Why Wintrust Financial Corp (NASDAQ: WTFC) stock is under pressure

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Wintrust Financial Corp (NASDAQ: WTFC) stock fell over 1.9% on 22nd January, 2020 (as of 9:38 am GMT-5; Source: Google finance) after the company posted mixed results for the fourth quarter of FY 19. Wintrust has reported net income of $86.0 million for the fourth quarter of 2019, down from $99.1 million in the third quarter of 2019. The fourth quarter was characterized by strong balance sheet growth, decline in net interest margin, decline in mortgage banking revenue, stable credit quality, and a continued focus to increase franchise value in the market area.

For the fourth quarter of 2019, net interest income had totaled $261.9 million, which is a decline of $3 million as compared to the third quarter of 2019 and an increase of $7.8 million as compared to the fourth quarter of 2018. Net interest margin fell by 20 basis points in the fourth quarter of 2019 to 3.17% as compared to the third quarter of 2019 mainly due to downward repricing of variable rate loans partially offset by improvement in deposit pricing. Total assets increased by $1.7 billion in the fourth quarter of 2019 mainly due to a $1.1 billion increase in loans and an $836 million increase in available for sale securities, which is partially offset by a reduction in liquidity. Total liabilities rose by $1.6 billion in the fourth quarter of 2019 mainly comprised of a $1.4 billion increase in total deposits of which $690 million related to acquisitions. The Company had successfully grew deposits in the fourth quarter through organic retail channels, acquisitions and its wealth management segment.

WTFC in the fourth quarter of FY 19 has reported the adjusted earnings per share of $1.44, missing the analysts’ estimates for the adjusted earnings per share of $1.56, according to Zacks Investment Research. The company had reported the adjusted revenue of $374.1 million in the fourth quarter of FY 19, beating the analysts’ estimates for revenue of $373.6 million.

Moreover, the mortgage banking business production declined in the fourth quarter as loan volumes originated for sale fell to $1.2 billion from $1.4 billion in the third quarter of 2019. The decline in origination volumes was mainly due to the seasonal purchase market decline which was partially mitigated by elevated refinancing activity. The mortgage servicing rights portfolio grew by $10.1 million primarily due to the capitalization of retained servicing rights of $14.5 million partially offset by a $6.8 million reduction related to payoffs and paydowns.

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