WARREN - Northwest Bancshares Inc. announced net income for the quarter ended June 30 of $12.7 million or 14 cents per diluted share. This represents a decrease of $763,000, or 5.7 percent, compared to the same quarter last year when net income was $13.5 million, or 15 cents per diluted share, and a decrease of $1.9 million, or 13.1 percent, compared to the quarter ended March 31, when net income was $14.6 million, or 16 cents per diluted share. The annualized returns on average shareholders' equity and average assets for the quarter ended June 30 were 4.77 percent and .64 percent compared to 4.79 percent and .68 percent for the same quarter last year and 5.16 percent and .75 percent for the quarter ended March 31.
The company also announced that its board of directors declared a quarterly cash dividend of 13 cents per share payable on Aug. 14, to shareholders of record as of July 31. This represents the 79th consecutive quarter in which the company has paid a cash dividend.
William J. Wagner, president and CEO, said, "The deterioration of several commercial credits negatively impacted what was otherwise consistent core earnings highlighted by a 2.1 percent increase in net interest income compared to the previous quarter. This improvement was the result of loan growth of nearly $35 million and an increase in checking accounts of more than $38 million. Looking at the other elements of income, we are pleased to report that noninterest income increased by 27.7 percent while noninterest expense was held to just a 1.9 percent increase over the previous year. Finally, we were excited to be recognized for the fourth time in the last five years by J.D. Power & Associates as the 'Highest Rated Financial Institution for Customer Satisfaction in the Mid-Atlantic Region'. Further recognition was received from Forbes who named Northwest as 'One of America's 50 Most Trustworthy Financial Companies' and from Keefe, Bruyette & Woods who included Northwest as one of 31 companies on their 'Bank Honor Roll.'"
Net interest income decreased by $1.2 million, or 1.9 percent, to $62.1 million for the quarter ended June 30, from $63.3 million for the quarter ended June 30, 2013, as interest income on both loans receivable and investment securities decreased from the prior year. These decreases were partially offset by a $1.2 million decrease in interest paid on deposit accounts and borrowed funds. These changes from the previous year were due primarily to the continued low level of market interest rates. Net interest income, however, improved by $1.3 million, or 2.1 percent, over the prior quarter due primarily to growth of $24.7 million, or 1.2 percent, in commercial loans.
The provision for loan losses increased by $2.9 million, or 53.3 percent, to $8.3 million for the quarter ended June 30, from $5.4 million for the quarter ended June 30, 2013 and increased by $800,000 compared to the quarter ended March 31. This increase is due primarily to the deterioration of several commercial loans which required a provision of $5.5 million. The total required provision for the quarter was lessened by the continued improvement in overall asset quality with loans 90 days or more delinquent decreasing $12.2 million, or 19.3 percent, and total nonaccrual loans decreasing $23.8 million, or 19.7 percent, compared to a year ago and the continued recovery of previously charged-off loans. Net charge-offs for the current quarter were $13.1 million, or .9 percent of average loans compared to $4.8 million, or .34 percent for the same quarter last year. This increase resulted from the charge-off of two commercial loans for $6.8 million and $1.3 million, respectively. At June 30, the allowance for loan losses was $71.4 million, or 1.21 percent of total loans, compared to $72.6 million, or 1.28 percent of total loans, at June 30, 2013.
Noninterest income increased by $3.7 million, or 27.7 percent, to $17.1 million for the quarter ended June 30, from $13.4 million for the quarter ended June 30, 2013. This increase is due primarily to a $1.7 million decrease in the loss on real estate owned and an increase in other operating income of $823,000, as a result of increased Federal Home Loan Bank dividends. Additionally, trust and other financial services income increased by $792,000, due primarily to the acquisition of Evans Capital Management, Inc. on Jan. 1.
Noninterest expense increased by $1 million, or 1.9 percent, to $53.8 million for the quarter ended June 30, from $52.8 million for the quarter ended June 30, 2013. This increase was due primarily to an $838,000 increase in marketing expense as the result of robust marketing activity in the current quarter to promote loan and checking growth. Additionally, professional services increased by $576,000, due primarily to compliance related consulting engagements as we continue to strengthen our regulatory compliance management system.
Net income for the six-month period ended June 30 of $27.4 million represents a decrease of $1.4 million, or 4.9 percent, compared to net income of $28.8 million for the six-month period ended June 30, 2013. Diluted earnings per share for the six-month period ended June 30 decreased to 30 cents per share from 32 cents per share in the same period last year. The annualized returns on average shareholders' equity and average assets were 4.97 percent and .7 percent, respectively, for the current six-month period compared to 5.12 percent and .73 percent, respectively, in the prior year.
Headquartered in Warren, Northwest Bancshares Inc. is the holding company of Northwest Savings Bank. Northwest operates 165 community banking offices in Pennsylvania, New York, Ohio and Maryland and 50 consumer finance offices in Pennsylvania through its subsidiary, Northwest Consumer Discount Company. Northwest Bancshares, Inc.'s common stock is listed on the NASDAQ Global Select Market as NWBI. Additional information regarding Northwest Bancshares Inc. and Northwest Savings Bank can be accessed online at www.northwestsavingsbank.com.