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5 Banks Stocks Showing 'Real' Earnings Growth

5. Wintrust Financial
Shares of Wintrust Financial (WTFCO) of Lake Forest, Ill., closed at $37.07 Friday, returning 33% year-to-date, following a 15% decline during 2011.

Wintrust's shares trade for 1.3 times their reported Sept. 30 tangible book value of $28.93, and for 15 times the consensus 2013 earnings estimate of $2.47 a share, among analysts polled by Thomson Reuters.

During the third quarter, Wintrust purchased the failed First United Bank of Crete, Ill., and Second Federal Savings and Loan Association from the Federal Deposit Insurance Corp. The company in September agreed to acquire HPK Financial Corp. of Hyde Park, Ill, which has about $390 million in total assets, in a deal that is expected to be completed in the fourth quarter.

Wintrust had $17 billion in total assets as of Sept. 30. The company's third-quarter pre-provision net revenue -- aside from bargain purchase gains on acquisitions and gains on available-for-sale securities -- grew by 23% from a year earlier to $63.9 million, reflecting a 12% increase in net interest income to $132.6 million, from strong loan growth, while the net interest margin bucked the industry trend and expanded to 3.55% from 3.38% in the third quarter of 2011. Excluding bargain purchase gains booked after failed-bank acquisitions in both periods and gains on securities available for sale, Wintrust's noninterest income grew 41% year-over-year, to $55.9 million in the third quarter. The bulk of this improvement was mortgage banking income, which totaled $31.1 million in the third quarter, increasing from $14.5 million a year earlier. Noninterest expense was up 17% year-over-year, to $124.6 million.

Third-quarter earnings were $32.3 million, or 66 cents a share, increasing from $30.2 million, or 65 cents a share, in the third quarter of 2011. The company's second-quarter ROA was 0.77% and its return on average common equity was 7.57%.

Jefferies analyst Emlen Harmon reiterated his "Hold" rating for Wintrust on Oct. 18, after the company reported its third-quarter results, saying "concerns about the longer-term earnings run-rate surfaced as a portion of outsized expense growth will be run-rated. We remain cautious on the shares, as the roll-off of mortgage revenue and modest margin compression weigh on the company's ability to generate significant earnings growth post-4Q.

Harmon has a $35 price target for Wintrust's shares, and estimates the company will earn $2.50 a share in 2013.

WTFC Chart WTFC data by YCharts

Interested in more on Wintrust? See TheStreet Ratings' report card for this stock.

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