Wintrust Financial (WTFC)

Regional banking company Wintrust Financial (NASDAQ:WTFC) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 13.3% year on year to $697.8 million. Its non-GAAP profit of $3.06 per share was 12.9% above analysts’ consensus estimates.

Company Overview

Founded in 1991 as a community-focused alternative to big banks in the Chicago area, Wintrust Financial (NASDAQGS:WTFC) operates community banks in the Chicago area and provides specialty finance services including insurance premium financing and wealth management.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Wintrust Financial competes with larger regional banks like Fifth Third Bancorp (NASDAQ:FITB) and U.S. Bancorp (NYSE:USB), as well as local Chicago-area financial institutions such as First Midwest Bancorp (now part of Old National Bancorp, NASDAQ:ONB) and MB Financial (acquired by Fifth Third). In its specialty finance segments, particularly premium finance, it competes with IPFS Corporation and Afco Credit Corporation.

Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income. Thankfully, Wintrust Financial’s 10.6% annualized revenue growth over the last five years was impressive. Its growth beat the average banking company and shows its offerings resonate with customers.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Wintrust Financial’s annualized revenue growth of 8.6% over the last two years is below its five-year trend, but we still think the results suggest healthy demand. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Wintrust Financial reported year-on-year revenue growth of 13.3%, and its $697.8 million of revenue exceeded Wall Street’s estimates by 1.2%.

Net interest income made up 75.8% of the company’s total revenue during the last five years, meaning lending operations are Wintrust Financial’s largest source of revenue.

Net interest income commands greater market attention due to its reliability and consistency, whereas non-interest income is often seen as lower-quality revenue that lacks the same dependable characteristics.

Topline growth carries importance, but the overall profitability behind this expansion determines true value creation. For banks, the efficiency ratio captures this relationship by measuring non-interest expenses, including salaries, facilities, technology, and marketing, against total revenue.

Markets understand that a bank’s expense base depends on its revenue mix and what mostly drives share price performance is the change in this ratio, rather than its absolute value. It’s somewhat counterintuitive, but a lower efficiency ratio is better.

Over the last five years, Wintrust Financial’s efficiency ratio has swelled by 5.4 percentage points, going from 66.2% to 56.1%. Said differently, the company’s expenses have grown at a slower rate than revenue, which typically signals prudent management.

Wintrust Financial’s efficiency ratio came in at 54.7% this quarter, beating analysts’ expectations by 95 basis points (100 basis points = 1 percentage point). This result was 3.9 percentage points better than the same quarter last year.

For the next 12 months, Wall Street expects Wintrust Financial to maintain its trailing one-year ratio with a projection of 55.5%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Wintrust Financial’s EPS grew at an astounding 17.4% compounded annual growth rate over the last five years, higher than its 10.6% annualized revenue growth. However, we take this with a grain of salt because its efficiency ratio didn’t improve and it didn’t repurchase its shares, meaning the delta came from factors we consider non-core or less sustainable over the long term.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Wintrust Financial, its two-year annual EPS growth of 6.1% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, Wintrust Financial reported adjusted EPS of $3.06, up from $2.47 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Wintrust Financial’s full-year EPS of $11.20 to grow 2.2%.

Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.

Because of this, tangible book value per share (TBVPS) emerges as the critical performance benchmark. By excluding intangible assets with uncertain liquidation values, this metric captures real, liquid net worth per share. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.

Wintrust Financial’s TBVPS grew at an incredible 10.6% annual clip over the last five years. TBVPS growth has also accelerated recently, growing by 15.4% annually over the last two years from $64.07 to $85.39 per share.

Over the next 12 months, Consensus estimates call for Wintrust Financial’s TBVPS to grow by 9.9% to $93.85, solid growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Wintrust Financial has averaged a Tier 1 capital ratio of 9.8%, which is considered unsafe in the event of a black swan or if macro or market conditions suddenly deteriorate. For this reason alone, we will be crossing it off our shopping list.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, Wintrust Financial has averaged an ROE of 11.5%, impressive for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This is a bright spot for Wintrust Financial.

It was good to see Wintrust Financial beat analysts’ revenue and EPS expectations this quarter. We were also happy its tangible book value per share outperformed Wall Street’s estimates. On the other hand, its net interest income was in line. Overall, this print had some key positives. The stock traded up 1.9% to $129.01 immediately after reporting.

Updated: December 3, 2025 at 11:38 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Wintrust Financial.

Wintrust Financial is a pretty decent company if you ignore its balance sheet. First off, its revenue growth was decent over the last five years. And while its declining net interest margin shows its loan book is becoming less profitable, its TBVPS growth was exceptional over the last five years. On top of that, its spectacular EPS growth over the last five years shows its profits are trickling down to shareholders.

Wintrust Financial’s P/B ratio based on the next 12 months is 1.3x. Certain aspects of its fundamentals are attractive, but we aren’t investing at the moment because its balance sheet makes us uneasy. We think a potential buyer of the stock should wait until the company’s debt falls or its profits increase.

Wall Street analysts have a consensus one-year price target of $157.07 on the company (compared to the current share price of $136.81).