Wintrust Financial Corporation
) 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
Wintrust's net income applicable to shareholders of $38.5 million
in the reported quarter marks an increase of 12% from the year-ago
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
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 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.
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%.
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
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
Peoples Bancorp Inc.
Enterprise Financial Services Corp.
) are expected to release their second-quarter earnings on 16th,
22nd and 24th of Jul 2014 respectively.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
WINTRUST FINL (WTFC): Free Stock Analysis
CHEMICAL FINL (CHFC): Free Stock Analysis
ENTERPRISE FINL (EFSC): Free Stock Analysis
PEOPL BNCP-OHIO (PEBO): Free Stock Analysis
To read this article on Zacks.com click here.