Wintrust Q2 Earnings Beat on Higher Revenues - Analyst Blog

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Wintrust Financial Corporation ( WTFC ) reported earnings per share of 76 cents in second-quarter 2014, beating the Zacks Consensus Estimate of 72 cents per share. Further, results compared favorably with the prior-year quarter figure of 69 cents.

Wintrust's results reflected strong top-line performance, aided by higher net interest income. Further, improvement in credit quality and solid capital position were among the other positives. However, mounting non-interest expenses depicted undisciplined expense management. Moreover, lower mortgage banking revenues acted as a dampener.

Wintrust's net income applicable to shareholders of $38.5 million in the reported quarter marks an increase of 12% from the year-ago quarter.

Wintrust Financial Corporation - Quarterly EPS (BNRI) | FindTheBest

Performance in Details


Net revenue increased 2% year over year to $203.3 million. Moreover, the reported revenue also beat the Zacks Consensus Estimate of $197 million.

Net interest income at Wintrust on a fully tax equivalent basis rose 10% from the prior-year quarter to $149.2 million. The increase was a result of higher average loans somewhat mitigated by weakened earning assets yield, enhanced funding mix and lower interest expenses. Net interest margin climbed 12 basis points (bps) year over year to 3.62%.

Wintrust's non-interest income fell 15% year over year to $54.1 million, mainly due to lower mortgage banking revenues and trading losses. These negatives were partly offset by elevated wealth management revenues.

Non-interest expenses stood at $133.6 million, up 4% year over year. Higher salary and employee benefit costs as well as elevated occupancy, equipment and marketing expenses were the dampeners.

On a fully tax equivalent basis, efficiency ratio stood at 65.36% as compared to 63.97% in the prior-year quarter. An increase in the ratio indicates low profitability.

Credit Quality

Credit quality metrics continued to display a striking improvement in the quarter. Wintrust's provision for credit losses lessened 55% from the prior-year quarter to $6.7 million.

Net charge-offs, as a percentage of loans, excluding covered loans, stood at 0.19% on an annualized basis, down 40 bps year over year, due to lower charge-offs within the commercial real-estate loan and home equity loan portfolios. However, this was moderately offset by a rise in the commercial loan portfolio.

As of Jun 30, 2014, excluding the allowance for covered loan losses, the allowance for credit losses came in at $93.1 million or 0.68% of total loans, compared with $110.4 million or 0.88% of total loans as of Jun 30, 2013.

Balance Sheet

Net loans increased 8.4% year over year to $13.9 billion. Further, total deposits rose 8.3% year over year to $15.6 billion. Improved deposits were primarily the result of higher money market and non-interest bearing deposits partially balanced by a decline in time certificates of deposits and NOW deposits.

Capital and Profitability Ratios

Wintrust remains well capitalized. As of Jun 30, 2014, the tangible common equity ratio stood at 8.0%, up 60 bps year over year. Tier 1 capital to risk-weighted assets stood at 11.7%, down from 12.0% in the prior-year period. However, total capital to risk-weighted assets increased 30 bps to 13.2%.

Return on average assets were 0.84%, up 4 bps year over year, while return on average common equity escalated 48 bps to 8.03%.

Our Take

Despite the dismal economic environment and prevailing low interest rates, Wintrust has successfully remained profitable given the efforts to maintain its strong capital position and the consistently improving asset quality. Further, improved revenues from various segments like Wealth Management can be regarded as a good sign for the company's future growth and profitability.

Moreover, Wintrust's dual focus on inorganic growth through inclusion of new branches like the recent acquisition of the Stone Park branch in May as well as on its organic growth makes us have a favorable outlook.

However, the company needs to deal with its unmanageable expenses and non performing loans to sustain its profitable position.

Wintrust currently carries a Zacks Rank #3 (Hold).

Among other Midwest banks, Chemical Financial Corporation ( CHFC ), Peoples Bancorp Inc. ( PEBO ) and Enterprise Financial Services Corp. ( EFSC ) are expected to release their second-quarter earnings on 16th, 22nd and 24th of Jul 2014 respectively.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: WTFC , CHFC , EFSC , PEBO

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