##### 



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, 2006
 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
    
    (I.R.S. Employerincorporation or organization)
    
    Identification Number)100 Liberty Street, Warren, Pennsylvania
    
    16365(Address of Principal Executive Offices)
    
    Zip Code
 (814) 726-2140  (Registrants telephone number)
  Title of each Class
    
    Name of each exchange on which registeredCommon Stock, $0.10 Par Value
    
    NASDAQ Stock Market, LLC
   o þ
 o þ
 þ o
 o
  o þ o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



PART I
 
 ITEM 1. BUSINESS
 General
 Northwest Bancorp, Inc.
     www.northwestsavingsbank.com
 Northwest Savings Bank
  2




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##### 



Market Area
  Lending Activities
 General.
  3




---



##### 



Analysis of Loan Portfolio.
 At December 31,
    
    
    At June 30,2006
    
    
    2005
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in Thousands)
    
    
    (Dollars in Thousands)Real estate:One- to four-family
    
    $
    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
    %
    
    
    2,056,105
    
    
    
    66.9
    %Multifamily and
commercial
    
    
    701,951
    
    
    
    15.6
    
    
    
    594,503
    
    
    
    12.6
    
    
    
    534,224
    
    
    
    11.9
    
    
    
    454,606
    
    
    
    11.0
    
    
    
    377,507
    
    
    
    10.8
    
    
    
    304,456
    
    
    
    9.9Total real estate loans
    
    
    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
    
    
    
    2,360,561
    
    
    
    76.8Consumer:Automobile
    
    
    138,401
    
    
    
    3.1
    
    
    
    144,519
    
    
    
    3.1
    
    
    
    138,102
    
    
    
    3.1
    
    
    
    120,887
    
    
    
    2.9
    
    
    
    119,778
    
    
    
    3.4
    
    
    
    117,240
    
    
    
    3.8Home improvement
    
    
    887,352
    
    
    
    19.7
    
    
    
    780,451
    
    
    
    16.5
    
    
    
    737,619
    
    
    
    16.5
    
    
    
    588,192
    
    
    
    14.2
    
    
    
    387,698
    
    
    
    11.1
    
    
    
    293,865
    
    
    
    9.6Education loans
    
    
    11,973
    
    
    
    0.3
    
    
    
    120,504
    
    
    
    2.5
    
    
    
    112,462
    
    
    
    2.5
    
    
    
    95,599
    
    
    
    2.3
    
    
    
    90,485
    
    
    
    2.6
    
    
    
    84,817
    
    
    
    2.8Loans on savings accounts
    
    
    10,313
    
    
    
    0.2
    
    
    
    9,066
    
    
    
    0.2
    
    
    
    8,500
    
    
    
    0.2
    
    
    
    8,038
    
    
    
    0.2
    
    
    
    7,879
    
    
    
    0.2
    
    
    
    7,733
    
    
    
    0.2Other (1)
    
    
    109,303
    
    
    
    2.4
    
    
    
    106,390
    
    
    
    2.3
    
    
    
    102,787
    
    
    
    2.3
    
    
    
    112,163
    
    
    
    2.7
    
    
    
    107,522
    
    
    
    3.1
    
    
    
    113,570
    
    
    
    3.7Total consumer loans
    
    
    1,157,342
    
    
    
    25.7
    
    
    
    1,160,930
    
    
    
    24.6
    
    
    
    1,099,470
    
    
    
    24.6
    
    
    
    924,879
    
    
    
    22.3
    
    
    
    713,362
    
    
    
    20.4
    
    
    
    617,225
    
    
    
    20.1Commercial business
    
    
    235,311
    
    
    
    5.2
    
    
    
    157,572
    
    
    
    3.3
    
    
    
    142,391
    
    
    
    3.2
    
    
    
    149,509
    
    
    
    3.6
    
    
    
    130,694
    
    
    
    3.7
    
    
    
    95,968
    
    
    
    3.1Total loans receivable,
gross
    
    
    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
    %
    
    
    3,073,754
    
    
    
    100.0
    %Deferred loan fees
    
    
    (3,027
    )
    
    
    
    
    
    
    (3,877
    )
    
    
    
    
    
    
    (4,257
    )
    
    
    
    
    
    
    (6,630
    )
    
    
    
    
    
    
    (7,402
    )
    
    
    
    
    
    
    (2,938
    )Undisbursed loan proceeds
    
    
    (52,505
    )
    
    
    
    
    
    
    (59,348
    )
    
    
    
    
    
    
    (56,555
    )
    
    
    
    
    
    
    (53,081
    )
    
    
    
    
    
    
    (42,272
    )
    
    
    
    
    
    
    (36,168
    )Allowance for loan losses
(real estate loans)
    
    
    (17,936
    )
    
    
    
    
    
    
    (16,875
    )
    
    
    
    
    
    
    (15,918
    )
    
    
    
    
    
    
    (15,113
    )
    
    
    
    
    
    
    (13,660
    )
    
    
    
    
    
    
    (11,703
    )Allowance for loan losses
(other loans)
    
    
    (19,719
    )
    
    
    
    
    
    
    (16,536
    )
    
    
    
    
    
    
    (15,645
    )
    
    
    
    
    
    
    (15,557
    )
    
    
    
    
    
    
    (13,506
    )
    
    
    
    
    
    
    (10,339
    )Total loans receivable, net
    
    $
    4,412,441
    
    
    
    
    
    
    
    4,622,269
    
    
    
    
    
    
    
    4,376,884
    
    
    
    
    
    
    
    4,053,941
    
    
    
    
    
    
    
    3,429,874
    
    
    
    
    
    
    
    3,012,606
 
 (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
    
    $
    205,308
    
    
    
    120,731
    
    
    
    115,204
    
    
    
    235,035
    
    
    
    1,734,746
    
    
    $
    2,411,024Multifamily and commercial
    
    
    260,232
    
    
    
    114,268
    
    
    
    77,112
    
    
    
    159,816
    
    
    
    90,523
    
    
    
    701,951Consumer loans
    
    
    314,660
    
    
    
    129,407
    
    
    
    117,721
    
    
    
    194,727
    
    
    
    400,827
    
    
    
    1,157,342Commercial business loans
    
    
    87,236
    
    
    
    38,306
    
    
    
    25,850
    
    
    
    53,574
    
    
    
    30,345
    
    
    
    235,311Total loans
    
    $
    867,436
    
    
    
    402,712
    
    
    
    335,887
    
    
    
    643,152
    
    
    
    2,256,441
    
    
    $
    4,505,628
 4




---



##### 



Fixed- and Adjustable-Rate Loan Schedule.
 Fixed
    
    
    Adjustable
    
    
    Total(In Thousands)Real estate loans:One- to four-family residential
    
    $
    2,203,897
    
    
    
    87,065
    
    
    $
    2,290,962Multifamily and commercial
    
    
    153,070
    
    
    
    451,951
    
    
    
    605,021Consumer loans
    
    
    832,880
    
    
    
    113,754
    
    
    
    946,634Commercial business loans
    
    
    45,493
    
    
    
    157,325
    
    
    
    202,818Total loans
    
    $
    3,235,340
    
    
    
    810,095
    
    
    $
    4,045,435
 One- to Four-Family Residential Real Estate Loans.
      5




---



##### 



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




---



##### 



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




---



##### 



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




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##### 



Loans Past Due and Nonperforming Assets.
 At December 31,
    
    
    At June 30,2006
    
    
    2005
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002Number
    
    
    Balance(Dollars in Thousands)Loans past due 30 days to 59 days:One- to four-family residential loans
    
    
    352
    
    
    $
    24,078
    
    
    
    26,290
    
    
    
    3,941
    
    
    
    5,765
    
    
    
    3,830
    
    
    
    4,068Multifamily and commercial loans
    
    
    68
    
    
    
    7,975
    
    
    
    4,924
    
    
    
    5,198
    
    
    
    2,201
    
    
    
    1,291
    
    
    
    1,278Consumer loans
    
    
    950
    
    
    
    9,096
    
    
    
    12,053
    
    
    
    5,611
    
    
    
    4,877
    
    
    
    3,832
    
    
    
    3,243Commercial business loans
    
    
    60
    
    
    
    4,325
    
    
    
    2,450
    
    
    
    1,000
    
    
    
    782
    
    
    
    308
    
    
    
    165Total loans
past due 30 days to 59 days
    
    
    1,430
    
    
    $
    45,474
    
    
    
    45,717
    
    
    
    15,750
    
    
    
    13,625
    
    
    
    9,261
    
    
    
    8,754Loans past due 60 days to 89 days:One- to four-family residential loans
    
    
    93
    
    
    
    5,970
    
    
    
    9,156
    
    
    
    4,687
    
    
    
    4,925
    
    
    
    3,998
    
    
    
    3,478Multifamily and commercial loans
    
    
    26
    
    
    
    3,846
    
    
    
    3,399
    
    
    
    8,156
    
    
    
    1,023
    
    
    
    873
    
    
    
    269Consumer loans
    
    
    276
    
    
    
    2,833
    
    
    
    3,773
    
    
    
    3,134
    
    
    
    2,032
    
    
    
    1,920
    
    
    
    1,604Commercial business loans
    
    
    16
    
    
    
    501
    
    
    
    263
    
    
    
    279
    
    
    
    309
    
    
    
    159
    
    
    
    35Total loans past due 60 days to 89 days
    
    
    411
    
    
    $
    13,150
    
    
    
    16,591
    
    
    
    16,256
    
    
    
    8,289
    
    
    
    6,950
    
    
    
    5,386Loans past due 90 days or more (1):One- to four-family residential loans
    
    
    188
    
    
    
    10,334
    
    
    
    12,179
    
    
    
    11,507
    
    
    
    11,322
    
    
    
    11,267
    
    
    
    7,278Multifamily and commercial loans
    
    
    75
    
    
    
    18,982
    
    
    
    21,013
    
    
    
    15,610
    
    
    
    13,823
    
    
    
    11,975
    
    
    
    2,407Consumer loans
    
    
    586
    
    
    
    4,578
    
    
    
    8,322
    
    
    
    5,514
    
    
    
    4,536
    
    
    
    4,912
    
    
    
    3,991Commercial business loans
    
    
    45
    
    
    
    6,631
    
    
    
    1,502
    
    
    
    979
    
    
    
    2,824
    
    
    
    4,602
    
    
    
    2,124Total loans past due 90 days or more
    
    
    894
    
    
    $
    40,525
    
    
    
    43,016
    
    
    
    33,610
    
    
    
    32,505
    
    
    
    32,756
    
    
    
    15,800Total loans 30 days or more past due
    
    
    2,735
    
    
    $
    99,149
    
    
    
    105,324
    
    
    
    65,616
    
    
    
    54,419
    
    
    
    48,967
    
    
    
    29,940Total loans 90 days or more past due (1)
    
    
    894
    
    
    $
    40,525
    
    
    
    43,016
    
    
    
    33,610
    
    
    
    32,505
    
    
    
    32,756
    
    
    
    15,800Total REO
    
    
    98
    
    
    
    6,653
    
    
    
    4,872
    
    
    
    6,685
    
    
    
    3,951
    
    
    
    5,739
    
    
    
    5,157Total loans 90 days or more past due
and REO
    
    
    992
    
    
    $
    47,178
    
    
    
    47,888
    
    
    
    40,295
    
    
    
    36,456
    
    
    
    38,495
    
    
    
    20,957Total loans 90 days or more past due
to net loans receivable
    
    
    
    
    
    
    0.92
    %
    
    
    0.93
    %
    
    
    0.77
    %
    
    
    0.80
    %
    
    
    0.96
    %
    
    
    0.52
    %Total loans 90 days or more past due
and REO to total assets
    
    
    
    
    
    
    0.72
    %
    
    
    0.74
    %
    
    
    0.64
    %
    
    
    0.57
    %
    
    
    0.68
    %
    
    
    0.49
    %
 
 (1)
    
    The Company classifies as nonperforming all loans 90 days or more delinquent.  Classification of Assets.
 9




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##### 



At December 31,
    
    
    At June 30,2006
    
    
    2005
    
    
    2005
    
    
    2004(In Thousands)Substandard assets
    
    $
    70,182
    
    
    
    61,522
    
    
    
    58,925
    
    
    
    58,561Doubtful assets
    
    
    2,129
    
    
    
    1,983
    
    
    
    1,752
    
    
    
    5,055Loss assets
    
    
    270
    
    
    
    232
    
    
    
    32
    
    
    
    259Total classified assets
    
    $
    72,581
    
    
    
    63,737
    
    
    
    60,709
    
    
    
    63,875
 Allowance for Loan Losses.
     10




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##### 



Analysis of the Allowance For Loan Losses.
 Six MonthsYear Ended
    
    
    EndedDecember 31,
    
    
    December 31,
    
    
    Years Ended June 30,2006
    
    
    2005
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(In Thousands)Net loans receivable
    
    $
    4,412,441
    
    
    
    4,622,269
    
    
    
    4,376,884
    
    
    
    4,053,941
    
    
    
    3,429,874
    
    
    
    3,012,606Average loans outstanding
    
    $
    4,395,274
    
    
    
    4,532,523
    
    
    
    4,234,241
    
    
    
    3,846,261
    
    
    
    3,258,520
    
    
    
    2,935,629Allowance for loan losses
balance at beginning of period
    
    $
    33,411
    
    
    
    31,563
    
    
    
    30,670
    
    
    
    27,166
    
    
    
    22,042
    
    
    
    20,290Provision for loan losses
    
    $
    8,480
    
    
    
    4,722
    
    
    
    9,566
    
    
    
    6,860
    
    
    
    8,445
    
    
    
    6,360Charge-offs:Real estate loans
    
    
    (1,148
    )
    
    
    (282
    )
    
    
    (676
    )
    
    
    (176
    )
    
    
    (242
    )
    
    
    (292
    )Consumer loans
    
    
    (5,543
    )
    
    
    (3,314
    )
    
    
    (5,726
    )
    
    
    (5,113
    )
    
    
    (4,281
    )
    
    
    (4,452
    )Commercial loans
    
    
    (926
    )
    
    
    (43
    )
    
    
    (3,071
    )
    
    
    (461
    )
    
    
    (1,258
    )
    
    
    (569
    )Total charge-offs
    
    
    (7,617
    )
    
    
    (3,639
    )
    
    
    (9,473
    )
    
    
    (5,750
    )
    
    
    (5,781
    )
    
    
    (5,313
    )Recoveries:Real estate loans
    
    
    123
    
    
    
    4
    
    
    
    1
    
    
    
    
    
    
    
    47
    
    
    
    63Consumer loans
    
    
    1,214
    
    
    
    455
    
    
    
    750
    
    
    
    562
    
    
    
    527
    
    
    
    382Commercial loans
    
    
    62
    
    
    
    51
    
    
    
    49
    
    
    
    502
    
    
    
    123
    
    
    
    23Total recoveries
    
    
    1,399
    
    
    
    510
    
    
    
    800
    
    
    
    1,064
    
    
    
    697
    
    
    
    468Acquired through acquisition
    
    
    1,982
    
    
    
    255
    
    
    
    
    
    
    
    1,330
    
    
    
    1,763
    
    
    
    237Allowance for loan losses
balance at end of period
    
    $
    37,655
    
    
    
    33,411
    
    
    
    31,563
    
    
    
    30,670
    
    
    
    27,166
    
    
    
    22,042Allowance for loan losses as a
percentage of net loans
receivable
    
    
    0.85
    %
    
    
    0.72
    %
    
    
    0.72
    %
    
    
    0.76
    %
    
    
    0.79
    %
    
    
    0.73
    %Net charge-offs as a percentage
of average loans outstanding
    
    
    0.14
    %
    
    
    0.14
    %
    
    
    0.20
    %
    
    
    0.12
    %
    
    
    0.16
    %
    
    
    0.17
    %Allowance for loan losses as a
percentage of nonperforming
loans
    
    
    92.92
    %
    
    
    77.67
    %
    
    
    93.91
    %
    
    
    94.35
    %
    
    
    82.93
    %
    
    
    139.51
    %Allowance for loan losses as a
percentage of nonperforming
loans and REO
    
    
    79.81
    %
    
    
    69.77
    %
    
    
    78.33
    %
    
    
    84.13
    %
    
    
    70.57
    %
    
    
    105.18
    %
 11




---



##### 



Allocation of Allowance for Loan Losses.
 At December 31,
    
    
    At June 30,2006
    
    
    2005
    
    
    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
    
    $
    17,936
    
    
    
    69.1
    %
    
    
    16,875
    
    
    
    72.1
    %
    
    
    15,918
    
    
    
    72.2
    %Consumer loans
    
    
    16,500
    
    
    
    25.7
    
    
    
    13,991
    
    
    
    24.6
    
    
    
    13,179
    
    
    
    24.6Commercial business loans
    
    
    3,219
    
    
    
    5.2
    
    
    
    2,545
    
    
    
    3.3
    
    
    
    2,466
    
    
    
    3.2Total allowance for loan loss
    
    $
    37,655
    
    
    
    100.0
    %
    
    
    33,411
    
    
    
    100.0
    %
    
    
    31,563
    
    
    
    100.0
    %
 
 (1)
    
    Represents percentage of loans in each category to total loans. At June 30,2004
    
    
    2003
    
    
    2002% 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
    
    $
    15,113
    
    
    
    74.1
    %
    
    
    13,660
    
    
    
    75.9
    %
    
    
    11,703
    
    
    
    76.8
    %Consumer loans
    
    
    11,790
    
    
    
    22.3
    
    
    
    10,965
    
    
    
    20.4
    
    
    
    8,855
    
    
    
    20.1Commercial business loans
    
    
    3,767
    
    
    
    3.6
    
    
    
    2,541
    
    
    
    3.7
    
    
    
    1,484
    
    
    
    3.1Total allowance for loan loss
    
    $
    30,670
    
    
    
    100.0
    %
    
    
    27,166
    
    
    
    100.0
    %
    
    
    22,042
    
    
    
    100.0
    %
 
 (1)
    
    Represents percentage of loans in each category to total loans. Investment Activities
   12




---



##### 



Amortized Cost and Market Value of Investment and Mortgage-Backed Securities.
 At December 31,
    
    
    At June 30,2006
    
    
    2005
    
    
    2005
    
    
    2004Amortized
    
    
    
    
    
    
    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
    
    
    
    14,791
    
    
    
    16,618
    
    
    
    16,744Variable-rate pass through
certificates
    
    
    188,700
    
    
    
    188,382
    
    
    
    111,070
    
    
    
    110,369
    
    
    
    140,473
    
    
    
    140,546
    
    
    
    198,497
    
    
    
    196,961Fixed-rate collateralized mortgage
obligations (CMOs)
    
    
    4,484
    
    
    
    4,249
    
    
    
    6,411
    
    
    
    6,123
    
    
    
    7,725
    
    
    
    7,504
    
    
    
    7,519
    
    
    
    7,444Variable-rate CMOs
    
    
    49,374
    
    
    
    49,335
    
    
    
    59,648
    
    
    
    59,687
    
    
    
    72,869
    
    
    
    73,197
    
    
    
    169,667
    
    
    
    170,753Total mortgage-backed securities
held to maturity
    
    
    251,655
    
    
    
    250,931
    
    
    
    189,851
    
    
    
    188,822
    
    
    
    235,676
    
    
    
    236,038
    
    
    
    392,301
    
    
    
    391,902Mortgage-backed securities
available for sale:Fixed-rate pass through certificates
    
    $
    68,720
    
    
    $
    67,430
    
    
    
    77,383
    
    
    
    76,407
    
    
    
    82,612
    
    
    
    83,153
    
    
    
    92,659
    
    
    
    92,106Variable-rate pass through
certificates
    
    
    199,442
    
    
    
    198,365
    
    
    
    147,426
    
    
    
    145,856
    
    
    
    172,263
    
    
    
    171,639
    
    
    
    87,486
    
    
    
    86,752Fixed-rate CMOs
    
    
    87,946
    
    
    
    85,402
    
    
    
    78,615
    
    
    
    76,033
    
    
    
    98,478
    
    
    
    97,192
    
    
    
    141,485
    
    
    
    137,866Variable-rate CMOs
    
    
    27,613
    
    
    
    27,771
    
    
    
    25,529
    
    
    
    25,669
    
    
    
    32,296
    
    
    
    32,497
    
    
    
    92,710
    
    
    
    94,279Total mortgage-backed securities
available for sale
    
    
    383,721
    
    
    
    378,968
    
    
    
    328,953
    
    
    
    323,965
    
    
    
    385,649
    
    
    
    384,481
    
    
    
    414,340
    
    
    
    411,003Total mortgage-backed securities
    
    $
    635,376
    
    
    $
    629,899
    
    
    
    518,804
    
    
    
    512,787
    
    
    
    621,325
    
    
    
    620,519
    
    
    
    806,641
    
    
    
    802,905Investment securities held to
maturity:U.S. Government, agency and GSEs
    
    $
    161,755
    
    
    $
    160,580
    
    
    
    166,812
    
    
    
    165,331
    
    
    
    184,341
    
    
    
    183,738
    
    
    
    53,214
    
    
    
    53,584Municipal securities
    
    
    269,886
    
    
    
    273,438
    
    
    
    238,580
    
    
    
    241,080
    
    
    
    242,850
    
    
    
    246,707
    
    
    
    114,849
    
    
    
    113,755Corporate debt issues
    
    
    33,671
    
    
    
    35,566
    
    
    
    39,015
    
    
    
    41,274
    
    
    
    40,112
    
    
    
    42,985
    
    
    
    41,178
    
    
    
    42,497Total investment securities held to
maturity
    
    $
    465,312
    
    
    $
    469,584
    
    
    
    444,407
    
    
    
    447,685
    
    
    
    467,303
    
    
    
    473,430
    
    
    
    209,241
    
    
    
    209,836Investment securities available
for sale:U.S. Government, agency and GSEs
    
    $
    214,031
    
    
    $
    212,525
    
    
    
    114,965
    
    
    
    113,747
    
    
    
    138,996
    
    
    
    138,557
    
    
    
    184,887
    
    
    
    181,521Municipal securities
    
    
    14,553
    
    
    
    14,604
    
    
    
    14,548
    
    
    
    14,354
    
    
    
    14,545
    
    
    
    14,642
    
    
    
    144,802
    
    
    
    142,469Corporate debt issues
    
    
    63,114
    
    
    
    60,577
    
    
    
    65,976
    
    
    
    64,560
    
    
    
    40,945
    
    
    
    40,806
    
    
    
    27,441
    
    
    
    27,438Equity securities and mutual funds
    
    
    95,548
    
    
    
    100,840
    
    
    
    92,350
    
    
    
    97,210
    
    
    
    91,002
    
    
    
    96,697
    
    
    
    87,099
    
    
    
    93,248Total investment securities
available for sale
    
    $
    387,246
    
    
    $
    388,546
    
    
    
    287,839
    
    
    
    289,871
    
    
    
    285,488
    
    
    
    290,702
    
    
    
    444,229
    
    
    
    444,676
 Issuers of Mortgage-Backed Securities.
 At December 31,
    
    
    At June 30,2006
    
    
    2005
    
    
    2005
    
    
    2004(In Thousands)Mortgage-backed securities:Fannie Mae
    
    $
    205,127
    
    
    
    188,448
    
    
    
    222,549
    
    
    
    402,469Ginnie Mae
    
    
    120,799
    
    
    
    151,477
    
    
    
    179,795
    
    
    
    178,847Freddie Mac
    
    
    249,685
    
    
    
    146,714
    
    
    
    184,717
    
    
    
    179,506Other (non-agency)
    
    
    55,012
    
    
    
    27,177
    
    
    
    33,096
    
    
    
    42,482Total mortgage-backed securities
    
    $
    630,623
    
    
    
    513,816
    
    
    
    620,157
    
    
    
    803,304
 13




---



##### 



Investment Portfolio Maturities.
 At December 31, 2006One 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 held to maturity:U.S. Government and agency obligations
    
    $
    
    
    
    
    
    
    
    
    110,000
    
    
    
    4.78
    
    
    
    33,356
    
    
    
    5.56
    
    
    
    18,399
    
    
    
    4.22
    
    
    $
    161,755
    
    
    $
    160,580
    
    
    
    4.87Municipal securities
    
    
    
    
    
    
    
    
    
    
    290
    
    
    
    3.35
    
    
    
    16,338
    
    
    
    4.64
    
    
    
    253,258
    
    
    
    4.66
    
    
    
    269,886
    
    
    
    273,438
    
    
    
    4.66Corporate debt issues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,671
    
    
    
    8.78
    
    
    
    33,671
    
    
    
    35,566
    
    
    
    8.78Total investment securities held to maturity
    
    
    
    
    
    
    
    
    
    
    110,290
    
    
    
    4.77
    
    
    
    49,694
    
    
    
    5.26
    
    
    
    305,328
    
    
    
    5.09
    
    
    
    465,312
    
    
    
    469,584
    
    
    
    5.03Investment securities available for sale:U.S. Government and agency obligations
    
    
    15,833
    
    
    
    4.68
    
    
    
    20,957
    
    
    
    5.25
    
    
    
    49,907
    
    
    
    5.33
    
    
    
    127,334
    
    
    
    5.14
    
    
    
    214,031
    
    
    
    212,525
    
    
    
    5.16Municipal securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,119
    
    
    
    3.72
    
    
    
    9,434
    
    
    
    4.02
    
    
    
    14,553
    
    
    
    14,604
    
    
    
    3.91Corporate debt issues
    
    
    
    
    
    
    
    
    
    
    16,567
    
    
    
    5.73
    
    
    
    13,500
    
    
    
    4.03
    
    
    
    33,047
    
    
    
    6.64
    
    
    
    63,114
    
    
    
    60,577
    
    
    
    5.84Equity securities and mutual funds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,548
    
    
    
    4.96
    
    
    
    95,548
    
    
    
    100,840
    
    
    
    4.96Total investment securities available for sale
    
    
    15,833
    
    
    
    4.68
    
    
    
    37,524
    
    
    
    5.46
    
    
    
    68,526
    
    
    
    4.96
    
    
    
    265,363
    
    
    
    5.22
    
    
    
    387,246
    
    
    
    388,546
    
    
    
    5.18Mortgage-backed securities held to maturity:Pass-through certificates
    
    
    188,700
    
    
    
    5.00
    
    
    
    2
    
    
    
    11.20
    
    
    
    375
    
    
    
    4.96
    
    
    
    8,720
    
    
    
    5.24
    
    
    
    197,797
    
    
    
    197,347
    
    
    
    5.01CMOs
    
    
    49,374
    
    
    
    5.69
    
    
    
    2,179
    
    
    
    3.63
    
    
    
    
    
    
    
    
    
    
    
    2,305
    
    
    
    3.21
    
    
    
    53,858
    
    
    
    53,584
    
    
    
    5.50Total mortgage-backed securities held to maturity
    
    
    238,074
    
    
    
    5.14
    
    
    
    2,181
    
    
    
    3.64
    
    
    
    375
    
    
    
    4.96
    
    
    
    11,025
    
    
    
    4.81
    
    
    
    251,655
    
    
    
    250,931
    
    
    
    5.12Mortgage-backed securities available for sale:Pass through certificates
    
    
    199,442
    
    
    
    4.77
    
    
    
    819
    
    
    
    4.91
    
    
    
    23,364
    
    
    
    4.41
    
    
    
    44,537
    
    
    
    4.98
    
    
    
    268,162
    
    
    
    265,795
    
    
    
    4.77CMOs
    
    
    27,613
    
    
    
    6.21
    
    
    
    
    
    
    
    
    
    
    
    7,315
    
    
    
    4.62
    
    
    
    80,631
    
    
    
    4.66
    
    
    
    115,559
    
    
    
    113,173
    
    
    
    5.03Total mortgage-backed securities available for sale
    
    
    227,055
    
    
    
    4.94
    
    
    
    819
    
    
    
    4.91
    
    
    
    30,679
    
    
    
    4.46
    
    
    
    125,168
    
    
    
    4.77
    
    
    
    383,721
    
    
    
    378,968
    
    
    
    4.85Total investment securities and mortgage-backed
securities
    
    $
    480,962
    
    
    
    5.03
    
    
    
    150,814
    
    
    
    4.93
    
    
    
    149,274
    
    
    
    4.96
    
    
    
    706,884
    
    
    
    5.08
    
    
    $
    1,487,934
    
    
    $
    1,488,029
    
    
    
    5.04
 14




---



##### 



Sources of Funds
 General.
 Deposits.
  At December 31,2006
    
    
    2005Balance
    
    
    Percent(1)
    
    
    Rate(2)
    
    
    Balance
    
    
    Percent(1)
    
    
    Rate(2)(Dollars in Thousands)Savings accounts
    
    $
    807,873
    
    
    
    15.1
    %
    
    
    1.44
    %
    
    
    935,564
    
    
    
    17.9
    %
    
    
    1.41
    %Checking accounts
    
    
    994,783
    
    
    
    18.5
    %
    
    
    1.05
    %
    
    
    957,662
    
    
    
    18.3
    %
    
    
    0.79
    %Money market accounts
    
    
    594,472
    
    
    
    11.1
    %
    
    
    3.62
    %
    
    
    596,352
    
    
    
    11.4
    %
    
    
    2.62
    %Certificates of depositMaturing within 1 year
    
    
    2,024,850
    
    
    
    37.7
    %
    
    
    4.47
    %
    
    
    1,506,235
    
    
    
    28.8
    %
    
    
    3.51
    %Maturing 1 to 3 years
    
    
    801,156
    
    
    
    14.9
    %
    
    
    4.50
    %
    
    
    1,066,160
    
    
    
    20.4
    %
    
    
    3.99
    %Maturing more than 3
years
    
    
    143,616
    
    
    
    2.7
    %
    
    
    4.56
    %
    
    
    166,506
    
    
    
    3.2
    %
    
    
    4.23
    %Total certificates
    
    
    2,969,622
    
    
    
    55.3
    %
    
    
    4.48
    %
    
    
    2,738,901
    
    
    
    52.4
    %
    
    
    3.74
    %Total deposits
    
    $
    5,366,750
    
    
    
    100.0
    %
    
    
    3.26
    %
    
    
    5,228,479
    
    
    
    100.0
    %
    
    
    2.64
    %
 
 (1)
    
    Represents percentage of total deposits.(2)
    
    Represents weighted average nominal rate at fiscal year end. At June 30,2005
    
    
    2004Balance
    
    
    Percent(1)
    
    
    Rate(2)
    
    
    Balance
    
    
    Percent(1)
    
    
    Rate(2)(Dollars in Thousands)Savings accounts
    
    $
    1,049,606
    
    
    
    20.2
    %
    
    
    1.40
    %
    
    
    1,076,999
    
    
    
    20.7
    %
    
    
    1.38
    %Checking accounts
    
    
    944,168
    
    
    
    18.2
    %
    
    
    0.69
    %
    
    
    885,121
    
    
    
    17.1
    %
    
    
    0.49
    %Money market accounts
    
    
    631,685
    
    
    
    12.2
    %
    
    
    2.05
    %
    
    
    897,325
    
    
    
    17.3
    %
    
    
    1.60
    %Certificates of depositMaturing within 1 year
    
    
    1,160,817
    
    
    
    22.4
    %
    
    
    2.94
    %
    
    
    1,189,234
    
    
    
    22.9
    %
    
    
    2.61
    %Maturing 1 to 3 years
    
    
    1,188,683
    
    
    
    22.9
    %
    
    
    3.79
    %
    
    
    876,342
    
    
    
    16.9
    %
    
    
    3.69
    %Maturing more than 3
years
    
    
    212,987
    
    
    
    4.1
    %
    
    
    4.14
    %
    
    
    266,600
    
    
    
    5.1
    %
    
    
    4.19
    %Total certificates
    
    
    2,562,487
    
    
    
    49.4
    %
    
    
    3.44
    %
    
    
    2,332,176
    
    
    
    44.9
    %
    
    
    3.24
    %Total deposits
    
    $
    5,187,946
    
    
    
    100.0
    %
    
    
    2.33
    %
    
    
    5,191,621
    
    
    
    100.0
    %
    
    
    2.05
    %
 
 (1)
    
    Represents percentage of total deposits.(2)
    
    Represents weighted average nominal rate at fiscal year end. 15




---



##### 



Large Certificates of Deposit Maturities.
 Certificates ofMaturity Period
    
    Deposits(In Thousands)Three months or less
    
    $
    81,540Three through six months
    
    
    101,453Six through twelve months
    
    
    251,790Over twelve months
    
    
    199,344Total
    
    $
    634,127
 Borrowings
   During the Year Ended
    
    During the Six MonthsDecember 31,
    
    Ended December 31,
    
    During the Year Ended June 30,2006
    
    2005
    
    2005
    
    2004(Dollars in Thousand)FHLB-Pittsburgh borrowings:Average balance outstanding
    
    $
    352,596
    
    
    
    379,781
    
    
    
    406,057
    
    
    
    428,591Maximum outstanding at end of any month during period
    
    $
    377,592
    
    
    
    399,665
    
    
    
    412,915
    
    
    
    519,631Balance outstanding at end of period
    
    $
    332,196
    
    
    
    377,629
    
    
    
    377,846
    
    
    
    412,981Weighted average interest rate during period
    
    
    4.62
    %
    
    
    4.57
    %
    
    
    4.64
    %
    
    
    4.62
    %Weighted average interest rate at end of period
    
    
    4.58
    %
    
    
    4.59
    %
    
    
    4.71
    %
    
    
    4.83
    %Reverse repurchase agreements:Average balance outstanding
    
    $
    44,860
    
    
    
    28,416
    
    
    
    26,889
    
    
    
    29,364Maximum outstanding at end of any month during period
    
    $
    55,705
    
    
    
    34,025
    
    
    
    33,670
    
    
    
    32,097Balance outstanding at end of period
    
    $
    55,705
    
    
    
    34,025
    
    
    
    26,579
    
    
    
    29,902Weighted average interest rate during period
    
    
    4.03
    %
    
    
    2.77
    %
    
    
    1.63
    %
    
    
    1.27
    %Weighted average interest rate at end of period
    
    
    4.25
    %
    
    
    3.14
    %
    
    
    2.25
    %
    
    
    1.29
    %Other borrowings:Average balance outstanding
    
    $
    5,333
    
    
    
    5,749
    
    
    
    6,182
    
    
    
    6,253Maximum outstanding at end of any month during period
    
    $
    5,660
    
    
    
    5,928
    
    
    
    6,300
    
    
    
    6,322Balance outstanding at end of period
    
    $
    4,913
    
    
    
    5,702
    
    
    
    5,919
    
    
    
    6,264Weighted average interest rate during period
    
    
    4.99
    %
    
    
    4.97
    %
    
    
    4.99
    %
    
    
    5.10
    %Weighted average interest rate at end of period
    
    
    4.99
    %
    
    
    4.99
    %
    
    
    4.99
    %
    
    
    4.99
    %Total borrowings:Average balance outstanding
    
    $
    402,789
    
    
    
    413,946
    
    
    
    439,847
    
    
    
    466,277Maximum outstanding at end of any month during period
    
    $
    424,766
    
    
    
    432,223
    
    
    
    452,737
    
    
    
    554,257Balance outstanding at end of period
    
    $
    392,814
    
    
    
    417,356
    
    
    
    410,344
    
    
    
    449,147Weighted average interest rate during period
    
    
    4.59
    %
    
    
    4.53
    %
    
    
    4.52
    %
    
    
    4.39
    %Weighted average interest rate at end of period
    
    
    4.54
    %
    
    
    4.48
    %
    
    
    4.55
    %
    
    
    4.60
    %
 16




---



##### 



Competition
   Subsidiary Activities
        17




---



##### 



Personnel
  REGULATION
 General
   Pennsylvania Savings Bank Law
   18




---



##### 



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




---



##### 



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




---



##### 



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




---



##### 



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




---



##### 



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




---



##### 



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




---



##### 



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




---



##### 



PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
  Year Ended December
    
    
    
    
    
    
    
    
    
    Cash Dividends31, 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
 Twelve Months Ended
    
    
    
    
    
    
    
    
    
    Cash DividendsDecember 31, 2005
    
    High
    
    Low
    
    DeclaredFirst quarter
    
    
    25.23
    
    
    
    21.00
    
    
    
    0.12Second quarter
    
    
    22.23
    
    
    
    19.79
    
    
    
    0.12Third quarter
    
    
    22.89
    
    
    
    20.08
    
    
    
    0.14Fourth quarter
    
    
    23.06
    
    
    
    19.77
    
    
    
    0.16
     ISSUER PURCHASES OF EQUITY SECURITIES
 (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 2006
    
    
    7,000
    
    
    
    26.77
    
    
    
    7,000
    
    
    
    993,000November 2006
    
    
    74,500
    
    
    
    26.78
    
    
    
    74,500
    
    
    
    918,500December 2006
    
    
    10,000
    
    
    
    26.95
    
    
    
    10,000
    
    
    
    908,500Total
    
    
    91,500
    
    
    
    26.80
 
 (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.  26




---



##### 



Stock Performance Graph
   6/01
    
    6/02
    
    6/03
    
    6/04
    
    6/05
    
    12/05
    

12/06Northwest Bancorp, Inc.
    
    
    100.00
    
    
    
    128.55
    
    
    
    159.43
    
    
    
    232.38
    
    
    
    220.50
    
    
    
    223.50
    
    
    
    296.94NASDAQ Composite
    
    
    100.00
    
    
    
    71.03
    
    
    
    78.04
    
    
    
    99.65
    
    
    
    100.84
    
    
    
    109.80
    
    
    
    124.85NASDAQ Bank Index
    
    
    100.00
    
    
    
    68.36
    
    
    
    63.78
    
    
    
    94.86
    
    
    
    120.59
    
    
    
    141.79
    
    
    
    180.32
 COMPARISON OF 66 MONTH CUMULATIVE TOTAL RETURN*
 
 
 *
    
    $100 invested on 6/30/01 in stock or index including
reinvestment of dividends. Fiscal year ending December 31. 27




---



##### 



ITEM 6.
    
    SELECTED FINANCIAL DATA
 Selected Financial and Other Data
  At December 31,
    
    At June 30,2006
    
    2005
    
    2005
    
    2004
    
    2003
    
    2002(In Thousands)Selected Consolidated Financial Data:Total assets
    
    $
    6,527,815
    
    
    
    6,477,307
    
    
    
    6,330,482
    
    
    
    6,343,248
    
    
    
    5,681,695
    
    
    
    4,305,535Investment securities held-to-maturity
    
    
    465,312
    
    
    
    444,407
    
    
    
    467,303
    
    
    
    209,241
    
    
    
    130,111
    
    
    
    132,643Investment securities available-for-sale
    
    
    388,546
    
    
    
    289,871
    
    
    
    290,702
    
    
    
    444,676
    
    
    
    342,456
    
    
    
    174,982Mortgage-backed securities held-to-maturity
    
    
    251,655
    
    
    
    189,851
    
    
    
    235,676
    
    
    
    392,301
    
    
    
    366,706
    
    
    
    263,860Mortgage-backed securities available-for-sale
    
    
    378,968
    
    
    
    323,965
    
    
    
    384,481
    
    
    
    411,003
    
    
    
    561,628
    
    
    
    260,741Loans receivable net:Real estate
    
    
    3,039,507
    
    
    
    3,320,303
    
    
    
    3,150,668
    
    
    
    2,995,110
    
    
    
    2,599,324
    
    
    
    2,309,752Consumer
    
    
    1,140,842
    
    
    
    1,146,939
    
    
    
    1,086,291
    
    
    
    913,089
    
    
    
    702,397
    
    
    
    608,370Commercial
    
    
    232,092
    
    
    
    155,027
    
    
    
    139,925
    
    
    
    145,742
    
    
    
    128,153
    
    
    
    94,484Total loans receivable, net
    
    
    4,412,441
    
    
    
    4,622,269
    
    
    
    4,376,884
    
    
    
    4,053,941
    
    
    
    3,429,874
    
    
    
    3,012,606Deposits
    
    
    5,366,750
    
    
    
    5,228,479
    
    
    
    5,187,946
    
    
    
    5,191,621
    
    
    
    4,678,499
    
    
    
    3,593,122Advances from FHLB and other borrowed funds
    
    
    392,814
    
    
    
    417,356
    
    
    
    410,344
    
    
    
    449,147
    
    
    
    465,750
    
    
    
    259,260Shareholders equity
    
    
    604,561
    
    
    
    585,658
    
    
    
    582,190
    
    
    
    550,472
    
    
    
    395,074
    
    
    
    316,640Six MonthsYear Ended
    
    
    EndedDecember 31,
    
    
    December 31,
    
    
    Years Ended June 30,2006
    
    
    2005
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002(In Thousands)Selected Consolidated Operating Data:Total interest income
    
    $
    368,573
    
    
    
    170,449
    
    
    
    321,824
    
    
    
    300,230
    
    
    
    282,524
    
    
    
    274,500Total interest expense
    
    
    191,109
    
    
    
    79,414
    
    
    
    138,047
    
    
    
    134,466
    
    
    
    142,014
    
    
    
    147,255Net interest income
    
    
    177,464
    
    
    
    91,035
    
    
    
    183,777
    
    
    
    165,764
    
    
    
    140,510
    
    
    
    127,245Provision for loan losses
    
    
    8,480
    
    
    
    4,722
    
    
    
    9,566
    
    
    
    6,860
    
    
    
    8,445
    
    
    
    6,360Net interest income after provision for
loan losses
    
    
    168,984
    
    
    
    86,313
    
    
    
    174,211
    
    
    
    158,904
    
    
    
    132,065
    
    
    
    120,885Noninterest income
    
    
    46,026
    
    
    
    19,851
    
    
    
    32,004
    
    
    
    31,862
    
    
    
    27,028
    
    
    
    18,173Noninterest expense
    
    
    143,682
    
    
    
    66,317
    
    
    
    128,659
    
    
    
    128,805
    
    
    
    116,460
    
    
    
    84,780Income before income tax expense and
cumulative effect of accounting change
    
    
    71,328
    
    
    
    39,847
    
    
    
    77,556
    
    
    
    61,961
    
    
    
    42,633
    
    
    
    54,278Income tax expense
    
    
    19,792
    
    
    
    10,998
    
    
    
    22,741
    
    
    
    19,829
    
    
    
    16,947
    
    
    
    16,572Income before cumulative effect of
accounting change
    
    
    51,536
    
    
    
    28,849
    
    
    
    54,815
    
    
    
    42,132
    
    
    
    25,686
    
    
    
    37,706Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,237Net income
    
    $
    51,536
    
    
    
    28,849
    
    
    
    54,815
    
    
    
    42,132
    
    
    
    25,686
    
    
    
    39,943Basic per share amounts:Income before cumulative effect of
accounting change
    
    $
    1.03
    
    
    
    0.57
    
    
    
    1.10
    
    
    
    0.88
    
    
    
    0.54
    
    
    
    0.79Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.05Net income
    
    $
    1.03
    
    
    
    0.57
    
    
    
    1.10
    
    
    
    0.88
    
    
    
    0.54
    
    
    
    0.84Diluted per share amounts:Income before cumulative effect of
accounting change
    
    $
    1.03
    
    
    
    0.56
    
    
    
    1.09
    
    
    
    0.87
    
    
    
    0.53
    
    
    
    0.78Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.05Net income
    
    $
    1.03
    
    
    
    0.56
    
    
    
    1.09
    
    
    
    0.87
    
    
    
    0.53
    
    
    
    0.83
 28




---



##### 



At or forAt or for
    
    the Sixthe year
    
    MonthsEnded
    
    EndedDecember 31,
    
    December 31,
    

    At or for the Year Ended June 30,2006
    
    2005*
    
    2005
    
    2004
    
    2003
    
    2002Key Financial Ratios and Other Data:Return on average assets (net income
divided by average total assets)
    
    
    0.79
    %
    
    
    0.91
    %
    
    
    0.86
    %
    
    
    0.68
    %
    
    
    0.51
    %
    
    
    0.98
    %Return on average equity (net income
divided by average equity)
    
    
    8.60
    
    
    
    9.81
    
    
    
    9.74
    
    
    
    8.17
    
    
    
    7.15
    
    
    
    13.53Average capital to average assets
    
    
    9.19
    
    
    
    9.23
    
    
    
    8.87
    
    
    
    8.27
    
    
    
    7.07
    
    
    
    7.24Capital to total assets
    
    
    9.26
    
    
    
    9.04
    
    
    
    9.20
    
    
    
    8.68
    
    
    
    6.95
    
    
    
    7.35Net interest rate spread (average yield on
interest-earning assets less average cost of
interest-bearing liabilities)
    
    
    2.77
    
    
    
    2.99
    
    
    
    3.07
    
    
    
    2.83
    
    
    
    2.85
    
    
    
    3.11Net interest margin (net interest income as a
percentage of average interest-earning
assets)
    
    
    3.06
    
    
    
    3.21
    
    
    
    3.24
    
    
    
    2.98
    
    
    
    3.01
    
    
    
    3.42Noninterest expense to average assets
    
    
    2.20
    
    
    
    2.08
    
    
    
    2.03
    
    
    
    2.06
    
    
    
    2.29
    
    
    
    2.08Net interest income to noninterest expense
    
    
    1.24x
    
    
    
    1.37x
    
    
    
    1.43x
    
    
    
    1.29x
    
    
    
    1.21x
    
    
    
    1.50xDividend payout ratio
    
    
    67.96
    
    
    
    53.57
    
    
    
    44.04
    
    
    
    45.98
    
    
    
    60.38
    
    
    
    28.92Nonperforming loans to net loans receivable
    
    
    0.92
    
    
    
    0.93
    
    
    
    0.76
    
    
    
    0.80
    
    
    
    0.96
    
    
    
    0.52Nonperforming assets to total assets
    
    
    0.72
    
    
    
    0.74
    
    
    
    0.64
    
    
    
    0.57
    
    
    
    0.68
    
    
    
    0.49Allowance for loan losses to nonperforming
loans
    
    
    92.92
    
    
    
    77.67
    
    
    
    93.91
    
    
    
    94.35
    
    
    
    82.93
    
    
    
    139.51Allowance for loan losses to net loans
receivable
    
    
    0.85
    
    
    
    0.72
    
    
    
    0.72
    
    
    
    0.76
    
    
    
    0.79
    
    
    
    0.73Average interest-earning assets to average
interest-bearing liabilities
    
    
    1.09x
    
    
    
    1.09x
    
    
    
    1.08x
    
    
    
    1.06x
    
    
    
    1.06x
    
    
    
    1.08xNumber of:Full-service offices
    
    
    160
    
    
    
    153
    
    
    
    153
    
    
    
    152
    
    
    
    141
    
    
    
    126Consumer finance offices
    
    
    51
    
    
    
    50
    
    
    
    49
    
    
    
    49
    
    
    
    47
    
    
    
    49
 
 *
    
    Annualized 
 ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
 Forward-Looking Statements
  Executive Summary
   29




---



##### 



Topic 1: Financial Statements, N. Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statement
  Critical Accounting Policies
  Allowance for Loan Losses. Accounting
by Creditors for Impairment of a Loan
 30




---



##### 



Goodwill.
 Deferred Income Taxes. Accounting for
Income Taxes
 Other Intangible Assets.
 Pension Benefits.
  31




---



##### 



Financial Condition
 Cash and cash equivalents.
 Investment securities
 Mortgage-backed securities
 Loans receivable
 Deposits
 Shareholders equity
 Results of Operations  Year ended 12/31/06 compared to twelve months ended 12/31/05
 Interest income
  32




---



##### 



Interest expense
 Net interest income
 Provision for Loan Losses
 Noninterest Income.
 Noninterest Expense.
 33




---



##### 



Income Taxes
 Results of Operations  Six months ended 12/31/05 compared to Six months ended 12/31/04
 Interest income
    Interest expense
 Net interest income
 Provision for Loan Losses
 34




---



##### 



Noninterest income
 Noninterest expense
 Income taxes
 Results of Operations  Year ended 6/30/05 compared to Year ended 6/30/04
 Interest income
    35




---



##### 



Interest expense
 Net interest income
 Provision for Loan Losses
 Noninterest income
 Noninterest expense
 Income taxes
 36




---



##### 



Average Balance Sheets
 Years Ended December 31,2006
    
    
    
    
    
    
    
    
    
    
    2005Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage Balance
    
    
    Interest
    
    
    Yield/Cost
    
    
    Average Balance
    
    
    Interest
    
    
    Yield/Cost(Dollars in Thousands)Interest-earning assets:Loans receivable (1)(2) (3)
    
    $
    4,395,274
    
    
    $
    288,037
    
    
    
    6.59
    %
    
    $
    4,421,814
    
    
    $
    275,518
    
    
    
    6.23
    %Mortgage-backed securities (4)
    
    
    660,986
    
    
    
    31,523
    
    
    
    4.77
    %
    
    
    627,979
    
    
    
    24,147
    
    
    
    3.85
    %Investment securities(3)(4)(5)
    
    
    861,411
    
    
    
    49,450
    
    
    
    5.74
    %
    
    
    739,727
    
    
    
    39,123
    
    
    
    5.29
    %FHLB stock
    
    
    34,292
    
    
    
    1,692
    
    
    
    4.93
    %
    
    
    33,702
    
    
    
    1,032
    
    
    
    3.06
    %Interest-earning deposits
    
    
    133,218
    
    
    
    6,584
    
    
    
    4.87
    %
    
    
    88,659
    
    
    
    2,805
    
    
    
    3.12
    %Total interest-earning assets
    
    
    6,085,181
    
    
    
    377,286
    
    
    
    6.20
    %
    
    
    5,911,881
    
    
    
    342,625
    
    
    
    5.80
    %Noninterest-earning assets(6)
    
    
    437,607
    
    
    
    
    
    
    
    
    
    
    
    446,194Total assets
    
    $
    6,522,788
    
    
    
    
    
    
    
    
    
    
    $
    6,358,075Interest-bearing liabilities:Savings accounts
    
    $
    882,974
    
    
    $
    12,619
    
    
    
    1.43
    %
    
    $
    1,030,150
    
    
    $
    14,213
    
    
    
    1.38
    %NOW accounts
    
    
    663,046
    
    
    
    9,396
    
    
    
    1.42
    %
    
    
    672,852
    
    
    
    6,845
    
    
    
    1.02
    %Money market demand accounts
    
    
    574,820
    
    
    
    19,446
    
    
    
    3.38
    %
    
    
    645,273
    
    
    
    14,204
    
    
    
    2.20
    %Certificate accounts
    
    
    2,850,548
    
    
    
    115,524
    
    
    
    4.05
    %
    
    
    2,572,588
    
    
    
    86,841
    
    
    
    3.38
    %Borrowed funds(7)
    
    
    402,789
    
    
    
    18,508
    
    
    
    4.59
    %
    
    
    423,392
    
    
    
    19,241
    
    
    
    4.54
    %Debentures
    
    
    203,413
    
    
    
    15,616
    
    
    
    7.57
    %
    
    
    107,605
    
    
    
    8,737
    
    
    
    8.01
    %Total interest-bearing liabilities
    
    
    5,577,590
    
    
    
    191,109
    
    
    
    3.43
    %
    
    
    5,451,860
    
    
    
    150,081
    
    
    
    2.75
    %Noninterest-bearing liabilities
    
    
    346,016
    
    
    
    
    
    
    
    
    
    
    
    327,357Total liabilities
    
    
    5,923,606
    
    
    
    
    
    
    
    
    
    
    
    5,779,217Shareholders equity
    
    
    599,182
    
    
    
    
    
    
    
    
    
    
    
    578,858Total liabilities and equity
    
    $
    6,522,788
    
    
    
    
    
    
    
    
    
    
    $
    6,358,075Net interest income
    
    
    
    
    
    $
    186,177
    
    
    
    
    
    
    
    
    
    
    $
    192,544Net interest rate spread(8)
    
    
    
    
    
    
    
    
    
    
    2.77
    %
    
    
    
    
    
    
    
    
    
    
    3.05
    %Net interest-earning assets
    
    $
    507,591
    
    
    
    
    
    
    
    
    
    
    $
    460,021Net interest margin(9)
    
    
    
    
    
    
    
    
    
    
    3.06
    %
    
    
    
    
    
    
    
    
    
    
    3.26
    %Ratio of average interest-earning
assets to average interest-bearing
liabilities
    
    
    1.09 x
    
    
    
    
    
    
    
    
    
    
    
    1.08x
 
 (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
investment securities and tax-free loans are presented on a taxable equivalent basis.(4)
    
    Average balances do not include the effect of unrealized gains or losses on
securities held as available-for-sale.(5)
    
    Average balances include Fannie Mae and
Freddie Mac stock.(6)
    
    Average balances include the effect of unrealized gains or
losses on securities held as available-for-sale.(7)
    
    Average balances include FHLB
advances, securities sold under agreements to repurchase and other borrowings.(8)
    
    Net interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing liabilities.(9)
    
    Net interest
margin represents net interest income as a percentage of average interest-earning assets. 37




---



##### 



Six Months Ended December 31,2005
    
    
    2004Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost (10)
    
    
    Balance
    
    
    Interest
    
    
    Cost (10)(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 (4)
    
    
    568,879
    
    
    
    11,332
    
    
    
    3.98
    %
    
    
    772,434
    
    
    
    13,286
    
    
    
    3.44
    %Investment securities(3)(4)(5)
    
    
    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(6)
    
    
    488,639
    
    
    
    
    
    
    
    
    
    
    
    423,843Total assets
    
    $
    6,372,714
    
    
    
    
    
    
    
    
    
    
    $
    6,348,196Interest-bearing liabilities:Savings accounts
    
    $
    987,053
    
    
    $
    7,035
    
    
    
    1.41
    %
    
    $
    1,088,531
    
    
    $
    7,325
    
    
    
    1.35
    %NOW 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(7)
    
    
    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(8)
    
    
    
    
    
    
    
    
    
    
    2.99
    %
    
    
    
    
    
    
    
    
    
    
    3.01
    %Net interest-earning assets
    
    $
    484,675
    
    
    
    
    
    
    
    
    
    
    $
    404,621Net interest margin(9)
    
    
    
    
    
    
    
    
    
    
    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
investment securities and tax-free loans are presented on a taxable equivalent basis.(4)
    
    Average balances do not include the effect of unrealized gains or losses on securities held as
available-for-sale.(5)
    
    Average balances include Fannie Mae and Freddie Mac stock.(6)
    
    Average balances include the effect of unrealized gains or losses on securities held as
available-for-sale.(7)
    
    Average balances include FHLB advances, securities sold under
agreements to repurchase and other borrowings.(8)
    
    Net interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing liabilities.(9)
    
    Net interest
margin represents net interest income as a percentage of average interest-earning assets.(10)
    
    Presented on an annualized basis. 38




---



##### 



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 (4)
    
    
    729,757
    
    
    
    26,102
    
    
    
    3.58
    %
    
    
    883,914
    
    
    
    25,815
    
    
    
    2.92
    %Investment securities(3)(4)(5)
    
    
    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(6)
    
    
    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
    %NOW 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(7)
    
    
    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(8)
    
    
    
    
    
    
    
    
    
    
    3.07
    %
    
    
    
    
    
    
    
    
    
    
    2.83
    %Net interest-earning assets
    
    $
    419,993
    
    
    
    
    
    
    
    
    
    
    $
    346,830Net interest margin(9)
    
    
    
    
    
    
    
    
    
    
    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
investment securities and tax-free loans are presented on a taxable equivalent basis.(4)
    
    Average balances do not include the effect of unrealized gains or losses on
securities held as available-for-sale.(5)
    
    Average balances include Fannie Mae and
Freddie Mac stock.(6)
    
    Average balances include the effect of unrealized gains or
losses on securities held as available-for-sale.(7)
    
    Average balances include FHLB
advances, securities sold under agreements to repurchase and other borrowings.(8)
    
    Net interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing liabilities.(9)
    
    Net interest
margin represents net interest income as a percentage of average interest-earning assets. 39




---



##### 



Rate/Volume Analysis.
 Years Ended December 31,
    
    
    Six Months Ended December 31,
    
    
    Years Ended June 30,2006 vs. 2005
    
    
    
    
    
    
    
    
    
    
    2005 vs. 2004
    
    
    
    
    
    
    
    
    
    
    2005 vs. 2004Increase/(Decrease)
Due to
    
    

Total
Increase
    
    
Increase/(Decrease)
Due to

    
    
Total
Increase

    
    
Increase/(Decrease)
Due to

    
    
Total
IncreaseRate
    
    
    Volume
    
    
    (Decrease)
    
    
    Rate
    
    
    Volume
    
    
    (Decrease)
    
    
    Rate
    
    
    Volume
    
    
    (Decrease)(In Thousands)Interest-earning assets:Loans receivable
    
    $
    14,258
    
    
    
    (1,739
    )
    
    $
    12,519
    
    
    $
    1,680
    
    
    
    11,860
    
    
    $
    13,360
    
    
    $
    (7,474
    )
    
    
    24,706
    
    
    $
    17,232Mortgage-backed securities
    
    
    5,955
    
    
    
    1,421
    
    
    
    7,376
    
    
    
    2,101
    
    
    
    (4,055
    )
    
    
    (1,954
    )
    
    
    5,801
    
    
    
    (5,514
    )
    
    
    287Investment securities
    
    
    3,617
    
    
    
    6,710
    
    
    
    10,327
    
    
    
    55
    
    
    
    2,653
    
    
    
    2,708
    
    
    
    1,900
    
    
    
    1,387
    
    
    
    3,287FHLB stock
    
    
    637
    
    
    
    23
    
    
    
    660
    
    
    
    226
    
    
    
    (49
    )
    
    
    177
    
    
    
    352
    
    
    
    (69
    )
    
    
    283Interest-earning deposits
    
    
    1,973
    
    
    
    1,806
    
    
    
    3,779
    
    
    
    3,764
    
    
    
    (5,143
    )
    
    
    (1,379
    )
    
    
    3,834
    
    
    
    (3,177
    )
    
    
    657Total interest-earning assets
    
    
    26,440
    
    
    
    8,221
    
    
    
    34,661
    
    
    
    7,826
    
    
    
    5,086
    
    
    
    12,912
    
    
    
    4,413
    
    
    
    17,333
    
    
    
    21,746Interest-bearing liabilities:Savings accounts
    
    
    510
    
    
    
    (2,104
    )
    
    
    (1,594
    )
    
    
    433
    
    
    
    (723
    )
    
    
    (290
    )
    
    
    436
    
    
    
    678
    
    
    
    1,114NOW accounts
    
    
    2,690
    
    
    
    (139
    )
    
    
    2,551
    
    
    
    1,451
    
    
    
    31
    
    
    
    1,482
    
    
    
    174
    
    
    
    (113
    )
    
    
    61Money market demand
accounts
    
    
    7,626
    
    
    
    (2,384
    )
    
    
    5,242
    
    
    
    3,283
    
    
    
    (2,782
    )
    
    
    501
    
    
    
    474
    
    
    
    (2,092
    )
    
    
    (1,618
    )Certificate accounts
    
    
    18,359
    
    
    
    10,324
    
    
    
    28,683
    
    
    
    6,077
    
    
    
    4,253
    
    
    
    10,330
    
    
    
    233
    
    
    
    3,961
    
    
    
    4,194Borrowed funds
    
    
    213
    
    
    
    (946
    )
    
    
    (733
    )
    
    
    102
    
    
    
    (751
    )
    
    
    (649
    )
    
    
    602
    
    
    
    (1,195
    )
    
    
    (593
    )Debentures
    
    
    (901
    )
    
    
    7,780
    
    
    
    6,879
    
    
    
    216
    
    
    
    442
    
    
    
    658
    
    
    
    364
    
    
    
    59
    
    
    
    423Total interest-bearing
liabilities
    
    
    28,497
    
    
    
    12,531
    
    
    
    41,028
    
    
    
    11,562
    
    
    
    470
    
    
    
    12,032
    
    
    
    2,283
    
    
    
    1,298
    
    
    
    3,581Net Change in net interest
income
    
    $
    (2,057
    )
    
    
    (4,310
    )
    
    $
    (6,367
    )
    
    $
    (3,736
    )
    
    
    4,616
    
    
    $
    880
    
    
    $
    2,130
    
    
    
    16,035
    
    
    $
    18,165
 Regulatory Capital Requirements
    40




---



##### 



December 31, 2006
    
    
    December 31, 2005
    
    
    June 30, 2005(Dollars in thousands)Total shareholders equity (GAAP capital)
    
    $
    694,160
    
    
    
    689,001
    
    
    
    667,374Less:
accumulated other comprehensive income
    
    
    11,627
    
    
    
    405
    
    
    
    (4,492
    )Less: nonqualifying intangible assets
    
    
    (166,252
    )
    
    
    (162,430
    )
    
    
    (154,253
    )Leverage capital
    
    
    539,535
    
    
    
    526,976
    
    
    
    508,629Plus: Tier 2 capital (1)
    
    
    40,025
    
    
    
    35,583
    
    
    
    34,110Total risk-based capital
    
    $
    579,560
    
    
    
    562,559
    
    
    
    542,739Average total assets for leverage ratio
    
    $
    6,385,392
    
    
    
    6,281,262
    
    
    
    6,083,422Net risk-weighted assets including off-balance sheet items
    
    $
    3,790,927
    
    
    
    3,666,674
    
    
    
    3,494,230Leverage capital ratio
    
    
    8.45
    %
    
    
    8.39
    %
    
    
    8.36
    %Minimum requirement (2)
    
    3.00% to 5.00
    %
    3.00% to 5.00
    %
    3.00% to 5.00%Risk-based capital ratio
    
    
    15.29
    %
    
    
    15.34
    %
    
    
    15.53
    %Minimum requirement
    
    
    8.00
    %
    
    
    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.(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.
  41




---



##### 



42




---



##### 



Contractual Obligations.
 Payments dueThree years toLess than one
    
    
    One year to less
    
    
    less than five
    
    
    Five years oryear
    
    
    than three years
    
    
    years
    
    
    greater
    
    
    Total(In thousands)Contractual obligations at December 31, 2006Long-term debt (1)
    
    $
    95,618
    
    
    
    144,700
    
    
    
    116,597
    
    
    
    35,899
    
    
    $
    392,814Junior subordinated debentures (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103,094
    
    
    
    103,094Operating leases (3)
    
    
    3,508
    
    
    
    6,238
    
    
    
    4,603
    
    
    
    8,494
    
    
    
    22,843Total
    
    $
    99,126
    
    
    
    150,938
    
    
    
    121,200
    
    
    
    147,487
    
    
    $
    518,751
 
 (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 DISCLOSURE ABOUT MARKET
RISK
 Asset and Liability Management-Interest Rate Sensitivity Analysis.
   43




---



##### 



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
    
    $
    55,320
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    55,320Mortgage-backed securities:Fixed
    
    
    29,406
    
    
    
    57,211
    
    
    
    33,745
    
    
    
    46,051
    
    
    
    
    
    
    
    
    
    
    
    166,413Variable
    
    
    464,210
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    464,210Investment securities
    
    
    400,801
    
    
    
    192,158
    
    
    
    71,437
    
    
    
    189,462
    
    
    
    
    
    
    
    
    
    
    
    853,858Real estate loans:Adjustable-rate
    
    
    86,883
    
    
    
    2,350
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89,233Fixed-rate
    
    
    266,182
    
    
    
    467,517
    
    
    
    413,311
    
    
    
    750,531
    
    
    
    404,162
    
    
    
    
    
    
    
    2,301,703Home equity lines of credit
    
    
    137,986
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137,986Education loans
    
    
    11,973
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,973Other consumer loans
    
    
    354,347
    
    
    
    403,862
    
    
    
    205,502
    
    
    
    36,930
    
    
    
    
    
    
    
    
    
    
    
    997,641Commercial loans
    
    
    499,890
    
    
    
    275,583
    
    
    
    128,474
    
    
    
    10,640
    
    
    
    
    
    
    
    
    
    
    
    914,587Total rate-sensitive assets
    
    
    2,306,998
    
    
    
    1,398,681
    
    
    
    849,469
    
    
    
    1,033,614
    
    
    
    404,162
    
    
    
    
    
    
    
    5,992,924Rate-sensitive liabilities:Fixed maturity deposits
    
    
    2,025,947
    
    
    
    800,024
    
    
    
    122,552
    
    
    
    20,915
    
    
    
    184
    
    
    
    
    
    
    
    2,969,622Money market deposit accounts
    
    
    99,003
    
    
    
    198,005
    
    
    
    99,003
    
    
    
    
    
    
    
    198,461
    
    
    
    
    
    
    
    594,472Savings accounts
    
    
    181,000
    
    
    
    362,000
    
    
    
    
    
    
    
    
    
    
    
    264,873
    
    
    
    
    
    
    
    807,873Checking accounts
    
    
    119,998
    
    
    
    239,996
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    634,789
    
    
    
    994,783FHLB advances
    
    
    35,000
    
    
    
    114,739
    
    
    
    116,558
    
    
    
    35,899
    
    
    
    
    
    
    
    
    
    
    
    332,196Other borrowings
    
    
    57,169
    
    
    
    1,393
    
    
    
    2,056
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60,618Trust Preferred Securities
    
    
    103,094
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103,094Total rate-sensitive liabilities
    
    
    2,621,211
    
    
    
    1,746,157
    
    
    
    340,169
    
    
    
    56,814
    
    
    
    463,518
    
    
    
    634,789
    
    
    
    5,862,658Interest sensitivity gap per period
    
    $
    (314,213
    )
    
    
    (347,476
    )
    
    
    509,300
    
    
    
    976,800
    
    
    
    (59,356
    )
    
    
    (634,789
    )
    
    $
    130,266Cumulative interest sensitivity gap
    
    $
    (314,213
    )
    
    
    (661,689
    )
    
    
    (152,389
    )
    
    
    824,411
    
    
    
    765,055
    
    
    
    130,266
    
    
    $
    130,266Cumulative interest sensitivity gap as a percentage of
total assets
    
    
    (4.81
    )%
    
    
    (10.14
    )%
    
    
    (2.33
    )%
    
    
    12.63
    %
    
    
    11.72
    %
    
    
    2.00
    %
    
    
    2.00
    %Cumulative interest-earning assets as a percent of
cumulative interest-bearing liabilities
    
    
    88.01
    %
    
    
    84.85
    %
    
    
    96.76
    %
    
    
    117.30
    %
    
    
    114.63
    %
    
    
    102.22
    %
    
    
    102.22
    %
  44




---



##### 




    
    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, 2006 ratesIncrease
    
    Decrease1%
    
    2%
    
    1 %
    
    2%Simulated impact over the next 12 months compared with
December 31, 2006:Percentage increase/(decrease) in net income
    
    
    1.9
    %
    
    
    2.1
    %
    
    
    (3.2
    )%
    
    
    (8.1
    )%Increase/(decrease) in return on average equity
    
    
    0.2
    %
    
    
    0.2
    %
    
    
    (0.2
    )%
    
    
    (0.6
    )%Increase/(decrease) in diluted earnings per share
    
    $
    0.02
    
    
    $
    0.02
    
    
    
    ($0.03
    )
    
    
    ($0.08
    )Percentage increase/(decrease) in market value of equity
    
    
    (12.8
    )%
    
    
    (25.0
    )%
    
    
    6.6
    %
    
    
    13.5
    %
 45




---



##### 



ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
 Managements Report on Internal Control Over Financial Reporting
  Internal control  Integrated Framework
  /s/
William J. Wagner
    
    
    
    /s/ William W. Harvey, Jr.William J. Wagner
    
    
    
    William W. Harvey, Jr.Chief Executive Officer
    
    
    
    Chief Financial Officer
 46




---



##### 



Report
of Independent Registered Public Accounting Firm
On Internal Control Over Financial Reporting
 
     47




---



##### 



48




---



##### 



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.
  
 49




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
   December 312006
    
    
    2005AssetsCash and cash equivalents
    
    $
    99,013
    
    
    
    83,685Interest-earning deposits in other financial institutions
    
    
    41,387
    
    
    
    67,243Federal funds sold and other short-term investments
    
    
    13,933
    
    
    
    1,164Marketable securities available-for-sale (amortized cost
of $770,967 and $616,792)
    
    
    767,514
    
    
    
    613,836Marketable securities held-to-maturity (market value
of $720,515 and $636,507)
    
    
    716,967
    
    
    
    634,258Loans receivable, net of allowance for loan
losses of $37,655 and $33,411
    
    
    4,412,441
    
    
    
    4,622,269Accrued interest receivable
    
    
    28,033
    
    
    
    25,053Real estate owned, net
    
    
    6,653
    
    
    
    4,872Federal Home Loan Bank stock, at cost
    
    
    34,289
    
    
    
    33,130Premises and equipment, net
    
    
    104,866
    
    
    
    96,981Bank owned life insurance
    
    
    110,864
    
    
    
    106,737Goodwill
    
    
    155,770
    
    
    
    150,485Other intangible assets
    
    
    9,581
    
    
    
    11,477Mortgage servicing rights
    
    
    7,688
    
    
    
    3,357Other assets
    
    
    18,816
    
    
    
    22,760Total assets
    
    $
    6,527,815
    
    
    
    6,477,307Liabilities and Shareholders EquityLiabilities:Deposits
    
    $
    5,366,750
    
    
    
    5,228,479Borrowed funds
    
    
    392,814
    
    
    
    417,356Advances by borrowers for taxes and insurance
    
    
    22,600
    
    
    
    24,742Accrued interest payable
    
    
    4,038
    
    
    
    4,387Other liabilities
    
    
    33,958
    
    
    
    11,529Junior subordinated deferrable interest debentures
held by trusts that issued guaranteed capital
debt securities
    
    
    103,094
    
    
    
    205,156Total liabilities
    
    
    5,923,254
    
    
    
    5,891,649Shareholders 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 51,137,227 and 51,076,836, respectively
    
    
    5,114
    
    
    
    5,108Paid-in capital
    
    
    211,295
    
    
    
    208,132Retained earnings, substantially restricted
    
    
    425,024
    
    
    
    389,985Accumulated other comprehensive loss, net
    
    
    (11,609
    )
    
    
    (384
    )Treasury stock of 1,107,900 and 766,400 shares,
respectively, at cost
    
    
    (25,263
    )
    
    
    (17,183
    )Total shareholders equity
    
    
    604,561
    
    
    
    585,658Total liabilities and shareholders equity
    
    $
    6,527,815
    
    
    
    6,477,307
  50




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
 
   Twelve-month
    
    
    Six-monthYear ended
    
    
    period ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    Years ended June 302006
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2004(Unaudited)Interest income:Loans receivable
    
    $
    286,316
    
    
    
    273,999
    
    
    
    141,164
    
    
    
    260,833
    
    
    
    243,630Mortgage-backed securities
    
    
    31,523
    
    
    
    24,148
    
    
    
    11,332
    
    
    
    26,102
    
    
    
    25,815Taxable investment securities
    
    
    31,164
    
    
    
    21,768
    
    
    
    10,943
    
    
    
    18,513
    
    
    
    15,210Tax-free investment securities
    
    
    12,986
    
    
    
    11,952
    
    
    
    5,922
    
    
    
    12,192
    
    
    
    12,048Interest-earning deposits
    
    
    6,584
    
    
    
    2,805
    
    
    
    1,088
    
    
    
    4,184
    
    
    
    3,527Total interest income
    
    
    368,573
    
    
    
    334,672
    
    
    
    170,449
    
    
    
    321,824
    
    
    
    300,230Interest expense:Deposits
    
    
    156,985
    
    
    
    122,102
    
    
    
    65,349
    
    
    
    110,079
    
    
    
    106,328Borrowed funds
    
    
    34,124
    
    
    
    27,977
    
    
    
    14,065
    
    
    
    27,968
    
    
    
    28,138Total interest expense
    
    
    191,109
    
    
    
    150,079
    
    
    
    79,414
    
    
    
    138,047
    
    
    
    134,466Net interest income
    
    
    177,464
    
    
    
    184,593
    
    
    
    91,035
    
    
    
    183,777
    
    
    
    165,764Provision for loan losses
    
    
    8,480
    
    
    
    10,285
    
    
    
    4,722
    
    
    
    9,566
    
    
    
    6,860Net interest income after
provision for loan losses
    
    
    168,984
    
    
    
    174,308
    
    
    
    86,313
    
    
    
    174,211
    
    
    
    158,904Noninterest income:Service charges and fees
    
    
    26,323
    
    
    
    20,713
    
    
    
    11,949
    
    
    
    16,786
    
    
    
    14,068Trust and other financial services income
    
    
    5,321
    
    
    
    4,446
    
    
    
    2,267
    
    
    
    4,291
    
    
    
    3,982Insurance commission income
    
    
    2,550
    
    
    
    2,473
    
    
    
    1,272
    
    
    
    2,222
    
    
    
    948Gain on sale of marketable securities, net
    
    
    368
    
    
    
    381
    
    
    
    
    
    
    
    523
    
    
    
    4,536Gain (loss) on sale of loans, net
    
    
    3,447
    
    
    
    343
    
    
    
    308
    
    
    
    (100
    )
    
    
    433Gain on sale of real estate owned, net
    
    
    735
    
    
    
    1,542
    
    
    
    788
    
    
    
    906
    
    
    
    1,561Income from bank owned life insurance
    
    
    4,344
    
    
    
    4,298
    
    
    
    2,160
    
    
    
    4,378
    
    
    
    4,364Other operating income
    
    
    2,938
    
    
    
    2,548
    
    
    
    1,107
    
    
    
    2,998
    
    
    
    1,970Total noninterest income
    
    
    46,026
    
    
    
    36,744
    
    
    
    19,851
    
    
    
    32,004
    
    
    
    31,862Noninterest expense:Compensation and employee benefits
    
    
    78,611
    
    
    
    72,688
    
    
    
    36,382
    
    
    
    71,843
    
    
    
    65,593Premises and occupancy costs
    
    
    20,368
    
    
    
    18,917
    
    
    
    9,511
    
    
    
    17,724
    
    
    
    16,175Office operations
    
    
    12,411
    
    
    
    11,562
    
    
    
    5,910
    
    
    
    11,329
    
    
    
    10,785Processing expenses
    
    
    12,051
    
    
    
    10,807
    
    
    
    5,251
    
    
    
    10,578
    
    
    
    9,317Amortization of intangible assets
    
    
    3,876
    
    
    
    3,972
    
    
    
    1,932
    
    
    
    4,509
    
    
    
    4,706Advertising
    
    
    2,818
    
    
    
    3,281
    
    
    
    1,308
    
    
    
    3,674
    
    
    
    3,582Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,904Loss on early extinguishment of debt
    
    
    3,124
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,533Other expenses
    
    
    10,423
    
    
    
    10,710
    
    
    
    6,023
    
    
    
    9,002
    
    
    
    8,210Total noninterest expense
    
    
    143,682
    
    
    
    131,937
    
    
    
    66,317
    
    
    
    128,659
    
    
    
    128,805Income before income taxes
    
    
    71,328
    
    
    
    79,115
    
    
    
    39,847
    
    
    
    77,556
    
    
    
    61,961Provision for income taxes:Federal
    
    
    16,840
    
    
    
    19,189
    
    
    
    9,436
    
    
    
    19,013
    
    
    
    16,425State
    
    
    2,952
    
    
    
    3,176
    
    
    
    1,562
    
    
    
    3,728
    
    
    
    3,404Total provision for income taxes
    
    
    19,792
    
    
    
    22,365
    
    
    
    10,998
    
    
    
    22,741
    
    
    
    19,829Net income
    
    $
    51,536
    
    
    
    56,750
    
    
    
    28,849
    
    
    
    54,815
    
    
    
    42,132Basic earnings per share
    
    $
    1.03
    
    
    
    1.12
    
    
    
    0.57
    
    
    
    1.10
    
    
    
    0.88Diluted earnings per share
    
    $
    1.03
    
    
    
    1.11
    
    
    
    0.56
    
    
    
    1.09
    
    
    
    0.87
  51




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
 
 
  Accumulatedothercomprehensive
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-in
    
    
    Retained
    
    
    income
    
    
    Treasury
    
    
    shareholdersstock
    
    
    capital
    
    
    earnings
    
    
    (loss), net
    
    
    stock
    
    
    equityBalance at June 30, 2003
    
    $
    4,769
    
    
    
    90,592
    
    
    
    289,854
    
    
    
    9,859
    
    
    
    
    
    
    
    395,074Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    42,132
    
    
    
    
    
    
    
    
    
    
    
    42,132Change in unrealized gain on securities, net of tax and reclassification adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,892
    )
    
    
    
    
    
    
    (11,892
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    42,132
    
    
    
    (11,892
    )
    
    
    
    
    
    
    30,240Exercise of stock options
    
    
    27
    
    
    
    1,004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,031Stock compensation
    
    
    
    
    
    
    1,350
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,350Dividends paid ($0.40 per share)
    
    
    
    
    
    
    
    
    
    
    (9,963
    )
    
    
    
    
    
    
    
    
    
    
    (9,963
    )Acquistion of First Carnegie Deposit
    
    
    
    
    
    
    9,118
    
    
    
    10,818
    
    
    
    
    
    
    
    
    
    
    
    19,936Common stock issued, net of issuance cost
    
    
    
    
    
    
    112,804
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112,804Balance at June 30, 2004
    
    
    4,796
    
    
    
    214,868
    
    
    
    332,841
    
    
    
    (2,033
    )
    
    
    
    
    
    
    550,472Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    54,815
    
    
    
    
    
    
    
    
    
    
    
    54,815Change in unrealized gain on securities, net of tax and reclassification adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    28,849Change in unrealized gain on securities, net of tax and reclassification adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (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
    
    
    
    
    
    
    
    
    
    
    
    51,536Change in unrealized loss on securities, net of tax and reclassification adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (859
    )
    
    
    
    
    
    
    (859
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    51,536
    
    
    
    (859
    )
    
    
    
    
    
    
    50,677Treasury stock repurchases
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,080
    )
    
    
    (8,080
    )Prior period adjustments
    
    
    
    
    
    
    
    
    
    
    (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
    )
    
    
    604,561
  52




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##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
 
   Six-monthYear ended
    
    
    Year ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    Years ended June 302006
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2004(Unaudited)Operating activities:Net income
    
    $
    51,536
    
    
    
    56,750
    
    
    
    28,849
    
    
    
    54,815
    
    
    
    42,132Adjustments to reconcile net income to net
cash provided by operating activities:Provision for loan losses
    
    
    8,480
    
    
    
    10,285
    
    
    
    4,722
    
    
    
    9,566
    
    
    
    6,860Net gain on sales of assets
    
    
    (4,550
    )
    
    
    (2,266
    )
    
    
    (1,096
    )
    
    
    (1,329
    )
    
    
    (6,530
    )Loss on early extinquishment on debt
    
    
    3,124
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net depreciation, amortization, and accretion
    
    
    10,828
    
    
    
    9,775
    
    
    
    5,846
    
    
    
    9,216
    
    
    
    12,530Decrease/(increase) in other assets
    
    
    (1,965
    )
    
    
    (3,692
    )
    
    
    (5,265
    )
    
    
    6,752
    
    
    
    17,360Increase/(decreases) in other liabilities
    
    
    5,353
    
    
    
    (2,104
    )
    
    
    (1,543
    )
    
    
    (3,168
    )
    
    
    (13,618
    )Net amortization of discounts/premiums
on marketable securities
    
    
    (1,334
    )
    
    
    2,655
    
    
    
    1,243
    
    
    
    2,787
    
    
    
    7,633Noncash compensation expense related
to stock benefit plans
    
    
    2,296
    
    
    
    2,069
    
    
    
    1,085
    
    
    
    1,512
    
    
    
    534Noncash writedown of investment securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    166Noncash goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,904Origination of loans held for sale
    
    
    (153,354
    )
    
    
    (131,508
    )
    
    
    (85,937
    )
    
    
    (78,314
    )
    
    
    (89,496
    )Proceeds from loan sales
    
    
    143,340
    
    
    
    131,629
    
    
    
    86,245
    
    
    
    78,214
    
    
    
    89,929Net cash provided by operating activities
    
    
    63,754
    
    
    
    73,593
    
    
    
    34,149
    
    
    
    80,051
    
    
    
    75,404Investing activities:Purchase of marketable securities held-to-maturity
    
    
    (201,912
    )
    
    
    
    
    
    
    
    
    
    
    (172,540
    )
    
    
    (314,227
    )Purchase of marketable securities available-for-sale
    
    
    (280,459
    )
    
    
    (98,892
    )
    
    
    (31,340
    )
    
    
    (247,716
    )
    
    
    (631,218
    )Proceeds from maturities and principal reductions
of marketable securities held-to-maturity
    
    
    115,550
    
    
    
    140,258
    
    
    
    67,777
    
    
    
    215,900
    
    
    
    436,922Proceeds from maturities and principal reductions
of marketable securities available-for-sale
    
    
    138,640
    
    
    
    180,299
    
    
    
    89,876
    
    
    
    267,204
    
    
    
    697,042Proceeds from sales of marketable securities
available-for-sale
    
    
    5,333
    
    
    
    12,088
    
    
    
    2,145
    
    
    
    22,713
    
    
    
    307,736Loan originations
    
    
    (1,334,596
    )
    
    
    (1,454,869
    )
    
    
    (770,459
    )
    
    
    (1,351,294
    )
    
    
    (1,341,810
    )Proceeds from loan maturities and principal
reductions
    
    
    1,118,372
    
    
    
    1,101,853
    
    
    
    584,023
    
    
    
    997,290
    
    
    
    966,289Proceeds from sale of portfolio loans
    
    
    481,301
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Redemption/(purchase) of Federal Home Loan
Bank stock
    
    
    (979
    )
    
    
    3,044
    
    
    
    301
    
    
    
    5,829
    
    
    
    12,960Proceeds from sale of real estate owned
    
    
    6,771
    
    
    
    10,380
    
    
    
    5,430
    
    
    
    6,749
    
    
    
    8,107Sale/(purchase) of real estate owned for investment
    
    
    66
    
    
    
    384
    
    
    
    481
    
    
    
    78
    
    
    
    (226
    )Purchase of premises and equipment
    
    
    (13,071
    )
    
    
    (10,512
    )
    
    
    (4,960
    )
    
    
    (20,373
    )
    
    
    (22,848
    )Acquisitions, net of cash received
    
    
    (2,605
    )
    
    
    (5,246
    )
    
    
    (5,246
    )
    
    
    
    
    
    
    (21,910
    )Net cash (used) provided by
investing activities
    
    
    32,411
    
    
    
    (121,213
    )
    
    
    (61,972
    )
    
    
    (276,160
    )
    
    
    96,817
 53




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
   Six-monthYear ended
    
    
    Year ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    Years ended June 302006
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2004(Unaudited)Financing activities:(Decrease) increase in deposits, net
    
    $
    54,948
    
    
    
    (32,282
    )
    
    
    (32,686
    )
    
    
    (3,635
    )
    
    
    (177,807
    )Proceeds from long-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repayments of long-term borrowings
    
    
    (47,759
    )
    
    
    (37,701
    )
    
    
    (5,173
    )
    
    
    (35,056
    )
    
    
    (251,064
    )Net increase (decrease) in short-term borrowings
    
    
    24,025
    
    
    
    11,658
    
    
    
    7,446
    
    
    
    (2,823
    )
    
    
    676(Decrease) increase in advances by borrowers
for taxes and insurance
    
    
    (2,142
    )
    
    
    1,196
    
    
    
    (7,086
    )
    
    
    1,162
    
    
    
    2,994Treasury stock repurchases
    
    
    (8,080
    )
    
    
    (17,183
    )
    
    
    (17,183
    )
    
    
    
    
    
    
    Proceeds/(repayment) of debentures
    
    
    (102,062
    )
    
    
    103,094
    
    
    
    103,094
    
    
    
    
    
    
    
    Proceeds from stock offering, net of issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112,804Cash dividends paid
    
    
    (13,727
    )
    
    
    (14,613
    )
    
    
    (6,119
    )
    
    
    (20,171
    )
    
    
    (9,963
    )Proceeds from options exercised, including
tax benefit realized
    
    
    873
    
    
    
    1,438
    
    
    
    1,734
    
    
    
    797
    
    
    
    1,031Net cash provided (used) by
financing activities
    
    
    (93,924
    )
    
    
    15,607
    
    
    
    44,027
    
    
    
    (59,726
    )
    
    
    (321,329
    )Net increase (decrease) in cash and
cash equivalents
    
    $
    2,241
    
    
    
    (32,013
    )
    
    
    16,204
    
    
    
    (255,835
    )
    
    
    (149,108
    )Cash and cash equivalents at beginning of year
    
    $
    152,092
    
    
    
    184,105
    
    
    
    135,888
    
    
    
    391,723
    
    
    
    540,831Net increase (decrease) in cash and cash equivalents
    
    
    2,241
    
    
    
    (32,013
    )
    
    
    16,204
    
    
    
    (255,835
    )
    
    
    (149,108
    )Cash and cash equivalents at end of year
    
    $
    154,333
    
    
    
    152,092
    
    
    
    152,092
    
    
    
    135,888
    
    
    
    391,723Cash paid during the year for:Interest on deposits and borrowings (including
interest credited to deposit accounts of $136,319,
$103,267 (unaudited), $54,609, $94,106,
and $91,829, respectively)
    
    $
    191,458
    
    
    
    149,763
    
    
    
    79,047
    
    
    
    138,307
    
    
    
    131,909Income taxes
    
    
    6,940
    
    
    
    11,085
    
    
    
    4,800
    
    
    
    19,491
    
    
    
    7,459Noncash activities:Business acquisitions:Fair value of assets acquired
    
    $
    86,673
    
    
    
    84,957
    
    
    
    84,957
    
    
    
    
    
    
    
    1,000,392Net cash paid
    
    
    (2,605
    )
    
    
    (5,246
    )
    
    
    (5,246
    )
    
    
    
    
    
    
    (21,910
    )Liabilities assumed
    
    $
    84,068
    
    
    
    79,711
    
    
    
    79,711
    
    
    
    
    
    
    
    978,482Loan foreclosures and repossessions
    
    $
    7,817
    
    
    
    6,436
    
    
    
    2,829
    
    
    
    8,622
    
    
    
    4,647Sale of real estate owned financed by the Company
    
    
    768
    
    
    
    1,269
    
    
    
    773
    
    
    
    1,113
    
    
    
    340Forgiveness of loan to Northwest Bancorp, MHC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,000
    
    
    
    
  54




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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,
2006 and 2005, owned approximately 61% and 60%, 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, 2006 and 2005, the
six-month period December 31, 2005 and years ended June 30, 2005 and 2004 were
$21,376,000, $12,825,000 (unaudited), $9,161,000, $3,664,000, and $9,159,000,
respectively. Dividends paid to MHC during the years ended December 31, 2006 and 2005,
the six-month period December 31, 2005 and years ended June 30, 2005 and 2004 were $0,
$3,664,000 (unaudited), $0, $10,571,000, and $2,812,000, respectively.During the 2004 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 160 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 either
held-to-maturity, available-for-sale, or trading securities. Securities for which management
has the intent and the Company has the ability to hold until their maturity are classified as
held-to-maturity and are carried on the Companys books at cost, adjusted for amortization of
premium and accretion of discount on a level yield basis. If it is managements intent at the
time of
 55




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##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    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 reported as accumulated other comprehensive income, a separate component of
shareholders equity, net of tax. Securities 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, 2006 and 2005.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, 2006 and 2005 were $23.4 million and $2.3 million, 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
 56




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    collectibility of principal. Interest that has been accrued on impaired loans that are
contractually past due 90 days and over is reversed.(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, as 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. Prior to the Companys acquisition of First Carnegie Deposit from Northwest
Bancorp, MHC, First Carnegie Deposit recorded a goodwill impairment loss of $7,904,000 in
fiscal year 2004.(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.
 57




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##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (l)
    
    DepositsInterest on deposits is accrued and charged to expense monthly and is paid or credited in
accordance with the terms of the accounts.(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 2004), 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. 158,333 options were awarded during the year ended
December 31, 2006. 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 $1,176,000, $1,073,000 (unaudited), $581,000 and $492,000, was included in income before income
taxes during the years ended December 31, 2006 and 2005, 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, 2006 and 2005 and six-month period ended December 31, 2005 and fiscal year ended June
30, 2005 was a reduction of $765,000, $698,000 (unaudited), $378,000, and $320,000, respectively.
No other periods presented included expense related to the Companys recognition and retention
plan. The Company will recognize the remaining expense of $3,710,000 over the next four years.
Total compensation expense for nonvested stock options of $2,124,000 has yet to be recognized as of
December 31, 2006. The weighted average period over which this remaining amount 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 2.9%; (2) expected volatility of 21% to 33%; (3) risk-free interest rates ranging from
4.5% to 6.5%; and (4) expected lives of seven years.
 58




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (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.(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
 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
 59




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Accounting for Uncertainty in Income Taxes:
 Accounting for Servicing of Financial Assets:
 Accounting for Certain Hybrid Financial Instruments:
 Considering the Effects of Prior Year Misstatements: Considering the Effects of
Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (SAB
108),
 60




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
      Accounting for
Leases
 Opening balancePreviously reported
    
    Adjustment
    
    January 1, 2006Other assets
    
    $
    26,117
    
    
    
    2,652
    
    
    $
    28,769Other liabilities
    
    
    11,529
    
    
    
    5,422
    
    
    
    16,951Retained earnings
    
    $
    367,255
    
    
    
    (2,770
    )
    
    $
    364,485
 61




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (3)
    
    Marketable SecuritiesMarketable securities at December 31, 2006 are as follows:
 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 year  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
 62




---



##### 



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
 63




---



##### 



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
    
    $
    20,000
    
    
    
    
    
    
    
    (59
    )
    
    
    19,941Due in one year  five years
    
    
    70,000
    
    
    
    
    
    
    
    (456
    )
    
    
    69,544Due in five years  ten years
    
    
    58,414
    
    
    
    170
    
    
    
    (900
    )
    
    
    57,684Due after ten years
    
    
    18,398
    
    
    
    
    
    
    
    (236
    )
    
    
    18,162Municipal securities:Due in one years  five years
    
    
    294
    
    
    
    
    
    
    
    
    
    
    
    294Due in five years  ten years
    
    
    7,374
    
    
    
    120
    
    
    
    (25
    )
    
    
    7,469Due after ten years
    
    
    230,912
    
    
    
    2,853
    
    
    
    (448
    )
    
    
    233,317Corporate debt issues:Due after ten years
    
    
    39,015
    
    
    
    2,392
    
    
    
    (133
    )
    
    
    41,274Mortgage-backed securities:Fixed rate pass-through
    
    
    12,722
    
    
    
    98
    
    
    
    (177
    )
    
    
    12,643Variable rate pass-through
    
    
    111,070
    
    
    
    473
    
    
    
    (1,174
    )
    
    
    110,369Fixed rate CMO
    
    
    6,411
    
    
    
    
    
    
    
    (288
    )
    
    
    6,123Variable rate CMO
    
    
    59,648
    
    
    
    329
    
    
    
    (290
    )
    
    
    59,687Total mortgage-backed securities
    
    
    189,851
    
    
    
    900
    
    
    
    (1,929
    )
    
    
    188,822Total securities
held-to-maturity
    
    $
    634,258
    
    
    
    6,435
    
    
    
    (4,186
    )
    
    
    636,507
 64




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    Gross
    
    
    Grossunrealized
    
    
    unrealizedAmortized
    
    
    holding
    
    
    holding
    
    
    Marketcost
    
    
    gains
    
    
    losses
    
    
    valueAvailable-for-sale:Government sponsored enterprises:Due in one year  five years
    
    $
    37,984
    
    
    
    2
    
    
    
    (417
    )
    
    
    37,569Due in five years  ten years
    
    
    16,998
    
    
    
    
    
    
    
    (374
    )
    
    
    16,624Due after ten years
    
    
    59,983
    
    
    
    16
    
    
    
    (445
    )
    
    
    59,554Equity securities and mutual funds
    
    
    92,350
    
    
    
    7,821
    
    
    
    (2,961
    )
    
    
    97,210Municipal securities:Due in five years  ten years
    
    
    1,573
    
    
    
    3
    
    
    
    (18
    )
    
    
    1,558Due after ten years
    
    
    12,975
    
    
    
    41
    
    
    
    (220
    )
    
    
    12,796Corporate debt issues:Due in one year  five years
    
    
    1,022
    
    
    
    
    
    
    
    (110
    )
    
    
    912Due in five years  ten years
    
    
    28,500
    
    
    
    71
    
    
    
    (1,188
    )
    
    
    27,383Due after ten years
    
    
    36,454
    
    
    
    111
    
    
    
    (300
    )
    
    
    36,265Mortgage-backed securities:Fixed rate pass-through
    
    
    77,383
    
    
    
    341
    
    
    
    (1,317
    )
    
    
    76,407Variable rate pass-through
    
    
    147,426
    
    
    
    67
    
    
    
    (1,637
    )
    
    
    145,856Fixed rate CMO
    
    
    78,615
    
    
    
    2
    
    
    
    (2,584
    )
    
    
    76,033Variable rate CMO
    
    
    25,529
    
    
    
    178
    
    
    
    (38
    )
    
    
    25,669Total mortgage-
backed securities
    
    
    328,953
    
    
    
    588
    
    
    
    (5,576
    )
    
    
    323,965Total securities
available-for-sale
    
    $
    616,792
    
    
    
    8,653
    
    
    
    (11,609
    )
    
    
    613,836
  December 312006
    
    
    2005Mortgage-backed securities:FNMA
    
    $
    205,127
    
    
    
    188,448GNMA
    
    
    120,799
    
    
    
    151,477FHLMC
    
    
    249,685
    
    
    
    146,714Other (nonagency)
    
    
    55,012
    
    
    
    27,177Total mortgage-backed
securities
    
    $
    630,623
    
    
    
    513,816
 65




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
      Less than 12 months
    
    
    12 months or more
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealizedvalue
    
    
    losses
    
    
    value
    
    
    losses
    
    
    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
    %
  66




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (4)
    
    Loans ReceivableLoans receivable at December 31, 2006 and 2005 are summarized in the table below:
 December 312006
    
    
    2005Real estate loans:One-to-four family
    
    $
    2,411,024
    
    
    
    2,805,900Multi-family and commercial
    
    
    701,951
    
    
    
    594,503Total real estate loans
    
    
    3,112,975
    
    
    
    3,400,403Consumer loans:Automobile
    
    
    138,401
    
    
    
    144,519Home improvement
    
    
    887,352
    
    
    
    780,451Education
    
    
    11,973
    
    
    
    120,504Loans on savings accounts
    
    
    10,313
    
    
    
    9,066Other
    
    
    109,303
    
    
    
    106,390Total consumer loans
    
    
    1,157,342
    
    
    
    1,160,930Commercial loans
    
    
    235,311
    
    
    
    157,572Total loans receivable,
gross
    
    
    4,505,628
    
    
    
    4,718,905Deferred loan fees
    
    
    (3,027
    )
    
    
    (3,877
    )Allowance for loan losses
    
    
    (37,655
    )
    
    
    (33,411
    )Undisbursed loan proceeds (real
estate loans)
    
    
    (52,505
    )
    
    
    (59,348
    )Total loans
receivable, net
    
    $
    4,412,441
    
    
    
    4,622,269
     67




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     December 312006
    
    
    2005Loan commitments
    
    $
    82,890
    
    
    
    22,322Undisbursed lines of credit
    
    
    292,825
    
    
    
    266,455Standby letters of credit
    
    
    13,383
    
    
    
    14,548$
    389,098
    
    
    
    303,325
     Accounting by Creditors for
Impairment of a Loan
 68




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
      (5)
    
    Accrued Interest ReceivableAccrued interest receivable as of December 31, 2006 and 2005 is presented in the following
table:
 December 312006
    
    
    2005Investment securities
    
    $
    8,139
    
    
    
    5,807Mortgage-backed securities
    
    
    3,312
    
    
    
    1,997Loans receivable
    
    
    16,582
    
    
    
    17,249$
    28,033
    
    
    
    25,053
 (6)
    
    Allowance for Loan LossesChanges in the allowance for losses on loans receivable for the years ended December 31, 2006
and 2005, six-month period ended December 31, 2005 and years ended June 30, 2005 and 2004 are
presented in the following table:
 Twelve-month
    
    
    Six-monthperiod ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    June 302006
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2004(Unaudited)Balance, beginning of fiscal year
    
    $
    33,411
    
    
    
    29,628
    
    
    
    31,563
    
    
    
    30,670
    
    
    
    27,166Provision
    
    
    8,480
    
    
    
    10,285
    
    
    
    4,722
    
    
    
    9,566
    
    
    
    6,860Charge-offs
    
    
    (7,617
    )
    
    
    (7,763
    )
    
    
    (3,639
    )
    
    
    (9,473
    )
    
    
    (5,750
    )Acquisitions
    
    
    1,982
    
    
    
    255
    
    
    
    255
    
    
    
    
    
    
    
    1,330Recoveries
    
    
    1,399
    
    
    
    1,006
    
    
    
    510
    
    
    
    800
    
    
    
    1,064Balance, end of fiscal year
    
    $
    37,655
    
    
    
    33,411
    
    
    
    33,411
    
    
    
    31,563
    
    
    
    30,670
  69




---



##### 



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, 2006 and 2005 are summarized by major classification
in the following table:
 December 312006
    
    
    2005Land and land improvements
    
    $
    13,080
    
    
    
    9,372Office buildings and improvements
    
    
    92,033
    
    
    
    86,027Furniture, fixtures, and equipment
    
    
    69,291
    
    
    
    63,796Leasehold improvements
    
    
    10,576
    
    
    
    7,703Total, at cost
    
    
    184,980
    
    
    
    166,898Less accumulated depreciation and
amortization
    
    
    (80,114
    )
    
    
    (69,917
    )Premises and equipment,
net
    
    $
    104,866
    
    
    
    96,981
   2007
    
    $
    3,5082008
    
    
    3,2452009
    
    
    2,9932010
    
    
    2,4852011
    
    
    2,118Thereafter
    
    
    8,494$
    22,843
  70




---



##### 



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 312006
    
    
    2005Amortized intangible assets:Core deposit intangibles  gross
    
    $
    22,495
    
    
    
    21,006Acquisitions
    
    
    1,980
    
    
    
    1,489Less accumulated amortization
    
    
    (15,352
    )
    
    
    (11,560
    )Core deposit
intangibles  net
    
    $
    9,123
    
    
    
    10,935Customer contract intangible
assets  gross
    
    $
    831
    
    
    
    831Less accumulated amortization
    
    
    (373
    )
    
    
    (289
    )Customer contract
intangible assets  net
    
    $
    458
    
    
    
    542
  For the fiscal year ended 6/30/04
    
    $
    4,706For the fiscal year ended 6/30/05
    
    
    4,509For the six-month period ended 12/31/05
    
    
    1,932For the fiscal year ended 12/31/05 (unaudited)
    
    
    3,972For the fiscal year ended 12/31/06
    
    
    3,876For the fiscal year ending 12/31/07
    
    
    3,397For the fiscal year ending 12/31/08
    
    
    2,661For the fiscal year ending 12/31/09
    
    
    1,692For the fiscal year ending 12/31/10
    
    
    968For the fiscal year ending 12/31/11
    
    
    657
 71




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Community
    
    
    Consumerbanks
    
    
    finance
    
    
    TotalBalance at June 30, 2005
    
    $
    140,766
    
    
    
    1,312
    
    
    
    142,078Goodwill acquired
    
    
    8,407
    
    
    
    
    
    
    
    8,407Amortization
    
    
    
    
    
    
    
    
    
    
    Impairment losses
    
    
    
    
    
    
    
    
    
    
    Balance 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
    
    
    
    155,770
 (10)
    
    DepositsDeposit balances at December 31, 2006 and 2005 are shown in the table below:
 December 312006
    
    
    2005Savings accounts
    
    $
    807,873
    
    
    
    935,564Interest-bearing checking accounts
    
    
    677,394
    
    
    
    668,235Noninterest-bearing checking accounts
    
    
    317,389
    
    
    
    289,427Money market deposit accounts
    
    
    594,472
    
    
    
    596,352Certificates of deposit
    
    
    2,969,622
    
    
    
    2,738,901$
    5,366,750
    
    
    
    5,228,479
  72




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     December 312006
    
    
    2005Due within 12 months
    
    $
    2,024,850
    
    
    
    1,506,235Due between 12 and 24 months
    
    
    707,477
    
    
    
    764,783Due between 24 and 36 months
    
    
    93,679
    
    
    
    301,377Due between 36 and 48 months
    
    
    84,992
    
    
    
    71,767Due between 48 and 60 months
    
    
    37,531
    
    
    
    65,803After 60 months
    
    
    21,093
    
    
    
    28,936$
    2,969,622
    
    
    
    2,738,901
  Six-monthYear ended
    
    
    Year ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    Year ended June 302006
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2004(Unaudited)Savings accounts
    
    $
    12,619
    
    
    
    14,212
    
    
    
    7,035
    
    
    
    15,037
    
    
    
    13,923Interest-bearing checking
accounts
    
    
    9,396
    
    
    
    6,845
    
    
    
    3,839
    
    
    
    5,363
    
    
    
    5,302Money market deposit accounts
    
    
    19,446
    
    
    
    14,204
    
    
    
    7,668
    
    
    
    13,168
    
    
    
    14,786Certificate accounts
    
    
    115,524
    
    
    
    86,841
    
    
    
    46,807
    
    
    
    76,511
    
    
    
    72,317$
    156,985
    
    
    
    122,102
    
    
    
    65,349
    
    
    
    110,079
    
    
    
    106,328
 73




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (11)
    
    Borrowed FundsBorrowed funds at December 31, 2006 and 2005 are presented in the following table:
 December 312006
    
    
    2005Average
    
    
    
    
    
    
    AverageAmount
    
    
    rate
    
    
    Amount
    
    
    rateTerm notes payable to the FHLB
of Pittsburgh:Due within one year
    
    $
    35,000
    
    
    
    3.62
    %
    
    
    
    
    
    
    
    %Due between one and two years
    
    
    109,200
    
    
    
    5.03
    
    
    
    35,000
    
    
    
    3.62Due between two and three years
    
    
    35,500
    
    
    
    4.65
    
    
    
    109,369
    
    
    
    5.03Due between three and four years
    
    
    36,597
    
    
    
    4.36
    
    
    
    35,675
    
    
    
    4.66Due between four and five years
    
    
    80,000
    
    
    
    5.01
    
    
    
    36,627
    
    
    
    4.37Due between five and ten years
    
    
    35,899
    
    
    
    4.51
    
    
    
    160,958
    
    
    
    4.81Due between ten and twenty years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    332,196
    
    
    
    
    
    
    
    377,629Revolving line of credit, Federal
Home Loan Bank of Pittsburgh
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Investor notes payable, due various
dates through 2009
    
    
    4,913
    
    
    
    4.99
    
    
    
    5,702
    
    
    
    4.99Securities sold under agreement to
repurchase, due within one year
    
    
    55,705
    
    
    
    4.25
    
    
    
    34,025
    
    
    
    3.14Total borrowed funds
    
    $
    392,814
    
    
    
    
    
    
    
    417,356
    74




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (12)
    
    Income TaxesTotal income tax was allocated for the years ended December 31, 2006 and 2005 and six-month
period ended December 31, 2005 and years ended June 30, 2005 and 2004 as follows:
 Six-monthYear ended
    
    
    Year ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    Year ended June 302006
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2004(Unaudited)Income before income taxes
    
    $
    19,792
    
    
    
    22,365
    
    
    
    10,998
    
    
    
    22,741
    
    
    
    19,829Shareholders equity for
unrealized (loss)/gain on
securities available-for-sale
    
    
    (627
    )
    
    
    (4,218
    )
    
    
    (2,637
    )
    
    
    3,525
    
    
    
    (6,403
    )Shareholders equity for tax
benefit for excess of fair value
above cost of stock
benefit plans
    
    
    (305
    )
    
    
    (909
    )
    
    
    (691
    )
    
    
    (218
    )
    
    
    (816
    )Shareholders equity for
pension adjustment
    
    
    (6,628
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shareholders equity for
prior period adjustments
    
    
    (1,492
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    10,740
    
    
    
    17,238
    
    
    
    7,670
    
    
    
    26,048
    
    
    
    12,610
  Six-monthYear ended
    
    
    Year ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    Year ended June 302006
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2004(Unaudited)Current
    
    $
    11,017
    
    
    
    14,032
    
    
    
    7,896
    
    
    
    12,276
    
    
    
    17,512Deferred
    
    
    8,775
    
    
    
    8,333
    
    
    
    3,102
    
    
    
    10,465
    
    
    
    2,317$
    19,792
    
    
    
    22,365
    
    
    
    10,998
    
    
    
    22,741
    
    
    
    19,829
 75




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Six-monthYear ended
    
    
    Year ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    Year ended June 302006
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2004(Unaudited)Expected tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Tax-exempt interest income
    
    
    (7.0
    )
    
    
    (5.8
    )
    
    
    (5.8
    )
    
    
    (5.9
    )
    
    
    (6.5
    )State income tax, net of federal
benefit
    
    
    2.6
    
    
    
    2.7
    
    
    
    2.5
    
    
    
    3.0
    
    
    
    3.0Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.4Bank-owned life insurance
    
    
    (2.1
    )
    
    
    (1.9
    )
    
    
    (1.9
    )
    
    
    (2.0
    )
    
    
    (2.0
    )Other
    
    
    (0.8
    )
    
    
    (1.7
    )
    
    
    (2.2
    )
    
    
    (1.1
    )
    
    
    (2.1
    )Effective tax rate
    
    
    27.7
    %
    
    
    28.3
    %
    
    
    27.6
    %
    
    
    29.0
    %
    
    
    31.8
    %
 76




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     December 312006
    
    
    2005Deferred tax assets:Deferred fee income
    
    $
    297
    
    
    
    449Deferred compensation expense
    
    
    1,169
    
    
    
    1,497Net operating loss carryforwards
    
    
    2,408
    
    
    
    2,721Bad debts
    
    
    11,161
    
    
    
    10,550Accrued postretirement benefit cost
    
    
    366
    
    
    
    394Stock benefit plans
    
    
    356
    
    
    
    346Marketable securities
available-for-sale
    
    
    834
    
    
    
    207Reserve for uncollected interest
    
    
    527
    
    
    
    393Pension expense
    
    
    
    
    
    
    459Pension and postretirement benefits
    
    
    6,628
    
    
    
    Alternative minimum tax credit
carryforwards
    
    
    2,081
    
    
    
    1,950Other
    
    
    388
    
    
    
    26726,215
    
    
    
    19,233Deferred tax liabilities:Pension expense
    
    
    24
    
    
    
    Purchase accounting
    
    
    3,507
    
    
    
    243Intangible asset
    
    
    7,510
    
    
    
    8,711Mortgage servicing rights
    
    
    2,691
    
    
    
    1,175Fixed assets
    
    
    6,528
    
    
    
    2,913Other
    
    
    480
    
    
    
    41820,740
    
    
    
    13,460Net deferred tax asset
    
    $
    5,475
    
    
    
    5,773
   77




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (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, 2006 include approximately $39,107,000 representing such bad debt
deductions for which no deferred income taxes have been provided.(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-monthYear ended
    
    
    Year ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    Years ended June 302006
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2004(Unaudited)Net income available to common
shareholders
    
    $
    51,536
    
    
    
    56,750
    
    
    
    28,849
    
    
    
    54,815
    
    
    
    42,132Weighted average common
shares outstanding
    
    
    49,879
    
    
    
    50,776
    
    
    
    50,850
    
    
    
    49,901
    
    
    
    47,817Dilutive potential shares due
to effect of stock options
    
    
    257
    
    
    
    363
    
    
    
    314
    
    
    
    467
    
    
    
    582Total weighted average
common shares and
dilutive potential shares
    
    $
    50,136
    
    
    
    51,139
    
    
    
    51,164
    
    
    
    50,368
    
    
    
    48,399Basic earnings per share
    
    $
    1.03
    
    
    
    1.12
    
    
    
    0.57
    
    
    
    1.10
    
    
    
    0.88Diluted earnings per share
    
    $
    1.03
    
    
    
    1.11
    
    
    
    0.56
    
    
    
    1.09
    
    
    
    0.87
 (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
 78




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
        Six-monthYear ended
    
    
    Year ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    Years ended June 302006
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2004(Unaudited)Service cost
    
    $
    4,555
    
    
    
    4,132
    
    
    
    2,256
    
    
    
    3,753
    
    
    
    3,324Interest cost
    
    
    3,492
    
    
    
    3,242
    
    
    
    1,735
    
    
    
    3,104
    
    
    
    2,656Expected return on plan assets
    
    
    (3,601
    )
    
    
    (3,068
    )
    
    
    (1,663
    )
    
    
    (2,810
    )
    
    
    (2,208
    )Net amortization and deferral
    
    
    793
    
    
    
    831
    
    
    
    490
    
    
    
    701
    
    
    
    811Net periodic pension cost
    
    $
    5,239
    
    
    
    5,137
    
    
    
    2,818
    
    
    
    4,748
    
    
    
    4,583
 79




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     December 312006
    
    
    2005Change in benefit obligation:Benefit obligation at
beginning of period
    
    $
    61,363
    
    
    
    61,701Service cost
    
    
    4,555
    
    
    
    2,256Interest cost
    
    
    3,492
    
    
    
    1,735Actuarial (gain) loss
    
    
    3,941
    
    
    
    (2,972
    )Benefits paid
    
    
    (1,460
    )
    
    
    (1,357
    )Benefit obligation at end of
period
    
    $
    71,891
    
    
    
    61,363Change in plan assets:Fair value of plan assets at
beginning of period
    
    $
    45,456
    
    
    
    42,740Actual return on plan assets
    
    
    4,904
    
    
    
    1,881Employer contribution
    
    
    6,722
    
    
    
    2,192Benefits paid
    
    
    (1,460
    )
    
    
    (1,357
    )Fair value of plan assets at
end of period
    
    $
    55,622
    
    
    
    45,456Funded status
    
    $
    (16,269
    )
    
    
    (15,906
    )
   80




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Six-monthYear ended
    
    period endedDecember 31,
    
    December 31,
    
    Years ended June 302006
    
    2005
    
    2005
    
    2004Discount rate
    
    
    5.75
    %
    
    
    5.75
    
    
    
    5.75
    
    
    
    6.25Expected long-term rate of
return on assets
    
    
    8.00
    
    
    
    8.00
    
    
    
    8.00
    
    
    
    8.00Rate of increase in
compensation levels
    
    
    4.00
    
    
    
    4.00
    
    
    
    4.00
    
    
    
    4.00
      81




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    The following table sets forth the weighted average asset allocation of defined benefit plans:
 Target
    
    December 31Asset category
    
    allocation
    
    2006
    
    2005Debt securities
    
    
    20  50
    %
    
    
    26
    %
    
    
    28
    %Equity securities
    
    
    30  60
    
    
    
    53
    
    
    
    60Other
    
    
    5  50
    
    
    
    21
    
    
    
    12Total
    
    
    
    
    
    
    100
    %
    
    
    100
    %
 The benefits expected to be paid in each year from 2007  2011 are $1,897,000, $1,976,000,
$2,062,000, $2,329,000, and $2,502,000, respectively. The aggregate benefits expected to be paid in
the five years from 2012 2016 are $18,725,000. The expected benefits to be paid are based on the
same assumptions used to measure the Companys benefit obligation at December 31, 2006 and include
estimated future employee service.Amounts recognized in accumulated other comprehensive loss, net of tax, as of December 31, 2006 are
prior service costs of $80,000 and a net loss of $9,785,000. As of December 31, 2005, there were no
amounts recognized in accumulated other comprehensive loss for the plans. It is estimated that
$77,000 of the prior service cost and $747,000 of the net loss will be amortized from accumulated
other comprehensive loss in to net periodic cost over the next fiscal year.The incremental effect of applying SFAS No. 158 on individual line items in the Consolidated
Statement of Financial Condition at December 31, 2006 is:
 Before Application
    
    
    
    
    
    After Applicationof SFAS No. 158
    
    Reclassifications
    
    of SFAS No. 158Other assets
    
    $
    12,188
    
    
    
    6,628
    
    
    
    18,816Total assets
    
    
    6,521,187
    
    
    
    6,628
    
    
    
    6,527,815Other liabilities
    
    
    16,964
    
    
    
    16,994
    
    
    
    33,958Total liabilities
    
    
    5,906,260
    
    
    
    16,994
    
    
    
    5,923,254Accumulated other
comprehensive loss, net
    
    
    (1,243
    )
    
    
    (10,366
    )
    
    
    (11,609
    )Shareholders equity
    
    $
    614,927
    
    
    
    (10,366
    )
    
    
    604,561
 (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.
 82




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    Net periodic cost for the Companys postretirement healthcare benefits consist of the
following:
 Six-monthYear ended
    
    
    Year ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    Years ended June 30,2006
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2004(Unaudited)Service cost
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest cost
    
    
    91
    
    
    
    87
    
    
    
    46
    
    
    
    98
    
    
    
    91Recognized actuarial gain
    
    
    34
    
    
    
    31
    
    
    
    17
    
    
    
    29
    
    
    
    22Net periodic cost
    
    $
    125
    
    
    
    118
    
    
    
    63
    
    
    
    127
    
    
    
    113
 The following table sets forth the funded status of the Companys postretirement healthcare benefit
plan at December 31, 2006 and 2005:
 December 312006
    
    
    2005Change in benefit obligation:Benefit obligation at
beginning of year
    
    $
    1,642
    
    
    
    1,675Service cost
    
    
    
    
    
    
    Interest cost
    
    
    91
    
    
    
    46Actuarial (gain) loss
    
    
    110
    
    
    
    (15
    )Benefits paid
    
    
    (142
    )
    
    
    (64
    )Benefit obligation at end of year
    
    
    1,701
    
    
    
    1,642Fair value of plan assets at
end of year
    
    
    
    
    
    
    Funded Status
    
    $
    (1,701
    )
    
    
    (1,062
    )
 83




---



##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    The assumptions used to develop the preceding information for postretirement healthcare
benefits are as follows:
 Six-monthYear ended
    
    period endedDecember 31,
    
    December 31,
    
    Years ended June 302006
    
    2005
    
    2005
    
    2004Discount rate
    
    
    5.75
    %
    
    
    5.75
    
    
    
    5.75
    
    
    
    6.25Monthly cost of healthcare
insurance per beneficiary
    
    $
    257
    
    
    
    233
    
    
    
    229
    
    
    
    222Annual rate of increase in
healthcare costs
    
    
    4.00
    
    
    
    4.00
    
    
    
    4.00
    
    
    
    4.00
 If the assumed rate of increase in healthcare costs was increased by one percentage point to
5% from the
level of 4% presented above, the service and interest cost components of net periodic
postretirement healthcare benefit cost would increase by $5,000, in the aggregate, and the
accumulated postretirement benefit obligation for healthcare benefits would increase by $85,000.Recognized in accumulated other comprehensive loss, net of tax, as of December 31, 2006 is a net
loss of $394,000. As of December 31, 2005 there were no amounts recognized in accumulated other
comprehensive loss for the plan. It is estimated that $42,000 of the net loss will be amortized
from accumulated other comprehensive loss into net periodic cost over the next fiscal year.(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 now makes annual
contributions to the ESOP at the boards discretion. Company shares are then 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.ESOP compensation expense was $0, $600,000 (unaudited), $0, $1,100,000, and $871,000, for the years
ended December 31, 2006 and 2005, the six-month period ended December 31, 2005 and the fiscal years
ended June 30, 2005 and 2004, respectively.(d)
    
    Recognition and Retention PlanOn November 17, 2004, the Company established a Recognition and Retention Plan for Employees
and Outside Directors (RRP). The objective of the RRP was to enable the Company to provide
directors, officers, and employees with a proprietary interest in the Company. The number of
common shares authorized and granted under the RRP was 290,220 and 278,231, 20% of which had
vested as of December 31, 2006 (total market value of $5,959,000 at issuance date),
respectively. The shares were granted on March 16, 2005 with a weighted average grant date
fair value per share of $21.42. Total common shares forfeited were 4,399, of which, 1,464 and
2,935 shares were forfeited during the years ended December 31, 2006 and 2005, respectively.
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. 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
 84




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    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, 2004, the Company adopted the 2004 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 employees at an exercise price of $22.93 per share. On
January 18, 2006 the Company granted 158,333 incentive stock options to employees at an exercise
price of $22.18 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 one year from the grant
date.
 85




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##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    The following table summarizes the activity in the Companys Option Plans during the year
ended December 31, 2006 the six-month period ended December 31, 2005 and the fiscal years ended
June 30, 2005 and 2004:
 Year Ended
    
    Six Months Ended
    
    Year Ended June 30,December 31, 2006
    
    December 31, 2005
    
    2005
    
    2004Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    average
    
    
    
    
    
    average
    
    
    
    
    
    averageexercise
    
    
    
    
    
    exercise
    
    
    
    
    
    exercise
    
    
    
    
    
    exerciseNumber
    
    price
    
    Number
    
    price
    
    Number
    
    price
    
    Number
    
    priceBalance at beginning of year
    
    
    1,019,189
    
    
    $
    17.55
    
    
    
    1,303,806
    
    
    $
    15.13
    
    
    
    1,061,884
    
    
    $
    9.66
    
    
    
    1,182,656
    
    
    $
    7.74Granted
    
    
    158,333
    
    
    
    22.18
    (a)
    
    
    
    
    
    
    
    
    
    
    445,326
    
    
    
    24.20
    (a)
    
    
    182,000
    
    
    
    16.59
    (a)Exercised
    
    
    (63,064
    )
    
    
    10.14
    (b)
    
    
    (282,461
    )
    
    
    6.34
    (b)
    
    
    (199,456
    )
    
    
    6.30
    (b)
    
    
    (301,314
    )
    
    
    6.30
    (b)Forfeited
    
    
    (1,600
    )
    
    
    5.63
    
    
    
    (2,156
    )
    
    
    18.73
    
    
    
    (3,948
    )
    
    
    15.16
    
    
    
    (1,458
    )
    
    
    13.23Balance at end of year
    
    
    1,112,858
    
    
    
    18.65
    
    
    
    1,019,189
    
    
    
    17.55
    
    
    
    1,303,806
    
    
    
    15.13
    
    
    
    1,061,884
    
    
    
    9.66Exerisable at end of year
    
    
    651,415
    
    
    
    15.78
    
    
    
    559,180
    
    
    
    13.90
    
    
    
    694,821
    
    
    
    10.19
    
    
    
    729,068
    
    
    
    7.78
 
 (a)
    
    Weighted average fair value of options at grant date: $4.75, $6.98, and $4.03,
respectively.(b)
    
    The total intrinsic value of options exercised was $898,000, $4,400,000, $3,300,000, and
$4,900,000, respectively. The aggregate intrinsic value of all options expected to vest and fully vested options at December
31, 2006 is $2,212,000 and $7,594,000, respectively. The following table summarizes the number of
options outstanding, number of options exercisable, and weighted average remaining life of all
option grants:
 Exercise
    
    Exercise
    
    Exercise
    
    Exercise
    
    Exercise
    
    Exercise
    
    Exercise
    
    Exercise
    
    ExercisePrice
    
    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
    
    $18.65Options outstanding:Number of options
    
    
    7,500
    
    
    
    26,700
    
    
    
    164,796
    
    
    
    13,164
    
    
    
    136,086
    
    
    
    163,150
    
    
    
    158,333
    
    
    
    223,861
    
    
    
    219,268
    
    
    
    1,112,858Weighted average
remaining contract
life (years)
    
    
    3.25
    
    
    
    3.00
    
    
    
    5.00
    
    
    
    2.25
    
    
    
    5.75
    
    
    
    6.75
    
    
    
    9.25
    
    
    
    8.50
    
    
    
    8.25
    
    
    
    5.89Options exercisable:Number of options
    
    
    7,500
    
    
    
    26,700
    
    
    
    164,796
    
    
    
    13,164
    
    
    
    136,086
    
    
    
    127,165
    
    
    
    
    
    
    
    44,587
    
    
    
    131,417
    
    
    
    651,415Weighted average
remaining term 
vested (years)
    
    
    3.25
    
    
    
    3.00
    
    
    
    5.00
    
    
    
    2.25
    
    
    
    5.75
    
    
    
    6.75
    
    
    
    9.25
    
    
    
    8.50
    
    
    
    8.25
    
    
    
    6.24
 (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
 86




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##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    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, 2006 and 2005:
 December 312006
    
    
    2005Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    Estimatedamount
    
    
    fair value
    
    
    amount
    
    
    fair valueFinancial assets:Cash and equivalents
    
    $
    154,333
    
    
    
    154,333
    
    
    
    152,092
    
    
    
    152,092Securities available-for-sale
    
    
    767,514
    
    
    
    767,514
    
    
    
    613,836
    
    
    
    613,836Securities held-to-maturity
    
    
    716,967
    
    
    
    720,515
    
    
    
    634,258
    
    
    
    636,507Loans receivable, net
    
    
    4,412,441
    
    
    
    4,432,894
    
    
    
    4,622,269
    
    
    
    4,720,202Accrued interest receivable
    
    
    28,033
    
    
    
    28,033
    
    
    
    25,053
    
    
    
    25,053FHLB stock
    
    
    34,289
    
    
    
    34,289
    
    
    
    33,130
    
    
    
    33,130Total financial assets
    
    $
    6,113,577
    
    
    
    6,137,578
    
    
    
    6,080,638
    
    
    
    6,180,820Financial liabilities:Savings and checking accounts
    
    $
    2,397,128
    
    
    
    2,397,128
    
    
    
    2,489,578
    
    
    
    2,489,578Time deposits
    
    
    2,969,622
    
    
    
    2,988,453
    
    
    
    2,738,901
    
    
    
    2,752,580Borrowed funds
    
    
    392,814
    
    
    
    382,106
    
    
    
    417,356
    
    
    
    414,545Trust-preferred securities
    
    
    103,094
    
    
    
    103,071
    
    
    
    205,156
    
    
    
    207,138Accrued interest payable
    
    
    4,038
    
    
    
    4,038
    
    
    
    4,387
    
    
    
    4,387Total financial liabilities
    
    $
    5,866,696
    
    
    
    5,874,796
    
    
    
    5,855,378
    
    
    
    5,868,228
 Fair value estimates are made at a point-in-time, based on relevant market data and information
about the instrument. The following methods and assumptions were used in estimating the fair value
of financial instruments at December 31, 2006 and 2005.Marketable SecuritiesEstimated market values are based on quoted market prices, dealer quotes, and prices obtained from
independent pricing services. If a quoted market price is not available, fair value is estimated
using quoted market prices for similar securities. Refer to note 3 of the consolidated financial
statements for the detail of the type of investment securities.Loans ReceivableLoans with comparable characteristics including collateral and repricing structures were segregated
for valuation purposes. Each loan pool was separately valued utilizing a discounted cash flow
analysis. Projected monthly cash flows were discounted to present value using a market rate for
comparable loans. Characteristics of comparable loans included remaining term, coupon interest, and
estimated prepayment speeds. Delinquent loans were evaluated separately, given the impact
delinquency has on the projected future cash flow of the loan and the approximate discount or
market rate.
 87




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    Deposit LiabilitiesSFAS 107 defines the estimated fair value of deposits with no stated maturity, which includes
demand deposits, money market, and other savings accounts, to be the amount payable on demand.
Although market premiums paid for depository institutions reflect an additional value for these
low-cost deposits, SFAS 107 prohibits adjusting fair value for any value expected to be derived
from retaining those deposits for a future period of time or from the benefit that results from the
ability to fund interest-earning assets with these deposit liabilities. The fair value estimates of
deposit liabilities do not include the benefit that results from the low-cost funding provided by
these deposits compared to the cost of borrowing funds in the market. Fair values for time deposits
are estimated using a discounted cash flow calculation that applies contractual cost currently
being offered in the existing portfolio to current market rates being offered locally for deposits
of similar remaining maturities. The valuation adjustment for the portfolio consists of the present
value of the difference of these two cash flows, discounted at the assumed market rate of the
corresponding maturity.Borrowed FundsThe fixed rate advances were valued by comparing their contractual cost to the prevailing market
cost.Trust-Preferred SecuritiesThe fair value of the trust-preferred securities are calculated using the discounted cash flows at
the prevailing rate of interest.Off-Balance Sheet Financial InstrumentsThese financial instruments generally are not sold or traded, and estimated fair values are not
readily available. However, the fair value of commitments to extend credit and standby letters of
credit is estimated using the fees currently charged to enter into similar agreements. Commitments
to extend credit issued by the Company are generally short-term in nature and, if drawn upon, are
issued under current market terms. At December 31, 2006 and 2005, there was no significant
unrealized appreciation or depreciation on these 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, 2006 and 2005 and June 30, 2005 and 2004,
the Companys banking subsidiary exceeds all capital adequacy requirements to which they are
subject. At December 31, 2005, the maximum amount available for dividend payments by Northwest to
the Company, while maintaining its well capitalized status, is approximately $105.2 million.As of December 15, 2006, the most recent notification from the FDIC categorized Northwest as well
capitalized under the regulatory framework for prompt corrective action. To be categorized as
well capitalized, the bank must maintain total risk-based, Tier 1 risk-based, and Tier 1 leverage
ratios as set forth in the table. There are no conditions or events since that notification that
management believes have changed the banks categories.
 88




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##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    The actual, required, and well capitalized levels as of December 31, 2006 and 2005:
 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
    
    
    
    6.00Tier I capital (leverage)
(to average assets):
    
    
    539,535
    
    
    
    8.45
    
    
    
    191,562
    
    
    
    3.00
    *
    
    
    319,270
    
    
    
    5.00
 December 31, 2005Minimum capital
    
    Well capitalizedActual
    
    requirements
    
    requirementsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal capital (to risk
weighted assets):
    
    $
    562,559
    
    
    
    15.34
    %
    
    $
    293,334
    
    
    
    8.00
    %
    
    $
    366,667
    
    
    
    10.00
    %Tier I capital (to risk
weighted assets):
    
    
    526,976
    
    
    
    14.37
    
    
    
    146,667
    
    
    
    4.00
    
    
    
    220,000
    
    
    
    6.00Tier I capital (leverage)
(to average assets):
    
    
    526,976
    
    
    
    8.39
    
    
    
    188,438
    
    
    
    3.00
    *
    
    
    314,063
    
    
    
    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, 2006 and 2005, 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.
 89




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##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (19)
    
    Components of Comprehensive IncomeFor the years ended December 31, 2006 and 2005 and six-month period ended December
31, 2005 and the years ended June 30, 2005 and 2004:
 Six-monthYear ended
    
    Year ended
    
    period endedDecember 31,
    
    December 31,
    
    December 31,
    
    Years ended June 302006
    
    2005
    
    2005
    
    2005
    
    2004(Unaudited)Unrealized (loss) gain on
marketable securities
available-for-sale
    
    
    (764
    )
    
    
    (13,495
    )
    
    
    (7,535
    )
    
    
    10,072
    
    
    
    (15,526
    )Tax benefit (expense)
    
    
    298
    
    
    
    5,398
    
    
    
    2,637
    
    
    
    (3,789
    )
    
    
    5,434Reclassification adjustment for
losses (gains) included in net
income, net of tax of $263,
$(142) (unaudited), $0, $(142),
and $970, respectively
    
    
    (393
    )
    
    
    264
    
    
    
    
    
    
    
    264
    
    
    
    (1,800
    )Net unrealized (loss) gain
    
    
    (859
    )
    
    
    (7,833
    )
    
    
    (4,898
    )
    
    
    6,547
    
    
    
    (11,892
    )
 (20)
    
    Northwest Bancorp, Inc. (Parent Company Only)
  December 312006
    
    
    2005AssetsCash and cash equivalents
    
    $
    5,880
    
    
    
    91,713Marketable securities available-for-sale
    
    
    96
    
    
    
    102Investment in bank subsidiaries
    
    
    697,236
    
    
    
    689,002Other assets
    
    
    4,626
    
    
    
    10,268Total assets
    
    $
    707,838
    
    
    
    791,085Liabilities and Shareholders EquityLiabilities:Debentures payable
    
    $
    103,094
    
    
    
    205,156Other liabilities
    
    
    183
    
    
    
    271Total liabilities
    
    
    103,277
    
    
    
    205,427Shareholders equity
    
    
    604,561
    
    
    
    585,658Total liabilities and
shareholders equity
    
    $
    707,838
    
    
    
    791,085
 90




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##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Six-monthYear ended
    
    
    Year ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    Years ended June 302006
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2004(Unaudited)Income:Interest income
    
    $
    3,891
    
    
    
    511
    
    
    
    259
    
    
    
    823
    
    
    
    1,366Dividends from bank subsidiary
    
    
    45,000
    
    
    
    27,000
    
    
    
    19,000
    
    
    
    16,000
    
    
    
    Undistributed earnings from equity
investment in bank subsidiaries
    
    
    16,551
    
    
    
    35,316
    
    
    
    12,890
    
    
    
    44,449
    
    
    
    47,103Gain on sale of marketable
securities available-for-sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69Other income
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3
    
    
    
    2Total income
    
    
    65,442
    
    
    
    62,830
    
    
    
    32,149
    
    
    
    61,275
    
    
    
    48,540Expense:Compensation and benefits
    
    
    378
    
    
    
    280
    
    
    
    160
    
    
    
    804
    
    
    
    318Amortization of intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    262
    
    
    
    788Other expense
    
    
    182
    
    
    
    330
    
    
    
    155
    
    
    
    364
    
    
    
    292Loss on early extinquishment
of debt
    
    
    3,124
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense
    
    
    15,616
    
    
    
    8,737
    
    
    
    4,622
    
    
    
    8,079
    
    
    
    7,714Total expense
    
    
    19,300
    
    
    
    9,347
    
    
    
    4,937
    
    
    
    9,509
    
    
    
    9,112Income before income taxes
    
    
    46,142
    
    
    
    53,483
    
    
    
    27,212
    
    
    
    51,766
    
    
    
    39,428Federal and state income taxes
    
    
    (5,394
    )
    
    
    (3,267
    )
    
    
    (1,637
    )
    
    
    (3,049
    )
    
    
    (2,704
    )Net income
    
    $
    51,536
    
    
    
    56,750
    
    
    
    28,849
    
    
    
    54,815
    
    
    
    42,132
 91




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##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Six-monthYear ended
    
    
    Year ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    Years ended June 302006
    
    
    2005
    
    
    2005
    
    
    2005
    
    
    2004(Unaudited)Operating activities:Net income
    
    $
    51,536
    
    
    
    56,750
    
    
    
    28,849
    
    
    
    54,815
    
    
    
    42,132Adjustments to reconcile net income to
net cash provided (used) by
operating activities:Undistributed earnings of subsidiaries
    
    
    (16,551
    )
    
    
    (35,316
    )
    
    
    (12,890
    )
    
    
    (44,449
    )
    
    
    (47,103
    )Loss on early extingquishable
    
    
    3,124
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    262
    
    
    
    788Noncash compensation expense
related to stock benefit plans
    
    
    2,296
    
    
    
    2,069
    
    
    
    1,085
    
    
    
    1,512
    
    
    
    534Gain on sale of marketable
securities available-for-sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (69
    )Net change in other assets and
liabilities
    
    
    (3,242
    )
    
    
    (7,264
    )
    
    
    (5,756
    )
    
    
    (1,216
    )
    
    
    502Net cash (used in) provided by
operating activities
    
    
    37,163
    
    
    
    16,239
    
    
    
    11,288
    
    
    
    10,924
    
    
    
    (3,216
    )Investing activities:Additional investment in subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,000
    )Loan to Northwest Bancorp, MHC
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    10,000
    
    
    
    (10,000
    )Proceeds from sale or maturity of
marketable securities available-for-sale
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    1,000
    
    
    
    1,169Acquisitions, net of cash received
    
    
    
    
    
    
    (14,193
    )
    
    
    (11,193
    )
    
    
    (3,000
    )
    
    
    (122,673
    )Net cash (used in) provided by
investing activities
    
    
    
    
    
    
    (3,193
    )
    
    
    (11,193
    )
    
    
    8,000
    
    
    
    (132,504
    )Financing activities:Cash dividends paid
    
    
    (13,727
    )
    
    
    (14,613
    )
    
    
    (6,119
    )
    
    
    (20,171
    )
    
    
    (9,963
    )Treasury stock repurchases
    
    
    (8,080
    )
    
    
    (17,183
    )
    
    
    (17,183
    )
    
    
    
    
    
    
    Proceeds from stock offering, net of
issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112,804Proceeds/ (redemption) of trust preferred
stock offering
    
    
    (102,062
    )
    
    
    103,094
    
    
    
    103,094
    
    
    
    
    
    
    
    Proceeds from options exercised
    
    
    873
    
    
    
    2,129
    
    
    
    1,734
    
    
    
    797
    
    
    
    1,031Net cash provided (used) by
financing activities
    
    
    (122,996
    )
    
    
    73,427
    
    
    
    81,526
    
    
    
    (19,374
    )
    
    
    103,872Net increase (decrease) in
cash and cash equivalents
    
    $
    (85,833
    )
    
    
    86,473
    
    
    
    81,621
    
    
    
    (450
    )
    
    
    (31,848
    )Cash and cash equivalents at beginning of year
    
    
    91,713
    
    
    
    5,240
    
    
    
    10,092
    
    
    
    10,542
    
    
    
    42,390Net increase (decrease) in cash and
cash equivalents
    
    $
    (85,833
    )
    
    
    86,473
    
    
    
    81,621
    
    
    
    (450
    )
    
    
    (31,848
    )Cash and cash equivalents at end of year
    
    $
    5,880
    
    
    
    91,713
    
    
    
    91,713
    
    
    
    10,092
    
    
    
    10,542
 (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
 92




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##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    community-oriented institution that offers a full array of traditional deposit and loan
products, including mortgage, consumer, and commercial loans as well as trust, investment
management, actuarial and benefit plan administration, and brokerage services typically offered by
a full service financial institution. The Consumer Finance segment is comprised of Northwest
Consumer Discount Company, a subsidiary of Northwest Savings Bank, which operates offices in
Pennsylvania and New York. This subsidiary compliments the services of the bank by offering
personal installment loans for a variety of consumer and real estate products. This activity is
funded primarily through its intercompany borrowing relationship with Allegheny Services, Inc. Net
income is primarily used by management to measure segment performance. The following tables provide
financial information for these segments. The All Other column represents the parent company, other
nonbank subsidiaries, and elimination entries necessary to reconcile to the consolidated amounts
presented in the financial statements.
 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
 At or for the year ended
    
    Community
    
    Consumer
    
    AllDecember 31, 2005 (Unaudited)
    
    banking
    
    finance
    
    other*
    
    ConsolidatedExternal interest income
    
    $
    317,337
    
    
    
    17,257
    
    
    
    78
    
    
    $
    334,672Intersegment interest income
    
    
    6,393
    
    
    
    
    
    
    
    (6,393
    )
    
    
    Interest expense
    
    
    141,217
    
    
    
    6,691
    
    
    
    2,171
    
    
    
    150,079Provision for loan losses
    
    
    7,620
    
    
    
    2,665
    
    
    
    
    
    
    
    10,285Noninterest income
    
    
    33,937
    
    
    
    2,545
    
    
    
    262
    
    
    
    36,744Noninterest expense
    
    
    122,948
    
    
    
    7,852
    
    
    
    1,137
    
    
    
    131,937Income tax expense (benefit)
    
    
    24,693
    
    
    
    949
    
    
    
    (3,277
    )
    
    
    22,365Net income
    
    
    61,189
    
    
    
    1,645
    
    
    
    (6,084
    )
    
    
    56,750Total assets
    
    $
    6,439,163
    
    
    
    126,070
    
    
    
    (87,926
    )
    
    $
    6,477,307
 93




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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
 94




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##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    At or for the fiscal year ended
    
    Community
    
    Consumer
    
    AllJune 30, 2004
    
    banking
    
    finance
    
    other*
    
    ConsolidatedExternal interest income
    
    $
    282,072
    
    
    
    17,483
    
    
    
    675
    
    
    $
    300,230Intersegment interest income
    
    
    4,507
    
    
    
    
    
    
    
    (4,507
    )
    
    
    Interest expense
    
    
    126,960
    
    
    
    4,819
    
    
    
    2,687
    
    
    
    134,466Provision for loan losses
    
    
    4,138
    
    
    
    2,722
    
    
    
    
    
    
    
    6,860Noninterest income
    
    
    30,352
    
    
    
    1,269
    
    
    
    241
    
    
    
    31,862Noninterest expense
    
    
    119,489
    
    
    
    7,919
    
    
    
    1,397
    
    
    
    128,805Income tax expense (benefit)
    
    
    21,166
    
    
    
    1,367
    
    
    
    (2,704
    )
    
    
    19,829Net income
    
    
    45,178
    
    
    
    1,925
    
    
    
    (4,971
    )
    
    
    42,132Total assets
    
    $
    6,188,002
    
    
    
    123,153
    
    
    
    32,093
    
    
    $
    6,343,248
 
 *
    
    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 two statutory business trusts: Northwest Bancorp Capital Trust III, a Delaware
statutory business trust, and Northwest Bancorp Statutory Trust IV, a Connecticut statutory
business trust (the Trusts). 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 Trust Preferred Securities in a
private transaction to a pooled investment vehicle on December 5, 2005 (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, 2005 (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%.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, 2006 was
6.74%. 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, 2006 was 6.74%. 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.
 95




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##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    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).In December 2006, the Company redeemed $69.0 million of trust preferred securities issued by
Northwest Capital Trust I and $30.0 million of trust preferred securities issued by Northwest
Bancorp Statutory Trust I. The $99.0 million of trust preferred securities redeemed represent
all of the securities issued by these trusts. When the Company redeemed the trust preferred
securities it recognized a $3.1 million loss on the early redemption of this debt. The loss
recognized was the unamortized deferred issuance costs that were capitalized when the
securities were issued during 2001.(23)
    
    Selected Quarterly Financial Data (Unaudited)
 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
 96




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##### 



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    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
 97




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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
 Three months endedSeptember 30
    
    
    December 31
    
    
    March 31
    
    
    June 30(In thousands, except per share data)Fiscal 2004:Interest income
    
    $
    71,118
    
    
    
    76,786
    
    
    
    76,685
    
    
    
    75,641Interest expense
    
    
    35,355
    
    
    
    33,984
    
    
    
    32,502
    
    
    
    32,625Net interest income
    
    
    35,763
    
    
    
    42,802
    
    
    
    44,183
    
    
    
    43,016Provision for loan losses
    
    
    1,745
    
    
    
    1,733
    
    
    
    1,659
    
    
    
    1,723Noninterest income
    
    
    9,954
    
    
    
    7,484
    
    
    
    8,291
    
    
    
    6,133Noninterest expenses
    
    
    25,878
    
    
    
    30,782
    
    
    
    30,894
    
    
    
    41,251Income before
income taxes
    
    
    18,094
    
    
    
    17,771
    
    
    
    19,921
    
    
    
    6,175Income taxes
    
    
    5,469
    
    
    
    5,124
    
    
    
    5,828
    
    
    
    3,408Net income
    
    $
    12,625
    
    
    
    12,647
    
    
    
    14,093
    
    
    
    2,767Basic earnings per share
    
    $
    0.26
    
    
    
    0.26
    
    
    
    0.29
    
    
    
    0.06Diluted earnings per share
    
    $
    0.26
    
    
    
    0.26
    
    
    
    0.29
    
    
    
    0.06
 98




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##### 



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   99




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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
    
    
    47,364
    
    
    
    8.24
    
    
    
    2000 Stock Option Plan
    
    
    683,300
    
    
    
    17.15
    
    
    
    2004 Stock Option Plan
    
    
    382,194
    
    
    
    22.62
    
    
    
    342,673Total
    
    
    1,112,858
    
    
    
    18.65
    
    
    
    342,673
 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, 2006, and 2005(E)
    
    Consolidated Statements of Income  Years ended December 31,
2006 and 2005 (unaudited), the six months ended December 31, 2005 and the
years ended June 30, 2005 and 2004(F)
    
    Consolidated Statements of Changes in Shareholders Equity 
Year ended December 31, 2006, six months ended December 31, 2005 and years
ended June 30, 2005 and 2004(G)
    
    Consolidated Statements of Cash Flows  Years ended December
31, 2006 and 2005 (unaudited), six months ended December 31, 2005 and years
ended June 30, 2005 and 2004(H)
    
    Notes to Consolidated Financial Statements.
 Financial Statement Schedules
  Exhibits
 100




---



##### 



Regulation
    
    
    
    Reference to Prior FilingS-K Exhibit
    
    
    
    or Exhibit NumberNumber
    
    Document
    
    Attached Hereto2
    
    Plan of acquisition, reorganization,
arrangement, liquidation or succession
    
    None3
    
    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
    
    *10.5
    
    Employee Severance Compensation 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
    
    **22
    
    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
    
    31.1
 101




---



##### 



Regulation
    
    
    
    Reference to Prior FilingS-K Exhibit
    
    
    
    or Exhibit NumberNumber
    
    Document
    
    Attached Hereto31.2
    
    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
    
    31.232
    
    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. 102




---



##### 



SIGNATURES
  NORTHWEST BANCORP, INC.
 Date: March 14, 2007
    
    By:
    
    /s/ William J. WagnerWilliam J. Wagner, Chairman, President andChief Executive Officer (PrincipalExecutive 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 14, 2007
    
    
    
    Date: March 14, 2007By:
    
    /s/ John M. Bauer
    
    By:
    
    /s/ Richard L. CarrJohn M. Bauer, Director
    
    
    
    Richard L. Carr, DirectorDate: March 14, 2007
    
    
    
    Date: March 14, 2007By:
    
    /s/ Richard E. McDowell
    
    By:
    
    /s/ Thomas K. Creal, IIIRichard E. McDowell, Director
    
    
    
    Thomas K. Creal, III, DirectorDate: March 14, 2007
    
    
    
    Date: March 14, 2007By:
    
    /s/ Joseph F. Long
    
    By:
    
    /s/ A. Paul KingJoseph F. Long, Director
    
    
    
    A. Paul King, DirectorDate: March 14, 2007
    
    
    
    Date: March 14, 2007By:
    
    /s/ Robert G. FerrierRobert G. Ferrier, DirectorDate: March 14, 2007
 103