Wintrust Financial Corporation
) reported earnings per share of 70 cents in fourth-quarter 2013,
in line with the Zacks Consensus Estimate. Further, results
compared favorably with the prior-year quarter figure of 61
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For full-year 2013, Wintrust's earnings per share of $2.75 came
in line with the Zacks Consensus Estimate. Further, it came well
ahead of the prior-year figure of $2.31 cents. With this, the
company has delivered positive earnings surprises in three of the
four quarters of 2013.
Wintrust's results primarily reflect increased net interest
income (NII) and lower non-interest expenses. Profitability
ratios were also impressive during the quarter. Further, increase
in loan and deposit balances and a better asset quality were
among other positives. However, top-line showed deterioration
during the quarter.
The company's net income applicable to shareholders of $33.7
million in the reported quarter reflects an increase of 22.7%
from the year-ago quarter. Also, for 2013, it came in at $122.9
million, up 26.6% year over year.
Performance in Details
Wintrust's net revenue declined 5.0% year over year to $1.9
million. However, for 2013, it stood at $7.7 million, up 4% year
Wintrust's NII on a fully tax equivalent basis rose 7% from the
prior-year quarter to $1.4 million. The rise was primarily driven
by increase in average earning assets and lower interest
expenses. Net interest margin (NIM) climbed 13 basis points (bps)
year over year to 3.53%.
Wintrust's non-interest income fell 29% year over year to $46.4
million, primarily due to decreased mortgage banking income and
losses incurred on available-for-sale securities. Notably, the
absence of a credible improvement in the weak mortgage market
environment across the industry has affected the company as it
witnessed declining mortgage revenue in all four quarters of
Non-interest expenses at Wintrust stood at $127.0 million, down
2% year over. The decline was primarily driven by decrease in
other real estate owned (OREO) expenses and personnel expenses,
partially offset by rise in occupancy, data processing and
On a fully tax equivalent basis, efficiency ratio stood at 65.95%
declining 18 basis points year over year. A fall in the
ratio reflects improved profitability.
Credit quality metrics exhibited a marked improvement in the
quarter. Wintrust's provision for credit losses fell 81% from the
prior-year quarter to $3.9 million. Net charge-offs as a
percentage of loans, excluding covered loans, stood at 0.44% on
an annualized basis, down 39 basis points year over year.
As of Dec 31, 2013, excluding the allowance for covered loan
losses, the allowance for credit losses came in at 97.6 million
or 0.76% of total loans, compared with $122.0 million or 1.03% of
total loans as of Dec 30,2012 and $124.9 million or 1.09% of
total loans as of Sep 30, 2012.
Net loans increased 7% year over year to $13.1 billion. Further,
total deposits rose 2% year over year to $14.7 billion.
Capital and Profitability Ratios
Wintrust remained well capitalized. As of Dec 31, 2013, the
tangible common equity ratio was 7.8%, up 40 bps year over year.
Tier 1 Capital to risk-weighted assets remained stable year over
year at 12.1%. However, total capital to risk-weighted assets
declined 30 bps to 12.8%.
Return on average assets stood at 0.78%, up 9 bps year over year,
while return on average common equity increased 77 bps to 7.56%.
On Oct 18, Wintrust completed the acquisition of Washington-based
Diamond Bancorp, Inc, for around $2.9 million. The company
assumed assets and deposits worth $169 million and $140 million,
respectively, along with goodwill valued at $8.4 million.
Wintrust began 2013 on a positive note. Results reflected a
quality performance throughout the year. The company has a solid
franchise in the Midwest and is focused on capitalizing on growth
opportunities. The continued strategic acquisitions are a
reflection of inorganic growth.
However, we remain cautious as a tepid economic recovery, low
interest rate environment and stringent regulations may affect
the growth prospects in the near term.
Wintrust currently carries a Zacks Rank #2 (Buy).
Among other banks,
State Street Corp.
) is scheduled to report fourth-quarter results on Jan 24, while
Fifth Third Bancorp
) are expected to release results on Jan 23.