Northwest Reports Net Income Loss

Northwest Bancshares Inc. is reporting a 15.1 percent decrease in second quarter net income for 2018 when compared to last year, though the news for all of 2018 is still good.

Northwest officials announced 2018 second quarter net income of $26.3 million, or 25 cents per diluted share. It is a decrease of $4.7 million compared to the same quarter last year when net income was $31 million or 30 cents per diluted share. The prior year’s quarterly earnings were augmented by the sale of the company’s three Maryland offices for a profit of $17.2 million, or $10.3 million after tax.

Net income for the six month period ended June 30 was $51.3 million, or 50 cents per diluted share. This represents an increase of $2.6 million, or 5.2 percent, compared to the six month period ended June 30, 2017, when net income was $48.7 million, or 48 cents per diluted share. The annualized returns on average shareholders’ equity and average assets for the six month period ended June 30, were 8.54 percent and 1.09 percent compared to 8.34 percent and 1.03 percent for the same period last year. This increase in net income was the result of an increase in net interest income after provision of $3.3 million, or 2.2 percent, a reduction in noninterest expense of $7.7 million, or 5.3 percent, and a lower effective tax rate as prescribed by the Tax Cuts and Jobs Act.

The annualized returns on average shareholders’ equity and average assets for the quarter ended June 30 were 8.67 percent and 1.11 percent compared to 10.48 percent and 1.30 percent for the same quarter last year.

The company also announced that its board declared a quarterly cash dividend of 17 cents per share payable on Aug. 16 to shareholders of record as of Aug. 2. This is the 95th consecutive quarter in which the company has paid a cash dividend. Based on the market value of the company’s stock as of June 30, it will be an annualized dividend yield of 4 percent.

“We are very pleased with the positive momentum established in the first half of this year,” said Ronald J. Seiffert, bank president and chief executive officer. “We remained disciplined in our loan growth of approximately $150 million, or nearly 2 percent, all funded with organic increases in checking and savings accounts. Expense reductions of almost $8 million, or over 5 percent from the prior year, were realized from the efficiency initiatives implemented during the past two years. In addition, we were able to maintain a stable net interest rate spread and margin despite the continued flattening of the yield curve. Finally, with the June announcement of our merger with Donegal Financial Services Corporation and Union Community Bank, scheduled to close in the first quarter of 2019, we are looking forward to the meaningful impact that the employees and this franchise will have on Northwest going into next year.”

Net interest income increased by $1.5 million, or 1.8 percent, to $84.2 million for the quarter ended June 30, from $82.7 million for the quarter ended June 30, 2017, primarily due to a $3.4 million, or 4 percent, increase in interest income on loans receivable. The increase was primarily the result of an increase in the average balance of loans receivable of $196.8 million, or 2.6 percent, and an increase in the average yield on loans receivable of six basis points as a result of the recent increases in market interest rates. Partially offsetting this improvement was an increase in interest expense on deposits of $1.5 million, or 25.5 percent, due to the aforementioned increases in market interest rates. The net impact of these changes caused the company’s net interest margin to increase to 3.72 percent for the quarter ended June 30 from 3.66 percent for the same quarter last year.

Headquartered in Warren, Northwest Bancshares Inc. is the holding company of Northwest Bank.

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