NORTHWEST BANCORP INC - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


þ		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the quarterly period ended December 31, 2004


o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the transition period from to

Commission File Number 0-23817

Northwest Bancorp, Inc.

(Exact name of registrant as specified in its charter)


United States of America		23-2900888

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

301 Second Avenue, Warren, Pennsylvania		16365

(Address of principal executive offices)		(Zip Code)

(814) 726-2140

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ Noo

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).Yes þ Noo

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock ($.10 par value) 50,499,744 shares outstanding as of January 31, 2005

ITEM 1. FINANCIAL STATEMENTS

NORTHWEST BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(in thousands, except share data)


	December 31,			June 30,
	2004			2004
Assets
Cash and cash equivalents	$	69,027			57,466
Interest-earning deposits in other financial institutions		95,208			174,199
Federal funds sold and other short-term investments		19,870			160,058
Marketable securities available-for-sale (amortized cost of $717,561 and $858,569)		725,858			855,679
Marketable securities held-to-maturity (market value of $786,866 and $601,738)		776,437			601,542

Total cash, interest-earning deposits and marketable securities		1,686,400			1,848,944

Mortgage loans - one- to four- family		2,599,455			2,563,251
Commercial real estate loans		484,949			446,675
Consumer loans		1,004,221			924,786
Commercial business loans		146,069			149,899

Total loans receivable		4,234,694			4,084,611
Allowance for loan losses		(29,628	)		(30,670	)

Loans receivable, net		4,205,066			4,053,941

Federal Home Loan Bank stock, at cost		35,798			38,884
Accrued interest receivable		22,809			22,578
Real estate owned, net		7,274			3,951
Premises and equipment, net		93,753			82,417
Bank owned life insurance		102,433			100,090
Goodwill		142,078			142,078
Other intangible assets		13,971			16,429
Other assets		23,590			33,936

Total assets	$	6,333,172		$	6,343,248

Liabilities and Shareholders’ equity
Liabilities:
Noninterest-bearing demand deposits		245,230			220,667
Interest-bearing demand deposits		652,719			668,475
Savings deposits		1,838,178			1,970,303
Time deposits		2,451,415			2,332,176

Total deposits		5,187,542			5,191,621

Borrowed funds		439,236			449,147
Advances by borrowers for taxes and insurance		22,487			29,607
Accrued interest payable		4,071			4,280
Other liabilities		13,661			16,059
Junior subordinated deferrable interest debentures held by trusts that issued guaranteed capital debt securities		102,062			102,062

Total liabilities		5,769,059			5,792,776

Shareholders’ equity:
Preferred stock, $.10 par value: 10,000,000 authorized, no shares issued		—			—
Common stock, $.10 par value: 100,000,000 shares authorized, 50,485,654 and 47,960,287 issued and outstanding, respectively		5,049			4,796
Paid-in capital		199,924			211,545
Retained earnings		351,691			336,164
Accumulated other comprehensive income:
Net unrealized gain on securities available-for-sale, net of income taxes		7,449			(2,033	)

		564,113			550,472

Total liabilities and shareholders’ equity	$	6,333,172			6,343,248

See accompanying notes to unaudited consolidated financial statements

NORTHWEST BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)


	Three months ended					Six months ended
	December 31,					December 31,
	2004			2003		2004			2003
Interest income:
Loans receivable	$	64,571			61,262	$	127,998			119,929
Mortgage-backed securities		6,590			7,276		13,286			12,327
Taxable investment securities		3,926			4,391		7,688			7,883
Tax-free investment securities		3,070			3,112		6,162			5,922
Interest-earning deposits		1,311			745		2,467			1,843

Total interest income		79,468			76,786		157,601			147,904

Interest expense:
Deposits		27,049			26,900		53,326			55,065
Borrowed funds		7,033			7,084		14,056			14,274

Total interest expense		34,082			33,984		67,382			69,339

Net interest income		45,386			42,802		90,219			78,565
Provision for loan losses		2,164			1,733		4,003			3,478

Net interest income after provision for loan losses		43,222			41,069		86,216			75,087

Noninterest income:
Service charges and fees		4,044			3,530		8,022			6,874
Trust and other financial services income		1,057			941		2,112			1,849
Insurance commission income		557			192		1,021			359
Gain on sale of marketable securities, net		12			583		142			3,897
Gain (loss) on sale of loans, net		(56	)		115		(135	)		401
Gain on sale of real estate owned, net		127			507		152			1,060
Income from bank owned life insurance		1,095			1,152		2,240			2,148
Other operating income		665			464		1,557			850

Total noninterest income		7,501			7,484		15,111			17,438

Noninterest expense:
Compensation and employee benefits		17,976			17,086		35,009			31,789
Premises and occupancy costs		4,187			3,916		8,318			7,635
Office operations		2,984			2,888		5,677			5,445
Processing expenses		2,576			2,346		5,022			4,576
Advertising		1,083			599		1,701			1,172
Amortization of other intangible assets		1,075			1,705		2,458			1,884
Other expenses		2,292			2,139		4,326			3,825

Total noninterest expense		32,173			30,679		62,511			56,326


Income before income taxes		18,550			17,874		38,816			36,199

Federal and state income taxes		5,384			5,128		11,382			10,601


Net income	$	13,166		$	12,746	$	27,434			25,598


Basic earnings per share	$	0.26		$	0.27	$	0.56			0.54


Diluted earnings per share	$	0.26		$	0.26	$	0.55			0.53

See accompanying notes to unaudited consolidated financial statements

NORTHWEST BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands)


										Accum.
										Other		Total
	Common Stock				Paid-in		Retained			Comprehensive		Shareholders’
Three months ended December 31, 2003	Shares		Amount		Capital		Earnings			Income		Equity
Beginning balance at September 30, 2003		47,723,227	$	4,772		200,757		304,278			5,687	$	515,494

Comprehensive income:
Net income		—		—		—		12,746			—		12,746
Change in unrealized gain on securities, net of tax and reclassification adjustment		—		—		—		—			2,922		2,922

Total comprehensive income		—		—		—		12,746			2,922		15,668

Exercise of stock options		65,723		7		218		—			—		225

Dividends paid ($0.10 per share)		—		—		—		(1,965	)		—		(1,965	)


Ending balance at December 31, 2003		47,788,950	$	4,779		200,975		315,059			8,609	$	529,422


										Accum.
										Other		Total
	Common Stock				Paid-in		Retained			Comprehensive		Shareholders’
Three months ended December 31, 2004	Shares		Amount		Capital		Earnings			Income		Equity
Beginning balance at September 30, 2004		49,330,191	$	4,933		199,569		344,676			6,616	$	555,794

Comprehensive income:
Net income		—		—		—		13,166			—		13,166
Change in unrealized gain on securities, net of tax and reclassification adjustment		—		—		—		—			833		833

Total comprehensive income		—		—		—		13,166			833		13,999

Exercise of stock options		64,563		6		235		—			—		241

Issuance of common shares in exchange for First Carnegie shares		1,090,900		110		120		(230	)		—		—

Dividends paid ($0.12 per share)		—		—		—		(5,921	)		—		(5,921	)


Ending balance at December 31, 2004		50,485,654	$	5,049		199,924		351,691			7,449	$	564,113

See accompanying notes to unaudited consolidated financial statements

NORTHWEST BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(in thousands)


										Accum.
										Other			Total
	Common Stock				Paid-in		Retained			Comprehensive			Shareholders’
Six months ended December 31, 2003	Shares		Amount		Capital		Earnings			Income			Equity
Beginning balance at June 30, 2003		47,693,981	$	4,769		87,787		292,659			9,859		$	395,074

Comprehensive income:
Net income		—		—		—		25,598			—			25,598
Change in unrealized gain on securities, net of tax and reclassification adjustment		—		—		—		—			(1,250	)		(1,250	)

Total comprehensive income		—		—		—		25,598			(1,250	)		24,348

Exercise of stock options		94,969		10		384		—			—			394

Proceeds from incremental stock offering, net of related expenses of $2,196		—		—		112,804		—			—			112,804

Dividends paid ($0.20 per share)		—		—		—		(3,198	)		—			(3,198	)


Ending balance at December 31, 2003		47,788,950	$	4,779		200,975		315,059			8,609		$	529,422


											Accum.
											Other			Total
	Common Stock				Paid-in			Retained			Comprehensive			Shareholders’
Six months ended December 31, 2004	Shares		Amount		Capital			Earnings			Income			Equity
Beginning balance at June 30, 2004		47,960,287	$	4,796		211,545			336,164			(2,033	)	$	550,472

Comprehensive income:
Net income		—		—		—			27,434			—			27,434
Change in unrealized gain on securities, net of tax and reclassification adjustment		—		—		—			—			9,482			9,482

Total comprehensive income		—		—		—			27,434			9,482			36,916

Exercise of stock options		99,608		10		392			—			—			402

Issuance of common shares in exchange for Leeds and First Carnegie shares		2,425,759		243		(12,013	)		(230	)		—			(12,000	)

Dividends paid ($0.24 per share)		—		—		—			(11,677	)		—			(11,677	)


Ending balance at December 31, 2004		50,485,654	$	5,049		199,924			351,691			7,449		$	564,113

See accompanying notes to unaudited consolidated financial statements

NORTHWEST BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Three months ended						Six months ended
	December 31,						December 31,
	2004			2003			2004			2003
OPERATING ACTIVITIES:
Net Income	$	13,166			12,746			27,434			25,598
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		2,164			1,733			4,003			3,478
Net gain on sale of assets		(83	)		(1,205	)		(159	)		(5,358	)
Net depreciation, amortization and accretion		2,343			3,315			5,287			4,688
Decrease in other assets		5,449			3,276			5,878			15,080
Decrease in other liabilities		(1,231	)		(6,007	)		(2,607	)		(12,890	)
Net amortization of premium/ discount on marketable securities		663			3,250			1,375			5,689
Other		—			(66	)		—			(45	)

Net cash provided by operating activities		22,471			17,042			41,211			36,240

INVESTING ACTIVITIES:
Purchase of marketable securities held-to-maturity		(143,609	)		(3,270	)		(172,540	)		(4,154	)
Purchase of marketable securities available-for-sale		(99,706	)		(165,255	)		(180,164	)		(528,514	)
Proceeds from maturities and principal reductions of marketable securities held-to-maturity		69,507			66,050			143,419			269,266
Proceeds from maturities and principal reductions of marketable securities available-for-sale		61,057			200,022			176,781			385,867
Proceeds from sales of marketable securities, available-for-sale		10,377			25,730			12,770			218,557
Loan originations		(409,057	)		(307,036	)		(699,627	)		(833,089	)
Proceeds from loan maturities and principal reductions		294,939			209,958			479,460			551,315
Proceeds from loan sales		18,302			7,845			32,830			48,486
Sale of FHLB stock		3,086			14,362			3,086			13,393
Proceeds from sale of real estate owned		1,291			1,613			1,799			3,327
Net sale of real estate owned for investment		87			77			175			154
Purchase of premises and equipment		(8,119	)		(5,990	)		(14,821	)		(9,802	)
Acquisitions, net of cash received		—			—			—			(95,167	)

Net cash used by investing activities		(201,845	)		44,106			(216,832	)		19,639

NORTHWEST BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)


	Three months ended						Six months ended
	December 31,						December 31,
	2004			2003			2004			2003
FINANCING ACTIVITIES:
Increase (decrease) in deposits, net	$	7,438			(174,288	)		(4,039	)		(167,293	)
Repayments of long-term borrowings		(2,514	)		(15,814	)		(2,528	)		(202,707	)
Net increase (decrease) in short-term borrowings		(10,803	)		(86,336	)		(7,035	)		2,871
Increase (decrease) in advances by borrowers for taxes and insurance		10,861			9,973			(7,120	)		(4,274	)
Cash dividends paid		(5,922	)		(1,965	)		(11,677	)		(3,198	)
Proceeds from stock offering, net		—			—			—			112,804
Proceeds from stock options exercised		241			225			402			394

Net cash provided by financing activities		(699	)		(268,205	)		(31,997	)		(261,403	)

Net decrease in cash and cash equivalents		(180,073	)		(207,057	)		(207,618	)		(205,524	)


Cash and cash equivalents at beginning of period	$	364,178			542,364			391,723			540,831
Net decrease in cash and cash equivalents		(180,073	)		(207,057	)		(207,618	)		(205,524	)

Cash and cash equivalents at end of period		184,105			335,307			184,105			335,307


Cash paid during the period for:
Interest on deposits and borrowings (including interest credited to deposit accounts of $23,710, $26,851 $45,448 and $49,858, respectively)		34,734			37,435			67,141			69,267

Income taxes		5,412			2,682			13,206			3,124


Business acquisitions:
Fair value of assets acquired	$	—			—			—			908,873
Cash paid		—			—			—			(95,167	)

Liabilities assumed		—			—			—			813,706


Non-cash activities:
Loans transferred to real estate owned		3,345			1,194			5,015			2,039

Sale of real estate owned financed by the Company		410			68			617			317

See accompanying notes to unaudited consolidated financial statements

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation and Informational Disclosure

The Northwest group of companies is organized in a two-tier holding company structure. Northwest Bancorp, MHC, a federal mutual holding company, owns approximately 60% of the outstanding shares of common stock of Northwest Bancorp, Inc. (the “Company”). The Company is a federally-chartered savings and loan holding company that is regulated by the Office of Thrift Supervision (“OTS”). The primary activity of the Company is the ownership of all of the issued and outstanding common stock of Northwest Savings Bank, a Pennsylvania chartered savings bank and Jamestown Savings Bank, a New York chartered savings bank (the “Banks”). Together the Banks operate 151 community banking offices throughout northwest, southwest and central Pennsylvania, western New York, eastern Ohio and eastern Maryland.

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with instructions for Form 10-Q and, accordingly, do not include the necessary footnote information for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments have been included which are necessary for a fair presentation of financial position and results of operations. The consolidated statements have been prepared using the accounting policies described in the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2004. Certain items previously reported have been reclassified to conform with the current period’s reporting format. The results of operations for the three months and six months ended December 31, 2004 are not necessarily indicative of the results that may be expected for the entire fiscal year.

Dollar amounts contained in this document have been revised to include the operations and financial condition of Leeds Federal Savings Bank (“Leeds Federal”) beginning January 24, 2003, the date Leeds Federal was acquired by Northwest Bancorp, MHC. On September 10, 2004, in exchange for 100% of the outstanding shares of Leeds Federal, the Company cancelled a $12.0 million loan receivable from, and issued 1,334,859 shares to, Northwest Bancorp, MHC. Concurrent with the Company’s acquisition of Leeds Federal, the Company merged Leeds Federal into Northwest Savings Bank.

Dollar amounts contained in this document have also been revised to include the operations and financial condition of First Carnegie Deposit (“First Carnegie”) beginning May 1, 2004, the date First Carnegie was acquired by Northwest Bancorp, MHC. On November 15, 2004, in exchange for 100% of the outstanding shares of First Carnegie, the Company issued 1,090,900 shares to Northwest Bancorp, MHC. Concurrent with the Company’s acquisition of First Carnegie, the Company merged First Carnegie into Northwest Savings Bank.

Pro forma cost of stock options

The Company accounts for its stock-based compensation plans under the provisions of APB Opinion No. 25, “Accounting for Stock Issued to Employees” utilizing the intrinsic-value-based method, on which APB No. 25 is based. In accordance with SFAS No. 123 “Accounting for Stock-based Compensation,” (“SFAS 123”) the Company previously adopted the disclosure-only option and continues to apply the provisions of APB No. 25, for financial statement purposes. The Black-Scholes option-pricing model was used to determine the fair value estimates for disclosure purposes.

The Company applies APB Opinion No. 25 and related interpretations in accounting for its plans. Had compensation costs for the Stock Option Plan been determined consistent with the fair value method of SFAS 123, which requires entities to expense an estimated fair value of employee stock options granted, the Company’s net income and earnings per share would have been reduced to the pro forma amounts indicated below (in thousands, except per share amounts):


	Three months ended						Six months ended
	December 31,						December 31,
	2004			2003			2004			2003
Net income:
As reported	$	13,166			12,746			27,434			25,598
Deduct total stock-based employee compensation expense determined under fair-value-based method for all awards, net of tax		(261	)		(63	)		(312	)		(187	)

Pro forma		12,905			12,683			27,122			25,411

Basic earnings per share:
As reported		0.26			0.27			0.56			0.54
Pro forma		0.26			0.26			0.55			0.53

Diluted earnings per share:
As reported		0.26			0.26			0.55			0.53
Pro forma		0.26			0.26			0.55			0.53

There was no stock-based employee compensation expense included in reported net income during the three or six months ended December 31, 2004 or 2003.

The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Northwest Savings Bank (“Northwest”), Jamestown Savings Bank (“Jamestown”), Northwest Consumer Discount Company, Northwest Finance Company, Northwest Financial Services, Inc., Northwest Capital Group, Inc., Boetger & Associates, Inc., Rid-Fed, Inc., Allegheny Services, Inc. and Great Northwest Corporation. All significant intercompany items have been eliminated.

The Company has identified two reportable business segments based upon the operating approach currently used by management. The Community Banks segment includes the savings bank subsidiaries of the Company: Northwest and Jamestown, as well as the subsidiaries of the savings banks that provide similar products and services. The savings banks are community-oriented institutions that offer a full array of traditional deposit and loan products, including mortgage, consumer and commercial loans, as well as trust, investment management 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, which operates 47 offices in Pennsylvania and two offices in southwestern New York. The subsidiary compliments the services of the banks 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 and elimination entries necessary to reconcile to the consolidated amounts presented in the financial statements.

As of or for the three months ended:



	Community		Consumer
December 31, 2004 ($ in 000’s)	Banks		Finance		All Other *			Consolidated
External interest income	$	75,056		4,261		151			79,468
Intersegment interest income		1,306		—		(1,306	)		—
Interest expense		32,023		1,383		676			34,082
Provision for loan losses		1,530		634		—			2,164
Noninterest income		6,845		596		60			7,501
Noninterest expense		30,084		1,856		233			32,173
Income tax expense (benefit)		5,681		409		(706	)		5,384
Net income		13,889		575		(1,298	)		13,166
Total assets	$	6,285,780		124,432		(77,040	)		6,333,172



	Community		Consumer
December 31, 2003 ($ in 000’s)	Banks		Finance		All Other *			Consolidated
External interest income	$	72,237		4,401		148			76,786
Intersegment interest income		1,129		—		(1,129	)		—
Interest expense		32,081		1,209		694			33,984
Provision for loan losses		1,040		693		—			1,733
Noninterest income		7,170		257		57			7,484
Noninterest expense		28,276		1,995		408			30,679
Income tax expense (benefit)		5,525		317		(714	)		5,128
Net income		13,614		444		(1,312	)		12,746
Total assets	$	6,093,254		124,946		24,379			6,242,579

* Eliminations consist of intercompany loans, interest income and interest expense.

As of or for the six months ended:



	Community		Consumer
December 31, 2004 ($ in 000’s)	Banks		Finance		All Other *			Consolidated
External interest income	$	148,554		8,646		401			157,601
Intersegment interest income		2,502		—		(2,502	)		—
Interest expense		63,316		2,657		1,409			67,382
Provision for loan losses		2,610		1,393		—			4,003
Noninterest income		13,853		1,139		119			15,111
Noninterest expense		58,128		3,775		608			62,511
Income tax expense (benefit)		11,976		815		(1,409	)		11,382
Net income		28,879		1,145		(2,590	)		27,434
Total assets	$	6,285,780		124,432		(77,040	)		6,333,172



	Community		Consumer
December 31, 2003 ($ in 000’s)	Banks		Finance		All Other *			Consolidated
External interest income	$	138,770		8,831		303			147,904
Intersegment interest income		2,283		—		(2,283	)		—
Interest expense		65,677		2,441		1,221			69,339
Provision for loan losses		2,123		1,355		—			3,478
Noninterest income		16,762		550		126			17,438
Noninterest expense		51,822		3,932		572			56,326
Income tax expense (benefit)		11,199		687		(1,285	)		10,601
Net income		26,994		966		(2,362	)		25,598
Total assets	$	6,093,254		124,946		24,379			6,242,579

* Eliminations consist of intercompany loans, interest income and interest expense.

(4) Business Combination

On August 31, 2003, the Company completed the acquisition of First Bell Bancorp, Inc., and its subsidiary Bell Federal Savings and Loan Association of Bellevue (collectively “Bell”), both headquartered in Bellevue, Pennsylvania. The acquisition included the seven offices of Bell, assets of $935.9 million including cash of $22.6 million, investments of $544.8 million, loans of $224.5 million, goodwill of $53.1 million, core deposit intangible of $15.1 million, noncompete intangible of $1.1 million, and other assets of $74.7 million. Liabilities assumed in the acquisition of $813.7 million included deposits of $609.4 million, long-term debt of $186.7 million and other liabilities of $17.6 million. Under terms of the agreement, shareholders of First Bell Bancorp, Inc. received $26.25 in cash for each share of common stock, or approximately $114.3 million. The acquisition created approximately $53.1 million of goodwill, none of which is tax deductible, $15.1 million of core deposit intangible with an estimated life of seven years and a non-compete intangible of $1.1 million with an estimated life of one year. The results of operations have been included in the consolidated financial statements beginning September 1, 2003.

(5) Goodwill and Other Intangible Assets

The following table provides information for intangible assets subject to amortization for the periods indicated (in thousands):


	December 31,			June 30,
	2004			2004
Amortizable intangible assets:
Core deposit intangibles – gross	$	21,006			21,006
Less: accumulated amortization		(7,660	)		(5,507	)

Core deposit intangibles – net	$	13,346			15,499

Customer and Contract intangible assets – gross		1,881			1,881
Less: accumulated amortization		(1,256	)		(951	)

Customer and Contract intangible assets – net	$	625			930

The following table provides information for the changes in the carrying amount of goodwill (in thousands):


	Community			Consumer
	Banks			Finance		Total
Balance at June 30, 2003	$	86,618			893		87,511

Goodwill acquired		62,051			420		62,471

Impairment losses		(7,904	)		—		(7,904	)


Balance at June 30, 2004		140,765			1,313		142,078

Goodwill acquired		—			—		—

Impairment losses		—			—		—

Balance at December 31, 2004	$	140,765			1,313		142,078

The following information shows the actual aggregate amortization expense for the current quarter, the prior year’s quarter, and prior fiscal year as well as the estimated aggregate amortization expense, based upon current levels of intangible assets, for the current fiscal year and each of the five succeeding fiscal years (in thousands):


For the three months ended 12/31/03	$	1,705

For the three months ended 12/31/04		1,075

For the six months ended 12/31/03		1,884

For the six months ended 12/31/04		2,458

For the fiscal year ended 6/30/04		4,706

For the fiscal year ended 6/30/05		4,509

For the fiscal year ended 6/30/06		3,601

For the fiscal year ended 6/30/07		2,999

For the fiscal year ended 6/30/08		2,298

For the fiscal year ended 6/30/09		1,752

For the fiscal year ended 6/30/10		827

(6) Guarantees

The Company issues standby letters of credit in the normal course of business. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party. The Company is required to perform under a standby letter of credit when drawn upon by the guaranteed third party in the case of nonperformance by the Company’s customer. The credit risk associated with standby letters of credit is essentially the same as that involved in extending loans to customers and is subject to normal credit policies. Collateral may be obtained based on management’s credit assessment of the customer. The maximum potential amount of future payments the Company could be required to make under these standby letters of credit is $15.6 million, of which $11.2 million is fully collateralized. At December 31, 2004, the Company had a liability of $58,000 related to the standby letters of credit. There are no recourse provisions that would enable the Company to recover any amounts from third parties.

(7) Earnings Per Share

Basic earnings per common share (EPS) is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period, without considering common stock equivalents or any dilutive items. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. Options to purchase 220,780 shares of common stock at $25.49 per share were outstanding during the quarter but were not included in the computation of diluted earnings per share because the options’ exercise price was greater than the average market price of the common shares. The computation of basic and diluted earnings per share follows (in thousands, except per share amounts):


	Three months ended				Six months ended
	December 31,				December 31,
	2004		2003		2004		2003
Reported net income	$	13,166		12,746		27,434		25,598

Weighted average common shares outstanding		49,947		47,761		49,115		47,735
Common stock equivalents due to effect of stock options		522		647		520		579


Total weighted average common shares and equivalents		50,469		48,408		49,635		48,314


Basic earnings per share:	$	0.26		0.27		0.56		0.54


Diluted earnings per share:	$	0.26		0.26		0.55		0.53

(8) Pension and Post-retirement benefits (in thousands):

Components of Net Periodic Benefit Cost


	Three months ended December 31,
	Pension Benefits						Other Post-retirement Benefits
	2004			2003			2004		2003
Service cost	$	938			831			—		—
Interest cost		776			664			25		23
Expected return on plan assets		702			552			—		—
Amortization of transition asset		(10	)		(10	)		—		—
Amortization of prior service cost		20			24			—		—
Amortization of the net (gain) loss		165			189			7		5

Net periodic benefit cost	$	1,187			1,146			32		28


	Six months ended December 31,
	Pension Benefits						Other Post-retirement Benefits
	2004			2003			2004		2003
Service cost	$	1,876			1,662			—		—
Interest cost		1,552			1,328			50		46
Expected return on plan assets		1,404			1,104			—		—
Amortization of transition asset		(20	)		(20	)		—		—
Amortization of prior service cost		40			48			—		—
Amortization of the net (gain) loss		330			378			14		10

Net periodic benefit cost	$	2,374			2,292			64		56

The Company made no contribution to its pension plans during the six months ended December 31, 2004. The Company anticipates making contributions to its defined benefit pension plan in the range of $3.0 million to $5.0 million during the fiscal year ending June 30, 2005.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

In addition to historical information, this document may contain certain forward-looking statements, as defined in the Securities Exchange Act of 1934, as amended, and the regulations thereunder. These forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Important factors that might cause such a difference include, but are not limited to, economic, regulatory and other factors as discussed herein. Readers are cautioned not to place undue reliance on these forward-looking statements, as they reflect management’s analysis only as of the date of this report. The Company has no obligation to revise or update these forward-looking statements to reflect events or circumstances that arise after the date of this report.

Overview of Critical Accounting Policies Involving Estimates

The Company’s critical accounting policy involves accounting estimates that: a) require assumptions about highly uncertain matters, and b) could vary sufficiently enough to cause a material effect on the Company’s financial condition or results of operations.

Allowance for Loan Losses. In originating loans, the Company recognizes that losses will be experienced on loans and that the risk of loss will vary with, among other things, the type of loan, the creditworthiness of the borrower, general economic conditions and the quality of the security for the loan. The Company maintains an allowance for loan losses to absorb losses inherent in the loan portfolio. The allowance for loan losses represents management’s estimate of probable losses based on information available as of the date of the financial statements. The allowance for loan losses is based on management’s evaluation of the collectibility of the loan portfolio, including past loan loss experience, known and inherent losses, information about specific borrower situations and estimated collateral values, and current economic conditions. The loan portfolio and other credit exposures are regularly reviewed by management in its determination of the allowance for loan losses. The methodology for assessing the appropriateness of the allowance includes a review of historical losses, peer group comparisons, industry data and economic conditions. As an integral part of their examination process, regulatory agencies periodically review the Company’s allowance for loan losses and may require the Company to make additional provisions for estimated losses based upon judgments different from those of management. In establishing the allowance for loan losses, loss factors are applied to various pools of outstanding loans. Loss factors are derived using the Company’s historical loss experience and may be adjusted for factors that affect the collectibility of the portfolio as of the evaluation date. Commercial loans over a certain dollar amount are evaluated individually to determine the required allowance for loan losses and to evaluate the potential impairment of such loans under SFAS 114, “Accounting by Creditors for Impairment of a Loan”. Although management believes that it uses the best information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate or that increases will not be necessary should the quality of any loans deteriorate as a result of the factors discussed above. Any material increase in the allowance for loan losses may adversely affect the Company’s financial condition and results of operations. The allowance review methodology is based on information known at the time of the review. Changes in factors underlying the assessment could have a material impact on the amount of the allowance that is necessary and the amount of provision to be charged against earnings. Such changes could impact future results. Management believes, to the best of their knowledge, that all known losses as of the balance sheet date have been recorded.

Discussion of Financial Condition Changes from June 30, 2004 to December 31, 2004

Assets

At December 31, 2004 the Company had total assets of $6.333 billion, a decrease of $10.1 million, or less than 1%, from $6.343 billion at June 30, 2004. This decrease is primarily attributed to a decrease in funding sources as deposits decreased $4.1 million, borrowed funds decreased by $9.9 million and advances by borrowers for taxes and insurance decreased $7.1 million.

Cash and investments totaled $1.686 billion at December 31, 2004, a decrease of $162.5 million, or 8.8%, from $1.849 billion at June 30, 2004. This decrease resulted from the aforementioned decrease in funding sources as well as to support the continued loan demand throughout the Company’s retail network. Net loans receivable increased by $151.1 million, or 3.7%, to $4.205 billion at December 31, 2004 from $4.054 at June 30, 2004.

Liabilities

Deposits decreased slightly by $4.1 million, or less than 1%, to $5.188 billion at December 31, 2004 from $5.192 billion at June 30, 2004. This decrease was anticipated by the Company as the industry, as a whole, began to experience an outflow of volatile funds accumulated during an uncertain investment environment over the last several years. Advances by borrowers for taxes and insurance decreased by $7.1 million, or 24.1%, to $22.5 million at December 31, 2004 from $29.6 million at June 30, 2004. This decrease is due to the seasonal nature of payments made to taxing authorities on behalf of our customers. Borrowed funds decreased by $9.9 million due to scheduled repayments on borrowings from the Federal Home Loan Bank.

Capital Resources and Liquidity

Total shareholders’ equity at December 31, 2004 was $564.1 million, an increase of $13.6 million, or 2.5%, from $550.5 million at June 30, 2004. This increase was primarily attributable to net income for the six-month period of $27.4 million and an increase in unrealized gain on securities, net of tax, of $9.5 million partially offset by the payment of cash dividends of $11.7 million and a decrease in additional paid-in capital of $11.6 million. The decrease in additional paid-in capital resulted from the Company canceling a $12.0 million loan to Northwest Bancorp, MHC as part of the consideration paid for the acquisition of Leeds Federal Savings Bank.

The Company’s banking subsidiaries, Northwest and Jamestown, are subject to various regulatory capital requirements administered by the state and federal 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, the banking subsidiaries must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgements by the regulators about components, risk-weighting and other factors.

Quantitative measures, established by regulation to ensure capital adequacy require the banking subsidiaries 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). The amounts included as of June 30, 2004 for Leeds Federal and First Carnegie Deposit have been calculated using the corresponding OTS definitions for Tier I core capital [Tier I Capital (Leverage)], Risk-based capital, Tier I (Tier I Capital) and Risk-based capital, total (Total Capital).

December 31, 2004



						Minimum Capital					Well Capitalized
	Actual					Requirements					Requirements
	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital (to risk weighted assets):
Northwest Savings Bank	$	487,076		15.41	%	$	252,852		8.00	%	$	316,066		10.00	%
Jamestown Savings Bank	$	25,994		10.32	%	$	20,153		8.00	%	$	25,191		10.00	%

Tier I Capital (to risk weighted assets):
Northwest Savings Bank	$	456,425		14.44	%	$	126,426		4.00	%	$	189,639		6.00	%
Jamestown Savings Bank	$	23,612		9.37	%	$	10,076		4.00	%	$	15,115		6.00	%

Tier I Capital (leverage) (to average assets):
Northwest Savings Bank	$	456,425		7.97	%	$	171,910		3.00	%*	$	286,517		5.00	%
Jamestown Savings Bank	$	23,612		5.71	%	$	12,416		3.00	%*	$	20,693		5.00	%

June 30, 2004



						Minimum Capital					Well Capitalized
	Actual					Requirements					Requirements
	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total Capital (to risk weighted assets):
Northwest Savings Bank	$	430,831		15.02	%	$	229,505		8.00	%	$	286,881		10.00	%
Jamestown Savings Bank	$	23,968		10.57	%	$	18,140		8.00	%	$	22,674		10.00	%
Leeds Federal Savings Bank	$	29,529		15.61	%	$	15,133		8.00	%	$	18,917		10.00	%
First Carnegie Deposit	$	5,147		17.27	%	$	2,384		8.00	%	$	2,980		10.00	%

Tier I Capital (to risk weighted assets):
Northwest Savings Bank	$	402,290		14.02	%	$	114,752		4.00	%	$	172,129		6.00	%
Jamestown Savings Bank	$	21,925		9.67	%	$	9,070		4.00	%	$	13,605		6.00	%
Leeds Federal Savings Bank	$	27,038		14.29	%	$	7,568		4.00	%	$	11,353		6.00	%
First Carnegie Deposit	$	4,775		16.03	%	$	1,192		4.00	%	$	1,788		6.00	%

Tier I Capital (leverage) (to average assets):
Northwest Savings Bank	$	402,290		7.56	%	$	159,709		3.00	%*	$	266,182		5.00	%
Jamestown Savings Bank	$	21,925		5.79	%	$	11,352		3.00	%*	$	18,920		5.00	%
Leeds Federal Savings Bank	$	27,038		5.98	%	$	18,086		4.00	%.	$	22,607		5.00	%
First Carnegie Deposit	$	4,775		5.14	%	$	3,715		4.00	%.	$	4,644		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, 2004, the Company had not been advised of any additional requirements in this regard.

The Company’s banking subsidiaries, Northwest and Jamestown, are required to maintain a sufficient level of liquid assets, as determined by management and defined and reviewed for adequacy by the FDIC and the applicable state department of banking during their regular examinations. The Banks’ internal liquidity requirements are based upon liquid assets as a percentage of deposits and borrowings (“liquidity ratio”). The Banks have always maintained a level of liquid assets in excess of regulatory and internal requirements, and the liquidity ratio at December 31, 2004 was 27.3% and 40.3% for Northwest and Jamestown, respectively. The Company and its subsidiaries adjust liquidity levels in order to meet funding needs for deposit outflows, payment of real estate taxes and insurance on mortgage loan escrow accounts, repayment of borrowings, when applicable, and loan commitments.

The Company paid $11.7 million in cash dividends during the first six months of the current fiscal year, compared with $3.2 million in the prior year period. During the current six-month period, Northwest Bancorp, MHC did not waive its right to receive dividends in order to provide a source of additional strength to its savings bank subsidiaries, Leeds Federal and First Carnegie. During the comparable period in the prior fiscal year, no dividends were paid to Northwest Bancorp, MHC. The common stock dividend payout ratio (dividend declared per share divided by net income per share) was 46.2% in the current quarter on a dividend of $0.12 compared with 38.5% in the same period last year on a dividend of $0.10 per share.

Nonperforming Assets

The following table sets forth information with respect to the Company’s nonperforming assets. Nonaccrual loans are those loans on which the accrual of interest has ceased. Loans are automatically placed on nonaccrual status when they are more than 90 days contractually delinquent and may also be placed on nonaccrual status even if not more than 90 days delinquent but other conditions exist. Other nonperforming assets represent property acquired by the Company through foreclosure or repossession. Foreclosed property is carried at the lower of its fair value less estimated costs to sell or the principal balance of the related loan. Management believes that the generally low level of nonperforming assets is attributable to stringent credit policies and sustained collection procedures.



	December 31, 2004			June 30, 2004
	(Dollars in Thousands)
Loans accounted for on a nonaccrual basis:
One-to-four family residential loans	$	12,376		$	11,262
Multifamily and commercial real estate loans		12,026			13,883
Consumer loans		5,184			4,536
Commercial business loans		2,452			2,824
Total	$	32,038		$	32,505
Total nonperforming loans as a percentage of loans receivable		0.76	%		0.80	%
Total real estate acquired through foreclosure and other real estate owned	$	7,274		$	3,951
Total nonperforming assets	$	39,312		$	36,456
Total nonperforming assets as a percentage of total assets		0.62	%		0.57	%

A loan is considered to be impaired, as defined by SFAS No. 114, “Accounting by Creditors for Impairment of a Loan” (“SFAS 114”), when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement including both contractual principal and interest payments. The amount of impairment is required to be measured using one of three methods prescribed by SFAS 114: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the loan’s observable market price; or (3) the fair value of collateral if the loan is collateral dependent. If the measure of the impaired loan is less than the recorded investment in the loan, a specific reserve is allocated for the impairment. Impaired loans at December 31, 2004 and June 30, 2004 were $32.0 million and $32.5 million, respectively.

Allowance for Loan Losses

The Company’s Board of Directors has adopted an “Allowance for Loan Losses” (ALL) policy designed to provide management with a systematic methodology for determining and documenting the ALL each reporting period. This methodology was developed to provide a consistent process and review procedure to ensure that the ALL is in conformity with the Company’s policies and procedures and other supervisory and regulatory guidelines.

On a monthly basis, the Credit Review department, as well as loan officers, branch managers and department heads, review and monitor the loan portfolio for problem loans. This review includes the monthly delinquency reports as well as historical comparisons and trend analysis. On a quarterly basis the Credit Review department grades or classifies problem loans or potential problem loans based upon their knowledge of the lending relationship and other information previously accumulated. The Company’s loan grading system for problem loans is consistent with industry regulatory guidelines which classify loans as “special mention”, “substandard”, “doubtful” or “loss.” Loans that do not expose the Company to risk sufficient to warrant classification in one of the subsequent categories, but which possess some weaknesses, are designated as “special mention”. A “substandard” loan is any loan that is more than 90 days contractually delinquent or is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as “doubtful” have all the weaknesses inherent in those classified as “substandard” with the added characteristic that the weaknesses present make a collection or liquidation in full, on the basis of currently existing facts, conditions or values, highly questionable and improbable. Loans classified as “loss” are considered uncollectible so that their continuance as assets without the establishment of a specific loss reserve in not warranted.

The loans that have been classified as substandard or doubtful are reviewed by the Credit Review department for possible impairment under the provisions of SFAS 114. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement including both contractual principal and interest payments.

If an individual loan is deemed to be impaired, the Credit Review department determines the proper measure of impairment for each loan based on one of three methods as prescribed by SFAS 114: (1) the present value of expected future cash flows discounted at the loan’s effective interest rate; (2) the loan’s observable market price; or (3) the fair value of the collateral if the loan is collateral dependent. If the measurement of the impaired loan is more or less than the recorded investment in the loan, the Credit Review department adjusts the specific allowance associated with that individual loan accordingly.

If a substandard or doubtful loan is not considered individually for impairment, it is grouped with other loans that possess common characteristics for impairment evaluation and analysis under the provisions of Statement of Financial Accounting Standards No. 5, “Accounting for Contingencies.” This segmentation is accomplished by grouping loans of similar product types, risk characteristics and industry concentration into homogeneous pools. A range of losses for each pool is then established based upon historical loss ratios. This historical net charge-off amount is then analyzed and adjusted based on historical delinquency trends as

well as the current economic, political, regulatory and interest rate environment and used to estimate the current measure of impairment.

The individual impairment measures along with the estimated range of losses for each homogeneous pool are consolidated into one summary document. This summary schedule along with the support documentation used to establish this schedule is presented to the Credit Committee on a quarterly basis. The Credit Committee reviews the processes and documentation presented, reviews the concentration of credit by industry and customer, discusses lending products, activity, competition and collateral values, as well as economic conditions in general and in each market area of the Company. Based on this review and discussion the appropriate amount of ALL is estimated and any adjustments to reconcile the actual ALL with this estimate is determined. In addition, the Credit Committee considers if any changes to the methodology are needed. The Credit Committee also reviews and discusses the Company’s delinquency trends, nonperforming asset amounts and ALL levels and ratios compared to its peer group as well as state and national statistics. Following the Credit Committee’s review and approval, a similar review is performed by the Board of Director’s Risk Management Committee.

In addition to the reviews by the Credit Committee and the Risk Management Committee, regulators from either the FDIC or state department of banking perform an extensive review on an annual basis for the adequacy of the ALL and its conformity with regulatory guidelines and pronouncements. Any recommendations or enhancements from these independent parties are considered by management and the Credit Committee and implemented accordingly.

Management acknowledges that this is a dynamic process and consists of factors, many of which are external and out of management’s control, that can change often, rapidly and substantially. The adequacy of the ALL is based upon estimates using all the information previously discussed as well as current and known circumstances and events. There is no assurance that actual portfolio losses will not be substantially different than those that were estimated.

Comparison of Operating Results for the Three Months Ended December 31, 2004 and 2003

Net income for the three months ended December 31, 2004 was $13.2 million, or $0.26 per diluted share, an increase of $420,000, or 3.3%, from $12.7 million, or $0.26 per diluted share, for the same quarter last year. This increase resulted primarily from an increase in net interest income of $2.6 million, which was partially offset by an increase in the provision for loan losses of $431,000 and an increase in noninterest expense of $1.5 million.

Net income for the three months ended December 31, 2004 represents a 9.47% and 0.83% return on average equity and return on average assets, respectively, compared to 9.82% and 0.81% for the same quarter last year.

Interest Income

Total interest income increased by $2.3 million, or 3.0%, on a taxable equivalent basis, to $81.4 million due to increases in both average interest earnings assets and the average yield earned on interest earning assets. Average interest earnings assets increased by $9.5 million, or less than 1%, to $5.916 billion for the three months ended December 31, 2004 from $5.906 billion for the three months ended December 31, 2003. The average yield on interest earnings assets increased to 5.51% from 5.36%.

Interest income on loans receivable increased by $3.3 million, or 5.4%, on a taxable equivalent basis, to $64.9 million primarily because of an increase in the average balance of $327.2 million, or 8.5%, to $4.193 billion for the three months ended December 31, 2004 from $3.866 billion for the three months ended December 31, 2003. The increase in average balance was partially offset by a decrease in the average rate to 6.19% from 6.37%. Average loans outstanding increased primarily as a result of the continued strong

internal loan demand. The decrease in average yield resulted primarily from the repricing of variable rate loans and the refinancing of fixed rate loans during a period of relatively low interest rates.

Interest income on mortgage-backed securities decreased by $686,000, or 9.4%, to $6.6 million, primarily because of a decrease in the average balance of $171.9 million, or 18.6%, to $753.3 million. The effect of the decrease in the average balance was partially offset by an increase in the average yield to 3.50% from 3.15%. The average balance decreased when funds received from principal and interest payments were used to fund loan demand rather than a reinvestment in mortgage-backed securities. The average yield on mortgage-backed securities, of which approximately 71% are variable rate, increased in response to the recent increases in short-term interest rates.

Interest income on investment securities decreased by $846,000, or 9.1%, to $8.5 million, on a taxable-equivalent basis, primarily because of a decrease in the average balance of $115.8 million, or 15.4% to $634.1 million for the three month period ended December 31, 2004 from $749.9 million for the three month period ended December 31, 2003. The decrease in average balance was partially offset by an increase in the average yield to 5.36% from 4.98%, on a taxable equivalent basis. The average balance decreased as funds received from maturing and called securities were used to fund loan growth and reinvest in higher yielding agency notes.

Interest income on interest-earning deposits increased by $566,000, or 76.0%, primarily because of an increase in the average yield to 1.76% from 0.91%. The effect of the increase in the average yield was partially offset by a decrease in the average balance of $28.8 million, or 8.8%, to $297.7 million for the three month period ended December 31, 2004 from $326.5 million for the three month period ended December 31, 2003. The increase in average yield was primarily due to the recent increases in overnight interest rates. The average balance decreased due to the use of cash to fund loan growth and repay short-term liabilities.

Interest Expense

Total interest expense increased by $98,000, or less than 1.0%, to $34.1 million due to an increase in the average cost of interest-bearing liabilities to 2.48% from 2.45%, which was partially offset by a decrease in the average balance of interest-bearing liabilities of $48.4 million, or less than 1.0%, to $5.504 billion. The increase in the cost of funds resulted primarily from a slight increase in the cost of deposits of 3 basis points, from 2.15% to 2.18%, driven by an increase in the level of short-term interest rates. The decrease in the average balance of interest-bearing liabilities resulted primarily from a decrease of $162.9 million, or 10.2%, in the average balance of demand deposits. This decrease was primarily due to the loss of funds in municipal checking accounts as the municipalities moved their funds from checking to alternative types of investments.

Net Interest Income

Net interest income increased by $2.2 million, or 5.0%, on a taxable equivalent basis, to $47.3 million from $45.1 million during the prior year period. This increase in net interest income was attributable to the overall growth in the Company’s balance sheet, the expansion of the Company’s net interest rate spread to 3.03%, from 2.91% and the procurement of new capital, in the amount of $112.8 million, which occurred in August 2003.

Provision for Loan Losses

The provision for loan losses increased by $431,000, or 24.9%, to $2.2 million for the three months ended December 31, 2004. Management analyzes the allowance for loan losses as described in the section entitled “Allowance for Loan Losses.” The provision that is recorded is sufficient, in management’s judgment, to bring this reserve to a level that reflects the losses inherent in the Company’s loan portfolio relative to loan mix, economic conditions and historical loss experience. Management believes, to the best of their knowledge, that all known losses as of the balance sheet dates have been recorded.

Noninterest Income

Noninterest income increased by $588,000, or 8.5%, to $7.5 million, excluding the gain on sale of investment securities, which the Company does not consider to be core earnings. This increase was primarily due to increases in service charges and fees, trust and other financial services income and insurance commissions partially offset by a decrease in the gain on sale of assets. Service charges and fees increased $514,000, or 14.6%. Trust and other financial services income increased $116,000, or 12.3%. The increases in both service charges and other financial services income are primarily due to increased volume and growth of the Company. Insurance commissions income increased $365,000, or greater than 100%, primarily as a result of the Company again offering life insurance related to consumer loans.

Noninterest Expense

Noninterest expense increased by $1.5 million, or 4.9%, to $32.2 million from $30.7 million for the same quarter in the prior year. All major expense categories, except amortization of intangibles, increased as a result of the growth of the Company’s retail network, the expansion of business banking and investment management and trust services and the addition of new products and services. The largest increase was in compensation and employee benefits expense. Compensation and employee benefits increased as a result of the continued increase in health care costs, normal annual merit increases in salaries and the continued growth of the Company’s employee base. Amortization of intangible assets decreased primarily because of the continued reduction of the core deposit intangibles. Advertising expense increased primarily due to branding campaigns in new markets and additional product promotions. Management believes that progress has been made in controlling operating expense as the ratio of operating expense to average assets remains around 2.0%.

Income Taxes

The provision for income taxes for the three months ended December 31, 2004 increased by $256,000, or 5.0%, compared to the same period last year. This increase in income tax expense is primarily due to an increase in income before income taxes of $676,000, or 3.8%, to $18.6 million from $17.9 million. The Company’s effective tax rate remained at approximately 29.0% for both periods presented.

Comparison of Operating Results for the Six Months Ended December 31, 2004 and 2003

Net income for the six months ended December 31, 2004 was $27.4 million, or $0.55 per diluted share, an increase of $1.8 million, or 7.2%, from $25.6 million, or $0.53 per diluted share, for the same period last year. This increase resulted primarily from an increase in net interest income of $11.7 million, which was partially offset by a decrease in the gain on sale of marketable securities of $3.8 million and an increase in noninterest expense of $6.2 million.

Net income for the six months ended December 31, 2004 represents a 9.86% and 0.86% return on average equity and return on average assets, respectively, compared to 10.51% and 0.83% for the same period last year.

Interest Income

Total interest income increased by $9.8 million, or 6.4%, on a taxable equivalent basis, to $161.5 million due to increases in both average interest earnings assets and the average yield earned on interest earning assets. Average interest earnings assets increased by $152.3 million, or 2.6%, to $5.924 billion for the six months ended December 31, 2004 from $5.772 billion for the six months ended December 31, 2003. The average yield on interest earnings assets increased to 5.45% from 5.26%.

Interest income on loans receivable increased by $8.0 million, or 6.6%, on a taxable equivalent basis, to $128.6 million primarily because of an increase in the average balance of $441.0 million, or 11.9%, to $4.157 billion for the six months ended December 31, 2004 from $3.716 billion for the six months ended December 31, 2003. The increase in average balance was partially offset by a decrease in the average yield to 6.19% from 6.49%. Average loans outstanding increased as a result of strong internal loan growth. The decrease in average yield resulted primarily from the significant growth of the mortgage portfolio during a period of relatively low long-term interest rates.

Interest income on mortgage-backed securities increased by $958,000, or 7.8%, to $13.3 million, primarily because of an increase in the average yield to 3.44% from 2.64%. The effect of the increase in average yield was partially offset by a decrease in the average balance of $160.7 million, or 17.2%, to $772.4 million. The average yield on mortgage-backed securities, of which approximately 71% are variable rate, increased in response to the recent increases in short-term interest rates. The average balance decreased when funds received from principal and interest payments were used to fund loan demand rather than being reinvested in mortgage-backed securities.

Interest income on investment securities increased by $243,000, or 1.5%, to $16.9 million, on a taxable-equivalent basis, primarily because of an increase in the average yield to 5.34% from 4.98%. This increase was partially offset by a decrease in the average balance of $35.8 million, or 5.4% to $632.3 million for the six month period ended December 31, 2004 from $668.1 million for the six month period ended December 31, 2003.

Interest income on interest-earning deposits increased by $624,000, or 33.9%, primarily because of an increase in the average yield to 1.52% from 0.89%. The effect of the increase in the average yield was partially offset by a decrease in the average balance of $90.5 million, or 21.8%, to $324.1 million for the six month period ended December 31, 2004 from $414.6 million for the six month period ended December 31, 2003. The increase in average yield was primarily due to the recent increases in short-term interest rates. The decrease in average balance resulted from using short-term funds to finance the growth in the loan portfolio.

Interest Expense

Total interest expense decreased by $2.0 million, or 2.8%, to $67.4 million due to a decrease in the average cost of interest-bearing liabilities to 2.44% from 2.55%, which was partially offset by an increase in the average balance of interest-bearing liabilities of $75.4 million, or 1.4%, to $5.520 billion. The decrease in the cost of funds resulted primarily from a decrease in the average cost of certificates of deposit. The increase in the average balance of interest-bearing liabilities resulted primarily from an increase in savings accounts.

Net Interest Income

Net interest income increased by $11.7 million, or 14.2%, on a taxable equivalent basis, to $94.1 million from $82.4 million during the prior year period. This increase in net interest income was attributable to the overall growth in the Company’s balance sheet, the expansion of the Company’s net interest rate spread to 3.01%, from 2.71% and the procurement of new capital, in the amount of $112.8 million, which occurred in August 2003.

Provision for Loan Losses

The provision for loan losses increased by $525,000, or 15.1%, to $4.0 million for the six months ended December 31, 2004. Management analyzes the allowance for loan losses as described in the section entitled “Allowance for Loan Losses.” The provision that is recorded is sufficient, in management’s judgment, to bring this reserve to a level that reflects the losses inherent in the Company’s loan portfolio relative to loan

mix, economic conditions and historical loss experience. Management believes, to the best of their knowledge, that all known losses as of the balance sheet dates have been recorded.

Noninterest Income

Noninterest income decreased by $2.3 million, or 13.3%, to $15.1 million for the current six month period from $17.4 million for the same period in the prior year. This decrease was primarily due to a decrease in gain on sale of investments of $3.8 million. The Company recorded a substantial gain in the previous year as a result of the sale of municipal bonds acquired with the purchase of Bell Federal. Partially offsetting the decrease in the gain on sale of investments are increases in service charges and fees and insurance commission income. Service charges and fees increased $1.1 million, or 16.7%, to $8.0 million for the six month period ended December 31, 2004 from $6.9 million for the six month period ended December 31, 2003. This increase is primarily due to the overall growth of the Company. Insurance commissions income increased $662,000, or greater than 100%, primarily as a result of the Company again offering life insurance related to consumer loans.

Noninterest Expense

Noninterest expense increased by $6.2 million, or 11.0%, to $62.5 million from $56.3 million for the same period in the prior year. All major expense categories increased as a result of the significant growth of the Company’s retail network; the expansion of its investment management, trust and brokerage services; and the addition of new products and services. The largest increases were in compensation and employee benefits expense and the amortization of intangible assets. Compensation and employee benefits increased as a result of the continued increase in health care costs, normal annual merit increases in salaries and the addition of approximately 100 full-time equivalent employees. Amortization of intangible assets increased primarily because of the core deposit intangible created as part of the acquisition of Bell Federal. Management believes that despite these increases in costs due to expansion, progress has been made in controlling operating expense as the ratio of operating expense to average assets remains about 2.0%.

Income Taxes

The provision for income taxes for the six months ended December 31, 2004 increased by $781,000, or 7.4%, compared to the same period last year. This increase in income tax expense is primarily due to an increase in income before income taxes of $2.6 million, or 7.2%, to $38.8 million from $36.2 million. The Company’s effective tax rate remains at 29.3%.

Recently Issued Accounting Standards

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payments (“SFAS 123R”). SFAS 123R is a revision of the FASB Statement No. 123, Accounting for Stock-Based Compensation. SFAS 123R supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and any related implementation guidance. SFAS 123R establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. SFAS 123R focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions. SFAS 123R is effective as of the beginning of the annual reporting period that begins after June 15, 2005, which for the Company will be July 1, 2005. SFAS 123R applies to all awards granted after the required effective date and to awards modified, repurchased, or cancelled after that date. The cumulative effect of initially applying this Statement, if any, is recognized as of the required effective date. As of the required effective date, the Company will apply SFAS 123R using a permitted modified version of prospective application. Under this transition method, the Company will recognize compensation costs as previously issued stock option grants

vest. See the Basis of Presentation and Informational Disclosure section of this quarterly report for analysis on the effect of this new standard on the Company’s financial statements.

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 152, Accounting for Real Estate Time-Sharing Transactions, an amendment of FASB Statements No. 66 and 67 (“SFAS 152”). SFAS 152 amends FASB Statement No. 66 to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position 04-2. SFAS 152 also amends FASB Statement No. 67 to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-2. SFAS 152 is effective for financial statements for fiscal years beginnings after June 15, 2005. The Company does not anticipate that this accounting standard will have a material effect on the Company’s financial statements.

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 153, Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29 (“SFAS 153”). SFAS 153 amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. SFAS 153 is effective for financial statements for fiscal years beginning after June 15, 2005. The Company does not anticipate that this accounting standard will have a material effect on the Company’s financial statements.

Average Balance Sheet
(Dollars in Thousands)

The following table sets forth certain information relating to the Company’s average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods presented. Average balances are calculated using daily averages.

Three Months Ended December 31,

2004

2003


					Avg.							Avg.
	Average				Yield/			Average				Yield/
	Balance		Interest		Cost			Balance		Interest		Cost
ASSETS:
Interest earning assets:
Loans receivable (a) (b) (d)	$	4,193,225	$	64,889		6.19	%	$	3,866,010	$	61,596		6.37	%
Mortgage-backed securities (c)	$	753,321	$	6,590		3.50	%	$	925,180	$	7,276		3.15	%
Investment securities (c) (d) (e)	$	634,089	$	8,495		5.36	%	$	749,852	$	9,341		4.98	%
FHLB stock	$	37,262	$	155		1.66	%	$	38,482	$	138		1.43	%
Other interest earning deposits	$	297,722	$	1,311		1.76	%	$	326,546	$	745		0.91	%


Total interest earning assets	$	5,915,619	$	81,440		5.51	%	$	5,906,070	$	79,096		5.36	%

Noninterest earning assets (f)	$	427,617						$	401,718


TOTAL ASSETS	$	6,343,236						$	6,307,788


LIABILITIES AND SHAREHOLDERS’ EQUITY:
Interest bearing liabilities:
Savings accounts	$	1,095,351	$	3,648		1.33	%	$	1,002,197	$	3,485		1.39	%
Now accounts	$	664,768	$	1,234		0.74	%	$	701,347	$	1,352		0.77	%
Money market demand accounts	$	777,265	$	3,467		1.78	%	$	903,552	$	3,703		1.64	%
Certificate accounts	$	2,420,583	$	18,700		3.09	%	$	2,390,093	$	18,360		3.07	%
Borrowed funds (g)	$	443,979	$	5,035		4.54	%	$	453,173	$	5,153		4.55	%
Debentures	$	102,062	$	1,998		7.83	%	$	102,062	$	1,931		7.57	%


Total interest bearing liabilities	$	5,504,008	$	34,082		2.48	%	$	5,552,424	$	33,984		2.45	%

Noninterest bearing liabilities	$	282,922						$	235,953


Total liabilities	$	5,786,930						$	5,788,377

Shareholders’ equity	$	556,306						$	519,411


TOTAL LIABILITIES AND EQUITY	$	6,343,236						$	6,307,788


Net interest income/ Interest rate spread			$	47,358		3.03	%			$	45,112		2.91	%

Net interest earning assets/ Net interest margin	$	411,611				3.20	%	$	353,646				3.06	%

Ratio of interest earning assets to interest bearing liabilities		1.07X							1.06X

(a)   Average gross loans receivable includes loans held as available-for-sale and loans placed on nonaccrual status.

(b)   Interest income includes accretion/ amortization of deferred loan fees/ expenses.

(c)   Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.

(d)   Interest income on tax-free investment securities and tax-free loans is presented on a taxable equivalent basis.

(e)   Average balances include FNMA and FHLMC stock.

(f)   Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.

(g)   Average balances include FHLB borrowings, securities sold under agreements to repurchase and other borrowings.

Rate/ Volume Analysis
(Dollars in Thousands)

The following table represents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected the Company’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), (iii) the net change. Changes that cannot be attributed to either rate or volume have been allocated among both rate and volume.

Three months ended December 31, 2004 and 2003


							Net
	Rate			Volume			Change
Interest earning assets:
Loans receivable	$	(1,920	)	$	5,213		$	3,293
Mortgage-backed securities	$	816		$	(1,502	)	$	(686	)
Investment securities	$	705		$	(1,551	)	$	(846	)
FHLB stock	$	22		$	(5	)	$	17
Other interest-earning deposits	$	693		$	(127	)	$	566

Total interest-earning assets	$	316		$	2,028		$	2,344

Interest-bearing liabilities:
Savings accounts	$	(161	)	$	324		$	163
Now accounts	$	(49	)	$	(69	)	$	(118	)
Money market demand accounts	$	327		$	(563	)	$	(236	)
Certificate accounts	$	105		$	235		$	340
Borrowed funds	$	(14	)	$	(104	)	$	(118	)
Debentures	$	67		$	-0-		$	67

Total interest-bearing liabilities	$	275		$	(177	)	$	98


Net change in net interest income	$	41		$	2,205		$	2,246

Average Balance Sheet
(Dollars in Thousands)

Six Months Ended December 31,

2004

2003


					Avg.							Avg.
	Average				Yield/			Average				Yield/
	Balance		Interest		Cost			Balance		Interest		Cost
ASSETS:
Interest earning assets:
Loans receivable (a) (b) (d)	$	4,157,376	$	128,623		6.19	%	$	3,716,365	$	120,611		6.49	%
Mortgage-backed securities (c)	$	772,434	$	13,286		3.44	%	$	933,156	$	12,328		2.64	%
Investment securities (c) (d) (e)	$	632,350	$	16,877		5.34	%	$	668,102	$	16,634		4.98	%
FHLB stock	$	38,073	$	291		1.53	%	$	39,810	$	348		1.75	%
Other interest earning deposits	$	324,120	$	2,467		1.52	%	$	414,612	$	1,843		0.89	%


Total interest earning assets	$	5,924,353	$	161,544		5.45	%	$	5,772,045	$	151,764		5.26	%

Noninterest earning assets (f)	$	423,843						$	388,223


TOTAL ASSETS	$	6,348,196						$	6,160,268


LIABILITIES AND SHAREHOLDERS’ EQUITY:
Interest bearing liabilities:
Savings accounts	$	1,088,531	$	7,325		1.35	%	$	1,023,196	$	7,150		1.40	%
Now accounts	$	665,356	$	2,357		0.71	%	$	702,835	$	3,101		0.88	%
Money market demand accounts	$	832,161	$	7,167		1.72	%	$	821,035	$	6,896		1.68	%
Certificate accounts	$	2,384,768	$	36,477		3.06	%	$	2,316,311	$	37,918		3.27	%
Borrowed funds (g)	$	446,854	$	10,092		4.52	%	$	480,392	$	10,476		4.36	%
Debentures	$	102,062	$	3,964		7.77	%	$	100,531	$	3,798		7.56	%


Total interest bearing liabilities	$	5,519,732	$	67,382		2.44	%	$	5,444,300	$	69,339		2.55	%

Noninterest bearing liabilities	$	272,046						$	228,769


Total liabilities	$	5,791,778						$	5,673,069

Shareholders’ equity	$	556,418						$	487,199


TOTAL LIABILITIES AND EQUITY	$	6,348,196						$	6,160,268


Net interest income/ Interest rate spread			$	94,162		3.01	%			$	82,425		2.71	%

Net interest earning assets/ Net interest margin	$	404,621				3.18	%	$	327,745				2.86	%

Ratio of interest earning assets to interest bearing liabilities		1.07X							1.06X

Rate/ Volume Analysis
(Dollars in Thousands)

Six months ended December 31, 2004 and 2003


							Net
	Rate			Volume			Change
Interest earning assets:
Loans receivable	$	(6,300	)	$	14,312		$	8,012
Mortgage-backed securities	$	3,722		$	(2,764	)	$	958
Investment securities	$	1,197		$	(954	)	$	243
FHLB stock	$	(43	)	$	(14	)	$	(57	)
Other interest-earning deposits	$	1,313		$	(689	)	$	624

Total interest-earning assets	$	(111	)	$	9,891		$	9,780

Interest-bearing liabilities:
Savings accounts	$	(282	)	$	457		$	175
Now accounts	$	(595	)	$	(149	)	$	(744	)
Money market demand accounts	$	176		$	95		$	271
Certificate accounts	$	(2,562	)	$	1,121		$	(1,441	)
Borrowed funds	$	373		$	(757	)	$	(384	)
Debentures	$	108		$	58		$	166

Total interest-bearing liabilities	$	(2,782	)	$	825		$	(1,957	)


Net change in net interest income	$	2,671		$	9,066		$	11,737

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a savings bank holding company, the Company’s primary market risk is interest rate risk. Interest rate risk is the sensitivity of net interest income to variations in interest rates over a specified time period. The sensitivity results from differences in the time periods in which interest rate sensitive assets and liabilities mature or reprice. The Company attempts to control interest rate risk by matching, within acceptable limits, the repricing periods of its assets and liabilities. Because the Company’s interest sensitive liabilities typically have repricing periods or maturities of short duration, the Company has attempted to shorten the maturities of its assets by emphasizing the origination of short-term, fixed-rate consumer loans, one-to-four family residential mortgage loans with terms of 15 years or less and adjustable rate mortgage loans, consumer loans and commercial loans. In addition, the Company has purchased shorter term or adjustable-rate investment securities and adjustable-rate mortgage-backed securities.

The Company has an Asset/ Liability Committee consisting of several members of senior management which meets monthly to review market interest rates, economic conditions, the pricing of interest earning assets and interest bearing liabilities and the Company’s balance sheet structure. On a quarterly basis, this Committee also reviews the Company’s interest rate risk position.

The Company also has a Risk Management Committee comprised of certain members of the Board of Directors which meets quarterly and reviews interest rate risks and trends, the Company’s interest sensitivity position, the Company’s liquidity position and the market risk inherent in the Company’s investment portfolio.

In an effort to assess market risk, the Company utilizes a simulation model to determine the effect of immediate incremental increases and decreases in interest rates in net interest income and the market value of the Company’s equity. Certain assumptions are made regarding loan prepayments and decay rates of passbook and NOW accounts. Because it is difficult to accurately project the market reaction of depositors and borrowers, the effect of actual changes in interest on these assumptions may differ from simulated results. The Company has established the following guidelines for assessing interest rate risk:

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 present value of the Company’s assets and liabilities. Given a parallel shift of 2% in interest rates, the market value of equity may not decrease by more than 35% of total shareholders’ equity.

The following table illustrates the simulated impact of a 1% or 2% upward or 1% downward movement in interest rates on net income, return on average equity, earnings per share and market value of equity. Given the low interest rate environment that existed in the current period, the impact of a 2% downward shift is not shown in the table. This analysis was prepared assuming that interest-earning asset levels at December 31, 2004 remain constant. The impact of the rate movements was computed by simulating the effect of an immediate and sustained shift in interest rates over a twelve-month period from December 31, 2004 levels.


	Increase						Decrease
Parallel shift in interest rates over the next 12 months		1.0	%		2.0	%		1.0	%		2.0	%

Projected percentage increase/ (decrease) in net income		0.7	%		(5.0	)%		(3.5	)%	NM
Projected increase/ (decrease) in return on average equity		0.1	%		(0.4	)%		(0.3	)%	NM
Projected increase/ (decrease) in earnings per share	$	0.01		$	(0.06	)%	$	(0.04	)%	NM
Projected percentage increase/ (decrease) in market value of equity		(3.5	)%		(13.3	)%		4.7	%	NM

NM — Not meaningful

The figures included in the table above represent projections that were computed based upon certain assumptions including prepayment rates and decay rates. These assumptions are inherently uncertain and, as a result, the Company cannot precisely predict the impact of changes in interest rates. Actual results may differ significantly due to timing, magnitude and frequency of interest rate changes and changes in market conditions.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision of and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of this fiscal quarter. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, these disclosure controls and procedures are effective in timely alerting them to the material information relating to the Company (or the consolidated subsidiaries) required to be included in the Company’s periodic SEC filings.

There were no changes in the Company’s internal controls over financial reporting during the period covered by this report or in other factors that has materially affected, or is reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The 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.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On November 15, 2004, the Company issued 1,090,900 common shares to Northwest Bancorp, MHC in exchange for 100% of the common stock of First Carnegie Deposit.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

(a) The Company held its Annual Meeting of Shareholders on November 17, 2004

(b) The name of each director elected at the Annual Meeting is as follows:

Robert G. Ferrier
Richard E. McDowell
Joseph F. Long

The name of each director whose term of office continued after the Annual Meeting is as follows:

William J. Wagner
Thomas K. Creal, III
Richard L. Carr
John M. Bauer
A. Paul King

(i) Election of three directors of the Company:


	For		Withheld
Robert G. Ferrier		44,104,763		120,424
Richard E. McDowell		43,504,028		721,159
Joseph F. Long		43,449,725		775,462

(ii) Approval of an amendment to the Company’s Stock Holding Company Charter to increase the number of authorized shares of common stock.


For	Against	Withheld
35,098,263	4,246,637	4,880,287

(iii) Approval of the Northwest Bancorp, Inc. 2004 Stock Option Plan


For	Against	Withheld
37,470,334	2,024,452	4,730,401

(iv) Approval of the Northwest Bancorp, Inc. Recognition and Retention Plan


For	Against	Withheld
37,674,992	1,843,340	4,706,855

(v) Ratification of the appointment of KPMG LLP as the Company’s independent auditors for the fiscal year ending June 30, 2005.


For	Against	Withheld
43,381,875	711,429	131,883

Not applicable.

Item 5. Other Information

Not applicable.


	PAGE

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Statements of Financial Condition as of December 31, 2004 and June 30, 2004		1

Consolidated Statements of Income for the three months and six months ended December 31, 2004 and 2003		2

Consolidated Statements of Changes in Shareholders’ Equity for the three months ended December 31, 2004 and 2003		3

Consolidated Statements of Changes in Shareholders’ Equity for the six months ended December 31, 2004 and 2003		4

Consolidated Statements of Cash Flows for the three months and six months ended December 31, 2004 and 2003		5

Notes to Unaudited Consolidated Financial Statements		7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

Item 3. Quantitative and Qualitative Disclosures about Market Risk		29

Item 4. Controls and Procedures		30

PART II OTHER INFORMATION

Item 1. Legal Proceedings		30

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		30

Item 3. Defaults Upon Senior Securities		30

Item 4. Submission of Matters to a Vote of Security Holders		30

Item 5. Other Information		31

Item 6. Exhibits		32

Signatures		33

Certifications
EX-31.1
EX-31.2
EX-32.1


31.1		Certification of the Company’s Chief Executive Officer pursuant to Rule 13a-15 or 15d-15 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Company’s Chief Financial Officer pursuant to Rule 13a-15 or 15d-15 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


Date: February 9, 2005	By:	/s/ William J. Wagner

		William J. Wagner
		President and Chief Executive Officer

Date:February 9, 2005	By:	/s/ William W. Harvey, Jr.

		William W. Harvey, Jr.
		Senior Vice President and
		Chief Financial Officer

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ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(a)	Average gross loans receivable includes loans held as available-for-sale and loans placed on nonaccrual status.

(b)	Interest income includes accretion/ amortization of deferred loan fees/ expenses.

(c)	Average balances do not include the effect of unrealized gains or losses on securities held as available-for-sale.

(d)	Interest income on tax-free investment securities and tax-free loans is presented on a taxable equivalent basis.

(e)	Average balances include FNMA and FHLMC stock.

(f)	Average balances include the effect of unrealized gains or losses on securities held as available-for-sale.

(g)	Average balances include FHLB borrowings, securities sold under agreements to repurchase and other borrowings.

	(a)	The Company held its Annual Meeting of Shareholders on November 17, 2004

	(b)	The name of each director elected at the Annual Meeting is as follows: