0001471265us-gaap:~~ForwardContractsMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-31~~NondesignatedMemberus-gaap:CreditRiskContractMember2022-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, ~~2021~~2022

☐ 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)

Maryland

27-0950358

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

~~100 Liberty Street~~3 Easton Oval

~~Warren,~~Suite 500

Columbus

~~Pennsylvania~~Ohio

~~16365~~43219

(Address of Principal Executive Offices)

(Zip Code)

(814) 726-2140

(Registrant’s telephone number, including area code)

Not applicable

~~(Former~~(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 class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, 0.01 Par Value

NWBI

NASDAQ 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Yes ☒ No ☐

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.

☒ Large accelerated filer ☐ Accelerated filer

☐ Non-accelerated filer ☐ Smaller reporting company

☐ 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. ☐

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), ~~126,562,556~~126,988,367 shares outstanding as of October 31, ~~2021.~~2022.

~~Tabl~~e Table of Contents

NORTHWEST BANCSHARES, INC.

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements

Consolidated Statements of Financial Condition at September 30, 2022 ~~30, 2021~~ and December 31, ~~2020~~2021 (Unaudited)

Consolidated Statements of Income for the quarter and ~~and~~ nine months ended September 30 ~~30,~~, 2022 and 2021 ~~and 2020~~ (Unaudited)

Consolidated Statements of Comprehensive Income for the quarter and nine ~~and nine~~ months ended ~~ended~~ September 30, ~~2021~~2022 and ~~2020~~2021 (Unaudited)

Consolidated Statements of Changes in Shareholders’ Equity for the quarter and nine ~~and nine~~ months ended Se ~~ptember~~September 30, ~~2021~~2022 and ~~2020~~2021 (Unaudited)

Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 (Unaudited)

Notes to Consolidated Financial Statements (Unaudited)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

4543

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

5958

Item 4.

Controls and Procedures

Unregistered Sales of Equity Securities and Use of Proceeds

6160

Item 3.

Defaults Upon Senior Securities

6160

Item 4.

Mine Safety Disclosures

6160

Item 5.

Other ~~information~~Information

~~Tabl~~e Table of Contents

Item 1. FINANCIAL STATEMENTS

NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)

(in thousands, except share data)


		September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Assets	Assets				Assets
Cash and cash equivalents	Cash and cash equivalents	$	1,090,485	736,277	Cash and cash equivalents	$	118,549	1,279,259

Marketable securities available-for-sale (amortized cost of $1,587,105 and $1,375,685, respectively)		1,583,715		1,398,941
Marketable securities held-to-maturity (fair value of $609,777 and $179,666, respectively)		618,395		178,887
Marketable securities available-for-sale (amortized cost of $1,466,883 and $1,565,002, respectively)					Marketable securities available-for-sale (amortized cost of $1,466,883 and $1,565,002, respectively)	1,251,791		1,548,592
Marketable securities held-to-maturity (fair value of $771,238 and $751,513, respectively)					Marketable securities held-to-maturity (fair value of $771,238 and $751,513, respectively)	899,411		768,154
Total cash and cash equivalents and marketable securities	Total cash and cash equivalents and marketable securities	3,292,595		2,314,105	Total cash and cash equivalents and marketable securities	2,269,751		3,596,005

Loans held-for-sale	Loans held-for-sale	27,411		58,786	Loans held-for-sale	15,834		25,056

Loans held for investment	Loans held for investment	10,171,557		10,522,063	Loans held for investment	10,725,691		9,991,336

Allowance for credit losses	Allowance for credit losses	(109,767)		(134,427)	Allowance for credit losses	(109,819)		(102,241)
Loans receivable, net	Loans receivable, net	10,089,201		10,446,422	Loans receivable, net	10,631,706		9,914,151

FHLB stock, at cost	FHLB stock, at cost	14,567		21,748	FHLB stock, at cost	19,281		14,184
Accrued interest receivable	Accrued interest receivable	26,995		35,554	Accrued interest receivable	29,536		25,599
Real estate owned, net	Real estate owned, net	809		2,232	Real estate owned, net	450		873
Premises and equipment, net	Premises and equipment, net	155,740		161,538	Premises and equipment, net	146,173		156,524
Bank-owned life insurance	Bank-owned life insurance	254,871		253,951	Bank-owned life insurance	255,015		256,213
Goodwill	Goodwill	380,997		382,279	Goodwill	380,997		380,997
Other intangible assets, net	Other intangible assets, net	14,041		19,936	Other intangible assets, net	9,491		12,836
Other assets	Other assets	159,419		168,503	Other assets	210,744		144,126
Total assets	Total assets	$	14,389,235	13,806,268	Total assets	$	13,953,144	14,501,508

Liabilities and shareholders’ equity	Liabilities and shareholders’ equity				Liabilities and shareholders’ equity
Liabilities:	Liabilities:				Liabilities:
Noninterest-bearing demand deposits	Noninterest-bearing demand deposits	$	3,052,115	2,716,224	Noninterest-bearing demand deposits	$	3,094,120	3,099,526
Interest-bearing demand deposits	Interest-bearing demand deposits	2,926,351		2,755,950	Interest-bearing demand deposits	2,812,730		2,940,442
Money market deposit accounts	Money market deposit accounts	2,584,424		2,437,539	Money market deposit accounts	2,577,013		2,629,882
Savings deposits	Savings deposits	2,271,496		2,047,424	Savings deposits	2,327,419		2,303,760
Time deposits	Time deposits	1,387,827		1,642,096	Time deposits	1,067,110		1,327,555
Total deposits	Total deposits	12,222,213		11,599,233	Total deposits	11,878,392		12,301,165

Borrowed funds	Borrowed funds	126,496		159,715	Borrowed funds	150,036		139,093
Subordinated debt	Subordinated debt	123,486		123,329	Subordinated debt	113,753		123,575
Junior subordinated debentures	Junior subordinated debentures	128,989		128,794	Junior subordinated debentures	129,249		129,054
Advances by borrowers for taxes and insurance	Advances by borrowers for taxes and insurance	26,951		45,230	Advances by borrowers for taxes and insurance	29,647		44,582
Accrued interest payable	Accrued interest payable	589		2,054	Accrued interest payable	831		1,804
Other liabilities	Other liabilities	198,743		209,210	Other liabilities	191,450		178,664
Total liabilities	Total liabilities	12,827,467		12,267,565	Total liabilities	12,493,358		12,917,937

Shareholders’ equity:	Shareholders’ equity:				Shareholders’ equity:
Preferred stock, $0.01 par value: 50,000,000 authorized, no shares issued	Preferred stock, $0.01 par value: 50,000,000 authorized, no shares issued	—		—	Preferred stock, $0.01 par value: 50,000,000 authorized, no shares issued	—		—
Common stock, $0.01 par value: 500,000,000 shares authorized, 126,521,344 and 127,019,452 shares issued and outstanding, respectively		1,265		1,270
Common stock, $0.01 par value: 500,000,000 shares authorized, 126,921,989 and 126,612,183 shares issued and outstanding, respectively					Common stock, $0.01 par value: 500,000,000 shares authorized, 126,921,989 and 126,612,183 shares issued and outstanding, respectively	1,269		1,266
Additional paid-in capital	Additional paid-in capital	1,008,099		1,015,502	Additional paid-in capital	1,017,189		1,010,405
Retained earnings	Retained earnings	604,787		555,480	Retained earnings	632,476		609,529

Accumulated other comprehensive loss	Accumulated other comprehensive loss	(52,383)		(33,549)	Accumulated other comprehensive loss	(191,148)		(37,629)
Total shareholders’ equity	Total shareholders’ equity	1,561,768		1,538,703	Total shareholders’ equity	1,459,786		1,583,571
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	14,389,235	13,806,268	Total liabilities and shareholders’ equity	$	13,953,144	14,501,508

See accompanying notes to unaudited Consolidated Financial Statements.

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NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except share data)


		Quarter ended September 30,			Nine months ended September 30,			Quarter ended September 30,			Nine months ended September 30,
		2021		2020	2021	2020		2022		2021	2022	2021
Interest income:	Interest income:						Interest income:
Loans receivable	Loans receivable	$	97,475	107,241	295,048	305,226	Loans receivable	$	106,943	97,475	290,691	295,048
Mortgage-backed securities	Mortgage-backed securities	5,840		4,652	15,720	12,865	Mortgage-backed securities	8,683		5,840	22,201	15,720
Taxable investment securities	Taxable investment securities	649		427	1,976	1,514	Taxable investment securities	838		649	2,230	1,976
Tax-free investment securities	Tax-free investment securities	628		655	1,797	1,404	Tax-free investment securities	709		628	2,066	1,797
FHLB stock dividends	FHLB stock dividends	71		218	325	789	FHLB stock dividends	148		71	311	325
Interest-earning deposits	Interest-earning deposits	352		221	727	541	Interest-earning deposits	1,295		352	3,446	727
Total interest income	Total interest income	105,015		113,414	315,593	322,339	Total interest income	118,616		105,015	320,945	315,593
Interest expense:	Interest expense:						Interest expense:
Deposits	Deposits	4,540		8,443	14,827	29,182	Deposits	3,157		4,540	10,249	14,827
Borrowed funds	Borrowed funds	2,056		1,437	6,160	4,317	Borrowed funds	2,710		2,056	7,059	6,160
Total interest expense	Total interest expense	6,596		9,880	20,987	33,499	Total interest expense	5,867		6,596	17,308	20,987
Net interest income	Net interest income	98,419		103,534	294,606	288,840	Net interest income	112,749		98,419	303,637	294,606
Provision for credit losses	Provision for credit losses	(4,354)		6,818	(9,974)	86,205	Provision for credit losses	7,689		(4,354)	8,837	(9,974)
Net interest income after provision for credit losses	Net interest income after provision for credit losses	102,773		96,716	304,580	202,635	Net interest income after provision for credit losses	105,060		102,773	294,800	304,580
Noninterest income:	Noninterest income:						Noninterest income:
Gain/(loss) on sale of investments		(46)		(12)	(172)	161
Gain on sale of loans		—		—	—	1,302
Loss on sale of investments							Loss on sale of investments	(2)		(46)	(7)	(172)

Service charges and fees	Service charges and fees	13,199		14,354	38,337	42,539	Service charges and fees	14,323		13,199	41,063	38,337

Trust and other financial services income	Trust and other financial services income	7,182		5,376	21,101	15,200	Trust and other financial services income	6,650		7,182	21,123	21,101
Insurance commission income	Insurance commission income	44		2,331	3,633	7,098	Insurance commission income	—		44	—	3,633
Gain/(loss) on real estate owned, net		247		(32)	371	(220)
Gain on real estate owned, net							Gain on real estate owned, net	290		247	552	371
Income from bank-owned life insurance	Income from bank-owned life insurance	1,332		1,576	4,707	3,860	Income from bank-owned life insurance	1,475		1,332	5,466	4,707
Mortgage banking income	Mortgage banking income	3,941		11,055	13,772	24,271	Mortgage banking income	766		3,941	4,388	13,772
Gain on sale of insurance business	Gain on sale of insurance business	—		—	25,327	—	Gain on sale of insurance business	—		—	—	25,327
Other operating income	Other operating income	3,287		2,022	8,771	5,931	Other operating income	3,301		3,287	10,406	8,771
Total noninterest income	Total noninterest income	29,186		36,670	115,847	100,142	Total noninterest income	26,803		29,186	82,991	115,847
Noninterest expense:	Noninterest expense:						Noninterest expense:
Compensation and employee benefits	Compensation and employee benefits	49,063		47,371	145,196	130,166	Compensation and employee benefits	46,711		49,063	141,701	145,196
Premises and occupancy costs	Premises and occupancy costs	7,745		8,342	23,969	23,008	Premises and occupancy costs	7,171		7,745	22,248	23,969
Office operations	Office operations	4,143		4,626	10,625	11,719	Office operations	3,229		4,143	9,774	10,625
Collections expense	Collections expense	411		1,264	1,330	2,382	Collections expense	322		411	1,245	1,330
Processing expenses	Processing expenses	13,517		15,042	42,124	37,864	Processing expenses	13,416		13,517	38,911	42,124
Marketing expenses	Marketing expenses	2,102		2,147	6,183	5,701	Marketing expenses	2,147		2,102	6,322	6,183
Federal deposit insurance premiums	Federal deposit insurance premiums	1,184		1,498	3,844	3,116	Federal deposit insurance premiums	1,200		1,184	3,459	3,844
Professional services	Professional services	4,295		3,246	13,108	8,883	Professional services	3,363		4,295	9,269	13,108
Amortization of intangible assets	Amortization of intangible assets	1,321		1,781	4,348	5,192	Amortization of intangible assets	1,047		1,321	3,345	4,348
Real estate owned expense	Real estate owned expense	94		111	254	295	Real estate owned expense	61		94	170	254
Merger, asset disposition and restructuring expense	Merger, asset disposition and restructuring expense	—		1,414	641	13,551	Merger, asset disposition and restructuring expense	—		—	1,374	641

Other expenses	Other expenses	2,227		27	7,003	12,766	Other expenses	3,906		2,227	11,506	7,003
Total noninterest expense	Total noninterest expense	86,102		86,869	258,625	254,643	Total noninterest expense	82,573		86,102	249,324	258,625
Income before income taxes	Income before income taxes	45,857		46,517	161,802	48,134	Income before income taxes	49,290		45,857	128,467	161,802
Federal and state income taxes expense	Federal and state income taxes expense	10,794		8,467	37,535	8,345	Federal and state income taxes expense	11,986		10,794	29,450	37,535
Net income	Net income	$	35,063	38,050	124,267	39,789	Net income	$	37,304	35,063	99,017	124,267
Basic earnings per share	Basic earnings per share	$	0.28	0.30	0.98	0.34	Basic earnings per share	$	0.29	0.28	0.78	0.98
Diluted earnings per share	Diluted earnings per share	$	0.27	0.30	0.97	0.34	Diluted earnings per share	$	0.29	0.27	0.78	0.97

See accompanying notes to unaudited Consolidated Financial Statements.

~~Tabl~~e 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,
2021 2020 2021 2020
Net income $ 35,063 38,050 124,267 39,789
Other comprehensive income net of tax:
Net unrealized holding gains/(losses) on marketable securities:
Unrealized holding gains/(losses), net of tax of $2,076, ($107), $6,812, and ($5,286), respectively (6,455) 676 (19,554) 13,623
Reclassification adjustment for (gains)/losses included in net income, net of tax of $24, $1, $89, and $0, respectively (69) (1) (280) 1
Net unrealized holding gains/(losses) on marketable securities (6,524) 675 (19,834) 13,624
Change in fair value of interest rate swaps
Unrealized holding losses on interest rate swaps, net of tax of $0, $0, $0, and $209, respectively — — — (946)
Reclassification adjustment for losses included in net income, net of tax of $0, ($375), $0, and ($375), respectively — 946 — 946
Net change in fair value of interest rate swaps — 946 — —
Defined benefit plan:
Actuarial reclassification adjustments for prior period service costs and actuarial losses included in net income, net of tax of ($128), ($99), ($386), and ($297) respectively 333 250 1,000 748
Other comprehensive income/(loss) (6,191) 1,871 (18,834) 14,372
Total comprehensive income $ 28,872 39,921 105,433 54,161


	Quarter ended September 30,			Nine months ended September 30,
	2022		2021	2022	2021
Net income	$	37,304	35,063	99,017	124,267
Other comprehensive income net of tax:
Net unrealized holding losses on marketable securities:
Unrealized holding losses, net of tax of $14,705, $2,076, $45,555, and $6,812, respectively	(48,387)		(6,455)	(153,124)	(19,554)
Reclassification adjustment for gains included in net income, net of tax of $0, $24, $0, and $89, respectively	—		(69)	(2)	(280)
Net unrealized holding losses on marketable securities	(48,387)		(6,524)	(153,126)	(19,834)






Defined benefit plan:
Actuarial reclassification adjustments for prior period service costs and actuarial (gains)/losses included in net income, net of tax of $50, ($128), $151, and ($386), respectively	(131)		333	(393)	1,000



Other comprehensive loss	(48,518)		(6,191)	(153,519)	(18,834)

Total comprehensive income/(loss)	$	(11,214)	28,872	(54,502)	105,433

See accompanying notes to unaudited Consolidated Financial Statements.

~~Tabl~~e Table of Contents

NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

(in thousands, expect share data)


					Additional paid-in capital	Retained earnings	Accumulated other comprehensive loss	Total shareholders’ equity					Additional paid-in capital	Retained earnings	Accumulated other comprehensive loss		Total shareholders’ equity
		Common stock								Common stock
Quarter ended September 30, 2021		Shares	Amount
Beginning balance at June 30, 2021		127,907,885	$	1,279	1,025,174	595,100	(46,192)	1,575,361
Quarter ended September 30, 2022									Quarter ended September 30, 2022	Shares	Amount			Additional paid-in capital	Retained earnings	Accumulated other comprehensive loss		Total shareholders’ equity
Beginning balance at June 30, 2022									Beginning balance at June 30, 2022	126,881,766	$	1,269

Comprehensive income:	Comprehensive income:								Comprehensive income:
Net income	Net income	—	—		—	35,063	—	35,063	Net income	—	—		—	37,304	—		37,304

Other comprehensive loss, net of tax of $1,972		—	��		—	—	(6,191)	(6,191)
Other comprehensive loss, net of tax of $14,755									Other comprehensive loss, net of tax of $14,755	—	—		—	—	(48,518)		(48,518)

Total comprehensive income/(loss)	Total comprehensive income/(loss)	—	—		—	35,063	(6,191)	28,872	Total comprehensive income/(loss)	—	—		—	37,304	(48,518)		(11,214)

Exercise of stock options	Exercise of stock options	57,142	—		688	—	—	688	Exercise of stock options	73,472	—		897	—	—		897

Stock-based compensation expense	Stock-based compensation expense	1,139	—		1,046	—	—	1,046	Stock-based compensation expense	—	—		944	—	—		944

Share repurchases		(1,425,120)	(14)		(18,809)	—	—	(18,823)

Stock-based compensation forfeited	Stock-based compensation forfeited	(19,702)	—		—	—	—	—	Stock-based compensation forfeited	(33,249)	—		(1)	—	—		(1)

Dividends paid ($0.20 per share)	Dividends paid ($0.20 per share)	—	—		—	(25,376)	—	(25,376)	Dividends paid ($0.20 per share)	—	—		—	(25,379)	—		(25,379)

Ending balance at September 30, 2021		126,521,344	$	1,265	1,008,099	604,787	(52,383)	1,561,768
Ending balance at September 30, 2022									Ending balance at September 30, 2022	126,921,989	$	1,269	1,017,189	632,476	(191,148)		1,459,786

Additional paid-in capital Retained earnings Accumulated
other comprehensive income/(loss) Total shareholders’ equity
Common stock
Quarter ended September 30, 2020 Shares Amount
Beginning balance at June 30, 2020 127,838,400 $ 1,278 1,023,083 530,928 (24,440) 1,530,849
Comprehensive income:
Net income — — — 38,050 — 38,050
Other comprehensive income, net of tax of ($581) — — — — 1,871 1,871
Total comprehensive income — — — 38,050 1,871 39,921
Stock-based compensation expense — — 743 — — 743
Stock-based compensation forfeited (37,103) — 1 — — 1
Dividends paid ($0.19 per share) — — — (24,283) — (24,283)
Ending balance at September 30, 2020 127,801,297 $ 1,278 1,023,827 544,695 (22,569) 1,547,231


				Additional paid-in capital	Retained earnings	Accumulated other comprehensive loss	Total shareholders’ equity
	Common stock
Quarter ended September 30, 2021	Shares	Amount
Beginning balance at June 30, 2021	127,907,885	$	1,279	1,025,174	595,100	(46,192)	1,575,361

Comprehensive income:
Net income	—	—		—	35,063	—	35,063

Other comprehensive loss, net of tax of $1,972	—	—		—	—	(6,191)	(6,191)

Total comprehensive income/(loss)	—	—		—	35,063	(6,191)	28,872





Exercise of stock options	57,142	—		688	—	—	688

Stock-based compensation expense	1,139	—		1,046	—	—	1,046

Share repurchases	(1,425,120)	(14)		(18,809)	—	—	(18,823)

Stock-based compensation forfeited	(19,702)	—		—	—	—	—



Dividends paid ($0.20 per share)	—	—		—	(25,376)	—	(25,376)

Ending balance at September 30, 2021	126,521,344	$	1,265	1,008,099	604,787	(52,383)	1,561,768

See accompanying notes to unaudited Consolidated Financial Statements.

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NORTHWEST BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

(in thousands, expect share data)


					Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss			Total shareholders’ equity									Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss			Total shareholders’ equity
		Common stock									Common stock
Nine months ended September 30, 2021		Shares	Amount
Beginning balance at December 31, 2020		127,019,452	$	1,270		1,015,502		555,480		(33,549)					1,538,703
Nine months ended September 30, 2022													Nine months ended September 30, 2022	Shares				Amount				Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss			Total shareholders’ equity
Beginning balance at December 31, 2021													Beginning balance at December 31, 2021	126,612,183				$	1,266

Comprehensive income:	Comprehensive income:																Comprehensive income:
Net income	Net income	—	—		—		124,267		—				124,267		Net income	—				—			—		99,017		—			99,017

Other comprehensive loss, net of tax of $6,515		—	—		—		—		(18,834)				(18,834)
Other comprehensive loss, net of tax of $45,706													Other comprehensive loss, net of tax of $45,706	—				—			—		—		(153,519)			(153,519)

Total comprehensive income/(loss)	Total comprehensive income/(loss)	—	—		—		124,267		(18,834)			105,433	Total comprehensive income/(loss)	—				—			—		99,017		(153,519)			(54,502)

Exercise of stock options	Exercise of stock options	1,043,487	10		12,711		—		—			12,721	Exercise of stock options	314,880				2			3,719		—		—			3,721

Stock-based compensation expense	Stock-based compensation expense	323,824	3		3,722		—		—			3,725	Stock-based compensation expense	75,377				2			3,065		—		—			3,067

Share repurchases		(1,813,132)	(18)		(23,836)		—		—			(23,854)

Stock-based compensation forfeited	Stock-based compensation forfeited	(52,287)	—		—		—		—			—	Stock-based compensation forfeited	(80,451)				(1)			—		—		—			(1)

Dividends paid ($0.59 per share)		—	—		—		(74,960)		—			(74,960)
Dividends paid ($0.60 per share)													Dividends paid ($0.60 per share)	—				—			—		(76,070)		—			(76,070)

Ending balance at September 30, 2021		126,521,344	$	1,265	1,008,099		604,787		(52,383)			1,561,768
Ending balance at September 30, 2022													Ending balance at September 30, 2022	126,921,989				$	1,269		1,017,189		632,476		(191,148)			1,459,786

Additional paid-in capital Retained earnings Accumulated
other comprehensive income/(loss) Total shareholders’ equity
Common stock
Nine months ended September 30, 2020 Shares Amount
Beginning balance at December 31, 2019 106,859,088 $ 1,069 805,750 583,407 (36,941) 1,353,285
Comprehensive income:
Net income — — — 39,789 — 39,789
Other comprehensive income, net of tax of ($5,749) — — — — 14,372 14,372
Total comprehensive income — — — 39,789 14,372 54,161
Acquisition of MutualBank 20,658,957 206 213,200 — — 213,406
Reclassification due to adoption of ASU No. 2016-13 — — — (9,649) — (9,649)
Exercise of stock options 87,305 1 1,005 — — 1,006
Stock-based compensation expense 282,691 3 3,766 — — 3,769
Stock-based compensation forfeited (86,744) (1) 1 — — —
Other — — 105 — — 105
Dividends paid ($0.57 per share) — — — (68,852) — (68,852)
Ending balance at September 30, 2020 127,801,297 $ 1,278 1,023,827 544,695 (22,569) 1,547,231


				Additional paid-in capital	Retained earnings	Accumulated other comprehensive loss	Total shareholders’ equity
	Common stock
Nine months ended September 30, 2021	Shares	Amount
Beginning balance at December 31, 2020	127,019,452	$	1,270	1,015,502	555,480	(33,549)	1,538,703

Comprehensive income:
Net income	—	—		—	124,267	—	124,267

Other comprehensive loss, net of tax of $6,515	—	—		—	—	(18,834)	(18,834)

Total comprehensive income/(loss)	—	—		—	124,267	(18,834)	105,433





Exercise of stock options	1,043,487	10		12,711	—	—	12,721

Stock-based compensation expense	323,824	3		3,722	—	—	3,725

Share repurchases	(1,813,132)	(18)		(23,836)	—	—	(23,854)

Stock-based compensation forfeited	(52,287)	—		—	—	—	—

Dividends paid ($0.59 per share)	—	—		—	(74,960)	—	(74,960)

Ending balance at September 30, 2021	126,521,344	$	1,265	1,008,099	604,787	(52,383)	1,561,768

See accompanying notes to unaudited Consolidated Financial Statements.

~~Tabl~~e Table of Contents

NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)


		Nine months ended September 30,				Nine months ended September 30,
		2021		2020		2022		2021
Operating activities:	Operating activities:				Operating activities:
Net income	Net income	$	124,267	39,789	Net income	$	99,017	124,267
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:				Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	Provision for credit losses	(9,974)		86,205	Provision for credit losses	8,837		(9,974)
Net gain on sale of assets	Net gain on sale of assets	(970)		(2,322)	Net gain on sale of assets	(858)		(970)
Mortgage banking activity	Mortgage banking activity	(17,321)		(16,676)	Mortgage banking activity	(3,308)		(17,321)
Gain on sale of insurance business	Gain on sale of insurance business	(25,327)		—	Gain on sale of insurance business	—		(25,327)

Net depreciation, amortization and accretion	Net depreciation, amortization and accretion	(271)		6,625	Net depreciation, amortization and accretion	3,874		(271)
(Increase)/decrease in other assets	(Increase)/decrease in other assets	19,248		(28,825)	(Increase)/decrease in other assets	(31,790)		19,248
Increase/(decrease) in other liabilities	Increase/(decrease) in other liabilities	(10,545)		79,299	Increase/(decrease) in other liabilities	11,270		(10,545)
Net amortization on marketable securities	Net amortization on marketable securities	5,830		2,240	Net amortization on marketable securities	3,849		5,830
Noncash compensation expense related to stock benefit plans	Noncash compensation expense related to stock benefit plans	3,725		3,769	Noncash compensation expense related to stock benefit plans	3,066		3,725
Noncash write-down of real estate owned	Noncash write-down of real estate owned	173		272	Noncash write-down of real estate owned	44		173

Deferred income tax (benefit)/expense		1,889		(15,812)
Deferred income tax expense					Deferred income tax expense	1,928		1,889

Origination of loans held-for-sale	Origination of loans held-for-sale	(605,947)		(472,121)	Origination of loans held-for-sale	(317,117)		(605,947)
Proceeds from sale of loans held-for-sale	Proceeds from sale of loans held-for-sale	652,770		471,367	Proceeds from sale of loans held-for-sale	331,268		652,770

Net cash provided by operating activities	Net cash provided by operating activities	137,547		153,810	Net cash provided by operating activities	110,080		137,547

Investing activities:	Investing activities:				Investing activities:
Purchase of marketable securities held-to-maturity	Purchase of marketable securities held-to-maturity	(479,165)		—	Purchase of marketable securities held-to-maturity	(212,892)		(479,165)
Purchase of marketable securities available-for-sale	Purchase of marketable securities available-for-sale	(619,987)		(730,096)	Purchase of marketable securities available-for-sale	(102,178)		(619,987)
Proceeds from maturities and principal reductions of marketable securities held-to-maturity	Proceeds from maturities and principal reductions of marketable securities held-to-maturity	38,974		2,694	Proceeds from maturities and principal reductions of marketable securities held-to-maturity	80,765		38,974
Proceeds from maturities and principal reductions of marketable securities available-for-sale	Proceeds from maturities and principal reductions of marketable securities available-for-sale	341,121		284,532	Proceeds from maturities and principal reductions of marketable securities available-for-sale	197,310		341,121
Proceeds from sale of marketable securities available-for-sale	Proceeds from sale of marketable securities available-for-sale	62,127		8	Proceeds from sale of marketable securities available-for-sale	—		62,127
Proceeds from bank-owned life insurance	Proceeds from bank-owned life insurance	3,984		596	Proceeds from bank-owned life insurance	4,753		3,984
Loan originations	Loan originations	(3,063,998)		(3,640,293)	Loan originations	(3,464,471)		(3,063,998)
Loan purchases					Loan purchases	(371,121)		—
Proceeds from loan maturities and principal reductions	Proceeds from loan maturities and principal reductions	3,413,907		3,132,329	Proceeds from loan maturities and principal reductions	3,110,264		3,413,907
Proceeds from sale of loans held for investment		—		50,791
Net proceeds of FHLB stock		7,181		4,684

Net (redemptions)/proceeds of FHLB stock					Net (redemptions)/proceeds of FHLB stock	(5,097)		7,181
Proceeds from sale of real estate owned	Proceeds from sale of real estate owned	2,440		1,062	Proceeds from sale of real estate owned	1,469		2,440
Proceeds from sale of real estate owned for investment, net		229		455
Purchase of premises and equipment		(3,728)		(10,808)
Proceeds from sale of real estate owned for investment					Proceeds from sale of real estate owned for investment	229		229
Purchases of premises and equipment, net					Purchases of premises and equipment, net	(613)		(3,728)
Proceeds from the sale of insurance business	Proceeds from the sale of insurance business	28,238		—	Proceeds from the sale of insurance business	—		28,238
Acquisitions, net of cash received		—		261,712

Net cash used in investing activities	Net cash used in investing activities	(268,677)		(642,334)	Net cash used in investing activities	(761,582)		(268,677)

~~Tabl~~e Table of Contents

NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued)

(in thousands)


		Nine months ended September 30,				Nine months ended September 30,
		2021		2020		2022		2021
Financing activities:	Financing activities:				Financing activities:
Net increase in deposits		$	622,980	1,247,573
Proceeds from long-term borrowings		—		123,247
Net (decrease)/increase in deposits					Net (decrease)/increase in deposits	$	(422,773)	622,980

Repayments of long-term borrowings	Repayments of long-term borrowings	(22,105)		(112,253)	Repayments of long-term borrowings	(10,094)		(22,105)
Net decrease in short-term borrowings		(11,165)		(89,504)
Net increase/(decrease) in short-term borrowings					Net increase/(decrease) in short-term borrowings	10,943		(11,165)
Increase in advances by borrowers for taxes and insurance	Increase in advances by borrowers for taxes and insurance	(18,279)		(16,790)	Increase in advances by borrowers for taxes and insurance	(14,935)		(18,279)
Cash dividends paid on common stock	Cash dividends paid on common stock	(74,960)		(68,852)	Cash dividends paid on common stock	(76,070)		(74,960)
Purchase of common stock for retirement	Purchase of common stock for retirement	(23,854)		—	Purchase of common stock for retirement	—		(23,854)
Proceeds from stock options exercised	Proceeds from stock options exercised	12,721		1,006	Proceeds from stock options exercised	3,721		12,721

Net cash provided by financing activities		485,338		1,084,427
Net cash (used in)/provided by financing activities					Net cash (used in)/provided by financing activities	(509,208)		485,338

Net increase in cash and cash equivalents		$	354,208	595,903
Net (decrease)/increase in cash and cash equivalents					Net (decrease)/increase in cash and cash equivalents	$	(1,160,710)	354,208

Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	$	736,277	60,846	Cash and cash equivalents at beginning of period	$	1,279,259	736,277
Net increase in cash and cash equivalents		354,208		595,903
Net (decrease)/increase in cash and cash equivalents					Net (decrease)/increase in cash and cash equivalents	(1,160,710)		354,208
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	1,090,485	656,749	Cash and cash equivalents at end of period	$	118,549	1,090,485

Cash paid during the period for:	Cash paid during the period for:				Cash paid during the period for:
Interest on deposits and borrowings (including interest credited to deposit accounts of $14,631 and $27,668, respectively)		$	22,452	33,639
Interest on deposits and borrowings (including interest credited to deposit accounts of $9,812 and $14,631, respectively)					Interest on deposits and borrowings (including interest credited to deposit accounts of $9,812 and $14,631, respectively)	$	18,281	22,452
Income taxes	Income taxes	28,961		21,800	Income taxes	21,851		28,961

Business acquisitions:
Fair value of assets acquired		$	—	2,090,599
Northwest Bancshares, Inc. common stock issued		—		(213,406)
Net cash paid		—		—
Liabilities assumed		$	—	1,877,193

Non-cash activities:	Non-cash activities:				Non-cash activities:
Loan foreclosures and repossessions	Loan foreclosures and repossessions	$	3,848	4,216	Loan foreclosures and repossessions	$	3,423	3,848
Sale of real estate owned financed by the Company	Sale of real estate owned financed by the Company	54		—	Sale of real estate owned financed by the Company	175		54

See accompanying notes to unaudited Consolidated Financial Statements.

~~Tabl~~e Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(1) Basis of Presentation and Informational Disclosures

Northwest Bancshares, Inc. (the “Company” or “NWBI”), a Maryland corporation headquartered in ~~Warren, Pennsylvania,~~Columbus, Ohio, is a bank holding company regulated by the Board of Governors of the Federal Reserve System ~~("FRB"~~(“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 Federal Deposit Insurance Corporation ~~("FDIC"~~(“FDIC”) and the Pennsylvania Department of Banking. Northwest operates ~~170~~150 community-banking offices throughout Pennsylvania, Western New York, Eastern Ohio, and Indiana.

The accompanying unaudited Consolidated Financial Statements include the accounts of the Company and its subsidiary, Northwest, and Northwest’s subsidiaries Northwest Capital Group, Inc., ~~Allegheny Services, Inc.,~~ Great Northwest Corporation, ~~The Bert Company (doing business as Northwest Insurance Services, which was sold April 30, 2021)~~ and MutualFirst ~~Investment~~Interest Company, Inc. The unaudited Consolidated 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 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, ~~2020~~2021 updated, as required, for any new pronouncements or changes.

Certain items previously reported have been reclassified to conform to the current ~~year's~~year’s reporting format.

The results of operations for the quarter ~~and nine months~~ ended September 30, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021,~~2022, or any other period.

Allowance for Credit Losses and Provision for Credit Losses Update

During the nine months ended September 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 prepayments 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.

Stock-Based Compensation

On May ~~25, 2021,~~18, 2022, the Company awarded employees ~~621,972~~150,027 restricted stock ~~options and directors 72,000 stock options~~units (“RSUs”) with ~~an exercise price of $13.68 and~~a weighted average discounted grant date fair value of ~~$0.64 per stock option, and~~$11.00. The RSUs vest over a three-year period with the first vesting occurring one year from the grant date. The Company awarded ~~employees 293,755~~directors 41,206 restricted ~~common shares and directors 27,000 restricted common shares~~stock awards (“RSAs”) with a grant date fair value of ~~$13.68. Awarded 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 ~~five-year~~three-year period, with the ~~first~~actual number of shares issuable ranging between 0% and 150% of the number of PSUs granted. The PSUs have a three-year cliff vesting, ~~occurring on~~from the date of grant, ~~date.~~and any PSUs earned will be issued after the vesting period. Stock-based compensation expense of $944,000 and $1.0 million ~~and $743,000~~ for the quarters ended September 30, 2022 and 2021, respectively, and ~~2020,~~$3.1 million and $3.7 million for the nine months ended September 30, 2022 and 2021, respectively, was recognized in compensation expense relating to our stock benefit plans. At September 30, ~~2021,~~2022, there was compensation expense of ~~$1.9~~$1.0 million to be recognized for awarded but unvested stock options, ~~and $10.7~~$6.0 million for unvested restricted common ~~shares.~~shares, $1.2 million to be recognized for awarded but unvested RSUs, $300,000 to be recognized for awarded but unvested RSAs, and $1.2 million to be recognized for awarded but unvested PSUs.

Table of Contents

Income Taxes-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, 2021, we~~We had ~~$336,000 of~~a $241,000 liability for unrecognized tax ~~benefits.~~benefits as of both September 30, 2022 and December 31, 2021.

We recognize interest accrued related to: (1) unrecognized tax benefits in other expenses and (2) refund claims in other operating income. 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, 2021, 2020, 2019 ~~2018~~ and ~~2017.~~

~~Recently Adopted Accounting Standards~~

~~In August 2018, the Financial Accounting Standards Board ("FASB") issued the accounting standard update ("ASU") 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) - Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans.”~~ This guidance removes and adds disclosure requirements for defined benefit pension or other post-retirement plans. On January 1, 2021, the Company adopted ASU 2018-14 on a retrospective basis for disclosures impacted. The adoption of this standard did not have a material effect on our results of operations or financial position. Refer to Note 8, "Pension and Other Post-Retirement Benefits".

~~Tabl~~e of ~~Contents~~

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~"Income Taxes - Simplifying the Accounting for Income Taxes."~~This guidance simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition for deferred tax liabilities for outside basis differences. ASU 2019-12 also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ~~On January 1, 2021, the Company adopted ASU 2019-12 on a prospective basis. The adoption of this standard did not have a material effect on our results of operations or financial position.~~2018.

(2) Marketable Securities

The following table shows the portfolio of marketable securities available-for-sale at September 30, ~~2021~~2022 (in thousands):


		Amortized cost		Gross unrealized holding gains	Gross unrealized holding losses	Fair value		Amortized cost		Gross unrealized holding gains	Gross unrealized holding losses	Fair value
Debt issued by the U.S government and agencies:	Debt issued by the U.S government and agencies:						Debt issued by the U.S government and agencies:
Due after one year through five years							Due after one year through five years	$	20,000	—	(1,921)	18,079
Due after ten years	Due after ten years	$	58,537	—	(1,545)	56,992	Due after ten years	54,213		—	(10,367)	43,846

Debt issued by government-sponsored enterprises:	Debt issued by government-sponsored enterprises:						Debt issued by government-sponsored enterprises:
Due in less than one year		191		1	—	192

Due in five years through ten years		47,516		87	(1,133)	46,470
Due after one year through five years							Due after one year through five years	993		—	(53)	940
Due after five years through ten years							Due after five years through ten years	45,890		—	(7,739)	38,151

Municipal securities:	Municipal securities:						Municipal securities:
Due in less than one year		1,151		18	—	1,169
Due in one year through five years		1,647		31	—	1,678
Due in five years through ten years		21,722		583	(93)	22,212
Due within one year							Due within one year	509		—	(2)	507
Due after one year through five years							Due after one year through five years	618		—	(15)	603
Due after five years through ten years							Due after five years through ten years	33,945		8	(3,272)	30,681
Due after ten years	Due after ten years	99,832		2,385	(747)	101,470	Due after ten years	92,791		—	(18,406)	74,385

Corporate debt issues:							Corporate debt issues:

Due after five years through ten years							Due after five years through ten years	13,551		—	(411)	13,140

Residential mortgage-backed securities:	Residential mortgage-backed securities:						Residential mortgage-backed securities:
Fixed rate pass-through	Fixed rate pass-through	283,015		3,278	(2,325)	283,968	Fixed rate pass-through	233,394		14	(34,557)	198,851
Variable rate pass-through	Variable rate pass-through	12,115		356	(15)	12,456	Variable rate pass-through	9,341		25	(117)	9,249

Fixed rate agency CMOs	Fixed rate agency CMOs	1,017,472		4,800	(9,335)	1,012,937	Fixed rate agency CMOs	932,668		1	(137,752)	794,917
Variable rate agency CMOs	Variable rate agency CMOs	43,907		294	(30)	44,171	Variable rate agency CMOs	28,970		45	(573)	28,442
Total residential mortgage-backed securities	Total residential mortgage-backed securities	1,356,509		8,728	(11,705)	1,353,532	Total residential mortgage-backed securities	1,204,373		85	(172,999)	1,031,459
Total marketable securities available-for-sale	Total marketable securities available-for-sale	$	1,587,105	11,833	(15,223)	1,583,715	Total marketable securities available-for-sale	$	1,466,883	93	(215,185)	1,251,791

~~Tabl~~e Table of Contents

The following table shows the portfolio of marketable securities available-for-sale at December 31, ~~2020~~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 after ten years $ 40,761 211 (55) 40,917
Debt issued by government-sponsored enterprises:
Due in less than one year 24,976 159 — 25,135
Due in one year through five years 238 3 — 241
Due in five years through ten years 68,973 238 (80) 69,131
Municipal securities:
Due in less than one year 4,008 14 — 4,022
Due in one year through five years 2,803 63 (2) 2,864
Due in five years through ten years 16,045 429 (5) 16,469
Due after ten years 89,778 3,752 (72) 93,458
Residential mortgage-backed securities:
Fixed rate pass-through 339,406 7,125 (86) 346,445
Variable rate pass-through 14,778 431 (20) 15,189
Fixed rate agency CMOs 723,586 11,758 (1,093) 734,251
Variable rate agency CMOs 50,333 519 (33) 50,819
Total residential mortgage-backed securities 1,128,103 19,833 (1,232) 1,146,704
Total marketable securities available-for-sale $ 1,375,685 24,702 (1,446) 1,398,941


	Amortized cost		Gross unrealized holding gains	Gross unrealized holding losses	Fair value
Debt issued by the U.S. government and agencies:
Due after one year through five years	$	20,000	—	(68)	19,932
Due after ten years	57,681		—	(1,722)	55,959

Debt issued by government-sponsored enterprises:
Due within one year	177		—	—	177
Due after one year through five years	991		73	—	1,064

Due after five years through ten years	46,411		1	(1,568)	44,844




Municipal securities:
Due within one year	946		13	—	959
Due after one year through five years	1,261		22	(3)	1,280
Due after five years through ten years	23,692		661	(146)	24,207
Due after ten years	99,558		2,884	(187)	102,255





Residential mortgage-backed securities:
Fixed rate pass-through	265,604		2,389	(2,525)	265,468
Variable rate pass-through	11,306		294	(9)	11,591

Fixed rate agency CMOs	997,680		2,284	(18,965)	980,999
Variable rate agency CMOs	39,695		224	(62)	39,857
Total residential mortgage-backed securities	1,314,285		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 September 30, ~~2021~~2022 (in thousands):


		Amortized cost		Gross unrealized holding gains	Gross unrealized holding losses	Fair value		Amortized cost		Gross unrealized holding gains	Gross unrealized holding losses	Fair value
Debt issued by government-sponsored enterprises:
Due in one year through five years		$	16,478	—	(49)	16,429
Due in five years through ten years		107,972		—	(3,636)	104,336
Debt issued by the U.S. government and agencies:							Debt issued by the U.S. government and agencies:
Due after one year through five years							Due after one year through five years	$	16,478	—	(1,739)	14,739
Due after five years through ten years							Due after five years through ten years	107,976		—	(20,352)	87,624

Residential mortgage-backed securities:	Residential mortgage-backed securities:						Residential mortgage-backed securities:
Fixed rate pass-through	Fixed rate pass-through	192,976		248	(1,104)	192,120	Fixed rate pass-through	167,016		—	(26,701)	140,315
Variable rate pass-through	Variable rate pass-through	716		24	—	740	Variable rate pass-through	574		—	(7)	567
Fixed rate agency CMOs	Fixed rate agency CMOs	299,650		476	(4,595)	295,531	Fixed rate agency CMOs	606,808		—	(79,373)	527,435
Variable rate agency CMOs	Variable rate agency CMOs	603		18	—	621	Variable rate agency CMOs	559		1	(2)	558
Total residential mortgage-backed securities	Total residential mortgage-backed securities	493,945		766	(5,699)	489,012	Total residential mortgage-backed securities	774,957		1	(106,083)	668,875
Total marketable securities held-to-maturity	Total marketable securities held-to-maturity	$	618,395	766	(9,384)	609,777	Total marketable securities held-to-maturity	$	899,411	1	(128,174)	771,238

~~Tabl~~e Table of Contents

The following table shows the portfolio of marketable securities held-to-maturity at December 31, ~~2020~~2021 (in thousands):


		Amortized cost		Gross unrealized holding gains	Gross unrealized holding losses	Fair value		Amortized cost		Gross unrealized holding gains	Gross unrealized holding losses	Fair value
Debt issued by government-sponsored enterprises:
Due in five years through ten years		$	67,990	12	(123)	67,879
Debt issued by the U.S. government and agencies:							Debt issued by the U.S. government and agencies:
Due after one year through five years							Due after one year through five years	$	16,478	—	(206)	16,272
Due after five years through ten years							Due after five years through ten years	107,973		—	(4,613)	103,360

Residential mortgage-backed securities:	Residential mortgage-backed securities:						Residential mortgage-backed securities:
Fixed rate pass-through	Fixed rate pass-through	1,723		131	—	1,854	Fixed rate pass-through	183,092		58	(2,161)	180,989
Variable rate pass-through	Variable rate pass-through	919		30	—	949	Variable rate pass-through	667		24	—	691
Fixed rate agency CMOs	Fixed rate agency CMOs	107,651		716	(2)	108,365	Fixed rate agency CMOs	459,345		251	(10,011)	449,585
Variable rate agency CMOs	Variable rate agency CMOs	604		15	—	619	Variable rate agency CMOs	599		17	—	616
Total residential mortgage-backed securities	Total residential mortgage-backed securities	110,897		892	(2)	111,787	Total residential mortgage-backed securities	643,703		350	(12,172)	631,881
Total marketable securities held-to-maturity	Total marketable securities held-to-maturity	$	178,887	904	(125)	179,666	Total marketable securities held-to-maturity	$	768,154	350	(16,991)	751,513

The following table shows the contractual maturity of our residential mortgage-backed securities available-for-sale at September 30, ~~2021~~2022 (in thousands):


		Amortized cost		Fair value		Amortized cost		Fair value

Residential mortgage-backed securities:	Residential mortgage-backed securities:				Residential mortgage-backed securities:
Due in less than one year		$	453	455
Due in one year through five years		39,580		40,067
Due within one year					Due within one year	$	254	252
Due after one year through five years					Due after one year through five years	49,435		46,268
Due after five years through ten years	Due after five years through ten years	230,932		232,244	Due after five years through ten years	155,960		137,226
Due after ten years	Due after ten years	1,085,544		1,080,766	Due after ten years	998,724		847,713
Total residential mortgage-backed securities	Total residential mortgage-backed securities	$	1,356,509	1,353,532	Total residential mortgage-backed securities	$	1,204,373	1,031,459

The following table shows the contractual maturity of our residential mortgage-backed securities held-to-maturity at September 30, ~~2021~~2022 (in thousands):


		Amortized cost		Fair value		Amortized cost		Fair value

Residential mortgage-backed securities:	Residential mortgage-backed securities:				Residential mortgage-backed securities:

Due in one year through five years		$	890	948
Due after one year through five years					Due after one year through five years	$	20,705	17,551
Due after five years through ten years	Due after five years through ten years	212,525		210,946	Due after five years through ten years	168,546		141,707
Due after ten years	Due after ten years	280,530		277,118	Due after ten years	585,706		509,617
Total residential mortgage-backed securities	Total residential mortgage-backed securities	$	493,945	489,012	Total residential mortgage-backed securities	$	774,957	668,875

The following table shows the fair value of and gross unrealized losses on marketable 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 September 30, ~~2021~~2022 (in thousands):


		Less than 12 months			12 months or more		Total			Less than 12 months			12 months or more		Total
		Fair value		Unrealized loss	Fair value	Unrealized loss	Fair value	Unrealized loss		Fair value		Unrealized loss	Fair value	Unrealized loss	Fair value	Unrealized loss
U.S. government-sponsored enterprises	U.S. government-sponsored enterprises	$	216,233	(6,055)	6,916	(308)	223,149	(6,363)	U.S. government-sponsored enterprises	$	19,905	(1,989)	183,474	(40,182)	203,379	(42,171)
Municipal securities	Municipal securities	34,492		(840)	—	—	34,492	(840)	Municipal securities	87,699		(14,160)	17,671	(7,535)	105,370	(21,695)

Corporate debt issues									Corporate debt issues	13,140		(411)	—	—	13,140	(411)

Residential mortgage-backed securities - agency	Residential mortgage-backed securities - agency	1,106,779		(14,455)	103,690	(2,949)	1,210,469	(17,404)	Residential mortgage-backed securities - agency	624,780		(61,296)	1,069,396	(217,786)	1,694,176	(279,082)

Total	Total	$	1,357,504	(21,350)	110,606	(3,257)	1,468,110	(24,607)	Total	$	745,524	(77,856)	1,270,541	(265,503)	2,016,065	(343,359)

~~Tabl~~e Table of Contents


		Less than 12 months			12 months or more		Total			Less than 12 months			12 months or more		Total
		Fair value		Unrealized loss	Fair value	Unrealized loss	Fair value	Unrealized loss		Fair value		Unrealized loss	Fair value	Unrealized loss	Fair value	Unrealized loss
U.S. government-sponsored enterprises	U.S. government-sponsored enterprises	$	67,809	(179)	1,923	(80)	69,732	(259)	U.S. government-sponsored enterprises	$	132,782	(3,504)	106,160	(4,673)	238,942	(8,177)

Municipal securities	Municipal securities	4,257		(79)	—	—	4,257	(79)	Municipal securities	25,118		(336)	—	—	25,118	(336)
Residential mortgage-backed securities - agency	Residential mortgage-backed securities - agency	300,767		(1,202)	5,533	(31)	306,300	(1,233)	Residential mortgage-backed securities - agency	1,428,582		(26,516)	184,389	(7,217)	1,612,971	(33,733)
Total	Total	$	372,833	(1,460)	7,456	(111)	380,289	(1,571)	Total	$	1,586,482	(30,356)	290,549	(11,890)	1,877,031	(42,246)

The Company does not believe that the available-for-sale debt securities that were in an unrealized loss position as of September 30, ~~2021,~~2022, which were comprised of ~~216~~664 individual securities, represents a credit loss impairment. All of these securities were issued by U.S. government agencies, U.S. government-sponsored enterprises, local municipalities, or represent corporate debt. The securities issued by the U.S. government agencies or U.S. government-sponsored ~~enterprises.~~enterprises are ~~There 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. 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 securities. The Company does not have the intent to sell these investment securities and it is likely that we will not be required to sell these securities before their anticipated recovery, which may be at maturity.

All of the ~~Company's~~Company’s held-to-maturity debt securities are issued by U.S. government agencies or U.S. government-sponsored enterprises. ~~There~~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 September 30, ~~2021.~~2022.

The following table presents the credit quality of our held-to-maturity securities, based on the latest information available as of September 30, ~~2021~~2022 (in thousands). The credit ratings are sourced from nationally recognized rating agencies, which include ~~Moody's~~Moody’s and S&P, or when credit ratings cannot be sourced from the agencies, they are presented based on asset type. All of our held-to-maturity securities were current in their payment of principal and interest as of September 30, ~~2021.~~2022.


		AA+		Total		AA+		Total

Held-to-maturity securities (at amortized cost):	Held-to-maturity securities (at amortized cost):				Held-to-maturity securities (at amortized cost):
Debt issued by government-sponsored enterprises		$	124,450	124,450
Debt issued by the U.S. government-sponsored enterprises					Debt issued by the U.S. government-sponsored enterprises	$	124,454	124,454
Residential mortgage-backed securities	Residential mortgage-backed securities	493,945		493,945	Residential mortgage-backed securities	774,957		774,957
Total marketable securities held-to-maturity	Total marketable securities held-to-maturity	$	618,395	618,395	Total marketable securities held-to-maturity	$	899,411	899,411

~~Tabl~~e Table of Contents

(3) Loans Receivable

The following table shows a summary of our loans receivable at amortized cost basis at September 30, ~~2021~~2022 and December 31, ~~2020~~2021 (in thousands):


		September 30, 2021				December 31, 2020				September 30, 2022				December 31, 2021
		Originated		Acquired	Total	Originated	Acquired	Total		Originated (1)		Acquired (2)	Total	Originated (1)	Acquired (2)	Total
Personal Banking:	Personal Banking:								Personal Banking:

Residential mortgage loans ~~(1)~~(3)	Residential mortgage loans ~~(1)~~(3)	$	2,756,383	233,138	2,989,521	2,753,593	314,528	3,068,121	Residential mortgage loans ~~(1)~~(3)	$	3,225,348	176,550	3,401,898	2,783,459	211,161	2,994,620
Home equity loans	Home equity loans	1,122,611		227,737	1,350,348	1,175,703	292,033	1,467,736	Home equity loans	1,110,401		174,588	1,284,989	1,107,202	212,729	1,319,931
Vehicle loans	Vehicle loans	1,350,278		110,912	1,461,190	995,040	157,633	1,152,673	Vehicle loans	1,907,210		99,987	2,007,197	1,384,246	99,985	1,484,231
Consumer loans	Consumer loans	305,549		50,097	355,646	288,066	67,254	355,320	Consumer loans	100,831		8,210	109,041	307,961	46,556	354,517
Total Personal Banking	Total Personal Banking	5,534,821		621,884	6,156,705	5,212,402	831,448	6,043,850	Total Personal Banking	6,343,790		459,335	6,803,125	5,582,868	570,431	6,153,299

Commercial Banking:	Commercial Banking:								Commercial Banking:
Commercial real estate loans	Commercial real estate loans	2,258,953		477,531	2,736,484	2,223,108	624,873	2,847,981	Commercial real estate loans	2,101,684		327,222	2,428,906	2,202,027	423,454	2,625,481
Commercial real estate loans - owner occupied	Commercial real estate loans - owner occupied	335,461		90,606	426,067	344,016	153,892	497,908	Commercial real estate loans - owner occupied	344,504		39,420	383,924	321,253	68,750	390,003
Commercial loans	Commercial loans	786,111		93,601	879,712	1,019,482	171,628	1,191,110	Commercial loans	1,072,857		52,713	1,125,570	765,877	81,732	847,609
Total Commercial Banking	Total Commercial Banking	3,380,525		661,738	4,042,263	3,586,606	950,393	4,536,999	Total Commercial Banking	3,519,045		419,355	3,938,400	3,289,157	573,936	3,863,093
Total loans receivable, gross	Total loans receivable, gross	8,915,346		1,283,622	10,198,968	8,799,008	1,781,841	10,580,849	Total loans receivable, gross	9,862,835		878,690	10,741,525	8,872,025	1,144,367	10,016,392

Allowance for credit losses	Allowance for credit losses	(87,222)		(22,545)	(109,767)	(102,874)	(31,553)	(134,427)	Allowance for credit losses	(97,738)		(12,081)	(109,819)	(86,750)	(15,491)	(102,241)
Total loans receivable, net ~~(2)~~(4)	Total loans receivable, net ~~(2)~~(4)	$	8,828,124	1,261,077	10,089,201	8,696,134	1,750,288	10,446,422	Total loans receivable, net ~~(2)~~(4)	$	9,765,097	866,609	10,631,706	8,785,275	1,128,876	9,914,151

(1) Includes originated 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 ~~$27.4~~$15.8 million and ~~$58.8~~$25.1 million of loans held-for-sale at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

~~(2)~~(4) Includes ~~$57.6~~$74.3 million and ~~$40.9~~$62.8 million of net unearned income, unamortized premiums and discounts and deferred fees and costs at September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

During the nine months ended September 30, 2022, the Company purchased a total of $182.8 million small business equipment finance loan pools and a total of $188.3 million one- to four-family jumbo mortgage loan pools.

~~Tabl~~e Table of Contents

The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the quarter ended September 30, 2022 (in thousands):


	Balance as of September 30, 2022		Current period provision	Charge-offs	Recoveries	Balance as of June 30, 2022
Allowance for Credit Losses
Personal Banking:
Residential mortgage loans	$	17,967	1,646	(166)	329	16,158
Home equity loans	5,448		341	(535)	410	5,232
Vehicle loans	17,004		1,576	(936)	626	15,738
Consumer loans	825		1,170	(1,405)	281	779
Total Personal Banking	41,244		4,733	(3,042)	1,646	37,907

Commercial Banking:
Commercial real estate loans	49,649		5,117	(1,329)	6,220	39,641
Commercial real estate loans - owner occupied	4,087		(34)	—	26	4,095
Commercial loans	14,839		(2,127)	(243)	497	16,712
Total Commercial Banking	68,575		2,956	(1,572)	6,743	60,448
Total	$	109,819	7,689	(4,614)	8,389	98,355

Allowance for Credit Losses - off-balance sheet exposure
Personal Banking:

Residential mortgage loans	$	4	(2)	—	—	6
Home equity loans	74		10	—	—	64

Total Personal Banking	78		8	—	—	70

Commercial Banking:
Commercial real estate loans	5,382		1,919	—	—	3,463
Commercial real estate loans - owner occupied	287		(41)	—	—	328
Commercial loans	5,288		1,699	—	—	3,589
Total Commercial Banking	10,957		3,577	—	—	7,380
Total off-balance sheet exposure	$	11,035	3,585	—	—	7,450

Table of Contents

The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the quarter ended September 30, 2021 (in thousands):


	Balance as of September 30, 2021		Current period provision	Charge-offs	Recoveries	Balance as of June 30, 2021
Allowance for Credit Losses
Personal Banking:
Residential mortgage loans	$	7,987	1,939	(1,263)	64	7,247
Home equity loans	6,293		291	(1,474)	237	7,239
Vehicle loans	12,457		82	(1,112)	599	12,888
Consumer loans	3,074		949	(1,036)	360	2,801
Total Personal Banking	29,811		3,261	(4,885)	1,260	30,175

Commercial Banking:
Commercial real estate loans	58,451		(5,103)	(1,581)	555	64,580
Commercial real estate loans - owner occupied	3,246		(1,487)	—	4	4,729
Commercial loans	18,259		(1,025)	(412)	1,850	17,846
Total Commercial Banking	79,956		(7,615)	(1,993)	2,409	87,155
Total	$	109,767	(4,354)	(6,878)	3,669	117,330

Allowance for Credit Losses - off-balance sheet exposure
Personal Banking:
Residential mortgage loans	$	2	—	—	—	2
Home equity loans	40		(2)	—	—	42

Total Personal Banking	42		(2)	—	—	44

Commercial Banking:
Commercial real estate loans	2,647		715	—	—	1,932
Commercial real estate loans - owner occupied	140		(41)	—	—	181
Commercial loans	1,333		101	—	—	1,232
Total Commercial Banking	4,120		775	—	—	3,345
Total off-balance sheet exposure	$	4,162	773	—	—	3,389

1415

~~Tabl~~e Table of Contents

The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the ~~quarter~~nine months ended September 30, ~~2020, and includes the cumulative effect of adopting ASU 2016-13~~2022 (in thousands):


		Balance as of September 30, 2020		Current period provision	Charge-offs	Recoveries	Balance as of June 30, 2020		Balance as of September 30, 2022		Current period provision	Charge-offs	Recoveries	Balance as of December 31, 2021
Allowance for Credit Losses	Allowance for Credit Losses							Allowance for Credit Losses
Personal Banking:	Personal Banking:							Personal Banking:
Residential mortgage loans	Residential mortgage loans	$	12,036	268	(129)	189	11,708	Residential mortgage loans	$	17,967	11,331	(1,487)	750	7,373
Home equity loans	Home equity loans	9,585		183	(88)	127	9,363	Home equity loans	5,448		127	(1,237)	1,258	5,300
Vehicle loans	Vehicle loans	16,713		4,111	(1,763)	530	13,835	Vehicle loans	17,004		2,159	(2,517)	1,879	15,483
Consumer loans	Consumer loans	3,147		1,871	(1,593)	363	2,506	Consumer loans	825		479	(3,459)	921	2,884
Total Personal Banking	Total Personal Banking	41,481		6,433	(3,573)	1,209	37,412	Total Personal Banking	41,244		14,096	(8,700)	4,808	31,040

Commercial Banking:	Commercial Banking:							Commercial Banking:
Commercial real estate loans	Commercial real estate loans	73,410		780	(470)	267	72,833	Commercial real estate loans	49,649		(6,465)	(6,745)	8,718	54,141
Commercial real estate loans - owner occupied	Commercial real estate loans - owner occupied	13,570		(1,205)	(62)	10	14,827	Commercial real estate loans - owner occupied	4,087		167	—	37	3,883
Commercial loans	Commercial loans	11,748		810	(4,892)	316	15,514	Commercial loans	14,839		1,039	(1,253)	1,876	13,177
Total Commercial Banking	Total Commercial Banking	98,728		385	(5,424)	593	103,174	Total Commercial Banking	68,575		(5,259)	(7,998)	10,631	71,201
Total	Total	$	140,209	6,818	(8,997)	1,802	140,586	Total	$	109,819	8,837	(16,698)	15,439	102,241

Allowance for Credit Losses - off-balance sheet exposure	Allowance for Credit Losses - off-balance sheet exposure							Allowance for Credit Losses - off-balance sheet exposure
Personal Banking:	Personal Banking:							Personal Banking:
Residential mortgage loans	Residential mortgage loans	$	3	3	—	—	—	Residential mortgage loans	$	4	2	—	—	2
Home equity loans	Home equity loans	40		2	—	—	38	Home equity loans	74		35	—	—	39

Total Personal Banking	Total Personal Banking	43		5	—	—	38	Total Personal Banking	78		37	—	—	41

Commercial Banking:	Commercial Banking:							Commercial Banking:
Commercial real estate loans	Commercial real estate loans	2,423		(2,712)	—	—	5,135	Commercial real estate loans	5,382		4,501	—	—	881
Commercial real estate loans - owner occupied	Commercial real estate loans - owner occupied	469		(157)	—	—	626	Commercial real estate loans - owner occupied	287		145	—	—	142
Commercial loans	Commercial loans	3,312		(1,072)	—	—	4,384	Commercial loans	5,288		3,894	—	—	1,394
Total Commercial Banking	Total Commercial Banking	6,204		(3,941)	—	—	10,145	Total Commercial Banking	10,957		8,540	—	—	2,417
Total off-balance sheet exposure	Total off-balance sheet exposure	$	6,247	(3,936)	—	—	10,183	Total off-balance sheet exposure	$	11,035	8,577	—	—	2,458

1516

~~Tabl~~e Table of Contents

The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the nine months ended September 30, 2021 (in thousands):


		Balance as of September 30, 2021		Current period provision	Charge-offs	Recoveries	Balance as of December 31, 2020		Balance as of September 30, 2021		Current period provision	Charge-offs	Recoveries	Balance as of December 31, 2020
Allowance for Credit Losses	Allowance for Credit Losses							Allowance for Credit Losses
Personal Banking:	Personal Banking:							Personal Banking:
Residential mortgage loans	Residential mortgage loans	$	7,987	3,269	(2,888)	340	7,266	Residential mortgage loans	$	7,987	3,269	(2,888)	340	7,266
Home equity loans	Home equity loans	6,293		1,892	(2,081)	490	5,992	Home equity loans	6,293		1,892	(2,081)	490	5,992
Vehicle loans	Vehicle loans	12,457		(341)	(4,017)	1,990	14,825	Vehicle loans	12,457		(341)	(4,017)	1,990	14,825
Consumer loans	Consumer loans	3,074		2,291	(3,135)	1,047	2,871	Consumer loans	3,074		2,291	(3,135)	1,047	2,871
Total Personal Banking	Total Personal Banking	29,811		7,111	(12,121)	3,867	30,954	Total Personal Banking	29,811		7,111	(12,121)	3,867	30,954

Commercial Banking:	Commercial Banking:							Commercial Banking:
Commercial real estate loans	Commercial real estate loans	58,451		(12,859)	(9,281)	1,210	79,381	Commercial real estate loans	58,451		(12,859)	(9,281)	1,210	79,381
Commercial real estate loans - owner occupied	Commercial real estate loans - owner occupied	3,246		(6,392)	(890)	9	10,518	Commercial real estate loans - owner occupied	3,246		(6,391)	(890)	9	10,518
Commercial loans	Commercial loans	18,259		2,166	(1,627)	4,147	13,574	Commercial loans	18,259		2,165	(1,627)	4,147	13,574
Total Commercial Banking	Total Commercial Banking	79,956		(17,085)	(11,798)	5,366	103,473	Total Commercial Banking	79,956		(17,085)	(11,798)	5,366	103,473
Total	Total	$	109,767	(9,974)	(23,919)	9,233	134,427	Total	$	109,767	(9,974)	(23,919)	9,233	134,427

Allowance for Credit Losses - off-balance sheet exposure	Allowance for Credit Losses - off-balance sheet exposure							Allowance for Credit Losses - off-balance sheet exposure
Personal Banking:	Personal Banking:							Personal Banking:
Residential mortgage loans	Residential mortgage loans	$	2	—	—	—	2	Residential mortgage loans	$	2	—	—	—	2
Home equity loans	Home equity loans	40		5	—	—	35	Home equity loans	40		5	—	—	35

Total Personal Banking	Total Personal Banking	42		5	—	—	37	Total Personal Banking	42		5	—	—	37

Commercial Banking:	Commercial Banking:							Commercial Banking:
Commercial real estate loans	Commercial real estate loans	2,647		(802)	—	—	3,449	Commercial real estate loans	2,647		(802)	—	—	3,449
Commercial real estate loans - owner occupied	Commercial real estate loans - owner occupied	140		(186)	—	—	326	Commercial real estate loans - owner occupied	140		(186)	—	—	326
Commercial loans	Commercial loans	1,333		(1,218)	—	—	2,551	Commercial loans	1,333		(1,218)	—	—	2,551
Total Commercial Banking	Total Commercial Banking	4,120		(2,206)	—	—	6,326	Total Commercial Banking	4,120		(2,206)	—	—	6,326
Total off-balance sheet exposure	Total off-balance sheet exposure	$	4,162	(2,201)	—	—	6,363	Total off-balance sheet exposure	$	4,162	(2,201)	—	—	6,363

~~Tabl~~e of ~~Contents~~

Balance as of September 30, 2020 Current
period provision Charge-offs Recoveries Initial ACL on loans purchased with credit deterioration Cumulative effect of ASU 2016-13* Balance as of December 31, 2019
Allowance for Credit Losses
Personal Banking:
Residential mortgage loans $ 12,036 1,132 (510) 304 1,095 7,441 2,574
Home equity loans 9,585 536 (550) 408 216 5,786 3,189
Vehicle loans 16,713 12,419 (5,369) 1,294 235 842 7,292
Consumer loans 3,147 3,600 (4,666) 1,179 157 (2,424) 5,301
Total Personal Banking 41,481 17,687 (11,095) 3,185 1,703 11,645 18,356
Commercial Banking:
Commercial real estate loans 73,410 50,018 (1,470) 1,011 5,720 2,288 15,843
Commercial real estate loans - owner occupied 13,570 5,642 (83) 25 963 1,278 5,745
Commercial loans 11,748 12,858 (16,056) 909 459 (4,419) 17,997
Total Commercial Banking 98,728 68,518 (17,609) 1,945 7,142 (853) 39,585
Total $ 140,209 86,205 (28,704) 5,130 8,845 10,792 57,941
Allowance for Credit Losses -
off-balance sheet exposure
Personal Banking:
Residential mortgage loans $ 3 3 — — — — —
Home equity loans 40 10 — — — (293) 323
Consumer loans — — — — — (402) 402
Total Personal Banking 43 13 — — — (695) 725
Commercial Banking:
Commercial real estate loans 2,423 412 — — — 1,934 77
Commercial real estate loans - owner occupied 469 378 — — — 88 3
Commercial loans 3,312 2,220 — — — 923 169
Total Commercial Banking 6,204 3,010 — — — 2,945 249
Total off-balance sheet exposure $ 6,247 3,023 — — — 2,250 974

* Includes the impact of the initial allowance on PCD loans of $517,000.

During the nine months ended September 30, 2021, there were no loans sold that were classified as held for investment. During the nine months ended September 30, 2020, we sold $50.0 million of loans that were classified as held for investment, for a gain of $1.3 million, which is reported in gain on sale of loans on the Consolidated Statements of Income. No loans were sold during the three months ended September 30, 2021 or September 30, 2020.

~~Tabl~~e Table of Contents

The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at September 30, ~~2021~~2022 (in thousands):

Total loans
receivable Allowance for
credit losses Nonaccrual
loans (1) Loans 90 days past due and accruing TDRs Allowance
related to
TDRs Additional
commitments
to customers
with loans
classified as
TDRs
Personal Banking:
Residential mortgage loans $ 2,989,521 7,987 10,710 — 7,007 1,792 —
Home equity loans 1,350,348 6,293 6,482 — 1,821 709 —
Vehicle loans 1,461,190 12,457 2,977 — — — —
Consumer loans 355,646 3,074 1,115 386 — — —
Total Personal Banking 6,156,705 29,811 21,284 386 8,828 2,501 —
Commercial Banking:
Commercial real estate loans 2,736,484 58,451 135,902 — 14,032 845 499
Commercial real estate loans - owner occupied 426,067 3,246 1,359 — 326 55 —
Commercial loans 879,712 18,259 18,397 — 3,336 187 296
Total Commercial Banking 4,042,263 79,956 155,658 — 17,694 1,087 795
Total $ 10,198,968 109,767 176,942 386 26,522 3,588 795


	Total loans receivable		Allowance for credit losses	Nonaccrual loans (1)	Loans 90 days past due and accruing	TDRs	Allowance related to TDRs	Additional commitments to customers with loans classified as TDRs
Personal Banking:
Residential mortgage loans	$	3,401,898	17,967	7,816	—	6,040	1,032	—
Home equity loans	1,284,989		5,448	3,685	—	1,584	657	—
Vehicle loans	2,007,197		17,004	3,235	—	—	—	—
Consumer loans	109,041		825	166	357	—	—	—
Total Personal Banking	6,803,125		41,244	14,902	357	7,624	1,689	—

Commercial Banking:
Commercial real estate loans	2,428,906		49,649	65,298	—	37,993	678	10
Commercial real estate loans - owner occupied	383,924		4,087	619	—	96	18	—
Commercial loans	1,125,570		14,839	2,808	—	1,037	157	400
Total Commercial Banking	3,938,400		68,575	68,725	—	39,126	853	410

Total	$	10,741,525	109,819	83,627	357	46,750	2,542	410

(1)Includes ~~$12.9~~$30.4 million of nonaccrual TDRs.

The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at December 31, ~~2020~~2021 (in thousands):


		Total loans receivable		Allowance for credit losses	Nonaccrual loans (1)	Loans 90 days past due and accruing	TDRs	Allowance related to TDRs	Additional commitments to customers with loans classified as TDRs		Total loans receivable		Allowance for credit losses	Nonaccrual loans (1)	Loans 90 days past due and accruing	TDRs	Allowance related to TDRs	Additional commitments to customers with loans classified as TDRs
Personal Banking:	Personal Banking:									Personal Banking:
Residential mortgage loans	Residential mortgage loans	$	3,068,121	7,266	15,924	—	8,431	560	—	Residential mortgage loans	$	2,994,620	7,373	10,402	—	6,749	1,442	—
Home equity loans	Home equity loans	1,467,736		5,992	9,123	—	2,058	381	26	Home equity loans	1,319,931		5,300	5,758	—	1,781	718	—
Vehicle loans	Vehicle loans	1,152,673		14,825	5,533	1	—	—	—	Vehicle loans	1,484,231		15,483	3,263	—	—	—	—
Consumer loans	Consumer loans	355,320		2,871	1,031	584	1	—	—	Consumer loans	354,517		2,884	675	331	—	—	—
Total Personal Banking	Total Personal Banking	6,043,850		30,954	31,611	585	10,490	941	26	Total Personal Banking	6,153,299		31,040	20,098	331	8,530	2,160	—

Commercial Banking:	Commercial Banking:									Commercial Banking:
Commercial real estate loans	Commercial real estate loans	2,847,981		79,381	44,092	—	18,430	787	471	Commercial real estate loans	2,625,481		54,141	129,666	—	17,025	2,024	400
Commercial real estate loans - owner occupied	Commercial real estate loans - owner occupied	497,908		10,518	3,642	—	761	123	—	Commercial real estate loans - owner occupied	390,003		3,883	1,233	—	159	24	—
Commercial loans	Commercial loans	1,191,110		13,574	23,487	—	2,454	165	362	Commercial loans	847,609		13,177	7,474	—	4,574	609	60
Total Commercial Banking	Total Commercial Banking	4,536,999		103,473	71,221	—	21,645	1,075	833	Total Commercial Banking	3,863,093		71,201	138,373	—	21,758	2,657	460

Total	Total	$	10,580,849	134,427	102,832	585	32,135	2,016	859	Total	$	10,016,392	102,241	158,471	331	30,288	4,817	460

(1)Includes ~~$10.7~~$17.2 million of nonaccrual TDRs.

~~Tabl~~e 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 September 30, ~~2021 and December 31, 2020~~2022 (in thousands):

Nonaccrual loans at December 31, 2020 Nonaccrual loans at September 30, 2021 with an allowance Nonaccrual loans at September 30, 2021 with no allowance Loans at September 30, 2021 90 days past due and accruing
Personal Banking:
Residential mortgage loans $ 15,924 10,710 — —
Home equity loans 9,123 6,270 212 —
Vehicle loans 5,533 2,964 13 —
Consumer loans 1,031 1,114 1 386
Total Personal Banking 31,611 21,058 226 386
Commercial Banking:
Commercial real estate loans 44,092 80,831 55,071 —
Commercial real estate loans - owner occupied 3,642 1,359 — —
Commercial loans 23,487 14,726 3,671 —
Total Commercial Banking 71,221 96,916 58,742 —
Total $ 102,832 117,974 58,968 386


			September 30, 2022
	Nonaccrual loans at January 1, 2022		Nonaccrual loans with an allowance	Nonaccrual loans with no allowance	Total nonaccrual loans at the end of the period	Loans 90 days past due and accruing
Personal Banking:
Residential mortgage loans	$	10,402	7,816	—	7,816	—
Home equity loans	5,758		3,489	196	3,685	—
Vehicle loans	3,263		1,891	1,344	3,235	—
Consumer loans	675		166	—	166	357
Total Personal Banking	20,098		13,362	1,540	14,902	357

Commercial Banking:
Commercial real estate loans	129,666		27,690	37,608	65,298	—
Commercial real estate loans - owner occupied	1,233		619	—	619	—
Commercial loans	7,474		2,030	778	2,808	—
Total Commercial Banking	138,373		30,339	38,386	68,725	—

Total	$	158,471	43,701	39,926	83,627	357

During the three and nine months ended September 30, ~~2021,~~2022, we recognized ~~$138,000~~$197,000 and ~~$664,000~~$487,000 of interest income on nonaccrual and troubled debt restructuring loans.

The following table presents the amortized cost of our loans on nonaccrual status as of the year ended December 31, ~~2020 and December 21, 2019~~2021 (in thousands):


										December 31, 2021
		Nonaccrual loans at December 31, 2019		Nonaccrual loans at December 31, 2020 with an allowance	Nonaccrual loans at December 31, 2020 with no allowance	Loans at December 31, 2020 90 days past due and accruing		Nonaccrual loans at January 1, 2021		Nonaccrual loans with an allowance	Nonaccrual loans with no allowance	Total nonaccrual loans at the end of the period	Loans 90 days past due and accruing
Personal Banking:	Personal Banking:						Personal Banking:
Residential mortgage loans	Residential mortgage loans	$	14,476	15,923	—	—	Residential mortgage loans	$	15,924	10,402	—	10,402	—
Home equity loans	Home equity loans	6,745		8,872	252	—	Home equity loans	9,123		5,551	207	5,758	—
Vehicle loans	Vehicle loans	3,147		5,377	156	1	Vehicle loans	5,533		3,251	12	3,263	—
Consumer loans	Consumer loans	1,079		1,030	1	584	Consumer loans	1,031		674	1	675	331
Total Personal Banking	Total Personal Banking	25,447		31,202	409	585	Total Personal Banking	31,611		19,878	220	20,098	331

Commercial Banking:	Commercial Banking:						Commercial Banking:
Commercial real estate loans	Commercial real estate loans	18,832		27,079	17,013	—	Commercial real estate loans	44,092		65,529	64,137	129,666	—
Commercial real estate loans - owner occupied	Commercial real estate loans - owner occupied	16,032		3,642	—	—	Commercial real estate loans - owner occupied	3,642		1,233	—	1,233	—
Commercial loans	Commercial loans	8,559		18,069	5,418	—	Commercial loans	23,487		3,941	3,533	7,474	—
Total Commercial Banking	Total Commercial Banking	43,423		48,790	22,431	—	Total Commercial Banking	71,221		70,703	67,670	138,373	—

Total	Total	$	68,870	79,992	22,840	585	Total	$	102,832	90,581	67,890	158,471	331

During the year ended December 31, ~~2020,~~2021, we recognized ~~$842,000~~$803,000 of interest income on nonaccrual and troubled debt restructuring loans.

~~Tabl~~e Table of Contents

The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of September 30, ~~2021~~2022 (in thousands):


		Real estate		Equipment	Other	Total		Real estate		Equipment	Total
Personal Banking:	Personal Banking:						Personal Banking:
Residential mortgage loans	Residential mortgage loans	$	—	—	583	583	Residential mortgage loans	$	572	—	572
Home equity loans	Home equity loans	—		—	99	99	Home equity loans	99		—	99

Total Personal Banking	Total Personal Banking	—		—	682	682	Total Personal Banking	671		—	671

Commercial Banking:	Commercial Banking:						Commercial Banking:
Commercial real estate loans	Commercial real estate loans	123,975		1,778	—	125,753	Commercial real estate loans	63,834		—	63,834

Commercial loans	Commercial loans	4,301		9,576	1,211	15,088	Commercial loans	432		1,122	1,554
Total Commercial Banking	Total Commercial Banking	128,276		11,354	1,211	140,841	Total Commercial Banking	64,266		1,122	65,388

Total	Total	$	128,276	11,354	1,893	141,523	Total	$	64,937	1,122	66,059

The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of December 31, ~~2020~~2021 (in thousands):


		Real estate		Equipment	Other	Total		Real estate		Equipment	Total
Personal Banking:	Personal Banking:						Personal Banking:
Residential mortgage loans	Residential mortgage loans	$	1,269	—	—	1,269	Residential mortgage loans	$	580	—	580
Home equity loans	Home equity loans	99		—	—	99	Home equity loans	99		—	99

Total Personal Banking	Total Personal Banking	1,368		—	—	1,368	Total Personal Banking	679		—	679

Commercial Banking:	Commercial Banking:						Commercial Banking:
Commercial real estate loans	Commercial real estate loans	79,392		1,997	1,703	83,092	Commercial real estate loans	119,825		1,705	121,530

Commercial loans	Commercial loans	3,313		197	11,069	14,579	Commercial loans	3,973		1,926	5,899
Total Commercial Banking	Total Commercial Banking	82,705		2,194	12,772	97,671	Total Commercial Banking	123,798		3,631	127,429

Total	Total	$	84,073	2,194	12,772	99,039	Total	$	124,477	3,631	128,108

~~Tabl~~e Table of Contents

Our loan portfolios include loans that have been modified in a 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 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 six 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 premiums or 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 in 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"~~(“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~~.Coronavirus. Accordingly, these loans ~~and leases~~ were not categorized as TDRs.

~~Tabl~~e Table of Contents

The following ~~table provides~~tables provide a roll forward of troubled debt restructurings for the periods indicated (dollars in thousands):


		For the quarter ended September 30,							For the quarter ended September 30,
		2021			2020				2022			2021
		Number of contracts	Amount		Number of contracts	Amount			Number of contracts	Amount		Number of contracts	Amount
Beginning TDR balance:	Beginning TDR balance:	158	$	27,431	167	$	35,450	Beginning TDR balance:	128	$	54,237	158	$	27,431
New TDRs	New TDRs	3	345		7	803		New TDRs	6	221		3	345
Re-modified TDRs	Re-modified TDRs	3	4,490		3	6,679		Re-modified TDRs	4	977		3	4,490
Net paydowns	Net paydowns	—	(4,702)		—	(8,127)		Net paydowns	—	(810)		—	(4,702)
Charge-offs:	Charge-offs:							Charge-offs:

Home equity loans	Home equity loans	1	(29)		—	—		Home equity loans	—	—		1	(29)

Commercial real estate loans	Commercial real estate loans	2	(53)		—	—		Commercial real estate loans	—	—		2	(53)
Commercial real estate loans - owner occupied	Commercial real estate loans - owner occupied	1	(105)		—	—		Commercial real estate loans - owner occupied	—	—		1	(105)
Commercial loans	Commercial loans	5	(139)		—	—		Commercial loans	—	—		5	(139)
Paid-off loans:	Paid-off loans:							Paid-off loans:
Residential mortgage loans	Residential mortgage loans	5	(307)		—	—		Residential mortgage loans	1	(35)		5	(307)
Home equity loans	Home equity loans	4	(122)		—	—		Home equity loans	1	(11)		4	(122)

Commercial real estate loans	Commercial real estate loans	4	(287)		—	—		Commercial real estate loans	1	(3,349)		4	(287)

Commercial real estate loans - owner occupied								Commercial real estate loans - owner occupied	1	(44)		—	—
Commercial loans	Commercial loans	—	—		1	(1)		Commercial loans	3	(3,459)		—	—
Ending TDR balance:	Ending TDR balance:	139	$	26,522	173	$	34,804	Ending TDR balance:	127	$	46,750	139	$	26,522
Accruing TDRs	Accruing TDRs		$	13,664		$	17,684	Accruing TDRs		$	16,344		$	13,664
Nonaccrual TDRs	Nonaccrual TDRs		12,858			17,120		Nonaccrual TDRs		30,406			12,858

For the nine months ended September 30,
2021 2020
Number of
contracts Amount Number of
contracts Amount
Beginning TDR balance: 170 $ 32,135 176 $ 31,999
New TDRs 5 2,608 10 889
Re-modified TDRs 8 5,701 5 9,720
Net paydowns — (8,713) — (7,192)
Charge-offs:
Home equity loans 1 (29) 1 (10)
Commercial real estate loans 2 (53) — —
Commercial real estate loans - owner occupied 1 (105) — —
Commercial loans 5 (139) — —
Paid-off loans:
Residential mortgage loans 9 (1,033) 2 (330)
Home equity loans 5 (133) 2 (3)
Commercial real estate loans 9 (2,973) 1 (26)
Commercial real estate loans - owner occupied 1 (47) 1 (25)
Commercial loans 3 (697) 6 (218)
Ending TDR balance: 139 $ 26,522 173 $ 34,804
Accruing TDRs $ 13,664 $ 17,684
Nonaccrual TDRs 12,858 17,120


	For the nine months ended September 30,
	2022			2021
	Number of contracts	Amount		Number of contracts	Amount
Beginning TDR balance:	134	$	30,288	170	$	32,135
New TDRs	8	25,626		5	2,608
Re-modified TDRs	10	1,178		8	5,701
Net paydowns	—	(1,609)		—	(8,713)
Charge-offs:
Residential mortgage loans	1	(3)		—	—
Home equity loans	—	—		1	(29)

Commercial real estate loans	—	—		2	(53)
Commercial real estate loans - owner occupied	—	—		1	(105)
Commercial loans	—	—		5	(139)
Paid-off loans:
Residential mortgage loans	2	(236)		9	(1,033)
Home equity loans	3	(88)		5	(133)

Commercial real estate loans	4	(3,718)		9	(2,973)
Commercial real estate loans - owner occupied	1	(44)		1	(47)
Commercial loans	4	(3,466)		3	(697)
Ending TDR balance:	127	$	46,750	139	$	26,522
Accruing TDRs		$	16,344		$	13,664
Nonaccrual TDRs		30,406			12,858

~~Tabl~~e Table of Contents

The following ~~table provides~~tables provide information related to TDRs (including re-modified TDRs) by portfolio segment and by class of financing receivable during the periods indicated (in thousands):


		For the quarter ended September 30, 2021					For the nine months ended September 30, 2021						For the quarter ended September 30, 2022					For the nine months ended September 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		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

Personal Banking:	Personal Banking:											Personal Banking:
Residential mortgage loans	Residential mortgage loans	—	$	—	—	—	1	$	125	115	16	Residential mortgage loans	2	$	147	144	15	2	$	147	144	15
Home equity loans	Home equity loans	2	153		36	17	3	156		36	17	Home equity loans	5	160		154	23	5	160		154	23

Total Personal Banking	Total Personal Banking	2	153		36	17	4	281		151	33	Total Personal Banking	7	307		298	38	7	307		298	38

Commercial Banking:	Commercial Banking:											Commercial Banking:
Commercial real estate loans	Commercial real estate loans	3	4,840		4,490	65	6	6,723		5,586	207	Commercial real estate loans	1	610		609	89	5	34,295		26,212	102

Commercial loans	Commercial loans	1	330		309	—	3	2,726		2,572	—	Commercial loans	2	332		291	20	6	3,856		294	20
Total Commercial Banking	Total Commercial Banking	4	5,170		4,799	65	9	9,449		8,158	207	Total Commercial Banking	3	942		900	109	11	38,151		26,506	122

Total	Total	6	$	5,323	4,835	82	13	$	9,730	8,309	240	Total	10	$	1,249	1,198	147	18	$	38,458	26,804	160


		For the quarter ended September 30, 2020					For the nine months ended September 30, 2020						For the quarter ended September 30, 2021					For the nine months ended September 30, 2021
		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

Personal Banking:	Personal Banking:											Personal Banking:
Residential mortgage loans	Residential mortgage loans	1	$	90	89	1	1	$	90	89	1	Residential mortgage loans	—	$	—	—	—	1	$	125	115	16
Home equity loans	Home equity loans	—	—		—	—	2	86		81	14	Home equity loans	2	153		36	17	3	156		36	17

Total Personal Banking	Total Personal Banking	1	90		89	1	3	176		170	15	Total Personal Banking	2	153		36	17	4	281		151	33

Commercial Banking:	Commercial Banking:											Commercial Banking:
Commercial real estate loans	Commercial real estate loans	5	7,096		7,040	816	5	7,096		7,040	816	Commercial real estate loans	3	4,840		4,490	65	6	6,723		5,586	207
Commercial real estate loans - owner occupied		—	—		—	—	1	58		51	10

Commercial loans	Commercial loans	4	444		353	—	5	2,944		2,354	2	Commercial loans	1	330		309	—	3	2,726		2,572	—
Total Commercial Banking	Total Commercial Banking	9	7,540		7,393	816	11	10,098		9,445	828	Total Commercial Banking	4	5,170		4,799	65	9	9,449		8,158	207

Total	Total	10	$	7,630	7,482	817	14	$	10,274	9,615	843	Total	6	$	5,323	4,835	82	13	$	9,730	8,309	240

~~Tabl~~e Table of Contents

The following table provides information as of September 30, 2022 for TDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the quarter ended September 30, 2022 (in thousands):


		Type of modification
	Number of contracts	Maturity date	Total
Personal Banking:
Residential mortgage loans	2	144	144
Home equity loans	5	154	154


Total Personal Banking	7	298	298

Commercial Banking:
Commercial real estate loans	1	609	609

Commercial loans	2	291	291
Total Commercial Banking	3	900	900

Total	10	1,198	1,198

The following table provides information as of September 30, 2021 for TDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the quarter ended September 30, 2021 (in thousands):


			Type of modification								Type of modification
		Number of contracts	Rate		Payment	Maturity date	Other	Total		Number of contracts	Rate		Payment	Maturity date	Total
Personal Banking:	Personal Banking:								Personal Banking:

Home equity loans	Home equity loans	2	$	—	30	6	—	36	Home equity loans	2	$	—	30	6	36

Total Personal Banking	Total Personal Banking	2	—		30	6	—	36	Total Personal Banking	2	—		30	6	36

Commercial Banking:	Commercial Banking:								Commercial Banking:
Commercial real estate loans	Commercial real estate loans	3	378		—	4,112	—	4,490	Commercial real estate loans	3	378		—	4,112	4,490

Commercial loans	Commercial loans	1	—		—	309	—	309	Commercial loans	1	—		—	309	309
Total Commercial Banking	Total Commercial Banking	4	378		—	4,421	—	4,799	Total Commercial Banking	4	378		—	4,421	4,799

Total	Total	6	$	378	30	4,427	—	4,835	Total	6	$	378	30	4,427	4,835

The following table provides information as of September 30, ~~2020~~2022 for TDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the ~~quarter~~nine months ended September 30, ~~2020~~2022 (in thousands):

Type of modification
Number of contracts Rate Payment Maturity date Other Total
Personal Banking:
Residential mortgage loans 1 $ — — 89 — 89
Total Personal Banking 1 — — 89 — 89
Commercial Banking:
Commercial real estate loans 5 — — 6,755 285 7,040
Commercial loans 4 — 114 239 — 353
Total Commercial Banking 9 — 114 6,994 285 7,393
Total 10 $ — 114 7,083 285 7,482


		Type of modification
	Number of contracts	Rate		Maturity date	Total
Personal Banking:
Residential mortgage loans	2	$	—	144	144
Home equity loans	5	—		154	154


Total Personal Banking	7	—		298	298

Commercial Banking:
Commercial real estate loans	5	4,166		22,046	26,212

Commercial loans	6	—		294	294
Total Commercial Banking	11	4,166		22,340	26,506

Total	18	$	4,166	22,638	26,804

~~Tabl~~e Table of Contents


		Type of modification
	Number of contracts	Rate		Payment	Maturity date	Other	Total
Personal Banking:
Residential mortgage loans	1	$	115	—	—	—	115
Home equity loans	3	—		30	6	—	36


Total Personal Banking	4	115		30	6	—	151

Commercial Banking:
Commercial real estate loans	6	378		—	5,136	72	5,586

Commercial loans	3	—		—	2,572	—	2,572
Total Commercial Banking	9	378		—	7,708	72	8,158

Total	13	$	493	30	7,714	72	8,309

~~The following table provides information as~~No TDRs modified within the previous twelve months of September 30, 2020 for TDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the nine months ended September 30, 2020 (in thousands):

Type of modification
Number of contracts Rate Payment Maturity date Other Total
Personal Banking:
Residential mortgage loans 1 $ — — 89 — 89
Home equity loans 2 66 — 15 — 81
Total Personal Banking 3 66 — 104 — 170
Commercial Banking:
Commercial real estate loans 5 — — 6,755 285 7,040
Commercial real estate loans - owner occupied 1 — — 51 — 51
Commercial loans 5 — 114 239 2,001 2,354
Total Commercial Banking 11 — 114 7,045 2,286 9,445
Total 14 $ 66 114 7,149 2,286 9,615

~~Tabl~~e of ~~Contents~~

2022 subsequently defaulted.

The following table provides information related to troubled debt restructurings modified within the previous twelve months

of September 30, 2021 that subsequently defaulted:


		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 Banking:						Commercial Banking:
Commercial real estate loans	Commercial real estate loans	3	4,167		3,951	2	Commercial real estate loans	3	$	4,167	3,951	2

Total Commercial Banking	Total Commercial Banking	3	$	4,167	3,951	2	Total Commercial Banking	3	4,167		3,951	2

Total	Total	3	$	4,167	3,951	2	Total	3	$	4,167	3,951	2

~~No TDRs modified within the previous twelve months of September 30, 2020 subsequently defaulted.~~

The following table provides information related to the amortized cost basis of loan payment delinquencies at September 30, ~~2021~~2022 (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		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

Personal Banking:	Personal Banking:									Personal Banking:
Residential mortgage loans	Residential mortgage loans	$	765	4,907	8,069	13,741	2,975,780	2,989,521	—	Residential mortgage loans	$	1,052	4,320	5,544	10,916	3,390,982	3,401,898	—
Home equity loans	Home equity loans	3,351		1,024	4,745	9,120	1,341,228	1,350,348	—	Home equity loans	3,278		1,227	1,779	6,284	1,278,705	1,284,989	—
Vehicle loans	Vehicle loans	4,795		1,345	1,198	7,338	1,453,852	1,461,190	—	Vehicle loans	6,086		2,322	1,935	10,343	1,996,854	2,007,197	—
Consumer loans	Consumer loans	1,351		412	1,370	3,133	352,513	355,646	386	Consumer loans	460		341	453	1,254	107,787	109,041	357
Total Personal Banking	Total Personal Banking	10,262		7,688	15,382	33,332	6,123,373	6,156,705	386	Total Personal Banking	10,876		8,210	9,711	28,797	6,774,328	6,803,125	357

Commercial Banking:	Commercial Banking:									Commercial Banking:
Commercial real estate loans	Commercial real estate loans	1,743		1,170	25,420	28,333	2,708,151	2,736,484	—	Commercial real estate loans	929		1,648	8,558	11,135	2,417,771	2,428,906	—
Commercial real estate loans - owner occupied	Commercial real estate loans - owner occupied	261		—	142	403	425,664	426,067	—	Commercial real estate loans - owner occupied	403		93	263	759	383,165	383,924	—
Commercial loans	Commercial loans	692		170	1,104	1,966	877,746	879,712	—	Commercial loans	2,582		808	638	4,028	1,121,542	1,125,570	—
Total Commercial Banking	Total Commercial Banking	2,696		1,340	26,666	30,702	4,011,561	4,042,263	—	Total Commercial Banking	3,914		2,549	9,459	15,922	3,922,478	3,938,400	—

Total loans	Total loans	$	12,958	9,028	42,048	64,034	10,134,934	10,198,968	386	Total loans	$	14,790	10,759	19,170	44,719	10,696,806	10,741,525	357

Table of Contents

The following table provides information related to the amortized cost basis of loan payment delinquencies at December 31, ~~2020~~2021 (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		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

Personal Banking:	Personal Banking:									Personal Banking:
Residential mortgage loans	Residential mortgage loans	$	28,797	5,083	14,489	48,369	3,019,752	3,068,121	—	Residential mortgage loans	$	20,567	5,433	7,641	33,641	2,960,979	2,994,620	—
Home equity loans	Home equity loans	4,763		1,656	8,441	14,860	1,452,876	1,467,736	—	Home equity loans	3,153		949	4,262	8,364	1,311,567	1,319,931	—
Vehicle loans	Vehicle loans	7,707		1,776	4,599	14,082	1,138,592	1,152,674	1	Vehicle loans	5,331		1,487	1,635	8,453	1,475,778	1,484,231	—
Consumer loans	Consumer loans	2,867		966	1,459	5,292	350,027	355,319	584	Consumer loans	1,205		519	765	2,489	352,028	354,517	331
Total Personal Banking	Total Personal Banking	44,134		9,481	28,988	82,603	5,961,247	6,043,850	585	Total Personal Banking	30,256		8,388	14,303	52,947	6,100,352	6,153,299	331

Commercial Banking:	Commercial Banking:									Commercial Banking:
Commercial real estate loans	Commercial real estate loans	6,692		1,615	23,307	31,614	2,816,366	2,847,980	—	Commercial real estate loans	16,938		699	23,489	41,126	2,584,355	2,625,481	—
Commercial real estate loans - owner occupied	Commercial real estate loans - owner occupied	4,231		—	1,980	6,211	491,698	497,909	—	Commercial real estate loans - owner occupied	127		70	574	771	389,232	390,003	—
Commercial loans	Commercial loans	6,405		864	7,325	14,594	1,176,516	1,191,110	—	Commercial loans	193		727	1,105	2,025	845,584	847,609	—
Total Commercial Banking	Total Commercial Banking	17,328		2,479	32,612	52,419	4,484,580	4,536,999	—	Total Commercial Banking	17,258		1,496	25,168	43,922	3,819,171	3,863,093	—
Total originated loans	Total originated loans	$	61,462	11,960	61,600	135,022	10,445,827	10,580,849	585	Total originated loans	$	47,514	9,884	39,471	96,869	9,919,523	10,016,392	331

~~Tabl~~e of ~~Contents~~

Credit Quality Indicators: For Commercial Banking ~~loans~~ 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 Mention — 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.

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 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.

Table of Contents

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 ~~PCD loans,~~ 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.

~~Tabl~~e 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 September 30, ~~2021~~2022 (in thousands):

YTD September 30, 2021 2020 2019 2018 2017 Prior Revolving loans Revolving loans converted to term loans Total loans
receivable
Personal Banking:
Residential mortgage loans
Pass $ 487,627 627,031 327,054 169,600 186,866 1,174,311 — — 2,972,489
Substandard — 495 205 565 946 14,821 — — 17,032
Total residential mortgage loans 487,627 627,526 327,259 170,165 187,812 1,189,132 — — 2,989,521
Home equity loans
Pass 122,912 225,366 150,967 69,938 67,057 228,689 437,098 40,452 1,342,479
Substandard — 66 539 65 361 4,116 1,440 1,282 7,869
Total home equity loans 122,912 225,432 151,506 70,003 67,418 232,805 438,538 41,734 1,350,348
Vehicle loans
Pass 679,196 330,014 235,766 139,654 41,199 32,385 — — 1,458,214
Substandard 196 233 1,056 885 405 201 — — 2,976
Total vehicle loans 679,392 330,247 236,822 140,539 41,604 32,586 — — 1,461,190
Consumer loans
Pass 97,143 91,731 54,194 23,280 11,168 13,248 61,703 1,679 354,146
Substandard 145 151 328 180 132 144 410 10 1,500
Total consumer loans 97,288 91,882 54,522 23,460 11,300 13,392 62,113 1,689 355,646
Total Personal Banking 1,387,219 1,275,087 770,109 404,167 308,134 1,467,915 500,651 43,423 6,156,705
Business Banking:
Commercial real estate loans
Pass 231,278 449,316 415,206 280,005 238,909 757,071 29,551 10,509 2,411,845
Special Mention 811 2,653 34,758 1,177 4,149 10,891 708 25 55,172
Substandard — 33,671 27,741 49,665 59,169 92,974 1,233 5,014 269,467
Total commercial real estate loans 232,089 485,640 477,705 330,847 302,227 860,936 31,492 15,548 2,736,484
Commercial real estate loans - owner occupied
Pass 65,945 24,876 56,170 69,834 59,792 105,531 2,851 2,748 387,747
Special Mention — — 1,729 784 2,963 1,770 616 — 7,862
Substandard — — 2,783 1,195 9,072 16,542 98 768 30,458
Total commercial real estate loans - owner occupied 65,945 24,876 60,682 71,813 71,827 123,843 3,565 3,516 426,067
Commercial loans
Pass 245,021 111,415 79,383 32,820 37,961 80,850 215,455 10,760 813,665
Special Mention 108 5,578 806 1,384 52 646 2,402 — 10,976
Substandard 401 5,215 5,852 5,840 3,828 3,717 15,032 15,186 55,071
Total commercial loans 245,530 122,208 86,041 40,044 41,841 85,213 232,889 25,946 879,712
Total Business Banking 543,564 632,724 624,428 442,704 415,895 1,069,992 267,946 45,010 4,042,263
Total loans $ 1,930,783 1,907,811 1,394,537 846,871 724,029 2,537,907 768,597 88,433 10,198,968


	YTD September 30, 2022		2021	2020	2019	2018	Prior	Revolving loans	Revolving loans converted to term loans	Total loans receivable
Personal Banking:
Residential mortgage loans
Pass	$	496,721	841,725	557,403	271,096	136,426	1,084,797	—	—	3,388,168
Substandard	—		224	310	351	709	12,136	—	—	13,730
Total residential mortgage loans	496,721		841,949	557,713	271,447	137,135	1,096,933	—	—	3,401,898
Home equity loans
Pass	99,288		132,418	180,140	115,548	52,827	214,833	443,136	41,778	1,279,968
Substandard	—		47	26	62	382	3,075	579	850	5,021
Total home equity loans	99,288		132,465	180,166	115,610	53,209	217,908	443,715	42,628	1,284,989
Vehicle loans
Pass	791,768		670,925	254,957	156,151	82,807	47,352	—	—	2,003,960
Substandard	214		969	503	656	541	354	—	—	3,237
Total vehicle loans	791,982		671,894	255,460	156,807	83,348	47,706	—	—	2,007,197
Consumer loans
Pass	14,944		11,232	5,066	4,313	3,002	5,631	63,134	1,196	108,518
Substandard	—		8	6	4	5	52	405	43	523
Total consumer loans	14,944		11,240	5,072	4,317	3,007	5,683	63,539	1,239	109,041
Total Personal Banking	1,402,935		1,657,548	998,411	548,181	276,699	1,368,230	507,254	43,867	6,803,125
Business Banking:
Commercial real estate loans
Pass	238,090		353,748	395,986	255,223	214,146	740,333	26,992	7,447	2,231,965
Special mention	—		787	1,350	20,784	1,015	7,244	111	15	31,306
Substandard	—		95	7,066	26,833	42,783	87,511	489	858	165,635


Total commercial real estate loans	238,090		354,630	404,402	302,840	257,944	835,088	27,592	8,320	2,428,906
Commercial real estate loans - owner occupied
Pass	53,373		62,701	18,001	51,376	46,512	121,462	2,703	1,555	357,683
Special mention	—		—	—	—	1,673	501	1,204	—	3,378
Substandard	—		—	—	5,379	2,509	13,002	59	1,914	22,863


Total commercial real estate loans - owner occupied	53,373		62,701	18,001	56,755	50,694	134,965	3,966	3,469	383,924
Commercial loans
Pass	451,388		102,258	58,114	50,237	18,805	60,839	349,086	4,103	1,094,830
Special mention	144		209	275	1,282	193	—	1,901	—	4,004
Substandard	540		291	1,088	2,338	1,825	1,356	12,791	6,507	26,736


Total commercial loans	452,072		102,758	59,477	53,857	20,823	62,195	363,778	10,610	1,125,570
Total Business Banking	743,535		520,089	481,880	413,452	329,461	1,032,248	395,336	22,399	3,938,400

Total loans	$	2,146,470	2,177,637	1,480,291	961,633	606,160	2,400,478	902,590	66,266	10,741,525

~~For~~During the nine months ended September 30, ~~2021, $23.0~~2022, $13.4 million of revolving loans were converted to term loans.

2827

~~Tabl~~e 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 December 31, ~~2020~~2021 (in thousands):

2020 2019 2018 2017 2016 Prior Revolving loans Revolving loans converted to term loans Total loans
receivable
Personal Banking:
Residential mortgage loans
Pass $ 641,963 418,057 229,477 247,426 215,893 1,289,728 — — 3,042,544
Substandard — 68 1,293 1,674 1,091 21,451 — — 25,577
Total residential mortgage loans 641,963 418,125 230,770 249,100 216,984 1,311,179 — — 3,068,121
Home equity loans
Pass 273,076 193,439 94,757 87,717 81,212 219,061 465,453 40,759 1,455,474
Substandard — 210 318 281 876 5,158 3,509 1,910 12,262
Total home equity loans 273,076 193,649 95,075 87,998 82,088 224,219 468,962 42,669 1,467,736
Vehicle loans
Pass 448,746 352,661 218,372 70,122 31,197 24,791 — — 1,145,889
Substandard 343 1,958 2,087 1,210 667 519 — — 6,784
Total vehicle loans 449,089 354,619 220,459 71,332 31,864 25,310 — — 1,152,673
Consumer loans
Pass 128,809 83,419 35,183 17,439 7,848 11,757 66,965 1,695 353,115
Substandard 133 399 139 192 36 619 686 1 2,205
Total consumer loans 128,942 83,818 35,322 17,631 7,884 12,376 67,651 1,696 355,320
Total Personal Banking 1,493,070 1,050,211 581,626 426,061 338,820 1,573,084 536,613 44,365 6,043,850
Business Banking:
Commercial real estate loans
Pass 417,390 473,115 316,045 264,702 195,168 709,459 36,980 29,755 2,442,614
Special Mention 584 3,381 20,180 24,675 15,424 15,817 597 3,048 83,706
Substandard 7,426 4,007 57,694 56,991 24,056 140,147 2,240 29,100 321,661
Total commercial real estate loans 425,400 480,503 393,919 346,368 234,648 865,423 39,817 61,903 2,847,981
Commercial real estate loans - owner occupied
Pass 24,895 67,162 87,497 71,626 46,760 100,081 4,422 7,648 410,091
Special Mention — 4,371 4,514 3,643 4,276 3,689 3,822 — 24,315
Substandard — 21,627 1,903 12,898 4,013 21,777 874 410 63,502
Total commercial real estate loans - owner occupied 24,895 93,160 93,914 88,167 55,049 125,547 9,118 8,058 497,908
Commercial loans
Pass 479,436 99,877 50,915 51,858 58,597 49,178 286,467 16,170 1,092,498
Special Mention 5,828 2,751 5,579 4,588 162 190 16,512 5,668 41,278
Substandard 1,660 3,343 2,932 2,016 2,266 3,003 27,988 14,126 57,334
Total commercial loans 486,924 105,971 59,426 58,462 61,025 52,371 330,967 35,964 1,191,110
Total Business Banking 937,219 679,634 547,259 492,997 350,722 1,043,341 379,902 105,925 4,536,999
Total loans $ 2,430,289 1,729,845 1,128,885 919,058 689,542 2,616,425 916,515 150,290 10,580,849


	2021		2020	2019	2018	2017	Prior	Revolving loans	Revolving loans converted to term loans	Total loans receivable
Personal Banking:
Residential mortgage loans
Pass	$	644,862	602,429	304,275	156,639	171,240	1,098,635	—	—	2,978,080
Substandard	138		489	377	538	882	14,116	—	—	16,540
Total residential mortgage loans	645,000		602,918	304,652	157,177	172,122	1,112,751	—	—	2,994,620
Home equity loans
Pass	150,847		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 loans	150,847		210,224	139,102	65,071	62,147	213,779	436,935	41,826	1,319,931
Vehicle loans
Pass	801,084		292,804	205,653	119,304	34,546	27,576	—	—	1,480,967
Substandard	387		365	1,141	745	379	247	—	—	3,264
Total vehicle loans	801,471		293,169	206,794	120,049	34,925	27,823	—	—	1,484,231
Consumer loans
Pass	117,856		81,266	47,195	20,595	9,794	12,202	63,025	1,578	353,511
Substandard	213		161	105	64	26	50	357	30	1,006
Total consumer loans	118,069		81,427	47,300	20,659	9,820	12,252	63,382	1,608	354,517
Total Personal Banking	1,715,387		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
Pass	306,689		433,219	335,541	263,524	221,450	683,537	26,288	10,179	2,280,427
Special mention	803		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 loans	307,492		469,180	432,766	312,865	278,921	781,377	27,509	15,371	2,625,481
Commercial real estate - owner occupied
Pass	69,084		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 loans	69,084		19,452	55,572	64,480	67,475	106,733	3,678	3,529	390,003
Commercial loans
Pass	224,367		110,171	73,276	27,668	20,748	76,987	262,805	12,301	808,323
Special mention	197		661	812	1,195	50	581	2,234	—	5,730
Substandard	329		4,767	5,102	4,437	1,529	2,116	6,667	8,609	33,556


Total commercial loans	224,893		115,599	79,190	33,300	22,327	79,684	271,706	20,910	847,609
Total Business Banking	601,469		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

~~For~~During the year ended December 31, ~~2020, $23.1~~2021, $27.3 million of revolving loans were converted to term loans.

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(4) Goodwill and Other Intangible Assets

The following table provides information for intangible assets subject to amortization at the dates indicated (in thousands):


		September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Amortizable intangible assets:	Amortizable intangible assets:				Amortizable intangible assets:
Core deposit intangibles - gross	Core deposit intangibles - gross	$	74,899	71,182	Core deposit intangibles - gross	$	74,899	74,899
Acquisitions		—		3,717

Less: accumulated amortization	Less: accumulated amortization	(60,974)		(56,896)	Less: accumulated amortization	(65,446)		(62,158)
Core deposit intangibles - net	Core deposit intangibles - net	$	13,925	18,003	Core deposit intangibles - net	$	9,453	12,741
Customer and Contract intangible assets - gross	Customer and Contract intangible assets - gross	$	12,775	12,775	Customer and Contract intangible assets - gross	$	12,775	12,775

Customer list intangible assets disposed of due to sale of insurance business	Customer list intangible assets disposed of due to sale of insurance business	(1,591)		—	Customer list intangible assets disposed of due to sale of insurance business	—		(1,547)
Less: accumulated amortization	Less: accumulated amortization	(11,068)		(10,842)	Less: accumulated amortization	(12,737)		(11,133)
Customer and Contract intangible assets - net	Customer and Contract intangible assets - net	116		1,933	Customer and Contract intangible assets - net	38		95
Total intangible assets - net	Total intangible assets - net	$	14,041	19,936	Total intangible assets - net	$	9,491	12,836

The following table shows the actual aggregate amortization expense for the quarters and nine months ended September 30, ~~2021~~2022 and ~~2020,~~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, ~~2021~~2022	$	~~1,321~~1,047
For the quarter ended September 30, ~~2020~~2021	~~1,781~~1,321
For the nine months ended September 30, 2022	3,345
For the nine months ended September 30, 2021	4,348
~~For the nine months ended September 30, 2020~~	~~5,192~~
~~For the year ending December 31, 2021~~	~~5,509~~
For the year ending December 31, 2022	4,277
For the year ending December 31, 2023	3,270
For the year ending December 31, 2024	2,452
For the year ending December 31, 2025	1,662
For the year ending December 31, 2026	871
For the year ending December 31, 2027	304

The following table provides information for the changes in the carrying amount of goodwill (in thousands):


	Total
Balance at December 31, ~~2019~~2020	$	~~346,103~~
~~Goodwill acquired~~	~~36,176~~

~~Balance at December 31, 2020~~	382,279
Purchase accounting adjustment	77
Goodwill disposed of due to sale of insurance business	(1,359)
Balance at December 31, 2021	380,997


Balance at September 30, ~~2021~~2022	$	380,997

We performed our annual goodwill impairment test as of June 30, ~~2021~~2022 in accordance with ASC 350 ~~as updated by ASU 2017-04 ("Step 0"),~~ and concluded that goodwill was not impaired. As of September 30, ~~2021,~~2022, there were no events or changes in circumstances that would cause us to update that goodwill impairment test and we have concluded there is no impairment of goodwill.

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(5) Borrowed Funds

(a) Borrowings

September 30, 2021
Amount Average rate
Collateralized borrowings, due within one year $ 126,496 0.19 %
Total borrowed funds $ 126,496

Borrowed funds at September 30, 2022 and December 31, 2021 are presented in the following table:


	September 30, 2022				December 31, 2021
	Amount		Average rate		Amount		Average rate

Note payable to the FHLB of Pittsburgh, due within one year	$	11,900	3.11	%	$	—	—	%




Collateralized borrowings, due within one year	98,315		0.18	%	139,093		0.19	%
Collateral received, due within one year	39,821		3.08	%	—		—
Total borrowed funds	$	150,036			$	139,093

Borrowings from the Federal Home Loan ~~Banks ("FHLB"~~Bank (“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. ~~During the year ended September 30, 2021, $2.0 million of term notes payable to the FHLB of Indianapolis matured.~~

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~~At September 30, 2022 and December 31, 2021, the balance of the revolving line of credit ~~had no balance as of~~was $11.9 million and $0, respectively.

At September 30, ~~2021~~2022 and December 31, ~~2020.~~

~~At September 30,~~ 2021, ~~and December 31, 2020,~~ collateralized borrowings due within one year were ~~$126.5~~$98.3 million and ~~$137.7~~$139.1 million, respectively. These borrowings are collateralized by cash or various securities held in safekeeping by the FHLB.

At September 30, 2022 and December 31, 2021, collateral received was $39.8 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"~~(“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 September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, subordinated debentures, net of issuance costs, were ~~$123.5~~$113.8 million and ~~$123.3~~$123.6 million, respectively.

(b) Trust Preferred Securities

The Company has 7seven 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"I”), a Delaware statutory business trust, Union National Capital Trust II ("(“UNCT ~~II"~~II”), a Delaware statutory business trust, MFBC Statutory Trust I, a Delaware statutory trust, and Universal Preferred Trust, a Delaware statutory trust (the ~~"Trusts"~~“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.

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The following table sets forth a summary of the cumulative trust preferred securities and the junior subordinated debt held by the Trust as of ~~September 30, 2021.~~the date listed.


		Maturity date	Interest rate	Capital debt securities		September 30, 2021			Maturity date	Interest rate	Capital debt securities		September 30, 2022		December 31, 2021
Northwest Bancorp Capital Trust III	Northwest Bancorp Capital Trust III	December 30, 2035	3-month LIBOR plus 1.38%	$	50,000	$	51,547	Northwest Bancorp Capital Trust III	December 30, 2035	3-month LIBOR plus 1.38%	$	50,000	$	51,547	51,547
Northwest Bancorp Statutory Trust IV	Northwest Bancorp Statutory Trust IV	December 15, 2035	3-month LIBOR plus 1.38%	50,000		51,547		Northwest Bancorp Statutory Trust IV	December 15, 2035	3-month LIBOR plus 1.38%	50,000		51,547		51,547
LNB Trust II	LNB Trust II	June 15, 2037	3-month LIBOR plus 1.48%	7,875		8,119		LNB Trust II	June 15, 2037	3-month LIBOR plus 1.48%	7,875		8,119		8,119
UNCT I (1)	UNCT I (1)	January 23, 2034	3-month LIBOR plus 2.85%	8,000		7,944		UNCT I (1)	January 23, 2034	3-month LIBOR plus 2.85%	8,000		7,968		7,950
UNCT II (1)	UNCT II (1)	November 23, 2034	3-month LIBOR plus 2.00%	3,000		2,734		UNCT II (1)	November 23, 2034	3-month LIBOR plus 2.00%	3,000		2,762		2,741
MFBC Statutory Trust I (1)	MFBC Statutory Trust I (1)	September 15, 2035	3-month LIBOR plus 1.70%	5,000		3,554		MFBC Statutory Trust I (1)	September 15, 2035	3-month LIBOR plus 1.70%	5,000		3,658		3,580
Universal Preferred Trust (1)	Universal Preferred Trust (1)	October 7, 2035	3-month LIBOR plus 1.69%	5,000		3,544		Universal Preferred Trust (1)	October 7, 2035	3-month LIBOR plus 1.69%	5,000		3,648		3,570
						$	128,989						$	129,249	129,054

(1) Net of discounts due to the fair value adjustment made at the time of acquisition.

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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 September 30, ~~2021,~~2022, the maximum potential amount of future payments we could be required to make under these non-recourse standby letters of credit was $47.8 million, of which ~~$38.4~~$37.6 million is fully collateralized. At September 30, ~~2021,~~2022, we had a liability which represents deferred income of ~~$481,000~~$710,000 related to the standby letters of credit.

In addition, we maintain a $5.0 million credit limit with a correspondent bank for private label credit card facilities for certain existing commercial clients of the Bank, of which $727,000 of the credit limit was allocated to credit cards that have been issued. These issued credit cards had an outstanding balance of $62,000 at September 30, 2022. The clients of the Bank are responsible for repaying any balances due on these credit cards directly to the correspondent bank; however, if the customer fails to repay their balance, the Bank could be required to satisfy the obligation to the correspondent bank and initiate collection from our customer as part of the existing credit facility of that customer.

(7) Earnings Per Share

Basic earnings per common share ~~("EPS"~~(“EPS”) is computed by dividing net income available to common shareholders by the weighted 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.

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The following table sets forth the computation of basic and diluted EPS (in thousands, except share data and per share amounts):


		Quarter ended September 30,			Nine months ended September 30,			Quarter ended September 30,			Nine months ended September 30,
		2021		2020	2021	2020		2022		2021	2022	2021
Net income	Net income	$	35,063	38,050	124,267	39,789	Net income	$	37,304	35,063	99,017	124,267
Less: Dividends and undistributed earnings allocated to participating securities	Less: Dividends and undistributed earnings allocated to participating securities	237		—	841	—	Less: Dividends and undistributed earnings allocated to participating securities	166		237	441	841
Net income available to common shareholders	Net income available to common shareholders	$	34,826	38,050	123,426	39,789	Net income available to common shareholders	$	37,138	34,826	98,576	123,426

Weighted average common shares outstanding	Weighted average common shares outstanding	126,111,774		126,855,810	126,333,290	118,088,122	Weighted average common shares outstanding	126,320,706		126,111,774	126,082,217	126,333,290
Add: Participating shares outstanding	Add: Participating shares outstanding	856,206		—	856,206	—	Add: Participating shares outstanding	565,729		856,206	565,729	856,206
Total weighted average common shares and dilutive potential shares	Total weighted average common shares and dilutive potential shares	126,967,980		126,855,810	127,189,496	118,088,122	Total weighted average common shares and dilutive potential shares	126,886,435		126,967,980	126,647,946	127,189,496

Basic earnings per share	Basic earnings per share	$	0.28	0.30	0.98	0.34	Basic earnings per share	$	0.29	0.28	0.78	0.98

Diluted earnings per share	Diluted earnings per share	$	0.27	0.30	0.97	0.34	Diluted earnings per share	$	0.29	0.27	0.78	0.97

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(8) Pension and Other Post-Retirement Benefits

The following table sets forth the net periodic costs for the defined benefit pension plans and post-retirement healthcare plans for the periods indicated (in thousands):


		Quarter ended September 30,						Quarter ended September 30,
		Pension benefits			Other post-retirement benefits			Pension benefits			Other post-retirement benefits
		2021		2020	2021	2020		2022		2021	2022	2021
Service cost	Service cost	$	2,860	2,097	—	—	Service cost	$	2,599	2,860	—	—
Interest cost	Interest cost	1,517		1,713	4	7	Interest cost	1,671		1,517	10	4
Expected return on plan assets	Expected return on plan assets	(3,464)		(3,090)	—	—	Expected return on plan assets	(3,864)		(3,464)	—	—
Amortization of prior service cost	Amortization of prior service cost	(580)		(580)	—	—	Amortization of prior service cost	(564)		(580)	—	—
Amortization of the net loss	Amortization of the net loss	1,038		925	3	4	Amortization of the net loss	381		1,038	2	3
Net periodic cost	Net periodic cost	$	1,371	1,065	7	11	Net periodic cost	$	223	1,371	12	7

Nine months ended September 30,
Pension benefits Other post-retirement benefits
2021 2020 2021 2020
Service cost $ 8,580 6,293 — —
Interest cost 4,552 5,141 13 20
Expected return on plan assets (10,394) (9,272) — —
Amortization of prior service cost (1,741) (1,742) — —
Amortization of the net loss 3,117 2,773 10 13
Net periodic cost $ 4,114 3,193 23 33



	Nine months ended September 30,
	Pension benefits			Other post-retirement benefits
	2022		2021	2022	2021
Service cost	$	7,797	8,580	—	—
Interest cost	5,013		4,552	30	13
Expected return on plan assets	(11,592)		(10,394)	—	—
Amortization of prior service cost	(1,692)		(1,741)	—	—
Amortization of the net loss	1,143		3,117	6	10
Net periodic cost	$	669	4,114	36	23

We anticipate making a contribution to our defined benefit pension plan between ~~$4.0 million~~$0 and ~~$8.0~~$2.0 million during the year ending December 31, ~~2021.~~2022.

(9) Disclosures About Fair Value of Financial Instruments

We are required to disclose fair value information about financial instruments whether or not recognized in the Consolidated Statement of Financial Condition. Fair value information of certain financial instruments and all nonfinancial 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

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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;

~~Tabl~~e of ~~Contents~~

◦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

◦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 Statement of Financial Condition approximate fair value for the following financial instruments: cash and 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, foreign exchange swaps, risk participation agreements, and accrued interest 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-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 U.S. government obligations. Certain debt securities which were AAA rated at purchase do not have an active market and as such we have used an alternative method to determine the fair value of these securities. The fair value has been determined using a discounted cash flow model using market assumptions, which generally include cash flow, collateral and other market assumptions. As such, 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.

Debt Securities — held-to-maturity - The fair value of debt securities held-to-maturity is determined in the same manner as debt securities available-for-sale.

Loans Receivable

Loans with comparable characteristics including collateral and re-pricing structures are segregated for valuation purposes. 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.

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~~Loans Held for Investment~~

The fair value of loans held for investment is estimated using a discounted cash flow analysis that utilizes interest rates currently being offered for similar loans adjusted for liquidity and credit risk.

FHLB Stock

Due to the restrictions placed on transferability of FHLB stock, it is not practical to determine the fair value. FHLB stock is recorded at cost.

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

~~Tabl~~e of ~~Contents~~

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.

Borrowed Funds

Fixed rate advances are valued by comparing their contractual cost to the prevailing market cost. The carrying amount of ~~collateralized borrowings~~repurchase agreements approximates ~~the~~their 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.

Interest Rate Lock Commitments and Forward Commitments

The fair value of interest rate lock commitments is based on the value 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, a significant unobservable input). The fair value of forward sale commitments is based on quoted prices from the secondary market based on the settlement date of the contracts.

~~Cash Flow Hedges,~~ 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 September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, there was no significant unrealized appreciation or depreciation on these financial instruments.

3534

~~Tabl~~e Table of Contents

The following table sets forth the carrying amount and estimated fair value of our financial instruments included in the Consolidated Statement of Financial Condition at September 30, ~~2021~~2022 (in thousands):


		Carrying amount		Estimated fair value	Level 1	Level 2	Level 3		Carrying amount		Estimated fair value	Level 1	Level 2	Level 3
Financial assets:	Financial assets:							Financial assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,090,485	1,090,485	1,090,485	—	—	Cash and cash equivalents	$	118,549	118,549	118,549	—	—
Securities available-for-sale	Securities available-for-sale	1,583,715		1,583,715	—	1,583,715	—	Securities available-for-sale	1,251,791		1,251,791	—	1,251,791	—
Securities held-to-maturity	Securities held-to-maturity	618,395		609,777	—	609,777	—	Securities held-to-maturity	899,411		771,238	—	771,238	—
Loans receivable, net	Loans receivable, net	10,061,790		10,012,659	—	—	10,012,659	Loans receivable, net	10,615,872		9,639,188	—	—	9,639,188
Residential mortgage loans held-for-sale	Residential mortgage loans held-for-sale	27,411		27,411	—	—	27,411	Residential mortgage loans held-for-sale	15,834		15,834	—	—	15,834
Accrued interest receivable	Accrued interest receivable	26,995		26,995	26,995	—	—	Accrued interest receivable	29,536		29,536	29,536	—	—
Interest rate lock commitments	Interest rate lock commitments	3,137		3,137	—	—	3,137	Interest rate lock commitments	1,063		1,063	—	—	1,063
Forward commitments		518		518	—	518	—

Foreign exchange swaps	Foreign exchange swaps	1,399		1,399	—	1,399	—	Foreign exchange swaps	38		38	—	38	—
Interest rate swaps not designated as hedging instruments	Interest rate swaps not designated as hedging instruments	34,983		34,983	—	34,983	—	Interest rate swaps not designated as hedging instruments	50,295		50,295	—	50,295	—
FHLB stock	FHLB stock	14,567		14,567	—	—	—	FHLB stock	19,281		19,281	—	—	—
Total financial assets	Total financial assets	$	13,463,395	13,405,646	1,117,480	2,230,392	10,043,207	Total financial assets	$	13,001,670	11,896,813	148,085	2,073,362	9,656,085

Financial liabilities:	Financial liabilities:							Financial liabilities:
Savings and checking deposits	Savings and checking deposits	$	10,834,386	10,834,386	10,834,386	—	—	Savings and checking deposits	$	10,811,282	10,811,282	10,811,282	—	—
Time deposits	Time deposits	1,387,827		1,402,858	—	—	1,402,858	Time deposits	1,067,110		1,069,395	—	—	1,069,395

Borrowed funds	Borrowed funds	126,496		126,496	126,496	—	—	Borrowed funds	150,036		149,914	149,914	—	—
Subordinated debt	Subordinated debt	123,486		129,421	—	129,421	—	Subordinated debt	113,753		103,312	—	103,312	—
Junior subordinated debentures	Junior subordinated debentures	128,989		121,571	—	—	121,571	Junior subordinated debentures	129,249		117,475	—	—	117,475
Forward commitments								Forward commitments	139		139	—	139	—
Foreign exchange swaps	Foreign exchange swaps	961		961	—	961	—	Foreign exchange swaps	9		9	—	9	—

Interest rate swaps not designated as hedging instruments	Interest rate swaps not designated as hedging instruments	35,152		35,152	—	35,152	—	Interest rate swaps not designated as hedging instruments	50,295		50,295	—	50,295	—
Risk participation agreements	Risk participation agreements	71		71	—	71	—	Risk participation agreements	25		25	—	25	—
Accrued interest payable	Accrued interest payable	589		589	589	—	—	Accrued interest payable	831		831	831	—	—
Total financial liabilities	Total financial liabilities	$	12,637,957	12,651,505	10,961,471	165,605	1,524,429	Total financial liabilities	$	12,322,729	12,302,677	10,962,027	153,780	1,186,870

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The following table sets forth the carrying amount and estimated fair value of our financial instruments included in the Consolidated Statement of Financial Condition at December 31, ~~2020~~2021 (in thousands):

Carrying
amount Estimated
fair value Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents $ 736,277 736,277 736,277 — —
Securities available-for-sale 1,398,941 1,398,941 — 1,398,941 —
Securities held-to-maturity 178,887 179,666 — 179,666 —
Loans receivable, net 10,387,636 10,334,521 — — 10,334,521
Residential mortgage loans held-for-sale 58,786 58,786 — — 58,786
Accrued interest receivable 35,554 35,554 35,554 — —
Interest rate lock commitments 6,465 6,465 — — 6,465
Forward commitments 1,105 1,105 — 1,105 —
Interest rate swaps not designated as hedging instruments 53,863 53,863 — 53,863 —
FHLB stock 21,748 21,748 — — —
Total financial assets $ 12,879,262 12,826,926 771,831 1,633,575 10,399,772
Financial liabilities:
Savings and checking accounts $ 9,957,137 9,957,137 9,957,137 — —
Time deposits 1,642,096 1,669,546 — — 1,669,546
Borrowed funds 159,715 159,745 159,745 — —
Subordinated debt 123,329 123,329 — 123,329 —
Junior subordinated debentures 128,794 121,106 — — 121,106
Interest rate swaps not designated as hedging instruments 54,579 54,579 — 54,579 —
Risk participation agreements 86 86 — 86 —
Accrued interest payable 2,054 2,054 2,054 — —
Total financial liabilities $ 12,067,790 12,087,582 10,118,936 177,994 1,790,652


	Carrying amount		Estimated fair value	Level 1	Level 2	Level 3
Financial assets:
Cash and cash equivalents	$	1,279,259	1,279,259	1,279,259	—	—
Securities available-for-sale	1,548,592		1,548,592	—	1,548,592	—
Securities held-to-maturity	768,154		751,513	—	751,513	—
Loans receivable, net	9,889,095		9,648,825	—	—	9,648,825
Residential mortgage loans held-for-sale	25,056		25,056	—	—	25,056
Accrued interest receivable	25,599		25,599	25,599	—	—
Interest rate lock commitments	1,684		1,684	—	—	1,684
Forward commitments	371		371	—	371	—
Interest rate swaps not designated as hedging instruments	31,254		31,254	—	31,254	—
FHLB stock	14,184		14,184	—	—	—
Total financial assets	$	13,583,248	13,326,337	1,304,858	2,331,730	9,675,565

Financial liabilities:
Savings and checking accounts	$	10,973,610	10,973,610	10,973,610	—	—
Time deposits	1,327,555		1,339,308	—	—	1,339,308
Borrowed funds	139,093		139,093	139,093	—	—
Subordinated debt	123,575		129,138	—	129,138	—
Junior subordinated debentures	129,054		120,083	—	—	120,083
Foreign exchange swaps	341		341	—	341	—
Interest rate swaps not designated as hedging instruments	31,357		31,357	—	31,357	—
Risk participation agreements	60		60	—	60	—
Accrued interest payable	1,804		1,804	1,804	—	—
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 September 30, ~~2021~~2022 and December 31, ~~2020.~~ 2021.

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The following table represents assets and liabilities measured at fair value on a recurring basis at September 30, ~~2021~~2022 (in thousands):

Level 1 Level 2 Level 3 Total assets
at fair value
Debt securities:
U.S. government and agencies $ — 56,992 — 56,992
Government-sponsored enterprises — 46,662 — 46,662
States and political subdivisions — 126,529 — 126,529
Total debt securities — 230,183 — 230,183
Residential mortgage-backed securities:
GNMA — 18,029 — 18,029
FNMA — 171,926 — 171,926
FHLMC — 106,027 — 106,027
Non-agency — 442 — 442
Collateralized mortgage obligations:
GNMA — 490,548 — 490,548
FNMA — 277,829 — 277,829
FHLMC — 288,731 — 288,731
Total mortgage-backed securities — 1,353,532 — 1,353,532
Interest rate lock commitments — — 3,137 3,137
Forward commitments — 518 — 518
Foreign exchange swaps — 1,399 — 1,399
Interest rate swaps not designated as hedging instruments — 34,983 — 34,983
Total assets $ — 1,620,615 3,137 1,623,752
Foreign exchange swaps $ — 961 — 961
Interest rate swaps not designated as hedging instruments — 35,152 — 35,152
Risk participation agreements — 71 — 71
Total liabilities $ — 36,184 — 36,184


	Level 1		Level 2	Level 3	Total assets at fair value


Debt securities:
U.S. government and agencies	$	—	61,925	—	61,925
Government-sponsored enterprises	—		39,091	—	39,091
States and political subdivisions	—		106,176	—	106,176
Corporate	—		13,140	—	13,140
Total debt securities	—		220,332	—	220,332

Residential mortgage-backed securities:
GNMA	—		12,768	—	12,768
FNMA	—		119,202	—	119,202
FHLMC	—		76,124	—	76,124
Non-agency	—		6	—	6
Collateralized mortgage obligations:
GNMA	—		379,420	—	379,420
FNMA	—		194,850	—	194,850
FHLMC	—		249,089	—	249,089


Total mortgage-backed securities	—		1,031,459	—	1,031,459

Interest rate lock commitments	—		—	1,063	1,063

Foreign exchange swaps	—		38	—	38
Interest rate swaps not designated as hedging instruments	—		50,295	—	50,295
Total assets	$	—	1,302,124	1,063	1,303,187



Interest rate swaps not designated as hedging instruments	—		50,295	—	50,295
Foreign exchange swaps	—		9	—	9
Forward commitments	—		139	—	139
Risk participation agreements	—		25	—	25
Total liabilities	$	—	50,468	—	50,468

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The following table represents assets and liabilities measured at fair value on a recurring basis at December 31, ~~2020~~2021 (in thousands):


		Level 1		Level 2	Level 3	Total assets at fair value		Level 1		Level 2	Level 3	Total assets at fair value

Debt securities:	Debt securities:						Debt securities:
U.S. government and agencies	U.S. government and agencies	$	—	40,917	—	40,917	U.S. government and agencies	$	—	75,891	—	75,891
Government-sponsored enterprises	Government-sponsored enterprises	—		94,507	—	94,507	Government-sponsored enterprises	—		46,085	—	46,085
States and political subdivisions	States and political subdivisions	—		116,813	—	116,813	States and political subdivisions	—		128,701	—	128,701

Total debt securities	Total debt securities	—		252,237	—	252,237	Total debt securities	—		250,677	—	250,677

Residential mortgage-backed securities:	Residential mortgage-backed securities:						Residential mortgage-backed securities:
GNMA	GNMA	—		23,026	—	23,026	GNMA	—		16,510	—	16,510
FNMA	FNMA	—		203,571	—	203,571	FNMA	—		160,063	—	160,063
FHLMC	FHLMC	—		134,572	—	134,572	FHLMC	—		100,055	—	100,055
Non-agency	Non-agency	—		465	—	465	Non-agency	—		431	—	431
Collateralized mortgage obligations:	Collateralized mortgage obligations:						Collateralized mortgage obligations:
GNMA	GNMA	—		343,409	—	343,409	GNMA	—		492,328	—	492,328
FNMA	FNMA	—		262,109	—	262,109	FNMA	—		269,060	—	269,060
FHLMC	FHLMC	—		179,552	—	179,552	FHLMC	—		259,468	—	259,468

Total mortgage-backed securities	Total mortgage-backed securities	—		1,146,704	—	1,146,704	Total mortgage-backed securities	—		1,297,915	—	1,297,915

Interest rate lock commitments	Interest rate lock commitments	—		—	6,465	6,465	Interest rate lock commitments	—		—	1,684	1,684
Forward commitments	Forward commitments	—		1,105	—	1,105	Forward commitments	—		371	—	371
Interest rate swaps not designated as hedging instruments	Interest rate swaps not designated as hedging instruments	—		53,863	—	53,863	Interest rate swaps not designated as hedging instruments	—		31,254	—	31,254
Total assets	Total assets	$	—	1,453,909	6,465	1,460,374	Total assets	$	—	1,580,217	1,684	1,581,901

Foreign exchange swaps							Foreign exchange swaps	$	—	341	—	341
Interest rate swaps not designated as hedging instruments	Interest rate swaps not designated as hedging instruments	$	—	54,579	—	54,579	Interest rate swaps not designated as hedging instruments	—		31,357	—	31,357
Risk participation agreements	Risk participation agreements	—		86	—	86	Risk participation agreements	—		60	—	60

Total liabilities	Total liabilities	$	—	54,665	—	54,665	Total liabilities	$	—	31,758	—	31,758

The following table presents the changes in Level 3 assets and liabilities measured at fair value on a recurring basis (in thousands):

For the quarter ended September 30, For the nine months ended September 30,
2021 2020 2021 2020
Beginning balance $ 3,608 7,416 6,465 559
Total gains or losses:
Included in net income — — — —
Included in other comprehensive income — — — —
Interest rate lock commitments:
Net activity (471) 792 (3,328) 7,649
Transfers from Level 3 — — — —
Transfers into Level 3 — — — —
Ending balance $ 3,137 8,208 3,137 8,208


	For the quarter ended September 30,			Nine months ended September 30, 2022
	2022		2021	2022	2021
Beginning balance	$	1,520	3,608	1,684	6,465





Interest rate lock commitments:

Net activity	(457)		(471)	(621)	(3,328)



Ending balance	$	1,063	3,137	1,063	3,137

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

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The following table represents the fair market measurement for only those nonrecurring assets that had a fair market value below the carrying amount as of September 30, ~~2021~~2022 (in thousands):


		Level 1		Level 2	Level 3	Total assets at fair value		Level 1		Level 2	Level 3	Total assets at fair value
Loans individually assessed	Loans individually assessed	$	—	—	65,835	65,835	Loans individually assessed	$	—	—	21,173	21,173

Mortgage servicing rights	Mortgage servicing rights	—		—	2,333	2,333	Mortgage servicing rights	—		—	82	82
Real estate owned, net	Real estate owned, net	—		—	809	809	Real estate owned, net	—		—	450	450
Total assets	Total assets	$	—	—	68,977	68,977	Total assets	$	—	—	21,705	21,705

The following table represents the fair market measurement for only those nonrecurring assets that had a fair market value below the carrying amount as of December 31, ~~2020~~2021 (in thousands):


		Level 1		Level 2	Level 3	Total assets at fair value		Level 1		Level 2	Level 3	Total assets at fair value
Loans individually assessed	Loans individually assessed	$	—	—	95,303	95,303	Loans individually assessed	$	—	—	46,968	46,968

Mortgage servicing rights							Mortgage servicing rights	—		—	380	380
Real estate owned, net	Real estate owned, net	—		—	2,232	2,232	Real estate owned, net	—		—	873	873

Total assets	Total assets	$	—	—	97,535	97,535	Total assets	$	—	—	48,221	48,221

Individually Assessed Loans - A loan is considered to be individually assessed as described in Note 1(f) of the Notes to the Consolidated Financial Statements in Item 8 of Part II of our ~~2020~~2021 Annual Report on Form 10-K. We classify loans individually assessed as nonrecurring Level 3.

Real Estate Owned - Real estate owned is comprised of property acquired through foreclosure or voluntarily conveyed by 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 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 September 30, ~~2021~~2022 (in thousands):

Fair
value

Valuation
techniques

Significant
unobservable inputs

Range
(weighted average)

Fair value

Valuation techniques

Significant
unobservable inputs

Range (weighted average)

Loans individually assessed

65,835

Appraisal value (1)

Estimated cost to sell

10.0%

Loans individually assessed

21,173

Appraisal value (1)

Estimated cost to sell

10.0%

Discounted cash flow

Discount rate

10.92% to 15.4% (13.26%)

Discounted cash flow

Discount rate

6.47% to 14.56% (8.28%)

Mortgage servicing rights

2,333

Discounted cash flow

Annual service cost

$84

Mortgage servicing rights

Discounted cash flow

Annual service cost

$85

Prepayment rates

7.0% to 24.6% (11.2%)

Prepayment rate

7.0% to 15.1% (9.5%)

Expected life (months)

40.1 to 103.9 (73.2)

Expected life (months)

56.7 to 101.7 (75.7)

Option adjusted spread

750 basis points

Option adjusted spread

650 basis points

Forward yield curve

0.09% to 1.32%

Forward yield curve

2.56% to 4.16%

Real estate owned, net

809

Appraisal value (1)

Estimated cost to sell

10.0%

Real estate owned, net

450

Appraisal value (1)

Estimated cost to sell

10.0%

Loans held for sale

15,834

Quoted prices for similar loans in active markets adjusted by an expected pull-through rate

Estimated pull-through rate

100.0%

(1)Fair value is generally determined through independent appraisals of the underlying collateral, which may include Level 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

We are a party to derivative financial instruments in the normal course of business to manage our own exposure to fluctuations in interest rates and to meet the needs of our customers. The primary derivatives that we use are interest rate swaps and caps and foreign exchange contracts, which are entered into with counterparties that meet established credit standards. We believe that the credit risk inherent in all of our derivative contracts is minimal based on our credit standards and the netting and collateral provisions of the interest rate swap agreements.

~~Derivatives Designated as Hedging Instruments~~

During March 2020, the Company entered into 4 separate pay-fixed interest rate swaps in order to synthetically convert short-term three month FHLB advances to fixed-rate term funding with an aggregate value of $100 million with maturities ranging

4039

~~Tabl~~e Table of Contents

~~from~~ ~~three~~ to five years. Our risk management objective and strategy for these interest rate swaps at such time was to reduce our exposure to variability in interest-related cash outflows attributable to changes in the USD-LIBOR swap rate, the designated benchmark interest rate being hedged. Based upon our contemporaneous quantitative analysis at the inception of each interest rate swap, we have determined these interest rate swaps to qualify for hedge accounting in accordance with ASC 815, ~~Derivatives and Hedging~~.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the quarter ended September 30, 2020, the Company discontinued these cash flow hedges and, as a result, reclassified a $1.3 million loss into earnings. As of September 30, 2021, the Company had no cash flow hedges.

Derivatives Not Designated as Hedging Instruments

We act as an interest rate or foreign exchange swap counterparty for certain commercial borrowers in the normal course of servicing our customers, which are accounted for at fair value. We manage our exposure to such interest rate or foreign exchange swaps by entering into corresponding and offsetting interest rate swaps with third parties that mirror the terms of the swaps we have with the commercial borrowers. These positions (referred to as “customer swaps”) directly offset each other, and our exposure is the fair value of the derivatives due to changes in credit risk of our commercial borrowers and third parties. Customer swaps are recorded within other assets or other liabilities on the consolidated statement of financial condition at their estimated fair value. Changes to the fair value of assets and liabilities 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 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.

~~Tabl~~e of ~~Contents~~

The following table presents information regarding our derivative financial instruments for the periods indicated (in thousands):

Asset derivatives Liability derivatives
Notional amount Fair value Notional amount Fair value
At September 30, 2021
Derivatives not designated as hedging instruments:
Interest rate swap agreements $ 632,709 34,983 632,709 35,152
Foreign exchange swap agreements 20,027 1,399 2,824 961
Interest rate lock commitments 100,695 3,137 — —
Forward commitments 17,135 518 — —
Risk participation agreements — — 81,888 71
Total derivatives $ 770,566 40,037 717,421 36,184
At December 31, 2020
Derivatives not designated as hedging instruments:
Interest rate swap agreements $ 599,300 53,863 599,300 54,579
Interest rate lock commitments 171,357 6,465 — —
Forward commitments 25,474 1,105 — —
Risk participation agreements — — 77,532 86
Total derivatives $ 796,131 61,433 676,832 54,665


	Asset derivatives			Liability derivatives
	Notional amount		Fair value	Notional amount	Fair value
At September 30, 2022


Derivatives not designated as hedging instruments:
Interest rate swap agreements	$	659,480	50,295	659,480	50,295
Foreign exchange swap agreements	1,218		38	959	9
Interest rate lock commitments	38,880		1,063	—	—
Forward commitments	—		—	5,578	139
Risk participation agreements	—		—	114,796	25
Total Derivatives	$	699,578	51,396	780,813	50,468

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 commitments	67,473		1,684	—	—
Forward commitments	14,484		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 September 30, For the nine months ended September 30,
2021 2020 2021 2020
Hedging derivatives:
Decrease in interest expense $ — 67 — (35)
Non-hedging swap derivatives:
Increase/(decrease) in other income 590 (353) 1,087 (875)
Increase in mortgage banking income 345 315 3,915 8,563


	For the quarter ended September 30,			For the nine months ended September 30,
	2022		2021	2022	2021



Non-hedging swap derivatives:
Increase in other income	$	93	590	207	1,087
Increase in mortgage banking income	809		345	1,131	3,915

Table of Contents

(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 September 30, ~~2021,~~2022, we do not anticipate that the aggregate ultimate liability arising out of any pending or threatened legal proceedings will be material to our 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.

During the ~~year-ended~~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 September 30, ~~2021.~~2022.

~~Tabl~~e of ~~Contents~~

(12) Changes in Accumulated Other Comprehensive Income

The following tables show the changes in accumulated other comprehensive income by component for the periods indicated (in thousands):

For the quarter ended September 30, 2021
Unrealized
gains/(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, 2021 $ 3,533 — (49,725) (46,192)
Other comprehensive loss before reclassification adjustments (1) (6,455) — — (6,455)
Amounts reclassified from accumulated other comprehensive income (2) (3) (69) — 333 264
Net other comprehensive income/(loss) (6,524) — 333 (6,191)
Balance as of September 30, 2021 $ (2,991) — (49,392) (52,383)


	For the quarter ended September 30, 2022
	Unrealized losses on securities available-for-sale		Change in defined benefit pension plans	Total
Balance as of June 30, 2022	$	(117,056)	(25,574)	(142,630)



Other comprehensive loss before reclassification adjustments (1)	(48,387)		—	(48,387)
Amounts reclassified from accumulated other comprehensive income (2)	—		(131)	(131)

Net other comprehensive loss	(48,387)		(131)	(48,518)

Balance as of September 30, 2022	$	(165,443)	(25,705)	(191,148)

For the quarter ended September 30, 2020
Unrealized
gains/(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, 2020 $ 16,096 (946) (39,590) (24,440)
Other comprehensive income before reclassification adjustments (4) 676 — — 676
Amounts reclassified from accumulated other comprehensive income (5) (6) (7) (1) 946 250 1,195
Net other comprehensive income 675 946 250 1,871
Balance as of September 30, 2020 $ 16,771 — (39,340) (22,569)


	For the quarter ended September 30, 2021
	Unrealized gains/(losses) on securities available-for-sale		Change in defined benefit pension plans	Total
Balance as of June 30, 2021	$	3,533	(49,725)	(46,192)



Other comprehensive loss before reclassification adjustments (3)	(6,455)		—	(6,455)
Amounts reclassified from accumulated other comprehensive income (4) (5)	(69)		333	264

Net other comprehensive income	(6,524)		333	(6,191)

Balance as of September 30, 2021	$	(2,991)	(49,392)	(52,383)

(1)Consists of unrealized holding losses, net of tax of ~~($2,076).~~$14,705.

(2)Consists of realized gains, net of tax of $50.

(3)Consists of unrealized holding losses, net of tax $2,076.

(4)Consists of realized gains, net of tax $24.

(5)Consists of realized losses, net of tax of ($~~24)~~128).

~~(3)Consists of realized gains, net of tax of $128.~~

~~(4)Consists of unrealized holding gains, net of tax $107.~~

~~(5)Consists of realized gains on securities, net of tax ($1).~~

~~(6)Consists of realized losses, net of tax of $375.~~

~~(7)Consists of realized gains, net of tax of $99.~~

For the nine months ended September 30, 2021
Unrealized
gains/(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, 2020 $ 16,843 — (50,392) (33,549)
Other comprehensive loss before reclassification adjustments (1) (19,554) — — (19,554)
Amounts reclassified from accumulated other comprehensive income (2) (3) (280) — 1,000 720
Net other comprehensive income/(loss) (19,834) — 1,000 (18,834)
Balance as of September 30, 2021 $ (2,991) — (49,392) (52,383)

4341

~~Tabl~~e Table of Contents

For the nine months ended September 30, 2020
Unrealized
gains
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, 2019 $ 3,147 — (40,088) (36,941)
Other comprehensive income/(loss) before reclassification adjustments (4) (5) 13,623 (946) — 12,677
Amounts reclassified from accumulated other comprehensive income (6) (7) (8) 1 946 748 1,695
Net other comprehensive income 13,624 — 748 14,372
Balance as of September 30, 2020 $ 16,771 — (39,340) (22,569)



	For the nine months ended September 30, 2022
	Unrealized 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)	(153,124)		—	(153,124)
Amounts reclassified from accumulated other comprehensive income (2) (3)	(2)		(393)	(395)

Net other comprehensive loss	(153,126)		(393)	(153,519)

Balance as of September 30, 2022	$	(165,443)	(25,705)	(191,148)



	For the nine months ended September 30, 2021
	Unrealized gains/(losses) 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 loss before reclassification adjustments (4)	(19,554)		—	(19,554)
Amounts reclassified from accumulated other comprehensive income (5) (6)	(280)		1,000	720

Net other comprehensive income/(loss)	(19,834)		1,000	(18,834)

Balance as of September 30, 2021	$	(2,991)	(49,392)	(52,383)

(1)Consists of unrealized holding losses, net of tax of ~~($6,812).~~$45,555.

(2)Consists of realized ~~losses,~~gains, net of tax of ~~($89).~~$0.

(3)Consists of realized gains, net of tax of ~~$386.~~$151.

(4)Consists of unrealized holding ~~gains, net of tax $5,286.~~

~~(5)Consists of realized holding~~ losses, net of tax ~~($209).~~$6,812.

~~(6)~~(5)Consists of realized gains, net of tax ~~of $0.~~$89.

~~(7)~~(6)Consists of realized losses, net of tax of ~~$375.~~$(386).

~~(8)Consists of realized gains, net of tax of $297.~~

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking 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.

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 ~~or COVID-19,~~(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;

~~• inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments;~~

• adverse changes in the securities and credit markets;

• 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;~~institutions, including with respect to service charges and fees;

• our ability to enter new markets successfully and capitalize on growth opportunities;

• ~~managing~~our ability to manage our internal growth and our ability to successfully integrate acquired entities, businesses or branch offices;

• changes in consumer spending, borrowing and savings habits;

• our ability to continue to increase and manage our commercial 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;

• the effects of 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 ~~FASB~~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.

Table of Contents

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 ~~2020~~2021 Annual Report on Form 10-K.

Recently Issued Accounting Standards

The following accounting standard updates issued by the FASB have not yet been adopted.

In March 2020, the FASB issued ~~ASU~~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

~~Tabl~~e of ~~Contents~~

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. We established a cross-functional working group to manage the LIBOR transition. A transition plan was created to identify and modify the Company’s loan and other financial instrument contracts that are impacted by LIBOR transition. The Company chose the Secured Overnight Financing Rate (“SOFR”) as its alternative replacement for LIBOR on both back-to-back swaps and variable rate loans. We have not offered LIBOR for any new contracts since December 31, 2021. We are continuing to evaluate the amendments on our financial statements, with no material impacts expected, and execute on our transition plan.

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 asfor 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 ~~date~~fiscal year of ~~issuance through December 31, 2022.~~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 ~~amendments~~ASU and determining the impact on our financial statements.

Comparison of Financial Condition

Total assets at September 30, ~~2021~~2022 were ~~$14.389~~$13.953 billion, ~~an increase~~a decrease of ~~$583.0~~$548.4 million, or ~~4.2%~~3.8%, from ~~$13.806~~$14.502 billion at December 31, ~~2020.~~2021. This ~~increase~~decrease in assets was due to ~~an increase in marketable securities as well as an increase~~decreases in total cash and cash equivalents and marketable securities, partially offset by an increase in loans receivable, as described in further detail below.

Total cash and cash equivalents ~~increased~~decreased by ~~$354.2 million,~~$1.161 billion, or ~~48.1%~~90.7%, to ~~$1.090 billion~~$118.5 million at September 30, ~~2021~~2022 from ~~$736.3 million~~$1.279 billion at December 31, ~~2020.~~2021. This ~~increase~~decrease was ~~primarily due~~ todriven by organic loan growth and deposit outflow, described in further detail below, as well as the ~~increase in customer deposit balances associated with consumer stimulus checks~~purchase of three small business equipment finance loan pools totaling $182.8 million and two one-to four-family jumbo mortgage loan ~~funds from~~packages totaling $188.3 million during the ~~Paycheck Protection Program ("PPP").~~nine months ended September 30, 2022.

Total marketable securities ~~increased~~decreased by ~~$624.3~~$165.5 million, or ~~39.6%~~7.1%, to ~~$2.202~~$2.151 billion at September 30, ~~2021~~2022 from ~~$1.578~~$2.317 billion at December 31, ~~2020.~~2021. This ~~increase~~decrease was driven primarily ~~due to~~by the ~~$439.5 million increase in held-to-maturity~~rising interest rate environment which negatively impacted the fair market value of our available-for-sale portfolio. Additionally, the maturity and monthly cash flow of marketable securities ~~as a result of investing excess cash generated by deposits within our held-to-maturity portfolio.~~was redeployed into higher interest-earning loan products.

Total loans receivable ~~decreased~~increased by ~~$381.9~~$725.1 million, or ~~3.6%~~7.2%, to ~~$10.199~~$10.742 billion at September 30, ~~2021,~~2022, from ~~$10.581~~$10.016 billion at December 31, ~~2020.~~2021. This ~~decrease~~increase was due to organic loan ~~paydowns~~growth as well as the purchases of small business equipment finance and ~~payoffs outpacing new originations across all of our~~one-to- four-family jumbo mortgage loan ~~portfolios including PPP forgiveness, with~~pools during the ~~exception of consumer loans, primarily indirect auto, which~~year. Our personal loan portfolio increased by ~~$308.8~~$649.8 million, or ~~20.5%~~10.6%, to ~~$1.817~~$6.803 billion at September 30, ~~2021 compared to $1.508~~2022, from $6.153 billion at December 31, ~~2020.~~2021. Continued growth in our consumer indirect auto loans and fewer sales of residential mortgages into the secondary market contributed to the increase in total loans receivable.

Total deposits ~~increased~~decreased by ~~$623.0~~$422.8 million, or ~~5.4%~~3.4%, to ~~$12.222~~$11.878 billion at September 30, ~~2021~~2022 from ~~$11.599~~$12.301 billion at December 31, ~~2020.~~2021. This ~~increase~~decrease was primarily due to ~~increases~~decreases in ~~checking deposits~~time and demand deposit accounts of ~~$506.3~~$393.6 million, or ~~9.3%, as well as savings and money market deposits of $371.0 million, or 8.3%~~5.3%. T~~hese increases~~We believe these decreases were primarily the result of ~~consumer~~customer spending activity returning to pre-pandemic levels at a time when inflationary pressures have caused higher prices and government stimulus ~~checks and PPP loan funds.~~ ~~Partially offsetting this increase was a decrease in time deposits of $254.3 million, or 15.5%, as customers moved funds from term products to checking and savings accounts.~~programs have ended.

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Total shareholders’ equity at September 30, ~~2021~~2022 was ~~$1.562~~$1.460 billion, or ~~$12.34~~$11.50 per share, ~~an increase~~a decrease of ~~$23.1~~$123.8 million, or ~~1.5%~~7.8%, from ~~$1.539~~$1.584 billion, or ~~$12.11~~$12.51 per share, at December 31, ~~2020.~~2021. This ~~increase~~decrease was primarily the result of an increase in accumulated other comprehensive loss of $153.5 million due to an increase in unrealized losses in the available-for-sale investment portfolio as a result of rising interest rates. These decreases were partially offset by year-to-date earnings of ~~$124.3 million. Partially offsetting this increase was the payment~~$99.0 million, net of $76.1 million of cash ~~dividends of $75.0 million for the nine months ended September 30, 2021 as well as the payment of $23.9 million for share repurchases for the nine months ended September 30, 2021.~~dividend payments.

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.

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.

~~Tabl~~e of ~~Contents~~

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


		At September 30, 2021
						Minimum capital				Well capitalized					At September 30, 2022
		Actual				requirements (1)				requirements					Actual				Minimum capital requirements (1)				Well capitalized requirements
		Amount		Ratio		Amount		Ratio		Amount		Ratio			Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk weighted assets)	Total capital (to risk weighted assets)													Total capital (to risk weighted assets)
Northwest Bancshares, Inc.	Northwest Bancshares, Inc.	$	1,683,307	16.850	%	$	1,048,922	10.500	%	$	998,974	10.000	%	Northwest Bancshares, Inc.	$	1,722,817	16.290	%	$	1,110,459	10.500	%	$	1,057,580	10.000	%
Northwest Bank	Northwest Bank	1,526,216		15.292	%	1,047,946		10.500	%	998,044		10.000	%	Northwest Bank	1,518,737		14.373	%	1,109,455		10.500	%	1,056,624		10.000	%

Tier 1 capital (to risk weighted assets)	Tier 1 capital (to risk weighted assets)													Tier 1 capital (to risk weighted assets)
Northwest Bancshares, Inc.	Northwest Bancshares, Inc.	1,469,178		14.707	%	849,127		8.500	%	799,179		8.000	%	Northwest Bancshares, Inc.	1,506,056		14.241	%	898,943		8.500	%	846,064		8.000	%
Northwest Bank	Northwest Bank	1,435,573		14.384	%	848,337		8.500	%	798,435		8.000	%	Northwest Bank	1,415,729		13.399	%	898,130		8.500	%	845,299		8.000	%

CET1 capital (to risk weighted assets)	CET1 capital (to risk weighted assets)													CET1 capital (to risk weighted assets)
Northwest Bancshares, Inc.	Northwest Bancshares, Inc.	1,344,178		13.456	%	699,281		7.000	%	649,333		6.500	%	Northwest Bancshares, Inc.	1,380,796		13.056	%	740,306		7.000	%	687,427		6.500	%
Northwest Bank	Northwest Bank	1,435,573		14.384	%	698,630		7.000	%	648,728		6.500	%	Northwest Bank	1,415,729		13.399	%	739,636		7.000	%	686,805		6.500	%

Tier 1 capital (leverage) (to average assets)	Tier 1 capital (leverage) (to average assets)													Tier 1 capital (leverage) (to average assets)
Northwest Bancshares, Inc.	Northwest Bancshares, Inc.	1,469,178		9.531	%	616,557		4.000	%	770,697		5.000	%	Northwest Bancshares, Inc.	1,506,056		11.019	%	546,713		4.000	%	683,391		5.000	%
Northwest Bank	Northwest Bank	1,435,573		10.101	%	568,480		4.000	%	710,601		5.000	%	Northwest Bank	1,415,729		10.348	%	547,270		4.000	%	684,087		5.000	%

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

Table of Contents


		At December 31, 2020
						Minimum capital				Well capitalized					At December 31, 2021
		Actual				requirements (1)				requirements					Actual				Minimum capital requirements (1)				Well capitalized requirements
		Amount		Ratio		Amount		Ratio		Amount		Ratio			Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk weighted assets)	Total capital (to risk weighted assets)													Total capital (to risk weighted assets)
Northwest Bancshares, Inc.	Northwest Bancshares, Inc.	$	1,654,198	16.642	%	$	1,043,693	10.500	%	$	993,993	10.000	%	Northwest Bancshares, Inc.	$	1,682,487	17.056	%	$	1,035,786	10.500	%	$	986,463	10.000	%
Northwest Bank	Northwest Bank	1,478,310		14.887	%	1,042,655		10.500	%	993,004		10.000	%	Northwest Bank	1,551,084		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)													Tier I capital (to risk weighted assets)
Northwest Bancshares, Inc.	Northwest Bancshares, Inc.	1,406,321		14.148	%	844,894		8.500	%	795,195		8.000	%	Northwest Bancshares, Inc.	1,475,190		14.954	%	838,494		8.500	%	789,170		8.000	%
Northwest Bank	Northwest Bank	1,354,028		13.636	%	844,054		8.500	%	794,403		8.000	%	Northwest Bank	1,467,362		14.889	%	837,711		8.500	%	788,434		8.000	%

CET1 capital (to risk weighted assets)	CET1 capital (to risk weighted assets)													CET1 capital (to risk weighted assets)
Northwest Bancshares, Inc.	Northwest Bancshares, Inc.	1,281,516		12.893	%	695,795		7.000	%	646,096		6.500	%	Northwest Bancshares, Inc.	1,350,125		13.687	%	690,524		7.000	%	641,201		6.500	%
Northwest Bank	Northwest Bank	1,354,028		13.636	%	695,103		7.000	%	645,453		6.500	%	Northwest Bank	1,467,362		14.889	%	689,879		7.000	%	640,602		6.500	%

Tier I capital (leverage) (to average assets)	Tier I capital (leverage) (to average assets)													Tier I capital (leverage) (to average assets)
Northwest Bancshares, Inc.	Northwest Bancshares, Inc.	1,406,321		10.145	%	554,501		4.000	%	693,126		5.000	%	Northwest Bancshares, Inc.	1,475,190		10.349	%	570,160		4.000	%	712,699		5.000	%
Northwest Bank	Northwest Bank	1,354,028		9.903	%	546,905		4.000	%	683,631		5.000	%	Northwest Bank	1,467,362		10.296	%	570,047		4.000	%	712,558		5.000	%

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

~~Tabl~~e of ~~Contents~~

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 Bank’s liquidity ratio at September 30, ~~2021~~2022 was ~~20.4%~~9.74%. 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 September 30, ~~2021,~~2022, Northwest had ~~$3.511~~$3.502 billion of additional borrowing capacity available with the FHLB, including $250.0 million on an overnight line of credit which had noa balance of $11.9 million at September 30, ~~2021,~~2022, as well as ~~$79.5~~$98.9 million of borrowing capacity available with the Federal Reserve Bank and ~~$110.0~~$105.0 million with ~~three~~two correspondent banks.

Dividends

We paid $25.4 million ~~and $24.3 million~~ in cash dividends during the quarters ended September 30, ~~2021~~2022 and ~~2020, respectively.~~2021. The common stock dividend payout ratio (dividends declared per share divided by net income per diluted share) was ~~74.1%~~69.0% and ~~63.3%~~74.1% for the quarters ended September 30, ~~2021~~2022 and September 30, ~~2020,~~2021, respectively, on dividends of $0.20 per ~~share for the quarter ended September 30, 2021 and $0.19 per share for the quarter ended September 30, 2020.~~share. On ~~October 25, 2021,~~ October 24, 2022, the Board of Directors declared a cash dividend of $0.20 per share payable on November ~~15, 2021~~14, 2022 to shareholders of record as of November ~~5, 2021.~~3, 2022. This represents the ~~108~~112th consecutive quarter we have paid a cash dividend.

Table of Contents

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-secured loans that are in the process of collection. Loans may also be placed on nonaccrual before they reach 90 days past due if conditions exist that call into question our ability to collect all contractual interest. Other nonperforming assets represent property acquired through foreclosure or repossession. Foreclosed property is carried at the lower of its fair value less estimated costs to sell or the principal balance of the related loan.


		September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021
		(in thousands)						(in thousands)
Nonaccrual loans 90 days or more past due:
Loans 90 days or more past due:							Loans 90 days or more past due:
Residential mortgage loans	Residential mortgage loans	$	8,069		14,489		Residential mortgage loans	$	5,544		7,641
Home equity loans	Home equity loans	4,745			8,441		Home equity loans	1,779			4,262
Consumer loans		2,184			5,473
Vehicle loans							Vehicle loans	1,935			1,635
Other consumer loans							Other consumer loans	453			765
Commercial real estate loans	Commercial real estate loans	25,562			25,287		Commercial real estate loans	8,558			23,489
Commercial real estate - owner occupied							Commercial real estate - owner occupied	263			574
Commercial loans	Commercial loans	1,104			7,325		Commercial loans	638			1,105
Total nonaccrual loans 90 days or more past due		41,664			61,015
Total REO, net		$	809		2,232
Total loans 90 days or more past due							Total loans 90 days or more past due	$	19,170		39,471
Total real estate owned (REO)							Total real estate owned (REO)	$	450		873
Total loans 90 days or more past due and REO	Total loans 90 days or more past due and REO	42,473			63,247		Total loans 90 days or more past due and REO	19,620			40,344
Total loans 90 days or more past due to net loans receivable	Total loans 90 days or more past due to net loans receivable	0.41		%	0.58	%	Total loans 90 days or more past due to net loans receivable	0.18		%	0.40	%
Total loans 90 days or more past due and REO to total assets	Total loans 90 days or more past due and REO to total assets	0.30		%	0.46	%	Total loans 90 days or more past due and REO to total assets	0.14		%	0.28	%
Nonperforming assets:	Nonperforming assets:						Nonperforming assets:
Nonaccrual loans - loans 90 days or more past due	Nonaccrual loans - loans 90 days or more past due	41,664			61,015		Nonaccrual loans - loans 90 days or more past due	$	18,813		39,140
Nonaccrual loans - loans less than 90 days past due	Nonaccrual loans - loans less than 90 days past due	135,278			41,817		Nonaccrual loans - loans less than 90 days past due	64,814			119,331
Loans 90 days or more past due and still accruing		386			585
Loans 90 days or more past due still accruing							Loans 90 days or more past due still accruing	357			331
Total nonperforming loans	Total nonperforming loans	177,328			103,417		Total nonperforming loans	83,984			158,802
Total nonperforming assets	Total nonperforming assets	$	178,137		105,649		Total nonperforming assets	$	84,434		159,675
Total nonaccrual loans to total loans							Total nonaccrual loans to total loans	0.78		%	1.59	%
Nonaccrual TDR loans (1)	Nonaccrual TDR loans (1)	$	12,858		10,704		Nonaccrual TDR loans (1)	$	30,406		17,216
Accruing TDR loans	Accruing TDR loans	13,664			21,431		Accruing TDR loans	16,344			13,072
Total TDR loans	Total TDR loans	$	26,522		32,135		Total TDR loans	$	46,750		30,288

(1)Included in nonaccrual loans above.

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Allowance for Credit 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 ~~2020~~2021 Annual Report on Form 10-K. Our Board of Directors has adopted an “Allowance for Credit Losses” policy designed to provide management with a systematic methodology for determining and documenting the allowance for credit losses each reporting period. This methodology was developed to provide a consistent process to ensure that the allowance for credit losses is in conformity with GAAP, our policies and procedures and other supervisory and regulatory guidelines.

On an ongoing basis, the Credit Administration department, as well as loan officers, 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 classifies loans as “substandard”, “doubtful” or “loss.” Loans that do not expose us to risk sufficient to warrant classification in one of the previous categories, but which possess some weaknesses, are designated as “special mention”. A “substandard” loan is any loan that is 90 days or more contractually delinquent or is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as “doubtful” have all the weaknesses inherent in those classified as “substandard” with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts,

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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"~~“doubtful” and are considered uncollectible.

Credit relationships that have been classified as substandard or doubtful and are greater than or equal to $1.0 million are reviewed by the Credit Administration department to determine if they no longer continue to demonstrate similar risk characteristics to their loan pool. If a loan no longer demonstrates similar risk characteristics to their loan pool they are removed from the pool and an individual assessment will be performed.

If it is determined that a loan needs to be individually assessed, the Credit Administration department determines the proper measure of fair value for each loan based on one of three methods: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the loan’s observable market price; or (3) the fair value of the collateral if the loan is collateral dependent, less costs of sale or disposal. If the measurement of the fair value of the loan is more or less than the amortized cost basis of the loan, the Credit Administration department adjusts the specific allowance associated with that individual loan accordingly.

If a substandard or doubtful loan is not individually assessed, it is grouped with other loans that possess common characteristics for credit losses and analysis. For the purpose of calculating reserves, we have grouped our loans into seven segments: residential mortgage loans, home equity loans, vehicle loans, consumer loans, commercial real estate loans, commercial real estate loans - owner occupied and commercial loans. The allowance for credit losses is measured using a combination of statistical models and qualitative assessments. We use a twenty four month forecasting period and revert to historical average loss rates thereafter. Reversion to average loss rates takes place over twelve months. Historical average loss rates are calculated using historical data beginning in October 2009 through the current period.

The credit losses for individually assessed loans along with the estimated loss for each homogeneous pool are consolidated into one summary document. This summary schedule along with the support documentation used to establish this schedule is presented to management’s Allowance for Credit Loss Committee ("(“ACL ~~Committee"~~Committee”) monthly. The ACL Committee reviews and approves the processes and ACL documentation presented. Based on this review and discussion, the appropriate amount of ACL is estimated and any adjustments to reconcile the actual ACL with this estimate are determined. The ACL Committee also considers if any changes to the methodology are needed. In addition to the ACL ~~Committee's~~Committee’s review and approval, a review is performed by the Risk Management Committee of the Board of Directors on a quarterly basis and annually by internal audit.

In addition to the reviews by management’s ACL Committee and the Board of Directors’ Risk Management Committee, regulators from either the FDIC and/or the Pennsylvania Department of Banking and Securities perform an extensive review on at least an annual basis for the adequacy of the ACL and its conformity with regulatory guidelines and pronouncements. Any recommendations or enhancements from these independent parties are considered by management and the ACL Committee and implemented accordingly.

We acknowledge that this is a dynamic process and consists of factors, many of which are external and out of our control, that can change frequently, rapidly and substantially. The adequacy of the ACL is based upon estimates using all the information

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previously discussed as well as current and known circumstances and events. There is no assurance that actual portfolio losses will not be substantially different than those that were estimated.

We utilize a structured methodology each period when analyzing the adequacy of the allowance for credit losses and the related provision for credit losses, which the ACL Committee assesses regularly for appropriateness. As part of the analysis as of September 30, ~~2021,~~2022, we considered the most recent economic conditions and forecasts available which incorporated the impact of ~~COVID-19.~~material recent economic events. In addition, we considered the overall trends in asset quality, reserves on individually assessed loans, historical loss rates and collateral valuations. The ACL ~~decreased~~increased by ~~$24.7~~$7.6 million, or ~~18.3%~~7.4%, to $109.8 million, or ~~1.08%~~1.02% of total loans at September 30, ~~2021~~2022 from ~~$134.4~~$102.2 million, or ~~1.27%~~1.02% of total loans, at December 31, ~~2020.~~2021. Total classified loans decreased ~~$105.0~~$125.4 million, or ~~21.4%~~34.5%, to ~~$384.4~~$237.7 million at September 30, ~~2021~~2022 from ~~$489.3~~$363.2 million at December 31, ~~2020.~~2021. This decrease was primarily due to the upgrade and payoff of loans in our commercial real estate portfolio during the current year.

We also consider how the levels of nonaccrual loans and historical charge-offs have influenced the required amount of allowance for credit losses. Nonaccrual loans of ~~$176.9~~$83.6 million, or ~~1.73%~~0.78% of total loans receivable at September 30, ~~2021, increased~~2022, decreased by ~~$74.1~~$74.8 million, or ~~72.1%~~47.2%, from ~~$102.8~~$158.5 million, or ~~0.97%~~1.59% of total loans receivable at December 31, ~~2020.~~2021. This ~~increase~~decrease was primarily related to upgrades to loans within our commercial real estate portfolio. We experienced an annualized net recovery during the ~~hospitality industry~~quarter ended September 30, 2022 of 0.14%, as ~~they were judgmentally placed on nonaccrual after the end of their deferral periods. As~~ a percentage of average loans, ~~annualized net charge-offs decreased to 0.12% for the quarter ended September 30, 2021~~ compared to ~~0.13%~~a total net charge-off 0.20% as a percentage of average loans for the year ended December 31, ~~2020.~~2021. The net recovery was primarily from the recovery of a previously charged-off commercial real estate loan.

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Comparison of Operating Results for the Quarters Ended September 30, ~~2021~~2022 and ~~2020~~2021

Net income for the quarter ended September 30, ~~2021~~2022 was ~~$35.1~~$37.3 million, or ~~$0.27~~$0.29 per diluted share, ~~a decrease~~an increase of ~~$3.0~~$2.2 million, or ~~7.9%~~6.4%, from net income of ~~$38.1~~$35.1 million, or ~~$0.30~~$0.27 per diluted share, for the quarter ended September 30, ~~2020.~~2021. The ~~decrease~~increase in net income primarily resulted from a ~~decrease in noninterest income of $7.5~~$14.3 million, or ~~20.4%~~14.6%, ~~and a decrease~~increase in net interest income, ~~of $5.1 million, or 4.9%. Partially offsetting these changes was~~ ~~a decrease in provision for credit losses of $11.2 million, or 163.9%, and~~ as well as a decrease in noninterest expense of ~~$767,000,~~$3.5 million, or ~~0.9%~~4.1%. These increases were partially offset by an increase in the provision for credit losses of $12.0 million, or 276.6%, a decrease in noninterest income of $2.4 million, or 8.2%, and a $1.2 million, or 11.0%, increase in income tax expense. Net income for the quarter ended September 30, ~~2021~~2022 represents annualized returns on average equity and average assets of ~~8.86%~~9.84% and ~~0.97%~~1.05%, respectively, compared to ~~9.82%~~8.86% and ~~1.09%~~0.97% for the same quarter last year. A further discussion of notable changes follows.

Interest Income

Total interest income ~~decreased $8.4~~increased $13.6 million, or ~~7.4%~~13.0%, to $118.6 million for the quarter ended September 30, 2022 from $105.0 million for the quarter ended September 30, ~~2021 from $113.4 million for the quarter ended September 30, 2020.~~2021. This ~~decrease is~~increase was due to ~~a decrease~~an increase in the average yield earned on interest-earning assets to 3.58% for the quarter ended September 30, 2022 from 3.13% for the quarter ended September 30, 2021 ~~from 3.52% for the quarter ended September 30, 2020~~ due to ~~decreases~~the rising interest rate environment, as well as the change in ~~market interest rates over the past 18 months. Offsetting this decrease in average yield earned~~our interest-earning asset mix. This was ~~an increase~~partially offset by a decline in the average balance of interest-earning assets ~~by $518.8~~of $177.9 million, or ~~4.0%~~1.3%, to $13.156 billion for the quarter ended September 30, 2022 from $13.334 billion for the quarter ended September 30, 2021, ~~from $12.815 billion for the quarter ended September 30, 2020, which was primarily~~ driven by ~~growth~~a decrease in ~~the mortgage-backed securities portfolio.~~other interest-earning deposits.

Interest income on loans receivable ~~decreased~~increased by ~~$9.8~~$9.5 million, or ~~9.1%~~9.7%, to $106.9 million for the quarter ended September 30, 2022 compared to $97.5 million for the quarter ended September 30, ~~2021 compared~~2021. This increase in interest income was due to ~~$107.2~~increases in both the average yield and average balance on loans receivable. The average yield increased to 4.05% for the quarter ended September 30, 2022, from 3.79% from the quarter ended September 30, 2021, due to the increase in market interest rates. The average balance of loans receivable increased by $254.6 million, or 2.5%, to $10.481 billion for the quarter ended September 30, 2020. This decrease in interest income was due to decreases in both the average balance of loans receivable and the average yield on loans receivable. The average balance of loans receivable decreased $551.4 million, or 5.1%, to2022 from $10.226 billion for the quarter ended September 30, 2021 ~~from $10.777 billion for~~due to organic loan growth as well as the ~~quarter~~purchases of three small business equipment finance loan pools totaling $182.8 million and two one-to four-family jumbo mortgage loan packages totaling $188.3 million during the nine months ended September 30, 2020 due to slower loan demand and $580.0 million of PPP loan forgiveness since September 30 of last year. The average yield on loans receivable decreased to 3.79% for the quarter ended September 30, 2021 from 3.96% for the quarter ended September 30, 2020, due to the decrease in market interest rates. Included in loan interest income for the current quarter is 2022~~$4.1 million of accretion related to PPP fees, net of origination costs, compared to $1.8 million in the third quarter last year.~~.

Interest income on mortgage-backed securities increased by ~~$1.2~~$2.8 million, or ~~25.5%~~48.7%, to $8.7 million for the quarter ended September 30, 2022 compared to $5.8 million for the quarter ended September 30, ~~2021 compared to $4.7 million for the quarter ended September 30, 2020.~~2021. This increase was driven by an increase in the average yield on mortgage-backed securities to 1.72% for the quarter ended September 30, 2022 from 1.27% for the quarter ended September 30, 2021 due to the purchase of mortgage-backed securities with yields higher than the existing portfolio. Additionally, the average balance of mortgage-backed securities ~~of $828.1~~increased $186.8 million, or ~~82.4%~~10.2%, to $2.020 billion for the quarter ended September 30, 2022 from $1.833 billion for the quarter ended September 30, ~~2021 from $1.005 billion for the quarter ended September 30, 2020.~~2021. This increase in average balance was primarily a result of additional purchases utilizing excess cash from deposit growth during the past year. Offsetting this increase was a decrease in the average yield on mortgage-backed securities to 1.27% for the quarter ended September 30, 2021 from 1.85% for the quarter ended September 30, 2020 due to new purchases at lower market yields than our existing portfolio.as we deployed interest-earning deposits into higher yielding investments.

Interest income on investment securities increased by ~~$195,000,~~$270,000, or ~~18.0%~~21.1%, for the quarter ended September 30, ~~2021~~2022 to ~~$1.3~~$1.5 million from ~~$1.1~~$1.3 million for the quarter ended September 30, ~~2020.~~2021. This increase was due to an increase in the average balance of investment securities by ~~$132.5~~$40.1 million, or ~~61.3%~~11.5%, to $388.8 million for the quarter ended September 30, 2022 from $348.6 million for the quarter ended September 30, ~~2021 from $216.1 million~~2021. The average yield on investment securities increased to 1.59% for the quarter ended September 30, ~~2020. The average balance of investment securities increased due to the utilization of excess funds~~

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2022 from ~~deposit growth. Partially offsetting this increase was a decrease in the average yield on investment securities which decreased to~~ 1.47% for the quarter ended September 30, ~~2021 from 2.00% for the quarter ended September 30, 2020 due to new investment purchases at yields lower than the existing portfolio.~~2021.

Dividends on FHLB stock ~~decreased~~increased by ~~$147,000,~~$77,000, or ~~67.4%~~108.5%, to $148,000 for the quarter ended September 30, 2022 from $71,000 for the quarter ended September 30, ~~2021 from $218,000~~2021. This increase was due to the average yield increasing to 4.19% for the quarter ended September 30, ~~2020. This decrease was due to both the decrease in average yield on FHLB stock and the decrease in the average balance of FHLB stock. The average yield decreased to~~2022 from 1.31% for the quarter ended September 30, 2021 ~~from 3.39%~~due to increases in market interest rates. This was partially offset by a decrease in the average balance of FHLB stock of $7.6 million, or 35.1%, to $14.0 million for the quarter ended September 30, 2020 as the FHLB of Pittsburgh recently decreased yields on required stock holdings in reaction to lower market interest rates. The average balance of FHLB stock decreased by $4.0 million, or 15.6%, to2022 from $21.6 million for the quarter ended September 30, ~~2021 from $25.6 million for the quarter ended September 30, 2020.~~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.

Interest income on interest-earning deposits increased by ~~$131,000, or 59.3%,~~$943,000 to $1.3 million for the quarter ended September 30, 2022 from $352,000 for the quarter ended September 30, 2021 from $221,000 for the quarter ended September 30, 2020. The average balance of interest-earning deposits increased by $113.5 million, or 14.3%, to $905.1 million for the quarter ended September 30, 2021 from $791.6 million for the quarter ended September 30, 2020 due to excess liquidity from recent deposit inflows. Also contributing to this2021. This increase was driven by an increase in the average yield on interest-earning deposits to 2.00% for the quarter ended September 30, 2022 from 0.15% for the quarter ended September 30, 2021, ~~from 0.11%~~due to the Federal Reserve Board raising targeted short-term interest rates. The average balance of interest-earning deposits decreased by $651.9 million, or 72.0%, to $253.2 million for the quarter ended September 30, ~~2020.~~2022 from $905.1 million for the quarter ended September 30, 2021 as the Bank has deployed these funds into higher yielding loans and investments.

Interest Expense

Interest expense decreased by ~~$3.3~~$729,000, or 11.1%, to $5.9 million ~~or 33.2%, to~~for the quarter ended September 30, 2022 from $6.6 million for the quarter ended September 30, ~~2021 from $9.9 million for the quarter ended September 30, 2020.~~2021. This decrease in interest expense was primarily due to the decrease in the average

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balance of interest-bearing deposits of $287.8 million, or 3.0%, to $9.246 billion for the quarter ended September 30, 2022 from $9.534 billion for the quarter ended September 30, 2021. Additionally, there was a decline in the average cost of interest-bearing liabilities, which decreased to 0.25% for the quarter ended September 30, 2022 from 0.27% for the quarter ended September 30, ~~2021 from 0.42% for the quarter ended September 30, 2020.~~2021. This decrease resulted from ~~decreases~~the overall change in the mix of deposit accounts as customers move from fixed-rate time deposits to more liquid deposit accounts. In addition, despite a rising interest rate ~~paid on~~environment, we have been able to keep our cost of deposits and junior subordinated debentures in response to decreases in market interest rates. Partially offsetting this decrease was an increase in the average balance of interest-bearing liabilities by $159.1 million, or 1.7%, to $9.534 billion for the quarter ended September 30, 2021 from $9.375 billion for the quarter ended September 30, 2020. This increase in average balance resulted from internal growth in deposits. In addition, on September 9, 2020, the Company issued $125 million of fixed-to-floating subordinated debt with an initial five-year fixed interest rate of 4.00%.stable.

Net Interest Income

Net interest income ~~decreased~~increased by ~~$5.1~~$14.3 million, or ~~4.9%~~14.6%, to $112.7 million for the quarter ended September 30, 2022 from $98.4 million for the quarter ended September 30, ~~2021 from $103.5 million for the quarter ended September 30, 2020.~~2021. This ~~decrease~~increase is attributable to the factors discussed above. ~~Our~~Additionally, our interest rate spread ~~decreased~~increased to 3.33% for the quarter ended September 30, 2022 from 2.86% for the quarter ended September 30, 2021, ~~from 3.10%~~and our net interest margin increased to 3.40% for the quarter ended September 30, ~~2020 and our net interest margin decreased to~~2022 from 2.95% for the quarter ended September 30, 2021, ~~from 3.23% for the quarter ended September 30, 2020~~ primarily due to ~~declining~~rising interest-earning asset ~~yields.~~yields in response to recent increases in market interest rates.

Provision for Credit Losses

The provision for credit losses ~~decreased~~increased by ~~$11.2~~$12.0 million, or ~~163.9%~~276.6%, to a current period ~~credit~~provision expense of ~~$4.4~~$7.7 million for the quarter ended September 30, ~~2021 compared to~~2022 from a negative provision ~~expense~~ of ~~$6.8~~$4.4 million ~~for~~ the quarter ended September 30, ~~2020.~~ 2021. The ~~prior~~current period provision was driven by loan portfolio growth during the current year ~~was impacted by COVID-19 and~~as well as a deterioration in the ~~uncertainty surrounding the possible negative effect on the economy. As such,~~economic forecasts utilized in our allowance for credit loss models. The credit to the provision in the prior year was driven by ~~the estimated increase~~improvements in ~~possible future loan losses. The current period decrease in provision was driven by continued improvements in~~the economic forecasts compared to the uncertainty that existed ~~last year due~~in 2020 to 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 ~~improvements in~~ unemployment levels, expected economic growth, bankruptcy filings, and changes in real estate values and the impact of these factors on the quality of our loan portfolio and historical loss experience. We analyze the allowance for credit losses as described in the section entitled ~~"Allowance~~“Allowance for Credit Losses."” The provision that is recorded is sufficient, in our judgment, to bring this reserve to a level that reflects the current expected lifetime losses in our loan portfolio relative to loan mix, a reasonable and supportable economic forecast period, and historical loss experience at September 30, ~~2021.~~2022.

Noninterest Income

Noninterest income decreased by ~~$7.5~~$2.4 million, or ~~20.4%~~8.2%, to $26.8 million for the quarter ended September 30, 2022 from $29.2 million for the quarter ended September 30, ~~2021 from $36.7 million for the quarter ended September 30, 2020.~~2021. This decrease was primarily due to a ~~decrease~~decline in our mortgage banking income of ~~$7.1~~$3.2 million, or ~~64.4%~~80.6%, to $766,000 for the quarter ended September 30, 2022 from $3.9 million for the quarter ended September 30, ~~2021 from $11.1 million for~~2021. This decrease reflects the ~~quarter ended~~

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~~September 30, 2020 due to t~~he impact of less favorable pricing in the secondary ~~market.~~market, due primarily to the volatile interest rate environment, as well as decreased mortgage volumes. ~~In addition,~~ ~~insurance commission income decreased by $2.3~~Partially offsetting this decrease was an increase in service charges and fees of $1.1 million, or ~~98.1%~~8.5%, to ~~$44,000 for the quarter ended September 30, 2021 from $2.3~~$14.3 million for the quarter ended September 30, ~~2020 due to the sale of the insurance business during the second quarter of 2021. Lastly, service charges and fees decreased $1.2 million, or 8.0%,~~2022 compared to $13.2 million for the quarter ended September 30, 2021, ~~from $14.4 million for~~as customer activity increased in 2022 after COVID-19 restricted behavior in the ~~quarter ended September 30, 2020 due primarily to the impact of being subject to the Durbin amendment on interchange revenue.~~prior year.Partially offsetting this decrease was an increase in trust and other financial services income of $1.8 million, or 33.6%, to $7.2 million for the quarter ended September 30, 2021 from $5.4 million for the quarter ended September 30, 2020 as a result of increases in both trust and brokerage advisory services. In addition, there was an increase in other operating income of $1.3 million, or 62.6%, to $3.3 million for the quarter ended September 30, 2021 from $2.0 million for the quarter ended September 30, 2020 primarily as a result of fees earned from debit/credit card volume-based incentives.

Noninterest Expense

Noninterest expense decreased by ~~$767,000,~~$3.5 million, or ~~0.9%~~4.1%, to $82.6 million for the quarter ended September 30, 2022 from $86.1 million for the quarter ended September 30, ~~2021~~2021. Almost all expense categories decreased as the Company continues to focus on controlling costs and improving efficiency. Compensation and employee benefits decreased $2.4 million, or 4.8%, to $46.7 million for the quarter ended September 30, 2022 from ~~$86.9~~$49.1 million for the quarter ended September 30, ~~2020.~~2021, driven primarily by the ~~This decrease was due to a decline~~branch consolidations completed in ~~a majority of the noninterest expense categories. Processing expenses~~April 2022. Professional services decreased ~~$1.5 million,~~$932,000, or ~~10.1%~~21.7%, to ~~$13.5 million~~ ~~for the quarter ended September 30, 2021 from $15.0~~$3.4 million for the quarter ended September 30, ~~2020~~. Merger related expenses decreased $1.4 million, or 100.0%, due to expenses incurred in the prior year as a result of the acquisition of MutualFirst Financial, Inc. Partially offsetting these decreases was an increase of $1.7 million, or 3.6%, in compensation and employee benefits due primarily to increases in health insurance and other benefit costs, regular merit expense increases and the addition of strategic personnel. In addition, there was an increase in other expenses of $2.22022 from $4.3 million for the quarter ended September 30, 2021 due ~~primarily~~ to the use of third-party consulting services during the prior year. Offsetting these decreases was an increase in other expenses of $1.7 million, or 75.4%, to $3.9 million for the quarter ended September 30, 2022 from $2.2 million for the quarter ended September 30, 2021 due to an increase in our unfunded loan loss reserve associated with the ~~unfunded reserve as a result~~origination of ~~an increase in the undrawn commitments in the commercial real estate and construction portfolios.~~loans with current off balance sheet exposure.

Income Taxes

The provision for income taxes increased by ~~$2.3~~$1.2 million, or ~~27.5%~~11.0%, to $12.0 million for the quarter ended September 30, 2022 from $10.8 million for the quarter ended September 30, ~~2021 from $8.5 million for the quarter ended September 30, 2020.~~2021. This increase in income taxes was due to an increase in income before taxes in the ~~annual effective tax rate for 2021 as the prior year had a greater percentage of net income generated by tax free or tax efficient earning assets.~~ current year. We anticipate our effective tax rate to be between 22.0% and 24.0% for the year ending December 31, ~~2021.~~2022.

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Comparison of Operating Results for the Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021

Net income for the nine months ended September 30, ~~2021~~2022 was $99.0 million, or $0.78 per diluted share, a decrease of $25.3 million, or 20.3%, from $124.3 million, or $0.97 ~~per diluted share, an increase of $84.5 million, or 212.3%, from $39.8 million, or $0.34~~ per diluted share, for the nine months ended September 30, ~~2020.~~2021. The ~~increase~~decrease in net income resulted primarily from a decrease in ~~provision for credit losses~~noninterest income of ~~$96.2~~$32.9 million, or ~~111.6%~~28.4%, as well as an increase in ~~noninterest income~~the provision for credit losses of ~~$15.7~~$18.8 million, or ~~15.7%~~188.6%. These unfavorable fluctuations were partially offset by a $9.3 million, or 3.6%, ~~and an~~decrease in noninterest expense, a $9.0 million, or 3.1%, increase in net interest income, ~~of $5.8 million, or 2.0%. Partially offsetting these factors were an increase of $4.0 million, or 1.6%, in noninterest expense~~ and ~~an increase~~a decrease in income tax expense of ~~$29.2 million.~~$8.1 million, or 21.5%. Net income for the nine months ended September 30, ~~2021~~2022 represents annualized returns on average equity and average assets of ~~10.67%~~8.61% and ~~1.17%~~0.93%, respectively, compared to ~~3.33%~~10.67% and ~~0.42%~~1.17% for the nine months ended September 30, ~~2020.~~2021. A further discussion of notable changes follows.

Interest Income

Total interest income ~~decreased~~increased by ~~$6.7~~$5.4 million, or ~~2.1%~~1.7%, to $320.9 million for the nine months ended September 30, 2022 from $315.6 million for the nine months ended September 30, ~~2021 from $322.3 million for the nine months ended September 30, 2020.~~2021. This ~~decrease~~increase is the result of ~~a decrease~~increases in the average yield earned on interest-earning assets as well as the average balance of interest-earning assets, and specifically the change in our interest-earning asset mix. The average yield earned on interest-earning assets increased to 3.23% for the nine months ended September 30, 2022 from 3.20% for the nine months ended September 30, 2021 ~~from 3.78%~~due to the recent rising interest rate environment. The average balance of interest-earning assets increased by $143.0 million, or 1.1%, to $13.301 billion for the nine months ended September 30, 2020. This decrease in average yield is attributed to a decline in overall market interest rates. Partially offsetting this decrease was an increase in the average balance of interest-earning assets of $1.759 billion, or 15.4%, to2022 from $13.158 billion for the nine months ended September 30, 2021 ~~from $11.400 billion~~primarily driven by growth in the mortgage-backed securities portfolio which offset the decreases in the average balance of loans receivable.

Interest income on loans receivable decreased by $4.4 million, or 1.5%, to $290.7 million for the nine months ended September 30, ~~2020 due primarily to the investment of excess cash~~2022 from ~~deposit growth.~~

~~Interest income on loans receivable decreased by $10.2 million, or 3.3%, to~~ $295.0 million for the nine months ended September 30, ~~2021 from $305.2 million for the nine months ended September 30, 2020.~~2021. This decrease is attributed to a decrease in the average ~~yield on~~balance of loans receivable by $127.7 million, or 1.2%, to ~~3.82%~~$10.182 billion for the nine months ended September 30, ~~2021~~2022 from 4.11% for the nine months ended September 30, 2020 primarily as a result of the decrease in market interest rates. Partially offsetting this decrease was an increase in the average balance of loans receivable of $387.9 million, or 3.9%, to $10.309 billion for the nine months ended September 30, 2021 ~~from $9.921 billion~~due primarily to PPP loan forgiveness and the payoff of several classified commercial real estate loan relationships. The average yield remained consistent at 3.82% for the nine months ended September 30, ~~2020.~~ This increase is due to organic loan growth as well as the origination of almost $800.0 million of PPP loans over the past 18 months. Included in loan interest income for the current period is $11.4 million of accretion related to PPP fees, net of origination costs, compared to $2.9 million in the prior year period.2022 and September 30, 2021.

~~Tabl~~e of ~~Contents~~

Interest income on mortgage-backed securities increased by ~~$2.9~~$6.5 million, or ~~22.2%~~41.2%, to $22.2 million for the nine months ended September 30, 2022 from $15.7 million for the nine months ended September 30, ~~2021 from $12.9~~2021. This increase is attributed to increases in both the average balance and the average yield of mortgage-backed securities. The average balance increased $332.9 million, or 20.3%, to $1.973 billion for the nine months ended September 30, ~~2020. This increase is attributed to an increase in the average balance of mortgage-backed securities of $843.0 million, or 105.8%, to~~2022 from $1.640 billion for the nine months ended September 30, ~~2021 from $796.7 million~~2021. This increase was primarily a result of additional purchases as we deployed interest-earning deposits into higher yielding investments. Additionally, the average yield on mortgage-backed securities increased to 1.50% for the nine months ended September 30, ~~2020. This increase is due primarily~~ ~~to the additional purchases utilizing excess cash~~2022 from ~~deposit growth during the past year.~~ ~~Partially offsetting this increase was a decrease in the average yield on mortgage-backed securities to~~ 1.28% for the ~~quarter~~nine months ended September 30, 2021 ~~from 2.15% for the quarter ended September 30, 2020. This decrease in yield was primarily~~ due to ~~new purchases~~the purchase of fixed-rate mortgage-backed securities ~~at lower market~~with yields higher than ~~our~~the existing portfolio.

Interest income on investment securities increased by ~~$855,000,~~$523,000, or ~~29.3%~~13.9%, to $4.3 million for the nine months ended September 30, 2022 from $3.8 million for the nine months ended September 30, ~~2021 from $2.9 million for the nine months ended September 30, 2020.~~2021. This increase is primarily attributable to an increase in the average balance of investment securities ~~of $171.2~~by $31.7 million, or ~~96.7%~~9.1%, to $379.9 million for the nine months ended September 30, 2022 from $348.2 million for the nine months ended September 30, ~~2021 from $177.0 million~~2021. Additionally, the average yield on investment securities increased to 1.51% for the nine months ended September 30, ~~2020. The average balance of investments increased due to the utilization of excess funds~~2022 from ~~deposit growth. Partially offsetting this increase was a decrease in the average yield on investment securities to~~ 1.44% for the nine months ended September 30, ~~2021 from 2.20% for the nine months ended September 30, 2020.~~ 2021.

Dividends on FHLB stock decreased by ~~$464,000,~~$14,000, or ~~58.8%~~4.3%, to $311,000 for the nine months ended September 30, 2022 from $325,000 for the nine months ended September 30, ~~2021 from $789,000~~2021. This decrease was due to an $8.4 million, or 37.9%, decrease in the average balance of FHLB stock to $13.8 million for the nine months ended September 30, ~~2020. This decrease was due to a decrease in the average yield on FHLB stock to 1.95% for the nine months ended September 30, 2021~~2022 from ~~4.96% for the nine months ended September 30, 2020~~ ~~as the FHLB of Pittsburgh decreased yields on required stock holdings due to lower market interest rates.~~ ~~Partially offsetting this decrease was an increase of $919,000, or 4.3%, in the average balance of FHLB stock to~~ $22.2 million for the nine months ended September 30, ~~2021 from $21.3 million for the nine months ended September 30, 2020.~~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 3.02% for the nine months ended September 30, 2022 from 1.95% for the nine months ended September 30, 2021 as the FHLB of Pittsburgh increased dividend rates on required stock holdings in relation to higher market interest rates.

Interest income on interest-earning deposits increased by ~~$186,000, or 34.4%,~~$2.7 million to $3.4 million for the nine months ended September 30, 2022 from $727,000 for the nine months ended September 30, ~~2021 from $541,000 for the nine months ended September 30, 2020.~~2021. This increase is attributable to an increase in the average yield on interest-earning deposits to 0.60% for the nine months ended September 30, 2022 from 0.11% for the nine months ended September 30, 2021, as a result of increases in the targeted federal funds rate by the Federal Reserve. This was partially offset by a decrease in the average balance of interest-earning deposits ~~which increased~~ by ~~$355.6~~$85.5 million, or ~~73.6%~~10.2%, to $753.5 million for the nine months ended September 30, 2022 from $839.0 million for the nine months ended September 30, 2021 ~~from $483.4~~as we deployed funds into higher yielding investments.

Table of Contents

Interest Expense

Interest expense decreased by $3.7 million, or 17.5%, to $17.3 million for the nine months ended September 30, ~~2020 due to excess liquidity~~2022 from steady deposit inflows. Partially offsetting this increase was a decrease in the average yield on interest-earning deposits to 0.11% for the nine months ended September 30, 2021 from 0.15% for the nine months ended September 30, 2020, as a result of decreases in the targeted federal funds rate by the Federal Reserve.

~~Interest Expense~~

~~Interest expense decreased by $12.5 million, or 37.4%, to~~ $21.0 million for the nine months ended September 30, ~~2021 from $33.5 million~~2021. This decrease in interest expense was driven by decreases in both the average cost and the average balance of interest-bearing liabilities. The average cost of interest-bearing liabilities decreased to 0.25% for the nine months ended September 30, ~~2020. This decrease in interest expense was due to a decrease in the average cost of interest-bearing liabilities to~~2022 from 0.30% for the nine months ended September 30, ~~2021 from 0.53% for the nine months ended September 30, 2020.~~2021. This decrease resulted from decreases in the interest rate paid on deposits as well as the change in deposit mix as customers chose to move funds from fixed-rate time deposits to more liquid deposit accounts. Despite a rising interest rate environment, we have been able to keep our cost of deposits stable. Additionally, the yield on time deposits has continued to decrease, from 0.87% for the nine months ended September 30, 2021 to 0.60% for the nine months ended September 30, 2022, as time deposits with higher rates matured and ~~junior subordinated debentures~~rolled into lower rate deposit products. This decrease in ~~response~~time deposits has contributed largely to ~~decreases in market interest rates. Partially offsetting this~~a decrease ~~was an increase~~ in the average balance of interest-bearing liabilities ~~which increased by $976.1~~of $50.1 million, or ~~11.5%~~0.5%, to $9.425 billion for the nine months ended September 30, 2022 from $9.475 billion for the nine months ended September 30, ~~2021 from $8.499 billion for the nine months ended September 30, 2020.~~This increase resulted from internal growth in deposits. In addition, on September 9, 2020, the Company issued $125 million of fixed-to-floating subordinated debt with an initial five year fixed interest rate of 4.00%.2021.

Net Interest Income

Net interest income increased by ~~$5.8~~$9.0 million, or ~~2.0%~~3.1%, to $303.6 million for the nine months ended September 30, 2022 from $294.6 million for the nine months ended September 30, ~~2021 from $288.8 million for the nine months ended September 30, 2020.~~2021. This increase is attributable to the factors discussed above. ~~Despite the overall increase in net interest income due primarily to balance sheet growth and the accretion of net PPP fees, our~~Our interest rate spread and net interest margin both ~~decreased.~~increased over the course of the year. Our interest rate spread ~~decreased~~increased to 2.98% for the nine months ended September 30, 2022 from 2.91% for the nine months ended September 30, 2021 ~~from 3.25%~~and our net interest margin increased to 3.05% for the nine months ended September 30, ~~2020 and our net interest margin decreased to~~2022 from 2.99% for the nine months ended September 30, ~~2021 from 3.38% for the nine months ended September 30, 2020.~~ 2021. These ~~decreases~~increases were ~~primarily due to declining interest-earning asset yields. Contributing to the decline~~driven largely by increasing interest rates and a change in ~~asset yields was an increase in average cash balances of $355.6 million, earning just 0.11%, due to deposit growth associated with the PPP loan funds and consumer stimulus checks.~~balance sheet mix.

Provision for Credit Losses

The provision for credit losses ~~decreased~~increased by ~~$96.2~~$18.8 million, or ~~111.6%~~188.6%, to a current period ~~credit~~provision expense of $8.8 million for the nine months ended September 30, 2022 from a negative provision of $10.0 million for the nine months ended September 30, ~~2021 from a provision expense of $86.2 million for the nine months ended September 30, 2020.~~ 2021. The

~~Tabl~~e of ~~Contents~~

~~prior year~~ current period provision was ~~impacted~~driven primarily by ~~COVID-19 and~~growth within our loan portfolio as well as a deterioration in the ~~uncertainty surrounding the possible~~most recent economic forecasts. The negative ~~effect on economic forecasts. As such, the outsized~~ provision in the prior year was driven by the ~~estimated increase~~improvements in ~~possible future loan losses due to COVID-19. The current period decrease was primarily due to continued improvements in~~the economic forecasts compared to the uncertainty that existed in ~~the prior year.~~2020 for industries impacted by COVID-19

Annualized net charge-offs to average loans decreased to 0.02% for the nine months ended September 30, 2022 from 0.19% for the nine months ended September 30, ~~2021 from 0.32% for the nine months ended September 30, 2020.~~2021. Additionally, classified assets declined by ~~$73.4~~$146.6 million, or ~~16.0%~~38.1%, to ~~$384.4~~$237.7 million, or ~~3.8%~~2.21% of loans outstanding at September 30, ~~2021~~2022 from ~~$457.8~~$384.4 million, or ~~4.2%~~3.77% of loans outstanding at September 30, ~~2020.~~2021.

In determining the amount of the current period provision, we considered current economic conditions, including but not limited to unemployment levels, bankruptcy filings, and changes in real estate values and the impact of these factors on the quality of our loan portfolio and historical loss experience. We analyze the allowance for credit losses as described in the section entitled ~~"Allowance~~“Allowance for Credit Losses."” The provision that is recorded is sufficient, in our judgment, to bring this reserve to a level that reflects the current expected lifetime losses in our loan portfolio relative to loan mix, a reasonable and supportable economic forecast period and historical loss experience at September 30, ~~2021.~~2022.

Noninterest Income

Noninterest income ~~increased~~decreased by ~~$15.7~~$32.9 million, or ~~15.7%~~28.4%, to $83.0 million for the nine months ended September 30, 2022 from $115.8 million for the nine months ended September 30, 2021. This decrease was primarily driven by the sale of our insurance business on April 30, 2021, resulting in a $25.3 million pre-tax gain during the prior nine month period. This insurance business sale in the prior year also resulted in a decrease in insurance commission income of $3.6 million from ~~$100.1~~the nine months ended September 30, 2021. In addition, mortgage banking income decreased by $9.4 million, or 68.1%, due to the impact of less favorable secondary market pricing, as well as decreased mortgage volumes. Partially offsetting these decreases was a $2.7 million, or 7.1%, increase in service charges and fees to $41.1 million for the nine months ended September 30, 2020. This increase was primarily due to a $25.3 million pre-tax gain on the sale of our insurance business offered through Northwest Insurance Services, which closed April 30, 2021. In addition, trust and other financial services income increased by $5.9 million, or 38.8%, to $21.12022 from $38.3 million for the nine months ended September 30, 2021 ~~from $15.2~~due to increased customer activity in 2022 after COVID-19 restricted behavior in the prior year. In addition, other operating income increased $1.6 million, or 18.6%, to $10.4 million for the nine months ended September 30, ~~2020~~2022 from $8.8 million for the nine months ended September 30, 2021 due to an increase in swap fee income as well as a ~~result~~gain of ~~increases in both trust and brokerage advisory services. Partially offsetting this increase was a $10.5~~approximately $1.0 million ~~or 43.3 %, decrease in mortgage banking income due to~~from the ~~impact~~sale of ~~less favorable secondary market pricing. Additionally, service charges and fees decreased by $4.2 million, or 9.9%, due to~~branch buildings associated with the ~~impact~~previously announced consolidation of ~~the Durbin amendment on our interchange fees which came into effect in the second half of 2020.~~20 branch office facilities.

Table of Contents

Noninterest Expense

Noninterest expense ~~increased~~decreased by ~~$4.0~~$9.3 million, or ~~1.6%~~3.6%, to $249.3 million for the nine months ended September 30, 2022, from $258.6 million for the nine months ended September 30, ~~2021, from $254.6~~2021. Spread across almost all expense categories, this decrease was driven by a $3.8 million, or 29.3%, decrease in professional service expense to $9.3 million for the nine months ended September 30, ~~2020. This increase was primarily~~2022 from $13.1 million for the nine months ended September 30, 2021 due to the ~~increase in compensation~~utilization of third-party experts to recruit talent, provide consulting services, and to assist with our digital strategy rollout during the prior year. Compensation and employee benefits expense ~~of $15.0~~decreased $3.5 million, or ~~11.5%~~2.4%, to $141.7 million for the nine months ended September 30, 2022 from $145.2 million for the nine months ended September 30, 2021 ~~from $130.2~~despite recognizing approximately $1.4 million of additional expense related to the acceleration of compensation and stock benefits upon the passing of our former Chief Executive Officer. This decrease in compensation and benefits as well as the $1.7 million, or 7.2%, decrease in premises and occupancy costs are due primarily to branch consolidations completed over the past two years. Processing expenses decreased $3.2 million, or 7.6%, to $38.9 million for the nine months ended September 30, 2020 primarily due to increases in health insurance and other benefit costs, regular merit expense and the addition of MutualBank employees and other strategic personnel. Processing expenses increased by $4.3 million, or 11.3%, to2022 from $42.1 million for the nine months ended September 30, 2021 ~~from $37.9 million for~~due to the ~~nine months ended September 30, 2020 as we continue to invest~~prior year investment in technology and infrastructure and as activity-driven utilization fees for ATM, check card and online and mobile banking has increased. Additionally, professional service expense increased by $4.2 million, or 47.6%, to $13.1 million for the nine months ended September 30, 2021 from $8.9 million for the nine months ended September 30, 2020 due primarily to utilization of third-party experts to assist with our digital strategy rollout.infrastructure. Partially offsetting these ~~increases, merger, asset disposition and restructuring expense decreased $12.9~~decreases, was a $4.5 million, or ~~95.3%~~64.3%, increase in other expenses due to ~~expenses incurred in the prior period as part of the MutualBank acquisition. Additionally, other expenses decreased by $5.8 million, or 45.1%,~~ ~~primarily due to the decrease~~an increase in the reserve for unfunded ~~commitments. The prior year was significantly impacted by~~commitments resulting from the ~~onset~~origination of ~~COVID-19 and the uncertainty surrounding the possible negative effect on loan commitments and undrawn lines of credit.~~ loans with current off balance sheet exposure.

Income Taxes

The provision for income taxes ~~increased~~decreased by ~~$29.2~~$8.1 million, or ~~349.8%~~21.5%, to $29.5 million for the nine months ended September 30, 2022 from $37.5 million for the nine months ended September 30, ~~2021 from $8.3 million for the nine months ended September 30, 2020.~~2021. This ~~increase~~decrease was primarily due to the ~~increase~~decrease in income before tax of ~~$113.7~~$33.3 million, or ~~236.1%~~20.6%. We anticipate our effective tax rate to be between 22.0% and 24.0% for the year ending December 31, ~~2021.~~2022.

5453

~~Tabl~~e Table of Contents

Average Balance Sheet

(in thousands)

The following table sets forth certain information relating to the Company’s average balance sheet and reflects the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented. Average balances are calculated using daily averages.


		Quarter ended September 30,											Quarter ended September 30,
		2021					2020						2022					2021
		Average balance		Interest	Avg. yield/ cost (i)		Average balance		Interest	Avg. yield/ cost (i)			Average balance		Interest	Avg. yield/ cost (h)		Average balance		Interest	Avg. yield/ cost (h)
Assets	Assets											Assets
Interest-earning assets:	Interest-earning assets:											Interest-earning assets:
Residential mortgage loans	Residential mortgage loans	$	2,959,794	25,398	3.43	%	$	3,176,436	28,769	3.62	%	Residential mortgage loans	$	3,331,173	29,414	3.53	%	$	2,959,794	25,398	3.43	%
Home equity loans	Home equity loans	1,356,131		11,993	3.51	%	1,479,429		13,732	3.69	%	Home equity loans	1,274,918		13,658	4.25	%	1,356,131		11,993	3.51	%
Consumer loans	Consumer loans	1,728,563		16,220	3.72	%	1,437,828		15,851	4.39	%	Consumer loans	1,981,754		17,256	3.45	%	1,728,563		16,220	3.72	%

Commercial real estate loans	Commercial real estate loans	3,205,839		35,305	4.31	%	3,306,386		36,887	4.37	%	Commercial real estate loans	2,842,597		34,158	4.70	%	3,205,839		35,305	4.31	%
Commercial loans	Commercial loans	975,603		9,096	3.65	%	1,377,223		12,603	3.58	%	Commercial loans	1,050,124		12,978	4.84	%	975,603		9,096	3.65	%
Loans receivable (a) (b) (d) (includes FTE adjustments of $537 and $600, respectively)		10,225,930		98,012	3.80	%	10,777,302		107,842	3.98	%
Loans receivable (a) (b) (d) (includes FTE adjustments of $521 and $537, respectively)												Loans receivable (a) (b) (d) (includes FTE adjustments of $521 and $537, respectively)	10,480,566		107,464	4.07	%	10,225,930		98,012	3.80	%
Mortgage-backed securities (c)	Mortgage-backed securities (c)	1,832,876		5,840	1.27	%	1,004,803		4,651	1.85	%	Mortgage-backed securities (c)	2,019,715		8,683	1.72	%	1,832,876		5,840	1.27	%
Investment securities (c) (d) (includes FTE adjustments of $189 and $254, respectively)		348,619		1,466	1.68	%	216,081		1,336	2.47	%
Investment securities (c) (d) (includes FTE adjustments of $215 and $189, respectively)												Investment securities (c) (d) (includes FTE adjustments of $215 and $189, respectively)	388,755		1,762	1.81	%	348,619		1,466	1.68	%
FHLB stock, at cost	FHLB stock, at cost	21,607		71	1.31	%	25,595		218	3.39	%	FHLB stock, at cost	14,028		148	4.19	%	21,607		71	1.31	%
Other interest-earning deposits	Other interest-earning deposits	905,130		352	0.15	%	791,601		221	0.11	%	Other interest-earning deposits	253,192		1,295	2.00	%	905,130		352	0.15	%
Total interest-earning assets (includes FTE adjustments of $726 and $854, respectively)		13,334,162		105,741	3.15	%	12,815,382		114,268	3.55	%
Total interest-earning assets (includes FTE adjustments of $736 and $726, respectively)												Total interest-earning assets (includes FTE adjustments of $736 and $726, respectively)	13,156,256		119,352	3.60	%	13,334,162		105,741	3.15	%
Noninterest-earning assets (e)	Noninterest-earning assets (e)	1,074,122					1,088,273					Noninterest-earning assets (e)	896,663					1,074,122

Total assets	Total assets	$	14,408,284				$	13,903,655				Total assets	$	14,052,919				$	14,408,284

Liabilities and shareholders’ equity	Liabilities and shareholders’ equity											Liabilities and shareholders’ equity
Interest-bearing liabilities:	Interest-bearing liabilities:											Interest-bearing liabilities:
Savings deposits	Savings deposits	$	2,271,365	603	0.11	%	$	2,015,604	648	0.13	%	Savings deposits	$	2,350,248	594	0.10	%	$	2,271,365	603	0.11	%
Interest-bearing demand deposits	Interest-bearing demand deposits	2,890,905		414	0.06	%	2,680,591		763	0.11	%	Interest-bearing demand deposits	2,794,338		360	0.05	%	2,890,905		414	0.06	%
Money market deposit accounts	Money market deposit accounts	2,565,159		637	0.10	%	2,347,097		1,347	0.23	%	Money market deposit accounts	2,620,850		692	0.10	%	2,565,159		637	0.10	%
Time deposits	Time deposits	1,423,041		2,886	0.80	%	1,782,350		5,685	1.27	%	Time deposits	1,110,906		1,511	0.54	%	1,423,041		2,886	0.80	%
Borrowed funds (f)	Borrowed funds (f)	131,199		154	0.47	%	419,375		411	0.55	%	Borrowed funds (f)	127,073		239	0.75	%	131,199		154	0.47	%
Subordinated debentures ~~(g)~~	Subordinated debentures ~~(g)~~	123,513		1,277	4.10	%	1,340		306	N/M		Subordinated debentures ~~(g)~~	113,695		1,149	4.04	%	123,513		1,277	4.10	%
Junior subordinated debentures	Junior subordinated debentures	128,946		625	1.90	%	128,658		720	2.19	%	Junior subordinated debentures	129,207		1,322	4.00	%	128,946		625	1.90	%
Total interest-bearing liabilities	Total interest-bearing liabilities	9,534,128		6,596	0.27	%	9,375,015		9,880	0.42	%	Total interest-bearing liabilities	9,246,317		5,867	0.25	%	9,534,128		6,596	0.27	%
Noninterest-bearing demand deposits ~~(h)~~(g)	Noninterest-bearing demand deposits ~~(h)~~(g)	3,058,819					2,703,266					Noninterest-bearing demand deposits ~~(h)~~(g)	3,093,490					3,058,819
Noninterest-bearing liabilities	Noninterest-bearing liabilities	244,402					284,440					Noninterest-bearing liabilities	209,486					244,402

Total liabilities	Total liabilities	12,837,349					12,362,721					Total liabilities	12,549,293					12,837,349

Shareholders’ equity	Shareholders’ equity	1,570,935					1,540,934					Shareholders’ equity	1,503,626					1,570,935

Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	14,408,284				$	13,903,655				Total liabilities and shareholders’ equity	$	14,052,919				$	14,408,284

Net interest income/Interest rate spread	Net interest income/Interest rate spread			99,145	2.87	%			104,388	3.13	%	Net interest income/Interest rate spread			113,485	3.35	%			99,145	2.87	%

Net interest-earning assets/Net interest margin	Net interest-earning assets/Net interest margin	$	3,800,034		2.97	%	$	3,440,367		3.26	%	Net interest-earning assets/Net interest margin	$	3,909,939		3.42	%	$	3,800,034		2.97	%

Ratio of interest-earning assets to interest-bearing liabilities		1.40X					1.37X
Ratio of interest-earning assets to interest- bearing liabilities												Ratio of interest-earning assets to interest- bearing liabilities	1.42X					1.40X

(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"~~(“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)~~On September 9, 2020, the Company issued $125.0 million of 4.00% fixed-to-floating rate subordinated notes with a maturity of September 15, 2030.~~

~~(h)~~Average cost of total deposits ~~were~~was 0.11% and 0.15% ~~and 0.29%~~, respectively.

~~(i)~~(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 — ~~3.79%~~4.05% and ~~3.96%~~3.79%, respectively; investment securities — ~~1.47%~~1.59% and ~~2.00%~~1.47%, respectively; interest-earning assets — ~~3.13%~~3.58% and ~~3.52%~~3.13%, respectively. GAAP basis net interest rate spreads were ~~2.86%~~3.33% and ~~3.10%~~2.86%, respectively; and GAAP basis net interest margins were ~~2.95%~~3.40% and ~~3.23%~~2.95%, respectively.

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~~Tabl~~e Table of Contents

Rate/Volume Analysis

(in thousands)

The following table represents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) net change. Changes that cannot be attributed to either rate or volume have been allocated to both rate and volume.


		For the quarter ended September 30, 2021 vs. 2020					For the quarter ended September 30, 2022 vs. 2021
		Increase/(decrease) due to			Total increase/(decrease)		Increase/(decrease) due to			Total increase/(decrease)
		Rate		Volume			Rate		Volume
Interest-earning assets:	Interest-earning assets:					Interest-earning assets:
Loans receivable	Loans receivable	$	(4,841)	(4,989)	(9,830)	Loans receivable	$	6,908	2,544	9,452
Mortgage-backed securities	Mortgage-backed securities	(1,449)		2,638	1,189	Mortgage-backed securities	2,061		782	2,843
Investment securities	Investment securities	(428)		558	130	Investment securities	116		180	296
FHLB stock, at cost	FHLB stock, at cost	(133)		(14)	(147)	FHLB stock, at cost	155		(78)	77
Other interest-earning deposits	Other interest-earning deposits	87		44	131	Other interest-earning deposits	4,188		(3,245)	943
Total interest-earning assets	Total interest-earning assets	(6,764)		(1,763)	(8,527)	Total interest-earning assets	13,428		183	13,611

Interest-bearing liabilities:	Interest-bearing liabilities:					Interest-bearing liabilities:
Savings deposits	Savings deposits	(115)		70	(45)	Savings deposits	(56)		47	(9)
Interest-bearing demand deposits	Interest-bearing demand deposits	(382)		33	(349)	Interest-bearing demand deposits	(65)		11	(54)
Money market deposit accounts	Money market deposit accounts	(768)		58	(710)	Money market deposit accounts	31		24	55
Time deposits	Time deposits	(2,085)		(714)	(2,799)	Time deposits	(934)		(441)	(1,375)
Borrowed funds	Borrowed funds	81		(338)	(257)	Borrowed funds	92		(7)	85
Subordinated debt	Subordinated debt	(292)		1,263	971	Subordinated debt	(19)		(109)	(128)
Junior subordinated debentures	Junior subordinated debentures	(97)		2	(95)	Junior subordinated debentures	693		4	697
Total interest-bearing liabilities	Total interest-bearing liabilities	(3,658)		374	(3,284)	Total interest-bearing liabilities	(258)		(471)	(729)

Net change in net interest income	Net change in net interest income	$	(3,106)	(2,137)	(5,243)	Net change in net interest income	$	13,686	654	14,340

5655

~~Tabl~~e Table of Contents

Average Balance Sheet

(in thousands)


		Nine months ended September 30,											Nine months ended September 30,
		2021					2020						2022					2021
		Average balance		Interest	Avg. yield/ cost (i)		Average balance		Interest	Avg. yield/ cost (i)			Average balance		Interest	Avg. yield/ cost (h)		Average balance		Interest	Avg. yield/ cost (h)
Assets	Assets											Assets
Interest-earning assets:	Interest-earning assets:											Interest-earning assets:
Residential mortgage loans	Residential mortgage loans	$	2,967,248	77,373	3.48	%	$	3,038,712	85,850	3.77	%	Residential mortgage loans	$	3,162,758	82,282	3.47	%	$	2,967,248	77,373	3.48	%
Home equity loans	Home equity loans	1,389,367		37,039	3.55	%	1,424,580		42,340	3.97	%	Home equity loans	1,282,045		37,443	3.90	%	1,389,367		37,039	3.55	%
Consumer loans	Consumer loans	1,594,834		45,341	3.79	%	1,302,282		43,004	4.41	%	Consumer loans	1,887,843		47,588	3.37	%	1,594,834		45,341	3.79	%

Commercial real estate loans	Commercial real estate loans	3,258,785		107,124	4.32	%	3,071,047		102,918	4.40	%	Commercial real estate loans	2,918,940		95,813	4.33	%	3,258,785		107,124	4.32	%
Commercial loans	Commercial loans	1,099,010		29,640	3.54	%	1,084,739		32,727	3.96	%	Commercial loans	929,942		28,981	4.11	%	1,099,010		29,640	3.54	%
Loans receivable (a) (b) (d) (includes FTE adjustments of $1,468 and $1,613, respectively)		10,309,244		296,517	3.83	%	9,921,360		306,839	4.13	%
Loans receivable (a) (b) (d) (includes FTE adjustments of $1,416 and $1,468, respectively)												Loans receivable (a) (b) (d) (includes FTE adjustments of $1,416 and $1,468, respectively)	10,181,528		292,107	3.84	%	10,309,244		296,517	3.83	%
Mortgage-backed securities (c)	Mortgage-backed securities (c)	1,639,749		15,720	1.28	%	796,739		12,865	2.15	%	Mortgage-backed securities (c)	1,972,694		22,201	1.50	%	1,639,749		15,720	1.28	%
Investment securities (c) (d) (includes FTE adjustments of $540 and $543, respectively)		348,193		4,313	1.65	%	176,991		3,461	2.61	%
Investment securities (c) (d) (includes FTE adjustments of $627 and $540, respectively)												Investment securities (c) (d) (includes FTE adjustments of $627 and $540, respectively)	379,850		4,923	1.73	%	348,193		4,313	1.65	%
FHLB stock, at cost	FHLB stock, at cost	22,174		325	1.95	%	21,255		789	4.96	%	FHLB stock, at cost	13,776		311	3.02	%	22,174		325	1.95	%
Other interest-earning deposits	Other interest-earning deposits	838,997		727	0.11	%	483,390		541	0.15	%	Other interest-earning deposits	753,482		3,447	0.60	%	838,997		727	0.11	%
Total interest-earning assets (includes FTE adjustments of $2,008 and $2,156, respectively)		13,158,357		317,602	3.22	%	11,399,735		324,495	3.80	%
Total interest-earning assets (includes FTE adjustments of $2,043 and $2,008, respectively)												Total interest-earning assets (includes FTE adjustments of $2,043 and $2,008, respectively)	13,301,330		322,989	3.25	%	13,158,357		317,602	3.22	%
Noninterest-earning assets (e)	Noninterest-earning assets (e)	1,094,117					1,190,283					Noninterest-earning assets (e)	941,947					1,094,117

Total assets	Total assets	$	14,252,474				$	12,590,018				Total assets	$	14,243,277				$	14,252,474

Liabilities and shareholders’ equity	Liabilities and shareholders’ equity											Liabilities and shareholders’ equity
Interest-bearing liabilities:	Interest-bearing liabilities:											Interest-bearing liabilities:
Savings deposits	Savings deposits	$	2,215,553	1,818	0.11	%	$	1,837,624	2,023	0.15	%	Savings deposits	$	2,348,944	1,758	0.10	%	$	2,215,553	1,818	0.11	%
Interest-bearing demand deposits	Interest-bearing demand deposits	2,838,822		1,250	0.06	%	2,342,748		2,882	0.16	%	Interest-bearing demand deposits	2,842,071		1,008	0.05	%	2,838,822		1,250	0.06	%
Money market deposit accounts	Money market deposit accounts	2,533,676		1,914	0.10	%	2,157,212		6,035	0.37	%	Money market deposit accounts	2,647,301		2,067	0.10	%	2,533,676		1,914	0.10	%
Time deposits	Time deposits	1,499,583		9,845	0.87	%	1,691,168		18,243	1.44	%	Time deposits	1,207,444		5,416	0.60	%	1,499,583		9,845	0.87	%
Borrowed funds (f)	Borrowed funds (f)	135,369		458	0.45	%	344,007		1,415	0.55	%	Borrowed funds (f)	131,368		563	0.57	%	135,369		458	0.45	%
Subordinated debentures ~~(g)~~	Subordinated debentures ~~(g)~~	123,438		3,799	4.10	%	450		306	N/M		Subordinated debentures ~~(g)~~	118,919		3,603	4.04	%	123,438		3,799	4.10	%
Junior subordinated debentures	Junior subordinated debentures	128,882		1,903	1.94	%	125,988		2,595	2.71	%	Junior subordinated debentures	129,142		2,893	2.95	%	128,882		1,903	1.94	%
Total interest-bearing liabilities	Total interest-bearing liabilities	9,475,323		20,987	0.30	%	8,499,197		33,499	0.53	%	Total interest-bearing liabilities	9,425,189		17,308	0.25	%	9,475,323		20,987	0.30	%
Noninterest-bearing demand deposits ~~(h)~~(g)	Noninterest-bearing demand deposits ~~(h)~~(g)	2,967,672					2,250,864					Noninterest-bearing demand deposits ~~(h)~~(g)	3,081,640					2,967,672
Noninterest-bearing liabilities	Noninterest-bearing liabilities	252,587					243,705					Noninterest-bearing liabilities	199,742					252,587

Total liabilities	Total liabilities	12,695,582					10,993,766					Total liabilities	12,706,571					12,695,582

Shareholders’ equity	Shareholders’ equity	1,556,892					1,596,252					Shareholders’ equity	1,536,706					1,556,892

Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	14,252,474				$	12,590,018				Total liabilities and shareholders’ equity	$	14,243,277				$	14,252,474

Net interest income/Interest rate spread	Net interest income/Interest rate spread			296,615	2.92	%			290,996	3.27	%	Net interest income/Interest rate spread			305,681	3.00	%			296,615	2.92	%

Net interest-earning assets/Net interest margin	Net interest-earning assets/Net interest margin	$	3,683,034		3.01	%	$	2,900,538		3.40	%	Net interest-earning assets/Net interest margin	$	3,876,141		3.07	%	$	3,683,034		3.01	%

Ratio of interest-earning assets to interest-bearing liabilities	Ratio of interest-earning assets to interest-bearing liabilities	1.39X					1.34X					Ratio of interest-earning assets to interest-bearing liabilities	1.41X					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"~~(“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)~~On September 9, 2020, the Company issued $125.0 million of 4.00% fixed-to-floating rate subordinated notes with a maturity of September 15, 2030.~~

~~(h)~~Average cost of total deposits ~~were~~was 0.11% and 0.16% ~~and 0.38%~~, respectively.

~~(i)~~(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 — 3.82% and ~~4.11%~~3.82%, respectively; investment securities — ~~1.44%~~1.51% and ~~2.20%~~1.44%, respectively; interest-earning assets — ~~3.20%~~3.23% and ~~3.78%~~3.20%, respectively. GAAP basis net interest rate spreads were ~~2.91%~~2.98% and ~~3.25%~~2.91%, respectively; and GAAP basis net interest margins were ~~2.99%~~3.05% and ~~3.38%~~2.99%, respectively.

5756

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Rate/Volume Analysis

(in thousands)


		For the nine months ended September 30, 2021 vs. 2020					For the nine months ended September 30, 2022 vs. 2021
		Increase/(decrease) due to			Total increase/(decrease)		Increase/(decrease) due to			Total increase/(decrease)
		Rate		Volume			Rate		Volume
Interest-earning assets:	Interest-earning assets:					Interest-earning assets:
Loans receivable	Loans receivable	$	(22,258)	11,936	(10,322)	Loans receivable	$	449	(4,859)	(4,410)
Mortgage-backed securities	Mortgage-backed securities	(5,227)		8,082	2,855	Mortgage-backed securities	2,713		3,768	6,481
Investment securities	Investment securities	(1,269)		2,121	852	Investment securities	204		406	610
FHLB stock, at cost	FHLB stock, at cost	(479)		15	(464)	FHLB stock, at cost	178		(192)	(14)
Other interest-earning deposits	Other interest-earning deposits	(122)		308	186	Other interest-earning deposits	3,094		(374)	2,720
Total interest-earning assets	Total interest-earning assets	(29,355)		22,462	(6,893)	Total interest-earning assets	6,638		(1,251)	5,387

Interest-bearing liabilities:	Interest-bearing liabilities:					Interest-bearing liabilities:
Savings deposits	Savings deposits	(519)		314	(205)	Savings deposits	(165)		105	(60)
Interest-bearing demand deposits	Interest-bearing demand deposits	(1,852)		220	(1,632)	Interest-bearing demand deposits	(267)		25	(242)
Money market deposit accounts	Money market deposit accounts	(4,406)		285	(4,121)	Money market deposit accounts	28		125	153
Time deposits	Time deposits	(7,164)		(1,234)	(8,398)	Time deposits	(3,032)		(1,397)	(4,429)
Borrowed funds	Borrowed funds	(251)		(706)	(957)	Borrowed funds	125		(20)	105
Subordinated debt	Subordinated debt	(291)		3,784	3,493	Subordinated debt	(57)		(139)	(196)
Junior subordinated debentures	Junior subordinated debentures	(732)		40	(692)	Junior subordinated debentures	990		—	990
Total interest-bearing liabilities	Total interest-bearing liabilities	(15,215)		2,703	(12,512)	Total interest-bearing liabilities	(2,378)		(1,301)	(3,679)

Net change in net interest income	Net change in net interest income	$	(14,140)	19,759	5,619	Net change in net interest income	$	9,016	50	9,066

5857

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Item 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 have 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 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 parallel 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 parallel shift of 100 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 parallel 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, 200 bps or 300 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 September 30, ~~2021~~2022 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 September 30, ~~2021~~2022 levels.


		Increase									Decrease				Increase									Decrease
Parallel shift in interest rates over the next 12 months	Parallel shift in interest rates over the next 12 months	100 bps			200 bps			300 bps			100 bps			Parallel shift in interest rates over the next 12 months	100 bps			200 bps			300 bps			100 bps			200 bps			300 bps
Projected percentage increase/(decrease) in net interest income	Projected percentage increase/(decrease) in net interest income	1.1		%	1.4		%	1.4		%	(2.7		%)	Projected percentage increase/(decrease) in net interest income	(0.4		%)	(0.9		%)	(1.6		%)	(6.4		%)	(13.4		%)	(21.0		%)
Projected percentage increase/(decrease) in net income	Projected percentage increase/(decrease) in net income	3.4		%	4.6		%	5.0		%	(8.0		%)	Projected percentage increase/(decrease) in net income	(0.7		%)	(1.7		%)	(2.9		%)	(13.9		%)	(29.2		%)	(45.8		%)
Projected increase/(decrease) in return on average equity	Projected increase/(decrease) in return on average equity	3.3		%	4.4		%	4.9		%	(7.8		%)	Projected increase/(decrease) in return on average equity	(0.6		%)	(1.6		%)	(2.8		%)	(13.2		%)	(28.0		%)	(44.4		%)
Projected increase/(decrease) in earnings per share	Projected increase/(decrease) in earnings per share	$	0.03		$	0.04		$	0.04		$	(0.06)		Projected increase/(decrease) in earnings per share	$	(0.01)		$	(0.03)		$	(0.04)		$	(0.19)		$	(0.39)		$	(0.61)
Projected percentage decrease in market value of equity		(2.9		%)	(7.8		%)	(14.4		%)	(12.2		%)
Projected percentage increase/(decrease) in market value of equity														Projected percentage increase/(decrease) in market value of equity	(7.6		%)	(15.2		%)	(24.7		%)	1.7		%	5.2		%	8.0		%

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.

5958

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Item 4. CONTROLS AND PROCEDURES

Under the supervision of and with the participation of management, including the Principal Executive Officer and Principal Financial Officer, we evaluated the effectiveness of the design and operation of the ~~Company's~~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 controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. LEGAL 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. Refer to Note 11.

Item 1A. RISK 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, ~~2020~~2021 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.

6059

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Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

a) Not applicable.

b) Not applicable.

c) On December 13, 2012, the Board of Directors 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 September 30, ~~2021, we~~2022, there were no shares of common stock repurchased ~~1,425,120 shares~~ and there are a maximum of 2,261,130 remaining shares that can be purchased under the current repurchase program.

Month Number of shares purchased Average
price paid
per share Total number of shares purchased as part of a publicly announced repurchase plan Maximum number of
shares yet to be purchased under the plan
July 1,065,540 $ 13.35 1,065,540 2,620,710
August — — — 2,620,710
September 359,580 12.69 359,580 2,261,130
1,425,120

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

Not applicable.

6160

~~Tabl~~e Table of Contents

Item 6. EXHIBITS


10.1			Employment Agreement by and between Northwest Bank, Northwest Bancshares, Inc. and Louis J. Torchio, dated August 17, 2022.

10.2			Employment Agreement by and between Northwest Bank, Northwest Bancshares, Inc. and William W. Harvey Jr., dated August 17, 2022.

31.1			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 the Chief Operating Officer and 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.

32.1			Certification of the Chief Executive Officer and Chief Operating 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.INS			The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH			XBRL Taxonomy Extension Schema Document.
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB			XBRL Taxonomy Extension Label Linkbase.
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document.
104			The cover page of this Quarterly Report on Form 10-Q, formatted in inline XBRL.

6261

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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 4, ~~2021~~2022	By:	/s/ ~~Ronald~~Louis J. ~~Seiffert~~Torchio
			~~Ronald~~Louis J. ~~Seiffert~~Torchio
			~~Chairman,~~ President and Chief Executive Officer
			(Duly Authorized Officer)


Date:	November 4, ~~2021~~2022	By:	/s/ Jeffrey ~~R. White~~J. Maddigan
			Jeffrey ~~R. White~~J. Maddigan
			~~Senior~~Executive Vice President, Finance, Accounting and ~~Controller~~Corporate Treasurer
			(Principal Accounting Officer)

6362


				Additional paid-in capital	Retained earnings	Accumulated other comprehensive income/(loss)	Total shareholders’ equity
	Common stock
Quarter ended September 30, 2020	Shares	Amount
Beginning balance at June 30, 2020	127,838,400	$	1,278	1,023,083	530,928	(24,440)	1,530,849

Comprehensive income:
Net income	—	—		—	38,050	—	38,050

Other comprehensive income, net of tax of ($581)	—	—		—	—	1,871	1,871

Total comprehensive income	—	—		—	38,050	1,871	39,921







Stock-based compensation expense	—	—		743	—	—	743



Stock-based compensation forfeited	(37,103)	—		1	—	—	1



Dividends paid ($0.19 per share)	—	—		—	(24,283)	—	(24,283)

Ending balance at September 30, 2020	127,801,297	$	1,278	1,023,827	544,695	(22,569)	1,547,231


	Nonaccrual loans at December 31, 2020		Nonaccrual loans at September 30, 2021 with an allowance	Nonaccrual loans at September 30, 2021 with no allowance	Loans at September 30, 2021 90 days past due and accruing
Personal Banking:
Residential mortgage loans	$	15,924	10,710	—	—
Home equity loans	9,123		6,270	212	—
Vehicle loans	5,533		2,964	13	—
Consumer loans	1,031		1,114	1	386
Total Personal Banking	31,611		21,058	226	386

Commercial Banking:
Commercial real estate loans	44,092		80,831	55,071	—
Commercial real estate loans - owner occupied	3,642		1,359	—	—
Commercial loans	23,487		14,726	3,671	—
Total Commercial Banking	71,221		96,916	58,742	—

Total	$	102,832	117,974	58,968	386


	YTD September 30, 2021		2020	2019	2018	2017	Prior	Revolving loans	Revolving loans converted to term loans	Total loans receivable
Personal Banking:
Residential mortgage loans
Pass	$	487,627	627,031	327,054	169,600	186,866	1,174,311	—	—	2,972,489
Substandard	—		495	205	565	946	14,821	—	—	17,032
Total residential mortgage loans	487,627		627,526	327,259	170,165	187,812	1,189,132	—	—	2,989,521
Home equity loans
Pass	122,912		225,366	150,967	69,938	67,057	228,689	437,098	40,452	1,342,479
Substandard	—		66	539	65	361	4,116	1,440	1,282	7,869
Total home equity loans	122,912		225,432	151,506	70,003	67,418	232,805	438,538	41,734	1,350,348
Vehicle loans
Pass	679,196		330,014	235,766	139,654	41,199	32,385	—	—	1,458,214
Substandard	196		233	1,056	885	405	201	—	—	2,976
Total vehicle loans	679,392		330,247	236,822	140,539	41,604	32,586	—	—	1,461,190
Consumer loans
Pass	97,143		91,731	54,194	23,280	11,168	13,248	61,703	1,679	354,146
Substandard	145		151	328	180	132	144	410	10	1,500
Total consumer loans	97,288		91,882	54,522	23,460	11,300	13,392	62,113	1,689	355,646
Total Personal Banking	1,387,219		1,275,087	770,109	404,167	308,134	1,467,915	500,651	43,423	6,156,705
Business Banking:
Commercial real estate loans
Pass	231,278		449,316	415,206	280,005	238,909	757,071	29,551	10,509	2,411,845
Special Mention	811		2,653	34,758	1,177	4,149	10,891	708	25	55,172
Substandard	—		33,671	27,741	49,665	59,169	92,974	1,233	5,014	269,467


Total commercial real estate loans	232,089		485,640	477,705	330,847	302,227	860,936	31,492	15,548	2,736,484
Commercial real estate loans - owner occupied
Pass	65,945		24,876	56,170	69,834	59,792	105,531	2,851	2,748	387,747
Special Mention	—		—	1,729	784	2,963	1,770	616	—	7,862
Substandard	—		—	2,783	1,195	9,072	16,542	98	768	30,458


Total commercial real estate loans - owner occupied	65,945		24,876	60,682	71,813	71,827	123,843	3,565	3,516	426,067
Commercial loans
Pass	245,021		111,415	79,383	32,820	37,961	80,850	215,455	10,760	813,665
Special Mention	108		5,578	806	1,384	52	646	2,402	—	10,976
Substandard	401		5,215	5,852	5,840	3,828	3,717	15,032	15,186	55,071


Total commercial loans	245,530		122,208	86,041	40,044	41,841	85,213	232,889	25,946	879,712
Total Business Banking	543,564		632,724	624,428	442,704	415,895	1,069,992	267,946	45,010	4,042,263

Total loans	$	1,930,783	1,907,811	1,394,537	846,871	724,029	2,537,907	768,597	88,433	10,198,968


	For the quarter ended September 30, 2021
	Unrealized gains/(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, 2021	$	3,533	—	(49,725)	(46,192)



Other comprehensive loss before reclassification adjustments (1)	(6,455)		—	—	(6,455)
Amounts reclassified from accumulated other comprehensive income (2) (3)	(69)		—	333	264

Net other comprehensive income/(loss)	(6,524)		—	333	(6,191)

Balance as of September 30, 2021	$	(2,991)	—	(49,392)	(52,383)


	For the nine months ended September 30, 2020
	Unrealized gains 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, 2019	$	3,147	—	(40,088)	(36,941)



Other comprehensive income/(loss) before reclassification adjustments (4) (5)	13,623		(946)	—	12,677
Amounts reclassified from accumulated other comprehensive income (6) (7) (8)	1		946	748	1,695

Net other comprehensive income	13,624		—	748	14,372

Balance as of September 30, 2020	$	16,771	—	(39,340)	(22,569)


Month	Number of shares purchased	Average price paid per share		Total number of shares purchased as part of a publicly announced repurchase plan	Maximum number of shares yet to be purchased under the plan
July	1,065,540	$	13.35	1,065,540	2,620,710
August	—	—		—	2,620,710
September	359,580	12.69		359,580	2,261,130
	1,425,120