Wintrust Takes Hits from Servicing, Derivatives
Lake Forest, IL-Wintrust Financial Corp. here expects declining market values and loan performance concerns to continue to challenge it going forward, but for the time being the company as a whole is relatively profitable and able to meet lending demand.
"We have completed a very difficult 2008 by recording a profit of $2 million in the fourth quarter and $20.5 million for the full year," said Edward J. Wehmer, president and chief executive officer.
The company took a $2.5 million loss in the third quarter and its net income during the period represented a $13.7 million decrease from the fourth quarter last year.
"While these levels are not acceptable under normal circumstances, given the current global economic conditions, recording a profit during these periods is atypical in the banking industry," Mr. Wehmer said.
A participant in the Treasury's Capital Purchase Program with 15 subsidiary community banks and the recent acquirer of certain assets and liabilities of Professional Mortgage Partners, Downers Grove, Ill., Wintrust appears to be one of the players in the market today relatively well positioned to make loans.
"The company has the capital available to meet lending demands as well as diversified retail deposit funding sources to support this asset growth," Mr. Wehmer said.
But the company said its mortgage banking income revenue of $2.7 million for the quarter was down year-to-year "primarily attributable to decreases in the fair market value of mortgage servicing rights, valuation fluctuations of mortgage banking derivatives and fair value accounting for certain residential loans held for sale."
Also during the fourth quarter, Wintrust's net loan charge-offs were $9.9 million and it had a $14.5 million provision for credit losses. "Both of those are down significantly from the amounts recorded in the previous quarter," he said. Nonperforming loans during the period increased "moderately," Mr. Wehmer said.
"The company continues to aggressively manage its impaired loan portfolio," he said, but he also noted, "Distressed real estate valuations continue to impact this process as values become more distressed due to lack of sales activity, large property inventories, decreasing numbers of potential buyers and other factors."