Borrowed Funds

6 Months Ended

Jun. 30, 2024

(a) Borrowings

Borrowed funds at June 30, 2024 and December 31, 2023 are presented in the following table (dollars in thousands):


	June 30, 2024				December 31, 2023
	Amount		Average rate		Amount		Average rate
Term notes payable to the FHLB of Pittsburgh, due within one year	$	175,000	5.65	%	$	175,000	5.71	%
Notes payable to the FHLB of Pittsburgh, due within one year	—		—	%	163,500		5.70	%




Collateralized borrowings, due within one year	26,213		1.83	%	35,495		1.72	%
Collateral received, due within one year	41,150		5.17	%	24,900		5.26	%
Total borrowed funds	$	242,363			$	398,895

Borrowings from the Federal Home Loan Bank (“FHLB”) of Pittsburgh, if any, are secured by our residential first mortgage and other qualifying loans. At June 30, 2024, the carrying value of these loans was $6.0 billion. Certain of these borrowings are subject to restrictions or penalties in the event of prepayment.

The revolving line of credit with the FHLB of Pittsburgh carries a commitment of $250 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. At June 30, 2024 there was no balance on the revolving line of credit, and at December 31, 2023 the balance was $164 million.

At June 30, 2024 and December 31, 2023, collateralized borrowings due within one year were $26 million and $35 million, respectively. These borrowings are collateralized by cash or various securities held in safekeeping by the FHLB. At June 30, 2024, the carrying value of the cash and securities used as collateral was $36 million.

At June 30, 2024 and December 31, 2023, collateral received was $41 million and $25 million, respectively. This represents collateral posted to us from our derivative counterparties.

At June 30, 2024 and December 31, 2023, term notes payable to the FHLB of Pittsburgh due within one year were $175 million. The June 30, 2024 total is made up of seven advances: $25 million at 5.66% maturing July 26, 2024; $25 million at 5.68% maturing July 31, 2024; $25 million at 5.66% maturing August 9, 2024; $25 million at 5.65% maturing August 12, 2024; $25 million at 5.65% maturing August 12, 2024; $25 million at 5.65% maturing August 19, 2024; $25 million at 5.65% maturing August 30, 2024.

On September 9, 2020, the Company issued $125 million of 4.00% fixed-to-floating rate subordinated notes with a maturity date of September 15, 2030. 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. During the year ended December 31, 2023 the Company repurchased $10 million of subordinated notes leaving $115 million of subordinated notes outstanding. The subordinated debt issuance costs of approximately $2 million are being amortized over five years on a straight-line basis into interest expense. At June 30, 2024 and December 31, 2023, subordinated debentures, net of issuance costs, were $114 million. For the six months ended June 30, 2024 and June 30, 2023 total interest expense paid on the subordinate notes was $2 million.

(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 the date listed (dollars in thousands).


	Maturity date	Interest rate	Capital debt securities		June 30, 2024	December 31, 2023
Northwest Bancorp Capital Trust III	December 30, 2035	3-month SOFR plus 1.38%	$	50,000	51,547	51,547
Northwest Bancorp Statutory Trust IV	December 15, 2035	3-month SOFR plus 1.38%	50,000		51,547	51,547
LNB Trust II	June 15, 2037	3-month SOFR plus 1.48%	7,875		8,119	8,119
Union National Capital Trust I (1)	January 23, 2034	3-month SOFR plus 2.85%	8,000		8,012	7,999
Union National Capital Trust II (1)	November 23, 2034	3-month SOFR plus 2.00%	3,000		2,809	2,796
MFBC Statutory Trust I (1)	September 15, 2035	3-month SOFR plus 1.70%	5,000		3,840	3,788
Universal Preferred Trust (1)	October 7, 2035	3-month SOFR plus 1.69%	5,000		3,829	3,778
			$	128,875	129,703	129,574

(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. For each of the six month periods ended June 30, 2024 and June 30, 2023 total interest expense paid on trust preferred securities was $5 million and $4 million, respectively.

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.