Strong Net Interest Income Drives 3Q Gain at Wintrust

Strong net interest income helped Wintrust Financial (WTFC) overcome rising labor expenses and smaller gains on failed-bank acquisitions.

Earnings rose 7%, to $32.3 million, in the third quarter compared with a year earlier at the Rosemont, Ill., company.

Net interest income was $132.6 million, up 12% from a year earlier. The improvement was largely driven by a 30% reduction in interest expense, which totaled $25.6 million. Average earning assets increased $1.1 billion.

Wintrust's net interest margin rose 13 basis points from a year earlier to 3.50%. However, it fell a basis point from the second quarter.

The provision for loan losses fell 36%, to $18.8 million. Its quarterly provisions for loan losses have ranged from $17.4 million to $20.7 million this year.

Noninterest expense was $124.5 million, 17% higher than a year earlier, largely because of a $7.1 million increase in salaries and benefits. The overhead increase was related to its mortgage banking division, bonuses and the impact of two acquisitions, Wintrust said.

Noninterest income fell 6%, to $63 million. Wintrust made $31 million on mortgage banking, more than double from a year earlier and 20% higher from the second quarter.

Wintrust recorded a $6.6 million bargain-purchase gain in the third quarter, largely stemming from its acquisition of the failed First United Bank. Such gains are created when comparing the value of assets acquired in failed-bank transactions versus the value of loss-sharing arrangements with the Federal Deposit Insurance Corp.

That gain was much smaller than its $27 million bargain-purchase gain in the third quarter of 2011 on the acquisition of the failed First Chicago Bank & Trust.

Wintrust has acquired nine failed banks since 2010.