Northwest Bancshares, Inc.
For the period ended Jun 30, 2026. Filed Aug 5, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 5, 2026
NWBI$15.24-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-07.
0001471265-26-000017
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-05.
0001471265-26-000032
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 130 previous paragraphs and 144 current paragraphs.
98 unchanged; 31 reworded; 5 added; 1 removed; 0 previous and 10 current paragraphs rearranged.
Tables are not compared: 10 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
Average Balance Sheet
Current report
(h)Annualized.
Current report
Rate/Volume Analysis
Current report
The increase from the six months ended June 30, 2025 was driven by an increase in compensation and employee benefits expense of $12 million, an increase in processing expense of $7 million and an increase in amortization in intangible expense of $3 million. These increases were offset by a decrease in acquisition expenses of $6 million and FDIC insurance premiums of $2 million. These fluctuations were driven by the same reasons noted above.
Current report
The provision for income taxes increased by $6 million from the quarter ended June 30, 2025 and $9 million for the six months ended June 30, 2025. These increases were driven by higher income before taxes, primarily resulting from increased interest income associated with the acquisition, which expanded our loan portfolio.
Removed paragraphs (1)
Previous report
The provision for income taxes increased by $3 million from the quarter ended March 31, 2025 due to higher income before taxes as the result of an increase in interest income due to the acquisition resulting in a larger loan portfolio.
Reworded paragraphs (31)
Previous wording
Please refer to Note 1 of the Notes to Consolidated Financial Statements in Item 8 of Part II of our 2025 Annual Report on Form 10-K.
Current wording
Please refer to Note 1 of the Notes to Consolidated Financial Statements in Item 8 of Part II of our 2025 Annual Report on Form 10-K and Note 1 “Basis of Presentation and Informational Disclosures” within this Item 1 of this Quarterly Report for more information.
Previous wording
The Penns Woods results of operations are included in the Company’s consolidated results since the date of acquisition. Therefore, the Company’s first quarter 2026 results reflect increased levels of average balances, net interest income, and noninterest expense compared to the first quarter 2025 results. After purchase accounting fair value adjustments, the acquisition added $2.2 billion of total assets, including $1.8 billion of loans, $160 million of investments, of which $82 million were immediately sold, as well as $2.0 billion of total liabilities, primarily consisting of $1.6 billion in deposits. The Company recorded preliminary goodwill of $63 million and core deposit intangibles of $42 million related to the acquisition.
Current wording
The Penns Woods results of operations are included in the Company’s consolidated results since the date of acquisition. Therefore, the Company’s second quarter 2026 results reflect increased levels of average balances, net interest income, and noninterest expense compared to the second quarter 2025 results. After purchase accounting fair value adjustments, the acquisition added $2.2 billion of total assets, including $1.8 billion of loans, $160 million of investments, of which $82 million were immediately sold, as well as $2.0 billion of total liabilities, primarily consisting of $1.6 billion in deposits. The Company recorded goodwill of $64 million and core deposit intangibles of $42 million related to the acquisition.
Previous wording
Total assets at March 31, 2026 were $16.9 billion, an increase of $140 million from December 31, 2025. A discussion of significant changes follows.
Current wording
Total assets at June 30, 2026 were $17.2 billion, an increase of $441 million from December 31, 2025. A discussion of significant changes follows.
Previous wording
Cash and cash equivalents increased by $53 million, or 23%, to $287 million at March 31, 2026, from $234 million at December 31, 2025 due to growth in our deposits exceeding the growth in loans and securities.
Current wording
Cash and cash equivalents increased by $15 million, or 6%, to $248 million at June 30, 2026, from $234 million at December 31, 2025 due to growth in our deposits and borrowings exceeding the growth in loans and securities.
Previous wording
Total marketable securities increased to $2.4 billion at March 31, 2026, increasing by $124 million, or 5%, from December 31, 2025. Available-for-sale securities increased by $161 million, this was driven by the purchase of additional securities. Held-to-maturity securities decreased $37 million, driven by maturities and regular monthly cash flows.
Current wording
Total marketable securities increased to $2.5 billion at June 30, 2026, increasing by $190 million, or 8%, from December 31, 2025. Available-for-sale securities increased by $243 million, this was driven by the purchase of additional securities. Held-to-maturity securities declined $53 million, driven by maturities and recurring monthly cash flows.
Previous wording
Gross loans receivable was $13.1 billion at March 31, 2026, increasing $49 million from December 31, 2025. This increase is attributed to net growth of C&I and vehicle loans. Our total personal banking loan portfolio increased by $20 million, to $7.2 billion at March 31, 2026 while our total commercial banking loans increased by $28 million, to $5.9 billion at March 31, 2026.
Current wording
Gross loans receivable was $13.2 billion at June 30, 2026, increasing $222 million from December 31, 2025. This increase is attributed to net growth of commercial and industrial (C&I) and vehicle loans. Our total personal banking loan portfolio increased by $170 million, to $7.3 billion at June 30, 2026, while our total commercial banking loans increased by $52 million, to $5.9 billion at June 30, 2026.
Previous wording
Total deposits increased by $270 million, to $14.2 billion at March 31, 2026 from $13.9 billion at December 31, 2025. This increase was driven primarily by an increase in the balance of money market, savings deposits and time deposits of $194 million, $78 million and $58 million, respectively. This is partially offset by a decrease in interest-bearing checking deposits of $58 million.
Current wording
Total deposits increased by $219 million, to $14.2 billion at June 30, 2026, from $13.9 billion at December 31, 2025. This increase was driven primarily by an increase in the balance of money market and savings deposits of $226 million and $93 million, respectively, partly due to customers shifting funds to these products as their time deposits matured. This is partially offset by a decrease in interest-bearing checking and time deposits of $79 million and $89 million, respectively.
Previous wording
As of March 31, 2026, we had $306 million of brokered deposits, which made up 10% of our time deposits and 2% of our total deposit balance at quarter end. As of December 31, 2025, we had $193 million of brokered deposits, which made up 7% of our time deposits and 1% of our total deposit balance at year end. The brokered deposits had an average original term of 7 and 8.5 months, respectively.
Current wording
As of June 30, 2026, we had $236 million of brokered deposits, which made up 9% of our time deposits and 2% of our total deposit balance at quarter end. As of December 31, 2025, we had $193 million of brokered deposits, which made up 7% of our time deposits and 1% of our total deposit balance at year end. The brokered deposits had an average original term of 7 and 8.5 months, respectively.
Previous wording
In addition, we had $903 million and $941 million of deposits through our participation in the IntraFi Network Deposits and R&T Insured Deposit programs as of March 31, 2026 and December 31, 2025, respectively. These deposits are part of a reciprocal program that allows our depositors to receive expanded FDIC coverage by placing multiple interest-bearing demand accounts at other member banks and Northwest Bank receives an equal amount of deposits from other member banks. The balance carried an average cost of 2.85% as of March 31, 2026 and 3.00% as of December 31, 2025.
Current wording
In addition, we had $901 million and $941 million of deposits through our participation in the IntraFi Network Deposits and R&T Insured Deposit programs as of June 30, 2026 and December 31, 2025, respectively. These deposits are part of a reciprocal program that allows our depositors to receive expanded FDIC coverage by placing multiple interest-bearing demand accounts at other member banks and Northwest Bank receives an equal amount of deposits from other member banks. The balance carried an average cost of 3.03% as of June 30, 2026 and 3.00% as of December 31, 2025.
Previous wording
Our largest uninsured depositor, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $134 million, or 0.95% of total deposits, as of March 31, 2026. Our top ten largest uninsured depositors, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $358 million, or 2.53%, of total deposits, as of March 31, 2026. The average uninsured deposit account balance, excluding intercompany and collateralized accounts, was $336,335 as of March 31, 2026.
Current wording
Our largest uninsured depositor, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $185 million, or 1.3% of total deposits, as of June 30, 2026. Our top ten largest uninsured depositors, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $404 million, or 2.9%, of total deposits, as of June 30, 2026. The average uninsured deposit account balance, excluding intercompany and collateralized accounts, was $344,187 as of June 30, 2026.
Previous wording
Total shareholders’ equity increased to $1.9 billion, or $13.02 per share, at March 31, 2026 compared to $12.94 per share at December 31, 2025, increasing by $14 million in the current year. The increase was the result of year-to-date earnings of $51 million, partially offset by a $29 million of cash dividend payment and an increase in accumulated other comprehensive loss of $8 million, or 12%, due to an increase in unrealized loss in the available-for-sale investment portfolio.
Current wording
Total shareholders’ equity increased to $1.9 billion, or $13.17 per share, at June 30, 2026 compared to $12.94 per share at December 31, 2025, increasing by $37 million in the current year. The increase was the result of year-to-date earnings of $104 million, partially offset by $59 million of cash dividend payments and an increase in accumulated other comprehensive loss of $12 million, or 17%, due to an increase in unrealized loss in the available-for-sale investment portfolio.
Previous wording
Northwest Bank is required to maintain a sufficient level of liquid assets, as determined by management and reviewed for adequacy by the FDIC and the Pennsylvania Department of Banking and Securities during their regular examinations. Northwest frequently monitors its liquidity position primarily using the ratio of unencumbered available-for-sale liquid assets as a percentage of deposits and borrowings (“liquidity ratio”). Northwest Bank’s liquidity ratio at March 31, 2026 was 21.89% compared to 18.44% as of December 31, 2025. Northwest Bank adjusts liquidity levels in order to meet funding needs for deposit outflows, payment of real estate taxes and insurance on mortgage loan escrow accounts, repayment of borrowings and loan commitments. At March 31, 2026, Northwest had $4.4 billion of additional borrowing capacity available with the FHLB, including $250 million on an overnight line of credit, which had no balance as of March 31, 2026, as well as $1.7 billion of borrowing capacity available with the Federal Reserve Bank and $369 million with four correspondent banks.
Current wording
Northwest Bank is required to maintain a sufficient level of liquid assets, as determined by management and reviewed for adequacy by the FDIC and the Pennsylvania Department of Banking and Securities during their regular examinations. Northwest frequently monitors its liquidity position primarily using the ratio of unencumbered available-for-sale liquid assets as a percentage of deposits and borrowings (“liquidity ratio”). Northwest Bank’s liquidity ratio at June 30, 2026 was 23.56% compared to 18.44% as of December 31, 2025. Northwest Bank adjusts liquidity levels in order to meet funding needs for deposit outflows, payment of real estate taxes and insurance on mortgage loan escrow accounts, repayment of borrowings and loan commitments. At June 30, 2026, Northwest had $4.3 billion of additional borrowing capacity available with the FHLB, including $250 million on an overnight line of credit, which had a drawn balance of $227 million as of June 30, 2026, as well as $1.9 billion of borrowing capacity available with the Federal Reserve Bank and $419 million with five correspondent banks.
Previous wording
We paid $29 million in cash dividends during the quarter ended March 31, 2026 compared to $26 million for the quarter ended March 31, 2025. The common stock dividend payout ratio (dividends declared per share divided by net income per diluted share) for the quarters ended March 31, 2026 and 2025 was 58.8% on dividends of $0.20 per share. On April 22, 2026, the Board of Directors declared a cash dividend of $0.20 per share payable on May 20, 2026 to shareholders of record as of May 7, 2026. This represents the 126 th consecutive quarter we have paid a cash dividend.
Current wording
We paid $29 million in cash dividends during the quarter ended June 30, 2026 compared to $26 million for the quarter ended June 30, 2025. The common stock dividend payout ratio (dividends declared per share divided by net income per diluted share) for the quarters ended June 30, 2026 and 2025 was 55.6% and 76.9%, respectively, on dividends of $0.20 per share. On July 22, 2026, the Board of Directors declared a cash dividend of $0.20 per share payable on August 18, 2026 to shareholders of record as of August 6, 2026. This represents the 127 th consecutive quarter we have paid a cash dividend.
Previous wording
On an ongoing basis, the Credit Administration department, as well as loan officers and department heads, review and monitor the loan portfolio for problem loans. This portfolio monitoring includes a review of the monthly delinquency reports as well as historical comparisons and trend analysis. Personal and small business commercial loans are classified primarily by delinquency status. In addition, a meeting is held every quarter with each vertical to monitor the performance and status of commercial loans on an internal watch list. On an on-going basis, the loan officer, in conjunction with a portfolio manager, grades or classifies problem commercial loans or potential problem commercial loans based upon their knowledge of the lending relationship and other information previously accumulated. This rating is also reviewed independently by our Loan Review department on a periodic basis. Our loan grading system for problem commercial loans is consistent with industry regulatory guidelines which classifies loans as “substandard”, “doubtful” or “loss”. Loans that do not expose us to risk sufficient to warrant classification in one of the previous categories, but which possess some weaknesses, are designated as “special mention”. A “substandard” loan is any loan that is 90 days or more contractually delinquent or is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as “doubtful” have all the weaknesses inherent in those classified as “substandard” with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions or values, highly questionable and improbable. Loans classified as “loss” have all the weakness inherent in those classified as “doubtful” and are considered uncollectible.
Current wording
On an ongoing basis, the Credit Administration department, as well as loan officers and department heads, review and monitor the loan portfolio for problem loans. This portfolio monitoring includes a review of the monthly delinquency reports as well as historical comparisons and trend analysis. Personal and small business commercial loans are classified primarily by delinquency status. In addition, a meeting is held every quarter with each vertical to monitor the performance and status of commercial loans on an internal watch list. On an on-going basis, the loan officer, in conjunction with a portfolio manager, grades or classifies problem commercial loans or potential problem commercial loans based upon their knowledge of the lending relationship and other information previously accumulated. These rating are periodically reviewed by our Credit Risk Review department as part of a targeted risk-based review program. Our loan grading system for problem commercial loans is consistent with industry regulatory guidelines which classifies loans as “substandard”, “doubtful” or “loss”. Loans that do not expose us to risk sufficient to warrant classification in one of the previous categories, but which possess potential weaknesses, are designated as “special mention”. A “substandard” loan is any loan that has well defined weaknesses, is 90 days or more contractually delinquent or is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as “doubtful” have all the weaknesses inherent in those classified as “substandard” with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of currently existing facts, conditions or values, highly questionable and improbable. Loans classified as “loss” have all the weakness inherent in those classified as “doubtful” and are considered uncollectible.
Previous wording
If a substandard or doubtful loan is not individually assessed, it is grouped with other loans that possess common characteristics for credit losses and analysis. For the purpose of calculating reserves, we have grouped our loans into seven segments: residential mortgage loans, home equity loans, vehicle loans, consumer loans, commercial real estate loans, commercial real estate loans - owner occupied and commercial loans. The allowance for credit losses is measured using a combination of statistical models and qualitative assessments. We use a twenty four month forecasting period and revert to historical average loss rates thereafter. Reversion to average loss rates takes place over twelve months. Historical average loss rates are calculated using historical data beginning in October 2009 through the current period.
Current wording
If a substandard or doubtful loan is not individually assessed, it is grouped with other loans that possess common characteristics for credit losses and analysis. For the purpose of calculating reserves, we have grouped our loans into seven segments: residential mortgage loans, home equity loans, vehicle loans, consumer loans, commercial real estate loans, commercial real estate loans - owner occupied and commercial and industrial loans. The allowance for credit losses is measured using a combination of statistical models and qualitative assessments. We use a twenty four month forecasting period and revert to historical average loss rates thereafter.
Previous wording
We utilize a structured methodology each period when analyzing the adequacy of the allowance for credit losses and the related provision for credit losses, which the ACL Committee assesses regularly for appropriateness. As part of the analysis as of March 31, 2026, we considered the most recent economic conditions and forecasts available which incorporated the impact of material recent economic events. In addition, we considered the overall trends in asset quality, reserves on individually assessed loans, historical loss rates and collateral valuations. The ACL increased by $167 thousand to $150 million, or 1.15% of total loans at March 31, 2026, consistent with 1.15% at December 31, 2025. This increase was primarily driven by the increase in the balance of total loans. The provision for credit losses for the quarter ended March 31, 2026 was $4 million, driven by growth in our commercial lending portfolio and increased uncertainty in the economic outlook, compared to $8 million for the quarter ended March 31, 2025.
Current wording
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 June 30, 2026, we considered the most recent economic conditions and forecasts available which incorporated the impact of material recent economic events. In addition, we considered the overall trends in asset quality, reserves on individually assessed loans, historical loss rates and collateral valuations. The ACL decreased by $1 million to $149 million, or 1.13% of total loans at June 30, 2026, which is a slight decrease from 1.15% at December 31, 2025. This decrease was primarily driven by our loan portfolio mix. The provision for credit losses for the quarter ended June 30, 2026 was $7 million, driven by growth in our commercial lending portfolio, including unfunded commitments, compared to $9 million for the quarter ended June 30, 2025.
Previous wording
Total classified loans increased by $44 million to $498 million at March 31, 2026 compared to $453 million at December 31, 2025. This increase was driven by net increases in our C&I and commercial real estate portfolios which increased $30 million and $15 million, respectively. The increase in classified loans was driven primarily by receipt of updated financials and borrowers whose performance deteriorated during the quarter.
Current wording
Total classified loans increased by $71 million to $524 million at June 30, 2026 compared to $453 million at December 31, 2025. This increase was driven by net increases in our C&I and commercial real estate portfolios which increased $26 million and $44 million, respectively. The increase in classified loans was driven by acquired loans to borrowers whose updated financial statements indicated financial deterioration.
Previous wording
We also consider how the levels of nonaccrual loans and historical charge-offs have influenced the required amount of allowance for credit losses. Nonaccrual loans of $91 million at March 31, 2026 decreased by $16 million, or 15%, from $107 million at December 31, 2025, or 0.70% of total loans receivable as of March 31, 2026 and 0.82% of total loans receivable as of December 31, 2025. As a percentage of average loans, annualized net charge-offs were 0.16% for the three months ended March 31, 2026 compared to 0.25% for the year ended December 31, 2025.
Current wording
We also consider how the levels of nonaccrual loans and historical charge-offs have influenced the required amount of allowance for credit losses. Nonaccrual loans of $91 million at June 30, 2026 decreased by $16 million, or 15%, from $107 million at December 31, 2025, or 0.69% of total loans receivable as of June 30, 2026 and 0.82% of total loans receivable as of December 31, 2025. As a percentage of average loans, annualized net charge-offs were 0.15% for the three months ended June 30, 2026 compared to 0.25% for the year ended December 31, 2025.
Previous wording
Net income for the quarter ended March 31, 2026 was $51 million, or $0.34 per diluted share, an increase of $7 million, or 16%, from net income of $43 million, or $0.34 per diluted share, for the quarter ended March 31, 2025. This increase in net income resulted primarily from an increase in net interest income of $15 million which was driven by the increase in interest income on loans receivable of $16 million. This was offset by an increase in noninterest expense of $12 million which was driven by an increase in compensation and employee benefits and processing expenses of $4 million and $3 million, respectively. Net income for the quarter ended March 31, 2026 represents annualized returns on average equity and average assets of 10.86% and 1.22%, respectively, compared to 10.90% and 1.22% for the same quarter last year.
Current wording
Net income for the quarter ended June 30, 2026 was $54 million, or $0.36 per diluted share, an increase of $20 million, or 59%, from net income of $34 million, or $0.26 per diluted share, for the quarter ended June 30, 2025. This increase in net income resulted primarily from an increase in net interest income of $27 million which was driven by the increase in interest income on loans receivable of $28 million. This was offset by an increase in noninterest expense of $7 million which was driven by an increase in compensation and employee benefits and processing expenses of $8 million and $4 million, respectively. Net income for the quarter ended June 30, 2026 represents annualized returns on average equity and average assets of 11.20% and 1.27%, respectively, compared to 8.26% and 0.93% for the same quarter last year.
Previous wording
Net interest income for the first quarter of 2026 was $142 million which increased $15 million, or 11%, from the first quarter of 2025. Net interest income (FTE) was $143 million for the quarter ended March 31, 2026 and net interest margin (FTE) was 3.70%. Compared to the same quarter of the prior year, net interest income (FTE) increased $15 million and net interest margin (FTE) decreased by seventeen basis points. The increase in net interest income (FTE) was primarily driven by a higher average balance of earnings assets and interest bearing liabilities acquired from the Penns Woods acquisition. The decrease in net interest margin (FTE) was driven by a $13.1 million non-accrual loan interest recovery in the first quarter of 2025.
Current wording
Net interest income for the second quarter of 2026 was $147 million which increased $27 million, or 23%, from the second quarter of 2025. Net interest income (FTE) was $148 million for the quarter ended June 30, 2026 and net interest margin (FTE) was 3.75%. Compared to the same quarter of the prior year, net interest income (FTE) increased $27 million and net interest margin (FTE) increased by nineteen basis points. The increase in net interest income (FTE) and net interest margin (FTE) was primarily driven by a higher average balance of earnings assets and interest bearing liabilities acquired from the Penns Woods acquisition.
Previous wording
Average loans receivable increased $1.9 billion, or 17%, from the quarter ended March 31, 2025. This increase was driven by the acquisition of Penns Woods which resulted in an additional $1.8 billion in loans. Interest income on loans receivable increased by $16 million, or 10%, from the same quarter in the prior year, driven by the Penns Woods acquisition and a loan mix shift towards higher yielding commercial loans which was partially offset by an interest recovery of $13.1 million on a non-accrual commercial real estate loan payoff during the first quarter of 2025.
Current wording
Average loans receivable increased $1.8 billion, or 16%, from the quarter ended June 30, 2025. This increase was driven by the acquisition of Penns Woods which resulted in an additional $1.8 billion in loans. Interest income on loans receivable increased by $28 million, or 18%, from the same quarter in the prior year, driven by the Penns Woods acquisition and a loan mix shift towards higher yielding commercial loans.
Previous wording
Average investments increased 21% from the first quarter of 2025 driven by the Penns Woods acquisition and a targeted increase in the overall securities portfolio. Interest income on investment securities increased by $6 million, or 47%, from the quarter ended March 31, 2025. The increase is due to the increase in the average balance of investments and the increase in average yield on investments (FTE) to 3.17% for the quarter ended March 31, 2026.
Current wording
Average investments increased 23% from the second quarter of 2025 driven by the Penns Woods acquisition and a targeted increase in the overall securities portfolio. Interest income on investment securities increased by $7 million, or 50%, from the quarter ended June 30, 2025. The increase is due to the increase in the average balance of investments and the increase in average yield on investments (FTE) to 3.27% for the quarter ended June 30, 2026.
Previous wording
Average deposits grew 16% from the quarter ended March 31, 2025 driven by deposits acquired from the Penns Woods merger. Our average money market, interest-bearing checking, and time deposit accounts grew by $526 million, $406 million, $338 million respectively, from the quarter ended March 31, 2025 partly due to acquisition and higher use of brokered CDs. Interest expense on deposits increased by $4 million, or 8% from the quarter ended March 31, 2025, primarily attributable to an increase in average balance of deposits partially offset by lower cost of funds.
Current wording
Average deposits grew 16% from the quarter ended June 30, 2025 driven by deposits acquired from the Penns Woods merger. Our average money market, interest-bearing checking, and time deposit accounts grew by $608 million, $364 million, $283 million respectively, from the quarter ended June 30, 2025 partly due to acquisition and higher use of brokered CDs. Interest expense on deposits increased by $4 million, or 8% from the quarter ended June 30, 2025, primarily attributable to an increase in average balance of deposits partially offset by lower cost of funds.
Previous wording
Compared to the quarter ended March 31, 2025, average borrowings saw a 81% increase. This increase was attributable to the acquisition of long-term borrowings from Penns Woods. The increase in the average balance of borrowings resulted in an increase in interest expense on borrowings of $3 million from the quarter ended March 31, 2025.
Current wording
Compared to the quarter ended June 30, 2025, average borrowings saw an 82% increase. This increase was attributable to the acquisition of long-term borrowings from Penns Woods. The increase in the average balance of borrowings resulted in an increase in interest expense on borrowings of $3 million from the quarter ended June 30, 2025.
Previous wording
(b)Interest income includes accretion/amortization of deferred loan fees/expenses, which were not material.
Current wording
(b)Interest income includes accretion/amortization of deferred loan fees/expenses and fair value marks, which were not material.
Previous wording
(g)Average cost of deposits were 1.48% and 1.59%, respectively.
Current wording
(g)Average cost of deposits were 1.43% and 1.55%, respectively.
Previous wording
The provision for credit losses decreased by $4 million from the quarter ended March 31, 2025. This decrease included a $3 million decrease in the provision for credit losses - loans, as well as a $0.2 million decrease in the provision for credit losses - unfunded commitments. This decrease is provision for unfunded was due to the timing of organic origination and funding of commercial construction loans and lines of credit which was partially offset by increased uncertainty in the economic outlook.
Current wording
The provision for credit losses decreased by $2 million from the quarter ended June 30, 2025. This decrease included a $7 million decrease in the provision for credit losses - loans, as well as a $5 million increase in the provision for credit losses - unfunded commitments. The current year provision was driven by growth in our commercial lending portfolio. The prior year provision for credit losses - loans was driven by downgrades within our commercial real estate portfolio offset by changes in the economic forecasts. This increase in provision for unfunded was due to an increase in timing of undrawn commitments and increased uncertainty in the economic outlook.
Previous wording
Additionally, the Company saw an increase in classified loans to $498 million, or 3.81% of total loans, at March 31, 2026 from $279 million, or 2.49% of total loans, at March 31, 2025 and $453 million, or 3.49% of total loans, at December 31, 2025. The increase from the prior year was primarily due to classified loans acquired in the Penns Woods acquisition. The increase from the prior quarter was due to receipt of updated financials and borrowers whose performance deteriorated during the quarter.
Current wording
Additionally, the Company saw an increase in classified loans to $524 million, or 3.96% of total loans, at June 30, 2026 from $518 million, or 4.57% of total loans, at June 30, 2025 and $498 million, or 3.81% of total loans, at March 31, 2026. The increase from the prior year was primarily due to classified loans acquired in the Penns Woods acquisition. The increase from the prior quarter was due to changes in our commercial real estate portfolio.
Previous wording
Noninterest income for the quarter ended March 31, 2026 was $33 million, an increase of $4 million from the quarter ended March 31, 2025, driven by an increase in service charges and fees driven by deposit related fees based on customer activity related to the Penns Woods acquisition and other operating income driven by a gain on equity method investments during the current quarter.
Current wording
Noninterest income for the quarter ended June 30, 2026 was $34 million, an increase of $3 million from the quarter ended June 30, 2025, and an increase of $8 million from the six months ended June 30, 2025 driven by an increase in service charges and fees driven by deposit related fees based on customer activity related to the Penns Woods acquisition and trust and other financial services income driven by an increase in our wealth management business.
Previous wording
Noninterest expense increased by $12 million, or 13%, from the quarter ended March 31, 2025. The increase from the prior year quarter was primarily attributable an increase in compensation and employee benefits expense of $4 million, or 7%, to $58 million for the quarter ended March 31, 2026 driven by an increase in core compensation and benefits expense due to the addition of Penns Woods employees. Additional increases included an increase in processing expenses of $3 million for the quarter ended March 31, 2026, due to the addition of the Penns Woods branches to our footprint and an increase of $2 million in amortization of intangible expense related to the acquisition.
Current wording
Noninterest expense increased by $7 million, or 7%, from the quarter ended June 30, 2025 and $19 million, or 10% from the six months ended June 30, 2025. The increase from the prior year quarter was primarily attributable an increase in compensation and employee benefits expense of $8 million, or 15%, to $63 million for the quarter ended June 30, 2026 driven by an increase in core compensation and benefits expense due to the addition of Penns Woods employees. Additional increases included an increase in processing expenses of $4 million for the quarter ended June 30, 2026, due to the addition of the Penns Woods branches to our footprint and an increase of $2 million in amortization of intangible expense related to the acquisition. This was partially offset by a decrease in acquisition expenses of $6 million and a decrease in FDIC insurance premiums of $3 million related to prior period assessment rate changes.
Previous wording
The provision for income taxes isprimarily driven by changes in our current period income before taxes. We anticipate our effective tax rate to be between 23.0% and 25.0% for the year ending December 31, 2026.
Current wording
The provision for income taxes is primarily driven by changes in our current period income before taxes. We anticipate our effective tax rate to be between 23.0% and 25.0% for the year ending December 31, 2026.
Rearranged current paragraphs (10)
Current report — wording carried from elsewhere
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.
Current report — wording carried from elsewhere
The following table sets forth certain information relating to the Company’s average balance sheet and reflects the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented. Average balances are calculated using daily averages
Current report — wording carried from elsewhere
(a)Average gross loans includes loans held as available-for-sale and loans placed on nonaccrual status.
Current report — wording carried from elsewhere
(b)Interest income includes accretion/amortization of deferred loan fees/expenses and fair value marks, which were not material.
Current report — wording carried from elsewhere
(c)Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.
Current report — wording carried from elsewhere
(d)Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent (“FTE”) basis. We believe this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts.
Current report — wording carried from elsewhere
(e)Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.
Current report — wording carried from elsewhere
(f)Average balances include FHLB borrowings and collateralized borrowings.
Current report — wording carried from elsewhere
(g)Average cost of deposits were 1.45% and 1.57%, respectively.
Current report — wording carried from elsewhere
The following table represents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected interest income (FTE) and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) net change. Changes that cannot be attributed to either rate or volume have been allocated to both rate and volume.