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Jun 30, 2020
Wintrust Q2 2020 Earnings Report
Net income decreased significantly due to increased provision for credit losses related to deteriorating economic conditions impacted by the COVID-19 pandemic, despite strong balance sheet growth and mortgage banking revenue.
Key Takeaways
Wintrust Financial Corporation reported a net income of $21.7 million for Q2 2020, a significant decrease compared to the previous quarter and the same quarter last year, primarily due to increased provision for credit losses related to deteriorating economic conditions impacted by the COVID-19 pandemic. However, the company experienced strong balance sheet growth and record mortgage banking revenue.
Total assets increased by $4.7 billion, including $3.3 billion of PPP loans, net of fees.
Total deposits increased by $4.2 billion, primarily related to both PPP lending and organic growth of retail deposits.
Mortgage banking revenue increased by $54.0 million to $102.3 million.
Provision for credit losses was $135.1 million, primarily related to deteriorating forecasted economic conditions impacted by the COVID-19 pandemic.
Wintrust
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Wintrust Revenue by Segment
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Wealth Management Revenue
CapyFin.com Forward Guidance
Wintrust remains committed to supporting its community and carefully monitoring the COVID-19 pandemic, evaluating its impact on the economy, customers, and business. The company is focused on navigating the current environment by actively monitoring and managing its credit portfolio.
Positive Outlook
- Opportunities for internal and external growth remain consistently strong.
- Successful participation in PPP lending enhanced growth prospects.
- The company has adequate liquidity and capital to effectively manage through the COVID-19 pandemic.
- Strong quarter for mortgage banking production is expected in the third quarter of 2020.
- The majority of variable rate loan portfolio has repriced to reflect the low interest rate environment.
Challenges Ahead
- The Company continues to carefully monitor the COVID-19 pandemic and evaluate the impact that it could have on the economy, our customers and our business.
- The Company experienced net interest margin compression in part due to low and declining interest rates and possession of excess short-term liquidity.
- The Company recorded provision for credit losses of $135.1 million in the second quarter primarily related to generally deteriorating forecasted economic conditions impacted by the COVID-19 pandemic.
- Declines in asset management and trust fees are primarily due to volatile equity markets since year end.
- Brokerage commissions were negatively impacted in the second quarter of 2020 due to lower transactional volume as compared to the prior quarter.