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Northwest’s net income drops 17.6% in second quarter

Northwest Bancshares reported a 17.6 percent drop in net income in its second quarter, dragged down by some atypical factors.

The Warren, Pa.-based parent company of Northwest Savings Bank reported net income of $13.5 million for the quarter ending June 30, compared with $16.4 million a year ago. It recorded diluted earnings per share of 15 cents, missing analysts’ estimate of 18 cents and declining from 17 cents a year earlier.

William J. Wagner, Northwest’s president and CEO, called the earnings “disappointing” but cited the influence of unusual items such as a $1.9 million write-down of a foreclosed condominium project and $1.3 million in expenses for upgrading and replacing its ATM network.

The bank’s net interest income fell by 3.6 percent from a year ago, to $63.3 million.

Its non-interest income dropped by 11.1 percent, to $13.4 million. That category included a 70 percent decline in mortgage banking income, attributed primarily to the bank’s decision to hold more residential mortgage loan originations in its portfolio rather than sell them. The bank did record a $587,000 increase in insurance commission income, stemming from its purchase of the Bert Co. insurance agency that took effect Jan. 1.

Non-interest expenses were up by 1.6 percent from a year ago, due partly to the ATM upgrade and adding 38 full-time equivalent employees, as well as increased health insurance costs.

Northwest has eight branches in Erie and Niagara counties. It ranked eighth in deposits in the Buffalo Niagara region in 2012, according to the most recent comparative data available from the Federal Deposit Insurance Corp.