##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the Fiscal Year Ended December 31, 2007
 OR
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 For the transition period from  to
 Commission File No. 000-23817
 NORTHWEST BANCORP, INC.
  United States
    
    23-2900888(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)100 Liberty Street, Warren, Pennsylvania
    
    16365(Address of Principal Executive Offices)
    
    Zip Code
 (814) 726-2140
 (Registrants telephone number)
 Securities Registered Pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registeredCommon Stock, $0.10 Par Value
    
    NASDAQ Stock Market, LLC
 Securities Registered Pursuant to Section 12(g) of the Act:
 None
 o þ
 o þ
 þ o
 o
  Large Accelerated Filer o
    
    Accelerated Filer þ
    
    Non-Accelerated Filer o
    
    Smaller reporting company o
  o þ
   DOCUMENTS INCORPORATED BY REFERENCE
 (1)
    
    Proxy Statement for the 2008 Annual Meeting of Stockholders of the Registrant (Part III).




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 1A. RISK FACTORSITEM 1B. UNRESOLVED STAFF COMMENTSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONPART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEITEM 11.EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESPART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESEX-10.10EX-21EX-23EX-31.1EX-31.2EX-32    Table of Contents  
 PART I
 
 ITEM 1. BUSINESS
 General
 Northwest Bancorp, Inc.
     www.northwestsavingsbank.com
 Northwest Savings Bank
   2




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##### Table of Contents



Market Area
  Lending Activities
 General.
  3




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##### Table of Contents



Analysis of Loan Portfolio.
 At December 31,
    
    
    At June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005
    
    
    2004
    
    
    2003Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in Thousands)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Dollars in Thousands)Real estate:One- to four-family
    
    $
    2,430,117
    
    
    
    48.9
    %
    
    
    2,411,024
    
    
    
    53.5
    %
    
    
    2,805,900
    
    
    
    59.5
    %
    
    
    2,693,174
    
    
    
    60.3
    %
    
    
    2,615,328
    
    
    
    63.1
    %
    
    
    2,285,151
    
    
    
    65.1
    %Multifamily and commercial
    
    
    906,594
    
    
    
    18.3
    %
    
    
    701,951
    
    
    
    15.6
    %
    
    
    594,503
    
    
    
    12.6
    %
    
    
    534,224
    
    
    
    11.9
    %
    
    
    454,606
    
    
    
    11.0
    %
    
    
    377,507
    
    
    
    10.8
    %Total real estate loans
    
    $
    3,336,711
    
    
    
    67.2
    %
    
    
    3,112,975
    
    
    
    69.1
    %
    
    
    3,400,403
    
    
    
    72.1
    %
    
    
    3,227,398
    
    
    
    72.2
    %
    
    
    3,069,934
    
    
    
    74.1
    %
    
    
    2,662,658
    
    
    
    75.9
    %Consumer:Automobile
    
    
    125,298
    
    
    
    2.5
    %
    
    
    138,401
    
    
    
    3.1
    %
    
    
    144,519
    
    
    
    3.1
    %
    
    
    138,102
    
    
    
    3.1
    %
    
    
    120,887
    
    
    
    2.9
    %
    
    
    119,778
    
    
    
    3.4
    %Home equity
    
    
    992,335
    
    
    
    20.0
    %
    
    
    887,352
    
    
    
    19.7
    %
    
    
    780,451
    
    
    
    16.5
    %
    
    
    737,619
    
    
    
    16.5
    %
    
    
    588,192
    
    
    
    14.2
    %
    
    
    387,698
    
    
    
    11.1
    %Education loans
    
    
    14,551
    
    
    
    0.3
    %
    
    
    11,973
    
    
    
    0.3
    %
    
    
    120,504
    
    
    
    2.5
    %
    
    
    112,462
    
    
    
    2.5
    %
    
    
    95,599
    
    
    
    2.3
    %
    
    
    90,485
    
    
    
    2.6
    %Loans on savings accounts
    
    
    10,563
    
    
    
    0.2
    %
    
    
    10,313
    
    
    
    0.2
    %
    
    
    9,066
    
    
    
    0.2
    %
    
    
    8,500
    
    
    
    0.2
    %
    
    
    8,038
    
    
    
    0.2
    %
    
    
    7,879
    
    
    
    0.2
    %Other (1)
    
    
    117,831
    
    
    
    2.4
    %
    
    
    109,303
    
    
    
    2.4
    %
    
    
    106,390
    
    
    
    2.3
    %
    
    
    102,787
    
    
    
    2.3
    %
    
    
    112,163
    
    
    
    2.7
    %
    
    
    107,522
    
    
    
    3.1
    %Total consumer loans
    
    $
    1,260,578
    
    
    
    25.4
    %
    
    
    1,157,342
    
    
    
    25.7
    %
    
    
    1,160,930
    
    
    
    24.6
    %
    
    
    1,099,470
    
    
    
    24.6
    %
    
    
    924,879
    
    
    
    22.3
    %
    
    
    713,362
    
    
    
    20.4
    %Commercial business
    
    
    367,459
    
    
    
    7.4
    %
    
    
    235,311
    
    
    
    5.2
    %
    
    
    157,572
    
    
    
    3.3
    %
    
    
    142,391
    
    
    
    3.2
    %
    
    
    149,509
    
    
    
    3.6
    %
    
    
    130,694
    
    
    
    3.7
    %Total loans receivable, gross
    
    $
    4,964,748
    
    
    
    100.0
    %
    
    
    4,505,628
    
    
    
    100.0
    %
    
    
    4,718,905
    
    
    
    100.0
    %
    
    
    4,469,259
    
    
    
    100.0
    %
    
    
    4,144,322
    
    
    
    100.0
    %
    
    
    3,506,714
    
    
    
    100.0
    %Deferred loan fees
    
    
    (4,179
    )
    
    
    
    
    
    
    (3,027
    )
    
    
    
    
    
    
    (3,877
    )
    
    
    
    
    
    
    (4,257
    )
    
    
    
    
    
    
    (6,630
    )
    
    
    
    
    
    
    (7,402
    )Undisbursed loan proceeds
    
    
    (123,163
    )
    
    
    
    
    
    
    (52,505
    )
    
    
    
    
    
    
    (59,348
    )
    
    
    
    
    
    
    (56,555
    )
    
    
    
    
    
    
    (53,081
    )
    
    
    
    
    
    
    (42,272
    )Allowance for loan losses
(real estate loans)
    
    
    (28,854
    )
    
    
    
    
    
    
    (17,936
    )
    
    
    
    
    
    
    (16,875
    )
    
    
    
    
    
    
    (15,918
    )
    
    
    
    
    
    
    (15,113
    )
    
    
    
    
    
    
    (13,660
    )Allowance for loan losses
(other loans)
    
    
    (12,930
    )
    
    
    
    
    
    
    (19,719
    )
    
    
    
    
    
    
    (16,536
    )
    
    
    
    
    
    
    (15,645
    )
    
    
    
    
    
    
    (15,557
    )
    
    
    
    
    
    
    (13,506
    )Total loans receivable, net
    
    $
    4,795,622
    
    
    
    
    
    
    
    4,412,441
    
    
    
    
    
    
    
    4,622,269
    
    
    
    
    
    
    
    4,376,884
    
    
    
    
    
    
    
    4,053,941
    
    
    
    
    
    
    
    3,429,874
 
 (1)
    
    Consists primarily of secured and unsecured personal loans. Loan Maturity and Repricing Schedule.
 Between
    
    
    Between
    
    
    BetweenWithin 1 Year
    
    
    1-2 Years
    
    
    2-3 Years
    
    
    3-5 Years
    
    
    Beyond 5 Years
    
    
    Total(In Thousands)Real estate loans:One- to four-family residential
    
    $
    203,221
    
    
    
    123,719
    
    
    
    117,677
    
    
    
    236,198
    
    
    
    1,749,302
    
    
    $
    2,430,117Multifamily and commercial
    
    
    341,509
    
    
    
    120,134
    
    
    
    103,575
    
    
    
    247,905
    
    
    
    93,471
    
    
    
    906,594Consumer loans
    
    
    328,741
    
    
    
    135,412
    
    
    
    124,022
    
    
    
    208,865
    
    
    
    463,538
    
    
    
    1,260,578Commercial business loans
    
    
    138,420
    
    
    
    48,693
    
    
    
    41,981
    
    
    
    100,480
    
    
    
    37,885
    
    
    
    367,459Total loans
    
    $
    1,011,891
    
    
    
    427,958
    
    
    
    387,255
    
    
    
    793,448
    
    
    
    2,344,196
    
    
    $
    4,964,748
 4




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##### Table of Contents



Fixed- and Adjustable-Rate Loan Schedule.
 Fixed
    
    
    Adjustable
    
    
    Total(In Thousands)Real estate loans:One- to four-family residential
    
    $
    2,224,828
    
    
    
    84,217
    
    
    $
    2,309,045Mulitfamily and commercial
    
    
    329,454
    
    
    
    451,951
    
    
    
    781,405Consumer loans
    
    
    910,719
    
    
    
    118,480
    
    
    
    1,029,199Commercial business loans
    
    
    139,703
    
    
    
    177,015
    
    
    
    316,718Total loans
    
    $
    3,604,704
    
    
    
    831,663
    
    
    $
    4,436,367
 One- to Four-Family Residential Real Estate Loans.
      5




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##### Table of Contents



Multifamily Residential and Commercial Real Estate Loans.
  Consumer Loans.
   6




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##### Table of Contents



Commercial Business Loans.
   Loan Originations, Solicitation, Processing, and Commitments.
  Loan Origination Fees and Other Income.
  7




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##### Table of Contents



Loans-to-One Borrower.
 Delinquencies and Classified Assets
 Collection Procedures.
 Nonperforming Assets.
  8




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##### Table of Contents



Loans Past Due and Nonperforming Assets.
 At December 31,
    
    
    At June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005
    
    
    2004
    
    
    2003Number
    
    
    Balance(Dollars in Thousands)Loans past due 30 days to 59 days:One- to four-family residential loans
    
    
    361
    
    
    $
    27,270
    
    
    
    24,078
    
    
    
    26,290
    
    
    
    3,941
    
    
    
    5,765
    
    
    
    3,830Multifamily and commercial RE loans
    
    
    88
    
    
    
    11,331
    
    
    
    7,975
    
    
    
    4,924
    
    
    
    5,198
    
    
    
    2,201
    
    
    
    1,291Consumer loans
    
    
    1,331
    
    
    
    10,550
    
    
    
    9,096
    
    
    
    12,053
    
    
    
    5,611
    
    
    
    4,877
    
    
    
    3,832Commercial business loans
    
    
    70
    
    
    
    9,947
    
    
    
    4,325
    
    
    
    2,450
    
    
    
    1,000
    
    
    
    782
    
    
    
    308Total loans past due 30 days to 59 days
    
    
    1,850
    
    
    $
    59,098
    
    
    
    45,474
    
    
    
    45,717
    
    
    
    15,750
    
    
    
    13,625
    
    
    
    9,261Loans past due 60 days to 89 days:One- to four-family residential loans
    
    
    99
    
    
    
    6,077
    
    
    
    5,970
    
    
    
    9,156
    
    
    
    4,687
    
    
    
    4,925
    
    
    
    3,998Multifamily and commercial RE loans
    
    
    41
    
    
    
    4,984
    
    
    
    3,846
    
    
    
    3,399
    
    
    
    8,156
    
    
    
    1,023
    
    
    
    873Consumer loans
    
    
    437
    
    
    
    2,676
    
    
    
    2,833
    
    
    
    3,773
    
    
    
    3,134
    
    
    
    2,032
    
    
    
    1,920Commercial business loans
    
    
    34
    
    
    
    2,550
    
    
    
    501
    
    
    
    263
    
    
    
    279
    
    
    
    309
    
    
    
    159Total loans past due 60 days to 89 days
    
    
    611
    
    
    $
    16,287
    
    
    
    13,150
    
    
    
    16,591
    
    
    
    16,256
    
    
    
    8,289
    
    
    
    6,950Loans past due 90 days or more (1):One- to four-family residential loans
    
    
    193
    
    
    
    12,542
    
    
    
    10,334
    
    
    
    12,179
    
    
    
    11,507
    
    
    
    11,322
    
    
    
    11,267Multifamily and commercial RE loans
    
    
    105
    
    
    
    24,323
    
    
    
    18,982
    
    
    
    21,013
    
    
    
    15,610
    
    
    
    13,823
    
    
    
    11,975Consumer loans
    
    
    744
    
    
    
    7,582
    
    
    
    4,578
    
    
    
    8,322
    
    
    
    5,514
    
    
    
    4,536
    
    
    
    4,912Commercial business loans
    
    
    84
    
    
    
    5,163
    
    
    
    6,631
    
    
    
    1,502
    
    
    
    979
    
    
    
    2,824
    
    
    
    4,602Total loans past due 90 days or more
    
    
    1,126
    
    
    $
    49,610
    
    
    
    40,525
    
    
    
    43,016
    
    
    
    33,610
    
    
    
    32,505
    
    
    
    32,756Total loans 30 days or more past due
    
    
    3,587
    
    
    $
    124,995
    
    
    
    99,149
    
    
    
    105,324
    
    
    
    65,616
    
    
    
    54,419
    
    
    
    48,967Total loans 90 days or more past due (1)
    
    
    1,126
    
    
    $
    49,610
    
    
    
    40,525
    
    
    
    43,016
    
    
    
    33,610
    
    
    
    32,505
    
    
    
    32,756Total REO
    
    
    105
    
    
    
    8,667
    
    
    
    6,653
    
    
    
    4,872
    
    
    
    6,685
    
    
    
    3,951
    
    
    
    5,739Total loans 90 days or more past due
and REO
    
    
    1,231
    
    
    $
    58,277
    
    
    
    47,178
    
    
    
    47,888
    
    
    
    40,295
    
    
    
    36,456
    
    
    
    38,495Total loans 90 days or more past due
to net loans receivable
    
    
    
    
    
    
    1.03
    %
    
    
    0.92
    %
    
    
    0.93
    %
    
    
    0.77
    %
    
    
    0.80
    %
    
    
    0.96
    %Total loans 90 days or more past due
and REO to total assets
    
    
    
    
    
    
    0.87
    %
    
    
    0.72
    %
    
    
    0.74
    %
    
    
    0.64
    %
    
    
    0.57
    %
    
    
    0.68
    %
 
 (1)
    
    The Company classifies as nonperforming all loans 90 days or more delinquent.  Classification of Assets.
 9




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##### Table of Contents



At December 31,
    
    
    At June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005(In Thousands)Substandard assets
    
    $
    85,526
    
    
    
    70,182
    
    
    
    61,522
    
    
    
    58,925Doubtful assets
    
    
    4,374
    
    
    
    2,129
    
    
    
    1,983
    
    
    
    1,752Loss assets
    
    
    388
    
    
    
    270
    
    
    
    232
    
    
    
    32Total classified assets
    
    $
    90,288
    
    
    
    72,581
    
    
    
    63,737
    
    
    
    60,709
 Allowance for Loan Losses.
     10




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##### Table of Contents



Analysis of the Allowance For Loan Losses.
 Six MonthEndedYears Ended December 31,
    
    
    December 31,
    
    
    Years Ended June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005
    
    
    2004
    
    
    2003(In Thousands)Net loans receivable
    
    $
    4,795,622
    
    
    
    4,412,441
    
    
    
    4,622,269
    
    
    
    4,376,884
    
    
    
    4,053,941
    
    
    
    3,429,874Average loans outstanding
    
    $
    4,660,693
    
    
    
    4,395,274
    
    
    
    4,532,523
    
    
    
    4,234,241
    
    
    
    3,846,261
    
    
    
    3,258,520Allowance for loan losses
balance at beginning of period
    
    $
    37,655
    
    
    
    33,411
    
    
    
    31,563
    
    
    
    30,670
    
    
    
    27,166
    
    
    
    22,042Provision for loan losses
    
    $
    8,743
    
    
    
    8,480
    
    
    
    4,722
    
    
    
    9,566
    
    
    
    6,860
    
    
    
    8,445Charge-offs:Real estate loans
    
    
    (2,042
    )
    
    
    (1,148
    )
    
    
    (282
    )
    
    
    (676
    )
    
    
    (176
    )
    
    
    (242
    )Consumer loans
    
    
    (5,175
    )
    
    
    (5,543
    )
    
    
    (3,314
    )
    
    
    (5,726
    )
    
    
    (5,113
    )
    
    
    (4,281
    )Commercial loans
    
    
    (973
    )
    
    
    (926
    )
    
    
    (43
    )
    
    
    (3,071
    )
    
    
    (461
    )
    
    
    (1,258
    )Total charge-offs
    
    
    (8,190
    )
    
    
    (7,617
    )
    
    
    (3,639
    )
    
    
    (9,473
    )
    
    
    (5,750
    )
    
    
    (5,781
    )Recoveries:Real estate loans
    
    
    250
    
    
    
    123
    
    
    
    4
    
    
    
    1
    
    
    
    
    
    
    
    47Consumer loans
    
    
    1,073
    
    
    
    1,214
    
    
    
    455
    
    
    
    750
    
    
    
    562
    
    
    
    527Commercial loans
    
    
    134
    
    
    
    62
    
    
    
    51
    
    
    
    49
    
    
    
    502
    
    
    
    123Total recoveries
    
    
    1,457
    
    
    
    1,399
    
    
    
    510
    
    
    
    800
    
    
    
    1,064
    
    
    
    697Acquired through acquistions
    
    
    2,119
    
    
    
    1,982
    
    
    
    255
    
    
    
    
    
    
    
    1,330
    
    
    
    1,763Allowance for loan losses
balance at end of period
    
    $
    41,784
    
    
    
    37,655
    
    
    
    33,411
    
    
    
    31,563
    
    
    
    30,670
    
    
    
    27,166Allowance for loan losses as a
percentage of net loans
receivable
    
    
    0.87
    %
    
    
    0.85
    %
    
    
    0.72
    %
    
    
    0.72
    %
    
    
    0.76
    %
    
    
    0.79
    %Net charge-offs as a percentage
of average loans outstanding
    
    
    0.14
    %
    
    
    0.14
    %
    
    
    0.14
    %
    
    
    0.20
    %
    
    
    0.12
    %
    
    
    0.16
    %Allowance for loan losses as a
percentage of nonperforming
loans
    
    
    84.22
    %
    
    
    92.92
    %
    
    
    77.67
    %
    
    
    93.91
    %
    
    
    94.35
    %
    
    
    82.93
    %Allowance for loan losses as a
percentage of nonperforming
loans and REO
    
    
    71.70
    %
    
    
    79.81
    %
    
    
    69.77
    %
    
    
    78.33
    %
    
    
    84.13
    %
    
    
    70.57
    %
 11




---



##### Table of Contents



Allocation of Allowance for Loan Losses.
 At December 31,2007
    
    
    2006
    
    
    2005% of Total
    
    
    
    
    
    
    % of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Loans (1)
    
    
    Amount
    
    
    Loans (1)
    
    
    Amount
    
    
    Loans (1)(Dollars in Thousands)Balance at end of period
applicable to:Real estate loans
    
    $
    28,854
    
    
    
    67.2
    %
    
    
    17,936
    
    
    
    69.1
    %
    
    
    16,875
    
    
    
    72.1
    %Consumer loans
    
    
    6,645
    
    
    
    25.4
    %
    
    
    16,500
    
    
    
    25.7
    %
    
    
    13,991
    
    
    
    24.6
    %Commercial business loans
    
    
    6,285
    
    
    
    7.4
    %
    
    
    3,219
    
    
    
    5.2
    %
    
    
    2,545
    
    
    
    3.3
    %Total allowance for loan loss
    
    $
    41,784
    
    
    
    100.0
    %
    
    
    37,655
    
    
    
    100.0
    %
    
    
    33,411
    
    
    
    100.0
    %
 
 (1)
    
    Represents percentage of loans in each category to total loans. At June 30,2005
    
    
    2004
    
    
    2003% of Total
    
    
    
    
    
    
    % of Total
    
    
    
    
    
    
    % of TotalAmount
    
    
    Loans (1)
    
    
    Amount
    
    
    Loans (1)
    
    
    Amount
    
    
    Loans (1)(Dollars in Thousands)Balance at end of period
applicable to:Real estate loans
    
    $
    15,918
    
    
    
    72.2
    %
    
    
    15,113
    
    
    
    74.1
    %
    
    
    13,660
    
    
    
    75.9
    %Consumer loans
    
    
    13,179
    
    
    
    24.6
    %
    
    
    11,790
    
    
    
    22.3
    %
    
    
    10,965
    
    
    
    20.4
    %Commercial business loans
    
    
    2,466
    
    
    
    3.2
    %
    
    
    3,767
    
    
    
    3.6
    %
    
    
    2,541
    
    
    
    3.7
    %Total allowance for loan loss
    
    $
    31,563
    
    
    
    100.0
    %
    
    
    30,670
    
    
    
    100.0
    %
    
    
    27,166
    
    
    
    100.0
    %
 
 (1)
    
    Represents percentage of loans in each category to total loans. Investment Activities
   12




---



##### Table of Contents



Amortized Cost and Market Value of Investment and Mortgage-Backed Securities.
 At December 31,
    
    
    At June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Amortized
    
    
    
    
    
    
    Amortized
    
    
    
    
    
    
    Amortized
    
    
    
    
    
    
    AmortizedCost
    
    
    Market Value
    
    
    Cost
    
    
    Market Value
    
    
    Cost
    
    
    Market Value
    
    
    Cost
    
    
    Market Value(In Thousands)Mortgage-backed securities held to
maturity:Fixed-rate pass through certificates
    
    $
    
    
    
    
    
    
    
    
    9,097
    
    
    
    8,965
    
    
    
    12,722
    
    
    
    12,643
    
    
    
    14,609
    
    
    
    14,791Variable-rate pass through
certificates
    
    
    
    
    
    
    
    
    
    
    188,700
    
    
    
    188,382
    
    
    
    111,070
    
    
    
    110,369
    
    
    
    140,473
    
    
    
    140,546Fixed-rate collateralized mortgage
obligations (CMOs)
    
    
    
    
    
    
    
    
    
    
    4,484
    
    
    
    4,249
    
    
    
    6,411
    
    
    
    6,123
    
    
    
    7,725
    
    
    
    7,504Variable-rate CMOs
    
    
    
    
    
    
    
    
    
    
    49,374
    
    
    
    49,335
    
    
    
    59,648
    
    
    
    59,687
    
    
    
    72,869
    
    
    
    73,197Total mortgage-backed securities
held to maturity
    
    $
    
    
    
    
    
    
    
    
    251,655
    
    
    
    250,931
    
    
    
    189,851
    
    
    
    188,822
    
    
    
    235,676
    
    
    
    236,038Mortgage-backed securities
available for sale:Fixed-rate pass through certificates
    
    
    73,284
    
    
    
    73,992
    
    
    
    68,720
    
    
    
    67,430
    
    
    
    77,383
    
    
    
    76,407
    
    
    
    82,612
    
    
    
    83,153Variable-rate pass through
certificates
    
    
    306,885
    
    
    
    309,054
    
    
    
    199,442
    
    
    
    198,365
    
    
    
    147,426
    
    
    
    145,856
    
    
    
    172,263
    
    
    
    171,639Fixed-rate CMOs
    
    
    73,514
    
    
    
    71,793
    
    
    
    87,946
    
    
    
    85,402
    
    
    
    78,615
    
    
    
    76,033
    
    
    
    98,478
    
    
    
    97,192Variable-rate CMOs
    
    
    76,886
    
    
    
    76,908
    
    
    
    27,613
    
    
    
    27,771
    
    
    
    25,529
    
    
    
    25,669
    
    
    
    32,296
    
    
    
    32,497Total mortgage-backed securities
available for sale
    
    $
    530,569
    
    
    
    531,747
    
    
    
    383,721
    
    
    
    378,968
    
    
    
    328,953
    
    
    
    323,965
    
    
    
    385,649
    
    
    
    384,481Total mortgage-backed securities
    
    $
    530,569
    
    
    
    531,747
    
    
    
    635,376
    
    
    
    629,899
    
    
    
    518,804
    
    
    
    512,787
    
    
    
    621,325
    
    
    
    620,519Investment securities held to
maturity:U.S. Government, agency and GSEs
    
    
    
    
    
    
    
    
    
    
    161,755
    
    
    
    160,580
    
    
    
    166,812
    
    
    
    165,331
    
    
    
    184,341
    
    
    
    183,738Municipal securities
    
    
    
    
    
    
    
    
    
    
    269,886
    
    
    
    273,438
    
    
    
    238,580
    
    
    
    241,080
    
    
    
    242,850
    
    
    
    246,707Corporate debt issues
    
    
    
    
    
    
    
    
    
    
    33,671
    
    
    
    35,566
    
    
    
    39,015
    
    
    
    41,274
    
    
    
    40,112
    
    
    
    42,985Total investment securities held to
maturity
    
    $
    
    
    
    
    
    
    
    
    465,312
    
    
    
    469,584
    
    
    
    444,407
    
    
    
    447,685
    
    
    
    467,303
    
    
    
    473,430Investment securities available
for sale:U.S. Government, agency and GSEs
    
    
    286,359
    
    
    
    292,546
    
    
    
    214,031
    
    
    
    212,525
    
    
    
    144,965
    
    
    
    113,747
    
    
    
    138,996
    
    
    
    138,557Municipal securities
    
    
    262,895
    
    
    
    267,120
    
    
    
    14,553
    
    
    
    14,604
    
    
    
    14,548
    
    
    
    14,354
    
    
    
    14,545
    
    
    
    14,642Corporate debt issues
    
    
    37,225
    
    
    
    35,075
    
    
    
    63,114
    
    
    
    60,577
    
    
    
    65,976
    
    
    
    64,560
    
    
    
    40,945
    
    
    
    40,806Equity securities and mutual funds
    
    
    6,478
    
    
    
    6,879
    
    
    
    95,548
    
    
    
    100,840
    
    
    
    92,350
    
    
    
    97,210
    
    
    
    91,002
    
    
    
    96,697Total investment securities
available for sale
    
    $
    592,957
    
    
    
    601,620
    
    
    
    387,246
    
    
    
    388,546
    
    
    
    287,839
    
    
    
    289,871
    
    
    
    285,488
    
    
    
    290,702
 Issuers of Mortgage-Backed Securities.
 At December 31,
    
    
    At June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005(In Thousands)Mortgage-backed securities:Fannie Mae
    
    $
    165,391
    
    
    
    205,127
    
    
    
    188,448
    
    
    
    222,549Ginnie Mae
    
    
    88,428
    
    
    
    120,799
    
    
    
    151,477
    
    
    
    179,795Freddie Mac
    
    
    229,960
    
    
    
    249,685
    
    
    
    146,714
    
    
    
    184,717Other (non-agency)
    
    
    47,968
    
    
    
    55,012
    
    
    
    27,177
    
    
    
    33,096Total mortgage-backed securities
    
    $
    531,747
    
    
    
    630,623
    
    
    
    513,816
    
    
    
    620,157
 13




---



##### Table of Contents



Investment Portfolio Maturities.
 At December 31, 2007One Year or Less
    
    
    One to Five Years
    
    
    Five to Ten Years
    
    
    More than Ten Years
    
    
    TotalAnnualized
    
    
    
    
    
    
    Annualized
    
    
    
    
    
    
    Annualized
    
    
    
    
    
    
    Annualized
    
    
    
    
    
    
    
    
    
    
    AnnualizedAmortized
    
    
    Weighted
    
    
    Amortized
    
    
    Weighted
    
    
    Amortized
    
    
    Weighted
    
    
    Amortized
    
    
    Weighted
    
    
    Amortized
    
    
    Market
    
    
    WeightedCost
    
    
    Average Yield
    
    
    Cost
    
    
    Average Yield
    
    
    Cost
    
    
    Average Yield
    
    
    Cost
    
    
    Average Yield
    
    
    Cost
    
    
    Value
    
    
    Average Yield(Dollars in Thousands)Investment securities available for sale:Government sponsored entites
    
    $
    6,959
    
    
    
    5.33
    %
    
    
    42,352
    
    
    
    5.25
    %
    
    
    56,406
    
    
    
    5.17
    %
    
    
    180,274
    
    
    
    5.14
    %
    
    $
    285,991
    
    
    $
    292,181
    
    
    
    5.17
    %U.S. Government and agency obligations
    
    
    368
    
    
    
    4.94
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    368
    
    
    
    365
    
    
    
    4.94
    %Municipal securities
    
    
    
    
    
    
    
    
    
    
    816
    
    
    
    3.98
    %
    
    
    33,217
    
    
    
    4.10
    %
    
    
    228,862
    
    
    
    4.64
    %
    
    
    262,895
    
    
    
    267,120
    
    
    
    4.57
    %Corporate debt issues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,225
    
    
    
    6.24
    %
    
    
    37,225
    
    
    
    35,075
    
    
    
    6.24
    %Equity securities and mutual funds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,478
    
    
    
    7.06
    %
    
    
    6,478
    
    
    
    6,879
    
    
    
    7.06
    %Total investment securities available for sale
    
    $
    7,327
    
    
    
    5.31
    %
    
    
    43,168
    
    
    
    5.22
    %
    
    
    89,623
    
    
    
    4.78
    %
    
    
    452,839
    
    
    
    5.04
    %
    
    $
    592,957
    
    
    $
    601,620
    
    
    
    5.01
    %Mortgage-backed securities available for sale:Pass through certificates
    
    
    306,904
    
    
    
    5.15
    %
    
    
    2,988
    
    
    
    5.52
    %
    
    
    19,984
    
    
    
    4.59
    %
    
    
    50,293
    
    
    
    5.58
    %
    
    
    380,169
    
    
    
    383,046
    
    
    
    5.18
    %CMOs
    
    
    76,886
    
    
    
    5.53
    %
    
    
    816
    
    
    
    3.51
    %
    
    
    10,738
    
    
    
    4.18
    %
    
    
    61,960
    
    
    
    4.60
    %
    
    
    150,400
    
    
    
    148,701
    
    
    
    5.04
    %Total mortgage-backed securities available for sale
    
    $
    383,790
    
    
    
    5.22
    %
    
    
    3,804
    
    
    
    5.09
    %
    
    
    30,722
    
    
    
    4.44
    %
    
    
    112,253
    
    
    
    5.04
    %
    
    $
    530,569
    
    
    $
    531,747
    
    
    
    5.14
    %Total investment securities and mortgage-backed
securities
    
    $
    391,117
    
    
    
    5.23
    %
    
    
    46,972
    
    
    
    5.21
    %
    
    
    120,345
    
    
    
    4.69
    %
    
    
    565,092
    
    
    
    5.04
    %
    
    $
    1,123,526
    
    
    $
    1,133,367
    
    
    
    5.07
    %
 14




---



##### Table of Contents



Sources of Funds
 General.
 Deposits.
  At December 31,2007
    
    
    2006Balance
    
    
    Percent(1)
    
    
    Rate(2)
    
    
    Balance
    
    
    Percent(1)
    
    
    Rate(2)(Dollars in Thousands)Savings accounts
    
    $
    745,430
    
    
    
    13.4
    %
    
    
    1.20
    %
    
    $
    807,873
    
    
    
    15.1
    %
    
    
    1.44
    %Checking accounts
    
    
    1,079,093
    
    
    
    19.5
    %
    
    
    0.85
    %
    
    
    994,783
    
    
    
    18.5
    %
    
    
    1.05
    %Money market accounts
    
    
    681,115
    
    
    
    12.3
    %
    
    
    3.63
    %
    
    
    594,472
    
    
    
    11.1
    %
    
    
    3.62
    %Certificates of depositMaturing within 1 year
    
    
    2,541,053
    
    
    
    45.9
    %
    
    
    4.70
    %
    
    
    2,024,850
    
    
    
    37.7
    %
    
    
    4.47
    %Maturing 1 to 3 years
    
    
    379,183
    
    
    
    6.8
    %
    
    
    4.31
    %
    
    
    801,156
    
    
    
    14.9
    %
    
    
    4.50
    %Maturing more than 3
years
    
    
    116,460
    
    
    
    2.1
    %
    
    
    4.62
    %
    
    
    143,616
    
    
    
    2.7
    %
    
    
    4.56
    %Total certificates
    
    $
    3,036,696
    
    
    
    54.8
    %
    
    
    4.65
    %
    
    
    2,969,622
    
    
    
    55.3
    %
    
    
    4.48
    %Total deposits
    
    $
    5,542,334
    
    
    
    100.0
    %
    
    
    3.29
    %
    
    $
    5,366,750
    
    
    
    100.0
    %
    
    
    3.26
    %
 
 (1)
    
    Represents percentage of total deposits.(2)
    
    Represents weighted average nominal rate at fiscal year end. At December 31,
    
    
    At June 30,2005
    
    
    2005Balance
    
    
    Percent(1)
    
    
    Rate(2)
    
    
    Balance
    
    
    Percent(1)
    
    
    Rate(2)(Dollars in Thousands)Savings accounts
    
    $
    935,564
    
    
    
    17.9
    %
    
    
    1.41
    %
    
    $
    1,049,606
    
    
    
    20.2
    %
    
    
    1.40
    %Checking accounts
    
    
    957,662
    
    
    
    18.3
    %
    
    
    0.79
    %
    
    
    944,168
    
    
    
    18.2
    %
    
    
    0.69
    %Money market accounts
    
    
    596,352
    
    
    
    11.4
    %
    
    
    2.62
    %
    
    
    631,685
    
    
    
    12.2
    %
    
    
    2.05
    %Certificates of depositMaturing within 1 year
    
    
    1,506,235
    
    
    
    28.8
    %
    
    
    3.51
    %
    
    
    1,160,817
    
    
    
    22.4
    %
    
    
    2.94
    %Maturing 1 to 3 years
    
    
    1,066,160
    
    
    
    20.4
    %
    
    
    3.99
    %
    
    
    1,188,683
    
    
    
    22.9
    %
    
    
    3.79
    %Maturing more than 3
years
    
    
    166,506
    
    
    
    3.2
    %
    
    
    4.23
    %
    
    
    212,987
    
    
    
    4.1
    %
    
    
    4.14
    %Total certificates
    
    $
    2,738,901
    
    
    
    52.4
    %
    
    
    3.74
    %
    
    
    2,562,487
    
    
    
    49.4
    %
    
    
    3.44
    %Total deposits
    
    $
    5,228,479
    
    
    
    100.0
    %
    
    
    2.64
    %
    
    $
    5,187,946
    
    
    
    100.0
    %
    
    
    2.33
    %
 
 (1)
    
    Represents percentage of total deposits.(2)
    
    Represents weighted average nominal rate at fiscal year end. 15




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##### Table of Contents



Large Certificates of Deposit Maturities.
 Certificates ofMaturity Period
    
    Deposits(In Thousands)Three months or less
    
    $
    170,004Three through six months
    
    
    192,503Six through twelve months
    
    
    207,436Over twelve months
    
    
    111,752Total
    
    $
    681,695
 Borrowings
   During the SixMonths Ended
    
    During the YearDuring the Years Ended December 31,
    
    December 31,
    
    Ended June 30,2007
    
    2006
    
    2005
    
    2005(Dollars in Thousands)FHLB-Pittsburgh borrowings:Average balance outstanding
    
    $
    305,597
    
    
    
    352,596
    
    
    
    379,781
    
    
    
    406,057Maximum outstanding at end of any month during period
    
    $
    332,160
    
    
    
    377,592
    
    
    
    399,665
    
    
    
    412,915Balance outstanding at end of period
    
    $
    257,025
    
    
    
    332,196
    
    
    
    377,629
    
    
    
    377,846Weighted average interest rate during period
    
    
    4.59
    %
    
    
    4.62
    %
    
    
    4.57
    %
    
    
    4.64
    %Weighted average interest rate at end of period
    
    
    4.64
    %
    
    
    4.58
    %
    
    
    4.59
    %
    
    
    4.71
    %Reverse repurchase agreements:Average balance outstanding
    
    $
    70,875
    
    
    
    44,860
    
    
    
    28,416
    
    
    
    26,889Maximum outstanding at end of any month during period
    
    $
    83,432
    
    
    
    55,705
    
    
    
    34,025
    
    
    
    33,670Balance outstanding at end of period
    
    $
    77,452
    
    
    
    55,705
    
    
    
    34,025
    
    
    
    26,579Weighted average interest rate during period
    
    
    4.01
    %
    
    
    4.03
    %
    
    
    2.77
    %
    
    
    1.63
    %Weighted average interest rate at end of period
    
    
    3.25
    %
    
    
    4.25
    %
    
    
    3.14
    %
    
    
    2.25
    %Other borrowings:Average balance outstanding
    
    $
    4,790
    
    
    
    5,333
    
    
    
    5,749
    
    
    
    6,182Maximum outstanding at end of any month during period
    
    $
    4,923
    
    
    
    5,660
    
    
    
    5,928
    
    
    
    6,300Balance outstanding at end of period
    
    $
    4,638
    
    
    
    4,913
    
    
    
    5,702
    
    
    
    5,919Weighted average interest rate during period
    
    
    4.99
    %
    
    
    4.99
    %
    
    
    4.97
    %
    
    
    4.99
    %Weighted average interest rate at end of period
    
    
    4.99
    %
    
    
    4.99
    %
    
    
    4.99
    %
    
    
    4.99
    %Total borrowings:Average balance outstanding
    
    $
    381,262
    
    
    
    402,789
    
    
    
    413,946
    
    
    
    439,847Maximum outstanding at end of any month during period
    
    $
    408,596
    
    
    
    424,766
    
    
    
    432,223
    
    
    
    452,737Balance outstanding at end of period
    
    $
    339,115
    
    
    
    392,814
    
    
    
    417,356
    
    
    
    410,344Weighted average interest rate during period
    
    
    4.52
    %
    
    
    4.59
    %
    
    
    4.53
    %
    
    
    4.52
    %Weighted average interest rate at end of period
    
    
    4.33
    %
    
    
    4.54
    %
    
    
    4.48
    %
    
    
    4.55
    %
 16




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##### Table of Contents



Competition
   Subsidiary Activities
        17




---



##### Table of Contents



Personnel
  REGULATION
 General
   Pennsylvania Savings Bank Law
   18




---



##### Table of Contents



Insurance of Deposit Accounts.
     Capital Requirements
   Loans-to-One Borrower Limitation
  19




---



##### Table of Contents



Prompt Corrective Action
  Activities and Investments of Insured State-Chartered Banks
  The USA PATRIOT Act
  Holding Company Regulation
 Generally.
 20




---



##### Table of Contents



Permitted Activities.
  Qualified Thrift Lender Test.
 Waivers of Dividends by the Mutual Holding Company.
 Conversion of the Mutual Holding Company to Stock Form.
 21




---



##### Table of Contents



Federal Securities Laws
  Sarbanes-Oxley Act of 2002
    Regulatory Enforcement Authority
  Dividends
   22




---



##### Table of Contents



FEDERAL AND STATE TAXATION
 Federal Taxation.
   State Taxation.
   
 ITEM 1A. RISK FACTORS
  Our Stock Value May be Negatively Affected by our Mutual Holding Company Structure, which May
Impede Takeovers.
 Changes in Interest Rates Could Adversely Affect the Companys Results of Operations and
Financial Condition.
  23




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##### Table of Contents



If the Allowance for Credit Losses is Not Sufficient to Cover Actual Loan Losses, the
Companys Earnings Could Decrease.
   The Concentration of Loans in the Companys Primary Market Area May Increase Risk.
 Strong Competition May Limit Growth and Profitability.
 The Company Operates in a Highly Regulated Environment and May Be Adversely Affected by
Changes in Laws and Regulations.
 24




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##### Table of Contents



ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  25




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##### Table of Contents



PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
  Year Ended
    
    
    
    
    
    
    
    
    
    Cash DividendsDecember 31, 2007
    
    High
    
    Low
    
    DeclaredFirst quarter
    
    $
    28.31
    
    
    
    25.26
    
    
    $
    0.20Second quarter
    
    
    28.99
    
    
    
    26.08
    
    
    
    0.20Third quarter
    
    
    29.75
    
    
    
    25.51
    
    
    
    0.22Fourth quarter
    
    
    30.03
    
    
    
    25.76
    
    
    
    0.22
 Twelve Months Ended
    
    
    
    
    
    
    
    
    
    Cash DividendsDecember 31, 2006
    
    High
    
    Low
    
    DeclaredFirst quarter
    
    $
    24.86
    
    
    
    21.00
    
    
    $
    0.16Second quarter
    
    
    26.52
    
    
    
    18.59
    
    
    
    0.18Third quarter
    
    
    27.25
    
    
    
    23.25
    
    
    
    0.20Fourth quarter
    
    
    29.73
    
    
    
    24.85
    
    
    
    0.20
     ISSUER PURCHASES OF EQUITY SECURITES
 (c) Total Number ofShares
    
    (d) Maximum Number of(a) Total Number
    
    (b) Average
    
    Purchased as Part of
    
    Shares that May Yetof Shares
    
    Price Paid per
    
    Publicly Announced
    
    Be Purchased Under thePeriod
    
    Purchased
    
    Share
    
    Plans or Programs (1)
    
    Plans or Programs (1)October 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    520,200November 2007
    
    
    114,600
    
    
    $
    26.98
    
    
    
    114,600
    
    
    
    405,600December 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    405,600Total
    
    
    114,600
    
    
    $
    26.98
    
    
    
    114,600
 
 (1)
    
    The Companys Board of Directors approved a repurchase program for up to 5% of publicly
traded common stock, or 1,000,000 shares. The current program has no expiration date. 26




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##### Table of Contents



Stock Performance Graph
   6/02
    
    
    6/03
    
    
    6/04
    
    
    6/05
    
    
    12/05
    
    
    12/06
    
    
    12/07Northwest Bancorp
    
    
    100.00
    
    
    
    124.02
    
    
    
    180.77
    
    
    
    171.52
    
    
    
    173.86
    
    
    
    230.99
    
    
    
    230.43NASDAQ Composite
    
    
    100.00
    
    
    
    108.83
    
    
    
    138.29
    
    
    
    139.23
    
    
    
    150.66
    
    
    
    168.33
    
    
    
    185.78NASDAQ Bank
    
    
    100.00
    
    
    
    105.53
    
    
    
    123.61
    
    
    
    133.97
    
    
    
    135.63
    
    
    
    153.43
    
    
    
    120.74
 COMPARISON OF 66 MONTH CUMULATIVE TOTAL RETURN*
 
 
 *
    
    $100 invested on 6/30/02 in stock or index-including reinvestment of dividends. 27




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##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA
 Selected Financial and Other Data
  At December 31,
    
    At June 30,2007
    
    2006
    
    2005
    
    2005
    
    2004
    
    2003(In Thousands)Selected Consolidated Financial Data:Total assets
    
    $
    6,663,516
    
    
    
    6,527,815
    
    
    
    6,447,307
    
    
    
    6,330,482
    
    
    
    6,343,248
    
    
    
    5,681,695Investment securities held-to-maturity
    
    
    
    
    
    
    465,312
    
    
    
    444,407
    
    
    
    467,303
    
    
    
    209,241
    
    
    
    130,111Investment securities available-for-sale
    
    
    601,620
    
    
    
    388,546
    
    
    
    289,871
    
    
    
    290,702
    
    
    
    444,676
    
    
    
    342,456Mortgage-backed securities held-to-maturity
    
    
    
    
    
    
    251,655
    
    
    
    189,851
    
    
    
    235,676
    
    
    
    392,301
    
    
    
    366,706Mortgage-backed securities available-for-sale
    
    
    531,747
    
    
    
    378,968
    
    
    
    323,965
    
    
    
    384,481
    
    
    
    411,003
    
    
    
    561,628Loans receivable net:Real estate
    
    
    3,180,515
    
    
    
    3,039,507
    
    
    
    3,320,303
    
    
    
    3,150,668
    
    
    
    2,995,110
    
    
    
    2,599,324Consumer
    
    
    1,253,933
    
    
    
    1,140,842
    
    
    
    1,146,939
    
    
    
    1,086,291
    
    
    
    913,089
    
    
    
    702,397Commercial
    
    
    361,174
    
    
    
    232,092
    
    
    
    155,027
    
    
    
    139,925
    
    
    
    145,742
    
    
    
    128,153Total loans receivable, net
    
    $
    4,795,622
    
    
    
    4,412,441
    
    
    
    4,622,269
    
    
    
    4,376,884
    
    
    
    4,053,941
    
    
    
    3,429,874Deposits
    
    
    5,542,334
    
    
    
    5,366,750
    
    
    
    5,228,479
    
    
    
    5,187,946
    
    
    
    5,191,621
    
    
    
    4,678,499Advances from FHLB and other borrowed funds
    
    
    339,115
    
    
    
    392,814
    
    
    
    417,356
    
    
    
    410,344
    
    
    
    449,147
    
    
    
    465,750Shareholders equity
    
    $
    612,878
    
    
    
    604,561
    
    
    
    585,658
    
    
    
    582,190
    
    
    
    550,472
    
    
    
    395,074
 Six MonthsEndedYears Ended December 31,
    
    
    December 31,
    
    
    Years Ended June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005
    
    
    2004
    
    
    2003(In Thousands)Selected Consolidated Operating Data:Total interest income
    
    $
    396,031
    
    
    
    368,573
    
    
    
    170,449
    
    
    
    321,824
    
    
    
    300,230
    
    
    
    282,524Total interest expense
    
    
    211,015
    
    
    
    191,109
    
    
    
    79,414
    
    
    
    138,047
    
    
    
    134,466
    
    
    
    142,014Net interest income
    
    
    185,016
    
    
    
    177,464
    
    
    
    91,035
    
    
    
    183,777
    
    
    
    165,764
    
    
    
    140,510Provision for loan losses
    
    
    8,743
    
    
    
    8,480
    
    
    
    4,722
    
    
    
    9,566
    
    
    
    6,860
    
    
    
    8,445Net interest income after provision for
loan losses
    
    
    176,273
    
    
    
    168,984
    
    
    
    86,313
    
    
    
    174,211
    
    
    
    158,904
    
    
    
    132,065Noninterest income
    
    
    43,022
    
    
    
    46,026
    
    
    
    19,851
    
    
    
    32,004
    
    
    
    31,862
    
    
    
    27,028Noninterest expense
    
    
    152,742
    
    
    
    143,682
    
    
    
    66,317
    
    
    
    128,659
    
    
    
    128,805
    
    
    
    116,460Income before income tax expense
    
    
    66,553
    
    
    
    71,328
    
    
    
    39,847
    
    
    
    77,556
    
    
    
    61,961
    
    
    
    42,633Income tax expense
    
    
    17,456
    
    
    
    19,792
    
    
    
    10,998
    
    
    
    22,741
    
    
    
    19,829
    
    
    
    16,947Net income
    
    $
    49,097
    
    
    
    51,536
    
    
    
    28,849
    
    
    
    54,815
    
    
    
    42,132
    
    
    
    25,686Earnings per share:Basic
    
    $
    1.00
    
    
    
    1.03
    
    
    
    0.57
    
    
    
    1.10
    
    
    
    0.88
    
    
    
    0.54Diluted
    
    $
    0.99
    
    
    
    1.03
    
    
    
    0.56
    
    
    
    1.09
    
    
    
    0.87
    
    
    
    0.53
 28




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##### Table of Contents



At or forthe SixMonthsEndedAt or for the Year Ended December 31,
    
    December 31,
    
    At or for the Year Ended June 30,2007
    
    2006
    
    2005*
    
    2005
    
    2004
    
    2003Key Financial Ratios and Other Data:Return on average assets (net income
divided by average total assets)
    
    
    0.73
    %
    
    
    0.79
    %
    
    
    0.91
    %
    
    
    0.86
    %
    
    
    0.68
    %
    
    
    0.51
    %Return on average equity (net income
divided by average equity)
    
    
    8.18
    %
    
    
    8.60
    %
    
    
    9.81
    %
    
    
    9.74
    %
    
    
    8.17
    %
    
    
    7.15
    %Average capital to average assets
    
    
    8.96
    %
    
    
    9.19
    %
    
    
    9.23
    %
    
    
    8.87
    %
    
    
    8.27
    %
    
    
    7.07
    %Capital to total assets
    
    
    9.20
    %
    
    
    9.26
    %
    
    
    9.04
    %
    
    
    9.20
    %
    
    
    8.68
    %
    
    
    6.95
    %Net interest rate spread (average yield on
interest-earning assets less average cost of
interest-bearing liabilities)
    
    
    2.74
    %
    
    
    2.77
    %
    
    
    2.99
    %
    
    
    3.07
    %
    
    
    2.83
    %
    
    
    2.85
    %Net interest margin (net interest income as a
percentage of average interest-earning
assets)
    
    
    3.10
    %
    
    
    3.06
    %
    
    
    3.21
    %
    
    
    3.24
    %
    
    
    2.98
    %
    
    
    3.01
    %Noninterest expense to average assets
    
    
    2.28
    %
    
    
    2.20
    %
    
    
    2.08
    %
    
    
    2.03
    %
    
    
    2.06
    %
    
    
    2.29
    %Net interest income to noninterest expense
    
    
    1.21
    x
    
    
    1.24
    x
    
    
    1.37
    x
    
    
    1.43
    x
    
    
    1.29
    x
    
    
    1.21
    xDividend payout ratio
    
    
    84.85
    %
    
    
    67.96
    %
    
    
    53.57
    %
    
    
    44.04
    %
    
    
    45.98
    %
    
    
    60.38
    %Nonperforming loans to net loans receivable
    
    
    1.03
    %
    
    
    0.92
    %
    
    
    0.93
    %
    
    
    0.76
    %
    
    
    0.80
    %
    
    
    0.96
    %Nonperforming assets to total assets
    
    
    0.88
    %
    
    
    0.72
    %
    
    
    0.74
    %
    
    
    0.64
    %
    
    
    0.57
    %
    
    
    0.68
    %Allowance for loan losses to nonperforming
loans
    
    
    84.22
    %
    
    
    92.92
    %
    
    
    77.67
    %
    
    
    93.91
    %
    
    
    94.35
    %
    
    
    82.93
    %Allowance for loan losses to net loans
receivable
    
    
    0.87
    %
    
    
    0.85
    %
    
    
    0.72
    %
    
    
    0.72
    %
    
    
    0.76
    %
    
    
    0.79
    %Average interest-earning assets to average
interest-bearing liabilities
    
    
    1.10
    x
    
    
    1.09
    x

    
    
    1.09
    x

    
    
    1.08
    x

    
    
    1.06
    x

    
    
    1.06
    xNumber of:Full-service offices
    
    
    166
    
    
    
    160
    
    
    
    153
    
    
    
    153
    
    
    
    152
    
    
    
    141Consumer finance offices
    
    
    51
    
    
    
    51
    
    
    
    50
    
    
    
    49
    
    
    
    49
    
    
    
    47
 
 *
    
    Ratios are annualized where appropriate 
 ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Forward-Looking Statements
  Executive Summary
   29




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##### Table of Contents



Critical Accounting Policies
  Allowance for Loan Losses. Accounting by Creditors for Impairment of a Loan
 Goodwill.
 30




---



##### Table of Contents



Deferred Income Taxes. Accounting for
Income Taxes
 Other Intangible Assets.
 Pension Benefits.
  Financial Condition
 Cash and equivalents.
 Investment securities
 31




---



##### Table of Contents



Mortgage-backed securities
 Loans receivable
 Deposits
 Shareholders equity
 Results of Operations  Year ended December 31, 2007 compared to year ended December 31,
2006
 Interest income
  32




---



##### Table of Contents



Interest expense
 Net interest income (including GAAP reconciliation)
 Provision for loan losses
 Noninterest income
 33




---



##### Table of Contents



Noninterest expense
 Income taxes
 Results of Operations  Year ended December 31, 2006 compared to twelve months ended December
31, 2005
 Interest income
    34




---



##### Table of Contents



Interest expense
 Net interest income (including GAAP reconciliation).
 Provision for Loan Losses
 Noninterest Income.
 Noninterest Expense.
 Income Taxes
 35




---



##### Table of Contents



Results of Operations  Six months ended December 31, 2005 compared to six months ended
December 31, 2004
 Interest income
    Interest expense
 Net interest income (including GAAP reconciliation)
 Provision for Loan Losses
 36




---



##### Table of Contents



Noninterest income
 Noninterest expense
 Income taxes
 Results of Operations  Fiscal year ended June 30, 2005 compared to fiscal year ended June 30,
2004
 Interest income
    Interest expense
 37




---



##### Table of Contents



Net interest income (including GAAP reconciliation)
 Provision for Loan Losses
 Noninterest income
 Noninterest expense
 Income taxes
 38




---



##### Table of Contents



Average Balance Sheets
 Years Ended December 31,2007
    
    
    2006
    
    
    2005Average
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    

    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost
    
    
    Balance
    
    
    Interest
    
    
    Cost
    
    
    Balance
    
    
    Interest
    
    
    Cost(Dollars in Thousands)Interest-earning assets:Loans receivable (1)(2)(3)
    
    $
    4,660,693
    
    
    
    317,321
    
    
    
    6.78
    %
    
    $
    4,395,274
    
    
    $
    288,037
    
    
    
    6.59
    %
    
    $
    4,421,814
    
    
    $
    275,518
    
    
    
    6.23
    %Mortgage-backed securities (5)
    
    
    584,053
    
    
    
    29,385
    
    
    
    5.03
    %
    
    
    660,986
    
    
    
    31,523
    
    
    
    4.77
    %
    
    
    627,979
    
    
    
    24,147
    
    
    
    3.85
    %Investment securities (4)(5)(6)
    
    
    820,337
    
    
    
    47,990
    
    
    
    5.85
    %
    
    
    861,411
    
    
    
    49,450
    
    
    
    5.74
    %
    
    
    739,727
    
    
    
    39,123
    
    
    
    5.29
    %FHLB stock
    
    
    33,348
    
    
    
    2,017
    
    
    
    6.05
    %
    
    
    34,292
    
    
    
    1,692
    
    
    
    4.93
    %
    
    
    33,702
    
    
    
    1,032
    
    
    
    3.06
    %Interest-earning deposits:
    
    
    150,665
    
    
    
    7,867
    
    
    
    5.15
    %
    
    
    133,218
    
    
    
    6,584
    
    
    
    4.87
    %
    
    
    88,659
    
    
    
    2,805
    
    
    
    3.12
    %Total interest-earning assets:
    
    $
    6,249,096
    
    
    
    404,580
    
    
    
    6.45
    %
    
    
    6,085,181
    
    
    
    377,286
    
    
    
    6.20
    %
    
    
    5,911,881
    
    
    
    342,625
    
    
    
    5.80
    %Noninterest-earning assets (7)
    
    
    453,922
    
    
    
    
    
    
    
    
    
    
    
    437,607
    
    
    
    
    
    
    
    
    
    
    
    446,194Total assets
    
    $
    6,703,018
    
    
    
    
    
    
    
    
    
    
    $
    6,522,788
    
    
    
    
    
    
    
    
    
    
    $
    6,358,075Interest-bearing liabilities:Savings accounts
    
    $
    793,172
    
    
    
    10,909
    
    
    
    1.38
    %
    
    $
    882,974
    
    
    $
    12,619
    
    
    
    1.43
    %
    
    $
    1,030,150
    
    
    $
    14,213
    
    
    
    1.38
    %Interest-bearing demand accounts
    
    
    698,585
    
    
    
    11,038
    
    
    
    1.58
    %
    
    
    663,046
    
    
    
    9,396
    
    
    
    1.42
    %
    
    
    672,852
    
    
    
    6,845
    
    
    
    1.02
    %Money market demand accounts
    
    
    637,983
    
    
    
    23,551
    
    
    
    3.69
    %
    
    
    574,820
    
    
    
    19,446
    
    
    
    3.38
    %
    
    
    645,273
    
    
    
    14,204
    
    
    
    2.20
    %Certificate accounts
    
    
    3,076,693
    
    
    
    141,042
    
    
    
    4.58
    %
    
    
    2,850,548
    
    
    
    115,524
    
    
    
    4.05
    %
    
    
    2,572,588
    
    
    
    86,841
    
    
    
    3.38
    %Borrowed funds (8)
    
    
    381,262
    
    
    
    17,225
    
    
    
    4.52
    %
    
    
    402,789
    
    
    
    18,508
    
    
    
    4.59
    %
    
    
    423,392
    
    
    
    19,241
    
    
    
    4.54
    %Debentures
    
    
    105,850
    
    
    
    7,250
    
    
    
    6.76
    %
    
    
    203,413
    
    
    
    15,616
    
    
    
    7.57
    %
    
    
    107,605
    
    
    
    8,737
    
    
    
    8.01
    %Total interest-bearing
liabilities
    
    $
    5,693,545
    
    
    
    211,015
    
    
    
    3.71
    %
    
    
    5,577,590
    
    
    
    191,109
    
    
    
    3.43
    %
    
    
    5,451,860
    
    
    
    150,081
    
    
    
    2.75
    %Noninterest-bearing liabilities
    
    
    409,096
    
    
    
    
    
    
    
    
    
    
    
    346,016
    
    
    
    
    
    
    
    
    
    
    
    327,357Total liabilities
    
    $
    6,102,641
    
    
    
    
    
    
    
    
    
    
    
    5,923,606
    
    
    
    
    
    
    
    
    
    
    
    5,779,217Shareholders equity
    
    
    600,377
    
    
    
    
    
    
    
    
    
    
    
    599,182
    
    
    
    
    
    
    
    
    
    
    
    578,858Total liabilities and equity
    
    $
    6,703,018
    
    
    
    
    
    
    
    
    
    
    $
    6,522,788
    
    
    
    
    
    
    
    
    
    
    $
    6,358,075Net interest income
    
    
    
    
    
    $
    193,565
    
    
    
    
    
    
    
    
    
    
    $
    186,177
    
    
    
    
    
    
    
    
    
    
    $
    192,544Net interest rate spread (9)
    
    
    
    
    
    
    
    
    
    
    2.74
    %
    
    
    
    
    
    
    
    
    
    
    2.77
    %
    
    
    
    
    
    
    
    
    
    
    3.05
    %Net interest-earning assets
    
    $
    555,551
    
    
    
    
    
    
    
    
    
    
    $
    507,591
    
    
    
    
    
    
    
    
    
    
    $
    460,021Net interest margin (10)
    
    
    
    
    
    
    
    
    
    
    3.10
    %
    
    
    
    
    
    
    
    
    
    
    3.06
    %
    
    
    
    
    
    
    
    
    
    
    3.26
    %Ratio of average interest-earning
assets to average interest-bearing
liabilities
    
    
    1.10
    x
    
    
    
    
    
    
    
    
    
    
    1.09
    x

    
    
    
    
    
    
    
    
    
    
    1.08
    x
 
 (1)
    
    Average gross loans receivable includes loans held as available-for-sale and loans placed on
nonaccrual status.(2)
    
    Interest income includes accretion/amortization of deferred loan fees/expenses, which were not
material.(3)
    
    Interest income on tax-free loans is presented on a taxable equivalent basis including
adjustments of $1,751, $1,721 and $1,519, respectively.(4)
    
    Interest income on tax-free investment securities is presented on a taxable equivalent basis
including adjustments of $6,798, $6,992 and $6,435, respectively.(5)
    
    Average balances do not include the effect of unrealized gains or losses on securities held as
available-for-sale.(6)
    
    Average balances include Fannie Mae and Freddie Mac stock.(7)
    
    Average balances include the effect of unrealized gains or losses on securities held as
available-for-sale.(8)
    
    Average balances include FHLB advances, securities sold under agreements to repurchase and
other borrowings.(9)
    
    Net interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing liabilities.(10)
    
    Net interest margin represents net interest income as a percentage of average interest-earning
assets. 39




---



##### Table of Contents



Six Months Ended December 31,2005
    
    
    2004Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost (11)
    
    
    Balance
    
    
    Interest
    
    
    Cost (11)(Dollars in Thousands)Interest-earning assets:Loans receivable (1)(2)(3)
    
    $
    4,532,523
    
    
    $
    141,983
    
    
    
    6.27
    %
    
    $
    4,157,376
    
    
    $
    128,623
    
    
    
    6.19
    %Mortgage-backed securities (5)
    
    
    568,879
    
    
    
    11,332
    
    
    
    3.98
    %
    
    
    772,434
    
    
    
    13,286
    
    
    
    3.44
    %Investment securities (4)(5)(6)
    
    
    731,612
    
    
    
    19,585
    
    
    
    5.35
    %
    
    
    632,350
    
    
    
    16,877
    
    
    
    5.34
    %FHLB stock
    
    
    34,467
    
    
    
    468
    
    
    
    2.72
    %
    
    
    38,073
    
    
    
    291
    
    
    
    1.53
    %Interest-earning deposits:
    
    
    56,594
    
    
    
    1,088
    
    
    
    3.84
    %
    
    
    324,120
    
    
    
    2,467
    
    
    
    1.52
    %Total interest-earning assets:
    
    $
    5,924,075
    
    
    
    174,456
    
    
    
    5.89
    %
    
    
    5,924,353
    
    
    
    161,544
    
    
    
    5.45
    %Noninterest-earning assets (7)
    
    
    488,639
    
    
    
    
    
    
    
    
    
    
    
    423,843Total assets
    
    $
    6,412,714
    
    
    
    
    
    
    
    
    
    
    $
    6,348,196Interest-bearing liabilities:Savings accounts
    
    $
    987,053
    
    
    $
    7,035
    
    
    
    1.41
    %
    
    $
    1,088,531
    
    
    $
    7,325
    
    
    
    1.35
    %Interest-bearing demand accounts
    
    
    672,092
    
    
    
    3,839
    
    
    
    1.13
    %
    
    
    665,356
    
    
    
    2,357
    
    
    
    0.71
    %Money market demand accounts
    
    
    610,655
    
    
    
    7,668
    
    
    
    2.49
    %
    
    
    832,161
    
    
    
    7,167
    
    
    
    1.72
    %Certificate accounts
    
    
    2,642,507
    
    
    
    46,807
    
    
    
    3.51
    %
    
    
    2,384,768
    
    
    
    36,477
    
    
    
    3.06
    %Borrowed funds (8)
    
    
    413,946
    
    
    
    9,443
    
    
    
    4.53
    %
    
    
    446,854
    
    
    
    10,092
    
    
    
    4.52
    %Debentures
    
    
    113,147
    
    
    
    4,622
    
    
    
    8.10
    %
    
    
    102,062
    
    
    
    3,964
    
    
    
    7.77
    %Total interest-bearing liabilities
    
    $
    5,439,400
    
    
    
    79,414
    
    
    
    2.90
    %
    
    
    5,519,732
    
    
    
    67,382
    
    
    
    2.44
    %Noninterest-bearing liabilities
    
    
    345,074
    
    
    
    
    
    
    
    
    
    
    
    272,046Total liabilities
    
    $
    5,784,474
    
    
    
    
    
    
    
    
    
    
    
    5,791,778Shareholders equity
    
    
    588,240
    
    
    
    
    
    
    
    
    
    
    
    556,418Total liabilities and equity
    
    $
    6,372,714
    
    
    
    
    
    
    
    
    
    
    $
    6,348,196Net interest income
    
    
    
    
    
    $
    95,042
    
    
    
    
    
    
    
    
    
    
    $
    94,162Net interest rate spread (9)
    
    
    
    
    
    
    
    
    
    
    2.99
    %
    
    
    
    
    
    
    
    
    
    
    3.01
    %Net interest-earning assets
    
    $
    484,675
    
    
    
    
    
    
    
    
    
    
    $
    404,621Net interest margin (10)
    
    
    
    
    
    
    
    
    
    
    3.21
    %
    
    
    
    
    
    
    
    
    
    
    3.18
    %Ratio of average interest-earning
assets to average interest-bearing
liabilities
    
    
    1.09x
    
    
    
    
    
    
    
    
    
    
    
    1.07x
 
 (1)
    
    Average gross loans receivable includes loans held as available-for-sale and loans placed on
nonaccrual status.(2)
    
    Interest income includes accretion/amortization of deferred loan fees/expenses, which were not
material.(3)
    
    Interest income on tax-free loans is presented on a taxable equivalent basis including
adjustments of $819 and $625, respectively.(4)
    
    Interest income on tax-free investment securities is presented on a taxable equivalent basis
including adjustments of $3,188 and $3,318, respectively.(5)
    
    Average balances do not include the effect of unrealized gains or losses on securities held as
available-for-sale.(6)
    
    Average balances include Fannie Mae and Freddie Mac stock.(7)
    
    Average balances include the effect of unrealized gains or losses on securities held as
available-for-sale.(8)
    
    Average balances include FHLB advances, securities sold under agreements to repurchase and
other borrowings.(9)
    
    Net interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing liabilities.(10)
    
    Net interest margin represents net interest income as a percentage of average interest-earning
assets.(11)
    
    Presented on an annualized basis. 40




---



##### Table of Contents



Years Ended June 30,2005
    
    
    2004Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost
    
    
    Balance
    
    
    Interest
    
    
    Cost(Dollars in Thousands)Interest-earning assets:Loans receivable (1)(2)(3)
    
    $
    4,234,241
    
    
    $
    262,158
    
    
    
    6.19
    %
    
    $
    3,846,261
    
    
    $
    244,926
    
    
    
    6.37
    %Mortgage-backed securities (5)
    
    
    729,757
    
    
    
    26,102
    
    
    
    3.58
    %
    
    
    883,914
    
    
    
    25,815
    
    
    
    2.92
    %Investment securities (4)(5)(6)
    
    
    690,096
    
    
    
    36,415
    
    
    
    5.28
    %
    
    
    662,687
    
    
    
    33,128
    
    
    
    5.00
    %FHLB stock
    
    
    35,504
    
    
    
    855
    
    
    
    2.41
    %
    
    
    38,381
    
    
    
    572
    
    
    
    1.49
    %Interest-earning deposits:
    
    
    222,422
    
    
    
    4,184
    
    
    
    1.88
    %
    
    
    391,352
    
    
    
    3,527
    
    
    
    0.90
    %Total interest-earning assets:
    
    $
    5,912,020
    
    
    
    329,714
    
    
    
    5.58
    %
    
    
    5,822,595
    
    
    
    307,968
    
    
    
    5.29
    %Noninterest-earning assets (7)
    
    
    433,796
    
    
    
    
    
    
    
    
    
    
    
    415,125Total assets
    
    $
    6,345,816
    
    
    
    
    
    
    
    
    
    
    $
    6,237,720Interest-bearing liabilities:Savings accounts
    
    $
    1,080,889
    
    
    $
    15,037
    
    
    
    1.39
    %
    
    $
    1,031,405
    
    
    $
    13,923
    
    
    
    1.35
    %Interest-bearing demand accounts
    
    
    669,485
    
    
    
    5,363
    
    
    
    0.80
    %
    
    
    683,626
    
    
    
    5,302
    
    
    
    0.78
    %Money market demand accounts
    
    
    756,026
    
    
    
    13,168
    
    
    
    1.74
    %
    
    
    876,157
    
    
    
    14,786
    
    
    
    1.69
    %Certificate accounts
    
    
    2,443,718
    
    
    
    76,511
    
    
    
    3.13
    %
    
    
    2,317,003
    
    
    
    72,317
    
    
    
    3.12
    %Borrowed funds (8)
    
    
    439,847
    
    
    
    19,889
    
    
    
    4.52
    %
    
    
    466,277
    
    
    
    20,482
    
    
    
    4.39
    %Debentures
    
    
    102,062
    
    
    
    8,079
    
    
    
    7.92
    %
    
    
    101,297
    
    
    
    7,656
    
    
    
    7.56
    %Total interest-bearing liabilities
    
    $
    5,492,027
    
    
    
    138,047
    
    
    
    2.51
    %
    
    
    5,475,765
    
    
    
    134,466
    
    
    
    2.46
    %Noninterest-bearing liabilities
    
    
    290,842
    
    
    
    
    
    
    
    
    
    
    
    246,105Total liabilities
    
    $
    5,782,869
    
    
    
    
    
    
    
    
    
    
    
    5,721,870Shareholders equity
    
    
    562,947
    
    
    
    
    
    
    
    
    
    
    
    515,850Total liabilities and equity
    
    $
    6,345,816
    
    
    
    
    
    
    
    
    
    
    $
    6,237,720Net interest income
    
    
    
    
    
    $
    191,667
    
    
    
    
    
    
    
    
    
    
    $
    173,502Net interest rate spread (9)
    
    
    
    
    
    
    
    
    
    
    3.07
    %
    
    
    
    
    
    
    
    
    
    
    2.83
    %Net interest-earning assets
    
    $
    419,993
    
    
    
    
    
    
    
    
    
    
    $
    346,830Net interest margin (10)
    
    
    
    
    
    
    
    
    
    
    3.24
    %
    
    
    
    
    
    
    
    
    
    
    2.98
    %Ratio of average interest-earning
assets to average interest-bearing
liabilities
    
    
    1.08x
    
    
    
    
    
    
    
    
    
    
    
    1.06x
 
 (1)
    
    Average gross loans receivable includes loans held as available-for-sale and loans placed on
nonaccrual status.(2)
    
    Interest income includes accretion/amortization of deferred loan fees/expenses, which were not
material.(3)
    
    Interest income on tax-free loans is presented on a taxable equivalent basis including
adjustments of $1,325 and $1,296, respectively.(4)
    
    Interest income on tax-free investments is presented on a taxable equivalent basis including
adjustments of $5,565 and $6,442, respectively.(5)
    
    Average balances do not include the effect of unrealized gains or losses on securities held as
available-for-sale.(6)
    
    Average balances include Fannie Mae and Freddie Mac stock.(7)
    
    Average balances include the effect of unrealized gains or losses on securities held as
available-for-sale.(8)
    
    Average balances include FHLB advances, securities sold under agreements to repurchase and
other borrowings.(9)
    
    Net interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing liabilities.(10)
    
    Net interest margin represents net interest income as a percentage of average interest-earning
assets. 41




---



##### Table of Contents



Rate/Volume Analysis.
 Years Ended December 31,2007 vs. 2006
    
    
    2006 vs. 2005Increase/(Decrease) Due to
    
    
    Total Increase
    
    
    Increase/(Decrease) Due to
    
    
    Total IncreaseRate
    
    
    Volume
    
    
    (Decrease)
    
    
    Rate
    
    
    Volume
    
    
    (Decrease)(In Thousands)Interest-earning assets:Loans receivable
    
    $
    10,072
    
    
    
    19,212
    
    
    $
    29,284
    
    
    $
    14,258
    
    
    
    (1,739
    )
    
    $
    12,519Mortgage-backed securities
    
    
    1,733
    
    
    
    (3,871
    )
    
    
    (2,138
    )
    
    
    5,955
    
    
    
    1,421
    
    
    
    7,376Investment securities
    
    
    943
    
    
    
    (2,403
    )
    
    
    (1,460
    )
    
    
    3,617
    
    
    
    6,710
    
    
    
    10,327FHLB stock
    
    
    382
    
    
    
    (57
    )
    
    
    325
    
    
    
    637
    
    
    
    23
    
    
    
    660Interest-earning deposits:
    
    
    396
    
    
    
    887
    
    
    
    1,283
    
    
    
    1,973
    
    
    
    1,806
    
    
    
    3,779Total interest-earnings assets
    
    $
    13,526
    
    
    
    13,768
    
    
    $
    27,294
    
    
    $
    26,440
    
    
    
    8,221
    
    
    $
    34,661Interest-bearing liabilities:Savings accounts
    
    
    (451
    )
    
    
    (1,259
    )
    
    
    (1,710
    )
    
    
    510
    
    
    
    (2,104
    )
    
    
    (1,594
    )Interest-bearing demand
accounts
    
    
    1,109
    
    
    
    533
    
    
    
    1,642
    
    
    
    2,690
    
    
    
    (139
    )
    
    
    2,551Money market demand
accounts
    
    
    1,870
    
    
    
    2,235
    
    
    
    4,105
    
    
    
    7,626
    
    
    
    (2,384
    )
    
    
    5,242Certificate accounts
    
    
    15,752
    
    
    
    9,766
    
    
    
    25,518
    
    
    
    18,359
    
    
    
    10,324
    
    
    
    28,683Borrowed funds
    
    
    (302
    )
    
    
    (981
    )
    
    
    (1,283
    )
    
    
    213
    
    
    
    (946
    )
    
    
    (733
    )Debentures
    
    
    (1,280
    )
    
    
    (7,086
    )
    
    
    (8,366
    )
    
    
    (901
    )
    
    
    7,780
    
    
    
    6,879Total interest-bearing
liabilities
    
    $
    16,698
    
    
    
    3,208
    
    
    $
    19,906
    
    
    $
    28,497
    
    
    
    12,531
    
    
    $
    41,028Net change in net interest
income
    
    $
    (3,172
    )
    
    
    10,560
    
    
    $
    7,388
    
    
    $
    (2,057
    )
    
    
    (4,310
    )
    
    $
    (6,367
    )
 Six Months Ended December 31,
    
    
    Years Ended June 30,2005 vs. 2004
    
    
    2005 vs. 2004Increase/(Decrease) Due to
    
    
    Total Increase
    
    
    Increase/(Decrease) Due to
    
    
    Total IncreaseRate
    
    
    Volume
    
    
    (Decrease)
    
    
    Rate
    
    
    Volume
    
    
    (Decrease)Interest-earning assets:Loans receivable
    
    $
    1,680
    
    
    
    11,680
    
    
    $
    13,360
    
    
    $
    (7,474
    )
    
    
    24,706
    
    
    $
    17,232Mortgage-backed securities
    
    
    2,101
    
    
    
    (4,055
    )
    
    
    (1,954
    )
    
    
    5,801
    
    
    
    (5,514
    )
    
    
    287Investment securities
    
    
    55
    
    
    
    2,653
    
    
    
    2,708
    
    
    
    1,900
    
    
    
    1,387
    
    
    
    3,287FHLB stock
    
    
    226
    
    
    
    (49
    )
    
    
    177
    
    
    
    352
    
    
    
    (69
    )
    
    
    283Interest-earning deposits:
    
    
    3,764
    
    
    
    (5,143
    )
    
    
    (1,379
    )
    
    
    3,834
    
    
    
    (3,177
    )
    
    
    657Total interest-earnings assets
    
    $
    7,826
    
    
    
    5,086
    
    
    $
    12,912
    
    
    $
    4,413
    
    
    
    17,333
    
    
    $
    21,746Interest-bearing liabilities:Savings accounts
    
    
    433
    
    
    
    (723
    )
    
    
    (290
    )
    
    
    436
    
    
    
    678
    
    
    
    1,114Interest-bearing demand
accounts
    
    
    1,451
    
    
    
    31
    
    
    
    1,482
    
    
    
    174
    
    
    
    (113
    )
    
    
    61Money market demand accounts
    
    
    3,283
    
    
    
    (2,782
    )
    
    
    501
    
    
    
    474
    
    
    
    (2,092
    )
    
    
    (1,618
    )Certificate accounts
    
    
    6,077
    
    
    
    4,253
    
    
    
    10,330
    
    
    
    233
    
    
    
    3,961
    
    
    
    4,194Borrowed funds
    
    
    102
    
    
    
    (751
    )
    
    
    (649
    )
    
    
    602
    
    
    
    (1,195
    )
    
    
    (593
    )Debentures
    
    
    216
    
    
    
    442
    
    
    
    658
    
    
    
    364
    
    
    
    59
    
    
    
    423Total interest-bearing
liabilities
    
    $
    11,562
    
    
    
    470
    
    
    $
    12,032
    
    
    $
    2,283
    
    
    
    1,298
    
    
    $
    3,581Net change in net interest
income
    
    $
    (3,736
    )
    
    
    4,616
    
    
    $
    880
    
    
    $
    2,130
    
    
    
    16,035
    
    
    $
    18,165
 42




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##### Table of Contents



Regulatory Capital Requirements
     December 31, 2007
    
    
    December 31, 2006(Dollars in Thousands)Total shareholders equity (GAAP capital)
    
    $
    714,160
    
    
    
    694,160Less: accumulated other comprehensive income
    
    
    (931
    )
    
    
    11,627Less: nonqualifying intangible assets
    
    
    (183,396
    )
    
    
    (166,252
    )Leverage capital
    
    $
    529,833
    
    
    
    539,535Plus: Tier 2 capital (1)
    
    
    41,952
    
    
    
    40,025Total risk-based capital
    
    $
    571,785
    
    
    
    579,560Average total assets for leverage ratio
    
    $
    6,454,343
    
    
    
    6,385,392Net risk-weighted assets including off-balance sheet items
    
    $
    4,053,803
    
    
    
    3,790,927Leverage capital ratio
    
    
    8.21
    %
    
    
    8.45
    %Minimum requirement (2)
    
    3.00% to 5.00
    %
    
    3.00% to 5.00
    %Risk-based capital ratio
    
    
    14.10
    %
    
    
    15.29
    %Minimum requirement
    
    
    8.00
    %
    
    
    8.00
    %
 
 (1)
    
    Tier 2 capital consists of the allowance for loan losses, which is limited to 1.25% of total
risk-weighted assets as detailed under regulations of the FDIC, and 45% of pre-tax net
unrealized gains on securities available-for-sale. 43




---



##### Table of Contents



(2)
    
    The FDIC has indicated that the most highly rated institutions which meet certain criteria
will be required to maintain a ratio of 3.00%, and all other institutions will be required to
maintain an additional cushion of 100 to 200 basis points.  Liquidity and Capital Resources.
        44




---



##### Table of Contents



Contractual Obligations.
 Payments dueLess than one
    
    
    One year to less than
    
    
    Three years to less
    
    
    Five years oryear
    
    
    three years
    
    
    than five years
    
    
    greater
    
    
    Total(In Thousands)Contractual
obligations at December 31, 2007Long-term debt (1)
    
    $
    166,121
    
    
    
    72,155
    
    
    
    100,000
    
    
    
    839
    
    
    $
    339,115Junior subordinated debentures (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108,320
    
    
    
    108,320Operating leases (3)
    
    
    3,772
    
    
    
    6,432
    
    
    
    4,382
    
    
    
    10,444
    
    
    
    25,030Total
    
    $
    169,893
    
    
    
    78,587
    
    
    
    104,382
    
    
    
    119,603
    
    
    $
    472,465
 
 (1)
    
    See Note 11, Borrowed funds, of the Notes to Consolidated Financial Statements
for additional information.(2)
    
    See Note 22, Junior Subordinated Debentures/Trust-Preferred Securities, of the
Notes to Consolidated Financial Statements for additional information.(3)
    
    See Note 8, Premises and Equipment, of the Notes to Consolidated Financial
Statements for additional information. Impact of Inflation and Changing Prices
 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Asset and Liability Management-Interest Rate Sensitivity Analysis.
 45




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##### Table of Contents



46




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##### Table of Contents



Amounts Maturing or RepricingWithin
    
    
    1-3
    
    
    3-5
    
    
    5-10
    
    
    10-20
    
    
    Over 201 Year
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Total(Dollars in Thousands)Rate-sensitive assets:Interest-earning deposits
    
    $
    154,711
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    154,711Mortgage-backed securities:Fixed-rate
    
    
    26,609
    
    
    
    43,784
    
    
    
    26,924
    
    
    
    48,468
    
    
    
    
    
    
    
    
    
    
    
    145,785Variable-rate
    
    
    385,962
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    385,962Investment securities
    
    
    238,790
    
    
    
    91,715
    
    
    
    40,727
    
    
    
    230,388
    
    
    
    
    
    
    
    
    
    
    
    601,620Real estate loans:Adjustable-rate
    
    
    84,050
    
    
    
    2,517
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86,567Fixed-rate
    
    
    261,123
    
    
    
    462,191
    
    
    
    411,333
    
    
    
    734,125
    
    
    
    445,247
    
    
    
    
    
    
    
    2,314,019Home equity lines of credit
    
    
    144,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    144,500Education loans
    
    
    14,551
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,551Other consumer loans
    
    
    389,462
    
    
    
    445,542
    
    
    
    211,881
    
    
    
    54,670
    
    
    
    
    
    
    
    
    
    
    
    1,101,555Commercial loans
    
    
    696,692
    
    
    
    367,045
    
    
    
    114,182
    
    
    
    2,474
    
    
    
    
    
    
    
    
    
    
    
    1,180,393Total rate-sensitive assets
    
    
    2,396,450
    
    
    
    1,412,794
    
    
    
    805,047
    
    
    
    1,070,125
    
    
    
    445,247
    
    
    
    
    
    
    
    6,129,663Rate-sensitive liabilities:Fixed maturity deposits
    
    
    2,541,053
    
    
    
    379,183
    
    
    
    95,718
    
    
    
    20,590
    
    
    
    152
    
    
    
    
    
    
    
    3,036,696Money market deposit accounts
    
    
    147,000
    
    
    
    214,000
    
    
    
    107,000
    
    
    
    
    
    
    
    213,115
    
    
    
    
    
    
    
    681,115Savings accounts
    
    
    166,000
    
    
    
    332,000
    
    
    
    
    
    
    
    
    
    
    
    247,430
    
    
    
    
    
    
    
    745,430Checking accounts
    
    
    130,000
    
    
    
    260,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    689,093
    
    
    
    1,079,093FHLB advances
    
    
    84,031
    
    
    
    72,155
    
    
    
    100,000
    
    
    
    839
    
    
    
    
    
    
    
    
    
    
    
    257,025Other borrowings
    
    
    78,417
    
    
    
    1,983
    
    
    
    1,690
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    82,090Trust preferred securities
    
    
    108,320
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108,320Total rate-sensitive liabilities
    
    
    3,254,821
    
    
    
    1,259,321
    
    
    
    304,408
    
    
    
    21,429
    
    
    
    460,697
    
    
    
    689,093
    
    
    
    5,989,769Interest sensitivity gap per period
    
    $
    (858,371
    )
    
    
    153,473
    
    
    
    500,639
    
    
    
    1,048,696
    
    
    
    (15,450
    )
    
    
    (689,093
    )
    
    $
    139,894Cumulative interest sensitivity gap
    
    $
    (858,371
    )
    
    
    (704,898
    )
    
    
    (204,259
    )
    
    
    844,437
    
    
    
    828,987
    
    
    
    139,894
    
    
    $
    139,894Cumulative interest sensitivity gap as a
percentage of total assets
    
    
    (12.88
    )%
    
    
    (10.58
    )%
    
    
    (3.07
    )%
    
    
    12.67
    %
    
    
    12.44
    %
    
    
    2.10
    %
    
    
    2.10
    %Cumulative interest-earning
assets as a percent
of cumulative interest-bearing
liabilities
    
    
    73.63
    %
    
    
    84.38
    %
    
    
    95.76
    %
    
    
    117.45
    %
    
    
    115.64
    %
    
    
    102.34
    %
    
    
    102.34
    %
   47




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##### Table of Contents




    
    Net income simulation.Given a parallel shift of 2% in interest rates, the estimated
net income may not decrease by more than 20% within a one-year period.
    
    Market value of equity simulation.The market value of the Companys equity is the
net present value of the Companys assets and liabilities. Given a parallel shift of 2%
in interest rates, equity may not decrease by more than 35% of total shareholder
equity.
  Movements in interest rates fromDecember 31, 2007 ratesIncrease
    
    
    Decrease1%
    
    
    2%
    
    
    1%
    
    
    2%Simulated impact over the next 12 months
compared with December 31, 2007:Percentage increase/(decrease) in net income
    
    
    2.5
    %
    
    
    (9.3
    )%
    
    
    12.5
    %
    
    
    15.5
    %Increase/(decrease) in return on average equity
    
    
    0.5
    %
    
    
    (0.5
    )%
    
    
    1.4
    %
    
    
    1.6
    %Increase/(decrease) in diluted earnings per share
    
    $
    0.12
    
    
    
    ($0.01
    )
    
    $
    0.23
    
    
    $
    0.27Percentage increase/(decrease) in market value of equity
    
    
    (13.1
    )%
    
    
    (24.8
    )%
    
    
    3.6
    %
    
    
    10.9
    %
 48




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Managements Report on Internal Control Over Financial Reporting
  Internal control  Integrated Framework
  /s/ William J. WagnerWilliam J. Wagner
    
    /s/ William W. Harvey, Jr.
William W. Harvey, Jr.Chief Executive Officer
    
    Chief Financial Officer
 49




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
On Internal Control Over Financial Reporting
 
 Internal Control -
Integrated Framework
    Internal Control  Integrated Framework
 50




---



##### Table of Contents



51




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
On Consolidated Financial Statements
 
    Employers Accounting for defined Benefit
Pension and Other Postretirement Plans
 Considering the Effects of Prior Year Misstatements When
Quantifying Misstatements in Current Year Financial Statements
 Internal Control  Integrated
Framework
 
 52




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
   December 312007
    
    
    2006AssetsCash and cash equivalents
    
    $
    75,905
    
    
    
    99,013Interest-earning deposits in other financial institutions
    
    
    153,160
    
    
    
    41,387Federal funds sold and other short-term investments
    
    
    1,551
    
    
    
    13,933Marketable securities available-for-sale (amortized cost
of $1,123,526 and $770,967)
    
    
    1,133,367
    
    
    
    767,514Marketable securities held-to-maturity (market value
of $  and $720,515)
    
    
    
    
    
    
    716,967Loans receivable, net of allowance for loan
losses of $41,784 and $37,655
    
    
    4,795,622
    
    
    
    4,412,441Accrued interest receivable
    
    
    27,084
    
    
    
    28,033Real estate owned, net
    
    
    8,667
    
    
    
    6,653Federal Home Loan Bank stock, at cost
    
    
    31,304
    
    
    
    34,289Premises and equipment, net
    
    
    110,894
    
    
    
    104,866Bank owned life insurance
    
    
    118,682
    
    
    
    110,864Goodwill
    
    
    171,614
    
    
    
    155,770Other intangible assets
    
    
    11,782
    
    
    
    9,581Mortgage servicing rights
    
    
    8,955
    
    
    
    7,688Other assets
    
    
    14,929
    
    
    
    18,816Total assets
    
    $
    6,663,516
    
    
    
    6,527,815Liabilities and Shareholders EquityLiabilities:Deposits
    
    $
    5,542,334
    
    
    
    5,366,750Borrowed funds
    
    
    339,115
    
    
    
    392,814Advances by borrowers for taxes and insurance
    
    
    24,159
    
    
    
    22,600Accrued interest payable
    
    
    4,356
    
    
    
    4,038Other liabilities
    
    
    32,354
    
    
    
    33,958Junior subordinated deferrable interest debentures
held by trusts that issued guaranteed capital debt securities
    
    
    108,320
    
    
    
    103,094Total liabilities
    
    
    6,050,638
    
    
    
    5,923,254Shareholders equity:Preferred stock, $0.10 par value. 50,000,000 shares authorized
no shares issued
    
    
    
    
    
    
    Common stock, $0.10 par value. 500,000,000 shares authorized
shares issued 51,191,109 and 51,137,227, respectively
    
    
    5,119
    
    
    
    5,114Paid-in capital
    
    
    214,606
    
    
    
    211,295Retained earnings, substantially restricted
    
    
    458,425
    
    
    
    425,024Accumulated other comprehensive income (loss), net
    
    
    816
    
    
    
    (11,609
    )Treasury stock of 2,610,800 and 1,107,900 shares,
respectively, at cost
    
    
    (66,088
    )
    
    
    (25,263
    )Total shareholders equity
    
    
    612,878
    
    
    
    604,561Total liabilities and shareholders equity
    
    $
    6,663,516
    
    
    
    6,527,815
  53




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
   Six-monthperiod ended
    
    
    Year endedYears ended December 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Interest income:Loans receivable
    
    $
    315,570
    
    
    
    286,316
    
    
    
    141,164
    
    
    
    260,833Mortgage-backed securities
    
    
    29,385
    
    
    
    31,523
    
    
    
    11,332
    
    
    
    26,102Taxable investment securities
    
    
    30,583
    
    
    
    31,164
    
    
    
    10,943
    
    
    
    18,513Tax-free investment securities
    
    
    12,626
    
    
    
    12,986
    
    
    
    5,922
    
    
    
    12,192Interest-earning deposits
    
    
    7,867
    
    
    
    6,584
    
    
    
    1,088
    
    
    
    4,184Total interest income
    
    
    396,031
    
    
    
    368,573
    
    
    
    170,449
    
    
    
    321,824Interest expense:Deposits
    
    
    186,540
    
    
    
    156,985
    
    
    
    65,349
    
    
    
    110,079Borrowed funds
    
    
    24,475
    
    
    
    34,124
    
    
    
    14,065
    
    
    
    27,968Total interest expense
    
    
    211,015
    
    
    
    191,109
    
    
    
    79,414
    
    
    
    138,047Net interest income
    
    
    185,016
    
    
    
    177,464
    
    
    
    91,035
    
    
    
    183,777Provision for loan losses
    
    
    8,743
    
    
    
    8,480
    
    
    
    4,722
    
    
    
    9,566Net interest income after
provision for loan losses
    
    
    176,273
    
    
    
    168,984
    
    
    
    86,313
    
    
    
    174,211Noninterest income:Service charges and fees
    
    
    27,754
    
    
    
    24,459
    
    
    
    11,949
    
    
    
    16,786Trust and other financial services income
    
    
    6,223
    
    
    
    5,321
    
    
    
    2,267
    
    
    
    4,291Insurance commission income
    
    
    2,705
    
    
    
    2,550
    
    
    
    1,272
    
    
    
    2,222Gain (loss) on marketable securities, net
    
    
    (3,454
    )
    
    
    368
    
    
    
    
    
    
    
    523Gain (loss) on sale of loans, net
    
    
    728
    
    
    
    4,832
    
    
    
    308
    
    
    
    (100
    )Gain (loss) on sale of real estate owned, net
    
    
    (83
    )
    
    
    735
    
    
    
    788
    
    
    
    906Income from bank owned life insurance
    
    
    4,460
    
    
    
    4,344
    
    
    
    2,160
    
    
    
    4,378Mortgage banking income
    
    
    1,643
    
    
    
    479
    
    
    
    
    
    
    
    Other operating income
    
    
    3,046
    
    
    
    2,938
    
    
    
    1,107
    
    
    
    2,998Total noninterest income
    
    
    43,022
    
    
    
    46,026
    
    
    
    19,851
    
    
    
    32,004Noninterest expense:Compensation and employee benefits
    
    
    84,217
    
    
    
    78,611
    
    
    
    36,382
    
    
    
    71,843Premises and occupancy costs
    
    
    21,375
    
    
    
    20,368
    
    
    
    9,511
    
    
    
    17,724Office operations
    
    
    12,788
    
    
    
    12,411
    
    
    
    5,910
    
    
    
    11,329Processing expenses
    
    
    15,019
    
    
    
    12,051
    
    
    
    5,251
    
    
    
    10,578Amortization of intangible assets
    
    
    4,499
    
    
    
    3,876
    
    
    
    1,932
    
    
    
    4,509Advertising
    
    
    3,742
    
    
    
    2,818
    
    
    
    1,308
    
    
    
    3,674Loss on early extinguishment of debt
    
    
    
    
    
    
    3,124
    
    
    
    
    
    
    
    Other expenses
    
    
    11,102
    
    
    
    10,423
    
    
    
    6,023
    
    
    
    9,002Total noninterest expense
    
    
    152,742
    
    
    
    143,682
    
    
    
    66,317
    
    
    
    128,659Income before income taxes
    
    
    66,553
    
    
    
    71,328
    
    
    
    39,847
    
    
    
    77,556Provision for income taxes:Federal
    
    
    15,597
    
    
    
    16,840
    
    
    
    9,436
    
    
    
    19,013State
    
    
    1,859
    
    
    
    2,952
    
    
    
    1,562
    
    
    
    3,728Total provision for income taxes
    
    
    17,456
    
    
    
    19,792
    
    
    
    10,998
    
    
    
    22,741Net income
    
    $
    49,097
    
    
    
    51,536
    
    
    
    28,849
    
    
    
    54,815Basic earnings per share
    
    $
    1.00
    
    
    
    1.03
    
    
    
    0.57
    
    
    
    1.10Diluted earnings per share
    
    $
    0.99
    
    
    
    1.03
    
    
    
    0.56
    
    
    
    1.09
  54




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
 
 Accumulatedother
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-in
    
    
    Retained
    
    
    comprehensive
    
    
    Treasury
    
    
    shareholdersstock
    
    
    capital
    
    
    earnings
    
    
    income (loss), net
    
    
    stock
    
    
    equityBalance at June 30, 2004
    
    $
    4,796
    
    
    
    214,868
    
    
    
    332,841
    
    
    
    (2,033
    )
    
    
    
    
    
    $
    550,472Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    54,815
    
    
    
    
    
    
    
    
    
    
    
    54,815Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,547
    
    
    
    
    
    
    
    6,547Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    54,815
    
    
    
    6,547
    
    
    
    
    
    
    
    61,362Issuance of common shares in exchange for Leeds Federal and First Carnegie Shares
    
    
    243
    
    
    
    (12,013
    )
    
    
    (230
    )
    
    
    
    
    
    
    
    
    
    
    (12,000
    )Exercise of stock options
    
    
    18
    
    
    
    779
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    797Stock compensation
    
    
    27
    
    
    
    1,703
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,730Dividends paid ($0.48 per share)
    
    
    
    
    
    
    
    
    
    
    (20,171
    )
    
    
    
    
    
    
    
    
    
    
    (20,171
    )Balance at June 30, 2005
    
    
    5,084
    
    
    
    205,337
    
    
    
    367,255
    
    
    
    4,514
    
    
    
    
    
    
    
    582,190Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    28,849
    
    
    
    
    
    
    
    
    
    
    
    28,849Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,898
    )
    
    
    
    
    
    
    (4,898
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    28,849
    
    
    
    (4,898
    )
    
    
    
    
    
    
    23,951Treasury stock repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,183
    )
    
    
    (17,183
    )Exercise of stock options
    
    
    24
    
    
    
    1,710
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,734Stock compensation
    
    
    
    
    
    
    1,085
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,085Dividends paid ($0.30 per share)
    
    
    
    
    
    
    
    
    
    
    (6,119
    )
    
    
    
    
    
    
    
    
    
    
    (6,119
    )Balance at December 31, 2005
    
    
    5,108
    
    
    
    208,132
    
    
    
    389,985
    
    
    
    (384
    )
    
    
    (17,183
    )
    
    
    585,658Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    51,536
    
    
    
    
    
    
    
    
    
    
    
    51,536Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (859
    )
    
    
    
    
    
    
    (859
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    51,536
    
    
    
    (859
    )
    
    
    
    
    
    
    50,677Treasury stock repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,080
    )
    
    
    (8,080
    )Prior period adjustments  SAB 108 adoption
    
    
    
    
    
    
    
    
    
    
    (2,770
    )
    
    
    
    
    
    
    
    
    
    
    (2,770
    )Exercise of stock options
    
    
    6
    
    
    
    867
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    873Stock compensation
    
    
    
    
    
    
    2,296
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,296Adjustment for Adoption of SFAS No. 158
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,366
    )
    
    
    
    
    
    
    (10,366
    )Dividends paid ($0.70 per share)
    
    
    
    
    
    
    
    
    
    
    (13,727
    )
    
    
    
    
    
    
    
    
    
    
    (13,727
    )Balance at December 31, 2006
    
    
    5,114
    
    
    
    211,295
    
    
    
    425,024
    
    
    
    (11,609
    )
    
    
    (25,263
    )
    
    
    604,561Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    49,097
    
    
    
    
    
    
    
    
    
    
    
    49,097Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,425
    
    
    
    
    
    
    
    12,425Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    49,097
    
    
    
    12,425
    
    
    
    
    
    
    
    61,522Treasury stock repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,825
    )
    
    
    (40,825
    )Exercise of stock options
    
    
    5
    
    
    
    857
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    862Stock compensation
    
    
    
    
    
    
    2,454
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,454Dividends paid ($0.84 per share)
    
    
    
    
    
    
    
    
    
    
    (15,696
    )
    
    
    
    
    
    
    
    
    
    
    (15,696
    )Balance at December 31, 2007
    
    $
    5,119
    
    
    
    214,606
    
    
    
    458,425
    
    
    
    816
    
    
    
    (66,088
    )
    
    $
    612,878
  55




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
 Six-monthperiod ended
    
    
    Year endedYears ended December 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Operating activities:Net income
    
    $
    49,097
    
    
    
    51,536
    
    
    
    28,849
    
    
    
    54,815Adjustments to reconcile net income to net
cash provided by operating activities:Provision for loan losses
    
    
    8,743
    
    
    
    8,480
    
    
    
    4,722
    
    
    
    9,566Net loss/(gain) on sales of assets
    
    
    1,874
    
    
    
    (4,550
    )
    
    
    (1,096
    )
    
    
    (1,329
    )Loss on early extinguishment of debt
    
    
    
    
    
    
    3,124
    
    
    
    
    
    
    
    Net depreciation, amortization, and accretion
    
    
    14,572
    
    
    
    10,828
    
    
    
    5,846
    
    
    
    9,216Decrease/(increase) in other assets
    
    
    (11,184
    )
    
    
    (10,740
    )
    
    
    (8,367
    )
    
    
    (3,713
    )Increase/(decreases) in other liabilities
    
    
    3,799
    
    
    
    5,353
    
    
    
    (1,543
    )
    
    
    (3,168
    )Net amortization of discounts/premiums
on marketable securities
    
    
    (4,396
    )
    
    
    (1,334
    )
    
    
    1,243
    
    
    
    2,787Noncash compensation expense related
to stock benefit plans
    
    
    2,454
    
    
    
    2,296
    
    
    
    1,085
    
    
    
    1,512Noncash writedown of investment securities
    
    
    1,900
    
    
    
    
    
    
    
    
    
    
    
    Deferred income tax expense (benefit)
    
    
    (750
    )
    
    
    8,775
    
    
    
    3,102
    
    
    
    10,465Origination of loans held for sale
    
    
    (252,810
    )
    
    
    (153,354
    )
    
    
    (85,937
    )
    
    
    (78,314
    )Proceeds from loan sales
    
    
    250,295
    
    
    
    143,340
    
    
    
    86,245
    
    
    
    78,214Net cash provided by operating activities
    
    
    63,594
    
    
    
    63,754
    
    
    
    34,149
    
    
    
    80,051Investing activities:Purchase of marketable securities held-to-maturity
    
    
    
    
    
    
    (201,912
    )
    
    
    
    
    
    
    (172,540
    )Purchase of marketable securities available-for-sale
    
    
    (49,102
    )
    
    
    (280,459
    )
    
    
    (31,340
    )
    
    
    (247,716
    )Proceeds from maturities and principal reductions
of marketable securities held-to-maturity
    
    
    151,374
    
    
    
    115,550
    
    
    
    67,777
    
    
    
    215,900Proceeds from maturities and principal reductions
of marketable securities available-for-sale
    
    
    182,454
    
    
    
    138,640
    
    
    
    89,876
    
    
    
    267,204Proceeds from sales of marketable securities
available-for-sale
    
    
    105,361
    
    
    
    5,333
    
    
    
    2,145
    
    
    
    22,713Proceeds from sales of marketable securities
held-to-maturity
    
    
    15,652
    
    
    
    
    
    
    
    
    
    
    
    Loan originations
    
    
    (1,489,646
    )
    
    
    (1,334,596
    )
    
    
    (770,459
    )
    
    
    (1,351,294
    )Proceeds from loan maturities and principal
reductions
    
    
    1,234,511
    
    
    
    1,118,372
    
    
    
    584,023
    
    
    
    997,290Proceeds from sale of portfolio loans
    
    
    
    
    
    
    481,301
    
    
    
    
    
    
    
    Redemption/(purchase) of Federal Home Loan
Bank stock
    
    
    3,715
    
    
    
    (979
    )
    
    
    301
    
    
    
    5,829Proceeds from sale of real estate owned
    
    
    5,316
    
    
    
    6,771
    
    
    
    5,430
    
    
    
    6,749Sale/(purchase) of real estate owned for investment
    
    
    (101
    )
    
    
    66
    
    
    
    481
    
    
    
    78Purchase of premises and equipment
    
    
    (11,411
    )
    
    
    (13,071
    )
    
    
    (4,960
    )
    
    
    (20,373
    )Acquisitions, net of cash received
    
    
    (25,150
    )
    
    
    (2,605
    )
    
    
    (5,246
    )
    
    
    Net cash (used) provided by
investing activities
    
    
    122,973
    
    
    
    32,411
    
    
    
    (61,972
    )
    
    
    (276,160
    )
 56




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
 Six-monthperiod ended
    
    
    Year endedYears ended December 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Financing activities:(Decrease) increase in deposits, net
    
    $
    9,737
    
    
    
    54,948
    
    
    
    (32,686
    )
    
    
    (3,635
    )Proceeds from long-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repayments of long-term borrowings
    
    
    (75,180
    )
    
    
    (47,759
    )
    
    
    (5,173
    )
    
    
    (35,056
    )Net increase (decrease) in short-term borrowings
    
    
    9,342
    
    
    
    24,025
    
    
    
    7,446
    
    
    
    (2,823
    )(Decrease) increase in advances by borrowers
for taxes and insurance
    
    
    1,476
    
    
    
    (2,142
    )
    
    
    (7,086
    )
    
    
    1,162Treasury stock repurchases
    
    
    (40,825
    )
    
    
    (8,080
    )
    
    
    (17,183
    )
    
    
    Proceeds/(repayment) of debentures
    
    
    
    
    
    
    (102,062
    )
    
    
    103,094
    
    
    
    Cash dividends paid
    
    
    (15,696
    )
    
    
    (13,727
    )
    
    
    (6,119
    )
    
    
    (20,171
    )Proceeds from options exercised, including
tax benefit realized
    
    
    862
    
    
    
    873
    
    
    
    1,734
    
    
    
    797Net cash provided (used) by
financing activities
    
    
    (110,284
    )
    
    
    (93,924
    )
    
    
    44,027
    
    
    
    (59,726
    )Net increase (decrease) in cash and
cash equivalents
    
    $
    76,283
    
    
    
    2,241
    
    
    
    16,204
    
    
    
    (255,835
    )Cash and cash equivalents at beginning of period
    
    $
    154,333
    
    
    
    152,092
    
    
    
    135,888
    
    
    
    391,723Net increase (decrease) in cash and cash equivalents
    
    
    76,283
    
    
    
    2,241
    
    
    
    16,204
    
    
    
    (255,835
    )Cash and cash equivalents at end of period
    
    $
    230,616
    
    
    
    154,333
    
    
    
    152,092
    
    
    
    135,888Cash paid during the period for:Interest on deposits and borrowings (including
interest credited to deposit accounts of $160,291,
$136,319, $54,609 and $94,106, respectively)
    
    $
    210,697
    
    
    
    191,458
    
    
    
    79,047
    
    
    
    138,307Income taxes
    
    
    16,684
    
    
    
    6,940
    
    
    
    4,800
    
    
    
    19,491Noncash activities:Business acquisitions:Fair value of assets acquired
    
    $
    211,846
    
    
    
    86,673
    
    
    
    84,957
    
    
    
    Net cash (paid) received
    
    
    (25,150
    )
    
    
    (2,605
    )
    
    
    (5,246
    )
    
    
    Liabilities assumed
    
    $
    186,696
    
    
    
    84,068
    
    
    
    79,711
    
    
    
    Loan foreclosures and repossessions
    
    $
    6,975
    
    
    
    7,817
    
    
    
    2,829
    
    
    
    8,622Sale of real estate owned financed by the Company
    
    
    1,013
    
    
    
    768
    
    
    
    773
    
    
    
    1,113Forgiveness of loan to Northwest Bancorp, MHC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,000
  57




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
 (1)
    
    Summary of Significant Accounting Policies
 (a)
    
    Nature of OperationsThe Northwest group of companies is organized in a two-tier holding company structure.
Northwest Bancorp, MHC (MHC) is a federal mutual holding company and, at December 31,
2007 and 2006, owned approximately 63% and 61%, respectively, of the outstanding shares
of common stock of Northwest Bancorp, Inc. (the Company). On September 10, 2004, in
exchange for 100% of the outstanding shares of Leeds Federal, the Company cancelled a
$12.0 million loan receivable from, and issued 1,334,859 shares to, MHC. Concurrent
with the Companys acquisition of Leeds Federal, the Company merged Leeds Federal into
Northwest Savings Bank. On November 15, 2004, in exchange for 100% of the outstanding shares
of First Carnegie, the Company issued 1,090,900 shares to MHC. Concurrent with
the Companys acquisition of First Carnegie, the Company merged First Carnegie into
Northwest Savings Bank. The Companys financial condition and financial results have
been revised to reflect the acquisitions of both Leeds Federal Savings Bank and First
Carnegie Deposit as of the date they were acquired by MHC. After the Companys
acquisition of First Carnegie, MHC applied for and received approval from the Office of
Thrift Supervision to waive its right to receive dividends from the Company. While MHC
owned Leeds Federal and First Carnegie, it accepted dividends from the Company.
Dividends waived by MHC during the years ended December 31, 2007 and 2006, the
six-month period ended December 31, 2005 and the year ended June 30, 2005 were
$25,651,000, $21,376,000, $9,161,000, and $3,664,000, respectively. No dividends were
paid to MHC during the years ended December 31, 2007 and 2006 and the six-month period
ended December 31, 2005. Dividends paid to MHC during the fiscal year ended June 30,
2005 were $10,571,000.During the 2005 fiscal year, the Company sold 7,255,520 common shares previously owned
by MHC. The transaction increased the Companys capital by $112.8 million but did not
increase the number of shares outstanding.The Company changed its fiscal year end from June 30 to December 31, effective December
31, 2005.Northwest Bancorp, Inc., which is headquartered in Warren, Pennsylvania, is a federal
savings and loan holding company for its wholly owned subsidiary, Northwest Savings
Bank (Northwest). Northwest offers traditional deposit and loan products through its
166 banking locations in Pennsylvania, New York, Ohio, Maryland, and Florida. The
Company and its subsidiaries also offer loan products through 51 consumer finance
offices in Pennsylvania and New York.(b)
    
    Principles of ConsolidationThe consolidated financial statements include the accounts of the Company and its
wholly owned subsidiaries after elimination of all intercompany accounts and
transactions.(c)
    
    Cash and Cash EquivalentsFor purposes of the statement of cash flows, cash and cash equivalents include cash and
amounts due from depository institutions, interest-bearing deposits in other financial
institutions, federal funds sold, and other short-term investments.(d)
    
    Marketable SecuritiesThe Company classifies marketable securities at the time of their purchase as
available-for-sale, or trading securities. If it is managements intent at the time of
purchase to hold securities for an indefinite period of time and/or to use such
securities as part of its asset/liability management strategy, the securities are
classified as available-for-sale and are carried at fair value, with unrealized gains and losses excluded from net earnings and
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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
 reported as accumulated other comprehensive
income, a separate component of shareholders equity, net
of tax. Securities classified as available-for-sale include securities that may be sold
in response to changes in interest rates, resultant prepayment risk, or other market
factors. Securities that are bought and held principally for the purpose of selling
them in the near term are classified as trading and are reported at fair value, with
unrealized gains and losses included in earnings. The cost of securities sold is
determined on a specific identification basis. The Company held no securities
classified as trading at December 31, 2007 and 2006.Federal law requires a member institution of the Federal Home Loan Bank (FHLB) system
to hold stock of its district FHLB according to a predetermined formula. This stock is
recorded at cost and may be pledged to secure FHLB advances.(e)
    
    Loans ReceivableLoans are stated at their unpaid principal balance net of any deferred origination fees
or costs and the allowance for estimated loan losses. Interest income on loans is
credited to income as earned. Interest earned on loans for which no payments were
received during the month is accrued at month end. Interest accrued on loans more than
90 days delinquent is reversed, and such loans are placed on nonaccrual status.The Company has identified certain residential and education loans which will be sold
prior to maturity. These loans are recorded at the lower of amortized cost or market
value and at December 31, 2007 and 2006 were $28,412,000 and $23,390,000, respectively.Loan fees and certain direct loan origination costs are deferred, and the net deferred
fee or cost is then recognized using the level-yield method over the contractual life
of the loan as an adjustment to interest income.(f)
    
    Provision for Loan LossesProvisions for estimated loan losses and the amount of the allowance for loan losses
are based on losses inherent in the loan portfolio that are both probable and
reasonably estimable at the date of the financial statements. Management believes, to
the best of their knowledge, that all known losses as of the statement of condition
dates have been recorded.Management considers a loan to be impaired when it is probable that the Company will be
unable to collect all amounts due according to the contractual terms of the loan
agreement. Nonaccrual loans are deemed to be impaired unless fully secured with liquid
collateral. In evaluating whether a loan is impaired, management considers not only the
amount that the Company expects to collect but also the timing of collection.
Generally, if a delay in payment is insignificant (e.g., less than 30 days), a loan is
not deemed to be impaired.When a loan is considered to be impaired, the amount of impairment is measured based on
the present value of expected future cash flows discounted at the loans effective
interest rate or at the loans market price or fair value of the collateral if the loan
is collateral dependent. Larger loans are evaluated individually for impairment.
Smaller balance, homogeneous loans (e.g., primarily consumer and residential mortgages)
are evaluated collectively for impairment. Impairment losses are included in the
allowance for loan losses. Impaired loans are charged off when management believes that
the ultimate collectibility of a loan is not likely.Interest income on impaired loans is recognized using the cash basis method. Such
interest ultimately collected is credited to income in the period of recovery or
applied to reduce principal if there is sufficient doubt about the collectibility of
principal. Interest that has been accrued on impaired loans that are contractually past
due 90 days and over is reversed.
 59




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
 (g)
    
    Real Estate OwnedReal estate owned is comprised of property acquired through foreclosure or voluntarily
conveyed by delinquent borrowers. These assets are recorded on the date acquired at the
lower of the related loan balance or market value of the collateral less disposition
cost with the market value being determined by an appraisal. Subsequently, foreclosed
assets are valued at the lower of the amount recorded at acquisition date or the
current market value, less estimated disposition costs. Gains or losses realized from
the disposition of such property are credited or charged to noninterest income.(h)
    
    Premises and EquipmentPremises and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation is accumulated on a straight-line basis over the estimated
useful lives of the related assets. Estimated lives range from three to thirty years.
Amortization of leasehold improvements is accumulated on a straight-line basis over the
terms of the related leases or the useful lives of the related assets, whichever is
shorter.(i)
    
    GoodwillIn accordance with Statement of Financial Accounting Standards No. 142, Goodwill and
Other Intangible Assets(SFAS 142), goodwill is allocated to various reporting units,
which are either the Companys reportable segments or one level below. Goodwill is no
longer amortized but is tested for impairment on an annual basis and between annual
tests if events occur, or if circumstances change, that would more likely than not
reduce the fair value below its carrying amount. The annual impairment test is based on
discounted cash flow models that incorporate variables including growth in net income,
discount rates, and terminal values. If the carrying amount of goodwill exceeds its
fair value, an impairment loss is recognized as a non-cash charge.(j)
    
    Core Deposit IntangiblesThe Company engages an independent third party of experts to analyze and prepare a core
deposit study for substantially all acquisitions. This study reflects the cumulative
present value benefit of acquiring deposits versus an alternative source of funding.
Based upon this analysis, the amount of the premium related to the core deposits of the
business purchased is calculated along with the estimated life of the acquired
deposits. The core deposit intangible, which is recorded in other intangible assets, is
then amortized to expense on an accelerated basis over an approximate life of seven
years.(k)
    
    Bank-Owned Life InsuranceThe Company owns insurance on the lives of a certain group of key employees and
directors. The policies were purchased to help offset the increase in the costs of
various fringe benefit plans including healthcare as well as the directors deferred
compensation plan. The cash surrender value of these policies is included as an asset
on the consolidated statements of financial condition, and any increases in the cash
surrender value are recorded as noninterest income on the consolidated statements of
income. In the event of the death of an insured individual under these policies, the
Company would receive a death benefit, which would be recorded as noninterest income.(l)
    
    DepositsInterest on deposits is accrued and charged to expense monthly and is paid or credited
in accordance with the terms of the accounts.
 60




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
 (m)
    
    Pension PlansThe Company has noncontributory defined benefit pension plans. The net periodic pension
cost has been calculated in accordance with Statement of Financial Accounting Standards
No. 87, Employers Accounting for Pensions. In conjunction with the Companys fiscal
year change, the Company changed its measurement date to October 31 for its defined
benefit pension plans.(n)
    
    Income TaxesThe Company joins with its wholly owned subsidiaries in filing a consolidated federal
income tax return.The Company accounts for income taxes using the asset and liability method prescribed
by Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes.
The objective of the asset and liability method is to establish deferred tax assets and
liabilities for temporary differences between the financial reporting and tax basis of
the Companys assets and liabilities based on the tax rates expected to be in effect
when such amounts are realized or settled.(o)
    
    Stock Related CompensationThe Company accounts for its stock-based compensation plans under the provisions of
Statement of Financial Accounting Standards No. 123 (revised 2005), Share-Based
Payments. The Black-Scholes-Merton option-pricing model was used to determine the fair
value of each option award, estimated on the grant date. During the year ended
December 31, 2007 the Company awarded 181,709 stock options to employees. Option
awards are generally granted with an exercise price equal to the market price of the
Companys stock at the grant date and options generally vest over a five-year period
from the grant date. Expected volatilities are based on historical volatility of the
Companys stock. The expected term of options is based upon previous option grants. The
risk-free rate is based on yields on U.S. Treasury securities of a similar maturity to
the expected term of the options. When options are exercised new shares are issued.Stock-based employee compensation expense related to the Companys recognition and
retention plan of $1,251,000, $1,176,000, $581,000 and $492,000, was included in income
before income taxes during the years ended December 31, 2007 and 2006, the six-month
period ended December 31, 2005 and fiscal year ended June 30, 2005, respectively. The
effect on net income for the years ended December 31, 2007 and 2006, the six-month
period ended December 31, 2005 and the fiscal year ended June 30, 2005 was a reduction
of $813,000, $765,000, $378,000, and $320,000, respectively. The Company will
recognize the remaining expense of $2,217,000 over the next four years. Total
compensation expense for nonvested stock options of $1,851,000 has yet to be recognized
as of December 31, 2007. The weighted average period over which this remaining stock
option expense will be recognized is approximately 2.25 years.The fair value of each option grant is estimated on the date of grant using the
Black-Scholes-Merton option-pricing model with the following weighted average
assumptions: (1) dividend yields ranging from 1.6% to 3.5%; (2) expected volatility of
17% to 33%; (3) risk-free interest rates ranging from 3.1% to 6.5%; and (4) expected
lives of seven years.(p)
    
    Segment ReportingStatement of Financial Accounting Standard No. 131, Disclosures about Segments of an
Enterprise and Related Information, requires that public business enterprises report
financial and descriptive information about their reportable operating segments. Based
on the guidance provided by this statement, the Company has identified two reportable
segments, Community Banks and Consumer Finance. See note 21 for related disclosures.
 61




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
 (q)
    
    Off-Balance-Sheet InstrumentsIn the normal course of business, the Company extends credit in the form of loan
commitments, undisbursed lines of credit, and standby letters of credit. These
off-balance-sheet instruments involve, to various degrees, elements of credit and
interest rate risk not reported in the consolidated statement of financial condition.(r)
    
    Use of EstimatesThe preparation of financial statements, in conformity with accounting principles
generally accepted in the United States of America, requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amount of revenues and expenses during the reporting
period. Actual results could differ from these estimates.(s)
    
    Reclassification of Prior Years StatementsCertain items previously reported have been reclassified to conform with the current
years reporting format.
 (2)
    
    Recent Accounting Pronouncements
 Business Combinations:In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 141 (revised 2007), Business Combinations (SFAS 141R).SFAS
141R applies to all transactions or other events in which an entity obtains control of
one or more businesses, including those sometimes referred to as true mergers or
mergers of equals and combinations achieved without the transfer of consideration.
SFAS 141R applies to all business entities, including mutual entities that previously
used the pooling-of-interest method of accounting for some business combinations. The
objective of SFAS 141R is to improve the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its financial
reports about a business combination and its effects. SFAS 141R establishes principles
and requirements for how the acquirer recognizes and measures the identifiable assets
acquired and the liabilities assumed, recognizes and measures the goodwill acquired,
and determines what information to disclose to enable users of the financial statements
to evaluate the nature and financial effect of the business combination. SFAS 141R
does not apply to the acquisition of an asset or a group of assets that does not
constitute a business or a combination between entities under common control. SFAS
141R applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or after
December 15, 2008. An entity may not apply it before that date.The Fair Value Option for Financial Assets and Financial Liabilities  Including an
amendment of FASB Statement No. 115:In February 2007, the FASB issued Statement of
Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of FASB Statement No. 115 (SFAS 159).
SFAS 159 permits entities to choose to measure many financial instruments and certain
other items at fair value. The objective of SFAS 159 is to improve financial reporting
by providing entities with the opportunity to mitigate volatility in reported earnings
caused by measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions. SFAS 159 is expected to expand the use of fair
value measurement, which is consistent with the FASBs long-term measurement objectives
for accounting for financial instruments. SFAS 159 is effective as of the beginning of
an entitys first fiscal year that begins after November 15, 2007. Early adoption is
permitted as of the beginning of a fiscal year that begins on or before November 15,
2007, provided the entity also elects to apply the provisions of SFAS 157. No entity
is permitted to apply this Statement retrospectively to fiscal years preceding the
effective date unless the entity chooses early adoption. The Company will apply SFAS
159 beginning January 1, 2008 and does not anticipate that it will have a material
effect on the financial condition or operations of the Company.
 62




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    Employers Accounting for Defined Benefit Pension and Other Postretirement Plans : Employers Accounting for Defined Benefit Pension
and Other Postretirement Plans (SFAS 158
  Fair Value Measurements: Fair Value Measurements SFAS 157
 Accounting for Uncertainty in Income Taxes:
 Considering
the Effects of Prior Year Misstatements: Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements
(SAB 108)
 63




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (3) Marketable Securities
  Gross
    
    
    Grossunrealized
    
    
    unrealizedAmortized
    
    
    holding
    
    
    holding
    
    
    Marketcost
    
    
    gains
    
    
    losses
    
    
    valueAvailable-for-sale:U.S. government and agencies:Due in one year or less
    
    $
    368
    
    
    
    
    
    
    
    (3
    )
    
    
    365Government sponsored enterprises:Due in one year or less
    
    
    6,959
    
    
    
    35
    
    
    
    
    
    
    
    6,994Due in one year  five years
    
    
    42,352
    
    
    
    259
    
    
    
    
    
    
    
    42,611Due in five years  ten years
    
    
    56,406
    
    
    
    194
    
    
    
    (50
    )
    
    
    56,550Due after ten years
    
    
    180,274
    
    
    
    5,945
    
    
    
    (193
    )
    
    
    186,026Equity securities and mutual funds
    
    
    6,478
    
    
    
    401
    
    
    
    
    
    
    
    6,879Municipal securities:Due in one year  five years
    
    
    816
    
    
    
    1
    
    
    
    
    
    
    
    817Due in five years  ten years
    
    
    33,217
    
    
    
    388
    
    
    
    (63
    )
    
    
    33,542Due after ten years
    
    
    228,862
    
    
    
    4,019
    
    
    
    (120
    )
    
    
    232,761Corporate debt issues:Due after ten years
    
    
    37,225
    
    
    
    546
    
    
    
    (2,696
    )
    
    
    35,075Mortgage-backed securities:Fixed rate pass-through
    
    
    73,284
    
    
    
    998
    
    
    
    (290
    )
    
    
    73,992Variable rate pass-through
    
    
    306,885
    
    
    
    2,663
    
    
    
    (494
    )
    
    
    309,054Fixed rate CMO
    
    
    73,514
    
    
    
    248
    
    
    
    (1,969
    )
    
    
    71,793Variable rate CMO
    
    
    76,886
    
    
    
    416
    
    
    
    (394
    )
    
    
    76,908Total mortgage-
backed securities
    
    
    530,569
    
    
    
    4,325
    
    
    
    (3,147
    )
    
    
    531,747Total securities
available-for-sale
    
    $
    1,123,526
    
    
    
    16,113
    
    
    
    (6,272
    )
    
    
    1,133,367
 64




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Gross
    
    
    Grossunrealized
    
    
    unrealizedAmortized
    
    
    holding
    
    
    holding
    
    
    Marketcost
    
    
    gains
    
    
    losses
    
    
    valueHeld-to-maturity:Government sponsored enterprises:Due in one year or less
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    Due in one year  five years
    
    
    110,000
    
    
    
    
    
    
    
    (760
    )
    
    
    109,240Due in five years  ten years
    
    
    33,356
    
    
    
    95
    
    
    
    (208
    )
    
    
    33,243Due after ten years
    
    
    18,399
    
    
    
    
    
    
    
    (302
    )
    
    
    18,097Municipal securities:Due in one years  five years
    
    
    290
    
    
    
    
    
    
    
    
    
    
    
    290Due in five years  ten years
    
    
    16,338
    
    
    
    157
    
    
    
    (19
    )
    
    
    16,476Due after ten years
    
    
    253,258
    
    
    
    3,460
    
    
    
    (46
    )
    
    
    256,672Corporate debt issues:Due after ten years
    
    
    33,671
    
    
    
    2,032
    
    
    
    (137
    )
    
    
    35,566Mortgage-backed securities:Fixed rate pass-through
    
    
    9,097
    
    
    
    27
    
    
    
    (159
    )
    
    
    8,965Variable rate pass-through
    
    
    188,700
    
    
    
    726
    
    
    
    (1,044
    )
    
    
    188,382Fixed rate CMO
    
    
    4,484
    
    
    
    
    
    
    
    (235
    )
    
    
    4,249Variable rate CMO
    
    
    49,374
    
    
    
    203
    
    
    
    (242
    )
    
    
    49,335Total mortgage-
backed securities
    
    
    251,655
    
    
    
    956
    
    
    
    (1,680
    )
    
    
    250,931Total securities
held-to-maturity
    
    $
    716,967
    
    
    
    6,700
    
    
    
    (3,152
    )
    
    
    720,515
 65




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    Gross
    
    
    Grossunrealized
    
    
    unrealizedAmortized
    
    
    holding
    
    
    holding
    
    
    Marketcost
    
    
    gains
    
    
    losses
    
    
    valueAvailable-for-sale:U.S. government and agencies:Due in one year or less
    
    $
    100
    
    
    
    
    
    
    
    
    
    
    
    100Due in one year  five years
    
    
    248
    
    
    
    
    
    
    
    
    
    
    
    248Due in five years  ten years
    
    
    15,020
    
    
    
    
    
    
    
    (94
    )
    
    
    14,926Government sponsored enterprises:Due in one year or less
    
    
    15,733
    
    
    
    
    
    
    
    (3
    )
    
    
    15,730Due in one year  five years
    
    
    20,709
    
    
    
    1
    
    
    
    (125
    )
    
    
    20,585Due in five years  ten years
    
    
    34,887
    
    
    
    70
    
    
    
    (612
    )
    
    
    34,345Due after ten years
    
    
    127,334
    
    
    
    847
    
    
    
    (1,590
    )
    
    
    126,591Equity securities and mutual funds
    
    
    95,548
    
    
    
    8,091
    
    
    
    (2,799
    )
    
    
    100,840Municipal securities:Due in five years  ten years
    
    
    5,119
    
    
    
    56
    
    
    
    (64
    )
    
    
    5,111Due after ten years
    
    
    9,434
    
    
    
    86
    
    
    
    (27
    )
    
    
    9,493Corporate debt issues:Due in one year  five years
    
    
    16,567
    
    
    
    30
    
    
    
    (11
    )
    
    
    16,586Due in five years  ten years
    
    
    13,500
    
    
    
    
    
    
    
    (1,208
    )
    
    
    12,292Due after ten years
    
    
    33,047
    
    
    
    62
    
    
    
    (1,410
    )
    
    
    31,699Mortgage-backed securities:Fixed rate pass-through
    
    
    68,720
    
    
    
    162
    
    
    
    (1,452
    )
    
    
    67,430Variable rate pass-through
    
    
    199,442
    
    
    
    394
    
    
    
    (1,471
    )
    
    
    198,365Fixed rate CMO
    
    
    87,946
    
    
    
    
    
    
    
    (2,544
    )
    
    
    85,402Variable rate CMO
    
    
    27,613
    
    
    
    205
    
    
    
    (47
    )
    
    
    27,771Total mortgage-
backed securities
    
    
    383,721
    
    
    
    761
    
    
    
    (5,514
    )
    
    
    378,968Total securities
available-for-sale
    
    $
    770,967
    
    
    
    10,004
    
    
    
    (13,457
    )
    
    
    767,514
 66




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     December 312007
    
    
    2006Mortgage-backed securities:FNMA
    
    $
    165,391
    
    
    
    205,127GNMA
    
    
    88,428
    
    
    
    120,799FHLMC
    
    
    229,960
    
    
    
    249,685Other (nonagency)
    
    
    47,968
    
    
    
    55,012Total mortgage-backed
securities
    
    $
    531,747
    
    
    
    630,623
  67




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Less than 12 months
    
    
    12 months or more
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedFair value
    
    
    losses
    
    
    Fair value
    
    
    losses
    
    
    Fair value
    
    
    lossesU.S. government and agencies
    
    $
    
    
    
    
    
    
    
    
    30,225
    
    
    
    (246
    )
    
    $
    30,225
    
    
    
    (246
    )Municipal securities
    
    
    24,775
    
    
    
    (96
    )
    
    
    5,928
    
    
    
    (87
    )
    
    
    30,703
    
    
    
    (183
    )Corporate issues
    
    
    24,533
    
    
    
    (2,551
    )
    
    
    847
    
    
    
    (145
    )
    
    
    25,380
    
    
    
    (2,696
    )Mortgage-backed securities
    
    
    59,032
    
    
    
    (495
    )
    
    
    130,731
    
    
    
    (2,652
    )
    
    
    189,763
    
    
    
    (3,147
    )Total temporarily
impaired securities
    
    $
    108,340
    
    
    
    (3,142
    )
    
    
    167,731
    
    
    
    (3,130
    )
    
    $
    276,071
    
    
    
    (6,272
    )Percentage of total
    
    
    39
    %
    
    
    
    
    
    
    61
    %
    
    
    
    
    
    
    100
    %
  Less than 12 months
    
    
    12 months or more
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedFair value
    
    
    losses
    
    
    Fair value
    
    
    losses
    
    
    Fair value
    
    
    lossesU.S. government and agencies
    
    $
    119,226
    
    
    
    (1,616
    )
    
    
    166,462
    
    
    
    (2,079
    )
    
    $
    285,688
    
    
    
    (3,695
    )Municipal securities
    
    
    4,089
    
    
    
    (6
    )
    
    
    8,314
    
    
    
    (150
    )
    
    
    12,403
    
    
    
    (156
    )Corporate issues
    
    
    8,901
    
    
    
    (196
    )
    
    
    114,501
    
    
    
    (5,368
    )
    
    
    123,402
    
    
    
    (5,564
    )Mortgage-backed securities
    
    
    159,180
    
    
    
    (871
    )
    
    
    258,231
    
    
    
    (6,323
    )
    
    
    417,411
    
    
    
    (7,194
    )Total temporarily
impaired securities
    
    $
    291,396
    
    
    
    (2,689
    )
    
    
    547,508
    
    
    
    (13,920
    )
    
    $
    838,904
    
    
    
    (16,609
    )Percentage of total
    
    
    35
    %
    
    
    
    
    
    
    65
    %
    
    
    
    
    
    
    100
    %
  68




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     (4) Loans Receivable
  December 312007
    
    
    2006Real estate loans:One-to-four family
    
    $
    2,430,117
    
    
    
    2,411,024Multi-family and commercial
    
    
    906,594
    
    
    
    701,951Total real estate loans
    
    
    3,336,711
    
    
    
    3,112,975Consumer loans:Automobile
    
    
    125,298
    
    
    
    138,401Home equity
    
    
    992,335
    
    
    
    887,352Education
    
    
    14,551
    
    
    
    11,973Loans on savings accounts
    
    
    10,563
    
    
    
    10,313Other
    
    
    117,831
    
    
    
    109,303Total consumer loans
    
    
    1,260,578
    
    
    
    1,157,342Commercial loans
    
    
    367,459
    
    
    
    235,311Total loans receivable,
gross
    
    
    4,964,748
    
    
    
    4,505,628Deferred loan fees
    
    
    (4,179
    )
    
    
    (3,027
    )Allowance for loan losses
    
    
    (41,784
    )
    
    
    (37,655
    )Undisbursed
loan proceeds (real estate loans)
    
    
    (123,163
    )
    
    
    (52,505
    )Total loans
receivable, net
    
    $
    4,795,622
    
    
    
    4,412,441
    69




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     December 312007
    
    
    2006Loan commitments
    
    $
    69,851
    
    
    
    82,890Undisbursed lines of credit
    
    
    328,373
    
    
    
    292,825Standby letters of credit
    
    
    14,955
    
    
    
    13,383$
    413,179
    
    
    
    389,098
     Accounting by Creditors for
Impairment of a Loan
 70




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
      (5) Accrued Interest Receivable
  December 312007
    
    
    2006Investment securities
    
    $
    5,455
    
    
    
    8,139Mortgage-backed securities
    
    
    2,818
    
    
    
    3,312Loans receivable
    
    
    18,811
    
    
    
    16,582$
    27,084
    
    
    
    28,033
 (6) Allowance for Loan Losses
  Six-monthperiod ended
    
    
    Year endedYears ended December 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Balance, beginning of fiscal year
    
    $
    37,655
    
    
    
    33,411
    
    
    
    31,563
    
    
    
    30,670Provision
    
    
    8,743
    
    
    
    8,480
    
    
    
    4,722
    
    
    
    9,566Charge-offs
    
    
    (8,190
    )
    
    
    (7,617
    )
    
    
    (3,639
    )
    
    
    (9,473
    )Acquisitions
    
    
    2,119
    
    
    
    1,982
    
    
    
    255
    
    
    
    Recoveries
    
    
    1,457
    
    
    
    1,399
    
    
    
    510
    
    
    
    800Balance, end of fiscal year
    
    $
    41,784
    
    
    
    37,655
    
    
    
    33,411
    
    
    
    31,563
  71




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (7)
    
    Federal Home Loan Bank StockThe Companys banking subsidiary is a member of the Federal Home Loan Bank system. As a
member, Northwest maintains an investment in the capital stock of the Federal Home Loan Bank
of Pittsburgh, at cost, in an amount not less than 4.65% of borrowings outstanding plus 0.65%
of unused FHLB borrowing capacity.(8)
    
    Premises and EquipmentPremises and equipment at December 31, 2007 and 2006 are summarized by major classification in
the following table:
 December 312007
    
    
    2006Land and land improvements
    
    $
    14,139
    
    
    
    13,080Office buildings and improvements
    
    
    99,438
    
    
    
    92,033Furniture, fixtures, and equipment
    
    
    74,013
    
    
    
    69,291Leasehold improvements
    
    
    11,186
    
    
    
    10,576Total, at cost
    
    
    198,776
    
    
    
    184,980Less accumulated depreciation and amortization
    
    
    (87,882
    )
    
    
    (80,114
    )Premises and equipment, net
    
    $
    110,894
    
    
    
    104,866
   2008
    
    $
    3,7722009
    
    
    3,4912010
    
    
    2,9412011
    
    
    2,5732012
    
    
    1,809Thereafter
    
    
    10,444$
    25,030
  72




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (9)
    
    Goodwill and Other Intangible AssetsThe following table provides information for intangible assets subject to amortization for the
periods indicated:
 December 312007
    
    
    2006Amortized intangible assets:Core deposit intangibles  gross
    
    $
    24,475
    
    
    
    22,495Acquisitions
    
    
    5,800
    
    
    
    1,980Less accumulated amortization
    
    
    (19,318
    )
    
    
    (15,352
    )Core deposit intangibles  net
    
    $
    10,957
    
    
    
    9,123Customer contract intangible assets  gross
    
    $
    831
    
    
    
    831Acquisitions
    
    
    900
    
    
    
    Less accumulated amortization
    
    
    (906
    )
    
    
    (373
    )Customer contract intangible assets  net
    
    $
    825
    
    
    
    458
  For the fiscal year ended 6/30/05
    
    $
    4,509For the six-month period ended 12/31/05
    
    
    1,932For the fiscal year ended 12/31/06
    
    
    3,876For the fiscal year ended 12/31/07
    
    
    4,499For the fiscal year ending 12/31/08
    
    
    4,443For the fiscal year ending 12/31/09
    
    
    2,847For the fiscal year ending 12/31/10
    
    
    1,896For the fiscal year ending 12/31/11
    
    
    1,445For the fiscal year ending 12/31/12
    
    
    693
 73




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Community
    
    
    Consumerbanks
    
    
    finance
    
    
    TotalBalance at December 31, 2005
    
    $
    149,173
    
    
    
    1,312
    
    
    
    150,485Goodwill acquired
    
    
    5,285
    
    
    
    
    
    
    
    5,285Amortization
    
    
    
    
    
    
    
    
    
    
    Impairment losses
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2006
    
    
    154,458
    
    
    
    1,312
    
    
    
    155,770Goodwill acquired
    
    
    15,844
    
    
    
    
    
    
    
    15,844Amortization
    
    
    
    
    
    
    
    
    
    
    Impairment losses
    
    
    
    
    
    
    
    
    
    
    Balance at December 31, 2007
    
    $
    170,302
    
    
    
    1,312
    
    
    
    171,614
 (10)
    
    DepositsDeposit balances at December 31, 2007 and 2006 are shown in the table below:
 December 312007
    
    
    2006Savings accounts
    
    $
    745,430
    
    
    
    807,873Interest-bearing checking accounts
    
    
    717,991
    
    
    
    677,394Noninterest-bearing checking accounts
    
    
    361,102
    
    
    
    317,389Money market deposit accounts
    
    
    681,115
    
    
    
    594,472Certificates of deposit
    
    
    3,036,696
    
    
    
    2,969,622$
    5,542,334
    
    
    
    5,366,750
  74




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     December 312007
    
    
    2006Due within 12 months
    
    $
    2,541,053
    
    
    
    2,024,850Due between 12 and 24 months
    
    
    253,957
    
    
    
    707,477Due between 24 and 36 months
    
    
    125,226
    
    
    
    93,679Due between 36 and 48 months
    
    
    50,759
    
    
    
    84,992Due between 48 and 60 months
    
    
    44,959
    
    
    
    37,531After 60 months
    
    
    20,742
    
    
    
    21,093$
    3,036,696
    
    
    
    2,969,622
  Six-monthperiod ended
    
    
    Year endedYears ended December 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Savings accounts
    
    $
    10,908
    
    
    
    12,619
    
    
    
    7,035
    
    
    
    15,037Interest-bearing checking
accounts
    
    
    11,038
    
    
    
    9,396
    
    
    
    3,839
    
    
    
    5,363Money market deposit accounts
    
    
    23,551
    
    
    
    19,446
    
    
    
    7,668
    
    
    
    13,168Certificate accounts
    
    
    141,043
    
    
    
    115,524
    
    
    
    46,807
    
    
    
    76,511$
    186,540
    
    
    
    156,985
    
    
    
    65,349
    
    
    
    110,079
 75




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (11)
    
    Borrowed FundsBorrowed funds at December 31, 2007 and 2006 are presented in the following table:
 December 312007
    
    
    2006Average
    
    
    
    
    
    
    AverageAmount
    
    
    rate
    
    
    Amount
    
    
    rateTerm notes payable to the FHLB
of Pittsburgh:Due within one year
    
    $
    84,031
    
    
    
    5.00
    %
    
    
    35,000
    
    
    
    3.62
    %Due between one and two years
    
    
    35,588
    
    
    
    4.63
    %
    
    
    109,200
    
    
    
    5.03
    %Due between two and three years
    
    
    36,567
    
    
    
    4.36
    %
    
    
    35,500
    
    
    
    4.65
    %Due between three and four years
    
    
    65,000
    
    
    
    5.02
    %
    
    
    36,597
    
    
    
    4.36
    %Due between four and five years
    
    
    35,000
    
    
    
    4.55
    %
    
    
    80,000
    
    
    
    5.01
    %Due between five and ten years
    
    
    839
    
    
    
    2.81
    %
    
    
    35,899
    
    
    
    4.51
    %257,025
    
    
    
    
    
    
    
    332,196Revolving line of credit, Federal
Home Loan Bank of Pittsburgh
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Investor notes payable, due various
dates through 2009
    
    
    4,638
    
    
    
    4.99
    %
    
    
    4,913
    
    
    
    4.99
    %Securities sold under agreement to
repurchase, due within one year
    
    
    77,452
    
    
    
    3.25
    %
    
    
    55,705
    
    
    
    4.25
    %Total borrowed funds
    
    $
    339,115
    
    
    
    
    
    
    
    392,814
    76




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (12)
    
    Income TaxesTotal income tax was allocated for the years ended December 31, 2007 and 2006, the six-month
period ended December 31, 2005 and fiscal year ended June 30, 2005 as follows:
 Six-monthperiod ended
    
    
    Year endedYears ended December 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Income before income taxes
    
    $
    17,456
    
    
    
    19,792
    
    
    
    10,998
    
    
    
    22,741Shareholders equity for
unrealized (loss)/gain on
securities available-for-sale
    
    
    4,672
    
    
    
    (627
    )
    
    
    (2,637
    )
    
    
    3,525Shareholders equity for tax
benefit for excess of fair value
above cost of stock
benefit plans
    
    
    (300
    )
    
    
    (305
    )
    
    
    (691
    )
    
    
    (218
    )Shareholders equity for
pension adjustment
    
    
    3,311
    
    
    
    (6,628
    )
    
    
    
    
    
    
    Shareholders equity for
prior period adjustments
    
    
    
    
    
    
    (1,492
    )
    
    
    
    
    
    
    $
    25,139
    
    
    
    10,740
    
    
    
    7,670
    
    
    
    26,048
  Six-monthperiod ended
    
    
    Year endedYears ended December 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Current
    
    $
    18,206
    
    
    
    11,017
    
    
    
    7,896
    
    
    
    12,276Deferred
    
    
    (750
    )
    
    
    8,775
    
    
    
    3,102
    
    
    
    10,465$
    17,456
    
    
    
    19,792
    
    
    
    10,998
    
    
    
    22,741
  Six-monthperiod ended
    
    Year endedYears ended December 31,
    
    December 31,
    
    June 30,2007
    
    2006
    
    2005
    
    2005Expected tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Tax-exempt interest income
    
    
    (7.3
    )%
    
    
    (7.0
    )%
    
    
    (5.8
    )%
    
    
    (5.9
    )%State income tax, net of federal benefit
    
    
    1.9
    %
    
    
    2.6
    %
    
    
    2.5
    %
    
    
    3.0
    %Bank-owned life insurance
    
    
    (2.3
    )%
    
    
    (2.1
    )%
    
    
    (1.9
    )%
    
    
    (2.0
    )%Other
    
    
    (1.1
    )%
    
    
    (0.8
    )%
    
    
    (2.2
    )%
    
    
    (1.1
    )%Effective tax rate
    
    
    26.2
    %
    
    
    27.7
    %
    
    
    27.6
    %
    
    
    29.0
    %
 77




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     December 312007
    
    
    2006Deferred tax assets:Deferred fee income
    
    $
    499
    
    
    
    297Deferred compensation expense
    
    
    1,719
    
    
    
    1,169Net operating loss carryforwards
    
    
    3,716
    
    
    
    2,408Bad debts
    
    
    10,438
    
    
    
    11,161Accrued postretirement benefit cost
    
    
    698
    
    
    
    366Stock benefit plans
    
    
    375
    
    
    
    356Marketable securities available for sale
    
    
    
    
    
    
    834Writedown of investment securities
    
    
    665
    
    
    
    Reserve for uncollected interest
    
    
    844
    
    
    
    527Pension expense
    
    
    1,013
    
    
    
    Pension and postretirement benefits
    
    
    3,317
    
    
    
    6,628Alternative minimum tax credit
carryforwards
    
    
    1,950
    
    
    
    2,081Other
    
    
    142
    
    
    
    38825,376
    
    
    
    26,215Deferred tax liabilities:Pension expense
    
    
    
    
    
    
    24Marketable securities available for sale
    
    
    3,838
    
    
    
    Purchase accounting
    
    
    3,451
    
    
    
    3,507Intangible asset
    
    
    9,228
    
    
    
    7,510Mortgage servicing rights
    
    
    3,134
    
    
    
    2,691Fixed assets
    
    
    5,993
    
    
    
    6,528Other
    
    
    613
    
    
    
    48026,257
    
    
    
    20,740Net deferred tax asset/ (liability)
    
    $
    (881
    )
    
    
    5,475
   78




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    Accounting for Uncertainty
in Income Taxes, an interpretation of FASB Statement No. 109 (FIN 48)
 Balance at January 1, 2007
    
    $
    841Additions based on tax positions related to the current year
    
    
    Additions for tax positions of prior years
    
    
    126Reductions for tax positions of prior years
    
    
    Settlements
    
    
    Balance at December 31, 2007
    
    $
    967
 Included in the balance at December 31, 2007, are $967,000 of unrecognized tax benefits that,
if recognized, would favorably affect the effective income tax rate. The Company recognizes
interest accrued related to unrecognized tax benefits in income tax expense. The Company recognizes penalties (if any) in income
tax expense. During the year ended December 31, 2007, we accrued approximately $126,000 of
interest. At December 31, 2007 the Company had approximately $337,000 accrued for interest
and no amount accrued for the payment of penalties. It is anticipated that during 2008,
approximately $967,000 of unrecognized tax benefits (including interest) that arose as part of
a previous acquisition will be recognized.The Company is subject to routine audits of our tax returns by the Internal Revenue Service
and all states the Company does business in. The Internal Revenue Service commenced an
examination of our federal income tax returns for the year ended June 30, 2005, the six-month
period ended December 31, 2005 and the year ended December 31, 2006 in January of 2008 that we
anticipate will be completed during 2008. We do not anticipate a material change to our
financial position due to the settlement of this audit. The Company is subject to audit by
any state we do business in for the tax periods ended June 30, 2004, June 30, 2005, December
31, 2005 and December 31, 2006.(13)
    
    Shareholders EquityRetained earnings are partially restricted in connection with regulations related to the
insurance of savings accounts, which requires Northwest to maintain certain statutory
reserves. Northwest may not pay dividends on or repurchase any of their common stock if the
effect thereof would reduce retained earnings below the level of adequate capitalization as
defined by federal and state regulators.In tax years prior to fiscal 1997, Northwest was permitted, under the Internal Revenue Code
(the Code), to deduct an annual addition to a reserve for bad debts in determining taxable
income, subject to certain limitations. Bad debt deductions for income tax purposes are
included in taxable income of later years only if the bad debt reserve is used subsequently
for purposes other than to absorb bad debt losses. Because Northwest does not intend to use
the reserve for purposes other than to absorb losses, no deferred income taxes have been
provided prior to fiscal 1987. Retained earnings at December 31, 2007 include approximately
$39,107,000 representing such bad debt deductions for which no deferred income taxes have been
provided.
 79




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    
 (14)
    
    Earnings Per ShareBasic 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. There were no anti-dilutive options in any period presented in the table below.
The computation of basic and diluted earnings per share follows:
 Six-monthperiod ended
    
    
    Year endedYears ended December 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Net income available to common
shareholders
    
    $
    49,097
    
    
    
    51,536
    
    
    
    28,849
    
    
    
    54,815Weighted average common
shares outstanding
    
    
    49,041
    
    
    
    49,879
    
    
    
    50,850
    
    
    
    49,901Dilutive potential shares due
to effect of stock options
    
    
    313
    
    
    
    257
    
    
    
    314
    
    
    
    467Total weighted average
common shares and
dilutive potential shares
    
    
    49,354
    
    
    
    50,136
    
    
    
    51,164
    
    
    
    50,368Basic earnings per share
    
    $
    1.00
    
    
    
    1.03
    
    
    
    0.57
    
    
    
    1.10Diluted earnings per share
    
    $
    0.99
    
    
    
    1.03
    
    
    
    0.56
    
    
    
    1.09
 (15)
    
    Employee Benefit Plans
 (a)
    
    Pension PlansThe Company maintains noncontributory defined benefit pension plans covering
substantially all employees and the members of its board of directors. Retirement
benefits are based on certain compensation levels, age, and length of service.
Contributions are based on an actuarially determined amount to fund not only benefits
attributed to service to date but also for those expected to be earned in the future. In
addition, the Company has an unfunded Supplemental Executive Retirement Plan (SERP) to
compensate those executive participants eligible for the Companys defined benefit
pension plan whose benefits are limited by Section 415 of the Internal Revenue Code.The Company also sponsors a retirement savings plan in which substantially all employees
participate. The Company provides a matching contribution of 50% of each employees
contribution to a maximum of 6% of the employees compensation.
 80




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Components of net periodic pension cost and other amounts recognized in other
comprehensive income:
  Six-monthperiod ended
    
    
    Year endedYears ended December 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Service cost
    
    $
    4,958
    
    
    
    4,555
    
    
    
    2,256
    
    
    
    3,753Interest cost
    
    
    4,094
    
    
    
    3,492
    
    
    
    1,735
    
    
    
    3,104Expected return on plan assets
    
    
    (4,409
    )
    
    
    (3,601
    )
    
    
    (1,663
    )
    
    
    (2,810
    )Net amortization and deferral
    
    
    825
    
    
    
    793
    
    
    
    490
    
    
    
    701Net periodic pension cost
    
    $
    5,468
    
    
    
    5,239
    
    
    
    2,818
    
    
    
    4,748
  Six-monthperiod ended
    
    
    Year endedYears ended December 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Net loss (gain)
    
    $
    (8,391
    )
    
    
    
    
    
    
    
    
    
    
    Prior service cost (credit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior sevice cost
    
    
    (77
    )
    
    
    
    
    
    
    
    
    
    
    Total recognized in other
comprehensive income
    
    $
    (8,468
    )
    
    
    
    
    
    
    
    
    
    
    Total recognized in net periodic pension
cost and other comprehensive income
    
    $
    (3,000
    )
    
    
    5,239
    
    
    
    2,818
    
    
    
    4,748
  81




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     December 312007
    
    
    2006Change in benefit obligation:Benefit obligation at beginning of year
    
    $
    71,891
    
    
    
    61,363Service cost
    
    
    4,958
    
    
    
    4,555Interest cost
    
    
    4,094
    
    
    
    3,492Actuarial (gain) loss
    
    
    (5,630
    )
    
    
    3,941Benefits paid
    
    
    (1,605
    )
    
    
    (1,460
    )Benefit obligation at end of year
    
    $
    73,708
    
    
    
    71,891Change in plan assets:Fair value of plan assets at beginning of year
    
    $
    55,622
    
    
    
    45,456Actual return on plan assets
    
    
    6,461
    
    
    
    4,904Employer contributions
    
    
    2,465
    
    
    
    6,722Benefits paid
    
    
    (1,605
    )
    
    
    (1,460
    )Fair value of plan assets at end of period
    
    $
    62,943
    
    
    
    55,622Funded status at end of year
    
    $
    (10,765
    )
    
    
    (16,269
    )
  Six-monthperiod ended
    
    Year endedYears ended December 31,
    
    December 31,
    
    June 30,2007
    
    2006
    
    2005
    
    2005Discount rate
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    5.75
    %Expected long-term rate of return on assets
    
    
    8.00
    %
    
    
    8.00
    %
    
    
    8.00
    %
    
    
    8.00
    %Rate of increase in compensation levels
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
 82




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Six-monthperiod ended
    
    Year endedYears ended December 31,
    
    December 31,
    
    June 30,2007
    
    2006
    
    2005
    
    2005Discount rate
    
    
    6.25
    %
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    5.75
    %Expected long-term rate of return on assets
    
    
    8.00
    %
    
    
    8.00
    %
    
    
    8.00
    %
    
    
    8.00
    %Rate of increase in compensation levels
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
    December 31,2007
    
    2006Projected benefit obligation
    
    $
    73,708
    
    
    
    71,891Accumulated benefit obligation
    
    $
    54,668
    
    
    
    52,339Fair value of plan assets
    
    $
    62,943
    
    
    
    55,622
    83




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Target
    
    December 31Asset category
    
    allocation
    
    2007
    
    2006Debt securities
    
    
    20-50
    %
    
    
    39
    %
    
    
    26
    %Equity securities
    
    
    30-60
    %
    
    
    58
    %
    
    
    53
    %Other
    
    
    5-50
    %
    
    
    3
    %
    
    
    21
    %Total
    
    
    
    
    
    
    100
    %
    
    
    100
    %
 The benefits expected to be paid in each year from 2008  2012 are $2,137,000,
$2,187,000, $2,399,000, $2,573,000, and $2,868,000, respectively. The aggregate benefits
expected to be paid in the five years from 2013  2017 are $21,884,000. The expected
benefits to be paid are based on the same assumptions used to measure the Companys
benefit obligations at December 31, 2007 and include estimated future employee service.(b)
    
    Postretirement Healthcare PlanIn addition to pension benefits, the Company provides postretirement healthcare benefits
for certain employees who were employed by the Company as of October 1, 1993 and were at
least 55 years of age on that date. The Company accounts for these benefits in accordance
with Statement of Financial Accounting Standards No. 106, Employers Accounting for
Postretirement Benefits Other than Pensions(SFAS 106). SFAS 106 requires the accrual
method of accounting for postretirement benefits other than pensions.Components of net periodic benefit cost and other amounts recognized in other
comprehensive income:The following table sets forth the net periodic benefit cost for the Companys
postretirement healthcare benefits plan:
 Six-monthperiod ended
    
    
    Year endedYears ended December 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Service cost
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    Interest cost
    
    
    93
    
    
    
    91
    
    
    
    46
    
    
    
    98Recognized actuarial gain
    
    
    42
    
    
    
    34
    
    
    
    17
    
    
    
    29Net periodic benefit cost
    
    $
    135
    
    
    
    125
    
    
    
    63
    
    
    
    127
 84




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Six-monthperiod ending
    
    
    Year endedYears ended December 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Net loss (gain)
    
    $
    (22
    )
    
    
    
    
    
    
    
    
    
    
    Total recognized in other
comprehensive income
    
    $
    (22
    )
    
    
    
    
    
    
    
    
    
    
    Total recognized in net periodic
benefit cost and other
comprehensive income
    
    $
    113
    
    
    
    125
    
    
    
    63
    
    
    
    127
   December 312007
    
    
    2006Change in benefit obligation:Benefit obligation at beginning of year
    
    $
    1,701
    
    
    
    1,642Service cost
    
    
    
    
    
    
    Interest cost
    
    
    93
    
    
    
    91Actuarial (gain) loss
    
    
    20
    
    
    
    110Benefits paid
    
    
    (177
    )
    
    
    (142
    )Benefit obligation at end of year
    
    
    1,637
    
    
    
    1,701Change in plan assets:Fair value of plan assets at beginning of year
    
    $
    
    
    
    
    Employer contributions
    
    
    177
    
    
    
    142Benefits paid
    
    
    (177
    )
    
    
    (142
    )Fair value of plan assets at end of year
    
    $
    
    
    
    
    Funded Status
    
    $
    (1,637
    )
    
    
    (1,701
    )
 85




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Six-monthperiod ended
    
    Year endedYears ended December 31,
    
    December 31,
    
    June 30,2007
    
    2006
    
    2005
    
    2005Discount rate
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    5.75
    %Monthly cost of healthcare insurance per beneficiary (1)
    
    $
    274
    
    
    
    257
    
    
    
    233
    
    
    
    229Annual rate of increase in
healthcare costs
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
 
 (1)
   Six-monthperiod ended
    
    
    Year endedYears ended December 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Net loss
    
    $
    634
    
    
    
    656
    
    
    
    
    
    
    
    
   December 31,2007
    
    2006Projected benefit obligation
    
    $
    1,637
    
    
    
    1,701Accumulated benefit obligation
    
    $
    1,637
    
    
    
    1,701Fair value of plan assets
    
    $
    
    
    
    
    
 (c)
    
    Employee Stock Ownership PlanThe Company had continued its previously leveraged employee stock ownership plan (ESOP)
for employees who have attained age 21 and who have completed a 12-month period of
employment with the Company during which they worked at least 1,000 hours. The Company
can make contributions to the ESOP at the boards discretion. Company shares would then
be purchased periodically in the open market and allocated to employee accounts based on
each employees relative portion of the Companys total eligible compensation recorded
during the year.
 86




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    No contributions were made and no expense was recognized during the years ended December
31, 2007 and 2006 and the six-month period ended December 31, 2005. ESOP compensation
expense was $1,100,000 for the year ended June 30, 2005.(d)
    
    Recognition and Retention PlanOn November 17, 2004, the Company established a Recognition and Retention Plan for
Employees and Outside Directors (RRP) with 290,220 shares authorized. The objective of
the RRP is to enable the Company to provide directors, officers, and employees with a
proprietary interest in the Company. On March 16, 2005, 278,231 shares were issued with
a weighted average grant date fair value per share of $21.42 (total market value of
$5,959,000 at issuance). Total common shares forfeited were 7,637, of which, 3,058,
1,644 and 2,935 shares were forfeited during the years ended December 31, 2007, 2006, and
2005, respectively. During 2007, 4,300 shares were issued with a weighted average grant
date fair value per share of $27.04 (total market value of $116,000 at issuance). Shares
of common stock granted pursuant to the RRP were in the form of restricted stock and
generally vest over a five-year period at the rate of 20% per year, commencing one year
after the award date. As of December 31, 2007, 40% of the March 16, 2005 issuance have
vested, none of the 2007 issuances have vested. Once shares have vested, they are no
longer restricted. Compensation expense, in the amount of the fair market value of the
common stock at the date of the grant, will be recognized pro rata over the five years
during which the shares are payable. While restricted, the recipients are entitled to all
voting and other shareholder rights, except that the shares may not be sold, pledged, or
otherwise disposed of and are required to be held in a trust.(e)
    
    Stock Option PlansOn November 21, 1995, the Company adopted the 1995 Stock Option Plan. The objective of
the Stock Option Plan is to provide an additional performance incentive to the Companys
employees and outside directors. The Stock Option Plan authorized the grant of stock
options and limited stock appreciation rights for 1,380,000 shares of the Companys
common stock. On December 20, 1995, the Company granted 242,000 nonstatutory stock
options to its outside directors at an exercise price of $5.58 per share (95% of the
Companys common stock fair market value per share at grant date) and 923,200 incentive
stock options to employees at an exercise price of $5.875 per share. On March 22, 1996,
the Company granted 122,800 incentive stock options to employees at an exercise price of
$5.625 per share. On December 16, 1998, the Company granted 15,086 incentive stock
options to employees at an exercise price of $9.875 per share. On October 20, 1999, the
Company granted 2,000 nonstatutory stock options to an outside director and 57,700
incentive stock options to employees at an exercise price of $7.812 per share. On
June 21, 2000, the Company granted the remaining 17,214 incentive stock options as well
as 786 previously forfeited options at an exercise price of $6.875 per share. These
options are exercisable for a period of ten years from the grant date with each recipient
vesting at the rate of 20% per year commencing with the grant date.On November 17, 2000, the Company adopted the 2000 Stock Option Plan. This Plan
authorized the grant of stock options and limited stock rights for 800,000 shares of the
Companys common stock. On October 17, 2001, the Company granted 84,000 nonstatutory
stock options to its outside directors and 143,845 incentive stock options to employees
at an exercise price of $9.780 per share. On August 21, 2002, the Company granted 162,940
incentive stock options to employees at an exercise price of $13.30 per share. On
August 20, 2003, the Company granted 182,000 incentive stock options to employees at an
exercise price of $16.59 per share. On December 15, 2004, the Company granted 220,780
incentive stock options to employees at an exercise price of $25.49 per share. These
options are exercisable for a period of ten years from the grant date with each recipient
vesting at the rate of 20% per year commencing with the grant date.On November 17, 2005, the Company adopted the 2005 Stock Option Plan. This Plan
authorizes the grant of stock options and limited stock rights for 725,552 shares of the
Companys common stock. On January 19, 2005, the Company granted 70,000 nonstatutory
stock options to its outside directors and 154,546 incentive stock options to
 87




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
      Years Ended December 31,
    
    Six Months Ended
    
    Year Ended2007
    
    2006
    
    December 31, 2005
    
    June 30, 2005Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    average
    
    
    
    
    
    average
    
    
    
    
    
    averageexercise
    
    
    
    
    
    exercise
    
    
    
    
    
    exercise
    
    
    
    
    
    exerciseNumber
    
    price
    
    Number
    
    price
    
    Number
    
    price
    
    Number
    
    priceBalance at beginning of
year
    
    
    1,112,858
    
    
    $
    18.65
    
    
    
    1,019,189
    
    
    $
    17.55
    
    
    
    1,303,806
    
    
    $
    15.13
    
    
    
    1,061,884
    
    
    $
    9.66Granted
    
    
    181,806
    
    
    
    25.91
    (a)
    
    
    158,333
    
    
    
    22.18
    (a)
    
    
    
    
    
    
    
    
    
    
    445,326
    
    
    
    24.20
    (a)Exercised
    
    
    (52,572
    )
    
    
    12.66
    (b)
    
    
    (63,064
    )
    
    
    10.14
    (b)
    
    
    (282,461
    )
    
    
    6.34
    (b)
    
    
    (199,456
    )
    
    
    6.30
    (b)Forfeited
    
    
    (5,734
    )
    
    
    22.14
    
    
    
    (1,600
    )
    
    
    5.63
    
    
    
    (2,156
    )
    
    
    18.73
    
    
    
    (3,948
    )
    
    
    15.16Balance at end of year
    
    
    1,236,358
    
    
    
    19.96
    
    
    
    1,112,858
    
    
    
    18.65
    
    
    
    1,019,189
    
    
    
    17.55
    
    
    
    1,303,806
    
    
    
    15.13Exercisable at end of year
    
    
    796,270
    
    
    
    17.61
    
    
    
    651,415
    
    
    
    15.78
    
    
    
    559,180
    
    
    
    13.90
    
    
    
    694,821
    
    
    
    10.19
 
 (a)
    
    Weighted average fair value of options at grant date: $5.12, $4.75,
and $6.98, respectively.(b)
    
    The total intrinsic value of options exercised was $773,000,
$898,000, $4,400,000, and $3,300,000, respectively.  Exercise
    
    Exercise
    
    Exercise
    
    Exercise
    
    Exercise
    
    Exercise
    
    Exercise
    
    Exercise
    
    Exercise
    
    Exercise
    
    ExercisePrice
    
    Price
    
    Price
    
    Price
    
    Price
    
    Price
    
    Price
    
    Price
    
    Price
    
    Price
    
    Price
    
    Total$6.875
    
    $7.812
    
    $9.780
    
    $9.875
    
    $13.302
    
    $16.59
    
    $22.18
    
    $22.93
    
    $25.49
    
    $25.89
    
    $28.09
    
    $19.96Options outstanding:Number of options
    
    
    6,300
    
    
    
    21,300
    
    
    
    146,794
    
    
    
    11,842
    
    
    
    122,512
    
    
    
    151,996
    
    
    
    156,456
    
    
    
    222,030
    
    
    
    215,322
    
    
    
    179,806
    
    
    
    2,000
    
    
    
    1,236,358Weighted average
remaining contract
life (years)
    
    
    2.50
    
    
    
    2.25
    
    
    
    4.25
    
    
    
    1.50
    
    
    
    5.00
    
    
    
    6.00
    
    
    
    8.50
    
    
    
    7.75
    
    
    
    7.50
    
    
    
    9.50
    
    
    
    9.50
    
    
    
    5.58Options exercisable:Number of options
    
    
    6,300
    
    
    
    21,300
    
    
    
    146,794
    
    
    
    11,842
    
    
    
    122,512
    
    
    
    151,996
    
    
    
    30,992
    
    
    
    132,749
    
    
    
    171,785
    
    
    
    
    
    
    
    
    
    
    
    796,270Weighted average
remaining term -
vested (years)
    
    
    2.50
    
    
    
    2.25
    
    
    
    4.25
    
    
    
    1.50
    
    
    
    5.00
    
    
    
    6.00
    
    
    
    8.50
    
    
    
    7.75
    
    
    
    7.50
    
    
    
    9.50
    
    
    
    9.50
    
    
    
    6.94
 88




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (16)
    
    Disclosures About Fair Value of Financial InstrumentsSFAS No. 107, Disclosure about Fair Value of Financial Instruments(SFAS 107), requires
disclosure of fair value information about financial instruments whether or not recognized in
the consolidated statement of financial condition. SFAS 107 excludes certain financial
instruments and all nonfinancial instruments from its disclosure requirements. Accordingly,
the aggregate fair value amounts presented do not represent the underlying value of the
Company. The carrying amounts reported in the consolidated statement of financial condition
approximate fair value for the following financial instruments: cash on hand, interest-earning
deposits in other institutions, federal funds sold and other short-term investments, accrued
interest receivable, accrued interest payable, and marketable securities available-for-sale.The following table sets forth the carrying amount and estimated fair value of the Companys
financial instruments included in the consolidated statement of financial condition as of
December 31, 2007 and 2006:
 December 312007
    
    
    2006Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    Estimatedamount
    
    
    fair value
    
    
    amount
    
    
    fair valueFinancial assets:Cash and equivalents
    
    $
    230,616
    
    
    
    230,616
    
    
    
    154,333
    
    
    
    154,333Securities available-for-sale
    
    
    1,133,367
    
    
    
    1,133,367
    
    
    
    767,514
    
    
    
    767,514Securities held-to-maturity
    
    
    
    
    
    
    
    
    
    
    716,967
    
    
    
    720,515Loans receivable, net
    
    
    4,795,622
    
    
    
    4,941,215
    
    
    
    4,412,441
    
    
    
    4,432,894Accrued interest receivable
    
    
    27,084
    
    
    
    27,084
    
    
    
    28,033
    
    
    
    28,033FHLB stock
    
    
    31,304
    
    
    
    31,304
    
    
    
    34,289
    
    
    
    34,289Total financial assets
    
    $
    6,217,993
    
    
    
    6,363,586
    
    
    
    6,113,577
    
    
    
    6,137,578Financial liabilities:Savings and checking accounts
    
    $
    2,505,638
    
    
    
    2,505,638
    
    
    
    2,397,128
    
    
    
    2,397,128Time deposits
    
    
    3,036,696
    
    
    
    3,071,514
    
    
    
    2,969,622
    
    
    
    2,988,453Borrowed funds
    
    
    339,115
    
    
    
    338,671
    
    
    
    392,814
    
    
    
    382,106Trust-preferred securities
    
    
    108,320
    
    
    
    108,320
    
    
    
    103,094
    
    
    
    103,071Accrued interest payable
    
    
    4,356
    
    
    
    4,356
    
    
    
    4,038
    
    
    
    4,038Total financial
liabilities
    
    $
    5,994,125
    
    
    
    6,028,499
    
    
    
    5,866,696
    
    
    
    5,874,796
  Marketable Securities
  89




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    Loans Receivable
  Deposit Liabilities
  Borrowed Funds
  Trust-Preferred Securities
  Off-Balance Sheet Financial Instruments
  (17)
    
    Regulatory Capital RequirementsThe Companys banking subsidiary is subject to various regulatory capital requirements
administered by the federal and state banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory  and possibly additional discretionary  actions
by the regulators that, if undertaken, could have a direct material effect on the Companys
financial statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, specific capital guidelines that involve quantitative measures of
assets, liabilities, and certain off-balance sheet items as calculated under regulatory
accounting practices must be met. The capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings, and other factors.Quantitative measures established by regulation to ensure capital adequacy require the
Companys banking subsidiary to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as
defined) and of Tier I capital to average assets (as defined). At December 31, 2007
 90




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
       December 31, 2007Minimum capital
    
    Well capitalizedActual
    
    requirements
    
    requirementsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal capital (to risk weighted assets):
    
    $
    571,785
    
    
    
    14.10
    %
    
    $
    324,304
    
    
    
    8.00
    %
    
    $
    405,380
    
    
    
    10.00
    %Tier I capital (to risk
weighted assets):
    
    
    529,833
    
    
    
    13.07
    %
    
    
    162,152
    
    
    
    4.00
    %
    
    
    243,228
    
    
    
    6.00
    %Tier I capital (leverage)
(to average assets):
    
    
    529,833
    
    
    
    8.21
    %
    
    
    193,630
    
    
    
    3.00
    %*
    
    
    322,717
    
    
    
    5.00
    %
 December 31, 2006Minimum capital
    
    Well capitalizedActual
    
    requirements
    
    requirementsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal capital (to risk weighted assets):
    
    $579,560
    
    
    15.29
    %
    
    $303,274
    
    
    8.00
    %
    
    $379,093
    
    
    10.00
    %Tier I capital (to risk weighted assets):
    
    539,535
    
    
    14.23
    %
    
    151,637
    
    
    4.00
    %
    
    227,456
    
    
    6.00
    %Tier I capital (leverage) (to average assets):
    
    539,535
    
    
    8.45
    %
    
    191,562
    
    
    3.00
    %*
    
    319,270
    
    
    5.00
    %
 
 *
    
    The FDIC has indicated that the most highly rated institutions, which meet certain
criteria, will be required to maintain a ratio of 3%, and all other institutions will be
required to maintain an additional capital cushion of 100 to 200 basis points. As of
December 31, 2007 and 2006, the Company had not been advised of any additional
requirements in this regard. (18)
    
    Contingent LiabilitiesThe Company and its subsidiaries are subject to a number of asserted and unasserted claims
encountered in the normal course of business. Management believes that the aggregate
liability, if any, that may result from such potential litigation will not have a material
adverse effect on the Companys financial statements.
 91




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (19)
    
    Components of Comprehensive IncomeFor the years ended December 31, 2007 and 2006, the six-month period ended December 31, 2005
and the fiscal year ended June 30, 2005:
 Six-monthperiod endedYears ended December 31,
    
    
    December 31,
    
    
    Year ended June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Unrealized (loss) gain on
marketable securities
available-for-sale
    
    $
    16,695
    
    
    
    (764
    )
    
    
    (7,535
    )
    
    
    10,072Tax benefit (expense)
    
    
    (6,511
    )
    
    
    298
    
    
    
    2,637
    
    
    
    (3,789
    )Reclassification adjustment for
losses (gains) included in net
income, net of tax of $1,877,
$263, $0, and $(142),
respectively
    
    
    (2,938
    )
    
    
    (393
    )
    
    
    
    
    
    
    264Defined benefit plans:Net gain
    
    
    8,413
    
    
    
    
    
    
    
    
    
    
    
    Amortization of prior service
costs
    
    
    77
    
    
    
    
    
    
    
    
    
    
    
    Total defined benefit plans
    
    
    8,490
    
    
    
    
    
    
    
    
    
    
    
    Tax expense
    
    
    (3,311
    )
    
    
    
    
    
    
    
    
    
    
    Other comprehensive income
    
    $
    12,425
    
    
    
    (859
    )
    
    
    (4,898
    )
    
    
    6,547
 (20) Northwest Bancorp, Inc. (Parent Company Only)
  December 312007
    
    
    2006AssetsCash and cash equivalents
    
    $
    3,618
    
    
    
    5,880Marketable securities available-for-sale
    
    
    96
    
    
    
    96Investment in bank subsidiary
    
    
    714,160
    
    
    
    697,236Other assets
    
    
    3,582
    
    
    
    4,626Total assets
    
    $
    721,456
    
    
    
    707,838Liabilities and Shareholders EquityLiabilities:Debentures payable
    
    $
    108,249
    
    
    
    103,094Other liabilities
    
    
    329
    
    
    
    183Total liabilities
    
    
    108,578
    
    
    
    103,277Shareholders equity
    
    
    612,878
    
    
    
    604,561Total liabilities and
shareholders equity
    
    $
    721,456
    
    
    
    707,838
 92




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Six-monthperiod ended
    
    
    Year endedYears ended December 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Income:Interest income
    
    $
    480
    
    
    
    3,891
    
    
    
    259
    
    
    
    823Dividends from bank subsidiary
    
    
    49,000
    
    
    
    45,000
    
    
    
    19,000
    
    
    
    16,000Undistributed earnings from equity
investment in bank subsidiary
    
    
    4,838
    
    
    
    16,551
    
    
    
    12,890
    
    
    
    44,449Other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3Total income
    
    
    54,318
    
    
    
    65,442
    
    
    
    32,149
    
    
    
    61,275Expense:Compensation and benefits
    
    
    366
    
    
    
    378
    
    
    
    160
    
    
    
    804Amortization of intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    262Other expense
    
    
    159
    
    
    
    182
    
    
    
    155
    
    
    
    364Loss on early extinquishment of debt
    
    
    
    
    
    
    3,124
    
    
    
    
    
    
    
    Interest expense
    
    
    7,250
    
    
    
    15,616
    
    
    
    4,622
    
    
    
    8,079Total expense
    
    
    7,775
    
    
    
    19,300
    
    
    
    4,937
    
    
    
    9,509Income before
income taxes
    
    
    46,543
    
    
    
    46,142
    
    
    
    27,212
    
    
    
    51,766Federal and state income taxes
    
    
    (2,554
    )
    
    
    (5,394
    )
    
    
    (1,637
    )
    
    
    (3,049
    )Net income
    
    $
    49,097
    
    
    
    51,536
    
    
    
    28,849
    
    
    
    54,815
 93




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Six-monthperiod ended
    
    
    Year endedYears ended December 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2005Operating activities:Net income
    
    $
    49,097
    
    
    
    51,536
    
    
    
    28,849
    
    
    
    54,815Adjustments to reconcile net income to
net cash provided (used) by
operating activities:Undistributed earnings of subsidiary
    
    
    (4,838
    )
    
    
    (16,551
    )
    
    
    (12,890
    )
    
    
    (44,449
    )Loss on early extinguishment
    
    
    
    
    
    
    3,124
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    262Noncash compensation expense
related to stock benefit plans
    
    
    2,454
    
    
    
    2,296
    
    
    
    1,085
    
    
    
    1,512Net change in other assets and
liabilities
    
    
    1,636
    
    
    
    (3,242
    )
    
    
    (5,756
    )
    
    
    (1,216
    )Net cash provided by
operating activities
    
    
    48,349
    
    
    
    37,163
    
    
    
    11,288
    
    
    
    10,924Investing activities:Additional investment in subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loan to Northwest Bancorp, MHC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000Proceeds from sale or maturity of
marketable securities available-for-sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000Acquisitions, net of cash received
    
    
    5,048
    
    
    
    
    
    
    
    (11,193
    )
    
    
    (3,000
    )Net cash (used in) provided by
investing activities
    
    
    5,048
    
    
    
    
    
    
    
    (11,193
    )
    
    
    8,000Financing activities:Cash dividends paid
    
    
    (15,696
    )
    
    
    (13,727
    )
    
    
    (6,119
    )
    
    
    (20,171
    )Treasury stock repurchases
    
    
    (40,825
    )
    
    
    (8,080
    )
    
    
    (17,183
    )
    
    
    Proceeds/ (redemption) of trust preferred
stock offering
    
    
    
    
    
    
    (102,062
    )
    
    
    103,094
    
    
    
    Proceeds from options exercised
    
    
    862
    
    
    
    873
    
    
    
    1,734
    
    
    
    797Net cash provided (used) by
financing activities
    
    
    (55,659
    )
    
    
    (122,996
    )
    
    
    81,526
    
    
    
    (19,374
    )Net increase (decrease) in
cash and cash equivalents
    
    $
    (2,262
    )
    
    
    (85,833
    )
    
    
    81,621
    
    
    
    (450
    )Cash and cash equivalents at beginning of year
    
    
    5,880
    
    
    
    91,713
    
    
    
    10,092
    
    
    
    10,542Net increase (decrease) in cash and
cash equivalents
    
    $
    (2,262
    )
    
    
    (85,833
    )
    
    
    81,621
    
    
    
    (450
    )Cash and cash equivalents at end of year
    
    $
    3,618
    
    
    
    5,880
    
    
    
    91,713
    
    
    
    10,092
 (21)
    
    Business SegmentsThe Company has identified two reportable business segments based upon the operating approach
currently used by management. The Community Banking segment includes the savings bank
subsidiary of the Company, Northwest Savings Bank, as well as the subsidiaries of the savings
bank that provide similar products and services. The savings bank is a
 94




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     At or for the year ended
    
    Community
    
    
    Consumer
    
    
    AllDecember 31, 2007
    
    banking
    
    
    finance
    
    
    other*
    
    
    ConsolidatedExternal interest income
    
    $
    375,761
    
    
    
    20,266
    
    
    
    4
    
    
    $
    396,031Intersegment interest income
    
    
    7,991
    
    
    
    
    
    
    
    (7,991
    )
    
    
    Interest expense
    
    
    195,533
    
    
    
    8,232
    
    
    
    7,250
    
    
    
    211,015Provision for loan losses
    
    
    6,000
    
    
    
    2,743
    
    
    
    
    
    
    
    8,743Noninterest income
    
    
    40,250
    
    
    
    2,552
    
    
    
    220
    
    
    
    43,022Noninterest expense
    
    
    143,878
    
    
    
    8,339
    
    
    
    525
    
    
    
    152,742Income tax expense (benefit)
    
    
    18,607
    
    
    
    1,403
    
    
    
    (2,554
    )
    
    
    17,456Net income
    
    $
    59,984
    
    
    
    2,101
    
    
    
    (12,988
    )
    
    $
    49,097Total assets
    
    $
    6,629,725
    
    
    
    122,657
    
    
    
    (88,866
    )
    
    $
    6,663,516
 At or for the year ended
    
    Community
    
    
    Consumer
    
    
    AllDecember 31, 2006
    
    banking
    
    
    finance
    
    
    other*
    
    
    ConsolidatedExternal interest income
    
    $
    349,964
    
    
    
    18,605
    
    
    
    4
    
    
    $
    368,573Intersegment interest income
    
    
    8,234
    
    
    
    
    
    
    
    (8,234
    )
    
    
    Interest expense
    
    
    178,634
    
    
    
    8,494
    
    
    
    3,981
    
    
    
    191,109Provision for loan losses
    
    
    6,000
    
    
    
    2,480
    
    
    
    
    
    
    
    8,480Noninterest income
    
    
    42,988
    
    
    
    2,515
    
    
    
    523
    
    
    
    46,026Noninterest expense
    
    
    131,847
    
    
    
    8,150
    
    
    
    3,685
    
    
    
    143,682Income tax expense (benefit)
    
    
    24,435
    
    
    
    751
    
    
    
    (5,394
    )
    
    
    19,792Net income
    
    $
    60,270
    
    
    
    1,245
    
    
    
    (9,979
    )
    
    $
    51,536Total assets
    
    $
    6,493,770
    
    
    
    124,993
    
    
    
    (90,948
    )
    
    $
    6,527,815
 95




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    At or for the six-month period
    
    Community
    
    Consumer
    
    Allended December 31, 2005
    
    banking
    
    finance
    
    other*
    
    ConsolidatedExternal interest income
    
    $
    161,747
    
    
    
    8,700
    
    
    
    2
    
    
    $
    170,449Intersegment interest income
    
    
    3,446
    
    
    
    
    
    
    
    (3,446
    )
    
    
    Interest expense
    
    
    74,766
    
    
    
    3,591
    
    
    
    1,057
    
    
    
    79,414Provision for loan losses
    
    
    3,250
    
    
    
    1,472
    
    
    
    
    
    
    
    4,722Noninterest income
    
    
    18,416
    
    
    
    1,296
    
    
    
    139
    
    
    
    19,851Noninterest expense
    
    
    62,199
    
    
    
    3,803
    
    
    
    315
    
    
    
    66,317Income tax expense (benefit)
    
    
    12,294
    
    
    
    341
    
    
    
    (1,637
    )
    
    
    10,998Net income
    
    $
    31,100
    
    
    
    789
    
    
    
    (3,040
    )
    
    $
    28,849Total assets
    
    $
    6,439,163
    
    
    
    126,070
    
    
    
    (87,926
    )
    
    $
    6,477,307
 At or for the fiscal year ended
    
    Community
    
    
    Consumer
    
    
    AllJune 30, 2005
    
    banking
    
    
    finance
    
    
    other*
    
    
    ConsolidatedExternal interest income
    
    $
    304,144
    
    
    
    17,203
    
    
    
    477
    
    
    $
    321,824Intersegment interest income
    
    
    5,449
    
    
    
    
    
    
    
    (5,449
    )
    
    
    Interest expense
    
    
    129,767
    
    
    
    5,757
    
    
    
    2,523
    
    
    
    138,047Provision for loan losses
    
    
    6,980
    
    
    
    2,586
    
    
    
    
    
    
    
    9,566Noninterest income
    
    
    29,374
    
    
    
    2,388
    
    
    
    242
    
    
    
    32,004Noninterest expense
    
    
    119,405
    
    
    
    7,824
    
    
    
    1,430
    
    
    
    128,659Income tax expense (benefit)
    
    
    24,367
    
    
    
    1,423
    
    
    
    (3,049
    )
    
    
    22,741Net income
    
    $
    58,448
    
    
    
    2,001
    
    
    
    (5,634
    )
    
    $
    54,815Total assets
    
    $
    6,295,545
    
    
    
    123,363
    
    
    
    (88,426
    )
    
    $
    6,330,482
 
 *
    
    Eliminations consist of intercompany interest income and interest expense. (22)
    
    Guaranteed Preferred Beneficial Interests in Companys Junior Subordinated Deferrable
Interest Debentures (Trust-Preferred Securities)
 The Company has three statutory business trusts: Northwest Bancorp Capital Trust III, a
Delaware statutory business trust, and Northwest Bancorp Statutory Trust IV, a Connecticut
statutory business trust and Penn Laurel Financial Corp. Trust I, a Delaware statutory
business trust (the Trusts). The Penn Laurel Financial Corp, Trust I was assumed with the
acquisition of Penn Laurel Financial Corporation in June 2007. These 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. Northwest Bancorp Capital Trust III issued 50,000
cumulative
 96




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    trust preferred securities in a private transaction to a pooled investment vehicle
on December 5, 2006 (liquidation value of $1,000 per preferred security or $50,000,000) with a
stated maturity of December 30, 2035 and a floating rate of interest, which is reset
quarterly, equal to three-month LIBOR plus 1.38%. Northwest Bancorp Statutory Trust IV issued
50,000 cumulative trust preferred securities in a private transaction to a pooled investment
vehicle on December 15, 2006 (liquidation value of $1,000 per preferred security or
$50,000,000) with a stated maturity of December 15, 2035 and a floating rate of interest,
which is reset quarterly, equal to three-month LIBOR plus 1.38%. Penn Laurel Financial Corp.
Trust I issued 5,000 cumulative trust preferred securities in a private transaction to a
pooled investment vehicle on January 23, 2004 (liquidation value of $1,000 per preferred
security or $5,000,000) with a stated maturity of January 23, 2034 and floating rate of
interest, which is reset quarterly, equal to three-month LIBOR plus 2.80%.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. Northwest Bancorp Statutory Trust III holds
$51,547,000 of the Companys junior subordinated debentures due December 30, 2035 with a
floating rate of interest, reset quarterly, of three-month LIBOR plus 1.38%. The rate in
effect at December 31, 2007 was 6.21%. Northwest Bancorp Statutory Trust IV holds $51,547,000
of the Companys junior subordinated debentures due December 15, 2035 with a floating rate of
interest, reset quarterly, of three-month LIBOR plus 1.38%. The rate in effect at December 31,
2007 was 6.37%. Penn Laurel Financial Corp. Trust I holds $5,155,000 of the Companys junior
subordinated debentures due January 23, 2034 with a floating rate of interest, reset
quarterly, of three-month LIBOR plus 2.80%. The in effect at December 31, 2007 was 7.78%.
These subordinated debentures are the sole assets of the Trusts.Cash distributions on the trust securities are made on a quarterly basis to the extent
interest on the debentures is received by the Trusts. The Company has 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. Interest on the
subordinated debentures and distributions on the trust securities is cumulative. The Company
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 on or after December 31, 2010. 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 trust to become subject to federal income tax or to certain other taxes or
governmental charges;
    
    the trust to register as an investment company; and
    
    the Company to become subject to capital requirements and the preferred securities do
not qualify as Tier I capital.
 The Company may, at any time, dissolve the trust and distribute the debentures to the trust
security holders, subject to receipt of any required regulatory approval(s).
 97




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (23)
    
    Selected Quarterly Financial Data (Unaudited)
 Three months endedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31(In thousands, except per share data)2007:Interest income
    
    $
    95,592
    
    
    
    98,827
    
    
    
    101,558
    
    
    
    100,054Interest expense
    
    
    50,857
    
    
    
    53,458
    
    
    
    54,468
    
    
    
    52,232Net interest income
    
    
    44,735
    
    
    
    45,369
    
    
    
    47,090
    
    
    
    47,822Provision for loan losses
    
    
    2,006
    
    
    
    2,066
    
    
    
    2,149
    
    
    
    2,522Noninterest income
    
    
    10,489
    
    
    
    11,366
    
    
    
    5,247
    
    
    
    15,920Noninterest expenses
    
    
    37,876
    
    
    
    37,777
    
    
    
    38,481
    
    
    
    38,608Income before
income taxes
    
    
    15,342
    
    
    
    16,892
    
    
    
    11,707
    
    
    
    22,612Income taxes
    
    
    4,045
    
    
    
    4,592
    
    
    
    2,121
    
    
    
    6,698Net income
    
    $
    11,297
    
    
    
    12,300
    
    
    
    9,586
    
    
    
    15,914Basic earnings per share
    
    $
    0.23
    
    
    
    0.25
    
    
    
    0.20
    
    
    
    0.33Diluted earnings per share
    
    $
    0.23
    
    
    
    0.25
    
    
    
    0.20
    
    
    
    0.33
 98




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    Three months endedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31(In thousands, except per share data)2006:Interest income
    
    $
    89,402
    
    
    
    91,316
    
    
    
    93,365
    
    
    
    94,490Interest expense
    
    
    43,542
    
    
    
    46,532
    
    
    
    49,404
    
    
    
    51,631Net interest income
    
    
    45,860
    
    
    
    44,784
    
    
    
    43,961
    
    
    
    42,859Provision for loan losses
    
    
    2,099
    
    
    
    2,067
    
    
    
    2,237
    
    
    
    2,077Noninterest income
    
    
    13,965
    
    
    
    10,207
    
    
    
    11,372
    
    
    
    10,482Noninterest expenses
    
    
    35,203
    
    
    
    34,897
    
    
    
    35,278
    
    
    
    38,304Income before
income taxes
    
    
    22,523
    
    
    
    18,027
    
    
    
    17,818
    
    
    
    12,960Income taxes
    
    
    6,711
    
    
    
    5,000
    
    
    
    4,961
    
    
    
    3,120Net income
    
    $
    15,812
    
    
    
    13,027
    
    
    
    12,857
    
    
    
    9,840Basic earnings per share
    
    $
    0.32
    
    
    
    0.26
    
    
    
    0.26
    
    
    
    0.20Diluted earnings per share
    
    $
    0.32
    
    
    
    0.26
    
    
    
    0.26
    
    
    
    0.20
 Three months endedSeptember 30
    
    
    December 31(In thousands, except per share data)Six-month period ended December 31, 2005:Interest income
    
    $
    83,737
    
    
    
    86,712Interest expense
    
    
    38,389
    
    
    
    41,025Net interest income
    
    
    45,348
    
    
    
    45,687Provision for loan losses
    
    
    2,411
    
    
    
    2,311Noninterest income
    
    
    9,665
    
    
    
    10,186Noninterest expenses
    
    
    32,455
    
    
    
    33,862Income before
income taxes
    
    
    20,147
    
    
    
    19,700Income taxes
    
    
    6,126
    
    
    
    4,872Net income
    
    $
    14,021
    
    
    
    14,828Basic earnings per share
    
    $
    0.28
    
    
    
    0.29Diluted earnings per share
    
    $
    0.27
    
    
    
    0.29
 99




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    Three months endedSeptember 30
    
    
    December 31
    
    
    March 31
    
    
    June 30(In thousands, except per share data)Fiscal 2005:Interest income
    
    $
    78,133
    
    
    
    79,468
    
    
    
    81,752
    
    
    
    82,471Interest expense
    
    
    33,300
    
    
    
    34,082
    
    
    
    34,429
    
    
    
    36,236Net interest income
    
    
    44,833
    
    
    
    45,386
    
    
    
    47,323
    
    
    
    46,235Provision for loan losses
    
    
    1,839
    
    
    
    2,164
    
    
    
    2,906
    
    
    
    2,657Noninterest income
    
    
    7,610
    
    
    
    7,501
    
    
    
    8,558
    
    
    
    8,335Noninterest expenses
    
    
    30,435
    
    
    
    32,604
    
    
    
    32,969
    
    
    
    32,651Income before
income taxes
    
    
    20,169
    
    
    
    18,119
    
    
    
    20,006
    
    
    
    19,262Income taxes
    
    
    5,994
    
    
    
    5,380
    
    
    
    5,972
    
    
    
    5,395Net income
    
    $
    14,175
    
    
    
    12,739
    
    
    
    14,034
    
    
    
    13,867Basic earnings per share
    
    $
    0.29
    
    
    
    0.26
    
    
    
    0.28
    
    
    
    0.27Diluted earnings per share
    
    $
    0.29
    
    
    
    0.25
    
    
    
    0.28
    
    
    
    0.27
 100




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##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
    
 ITEM 9B.
    
    OTHER INFORMATION
  
 PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
   101




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Number of securities tobe issued upon exercise
    
    
    
    
    
    
    Number of securitiesEquity compensation plans
    
    of outstanding options
    
    
    Weighted average
    
    
    remaining available forapproved by stockholders
    
    and rights
    
    
    exercise price
    
    
    issuance under plan1995 Stock Option Plan
    
    
    39,442
    
    
    $
    8.28
    
    
    
    2000 Stock Option Plan
    
    
    636,624
    
    
    
    17.40
    
    
    
    2004 Stock Option Plan
    
    
    560,292
    
    
    
    23.69
    
    
    
    160,867Total
    
    
    1,236,358
    
    
    $
    19.96
    
    
    
    160,867
 
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 Financial Statements
  (A)
    
    Managements Report on Internal Control Over Financial Reporting(B)
    
    Report of Independent Registered Public Accounting Firm on
Internal Control Over Financial Reporting(C)
    
    Report of Independent Registered Public Accounting Firm(D)
    
    Consolidated Statements of Financial Condition  at December 31,
2007, and 2006(E)
    
    Consolidated Statements of Income  Years ended December 31,
2007 and 2006, the six months ended December 31, 2005 and the fiscal year ended
June 30, 2005(F)
    
    Consolidated Statements of Changes in Shareholders Equity 
Years ended December 31, 2007 and 2006, six months ended December 31, 2005 and
fiscal year ended June 30, 2005(G)
    
    Consolidated Statements of Cash Flows  Years ended December 31,
2007 and 2006, six months ended December 31, 2005 and fiscal year ended June 30,
2005(H)
    
    Notes to Consolidated Financial Statements.
 Financial Statement Schedules
  Exhibits
 Regulation
    
    
    
    Reference to Prior FilingS-K Exhibit
    
    
    
    or Exhibit NumberNumber
    
    Document
    
    Attached Hereto2
    
    Plan of acquisition, reorganization,
arrangement, liquidation or
succession
    
    None
 102




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##### Table of Contents



Regulation
    
    
    
    Reference to Prior FilingS-K Exhibit
    
    
    
    or Exhibit NumberNumber
    
    Document
    
    Attached Hereto3
    
    Articles of Incorporation and Bylaws
    
    ***4
    
    Instruments defining the rights of
security holders, including
indentures
    
    *9
    
    Voting trust agreement
    
    None10.1
    
    Restated Deferred Compensation Plan
for Directors
    
    *10.2
    
    Retirement Plan for Outside Directors
    
    *10.3
    
    Northwest Savings Bank Nonqualified
Supplemental Retirement Plan
    
    *10.4
    
    Employee Stock Ownership Plan
    
    *10.6
    
    Employment Agreement for William J.
Wagner
    
    **10.7
    
    Form of Senior Vice President
Employment Agreement
    
    **10.8
    
    Northwest Bancorp, Inc. 2004 Stock
Option Plan
    
    ****10.9
    
    Northwest Bancorp, Inc. 2004
Recognition and Retention Plan
    
    ****10.10
    
    Bonus Plan
    
    10.1011
    
    Statement re: computation of per
share earnings
    
    None12
    
    Statement re: computation or ratios
    
    Not required16
    
    Letter re: change in certifying
accountant
    
    None18
    
    Letter re: change in accounting
principles
    
    None21
    
    Subsidiaries of Registrant
    
    2122
    
    Published report regarding matters
submitted to vote of security
holders
    
    None23
    
    Consent of experts and counsel
    
    2324
    
    Power of Attorney
    
    Not Required28
    
    Information from reports furnished
to State insurance regulatory
authorities
    
    None31.1
    
    Certification pursuant to Rule
13a-14 of the Securities Exchange
Act of 1934, as Amended, as adopted
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    31.131.2
    
    Certification pursuant to Rule
13a-14 of the Securities Exchange
Act of 1934, as Amended, as adopted
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
    
    31.2
 103




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##### Table of Contents



Regulation
    
    
    
    Reference to Prior FilingS-K Exhibit
    
    
    
    or Exhibit NumberNumber
    
    Document
    
    Attached Hereto32
    
    Certification pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002
    
    32
 
 *
    
    Incorporated by reference to the Companys Registration Statement on Form S-4 (File No.
333-31687), originally filed with the SEC on July 21, 1997, as amended on October 9, 1997 and
November 4, 1997.**
    
    This document has been filed with the Securities and Exchange Commission on September 30,
2002.***
    
    Incorporated by reference to the Definitive Proxy Statement for the 2000 Annual Meeting of
Shareholders (File No. 000-23817), filed with the SEC on November 21, 2000.****
    
    Incorporated by reference to the Definitive Proxy Statement for the 2004 Annual Meeting of
Shareholders (File No. 000-23817), filed with the SEC on October 6, 2004. 104




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##### Table of Contents



SIGNATURES
  NORTHWEST BANCORP, INC.
 Date: March 12, 2008
    By:

/s/
William J. WagnerWilliam J. Wagner, Chairman, President andChief Executive Officer (Principal
Executive Officer)  By:
    
    /s/
William J. Wagner
    
    
    
    By:
    
    /s/ William W. Harvey, Jr.William J. Wagner, Chairman, President,
Chief Executive Officer and Director
    
    
    
    
    
    William W. Harvey, Jr., Executive Vice
President, Finance (Principal
Financial and Accounting Officer)Date:
    
    March 12, 2008
    
    
    
    
    
    Date:
    
    March 12, 2008By:
    
    /s/ John M. Bauer
    
    
    
    By:
    
    /s/ Richard L. CarrJohn M. Bauer, Director
    
    
    
    
    
    Richard L. Carr, DirectorDate:
    
    March 12, 2008
    
    
    
    
    
    Date:
    
    March 12, 2008By:
    
    /s/ Richard E. McDowell
    
    
    
    By:
    
    /s/ Thomas K. Creal, IIIRichard E. McDowell, Director
    
    
    
    
    
    Thomas K. Creal, III, DirectorDate:
    
    March 12, 2008
    
    
    
    
    
    Date:
    
    March 12, 2008By:
    
    /s/ Joseph F. Long
    
    
    
    By:
    
    /s/ A. Paul KingJoseph F. Long, Director
    
    
    
    
    
    A. Paul King, DirectorDate:
    
    March 12, 2008
    
    
    
    
    
    Date:
    
    March 12, 2008By:
    
    /s/ Robert G. Ferrier
    
    
    
    By:
    
    /s/ Philip
M. TredwayRobert G. Ferrier, Director
    
    
    
    
    

Philip
M. Tredway, DirectorDate:
    
    March 12, 2008
    
    
    
    
    
    Date:
    
    March 12, 2008
 105