Company: NWBI
Filing Date: 2025-08-05
Form Type: 10-Q
Source: 0001471265-25-000137
Chunk: 48

Company: Northwest Bancshares, Inc.
Filing Date: 2025-08-05
Form: 10-Q
Item: Item 1
Chunk 48
---
 Appraisal value (1)Estimated cost to sell10%Mortgage servicing rights1 Discounted cash flowAnnual service cost$89Prepayment rate6.0% to 17.4% (10.2%)Expected life (months)50.4 to 105.4 (74.1)Option adjusted spread724 basis pointsForward yield curve4.43% to 4.30%Real estate owned, net48 Appraisal value (1)Estimated cost to sell10%Loans held for sale12,726 Quoted prices for similar loans in active markets adjusted by an expected pull-through rateEstimated pull-through rate100%(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.

34

Table of Contents

(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 InstrumentsAs of  June 30, 2025, the Company had entered into seven 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 $175 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-SOFR swap rate, the designated benchmark interest rate being hedged. Based upon our contemporaneous quantitative analysis at the inception of the interest rate swaps, we have determined these interest rate swaps qualify for hedge accounting in accordance with ASC 815, Derivatives and Hedging.  Our cash flow hedges are recorded within other assets on the Consolidated Statement of Financial Condition at their estimated fair value. As long as the hedge remains highly effective, the changes in the fair value of derivatives designated, and that qualify, as cash flow hedges are recorded in accumulated other