Wintrust reports strong first-quarter earnings

By Yimian Wu

Wintrust Financial Corp. announced a strong first quarter result, exceeding expectations, with growing loans and deposits, a substantial increase in mortgage banking revenue, and continuing acquisitions. Shares went up 1 percent.

In the quarter ended March 31, the Rosemont-based bank holding company earned $39.1 million, or 76 cents per diluted share, a 13 percent increase from $34.5 million, or 68 cents per diluted share, in the same quarter of 2014. Analysts estimated 73 cents per diluted share, according to Bloomberg.

The quarterly cash dividend was increased 1 cent to 11 cents per share.

Net interest income totaled $151.9 million in the quarter, up 5 percent, primarily because of the strong growth in loans. Non-interest income went up 42 percent to $64.5 million due to a 68 percent increase in mortgage banking income benefited by continuing low interest rates encouraging refinancings.

Credit quality improved. Non-performing loans decreased to $81.8 million, or 0.55 percent of total loans, from $90.1 million, or 0.69 percent of total loans. Net charge-offs declined to $3.1 million from $7.8 million.

Speaking on a conference call with analysts, CEO Edward Wehmer said, “How could you be not happy? The stock traded at a 52-week high today. The Blackhawks are up 1-nothing, the Cubs are in first place. How about that?” He referred to the 52-week high intra-day price of $49.97.

Shares closed at $49.30, up 53 cents.

After completing the acquisition of Delavan Bancshares with approximately $256 million of assets in January, the company announced agreements to acquire Community Financial Shares, North Bank and Suburban Illinois Bancorp. “We are going to make hay while the sun shines,” said Wehmer as he talked about his acquisition plans.

Asked later if there are acquisition risks involved in Wintrust’s rapid expansion, Stephen Geyen, senior research analyst at D. A. Davidson, said in an email, “these acquisitions are quite small and each of Wintrust’s 13 subsidiary banks has the experience to integrate an acquisition.  Therefore, risk is manageable.”

A shrinking net interest margin was the only unsatisfying figure reported by Wintrust. The net interest margin for the first quarter of 2015 was 3.42 percent compared with 3.61 percent in the same period last year. The decline was the result of a decline in loan yields.

“Given the current rate environment, loan growth is likely to come at lower rates. Therefore, some net interest margin pressure is to be expected,” said Geyen.

Photo at top: Wintrust’s banking center in downtown Chicago (Yimian Wu/Medill)