Northwest Bancorp 4Q earnings fall

Northwest Bancorp 4Q earnings fall

	Published : Mon, 22 Jan 2007 22:21 By : Agencies Print this Story

WARREN, Pa. (AFX) - Northwest Bancorp Inc., which runs community banker Northwest Savings Bank in Pennsylvania and four other states, said Monday its fourth-quarter earnings fell 34 percent, citing unfavorable interest rates.

Quarterly earnings declined to $9.8 million, or 20 cents per share, from $14.8 million, or 29 cents per share during the same period last year.

The results included an expense of $3.1 million related to the redemption of certain securities.

Analysts polled by Thomson Financial forecast a profit of 25 cents per share.

Net interest income, or the bank's business that deals with interest accounts such as loans and deposits, fell 6 percent to $42.9 million from $45.7 million a year ago.

The company cited a flat yield curve. That is a reference to unusually high short-term interest rates that currently exceed or match long-term interest rates, which usually are higher than short-term rates. That creates a so-called flat yield curve, which is a hardship for banks because they typically borrow money short-term money and loan it long term, profiting from the difference in interest rates. Much of the short-term interest rate stems from the U.S. central bank's activities. At 5.25 percent, the Federal Reserve's short-term interest rates target is at its highest level since April 2001, while long-term rates have remained fairly stagnant.

Northwest Bancorp said non-interest income, or the cash its makes from mortgage loan service fees and other fees and charges, rose 2.9 percent to $10.5 million from $10.2 million last year.

For the year, the company said its earnings fell 9 percent to $51.5 million, or $1.03 per share, from $56.8 million, or $1.11 per share in 2005.

Analysts expected a profit of $1.10 per share.

The company said net interest income fell 4 percent to $177.5 million from $184.6 million a year ago. Noninterest income rose 25 percent to $46 million from $36.7 million last year.

Shares of Northwest Bancorp fell 40 cents to $25.47 in afternoon trading on the Nasdaq Stock Market.