Earnings at Northwest Bancshares in Warren, Pa., dropped slightly compared with last year, as a reduced return from the bank's loan portfolio squeezed profits.

The $7.8 billion-asset bank's net income was $17.3 million, or 1.3% lower than the same quarter last year. Earnings were 19 cents per share, beating an estimate of analysts polled by Bloomberg by three cents.

Lower margins weighed down profits. Net interest income fell 0.9% from the previous year, to $61.9 million, while the bank's loan portfolio grew 2.6%, to $5.9 billion. The net interest margin declined by 1 basis point, to 3.47%.

On the plus side, credit quality improved, as the bank's provision for bad loans dropped 31%, to $3.5 million.

Earnings were goosed by higher fee-based revenue, particularly from trusts and investments. Noninterest income climbed 12%, to $18.2 million.

An increase in operating expenses offset some of the gains from fees, however, as non-interest expenses jumped 5.8%, to $53.4 million.

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