Northwest Bancshares, Inc. (Northwest) operates as the bank holding company for Northwest Bank that offers personal and commercial banking solutions, investment management and trust services.
The company has community-banking locations throughout its market area in Pennsylvania, western New York, eastern Ohio, and Indiana. The company’s principal lending activities are the origination of loans secured by first mortgages on owner-occupied, one-to-four-family residences, shorter term consumer loa...
Northwest Bancshares, Inc. (Northwest) operates as the bank holding company for Northwest Bank that offers personal and commercial banking solutions, investment management and trust services.
The company has community-banking locations throughout its market area in Pennsylvania, western New York, eastern Ohio, and Indiana. The company’s principal lending activities are the origination of loans secured by first mortgages on owner-occupied, one-to-four-family residences, shorter term consumer loans, and commercial business and commercial real estate loans.
The company’s principal sources of funds are personal and business deposits, borrowed funds and the principal and interest payments on loans and marketable securities. The company’s principal source of income is interest received on loans and marketable securities.
Market Area
The company has expanded primarily through acquisitions, into the southwestern and central regions of Pennsylvania, as well as western New York, northeastern Ohio, and Indiana.
Pennsylvania Market Area: The company’s retail branch network of community banking offices within the Commonwealth of Pennsylvania encompasses 24 counties. The company’s western Pennsylvania market has a diverse economy driven by healthcare and education industries, service businesses, technology companies and small manufacturing operations. The company’s southeastern Pennsylvania market is primarily driven by service businesses but also serves as a bedroom community to the cities of Baltimore, Maryland and Philadelphia, Pennsylvania.
The company’s Pennsylvania market area has a total population of approximately 4.3 million and total households of approximately 1.8 million as of December 31, 2024. The Pennsylvania markets in which the company operates its retail branches contain approximately half of Pennsylvania’s population and a similar percentage of households.
As of September 30, 2024, the foreclosure rate for mortgage loans on one-to-four unit residential properties in the state of Pennsylvania was one in every 7,424 housing units, compared to the national average of one in every 4,578 housing units.
Western New York Market Area: The company’s retail branch network of community banking offices in New York encompasses four counties in the western portion of the state.
Northeastern Ohio Market Area: The company’s retail branch network of 11 community banking offices in Ohio includes two counties in northeastern Ohio, including the Cleveland metro area. The major employment sectors in this market are similar to the contiguous market in western Pennsylvania.
Indiana Market Area: The company’s retail branch network of 20 community banking offices in Indiana includes nine counties in Indiana. This market has a diverse economy driven by healthcare and education industries, service businesses, technology companies and small manufacturing operations.
Lending Activities
The company’s principal lending activities are the origination of fixed and adjustable-rate loans collateralized by one-to-four-family residential real estate, shorter term consumer loans and loans collateralized by multi-family residential and commercial real estate, as well as commercial business loans. The company focuses its lending activities in the geographic areas where it maintains offices.
In an effort to manage interest rate risk, the company has sought to make its interest-earning assets more interest rate sensitive by originating adjustable-rate loans, such as adjustable-rate residential mortgage loans and home equity lines of credit, and by originating short-term and medium-term fixed-rate consumer loans. Because the company originates a substantial amount of long-term fixed-rate mortgage loans collateralized by one-to-four-family residential real estate, when possible, it originates and underwrites loans according to standards that allow it to sell them into the secondary mortgage market for purposes of managing interest-rate risk and liquidity. The sale of mortgage loans supports the company’s strategy to grow the consumer and commercial loan portfolios faster than its portfolio of long-term fixed-rate residential mortgage loans. The company sells low-yielding fixed-rate residential mortgage loans with maturities of more than 15 years, and on a more limited basis, those with maturities of 15 years or less, while retaining all adjustable-rate residential mortgage loans. With the build out of its Columbus, Ohio mortgage fulfillment center, the company’s intention is to sell more loans into the secondary market on a servicing released basis. The company also retains servicing on some of the mortgage loans it sells which generates monthly service fee income. The company generally retains in its portfolio all consumer loans that it originates while it periodically sells participation loans in the multi-family residential, commercial real estate and commercial business loans that it originates in an effort to reduce the concentration of certain individual credits and the risk associated with certain businesses, industries or geographies.
Residential Mortgage Loans: The company offers residential mortgage loans with terms typically ranging from 15 to 30 years, with either fixed or adjustable interest rates. The company’s mortgage loans are amortized on a monthly basis with both principal and interest due monthly. Originations of fixed-rate residential mortgage loans versus adjustable-rate residential mortgage loans are monitored on an ongoing basis.
The company’s fixed-rate residential mortgage loan products offer fixed rates for up to 30 years. Whenever possible, the company’s fixed-rate residential mortgages are originated and underwritten according to secondary mortgage market guidelines in order to manage credit risk, as well as interest rate risk and liquidity risk. The company’s adjustable-rate residential mortgage loans offer initial interest rate adjustment periods of five, seven, and ten years, terms up to 30 years and adjustments based on changes in designated market indices.
The company generally limits the maximum loan-to-value on both fixed-rate and adjustable-rate residential mortgage loans without private mortgage insurance, to 80% of the lesser of appraised values or purchase prices of real estate serving as collateral for its mortgage loans. The company requires fire and casualty insurance, as well as a title guaranty regarding good title, on all properties securing its residential mortgage loans. The company also requires flood insurance for loans secured by properties located within special flood hazard areas.
In addition, the company originates loans within its market area that are secured by individual unimproved or improved lots. Land loans for the construction of owner-occupied residential real estate properties are offered with fixed rates for terms of up to ten years.
The company’s residential mortgage loans customarily include due-on-sale clauses, which are provisions giving it the right to declare loans immediately due and payable in the event, among other things, borrowers sell or otherwise dispose of underlying real properties serving as collateral for loans.
Home Equity Loans and Lines of Credit: Generally, the company’s home equity loans are secured by the borrower’s principal residence with a maximum loan-to-value ratio, including the principal balances of both the first and subordinate mortgage loans, of 95% or less. The company generally underwrites home equity loans and lines of credit in a manner similar to its underwriting of residential mortgage 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.
Home equity lines of credit are offered on an adjustable-rate basis with terms of up to 25 years, including a draw period of 10 years each. Although home equity lines of credit require interest-only payments during draw periods, they are underwritten using amortizing principal and interest payments based on current rates of equivalent fixed-rate products.
Other Consumer Loans: The principal types of other consumer loans the company offers 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.
The underwriting standards the company employs for consumer loans include a determination of the applicant’s credit history and an assessment of ability to meet existing obligations and payments on the proposed loan. The stability of the applicant’s monthly income may be determined by verification of gross monthly income from primary employment, and additionally, from any verifiable secondary income. 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.
Commercial Real Estate Loans: The company’s multi-family commercial real estate loans are secured by multi-family residences, such as rental properties, student housing, and senior living facilities. The company’s other commercial real estate loans are secured by nonresidential properties such as hotels, commercial offices, medical buildings, manufacturing facilities and retail establishments. At December 31, 2024, a significant portion of the company’s multi-family commercial real estate and commercial real estate loans were secured by properties located within its market area.
Multi-family commercial and commercial real estate loans are offered with both adjustable and fixed interest rates. The terms of each multi-family residential and commercial real estate loan are negotiated on a case-by-case basis. The company generally originates multi-family commercial and commercial real estate loans in amounts up to 80% of the appraised value of the property collateralizing the loan.
Commercial Loans: The company offers commercial loans to finance various activities in its market area, some of which are secured in part by additional real estate collateral.
Commercial business loans are offered with both fixed and adjustable interest rates. Underwriting standards the company employs for commercial business loans include a determination of the applicant’s ability to meet existing obligations and payments on the proposed loan from operating cash flows generated by the applicant’s business.
The company originates commercial loans through its network of Small Business and Commercial Loan Officers located in its areas. In addition, the company’s Commercial Finance group originates loans where multiple banks may be involved in the credit facilities. These loans are made to companies operating in its market area.
Deposits
Personal and business deposits are generated from the company’s market area by offering a broad selection of deposit instruments including checking accounts, savings accounts, money market deposit accounts, term certificate accounts and individual retirement accounts.
Subsidiary Activities
The company also owns all of the common stock of seven statutory business trusts: Northwest Bancorp Capital Trust III, a Delaware statutory business trust, Northwest Bancorp Statutory Trust IV, a Connecticut statutory business trust, LNB Trust II, a Delaware statutory business trust, Union National Capital Trust I, a Delaware statutory business trust, Union National Capital Trust II, a Delaware statutory business trust, MFBC Statutory Trust I, a Delaware statutory business trust, and Universal Preferred Trust, a Delaware statutory business trust (the Trusts).
As of December 31, 2024, the bank had three active wholly-owned subsidiaries; Great Northwest Corporation, Northwest Capital Group, Inc., and Mutual Federal Interest Corporation.
Great Northwest Corporation holds equity investments in government-assisted, low-income housing projects in various locations throughout its market area.
Northwest Capital Group, Inc.’s principal activity is to own, operate and ultimately divest of properties that were acquired in foreclosure.
Mutual Federal Interest Corporation, which is a Nevada corporation, holds and manages a portion of the bank investment portfolio and consumer closed-end first mortgage loans.
Investment Portfolio
As of December 31, 2024, the company’s investment portfolio included Government sponsored entities; U.S. Government and agency obligations; municipal securities; and corporate debt issues. The company purchases debentures and mortgage-backed securities that generally are issued by the Federal Home Loan Bank (FHLB), Fannie Mae (FNMA), Freddie Mac (FHLMC) or Ginnie Mae (GNMA).
Supervision and Regulation
As a bank holding company, the company is required to comply with the rules and regulations of the Federal Reserve Board and is also required to file certain reports with, and subject to examination by, the Federal Reserve Board. The company is subject to additional statutory and regulatory requirements, including enhanced risk management and corporate governance processes and examination and supervision for compliance with federal financial consumer protection laws by the Consumer Financial Protection Bureau (the CFPB). The Company is also subject to the disclosure and regulatory requirements of the Securities Act of 1933, as amended (the Securities Act), and the Securities Exchange Act of 1934, as amended (the Exchange Act), both as administered by the SEC, as well as the rules of Nasdaq that apply to companies with securities listed on the NASDAQ Global Select Market.
The bank is a Pennsylvania-chartered stock savings bank and the company’s deposit accounts are insured up to applicable limits by the FDIC’s Deposit Insurance Fund (the ‘DIF’). The bank is subject to extensive regulation by the Department of Banking and Securities of the Commonwealth of Pennsylvania (the ‘Department of Banking’), as its chartering agency, and by the FDIC, as its primary federal regulator and the insurer of its deposit accounts. The bank must file reports with the Department of Banking and the FDIC concerning its activities and financial condition in addition to obtaining regulatory approvals prior to entering into certain transactions including acquisitions of other financial institutions. The bank is examined periodically by the Department of Banking and the FDIC to test Northwest Bank’s compliance with various laws and regulations.
As a bank holding company, the company is subject to regulation under the Bank Holding Company Act, as amended (the BHCA), and to regulation, examination and supervision by, and periodic reporting to, the Federal Reserve Board. The Federal Reserve Board has supervisory and 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.
As a bank holding company, the company and its subsidiaries are generally limited to activities deemed by the Federal Reserve Board to be the business of banking or closely related activities that are incidental to banking.
The bank is also subject to extensive regulation, examination and supervision by the FDIC, as its primary federal regulator. The deposit accounts of the bank are insured by the DIF to the maximum amount provided by law. The company and the bank are also subject to the Volcker Rule, which contains prohibitions on proprietary trading and certain investments in, and relationships with, hedge funds, private equity funds and similar funds.
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.
The bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks. 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, the bank is required to acquire and hold shares of capital stock in the Federal Home Loan Bank in specified amounts. The company’s common stock is registered with the SEC under Section 12(b) of the Exchange Act. The company is also subject to the proxy rules, tender offer rules, insider trading restrictions, annual and periodic reporting, and other requirements of the Exchange Act.
History
Northwest Bancshares, Inc. was founded in 1896. The company, a Maryland corporation, was incorporated in 2009.
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