Wintrust To Strengthen Foothold In Chicago With New Buyout

With a view to fortify its presence in the Chicago region, Wintrust Financial Corporation (NASDAQ:WTFC) announced plans to acquire Chicago Shore Corporation at an aggregate purchase price of $34 million.

The deal is expected to close in the latter part of third-quarter 2018. The company does not expect this transaction to have a meaningful impact on its 2018 earnings.

Chicago Shore, the parent company of Delaware Place Bank, provides private and business banking services in Chicago, IL. As of Mar 31, 2018, Delaware Place Bank had approximately $245 million in assets, roughly $165 million in loans and around $215 million in deposits.

Details of the Deal

Per the terms, shares of Chicago Shore, outstanding at the time of the merger, will be converted into the right to receive per share merger consideration paid in cash.

Further, subject to approval by banking regulators and CSC’s stockholders and certain closing conditions, all other outstanding securities of the acquired company (including trust preferred securities of its trust subsidiaries and preferred stock) would be redeemed in accordance with their terms.

Edward J. Wehmer, President and CEO of Wintrust, said, “This transaction provides a wonderful opportunity to expand and complement our market presence in the heart of the City of Chicago.”

Similarly, James W. Aldrich, Chairman and CEO, Chicago Shore and Delaware Place Bank, said, “This partnership offers our customers and employees the long-term benefits that being part of a successful, growing and caring organization brings.”

Inorganic Expansion Drives Growth

Previously, Wintrust had completed the acquisition of certain assets and liabilities of iFreedom Direct Corporation DBA Veterans First Mortgage in January 2018. The deal is expected to be slightly accretive to the company’s earnings per share in 2018. Also, the acquisition has provided Wintrust Mortgage with Veterans First Mortgage’s servicing rights on nearly 8,300 loans, which total $1.4 billion in principal balance.

Both the acquisitions support Wintrust’s growth plan in the United States. The company’s involvement in such strategic deals is indicative of its strong balance sheet position.

In addition to helping the company in strengthening its footprint in Chicago, the deal will diversify its revenue sources. Also, the company plans to open several branches in the region as part of its overall growth strategy.

Shares of Wintrust have gained 12% over the past six months, outperforming 7% rally for the industry.

Currently, Wintrust carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other stocks in the same space worth considering are 1st Source Corporation (NASDAQ:SRCE) , Independent Bank Corporation (NASDAQ:IBCP) and Peoples Bancorp (NASDAQ:PEBO) . All these stocks carry a Zacks Rank of 2.

Earnings estimates for 1st Source have been revised slightly upward for the current year, over the last 60 days. Its share price has increased 8.3% over the past year.

Independent Bank’s earnings estimates have been revised 3.1% upward for the current year, over the last 60 days. Its shares have gained more than 8% in a year’s time.

Peoples Bancorp’s Zacks Consensus Estimate for current-year earnings has been revised 1.6% up in the last 60 days. Over the past year, its share price has increased nearly 9.8%.

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