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Wintrust Financial Agrees to Acquire Veterans First Mortgage

Zacks Equity Research

With an aim to expand in both size and structure, Wintrust Financial Corporation’s WTFC subsidiary, Barrington Bank & Trust Company, N.A., through its Mortgage division, has entered into an agreement to acquire certain assets and liabilities of iFreedom Direct Corporation DBA Veterans First Mortgage.

Although, terms of the deal have not yet been disclosed, the cash transaction is expected to be slightly accretive to Wintrust Financial’s earnings per share (EPS) in 2018.

Being a consumer direct lender, Veterans First Mortgage specializes primarily in VA loans. VA loans are mortgage loans that are guaranteed by the United States Department of Veterans Affairs.

Veterans First Mortgage provides these loans specially for new home purchases and is a unique feature in the consumer direct lending business. It is expected that the company will raise more than $800 million in loans by the end of 2017 and will also employ nearly 400 people.

The acquisition is expected to be advantageous for Wintrust Financial, as it will help the company build a more robust platform amalgamating the CRM technology, customized loan origination software and telephony systems.

Notably, the deal is also expected to provide Wintrust Financial with Veterans First Mortgage’s servicing rights on nearly 9,000 loans, which total $1.4 billion in principal balance. The closing of the agreement is subject to certain conditions that include final due diligence and the mortgage regulators’ approval.

David Hrobon, president and CEO of Wintrust Mortgage, said, “This acquisition will allow Wintrust Mortgage to expand both in size and structure. Veterans First Mortgage has built a terrific consumer direct lending business with some of the industry’s brightest leadership and employees. We look forward to the synergistic opportunities that will arise from this merger of talent.”

“Veterans First Mortgage has built a reputation on quality loans, expertise and customer-first service and we know this is also true of Wintrust Mortgage. We share a common culture and have common leadership styles, so this acquisition could not be a better fit,” said Kevin Gates, Veterans First Mortgage’s president and CEO.

Wintrust Financial’s shares have gained 17.2% in a year’s time, outperforming 6% growth for the industry it belongs to.

Currently, the stock has a Zacks Rank #3 (Hold).

A few better-ranked stocks from the finance space are Ameriprise Financial, Inc. AMP, Farmers Capital Bank Corporation FFKT and Comerica Incorporated CMA, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings estimates for Ameriprise Financial have been revised 6% upward for 2017 over the past 60 days. Its share price has risen 46.1% in the past year.

Farmers Capital’s earnings estimates have been revised upward by 5.3% for the current year in the past 60 days. Also, over the last twelve months, its share price has increased merely 0.1%.

Comerica Incorporated has witnessed an upward earnings estimate revision of 1.5% for the current year over the past 60 days. Also, its share price has seen a 24.4% rise in a year’s time.

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