interest income $89,711
 475
 45
 90,231
Intersegment interest income/ expense 138
 —
 (138) —
Interest expense 5,871
 138
 985
 6,994
Provision for loan losses 8,693
 (5,666) —
 3,027
Noninterest income 23,922
 36
 636
 24,594
Noninterest expense 67,493
 1,941
 (635) 68,799
Income tax expense 10,656
 1,700
 58
 12,414
Net income $21,058
 2,398
 135
 23,591
Total assets $9,404,881
 44,849
 10,084
 9,459,814
 (1) Consists of intercompany elimination entries and holding company income, expense and assets.

  Community Consumer    
September 30, 2016 Banking Finance All other (1) Consolidated
External interest income $80,245
 4,264
 239
 84,748
Intersegment interest income/ expense 645
 —
 (645) —
Interest expense 6,338
 645
 471
 7,454
Provision for loan losses 4,276
 1,262
 —
 5,538
Noninterest income 20,424
 372
 22
 20,818
Noninterest expense 70,580
 2,908
 192
 73,680
Income tax expense/ (benefit) 5,147
 (74) (376) 4,697
Net income/ (loss) $14,973
 (105) (671) 14,197
Total assets $9,590,487
 109,601
 14,519
 9,714,607
(1)Consists of intercompany elimination entries and holding company income, expense and assets.




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At or for the nine months ended (in thousands):
  Community Consumer    
September 30, 2017 Banking Finance All other (1) Consolidated
External interest income $259,160
 8,008
 127
 267,295
Intersegment interest income 1,473
 —
 (1,473) —
Interest expense 17,344
 1,473
 1,933
 20,750
Provision for loan losses 15,371
 (2,145) —
 13,226
Noninterest income 85,653
 357
 1,565
 87,575
Noninterest expense 203,225
 9,458
 1,024
 213,707
Income tax expense/ (benefit) 36,028
 (175) (985) 34,868
Net income/ (loss) $74,318
 (246) (1,753) 72,319
Total assets $9,404,881
 44,849
 10,084
 9,459,814
(1)Consists of intercompany elimination entries and holding company income, expense and assets.

  Community Consumer    
September 30, 2016 Banking Finance All other (1) Consolidated
External interest income $242,081
 12,831
 689
 255,601
Intersegment interest income 1,918
 —
 (1,918) —
Interest expense 27,943
 1,918
 1,347
 31,208
Provision for loan losses 8,854
 2,543
 —
 11,397
Noninterest income 59,278
 1,152
 111
 60,541
Noninterest expense 229,492
 8,715
 870
 239,077
Income tax expense/ (benefit) 10,144
 335
 (1,192) 9,287
Net income/ (loss) $26,844
 472
 (2,143) 25,173
Total assets $9,590,487
 109,601
 14,519
 9,714,607
(1)Consists of intercompany elimination entries and holding company income, expense and assets.



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(3)    Investment securities and impairment of investment securities

     The following table shows the portfolio of investment securities available-for-sale at September 30, 2017 (in thousands):

 
Amortized
cost
 
Gross
unrealized
holding
gains
 
Gross
unrealized
holding
losses
 
Fair
value
Debt issued by the U.S. government and agencies: 
  
  
  
Due in one year or less$2
 —
 —
 2
        
Debt issued by government sponsored enterprises: 
  
  
  
Due in one year or less96,608
 36
 (244) 96,400
Due in one year through five years141,476
 34
 (1,543) 139,967
Due in five years through ten years—
 —
 —
 —
Due after ten years5,304
 —
 (72) 5,232
        
Equity securities824
 131
 (6) 949
        
Municipal securities: 
  
  
  
Due in one year or less2,312
 13
 —
 2,325
Due in one year through five years7,472
 142
 (3) 7,611
Due in five years through ten years12,315
 165
 —
 12,480
Due after ten years30,226
 572
 —
 30,798
        
Corporate debt issues: 
  
  
  
Due after ten years14,280
 4,611
 (213) 18,678
        
Residential mortgage-backed securities: 
  
  
  
Fixed rate pass-through143,106
 1,460
 (2,070) 142,496
Variable rate pass-through35,140
 1,573
 (4) 36,709
Fixed rate non-agency CMOs41
 —
 —
 41
Fixed rate agency CMOs300,741
 263
 (2,855) 298,149
Variable rate agency CMOs77,464
 274
 (94) 77,644
Total residential mortgage-backed securities556,492
 3,570
 (5,023) 555,039
Total marketable securities available-for-sale$867,311
 9,274
 (7,104) 869,481




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The following table shows the portfolio of investment securities available-for-sale at December 31, 2016 (in thousands): 
 
Amortized
cost
 
Gross
unrealized
holding
gains
 
Gross
unrealized
holding
losses
 
Fair
value
Debt issued by the U.S. government and agencies: 
  
  
  
Due in one year or less$6
 —
 —
 6
        
Debt issued by government sponsored enterprises: 
  
  
  
Due in one year or less74,980
 5
 (33) 74,952
Due after one year through five years220,937
 203
 (2,504) 218,636
Due after five years through ten years585
 —
 (3) 582
        
Equity securities3,351
 1,095
 (6) 4,440
        
Municipal securities: 
  
  
  
Due in one year or less2,449
 7
 —
 2,456
Due after one year through five years9,448
 105
 (21) 9,532
Due after five years through ten years11,794
 137
 (1) 11,930
Due after ten years38,141
 1,027
 (16) 39,152
        
Corporate debt issues: 
  
  
  
Due after ten years14,367
 2,935
 (322) 16,980
        
Residential mortgage-backed securities: 
  
  
  
Fixed rate pass-through175,398
 1,849
 (2,680) 174,567
Variable rate pass-through43,587
 2,007
 (6) 45,588
Fixed rate non-agency CMOs100
 1
 —
 101
Fixed rate agency CMOs165,535
 185
 (3,455) 162,265
Variable rate agency CMOs64,874
 306
 (167) 65,013
Total residential mortgage-backed securities449,494
 4,348
 (6,308) 447,534
Total marketable securities available-for-sale$825,552
 9,862
 (9,214) 826,200
(2)    Marketable Securities
 
The following table shows the portfolio of investmentmarketable securities available-for-sale at June 30, 2022 (in thousands):
Amortized
cost		Gross
unrealized
holding
gains		Gross
unrealized
holding
losses		Fair
value
Debt issued by the U.S government and agencies:
Due in one year through five years$20,000 — (1,147)18,853 
Due after ten years55,553 — (7,674)47,879 
Debt issued by government-sponsored enterprises:
Due in one year through five years992 — (12)980 
Due in five years through ten years46,019 — (5,735)40,284 
Municipal securities:
Due in less than one year723 1 — 724 
Due in one year through five years1,174 6 (19)1,161 
Due in five years through ten years32,974 25 (1,640)31,359 
Due after ten years95,283 45 (13,175)82,153 
Corporate debt issues:
Due in five years through ten years13,564 8 (62)13,510 
Residential mortgage-backed securities:
Fixed rate pass-through243,193 144 (22,991)220,346 
Variable rate pass-through9,813 62 (60)9,815 
Fixed rate agency CMOs964,937 12 (99,663)865,286 
Variable rate agency CMOs32,518 137 (262)32,393 
Total residential mortgage-backed securities1,250,461 355 (122,976)1,127,840 
Total marketable securities available-for-sale$1,516,743 440 (152,440)1,364,743 


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The following table shows the portfolio of marketable securities available-for-sale at December 31, 2021 (in thousands):
Amortized
cost		Gross
unrealized
holding
gains		Gross
unrealized
holding
losses		Fair
value
Debt issued by the U.S. government and agencies:    
Due in one year through five years$20,000 — (68)19,932 
Due after ten years57,681 — (1,722)55,959 
Debt issued by government-sponsored enterprises:    
Due in less than one year177 — — 177 
Due in one year through five years991 73 — 1,064 
Due in five years through ten years46,411 1 (1,568)44,844 
Municipal securities:    
Due in less than one year946 13 — 959 
Due in one year through five years1,261 22 (3)1,280 
Due in five years through ten years23,692 661 (146)24,207 
Due after ten years99,558 2,884 (187)102,255 
Residential mortgage-backed securities:    
Fixed rate pass-through265,604 2,389 (2,525)265,468 
Variable rate pass-through11,306 294 (9)11,591 
Fixed rate agency CMOs997,680 2,284 (18,965)980,999 
Variable rate agency CMOs39,695 224 (62)39,857 
Total residential mortgage-backed securities1,314,285 5,191 (21,561)1,297,915 
Total marketable securities available-for-sale$1,565,002 8,845 (25,255)1,548,592 
     
    The following table shows the portfolio of marketable securities held-to-maturity at SeptemberJune 30, 20172022 (in thousands):
Amortized
cost		Gross
unrealized
holding
gains		Gross
unrealized
holding
losses		Fair
value
Debt issued by the U.S. government and agencies:    
Due in one year through five years$16,477 — (1,214)15,263 
Due in five years through ten years107,975 — (15,547)92,428 
Residential mortgage-backed securities:    
Fixed rate pass-through171,477 2 (18,329)153,150 
Variable rate pass-through611 2 — 613 
Fixed rate agency CMOs626,080 197 (52,731)573,546 
Variable rate agency CMOs560 5 — 565 
Total residential mortgage-backed securities798,728 206 (71,060)727,874 
Total marketable securities held-to-maturity$923,180 206 (87,821)835,565 

 
Amortized
cost
 
Gross
unrealized
holding
gains
 
Gross
unrealized
holding
losses
 
Fair
value
Residential mortgage-backed securities: 
  
  
  
Fixed rate pass-through$3,971
 189
 —
 4,160
Variable rate pass-through2,412
 57
 —
 2,469
Fixed rate agency CMOs24,791
 87
 (25) 24,853
Variable rate agency CMOs787
 13
 —
 800
Total residential mortgage-backed securities31,961
 346
 (25) 32,282
Total marketable securities held-to-maturity$31,961
 346
 (25) 32,282




10
13
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The following table shows the portfolio of investmentmarketable securities held-to-maturity at December 31, 20162021 (in thousands): 
Amortized
cost		Gross
unrealized
holding
gains		Gross
unrealized
holding
losses		Fair
value
Debt issued by the U.S. government and agencies:    
Due in one through five years$16,478 — (206)16,272 
Due in five years through ten years107,973 — (4,613)103,360 
Residential mortgage-backed securities:    
Fixed rate pass-through183,092 58 (2,161)180,989 
Variable rate pass-through667 24 — 691 
Fixed rate agency CMOs459,345 251 (10,011)449,585 
Variable rate agency CMOs599 17 — 616 
Total residential mortgage-backed securities643,703 350 (12,172)631,881 
Total marketable securities held-to-maturity$768,154 350 (16,991)751,513 
 
Amortized
cost
 
Gross
unrealized
holding
gains
 
Gross
unrealized
holding
losses
 
Fair
value
Municipal securities: 
  
  
  
Due after ten years$4,808
 65
 —
 4,873
        
Residential mortgage-backed securities: 
  
  
  
Fixed rate pass-through4,807
 217
 —
 5,024
Variable rate pass-through2,848
 58
 —
 2,906
Fixed rate agency CMOs6,674
 94
 —
 6,768
Variable rate agency CMOs841
 14
 —
 855
Total residential mortgage-backed securities15,170
 383
 —
 15,553
Total marketable securities held-to-maturity$19,978
 448
 —
 20,426

The following table shows the contractual maturity of our residential mortgage-backed securities available-for-sale at June 30, 2022 (in thousands):
Amortized
cost		Fair
value
Residential mortgage-backed securities:  
Due in less than one year$142 142 
Due in one year through five years44,173 42,250 
Due after five years through ten years175,552 163,453 
Due after ten years1,030,594 921,995 
Total residential mortgage-backed securities$1,250,461 1,127,840 

The following table shows the contractual maturity of our residential mortgage-backed securities held-to-maturity at June 30, 2022 (in thousands):
Amortized
cost		Fair
value
Residential mortgage-backed securities:  
Due in one year through five years$20,792 18,371 
Due after five years through ten years171,108 152,785 
Due after ten years606,828 556,718 
Total residential mortgage-backed securities$798,728 727,874 

The following table shows the fair value of and gross unrealized losses on investmentmarketable securities, for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at SeptemberJune 30, 20172022 (in thousands):
 Less than 12 months12 months or moreTotal
Fair 
value		Unrealized
loss		Fair 
value		Unrealized
loss		Fair 
value		Unrealized
loss
U.S. government-sponsored enterprises$65,246 (6,707)150,441 (24,622)215,687 (31,329)
Municipal securities101,666 (14,055)3,702 (779)105,368 (14,834)
Corporate debt issues6,409 (62)— — 6,409 (62)
Residential mortgage-backed securities - agency1,141,928 (107,959)560,788 (86,077)1,702,716 (194,036)
Total$1,315,249 (128,783)714,931 (111,478)2,030,180 (240,261)

11
 Less than 12 months 12 months or more Total
 Fair value 
Unrealized
loss
 Fair value 
Unrealized
loss
 Fair value 
Unrealized
loss
U.S. government sponsored enterprises$55,288
 (161) 174,633
 (1,698) 229,921
 (1,859)
Municipal securities1,735
 (3) —
 —
 1,735
 (3)
Corporate issues—
 —
 2,220
 (213) 2,220
 (213)
Equity securities—
 —
 544
 (6) 544
 (6)
Residential mortgage-backed securities - agency195,468
 (814) 177,277
 (4,234) 372,745
 (5,048)
            
Total temporarily impaired securities$252,491
 (978) 354,674
 (6,151) 607,165
 (7,129)
Table of Contents

The following table shows the fair value of and gross unrealized losses on investmentmarketable securities, for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at December 31, 20162021 (in thousands):
 Less than 12 months 12 months or more Total
 Fair value 
Unrealized
loss
 Fair value 
Unrealized
loss
 Fair value 
Unrealized
loss
U.S. government sponsored enterprises$238,003
 (2,448) 9,205
 (92) 247,208
 (2,540)
Municipal securities5,621
 (37) 66
 (1) 5,687
 (38)
Corporate debt issues—
 —
 2,107
 (322) 2,107
 (322)
Equity securities—
 —
 544
 (6) 544
 (6)
Residential mortgage-backed securities - agency213,662
 (3,837) 87,723
 (2,471) 301,385
 (6,308)
            
Total temporarily impaired securities$457,286
 (6,322) 99,645
 (2,892) 556,931
 (9,214)
 Less than 12 months12 months or moreTotal
Fair 
value		Unrealized
loss		Fair 
value		Unrealized
loss		Fair 
value		Unrealized
loss
U.S. government-sponsored enterprises$132,782 (3,504)106,160 (4,673)238,942 (8,177)
Municipal securities25,118 (336)— — 25,118 (336)
Residential mortgage-backed securities - agency1,428,582 (26,516)184,389 (7,217)1,612,971 (33,733)
Total$1,586,482 (30,356)290,549 (11,890)1,877,031 (42,246)
 
We review ourThe Company does not believe that the available-for-sale debt securities that were in an unrealized loss position as of June 30, 2022, which were comprised of 583 individual securities, represents a credit loss impairment. All of these securities were issued by U.S. government agencies, U.S. government-sponsored enterprises, corporate debt or local municipalities. The securities issued by the U.S. government agencies or U.S. government-sponsored enterprises are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. The corporate debt issues and securities issued by local municipalities were all highly rated by major rating agencies and have no history of credit losses. The unrealized losses were primarily attributable to changes in the interest rate environment and not due to the credit quality of these investment portfolio for indications of impairment. This review includes analyzingsecurities. The Company does not have the length of timeintent to sell these investment securities and the extentit is likely that we will not be required to sell these securities before their anticipated recovery, which amortized costs have exceeded fair values, the financial condition and near-term prospectsmay be at maturity.

All of the issuer, including any specific eventsCompany’s held-to-maturity debt securities are issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses.Therefore, the Company did not record an allowance for credit losses for these securities as of June 30, 2022.

The following table presents the credit quality of our held-to-maturity securities, based on the latest information available as of June 30, 2022 (in thousands). The credit ratings are sourced from nationally recognized rating agencies, which may influenceinclude Moody’s and S&P, or when credit ratings cannot be sourced from the operationsagencies, they are presented based on asset type. All of the issuer,our held-to-maturity securities were current in their payment of principal and the intent and ability to hold the investments for a periodinterest as of time sufficient to allow for a recovery in value. Certain investments are evaluated using our best estimate of future cash flows. If the estimate of cash flows indicates that an adverse change has occurred, other-than-temporary impairment is recognized for the amount of the unrealized loss that was deemed credit related.June 30, 2022.

AA+Total
Held-to-maturity securities (at amortized cost):
  Debt issued by the U.S. government-sponsored enterprises$124,452 124,452 
  Residential mortgage-backed securities798,728 798,728 
Total marketable securities held-to-maturity$923,180 923,180 



12
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(3)    Loans Receivable

    
Credit related impairment on all debt securities is recognized in earnings while noncredit related impairment on available-for-sale debt securities, not expected to be sold, is recognized in other comprehensive income.
The table below shows a cumulative roll forward of credit losses recognized in earnings for debt securities held and not intended to be sold for the quarter and nine months ended (in thousands):

 2017 2016
Beginning balance at July 1, (1)$7,942
 8,408
Credit losses on debt securities for which other-than-temporary impairment was not previously recognized—
 —
Reduction for losses realized during the quarter—
 (16)
Reduction for securities sold/ called realized during the quarter—
 —
Additional credit losses on debt securities for which other-than-temporary impairment was previously recognized—
 —
Ending balance at September 30,$7,942
 8,392
(1) The beginning balance represents credit losses included in other-than-temporary impairment charges recognized on debt securities in prior periods
 2017 2016
Beginning balance at January 1, (1)$7,942
 8,436
Credit losses on debt securities for which other-than-temporary impairment was not previously recognized—
 —
Reduction for losses realized during the quarter—
 (44)
Reduction for securities sold/ called realized during the nine months—
 —
Additional credit losses on debt securities for which other-than-temporary impairment was previously recognized—
 —
Ending balance at September 30,$7,942
 8,392
(1) The beginning balance represents credit losses included in other-than-temporary impairment charges recognized on debt securities in prior periods.



15
Table of Contents

(4)    Loans receivable
The following table shows a summary of our loans receivable at Septemberamortized cost basis at June 30, 20172022 and December 31, 20162021 (in thousands): 
September 30, 2017 December 31, 2016June 30, 2022December 31, 2021
Originated Acquired Total Originated Acquired Total Originated (1)Acquired (2)TotalOriginated (1)Acquired (2)Total
Personal Banking: 
  
  
  
    Personal Banking:    
Residential mortgage loans (1)(3)$2,624,216
 119,463
 2,743,679
 2,565,620
 133,511
 2,699,131
$3,101,251 185,524 3,286,775 2,783,459 211,161 2,994,620 
Home equity loans1,045,152
 268,283
 1,313,435
 1,042,913
 302,457
 1,345,370
Home equity loans1,095,844 184,648 1,280,492 1,107,202 212,729 1,319,931 
Consumer finance loans (2)26,892
 —
 26,892
 48,981
 —
 48,981
Vehicle loansVehicle loans1,785,828 109,907 1,895,735 1,384,246 99,985 1,484,231 
Consumer loans522,604
 110,611
 633,215
 418,656
 163,622
 582,278
Consumer loans97,939 8,871 106,810 307,961 46,556 354,517 
Total Personal Banking4,218,864
 498,357
 4,717,221
 4,076,170
 599,590
 4,675,760
Total Personal Banking6,080,862 488,950 6,569,812 5,582,868 570,431 6,153,299 
           
Commercial Banking: 
  
  
  
  
  
Commercial Banking:      
Commercial real estate loans2,210,699
 312,192
 2,522,891
 2,140,678
 372,991
 2,513,669
Commercial real estate loans2,130,573 355,401 2,485,974 2,202,027 423,454 2,625,481 
Commercial real estate loans - owner occupiedCommercial real estate loans - owner occupied342,907 47,295 390,202 321,253 68,750 390,003 
Commercial loans556,750
 69,724
 626,474
 481,543
 75,676
 557,219
Commercial loans926,565 60,271 986,836 765,877 81,732 847,609 
Total Commercial Banking2,767,449
 381,916
 3,149,365
 2,622,221
 448,667
 3,070,888
Total Commercial Banking3,400,045 462,967 3,863,012 3,289,157 573,936 3,863,093 
Total loans receivable, gross6,986,313
 880,273
 7,866,586
 6,698,391
 1,048,257
 7,746,648
Total loans receivable, gross9,480,907 951,917 10,432,824 8,872,025 1,144,367 10,016,392 
           
Deferred loan costs24,707
 1,799
 26,506
 20,081
 2,294
 22,375
Allowance for loan losses(50,845) (6,082) (56,927) (55,293) (5,646) (60,939)
Undisbursed loan proceeds: 
  
  
  
  
  
Residential mortgage loans(13,146) —
 (13,146) (11,638) —
 (11,638)
Commercial real estate loans(121,316) (2,689) (124,005) (168,595) (2,985) (171,580)
Commercial loans(28,519) (1,284) (29,803) (26,168) (2,290) (28,458)
Total loans receivable, net$6,797,194
 872,017
 7,669,211
 6,456,778
 1,039,630
 7,496,408
Allowance for credit lossesAllowance for credit losses(84,300)(14,055)(98,355)(86,750)(15,491)(102,241)
Total loans receivable, net (4)Total loans receivable, net (4)$9,396,607 937,862 10,334,469 8,785,275 1,128,876 9,914,151 
(1) Includes $1.4originated and purchased loan pools purchased in an asset acquisition.
(2) Includes loans subject to purchase accounting in a business combination.
(3)     Includes fair value of $31.2 million and $9.6$25.1 million of loans held for saleheld-for-sale at SeptemberJune 30, 20172022 and December 31, 2016,2021, respectively.
(2) Represents consumer loans from our NCDC offices which are no longer being originated.(4)    Includes $67.0 million and $62.8 million of net unearned income, unamortized premiums and discounts and deferred fees and costs at June 30, 2022 and December 31, 2021, respectively.


Acquired loans were initially measured at fair value
During the six months ended June 30, 2022, the Company purchased a total of $115.8 million small business equipment finance loan pools and subsequently accounted for under either Accounting Standards Codification (“ASC”) Topic 310-30 or ASC Topic 310-20. The following table provides information relateda total of $188.3 million one- to the outstanding principal balance and related carrying value of acquired loans for the dates indicated (in thousands): four-family jumbo mortgage loan pools.
13
 September 30,
2017		 December 31,
2016
Acquired loans evaluated individually for future credit losses: 
  
Outstanding principal balance$10,344
 16,108
Carrying value7,393
 12,665
  
  
Acquired loans evaluated collectively for future credit losses: 
  
Outstanding principal balance877,022
 1,040,378
Carrying value870,705
 1,032,611
  
  
Total acquired loans: 
  
Outstanding principal balance887,366
 1,056,486
Carrying value878,098
 1,045,276


16
Table of Contents

The following table provides information related to the changes in the accretable discount, which includes income recognized from contractual cash flows for the dates indicated (in thousands): 
 Total
Balance at December 31, 2015$2,019
Accretion(1,170)
Net reclassification from nonaccretable yield1,338
Balance at December 31, 20162,187
Accretion(1,130)
Net reclassification from nonaccretable yield498
Balance at September 30, 2017$1,555
The following table provides information related to acquired impaired loans by portfolio segment and by class of financing receivable at and for the nine months ended September 30, 2017 (in thousands):
 
Carrying
value
 
Outstanding
principal
balance
 
Related
impairment
reserve
 
Average
recorded
investment
in impaired
loans
 
Interest
income
recognized
Personal Banking: 
  
  
  
  
Residential mortgage loans$1,215
 1,931
 37
 1,267
 126
Home equity loans1,166
 2,274
 9
 1,264
 124
Consumer loans80
 198
 4
 108
 43
Total Personal Banking2,461
 4,403
 50
 2,639
 293
          
Commercial Banking: 
        
Commercial real estate loans4,828
 5,826
 67
 7,212
 823
Commercial loans104
 115
 —
 178
 14
Total Commercial Banking4,932
 5,941
 67
 7,390
 837
          
Total$7,393
 10,344
 117
 10,029
 1,130
The following table provides information related to acquired impaired loans by portfolio segment and by class of financing receivable at and for the year ended December 31, 2016 (in thousands):
 Carrying
value		 Outstanding
principal
balance		 Related
impairment
reserve		 Average
recorded
investment
in impaired
loans		 Interest
income
recognized
Personal Banking:         
Residential mortgage loans$1,319
 2,062
 204
 1,650
 202
Home equity loans1,363
 2,669
 8
 1,724
 185
Consumer loans136
 303
 3
 201
 51
Total Personal Banking2,818
 5,034
 215
 3,575
 438
          
Commercial Banking:         
Commercial real estate loans9,596
 10,809
 52
 10,942
 721
Commercial loans251
 265
 —
 249
 11
Total Commercial Banking9,847
 11,074
 52
 11,191
 732
   
 
 
 
Total$12,665
 16,108
 267
 14,766
 1,170



17
Table of Contents

The following table provides information related to the allowance for loancredit losses by portfolio segment and by class of financing receivable for the quarter ended SeptemberJune 30, 20172022 (in thousands):
Balance as of June 30, 2022Current period provisionCharge-offsRecoveriesBalance as of March 31, 2022
Allowance for Credit Losses
Personal Banking:     
Residential mortgage loans$16,158 2,723 (138)267 13,306 
Home equity loans5,232 (583)(255)427 5,643 
Vehicle loans15,738 1,888 (934)603 14,181 
Consumer loans779 (1,685)(978)333 3,109 
Total Personal Banking37,907 2,343 (2,305)1,630 36,239 
Commercial Banking:     
Commercial real estate loans39,641 (1,917)(4,392)1,378 44,572 
Commercial real estate loans - owner occupied4,095 (188)— 7 4,276 
Commercial loans16,712 2,391 (329)442 14,208 
Total Commercial Banking60,448 286 (4,721)1,827 63,056 
Total$98,355 2,629 (7,026)3,457 99,295 
Allowance for Credit Losses - off-balance sheet exposure
Personal Banking:
Residential mortgage loans$6 — — — 6 
Home equity loans64 9 — — 55 
Total Personal Banking70 9 — — 61 
Commercial Banking:     
Commercial real estate loans3,463 1,671 — — 1,792 
Commercial real estate loans - owner occupied328 120 — — 208 
Commercial loans3,589 1,596 — — 1,993 
Total Commercial Banking7,380 3,387 — — 3,993 
Total off-balance sheet exposure$7,450 3,396 — — 4,054 























14
 Balance
September 30,
2017		 
Current
period
provision
 Charge-offs Recoveries Balance
June 30, 2017
Originated loans:         
Personal Banking: 
  
  
  
  
Residential mortgage loans$3,986
 (462) (211) 24
 4,635
Home equity loans3,295
 615
 (285) 8
 2,957
Consumer finance loans4,876
 4,220
 (3,891) 80
 4,467
Consumer loans7,383
 4,594
 (2,844) 353
 5,280
Total Personal Banking19,540
 8,967
 (7,231) 465
 17,339
          
Commercial Banking: 
  
  
  
  
Commercial real estate loans20,174
 (2,529) (163) 282
 22,584
Commercial loans11,131
 (5,445) (204) 76
 16,704
Total Commercial Banking31,305
 (7,974) (367) 358
 39,288
Total originated loans50,845
 993
 (7,598) 823
 56,627
          
Acquired loans:         
Personal Banking:         
Residential mortgage loans77
 (11) (4) 7
 85
Home equity loans748
 324
 (243) 44
 623
Consumer loans594
 106
 (158) 18
 628
Total Personal Banking1,419
 419
 (405) 69
 1,336
          
Commercial Banking: 
  
  
  
  
Commercial real estate loans3,301
 2,433
 (1,738) 160
 2,446
Commercial loans1,362
 (818) (305) 9
 2,476
Total Commercial Banking4,663
 1,615
 (2,043) 169
 4,922
Total acquired loans6,082
 2,034
 (2,448) 238
 6,258
          
Total$56,927
 3,027
 (10,046) 1,061
 62,885


18
Table of Contents


The following table provides information related to the allowance for loancredit losses by portfolio segment and by class of financing receivable for the quarter ended SeptemberJune 30, 20162021 (in thousands):
Balance as of June 30, 2021Current period provisionCharge-offsRecoveriesBalance as of March 31, 2021
Allowance for Credit Losses
Personal Banking:
Residential mortgage loans$7,247 1,922 (770)234 5,861 
Home equity loans7,239 2,253 (379)124 5,241 
Vehicle loans12,888 (1,196)(1,598)794 14,888 
Consumer loans2,801 691 (803)350 2,563 
Total Personal Banking30,175 3,670 (3,550)1,502 28,553 
Commercial Banking:
Commercial real estate loans64,580 (2,925)(3,074)373 70,206 
Commercial real estate loans - owner occupied4,729 (1,138)(890)4 6,753 
Commercial loans17,846 393 (1,161)129 18,485 
Total Commercial Banking87,155 (3,670)(5,125)506 95,444 
Total$117,330 — (8,675)2,008 123,997 
Allowance for Credit Losses - off-balance sheet exposure
Personal Banking:
Residential mortgage loans$2 — — — 2 
Home equity loans42 8 — — 34 
Total Personal Banking44 8 — — 36 
Commercial Banking:
Commercial real estate loans1,932 (183)— — 2,115 
Commercial real estate loans - owner occupied181 (207)— — 388 
Commercial loans1,232 (848)— — 2,080 
Total Commercial Banking3,345 (1,238)— — 4,583 
Total off-balance sheet exposure$3,389 (1,230)— — 4,619 
 Balance
September 30,
2016		 Current period provision Charge-offs Recoveries Balance
June 30, 2016
Originated loans:         
Personal Banking: 
  
  
  
  
Residential mortgage loans$4,002
 1,109
 (268) 139
 3,022
Home equity loans3,519
 296
 (161) 49
 3,335
Consumer finance loans3,429
 1,014
 (835) 111
 3,139
Consumer loans5,667
 2,331
 (1,700) 251
 4,785
Total Personal Banking16,617
 4,750
 (2,964) 550
 14,281
          
Commercial Banking: 
  
  
  
  
Commercial real estate loans24,530
 (1,041) (602) 487
 25,686
Commercial loans16,877
 1,668
 (708) 561
 15,356
Total Commercial Banking41,407
 627
 (1,310) 1,048
 41,042
Total originated loans58,024
 5,377
 (4,274) 1,598
 55,323
          
Acquired loans:         
Personal Banking:         
Residential mortgage loans78
 45
 (86) 58
 61
Home equity loans1,171
 138
 (127) 32
 1,128
Consumer loans644
 212
 (166) 46
 552
Total Personal Banking1,893
 395
 (379) 136
 1,741
          
Commercial Banking:         
Commercial real estate loans2,422
 (588) (187) 32
 3,165
Commercial loans907
 354
 —
 1
 552
Total Commercial Banking3,329
 (234) (187) 33
 3,717
Total acquired loans5,222
 161
 (566) 169
 5,458
          
Total$63,246
 5,538
 (4,840) 1,767
 60,781


















15
19
Table of Contents

The following table provides information related to the allowance for loancredit losses by portfolio segment and by class of financing receivable for the ninesix months ended SeptemberJune 30, 20172022 (in thousands):
Balance as of June 30, 2022Current period provisionCharge-offsRecoveriesBalance as of December 31, 2021
Balance
September 30, 2017		 
Current
period
provision
 Charge-offs Recoveries Balance
December 31, 2016
Originated loans:         
Allowance for Credit LossesAllowance for Credit Losses
Personal Banking: 
  
  
  
  Personal Banking:
Residential mortgage loans$3,986
 (278) (678) 286
 4,656
Residential mortgage loans$16,158 9,685 (1,321)421 7,373 
Home equity loans3,295
 503
 (803) 109
 3,486
Home equity loans5,232 (214)(702)848 5,300 
Consumer finance loans4,876
 6,610
 (5,469) 290
 3,445
Vehicle loansVehicle loans15,738 583 (1,581)1,253 15,483 
Consumer loans7,383
 9,741
 (7,912) 1,025
 4,529
Consumer loans779 (691)(2,054)640 2,884 
Total Personal Banking19,540
 16,576
 (14,862) 1,710
 16,116
Total Personal Banking37,907 9,363 (5,658)3,162 31,040 
         
Commercial Banking: 
  
  
  
  
Commercial Banking:
Commercial real estate loans20,174
 (3,988) (498) 993
 23,667
Commercial real estate loans39,641 (11,582)(5,416)2,498 54,141 
Commercial real estate loans - owner occupiedCommercial real estate loans - owner occupied4,095 201 — 11 3,883 
Commercial loans11,131
 (3,517) (1,858) 996
 15,510
Commercial loans16,712 3,166 (1,010)1,379 13,177 
Total Commercial Banking31,305
 (7,505) (2,356) 1,989
 39,177
Total Commercial Banking60,448 (8,215)(6,426)3,888 71,201 
Total originated loans50,845
 9,071
 (17,218) 3,699
 55,293
TotalTotal$98,355 1,148 (12,084)7,050 102,241 
         
Acquired loans:         
Allowance for Credit Losses - off-balance sheet exposureAllowance for Credit Losses - off-balance sheet exposure
Personal Banking:         Personal Banking:
Residential mortgage loans77
 130
 (199) 75
 71
Residential mortgage loans$6 4 — — 2 
Home equity loans748
 512
 (1,063) 252
 1,047
Home equity loans64 25 — — 39 
Consumer loans594
 405
 (689) 225
 653
Total Personal Banking1,419
 1,047
 (1,951) 552
 1,771
Total Personal Banking7029— — 41
         
Commercial Banking:         Commercial Banking:
Commercial real estate loans3,301
 1,832
 (2,206) 667
 3,008
Commercial real estate loans3,463 2,582 — — 881 
Commercial real estate loans - owner occupiedCommercial real estate loans - owner occupied328 186 — — 142 
Commercial loans1,362
 1,276
 (847) 66
 867
Commercial loans3,589 2,195 — — 1,394 
Total Commercial Banking4,663
 3,108
 (3,053) 733
 3,875
Total Commercial Banking7,380 4,963 — — 2,417 
Total acquired loans6,082
 4,155
 (5,004) 1,285
 5,646


 

 

 

 

Total$56,927
 13,226
 (22,222) 4,984
 60,939
Total off-balance sheet exposureTotal off-balance sheet exposure$7,450 4,992 — — 2,458 































16
20
Table of Contents

The following table provides information related to the allowance for loancredit losses by portfolio segment and by class of financing receivable for the ninesix months ended SeptemberJune 30, 20162021 (in thousands):
 Balance
September 30, 2016		 
Current
period
provision
 Charge-offs Recoveries Balance
December 31, 2015
Originated loans:         
Personal banking: 
  
  
  
  
Residential mortgage loans$4,002
 1,612
 (2,559) 257
 4,692
Home equity loans3,519
 253
 (898) 223
 3,941
Consumer finance loans3,429
 2,163
 (2,321) 312
 3,275
Consumer loans5,667
 5,205
 (4,587) 836
 4,213
Total personal banking16,617
 9,233
 (10,365) 1,628
 16,121
          
Commercial banking: 
  
  
  
  
Commercial real estate loans24,530
 (8,756) (2,103) 3,041
 32,348
Commercial loans16,877
 5,008
 (1,704) 1,072
 12,501
   Total commercial banking41,407
 (3,748) (3,807) 4,113
 44,849
Total originated loans58,024
 5,485
 (14,172) 5,741
 60,970
          
Acquired loans:         
Personal banking:         
        Residential mortgage loans78
 118
 (211) 153
 18
        Home equity loans1,171
 2,093
 (1,320) 297
 101
        Consumer loans644
 925
 (528) 137
 110
Total personal banking1,893
 3,136
 (2,059) 587
 229
          
Commercial banking:         
       Commercial real estate loans2,422
 1,886
 (1,314) 411
 1,439
        Commercial loans907
 890
 (24) 7
 34
Total commercial banking3,329
 2,776
 (1,338) 418
 1,473
Total acquired loans5,222
 5,912
 (3,397) 1,005
 1,702
          
Total$63,246
 11,397
 (17,569) 6,746
 62,672
 Balance as of June 30, 2021Current
period provision		Charge-offsRecoveriesBalance as of December 31, 2020
Allowance for Credit Losses
Personal Banking:     
Residential mortgage loans$7,247 1,330 (1,625)276 7,266 
Home equity loans7,239 1,601 (607)253 5,992 
Vehicle loans12,888 (423)(2,905)1,391 14,825 
Consumer loans2,801 1,342 (2,099)687 2,871 
Total Personal Banking30,175 3,850 (7,236)2,607 30,954 
Commercial Banking:
Commercial real estate loans64,580 (7,756)(7,700)655 79,381 
Commercial real estate loans - owner occupied4,729 (4,904)(890)5 10,518 
Commercial loans17,846 3,190 (1,215)2,297 13,574 
Total Commercial Banking87,155 (9,470)(9,805)2,957 103,473 
Total$117,330 (5,620)(17,041)5,564 134,427 
Allowance for Credit Losses - off-balance sheet exposure
Personal Banking:
Residential mortgage loans$2 — — — 2 
Home equity loans42 7 — — 35 
Total Personal Banking44 7 — — 37 
Commercial Banking:
Commercial real estate loans1,932 (1,517)— — 3,449 
Commercial real estate loans - owner occupied181 (145)— — 326 
Commercial loans1,232 (1,319)— — 2,551 
Total Commercial Banking3,345 (2,981)— — 6,326 
Total off-balance sheet exposure$3,389 (2,974)— — 6,363 























17
21
Table of Contents


At September 30, 2017, we expect to fully collect the carrying value of our purchased credit impaired loans and have determined that we can reasonably estimate their future cash flows including those loans that are 90 days or more delinquent.  As a result, we do not consider our purchased credit impaired loans that are 90 days or more delinquent to be nonaccrual or impaired and continue to recognize interest income on these loans, including the loans’ accretable discount.
The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at SeptemberJune 30, 20172022 (in thousands):
 Total loans
receivable		Allowance for
credit losses		Nonaccrual
loans (1)		Loans 90 days past due and accruingTDRsAllowance
related to
TDRs		Additional
commitments
to customers
with loans
classified as
TDRs
Personal Banking:       
Residential mortgage loans$3,286,775 16,158 7,616 — 6,157 861 — 
Home equity loans1,280,492 5,232 4,156 — 1,465 472 — 
Vehicle loans1,895,735 15,738 3,166 — — — — 
Consumer loans106,810 779 136 379 — — — 
Total Personal Banking6,569,812 37,907 15,074 379 7,622 1,333 — 
Commercial Banking:       
Commercial real estate loans2,485,974 39,641 76,437 — 42,180 1,558 18 
Commercial real estate loans - owner occupied390,202 4,095 590 — 144 23 — 
Commercial loans986,836 16,712 6,284 — 4,291 549 327 
Total Commercial Banking3,863,012 60,448 83,311 — 46,615 2,130 345 
Total$10,432,824 98,355 98,385 379 54,237 3,463 345 
(1)Includes $37.6 million of nonaccrual TDRs.
 
Total loans
receivable
 
Allowance for
loan losses
 
Nonaccrual
loans (1)
 
Loans past
due 90 days
or more and
still accruing
(2)
 TDRs (3) 
Allowance
related to
TDRs
 
Additional
commitments
to customers
with loans
classified as
TDRs
Personal Banking: 
  
  
  
  
  
  
Residential mortgage loans$2,743,226
 4,063
 13,195
 —
 7,807
 782
 —
Home equity loans1,313,435
 4,043
 7,699
 146
 1,781
 451
 4
Consumer finance loans26,892
 4,876
 333
 —
 —
 —
 —
Consumer loans647,028
 7,977
 4,108
 252
 —
 —
 —
Total Personal Banking4,730,581
 20,959
 25,335
 398
 9,588
 1,233
 4
              
Commercial Banking: 
  
  
  
  
  
  
Commercial real estate loans2,398,886
 23,475
 39,721
 —
 22,173
 1,926
 252
Commercial loans596,671
 12,493
 8,278
 —
 6,708
 1,025
 23
Total Commercial Banking2,995,557
 35,968
 47,999
 —
 28,881
 2,951
 275
              
Total$7,726,138
 56,927
 73,334
 398
 38,469
 4,184
 279
(1)Includes $17.8 million of nonaccrual TDRs.
(2)Represents loans 90 days past maturity and still accruing.
(3)Includes $17.8 million of nonaccrual, and $20.7 million of accruing TDRs.


The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at December 31, 20162021 (in thousands): 
 Total loans
receivable		Allowance for
credit losses		Nonaccrual
loans (1)		Loans 90 days past due and accruingTDRsAllowance
related to
TDRs		Additional
commitments
to customers
with loans
classified as
TDRs
Personal Banking:       
Residential mortgage loans$2,994,620 7,373 10,402 — 6,749 1,442 — 
Home equity loans1,319,931 5,300 5,758 — 1,781 718 — 
Vehicle loans1,484,231 15,483 3,263 — — — — 
Consumer loans354,517 2,884 675 331 — — — 
Total Personal Banking6,153,299 31,040 20,098 331 8,530 2,160 — 
Commercial Banking:       
Commercial real estate loans2,625,481 54,141 129,666 — 17,025 2,024 400 
Commercial real estate loans - owner occupied390,003 3,883 1,233 — 159 24 — 
Commercial loans847,609 13,177 7,474 — 4,574 609 60 
Total Commercial Banking3,863,093 71,201 138,373 — 21,758 2,657 460 
Total$10,016,392 102,241 158,471 331 30,288 4,817 460 
 
Total loans
receivable
 
Allowance for
loan losses
 
Nonaccrual
loans (1)
 
Loans past
due 90 days
or more and
still accruing
(2)
 TDRs (3) 
Allowance
related to
TDRs
 
Additional
commitments
to customers
with loans
classified as
TDRs
Personal Banking: 
  
  
  
  
  
  
Residential mortgage loans$2,698,166
 4,727
 18,264
 —
 7,299
 708
 —
Home equity loans1,345,370
 4,533
 7,865
 —
 1,813
 450
 4
Consumer finance loans48,981
 3,445
 743
 —
 —
 —
 —
Consumer loans593,980
 5,182
 4,366
 85
 —
 —
 —
Total Personal Banking4,686,497
 17,887
 31,238
 85
 9,112
 1,158
 4
              
Commercial Banking: 
  
  
  
  
  
  
Commercial real estate loans2,342,089
 26,675
 38,724
 564
 24,483
 2,072
 417
Commercial loans528,761
 16,377
 9,574
 —
 9,331
 1,360
 17
Total Commercial Banking2,870,850
 43,052
 48,298
 564
 33,814
 3,432
 434
              
Total$7,557,347
 60,939
 79,536
 649
 42,926
 4,590
 438
(1)Includes $16.3 million of nonaccrual TDRs.
(2)Represents loans 90 days past maturity and still accruing.
(3)Includes $16.3 million of nonaccrual, and $26.6 million of accruing TDRs.



(1)Includes $17.2 million of nonaccrual TDRs.

18
22
Table of Contents

We present the amortized cost of our loans on nonaccrual status including such loans with no allowance. The following table presents the amortized cost of our loans on nonaccrual status as of the beginning and end of the period ended June 30, 2022 (in thousands): 
June 30, 2022
 Nonaccrual loans at January 1, 2022Nonaccrual loans with an allowanceNonaccrual loans with no allowanceTotal nonaccrual loans at the end of the periodLoans 90 days past due and accruing
Personal Banking:    
Residential mortgage loans$10,402 7,616 — 7,616 — 
Home equity loans5,758 3,956 200 4,156 — 
Vehicle loans3,263 1,941 1,225 3,166 — 
Consumer loans675 136 — 136 379 
Total Personal Banking20,098 13,649 1,425 15,074 379 
Commercial Banking:    
Commercial real estate loans129,666 10,534 65,903 76,437 — 
Commercial real estate loans - owner occupied1,233 590 — 590 — 
Commercial loans7,474 3,506 2,778 6,284 — 
Total Commercial Banking138,373 14,630 68,681 83,311 — 
Total$158,471 28,279 70,106 98,385 379 
During the three and six months ended June 30, 2022, we recognized $137,000 and $290,000 of interest income on nonaccrual and troubled debt restructuring loans.

The following table provides information related topresents the compositionamortized cost of originated impairedour loans by portfolio segmenton nonaccrual status as of the year ended December 31, 2021 (in thousands): 
December 31, 2021
 Nonaccrual loans at January 1, 2021Nonaccrual loans with an allowanceNonaccrual loans with no allowanceTotal nonaccrual loans at the end of the periodLoans 90 days past due and accruing
Personal Banking:
Residential mortgage loans$15,924 10,402 — 10,402 — 
Home equity loans9,123 5,551 207 5,758 — 
Vehicle loans5,533 3,251 12 3,263 — 
Consumer loans1,031 674 1 675 331 
Total Personal Banking31,611 19,878 220 20,098 331 
Commercial Banking:
Commercial real estate loans44,092 65,529 64,137 129,666 — 
Commercial real estate loans - owner occupied3,642 1,233 — 1,233 — 
Commercial loans23,487 3,941 3,533 7,474 — 
Total Commercial Banking71,221 70,703 67,670 138,373 — 
Total$102,832 90,581 67,890 158,471 331 
During the year ended December 31, 2021, we recognized $803,000 of interest income on nonaccrual and troubled debt restructuring loans.

19
Table of Contents
The following table presents the amortized cost basis of collateral-dependent loans by class of financing receivable at and for the nine months ended Septemberloans as of June 30, 20172022 (in thousands):
Nonaccrual
loans 90 or
more days
delinquent
 
Nonaccrual
loans less
than 90
days
delinquent
 
Loans less
than 90
days
delinquent
reviewed for
impairment
 
TDRs less
than 90
days
delinquent
not included
elsewhere
 
Total
impaired
loans
 
Average
recorded
investment
in impaired
loans
 
Interest
income
recognized
on impaired
loans
 Real estateEquipmentTotal
Personal Banking: 
  
  
  
  
  
  
Personal Banking:   
Residential mortgage loans$11,785
 1,410
 —
 6,894
 20,089
 21,521
 706
Residential mortgage loans$575 — 575 
Home equity loans6,295
 1,404
 —
 1,436
 9,135
 8,878
 320
Home equity loans100 — 100 
Consumer finance loans332
 1
 ���
 —
 333
 428
 15
Consumer loans3,244
 864
 —
 —
 4,108
 3,887
 132
Total Personal Banking21,656
 3,679
 —
 8,330
 33,665
 34,714
 1,173
Total Personal Banking675 — 675 
             
Commercial Banking: 
  
  
  
  
  
  
Commercial Banking:   
Commercial real estate loans22,583
 17,138
 4,707
 4,804
 49,232
 52,813
 1,381
Commercial real estate loans74,267 — 74,267 
Commercial loans4,177
 4,101
 943
 2,447
 11,668
 12,402
 544
Commercial loans3,810 1,262 5,072 
Total Commercial Banking26,760
 21,239
 5,650
 7,251
 60,900
 65,215
 1,925
Total Commercial Banking78,077 1,262 79,339 
             
Total$48,416
 24,918
 5,650
 15,581
 94,565
 99,929
 3,098
Total$78,752 1,262 80,014 
 
The following table provides information related topresents the compositionamortized cost basis of originated impairedcollateral-dependent loans by portfolio segment and by class of financing receivable at and for the year endedloans as of December 31, 20162021 (in thousands):
 Real estateEquipmentTotal
Personal Banking:
Residential mortgage loans$580 — 580 
Home equity loans99 — 99 
Total Personal Banking679 — 679 
Commercial Banking:
Commercial real estate loans119,825 1,705 121,530 
Commercial loans3,973 1,926 5,899 
Total Commercial Banking123,798 3,631 127,429 
Total$124,477 3,631 128,108 
 
Nonaccrual
loans 90 or
more days
delinquent
 
Nonaccrual
loans less
than 90
days
delinquent
 
Loans less
than 90
days
delinquent
reviewed for
impairment
 
TDRs less
than 90
days
delinquent
not included
elsewhere
 
Total
impaired
loans
 
Average
recorded
investment
in impaired
loans
 
Interest
income
recognized
on impaired
loans
Personal Banking: 
  
  
  
  
  
  
Residential mortgage loans$13,169
 5,095
 —
 5,929
 24,193
 24,483
 1,079
Home equity loans5,552
 2,313
 —
 1,439
 9,304
 9,234
 496
Consumer finance loans743
 —
 —
 —
 743
 772
 35
Consumer loans3,080
 1,286
 —
 —
 4,366
 2,931
 131
Total Personal Banking22,544
 8,694
 —
 7,368
 38,606
 37,420
 1,741
              
Commercial Banking: 
  
  
  
  
  
  
Commercial real estate loans19,264
 19,460
 3,622
 11,582
 53,928
 64,350
 2,864
Commercial loans3,373
 6,201
 2,837
 3,116
 15,527
 16,905
 991
Total Commercial Banking22,637
 25,661
 6,459
 14,698
 69,455
 81,255
 3,855
              
Total$45,181
 34,355
 6,459
 22,066
 108,061
 118,675
 5,596




20
23
Table of Contents

The following table provides information related to the evaluation of impaired loans by portfolio segment and by class of financing receivable at September 30, 2017 (in thousands): 
 
Loans
collectively
evaluated for
impairment
 
Loans
individually
evaluated for
impairment
 
Loans
individually
evaluated for
impairment
for which
there is a
related
impairment
reserve
 
Related
impairment
reserve
 
Loans
individually
evaluated for
impairment
for which
there is no
related
reserve
Personal Banking: 
  
  
  
  
Residential mortgage loans$2,734,753
 8,473
 8,473
 783
 —
Home equity loans1,311,654
 1,781
 1,781
 451
 —
Consumer finance loans26,892
 —
 —
 —
 —
Consumer loans646,933
 95
 95
 23
 —
Total Personal Banking4,720,232
 10,349
 10,349
 1,257
 —
          
Commercial Banking: 
  
  
  
  
Commercial real estate loans2,370,814
 28,072
 25,223
 3,028
 2,849
Commercial loans587,013
 9,658
 9,150
 1,530
 508
Total Commercial Banking2,957,827
 37,730
 34,373
 4,558
 3,357
          
Total$7,678,059
 48,079
 44,722
 5,815
 3,357
The following table provides information related to the evaluation of impaired loans by portfolio segment and by class of financing receivable at December 31, 2016 (in thousands): 
 
Loans
collectively
evaluated for
impairment
 
Loans
individually
evaluated for
impairment
 
Loans
individually
evaluated for
impairment
for which
there is a
related
impairment
reserve
 
Related
impairment
reserve
 
Loans
individually
evaluated for
impairment
for which
there is no
related
reserve
Personal Banking: 
  
  
  
  
Residential mortgage loans$2,689,886
 8,280
 8,280
 709
 —
Home equity loans1,343,556
 1,814
 1,814
 450
 —
Consumer finance loans48,981
 —
 —
 —
 —
Consumer loans593,854
 126
 126
 29
 —
Total Personal Banking4,676,277
 10,220
 10,220
 1,188
 —
          
Commercial Banking: 
  
  
  
  
Commercial real estate loans2,309,186
 32,903
 27,594
 3,545
 5,309
Commercial loans518,449
 10,312
 10,242
 1,390
 70
Total Commercial Banking2,827,635
 43,215
 37,836
 4,935
 5,379
          
Total$7,503,912
 53,435
 48,056
 6,123
 5,379



24

Our loan portfolios include loans that have been modified in a troubled debt restructuring ("TDR"),TDR, where concessions have been granted to borrowers who have experienced financial difficulties. These concessions typically result from our loss mitigation activities and could include: extending the note’s maturity date, permitting interest-onlyinterest only payments, reducing the interest rate to a rate lower than current market rates for new debt with similar risk, reducing the principal payment, principal forbearance or other actions. These concessions are applicable to all loan segments and classes. Certain TDRs are classified as nonperforming at the time of restructuring and may be returned to performing status after considering the borrower’s sustained repayment performance for a period of at least ninesix months.
 
When we modify loans in a TDR, we evaluate any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, the loan’s observable market price or the current fair value of the collateral, less selling costs, for collateral dependent loans. If we determine that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premiumpremiums or discount)discounts), impairment is recognized through an allowance estimate or a charge-off to the allowance. In periods subsequent to modification, we evaluate all TDRs, including those that have payment defaults, for possible impairment usingin accordance with ASC 310-10. As a result, loans modified in a TDR may have the financial effect of increasing the specific allowance associated with the loan.
 
Loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a TDR subsequently default, we evaluate the loan for possible further impairment. The allowance may be increased, adjustments may be made in the allocation of the allowance, partial charge-offs may be taken to further write-down the carrying value of the loan, or the loan may be charged-off completely.


In March 2020 and August 2020, joint statements were issued by federal and state regulatory agencies, after consultation with the FASB, to clarify that short-term loan modifications are not TDRs if made on a good-faith basis in response to COVID-19 to borrowers who were current prior to any relief. Under this guidance, six months is provided as an example of short-term, and current is defined as less than 30 days past due at the time the modification program is implemented. The guidance also provides that these modified loans generally will not be classified as nonaccrual during the term of the modification. For borrowers who are 30 days or more past due when enrolling in a loan modification program related to the COVID-19 pandemic, we evaluate the loan modifications under our existing TDR framework, and where such a loan modification would result in a concession to a borrower experiencing financial difficulty, the loan will be accounted for as a TDR and will generally not accrue interest. This TDR relief under the CARES Act was extended by the Consolidated Appropriations Act, 2021 (“CAA”), signed into law on December 27, 2020. Under the CAA, such relief will continue until the earlier of 60 days after the date the COVID-19 national emergency comes to an end or January 1, 2022.Certain loan modifications made during the prior year were done in accordance with Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus. Accordingly, these loans were not categorized as TDRs.

21
Table of Contents
The following table provides a roll forward of troubled debt restructurings for the periods indicated (dollars in thousands):
 For the quarter ended June 30,
 20222021
 Number of
contracts		AmountNumber of
contracts		Amount
Beginning TDR balance:130 $28,701 164 $27,510 
New TDRs2 26,115 2 2,295 
Re-modified TDRs5 6,403 1 344 
Net paydowns— (479)— (1,610)
Paid-off loans:
Residential mortgage loans— — 4 (726)
Home equity loans1 (13)1 (11)
Commercial real estate loans2 (80)2 (302)
Commercial loans1 (7)1 (69)
Ending TDR balance:128 $54,237 158 $27,431 
Accruing TDRs $16,590 $18,480 
Nonaccrual TDRs 37,647 8,951 
 For the quarters ended September 30,
 2017 2016
 
Number of
contracts
 Amount 
Number of
contracts
 Amount
Beginning TDR balance:203
 $41,860
 230
 $49,113
New TDRs6
 546
 5
 245
Re-modified TDRs2
 265
 1
 799
Net paydowns 
 (987)  
 (1,781)
Charge-offs: 
  
  
  
Residential mortgage loans—
 —
 —
 —
Home equity loans—
 —
 —
 —
Commercial real estate loans2
 (2,498) —
 —
Commercial loans—
 —
 1
 (99)
Paid-off loans: 
  
  
  
Residential mortgage loans—
 —
 3
 (143)
Home equity loans3
 (30) 2
 (264)
Commercial real estate loans1
 (564) 8
 (1,022)
Commercial loans2
 (123) 3
 (253)
Ending TDR balance:201
 $38,469
 218
 $46,595
        
Accruing TDRs 
 $20,660
  
 $29,221
Non-accrual TDRs 
 17,809
  
 17,374







For the six months ended June 30,
20222021
Number of
contracts		AmountNumber of
contracts		Amount
Beginning TDR balance:134 $30,288 170 $32,135 
New TDRs2 26,115 2 2,295 
Re-modified TDRs6 6,603 5 1,241 
Net paydowns— (1,509)— (4,073)
Charge-offs:
Residential mortgage loans1 (3)— — 
Paid-off loans:
Residential mortgage loans1 (201)4 (726)
Home equity loans2 (77)1 (11)
Commercial real estate loans3 (369)5 (2,686)
Commercial real estate loans - owner occupied— — 1 (47)
Commercial loans1 (7)3 (697)
Ending TDR balance:128 $54,237 158 $27,431 
Accruing TDRs$16,590 $18,480 
Nonaccrual TDRs37,647 8,951 

22
25
Table of Contents

The following table provides a roll forward of troubled debt restructuring for the periods indicated (dollars in thousands):
 For the nine months ended September 30,
 2017 2016
 
Number of
contracts
 Amount 
Number of
contracts
 Amount
Beginning TDR balance:225
 $42,926
 227
 $51,115
New TDRs13
 4,685
 23
 5,256
Re-modified TDRs3
 710
 5
 1,862
Net paydowns 
 (3,668)  
 (4,685)
Charge-offs: 
  
  
  
Residential mortgage loans—
 —
 —
 —
Home equity loans—
 —
 —
 —
Commercial real estate loans2
 (2,498) —
 —
Commercial loans6
 (259) 2
 (142)
Paid-off loans: 
  
  
  
Residential mortgage loans—
 —
 3
 (143)
Home equity loans8
 (62) 5
 (496)
Commercial real estate loans11
 (1,109) 16
 (5,584)
Commercial loans10
 (2,256) 6
 (588)
Ending TDR balance:201
 $38,469
 218
 $46,595
        
Accruing TDRs 
 $20,660
  
 $29,221
Non-accrual TDRs 
 17,809
  
 17,374



26

The following table provides information related to troubled debt restructuringsTDRs (including re-modified TDRs) by portfolio segment and by class of financing receivable during the periods indicated (dollars in(in thousands):
 For the quarter ended June 30, 2022For the six months ended June 30, 2022
 Number of
contracts		Recorded
investment
at the time of
modification		Current
recorded
investment		Current
allowance		Number of
contracts		Recorded
investment
at the time of
modification		Current
recorded
investment		Current
allowance
        
Commercial Banking:        
Commercial real estate loans3 $58,042 29,292 1,122 4 $58,372 29,492 1,133 
Commercial loans4 3,524 3,226 410 4 3,524 3,226 411 
Total Commercial Banking7 61,566 32,518 1,532 8 61,896 32,718 1,544 
Total7 $61,566 32,518 1,532 8 $61,896 32,718 1,544 
For the quarter ended June 30, 2021For the six months ended June 30, 2021
For the quarter ended
September 30, 2017		 For the nine months ended September 30, 2017 Number of
contracts		Recorded
investment
at the time of
modification		Current
recorded
investment		Current
allowance		Number of
contracts		Recorded
investment
at the time of
modification		Current
recorded
investment		Current
allowance
Number
of
contracts
 
Recorded
investment
at the time of
modification
 
Current
recorded
investment
 
Current
allowance
 
Number
of
contracts
 
Recorded
investment
at the time of
modification
 
Current
recorded
investment
 
Current
allowance
Troubled debt restructurings: 
  
  
  
  
  
  
  
Personal Banking: 
  
  
  
  
  
  
  
Personal Banking:        
Residential mortgage loans2
 $403
 402
 40
 5
 $1,297
 1,276
 128
Residential mortgage loans— $— — — 1 $121 116 10 
Home equity loans2
 122
 119
 30
 2
 122
 119
 30
Home equity loans— — — — 1 3 — — 
Total Personal Banking4
 525
 521
 70
 7
 1,419
 1,395
 158
Total Personal Banking— — — — 2 124 116 10 
               
Commercial Banking: 
  
  
  
  
  
  
  
Commercial Banking:
Commercial real estate loans2
 114
 116
 13
 6
 3,600
 3,282
 285
Commercial real estate loans1 725 343 34 3 1,537 1,125 148 
Commercial loans2
 172
 170
 71
 3
 376
 352
 84
Commercial loans2 2,396 2,295 — 2 2,396 2,295 — 
Total Commercial Banking4
 286
 286
 84
 9
 3,976
 3,634
 369
Total Commercial Banking3 3,121 2,638 34 5 3,933 3,420 148 
               
Total8
 $811
 807
 154
 16
 $5,395
 5,029
 527
Total3 $3,121 2,638 34 7 $4,057 3,536 158 
               
Troubled debt restructurings modified within the previous twelve months that have subsequently defaulted: 
  
  
  
  
  
  
  
Personal Banking: 
  
  
  
  
  
  
  
Residential mortgage loans—
 $—
 —
 —
 —
 $—
 —
 —
Home equity loans—
 —
 —
 —
 —
 —
 —
 —
Total Personal Banking—
 —
 —
 —
 —
 —
 —
 —
               
Commercial Banking 
  
  
  
  
  
  
  
Commercial real estate loans1
 90
 90
 11
 1
 90
 90
 11
Commercial loans1
 150
 150
 70
 1
 150
 150
 70
Total Commercial Banking2
 240
 240
 81
 2
 240
 240
 81
               
Total2
 $240
 240
 81
 2
 $240
 240
 81


















23
27
Table of Contents

The following table provides information related to troubled debt restructurings (including re-modified TDRs) by portfolio segment and by class of financing receivable during the periods indicated (dollars in thousands):
 For the quarter ended
September 30, 2016		 For the nine months ended September 30, 2016
 
Number
of
contracts
 
Recorded
investment
at the time of
modification
 
Current
recorded
investment
 
Current
allowance
 
Number
of
contracts
 
Recorded
investment
at the time of
modification
 
Current
recorded
investment
 
Current
allowance
Troubled debt restructurings: 
  
  
  
  
  
  
  
Personal Banking: 
  
  
  
  
  
  
  
Residential mortgage loans1
 $9
 8
 1
 6
 $1,041
 1,031
 105
Home equity loans1
 3
 3
 1
 6
 284
 281
 60
Total Personal Banking2
 12
 11
 2
 12
 1,325
 1,312
 165
                
Commercial Banking: 
  
  
  
  
  
  
  
Commercial real estate loans1
 154
 153
 11
 5
 2,250
 2,218
 295
Commercial loans3
 878
 877
 64
 11
 3,543
 2,591
 632
Total Commercial Banking4
 1,032
 1,030
 75
 16
 5,793
 4,809
 927
                
Total6
 $1,044
 1,041
 77
 28
 $7,118
 6,121
 1,092
                
Troubled debt restructurings modified within the previous twelve months that have subsequently defaulted: 
  
  
  
  
  
  
  
Personal Banking: 
  
  
  
  
  
  
  
Residential mortgage loans—
 $—
 —
 —
 —
 $—
 —
 —
Home equity loans—
 —
 —
 —
 —
 —
 —
 —
Total Personal Banking—
 —
 —
 —
 —
 —
 —
 —
                
Commercial Banking: 
  
  
  
  
  
  
  
Commercial real estate loans1
 6,256
 6,113
 893
 1
 6,256
 6,113
 893
Commercial loans—
 —
 —
 —
 —
 —
 —
 —
Total Commercial Banking1
 6,256
 6,113
 893
 1
 6,256
 6,113
 893
                
Total1
 $6,256
 6,113
 893
 1
 $6,256
 6,113
 893

The following table provides information as of SeptemberJune 30, 20172022 for troubled debt restructuringTDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the quarter ended SeptemberJune 30, 2017 (dollars in2022 (in thousands):
Type of modification
Number of contractsRateMaturity dateTotal
Commercial Banking:
Commercial real estate loans3 $4,179 25,113 29,292 
Commercial loans4 — 3,226 3,226 
Total Commercial Banking7 4,179 28,339 32,518 
Total7 $4,179 28,339 32,518 
   Type of modification  
 
Number of
contracts
 Rate Payment 
Maturity
date
 Other Total
Personal Banking: 
  
  
  
  
  
Residential mortgage loans2
 $250
 —
 —
 152
 402
Home equity loans2
 119
 —
 —
 —
 119
Total Personal Banking4
 369
 —
 —
 152
 521
            
Commercial Banking: 
  
  
  
  
  
Commercial real estate loans2
 —
 —
 116
 —
 116
Commercial loans2
 —
 —
 170
 —
 170
Total Commercial Banking4
 —
 —
 286
 —
 286
            
Total8
 $369
 —
 286
 152
 807


28


The following table provides information as of SeptemberJune 30, 20162021 for troubled debt restructuringTDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the quarter ended SeptemberJune 30, 2016 (dollars in2021 (in thousands):
Type of modification
Number of contractsRateMaturity dateTotal
Commercial Banking:
Commercial real estate loans1 $— 343 343 
Commercial loans2 — 2,295 2,295 
Total Commercial Banking3 — 2,638 2,638 
Total3 $— 2,638 2,638 
   Type of modification  
 
Number of
contracts
 Rate Payment 
Maturity
date
 Other Total
Personal Banking: 
  
  
  
  
  
Residential mortgage loans1
 $—
 —
 8
 —
 8
Home equity loans1
 —
 —
 3
 —
 3
Total Personal Banking2
 —
 —
 11
 —
 11
            
Commercial Banking: 
  
  
  
  
  
Commercial real estate loans1
 —
 —
 153
 —
 153
Commercial loans3
 —
 799
 78
 —
 877
Total Commercial Banking4
 —
 799
 231
 —
 1,030
            
Total6
 $—
 799
 242
 —
 1,041


The following table provides information as of SeptemberJune 30, 20172022 for troubled debt restructuringTDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the ninesix months ended SeptemberJune 30, 2017 (dollars in2022 (in thousands):
Type of modification
Number of contractsRateMaturity dateTotal
Commercial Banking:
Commercial real estate loans4 $4,179 25,313 29,492 
Commercial loans4 — 3,226 3,226 
Total Commercial Banking8 4,179 28,539 32,718 
Total8 $4,179 28,539 32,718 
   Type of modification  
 
Number of
contracts
 Rate Payment 
Maturity
date
 Other Total
Personal Banking: 
  
  
  
  
  
Residential mortgage loans5
 $360
 —
 —
 916
 1,276
Home equity loans2
 119
 —
 —
 —
 119
Total Personal Banking7
 479
 —
 —
 916
 1,395
            
Commercial Banking: 
  
  
  
  
  
Commercial real estate loans6
 —
 2,710
 572
 —
 3,282
Commercial loans3
 —
 —
 352
 —
 352
Total Commercial Banking9
 —
 2,710
 924
 —
 3,634
            
Total16
 $479
 2,710
 924
 916
 5,029
































24
29
Table of Contents

The following table provides information as of SeptemberJune 30, 20162021 for troubled debt restructuringsTDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the ninesix months ended SeptemberJune 30, 2016 (dollars in2021 (in thousands):
  Type of modification  Type of modification
Number of
contracts
 Rate Payment 
Maturity
date
 Other TotalNumber of contractsRateMaturity dateOtherTotal
Personal Banking: 
  
  
  
  
  
Personal Banking:
Residential mortgage loans6
 $361
 —
 622
 48
 1,031
Residential mortgage loans1 $116 — — 116 
Home equity loans6
 121
 —
 3
 157
 281
Home equity loans1 — — — — 
Total Personal Banking12
 482
 —
 625
 205
 1,312
Total Personal Banking2 116 — — 116 
           
Commercial Banking: 
  
  
  
  
  
Commercial Banking:
Commercial real estate loans5
 —
 429
 535
 1,254
 2,218
Commercial real estate loans3 — 1,052 73 1,125 
Commercial loans11
 —
 799
 1,042
 750
 2,591
Commercial loans2 — 2,295 — 2,295 
Total Commercial Banking16
 —
 1,228
 1,577
 2,004
 4,809
Total Commercial Banking5 — 3,347 73 3,420 
           
Total28
 $482
 1,228
 2,202
 2,209
 6,121
Total7 $116 3,347 73 3,536 
The following table provides information related to re-modified troubled debt restructuring by portfolio segment and by class of financing receivable for the quarter ended September 30, 2017 (dollars in thousands):
   Type of re-modification  
 
Number of
re-modified
TDRs
 Rate Payment 
Maturity
date
 Other Total
Personal Banking: 
  
  
  
  
  
Residential mortgage loans1
 $250
 —
 —
 —
 250
Home equity loans1
 13
 —
 —
 —
 13
Total Personal Banking2
 263
 —
 —
 —
 263
            
Commercial Banking: 
  
  
  
  
  
Commercial real estate loans—
 —
 —
 —
 —
 —
Commercial loans—
 —
 —
 —
 —
 —
Total Commercial Banking—
 —
 —
 —
 —
 —
            
Total2
 $263
 —
 —
 —
 263

The following table provides information related to re-modified troubled debt restructurings by portfolio segment and by classmodified within the previous twelve months of financing receivable for the quarter endedSeptemberJune 30, 2016 (dollars in thousands): 2022 that subsequently defaulted:
   Type of re-modification  
 
Number of
re-modified
TDRs
 Rate Payment 
Maturity
date
 Other Total
Personal Banking: 
  
  
  
  
  
Residential mortgage loans—
 $—
 —
 —
 —
 —
Home equity loans—
 —
 —
 —
 —
 —
Total Personal Banking—
 —
 —
 —
 —
 —
            
Commercial Banking: 
  
  
  
  
  
Commercial real estate loans—
 —
 —
 —
 —
 —
Commercial loans1
 —
 799
 —
 —
 799
Total Commercial Banking1
 —
 799
 —
 —
 799
            
Total1
 $—
 799
 —
 —
 799


30

Number of
contracts		Recorded
investment
at the time of
modification		Current
recorded
investment		Current
allowance
Commercial Banking:
     Commercial real estate loans1 $4,167 3,823 — 
Total Commercial Banking1 4,167 3,823 — 
Total1 $4,167 3,823 — 
The following table provides information related to re-modified troubled debt restructurings by portfolio segment and by classmodified within the previous twelve months of financing receivable for the nine months ended SeptemberJune 30, 2017 (dollars in thousands):2021 that subsequently defaulted:
Number of
contracts		Recorded
investment
at the time of
modification		Current
recorded
investment		Current
allowance
Commercial Banking:
     Commercial real estate loans1 $454 454 50 
Total Commercial Banking1 454 454 50 
Total1 $454 454 50 














25
   Type of re-modification  
 
Number of
re-modified
TDRs
 Rate Payment 
Maturity
date
 Other Total
Personal Banking: 
  
  
  
  
  
Residential mortgage loans2
 $250
 —
 —
 430
 680
Home equity loans1
 13
 —
 —
 —
 13
Total Personal Banking3
 263
 —
 —
 430
 693
            
Commercial Banking: 
  
  
  
  
  
Commercial real estate loans—
 —
 —
 —
 —
 —
Commercial loans—
 —
 —
 —
 —
 —
Total Commercial Banking—
 —
 —
 —
 —
 —
            
Total3
 $263
 —
 —
 430
 693
Table of Contents


The following table provides information related to re-modified troubled debt restructurings by portfolio segment and by classthe amortized cost basis of financing receivable for the nine months ended Septemberloan payment delinquencies at June 30, 2016 (dollars in2022 (in thousands):
 30-59 days
delinquent		60-89 days
delinquent		90 days or
greater
delinquent		Total
delinquency		CurrentTotal loans
receivable		90 days or
greater
delinquent
and accruing
Personal Banking:     
Residential mortgage loans$785 5,941 5,445 12,171 3,274,604 3,286,775 — 
Home equity loans3,664 952 2,081 6,697 1,273,795 1,280,492 — 
Vehicle loans6,449 1,170 1,861 9,480 1,886,255 1,895,735 — 
Consumer loans449 290 460 1,199 105,611 106,810 379 
Total Personal Banking11,347 8,353 9,847 29,547 6,540,265 6,569,812 379 
Commercial Banking:     
Commercial real estate loans2,581 1,350 14,823 18,754 2,467,220 2,485,974 — 
Commercial real estate loans - owner occupied120 122 126 368 389,834 390,202 — 
Commercial loans1,486 341 583 2,410 984,426 986,836 — 
Total Commercial Banking4,187 1,813 15,532 21,532 3,841,480 3,863,012 — 
Total loans$15,534 10,166 25,379 51,079 10,381,745 10,432,824 379 
   Type of re-modification  
 
Number of
re-modified
TDRs
 Rate Payment 
Maturity
date
 Other Total
Personal Banking: 
  
  
  
  
  
Residential mortgage loans—
 $—
 —
 —
 —
 —
Home equity loans—
 —
 —
 —
 —
 —
Total Personal Banking—
 —
 —
 —
 —
 —
            
Commercial Banking: 
  
  
  
  
  
Commercial real estate loans1
 —
 —
 —
 182
 182
Commercial loans4
 —
 1,662
 —
 —
 1,662
Total Commercial Banking5
 —
 1,662
 —
 182
 1,844
            
Total5
 $—
 1,662
 —
 182
 1,844


31


The following table provides information related to loan payment delinquencies at September 30, 2017 (in thousands):
 
30-59 Days
delinquent
 
60-89 Days
delinquent
 
90 Days or
greater
delinquent
 
Total
delinquency
 Current 
Total loans
receivable
 
90 Days or
greater
delinquent
and accruing
(1)
Originated loans: 
  
  
  
  
  
  
Personal Banking: 
  
  
  
  
  
  
Residential mortgage loans$2,771
 6,133
 11,315
 20,219
 2,603,544
 2,623,763
 —
Home equity loans6,636
 2,219
 5,158
 14,013
 1,031,139
 1,045,152
 —
Consumer finance loans3,065
 2,190
 332
 5,587
 21,305
 26,892
 —
Consumer loans8,248
 2,963
 2,939
 14,150
 520,468
 534,618
 —
Total Personal Banking20,720
 13,505
 19,744
 53,969
 4,176,456
 4,230,425
 —
              
Commercial Banking: 
  
  
  
  
  
  
Commercial real estate loans3,586
 7,290
 18,069
 28,945
 2,060,438
 2,089,383
 —
Commercial loans271
 2
 3,288
 3,561
 524,670
 528,231
 —
Total Commercial Banking3,857
 7,292
 21,357
 32,506
 2,585,108
 2,617,614
 —
Total originated loans24,577
 20,797
 41,101
 86,475
 6,761,564
 6,848,039
 —
              
Acquired loans: 
  
  
  
  
  
  
Personal Banking: 
  
  
  
  
  
  
Residential mortgage loans—
 1,063
 875
 1,938
 117,525
 119,463
 405
Home equity loans694
 171
 1,239
 2,104
 266,179
 268,283
 102
Consumer loans1,262
 320
 315
 1,897
 110,513
 112,410
 10
Total Personal Banking1,956
 1,554
 2,429
 5,939
 494,217
 500,156
 517
              
Commercial Banking: 
  
  
  
  
  
  
Commercial real estate loans2,167
 376
 5,241
 7,784
 301,719
 309,503
 727
Commercial loans475
 194
 889
 1,558
 66,882
 68,440
 —
Total Commercial Banking2,642
 570
 6,130
 9,342
 368,601
 377,943
 727
Total acquired loans4,598
 2,124
 8,559
 15,281
 862,818
 878,099
 1,244
              
Total loans$29,175
 22,921
 49,660
 101,756
 7,624,382
 7,726,138
 1,244
(1)Represents acquired loans that were originally recorded at fair value upon acquisition. These loans are considered to be accruing because we can reasonably estimate future cash flows on and expect to fully collect the carrying valuethe amortized cost basis of these loans. Therefore, we are accreting the difference between the carrying value and their expected cash flows into interest income.



32

The following table provides information related to loan payment delinquencies at December 31, 20162021 (in thousands):
 30-59 days
delinquent		60-89 days
delinquent		90 days or
greater
delinquent		Total
delinquency		CurrentTotal loans
receivable		90 days or
greater
delinquent
and accruing
Personal Banking:      
Residential mortgage loans$20,567 5,433 7,641 33,641 2,960,979 2,994,620 — 
Home equity loans3,153 949 4,262 8,364 1,311,567 1,319,931 — 
Vehicle loans5,331 1,487 1,635 8,453 1,475,778 1,484,231 — 
Consumer loans1,205 519 765 2,489 352,028 354,517 331 
Total Personal Banking30,256 8,388 14,303 52,947 6,100,352 6,153,299 331 
Commercial Banking:
Commercial real estate loans16,938 699 23,489 41,126 2,584,355 2,625,481 — 
Commercial real estate loans - owner occupied127 70 574 771 389,232 390,003 — 
Commercial loans193 727 1,105 2,025 845,584 847,609 — 
Total Commercial Banking17,258 1,496 25,168 43,922 3,819,171 3,863,093 — 
Total originated loans$47,514 9,884 39,471 96,869 9,919,523 10,016,392 331 
 
30-59 Days
delinquent
 
60-89 Days
delinquent
 
90 Days or
greater
delinquent
 
Total
delinquency
 Current 
Total loans
receivable
 90 Days or
greater
delinquent
and accruing
(1)
Originated loans:             
Personal Banking: 
  
  
  
  
  
  
Residential mortgage loans$26,212
 5,806
 12,792
 44,810
 2,536,443
 2,564,655
 —
Home equity loans5,785
 1,305
 4,783
 11,873
 1,014,442
 1,042,913
 —
Consumer finance loans1,255
 766
 743
 2,764
 46,217
 48,981
 —
Consumer loans7,343
 2,438
 2,775
 12,556
 415,508
 428,064
 —
Total Personal Banking40,595
 10,315
 21,093
 72,003
 4,012,610
 4,084,613
 —
              
Commercial Banking: 
  
  
  
  
  
  
Commercial real estate loans7,674
 3,674
 16,508
 27,856
 1,944,227
 1,972,083
 —
Commercial loans1,067
 1,957
 3,107
 6,131
 449,244
 455,375
 —
Total Commercial Banking8,741
 5,631
 19,615
 33,987
 2,393,471
 2,427,458
 —
Total originated loan49,336
 15,946
 40,708
 105,990
 6,406,081
 6,512,071
 —
              
Acquired loans:             
Personal Banking:             
Residential mortgage loans1,174
 421
 829
 2,424
 131,087
 133,511
 452
Home equity loans1,020
 258
 973
 2,251
 300,206
 302,457
 204
Consumer loans1,270
 405
 320
 1,995
 163,921
 165,916
 15
Total Personal Banking3,464
 1,084
 2,122
 6,670
 595,214
 601,884
 671
              
Commercial Banking: 
  
  
  
  
  
  
Commercial real estate loans2,703
 821
 4,762
 8,286
 361,720
 370,006
 2,006
Commercial loans111
 124
 413
 648
 72,738
 73,386
 147
Total Commercial Banking2,814
 945
 5,175
 8,934
 434,458
 443,392
 2,153
Total acquired loan6,278
 2,029
 7,297
 15,604
 1,029,672
 1,045,276
 2,824
              
Total$55,614
 17,975
 48,005
 121,594
 7,435,753
 7,557,347
 2,824

(1) Represents acquired loans that were originally recorded at fair value upon acquisition. These loans are considered to be accruing becauseCredit Quality Indicators: For Commercial Banking we can reasonably estimate future cash flows on and expect to fully collect the carrying value of these loans. Therefore, we are accreting the difference between the carrying value and their expected cash flows into interest income.

Credit quality indicators:  We categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. We analyze loans individually by classifying the loans by credit risk. Credit relationships greater than or equal to $1.0 million classified as special mention or substandard are reviewed quarterly for deterioration or improvement to determine if the loan is appropriately classified. We use the following definitions for risk ratings other than pass:
 
Special mentionMention — Loans designated as special mention have specific, well-defined risk issues, which create a high level of uncertainty regarding the long-term viability of the business. Loans in this class are considered to have high-risk characteristics. A special mention loan exhibits material negative financial trends due to company-specific or systemic conditions. If these potential weaknesses are not mitigated, they threaten the borrower’s capacity to meet its debt obligations. Special mention loans still demonstrate sufficient financial flexibility to react to and positively address the root cause of the adverse financial trends without significant deviations from their current business strategy. Their potential weaknesses deserve our close attention and warrant enhanced monitoring.
 


33

Substandard — Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the
26
Table of Contents
liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.

Doubtful — Loans classified as doubtful have all the weaknesses inherent in those classified as substandard. In addition, those weaknesses make collection or liquidation in full highly questionable and improbable. A loan classified as doubtful exhibits discernible loss potential, but a complete loss seems very unlikely. The possibility of a loss on a doubtful loan is high, but because of certain important and reasonably specific pending factors that may strengthen the loan, its classification as an estimated loss is deferred until a more exact status can be determined.
 
Loss — Loans classified as loss are considered uncollectible and of such value that the continuance as a loan is not warranted. A loss classification does not mean that the loan has no recovery or salvage value; instead, it means that it is not practical or desirable to defer writing off all or a portion of a basically worthless loan even though partial recovery may be possible in the future.

For Personal Banking loans a pass risk rating is maintained until they are greater than 90 days past due, and risk rating reclassification is based primarily on past due status of the loan. The risk rating categories can generally be described by the following groupings:

Pass — Loans classified as pass are homogeneous loans that are less than 90 days past due from the required payment date at month-end.

Substandard — Loans classified as substandard are homogeneous loans that are greater than 90 days past due from the required payment date at month-end, loans classified as TDRs or homogenous retail loans that are greater than 180 days past due from the required payment date at month-end that has been written down to the value of underlying collateral, less costs to sell.

Doubtful — Loans classified as doubtful are homogeneous loans that are greater than 180 days past due from the required payment date at month-end and not written down to the value of underlying collateral. These loans are generally charged-off in the month in which the 180 day period elapses.


 
27
Table of Contents
The following table presents the amortized cost basis of our loan portfolio by year of origination and credit quality indicator for each portfolio segment as of June 30, 2022 (in thousands):
YTD June 30, 20222021202020192018PriorRevolving loansRevolving loans converted to term loansTotal loans
receivable
Personal Banking:    
Residential mortgage loans
Pass$290,471 843,802 572,648 278,086 141,007 1,147,103 — — 3,273,117 
Substandard— 106 710 258 417 12,167 — — 13,658 
Total residential mortgage loans290,471 843,908 573,358 278,344 141,424 1,159,270 — — 3,286,775 
Home equity loans
Pass62,500 138,755 187,786 121,932 56,161 231,691 435,304 40,995 1,275,124 
Substandard— 48 — 378 345 2,889 845 863 5,368 
Total home equity loans62,500 138,803 187,786 122,310 56,506 234,580 436,149 41,858 1,280,492 
Vehicle loans
Pass527,150 742,059 288,651 181,929 97,160 55,620 — — 1,892,569 
Substandard83 964 402 764 578 375 — — 3,166 
Total vehicle loans527,233 743,023 289,053 182,693 97,738 55,995 — — 1,895,735 
Consumer loans
Pass9,391 12,822 5,966 5,235 3,613 6,244 61,662 1,361 106,294 
Substandard— 27 — 10 5 61 412 1 516 
Total consumer loans9,391 12,849 5,966 5,245 3,618 6,305 62,074 1,362 106,810 
Total Personal Banking889,595 1,738,583 1,056,163 588,592 299,286 1,456,150 498,223 43,220 6,569,812 
Business Banking:     
Commercial real estate loans
Pass124,555 344,825 415,474 297,289 235,348 798,170 28,902 9,104 2,253,667 
Special mention— 798 1,466 20,818 1,077 6,863 988 15 32,025 
Substandard— 96 7,117 28,401 43,407 116,480 564 4,217 200,282 
Total commercial real estate loans124,555 345,719 424,057 346,508 279,832 921,513 30,454 13,336 2,485,974 
Commercial real estate loans - owner occupied
Pass41,726 63,126 18,245 39,001 47,377 132,060 3,233 1,772 346,540 
Special mention— — — 15,067 3,698 689 61 — 19,515 
Substandard— — — 5,360 1,934 14,747 — 2,106 24,147 
Total commercial real estate loans - owner occupied41,726 63,126 18,245 59,428 53,009 147,496 3,294 3,878 390,202 
Commercial loans
Pass335,778 127,282 63,945 54,761 21,293 57,692 288,640 4,738 954,129 
Special mention153 155 283 486 47 — 1,344 — 2,468 
Substandard569 306 896 3,309 2,596 1,881 11,060 9,622 30,239 
Total commercial loans336,500 127,743 65,124 58,556 23,936 59,573 301,044 14,360 986,836 
Total Business Banking502,781 536,588 507,426 464,492 356,777 1,128,582 334,792 31,574 3,863,012 
Total loans$1,392,376 2,275,171 1,563,589 1,053,084 656,063 2,584,732 833,015 74,794 10,432,824 
    During the six months ended June 30, 2022, $9.2 million of revolving loans were converted to term loans.








28
Table of Contents
The following table sets forth information aboutpresents the amortized cost basis of our loan portfolio by year of origination and credit quality indicators updated during the quarter ended September 30, 2017indicator for each portfolio segment as of December 31, 2021 (in thousands): 
20212020201920182017PriorRevolving loansRevolving loans converted to term loansTotal loans
receivable
Personal Banking:     
Residential mortgage loans
Pass$644,862 602,429 304,275 156,639 171,240 1,098,635 — — 2,978,080 
Substandard138 489 377 538 882 14,116 — — 16,540 
Total residential mortgage loans645,000 602,918 304,652 157,177 172,122 1,112,751 — — 2,994,620 
Home equity loans
Pass150,847 210,224 138,661 65,011 61,692 209,959 435,660 40,766 1,312,820 
Substandard— — 441 60 455 3,820 1,275 1,060 7,111 
Total home equity loans150,847 210,224 139,102 65,071 62,147 213,779 436,935 41,826 1,319,931 
Vehicle loans
Pass801,084 292,804 205,653 119,304 34,546 27,576 — — 1,480,967 
Substandard387 365 1,141 745 379 247 — — 3,264 
Total vehicle loans801,471 293,169 206,794 120,049 34,925 27,823 — — 1,484,231 
Consumer loans
Pass117,856 81,266 47,195 20,595 9,794 12,202 63,025 1,578 353,511 
Substandard213 161 105 64 26 50 357 30 1,006 
Total consumer loans118,069 81,427 47,300 20,659 9,820 12,252 63,382 1,608 354,517 
Total Personal Banking1,715,387 1,187,738 697,848 362,956 279,014 1,366,605 500,317 43,434 6,153,299 
Business Banking:
Commercial real estate loans
Pass306,689 433,219 335,541 263,524 221,450 683,537 26,288 10,179 2,280,427 
Special mention803 1,808 52,513 3,296 1,394 8,529 729 23 69,095 
Substandard— 34,153 44,712 46,045 56,077 89,311 492 5,169 275,959 
Total commercial real estate loans307,492 469,180 432,766 312,865 278,921 781,377 27,509 15,371 2,625,481 
Commercial real estate - owner occupied
Pass69,084 19,452 51,997 60,824 57,676 94,687 2,822 2,707 359,249 
Special mention— — — 769 1,959 1,444 856 — 5,028 
Substandard— — 3,575 2,887 7,840 10,602 — 822 25,726 
Total commercial real estate - owner occupied loans69,084 19,452 55,572 64,480 67,475 106,733 3,678 3,529 390,003 
Commercial loans
Pass224,367 110,171 73,276 27,668 20,748 76,987 262,805 12,301 808,323 
Special mention197 661 812 1,195 50 581 2,234 — 5,730 
Substandard329 4,767 5,102 4,437 1,529 2,116 6,667 8,609 33,556 
Total commercial loans224,893 115,599 79,190 33,300 22,327 79,684 271,706 20,910 847,609 
Total Business Banking601,469 604,231 567,528 410,645 368,723 967,794 302,893 39,810 3,863,093 
Total loans$2,316,856 1,791,969 1,265,376 773,601 647,737 2,334,399 803,210 83,244 10,016,392 
 Pass 
Special
mention
 Substandard Doubtful Loss 
Total loans
receivable
Originated loans: 
  
  
  
  
  
Personal Banking: 
  
  
  
  
  
Residential mortgage loans$2,607,925
 —
 15,838
 —
 —
 2,623,763
Home equity loans1,037,567
 —
 7,585
 —
 —
 1,045,152
Consumer finance loans26,560
 —
 332
 —
 —
 26,892
Consumer loans531,310
 —
 3,308
 —
 —
 534,618
Total Personal Banking4,203,362
 —
 27,063
 —
 —
 4,230,425
            
Commercial Banking: 
  
  
  
  
  
Commercial real estate loans1,927,940
 50,962
 110,481
 —
 —
 2,089,383
Commercial loans467,664
 15,204
 45,363
 —
 —
 528,231
Total Commercial Banking2,395,604
 66,166
 155,844
 —
 —
 2,617,614
Total originated loans6,598,966
 66,166
 182,907
 —
 —
 6,848,039
            
Acquired loans: 
  
  
  
  
  
Personal Banking: 
  
  
  
  
  
Residential mortgage loans117,135
 —
 2,328
 —
 —
 119,463
Home equity loans264,469
 —
 3,814
 —
 —
 268,283
Consumer loans111,662
 —
 748
 —
 —
 112,410
Total Personal Banking493,266
 —
 6,890
 —
 —
 500,156
            
Commercial Banking: 
  
  
  
  
  
Commercial real estate loans268,570
 5,156
 35,777
 —
 —
 309,503
Commercial loans59,160
 3,720
 5,560
 —
 —
 68,440
Total Commercial Banking327,730
 8,876
 41,337
 —
 —
 377,943
Total acquired loans820,996
 8,876
 48,227
 —
 —
 878,099
            
Total loans$7,419,962
 75,042
 231,134
 —
 —
 7,726,138



34

The following table sets forth information about credit quality indicators, which were updated during    During the year ended December 31, 2016 (in thousands):2021, $27.3 million of revolving loans were converted to term loans.
29
 Pass 
Special
mention
 Substandard Doubtful Loss 
Total loans
receivable
Originated loans:           
Personal Banking: 
  
  
  
  
  
Residential mortgage loans$2,548,390
 —
 16,265
 —
 —
 2,564,655
Home equity loans1,035,496
 —
 7,417
 —
 —
 1,042,913
Consumer finance loans48,238
 —
 743
 —
 —
 48,981
Consumer loans425,712
 —
 2,352
 —
 —
 428,064
Total Personal Banking4,057,836
 —
 26,777
 —
 —
 4,084,613
            
Commercial Banking: 
  
  
  
  
  
Commercial real estate loans1,821,548
 36,321
 114,214
 —
 —
 1,972,083
Commercial loans401,866
 15,203
 38,306
 —
 —
 455,375
Total Commercial Banking2,223,414
 51,524
 152,520
 —
 —
 2,427,458
Total originated loans6,281,250
 51,524
 179,297
 —
 —
 6,512,071
            
Acquired loans:           
Personal Banking:           
Residential mortgage loans131,717
 —
 1,794
 —
 —
 133,511
Home equity loans300,100
 —
 2,357
 —
 —
 302,457
Consumer loans165,094
 —
 822
 —
 —
 165,916
Total Personal Banking596,911
 —
 4,973
 —
 —
 601,884
            
Commercial Banking: 
  
  
  
  
  
Commercial real estate loans331,780
 7,403
 30,823
 —
 —
 370,006
Commercial loans68,127
 1,989
 3,270
 —
 —
 73,386
Total Commercial Banking399,907
 9,392
 34,093
 —
 —
 443,392
Total acquired loans996,818
 9,392
 39,066
 —
 —
 1,045,276
            
Total$7,278,068
 60,916
 218,363
 —
 —
 7,557,347
Table of Contents
(4)    Goodwill and Other Intangible Assets
(5)Goodwill and Other Intangible Assets
 
The following table provides information for intangible assets subject to amortization as ofat the dates indicated (in thousands):
June 30, 2022December 31, 2021
Amortizable intangible assets:  
Core deposit intangibles - gross$74,899 74,899 
Less: accumulated amortization(64,416)(62,158)
Core deposit intangibles - net$10,483 12,741 
Customer and Contract intangible assets - gross$12,775 12,775 
Customer list intangible assets disposed of due to sale of insurance business— (1,547)
Less: accumulated amortization(12,720)(11,133)
Customer and Contract intangible assets - net55 95 
Total intangible assets - net$10,538 12,836 
 September 30,
2017		 December 31,
2016
Amortizable intangible assets: 
  
Core deposit intangibles — gross$63,685
 37,953
Acquisitions—
 25,732
Less: accumulated amortization(38,725) (34,378)
Core deposit intangibles — net24,960
 29,307
Customer and Contract intangible assets — gross10,474
 8,496
Acquisitions—
 1,978
Less: accumulated amortization(8,190) (7,348)
Customer and Contract intangible assets — net$2,284
 3,126



35


The following table shows the actual aggregate amortization expense for the quarters and ninesix months ended SeptemberJune 30, 20172022 and 2016,2021, as well as the estimated aggregate amortization expense, based upon current levels of intangible assets, for the current fiscal year and each of the five succeeding fiscal years (in thousands):
For the quarter ended September 30, 2017$1,691
For the quarter ended September 30, 20161,068
For the nine months ended September 30, 20175,189
For the nine months ended September 30, 20162,453
For the year ending December 31, 20176,764
For the year ending December 31, 20185,848
For the year ending December 31, 20194,933
For the year ending December 31, 20204,017
For the year ending December 31, 20213,188
For the year ending December 31, 20222,456
For the quarter ended June 30, 2022$1,115 
For the quarter ended June 30, 20211,433 
For the six months ended June 30, 20222,298 
For the six months ended June 30, 20213,027 
For the year ending December 31, 20224,277 
For the year ending December 31, 20233,270 
For the year ending December 31, 20242,452 
For the year ending December 31, 20251,662 
For the year ending December 31, 2026871 
For the year ending December 31, 2027304 
 
The following table provides information for the changes in the carrying amount of goodwill (in thousands):
Total
Balance at December 31, 20152020261,736$
382,279 
Goodwill acquiredPurchase accounting adjustment45,68477 
Goodwill disposed of due to sale of insurance business(1,359)
Balance at December 31, 20162021307,420380,997 
Goodwill acquired—
Impairment losses—
Balance at SeptemberJune 30, 20172022307,420$
380,997 

We performed our annual goodwill impairment test as of June 30, 2017 using ASU 2011-08, Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment ("Step 0")2022 in accordance with ASC 350 and concluded that goodwill was not impaired.



















30
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(6)Guarantees
(5)Borrowed Funds

(a)Borrowings

Borrowed funds at June 30, 2022 and December 31, 2021 are presented in the following table:
June 30, 2022December 31, 2021
AmountAverage rateAmountAverage rate
Collateralized borrowings, due within one year$117,440 0.19 %$139,093 0.19 %
Collateral received, due within one year13,050 1.58 %— — 
      Total borrowed funds$130,490 $139,093 
Borrowings from the Federal Home Loan Banks (“FHLB”) of Pittsburgh and Indianapolis, if any, are secured by our residential first mortgage and other qualifying loans. Certain of these borrowings are subject to restrictions or penalties in the event of prepayment.

    The revolving line of credit with the FHLB of Pittsburgh carries a commitment of $250.0 million. The rate is adjusted daily by the FHLB of Pittsburgh, and any borrowings on this line may be repaid at any time without penalty. The revolving line of credit had no balance as of June 30, 2022 and December 31, 2021.

    At June 30, 2022 and December 31, 2021, collateralized borrowings due within one year were $117.4 million and $139.1 million, respectively. These borrowings are collateralized by cash or various securities held in safekeeping by the FHLB.

At June 30, 2022 and December 31, 2021, collateral received was $13.1 million and $0, respectively. This represents collateral posted to us from our derivative counterparties.

On September 9, 2020, the Company issued $125.0 million of 4.00% fixed-to-floating rate subordinated notes with a maturity date of September 15, 2030. The subordinated notes, which qualify as Tier 2 capital, bear interest at an annual rate of 4.00%, payable semi-annually in arrears commencing on March 15, 2021, and a floating rate of interest equivalent to the 3-month Secured Overnight Financing Rate (“SOFR”) plus 3.89% payable quarterly in arrears commencing on December 15, 2025. The subordinated debt issuance costs of approximately $1.8 million are being amortized over five years on a straight-line basis into interest expense. At June 30, 2022 and December 31, 2021, subordinated debentures, net of issuance costs, were $113.7 million and $123.6 million, respectively.

(b)Trust Preferred Securities

The Company has 7 statutory business trusts: Northwest Bancorp Capital Trust III, a Delaware statutory business trust, Northwest Bancorp Statutory Trust IV, a Connecticut statutory business trust, LNB Trust II, a Delaware statutory business trust, Union National Capital Trust I (“UNCT I”), a Delaware statutory business trust, Union National Capital Trust II (“UNCT II”), a Delaware statutory business trust, MFBC Statutory Trust I, a Delaware statutory trust, and Universal Preferred Trust, a Delaware statutory trust (the “Trusts”). The Trusts exist solely to issue preferred securities to third parties for cash, issue common securities to the Company in exchange for capitalization of the Trusts, invest the proceeds from the sale of trust securities in an equivalent amount of debentures of the Company, and engage in other activities that are incidental to those previously listed. 

The Trusts have invested the proceeds of the offerings in junior subordinated deferrable interest debentures issued by the Company. The structure of these debentures mirrors the structure of the trust-preferred securities. These subordinated debentures are the sole assets of the Trusts. As the shareholders of the trust preferred securities are the primary beneficiaries of the Trusts, the Trusts are not consolidated in our financial statements.

31
Table of Contents
The following table sets forth a summary of the cumulative trust preferred securities and the junior subordinated debt held by the Trust as of the date listed.
Maturity dateInterest rateCapital debt securitiesJune 30, 2022December 31, 2021
Northwest Bancorp Capital Trust IIIDecember 30, 20353-month LIBOR plus 1.38%$50,000 $51,547 51,547 
Northwest Bancorp Statutory Trust IVDecember 15, 20353-month LIBOR plus 1.38%50,000 51,547 51,547 
LNB Trust IIJune 15, 20373-month LIBOR plus 1.48%7,875 8,119 8,119 
UNCT I (1)January 23, 20343-month LIBOR plus 2.85%8,000 7,962 7,950 
UNCT II (1)November 23, 20343-month LIBOR plus 2.00%3,000 2,755 2,741 
MFBC Statutory Trust I (1)September 15, 20353-month LIBOR plus 1.70%5,000 3,632 3,580 
Universal Preferred Trust (1)October 7, 20353-month LIBOR plus 1.69%5,000 3,622 3,570 
$129,184 129,054 
(1) Net of discounts due to the fair value adjustment made at the time of acquisition.

Cash distributions on the trust securities are made on a quarterly basis to the extent interest on the debentures is received by the Trusts. We have the right to defer payment of interest on the subordinated debentures at any time, or from time-to-time, for periods not exceeding five years. If interest payments on the subordinated debentures are deferred, the distributions on the trust securities also are deferred. To date there have been no interest deferrals. Interest on the subordinated debentures and distributions on the trust securities is cumulative. Our obligation constitutes a full, irrevocable, and unconditional guarantee on a subordinated basis of the obligations of the trust under the preferred securities.
The Trusts must redeem the preferred securities when the debentures are paid at maturity or upon an earlier redemption of the debentures to the extent the debentures are redeemed. All or part of the debentures may be redeemed at any time. Also, the debentures may be redeemed at any time if existing laws or regulations, or the interpretation or application of these laws or regulations, change causing:
•the interest on the debentures to no longer be deductible by the Company for federal income tax purposes;
•the trusts to become subject to federal income tax or to certain other taxes or governmental charges;
•the trusts to register as an investment company; or
•the preferred securities to no longer qualify as Tier I capital. 

We may, at any time, dissolve any of the Trusts and distribute the debentures to the trust security holders, subject to receipt of any required regulatory approvals.

(6)    Guarantees
 
We issue standby letters of credit in the normal course of business. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party. We are required to perform under a standby letter of credit when drawn upon by the guaranteed third party in the case of nonperformance by our customer. The credit risk associated with standby letters of credit is essentially the same as that involved in extending loans to customers and is subject to normal loan underwriting procedures. Collateral may be obtained based on management’s credit assessment of the customer. At SeptemberJune 30, 2017,2022, the maximum potential amount of future payments we could be required to make under these non-recourse standby letters of credit was $17.7$46.5 million, of which $17.2$36.8 million is fully collateralized. At SeptemberJune 30, 2017,2022, we had a liability which represents deferred income of $137,000$685,000 related to the standby letters of credit.


(7)Earnings Per Share
(7)    Earnings Per Share

     
Basic earnings per common share (EPS)(“EPS”) is computed by dividing net income available to common shareholders by the weighted-averageweighted average number of common shares outstanding for the period, without considering any dilutive items. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. All stock options outstanding during the quarter ended September 30, 2017 and 2016, were included in the computation of diluted earnings per share because the options’ exercise price was less than the average market price of the common shares of $16.26 and $15.19, respectively. All stock options outstanding during the nine months ended September 30, 2017 were included in the computation of diluted earnings per share because the options’ exercise price was less than the average market price of the common shares of $16.58. Stock options to purchase 710,423 shares of common stock with a weighted average exercise price of $14.15 per share were outstanding during the nine months ended September 30, 2016 but were not included in the computation of diluted earnings per share because the options’ exercise price was greater than the average market price of the common shares of $14.02.




32
36
Table of Contents

The following table sets forth the computation of basic and diluted earnings per share followsEPS (in thousands, except share data and per share amounts): 
Quarter ended June 30,Six months ended June 30,
 2022202120222021
Net income$33,426 48,967 61,713 89,204 
Less: Dividends and undistributed earnings allocated to participating securities159 340 294 619 
Net income available to common shareholders$33,267 48,627 61,419 88,585 
Weighted average common shares outstanding126,059,165 126,749,707 125,960,997 126,456,814 
Add: Participating shares outstanding604,613 887,958 604,613 887,958 
Total weighted average common shares and dilutive potential shares126,663,778 127,637,665 126,565,610 127,344,772 
Basic earnings per share$0.26 0.38 0.49 0.70 
Diluted earnings per share$0.26 0.38 0.49 0.70 


33
Table of Contents
 Quarter ended
September 30,		 Nine months ended
September 30, 2017
 2017 2016 2017 2016
Reported net income$23,591
 14,197
 72,319
 25,173
        
Weighted average common shares outstanding101,163,534
 99,602,535
 100,921,322
 99,224,565
Dilutive potential shares due to effect of stock options1,400,942
 1,465,710
 1,617,020
 1,008,942
Total weighted average common shares and dilutive potential shares102,564,476
 101,068,245
 102,538,342
 100,233,507
        
Basic earnings per share:$0.23
 0.14
 0.72
 0.25
        
Diluted earnings per share:$0.23
 0.14
 0.71
 0.25

(8)    Pension and Other Post-retirementPost-Retirement Benefits
 
The following table sets forth the net periodic costs for the defined benefit pension plans and post retirementpost-retirement healthcare plans for the periods indicated (in thousands):
 Quarter ended June 30,
 Pension benefitsOther post-retirement benefits
 2022202120222021
Service cost$2,599 2,860 — — 
Interest cost1,671 1,518 10 5 
Expected return on plan assets(3,864)(3,465)— — 
Amortization of prior service cost(564)(581)— — 
Amortization of the net loss381 1,040 2 3 
Net periodic cost$223 1,372 12 8 
Components of net periodic benefit cost
Six months ended June 30,
Pension benefitsOther post-retirement benefits
2022202120222021
Service cost$5,198 5,720 — — 
Interest cost3,342 3,035 20 9 
Expected return on plan assets(7,728)(6,930)— — 
Amortization of prior service cost(1,128)(1,161)— — 
Amortization of the net loss762 2,079 4 7 
Net periodic cost$446 2,743 24 16 
    
 Quarter ended September 30,
 Pension benefits Other post-retirement benefits
 2017 2016 2017 2016
Service cost$1,537
 1,374
 —
 —
Interest cost1,719
 1,695
 17
 18
Expected return on plan assets(2,628) (2,474) —
 —
Amortization of prior service cost(580) (581) —
 —
Amortization of the net loss928
 927
 27
 22
Net periodic cost$976
 941
 44
 40
 Nine Months Ended September 30, 2016
 Pension benefits Other post-retirement benefits
 2017 2016 2017 2016
Service cost$4,612
 4,122
 —
 —
Interest cost5,159
 5,087
 51
 53
Expected return on plan assets(7,884) (7,423) —
 —
Amortization of prior service cost(1,742) (1,742) —
 —
Amortization of the net loss2,783
 2,782
 81
 67
Net periodic cost$2,928
 2,826
 132
 120

We anticipate making a contribution to our defined benefit pension plan of $4.0 million to $5.0between $0 and $2.0 million during the year ending December 31, 2017.2022.

(9)    Disclosures About Fair Value of Financial Instruments
 


37

(9)Disclosures About Fair Value of Financial Instruments
Fair    We are required to disclose fair value information about financial instruments whether or not recognized in the consolidated statementConsolidated Statement of financial condition, is required to be disclosed. These requirements excludeFinancial Condition. Fair value information of certain financial instruments and all nonfinancial instruments.instruments is not required to be disclosed. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.

Financial assets and liabilities recognized or disclosed at fair value on a recurring basis and certain financial assets and liabilities on a non-recurring basis are accounted for using a three-level hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. This hierarchy gives the highest priority to quoted prices with readily available independent data in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable market inputs (Level 3). When various inputs for measurement fall within different levels of the fair value hierarchy, the lowest level input that has a significant impact on fair value measurement is used.

Financial assets and liabilities are categorized based upon the following characteristics or inputs to the valuation techniques:

•    Level 1 —- Financial assets and liabilities for which inputs are observable and are obtained from reliable quoted prices for identical assets or liabilities in actively traded markets. This is the most reliable fair value measurement and includes, for example, active exchange-traded equity securities.

•    Level 2 —- Financial assets and liabilities for which values are based on quoted prices in markets that are not active or for which values are based on similar assets or liabilities that are actively traded. Level 2 also includes pricing models in which the inputs are corroborated by market data, for example, matrix pricing.

•     Level 3 —- Financial assets and liabilities for which values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Level 3 inputs include the following:

◦Quotes from brokers or other external sources that are not considered binding;
◦Quotes from brokers or other external sources where it cannot be determined that market participants would in fact transact for the asset or liability at the quoted price; and
34
Table of Contents
◦Quotes and other information from brokers or other external sources where the inputs are not deemed observable.

    
We are responsible for the valuation process and as part of this process may use data from outside sources in establishing fair value. We perform due diligence to understand the inputs used or how the data was calculated or derived. We also corroborate the reasonableness of external inputs in the valuation process.

The carrying amounts reported in the consolidated statementConsolidated Statement of financial conditionFinancial Condition approximate fair value for the following financial instruments: cash on hand, interest-earning deposits in other institutions, federal funds sold and other short-term investments,cash equivalents, marketable securities available-for-sale, residential mortgage loans held-for-sale, accrued interest receivable, interest rate lock commitments, forward commitments, interest rate swaps, savings and checking deposits, borrowed funds, foreign exchange swaps, risk participation agreements, and accrued interest payable, and marketable securities available-for-sale.payable.

Marketable Securities
 
Where available, market values are based on quoted market prices, dealer quotes, and prices obtained from independent pricing services.
 
Debt securities - available for saleSecurities — available-for-sale - Generally, debt securities are valued using pricing for similar securities, recently executed transactions and other pricing models utilizing observable inputs. The valuation for most debt securities is classified as Level 2. Securities within Level 2 include corporate bonds, municipal bonds, mortgage-backed securities and USU.S. government obligations. Certain corporate debt securities which were AAA rated at purchase do not have an active market and as such the broker pricing received useswe have used an alternative methods. Themethod to determine the fair value of these corporate debt securities issecurities. The fair value has been determined by using a discounted cash flow model using market assumptions, which generally include cash flow, collateral and other market assumptions. As such, these securities which otherwise would have been classified as Level 2 securities if an active market for those assets or similar assets existed are included herein as Level 3 assets.

Equity securitiesDebt Securities — held-to-maturity - available for sale - Level 1 securities include publicly traded securities valued using quoted market prices.  We consider the financial condition of the issuer to determine if the securities have indicators of impairment.


38

Debt securities - held to maturity- The fair value of debt securities held to maturityheld-to-maturity is determined in the same manner as debt securities available for sale.available-for-sale.
 
Loans Held for SaleReceivable

The estimated fair value of loans held for sale is based on market bids obtained from potential buyers.
    
Loans Held for Investment
Loans with comparable characteristics including collateral and re-pricing structures are segregated for valuation purposes. Characteristics include remaining term, coupon interest, and estimated prepayment speeds. Delinquent loans are separately evaluated given the impact delinquency has on the projected future cash flow of the loan and the approximate discount or market rate. Each loan pool is separately valued utilizing a discounted cash flow analysis. Projected monthly cash flows are discounted to present value using a market rate for comparable loans, which is not considered an exit price. Characteristics of comparable loans include remaining term, coupon interest, and estimated prepayment speeds. Delinquent loans are separately evaluated given the impact delinquency has on the projected future cash flow of the loan including the approximate discount or market rate, which is not considered an exit price.

Loans Held-for-Sale

The estimated fair value of loans held-for-sale is based on market bids obtained from potential buyers.
    
Federal Home Loan Bank (“FHLB”)FHLB Stock
 
Due to the restrictions placed on the transferability of FHLB stock, it is not practical to determine the fair value.

Deposit Liabilities

The estimated fair value of deposits with no stated maturity, which includes demand deposits, money market, and other savings accounts, is the amount payable on demand. Although market premiums paid for depository institutions reflect an additional value for these low-cost deposits, adjusting fair value for any value expected to be derived from retaining those deposits for a future period of time or from the benefit that results from the ability to fund interest-earning assets with these deposit liabilities is prohibited. The fair value estimates of deposit liabilities do not include the benefit that results from the low-cost funding provided by these deposits compared to the cost of borrowing funds in the market. Fair values for time deposits are estimated using a discounted cash flow calculation that applies contractual cost currently being offered in the existing portfolio to current market rates being offered locally for deposits of similar remaining maturities. The valuation adjustment for the portfolio consists of the present value of the difference of these two cash flows, discounted at the assumed market rate of the corresponding maturity.



35
Table of Contents
Borrowed Funds
 
Fixed rate advances are valued by comparing their contractual cost to the prevailing market cost. The carrying amount of collateralized borrowingsrepurchase agreements approximates thetheir fair value.

Subordinated Debentures

The fair value of our subordinated debentures is calculated using the discounted cash flows at rates observable for other similarly traded liabilities.

Junior Subordinated Debentures
 
The fair value of junior subordinated debentures is calculated using the discounted cash flows at the prevailing rate of interest.

Cash flow hedges — Interest rate swap agreements (“swaps”)Rate Lock Commitments and Forward Commitments

The fair value of interest rate lock commitments is based on the swapsvalue of underlying loans held-for-sale which is based on quoted prices for similar loans in the secondary market. This value is then adjusted based on the probability of the loan closing (i.e., the “pull-through” amount, we would expect to pay to terminatea significant unobservable input). The fair value of forward sale commitments is based on quoted prices from the agreementssecondary market based on the settlement date of the contracts.

Interest Rate and Foreign Exchange Swap Agreements and Risk Participation Agreements
    The fair value of interest rate swaps is based upon the present value of the expected future cash flows using the LIBOR swap curve, the basis for the underlying interest rate. To price interest rate swaps, cash flows are first projected for each payment date using the fixed rate for the fixed side of the swap and the forward rates for the floating side of the swap. These swap cash flows are then discounted to time zero using LIBOR zero-coupon interest rates. The sum of the present value of both legs is the fair market value of the interest rate swap. These valuations have been derived from our third party vendor’s proprietary models rather than actual market quotations. The proprietary models are based upon financial principles and assumptions that we believe to be reasonable. The fair value of the foreign exchange swap is derived from proprietary models rather than actual market quotations. The proprietary models are based upon financial principles and assumptions we believe to be reasonable. Risk participation agreements are entered into when Northwest purchases a portion of a commercial loan that has an interest rate swap. Northwest assumes credit risk on its portion of the interest rate swap should the borrower fail to pay as agreed. The value of risk participation agreements is determined based on the value of the swap after considering the credit quality, probability of default, and loss given default of the borrower.

Off-Balance Sheet Financial Instruments
 
These financial instruments generally are not sold or traded, and estimated fair values are not readily available. However, the fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements. Commitments to extend credit are generally short-term in nature and, if drawn upon, are issued under current market terms. At SeptemberJune 30, 20172022 and December 31, 2016,2021, there was no significant unrealized appreciation or depreciation on these financial instruments.




36
39
Table of Contents

The following table sets forth the carrying amount and estimated fair value of our financial instruments included in the consolidated statementConsolidated Statement of financial conditionFinancial Condition at SeptemberJune 30, 20172022 (in thousands): 
Carrying
amount
 
Estimated
fair value
 Level 1 Level 2 Level 3Carrying
amount		Estimated
fair value		Level 1Level 2Level 3
Financial assets: 
  
  
  
  
Financial assets:     
Cash and cash equivalents$165,676
 165,676
 165,676
 —
 —
Cash and cash equivalents$504,532 504,532 504,532 — — 
Securities available-for-sale869,481
 869,481
 949
 857,873
 10,659
Securities available-for-sale1,364,743 1,364,743 — 1,364,743 — 
Securities held-to-maturity31,961
 32,282
 —
 32,282
 —
Securities held-to-maturity923,180 835,565 — 835,565 — 
Loans receivable, net7,669,211
 7,746,906
 1,382
 —
 7,745,524
Loans receivable, net10,303,316 9,619,661 — — 9,619,661 
Residential mortgage loans held-for-saleResidential mortgage loans held-for-sale31,153 31,153 — — 31,153 
Accrued interest receivable22,802
 22,802
 22,802
 —
 —
Accrued interest receivable27,708 27,708 27,708 — — 
FHLB Stock7,984
 7,984
 —
 —
 —
Interest rate lock commitmentsInterest rate lock commitments1,520 1,520 — — 1,520 
Forward commitmentsForward commitments213 213 — 213 — 
Foreign exchange swapsForeign exchange swaps2 2 — 2 — 
Interest rate swaps not designated as hedging instrumentsInterest rate swaps not designated as hedging instruments31,018 31,018 — 31,018 — 
FHLB stockFHLB stock13,362 13,362 — — — 
Total financial assets$8,767,115
 8,845,131
 190,809
 890,155
 7,756,183
Total financial assets$13,200,747 12,429,477 532,240 2,231,541 9,652,334 
         
Financial liabilities: 
  
  
  
  
Financial liabilities:     
Savings and checking deposits$6,506,184
 6,506,184
 6,506,184
 —
 —
Savings and checking deposits$10,911,377 10,911,377 10,911,377 — — 
Time deposits1,435,861
 1,455,485
 —
 —
 1,455,485
Time deposits1,155,878 1,163,015 — — 1,163,015 
Borrowed funds115,388
 115,388
 115,388
 —
 —
Borrowed funds130,490 130,418 130,418 — — 
Subordinated debtSubordinated debt113,666 107,485 — 107,485 — 
Junior subordinated debentures111,213
 112,954
 —
 —
 112,954
Junior subordinated debentures129,184 114,729 — — 114,729 
Cash flow hedges - swaps1,538
 1,538
 —
 1,538
 —
Interest rate swaps not designated as hedging instrumentsInterest rate swaps not designated as hedging instruments31,028 31,028 — 31,028 — 
Risk participation agreementsRisk participation agreements18 18 — 18 — 
Accrued interest payable518
 518
 518
 —
 —
Accrued interest payable1,725 1,725 1,725 — — 
Total financial liabilities$8,170,702
 8,192,067
 6,622,090
 1,538
 1,568,439
Total financial liabilities$12,473,366 12,459,795 11,043,520 138,531 1,277,744 
 
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The following table sets forth the carrying amount and estimated fair value of our financial instruments included in the consolidated statementConsolidated Statement of financial conditionFinancial Condition at December 31, 20162021 (in thousands): 
Carrying
amount
 
Estimated
fair value
 Level 1 Level 2 Level 3Carrying
amount		Estimated
fair value		Level 1Level 2Level 3
Financial assets: 
  
  
  
  
Financial assets:     
Cash and cash equivalents$389,867
 389,867
 389,867
 —
 —
Cash and cash equivalents$1,279,259 1,279,259 1,279,259 — — 
Securities available-for-sale826,200
 826,200
 4,440
 812,394
 9,366
Securities available-for-sale1,548,592 1,548,592 — 1,548,592 — 
Securities held-to-maturity19,978
 20,426
 —
 20,426
 —
Securities held-to-maturity768,154 751,513 — 751,513 — 
Loans receivable, net7,496,408
 7,878,815
 9,625
 —
 7,869,190
Loans receivable, net9,889,095 9,648,825 — — 9,648,825 
Assets held-for-sale146,660
 146,660
 146,660
 —
 —
Residential mortgage loans held-for-saleResidential mortgage loans held-for-sale25,056 25,056 — — 25,056 
Accrued interest receivable21,699
 21,699
 21,699
 —
 —
Accrued interest receivable25,599 25,599 25,599 — — 
FHLB Stock7,390
 7,390
 —
 —
 —
Interest rate lock commitmentsInterest rate lock commitments1,684 1,684 — — 1,684 
Forward commitmentsForward commitments371 371 — 371 — 
Interest rate swaps not designated as hedging instrumentsInterest rate swaps not designated as hedging instruments31,254 31,254 — 31,254 — 
FHLB stockFHLB stock14,184 14,184 — — — 
Total financial assets$8,908,202
 9,291,057
 572,291
 832,820
 7,878,556
Total financial assets$13,583,248 13,326,337 1,304,858 2,331,730 9,675,565 
         
Financial liabilities: 
  
  
  
  
Financial liabilities:     
Savings and checking accounts$6,341,735
 6,341,735
 6,341,735
 —
 —
Savings and checking accounts$10,973,610 10,973,610 10,973,610 — — 
Time deposits1,540,586
 1,626,434
 —
 —
 1,626,434
Time deposits1,327,555 1,339,308 — — 1,339,308 
Liabilities held-for-sale215,649
 215,649
 215,649
 —
 —
Borrowed funds142,899
 142,899
 142,899
 —
 —
Borrowed funds139,093 139,093 139,093 — — 
Subordinated debtSubordinated debt123,575 129,138 — 129,138 — 
Junior subordinated debentures111,213
 113,313
 —
 —
 113,313
Junior subordinated debentures129,054 120,083 — — 120,083 
Cash flow hedges - swaps2,736
 2,736
 —
 2,736
 —
Foreign exchange swapsForeign exchange swaps341 341 — 341 — 
Interest rate swaps not designated as hedging instrumentsInterest rate swaps not designated as hedging instruments31,357 31,357 — 31,357 — 
Risk participation agreementsRisk participation agreements60 60 — 60 — 
Accrued interest payable643
 643
 643
 —
 —
Accrued interest payable1,804 1,804 1,804 — — 
Total financial liabilities$8,355,461
 8,443,409
 6,700,926
 2,736
 1,739,747
Total financial liabilities$12,726,449 12,734,794 11,114,507 160,896 1,459,391 
Fair value estimates are made at a point-in-time, based on relevant market data and information about the instrument. The methods and assumptions detailed above were used in estimating the fair value of financial instruments at both SeptemberJune 30, 20172022 and December 31, 2016.  There were no transfers of financial instruments between Level 1 and Level 2 during the nine months ended September 30, 2017.2021.


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The following table represents assets and liabilities measured at fair value on a recurring basis at SeptemberJune 30, 20172022 (in thousands): 
Level 1Level 2Level 3Total assets 
at fair value
Debt securities:    
U.S. government and agencies$— 66,732 — 66,732 
Government-sponsored enterprises— 41,264 — 41,264 
States and political subdivisions— 115,397 — 115,397 
Corporate— 13,510 — 13,510 
Total debt securities— 236,903 — 236,903 
Residential mortgage-backed securities:    
GNMA— 14,100 — 14,100 
FNMA— 132,487 — 132,487 
FHLMC— 83,164 — 83,164 
Non-agency— 410 — 410 
Collateralized mortgage obligations:    
GNMA— 404,716 — 404,716 
FNMA— 217,403 — 217,403 
FHLMC— 275,560 — 275,560 
Total mortgage-backed securities— 1,127,840 — 1,127,840 
Interest rate lock commitments— — 1,520 1,520 
Forward commitments— 213 0213 
Foreign exchange swaps— 2 — 2 
Interest rate swaps not designated as hedging instruments— 31,018 — 31,018 
Total assets$— 1,395,976 1,520 1,397,496 
Interest rate swaps not designated as hedging instruments— 31,028 — 31,028 
Risk participation agreements— 18 — 18 
Total liabilities$— 31,046 — 31,046 
39
 Level 1 Level 2 Level 3 
Total
assets at
fair value
Equity securities$949
 —
 —
 949
        
Debt securities: 
  
  
  
U.S. government and agencies—
 2
 —
 2
Government sponsored enterprises—
 241,599
 —
 241,599
States and political subdivisions—
 53,214
 —
 53,214
Corporate—
 8,019
 10,659
 18,678
Total debt securities—
 302,834
 10,659
 313,493
        
Residential mortgage-backed securities: 
  
  
  
GNMA—
 28,388
 —
 28,388
FNMA—
 82,023
 —
 82,023
FHLMC—
 68,234
 —
 68,234
Non-agency—
 560
 —
 560
Collateralized mortgage obligations: 
  
  
  
GNMA—
 5,152
 —
 5,152
FNMA—
 202,459
 —
 202,459
FHLMC—
 168,182
 —
 168,182
SBA—
 —
 —
 —
Non-agency—
 41
 —
 41
Total mortgage-backed securities—
 555,039
 —
 555,039
        
Interest rate swaps—
 (1,538) —
 (1,538)
        
Total assets and liabilities$949
 856,335
 10,659
 867,943



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The following table represents assets and liabilities measured at fair value on a recurring basis at December 31, 20162021 (in thousands):
Level 1Level 2Level 3Total assets 
at fair value
Debt securities:    
U.S. government and agencies$— 75,891 — 75,891 
Government-sponsored enterprises— 46,085 — 46,085 
States and political subdivisions— 128,701 — 128,701 
Total debt securities— 250,677 — 250,677 
Residential mortgage-backed securities:    
GNMA— 16,510 — 16,510 
FNMA— 160,063 — 160,063 
FHLMC— 100,055 — 100,055 
Non-agency— 431 — 431 
Collateralized mortgage obligations:    
GNMA— 492,328 — 492,328 
FNMA— 269,060 — 269,060 
FHLMC— 259,468 — 259,468 
Total mortgage-backed securities— 1,297,915 — 1,297,915 
Interest rate lock commitments— — 1,684 1,684 
Forward commitments— 371 — 371 
Interest rate swaps not designated as hedging instruments— 31,254 — 31,254 
Total assets$— 1,580,217 1,684 1,581,901 
Foreign exchange swaps$— 341 — 341 
Interest rate swaps not designated as hedging instruments— 31,357 — 31,357 
Risk participation agreements— 60 — 60 
Total liabilities$— 31,758 — 31,758 
 Level 1 Level 2 Level 3 
Total
assets at
fair value
Equity securities$4,440
 —
 —
 4,440
        
Debt securities: 
  
  
  
U.S. government and agencies—
 6
 —
 6
Government sponsored enterprises—
 294,170
 —
 294,170
States and political subdivisions—
 63,070
 —
 63,070
Corporate—
 7,614
 9,366
 16,980
Total debt securities—
 364,860
 9,366
 374,226
        
Residential mortgage-backed securities: 
  
  
  
GNMA—
 30,883
 —
 30,883
FNMA—
 106,578
 —
 106,578
FHLMC—
 82,115
 —
 82,115
Non-agency—
 579
 —
 579
Collateralized mortgage obligations: 
  
  
  
GNMA—
 6,287
 —
 6,287
FNMA—
 95,186
 —
 95,186
FHLMC—
 119,197
 —
 119,197
SBA—
 6,608
 —
 6,608
Non-agency—
 101
 —
 101
Total mortgage-backed securities—
 447,534
 —
 447,534
        
Interest rate swaps—
 (2,736) —
 (2,736)
        
Total assets and liabilities$4,440
 809,658
 9,366
 823,464


The following table below presents a reconciliation of allthe changes in Level 3 assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods indicated (in thousands):
For the quarter ended June 30,Six months ended June 30, 2022
2022202120222021
Beginning balance,$1,680 5,060 1,684 6,465 
Interest rate lock commitments:
Net activity(160)(1,452)(164)(2,857)
Ending balance$1,520 3,608 1,520 3,608 
 Quarter ended Nine Months Ended
 September 30,
2017		 September 30,
2016		 September 30,
2017		 September 30,
2016
Beginning balance$10,638
 8,719
 9,366
 8,955
        
Net change in unrealized appreciation: 
  
  
  
Included in net income as OTTI—
 —
 

 —
Included in other comprehensive income21
 510
 1,293
 274
        
Purchases—
 —
 —
 —
Sales—
 —
 —
 —
Transfers in to Level 3—
 —
 —
 —
Transfers out of Level 3—
 —
 —
 —
        
Ending balance$10,659
 9,229
 10,659
 9,229


42


Certain assets and liabilities are measured at fair value on a nonrecurring basis after initial recognition such as loans measured for impairment andheld-for-sale, loans individually assessed, real estate owned.owned, and mortgage servicing rights.

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    The following table represents the fair valuemarket measurement for only those nonrecurring assets at Septemberthat had a fair market value below the carrying amount as of June 30, 20172022 (in thousands):
Level 1Level 2Level 3Total assets 
at fair value
Loans individually assessed$— — 7,168 7,168 
Real estate owned, net— — 1,205 1,205 
Total assets$— — 8,373 8,373 
 Level 1 Level 2 Level 3 
Total
assets at
fair value
Loans measured for impairment$—
 —
 38,907
 38,907
Real estate owned—
 —
 5,462
 5,462
        
Total assets$—
 —
 44,369
 44,369


Certain assets and liabilities are measured at fair value on a nonrecurring basis after initial recognition such as loans measured for impairment, mortgage servicing rights, and real estate owned.    The following table represents the fair valuemarket measurement for only those nonrecurring assets atthat had a fair market value below the carrying amount as of December 31, 20162021 (in thousands): 
Level 1Level 2Level 3Total assets 
at fair value
Loans individually assessed$— — 46,968 46,968 
Mortgage servicing rights— — 380 380 
Real estate owned, net— — 873 873 
Total assets$— — 48,221 48,221 
 Level 1 Level 2 Level 3 
Total
assets at
fair value
Loans measured for impairment$—
 —
 41,933
 41,933
Mortgage loan servicing—
 —
 246
 246
Real estate owned—
 —
 4,889
 4,889
        
Total assets$—
 —
 47,068
 47,068


Impaired loans —Individually Assessed Loans - A loan is considered to be impairedindividually assessed as described in Note 11(f) of the Notes to the Consolidated Financial Statements in Item 8 of Part II of our 20162021 Annual Report on Form 10-K. We classify loans individually evaluated for impairment that require a specific reserveassessed as nonrecurring Level 3.


Mortgage servicing rights - Mortgage servicing rights represent the value of servicing residential mortgage loans, when the mortgage loans have been sold into the secondary market and the associated servicing has been retained. The value is determined through a discounted cash flow analysis, which uses interest rates, prepayment speeds and delinquency rate assumptions as inputs. All of these assumptions require a significant degree of management judgment. Servicing rights and the related mortgage loans are segregated into categories or homogeneous pools based upon common characteristics. Adjustments are only made when the estimated discounted future cash flows are less than the carrying value, as determined by individual pool. As such, mortgage servicing rights are classified as nonrecurring Level 3.

Real Estate Owned — - Real estate owned is comprised of property acquired through foreclosure or voluntarily conveyed by delinquent borrowers. These assets are recorded on the date acquired at the lower of the related loan balance or fair value, less estimated disposition costs, with the fair value being determined by appraisal. Subsequently, foreclosed assets are valued at the lower of the amount recorded at acquisition date or fair value, less estimated disposition costs. We classify all real estate owned as nonrecurring Level 3.
The following table presents additional quantitative information about assets measured at fair value on a recurring and nonrecurring basis and for which we have utilized Level 3 inputs to determine fair value at SeptemberJune 30, 2017 (dollar amounts in2022 (in thousands): 
 Fair valueValuation techniquesSignificant
unobservable inputs		Range  (weighted average)
Loans individually assessed$7,168 Appraisal value (1)Estimated cost to sell10.0%
 Discounted cash flowDiscount rate5.46% to 13.26% (6.86%)
Real estate owned, net1,205 Appraisal value (1)Estimated cost to sell10.0%
Loans held for sale31,153 Quoted prices for similar loans in active markets adjusted by an expected pull-through rateEstimated pull-through rate100.0%
 Fair value 
Valuation
techniques
 
Significant
unobservable inputs
 
Range (weighted
average)
Debt securities$10,659
 Discounted cash Discount margin 0.4% to 2.1% (0.7%)
   flow Default rates 1.0%
     Prepayment speeds 1.0 annually
        
Loans measured for impairment38,907
 Appraisal value (1) Estimated cost to sell 10.0%
  
 Discounted cash flow Discount rate 4.25% to 10.0% (7.50%)
        
Real estate owned5,462
 Appraisal value (1) Estimated cost to sell 10.0%
(1)Fair value is generally determined through independent appraisals of the underlying collateral, which may include levelLevel 3 inputs that are not identifiable, or by using the discounted cash flow method if the loan is not collateral dependent.

(10)    Derivative Financial Instruments
 
The significant unobservable inputs used    We are a party to derivative financial instruments in the fair value measurementnormal course of business to manage our own exposure to fluctuations in interest rates and to meet the needs of our debt securitiescustomers. The primary derivatives that we use are discount margins, default rates and prepayment speeds.  Significant increases in any of those rates would result in a significantly lower fair value measurement.


43


(10)Guaranteed Preferred Beneficial Interests in the Company’s Junior Subordinated Deferrable Interest Debentures (Trust Preferred Securities) and Derivatives
We have two legacy statutory business trusts: Northwest Bancorp Capital Trust III, a Delaware statutory business trust and Northwest Bancorp Statutory Trust IV, a Connecticut statutory business trust (“Trusts”).  These trusts exist solely to issue preferred securities to third parties for cash, issue common securities to the Company in exchange for capitalization of the Trusts, invest the proceeds from the sale of the trust securities in an equivalent amount of debentures of the Company, and engage in other activities that are incidental to those previously listed.
Northwest Bancorp Capital Trust III (Trust III) issued 50,000 cumulative trust preferred securities in a private transaction to a pooled investment vehicle on December 5, 2006 (liquidation value of $1,000 per preferred security or $50,000,000) with a stated maturity of December 30, 2035.  These securities carry a floating interest rate swaps and caps and foreign exchange contracts, which is reset quarterly, equal to three-month LIBOR plus 1.38%.  Northwest Bancorp Statutory Trust IV (Trust IV) issued 50,000 cumulative trust preferred securities in a private transaction to a pooled investment vehicle on December 15, 2006 (liquidation value of $1,000 per preferred security or $50,000,000) with a stated maturity of December 15, 2035.  These securities carry a floating interest rate, which is reset quarterly, equal to three-month LIBOR plus 1.38%.  The Trusts have invested the proceeds of the offerings in junior subordinated deferrable interest debentures issued by the Company.  The structure of these debentures mirrors the structure of the trust-preferred securities. Trust III holds $51,547,000 of the Company’s junior subordinated debentures and Trust IV holds $51,547,000 of the Company’s junior subordinated debentures. These subordinated debentures are the sole assets of the Trusts. Cash distributions on the trust securities are made on a quarterly basis to the extent interest on the debentures is received by the Trusts.  We have the right to defer payment of interest on the subordinated debentures at any time, or from time-to-time, for periods not exceeding five years.  If interest payments on the subordinated debentures are deferred, the distributions on the trust preferred securities are also deferred.  Interest on the subordinated debentures and distributions on the trust securities is cumulative.  To date, there have been no interest deferrals.  Our obligation constitutes a full, irrevocable, and unconditional guarantee on a subordinated basis of the obligations of the trust under the preferred securities.
As a result of the LNB acquisition we acquired two statutory business trusts: LNB Trust I and LNB Trust II; both are Delaware statutory business trusts.  The outstanding stock issued by LNB Trust I was redeemed on December 15, 2015. At September 30, 2017, LNB Trust II had 7,875 cumulative trust preferred securities outstanding (liquidation value of $1,000 per preferred security or $7,875,000) with a stated maturity of June 15, 2037. These securities carry a floating interest rate, which is reset quarterly, equal to three-month LIBOR plus 1.48%.  LNB Trust II invested the proceeds of the offerings in junior subordinated deferrable interest debentures acquired by the Company.  The structure of these debentures mirrors the structure of the trust-preferred securities. LNB Trust II holds $8,119,000 of junior subordinated debentures. The subordinated debentures are the sole assets of the Trusts. Cash distributions on the trust securities are made on a quarterly basis to the extent interest on the debentures is received by the Trusts.
Derivatives Designated as Hedging Instruments

We are currently a counterparty to two interest rate swap agreements (swaps), designating the swaps as cash flow hedges.  The swaps are intended to protect against the variability of cash flows associated with Trust III and Trust IV.  The first swap modifies the re-pricing characteristics of Trust III, wherein for a ten year period expiring in September 2018, the Company receives interest of three-month LIBOR from a counterparty and pays a fixed rate of 4.61% to the same counterparty calculated on a notional amount of $25.0 million.  The other swap modifies the re-pricing characteristics of Trust IV, wherein for a ten year period expiring in December 2018, the Company receives interest of three-month LIBOR from a counterparty and pays a fixed rate of 4.09% to the same counterparty calculated on a notional amount of $25.0 million.  The swap agreements were entered into with a counterpartycounterparties that met ourmeet established credit standards and the agreements contain collateral provisions protecting the at-risk party.standards. We believe that the credit risk inherent in theall of our derivative contracts is not significant.  At September 30, 2017, $2.1 million of cash was pledged asminimal based on our credit standards and the netting and collateral to the counterparty.
At September 30, 2017, the fair valueprovisions of the interest rate swap agreements was $(1.5) million and was the amount we would have expected to pay if the contracts were terminated.  There was no material hedge ineffectiveness for these swaps.agreements.










44

Derivatives Not Designated as Hedging Instruments


We are currently a counterparty toact as an interest rate or foreign exchange contracts, which include spot and forward contracts,swap counterparty for certain commercial borrowers in the normal course of servicing our customers, which are commitments to buy or sell foreign currencyaccounted for at an agreed-upon price on an agreed-upon settlement date.fair value. We use these instruments on a limited basis to eliminatemanage our exposure to fluctuations in currencysuch interest rate or foreign exchange rates on certainswaps by entering into corresponding and offsetting interest rate swaps with third parties that mirror the terms of the swaps we have with the commercial loans that are denominated in foreign currencies. As a result of fluctuations in foreign currencies,borrowers. These positions (referred to as “customer swaps”) directly offset each other, and our exposure is the U.S. dollar-equivalentfair value of the foreign currency denominated loans increasederivatives due to changes in credit risk of our commercial borrowers and third parties. Customer swaps are recorded within other assets or decrease. Gains or lossesother liabilities on the foreign exchange contracts substantially offsetconsolidated statement of financial condition at their estimated fair value. Changes to the translation gains
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fair value of assets and lossesliabilities arising from these derivatives are included, net, in other operating income in the Consolidated Statement of Income.
We enter into interest rate lock commitments for residential mortgage loans which commit us to lend funds to a potential borrower at a specific interest rate within a specified period of time. Interest rate lock commitments that relate to the origination of mortgage loans that will be held-for-sale are considered derivative financial instruments under applicable accounting guidance. Interest rate lock commitments on loans held-for-sale are carried at fair value in other assets on the related foreign currency denominated loans.consolidated statement of financial condition. Northwest sells loans to the secondary market on a mandatory or best efforts basis. The loans sold on a mandatory basis commit us to deliver a specific principal amount of mortgage loans to an investor at a specified price, by a specified date, or the commitment must be paired off. These forward commitments entered into on a mandatory delivery basis meet the definition of a derivative financial instrument. All closed loans to be sold on a mandatory delivery basis are classified as held-for-sale on the Consolidated Statement of Financial Condition. Changes to the fair value of the interest rate lock commitments and the forward commitments are recorded in mortgage banking income in the Consolidated Statements of Income.



    We enter into risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which we are a participant. The risk participation agreements provide credit protection to the financial institution should the borrower fail to perform on its interest rate derivative contract with the financial institution.

The following table sets forthpresents information related to derivatives at September 30, 2017 and December 31, 2016regarding our derivative financial instruments for the periods indicated (in thousands):
Asset derivativesLiability derivatives
Notional amountFair valueNotional amountFair value
At June 30, 2022
Derivatives not designated as hedging instruments:
Interest rate swap agreements$691,991 31,018 691,991 31,028 
Foreign exchange swap agreements675 2 — — 
Interest rate lock commitments72,160 1,520 — — 
Forward commitments19,621 213 — — 
Risk participation agreements— — 92,812 18 
Total Derivatives$784,447 32,753 784,803 31,046 
At December 31, 2021
Derivatives not designated as hedging instruments:
   Interest rate swap agreements$644,997 31,254 644,997 31,357 
Foreign exchange swap agreements— — 17,124 341 
   Interest rate lock commitments67,473 1,684 — — 
Forward commitments14,484 371 — — 
Risk participation agreements— — 93,135 60 
Total derivatives$726,954 33,309 755,256 31,758 
The following table presents income or expense recognized on derivatives for the periods indicated (in thousands):
For the quarter ended June 30,For the six months ended June 30,
2022202120222021
Non-hedging swap derivatives:
Increase/(decrease) in other income$53 (26)114 498 
(Decrease)/increase in mortgage banking income(96)1,510 322 3,570 

 September 30,
2017		 December 31,
2016
Derivatives designed as hedging instruments:   
Fair value (1)$1,538
 2,736
Notional amount50,000
 50,000
   Collateral posted2,055
 3,005
    
Derivatives not designed as hedging instruments:   
Foreign exchange fair value (2)44
 —
Notional amount4,578
 —
(1) Included in other liabilities.
(2) Included in other assets.

(11)    Legal Proceedings

We establish accruals for legal proceedings when information related to the loss contingencies represented by those matters indicates both that a loss is probable and that the amount of loss can be reasonably estimated. As of SeptemberJune 30, 20172022, we havedo not accrued foranticipate that the aggregate ultimate liability arising out of any pending or threatened legal proceedings based onwill be material to our analysis of currently available information which is subject to significant judgment and a variety of assumptions and uncertainties.Consolidated Financial Statements. Any such accruals are adjusted thereafter as appropriate to reflect changes in circumstances. Due to the inherent subjectivity of assessments and unpredictability of outcomes of legal proceedings, any amounts accrued may not represent the ultimate loss to us from legal proceedings.




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    During the year ended December 31, 2018, Northwest and our subsidiary, The Bert Company (doing business as Northwest Insurance Services) (“NWIS”), were involved in a lawsuit against, among others, First National Bank of Pennsylvania (“FNB”) and their insurance subsidiary, First National Insurance Agency, LLC (“FNIA”). All counterclaims against Northwest were discontinued and, in December 2018, a verdict was rendered in favor of NWIS on several of its claims. Post-trial proceedings have continued throughout the current year and, due to the inherent uncertainties with respect to these proceedings, we have not accrued any awards associated with this verdict within our Consolidated Financial Statements as of June 30, 2022.
(12)Changes in Accumulated Other Comprehensive Income/ (Loss)

(12)    Changes in Accumulated Other Comprehensive Income
 
The following table showstables show the changes in accumulated other comprehensive income by component for the periods indicated (in thousands): 
 For the quarter ended June 30, 2022
 Unrealized 
losses 
on securities 
available-for-sale		Change in 
defined benefit 
pension plans		Total
Balance as of March 31, 2022$(77,101)(25,443)(102,544)
Other comprehensive loss before reclassification adjustments (1)(39,954)— (39,954)
Amounts reclassified from accumulated other comprehensive income (2) (3)(1)(131)(132)
Net other comprehensive loss(39,955)(131)(40,086)
Balance as of June 30, 2022$(117,056)(25,574)(142,630)
 For the quarter ended September 30, 2017
 
Unrealized 
gains and 
(losses) on 
securities 
available-
for-sale
 
Change in 
fair value of 
interest rate 
swaps
 
Change in 
defined 
benefit 
pension 
plans
 Total
Balance as of June 30, 2017$2,276
 (1,257) (26,167) (25,148)
Other comprehensive income before reclassification adjustments(264) 258
 —
 (6)
Amounts reclassified from accumulated other comprehensive income (1), (2)(674) —
 221
 (453)
Net other comprehensive income(938) 258
 221
 (459)
Balance as of September 30, 2017$1,338
 (999) (25,946) (25,607)

 
 For the quarter ended June 30, 2021
Unrealized 
gains/(losses) 
on securities 
available-for-sale		Change in 
defined benefit 
pension plans		Total
Balance as of March 31, 2021$(653)(50,059)(50,712)
Other comprehensive loss before reclassification adjustments (4)4,322 — 4,322 
Amounts reclassified from accumulated other comprehensive income (5) (6)(136)334 198 
Net other comprehensive income4,186 334 4,520 
Balance as of June 30, 2021$3,533 (49,725)(46,192)
 For the quarter ended September 30, 2016
 
Unrealized 
gains and 
(losses) on 
securities 
available-
for-sale
 
Change in 
fair value of 
interest rate 
swaps
 
Change in 
defined 
benefit 
pension 
plans
 Total
Balance as of June 30, 2016$7,866
 (2,753) (24,630) (19,517)
Other comprehensive income before reclassification adjustments(785) 471
 —
 (314)
Amounts reclassified from accumulated other comprehensive income (3), (4)(36) —
 224
 188
Net other comprehensive income(821) 471
 224
 (126)
Balance as of September 30, 2016$7,045
 (2,282) (24,406) (19,643)

(1)Consists of realized gain on securities (gain on sales of investments, net) of $1,043, net of tax (income tax expense) of $(369).
(2)Consists of amortization of prior service cost (compensation and employee benefits) of $580 and amortization of net loss (compensation and employee benefits) of $(954), net of tax (income tax expense) of $153.  See note 9.
(3)Consists of realized loss on securities (gain on sales of investments, net) of $59, net of tax (income tax expense) of $(23).
(4)Consists of amortization of prior service cost (compensation and employee benefits) of $581 and amortization of net loss (compensation and employee benefits) of $(949), net of tax (income tax expense) of $144.  See note 9.

(1)Consists of unrealized holding losses, net of tax of $11,973.
(2)Consists of realized gains, net of tax of $0.
(3)Consists of realized gains, net of tax of $51.
(4)Consists of unrealized holding gains, net of tax ($1,245).
(5)Consists of realized gains, net of tax $43.
(6)Consists of realized losses, net of tax of ($128).




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 For the six months ended June 30, 2022
 Unrealized 
gains/(losses) 
on securities 
available-for-sale		Change in 
defined benefit 
pension plans		Total
Balance as of December 31, 2021$(12,317)(25,312)(37,629)
Other comprehensive loss before reclassification adjustments (1)(104,737)— (104,737)
Amounts reclassified from accumulated other comprehensive income (2) (3)(2)(262)(264)
Net other comprehensive loss(104,739)(262)(105,001)
Balance as of June 30, 2022$(117,056)(25,574)(142,630)


The following table shows the changes in accumulated other comprehensive income by component for the periods indicated (in thousands): 
 For the six months ended June 30, 2021
 Unrealized 
gains 
on securities 
available-for-sale		Change in 
defined benefit 
pension plans		Total
Balance as of December 31, 2020$16,843 (50,392)(33,549)
Other comprehensive income/(loss) before reclassification adjustments (4)(13,099)— (13,099)
Amounts reclassified from accumulated other comprehensive income (5) (6)(211)667 456 
Net other comprehensive (loss)/income(13,310)667 (12,643)
Balance as of June 30, 2021$3,533 (49,725)(46,192)
(1)Consists of unrealized holding losses, net of tax of $30,850.
(2)Consists of realized gains, net of tax of $0.
(3)Consists of realized gains, net of tax of $101.
(4)Consists of unrealized holding losses, net of tax $4,736.
(5)Consists of realized gains, net of tax $65.
(6)Consists of realized losses, net of tax of ($258).

 For the nine months ended September 30, 2017
 
Unrealized 
gains and 
(losses) on 
securities 
available-
for-sale
 
Change in 
fair value of 
interest rate 
swaps
 
Change in 
defined 
benefit 
pension 
plans
 Total
Balance as of December 31, 2016$395
 (1,778) (26,608) (27,991)
Other comprehensive income before reclassification adjustments1,684
 779
 —
 2,463
Amounts reclassified from accumulated other comprehensive income (1), (2)(741) —
 662
 (79)
Net other comprehensive income943
 779
 662
 2,384
Balance as of September 30, 2017$1,338
 (999) (25,946) (25,607)
44
 For the nine months ended September 30, 2016
 
Unrealized 
gains and 
(losses) on 
securities 
available-
for-sale
 
Change in 
fair value of 
interest rate 
swaps
 
Change in 
defined 
benefit 
pension 
plans
 Total
Balance as of December 31, 2015$3,325
 (2,779) (25,081) (24,535)
Other comprehensive income before reclassification adjustments3,717
 497
 —
 4,214
Amounts reclassified from accumulated other comprehensive income (3), (4)3
 —
 675
 678
Net other comprehensive income3,720
 497
 675
 4,892
Balance as of September 30, 2016$7,045
 (2,282) (24,406) (19,643)
(1)Consists of realized gains on securities (gain on sales of investments, net) of $1,157, net of tax (income tax expense) of $(416).
(2)Consists of amortization of prior service cost (compensation and employee benefits) of $1,742 and amortization of net loss (compensation and employee benefits) of $(2,864), net of tax (income tax expense) of $460. See note 9.
(3)Consists of realized gains on securities (gain on sales of investments, net) of $(4), net of tax (income tax expense) of $1.
(4)Consists of amortization of prior service cost (compensation and employee benefits) of $1,742 and amortization of net loss (compensation and employee benefits) of $(2,849), net of tax (income tax expense) of $432. See note 9.

Table of Contents

ITEMItem 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Forward-Looking Statements:Statements
 
In addition to historical information, this document may contain certain forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, as they reflect management’s analysis only as of the date of this report. We have no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this report.
 


47

Important factors that might cause such a difference include, but are not limited to:
 
•    inflation and changes in the interest rate environment that reduce our margins, our loan origination, or the fair value of financial instruments;     
•    the disruption to local, regional, national and global economic activity caused by infectious disease outbreaks, including the outbreak of coronavirus (COVID-19) and the significant impact that such outbreak has had and may continue to have on our growth, operations and earnings;
•changes in asset quality, including increases in default rates on loans and higher levels of nonperforming loans and loan charge-offs generally, and specifically resulting from the economic dislocation caused by the COVID-19 pandemic;
•changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;
•changes in federal, state, or local tax laws and tax rates;
•     general economic conditions, either nationally or in our market areas, that are different than expected;
competition among other financial institutions and non-depository entities;
inflation and changes in the interest rate environment that impact our margins or the fair value of financial instruments;
•    adverse changes in the securities and credit markets;
cyber security•    cyber-security concerns, including an interruption or breach in the security of our website or other information systems;
•     technological changes that may be more difficult or expensive than expected;
•     the ability of third-party providers to perform their obligations to us;
•     competition among depository and other financial institutions, including with respect to service charges and fees;
•     our ability to enter new markets successfully and/orand capitalize on growth opportunities;
managing•     our ability to manage our internal growth and our ability to successfully integrate acquired entities, businesses andor branch offices;
•     changes in consumer spending, borrowing and savings habits;
•     our ability to continue to increase and manage our businesscommercial and personal loans;
•    possible impairments of securities held by us, including those issued by government entities and government sponsored enterprises;
•    the impact of the economy on our loan portfolio (including cash flow and collateral values), investment portfolio, customers and capital market activities;
•     our ability to receive regulatory approvals for proposed transactions or new lines of business:business;
•     the impacteffects of the current governmental effort to restructure the U.S. financial and regulatory system;any federal government shutdown;
•     changes in the financial performance and/or condition of our borrowers; and
•    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.setters;

•    changes in the level and direction of loan delinquencies and write-offs and changes in estimates of the adequacy of the allowance for credit losses;
•    our ability to access cost-effective funding;
•    the effect of global or national war, conflict, or terrorism;
•    our ability to manage market risk, credit risk and operational risk;
•    our ability to retain key employees; and
•    our compensation expense associated with equity allocated or awards to our employees.

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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 20162021 Annual Report on Form 10-K.

Executive SummaryRecently Issued Accounting Standards
The following accounting standard updates issued by the FASB have not yet been adopted.

In March 2020, the FASB issued Accounting Standards Update ("ASU") No. 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides temporary optional guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. The guidance provides expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met. The amendments primarily include contract modifications and hedge accounting, as well as providing a one-time election for the sale or transfer of debt securities classified as held-to-maturity. This guidance is effective as of March 12, 2020 through December 31, 2022. We are currently in the process of evaluating the amendments and determining the impact on our financial statements.

In January 2021, the FASB issued ASU No. 2021-01, “Reference Rate Reform.” This ASU provides amendments, which are elective, and apply to all entities that have derivative instruments that use an interest rate for margining, discounting or contract price alignment of certain derivative instruments that are modified as a result of the reference rate reform. This guidance is effective as of the date of issuance through December 31, 2022. We are currently in the process of evaluating the amendments and determining the impact on our financial statements.

In March 2022, the FASB issued ASU No. 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosure.” This ASU eliminates the accounting guidance for troubled debt restructurings, while enhancing disclosure requirements for certain loan modifications when a borrower is experiencing financial difficulty. This ASU also requires the disclosure of current period gross write-offs by year for origination for financing receivables. This guidance is effective for annual periods beginning after December 15, 2022, including interim periods within those years, with early adoption permitted. This ASU is applied prospectively to modifications and write-offs beginning on the first day of the fiscal year of adoption. An entity may elect to adopt a modified retrospective transition method on the recognition and measurement of the TDR guidance. We are currently in the process of evaluating the ASU and determining the impact on our financial statements.
Comparison of Financial Condition

Total assets at SeptemberJune 30, 20172022 were $9.460$14.155 billion, a decrease of $163.8$346.8 million, or 1.7%2.4%, from $9.624$14.502 billion at December 31, 2016.2021. This decrease in assets was due to a decrease in total cash and cash equivalents as well as a decrease in marketable securities, partially offset by an increase in loans receivable, as described in further detail below.

Total cash and cash equivalents decreased by $774.7 million, or 60.6%, to $504.5 million at June 30, 2022 from $1.279 billion at December 31, 2021. This decrease was driven by organic loan growth, described in further detail below, as well as the purchase of two small business equipment finance loan pools totaling $115.8 million and two one-to four-family jumbo mortgage loan packages totaling $188.3 million during the six months ended June 30, 2022.

Total marketable securities decreased by $28.8 million, or 1.2%, to $2.288 billion at June 30, 2022 from $2.317 billion at December 31, 2021. This decrease was driven primarily to $152.5 millionby the rising interest rate environment which negatively impacted the fair market value of assets sold to Shore United Bank on May 19, 2017, in connection with the sale of three Maryland branch offices.our available-for-sale portfolio.

Total loans receivable increased by $168.8$416.4 million, or 2.2%4.2%, to $7.726$10.433 billion at SeptemberJune 30, 2017,2022, from $7.557$10.016 billion at December 31, 20162021. This increase was due primarily to an increase in our commercialorganic loan growth as well as the purchases of the small business equipment finance and one-to- four-family jumbo mortgage loan pools during the year. Our personal loan banking loan portfolio of $124.7increased by $416.5 million, or 4.3%6.8%, to $2.996$6.570 billion at SeptemberJune 30, 20172022, from $2.871$6.153 billion at December 31, 2016. Additionally,2021. In addition, continued growth in our personal banking loan portfolio increasedconsumer indirect auto loans and lower sales of residential mortgages into the secondary market contributed to the increase in total loans receivable.

     Total deposits decreased by $44.1$233.9 million, or 0.9%1.9%, to $4.731$12.067 billion at SeptemberJune 30, 20172022 from $4.686$12.301 billion at December 31, 2016,2021. This decrease was primarily due primarily to the growth of the indirect automobile portfolio.

     Total deposits increased by $59.7 million, or 0.8%, to $7.942 billion at September 30, 2017 from $7.882 billion at December 31, 2016. Noninterest-bearing checking deposits increased by $176.2 million, or 12.2%, to $1.625 billion at September 30, 2017 from $1.449 billion at December 31, 2016, interest-bearing checking deposits increased by $23.5 million, or 1.6%, to $1.452 billion at September 30, 2017 from $1.428 billion at December 31, 2016 and savings deposits increased by $46.9 million, or 2.9%, to $1.670 billion at September 30, 2017 from $1.623 billion at December 31, 2016. Partially offsetting these increases were decreases in time depositsand demand deposit accounts of $104.7$294.7 million, or 6.8%,4.0%. We believe these decreases were primarily the result of customer spending activity returning to $1.436 billionpre-pandemic levels at September 30, 2017 from $1.541 billion at December 31, 2016,a time when inflationary pressures have caused higher prices and money market demand accounts decreased by $82.2 million, or 4.5%, to $1.759 billion at September 30, 2017 from $1.842 billion at December 31, 2016. Despite modest increases in interest rates, these changes reflect our customers' preference for more liquid deposit products.government stimulus programs have ended.

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Total shareholders’ equity at SeptemberJune 30, 20172022 was $1.206$1.495 billion, or $11.76$11.78 per share, an increasea decrease of $35.2$89.0 million, or 3.0%5.6%, from $1.171$1.584 billion, or $11.51$12.51 per share, at December 31, 2016.2021. This increase in equitydecrease was primarily the result of net incomean increase in accumulated other comprehensive loss of $72.3$105.0 million fordue to an increase in unrealized losses in the nine months ended September 30, 2017, which was partially offset by theavailable-for-sale investment portfolio due to rising interest rates, as well as a payment of cash dividends of $48.9$50.7 million duringfor the ninesix months ended SeptemberJune 30, 2017.2022. These decreases were partially offset by year-to-date earnings of $61.7 million.


48


As previously announced in April, we closed the remaining offices of our consumer finance subsidiary, Northwest Consumer Discount Company, Inc. ("NCDC"), on July 14, 2017. All NCDC loans were transferred to Northwest for servicing and collections. Northwest continues to make direct consumer loans to qualified customers as well as indirect sales finance loans through various dealers and retailers.


Regulatory Capital
 
Financial institutions and their holding companies are subject to various regulatory capital requirements. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by the regulators that, if undertaken, could have a direct, material effect on a company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, financial institutions must meet specific capital guidelines that involve quantitative measures of its assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting guidelines. Capital amounts and classifications are also subject to qualitative judgments made by the regulators about components, risk-weighting and other factors.

In July 2013, the FDIC and the other federal regulatory agencies issued a final rule that revised their leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. The rule limits    Applicable rules limit an organization’s capital distributions and certain discretionary bonus payments if the organization does not hold a “capital“capital conservation buffer”buffer” consisting of 2.5% of Total, Tier 1 and Common Equity Tier 1 ("CET1"(“CET1”) capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements.

    
  The capital conservation buffer requirement is being phased in beginning on January 1, 2016 and ending on January 1, 2019, when the full capital conservation buffer requirement will be effective.
Quantitative measures, established by regulation to ensure capital adequacy, require financial institutions to maintain minimum amounts and ratios (set forth in the table below) of Total, CET1 and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital to average assets (as defined). Capital ratiosrequirements are presented in the tables below.  Dollar amounts in the accompanying tables are in thousands.below (in thousands).
At September 30, 2017
    Minimum capital Well capitalized At June 30, 2022
Actual requirements (1) requirements ActualMinimum capital requirements (1)Well capitalized requirements
Amount Ratio Amount Ratio Amount Ratio AmountRatioAmountRatioAmountRatio
Total capital (to risk weighted assets) 
  
  
  
  
  
Total capital (to risk weighted assets)      
Northwest Bancshares, Inc.$1,077,603
 15.152% 657,874
 9.250% 711,216
 10.00%Northwest Bancshares, Inc.$1,692,802 16.481 %$1,078,484 10.500 %$1,027,128 10.000 %
Northwest Bank1,032,725
 14.538% 657,102
 9.250% 710,381
 10.00%Northwest Bank1,461,989 14.247 %1,077,489 10.500 %1,026,180 10.000 %
           
Tier 1 capital (to risk weighted assets)     
  
  
  
Tier 1 capital (to risk weighted assets)    
Northwest Bancshares, Inc.1,020,620
 14.350% 515,631
 7.250% 568,972
 8.00%Northwest Bancshares, Inc.1,491,179 14.518 %873,058 8.500 %821,702 8.000 %
Northwest Bank975,788
 13.736% 515,026
 7.250% 568,304
 8.00%Northwest Bank1,374,032 13.390 %872,253 8.500 %820,944 8.000 %
           
CET1 capital (to risk weighted assets)     
  
  
  
CET1 capital (to risk weighted assets)    
Northwest Bancshares, Inc.912,745
 12.834% 408,949
 5.750% 462,290
 6.50%Northwest Bancshares, Inc.1,365,984 13.299 %718,989 7.000 %667,633 6.500 %
Northwest Bank975,788
 13.736% 408,469
 5.750% 461,747
 6.50%Northwest Bank1,374,032 13.390 %718,326 7.000 %667,017 6.500 %
           
Tier 1 capital (leverage) (to average assets)     
  
  
  
Tier 1 capital (leverage) (to average assets)    
Northwest Bancshares, Inc.1,020,620
 10.994% 371,341
 4.000% 464,176
 5.000%Northwest Bancshares, Inc.1,491,179 10.717 %556,565 4.000 %695,707 5.000 %
Northwest Bank975,788
 10.521% 370,992
 4.000% 463,740
 5.000%Northwest Bank1,374,032 9.878 %556,391 4.000 %695,489 5.000 %
(1) Amounts and ratios include the current capital conservation buffer of 1.250%2.5%, with the exception ofwhich does not apply to Tier 1 capital to average assets (leverage ratio).


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Table of Contents

At December 31, 2016
    Minimum capital Well capitalized At December 31, 2021
Actual requirements (1) requirements ActualMinimum capital requirements (1)Well capitalized requirements
Amount Ratio Amount Ratio Amount Ratio AmountRatioAmountRatioAmountRatio
Total capital (to risk weighted assets) 
  
  
  
  
  
Total capital (to risk weighted assets)      
Northwest Bancshares, Inc.$1,051,582
 14.873% 609,835
 8.625% 751,246
 10.00%Northwest Bancshares, Inc.$1,682,487 17.056 %$1,035,786 10.500 %$986,463 10.000 %
Northwest Bank961,279
 13.609% 609,248
 8.625% 750,523
 10.00%Northwest Bank1,551,084 15.738 %1,034,819 10.500 %985,542 10.000 %
           
Tier I capital (to risk weighted assets) 
  
  
  
  
  
Tier I capital (to risk weighted assets)    
Northwest Bancshares, Inc.990,153
 14.004% 468,424
 6.625% 609,835
 8.00%Northwest Bancshares, Inc.1,475,190 14.954 %838,494 8.500 %789,170 8.000 %
Northwest Bank900,328
 12.746% 467,973
 6.625% 609,248
 8.00%Northwest Bank1,467,362 14.889 %837,711 8.500 %788,434 8.000 %
           
CET1 capital (to risk weighted assets)           CET1 capital (to risk weighted assets)
Northwest Bancshares, Inc.882,278
 12.478% 362,366
 5.125% 503,777
 6.50%Northwest Bancshares, Inc.1,350,125 13.687 %690,524 7.000 %641,201 6.500 %
Northwest Bank900,328
 12.746% 362,017
 5.125% 503,292
 6.50%Northwest Bank1,467,362 14.889 %689,879 7.000 %640,602 6.500 %
           
Tier I capital (leverage) (to average assets) 
  
  
  
  
  
Tier I capital (leverage) (to average assets) 
Northwest Bancshares, Inc.990,153
 10.530% 376,116
 4.000% 470,145
 5.000%Northwest Bancshares, Inc.1,475,190 10.349 %570,160 4.000 %712,699 5.000 %
Northwest Bank900,328
 9.585% 375,735
 4.000% 469,669
 5.000%Northwest Bank1,467,362 10.296 %570,047 4.000 %712,558 5.000 %
(1) Amounts and ratios include the 2016 capital conservation buffer of 0.625%2.5%, with the exception ofwhich does not apply to Tier 1 capital to average assets (leverage ratio).



Liquidity
 
We are 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 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’sNorthwest Bank’s liquidity ratio at SeptemberJune 30, 20172022 was 11.2%13.6%. We adjust 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 SeptemberJune 30, 20172022, Northwest had $3.248$3.582 billion of additional borrowing capacity available with the FHLB, including $150.0$250.0 million on an overnight line of credit which had no balance at June 30, 2022, as well as $70.4$91.2 million of borrowing capacity available with the Federal Reserve Bank and $80.0$110.0 million with twothree correspondent banks.
 
Dividends
 
We paid $16.3$25.4 million or $0.16 per share, and $15.1$25.5 million or $0.15 per share, in cash dividends during the quarters ended SeptemberJune 30, 20172022 and 2016,2021, respectively. The common stock dividend payout ratio (dividends declared per share divided by net income per diluted share) was 69.6%76.9% and 107.1%52.6% for the quarters ended SeptemberJune 30, 20172022 and 2016, respectively.We paid $48.9 million, or $0.48June 30, 2021, respectively, on dividends of $0.20 per share and $45.0 million, or $0.45 per share in cash dividends during the nine months ended September 30, 2017 and 2016, respectively.  The common stock dividend payout ratio (dividends declared per share divided by net income per share) was 67.6% and 180.0% for the nine monthsquarters ended SeptemberJune 30, 20172022 and 2016, respectively. June 30, 2021.On October 17, 2017,July 20, 2022, theBoard of Directors declared a cash dividend of $0.16$0.20 per share payable on November 16, 2017August 15, 2022 to shareholders of record as of November 2, 2017.August 4, 2022. This represents the 92nd111th consecutive quarter we have paid a cash dividend.


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Nonperforming Assets
 
The following table sets forth information with respect to nonperforming assets. Nonaccrual loans are those loans on which the accrual of interest has ceased. Generally, when a loan is 90 days past due, we fully reverse all accrued interest thereon and cease to accrue interest thereafter. Exceptions are made for loans that have contractually matured, are in the process of being modified to extend the maturity date and are otherwise current as to principal and interest, and well securedwell-secured loans that are in the process


50

of collection. Loans may also be placed on nonaccrual before they reach 90 days past due if conditions exist that call into question our ability to collect all contractual 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.
June 30, 2022December 31, 2021
 (in thousands)
Loans 90 days or more past due: 
Residential mortgage loans$5,445 7,641 
Home equity loans2,081 4,262 
Vehicle loans1,861 1,635 
Other consumer loans460 765 
Commercial real estate loans14,823 23,489 
Commercial real estate - owner occupied126 574 
Commercial loans583 1,105 
Total loans 90 days or more past due$25,379 39,471 
Total real estate owned (REO)$1,205 873 
Total loans 90 days or more past due and REO26,584 40,344 
Total loans 90 days or more past due to net loans receivable0.25 %0.40 %
Total loans 90 days or more past due and REO to total assets0.19 %0.28 %
Nonperforming assets:
Nonaccrual loans - loans 90 days or more past due$25,000 39,140 
Nonaccrual loans - loans less than 90 days past due73,385 119,331 
Loans 90 days or more past due still accruing379 331 
Total nonperforming loans98,764 158,802 
Total nonperforming assets$99,969 159,675 
Total nonaccrual loans to total loans0.94 %1.59 %
Nonaccrual TDR loans (1)$37,647 17,216 
Accruing TDR loans16,590 13,072 
Total TDR loans$54,237 30,288 
 September 30, 2017 December 31, 2016
 (Dollars in thousands)
Loans 90 days or more past due 
  
Residential mortgage loans$12,190
 13,621
Home equity loans6,543
 5,756
Consumer legacy finance loans332
 743
Consumer loans3,506
 3,180
Commercial real estate loans23,310
 21,834
Commercial loans4,177
 3,520
Total loans 90 days or more past due$50,058
 48,654
Total real estate owned (REO)5,462
 4,889
Total loans 90 days or more past due and REO55,520
 53,543
Total loans 90 days or more past due to net loans receivable0.65% 0.65%
Total loans 90 days or more past due and REO to total assets0.59% 0.56%
Nonperforming loans: 
  
Nonaccrual loans - loans 90 days or more delinquent$48,416
 45,181
Nonaccrual loans - loans less than 90 days delinquent24,918
 34,355
Loans 90 days or more past maturity and still accruing398
 649
Total nonperforming loans73,732
 80,185
Total nonperforming assets$79,194
 85,074
Nonaccrual troubled debt restructured loans (1)$17,809
 16,346
Accruing troubled debt restructured loans20,660
 26,580
Total troubled debt restructured loans$38,469
 42,926
(1)Included in nonaccurual loans above.
At September 30, 2017, we expect to fully collect the carrying value of our purchased credit impaired(1)Included in nonaccrual loans and have determined that we can reasonably estimate their future cash flows including those loans that are 90 days or more delinquent. As a result, we do not consider these loans that are 90 days or more delinquent, which total $1.2 million, to be nonaccrual or impaired and continue to recognize interest income on these loans, including the loans’ accretable discount.
A loan is considered to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement including both contractual principal and interest payments.  The amount of impairment is required to be measured using one of three methods: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the loan’s observable market price; or (3) the fair value of collateral if the loan is collateral dependent.  If the measure of the impaired loan is less than the recorded investment in the loan, a specific allowance is allocated for the impairment. Impaired loans at September 30, 2017 and December 31, 2016 were $94.6 million and $108.1 million, respectively.above.
 
Allowance for LoanCredit Losses
 
We adopted CECL on January 1, 2020, as further described in Note 1(f) of the Notes to the Consolidated Financial Statements in Item 8 of Part II of our 2021 Annual Report on Form 10-K. Our Board of Directors has adopted an “Allowance for Loan and LeaseCredit Losses” (“ALL”) policy designed to provide management with a systematic methodology for determining and documenting the ALLallowance for credit losses each reporting period. This methodology was developed to provide a consistent process and review procedure to ensure that the ALLallowance for credit losses is in conformity with GAAP, our policies and procedures and other supervisory and regulatory guidelines.
 
On an ongoing basis, the Credit Administration department, as well as loan officers, branch managers and department heads, review and monitor the loan portfolio for problem loans. This portfolio monitoring includes a review of the monthly delinquency reports as well as historical comparisons and trend analysis. Personal and small business commercial loans are classified primarily by delinquency status. In addition, a meeting is held every quarter with each region to monitor the performance and status of commercial loans on an internal watch list. On an on-going basis, the loan officer, in conjunction with a portfolio manager, grades or classifies problem commercial loans or potential problem commercial loans based upon their knowledge of the lending relationship and other information previously accumulated. This rating is also reviewed independently by our Loan Review department on a periodic basis. Our loan grading system for problem commercial loans is consistent with industry regulatory guidelines which classifyclassifies loans as “substandard”, “doubtful” or “loss.” Loans that do not expose us to risk sufficient to warrant classification in


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one of the previous categories, but which possess some weaknesses, are designated as “special mention”. A “substandard” loan is any loan that is 90 days or more contractually delinquent or is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as “doubtful” have all the weaknesses inherent in those classified as “substandard” with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts,
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conditions or values, highly questionable and improbable. Loans classified as “loss” have all the weakness inherent in those classified as “doubtful” and are considered uncollectible so that their continuance as assets without the establishment of a specific loss allowance is not warranted.uncollectible.
 
Credit relationships that have been classified as substandard or doubtful and are greater than or equal to $1.0 million are reviewed by the Credit Administration department for possible impairment.  Ato determine if they no longer continue to demonstrate similar risk characteristics to their loan is considered impaired when, based on current informationpool. If a loan no longer demonstrates similar risk characteristics to their loan pool they are removed from the pool and events, it is probable that wean individual assessment will be unable to collect all amounts due according to the contractual terms of the loan agreement, including both contractual principal and interest payments.performed.
 
If such an individualit is determined that a loan is deemedneeds to be impaired,individually assessed, the Credit Administration department determines the proper measure of impairmentfair value for each loan based on one of three methods: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the loan’s observable market price; or (3) the fair value of the collateral if the loan is collateral dependent, less costs of sale or disposal. If the measurement of the impairedfair value of the loan is more or less than the recorded investment inamortized cost basis of the loan, the Credit Administration department adjusts the specific allowance associated with that individual loan accordingly.
 
If a substandard or doubtful loan is not considered individually for impairment,assessed, it is grouped with other loans that possess common characteristics for impairment evaluationcredit losses and analysis. This segmentationFor 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. The allowance for credit losses is accomplished by grouping loansmeasured using a combination of similar product types, risk characteristicsstatistical models and industry concentration into homogeneous pools.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. Historical average loss ratiosrates are analyzed and adjusted based on delinquency trends as well ascalculated using historical data beginning in October 2009 through the current economic, political, regulatory, and interest rate environment and used to estimate the current measure of impairment.period.


The individual impairment measurescredit losses for individually assessed loans along with the estimated loss for each homogeneous pool are consolidated into one summary document. This summary schedule along with the support documentation used to establish this schedule is presented to management’s AllowancesAllowance for Loan LossesCredit Loss Committee (“ACL Committee”) monthly. The Allowances for Loan LossesACL Committee reviews and approves the processes and ACL documentation presented. Quarterly management's Credit Committee reviews the allowance for loan loss committee's report, reviews the concentration of credit by industry and customer, lending products and activity, competition and collateral values, as well as economic conditions in general and in each of our market areas. Based on this review and discussion, the appropriate amount of ALLACL is estimated and any adjustments to reconcile the actual ALLACL with this estimate are determined. In addition, the CreditThe ACL Committee also considers if any changes to the methodology are needed. The Credit Committee also reviews and discusses delinquency trends, nonperforming asset amounts and ALL levels and ratios comparedIn addition to our peer group as well as state and national statistics.  Similarly, following the CreditACL Committee’s review and approval, a review is performed by the Risk Management Committee of the Board of Directors on a quarterly basis.basis and annually by internal audit.
 
In addition to the reviews by management’s CreditACL Committee and the Board of Directors’ Risk Management Committee, regulators from either the FDIC and/or the Pennsylvania Department of Banking and Securities perform an extensive review on at least an annual basis for the adequacy of the ALLACL and its conformity with regulatory guidelines and pronouncements. Any recommendations or enhancements from these independent parties are considered by management and the CreditACL Committee and implemented accordingly.
 
We acknowledge that this is a dynamic process and consists of factors, many of which are external and out of our control, that can change often,frequently, rapidly and substantially. The adequacy of the ALLACL is based upon estimates using all the information previously discussed as well as current and known circumstances and events. There is no assurance that actual portfolio losses will not be substantially different than those that were estimated.

We utilize a structured methodology each period when analyzing the adequacy of the allowance for loancredit losses and the related provision for loancredit losses, which the CreditACL Committee assesses regularly for appropriateness. As part of the analysis as of SeptemberJune 30, 2017,2022, we considered the most recent economic conditions in our markets, such as unemployment and bankruptcy levels as well as changes in estimatesforecasts available which incorporated the impact of real estate collateral values; and no changes in methodology was determined necessary.material recent economic events. In addition, we considered the overall trends in asset quality, specific reserves already established for criticizedon individually assessed loans, historical loss rates and collateral valuations. The allowance for loan lossesACL decreased by $4.0$3.9 million, or 6.6%3.8%, to $56.9$98.4 million, or 0.74%0.94% of total loans at SeptemberJune 30, 20172022 from $60.9$102.2 million, or 0.81%1.02% of total loans, at December 31, 2016. 2021.Total classified loans decreased $85.8 million, or 23.6%, to $277.4 million at June 30, 2022 from $363.2 million at December 31, 2021. This decrease iswas primarily due primarily to improvementsthe upgrade and payoff of loans in our commercial real estate portfolio during the historical loss rates used to calculated the ALL for commercial banking loans .current year.
 
We also consider how the levels of non-accrualnonaccrual loans and historical charge-offs have influenced the required amount of allowance for loancredit losses. Nonaccrual loans of $73.3$98.4 million, or 0.95%0.94% of total loans receivable at SeptemberJune 30, 20172022, decreased by $6.2$60.1 million, or 7.8%37.9%, from $79.5$158.5 million, or 1.05%1.59% of total loans receivable at December 31, 2016.2021. This decrease was primarily related to upgrades to loans within our commercial real estate portfolio. As a percentage of average


52

loans, annualized net charge-offs increaseddecreased to 0.30%0.14% for the nine monthsquarter ended SeptemberJune 30, 20172022 compared to 0.21%0.20% for the year ended December 31, 2016. However, this increase was concentrated primarily in the discontinued consumer finance company business line.2021.



Comparison of Operating Results for the Quarters Ended SeptemberJune 30, 20172022 and 20162021
 
Net income for the quarter ended SeptemberJune 30, 20172022 was $23.6$33.4 million, or $0.23$0.26 per diluted share, an increasea decrease of $9.4$15.5 million, or 66.2%31.7%, from net income of $14.2$49.0 million, or $0.14$0.38 per diluted share, for the quarter ended SeptemberJune 30, 2016.2021. The decrease in net income
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primarily resulted from a decrease in noninterest income of $24.3 million, or 44.3% and an increase in net income resulted from increasesthe provision for credit losses of $2.6 million. Partially offsetting these changes was a $4.5 million, or 4.7%, increase in net interest income, of $5.9 million, or 7.7% and noninterest income of $3.8 million, or 18.1% and decreasesa decrease in noninterest expense of $4.9$1.5 million, or 6.6% and provision for loan losses of $2.51.8%, as well as a $5.3 million, or 45.3%. Partially offsetting these factors was an increase34.9%, decrease in income tax expense of $7.7 million, or 164.3%.expense. Net income for the quarter ended SeptemberJune 30, 20172022 represents annualized returns on average equity and average assets of 7.81%8.90% and 0.99%0.94%, respectively, compared to 4.89%12.58% and 0.63%1.37% for the same quarter last year. A further discussion of significantnotable changes follows.

Interest Income
 
Total interest income increased by $5.5$3.3 million, or 6.5%3.3%, to $90.2$105.9 million for the quarter ended SeptemberJune 30, 20172022 from $84.7$102.6 million for the quarter ended SeptemberJune 30, 2016,2021. This increase iswas due to an increase in the average balance of interest earninginterest-earning assets of $512.5$94.9 million, or 6.3%0.7%, to $8.706$13.347 billion for the quarter ended SeptemberJune 30, 20172022 from $8.193$13.252 billion for the quarter ended SeptemberJune 30, 2016, resulting from2021, which was primarily driven by growth in the western New York office acquisition which closed in September 2016. Themortgage-backed securities portfolio and interest-earning deposits. Additionally, the average yield earned on interest earninginterest-earning assets was 4.11%increased to 3.18% for the both quartersquarter ended SeptemberJune 30, 2017 and 2016.2022 from 3.10% for the quarter ended June 30, 2021 due to the rising interest rate environment.


Interest income on loans receivable increased by $4.3 million,$319,000, or 5.3%0.3%, to $85.4$95.6 million for the quarter ended SeptemberJune 30, 2017 from $81.12022 compared to $95.3 million for the quarter ended SeptemberJune 30, 2016.2021. This increase is attributablein interest income was due to increasesan increase in both the average balance and average yield. Theyield on loans receivable, to 3.77% for the quarter ended June 30, 2022, from 3.71% from the quarter ended June 30, 2021, due to the increase in market interest rates.Partially offsetting this increase in yield was a decrease in the average balance of loans receivable increased by $308.7$139.5 million, or 4.2%1.4%, to $7.666$10.158 billion for the quarter ended SeptemberJune 30, 20172022 from $7.358$10.297 billion for the quarter ended SeptemberJune 30, 2016. This increase is2021 due primarily to the addition of $455.9$252.4 million of loans acquired, at fair value, in the third quarterPPP loan forgiveness since June 30 of 2016 in the western New York office acquisition and $168.8 million of loan growth during 2017. The average yield on loans receivable increased to 4.42% for the quarter ended September 30, 2017 from 4.38% for the quarter ended September 30, 2016.  The average loan yield was positively impacted by an increase in rates on adjustable rate loans in response to increases in short-term rates by the Federal Reserve.last year.


Interest income on mortgage-backed securities increased by $1.1$1.5 million, or 53.6%26.0%, to $3.1$7.2 million for the quarter ended SeptemberJune 30, 2017 from $2.02022 compared to $5.7 million for the quarter ended SeptemberJune 30, 2016.2021. This increase is attributable to increaseswas driven by an increase in both the average balance and average yield. The average balance of mortgage-backed securities increased by $166.5of $196.1 million, or 37.8%11.2%, to $607.5 million$1.952 billion for the quarter ended SeptemberJune 30, 20172022 from $441.0 million$1.756 billion for the quarter ended SeptemberJune 30, 2016. The2021. This increase in the average balance was due to the investmentprimarily a result of additional purchases utilizing excess cash resulting from deposit growth andduring the September 2016 office purchases. Additionally, thepast year. The average yield on mortgage-backed securities increased to 2.05%1.47% for the quarter ended SeptemberJune 30, 20172022 from 1.84%1.29% for the quarter ended SeptemberJune 30, 20162021 due to both an increase in short-term market interest rates that positively impacted our adjustable rate mortgage-backed securities and the purchase of fixed rate mortgage-backed securities with yields higher than those on the existing portfolio.

Interest income on investment securities increased by $130,000,$111,000, or 10.0%8.6%, for the quarter ended June 30, 2022 to $1.4 million or the quarter ended September 30, 2017 from $1.3 million for the quarter ended SeptemberJune 30, 2016. The2021. This increase is attributablewas due to an increase in the average balance of investment securities of $77.1by $12.5 million, or 28.0%3.4%, to $352.8$376.9 million for the quarter ended SeptemberJune 30, 20172022 from $275.7$364.4 million for the quarter ended SeptemberJune 30, 2016. This increase is due primarily to the investment of excess cash. Partially offsetting this increase was a decrease in the2021. The average yield on investment securities increased to 1.62%1.48% for the quarter ended SeptemberJune 30, 20172022 from 1.89%1.41% for the quarter ended SeptemberJune 30, 2016 due to higher yielding municipal securities being called and replaced with lower yielding, shorter-term government agency securities. 2021.

    
Dividends on FHLB stock decreased by $155,000,$56,000, or 71.1%40.6%, to $63,000$82,000 for the quarter ended SeptemberJune 30, 20172022 from $218,000$138,000 for the quarter ended SeptemberJune 30, 2016.2021. This decrease is attributablewas due to athe decrease in the average balance of FHLB stock of $20.1by $9.7 million, or 72.1%41.9%, to $7.7$13.4 million for the quarter ended SeptemberJune 30, 20172022 from $27.8$23.1 million for the quarter ended SeptemberJune 30, 2016. Partially offsetting this decrease was an increase in the average yield on FHLB stock to 3.23% for the quarter ended September 30, 2017 from 3.12% for the quarter ended September 30, 2016.2021. Required FHLB stock holdings fluctuate with, among other things, the utilization of our borrowing capacity as well as capital requirements established by the FHLB. The average yield increased slightly to 2.44% for the quarter ended June 30, 2022 from 2.40% for the quarter ended June 30, 2021.
 
Interest income on interest-earning deposits increased by $130,000, or 114.0%$1.5 million to $244,000$1.7 million for the quarter ended SeptemberJune 30, 20172022 from $114,000$192,000 for the quarter ended SeptemberJune 30, 2016.2021. This increase is attributable towas driven by an increase in the


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average yield on interest-earning deposits to 1.33%0.79% for the quarter ended SeptemberJune 30, 20172022 from 0.49%0.09% for the quarter ended SeptemberJune 30, 2016, as a result of the recent increases in the targeted Federal Funds rate by2021, due to the Federal Reserve Board. Partially offsetting this increase was a decrease inBoard raising targeted short-term interest rates. Additionally, the average balance of interest-earning deposits of $19.7increased by $35.4 million, or 21.7%4.4%, to $71.5$846.1 million for the quarter ended SeptemberJune 30, 20172022 from $91.2$810.7 million for the quarter ended SeptemberJune 30, 2016, due to utilizing excess cash to fund loan growth.2021.


Interest Expense

Interest expense decreased by $460,000,$1.2 million, or 6.2%17.5%, to $7.0$5.6 million for the quarter ended SeptemberJune 30, 20172022 from $7.5$6.8 million for the quarter ended SeptemberJune 30, 2016.2021. This decrease in interest expense was primarily due to a decreasethe decline in the the average cost of interest-bearing liabilities, which decreased to 0.42%0.24% for the quarter ended SeptemberJune 30, 20172022 from 0.47%0.29% for the quarter ended SeptemberJune 30, 2016.2021. This decrease resulted primarily from the replacement of short-term FHLB advances with lower-cost deposits received as part of the September 2016 office acquisition. Partially offsetting the decrease in cost was an increasethe interest rate paid on deposit accounts in response to decreases in market interest rates as well as the overall change in the mix of deposit accounts as customers move from time deposits to more liquid accounts. Additionally, the average balance of interest-bearing liabilities of $220.1decreased by $45.7 million, or 3.5%0.5%, to $6.573$9.466 billion for the quarter ended SeptemberJune 30, 20172022 from $6.353$9.512 billion for the quarter ended SeptemberJune 30, 2016. This increase is due primarily to the addition2021.
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Table of $1.643 billion of deposit balances, at fair value, from the aforementioned office acquisition in the third quarter of 2016.Contents
Net Interest Income
 
Net interest income increased by $5.9$4.5 million, or 7.7%4.7%, to $83.2$100.3 million for the quarter ended SeptemberJune 30, 20172022 from $77.3$95.7 million for the quarter ended SeptemberJune 30, 2016.2021. This increase is attributable to the factors discussed above. The repayment of all FHLB advances with deposits from the aforementioned acquisition improvedAdditionally, our net interest spread and margin. Net interest rate spread increased to 3.69%2.94% for the quarter ended SeptemberJune 30, 20172022 from 3.65%2.82% for the quarter ended SeptemberJune 30, 2016 while2021, and our net interest margin increased to 3.82%3.05% for the quarter ended SeptemberJune 30, 20172022 from 3.77%2.89% for the quarter ended SeptemberJune 30, 2016.2021, primarily due to rising interest-earning asset yields in response to recent increases in market interest rates.

Provision for LoanCredit Losses

Despite the increase in consumer loan charge-offs for the current quarter, which was directly related to the closure    The Company recorded a provision expense of our consumer finance subsidiary, the provision for loan losses decreased by $2.5 million, or 45.3%, to $3.0$2.6 million for the quarter ended SeptemberJune 30, 2017 from $5.5 million2022 compared to no provision for credit losses during the quarter ended SeptemberJune 30, 2016.  This decrease is due primarily2021. The current period provision was driven by loan portfolio growth and the slower economic growth forecasts by Moodys. The lack of provision in the prior year was driven by the improvements in the economic forecasts compared to a decreasethe uncertainty that existed in total nonaccrual loans of $13.0 million, or 15.0%,2020 to $73.3 million at September 30, 2017 from $86.3 million at September 30, 2016.the industries impacted by COVID-19.
     
In determining the amount of the current period provision, we considered current and forecasted economic conditions, including but not limited to unemployment levels, andexpected 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 factors.experience. We analyze the allowance for loancredit losses as described in the section entitled “Allowance“Allowance for LoanCredit Losses.” The provision that is recorded is sufficient, in our judgment, to bring this reserve to a level that reflects the current expected lifetime losses inherent in our loan portfolio relative to loan mix, a reasonable and supportable economic conditionsforecast period and historical loss experience.experience at June 30, 2022.

Noninterest Income
 
Noninterest income increaseddecreased by $3.8$24.3 million, or 18.1%44.3%, to $24.6$30.4 million for the quarter ended SeptemberJune 30, 20172022 from $20.8$54.7 million for the quarter ended SeptemberJune 30, 2016. The increase is2021. This decrease was primarily attributable todriven by the increasesale of the insurance business during the quarter ended June 30, 2021, resulting in service charges and feesa $25.3 million pre-tax gain. As a result of $1.7 million, or 15.5%, to $12.7this sale, insurance commission income ceased during the second quarter last year resulting in a decrease of $1.0 million for the quarter ended SeptemberJune 30, 2017 from $11.0 million for the quarter ended September 30, 2016, due2022. Also contributing to the aforementioned growth and acquisition of checking accounts. Trust and other financial servicesdecrease in noninterest income increased by $1.4 million, or 39.6%, to $4.8 million for the quarter ended September 30, 2017 from $3.4 million for the quarter ended September 30, 2016, due primarily to the acquisition of assets under management related to the offices acquired in September 2016. Additionally, investment securities sold during the current quarter resulted in profits of $1.5 million compared to $58,000 during the same quarter last year. Partially offsetting these improvements was a decrease in mortgage banking income of $1.4$1.7 million, or 72.5%, as a result of fewer residential mortgage loans being sold into the secondary market.
Noninterest Expense
Noninterest expense decreased by $4.9 million, or 6.6%43.4%, to $68.8$2.2 million for the quarter ended SeptemberJune 30, 20172022 from $73.7$3.8 million for the quarter ended SeptemberJune 30, 2016.  This decrease is primarily2021 due to the impact of less favorable pricing in the secondary market, as a result of a $5.8the recent volatile interest rate environment.Partially offsetting these decreases was an increase in other operating income of $2.2 million, or 80.5%, decrease in restructuring and acquisition expense due to the September 2016 acquisition of 18 offices in western New York. Additionally, compensation and employee benefits decreased by $2.1 million, 5.5%83.6%, to $36.0$4.9 million for the quarter ended SeptemberJune 30, 20172022 compared to $2.6 million for the quarter ended June 30, 2021. This increase was driven by an increase in interest rate swap income as well as a gain of approximately $1.0 million from $38.1the sale of branch buildings associated with the previously announced consolidation of 20 branch office facilities. Service charges and fees increased $929,000, or 7.3%, to $13.7 million for the quarter ended SeptemberJune 30, 2016. This decrease is due primarily2022 compared to $12.7 million for the closure of our consumer finance


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subsidiary, quarter ended June 30, 2021, as well as $5.1 million of expensecustomer activity increased in 2022 after COVID-19 restricted behavior in the prior yearyear.

Noninterest Expense

Noninterest expense decreased by $1.5 million, or 1.8%, to $84.8 million for the quarter ended June 30, 2022 from $86.3 million for the quarter ended June 30, 2021. This decrease was due to a decline in a majority of the noninterest expense categories as we continue to emphasize efficiency initiatives. Processing expenses decreased $2.2 million, or 14.5%, to $12.9 million for the quarter ended June 30, 2022 from $15.2 million for the quarter ended June 30, 2021 due to the investment in our technology and infrastructure during the prior year. Professional services decreased $898,000, or 21.2%, to $3.3 million for the quarter ended June 30, 2022 from $4.2 million for the quarter ended June 30, 2021 due to the use of third-party experts to assist with our digital strategy rollout in the prior year. Compensation and employee benefits decreased $821,000 to $48.1 million for the quarter ended June 30, 2022 from $48.9 million for the quarter ended June 30, 2021, despite recognizing approximately $1.4 million of additional expense related to the terminationacceleration of Northwest's Employee Stock Ownership Plan ("ESOP"). Partially offsettingcompensation and stock benefits upon Mr. Seiffert's passing. The decrease in compensation and employee benefits was driven primarily by the branch consolidations completed in April. Offsetting these factors were increasesdecreases was an increase in premises and occupancy costs of $857,000, processingother expenses of $806,000 and amortization of intangible assets of $623,000, $3.8 million to $5.2 million for the quarter ended June 30, 2022 from $1.4 million for the quarter ended June 30, 2021 due primarily to the incremental costsan increase in our unfunded loan loss reserve associated with the aforementioned acquisition.origination of loans with current off balance sheet exposure.

Income Taxes
 
The provision for income tax expense increasedtaxes decreased by $7.7$5.3 million, or 34.9%, to $12.4$9.9 million for the quarter ended SeptemberJune 30, 20172022 from $4.7$15.1 million for the quarter ended SeptemberJune 30, 2016. 2021. This increasedecrease in income tax expense is primarily the result of an increasetaxes was due to a decrease in income before income taxes of $17.1 million. The effective tax rate for the quarter ended September 30, 2017 was 34.5% compared to 24.9% for the quarter ended September 30, 2016. This increase is due to reduced tax-free income as a percentage of income before income taxes in the current quarter compared to the same quarter last year. We anticipate our effective tax rate willto be between 32.0%21.0% and 34.0% 23.0%for allthe year ending December 31, 2022.




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Comparison of Operating Results for the NineSix Months Ended SeptemberJune 30, 2017and 20162022 and 2021
 
Net income for the ninesix months ended SeptemberJune 30, 20172022 was $72.3$61.7 million, or $0.71$0.49 per diluted share, an increasea decrease of $47.1 million from $25.2$27.5 million, or $0.2530.8%, from $89.2 million, or $0.70 per diluted share, for the ninesix months ended SeptemberJune 30, 2016.2021. The increasedecrease in net income resulted primarily from increasesa decrease in noninterest income of $27.1$30.5 million, or 44.7%35.2%, and net interest incomeas well as an increase in the provision for credit losses of $22.1$6.8 million, or 9.9%120.4%, and a $5.3 million, or 2.7% decrease in noninterest expense of $25.4 million, or 10.6%.net interest income. Partially offsetting these factors were increasesunfavorable variances was a decrease in income tax expense of $25.6$9.3 million, or 275.4%34.7%, and provision for loan losses of $1.8a $5.8 million, or 16.0%.3.3%, decrease in noninterest expense. Net income for the ninesix months ended SeptemberJune 30, 20172022 represents annualized returns on average equity and average assets of 8.16%8.01% and 1.01%0.87%, respectively, compared to 2.90%11.61% and 0.38%1.27% for the ninesix months ended SeptemberJune 30, 2016.2021. A further discussion of significantnotable changes follows.
 
Interest Income
 
Total interest income increaseddecreased by $11.7$8.2 million, or 4.6%3.9%, to $267.3$202.3 million for the ninesix months ended SeptemberJune 30, 20172022 from $255.6$210.6 million for the ninesix months ended SeptemberJune 30, 2016.2021. This increasedecrease is the result of a decrease in the average yield earned on interest-earning assets to 3.05% for the six months ended June 30, 2022 from 3.23% for the six months ended June 30, 2021. Despite the recent rising rate environment, loan yields are down year over year and have only started to rise during the quarter ended June 30, 2022. Partially offsetting this decrease was an increase in the average balance of interest earninginterest-earning assets of $640.8by $301.4 million, or 7.9%2.3%, to $8.798$13.371 billion for the ninesix months ended SeptemberJune 30, 20172022 from $8.157$13.070 billion for the ninesix months ended SeptemberJune 30, 2016. Partially offsetting this increase was a decrease2021 primarily driven by growth in the average yield onmortgage-backed securities portfolio and interest-earning assets to 4.06% for the nine months ended September 30, 2017 from 4.19% for the nine months ended September 30, 2016.deposits.


Interest income on loans receivable increaseddecreased by $9.4$13.8 million, or 3.9%7.0%, to $252.8$183.7 million for the ninesix months ended SeptemberJune 30, 20172022 from $243.4$197.6 million for the ninesix months ended SeptemberJune 30, 2016.2021. This increasedecrease is attributed to a decrease in the average balance of loans receivable by $322.1 million, or 3.1%, to $10.030 billion for the six months ended June 30, 2022 from $10.352 billion for the six months ended June 30, 2021 due primarily to PPP loan forgiveness and the payoff of several classified commercial real estate loan relationships. Additionally, the average yield on loans receivable decreased to 3.69% for the six months ended June 30, 2022 from 3.83% for the six months ended June 30, 2021 despite the recent rise in market interest rates.

    Interest income on loans receivablemortgage-backed securities increased by $3.6 million, or 36.8%, to $13.5 million for the six months ended June 30, 2022 from $9.9 million for the six months ended June 30, 2021. This increase is attributed to an increase in the average balance of loans receivablemortgage-backed securities of $384.8$407.2 million, or 5.3%26.4%, to $7.663$1.949 billion for the ninesix months ended SeptemberJune 30, 20172022 from $7.278$1.542 billion for the ninesix months ended SeptemberJune 30, 2016. 2021. This increase is due primarily to the addition of $455.9 million of loans acquired, at fair value, in the third quarter of 2016, and $168.8 million of organic loan growth during 2017. Partially offsetting this increase was a decrease in the average yield on loans receivable to 4.41% for the nine months ended September 30, 2017 from 4.47% for the nine months ended September 30, 2016. The average loan yield was negatively affected by the origination of fixed rate residential mortgage loans at lower rates than the existing portfolio yield as well as the runoff of higher rate consumer loans at our consumer discount subsidiary. Partially offsetting these declines was the increase in rates on adjustable rate loans in response to increases in short-term rates by the Federal Reserve.
Interest income on mortgage-backed securities increased by $1.9 million, or 30.6%, to $8.3 million for the nine months ended September 30, 2017 from $6.4 million for the nine months ended September 30, 2016. This increase is the result of increases in both the average balance and average yield. The average balance of mortgage-backed securities increased by $95.3 million, or 20.6%, to $557.8 million for the nine months ended September 30, 2017 from $462.5 million for the nine months ended September 30, 2016. The increase in the average balance was due to the investmentprimarily a result of additional purchases utilizing excess cash resulting from deposit growth and office purchases. Theduring the past year. Additionally, the average yieldyield on mortgage-backed securities increased to 1.99%1.39% for the ninesix months ended SeptemberJune 30, 20172022 from 1.84%1.28% for the ninesix months ended SeptemberJune 30, 20162021 due to both an increase in short-term market interest rates that positively impacted the yield of adjustable rate mortgage-backed securities and the purchase of fixed rate mortgage-backed securities with yields higher than the existing portfolio.


Interest income on investment securities remained flat at $4.5increased by $253,000, or 10.1%, to $2.7 million for both the ninesix months ended SeptemberJune 30, 2017 and 2016. The modest decrease of $10,000, or 0.2%, is the result of a decrease in the average yield on investment securities to 1.64%2022 from $2.5 million for the ninesix months ended SeptemberJune 30, 2017 from 1.86% for the nine months ended September 30, 2016.2021. This decreaseincrease is primarily the result of higher rate, tax-free, municipal securities maturing or being called and replaced by lower yielding, shorter duration government agency securities. Partially offsetting this decrease wasattributable to an increase in the average balance of investment


55

securities of $42.2by $27.3 million, or 13.0%7.9%, to $367.6$375.3 million for the ninesix months ended SeptemberJune 30, 20172022 from $325.4$348.0 million for the ninesix months ended SeptemberJune 30, 2016. This increase is due primarily2021. Additionally, the average yield on investment securities increased slightly to 1.46% for the investment of excess cash.six months ended June 30, 2022 from 1.43% for the six months ended June 30, 2021.

Dividends on FHLB stock decreased by $914,000,$91,000, or 84.2%35.8%, to $172,000$163,000 for the ninesix months ended SeptemberJune 30, 20172022 from $1.1$254,000 for the six months ended June 30, 2021. This decrease was due to an $8.8 million, or 39.2%, decrease in the average balance of FHLB stock to $13.6 million for the ninesix months ended SeptemberJune 30, 2016. This decrease is the result of decreases in both the average balance and average yield. The average balance on FHLB stock decreased by $25.1 million, or 76.9%, to $7.62022 from $22.5 million for the ninesix months ended SeptemberJune 30, 2017 from $32.7 million for the nine months ended September 30, 2016. Additionally, the average yield on FHLB stock decreased to 3.04% for the nine months ended September 30, 2017 from 4.44% for the nine months ended September 30, 2016.2021. Required FHLB stock holdings fluctuate with, among other things, the utilization of our borrowing capacity as well as capital requirements established by the FHLB. Partially offsetting the decrease in the balance was an increase in the average yield on FHLB stock to 2.41% for the six months ended June 30, 2022 from 2.27% for the six months ended June 30, 2021 as the FHLB of Pittsburgh increased yields on required stock holdings due to higher market interest rates.

Interest income on interest-earning deposits increased by $1.2$1.8 million to $1.4$2.2 million for the ninesix months ended SeptemberJune 30, 20172022 from $243,000$375,000 for the ninesix months ended SeptemberJune 30, 2016.2021. This increase is the result of increasesattributable to an increase in both the average balance of and average yield earned on interest-earning deposits. The average balance increaseddeposits by $143.6$197.7 million, or 24.5%, to $201.6$1.004 billion for the six months ended June 30, 2022 from $805.9 million for the ninesix months ended SeptemberJune 30, 2017 from $58.0 million for the nine months ended September 30, 2016, due to increased customer deposits and the excess cash received from the September 2016 office acquisition.2021. Additionally, the average yield on interest-earning deposits increased to 0.94%0.43% for the ninesix months ended SeptemberJune 30, 20172022 from 0.55%0.09% for the ninesix months ended SeptemberJune 30, 2016,2021, as a result of recent increases in the targeted Federal Fundsfederal funds rate by the Federal Reserve Board.Reserve.

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Interest Expense
 
Interest expense decreased by $10.4$3.0 million, or 33.5%20.5%, to $20.8$11.4 million for the ninesix months ended SeptemberJune 30, 20172022 from $31.2$14.4 million for the ninesix months ended SeptemberJune 30, 2016.2021. This decrease in interest expense was due todriven by a decrease in the average cost of interest-bearing liabilities to 0.41%0.24% for the ninesix months ended SeptemberJune 30, 20172022 from 0.65%0.31% for the ninesix months ended SeptemberJune 30, 2016, and a2021. This decrease resulted from decreases in the average balance of borrowedinterest rate paid on deposits as well as the change in deposit mix as customers chose to move funds of $620.2 million, or 83.4%. The decrease in both the averagefrom fixed-rate time deposits to more liquid deposit accounts. Despite a rising interest rate environment, we have been able to keep our cost of interest-bearing liabilities and the average balance of borrowed funds is due primarily to the payoff of all FHLB advances in the third quarter of 2016.deposits stable. Additionally, the average cost of eachyield on time deposits has continued to decrease, from 0.91% for the six months ended June 30, 2021 to 0.64% for the six months ended June 30, 2022, as time deposits with higher rates are maturing and rolling into lower rate deposit type declined from the prior year with the exception of interest-bearing demand deposits.products. Partially offsetting thethis decrease in cost was an increase in the average balance of interest-bearing deposits of $325.9liabilities by $66.6 million, or 5.1%0.7%, to $6.719$9.512 billion for the ninesix months ended SeptemberJune 30, 20172022 from $6.394$9.445 billion for the ninesix months ended SeptemberJune 30, 2016. 2021.This increase is due primarily to the addition of $1.643 billion, at fair value, of deposit balances from the office acquisition in the third quarter of 2016, which was augmented byaverage balance resulted from growth in deposits over the success in our efforts to procure new checking relationships.past year.

Net Interest Income
 
Net interest income increaseddecreased by $22.1$5.3 million, or 9.9%2.7%, to $246.5$190.9 million for the ninesix months ended SeptemberJune 30, 20172022 from $224.4$196.2 million for the ninesix months ended SeptemberJune 30, 2016.2021. This increasedecrease is attributable to the factors discussed above. The repayment of all FHLB advances with deposits from the aforementioned office acquisition improved net interest spread and margin. NetOur interest rate spread increased to 3.65% for the nine months ended September 30, 2017 from 3.53% for the nine months ended September 30, 2016 whileand net interest margin increasedboth decreased over the course of the year. Our interest rate spread decreased to 3.74%2.81% for the ninesix months ended SeptemberJune 30, 20172022 from 3.67%2.92% for the ninesix months ended SeptemberJune 30, 2016.2021 and our net interest margin decreased to 2.86% for the six months ended June 30, 2022 from 3.00% for the six months ended June 30, 2021. These decreases were primarily due to declining interest-earning asset yields on loans receivable.

Provision for LoanCredit Losses

The provision for loancredit losses increased by $1.8$6.8 million, or 16.0%120.4%, to $13.2a current period provision expense of $1.1 million for the ninesix months ended SeptemberJune 30, 20172022 from $11.4a negative provision of $5.6 million for the ninesix months ended SeptemberJune 30, 2016. This increase is due primarily2021. The current period provision was driven by the current portfolio mix, changes to reserves relatedasset quality and classified assets and the most recent economic forecasts. The negative provision in the prior year was driven by the improvements in the economic forecasts compared to growththe uncertainty that existed in our indirect automobile and commercial loan portfolios, as well as2020 for industries impacted by COVID-19

Annualized net charge-offs to average loans decreased to 0.10% for the closure of our consumer finance subsidiary. Additionally, annualized net charge-offs increased to 0.30% of total loanssix months ended June 30, 2022 from 0.22% for the ninesix months ended SeptemberJune 30, 2017 compared to 0.20% for the nine months ended September 30, 2016. Partially offsetting these factors was a decrease in total nonaccrual loans of $13.0 million to $73.02021. Additionally, classified assets declined by $175.7 million, or 0.95% of total loans, at September 30, 2017 from $86.338.8%, to $277.4 million, or 1.11%2.66% of total loans outstanding at SeptemberJune 30, 2016.2022 from $453.1 million, or 4.39% of loans outstanding at June 30, 2021.
     
In determining the amount of the current period provision, we considered current economic conditions, including but not limited to unemployment levels, and bankruptcy filings, and changes in real estate values and the impact of these factors on the quality of our loan portfolio and historical loss factors.experience. We analyze the allowance for loancredit losses as described in the section entitled “Allowance for LoanCredit Losses.” The provision that is recorded is sufficient, in our judgment, to bring this reserve to a level that reflects the current expected lifetime losses inherent in our loan portfolio relative to loan mix, a reasonable and supportable economic conditionsforecast period and historical loss experience.experience at June 30, 2022.



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Noninterest Income

Noninterest income increaseddecreased by $27.1$30.5 million, or 44.7%35.2%, to $87.6$56.2 million for the ninesix months ended SeptemberJune 30, 20172022 from $60.5$86.7 million for the ninesix months ended SeptemberJune 30, 2016. The increase is2021. This decrease was primarily attributable to the $17.2 million gain ondriven by the sale of our three Maryland officesthe insurance business on April 30, 2021, during the six months ended June 30, 2021, resulting in May 2017. Additionally, service charges and fees increased by $5.5a $25.3 million or 17.3%, to $37.2 million for the nine months ended September 30, 2017 from $31.7 million for the nine months ended September 30, 2016, due primarily to the growth in checking accounts from the September 2016 office acquisition and the successful execution of organic checking account growth initiatives. Trust and other financial services income increased by $3.7 million, or 37.4%, to $13.7 million for the nine months ended September 30, 2017 from $10.0 million for the nine months ended September 30, 2016, due to an increase in assets under management. Additionally, the gain onpre-tax gain. This insurance business sale of investments was $1.1 million higher in the currentprior year and other operating income increased by $2.3 million, or 58.6%. Partially offsetting these increasesalso resulted in non-interest income, was a decrease in insurance commission income of $884,000,$3.6 million from the six months ended June 30, 2021. In addition, mortgage banking income decreased by $6.2 million, or 11.0%63.2%, primarily relateddue to the closureimpact of our consumer finance subsidiaryless favorable secondary market pricing. Partially offsetting these decreases were $1.6 million increases in both service charges and fees and other operating income. Service charges and fees increased to $26.7 million for the discontinuationsix months ended June 30, 2022 from $25.1 million for the six months ended June 30, 2021 due to increased customer activity in 2022 after COVID-19 restricted behavior in the prior year. Other operating income increased to $7.1 million for the six months ended June 30, 2022 from $5.5 million for the six months ended June 30, 2021 due to an increase in swap fee income as well as a gain of consumer loan originatingapproximately $1.0 million from the sale of branch buildings associated with related insurance fee income.the previously announced consolidation of 20 branch office facilities.







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Noninterest Expense

Noninterest expense decreased by $25.4$5.8 million, or 10.6%3.3%, to $213.7$166.8 million for the ninesix months ended SeptemberJune 30, 20172022, from $239.1$172.5 million for the ninesix months ended SeptemberJune 30, 2016.2021. This decrease is primarilywas driven by a $3.1 million, or 10.9%, decrease in processing expenses to $25.5 million for the resultsix months ended June 30, 2022 from $28.6 million for the six months ended June 30, 2021 due to the prior year investment in technology and infrastructure. Additionally, professional service expense decreased by $2.9 million, or 33.0%, to $5.9 million for the six months ended June 30, 2022 from $8.8 million for the six months ended June 30, 2021 due to utilization of third-party experts to recruit talent and to assist with our digital strategy rollout during the $37.0prior year. Compensation and employee benefits expense decreased $1.1 million, prepayment penalty incurred as a result of paying off $715.0or 1.2%, to $95.0 million for the six months ended June 30, 2022 from $96.1 million for the six months ended June 30, 2021 despite recognizing approximately $1.4 million of FHLB long-term advances during the second quarter of 2016. In addition, acquisition and restructuring costs of $4.3 million in the current yearadditional expense related to the saleacceleration of our Maryland regioncompensation and the closure of our consumer finance subsidiary, was $6.9 million, or 62.0% less than the prior year, which included costs associated with the consolidation of 24 legacy Northwest offices,stock benefits upon Mr. Seiffert's passing. This decrease in compensation and benefits as well as the expense with the purchase of 18 western New York offices. Partially offsetting this decrease was an increase in compensation and employee benefits of $7.1$1.1 million, or 6.8%7.1%, to $111.5 million for the nine months ended September 30, 2017 from $104.4 million for the nine months ended September 30, 2016. This increase is due primarily to the employees added from the aforementioned acquisition, an increase decrease in health-care costs, and normal annual merit increases. Additionally, processing expenses increased by $3.8 million, amortization of intangible assets increased by $2.7 million, premises and occupancy costs increased by $2.7 million, and office operations increased by $1.8 million, are due primarily to branch consolidations completed over the incremental costs associated with the 18 offices acquiredpast two years. Partially offsetting these decreases, was a $2.8 million, or 59.1%, increase in other expenses due to an increase in the third quarterreserve for unfunded commitments resulting from the origination of 2016.loans with current off balance sheet exposure.

Income Taxes
 
The provision for income taxes increaseddecreased by $25.6$9.3 million, or 34.7%, to $34.9$17.5 million for the ninesix months ended SeptemberJune 30, 20172022 from $9.3$26.7 million for the ninesix months ended SeptemberJune 30, 2016.2021. This increase in income tax expense isdecrease was primarily the result of an increase in pretax income of $72.7 million. Our effective tax rate for the nine months ended September 30, 2017 was 32.5% compared to 27.0% for the nine months ended September 30, 2016, due to the factors previously discusseddecrease in the Comparisonincome before tax of Operating Results for the Quarters Ended September 30, 2017 and 2016.  $36.8 million, or 31.7%. We anticipate our effective tax rate willto be between 32.0%21.0% and 34.0%23.0% for all of 2017.the year ending December 31, 2022.





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57
Table of Contents

Average Balance Sheet
(Dollars 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. 
 Quarter ended June 30,
 20222021
Average
balance		InterestAvg.
yield/
cost (h)		Average
balance		InterestAvg.
yield/
cost (h)
Assets      
Interest-earning assets:     
Residential mortgage loans$3,171,469 27,327 3.45 %$2,935,034 25,609 3.49 %
Home equity loans1,277,440 11,961 3.76 %1,380,794 12,232 3.55 %
Consumer loans1,880,769 15,777 3.36 %1,589,739 14,555 3.67 %
Commercial real estate loans2,915,750 31,844 4.32 %3,257,810 33,349 4.05 %
Commercial loans912,454 9,090 3.94 %1,133,969 9,978 3.48 %
Loans receivable (a) (b) (d) (includes FTE adjustments of $425 and $468, respectively)10,157,882 95,999 3.79 %10,297,346 95,723 3.73 %
Mortgage-backed securities (c)1,952,375 7,158 1.47 %1,756,227 5,680 1.29 %
Investment securities (c) (d) (includes FTE adjustments of $192 and $179, respectively)376,935 1,590 1.69 %364,414 1,466 1.61 %
FHLB stock, at cost13,428 82 2.44 %23,107 138 2.40 %
Other interest-earning deposits846,142 1,684 0.79 %810,741 192 0.09 %
Total interest-earning assets (includes FTE adjustments of $617 and $647, respectively)13,346,762 106,513 3.20 %13,251,835 103,199 3.12 %
Noninterest-earning assets (e)909,943 1,104,924 
Total assets$14,256,705   $14,356,759   
Liabilities and shareholders’ equity      
Interest-bearing liabilities:      
Savings deposits$2,361,919 589 0.10 %$2,255,578 590 0.10 %
Interest-bearing demand deposits2,857,336 310 0.04 %2,840,949 407 0.06 %
Money market deposit accounts2,653,467 668 0.10 %2,537,629 621 0.10 %
Time deposits1,220,815 1,774 0.58 %1,493,947 3,155 0.85 %
Borrowed funds (f)123,749 167 0.54 %131,240 150 0.46 %
Subordinated debentures119,563 1,203 4.03 %123,443 1,264 4.11 %
Junior subordinated debentures129,142 920 2.82 %128,882 636 1.95 %
Total interest-bearing liabilities9,465,991 5,631 0.24 %9,511,668 6,823 0.29 %
Noninterest-bearing demand deposits (g)3,090,372 3,036,202 
Noninterest-bearing liabilities193,510 247,930 
Total liabilities12,749,873   12,795,800  
Shareholders’ equity1,506,832 1,560,959  
Total liabilities and shareholders’ equity$14,256,705   $14,356,759   
Net interest income/Interest rate spread 100,882 2.96 % 96,376 2.84 %
Net interest-earning assets/Net interest margin$3,880,771  3.07 %$3,740,167  2.91 %
Ratio of interest-earning assets to interest- bearing liabilities1.41X  1.39X  
(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.
(c)Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
(d)Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent (“FTE”) basis.
(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 0.11% and 0.16%, respectively.
(h)Annualized. Shown on a FTE basis. The FTE basis adjusts for the tax benefit of income on certain tax exempt loans and investments using the federal statutory rate applicable to each period presented. We believe this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts. GAAP basis yields were: loans — 3.77% and 3.71%, respectively; investment securities — 1.48% and 1.41%, respectively; interest-earning assets — 3.18% and 3.10%, respectively. GAAP basis net interest rate spreads were 2.94% and 2.82%, respectively; and GAAP basis net interest margins were 3.05% and 2.89%, respectively.
56
 Quarter ended September 30,
 2017 2016
 
Average
balance
 Interest 
Avg.
yield/
cost (g)
 
Average
balance
 Interest 
Avg.
yield/
cost (g)
Assets: 
  
  
  
  
  
Interest-earning assets: 
  
  
  
  
  
Residential mortgage loans$2,732,546
 28,279
 4.14% $2,739,099
 27,952
 4.08%
Home equity loans1,299,473
 14,694
 4.49% 1,192,929
 12,884
 4.30%
Consumer loans617,754
 7,627
 4.90% 504,376
 6,267
 4.94%
Legacy consumer finance loans33,469
 1,433
 17.13% 50,578
 2,664
 21.07%
Commercial real estate loans2,389,969
 27,234
 4.46% 2,394,001
 26,683
 4.36%
Commercial loans593,143
 6,659
 4.39% 476,715
 5,193
 4.26%
Loans receivable (a) (b) (includes FTE adjustments of $553 and $560, respectively)7,666,354
 85,926
 4.45% 7,357,698
 81,643
 4.41%
Mortgage-backed securities (c)607,454
 3,118
 2.05% 440,966
 2,030
 1.84%
Investment securities (c) (includes FTE adjustments of $257 and $364, respectively)352,813
 1,690
 1.92% 275,718
 1,667
 2.42%
FHLB stock7,748
 63
 3.23% 27,761
 218
 3.12%
Other interest-earning deposits71,482
 243
 1.33% 91,243
 114
 0.49%
Total interest-earning assets (includes FTE adjustments of $809 and $924, respectively)8,705,851
 91,040
 4.15% 8,193,386
 85,672
 4.16%
Noninterest earning assets (d)755,026
  
   835,500
  
  
            
Total assets$9,460,877
  
   $9,028,886
  
  
            
Liabilities and shareholders’ equity: 
  
    
  
  
Interest-bearing liabilities: 
  
    
  
  
Savings deposits$1,681,777
 776
 0.18% $1,485,763
 744
 0.20%
Interest-bearing checking deposits1,435,143
 297
 0.08% 1,179,557
 78
 0.03%
Money market deposit accounts1,789,082
 1,048
 0.23% 1,418,779
 826
 0.23%
Time deposits1,449,830
 3,674
 1.01% 1,597,542
 4,005
 1.00%
Borrowed funds (e)106,282
 49
 0.18% 560,407
 657
 0.47%
Junior subordinated debentures111,213
 1,150
 4.05% 111,213
 1,144
 4.03%
Total interest-bearing liabilities6,573,327
 6,994
 0.42% 6,353,261
 7,454
 0.47%
Noninterest-bearing checking deposits (f)1,573,112
  
  
 1,243,474
  
  
Noninterest-bearing liabilities116,021
  
  
 276,014
  
  
            
Total liabilities8,262,460
  
  
 7,872,749
  
  
            
Shareholders’ equity1,198,417
  
  
 1,156,137
  
  
            
Total liabilities and shareholders’ equity$9,460,877
  
  
 $9,028,886
  
  
            
Net interest income/ Interest rate spread 
 84,046
 3.73%  
 78,218
 3.69%
            
Net interest-earning assets/ Net interest margin$2,132,524
  
 3.86% $1,840,125
  
 3.82%
            
Ratio of interest-earning assets to interest-bearing liabilities1.32X
  
  
 1.29X  
  
(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.
(c)Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
(d)Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.
(e)Average balances include FHLB borrowings and collateralized borrowings.
(f)Average cost of total deposits including noninterest-bearing checking was 0.29% and 0.35%, respectively.
(g)Annualized. Shown on a fully tax-equivalent basis (“FTE”). The FTE basis adjusts for the tax benefit of income on certain tax exempt loans and investments using the federal statutory rate of 35% for each period presented. We believe this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts. GAAP basis yields were: Loans — 4.42% and 4.38%, respectively; Investment securities — 1.62% and 1.89%, respectively; interest-earning assets — 4.11% and 4.11%, respectively. GAAP basis net interest rate spreads were 3.69% and 3.65%, respectively; and GAAP basis net interest margins were 3.82% and 3.77%, respectively.



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Table of Contents

Rate/Volume Analysis
(Dollars in Thousands)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 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.
Quarters ended September 30, 2017 and 2016
��
For the quarter ended June 30, 2022 vs. 2021
Increase/(decrease) due toTotal
 increase/(decrease)
RateVolume
Interest-earning assets:   
Loans receivable$1,576 (1,300)276 
Mortgage-backed securities759 719 1,478 
Investment securities71 53 124 
FHLB stock, at cost3 (59)(56)
Other interest-earning deposits1,406 86 1,492 
Total interest-earning assets3,815 (501)3,314 
Interest-bearing liabilities:   
Savings deposits(27)26 (1)
Interest-bearing demand deposits(99)2 (97)
Money market deposit accounts17 30 47 
Time deposits(984)(397)(1,381)
Borrowed funds27 (10)17 
Subordinated debt(25)(36)(61)
Junior subordinated debentures282 2 284 
Total interest-bearing liabilities(809)(383)(1,192)
Net change in net interest income$4,624 (118)4,506 
57
 Rate Volume 
Net
Change
Interest earning assets:     
Loans receivable$1,145
 3,138
 4,283
Mortgage-backed securities321
 767
 1,088
Investment securities(443) 466
 23
FHLB stock4
 (159) (155)
Other interest-earning deposits196
 (67) 129
Total interest-earning assets1,223

4,145
 5,368
      
Interest-bearing liabilities: 
  
  
Savings deposits(60) 92
 32
Interest-bearing checking deposits166
 53
 219
Money market deposit accounts3
 219
 222
Time deposits32
 (363) (331)
Borrowed funds(100) (508) (608)
Junior subordinated debentures6
 —
 6
Total interest-bearing liabilities47
 (507) (460)
      
Net change in net interest income$1,176
 4,652
 5,828


59
Table of Contents

Average Balance Sheet
(Dollars 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,
 20222021
Average
balance		InterestAvg.
yield/
cost (h)		Average
balance		InterestAvg.
yield/
cost (h)
Assets      
Interest-earning assets:      
Residential mortgage loans$3,077,155 52,868 3.44 %$2,971,037 51,975 3.50 %
Home equity loans1,285,668 23,433 3.68 %1,406,260 25,046 3.57 %
Consumer loans1,840,110 30,684 3.36 %1,526,861 29,121 3.82 %
Commercial real estate loans2,957,744 61,601 4.14 %3,285,696 71,820 4.32 %
Commercial loans868,854 15,987 3.66 %1,161,736 20,543 3.50 %
Loans receivable (a) (b) (d) (includes FTE adjustments of $825 and $932, respectively)10,029,531 184,573 3.71 %10,351,590 198,505 3.85 %
Mortgage-backed securities (c)1,948,794 13,518 1.39 %1,541,585 9,880 1.28 %
Investment securities (c) (d) (includes FTE adjustments of $381 and $351, respectively)375,323 3,130 1.67 %347,977 2,847 1.64 %
FHLB stock, at cost13,648 163 2.41 %22,462 254 2.27 %
Other interest-earning deposits1,003,627 2,151 0.43 %805,930 375 0.09 %
Total interest-earning assets (includes FTE adjustments of $1,206 and $1,283, respectively)13,370,923 203,535 3.07 %13,069,544 211,861 3.25 %
Noninterest-earning assets (e)969,111 1,103,734  
Total assets$14,340,034   $14,173,278   
Liabilities and shareholders’ equity      
Interest-bearing liabilities:     
Savings deposits$2,348,282 1,181 0.10 %$2,187,184 1,215 0.11 %
Interest-bearing demand deposits2,866,333 631 0.04 %2,812,348 836 0.06 %
Money market deposit accounts2,660,745 1,321 0.10 %2,517,673 1,278 0.10 %
Time deposits1,256,513 3,959 0.64 %1,538,489 6,959 0.91 %
Borrowed funds (f)129,487 324 0.50 %137,488 303 0.44 %
Subordinated debentures121,574 2,454 4.04 %123,400 2,522 4.10 %
Junior subordinated debentures129,109 1,571 2.42 %128,850 1,278 1.96 %
Total interest-bearing liabilities9,512,043 11,441 0.24 %9,445,432 14,391 0.31 %
Noninterest-bearing demand deposits (g)3,075,617 2,921,343  
Noninterest-bearing liabilities198,854 256,748  
Total liabilities12,786,514   12,623,523   
Shareholders’ equity1,553,520 1,549,755   
Total liabilities and shareholders’ equity$14,340,034   $14,173,278   
Net interest income/Interest rate spread 192,094 2.83 % 197,470 2.94 %
Net interest-earning assets/Net interest margin$3,858,880  2.87 %$3,624,112  3.02 %
Ratio of interest-earning assets to interest-bearing liabilities1.41X  1.38X  
(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.
(c)Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
(d)Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent ("FTE") basis.
(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 0.12% and 0.17%, respectively.
(h)Annualized. Shown on a FTE basis. The FTE basis adjusts for the tax benefit of income on certain tax exempt loans and investments using the federal statutory rate applicable to each period presented. We believe this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts. GAAP basis yields were: loans — 3.69% and 3.83%, respectively; investment securities — 1.46% and 1.43%, respectively; interest-earning assets — 3.05% and 3.23%, respectively. GAAP basis net interest rate spreads were 2.81% and 2.92%, respectively; and GAAP basis net interest margins were 2.86% and 3.00%, respectively.
58
 Nine Months Ended September 30,
 2017 2016
 
Average
balance
 Interest 
Avg.
yield/
cost (g)
 
Average
balance
 Interest 
Avg.
yield/
cost (g)
Assets: 
  
  
  
  
  
Interest-earning assets: 
  
    
  
  
Residential mortgage loans$2,724,348
 83,833
 4.10% $2,743,480
 86,826
 4.22%
Home equity loans1,314,344
 43,239
 4.40% 1,178,133
 38,229
 4.33%
Consumer loans598,056
 22,251
 4.97% 477,814
 17,768
 4.97%
Legacy consumer finance loans40,241
 6,025
 19.96% 51,542
 8,080
 20.90%
Commercial real estate loans2,425,302
 80,867
 4.40% 2,367,014
 79,367
 4.41%
Commercial loans560,677
 18,260
 4.29% 460,228
 14,817
 4.23%
Loans receivable (a) (b) (includes FTE adjustments of $1,637 and $1,717, respectively)7,662,968
 254,475
 4.44% 7,278,211
 245,087
 4.50%
Mortgage-backed securities (c)557,846
 8,327
 1.99% 462,474
 6,374
 1.84%
Investment securities (c) (includes FTE adjustments of $848 and $1,134, respectively)367,585
 5,366
 1.95% 325,427
 5,662
 2.32%
FHLB stock7,553
 172
 3.04% 32,702
 1,086
 4.44%
Other interest-earning deposits201,643
 1,440
 0.94% 57,996
 243
 0.55%
            
Total interest-earning assets (includes FTE adjustments of $2,485 and $2,851, respectively)8,797,595
 269,780
 4.10% 8,156,810
 258,452
 4.23%
            
Noninterest earning assets (d)742,837
  
   783,838
  
  
            
Total assets$9,540,432
  
  
 $8,940,648
  
  
            
Liabilities and shareholders’ equity: 
  
  
  
  
  
Interest-bearing liabilities: 
  
  
  
  
  
Savings deposits$1,699,455
 2,300
 0.18% $1,444,302
 2,446
 0.23%
Interest-bearing checking deposits1,436,442
 696
 0.06% 1,134,669
 378
 0.04%
Money market deposit accounts1,835,638
 3,186
 0.23% 1,334,158
 2,520
 0.25%
Time deposits1,513,565
 10,904
 0.96% 1,625,936
 12,262
 1.01%
Borrowed funds (e)123,168
 161
 0.17% 743,353
 10,213
 1.84%
Junior subordinated debentures111,213
 3,503
 4.15% 111,213
 3,389
 4.00%
            
Total interest-bearing liabilities6,719,481
 20,750
 0.41% 6,393,631
 31,208
 0.65%
            
Noninterest-bearing checking deposits (f)1,541,845
  
  
 1,196,737
  
  
Noninterest-bearing liabilities94,546
  
  
 191,934
  
  
            
Total liabilities8,355,872
  
  
 7,782,302
  
  
            
Shareholders’ equity1,184,560
  
  
 1,158,346
  
  
            
Total liabilities and shareholders’ equity$9,540,432
  
  
 $8,940,648
  
  
            
Net interest income/ Interest rate spread 
 249,030
 3.69%  
 227,244
 3.58%
            
Net interest-earning assets/ Net interest margin$2,078,114
  
 3.77% $1,763,179
  
 3.71%
            
Ratio of interest-earning assets to interest-bearing liabilities1.31X  
  
 1.28X  
  
(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.
(c)Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
(d)Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.
(e)Average balances include FHLB borrowings and collateralized borrowings.
(f)
Average cost of total deposits including noninterest-bearing checking was 0.28% and 0.35%, respectively.
(g) Annualized. Shown on a fully tax-equivalent basis (“FTE”). The FTE basis adjusts for the tax benefit of income on certain tax exempt loans and investments using the federal statutory rate of 35% for each period presented. We believe this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts. GAAP basis yields were: Loans  – 4.41% and 4.47%, respectively; Investment securities  – 1.64% and 1.86%, respectively; interest-earning assets  – 4.06% and 4.19%, respectively. GAAP basis net interest rate spreads were 3.65% and 3.53%, respectively; and GAAP basis net interest margins were 3.74% and 3.67%, respectively.


60
Table of Contents


Rate/Volume Analysis
(Dollars in Thousands)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 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.
Nine Months Ended September 30, 2017 and 2016
For the six months ended June 30, 2022 vs. 2021
Increase/(decrease) due toTotal
increase/(decrease)
RateVolume
Interest-earning assets:   
Loans receivable$(6,914)(7,018)(13,932)
Mortgage-backed securities813 2,825 3,638 
Investment securities55 228 283 
FHLB stock, at cost16 (107)(91)
Other interest-earning deposits1,354 422 1,776 
Total interest-earning assets(4,676)(3,650)(8,326)
Interest-bearing liabilities:   
Savings deposits(108)74 (34)
Interest-bearing demand deposits(212)7 (205)
Money market deposit accounts(21)64 43 
Time deposits(2,073)(927)(3,000)
Borrowed funds43 (22)21 
Subordinated debt(38)(30)(68)
Junior subordinated debentures297 (4)293 
Total interest-bearing liabilities(2,112)(838)(2,950)
Net change in net interest income$(2,564)(2,812)(5,376)
 
59
 Rate Volume 
Net
Change
Interest earning assets: 
  
  
Loans receivable$(2,256) 11,643
 9,387
Mortgage-backed securities639
 1,314
 1,953
Investment securities(1,029) 733
 (296)
FHLB stock(209) (705) (914)
Other interest-earning deposits373
 825
 1,198
Total interest-earning assets(2,482) 13,810
 11,328
      
Interest-bearing liabilities: 
  
  
Savings deposits(489) 343
 (146)
Interest-bearing checking deposits172
 146
 318
Money market deposit accounts(202) 868
 666
Time deposits(511) (847) (1,358)
Borrowed funds(4,232) (5,820) (10,052)
Junior subordinated debentures114
 —
 114
Total interest-bearing liabilities(5,148) (5,310) (10,458)
      
Net change in net interest income$2,666
 19,120
 21,786
Table of Contents

ITEMItem 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
As the holding company for a savings bank, one of our primary market risks is interest rate risk. Interest rate risk is the sensitivity of net interest income to variations in interest rates over a specified time period. The sensitivity results from differences in the time periods in which interest rate sensitive assets and liabilities mature or re-price. We attempt to control interest rate risk by matching, within acceptable limits, the re-pricing periods of assets and liabilities. We have attempted to limit our exposure to interest sensitivity by increasing core deposits, enticing customers to extend certificates of deposit maturities, borrowing funds with fixed-rates and longer maturities and by shortening the maturities of our assets by emphasizing the origination of more short-term fixed rate loans and adjustable rate loans. We also continuehave the ability to sell a portion of the long-term, fixed-rate mortgage loans that we originate. In addition, we purchase shorter term or adjustable-rate investment securities and mortgage-backed securities.


We have an Asset/Liability Committee consisting of members of management which meets monthly to review market interest rates, economic conditions, the pricing of interest-earning assets and interest-bearing liabilities and the balance sheet structure. On a quarterly basis, this Committee also reviews the interest rate risk position and cash flow projections.
 
The Board of Directors has a Risk Management Committee which meets quarterly and reviews interest rate risk and trends, our interest sensitivity position, the liquidity position and the market risk inherent in the investment portfolio.
 
In an effort to assess interest rate risk and market risk, we utilize a simulation model to determine the effect of immediate incremental increases and decreases in interest rates on net income and the market value of equity. Certain assumptions are made regarding loan prepayments and decay rates of savings and interest-bearing demand accounts. Because it is difficult to accurately


61

project the market reaction of depositors and borrowers, the effect of actual changes in interest rates on these assumptions may differ from simulated results. We have established the following guidelines for assessing interest rate risk:
 
Net interest income simulation. Given a non-parallelparallel shift of 100 basis points (“bps”), 200 bps and 300 bps in interest rates, the estimated net income may not decrease by more than 5%, 10% and 15%, respectively, within a one-year period.

Net income simulation. Given a non-parallelparallel shift of 100 basis points (“bps”),bps, 200 bps and 300 bps in interest rates, the estimated net income may not decrease by more than 10%, 20% and 30%, respectively, within a one-year period.
 
Market value of equity simulation. The market value of equity is the present value of assets and liabilities. Given a non-parallelparallel shift of 100 bps, 200 bps and 300 bps in interest rates, the market value of equity may not decrease by more than 15%, 30% and 35%, respectively, from the computed economic value at current interest rate levels.
 
The following table illustrates the simulated impact of a 100 bps, 200 bps or 300 bps upward or a 100 bps downward movement in interest rates on net income, return on average equity, earnings per share and market value of equity. This analysis was prepared assuming that interest-earning asset and interest-bearing liability levels at SeptemberJune 30, 20172022 remain constant. The impact of the rate movements was computed by simulating the effect of an immediate and sustained shift in interest rates over a twelve-month period from SeptemberJune 30, 20172022 levels.
 IncreaseDecrease
Parallel shift in interest rates over the next 12 months100 bps200 bps300 bps100 bps
Projected percentage increase/(decrease) in net interest income0.2 %0.1 %(0.1)%(8.0 %)
Projected percentage increase/(decrease) in net income0.7 %0.5 %0.2 %(18.0 %)
Projected increase/(decrease) in return on average equity0.7 %0.5 %0.2 %(17.3 %)
Projected increase/(decrease) in earnings per share$0.01 $— $— $(0.21)
Projected percentage increase/(decrease) in market value of equity(6.4 %)(12.9 %)(19.1 %)2.5 %
 
  Increase Decrease
Non-parallel shift in interest rates over the next 12 months 100 bps 200 bps 300 bps 100 bps
Projected percentage increase/ (decrease) in net interest income (0.2)% (0.2)% (0.1)% (4.6)%
Projected percentage increase/ (decrease) in net income 0.5 % 1.2 % 2.6 % (11.0)%
Projected increase/ (decrease) in return on average equity 0.6 % 1.1 % 2.5 % (10.5)%
Projected increase/ (decrease) in earnings per share $0.01
 $0.01
 $0.03
 $(0.12)
Projected percentage increase/ (decrease) in market value of equity (4.6)% (9.6)% (13.2)% (1.8)%
The figures included in the table above represent projections that were computed based upon certain assumptions including prepayment rates and decay rates. These assumptions are inherently uncertain and, as a result, cannot precisely predict the impact of changes in interest rates. Actual results may differ significantly due to timing, magnitude and frequency of interest rate changes and changes in market conditions, and actions that may be taken by management in response to interest rate changes.




60
62
Table of Contents

ITEMItem 4.CONTROLS AND PROCEDURES
 
Under the supervision of and with the participation of management, including ourthe Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of the design and operation of itsthe Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that, as of the Evaluation Date, these disclosure controls and procedures were effective.
 
There were no changes in the internal controls over financial reporting during the period covered by this report or in other factors that have materially affected, or are reasonably likely to materially affect the internal controlcontrols over financial reporting.

PART II.    OTHER INFORMATION
 
Item 1.        Legal ProceedingsLEGAL PROCEEDINGS
 
We are subject to a number of asserted and unasserted claims encountered in the normal course of business. We believe that any additional liability, other than that which has already been accrued, that may result from such potential litigation will not have a material adverse effect on the financial statements. However, we cannot presently determine whether or not any claims against us will have a material adverse effect on our results of operations in any future reporting period. See noteRefer to Note 11.
 
Item 1A.    Risk FactorsRISK FACTORS


Except as previously disclosed, there have been no material updates or additions to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 20162021 as filed with the Securities and Exchange Commission. Additional risks not presently known to us, or that we currently deem immaterial, may also adversely affect our business, financial condition or results of operations.




61
Table of Contents
Item 2.        Unregistered SalesUNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

a)Not applicable.
b)Not applicable.
c)    On December 13, 2012, the Board of Equity Securities and Use of Proceeds
a.)Not applicable.
b.)Not applicable.

c.)            The following table discloses information regardingDirectors approved a program that authorizes the repurchase of approximately 5,000,000 shares of common stock. This program does not have an expiration date. During the quarter ended June 30, 2022, there were no shares of common stock duringrepurchased and there are a maximum of 2,261,130 remaining shares that can be purchased under the quarter ending September 30, 2017:current repurchase program.


Item 3.        DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4.        MINE SAFETY DISCLOSURES
Not applicable.
Item 5.        OTHER INFORMATION
Not applicable.
 
62
Table of Contents
Item 6.        EXHIBITS
Month
Number of
shares
purchased
Average price
paid per
share
Total number of shares
purchased as part of a
publicly announced
repurchase plan (1)
Maximum number of
shares yet to be
purchased under the
plan (1)
July—
$—
—
4,834,089
August—
—
—
4,834,089
September—
—
—
4,834,089
—
$—


(1)Reflects the program for 5,000,000 shares announced December 13, 2012. This program does not have an expiration date.




63

Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits
Certification of the Chief Executive Officer pursuant to Rule 13a-15 or 15d-15 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of theand Chief Financial Officer pursuant to Rule 13a-15 or 15d-15 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INSThe instance document does not appear in the interactive data file because its XBRL Instance Documenttags are embedded within the inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema DocumentDocument.
101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentDocument.
101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentDocument.
101.LABXBRL Taxonomy Extension Label LinkbaseLinkbase.
101.PREXBRL Taxonomy Extension Presentation Linkbase DocumentDocument.
104The cover page of this Quarterly Report on Form 10-Q, formatted in inline XBRL.
63



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Signature
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned thereunto duly authorized.
 
NORTHWEST BANCSHARES, INC.
(Registrant)
Date:November 9, 2017August 5, 2022By:/s/ William J. WagnerW. Harvey, Jr.
William J. WagnerW. Harvey, Jr.
Chief Financial Officer and Interim President and Chief Executive Officer
(Duly Authorized Officer)
Date:November 9, 2017August 5, 2022By:/s/ GeraldJeffrey J. RitzertMaddigan
GeraldJeffrey J. RitzertMaddigan
ControllerExecutive Vice President, Finance, Accounting and Corporate Treasurer
(Principal Accounting Officer)




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