Shares of Illinois-based Wintrust Financial Corporation WTFC gained nearly 1% since the company announced the pricing of $125 million or 5 million shares, of its Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D, no par value. The preferred stock has been priced at $25.00 per share. The offering is anticipated to close on Jun 25, 2015.
The liquidation preference of the preferred stock is $25.00 per share and the dividends will be non-cumulative. Such dividends will accrue and be paid quarterly in arrears. Per the company’s release, the dividend will be paid at a fixed rate of 6.5% per annum from the original issuance date to, but excluding, Jul 15, 2025, and from (and including) that date at a floating rate equal to three-month LIBOR plus a spread of 4.06% per annum, in each case subject to declaration by Wintrust’s board of directors or an authorized committee.
Joint book-running managers for the transaction include Incapital LLC and an arm of U.S. Bancorp USB – U.S. Bancorp Investments, Inc.
After excluding underwriting discounts and commissions and estimated offering expenses, Wintrust Financial anticipates net proceeds to be around $120.8 million. The company expects to utilize the net proceeds from the offering in a number of purposes including making investments at the holding company level and providing capital to aid the company’s growth. The company also intends to deploy the net proceeds in acquisitions including FDIC-assisted acquisitions and lowering or refinancing existing debt.
However, we believe the preferred stock offering might lead to a further increase in interest expenses of the company, thereby affecting overall profitability. Notably, for the quarter ended Mar 2015, interest expenses increased 6.6 % year over year to $18.5 million.
Wintrust Financial currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the finance space include Territorial Bancorp Inc. TBNK and Heartland Financial USA, Inc. HTLF. Both the stocks carry a Zacks Rank #1 (Strong Buy).
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