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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 March 31, 2022
 OR
☐    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.)
   
3 Easton Oval
    Suite 500
Columbus
   Ohio
 43219
(Address of Principal Executive Offices) (Zip Code)
 
(814) 726-2140
(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ 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 growth 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), 126,710,453 shares outstanding as of April 30, 2022.
NORTHWEST BANCSHARES, INC.
Table of Contents
 
    
PART I FINANCIAL INFORMATION 
    
   
     
   
     
   
     
   
     
   
     
   
     
   
     
  
     
  
     
  
     
  
     
  
     
  
     
  
     
  
     
  
     
  
     
  
     
   
     
   


Item 1.        FINANCIAL STATEMENTS
 
NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(in thousands, except share data)
March 31, 2022December 31, 2021
Assets  
Cash and cash equivalents $1,161,006 1,279,259 
Marketable securities available-for-sale (amortized cost of $1,542,170 and $1,565,002, respectively)
1,442,098 1,548,592 
Marketable securities held-to-maturity (fair value of $677,376 and $751,513, respectively)
737,730 768,154 
Total cash and cash equivalents and marketable securities3,340,834 3,596,005 
Loans held-for-sale19,272 25,056 
Loans held for investment10,119,762 9,991,336 
Allowance for credit losses(99,295)(102,241)
Loans receivable, net10,039,739 9,914,151 
FHLB stock, at cost13,318 14,184 
Accrued interest receivable26,268 25,599 
Real estate owned, net929 873 
Premises and equipment, net149,970 156,524 
Bank-owned life insurance254,109 256,213 
Goodwill380,997 380,997 
Other intangible assets, net11,654 12,836 
Other assets193,365 144,126 
Total assets$14,411,183 14,501,508 
Liabilities and shareholders’ equity  
Liabilities:  
Noninterest-bearing demand deposits$3,128,849 3,099,526 
Interest-bearing demand deposits2,891,622 2,940,442 
Money market deposit accounts2,680,613 2,629,882 
Savings deposits2,367,438 2,303,760 
Time deposits1,251,878 1,327,555 
Total deposits12,320,400 12,301,165 
Borrowed funds121,436 139,093 
Subordinated debt123,670 123,575 
Junior subordinated debentures 129,119 129,054 
Advances by borrowers for taxes and insurance44,022 44,582 
Accrued interest payable563 1,804 
Other liabilities148,461 178,664 
Total liabilities12,887,671 12,917,937 
Shareholders’ equity:  
Preferred stock, $0.01 par value: 50,000,000 authorized, no shares issued
— — 
Common stock, $0.01 par value: 500,000,000 shares authorized, 126,686,373 and 126,612,183 shares issued and outstanding, respectively
1,267 1,266 
Additional paid-in capital1,012,308 1,010,405 
Retained earnings612,481 609,529 
Accumulated other comprehensive loss(102,544)(37,629)
Total shareholders’ equity1,523,512 1,583,571 
Total liabilities and shareholders’ equity$14,411,183 14,501,508 
See accompanying notes to unaudited Consolidated Financial Statements.
1
NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands, except share data) 
Quarter ended March 31,
 20222021
Interest income:  
Loans receivable$88,174 102,318 
Mortgage-backed securities6,360 4,200 
Taxable investment securities677 634 
Tax-free investment securities674 575 
FHLB stock dividends81 116 
Interest-earning deposits467 183 
Total interest income
96,433 108,026 
Interest expense:  
Deposits3,751 5,514 
Borrowed funds2,059 2,054 
Total interest expense
5,810 7,568 
Net interest income
90,623 100,458 
Provision for credit losses(1,481)(5,620)
Net interest income after provision for credit losses
92,104 106,078 
Noninterest income:  
Loss on sale of investments(2)(21)
Service charges and fees13,067 12,394 
Trust and other financial services income7,012 6,484 
Insurance commission income— 2,546 
Loss on real estate owned, net(29)(42)
Income from bank-owned life insurance1,983 1,736 
Mortgage banking income1,465 6,020 
Other operating income2,244 2,836 
Total noninterest income
25,740 31,953 
Noninterest expense:  
Compensation and employee benefits46,917 47,239 
Premises and occupancy costs7,797 8,814 
Office operations3,383 3,165 
Collections expense520 616 
Processing expenses12,548 13,456 
Marketing expenses2,128 1,980 
Federal deposit insurance premiums1,129 1,307 
Professional services2,573 4,582 
Amortization of intangible assets1,183 1,594 
Real estate owned expense37 75 
Merger, asset disposition and restructuring expense1,374 9 
Other expenses2,355 3,354 
Total noninterest expense
81,944 86,191 
Income before income taxes35,900 51,840 
Federal and state income taxes expense7,613 11,603 
Net income$28,287 40,237 
Basic earnings per share$0.22 0.32 
Diluted earnings per share$0.22 0.32 
See accompanying notes to unaudited Consolidated Financial Statements.
2
NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(in thousands)
Quarter ended March 31,
 20222021
Net income$28,287 40,237 
Other comprehensive income net of tax:  
Net unrealized holding losses on marketable securities:  
Unrealized holding losses, net of tax of $18,877 and $5,981, respectively
(64,783)(17,421)
Reclassification adjustment for gains included in net income, net of tax of $0 and $22, respectively
(1)(75)
Net unrealized holding losses on marketable securities(64,784)(17,496)
Defined benefit plan:  
Actuarial reclassification adjustments for prior period service costs and actuarial (gains)/losses included in net income, net of tax of $50 and ($129), respectively
(131)333 
Other comprehensive loss(64,915)(17,163)
Total comprehensive (loss)/income$(36,628)23,074 
See accompanying notes to unaudited Consolidated Financial Statements.

3
NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)
(in thousands, expect share data) 
Additional paid-in capitalRetained earningsAccumulated
other comprehensive loss		Total shareholders’ equity
 Common stock
Quarter ended March 31, 2022SharesAmount
Beginning balance at December 31, 2021126,612,183 $1,266 1,010,405 609,529 (37,629)1,583,571 
Comprehensive income:      
Net income— — — 28,287 — 28,287 
Other comprehensive loss, net of tax of $18,927
— — — — (64,915)(64,915)
Total comprehensive income/(loss)— — — 28,287 (64,915)(36,628)
Exercise of stock options101,613 1 1,204 — — 1,205 
Stock-based compensation expense10,222 — 699 — — 699 
Stock-based compensation forfeited(37,645)— — — — — 
Dividends paid ($0.20 per share)
— — — (25,335)— (25,335)
Ending balance at March 31, 2022126,686,373 $1,267 1,012,308 612,481 (102,544)1,523,512 

Additional paid-in capitalRetained earningsAccumulated
other comprehensive income/(loss)		Total shareholders’ equity
 Common stock
Quarter ended March 31, 2021SharesAmount
Beginning balance at December 31, 2020127,019,452 $1,270 1,015,502 555,480 (33,549)1,538,703 
Comprehensive income:      
Net income— — — 40,237 — 40,237 
Other comprehensive loss, net of tax of $5,874
— — — — (17,163)(17,163)
Total comprehensive income/(loss)— — — 40,237 (17,163)23,074 
Exercise of stock options567,429 6 6,921 — — 6,927 
Stock-based compensation expense1,930 — 961 — — 961 
Share repurchases(353,552)(4)(4,562)— — (4,566)
Stock-based compensation forfeited (12,611)— — — — — 
Dividends paid ($0.19 per share)
— — — (24,105)— (24,105)
Ending balance at March 31, 2021127,222,648 $1,272 1,018,822 571,612 (50,712)1,540,994 
See accompanying notes to unaudited Consolidated Financial Statements.

4
NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
Quarter ended March 31,
 20222021
Operating activities:  
Net income$28,287 40,237 
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:  
Provision for credit losses(1,481)(5,620)
Net loss/(gain) on sale of assets780 (262)
Mortgage banking activity677 (8,429)
Net depreciation, amortization and accretion3,595 6,514 
(Increase)/decrease in other assets(30,666)33,746 
Decrease in other liabilities(31,625)(21,034)
Net amortization on marketable securities1,505 2,154 
Noncash compensation expense related to stock benefit plans699 961 
Noncash write-down of real estate owned29 123 
Origination of loans held-for-sale(104,535)(240,765)
Proceeds from sale of loans held-for-sale110,278 260,394 
Net cash (used in)/provided by operating activities(22,457)68,019 
Investing activities:  
Purchase of marketable securities held-to-maturity— (428,861)
Purchase of marketable securities available-for-sale(61,640)(220,666)
Proceeds from maturities and principal reductions of marketable securities held-to-maturity30,092 3,374 
Proceeds from maturities and principal reductions of marketable securities available-for-sale83,295 128,556 
Proceeds from sale of marketable securities available-for-sale— 35,357 
Proceeds from bank-owned life insurance1,354 1,750 
Loan originations(901,499)(975,141)
Loan purchases(210,775)— 
Proceeds from loan maturities and principal reductions985,218 1,169,026 
Net proceeds/(redemptions) of FHLB stock866 (113)
Proceeds from sale of real estate owned— 479 
Proceeds from sale of real estate owned for investment, net76 76 
Disposals/(purchases) of premises and equipment, net329 (285)
Net cash used in investing activities(72,684)(286,448)
5
NORTHWEST BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued)
(in thousands) 
Three months ended March 31,
 20222021
Financing activities:  
Net increase in deposits$19,235 513,861 
Repayments of long-term borrowings— (20,000)
Net decrease in short-term borrowings(17,657)(9,469)
Decrease in advances by borrowers for taxes and insurance(560)(1,206)
Cash dividends paid on common stock(25,335)(24,105)
Purchase of common stock for retirement— (4,566)
Proceeds from stock options exercised1,205 6,927 
Net cash (used in)/provided by financing activities(23,112)461,442 
Net (decrease)/increase in cash and cash equivalents$(118,253)243,013 
Cash and cash equivalents at beginning of period$1,279,259 736,277 
Net (decrease)/increase in cash and cash equivalents(118,253)243,013 
Cash and cash equivalents at end of period$1,161,006 979,290 
Cash paid during the period for:  
Interest on deposits and borrowings (including interest credited to deposit accounts of $3,650 and $5,543, respectively)
$7,051 8,963 
Income taxes84 — 
Non-cash activities:  
Loan foreclosures and repossessions$1,142 1,197 
Sale of real estate owned financed by the Company— 54 
See accompanying notes to unaudited Consolidated Financial Statements.

6
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 Columbus, Ohio, is a bank holding company regulated by the Board of Governors of the Federal Reserve System (“FRB”). The primary activity of the Company is the ownership of all of the issued and outstanding common stock of Northwest Bank, a Pennsylvania-chartered savings bank (“Northwest”). Northwest is regulated by the Federal Deposit Insurance Corporation (“FDIC”) and the Pennsylvania Department of Banking. Northwest operates 170 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., Great Northwest Corporation, and MutualFirst 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, 2021 updated, as required, for any new pronouncements or changes.
 
    Certain items previously reported have been reclassified to conform to the current year’s reporting format.

    The results of operations for the quarter ended are not necessarily indicative of the results that may be expected for the year ending December 31, 2022, or any other period.
 
Stock-Based Compensation
 
Stock-based compensation expense of $699,000 and $961,000 for the quarters ended March 31, 2022 and 2021, respectively, was recognized in compensation expense relating to our stock benefit plans. At March 31, 2022, there was compensation expense of $1.3 million to be recognized for awarded but unvested stock options and $7.5 million for unvested restricted common shares.

 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 March 31, 2022, we had $241,000 of liability for unrecognized tax benefits.
 
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 and 2018.



7
(2)    Marketable Securities
 
The following table shows the portfolio of marketable securities available-for-sale at March 31, 2022 (in thousands):
Amortized
cost		Gross
unrealized
holding
gains		Gross
unrealized
holding
losses		Fair
value
Debt issued by the U.S government and agencies:
Due in one year through five years$20,000 — (738)19,262 
Due after ten years56,586 — (5,196)51,390 
Debt issued by government-sponsored enterprises:
Due in one year through five years992 13 — 1,005 
Due in five years through ten years46,172 1 (4,313)41,860 
Municipal securities:
Due in less than one year892 5 — 897 
Due in one year through five years1,257 6 (11)1,252 
Due in five years through ten years25,181 55 (705)24,531 
Due after ten years95,265 26 (6,971)88,320 
Residential mortgage-backed securities:
Fixed rate pass-through252,798 410 (15,540)237,668 
Variable rate pass-through10,577 203 (14)10,766 
Fixed rate agency CMOs995,579 94 (67,438)928,235 
Variable rate agency CMOs36,871 202 (161)36,912 
Total residential mortgage-backed securities1,295,825 909 (83,153)1,213,581 
Total marketable securities available-for-sale$1,542,170 1,015 (101,087)1,442,098 


8
The following table shows the portfolio of marketable securities available-for-sale at December 31, 2021 (in thousands):
Amortized
cost		Gross
unrealized
holding
gains		Gross
unrealized
holding
losses		Fair
value
Debt issued by the U.S. government and agencies:    
Due in one year through five years$20,000 — (68)19,932 
Due after ten years57,681 — (1,722)55,959 
Debt issued by government-sponsored enterprises:    
Due in less than one year177 — — 177 
Due in one year through five years991 73 — 1,064 
Due in five years through ten years46,411 1 (1,568)44,844 
Municipal securities:    
Due in less than one year946 13 — 959 
Due in one year through five years1,261 22 (3)1,280 
Due in five years through ten years23,692 661 (146)24,207 
Due after ten years99,558 2,884 (187)102,255 
Residential mortgage-backed securities:    
Fixed rate pass-through265,604 2,389 (2,525)265,468 
Variable rate pass-through11,306 294 (9)11,591 
Fixed rate agency CMOs997,680 2,284 (18,965)980,999 
Variable rate agency CMOs39,695 224 (62)39,857 
Total residential mortgage-backed securities1,314,285 5,191 (21,561)1,297,915 
Total marketable securities available-for-sale$1,565,002 8,845 (25,255)1,548,592 
     
    The following table shows the portfolio of marketable securities held-to-maturity at March 31, 2022 (in thousands):
Amortized
cost		Gross
unrealized
holding
gains		Gross
unrealized
holding
losses		Fair
value
Debt issued by the U.S. government and agencies:    
Due in one year through five years$16,478 — (968)15,510 
Due in five years through ten years107,974 — (11,375)96,599 
Residential mortgage-backed securities:    
Fixed rate pass-through176,949 24 (12,117)164,856 
Variable rate pass-through643 18 — 661 
Fixed rate agency CMOs435,087 — (35,948)399,139 
Variable rate agency CMOs599 12 — 611 
Total residential mortgage-backed securities613,278 54 (48,065)565,267 
Total marketable securities held-to-maturity$737,730 54 (60,408)677,376 


9
The following table shows the portfolio of marketable securities held-to-maturity at December 31, 2021 (in thousands): 
Amortized
cost		Gross
unrealized
holding
gains		Gross
unrealized
holding
losses		Fair
value
Debt issued by the U.S. government and agencies:    
Due in one through five years$16,478 — (206)16,272 
Due in five years through ten years107,973 — (4,613)103,360 
Residential mortgage-backed securities:    
Fixed rate pass-through183,092 58 (2,161)180,989 
Variable rate pass-through667 24 — 691 
Fixed rate agency CMOs459,345 251 (10,011)449,585 
Variable rate agency CMOs599 17 — 616 
Total residential mortgage-backed securities643,703 350 (12,172)631,881 
Total marketable securities held-to-maturity$768,154 350 (16,991)751,513 

The following table shows the contractual maturity of our residential mortgage-backed securities available-for-sale at March 31, 2022 (in thousands):
Amortized
cost		Fair
value
Residential mortgage-backed securities:  
Due in less than one year$382 382 
Due in one year through five years18,660 18,319 
Due after five years through ten years78,165 76,050 
Due after ten years1,198,618 1,118,830 
Total residential mortgage-backed securities$1,295,825 1,213,581 

The following table shows the contractual maturity of our residential mortgage-backed securities held-to-maturity at March 31, 2022 (in thousands):
Amortized
cost		Fair
value
Residential mortgage-backed securities:  
Due in one year through five years$709 727 
Due after five years through ten years40,477 36,191 
Due after ten years572,092 528,349 
Total residential mortgage-backed securities$613,278 565,267 

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 March 31, 2022 (in thousands):
 Less than 12 months12 months or moreTotal
Fair 
value		Unrealized
loss		Fair 
value		Unrealized
loss		Fair 
value		Unrealized
loss
U.S. government-sponsored enterprises$66,445 (4,519)156,991 (18,071)223,436 (22,590)
Municipal securities101,496 (7,356)2,741 (331)104,237 (7,687)
Residential mortgage-backed securities - agency1,184,448 (80,073)523,224 (51,145)1,707,672 (131,218)
Total $1,352,389 (91,948)682,956 (69,547)2,035,345 (161,495)

10
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 December 31, 2021 (in thousands):
 Less than 12 months12 months or moreTotal
Fair 
value		Unrealized
loss		Fair 
value		Unrealized
loss		Fair 
value		Unrealized
loss
U.S. government-sponsored enterprises$132,782 (3,504)106,160 (4,673)238,942 (8,177)
Municipal securities25,118 (336)— — 25,118 (336)
Residential mortgage-backed securities - agency1,428,582 (26,516)184,389 (7,217)1,612,971 (33,733)
Total $1,586,482 (30,356)290,549 (11,890)1,877,031 (42,246)
 
The Company does not believe that the available-for-sale debt securities that were in an unrealized loss position as of March 31, 2022, which were comprised of 494 individual securities, represents a credit loss impairment. All of these securities were issued by U.S. government agencies, U.S. government-sponsored enterprises or local municipalities. The securities issued by the U.S. government agencies or U.S. government-sponsored enterprises are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. The 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 held-to-maturity debt securities are issued by U.S. government agencies or U.S. government-sponsored enterprises. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. Therefore, the Company did not record an allowance for credit losses for these securities as of March 31, 2022.

The following table presents the credit quality of our held-to-maturity securities, based on the latest information available as of March 31, 2022 (in thousands). The credit ratings are sourced from nationally recognized rating agencies, which include 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 March 31, 2022.
AA+Total
Held-to-maturity securities (at amortized cost):
  Debt issued by the U.S. government-sponsored enterprises$124,452 124,452 
  Residential mortgage-backed securities613,278 613,278 
Total marketable securities held-to-maturity$737,730 737,730 


11
(3)    Loans Receivable

    The following table shows a summary of our loans receivable at amortized cost basis at March 31, 2022 and December 31, 2021 (in thousands): 
March 31, 2022December 31, 2021
 Originated (1)Acquired (2)TotalOriginated (1)Acquired (2)Total
Personal Banking:    
Residential mortgage loans (3)$2,924,864 197,025 3,121,889 2,783,459 211,161 2,994,620 
Home equity loans1,089,234 197,286 1,286,520 1,107,202 212,729 1,319,931 
Vehicle loans1,457,137 90,118 1,547,255 1,384,246 99,985 1,484,231 
Consumer loans305,969 42,757 348,726 307,961 46,556 354,517 
Total Personal Banking5,777,204 527,186 6,304,390 5,582,868 570,431 6,153,299 
Commercial Banking:      
Commercial real estate loans2,189,050 384,491 2,573,541 2,202,027 423,454 2,625,481 
Commercial real estate loans - owner occupied326,958 59,394 386,352 321,253 68,750 390,003 
Commercial loans803,833 70,918 874,751 765,877 81,732 847,609 
Total Commercial Banking3,319,841 514,803 3,834,644 3,289,157 573,936 3,863,093 
Total loans receivable, gross9,097,045 1,041,989 10,139,034 8,872,025 1,144,367 10,016,392 
Allowance for credit losses(83,685)(15,610)(99,295)(86,750)(15,491)(102,241)
Total loans receivable, net (4)$9,013,360 1,026,379 10,039,739 8,785,275 1,128,876 9,914,151 
(1) Includes originated and purchased loan pools.
(2) Includes loans subject to purchase accounting.
(3)     Includes fair value of $19.3 million and $25.1 million of loans held-for-sale at March 31, 2022 and December 31, 2021, respectively.
(4)    Includes $63.1 million and $62.8 million of net unearned income, unamortized premiums and discounts and deferred fees and costs at March 31, 2022 and December 31, 2021, respectively.

12
    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 March 31, 2022 (in thousands):
Balance as of March 31, 2022Current period provisionCharge-offsRecoveriesBalance as of December 31, 2021
Allowance for Credit Losses
Personal Banking:     
Residential mortgage loans$13,306 6,962 (1,183)154 7,373 
Home equity loans5,643 369 (447)421 5,300 
Vehicle loans14,181 (1,305)(647)650 15,483 
Consumer loans3,109 994 (1,076)307 2,884 
Total Personal Banking36,239 7,020 (3,353)1,532 31,040 
Commercial Banking:     
Commercial real estate loans44,572 (9,665)(1,024)1,120 54,141 
Commercial real estate loans - owner occupied4,276 389 — 4 3,883 
Commercial loans14,208 775 (681)937 13,177 
Total Commercial Banking63,056 (8,501)(1,705)2,061 71,201 
Total$99,295 (1,481)(5,058)3,593 102,241 
Allowance for Credit Losses - off-balance sheet exposure
Personal Banking:
Residential mortgage loans$6 4 — — 2 
Home equity loans55 16 — — 39 
Total Personal Banking61 20 — — 41 
Commercial Banking:     
Commercial real estate loans1,792 911 — — 881 
Commercial real estate loans - owner occupied 208 66 — — 142 
Commercial loans1,993 599 — — 1,394 
Total Commercial Banking3,993 1,576 — — 2,417 
Total off-balance sheet exposure$4,054 1,596 — — 2,458 
























13
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 March 31, 2021 (in thousands):
Balance as of March 31, 2021Current period provisionCharge-offsRecoveriesBalance as of December 31, 2020
Allowance for Credit Losses
Personal Banking:
Residential mortgage loans$5,861 (592)(855)42 7,266 
Home equity loans5,241 (652)(228)129 5,992 
Vehicle loans14,888 773 (1,307)597 14,825 
Consumer loans2,563 651 (1,296)337 2,871 
Total Personal Banking28,553 180 (3,686)1,105 30,954 
Commercial Banking:
Commercial real estate loans70,206 (4,831)(4,626)282 79,381 
Commercial real estate loans - owner occupied6,753 (3,766)— 1 10,518 
Commercial loans18,485 2,797 (54)2,168 13,574 
Total Commercial Banking95,444 (5,800)(4,680)2,451 103,473 
Total$123,997 (5,620)(8,366)3,556 134,427 
Allowance for Credit Losses - off-balance sheet exposure
Personal Banking:
Residential mortgage loans$2 — — — 2 
Home equity loans34 (1)— — 35 
Total Personal Banking36 (1)— — 37 
Commercial Banking:
Commercial real estate loans2,115 (1,334)— — 3,449 
Commercial real estate loans - owner occupied388 62 — — 326 
Commercial loans2,080 (471)— — 2,551 
Total Commercial Banking4,583 (1,743)— — 6,326 
Total off-balance sheet exposure$4,619 (1,744)— — 6,363 
During the quarter ended March 31, 2022, the Company purchased a $72.7 million small business equipment finance loan pool and a $138.1 million one- to four-family jumbo mortgage loan pool.







    
 

14
    The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at March 31, 2022 (in thousands):
 Total loans
receivable		Allowance for
credit losses		Nonaccrual
loans (1)		Loans 90 days past due and accruingTDRsAllowance
related to
TDRs		Additional
commitments
to customers
with loans
classified as
TDRs
Personal Banking:       
Residential mortgage loans$3,121,889 13,306 7,450 — 6,187 861 — 
Home equity loans1,286,520 5,643 4,910 — 1,503 489 — 
Vehicle loans1,547,255 14,181 2,782 — — — — 
Consumer loans348,726 3,109 618 420 — — — 
Total Personal Banking6,304,390 36,239 15,760 420 7,690 1,350 — 
Commercial Banking:       
Commercial real estate loans2,573,541 44,572 100,887 — 16,426 1,620 364 
Commercial real estate loans - owner occupied386,352 4,276 655 — 152 25 — 
Commercial loans874,751 14,208 6,859 — 4,433 589 — 
Total Commercial Banking3,834,644 63,056 108,401 — 21,011 2,234 364 
Total$10,139,034 99,295 124,161 420 28,701 3,584 364 
(1)Includes $16.0 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, 2021 (in thousands): 
 Total loans
receivable		Allowance for
credit losses		Nonaccrual
loans (1)		Loans 90 days past due and accruingTDRsAllowance
related to
TDRs		Additional
commitments
to customers
with loans
classified as
TDRs
Personal Banking:       
Residential mortgage loans$2,994,620 7,373 10,402 — 6,749 1,442 — 
Home equity loans1,319,931 5,300 5,758 — 1,781 718 — 
Vehicle loans1,484,231 15,483 3,263 — — — — 
Consumer loans354,517 2,884 675 331 — — — 
Total Personal Banking6,153,299 31,040 20,098 331 8,530 2,160 — 
Commercial Banking:       
Commercial real estate loans2,625,481 54,141 129,666 — 17,025 2,024 400 
Commercial real estate loans - owner occupied390,003 3,883 1,233 — 159 24 — 
Commercial loans847,609 13,177 7,474 — 4,574 609 60 
Total Commercial Banking3,863,093 71,201 138,373 — 21,758 2,657 460 
Total$10,016,392 102,241 158,471 331 30,288 4,817 460 
(1)Includes $17.2 million of nonaccrual TDRs.
15
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 quarter ended March 31, 2022 (in thousands): 
March 31, 2022
 Nonaccrual loans at January 1, 2022Nonaccrual loans with an allowanceNonaccrual loans with no allowanceTotal nonaccrual loans at the end of the periodLoans 90 days past due and accruing
Personal Banking:    
Residential mortgage loans$10,402 7,450 — 7,450 — 
Home equity loans5,758 4,706 204 4,910 — 
Vehicle loans3,263 2,738 44 2,782 — 
Consumer loans675 617 1 618 420 
Total Personal Banking20,098 15,511 249 15,760 420 
Commercial Banking:    
Commercial real estate loans129,666 15,730 85,157 100,887 — 
Commercial real estate loans - owner occupied1,233 655 — 655 — 
Commercial loans7,474 3,472 3,387 6,859 — 
Total Commercial Banking138,373 19,857 88,544 108,401 — 
Total$158,471 35,368 88,793 124,161 420 
 
During the quarter ended March 31, 2022, we recognized $153,000 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, 2021 (in thousands): 
December 31, 2021
 Nonaccrual loans at January 1, 2021Nonaccrual loans with an allowanceNonaccrual loans with no allowanceTotal nonaccrual loans at the end of the periodLoans 90 days past due and accruing
Personal Banking:
Residential mortgage loans$15,924 10,402 — 10,402 — 
Home equity loans9,123 5,551 207 5,758 — 
Vehicle loans5,533 3,251 12 3,263 — 
Consumer loans1,031 674 1 675 331 
Total Personal Banking31,611 19,878 220 20,098 331 
Commercial Banking:
Commercial real estate loans44,092 65,529 64,137 129,666 — 
Commercial real estate loans - owner occupied 3,642 1,233 — 1,233 — 
Commercial loans23,487 3,941 3,533 7,474 — 
Total Commercial Banking71,221 70,703 67,670 138,373 — 
Total$102,832 90,581 67,890 158,471 331 
 
During the year ended December 31, 2021, we recognized $803,000 of interest income on nonaccrual and troubled debt restructuring loans.

16
The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of March 31, 2022 (in thousands):
 Real estateEquipmentTotal
Personal Banking:   
Residential mortgage loans$577 — 577 
Home equity loans99 — 99 
Total Personal Banking676 — 676 
Commercial Banking:   
Commercial real estate loans95,904 1,631 97,535 
Commercial loans3,841 1,854 5,695 
Total Commercial Banking99,745 3,485 103,230 
Total$100,421 3,485 103,906 
 
The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of December 31, 2021 (in thousands):
 Real estateEquipmentTotal
Personal Banking:
Residential mortgage loans$580 — 580 
Home equity loans99 — 99 
Total Personal Banking679 — 679 
Commercial Banking:
Commercial real estate loans119,825 1,705 121,530 
Commercial loans3,973 1,926 5,899 
Total Commercial Banking123,798 3,631 127,429 
Total$124,477 3,631 128,108 
 
     

17
    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”), signed into law on December 27, 2020. Under the CAA, such relief will continue until the earlier of 60 days after the date the COVID-19 national emergency comes to an end or January 1, 2022. Certain loan modifications made during the prior year were done in accordance with Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus. Accordingly, these loans were not categorized as TDRs.

18
ollowing table provides a roll forward of troubled debt restructurings for the periods indicated (dollars in thousands):
 For the quarter ended March 31,
 20222021
 Number of
contracts		AmountNumber of
contracts		Amount
Beginning TDR balance:134 $30,288 170 $32,135 
New TDRs— — — — 
Re-modified TDRs1 202 4 922 
Net paydowns— (1,030)— (2,488)
Charge-offs:  
Residential mortgage loans1 (3)— — 
Paid-off loans:
Residential mortgage loans1 (201)— — 
Home equity loans1 (64)— — 
Commercial real estate loans1 (289)3 (2,384)
Commercial real estate loans - owner occupied— — 1 (47)
Commercial loans— — 2 (628)
Ending TDR balance:130 $28,701 164 $27,510 
Accruing TDRs $12,686 $20,120 
Nonaccrual TDRs 16,015 7,390 

19
    The following table provides 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 March 31, 2022
 Number of
contracts		Recorded
investment
at the time of
modification		Current
recorded
investment		Current
allowance
    
Commercial Banking:    
Commercial real estate loans1 $330 202 11 
Total Commercial Banking1 330 202 11 
Total1 $330 202 11 

 For the quarter ended March 31, 2021
 Number of
contracts		Recorded
investment
at the time of
modification		Current
recorded
investment		Current
allowance
Personal Banking:    
Residential mortgage loans1 $121 117 10 
Home equity loans1 3 2 — 
Total Personal Banking2 124 119 10 
Commercial Banking:
Commercial real estate loans2 812 803 130 
Total Commercial Banking2 812 803 130 
Total4 $936 922 140 














20
The following table provides information as of March 31, 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 March 31, 2022 (in thousands):
Type of modification
Number of contractsRatePaymentMaturity dateOtherTotal
Commercial Banking:
Commercial real estate loans1 $— — 202 — 202 
Total Commercial Banking1 — — 202 — 202 
Total1 $— — 202 — 202 

The following table provides information as of March 31, 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 March 31, 2021 (in thousands):
Type of modification
Number of contractsRatePaymentMaturity dateOtherTotal
Personal Banking:
Residential mortgage loans1 $117 — — — 117 
Home equity loans
1 — — 2 — 2 
Total Personal Banking2 117 — 2 — 119 
Commercial Banking:
Commercial real estate loans2 — — 729 74 803 
Total Commercial Banking2 — — 729 74 803 
Total4 $117 — 731 74 922 

The following table provides information related to troubled debt restructurings modified within the previous twelve months of March 31, 2022 that subsequently defaulted:
Number of
contracts		Recorded
investment
at the time of
modification		Current
recorded
investment		Current
allowance
Commercial Banking:
     Commercial real estate loans1 $4,167 3,823 — 
Total Commercial Banking1 4,167 3,823 — 
Total1 $4,167 3,823 — 

No TDRs modified within the previous twelve months of March 31, 2021 subsequently defaulted.










21
The following table provides information related to the amortized cost basis of loan payment delinquencies at March 31, 2022 (in thousands):
 30-59 days
delinquent		60-89 days
delinquent		90 days or
greater
delinquent		Total
delinquency		CurrentTotal loans
receivable		90 days or
greater
delinquent
and accruing
Personal Banking:     
Residential mortgage loans$24,057 1,950 3,976 29,983 3,091,906 3,121,889 — 
Home equity loans3,867 1,138 2,968 7,973 1,278,547 1,286,520 — 
Vehicle loans4,724 1,324 1,432 7,480 1,539,775 1,547,255 — 
Consumer loans1,319 515 770 2,604 346,122 348,726 420 
Total Personal Banking33,967 4,927 9,146 48,040 6,256,350 6,304,390 420 
Commercial Banking:     
Commercial real estate loans2,485 112 21,264 23,861 2,549,680 2,573,541 — 
Commercial real estate loans - owner occupied1,158 — 135 1,293 385,059 386,352 — 
Commercial loans1,268 103 795 2,166 872,585 874,751 — 
Total Commercial Banking4,911 215 22,194 27,320 3,807,324 3,834,644 — 
Total loans$38,878 5,142 31,340 75,360 10,063,674 10,139,034 420 

The following table provides information related to the amortized cost basis of loan payment delinquencies at December 31, 2021 (in thousands):
 30-59 days
delinquent		60-89 days
delinquent		90 days or
greater
delinquent		Total
delinquency		CurrentTotal loans
receivable		90 days or
greater
delinquent
and accruing
Personal Banking:      
Residential mortgage loans
$20,567 5,433 7,641 33,641 2,960,979 2,994,620 — 
Home equity loans
3,153 949 4,262 8,364 1,311,567 1,319,931 — 
Vehicle loans5,331 1,487 1,635 8,453 1,475,778 1,484,231 — 
Consumer loans
1,205 519 765 2,489 352,028 354,517 331 
Total Personal Banking30,256 8,388 14,303 52,947 6,100,352 6,153,299 331 
Commercial Banking:       
Commercial real estate loans
16,938 699 23,489 41,126 2,584,355 2,625,481 — 
Commercial real estate loans - owner occupied127 70 574 771 389,232 390,003 — 
Commercial loans
193 727 1,105 2,025 845,584 847,609 — 
Total Commercial Banking17,258 1,496 25,168 43,922 3,819,171 3,863,093 — 
Total originated loans$47,514 9,884 39,471 96,869 9,919,523 10,016,392 331 

Credit Quality Indicators: For Commercial Banking 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
22
liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.

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

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

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

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

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


 
23
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 March 31, 2022 (in thousands):
YTD March 31, 20222021202020192018PriorRevolving loansRevolving loans converted to term loansTotal loans
receivable
Personal Banking:    
Residential mortgage loans
Pass$81,603 810,544 585,855 289,202 146,678 1,194,484 — — 3,108,366 
Substandard— — 583 375 238 12,327 — — 13,523 
Total residential mortgage loans81,603 810,544 586,438 289,577 146,916 1,206,811 — — 3,121,889 
Home equity loans
Pass27,811 145,099 199,289 128,051 60,585 250,728 426,764 42,015 1,280,342 
Substandard— — 66 303 191 3,507 1,176 935 6,178 
Total home equity loans27,811 145,099 199,355 128,354 60,776 254,235 427,940 42,950 1,286,520 
Vehicle loans
Pass223,063 729,574 260,616 177,605 101,513 52,103 — — 1,544,474 
Substandard— 541 390 856 531 463 — — 2,781 
Total vehicle loans223,063 730,115 261,006 178,461 102,044 52,566 — — 1,547,255 
Consumer loans
Pass28,887 106,849 71,992 40,506 17,879 20,568 59,537 1,470 347,688 
Substandard— 203 103 153 64 80 422 13 1,038 
Total consumer loans28,887 107,052 72,095 40,659 17,943 20,648 59,959 1,483 348,726 
Total Personal Banking361,364 1,792,810 1,118,894 637,051 327,679 1,534,260 487,899 44,433 6,304,390 
Business Banking:     
Commercial real estate loans
Pass25,880 324,062 451,209 319,291 249,608 868,339 28,639 9,583 2,276,611 
Special mention— 794 4,070 46,100 1,189 5,206 1,253 — 58,612 
Substandard— 97 8,358 44,165 44,672 133,415 492 7,119 238,318 
Total commercial real estate loans25,880 324,953 463,637 409,556 295,469 1,006,960 30,384 16,702 2,573,541 
Commercial real estate loans - owner occupied
Pass26,504 67,571 18,312 42,419 51,402 145,640 3,839 1,510 357,197 
Special mention— — — 647 2,046 722 64 — 3,479 
Substandard— — — 4,790 3,457 15,510 — 1,919 25,676 
Total commercial real estate loans - owner occupied26,504 67,571 18,312 47,856 56,905 161,872 3,903 3,429 386,352 
Commercial loans
Pass182,912 163,204 97,395 65,195 24,462 61,417 238,852 5,688 839,125 
Special mention166 180 616 625 386 2 1,302 — 3,277 
Substandard— 246 1,463 3,725 2,616 2,763 11,263 10,273 32,349 
Total commercial loans183,078 163,630 99,474 69,545 27,464 64,182 251,417 15,961 874,751 
Total Business Banking235,462 556,154 581,423 526,957 379,838 1,233,014 285,704 36,092 3,834,644 
Total loans$596,826 2,348,964 1,700,317 1,164,008 707,517 2,767,274 773,603 80,525 10,139,034 
    For the quarter ended March 31, 2022, $5.1 million of revolving loans were converted to term loans.








24
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, 2021 (in thousands): 
20212020201920182017PriorRevolving loansRevolving loans converted to term loansTotal loans
receivable
Personal Banking:     
Residential mortgage loans
Pass$644,862 602,429 304,275 156,639 171,240 1,098,635 — — 2,978,080 
Substandard138 489 377 538 882 14,116 — — 16,540 
Total residential mortgage loans645,000 602,918 304,652 157,177 172,122 1,112,751 — — 2,994,620 
Home equity loans
Pass150,847 210,224 138,661 65,011 61,692 209,959 435,660 40,766 1,312,820 
Substandard— — 441 60 455 3,820 1,275 1,060 7,111 
Total home equity loans150,847 210,224 139,102 65,071 62,147 213,779 436,935 41,826 1,319,931 
Vehicle loans
Pass801,084 292,804 205,653 119,304 34,546 27,576 — — 1,480,967 
Substandard387 365 1,141 745 379 247 — — 3,264 
Total vehicle loans801,471 293,169 206,794 120,049 34,925 27,823 — — 1,484,231 
Consumer loans
Pass117,856 81,266 47,195 20,595 9,794 12,202 63,025 1,578 353,511 
Substandard213 161 105 64 26 50 357 30 1,006 
Total consumer loans118,069 81,427 47,300 20,659 9,820 12,252 63,382 1,608 354,517 
Total Personal Banking1,715,387 1,187,738 697,848 362,956 279,014 1,366,605 500,317 43,434 6,153,299 
Business Banking:
Commercial real estate loans
Pass306,689 433,219 335,541 263,524 221,450 683,537 26,288 10,179 2,280,427 
Special mention803 1,808 52,513 3,296 1,394 8,529 729 23 69,095 
Substandard— 34,153 44,712 46,045 56,077 89,311 492 5,169 275,959 
Total commercial real estate loans307,492 469,180 432,766 312,865 278,921 781,377 27,509 15,371 2,625,481 
Commercial real estate - owner occupied
Pass69,084 19,452 51,997 60,824 57,676 94,687 2,822 2,707 359,249 
Special mention— — — 769 1,959 1,444 856 — 5,028 
Substandard— — 3,575 2,887 7,840 10,602 — 822 25,726 
Total commercial real estate - owner occupied loans69,084 19,452 55,572 64,480 67,475 106,733 3,678 3,529 390,003 
Commercial loans
Pass224,367 110,171 73,276 27,668 20,748 76,987 262,805 12,301 808,323 
Special mention197 661 812 1,195 50 581 2,234 — 5,730 
Substandard329 4,767 5,102 4,437 1,529 2,116 6,667 8,609 33,556 
Total commercial loans224,893 115,599 79,190 33,300 22,327 79,684 271,706 20,910 847,609 
Total Business Banking601,469 604,231 567,528 410,645 368,723 967,794 302,893 39,810 3,863,093 
Total loans$2,316,856 1,791,969 1,265,376 773,601 647,737 2,334,399 803,210 83,244 10,016,392 
    For the year ended December 31, 2021, $27.3 million of revolving loans were converted to term loans.
25
(4)    Goodwill and Other Intangible Assets
 
The following table provides information for intangible assets subject to amortization at the dates indicated (in thousands):
March 31, 2022December 31, 2021
Amortizable intangible assets:  
Core deposit intangibles - gross$74,899 74,899 
Acquisitions— — 
Less: accumulated amortization(63,320)(62,158)
Core deposit intangibles - net$11,579 12,741 
Customer and Contract intangible assets - gross$12,775 12,775 
Customer list intangible assets disposed of due to sale of insurance business— (1,547)
Less: accumulated amortization(12,700)(11,133)
Customer and Contract intangible assets - net75 95 
Total intangible assets - net$11,654 12,836 

The following table shows the actual aggregate amortization expense for the quarters ended March 31, 2022 and 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 March 31, 2022$1,183 
For the quarter ended March 31, 20211,594 
For the year ending December 31, 20224,277 
For the year ending December 31, 20233,270 
For the year ending December 31, 20242,452 
For the year ending December 31, 20251,662 
For the year ending December 31, 2026871 
For the year ending December 31, 2027305 
 
    The following table provides information for the changes in the carrying amount of goodwill (in thousands):
Total
Balance at December 31, 2020$382,279 
Purchase accounting adjustment77 
Goodwill disposed of due to sale of insurance business(1,359)
Balance at December 31, 2021380,997 
Balance at March 31, 2022$380,997 
 
We performed our annual goodwill impairment test as of June 30, 2021 in accordance with ASC 350, as updated by ASU 2017-04 (“Step 0”), and concluded that goodwill was not impaired. As of March 31, 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.

















26
(5)    Borrowed Funds

    (a)    Borrowings

Borrowed funds at March 31, 2022 and December 31, 2021 are presented in the following table:
March 31, 2022December 31, 2021
AmountAverage rateAmountAverage rate
Collateralized borrowings, due within one year$121,436 0.19 %$139,093 0.19 %
      Total borrowed funds$121,436 $139,093 
    
Borrowings from the Federal Home Loan Banks (“FHLB”) of Pittsburgh and Indianapolis, if any, are secured by our residential first mortgage and other qualifying loans. Certain of these borrowings are subject to restrictions or penalties in the event of prepayment.

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

    At March 31, 2022 and December 31, 2021, collateralized borrowings due within one year were $121.4 million and $139.1 million, respectively. These borrowings are collateralized by cash or various securities held in safekeeping by the FHLB.

On September 9, 2020, the Company issued $125.0 million of 4.00% fixed-to-floating rate subordinated notes with a maturity date of September 15, 2030. The subordinated notes, which qualify as Tier 2 capital, bear interest at an annual rate of 4.00%, payable semi-annually in arrears commencing on March 15, 2021, and a floating rate of interest equivalent to the 3-month Secured Overnight Financing Rate (“SOFR”) plus 3.89% payable quarterly in arrears commencing on December 15, 2025. The subordinated debt issuance costs of approximately $1.8 million are being amortized over five years on a straight-line basis into interest expense. At March 31, 2022 and December 31, 2021, subordinated debentures, net of issuance costs, were $123.7 million and $123.6 million, respectively.

(b)    Trust Preferred Securities

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

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

The following table sets forth a summary of the cumulative trust preferred securities and the junior subordinated debt held by the Trust as of the date listed.
Maturity dateInterest rateCapital debt securitiesMarch 31, 2022December 31, 2021
Northwest Bancorp Capital Trust IIIDecember 30, 2035
3-month LIBOR plus 1.38%
$50,000 $51,547 51,547 
Northwest Bancorp Statutory Trust IVDecember 15, 2035
3-month LIBOR plus 1.38%
50,000 51,547 51,547 
LNB Trust IIJune 15, 2037
3-month LIBOR plus 1.48%
7,875 8,119 8,119 
UNCT I (1)January 23, 2034
3-month LIBOR plus 2.85%
8,000 7,956 7,950 
UNCT II (1)November 23, 2034
3-month LIBOR plus 2.00%
3,000 2,748 2,741 
MFBC Statutory Trust I (1)September 15, 2035
3-month LIBOR plus 1.70%
5,000 3,606 3,580 
Universal Preferred Trust (1)October 7, 2035
3-month LIBOR plus 1.69%
5,000 3,596 3,570 
$129,119 129,054 
(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 March 31, 2022, the maximum potential amount of future payments we could be required to make under these non-recourse standby letters of credit was $45.7 million, of which $35.9 million is fully collateralized. At March 31, 2022, we had a liability which represents deferred income of $583,000 related to the standby letters of credit.

(7)    Earnings Per Share

     Basic earnings per common share (“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.

The following table sets forth the computation of basic and diluted EPS (in thousands, except share data and per share amounts): 
Quarter ended March 31,
 20222021
Net income$28,287 40,237 
Less: Dividends and undistributed earnings allocated to participating securities177 — 
Net income available to common shareholders$28,110 40,237 
Weighted average common shares outstanding125,861,738 126,182,409 
Add: Participating shares outstanding791,217 517,615 
Total weighted average common shares and dilutive potential shares126,652,955 126,700,024 
Basic earnings per share$0.22 0.32 
Diluted earnings per share$0.22 0.32 


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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 March 31,
 Pension benefitsOther post-retirement benefits
 2022202120222021
Service cost$2,599 2,860 — — 
Interest cost1,671 1,517 10 4 
Expected return on plan assets(3,864)(3,465)— — 
Amortization of prior service cost(564)(580)— — 
Amortization of the net loss381 1,039 2 4 
Net periodic cost$223 1,371 12 8 
    We anticipate making a contribution to our defined benefit pension plan between $0 and $2.0 million during the year ending December 31, 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 inputs (Level 3). When various inputs for measurement fall within different levels of the fair value hierarchy, the lowest level input that has a significant impact on fair value measurement is used.

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

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

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

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

◦Quotes from brokers or other external sources that are not considered binding;
◦Quotes from brokers or other external sources where it cannot be determined that market participants would in fact transact for the asset or liability at the quoted price; and
◦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, 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.

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

Deposit Liabilities

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

Borrowed Funds
 
Fixed rate advances are valued by comparing their contractual cost to the prevailing market cost. The carrying amount of repurchase agreements approximates 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.
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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
 
    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 March 31, 2022 and December 31, 2021, there was no significant unrealized appreciation or depreciation on these financial instruments.

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 March 31, 2022 (in thousands): 
Carrying
amount		Estimated
fair value		Level 1Level 2Level 3
Financial assets:     
Cash and cash equivalents$1,161,006 1,161,006 1,161,006 — — 
Securities available-for-sale1,442,098 1,442,098 — 1,442,098 — 
Securities held-to-maturity737,730 677,376 — 677,376 — 
Loans receivable, net10,020,467 9,389,401 — — 9,389,401 
Residential mortgage loans held-for-sale19,272 19,272 — — 19,272 
Accrued interest receivable26,268 26,268 26,268 — — 
Interest rate lock commitments1,680 1,680 — — 1,680 
Interest rate swaps not designated as hedging instruments23,338 23,338 — 23,338 — 
FHLB stock13,318 13,318 — — — 
Total financial assets$13,445,177 12,753,757 1,187,274 2,142,812 9,410,353 
Financial liabilities:     
Savings and checking deposits$11,068,522 11,068,522 11,068,522 — — 
Time deposits1,251,878 1,261,070 — — 1,261,070 
Borrowed funds121,436 121,419 121,419 — — 
Subordinated debt123,670 123,987 — 123,987 — 
Junior subordinated debentures129,119 115,159 — — 115,159 
Forward commitments43 43 — 43 — 
Foreign exchange swaps 6 6 — 6 — 
Interest rate swaps not designated as hedging instruments23,363 23,363 — 23,363 — 
Risk participation agreements31 31 — 31 — 
Accrued interest payable563 563 563 — — 
Total financial liabilities$12,718,631 12,714,163 11,190,504 147,430 1,376,229 
 
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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, 2021 (in thousands): 
Carrying
amount		Estimated
fair value		Level 1Level 2Level 3
Financial assets:     
Cash and cash equivalents$1,279,259 1,279,259 1,279,259 — — 
Securities available-for-sale1,548,592 1,548,592 — 1,548,592 — 
Securities held-to-maturity768,154 751,513 — 751,513 — 
Loans receivable, net9,889,095 9,648,825 — — 9,648,825 
Residential mortgage loans held-for-sale25,056 25,056 — — 25,056 
Accrued interest receivable 25,599 25,599 25,599 — — 
Interest rate lock commitments1,684 1,684 — — 1,684 
Forward commitments371 371 — 371 — 
Interest rate swaps not designated as hedging instruments31,254 31,254 — 31,254 — 
FHLB stock14,184 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 deposits1,327,555 1,339,308 — — 1,339,308 
Borrowed funds139,093 139,093 139,093 — — 
Subordinated debt123,575 129,138 — 129,138 — 
Junior subordinated debentures129,054 120,083 — — 120,083 
Foreign exchange swaps341 341 — 341 — 
Interest rate swaps not designated as hedging instruments31,357 31,357 — 31,357 — 
Risk participation agreements 60 60 — 60 — 
Accrued interest payable1,804 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 March 31, 2022 and December 31, 2021.
     
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    The following table represents assets and liabilities measured at fair value on a recurring basis at March 31, 2022 (in thousands): 
Level 1Level 2Level 3Total assets 
at fair value
Debt securities:    
U.S. government and agencies$— 70,652 — 70,652 
Government-sponsored enterprises— 42,865 — 42,865 
States and political subdivisions— 115,000 — 115,000 
Total debt securities— 228,517 — 228,517 
Residential mortgage-backed securities:    
GNMA— 15,213 — 15,213 
FNMA— 143,311 — 143,311 
FHLMC— 89,488 — 89,488 
Non-agency— 422 — 422 
Collateralized mortgage obligations:    
GNMA— 441,895 — 441,895 
FNMA— 239,181 — 239,181 
FHLMC— 284,071 — 284,071 
Total mortgage-backed securities— 1,213,581 — 1,213,581 
Interest rate lock commitments— — 1,680 1,680 
Interest rate swaps not designated as hedging instruments— 23,338 — 23,338 
Total assets$— 1,465,436 1,680 1,467,116 
Forward commitments$— 43 — 43 
Foreign exchange swaps — 6 — 6 
Interest rate swaps not designated as hedging instruments— 23,363 — 23,363 
Risk participation agreements— 31 — 31 
Total liabilities $— 23,443 — 23,443 
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    The following table represents assets and liabilities measured at fair value on a recurring basis at December 31, 2021 (in thousands):
Level 1Level 2Level 3Total assets 
at fair value
Debt securities:    
U.S. government and agencies$— 75,891 — 75,891 
Government-sponsored enterprises— 46,085 — 46,085 
States and political subdivisions— 128,701 — 128,701 
Total debt securities— 250,677 — 250,677 
Residential mortgage-backed securities:    
GNMA— 16,510 — 16,510 
FNMA— 160,063 — 160,063 
FHLMC— 100,055 — 100,055 
Non-agency— 431 — 431 
Collateralized mortgage obligations:    
GNMA— 492,328 — 492,328 
FNMA— 269,060 — 269,060 
FHLMC— 259,468 — 259,468 
Total mortgage-backed securities— 1,297,915 — 1,297,915 
Interest rate lock commitments— — 1,684 1,684 
Forward commitments— 371 — 371 
Interest rate swaps not designated as hedging instruments— 31,254 — 31,254 
Total assets$— 1,580,217 1,684 1,581,901 
Foreign exchange swaps$— 341 — 341 
Interest rate swaps not designated as hedging instruments— 31,357 — 31,357 
Risk participation agreements— 60 — 60 
Total liabilities $— 31,758 — 31,758 

    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 March 31,
20222021
Beginning balance January 1,$1,684 6,465 
Interest rate lock commitments:
Net activity(4)(1,405)
Ending balance$1,680 5,060 

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 March 31, 2022 (in thousands):
Level 1Level 2Level 3Total assets 
at fair value
Loans individually assessed$— — 7,178 7,178 
Mortgage servicing rights— — 22 22 
Real estate owned, net— — 929 929 
Total assets$— — 8,129 8,129 

    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, 2021 (in thousands): 
Level 1Level 2Level 3Total assets 
at fair value
Loans individually assessed$— — 46,968 46,968 
Mortgage servicing rights— — 380 380 
Real estate owned, net— — 873 873 
Total assets$— — 48,221 48,221 

    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 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 March 31, 2022 (in thousands): 
 Fair valueValuation techniquesSignificant
unobservable inputs		Range  (weighted average)
Loans individually assessed$7,178 Appraisal value (1)Estimated cost to sell10.0%
 Discounted cash flowDiscount rate
5.46% to 13.26% (7.25%)
Mortgage servicing rights22 Discounted cash flowAnnual service cost$86
Prepayment rate
7.1% to 18.3% (9.8%)
Expected life (months)47.8 to 102.3 (77.1)
Option adjusted spread
650 basis points
Forward yield curve
0.23% to 1.92%
Real estate owned, net929 Appraisal value (1)Estimated cost to sell10.0%
Loans held for sale19,272 Quoted prices for similar loans in active markets adjusted by an expected pull-through rateEstimated pull-through rate100.0%
(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.

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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.

    














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The following table presents information regarding our derivative financial instruments for the periods indicated (in thousands):
Asset derivativesLiability derivatives
Notional amountFair valueNotional amountFair value
At March 31, 2022
Derivatives not designated as hedging instruments:
Interest rate swap agreements$625,751 23,338 625,751 23,363 
Foreign exchange swap agreements— — 290 6 
Interest rate lock commitments72,147 1,680 — — 
Forward commitments— — 8,078 43 
Risk participation agreements— — 94,626 31 
Total Derivatives$697,898 25,018 728,745 23,443 
At December 31, 2021
Derivatives not designated as hedging instruments:
   Interest rate swap agreements $644,997 31,254 644,997 31,357 
Foreign exchange swap agreements— — 17,124 341 
   Interest rate lock commitments67,473 1,684 — — 
Forward commitments14,484 371 — — 
Risk participation agreements— — 93,135 60 
Total derivatives $726,954 33,309 755,256 31,758 
The following table presents income or expense recognized on derivatives for the periods indicated (in thousands):
For the quarter ended March 31,
20222021
Non-hedging swap derivatives:
Increase in other income$61 524 
Increase in mortgage banking income418 2,060 

(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 March 31, 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 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 March 31, 2022.

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(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 March 31, 2022
 Unrealized 
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, 2021$(12,317)— (25,312)(37,629)
Other comprehensive loss before reclassification adjustments (1)(64,783)— — (64,783)
Amounts reclassified from accumulated other comprehensive income (2) (3)(1)— (131)(132)
Net other comprehensive loss(64,784)— (131)(64,915)
Balance as of March 31, 2022$(77,101)— (25,443)(102,544)
 
 For the quarter ended March 31, 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$16,843 — (50,392)(33,549)
Other comprehensive loss before reclassification adjustments (4)(17,421)— — (17,421)
Amounts reclassified from accumulated other comprehensive income (5) (6)(75)— 333 258 
Net other comprehensive (loss)/income(17,496)— 333 (17,163)
Balance as of March 31, 2021$(653)— (50,059)(50,712)
(1)Consists of unrealized holding losses, net of tax of $18,877.
(2)Consists of realized gains, net of tax of $0.
(3)Consists of realized gains, net of tax of $50.
(4)Consists of unrealized holding losses, net of tax $5,981.
(5)Consists of realized gains, net of tax $22.
(6)Consists of realized losses, net of tax of ($129).





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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:
 
•     the disruption to local, regional, national and global economic activity caused by infectious disease outbreaks, including the outbreak of coronavirus (COVID-19) and the significant impact that such outbreak has had and may continue to have on our growth, operations and earnings;
•changes in asset quality, including increases in default rates on loans and higher levels of nonperforming loans and loan charge-offs generally, and specifically resulting from the economic dislocation caused by the COVID-19 pandemic;
•changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;
•changes in federal, state, or local tax laws and tax rates;
•     general economic conditions, either nationally or in our market areas, that are different than expected;
•    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;
•     our ability to enter new markets successfully and capitalize on growth opportunities;
•     our ability to manager 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 Financial Accounting Standards Board (“FASB”) and other accounting standard 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 in the current economic environment;
•    our ability to retain key employees; and
•    our compensation expense associated with equity allocated or aware to our employees.

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Overview of Critical Accounting Policies Involving Estimates
 
Please refer to Note 1 of the Notes to Consolidated Financial Statements in Item 8 of Part II of our 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 No. 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides temporary optional guidance on contract modifications and hedge accounting to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. The guidance provides expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met. The amendments primarily include contract modifications and hedge accounting, as well as providing a one-time election for the sale or transfer of debt securities classified as held-to-maturity. This guidance is effective as of March 12, 2020 through December 31, 2022. We are currently in the process of evaluating the amendments and determining the impact on our financial statements.

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

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

Total assets at March 31, 2022 were $14.411 billion, a decrease of $90.3 million, or 0.6%, from $14.502 billion at December 31, 2021. This decrease in assets was due to a decrease in marketable securities as well as a decrease in total cash and cash equivalents, partially offset by an increase in loans receivable, as described in further detail below.

Total cash and cash equivalents decreased by $118.3 million, or 9.2%, to $1.161 billion at March 31, 2022 from $1.279 billion at December 31, 2021. This decrease was driven by the purchase of a $72.7 million small business equipment finance pool and a $138.1 million one-to four-family jumbo mortgage package during March.

Total marketable securities decreased by $136.9 million, or 5.9%, to $2.180 billion at March 31, 2022 from $2.317 billion at December 31, 2021. This decrease was primarily due to the $106.5 million decrease in available-for-sale marketable securities primarily as a result of the rising interest rate environment which negatively impacted the fair market value.

Total loans receivable increased by $122.6 million, or 1.2%, to $10.139 billion at March 31, 2022, from $10.016 billion at December 31, 2021. This increase was due to the purchase of the loan pools described above, as well as continued growth of consumer indirect auto loans, which increased by $63.0 million, or 4.2%, to $1.547 billion at March 31, 2022 compared to $1.484 billion at December 31, 2021. These increases were offset by decreases across all other portfolios due to loan paydowns and payoffs, including $32.1 million of PPP loan forgiveness, outpacing originations.

     Total deposits increased by $19.2 million, or 0.2%, to $12.320 billion at March 31, 2022 from $12.301 billion at December 31, 2021. This increase was primarily due to increases in savings and money market deposits of $114.4 million, or 2.3%. These increases were primarily the result of customers reinvesting time deposit maturities and annual tax refunds. Partially offsetting this increase was a decrease in time deposits of $75.7 million, or 5.7%, as customers continue to move funds from term products to checking and savings accounts.

Total shareholders’ equity at March 31, 2022 was $1.524 billion, or $12.03 per share, a decrease of $60.1 million, or 3.8%, from $1.584 billion, or $12.51 per share, at December 31, 2021. This decrease was primarily the result of an increase in accumulated
40
other comprehensive loss of $64.9 million due to an increase in unrealized losses in the investment portfolio, as well as a payment of cash dividends of $25.3 million for the three months ended March 31, 2022. This decrease was partially offset by quarterly earnings of $28.3 million.

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 conservation buffer” consisting of 2.5% of Total, Tier 1 and Common Equity Tier 1 (“CET1”) capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements.

    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 March 31, 2022
 Actual Minimum capital requirements (1)Well capitalized requirements
 AmountRatioAmountRatioAmountRatio
Total capital (to risk weighted assets)      
Northwest Bancshares, Inc.$1,687,337 16.891 %$1,048,912 10.500 %$998,964 10.000 %
Northwest Bank1,420,908 14.238 %1,047,877 10.500 %997,978 10.000 %
Tier 1 capital (to risk weighted assets)    
Northwest Bancshares, Inc.1,480,958 14.825 %849,119 8.500 %799,171 8.000 %
Northwest Bank1,338,199 13.409 %848,281 8.500 %798,382 8.000 %
CET1 capital (to risk weighted assets)    
Northwest Bancshares, Inc.1,355,828 13.572 %699,275 7.000 %649,327 6.500 %
Northwest Bank1,338,199 13.409 %698,585 7.000 %648,686 6.500 %
Tier 1 capital (leverage) (to average assets)    
Northwest Bancshares, Inc.1,480,958 10.431 %567,907 4.000 %709,884 5.000 %
Northwest Bank1,338,199 9.428 %567,749 4.000 %709,686 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).
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 At December 31, 2021
 ActualMinimum capital requirements (1)Well capitalized requirements
 AmountRatioAmountRatioAmountRatio
Total capital (to risk weighted assets)      
Northwest Bancshares, Inc.$1,682,487 17.056 %$1,035,786 10.500 %$986,463 10.000 %
Northwest Bank1,551,084 15.738 %1,034,819 10.500 %985,542 10.000 %
Tier I capital (to risk weighted assets)    
Northwest Bancshares, Inc.1,475,190 14.954 %838,494 8.500 %789,170 8.000 %
Northwest Bank1,467,362 14.889 %837,711 8.500 %788,434 8.000 %
CET1 capital (to risk weighted assets)
Northwest Bancshares, Inc.1,350,125 13.687 %690,524 7.000 %641,201 6.500 %
Northwest Bank1,467,362 14.889 %689,879 7.000 %640,602 6.500 %
Tier I capital (leverage) (to average assets) 
Northwest Bancshares, Inc.1,475,190 10.349 %570,160 4.000 %712,699 5.000 %
Northwest Bank1,467,362 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).

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 March 31, 2022 was 19.2%. 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 March 31, 2022, Northwest had $3.526 billion of additional borrowing capacity available with the FHLB, including $250.0 million on an overnight line of credit which had no balance at March 31, 2022, as well as $91.4 million of borrowing capacity available with the Federal Reserve Bank and $110.0 million with three correspondent banks.
 
Dividends
 
We paid $25.3 million and $24.1 million in cash dividends during the quarters ended March 31, 2022 and 2021, respectively. The common stock dividend payout ratio (dividends declared per share divided by net income per diluted share) was 90.9% and 59.4% for the quarters ended March 31, 2022 and March 31, 2021, respectively, on dividends of $0.20 per share for the quarter ended March 31, 2022 and $0.19 per share for the quarter ended March 31, 2021. On April 25, 2022, the Board of Directors declared a cash dividend of $0.20 per share payable on May 16, 2022 to shareholders of record as of May 5, 2022. This represents the 110th consecutive quarter we have paid a cash dividend.

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Nonperforming Assets
 
The following table sets forth information with respect to nonperforming assets. Nonaccrual loans are those loans on which the accrual of interest has ceased. Generally, when a loan is 90 days past due, we fully reverse all accrued interest thereon and cease to accrue interest thereafter. Exceptions are made for loans that have contractually matured, are in the process of being modified to extend the maturity date and are otherwise current as to principal and interest, and well-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.
March 31, 2022December 31, 2021
 (in thousands)
Loans 90 days or more past due:  
Residential mortgage loans$3,976 7,641 
Home equity loans2,968 4,262 
Vehicle loans1,432 1,635 
Other consumer loans770 765 
Commercial real estate loans21,264 23,489 
Commercial real estate - owner occupied135 574 
Commercial loans795 1,105 
Total loans 90 days or more past due$31,340 39,471 
Total real estate owned (REO)$929 873 
Total loans 90 days or more past due and REO32,269 40,344 
Total loans 90 days or more past due to net loans receivable0.31 %0.40 %
Total loans 90 days or more past due and REO to total assets0.22 %0.28 %
Nonperforming assets:
Nonaccrual loans - loans 90 days or more past due$30,920 39,140 
Nonaccrual loans - loans less than 90 days past due93,241 119,331 
Loans 90 days or more past due still accruing420 331 
Total nonperforming loans124,581 158,802 
Total nonperforming assets$125,510 159,675 
Total nonaccrual loans to total loans1.22 %1.59 %
Nonaccrual TDR loans (1)$16,015 17,216 
Accruing TDR loans12,686 13,072 
Total TDR loans$28,701 30,288 
(1)Included in nonaccrual loans above.
 
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 20210 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” 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”) 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 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 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 March 31, 2022, we considered the most recent economic conditions and forecasts available which incorporated the impact of material recent economic events. In addition, we considered the overall trends in asset quality, reserves on individually assessed loans, historical loss rates and collateral valuations. The ACL decreased by $2.9 million, or 2.9%, to $99.3 million, or 0.98% of total loans at March 31, 2022 from $102.2 million, or 1.02% of total loans, at December 31, 2021. Total classified loans decreased $43.3 million, or 11.9%, to $319.9 million at March 31, 2022 from $363.2 million at December 31, 2021. This decrease was primarily due to the upgrade and payoff of loans in our commercial real estate portfolio during the current quarter.
 
We also consider how the levels of nonaccrual loans and historical charge-offs have influenced the required amount of allowance for credit losses. Nonaccrual loans of $124.2 million, or 1.22% of total loans receivable at March 31, 2022, decreased by $34.3 million, or 21.7%, from $158.5 million, or 1.59% of total loans receivable at December 31, 2021. This decrease was primarily related to upgrades to loans within our commercial real estate portfolio. As a percentage of average loans, annualized net charge-offs decreased to 0.06% for the quarter ended March 31, 2022 compared to 0.20% for the year ended December 31, 2021.

Comparison of Operating Results for the Quarters Ended March 31, 2022 and 2021
 
Net income for the quarter ended March 31, 2022 was $28.3 million, or $0.22 per diluted share, a decrease of $12.0 million, or 29.7%, from net income of $40.2 million, or $0.32 per diluted share, for the quarter ended March 31, 2021. The decrease in net
44
income primarily resulted from a decrease in net interest income of $9.8 million, or 9.8% and a decrease in noninterest income of $6.2 million, or 19.4%. Partially offsetting these changes was a decrease in the negative provision for credit losses of $4.1 million, or 73.6%, a decrease in noninterest expense of $4.2 million, or 4.9%, and a $4.0 million, or 34.4%, decrease in income tax expense. Net income for the quarter ended March 31, 2022 represents annualized returns on average equity and average assets of 7.17% and 0.80%, respectively, compared to 10.61% and 1.17% for the same quarter last year. A further discussion of notable changes follows.

Interest Income
 
    Total interest income decreased $11.6 million, or 10.7%, to $96.4 million for the quarter ended March 31, 2022 from $108.0 million for the quarter ended March 31, 2021. This decrease is due to a decrease in the average yield earned on interest-earning assets to 2.91% for the quarter ended March 31, 2022 from 3.40% for the quarter ended March 31, 2021 due to the continued low interest rate environment. Offsetting this decrease in average yield earned was an increase in the average balance of interest-earning assets by $565.2 million, or 4.4%, to $13.450 billion for the quarter ended March 31, 2022 from $12.885 billion for the quarter ended March 31, 2021, which was primarily driven by growth in the mortgage-backed securities portfolio.

    Interest income on loans receivable decreased by $14.1 million, or 13.8%, to $88.2 million for the quarter ended March 31, 2022 compared to $102.3 million for the quarter ended March 31, 2021. 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 $507.7 million, or 4.9%, to $9.899 billion for the quarter ended March 31, 2022 from $10.406 billion for the quarter ended March 31, 2021 due to slower loan demand and $361.3 million of PPP loan forgiveness since March 31 of last year. The average yield on loans receivable decreased to 3.61% for the quarter ended March 31, 2022 from 3.99% for the quarter ended March 31, 2021, due to the decrease in market interest rates. Also, included in loan interest income for the current quarter is just $1.2 million of accretion related to PPP fees, net of origination costs, compared to $4.8 million in the first quarter last year.

    Interest income on mortgage-backed securities increased by $2.2 million, or 51.4%, to $6.4 million for the quarter ended March 31, 2022 compared to $4.2 million for the quarter ended March 31, 2021. This increase was driven by an increase in the average balance of mortgage-backed securities of $620.6 million, or 46.9%, to $1.945 billion for the quarter ended March 31, 2022 from $1.325 billion for the quarter ended March 31, 2021. This increase in average balance was primarily a result of additional purchases utilizing excess cash from deposit growth during the past year. The average yield on mortgage-backed securities remained relatively consistent, increasing slightly to 1.31% for the quarter ended March 31, 2022 from 1.27% for the quarter ended March 31, 2021.

    Interest income on investment securities increased by $142,000, or 11.7%, for the quarter ended March 31, 2022 to $1.4 million from $1.2 million for the quarter ended March 31, 2021. This increase was due to an increase in the average balance of investment securities by $42.3 million, or 12.8%, to $373.7 million for the quarter ended March 31, 2022 from $331.4 million for the quarter ended March 31, 2021. The average balance of investment securities increased due to the utilization of excess funds from deposit growth. The average yield on investment securities remained consistent, decreasing slightly to 1.45% for the quarter ended March 31, 2022 from 1.46% for the quarter ended March 31, 2021.

    Dividends on FHLB stock decreased by $35,000, or 30.2%, to $81,000 for the quarter ended March 31, 2022 from $116,000 for the quarter ended March 31, 2021. This decrease was due to the decrease in the average balance of FHLB stock. The average balance of FHLB stock decreased by $7.9 million, or 36.4%, to $13.9 million for the quarter ended March 31, 2022 from $21.8 million for the quarter ended March 31, 2021. Required FHLB stock holdings fluctuate with, among other things, the utilization of our borrowing capacity as well as capital requirements established by the FHLB. The average yield increased to 2.38% for the quarter ended March 31, 2022 from 2.17% for the quarter ended March 31, 2021.
 
    Interest income on interest-earning deposits increased by $284,000, or 155.2%, to $467,000 for the quarter ended March 31, 2022 from $183,000 for the quarter ended March 31, 2021. The average balance of interest-earning deposits increased by $417.8 million, or 52.2%, to $1.2 billion for the quarter ended March 31, 2022 from $801.1 million for the quarter ended March 31, 2021 due to excess liquidity from loan paydowns and payoffs as well as PPP loan forgiveness. Also contributing to this increase was an increase in the average yield on interest-earning deposits to 0.15% for the quarter ended March 31, 2022 from 0.09% for the quarter ended March 31, 2021.

Interest Expense

Interest expense decreased by $1.8 million, or 23.2%, to $5.8 million for the quarter ended March 31, 2022 from $7.6 million for the quarter ended March 31, 2021. This decrease in interest expense was primarily due to the decline in the average cost of interest-bearing liabilities, which decreased to 0.25% for the quarter ended March 31, 2022 from 0.33% for the quarter ended March 31, 2021. This decrease resulted from decreases in the interest rate paid on deposits in response to decreases in market interest rates. Partially offsetting this decrease was an increase in the average balance of interest-bearing liabilities by $180.2 million, or 1.9%,
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to $9.559 billion for the quarter ended March 31, 2022 from $9.378 billion for the quarter ended March 31, 2021. This increase in the average balance resulted from growth in deposits.
 
Net Interest Income
 
Net interest income decreased by $9.8 million, or 9.8%, to $90.6 million for the quarter ended March 31, 2022 from $100.5 million for the quarter ended March 31, 2021. This decrease is attributable to the factors discussed above. Our interest rate spread decreased to 2.66% for the quarter ended March 31, 2022 from 3.07% for the quarter ended March 31, 2021 and our net interest margin decreased to 2.73% for the quarter ended March 31, 2022 from 3.16% for the quarter ended March 31, 2021 primarily due to declining interest-earning asset yields as well as the increased weighting of cash and investments as a percentage of total assets.

Provision for Credit Losses

    The negative provision for credit losses decreased by $4.1 million, or 73.6%, to a current period credit of $1.5 million for the quarter ended March 31, 2022 compared to a negative provision of $5.6 million for the quarter ended March 31, 2021. The current period negative provision was driven by continued improvements in asset quality and classified loans, as described above. The negative provision in the prior year was driven by the release of the previously outsized allowance for credit losses established during the COVID-19 pandemic.
     
    In determining the amount of the current period provision, we considered current and forecasted economic conditions, including but not limited to improvements in unemployment levels, expected economic growth, bankruptcy filings, and changes in real estate values and the impact of these factors on the quality of our loan portfolio and historical loss experience. We analyze the allowance for credit losses as described in the section entitled “Allowance for Credit Losses.” The provision that is recorded is 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 March 31, 2022.

Noninterest Income
 
Noninterest income decreased by $6.2 million, or 19.4%, to $25.7 million for the quarter ended March 31, 2022 from $32.0 million for the quarter ended March 31, 2021. This decrease was primarily due to a decrease in mortgage banking income of $4.6 million, or 75.7%, to $1.5 million for the quarter ended March 31, 2022 from $6.0 million for the quarter ended March 31, 2021 due to the impact of less favorable pricing in the secondary market. In addition, insurance commission income decreased by $2.5 million, or 100.0%, for the quarter ended March 31, 2022 due to the sale of the insurance business during the second quarter of 2021. Partially offsetting these decreases was an increase in service charges and fees of $673,000, or 5.4%, as customer activity increased in 2022 after COVID-19 restricted behavior in the prior year. In addition, trust and other financial services income increased $528,000, or 8.1%, due to successful growth in wealth management relationships.

Noninterest Expense

Noninterest expense decreased by $4.2 million, or 4.9%, to $81.9 million for the quarter ended March 31, 2022 from $86.2 million for the quarter ended March 31, 2021. This decrease was due to a decline in a majority of the noninterest expense categories. Professional services decreased $2.0 million, or 43.8%, to $2.6 million for the quarter ended March 31, 2022 from $4.6 million for the quarter ended March 31, 2021 due to the use of third-party experts to recruit talent and assist with our digital strategy rollout in the prior year. Premises and occupancy costs decreased $1.0 million, or 11.5%, to $7.8 million for the quarter ended March 31, 2022 from $8.8 million for the quarter ended March 31, 2021 due primarily to the cost savings from the prior year branch optimization initiative. In addition, there was an decrease in other expenses of $1.0 million for the quarter ended March 31, 2022 due primarily due to the increase in the discount rate used to calculate our pension liability and related pension expense. Partially offsetting these decreases was a $1.4 million increase in merger, asset disposition and restructuring expense as a result of the branch optimization initiative announced during the fourth quarter of 2021.

Income Taxes
 
The provision for income taxes decreased by $4.0 million, or 34.4%, to $7.6 million for the quarter ended March 31, 2022 from $11.6 million for the quarter ended March 31, 2021. This decrease in income taxes was due to a decrease in income before taxes in the current year. We anticipate our effective tax rate to be between 21.0% and 23.0% for the year ending December 31, 2022.

46
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 March 31,
 20222021
Average
balance		InterestAvg.
yield/
cost (i)		Average
balance		InterestAvg.
yield/
cost (i)
Assets      
Interest-earning assets:     
Residential mortgage loans$2,980,788 25,542 3.43 %$3,007,439 26,366 3.51 %
Home equity loans1,293,986 11,472 3.60 %1,432,009 12,815 3.63 %
Consumer loans1,799,037 14,907 3.36 %1,463,284 14,566 4.04 %
Commercial real estate loans3,000,204 29,757 3.97 %3,313,892 38,471 4.64 %
Commercial loans824,770 6,897 3.34 %1,189,812 10,566 3.55 %
Loans receivable (a) (b) (d) (includes FTE adjustments of $401 and $600, respectively)9,898,785 88,575 3.63 %10,406,436 102,784 4.01 %
Mortgage-backed securities (c)1,945,173 6,360 1.31 %1,324,558 4,200 1.27 %
Investment securities (c) (d) (includes FTE adjustments of $189 and $254, respectively)373,694 1,540 1.65 %331,358 1,381 1.67 %
FHLB stock, at cost 13,870 81 2.38 %21,811 116 2.17 %
Other interest-earning deposits1,218,960 467 0.15 %801,119 183 0.09 %
Total interest-earning assets (includes FTE adjustments of $590 and $854, respectively)13,450,482 97,023 2.93 %12,885,282 108,664 3.42 %
Noninterest-earning assets (e)973,092 1,102,477 
Total assets$14,423,574   $13,987,759   
Liabilities and shareholders’ equity      
Interest-bearing liabilities:      
Savings deposits$2,334,494 592 0.10 %$2,118,030 625 0.12 %
Interest-bearing demand deposits2,875,430 321 0.05 %2,783,429 429 0.06 %
Money market deposit accounts2,668,105 653 0.10 %2,497,495 657 0.11 %
Time deposits1,292,608 2,185 0.69 %1,583,525 3,803 0.97 %
Borrowed funds (f)135,289 158 0.47 %143,806 154 0.43 %
Subordinated debentures (g)123,608 1,250 4.05 %123,357 1,258 4.14 %
Junior subordinated debentures129,077 651 2.02 %128,817 642 1.99 %
Total interest-bearing liabilities9,558,611 5,810 0.25 %9,378,459 7,568 0.33 %
Noninterest-bearing demand deposits (h)3,060,698 2,805,206 
Noninterest-bearing liabilities203,537 265,667 
Total liabilities12,822,846   12,449,332  
Shareholders’ equity1,600,728 1,538,427  
Total liabilities and shareholders’ equity$14,423,574   $13,987,759   
Net interest income/Interest rate spread 91,213 2.68 % 101,096 3.09 %
Net interest-earning assets/Net interest margin$3,891,871  2.75 %$3,506,823  3.18 %
Ratio of interest-earning assets to interest- bearing liabilities1.41X  1.37X  
(a)Average gross loans includes loans held as available-for-sale and loans placed on nonaccrual status.
(b)Interest income includes accretion/amortization of deferred loan fees/expenses, which were not material.
(c)Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
(d)Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent (“FTE”) basis.
(e)Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.
(f)Average balances include FHLB borrowings and collateralized borrowings.
(g)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 deposits were 0.12% and 0.19%, respectively.
(i)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 — 3.61% and 3.99%, respectively; investment securities — 1.45% and 1.46%, respectively; interest-earning assets — 2.91% and 3.40%, respectively. GAAP basis net interest rate spreads were 2.66% and 3.07%, respectively; and GAAP basis net interest margins were 2.73% and 3.16%, respectively.
47
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 March 31, 2022 vs. 2021
Increase/(decrease) due to Total
 increase/(decrease)
RateVolume
Interest-earning assets:   
Loans receivable$(9,666)(4,543)(14,209)
Mortgage-backed securities130 2,030 2,160 
Investment securities(16)175 159 
FHLB stock, at cost11 (46)(35)
Other interest-earning deposits124 160 284 
Total interest-earning assets(9,417)(2,224)(11,641)
Interest-bearing liabilities:   
Savings deposits(88)55 (33)
Interest-bearing demand deposits(118)10 (108)
Money market deposit accounts(46)42 (4)
Time deposits(1,126)(492)(1,618)
Borrowed funds14 (10)4 
Subordinated debt(28)20 (8)
Junior subordinated debentures8 1 9 
Total interest-bearing liabilities(1,384)(374)(1,758)
Net change in net interest income$(8,033)(1,850)(9,883)
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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 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 March 31, 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 March 31, 2022 levels.
 IncreaseDecrease
Parallel shift in interest rates over the next 12 months100 bps200 bps300 bps100 bps
Projected percentage increase/(decrease) in net interest income1.1 %1.7 %2.2 %(4.2 %)
Projected percentage increase/(decrease) in net income3.1 %4.9 %6.6 %(11.4 %)
Projected increase/(decrease) in return on average equity3.0 %4.7 %6.3 %(11.1 %)
Projected increase/(decrease) in earnings per share$0.02 $0.04 $0.05 $(0.10)
Projected percentage increase/(decrease) in market value of equity(5.0 %)(10.2 %)(15.3 %)1.6 %
 
    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.

49
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 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, 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.


50
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 March 31, 2022, there were no shares of common stock repurchased and there are a maximum of 2,261,130 remaining shares that can be purchased under the current repurchase program.


Item 3.        DEFAULTS UPON SENIOR SECURITIES
 
Not applicable.
 
Item 4.        MINE SAFETY DISCLOSURES
 
Not applicable.
 
Item 5.        OTHER INFORMATION
 
Not applicable.
 
51
Item 6.        EXHIBITS
Northwest Bancshares, Inc. 2022 Equity Incentive Plan (incorporated by reference to the proxy statement for the Annual Meeting of Stockholders filed with the Securities and Exchange Commission on March 10, 2022 (file no. 001-34582)).
Northwest Bank Annual Performance Award Plan.
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.
  
Certification of the Chief Financial Officer pursuant to Rule 13a-15 or 15d-15 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
  
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INSThe instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema Document.
101.CALXBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.
101.LABXBRL Taxonomy Extension Label Linkbase.
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.
104The cover page of this Quarterly Report on Form 10-Q, formatted in inline XBRL.
52
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:May 6, 2022By:/s/ Ronald J. Seiffert
  Ronald J. Seiffert
  Chairman, President and Chief Executive Officer
  (Duly Authorized Officer)
  
  
Date:May 6, 2022By:/s/ Jeffrey J. Maddigan
  Jeffrey J. Maddigan
  Executive Vice President, Finance, Accounting and Corporate Treasurer
(Principal Accounting Officer)
  

53
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