10q10k10q10k.net

What changed in Northwest Bancshares, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Northwest Bancshares, Inc.'s 2022 and 2023 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 2023 report.

+459 added−370 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in Northwest Bancshares, Inc.'s 2023 10-K

459 paragraphs added · 370 removed · 315 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

110 edited+55 added−6 removed121 unchanged
Biggest changeNorthwest Capital Group, Inc.’s principal activity is to own, operate and ultimately divest of properties that were acquired in foreclosure. At December 31, 2022, Northwest Bank had an equity investment of $11.6 million in Northwest Capital Group, Inc., with a $2,000 net loss reported for the year ended December 31, 2022.
Biggest changeAt 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.
We generally retain in our portfolio all consumer loans that we originate while we periodically sell participation loans in the multi-family residential, commercial real estate or commercial business loans that we originate in an effort to reduce the concentration of certain individual credits and the risk associated with certain businesses, industries or geographies. Residential Mortgage Loans .
We generally retain in our portfolio all consumer loans that we originate while we periodically sell participation loans in the multi-family residential, commercial real estate and commercial business loans that we originate in an effort to reduce the concentration of certain individual credits and the risk associated with certain businesses, industries or geographies. Residential Mortgage Loans .
Capital Requirements Federal regulations require federally insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets ratio of 8.0%, and a 4.0% Tier 1 capital to total assets leverage ratio.
Capital Requirements Federal regulations require federally insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets ratio of 8.0%, and a Tier 1 capital to total assets leverage ratio of 4.0%.
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, the 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 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.
The FDIC is required by law to examine each regulated institution every twelve months. The FDIC has the authority to order any savings bank and its directors, officers, attorneys or employees to discontinue any violation of law or unsafe or unsound banking practice.
The FDIC is required by law to examine each regulated institution every twelve months. The FDIC has the authority to order any savings bank and its directors, officers, or employees to discontinue any violation of law or unsafe or unsound banking practice.
Limited special financing programs allow for insured loans with loan-to-value ratios of up to 97%, and uninsured loans with loan-to-value ratios up to 100%. The appraisal process is managed by Northwest Appraisal Services, and appraisals are performed by our in-house appraiser staff or by appraisers deemed qualified by our Residential Appraising Manager.
Limited special financing programs allow for insured loans with loan-to-value ratios of up to 97%, and uninsured loans with loan-to-value ratios up to 100%. The appraisal process is managed by the Northwest Appraising Department, and appraisals are performed by our in-house appraiser staff or by appraisers deemed qualified by our Residential Appraising Manager.
Such 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 • Establishes standards for safety and soundness.
Such 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.
Common equity Tier 1 ratio plus capital conservation buffer 7.000 % Tier 1 risk-based capital ratio plus capital conservation buffer 8.500 % Total risk-based capital ratio plus capital conservation buffer 10.500 % As of December 31, 2022, Northwest Bank’s capital exceeded all applicable regulatory requirements and it had an appropriate capital conservation buffer.
Common equity Tier 1 ratio plus capital conservation buffer 7.000 % Tier 1 risk-based capital ratio plus capital conservation buffer 8.500 % Total risk-based capital ratio plus capital conservation buffer 10.500 % As of December 31, 2023, Northwest Bank’s capital exceeded all applicable regulatory requirements and it had an appropriate capital conservation buffer.
The principal types of other consumer loans we offer are direct and indirect automobile loans, sales finance loans, unsecured personal loans, credit card loans, and loans secured by deposit accounts. These loans are typically offered with maturities of ten years or less.
The principal types of other consumer loans we offer are direct and indirect automobile loans, sales finance loans, unsecured personal loans, credit card loans, and loans secured by investment accounts. These loans are typically offered with maturities of ten years or less.
Consumer loans entail greater credit risk than residential mortgage loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly, such as automobiles, mobile homes, boats, recreation vehicles, appliances and furniture.
Consumer loans entail greater credit risk than residential mortgage loans, particularly in the case of consumer loans that are unsecured or secured by assets that depreciate rapidly, such as automobiles, mobile homes, boats, and recreation vehicles.
The fair values of our securities are based on published or securities dealers’ market values, when available. See Note 3 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 Stat ements for a detailed analysis and description of our investment portfolio and valuation techniques.
An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.
An institution is deemed to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%.
In addition to other enforcement and supervision powers, the FDIC may determine after notice and opportunity for a hearing that the continuation of a savings bank’s ownership of or relation to a subsidiary constitutes a serious risk to the safety, soundness or stability of the savings bank, or is inconsistent with the purposes of federal banking laws.
In addition to other enforcement and supervision powers, the FDIC may determine 11 Table of Contents after notice and opportunity for a hearing that the continuation of a savings bank’s ownership of or relation to a subsidiary constitutes a serious risk to the safety, soundness or stability of the savings bank, or is inconsistent with the purposes of federal banking laws.
This includes enhanced risk management and corporate governance processes, and examination for compliance with federal financial consumer protection laws by the Consumer Financial Protection Bureau (“CFPB”) rather than the FDIC. Set forth below is a brief description of certain regulatory requirements that are applicable to Northwest Bank and Northwest Bancshares, Inc.
This includes enhanced risk management and corporate governance processes, and examination for compliance with federal financial consumer protection laws by the Consumer Financial Protection Bureau (“CFPB”). Set forth below is a brief description of certain regulatory requirements that are applicable to Northwest Bank and Northwest Bancshares, Inc.
These loans were performing in accordance with their agreed upon terms as of December 31, 2022. 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, 2023. Commercial business loans are offered with both fixed and adjustable interest rates.
The Federal Reserve Board’s final rule applies to questions of control under the Bank Holding Company Act but does not extend to the Change in Bank Control Act. 14 Table of Contents Federal Securities Laws Our common stock is registered with the SEC under Section 12(b) of the Exchange Act.
The Federal Reserve Board’s final rule applies to questions of control under the Bank Holding Company Act but does not extend to the Change in Bank Control Act. Federal Securities Laws Our common stock is registered with the SEC under Section 12(b) of the Exchange Act.
At December 31, 2022, a significant portion of our multi-family commercial real estate and commercial real estate loans were secured by properties located within our market area.
At December 31, 2023, a significant portion of our multi-family commercial real estate and commercial real estate loans were secured by properties located within our market area.
At December 31, 2022, 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, 2023, the Trusts have issued a total of $128.9 million of trust preferred securities. The Trusts are not consolidated with Northwest Bancshares, Inc.
Additionally, when the consolidated assets of a financial institution and its holding company exceed $10 billion, such as is the case with us, the financial institution becomes subject to additional statutory and regulatory requirements that will result in additional costs.
Additionally, when the consolidated assets of a financial institution and its holding company exceed $10 billion, such as is the case with us, the financial institution becomes subject to additional statutory and regulatory 12 Table of Contents requirements that will result in additional costs.
A majority of Northwest Bank’s affairs are conducted in Pennsylvania; however as the Company’s operational footprint expands, taxes paid to other states, such as New York (with a 6.5% rate) and Indiana (with a 6% rate) have grown slightly in significance.
A majority of Northwest Bank’s affairs are conducted in Pennsylvania; however as the Company’s operational footprint expands, taxes paid to other states, such as New York (with a 7.25% rate) and Indiana (with a 6% rate) have grown slightly in significance.
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, 2022, Northwest Bank operated 150 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 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.
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 .
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 .
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, 2022, we operated 150 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, 2023, we operated 142 community banking locations across these market areas.
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 88 community banking offices within the Commonwealth of Pennsylvania encompasses 25 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. 2 Table of Contents Pennsylvania Market Area . Our retail branch network of 83 community banking offices within the Commonwealth of Pennsylvania encompasses 23 counties.
Federal regulations also specify circumstances under which a federal banking agency may reclassify a well capitalized institution as adequately capitalized, and may require an adequately capitalized institution to comply with supervisory actions as if it were in the next lower category (except that the FDIC may not 12 Table of Contents reclassify a significantly undercapitalized institution as critically undercapitalized).
Federal regulations also specify circumstances under which a federal banking agency may reclassify a well capitalized institution as adequately capitalized, and may require an adequately capitalized institution to comply with supervisory actions as if it were in the next lower category (except that the FDIC may not reclassify a significantly undercapitalized institution as critically undercapitalized).
Copies of our filings may be obtained, without charge, by written request to Shareholder Relations, 100 Liberty Street, P.O. Box 128, Warren, Pennsylvania 16365, or emailing shareholderrelations@northwest.com. Northwest Bank Northwest Bank is a Pennsylvania-chartered savings bank headquartered in Warren, Pennsylvania, which is located in northwestern Pennsylvania.
Copies of our filings may be obtained, without charge, by written request to Shareholder Relations, 100 Liberty Street, P.O. Box 128, Warren, Pennsylvania 16365, or emailing [email protected] . Northwest Bank Northwest Bank is a Pennsylvania-chartered savings bank headquartered in Warren, Pennsylvania, which is located in northwestern Pennsylvania.
Higher levels of capital are required for asset categories believed to present greater risk. 11 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.
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.
An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%.
An institution is deemed to be “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 6.0%, a leverage ratio of less than 4.0% or a common equity Tier 1 ratio of less than 4.5%.
At December 31, 2022, Northwest Bancshares, Inc.’s investment in the Trusts totaled $4.0 million, and the Trusts had assets of $129.3 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, 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.
Bank holding companies with greater than $3 billion in total consolidated assets are subject to consolidated regulatory capital requirements identical to those applicable to the subsidiary depository institutions. Northwest Bancshares, Inc. was in compliance with the holding company capital requirements and the capital conservation buffer as of December 31, 2022. 13 Table of Contents Source of Strength Doctrine.
Bank holding companies with greater than $3 billion in total consolidated assets are subject to consolidated regulatory capital requirements identical to those applicable to the subsidiary depository institutions. Northwest Bancshares, Inc. was in compliance with the holding company capital requirements and the capital conservation buffer as of December 31, 2023. Source of Strength Doctrine.
Creditworthiness of the applicant is of primary consideration; however, the underwriting process also includes a comparison of the value of the collateral in relation to the proposed loan amount.
Creditworthiness of the applicant is of primary consideration; however, the underwriting process also includes a comparison of the value of the collateral in relation to the proposed loan amount for secured products.
Loans-to-One Borrower Limitation In accordance with the Banking Code, a Pennsylvania chartered savings bank, with certain limited exceptions, may lend to a single or related group of borrowers on an “unsecured” basis an amount equal to 15% of its capital accounts, the aggregate of capital, surplus, undivided profits, capital securities and reserve for credit losses.
Loans-to-One Borrower Limitation In accordance with the Banking Code, a Pennsylvania chartered savings bank, with certain limited exceptions, may lend to a single or related group of borrowers an amount equal to up to 15% of its capital accounts, defined as the aggregate of capital, surplus, undivided profits, capital securities and reserve for credit losses.
At December 31, 2022, commercial real estate loans totaled $2.825 billion, or 26.1% 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, 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.
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, 2022, our largest commercial loan relationship had an aggregate total exposure of $75.5 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, 2023, our largest commercial loan relationship had an aggregate total exposure of $67.4 million, and operates in the internet, cable and phone space.
An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater and a common equity Tier 1 ratio of 4.5% or greater.
An institution is deemed to be “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater, a leverage ratio of 4.0% or greater, or a common equity Tier 1 ratio of 4.5% or greater.
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 $62.9 million, or 0.6%, of our gross loan portfolio at December 31, 2022.
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.
Our fourth largest commercial relationship totaled $75.5 million in exposure and was secured by accounts receivable, information systems, property, and equipment. Our fifth largest commercial relationship totaled $65.0 million in exposure and was secured by accounts receivable, inventory, manufacturing property and equipment. All of these loans were performing in accordance with their terms at December 31, 2022.
Our fourth largest commercial relationship totaled $67.4 million in exposure and was secured by accounts receivable, information systems, property, and equipment. Our fifth largest commercial relationship totaled $65.0 million in exposure and was secured by accounts receivable, inventory, manufacturing property and equipment. All of these loans were performing in accordance with their terms at December 31, 2023.
Our general policy is to make no loans, either individually or in the aggregate to one borrower or single source of repayment, in excess of $30.0 million. The Aggregate Credit Exposure limit is $100.0 million.
Our general policy is to make no loans, either individually or in the aggregate to one borrower or single source of repayment, in excess of $30.0 million.
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, 2022, the Company had 127,028,848 shares outstanding and a market capitalization of approximately $1.776 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, 2023, the Company had 127,110,453 shares outstanding and a market capitalization of approximately $1.586 billion.
As of September 30, 2022, the foreclosure rate for mortgage loans on one-to-four unit residential properties in the state of Pennsylvania was one in every 1,973 housing units, compared to the national average of one in every 1,517 housing units. Western New York Market Area .
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, 2022, the foreclosure rate for mortgage loans on one-to-four unit residential properties in the state of New York was one in every 1,432 housing units, compared to the national average of one in every 1,517 housing units. Northeastern Ohio Market Area .
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 .
The “source of strength doctrine” requires bank holding companies to provide assistance to their subsidiary depository institutions in the event the subsidiary depository institution experiences 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. Capital Distributions.
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.
As of September 30, 2022, the foreclosure rate for mortgage loans on one-to-four unit residential properties in the state of Indiana was one in every 1,154 housing units, compared to the national average of one in every 1,517 housing units. Lending Activities General .
As of September 30, 2023, the foreclosure rate for mortgage loans on one-to-four unit residential properties in the state of Indiana was one in every 1,144 housing units, compared to the national average of one in every 1,389 housing units. Lending Activities General .
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, 2022, other consumer loans totaled $2.104 billion, or 19.4% 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, 2023, other consumer loans totaled $2.066 billion, or 18.2% of gross loans. Commercial Real Estate Loans .
As of September 30, 2022, the foreclosure rate for mortgage loans on one-to-four unit residential properties in the state of Ohio was one in every 1,027 housing units, compared to the national average of one in every 1,517 housing units. Indiana Market Area . Our retail branch network of 22 community banking offices includes eight 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 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.
Included in our $3.489 billion portfolio of residential mortgage loans as of December 31, 2022 are construction loans of $36.9 million, or 0.3% 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 $3.419 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.
At December 31, 2022, we had commitments to originate $248.6 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, 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.
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, 2022, Northwest Bank had an equity investment of $28.8 million in The Bert Company.
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, 2022, commercial loans totaled $1.133 billion, or 10.4% 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, 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.
Upon the making of such a determination, the FDIC may order the savings bank to divest the subsidiary or take other actions. Human Capital Management Workforce Demographics . As of December 31, 2022, we had 2,088 full-time and 140 part-time employees, or 2,158 full-time equivalent employees ( “ FTEs”).
Upon the making of such a determination, the FDIC may order the savings bank to divest the subsidiary or take other actions. Human Capital Management Workforce Demographics . As of December 31, 2023, we had 2,030 full-time and 135 part-time employees, or 2,098 full-time equivalent employees ( “ FTEs”).
This relationship is also our largest commercial real estate loan relationship as of December 31, 2022, of which $121.6 million is attributed to commercial real estate loans. All loans were performing in accordance with their terms as of December 31, 2022. Multi-family commercial and commercial real estate loans are offered with both adjustable and fixed interest rates.
This relationship is also our largest commercial real estate loan relationship as of December 31, 2023, of which $117.2 million is attributed to commercial real estate loans. All of the underlying loans were performing in accordance with their terms as of December 31, 2023. Multi-family commercial and commercial real estate loans are offered with both adjustable and fixed interest rates.
Our second largest lending relationship totaled $90.6 million in exposure and was secured by student housing, medical space, senior housing, office space, industrial, aerospace, and transportation engineering and retail space. Our third largest commercial relationship totaled $75.9 million in exposure and was secured by a hotel, retail space, office space, multi-family, a charter school, self-storage, and a restaurant.
Our second largest lending relationship totaled $69.1 million in exposure and was secured by student housing, medical space, senior housing, office space, industrial, aerospace, and transportation engineering and retail space. Our third largest commercial relationship totaled $67.8 million in exposure and was secured by a hotel, retail space, office space, multi-family, a charter school, self-storage, and a restaurant.
Home equity loans are offered on a fixed-rate basis with amortized terms of up to 20 years. Principal and interest is due monthly. At December 31, 2022, our fixed-rate home equity loans totaled $853.4 million, or 7.9% of gross loans.
Home equity loans are offered on a fixed-rate basis with amortized terms of up to 20 years. Principal and interest is due monthly. At December 31, 2023, our fixed-rate home equity loans totaled $820.0 million, or 7.2% of gross loans.
The Sarbanes-Oxley Act generally applies to all companies that file or are required to file periodic reports with the Securities and Exchange Commission, under the Exchange Act. The Company has policies, procedures and systems designed to comply with these regulations. FEDERAL AND STATE TAXATION Federal Taxation .
The Sarbanes-Oxley Act generally applies to all companies that file or are required to file periodic reports with the Securities and Exchange Commission, under the Exchange Act. The Company has policies, procedures and systems designed to comply with this Act and its implementing regulations. 17 Table of Contents FEDERAL AND STATE TAXATION Federal Taxation .
Our retail branch network of 12 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 853,213 and total households of approximately 353,484 as of December 31, 2022.
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.
Such action may include a capital directive, a cease and desist order, civil money penalties, restrictions on an institution’s operations, termination of federal deposit insurance, and the appointment of a conservator or receiver. Such action, through enforcement proceedings or otherwise, may require a variety of corrective measures.
Such action may include a capital directive, a cease and desist order, civil money penalties, restrictions on an institution’s operations, termination of federal deposit insurance, and the appointment of a conservator or receiver.
Our Pennsylvania market area has a total population of approximately 4.4 million and total households of approximately 2.1 million as of December 31, 2022. The Pennsylvania markets in which we operate our retail branches contain approximately half of Pennsylvania’s population and a similar percentage of households. These markets have experienced a 2.9% decrease in population between 2010 and 2022.
Our Pennsylvania market area has a total population of approximately 4.3 million and total households of approximately 1.8 million as of December 31, 2023. The Pennsylvania markets in which we operate our retail branches contain approximately half of Pennsylvania’s population and a similar percentage of households. These markets have experienced a 1.5% decrease in population between 2020 and 2024.
As of September 30, 2022, 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 9.6%, compared to an increase in the national average of 12.4%.
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 December 31, 2022, the unemployment rate for our Indiana market was 3.0%, compared to the national average of 3.3%. 3 Table of Contents As of September 30, 2022, the House Price Index for the last four quarters in our Indiana market area increased by 12.8%, compared to an increase in the national average of 12.4%.
As of December 31, 2023, the unemployment rate for our Indiana market was 3.7%, the same as the national average. 3 Table of Contents As of September 30, 2023, the House Price Index for the last four quarters in our Indiana market area increased by 6.5%, compared to an increase in the national average of 5.5%.
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 these regulations. Holding Company Regulation General.
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.
Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations. The company did exercise this opt-out election during the year ended December 31, 2022.
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.
As of December 31, 2022, the unemployment rate for our Ohio market was 3.6%, compared to the national average of 3.3%. As of September 30, 2022, the House Price Index for the last four quarters in our Ohio market area increased by 11.6%, compared to an increase in the national average of 12.4%.
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%.
Our largest commercial relationship with an aggregate total exposure of $123.4 million as of December 31, 2022, is comprised of multi-family residential, commercial office, hotel, retail buildings, and student housing, the largest of which is $36.6 million of the total exposure secured by retail buildings.
Our largest commercial relationship with an aggregate total exposure of $118.9 million as of December 31, 2023, is comprised of multi-family residential, commercial office, hotel, retail buildings, and student housing, the largest of which is $33.5 million of the total exposure secured by retail buildings.
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.
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.
Among other things, this authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a risk to Northwest Bank. Permissible Activities.
The Federal Reserve Board has enforcement authority over the Company and any non-bank subsidiaries. Among other things, this authority permits the Federal Reserve Board to restrict or prohibit activities that are determined to be a risk to Northwest Bank. Permissible Activities.
In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
Such action, through enforcement proceedings or otherwise, may require a variety of corrective measures. 14 Table of Contents In addition to establishing the minimum regulatory capital requirements, the regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
The assessment range (inclusive of possible adjustments specified by the regulations) for institutions with greater than $10 billion of total assets was 1.5 to 40 basis points effective through December 31, 2022.
The assessment range (inclusive of possible adjustments specified by the regulations) for institutions with greater than $10 billion of total assets was 2.5 to 42 basis points effective January 1, 2023.
The Federal Home Loan Bank System provides a central credit facility primarily for member institutions. As a member of the Federal Home Loan Bank of Pittsburgh, Northwest Bank is required to acquire and hold share of capital stock in the Federal Home Loan Bank in specified amounts. As of December 31, 2022, Northwest Bank was in compliance with this requirement.
The Federal Home Loan Bank System provides a central credit facility primarily for member institutions. As a member of the 15 Table of Contents Federal Home Loan Bank of Pittsburgh, Northwest Bank is required to acquire and hold share of capital stock in the Federal Home Loan Bank in specified amounts.
As of September 30, 2022, the House Price Index for the last four quarters in our New York market increased by 11.3%, compared to an increase in the national average of 12.4%.
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%.
We are subject to audit by the Internal Revenue Service for the tax periods ended after December 31, 2018 and generally subject to audit by any state in which we conduct business for the tax periods ended after December 31, 2018. We are under audit by the state of New York for tax years 2016 through 2018.
We are subject to audit by the Internal Revenue Service for the tax periods ended after December 31, 2019 and generally subject to audit by any state in which we conduct business for the tax periods ended after December 31, 2019.
At December 31, 2022, 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. At December 31, 2022, Northwest Bank had an equity investment in Northwest Consumer Discount Company of $44.3 million.
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 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, 2022, Northwest Bank had an equity investment in Northwest Advisors, Inc. of $819,000. 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 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.
The average median household income in this market increased by 1.3% over the last year to $65,170 as of December 31, 2022, compared to the national median income level of $73,503. As of December 31, 2022, the unemployment rate for our New York market area was 3.1%, compared to the national average of 3.3%.
The average median household income in this market increased by 0.6% over the last year to $65,563 as of December 31, 2023, compared to the national median income level of $75,874. As of December 31, 2023, the unemployment rate for our New York market area was 3.9%, compared to the national average of 3.7%.
The disbursed portion of home equity lines of credit totaled $438.3 million, or 4.0% of gross loans, with $812.9 million remaining undistributed as of December 31, 2022. Other Consumer Loans .
The disbursed portion of home equity lines of credit totaled $403.1 million, or 3.6% of gross loans, with $701.0 million remaining undistributed as of December 31, 2023. Other Consumer Loans .
As of December 31, 2022, Northwest Bank was well-capitalized for this purpose. Transactions with Affiliates Transactions between Northwest Bank and its affiliates, including the Company, are limited by Sections 23A and 23B of the Federal Reserve Act, applicable to FDIC-insured state nonmember banks by Section 18(j) of the Federal Deposit Insurance Act, and its implementing regulations.
Transactions with Affiliates Transactions between Northwest Bank and its affiliates, including the Company, are limited by Sections 23A and 23B of the Federal Reserve Act, applicable to FDIC-insured state nonmember banks by Section 18(j) of the Federal Deposit Insurance Act, and the Federal Reserve Act ’ s implementing regulation, Regulation W.
We accept brokered deposits through the CDARS program, but generally do not solicit funds outside our market area. As of December 31, 2022, we had deposits through the CDARS program with an aggregate balance of $200,000. In addition, we acquired brokered certificates of deposit in our MutualBank acquisition transaction that have yet to mature.
We accept brokered deposits through the CDARS program, but generally do not solicit funds outside our market area. As of December 31, 2023, we had deposits through the CDARS program with an aggregate balance of $200,000. In addition, we purchased $483.9 million of brokered certificates of deposit in 2023.
In general, transactions with affiliates must be on terms that are at least as favorable to the bank as comparable transactions with non-affiliates. In addition, certain types of affiliate transactions are restricted to an aggregate percentage of the bank’s capital. Certain transactions with affiliates are required to be secured by specified collateral.
In general, transactions with affiliates must be on terms and under circumstances that are substantially the same, or at least as favorable to the bank, as comparable transactions with non-affiliates. In addition, certain types of transactions with affiliates are restricted to an aggregate percentage of the bank’s capital stock and surplus.
This represents a decrease of 174 FTEs, or 7.5%, from December 31, 2021 when we had 2,251 full-time and 162 part-time employees, or 2,332 FTEs. This decrease is a result of our efforts to optimize our retail network.
This represents a decrease of 60 FTEs, or 2.8%, from December 31, 2022 when we had 2,088 full-time and 140 part-time employees, or 2,158 FTEs. This decrease is a result of our efforts to optimize our retail network.
As of December 31, 2022, the market’s average median household income has increased over the last year by 1.6%, to $63,349, compared to the national median income level of $73,503. The household income growth rate in Pennsylvania of 11.7%, is projected to be slightly below the national average growth rates during the next five years of 13.4%.
As of December 31, 2023, the market’s average median household income has increased over the last year by 6.7%, to $67,574, compared to the national median income level of $75,874. The household income growth rate in Pennsylvania of 10.3%, is projected to be slightly higher than the national average growth rates during the next five years of 10.1%.
As of December 31, 2022, the market’s unemployment rate was 3.3%, slightly lower than the Commonwealth of Pennsylvania rate of 3.9% and the same as the national average of 3.3%.
As of December 31, 2023, the market’s unemployment rate was 2.8%, slightly lower than both the Commonwealth of Pennsylvania rate of 3.5% and the national average of 3.7%.

… 91 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

53 edited+30 added−8 removed134 unchanged
Biggest changeRisks Related to our Lending Activities Our commercial loan portfolio is increasing and the inherently higher risk of loss may lead to additional provisions for credit losses or charge-offs, which would negatively impact earnings and capital. 15 Table of Contents Commercial loans generally expose a lender to greater risk of non-payment and loss than one- to four-family residential mortgage loans because repayment of the loans often depends on the successful operation of the business and the income stream of the borrowers.
Biggest changeRisks Related to our Lending Activities Our commercial loan portfolio is increasing and the inherently higher risk of loss may lead to additional provisions for credit losses or charge-offs, which would negatively impact earnings and capital.
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; 20 Table of Contents • 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, 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.
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. 19 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 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.
At December 31, 2022, 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.
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.
As we continue to grow, we are likely to become more dependent on these sources, which may include FHLB advances, proceeds from the sale of loans, federal funds purchased and brokered certificates of deposit. Adverse operating results or changes in industry conditions could lead to difficulty or an inability to access these additional funding sources.
As we continue to grow, we are likely to become more dependent on these sources, which may include FHLB advances, proceeds from the sale of loans, federal funds purchased and brokered certificates of deposit. Adverse operating results or changes in industry conditions could lead to difficulty or an inability to maintain timely access to these additional funding sources.
Our financial flexibility will be severely constrained if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates. If we are required to rely more heavily on more expensive funding sources to support future growth, our revenues may not increase proportionately to cover our costs.
Our financial flexibility will be materially constrained if we are unable to maintain our access to funding or if adequate financing is not available to accommodate future growth at acceptable interest rates. If we are required to rely more heavily on more expensive funding sources to support future growth, our revenues may not increase proportionately to cover our costs.
Competitive factors driven by consumer sentiment or otherwise can also reduce our ability to generate fee income, such as through overdraft fees. Our profitability depends upon our ability to successfully compete in our market areas. Risks Related to Operational Matters Risks associated with system failures, interruptions, or breaches of security could negatively affect our earnings.
Competitive factors driven by consumer sentiment or otherwise can also reduce our ability to generate fee income, such as through overdraft fees. Our profitability depends upon our ability to successfully compete in our market areas. 25 Table of Contents Risks Related to Operational Matters Risks associated with system failures, interruptions, or breaches of security could negatively affect our earnings.
Because it is difficult to perfectly match the maturities and cash flows from our financial assets and liabilities our net income could be adversely impacted by changes in the level of interest rates or the slope of the Treasury yield curve. Changes in interest rates may also affect the average life of loans and mortgage-related securities.
Because it is difficult to perfectly match the maturities and cash flows from our financial assets and liabilities our net income could be adversely impacted by changes in the level of interest rates or the slope of the Treasury yield curve. 21 Table of Contents Changes in interest rates may also affect the average life of loans and mortgage-related securities.
The benefits of this strategy will depend on our ability to realize expected expense reductions without experiencing significant customer attrition. 26 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. 30 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
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.
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.
An institution will be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its 17 Table of Contents 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 buffer amount. These limitations will establish a maximum percentage of eligible retained income that can be utilized for such actions.
Our business, financial condition, and results of operations could be adversely affected by natural disasters, health epidemics, and other catastrophic events. 23 Table of Contents We could be adversely affected if key personnel or a significant number of employees were to become unavailable due to a pandemic, natural disaster, war, act of terrorism, accident, or other reason.
Our business, financial condition, and results of operations could be adversely affected by natural disasters, health epidemics, and other catastrophic events. We could be adversely affected if key personnel or a significant number of employees were to become unavailable due to a pandemic, natural disaster, war, act of terrorism, accident, or other reason.
Changes in interest rates could adversely affect our results of operations and financial condition. 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.
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.
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. 22 Table of Contents 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. 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.
These reasons and the legal and 16 Table of Contents regulatory responses have impacted the foreclosure process and completion time of foreclosures for residential mortgage lenders. This may result in a material adverse effect on collateral values and our ability to minimize its losses.
These reasons and the legal and regulatory responses have impacted the foreclosure process and completion time of foreclosures for residential mortgage lenders. This may result in a material adverse effect on collateral values and our ability to minimize its losses.
A deterioration in economic conditions, as a result of COVID-19, recession or otherwise, 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 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.
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.
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.
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 $4.9 million on mortgage banking activities during the year ended December 31, 2022. 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 $2.4 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 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. 25 Table of Contents We are a community bank, and our reputation is one of the most valuable components of our business.
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.
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, 2022, we incurred other comprehensive losses of $151.9 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, 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.
At December 31, 2022, 41% 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, 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.
This concern has led to speculation about the potential for a significant deterioration in the municipal bond market, which could materially affect our results of operations, financial condition and liquidity. We may not be able to mitigate the exposure in our municipal portfolio if state and local governments are unable to fulfill their obligations.
These challenges have led to speculation about the potential for a significant deterioration in the municipal bond market, which could materially affect our results of operations, financial condition and liquidity. We may not be able to mitigate the exposure in our municipal portfolio if state and local governments are unable to fulfill their obligations.
In addition, our articles of incorporation and bylaws restrict who may call special meetings of stockholders and how directors may be removed from office.
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.
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, 2022, we held $672.6 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, 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.
In addition, deflationary pressures, while possibly lowering our operating costs, 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. Inflation can have an adverse impact on our business and on our customers.
Based on these factors, we have a concentration in multi-family and commercial real estate lending, as such loans represent 362% of total bank capital as of December 31, 2022.
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.
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, 2022, the fair value of our investment and mortgage-backed securities portfolio totaled $1.969 billion. Net unrealized losses on these securities totaled $343.5 million at December 31, 2022.
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.
In addition, any future credit deterioration, including as a result of COVID-19, could require us to increase our allowance for credit losses in the future. Bank regulators periodically review our allowance for credit losses and may require an increase to the provision for credit losses or further loan charge-offs.
In addition, any future credit deterioration could require us to increase our allowance for credit losses in the future. Bank regulators periodically review our allowance for credit losses and may require an increase to the provision for credit losses or further loan charge-offs.
During periods of reduced loan demand, our results of operations may be adversely affected to the extent that we are unable to reduce expenses commensurate with the decline in mortgage loan origination activity.
During periods of reduced loan demand, our results of operations may be adversely affected to the extent that we are unable to reduce expenses commensurate with the decline in mortgage loan origination activity. Hedging against interest rate exposure may adversely affect our earnings .
As a result, it may be difficult to predict the future performance of newly originated loans. These loans may have delinquency or charge-off levels above our recent historical experience, which could adversely affect our future performance. Risk Related to Competitive Matters Strong competition may limit growth and profitability. Competition in the banking and financial services industry is intense.
These loans may have delinquency or charge-off levels above our recent historical experience, which could adversely affect our future performance. Risk Related to Competitive Matters Strong competition may limit growth and profitability. Competition in the banking and financial services industry is intense.
Our municipal bond portfolio may be impacted by the effects of economic stress on state and local governments. At December 31, 2022, we had $127.5 million invested in debt obligations of states, municipalities and political subdivisions (collectively referred to as our municipal bond portfolio). We also had $183.9 million of loans outstanding to municipalities and political subdivisions.
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.
During the year ended December 31, 2022, we incurred other comprehensive losses of $151.9 million related to net changes in unrealized holding losses in the available-for-sale investment securities portfolio. Any increase in market interest rates may reduce our mortgage banking income.
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.
The risk of widespread issuer defaults may also increase if there are changes in legislation that permit states, or additional municipalities and political subdivisions, to file for bankruptcy protection or if there are judicial interpretations that, in a bankruptcy or other proceeding, lessen the value of any structural protections. 24 Table of Contents The financial services sector represents a significant concentration within our investment portfolio.
The risk of widespread issuer defaults may also increase if there are changes in legislation that permit states, or additional municipalities and political subdivisions, to file for bankruptcy protection or if there are judicial interpretations that, in a bankruptcy or other proceeding, lessen the value of any structural protections.
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.
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.
There have been proposals made by members of Congress and others that would reduce the amount distressed borrowers are otherwise contractually obligated to pay under their mortgage loans and limit an institution’s ability to foreclose on mortgage collateral.
Future legislative or regulatory actions responding to perceived financial and market problems could impair our ability to foreclose on collateral. There have been proposals made by members of Congress and others that would reduce the amount distressed borrowers are otherwise contractually obligated to pay under their mortgage loans and limit an institution’s ability to foreclose on mortgage collateral.
In addition, if we foreclose on these loans, our holding period for the collateral may be longer than for a single or multi-family residential property if there are fewer potential purchasers of the collateral. The level of our commercial real estate loan portfolio may subject us to additional regulatory scrutiny.
In addition, if we foreclose on these loans, our holding period for the collateral may be longer than for a single or multi-family residential property if there are fewer potential purchasers of the collateral.
We anticipate that we will have sufficient capital resources to satisfy our capital requirements for the foreseeable future. We may at some point, however, need to raise additional capital to support our continued growth.
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.
In order to provide our debit card and cash management solutions, we are members of the Visa network. As such, we are subject to card network rules that could subject us to a variety of fines or penalties that may be assessed on us.
As such, we are subject to card network rules that could subject us to a variety of fines or penalties that may be assessed on us.
Specifically, Northwest Bank’s ability to pay dividends will be limited if it does not have the capital conservation buffer required by the capital rules, which may limit our ability to pay dividends to stockholders. The Federal Reserve Board may require us to commit capital resources to support Northwest Bank.
Specifically, Northwest Bank’s ability to pay dividends to stockholders will be limited if it does not have the capital conservation buffer required by the capital rules.
Furthermore, the imposition of liquidity requirements in connection with the implementation of Basel III could result in our having to lengthen the term of our funding, restructure our business models, and/or increase our holdings of liquid assets.
Furthermore, the imposition of liquidity requirements in connection with the implementation of Basel III could result in our having to increase our holdings of liquid assets, lengthen the term of our funding, and/or restructure our business model. 20 Table of Contents The Federal Reserve Board may require us to commit capital resources to support Northwest Bank.
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 business may be adversely affected by an increasing prevalence of fraud and other financial crimes.
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.
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. 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 guidance, a financial institution that, like us, is actively involved in commercial real estate lending should perform a risk assessment to identify concentrations.
In addition, 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 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.
Increasing loan originations would likely require us to lend to borrowers with which we have limited experience. Accordingly, we would not have a significant payment history pattern with which to judge future collectability. Further, newly originated loans have not been subjected to unfavorable economic conditions.
Accordingly, we would not have a significant payment history pattern with which to judge future collectability. Further, newly originated loans have not been subjected to unfavorable economic conditions. As a result, it may be difficult to predict the future performance of newly originated loans.
Growth opportunities may not be available or we may not be able to manage our growth successfully.
Growth opportunities may not be available or we may not be able to manage our growth successfully. If we do not manage our growth effectively, our financial condition and operating results could be negatively affected.
We must maintain sufficient funds to respond to the needs of depositors and borrowers. As a part of our liquidity management, we use a number of funding sources in addition to core deposit growth and repayments and maturities of loans and investments.
We must maintain sufficient liquidity to respond to the needs of depositors and borrowers. As such, we utilize a diverse set of funding sources in addition to core deposits.
If we do not manage our growth effectively, our financial condition and operating results could be negatively affected. 21 Table of Contents Uncertainties associated with increased loan originations may result in errors in our judgment of collectability, which may lead to additional provisions for credit losses or charge-offs, which would negatively affect our operations.
Uncertainties associated with increased loan originations may result in errors in our judgment of collectability, which may lead to additional provisions for credit losses or charge-offs, which would negatively affect our operations. Increasing loan originations would likely require us to lend to borrowers with which we have limited experience.
The Federal Reserve Board has 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 recent rate increases. As discussed below, the increase in market interest rates is expected to have an adverse effect on our net interest income and profitability.
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.
A capital injection may be required at times when the holding company may not have the resources to provide it and therefore may be required to borrow the funds or raise capital.
A capital injection may be required at times when the holding company may not have sufficient resources and therefore may be required to borrow the funds or raise capital. Any borrowing or capital raise could occur at a time that is more difficult and expensive and could have an adverse effect on our business, financial condition, and results of operations.
Additionally, since alternative rates are calculated differently, the transition may change our market risk profile, requiring changes to the risk and pricing models. A protracted government shutdown may result in reduced loan originations and related gains on sale and could negatively affect our financial condition and results of operations.
In this case, our operating margins and profitability would be adversely affected. A protracted government shutdown may result in reduced loan originations and related gains on sale and could negatively affect our financial condition and results of operations.
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. Risks Related to Our Debit and Credit Activities Changes in card network rules or standards could adversely affect our business.
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 effects of such policies upon our business, financial condition and results of operations cannot be predicted.
The effects of such policies upon our business, financial condition and results of operations cannot be predicted. Risks Related to Market Interest Rates The reversal of the historically low interest rate environment has and may continue to adversely affect our net interest income and profitability.
Debt-to-gross domestic product ratios for the majority of states have been deteriorating due to, among other factors, declines in federal monetary assistance provided as the United States is currently experiencing the largest deficit in its history.
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.
Removed
Thus, any borrowing or funds needed to raise capital required to make a capital injection becomes more difficult and expensive and could have an adverse effect on our business, financial condition and results of operations. Future legislative or regulatory actions responding to perceived financial and market problems could impair our ability to foreclose on collateral.
Added
Commercial loans generally expose a lender to greater risk of non-payment and loss than one- to four-family residential mortgage loans because repayment of the loans often depends on the successful operation of the business and the income stream of the borrowers.
Removed
Risks Related to Market Interest Rates The reversal of the historically low interest rate environment may adversely affect our net interest income and profitability. 18 Table of Contents The Federal Reserve Board decreased benchmark interest rates significantly, to near zero, in response to the COVID-19 pandemic.
Added
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.
Removed
At December 31, 2022, our interest rate risk analysis indicated that the market value of our equity would decrease by 16.3% if there was an instant parallel 200 basis point increase in market interest rates. See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk”.
Added
As discussed below, the increase in market interest rates has had, and may continue to have, an adverse effect on our net interest income and profitability. Changes in interest rates could adversely affect our results of operations and financial condition.
Removed
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. Over the past year, in response to a pronounced rise in inflation, the Federal Reserve Board has raised certain benchmark interest rates to combat inflation.
Added
On occasion we have employed various financial methodologies that limit, or “hedge,” the adverse effects of rising or decreasing interest rates on our loan portfolios and short-term liabilities. We also engage in hedging strategies with respect to arrangements with our customers. Our hedging activity varies based on the level and volatility of interest rates and other changing market conditions.
Removed
Our continued pace of growth may require us to raise additional capital in the future, but that capital may not be available when it is needed. We are required by federal regulatory authorities to maintain adequate levels of capital to support our operations.
Added
Hedging strategies can be imperfect and may fail to protect us from loss. Moreover, hedging activities could result in costs if the hedge proves to be ineffective.
Removed
Widespread concern currently exists regarding the stress on state and local governments emanating from: (i) declining revenues; (ii) large unfunded liabilities to government workers; and (iii) entrenched cost structures.
Added
Additionally, hedging activities could fail to protect us or adversely affect us because, among other things: • available interest rate hedging may not correlate to the risk for which protection is sought; • the duration of the hedge may not match the duration of the related asset or liability; • the counterparty in the hedging transaction may default on its obligation to pay; • the credit quality of the counterparty may degrade to such an extent that it impairs our ability to sell or assign our side of the hedging transaction; • the value of derivatives used for hedging may be adjusted from time to time in accordance with accounting rules to reflect changes in fair value; and/or • downward adjustments, or “mark-to-market” losses, would reduce our stockholders’ equity.
Removed
In this case, our operating margins and profitability would be adversely affected. We are required to transition from the use of the LIBOR interest rate index in the future. We have certain loans indexed to LIBOR to calculate the loan interest rate. The LIBOR index will be discontinued for U.S. Dollar settings effective June 30, 2023.
Added
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.
Removed
The implementation of a substitute index or indices for the calculation of interest rates under our loan agreements with our borrowers may incur significant expenses in effecting the transition, may result in reduced loan balances if borrowers do not accept the substitute index or indices, and may result in disputes or litigation with customers over the appropriateness or comparability to LIBOR of the substitute index or indices, which could have an adverse effect on our results of operations.
Added
We may be negatively impacted by customer and depositor reaction to unrelated bank failures. On March 9, 2023, Silvergate Bank, La Jolla, California, announced its decision to voluntarily liquidate its assets and wind down operations. On March 10, 2023, Silicon Valley Bank, Santa Clara, California, was closed by the California Department of Financial Protection and Innovation.
Added
On March 12, 2023, Signature Bank, New York, New York, was closed by the New York State Department of Financial Services, and on May 1, 2023, First Republic Bank, San Francisco, California, was closed by the California Department of Financial Protection and Innovation.
Added
These banks had elevated levels of uninsured deposits, which may be less likely to remain at the bank over time and less stable as a source of funding than insured deposits. These failures led to volatility and declines in the market for bank stocks and questions about depositor confidence in depository institutions.
Added
These bank failures have led to an increased customer and regulatory focus on funding and liquidity at financial institutions, the composition of its deposits, including the amount of uninsured deposits, the amount of accumulated other comprehensive loss, capital levels and interest rate risk management.
Added
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.
Added
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.
Added
The Company’s most important source of funds is its deposits.
Added
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.
Added
If customers move money out of bank deposits and into other investments such as money market funds, the Company would lose a relatively low-cost source of funds, which would increase its funding costs and reduce net interest income.
Added
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.
Added
The Company also may borrow funds from third-party lenders, such as other financial institutions.
Added
The Company’s access to funding sources in amounts adequate to finance or capitalize its activities, or on terms that are acceptable, could be impaired by factors that affect the Company directly or the financial services industry or economy in general, such as disruptions in the financial markets or negative views and expectations about the prospects for the financial services industry, a decrease in the level of the Company’s business activity as a result of a downturn in markets or by one or more adverse regulatory actions against the Company or the financial sector in general.

… 11 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changePROPERTIES As of December 31, 2022, we conducted our business through our main office located in Warren, Pennsylvania, 82 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, 11 full-service offices and one free-standing drive-through location in eastern Ohio, and 22 full-service office locations in Indiana.
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.
At December 31, 2022, our premises and equipment had an aggregate net book value of approximately $145.9 million.
At December 31, 2023, our premises and equipment had an aggregate net book value of approximately $138.8 million.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeSee Note 18 in the notes to the Consolidated Financial Statements. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
Biggest changeSee Note 19 in the notes to the Consolidated Financial Statements. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed4 unchanged
Biggest changeCOMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Northwest Bancshares, Inc., the NASDAQ Composite Index, and the NASDAQ Bank Index At December 31, 2017 2018 2019 2020 2021 2022 Northwest Bancshares, Inc. 100.00 105.40 107.87 88.47 104.23 109.01 NASDAQ Composite 100.00 97.16 132.81 192.47 235.15 158.65 NASDAQ Bank 100.00 75.78 89.41 81.19 114.69 96.14 28 Table of Contents ITEM 6. [RESERVED]
Biggest changeCOMPARISON 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]
There were no sales of unregistered securities during the quarter ended December 31, 2022. 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, 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.
During the year ended December 31, 2022, 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. 27 Table of Contents Stock Performance Graph The following stock performance graph compares (a) the cumulative total return on our common stock between December 31, 2017 and December 31, 2022, (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, 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.
As of February 17, 2023, we had 26 registered market makers, 11,196 stockholders of record (excluding the number of persons or entities holding stock in street name through various brokerage firms), and 127,047,704 shares outstanding.
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.

Item 7. Management's Discussion & Analysis

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

134 edited+57 added−40 removed104 unchanged
Biggest changeFor the years ended December 31, 2022 2021 2020 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 $1,954, $1,922, and $2,223, respectively) (1), (2), (3) $ 10,318,898 409,782 3.97 % $ 10,239,620 392,265 3.83 % $ 10,104,453 413,131 4.09 % Mortgage-backed securities (4) 1,968,528 30,804 1.56 % 1,704,006 21,463 1.26 % 889,744 17,416 1.96 % Investment securities (includes FTE adjustments of $834, $747, and $797, respectively) (4), (5) 381,518 6,671 1.75 % 350,806 5,848 1.67 % 196,071 4,841 2.47 % FHLB stock, at cost 17,065 730 4.27 % 20,229 407 2.01 % 21,781 981 4.50 % Interest-earning deposits 567,609 3,599 0.63 % 921,360 1,194 0.13 % 520,666 719 0.14 % Total interest-earning assets (includes FTE adjustments of $2,788, $2,669, and $3,020, respectively) 13,253,618 451,586 3.41 % 13,236,021 421,177 3.18 % 11,732,715 437,088 3.73 % Noninterest-earning assets (6) 924,080 1,072,313 1,159,405 Total assets $ 14,177,698 $ 14,308,334 $ 12,892,120 Interest-bearing liabilities: Savings deposits $ 2,336,217 2,343 0.10 % $ 2,232,454 2,440 0.11 % $ 1,885,517 2,640 0.14 % Interest-bearing demand deposits 2,810,889 1,517 0.05 % 2,862,677 1,660 0.06 % 2,432,427 3,358 0.14 % Money market deposit accounts 2,613,422 3,377 0.13 % 2,554,975 2,570 0.10 % 2,224,904 6,995 0.31 % Time deposits 1,161,432 6,883 0.59 % 1,463,522 12,452 0.85 % 1,687,381 22,903 1.36 % Borrowed funds (7) 212,026 4,531 2.14 % 135,285 616 0.46 % 315,116 1,628 0.52 % Subordinated debt 117,625 4,750 4.04 % 123,457 4,980 4.03 % 31,326 1,562 4.99 % Junior subordinated debentures 129,175 4,716 3.60 % 128,915 2,528 1.93 % 126,683 3,254 2.53 % Total interest-bearing liabilities 9,380,786 28,117 0.30 % 9,501,285 27,246 0.29 % 8,703,354 42,340 0.49 % Noninterest-bearing demand deposits (8) 3,070,892 2,999,392 2,357,725 Noninterest-bearing liabilities 207,316 250,075 246,294 Total liabilities 12,658,994 12,750,752 11,307,373 Shareholders’ equity 1,518,704 1,557,582 1,584,747 Total liabilities and shareholders’ equity $ 14,177,698 $ 14,308,334 $ 12,892,120 Net interest income 423,469 393,931 394,748 Net interest rate spread (9) 3.11 % 2.89 % 3.24 % Net interest-earning assets/net interest margin (10) $ 3,872,832 3.20 % $ 3,734,736 2.98 % $ 3,029,361 3.36 % Ratio of average interest-earning assets to average interest-bearing liabilities 1.41X 1.39X 1.35X (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, 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.
Net interest income and noninterest income are offset by provisions for credit losses, general administrative and other expenses, including employee compensation and benefits and occupancy and processing costs, as well as by state and federal income tax expense.
Net interest income and noninterest income are offset by provisions for credit losses, general administrative and other expenses, including employee compensation and benefits, occupancy expense and processing costs, as well as by state and federal income tax expense.
The provision for income taxes decreased by $6.8 million, or 14.5%, to $40.0 million for the year ended December 31, 2022 from $46.8 million for the year ended December 31, 2021.
Income Taxes. The provision for income taxes decreased by $6.8 million, or 14.5%, to $40.0 million for the year ended December 31, 2022 from $46.8 million for the year ended December 31, 2021.
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.
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.
Lastly, amortization of intangible assets decreased $1.3 million, or 23.0%, to $4.3 million for the year ended December 31, 2022 compared to $5.6 million for the year ended December 31, 2021 due to previously acquired intangbile assets being fully amortized.
Lastly, amortization of intangible assets decreased $1.3 million, or 23.0%, to $4.3 million for the year ended December 31, 2022 compared to $5.6 million for the year ended December 31, 2021 due to previously acquired intangible assets being fully amortized.
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, 2021. 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, 2023. Noninterest Income.
We utilized a multi-scenario based macroeconomic forecast in determining the December 31, 2022 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 scenario.
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 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, 2022, 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, 2023, 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, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 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, 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 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, 2022. 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, 2023. The annualized weighted average yields are calculated by taking the interest of the marketable securities divided by the amortized cost.
Also contributing to this decrease was a decrease in mortgage banking income of $11.0 million, or 69.4%, to $4.9 million for the year ended December 31, 2022 from $15.9 million for the year ended December 31, 2021, due primarily to the volatile interest rate environment causing unfavorable pricing in the secondary market, as well as a slowdown in mortgage loan activity in general.
Also contributing to this decrease was a decrease in mortgage banking income of $11.0 million, or 69.4%, to $4.9 million for the year ended December 31, 2022 from $15.9 million for the year ended December 31, 2021, due primarily to the volatile interest rate 50 Table of Contents environment causing unfavorable pricing in the secondary market, as well as a slowdown in mortgage loan activity in general.
The following table sets forth the maturity of our loan portfolio at December 31, 2022. 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, 2023. Demand loans and loans having no stated schedule of repayments and no stated maturity are reported as due in one year or less.
Northwest Bank is required by the Pennsylvania Department of Banking and Securities and the FDIC to meet minimum capital adequacy requirements. At December 31, 2022, Northwest Bank exceeded all regulatory minimum capital requirements and is considered to be “well capitalized”.
Northwest Bank is required by the Pennsylvania Department of Banking and Securities and the FDIC to meet minimum capital adequacy requirements. At December 31, 2023, Northwest Bank exceeded all regulatory minimum capital requirements and is considered to be “well capitalized”.
(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, 2022.
(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.
Interest rates do not necessarily move in the same direction or to the same extent as the price of goods and services. 52 Table of Contents Off-Balance-Sheet Arrangements. As a financial services provider, we are routinely a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit.
Interest rates do not necessarily move in the same direction or to the same extent as the price of goods and services. Off-Balance-Sheet Arrangements. As a financial services provider, we are routinely a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit.
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, 2022.
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.
Net income for the year ended December 31, 2022 represents returns on average equity and average assets of 8.80% and 0.94%, respectively, compared to 9.91% and 1.08% for the year ended December 31, 2021. A discussion of significant changes follows. 39 Table of Contents Interest Income.
Net income for the year ended December 31, 2022 represents returns on average equity and average assets of 8.80% and 0.94%, respectively, compared to 9.91% and 1.08% for the year ended December 31, 2021. A discussion of significant changes follows. Interest Income.
At December 31, 2022, stockholders’ equity totaled $1.491 billion. During 2022, our Board of Directors declared regular quarterly cash dividends totaling $0.80 per share of common stock. We monitor the capital levels of Northwest Bank to provide for current and future business opportunities and to meet regulatory guidelines for “well capitalized” institutions.
At December 31, 2023, stockholders’ equity totaled $1.551 billion. During 2023, our Board of Directors declared regular quarterly cash dividends totaling $0.80 per share of common stock. We monitor the capital levels of Northwest Bank to provide for current and future business opportunities and to meet regulatory guidelines for “well capitalized” institutions.
In addition, as of December 31, 2022, we were not aware of any recommendation by a regulatory authority that, if it were implemented, would have a material effect on liquidity, capital resources or operations. 51 Table of Contents Regulatory Capital Requirements. Northwest Bank is subject to minimum capital requirements established by the FDIC. See “Item 1.
In addition, as of December 31, 2023, we were not aware of any recommendation by a regulatory authority that, if it were implemented, would have a material effect on liquidity, capital resources or operations. 59 Table of Contents Regulatory Capital Requirements. Northwest Bank is subject to minimum capital requirements established by the FDIC. See “Item 1.
Also contributing to our earnings is noninterest income, which consists primarily of service charges and fees on loan and deposit products and services, fees related to investment management and trust services, net gains and losses on the sale of assets and mortgage banking income.
Also contributing to our earnings is noninterest income, which consists primarily of service charges and fees on loan and deposit products and services, fees related to investment management and trust services, net gains and losses on the sale of assets, including SBA loans, and mortgage banking income.
We use a twenty four month forecasting period and revert to historical average loss rates thereafter. Reversion to average loss rates takes place over twelve months. Historical average loss rates are calculated using historical data beginning in October 2009 through the current period.
We use a 24 month forecasting period and revert to historical average loss rates thereafter. Reversion to average loss rates takes place over twelve months. Historical average loss rates are calculated using historical data beginning in October 2009 through the current period.
For additional information about our cash flows from operating, financing, and investing activities, see the Consolidated Statements of Cash Flows included in the Consolidated Financial Statements. 50 Table of Contents A portion of our liquidity consists of cash and cash equivalents, which are a product of our operating, investing, and financing activities.
For additional information about our cash flows from operating, financing, and investing activities, see the Consolidated Statements of Cash Flows included in the Consolidated Financial Statements. A portion of our liquidity consists of cash and cash equivalents, which are a product of our operating, investing, and financing activities.
If we placed 100% weighting on the baseline scenario, the quantitative allowance for credit losses would have been approximately $10.2 million lower. These forecasts revert to our long-term historical average loss rate after a 24 month forecasting period.
If we placed 100% weighting on the baseline scenario, the quantitative allowance for credit losses would have been approximately $15.3 million lower. These forecasts revert to our long-term historical average loss rate after a 24 month forecasting period.
Using this formula, Northwest Bank’s liquidity ratio was 9.59% as of December 31, 2022. 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.
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 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, 2022, 2021 and 2020 were $383.9 million, $804.7 million, and $704.7 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, 2023, 2022 and 2021 were $203.7 million, $383.9 million, and $804.7 million, 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, 2022, 2021 and 2020 were $4.047 billion, $4.490 billion, $4.384 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, 2023, 2022 and 2021 were $3.447 billion, $4.047 billion, and $4.490 billion, respectively.
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 are the accounting estimates we believe are critical. 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. 37 Table of Contents Allowance for Credit Losses.
Additionally, the average yield on investment securities increased to 1.53% for the year ended December 31, 2022 from 1.45% for the year ended December 31, 2021. Dividends on FHLB stock increased by $323,000, or 79.4%, to $730,000 for the year ended December 31, 2022 from $407,000 for the year ended December 31, 2021.
Additionally, the average yield on investment securities increased to 1.53% for the year ended December 31, 2022 from 1.45% for the year ended December 31, 2021. 49 Table of Contents Dividends on FHLB stock increased by $323,000, or 79.4%, to $730,000 for the year ended December 31, 2022 from $407,000 for the year ended December 31, 2021.
This decrease in average balance was driven by a decrease in average deposits by $191.7 million, or 2.1%, as customers utilized funds for higher inflationary purchases and searched for higher alternative yields. 40 Table of Contents Net Interest Income.
This decrease in average balance was driven by a decrease in average deposits by $191.7 million, or 2.1%, as customers utilized funds for higher inflationary purchases and searched for higher alternative yields. Net Interest Income.
If a loan no longer demonstrates similar risk characteristics to their loan pool they are removed from the pool and an individual assessment will be performed.
If a loan no longer demonstrates similar risk characteristics to their loan pool they are removed from the pool and an individual assessment is performed.
If we shortened the forecasting period to twelve months and reverted to our long-term historical loss rate thereafter, the quantitative allowance for credit losses would have been approximately $18.8 million lower.
If we shortened the forecasting period to twelve months and reverted to our long-term historical loss rate thereafter, the quantitative allowance for credit losses would have been approximately $5.2 million lower.
Cash flows from the repayment of principal and the maturity or call of marketable securities for the years ended December 31, 2022, 2021 and 2020 were $330.4 million, $517.9 million, and $396.3 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, 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.
Partially offsetting these unfavorable variances was an increase in net interest income of $29.4 million, or 7.5%, a decrease in income tax expense of $6.8 million, or 14.5%, and a decrease in noninterest expense of $4.9 million, or 1.4%.
Partially offsetting these unfavorable variances was an increase in net interest income of $29.4 million, or 7.5%, a decrease in income tax expense of $6.8 million, or 14.5%, and a decrease in noninterest expense of $19.3 million, or 5.5%.
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, 2022, Northwest Bank had an outstanding balance of $551.3 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, 2023, Northwest Bank had an outstanding balance of $338.5 million with the FHLB of Pittsburgh.
In addition, our effective tax rate for the year ended December 31, 2021 was 23.3% compared to 19.1% for the year ended December 31, 2020. Asset Quality We actively manage asset quality through our underwriting practices and collection procedures.
In addition, our effective tax rate for the year ended December 31, 2022 was 23.0% compared to 23.3% for the year ended December 31, 2021. Asset Quality We actively manage asset quality through our underwriting practices and collection procedures.
GAAP basis net interest rate spreads were 3.09%, 2.88%, and 3.21%, respectively, and GAAP basis net interest margins were 3.17%, 2.96%, and 3.34% respectively. 49 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, 2022 compared to 2021 and for the year ended December 31, 2021 compared to 2020.
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.
We borrow from these sources to reduce interest rate risk and to provide liquidity when necessary. At December 31, 2022, our customers had $1.095 billion of unused lines of credit available and $248.6 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. 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.
At December 31, 2022, Northwest Bancshares, Inc. (on an unconsolidated basis) had liquid assets of $174.1 million. Other activity with respect to cash flow was the payment of cash dividends on common stock in the amount of $101.5 million million, $100.3 million, and $93.1 million for years the ended December 31, 2022, 2021 and 2020, respectively.
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.
Financial institutions, such as Northwest Bank, are also subject to deposit outflows. Our net deposits decreased by $836.6 million for the year ended December 31, 2022, increased by $701.9 million for the year ended December 31, 2021 and increased by $3.007 billion for the year ended December 31, 2020.
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.
The net cash flow from the receipt and repayment of borrowings was a net increase of $532.0 million, a net decrease of $20.7 million, and a net decrease of $192.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.
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.
(2) See Note 10 to the Consolidated Financial Statements, Borrowed Funds, for additional information. (3) See Note 2 to the Consolidated Financial Statements, Leases, for additional information. 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. 60 Table of Contents Impact of Inflation and Changing Prices.
Time deposits scheduled to mature in less than one year at December 31, 2022, totaled $ 754.6 million . 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, 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.
(5) Interest income on tax-free investment securities is presented on a FTE basis including adjustments, as indicated. (6) Average balances include the effect of unrealized gains or losses on securities held as available-for-sale. (7) Average balances include FHLB borrowings and collateralized borrowings. (8) Average cost of deposits was 0.12%, 0.16% and 0.34%, respectively.
(5) Interest income on tax-free investment securities is presented on a FTE basis including adjustments, as indicated. (6) Average balances include the effect of unrealized gains or losses on securities held as available-for-sale. (7) Average balances include FHLB borrowings and collateralized borrowings.
Our net income was $133.7 million, or $1.05 per diluted share, for the year ended December 31, 2022 compared to $154.3 million, or $1.21 per diluted share, for the year ended December 31, 2021, and $74.9 million, or $0.62 per diluted share, for the year ended December 31, 2020.
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.
The decrease in net income resulted from an increase in the provision for credit losses of $29.7 million, or 250.3%, and a decrease in noninterest income of $32.0 million, or 22.4%.
The decrease in net income resulted from an increase in the provision for credit losses of $44.1 million, or 279.3%, and a decrease in noninterest income of $32.0 million, or 22.4%.
At December 31, 2022, Northwest Bank had $3.091 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 $51.3 million at December 31, 2022, as well as $96.0 million of borrowing capacity available with the Federal Reserve Bank and $105.0 million with two correspondent banks.
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.
Recently Issued Accounting Standards The following Accounting Standard Updates (“ASU”) issued by the FASB have not yet been adopted.
Recently Issued Accounting Standards The following Accounting Standard Updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”) have not yet been adopted.
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 $15.8 million, or 15.4%, to $118.0 million, or 1.08% of gross loans at December 31, 2022 from $102.2 million, or 1.02% of total loans, at December 31, 2021 .
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, our effective tax rate for the year ended December 31, 2022 was 23.0% compared to 23.3% for the year ended December 31, 2021. Comparison of Results of Operations for the Years Ended December 31, 2021 and 2020 General.
Our effective tax rate for the year ended December 31, 2023 was 22.9% compared to 23.0% for the year ended December 31, 2022. Comparison of Results of Operations for the Years Ended December 31, 2022 and 2021 General.
Loan originations for the years ended December 31, 2022, 2021 and 2020 were $4.948 billion, $4.715 billion, and $5.386 billion, respectively.
Loan originations for the years ended December 31, 2023, 2022 and 2021 were $4.162 billion, $4.948 billion, and $4.715 billion, respectively.
We experienced an increase of $2.2 million, or 62.7%, in merger, asset disposition and restructuring expense to $5.6 million for the year ended December 31, 2022 from $3.5 million for the year ended December 31, 2021 due to severance and fixed asset charges related to the branch and personnel optimization to be completed during the first quarter of 2023. 41 Table of Contents Income Taxes.
These decreases were partially offset by an increase of $2.2 million, or 62.7%, in merger, asset disposition and restructuring expense to $5.6 million for the year ended December 31, 2022 from $3.5 million for the year ended December 31, 2021 due to severance and fixed asset charges related to the branch and personnel optimization to be completed during the first quarter of 2023.
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 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.
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 earnings. Nonaccrual, Past Due, Restructured Loans and Nonperforming Assets .
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.
The provision for credit losses was $17.9 million for the year ended December 31, 2022 compared to a provision credit of $11.9 million for the year ended December 31, 2021 and a provision expense of $84.0 million for the year ended December 31, 2020. 29 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 $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.
In addition, we invest excess funds in short-term interest earning and other assets, which provide liquidity to meet lending requirements. Short-term interest-earning deposits amounted to $33.8 million at December 31, 2022.
In addition, we invest excess funds in short-term interest earning and 58 Table of Contents other assets, which provide liquidity to meet lending requirements. Short-term interest-earning deposits amounted to $35.9 million at December 31, 2023.
At December 31, 2022 2021 (Dollars in thousands) Total shareholders’equity (GAAP capital) $ 1,562,610 1,714,817 Add: Accumulated other comprehensive loss 159,511 25,980 Less: non-qualifying intangible assets (269,159) (273,435) CET 1 capital 1,452,962 1,467,362 Additions to Tier 1 capital — — Leverage or Tier 1 capital 1,452,962 1,467,362 Add: Tier 2 capital (1) 115,240 83,722 Total risk-based capital $ 1,568,202 1,551,084 Average assets for leverage ratio $ 14,017,646 14,251,169 Net risk-weighted assets including off-balance-sheet items $ 10,659,180 9,855,420 CET 1 capital ratio 13.631 % 14.889 % Minimum requirement 4.500 % 4.500 % Leverage capital ratio 10.365 % 10.296 % Minimum requirement 4.000 % 4.000 % Total risk-based capital ratio 14.712 % 15.738 % 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.
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.
At December 31, 2022, we had 122 loans, with an aggregate principal balance of $62.5 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.
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, 2022 2021 Amount % of total loans (1) Amount % of total loans (1) (Dollars in thousands) Balance at end of year applicable to: Residential mortgage loans $ 19,261 32.0 % $ 7,373 29.9 % Home equity loans 5,902 11.9 % 5,300 13.2 % Vehicle loans 23,059 18.8 % 15,483 14.8 % Consumer loans 665 1.0 % 2,884 3.5 % Commercial real estate loans 44,506 22.5 % 54,141 26.2 % Commercial real estate loans - owner occupied 4,004 3.4 % 3,883 3.9 % Commercial loans 20,639 10.4 % 13,177 8.5 % Total $ 118,036 100.0 % $ 102,241 100.0 % (1) Represents percentage of loans in each category to total loans. 48 Table of Contents Average Balance Sheets The following tables set 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, 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.
Government and agencies 124,455 102,622 124,451 119,632 Total marketable securities held-to-maturity $ 881,249 751,384 768,154 751,513 34 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.
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.
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 $ — — % $ 993 2.82 % $ 45,814 1.06 % $ — — % $ 46,807 39,201 1.09 % 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 (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.
Additionally, the maturity and monthly cash flow of marketable securities was redeployed into higher interest-earning loan 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.
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.
Government, agency and GSEs 119,959 99,793 125,260 121,976 Municipal securities 127,455 111,766 125,457 128,701 Corporate debt issues 13,540 12,978 — — Total marketable securities available-for-sale $ 1,431,728 1,218,108 1,565,002 1,548,592 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 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.
Noninterest expense decreased by $4.9 million, or 1.4%, to $340.0 million for the year ended December 31, 2022 from $344.9 million for the year ended December 31, 2021 due to decreases across the majority of expense categories.
Noninterest expense decreased by $19.3 million, or 5.5%, to $329.5 million for the year ended December 31, 2022 from $348.8 million for the year ended December 31, 2021 due to decreases across the majority of expense categories.
Total assets at December 31, 2022 were $14.113 billion, a decrease of $388.2 million, or 2.7%, from $14.502 billion at December 31, 2021. This decrease in assets was driven by a decrease in both marketable securities and total cash and cash equivalents. A discussion of significant changes follows. Cash and cash equivalents .
Total assets at December 31, 2023 were $14.419 billion, an increase of $305.8 million, or 2.2%, from $14.113 billion at December 31, 2022. This increase in assets was driven by an increase in total loans receivable. A discussion of significant changes follows. Cash and cash equivalents .
These decreases were partially offset by net income of $133.7 million for the year ended December 31, 2022. Comparison of Results of Operations for the Years Ended December 31, 2022 and 2021 General.
These changes were partially offset by $101.7 million of cash dividend payments during the year ended December 31, 2023. Comparison of Results of Operations for the Years Ended December 31, 2023 and 2022 General.
In addition, net charge-offs to average loans decreased to 0.02% for the year ended December 31, 2022 from 0.20% for the year ended December 31, 2021.
Total classified loans decreased by $126.9 million, or 34.9%, to $236.2 million at December 31, 2022 from $363.2 million at December 31, 2021. In addition, net charge-offs to average loans decreased to 0.02% for the year ended December 31, 2022 from 0.20% for the year ended December 31, 2021.
The allowance calculation is also supplemented with qualitative reserves that takes into consideration the current portfolio and specific risk characteristics, such as changes in underwriting standards, portfolio mix, delinquency level, or term, as well as changes in environmental conditions, among other factors, that have occurred but are not yet reflected in the quantitative model component. 31 Table of Contents Our allowance for credit losses is sensitive to a number of inputs, most notably the macroeconomic forecast assumptions as well as the reasonable and supportable forecasting periods that are incorporated in our estimate of credit losses.
The allowance calculation is also supplemented with qualitative reserves that take into consideration the current portfolio and specific risk characteristics, such as changes in underwriting standards, portfolio mix, delinquency level, or term, as well as changes in environmental conditions, among other factors, that have occurred but are not yet reflected in the quantitative model component.
In determining the amount of the current period provision, we considered current economic conditions, including unemployment levels, bankruptcy filings, and changes in real estate values, and assessed the impact of these factors on the quality of our loan portfolio and historical loss experience. We analyze the allowance for credit losses as described in the section entitled “Allowance for Credit Losses”.
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 provision for credit losses increased by $29.7 million, or 250.3%, to a provision expense of $17.9 million for the year ended December 31, 2022 compared to a provision credit of $11.9 million for the year ended December 31, 2021.
The provision for credit losses increased by $44.1 million, or 279.3%, to a total provision expense of $28.3 million for the year ended December 31, 2022 compared to a provision credit of $15.8 million for the year ended December 31, 2021.
At December 31, 2022 2021 Balance Percent (1) Rate (2) Balance Percent (1) Rate (2) (Dollars in thousands) Savings deposits $ 2,275,020 19.9 % 0.10 % $ 2,303,760 18.7 % 0.10 % Demand deposits 5,679,674 49.5 % 0.03 % 6,039,968 49.1 % 0.01 % Money market deposit accounts 2,457,569 21.4 % 0.14 % 2,629,882 21.4 % 0.10 % Time deposits: Maturing within 1 year 754,564 6.6 % 1.04 % 890,101 7.2 % 0.68 % Maturing 1 to 3 years 233,303 2.0 % 0.97 % 368,535 3.0 % 1.28 % Maturing more than 3 years 64,418 0.6 % 0.21 % 68,919 0.6 % 0.43 % Total certificates 1,052,285 9.2 % 0.65 % 1,327,555 10.8 % 0.84 % Total deposits $ 11,464,548 100.0 % 0.12 % $ 12,301,165 100.0 % 0.14 % (1) Represents percentage of total deposits.
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.
The increase in net income resulted from a decrease in provision for credit losses of $95.9 million, or 114.2%, an increase in noninterest income of $10.6 million, or 8.0%, and a decrease in noninterest expense of $2.6 million, or 0.7%.
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%.
At December 31, 2022 2021 (In thousands) Selected Consolidated Financial Data: Total assets $ 14,113,324 14,501,508 Cash and cash equivalents 139,365 1,279,259 Marketable securities held-to-maturity 124,455 124,451 Marketable securities available-for-sale 224,537 250,677 Mortgage-backed securities held-to-maturity 756,794 643,703 Mortgage-backed securities available-for-sale 993,571 1,297,915 Loans receivable, net of allowance for credit losses: Residential mortgage loans held-for-sale 9,913 25,056 Residential mortgage loans 3,469,425 2,962,191 Home equity loans 1,291,772 1,314,631 Consumer loans 2,144,931 1,820,381 Commercial real estate loans 2,775,045 2,957,460 Commercial loans 1,111,330 834,432 Total loans receivable, net 10,802,416 9,914,151 Deposits 11,464,548 12,301,165 Borrowed funds 681,166 139,093 Subordinated debt 113,840 123,575 Shareholders’ equity 1,491,486 1,583,571 For the years ended December 31, 2022 2021 2020 (In thousands except per share data) Selected Consolidated Operating Data: Total interest income $ 448,798 418,508 434,068 Total interest expense 28,117 27,246 42,340 Net interest income 420,681 391,262 391,728 Provision for credit losses 17,860 (11,883) 83,975 Net interest income after provision for credit losses 402,821 403,145 307,753 Noninterest income 110,849 142,889 132,265 Noninterest expense 339,978 344,910 347,492 Income before income taxes 173,692 201,124 92,526 Income tax expense 40,026 46,801 17,672 Net income $ 133,666 154,323 74,854 Earnings per share: Basic $ 1.05 1.22 0.62 Diluted $ 1.05 1.21 0.62 30 Table of Contents At or for the year ended December 31, 2022 2021 2020 Selected Financial Ratios and Other Data: Return on average assets (1), (5), (6), (7), (8) 0.94 % 1.08 % 0.58 % Return on average equity (2), (5), (6), (7), (8) 8.80 % 9.91 % 4.72 % Average capital to average assets 10.71 % 10.89 % 12.29 % Capital to total assets 10.57 % 10.92 % 11.14 % Tangible common equity to tangible assets 8.03 % 8.43 % 8.48 % Net interest rate spread (3) 3.11 % 2.89 % 3.24 % Net interest margin (4) 3.20 % 2.98 % 3.36 % Noninterest expense to average assets (6), (7), (8) 2.40 % 2.41 % 2.70 % Efficiency ratio (5), (6), (7), (8) 63.16 % 63.53 % 65.01 % Noninterest income to average assets (7) 0.78 % 1.00 % 1.03 % Net interest income to noninterest expense (5), (6), (8) 1.24x 1.13x 1.13x Dividend payout ratio 76.19 % 65.29 % 122.58 % Nonperforming loans to net loans receivable 0.76 % 1.60 % 0.99 % Nonperforming assets to total assets 0.58 % 1.10 % 0.77 % Allowance for credit losses to nonperforming loans 143.98 % 64.38 % 129.99 % Allowance for credit losses to loans receivable 1.08 % 1.02 % 1.27 % Average interest-earning assets to average interest-bearing liabilities 1.41x 1.39x 1.35x Number of banking offices 150 170 170 (1) Represents net income divided by average assets.
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.
Classification of Assets . Our policies, consistent with regulatory guidelines, provide for the classification of loans, or other assets including other real estate owned, considered to be of lesser quality as “substandard,” “doubtful,” or “loss” assets.
Our policies, consistent with regulatory guidelines, provide for the classification of loans, or other assets including other real estate owned, considered to be of lesser quality as “substandard,” “doubtful,” or “loss” assets. An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.
At December 31, 2022 2021 Amortized cost Fair value Amortized cost Fair value (In thousands) Residential mortgage-backed securities held-to-maturity: Fixed rate pass-through $ 163,196 138,512 183,092 180,989 Variable rate pass-through 542 530 667 691 Fixed rate agency CMOs 592,527 509,202 459,345 449,585 Variable rate agency CMOs 529 518 599 616 Total residential mortgage-backed securities held-to-maturity 756,794 648,762 643,703 631,881 Marketable securities held-to-maturity: U.S.
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.
Years ended December 31, 2022 vs. 2021 Years ended December 31, 2021 vs. 2020 Increase/(decrease) due to Total increase/(decrease) Increase/(decrease) due to Total increase/(decrease) Rate Volume Rate Volume (In thousands) Interest-earning assets: Loans receivable $ 14,458 3,059 17,517 (26,044) 5,178 (20,866) Mortgage-backed securities 5,194 4,147 9,341 (6,209) 10,256 4,047 Investment securities 275 548 823 (1,572) 2,579 1,007 FHLB stock, at cost 458 (135) 323 (543) (31) (574) Interest-earning deposits 4,564 (2,159) 2,405 (42) 517 475 Total interest-earning assets 24,949 5,460 30,409 (34,410) 18,499 (15,911) Interest-bearing liabilities: Savings deposits (217) 120 (97) (579) 379 (200) Interest-bearing demand deposits (172) 29 (143) (1,947) 250 (1,697) Money market deposit accounts 746 61 807 (4,757) 332 (4,425) Time deposits (3,767) (1,802) (5,569) (8,547) (1,905) (10,452) Borrowed funds 2,269 1,646 3,915 (193) (819) (1,012) Subordinated debt 10 (240) (230) (298) 3,716 3,418 Junior subordinated debentures 2,184 4 2,188 (761) 35 (726) Total interest-bearing liabilities 1,053 (182) 871 (17,082) 1,988 (15,094) Net change in net interest income $ 23,896 5,642 29,538 (17,328) 16,511 (817) Liquidity and Capital Resources Northwest Bank is required to maintain a sufficient level of liquid assets, as determined by management and defined and reviewed for adequacy by the FDIC during their regular examinations.
Years ended December 31, 2023 vs. 2022 Years ended December 31, 2022 vs. 2021 Increase/(decrease) due to Total increase/(decrease) Increase/(decrease) due to Total increase/(decrease) Rate Volume Rate Volume (In thousands) Interest-earning assets: Loans receivable $ 97,916 38,438 136,354 14,458 3,059 17,517 Mortgage-backed securities 4,720 (2,638) 2,082 5,194 4,147 9,341 Investment securities 67 (426) (359) 275 548 823 FHLB stock, at cost 510 1,628 2,138 458 (135) 323 Interest-earning deposits 30,861 (31,559) (698) 4,564 (2,159) 2,405 Total interest-earning assets 134,074 5,443 139,517 24,949 5,460 30,409 Interest-bearing liabilities: Savings deposits 7,251 (772) 6,479 (217) 120 (97) Interest-bearing demand deposits 11,245 (1,156) 10,089 (172) 29 (143) Money market deposit accounts 26,226 (4,869) 21,357 746 61 807 Time deposits 29,647 23,651 53,298 (3,767) (1,802) (5,569) Borrowed funds 5,555 22,817 28,372 2,269 1,646 3,915 Subordinated debt (12) (146) (158) 10 (240) (230) Junior subordinated debentures 4,667 18 4,685 2,184 4 2,188 Total interest-bearing liabilities 84,579 39,543 124,122 1,053 (182) 871 Net change in net interest income $ 49,495 (34,100) 15,395 23,896 5,642 29,538 Liquidity and Capital Resources Northwest Bank is required to maintain a sufficient level of liquid assets, as determined by management and defined and reviewed for adequacy by the FDIC during their regular examinations.
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. 45 Table of Contents 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 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 increase in income tax expense is primarily due to the $108.6 million, or 117.4%, increase in pretax income to $201.1 million for the year ended December 31, 2021 from $92.5 million for the year ended December 31, 2020.
This increase in income tax expense is primarily due to the $1.4 million, or 0.8%, increase in pretax income to $175.1 million for the year ended December 31, 2023 from $173.7 million for the year ended December 31, 2022.
Maturity period Certificates of deposit (In thousands) Three months or less $ 15,515 Over three months through six months 13,588 Over six months through twelve months 53,555 Over twelve months 25,665 Total $ 108,323 At December 31, 2022 and 2021, we had deposits in excess of $250,000 (the limit for FDIC insurance) of $4.031 billion and $4.194 billion, respectively.
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.
During the years ended December 31, 2022 2021 (Dollars in thousands) FHLB borrowings: Average balance outstanding $ 96,358 1,671 Maximum outstanding at end of any month during year 551,300 7,019 Balance outstanding at end of year 551,300 — Weighted average interest rate during year 4.27 % 2.20 % Weighted average interest rate at end of year 4.54 % — % Collateralized borrowings: Average balance outstanding $ 115,402 132,100 Maximum outstanding at end of any month during year 135,736 139,568 Balance outstanding at end of year 105,766 139,093 Weighted average interest rate during year 0.19 % 0.19 % Weighted average interest rate at end of year 0.27 % 0.19 % Collateral received: Average balance outstanding $ 14,104 — Maximum outstanding at end of any month during year 42,824 — Balance outstanding at end of year 24,100 — Weighted average interest rate during year 2.62 % — % Weighted average interest rate at end of year 4.17 % — % Subordinated borrowings: Average balance outstanding $ 116,644 123,481 Maximum outstanding at end of any month during year 123,638 123,560 Balance outstanding at end of year 113,840 123,575 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 $ 342,508 258,742 Maximum outstanding at end of any month during year 795,006 269,931 Balance outstanding at end of year 795,006 262,668 Weighted average interest rate during year 2.74 % 2.03 % Weighted average interest rate at end of year 3.88 % 1.98 % Shareholders’ equity .
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 .
State Balance Percent (Dollars in thousands) Pennsylvania $ 6,527,226 56.9 % New York 2,787,272 24.3 % Ohio 926,008 8.1 % Indiana 1,224,042 10.7 % Total $ 11,464,548 100.0 % The following table indicates the amount of our certificates of deposits of $250,000 or more by time remaining until maturity at December 31, 2022.
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.

… 151 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+2 added−1 removed21 unchanged
Biggest changeIncrease Decrease Parallel shift in interest rates over the next 12 months 100 bps 200 bps 300 bps 100 bps Projected percentage decrease in net interest income 1.3 % 1.9 % 2.4 % (4.0) % Projected percentage decrease in net income 4.0 % 6.0 % 7.8 % (11.7) % Projected decrease in return on average equity 3.8 % 5.8 % 7.6 % (11.3) % Projected decrease in earnings per share $ 0.03 $ 0.04 $ 0.06 $ (0.09) Projected percentage decrease in market value of equity (3.2) % (9.3) % (15.0) % (7.7) % 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 (1.3) % (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.
Because it is difficult to 54 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 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 .
These analyses were prepared assuming that total interest-earning asset and interest-bearing liability levels at December 31, 2021 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, 2021 levels.
These analyses were prepared assuming that total interest-earning asset and interest-bearing liability levels at December 31, 2023 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, 2023 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 bps the market value of net assets is not expected to decrease by more than 15% to 35%. 56 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%. 64 Table of Contents
At December 31, 2022, 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 $522.2 million, representing a negative one-year gap ratio of 3.70%. 53 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, 2022, which are expected to re-price or mature, based upon certain assumptions, in each of the future time periods shown.
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.
When open market conditions are favorable, we also attempt to reduce interest rate risk by lengthening the maturities of our interest-bearing liabilities by using FHLB advances as a source of long-term fixed-rate funds, if necessary, and by promoting longer-term certificates of deposit.
When open market conditions are favorable, we also attempt to reduce interest rate risk by lengthening the maturities of our interest-bearing liabilities by using FHLB advances as a source of long-term fixed-rate funds, if necessary, and by promoting longer-term certificates of deposit. At times, the Company may also use derivatives to adjust our interest rate risk profile.
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 (1.3) % (2.7) % (4.3) % (5.0) % (10.8) % (16.9) % Projected percentage increase/(decrease) in net income (2.8) % (5.9) % (9.3) % (11.8) % (25.0) % (39.2) % Projected increase/(decrease) in return on average equity (2.6) % (5.6) % (8.9) % (11.2) % (24.0) % (37.9) % Projected increase/(decrease) in earnings per share $ (0.03) $ (0.07) $ (0.11) $ (0.14) $ (0.30) $ (0.48) Projected percentage increase/(decrease) in market value of equity (8.1) % (16.3) % (26.2) % 2.6 % 6.3 % 7.1 % 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 (1.4) % (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.
For purposes of this analysis, management has estimated, based on historical trends, that $699.2 million, or 26.0%, of our interest-bearing demand accounts and $408.5 million, or 18.0%, 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. 55 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 $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.
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 4% to 23%, depending on the type of loan; (iii) commercial loans will prepay at an annual rate of 9% to 32%; and (iv) consumer loans held by Northwest Bank will prepay at an annual rate of 12% to 25%.
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%.
We purchase adjustable-rate investment securities and mortgage-backed securities, which at December 31, 2022, totaled $50.7 million, and originate adjustable-rate loans, which at December 31, 2022, totaled $ 3.334 billion or 30.7 % of our gross loan portfolio.
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.
Of our $12.981 billion of interest-earning assets at December 31, 2022, $3.384 billion, or 26.07 %, consisted of assets with adjustable rates of interest.
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.
Removed
Amounts maturing or re-pricing Within 1 year Over 1-3 years Over 3-5 years Over 5-10 years Over 10-20 years Total (Dollars in thousands) Rate-sensitive assets: Interest-earning deposits $ 37,739 — — — — 37,739 Mortgage-backed securities: Fixed-rate 233,763 386,591 320,418 770,935 — 1,711,707 Variable-rate 38,658 — — — — 38,658 Investment securities 22,476 11,192 69,989 245,335 — 348,992 Mortgage loans: Adjustable-rate 32,900 12,705 9,624 7,628 — 62,857 Fixed-rate 302,459 578,080 525,182 1,064,456 956,784 3,426,961 Home equity loans: Adjustable-rate 438,316 — — — — 438,316 Fixed-rate 175,953 294,424 209,057 170,881 3,041 853,356 Consumer loans 773,868 1,064,758 260,318 5,384 38 2,104,366 Commercial real estate loans 1,646,704 848,822 301,973 27,870 — 2,825,369 Commercial loans 782,549 239,504 88,749 15,353 6,944 1,133,099 Total rate-sensitive assets 4,485,385 3,436,076 1,785,310 2,307,842 966,807 12,981,420 Rate-sensitive liabilities: Time deposits 759,863 233,592 55,402 3,418 10 1,052,285 Money market demand accounts 2,329,914 — — — 127,655 2,457,569 Savings deposits 408,486 454,334 454,334 957,866 — 2,275,020 Interest-bearing demand deposits 699,212 407,786 407,786 1,019,465 152,182 2,686,431 FHLB Advances 551,300 — — — — 551,300 Collateral 24,100 — — — — 24,100 Other borrowings 105,766 — — — — 105,766 Trust Preferred Securities 129,314 — — — — 129,314 Subordinated debt (322) (638) 114,800 — — 113,840 Total rate-sensitive liabilities $ 5,007,633 1,095,074 1,032,322 1,980,749 279,847 9,395,625 Cumulative interest sensitivity gap $ (522,248) 1,818,754 2,571,742 2,898,835 3,585,795 3,585,795 Cumulative interest sensitivity gap as a percentage of total assets (3.70) % 12.89 % 18.22 % 20.54 % 25.41 % 25.41 % Cumulative interest-earning assets as a percent of cumulative interest-bearing liabilities 89.57 % 129.80 % 136.04 % 131.80 % 138.16 % 138.16 % At December 31, 2021, we had a cumulative interest sensitivity gap as a percentage of total assets of 25.75%.
Added
As of December 31, 2023 we had $175 million of cash flow hedges.
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 $ 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%.

Other NWBI 10-K year-over-year comparisons