For immediate release

The Federal Reserve Board today announced its approval of the applications of Northwest Bancorp, MHC ("MHC"), and Northwest Bancorp, Inc., MHC's newly formed majority owned subsidiary stock bank holding company, to own all the voting shares of MHC's subsidiary bank, Northwest Savings Bank, all of Warren, Pennsylvania. Attached is the Board's Order relating to this action.

Northwest Bancorp, MHC Warren, Pennsylvania Northwest Bancorp, Inc. Warren, Pennsylvania Order Approving Formation of a Bank Holding Company and Acquisitions by Bank Holding Companies

Northwest Bancorp, MHC ("MHC"), Warren, Pennsylvania, a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act") and organized in mutual form, has requested the Board's approval under section 3 of the BHC Act (12 U.S.C. § 1842) to reorganize its corporate structure by forming Northwest Bancorp, Inc. ("Bancorp"), as a majority owned subsidiary stock bank holding company that would own all the voting shares of MHC's subsidiary bank, Northwest Savings Bank ("Bank"), all of Warren, Pennsylvania. Bancorp also has requested the Board's approval to become a bank holding company section under 3 of the BHC Act. Notice of this proposal, affording interested persons an opportunity to submit comments, has been published (62 Federal Register 3513 (1997)). The time for filing comments has expired, and the Board has considered the proposal and all comments received in light of the factors set forth in section 3 of the BHC Act. Bank is the 19th largest depository institution in Pennsylvania, controlling approximately $1.5 billion in deposits, representing less than 1 percent of all deposits in depository institutions in the state.1 Based on all the facts of record, including the fact that the transaction represents a corporate reorganization to form a second-tier bank holding company, the Board concludes that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of banking resources in any relevant banking market, and that competitive considerations are consistent with approval. In every application under section 3 of the BHC Act, the Board is required to consider the financial and managerial resources and future prospects of the companies and banks concerned, and the convenience and needs of the communities to be served. MHC owns approximately 69 percent of the voting shares of Bank. The remaining 31 percent of Bank's shares are owned by members of the public, including minority shareholders who serve as senior management of Bank and members of MHC's board of trustees. Shareholders of Bank would exchange their stock for voting shares of Bancorp, and would own the same percentage of shares of Bancorp as they currently own of Bank.2 When the Board approved the formation of MHC in 1994, the Board noted that, because MHC did not own all the voting shares of Bank, equity could be transferred from the mutual owners of the holding company to the minority shareholders of Bank at the expense of the mutual owners if MHC were the only shareholder to waive dividends from Bank.3 The Board concluded that such a result could present adverse considerations under the financial and managerial resources and future prospects and convenience and needs factors required to be reviewed under the BHC Act.4 After carefully reviewing all the facts of record, including MHC's commitments requiring Bank to retain any dividends waived, and the fulfillment of the conditions imposed by the Federal Deposit Insurance Corporation ("FDIC") and the Pennsylvania Department of Banking, the Board concluded that these factors were consistent with approving the formation of MHC.5 The formation of Bancorp as a subsidiary stock company between MHC and Bank potentially raises the same adverse considerations discussed in the Northwest Order. Bancorp, for example, as a company controlled by MHC, could pay a dividend to insider minority shareholders, notwithstanding MHC's dividend waiver commitment, by issuing special classes of stock with dividend rights to the minority shareholders. In addition, insider minority shareholders could increase the value of their shares at no cost through the repurchase of MHC stock by Bancorp, or by repurchases of insider minority shareholdings at above market prices. The Board is also concerned that the preference to purchase new shares of Bank or shares of MHC that was provided to Bank's depositors by the Northwest Order could be circumvented through the sale of new shares of Bancorp.6 To address these concerns, MHC and Bancorp have made a number of commitments set forth in the Appendix. In particular, MHC or its subsidiaries will not issue any securities that would give the holder a right to acquire equity securities or convey an interest in the retained earnings of the issuer to a person other than MHC without the Board's approval. Bancorp also will seek the Board's approval before repurchasing any equity securities from MHC, will repurchase equity securities from shareholders other than MHC only at the current market price, and will maintain detailed records of all stock repurchases. Finally, Bank's depositors will be accorded the same preference to purchase shares that is provided by the Northwest Order for any sale, transfer or issuance of shares of Bank or Bancorp to any person other than MHC. The Board believes that these commitments permit the Board to monitor and address the issues raised when a mutual holding company owns less than all the voting shares of a savings bank through a subsidiary stock holding company. In this light, and based on all the facts of record, including consultations with federal and state banking supervisory agencies, the Board concludes the financial and managerial resources and future prospects of MHC, Bancorp, and Bank are consistent with approval, as are the convenience and needs and other supervisory factors that the Board must consider under section 3 of the BHC Act. Based on the foregoing and other facts of record, the Board has determined that the applications should be, and hereby are, approved. The Board's approval of the proposal is expressly conditioned on compliance with all the commitments made by the applicants in connection with the applications, including the commitments and conditions discussed in the order, and is conditioned on receipt by the applicants of all necessary approvals from all relevant regulators, and compliance with the requirements imposed by those regulators. For purposes of this action, the commitments and conditions relied on by the Board in reaching this decision are deemed to be conditions imposed in writing and, as such, may be enforced in proceedings under applicable law. This proposal shall not be consummated before the fifteenth calendar day after the effective date of this order or later than three months after the effective date of this order, unless such period is extended for good cause by the Board or by the Federal Reserve Bank of Cleveland, acting pursuant to delegated authority.

By order of the Board of Governors,7 effective August 18, 1997. (signed) Jennifer J. Johnson Jennifer J. Johnson Deputy Secretary of the Board

Appendix (1) MHC will not sell, transfer, or otherwise dispose of any of its shares in Bancorp, or Bank to any person (including an Employee Stock Ownership Plan) and Bancorp will not sell, transfer, or otherwise dispose of any of its shares of Bank without the prior approval of the Board. Bancorp, Bank, or any other direct or indirect subsidiary of MHC will not issue equity securities or any securities that would accord the holder the right to acquire equity securities or that would bestow upon the holder an interest in the retained earnings of the issuer to persons other than MHC, unless MHC and Bancorp seek prior approval of the Board and the Board approves the issuance; (2) In any conversion of MHC from mutual to stock form, the holding company will file an application for approval of the conversion with the Board and will comply with the rules and regulations of the Office of Thrift Supervision ("OTS") as if Bank were a savings association and MHC and Bancorp were savings and loan holding companies, respectively, except that such rules shall be administered by the Board; (3) In connection with commitments 1 and 2, MHC and Bancorp agree with the following: A. In any sale, transfer or issuance of shares of Bank or Bancorp to any person other than MHC, the depositors of Bank will be accorded the same stock purchase priorities given to depositors of a mutual savings association in connection with such association converting to stock form, unless such condition is waived by the Board. In making such sale, or transferring or issuing such shares, MHC and Bancorp and their management will comply with any fiduciary duty they owe. B. The Board will take into account the extent to which the proposed transactions conform with the provisions and purpose of the regulations of the OTS (12 C.F.R. Part 563b and 575) and the FDIC (12 C.F.R. 303.15 and 333.4), as currently in effect at the time the Board reviews the required materials related to the proposed transactions. Any nonconformity with those provisions will be closely scrutinized. Conformity with the OTS and FDIC requirements, however, will not be sufficient for Board regulatory purposes if the Board determines that the proposed transaction would pose a risk to the institution's safety and soundness, violate any law or regulations, or present a breach of fiduciary duty. (4) Bancorp commits to seek the Board's prior approval before repurchasing any equity securities from MHC. Bancorp commits that any repurchases of equity securities from shareholders other than MHC shall be at the current market price for such share repurchase. Bancorp shall maintain detailed records of all stock repurchases for review by the Board; (5) MHC and Bancorp commit not to incur debt without receiving prior approval from the Board; and (6) MHC and Bancorp commit not to pledge the stock of Bancorp in support of any borrowing without receiving prior approval from the Board.

Footnotes 1 All banking data are as of September 30, 1996. In this context, depository institutions include commercial banks, savings banks, and savings and loan associations. 2 Bancorp would be formed through a series of transitions that would occur simultaneously. Bancorp would initially be formed as a wholly owned subsidiary of Bank. Bancorp would then charter an interim savings bank as a wholly owned subsidiary. Bank would merge with the interim savings bank and, as the surviving institution, become a wholly owned subsidiary of Bancorp. The shareholders of Bank would then exchange their Bank stock for Bancorp stock on a one-for-one basis and Bancorp would own all the voting stock of Bank. 3 See Northwest Bancorp, MHC, 80 Federal Reserve Bulletin 1131 (1994) ("Northwest Order"). 4 The Board noted that a waiver of dividends by MHC could reduce or impair its ability to serve as a source of strength for Bank. The Board also concluded that a decision by MHC's board of trustees to execute such a waiver, without a corresponding waiver by the minority shareholders, raised a potential conflict of interest because, as minority shareholders, board members had a financial interest in the waiver. The potential conflict was of particular concern in a company that was organized in mutual form because, unlike a stock company whose management may be replaced by its shareholders, state law did not provide a mechanism for management of a mutual holding company to be changed by its mutual owners. See Northwest Order at 1132-33. 5 The commitments and conditions discussed in the Northwest Order are specifically incorporated by reference as commitments and conditions in connection with the Board's action on this proposal. 6 The Office of Thrift Supervision's ("OTS") regulations require that if a stock thrift subsidiary of a mutual holding company issues stock, the thrift must first offer the stock to its depositors before offering shares to the public, including stock issuances to fund an acquisition. FDIC regulations require the FDIC to take into account the extent to which a proposal to convert a state chartered savings bank to stock form complies with the OTS regulations, including stock issuances and depositor preference rules. MHC has agreed to commitments that are consistent with the OTS's depositor preference rules and the commitments in the Northwest Order. 7 Voting for this action: Chairman Greenspan, Vice Chair Rivlin, and Governors Kelley, Phillips, and Meyer.

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1997 Orders on banking applications