Wintrust Financial Q1 Profit Lower, Revenue Higher: A Mixed Quarter Amid Margin Gains and Wealth Headwinds

Wintrust Financial Corporation (NASDAQ: WTFC) reported first-quarter 2025 results that highlighted a divergence between its top and bottom lines. While net income rose slightly to $189.0 million (up from $185.4 million in Q4 2024), diluted earnings per share (EPS) fell to $2.69, down from $2.89 in the year-ago quarter. This drop in EPS reflects a larger share count due to stock buybacks and equity issuance. Meanwhile, total revenue hit $643.1 million, driven by strong net interest income and disciplined balance sheet growth. The quarter underscored Wintrust’s ability to navigate macroeconomic challenges while confronting headwinds in its wealth management division.

Revenue Growth Driven by Margin Expansion and Balance Sheet Strength

The company’s net interest income rose to $526.5 million, a $1.3 million increase from Q4 2024, despite two fewer calendar days in the quarter. This growth stemmed from a 5 basis point expansion in the net interest margin (NIM) to 3.56%, fueled by a 23 basis point decline in interest-bearing deposit costs. This offset a 15 basis point drop in loan yields, showcasing effective margin management.

Meanwhile, non-interest income totaled $116.6 million, up $3.2 million sequentially but hampered by a $4.7 million decline in wealth management revenue. System transitions for brokerage services and lower assets under management due to market volatility were key drags. Mortgage banking revenue held steady at $20.5 million, while service charges on deposits rose to $19.4 million, aided by higher commercial account fees.

Balance Sheet and Credit Quality Remain Robust

Wintrust continued its growth trajectory in loans and deposits:
- Loans grew by $653 million (6% annualized), led by commercial and premium finance life insurance portfolios.
- Deposits surged by $1.1 billion (8% annualized), with 21% of deposits non-interest bearing, enhancing low-cost funding. The loans-to-deposits ratio improved to 90.9%, bolstering liquidity.

Credit metrics remained solid:
- Net charge-offs fell to 11 basis points of average total loans (down from 13 basis points in Q4 2024).
- Non-performing assets stayed at 0.30% of total assets, reflecting conservative underwriting standards.

Challenges and Management Outlook

Despite strong performance in core banking operations, Wintrust faces hurdles:
- Wealth Management Transition: The brokerage system shift and market-driven AUM declines contributed to the revenue dip. Management expects stabilization but acknowledges temporary headwinds.
- Macroeconomic Risks: A $24.0 million provision for credit losses (up from $17.0 million in Q4 2024) reflects cautious assumptions about economic uncertainty.

CEO Timothy S. Crane emphasized optimism for Q2 2025, citing “strong commercial and premium finance pipelines” and stable margins. The acquisition of Macatawa Bank, completed in August 2024, added $2.9 billion in assets and is expected to drive synergies.

Conclusion: A Resilient Bank, But Valuation Matters

Wintrust’s Q1 results reflect a disciplined execution in its core banking business, with margin expansion and deposit growth offsetting wealth management struggles. The company’s 90.9% loans-to-deposits ratio and 21% non-interest-bearing deposits underscore prudent balance sheet management, while credit quality metrics remain among the strongest in the industry.

Investors should weigh these positives against the lower EPS growth trajectory and the wealth division’s unresolved issues. With a forward P/E ratio of 13.5x (based on 2024 estimates), Wintrust trades at a discount to its peers like Comerica (CMA) and KeyCorp (KEY). However, the stock’s 5% dividend yield and track record of consistent earnings growth make it a defensive play in a volatile banking sector.

The path forward hinges on whether Wintrust can stabilize wealth management and sustain loan growth without compromising margins. For now, the company’s “Different Approach, Better Results” strategy appears intact, but investors must monitor macroeconomic conditions and the wealth division’s recovery closely.

Final Take: Hold for now, but keep an eye on Q2’s loan growth and margin stability.