Northwest Bancshares said third-quarter profits fell 6 percent, as loan growth and improved asset quality failed to overcome pressure on the bank’s profit margin from continued record low interest rates that show no signs of abating.
The Warren, Pa.-based parent of Northwest Savings Bank reported net income of $15.7 million, or 17 cents per share, down from $16.7 million, or 17 cents per share, a year ago. Results were also down from the second quarter, when the bank earned $16.4 million, or 17 cents per share.
Still, the bank declared a quarterly cash dividend of 12 cents per share, to be paid Nov. 15 to shareholders of record on Nov. 1. That’s the 72nd straight quarter of a cash dividend, the company noted. The bank also bought back 183,780 shares of its stock during the quarter, at an average price of $12 per share.
The company grew its loans by $177 million, or 3.2 percent, in the past nine months, which helped to prop up lending revenues, despite low interest rates and competitive pressures. Still, net interest income from taking deposits and making loans fell 1.5 percent to $66 million, as interest income from loans fell 4.3 percent and income from investments fell 25.7 percent, while interest expenses on deposits fell 31.8 percent.
“We are pleased to have maintained a stable net interest margin… over the past year despite ongoing economic uncertainty and the challenges of the prolonged low interest rate environment,” said President and CEO William J. Wagner.
The bank set aside $6.9 million for loan losses, down 14.2 percent, as loans written off as uncollectible fell 43.2 percent to $5.8 million, while loans that are at least 90 days late in payments fell 28 percent to $80.4 million — the lowest level since the second quarter of 2008.
Fee and other income rose 2.9 percent to $14.9 million, driven by a $1.1 million increase in mortgage banking revenues. Expenses rose 3.8 percent to $51.8 million, driven by higher compensation and benefits because of increased health insurance costs and an increase in lending and compliance staff, offset in part by lower marketing costs.
Northwest operates 166 branches in New York, Pennsylvania, Ohio and Maryland, and 52 consumer finance offices in Pennsylvania.