NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(1) Basis of Presentation and Informational Disclosures
Northwest Bancshares, Inc. (the “Company” or “NWBI”), a Maryland corporation headquartered in Warren, Pennsylvania, is a bank holding company regulated by the Board of Governors of the Federal Reserve System ("FRB"). The primary activity of the Company is the ownership of all of the issued and outstanding common stock of Northwest Bank, a Pennsylvania-chartered savings bank (“Northwest”). Northwest is regulated by the Federal Deposit Insurance Corporation ("FDIC") and the Pennsylvania Department of Banking. Northwest operates 170 community-banking offices throughout Pennsylvania, Western New York, Eastern Ohio, and Indiana.
The accompanying unaudited Consolidated Financial Statements include the accounts of the Company and its subsidiary, Northwest, and Northwest’s subsidiaries Northwest Capital Group, Inc., Allegheny Services, Inc., Great Northwest Corporation, The Bert Company (doing business as Northwest Insurance Services) and MutualFirst Investment Company, Inc. The unaudited Consolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information or footnotes required for complete annual financial statements. In the opinion of management, all adjustments necessary for the fair presentation of the Company’s financial position and results of operations have been included. The Consolidated Financial Statements have been prepared using the accounting policies described in the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 updated, as required, for any new pronouncements or changes.
Certain items previously reported have been reclassified to conform to the current year's reporting format.
The results of operations for the quarter ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021, or any other period.
Stock-Based Compensation
Stock-based compensation expense of $961,000 and $1.5 million for the quarters ended March 31, 2021 and 2020, respectively, was recognized in compensation expense relating to our stock benefit plans. At March 31, 2021, there was compensation expense of $1.8 million to be recognized for awarded but unvested stock options and $8.6 million for unvested restricted common shares.
Income Taxes-Uncertain Tax Positions
Accounting standards prescribe a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. A tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable, based on its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. At March 31, 2021, we had $336,000 of liability for unrecognized tax benefits.
We recognize interest accrued related to: (1) unrecognized tax benefits in other expenses and (2) refund claims in other operating income. We recognize penalties (if any) in other expenses. We are subject to audit by the Internal Revenue Service and any state in which we conduct business for the tax periods ended December 31, 2020, 2019, 2018, and 2017.
Recently Adopted Accounting Standards
In August 2018, the Financial Accounting Standards Board ("FASB") issued the accounting standard update ("ASU") 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20) - Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans.” This guidance removes and adds disclosure requirements for defined benefit pension or other post-retirement plans. On January 1, 2021, the Company adopted ASU 2018-14 on a retrospective basis for disclosures impacted. The adoption of this standard did not have a material effect on our results of operations or financial position. Refer to Note 8, "Pension and Other Post-Retirement Benefits".
In December 2019, the FASB issued ASU 2019-12, "Income Taxes - Simplifying the Accounting for Income Taxes." This guidance simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition for deferred tax liabilities for outside basis differences. ASU 2019-12 also simplifies aspects of the accounting for franchise taxes and
enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. On January 1, 2021, the Company adopted ASU 2019-12 on a prospective basis. The adoption of this standard did not have a material effect on our results of operations or financial position.
(2) Marketable Securities
The following table shows the portfolio of marketable securities available-for-sale at March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
cost
|
|
Gross
unrealized
holding
gains
|
|
Gross
unrealized
holding
losses
|
|
Fair
value
|
|
Debt issued by the U.S government and agencies:
|
|
|
|
|
|
|
|
|
Due after ten years
|
$
|
40,142
|
|
|
—
|
|
|
(1,318)
|
|
|
38,824
|
|
|
|
|
|
|
|
|
|
|
|
Debt issued by government sponsored enterprises:
|
|
|
|
|
|
|
|
|
Due in less than one year
|
25,211
|
|
|
93
|
|
|
—
|
|
|
25,304
|
|
|
|
|
|
|
|
|
|
|
|
Due in five years through ten years
|
68,802
|
|
|
91
|
|
|
(2,253)
|
|
|
66,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal securities:
|
|
|
|
|
|
|
|
|
Due in less than one year
|
4,130
|
|
|
8
|
|
|
—
|
|
|
4,138
|
|
|
Due in one year through five years
|
2,627
|
|
|
55
|
|
|
—
|
|
|
2,682
|
|
|
Due in five years through ten years
|
22,040
|
|
|
464
|
|
|
(139)
|
|
|
22,365
|
|
|
Due after ten years
|
69,493
|
|
|
2,275
|
|
|
(2)
|
|
|
71,766
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
Fixed rate pass-through
|
324,804
|
|
|
3,571
|
|
|
(3,104)
|
|
|
325,271
|
|
|
Variable rate pass-through
|
13,970
|
|
|
433
|
|
|
(18)
|
|
|
14,385
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate agency CMOs
|
811,591
|
|
|
7,403
|
|
|
(8,264)
|
|
|
810,730
|
|
|
Variable rate agency CMOs
|
47,542
|
|
|
571
|
|
|
(87)
|
|
|
48,026
|
|
|
Total residential mortgage-backed securities
|
1,197,907
|
|
|
11,978
|
|
|
(11,473)
|
|
|
1,198,412
|
|
|
Total marketable securities available-for-sale
|
$
|
1,430,352
|
|
|
14,964
|
|
|
(15,185)
|
|
|
1,430,131
|
|
The following table shows the portfolio of marketable securities available-for-sale at December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
cost
|
|
Gross
unrealized
holding
gains
|
|
Gross
unrealized
holding
losses
|
|
Fair
value
|
|
Debt issued by the U.S. government and agencies:
|
|
|
|
|
|
|
|
|
Due after ten years
|
$
|
40,761
|
|
|
211
|
|
|
(55)
|
|
|
40,917
|
|
|
|
|
|
|
|
|
|
|
|
Debt issued by government sponsored enterprises:
|
|
|
|
|
|
|
|
|
Due in less than one year
|
24,976
|
|
|
159
|
|
|
—
|
|
|
25,135
|
|
|
Due in one year through five years
|
238
|
|
|
3
|
|
|
—
|
|
|
241
|
|
|
|
|
|
|
|
|
|
|
|
Due in five years through ten years
|
68,973
|
|
|
238
|
|
|
(80)
|
|
|
69,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal securities:
|
|
|
|
|
|
|
|
|
Due in less than one year
|
4,008
|
|
|
14
|
|
|
—
|
|
|
4,022
|
|
|
Due in one year through five years
|
2,803
|
|
|
63
|
|
|
(2)
|
|
|
2,864
|
|
|
Due in five years through ten years
|
16,045
|
|
|
429
|
|
|
(5)
|
|
|
16,469
|
|
|
Due after ten years
|
89,778
|
|
|
3,752
|
|
|
(72)
|
|
|
93,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
Fixed rate pass-through
|
339,406
|
|
|
7,125
|
|
|
(86)
|
|
|
346,445
|
|
|
Variable rate pass-through
|
14,778
|
|
|
431
|
|
|
(20)
|
|
|
15,189
|
|
|
|
|
|
|
|
|
|
|
|
Fixed rate agency CMOs
|
723,586
|
|
|
11,758
|
|
|
(1,093)
|
|
|
734,251
|
|
|
Variable rate agency CMOs
|
50,333
|
|
|
519
|
|
|
(33)
|
|
|
50,819
|
|
|
Total residential mortgage-backed securities
|
1,128,103
|
|
|
19,833
|
|
|
(1,232)
|
|
|
1,146,704
|
|
|
Total marketable securities available-for-sale
|
$
|
1,375,685
|
|
|
24,702
|
|
|
(1,446)
|
|
|
1,398,941
|
|
The following table shows the portfolio of marketable securities held-to-maturity at March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
cost
|
|
Gross
unrealized
holding
gains
|
|
Gross
unrealized
holding
losses
|
|
Fair
value
|
|
Debt issued by government sponsored enterprises:
|
|
|
|
|
|
|
|
|
Due in one year through five years
|
$
|
16,900
|
|
|
—
|
|
|
(83)
|
|
|
16,817
|
|
|
Due in five years through ten years
|
107,971
|
|
|
—
|
|
|
(5,135)
|
|
|
102,836
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
Fixed rate pass-through
|
188,378
|
|
|
131
|
|
|
(2,320)
|
|
|
186,189
|
|
|
Variable rate pass-through
|
824
|
|
|
30
|
|
|
—
|
|
|
854
|
|
|
Fixed rate agency CMOs
|
289,608
|
|
|
628
|
|
|
(4,321)
|
|
|
285,915
|
|
|
Variable rate agency CMOs
|
603
|
|
|
18
|
|
|
—
|
|
|
621
|
|
|
Total residential mortgage-backed securities
|
479,413
|
|
|
807
|
|
|
(6,641)
|
|
|
473,579
|
|
|
Total marketable securities held-to-maturity
|
$
|
604,284
|
|
|
807
|
|
|
(11,859)
|
|
|
593,232
|
|
The following table shows the portfolio of marketable securities held-to-maturity at December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
cost
|
|
Gross
unrealized
holding
gains
|
|
Gross
unrealized
holding
losses
|
|
Fair
value
|
|
Debt issued by government sponsored enterprises:
|
|
|
|
|
|
|
|
|
Due in five years through ten years
|
$
|
67,990
|
|
|
12
|
|
|
(123)
|
|
|
67,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
Fixed rate pass-through
|
1,723
|
|
|
131
|
|
|
—
|
|
|
1,854
|
|
|
Variable rate pass-through
|
919
|
|
|
30
|
|
|
—
|
|
|
949
|
|
|
Fixed rate agency CMOs
|
107,651
|
|
|
716
|
|
|
(2)
|
|
|
108,365
|
|
|
Variable rate agency CMOs
|
604
|
|
|
15
|
|
|
—
|
|
|
619
|
|
|
Total residential mortgage-backed securities
|
110,897
|
|
|
892
|
|
|
(2)
|
|
|
111,787
|
|
|
Total marketable securities held-to-maturity
|
$
|
178,887
|
|
|
904
|
|
|
(125)
|
|
|
179,666
|
|
The following table shows the contractual maturity of our residential mortgage-backed securities available-for-sale at March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
cost
|
|
Fair
value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities:
|
|
|
|
|
Due in less than one year
|
$
|
5,169
|
|
|
5,183
|
|
|
Due in one year through five years
|
20,613
|
|
|
20,942
|
|
|
Due after five years through ten years
|
94,567
|
|
|
95,753
|
|
|
Due after ten years
|
1,077,558
|
|
|
1,076,534
|
|
|
Total residential mortgage-backed securities
|
$
|
1,197,907
|
|
|
1,198,412
|
|
|
|
|
|
|
The following table shows the contractual maturity of our residential mortgage-backed securities held-to-maturity at March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
cost
|
|
Fair
value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities:
|
|
|
|
|
Due in less than one year
|
$
|
1
|
|
|
1
|
|
|
Due in one year through five years
|
1,060
|
|
|
1,130
|
|
|
Due after five years through ten years
|
40,547
|
|
|
38,780
|
|
|
Due after ten years
|
437,805
|
|
|
433,668
|
|
|
Total residential mortgage-backed securities
|
$
|
479,413
|
|
|
473,579
|
|
|
|
|
|
|
The following table shows the fair value of and gross unrealized losses on marketable securities, for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
|
|
Fair value
|
|
Unrealized
loss
|
|
Fair value
|
|
Unrealized
loss
|
|
Fair value
|
|
Unrealized
loss
|
|
U.S. government sponsored enterprises
|
$
|
222,278
|
|
|
(8,716)
|
|
|
1,758
|
|
|
(73)
|
|
|
224,036
|
|
|
(8,789)
|
|
|
Municipal securities
|
3,573
|
|
|
(141)
|
|
|
122
|
|
|
—
|
|
|
3,695
|
|
|
(141)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities - agency
|
1,007,574
|
|
|
(18,064)
|
|
|
10,589
|
|
|
(50)
|
|
|
1,018,163
|
|
|
(18,114)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
1,233,425
|
|
|
(26,921)
|
|
|
12,469
|
|
|
(123)
|
|
|
1,245,894
|
|
|
(27,044)
|
|
The following table shows the fair value of and gross unrealized losses on marketable securities, for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
|
|
Fair value
|
|
Unrealized
loss
|
|
Fair value
|
|
Unrealized
loss
|
|
Fair value
|
|
Unrealized
loss
|
|
U.S. government sponsored enterprises
|
$
|
67,809
|
|
|
(179)
|
|
|
1,923
|
|
|
(80)
|
|
|
69,732
|
|
|
(259)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Municipal securities
|
4,257
|
|
|
(79)
|
|
|
—
|
|
|
—
|
|
|
4,257
|
|
|
(79)
|
|
|
Residential mortgage-backed securities - agency
|
300,767
|
|
|
(1,202)
|
|
|
5,533
|
|
|
(31)
|
|
|
306,300
|
|
|
(1,233)
|
|
|
Total
|
$
|
372,833
|
|
|
(1,460)
|
|
|
7,456
|
|
|
(111)
|
|
|
380,289
|
|
|
(1,571)
|
|
The Company does not believe that the available-for-sale debt securities that were in an unrealized loss position as of March 31, 2021, which were comprised of 192 individual securities, represents a credit loss impairment. All of these securities were issued by U.S. government agencies or U.S. government-sponsored agencies. There securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. The unrealized losses were primarily attributable to changes in the interest rate environment and not due to the credit quality of these investment securities. The Company does not have the intent to sell these investment securities and it is likely that we will not be required to sell these securities before their anticipated recovery, which may be at maturity.
All of the Company's held-to-maturity debt securities are issued by U.S. government agencies or U.S. government-sponsored agencies. There securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. Therefore, the Company did not record an allowance for credit losses for these securities as of March 31, 2021.
The following table presents the credit quality of our held-to-maturity securities, based on the latest information available as of March 31, 2021. The credit ratings are sourced from nationally recognized rating agencies, which include Moody's and S&P, or when credit ratings cannot be sourced from the agencies, they are presented based on asset type. All of our held-to-maturity securities were current in their payment of principal and interest as of March 31, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AA+
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity securities:
|
|
|
|
|
Debt issued by government sponsored enterprises
|
$
|
124,871
|
|
|
124,871
|
|
|
Residential mortgage-backed securities
|
479,413
|
|
|
479,413
|
|
|
Total marketable securities held-to-maturity
|
$
|
604,284
|
|
|
604,284
|
|
(3) Loans Receivable
The following table shows a summary of our loans receivable at amortized cost basis at March 31, 2021 and December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
|
Originated
|
|
Acquired
|
|
Total
|
|
Originated
|
|
Acquired
|
|
Total
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans (1)
|
$
|
2,693,075
|
|
|
278,603
|
|
|
2,971,678
|
|
|
2,753,593
|
|
|
314,528
|
|
|
3,068,121
|
|
|
Home equity loans
|
1,138,718
|
|
|
268,806
|
|
|
1,407,524
|
|
|
1,175,703
|
|
|
292,033
|
|
|
1,467,736
|
|
|
Vehicle loans
|
1,063,255
|
|
|
141,598
|
|
|
1,204,853
|
|
|
995,040
|
|
|
157,633
|
|
|
1,152,673
|
|
|
Consumer loans
|
288,146
|
|
|
61,356
|
|
|
349,502
|
|
|
288,066
|
|
|
67,254
|
|
|
355,320
|
|
|
Total Personal Banking
|
5,183,194
|
|
|
750,363
|
|
|
5,933,557
|
|
|
5,212,402
|
|
|
831,448
|
|
|
6,043,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
2,242,151
|
|
|
583,846
|
|
|
2,825,997
|
|
|
2,223,108
|
|
|
624,873
|
|
|
2,847,981
|
|
|
Commercial real estate loans - owner occupied
|
326,416
|
|
|
137,023
|
|
|
463,439
|
|
|
344,016
|
|
|
153,892
|
|
|
497,908
|
|
|
Commercial loans
|
1,011,722
|
|
|
133,325
|
|
|
1,145,047
|
|
|
1,019,482
|
|
|
171,628
|
|
|
1,191,110
|
|
|
Total Commercial Banking
|
3,580,289
|
|
|
854,194
|
|
|
4,434,483
|
|
|
3,586,606
|
|
|
950,393
|
|
|
4,536,999
|
|
|
Total loans receivable, gross
|
8,763,483
|
|
|
1,604,557
|
|
|
10,368,040
|
|
|
8,799,008
|
|
|
1,781,841
|
|
|
10,580,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for credit losses
|
(95,572)
|
|
|
(28,425)
|
|
|
(123,997)
|
|
|
(102,874)
|
|
|
(31,553)
|
|
|
(134,427)
|
|
|
Total loans receivable, net (2)
|
$
|
8,667,911
|
|
|
1,576,132
|
|
|
10,244,043
|
|
|
8,696,134
|
|
|
1,750,288
|
|
|
10,446,422
|
|
(1) Includes fair value of $46.3 million and $58.8 million of loans held-for-sale at March 31, 2021 and December 31, 2020, respectively.
(2) Includes $40.6 million and $40.9 million of net unearned income, unamortized premiums and discounts and deferred fees and costs at March 31, 2021 and December 31, 2020, respectively.
The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the quarter ended March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2021
|
|
Current
period provision
|
|
Charge-offs
|
|
Recoveries
|
|
|
|
Balance as of December 31, 2020
|
|
Allowance for Credit Losses
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
5,861
|
|
|
(592)
|
|
|
(855)
|
|
|
42
|
|
|
|
|
7,266
|
|
|
Home equity loans
|
5,241
|
|
|
(652)
|
|
|
(228)
|
|
|
129
|
|
|
|
|
5,992
|
|
|
Vehicle loans
|
14,888
|
|
|
773
|
|
|
(1,307)
|
|
|
597
|
|
|
|
|
14,825
|
|
|
Consumer loans
|
2,563
|
|
|
651
|
|
|
(1,296)
|
|
|
337
|
|
|
|
|
2,871
|
|
|
Total Personal Banking
|
28,553
|
|
|
180
|
|
|
(3,686)
|
|
|
1,105
|
|
|
|
|
30,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
70,206
|
|
|
(4,831)
|
|
|
(4,626)
|
|
|
282
|
|
|
|
|
79,381
|
|
|
Commercial real estate loans - owner occupied
|
6,753
|
|
|
(3,766)
|
|
|
—
|
|
|
1
|
|
|
|
|
10,518
|
|
|
Commercial loans
|
18,485
|
|
|
2,797
|
|
|
(54)
|
|
|
2,168
|
|
|
|
|
13,574
|
|
|
Total Commercial Banking
|
95,444
|
|
|
(5,800)
|
|
|
(4,680)
|
|
|
2,451
|
|
|
|
|
103,473
|
|
|
Total
|
$
|
123,997
|
|
|
(5,620)
|
|
|
(8,366)
|
|
|
3,556
|
|
|
|
|
134,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Credit Losses -
off-balance sheet exposure
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
2
|
|
|
Home equity loans
|
34
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Personal Banking
|
36
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
2,115
|
|
|
(1,334)
|
|
|
—
|
|
|
—
|
|
|
|
|
3,449
|
|
|
Commercial real estate loans - owner occupied
|
388
|
|
|
62
|
|
|
—
|
|
|
—
|
|
|
|
|
326
|
|
|
Commercial loans
|
2,080
|
|
|
(471)
|
|
|
—
|
|
|
—
|
|
|
|
|
2,551
|
|
|
Total Commercial Banking
|
4,583
|
|
|
(1,743)
|
|
|
—
|
|
|
—
|
|
|
|
|
6,326
|
|
|
Total off-balance sheet exposure
|
$
|
4,619
|
|
|
(1,744)
|
|
|
—
|
|
|
—
|
|
|
|
|
6,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides information related to the allowance for credit losses by portfolio segment and by class of financing receivable for the quarter ended March 31, 2020, and includes the cumulative effect of adopting ASU 2016-13 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2020
|
|
Current
period provision
|
|
Charge-offs
|
|
Recoveries
|
|
Cumulative effect of ASU 2016-13*
|
|
Balance as of December 31, 2019
|
|
Allowance for Credit Losses
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
10,673
|
|
|
894
|
|
|
(343)
|
|
|
107
|
|
|
7,441
|
|
|
2,574
|
|
|
Home equity loans
|
9,786
|
|
|
895
|
|
|
(289)
|
|
|
205
|
|
|
5,786
|
|
|
3,189
|
|
|
Vehicle loans
|
11,994
|
|
|
5,359
|
|
|
(1,843)
|
|
|
344
|
|
|
842
|
|
|
7,292
|
|
|
Consumer loans
|
5,166
|
|
|
3,518
|
|
|
(1,645)
|
|
|
416
|
|
|
(2,424)
|
|
|
5,301
|
|
|
Total Personal Banking
|
37,619
|
|
|
10,666
|
|
|
(4,120)
|
|
|
1,072
|
|
|
11,645
|
|
|
18,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
29,380
|
|
|
11,269
|
|
|
(310)
|
|
|
290
|
|
|
2,288
|
|
|
15,843
|
|
|
Commercial real estate loans - owner occupied
|
8,374
|
|
|
1,365
|
|
|
(21)
|
|
|
7
|
|
|
1,278
|
|
|
5,745
|
|
|
Commercial loans
|
17,524
|
|
|
4,337
|
|
|
(815)
|
|
|
424
|
|
|
(4,419)
|
|
|
17,997
|
|
|
Total Commercial Banking
|
55,278
|
|
|
16,971
|
|
|
(1,146)
|
|
|
721
|
|
|
(853)
|
|
|
39,585
|
|
|
Total
|
92,897
|
|
|
27,637
|
|
|
(5,266)
|
|
|
1,793
|
|
|
10,792
|
|
|
57,941
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for Credit Losses - off-balance sheet exposure
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home equity loans
|
34
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(293)
|
|
|
323
|
|
|
Consumer loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(402)
|
|
|
402
|
|
|
Total Personal Banking
|
34
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(695)
|
|
|
725
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
3,294
|
|
|
1,283
|
|
|
—
|
|
|
—
|
|
|
1,934
|
|
|
77
|
|
|
Commercial real estate loans - owner occupied
|
95
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
88
|
|
|
3
|
|
|
Commercial loans
|
1,281
|
|
|
189
|
|
|
—
|
|
|
—
|
|
|
923
|
|
|
169
|
|
|
Total Commercial Banking
|
4,670
|
|
|
1,476
|
|
|
—
|
|
|
—
|
|
|
2,945
|
|
|
249
|
|
|
Total off-balance sheet exposure
|
$
|
4,704
|
|
|
1,480
|
|
|
—
|
|
|
—
|
|
|
2,250
|
|
|
974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Includes the impact of the initial allowance on PCD loans of $517,000.
During the quarter ended March 31, 2021, there were no loans sold that were classified as held for investment. During the quarter ended March 31, 2020, we sold $50 million of loans that were classified as held for- investment, for a gain of $1.3 million, which is reported in gain on sale of loans on the Consolidated Statements of Income.
The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
receivable
|
|
Allowance for
credit losses
|
|
Nonaccrual
loans (1)
|
|
Loans 90 days past due and accruing
|
|
TDRs
|
|
Allowance
related to
TDRs
|
|
Additional
commitments
to customers
with loans
classified as
TDRs
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
2,971,678
|
|
|
5,861
|
|
|
11,571
|
|
|
—
|
|
|
8,285
|
|
|
516
|
|
|
—
|
|
|
Home equity loans
|
1,407,524
|
|
|
5,241
|
|
|
8,069
|
|
|
—
|
|
|
2,003
|
|
|
369
|
|
|
26
|
|
|
Vehicle loans
|
1,204,853
|
|
|
14,888
|
|
|
3,976
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Consumer loans
|
349,502
|
|
|
2,563
|
|
|
777
|
|
|
197
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
Total Personal Banking
|
5,933,557
|
|
|
28,553
|
|
|
24,393
|
|
|
197
|
|
|
10,289
|
|
|
885
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
2,825,997
|
|
|
70,206
|
|
|
175,136
|
|
|
—
|
|
|
15,318
|
|
|
1,097
|
|
|
473
|
|
|
Commercial real estate loans - owner occupied
|
463,439
|
|
|
6,753
|
|
|
3,747
|
|
|
—
|
|
|
688
|
|
|
113
|
|
|
—
|
|
|
Commercial loans
|
1,145,047
|
|
|
18,485
|
|
|
20,678
|
|
|
—
|
|
|
1,215
|
|
|
249
|
|
|
700
|
|
|
Total Commercial Banking
|
4,434,483
|
|
|
95,444
|
|
|
199,561
|
|
|
—
|
|
|
17,221
|
|
|
1,459
|
|
|
1,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
10,368,040
|
|
|
123,997
|
|
|
223,954
|
|
|
197
|
|
|
27,510
|
|
|
2,344
|
|
|
1,199
|
|
(1)Includes $7.4 million of nonaccrual TDRs.
The following table provides information related to the loan portfolio by portfolio segment and by class of financing receivable at December 31, 2020, (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
receivable
|
|
Allowance for
credit losses
|
|
Nonaccrual
loans (1)
|
|
Loans 90 days past due and accruing
|
|
TDRs
|
|
Allowance
related to
TDRs
|
|
Additional
commitments
to customers
with loans
classified as
TDRs
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
3,068,121
|
|
|
7,266
|
|
|
15,924
|
|
|
—
|
|
|
8,431
|
|
|
560
|
|
|
—
|
|
|
Home equity loans
|
1,467,736
|
|
|
5,992
|
|
|
9,123
|
|
|
—
|
|
|
2,058
|
|
|
381
|
|
|
26
|
|
|
Vehicle loans
|
1,152,673
|
|
|
14,825
|
|
|
5,533
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Consumer loans
|
355,320
|
|
|
2,871
|
|
|
1,031
|
|
|
584
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
Total Personal Banking
|
6,043,850
|
|
|
30,954
|
|
|
31,611
|
|
|
585
|
|
|
10,490
|
|
|
941
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
2,847,981
|
|
|
79,381
|
|
|
44,092
|
|
|
—
|
|
|
18,430
|
|
|
787
|
|
|
471
|
|
|
Commercial real estate loans - owner occupied
|
497,908
|
|
|
10,518
|
|
|
3,642
|
|
|
—
|
|
|
761
|
|
|
123
|
|
|
—
|
|
|
Commercial loans
|
1,191,110
|
|
|
13,574
|
|
|
23,487
|
|
|
—
|
|
|
2,454
|
|
|
165
|
|
|
362
|
|
|
Total Commercial Banking
|
4,536,999
|
|
|
103,473
|
|
|
71,221
|
|
|
—
|
|
|
21,645
|
|
|
1,075
|
|
|
833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
10,580,849
|
|
|
134,427
|
|
|
102,832
|
|
|
585
|
|
|
32,135
|
|
|
2,016
|
|
|
859
|
|
(1)Includes $10.7 million of nonaccrual TDRs.
We present the amortized cost of our loans on nonaccrual status including such loans with no allowance. The following table presents the amortized cost of our loans on nonaccrual status as of the beginning and end of the quarter ended March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans at January 1, 2021
|
|
Nonaccrual loans at March 31, 2021 with an allowance
|
|
Nonaccrual loans with no allowance
|
|
Loans 90 days past due and accruing
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
15,924
|
|
|
11,571
|
|
|
—
|
|
|
—
|
|
|
|
|
Home equity loans
|
9,123
|
|
|
8,069
|
|
|
—
|
|
|
—
|
|
|
|
|
Vehicle loans
|
5,533
|
|
|
3,976
|
|
|
—
|
|
|
—
|
|
|
|
|
Consumer loans
|
1,031
|
|
|
672
|
|
|
105
|
|
|
197
|
|
|
|
|
Total Personal Banking
|
31,611
|
|
|
24,288
|
|
|
105
|
|
|
197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
44,092
|
|
|
159,915
|
|
|
15,221
|
|
|
—
|
|
|
|
|
Commercial real estate loans - owner occupied
|
3,642
|
|
|
3,747
|
|
|
—
|
|
|
—
|
|
|
|
|
Commercial loans
|
23,487
|
|
|
16,503
|
|
|
4,175
|
|
|
—
|
|
|
|
|
Total Commercial Banking
|
71,221
|
|
|
180,165
|
|
|
19,396
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
102,832
|
|
|
204,453
|
|
|
19,501
|
|
|
197
|
|
|
|
During the quarter ended March 31, 2021, we recognized $279,000 of interest income on nonaccrual and troubled debt restructuring loans.
The following table presents the amortized cost of our loans on nonaccrual status as of the beginning and end of the year ended December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual
loans at
January 1, 2020
|
|
Nonaccrual loans at December 31, 2020
with an allowance
|
|
Nonaccrual
loans with
no allowance
|
|
Loans 90 days
past due
and accruing
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
14,476
|
|
|
15,923
|
|
|
—
|
|
|
—
|
|
|
|
|
Home equity loans
|
6,745
|
|
|
8,872
|
|
|
252
|
|
|
—
|
|
|
|
|
Vehicle loans
|
3,147
|
|
|
5,377
|
|
|
156
|
|
|
1
|
|
|
|
|
Consumer loans
|
1,079
|
|
|
1,030
|
|
|
1
|
|
|
584
|
|
|
|
|
Total Personal Banking
|
25,447
|
|
|
31,202
|
|
|
409
|
|
|
585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
18,832
|
|
|
27,079
|
|
|
17,013
|
|
|
—
|
|
|
|
|
Commercial real estate loans - owner occupied
|
16,032
|
|
|
3,642
|
|
|
—
|
|
|
—
|
|
|
|
|
Commercial loans
|
8,559
|
|
|
18,069
|
|
|
5,418
|
|
|
—
|
|
|
|
|
Total Commercial Banking
|
43,423
|
|
|
48,790
|
|
|
22,431
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
68,870
|
|
|
79,992
|
|
|
22,840
|
|
|
585
|
|
|
|
During the year ended December 31, 2020, we recognized $842,000 of interest income on nonaccrual and troubled debt restructuring loans.
The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
Equipment
|
|
Other
|
|
Total
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
588
|
|
|
—
|
|
|
—
|
|
|
588
|
|
|
|
|
Home equity loans
|
99
|
|
|
—
|
|
|
—
|
|
|
99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Personal Banking
|
687
|
|
|
—
|
|
|
—
|
|
|
687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
157,335
|
|
|
1,925
|
|
|
6,451
|
|
|
165,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans
|
3,255
|
|
|
190
|
|
|
10,948
|
|
|
14,393
|
|
|
|
|
Total Commercial Banking
|
160,590
|
|
|
2,115
|
|
|
17,399
|
|
|
180,104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
161,277
|
|
|
2,115
|
|
|
17,399
|
|
|
180,791
|
|
|
|
The following table presents the amortized cost basis of collateral-dependent loans by class of loans as of December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate
|
|
Equipment
|
|
Other
|
|
Total
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
1,269
|
|
|
—
|
|
|
—
|
|
|
1,269
|
|
|
|
|
Home equity loans
|
99
|
|
|
—
|
|
|
—
|
|
|
99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Personal Banking
|
1,368
|
|
|
—
|
|
|
—
|
|
|
1,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
79,392
|
|
|
1,997
|
|
|
1,703
|
|
|
83,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial loans
|
3,313
|
|
|
197
|
|
|
11,069
|
|
|
14,579
|
|
|
|
|
Total Commercial Banking
|
82,705
|
|
|
2,194
|
|
|
12,772
|
|
|
97,671
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$
|
84,073
|
|
|
2,194
|
|
|
12,772
|
|
|
99,039
|
|
|
|
Our loan portfolios include loans that have been modified in a TDR, where concessions have been granted to borrowers who have experienced financial difficulties. These concessions typically result from our loss mitigation activities and could include: extending the note’s maturity date, permitting interest only payments, reducing the interest rate to a rate lower than current market rates for new debt with similar risk, reducing the principal payment, principal forbearance or other actions. These concessions are applicable to all loan segments and classes. Certain TDRs are classified as nonperforming at the time of restructuring and may be returned to performing status after considering the borrower’s sustained repayment performance for a period of at least six months.
When we modify loans in a TDR, we evaluate any possible impairment similar to other impaired loans based on the present value of expected future cash flows, discounted at the contractual interest rate of the original loan agreement, the loan’s observable market price or the current fair value of the collateral, less selling costs, for collateral dependent loans. If we determine that the value of the modified loan is less than the recorded investment in the loan (net of previous charge-offs, deferred loan fees or costs and unamortized premiums or discounts), impairment is recognized through an allowance estimate or a charge-off to the allowance. In periods subsequent to modification, we evaluate all TDRs, including those that have payment defaults, for possible impairment in accordance with ASC 310-10. As a result, loans modified in a TDR may have the financial effect of increasing the specific allowance associated with the loan.
Loans modified in a TDR are closely monitored for delinquency as an early indicator of possible future default. If loans modified in a TDR subsequently default, we evaluate the loan for possible further impairment. The allowance may be increased, adjustments may be made in the allocation of the allowance, partial charge-offs may be taken to further write-down the carrying value of the loan, or the loan may be charged-off completely.
In March 2020 and August 2020, joint statements were issued by federal and state regulatory agencies, after consultation with the FASB, to clarify that short-term loan modifications are not TDRs if made on a good-faith basis in response to COVID-19 to borrowers who were current prior to any relief. Under this guidance, six months is provided as an example of short-term, and current is defined as less than 30 days past due at the time the modification program is implemented. The guidance also provides that these modified loans generally will not be classified as nonaccrual during the term of the modification. For borrowers who are 30 days or more past due when enrolling in a loan modification program related to the COVID-19 pandemic, we evaluate the loan modifications under our existing TDR framework, and where such a loan modification would result in a concession to a borrower experiencing financial difficulty, the loan will be accounted for as a TDR and will generally not accrue interest. This TDR relief under the CARES Act was extended by the Consolidated Appropriations Act, 2021 ("CAA"), signed into law on December 27, 2020. Under the CAA, such relief will continue until the earlier of 60 days after the date the COVID-19 national emergency comes to an end or January 1, 2022. Certain loan modifications made during the year were done in accordance with Section 4013 of the CARES Act and the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus. Accordingly, these loans and leases were not categorized as troubled debt restructurings.
The following table provides a roll forward of troubled debt restructurings for the periods indicated (dollars in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended March 31,
|
|
|
2021
|
|
2020
|
|
|
Number of
contracts
|
|
Amount
|
|
Number of
contracts
|
|
Amount
|
|
Beginning TDR balance:
|
170
|
|
|
$
|
32,135
|
|
|
176
|
|
|
$
|
31,999
|
|
|
New TDRs
|
—
|
|
|
—
|
|
|
2
|
|
|
2,518
|
|
|
Re-modified TDRs
|
4
|
|
|
922
|
|
|
2
|
|
|
2,076
|
|
|
Net paydowns
|
—
|
|
|
(2,488)
|
|
|
—
|
|
|
(2,841)
|
|
|
Charge-offs:
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Home equity loans
|
—
|
|
|
—
|
|
|
1
|
|
|
(10)
|
|
|
Vehicle loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Commercial real estate loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Commercial real estate loans - owner occupied
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Commercial loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Paid-off loans:
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
—
|
|
|
—
|
|
|
2
|
|
|
(330)
|
|
|
Home equity loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Vehicle loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Commercial real estate loans
|
3
|
|
|
(2,384)
|
|
|
1
|
|
|
(26)
|
|
|
Commercial real estate loans - owner occupied
|
1
|
|
|
(47)
|
|
|
—
|
|
|
—
|
|
|
Commercial loans
|
2
|
|
|
(628)
|
|
|
3
|
|
|
(34)
|
|
|
Ending TDR balance:
|
164
|
|
|
$
|
27,510
|
|
|
171
|
|
|
$
|
33,352
|
|
|
Accruing TDRs
|
|
|
$
|
20,120
|
|
|
|
|
$
|
15,977
|
|
|
Nonaccrual TDRs
|
|
|
7,390
|
|
|
|
|
17,375
|
|
The following table provides information related to TDRs (including re-modified TDRs) by portfolio segment and by class of financing receivable during the quarter ended March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended March 31, 2021
|
|
|
Number of contracts
|
|
Recorded
investment
at the time of
modification
|
|
Current
recorded
investment
|
|
Current
allowance
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
1
|
|
|
$
|
121
|
|
|
117
|
|
|
10
|
|
|
Home equity loans
|
1
|
|
|
3
|
|
|
2
|
|
|
—
|
|
|
Vehicle loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Consumer loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total Personal Banking
|
2
|
|
|
124
|
|
|
119
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
2
|
|
|
812
|
|
|
803
|
|
|
130
|
|
|
Commercial real estate loans - owner occupied
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Commercial loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total Commercial Banking
|
2
|
|
|
812
|
|
|
803
|
|
|
130
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
4
|
|
|
$
|
936
|
|
|
922
|
|
|
140
|
|
The following table provides information related to TDRs (including re-modified TDRs) by portfolio segment and by class of financing receivable during the quarter ended March 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended March 31, 2020
|
|
|
|
|
Number of contracts
|
|
Recorded
investment
at the time of
modification
|
|
Current
recorded
investment
|
|
Current
allowance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Home equity loans
|
1
|
|
|
19
|
|
|
18
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Vehicle loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Consumer loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Total Personal Banking
|
1
|
|
|
19
|
|
|
18
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans - owner occupied
|
2
|
|
|
2,077
|
|
|
2,076
|
|
|
176
|
|
|
|
|
|
|
|
|
|
|
Commercial loans
|
1
|
|
|
2,500
|
|
|
2,500
|
|
|
1,628
|
|
|
|
|
|
|
|
|
|
|
Total Commercial Banking
|
3
|
|
|
4,577
|
|
|
4,576
|
|
|
1,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
4
|
|
|
$
|
4,596
|
|
|
4,594
|
|
|
1,804
|
|
|
|
|
|
|
|
|
|
The following table provides information as of March 31, 2021 for TDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the quarter ended March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of modification
|
|
|
|
|
Number of contracts
|
|
Rate
|
|
Payment
|
|
Maturity date
|
|
Other
|
|
Total
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
1
|
|
|
$
|
117
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
117
|
|
|
Home equity loans
|
1
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|
Vehicle loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Consumer loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total Personal Banking
|
2
|
|
|
117
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
2
|
|
|
—
|
|
|
—
|
|
|
729
|
|
|
74
|
|
|
803
|
|
|
Commercial real estate loans - owner occupied
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Commercial loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total Commercial Banking
|
2
|
|
|
—
|
|
|
—
|
|
|
729
|
|
|
74
|
|
|
803
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
4
|
|
|
$
|
117
|
|
|
—
|
|
|
731
|
|
|
74
|
|
|
922
|
|
The following table provides information as of March 31, 2020 for TDRs (including re-modified TDRs) by type of modification, by portfolio segment and class of financing receivable for modifications during the quarter ended March 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type of modification
|
|
|
|
|
Number of contracts
|
|
Rate
|
|
Payment
|
|
Maturity date
|
|
Other
|
|
Total
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Home equity loans
|
1
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
18
|
|
|
Vehicle loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Consumer loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total Personal Banking
|
1
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Commercial real estate loans - owner occupied
|
2
|
|
|
—
|
|
|
—
|
|
|
2,076
|
|
|
—
|
|
|
2,076
|
|
|
Commercial loans
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,500
|
|
|
2,500
|
|
|
Total Commercial Banking
|
3
|
|
|
—
|
|
|
—
|
|
|
2,076
|
|
|
2,500
|
|
|
4,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
4
|
|
|
$
|
—
|
|
|
—
|
|
|
2,094
|
|
|
2,500
|
|
|
4,594
|
|
No TDRs modified within the previous twelve months of March 31, 2021 or March 31, 2020 subsequently defaulted.
The following table provides information related to the amortized cost basis of loan payment delinquencies at March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 days
delinquent
|
|
60-89 days
delinquent
|
|
90 days or
greater
delinquent
|
|
Total
delinquency
|
|
Current
|
|
Total loans
receivable
|
|
90 Days or
greater
delinquent
and accruing
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
22,236
|
|
|
2,062
|
|
|
9,333
|
|
|
33,631
|
|
|
2,938,047
|
|
|
2,971,678
|
|
|
—
|
|
|
Home equity loans
|
3,334
|
|
|
953
|
|
|
7,044
|
|
|
11,331
|
|
|
1,396,193
|
|
|
1,407,524
|
|
|
—
|
|
|
Vehicle loans
|
4,669
|
|
|
1,466
|
|
|
2,970
|
|
|
9,105
|
|
|
1,195,748
|
|
|
1,204,853
|
|
|
—
|
|
|
Consumer loans
|
1,063
|
|
|
402
|
|
|
852
|
|
|
2,317
|
|
|
347,185
|
|
|
349,502
|
|
|
197
|
|
|
Total Personal Banking
|
31,302
|
|
|
4,883
|
|
|
20,199
|
|
|
56,384
|
|
|
5,877,173
|
|
|
5,933,557
|
|
|
197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
7,526
|
|
|
6,578
|
|
|
27,877
|
|
|
41,981
|
|
|
2,784,016
|
|
|
2,825,997
|
|
|
—
|
|
|
Commercial real estate loans - owner occupied
|
4,714
|
|
|
1,031
|
|
|
1,860
|
|
|
7,605
|
|
|
455,834
|
|
|
463,439
|
|
|
—
|
|
|
Commercial loans
|
3,032
|
|
|
8,979
|
|
|
4,860
|
|
|
16,871
|
|
|
1,128,176
|
|
|
1,145,047
|
|
|
—
|
|
|
Total Commercial Banking
|
15,272
|
|
|
16,588
|
|
|
34,597
|
|
|
66,457
|
|
|
4,368,026
|
|
|
4,434,483
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
$
|
46,574
|
|
|
21,471
|
|
|
54,796
|
|
|
122,841
|
|
|
10,245,199
|
|
|
10,368,040
|
|
|
197
|
|
The following table provides information related to loan payment delinquencies at December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-59 days
delinquent
|
|
60-89 days
delinquent
|
|
90 days or
greater
delinquent
|
|
Total
delinquency
|
|
Current
|
|
Total loans
receivable
|
|
90 days or
greater
delinquent
and accruing
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
$
|
28,797
|
|
|
5,083
|
|
|
14,489
|
|
|
48,369
|
|
|
3,019,752
|
|
|
3,068,121
|
|
|
—
|
|
|
Home equity loans
|
4,763
|
|
|
1,656
|
|
|
8,441
|
|
|
14,860
|
|
|
1,452,876
|
|
|
1,467,736
|
|
|
—
|
|
|
Vehicle loans
|
7,707
|
|
|
1,776
|
|
|
4,599
|
|
|
14,082
|
|
|
1,138,592
|
|
|
1,152,674
|
|
|
1
|
|
|
Consumer loans
|
2,867
|
|
|
966
|
|
|
1,459
|
|
|
5,292
|
|
|
350,027
|
|
|
355,319
|
|
|
584
|
|
|
Total Personal Banking
|
44,134
|
|
|
9,481
|
|
|
28,988
|
|
|
82,603
|
|
|
5,961,247
|
|
|
6,043,850
|
|
|
585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
6,692
|
|
|
1,615
|
|
|
23,307
|
|
|
31,614
|
|
|
2,816,366
|
|
|
2,847,980
|
|
|
—
|
|
|
Commercial real estate loans - owner occupied
|
4,231
|
|
|
—
|
|
|
1,980
|
|
|
6,211
|
|
|
491,698
|
|
|
497,909
|
|
|
—
|
|
|
Commercial loans
|
6,405
|
|
|
864
|
|
|
7,325
|
|
|
14,594
|
|
|
1,176,516
|
|
|
1,191,110
|
|
|
—
|
|
|
Total Commercial Banking
|
17,328
|
|
|
2,479
|
|
|
32,612
|
|
|
52,419
|
|
|
4,484,580
|
|
|
4,536,999
|
|
|
—
|
|
|
Total originated loans
|
$
|
61,462
|
|
|
11,960
|
|
|
61,600
|
|
|
135,022
|
|
|
10,445,827
|
|
|
10,580,849
|
|
|
585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Represents acquired loans that were originally recorded at fair value upon acquisition. These loans are considered to be accruing because we can reasonably
estimate future cash flows and expect to fully collect the carrying value of these loans. Therefore, we are accreting the difference between the carrying value and their expected cash flows into interest income.
Credit Quality Indicators: For Commercial Banking loans we categorize loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. We analyze loans individually by classifying the loans by credit risk. Credit relationships greater than or equal to $1.0 million classified as special mention or substandard are reviewed quarterly for deterioration or improvement to determine if the loan is appropriately classified. We use the following definitions for risk ratings other than pass:
Special Mention — Loans designated as special mention have specific, well-defined risk issues, which create a high level of uncertainty regarding the long-term viability of the business. Loans in this class are considered to have high-risk characteristics. A special mention loan exhibits material negative financial trends due to company-specific or systemic conditions. If these potential weaknesses are not mitigated, they threaten the borrower’s capacity to meet its debt obligations. Special mention loans still demonstrate sufficient financial flexibility to react to and positively address the root cause of the adverse financial trends without significant deviations from their current business strategy. Their potential weaknesses deserve our close attention and warrant enhanced monitoring.
Substandard — Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected.
Doubtful — Loans classified as doubtful have all the weaknesses inherent in those classified as substandard. In addition, those weaknesses make collection or liquidation in full highly questionable and improbable. A loan classified as doubtful exhibits discernible loss potential, but a complete loss seems very unlikely. The possibility of a loss on a doubtful loan is high, but because of certain important and reasonably specific pending factors that may strengthen the loan, its classification as an estimated loss is deferred until a more exact status can be determined.
Loss — Loans classified as loss are considered uncollectible and of such value that the continuance as a loan is not warranted. A loss classification does not mean that the loan has no recovery or salvage value; instead, it means that it is not practical or desirable to defer writing off all or a portion of a basically worthless loan even though partial recovery may be possible in the future.
For Personal Banking loans a pass risk rating is maintained until they are greater than 90 days past due, and risk rating reclassification is based primarily on past due status of the loan. The risk rating categories can generally be described by the following groupings:
Pass — Loans classified as pass are homogeneous loans that are less than 90 days past due from the required payment date at month-end.
Substandard — Loans classified as substandard are homogeneous loans that are greater than 90 days past due from the required payment date at month-end, loans classified as TDRs, PCD loans, or homogenous retail loans that are greater than 180 days past due from the required payment date at month-end that has been written down to the value of underlying collateral, less costs to sell.
Doubtful — Loans classified as doubtful are homogeneous loans that are greater than 180 days past due from the required payment date at month-end and not written down to the value of underlying collateral. These loans are generally charged-off in the month in which the 180 day period elapses.
The following table presents the amortized cost basis of our loan portfolio by year of origination and credit quality indicator for each portfolio segment as of March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD March 31, 2021
|
|
2020
|
|
2019
|
|
2018
|
|
2017
|
|
Prior
|
|
Revolving loans
|
|
Revolving loans converted to term loans
|
|
Total loans
receivable
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
$
|
134,720
|
|
|
643,244
|
|
|
370,299
|
|
|
204,157
|
|
|
223,251
|
|
|
1,374,432
|
|
|
—
|
|
|
—
|
|
|
2,950,103
|
|
|
Substandard
|
—
|
|
|
88
|
|
|
—
|
|
|
1,113
|
|
|
1,232
|
|
|
19,142
|
|
|
—
|
|
|
—
|
|
|
21,575
|
|
|
Total residential mortgage loans
|
134,720
|
|
|
643,332
|
|
|
370,299
|
|
|
205,270
|
|
|
224,483
|
|
|
1,393,574
|
|
|
—
|
|
|
—
|
|
|
2,971,678
|
|
|
Home equity loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
32,737
|
|
|
259,169
|
|
|
177,981
|
|
|
86,119
|
|
|
79,633
|
|
|
276,030
|
|
|
443,607
|
|
|
41,481
|
|
|
1,396,757
|
|
|
Substandard
|
—
|
|
|
—
|
|
|
360
|
|
|
297
|
|
|
479
|
|
|
5,648
|
|
|
2,435
|
|
|
1,548
|
|
|
10,767
|
|
|
Total home equity loans
|
32,737
|
|
|
259,169
|
|
|
178,341
|
|
|
86,416
|
|
|
80,112
|
|
|
281,678
|
|
|
446,042
|
|
|
43,029
|
|
|
1,407,524
|
|
|
Vehicle loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
177,560
|
|
|
413,746
|
|
|
311,993
|
|
|
190,015
|
|
|
59,197
|
|
|
47,027
|
|
|
—
|
|
|
—
|
|
|
1,199,538
|
|
|
Substandard
|
—
|
|
|
541
|
|
|
1,739
|
|
|
1,351
|
|
|
793
|
|
|
891
|
|
|
—
|
|
|
—
|
|
|
5,315
|
|
|
Total vehicle loans
|
177,560
|
|
|
414,287
|
|
|
313,732
|
|
|
191,366
|
|
|
59,990
|
|
|
47,918
|
|
|
—
|
|
|
—
|
|
|
1,204,853
|
|
|
Consumer loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
31,080
|
|
|
116,764
|
|
|
73,190
|
|
|
30,897
|
|
|
15,021
|
|
|
17,456
|
|
|
61,529
|
|
|
2,027
|
|
|
347,964
|
|
|
Substandard
|
1
|
|
|
179
|
|
|
243
|
|
|
107
|
|
|
68
|
|
|
643
|
|
|
244
|
|
|
53
|
|
|
1,538
|
|
|
Total consumer loans
|
31,081
|
|
|
116,943
|
|
|
73,433
|
|
|
31,004
|
|
|
15,089
|
|
|
18,099
|
|
|
61,773
|
|
|
2,080
|
|
|
349,502
|
|
|
Total Personal Banking
|
376,098
|
|
|
1,433,731
|
|
|
935,805
|
|
|
514,056
|
|
|
379,674
|
|
|
1,741,269
|
|
|
507,815
|
|
|
45,109
|
|
|
5,933,557
|
|
|
Business Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
57,139
|
|
|
441,573
|
|
|
465,578
|
|
|
306,635
|
|
|
253,157
|
|
|
839,616
|
|
|
34,516
|
|
|
9,070
|
|
|
2,407,284
|
|
|
Special Mention
|
—
|
|
|
331
|
|
|
18,003
|
|
|
12,862
|
|
|
39,582
|
|
|
24,896
|
|
|
328
|
|
|
728
|
|
|
96,730
|
|
|
Substandard
|
—
|
|
|
33,707
|
|
|
22,108
|
|
|
63,575
|
|
|
39,069
|
|
|
155,940
|
|
|
2,883
|
|
|
4,701
|
|
|
321,983
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial real estate loans
|
57,139
|
|
|
475,611
|
|
|
505,689
|
|
|
383,072
|
|
|
331,808
|
|
|
1,020,452
|
|
|
37,727
|
|
|
14,499
|
|
|
2,825,997
|
|
|
Commercial real estate loans - owner occupied
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
6,883
|
|
|
29,494
|
|
|
59,292
|
|
|
83,443
|
|
|
67,713
|
|
|
134,215
|
|
|
3,971
|
|
|
8,787
|
|
|
393,798
|
|
|
Special Mention
|
—
|
|
|
—
|
|
|
4,277
|
|
|
4,467
|
|
|
4,944
|
|
|
9,076
|
|
|
851
|
|
|
—
|
|
|
23,615
|
|
|
Substandard
|
—
|
|
|
—
|
|
|
6,648
|
|
|
1,566
|
|
|
11,025
|
|
|
25,791
|
|
|
762
|
|
|
234
|
|
|
46,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial real estate loans - owner occupied
|
6,883
|
|
|
29,494
|
|
|
70,217
|
|
|
89,476
|
|
|
83,682
|
|
|
169,082
|
|
|
5,584
|
|
|
9,021
|
|
|
463,439
|
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
216,409
|
|
|
316,410
|
|
|
98,014
|
|
|
45,486
|
|
|
45,621
|
|
|
109,288
|
|
|
220,954
|
|
|
9,702
|
|
|
1,061,884
|
|
|
Special Mention
|
200
|
|
|
5,610
|
|
|
2,572
|
|
|
2,125
|
|
|
2,803
|
|
|
172
|
|
|
8,223
|
|
|
918
|
|
|
22,623
|
|
|
Substandard
|
—
|
|
|
6,291
|
|
|
5,414
|
|
|
6,180
|
|
|
3,353
|
|
|
4,909
|
|
|
21,031
|
|
|
13,362
|
|
|
60,540
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial loans
|
216,609
|
|
|
328,311
|
|
|
106,000
|
|
|
53,791
|
|
|
51,777
|
|
|
114,369
|
|
|
250,208
|
|
|
23,982
|
|
|
1,145,047
|
|
|
Total Business Banking
|
280,631
|
|
|
833,416
|
|
|
681,906
|
|
|
526,339
|
|
|
467,267
|
|
|
1,303,903
|
|
|
293,519
|
|
|
47,502
|
|
|
4,434,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
$
|
656,729
|
|
|
2,267,147
|
|
|
1,617,711
|
|
|
1,040,395
|
|
|
846,941
|
|
|
3,045,172
|
|
|
801,334
|
|
|
92,611
|
|
|
10,368,040
|
|
For the quarter ended March 31, 2021, $6.1 million of revolving loans were converted to term loans.
The following table presents the amortized cost basis of our loan portfolio by year of origination and credit quality indicator for each portfolio segment as of December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year to date
December 31, 2020
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
Prior
|
|
Revolving loans
|
|
Revolving loans converted to term loans
|
|
Total loans
receivable
|
|
|
Personal Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
$
|
641,963
|
|
|
418,057
|
|
|
229,477
|
|
|
247,426
|
|
|
215,893
|
|
|
1,289,728
|
|
|
—
|
|
|
—
|
|
|
3,042,544
|
|
|
|
Substandard
|
—
|
|
|
68
|
|
|
1,293
|
|
|
1,674
|
|
|
1,091
|
|
|
21,451
|
|
|
—
|
|
|
—
|
|
|
25,577
|
|
|
|
Total residential mortgage loans
|
641,963
|
|
|
418,125
|
|
|
230,770
|
|
|
249,100
|
|
|
216,984
|
|
|
1,311,179
|
|
|
—
|
|
|
—
|
|
|
3,068,121
|
|
|
|
Home equity loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
273,076
|
|
|
193,439
|
|
|
94,757
|
|
|
87,717
|
|
|
81,212
|
|
|
219,061
|
|
|
465,453
|
|
|
40,759
|
|
|
1,455,474
|
|
|
|
Substandard
|
—
|
|
|
210
|
|
|
318
|
|
|
281
|
|
|
876
|
|
|
5,158
|
|
|
3,509
|
|
|
1,910
|
|
|
12,262
|
|
|
|
Total home equity loans
|
273,076
|
|
|
193,649
|
|
|
95,075
|
|
|
87,998
|
|
|
82,088
|
|
|
224,219
|
|
|
468,962
|
|
|
42,669
|
|
|
1,467,736
|
|
|
|
Vehicle loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
448,746
|
|
|
352,661
|
|
|
218,372
|
|
|
70,122
|
|
|
31,197
|
|
|
24,791
|
|
|
—
|
|
|
—
|
|
|
1,145,889
|
|
|
|
Substandard
|
343
|
|
|
1,958
|
|
|
2,087
|
|
|
1,210
|
|
|
667
|
|
|
519
|
|
|
—
|
|
|
—
|
|
|
6,784
|
|
|
|
Total vehicle loans
|
449,089
|
|
|
354,619
|
|
|
220,459
|
|
|
71,332
|
|
|
31,864
|
|
|
25,310
|
|
|
—
|
|
|
—
|
|
|
1,152,673
|
|
|
|
Consumer loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
128,809
|
|
|
83,419
|
|
|
35,183
|
|
|
17,439
|
|
|
7,848
|
|
|
11,757
|
|
|
66,965
|
|
|
1,695
|
|
|
353,115
|
|
|
|
Substandard
|
133
|
|
|
399
|
|
|
139
|
|
|
192
|
|
|
36
|
|
|
619
|
|
|
686
|
|
|
1
|
|
|
2,205
|
|
|
|
Total consumer loans
|
128,942
|
|
|
83,818
|
|
|
35,322
|
|
|
17,631
|
|
|
7,884
|
|
|
12,376
|
|
|
67,651
|
|
|
1,696
|
|
|
355,320
|
|
|
|
Total Personal Banking
|
1,493,070
|
|
|
1,050,211
|
|
|
581,626
|
|
|
426,061
|
|
|
338,820
|
|
|
1,573,084
|
|
|
536,613
|
|
|
44,365
|
|
|
6,043,850
|
|
|
|
Business Banking:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
417,390
|
|
|
473,115
|
|
|
316,045
|
|
|
264,702
|
|
|
195,168
|
|
|
709,459
|
|
|
36,980
|
|
|
29,755
|
|
|
2,442,614
|
|
|
|
Special Mention
|
584
|
|
|
3,381
|
|
|
20,180
|
|
|
24,675
|
|
|
15,424
|
|
|
15,817
|
|
|
597
|
|
|
3,048
|
|
|
83,706
|
|
|
|
Substandard
|
7,426
|
|
|
4,007
|
|
|
57,694
|
|
|
56,991
|
|
|
24,056
|
|
|
140,147
|
|
|
2,240
|
|
|
29,100
|
|
|
321,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial real estate loans
|
425,400
|
|
|
480,503
|
|
|
393,919
|
|
|
346,368
|
|
|
234,648
|
|
|
865,423
|
|
|
39,817
|
|
|
61,903
|
|
|
2,847,981
|
|
|
|
Commercial real estate loans - owner occupied
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
24,895
|
|
|
67,162
|
|
|
87,497
|
|
|
71,626
|
|
|
46,760
|
|
|
100,081
|
|
|
4,422
|
|
|
7,648
|
|
|
410,091
|
|
|
|
Special Mention
|
—
|
|
|
4,371
|
|
|
4,514
|
|
|
3,643
|
|
|
4,276
|
|
|
3,689
|
|
|
3,822
|
|
|
—
|
|
|
24,315
|
|
|
|
Substandard
|
—
|
|
|
21,627
|
|
|
1,903
|
|
|
12,898
|
|
|
4,013
|
|
|
21,777
|
|
|
874
|
|
|
410
|
|
|
63,502
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial real estate loans - owner occupied
|
24,895
|
|
|
93,160
|
|
|
93,914
|
|
|
88,167
|
|
|
55,049
|
|
|
125,547
|
|
|
9,118
|
|
|
8,058
|
|
|
497,908
|
|
|
|
Commercial loans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pass
|
479,436
|
|
|
99,877
|
|
|
50,915
|
|
|
51,858
|
|
|
58,597
|
|
|
49,178
|
|
|
286,467
|
|
|
16,170
|
|
|
1,092,498
|
|
|
|
Special Mention
|
5,828
|
|
|
2,751
|
|
|
5,579
|
|
|
4,588
|
|
|
162
|
|
|
190
|
|
|
16,512
|
|
|
5,668
|
|
|
41,278
|
|
|
|
Substandard
|
1,660
|
|
|
3,343
|
|
|
2,932
|
|
|
2,016
|
|
|
2,266
|
|
|
3,003
|
|
|
27,988
|
|
|
14,126
|
|
|
57,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commercial loans
|
486,924
|
|
|
105,971
|
|
|
59,426
|
|
|
58,462
|
|
|
61,025
|
|
|
52,371
|
|
|
330,967
|
|
|
35,964
|
|
|
1,191,110
|
|
|
|
Total Business Banking
|
937,219
|
|
|
679,634
|
|
|
547,259
|
|
|
492,997
|
|
|
350,722
|
|
|
1,043,341
|
|
|
379,902
|
|
|
105,925
|
|
|
4,536,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans
|
$
|
2,430,289
|
|
|
1,729,845
|
|
|
1,128,885
|
|
|
919,058
|
|
|
689,542
|
|
|
2,616,425
|
|
|
916,515
|
|
|
150,290
|
|
|
10,580,849
|
|
|
For the year ended December 31, 2020, $23.1 million of revolving loans were converted to term loans.
(4) Goodwill and Other Intangible Assets
The following table provides information for intangible assets subject to amortization at the dates indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
December 31, 2020
|
|
Amortizable intangible assets:
|
|
|
|
|
Core deposit intangibles - gross
|
$
|
74,899
|
|
|
71,182
|
|
|
Acquisitions
|
—
|
|
|
3,717
|
|
|
Less: accumulated amortization
|
(58,322)
|
|
|
(56,896)
|
|
|
Core deposit intangibles - net
|
$
|
16,577
|
|
|
18,003
|
|
|
Customer and Contract intangible assets - gross
|
$
|
12,775
|
|
|
12,775
|
|
|
|
|
|
|
|
Less: accumulated amortization
|
(11,010)
|
|
|
(10,842)
|
|
|
Customer and Contract intangible assets - net
|
1,765
|
|
|
1,933
|
|
|
Total intangible assets - net
|
$
|
18,342
|
|
|
19,936
|
|
The following table shows the actual aggregate amortization expense for the quarters ended March 31, 2021 and 2020, as well as the estimated aggregate amortization expense, based upon current levels of intangible assets, for the current fiscal year and each of the five succeeding fiscal years (in thousands):
|
|
|
|
|
|
|
|
For the quarter ended March 31, 2021
|
$
|
1,594
|
|
|
For the quarter ended March 31, 2020
|
1,651
|
|
|
|
|
|
|
|
|
For the year ending December 31, 2021
|
5,902
|
|
|
For the year ending December 31, 2022
|
4,681
|
|
|
For the year ending December 31, 2023
|
3,592
|
|
|
For the year ending December 31, 2024
|
2,692
|
|
|
For the year ending December 31, 2025
|
1,819
|
|
|
For the year ending December 31, 2026
|
947
|
|
The following table provides information for the changes in the carrying amount of goodwill (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Balance at December 31, 2019
|
|
|
|
|
$
|
346,103
|
|
|
Goodwill acquired
|
|
|
|
|
36,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020
|
|
|
|
|
382,279
|
|
|
Purchase accounting adjustment
|
|
|
|
|
77
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2021
|
|
|
|
|
$
|
382,356
|
|
|
|
|
|
|
|
|
We performed our annual goodwill impairment test as of June 30, 2020 in accordance with ASC 350, as updated by ASU 2017-04, ("Step 0") and concluded that goodwill was not impaired. As of March 31, 2021, there were no events or changes in circumstances that would cause us to update that goodwill impairment test and we have concluded there is no impairment in goodwill.
(5) Borrowed Funds
(a) Borrowings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021
|
|
|
Amount
|
|
Average rate
|
|
|
|
|
|
|
|
|
|
|
|
Term notes payable to the FHLB of Indianapolis acquired from MutualFirst
|
$
|
2,012
|
|
|
2.58
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collateralized borrowings, due within one year
|
128,192
|
|
|
0.19
|
%
|
|
Subordinated debentures, net of issuance costs
|
123,413
|
|
|
4.00
|
%
|
|
Total borrowed funds
|
$
|
253,617
|
|
|
|
Borrowings from the Federal Home Loan Bank ("FHLB") of Pittsburgh and Indianapolis, if any, are secured by our residential first mortgage and other qualifying loans. Certain of these borrowings are subject to restrictions or penalties in the event of prepayment. During the quarter ended March 31, 2021, $20.0 million of term notes payable to the FHLB of Indianapolis matured.
The revolving line of credit with the FHLB of Pittsburgh carries a commitment of $250.0 million. The rate is adjusted daily by the FHLB of Pittsburgh, and any borrowings on this line may be repaid at any time without penalty. The revolving line of credit had no balance as of March 31, 2021 and December 31, 2020.
At March 31, 2021 and December 31, 2020, collateralized borrowings due within one year were $128.2 million and $137.7 million, respectively. These borrowings are collateralized by cash or various securities held in safekeeping by the FHLB.
On September 9, 2020, the Company issued $125.0 million of 4.00% fixed-to-floating rate subordinated notes with a maturity date of September 15, 2030. The subordinated notes, which qualify as Tier 2 capital, bear interest at an annual rate of 4.00%, payable semi-annually in arrears commencing on March 15, 2021, and a floating rate of interest equivalent to the 3-month Secured Overnight Financing Rate ("SOFR") plus 3.89% payable quarterly in arrears commencing on December 15, 2025. The subordinated debt issuance costs of approximately $1.8 million are being amortized over five years on a straight-line basis into interest expense.
(b) Trust Preferred Securities
The Company has seven statutory business trusts: Northwest Bancorp Capital Trust III, a Delaware statutory business trust, Northwest Bancorp Statutory Trust IV, a Connecticut statutory business trust, LNB Trust II, a Delaware statutory business trust, Union National Capital Trust I ("UNCT I"), a Delaware statutory business trust, Union National Capital Trust II ("UNCT II"), a Delaware statutory business trust, MFBC Statutory Trust I, a Delaware statutory trust, and Universal Preferred Trust, a Delaware statutory trust (the "Trusts"). The Trusts exist solely to issue preferred securities to third parties for cash, issue common securities to the Company in exchange for capitalization of the Trusts, invest the proceeds from the sale of trust securities in an equivalent amount of debentures of the Company, and engage in other activities that are incidental to those previously listed.
The Trusts have invested the proceeds of the offerings in junior subordinated deferrable interest debentures issued by the Company. The structure of these debentures mirrors the structure of the trust-preferred securities. These subordinated debentures are the sole assets of the Trusts. As the shareholders of the trust preferred securities are the primary beneficiaries of the Trusts, the Trusts are not consolidated in our financial statements.
The following table sets forth a summary of the cumulative trust preferred securities and the junior subordinated debt held by the Trust as of March 31, 2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturity date
|
|
Interest rate
|
|
|
|
Capital debt securities
|
|
March 31, 2021
|
|
Northwest Bancorp Capital Trust III
|
|
|
December 30, 2035
|
|
3-month LIBOR plus 1.38%
|
|
|
|
$
|
50,000
|
|
|
$
|
51,547
|
|
|
Northwest Bancorp Statutory Trust IV
|
|
|
December 15, 2035
|
|
3-month LIBOR plus 1.38%
|
|
|
|
50,000
|
|
|
51,547
|
|
|
LNB Trust II
|
|
|
June 15, 2037
|
|
3-month LIBOR plus 1.48%
|
|
|
|
7,875
|
|
|
8,119
|
|
|
UNCT I (1)
|
|
|
January 23, 2034
|
|
3-month LIBOR plus 2.85%
|
|
|
|
8,000
|
|
|
7,931
|
|
|
UNCT II (1)
|
|
|
November 23, 2034
|
|
3-month LIBOR plus 2.00%
|
|
|
|
3,000
|
|
|
2,721
|
|
|
MFBC Statutory Trust I (1)
|
|
|
September 15, 2035
|
|
3-month LIBOR plus 1.70%
|
|
|
|
5,000
|
|
|
3,502
|
|
|
Universal Preferred Trust (1)
|
|
|
October 7, 2035
|
|
3-month LIBOR plus 1.69%
|
|
|
|
5,000
|
|
|
3,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
128,859
|
|
(1) Net of discounts due to the fair value adjustment made at the time of acquisition.
Cash distributions on the trust securities are made on a quarterly basis to the extent interest on the debentures is received by the Trusts. We have the right to defer payment of interest on the subordinated debentures at any time, or from time-to-time, for periods not exceeding five years. If interest payments on the subordinated debentures are deferred, the distributions on the trust securities also are deferred. To date there have been no interest deferrals. Interest on the subordinated debentures and distributions on the trust securities is cumulative. Our obligation constitutes a full, irrevocable, and unconditional guarantee on a subordinated basis of the obligations of the trust under the preferred securities.
The Trusts must redeem the preferred securities when the debentures are paid at maturity or upon an earlier redemption of the debentures to the extent the debentures are redeemed. All or part of the debentures may be redeemed at any time. Also, the debentures may be redeemed at any time if existing laws or regulations, or the interpretation or application of these laws or regulations, change causing:
•the interest on the debentures to no longer be deductible by the Company for federal income tax purposes;
•the trusts to become subject to federal income tax or to certain other taxes or governmental charges;
•the trusts to register as an investment company; or
•the preferred securities to no longer qualify as Tier I capital.
We may, at any time, dissolve any of the Trusts and distribute the debentures to the trust security holders, subject to receipt of any required regulatory approvals.
(6) Guarantees
We issue standby letters of credit in the normal course of business. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party. We are required to perform under a standby letter of credit when drawn upon by the guaranteed third party in the case of nonperformance by our customer. The credit risk associated with standby letters of credit is essentially the same as that involved in extending loans to customers and is subject to normal loan underwriting procedures. Collateral may be obtained based on management’s credit assessment of the customer. At March 31, 2021, the maximum potential amount of future payments we could be required to make under these non-recourse standby letters of credit was $44.0 million, of which $35.5 million is fully collateralized. At March 31, 2021, we had a liability which represents deferred income of $529,000 related to the standby letters of credit.
(7) Earnings Per Share
Basic earnings per common share ("EPS") is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period, without considering any dilutive items. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. During the quarter ended March 31, 2021, 2,346,655 stock options were not included in the computation of diluted earnings per share because the stock options’ exercise price was more than the average market price of the common shares of $14.03. During the quarter ended March 31, 2020, 2,033,345 stock options were not included in the computation of diluted earnings per share because the stock options’ exercise price was less than the average market price of the common shares of $14.62.
The following table sets forth the computation of basic and diluted EPS (in thousands, except share data and per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended March 31,
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
Net income available to common shareholders
|
$
|
40,237
|
|
|
7,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
126,182,409
|
|
|
105,882,553
|
|
|
|
|
|
|
Dilutive potential shares due to effect of stock options
|
517,615
|
|
|
265,694
|
|
|
|
|
|
|
Total weighted average common shares and dilutive potential shares
|
$
|
126,700,024
|
|
|
106,148,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
$
|
0.32
|
|
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
$
|
0.32
|
|
|
0.07
|
|
|
|
|
|
(8) Pension and Other Post-Retirement Benefits
The following table sets forth the net periodic costs for the defined benefit pension plans and post-retirement healthcare plans for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended March 31,
|
|
|
Pension benefits
|
|
Other post-retirement benefits
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Service cost
|
$
|
2,860
|
|
|
2,098
|
|
|
—
|
|
|
—
|
|
|
Interest cost
|
1,517
|
|
|
1,714
|
|
|
4
|
|
|
7
|
|
|
Expected return on plan assets
|
(3,465)
|
|
|
(3,091)
|
|
|
—
|
|
|
—
|
|
|
Amortization of prior service cost
|
(580)
|
|
|
(581)
|
|
|
—
|
|
|
—
|
|
|
Amortization of the net loss
|
1,039
|
|
|
924
|
|
|
4
|
|
|
5
|
|
|
Net periodic cost
|
$
|
1,371
|
|
|
1,064
|
|
|
8
|
|
|
12
|
|
We anticipate making a contribution to our defined benefit pension plan of $2.0 million to $4.0 million during the year ending December 31, 2021.
(9) Disclosures About Fair Value of Financial Instruments
We are required to disclose fair value information about financial instruments whether or not recognized in the Consolidated Statement of Financial Condition. Fair value information of certain financial instruments and all nonfinancial instruments is not required to be disclosed. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company.
Financial assets and liabilities recognized or disclosed at fair value on a recurring basis and certain financial assets and liabilities on a non-recurring basis are accounted for using a three-level hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. This hierarchy gives the highest priority to quoted prices with readily available independent data in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable market inputs (Level 3). When various inputs for measurement fall within different levels of the fair value hierarchy, the lowest level input that has a significant impact on fair value measurement is used.
Financial assets and liabilities are categorized based upon the following characteristics or inputs to the valuation techniques:
• Level 1 - Financial assets and liabilities for which inputs are observable and are obtained from reliable quoted prices for identical assets or liabilities in actively traded markets. This is the most reliable fair value measurement and includes, for example, active exchange-traded equity securities.
• Level 2 - Financial assets and liabilities for which values are based on quoted prices in markets that are not active or for which values are based on similar assets or liabilities that are actively traded. Level 2 also includes pricing models in which the inputs are corroborated by market data, for example, matrix pricing.
• Level 3 - Financial assets and liabilities for which values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Level 3 inputs include the following:
◦Quotes from brokers or other external sources that are not considered binding;
◦Quotes from brokers or other external sources where it cannot be determined that market participants would in fact transact for the asset or liability at the quoted price;
◦Quotes and other information from brokers or other external sources where the inputs are not deemed observable.
We are responsible for the valuation process and as part of this process may use data from outside sources in establishing fair value. We perform due diligence to understand the inputs used or how the data was calculated or derived. We also corroborate the reasonableness of external inputs in the valuation process.
The carrying amounts reported in the Consolidated Statement of Financial Condition approximate fair value for the following financial instruments: cash and cash equivalents, marketable securities available-for-sale, accrued interest receivable, interest rate lock commitments, forward commitments, interest rate swaps, savings and checking deposits, risk participation agreements and accrued interest payable.
Marketable Securities
Where available, market values are based on quoted market prices, dealer quotes, and prices obtained from independent pricing services.
Debt Securities — available-for-sale - Generally, debt securities are valued using pricing for similar securities, recently executed transactions and other pricing models utilizing observable inputs. The valuation for most debt securities is classified as Level 2. Securities within Level 2 include corporate bonds, municipal bonds, mortgage-backed securities and U.S. government obligations. Certain debt securities which were AAA rated at purchase do not have an active market and as such we have used an alternative method to determine the fair value of these securities. The fair value has been determined using a discounted cash flow model using market assumptions, which generally include cash flow, collateral and other market assumptions. As such, securities which otherwise would have been classified as Level 2 securities if an active market for those assets or similar assets existed are included herein as Level 3 assets.
Debt Securities — held-to-maturity - The fair value of debt securities held-to-maturity is determined in the same manner as debt securities available-for-sale.
Loans Receivable
Loans with comparable characteristics including collateral and re-pricing structures are segregated for valuation purposes. Each loan pool is separately valued utilizing a discounted cash flow analysis. Projected monthly cash flows are discounted to present value using a market rate for comparable loans, which is not considered an exit price. Characteristics of comparable loans include remaining term, coupon interest, and estimated prepayment speeds. Delinquent loans are separately evaluated given the impact delinquency has on the projected future cash flow of the loan including the approximate discount or market rate, which is not considered an exit price.
Loans Held-for-Sale
The estimated fair value of loans held-for-sale is based on market bids obtained from potential buyers.
Loans Held for Investment
The fair value of loans held for investment is estimated using a discounted cash flow analysis that utilizes interest rates currently being offered for similar loans adjusted for liquidity and credit risk.
FHLB Stock
Due to the restrictions placed on transferability of FHLB stock, it is not practical to determine the fair value.
Deposit Liabilities
The estimated fair value of deposits with no stated maturity, which includes demand deposits, money market, and other savings accounts, is the amount payable on demand. Although market premiums paid for depository institutions reflect an additional value for these low-cost deposits, adjusting fair value for any value expected to be derived from retaining those deposits for a future period of time or from the benefit that results from the ability to fund interest-earning assets with these deposit liabilities is prohibited. The fair value estimates of deposit liabilities do not include the benefit that results from the low-cost funding provided by these deposits compared to the cost of borrowing funds in the market. Fair values for time deposits are estimated using a discounted cash flow calculation that applies contractual cost currently being offered in the existing portfolio to current market rates being offered locally for deposits of similar remaining maturities. The valuation adjustment for the portfolio consists of the present value of the difference of these two cash flows, discounted at the assumed market rate of the corresponding maturity.
Borrowed Funds
Fixed rate advances are valued by comparing their contractual cost to the prevailing market cost. The carrying amount of collateralized borrowings approximates the fair value. The fair value of our subordinated debentures is calculated using the discounted cash flows at rates observable for other similarly traded liabilities.
Junior Subordinated Debentures
The fair value of junior subordinated debentures is calculated using the discounted cash flows at the prevailing rate of interest.
Interest Rate Lock Commitments and Forward Commitments
The fair value of interest rate lock commitments is based on the value of underlying loans held-for-sale which is based on quoted prices for similar loans in the secondary market. This value is then adjusted based on the probability of the loan closing (i.e., the “pull-through” amount, a significant unobservable input). The fair value of forward sale commitments is based on quoted prices from the secondary market based on the settlement date of the contracts.
Cash Flow Hedges, Interest Rate and Foreign Exchange Swap Agreements
The fair value of interest rate swaps is based upon the present value of the expected future cash flows using the LIBOR swap curve, the basis for the underlying interest rate. To price interest rate swaps, cash flows are first projected for each payment date using the fixed rate for the fixed side of the swap and the forward rates for the floating side of the swap. These swap cash flows are then discounted to time zero using LIBOR zero-coupon interest rates. The sum of the present value of both legs is the fair market value of the interest rate swap. These valuations have been derived from our third party vendor’s proprietary models rather than actual market quotations. The proprietary models are based upon financial principles and assumptions that we believe to be reasonable. The fair value of the foreign exchange swap is derived from proprietary models rather than actual market quotations. The proprietary models are based upon financial principles and assumptions we believe to be reasonable. Risk participation agreements are entered into when Northwest purchases a portion of a commercial loan that has an interest rate swap. Northwest assumes credit risk on its portion of the interest rate swap should the borrower fail to pay as agreed. The value of risk participation agreements is determined based on the value of the swap after considering the credit quality, probability of default, and loss given default of the borrower.
Off-Balance Sheet Financial Instruments
These financial instruments generally are not sold or traded, and estimated fair values are not readily available. However, the fair value of commitments to extend credit and standby letters of credit is estimated using the fees currently charged to enter into similar agreements. Commitments to extend credit are generally short-term in nature and, if drawn upon, are issued under current market terms. At March 31, 2021 and December 31, 2020, there was no significant unrealized appreciation or depreciation on these financial instruments.
The following table sets forth the carrying amount and estimated fair value of our financial instruments included in the Consolidated Statement of Financial Condition at March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
amount
|
|
Estimated
fair value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
979,290
|
|
|
979,290
|
|
|
979,290
|
|
|
—
|
|
|
—
|
|
|
Securities available-for-sale
|
1,430,131
|
|
|
1,430,131
|
|
|
—
|
|
|
1,430,131
|
|
|
—
|
|
|
Securities held-to-maturity
|
604,284
|
|
|
593,232
|
|
|
—
|
|
|
593,232
|
|
|
—
|
|
|
Loans receivable, net
|
10,197,773
|
|
|
10,080,207
|
|
|
—
|
|
|
—
|
|
|
10,080,207
|
|
|
Residential mortgage loans held-for-sale
|
46,270
|
|
|
46,270
|
|
|
—
|
|
|
—
|
|
|
46,270
|
|
|
Accrued interest receivable
|
28,732
|
|
|
28,732
|
|
|
28,732
|
|
|
—
|
|
|
—
|
|
|
Interest rate lock commitments
|
5,060
|
|
|
5,060
|
|
|
—
|
|
|
—
|
|
|
5,060
|
|
|
Forward commitments
|
450
|
|
|
450
|
|
|
—
|
|
|
450
|
|
|
—
|
|
|
Interest rate swaps not designated as hedging instruments
|
34,961
|
|
|
34,961
|
|
|
—
|
|
|
34,961
|
|
|
—
|
|
|
FHLB stock
|
21,861
|
|
|
21,861
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total financial assets
|
$
|
13,348,812
|
|
|
13,220,194
|
|
|
1,008,022
|
|
|
2,058,774
|
|
|
10,131,537
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
Savings and checking deposits
|
$
|
10,577,575
|
|
|
10,577,575
|
|
|
10,577,575
|
|
|
—
|
|
|
—
|
|
|
Time deposits
|
1,535,519
|
|
|
1,557,947
|
|
|
—
|
|
|
—
|
|
|
1,557,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowed funds
|
253,617
|
|
|
255,664
|
|
|
130,209
|
|
|
125,455
|
|
|
—
|
|
|
Junior subordinated debentures
|
128,859
|
|
|
121,217
|
|
|
—
|
|
|
—
|
|
|
121,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps not designated as hedging instruments
|
35,158
|
|
|
35,158
|
|
|
—
|
|
|
35,158
|
|
|
—
|
|
|
Risk participation agreements
|
81
|
|
|
81
|
|
|
—
|
|
|
81
|
|
|
—
|
|
|
Accrued interest payable
|
659
|
|
|
659
|
|
|
659
|
|
|
—
|
|
|
—
|
|
|
Total financial liabilities
|
$
|
12,531,468
|
|
|
12,548,301
|
|
|
10,708,443
|
|
|
160,694
|
|
|
1,679,164
|
|
The following table sets forth the carrying amount and estimated fair value of our financial instruments included in the Consolidated Statement of Financial Condition at December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
amount
|
|
Estimated
fair value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
736,277
|
|
|
736,277
|
|
|
736,277
|
|
|
—
|
|
|
—
|
|
|
Securities available-for-sale
|
1,398,941
|
|
|
1,398,941
|
|
|
—
|
|
|
1,398,941
|
|
|
—
|
|
|
Securities held-to-maturity
|
178,887
|
|
|
179,666
|
|
|
—
|
|
|
179,666
|
|
|
—
|
|
|
Loans receivable, net
|
10,387,636
|
|
|
10,334,521
|
|
|
—
|
|
|
—
|
|
|
10,334,521
|
|
|
Residential mortgage loans held-for-sale
|
58,786
|
|
|
58,786
|
|
|
—
|
|
|
—
|
|
|
58,786
|
|
|
Accrued interest receivable
|
35,554
|
|
|
35,554
|
|
|
35,554
|
|
|
—
|
|
|
—
|
|
|
Interest rate lock commitments
|
6,465
|
|
|
6,465
|
|
|
—
|
|
|
—
|
|
|
6,465
|
|
|
Forward commitments
|
1,105
|
|
|
1,105
|
|
|
—
|
|
|
1,105
|
|
|
—
|
|
|
Interest rate swaps not designated as hedging instruments
|
53,863
|
|
|
53,863
|
|
|
—
|
|
|
53,863
|
|
|
—
|
|
|
FHLB stock
|
21,748
|
|
|
21,748
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total financial assets
|
$
|
12,879,262
|
|
|
12,826,926
|
|
|
771,831
|
|
|
1,633,575
|
|
|
10,399,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
|
|
Savings and checking accounts
|
$
|
9,957,137
|
|
|
9,957,137
|
|
|
9,957,137
|
|
|
—
|
|
|
—
|
|
|
Time deposits
|
1,642,096
|
|
|
1,669,546
|
|
|
—
|
|
|
—
|
|
|
1,669,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowed funds
|
283,044
|
|
|
283,074
|
|
|
159,745
|
|
|
123,329
|
|
|
123,329
|
|
|
Junior subordinated debentures
|
128,794
|
|
|
121,106
|
|
|
—
|
|
|
—
|
|
|
121,106
|
|
|
Interest rate swaps not designated as hedging instruments
|
54,579
|
|
|
54,579
|
|
|
—
|
|
|
54,579
|
|
|
—
|
|
|
Risk participation agreements
|
86
|
|
|
86
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
Accrued interest payable
|
2,054
|
|
|
2,054
|
|
|
2,054
|
|
|
—
|
|
|
—
|
|
|
Total financial liabilities
|
$
|
12,067,790
|
|
|
12,087,582
|
|
|
10,118,936
|
|
|
177,994
|
|
|
1,913,981
|
|
Fair value estimates are made at a point-in-time, based on relevant market data and information about the instrument. The methods and assumptions detailed above were used in estimating the fair value of financial instruments at both March 31, 2021 and December 31, 2020.
The following table represents assets and liabilities measured at fair value on a recurring basis at March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total assets
at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
U.S. government and agencies
|
$
|
—
|
|
|
38,824
|
|
|
—
|
|
|
38,824
|
|
|
Government sponsored enterprises
|
—
|
|
|
91,944
|
|
|
—
|
|
|
91,944
|
|
|
States and political subdivisions
|
—
|
|
|
100,951
|
|
|
—
|
|
|
100,951
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
—
|
|
|
231,719
|
|
|
—
|
|
|
231,719
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
GNMA
|
—
|
|
|
21,645
|
|
|
—
|
|
|
21,645
|
|
|
FNMA
|
—
|
|
|
195,233
|
|
|
—
|
|
|
195,233
|
|
|
FHLMC
|
—
|
|
|
122,321
|
|
|
—
|
|
|
122,321
|
|
|
Non-agency
|
—
|
|
|
457
|
|
|
—
|
|
|
457
|
|
|
Collateralized mortgage obligations:
|
|
|
|
|
|
|
|
|
GNMA
|
—
|
|
|
460,426
|
|
|
—
|
|
|
460,426
|
|
|
FNMA
|
—
|
|
|
233,754
|
|
|
—
|
|
|
233,754
|
|
|
FHLMC
|
—
|
|
|
164,576
|
|
|
—
|
|
|
164,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mortgage-backed securities
|
—
|
|
|
1,198,412
|
|
|
—
|
|
|
1,198,412
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate lock commitments
|
—
|
|
|
—
|
|
|
5,060
|
|
|
5,060
|
|
|
Forward commitments
|
—
|
|
|
450
|
|
|
—
|
|
|
450
|
|
|
Interest rate swaps not designated as hedging instruments
|
—
|
|
|
34,961
|
|
|
—
|
|
|
34,961
|
|
|
Total assets
|
$
|
—
|
|
|
1,465,542
|
|
|
5,060
|
|
|
1,470,602
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps not designated as hedging instruments
|
$
|
—
|
|
|
35,158
|
|
|
—
|
|
|
35,158
|
|
|
Risk participation agreements
|
—
|
|
|
81
|
|
|
—
|
|
|
81
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
$
|
—
|
|
|
35,239
|
|
|
—
|
|
|
35,239
|
|
The following table represents assets and liabilities measured at fair value on a recurring basis at December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total assets
at fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities:
|
|
|
|
|
|
|
|
|
U.S. government and agencies
|
$
|
—
|
|
|
40,917
|
|
|
—
|
|
|
40,917
|
|
|
Government sponsored enterprises
|
—
|
|
|
94,507
|
|
|
—
|
|
|
94,507
|
|
|
States and political subdivisions
|
—
|
|
|
116,813
|
|
|
—
|
|
|
116,813
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities
|
—
|
|
|
252,237
|
|
|
—
|
|
|
252,237
|
|
|
|
|
|
|
|
|
|
|
|
Residential mortgage-backed securities:
|
|
|
|
|
|
|
|
|
GNMA
|
—
|
|
|
23,026
|
|
|
—
|
|
|
23,026
|
|
|
FNMA
|
—
|
|
|
203,571
|
|
|
—
|
|
|
203,571
|
|
|
FHLMC
|
—
|
|
|
134,572
|
|
|
—
|
|
|
134,572
|
|
|
Non-agency
|
—
|
|
|
465
|
|
|
—
|
|
|
465
|
|
|
Collateralized mortgage obligations:
|
|
|
|
|
|
|
|
|
GNMA
|
—
|
|
|
343,409
|
|
|
—
|
|
|
343,409
|
|
|
FNMA
|
—
|
|
|
262,109
|
|
|
—
|
|
|
262,109
|
|
|
FHLMC
|
—
|
|
|
179,552
|
|
|
—
|
|
|
179,552
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total mortgage-backed securities
|
—
|
|
|
1,146,704
|
|
|
—
|
|
|
1,146,704
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate lock commitments
|
—
|
|
|
—
|
|
|
6,465
|
|
|
6,465
|
|
|
Forward commitments
|
—
|
|
|
1,105
|
|
|
—
|
|
|
1,105
|
|
|
Interest rate swaps not designated as hedging instruments
|
—
|
|
|
53,863
|
|
|
—
|
|
|
53,863
|
|
|
Total assets
|
$
|
—
|
|
|
1,453,909
|
|
|
6,465
|
|
|
1,460,374
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps not designated as hedging instruments
|
$
|
—
|
|
|
54,579
|
|
|
—
|
|
|
54,579
|
|
|
Risk participation agreements
|
—
|
|
|
86
|
|
|
—
|
|
|
86
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
$
|
—
|
|
|
54,665
|
|
|
—
|
|
|
54,665
|
|
The following table presents the changes in Level 3 assets and liabilities measured at fair value on a recurring basis (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended March 31,
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
Beginning balance January 1,
|
$
|
6,465
|
|
|
559
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gains or losses:
|
|
|
|
|
|
|
|
|
Included in net income
|
—
|
|
|
—
|
|
|
|
|
|
|
Included in other comprehensive income
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate lock commitments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net activity
|
1,405
|
|
|
52
|
|
|
|
|
|
|
Transfers from Level 3
|
—
|
|
|
—
|
|
|
|
|
|
|
Transfers into Level 3
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance March 31,
|
$
|
5,060
|
|
|
507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain assets and liabilities are measured at fair value on a nonrecurring basis after initial recognition such as loans held-for-sale, loans measured for impairment, real estate owned, and mortgage servicing rights.
The following table represents the fair market measurement for only those nonrecurring assets that had a fair market value below the carrying amount as of March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total assets
at fair value
|
|
Loans individually assessed
|
$
|
—
|
|
|
—
|
|
|
157,696
|
|
|
157,696
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate owned, net
|
—
|
|
|
—
|
|
|
1,738
|
|
|
1,738
|
|
|
Total assets
|
$
|
—
|
|
|
—
|
|
|
159,434
|
|
|
159,434
|
|
The following table represents the fair market measurement for only those nonrecurring assets that had a fair market value below the carrying amount as of December 31, 2020 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total assets
at fair value
|
|
Loans individually assessed
|
$
|
—
|
|
|
—
|
|
|
95,303
|
|
|
95,303
|
|
|
|
|
|
|
|
|
|
|
|
Real estate owned, net
|
—
|
|
|
—
|
|
|
2,232
|
|
|
2,232
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
$
|
—
|
|
|
—
|
|
|
97,535
|
|
|
97,535
|
|
Individually Assessed Loans - A loan is considered to be individually assessed as described in Note 1(f) of the Notes to the Consolidated Financial Statements in Item 8 of Part II of our 2020 Annual Report on Form 10-K. We classify loans individually assessed as nonrecurring Level 3.
Real Estate Owned - Real estate owned is comprised of property acquired through foreclosure or voluntarily conveyed by borrowers. These assets are recorded on the date acquired at the lower of the related loan balance or fair value, less estimated disposition costs, with the fair value being determined by appraisal. Subsequently, foreclosed assets are valued at the lower of the amount recorded at acquisition date or fair value, less estimated disposition costs. We classify real estate owned as nonrecurring Level 3.
The following table presents additional quantitative information about assets measured at fair value on a recurring and nonrecurring basis and for which we have utilized Level 3 inputs to determine fair value at March 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value
|
|
Valuation
techniques
|
|
Significant
unobservable inputs
|
|
Range
(weighted average)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans individually assessed
|
$
|
157,696
|
|
|
Appraisal value (1)
|
|
Estimated cost to sell
|
|
10.0%
|
|
|
|
|
Discounted cash flow
|
|
Discount rate
|
|
10.92% to 16.6% (12.88%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate owned, net
|
$
|
1,738
|
|
|
Appraisal value (1)
|
|
Estimated cost to sell
|
|
10.0%
|
(1)Fair value is generally determined through independent appraisals of the underlying collateral, which may include Level 3 inputs that are not identifiable, or by using the discounted cash flow method if the loan is not collateral dependent.
(10) Derivative Financial Instruments
We are a party to derivative financial instruments in the normal course of business to manage our own exposure to fluctuations in interest rates and to meet the needs of our customers. The primary derivatives that we use are interest rate swaps and caps and foreign exchange contracts, which are entered into with counterparties that meet established credit standards. We believe that the credit risk inherent in all of our derivative contracts is minimal based on our credit standards and the netting and collateral provisions of the interest rate swap agreements.
Derivatives Designated as Hedging Instruments
During March 2020, the Company entered into four separate pay-fixed interest rate swaps in order to synthetically convert short-term three month FHLB advances to fixed-rate term funding with an aggregate value of $100 million with maturities ranging from three to five years. Our risk management objective and strategy for these interest rate swaps at such time was to reduce our exposure to variability in interest-related cash outflows attributable to changes in the USD-LIBOR swap rate, the designated benchmark interest rate being hedged. Based upon our contemporaneous quantitative analysis at the inception of each interest rate swap, we have determined these interest rate swaps to qualify for hedge accounting in accordance with ASC 815, Derivatives and Hedging.
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted
transaction affects earnings. During the quarter ended September 30, 2020, the Company discontinued these cash flow hedges and, as a result, reclassified a $1.3 million loss into earnings.
Derivatives Not Designated as Hedging Instruments
We act as an interest rate or foreign exchange swap counterparty for certain commercial borrowers in the normal course of servicing our customers, which are accounted for at fair value. We manage our exposure to such interest rate or foreign exchange swaps by entering into corresponding and offsetting interest rate swaps with third parties that mirror the terms of the swaps we have with the commercial borrowers. These positions (referred to as “customer swaps”) directly offset each other and our exposure is the fair value of the derivatives due to changes in credit risk of our commercial borrowers and third parties. Customer swaps are recorded within other assets or other liabilities on the consolidated statement of financial condition at their estimated fair value. Changes to the fair value of assets and liabilities arising from these derivatives are included, net, in other operating income in the Consolidated Statement of Income.
We enter into interest rate lock commitments for residential mortgage loans which commit us to lend funds to a potential borrower at a specific interest rate within a specified period of time. Interest rate lock commitments that relate to the origination of mortgage loans that will be held-for-sale are considered derivative financial instruments under applicable accounting guidance. Interest rate lock commitments on loans held-for-sale are carried at fair value in other assets on the consolidated statement of financial condition. Northwest sells loans to the secondary market on a mandatory or best efforts basis. The loans sold on a mandatory basis commit us to deliver a specific principal amount of mortgage loans to an investor at a specified price, by a specified date, or the commitment must be paired off. These forward commitments entered into on a mandatory delivery basis meet the definition of a derivative financial instrument. All closed loans to be sold on a mandatory delivery basis are classified as held-for-sale on the Consolidated Statement of Financial Condition. Changes to the fair value of the interest rate lock commitments and the forward commitments are recorded in mortgage banking income in the Consolidated Statements of Income.
We enter into risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which we are a participant. The risk participation agreements provide credit protection to the financial institution should the borrower fail to perform on its interest rate derivative contract with the financial institution.
The following table presents information regarding our derivative financial instruments for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset derivatives
|
|
Liability derivatives
|
|
|
Notional amount
|
|
Fair value
|
|
Notional amount
|
|
Fair value
|
|
At March 31, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
Interest rate swap agreements
|
$
|
607,671
|
|
|
34,961
|
|
|
607,671
|
|
|
35,158
|
|
|
Interest rate lock commitments
|
129,127
|
|
|
5,060
|
|
|
—
|
|
|
—
|
|
|
Forward commitments
|
28,082
|
|
|
450
|
|
|
—
|
|
|
—
|
|
|
Risk participation agreements
|
—
|
|
|
—
|
|
|
77,282
|
|
|
81
|
|
|
Total derivatives
|
$
|
764,880
|
|
|
40,471
|
|
|
684,953
|
|
|
35,239
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
Interest rate swap agreements
|
$
|
599,300
|
|
|
53,863
|
|
|
599,300
|
|
|
54,579
|
|
|
Interest rate lock commitments
|
171,357
|
|
|
6,465
|
|
|
—
|
|
|
—
|
|
|
Forward commitments
|
25,474
|
|
|
1,105
|
|
|
—
|
|
|
—
|
|
|
Risk participation agreements
|
—
|
|
|
—
|
|
|
77,532
|
|
|
86
|
|
|
Total derivatives
|
$
|
796,131
|
|
|
61,433
|
|
|
676,832
|
|
|
54,665
|
|
The following table presents income or expense recognized on derivatives for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended March 31,
|
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
Hedging derivatives:
|
|
|
|
|
|
|
|
|
Decrease in interest expense
|
$
|
—
|
|
|
(12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-hedging swap derivatives:
|
|
|
|
|
|
|
|
|
Increase/(decrease) in other income
|
524
|
|
|
(177)
|
|
|
|
|
|
|
Increase in mortgage banking income
|
2,060
|
|
|
1
|
|
|
|
|
|
(11) Legal Proceedings
We establish accruals for legal proceedings when information related to the loss contingencies represented by those matters indicates both that a loss is probable and that the amount of loss can be reasonably estimated. As of March 31, 2021, we do not anticipate that the aggregate ultimate liability arising out of any pending or threatened legal proceedings will be material to our Consolidated Financial Statements. Any such accruals are adjusted thereafter as appropriate to reflect changes in circumstances. Due to the inherent subjectivity of assessments and unpredictability of outcomes of legal proceedings, any amounts accrued may not represent the ultimate loss to us from legal proceedings.
During the year-ended December 31, 2018, Northwest and our subsidiary, The Bert Company (doing business as Northwest Insurance Services) (“NWIS”), were involved in a lawsuit against, among others, First National Bank of Pennsylvania (“FNB”) and their insurance subsidiary, First National Insurance Agency, LLC (“FNIA”). All counterclaims against Northwest were discontinued and, in December 2018, a verdict was rendered in favor of NWIS on several of its claims. Post-trial proceedings have continued throughout the current year and, due to the inherent uncertainties with respect to these proceedings, we have not accrued any awards associated with this verdict within our Consolidated Financial Statements as of March 31, 2021.
(12) Changes in Accumulated Other Comprehensive Income
The following tables show the changes in accumulated other comprehensive income by component for the periods indicated (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended March 31, 2021
|
|
|
Unrealized
gains/(losses)
on securities
available-for-sale
|
|
Change in
fair value
of interest
rate swaps
|
|
Change in
defined benefit
pension plans
|
|
Total
|
|
Balance as of December 31, 2020
|
$
|
16,843
|
|
|
—
|
|
|
(50,392)
|
|
|
(33,549)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss before reclassification adjustments (1)
|
(17,421)
|
|
|
—
|
|
|
—
|
|
|
(17,421)
|
|
|
Amounts reclassified from accumulated other comprehensive income (2) (3)
|
(75)
|
|
|
—
|
|
|
333
|
|
|
258
|
|
|
|
|
|
|
|
|
|
|
|
Net other comprehensive income/(loss)
|
(17,496)
|
|
|
—
|
|
|
333
|
|
|
(17,163)
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2021
|
$
|
(653)
|
|
|
—
|
|
|
(50,059)
|
|
|
(50,712)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the quarter ended March 31, 2020
|
|
|
Unrealized
gains/(losses)
on securities
available-for-sale
|
|
Change in
fair value
of interest
rate swaps
|
|
Change in
defined benefit
pension plans
|
|
Total
|
|
Balance as of December 31, 2019
|
$
|
3,147
|
|
|
—
|
|
|
(40,088)
|
|
|
(36,941)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income/(loss) before reclassification adjustments (4) (5)
|
8,157
|
|
|
(409)
|
|
|
—
|
|
|
7,748
|
|
|
Amounts reclassified from accumulated other comprehensive income (6) (7)
|
37
|
|
|
—
|
|
|
249
|
|
|
286
|
|
|
|
|
|
|
|
|
|
|
|
Net other comprehensive income/(loss)
|
8,194
|
|
|
(409)
|
|
|
249
|
|
|
8,034
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of March 31, 2020
|
$
|
11,341
|
|
|
(409)
|
|
|
(39,839)
|
|
|
(28,907)
|
|
(1)Consists of unrealized holding gains, net of tax of $(5,981).
(2)Consists of realized gains, net of tax of $(22).
(3)Consists of realized gains, net of tax of $129.
(4)Consists of unrealized holding gains, net of tax $3,277.
(5)Consists of unrealized holding gains, net of tax $(162).
(6)Consists of realized gains, net of tax of $14.
(7)Consists of realized losses, net of tax of $99.
(13) Subsequent Events
The Company completed the sale of NWIS to USI Insurance Services LLC (“Buyer”) in accordance with the Asset Purchase Agreement (the “Agreement”), dated April 1, 2021. Pursuant to the Agreement, Buyer purchased substantially all of the assets of NWIS and assumed certain liabilities of NWIS.
Under the terms and conditions in the Agreement, at the closing of the transaction (the “Closing”), an aggregate purchase price of $31.8 million was paid in cash by the Buyer to the Company, less approximately $2.8 million in closing adjustments as set forth in the Agreement.