Northwest Bancshares said Monday that first-quarter earnings rose 0.8 percent from a year ago, as lower losses on foreclosed properties and higher insurance commissions from an acquisition overcame a drop in income from lending.
The Warren, Pa.-based parent of Northwest Savings Bank reported net income of $15.3 million, or 17 cents per share, up from $15.2 million, or 16 cents per share, a year ago.
Compared with the fourth quarter, profits fell 6.3 percent from $16.3 million, or 18 cents per share.
The company’s board also declared a regular quarterly cash dividend of 12 cents per share, payable May 16 to shareholders of record on May 2. That’s the 74th straight quarter with a cash dividend.
Additionally, the board declared a special extra cash dividend, also 12 cents per share, to be paid at the same time to the same shareholders. The bank said the special dividend will “supplement” the regular first- quarter dividend, which was prepaid in December to help shareholders avoid extra taxes in anticipation of the federal “fiscal cliff” at year’s end.
It will not affect the payment of regular quarterly dividends for the rest of the year, scheduled for May, August and November.
Chairman and CEO William J. Wagner noted that the board’s action stemmed from a recognition that Northwest has excess capital and a “limited ability” to put it to use “given current market and regulatory challenges.” Directors also considered that “persistently low interest rates” have harmed shareholders’ investment yields and cash flow.
“Given these considerations, our board felt that it made sense to return some of our excess capital to our shareholders at this time,” Wagner said.
Net interest income from taking deposits and making loans fell 1.4 percent to $64.5 million because of competitive pricing, drops in market interest rates and repricing of adjustable-rate loans. Interest income from loans fell by $4.7 million, and investment yields fell $1.3 million, while interest on deposits fell $5.1 million.
The bank set aside $7.2 million for loan losses, up 13.9 percent, as bad debts on its books rose to $125.7 million, and loan losses nearly doubled to $8.4 million from $4.5 million a year ago.
Fee and other income rose 16.4 percent to $15.9 million, not because it earned more but because it lost less. Specifically, its loss on foreclosed real estate fell by $940,000. The bank’s purchase of Bert Insurance Group also generated $577,000 more in insurance commissions.
Operating expenses rose by 0.4 percent to $51.5 million, as higher snow removal expenses drove occupancy costs up 7 percent. ATM and debit card processing expenses fell.