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Fitch Rates Wintrust Financial Corp.'s L-T IDR 'BBB'; Outlook Stable



  Fitch Rates Wintrust Financial Corp.'s L-T IDR 'BBB'; Outlook Stable

Business Wire

CHICAGO -- April 22, 2013

Fitch Ratings has today initiated ratings on Wintrust Financial Corp. (WTFC)
and its 15 separately chartered banks with a long-term Issuer Default Rating
(IDR) of 'BBB' and a Viability Rating (VR) of 'bbb'. The Rating Outlook is
Stable. A full list of rating actions is at the end of this rating action
commentary.

WTFC's ratings reflect its consistent and conservative management through the
credit cycle leading to superior asset quality performance relative to
similarly rated and similarly sized institutions. Further, Fitch believes
WTFC's loan portfolio structure provides the company unique credit
diversification relative to peers. Weighing on WTFC's rating is its mediocre
earnings profile and geographic loan concentration within greater Chicagoland.

KEY RATING DRIVERS - IDRs and Viability Ratings

Fitch recognizes WTFC's relatively strong asset quality compared to similarly
rated peers and believes it is a reflection of management's credit risk
management philosophy. While nonperforming assets (NPAs - inclusive of
accruing TDRs) have remained somewhat elevated relative to historical norms at
2.28% as of the first quarter of 2013 (1Q'13), the company's NPAs peaked at
just around 3% during the cycle. This compares considerably favorably to
WTFC's peer group in which some similarly rated institutions' NPAs peaked at
nearly 2x that level.

Similarly, net charge-offs (NCOs) have averaged just 1.03% over the last five
years. Fitch believes that these results are directly correlated with
management's stated strategy of pulling back lending prior to the credit
cycle. The Stable Outlook reflects Fitch's view that asset quality (AQ) will
continue to improve going forward as management works through problem assets
through its dedicated Managed Assets Division.

Fitch notes that these AQ metrics should also be taken in the context of
WTFC's primary lending area which is Chicago, IL, an area that was hit
particularly hard during the real estate downturn and an area in which many
banks subsequently failed or needed to raise significant capital due to
material concentrations in commercial real estate and land development.

Fitch views WTFC's premium finance lending, a product that is not widely
offered within Fitch's rating universe, as a unique credit diversification
tool. This lending area makes up one-third of the company's loan portfolio and
is split evenly between property and casualty policy financing and life policy
financing. Fitch notes the very low loss history between the two products and
would expect similar results going forward given deal structures and security.

Ratings are constrained to the initiated rating given the company's fairly
tepid earnings performance. The company's 2012 ROA of 67 basis points (bps) is
lower than similarly rated institutions but is also taken in the context of
WTFC's overall risk profile. Fitch believes that going forward earnings will
continue to be challenged by the expected prolonged period of low interest
rates coupled with the company's short-term balance sheet. At year-end 2012
(YE12), 70% of WTFC's loans were either variable or repriced within 12 months.
However, this should be advantageous to the company when interest rates do
begin to rise.

Further constraining the company's ratings is its geographic concentration
within its loan book. Three-fourths of WTFC's core loan book (excluding FIFC
loans) is located in the state of Illinois with the vast majority of that
concentrated in the greater Chicagoland area. Fitch views the Chicago market
as densely populated by banks and economically challenged which has resulted
in and could result in prolonged periods of tepid earnings and elevated NPAs
relative to historical levels.

Fitch notes that WTFC has consistently been able to maintain adequate
liquidity and funding. A third of the company's deposit funding consists of
CDs, a higher level than peer institutions. However, Fitch believes that the
majority of these are from long-term, core customers residing in the company's
primary market. Further, it is worth noting that CD reliance has come down
substantially over the past few years from around 50% of deposits while
noninterest bearing DDA accounts have increased from under 10% of deposits to
around 18%. Also of note is the company's aforementioned $2 billion P/C
insurance premium finance book which could potentially be securitized and sold
off if additional liquidity was needed.

With a Fitch Core Capital to Tangible Assets ratio of 7.28% (or a TCE ratio of
7.4%) as of 4Q'12, capital is considered adequate relative to others in WTFC's
peer group and relative to its overall risk profile. Regulatory capital ratios
are also considered ample. WTFC's rating not only reflects its ability to
maintain an adequate capital base through the cycle but also its shown ability
to raise capital in the private and public markets.

RATING SENSITIVITIES - IDRS and Viability Rating

Negative trends in earnings or a reversal in current AQ trends leading to
earnings and capital deterioration could lead to negative rating action.
Further, if the company growth (either through acquisition or organic) were to
exceed Fitch's comfort level and capital levels fell materially below their
current levels, ratings could be adversely impacted. While Fitch sees little
upside to the company's initial rating, if earnings performance improves and
comes in line with higher rated peers while AQ trends maintain their positive
course and risk management practices remain conservative, Fitch could take
positive rating action.

KEY RATING DRIVERS AND SENSITIVIES - SUPPORT RATING AND SUPPORT RATING FLOOR

In Fitch's view, WTFC is not considered systemically important and therefore,
believes the probability of state support is unlikely. Therefore, WTFC's IDR
and VR do not incorporate any government support.

RATING DRIVERS & SENSITIVITIES - Subordinated Debt and Other Hybrid Securities

Subordinated debt and other hybrid capital instruments issued by WTFC are all
notched down from WTFC's VR of 'bbb' in accordance with Fitch's assessment of
each instrument's respective non-performance and relative Loss Severity risk
profiles, which vary considerably. Their ratings are primarily sensitive to
any change in WTFC's VR.

RATING DRIVERS & SENSITIVITIES - Holding Company:

WTFC's IDR and VR is equalized with the company's subsidiary banks reflecting
its role as the bank holding company, which is mandated in the U.S. to act as
a source of strength for its bank subsidiary. Double leverage was at 107% for
WTFC at Dec. 31, 2012.

RATING DRIVERS & SENSITIVITIES - Subsidiary and Affiliated Company Rating:

The below ratings factor in a high probability of support from the parent to
its subsidiary. This reflects the fact that performing parent banks have very
rarely allowed subsidiaries to default. It also considers the high level of
integration, brand, management, financial and reputational incentives to avoid
subsidiary defaults. Further, all 15 subsidiary banks' ratings are linked
together and equalized due to cross-collateralization conditions found in
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).
Consequently, any movement in the parent's VR would equally impact all related
subsidiary banks.

Wintrust Financial Corp. is a financial holding company based in Rosemont,
Illinois, with total assets of approximately $17.5 billion as of Dec. 31,
2012. The company consists of 15 community banks offering basic financial
services in and around the greater Chicagoland area and Southeast Wisconsin.
Further, the company holds various subsidiaries that operate on a national
platform and offer products such as premium finance lending, short-term
accounts receivable lending and mortgage banking. Finally, WTFC also offers a
full range of wealth management services to those customers primarily in the
company's market area.

Fitch assigns the following ratings with a Stable Outlook:

Wintrust Financial Corporation

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Subordinated Debt at 'BBB-';

Preferred Stock at 'B+';

Support at '5';

Support Rating at 'NF'.

Lake Forest Bank and Trust Company

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Long-Term Deposits at 'BBB+';

Short-Term Deposits at 'F2';

Support at '5';

Support Rating at 'NF'.

Hinsdale Bank and Trust Company

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Long-Term Deposits at 'BBB+';

Short-Term Deposits at 'F2';

Support at '5';

Support Rating at 'NF'.

North Shore Community Bank and Trust Company

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Long-Term Deposits at 'BBB+';

Short-Term Deposits at 'F2';

Support at '5';

Support Rating at 'NF'.

Libertyville Bank and Trust Company

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Long-Term Deposits at 'BBB+';

Short-Term Deposits at 'F2';

Support at '5';

Support Rating at 'NF'.

Barrington Bank and Trust Company, NA

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Long-Term Deposits at 'BBB+';

Short-Term Deposits at 'F2';

Support at '5';

Support Rating at 'NF'.

Crystal Lake Bank and Trust Company, NA

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Long-Term Deposits at 'BBB+';

Short-Term Deposits at 'F2';

Support at '5';

Support Rating at 'NF'.

Northbrook Bank and Trust Company

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Long-Term Deposits at 'BBB+';

Short-Term Deposits at 'F2';

Support at '5';

Support Rating at 'NF'.

Schaumburg Bank and Trust Company, NA

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Long-Term Deposits at 'BBB+';

Short-Term Deposits at 'F2';

Support at '5';

Support Rating at 'NF'.

Village Bank and Trust

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Long-Term Deposits at 'BBB+';

Short-Term Deposits at 'F2';

Support at '5';

Support Rating at 'NF'.

Beverly Bank and Trust Company, NA

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Long-Term Deposits at 'BBB+';

Short-Term Deposits at 'F2';

Support at '5';

Support Rating at 'NF'.

Town Bank

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Long-Term Deposits at 'BBB+';

Short-Term Deposits at 'F2';

Support at '5';

Support Rating at 'NF'.

Wheaton Bank and Trust

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Long-Term Deposits at 'BBB+';

Short-Term Deposits at 'F2';

Support at '5';

Support Rating at 'NF'.

State Bank of the Lakes

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Long-Term Deposits at 'BBB+';

Short-Term Deposits at 'F2';

Support at '5';

Support Rating at 'NF'.

Old Plank Trail Community Bank, NA

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Long-Term Deposits at 'BBB+';

Short-Term Deposits at 'F2';

Support at '5';

Support Rating at 'NF'.

St. Charles Bank and Trust Company

Long-Term IDR at 'BBB';

Short-Term IDR at 'F2';

Viability Rating at 'bbb';

Long-Term Deposits at 'BBB+';

Short-Term Deposits at 'F2';

Support at '5';

Support Rating at 'NF'.

Additional information is available on www.fitchratings.com.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Aug. 15, 2012);

--'Rating FI Subsidiaries and Holding Companies' (Aug. 10, 2012);

--'Assessing and Rating Bank Subordinated and Hybrid Securities' (Dec. 5,
2012);

--'Treatment of Unrealized Losses in U.S. Bank Capital Rule Proposal
(Pro-Cyclical Capital Policy to Create Greater Capital Volatility for Banks)'
(Aug. 7, 2012);

--'Risk Radar' (April 4, 2013);

--U.S. Banking Quarterly Comment (Feb. 21, 2013).

Applicable Criteria and Related Research

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181

Rating FI Subsidiaries and Holding Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679209

Assessing and Rating Bank Subordinated and Hybrid Securities

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=695542

Treatment of Unrealized Losses in U.S. Bank Capital Rule Proposal
(Pro-Cyclical Capital Policy to Create Greater Capital Volatility for Banks)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685638

Risk Radar - Global

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=703937

U.S. Banking Quarterly Comment: 4Q12

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=701972

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=789178

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
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DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
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PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS
OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH WEBSITE.

Contact:

Fitch Ratings
Primary Analyst
Bain Rumohr, CFA
Associate Director
+1-312-368-3153
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
Julie Solar
Senior Director
+1-312-368-5472
or
Committee Chairperson
Christopher D. Wolfe
Managing Director
+1-212-908-0771
or
Media Relations:
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brian.bertsch@fitchratings.com
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