Wintrust Earnings Miss Mark

By Katie Murar

Wintrust Financial Corp. shares dropped 5 percent after the Chicago-area bank holding company reported significantly lower-than-expected fourth quarter earnings due to increased operating costs.

In the final quarter, the company posted net income of $35.5 million, or 64 cents per diluted share, down 6.8 percent from $38.1 million, or 75 cents per share, in the year-ago quarter.

Excluding acquisition-related costs and other one-time factors, Wintrust said, per-share earnings were 71 cents, still 7 cents shy of estimates from analysts surveyed by Zacks Investment Research.

Wintrust Quarterly Net Income (in millions)

Wintrust Financial Corp. posted a 6.8 percent decrease in net income from the year-ago quarter. (Katie Murar/MEDILL)
Wintrust Financial Corp. posted a 6.8 percent decrease in net income from the year-ago quarter. (Katie Murar/MEDILL)

“Obviously they came in a bit light,” John Rodis, senior vice president and research analyst for Fig Partners LLC, said. “Operating expenses were the primary driver for a lower-than-expected margin and net interest income.”

The bank’s provision for credit losses jumped 48 percent to $9.1 million from $6.1 million last quarter.

“Wintrust reported record annual net income in 2015 even with additional acquisition and non-operating compensation charges during the year,” Edward J. Wehmer, president and chief executive officer, said in a press release. “The Company grew significantly during the year as total assets increased by 15%, reaching nearly $23 billion.”

Despite their below-expected quarterly earnings, Fig Partners’ Rodis pointed to strong loan growth and solid credit quality as highlights for the quarter.

“Loans were up almost 5 percent which is better than expected, and credit quality was also good,” Rodis said. “As far as their future, they’re going to be fine. You will continue to see them grow in Chicago and take market share and you’ll continue to see them do some smaller, one-off acquisitions.”

Wintrust, which specializes in personal and commercial banking services to customers in 15 locations throughout Chicago and southeastern Wisconsin, had non-interest income of $65 million, up 12.9 percent from $57.7 million in the year-ago quarter. Net interest income was $167.2 million, up 9 percent from $153.7 million a year ago.

Rodis said his EPS 2016 estimate for the bank will come down following today’s release.

“With current interest rate requirements, net interest income remains a challenge, but I don’t expect the company to grow loans this fast going forward,” Rodis said. “With expenses continuing to come in higher than most people expect, expectations will come down some.”

For the full 2015 year, net income was $156.7 million, or $2.93 per diluted share, up 3.5 percent from $151.4 million, or $2.98 per diluted share, in 2014. Analysts surveyed by Zacks are currently expecting Wintrust to report full-year 2016 earnings of $3.46 a share.

In New York Stock Exchange trading Tuesday, Wintrust shares dropped $2.12 to close at $41.49.

“I do think once the dust clears the stock will get back into the higher 40s,” Rodis said.

Photo at top: Chicago-based Wintrust Financial Corp. posted lower-than-expected earnings, causing shares to drop Tuesday. (Katie Murar/MEDILL)