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Wintrust Financial Corporation Reports Record Year-to-Date Net Income
Source: Nasdaq GlobeNewswire / 19 Jul 2023 18:08:13 America/New_York
ROSEMONT, Ill., July 19, 2023 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust”, “the Company”, “we” or “our”) (Nasdaq: WTFC) announced record net income of $334.9 million or $5.18 per diluted common share for the first six months of 2023 compared to net income of $221.9 million or $3.56 per diluted common share for the same period of 2022, an increase in diluted earnings per common share of 46%. Pre-tax, pre-provision income (non-GAAP) for the first six months of 2023 totaled $506.5 million as compared to $329.9 million in the first six months of 2022, an increase in pre-tax, pre-provision income of 54%.
The Company recorded quarterly net income of $154.8 million or $2.38 per diluted common share for the second quarter of 2023, a decrease in diluted earnings per common share of 15% compared to the first quarter of 2023. Pre-tax, pre-provision income (non-GAAP) totaled $239.9 million as compared to $266.6 million for the first quarter of 2023.
Timothy S. Crane, President and Chief Executive Officer, commented, “We are very pleased with our record net income for the first half of 2023. Our margin stabilized in the second quarter of 2023 and we continue to believe that maintaining such level will allow for strong financial performance in the coming quarters. Specifically, the repricing of our premium finance receivables portfolios in the second quarter helped offset increases in deposit pricing. Strong and balanced deposit growth as well as prudent liquidity management provided stability in our balance sheet through this period of volatility. Credit performance within the portfolio remained strong.”
Highlights of the second quarter of 2023:
Comparative information to the first quarter of 2023, unless otherwise noted- Total deposits grew by $1.3 billion, or 12.4% annualized.
- Non-deposit borrowings decreased by $208.2 million.
- Total loans increased by $1.5 billion, or 14.8% annualized.
- Net interest margin decreased to 3.64% (3.66% on a fully taxable-equivalent basis, non-GAAP) during the second quarter of 2023 due to higher deposit costs. Importantly, however, net interest margin remained relatively stable throughout the second quarter of 2023.
- Provision for credit losses totaled $28.5 million in the second quarter of 2023 as compared to a provision for credit losses of $23.0 million in the first quarter of 2023.
- Net charge-offs totaled $17.0 million or 17 basis points of average total loans on an annualized basis in the second quarter of 2023 as compared to $5.5 million or six basis points of average total loans on an annualized basis in the first quarter of 2023.
- Non-performing assets remained at a low level and represent 0.22% of total assets.
Mr. Crane noted, “By effectively leveraging our strong customer relationships, unique market position, diversified products and competitive rates, Wintrust experienced significant deposit growth, with increased deposits of approximately $1.3 billion, or 12% on an annualized basis. This included outstanding balances of our MaxSafe® products increasing approximately $1.7 billion since the end of the first quarter of 2023. Deposit growth provided enhanced liquidity and reduced our reliance on other borrowings such as FHLB advances. Non-deposit borrowings decreased approximately $208.2 million during the quarter. Growth in deposits helped fund approximately $1.5 billion of loan growth during the quarter. This growth came primarily from approximately $1.0 billion in the commercial premium finance receivables portfolio and approximately $370 million largely from draws on existing commercial real estate loan facilities. We remain prudent in our review of credit prospects ensuring our loan growth stays within our conservative credit standards.”
Mr. Crane commented, “As noted in our first quarter earnings release, our net interest margin was approximately 3.70% at the end of March of 2023. Despite continued acceleration in deposit pricing and the impact of hedging activity, our net interest margin remained relatively stable throughout the second quarter of 2023. Due to our relatively short-term and asset sensitive balance sheet, we believe that we can maintain the net interest margin between 3.60% and 3.70% for the remainder of the year as we expect further upward repricing primarily in our premium finance receivable portfolios to mitigate higher deposit costs as deposit pricing stabilizes. Net interest income decreased by $10.5 million in the second quarter of 2023, however, we expect net interest income to increase in the third quarter given the aforementioned strong balance sheet growth paired with a stable net interest margin.”
Commenting on credit quality, Mr. Crane stated, “Credit metrics remained strong. The Company has a well-diversified commercial real estate portfolio with exposures primarily consisting of stabilized, income-producing properties. Additionally, the commercial real estate office portfolio represents a small portion of our loan portfolio. In the second quarter of 2023, we took a proactive approach to exit certain credits we considered to be vulnerable to existing market conditions. The resolution of these credits through a sale to external parties resulted in approximately $8.0 million in charge-offs. Net charge-offs totaled $17.0 million or 17 basis points of average total loans on an annualized basis in the second quarter of 2023 as compared to $5.5 million or six basis points of average total loans on an annualized basis in the first quarter of 2023. The allowance for credit losses on our core loan portfolio as of June 30, 2023 was approximately 1.50% of the outstanding balance (see Table 12 for additional information). We believe that the Company’s reserves remain appropriate and we remain diligent in our review of credit.”
Mr. Crane concluded, “Our second quarter of 2023 results continued to demonstrate the benefits of the diversified, multi-faceted nature of our business model. Net income for the quarter was the second highest in our history, behind only net income from the first quarter of 2023. We remain focused on continuing to grow deposits to enhance liquidity and support future asset growth while remaining well positioned for higher interest rates. Total loans as of June 30, 2023 were $917 million higher than average total loans in the second quarter of 2023, which is expected to benefit the third quarter. We are pleased by our position in the markets we serve to continue to grow deposit and loan relationships and believe we are situated well to expand our net revenues and earnings in the coming quarters.”
The graphs below illustrate certain financial highlights of the second quarter of 2023 as well as historical financial performance. See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 17 for additional information with respect to non-GAAP financial measures/ratios, including the reconciliations to the corresponding GAAP financial measures/ratios.
Graphs available at the following link:
http://ml.globenewswire.com/Resource/Download/92e4bba1-fb72-4c4a-8da7-f33effeda53fSUMMARY OF RESULTS:
BALANCE SHEET
Total assets increased $1.4 billion in the second quarter of 2023 as compared to the first quarter of 2023. Total loans increased by $1.5 billion as compared to the first quarter of 2023 primarily due to growth in the property and casualty insurance premium finance receivables and commercial real estate loan portfolios. The growth in the commercial real estate portfolio was largely driven by draws on previously-established credit facilities. Additionally, in the second quarter of 2023, the Company received settlement proceeds related to securities called and previously recognized as a trade date receivable of $940 million as of March 31, 2023. Proceeds received increased interest bearing cash on the balance sheet in the second quarter of 2023.
Total liabilities increased by $1.4 billion in the second quarter of 2023 as compared to the first quarter of 2023 primarily due to a $1.3 billion increase in total deposits. In the second quarter of 2023, the deposit mix shift continued as non-interest bearing deposits made up 24% of total deposits at June 30, 2023 compared to 26% at March 31, 2023. This included growth of $1.7 billion in the Company’s unique MaxSafe® product balances. The majority of the Company’s deposits are insured as approximately 74% of the total deposit balance is either fully FDIC-insured or fully collateralized as of June 30, 2023.
For more information regarding changes in the Company’s balance sheet, see Consolidated Statements of Condition and Table 1 through Table 3 in this report.
NET INTEREST INCOME
For the second quarter of 2023, net interest income totaled $447.5 million, a decrease of $10.5 million as compared to the first quarter of 2023. The $10.5 million decrease in net interest income in the second quarter of 2023 compared to the first quarter of 2023 was primarily due to net interest margin compression driven by an increase in deposit costs and the impact from hedges of our loan portfolio established to protect against the impact of lower rates.
Net interest margin was 3.64% (3.66% on a fully taxable-equivalent basis, non-GAAP) during the second quarter of 2023 compared to 3.81% (3.83% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2023. The net interest margin decrease as compared to the first quarter of 2023 was due to a 66 basis point increase in the rate paid on interest-bearing liabilities. This decrease was partially offset by a 34 basis point increase in yield on earning assets and a 15 basis point increase in the net free funds contribution. The 66 basis point increase on the rate paid on interest-bearing liabilities in the second quarter of 2023 as compared to the first quarter of 2023 was primarily due to a 74 basis point increase in the rate paid on interest-bearing deposits primarily related to the increasing rate environment. The 34 basis point increase in the yield on earning assets in the second quarter of 2023 as compared to the first quarter of 2023 was primarily due to a 42 basis point expansion on loan yields, which included an unfavorable eight basis point impact from the Company’s existing hedging positions.
For more information regarding net interest income, see Table 4 through Table 8 in this report.
ASSET QUALITY
The allowance for credit losses totaled $387.8 million as of June 30, 2023, an increase of $11.5 million as compared to $376.3 million as of March 31, 2023. A provision for credit losses totaling $28.5 million was recorded for the second quarter of 2023 as compared to $23.0 million recorded in the first quarter of 2023. For more information regarding the provision for credit losses, see Table 11 in this report.
Management believes the allowance for credit losses is appropriate to account for expected credit losses. The Current Expected Credit Losses (“CECL”) accounting standard requires the Company to estimate expected credit losses over the life of the Company’s financial assets as of the reporting date. There can be no assurances, however, that future losses will not significantly exceed the amounts provided for, thereby affecting future results of operations. A summary of the allowance for credit losses calculated for the loan components in each portfolio as of June 30, 2023, March 31, 2023, and December 31, 2022 is shown on Table 12 of this report.
Net charge-offs totaled $17.0 million in the second quarter of 2023, as compared to $5.5 million of net charge-offs in the first quarter of 2023. The increase in net charge-offs during the second quarter of 2023 was partially the result of the sale to external parties of certain credits within the commercial real estate portfolio, which resulted in approximately $8.0 million in charge-offs. Net charge-offs as a percentage of average total loans were reported as 17 basis points in the second quarter of 2023 on an annualized basis compared to six basis points on an annualized basis in the first quarter of 2023. For more information regarding net charge-offs, see Table 10 in this report.
The Company’s delinquency rates remain low and manageable. For more information regarding past due loans, see Table 13 in this report.
Non-performing assets totaled $120 million and comprised only 0.22% of total assets as of June 30, 2023, as compared to $110 million as of March 31, 2023. Non-performing loans were slightly higher totaling $109 million, or 0.26% of total loans, at June 30, 2023. For more information regarding non-performing assets, see Table 14 in this report.
NON-INTEREST INCOME
Wealth management revenue increased by $3.9 million in the second quarter of 2023 as compared to the first quarter of 2023 primarily due to increased asset management fees from the acquisition of two asset management businesses at the beginning of the second quarter, offset by lower fees associated with our tax-deferred like-kind exchange business. Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors, the brokerage commissions, managed money fees and insurance product commissions at Wintrust Investments and fees from tax-deferred like-kind exchange services provided by the Chicago Deferred Exchange Company.
Mortgage banking revenue increased by $11.7 million in the second quarter of 2023 as compared to the first quarter of 2023 primarily due to increased loan volume and favorable adjustments to the fair value of certain mortgage assets. The Company recorded net positive fair value adjustments of $1.2 million in the second quarter of 2023 related to fair value changes in certain mortgage assets. This included a $2.0 million favorable adjustment in the value of mortgage servicing rights related to changes in fair value model assumptions, net of economic hedges, offset by a $739,000 unfavorable adjustment on the Company’s held-for-sale portfolio of early buy-out exercised loans guaranteed by U.S. government agencies which are held at fair value. The Company intends to monitor the relationship of these assets and will seek to minimize the earnings impact of fair value changes in future quarters.
The Company recognized nominal net gains on investment securities in the second quarter of 2023 as compared to net gains of $1.4 million in the first quarter of 2023 related to changes in the value of equity securities.
Fees from covered call options decreased by $7.8 million in the second quarter of 2023 as compared to the first quarter of 2023. The Company has typically written call options with terms of less than three months against certain U.S. Treasury and agency securities held in its portfolio for liquidity and other purposes. Management has entered into these transactions with the goal of economically hedging security positions and enhancing its overall return on its investment portfolio. These option transactions are designed to mitigate overall interest rate risk and do not qualify as hedges pursuant to accounting guidance.
For more information regarding non-interest income, see Table 15 in this report.
NON-INTEREST EXPENSE
Salaries and employee benefits expense increased by $8.1 million in the second quarter of 2023 as compared to the first quarter of 2023. The $8.1 million increase is primarily related to higher incentive compensation expense due to elevated commissions and bonus accruals in the second quarter of 2023 and increased employee insurance costs.
Advertising and marketing expenses in the second quarter of 2023 totaled $17.8 million, which is a $5.8 million increase as compared to the first quarter of 2023 primarily due to an increase in seasonal media advertising and sponsorship costs. Marketing costs are incurred to promote the Company’s brand, commercial banking capabilities and the Company’s various products, to attract loans and deposits and to announce new branch openings as well as the expansion of the Company’s non-bank businesses. The level of marketing expenditures depends on the timing of sponsorship programs utilized which are determined based on the market area, targeted audience, competition and various other factors. Generally, these expenses are elevated in the second and third quarters of each year.
Lending expenses, net of deferred origination costs, increased by $4.8 million as compared to the first quarter of 2023 primarily due to increased loan originations in the second quarter of 2023.
Miscellaneous expense in the second quarter of 2023 decreased by $2.3 million as compared to the first quarter of 2023. Miscellaneous expense includes ATM expenses, correspondent bank charges, directors’ fees, telephone, postage, corporate insurance, dues and subscriptions, problem loan expenses and other miscellaneous operational losses and costs.
For more information regarding non-interest expense, see Table 16 in this report.
INCOME TAXES
The Company recorded income tax expense of $56.7 million in the second quarter of 2023 compared to $63.4 million in the first quarter of 2023. The effective tax rates were 26.81% in the second quarter of 2023 compared to 26.01% in the first quarter of 2023. The effective tax rates were partially impacted by the tax effects related to share-based compensation which fluctuate based on the Company’s stock price and timing of employee stock option exercises and vesting of other share-based awards. The Company recorded net excess tax benefits of $12,000 in the second quarter of 2023, compared to net excess tax benefits of $2.8 million in the first quarter of 2023 related to share-based compensation.
BUSINESS UNIT SUMMARY
Community Banking
Through its community banking unit, the Company provides banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas the Company services. In the second quarter of 2023, this unit expanded its commercial real estate and residential real estate loan portfolios and grew consumer deposits.
Mortgage banking revenue was $30.0 million for the second quarter of 2023, an increase of $11.7 million as compared to the first quarter of 2023, primarily due to higher production volume. Service charges on deposit accounts totaled $13.6 million in the second quarter of 2023, an increase of $705,000 as compared to the first quarter of 2023, primarily due to higher fees associated with commercial account activity. The Company’s gross commercial and commercial real estate loan pipelines remained solid as of June 30, 2023 indicating momentum for expected continued loan growth in the third quarter of 2023.
Specialty Finance
Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries, accounts receivable financing and value-added, out-sourced administrative services and other services. Originations within the insurance premium financing receivables portfolio were $5.0 billion during the second quarter of 2023 and average balances increased by $370.0 million as compared to the first quarter of 2023. The Company’s leasing portfolio balance remained steady in the second quarter of 2023, with its portfolio of assets, including capital leases, loans and equipment on operating leases, totaling $3.1 billion as of June 30, 2023 as compared to $3.1 billion as of March 31, 2023. Revenues from the Company’s out-sourced administrative services business were $1.3 million in the second quarter of 2023, a decrease of $296,000 from the first quarter of 2023.
Wealth Management
Through four separate subsidiaries within its wealth management unit, the Company offers a full range of wealth management services, including trust and investment services, tax-deferred like-kind exchange services, asset management, securities brokerage services and 401(k) and retirement plan services. Wealth management revenue totaled $33.9 million in the second quarter of 2023, an increase of $3.9 million compared to the first quarter of 2023. The increase in wealth management revenue in the second quarter of 2023 was primarily related to higher asset management fees from the acquisition of two asset management businesses at the beginning of the second quarter, offset by lower fees associated with our tax-deferred like-kind exchange business. At June 30, 2023, the Company’s wealth management subsidiaries had approximately $44.5 billion of assets under administration, which included $7.6 billion of assets owned by the Company and its subsidiary banks, representing an increase from the $35.2 billion of assets under administration at March 31, 2023. The increase in assets under administration was primarily the result of the acquisition of two asset management businesses in the second quarter of 2023.
ITEMS IMPACTING COMPARATIVE FINANCIAL RESULTS
Business Combination
On April 3, 2023, the Company completed its acquisition of Rothschild & Co Asset Management US Inc. and Rothschild & Co Risk Based Investments LLC from Rothschild & Co North America Inc. As of the acquisition date, the Company acquired approximately $12.6 million in assets. As the transaction was determined to be a business combination, the Company recorded goodwill of approximately $2.6 million on the purchase.
Common Stock Offering
In June 2022, the Company sold through a public offering a total of 3,450,000 shares of its common stock. Net proceeds to the Company totaled approximately $285.7 million, net of estimated issuance costs.
WINTRUST FINANCIAL CORPORATION
Key Operating MeasuresWintrust’s key operating measures and growth rates for the second quarter of 2023, as compared to the first quarter of 2023 (sequential quarter) and second quarter of 2022 (linked quarter), are shown in the table below:
% or(1)
basis point
(bp) change
from
1st Quarter
2023% or
basis point
(bp) change
from
2nd Quarter
2022Three Months Ended (Dollars in thousands, except per share data) Jun 30, 2023 Mar 31, 2023 Jun 30, 2022 Net income $ 154,750 $ 180,198 $ 94,513 (14 ) % 64 % Pre-tax income, excluding provision for credit losses (non-GAAP)(2) 239,944 266,595 152,078 (10 ) 58 Net income per common share – diluted 2.38 2.80 1.49 (15 ) 60 Cash dividends declared per common share 0.40 0.40 0.34 0 18 Net revenue(3) 560,567 565,764 440,746 (1 ) 27 Net interest income 447,537 457,995 337,804 (2 ) 32 Net interest margin 3.64 % 3.81 % 2.92 % (17 ) bps 72 bps Net interest margin – fully taxable-equivalent (non-GAAP)(2) 3.66 3.83 2.93 (17 ) 73 Net overhead ratio(4) 1.58 1.49 1.51 9 7 Return on average assets 1.18 1.40 0.77 (22 ) 41 Return on average common equity 12.79 15.67 8.53 (288 ) 426 Return on average tangible common equity (non-GAAP)(2) 15.12 18.55 10.36 (343 ) 476 At end of period Total assets $ 54,286,176 $ 52,873,511 $ 50,969,332 11 % 7 % Total loans(5) 41,023,408 39,565,471 37,053,103 15 11 Total deposits 44,038,707 42,718,211 42,593,326 12 3 Total shareholders’ equity 5,041,912 5,015,506 4,727,623 2 7 (1) Period-end balance sheet percentage changes are annualized.
(2) See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(3) Net revenue is net interest income plus non-interest income.
(4) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s average total assets. A lower ratio indicates a higher degree of efficiency.
(5) Excludes mortgage loans held-for-sale.Certain returns, yields, performance ratios, or quarterly growth rates are “annualized” in this presentation to represent an annual time period. This is done for analytical purposes to better discern, for decision-making purposes, underlying performance trends when compared to full-year or year-over-year amounts. For example, a 5% growth rate for a quarter would represent an annualized 20% growth rate. Additional supplemental financial information showing quarterly trends can be found on the Company’s website at www.wintrust.com by choosing “Financial Reports” under the “Investor Relations” heading, and then choosing “Financial Highlights.”
WINTRUST FINANCIAL CORPORATION
Selected Financial HighlightsThree Months Ended Six Months Ended (Dollars in thousands, except per share data) Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Jun 30,
2022Jun 30,
2023Jun 30,
2022Selected Financial Condition Data (at end of period): Total assets $ 54,286,176 $ 52,873,511 $ 52,949,649 $ 52,382,939 $ 50,969,332 Total loans(1) 41,023,408 39,565,471 39,196,485 38,167,613 37,053,103 Total deposits 44,038,707 42,718,211 42,902,544 42,797,191 42,593,326 Total shareholders’ equity 5,041,912 5,015,506 4,796,838 4,637,980 4,727,623 Selected Statements of Income Data: Net interest income $ 447,537 $ 457,995 $ 456,816 $ 401,448 $ 337,804 $ 905,532 $ 637,098 Net revenue(2) 560,567 565,764 550,655 502,930 440,746 1,126,331 902,830 Net income 154,750 180,198 144,817 142,961 94,513 334,948 221,904 Pre-tax income, excluding provision for credit losses (non-GAAP)(3) 239,944 266,595 242,819 206,461 152,078 506,539 329,864 Net income per common share – Basic 2.41 2.84 2.27 2.24 1.51 5.26 3.61 Net income per common share – Diluted 2.38 2.80 2.23 2.21 1.49 5.18 3.56 Cash dividends declared per common share 0.40 0.40 0.34 0.34 0.34 0.80 0.68 Selected Financial Ratios and Other Data: Performance Ratios: Net interest margin 3.64 % 3.81 % 3.71 % 3.34 % 2.92 % 3.72 % 2.76 % Net interest margin – fully taxable-equivalent (non-GAAP)(3) 3.66 3.83 3.73 3.35 2.93 3.74 2.77 Non-interest income to average assets 0.86 0.84 0.71 0.79 0.84 0.85 1.08 Non-interest expense to average assets 2.44 2.33 2.34 2.32 2.35 2.39 2.34 Net overhead ratio(4) 1.58 1.49 1.63 1.53 1.51 1.54 1.25 Return on average assets 1.18 1.40 1.10 1.12 0.77 1.29 0.91 Return on average common equity 12.79 15.67 12.72 12.31 8.53 14.20 10.22 Return on average tangible common equity (non-GAAP)(3) 15.12 18.55 15.21 14.68 10.36 16.79 12.40 Average total assets $ 52,601,953 $ 52,075,318 $ 52,087,618 $ 50,722,694 $ 49,353,426 $ 52,340,090 $ 49,427,225 Average total shareholders’ equity 5,044,718 4,895,271 4,710,856 4,795,387 4,526,110 4,970,407 4,513,356 Average loans to average deposits ratio 94.3 % 93.0 % 90.5 % 88.8 % 86.8 % 93.7 % 85.3 % Period-end loans to deposits ratio 93.2 92.6 91.4 89.2 87.0 Common Share Data at end of period: Market price per common share $ 72.62 $ 72.95 $ 84.52 $ 81.55 $ 80.15 Book value per common share 75.65 75.24 72.12 69.56 71.06 Tangible book value per common share (non-GAAP)(3) 64.50 64.22 61.00 58.42 59.87 Common shares outstanding 61,197,676 61,176,415 60,794,008 60,743,335 60,721,889 Other Data at end of period: Tier 1 leverage ratio(5) 9.3 % 9.1 % 8.8 % 8.8 % 8.8 % Risk-based capital ratios: Tier 1 capital ratio(5) 10.1 10.1 10.0 9.9 9.9 Common equity tier 1 capital ratio(5) 9.2 9.2 9.1 9.0 9.0 Total capital ratio(5) 11.9 12.1 11.9 11.8 11.9 Allowance for credit losses(6) $ 387,786 $ 376,261 $ 357,936 $ 315,338 $ 312,192 Allowance for loan and unfunded lending-related commitment losses to total loans 0.94 % 0.95 % 0.91 % 0.83 % 0.84 % Number of: Bank subsidiaries 15 15 15 15 15 Banking offices 175 174 174 174 173 (1) Excludes mortgage loans held-for-sale.
(2) Net revenue is net interest income and non-interest income.
(3) See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(4) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s average total assets. A lower ratio indicates a higher degree of efficiency.
(5) Capital ratios for current quarter-end are estimated.
(6) The allowance for credit losses includes the allowance for loan losses, the allowance for unfunded lending-related commitments and the allowance for held-to-maturity securities losses.
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION(Unaudited) (Unaudited) (Unaudited) (Unaudited) Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (In thousands) 2023 2023 2022 2022 2022 Assets Cash and due from banks $ 513,858 $ 445,928 $ 490,908 $ 489,590 $ 498,891 Federal funds sold and securities purchased under resale agreements 59 58 58 57 475,056 Interest-bearing deposits with banks 2,163,708 1,563,578 1,988,719 3,968,605 3,266,541 Available-for-sale securities, at fair value 3,492,481 3,259,845 3,243,017 2,923,653 2,970,121 Held-to-maturity securities, at amortized cost 3,564,473 3,606,391 3,640,567 3,389,842 3,413,469 Trading account securities 3,027 102 1,127 179 1,010 Equity securities with readily determinable fair value 116,275 111,943 110,365 114,012 93,295 Federal Home Loan Bank and Federal Reserve Bank stock 195,117 244,957 224,759 178,156 136,138 Brokerage customer receivables 15,722 16,042 16,387 20,327 21,527 Mortgage loans held-for-sale, at fair value 338,728 302,493 299,935 376,160 513,232 Loans, net of unearned income 41,023,408 39,565,471 39,196,485 38,167,613 37,053,103 Allowance for loan losses (302,499 ) (287,972 ) (270,173 ) (246,110 ) (251,769 ) Net loans 40,720,909 39,277,499 38,926,312 37,921,503 36,801,334 Premises, software and equipment, net 749,393 760,283 764,798 763,029 762,381 Lease investments, net 274,351 256,301 253,928 244,822 223,813 Accrued interest receivable and other assets 1,455,748 1,413,795 1,391,342 1,316,305 1,112,697 Trade date securities receivable — 939,758 921,717 — — Goodwill 656,674 653,587 653,524 653,079 654,709 Other acquisition-related intangible assets 25,653 20,951 22,186 23,620 25,118 Total assets $ 54,286,176 $ 52,873,511 $ 52,949,649 $ 52,382,939 $ 50,969,332 Liabilities and Shareholders’ Equity Deposits: Non-interest-bearing $ 10,604,915 $ 11,236,083 $ 12,668,160 $ 13,529,277 $ 13,855,844 Interest-bearing 33,433,792 31,482,128 30,234,384 29,267,914 28,737,482 Total deposits 44,038,707 42,718,211 42,902,544 42,797,191 42,593,326 Federal Home Loan Bank advances 2,026,071 2,316,071 2,316,071 2,316,071 1,166,071 Other borrowings 665,219 583,548 596,614 447,215 482,787 Subordinated notes 437,628 437,493 437,392 437,260 437,162 Junior subordinated debentures 253,566 253,566 253,566 253,566 253,566 Accrued interest payable and other liabilities 1,823,073 1,549,116 1,646,624 1,493,656 1,308,797 Total liabilities 49,244,264 47,858,005 48,152,811 47,744,959 46,241,709 Shareholders’ Equity: Preferred stock 412,500 412,500 412,500 412,500 412,500 Common stock 61,219 61,198 60,797 60,743 60,722 Surplus 1,923,623 1,913,947 1,902,474 1,891,621 1,880,913 Treasury stock (1,966 ) (1,966 ) (304 ) — — Retained earnings 3,120,626 2,997,263 2,849,007 2,731,844 2,616,525 Accumulated other comprehensive loss (474,090 ) (367,436 ) (427,636 ) (458,728 ) (243,037 ) Total shareholders’ equity 5,041,912 5,015,506 4,796,838 4,637,980 4,727,623 Total liabilities and shareholders’ equity $ 54,286,176 $ 52,873,511 $ 52,949,649 $ 52,382,939 $ 50,969,332
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)Three Months Ended Six Months Ended (In thousands, except per share data) Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Jun 30,
2022Jun 30,
2023Jun 30,
2022Interest income Interest and fees on loans $ 621,057 $ 558,692 $ 498,838 $ 402,689 $ 320,501 $ 1,179,749 $ 606,199 Mortgage loans held-for-sale 4,178 3,528 3,997 5,371 5,740 7,706 11,827 Interest-bearing deposits with banks 16,882 13,468 20,349 15,621 5,790 30,350 7,477 Federal funds sold and securities purchased under resale agreements 1 70 1,263 1,845 1,364 71 1,795 Investment securities 51,243 59,943 53,092 38,569 36,541 111,186 68,939 Trading account securities 6 14 6 7 4 20 9 Federal Home Loan Bank and Federal Reserve Bank stock 3,544 3,680 2,918 2,109 1,823 7,224 3,595 Brokerage customer receivables 265 295 282 267 205 560 379 Total interest income 697,176 639,690 580,745 466,478 371,968 1,336,866 700,220 Interest expense Interest on deposits 213,495 144,802 95,447 45,916 18,985 358,297 33,839 Interest on Federal Home Loan Bank advances 17,399 19,135 13,823 6,812 4,878 36,534 9,694 Interest on other borrowings 8,485 7,854 5,313 4,008 2,734 16,339 4,973 Interest on subordinated notes 5,523 5,488 5,520 5,485 5,517 11,011 10,999 Interest on junior subordinated debentures 4,737 4,416 3,826 2,809 2,050 9,153 3,617 Total interest expense 249,639 181,695 123,929 65,030 34,164 431,334 63,122 Net interest income 447,537 457,995 456,816 401,448 337,804 905,532 637,098 Provision for credit losses 28,514 23,045 47,646 6,420 20,417 51,559 24,523 Net interest income after provision for credit losses 419,023 434,950 409,170 395,028 317,387 853,973 612,575 Non-interest income Wealth management 33,858 29,945 30,727 33,124 31,369 63,803 62,763 Mortgage banking 29,981 18,264 17,407 27,221 33,314 48,245 110,545 Service charges on deposit accounts 13,608 12,903 13,054 14,349 15,888 26,511 31,171 Gains (losses) on investment securities, net 0 1,398 (6,745 ) (3,103 ) (7,797 ) 1,398 (10,579 ) Fees from covered call options 2,578 10,391 7,956 1,366 1,069 12,969 4,811 Trading gains (losses), net 106 813 (306 ) (7 ) 176 919 4,065 Operating lease income, net 12,227 13,046 12,384 12,644 15,007 25,273 30,482 Other 20,672 21,009 19,362 15,888 13,916 41,681 32,474 Total non-interest income 113,030 107,769 93,839 101,482 102,942 220,799 265,732 Non-interest expense Salaries and employee benefits 184,923 176,781 180,331 176,095 167,326 361,704 339,681 Software and equipment 26,205 24,697 24,699 24,126 24,250 50,902 47,060 Operating lease equipment 9,816 9,833 10,078 9,448 8,774 19,649 18,482 Occupancy, net 19,176 18,486 17,763 17,727 17,651 37,662 35,475 Data processing 9,726 9,409 7,927 7,767 8,010 19,135 15,515 Advertising and marketing 17,794 11,946 14,279 16,600 16,615 29,740 28,539 Professional fees 8,940 8,163 9,267 7,544 7,876 17,103 16,277 Amortization of other acquisition-related intangible assets 1,499 1,235 1,436 1,492 1,579 2,734 3,188 FDIC insurance 9,008 8,669 6,775 7,186 6,949 17,677 14,678 OREO expenses, net 118 (207 ) 369 229 294 (89 ) (738 ) Other 33,418 30,157 34,912 28,255 29,344 63,575 54,809 Total non-interest expense 320,623 299,169 307,836 296,469 288,668 619,792 572,966 Income before taxes 211,430 243,550 195,173 200,041 131,661 454,980 305,341 Income tax expense 56,680 63,352 50,356 57,080 37,148 120,032 83,437 Net income $ 154,750 $ 180,198 $ 144,817 $ 142,961 $ 94,513 $ 334,948 $ 221,904 Preferred stock dividends 6,991 6,991 6,991 6,991 6,991 13,982 13,982 Net income applicable to common shares $ 147,759 $ 173,207 $ 137,826 $ 135,970 $ 87,522 $ 320,966 $ 207,922 Net income per common share - Basic $ 2.41 $ 2.84 $ 2.27 $ 2.24 $ 1.51 $ 5.26 $ 3.61 Net income per common share - Diluted $ 2.38 $ 2.80 $ 2.23 $ 2.21 $ 1.49 $ 5.18 $ 3.56 Cash dividends declared per common share $ 0.40 $ 0.40 $ 0.34 $ 0.34 $ 0.34 $ 0.80 $ 0.68 Weighted average common shares outstanding 61,192 60,950 60,769 60,738 58,063 61,072 57,632 Dilutive potential common shares 902 873 1,096 837 775 933 823 Average common shares and dilutive common shares 62,094 61,823 61,865 61,575 58,838 62,005 58,455
TABLE 1: LOAN PORTFOLIO MIX AND GROWTH RATES% Growth From(1) (Dollars in thousands) Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Jun 30,
2022Dec 31,
2022(2)Jun 30,
2022Balance: Mortgage loans held-for-sale, excluding early buy-out exercised loans guaranteed by U.S. government agencies $ 235,570 $ 155,687 $ 156,297 $ 216,062 $ 294,688 NM (20 )% Mortgage loans held-for-sale, early buy-out exercised loans guaranteed by U.S. government agencies 103,158 146,806 143,638 160,098 218,544 (57 ) (53 ) Total mortgage loans held-for-sale $ 338,728 $ 302,493 $ 299,935 $ 376,160 $ 513,232 26 % (34 )% Core loans: Commercial Commercial and industrial $ 5,737,633 $ 5,855,035 $ 5,852,166 $ 5,818,959 $ 5,502,584 (4 )% 4 % Asset-based lending 1,465,848 1,482,071 1,473,344 1,545,038 1,552,033 (1 ) (6 ) Municipal 653,117 655,301 668,235 608,234 535,586 (5 ) 22 Leases 1,925,767 1,904,137 1,840,928 1,582,359 1,592,329 9 21 PPP loans 15,337 17,195 28,923 43,658 82,089 (95 ) (81 ) Commercial real estate Residential construction 51,689 69,998 76,877 66,957 55,941 (66 ) (8 ) Commercial construction 1,409,751 1,234,762 1,102,098 1,176,407 1,145,602 56 23 Land 298,996 292,293 307,955 282,147 304,775 (6 ) (2 ) Office 1,404,422 1,392,040 1,337,176 1,269,729 1,321,745 10 6 Industrial 2,002,740 1,858,088 1,836,276 1,777,658 1,746,280 18 15 Retail 1,304,083 1,309,680 1,304,444 1,331,316 1,331,059 0 (2 ) Multi-family 2,696,478 2,635,411 2,560,709 2,305,433 2,171,583 11 24 Mixed use and other 1,440,652 1,446,806 1,425,412 1,368,537 1,330,220 2 8 Home equity 336,974 337,016 332,698 328,822 325,826 3 3 Residential real estate Residential real estate loans for investment 2,455,392 2,309,393 2,207,595 2,086,795 1,965,051 23 25 Residential mortgage loans, early buy-out eligible loans guaranteed by U.S. government agencies 117,024 119,301 80,701 57,161 34,764 91 NM Residential mortgage loans, early buy-out exercised loans guaranteed by U.S. government agencies 70,824 76,851 84,087 91,503 79,092 (32 ) (10 ) Total core loans $ 23,386,727 $ 22,995,378 $ 22,519,624 $ 21,740,713 $ 21,076,559 8 % 11 % Niche loans: Commercial Franchise $ 1,091,164 $ 1,131,913 $ 1,169,623 $ 1,118,478 $ 1,136,929 (14 )% (4 )% Mortgage warehouse lines of credit 381,043 235,684 237,392 297,374 398,085 NM (4 ) Community Advantage - homeowners association 405,042 389,922 380,875 365,967 341,095 13 19 Insurance agency lending 925,520 905,727 897,678 879,183 906,375 6 2 Premium Finance receivables U.S. property & casualty insurance 5,900,228 5,043,486 5,103,820 4,983,795 4,781,042 31 23 Canada property & casualty insurance 862,470 695,394 745,639 729,545 760,405 32 13 Life insurance 8,039,273 8,125,802 8,090,998 8,004,856 7,608,433 (1 ) 6 Consumer and other 31,941 42,165 50,836 47,702 44,180 (75 ) (28 ) Total niche loans $ 17,636,681 $ 16,570,093 $ 16,676,861 $ 16,426,900 $ 15,976,544 12 % 10 % Total loans, net of unearned income $ 41,023,408 $ 39,565,471 $ 39,196,485 $ 38,167,613 $ 37,053,103 9 % 11 % (1) NM - Not meaningful.
(2) Annualized.TABLE 2: DEPOSIT PORTFOLIO MIX AND GROWTH RATES
% Growth From (Dollars in thousands) Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Jun 30,
2022Mar 31,
2023(1)Jun 30,
2022Balance: Non-interest-bearing $ 10,604,915 $ 11,236,083 $ 12,668,160 $ 13,529,277 $ 13,855,844 (23 )% (23 )% NOW and interest-bearing demand deposits 5,814,836 5,576,558 5,591,986 5,676,122 5,918,908 17 (2 ) Wealth management deposits(2) 1,417,984 1,809,933 2,463,833 2,988,195 3,182,407 (87 ) (55 ) Money market 14,523,124 13,552,277 12,886,795 12,538,489 12,273,350 29 18 Savings 5,321,578 5,192,108 4,556,635 3,988,790 3,686,596 10 44 Time certificates of deposit 6,356,270 5,351,252 4,735,135 4,076,318 3,676,221 75 73 Total deposits $ 44,038,707 $ 42,718,211 $ 42,902,544 $ 42,797,191 $ 42,593,326 12 % 3 % Mix: Non-interest-bearing 24 % 26 % 30 % 32 % 33 % NOW and interest-bearing demand deposits 13 13 13 13 13 Wealth management deposits(2) 3 4 5 7 7 Money market 33 32 30 29 29 Savings 12 12 11 9 9 Time certificates of deposit 15 13 11 10 9 Total deposits 100 % 100 % 100 % 100 % 100 % (1) Annualized.
(2) Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wintrust Investments, Chicago Deferred Exchange Company, LLC (“CDEC”), trust and asset management customers of the Company.TABLE 3: TIME CERTIFICATES OF DEPOSIT MATURITY/RE-PRICING ANALYSIS
As of June 30, 2023(Dollars in thousands) Total Time
Certificates of
DepositWeighted-Average
Rate of Maturing
Time Certificates
of Deposit(1)1-3 months $ 1,407,470 3.15 % 4-6 months 1,323,183 2.93 7-9 months 1,148,928 3.53 10-12 months 1,543,622 4.39 13-18 months 595,056 3.25 19-24 months 250,020 2.87 24+ months 87,991 1.99 Total $ 6,356,270 3.46 % (1) Weighted-average rate excludes the impact of purchase accounting fair value adjustments.
TABLE 4: QUARTERLY AVERAGE BALANCES
Average Balance for three months ended, Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (In thousands) 2023 2023 2022 2022 2022 Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents(1) $ 1,454,057 $ 1,235,748 $ 2,449,889 $ 3,039,907 $ 3,265,607 Investment securities(2) 7,252,582 7,956,722 7,310,383 6,655,215 6,589,947 FHLB and FRB stock 223,813 233,615 185,290 142,304 136,930 Liquidity management assets(3) 8,930,452 9,426,085 9,945,562 9,837,426 9,992,484 Other earning assets(3)(4) 17,401 18,445 18,585 21,805 24,059 Mortgage loans held-for-sale 307,683 270,966 308,639 455,342 560,707 Loans, net of unearned income(3)(5) 40,106,393 39,093,368 38,566,871 37,431,126 35,860,329 Total earning assets(3) 49,361,929 48,808,864 48,839,657 47,745,699 46,437,579 Allowance for loan and investment security losses (302,627 ) (282,704 ) (252,827 ) (260,270 ) (260,547 ) Cash and due from banks 481,510 488,457 475,691 458,263 476,741 Other assets 3,061,141 3,060,701 3,025,097 2,779,002 2,699,653 Total assets $ 52,601,953 $ 52,075,318 $ 52,087,618 $ 50,722,694 $ 49,353,426 NOW and interest-bearing demand deposits $ 5,540,597 $ 5,271,740 $ 5,598,291 $ 5,789,368 $ 5,230,702 Wealth management deposits 1,545,626 2,167,081 2,883,247 3,078,764 2,835,267 Money market accounts 13,735,924 12,533,468 12,319,842 12,037,412 11,892,948 Savings accounts 5,206,609 4,830,322 4,403,113 3,862,579 3,882,856 Time deposits 5,603,024 5,041,638 4,023,232 3,675,930 3,687,778 Interest-bearing deposits 31,631,780 29,844,249 29,227,725 28,444,053 27,529,551 Federal Home Loan Bank advances 2,227,106 2,474,882 2,088,201 1,403,573 1,197,390 Other borrowings 625,757 602,937 480,553 478,909 489,779 Subordinated notes 437,545 437,422 437,312 437,191 437,084 Junior subordinated debentures 253,566 253,566 253,566 253,566 253,566 Total interest-bearing liabilities 35,175,754 33,613,056 32,487,357 31,017,292 29,907,370 Non-interest-bearing deposits 10,908,022 12,171,631 13,404,036 13,731,219 13,805,128 Other liabilities 1,473,459 1,395,360 1,485,369 1,178,796 1,114,818 Equity 5,044,718 4,895,271 4,710,856 4,795,387 4,526,110 Total liabilities and shareholders’ equity $ 52,601,953 $ 52,075,318 $ 52,087,618 $ 50,722,694 $ 49,353,426 Net free funds/contribution (6) $ 14,186,175 $ 15,195,808 $ 16,352,300 $ 16,728,407 $ 16,530,209 (1) Includes interest-bearing deposits from banks and securities purchased under resale agreements with original maturities of greater than three months. Cash equivalents include federal funds sold and securities purchased under resale agreements with original maturities of three months or less.
(2) Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.
(3) See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(4) Other earning assets include brokerage customer receivables and trading account securities.
(5) Loans, net of unearned income, include non-accrual loans.
(6) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.TABLE 5: QUARTERLY NET INTEREST INCOME
Net Interest Income for three months ended, Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (In thousands) 2023 2023 2022 2022 2022 Interest income: Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents $ 16,882 $ 13,538 $ 21,612 $ 17,466 $ 7,154 Investment securities 51,795 60,494 53,630 39,071 37,013 FHLB and FRB stock 3,544 3,680 2,918 2,109 1,823 Liquidity management assets(1) 72,221 77,712 78,160 58,646 45,990 Other earning assets(1) 272 313 289 275 210 Mortgage loans held-for-sale 4,178 3,528 3,997 5,371 5,740 Loans, net of unearned income(1) 622,939 560,564 500,432 403,719 321,069 Total interest income $ 699,610 $ 642,117 $ 582,878 $ 468,011 $ 373,009 Interest expense: NOW and interest-bearing demand deposits $ 29,178 $ 18,772 $ 14,982 $ 8,041 $ 2,553 Wealth management deposits 9,097 12,258 14,079 11,068 3,685 Money market accounts 106,630 68,276 45,468 18,916 8,559 Savings accounts 25,603 15,816 8,421 2,130 347 Time deposits 42,987 29,680 12,497 5,761 3,841 Interest-bearing deposits 213,495 144,802 95,447 45,916 18,985 Federal Home Loan Bank advances 17,399 19,135 13,823 6,812 4,878 Other borrowings 8,485 7,854 5,313 4,008 2,734 Subordinated notes 5,523 5,488 5,520 5,485 5,517 Junior subordinated debentures 4,737 4,416 3,826 2,809 2,050 Total interest expense $ 249,639 $ 181,695 $ 123,929 $ 65,030 $ 34,164 Less: Fully taxable-equivalent adjustment (2,434 ) (2,427 ) (2,133 ) (1,533 ) (1,041 ) Net interest income (GAAP)(2) 447,537 457,995 456,816 401,448 337,804 Fully taxable-equivalent adjustment 2,434 2,427 2,133 1,533 1,041 Net interest income, fully taxable-equivalent (non-GAAP)(2) $ 449,971 $ 460,422 $ 458,949 $ 402,981 $ 338,845 (1) Interest income on tax-advantaged loans, trading securities and investment securities reflects a taxable-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period.
(2) See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.TABLE 6: QUARTERLY NET INTEREST MARGIN
Net Interest Margin for three months ended, Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Jun 30,
2022Yield earned on: Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents 4.66 % 4.44 % 3.50 % 2.28 % 0.88 % Investment securities 2.86 3.08 2.91 2.33 2.25 FHLB and FRB stock 6.35 6.39 6.25 5.88 5.34 Liquidity management assets 3.24 3.34 3.12 2.37 1.85 Other earning assets 6.27 6.87 6.17 5.01 3.49 Mortgage loans held-for-sale 5.45 5.28 5.14 4.68 4.11 Loans, net of unearned income 6.23 5.82 5.15 4.28 3.59 Total earning assets 5.68 % 5.34 % 4.73 % 3.89 % 3.22 % Rate paid on: NOW and interest-bearing demand deposits 2.11 % 1.44 % 1.06 % 0.55 % 0.20 % Wealth management deposits 2.36 2.29 1.94 1.43 0.52 Money market accounts 3.11 2.21 1.46 0.62 0.29 Savings accounts 1.97 1.33 0.76 0.22 0.04 Time deposits 3.08 2.39 1.23 0.62 0.42 Interest-bearing deposits 2.71 1.97 1.30 0.64 0.28 Federal Home Loan Bank advances 3.13 3.14 2.63 1.93 1.63 Other borrowings 5.44 5.28 4.39 3.32 2.24 Subordinated notes 5.06 5.02 5.05 5.02 5.05 Junior subordinated debentures 7.49 6.97 5.90 4.33 3.20 Total interest-bearing liabilities 2.85 % 2.19 % 1.51 % 0.83 % 0.46 % Interest rate spread(1)(2) 2.83 % 3.15 % 3.22 % 3.06 % 2.76 % Less: Fully taxable-equivalent adjustment (0.02 ) (0.02 ) (0.02 ) (0.01 ) (0.01 ) Net free funds/contribution(3) 0.83 0.68 0.51 0.29 0.17 Net interest margin (GAAP)(2) 3.64 % 3.81 % 3.71 % 3.34 % 2.92 % Fully taxable-equivalent adjustment 0.02 0.02 0.02 0.01 0.01 Net interest margin, fully taxable-equivalent (non-GAAP)(2) 3.66 % 3.83 % 3.73 % 3.35 % 2.93 % (1) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(2) See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(3) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.TABLE 7: YEAR-TO-DATE AVERAGE BALANCES, AND NET INTEREST INCOME AND MARGIN
Average Balance
for six months ended,Interest
for six months ended,Yield/Rate
for six months ended,(Dollars in thousands) Jun 30,
2023Jun 30,
2022Jun 30,
2023Jun 30,
2022Jun 30,
2023Jun 30,
2022Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents(1) $ 1,345,506 $ 3,911,080 $ 30,421 $ 9,272 4.56 % 0.48 % Investment securities(2) 7,602,707 6,484,570 112,288 69,876 2.98 2.17 FHLB and FRB stock 228,687 136,424 7,224 3,595 6.37 5.31 Liquidity management assets(3)(4) $ 9,176,900 $ 10,532,074 $ 149,933 $ 82,743 3.29 % 1.58 % Other earning assets(3)(4)(5) 17,920 24,622 585 391 6.58 3.20 Mortgage loans held-for-sale 289,426 612,078 7,706 11,827 5.37 3.90 Loans, net of unearned income(3)(4)(6) 39,602,672 35,348,269 1,183,503 607,194 6.03 3.46 Total earning assets(4) $ 49,086,918 $ 46,517,043 $ 1,341,727 $ 702,155 5.51 % 3.04 % Allowance for loan and investment security losses (292,721 ) (256,834 ) Cash and due from banks 484,964 479,174 Other assets 3,060,929 2,687,842 Total assets $ 52,340,090 $ 49,427,225 NOW and interest-bearing demand deposits $ 5,406,911 $ 5,010,709 $ 47,949 $ 4,543 1.79 % 0.18 % Wealth management deposits 1,854,637 2,671,444 21,355 4,603 2.32 0.35 Money market accounts 13,138,018 12,330,943 174,907 16,207 2.68 0.27 Savings accounts 5,019,505 3,893,519 41,419 683 1.66 0.04 Time deposits 5,323,882 3,774,095 72,667 7,803 2.75 0.42 Interest-bearing deposits $ 30,742,953 $ 27,680,710 $ 358,297 $ 33,839 2.35 % 0.25 % Federal Home Loan Bank advances 2,350,309 1,219,110 36,534 9,694 3.13 1.60 Other borrowings 614,410 492,011 16,338 4,973 5.36 2.04 Subordinated notes 437,484 437,025 11,011 10,999 5.08 5.03 Junior subordinated debentures 253,566 253,566 9,154 3,617 7.28 2.84 Total interest-bearing liabilities $ 34,398,722 $ 30,082,422 $ 431,334 $ 63,122 2.53 % 0.42 % Non-interest-bearing deposits 11,536,336 13,769,792 Other liabilities 1,434,625 1,061,655 Equity 4,970,407 4,513,356 Total liabilities and shareholders’ equity $ 52,340,090 $ 49,427,225 Interest rate spread(4)(7) 2.98 % 2.62 % Less: Fully taxable-equivalent adjustment (4,861 ) (1,935 ) (0.02 ) (0.01 ) Net free funds/contribution(8) $ 14,688,196 $ 16,434,621 0.76 0.15 Net interest income/margin (GAAP)(4) $ 905,532 $ 637,098 3.72 % 2.76 % Fully taxable-equivalent adjustment 4,861 1,935 0.02 0.01 Net interest income/margin, fully taxable-equivalent (non-GAAP)(4) $ 910,393 $ 639,033 3.74 % 2.77 % (1) Includes interest-bearing deposits from banks and securities purchased under resale agreements with original maturities of greater than three months. Cash equivalents include federal funds sold and securities purchased under resale agreements with original maturities of three months or less.
(2) Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.
(3) Interest income on tax-advantaged loans, trading securities and investment securities reflects a taxable-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period.
(4) See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(5) Other earning assets include brokerage customer receivables and trading account securities.
(6) Loans, net of unearned income, include non-accrual loans.
(7) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(8) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.
TABLE 8: INTEREST RATE SENSITIVITYAs an ongoing part of its financial strategy, the Company attempts to manage the impact of fluctuations in market interest rates on net interest income. Management measures its exposure to changes in interest rates by modeling many different interest rate scenarios.
The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon assuming increases and decreases of 100 and 200 basis points. The Static Shock Scenario results incorporate actual cash flows and repricing characteristics for balance sheet instruments following an instantaneous, parallel change in market rates based upon a static (i.e. no growth or constant) balance sheet. Conversely, the Ramp Scenario results incorporate management’s projections of future volume and pricing of each of the product lines following a gradual, parallel change in market rates over twelve months. Actual results may differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies. The interest rate sensitivity for both the Static Shock and Ramp Scenario is as follows:
Static Shock Scenario +200 Basis
Points+100 Basis
Points-100 Basis
Points-200 Basis
PointsJun 30, 2023 5.7 % 2.9 % (2.9 )% (7.9 )% Mar 31, 2023 4.2 2.4 (2.4 ) (7.3 ) Dec 31, 2022 7.2 3.8 (5.0 ) (12.1 ) Sep 30, 2022 12.9 7.1 (8.7 ) (18.9 ) Jun 30, 2022 17.0 9.0 (12.6 ) (23.8 ) Ramp Scenario +200 Basis
Points+100 Basis
Points-100 Basis
Points-200 Basis
PointsJun 30, 2023 2.9 % 1.8 % (0.9 )% (3.4 )% Mar 31, 2023 3.0 1.7 (1.3 ) (3.4 ) Dec 31, 2022 5.6 3.0 (2.9 ) (6.8 ) Sep 30, 2022 6.5 3.6 (3.9 ) (8.6 ) Jun 30, 2022 10.2 5.3 (6.9 ) (14.3 ) As shown above, the magnitude of potential changes in net interest income in various interest rate scenarios has continued to diminish. Given the recent unprecedented rise in interest rates, the Company has made a conscious effort to reposition its exposure to changing interest rates given the uncertainty of the future interest rate environment. To this end, management has executed various derivative instruments including collars and receive fixed swaps to hedge variable rate loan exposures and originated a higher percentage of its loan originations in longer term fixed rate loans. The Company will continue to monitor current and projected interest rates and expects to execute additional derivatives to mitigate potential fluctuations in the net interest margin in future years.
TABLE 9: MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES
Loans repricing or maturity period As of June 30, 2023 One year or
lessFrom one to
five yearsFrom five to
fifteen yearsAfter fifteen
yearsTotal (In thousands) Commercial Fixed rate $ 491,950 $ 2,588,577 $ 1,707,423 $ 11,360 $ 4,799,310 Variable rate 7,799,656 1,505 — — 7,801,161 Total commercial $ 8,291,606 $ 2,590,082 $ 1,707,423 $ 11,360 $ 12,600,471 Commercial real estate Fixed rate 580,938 2,884,383 573,579 51,683 4,090,583 Variable rate 6,509,558 8,631 39 — 6,518,228 Total commercial real estate $ 7,090,496 $ 2,893,014 $ 573,618 $ 51,683 $ 10,608,811 Home equity Fixed rate 11,132 2,682 — 31 13,845 Variable rate 323,129 — — — 323,129 Total home equity $ 334,261 $ 2,682 $ — $ 31 $ 336,974 Residential real estate Fixed rate 16,724 3,824 30,511 1,072,690 1,123,749 Variable rate 73,672 263,888 1,181,931 — 1,519,491 Total residential real estate $ 90,396 $ 267,712 $ 1,212,442 $ 1,072,690 $ 2,643,240 Premium finance receivables - property & casualty Fixed rate 6,657,042 105,656 — — 6,762,698 Variable rate — — — — — Total premium finance receivables - property & casualty $ 6,657,042 $ 105,656 $ — $ — $ 6,762,698 Premium finance receivables - life insurance Fixed rate 121,092 547,337 22,242 — 690,671 Variable rate 7,348,602 — — — 7,348,602 Total premium finance receivables - life insurance $ 7,469,694 $ 547,337 $ 22,242 $ — $ 8,039,273 Consumer and other Fixed rate 4,420 3,912 60 301 8,693 Variable rate 23,248 — — — 23,248 Total consumer and other $ 27,668 $ 3,912 $ 60 $ 301 $ 31,941 Total per category Fixed rate 7,883,298 6,136,371 2,333,815 1,136,065 17,489,549 Variable rate 22,077,865 274,024 1,181,970 — 23,533,859 Total loans, net of unearned income $ 29,961,163 $ 6,410,395 $ 3,515,785 $ 1,136,065 $ 41,023,408 Variable Rate Loan Pricing by Index: SOFR tenors $ 10,407,621 One- year CMT 5,819,451 One- month LIBOR 1,707,349 Three- month LIBOR 10,276 Twelve- month LIBOR 1,028,904 Prime 3,932,654 Ameribor tenors 356,300 Other U.S. Treasury tenors 46,387 BSBY tenors 49,436 Other 175,481 Total variable rate $ 23,533,859 SOFR - Secured Overnight Financing Rate.
CMT - Constant Maturity Treasury Rate.
LIBOR - London Interbank Offered Rate.
Ameribor - American Interbank Offered Rate.
BSBY - Bloomberg Short Term Bank Yield Index.Graph available at the following link:
http://ml.globenewswire.com/Resource/Download/b5ad0e3b-b9cd-4f50-9166-ef49f007ca12Source: Bloomberg
As noted in the table on the previous page, the majority of the Company’s portfolio is tied to SOFR, CMT and LIBOR indices which, as shown in the table above, do not mirror the same changes as the Prime rate which has historically moved when the Federal Reserve raises or lowers interest rates. Specifically, the Company has variable rate loans of $7.8 billion tied to one-month SOFR, $5.8 billion tied to one-year CMT and $1.7 billion tied to one-month LIBOR. The above chart shows:
Basis Point (bp) Change in 1-month
SOFR1-year
CMT1-month
LIBORPrime Second Quarter 2023 34 bps 76 bps 36 bps 25 bps First Quarter 2023 44 -9 47 50 Fourth Quarter 2022 132 68 125 125 Third Quarter 2022 135 125 135 150 Second Quarter 2022 139 117 134 125
TABLE 10: ALLOWANCE FOR CREDIT LOSSESThree Months Ended Six Months Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Jun 30, Jun 30, (Dollars in thousands) 2023 2023 2022 2022 2022 2023 2022 Allowance for credit losses at beginning of period $ 376,261 $ 357,936 $ 315,338 $ 312,192 $ 301,327 $ 357,936 $ 299,731 Cumulative effect adjustment from the adoption of ASU 2022-02 — 741 — — — 741 — Provision for credit losses 28,514 23,045 47,646 6,420 20,417 51,559 24,523 Other adjustments 41 4 31 (105 ) (56 ) 45 (34 ) Charge-offs: Commercial 5,629 2,543 3,019 780 8,928 8,172 10,342 Commercial real estate 8,124 5 538 24 40 8,129 817 Home equity — — — 43 192 — 389 Residential real estate — — — 5 — — 466 Premium finance receivables - property & casualty 4,519 4,629 3,629 6,037 2,903 9,148 4,574 Premium finance receivables - life insurance 134 21 28 — — 155 7 Consumer and other 110 153 — 635 253 263 446 Total charge-offs 18,516 7,351 7,214 7,524 12,316 25,867 17,041 Recoveries: Commercial 505 392 691 2,523 996 897 1,534 Commercial real estate 25 100 61 55 553 125 585 Home equity 37 35 65 38 123 72 216 Residential real estate 6 4 6 60 6 10 11 Premium finance receivables - property & casualty 890 1,314 1,279 1,648 1,119 2,204 2,595 Premium finance receivables - life insurance — 9 — — — 9 — Consumer and other 23 32 33 31 23 55 72 Total recoveries 1,486 1,886 2,135 4,355 2,820 3,372 5,013 Net charge-offs (17,030 ) (5,465 ) (5,079 ) (3,169 ) (9,496 ) (22,495 ) (12,028 ) Allowance for credit losses at period end $ 387,786 $ 376,261 $ 357,936 $ 315,338 $ 312,192 $ 387,786 $ 312,192 Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average: Commercial 0.16 % 0.07 % 0.08 % (0.06 )% 0.27 % 0.12 % 0.15 % Commercial real estate 0.31 0.00 0.02 0.00 (0.02 ) 0.16 0.01 Home equity (0.04 ) (0.04 ) (0.08 ) 0.01 0.09 (0.04 ) 0.11 Residential real estate 0.00 0.00 0.00 (0.01 ) 0.00 0.00 0.05 Premium finance receivables - property & casualty 0.24 0.23 0.16 0.30 0.14 0.24 0.02 Premium finance receivables - life insurance 0.01 0.00 0.00 — — 0.00 0.00 Consumer and other 0.45 0.74 (0.16 ) 4.02 1.31 0.58 1.26 Total loans, net of unearned income 0.17 % 0.06 % 0.05 % 0.03 % 0.11 % 0.11 % 0.07 % Loans at period end $ 41,023,408 $ 39,565,471 $ 39,196,485 $ 38,167,613 $ 37,053,103 Allowance for loan losses as a percentage of loans at period end 0.74 % 0.73 % 0.69 % 0.64 % 0.68 % Allowance for loan and unfunded lending-related commitment losses as a percentage of loans at period end 0.94 0.95 0.91 0.83 0.84
TABLE 11: ALLOWANCE AND PROVISION FOR CREDIT LOSSES BY COMPONENTThree Months Ended Six Months Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Jun 30, Jun 30, (In thousands) 2023 2023 2022 2022 2022 2023 2022 Provision for loan losses $ 31,516 $ 22,520 $ 29,110 $ (2,385 ) $ 10,782 $ 54,036 $ 15,996 Provision for unfunded lending-related commitments losses (2,945 ) 550 18,358 8,578 9,711 (2,395 ) 8,522 Provision for held-to-maturity securities losses (57 ) (25 ) 178 227 (76 ) (82 ) 5 Provision for credit losses $ 28,514 $ 23,045 $ 47,646 $ 6,420 $ 20,417 $ 51,559 $ 24,523 Allowance for loan losses $ 302,499 $ 287,972 $ 270,173 $ 246,110 $ 251,769 Allowance for unfunded lending-related commitments losses 84,881 87,826 87,275 68,918 60,340 Allowance for loan losses and unfunded lending-related commitments losses 387,380 375,798 357,448 315,028 312,109 Allowance for held-to-maturity securities losses 406 463 488 310 83 Allowance for credit losses $ 387,786 $ 376,261 $ 357,936 $ 315,338 $ 312,192
TABLE 12: ALLOWANCE BY LOAN PORTFOLIOThe table below summarizes the calculation of allowance for loan losses and allowance for unfunded lending-related commitments losses for the Company’s loan portfolios as well as core and niche portfolios, as of June 30, 2023, March 31, 2023 and December 31, 2022.
As of Jun 30, 2023 As of Mar 31, 2023 As of Dec 31, 2022 (Dollars in thousands) Recorded
InvestmentCalculated
Allowance% of its
category’s
balanceRecorded
InvestmentCalculated
Allowance% of its
category’s
balanceRecorded
InvestmentCalculated
Allowance% of its
category’s
balanceCommercial: Commercial, industrial and other $ 12,600,471 $ 143,142 1.14 % $ 12,576,985 $ 149,501 1.19 % $ 12,549,164 $ 142,769 1.14 % Commercial real estate: Construction and development 1,760,436 86,725 4.93 1,597,053 75,069 4.70 1,486,930 75,907 5.10 Non-construction 8,848,375 128,971 1.46 8,642,025 119,711 1.39 8,464,017 108,445 1.28 Home equity 336,974 6,967 2.07 337,016 7,728 2.29 332,698 7,573 2.28 Residential real estate 2,643,240 12,252 0.46 2,505,545 11,434 0.46 2,372,383 11,585 0.49 Premium finance receivables Commercial insurance loans 6,762,698 8,347 0.12 5,738,880 11,248 0.20 5,849,459 9,967 0.17 Life insurance loans 8,039,273 699 0.01 8,125,802 707 0.01 8,090,998 704 0.01 Consumer and other 31,941 277 0.87 42,165 400 0.95 50,836 498 0.98 Total loans, net of unearned income $ 41,023,408 $ 387,380 0.94 % $ 39,565,471 $ 375,798 0.95 % $ 39,196,485 $ 357,448 0.91 % Total core loans(1) $ 23,386,727 $ 350,930 1.50 % $ 22,995,378 $ 334,910 1.46 % $ 22,519,624 $ 320,403 1.42 % Total niche loans(1) 17,636,681 36,450 0.21 16,570,093 40,888 0.25 16,676,861 37,045 0.22 (1) See Table 1 for additional detail on core and niche loans.
TABLE 13: LOAN PORTFOLIO AGING
(In thousands) Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Loan Balances: Commercial Nonaccrual $ 40,460 $ 47,950 $ 35,579 $ 44,293 $ 32,436 90+ days and still accruing 573 — 462 237 — 60-89 days past due 22,808 10,755 21,128 24,641 16,789 30-59 days past due 48,970 95,593 56,696 34,917 14,120 Current 12,487,660 12,422,687 12,435,299 12,155,162 11,983,760 Total commercial $ 12,600,471 $ 12,576,985 $ 12,549,164 $ 12,259,250 $ 12,047,105 Commercial real estate Nonaccrual $ 18,483 $ 11,196 $ 6,387 $ 10,477 $ 10,718 90+ days and still accruing — — — — — 60-89 days past due 1,054 20,539 2,244 6,041 6,771 30-59 days past due 14,218 72,680 30,675 29,971 34,220 Current 10,575,056 10,134,663 9,911,641 9,531,695 9,355,496 Total commercial real estate $ 10,608,811 $ 10,239,078 $ 9,950,947 $ 9,578,184 $ 9,407,205 Home equity Nonaccrual $ 1,361 $ 1,190 $ 1,487 $ 1,320 $ 1,084 90+ days and still accruing 110 — — — — 60-89 days past due 316 116 — 125 154 30-59 days past due 601 1,118 2,152 848 930 Current 334,586 334,592 329,059 326,529 323,658 Total home equity $ 336,974 $ 337,016 $ 332,698 $ 328,822 $ 325,826 Residential real estate Early buy-out loans guaranteed by U.S. government agencies(1) $ 187,848 $ 196,152 $ 164,788 $ 148,664 $ 113,856 Nonaccrual 13,652 11,333 10,171 9,787 8,330 90+ days and still accruing — 104 — — — 60-89 days past due 7,243 74 4,364 2,149 534 30-59 days past due 872 19,183 9,982 15 147 Current 2,433,625 2,278,699 2,183,078 2,074,844 1,956,040 Total residential real estate $ 2,643,240 $ 2,505,545 $ 2,372,383 $ 2,235,459 $ 2,078,907 Premium finance receivables - property & casualty Nonaccrual $ 19,583 $ 18,543 $ 13,470 $ 13,026 $ 13,303 90+ days and still accruing 12,785 9,215 15,841 16,624 6,447 60-89 days past due 22,670 14,287 14,926 15,301 15,299 30-59 days past due 32,751 32,545 40,557 21,128 23,313 Current 6,674,909 5,664,290 5,764,665 5,647,261 5,483,085 Total Premium finance receivables - property & casualty $ 6,762,698 $ 5,738,880 $ 5,849,459 $ 5,713,340 $ 5,541,447 Premium finance receivables - life insurance Nonaccrual $ 6 $ — $ — $ — $ — 90+ days and still accruing 1,667 1,066 17,245 1,831 — 60-89 days past due 3,729 21,552 5,260 13,628 1,796 30-59 days past due 90,117 52,975 68,725 44,954 65,155 Current 7,943,754 8,050,209 7,999,768 7,944,443 7,541,482 Total Premium finance receivables - life insurance $ 8,039,273 $ 8,125,802 $ 8,090,998 $ 8,004,856 $ 7,608,433 Consumer and other Nonaccrual $ 4 $ 6 $ 6 $ 7 $ 8 90+ days and still accruing 28 87 49 31 25 60-89 days past due 51 10 18 26 8 30-59 days past due 146 379 224 343 119 Current 31,712 41,683 50,539 47,295 44,020 Total consumer and other $ 31,941 $ 42,165 $ 50,836 $ 47,702 $ 44,180 Total loans, net of unearned income Early buy-out loans guaranteed by U.S. government agencies(1) $ 187,848 $ 196,152 $ 164,788 $ 148,664 $ 113,856 Nonaccrual 93,549 90,218 67,100 78,910 65,879 90+ days and still accruing 15,163 10,472 33,597 18,723 6,472 60-89 days past due 57,871 67,333 47,940 61,911 41,351 30-59 days past due 187,675 274,473 209,011 132,176 138,004 Current 40,481,302 38,926,823 38,674,049 37,727,229 36,687,541 Total loans, net of unearned income $ 41,023,408 $ 39,565,471 $ 39,196,485 $ 38,167,613 $ 37,053,103 (1) Early buy-out loans are insured or guaranteed by the Federal Housing Administration or the U.S. Department of Veterans Affairs, subject to indemnifications and insurance limits for certain loans.
TABLE 14: NON-PERFORMING ASSETS(1)
Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (Dollars in thousands) 2023 2023 2022 2022 2022 Loans past due greater than 90 days and still accruing: Commercial $ 573 $ — $ 462 $ 237 $ — Commercial real estate — — — — — Home equity 110 — — — — Residential real estate — 104 — — — Premium finance receivables - property & casualty 12,785 9,215 15,841 16,624 6,447 Premium finance receivables - life insurance 1,667 1,066 17,245 1,831 — Consumer and other 28 87 49 31 25 Total loans past due greater than 90 days and still accruing 15,163 10,472 33,597 18,723 6,472 Non-accrual loans: Commercial 40,460 47,950 35,579 44,293 32,436 Commercial real estate 18,483 11,196 6,387 10,477 10,718 Home equity 1,361 1,190 1,487 1,320 1,084 Residential real estate 13,652 11,333 10,171 9,787 8,330 Premium finance receivables - property & casualty 19,583 18,543 13,470 13,026 13,303 Premium finance receivables - life insurance 6 — — — — Consumer and other 4 6 6 7 8 Total non-accrual loans 93,549 90,218 67,100 78,910 65,879 Total non-performing loans: Commercial 41,033 47,950 36,041 44,530 32,436 Commercial real estate 18,483 11,196 6,387 10,477 10,718 Home equity 1,471 1,190 1,487 1,320 1,084 Residential real estate 13,652 11,437 10,171 9,787 8,330 Premium finance receivables - property & casualty 32,368 27,758 29,311 29,650 19,750 Premium finance receivables - life insurance 1,673 1,066 17,245 1,831 — Consumer and other 32 93 55 38 33 Total non-performing loans $ 108,712 $ 100,690 $ 100,697 $ 97,633 $ 72,351 Other real estate owned 10,275 8,050 8,589 5,376 5,574 Other real estate owned - from acquisitions 1,311 1,311 1,311 1,311 1,265 Other repossessed assets — — — — — Total non-performing assets $ 120,298 $ 110,051 $ 110,597 $ 104,320 $ 79,190 Total non-performing loans by category as a percent of its own respective category’s period-end balance: Commercial 0.33 % 0.38 % 0.29 % 0.36 % 0.27 % Commercial real estate 0.17 0.11 0.06 0.11 0.11 Home equity 0.44 0.35 0.45 0.40 0.33 Residential real estate 0.52 0.46 0.43 0.44 0.40 Premium finance receivables - property & casualty 0.48 0.48 0.50 0.52 0.36 Premium finance receivables - life insurance 0.02 0.01 0.21 0.02 — Consumer and other 0.10 0.22 0.11 0.08 0.07 Total loans, net of unearned income 0.26 % 0.25 % 0.26 % 0.26 % 0.20 % Total non-performing assets as a percentage of total assets 0.22 % 0.21 % 0.21 % 0.20 % 0.16 % Allowance for loan losses and unfunded lending-related commitments losses as a percentage of non-accrual loans 414.09 % 416.54 % 532.71 % 399.22 % 473.76 % (1) Excludes early buy-out loans guaranteed by U.S. government agencies. Early buy-out loans are insured or guaranteed by the Federal Housing Administration or the U.S. Department of Veterans Affairs, subject to indemnifications and insurance limits for certain loans.
Non-performing Loans Rollforward, excluding early buy-out loans guaranteed by U.S. government agencies
Three Months Ended Six Months Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Jun 30, Jun 30, (In thousands) 2023 2023 2022 2022 2022 2023 2022 Balance at beginning of period $ 100,690 $ 100,697 $ 97,633 $ 72,351 $ 57,305 $ 100,697 $ 74,438 Additions from becoming non-performing in the respective period 21,246 24,455 10,027 35,234 22,841 45,701 26,982 Return to performing status (360 ) (480 ) (1,167 ) (154 ) (1,000 ) (840 ) (1,729 ) Payments received (12,314 ) (5,261 ) (16,351 ) (20,417 ) (4,029 ) (17,575 ) (24,168 ) Transfer to OREO and other repossessed assets (2,958 ) — (3,365 ) (185 ) (1,611 ) (2,958 ) (5,988 ) Charge-offs, net (2,696 ) (1,159 ) (1,363 ) (341 ) (1,969 ) (3,855 ) (4,323 ) Net change for niche loans(1) 5,104 (17,562 ) 15,283 11,145 814 (12,458 ) 7,139 Balance at end of period $ 108,712 $ 100,690 $ 100,697 $ 97,633 $ 72,351 $ 108,712 $ 72,351 (1) Includes activity for premium finance receivables and indirect consumer loans.
Other Real Estate Owned
Three Months Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (In thousands) 2023 2023 2022 2022 2022 Balance at beginning of period $ 9,361 $ 9,900 $ 6,687 $ 6,839 $ 6,203 Disposals/resolved (733 ) (435 ) (152 ) (133 ) (1,172 ) Transfers in at fair value, less costs to sell 2,958 — 3,365 134 2,090 Fair value adjustments — (104 ) — (153 ) (282 ) Balance at end of period $ 11,586 $ 9,361 $ 9,900 $ 6,687 $ 6,839 Period End Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Balance by Property Type: 2023 2023 2022 2022 2022 Residential real estate $ 318 $ 1,051 $ 1,585 $ 1,585 $ 1,630 Residential real estate development — — — — 133 Commercial real estate 11,268 8,310 8,315 5,102 5,076 Total $ 11,586 $ 9,361 $ 9,900 $ 6,687 $ 6,839
TABLE 15: NON-INTEREST INCOMEThree Months Ended Q2 2023 compared to
Q1 2023Q2 2023 compared to
Q2 2022Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (Dollars in thousands) 2023 2023 2022 2022 2022 $ Change % Change $ Change % Change Brokerage $ 4,404 $ 4,533 $ 4,177 $ 4,587 $ 4,272 $ (129 ) (3 )% $ 132 3 % Trust and asset management 29,454 25,412 26,550 28,537 27,097 4,042 16 2,357 9 Total wealth management 33,858 29,945 30,727 33,124 31,369 3,913 13 2,489 8 Mortgage banking 29,981 18,264 17,407 27,221 33,314 11,717 64 (3,333 ) (10 ) Service charges on deposit accounts 13,608 12,903 13,054 14,349 15,888 705 5 (2,280 ) (14 ) Gains (losses) on investment securities, net 0 1,398 (6,745 ) (3,103 ) (7,797 ) (1,398 ) (100 ) 7,797 (100 ) Fees from covered call options 2,578 10,391 7,956 1,366 1,069 (7,813 ) (75 ) 1,509 NM Trading gains (losses), net 106 813 (306 ) (7 ) 176 (707 ) (87 ) (70 ) (40 ) Operating lease income, net 12,227 13,046 12,384 12,644 15,007 (819 ) (6 ) (2,780 ) (19 ) Other: Interest rate swap fees 2,711 2,606 2,319 1,997 3,300 105 4 (589 ) (18 ) BOLI 1,322 1,351 1,394 248 (884 ) (29 ) (2 ) 2,206 NM Administrative services 1,319 1,615 1,736 1,533 1,591 (296 ) (18 ) (272 ) (17 ) Foreign currency remeasurement gains (losses) 543 (188 ) 277 (93 ) 97 731 NM 446 NM Early pay-offs of capital leases 201 365 131 138 160 (164 ) (45 ) 41 26 Miscellaneous 14,576 15,260 13,505 12,065 9,652 (684 ) (4 ) 4,924 51 Total Other 20,672 21,009 19,362 15,888 13,916 (337 ) (2 ) 6,756 49 Total Non-Interest Income $ 113,030 $ 107,769 $ 93,839 $ 101,482 $ 102,942 $ 5,261 5 % $ 10,088 10 % Six Months Ended Jun 30, Jun 30, $ % (Dollars in thousands) 2023 2022 Change Change Brokerage $ 8,937 $ 8,904 $ 33 0 % Trust and asset management 54,866 53,859 1,007 2 Total wealth management 63,803 62,763 1,040 2 Mortgage banking 48,245 110,545 (62,300 ) (56 ) Service charges on deposit accounts 26,511 31,171 (4,660 ) (15 ) Gains (losses) on investment securities, net 1,398 (10,579 ) 11,977 NM Fees from covered call options 12,969 4,811 8,158 NM Trading gains, net 919 4,065 (3,146 ) (77 ) Operating lease income, net 25,273 30,482 (5,209 ) (17 ) Other: Interest rate swap fees 5,317 7,869 (2,552 ) (32 ) BOLI 2,673 (836 ) 3,509 NM Administrative services 2,934 3,444 (510 ) (15 ) Foreign currency remeasurement gains 355 108 247 NM Early pay-offs of leases 566 425 141 33 Miscellaneous 29,836 21,464 8,372 39 Total Other 41,681 32,474 9,207 28 Total Non-Interest Income $ 220,799 $ 265,732 $ (44,933 ) (17 )% NM - Not meaningful.
BOLI - Bank-owned life insurance.TABLE 16: NON-INTEREST EXPENSE
Three Months Ended Q2 2023 compared to
Q1 2023Q2 2023 compared to
Q2 2022Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, (Dollars in thousands) 2023 2023 2022 2022 2022 $ Change % Change $ Change % Change Salaries and employee benefits: Salaries $ 107,671 $ 108,354 $ 100,232 $ 97,419 $ 92,414 $ (683 ) (1 )% $ 15,257 17 % Commissions and incentive compensation 44,511 39,799 49,546 50,403 46,131 4,712 12 (1,620 ) (4 ) Benefits 32,741 28,628 30,553 28,273 28,781 4,113 14 3,960 14 Total salaries and employee benefits 184,923 176,781 180,331 176,095 167,326 8,142 5 17,597 11 Software and equipment 26,205 24,697 24,699 24,126 24,250 1,508 6 1,955 8 Operating lease equipment 9,816 9,833 10,078 9,448 8,774 (17 ) 0 1,042 12 Occupancy, net 19,176 18,486 17,763 17,727 17,651 690 4 1,525 9 Data processing 9,726 9,409 7,927 7,767 8,010 317 3 1,716 21 Advertising and marketing 17,794 11,946 14,279 16,600 16,615 5,848 49 1,179 7 Professional fees 8,940 8,163 9,267 7,544 7,876 777 10 1,064 14 Amortization of other acquisition-related intangible assets 1,499 1,235 1,436 1,492 1,579 264 21 (80 ) (5 ) FDIC insurance 9,008 8,669 6,775 7,186 6,949 339 4 2,059 30 OREO expense, net 118 (207 ) 369 229 294 325 NM (176 ) (60 ) Other: Lending expenses, net of deferred origination costs 7,890 3,099 4,952 4,533 4,270 4,791 NM 3,620 85 Travel and entertainment 5,401 4,590 5,681 4,252 3,897 811 18 1,504 39 Miscellaneous 20,127 22,468 24,279 19,470 21,177 (2,341 ) (10 ) (1,050 ) (5 ) Total other 33,418 30,157 34,912 28,255 29,344 3,261 11 4,074 14 Total Non-Interest Expense $ 320,623 $ 299,169 $ 307,836 $ 296,469 $ 288,668 $ 21,454 7 % $ 31,955 11 % Six Months Ended Jun 30, Jun 30, $ % (Dollars in thousands) 2023 2022 Change Change Salaries and employee benefits: Salaries $ 216,025 $ 184,530 $ 31,495 17 % Commissions and incentive compensation 84,310 97,924 (13,614 ) (14 ) Benefits 61,369 57,227 4,142 7 Total salaries and employee benefits 361,704 339,681 22,023 6 Software and equipment 50,902 47,060 3,842 8 Operating lease equipment 19,649 18,482 1,167 6 Occupancy, net 37,662 35,475 2,187 6 Data processing 19,135 15,515 3,620 23 Advertising and marketing 29,740 28,539 1,201 4 Professional fees 17,103 16,277 826 5 Amortization of other acquisition-related intangible assets 2,734 3,188 (454 ) (14 ) FDIC insurance 17,677 14,678 2,999 20 OREO expense, net (89 ) (738 ) 649 (88 ) Other: Lending expenses, net of deferred origination costs 10,989 11,091 (102 ) (1 ) Travel and entertainment 9,991 6,573 3,418 52 Miscellaneous 42,595 37,145 5,450 15 Total other 63,575 54,809 8,766 16 Total Non-Interest Expense $ 619,792 $ 572,966 $ 46,826 8 % NM - Not meaningful.
TABLE 17: SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES/RATIOS
The accounting and reporting policies of Wintrust conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures and ratios are used by management to evaluate and measure the Company’s performance. These include taxable-equivalent net interest income (including its individual components), taxable-equivalent net interest margin (including its individual components), the taxable-equivalent efficiency ratio, tangible common equity ratio, tangible book value per common share, return on average tangible common equity, and pre-tax income, excluding provision for credit losses. Management believes that these measures and ratios provide users of the Company’s financial information a more meaningful view of the performance of the Company’s interest-earning assets and interest-bearing liabilities and of the Company’s operating efficiency. Other financial holding companies may define or calculate these measures and ratios differently.
Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis using tax rates effective as of the end of the period. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a fully taxable-equivalent basis is also used in the calculation of the Company’s efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses), measures how much it costs to produce one dollar of revenue. Securities gains or losses are excluded from this calculation to better match revenue from daily operations to operational expenses. Management considers the tangible common equity ratio and tangible book value per common share as useful measurements of the Company’s equity. The Company references the return on average tangible common equity as a measurement of profitability. Management considers pre-tax income, excluding provision for credit losses, as a useful measurement of the Company’s core net income.
Three Months Ended Six Months Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Jun 30, Jun 30, (Dollars and shares in thousands) 2023 2023 2022 2022 2022 2023 2022 Reconciliation of Non-GAAP Net Interest Margin and Efficiency Ratio: (A) Interest Income (GAAP) $ 697,176 $ 639,690 $ 580,745 $ 466,478 $ 371,968 $ 1,336,866 $ 700,220 Taxable-equivalent adjustment: - Loans 1,882 1,872 1,594 1,030 568 3,754 995 - Liquidity Management Assets 551 551 538 502 472 1,102 937 - Other Earning Assets 1 4 1 1 1 5 3 (B) Interest Income (non-GAAP) $ 699,610 $ 642,117 $ 582,878 $ 468,011 $ 373,009 $ 1,341,727 $ 702,155 (C) Interest Expense (GAAP) 249,639 181,695 123,929 65,030 34,164 431,334 63,122 (D) Net Interest Income (GAAP) (A minus C) $ 447,537 $ 457,995 $ 456,816 $ 401,448 $ 337,804 $ 905,532 $ 637,098 (E) Net Interest Income (non-GAAP) (B minus C) $ 449,971 $ 460,422 $ 458,949 $ 402,981 $ 338,845 $ 910,393 $ 639,033 Net interest margin (GAAP) 3.64 % 3.81 % 3.71 % 3.34 % 2.92 % 3.72 % 2.76 % Net interest margin, fully taxable-equivalent (non-GAAP) 3.66 3.83 3.73 3.35 2.93 3.74 2.77 (F) Non-interest income $ 113,030 $ 107,769 $ 93,839 $ 101,482 $ 102,942 $ 220,799 $ 265,732 (G) Gains (losses) on investment securities, net 0 1,398 (6,745 ) (3,103 ) (7,797 ) 1,398 (10,579 ) (H) Non-interest expense 320,623 299,169 307,836 296,469 288,668 619,792 572,966 Efficiency ratio (H/(D+F-G)) 57.20 % 53.01 % 55.23 % 58.59 % 64.36 % 55.10 % 62.73 % Efficiency ratio (non-GAAP) (H/(E+F-G)) 56.95 52.78 55.02 58.41 64.21 54.86 62.60 Three Months Ended Six Months Ended Jun 30, Mar 31, Dec 31, Sep 30, Jun 30, Jun 30, Jun 30, (Dollars and shares in thousands) 2023 2023 2022 2022 2022 2023 2022 Reconciliation of Non-GAAP Tangible Common Equity Ratio: Total shareholders’ equity (GAAP) $ 5,041,912 $ 5,015,506 $ 4,796,838 $ 4,637,980 $ 4,727,623 Less: Non-convertible preferred stock (GAAP) (412,500 ) (412,500 ) (412,500 ) (412,500 ) (412,500 ) Less: Intangible assets (GAAP) (682,327 ) (674,538 ) (675,710 ) (676,699 ) (679,827 ) (I) Total tangible common shareholders’ equity (non-GAAP) $ 3,947,085 $ 3,928,468 $ 3,708,628 $ 3,548,781 $ 3,635,296 (J) Total assets (GAAP) $ 54,286,176 $ 52,873,511 $ 52,949,649 $ 52,382,939 $ 50,969,332 Less: Intangible assets (GAAP) (682,327 ) (674,538 ) (675,710 ) (676,699 ) (679,827 ) (K) Total tangible assets (non-GAAP) $ 53,603,849 $ 52,198,973 $ 52,273,939 $ 51,706,240 $ 50,289,505 Common equity to assets ratio (GAAP) (L/J) 8.5 % 8.7 % 8.3 % 8.1 % 8.5 % Tangible common equity ratio (non-GAAP) (I/K) 7.4 7.5 7.1 6.9 7.2 Reconciliation of Non-GAAP Tangible Book Value per Common Share: Total shareholders’ equity $ 5,041,912 $ 5,015,506 $ 4,796,838 $ 4,637,980 $ 4,727,623 Less: Preferred stock (412,500 ) (412,500 ) (412,500 ) (412,500 ) (412,500 ) (L) Total common equity $ 4,629,412 $ 4,603,006 $ 4,384,338 $ 4,225,480 $ 4,315,123 (M) Actual common shares outstanding 61,198 61,176 60,794 60,743 60,722 Book value per common share (L/M) $ 75.65 $ 75.24 $ 72.12 $ 69.56 $ 71.06 Tangible book value per common share (non-GAAP) (I/M) 64.50 64.22 61.00 58.42 59.87 Reconciliation of Non-GAAP Return on Average Tangible Common Equity: (N) Net income applicable to common shares $ 147,759 $ 173,207 $ 137,826 $ 135,970 $ 87,522 $ 320,966 $ 207,922 Add: Intangible asset amortization 1,499 1,235 1,436 1,492 1,579 2,734 3,188 Less: Tax effect of intangible asset amortization (402 ) (321 ) (370 ) (425 ) (445 ) (722 ) (870 ) After-tax intangible asset amortization $ 1,097 $ 914 $ 1,066 $ 1,067 $ 1,134 $ 2,012 $ 2,318 (O) Tangible net income applicable to common shares (non-GAAP) $ 148,856 $ 174,121 $ 138,892 $ 137,037 $ 88,656 $ 322,978 $ 210,240 Total average shareholders’ equity $ 5,044,718 $ 4,895,271 $ 4,710,856 $ 4,795,387 $ 4,526,110 $ 4,970,407 $ 4,513,356 Less: Average preferred stock (412,500 ) (412,500 ) (412,500 ) (412,500 ) (412,500 ) (412,500 ) (412,500 ) (P) Total average common shareholders’ equity $ 4,632,218 $ 4,482,771 $ 4,298,356 $ 4,382,887 $ 4,113,610 $ 4,557,907 $ 4,100,856 Less: Average intangible assets (682,561 ) (675,247 ) (676,371 ) (678,953 ) (681,091 ) (678,924 ) (681,843 ) (Q) Total average tangible common shareholders’ equity (non-GAAP) $ 3,949,657 $ 3,807,524 $ 3,621,985 $ 3,703,934 $ 3,432,519 $ 3,878,983 $ 3,419,013 Return on average common equity, annualized (N/P) 12.79 % 15.67 % 12.72 % 12.31 % 8.53 % 14.20 % 10.22 % Return on average tangible common equity, annualized (non-GAAP) (O/Q) 15.12 18.55 15.21 14.68 10.36 16.79 12.40 Reconciliation of Non-GAAP Pre-Tax, Pre-Provision Income: Income before taxes $ 211,430 $ 243,550 $ 195,173 $ 200,041 $ 131,661 $ 454,980 $ 305,341 Add: Provision for credit losses 28,514 23,045 47,646 6,420 20,417 51,559 24,523 Pre-tax income, excluding provision for credit losses (non-GAAP) $ 239,944 $ 266,595 $ 242,819 $ 206,461 $ 152,078 $ 506,539 $ 329,864
WINTRUST SUBSIDIARIES AND LOCATIONSWintrust is a financial holding company whose common stock is traded on the Nasdaq Global Select Market (Nasdaq: WTFC). Its 15 community bank subsidiaries are: Lake Forest Bank & Trust Company, N.A., Hinsdale Bank & Trust Company, N.A., Wintrust Bank, N.A., in Chicago, Libertyville Bank & Trust Company, N.A., Barrington Bank & Trust Company, N.A., Crystal Lake Bank & Trust Company, N.A., Northbrook Bank & Trust Company, N.A., Schaumburg Bank & Trust Company, N.A., Village Bank & Trust, N.A., in Arlington Heights, Beverly Bank & Trust Company, N.A. in Chicago, Wheaton Bank & Trust Company, N.A., State Bank of The Lakes, N.A., in Antioch, Old Plank Trail Community Bank, N.A., in New Lenox, St. Charles Bank & Trust Company, N.A. and Town Bank, N.A., in Hartland, Wisconsin.
In addition to the locations noted above, the banks also operate facilities in Illinois in Addison, Algonquin, Aurora, Bloomingdale, Bolingbrook, Buffalo Grove, Burbank, Cary, Clarendon Hills, Countryside, Crete, Darien, Deerfield, Des Plaines, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Evanston, Evergreen Park, Frankfort, Geneva, Glen Ellyn, Glencoe, Glenview, Grayslake, Gurnee, Hanover Park, Highland Park, Highwood, Hoffman Estates, Homer Glen, Itasca, Joliet, Lake Bluff, Lake Villa, Lansing, Lemont, Lindenhurst, Lombard, Lynwood, Markham, Maywood, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, Norridge, Northfield, Oak Lawn, Oak Park, Orland Park, Palatine, Park Ridge, Prospect Heights, Riverside, Rockford, Rolling Meadows, Round Lake Beach, Shorewood, Skokie, South Holland, Spring Grove, Steger, Stone Park, Vernon Hills, Wauconda, Waukegan, Western Springs, Willowbrook, Wilmette, Winnetka and Wood Dale, and in Wisconsin in Burlington, Clinton, Delafield, Delavan, Elm Grove, Genoa City, Kenosha, Lake Geneva, Madison, Menomonee Falls, Milwaukee, Pewaukee, Racine, Wales, Walworth, Whitefish Bay and Wind Lake, and in Florida in Bonita Springs and Naples, and in Dyer, Indiana.
Additionally, the Company operates various non-bank business units:
- FIRST Insurance Funding and Wintrust Life Finance, each a division of Lake Forest Bank & Trust Company, N.A., serve commercial and life insurance loan customers, respectively, throughout the United States.
- First Insurance Funding of Canada serves commercial insurance loan customers throughout Canada.
- Tricom, Inc. of Milwaukee provides high-yielding, short-term accounts receivable financing and value-added out-sourced administrative services, such as data processing of payrolls, billing and cash management services, to temporary staffing service clients located throughout the United States.
- Wintrust Mortgage, a division of Barrington Bank & Trust Company, N.A., engages primarily in the origination and purchase of residential mortgages for sale into the secondary market through origination offices located throughout the United States. Loans are also originated nationwide through relationships with wholesale and correspondent offices.
- Wintrust Investments, LLC is a broker-dealer providing a full range of private client and brokerage services to clients and correspondent banks located primarily in the Midwest.
- Great Lakes Advisors LLC provides money management services and advisory services to individual accounts.
- The Chicago Trust Company, N.A., a trust subsidiary, allows Wintrust to service customers’ trust and investment needs at each banking location.
- Wintrust Asset Finance offers direct leasing opportunities.
- CDEC provides Qualified Intermediary services (as defined by U.S. Treasury regulations) for taxpayers seeking to structure tax-deferred like-kind exchanges under Internal Revenue Code Section 1031.
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information can be identified through the use of words such as “intend,” “plan,” “project,” “expect,” “anticipate,” “believe,” “estimate,” “contemplate,” “possible,” “will,” “may,” “should,” “would” and “could.” Forward-looking statements and information are not historical facts, are premised on many factors and assumptions, and represent only management’s expectations, estimates and projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict, and which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company’s 2022 Annual Report on Form 10-K and in any of the Company’s subsequent SEC filings. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be deemed to include, among other things, statements relating to the Company’s future financial performance, the performance of its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory developments, securities that the Company may offer from time to time, the Company’s business and growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth and plans to form additional de novo banks or branch offices, and management’s long-term performance goals, as well as statements relating to the anticipated effects on the Company’s financial condition and results of operations from expected developments or events. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:
- economic conditions and events that affect the economy, housing prices, the job market and other factors that may adversely affect the Company’s liquidity and the performance of its loan portfolios, including an actual or threatened U.S. government debt default or rating downgrade, particularly in the markets in which it operates;
- negative effects suffered by us or our customers resulting from changes in U.S. trade policies;
- the extent of defaults and losses on the Company’s loan portfolio, which may require further increases in its allowance for credit losses;
- estimates of fair value of certain of the Company’s assets and liabilities, which could change in value significantly from period to period;
- the financial success and economic viability of the borrowers of our commercial loans;
- commercial real estate market conditions in the Chicago metropolitan area and southern Wisconsin;
- the extent of commercial and consumer delinquencies and declines in real estate values, which may require further increases in the Company’s allowance for credit losses;
- inaccurate assumptions in our analytical and forecasting models used to manage our loan portfolio;
- changes in the level and volatility of interest rates, the capital markets and other market indices that may affect, among other things, the Company’s liquidity and the value of its assets and liabilities;
- the interest rate environment, including a prolonged period of low interest rates or rising interest rates, either broadly or for some types of instruments, which may affect the Company’s net interest income and net interest margin, and which could materially adversely affect the Company’s profitability;
- competitive pressures in the financial services business which may affect the pricing of the Company’s loan and deposit products as well as its services (including wealth management services), which may result in loss of market share and reduced income from deposits, loans, advisory fees and income from other products;
- failure to identify and complete favorable acquisitions in the future or unexpected difficulties or developments related to the integration of the Company’s recent or future acquisitions;
- unexpected difficulties and losses related to FDIC-assisted acquisitions;
- harm to the Company’s reputation;
- any negative perception of the Company’s financial strength;
- ability of the Company to raise additional capital on acceptable terms when needed;
- disruption in capital markets, which may lower fair values for the Company’s investment portfolio;
- ability of the Company to use technology to provide products and services that will satisfy customer demands and create efficiencies in operations and to manage risks associated therewith;
- failure or breaches of our security systems or infrastructure, or those of third parties;
- security breaches, including denial of service attacks, hacking, social engineering attacks, malware intrusion and similar events or data corruption attempts and identity theft;
- adverse effects on our information technology systems resulting from failures, human error or cyberattacks (including ransomware);
- adverse effects of failures by our vendors to provide agreed upon services in the manner and at the cost agreed, particularly our information technology vendors;
- increased costs as a result of protecting our customers from the impact of stolen debit card information;
- accuracy and completeness of information the Company receives about customers and counterparties to make credit decisions;
- ability of the Company to attract and retain senior management experienced in the banking and financial services industries, and ability of the Company to effectively manage the planned transition of the chief executive officer role;
- environmental liability risk associated with lending activities;
- the impact of any claims or legal actions to which the Company is subject, including any effect on our reputation;
- losses incurred in connection with repurchases and indemnification payments related to mortgages and increases in reserves associated therewith;
- the loss of customers as a result of technological changes allowing consumers to complete their financial transactions without the use of a bank;
- the soundness of other financial institutions and the impact of recent failures of financial institutions, including broader financial institution liquidity risk and concerns;
- the expenses and delayed returns inherent in opening new branches and de novo banks;
- liabilities, potential customer loss or reputational harm related to closings of existing branches;
- examinations and challenges by tax authorities, and any unanticipated impact of the Tax Act;
- changes in accounting standards, rules and interpretations, and the impact on the Company’s financial statements;
- the ability of the Company to receive dividends from its subsidiaries;
- the ability of the Company to successfully discontinue use of LIBOR and transition to an alternative benchmark rate for current and future transactions;
- a decrease in the Company’s capital ratios, including as a result of declines in the value of its loan portfolios, or otherwise;
- legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies;
- changes in laws, regulations, rules, standards and contractual obligations regarding data privacy and cybersecurity;
- a lowering of our credit rating;
- changes in U.S. monetary policy and changes to the Federal Reserve’s balance sheet, including changes in response to persistent inflation or otherwise;
- regulatory restrictions upon our ability to market our products to consumers and limitations on our ability to profitably operate our mortgage business;
- increased costs of compliance, heightened regulatory capital requirements and other risks associated with changes in regulation and the regulatory environment;
- the impact of heightened capital requirements;
- increases in the Company’s FDIC insurance premiums, or the collection of special assessments by the FDIC;
- delinquencies or fraud with respect to the Company’s premium finance business;
- credit downgrades among commercial and life insurance providers that could negatively affect the value of collateral securing the Company’s premium finance loans;
- the Company’s ability to comply with covenants under its credit facility;
- fluctuations in the stock market, which may have an adverse impact on the Company’s wealth management business and brokerage operation;
- widespread outages of operational, communication, or other systems, whether internal or provided by third parties, natural or other disasters (including acts of terrorism, armed hostilities and pandemics), and the effects of climate change could have an adverse effect on the Company’s financial condition and results of operations, lead to material disruption of the Company’s operations or the ability or willingness of clients to access the Company’s products and services; and
- the severity, magnitude and duration of the COVID-19 pandemic, including the continued emergence of variant strains, and the direct and indirect impact of such pandemic, as well as responses to the pandemic by the government, businesses and consumers, on the economy, our financial results, operations and personnel, commercial activity and demand across our business and our customers’ businesses.
Therefore, there can be no assurances that future actual results will correspond to these forward-looking statements. The reader is cautioned not to place undue reliance on any forward-looking statement made by the Company. Any such statement speaks only as of the date the statement was made or as of such date that may be referenced within the statement. The Company undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events after the date of the press release. Persons are advised, however, to consult further disclosures management makes on related subjects in its reports filed with the Securities and Exchange Commission and in its press releases.
CONFERENCE CALL, WEBCAST AND REPLAY
The Company will hold a conference call on Thursday, July 20, 2023 at 9:00 a.m. (CDT) regarding second quarter and year-to-date 2023 earnings results. Individuals interested in participating in the call by addressing questions to management should register for the call to receive the dial-in numbers and unique PIN at the link included within the Company’s press release dated July 6, 2023 available at the Investor Relations, Investor News and Events, Press Releases link on its website at https://www.wintrust.com. A separate simultaneous audio-only webcast link is included within the press release referenced above. Registration for and a replay of the audio-only webcast with an accompanying slide presentation will be available at https://www.wintrust.com, Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the second quarter and year-to-date 2023 earnings press release will also be available on the home page of the Company’s website at https://www.wintrust.com and at the Investor Relations, Investor News and Events, Press Releases link on its website.
FOR MORE INFORMATION CONTACT:
Timothy S. Crane, President & Chief Executive Officer
David A. Dykstra, Vice Chairman & Chief Operating Officer
(847) 939-9000
Web site address: www.wintrust.com
