Wintrust Financial Corp. posted lower-than-expected profits in the second quarter, partly because the $13.7 billion-asset bank holding company had to set aside more money for loan losses due to a fraud in its premium financing unit.
For the second quarter, net income was $13 million, or 25 cents a share, compared with $6.5 million, or 6 cents a share, in the same period a year ago.
Analysts on average expected the company to earn 38 cents a share, according to Thomson Reuters I/B/E/S.
In the latest quarter, Wintrust saw a slight drop in both the amount of seriously delinquent loans and in the percentage of such loans to total loans. The Lake Forest-based company said it also has a “strong pipeline of potential new lending relationships.”
But “this quarter was not without its challenges,” the company said. “A fraud perpetrated against a number of premium finance companies in the industry, including the property and casualty division of our premium financing subsidiary, increased” its provision for loan losses by $15.7 million. That comes off of a bank’s bottom line.
“Actions have been taken internally to decrease the likelihood of this type of loss from recurring in this important line of business for the company,” Wintrust said. “Management has conducted a thorough review of the premium finance — commercial portfolio and found no signs of similar situations.”
Wintrust shares were down 1.6 percent to $32.86 a share in morning trading.
To read the earnings report, click here.
