##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 o
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the Fiscal Year Ended December 31, 2005
 OR
 þ
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from July 1, 2005 to December 31, 2005
 Commission File No. 000-23817
 NORTHWEST BANCORP, INC.
  United States
    
    23-2900888(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)
 100 Liberty Street, Warren, Pennsylvania
    
    16365(Address of Principal Executive Offices)
    
    Zip Code
 (814) 726-2140
 Securities Registered Pursuant to Section 12(b) of the Act:
    
    NoneSecurities Registered Pursuant to Section 12(g) of the Act:
    
    Common Stock, par value $0.10 per share(Title of Class)
 o þ
 o þ
 þ o
 o
  Large Accelerated Filer o
    
    Accelerated Filer þ
    
    Non-Accelerated Filer o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE
 (1)
    
    Proxy Statement for the 2006 Annual Meeting of Stockholders of the Registrant (Part III).




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSITEM 1A. RISK FACTORSITEM 1B. UNRESOLVED STAFF COMMENTSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERSPART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULESSIGNATURESExhibit 23Exhibit 31.1Exhibit 31.2Exhibit 32    Table of Contents  
 PART I
 
 ITEM 1. BUSINESS
 General
 Northwest Bancorp, Inc.
     www.northwestsavingsbank.com




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##### Table of Contents



Northwest Savings Bank
   Market Area
  Lending Activities
 General.
  3




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##### Table of Contents



Analysis of Loan Portfolio.
 At December 31,
    
    
    At June 30,2005
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in Thousands)Real estate:One- to four-family
    
    $
    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
    %
    
    $
    2,005,020
    
    
    
    68.7
    %Multifamily and commercial
    
    
    594,503
    
    
    
    12.6
    
    
    
    534,224
    
    
    
    11.9
    
    
    
    454,606
    
    
    
    11.0
    
    
    
    377,507
    
    
    
    10.8
    
    
    
    304,456
    
    
    
    9.9
    
    
    
    249,049
    
    
    
    8.5Total real estate loans
    
    
    3,400,403
    
    
    
    72.1
    
    
    
    3,227,398
    
    
    
    72.2
    
    
    
    3,069,934
    
    
    
    74.1
    
    
    
    2,662,658
    
    
    
    75.9
    
    
    
    2,360,561
    
    
    
    76.8
    
    
    
    2,254,069
    
    
    
    77.2Consumer:Automobile
    
    
    144,519
    
    
    
    3.1
    
    
    
    138,102
    
    
    
    3.1
    
    
    
    120,887
    
    
    
    2.9
    
    
    
    119,778
    
    
    
    3.4
    
    
    
    117,240
    
    
    
    3.8
    
    
    
    94,475
    
    
    
    3.2Home improvement
    
    
    780,451
    
    
    
    16.5
    
    
    
    737,619
    
    
    
    16.5
    
    
    
    588,192
    
    
    
    14.2
    
    
    
    387,698
    
    
    
    11.1
    
    
    
    293,865
    
    
    
    9.6
    
    
    
    260,169
    
    
    
    8.9Education loans
    
    
    120,504
    
    
    
    2.5
    
    
    
    112,462
    
    
    
    2.5
    
    
    
    95,599
    
    
    
    2.3
    
    
    
    90,485
    
    
    
    2.6
    
    
    
    84,817
    
    
    
    2.8
    
    
    
    77,753
    
    
    
    2.7Loans on savings accounts
    
    
    9,066
    
    
    
    0.2
    
    
    
    8,500
    
    
    
    0.2
    
    
    
    8,038
    
    
    
    0.2
    
    
    
    7,879
    
    
    
    0.2
    
    
    
    7,733
    
    
    
    0.2
    
    
    
    8,923
    
    
    
    0.3Other (1)
    
    
    106,390
    
    
    
    2.3
    
    
    
    102,787
    
    
    
    2.3
    
    
    
    112,163
    
    
    
    2.7
    
    
    
    107,522
    
    
    
    3.1
    
    
    
    113,570
    
    
    
    3.7
    
    
    
    134,023
    
    
    
    4.6Total consumer loans
    
    
    1,160,930
    
    
    
    24.6
    
    
    
    1,099,470
    
    
    
    24.6
    
    
    
    924,879
    
    
    
    22.3
    
    
    
    713,362
    
    
    
    20.4
    
    
    
    617,225
    
    
    
    20.1
    
    
    
    575,343
    
    
    
    19.7Commercial business
    
    
    157,572
    
    
    
    3.3
    
    
    
    142,391
    
    
    
    3.2
    
    
    
    149,509
    
    
    
    3.6
    
    
    
    130,694
    
    
    
    3.7
    
    
    
    95,968
    
    
    
    3.1
    
    
    
    89,784
    
    
    
    3.1Total loans receivable, gross
    
    
    4,718,905
    
    
    
    100.00
    %
    
    
    4,469,259
    
    
    
    100.0
    %
    
    
    4,144,322
    
    
    
    100.0
    %
    
    
    3,506,714
    
    
    
    100.0
    %
    
    
    3,073,754
    
    
    
    100.0
    %
    
    
    2,919,196
    
    
    
    100.0
    %Deferred loan fees
    
    
    (3,877
    )
    
    
    
    
    
    
    (4,257
    )
    
    
    
    
    
    
    (6,630
    )
    
    
    
    
    
    
    (7,402
    )
    
    
    
    
    
    
    (2,938
    )
    
    
    
    
    
    
    (2,517
    )Undisbursed loan proceeds
    
    
    (59,348
    )
    
    
    
    
    
    
    (56,555
    )
    
    
    
    
    
    
    (53,081
    )
    
    
    
    
    
    
    (42,272
    )
    
    
    
    
    
    
    (36,168
    )
    
    
    
    
    
    
    (39,808
    )Allowance for loan losses
(real estate loans)
    
    
    (16,875
    )
    
    
    
    
    
    
    (15,918
    )
    
    
    
    
    
    
    (15,113
    )
    
    
    
    
    
    
    (13,660
    )
    
    
    
    
    
    
    (11,703
    )
    
    
    
    
    
    
    (11,629
    )Allowance for loan losses
(other loans)
    
    
    (16,536
    )
    
    
    
    
    
    
    (15,645
    )
    
    
    
    
    
    
    (15,557
    )
    
    
    
    
    
    
    (13,506
    )
    
    
    
    
    
    
    (10,339
    )
    
    
    
    
    
    
    (8,661
    )Total loans receivable, net
    
    $
    4,622,269
    
    
    
    
    
    
    $
    4,376,884
    
    
    
    
    
    
    $
    4,053,941
    
    
    
    
    
    
    $
    3,429,874
    
    
    
    
    
    
    $
    3,012,606
    
    
    
    
    
    
    $
    2,856,581
 
 (1)
    
    Consists primarily of secured and unsecured personal loans. Loan Maturity and Repricing Schedule.
 Within 1
    
    
    Between
    
    
    Between
    
    
    Between
    
    
    Beyond 5Year
    
    
    1-2 Years
    
    
    2-3 Years
    
    
    3-5 Years
    
    
    Years
    
    
    Total(In Thousands)Real estate loans:One- to four-family residential
    
    $
    231,566
    
    
    $
    131,775
    
    
    $
    124,791
    
    
    $
    252,802
    
    
    $
    2,064,966
    
    
    $
    2,805,900Multifamily and commercial
    
    
    193,669
    
    
    
    78,399
    
    
    
    97,538
    
    
    
    136,064
    
    
    
    88,833
    
    
    
    594,503Consumer loans
    
    
    444,119
    
    
    
    116,372
    
    
    
    107,209
    
    
    
    175,150
    
    
    
    318,080
    
    
    
    1,160,930Commercial business loans
    
    
    51,332
    
    
    
    20,780
    
    
    
    25,852
    
    
    
    36,063
    
    
    
    23,545
    
    
    
    157,572Total loans
    
    $
    920,686
    
    
    $
    347,326
    
    
    $
    355,390
    
    
    $
    600,079
    
    
    $
    2,495,424
    
    
    $
    4,718,905
 4




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##### Table of Contents



Fixed- and Adjustable-Rate Loan Schedule.
 Fixed
    
    
    Adjustable
    
    
    Total(In Thousands)Real estate loans:One- to four-family residential
    
    $
    2,570,781
    
    
    $
    106,366
    
    
    $
    2,677,147Multifamily and commercial
    
    
    166,380
    
    
    
    346,235
    
    
    
    512,615Consumer loans
    
    
    602,717
    
    
    
    235,218
    
    
    
    837,935Commercial business loans
    
    
    56,539
    
    
    
    4,998
    
    
    
    61,537Total loans
    
    $
    3,396,417
    
    
    $
    692,817
    
    
    $
    4,089,234
 One- to Four-Family Residential Real Estate Loans.
      5




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##### Table of Contents



Multifamily Residential and Commercial Real Estate Loans.
  6




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##### Table of Contents



Consumer Loans.
   Commercial Business Loans.
   Loan Originations, Solicitation, Processing, and Commitments.
 7




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##### Table of Contents



Loan Origination Fees and Other Income.
  Loans-to-One Borrower.
 Delinquencies and Classified Assets
 Collection Procedures.
 Nonperforming Assets.
 8




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##### Table of Contents



Loans Past Due and Nonperforming Assets.
 At December 31,
    
    
    At June 30,2005
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Number
    
    
    Balance(Dollars in Thousands)Loans past due 30 days to 59 days:One- to four-family residential loans
    
    
    410
    
    
    $
    26,290
    
    
    $
    3,941
    
    
    $
    5,765
    
    
    $
    3,830
    
    
    $
    4,068
    
    
    $
    3,055Multifamily and commercial loans
    
    
    46
    
    
    
    4,924
    
    
    
    5,198
    
    
    
    2,201
    
    
    
    1,291
    
    
    
    1,278
    
    
    
    1,184Consumer loans
    
    
    1,482
    
    
    
    12,053
    
    
    
    5,611
    
    
    
    4,877
    
    
    
    3,832
    
    
    
    3,243
    
    
    
    3,439Commercial business loans
    
    
    29
    
    
    
    2,450
    
    
    
    1,000
    
    
    
    782
    
    
    
    308
    
    
    
    165
    
    
    
    418Total loans past due 30 days to 59 days
    
    
    1,967
    
    
    $
    45,717
    
    
    $
    15,750
    
    
    $
    13,625
    
    
    $
    9,261
    
    
    $
    8,754
    
    
    $
    8,096Loans past due 60 days to 89 days:One- to four-family residential loans
    
    
    120
    
    
    $
    9,156
    
    
    $
    4,687
    
    
    $
    4,925
    
    
    $
    3,998
    
    
    $
    3,478
    
    
    $
    3,001Multifamily and commercial loans
    
    
    16
    
    
    
    3,399
    
    
    
    8,156
    
    
    
    1,023
    
    
    
    873
    
    
    
    269
    
    
    
    248Consumer loans
    
    
    545
    
    
    
    3,773
    
    
    
    3,134
    
    
    
    2,032
    
    
    
    1,920
    
    
    
    1,604
    
    
    
    1,262Commercial business loans
    
    
    10
    
    
    
    263
    
    
    
    279
    
    
    
    309
    
    
    
    159
    
    
    
    35
    
    
    
    758Total loans past due 60 days to 89 days
    
    
    691
    
    
    $
    16,591
    
    
    $
    16,256
    
    
    $
    8,289
    
    
    $
    6,950
    
    
    $
    5,386
    
    
    $
    5,269Loans past due 90 days or more (1):One- to four-family residential loans
    
    
    227
    
    
    $
    12,179
    
    
    $
    11,507
    
    
    $
    11,322
    
    
    $
    11,267
    
    
    $
    7,278
    
    
    $
    6,874Multifamily and commercial loans
    
    
    52
    
    
    
    21,013
    
    
    
    15,610
    
    
    
    13,823
    
    
    
    11,975
    
    
    
    2,407
    
    
    
    2,296Consumer loans
    
    
    1,294
    
    
    
    8,322
    
    
    
    5,514
    
    
    
    4,536
    
    
    
    4,912
    
    
    
    3,991
    
    
    
    3,129Commercial business loans
    
    
    36
    
    
    
    1,502
    
    
    
    979
    
    
    
    2,824
    
    
    
    4,602
    
    
    
    2,124
    
    
    
    5,336Total loans past due 90 days or more
    
    
    1,609
    
    
    $
    43,016
    
    
    $
    33,610
    
    
    $
    32,505
    
    
    $
    32,756
    
    
    $
    15,800
    
    
    $
    17,635Total loans 30 days or more past due
    
    
    4,267
    
    
    $
    105,324
    
    
    $
    65,616
    
    
    $
    54,419
    
    
    $
    48,967
    
    
    $
    29,940
    
    
    $
    31,000Total loans 90 days or more past due (1)
    
    
    1,609
    
    
    $
    43,016
    
    
    $
    33,610
    
    
    $
    32,505
    
    
    $
    32,756
    
    
    $
    15,800
    
    
    $
    17,635Total REO
    
    
    86
    
    
    
    4,872
    
    
    
    6,685
    
    
    
    3,951
    
    
    
    5,739
    
    
    
    5,157
    
    
    
    3,697Total loans 90 days or more past due
and REO
    
    
    1,695
    
    
    $
    47,888
    
    
    $
    40,295
    
    
    $
    36,456
    
    
    $
    38,495
    
    
    $
    20,957
    
    
    $
    21,332Total loans 90 days or more past due to
net loans receivable
    
    
    
    
    
    
    0.93
    %
    
    
    0.77
    %
    
    
    0.80
    %
    
    
    0.96
    %
    
    
    0.52
    %
    
    
    0.62
    %Total loans 90 days or more past due and
REO to total assets
    
    
    
    
    
    
    0.74
    %
    
    
    0.64
    %
    
    
    0.57
    %
    
    
    0.68
    %
    
    
    0.49
    %
    
    
    0.55
    %
 
 (1)
    
    The Company classifies as nonperforming all loans 90 days or more delinquent.  9




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##### Table of Contents



Classification of Assets.
   At December 31,
    
    
    At June 30,2005
    
    
    2005
    
    
    2004
    
    
    2003(In Thousands)Substandard assets
    
    $
    61,522
    
    
    $
    58,925
    
    
    $
    58,561
    
    
    $
    49,353Doubtful assets
    
    
    1,983
    
    
    
    1,752
    
    
    
    5,055
    
    
    
    3,256Loss assets
    
    
    232
    
    
    
    32
    
    
    
    259
    
    
    
    Total classified assets
    
    $
    63,737
    
    
    $
    60,709
    
    
    $
    63,875
    
    
    $
    52,609
 Allowance for Loan Losses.
    10




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##### Table of Contents



Analysis of the Allowance For Loan Losses.
 Six Months EndedDecember 31,
    
    
    Years Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(In Thousands)Net loans receivable
    
    $
    4,622,269
    
    
    $
    4,205,066
    
    
    $
    4,376,884
    
    
    $
    4,053,941
    
    
    $
    3,429,874
    
    
    $
    3,012,606
    
    
    $
    2,856,581Average loans outstanding
    
    
    4,532,523
    
    
    
    4,157,376
    
    
    
    4,234,241
    
    
    
    3,846,261
    
    
    
    3,258,520
    
    
    
    2,935,629
    
    
    
    2,715,012Allowance for loan losses
balance at beginning of period
    
    
    31,563
    
    
    
    30,670
    
    
    
    30,670
    
    
    
    27,166
    
    
    
    22,042
    
    
    
    20,290
    
    
    
    18,260Provision for loan losses
    
    
    4,722
    
    
    
    4,003
    
    
    
    9,566
    
    
    
    6,860
    
    
    
    8,445
    
    
    
    6,360
    
    
    
    5,347Charge-offs:Real estate loans
    
    
    (282
    )
    
    
    (42
    )
    
    
    (676
    )
    
    
    (176
    )
    
    
    (242
    )
    
    
    (292
    )
    
    
    (176
    )Consumer loans
    
    
    (3,314
    )
    
    
    (2,990
    )
    
    
    (5,726
    )
    
    
    (5,113
    )
    
    
    (4,281
    )
    
    
    (4,452
    )
    
    
    (3,528
    )Commercial loans
    
    
    (43
    )
    
    
    (2,317
    )
    
    
    (3,071
    )
    
    
    (461
    )
    
    
    (1,258
    )
    
    
    (569
    )
    
    
    (158
    )Total charge-offs
    
    
    (3,639
    )
    
    
    (5,349
    )
    
    
    (9,473
    )
    
    
    (5,750
    )
    
    
    (5,781
    )
    
    
    (5,313
    )
    
    
    (3,862
    )Recoveries:Real estate loans
    
    
    4
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    47
    
    
    
    63
    
    
    
    32Consumer loans
    
    
    455
    
    
    
    287
    
    
    
    750
    
    
    
    562
    
    
    
    527
    
    
    
    382
    
    
    
    453Commercial loans
    
    
    51
    
    
    
    17
    
    
    
    49
    
    
    
    502
    
    
    
    123
    
    
    
    23
    
    
    
    60Total recoveries
    
    
    510
    
    
    
    304
    
    
    
    800
    
    
    
    1,064
    
    
    
    697
    
    
    
    468
    
    
    
    545Acquired through acquisition
    
    
    255
    
    
    
    
    
    
    
    
    
    
    
    1,330
    
    
    
    1,763
    
    
    
    237
    
    
    
    Allowance for loan losses
balance at end of period
    
    $
    33,411
    
    
    $
    29,628
    
    
    $
    31,563
    
    
    $
    30,670
    
    
    $
    27,166
    
    
    $
    22,042
    
    
    $
    20,290Allowance for loan losses as a
percentage of net loans
receivable
    
    
    0.72
    %
    
    
    0.70
    %
    
    
    0.72
    %
    
    
    0.76
    %
    
    
    0.79
    %
    
    
    0.73
    %
    
    
    0.71
    %Net charge-offs as a percentage
of average loans outstanding
    
    
    0.14
    %
    
    
    0.24
    %
    
    
    0.20
    %
    
    
    0.12
    %
    
    
    0.16
    %
    
    
    0.17
    %
    
    
    0.12
    %Allowance for loan losses as a
percentage of nonperforming
loans
    
    
    77.67
    %
    
    
    92.48
    %
    
    
    93.91
    %
    
    
    94.35
    %
    
    
    82.93
    %
    
    
    139.51
    %
    
    
    115.06
    %Allowance for loan losses as a
percentage of nonperforming
loans and REO
    
    
    69.77
    %
    
    
    75.37
    %
    
    
    78.33
    %
    
    
    84.13
    %
    
    
    70.57
    %
    
    
    105.18
    %
    
    
    95.12
    %
 11




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##### Table of Contents



Allocation of Allowance for Loan Losses.
 At December 31,
    
    
    At June 30,2005
    
    
    2005
    
    
    2004% of% of
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    % ofTotal
    
    
    
    
    
    
    Loans
    
    
    
    
    
    
    TotalAmount
    
    
    Loans(1)
    
    
    Amount
    
    
    (1)
    
    
    Amount
    
    
    Loans(1)(Dollars in Thousands)Balance at end of period
applicable to:Real estate loans
    
    $
    16,875
    
    
    
    72.1
    %
    
    $
    15,918
    
    
    
    72.2
    %
    
    $
    15,113
    
    
    
    74.1
    %Consumer loans
    
    
    13,991
    
    
    
    24.6
    
    
    
    13,179
    
    
    
    24.6
    
    
    
    11,790
    
    
    
    22.3Commercial business loans
    
    
    2,545
    
    
    
    3.3
    
    
    
    2,466
    
    
    
    3.2
    
    
    
    3,767
    
    
    
    3.6Total allowance for loan loss
    
    $
    33,411
    
    
    
    100.0
    %
    
    $
    31,563
    
    
    
    100.0
    %
    
    $
    30,670
    
    
    
    100.0
    %
 
 (1)
    
    Represents percentage of loans in each category to total loans. At June 30,2003
    
    
    2002
    
    
    2001% of% of
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    % ofTotal
    
    
    
    
    
    
    Loans
    
    
    
    
    
    
    TotalAmount
    
    
    Loans(1)
    
    
    Amount
    
    
    (1)
    
    
    Amount
    
    
    Loans(1)(Dollars in Thousands)Balance at end of period
applicable to:Real estate loans
    
    $
    13,660
    
    
    
    75.9
    %
    
    $
    11,703
    
    
    
    76.8
    %
    
    $
    11,629
    
    
    
    77.2
    %Consumer loans
    
    
    10,965
    
    
    
    20.4
    
    
    
    8,855
    
    
    
    20.1
    
    
    
    6,682
    
    
    
    19.7Commercial business loans
    
    
    2,541
    
    
    
    3.7
    
    
    
    1,484
    
    
    
    3.1
    
    
    
    1,979
    
    
    
    3.1Total allowance for loan loss
    
    $
    27,166
    
    
    
    100.0
    %
    
    $
    22,042
    
    
    
    100.0
    %
    
    $
    20,290
    
    
    
    100.0
    %
 
 (1)
    
    Represents percentage of loans in each category to total loans. Investment Activities
   12




---



##### Table of Contents



Amortized Cost and Market Value of Investment and Mortgage-Backed Securities.
 At December 31,
    
    
    At June 30,2005
    
    
    2005
    
    
    2004
    
    
    2003Amortized
    
    
    Market
    
    
    Amortized
    
    
    Market
    
    
    Amortized
    
    
    Market
    
    
    Amortized
    
    
    MarketCost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value(In Thousands)Mortgage-backed securities held to
maturity:Fixed-rate pass through certificates
    
    $
    12,722
    
    
    $
    12,643
    
    
    $
    14,609
    
    
    $
    14,791
    
    
    $
    16,618
    
    
    $
    16,744
    
    
    $
    24,079
    
    
    $
    24,873Variable-rate pass through certificates
    
    
    111,070
    
    
    
    110,369
    
    
    
    140,473
    
    
    
    140,546
    
    
    
    198,497
    
    
    
    196,961
    
    
    
    59,510
    
    
    
    59,737Fixed-rate collateralized mortgage
obligations (CMOs)
    
    
    6,411
    
    
    
    6,123
    
    
    
    7,725
    
    
    
    7,504
    
    
    
    7,519
    
    
    
    7,444
    
    
    
    24,651
    
    
    
    24,596Variable-rate CMOs
    
    
    59,648
    
    
    
    59,687
    
    
    
    72,869
    
    
    
    73,197
    
    
    
    169,667
    
    
    
    170,753
    
    
    
    258,466
    
    
    
    259,966Total mortgage-backed securities
held to maturity
    
    
    189,851
    
    
    
    188,822
    
    
    
    235,676
    
    
    
    236,038
    
    
    
    392,301
    
    
    
    391,902
    
    
    
    366,706
    
    
    
    369,172Mortgage-backed securities available for
sale:Fixed-rate pass through certificates
    
    $
    77,383
    
    
    $
    76,407
    
    
    $
    82,612
    
    
    $
    83,153
    
    
    $
    92,659
    
    
    $
    92,106
    
    
    $
    43,449
    
    
    $
    45,461Variable-rate pass through certificates
    
    
    147,426
    
    
    
    145,856
    
    
    
    172,263
    
    
    
    171,639
    
    
    
    87,486
    
    
    
    86,752
    
    
    
    128,528
    
    
    
    129,486Fixed-rate CMOs
    
    
    78,615
    
    
    
    76,033
    
    
    
    98,478
    
    
    
    97,192
    
    
    
    141,485
    
    
    
    137,866
    
    
    
    191,911
    
    
    
    190,167Variable-rate CMOs
    
    
    25,529
    
    
    
    25,669
    
    
    
    32,296
    
    
    
    32,497
    
    
    
    92,710
    
    
    
    94,279
    
    
    
    194,973
    
    
    
    196,514Total mortgage-backed securities
available for sale
    
    
    328,953
    
    
    
    323,965
    
    
    
    385,649
    
    
    
    384,481
    
    
    
    414,340
    
    
    
    411,003
    
    
    
    558,861
    
    
    
    561,628Total mortgage-backed securities
    
    
    518,804
    
    
    
    512,787
    
    
    
    621,325
    
    
    
    620,519
    
    
    
    806,641
    
    
    
    802,905
    
    
    
    925,567
    
    
    
    930,800Investment securities held to maturity:U.S. Government and agency
    
    $
    166,812
    
    
    $
    165,331
    
    
    $
    184,341
    
    
    
    183,738
    
    
    $
    53,214
    
    
    $
    53,584
    
    
    $
    18,724
    
    
    $
    20,923Municipal securities
    
    
    238,580
    
    
    
    241,080
    
    
    
    242,850
    
    
    
    246,707
    
    
    
    114,849
    
    
    
    113,755
    
    
    
    65,556
    
    
    
    68,905Corporate debt issues
    
    
    39,015
    
    
    
    41,274
    
    
    
    40,112
    
    
    
    42,985
    
    
    
    41,178
    
    
    
    42,497
    
    
    
    45,831
    
    
    
    47,667Total investment securities held to
maturity
    
    $
    444,407
    
    
    $
    447,685
    
    
    $
    467,303
    
    
    $
    473,430
    
    
    $
    209,241
    
    
    $
    209,836
    
    
    $
    130,111
    
    
    $
    137,495Investment securities available for sale:U.S. Government and agency
    
    $
    114,965
    
    
    $
    113,747
    
    
    $
    138,996
    
    
    $
    138,557
    
    
    $
    184,887
    
    
    $
    181,521
    
    
    $
    41,900
    
    
    $
    43,703Municipal securities
    
    
    14,548
    
    
    
    14,354
    
    
    
    14,545
    
    
    
    14,642
    
    
    
    144,802
    
    
    
    142,469
    
    
    
    119,796
    
    
    
    123,654Corporate debt issues
    
    
    65,976
    
    
    
    64,560
    
    
    
    40,945
    
    
    
    40,806
    
    
    
    27,441
    
    
    
    27,438
    
    
    
    27,502
    
    
    
    27,581Equity securities and mutual funds
    
    
    92,350
    
    
    
    97,210
    
    
    
    91,002
    
    
    
    96,697
    
    
    
    87,099
    
    
    
    93,248
    
    
    
    140,660
    
    
    
    147,518Total investment securities available
for sale
    
    $
    287,839
    
    
    $
    289,871
    
    
    $
    285,488
    
    
    $
    290,702
    
    
    $
    444,229
    
    
    $
    444,676
    
    
    $
    329,858
    
    
    $
    342,456
 Issuers of Mortgage-Backed Securities.
 At December 31,
    
    
    At June 30,2005
    
    
    2005
    
    
    2004
    
    
    2003(In Thousands)Mortgage-backed securities:Fannie Mae
    
    $
    188,448
    
    
    $
    222,549
    
    
    $
    402,469
    
    
    $
    369,604Ginnie Mae
    
    
    151,477
    
    
    
    179,795
    
    
    
    178,847
    
    
    
    61,456Freddie Mac
    
    
    146,714
    
    
    
    184,717
    
    
    
    179,506
    
    
    
    427,553Other (non-agency)
    
    
    27,177
    
    
    
    33,096
    
    
    
    42,482
    
    
    
    69,721Total mortgage-backed securities
    
    $
    513,816
    
    
    $
    620,157
    
    
    $
    803,304
    
    
    $
    928,334
 13




---



##### Table of Contents



Investment Portfolio Maturities.
 At December 31, 2005One Year or Less
    
    
    One to Five Years
    
    
    Five to Ten Years
    
    
    More than Ten Years
    
    
    TotalAnnualized
    
    
    
    
    
    
    Annualized
    
    
    
    
    
    
    Annualized
    
    
    
    
    
    
    Annualized
    
    
    
    
    
    
    
    
    
    
    AnnualizedWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedAmortized
    
    
    Average
    
    
    Amortized
    
    
    Average
    
    
    Amortized
    
    
    Average
    
    
    Amortized
    
    
    Average
    
    
    Amortized
    
    
    Market
    
    
    AverageCost
    
    
    Yield
    
    
    Cost
    
    
    Yield
    
    
    Cost
    
    
    Yield
    
    
    Cost
    
    
    Yield
    
    
    Cost
    
    
    Value
    
    
    Yield(Dollars in Thousands)Investment securities held to maturity:U.S. Government and agency obligations
    
    $
    20,000
    
    
    
    3.02
    %
    
    $
    70,000
    
    
    
    4.13
    %
    
    $
    58,414
    
    
    
    4.36
    %
    
    $
    18,398
    
    
    
    4.22
    %
    
    $
    166,812
    
    
    $
    165,331
    
    
    
    4.09
    %Municipal securities
    
    
    
    
    
    
    
    
    
    
    294
    
    
    
    3.35
    
    
    
    7,374
    
    
    
    2.89
    
    
    
    230,912
    
    
    
    4.68
    
    
    
    238,580
    
    
    
    241,080
    
    
    
    4.62Corporate debt issues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,015
    
    
    
    8.47
    
    
    
    39,015
    
    
    
    41,274
    
    
    
    8.47Total investment securities held to maturity
    
    $
    20,000
    
    
    
    3.02
    %
    
    $
    70,294
    
    
    
    4.13
    %
    
    $
    65,788
    
    
    
    4.20
    %
    
    $
    288,325
    
    
    
    5.16
    %
    
    $
    444,407
    
    
    $
    447,685
    
    
    
    4.76
    %Investment securities available for sale:U.S. Government and agency obligations
    
    $
    
    
    
    
    
    %
    
    $
    37,984
    
    
    
    3.78
    %
    
    $
    16,998
    
    
    
    4.62
    %
    
    $
    59,983
    
    
    
    4.33
    %
    
    $
    114,965
    
    
    $
    113,747
    
    
    
    4.19
    %Municipal securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,573
    
    
    
    3.72
    
    
    
    12,975
    
    
    
    3.93
    
    
    
    14,548
    
    
    
    14,354
    
    
    
    3.91Corporate debt issues
    
    
    
    
    
    
    
    
    
    
    1,022
    
    
    
    5.00
    
    
    
    28,500
    
    
    
    4.45
    
    
    
    36,454
    
    
    
    6.26
    
    
    
    65,976
    
    
    
    64,560
    
    
    
    5.46Equity securities and mutual funds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    92,350
    
    
    
    4.52
    
    
    
    92,350
    
    
    
    97,210
    
    
    
    4.52Total investment securities available for sale
    
    $
    
    
    
    
    
    %
    
    $
    39,006
    
    
    
    3.81
    %
    
    $
    47,071
    
    
    
    4.48
    %
    
    $
    201,762
    
    
    
    4.74
    %
    
    $
    287,839
    
    
    $
    289,871
    
    
    
    4.57
    %Mortgage-backed securities held to maturity:Pass-through certificates
    
    $
    111,070
    
    
    
    3.90
    %
    
    $
    233
    
    
    
    4.82
    %
    
    $
    511
    
    
    
    4.83
    %
    
    $
    11,978
    
    
    
    5.47
    %
    
    $
    123,792
    
    
    $
    123,012
    
    
    
    4.06
    %CMOs
    
    
    59,648
    
    
    
    4.97
    
    
    
    
    
    
    
    
    
    
    
    3,695
    
    
    
    3.53
    
    
    
    2,716
    
    
    
    3.17
    
    
    
    66,059
    
    
    
    65,810
    
    
    
    4.81Total mortgage-backed securities held to
maturity
    
    $
    170,718
    
    
    
    4.27
    %
    
    $
    233
    
    
    
    4.82
    %
    
    $
    4,206
    
    
    
    3.69
    %
    
    $
    14,694
    
    
    
    5.04
    %
    
    $
    189,851
    
    
    $
    188,822
    
    
    
    4.32
    %Mortgage-backed securities available for sale:Pass through certificates
    
    $
    147,711
    
    
    
    3.77
    %
    
    $
    1,059
    
    
    
    4.62
    %
    
    $
    29,843
    
    
    
    4.42
    %
    
    $
    46,196
    
    
    
    4.90
    %
    
    $
    224,809
    
    
    $
    222,263
    
    
    
    4.09
    %CMOs
    
    
    25,529
    
    
    
    5.20
    
    
    
    
    
    
    
    
    
    
    
    4,253
    
    
    
    3.53
    
    
    
    74,362
    
    
    
    4.11
    
    
    
    104,144
    
    
    
    101,702
    
    
    
    4.36Total mortgage-backed securities available
for sale
    
    $
    173,240
    
    
    
    3.98
    %
    
    $
    1,059
    
    
    
    4.62
    %
    
    $
    34,096
    
    
    
    4.31
    %
    
    $
    120,558
    
    
    
    4.41
    %
    
    $
    328,953
    
    
    $
    323,965
    
    
    
    4.18
    %Total investment securities and mortgage-backed
securities
    
    $
    363,958
    
    
    
    4.07
    %
    
    $
    110,592
    
    
    
    4.02
    %
    
    $
    151,161
    
    
    
    4.30
    %
    
    $
    625,339
    
    
    
    4.88
    %
    
    $
    1,251,050
    
    
    $
    1,250,343
    
    
    
    4.50
    %
 14




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##### Table of Contents



Sources of Funds
 General.
 Deposits.
  At December 31,
    
    
    At June 30,2005
    
    
    2005Balance
    
    
    Percent(1)
    
    
    Rate(2)
    
    
    Balance
    
    
    Percent(1)
    
    
    Rate(2)(Dollars in Thousands)Savings accounts
    
    $
    935,564
    
    
    
    17.9
    %
    
    
    1.41
    %
    
    $
    1,049,606
    
    
    
    20.2
    %
    
    
    1.40
    %Checking accounts
    
    
    957,662
    
    
    
    18.3
    
    
    
    0.79
    
    
    
    944,168
    
    
    
    18.2
    
    
    
    0.69Money market accounts
    
    
    596,352
    
    
    
    11.4
    
    
    
    2.62
    
    
    
    631,685
    
    
    
    12.2
    
    
    
    2.05Certificates of depositMaturing within 1 year
    
    
    1,506,235
    
    
    
    28.8
    
    
    
    3.51
    
    
    
    1,160,817
    
    
    
    22.4
    
    
    
    2.94Maturing 1 to 3 years
    
    
    1,066,160
    
    
    
    20.4
    
    
    
    3.99
    
    
    
    1,188,683
    
    
    
    22.9
    
    
    
    3.79Maturing more than 3
years
    
    
    166,506
    
    
    
    3.2
    
    
    
    4.23
    
    
    
    212,987
    
    
    
    4.1
    
    
    
    4.14Total certificates
    
    
    2,738,901
    
    
    
    52.4
    
    
    
    3.74
    
    
    
    2,562,487
    
    
    
    49.4
    
    
    
    3.44Total deposits
    
    $
    5,228,479
    
    
    
    100.0
    %
    
    
    2.64
    %
    
    $
    5,187,946
    
    
    
    100.0
    %
    
    
    2.33
    %
 
 (1)
    
    Represents percentage of total deposits.(2)
    
    Represents weighted average nominal rate at fiscal year end. At June 30,2004
    
    
    2003Balance
    
    
    Percent(1)
    
    
    Rate(2)
    
    
    Balance
    
    
    Percent(1)
    
    
    Rate(2)(Dollars in Thousands)Savings accounts
    
    $
    1,076,999
    
    
    
    20.7
    %
    
    
    1.38
    %
    
    $
    947,030
    
    
    
    20.3
    %
    
    
    1.67
    %Checking accounts
    
    
    885,121
    
    
    
    17.1
    
    
    
    0.49
    
    
    
    878,586
    
    
    
    18.8
    
    
    
    0.86Money market accounts
    
    
    897,325
    
    
    
    17.3
    
    
    
    1.60
    
    
    
    689,590
    
    
    
    14.7
    
    
    
    2.06Certificates of depositMaturing within 1 year
    
    
    1,189,234
    
    
    
    22.9
    
    
    
    2.61
    
    
    
    998,250
    
    
    
    21.3
    
    
    
    2.93Maturing 1 to 3 years
    
    
    876,342
    
    
    
    16.9
    
    
    
    3.69
    
    
    
    812,212
    
    
    
    17.4
    
    
    
    4.01Maturing more than 3
years
    
    
    266,600
    
    
    
    5.1
    
    
    
    4.19
    
    
    
    352,831
    
    
    
    7.5
    
    
    
    4.55Total certificates
    
    
    2,332,176
    
    
    
    44.9
    
    
    
    3.24
    
    
    
    2,163,293
    
    
    
    46.2
    
    
    
    3.63Total deposits
    
    $
    5,191,621
    
    
    
    100.0
    %
    
    
    2.05
    %
    
    $
    4,678,499
    
    
    
    100.0
    %
    
    
    2.44
    %
 
 (1)
    
    Represents percentage of total deposits.(2)
    
    Represents weighted average nominal rate at fiscal year end. 15




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##### Table of Contents



Large Certificates of Deposit Maturities.
 Certificatesof DepositMaturity Period
    
    (In Thousands)Three months or less
    
    $
    63,885Three through six months
    
    
    99,345Six through twelve months
    
    
    147,093Over twelve months
    
    
    252,345Total
    
    $
    562,668
 Borrowings
   16




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##### Table of Contents



During the Six Months EndedDecember 31,
    
    During the Year Ended June 30,2005
    
    2004
    
    2005
    
    2004
    
    2003(Dollars in Thousand)FHLB-Pittsburgh borrowings:Average balance outstanding
    
    $
    379,781
    
    
    $
    411,727
    
    
    $
    406,057
    
    
    $
    428,591
    
    
    $
    412,817Maximum outstanding at end of any
month during period
    
    
    399,665
    
    
    
    412,915
    
    
    
    412,915
    
    
    
    519,631
    
    
    
    471,416Balance outstanding at end of period
    
    
    377,629
    
    
    
    410,107
    
    
    
    377,846
    
    
    
    412,981
    
    
    
    430,014Weighted average interest rate
during period
    
    
    4.57
    %
    
    
    4.63
    %
    
    
    4.64
    %
    
    
    4.62
    %
    
    
    4.78
    %Weighted average interest rate at
end of period
    
    
    4.59
    %
    
    
    4.64
    %
    
    
    4.71
    %
    
    
    4.83
    %
    
    
    4.89
    %Reverse repurchase agreements:Average balance outstanding
    
    $
    28,416
    
    
    $
    28,854
    
    
    $
    26,889
    
    
    $
    29,364
    
    
    $
    20,791Maximum outstanding at end of any
month during period
    
    
    34,025
    
    
    
    33,670
    
    
    
    33,670
    
    
    
    32,097
    
    
    
    29,226Balance outstanding at end of period
    
    
    34,025
    
    
    
    22,867
    
    
    
    26,579
    
    
    
    29,902
    
    
    
    29,226Weighted average interest rate
during period
    
    
    2.77
    %
    
    
    1.31
    %
    
    
    1.63
    %
    
    
    1.27
    %
    
    
    1.80
    %Weighted average interest rate at
end of period
    
    
    3.14
    %
    
    
    1.52
    %
    
    
    2.25
    %
    
    
    1.29
    %
    
    
    1.27
    %Other borrowings:Average balance outstanding
    
    $
    5,749
    
    
    $
    6,273
    
    
    $
    6,182
    
    
    $
    6,253
    
    
    $
    6,603Maximum outstanding at end of any
month during period
    
    
    5,928
    
    
    
    6,300
    
    
    
    6,300
    
    
    
    6,322
    
    
    
    6,696Balance outstanding at end of period
    
    
    5,702
    
    
    
    6,262
    
    
    
    5,919
    
    
    
    6,264
    
    
    
    6,510Weighted average interest rate
during period
    
    
    4.97
    %
    
    
    4.97
    %
    
    
    4.99
    %
    
    
    5.10
    %
    
    
    6.50
    %Weighted average interest rate at
end of period
    
    
    4.99
    %
    
    
    4.98
    %
    
    
    4.99
    %
    
    
    4.99
    %
    
    
    5.12
    %Total borrowings:Average balance outstanding
    
    $
    413,946
    
    
    $
    446,854
    
    
    $
    439,847
    
    
    $
    466,277
    
    
    $
    440,211Maximum outstanding at end of any
month during period
    
    
    432,223
    
    
    
    452,737
    
    
    
    452,737
    
    
    
    554,257
    
    
    
    496,026Balance outstanding at end of period
    
    
    417,356
    
    
    
    439,236
    
    
    
    410,344
    
    
    
    449,147
    
    
    
    465,750Weighted average interest rate
during period
    
    
    4.53
    %
    
    
    4.52
    %
    
    
    4.52
    %
    
    
    4.39
    %
    
    
    4.66
    %Weighted average interest rate at
end of period
    
    
    4.48
    %
    
    
    4.48
    %
    
    
    4.55
    %
    
    
    4.60
    %
    
    
    4.66
    %
 Competition
    17




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Subsidiary Activities
          18




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##### Table of Contents



Personnel
  REGULATION
 General
   Pennsylvania Savings Bank Law
   19




---



##### Table of Contents



Insurance of Accounts and Regulation by the FDIC
  i.e. i.e.
   Capital Requirements
  20




---



##### Table of Contents



Loans-to-One Borrower Limitation
  Prompt Corrective Action
  Activities and Investments of Insured State-Chartered Banks
  The USA PATRIOT Act
  21




---



##### Table of Contents



Holding Company Regulation
 Generally.
 Permitted Activities.
  Qualified Thrift Lender Test.
 22




---



##### Table of Contents



Waivers of Dividends by the Mutual Holding Company.
 Conversion of the Mutual Holding Company to Stock Form.
 Federal Securities Laws
  Sarbanes-Oxley Act of 2002
    23




---



##### Table of Contents



Regulatory Enforcement Authority
  Dividends
   FEDERAL AND STATE TAXATION
 Federal Taxation.
   State Taxation.
   24




---



##### Table of Contents



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.
   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.
 25




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##### Table of Contents



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.
 
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
 (a)
    
    The Company held its 5 Annual Meeting of Shareholders on November 16, 2005.(b)
    
    The name of each director elected at the Annual Meeting is as follows:
 William J. WagnerThomas K. Creal, IIIA. Paul King
  26




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##### Table of Contents



Richard L. CarrJohn M. BauerRobert G. FerrierRichard E. McDowellJoseph F. Long
 (c)
    
    The following matters were voted upon at the Annual Meeting:
 (i)
    
    Election of three directors of the Company:
 For
    
    
    WithheldWilliam J. Wagner
    
    
    46,424,966
    
    
    
    4,490,299Thomas K. Creal, III
    
    
    46,400,510
    
    
    
    4,514,755A. Paul King
    
    
    46,433,077
    
    
    
    4,485,188
 (ii)
    
    Ratification of the appointment of KPMG LLP as the Companys
independent auditors for the fiscal year ending June 30, 2006.
 For
    
    Against
    
    Withheld46,349,492
    
    161,930
    
    78,661
 
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
  Year Ended
    
    
    
    
    
    
    
    
    
    Cash DividendsDecember 31, 2005
    
    High
    
    Low
    
    DeclaredFirst quarter
    
    $
    25.21
    
    
    $
    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
 Year Ended
    
    
    
    
    
    
    
    
    
    Cash DividendsDecember 31, 2004
    
    High
    
    Low
    
    DeclaredFirst quarter
    
    $
    26.67
    
    
    $
    20.16
    
    
    $
    0.10Second quarter
    
    
    25.75
    
    
    
    20.05
    
    
    
    0.10Third quarter
    
    
    23.15
    
    
    
    20.42
    
    
    
    0.12Fourth quarter
    
    
    26.32
    
    
    
    21.95
    
    
    
    0.12
   27




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##### Table of Contents



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 1, 2005
through
October 31, 2005
    
    
    -0-
    
    
    $
    0.00
    
    
    
    -0-
    
    
    
    992,574November 1, 2005
through
November 30, 2005
    
    
    125,000
    
    
    $
    22.12
    
    
    
    125,00
    
    
    
    867,574December 1, 2005
through
December 31, 2005
    
    
    616,400
    
    
    $
    22.48
    
    
    
    616,400
    
    
    
    251,174Total
    
    
    741,400
    
    
    $
    22.42
 
 (1)
    
    On August 23, 2005, the Companys Board of Directors approved the purchase of up to 1,017,574 shares of its
common stock. This repurchase program was completed on February 16, 2006 with the aggregate repurchase of 1,016,400
shares at an average price of $22.44. The Companys Board of Directors approved a second repurchase program for up
to 5% of publicly traded common stock, or approximately 1,000,000 shares.  28




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##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA
 Selected Financial and Other Data
  AtDecember31,
    
    At June 30,2005
    
    2005
    
    2004*
    
    2003
    
    2002
    
    2001Selected Consolidated Financial ConditionData:
    
    (In Thousands)Total assets
    
    $
    6,477,307
    
    
    $
    6,330,482
    
    
    $
    6,343,248
    
    
    $
    5,681,695
    
    
    $
    4,305,535
    
    
    $
    3,852,831Investment securities held-to-maturity
    
    
    444,407
    
    
    
    467,303
    
    
    
    209,241
    
    
    
    130,111
    
    
    
    132,643
    
    
    
    129,991Investment securities available-for-sale
    
    
    289,871
    
    
    
    290,702
    
    
    
    444,676
    
    
    
    342,456
    
    
    
    174,982
    
    
    
    96,645Mortgage-backed securities held-to-maturity
    
    
    189,851
    
    
    
    235,676
    
    
    
    392,301
    
    
    
    366,706
    
    
    
    263,860
    
    
    
    209,340Mortgage-backed securities available-for-sale
    
    
    323,965
    
    
    
    384,481
    
    
    
    411,003
    
    
    
    561,628
    
    
    
    260,741
    
    
    
    294,934Loans receivable net:Real estate
    
    
    3,320,303
    
    
    
    3,150,668
    
    
    
    2,995,110
    
    
    
    2,599,324
    
    
    
    2,309,752
    
    
    
    2,200,115Consumer
    
    
    1,146,939
    
    
    
    1,086,291
    
    
    
    913,089
    
    
    
    702,397
    
    
    
    608,370
    
    
    
    568,661Commercial
    
    
    155,027
    
    
    
    139,925
    
    
    
    145,742
    
    
    
    128,153
    
    
    
    94,484
    
    
    
    87,805Total loans receivable, net
    
    
    4,622,269
    
    
    
    4,376,884
    
    
    
    4,053,941
    
    
    
    3,429,874
    
    
    
    3,012,606
    
    
    
    2,856,581Deposits
    
    
    5,228,479
    
    
    
    5,187,946
    
    
    
    5,191,621
    
    
    
    4,678,499
    
    
    
    3,593,122
    
    
    
    3,264,940Advances from FHLB and other borrowed funds
    
    
    417,356
    
    
    
    410,344
    
    
    
    449,147
    
    
    
    465,750
    
    
    
    259,260
    
    
    
    276,212Shareholders equity
    
    
    585,658
    
    
    
    582,190
    
    
    
    550,472
    
    
    
    395,074
    
    
    
    316,640
    
    
    
    275,713
 Six Months EndedDecember 31,
    
    
    Years Ended June 30,2005
    
    
    2004
    
    
    2005
    
    
    2004*
    
    
    2003
    
    
    2002
    
    
    2001Selected Consolidated Operating Data:
    
    (In Thousands)Total interest income
    
    $
    170,449
    
    
    $
    157,601
    
    
    $
    321,824
    
    
    $
    300,230
    
    
    
    282,524
    
    
    $
    274,500
    
    
    $
    269,430Total interest expense
    
    
    79,414
    
    
    
    67,382
    
    
    
    138,047
    
    
    
    134,466
    
    
    
    142,014
    
    
    
    147,255
    
    
    
    157,322Net interest income
    
    
    91,035
    
    
    
    90,219
    
    
    
    183,777
    
    
    
    165,764
    
    
    
    140,510
    
    
    
    127,245
    
    
    
    112,108Provision for loan losses
    
    
    4,722
    
    
    
    4,003
    
    
    
    9,566
    
    
    
    6,860
    
    
    
    8,445
    
    
    
    6,360
    
    
    
    5,347Net interest income after provision for
loan losses
    
    
    86,313
    
    
    
    86,216
    
    
    
    174,211
    
    
    
    158,904
    
    
    
    132,065
    
    
    
    120,885
    
    
    
    106,761Noninterest income
    
    
    19,851
    
    
    
    15,111
    
    
    
    32,004
    
    
    
    31,862
    
    
    
    27,028
    
    
    
    18,173
    
    
    
    15,054Noninterest expense
    
    
    66,317
    
    
    
    63,039
    
    
    
    128,659
    
    
    
    128,805
    
    
    
    116,460
    
    
    
    84,780
    
    
    
    82,393Income before income tax expense and
cumulative effect of accounting change
    
    
    39,847
    
    
    
    38,288
    
    
    
    77,556
    
    
    
    61,961
    
    
    
    42,633
    
    
    
    54,278
    
    
    
    39,422Income tax expense
    
    
    10,998
    
    
    
    11,374
    
    
    
    22,741
    
    
    
    19,829
    
    
    
    16,947
    
    
    
    16,572
    
    
    
    12,699Income before cumulative effect of
accounting change
    
    
    28,849
    
    
    
    26,914
    
    
    
    54,815
    
    
    
    42,132
    
    
    
    25,686
    
    
    
    37,706
    
    
    
    26,723Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,237
    
    
    
    Net income
    
    $
    28,849
    
    
    $
    26,914
    
    
    $
    54,815
    
    
    $
    42,132
    
    
    $
    25,686
    
    
    
    39,943
    
    
    $
    26,723Basic per share amounts:Income before cumulative effect of
accounting change
    
    $
    0.57
    
    
    $
    0.55
    
    
    $
    1.10
    
    
    $
    0.88
    
    
    $
    0.54
    
    
    $
    0.79
    
    
    $
    0.56Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.05
    
    
    
    Net income
    
    $
    0.57
    
    
    $
    0.55
    
    
    $
    1.10
    
    
    $
    0.88
    
    
    $
    0.54
    
    
    $
    0.84
    
    
    $
    0.56Diluted per share amounts:Income before cumulative effect of
accounting change
    
    $
    0.56
    
    
    $
    0.54
    
    
    $
    1.09
    
    
    $
    0.87
    
    
    $
    0.53
    
    
    $
    0.78
    
    
    $
    0.56Cumulative effect of accounting change
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.05
    
    
    
    Net income
    
    $
    0.56
    
    
    $
    0.54
    
    
    $
    1.09
    
    
    $
    0.87
    
    
    $
    0.53
    
    
    $
    0.83
    
    
    $
    0.56
 29




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##### Table of Contents



At or for the Six MonthsEnded December 31,
    
    At or for the Year Ended June 30,2005
    
    2004
    
    2005
    
    2004*
    
    2003
    
    2002
    
    2001Key Financial Ratios and Other Data:Return on average assets (net income
divided by average total assets)
    
    
    0.91
    %
    
    
    0.85
    %
    
    
    0.86
    %
    
    
    0.68
    %
    
    
    0.51
    %
    
    
    0.98
    %
    
    
    0.74
    %Return on average equity (net income
divided by average equity)
    
    
    9.81
    
    
    
    9.67
    
    
    
    9.74
    
    
    
    8.17
    
    
    
    7.15
    
    
    
    13.53
    
    
    
    10.23Average capital to average assets
    
    
    9.23
    
    
    
    8.77
    
    
    
    8.87
    
    
    
    8.27
    
    
    
    7.07
    
    
    
    7.24
    
    
    
    7.27Capital to total assets
    
    
    9.04
    
    
    
    8.91
    
    
    
    9.20
    
    
    
    8.68
    
    
    
    6.95
    
    
    
    7.35
    
    
    
    7.16Net interest rate spread (average yield on
interest-earning assets less average
cost of
interest-bearing liabilities)
    
    
    2.99
    
    
    
    3.01
    
    
    
    3.07
    
    
    
    2.83
    
    
    
    2.85
    
    
    
    3.11
    
    
    
    2.97Net interest margin (net interest income
as a
percentage of average interest-earning
assets)
    
    
    3.21
    
    
    
    3.18
    
    
    
    3.24
    
    
    
    2.98
    
    
    
    3.01
    
    
    
    3.42
    
    
    
    3.35Noninterest expense to average assets
    
    
    2.08
    
    
    
    1.99
    
    
    
    2.03
    
    
    
    2.06
    
    
    
    2.29
    
    
    
    2.08
    
    
    
    2.29Net interest income to noninterest expense
    
    
    1.37
    x
    
    
    1.43
    x
    
    
    1.43
    x
    
    
    1.29
    x
    
    
    1.21
    x
    
    
    1.50
    x
    
    
    1.36
    xDividend payout ratio
    
    
    53.57
    
    
    
    44.44
    
    
    
    44.04
    
    
    
    45.98
    
    
    
    60.38
    
    
    
    28.92
    
    
    
    28.57Nonperforming loans to net loans
receivable
    
    
    0.93
    
    
    
    0.76
    
    
    
    0.76
    
    
    
    0.80
    
    
    
    0.96
    
    
    
    0.52
    
    
    
    0.62Nonperforming assets to total assets
    
    
    0.74
    
    
    
    0.62
    
    
    
    0.64
    
    
    
    0.57
    
    
    
    0.68
    
    
    
    0.49
    
    
    
    0.55Allowance for loan losses to nonperforming
loans
    
    
    77.67
    
    
    
    92.48
    
    
    
    93.91
    
    
    
    94.35
    
    
    
    82.93
    
    
    
    139.51
    
    
    
    115.06Allowance for loan losses to net loans
receivable
    
    
    0.72
    
    
    
    0.70
    
    
    
    0.72
    
    
    
    0.76
    
    
    
    0.79
    
    
    
    0.73
    
    
    
    0.71Average interest-earning assets to average
interest-bearing liabilities
    
    
    1.09
    x
    
    
    1.07
    x    
    
    1.08
    x
    
    
    1.06
    x
    
    
    1.06
    x    
    
    1.08
    x    
    
    1.08
    xNumber of:Full-service offices
    
    
    153
    
    
    
    151
    
    
    
    153
    
    
    
    152
    
    
    
    141
    
    
    
    126
    
    
    
    118Consumer finance offices
    
    
    50
    
    
    
    49
    
    
    
    49
    
    
    
    49
    
    
    
    47
    
    
    
    49
    
    
    
    45
 
 *
    
    Includes effect of Bell Federal Savings and Loan acquisition. 
 ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Statements
  Executive Summary
 Share-Based Payments.
  30




---



##### Table of Contents



Critical Accounting Policies
  Allowance for Loan Losses. Accounting by Creditors for Impairment of a Loan
 Goodwill.
 31




---



##### Table of Contents



Deferred Income Taxes. Accounting for
Income Taxes
 Other Intangible Assets.
 Pension Benefits.
  Financial Condition
 Cash and cash equivalents.
 32




---



##### Table of Contents



Investment securities
 Mortgage-backed securities
 Loans receivable
 Deposits
 Borrowings
 Shareholders equity
 33




---



##### Table of Contents



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
 Noninterest income
 34




---



##### Table of Contents



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




---



##### Table of Contents



Net interest income
 Provision for Loan Losses
 Noninterest income
 Noninterest expense
 Income taxes
 Results of Operations  Year ended 6/30/04 compared to year ended 6/30/03
 Interest Income.
  36




---



##### Table of Contents



Interest expense
 Net interest income
 Provision for Loan Losses
 Noninterest income
 Noninterest expense
 37




---



##### Table of Contents



Income taxes
 Average Balance Sheets
 Six Months Ended December 31,2005
    
    
    2004Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Yield/Cost(10)
    
    
    Balance
    
    
    Interest
    
    
    Yield/Cost(10)(Dollars in ThousandsInterest-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
    
    
    
    3.44Investment securities(3)(4)(5)
    
    
    731,612
    
    
    
    19,585
    
    
    
    5.35
    
    
    
    632,350
    
    
    
    16,877
    
    
    
    5.34FHLB stock
    
    
    34,467
    
    
    
    468
    
    
    
    2.72
    
    
    
    38,073
    
    
    
    291
    
    
    
    1.53Interest-earning deposits
    
    
    56,594
    
    
    
    1,088
    
    
    
    3.84
    
    
    
    324,120
    
    
    
    2,467
    
    
    
    1.52Total interest-earning assets
    
    
    5,924,075
    
    
    
    174,456
    
    
    
    5.89
    
    
    
    5,924,353
    
    
    
    161,544
    
    
    
    5.45Noninterest-earning assets(6)
    
    
    448,639
    
    
    
    
    
    
    
    
    
    
    
    423,843Total assets
    
    $
    6,372,714
    
    
    
    
    
    
    
    
    
    
    $
    6,348,196Interest-bearing liabilities:Savings accounts
    
    $
    987,053
    
    
    $
    7,035
    
    
    
    1.41
    
    
    $
    1,088,531
    
    
    $
    7,325
    
    
    
    1.35NOW accounts
    
    
    672,092
    
    
    
    3,839
    
    
    
    1.13
    
    
    
    665,356
    
    
    
    2,357
    
    
    
    0.71Money market demand accounts
    
    
    610,655
    
    
    
    7,668
    
    
    
    2.49
    
    
    
    832,161
    
    
    
    7,167
    
    
    
    1.72Certificate accounts
    
    
    2,642,507
    
    
    
    46,807
    
    
    
    3.51
    
    
    
    2,384,768
    
    
    
    36,477
    
    
    
    3.06Borrowed funds(7)
    
    
    413,946
    
    
    
    9,443
    
    
    
    4.53
    
    
    
    446,854
    
    
    
    10,092
    
    
    
    4.52Debentures
    
    
    113,147
    
    
    
    4,622
    
    
    
    8.10
    
    
    
    102,062
    
    
    
    3,964
    
    
    
    7.77Total interest-bearing liabilities
    
    
    5,439,400
    
    
    
    79,414
    
    
    
    2.90
    
    
    
    5,519,732
    
    
    
    67,382
    
    
    
    2.44Noninterest-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




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##### Table of Contents



Years Ended June 30,2005
    
    
    2004
    
    
    2003Average
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost
    
    
    Balance
    
    
    Interest
    
    
    Cost
    
    
    Balance
    
    
    Interest
    
    
    Cost(Dollars in Thousands)Interest-earning assets:Loans receivable (1)(2) (3)
    
    $
    4,234,241
    
    
    $
    262,158
    
    
    
    6.19
    %
    
    $
    3,846,261
    
    
    $
    244,926
    
    
    
    6.37
    %
    
    $
    3,258,520
    
    
    $
    231,204
    
    
    
    7.10
    %Mortgage-backed securities (4)
    
    
    729,757
    
    
    
    26,102
    
    
    
    3.58
    
    
    
    883,914
    
    
    
    25,815
    
    
    
    2.92
    
    
    
    733,832
    
    
    
    26,744
    
    
    
    3.64Investment securities(3)(4)(5)
    
    
    690,096
    
    
    
    36,415
    
    
    
    5.28
    
    
    
    662,687
    
    
    
    33,128
    
    
    
    5.00
    
    
    
    345,501
    
    
    
    21,759
    
    
    
    6.30FHLB stock
    
    
    35,504
    
    
    
    855
    
    
    
    2.41
    
    
    
    38,381
    
    
    
    572
    
    
    
    1.49
    
    
    
    30,711
    
    
    
    924
    
    
    
    3.01Interest-earning deposits
    
    
    222,422
    
    
    
    4,184
    
    
    
    1.88
    
    
    
    391,352
    
    
    
    3,527
    
    
    
    0.90
    
    
    
    389,855
    
    
    
    4,813
    
    
    
    1.23Total interest-earning assets
    
    
    5,912,020
    
    
    
    329,714
    
    
    
    5.58
    
    
    
    5,822,595
    
    
    
    307,968
    
    
    
    5.29
    
    
    
    4,758,419
    
    
    
    285,444
    
    
    
    6.00Noninterest-earning assets(6)
    
    
    433,796
    
    
    
    
    
    
    
    
    
    
    
    415,125
    
    
    
    
    
    
    
    
    
    
    
    327,966Total assets
    
    $
    6,345,816
    
    
    
    
    
    
    
    
    
    
    $
    6,237,720
    
    
    
    
    
    
    
    
    
    
    $
    5,086,385Interest-bearing liabilities:Savings accounts
    
    $
    1,080,889
    
    
    $
    15,037
    
    
    
    1.39
    
    
    $
    1,031,405
    
    
    
    13,923
    
    
    
    1.35
    
    
    $
    841,614
    
    
    
    17,849
    
    
    
    2.12NOW accounts
    
    
    669,485
    
    
    
    5,363
    
    
    
    0.80
    
    
    
    683,626
    
    
    
    5,302
    
    
    
    0.78
    
    
    
    561,794
    
    
    
    6,897
    
    
    
    1.23Money market demand accounts
    
    
    756,026
    
    
    
    13,168
    
    
    
    1.74
    
    
    
    876,157
    
    
    
    14,786
    
    
    
    1.69
    
    
    
    525,503
    
    
    
    12,412
    
    
    
    2.36Certificate accounts
    
    
    2,443,718
    
    
    
    76,511
    
    
    
    3.13
    
    
    
    2,317,003
    
    
    
    72,317
    
    
    
    3.12
    
    
    
    2,036,329
    
    
    
    76,726
    
    
    
    3.77Borrowed funds(7)
    
    
    439,847
    
    
    
    19,889
    
    
    
    4.52
    
    
    
    466,277
    
    
    
    20,482
    
    
    
    4.39
    
    
    
    440,211
    
    
    
    20,521
    
    
    
    4.66Debentures
    
    
    102,062
    
    
    
    8,079
    
    
    
    7.92
    
    
    
    101,297
    
    
    
    7,656
    
    
    
    7.56
    
    
    
    99,000
    
    
    
    7,610
    
    
    
    7.69Total interest-bearing liabilities
    
    
    5,492,027
    
    
    
    138,047
    
    
    
    2.51
    
    
    
    5,475,765
    
    
    
    134,466
    
    
    
    2.46
    
    
    
    4,504,451
    
    
    
    142,015
    
    
    
    3.15Noninterest-bearing liabilities
    
    
    290,842
    
    
    
    
    
    
    
    
    
    
    
    246,105
    
    
    
    
    
    
    
    
    
    
    
    222,572Total liabilities
    
    
    5,782,869
    
    
    
    
    
    
    
    
    
    
    
    5,721,870
    
    
    
    
    
    
    
    
    
    
    
    4,727,023Shareholders equity
    
    
    562,947
    
    
    
    
    
    
    
    
    
    
    
    515,850
    
    
    
    
    
    
    
    
    
    
    
    359,362Total liabilities and equity
    
    $
    6,345,816
    
    
    
    
    
    
    
    
    
    
    $
    6,237,720
    
    
    
    
    
    
    
    
    
    
    $
    5,086,385Net interest income
    
    
    
    
    
    $
    191,667
    
    
    
    
    
    
    
    
    
    
    $
    173,502
    
    
    
    
    
    
    
    
    
    
    $
    143,429Net interest rate spread(8)
    
    
    
    
    
    
    
    
    
    
    3.07
    %
    
    
    
    
    
    
    
    
    
    
    2.83
    %
    
    
    
    
    
    
    
    
    
    
    2.85
    %Net interest-earning assets
    
    $
    419,993
    
    
    
    
    
    
    
    
    
    
    $
    346,830
    
    
    
    
    
    
    
    
    
    
    $
    253,968Net interest margin(9)
    
    
    
    
    
    
    
    
    
    
    3.24
    %
    
    
    
    
    
    
    
    
    
    
    2.98
    %
    
    
    
    
    
    
    
    
    
    
    3.01
    %Ratio of average interest-earning
assets to average interest-bearing
liabilities
    
    
    1.08x
    
    
    
    
    
    
    
    
    
    
    
    1.06x
    
    
    
    
    
    
    
    
    
    
    
    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.(7)
    
    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. Rate/Volume Analysis.
 39




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##### Table of Contents



Six Months Ended December 31,
    
    

Years Ended June 30,2005 vs. 2004
    
    
    2005 vs. 2004
    
    
    2004 vs. 2003Increase/(Decrease)
    
    
    Total
    
    
    Increase/(Decrease)
    
    
    Total
    
    
    Increase/(Decrease)
    
    
    TotalDue to
    
    
    Increase
    
    
    Due to
    
    
    Increase
    
    
    Due to
    
    
    IncreaseRate
    
    
    Volume
    
    
    (Decrease)
    
    
    Rate
    
    
    Volume
    
    
    (Decrease)
    
    
    Rate
    
    
    Volume
    
    
    (Decrease)(In Thousands)Interest-earning assets:Loans receivable
    
    $
    1,680
    
    
    $
    11,680
    
    
    $
    13,360
    
    
    $
    (7,474
    )
    
    $
    24,706
    
    
    $
    17,232
    
    
    $
    (27,980
    )
    
    $
    41,702
    
    
    $
    13,722Mortgage-backed securities
    
    
    2,101
    
    
    
    (4,055
    )
    
    
    (1,954
    )
    
    
    5,801
    
    
    
    (5,514
    )
    
    
    287
    
    
    
    (6,399
    )
    
    
    5,470
    
    
    
    (929
    )Investment securities
    
    
    55
    
    
    
    2,653
    
    
    
    2,708
    
    
    
    1,900
    
    
    
    1,387
    
    
    
    3,287
    
    
    
    (8,607
    )
    
    
    19,976
    
    
    
    11,369FHLB stock
    
    
    226
    
    
    
    (49
    )
    
    
    177
    
    
    
    352
    
    
    
    (69
    )
    
    
    283
    
    
    
    (583
    )
    
    
    231
    
    
    
    (352
    )Interest-earning deposits
    
    
    3,764
    
    
    
    (5,143
    )
    
    
    (1,379
    )
    
    
    3,834
    
    
    
    (3,177
    )
    
    
    657
    
    
    
    (1,304
    )
    
    
    18
    
    
    
    (1,286
    )Total interest-earning assets
    
    
    7,826
    
    
    
    5,086
    
    
    
    12,912
    
    
    
    4,413
    
    
    
    17,333
    
    
    
    21,746
    
    
    
    (44,873
    )
    
    
    67,397
    
    
    
    22,524Interest-bearing liabilities:Savings accounts
    
    
    433
    
    
    
    (723
    )
    
    
    (290
    )
    
    
    436
    
    
    
    678
    
    
    
    1,114
    
    
    
    (7,951
    )
    
    
    4,025
    
    
    
    (3,926
    )NOW accounts
    
    
    1,451
    
    
    
    31
    
    
    
    1,482
    
    
    
    174
    
    
    
    (113
    )
    
    
    61
    
    
    
    (3,091
    )
    
    
    1,496
    
    
    
    (1,595
    )Money market demand
accounts
    
    
    3,283
    
    
    
    (2,782
    )
    
    
    501
    
    
    
    474
    
    
    
    (2,092
    )
    
    
    (1,618
    )
    
    
    (5,908
    )
    
    
    8,282
    
    
    
    2,374Certificate accounts
    
    
    6,077
    
    
    
    4,253
    
    
    
    10,330
    
    
    
    233
    
    
    
    3,961
    
    
    
    4,194
    
    
    
    (14,984
    )
    
    
    10,575
    
    
    
    (4,409
    )Borrowed funds
    
    
    102
    
    
    
    (751
    )
    
    
    (649
    )
    
    
    602
    
    
    
    (1,195
    )
    
    
    (593
    )
    
    
    (1,254
    )
    
    
    1,215
    
    
    
    (39
    )Debentures
    
    
    216
    
    
    
    442
    
    
    
    658
    
    
    
    364
    
    
    
    59
    
    
    
    423
    
    
    
    (131
    )
    
    
    177
    
    
    
    46Total interest-bearing
liabilities
    
    
    11,562
    
    
    
    470
    
    
    
    12,032
    
    
    
    2,283
    
    
    
    1,298
    
    
    
    3,581
    
    
    
    (33,319
    )
    
    
    25,770
    
    
    
    (7,549
    )Net change in net interest
income
    
    $
    (3,736
    )
    
    $
    4,616
    
    
    $
    880
    
    
    $
    2,130
    
    
    $
    16,035
    
    
    $
    18,165
    
    
    $
    (11,554
    )
    
    $
    41,627
    
    
    $
    30,073
 Regulatory Capital Requirements
    40




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##### Table of Contents



December 31, 2005
    
    
    June 30, 2005
    
    
    June 30, 2004(Dollars in thousands)Total shareholders equity (GAAP capital)
    
    $
    689,001
    
    
    $
    667,374
    
    
    $
    539,691Less: unrealized (gain)/ loss on
securities available for sale
    
    
    405
    
    
    
    (4,492
    )
    
    
    2,438Less: nonqualifying intangible assets
    
    
    (162,430
    )
    
    
    (154,253
    )
    
    
    (139,839
    )Leverage capital
    
    
    526,976
    
    
    
    508,629
    
    
    
    402,290Plus: Tier 2 capital (1)
    
    
    35,583
    
    
    
    34,110
    
    
    
    28,541Total risk-based capital
    
    
    562,559
    
    
    
    542,739
    
    
    
    430,831Average total assets for leverage ratio
    
    
    6,281,262
    
    
    
    6,083,422
    
    
    
    5,323,638Net risk-weighted assets including
off-balance sheet items
    
    
    3,666,674
    
    
    
    3,494,230
    
    
    
    2,868,810Leverage capital ratio
    
    
    8.39
    %
    
    
    8.36
    %
    
    
    7.56
    %Minimum requirement (2)
    
    3.00% to 5.00%
    
    3.00% to 5.00%
    
    3.00% to 5.00%Risk-based capital ratio
    
    
    15.34
    %
    
    
    15.53
    %
    
    
    15.02
    %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




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42




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##### Table of Contents



Contractual Obligations.
 Payments dueOne year to
    
    
    Three yearsLess than
    
    
    less than
    
    
    to less than
    
    
    Five yearsone year
    
    
    three years
    
    
    five years
    
    
    or greater
    
    
    Total(In thousands)Contractual obligations at
December 31, 2005
Long-term debt
    
    $
    39,727
    
    
    $
    144,369
    
    
    $
    72,302
    
    
    $
    160,958
    
    
    $
    417,356Junior subordinated debentures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    205,156
    
    
    
    205,156Operating leases
    
    
    3,041
    
    
    
    4,859
    
    
    
    3,805
    
    
    
    6,839
    
    
    
    18,544Total
    
    $
    42,768
    
    
    $
    149,228
    
    
    $
    76,107
    
    
    $
    372,953
    
    
    $
    641,056
 
 (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
 Impact of New Accounting Standards
 Share-Based Payments (SFAS 123R) Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees Practical Accommodation to the
Application of Grant Date as Defined in FASB Statement 123(R).
 43




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##### Table of Contents



Classification of Options and Similar Instruments
Issued as Employee Compensation That Allow for Cash Settlement upon the Occurrence of a Contingent
Event.
 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 Asset and Liability Management-Interest Rate Sensitivity Analysis.
   44




---



##### Table of Contents



Amounts Maturing or RepricingWithin 1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Over 20Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5-10 Years
    
    
    10-20 Years
    
    
    Years
    
    
    Total(Dollars in Thousands)Rate-sensitive assets:Interest-earning deposits
    
    $
    68,407
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    68,407Mortgage-backed securities:Fixed
    
    
    33,429
    
    
    
    49,995
    
    
    
    36,889
    
    
    
    51,260
    
    
    
    
    
    
    
    
    
    
    
    171,573Variable
    
    
    342,243
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    342,243Investment securities
    
    
    336,708
    
    
    
    196,613
    
    
    
    75,835
    
    
    
    125,122
    
    
    
    
    
    
    
    
    
    
    
    734,278Real estate loans:Adjustable-rate
    
    
    104,183
    
    
    
    4,626
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    108,809Fixed-rate
    
    
    321,846
    
    
    
    558,575
    
    
    
    483,198
    
    
    
    848,887
    
    
    
    438,546
    
    
    
    
    
    
    
    2,651,052Home equity lines of credit
    
    
    171,486
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    171,486Education loans
    
    
    120,504
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    120,504Other consumer loans
    
    
    344,454
    
    
    
    360,493
    
    
    
    153,195
    
    
    
    18,913
    
    
    
    
    
    
    
    
    
    
    
    877,055Commercial loans
    
    
    376,629
    
    
    
    245,348
    
    
    
    91,983
    
    
    
    16,691
    
    
    
    
    
    
    
    
    
    
    
    730,651Total rate-sensitive assets
    
    $
    2,219,889
    
    
    $
    1,415,650
    
    
    $
    841,100
    
    
    $
    1,060,873
    
    
    $
    438,546
    
    
    $
    
    
    
    $
    5,976,058Rate-sensitive liabilities:Fixed maturity deposits
    
    $
    1,507,728
    
    
    $
    1,064,592
    
    
    $
    137,630
    
    
    $
    28,703
    
    
    $
    248
    
    
    $
    
    
    
    $
    2,738,901Money market deposit accounts
    
    
    352,984
    
    
    
    
    
    
    
    99,658
    
    
    
    
    
    
    
    143,710
    
    
    
    
    
    
    
    596,352Savings accounts
    
    
    415,012
    
    
    
    80,002
    
    
    
    
    
    
    
    
    
    
    
    440,550
    
    
    
    
    
    
    
    935,564Checking accounts
    
    
    120,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    837,662
    
    
    
    957,662FHLB advances
    
    
    
    
    
    
    144,000
    
    
    
    71,500
    
    
    
    161,333
    
    
    
    795
    
    
    
    
    
    
    
    377,628Other borrowings
    
    
    33,318
    
    
    
    4,390
    
    
    
    2,020
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,728Trust Preferred Securities
    
    
    134,022
    
    
    
    71,134
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    205,156Total rate-sensitive liabilities
    
    $
    2,563,064
    
    
    $
    1,364,118
    
    
    $
    310,808
    
    
    $
    190,036
    
    
    $
    585,303
    
    
    $
    837,662
    
    
    $
    5,850,991Interest sensitivity gap per period
    
    $
    (343,175
    )
    
    $
    51,532
    
    
    $
    530,292
    
    
    $
    870,837
    
    
    $
    (146,757
    )
    
    $
    (837,662
    )
    
    $
    125,067Cumulative interest sensitivity gap
    
    $
    (343,175
    )
    
    $
    (291,643
    )
    
    $
    238,649
    
    
    $
    1,109,486
    
    
    $
    962,729
    
    
    $
    125,067
    
    
    $
    125,067Cumulative interest sensitivity gap
as a percentage of total assets
    
    
    (5.30
    )%
    
    
    (4.50
    )%
    
    
    3.68
    %
    
    
    17.13
    %
    
    
    14.86
    %
    
    
    1.93
    %
    
    
    1.93
    %Cumulative interest-earning assets as
a percent of cumulative
interest-bearing liabilities
    
    
    86.61
    %
    
    
    92.57
    %
    
    
    105.63
    %
    
    
    125.06
    %
    
    
    119.20
    %
    
    
    102.14
    %
    
    
    102.14
    %
  45




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##### Table of Contents




    
    Net income simulation.Given a parallel shift of 2% in interest rates, the
estimated net income may not decrease by more than 20% within a one-year period.
    
    Market value of equity simulation.The market value of the Companys equity is the
net present value of the Companys assets and liabilities. Given a parallel shift of
2% in interest rates, equity may not decrease by more than 35% of total shareholder
equity.
  Movements in interest rates fromDecember 31, 2005 ratesIncrease
    
    Decrease1%
    
    2%
    
    1%
    
    2%Simulated impact over the next 12 months
compared with December 31, 2005:Percentage increase/(decrease) in net income
    
    
    0.7
    %
    
    
    (2.7
    )%
    
    
    1.3
    %
    
    
    0.0
    %Increase/(decrease) in return on average equity
    
    
    0.3
    %
    
    
    0.0
    %
    
    
    0.4
    %
    
    
    0.2
    %Increase/(decrease) in diluted earnings per share
    
    $
    0.01
    
    
    $
    (0.03
    )
    
    $
    0.02
    
    
    $
    0.00Percentage increase/(decrease) in market value of equity
    
    
    (13.9
    )%
    
    
    (27.1
    )%
    
    
    3.5
    %
    
    
    5.6
    %
 46




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  47




---



##### Table of Contents



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
 48




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##### Table of Contents



KPMG LLP
    
    Telephone
    
    412 391 9710Suite 2500
    
    Fax
    
    412 391 8963One Mellon Center
    
    Internet
    
    www.us.kpmg.comPittsburgh, PA 15219-2598
 Report of Independent Registered Public Accounting Firm
 
     
 49




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50




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##### Table of Contents



KPMG LLP
    
    Telephone
    
    412 391 9710Suite 2500
    
    Fax
    
    412 391 8963One Mellon Center
    
    Internet
    
    www.us.kpmg.comPittsburgh, PA 15219-2598
 Report of Independent Registered Public Accounting Firm
 
      
 
 
 52




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
   December 31,
    
    
    June 302005
    
    
    2005
    
    
    2004AssetsCash and cash equivalents
    
    $
    83,685
    
    
    
    83,651
    
    
    
    57,466Interest-earning deposits in other financial institutions
    
    
    67,243
    
    
    
    52,237
    
    
    
    174,199Federal funds sold and other short-term investments
    
    
    1,164
    
    
    
    
    
    
    
    160,058Marketable securities available-for-sale (amortized cost
of $616,792, $671,137, and $858,569)
    
    
    613,836
    
    
    
    675,183
    
    
    
    855,679Marketable securities held-to-maturity (market value
of $636,507, $709,468, and $601,738)
    
    
    634,258
    
    
    
    702,979
    
    
    
    601,542Loans receivable, net of allowance for loan
losses of $33,411, $31, 563, and $30,670
    
    
    4,622,269
    
    
    
    4,376,884
    
    
    
    4,053,941Accrued interest receivable
    
    
    25,053
    
    
    
    24,387
    
    
    
    22,578Real estate owned, net
    
    
    4,872
    
    
    
    6,685
    
    
    
    3,951Federal Home Loan Bank stock, at cost
    
    
    33,130
    
    
    
    33,055
    
    
    
    38,884Premises and equipment, net
    
    
    96,981
    
    
    
    96,028
    
    
    
    82,417Bank owned life insurance
    
    
    106,737
    
    
    
    104,573
    
    
    
    100,090Goodwill
    
    
    150,485
    
    
    
    142,078
    
    
    
    142,078Other intangible assets
    
    
    11,477
    
    
    
    11,920
    
    
    
    16,429Other assets
    
    
    26,117
    
    
    
    20,822
    
    
    
    33,936Total assets
    
    $
    6,477,307
    
    
    
    6,330,482
    
    
    
    6,343,248Liabilities and Shareholders EquityLiabilities:Deposits
    
    $
    5,228,479
    
    
    
    5,187,946
    
    
    
    5,191,621Borrowed funds
    
    
    417,356
    
    
    
    410,344
    
    
    
    449,147Advances by borrowers for taxes and insurance
    
    
    24,742
    
    
    
    30,769
    
    
    
    29,607Accrued interest payable
    
    
    4,387
    
    
    
    4,020
    
    
    
    4,280Other liabilities
    
    
    11,529
    
    
    
    13,151
    
    
    
    16,059Junior subordinated deferrable interest debentures held by trusts
that issued guaranteed capital debt securities
    
    
    205,156
    
    
    
    102,062
    
    
    
    102,062Total liabilities
    
    
    5,891,649
    
    
    
    5,748,292
    
    
    
    5,792,776Shareholders equity:Preferred stock, $0.10 par value. Authorized 50,000,000,
50,000,000, and 10,000,000 shares, respectively; issued and
outstanding 0 shares at December 31, 2005 and
June 30, 2005 and 2004
    
    
    
    
    
    
    
    
    
    
    Common stock, $0.10 par value. Authorized 500,000,000,
500,000,000, and 100,000,000 shares, respectively; issued 51,076,836,
50,843,805, and 47,960,287 shares at December 31, 2005 and
June 30, 2005 and 2004, respectively
    
    
    5,108
    
    
    
    5,084
    
    
    
    4,796Paid-in capital
    
    
    213,018
    
    
    
    210,804
    
    
    
    214,868Retained earnings, substantially restricted
    
    
    389,985
    
    
    
    367,255
    
    
    
    332,841Accumulated other comprehensive income (loss), net
    
    
    (384
    )
    
    
    4,514
    
    
    
    (2,033
    )Treasury stock of 766,400 shares, 0 shares, and 0 shares,
respectively, at cost
    
    
    (17,183
    )
    
    
    
    
    
    
    Unearned compensation  recognition and retention plan
    
    
    (4,886
    )
    
    
    (5,467
    )
    
    
    Total shareholders equity
    
    
    585,658
    
    
    
    582,190
    
    
    
    550,472Total liabilities and shareholders equity
    
    $
    6,477,307
    
    
    
    6,330,482
    
    
    
    6,343,248
  53




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
   Six-month
    
    
    Six-monthperiod ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    Years ended June 302005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2003(Unaudited)Interest income:Loans receivable
    
    $
    141,164
    
    
    
    127,998
    
    
    
    260,833
    
    
    
    243,630
    
    
    
    232,760Mortgage-backed securities
    
    
    11,332
    
    
    
    13,286
    
    
    
    26,102
    
    
    
    25,815
    
    
    
    26,744Taxable investment securities
    
    
    10,943
    
    
    
    7,688
    
    
    
    18,513
    
    
    
    15,210
    
    
    
    9,857Tax-free investment securities
    
    
    5,922
    
    
    
    6,162
    
    
    
    12,192
    
    
    
    12,048
    
    
    
    8,350Interest-earning deposits
    
    
    1,088
    
    
    
    2,467
    
    
    
    4,184
    
    
    
    3,527
    
    
    
    4,813Total interest income
    
    
    170,449
    
    
    
    157,601
    
    
    
    321,824
    
    
    
    300,230
    
    
    
    282,524Interest expense:Deposits
    
    
    65,349
    
    
    
    53,326
    
    
    
    110,079
    
    
    
    106,328
    
    
    
    113,883Borrowed funds
    
    
    14,065
    
    
    
    14,056
    
    
    
    27,968
    
    
    
    28,138
    
    
    
    28,131Total interest expense
    
    
    79,414
    
    
    
    67,382
    
    
    
    138,047
    
    
    
    134,466
    
    
    
    142,014Net interest income
    
    
    91,035
    
    
    
    90,219
    
    
    
    183,777
    
    
    
    165,764
    
    
    
    140,510Provision for loan losses
    
    
    4,722
    
    
    
    4,003
    
    
    
    9,566
    
    
    
    6,860
    
    
    
    8,445Net interest income after
provision for loan losses
    
    
    86,313
    
    
    
    86,216
    
    
    
    174,211
    
    
    
    158,904
    
    
    
    132,065Noninterest income:Service charges and fees
    
    
    11,949
    
    
    
    8,022
    
    
    
    16,786
    
    
    
    14,068
    
    
    
    13,540Trust and other financial services income
    
    
    2,267
    
    
    
    2,112
    
    
    
    4,291
    
    
    
    3,982
    
    
    
    3,492Insurance commission income
    
    
    1,272
    
    
    
    1,021
    
    
    
    2,222
    
    
    
    948
    
    
    
    1,188Gain on sale of marketable securities, ne
    
    
    
    
    
    
    142
    
    
    
    523
    
    
    
    4,536
    
    
    
    1,264Gain (loss) on sale of loans, net
    
    
    308
    
    
    
    (135
    )
    
    
    (100
    )
    
    
    433
    
    
    
    1,729Gain on sale of real estate owned, ne
    
    
    788
    
    
    
    152
    
    
    
    906
    
    
    
    1,561
    
    
    
    493Income from bank owned life insurance
    
    
    2,160
    
    
    
    2,240
    
    
    
    4,378
    
    
    
    4,364
    
    
    
    3,411Writedown of investment securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (166
    )
    
    
    Other operating income
    
    
    1,107
    
    
    
    1,557
    
    
    
    2,998
    
    
    
    2,136
    
    
    
    1,911Total noninterest income
    
    
    19,851
    
    
    
    15,111
    
    
    
    32,004
    
    
    
    31,862
    
    
    
    27,028Noninterest expense:Compensation and employee benefits
    
    
    36,382
    
    
    
    35,537
    
    
    
    71,843
    
    
    
    65,593
    
    
    
    55,532Premises and occupancy costs
    
    
    9,511
    
    
    
    8,318
    
    
    
    17,724
    
    
    
    16,175
    
    
    
    13,657Office operations
    
    
    5,910
    
    
    
    5,677
    
    
    
    11,329
    
    
    
    10,785
    
    
    
    9,856Processing expenses
    
    
    5,251
    
    
    
    5,022
    
    
    
    10,578
    
    
    
    9,317
    
    
    
    8,378Amortization of intangible assets
    
    
    1,932
    
    
    
    2,457
    
    
    
    4,509
    
    
    
    4,706
    
    
    
    701Advertising
    
    
    1,308
    
    
    
    1,701
    
    
    
    3,674
    
    
    
    3,582
    
    
    
    3,502Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,904
    
    
    
    16,771Prepayment penalties on FHLB advances
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,533
    
    
    
    Other expenses
    
    
    6,023
    
    
    
    4,327
    
    
    
    9,002
    
    
    
    8,210
    
    
    
    8,063Total noninterest expense
    
    
    66,317
    
    
    
    63,039
    
    
    
    128,659
    
    
    
    128,805
    
    
    
    116,460Income before income taxes
    
    
    39,847
    
    
    
    38,288
    
    
    
    77,556
    
    
    
    61,961
    
    
    
    42,633Provision for income taxes:Federal
    
    
    9,436
    
    
    
    9,283
    
    
    
    19,013
    
    
    
    16,425
    
    
    
    14,654State
    
    
    1,562
    
    
    
    2,091
    
    
    
    3,728
    
    
    
    3,404
    
    
    
    2,293Total provision for income taxes
    
    
    10,998
    
    
    
    11,374
    
    
    
    22,741
    
    
    
    19,829
    
    
    
    16,947Net income
    
    $
    28,849
    
    
    
    26,914
    
    
    
    54,815
    
    
    
    42,132
    
    
    
    25,686Basic earnings per share
    
    $
    0.57
    
    
    
    0.55
    
    
    
    1.10
    
    
    
    0.88
    
    
    
    0.54Diluted earnings per share
    
    $
    0.56
    
    
    
    0.54
    
    
    
    1.09
    
    
    
    0.87
    
    
    
    0.53
  54




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
  
 Accumulated
    
    
    
    
    
    
    Unearnedother
    
    
    
    
    
    
    recognitioncomprehensive
    
    
    
    
    
    
    and
    
    
    TotalCommon
    
    
    Paid-in
    
    
    Retained
    
    
    income
    
    
    Treasury
    
    
    retention
    
    
    shareholdersstock
    
    
    capital
    
    
    earnings
    
    
    (loss), net
    
    
    stock
    
    
    plan shares
    
    
    equityBalance at
June 30, 2002, as reported
    
    $
    4,755
    
    
    
    71,838
    
    
    
    233,831
    
    
    
    6,216
    
    
    
    
    
    
    
    
    
    
    
    316,640Impact of adoption of FAS 123R
    
    
    
    
    
    
    2,428
    
    
    
    (2,428
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    25,686
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,686Change in
unrealized gain on securities, net of tax and reclassification
adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,214
    
    
    
    
    
    
    
    
    
    
    
    1,214Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    25,686
    
    
    
    1,214
    
    
    
    
    
    
    
    
    
    
    
    26,900Exercise of slock options
    
    
    14
    
    
    
    728
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    742Stock compensation
    
    
    
    
    
    
    598
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    598Acquisition of Leeds Federal Savings Bank
    
    
    
    
    
    
    15,000
    
    
    
    36,688
    
    
    
    2,429
    
    
    
    
    
    
    
    
    
    
    
    54,117Dividends
paid ($0.32 per share)
    
    
    
    
    
    
    
    
    
    
    (3,923
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,923
    )Balance 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
    )Acquisition
of First Carnegie Deposit
    
    
    
    
    
    
    9,118
    
    
    
    10,818
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,936Common stock issued, net of issuance costs
    
    
    
    
    
    
    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
    )Recognition and retention plan, net
    
    
    27
    
    
    
    5,932
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,467
    )
    
    
    492Exercise of stock options
    
    
    18
    
    
    
    779
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    797Stock compensation
    
    
    
    
    
    
    1,238
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,238Dividends paid ($0.48 per share)
    
    
    
    
    
    
    
    
    
    
    (20,171
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20,171
    )Balance at June 30, 2005
    
    
    5,084
    
    
    
    210,804
    
    
    
    367,255
    
    
    
    4,514
    
    
    
    
    
    
    
    (5,467
    )
    
    
    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
    )Recognition
and retention plan, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    581
    
    
    
    581Exercise of stock options
    
    
    24
    
    
    
    1,710
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,734Stock compensation
    
    
    
    
    
    
    504
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    504Dividends
paid ($0.30 per share)
    
    
    
    
    
    
    
    
    
    
    (6,119
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,119
    )Balance at December 31 , 2005
    
    $
    5,108
    
    
    
    213,018
    
    
    
    389,985
    
    
    
    (384
    )
    
    
    (17,183
    )
    
    
    (4,886
    )
    
    
    585,658
  55




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
   Six-month
    
    
    Six-monthperiod ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    Years ended June 302005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2003(Unaudited)Operating activities:Net income
    
    $
    28,849
    
    
    
    26,914
    
    
    
    54,815
    
    
    
    42,132
    
    
    
    25,686Adjustments
to reconcile net income to net
cash provided by operating activitiesProvision for loan losses
    
    
    4,722
    
    
    
    4,003
    
    
    
    9,566
    
    
    
    6,860
    
    
    
    8,445Net gain on sales of assets
    
    
    (1,096
    )
    
    
    (159
    )
    
    
    (1,329
    )
    
    
    (6,530
    )
    
    
    (3,486
    )Net
depreciation, amortization, and accretion
    
    
    5,846
    
    
    
    5,287
    
    
    
    9,216
    
    
    
    12,530
    
    
    
    10,019Decrease/increase) in other assets
    
    
    (5,265
    )
    
    
    5,870
    
    
    
    6,752
    
    
    
    17,360
    
    
    
    1,418Decrease in other liabilities
    
    
    (1,543
    )
    
    
    (2,607
    )
    
    
    (3,168
    )
    
    
    (13,618
    )
    
    
    (2,482
    )Net amortization of discounts/premiums
on marketable securities
    
    
    1,243
    
    
    
    1,375
    
    
    
    2,787
    
    
    
    7,633
    
    
    
    987Noncash
compensation expense related
to stock benefit plans
    
    
    1,085
    
    
    
    528
    
    
    
    1,512
    
    
    
    534
    
    
    
    393Noncash writedown of investment securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    166
    
    
    
    Noncash goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,904
    
    
    
    16,771Origination of loans held for sale
    
    
    (85,937
    )
    
    
    (32,965
    )
    
    
    (78,314
    )
    
    
    (89,496
    )
    
    
    (232,139
    )Proceeds from loan sales
    
    
    86,245
    
    
    
    32,830
    
    
    
    78,214
    
    
    
    89,929
    
    
    
    233,868Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Net cash provided by operating
activities
    
    
    34,149
    
    
    
    41,076
    
    
    
    80,051
    
    
    
    75,404
    
    
    
    59,481Investing activities:Purchase of
marketable securities held-to-maturity
    
    
    
    
    
    
    (172,540
    )
    
    
    (172,540
    )
    
    
    (314,227
    )
    
    
    (478,871
    )Purchase of marketable securities
available-for-sale
    
    
    (31, 340
    )
    
    
    (180,164
    )
    
    
    (247,716
    )
    
    
    (631,218
    )
    
    
    (751,076
    )Proceeds from maturities and principal reductions
of marketable securities held-to-maturity
    
    
    67,777
    
    
    
    143,419
    
    
    
    215,900
    
    
    
    436,922
    
    
    
    422,231Proceeds from maturities and principal reductions
of marketable securities available-for-sale
    
    
    89,876
    
    
    
    176,781
    
    
    
    267,204
    
    
    
    697,042
    
    
    
    217,394Proceeds from sales of marketable securities
available-for-sale
    
    
    2,145
    
    
    
    12,770
    
    
    
    22,713
    
    
    
    307,736
    
    
    
    84,134Purchase of bank-owned life insurance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,000
    )Loan originations
    
    
    (770,459
    )
    
    
    (666,662
    )
    
    
    (1,351,294
    )
    
    
    (1,341,810
    )
    
    
    (1,084,860
    )Proceeds from loan maturities and principal
reductions
    
    
    584,023
    
    
    
    479,460
    
    
    
    997,290
    
    
    
    966,289
    
    
    
    1,000,429Redemption/(purchase) of Federal Home Loan
Bank stock
    
    
    301
    
    
    
    3,086
    
    
    
    5,829
    
    
    
    12,960
    
    
    
    (7,276
    )Proceeds from sale of real estate ownec
    
    
    5,430
    
    
    
    1,799
    
    
    
    6,749
    
    
    
    8,107
    
    
    
    5,317Sale/(purchase) of real estate owned for investment
    
    
    481
    
    
    
    175
    
    
    
    78
    
    
    
    (226
    )
    
    
    (87
    )Purchase of premises and equipment
    
    
    (4,960
    )
    
    
    (14,821
    )
    
    
    (20,373
    )
    
    
    (22,848
    )
    
    
    (11,425
    )Acquisitions, net of cash received
    
    
    (5,246
    )
    
    
    
    
    
    
    
    
    
    
    (21,910
    )
    
    
    167,223Net cash (used) provided by
investing activities
    
    
    (61,972
    )
    
    
    (216,697
    )
    
    
    (276,160
    )
    
    
    96,817
    
    
    
    (446,867
    )
 56




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
 Six-month
    
    
    Six-monthperiod ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    Years ended June 302005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2003(Unaudited)Financing activities:(Decrease) increase in deposits, net
    
    $
    (32,686
    )
    
    
    (4,039
    )
    
    
    (3,635
    )
    
    
    (177,807
    )
    
    
    560,802Proceeds
from long-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    180,000Repayments of long-term borrowings
    
    
    (5,173
    )
    
    
    (2,528
    )
    
    
    (35,056
    )
    
    
    (251,064
    )
    
    
    (40,776
    )Net increase
(decrease) in short-term borrowings
    
    
    7,446
    
    
    
    (7,035
    )
    
    
    (2,823
    )
    
    
    676
    
    
    
    12,056(Decrease)
increase in advances by borrowers
for taxes and insurance
    
    
    (7,086
    )
    
    
    (7,120
    )
    
    
    1,162
    
    
    
    2,994
    
    
    
    1,562Treasury stock repurchases
    
    
    (17,183
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from issuance of debentures
    
    
    103,094
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from stock offering, net of issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112,804
    
    
    
    Cash dividends paid
    
    
    (6,119
    )
    
    
    (11,677
    )
    
    
    (20,171
    )
    
    
    (9,963
    )
    
    
    (3,923
    )Proceeds from options exercised, including
tax benefit realized
    
    
    1,734
    
    
    
    402
    
    
    
    797
    
    
    
    1,031
    
    
    
    742Net cash provided (used) by
financing activities
    
    
    44,027
    
    
    
    (31,997
    )
    
    
    (59,726
    )
    
    
    (321,329
    )
    
    
    710,463Net increase (decrease) in cash and
cash equivalents
    
    
    16,204
    
    
    
    (207,618
    )
    
    
    (255,835
    )
    
    
    (149,108
    )
    
    
    323,077Cash and cash equivalents at beginning of year
    
    
    135,888
    
    
    
    391.723
    
    
    
    391,723
    
    
    
    540,831
    
    
    
    217,754Net increase
(decrease) in cash and cash equivalents
    
    
    16,204
    
    
    
    (207,618
    )
    
    
    (255,835
    )
    
    
    (149,108
    )
    
    
    323,077Cash and cash equivalents at end of year
    
    $
    152,092
    
    
    
    184,105
    
    
    
    135,888
    
    
    
    391,723
    
    
    
    540,831Cash paid during the year for:Interest on deposits and borrowings (including
interest credited to deposit accounts of $54,609,
$45,448, $94,106, $91,829, and $99,079,
respectively)
    
    $
    79,047
    
    
    
    67,141
    
    
    
    138,307
    
    
    
    131,909
    
    
    
    141,466Income taxes
    
    
    4,800
    
    
    
    13,206
    
    
    
    19,491
    
    
    
    7,459
    
    
    
    15,649Noncash activities:Business acquisitions:Fair value of assets acquired
    
    $
    84,957
    
    
    
    
    
    
    
    
    
    
    
    1,000,392
    
    
    
    473,007Net cash (paid) received
    
    
    (5,246
    )
    
    
    
    
    
    
    
    
    
    
    (21,910
    )
    
    
    167,223Liabilities assumed
    
    $
    79,711
    
    
    
    
    
    
    
    
    
    
    
    978,482
    
    
    
    640,230Loan foreclosures and repossessions
    
    $
    2,829
    
    
    
    5,015
    
    
    
    8,622
    
    
    
    4,647
    
    
    
    3,053Sale of real
estate owned financed by the Company
    
    
    773
    
    
    
    617
    
    
    
    1,113
    
    
    
    340
    
    
    
    815Forgiveness of loan to Northwest Bancorp, MHO
    
    
    
    
    
    
    
    
    
    
    12,000
    
    
    
    
    
    
    
    
  57




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
  
 (1)
    
    Summary of Significant Accounting Policies
 (a)
    
    Nature of Operations
     (b)
    
    Principles of Consolidation
  (c)
    
    Cash and Cash Equivalents
  58




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
 
  (d)
    
    Marketable Securities
   (e)
    
    Loans Receivable
    (f)
    
    Provision for LoanLosses
  59




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NORTHWEST BANCORP, INC, AND SUBSIDIARIES
 
      (g)
    
    Real Estate Owned
  (h)
    
    Premises and Equipment
  (i)
    
    Goodwill
 Goodwill and Other
Intangible Assets
 60




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    value, an impairment loss is recognized as a non-cash charge. Prior to the
Companys acquisition of Leeds and First Carnegie from Northwest
Bancorp, MHC,
Leeds recorded a goodwill impairment loss of $16,771,000 in fiscal year 2003
and First Carnegie 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 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. The policies were purchased to help offset the increase in the
costs of various fringe benefit plans including healthcare. 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.(I)
    
    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.
 (Continued) 61




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (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. No options were awarded during the six-month period ended December 31,
2005. 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.SFAS 123 (revised 2004) was adopted July 1, 2005 using the modified
retrospective transition method. The effect of the adoption of SFAS 123
(revised 2004) on income before income taxes for the six-month period ended
December 31, 2005, the six-month period ended December 31, 2004, and the fiscal
years ended June 30, 2005, 2004, and 2003 was $480,000, $528,000 (unaudited),
$1,000,000, $534,000, and $393,000, respectively. The effect of the adoption of
SFAS 123 (revised 2004) on net income for the six-month period ended December
31, 2005, the six-month period ended December 31, 2004, and the fiscal years
ended June 30, 2005, 2004, and 2003 was $459,000, $520,000 (unaudited),
$989,000, $518,000, and $377,000, respectively. The effect of the adoption of
SFAS 123 (revised 2004) on basic and diluted earnings per share was $0.01,
$0.01 (unaudited), $0.02, $0.01, and $0.01, respectively. Total compensation
expense for nonvested stock options of $2,500,000 has yet to be recognized as
of December 31, 2005. The weighted average period over which this remaining
amount will be recognized is approximately 2.25 years.Stock-based employee compensation expense related to the Companys recognition
and retention plan of $581,000 and $492,000 was included in income before
income taxes during the six-month period ended December 31, 2005 and the fiscal
year ended June 30, 2005. The effect on net income for the six months ended
December 31, 2005 and the year ended June 30, 2005 was a reduction of $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 $4,886,000 over the next four 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 2.5%; (2)
expected volatility of 24% to 33%; (3) risk-free interest rates ranging from
4.5% to 6.5%; and (4) expected lives of seven years.(p)
    
    Segment ReportingStatement of Financial Accounting Standard No. 131, Disclosures about
Segments of an Enterprise and Related Information,requires that public
business enterprises report financial and descriptive information about their
reportable operating segments. Based on the guidance provided by this
statement, the Company has identified two reportable segments, Community Banks
and Consumer Finance. See note 21 for related disclosures.
 (Continued) 62




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (q)
    
    Off-Balance-Sheet InstrumentsIn the normal course of business, the Company extends credit in the form
of loan commitments, undisbursed lines of credit, and standby letters of
credit. These off-balance-sheet instruments involve, to various degrees,
elements of credit and interest rate risk not reported in the consolidated
statement of financial condition.(r)
    
    Use of EstimatesThe preparation of financial statements, in conformity with accounting
principles generally accepted in the United States of America, requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amount of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.(s)
    
    Reclassification of Prior Years StatementsCertain items previously reported have been reclassified to conform with
the current years reporting format.
 (2)
    
    Business CombinationsOn August 31, 2003, the Company completed the acquisition of First Bell
Bancorp, Inc. and its subsidiary Bell Federal Savings and Loan Association of
Bellevue, both headquartered in Bellevue, Pennsylvania. The acquisition included
seven offices, assets of approximately $933.0 million, and deposits of approximately
$609.4 million. The cash acquisition amount of approximately $114.3 million created
intangible assets of approximately $66.4 million.On September 13, 2002, the Company completed the acquisition of Prestige Bancorp,
Inc. and its subsidiary Prestige Bank, both headquartered in Pleasant Hills,
Pennsylvania. The acquisition included four offices, assets of approximately $180.0
million, and deposits of approximately $122.0 million. The cash acquisition amount
of approximately $14.6 million created intangible assets of approximately $6.0
million.
 (Continued) 63




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (3)
    
    Marketable SecuritiesMarketable securities at December 31, 2005 are as follows:
 Gross
    
    
    Grossunrealized
    
    
    unrealizedAmortized
    
    
    holding
    
    
    holding
    
    
    Marketcost
    
    
    gains
    
    
    losses
    
    
    valueHeld-to-maturity:U.S. government and agencies: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
 (Continued) 64




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    Gross
    
    
    Grossunrealized
    
    
    unrealizedAmortized
    
    
    holding
    
    
    holding
    
    
    Marketcost
    
    
    gains
    
    
    losses
    
    
    valueAvailable-for-sale :U.S. government and agencies:Due in one year  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
 (Continued) 65




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Gross
    
    
    Grossunrealized
    
    
    unrealizedAmortized
    
    
    holding
    
    
    holding
    
    
    Marketcost
    
    
    gains
    
    
    losses
    
    
    valueHeld-to-maturity:U.S. government and agencies:Due in one year or less
    
    $
    20,000
    
    
    
    
    
    
    
    (95
    )
    
    
    19,905Due in one
year  five years
    
    
    72,530
    
    
    
    
    
    
    
    (319
    )
    
    
    72,211Due in five years  ten years
    
    
    73,413
    
    
    
    308
    
    
    
    (371
    )
    
    
    73,350Due after ten years
    
    
    18,398
    
    
    
    
    
    
    
    (126
    )
    
    
    18,272Municipal securities:Due in five years  ten years
    
    
    5,455
    
    
    
    73
    
    
    
    (2
    )
    
    
    5,526Due after ten years
    
    
    237,395
    
    
    
    4,051
    
    
    
    (265
    )
    
    
    241,181Corporate debt issues:Due after ten years
    
    
    40,112
    
    
    
    2,981
    
    
    
    (108
    )
    
    
    42,985Mortgage-backed securities:Fixed rate pass-through
    
    
    14,609
    
    
    
    213
    
    
    
    (31
    )
    
    
    14,791Variable rate pass-through
    
    
    140,473
    
    
    
    766
    
    
    
    (693
    )
    
    
    140,546Fixed rate CMO
    
    
    7,725
    
    
    
    
    
    
    
    (221
    )
    
    
    7,504Variable rate CMO
    
    
    72,869
    
    
    
    597
    
    
    
    (269
    )
    
    
    73,197Total
mortgage- backed securities
    
    
    235,676
    
    
    
    1,576
    
    
    
    (1,214
    )
    
    
    236,038Total
securities held-to-maturity
    
    $
    702,979
    
    
    
    8,989
    
    
    
    (2,500
    )
    
    
    709,468
 (Continued) 66




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    Gross
    
    
    Grossunrealized
    
    
    unrealizedAmortized
    
    
    holding
    
    
    holding
    
    
    Marketcost
    
    
    gains
    
    
    losses
    
    
    valueAvailable-for-sale:U.S. government and agencies:Due in one year  five years
    
    $
    30,787
    
    
    
    2
    
    
    
    (263
    )
    
    
    30,526Due in five years  ten years
    
    
    26,252
    
    
    
    38
    
    
    
    (161
    )
    
    
    26,129Due after ten years
    
    
    81,957
    
    
    
    91
    
    
    
    (146
    )
    
    
    81,902Equity securities and mutual funds
    
    
    91,002
    
    
    
    7,985
    
    
    
    (2,290
    )
    
    
    96,697Municipal securities:Due in five
years  ten years
    
    
    964
    
    
    
    17
    
    
    
    (3
    )
    
    
    978Due after ten years
    
    
    13,581
    
    
    
    157
    
    
    
    (74
    )
    
    
    13,664Corporate debt issues:Due in one year  five years
    
    
    1,027
    
    
    
    
    
    
    
    (59
    )
    
    
    968Due in five years  ten years
    
    
    28,500
    
    
    
    79
    
    
    
    (162
    )
    
    
    28,417Due after ten years
    
    
    11,418
    
    
    
    60
    
    
    
    (57
    )
    
    
    11,421Mortgage-backed securities:Fixed rate pass-through
    
    
    82,612
    
    
    
    799
    
    
    
    (258
    )
    
    
    83,153Variable rate pass-through
    
    
    172,263
    
    
    
    194
    
    
    
    (818
    )
    
    
    171,639Fixed rate CMO
    
    
    98,478
    
    
    
    173
    
    
    
    (1,459
    )
    
    
    97,192Variable rate CMO
    
    
    32,296
    
    
    
    244
    
    
    
    (43
    )
    
    
    32,497Total
mortgage - backed securities
    
    
    385,649
    
    
    
    1,410
    
    
    
    (2,578
    )
    
    
    384,481Total
securities available-for-sale
    
    $
    671,137
    
    
    
    9,839
    
    
    
    (5,793
    )
    
    
    675,183
 (Continued) 67




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    
 Gross
    
    
    Grossunrealized
    
    
    unrealizedAmortized
    
    
    holding
    
    
    holding
    
    
    Marketcost
    
    
    gains
    
    
    losses
    
    
    valueHeld-to-maturity:U.S. government and agencies:Due in one year  five years
    
    $
    12,518
    
    
    
    
    
    
    
    (1
    )
    
    
    12,517Due in five years  ten years
    
    
    39,982
    
    
    
    629
    
    
    
    (257
    )
    
    
    40,354Due after ten years
    
    
    714
    
    
    
    2
    
    
    
    (3
    )
    
    
    713Municipal securities:Due in five years  ten years
    
    
    2,568
    
    
    
    15
    
    
    
    
    
    
    
    2,583Due after ten years
    
    
    112,281
    
    
    
    1,148
    
    
    
    (2,257
    )
    
    
    111,172Corporate debt issues:Due after ten years
    
    
    41,178
    
    
    
    1,796
    
    
    
    (477
    )
    
    
    42,497Mortgage-backed securities:Fixed rate pass-through
    
    
    16,618
    
    
    
    197
    
    
    
    (71
    )
    
    
    16,744Variable rate pass-through
    
    
    198,497
    
    
    
    504
    
    
    
    (2,040
    )
    
    
    196,961Fixed rate CMO
    
    
    7,519
    
    
    
    
    
    
    
    (75
    )
    
    
    7,444Variable rate CMO
    
    
    169,667
    
    
    
    1,148
    
    
    
    (62
    )
    
    
    170,753Total
mortgage - backed securities
    
    
    392,301
    
    
    
    1,849
    
    
    
    (2,248
    )
    
    
    391,902Total
securities held-to-maturity
    
    $
    601,542
    
    
    
    5,439
    
    
    
    (5,243
    )
    
    
    601,738
 (Continued) 68




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    Gross
    
    
    Grossunrealized
    
    
    unrealizedAmortized
    
    
    holding
    
    
    holding
    
    
    Marketcost
    
    
    gains
    
    
    losses
    
    
    valueAvailable-for-sale:U.S. government and agencies:Due within one year
    
    $
    7,352
    
    
    
    
    
    
    
    (220
    )
    
    
    7,132Due in one year  five years
    
    
    18,290
    
    
    
    
    
    
    
    (506
    )
    
    
    17,784Due in five
years  ten years
    
    
    37,490
    
    
    
    204
    
    
    
    (164
    )
    
    
    37,530Due after ten years
    
    
    121,755
    
    
    
    164
    
    
    
    (2,844
    )
    
    
    119,075Equity securities and mutual funds
    
    
    87,099
    
    
    
    7,865
    
    
    
    (1,716
    )
    
    
    93,248Municipal securities:Due in five years  ten years
    
    
    915
    
    
    
    7
    
    
    
    (7
    )
    
    
    915Due after ten years
    
    
    143,887
    
    
    
    814
    
    
    
    (3,147
    )
    
    
    141,554Corporate debt issues:Due in one year or less
    
    
    3,018
    
    
    
    9
    
    
    
    
    
    
    
    3,027Due in one year  five years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Due in five years  ten years
    
    
    15,000
    
    
    
    80
    
    
    
    
    
    
    
    15,080Due after ten years
    
    
    9,423
    
    
    
    37
    
    
    
    (129
    )
    
    
    9,331Mortgage-backed securities:Fixed rate pass-through
    
    
    92,659
    
    
    
    767
    
    
    
    (1,320
    )
    
    
    92,106Variable rate pass-through
    
    
    87,486
    
    
    
    142
    
    
    
    (876
    )
    
    
    86,752Fixed rate CMO
    
    
    141,485
    
    
    
    280
    
    
    
    (3,899
    )
    
    
    137,866Variable rate CMO
    
    
    92,710
    
    
    
    1,603
    
    
    
    (34
    )
    
    
    94,279Total mortgage-backed securities
    
    
    414,340
    
    
    
    2,792
    
    
    
    (6,129
    )
    
    
    411,003Total securities
available-for-sale
    
    $
    858,569
    
    
    
    11,972
    
    
    
    (14,862
    )
    
    
    855,679
   69




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##### Table of Contents



NORTHWEST BANCORP, INC, AND SUBSIDIARIES
     December 31,
    
    
    June 302005
    
    
    2005
    
    
    2004Mortgage-backed securities:FNMA
    
    $
    188,448
    
    
    
    222,549
    
    
    
    402,469GNMA
    
    
    151,477
    
    
    
    179,795
    
    
    
    178,847FHLMC
    
    
    146,714
    
    
    
    184,717
    
    
    
    179,506Other (nonagency)
    
    
    27,177
    
    
    
    33,096
    
    
    
    42,482Total mortgage-backed
securities
    
    $
    513,816
    
    
    
    620,157
    
    
    
    803,304
   Less than 12 months
    
    
    12 months or more
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealizedvalue
    
    
    losses
    
    
    value
    
    
    losses
    
    
    value
    
    
    lossesU.S. government and agencies
    
    $
    48,011
    
    
    
    (878
    )
    
    
    195,910
    
    
    
    (2,009
    )
    
    
    243,921
    
    
    
    (2,887
    )Municipal securities
    
    
    27,628
    
    
    
    (631
    )
    
    
    3,919
    
    
    
    (80
    )
    
    
    31,547
    
    
    
    (711
    )Corporate issues
    
    
    38,305
    
    
    
    (618
    )
    
    
    87,799
    
    
    
    (4,075
    )
    
    
    126,104
    
    
    
    (4,693
    )Mortgage-backed securities
    
    
    213,137
    
    
    
    (3,029
    )
    
    
    168,748
    
    
    
    (4,477
    )
    
    
    381,885
    
    
    
    (7,506
    )Total temporarily
impaired securities
    
    $
    327,081
    
    
    
    (5,156
    )
    
    
    456,376
    
    
    
    (10,641
    )
    
    
    783,457
    
    
    
    (15,797
    )Percentage of total
    
    
    42
    %
    
    
    
    
    
    
    58
    %
    
    
    
    
    
    
    100
    %
   70




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (4)
    
    Loans Receivable
  December 31,
    
    
    June 302005
    
    
    2005
    
    
    2004Real estate loans:One-to-four family
    
    $
    2,805,900
    
    
    
    2,693,174
    
    
    
    2,615,328Multi-family and commercial
    
    
    594,503
    
    
    
    534,224
    
    
    
    454,606Total real estate loans
    
    
    3,400,403
    
    
    
    3,227,398
    
    
    
    3,069,934Consumer loans:Automobile
    
    
    144,519
    
    
    
    138,102
    
    
    
    120,887Home improvement
    
    
    780,451
    
    
    
    737,619
    
    
    
    588,192Education
    
    
    120,504
    
    
    
    112,462
    
    
    
    95,599Loans on savings accounts
    
    
    9,066
    
    
    
    8,500
    
    
    
    8,038Other
    
    
    106,390
    
    
    
    102,787
    
    
    
    112,163Total consumer loans
    
    
    1,160,930
    
    
    
    1,099,470
    
    
    
    924,879Commercial loans
    
    
    157,572
    
    
    
    142,391
    
    
    
    149,509Total loans receivable, gross
    
    
    4,718,905
    
    
    
    4,469,259
    
    
    
    4,144,322Deferred loan fees
    
    
    (3,877
    )
    
    
    (4,257
    )
    
    
    (6,630
    )Allowance for loan losses
    
    
    (33,411
    )
    
    
    (31,563
    )
    
    
    (30,670
    )Undisbursed loan proceeds (real estate loans)
    
    
    (59,348
    )
    
    
    (56,555
    )
    
    
    (53,081
    )Total loans receivable, net
    
    $
    4,622,269
    
    
    
    4,376,884
    
    
    
    4,053,941
      71




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     December 31,
    
    
    june 302005
    
    
    2005
    
    
    2004Loan commitments
    
    $
    22,322
    
    
    
    69,480
    
    
    
    151,426Undisbursed lines of credit
    
    
    266,455
    
    
    
    255,387
    
    
    
    220,262Standby letters of credit
    
    
    14,548
    
    
    
    14,205
    
    
    
    12,234$
    303,325
    
    
    
    339,072
    
    
    
    383,922
      72




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    Accounting by
Creditors for impairment of a Loan,
  (5)
    
    Accrued Interest Receivable
  December 31,
    
    
    June 302005
    
    
    2005
    
    
    2004Investment securities
    
    $
    5,807
    
    
    
    5,871
    
    
    
    5,299Mortgage-backed securities
    
    
    1,997
    
    
    
    2,218
    
    
    
    2,676Loans receivable
    
    
    17,249
    
    
    
    16,298
    
    
    
    14,603$
    25,053
    
    
    
    24,387
    
    
    
    22,578
 (6)
    
    Allowance for Loan Losses
  December 31,
    
    
    December 31,
    
    
    June 302005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2003(Unaudited)Balance, beginning of fiscal year
    
    $
    31,563
    
    
    
    30,670
    
    
    
    30,670
    
    
    
    27,166
    
    
    
    22,042Provision
    
    
    4,722
    
    
    
    4,003
    
    
    
    9,566
    
    
    
    6,860
    
    
    
    8,445Charge-offs
    
    
    (3,639
    )
    
    
    (5,349
    )
    
    
    (9,473
    )
    
    
    (5,750
    )
    
    
    (5,781
    )Acquisitions
    
    
    255
    
    
    
    
    
    
    
    
    
    
    
    1,330
    
    
    
    1,763Recoveries
    
    
    510
    
    
    
    304
    
    
    
    800
    
    
    
    1,064
    
    
    
    697Balance, end of fiscal year
    
    $
    33,411
    
    
    
    29,628
    
    
    
    31,563
    
    
    
    30,670
    
    
    
    27,166
   73




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     (7)
    
    Federal Home Loan Bank Stock
  (8)
    
    Premises and Equipment
  December 31,
    
    
    June 302005
    
    
    2005
    
    
    2004Land and land improvements
    
    $
    9,372
    
    
    
    9,362
    
    
    
    7,898Office buildings and improvements
    
    
    86,027
    
    
    
    83,982
    
    
    
    74,087Furniture, fixtures, and equipment
    
    
    63,796
    
    
    
    60,688
    
    
    
    51,956Leasehold improvements
    
    
    7,703
    
    
    
    7,283
    
    
    
    6,732Total, at cost
    
    
    166,898
    
    
    
    161,315
    
    
    
    140,673Less accumulated depreciation and
amortization
    
    
    69,917
    
    
    
    65,287
    
    
    
    58,256Premises and equipment, net
    
    $
    96,981
    
    
    
    96,028
    
    
    
    82,417
   2006
    
    $
    3,0412007
    
    
    2,5312008
    
    
    2,3282009
    
    
    2,1382010
    
    
    1,667Thereafter
    
    
    6,839$
    18,544
  74




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     (9)
    
    Goodwill and Other Intangible Assets
  December 31,
    
    
    June 302005
    
    
    2005
    
    
    2004Amortized intangible assets:Core deposit intangibles  gross
    
    $
    21,006
    
    
    
 21,006
    
    
    
 21,006Acquisition
of Equinox
    
    
    1,489
    
    
    
    
    
    
    
    Less accumulated amortization
    
    
    (11,560
    )
    
    
    (9,670
    )
    
    
    (5,507
    )Core deposit intangibles  net
    
    $
    10,935
    
    
    
    11,336
    
    
    
    15,499Customer contract intangible assets  gross
    
    $
    831
    
    
    
    831
    
    
    
    831Less accumulated amortization
    
    
    (289
    )
    
    
    (247
    )
    
    
    (164
    )Customer contract intangible
assets  net
    
    $
    542
    
    
    
    584
    
    
    
    667Noncompete intangible assets  gross
    
    $
    1,050
    
    
    
    1,050
    
    
    
    1,050Less accumulated amortization
    
    
    (1,050
    )
    
    
    (1,050
    )
    
    
    (787
    )Noncompete intangible assets  net
    
    $
    
    
    
    
    
    
    
    
    263
  For the fiscal year ended 6/30/03
    
    $
    701For the fiscal year ended 6/30/04
    
    
    4,706For the fiscal year ended 6/30/05
    
    
    4,509For the six-month period ended 12/31/04 (unaudited)
    
    
    2,458For the six-month period ended 12/31/05
    
    
    1,932For the fiscal year ended 12/31/06
    
    
    3,611For the fiscal year ended 12/31 /07
    
    
    2,957For the fiscal year ended 12/31/08
    
    
    2,276For the fiscal year ended 12/31/09
    
    
    1,377For the fiscal year ended 12/31/10
    
    
    732
  75




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
  Community
    
    
    Consumerbanks
    
    
    finance
    
    
    TotalBalance at June 30, 2003
    
    
    86,619
    
    
    
    893
    
    
    
    87,512Goodwill acquired
    
    
    62,051
    
    
    
    419
    
    
    
    62,470Amortization
    
    
    
    
    
    
    
    
    
    
    Impairment losses
    
    
    (7,904
    )
    
    
    
    
    
    
    (7,904
    )Balance at June 30,
2004
    
    
    140,766
    
    
    
    1,312
    
    
    
    142,078Goodwill acquired
    
    
    
    
    
    
    
    
    
    
    Amortization
    
    
    
    
    
    
    
    
    
    
    Impairment losses
    
    
    
    
    
    
    
    
    
    
    Balance 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
    
    
    
    150,485
 (10)
    
    Deposits
  December 31,
    
    
    June 302005
    
    
    2005
    
    
    2004Savings accounts
    
    $
    935,564
    
    
    
    1,049,606
    
    
    
    1,076,999Interest-bearing checking accounts
    
    
    668,235
    
    
    
    679,422
    
    
    
    666,193Noninterest-bearing checking accounts
    
    
    289,427
    
    
    
    264,746
    
    
    
    218,928Money market deposit accounts
    
    
    596,352
    
    
    
    631,685
    
    
    
    897,325Certificates of deposit
    
    
    2,738,901
    
    
    
    2,562,487
    
    
    
    2,332,176$
    5,228,479
    
    
    
    5,187,946
    
    
    
    5,191,621
   76




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
  December 31,
    
    
    June 302005
    
    
    2005
    
    
    2004Due within 12 months
    
    $
    1,506,235
    
    
    
    1,160,817
    
    
    
    1,189,234Due between 12 and 24 months
    
    
    764,783
    
    
    
    646,865
    
    
    
    547,293Due between 24 and 36 months
    
    
    301,377
    
    
    
    541,818
    
    
    
    329,049Due between 36 and 48 months
    
    
    71,767
    
    
    
    103,872
    
    
    
    142,048Due between 48 and 60 months
    
    
    65,803
    
    
    
    52,150
    
    
    
    85,656After 60 months
    
    
    28,936
    
    
    
    56,965
    
    
    
    38,896$
    2,738,901
    
    
    
    2,562,487
    
    
    
    2,332,176
  Six-month
    
    
    Six-monthperiod ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    Years ended June 302005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2003(Unaudited)Savings accounts
    
    $
    7,035
    
    
    
    7,325
    
    
    
    15,037
    
    
    
    13,923
    
    
    
    17,849Interest-bearing checking
accounts
    
    
    3,839
    
    
    
    2,357
    
    
    
    5,363
    
    
    
    5,302
    
    
    
    6,897Money market deposit accounts
    
    
    7,668
    
    
    
    7,167
    
    
    
    13,168
    
    
    
    14,786
    
    
    
    12,412Certificate accounts
    
    
    46,807
    
    
    
    36,477
    
    
    
    76,511
    
    
    
    72,317
    
    
    
    76,725$
    65,349
    
    
    
    53,326
    
    
    
    110,079
    
    
    
    106,328
    
    
    
    113,883
  77




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
 (11)
    
    Borrowed Funds
  December 31,
    
    
    June 302005
    
    
    2005
    
    
    2004Average
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageAmount
    
    
    rate
    
    
    Amount
    
    
    rate
    
    
    Amount
    
    
    rateTerm notes payable to the FHLB of Pittsburgh:Due within one year
    
    $
    
    %
    
    
    
    
    
    $
    
    %
    
    
    
    
    
    
    34,706
    %
    
    
    6.15Due between one and
two years
    
    
    35,000
    
    
    
    3.62
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Due between two and
three years
    
    
    109,369
    
    
    
    5.03
    
    
    
    43,396
    
    
    
    3.98
    
    
    
    
    
    
    
    Due between three and
four years
    
    
    35,675
    
    
    
    4.66
    
    
    
    101,058
    
    
    
    5.00
    
    
    
    43,546
    
    
    
    3.97Due between four and
five years
    
    
    36,627
    
    
    
    4.37
    
    
    
    37,406
    
    
    
    4.72
    
    
    
    101,076
    
    
    
    5.00Due between five
and ten years
    
    
    160,958
    
    
    
    4.81
    
    
    
    195,172
    
    
    
    4.72
    
    
    
    232,802
    
    
    
    4.72Due between ten and
twenty years
    
    
    
    
    
    
    
    
    
    
    814
    
    
    
    3.00
    
    
    
    851
    
    
    
    3.00377,629
    
    
    
    
    
    
    
    377,846
    
    
    
    
    
    
    
    412,981Revolving
line of credit, Federal Home Loan
Bank of Pittsburgh
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Investor notes payable,
due various dates through 2009
    
    
    5,702
    
    
    
    4.99
    
    
    
    5,919
    
    
    
    4.99
    
    
    
    6,264
    
    
    
    4.99Securities sold under agreement to repurchase, due
within one year
    
    
    34,025
    
    
    
    3.14
    
    
    
    26,579
    
    
    
    2.25
    
    
    
    29,902
    
    
    
    1.29Total borrowed funds
    
    $
    417,356
    
    
    
    
    
    
    $
    410,344
    
    
    
    
    
    
    $
    449,147
     78




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
 (12)
    
    Income Taxes
  Six-month
    
    
    Six-monthperiod ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    Years ended June 302005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2003(Unaudited)Income before income taxes
    
    $
    10,998
    
    
    
    11,374
    
    
    
    22,741
    
    
    
    19,829
    
    
    
    16,947Shareholders equity for unrealized
(loss)/gain on securities
available-for-sale
    
    
    (2,637
    )
    
    
    5,106
    
    
    
    3,525
    
    
    
    (6,403
    )
    
    
    1,962Shareholders equity for tax
benefit for excess of fair value
above cost of stock option and
recognition and retention
plans
    
    
    (691
    )
    
    
    
    
    
    
    (218
    )
    
    
    (816
    )
    
    
    (205
    )$
    7,670
    
    
    
    16,480
    
    
    
    26,048
    
    
    
    12,610
    
    
    
    18,704
  Six-monthSix-month
    
    
    period endedperiod ended
    
    
    December 31,December 31,
    
    
    2004
    
    
    Years ended June 302005
    
    
    (Unaudited)
    
    
    2005
    
    
    2004
    
    
    2003Current
    
    $
    7,896
    
    
    
    10,602
    
    
    
    12,276
    
    
    
    17,512
    
    
    
    15,045Deferred
    
    
    3,102
    
    
    
    772
    
    
    
    10,465
    
    
    
    2,317
    
    
    
    1,902$
    10,998
    
    
    
    11,374
    
    
    
    22,741
    
    
    
    19,829
    
    
    
    16,947
  79




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
  Six-month
    
    
    Six-monthperiod ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    Years ended June 302005
    

    

2004

    
    
    2005
    
    
    2004
    
    
    2003(Unaudited)Expected tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %Tax-exempt interest income
    
    
    (5.8
    )
    
    
    (6.1
    )
    
    
    (5.9
    )
    
    
    (6.5
    )
    
    
    (5.4
    )State income tax, net of federal
benefit
    
    
    2.5
    
    
    
    3.5
    
    
    
    3.0
    
    
    
    3.0
    
    
    
    2.5Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.4
    
    
    
    13.6Bank-owned life insurance
    
    
    (1.9
    )
    
    
    (2.0
    )
    
    
    (2.0
    )
    
    
    (2.0
    )
    
    
    (2.0
    )Other
    
    
    (2.2
    )
    
    
    (0.7
    )
    
    
    (1.1
    )
    
    
    (2.1
    )
    
    
    (4.3
    )Effective tax rate
    
    
    27.6
    %
    
    
    29.7
    %
    
    
    29.0
    %
    
    
    31.8
    %
    
    
    39.4
    %
  80




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     December 31,
    
    
    June 302005
    
    
    2005
    
    
    2004Deferred tax assets:Deferred fee income
    
    $
    449
    
    
    
    485
    
    
    
    609Deferred compensation expense
    
    
    1,497
    
    
    
    2,191
    
    
    
    2,671Net operating loss carryforwards
    
    
    2,721
    
    
    
    4,669
    
    
    
    7,449Bad debts
    
    
    10,550
    
    
    
    10,113
    
    
    
    9,319Accrued postretirement benefit cost
    
    
    394
    
    
    
    372
    
    
    
    367Stock benefit plans
    
    
    346
    
    
    
    
    
    
    
    Marketable securities avail able-for-sale
    
    
    207
    
    
    
    
    
    
    
    709Reserve for uncollected interest
    
    
    393
    
    
    
    333
    
    
    
    866Pension expense
    
    
    459
    
    
    
    218
    
    
    
    Purchase accounting
    
    
    
    
    
    
    
    
    
    
    449Alternative minimum tax credit
carryforward
    
    
    1,950
    
    
    
    1,950
    
    
    
    8,055Other
    
    
    267
    
    
    
    260
    
    
    
    49319,233
    
    
    
    20,591
    
    
    
    30,987Deferred tax liabilities:Marketable securities available-for-sale
    
    
    
    
    
    
    2,431
    
    
    
    Pension expense
    
    
    
    
    
    
    
    
    
    
    102Purchase accounting
    
    
    243
    
    
    
    255
    
    
    
    Intangible asset
    
    
    8,711
    
    
    
    8,417
    
    
    
    7,649Mortgage servicing rights
    
    
    1,175
    
    
    
    892
    
    
    
    844Fixed assets
    
    
    2,913
    
    
    
    2,005
    
    
    
    1,222Other
    
    
    418
    
    
    
    354
    
    
    
    73713,460
    
    
    
    14,354
    
    
    
    10,554Net deferred tax asset
    
    $
    5,773
    
    
    
    6,237
    
    
    
    20,433
    81




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (13) Shareholders Equity
   (14) Earnings Per Share
  Six-month
    
    
    Six-monthperiod ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    Years ended June 302005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2003(Unaudited)Net income available to common
shareholders
    
    $
    28,849
    
    
    
    26,914
    
    
    
    54,815
    
    
    
    42,132
    
    
    
    25,686Weighted average common shares outstanding
    
    
    50,850
    
    
    
    49,115
    
    
    
    49,901
    
    
    
    47,817
    
    
    
    47,626Common stock equivalents due to effect of stock
options
    
    
    314
    
    
    
    520
    
    
    
    467
    
    
    
    582
    
    
    
    531Total weighted
average common shares
and equivalents
    
    
    51,164
    
    
    
    49,635
    
    
    
    50,368
    
    
    
    48,399
    
    
    
    48,157Basic earnings per share
    
    $
    0.57
    
    
    
    0.55
    
    
    
    1.10
    
    
    
    0.88
    
    
    
    0.54Diluted earnings per share
    
    $
    0.56
    
    
    
    0.54
    
    
    
    1.09
    
    
    
    0.87
    
    
    
    0.53
  82




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (15) Employee
Benefit Plans
 (a) Pension Plans
     Six-month
    
    
    Six-monthperiod ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    Years ended June 302005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2003(Unaudited)Service cost
    
    $
    2,256
    
    
    
    1,876
    
    
    
    3,753
    
    
    
    3,324
    
    
    
    2,526Interest cost
    
    
    1,735
    
    
    
    1,552
    
    
    
    3,104
    
    
    
    2,656
    
    
    
    2,207Expected return obplan assets
    
    
    (1,663
    )
    
    
    (1,404
    )
    
    
    (2,810
    )
    
    
    (2,208
    )
    
    
    (1,910
    )Net amortization and deferral
    
    
    490
    
    
    
    350
    
    
    
    701
    
    
    
    811
    
    
    
    349Net periodic
pension cost
    
    $
    2,818
    
    
    
    2,374
    
    
    
    4,748
    
    
    
    4,583
    
    
    
    3,172
  83




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     December 31,
    
    
    June 302005
    
    
    2005
    
    
    2004Change in benefit obligation:Benefit obligation at beginning of period
    
    $
    61,701
    
    
    
    50,928
    
    
    
    43,628Service cost
    
    
    2,256
    
    
    
    3,753
    
    
    
    3,324Interest cost
    
    
    1,735
    
    
    
    3,147
    
    
    
    2,657Actuarial (gain) loss
    
    
    (2,972
    )
    
    
    5,040
    
    
    
    2,278Benefits paid
    
    
    (1,357
    )
    
    
    (1,167
    )
    
    
    (959
    )Benefit obligation at end of period
    
    $
    61,363
    
    
    
    61,701
    
    
    
    50,928Change in plan assets:Fair value of plan assets at beginning
of period
    
    $
    42,740
    
    
    
    36,310
    
    
    
    28,770Actual return on plan assets
    
    
    1,881
    
    
    
    2,337
    
    
    
    4,807Employer contribution
    
    
    2,192
    
    
    
    5,260
    
    
    
    3,692Benefits paid
    
    
    (1,357
    )
    
    
    (1,167
    )
    
    
    (959
    )Fair value of plan assets at end of period
    
    $
    45,456
    
    
    
    42,740
    
    
    
    36,310Funded status
    
    $
    (15,906
    )
    
    
    (18,961
    )
    
    
    (14,618
    )Unrecognized transition asset
    
    
    (77
    )
    
    
    (97
    )
    
    
    (137
    )Unrecognized prior service cost
    
    
    212
    
    
    
    251
    
    
    
    330Unrecognized net actuarial loss
    
    
    14,847
    
    
    
    18,509
    
    
    
    13,615Adjustment to recognize
minimum liability
    
    
    (461
    )
    
    
    (325
    )
    
    
    (138
    )Accrued benefit cost
    
    $
    (1,385
    )
    
    
    (623
    )
    
    
    (948
    )
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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Six-monthperiod endedDecember 31,
    
    Years ended June 302005
    
    2005
    
    2004
    
    2003Discount rate
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    6.25
    %
    
    
    6.25
    %Expected 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
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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Target
    
    December 31,
    
    June 30Asset category
    
    allocation
    
    2005
    
    2005
    
    2004Debt securities
    
    
    20-50
    %
    
    
    28
    %
    
    
    25
    %
    
    
    29
    %Equity securities Real estate
    
    
    30-60
    
    
    
    60
    
    
    
    56
    
    
    
    58Other
    
    
    5-50
    
    
    
    12
    
    
    
    19
    
    
    
    13Total
    
    
    
    
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  (b) Postretirement Healthcare Plan
 Employers Accounting for Postretirement Benefits Other than
Pensions
  Six-month
    
    
    Six-monthperiod ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    Years ended June 302005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2003(Unaudited)Service cost
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Interest
cost
    
    
    46
    
    
    
    50
    
    
    
    98
    
    
    
    91
    
    
    
    64Recognized actuarial gain
    
    
    17
    
    
    
    14
    
    
    
    29
    
    
    
    22
    
    
    
    2Net periodic
(benefit) cost
    
    $
    63
    
    
    
    64
    
    
    
    127
    
    
    
    113
    
    
    
    68
  86




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    The following table sets forth the funded status of the Companys postretirement healthcare
benefit plan and the amounts recognized in the Companys consolidated statements of financial
condition at December 31, 2005 and June 30, 2005 and 2004:
 December 31,
    
    
    June 302005
    
    
    2005
    
    
    2004Change in benefit obligation:Benefit obligation at beginning of year
    
    $
    1,675
    
    
    
    1,631
    
    
    
    1,507Service cost
    
    
    
    
    
    
    
    
    
    
    Interest cost
    
    
    46
    
    
    
    99
    
    
    
    91Actuarial (gain) loss
    
    
    (15
    )
    
    
    95
    
    
    
    131Benefits paid
    
    
    (64
    )
    
    
    (150
    )
    
    
    (98
    )Benefit obligation at end of year
    
    
    1,642
    
    
    
    1,675
    
    
    
    1,631Fair value of plan assets at end of year
    
    
    
    
    
    
    
    
    
    
    Funded status
    
    
    (1,642
    )
    
    
    (1,675
    )
    
    
    (1,631
    )Unrecognized net actuarial loss
    
    
    580
    
    
    
    612
    
    
    
    547Accrued benefit cost
    
    $
    (1,062
    )
    
    
    (1,063
    )
    
    
    (1,084
    )
 The assumptions used to develop the preceding information for postretirement healthcare
benefits are as follows:
 Six-monthperiod endedDecember 31,
    
    Years ended June 302005
    
    2005
    
    2004
    
    2003Discount rate
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    6.25
    %
    
    
    6.25
    %Monthly cost of
healthcare insurance per
beneficiary
    
    $
    233
    
    
    
    229
    
    
    
    222
    
    
    
    199Annual 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 $7,000, in the
aggregate, and the accumulated postretirement benefit obligation for healthcare benefits
would increase by $114,000.(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
 (Continued)
 
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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    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), $1,100,000, $871,000, and $1,123,000
for the six-month periods ended December 31, 2005 and 2004 and the fiscal years ended June
30, 2005, 2004, and 2003, 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, none of
which have vested as of December 31, 2005 (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 2,935, all of which
were forfeited during the six-month period ended December 31, 2005. 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 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.
 (Continued)
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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    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. 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.The following table summarizes the activity in the Companys Option Plans during
the periods ended December 31, 2005 and June 30, 2005, 2004, and 2003:
 December 31,
    
    June 302005
    
    2005
    
    2004
    
    2003Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    average
    
    
    
    
    
    average
    
    
    
    
    
    averageexercise
    
    
    
    
    
    exercise
    
    
    
    
    
    exercise
    
    
    
    
    
    exerciseNumber
    
    price
    
    Number
    
    price
    
    Number
    
    price
    
    Number
    
    priceBalance at beginning of
year
    
    
    1,303,806
    
    
    $
    15.13
    
    
    
    1,061,884
    
    
    $
    9.66
    
    
    
    1,182,656
    
    
    $
    7.74
    
    
    
    1,177,880
    
    
    $
    6.74Granted
    
    
    
    
    
    
    
    
    
    
    445,326
    
    
    
    24.20
    (a)
    182,000
    
    
    
    16.59
    (a)
    162,940
    
    
    
    13.30
    (a)ExercisedForfeited
    
    
    (282,461
    )
    
    
    6.34
    (b)
    (199,456
    )
    
    
    6.30
    (b)
(301,314
    )
    
    
    6.30
    (b)
    (156,792
    )
    
    
    5.94
    (b)(2,156
    )
    
    
    18.73
    
    
    
    (3,948
    )
    
    
    15.16
    
    
    
    (1,458
    )
    
    
    13.23
    
    
    
    (1,372
    )
    
    
    7.82Balance at end of
year
    
    
    1,019,189
    
    
    
    17.55
    
    
    
    1,303,806
    
    
    
    15.13
    
    
    
    1,061,884
    
    
    
    9.66
    
    
    
    1,182,656
    
    
    
    7.74Exercisable at end of
year
    
    
    559,180
    
    
    
    13.90
    
    
    
    694,821
    
    
    
    10.19
    
    
    
    729,068
    
    
    
    7.78
    
    
    
    902,983
    
    
    
    6.64
 
 (a)
    
    Weighted average fair value of options at grant date: $6.98, $4.03, and $3.76,
respectively.(b)
    
    The total intrinsic value of options exercised was $4,400,000, $3,300,000,
$4,900,000, and $1,400,000, respectively. (Continued)
 89




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    The aggregate intrinsic value of all options expected to vest and fully vested options at
December 31, 2005 is $3,800,000 and $4,100,000, 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$5.625
    
    $6.875
    
    $7.812
    
    $9.780
    
    $9.875
    
    $13.302
    
    $16.59
    
    $22.93
    
    $25.49
    
    $17.55Options
outstanding:Number
of options
    
    
    16,150
    
    
    
    7,500
    
    
    
    30,300
    
    
    
    191,237
    
    
    
    14,486
    
    
    
    145,580
    
    
    
    170,216
    
    
    
    224,092
    
    
    
    219,628
    
    
    
    1,019,189Weighted
average remaining
contract life
(years)
    
    
    0.25
    
    
    
    4.00
    
    
    
    3.75
    
    
    
    5.75
    
    
    
    3.00
    
    
    
    6.50
    
    
    
    7.50
    
    
    
    9.25
    
    
    
    9.00
    
    
    
    7.42Options
exercisable:Number
of options
    
    
    16,150
    
    
    
    7,500
    
    
    
    30,300
    
    
    
    191,237
    
    
    
    14,486
    
    
    
    113,410
    
    
    
    98,246
    
    
    
    
    
    
    
    87,851
    
    
    
    559,180Weighted
average remaining
term -vested
(years)
    
    
    0.25
    
    
    
    4.00
    
    
    
    3.75
    
    
    
    5.75
    
    
    
    3.00
    
    
    
    6.50
    
    
    
    7.50
    
    
    
    9.25
    
    
    
    9.00
    
    
    
    6.16
 (16)
    
    Disclosures About Fair Value of Financial InstrumentsSFAS No. 107, Disclosure about Fair Value of Financial Instruments(SFAS 107), requires
disclosure of fair value information about financial instruments whether or not recognized in
the consolidated statement of financial condition. SFAS 107 excludes certain financial
instruments and all nonfinancial instruments from its disclosure requirements. Accordingly,
the aggregate fair value amounts presented do not represent the underlying value of the
Company. The carrying amounts reported in the consolidated statement of financial condition
approximate fair value for the following financial instruments: cash on hand, interest-earning
deposits in other institutions, federal funds sold and other short-term investments, accrued
interest receivable, accrued interest payable, and marketable securities available-for-sale.
 (Continued)
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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    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, 2005 and June 30, 2005 and 2004:
 December 31,
    
    
    June 302005
    
    
    2005
    
    
    2004Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    Estimatedamount
    
    
    fair value
    
    
    amount
    
    
    fair value
    
    
    amount
    
    
    fair valueFinancial assets:Cash and equivalents
    
    $
    152,092
    
    
    
    152,092
    
    
    
    135,888
    
    
    
    135,888
    
    
    
    391,723
    
    
    
    391,723Securities available-for-sale
    
    
    613,836
    
    
    
    613,836
    
    
    
    675,183
    
    
    
    675,183
    
    
    
    855,679
    
    
    
    855,679Securities held-to-maturity
    
    
    634,258
    
    
    
    636,507
    
    
    
    702,979
    
    
    
    709,468
    
    
    
    601,542
    
    
    
    601,738Loans receivable, net
    
    
    4,622,269
    
    
    
    4,625,850
    
    
    
    4,376,884
    
    
    
    4,523,332
    
    
    
    4,053,941
    
    
    
    4,170,724Accrued interest receivable
    
    
    25,053
    
    
    
    25,053
    
    
    
    24,387
    
    
    
    24,387
    
    
    
    22,578
    
    
    
    22,578FHLB stock
    
    
    33,130
    
    
    
    33,130
    
    
    
    33,055
    
    
    
    33,055
    
    
    
    38,884
    
    
    
    38,884Total financial assets
    
    $
    6,080,638
    
    
    
    6,086,468
    
    
    
    5,948,376
    
    
    
    6,101,313
    
    
    
    5,964,347
    
    
    
    6,081,326Financial liabilities:Savings and checking accounts
    
    $
    2,489,578
    
    
    
    2,489,578
    
    
    
    2,625,459
    
    
    
    2,625,459
    
    
    
    2,859,445
    
    
    
    2,859,445Time deposits
    
    
    2,738,901
    
    
    
    2,752,580
    
    
    
    2,562,487
    
    
    
    2,590,090
    
    
    
    2,332,176
    
    
    
    2,367,329Borrowed funds
    
    
    417,356
    
    
    
    414,545
    
    
    
    410,344
    
    
    
    410,509
    
    
    
    449,147
    
    
    
    452,691Trust-preferred securities
    
    
    205,156
    
    
    
    207,138
    
    
    
    102,062
    
    
    
    104,493
    
    
    
    102,062
    
    
    
    102,959Accrued interest payable
    
    
    4,387
    
    
    
    4,387
    
    
    
    4,020
    
    
    
    4,020
    
    
    
    4,280
    
    
    
    4,280Total financial liabilities
    
    $
    5,855,378
    
    
    
    5,868,228
    
    
    
    5,704,372
    
    
    
    5,734,571
    
    
    
    5,747,110
    
    
    
    5,786,704
 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, 2005 and June 30, 2005 and 2004.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.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
 (Continued)
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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    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 fixed rate trust-preferred securities is based on the closing trade
price on the last day of the fiscal year. The variable rate 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, 2005 and
June 30, 2005 and 2004, 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, 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
 (Continued)
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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    available for dividend payments by Northwest to the Company, while maintaining its well
capitalized status, is approximately $196.0 million.As of June 15, 2005, 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.The actual, required, and well capitalized levels as of December 31, 2005 and June 30, 2005 and
2004 are as follows (in thousands):
 December 31, 2005Minimum capital
    
    Well capitalizedActual
    
    requirements
    
    requirementsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal capital (to risk
weighted assets):Northwest
Savings Bank
    
    $
    562,559
    
    
    
    15.34
    %
    
    $
    293,334
    
    
    
    8.00
    %
    
    $
    366,667
    
    
    
    10.00
    %Tier I capital (to risk
weighted assets):Northwest Savings
Bank
    
    
    526,976
    
    
    
    14.37
    
    
    
    146,667
    
    
    
    4.00
    
    
    
    220,000
    
    
    
    6.00Tier I capital (leverage)
(to average assets):Northwest Savings
Bank
    
    
    526,976
    
    
    
    8.39
    
    
    
    188,438
    
    
    
    3.00
    
    
    
    314,063
    
    
    
    5.00
 June 30, 2005Minimum capital
    
    Well capitalizedActual
    
    requirements
    
    requirementsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal capital (to risk
weighted assets):Northwest Savings
Bank
    
    $
    542,739
    
    
    
    15.53
    %
    
    $
    279,538
    
    
    
    8.00
    %
    
    $
    349,423
    
    
    
    10.00
    %Tier I capital (to risk
weighted assets):Northwest Savings
Bank
    
    
    508,629
    
    
    
    14.56
    
    
    
    139,769
    
    
    
    4.00
    
    
    
    209,654
    
    
    
    6.00Tier I capital (leverage)
(to average assets):Northwest Savings
Bank
    
    
    508,629
    
    
    
    8.36
    
    
    
    182,503
    
    
    
    3.00
    *
    
    
    304,171
    
    
    
    5.00
 (Continued)
 93




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    June 30, 2004Minimum capital
    
    Well capitalizedActual
 
    requirements
    
    requirementsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal capital (to risk
weighted assets):Northwest Savings
Bank
    
    $
    430,831
    
    
    
    15.02
    %
    
    $
    229,505
    
    
    
    8.00
    %
    
    $
    286,881
    
    
    
    10.00
    %Tier I capital (to risk
weighted assets):Northwest Savings
Bank
    
    
    402,290
    
    
    
    14.02
    
    
    
    114,752
    
    
    
    4.00
    
    
    
    172,129
    
    
    
    6.00Tier I capital (leverage)
(to average assets):Northwest Savings
Bank
    
    
    402,290
    
    
    
    7.56
    
    
    
    159,709
    
    
    
    3.00
    *
    
    
    266,182
    
    
    
    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, 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.
 (Continued)
 94




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (19)
    
    Components of Comprehensive IncomeFor the six-month periods ended December 31, 2005 and 2004 and the years ended June 30, 2005,
2004, and 2003:
 December 31,
    
    
    December 31,
    
    
    June 302005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2003(unaudited)Unrealized (loss) gain on
marketable securities
available-for-sale
    
    $
    (7,535
    )
    
    
    14,588
    
    
    
    10,072
    
    
    
    (15,526
    )
    
    
    2,568Tax benefit (expense)
    
    
    2,637
    
    
    
    (5,106
    )
    
    
    (3,789
    )
    
    
    5,434
    
    
    
    (899
    )Reclassification adjustment for
losses (gains) included in net
income, net of tax of $0, $0,
$(142), $970, and
$245, respectively
    
    
    
    
    
    
    
    
    
    
    264
    
    
    
    (1,800
    )
    
    
    (455
    )Net unrealized (loss) gain
    
    $
    (4,898
    )
    
    
    9,482
    
    
    
    6,547
    
    
    
    (11,892
    )
    
    
    1,214
 (20)
    
    Northwest Bancorp, Inc. (Parent Company Only)
  December 31,
    
    
    June 302005
    
    
    2005
    
    
    2004AssetsCash and cash equivalents
    
    $
    91,713
    
    
    
    10,092
    
    
    
    10,542Marketable securities available-for-sale
    
    
    102
    
    
    
    104
    
    
    
    1,116Investment in bank subsidiaries
    
    
    689,002
    
    
    
    667,373
    
    
    
    610,241Loan receivable  Northwest Bancorp, MHC
    
    
    
    
    
    
    
    
    
    
    22,000Goodwill
    
    
    
    
    
    
    
    
    
    
    2,138Other assets
    
    
    10,268
    
    
    
    6,907
    
    
    
    7,006Total assets
    
    $
    791,085
    
    
    
    684,476
    
    
    
    653,043Liabilities and Shareholders EquityLiabilities:Debentures payable
    
    $
    205,156
    
    
    
    102,062
    
    
    
    102,062Other liabilities
    
    
    271
    
    
    
    224
    
    
    
    509Total liabilities
    
    
    205,427
    
    
    
    102,286
    
    
    
    102,571Shareholders equity
    
    
    585,658
    
    
    
    582,190
    
    
    
    550,472Total liabilities and
shareholders equity
    
    $
    791,085
    
    
    
    684,476
    
    
    
    653,043
 (Continued)
 95




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Six-month
    
    
    Six-monthperiod ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    Years ended June 302005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2003(unaudited)Income:Interest income
    
    $
    259
    
    
    
    571
    
    
    
    823
    
    
    
    1,366
    
    
    
    2,042Dividends from bank subsidiary
    
    
    19,000
    
    
    
    8,000
    
    
    
    16,000
    
    
    
    
    
    
    
    Undistributed earnings from equity
investment in bank subsidiaries
    
    
    12,890
    
    
    
    22,023
    
    
    
    44,449
    
    
    
    47,103
    
    
    
    29,773Gain on sale of marketable
securities
available-for-sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69
    
    
    
    Other income
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    2
    
    
    
    9Total income
    
    
    32,149
    
    
    
    30,594
    
    
    
    61,275
    
    
    
    48,540
    
    
    
    31,824Expense:Compensation and benefits
    
    
    160
    
    
    
    684
    
    
    
    804
    
    
    
    318
    
    
    
    272Amortization of intangible assets
    
    
    
    
    
    
    262
    
    
    
    262
    
    
    
    788
    
    
    
    Other expense
    
    
    155
    
    
    
    189
    
    
    
    364
    
    
    
    292
    
    
    
    319Interest expense
    
    
    4,622
    
    
    
    3,964
    
    
    
    8,079
    
    
    
    7,714
    
    
    
    7,845Total expense
    
    
    4,937
    
    
    
    5,099
    
    
    
    9,509
    
    
    
    9,112
    
    
    
    8,436Net income before
taxes
    
    
    27,212
    
    
    
    25,495
    
    
    
    51,766
    
    
    
    39,428
    
    
    
    23,388Federal and state income taxes
    
    
    (1,637
    )
    
    
    (1,419
    )
    
    
    (3,049
    )
    
    
    (2,704
    )
    
    
    (2,298
    )Net income
    
    $
    28,849
    
    
    
    26,914
    
    
    
    54,815
    
    
    
    42,132
    
    
    
    25,686
 (Continued)
 96




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##### Table of Contents



NORTHWEST BANCORP, INC. AND SUBSIDIARIES
     Six-month
    
    
    Six-monthperiod ended
    
    
    period endedDecember 31,
    
    
    December 31,
    
    
    Years ended June 302005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2003(unaudited)Operating activities:Net income
    
    $
    28,849
    
    
    
    26,914
    
    
    
    54,815
    
    
    
    42,132
    
    
    
    25,686Adjustments to reconcile net income to net
cash provided (used) by operating
activities:Undistributed earnings of subsidiaries
    
    
    (12,890
    )
    
    
    (22,023
    )
    
    
    (44,449
    )
    
    
    (47,103
    )
    
    
    (29,773
    )Depreciation and amortization
    
    
    
    
    
    
    262
    
    
    
    262
    
    
    
    788
    
    
    
    Noncash compensation expense
related to stock benefit plans
    
    
    1,085
    
    
    
    528
    
    
    
    1,512
    
    
    
    534
    
    
    
    393Gain on sale of marketable securities
available-for-sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (69
    )
    
    
    Net change in other assets and
liabilities
    
    
    (5,756
    )
    
    
    292
    
    
    
    (1,216
    )
    
    
    502
    
    
    
    (1,538
    )Net cash (used in) provided by
operating activities
    
    
    11,288
    
    
    
    5,973
    
    
    
    10,924
    
    
    
    (3,216
    )
    
    
    (5,232
    )Investing activities:Additional investment in subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,000
    )
    
    
    (3,000
    )Loan to Northwest Bancorp, MHC
    
    
    
    
    
    
    
    
    
    
    10,000
    
    
    
    (10,000
    )
    
    
    (12,000
    )Proceeds from sale or maturity of
marketable securities available-for-sale
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    1,169
    
    
    
    1,932Acquisitions, net of cash received
    
    
    (11,193
    )
    
    
    
    
    
    
    (3,000
    )
    
    
    (122,673
    )
    
    
    Net cash (used in) provided by
investing activities
    
    
    (11,193
    )
    
    
    
    
    
    
    8,000
    
    
    
    (132,504
    )
    
    
    (13,068
    )Financing activities:Cash dividends paid
    
    
    (6,119
    )
    
    
    (11,677
    )
    
    
    (20,171
    )
    
    
    (9,963
    )
    
    
    (3,923
    )Treasury stock repurchases
    
    
    (17,183
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from stock offering, net of
issuance costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    112,804
    
    
    
    Proceeds from trust preferred stock
offering
    
    
    103,094
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from options exercised
    
    
    1,734
    
    
    
    402
    
    
    
    797
    
    
    
    1,031
    
    
    
    742Net cash provided (used) by
financing activities
    
    
    81,526
    
    
    
    (11,275
    )
    
    
    (19,374
    )
    
    
    103,872
    
    
    
    (3,181
    )Net increase (decrease) in cash
and cash equivalents
    
    $
    81,621
    
    
    
    (5,302
    )
    
    
    (450
    )
    
    
    (31,848
    )
    
    
    (21,481
    )Cash and cash equivalents at beginning
of year
    
    $
    10,092
    
    
    
    10,542
    
    
    
    10,542
    
    
    
    42,390
    
    
    
    63,871Net increase (decrease) in cash and
cash equivalents
    
    
    81,621
    
    
    
    (5,302
    )
    
    
    (450
    )
    
    
    (31,848
    )
    
    
    (21,481
    )Cash and cash equivalents at end of year
    
    $
    91,713
    
    
    
    5,240
    
    
    
    10,092
    
    
    
    10,542
    
    
    
    42,390
  97




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (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
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
fifty 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 six-month period
    
    Community
    
    
    Consumer
    
    
    Allended December 31, 2005
    
    banks
    
    
    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
  98




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    At or for the six-month periodended December 31, 2004
    
    Community
    
    
    Consumer
    
    
    All(Unaudited)
    
    banks
    
    
    finance
    
    
    other*
    
    
    ConsolidatedExternal interest income
    
    $
    148,554
    
    
    
    8,646
    
    
    
    401
    
    
    
    157,601Intersegment interest income
    
    
    2,502
    
    
    
    
    
    
    
    (2,502
    )
    
    
    Interest expense
    
    
    63,316
    
    
    
    2,657
    
    
    
    1,409
    
    
    
    67,382Provision for loan losses
    
    
    2,610
    
    
    
    1,393
    
    
    
    
    
    
    
    4,003Noninterest income
    
    
    13,853
    
    
    
    1,139
    
    
    
    119
    
    
    
    15,111Noninterest expense
    
    
    58,656
    
    
    
    3,775
    
    
    
    608
    
    
    
    63,039Income tax expense (benefit)
    
    
    11,968
    
    
    
    815
    
    
    
    (1,409
    )
    
    
    11,374Net income
    
    
    28,359
    
    
    
    1,145
    
    
    
    (2,590
    )
    
    
    26,914Total assets
    
    
    6,285,780
    
    
    
    124,432
    
    
    
    (77,040
    )
    
    
    6,333,172
 At or for the fiscal year ended
    
    Community
    
    
    Consumer
    
    
    AllJune 30, 2005
    
    banks
    
    
    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
  99




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    At or for the fiscal year ended
    
    Community
    
    
    Consumer
    
    
    AllJune 30, 2004
    
    banks
    
    
    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
 At or for the fiscal year ended
    
    Community
    
    
    Consumer
    
    
    AllJune 30, 2003
    
    banks
    
    
    finance
    
    
    other*
    
    
    ConsolidatedExternal interest income
    
    $
    264,235
    
    
    
    17,858
    
    
    
    431
    
    
    
    282,524Intersegment interest income
    
    
    5,278
    
    
    
    
    
    
    
    (5,278
    )
    
    
    Interest expense
    
    
    135,362
    
    
    
    5,705
    
    
    
    947
    
    
    
    142,014Provision for loan losses
    
    
    5,874
    
    
    
    2,571
    
    
    
    
    
    
    
    8,445Noninterest income
    
    
    25,918
    
    
    
    1,110
    
    
    
    
    
    
    
    27,028Noninterest expense
    
    
    108,299
    
    
    
    7,570
    
    
    
    591
    
    
    
    116,460Income tax expense (benefit)
    
    
    17,949
    
    
    
    1,296
    
    
    
    (2,298
    )
    
    
    16,947Net income
    
    
    27,947
    
    
    
    1,826
    
    
    
    (4,087
    )
    
    
    25,686Total assets
    
    
    5,537,746
    
    
    
    123,747
    
    
    
    20,202
    
    
    
    5,681,695
 
 *
    
    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 four Delaware statutory business trusts: Northwest Capital Trust I, Northwest
Bancorp Statutory Trust I, Northwest Bancorp Statutory Trust III, and Northwest Bancorp
Statutory Trust IV (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 Capital Trust I issued 2,760,000 of 8.75% Cumulative Trust
Preferred Securities through a public offering on November 30, 2001 (liquidation value of $25
per
  100




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
          101




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
      
    
    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.
    102




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NORTHWEST BANCORP, INC. AND SUBSIDIARIES
    (23)
    
    Selected Quarterly Financial Data (Unaudited)
 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
 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
  103




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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 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
 (24)
    
    Subsequent EventOn February 15, 2006, the Company sold approximately
$365.0 million of one-to-four
family first mortgage loans. The loans had an average interest rate of 5.75% and an average
remaining term of 27 years. The Company recorded an after-tax gain of less than $50,000
related to this loan sale. The Company recorded a mortgage servicing asset of approximately
$4.2 million.
 104




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
  ,
  
 ITEM 9B. OTHER INFORMATION
  PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIALOWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
   105




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##### Table of Contents



Number of securities to be issued
    
    
    
    
    
    
    Number of securitiesEquity compensation plans
    
    upon exercise of outstanding
    
    
    Weighted average
    
    
    remaining available forapproved by stockholders
    
    options and rights
    
    
    exercise price
    
    
    issuance under plan1995 Stock Option Plan
    
    
    68,436
    
    
    $
    7.63
    
    
    
    -0-2000 Stock Option Plan
    
    
    726,661
    
    
    $
    16.83
    
    
    
    -0-2004 Stock Option Plan
    
    
    224,092
    
    
    $
    22.93
    
    
    
    501,006Total
    
    
    1,019,189
    
    
    $
    17.55
    
    
    
    501,006
 
 ITEM
13. CERTAIN RELATIONSHIPSAND RELATED TRANSACTIONS
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)(l) 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, 2005, June 30, 2005 and 2004(E)
    
    Consolidated Statements of Income  Six months ended December
31, 2005 and 2004 (unaudited) and years ended June 30, 2005, 2004 and 2003(F)
    
    Consolidated Statements of Changes in Shareholders
Equity 
Six months ended December 31, 2005 and 2004 (unaudited) and years ended June 30, 2005, 2004 and 2003(G)
    
    Consolidated Statements of Cash Flows  Six months ended
December 31, 2005 and 2004 (unaudited) and years ended June 30, 2005, 2004 and 2003(H)
    
    Notes to Consolidated Financial Statements.
 (a)(2) Financial Statement Schedules
  (a)(3) Exhibits
 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
    
    ***
 106




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Regulation
    
    
    
    Reference to Prior FilingS-K Exhibit
    
    
    
    or Exhibit NumberNumber
    
    Document
    
    Attached Hereto4
    

    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
    
    ****11
    
    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
    
    31.131.2
    
    Certification pursuant to Rule 13a-14 of
the Securities Exchange Act of 1934, as
Amended, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
    
    31.2
 107




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##### Table of Contents



Regulation
    
    
    
    Reference to Prior FilingS-K Exhibit
    
    
    
    or Exhibit NumberNumber
    
    Document
    
    Attached Hereto32
    
    Certification
pursuant to 18 U.S.C.
Section 1350, as adopted
pursuant to Section 906
of the Sarbanes-Oxley
Act of 2002
    
    32
 
 *
    
    Incorporated by reference to the Companys Registration Statement on Form S-4 (File No.
333-31687), originally filed with the SEC on July 21, 1997, as amended on October 9, 1997 and November
4, 1997.**
    
    This document has been filed with the Securities and Exchange Commission on September 30, 2002.***
    
    Incorporated by reference to the Definitive Proxy Statement for the 2000 Annual Meeting of
Shareholders (File No. 000-23817), filed with the SEC on November 21, 2000.****
    
    Incorporated by reference to the Definitive Proxy Statement for the 2004 Annual Meeting of
Shareholders (File No. 000-23817), filed with the SEC on
October 6, 2004. 108




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SIGNATURES
  NORTHWEST BANCORP, INC.Date:
    
    March 15, 2006
    
    By:
    
    /s/ William J. WagnerWilliam J. Wagner, Chairman, Presidentand Chief Executive Officer(Principal Executive Officer)
  By:
    
    /s/ William J. Wagner
    
    By:
    
    /s/ William W. Harvey, Jr.William J. Wagner, Chairman, President,
Chief Executive Officer and Director
    
    
    
    William W. Harvey, Jr., Senior Vice
President, Finance (Principal
Financial and Accounting Officer)Date:
    
    March 15, 2006
    
    
    
    Date:
    
    March 15, 2006By:
    
    /s/ John M. Bauer
    
    By:
    
    /s/ Richard L. CarrJohn M. Bauer, Director
    
    
    
    Richard L. Carr, DirectorDate:
    
    March 15, 2006
    
    
    
    Date:
    
    March 15, 2006By:
    
    /s/ Richard E. McDowell
    
    By:
    
    /s/ Thomas K. CrealRichard E. McDowell, Director
    
    
    
    Thomas K. Creal, III, DirectorDate:
    
    March 15, 2006
    
    
    
    Date:
    
    March 15, 2006By:
    
    /s/ Joseph F. Long
    
    By:
    
    /s/ A. Paul KingJoseph F. Long, Director
    
    
    
    A. Paul King, DirectorDate:
    
    March 15, 2006
    
    
    
    Date:
    
    March 15, 2006By:
    
    /s/ Robert G. FerrierRobert G. Ferrier, DirectorDate:
    
    March 15, 2006
 109