Higher loan income bolsters Northwest in Q4

Northwest Bancshares enjoyed a stellar quarter in the last three months of 2020, paying less in interest on customer deposits and enjoying larger incomes from loans.

Northwest paid out less in interest on deposits, compared to the same quarter in 2019, and earned higher incomes on loans extended to clients. The bank attributed a 15.7% increase in net interest income to $102.9 million for the quarter to an 8% rise in interest income on loans and a 47.9%, decrease in interest expense on deposits.

Despite warnings from industry consultants that the pandemic could be “the most serious challenge to financial institutions in nearly a century,” Northwest shrugged off the headwinds with a huge rise in revenues.

The bank also maintained dividend payments throughout 2020 with a quarterly dividend of $0.19 per share for the fourth quarter, on the back of a 37% rise in net income.

In its fourth quarter earnings, Ronald J. Seiffert, chairman, president and chief executive of Northwest Bancshares, said the bank continued to pay a dividend “despite the challenges of Covid-19 on bank earnings”.

The quarterly dividend declared is payable on February 15, 2021. It will be the 105th consecutive quarter in which the company has paid a cash dividend.

Seiffert said that the proposed payment represents an annualized dividend yield of around 5.5%, which he noted as “among the highest” in the retail banking peer group.

The holding company of Northwest Bank reported net income for the quarter ended December 31, 2020 of $35.1 million, or $0.28 per diluted share, an increase of $9.5 million, or 37%, on the same quarter last year when net income was $25.6 million, or $0.24 per diluted share.

The company’s annualized returns on average shareholders’ equity and average assets also rose during the fourth quarter, ending the period at 9% and 1.01%, compared to 7.52% and 0.97% for the same quarter last year.

Non-interest income grew by 13.9% to $32.1 million in the fourth quarter of 2020.

The company said this was primarily due to the $5.6 million increase in mortgage banking income to $7.1 million, due to the “continued efforts to expand our secondary market sales capabilities over the past year, as well as an interest rate environment conducive to refinance activity and attractive secondary market pricing.”