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10 Big Banks With Solid Revenue

9. Wintrust Financial

Shares of Wintrust Financial (WTFC) of Lake Forest, Ill., closed at $33.96 Monday, returning 3% year-to-date.

On July 26, the company announced a deal to acquire Elgin State Bancorp of Elgin, Ill., for about $13.8 million, adding three branches in Kane County, Ill. Elgin State Bank had $277 million in total assets as of June 30. The acquisition is expected to be completed in the fourth quarter.

The Elgin deal follows the July 1 purchase of Great Lakes Advisors of Chicago, by Wintrust unit Wintrust Capital Management, LLC, in an exchange of shares valued by SNL Financial at $16.7 million, with Wintrust also agreeing to pay $2.3 million over the next year, upon achieving agreed-upon performance measures for the unit.

Wintrust has purchased four failed banks from the Federal Deposit Insurance Corp. over the past year, including Ravenswood Bank of Chicago last August, Community First Bank-Chicago , in February, Bank of Commerce of Wood Dale, Ill., in March, and First Chicago Bank & Trust on July 8.

Second-quarter net income applicable to common shares was $10.7 million, or 25 cents a share, increasing from $8.1 million, or 25 cents a share, in the second quarter of 2010. The second-quarter provision for credit losses was $29.2 million, declining from $41.3 million a year earlier.

According to SNL, second-quarter pre-provision net revenue increased 30% year-over-year, to $46.7 million. Net interest income was up slightly to $108.7 million, while noninterest income increased 45% year-over-year, if we exclude the $26.5 million bargain purchase gain on two failed-bank acquisitions, booked in the second quarter of 2010.

The company said that during the second quarter, "Loans outstanding, including mortgages held for sale but excluding covered assets from FDIC-assisted transactions, grew by $408 million, or 17% on an annualized basis, since March 31, 2011." The net interest margin was 3.40% during the second quarter, down slightly from 3.43% a year earlier. The operating ROA was 0.33% according to SNL.

Following Wintrust's second-quarter earnings announcement, RBC Capital Markets analyst Jon Arfstrom reiterated his "Outperform" or buy rating for Wintrust, while increasing his price target for the shares to $40 from $38, saying his firm was "most pleased with the core loan growth trends and believe that if the company can continue to generate that kind of growth, the valuation should improve."

The shares trade for 14.2 times the 2012 consensus EPS estimate of $2.40.

Out of 11 analysts covering Wintrust, six rate the shares a buy, while the remaining analysts all have neutral ratings.
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