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What changed in Northwest Bancshares, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Northwest Bancshares, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+591 added−601 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-23)

Top changes in Northwest Bancshares, Inc.'s 2024 10-K

591 paragraphs added · 601 removed · 402 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

154 edited+93 added−56 removed76 unchanged
Biggest changeSuch regulation and supervision: • Limits the activities and investment authority of Northwest Bank; • Establishes a continuing and affirmative obligation, consistent with Northwest Bank’s safe and sound operation, to help meet the credit needs of its community, including low- and moderate-income neighborhoods; • Establishes various capital categories resulting in various levels of regulatory scrutiny applied to the institutions in a particular category; and 13 Table of Contents • Establishes standards for safety and soundness.
Biggest changeSuch regulation and supervision: • Limits the activities and investment authority of Northwest Bank; • Establishes assessment rates for maintaining the DIF; • Establishes various capital categories resulting in various levels of regulatory scrutiny applied to the institutions in a particular category; • Establishes standards for safety and soundness; and • Establishes a continuing and affirmative obligation, consistent with Northwest Bank’s safe and sound operation, to help meet the credit needs of its community, including low- and moderate-income neighborhoods; The FDIC is required by law to examine each regulated institution every twelve months.
A loan underwriter checks the loan document file for accuracy and completeness and verifies the information provided. For our personal loans, including residential mortgage loans, home equity loans and lines of credit, automobile loans, credit cards and other unsecured loans, we have implemented a credit approval process based on a laddered individual loan authority system.
A loan underwriter checks the loan document file for accuracy and completeness and verifies the information provided. For our personal loans, including residential mortgage loans, home equity loans and lines of credit, automobile loans and credit cards and other unsecured loans, we have implemented a credit approval process based on a laddered individual loan authority system.
We include the risk information provided by the ERMC, and these management risk committees, along with additional risk information that is identified at the holding company level in our determination and assessment of the risks that are presented to and discussed with our Board and Board Committees. Risk Categories.
We include the risk information provided by the ERMC, and these management-level risk committees, along with additional risk information that is identified at the holding company level in our determination and assessment of the risks that are presented to and discussed with our Board and Board Committees. Risk Categories.
Credit Risk is the risk arising from an obligor’s failure to meet the terms of any contract or otherwise perform as agreed. Credit Risk is found in all activities in which settlement or repayment depends on counterparty, issuer, or borrower performance. We are exposed to credit risk on the loans we make to our customers.
Risk arising from an obligor’s failure to meet the terms of any contract or otherwise perform as agreed. Credit Risk is found in all activities in which settlement or repayment depends on counterparty, issuer, or borrower performance. We are exposed to credit risk on the loans we make to our customers.
Assessments for institutions with $10 billion or more of assets are primarily based on a scorecard approach by the FDIC, including factors such as examination ratings and modeling measuring the institution’s ability to withstand asset-related and funding-related stress and potential loss to the DIF should the bank fail.
Assessments for institutions with $10 billion or more of assets, such as Northwest Bank, are primarily based on a scorecard approach by the FDIC, including factors such as examination ratings and modeling measuring the institution’s ability to withstand asset-related and funding-related stress and potential loss to the DIF should the bank fail.
Under the final rule, banks with assets of at least $2 billion as of December 31 in both of the prior two calendar years will be a “large bank.” The agencies will evaluate large banks under four performance tests: the Retail Lending Test, the Retail Services and Products Test, the Community Development Financing Test, and the Community Development Services Test.
Under the final rule, banks with assets of at least $2 billion as of December 31 in both of the prior two calendar years will be a “large bank.” The agencies would evaluate large banks under four performance tests: the Retail Lending Test, the Retail Services and Products Test, the Community Development Financing Test, and the Community Development Services Test.
Real estate secured loans are underwritten centrally by our underwriting team. Non-real estate loans are underwritten by both local loan officers or a centralized underwriting team who are granted various levels of authority based on their lending experience and expertise. These authority levels are reviewed by the Credit Committee on at least an annual basis.
Real estate secured loans are underwritten centrally by our underwriting team. Non-real estate loans are underwritten by local loan officers and/or a centralized underwriting team who are granted various levels of authority based on their lending experience and expertise. These authority levels are reviewed by the Credit Committee on at least an annual basis.
In evaluating applications by bank holding companies to acquire banks, the Federal Reserve Board considers, among other factors, the financial and managerial resources and future prospects of the parties, the effect of the acquisition on the risk to the DIF, the convenience and needs of the community, competitive factors and compliance with anti-money laundering laws. Capital.
In evaluating applications by bank holding companies to acquire banks, the Federal Reserve Board considers, among other factors, the financial and managerial resources and future prospects of the parties, the effect of the acquisition on the risk to the DIF, the convenience and needs of the community, competitive factors and compliance with anti-money laundering laws.
Our credit risk relates to the risk that our borrowers will not repay their loan balances. To minimize our risk of loan write-offs, we have developed comprehensive policies and procedures outlining our underwriting guidelines across all loan types. The loan policies contain guidance and establish requirements specific to loan types for each line of business.
Our credit risk relates to the risk that our borrowers will not repay their loan balances. To minimize our risk of loan write-offs, we have developed policies and procedures outlining our underwriting guidelines across all loan types. The loan policies contain guidance and establish requirements specific to loan types for each line of business.
Workforce Health and Safety. The health and safety of our employees, their families and the communities we serve is our top priority. In order to maintain safety in the workplace, Northwest Bank has an inclusive Safety Focus Group that includes various levels of positions up through senior leadership.
The health and safety of our employees, their families and the communities we serve is our top priority. In order to maintain safety in the workplace, Northwest Bank has an inclusive Safety Focus Group that includes various levels of positions up through senior leadership.
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.
On September 9, 2020, the Company issued $125 million of 4.00% fixed-to-floating rate subordinated notes with a maturity date of September 15, 2030.
This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve. Inclusion and Diversity. At Northwest Bank, we know that in order to succeed, we must create and maintain an environment where all employees, whatever their background or role, can contribute, innovate and thrive.
This is done, in part, by recruiting, hiring and retaining employees who share our core values of being an integral part of the communities we serve. Inclusion and Workplace Environment. At Northwest Bank, we know that in order to succeed, we must create and maintain an environment where all employees, whatever their background or role, can contribute, innovate and thrive.
At December 31, 2023, Northwest Bank had an equity investment in Allegheny Services, Inc. of $876.2 million. The Bert Company (doing business as Northwest Insurance Services), was an employee benefits and property and casualty insurance agency specializing in commercial and personal insurance as well as retirement benefit plans and was sold during the second quarter of 2021.
At December 31, 2024, Northwest Bank had an equity investment in Allegheny Services, Inc. of $876.2 million. The Bert Company (doing business as Northwest Insurance Services), was an employee benefits and property and casualty insurance agency specializing in commercial and personal insurance as well as retirement benefit plans and was sold during the second quarter of 2021.
At December 31, 2023, Northwest Bank had an equity investment of $29.2 million in The Bert Company. Northwest Advisors, Inc., a federally registered investment advisor, which provided investment management programs and investment portfolio planning services, ceased operations and became inactive during 2018. At December 31, 2023, Northwest Bank had an equity investment in Northwest Advisors, Inc. of $819,000.
At December 31, 2024, Northwest Bank had an equity investment of $29.2 million in The Bert Company. Northwest Advisors, Inc., a federally registered investment advisor, which provided investment management programs and investment portfolio planning services, ceased operations and became inactive during 2018. At December 31, 2024, Northwest Bank had an equity investment in Northwest Advisors, Inc. of $819,000.
We manage model risk through a comprehensive model governance framework, including policies and procedures for model development, maintenance and performance monitoring activities, independent model validation and change management capabilities. We also assess model performance on an ongoing basis. Model and Data Risk oversight and monitoring is conducted by the Model Risk Management Committee. Reputational Risk.
We manage model risk through a comprehensive model governance framework, including policies and procedures for model development, maintenance and performance monitoring activities, independent model validation and change management capabilities. We also assess model performance on an ongoing basis. Model and Data risk oversight and monitoring is conducted by the Model Risk Management Committee. Operational Risk .
Each of these Committees is responsible for one or more of the Bank’s seven risk categories, which are described in greater detail below under the heading “Risk Categories”. For its risk category(ies) of responsibility, each Committee provides risk governance, risk oversight and monitoring.
Each of these Committees is responsible for one or more of the Bank’s eight risk categories, which are described in greater detail below under the heading “Risk Categories”. For its risk category(ies) of responsibility, each Committee provides risk governance, risk oversight and monitoring.
At the time of purchase, we designate a security as either held-to-maturity or available-for-sale based upon our ability and intentions. Securities available-for-sale are carried at fair value and securities held-to-maturity are carried at amortized cost. On a quarterly basis, we measure expected credit losses on held-to-maturity debt securities on a collective basis by m ajor security type.
At the time of purchase, we designate a security as either held-to-maturity or available-for-sale based upon our ability and intentions. Securities available-for-sale are carried at fair value and securities held-to-maturity are carried at amortized cost. On a quarterly basis, we measure expected credit losses on held-to-maturity debt securities on a collective basis by major security type.
Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations. Northwest Bank exercised this opt-out election during the year ended December 31, 2023.
Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations. Northwest Bank exercised this opt-out election during the year ended December 31, 2024 .
Construction lending generally involves a greater degree of credit risk than permanent residential mortgage lending, as repayment of 4 Table of Contents construction loans is often dependent upon the successful completion of construction projects. Construction delays or the inability of borrowers to sell properties once construction is completed may impair borrowers’ ability to repay loans.
Construction lending generally involves a greater degree of credit risk than permanent residential mortgage lending, as repayment of construction loans is often dependent upon the successful completion of construction projects. Construction delays or the inability of borrowers to sell properties once construction is completed may impair borrowers’ ability to repay loans.
This market has a diverse economy driven by healthcare and education industries, service businesses, technology companies and small manufacturing operations. Our Indiana market area has a total population of approximately 934,000 and total households of approximately 367,000 as of December 31, 2023. The population of this area has remained stable between 2020 and 2024.
This market has a diverse economy driven by healthcare and education industries, service businesses, technology companies and small manufacturing operations. Our Indiana market area has a total population of approximately 934,000 and total households of approximately 368,000 as of December 31, 2024. The population of this area has remained stable between 2020 and 2024.
These loans were performing in accordance with their agreed upon terms as of December 31, 2023. Commercial business loans are offered with both fixed and adjustable interest rates.
These loans were performing in accordance with their agreed upon terms as of December 31, 2024. Commercial business loans are offered with both fixed and adjustable interest rates.
Our Enterprise Risk Management (“ERM”) Framework defines our “three lines of defense” risk management model, which includes the following: • The “first line of defense” is comprised of the business areas that engage in activities that generate revenue or provide operational support or services that introduce risk to the Company.
Our Enterprise Risk Management Policy defines our “three lines of defense” risk management model, which includes the following: • The “first line of defense” is comprised of the business areas that engage in activities that generate revenue or provide operational support or services that introduce risk to the Company.
The Company’s website (www.northwest.com) contains a direct link to Northwest Bancshares, Inc.’s filings with the Securities and Exchange Commission, including copies of annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these filings, if any. Information on our website shall not be considered a part of this report.
The Company’s website (www.northwest.com) contains a direct link to Northwest Bancshares, Inc.’s filings with the SEC, including copies of annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these filings, if any. Information on our website shall not be considered a part of this report.
Borrowings may be used on a short-term basis to compensate for reductions in the availability of funds from other sources or on a longer term basis for general business purposes, including to manage interest rate risk. 7 Table of Contents Deposits .
Borrowings may be used on a short-term basis to compensate for reductions in the availability of funds from other sources or on a longer-term basis for general business purposes, including to manage interest rate risk. Deposits .
Dividends The Company’s ability to pay dividends depends, to a large extent, upon Northwest Bank’s ability to pay dividends to the Company. The Banking Code states that no dividend may be paid out of surplus without approval of the Department of Banking. Dividends may be paid out of accumulated net earnings.
Dividends The Company’s ability to pay dividends depends, to a large extent, upon Northwest Bank’s ability to pay dividends to the Company. The Banking Code states that no dividend may be paid out of surplus without approval of the Department of Banking. Dividends may 15 Table of Contents be paid out of accumulated net earnings.
Before engaging in a new activity as principal that is not permissible for a national bank or otherwise permissible under federal law or FDIC regulations, an insured savings bank must seek approval from the FDIC to engage in such activity.
Before engaging in a new activity as principal that is not permissible for a national bank or otherwise permissible under federal law or FDIC regulations, an insured state-chartered bank must seek approval from the FDIC to engage in such activity.
The fair values of our securities are based on published or securities dealers’ market values, when available. See Note 4 to the Consolidated Financial Stat ements for a detailed analysis and description of our investment portfolio and valuation techniques.
The fair values of our securities are based on published or securities dealers’ market values, when available. See Note 4 to the Consolidated Financial Statements for a detailed analysis and description of our investment portfolio and valuation techniques.
This risk may result from 1) input errors, including inaccurate data; 2) fundamental design errors resulting in inaccurate calculations, valuations, estimates, or forecasts; or 3) incorrect or improper usage or a misunderstanding about a model’s limitations and assumptions.
This risk may result from (1) input errors, including inaccurate or unrepresentative data; (2) design flaws resulting in inaccurate calculations, valuations, estimates, or forecasts; or (3) incorrect or improper usage or a misunderstanding about a model’s limitations and assumptions.
The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and with their examination policies, including policies with respect to the classification of assets and the establishment of adequate credit loss reserves for regulatory purposes.
The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and with their examination policies, including policies with respect to the classification of assets, establishment of adequate credit loss reserves for regulatory purposes and risk management and governance.
Market Area and Competition Northwest Bank is headquartered in northwestern Pennsylvania and has expanded primarily through acquisitions, into the southwestern and central regions of Pennsylvania, as well as western New York, northeastern Ohio, and Indiana. As of December 31, 2023, we operated 142 community banking locations across these market areas.
Market Area and Competition Northwest Bank is headquartered in northwestern Pennsylvania and has expanded primarily through acquisitions, into the southwestern and central regions of Pennsylvania, as well as western New York, northeastern Ohio, and Indiana. As of December 31, 2024, we operated 141 community banking locations across these market areas.
Institutions that fall into an “undercapitalized” category are subject to a variety of mandatory and discretionary supervisory actions, including a restriction on capital distributions and the requirement to file a capital restoration plan with the regulators.
Institutions that fall into an “undercapitalized” category are subject to a variety of mandatory and discretionary 16 Table of Contents supervisory actions, including a restriction on capital distributions and the requirement to file a capital restoration plan with the regulators.
Northwest Financial Services, Inc. provided retail brokerage services and became inactive during the fourth quarter of 2017. At December 31, 2023, Northwest Bank had an equity investment in Northwest Financial Services of $9.4 million. On July 14, 2017, Northwest Consumer Discount Company, Inc. became inactive as all consumer finance offices were closed.
Northwest Financial Services, Inc. provided retail brokerage services and became inactive during the fourth quarter of 2017. At December 31, 2024, Northwest Bank had an equity investment in Northwest Financial Services of $9.5 million. On July 14, 2017, Northwest Consumer Discount Company, Inc. became inactive as all consumer finance offices were closed.
As of December 31, 2023 we had 7 credit relationships that were equal to or exceeded our $30.0 million internal limit for individual borrowers, 4 credit relationships that were equal to or exceeded our $50.0 million internal limit for individual borrowers within the corporate finance portfolio, and one credit relationship that was equal to or exceeded the $100.0 million internal limit for Aggregate Credit Exposure.
As of December 31, 2024 we had no credit relationships that were equal to or exceeded our $30.0 million internal limit for individual borrowers, 4 credit relationships that were equal to or exceeded our $50.0 million internal limit for individual borrowers within the corporate finance portfolio, and one credit relationship that was equal to or exceeded the $100.0 million internal limit for Aggregate Credit Exposure.
Higher levels of capital are required for asset categories believed to present greater risk. Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital.
Higher levels of capital are required for asset categories believed to present greater risk. 13 Table of Contents Common equity Tier 1 capital is generally defined as common stockholders’ equity and retained earnings. Tier 1 capital is generally defined as common equity Tier 1 and additional Tier 1 capital.
For commercial loans, aggregate credit exposures over $1.0 million are underwritten by Credit Administration. Our commercial loan policy assigns individual lending limits for our various commercial loan officers and dual authority consisting of an individual from Commercial Lending and Credit Administration. Lending authorities are established by the Credit Committee.
For commercial loans, aggregate credit exposures over $1.0 million are underwritten by Commercial Credit Management. Our commercial loan policy assigns individual lending limits for our various commercial credit underwriters and dual authority consisting of an individual from Commercial Credit Management and Credit Risk Officers. Lending authorities are established by the Credit Committee.
Deferred loan fees and costs are recognized as part of interest income immediately upon prepayment or the sale of the related loan. At December 31, 2023, we had $72.1 million of net deferred loan origination fees. Loan origination fees vary with the volume and type of loans and commitments originated and purchased, principal repayments, and competitive conditions in the marketplace.
Deferred loan fees and costs are recognized as part of interest income immediately upon prepayment or the sale of the related loan. At December 31, 2024, we had $63 million of net deferred loan origination fees. Loan origination fees vary with the volume and type of loans and commitments originated and purchased, principal repayments, and competitive conditions in the marketplace.
The ERMC is the highest-level management committee at the Bank to oversee risks and is responsible for risk governance, risk oversight and making recommendations on the Banks’ risk appetite. The ERMC monitors compliance with limits and related escalation requirements and oversees implementation of risk policies.
The ERMC is the highest-management-level committee at the Bank to oversee risks and is responsible for risk governance and oversight and makes recommendations on the Bank’s risk appetite. The ERMC monitors compliance with limits and related escalation requirements and oversees implementation of risk policies.
At December 31, 2023, Northwest Bank had an equity investment of $11.6 million in Northwest Capital Group, Inc., with a $1,400 net loss reported for the year ended December 31, 2023. Mutual Federal Interest Corporation, which is a Nevada corporation, holds and manages a portion of the Northwest Bank investment portfolio and consumer closed-end first mortgage loans.
At December 31, 2024, Northwest Bank had an equity investment of $11.6 million in Northwest Capital Group, Inc., with a $28,000 net loss reported for the year ended December 31, 2024. Mutual Federal Interest Corporation, which is a Nevada corporation, holds and manages a portion of the Northwest Bank investment portfolio and consumer closed-end first mortgage loans.
Our retail branch network of 11 community banking offices includes two counties in northeastern Ohio, including the Cleveland metro area. The major employment sectors in this market are similar to the contiguous market in western Pennsylvania. Our Ohio market area has a total population of approximately 854,000 and total households of approximately 356,000 as of December 31, 2023.
Our retail branch network of 11 community banking offices in Ohio includes two counties in northeastern Ohio, including the Cleveland metro area. The major employment sectors in this market are similar to the contiguous market in western Pennsylvania. Our Ohio market area has a total population of approximately 857,000 and total households of approximately 357,000 as of December 31, 2024.
The “source of strength doctrine” requires bank holding companies to provide assistance to their subsidiary depository institutions in the event such subsidiary depository institutions experience financial difficulty. The Federal Reserve Board has issued regulations requiring that all bank holding companies serve as a source of financial and managerial strength to their subsidiary depository institutions. 16 Table of Contents Capital Distributions.
Source of Strength Doctrine The “source of strength doctrine” requires bank holding companies to provide assistance to their subsidiary depository institutions in the event such subsidiary depository institutions experience financial difficulty. The Federal Reserve Board has issued regulations requiring that all bank holding companies serve as a source of financial and managerial strength to their subsidiary depository institutions.
The CRO regularly reports to the Risk Committee as well as the Bank’s Enterprise Risk Management Committee (“ERMC”) on risk management matters. • The “third line of defense” is comprised of the Internal Audit organization.
The CRO regularly reports to the Board Risk Management Committee as well as the Bank’s Enterprise Risk Management Committee (“ERMC”) on risk management matters. 8 Table of Contents • The “third line of defense” is comprised of the Internal Audit organization.
Actual changes in our net interest income will depend on many factors, and therefore may differ from our estimated risk to changes in interest rates. The Asset & Liability Committee assists the Bank’s Board of Directors and Bank Management in overseeing, reviewing, and monitoring market risk. Treasury Risk.
Actual changes in our net interest income will depend on many factors, and therefore may differ from our estimated risk to changes in interest rates. The Asset/Liability Committee assists the Board of Directors and bank management in overseeing, reviewing, and monitoring market and treasury risk. 9 Table of Contents Model and Data Risk .
Internal Audit also assesses the design of the Company ’ s and the Bank’s policies and standards and validates the effectiveness of risk management controls and reports the results of such reviews to the Audit Committee. Management Committees.
Internal Audit also assesses the design of the Company’s and the Bank’s policies and standards and validates the effectiveness of risk management controls and reports the results of such reviews to the Audit Committee. Management Committees.
Our New York market area has a total population of approximately 2.0 million and total households of approximately 864,000 as of December 31, 2023. This area has experienced an decrease in population between 2020 and 2024, of 0.7%.
Our New York market area has a total population of approximately 2.0 million and total households of approximately 864,000 as of December 31, 2024. This area has experienced a decrease in population between 2020 and 2024, of 1.5%.
We also issued 1,277,565 shares of common stock and contributed $1.0 million in cash from the offering proceeds to Northwest Charitable Foundation, a charitable foundation that we established for the benefit of the communities in which Northwest Bank operates. As of December 31, 2023, the Company had 127,110,453 shares outstanding and a market capitalization of approximately $1.586 billion.
We also issued 1,277,565 shares of common stock and contributed $1.0 million in cash from the offering proceeds to Northwest Charitable Foundation, a charitable foundation that we established for the benefit of the communities in which Northwest Bank operates. As of December 31, 2024, the Company had 127,508,003 shares outstanding and a market capitalization of approximately $1.682 billion.
At December 31, 2023, Northwest Bancshares, Inc.’s investment in the Trusts totaled $4.0 million, and the Trusts had assets of $129.6 million, net of discounts due to fair value adjustments made at the time of acquisition of Union Community Bank and MutualFirst Financial, Inc.
At December 31, 2024, Northwest Bancshares, Inc.’s investment in the Trusts totaled $4 million, and the Trusts had assets of $130 million, net of discounts due to fair value adjustments made at the time of acquisition of Union Community Bank and MutualFirst Financial, Inc.
Borrowings are made pursuant to several different programs. Each credit program has its own interest rate and range of maturities. Depending on the program, limitations on the amount of borrowings are based either on a fixed percentage of a member institution’s net worth or on the FHLB’s assessment of the institution’s creditworthiness.
Each credit program has its own interest rate and range of maturities. Depending on the program, limitations on the amount of borrowings are based either on a fixed percentage of a member institution’s net worth or on the FHLB’s assessment of the institution’s creditworthiness.
The following description of our market area is based upon information obtained from SNL Securities, the Bureau of Labor Statistics, the Federal Housing Financial Agency and the Mortgage Bankers Association. 2 Table of Contents Pennsylvania Market Area . Our retail branch network of 83 community banking offices within the Commonwealth of Pennsylvania encompasses 23 counties.
The following description of our market area is based upon information obtained from SNL Securities, the Bureau of Labor Statistics, the Federal Housing Financial Agency and the Mortgage Bankers Association. Pennsylvania Market Area . Our retail branch network of 82 community banking offices within the Commonwealth of Pennsylvania encompasses 24 counties.
As of September 30, 2023, the most recent date for which data is available, the House Price Index for the last four quarters in the state of Pennsylvania increased by 8.1%, compared to an increase in the national average of 5.5%.
As of September 30, 2024, the most recent date for which data is available, the House Price Index for the last four quarters in the state of Pennsylvania increased by 5.4%, compared to an increase in the national average of 4.3%.
At December 31, 2023, commercial real estate loans totaled $2.977 billion, or 26.2% of gross loans. 5 Table of Contents Loans secured by multi-family commercial and commercial real estate generally involve a greater degree of credit risk than residential mortgage loans and carry larger loan balances.
At December 31, 2024, commercial real estate loans totaled $2.9 billion, or 26% of gross loans. Loans secured by multi-family commercial and commercial real estate generally involve a greater degree of credit risk than residential mortgage loans and carry larger loan balances.
For loans originated and managed within the Corporate Finance portfolio the Total Credit Exposure limit is increased to $50.0 million for borrowers with a strong credit profile and a risk rating of 3 or better. The Aggregate Credit Exposure limit is $100.0 million.
For loans originated and managed within the Corporate Finance portfolio, the Total Credit Exposure limit is increased to $50.0 million for borrowers with a strong credit profile and a risk rating of 3 or better. The Aggregate Credit Exposure, which represents total relationship exposure which may include multiple distinct borrowers, limit is $100.0 million.
Northwest Bank is a community-oriented financial institution offering personal and business banking solutions, investment management and trust services. Northwest Bank’s mutual savings bank predecessor was founded in 1896. As of December 31, 2023, Northwest Bank operated 142 community-banking locations throughout its market area in Pennsylvania, western New York, eastern Ohio, and Indiana.
Northwest Bank is a community-oriented financial institution offering personal and commercial banking solutions, investment management and trust services. Northwest Bank’s mutual savings bank predecessor was founded in 1896. 1 Table of Contents As of December 31, 2024, Northwest Bank operated 141 community-banking locations throughout its market area in Pennsylvania, western New York, eastern Ohio, and Indiana.
As of December 31, 2023, the unemployment rate for our Ohio market was 3.1%, compared to the national average of 3.7%. As of September 30, 2023, the House Price Index for the last four quarters in our Ohio market area increased by 8.5%, compared to an increase in the national average of 5.5%.
As of December 31, 2024, the unemployment rate for our Ohio market was 4.4%, compared to the national average of 4.1%. As of September 30, 2024, the House Price Index for the last four quarters in our Ohio market area increased by 6.6%, compared to an increase in the national average of 4.3%.
The terms of each multi-family residential and commercial real estate loan are negotiated on a case-by-case basis. We generally originate multi-family commercial and commercial real estate loans in amounts up to 80% of the appraised value of the property collateralizing the loan.
Multi-family commercial and commercial real estate loans are offered with both adjustable and fixed interest rates. The terms of each multi-family residential and commercial real estate loan are negotiated on a case-by-case basis. We generally originate multi-family commercial and commercial real estate loans in amounts up to 80% of the appraised value of the property collateralizing the loan.
Operational Risk is inherent in all business activities and can impact us through direct or indirect financial loss, brand damage, customer dissatisfaction, and legal and regulatory penalties. The Company has implemented a comprehensive operational risk framework that is defined in the Operational Risk Management Policy.
Operational risk is inherent in all business activities and can impact us through direct or indirect financial loss, brand damage, customer dissatisfaction, and legal and regulatory penalties. We have implemented an operational risk framework that is defined in the Operational Risk Management Policy.
Therefore, even when our strategy is to increase the origination of adjustable-rate residential mortgage loans, market conditions may be such that there is greater demand for fixed-rate mortgage loans. Adjustable-rate residential mortgage loans totaled $100.2 million, or 0.9%, of our gross loan portfolio at December 31, 2023.
Therefore, even when our strategy is to increase the origination of adjustable-rate residential mortgage loans, market conditions may be such that there is greater demand for fixed-rate mortgage loans. Adjustable-rate residential mortgage loans totaled $95 million, or 1%, of our gross loan portfolio at December 31, 2024.
Accordingly, if we engage in a merger or other acquisition, our controls designed to combat money laundering would be considered as part of the application process. We have established policies, procedures and systems designed to comply with the BSA, USA PATRIOT Act, and regulations implemented thereunder.
Accordingly, if we engage in a merger or other acquisition, our controls designed to combat money laundering would be considered as part of the application process. We have established policies, procedures and systems designed to comply with the BSA, as amended, and its implementing regulations.
Included in our $3.419 billion portfolio of residential mortgage loans as of December 31, 2023 are construction loans of $26.6 million, or 0.2% of our gross loan portfolio. We offer fixed-rate and adjustable-rate residential construction-to-permanent loans primarily for the construction of owner-occupied one-to four-family residences in our market area to builders or owners who have a contract for construction.
Included in our $3.2 billion portfolio of residential mortgage loans as of December 31, 2024 are construction loans of $7 million, or 0. 2% of our gros s loan portfolio. We offer fixed-rate and adjustable-rate residential construction-to-permanent loans primarily for the construction of owner-occupied one-to-four-family residences in our market area to owners who have a contract for construction.
In particular, amounts realizable on the sale of repossessed automobiles may be significantly reduced based upon the condition of the automobiles and the lack of demand for used automobiles. At December 31, 2023, other consumer loans totaled $2.066 billion, or 18.2% of gross loans. Commercial Real Estate Loans .
In particular, amounts realizable on the sale of repossessed automobiles may be significantly reduced based upon the condition of the automobiles and the lack of demand for used automobiles. At December 31, 2024, other consumer loans totaled $1.9 billion, or 17% of gross loans. Commercial Real Estate Loans .
At December 31, 2023, we had commitments to originate $198.2 million of loans. 6 Table of Contents Loan Origination Fees and Costs . We defer loan origination fees received from borrowers and costs to originate loans and amortize such amounts as an adjustment of yield over the life of the loan by using the level yield method.
At December 31, 2024, we had commitments to originate $190 million of loans. Loan Origination Fees and Costs . We defer loan origination fees received from borrowers and costs to originate loans and amortize such amounts as an adjustment of yield over the life of the loan by using the level yield method.
At December 31, 2023, the Trusts have issued a total of $128.9 million of trust preferred securities. The Trusts are not consolidated with Northwest Bancshares, Inc.
At December 31, 2024, the Trusts have issued a total of $129 million of trust preferred securities. The Trusts are not consolidated with Northwest Bancshares, Inc.
At December 31, 2023, Northwest Bank had an equity investment in Great Northwest Corporation of $14.3 million. For the year ended December 31, 2023, Great Northwest Corporation had net income of $178,000, generated primarily from federal low-income housing tax credits. Northwest Capital Group, Inc.’s principal activity is to own, operate and ultimately divest of properties that were acquired in foreclosure.
For the year ended December 31, 2024, Great Northwest Corporation had net income of $178,000, generated primarily from federal low-income housing tax credits. Northwest Capital Group, Inc.’s principal activity is to own, operate and ultimately divest of properties that were acquired in foreclosure.
At December 31, 2023, commercial loans totaled $1.661 billion, or 14.6% of gross loans. Loan Originations, Solicitation, Processing and Commitments. Upon receiving a retail loan application, we obtain a credit report and may verify employment to confirm specific information relating to the applicant’s employment, income, and credit standing.
At December 31, 2024, commercial loans totaled $2.0 billion, or 18% of gross loans. Loan Originations, Solicitation, Processing and Commitments. Upon receiving a retail loan application, we obtain a credit report and may verify employment to confirm specific information relating to the applicant’s employment, income, and credit standing.
As of September 30, 2023, the foreclosure rate for mortgage loans on one-to-four unit residential properties in the state of New York was one in every 1,269 housing units, compared to the national average of one in every 1,389 housing units. Northeastern Ohio Market Area .
As of September 30, 2024, the foreclosure rate for mortgage loans on one-to-four unit residential properties in the state of New York was one in every 4,829 housing units, compared to the national average of one in every 4,578 housing units. Northeastern Ohio Market Area .
At December 31, 2023, Northwest Bank had an equity investment in Mutual Federal Interest Corporation of $1.539 billion. For the year ended December 31, 2023, Mutual Federal Interest Corporation had net income of $28.0 million. Northwest Bank strategically ceased operating several business lines in prior periods.
At December 31, 2024, Northwest Bank had an equity investment in Mutual Federal Interest Corporation of $1.550 billion. For the year ended December 31, 2024, Mutual Federal Interest Corporation had net income of $11.3 million. Northwest Bank strategically ceased operating several business lines in prior periods.
Legislation enacted in 2012 clarified the Department of Banking’s examination and enforcement authority over subsidiaries of Pennsylvania institutions and authorized the assessment of civil money penalties of up to $25,000 under certain circumstances for violations of laws or orders related to the institution or unsafe or unsound practices or breaches of fiduciary duties.
Pennsylvania law provides for the Department of Banking’s examination and enforcement authority over subsidiaries of Pennsylvania institutions and authorizes the assessment of civil money penalties of up to $25,000 under certain circumstances for violations of laws or orders related to the institution or unsafe or unsound practices or breaches of fiduciary duties.
Federal law prohibits a bank holding company, including Northwest Bancshares, Inc., from acquiring, directly or indirectly, more than 5% of a class of voting securities of, or all or substantially all of the assets of, another bank or bank holding company, without prior written approval of the Federal Reserve Board.
Bank Acquisitions by the Company Federal law prohibits a bank holding company, including the Company, from acquiring, directly or indirectly, more than 5% of a class of voting securities of another bank or bank holding company or all or substantially all of the assets of a bank, or merging or consolidating with another bank holding company, without prior written approval of the Federal Reserve Board.
SUPERVISION AND REGULATION General As a bank holding company, we are required to comply with the rules and regulations of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), and are also required to file certain reports with and are subject to examination by the Federal Reserve Board.
SUPERVISION AND REGULATION General As a bank holding company, the Company is required to comply with the rules and regulations of the Federal Reserve Board and is also required to file certain reports with, and subject to examination by, the Federal Reserve Board.
As of September 30, 2023, the House Price Index for the last four quarters in our New York market increased by 7.6%, compared to an increase in the national average of 5.5%.
As of September 30, 2024, the House Price Index for the last four quarters in our New York market increased by 7.0%, compared to an increase in the national average of 4.3%.
As of September 30, 2023, the foreclosure rate for mortgage loans on one-to-four unit residential properties in the state of Ohio was one in every 955 housing units, compared to the national average of one in every 1,389 housing units. Indiana Market Area . Our retail branch network of 20 community banking offices includes eight counties in Indiana.
As of September 30, 2024, the foreclosure rate for mortgage loans on one-to-four unit residential properties in the state of Ohio was one in every 3,450 housing units, compared to the national average of one in every 4,578 housing units. Indiana Market Area . Our retail branch network of 20 community banking offices in Indiana includes nine counties in Indiana.
As of September 30, 2023, the foreclosure rate for mortgage loans on one-to-four unit residential properties in the state of Pennsylvania was one in every 1,324 housing units, compared to the national average of one in every 1,389 housing units. Western New York Market Area .
As of September 30, 2024, the foreclosure rate for mortgage loans on one-to-four unit residential properties in the state of Pennsylvania was one in every 7,424 housing units, compared to the national average of one in every 4,578 housing units. Western New York Market Area .
Generally, our home equity loans are secured by the borrower’s principal residence with a maximum loan-to-value ratio, including the principal balances of both the first and second mortgage loans, of 95% or less. We generally underwrite home equity loans and lines of credit in a manner similar to our underwriting of residential mortgage loans.
Home Equity Loans and Lines of Credit . Generally, our home equity loans are secured by the borrower’s principal residence with a maximum loan-to-value ratio, including the principal balances of both the first and subordinate mortgage loans, of 95% or less.
As the business owner, the first line of defense is responsible for, among other things, identifying, owning, managing and controlling key risks associated with their activities, timely addressing issues and remediation, and implementing processes and procedures to strengthen the risk and control environment.
The first line of defense is responsible for, among other things, identifying, owning, managing and controlling key risks associated with their activities, timely addressing issues and remediation, and implementing processes and procedures to strengthen the risk and control environment. The first line of defense identifies and manages key risk indicators and risks and controls consistent with the Company’s risk appetite.
The credit risk on our loan portfolio is quantified through our allowance for credit losses which is recorded net within loans on our Consolidated Balance Sheets. Credit risk is overseen and monitored by the Credit Committee. Market Risk. Market Risk is the risk arising from changes in the financial or economic environment, including movements in interest rates.
The credit risk on our loan portfolio is quantified through our allowance for credit losses which is recorded net within loans on our Consolidated Balance Sheets. Credit risk is overseen and monitored by the Credit Committee. Market Risk. Risk of financial loss arising from adverse changes in markets, primarily in interest rates.
In addition to the ERMC, we maintain the following risk management committees to oversee the risks listed below: Credit Committee; Compliance Risk Management Committee; Operational Risk Management Committee; Model Risk Management Committee; and the Asset & Liability Committee.
In addition to the ERMC, we maintain the following management-level committees to oversee our risk categories: Compliance Risk Management Committee; Credit Committee; Model Risk Management Committee; Operational Risk Management Committee; and the Asset/Liability Committee.
We offer commercial loans to finance various activities in our market area, some of which are secured in part by additional real estate collateral. At December 31, 2023, our largest commercial loan relationship had an aggregate total exposure of $67.4 million, and operates in the internet, cable and phone space.
We offer commercial loans to finance various activities in our market area, some of which are secured in part by additional real estate collateral. At December 31, 2024, our largest commercial loan relationship had an aggregate total exposure of 5 Table of Contents $65.0 million, and operates in the manufacturing space.
Any change in these laws or regulations, whether by the Department of Banking or the FDIC, could have a material adverse impact on the Company, Northwest Bank and their respective operations.
Any change in these laws or regulations or any heightened supervisory environment, including by the Federal Reserve Board, the Department of Banking, the FDIC or the CFPB, could have a material adverse impact on the Company, Northwest Bank and their respective operations.
Prompt Corrective Action Federal law requires, among other things, that federal bank regulators take “prompt corrective action” with respect to institutions that do not meet minimum capital requirements. For this purpose, federal law establishes five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized.
Prompt Corrective Action Federal law requires, among other things, that federal banking agencies take “prompt corrective action” (“PCA”) with respect to insured depository institutions that do not meet minimum capital requirements. For this purpose, federal law establishes five capital categories: (1) well capitalized, (2) adequately capitalized, (3) undercapitalized, (4) significantly undercapitalized and (5) critically undercapitalized.
Certain transactions with affiliates are required to be secured by specified collateral. Activities and Investments of Insured State-Chartered Banks Federal law generally limits the activities as principal and equity investments of state-chartered banks insured by the FDIC and its subsidiaries to those that are permissible for national banks.
Activities and Investments of Insured State-Chartered Banks Federal law generally limits the activities as principal and equity investments of state-chartered banks insured by the FDIC and its subsidiaries to those that are permissible for national banks.
The Bank Secrecy Act and USA PATRIOT Act The Bank Secrecy Act (“BSA”) and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”) require Northwest Bank to implement a compliance program to detect and prevent money laundering, terrorist financing, and illicit crime.
The Bank Secrecy Act and USA PATRIOT Act The Bank Secrecy Act (the “BSA”), as amended by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”), and its implementing regulations require Northwest Bank to implement a compliance program designed to detect and prevent money laundering, terrorist financing, and other illicit 18 Table of Contents financial crimes.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf consumer acceptance of debit financial services does not continue to develop or develops more slowly than expected or if there is a shift in the mix of payment forms, such as cash, credit cards, and debit cards, away from our products and services, it could have a material adverse effect on our financial position and results of operations.
Biggest changeIf consumer acceptance of debit financial services does not continue to develop or develops more slowly than expected or if there is a shift in the mix of payment forms, such as cash, credit cards, and debit cards, away from our products and services, it could have a material adverse effect on our financial position and results of operations. 32 Table of Contents Other Risks Related to Our Business The corporate governance provisions in our articles of incorporation and bylaws, and the corporate governance provisions under Maryland law, may prevent or impede the holders of our common stock from obtaining representation on our Board of Directors and may impede takeovers of the Company that our board might conclude are not in the best interest of us or our stockholders .
Our results of operations depend substantially on our net interest income, which is the difference between the interest income we earn on our interest-earning assets, such as loans and investment securities, and the interest expense we pay on our interest-bearing liabilities, such as deposits, borrowings and trust preferred securities.
Our results of operations and net interest income depend substantially on our net interest income, which is the difference between the interest income we earn on our interest-earning assets, such as loans and investment securities, and the interest expense we pay on our interest-bearing liabilities, such as deposits, borrowings and trust preferred securities.
Their use also affects interest rates charged on loans or paid on deposits. The monetary policies and regulations of the Federal Reserve Board have had a significant effect on the operating results of financial institutions in the past and are expected to continue to do so in the future.
Their use also affects interest rates charged on loans or paid on deposits. The monetary policies of the Federal Reserve Board have had a significant effect on the operating results of financial institutions in the past and are expected to continue to do so in the future.
A deterioration in economic conditions could result in the following consequences, any of which could have a material adverse affect on our business, financial condition, liquidity and results of operations: • demand for our products and services may decline; • loan delinquencies, problem assets and foreclosures may increase; • we may increase our allowance for credit losses; • collateral for loans, especially real estate, may decline in value, in turn reducing customers’ future borrowing power, and reducing the value of assets and collateral associated with existing loans; and • the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us.
A deterioration in economic conditions could result in the following consequences, any of which could have a material adverse effect on our business, financial condition, liquidity and results of operations: • demand for our products and services may decline; • loan delinquencies, problem assets and foreclosures may increase; • we may increase our allowance for credit losses; • collateral for loans, especially real estate, may decline in value, in turn reducing customers’ future borrowing power, and reducing the value of assets and collateral associated with existing loans; and • the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us.
Beginning in 2022, in response to a pronounced rise in inflation, the Federal Reserve Board reversed its policy of “near zero” interest rates and has materially increased the target Fed Funds rate.
Beginning in 2022, in response to a pronounced rise in inflation, the Federal Reserve Board reversed its policy of “near zero” interest rates and has materially increased the target federal funds rate.
Acquiring other banks, businesses, or branches may have an adverse effect on our financial results and may involve various other risks commonly associated with acquisitions, including, among other things: • difficulty in estimating the value of the target company; • payment of a premium over book and market values that may dilute our tangible book value and earnings per share in the short and long term; • potential exposure to unknown or contingent liabilities of the target company; • exposure to potential asset quality problems of the target company; • potential volatility in reported income associated with goodwill impairment losses; • difficulty and expense of integrating the operations and personnel of the target company; • inability to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits of the acquisition; • potential disruption to our business; • potential diversion of our management’s time and attention; • the possible loss of key employees and customers of the target company; and • potential changes in banking or tax laws or regulations that may affect the target company.
Acquiring other banks, such as Penns Woods, businesses, or branches may have an adverse effect on our financial results and may involve various other risks commonly associated with acquisitions, including, among other things: • difficulty in estimating the value of the target company; • payment of a premium over book and market values that may dilute our tangible book value and earnings per share in the short and long term; • potential exposure to unknown or contingent liabilities of the target company; • exposure to potential asset quality problems of the target company; • potential volatility in reported income associated with goodwill impairment losses; • difficulty and expense of integrating the operations and personnel of the target company; • inability to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits of the acquisition; • potential disruption to our business; • potential diversion of our management’s time and attention; • the possible loss of key employees and customers of the target company; and • potential changes in banking or tax laws or regulations that may affect the target company.
Under the guidance, a financial institution that, like us, is actively involved in commercial real estate lending should perform a risk assessment to identify concentrations.
Under the CRE Lending Guidance, a financial institution that, like us, is actively involved in commercial real estate lending should perform a risk assessment to identify concentrations.
Furthermore, we may not be able to ensure that all of our clients, suppliers, counterparties and other third parties have appropriate controls in place to protect the confidentiality of the information that they exchange with us, particularly where such information is transmitted by electronic means.
Furthermore, we may not be able to ensure that all of our clients, suppliers and other third-party providers, counterparties and other third parties have appropriate controls in place to protect the confidentiality of the information that they exchange with us, particularly where such information is transmitted by electronic means.
In preparing this annual report as well as periodic reports we are required to file under the Securities Exchange Act of 1934, including our Consolidated Financial Statements, our management is and will be required under applicable rules and regulations to make estimates and assumptions as of a specified date.
In preparing this annual report as well as periodic reports we are required to file under the Exchange Act, including our Consolidated Financial Statements, our management is and will be required under applicable rules and regulations to make estimates and assumptions as of a specified date.
Additionally, in certain instances, the Maryland General Corporation Law requires a supermajority vote of our stockholders to approve a merger or other business combination with a large stockholder, if the proposed transaction is not approved by a majority of our directors.
Additionally, in certain instances, the Maryland General Corporation Law requires a super majority vote of our stockholders to approve a merger or other business combination with a large stockholder, if the proposed transaction is not approved by a majority of our directors.
Furthermore, if customers do not perceive our new offerings as providing significant value, they may fail to accept our new products and services. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.
Furthermore, if customers do not perceive our new offerings as providing 27 Table of Contents significant value, they may fail to accept our new products and services. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service.
State and local governments may experience financial stress due to: (i) declining revenues; (ii) large unfunded liabilities to government workers; and (iii) entrenched cost structures. Additionally, the debt-to-gross domestic product ratios for the majority of states have been deteriorating due to, among other factors, declines in federal monetary assistance.
State and local governments may experience financial stress due to: (i) declinin g revenues; (ii) large unfunded liabilities to government workers; and (iii) entrenched cost structures. Additionally, the debt-to-gross domestic product ratios for the majority of states have been deteriorating due to, among other factors, declines in federal monetary assistance.
The benefits of this strategy will depend on our ability to realize expected expense reductions without experiencing significant customer attrition. 30 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
The benefits of this strategy will depend on our ability to realize expected expense reductions without experiencing significant customer attrition. 34 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
Any changes made to the rates offered on deposits to remain competitive with other financial institutions may also adversely affect profitability and liquidity. Other primary sources of funds consist of cash flows from operations, maturities and sales of investment securities and/or loans, brokered deposits, borrowings from the FHLB and/or FRB discount window, and unsecured borrowings.
Any changes made to the rates offered on deposits to remain competitive with other financial institutions may also adversely affect profitability and liquidity. Other primary sources of funds consist of cash flows from operations, maturities and sales of investment securities and/or loans, brokered deposits, borrowings from the FHLB and/or Federal Reserve discount window, and unsecured borrowings.
Any change in these regulations and oversight, whether in the form of regulatory policy, new regulations or legislation or additional deposit insurance premiums could have a material impact on our operations. 19 Table of Contents The potential exists for additional federal or state laws and regulations, or changes in policy, affecting lending and funding practices and liquidity standards.
Any change in these regulations and oversight, whether in the form of regulatory policy, new regulations or legislation or additional deposit insurance premiums could have a material impact on our operations. The potential exists for additional federal or state laws and regulations, or changes in policy, affecting lending and funding practices and liquidity standards.
We generate revenues primarily from gains on the sale of mortgage loans to investors, and from the amortization of deferred mortgage servicing rights. We recognized noninterest income of $2.4 million on mortgage banking activities during the year ended December 31, 2023. We also earn interest on loans held for sale while awaiting delivery to our investors.
We generate revenues primarily from gains on the sale of mortgage loans to investors, and from the amortization of deferred mortgage servicing rights. We recognized noninterest income of $2 million on mortgage banking activities during the year ended December 31, 2024. We also earn interest on loans held for sale while awaiting delivery to our investors.
Loans that were acquired as part of our acquisitions of other depository institutions were not underwritten or originated in accordance with our credit standards, including environmental matters, and we did not have long-standing relationships with many of these borrowers at the time of acquisition.
Loans that were acquired as part of our acquisitions of other depository institutions, such as Penns Woods, were not underwritten or originated in accordance with our credit standards, including environmental matters, and we did not have long-standing relationships with many of these borrowers at the time of acquisition.
A number of factors or combinations of factors could require us to conclude in one or more future reporting periods that an unrealized loss that exists with respect to these and ot her securities constitutes a credit related impairment, which could result in material losses to us.
A number of factors or combinations of factors could require us to conclude in one or more future reporting periods that an unrealized loss that exists with respect to these and other securities constitutes a credit related impairment, which could result in material losses to us.
Risks Related to our Business Strategy Acquisitions may disrupt our business and dilute stockholder value. We regularly evaluate merger and acquisition opportunities with other financial institutions and financial services companies. As a result, negotiations may take place and future mergers or acquisitions involving cash, debt, or equity securities may occur at any time.
Risks Related to our Business Strategy Acquisitions may disrupt our business and dilute stockholder value. 26 Table of Contents We regularly evaluate merger and acquisition opportunities with other financial institutions and financial services companies. As a result, negotiations may take place and future mergers or acquisitions involving cash, debt, or equity securities may occur at any time.
Those borrowers might not be able to repay their loans, and the collateral for such loans may decline significantly in value. 27 Table of Contents Risks Related to Accounting Matters If our intangible assets, including goodwill, are either partially or fully impaired in the future, it would decrease earnings.
Those borrowers might not be able to repay their loans, and the collateral for such loans may decline significantly in value. Risks Related to Accounting Matters If our intangible assets, including goodwill, are either partially or fully impaired in the future, it would decrease earnings.
If our government banking deposits were lost within a short period of time, this could negatively impact our liquidity and earnings. As of December 31, 2023, we held $602.3 million of deposits from municipalities throughout Pennsylvania, New York, Ohio, and Indiana. These deposits may be more volatile than other deposits.
If our government banking deposits were lost within a short period of time, this could negatively impact our liquidity and earnings. As of December 31, 2024, we held $618 million of deposits from municipalities throughout Pennsylvania, New York, Ohio, and Indiana. These deposits may be more volatile than other deposits.
We compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, fintech companies, mutual funds, insurance companies, and brokerage and investment banking firms operating locally and elsewhere.
We compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, fintech companies, money market funds and other mutual funds, insurance companies, and brokerage and investment banking firms operating locally and elsewhere.
A successful regulatory challenge to an institution’s performance under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including the required payment of damages and civil money penalties, injunctive relief, imposition of restrictions on mergers and acquisitions activity and restrictions on expansion.
A successful regulatory challenge to an institution’s performance under the CRA or fair lending laws and regulations could result in a wide variety of sanctions, including the required payment of damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on expansion and restrictions on entering new business lines.
In addition, the fair values of securities could decline if the overall economy and the financial condition of some of the issuers deteriorates and there remains limited liquidity for these securities. During the year ended December 31, 2023, we incurred other comprehensive gains of $7.9 million related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio.
In addition, the fair values of securities could decline if the overall economy and the financial condition of some of the issuers deteriorates and there remains limited liquidity for these securities. During the year ended December 31, 2024, we incurred other comprehensive losses of $6 million related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio.
In addition, our articles of incorporation and bylaws restrict who may call special meetings of stockholders and how directors may 29 Table of Contents be removed from office.
In addition, our articles of incorporation and bylaws restrict who may call special meetings of stockholders and how directors may be removed from office.
Based on these factors, we have a concentration in multi-family and commercial real estate lending, as such loans represent 356% of total bank capital as of December 31, 2023.
Based on these factors, we have a concentration in multi-family and commercial real estate lending, as such loans represent 357% of total bank capital as of December 31, 2024.
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Balance Sheet Analysis-Securities” for a discussion of our securities portfolio and the unrealized losses related to the portfolio, as well as the “Marketable Securities” and “Disclosures about Fair Value of Financial Instruments” footnotes to the audited financial statements. Our exposure to municipalities may lead to operating losses.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Balance Sheet Analysis—Securities” for a discussion of our securities portfolio and the unrealized losses related to the portfolio, as well as the “Marketable Securities” and “Disclosures about Fair Value of Financial Instruments” footnotes to the audited financial statements. 31 Table of Contents Our exposure to municipalities may lead to operating losses.
Implementation of changes to asset risk weightings for risk-based capital calculations, items included or deducted in calculating regulatory capital and/or additional capital conservation buffers could result in management modifying its business strategy, and could limit our ability to make distributions, including paying out dividends or buying back shares.
Changes to applicable capital requirements, including to asset risk weightings for risk-based capital calculations, items included or deducted in calculating regulatory capital and/or capital buffers, could result in management modifying its business strategy, and could limit our ability to make distributions, including paying out dividends or buying back shares.
We could become subject to more stringent capital requirements, which could adversely impact our return on equity, require us to raise additional capital, or constrain us from paying dividends or repurchasing shares. Federal regulations establish minimum capital requirements for insured depository institutions, including minimum risk-based capital and leverage ratios, and define “capital” for calculating these ratios.
We could become subject to more stringent capital requirements, which could adversely impact our return on equity, require us to raise additional capital, or constrain us from paying dividends or repurchasing shares. Federal regulations establish minimum capital requirements for bank holding companies and insured depository institutions, including minimum risk-based capital and leverage ratios.
During the year ended December 31, 2023, we incurred other comprehensive gains of $7.9 million related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio. The current level of, or any increases in market interest rates may reduce our mortgage banking income.
During the year ended December 31, 2024, we incurred other comprehensive loss of $6 million related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio. The current level of, or any increases in market interest rates may reduce our mortgage banking income.
Accordingly, we may not be able to raise additional capital, if needed, with favorable terms. If we cannot raise additional capital when needed, our ability to further expand our operations through internal growth and acquisitions could be materially impaired. New lines of business or new products and services may subject us to additional risks.
If we cannot raise additional capital when needed, our ability to further expand our operations through internal growth and acquisitions could be materially impaired. New lines of business or new products and services may subject us to additional risks.
The Federal Reserve Board decreased benchmark interest rates significantly, to near zero, in response to the COVID-19 pandemic. Beginning in 2022, the Federal Reserve Board reversed its policy of near zero interest rates given its concerns over inflation. Market interest rates have risen significantly in response to the Federal Reserve Board’s rate increases.
Beginning in 2022, the Federal Reserve Board reversed its policy of near zero interest rates given its concerns over inflation. Market interest rates have risen significantly in response to the Federal Reserve Board’s rate increases.
The level of our commercial real estate loan portfolio may subject us to additional regulatory scrutiny. 18 Table of Contents The FDIC and the other federal bank regulatory agencies have promulgated joint guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending.
The level of our commercial real estate loan portfolio may subject us to additional regulatory scrutiny. 20 Table of Contents The FDIC and the other federal banking regulatory agencies have jointly promulgated the CRE Lending Guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending.
Changes in interest rates also affect the current fair value of our interest-earning investment securities portfolio. Generally, the value of securities moves inversely with changes in interest rates. At December 31, 2023, the fair value of our investment and mortgage-backed securities portfolio totaled $1.743 billion. Net unrealized losses on these securities totaled $312.0 million at December 31, 2023.
Changes in interest rates also affect the current fair value of our interest-earning investment securities portfolio. Generally, the value of securities moves inversely with changes in interest rates. At December 31, 2024, the fair value of our investment and mortgage-backed securities portfolio totaled $1.7 billion. Net unrealized losses on these securities totaled $282 million at December 31, 2024.
We are a community bank and our ability to maintain our reputation is critical to the success of our business and the failure to do so may materially adversely affect our performance. We are a community bank, and our reputation is one of the most valuable components of our business.
Our ability to maintain our reputation is critical to the success of our business and the failure to do so may materially adversely affect our performance. Our reputation is one of the most valuable components of our business.
At December 31, 2023, 38% of our loan portfolio was secured by properties located in Pennsylvania, and 12% of our loan portfolio was secured by properties located in New York, with a large portion of the rest of our loans secured by real estate located in Ohio and Indiana.
At December 31, 2024, 36% of our loan portfolio was secured by properties located in Pennsylvania, and 16% of our loan portfolio was secured by properties located in New York, with a large portion of the rest of our loans secured by real estate located in Ohio and Indiana.
Furthermore, management of the Company has both an Enterprise Risk Management Committee and an Information Technology Steering Committee (ITSC), both of which are comprised of the most senior members of management, including the Chief Executive Officer, Chief Information Officer, and Chief Operating Officer.
Furthermore, management of the Company has both an Enterprise Risk Management Committee and an Information Technology Steering 29 Table of Contents Committee (“ITSC”), both of which are comprised of the most senior members of management, including the Chief Executive Officer, Chief Information Officer (“CIO”), and Chief Operating Officer.
These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the ability to impose restrictions on Northwest Bank’s operations, reclassify assets, determine the adequacy of Northwest Bank’s allowance for credit losses and determine the level of deposit insurance premiums assessed. The laws and regulations applicable to us are subject to frequent change and interpretations.
These regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the ability to impose restrictions on Northwest Bank’s operations, reclassify assets, determine the adequacy of Northwest Bank’s allowance for credit losses and determine the level of deposit insurance premiums assessed.
Failure to comply with these regulations could result in fines or sanctions or affect our ability to pursue further acquisition opportunities. During the last year, several banking institutions have received large fines for non-compliance with these laws and regulations.
Failure to comply with the Bank Secrecy, as amended, and its implementing regulations could result in fines or sanctions or affect our ability to pursue further acquisition opportunities. During the last year, several banking institutions have received large fines for non-compliance with the BSA, as amended, and its implementing regulations.
Our municipal bond portfolio may be impacted by the effects of economic stress on state and local governments. At December 31, 2023, we had $85.8 million invested in debt obligations of states, municipalities and political subdivisions (collectively referred to as our municipal bond portfolio). We also had $194.3 million of loans outstanding to municipalities and political subdivisions.
Our municipal bond portfolio may be impacte d by the effects of economic stress on state and local governments. At December 31, 2024, we had $69 million invested in debt obligations of states, municipalities and political subdivisions (collectively referred to as our municipal bond portfolio). We also had $204 million of loans outstanding to municipalities and political subdivisions.
Despite the defensive measures we take to manage our internal technological and operational infrastructure, threats may originate externally from third parties such as foreign governments, organized crime and other hackers, and outsource or infrastructure-support providers and application developers, or may originate internally from within our organization.
Despite the defensive measures we take designed to manage our internal technological and operational infrastructure, threats may originate externally from foreign governments, state-sponsored actors, organized crime, terrorists, hackers, and other third parties or internally from within our organization, including our personnel or third-party providers (including infrastructure-support providers and application developers).
We, and other participants in the financial services industry upon whom we rely to operate, have been and may in the future become involved in legal and regulatory proceedings.
Legal and regulatory proceedings and related matters could adversely affect us or the financial services industry in general. We, and other participants in the financial services industry upon whom we rely to operate, have been and may in the future become involved in legal and regulatory proceedings.
In addition, our credit risk may be exacerbated when our collateral cannot be foreclosed upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure due.
Many of these transactions expose us to credit risk in the event of a default by a counterparty or client. In addition, our credit risk may be exacerbated when our collateral cannot be foreclosed upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure due.
Our inability to tailor our retail delivery model to respond to consumer preferences in banking may negatively affect earnings. We have expanded our market presence through acquisitions and growth. Our branch network continues to be a very significant source of new business generation, however, consumers continue to migrate much of their routine banking to self-service channels.
We have expanded our market presence through acquisitions and growth. Our branch network continues to be a very significant source of new business generation, however, consumers continue to migrate much of their routine banking to self-service channels.
The financial services sector represents a significant concentration within our investment portfolio. Within our investment portfolio, we have a significant amount of corporate debt and mortgage-backed securities issued by companies in the financial services sector.
The financial services sector represents a significant concentration within our investment portfolio. Within our investment portfolio, we have a significant amount of corporate debt and mortgage-backed securities issued by companies in the financial services sector. Given current market conditions, this sector has an enhanced level of credit risk.
Unrealized gains and losses on certain “available-for-sale” securities holdings are to be included for purposes of calculating regulatory capital requirements unless a one-time opt-out was exercised. The Bank exercised this one-time opt-out option.
Unrealized gains and losses on certain “available-for-sale” securities holdings are to be included for purposes of calculating regulatory capital requirements unless a one-time opt-out was exercised, which we exercised. The regulations also establish a “capital conservation buffer” of 2.5%.
We are required by federal regulatory authorities to maintain adequate levels of capital to support our operations. We anticipate that we will have sufficient capital resources to satisfy our capital requirements for the foreseeable future. We may at some 24 Table of Contents point, however, need to raise additional capital to support our continued growth.
Our continued pace of growth may require us to raise additional capital during unfavorable market conditions. We are required by federal regulatory authorities to maintain adequate levels of capital to support our operations. We anticipate that we will have sufficient capital resources to satisfy our capital requirements for the foreseeable future.
Risks Related to Economic Conditions A worsening of economic conditions in our market area could reduce demand for our products and services and/or result in increases in our level of non-performing loans, which could adversely affect our operations, financial condition and earnings. 22 Table of Contents Our performance is significantly impacted by the general economic conditions in our primary markets in Pennsylvania, New York, Ohio, and Indiana.
Risks Related to Economic Conditions 24 Table of Contents A worsening of economic conditions in our market area could reduce demand for our products and services and/or result in increases in our level of non-performing loans, which could adversely affect our operations, financial condition and earnings.
We would seek acquisition partners that offer us either significant market presence or the potential to expand our market footprint and improve profitability through economies of scale or expanded services.
We would seek acquisition partners that offer us either significant market presence or the potential to expand our market footprint and improve profitability through economies of scale or expanded services. For example, on December 16, 2024, we entered into the Merger Agreement with Penns Woods.
Our efforts to take these risks into account in making lending and other decisions, including by increasing our business with climate-friendly companies, may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior.
Our efforts to take these risks into account in making lending and other decisions may not be effective in protecting us from the negative impact of new laws and regulations or changes in consumer or business behavior. Further, there is increased scrutiny of climate change-related policies, goals and disclosures.
A federal government shutdown could also result in reduced income for government employees or employees of companies that engage in business with the federal government, which could result in greater loan delinquencies, increases in our nonperforming, criticized and classified assets and a decline in demand for our products and services.
A federal government shutdown could also result in reduced income for government employees or employees of companies that engage in business with the federal government, which could result in greater loan delinquencies, increases in our nonperforming, criticized and classified assets and a decline in demand for our products and services. 33 Table of Contents Our inability to tailor our retail delivery model to respond to consumer preferences in banking may negatively affect earnings.
At December 31, 2023, Northwest Bank has met all of these requirements, including the full 2.5% capital conservation buffer. The application of more stringent capital requirements could, among other things, result in lower returns on equity, require the raising of additional capital, and result in regulatory actions if we were to be unable to comply with such requirements.
The application of more stringent capital requirements could, among other things, result in lower returns on equity, require the raising of additional capital, and result in regulatory actions if we were to be unable to comply with such requirements.
Given current market conditions, this sector has an enhanced level of credit risk. 28 Table of Contents Potential downgrades of U.S. government securities by one or more of the credit ratings agencies could have a material adverse effect on our operations, earnings and financial condition.
Potential downgrades of U.S. government securities by one or more of the credit ratings agencies could have a material adverse effect on our operations, earnings and financial condition.
Our heavy reliance on information technology systems exposes us to operational risks, which include the risk of malfeasance by employees or persons outside of our organization, errors relating to transaction processing and technology, systems failures or interruptions, failures to properly implement systems upgrades, breaches of our internal control systems and compliance requirements, and business continuation and disaster recovery.
Our heavy reliance on information technology systems exposes us to operational risks, which include the risk of malfeasance by personnel or persons outside of our organization, denial of service attacks, computer viruses, worms, ransomware, social engineering (including phishing attacks), service outages, software bugs or defects, server failures, errors relating to transaction processing and technology, failures to properly implement systems upgrades, breaches of our internal control systems and compliance requirements, business continuation and disaster recovery issues and other system failures, interruptions, or cybersecurity breaches.
Acquisitions may not enhance our cash flows, business, financial condition, results of operations or prospects as expected and such acquisitions may have an adverse effect on our results of operations, particularly during periods in which the acquisitions are being integrated into our operations. Our continued pace of growth may require us to raise additional capital during unfavorable market conditions.
Our merger with Penns Woods and other mergers and acquisitions may not enhance our cash flows, business, financial condition, results of operations or prospects as expected and such acquisitions may have an adverse effect on our results of operations, particularly during periods in which the acquisitions are being integrated into our operations.
In addition, deflationary pressures could have a significant negative effect on our borrowers, especially our business borrowers, and the values of underlying collateral securing loans, which could negatively affect our financial performance. Inflation can have an adverse impact on our business and on our customers.
In addition, deflationary pressures could have a significant negative effect on our borrowers, especially our business borrowers, and the values of underlying collateral securing loans, which could negatively affect our financial performance. The monetary policies of the Federal Reserve Board could adversely affect our business, financial condition and results of operations.
We may experience significant credit losses, which may have a material adverse effect on operating results. We make various assumptions and judgments about the collectability of the loan portfolio, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of loans.
We make various assumptions and judgments about the collectability of the loan portfolio, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of loans.
Moreover, bank regulatory agencies have been active in responding to concerns and trends identified in examinations, and have issued many formal enforcement orders requiring capital ratios in excess of regulatory requirements.
Moreover, bank regulatory agencies have been active in responding to concerns and trends identified in examinations, and have issued many formal enforcement orders requiring capital ratios in excess of regulatory requirements. In addition, new laws and regulations may increase our costs of regulatory compliance and of doing business, and otherwise affect our operations.
Recent economic conditions and heightened legislative and regulatory scrutiny of the financial services industry, among other developments, have increased our level of risk. Accordingly, we could suffer losses as a result of our failure to properly anticipate and manage these risks. Our board of directors relies to a large degree on management and outside consultants in overseeing cybersecurity risk management.
Accordingly, we could suffer losses as a result of our failure to properly anticipate and manage these risks. Our board of directors relies to a large degree on management and outside consultants in overseeing cybersecurity risk management.
In addition, we outsource a significant amount of our data processing to certain third-party providers. If these third-party providers encounter difficulties, or if we have difficulty communicating with them, our ability to adequately process and account for transactions could be affected, and our business operations could be adversely affected.
If these third-party providers encounter difficulties or experience system failures, interruptions, or cybersecurity breaches, or if we have difficulty communicating with them, our ability to adequately process and account for transactions could be affected, and our business operations could be adversely affected.
In addition, we could face reductions in creditworthiness on the part of some customers or in the value of asset securing loans.
We and our customers may face cost increases, asset value reductions, operating process changes and other issues. In addition, we could face reductions in creditworthiness on the part of some customers or in the value of asset securing loans.
We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks and other institutional customers. Many of these transactions expose us to credit risk in the event of a default by a counterparty or client.
Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties, and routinely execute transactions with counterparties in the financial services industry, including commercial banks, the FHLB, brokers and dealers, investment banks and other institutional customers.
There could be substantial cost and management diversion in such litigation and proceedings, and any adverse determination could have a materially adverse effect on our business, brand or image, or our financial condition and results of our operations. Monetary policies and regulations of the Federal Reserve Board could adversely affect our business, financial condition and results of operations.
There could be substantial cost and management diversion in such litigation and proceedings, and any adverse determination could have a materially adverse effect on our business, brand or image, or our financial condition and results of our operations. Data privacy and cybersecurity are areas of heightened legislative and regulatory scrutiny.
The directors of the Company do not have significant experience in cybersecurity risk management in other business entities comparable to the Company and rely on members of management, including, but not limited to, the Chief Information Security Officer, Chief Information Security Officer, Chief Technology Officer and Chief Data Officer, for cybersecurity guidance. 26 Table of Contents Our business may be adversely affected by an increasing prevalence of fraud and other financial crimes.
The directors of the Company do not have significant experience in cybersecurity risk management in other business entities comparable to the Company and rely on members of management, including, but not limited to, the CISO, CIO, Chief Operational Risk Management Officer, Chief Technology Officer and Chief Data Officer, for cybersecurity guidance.
The purpose of the guidance is to guide banks in developing risk management practices and capital levels commensurate with the level and nature of real estate concentrations. The guidance states that management should employ heightened risk management practices including board and management oversight and strategic planning, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing.
The CRE Lending Guidance states that management should employ heightened risk management practices including board and management oversight and strategic planning, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. Inflation generally increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our non-interest expenses.
Inflation generally increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our non-interest expenses.
If we are unable to meet the increased expectations of our customers and regulatory agencies, it may have a material adverse effect on our financial condition and results of operations. A lack of liquidity could adversely affect the Company’s financial condition and results of operations. Liquidity is essential to the Company’s business.
If we are unable to meet the increased expectations of our customers and regulatory agencies, it may have a material adverse effect on our financial condition and results of operations. The Company’s ability to engage in routine funding transactions could be adversely affected by the actions and commercial soundness of other financial institutions.
The Company relies on its ability to generate deposits and effectively manage the repayment of its liabilities to ensure that there is adequate liquidity to fund operations. An inability to raise funds through deposits, borrowings, the sale and maturities of loans and securities and other sources could have a substantial negative effect on liquidity.
An inability to raise funds through deposits, borrowings, the sale and maturities of loans and securities and other sources could have a substantial negative effect on liquidity. The Company’s most important source of funds is its deposits.
If we raise capital through the issuance of additional shares of our common stock or other securities, it would dilute the ownership interests of existing stockholders and may dilute the per share book value of our common stock. New investors may also have rights, preferences and privileges senior to our current stockholders, which may adversely impact our current stockholders.
We may at some point, however, need to raise additional capital to support our continued growth. If we raise capital through the issuance of additional shares of our common stock or other securities, it would dilute the ownership interests of existing stockholders and may dilute the per share book value of our common stock.
Deposit balances can decrease when customers perceive alternative investments as providing a better risk adjusted return, which are strongly influenced by such external factors as the direction of interest rates, local and national economic conditions and the availability and attractiveness of alternative investments. 23 Table of Contents Further, the demand for deposits may be reduced due to a variety of factors such as negative trends in the banking sector, the level of and/or composition of our uninsured deposits, demographic patterns, changes in customer preferences, reductions in consumers’ disposable income, the monetary policy of the Federal Reserve or regulatory actions that decrease customer access to particular products.
Further, the demand for deposits may be reduced due to a variety of factors such as negative trends in the banking sector, the level of and/or composition of our uninsured deposits, demographic patterns, changes in customer preferences, reductions in consumers’ disposable income, the monetary policy of the Federal Reserve Board or regulatory actions that decrease customer access to particular products.
In addition, any compromise of our systems could deter customers from using our products and services. Although we rely on security systems to provide security and authentication necessary to effect the secure transmission of data, these precautions may not protect our systems from compromises or breaches of security.
Although we rely on information technology systems designed to provide security and authentication necessary to effect the secure transmission of data, these precautions may not protect our information technology systems from system failures, interruptions, or cybersecurity breaches.
In addition, new laws and regulations may increase our costs of regulatory compliance and of doing business, and otherwise affect our operations. New laws and regulations may significantly affect the markets in which we do business, the markets for and value of our loans and investments, the fees we can charge and our ongoing operations, costs and profitability.
New laws and regulations may significantly affect the markets in which we do business, the markets for and value of our loans and investments, the fees we can charge and our ongoing operations, costs and profitability. Non-compliance with the Bank Secrecy Act, as amended, and its implementing regulations, or other laws and regulations could result in fines or sanctions.
Information technology systems are critical to our business. We use various technology systems to manage our customer relationships, general ledger, deposits, and loans. We have established policies and procedures to prevent or limit the impact of system failures, interruptions, and security breaches, but such events may still occur or may not be adequately addressed if they do occur.
We have established policies and procedures to prevent or limit the impact of system failures, interruptions, and cybersecurity breaches, but such events may still occur or may not be adequately addressed if they do occur. In addition, any compromise of our information technology systems could deter customers from using our products and services.
Also, the need to raise additional capital may force our management to spend more time in managerial and financing-related activities than in operational activities. Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside of our control, and on our financial performance.
Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside of our control, and on our financial performance. Accordingly, we may not be able to raise additional capital, if needed, with favorable terms.
If the allowance for credit losses is not sufficient to cover actual credit losses, our earnings could decrease. Our customers may not repay their loans according to the original terms, and the collateral, if any, securing the payment of these loans may be insufficient to pay any remaining loan balance.
Our customers may not repay their loans according to the original terms, and the collateral, if any, securing the payment of these loans may be insufficient to pay any remaining loan balance. We may experience significant credit losses, which may have a material adverse effect on operating results.
While we strive to control the impact of changes in interest rates on our net income, our results of operations and financial condition could be significantly affected by changes in interest rates.
Changes in interest rates could adversely affect our results of operations and financial condition. Our results of operations and financial condition could be significantly affected by changes in interest rates.
An institution will be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations will establish a maximum percentage of eligible retained income that can be utilized for such actions.
An institution will be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the 2.5% capital conservation buffer.
Risks Related to Laws and Regulations Changes in laws and regulations and the cost of compliance with new laws and regulations may adversely affect our operations and our income. The Company and Northwest Bank are subject to extensive regulation, supervision and examination by the Federal Reserve Board, the Department of Banking and the FDIC.
Risks Related to Laws and Regulations Changes in laws and regulations and the cost of compliance with new laws and regulations may adversely affect our operations and our income.
Any of these events could have a material adverse effect on our financial condition and results of operations. Our risk management framework may not be effective in mitigating risk and reducing the potential for significant losses. Our risk management framework is designed to minimize risk and loss to us.
Any of these events could have a material adverse effect on our financial condition and results of operations. In addition, any insurance coverage we may have may not be adequate to compensate for losses from any of the foregoing.
Our loans to businesses and individuals and our deposit relationships and related transactions are subject to exposure to the risk of loss due to fraud and other financial crimes. Nationally, reported incidents of fraud and other financial crimes have increased. We have also experienced losses due to apparent fraud and other financial crimes.
Our business may be adversely affected by an increasing prevalence of fraud and other financial crimes. Our loans to businesses and individuals and our deposit relationships and related transactions are subject to exposure to the risk of loss due to fraud and other financial crimes.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeTo date, the Company has not, to its knowledge, experienced an incident materially affecting or reasonably likely to materially affect the Company. To prepare and respond to incidents, the Company has implemented a multi-layered cybersecurity program that is intended to comply with Gramm-Leach-Bliley Act (GLBA) 12 CFR 364, Appendix B, integrating people, technology, and processes.
Biggest changeIn an effort to prepare for and respond to system failures, interruptions or cybersecurity breaches, the Company has implemented a multi-layered cybersecurity program that integrates people, technology, and processes and is intended to comply with the information security standards established pursuant to the Gramm-Leach-Bliley Act (GLBA) 12 CFR 364, Appendix B.
ITEM 1C. CYBERSECURITY Risk Management and Strategy Our risk management program is designed to identify, assess, and mitigate risks across various aspects of our company, including credit, market, treasury, operational, compliance, model and data, and reputational.
ITEM 1C. CYBERSECURITY Risk Management and Strategy Our risk management program is designed to identify, assess, and mitigate risks across various aspects of the Company, including credit, market, treasury, operational, compliance, model and data, and reputational risks.
Our objective for managing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts to penetrate, disrupt or misuse our systems or information.
Our objective for managing cybersecurity risk is to avoid or minimize the impacts of external threat events or other efforts that penetrate, disrupt or misuse our systems or information.
The Third-Party Risk Management Policy applies to any business arrangement between the Company and another individual or entity, by contract or otherwise, in compliance with the Interagency Guidance on Third-Party Relationships: Risk Management. The Third-Party Risk Management Program is audited periodically in accordance with our Board approved Internal Audit plan.
The third-party risk management policy applies to any business arrangement between the Company and another individual or entity, by contract or otherwise, in alignment with the Interagency Guidance on Third-Party Relationships: Risk Management. The third-party risk management program is audited periodically in accordance with our Board approved internal audit plan.
This includes employee training, the use of innovative technologies, and the implementation of policies and procedures in the areas of Information Security, Data Governance, Business Continuity and Disaster Recovery, Privacy, Third-Party Risk Management, and Incident Response.
This cybersecurity program includes employee training, the use of innovative technologies, and the implementation of policies and procedures in the areas of information security, data governance, business continuity and disaster recovery, privacy, third-party risk management, and incident response.
The cybersecurity program is built upon a foundation of advanced security technology, our internal employee team, and operations based on industry best practices recommendations from the National Institute of Standards and Technology (NIST) Cybersecurity Framework, Federal Financial Institutions Examination Council (FFIEC) Guidelines, and Center for Internet Security (CIS) Benchmarks.
The cybersecurity program is built upon a foundation of advanced security technology, our internal employee team, and operations based on industry best practice and recommendations from the National Institute of Standards and Technology (NIST) Cybersecurity Maturity Framework, Federal Financial Institutions Examination Council (FFIEC) Guidelines, and Center for Internet Security (CIS) Benchmarks.
We have established processes and systems designed to mitigate cyber risk, including regular and on-going education and training for employees, preparedness simulations and tabletop exercises, and recovery and resilience tests. We engage in regular assessments of our infrastructure, software systems, and network architecture, using internal cybersecurity experts and third-party specialists.
We have established processes and systems designed to mitigate cybersecurity risk, including regular and ongoing education and training for employees, preparedness simulations and tabletop exercises, and recovery and resilience tests. We engage in regular assessments of our infrastructure, software systems, and network architecture, using internal cybersecurity experts and third-party specialists.
Integral elements of the Plans related to the Company’s response to security vulnerabilities include the following. • Identifying the appropriate team and any appropriate sub-teams to address specific information and/or cyber security incidents, or categories of information and/or cyber security incidents. • Coordinating Incident or Crisis Management activities, including developing, maintaining, and following appropriate procedures to respond to and document identified information and/or cyber security incidents. • Conducting post-incident reviews to gather feedback on information and/or cyber security incident response procedures and address any identified gaps in security measures. • Providing training and conducting periodic exercises to promote employee and stakeholder preparedness and awareness of the Plans. • Reviewing the Plans at least annually, or whenever there is a material change in the Company’s business practices that may reasonably affect its cyber incident response procedures.
Integral elements of the Plans related to the Company’s response to cybersecurity vulnerabilities include the following: • Identifying the appropriate team and any appropriate sub-teams to address specific system failures, interruptions, or cybersecurity breaches, or categories thereof. • Coordinating incident or crisis management activities, including developing, maintaining, and following appropriate procedures to respond to and document identified system failures, interruptions, or cybersecurity breaches. • Conducting post-incident reviews to gather feedback on incident response procedures and address any identified gaps in cybersecurity measures. • Providing training and conducting periodic exercises to promote employee and stakeholder preparedness and awareness of the Plans. • Reviewing the Plans at least annually, or whenever there is a material change in the Company’s business practices that may reasonably affect its incident response procedures.
The responsibilities of this department include cybersecurity risk assessment, defense operations, cyber incident response, vulnerability assessment, threat intelligence, identity access governance, and the evaluation of third-party risk management and business resilience as it relates to the cybersecurity program. The foregoing responsibilities are covered on a day-to-day basis by our Chief Information Security Officer and their team.
The responsibilities of this department include privacy, resiliency, cybersecurity risk assessment, defense operations, incident response, vulnerability assessment, threat intelligence, identity access governance, and the evaluation of third-party risk management and business resilience as it relates to the cybersecurity program. The foregoing responsibilities are covered on a day-to-day basis by our CISO and their team.
The Plans are coordinated through the Business Resiliency Manager and Major Incident Manager, who 31 Table of Contents ultimately report to the Chief Information Officer, and key members of management are embedded into the Plans by their design. The Plans facilitate coordination across multiple parts of our organization and are evaluated at least annually.
The Plans are coordinated through the Business Resiliency Manager and Major Incident Manager, who ultimately report to the CISO and the CIO respectively, and key 35 Table of Contents members of management who are embedded into the Plans by their design. The Plans facilitate coordination across multiple parts of our organization and are evaluated at least annually.
These committees provide oversight and governance of the technology program and the information security program and are chaired by the Chief Information Officer and Chief Operational Risk Management Officer, respectively, and include the Chief Information Security Officer and other key departmental managers from throughout the entire company.
These committees provide oversight and governance of the cybersecurity program and are chaired by the CIO and Chief Operational Risk Management Officer, respectively, and include the CISO and other key departmental managers from throughout the Company.
The Chief Information Security Officer reports summaries of key issues, including significant cybersecurity incidents, discussed at committee meetings and the actions taken to the Innovation and Technology Committee of our board of directors on a quarterly basis (or more frequently as may be required by the Incident Response Plan).
The CISO reports summaries of key issues, including significant system failures, interruptions or cybersecurity breaches, discussed at committee meetings and the actions taken to the Innovation and Technology Committee of our Board of Directors on a quarterly basis (or more frequently as may be required by the incident response plan).
Any material findings related to the risk assessment, risk management and control decisions, service provider arrangements, results of testing, security breaches or violations are discussed as are management’s responses and any recommendations for program changes.
Any material findings related to the risk assessment, risk management and control decisions, service provider arrangements, results of testing, system failures, interruptions or cybersecurity breaches are discussed as are management’s responses and any recommendations for program changes. 36 Table of Contents
To mitigate the operational, informational and other risks associated with the use of vendors, the Company maintains a Third-Party Risk Management Program, which is implemented through a Third-Party Risk Management Policy and includes a detailed onboarding process and periodic reviews of vendors with access to sensitive Company data.
To mitigate the cyber, privacy and other o perational risks associated with the use of third-party vendors, the Company maintains a third-party risk management program, which is implemented through a third-party risk management policy and includes a detailed onboarding process and periodic reviews of third-party vendors with access to confidential, personal, sensitive and propriety information.
The information security program is periodically reviewed by such personnel with the goal of addressing changing threats and conditions. We also employ a variety of preventative and detective tools designed to monitor, block, and provide alerts regarding suspicious activity, as well as to report on suspected advanced persistent threats.
The cybersecurity program is periodically reviewed by such personnel with the goal of addressing changing threats and conditions. We also employ a variety of preventative and monitoring tools designed to monitor, block, and provide alerts regarding suspicious activity including suspected.
Cybersecurity is a critical component of this program, given the increasing reliance on technology and potential for a cybersecurity incident to occur, which could disrupt business operations or compromise sensitive data.
Cybersecurity is a critical component of this program, given the increasing reliance on technology and potential for system failure, interruption, or a cybersecurity breach to occur, which could disrupt business operations or compromise confidential, personal, sensitive or proprietary information.
Our Chief Information Security Officer (“CISO”) is primarily responsible for this cybersecurity component and is a key member of the organization, reporting directly to the Chief Information Officer and, as discussed below, periodically to the Innovation and Technology Committee of our board of directors.
Our CISO is primarily responsible for this cybersecurity component and is a key member of the organization, reporting directly to the CIO (who then reports directly to our Chief Executive Officer) and, as discussed below, periodically to the Innovation and Technology Committee, Enterprise Risk Committee and to our Board of Directors.
We maintain both an Incident Response Plan and a Crisis Management Plan (the “Plans”) that provide a documented framework for responding to actual or potential cybersecurity incidents, including timely notification of and escalation to the appropriate Board-approved management committees, as discussed further below, and to the Innovation and Technology Committee of our board of directors.
Management determines the scope and objectives of the penetration analysis. We maintain both an incident response plan and a crisis management plan (the “Plans”) that provide a documented framework for responding to actual or potential system failures, interruptions, or cybersecurity breaches, including timely notification of and escalation to the appropriate Board-approved management committees as discussed further below.
We also actively monitor our email gateways for malicious phishing email campaigns and monitor remote connections as a significant portion of our workforce has the option to work remotely. The Company relies on third-party vendor solutions to support its operations. Many of these vendors, especially in the financial services industry, have access to sensitive and proprietary information.
We also actively monitor our email gateways for incoming and outgoing malicious emails and monitor remote connections as a significant portion of our workforce has the option to work remotely. The Company relies on third-party vendor solutions to support its operations.
For further discussion of risks from cybersecurity threats, see the section captioned “Risks Related to Operational Matters” in Item 1A. Risk Factors. Governance Our Chief Information Security Officer is accountable for managing our enterprise information security department and delivering our information security program.
Not withstanding our defensive measures and processes, the threats posed by system failures, interruptions, or cybersecurity breaches are severe. For further discussion of risks from cybersecurity threats, see the section captioned “Risks Related to Operational Matters” in Item 1A. Risk Factors. Governance. Our CISO is accountable for managing our enterprise cybersecurity department and delivering our cybersecurity program.
The Innovation and Technology Committee of our board of directors is responsible for overseeing our information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
Additionally, the Chief Operational Risk Management Officer reports summaries of key cybersecurity risks to the Risk Committee of our Board of Directors on a quarterly basis. The Innovation and Technology Committee of our Board of Directors is responsible for overseeing our cybersecurity program, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
The Innovation and Technology Committee and Risk Committee of our board of directors each provide a report of their activities to the full board of directors at each board meeting. 32 Table of Contents Lastly, at least annually, the CISO reports directly to the Board the overall status of the Information Security Program and the Company’s compliance with the Interagency Guidelines for Safeguarding Customer Information.
Lastly, at least annually, the CISO reports directly to our Board of Directors the overall status of the cybersecurity program and the Company’s compliance with the Interagency Guidelines for Safeguarding Customer Information.
Our Chief Information Security Officer and our Chief Information Officer provide quarterly reports to the Innovation and Technology Committee of our board of directors regarding the information security program and the technology program, key enterprise cybersecurity initiatives, and other matters relating to cybersecurity processes.
Our CISO and our CIO provide quarterly reports to the Innovation and Technology Committee regarding our cybersecurity program, key enterprise cybersecurity initiatives, and other matters relating to cybersecurity processes. The Innovation and Technology Committee reviews and approves our cybersecurity and technology budgets and strategies annually.
Our board of directors has established management committees including the Information Technology Steering Committee, which focuses on technology and business impact, and the Operational Risk Management Committee, which focuses on the identification, monitoring, assessment, and management of risk associated with our cyber and information security programs.
Our Board of Directors has established management committees including the Innovation and Technology Steering Committee (ITSC), which focuses on overseeing our information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks, and the Operational Risk Management Committee, which focuses on the identification, monitoring, assessment, and management of risk associated with our cybersecurity program.
The Innovation and Technology Committee of our board of directors reviews and approves our information security and technology budgets and strategies annually. Additionally, the Risk Committee of our board of directors reviews key metrics summarizing our cyber security risk profile on a quarterly basis.
Additionally, the Risk Committee of our Board of Directors reviews key metrics summarizing our cybersecurity risk profile on a quarterly basis. The Innovation and Technology Committee and Risk Committee each provide a report of their activities to our full Board of Directors at each Board meeting.
The Information Technology Steering Committee meets monthly and the Operational Risk Management Committee meets at least quarterly to provide oversight of the risk management strategy, standards, policies, practices, controls, and mitigation and prevention efforts employed to manage security risks.
The ITSC meets quarterly and the Operational Risk Management Committee meets at least quarterly to provide oversight of the risk management strategy, standards, policies, practices, controls, and mitigation and prevention efforts employed to manage cybersecurity risks. More frequent meetings occur from time to time in accordance with the incident response plan to facilitate timely informing and monitoring efforts.
Our Chief Information Security Officer and our Chief Information Officer, who reports directly to our Chief Executive Officer, along with key members of their teams, regularly collaborate with peer banks, industry groups, and policymakers to discuss cybersecurity trends and issues and identify best practices.
This consists of controls designed to govern, identify, protect, detect, respond and recover from system failures, interruptions, and cybersecurity breaches. Our CISO and our CIO, along with key members of their teams, regularly collaborate with peer banks, industry groups, and policymakers to discuss cybersecurity trends and issues and identify best practices.
We leverage internal and external auditors and independent external partners to periodically review our processes, systems, and controls, including with respect to our information security program, to assess their design and operating effectiveness and make recommendations to strengthen our information security and risk management programs.
We leverage internal and third-party auditors and independent third-party sources to periodically review our processes, systems, and controls related to our cybersecurity security program. This includes assessing control design and operating effectiveness and recommendations to strengthen our cybersecurity program.
The department consists of information security professionals with varying degrees of education and experience. Individuals within the department are generally subject to professional education and certification requirements.
The cybersecurity department consists of cybersecurity professionals with varying degrees of education and experience. Individuals within the cybersecurity department are generally subject to professional education and certification requirements. Our CISO has substantial relevant expertise and formal training in the areas of cybersecurity risk management, including 25 years of cybersecurity experience in the financial services, retail, insurance sectors.
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This consists of controls designed to identify, protect, detect, respond and recover from information and cyber security incidents.
Added
To date, the Company has not, to its knowledge, experienced an incident materially affecting or reasonably likely to materially affect the Company.
Removed
Management determines the scope and objectives of the penetration analysis.
Added
Many of these their-party vendors, especially in the financial services industry, have access to confidential, personal, sensitive and proprietary information.
Removed
Notwithstanding our defensive measures and processes, the threat posed by cyber-attacks is severe. Our internal systems, processes, and controls are designed to mitigate loss from cyber-attacks and, while we have experienced cybersecurity incidents in the past, to date, risks from cybersecurity threats have not materially affected our company.
Removed
Our Chief Information Security Officer has substantial relevant expertise and formal training in the areas of information security and cybersecurity risk management, including 20 years of cybersecurity experience, 12 of which was spent at the Company. Our Operational Risk Management group provides guidance, oversight, monitoring and challenge of the first line’s activities.
Removed
The second line of defense function is separated from the first line of defense function through organizational structure and ultimately reports directly to the Chief Risk Officer.
Removed
More frequent meetings occur from time to time in accordance with the Incident Response Plan to facilitate timely informing and monitoring efforts.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changePROPERTIES As of December 31, 2023, we conducted our business through our main office located in Warren, Pennsylvania, 77 other full-service offices and six free-standing drive-through locations throughout our market area in central and western Pennsylvania, 27 full-service offices and one free-standing drive-through location in western New York, 10 full-service offices and one free-standing drive-through location in eastern Ohio, and 20 full-service office locations in Indiana.
Biggest changePROPERTIES As of December 31, 2024, we conducted our business through our main office located in Warren, Pennsylvania, 74 other full-service offices and eight free-standing drive-up locations throughout our market area in central and western Pennsylvania, 27 full-service offices and one free-standing drive-up location in western New York, 10 full-service offices and one free-standing drive-up location in eastern Ohio, and 19 full-service offices and one free-standing drive-up location in Indiana.
At December 31, 2023, our premises and equipment had an aggregate net book value of approximately $138.8 million.
At December 31, 2024, our premises and equipment had an aggregate net book value of approximately $124 million.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed3 unchanged
Biggest changeNo assurance can be given that dividends will continue to be declared or, if declared, what the amount of dividends will be. See “Item 1. Business Supervision and Regulation — Holding Company Regulation — Source of Strength/Capital Distributions” for additional information regarding our ability to pay dividends.
Biggest changeNo assurance can be given that dividends will continue to be declared or, if declared, what the amount of dividends will be. See “Item 1. Business—Supervision and Regulation—Federal Bank Holding Company Regulation—Source of Strength Doctrine” and “Item 1. Business—Supervision and Regulation—Federal Bank Holding Company Regulation—Capital Distributions” for additional information regarding our ability to pay dividends.
There were no sales of unregistered securities during the quarter ended December 31, 2023. 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 expiration date.
There were no sales of unregistered securities during the quarter ended December 31, 2024. 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 year ended December 31, 2023, we did not repurchase any shares and there are a maximum of 2,261,130 remaining shares that can be purchased under the current repurchase program. 33 Table of Contents Stock Performance Graph The following stock performance graph compares (a) the cumulative total return on our common stock between December 31, 2018 and December 31, 2023, (b) the cumulative total return on stocks included in the Total Return Index for the NASDAQ Stock Market (US) over such period, and (c) the cumulative total return on stocks included in the NASDAQ Bank Index over such period.
During the year ended December 31, 2024, we did not repurchase any shares and there are a maximum of 2,261,130 remaining shares that can be purchased under the current repurchase program. 37 Table of Contents Stock Performance Graph The following stock performance graph compares (a) the cumulative total return on our common stock between December 31, 2019 and December 31, 2024, (b) the cumulative total return on stocks included in the Total Return Index for the NASDAQ Stock Market (US) over such period, and (c) the cumulative total return on stocks included in the NASDAQ Bank Index over such period.
As of February 20, 2024, we had 22 registered market makers, 9,433 stockholders of record (excluding the number of persons or entities holding stock in street name through various brokerage firms), and 127,112,705 shares outstanding.
As of February 18, 2025, we had 23 registered market makers, 10,243 stockholders of record (excluding the number of persons or entities holding stock in street name through various brokerage firms), and 127,514,857 shares outstanding.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Northwest Bancshares, Inc., the NASDAQ Composite Index, and the NASDAQ Bank Index At December 31, 2018 2019 2020 2021 2022 2023 Northwest Bancshares, Inc. 100.00 102.35 83.94 98.89 103.43 98.90 NASDAQ Composite 100.00 136.69 198.10 242.03 163.28 236.17 NASDAQ Bank 100.00 117.98 107.14 151.35 126.88 135.67 34 Table of Contents ITEM 6. [RESERVED]
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Northwest Bancshares, Inc., the NASDAQ Composite Index, and the NASDAQ Bank Index At December 31, 2019 2020 2021 2022 2023 2024 Northwest Bancshares, Inc. 100.00 82.01 96.62 101.06 96.63 108.85 NASDAQ Composite 100.00 144.92 177.06 119.45 172.77 223.87 NASDAQ Bank 100.00 90.81 128.28 107.54 114.99 141.59 38 Table of Contents ITEM 6. [RESERVED]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

107 edited+34 added−115 removed73 unchanged
Biggest changeFor the years ended December 31, 2023 2022 2021 Average balance Interest Average yield/cost (11) Average balance Interest Average yield/cost (11) Average balance Interest Average yield/cost (11) (Dollars in thousands) Interest-earning assets: Loans receivable (includes FTE adjustments of $2,477, $1,954, and $1,922, respectively) (1), (2), (3) $ 11,100,118 546,136 4.92 % $ 10,318,898 409,782 3.97 % $ 10,239,620 392,265 3.83 % Mortgage-backed securities (4) 1,822,375 32,886 1.80 % 1,968,528 30,804 1.56 % 1,704,006 21,463 1.26 % Investment securities (includes FTE adjustments of $704, $834, and $747, respectively) (4), (5) 357,436 6,312 1.77 % 381,518 6,671 1.75 % 350,806 5,848 1.67 % FHLB stock, at cost 39,467 2,868 7.27 % 17,065 730 4.27 % 20,229 407 2.01 % Interest-earning deposits 47,787 2,901 6.07 % 567,609 3,599 0.63 % 921,360 1,194 0.13 % Total interest-earning assets (includes FTE adjustments of $3,181, $2,788, and $2,669, respectively) 13,367,183 591,103 4.42 % 13,253,618 451,586 3.41 % 13,236,021 421,177 3.18 % Noninterest-earning assets (6) 902,626 924,080 1,072,313 Total assets $ 14,269,809 $ 14,177,698 $ 14,308,334 Interest-bearing liabilities: Savings deposits $ 2,148,127 8,822 0.41 % $ 2,336,217 2,343 0.10 % $ 2,232,454 2,440 0.11 % Interest-bearing demand deposits 2,556,281 11,606 0.45 % 2,810,889 1,517 0.05 % 2,862,677 1,660 0.06 % Money market deposit accounts 2,183,583 24,734 1.13 % 2,613,422 3,377 0.13 % 2,554,975 2,570 0.10 % Time deposits 1,913,372 60,181 3.15 % 1,161,432 6,883 0.59 % 1,463,522 12,452 0.85 % Borrowed funds (7) 691,636 32,903 4.76 % 212,026 4,531 2.14 % 135,285 616 0.46 % Subordinated debt 114,002 4,592 4.03 % 117,625 4,750 4.04 % 123,457 4,980 4.03 % Junior subordinated debentures 129,434 9,401 7.26 % 129,175 4,716 3.60 % 128,915 2,528 1.93 % Total interest-bearing liabilities 9,736,435 152,239 1.56 % 9,380,786 28,117 0.30 % 9,501,285 27,246 0.29 % Noninterest-bearing demand deposits (8) 2,785,279 3,070,892 2,999,392 Noninterest-bearing liabilities 237,810 207,316 250,075 Total liabilities 12,759,524 12,658,994 12,750,752 Shareholders’ equity 1,510,285 1,518,704 1,557,582 Total liabilities and shareholders’ equity $ 14,269,809 $ 14,177,698 $ 14,308,334 Net interest income 438,864 423,469 393,931 Net interest rate spread (9) 2.86 % 3.11 % 2.89 % Net interest-earning assets/net interest margin (10) $ 3,630,748 3.28 % $ 3,872,832 3.20 % $ 3,734,736 2.98 % Ratio of average interest-earning assets to average interest-bearing liabilities 1.37X 1.41X 1.39X (1) Average gross loans receivable includes loans held as available-for-sale and loans placed on nonaccrual status.
Biggest changeFor the years ended December 31, 2024 2023 2022 Average balance Interest Average yield/cost (11) Average balance Interest Average yield/cost (11) Average balance Interest Average yield/cost (11) (Dollars in thousands) Interest-earning assets: Loans receivable (includes FTE adjustments of $2,928, $2,477, and $1,954, respectively) (1), (2), (3) $ 11,285,219 618,704 5.48 % $ 11,100,118 546,136 4.92 % $ 10,318,898 409,782 3.97 % Mortgage-backed securities (4) 1,739,141 39,793 2.29 % 1,822,375 32,886 1.80 % 1,968,528 30,804 1.56 % Investment securities (includes FTE adjustments of $576, $704, and $834, respectively) (4), (5) 287,118 5,825 2.03 % 357,436 6,312 1.77 % 381,518 6,671 1.75 % FHLB stock, at cost 24,948 1,891 7.58 % 39,467 2,868 7.27 % 17,065 730 4.27 % Interest-earning deposits 126,097 6,487 5.15 % 55,998 2,901 5.11 % 567,609 3,599 0.63 % Total interest-earning assets (includes FTE adjustments of $3,504, $3,181, and $2,788, respectively) 13,462,523 672,700 5.00 % 13,375,349 591,103 4.42 % 13,253,618 451,586 3.41 % Noninterest-earning assets (6) 922,648 894,415 924,080 Total assets $ 14,385,171 $ 14,269,809 $ 14,177,698 Interest-bearing liabilities: Savings deposits $ 2,142,852 24,222 1.13 % $ 2,148,127 8,822 0.41 % $ 2,336,217 2,343 0.10 % Interest-bearing demand deposits 2,574,810 27,394 1.06 % 2,556,281 11,606 0.45 % 2,810,889 1,517 0.05 % Money market deposit accounts 1,966,732 34,564 1.76 % 2,183,583 24,734 1.13 % 2,613,422 3,377 0.13 % Time deposits 2,758,157 119,312 4.33 % 1,913,372 60,181 3.15 % 1,161,432 6,883 0.59 % Borrowed funds (7) 308,540 13,882 4.50 % 691,636 32,903 4.76 % 212,026 4,531 2.14 % Subordinated debt 114,355 4,592 4.02 % 114,002 4,592 4.03 % 117,625 4,750 4.04 % Junior subordinated debentures 129,695 9,652 7.32 % 129,434 9,401 7.14 % 129,175 4,716 3.60 % Total interest-bearing liabilities 9,995,141 233,618 2.34 % 9,736,435 152,239 1.56 % 9,380,786 28,117 0.30 % Noninterest-bearing demand deposits (8) 2,582,540 2,785,279 3,070,892 Noninterest-bearing liabilities 244,036 237,810 207,316 Total liabilities 12,821,717 12,759,524 12,658,994 Shareholders’ equity 1,563,454 1,510,285 1,518,704 Total liabilities and shareholders’ equity $ 14,385,171 $ 14,269,809 $ 14,177,698 Net interest income 439,082 438,864 423,469 Net interest rate spread (9) 2.66 % 2.86 % 3.11 % Net interest-earning assets/net interest margin (10) $ 3,467,382 3.26 % $ 3,638,959 3.28 % $ 3,872,832 3.20 % Tax equivalent adjustment 3,504 3,181 2,788 Net interest income, GAAP basis 435,578 435,683 420,681 Ratio of average interest-earning assets to average interest-bearing liabilities 1.35X 1.37X 1.41X (1) Average gross loans receivable includes loans held as available-for-sale and loans placed on nonaccrual status.
In October 2023, the FASB issued ASU No. 2023-06, “Disclosure Improvements.” This ASU includes amendments on several subtopics in the FASB Accounting Standards Codification (“Codification”) to incorporate certain disclosures and presentation requirements currently residing in SEC Regulations S-X and S-K. The adoption of this ASU may lead to certain disclosure being relocated into the financial statements.
In October 2023, the FASB issued ASU No. 2023-06, “Disclosure Improvements.” This ASU includes amendments on several subtopics in the FASB Accounting Standards Codification (“Codification”) to incorporate certain disclosures and presentation requirements currently residing in SEC Regulations S-X and S-K. The adoption of this ASU may lead to certain disclosures being relocated into the financial statements.
Northwest Bancshares, Inc. is a separate legal entity from Northwest Bank and must provide for its own liquidity to pay dividends to shareholders, to repurchase its common stock and for other corporate purposes. Northwest Bancshares’ primary source of liquidity is the dividend payments it receives from Northwest Bank. During 2020, Northwest Bancshares, Inc. issued $125.0 million of subordinated debt.
Northwest Bancshares, Inc. is a separate legal entity from Northwest Bank and must provide for its own liquidity to pay dividends to shareholders, to repurchase its common stock and for other corporate purposes. Northwest Bancshares’ primary source of liquidity is the dividend payments it receives from Northwest Bank. During 2020, Northwest Bancshares, Inc. issued $125 million of subordinated debt.
Nonaccrual, Past Due, Restructured Loans and 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 becomes 90 days past due, we fully reverse all accrued interest thereon and cease to accrue interest thereafter.
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 becomes 90 days past due, we fully reverse all accrued interest thereon and cease to accrue interest thereafter.
We utilized a multi-scenario based macroeconomic forecast in determining the December 31, 2023 allowance for credit losses, which included a weighting of three scenarios: an upside scenario, a baseline scenario and a downside scenario. We placed the most weight on the baseline scenario, with the remaining weight split evenly between the upside and downside scenarios.
We utilized a multi-scenario based macroeconomic forecast in determining the December 31, 2024 allowance for credit losses, which included a weighting of three scenarios: an upside scenario, a baseline scenario and a downside scenario. We placed the most weight on the baseline scenario, with the remaining weight split evenly between the upside and downside scenarios.
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 December 31, 2023, we considered the most recent economic conditions and forecasts available.
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 December 31, 2024, we considered the most recent economic conditions and forecasts available.
The following is only a summary and should be read in conjunction with the Consolidated Financial Statements and notes included elsewhere in this document. The information at December 31, 2023 and 2022 and for the years ended December 31, 2023, 2022 and 2021 is derived in part from the audited Consolidated Financial Statements that appear in this document.
The following is only a summary and should be read in conjunction with the Consolidated Financial Statements and notes included elsewhere in this document. The information at December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022 is derived in part from the audited Consolidated Financial Statements that appear in this document.
The following table sets forth the scheduled maturities, carrying values, amortized cost, market values and weighted average yields for our marketable securities and mortgage-backed securities portfolios at December 31, 2023. The annualized weighted average yields are calculated by taking the interest of the marketable securities divided by the amortized cost.
The following table sets forth the scheduled maturities, carrying values, amortized cost, market values and weighted average yields for our marketable securities and mortgage-backed securities portfolios at December 31, 2024. The annualized weighted average yields are calculated by taking the interest of the marketable securities divided by the amortized cost.
The following table sets forth the maturity of our loan portfolio at December 31, 2023. Demand loans and loans having no stated schedule of repayments and no stated maturity are reported as due in one year or less.
The following table sets forth the maturity of our loan portfolio at December 31, 2024. Demand loans and loans having no stated schedule of repayments and no stated maturity are reported as due in one year or less.
When a loan continues in a delinquent status for 60 days or more, and a payment schedule has not been developed or kept by the borrower, we may send the borrower a notice of intent to foreclose, providing for cure periods of at least 30 days. If not cured, foreclosure proceedings are initiated. Nonperforming assets .
When a loan continues in a delinquent status for 60 days or more, and a payment 55 Table of Contents schedule has not been developed or kept by the borrower, we may send the borrower a notice of intent to foreclose, providing for cure periods of at least 30 days. If not cured, foreclosure proceedings are initiated. Nonperforming assets .
Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances, including, but without limitation, changes in interest rates, performance of the economy, financial condition of borrowers and laws and regulations. The following is the accounting estimate we believe is critical. 37 Table of Contents Allowance for Credit Losses.
Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances, including, but without limitation, changes in interest rates, performance of the economy, financial condition of borrowers and laws and regulations. The following is the accounting estimate we believe is critical. Allowance for Credit Losses.
(2) Represents weighted average nominal rate at year end. The following table sets forth the dollar amount of deposits in each state by branch location as of December 31, 2023.
(2) Represents weighted average nominal rate at year end. The following table sets forth the dollar amount of deposits in each state by branch location as of December 31, 2024.
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.
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 57 Table of Contents occupied and commercial loans. The allowance for credit losses is measured using a combination of statistical models and qualitative assessments.
The Credit Committee also reviews and discusses delinquency trends, nonperforming asset amounts and ACL levels and ratios compared to our peer group as well as state and national statistics. We also consider how the levels of non-accrual loans and h istorical charge-offs have influenced the required amount of ACL.
The Credit Committee also reviews and discusses delinquency trends, nonperforming asset amounts and ACL levels and ratios compared to our peer group as well as state and national statistics. We also consider how the levels of non-accrual loans and historical charge-offs have influenced the required amount of ACL.
(2) See Note 11 to the Consolidated Financial Statements, Borrowed Funds, for additional information. (3) See Note 3 to the Consolidated Financial Statements, Leases, for additional information. 60 Table of Contents Impact of Inflation and Changing Prices.
(2) See Note 11 to the Consolidated Financial Statements, Borrowed Funds, for additional information. (3) See Note 3 to the Consolidated Financial Statements, Leases, for additional information. 62 Table of Contents Impact of Inflation and Changing Prices.
The allowance for credit losses represents management’s estimate of lifetime expected losses based on all available information. The allowance for credit losses is based on management’s evaluation of relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts.
The allowance for credit losses represents management’s estimate of 41 Table of Contents lifetime expected losses based on all available information. The allowance for credit losses is based on management’s evaluation of relevant available information, from internal and external sources, relating to past events, current conditions and reasonable and supportable forecasts.
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 December 31, 2023. Noninterest Income.
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 December 31, 2024.
(8) Average cost of deposits was 0.91%, 0.12% and 0.16%, respectively and average cost of interest-bearing deposits were 1.20%, 0.16%, and 0.21%, respectively. (9) Net interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. (10) Net interest margin represents net interest income as a percentage of average interest-earning assets.
(8) Average cost of deposits was 1.71%, 0.91% and 0.12%, respectively and average cost of interest-bearing deposits were 2.18%, 1.20%, and 0.16%, respectively. (9) Net interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities. (10) Net interest margin represents net interest income as a percentage of average interest-earning assets.
Time deposits scheduled to mature in less than one year at December 31, 2023, totaled $2.464 billion. We believe that a significant portion of such deposits will remain with us. Deposits are our primary source of externally generated funds.
Time deposits scheduled to mature in less than one year at December 31, 2024, totaled $2.5 billion. We believe that a significant portion of such deposits will remain with us. Deposits are our primary source of externally generated funds.
If we require funds beyond our ability to generate them internally, borrowing agreements exist with the FHLB of Pittsburgh and the Federal Reserve Bank of Cleveland, which provide an additional source of funds. At December 31, 2023, Northwest Bank had an outstanding balance of $338.5 million with the FHLB of Pittsburgh.
If we require funds beyond our ability to generate them internally, borrowing agreements exist with the FHLB of Pittsburgh and the Federal Reserve Bank of Cleveland, which provide an additional source of funds. At December 31, 2024, Northwest Bank had an outstanding balance of $175 million with the FHLB of Pittsburgh.
The balance carried an average cost of 3.43%. 44 Table of Contents The following table sets forth the dollar amount of deposits in the various types of accounts we offered at the dates indicated.
The balance carried an average cost of 3.68%. 47 Table of Contents The following table sets forth the dollar amount of deposits in the various types of accounts we offered at the dates indicated.
Similarly, the amount of principal repayments on loans and the amount of new loan originations is heavily influenced by the general level of market interest rates, consumer confidence and consumer spending. Funds received from loan maturities and principal payments on loans for the years ended December 31, 2023, 2022 and 2021 were $3.447 billion, $4.047 billion, and $4.490 billion, respectively.
Similarly, the amount of principal repayments on loans and the amount of new loan originations is heavily influenced by the general level of market interest rates, consumer confidence and consumer spending. Funds received from loan maturities and principal payments on loans for the years ended December 31, 2024, 2023 and 2022 were $3.2 billion, $3.4 billion, and $4.0 billion, respectively.
Cash flows from the repayment of principal and the maturity or call of marketable securities for the years ended December 31, 2023, 2022 and 2021 were $169.0 million, $330.4 million, and $517.9 million, respectively. When necessary, we utilize borrowings as a source of liquidity and as a source of funds for long-term investment when market conditions permit.
Cash flows from the repayment of principal and the maturity or call of marketable securities for the years ended December 31, 2024, 2023 and 2022 were $147 million, $169 million, and $330 million, respectively. When necessary, we utilize borrowings as a source of liquidity and as a source of funds for long-term investment when market conditions permit.
These deposits are part of a reciprocal program that allows our depositors to receive expanded FDIC coverage by placing multiple interest-bearing demand accounts at other member banks and Northwest receives an equal amount of deposits from other member banks.
These deposits are part of a reciprocal program that allows our depositors to receive expanded FDIC insurance coverage above the insurance coverage available to our depositors at a single FDIC-insured institution, by placing multiple interest-bearing demand accounts at other member banks and Northwest receives an equal amount of deposits from other member banks.
Our underwriting practices are focused on balancing risk and return while our collection operations focus on diligently working with delinquent borrowers in an effort to minimize losses. Collection procedures .
Asset Quality We actively manage asset quality through our underwriting practices and collection procedures. Our underwriting practices are focused on balancing risk and return while our collection operations focus on diligently working with delinquent borrowers in an effort to minimize losses. Collection procedures .
We borrow from these sources to reduce interest rate risk and to provide liquidity when necessary. At December 31, 2023, our customers had $1.186 billion of unused lines of credit available and $198.2 million in loan commitments. This amount does not include the unfunded portion of loans in process.
We borrow from these sources to reduce interest rate risk and to provide liquidity when necessary. 60 Table of Contents At December 31, 2024, our customers had $1.3 billion of unused lines of credit available and $190 million in loan commitments. This amount does not include the unfunded portion of loans in process.
This increase was the result of net income of $135.0 million for the year ended December 31, 2023, as well as a decrease in accumulated other comprehensive loss of $21.7 million due primarily to a decrease in unrealized loss in the available-for-sale investment portfolio.
This increase was the result of net income of $100 million for the year ended December 31, 2024, as well as a decrease in accumulated other comprehensive loss of $39 million due primarily to a decrease in unrealized loss in the available-for-sale investment portfolio.
The net cash flow from the receipt and repayment of borrowings was a net decrease of $282.3 million, a net increase of $532.0 million, and a net decrease of $20.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.
The net cash flow from the receipt and repayment of borrowings was a net decrease of $199 million, a net decrease of $282 million, and a net increase of $532 million for the years ended December 31, 2024, 2023 and 2022, respectively.
At December 31, 2023, Northwest Bank had $3.286 billion of additional borrowing capacity available with the FHLB of Pittsburgh, including a $250.0 million overnight line of credit, which had a balance of $163.5 million at December 31, 2023, as well as $297.5 million of borrowing capacity available with the Federal Reserve Bank and $105.0 million with two correspondent banks.
At December 31, 2024, Northwest Bank had $3.2 billion of additional borrowing capacity available with the FHLB of Pittsburgh, including a $250 million overnight line of credit, which had no balance at December 31, 2024, as well as $555 million of borrowing capacity available with the Federal Reserve Bank and $105 million with two correspondent banks.
Financial institutions, such as Northwest Bank, are also subject to deposit outflows. Our net deposits increased by $515.4 million for the year ended December 31, 2023, decreased by $836.6 million for the year ended December 31, 2022, and increased by $701.9 million for the year ended December 31, 2021.
Financial institutions, such as Northwest Bank, are also subject to deposit outflows. Our net deposits increased by $165 million for the year ended December 31, 2024, increased by $515 million for the year ended December 31, 2023, and decreased by $837 million for the year ended December 31, 2022.
At December 31, 2023, Northwest Bancshares, Inc. (on an unconsolidated basis) had liquid assets of $276.0 million. Other activity with respect to cash flow was the payment of cash dividends on common stock in the amount of $101.7 million, $101.5 million, and $100.3 million for years the ended December 31, 2023, 2022 and 2021, respectively.
At December 31, 2024, Northwest Bancshares, Inc. (on an unconsolidated basis) had liquid assets of $239 mil lion. Other activity with respect to cash flow was the payment of cash dividends on common stock in the amount of $102 million, $102 million, and $101 million for years the ended December 31, 2024, 2023 and 2022, respectively.
We also sell a portion of the loans we originate as part of our mortgage banking operations, and the cash flows from such sales for the years ended December 31, 2023, 2022 and 2021 were $203.7 million, $383.9 million, and $804.7 million, respectively.
We also sell a portion of the loans we originate as part of our mortgage banking operations, and the cash flows from such sales for the years ended December 31, 2024, 2023 and 2022 were $207 million, $204 million, and $384 million, respectively.
In addition, we considered the overall trends in asset quality, reserves on individually assessed loans, historical loss rates and collateral valuations. The ACL increased by $7.2 million, or 6.1%, to $125.2 million, or 1.10% of gross loans at December 31, 2023 from $118.0 million, or 1.08% of total loans, at December 31, 2022 .
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 $8 million, or 7%, to $117 million, or 1.04% of gross loans at December 31, 2024 from $125 million, or 1.10% of total loans, at December 31, 2023.
The provision for credit losses was $22.9 million for the year ended December 31, 2023 compared to $28.3 million for the year ended December 31, 2022, and a provision credit of $15.8 million for the year ended December 31, 2021. 35 Table of Contents Selected Financial and Other Data The summary financial information presented below is derived in part from the Company’s Consolidated Financial Statements.
The provision for credit losses was $25 million for the year ended December 31, 2024 compared to $23 million for the year ended December 31, 2023, and $28 million for the year ended December 31, 2022. 39 Table of Contents Selected Financial and Other Data The summary financial information presented below is derived in part from the Company’s Consolidated Financial Statements.
The primary sources of cash during the current year were net income, principal repayments on loans and mortgage-backed securities and net increase in deposits. Liquidity management is both a daily and long-term function of business management.
A portion of our liquidity consists of cash and cash equivalents, which are a product of our operating, investing, and financing activities. The primary sources of cash during the current year were net income, principal repayments on loans and mortgage-backed securities and net increase in deposits. Liquidity management is both a daily and long-term function of business management.
Net income for the year ended December 31, 2023 represents a return on average equity and 46 Table of Contents average assets of 8.94% and 0.95%, respectively, compared to 8.80% and 0.94% for the year ended December 31, 2022. A discussion of significant changes follows. Interest Income.
Net income for the year ended December 31, 2024 represents a return on average equity and average assets of 6.41% and 0.70%, respectively, compared to 8.94% and 0.95% for the year ended December 31, 2023. A discussion of significant changes follows.
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. 53 Table of Contents 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.
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 Department of Banking perform an extensive review on at least an annual basis for the adequacy of the ACL and its conformity with regulatory guidelines and pronouncements.
If the value of the property is less 51 Table of Contents than the principal balance, less any related specific credit loss reserve allocations, the difference is charged against the allowance for credit losses. Any subsequent write-down of real estate owned or loss at the time of disposition is charged against earnings.
If the value of the property is less than the principal balance, less any related specific credit loss reserve allocations, the difference is charged against the allowance for credit losses. Any subsequent write-down of real estate owned or loss at the time of disposition is charged against income. Nonaccrual, Past Due, Restructured Loans and Nonperforming Assets .
Our net income was $135.0 million, or $1.06 per diluted share, for the year ended December 31, 2023 compared to $133.7 million, or $1.05 per diluted share, for the year ended December 31, 2022, and $154.3 million, or $1.21 per diluted share, for the year ended December 31, 2021.
Our net income was $100 million, or $0.79 per diluted share, for the year ended December 31, 2024 compared to $135 million, or $1.06 per diluted share, for the year ended December 31, 2023, and $134 million, or $1.05 per diluted share, for the year ended December 31, 2022.
(2) Represents net income divided by average equity. (3) Represents average yield on interest-earning assets less average cost of interest-bearing liabilities (shown on a fully taxable equivalent (“FTE”) basis). (4) Represents net interest income as a percentage of average interest-earning assets (shown on a FTE basis).
(2) Represents net income divided by average equity. (3) Represents average yield on interest-earning assets less average cost of interest-bearing liabilities (shown on a fully taxable equivalent (“FTE”) basis). (4) Represents net interest income as a percentage of average interest-earning assets (shown on a FTE basis). (5) 2022 includes $5.6 million in merger, asset disposition and restructuring expense.
If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity.
If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. We do not believe this guidance will have a material impact on the Company’s financial statements.
At December 31, 2023, we had 113 loans, with an aggregate principal balance of $130.8 million, designated as “special mention”. We regularly review our asset portfolio to determine whether any assets require classification in accordance with applicable regulations.
At December 31, 2024, we ha d 130 loans, with an aggregate principal balance of $110 million, designated as “special mention”. We regularly review our asset portfolio to determine whether any assets require classification in accordance with applicable regulations. Our largest classified assets generally are also our largest nonperforming assets.
December 31, 2023 December 31, 2022 December 31, 2021 Tangible common equity to assets Total shareholders’ equity $ 1,551,317 1,491,486 1,583,571 Less: goodwill and intangible assets (386,287) (389,557) (393,833) Tangible common equity $ 1,165,030 1,101,929 1,189,738 Total assets $ 14,419,105 14,113,324 14,501,508 Less: goodwill and intangible assets (386,287) (389,557) (393,833) Tangible assets $ 14,032,818 13,723,767 14,107,675 Tangible common equity to tangible assets 8.30 % 8.03 % 8.43 % Critical Accounting Estimates Our significant accounting policies are described in Note 1 of the notes to the Consolidated Financial Statements .
As of December 31, 2024 2023 2022 Tangible common equity to assets Total shareholders’ equity $ 1,596,856 1,551,317 1,491,486 Less: goodwill and intangible assets (383,834) (386,287) (389,557) Tangible common equity $ 1,213,022 1,165,030 1,101,929 Total assets $ 14,408,224 14,419,105 14,113,324 Less: goodwill and intangible assets (383,834) (386,287) (389,557) Tangible assets $ 14,024,390 14,032,818 13,723,767 Tangible common equity to tangible assets 8.65 % 8.30 % 8.03 % Critical Accounting Estimates Our significant accounting policies are described in Note 1 of the notes to the Consolidated Financial Statements .
Northwest Bank is also subject to capital guidelines of the Pennsylvania Department of Banking. Although not adopted in regulation form, the Department of Banking requires 6% leverage capital and 10% total risk-based capital. See “Item 1. Business — Supervision and Regulation — Capital Requirements and Prompt Corrective Action”. Contractual Obligations.
Northwest Bank is also subject to capital guidelines of the Department of Banking. Although not adopted in regulation form, the Department of Banking requires 6% leverage capital and 10% total risk-based capital. See “Item 1. Business—Supervision and Regulation—Pennsylvania Savings Bank Law”. Contractual Obligations. We are obligated to make future payments according to various contracts.
Government and agencies 124,458 107,658 124,455 102,622 Total marketable securities held-to-maturity $ 814,839 699,506 881,249 751,384 The following table sets forth information regarding the issuers and the carrying value of our mortgage-backed securities at the dates indicated.
Government and agencies 124,462 109,998 124,458 107,658 Total marketable securities held-to-maturity $ 750,586 637,948 814,839 699,506 43 Table of Contents The following table sets forth information regarding the issuers and the carrying value of our mortgage-backed securities at the dates indicated.
This methodology was developed to provide a consistent process and review procedure to ensure that the allowance for credit losses is in conformity with GAAP, our policies and procedures and other supervisory and regulatory guidelines.
This methodology was developed to provide a consistent process and review procedure 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 and department heads, review and monitor the loan portfolio for problem loans.
One year or less More than one year to five years More than five years to ten years More than ten years Total Amortized cost Annualized weighted average yield (1) Amortized cost Annualized weighted average yield (1) Amortized cost Annualized weighted average yield (1) Amortized cost Annualized weighted average yield (1) Amortized cost Fair value Annualized weighted average yield (1) (Dollars in thousands) Marketable securities available-for-sale: Government sponsored entities $ — — % $ 45,986 1.07 % $ 386 2.11 % $ — — % $ 46,372 40,597 1.08 % U.S.
One year or less More than one year to five years More than five years to ten years More than ten years Total Amortized cost Annualized weighted average yield Amortized cost Annualized weighted average yield Amortized cost Annualized weighted average yield Amortized cost Annualized weighted average yield Amortized cost Fair value Annualized weighted average yield (Dollars in thousands) Marketable securities available-for-sale: Government sponsored entities $ — — % $ 122 6.10 % $ — — % $ — — % $ 122 118 6.10 % U.S.
At December 31, 2023 2022 (In thousands) Selected Consolidated Financial Data: Total assets $ 14,419,105 14,113,324 Cash and cash equivalents 122,260 139,365 Marketable securities held-to-maturity 124,458 124,455 Marketable securities available-for-sale 182,068 224,537 Mortgage-backed securities held-to-maturity 690,381 756,794 Mortgage-backed securities available-for-sale 861,291 993,571 Loans receivable, net of allowance for credit losses: Residential mortgage loans held-for-sale 8,768 9,913 Residential mortgage loans 3,401,224 3,469,425 Home equity loans 1,222,455 1,291,772 Consumer loans 2,097,917 2,144,931 Commercial real estate loans 2,918,968 2,775,045 Commercial loans 1,640,234 1,111,330 Total loans receivable, net 11,289,566 10,802,416 Deposits 11,979,902 11,464,548 Borrowed funds 398,895 681,166 Subordinated debt 114,189 113,840 Shareholders’ equity 1,551,317 1,491,486 For the years ended December 31, 2023 2022 2021 (In thousands except per share data) Selected Consolidated Operating Data: Total interest income $ 587,922 448,798 418,508 Total interest expense 152,239 28,117 27,246 Net interest income 435,683 420,681 391,262 Provision for credit losses 22,874 28,315 (15,788) Net interest income after provision for credit losses 412,809 392,366 407,050 Noninterest income 113,823 110,849 142,889 Noninterest expense 351,554 329,523 348,815 Income before income taxes 175,078 173,692 201,124 Income tax expense 40,121 40,026 46,801 Net income $ 134,957 133,666 154,323 Earnings per share: Basic $ 1.06 1.05 1.22 Diluted $ 1.06 1.05 1.21 36 Table of Contents At or for the year ended December 31, 2023 2022 2021 Selected Financial Ratios and Other Data: Return on average assets (1), (6), (7), (8), (9) 0.95 % 0.94 % 1.08 % Return on average equity (2), (6), (7), (8), (9) 8.94 % 8.80 % 9.91 % Average capital to average assets 10.58 % 10.71 % 10.89 % Capital to total assets 10.76 % 10.57 % 10.92 % Tangible common equity to tangible assets (10) 8.30 % 8.03 % 8.43 % Net interest rate spread (3) 2.86 % 3.11 % 2.89 % Net interest margin (4) 3.28 % 3.20 % 2.98 % Noninterest expense to average assets (5), (6), (8), (9) 2.46 % 2.32 % 2.44 % Efficiency ratio (5), (6), (7), (8), (9) 63.98 % 62.00 % 65.30 % Noninterest income to average assets (7) 0.80 % 0.78 % 1.00 % Net interest income to noninterest expense (5), (6), (8), (9) 1.24x 1.28x 1.12x Dividend payout ratio 75.47 % 76.19 % 65.29 % Nonperforming loans to net loans receivable 0.86 % 0.76 % 1.60 % Nonperforming assets to total assets 0.67 % 0.58 % 1.10 % Allowance for credit losses to nonperforming loans 129.01 % 143.98 % 64.38 % Allowance for credit losses to loans receivable 1.10 % 1.08 % 1.02 % Average interest-earning assets to average interest-bearing liabilities 1.37x 1.41x 1.39x Number of banking offices 142 150 170 (1) Represents net income divided by average assets.
At December 31, 2024 2023 (In thousands) Selected Consolidated Financial Data: Total assets $ 14,408,224 14,419,105 Cash and cash equivalents 288,378 122,260 Marketable securities held-to-maturity 124,462 124,458 Marketable securities available-for-sale 120,237 182,068 Mortgage-backed securities held-to-maturity 626,124 690,381 Mortgage-backed securities available-for-sale 988,707 861,291 Loans held-for-sale 76,331 8,768 Loans receivable, net of allowance for credit losses: Residential mortgage loans 3,163,922 3,401,224 Home equity loans 1,144,551 1,222,455 Consumer loans 1,970,813 2,097,917 Commercial real estate loans 2,801,652 2,918,968 Commercial loans 1,982,257 1,640,234 Total loans receivable, net 11,063,195 11,280,798 Deposits 12,144,554 11,979,902 Borrowed funds 200,331 398,895 Subordinated debt 114,538 114,189 Shareholders’ equity 1,596,856 1,551,317 For the years ended December 31, 2024 2023 2022 (In thousands except per share data) Selected Consolidated Operating Data: Total interest income $ 669,196 587,922 448,798 Total interest expense 233,618 152,239 28,117 Net interest income 435,578 435,683 420,681 Provision for credit losses 24,505 22,874 28,315 Net interest income after provision for credit losses 411,073 412,809 392,366 Noninterest income 87,010 113,823 110,849 Noninterest expense 368,537 351,554 329,523 Income before income taxes 129,546 175,078 173,692 Income tax expense 29,268 40,121 40,026 Net income $ 100,278 134,957 133,666 Earnings per share: Basic $ 0.79 1.06 1.05 Diluted $ 0.79 1.06 1.05 40 Table of Contents At or for the year ended December 31, 2024 2023 2022 Selected Financial Ratios and Other Data: Return on average assets (1), (5), (6), (7) 0.70 % 0.95 % 0.94 % Return on average equity (2), (5), (6), (7) 6.41 % 8.94 % 8.80 % Average capital to average assets 10.87 % 10.58 % 10.71 % Capital to total assets 11.08 % 10.76 % 10.57 % Tangible common equity to tangible assets (8) 8.65 % 8.30 % 8.03 % Net interest rate spread (3) 2.66 % 2.86 % 3.11 % Net interest margin (4) 3.26 % 3.28 % 3.20 % Noninterest expense to average assets (5), (6), (7) 2.56 % 2.46 % 2.32 % Efficiency ratio (5), (6), (7) 70.52 % 63.98 % 62.00 % Noninterest income to average assets 0.60 % 0.80 % 0.78 % Net interest income to noninterest expense (5), (6), (7) 1.18x 1.24x 1.28x Dividend payout ratio 101.27 % 75.47 % 76.19 % Nonperforming loans to net loans receivable 0.56 % 0.86 % 0.76 % Nonperforming assets to total assets 0.54 % 0.67 % 0.58 % Allowance for credit losses to nonperforming loans 188.24 % 129.01 % 143.98 % Allowance for credit losses to loans receivable 1.04 % 1.10 % 1.08 % Average interest-earning assets to average interest-bearing liabilities 1.35x 1.37x 1.41x Number of banking offices 141 142 150 (1) Represents net income divided by average assets.
Loan originations for the years ended December 31, 2023, 2022 and 2021 were $4.162 billion, $4.948 billion, and $4.715 billion, respectively.
Loan originations for the years ended December 31, 2024, 2023 and 2022 were $3.3 billion, $4.2 billion, and $4.9 billion, respectively.
Our largest uninsured depositor, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $19.0 million, or 0.16% of total deposits, as of December 31, 2023. Our top ten largest uninsured depositors, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $105.8 million, or 0.88% of total deposits, as of December 31, 2023.
Our largest uninsured depositor, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $26.2 million, or 0.22% of total deposits, as of December 31, 2024. Our top ten largest uninsured depositors, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $167.4 million, or 1.38% of total deposits, as of December 31, 2024.
The average uninsured deposit account balance, excluding intercompany and collateralized accounts, was $300,000 as of December 31, 2023. 45 Table of Contents Borrowings. Borrowings decreased by $281.9 million, or 35.5%, to $513.1 million at December 31, 2023 from $795.0 million at December 31, 2022.
The average uninsured deposit account balance, excluding intercompany and collateralized accounts, was $295,000 as of December 31, 2024. 48 Table of Contents Borrowings. Borrowings decreased by $198 million, or 39%, to $315 million at December 31, 2024 from $513 million at December 31, 2023.
Government, agency and GSEs 115,755 98,911 119,959 99,793 Municipal securities 85,766 75,469 127,455 111,766 Corporate debt issues 8,466 7,688 13,540 12,978 Total marketable securities available-for-sale $ 1,240,003 1,043,359 1,431,728 1,218,108 39 Table of Contents The following table sets forth certain information regarding the amortized cost and fair value of our held-to-maturity marketable securities portfolio and mortgage-backed securities portfolio at the dates indicated.
Government, agency and GSEs 45,411 35,509 115,755 98,911 Municipal securities 68,807 58,627 85,766 75,469 Corporate debt issues 25,429 26,101 8,466 7,688 Total marketable securities available-for-sale $ 1,278,665 1,108,944 1,240,003 1,043,359 The following table sets forth certain information regarding the amortized cost and fair value of our held-to-maturity marketable securities portfolio and mortgage-backed securities portfolio at the dates indicated.
The FDIC, however, does not prescribe by regulation a minimum amount or percentage of liquid assets. The FDIC allows us to consider any unencumbered, available-for-sale marketable security, whose sale would not impair our capital adequacy, to be eligible for liquidity. Liquidity is monitored through the use of a standard liquidity ratio of liquid assets to borrowings plus deposits.
The FDIC allows us to consider any unencumbered, available-for-sale marketable security, whose sale would not impair our capital adequacy, to be eligible for liquidity. Liquidity is monitored through the use of a standard liquidity ratio of liquid assets to borrowings plus deposits. Using this formula, Northwest Bank’s liquidity ratio was 11.73% as of December 31, 2024.
We are obligated to make future payments according to various contracts. The following table presents the expected future payments of the contractual obligations aggregated by obligation type at December 31, 2023.
The following table presents the expected future payments of the contractual obligations aggregated by obligation type at December 31, 2024.
At December 31, 2023 2022 Balance Percent (1) Rate (2) Balance Percent (1) Rate (2) (Dollars in thousands) Savings deposits $ 2,105,234 17.6 % 0.42 % $ 2,275,020 19.9 % 0.10 % Demand deposits 5,303,569 44.3 % 0.22 % 5,679,674 49.5 % 0.03 % Money market deposit accounts 1,968,218 16.4 % 1.26 % 2,457,569 21.4 % 0.14 % Time deposits: Maturing within 1 year 2,464,022 20.6 % 4.44 % 754,564 6.6 % 1.04 % Maturing 1 to 3 years 98,229 0.8 % 0.86 % 233,303 2.0 % 0.97 % Maturing more than 3 years 40,630 0.3 % 0.24 % 64,418 0.6 % 0.21 % Total certificates 2,602,881 21.7 % 2.31 % 1,052,285 9.2 % 0.65 % Total deposits $ 11,979,902 100.0 % 0.88 % $ 11,464,548 100.0 % 0.12 % (1) Represents percentage of total deposits.
At December 31, 2024 2023 Balance Percent (1) Rate (2) Balance Percent (1) Rate (2) (Dollars in thousands) Savings deposits $ 2,171,251 17.9 % 1.12 % $ 2,105,234 17.6 % 0.42 % Demand deposits 5,287,919 43.5 % 0.52 % 5,303,569 44.3 % 0.22 % Money market deposit accounts 2,007,739 16.5 % 1.72 % 1,968,218 16.4 % 1.26 % Time deposits: Maturing within 1 year 2,547,129 21.0 % 4.08 % 2,464,022 20.6 % 4.44 % Maturing 1 to 3 years 109,727 0.9 % 1.96 % 98,229 0.8 % 0.86 % Maturing more than 3 years 20,789 0.2 % 0.46 % 40,630 0.3 % 0.24 % Total certificates 2,677,645 22.1 % 4.46 % 2,602,881 21.7 % 2.31 % Total deposits $ 12,144,554 100.0 % 1.69 % $ 11,979,902 100.0 % 0.88 % (1) Represents percentage of total deposits.
At December 31, 2023 2022 Amortized cost Fair value Amortized cost Fair value (In thousands) Residential mortgage-backed securities held-to-maturity: Fixed rate pass-through $ 147,874 127,040 163,196 138,512 Variable rate pass-through 449 450 542 530 Fixed rate agency CMOs 541,529 463,835 592,527 509,202 Variable rate agency CMOs 529 523 529 518 Total residential mortgage-backed securities held-to-maturity 690,381 591,848 756,794 648,762 Marketable securities held-to-maturity: U.S.
At December 31, 2024 2023 Amortized cost Fair value Amortized cost Fair value (In thousands) Residential mortgage-backed securities held-to-maturity: Fixed rate pass-through $ 132,816 112,635 147,874 127,040 Variable rate pass-through 364 365 449 450 Fixed rate agency CMOs 492,415 414,426 541,529 463,835 Variable rate agency CMOs 529 524 529 523 Total residential mortgage-backed securities held-to-maturity 626,124 527,950 690,381 591,848 Marketable securities held-to-maturity: U.S.
At December 31, 2023 2022 (In thousands) Residential mortgage-backed securities: FNMA $ 568,160 651,404 GNMA 407,441 438,193 FHLMC 576,066 660,762 Other (including non-agency) 5 6 Total residential mortgage-backed securities $ 1,551,672 1,750,365 40 Table of Contents Marketable Securities Portfolio Maturities and Yields .
At December 31, 2024 2023 (In thousands) Residential mortgage-backed securities: FNMA $ 443,354 568,160 GNMA 668,668 407,441 FHLMC 502,805 576,066 Other (including non-agency) 4 5 Total residential mortgage-backed securities $ 1,614,831 1,551,672 Marketable Securities Portfolio Maturities and Yields .
State Balance Percent (Dollars in thousands) Pennsylvania $ 7,375,130 61.5 % New York 2,773,706 23.2 % Ohio 761,676 6.4 % Indiana 1,069,390 8.9 % Total $ 11,979,902 100.0 % The following table indicates the amount of our certificates of deposits of $250,000 or more by time remaining until maturity at December 31, 2023.
State Balance Percent (Dollars in thousands) Pennsylvania $ 7,550,050 62.1 % New York 2,814,777 23.2 % Ohio 727,003 6.0 % Indiana 1,052,724 8.7 % Total $ 12,144,554 100.0 % The following table indicates the amount of our certificates of deposits of $250,000 or more by time remaining until maturity at December 31, 2024.
Years ended December 31, 2023 2022 (Dollars in thousands) Loans receivable $ 11,414,809 10,920,452 Average loans outstanding 11,100,118 10,318,898 Allowance for credit losses Balance at beginning of period 118,036 102,241 ASU 2022-02 Adoption 426 — Provision for credit losses 18,664 17,860 Charge-offs: Residential mortgage loans (1,189) (2,033) Home equity loans (852) (1,469) Vehicle loans (6,468) (3,621) Consumer loans (5,983) (4,785) Commercial real estate loans (2,298) (7,366) Commercial real estate loans - owner occupied (68) — Commercial loans (4,166) (1,657) Total charge-offs (21,024) (20,931) Recoveries: Residential mortgage loans 1,636 792 Home equity loans 709 1,531 Vehicle loans 2,021 2,334 Consumer loans 1,206 1,553 Commercial real estate loans 2,029 10,364 Commercial real estate loans - owner occupied 66 85 Commercial loans 1,474 2,207 Total recoveries 9,141 18,866 Balance at end of period $ 125,243 118,036 Allowance for credit losses as a percentage of loans receivable 1.10 % 1.08 % Net charge-offs as a percentage of average loans outstanding: Residential mortgage loans (0.01) % 0.04 % Home equity loans 0.01 % — % Vehicle loans 0.22 % 0.07 % Consumer loans 4.11 % 3.24 % Commercial real estate loans 0.01 % (0.12) % Commercial real estate loans - owner occupied — % (0.02) % Commercial loans 0.20 % (0.06) % Total Average Loans Receivable 0.11 % 0.02 % Allowance for credit losses as a percentage of nonperforming loans 129.01 % 143.98 % Allowance for credit losses as a percentage of nonperforming assets 128.87 % 143.26 % 55 Table of Contents Allocation of Allowance for Credit Losses .
Years ended December 31, 2024 2023 (Dollars in thousands) Loans receivable $ 11,180,014 11,406,041 Average loans outstanding 11,285,219 11,100,118 Allowance for credit losses Balance at beginning of period 125,243 118,036 ASU 2022-02 Adoption — 426 Provision for credit losses 27,679 18,664 Charge-offs: Residential mortgage loans (845) (1,189) Home equity loans (1,736) (852) Vehicle loans (8,809) (6,468) Consumer loans (5,929) (5,983) Commercial real estate loans (15,321) (2,298) Commercial real estate loans - owner occupied — (68) Commercial loans (14,462) (4,166) Total charge-offs (47,102) (21,024) Recoveries: Residential mortgage loans 1,472 1,636 Home equity loans 1,127 709 Vehicle loans 1,778 2,021 Consumer loans 1,591 1,206 Commercial real estate loans 3,480 2,029 Commercial real estate loans - owner occupied 38 66 Commercial loans 1,513 1,474 Total recoveries 10,999 9,141 Balance at end of period $ 116,819 125,243 Allowance for credit losses as a percentage of loans receivable 1.04 % 1.10 % Net charge-offs as a percentage of average loans outstanding: Residential mortgage loans (0.02) % (0.01) % Home equity loans 0.05 % 0.01 % Vehicle loans 0.37 % 0.22 % Consumer loans 4.04 % 4.11 % Commercial real estate loans 0.39 % 0.01 % Commercial real estate loans - owner occupied — % — % Commercial loans 0.72 % 0.20 % Total Average Loans Receivable 0.32 % 0.11 % Allowance for credit losses as a percentage of nonperforming loans 188.24 % 129.01 % Allowance for credit losses as a percentage of nonperforming assets 149.40 % 128.87 % 59 Table of Contents Allocation of Allowance for Credit Losses .
The following table provides details regarding the Company’s uninsured deposits portfolio: As of December 31, 2023 Balance Percent of total deposits Number of relationships Uninsured deposits per the Call Report (1) $ 2,810,966 23.46 % 4,924 Less intercompany deposit accounts 976,113 8.15 % 12 Less collateralized deposit accounts 432,443 3.61 % 239 Uninsured deposits excluding intercompany and collateralized accounts $ 1,402,410 11.71 % 4,673 (1) Uninsured deposits presented may be different from actual amounts due to titling of accounts.
The following table provides details regarding the Company’s uninsured deposits portfolio: As of December 31, 2024 Balance Percent of total deposits Number of relationships Uninsured deposits per the Call Report (1) $ 3,131,231 25.8 % 5,233 Less intercompany deposit accounts 1,244,219 10.3 % 11 Less collateralized deposit accounts 413,479 3.4 % 224 Uninsured deposits excluding intercompany and collateralized accounts $ 1,473,533 12.1 % 4,998 (1) Uninsured deposits presented may be different from actual amounts due to titling of accounts.
At December 31, 2023 2022 Amortized cost Fair value Amortized cost Fair value (In thousands) Residential mortgage-backed securities available-for-sale: Fixed rate pass-through $ 209,069 183,874 227,122 195,986 Variable rate pass-through 7,140 7,080 8,837 8,663 Fixed rate agency CMOs 789,842 646,787 906,962 761,678 Variable rate agency CMOs 23,965 23,550 27,853 27,244 Total residential mortgage-backed securities available-for-sale 1,030,016 861,291 1,170,774 993,571 Marketable securities available-for-sale: U.S.
At December 31, 2024 2023 Amortized cost Fair value Amortized cost Fair value (In thousands) Residential mortgage-backed securities available-for-sale: Fixed rate pass-through $ 237,892 220,417 209,069 183,874 Variable rate pass-through 3,738 3,789 7,140 7,080 Fixed rate agency CMOs 852,648 719,833 789,842 646,787 Variable rate agency CMOs 44,740 44,668 23,965 23,550 Total residential mortgage-backed securities available-for-sale 1,139,018 988,707 1,030,016 861,291 Marketable securities available-for-sale: U.S.
Set forth below are selected data related to the composition of our loan portfolio by type of loan as of the dates indicated.
Specifically, our commercial and industrial (C&I) loan portfolio increased by $349 million, or 21% compared to December 31, 2023. Set forth below are selected data related to the composition of our loan portfolio by type of loan as of the dates indicated.
At December 31, 2023 2022 (Dollars in thousands) Loans 90 days or more past due: Residential mortgage loans $ 7,995 5,574 Home equity loans 3,126 2,257 Vehicle loans 3,051 2,471 Consumer loans 927 608 Commercial real estate loans 6,535 7,589 Commercial real estate loans - owner occupied 177 278 Commercial loans 2,780 1,829 Total loans 90 days or more past due $ 24,591 20,606 Total real estate owned (REO) $ 104 413 Total loans 90 days or more past due and REO 24,695 21,019 Total loans 90 days or more past due to net loans receivable 0.22 % 0.19 % Total loans 90 days or more past due and REO to total assets 0.17 % 0.15 % Nonperforming assets: Nonaccrual loans - loans 90 days or more past due $ 21,894 19,861 Nonaccrual loans - loans less than 90 days past due 72,490 61,375 Loans 90 days or more past due still accruing 2,698 744 Total nonperforming loans 97,082 81,980 Total nonperforming assets $ 97,186 82,393 Classification of Assets .
At December 31, 2024 2023 (Dollars in thousands) Loans 90 days or more past due: Residential mortgage loans $ 4,931 7,995 Home equity loans 2,250 3,126 Vehicle loans 3,191 3,051 Consumer loans 776 927 Commercial real estate loans 7,702 6,535 Commercial real estate loans - owner occupied — 177 Commercial loans 7,335 2,780 Total loans 90 days or more past due $ 26,185 24,591 Total real estate owned (REO) $ 35 104 Total loans 90 days or more past due and REO 26,220 24,695 Total loans 90 days or more past due to net loans receivable 0.24 % 0.22 % Total loans 90 days or more past due and REO to total assets 0.18 % 0.17 % Nonperforming assets: Nonaccrual loans - loans 90 days or more past due $ 25,529 21,894 Nonaccrual loans - loans less than 90 days past due 35,872 72,490 Loans 90 days or more past due still accruing 656 2,698 Total nonperforming loans 62,057 97,082 Other nonperforming assets (1) 16,102 — Total nonperforming assets $ 78,194 97,186 (1) Other nonperforming assets includes nonaccrual loans held for sale. 56 Table of Contents Classification of Assets .
Total shareholders’ equity at December 31, 2023 was $1.551 billion, or $12.20 per share, an increase of $59.8 million, or 4.0%, from $1.491 billion, or $11.74 per share, at December 31, 2022.
Total shareholders’ equity at December 31, 2024 was $1.60 billion, or $12.52 per share, an increase of $46 million, or 2.9%, from $1.55 billion, or $12.20 per share, at December 31, 2023.
The following table sets forth certain information regarding the amortized cost and fair value of our available-for-sale marketable securities portfolio and mortgage-backed securities portfolio at the dates indicated.
During the second quarter the Company restructured our security portfolio by selling 15% of available-for-sale securities during the year in order to reallocate these funds into higher interest-earning products. The following table sets forth certain information regarding the amortized cost and fair value of our available-for-sale marketable securities portfolio and mortgage-backed securities portfolio at the dates indicated.
GAAP basis net interest rate spreads were 2.83%, 3.09%, and 2.88%, respectively, and GAAP basis net interest margins were 3.26%, 3.17%, and 2.96% respectively. 57 Table of Contents Rate/Volume Analysis The following table presents, on a FTE basis, the changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities for the year ended December 31, 2023 compared to 2022 and for the year ended December 31, 2022 compared to 2021.
(11) Shown on a FTE basis and in consideration of applicable current federal, state and local tax rates. 52 Table of Contents Rate/Volume Analysis The following table presents, on a FTE basis, the changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities for the year ended December 31, 2024 compared to 2023 and for the year ended December 31, 2023 compared to 2022.
The increase in net income resulted from an increase in net interest income of $15.0 million, or 3.6%, a decrease in the provision for credit losses of $5.4 million, or 19.2%, and an increase in noninterest income of $3.0 million, or 2.7%, partially offset by an increase in noninterest expense of $22.0 million, or 6.7%.
Additionally contributing to the decrease in net income was an increase in noninterest expense of $17 million or 4.8%, partially offset by a decrease in the provision for credit losses of $2 million, or 7.1%, and a decrease in income taxes of $11 million or 27.1%.
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.
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 vertical to monitor the performance and status of commercial loans on an internal watch list.
During the years ended December 31, 2023 2022 (Dollars in thousands) FHLB borrowings: Average balance outstanding $ 568,350 96,358 Maximum outstanding at end of any month during year 787,300 551,300 Balance outstanding at end of year 338,500 551,300 Weighted average interest rate during year 5.37 % 4.27 % Weighted average interest rate at end of year 5.70 % 4.54 % Collateralized borrowings: Average balance outstanding $ 63,694 115,402 Maximum outstanding at end of any month during year 101,059 135,736 Balance outstanding at end of year 35,495 105,766 Weighted average interest rate during year 1.09 % 0.19 % Weighted average interest rate at end of year 1.72 % 0.27 % Collateral received: Average balance outstanding $ 37,942 14,104 Maximum outstanding at end of any month during year 62,300 42,824 Balance outstanding at end of year 24,900 24,100 Weighted average interest rate during year 5.28 % 2.62 % Weighted average interest rate at end of year 5.26 % 4.17 % Subordinated borrowings: Average balance outstanding $ 114,029 116,644 Maximum outstanding at end of any month during year 114,189 123,638 Balance outstanding at end of year 114,189 113,840 Weighted average interest rate during year 4.00 % 4.00 % Weighted average interest rate at end of year 4.00 % 4.00 % Total borrowings: Average balance outstanding $ 784,015 342,508 Maximum outstanding at end of any month during year 1,009,462 795,006 Balance outstanding at end of year 513,084 795,006 Weighted average interest rate during year 4.82 % 2.74 % Weighted average interest rate at end of year 5.02 % 3.88 % Shareholders’ equity .
During the years ended December 31, 2024 2023 (Dollars in thousands) FHLB borrowings: Average balance outstanding $ 254,033 568,350 Maximum outstanding at end of any month during year 493,300 787,300 Balance outstanding at end of year 175,000 338,500 Weighted average interest rate during year 5.49 % 5.37 % Weighted average interest rate at end of year 4.64 % 5.70 % Collateralized borrowings: Average balance outstanding $ 26,061 63,694 Maximum outstanding at end of any month during year 35,278 101,059 Balance outstanding at end of year 22,323 35,495 Weighted average interest rate during year 1.71 % 1.09 % Weighted average interest rate at end of year 1.73 % 1.72 % Collateral received: Average balance outstanding $ 31,326 37,942 Maximum outstanding at end of any month during year 55,900 62,300 Balance outstanding at end of year 3,008 24,900 Weighted average interest rate during year 5.35 % 5.28 % Weighted average interest rate at end of year 4.65 % 5.26 % Subordinated borrowings: Average balance outstanding $ 114,378 114,029 Maximum outstanding at end of any month during year 114,538 114,189 Balance outstanding at end of year 114,538 114,189 Weighted average interest rate during year 4.00 % 4.00 % Weighted average interest rate at end of year 4.00 % 4.00 % Total borrowings: Average balance outstanding $ 425,798 784,015 Maximum outstanding at end of any month during year 681,027 1,009,462 Balance outstanding at end of year 314,869 513,084 Weighted average interest rate during year 4.85 % 4.82 % Weighted average interest rate at end of year 4.20 % 5.02 % Shareholders’ equity .
Payments due Less than one year One year to less than three years Three years to less than five years Five years or greater Total (In thousands) Supplemental Executive Retirement Plan (1) $ — — — 1,021 1,021 Term notes payable to the FHLB of Pittsburgh (2) 338,500 — — — 338,500 Collateralized borrowings (2) 35,495 — — — 35,495 Collateral received (2) 24,900 — — — 24,900 Subordinated debentures (2) — — — 114,800 114,800 Junior subordinated debentures (2) — — — 129,574 129,574 Operating leases (3) 6,153 11,768 11,572 63,147 92,640 Total $ 405,048 11,768 11,572 308,542 736,930 Commitments to extend credit $ 198,166 — — — 198,166 (1) See Note 15 to the Consolidated Financial Statements, Employee Benefit Plans, for additional information.
Payments due Less than one year One year to less than three years Three years to less than five years Five years or greater Total (In thousands) Supplemental Executive Retirement Plan (1) $ — — — 1,113 1,113 Term notes payable to the FHLB of Pittsburgh (2) 175,000 — — — 175,000 Collateralized borrowings (2) 22,323 — — — 22,323 Collateral received (2) 3,008 — — — 3,008 Subordinated debentures (2) — — — 114,800 114,800 Junior subordinated debentures (2) — — — 129,834 129,834 Operating leases (3) 5,514 10,692 9,697 42,703 68,606 Total $ 205,845 10,692 9,697 288,450 514,684 Commitments to extend credit $ 190,094 — — — 190,094 (1) See Note 15 to the Consolidated Financial Statements, Employee Benefit Plans, for additional information.
At December 31, 2023 2022 (Dollars in thousands) Total shareholders’equity (GAAP capital) $ 1,516,850 1,562,610 Add: Accumulated other comprehensive loss 137,847 159,511 Less: non-qualifying intangible assets (265,889) (269,159) CET 1 capital 1,388,808 1,452,962 Additions to Tier 1 capital — — Leverage or Tier 1 capital 1,388,808 1,452,962 Add: Tier 2 capital (1) 131,928 115,240 Total risk-based capital $ 1,520,736 1,568,202 Average assets for leverage ratio $ 14,322,564 14,017,646 Net risk-weighted assets including off-balance-sheet items $ 11,211,971 10,659,180 CET 1 capital ratio 12.387 % 13.631 % Minimum requirement 4.500 % 4.500 % Leverage capital ratio 9.697 % 10.365 % Minimum requirement 4.000 % 4.000 % Total risk-based capital ratio 13.564 % 14.712 % Minimum requirement 8.000 % 8.000 % (1) Tier 2 capital consists of the allowance for credit losses, which is limited to 1.25% of total risk-weighted assets as detailed under the regulations of the FDIC, and 45% of pre-tax net unrealized gains on securities available-for-sale.
Northwest Bank At December 31, At December 31, 2024 2023 2024 2023 (Dollars in thousands) (Dollars in thousands) Total shareholders’equity (GAAP capital) $ 1,601,303 1,560,316 $ 1,595,639 1,516,850 Add: Accumulated other comprehensive loss 110,914 149,492 110,914 149,492 Add: Other deductions (11,617) (11,645) (11,617) (11,645) Less: non-qualifying intangible assets (357,799) (269,982) (353,706) (265,889) CET 1 capital 1,342,801 1,428,181 1,341,230 1,388,808 Additions to Tier 1 capital 125,845 125,585 — — Leverage or Tier 1 capital 1,468,646 1,553,766 1,341,230 1,388,808 Add: Tier 2 capital (1) 240,140 246,117 125,602 131,928 Total risk-based capital $ 1,708,786 1,799,883 $ 1,466,832 1,520,736 Average assets for leverage ratio $ 14,135,644 14,332,246 $ 14,123,417 14,322,564 Net risk-weighted assets including off-balance-sheet items $ 10,627,925 10,743,366 $ 10,618,368 10,734,057 CET 1 capital ratio 12.635 % 13.294 % 12.631 % 12.938 % Minimum requirement 4.500 % 4.500 % 4.500 % 4.500 % Leverage capital ratio 10.390 % 10.841 % 9.496 % 9.697 % Minimum requirement 4.000 % 4.000 % 4.000 % 4.000 % Total risk-based capital ratio 16.078 % 16.753 % 13.814 % 14.167 % Minimum requirement 8.000 % 8.000 % 8.000 % 8.000 % (1) Tier 2 capital consists of the allowance for credit losses, which is limited to 1.25% of total risk-weighted assets as detailed under the regulations of the FDIC, and 45% of pre-tax net unrealized gains on securities available-for-sale.
Maturity period Certificates of deposit (In thousands) Three months or less $ 118,990 Over three months through six months 156,901 Over six months through twelve months 505,596 Over twelve months 6,790 Total $ 788,277 At December 31, 2023 and 2022, we had total deposits in excess of $250,000 (the limit for FDIC insurance) of $1.835 billion and $4.031 billion, respectively.
Maturity period Certificates of deposit (In thousands) Three months or less $ 141,194 Over three months through six months 123,113 Over six months through twelve months 104,198 Over twelve months 5,420 Total $ 373,925 At December 31, 2024 and 2023, we had total deposits in excess of $250,000 per depositor per account ownership category (the limit for FDIC insurance) of $1.9 billion and $1.8 billion, respectively.
Liquidity needs can also be met by temporarily drawing upon lines-of-credit established for such reasons. Following the first quarter of 2023 bank failures, the Federal Reserve Board (“FRB”) established the Bank Term Funding Program (“BTFP”) as an additional source of available liquidity to support depository institutions through pledging qualifying assets as collateral.
Following the first quarter of 2023 bank failures, the Federal Reserve Board established the Bank Term Funding Program (“BTFP”) as an additional source of available liquidity to support depository institutions through pledging qualifying assets as collateral. In January 2024, the Federal Reserve Board announced it will stop extending loans under the BTFP after March 11, 2024.
In addition, delinquencies remain well controlled. In determining the amount of the current period provision, we considered current economic conditions, including unemployment levels, bankruptcy filings, and changes in collateral values, and assessed the impact of these factors on the quality of our loan portfolio and historical loss experience.
The primary driver of the increase over the past year is reflective of the Company’s exposure to the Long Term Healthcare segment and the challenges a few operators have experienced post Covid. 53 Table of Contents In determining the amount of the current period provision, we considered current economic conditions, including unemployment levels, bankruptcy filings, and changes in collateral values, and assessed the impact of these factors on the quality of our loan portfolio and historical loss experience.
At December 31, 2023 2022 (In thousands) Substandard assets $ 218,571 236,653 Doubtful assets — — Loss assets — — Total classified assets $ 218,571 236,653 Allowance for Credit Losses .
The following table sets forth the aggregate amount of our classified assets at the dates indicated. At December 31, 2024 2023 (In thousands) Substandard assets $ 322,025 218,571 Doubtful assets — — Loss assets — — Total classified assets $ 322,025 218,571 Allowance for Credit Losses .
At December 31, 2023 2022 Amount % of total loans (1) Amount % of total loans (1) (Dollars in thousands) Balance at end of year applicable to: Residential mortgage loans $ 18,193 30.0 % $ 19,261 32.0 % Home equity loans 5,403 10.8 % 5,902 11.9 % Vehicle loans 26,911 17.6 % 23,059 18.8 % Consumer loans 1,199 1.0 % 665 1.0 % Commercial real estate loans 51,267 23.1 % 44,506 22.5 % Commercial real estate loans - owner occupied 3,775 3.0 % 4,004 3.4 % Commercial loans 18,495 14.5 % 20,639 10.4 % Total $ 125,243 100.0 % $ 118,036 100.0 % (1) Represents percentage of loans in each category to total loans. 56 Table of Contents Average Balance Sheets The following table sets forth average balance sheets, average yields, on a fully taxable equivalent (“FTE”) basis, and average costs, and certain other information at and for the periods indicated.
At December 31, 2024 2023 Amount % of total loans (1) Amount % of total loans (1) (Dollars in thousands) Balance at end of year applicable to: Residential mortgage loans $ 14,347 28.4 % $ 18,193 30.0 % Home equity loans 4,845 10.3 % 5,403 10.8 % Vehicle loans 22,389 16.7 % 26,911 17.6 % Consumer loans 1,883 1.1 % 1,199 1.0 % Commercial real estate loans 44,328 22.3 % 51,267 23.1 % Commercial real estate loans - owner occupied 3,882 3.2 % 3,775 3.0 % Commercial loans 25,145 18.0 % 18,495 14.5 % Total $ 116,819 100.0 % $ 125,243 100.0 % (1) Represents percentage of loans in each category to total loans.
Service charges and fees increased $4.0 million, or 7.3%, to $59.2 million for the year ended December 31, 2023 from $55.2 million for the year ended December 31, 2022, driven by commercial loan fees and an increase in deposit related fees based on customer activity in the current year.
Service charges and fees increased $4 million, or 6%, driven by commercial loan fees and deposit related fees based on customer activity in the current year. Gains on the sales of SBA loans increased $2 million in during the current.
Using this formula, Northwest Bank’s liquidity ratio was 9.51% as of December 31, 2023. We adjust our liquidity level in order to meet funding needs of deposit outflows, repayment of borrowings and loan commitments. We also adjust liquidity as appropriate to meet our asset and liability management objectives.
We adjust our liquidity level in order to meet funding needs of deposit outflows, repayment of borrowings and loan commitments. We also adjust liquidity as appropriate to meet our asset and liability management objectives. Liquidity needs can also be met by temporarily drawing upon lines-of-credit established for such reasons.
In particular, compensation and employee benefits increased $7.3 million, or 3.9%, to $195.7 million for the year ended December 31, 2023 from $188.4 million for the year ended December 31, 2022, driven primarily by the buildout of the commercial business and related credit, risk management, and internal audit support functions over the past twelve months.
This increase was primarily attributable to an increase in compensation and employee benefits expense of $19 million, or 10%, for the year ended December 31, 2024 driven primarily by the build out of the commercial business and related credit, risk management, and internal audit support functions over the past year coupled with an increase in contracted employees expense and an increase in employee benefits expense.
At December 31, 2023 2022 Amount Percent Amount Percent (Dollars in thousands) Personal Banking: Residential mortgage loans held-for-sale $ 8,768 0.1 % $ 9,913 0.1 % Residential mortgage loans 3,419,417 30.0 % 3,488,686 31.9 % Home equity loans 1,227,858 10.8 % 1,297,674 11.9 % Vehicle loans 2,008,601 17.6 % 2,056,783 18.8 % Consumer loans (1) 117,426 1.0 % 111,872 1.0 % Total Personal Banking 6,782,070 59.5 % 6,964,928 63.7 % Commercial Banking: Commercial real estate 2,628,457 23.0 % 2,448,028 22.5 % Commercial real estate - owner occupied 345,553 3.0 % 375,527 3.4 % Commercial loans 1,658,729 14.5 % 1,131,969 10.4 % Total Commercial Banking 4,632,739 40.5 % 3,955,524 36.3 % Total loans receivable, gross 11,414,809 100.0 % 10,920,452 100.0 % Total allowance for credit losses (125,243) (118,036) Total loans receivable, net $ 11,289,566 $ 10,802,416 (1) Consists primarily of secured and unsecured personal loans.
At December 31, 2024 2023 Amount Percent Amount Percent (Dollars in thousands) Personal Banking: Residential mortgage loans $ 3,178,269 28.4 % $ 3,419,417 30.0 % Home equity loans 1,149,396 10.3 % 1,227,858 10.8 % Vehicle loans 1,870,843 16.7 % 2,008,601 17.6 % Consumer loans (1) 124,242 1.1 % 117,426 1.0 % Total Personal Banking 6,322,750 56.5 % 6,773,302 59.4 % Commercial Banking: Commercial real estate 2,495,726 22.3 % 2,628,457 23.1 % Commercial real estate - owner occupied 354,136 3.2 % 345,553 3.0 % Commercial loans 2,007,402 18.0 % 1,658,729 14.5 % Total Commercial Banking 4,857,264 43.5 % 4,632,739 40.6 % Total loans receivable, gross 11,180,014 100.0 % 11,406,041 100.0 % Total allowance for credit losses (116,819) (125,243) Total loans receivable, net $ 11,063,195 $ 11,280,798 (1) Consists primarily of secured and unsecured personal loans.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+2 added−2 removed22 unchanged
Biggest changeIncrease Decrease Parallel shift in interest rates over the next 12 months 100 bps 200 bps 300 bps 100 bps 200 bps 300 bps Projected percentage decrease in net interest income (1.3) % (2.7) % (4.3) % (5.0) % (10.8) % (16.9) % Projected percentage decrease in net income (2.8) % (5.9) % (9.3) % (11.8) % (25.0) % (39.2) % Projected decrease in return on average equity (2.6) % (5.6) % (8.9) % (11.2) % (24.0) % (37.9) % Projected decrease in earnings per share $ (0.03) $ (0.07) $ (0.11) $ (0.14) $ (0.30) $ (0.48) Projected percentage decrease in market value of equity (8.1) % (16.3) % (26.2) % 2.6 % 6.3 % 7.1 % The figures included in the tables above represent projections that were computed based upon certain assumptions including loan prepayment rates and deposit decay rates.
Biggest changeIncrease Decrease Parallel shift in interest rates over the next 12 months 100 bps 200 bps 300 bps 100 bps 200 bps 300 bps Projected percentage decrease in net interest income (1.4) % (3.1) % (4.9) % (0.1) % (5.2) % (11.2) % Projected percentage decrease in net income (3.3) % (7.4) % (11.5) % (0.3) % (12.7) % (27.0) % Projected decrease in return on average equity (3.1) % (7.1) % (11.1) % (0.2) % (12.2) % (26.1) % Projected decrease in earnings per share $ (0.04) $ (0.08) $ (0.13) $ — $ (0.14) $ (0.29) Projected percentage decrease in market value of equity (8.6) % (17.2) % (25.3) % 8.6 % 10.8 % 9.4 % The figures included in the tables above represent projections that were computed based upon certain assumptions including loan prepayment rates and deposit decay rates.
Because it is difficult to 62 Table of Contents 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 .
Because it is difficult to 64 Table of Contents 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 .
These analyses were prepared assuming that total interest-earning asset and interest-bearing liability levels at December 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 December 31, 2022 levels.
These analyses were prepared assuming that total interest-earning asset and interest-bearing liability levels at December 31, 2024 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 December 31, 2024 levels.
While fluctuations are expected because of changes in interest rates, we have established policy limits for various interest rate scenarios. Given interest rate shocks of +100 to +300 bps and -100 to -300 bps the market value of net assets is not expected to decrease by more than 15% to 35%. 64 Table of Contents
While fluctuations are expected because of changes in interest rates, we have established policy limits for various interest rate scenarios. Given interest rate shocks of +100 to +300 bps and -100 to -300 bps the market value of net assets is not expected to decrease by more than 15% to 35%. 66 Table of Contents
In preparing the table above, the following assumptions were used: (i) adjustable-rate mortgage loans will prepay at an annual rate of 8% to 23%; (ii) fixed-rate mortgage loans will prepay at an annual rate of 6% to 70%, depending on the type of loan; (iii) commercial loans will prepay at an annual rate of 10% to 30%; and (iv) consumer loans held by Northwest Bank will prepay at an annual rate of 13% to 23%.
In preparing the table above, the following assumptions were used: (i) adjustable-rate mortgage loans will prepay at an annual rate of 8% to 23%; (ii) fixed-rate mortgage loans will prepay at an annual rate of 6% to 40%, depending on the type of loan; (iii) commercial loans will prepay at an annual rate of 10% to 30%; and (iv) consumer loans held by Northwest Bank will prepay at an annual rate of 15% to 25%.
As of December 31, 2023 we had $175 million of cash flow hedges.
As of December 31, 2024 we had $175 million of cash flow hedges.
At December 31, 2023, total interest-earning liabilities maturing or re-pricing within one year exceeded total interest-bearing assets maturing or re-pricing in the same period by $565.9 million, representing a negative one-year gap ratio of 3.92%. 61 Table of Contents The following table sets forth, on a carrying value basis, the amounts of interest-earning assets and interest-bearing liabilities outstanding at December 31, 2023, which are expected to re-price or mature, based upon certain assumptions, in each of the future time periods shown.
At December 31, 2024, total interest-earning liabilities maturing or re-pricing within one year exceeded total interest-bearing assets maturing or re-pricing in the same period by $30 million , representing a one-year gap ratio of 0.21%. 63 Table of Contents The following table sets forth, on a carrying value basis, the amounts of interest-earning assets and interest-bearing liabilities outstanding at December 31, 2024, which are expected to re-price or mature, based upon certain assumptions, in each of the future time periods shown.
For purposes of this analysis, management has estimated, based on historical trends, that $617.8 million, or 23.5%, of our interest-bearing demand accounts and $429.3 million, or 20.4%, of our savings deposits are interest sensitive and may re-price in one year or less, and that the remainder may re-price over longer time periods. 63 Table of Contents The above assumptions are annual percentages based on remaining balances and should not be regarded as indicative of the actual prepayments and withdrawals that we may experience.
For purposes of this analysis, management has estimated, based on historical trends, that $584 million, or 22%, of our interest-bearing demand accounts and $409 million, or 19%, of our savings deposits are interest sensitive and may re-price in one year or less, and that the remainder may re-price over longer time periods. 65 Table of Contents The above assumptions are annual percentages based on remaining balances and should not be regarded as indicative of the actual prepayments and withdrawals that we may experience.
Increase Decrease Parallel shift in interest rates over the next 12 months 100 bps 200 bps 300 bps 100 bps 200 bps 300 bps Projected percentage increase/(decrease) in net interest income (1.4) % (3.1) % (4.9) % (0.1) % (5.2) % (11.2) % Projected percentage increase/(decrease) in net income (3.3) % (7.4) % (11.5) % (0.3) % (12.7) % (27.0) % Projected increase/(decrease) in return on average equity (3.1) % (7.1) % (11.1) % (0.2) % (12.2) % (26.1) % Projected increase/(decrease) in earnings per share $ (0.04) $ (0.08) $ (0.13) $ — $ (0.14) $ (0.29) Projected percentage increase/(decrease) in market value of equity (8.6) % (17.2) % (25.3) % 8.6 % 10.8 % 9.4 % The following table illustrates the simulated impact of a parallel 100 bps, 200 bps or 300 bps upward or 100 bps downward movement in interest rates on net interest income, net income, return on average equity, earnings per share, and market value of equity.
Increase Decrease Parallel shift in interest rates over the next 12 months 100 bps 200 bps 300 bps 100 bps 200 bps 300 bps Projected percentage increase/(decrease) in net interest income (1.0) % (2.3) % (3.7) % (0.6) % (4.0) % (6.4) % Projected percentage increase/(decrease) in net income (2.4) % (5.5) % (8.8) % (1.5) % (9.7) % (15.4) % Projected increase/(decrease) in return on average equity (2.2) % (5.2) % (8.9) % (1.4) % (9.3) % (14.7) % Projected increase/(decrease) in earnings per share $ (0.03) $ (0.07) $ (0.11) $ (0.02) $ (0.12) $ (0.18) Projected percentage increase/(decrease) in market value of equity (5.1) % (10.5) % (16.0) % 3.4 % 3.9 % 5.7 % The following table illustrates the simulated impact of a parallel 100 bps, 200 bps or 300 bps upward or 100 bps downward movement in interest rates on net interest income, net income, return on average equity, earnings per share, and market value of equity.
We purchase adjustable-rate investment securities and mortgage-backed securities, which at December 31, 2023, totaled $39.7 million, and originate adjustable-rate loans, which at December 31, 2023, totaled $ 4.032 billion or 35.5 % of our gross loan portfolio.
We purchase adjustable-rate investment securities and mortgage-backed securities, which at December 31, 2024, totaled $76 million, and originate adjustable-rate loans, which at December 31, 2024, totaled $ 4.3 billion or 38% of our gross loan portfolio. Of our $13.2 billion of interest-earning assets at December 31, 2024, $4.3 billion, or 33%, consisted of assets with adjustable rates of interest.
Removed
Of our $13.283 billion of interest-earning assets at December 31, 2023, $4.072 billion, or 30.7 %, consisted of assets with adjustable rates of interest.
Added
Amounts maturing or re-pricing Within 1 year Over 1-3 years Over 3-5 years Over 5-10 years Over 10 years Total (Dollars in thousands) Rate-sensitive assets: Interest-earning deposits $ 184,264 — — — — 184,264 Mortgage-backed securities: Fixed-rate 221,194 379,645 267,350 439,545 257,745 1,565,479 Variable-rate 49,352 — — — — 49,352 Investment securities 7,284 41,952 111,682 61,245 22,536 244,699 Mortgage loans: Adjustable-rate 28,076 11,935 42,733 12,071 29 94,844 Fixed-rate 301,506 563,189 512,980 1,039,564 659,026 3,076,265 Home equity loans: Adjustable-rate 423,282 — — — — 423,282 Fixed-rate 146,859 242,853 178,705 148,734 5,009 722,160 Consumer loans 777,908 989,699 154,749 2,744 15,256 1,940,356 Commercial real estate loans 2,051,832 632,829 137,318 9,262 22,339 2,853,580 Commercial loans 1,444,952 445,655 96,703 6,523 15,731 2,009,564 Total rate-sensitive assets 5,636,509 3,307,757 1,502,220 1,719,688 997,671 13,163,845 Rate-sensitive liabilities: Time deposits 2,548,387 108,797 18,702 1,734 25 2,677,645 Money market demand accounts 1,763,560 — — — 244,179 2,007,739 Savings deposits 409,107 535,952 535,952 690,240 — 2,171,251 Interest-bearing demand deposits 583,984 400,052 400,052 1,000,130 282,286 2,666,504 FHLB Advances — 100,000 75,000 — — 175,000 Collateral 34,850 — — — — 34,850 Other borrowings 22,323 — — — — 22,323 Trust Preferred Securities 129,834 — — — — 129,834 Subordinated debt 114,538 — — — — 114,538 Total rate-sensitive liabilities $ 5,606,583 1,144,801 1,029,706 1,692,104 526,490 9,999,684 Cumulative interest sensitivity gap $ 29,926 2,192,882 2,665,396 2,692,980 3,164,161 3,164,161 Cumulative interest sensitivity gap as a percentage of total assets 0.21 % 15.18 % 18.46 % 18.65 % 21.91 % 21.91 % Cumulative interest-earning assets as a percent of cumulative interest-bearing liabilities 100.53 % 132.48 % 134.25 % 128.43 % 131.64 % 131.64 % For comparison, at December 31, 2023, we had a cumulative interest sensitivity gap as a percentage of total assets of 23.09%.
Removed
Amounts maturing or re-pricing Within 1 year Over 1-3 years Over 3-5 years Over 5-10 years Over 10 years Total (Dollars in thousands) Rate-sensitive assets: Interest-earning deposits $ 78,689 — — — — 78,689 Mortgage-backed securities: Fixed-rate 208,684 340,821 282,156 443,672 246,467 1,521,800 Variable-rate 29,872 — — — — 29,872 Investment securities 8,655 50,563 113,268 107,436 26,604 306,526 Mortgage loans: Adjustable-rate 36,973 15,327 33,026 14,735 138 100,199 Fixed-rate 398,133 689,205 572,425 1,034,657 625,453 3,319,873 Home equity loans: Adjustable-rate 403,123 — — — — 403,123 Fixed-rate 125,323 215,899 178,363 262,420 38,034 820,039 Consumer loans 675,156 982,060 370,114 23,165 15,069 2,065,564 Commercial real estate loans 1,904,597 698,336 314,031 26,459 33,517 2,976,940 Commercial loans 1,062,508 389,577 175,187 14,761 18,698 1,660,731 Total rate-sensitive assets 4,931,713 3,381,788 2,038,570 1,927,305 1,003,980 13,283,356 Rate-sensitive liabilities: Time deposits 2,465,478 97,076 37,142 2,922 263 2,602,881 Money market demand accounts 1,631,852 — — — 336,366 1,968,218 Savings deposits 429,344 515,956 515,956 643,978 — 2,105,234 Interest-bearing demand deposits 617,807 394,121 394,121 985,303 243,194 2,634,546 FHLB Advances 163,500 25,000 150,000 — — 338,500 Collateral 24,900 — — — — 24,900 Other borrowings 35,495 — — — — 35,495 Trust Preferred Securities 129,574 — — — — 129,574 Subordinated debt (349) 114,538 — — — 114,189 Total rate-sensitive liabilities $ 5,497,601 1,146,691 1,097,219 1,632,203 579,823 9,953,537 Cumulative interest sensitivity gap $ (565,888) 1,669,209 2,610,560 2,905,662 3,329,819 3,329,819 Cumulative interest sensitivity gap as a percentage of total assets (3.92) % 11.58 % 18.10 % 20.15 % 23.09 % 23.09 % Cumulative interest-earning assets as a percent of cumulative interest-bearing liabilities 89.71 % 125.12 % 133.72 % 131.00 % 133.45 % 133.45 % At December 31, 2022, we had a cumulative interest sensitivity gap as a percentage of total assets of 25.41%.
Added
Compared to 2023, the simulations showed decreased interest rate sensitivity in rising rate scenarios which was driven by an increase in floating rate commercial loans. Additionally, decreased interest rate sensitivity was driven by decreased deposit beta assumptions that were revised after most current down rate environment.

Other NWBI 10-K year-over-year comparisons