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Wintrust Financial Corporation Reports Record Year-to-Date Net Income
来源: Nasdaq GlobeNewswire / 17 10月 2023 17:00:28 America/New_York
ROSEMONT, Ill., Oct. 17, 2023 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust”, “the Company”, “we” or “our”) (Nasdaq: WTFC) announced record net income of $499.1 million or $7.71 per diluted common share for the first nine months of 2023 compared to net income of $364.9 million or $5.78 per diluted common share for the same period of 2022, an increase in diluted earnings per common share of 33%. Pre-tax, pre-provision income (non-GAAP) for the first nine months of 2023 totaled $751.3 million as compared to $536.3 million in the first nine months of 2022, an increase in pre-tax, pre-provision income of 40%.
The Company recorded quarterly net income of $164.2 million or $2.53 per diluted common share for the third quarter of 2023, an increase in diluted earnings per common share of 6% compared to the second quarter of 2023 and 14% compared to the third quarter of 2022. Pre-tax, pre-provision income (non-GAAP) totaled $244.8 million as compared to $239.9 million for the second quarter of 2023 and $206.5 million for the third quarter of 2022.
Timothy S. Crane, President and Chief Executive Officer, commented, “As demonstrated by our strong results, we followed our record first half of 2023 with continued momentum in the third quarter of 2023. We leveraged our position in the markets we serve to sustain growth in loans and deposits during the quarter.”
Additionally, Mr. Crane noted, “Our net interest margin for the quarter was within our expected range, down slightly due primarily to the impact of hedging activities. In the current interest rate environment, we expect to maintain our net interest margin within a narrow range around current levels for the remainder of 2023 and continuing into the beginning of 2024. We believe this growth and stability in net interest margin will drive strong financial performance in future quarters.”
Highlights of the third quarter of 2023:
Comparative information to the second quarter of 2023, unless otherwise noted- Total deposits grew by approximately $1 billion, or 9% annualized.
- Total loans increased by approximately $423 million, or 4% annualized. Adjusting for the impact of a loan sale transaction within our property and casualty insurance premium finance receivables portfolio during the third quarter of 2023, total loans would have increased $767 million, or 7% annualized.
- Record quarterly net interest income of $462.4 million, increasing approximately $14.8 million primarily due to strong growth in earning assets.
- Net interest margin decreased four basis points to 3.60% (3.62% on a fully taxable-equivalent basis, non-GAAP) during the third quarter of 2023 primarily due to the negative impact of hedging activities.
- Non-interest expense was negatively impacted by:
- Occupancy costs of approximately $2.9 million from the impairment of two Company-owned buildings that are no longer being used.
- Data processing costs of approximately $1.5 million from the termination of a duplicate service contract related to the acquisition of a wealth management business in 2023.
- Other salary costs of approximately $1.6 million related to acquisition-related severance charges and other contractually due compensation costs.
- Provision for credit losses totaled $19.9 million in the third quarter of 2023 as compared to a provision for credit losses of $28.5 million in the second quarter of 2023.
- Net charge-offs totaled $8.1 million or eight basis points of average total loans on an annualized basis in the third quarter of 2023 as compared to $17.0 million or 17 basis points of average total loans on an annualized basis in the second quarter of 2023.
Mr. Crane commented, “By leveraging our customer relationships, market positioning, diversified products and competitive rates, we continued to generate significant deposit growth, increasing deposits approximately $1 billion, or 9% on an annualized basis, in the third quarter of 2023. Growth in retail deposits helped reduce our level of brokered deposits by approximately $392 million during the third quarter of 2023. In addition, deposit growth helped fund approximately $423 million of loan growth during the quarter. This strong loan growth was achieved despite the impact of a loan sale transaction within our property and casualty insurance premium finance receivables portfolio that reduced period-end balances at the end of the third quarter by approximately $344 million. Loan growth came primarily from draws on existing commercial real estate loan facilities as well as growth in our commercial portfolio. Additionally, despite the loan sale transaction noted above, our property and casualty insurance premium finance receivables portfolio ended the quarter relatively unchanged. We remain prudent in our review of credit prospects ensuring our loan growth stays within our conservative credit standards.”
Mr. Crane noted, “We grew our net interest income during the third quarter of 2023 by approximately $14.8 million primarily due to an increase in average earning assets of approximately $1.6 billion. Our net interest margin decreased four basis points during the third quarter, however, three basis points of the decline was due to the impact of our interest rate hedging strategies, which are designed to protect our net interest income if interest rates decline. Deposit pricing pressures moderated in the third quarter of 2023 and we expect that to continue into the fourth quarter. Assuming a similar interest rate environment, we believe our net interest margin will be relatively stable for the remainder of 2023 and entering 2024. The combination of balance sheet growth and a stable net interest margin is expected to continue to grow our net interest income.”
Commenting on credit quality, Mr. Crane stated, “Credit metrics remained strong and at historically low levels. Net charge-offs totaled $8.1 million or eight basis points of average total loans on an annualized basis in the third quarter of 2023 as compared to $17.0 million or 17 basis points of average total loans on an annualized basis in the second quarter of 2023. Non-performing loans totaled $133.1 million, or 0.32% of total loans, at the end of the third quarter of 2023 compared to $108.7 million, or 0.26% of total loans, at the end of the second quarter of 2023. Of the $24.4 million increase in non-performing loans in the third quarter of 2023, $19.6 million is related to the premium finance receivables portfolios in which we ultimately expect minimal losses. The allowance for credit losses on our core loan portfolio as of September 30, 2023 was approximately 1.51% 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, “I am very pleased with our results for the third quarter of 2023. Net income for the quarter was the second highest in our history, behind only the net income reported in the first quarter of 2023. Total loans as of September 30, 2023 were $739 million higher than average total loans in the third quarter of 2023, which is expected to help continue our momentum into the fourth quarter. We continue to win business and expand our franchise, keeping us well-positioned in the markets we serve. This will help grow our deposit and loan relationships, which should generate higher net revenues and earnings in the coming quarters. As a result, our capital ratios will benefit from the increased earnings.”
The graphs below illustrate certain financial highlights of the third 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/c2b726e7-3c69-483b-b815-c3e18b1fa57f
SUMMARY OF RESULTS:
BALANCE SHEET
Total assets increased $1.3 billion in the third quarter of 2023 as compared to the second quarter of 2023. Total loans increased by $422.6 million as compared to the second quarter of 2023. The increase in loans was primarily the result of draws on existing commercial real estate loan facilities as well as growth in the commercial portfolio. Additionally, despite a loan sale transaction that reduced outstanding balances at the end of the third quarter of 2023 by $344 million, the property and casualty insurance premium finance receivables portfolio ended the quarter relatively unchanged. In the third quarter of 2023, the Company purchased securities, resulting in a $480.7 million increase in investment securities.
Total liabilities increased by $1.3 billion in the third quarter of 2023 as compared to the second quarter of 2023 primarily due to a $1.0 billion increase in total deposits. Non-interest bearing deposits as a percentage of total deposits was 23% at September 30, 2023 compared to 24% at June 30, 2023 as deposit growth came primarily from interest bearing deposit categories. Net outflows from non-interest bearing deposits stabilized during the third quarter of 2023 as average non-interest bearing deposits during the third quarter of 2023 essentially equaled the amount at the end of the second quarter of 2023 at $10.6 billion.
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 third quarter of 2023, net interest income totaled $462.4 million, an increase of $14.8 million as compared to the second quarter of 2023. The $14.8 million increase in net interest income in the third quarter of 2023 compared to the second quarter of 2023 was primarily due to a $1.6 billion increase in average earning assets and one additional day in the quarter.
Net interest margin was 3.60% (3.62% on a fully taxable-equivalent basis, non-GAAP) during the third quarter of 2023 compared to 3.64% (3.66% on a fully taxable-equivalent basis, non-GAAP) during the second quarter of 2023. The net interest margin decrease as compared to the second quarter of 2023 was primarily due to the negative impact of hedging activities as well as a 36 basis point increase in the rate paid on interest-bearing liabilities. This decrease was partially offset by a 27 basis point increase in yield on earning assets and a five basis point increase in the net free funds contribution. The 36 basis point increase on the rate paid on interest-bearing liabilities in the third quarter of 2023 as compared to the second quarter of 2023 was primarily due to a 41 basis point increase in the rate paid on interest-bearing deposits primarily related to the increasing rate environment. The 27 basis point increase in the yield on earning assets in the third quarter of 2023 as compared to the second quarter of 2023 was primarily due to a 28 basis point expansion on loan yields and 41 basis point increase in liquidity management asset yield.
For more information regarding net interest income, see Table 4 through Table 8 in this report.
ASSET QUALITY
The allowance for credit losses totaled $399.5 million as of September 30, 2023, an increase of $11.7 million as compared to $387.8 million as of June 30, 2023. A provision for credit losses totaling $19.9 million was recorded for the third quarter of 2023 as compared to $28.5 million recorded in the second quarter of 2023. For more information regarding the allowance for credit losses and 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 September 30, 2023, June 30, 2023, and March 31, 2023 is shown on Table 12 of this report.
Net charge-offs totaled $8.1 million in the third quarter of 2023, as compared to $17.0 million of net charge-offs in the second quarter of 2023. The decrease in net charge-offs during the third quarter of 2023 was primarily the result of the sale to external parties of certain credits within the commercial real estate portfolio during the second quarter of 2023, which resulted in approximately $8.0 million in charge-offs. Net charge-offs as a percentage of average total loans were eight basis points in the third quarter of 2023 on an annualized basis compared to 17 basis points on an annualized basis in the second 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 $147.2 million and comprised 0.26% of total assets as of September 30, 2023, as compared to $120.3 million as of June 30, 2023. Non-performing loans totaled $133.1 million, or 0.32% of total loans, at September 30, 2023. The increase in the third quarter was primarily due to an increase in loans 90 days or more past due but still fully collateralized within the life insurance premium finance receivables portfolio, and certain credits within the property and casualty insurance premium finance receivables portfolio becoming nonaccrual. For more information regarding non-performing assets, see Table 14 in this report.
NON-INTEREST INCOME
Wealth management revenue was relatively stable in the third quarter of 2023 as compared to the second quarter of 2023. 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 decreased by $2.6 million in the third quarter of 2023 as compared to the second quarter of 2023 primarily due to an unfavorable valuation related change in 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. This was partially offset by increased production revenue and a more favorable adjustments to the fair value of mortgage servicing rights compared to the second quarter of 2023. The Company monitors the relationship of these assets and seeks to minimize the earnings impact of fair value changes.
The Company recognized $2.4 million in net losses on investment securities in the third quarter of 2023 as compared to nominal gains in the second quarter of 2023.
Fees from covered call options increased by $1.6 million in the third quarter of 2023 as compared to the second 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 $7.4 million in the third quarter of 2023 as compared to the second quarter of 2023. The $7.4 million increase is primarily related to higher salary expense and incentive compensation expense due to elevated bonus accruals in the third quarter of 2023 as well as other salary costs of approximately $1.6 million related to acquisition-related severance charges and other contractually due compensation costs.
Operating lease equipment cost increased $2.2 million in the third quarter of 2023 as compared to the second quarter of 2023 primarily due to the impairment of certain assets during the period.
Occupancy expenses increased $2.1 million in the third quarter of 2023 as compared to the second quarter of 2023 primarily due to the impairment of two Company-owned buildings that are no longer being used.
Data processing expense increased $1.0 million in the third quarter of 2023 as compared to the second quarter of 2023 primarily due to the termination of a duplicate service contract related to the acquisition of a wealth management business in 2023.
Lending expenses, net of deferred origination costs, decreased by $3.1 million as compared to the second quarter of 2023 primarily due to higher loan originations in the second quarter of 2023.
Miscellaneous expense in the third quarter of 2023 decreased by $1.0 million as compared to the second 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 $60.7 million in the third quarter of 2023 compared to $56.7 million in the second quarter of 2023. The effective tax rates were 26.98% in the third quarter of 2023 compared to 26.81% in the second quarter of 2023.
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 third quarter of 2023, this unit expanded its commercial, commercial real estate and residential real estate loan portfolios and grew retail deposits.
Mortgage banking revenue was $27.4 million for the third quarter of 2023, a decrease of $2.6 million as compared to the second quarter of 2023, primarily due to an unfavorable valuation related change in 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. Service charges on deposit accounts totaled $14.2 million in the third quarter of 2023, an increase of $609,000 as compared to the second 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 September 30, 2023 indicating momentum for expected continued loan growth in the fourth 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 $4.6 billion during the third quarter of 2023 and average balances increased by $444.0 million as compared to the second quarter of 2023. The Company’s leasing portfolio balance increased in the third quarter of 2023, with its portfolio of assets, including capital leases, loans and equipment on operating leases, totaling $3.3 billion as of September 30, 2023 as compared to $3.1 billion as of June 30, 2023. Revenues from the Company’s out-sourced administrative services business were $1.3 million in the third quarter of 2023, an increase of $17,000 from the second 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 $33.5 million in the third quarter of 2023, which was relatively stable compared to the second quarter of 2023. At September 30, 2023, the Company’s wealth management subsidiaries had approximately $44.7 billion of assets under administration, which included $8.3 billion of assets owned by the Company and its subsidiary banks, representing an increase from the $44.5 billion of assets under administration at June 30, 2023.
ITEM 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 the transaction was determined to be a business combination, the Company recorded goodwill of approximately $2.6 million on the purchase.
WINTRUST FINANCIAL CORPORATION
Key Operating Measures
Wintrust’s key operating measures and growth rates for the third quarter of 2023, as compared to the second quarter of 2023 (sequential quarter) and third quarter of 2022 (linked quarter), are shown in the table below:
% or (1)
basis point (bp) change from
2nd Quarter
2023% or (1)
basis point (bp) change from
3rd Quarter
2022Three Months Ended (Dollars in thousands, except per share data) Sep 30, 2023 Jun 30, 2023 Sep 30, 2022 Net income $ 164,198 $ 154,750 $ 142,961 6 % 15 % Pre-tax income, excluding provision for credit losses (non-GAAP) (2) 244,781 239,944 206,461 2 19 Net income per common share – Diluted 2.53 2.38 2.21 6 14 Cash dividends declared per common share 0.40 0.40 0.34 — 18 Net revenue (3) 574,836 560,567 502,930 3 14 Net interest income 462,358 447,537 401,448 3 15 Net interest margin 3.60 % 3.64 % 3.34 % (4 ) bps 26 bps Net interest margin – fully taxable-equivalent (non-GAAP) (2) 3.62 3.66 3.35 (4 ) 27 Net overhead ratio (4) 1.59 1.58 1.53 1 6 Return on average assets 1.20 1.18 1.12 2 8 Return on average common equity 13.35 12.79 12.31 56 104 Return on average tangible common equity (non-GAAP) (2) 15.73 15.12 14.68 61 105 At end of period Total assets $ 55,555,246 $ 54,286,176 $ 52,382,939 9 % 6 % Total loans (5) 41,446,032 41,023,408 38,167,613 4 9 Total deposits 44,992,686 44,038,707 42,797,191 9 5 Total shareholders’ equity 5,015,613 5,041,912 4,637,980 (2 ) 8 (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 Nine Months Ended (Dollars in thousands, except per share data) Sep 30,
2023Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Sep 30,
2023Sep 30,
2022Selected Financial Condition Data (at end of period): Total assets $ 55,555,246 $ 54,286,176 $ 52,873,511 $ 52,949,649 $ 52,382,939 Total loans (1) 41,446,032 41,023,408 39,565,471 39,196,485 38,167,613 Total deposits 44,992,686 44,038,707 42,718,211 42,902,544 42,797,191 Total shareholders’ equity 5,015,613 5,041,912 5,015,506 4,796,838 4,637,980 Selected Statements of Income Data: Net interest income $ 462,358 $ 447,537 $ 457,995 $ 456,816 $ 401,448 $ 1,367,890 $ 1,038,546 Net revenue (2) 574,836 560,567 565,764 550,655 502,930 1,701,167 1,405,760 Net income 164,198 154,750 180,198 144,817 142,961 499,146 364,865 Pre-tax income, excluding provision for credit losses (non-GAAP) (3) 244,781 239,944 266,595 242,819 206,461 751,320 536,325 Net income per common share – Basic 2.57 2.41 2.84 2.27 2.24 7.82 5.86 Net income per common share – Diluted 2.53 2.38 2.80 2.23 2.21 7.71 5.78 Cash dividends declared per common share 0.40 0.40 0.40 0.34 0.34 1.20 1.02 Selected Financial Ratios and Other Data: Performance Ratios: Net interest margin 3.60 % 3.64 % 3.81 % 3.71 % 3.34 % 3.68 % 2.96 % Net interest margin – fully taxable-equivalent (non-GAAP) (3) 3.62 3.66 3.83 3.73 3.35 3.70 2.97 Non-interest income to average assets 0.82 0.86 0.84 0.71 0.79 0.84 0.98 Non-interest expense to average assets 2.41 2.44 2.33 2.34 2.32 2.39 2.33 Net overhead ratio (4) 1.59 1.58 1.49 1.63 1.53 1.55 1.35 Return on average assets 1.20 1.18 1.40 1.10 1.12 1.26 0.98 Return on average common equity 13.35 12.79 15.67 12.72 12.31 13.91 10.96 Return on average tangible common equity (non-GAAP) (3) 15.73 15.12 18.55 15.21 14.68 16.43 13.21 Average total assets $ 54,381,981 $ 52,601,953 $ 52,075,318 $ 52,087,618 $ 50,722,694 $ 53,028,199 $ 49,863,793 Average total shareholders’ equity 5,083,883 5,044,718 4,895,271 4,710,856 4,795,387 5,008,648 4,608,399 Average loans to average deposits ratio 92.4 % 94.3 % 93.0 % 90.5 % 88.8 % 93.2 % 86.5 % Period-end loans to deposits ratio 92.1 93.2 92.6 91.4 89.2 Common Share Data at end of period: Market price per common share $ 75.50 $ 72.62 $ 72.95 $ 84.52 $ 81.55 Book value per common share 75.19 75.65 75.24 72.12 69.56 Tangible book value per common share (non-GAAP) (3) 64.07 64.50 64.22 61.00 58.42 Common shares outstanding 61,222,058 61,197,676 61,176,415 60,794,008 60,743,335 Other Data at end of period: Tier 1 leverage ratio (5) 9.2 % 9.3 % 9.1 % 8.8 % 8.8 % Risk-based capital ratios: Tier 1 capital ratio (5) 10.2 10.1 10.1 10.0 9.9 Common equity tier 1 capital ratio (5) 9.3 9.3 9.2 9.1 9.0 Total capital ratio (5) 12.0 12.0 12.1 11.9 11.8 Allowance for credit losses (6) $ 399,531 $ 387,786 $ 376,261 $ 357,936 $ 315,338 Allowance for loan and unfunded lending-related commitment losses to total loans 0.96 % 0.94 % 0.95 % 0.91 % 0.83 % Number of: Bank subsidiaries 15 15 15 15 15 Banking offices 174 175 174 174 174 (1) Excludes mortgage loans held-for-sale.
(2) Net revenue is net interest income plus 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) Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, (In thousands) 2023 2023 2023 2022 2022 Assets Cash and due from banks $ 418,088 $ 513,858 $ 445,928 $ 490,908 $ 489,590 Federal funds sold and securities purchased under resale agreements 60 59 58 58 57 Interest-bearing deposits with banks 2,448,570 2,163,708 1,563,578 1,988,719 3,968,605 Available-for-sale securities, at fair value 3,611,835 3,492,481 3,259,845 3,243,017 2,923,653 Held-to-maturity securities, at amortized cost 3,909,150 3,564,473 3,606,391 3,640,567 3,389,842 Trading account securities 1,663 3,027 102 1,127 179 Equity securities with readily determinable fair value 134,310 116,275 111,943 110,365 114,012 Federal Home Loan Bank and Federal Reserve Bank stock 204,040 195,117 244,957 224,759 178,156 Brokerage customer receivables 14,042 15,722 16,042 16,387 20,327 Mortgage loans held-for-sale, at fair value 304,808 338,728 302,493 299,935 376,160 Loans, net of unearned income 41,446,032 41,023,408 39,565,471 39,196,485 38,167,613 Allowance for loan losses (315,039 ) (302,499 ) (287,972 ) (270,173 ) (246,110 ) Net loans 41,130,993 40,720,909 39,277,499 38,926,312 37,921,503 Premises, software and equipment, net 747,501 749,393 760,283 764,798 763,029 Lease investments, net 275,152 274,351 256,301 253,928 244,822 Accrued interest receivable and other assets 1,674,681 1,455,748 1,413,795 1,391,342 1,316,305 Trade date securities receivable — — 939,758 921,717 — Goodwill 656,109 656,674 653,587 653,524 653,079 Other acquisition-related intangible assets 24,244 25,653 20,951 22,186 23,620 Total assets $ 55,555,246 $ 54,286,176 $ 52,873,511 $ 52,949,649 $ 52,382,939 Liabilities and Shareholders’ Equity Deposits: Non-interest-bearing $ 10,347,006 $ 10,604,915 $ 11,236,083 $ 12,668,160 $ 13,529,277 Interest-bearing 34,645,680 33,433,792 31,482,128 30,234,384 29,267,914 Total deposits 44,992,686 44,038,707 42,718,211 42,902,544 42,797,191 Federal Home Loan Bank advances 2,326,071 2,026,071 2,316,071 2,316,071 2,316,071 Other borrowings 643,999 665,219 583,548 596,614 447,215 Subordinated notes 437,731 437,628 437,493 437,392 437,260 Junior subordinated debentures 253,566 253,566 253,566 253,566 253,566 Accrued interest payable and other liabilities 1,885,580 1,823,073 1,549,116 1,646,624 1,493,656 Total liabilities 50,539,633 49,244,264 47,858,005 48,152,811 47,744,959 Shareholders’ Equity: Preferred stock 412,500 412,500 412,500 412,500 412,500 Common stock 61,244 61,219 61,198 60,797 60,743 Surplus 1,933,226 1,923,623 1,913,947 1,902,474 1,891,621 Treasury stock (1,966 ) (1,966 ) (1,966 ) (304 ) — Retained earnings 3,253,332 3,120,626 2,997,263 2,849,007 2,731,844 Accumulated other comprehensive loss (642,723 ) (474,090 ) (367,436 ) (427,636 ) (458,728 ) Total shareholders’ equity 5,015,613 5,041,912 5,015,506 4,796,838 4,637,980 Total liabilities and shareholders’ equity $ 55,555,246 $ 54,286,176 $ 52,873,511 $ 52,949,649 $ 52,382,939 WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)Three Months Ended Nine Months Ended (Dollars in thousands, except per share data) Sep 30,
2023Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Sep 30,
2023Sep 30,
2022Interest income Interest and fees on loans $ 666,260 $ 621,057 $ 558,692 $ 498,838 $ 402,689 $ 1,846,009 $ 1,008,888 Mortgage loans held-for-sale 4,767 4,178 3,528 3,997 5,371 12,473 17,198 Interest-bearing deposits with banks 26,866 16,882 13,468 20,349 15,621 57,216 23,098 Federal funds sold and securities purchased under resale agreements 1,157 1 70 1,263 1,845 1,228 3,640 Investment securities 59,164 51,243 59,943 53,092 38,569 170,350 107,508 Trading account securities 6 6 14 6 7 26 16 Federal Home Loan Bank and Federal Reserve Bank stock 3,896 3,544 3,680 2,918 2,109 11,120 5,704 Brokerage customer receivables 284 265 295 282 267 844 646 Total interest income 762,400 697,176 639,690 580,745 466,478 2,099,266 1,166,698 Interest expense Interest on deposits 262,783 213,495 144,802 95,447 45,916 621,080 79,755 Interest on Federal Home Loan Bank advances 17,436 17,399 19,135 13,823 6,812 53,970 16,506 Interest on other borrowings 9,384 8,485 7,854 5,313 4,008 25,723 8,981 Interest on subordinated notes 5,491 5,523 5,488 5,520 5,485 16,502 16,484 Interest on junior subordinated debentures 4,948 4,737 4,416 3,826 2,809 14,101 6,426 Total interest expense 300,042 249,639 181,695 123,929 65,030 731,376 128,152 Net interest income 462,358 447,537 457,995 456,816 401,448 1,367,890 1,038,546 Provision for credit losses 19,923 28,514 23,045 47,646 6,420 71,482 30,943 Net interest income after provision for credit losses 442,435 419,023 434,950 409,170 395,028 1,296,408 1,007,603 Non-interest income Wealth management 33,529 33,858 29,945 30,727 33,124 97,332 95,887 Mortgage banking 27,395 29,981 18,264 17,407 27,221 75,640 137,766 Service charges on deposit accounts 14,217 13,608 12,903 13,054 14,349 40,728 45,520 Losses (gains) on investment securities, net (2,357 ) 0 1,398 (6,745 ) (3,103 ) (959 ) (13,682 ) Fees from covered call options 4,215 2,578 10,391 7,956 1,366 17,184 6,177 Trading gains (losses), net 728 106 813 (306 ) (7 ) 1,647 4,058 Operating lease income, net 13,863 12,227 13,046 12,384 12,644 39,136 43,126 Other 20,888 20,672 21,009 19,362 15,888 62,569 48,362 Total non-interest income 112,478 113,030 107,769 93,839 101,482 333,277 367,214 Non-interest expense Salaries and employee benefits 192,338 184,923 176,781 180,331 176,095 554,042 515,776 Software and equipment 25,951 26,205 24,697 24,699 24,126 76,853 71,186 Operating lease equipment 12,020 9,816 9,833 10,078 9,448 31,669 27,930 Occupancy, net 21,304 19,176 18,486 17,763 17,727 58,966 53,202 Data processing 10,773 9,726 9,409 7,927 7,767 29,908 23,282 Advertising and marketing 18,169 17,794 11,946 14,279 16,600 47,909 45,139 Professional fees 8,887 8,940 8,163 9,267 7,544 25,990 23,821 Amortization of other acquisition-related intangible assets 1,408 1,499 1,235 1,436 1,492 4,142 4,680 FDIC insurance 9,748 9,008 8,669 6,775 7,186 27,425 21,864 OREO expenses, net 120 118 (207 ) 369 229 31 (509 ) Other 29,337 33,418 30,157 34,912 28,255 92,912 83,064 Total non-interest expense 330,055 320,623 299,169 307,836 296,469 949,847 869,435 Income before taxes 224,858 211,430 243,550 195,173 200,041 679,838 505,382 Income tax expense 60,660 56,680 63,352 50,356 57,080 180,692 140,517 Net income $ 164,198 $ 154,750 $ 180,198 $ 144,817 $ 142,961 $ 499,146 $ 364,865 Preferred stock dividends 6,991 6,991 6,991 6,991 6,991 20,973 20,973 Net income applicable to common shares $ 157,207 $ 147,759 $ 173,207 $ 137,826 $ 135,970 $ 478,173 $ 343,892 Net income per common share - Basic $ 2.57 $ 2.41 $ 2.84 $ 2.27 $ 2.24 $ 7.82 $ 5.86 Net income per common share - Diluted $ 2.53 $ 2.38 $ 2.80 $ 2.23 $ 2.21 $ 7.71 $ 5.78 Cash dividends declared per common share $ 0.40 $ 0.40 $ 0.40 $ 0.34 $ 0.34 $ 1.20 $ 1.02 Weighted average common shares outstanding 61,213 61,192 60,950 60,769 60,738 61,119 58,679 Dilutive potential common shares 964 902 873 1,096 837 888 814 Average common shares and dilutive common shares 62,177 62,094 61,823 61,865 61,575 62,007 59,493 TABLE 1: LOAN PORTFOLIO MIX AND GROWTH RATES
% Growth From (1) (Dollars in thousands) Sep 30,
2023Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Dec 31,
2022 (2)Sep 30,
2022Balance: Mortgage loans held-for-sale, excluding early buy-out exercised loans guaranteed by U.S. government agencies $ 190,511 $ 235,570 $ 155,687 $ 156,297 $ 216,062 29 % (12 )% Mortgage loans held-for-sale, early buy-out exercised loans guaranteed by U.S. government agencies 114,297 103,158 146,806 143,638 160,098 (27 ) (29 ) Total mortgage loans held-for-sale $ 304,808 $ 338,728 $ 302,493 $ 299,935 $ 376,160 1 % (19 )% Core loans: Commercial Commercial and industrial $ 5,894,732 $ 5,737,633 $ 5,855,035 $ 5,852,166 $ 5,818,959 1 % 1 % Asset-based lending 1,396,591 1,465,848 1,482,071 1,473,344 1,545,038 (7 ) (10 ) Municipal 676,915 653,117 655,301 668,235 608,234 2 11 Leases 2,109,628 1,925,767 1,904,137 1,840,928 1,582,359 20 33 PPP loans 13,744 15,337 17,195 28,923 43,658 (70 ) (69 ) Commercial real estate Residential construction 51,550 51,689 69,998 76,877 66,957 (44 ) (23 ) Commercial construction 1,547,322 1,409,751 1,234,762 1,102,098 1,176,407 54 32 Land 294,901 298,996 292,293 307,955 282,147 (6 ) 5 Office 1,422,748 1,404,422 1,392,040 1,337,176 1,269,729 9 12 Industrial 2,057,957 2,002,740 1,858,088 1,836,276 1,777,658 16 16 Retail 1,341,451 1,304,083 1,309,680 1,304,444 1,331,316 4 1 Multi-family 2,710,829 2,696,478 2,635,411 2,560,709 2,305,433 8 18 Mixed use and other 1,519,422 1,440,652 1,446,806 1,425,412 1,368,537 9 11 Home equity 343,258 336,974 337,016 332,698 328,822 4 4 Residential real estate Residential real estate loans for investment 2,538,630 2,455,392 2,309,393 2,207,595 2,086,795 20 22 Residential mortgage loans, early buy-out eligible loans guaranteed by U.S. government agencies 97,911 117,024 119,301 80,701 57,161 29 71 Residential mortgage loans, early buy-out exercised loans guaranteed by U.S. government agencies 71,062 70,824 76,851 84,087 91,503 (21 ) (22 ) Total core loans $ 24,088,651 $ 23,386,727 $ 22,995,378 $ 22,519,624 $ 21,740,713 9 % 11 % Niche loans: Commercial Franchise $ 1,074,162 $ 1,091,164 $ 1,131,913 $ 1,169,623 $ 1,118,478 (11 )% (4 )% Mortgage warehouse lines of credit 245,450 381,043 235,684 237,392 297,374 5 (17 ) Community Advantage - homeowners association 424,054 405,042 389,922 380,875 365,967 15 16 Insurance agency lending 890,197 925,520 905,727 897,678 879,183 (1 ) 1 Premium Finance receivables U.S. property & casualty insurance 5,815,346 5,900,228 5,043,486 5,103,820 4,983,795 19 17 Canada property & casualty insurance 907,401 862,470 695,394 745,639 729,545 29 24 Life insurance 7,931,808 8,039,273 8,125,802 8,090,998 8,004,856 (3 ) (1 ) Consumer and other 68,963 31,941 42,165 50,836 47,702 48 45 Total niche loans $ 17,357,381 $ 17,636,681 $ 16,570,093 $ 16,676,861 $ 16,426,900 5 % 6 % Total loans, net of unearned income $ 41,446,032 $ 41,023,408 $ 39,565,471 $ 39,196,485 $ 38,167,613 8 % 9 % (1) NM - Not meaningful.
(2) Annualized.TABLE 2: DEPOSIT PORTFOLIO MIX AND GROWTH RATES
% Growth From (Dollars in thousands) Sep 30,
2023Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Jun 30,
2023 (1)Sep 30,
2022Balance: Non-interest-bearing $ 10,347,006 $ 10,604,915 $ 11,236,083 $ 12,668,160 $ 13,529,277 (10 )% (24 )% NOW and interest-bearing demand deposits 6,006,114 5,814,836 5,576,558 5,591,986 5,676,122 13 6 Wealth management deposits (2) 1,788,099 1,417,984 1,809,933 2,463,833 2,988,195 104 (40 ) Money market 14,478,504 14,523,124 13,552,277 12,886,795 12,538,489 (1 ) 15 Savings 5,584,294 5,321,578 5,192,108 4,556,635 3,988,790 20 40 Time certificates of deposit 6,788,669 6,356,270 5,351,252 4,735,135 4,076,318 27 67 Total deposits $ 44,992,686 $ 44,038,707 $ 42,718,211 $ 42,902,544 $ 42,797,191 9 % 5 % Mix: Non-interest-bearing 23 % 24 % 26 % 30 % 32 % NOW and interest-bearing demand deposits 13 13 13 13 13 Wealth management deposits (2) 4 3 4 5 7 Money market 32 33 32 30 29 Savings 13 12 12 11 9 Time certificates of deposit 15 15 13 11 10 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 September 30, 2023(Dollars in thousands) Total Time
Certificates of
DepositWeighted-Average
Rate of Maturing
Time Certificates
of Deposit1-3 months $ 987,384 3.36 % 4-6 months 1,674,674 3.47 7-9 months 1,984,259 4.51 10-12 months 1,382,970 4.54 13-18 months 566,457 3.28 19-24 months 117,916 2.54 24+ months 75,009 1.62 Total $ 6,788,669 3.92 % TABLE 4: QUARTERLY AVERAGE BALANCES
Average Balance for three months ended, Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, (In thousands) 2023 2023 2023 2022 2022 Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents (1) $ 2,053,568 $ 1,454,057 $ 1,235,748 $ 2,449,889 $ 3,039,907 Investment securities (2) 7,706,285 7,252,582 7,956,722 7,310,383 6,655,215 FHLB and FRB stock 201,252 223,813 233,615 185,290 142,304 Liquidity management assets (3) 9,961,105 8,930,452 9,426,085 9,945,562 9,837,426 Other earning assets (3)(4) 17,879 17,401 18,445 18,585 21,805 Mortgage loans held-for-sale 319,099 307,683 270,966 308,639 455,342 Loans, net of unearned income (3)(5) 40,707,042 40,106,393 39,093,368 38,566,871 37,431,126 Total earning assets (3) 51,005,125 49,361,929 48,808,864 48,839,657 47,745,699 Allowance for loan and investment security losses (319,491 ) (302,627 ) (282,704 ) (252,827 ) (260,270 ) Cash and due from banks 459,819 481,510 488,457 475,691 458,263 Other assets 3,236,528 3,061,141 3,060,701 3,025,097 2,779,002 Total assets $ 54,381,981 $ 52,601,953 $ 52,075,318 $ 52,087,618 $ 50,722,694 NOW and interest-bearing demand deposits $ 5,815,155 $ 5,540,597 $ 5,271,740 $ 5,598,291 $ 5,789,368 Wealth management deposits 1,512,765 1,545,626 2,167,081 2,883,247 3,078,764 Money market accounts 14,155,446 13,735,924 12,533,468 12,319,842 12,037,412 Savings accounts 5,472,535 5,206,609 4,830,322 4,403,113 3,862,579 Time deposits 6,495,906 5,603,024 5,041,638 4,023,232 3,675,930 Interest-bearing deposits 33,451,807 31,631,780 29,844,249 29,227,725 28,444,053 Federal Home Loan Bank advances 2,241,292 2,227,106 2,474,882 2,088,201 1,403,573 Other borrowings 657,454 625,757 602,937 480,553 478,909 Subordinated notes 437,658 437,545 437,422 437,312 437,191 Junior subordinated debentures 253,566 253,566 253,566 253,566 253,566 Total interest-bearing liabilities 37,041,777 35,175,754 33,613,056 32,487,357 31,017,292 Non-interest-bearing deposits 10,612,009 10,908,022 12,171,631 13,404,036 13,731,219 Other liabilities 1,644,312 1,473,459 1,395,360 1,485,369 1,178,796 Equity 5,083,883 5,044,718 4,895,271 4,710,856 4,795,387 Total liabilities and shareholders’ equity $ 54,381,981 $ 52,601,953 $ 52,075,318 $ 52,087,618 $ 50,722,694 Net free funds/contribution (6) $ 13,963,348 $ 14,186,175 $ 15,195,808 $ 16,352,300 $ 16,728,407 (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, Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, (In thousands) 2023 2023 2023 2022 2022 Interest income: Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents $ 28,022 $ 16,882 $ 13,538 $ 21,612 $ 17,466 Investment securities 59,737 51,795 60,494 53,630 39,071 FHLB and FRB stock 3,896 3,544 3,680 2,918 2,109 Liquidity management assets (1) 91,655 72,221 77,712 78,160 58,646 Other earning assets (1) 291 272 313 289 275 Mortgage loans held-for-sale 4,767 4,178 3,528 3,997 5,371 Loans, net of unearned income (1) 668,183 622,939 560,564 500,432 403,719 Total interest income $ 764,896 $ 699,610 $ 642,117 $ 582,878 $ 468,011 Interest expense: NOW and interest-bearing demand deposits $ 36,001 $ 29,178 $ 18,772 $ 14,982 $ 8,041 Wealth management deposits 9,350 9,097 12,258 14,079 11,068 Money market accounts 124,742 106,630 68,276 45,468 18,916 Savings accounts 31,784 25,603 15,816 8,421 2,130 Time deposits 60,906 42,987 29,680 12,497 5,761 Interest-bearing deposits 262,783 213,495 144,802 95,447 45,916 Federal Home Loan Bank advances 17,436 17,399 19,135 13,823 6,812 Other borrowings 9,384 8,485 7,854 5,313 4,008 Subordinated notes 5,491 5,523 5,488 5,520 5,485 Junior subordinated debentures 4,948 4,737 4,416 3,826 2,809 Total interest expense $ 300,042 $ 249,639 $ 181,695 $ 123,929 $ 65,030 Less: Fully taxable-equivalent adjustment (2,496 ) (2,434 ) (2,427 ) (2,133 ) (1,533 ) Net interest income (GAAP) (2) 462,358 447,537 457,995 456,816 401,448 Fully taxable-equivalent adjustment 2,496 2,434 2,427 2,133 1,533 Net interest income, fully taxable-equivalent (non-GAAP) (2) $ 464,854 $ 449,971 $ 460,422 $ 458,949 $ 402,981 (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, Sep 30,
2023Jun 30,
2023Mar 31,
2023Dec 31,
2022Sep 30,
2022Yield earned on: Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents 5.41 % 4.66 % 4.44 % 3.50 % 2.28 % Investment securities 3.08 2.86 3.08 2.91 2.33 FHLB and FRB stock 7.68 6.35 6.39 6.25 5.88 Liquidity management assets 3.65 3.24 3.34 3.12 2.37 Other earning assets 6.47 6.27 6.87 6.17 5.01 Mortgage loans held-for-sale 5.93 5.45 5.28 5.14 4.68 Loans, net of unearned income 6.51 6.23 5.82 5.15 4.28 Total earning assets 5.95 % 5.68 % 5.34 % 4.73 % 3.89 % Rate paid on: NOW and interest-bearing demand deposits 2.46 % 2.11 % 1.44 % 1.06 % 0.55 % Wealth management deposits 2.45 2.36 2.29 1.94 1.43 Money market accounts 3.50 3.11 2.21 1.46 0.62 Savings accounts 2.30 1.97 1.33 0.76 0.22 Time deposits 3.72 3.08 2.39 1.23 0.62 Interest-bearing deposits 3.12 2.71 1.97 1.30 0.64 Federal Home Loan Bank advances 3.09 3.13 3.14 2.63 1.93 Other borrowings 5.66 5.44 5.28 4.39 3.32 Subordinated notes 4.98 5.06 5.02 5.05 5.02 Junior subordinated debentures 7.74 7.49 6.97 5.90 4.33 Total interest-bearing liabilities 3.21 % 2.85 % 2.19 % 1.51 % 0.83 % Interest rate spread (1)(2) 2.74 % 2.83 % 3.15 % 3.22 % 3.06 % Less: Fully taxable-equivalent adjustment (0.02 ) (0.02 ) (0.02 ) (0.02 ) (0.01 ) Net free funds/contribution (3) 0.88 0.83 0.68 0.51 0.29 Net interest margin (GAAP) (2) 3.60 % 3.64 % 3.81 % 3.71 % 3.34 % Fully taxable-equivalent adjustment 0.02 0.02 0.02 0.02 0.01 Net interest margin, fully taxable-equivalent (non-GAAP) (2) 3.62 % 3.66 % 3.83 % 3.73 % 3.35 % (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 nine months ended,Interest
for nine months ended,Yield/Rate
for nine months ended,(Dollars in thousands) Sep 30,
2023Sep 30,
2022Sep 30,
2023Sep 30,
2022Sep 30,
2023Sep 30,
2022Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents (1) $ 1,584,120 $ 3,617,498 $ 58,443 $ 26,738 4.93 % 0.99 % Investment securities (2) 7,637,612 6,542,077 172,025 108,947 3.01 2.23 FHLB and FRB stock 219,442 138,405 11,120 5,704 6.77 5.51 Liquidity management assets (3)(4) $ 9,441,174 $ 10,297,980 $ 241,588 $ 141,389 3.42 % 1.84 % Other earning assets (3)(4)(5) 17,906 23,673 876 666 6.54 3.76 Mortgage loans held-for-sale 299,426 559,258 12,473 17,198 5.57 4.11 Loans, net of unearned income (3)(4)(6) 39,974,840 36,050,185 1,851,686 1,010,913 6.19 3.75 Total earning assets (4) $ 49,733,346 $ 46,931,096 $ 2,106,623 $ 1,170,166 5.66 % 3.33 % Allowance for loan and investment security losses (301,742 ) (257,992 ) Cash and due from banks 476,490 472,127 Other assets 3,120,105 2,718,562 Total assets $ 53,028,199 $ 49,863,793 NOW and interest-bearing demand deposits $ 5,544,488 $ 5,273,115 $ 83,949 $ 12,584 2.02 % 0.32 % Wealth management deposits 1,739,427 2,808,709 30,705 15,671 2.36 0.75 Money market accounts 13,480,887 12,232,024 299,649 35,123 2.97 0.38 Savings accounts 5,172,174 3,883,092 73,203 2,813 1.89 0.10 Time deposits 5,718,850 3,741,014 133,574 13,564 3.12 0.48 Interest-bearing deposits $ 31,655,826 $ 27,937,954 $ 621,080 $ 79,755 2.62 % 0.38 % Federal Home Loan Bank advances 2,313,571 1,281,273 53,970 16,506 3.12 1.72 Other borrowings 628,915 487,595 25,723 8,981 5.47 2.46 Subordinated notes 437,543 437,081 16,502 16,484 5.04 5.03 Junior subordinated debentures 253,566 253,566 14,101 6,426 7.44 3.34 Total interest-bearing liabilities $ 35,289,421 $ 30,397,469 $ 731,376 $ 128,152 2.77 % 0.56 % Non-interest-bearing deposits 11,224,841 13,756,793 Other liabilities 1,505,289 1,101,132 Equity 5,008,648 4,608,399 Total liabilities and shareholders’ equity $ 53,028,199 $ 49,863,793 Interest rate spread (4)(7) 2.89 % 2.77 % Less: Fully taxable-equivalent adjustment (7,357 ) (3,468 ) (0.02 ) (0.01 ) Net free funds/contribution (8) $ 14,443,925 $ 16,533,627 0.81 0.20 Net interest income/margin (GAAP) (4) $ 1,367,890 $ 1,038,546 3.68 % 2.96 % Fully taxable-equivalent adjustment 7,357 3,468 0.02 0.01 Net interest income/margin, fully taxable-equivalent (non-GAAP) (4) $ 1,375,247 $ 1,042,014 3.70 % 2.97 % (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 SENSITIVITY
As 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
PointsSep 30, 2023 3.3 % 1.9 % (2.0 )% (5.2 )% Jun 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 ) Ramp Scenario +200 Basis
Points+100 Basis
Points-100 Basis
Points-200 Basis
PointsSep 30, 2023 1.7 % 1.2 % (0.5 )% (2.4 )% Jun 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 ) 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 contractual maturity period As of September 30, 2023 One year or
lessFrom one to
five yearsFrom five to
fifteen yearsAfter fifteen
yearsTotal (In thousands) Commercial Fixed rate $ 532,313 $ 2,805,566 $ 1,740,199 $ 19,102 $ 5,097,180 Variable rate 7,626,902 1,391 — — 7,628,293 Total commercial $ 8,159,215 $ 2,806,957 $ 1,740,199 $ 19,102 $ 12,725,473 Commercial real estate Fixed rate 637,462 2,891,879 546,918 48,296 4,124,555 Variable rate 6,813,010 7,872 743 — 6,821,625 Total commercial real estate $ 7,450,472 $ 2,899,751 $ 547,661 $ 48,296 $ 10,946,180 Home equity Fixed rate 10,785 2,398 — 29 13,212 Variable rate 330,046 — — — 330,046 Total home equity $ 340,831 $ 2,398 $ — $ 29 $ 343,258 Residential real estate Fixed rate 16,676 3,817 30,733 1,063,669 1,114,895 Variable rate 74,016 268,720 1,249,972 — 1,592,708 Total residential real estate $ 90,692 $ 272,537 $ 1,280,705 $ 1,063,669 $ 2,707,603 Premium finance receivables - property & casualty Fixed rate 6,612,136 110,611 — — 6,722,747 Variable rate — — — — — Total premium finance receivables - property & casualty $ 6,612,136 $ 110,611 $ — $ — $ 6,722,747 Premium finance receivables - life insurance Fixed rate 137,889 594,399 3,978 — 736,266 Variable rate 7,195,542 — — — 7,195,542 Total premium finance receivables - life insurance $ 7,333,431 $ 594,399 $ 3,978 $ — $ 7,931,808 Consumer and other Fixed rate 21,528 6,741 54 469 28,792 Variable rate 40,171 — — — 40,171 Total consumer and other $ 61,699 $ 6,741 $ 54 $ 469 $ 68,963 Total per category Fixed rate 7,968,789 6,415,411 2,321,882 1,131,565 17,837,647 Variable rate 22,079,687 277,983 1,250,715 — 23,608,385 Total loans, net of unearned income $ 30,048,476 $ 6,693,394 $ 3,572,597 $ 1,131,565 $ 41,446,032 Variable Rate Loan Pricing by Index: SOFR tenors $ 12,798,760 One- year CMT 5,998,547 Prime 3,627,121 Ameribor tenors 329,220 Twelve-month LIBOR 38,888 Other U.S. Treasury tenors 38,760 BSBY tenors 36,145 Other 740,944 Total variable rate $ 23,608,385 SOFR - Secured Overnight Financing Rate.
CMT - Constant Maturity Treasury Rate.
Ameribor - American Interbank Offered Rate.
LIBOR - London Interbank Offered Rate.
BSBY - Bloomberg Short Term Bank Yield Index.Graph available at the following link:
http://ml.globenewswire.com/Resource/Download/3703bae4-a3c7-4b2a-b82a-8dd479f16cf6
Source: Bloomberg
As noted in the table on the previous page, the majority of the Company’s portfolio is tied to SOFR and CMT 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 $10.0 billion tied to one-month SOFR and $6.0 billion tied to one-year CMT. The above chart shows:
Basis Point (bp) Change in 1-month
SOFROne- year
CMTPrime Third Quarter 2023 18 bps 6 bps 25 bps Second Quarter 2023 34 76 25 First Quarter 2023 44 -9 50 Fourth Quarter 2022 132 68 125 Third Quarter 2022 135 125 150 TABLE 10: ALLOWANCE FOR CREDIT LOSSES
Three Months Ended Nine Months Ended Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Sep 30, Sep 30, (Dollars in thousands) 2023 2023 2023 2022 2022 2023 2022 Allowance for credit losses at beginning of period $ 387,786 $ 376,261 $ 357,936 $ 315,338 $ 312,192 $ 357,936 $ 299,731 Cumulative effect adjustment from the adoption of ASU 2022-02 — — 741 — — 741 — Provision for credit losses 19,923 28,514 23,045 47,646 6,420 71,482 30,943 Other adjustments (60 ) 41 4 31 (105 ) (15 ) (139 ) Charge-offs: Commercial 2,427 5,629 2,543 3,019 780 10,599 11,122 Commercial real estate 1,713 8,124 5 538 24 9,842 841 Home equity 227 — — — 43 227 432 Residential real estate 78 — — — 5 78 471 Premium finance receivables - property & casualty 5,830 4,519 4,629 3,629 6,037 14,978 10,611 Premium finance receivables - life insurance 18 134 21 28 — 173 7 Consumer and other 184 110 153 — 635 447 1,081 Total charge-offs 10,477 18,516 7,351 7,214 7,524 36,344 24,565 Recoveries: Commercial 1,162 505 392 691 2,523 2,059 4,057 Commercial real estate 243 25 100 61 55 368 640 Home equity 33 37 35 65 38 105 254 Residential real estate 1 6 4 6 60 11 71 Premium finance receivables - property & casualty 906 890 1,314 1,279 1,648 3,110 4,243 Premium finance receivables - life insurance — — 9 — — 9 — Consumer and other 14 23 32 33 31 69 103 Total recoveries 2,359 1,486 1,886 2,135 4,355 5,731 9,368 Net charge-offs (8,118 ) (17,030 ) (5,465 ) (5,079 ) (3,169 ) (30,613 ) (15,197 ) Allowance for credit losses at period end $ 399,531 $ 387,786 $ 376,261 $ 357,936 $ 315,338 $ 399,531 $ 315,338 Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average: Commercial 0.04 % 0.16 % 0.07 % 0.08 % (0.06 )% 0.09 % 0.08 % Commercial real estate 0.05 0.31 0.00 0.02 0.00 0.12 0.00 Home equity 0.23 (0.04 ) (0.04 ) (0.08 ) 0.01 0.05 0.07 Residential real estate 0.01 0.00 0.00 0.00 (0.01 ) 0.00 0.03 Premium finance receivables - property & casualty 0.29 0.24 0.23 0.16 0.30 0.26 0.16 Premium finance receivables - life insurance 0.00 0.01 0.00 0.00 — 0.00 0.00 Consumer and other 0.65 0.45 0.74 (0.16 ) 4.02 0.60 2.19 Total loans, net of unearned income 0.08 % 0.17 % 0.06 % 0.05 % 0.03 % 0.10 0.06 % Loans at period end $ 41,446,032 $ 41,023,408 $ 39,565,471 $ 39,196,485 $ 38,167,613 Allowance for loan losses as a percentage of loans at period end 0.76 % 0.74 % 0.73 % 0.69 % 0.64 % Allowance for loan and unfunded lending-related commitment losses as a percentage of loans at period end 0.96 0.94 0.95 0.91 0.83 TABLE 11: ALLOWANCE AND PROVISION FOR CREDIT LOSSES BY COMPONENT
Three Months Ended Nine Months Ended Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Sep 30, Sep 30, (In thousands) 2023 2023 2023 2022 2022 2023 2022 Provision for loan losses $ 20,717 $ 31,516 $ 22,520 $ 29,110 $ (2,385 ) $ 74,753 $ 13,611 Provision for unfunded lending-related commitments losses (769 ) (2,945 ) 550 18,358 8,578 (3,164 ) 17,100 Provision for held-to-maturity securities losses (25 ) (57 ) (25 ) 178 227 (107 ) 232 Provision for credit losses $ 19,923 $ 28,514 $ 23,045 $ 47,646 $ 6,420 $ 71,482 $ 30,943 Allowance for loan losses $ 315,039 $ 302,499 $ 287,972 $ 270,173 $ 246,110 Allowance for unfunded lending-related commitments losses 84,111 84,881 87,826 87,275 68,918 Allowance for loan losses and unfunded lending-related commitments losses 399,150 387,380 375,798 357,448 315,028 Allowance for held-to-maturity securities losses 381 406 463 488 310 Allowance for credit losses $ 399,531 $ 387,786 $ 376,261 $ 357,936 $ 315,338 TABLE 12: ALLOWANCE BY LOAN PORTFOLIO
The 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 September 30, 2023, June 30, 2023 and March 31, 2023.
As of Sep 30, 2023 As of Jun 30, 2023 As of Mar 31, 2023 (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 $ 12,725,473 $ 151,488 1.19 % $ 12,600,471 $ 143,142 1.14 % $ 12,576,985 $ 149,501 1.19 % Commercial real estate: Construction and development 1,893,773 90,622 4.79 1,760,436 86,725 4.93 1,597,053 75,069 4.70 Non-construction 9,052,407 125,096 1.38 8,848,375 128,971 1.46 8,642,025 119,711 1.39 Home equity 343,258 7,080 2.06 336,974 6,967 2.07 337,016 7,728 2.29 Residential real estate 2,707,603 12,659 0.47 2,643,240 12,252 0.46 2,505,545 11,434 0.46 Premium finance receivables Commercial insurance loans 6,722,747 11,132 0.17 6,762,698 8,347 0.12 5,738,880 11,248 0.20 Life insurance loans 7,931,808 688 0.01 8,039,273 699 0.01 8,125,802 707 0.01 Consumer and other 68,963 385 0.56 31,941 277 0.87 42,165 400 0.95 Total loans, net of unearned income $ 41,446,032 $ 399,150 0.96 % $ 41,023,408 $ 387,380 0.94 % $ 39,565,471 $ 375,798 0.95 % Total core loans (1) $ 24,088,651 $ 363,873 1.51 % $ 23,386,727 $ 350,930 1.50 % $ 22,995,378 $ 334,910 1.46 % Total niche loans (1) 17,357,381 35,277 0.20 17,636,681 36,450 0.21 16,570,093 40,888 0.25 (1) See Table 1 for additional detail on core and niche loans.
TABLE 13: LOAN PORTFOLIO AGING
(In thousands) Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Loan Balances: Commercial Nonaccrual $ 43,569 $ 40,460 $ 47,950 $ 35,579 $ 44,293 90+ days and still accruing 200 573 — 462 237 60-89 days past due 22,889 22,808 10,755 21,128 24,641 30-59 days past due 35,681 48,970 95,593 56,696 34,917 Current 12,623,134 12,487,660 12,422,687 12,435,299 12,155,162 Total commercial $ 12,725,473 $ 12,600,471 $ 12,576,985 $ 12,549,164 $ 12,259,250 Commercial real estate Nonaccrual $ 17,043 $ 18,483 $ 11,196 $ 6,387 $ 10,477 90+ days and still accruing 1,092 — — — — 60-89 days past due 7,395 1,054 20,539 2,244 6,041 30-59 days past due 60,984 14,218 72,680 30,675 29,971 Current 10,859,666 10,575,056 10,134,663 9,911,641 9,531,695 Total commercial real estate $ 10,946,180 $ 10,608,811 $ 10,239,078 $ 9,950,947 $ 9,578,184 Home equity Nonaccrual $ 1,363 $ 1,361 $ 1,190 $ 1,487 $ 1,320 90+ days and still accruing — 110 — — — 60-89 days past due 219 316 116 — 125 30-59 days past due 1,668 601 1,118 2,152 848 Current 340,008 334,586 334,592 329,059 326,529 Total home equity $ 343,258 $ 336,974 $ 337,016 $ 332,698 $ 328,822 Residential real estate Early buy-out loans guaranteed by U.S. government agencies (1) $ 168,973 $ 187,848 $ 196,152 $ 164,788 $ 148,664 Nonaccrual 16,103 13,652 11,333 10,171 9,787 90+ days and still accruing — — 104 — — 60-89 days past due 1,145 7,243 74 4,364 2,149 30-59 days past due 904 872 19,183 9,982 15 Current 2,520,478 2,433,625 2,278,699 2,183,078 2,074,844 Total residential real estate $ 2,707,603 $ 2,643,240 $ 2,505,545 $ 2,372,383 $ 2,235,459 Premium finance receivables - property & casualty Nonaccrual $ 26,756 $ 19,583 $ 18,543 $ 13,470 $ 13,026 90+ days and still accruing 16,253 12,785 9,215 15,841 16,624 60-89 days past due 16,552 22,670 14,287 14,926 15,301 30-59 days past due 31,919 32,751 32,545 40,557 21,128 Current 6,631,267 6,674,909 5,664,290 5,764,665 5,647,261 Total Premium finance receivables - property & casualty $ 6,722,747 $ 6,762,698 $ 5,738,880 $ 5,849,459 $ 5,713,340 Premium finance receivables - life insurance Nonaccrual $ — $ 6 $ — $ — $ — 90+ days and still accruing 10,679 1,667 1,066 17,245 1,831 60-89 days past due 41,894 3,729 21,552 5,260 13,628 30-59 days past due 14,972 90,117 52,975 68,725 44,954 Current 7,864,263 7,943,754 8,050,209 7,999,768 7,944,443 Total Premium finance receivables - life insurance $ 7,931,808 $ 8,039,273 $ 8,125,802 $ 8,090,998 $ 8,004,856 Consumer and other Nonaccrual $ 16 $ 4 $ 6 $ 6 $ 7 90+ days and still accruing 27 28 87 49 31 60-89 days past due 196 51 10 18 26 30-59 days past due 519 146 379 224 343 Current 68,205 31,712 41,683 50,539 47,295 Total consumer and other $ 68,963 $ 31,941 $ 42,165 $ 50,836 $ 47,702 Total loans, net of unearned income Early buy-out loans guaranteed by U.S. government agencies (1) $ 168,973 $ 187,848 $ 196,152 $ 164,788 $ 148,664 Nonaccrual 104,850 93,549 90,218 67,100 78,910 90+ days and still accruing 28,251 15,163 10,472 33,597 18,723 60-89 days past due 90,290 57,871 67,333 47,940 61,911 30-59 days past due 146,647 187,675 274,473 209,011 132,176 Current 40,907,021 40,481,302 38,926,823 38,674,049 37,727,229 Total loans, net of unearned income $ 41,446,032 $ 41,023,408 $ 39,565,471 $ 39,196,485 $ 38,167,613 (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)
Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, (Dollars in thousands) 2023 2023 2023 2022 2022 Loans past due greater than 90 days and still accruing: Commercial $ 200 $ 573 $ — $ 462 $ 237 Commercial real estate 1,092 — — — — Home equity — 110 — — — Residential real estate — — 104 — — Premium finance receivables - property & casualty 16,253 12,785 9,215 15,841 16,624 Premium finance receivables - life insurance 10,679 1,667 1,066 17,245 1,831 Consumer and other 27 28 87 49 31 Total loans past due greater than 90 days and still accruing 28,251 15,163 10,472 33,597 18,723 Non-accrual loans: Commercial 43,569 40,460 47,950 35,579 44,293 Commercial real estate 17,043 18,483 11,196 6,387 10,477 Home equity 1,363 1,361 1,190 1,487 1,320 Residential real estate 16,103 13,652 11,333 10,171 9,787 Premium finance receivables - property & casualty 26,756 19,583 18,543 13,470 13,026 Premium finance receivables - life insurance — 6 — — — Consumer and other 16 4 6 6 7 Total non-accrual loans 104,850 93,549 90,218 67,100 78,910 Total non-performing loans: Commercial 43,769 41,033 47,950 36,041 44,530 Commercial real estate 18,135 18,483 11,196 6,387 10,477 Home equity 1,363 1,471 1,190 1,487 1,320 Residential real estate 16,103 13,652 11,437 10,171 9,787 Premium finance receivables - property & casualty 43,009 32,368 27,758 29,311 29,650 Premium finance receivables - life insurance 10,679 1,673 1,066 17,245 1,831 Consumer and other 43 32 93 55 38 Total non-performing loans $ 133,101 $ 108,712 $ 100,690 $ 100,697 $ 97,633 Other real estate owned 12,928 10,275 8,050 8,589 5,376 Other real estate owned - from acquisitions 1,132 1,311 1,311 1,311 1,311 Other repossessed assets — — — — — Total non-performing assets $ 147,161 $ 120,298 $ 110,051 $ 110,597 $ 104,320 Total non-performing loans by category as a percent of its own respective category’s period-end balance: Commercial 0.34 % 0.33 % 0.38 % 0.29 % 0.36 % Commercial real estate 0.17 0.17 0.11 0.06 0.11 Home equity 0.40 0.44 0.35 0.45 0.40 Residential real estate 0.59 0.52 0.46 0.43 0.44 Premium finance receivables - property & casualty 0.64 0.48 0.48 0.50 0.52 Premium finance receivables - life insurance 0.13 0.02 0.01 0.21 0.02 Consumer and other 0.06 0.10 0.22 0.11 0.08 Total loans, net of unearned income 0.32 % 0.26 % 0.25 % 0.26 % 0.26 % Total non-performing assets as a percentage of total assets 0.26 % 0.22 % 0.21 % 0.21 % 0.20 % Allowance for loan losses and unfunded lending-related commitments losses as a percentage of non-accrual loans 380.69 % 414.09 % 416.54 % 532.71 % 399.22 % (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 Nine Months Ended Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Sep 30, Sep 30, (In thousands) 2023 2023 2023 2022 2022 2023 2022 Balance at beginning of period $ 108,712 $ 100,690 $ 100,697 $ 97,633 $ 72,351 $ 100,697 $ 74,438 Additions from becoming non-performing in the respective period 18,666 21,246 24,455 10,027 35,234 64,367 62,216 Return to performing status (1,702 ) (360 ) (480 ) (1,167 ) (154 ) (2,542 ) (1,883 ) Payments received (6,488 ) (12,314 ) (5,261 ) (16,351 ) (20,417 ) (24,063 ) (44,585 ) Transfer to OREO and other repossessed assets (2,671 ) (2,958 ) — (3,365 ) (185 ) (5,629 ) (6,173 ) Charge-offs, net (3,011 ) (2,696 ) (1,159 ) (1,363 ) (341 ) (6,866 ) (4,664 ) Net change for niche loans (1) 19,595 5,104 (17,562 ) 15,283 11,145 7,137 18,284 Balance at end of period $ 133,101 $ 108,712 $ 100,690 $ 100,697 $ 97,633 $ 133,101 $ 97,633 (1) Includes activity for premium finance receivables and indirect consumer loans.
Other Real Estate Owned
Three Months Ended Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, (In thousands) 2023 2023 2023 2022 2022 Balance at beginning of period $ 11,586 $ 9,361 $ 9,900 $ 6,687 $ 6,839 Disposals/resolved (467 ) (733 ) (435 ) (152 ) (133 ) Transfers in at fair value, less costs to sell 2,941 2,958 — 3,365 134 Fair value adjustments — — (104 ) — (153 ) Balance at end of period $ 14,060 $ 11,586 $ 9,361 $ 9,900 $ 6,687 Period End Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Balance by Property Type: 2023 2023 2023 2022 2022 Residential real estate $ 441 $ 318 $ 1,051 $ 1,585 $ 1,585 Commercial real estate 13,619 11,268 8,310 8,315 5,102 Total $ 14,060 $ 11,586 $ 9,361 $ 9,900 $ 6,687 TABLE 15: NON-INTEREST INCOME
Three Months Ended Q3 2023 compared to
Q2 2023Q3 2023 compared to
Q3 2022Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, (Dollars in thousands) 2023 2023 2023 2022 2022 $ Change % Change $ Change % Change Brokerage $ 4,359 $ 4,404 $ 4,533 $ 4,177 $ 4,587 $ (45 ) (1 )% $ (228 ) (5 )% Trust and asset management 29,170 29,454 25,412 26,550 28,537 (284 ) (1 ) 633 2 Total wealth management 33,529 33,858 29,945 30,727 33,124 (329 ) (1 ) 405 1 Mortgage banking 27,395 29,981 18,264 17,407 27,221 (2,586 ) (9 ) 174 1 Service charges on deposit accounts 14,217 13,608 12,903 13,054 14,349 609 4 (132 ) (1 ) (Losses) gains on investment securities, net (2,357 ) 0 1,398 (6,745 ) (3,103 ) (2,357 ) NM 746 (24 ) Fees from covered call options 4,215 2,578 10,391 7,956 1,366 1,637 63 2,849 NM Trading gains (losses), net 728 106 813 (306 ) (7 ) 622 NM 735 NM Operating lease income, net 13,863 12,227 13,046 12,384 12,644 1,636 13 1,219 10 Other: Interest rate swap fees 2,913 2,711 2,606 2,319 1,997 202 7 916 46 BOLI 729 1,322 1,351 1,394 248 (593 ) (45 ) 481 NM Administrative services 1,336 1,319 1,615 1,736 1,533 17 1 (197 ) (13 ) Foreign currency remeasurement (losses) gains (446 ) 543 (188 ) 277 (93 ) (989 ) NM (353 ) NM Early pay-offs of capital leases 461 201 365 131 138 260 NM 323 NM Miscellaneous 15,895 14,576 15,260 13,505 12,065 1,319 9 3,830 32 Total Other 20,888 20,672 21,009 19,362 15,888 216 1 5,000 31 Total Non-Interest Income $ 112,478 $ 113,030 $ 107,769 $ 93,839 $ 101,482 $ (552 ) 0 % $ 10,996 11 % Nine Months Ended Sep 30, Sep 30, $ % (Dollars in thousands) 2023 2022 Change Change Brokerage $ 13,296 $ 13,491 $ (195 ) (1 )% Trust and asset management 84,036 82,396 1,640 2 Total wealth management 97,332 95,887 1,445 2 Mortgage banking 75,640 137,766 (62,126 ) (45 ) Service charges on deposit accounts 40,728 45,520 (4,792 ) (11 ) Gains (losses) on investment securities, net (959 ) (13,682 ) 12,723 (93 ) Fees from covered call options 17,184 6,177 11,007 NM Trading gains, net 1,647 4,058 (2,411 ) (59 ) Operating lease income, net 39,136 43,126 (3,990 ) (9 ) Other: Interest rate swap fees 8,230 9,866 (1,636 ) (17 ) BOLI 3,402 (588 ) 3,990 NM Administrative services 4,270 4,977 (707 ) (14 ) Foreign currency remeasurement gains (91 ) 15 (106 ) NM Early pay-offs of leases 1,027 563 464 82 Miscellaneous 45,731 33,529 12,202 36 Total Other 62,569 48,362 14,207 29 Total Non-Interest Income $ 333,277 $ 367,214 $ (33,937 ) (9 )% NM - Not meaningful.
BOLI - Bank-owned life insurance.
TABLE 16: NON-INTEREST EXPENSE
Three Months Ended Q3 2023 compared to
Q2 2023Q3 2023 compared to
Q3 2022Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, (Dollars in thousands) 2023 2023 2023 2022 2022 $ Change % Change $ Change % Change Salaries and employee benefits: Salaries $ 111,303 $ 107,671 $ 108,354 $ 100,232 $ 97,419 $ 3,632 3 % $ 13,884 14 % Commissions and incentive compensation 48,817 44,511 39,799 49,546 50,403 4,306 10 (1,586 ) (3 ) Benefits 32,218 32,741 28,628 30,553 28,273 (523 ) (2 ) 3,945 14 Total salaries and employee benefits 192,338 184,923 176,781 180,331 176,095 7,415 4 16,243 9 Software and equipment 25,951 26,205 24,697 24,699 24,126 (254 ) (1 ) 1,825 8 Operating lease equipment 12,020 9,816 9,833 10,078 9,448 2,204 22 2,572 27 Occupancy, net 21,304 19,176 18,486 17,763 17,727 2,128 11 3,577 20 Data processing 10,773 9,726 9,409 7,927 7,767 1,047 11 3,006 39 Advertising and marketing 18,169 17,794 11,946 14,279 16,600 375 2 1,569 9 Professional fees 8,887 8,940 8,163 9,267 7,544 (53 ) (1 ) 1,343 18 Amortization of other acquisition-related intangible assets 1,408 1,499 1,235 1,436 1,492 (91 ) (6 ) (84 ) (6 ) FDIC insurance 9,748 9,008 8,669 6,775 7,186 740 8 2,562 36 OREO expense, net 120 118 (207 ) 369 229 2 2 (109 ) (48 ) Other: Lending expenses, net of deferred origination costs 4,777 7,890 3,099 4,952 4,533 (3,113 ) (39 ) 244 5 Travel and entertainment 5,449 5,401 4,590 5,681 4,252 48 1 1,197 28 Miscellaneous 19,111 20,127 22,468 24,279 19,470 (1,016 ) (5 ) (359 ) (2 ) Total other 29,337 33,418 30,157 34,912 28,255 (4,081 ) (12 ) 1,082 4 Total Non-Interest Expense $ 330,055 $ 320,623 $ 299,169 $ 307,836 $ 296,469 $ 9,432 3 % $ 33,586 11 % Nine Months Ended Sep 30, Sep 30, $ % (Dollars in thousands) 2023 2022 Change Change Salaries and employee benefits: Salaries $ 327,328 $ 281,949 $ 45,379 16 % Commissions and incentive compensation 133,127 148,327 (15,200 ) (10 ) Benefits 93,587 85,500 8,087 9 Total salaries and employee benefits 554,042 515,776 38,266 7 Software and equipment 76,853 71,186 5,667 8 Operating lease equipment 31,669 27,930 3,739 13 Occupancy, net 58,966 53,202 5,764 11 Data processing 29,908 23,282 6,626 28 Advertising and marketing 47,909 45,139 2,770 6 Professional fees 25,990 23,821 2,169 9 Amortization of other acquisition-related intangible assets 4,142 4,680 (538 ) (11 ) FDIC insurance 27,425 21,864 5,561 25 OREO expense, net 31 (509 ) 540 NM Other: Lending expenses, net of deferred origination costs 15,766 15,624 142 1 Travel and entertainment 15,440 10,825 4,615 43 Miscellaneous 61,706 56,615 5,091 9 Total other 92,912 83,064 9,848 12 Total Non-Interest Expense $ 949,847 $ 869,435 $ 80,412 9 % 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 Nine Months Ended Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Sep 30, Sep 30, (Dollars and shares in thousands) 2023 2023 2023 2022 2022 2023 2022 Reconciliation of Non-GAAP Net Interest Margin and Efficiency Ratio: (A) Interest Income (GAAP) $ 762,400 $ 697,176 $ 639,690 $ 580,745 $ 466,478 $ 2,099,266 $ 1,166,698 Taxable-equivalent adjustment: - Loans 1,923 1,882 1,872 1,594 1,030 5,677 2,025 - Liquidity Management Assets 572 551 551 538 502 1,674 1,439 - Other Earning Assets 1 1 4 1 1 6 4 (B) Interest Income (non-GAAP) $ 764,896 $ 699,610 $ 642,117 $ 582,878 $ 468,011 $ 2,106,623 $ 1,170,166 (C) Interest Expense (GAAP) 300,042 249,639 181,695 123,929 65,030 731,376 128,152 (D) Net Interest Income (GAAP) (A minus C) $ 462,358 $ 447,537 $ 457,995 $ 456,816 $ 401,448 $ 1,367,890 $ 1,038,546 (E) Net Interest Income (non-GAAP) (B minus C) $ 464,854 $ 449,971 $ 460,422 $ 458,949 $ 402,981 $ 1,375,247 $ 1,042,014 Net interest margin (GAAP) 3.60 % 3.64 % 3.81 % 3.71 % 3.34 % 3.68 % 2.96 % Net interest margin, fully taxable-equivalent (non-GAAP) 3.62 3.66 3.83 3.73 3.35 3.70 2.97 (F) Non-interest income $ 112,478 $ 113,030 $ 107,769 $ 93,839 $ 101,482 $ 333,277 $ 367,214 (G) (Losses) gains on investment securities, net (2,357 ) 0 1,398 (6,745 ) (3,103 ) (959 ) (13,682 ) (H) Non-interest expense 330,055 320,623 299,169 307,836 296,469 949,847 869,435 Efficiency ratio (H/(D+F-G)) 57.18 % 57.20 % 53.01 % 55.23 % 58.59 % 55.80 % 61.25 % Efficiency ratio (non-GAAP) (H/(E+F-G)) 56.94 56.95 52.78 55.02 58.41 55.56 61.10 Three Months Ended Nine Months Ended Sep 30, Jun 30, Mar 31, Dec 31, Sep 30, Sep 30, Sep 30, (Dollars and shares in thousands) 2023 2023 2023 2022 2022 2023 2022 Reconciliation of Non-GAAP Tangible Common Equity Ratio: Total shareholders’ equity (GAAP) $ 5,015,613 $ 5,041,912 $ 5,015,506 $ 4,796,838 $ 4,637,980 Less: Non-convertible preferred stock (GAAP) (412,500 ) (412,500 ) (412,500 ) (412,500 ) (412,500 ) Less: Intangible assets (GAAP) (680,353 ) (682,327 ) (674,538 ) (675,710 ) (676,699 ) (I) Total tangible common shareholders’ equity (non-GAAP) $ 3,922,760 $ 3,947,085 $ 3,928,468 $ 3,708,628 $ 3,548,781 (J) Total assets (GAAP) $ 55,555,246 $ 54,286,176 $ 52,873,511 $ 52,949,649 $ 52,382,939 Less: Intangible assets (GAAP) (680,353 ) (682,327 ) (674,538 ) (675,710 ) (676,699 ) (K) Total tangible assets (non-GAAP) $ 54,874,893 $ 53,603,849 $ 52,198,973 $ 52,273,939 $ 51,706,240 Common equity to assets ratio (GAAP) (L/J) 8.3 % 8.5 % 8.7 % 8.3 % 8.1 % Tangible common equity ratio (non-GAAP) (I/K) 7.1 7.4 7.5 7.1 6.9 Reconciliation of Non-GAAP Tangible Book Value per Common Share: Total shareholders’ equity $ 5,015,613 $ 5,041,912 $ 5,015,506 $ 4,796,838 $ 4,637,980 Less: Preferred stock (412,500 ) (412,500 ) (412,500 ) (412,500 ) (412,500 ) (L) Total common equity $ 4,603,113 $ 4,629,412 $ 4,603,006 $ 4,384,338 $ 4,225,480 (M) Actual common shares outstanding 61,222 61,198 61,176 60,794 60,743 Book value per common share (L/M) $ 75.19 $ 75.65 $ 75.24 $ 72.12 $ 69.56 Tangible book value per common share (non-GAAP) (I/M) 64.07 64.50 64.22 61.00 58.42 Reconciliation of Non-GAAP Return on Average Tangible Common Equity: (N) Net income applicable to common shares $ 157,207 $ 147,759 $ 173,207 $ 137,826 $ 135,970 $ 478,173 $ 343,892 Add: Intangible asset amortization 1,408 1,499 1,235 1,436 1,492 4,142 4,680 Less: Tax effect of intangible asset amortization (380 ) (402 ) (321 ) (370 ) (425 ) (1,102 ) (1,301 ) After-tax intangible asset amortization $ 1,028 $ 1,097 $ 914 $ 1,066 $ 1,067 $ 3,040 $ 3,379 (O) Tangible net income applicable to common shares (non-GAAP) $ 158,235 $ 148,856 $ 174,121 $ 138,892 $ 137,037 $ 481,213 $ 347,271 Total average shareholders’ equity $ 5,083,883 $ 5,044,718 $ 4,895,271 $ 4,710,856 $ 4,795,387 $ 5,008,648 $ 4,608,399 Less: Average preferred stock (412,500 ) (412,500 ) (412,500 ) (412,500 ) (412,500 ) (412,500 ) (412,500 ) (P) Total average common shareholders’ equity $ 4,671,383 $ 4,632,218 $ 4,482,771 $ 4,298,356 $ 4,382,887 $ 4,596,148 $ 4,195,899 Less: Average intangible assets (681,520 ) (682,561 ) (675,247 ) (676,371 ) (678,953 ) (679,799 ) (680,869 ) (Q) Total average tangible common shareholders’ equity (non-GAAP) $ 3,989,863 $ 3,949,657 $ 3,807,524 $ 3,621,985 $ 3,703,934 $ 3,916,349 $ 3,515,030 Return on average common equity, annualized (N/P) 13.35 % 12.79 % 15.67 % 12.72 % 12.31 % 13.91 % 10.96 % Return on average tangible common equity, annualized (non-GAAP) (O/Q) 15.73 15.12 18.55 15.21 14.68 16.43 13.21 Reconciliation of Non-GAAP Pre-Tax, Pre-Provision Income: Income before taxes $ 224,858 $ 211,430 $ 243,550 $ 195,173 $ 200,041 $ 679,838 $ 505,382 Add: Provision for credit losses 19,923 28,514 23,045 47,646 6,420 71,482 30,943 Pre-tax income, excluding provision for credit losses (non-GAAP) $ 244,781 $ 239,944 $ 266,595 $ 242,819 $ 206,461 $ 751,320 $ 536,325 WINTRUST SUBSIDIARIES AND LOCATIONS
Wintrust 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, 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 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 transition from LIBOR 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 Wednesday, October 18, 2023 at 10:00 a.m. (CDT) regarding third 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 Conference Call Link included within the Company’s press release dated September 29, 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 third 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
