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5 Chicago Banks Poised for Long-Term Growth

4. Wintrust

Company Profile

Shares of Wintrust Financial (WTFC - Get Report) of Lake Forest, Ill. closed at $31.66 Thursday, returning 15% over the previous year.

Income Statement

Wintrust reported third-quarter net income applicable to common shareholders of $15.2 million, or 47 cents a share, increasing from $8.1 million, or 25 cents a share during the second quarter, but falling from $27.3 million, or $1.07 a share during the third quarter of 2009, when the company booked $113.1 million in gains on bargain purchases of failed banks from the FDIC. Third-quarter 2010 earnings also received a $6.6 million boost from gains on bargain purchases.

The third-quarter provision for credit loan losses was $25.5 million, declining from $41.3 million the previous quarter and $91.2 million a year earlier. The provision in the third quarter exceeded net charge-offs of $21.4 million (excluding inherited balances from failed banks covered by FDIC loss-sharing agreements), so the bank was still building-up loan loss reserves.

Wintrust's net interest margin declined to 3.22% during the third quarter from 3.43% in the second quarter and 3.25% in the third quarter of 2009.

Following the earnings announcement, Peyton Green of Sterne Agee lowered his 2011 earnings estimate for Wintrust by 20 cents to $1.55 and his 2012 estimate by a quarter to $2.75, based on "a lower NIM assumption, more subdued balance sheet growth, and elevated credit costs."

Balance Sheet

Wintrust had $14.1 billion in total assets as of September 30, a 16% year-over-year increase reflecting the purchases of the failed Ravenswood Bank in August, Wheatland Bank and Lincoln Park Savings in April.

Nonperforming assets - nonaccrual loans (excluding loan balances covered by the FDIC) and repossessed real estate -- totaled $211 million, or 1.50% of total assets as of September 30. The third-quarter net charge-off ratio -- excluding covered loans -- was 0.86% and reserves covered 1.19% of total loans as of September 30.

Wintrust owes $250 million in TARP money. The company raised $221.8 million in common equity through a public offering completed in March. The Tier 1 leverage ratio was 10.0% and the total risk-based capital ratio was 14.1% as of September 30. Wintrust's tangible common equity ratio at the end of the third quarter was 5.94%, according to SNL Financial.

Stock Ratios

The stock trades for 1.2 times tangible book value according to SNL and 11.5 times the 2012 consensus earnings estimate of $2.76 a share.

Analyst Ratings

Two out of 11 analysts covering Wintrust rate the shares a buy, while the other nine - including Peyton Green - recommend investors hold the shares.
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