Wintrust Financial reports 54 percent boost in quarterly net income

Wintrust Bank Grand Banking Hall in Chicago.
The Grand Banking Hall at Wintrust Bank in Chicago. (Photo by RW Sinclair via Flickr)

By Katherine Hyunjung Lee

Wintrust Financial Corp. (NASDAQ:WTFC), an Illinois-based bank holding company providing community banking and financial services, late Wednesday reported its net income increased by 53.8 percent to $54.6 million in the fourth quarter ended Dec. 31 from $35.5 million a year before. Diluted earnings per share beat Bloomberg’s consensus estimate of 91.6 cents per share at 94 cents per share.

The stock opened at $70.02, up $1.08 from Wednesday’s close at $69.14, but dropped 92 cents on Thursday, closing at $68.22 in Nasdaq trading.

Net interest income of the company amounted to $190.8 million, up 14.1 percent from $167.2 million in the prior-year quarter.

“The increased loan volumes and stable net interest margin during the quarter resulted in an increase in net interest income of $6.1 million,” Edward J. Wehmer, president and CEO, said in the company’s earnings announcement.

In a note to investors, Terry McEvoy, an analyst at Stephens Inc., wrote that a high loan growth and strong revenues in wealth management and mortgage banking unit contributed to a better-than-expected performance.

The company’s income from wealth management and mortgage banking increased by 4.7 percent and 52.2 percent, respectively.

“Wintrust has been a big player in the mortgage business, principally in the Illinois market, so that has helped them as well,” Nathan Race, a research analyst at Piper Jaffray and Co., said in an interview. “A big player in the retail loan origination market,” Wintrust Financial has indicated over the last several quarters that it is trying to improve the profitability of its mortgage banking unit, according to Race.

Among the projects mentioned throughout Wintrust Financial’s earnings conference call on Thursday was the $209 million construction loan for the development of McDonald’s Corp.’s new headquarters in Chicago’s Fulton Market District, which Wintrust Financial and Bank of America financed in December.

“Given the recent rise in interest rates and typical seasonality, we expect originations to decrease in the first quarter of 2017,” Wehmer said in the earnings announcement.

Higher interest rates could benefit companies in lending spreads, but could also be a headwind for Wintrust’s big presence in mortgage origination, Race said.

In the earnings conference call analysts also questioned the impact of potential changes in the corporate tax rate on the company’s business. Executives said they were in a “wait-and-see” mode to see how trade and tax policies would play out in 2017 following the inauguration of President-elect Donald Trump.

For the year ended Dec. 31, the company reported net income of $206.9 million, or $3.66 per diluted share, up 32 percent from $156.7 million, or $2.93 per diluted share, in the prior year. The company’s net interest income also increased, by 12.6 percent, to $722.2 million from $641.5 million .

Photo at top: The Grand Banking Hall at Wintrust Bank in Chicago.(Photo by RW Sinclair via Flickr)