Wintrust Financial Corporation Reports Second Quarter 2022 Results

Rhea-AI Summary

Wintrust Financial Corporation (WTFC) reported a net income of $94.5 million or $1.49 per diluted share for Q2 2022, a 28% decrease from Q1 2022. For the first half of 2022, net income totaled $221.9 million compared to $258.3 million in the same period last year. Total loans, excluding PPP loans, increased by $1.9 billion (22% annualized), and net interest income rose by $38.5 million. However, mortgage banking revenue saw a sharp decline to $33.3 million from $77.2 million in Q1. The allowance for credit losses increased to 1.31% of the loan portfolio.

Positive

• Total loans, excluding PPP loans, increased by $1.9 billion, or 22% annualized.
• Net interest income rose by $38.5 million due to improved net interest margin.
• Total assets increased by $719 million, totaling $51.0 billion.
• Tangible book value per common share increased to $59.87.

Negative

• Net income fell by 28% compared to Q1 2022.
• Mortgage banking revenue decreased to $33.3 million from $77.2 million in Q1.
• Recorded a provision for credit losses totaling $20.4 million, up from $4.1 million in Q1.
• Non-performing loans increased to 0.20% of total loans, up from a previous low of 0.16%.

ROSEMONT, Ill., July 20, 2022 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust”, “the Company”, “we” or “our”) (Nasdaq: WTFC) announced net income of $94.5 million or $1.49 per diluted common share for the second quarter of 2022, a decrease in diluted earnings per common share of 28% compared to the first quarter of 2022. The Company recorded net income of $221.9 million or $3.56 per diluted common share for the first six months of 2022 compared to net income of $258.3 million or $4.24 per diluted common share for the same period of 2021. Pre-tax, pre-provision income (non-GAAP) for the first six months of 2022 totaled $329.9 million up 14% from $290.4 million in the first six months of 2021.

Edward J. Wehmer, Founder and Chief Executive Officer, commented, “I am pleased with the second quarter results which exhibited strong earnings momentum and core fundamentals. The second quarter is a turning point for Wintrust as our net interest income and margin expanded meaningfully and remain poised for future growth. Additionally, the Company experienced exceptional, diversified growth in our loan portfolio while maintaining historically good credit metrics.”

Highlights of the Second Quarter of 2022:
Comparative information to the first quarter of 2022

• Total loans, excluding Paycheck Protection Program (“PPP”) loans, increased by $1.9 billion, or 22% on an annualized basis. In addition, total loans as of June 30, 2022 were $1.2 billion higher than average total loans in the second quarter of 2022 which is expected to benefit future quarters.
  • Core loans increased by $910 million and niche loans increased by $1.0 billion.
  • PPP loans declined by $172 million in the second quarter of 2022 primarily as a result of processing forgiveness payments.
• Total assets increased by $719 million totaling $51.0 billion as of June 30, 2022 and total deposits increased by $374 million.
• Net interest income increased by $38.5 million due to improvement in net interest margin.
  • Net interest margin increased by 32 basis points primarily due to increasing loan yields and the deployment of liquidity to fund loan growth.
• Recorded a provision for credit losses of $20.4 million in the second quarter of 2022 primarily related to loan growth and $9.5 million of net charge-offs or 11 basis points on an annualized basis as compared to a provision for credit losses of $4.1 million in the first quarter of 2022.
• The allowance for credit losses on our core loan portfolio is approximately 1.31% of the outstanding balance as of June 30, 2022 unchanged from March 31, 2022. See Table 12 for more information.
• Non-performing loans remained historically low but increased to 0.20% of total loans, as of June 30, 2022, up from a record low of 0.16% as of March 31, 2022.
• Mortgage banking revenue decreased to $33.3 million for the second quarter of 2022 as compared to $77.2 million in the first quarter of 2022.
  • The Company recorded a net benefit of $445,000 related to essentially offsetting changes in the value of two mortgage assets in the second quarter of 2022. This consisted of a $9.1 million increase in the value of mortgage servicing rights (“MSR”) related to changes in fair value model assumptions and a negative $8.7 million valuation related adjustment on the Company’s portfolio of early buy-out exercised loans guaranteed by U.S. government agencies which are held at fair value. The change in value recorded in the first quarter of 2022 related to these two mortgage assets was a $43.4 million increase in value.
• Net losses on investment securities totaled $7.8 million in the second quarter of 2022 related to changes in the value of equity securities as compared to net losses of $2.8 million in the first quarter of 2022.
• Recorded $2.5 million of losses in other non-interest income related to the sale of a property no longer considered for future expansion and the anticipated sale of a former data processing facility.
• Completed a common stock offering of 3,450,000 shares, generating proceeds, net of estimated issuance costs, of $285.7 million.
• Tangible book value per common share (non-GAAP) increased to $59.87 as of June 30, 2022 as compared to $59.34 as of March 31, 2022. See Table 18 for reconciliation of non-GAAP measures.

Mr. Wehmer continued, “The Company experienced robust loan growth as loans, excluding PPP loans, increased by $1.9 billion or 22% on an annualized basis in the second quarter of 2022. We continue to pick up new market share and grow organically as all of our material loan portfolios exhibited good growth in the second quarter of 2022. We remain prudent in our review of credit prospects ensuring our loan growth stays within our conservative credit standards. The loan growth experienced in the second quarter of 2022 provides strong momentum for future quarters as total loans as of June 30, 2022 were $1.2 billion higher than average total loans in the second quarter of 2022. Our loans to deposits ratio ended the quarter at 87.0% and we believe that we have sufficient liquidity to meet customer loan demand.”

Mr. Wehmer commented, “Net interest income increased by $38.5 million in the second quarter of 2022 primarily due to improvement in net interest margin. Net interest margin increased by 32 basis points as the repricing of earning assets has significantly outpaced deposit rate changes. Additionally, asset mix improved as excess liquidity was deployed to fund loan growth. We believe, subject to a material change in the consensus projection of interest rates as of this release date, that our net interest margin will continue to expand in the third and fourth quarters of 2022 and could approach 3.50% by the end of 2022.”

Mr. Wehmer noted, “We recorded mortgage banking revenue of $33.3 million in the second quarter of 2022 as compared to $77.2 million in the first quarter of 2022. Loan volumes originated for sale in the second quarter of 2022 were $821 million, down from $896 million in the first quarter of 2022. However, production margin increased to 2.21% in the second quarter of 2022 as compared to 1.67% in the first quarter of 2022. In the second quarter of 2022, the increase in the value of mortgage servicing rights related to changes in fair value model assumptions was essentially offset by valuation related adjustments on the Company’s portfolio of early buy-out exercised loans guaranteed by U.S. government agencies which we expect will serve as a partial economic hedge of the mortgage servicing rights in future periods. By comparison, there was a $43.4 million benefit recognized in the first quarter of 2022 related to the change in fair value of mortgage servicing rights. We are focused on expanding our market share of purchase originations and finding efficiencies in our delivery channels to reduce costs in light of current market conditions. Based on limited inventory and elevated mortgage rates, we expect that mortgage originations in the third quarter of 2022 will decline relative to the second quarter of 2022. However, the impact of such decline on earnings is expected to be small relative to the anticipated growth in net interest income.”

Commenting on credit quality, Mr. Wehmer stated, "While uncertain economic conditions may persist in the coming quarters, Wintrust is confident in our ability to navigate such conditions especially given our current credit quality metrics. Non-performing loans comprise only 0.20% of total loans, as of June 30, 2022. The Company recorded a provision for credit losses of $20.4 million in the second quarter of 2022, in part related to $9.5 million of net charge-offs and strong loan growth recorded in the quarter. The allowance for credit losses on our core loan portfolio as of June 30, 2022 is approximately 1.31% of the outstanding balance. We believe that the Company’s reserves remain appropriate and we remain diligent in our review of credit.”

Mr. Wehmer concluded, “Our second quarter of 2022 results continued to demonstrate the multi-faceted nature of our business model which we believe uniquely positions us to be successful. We expect to leverage our differentiated, diversified loan portfolio to outperform peers with respect to loan growth which should allow us to continue to expand net interest income. We are focused on taking advantage of market opportunities to prudently deploy excess liquidity into earning assets including core and niche loans and investment securities while maintaining an interest rate sensitive asset portfolio. We are opportunistically evaluating the acquisition market which has been active for both banks and business lines of various sizes. Of course, we remain diligent in our consideration of acquisition targets and intend to be prudent in our decision making, always seeking to minimize dilution.”

The graphs below illustrate certain financial highlights of the second quarter of 2022 as well as historical financial performance. See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 18 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/9f62312c-504c-47a9-9a3b-cf0218d4588c

SUMMARY OF RESULTS:

BALANCE SHEET

Total loans, excluding PPP loans, increased by $1.9 billion as core loans increased by $910 million and niche loans increased by $1.0 billion. See Table 1 for more information. As of June 30, 2022, virtually all of the PPP loan balances were forgiven with only $82 million remaining on balance sheet.

Total liabilities increased $483 million in the second quarter of 2022 resulting primarily from a $374 million increase in total deposits. The increase in deposits was due to a $267 million increase in interest-bearing deposits and $107 million increase in non-interest-bearing deposits. The Company's loans to deposits ratio ended the quarter at 87.0%. Management believes in substantially funding the Company's balance sheet with core deposits and utilizes brokered or wholesale funding sources on a limited basis to manage its liquidity position as well as for interest rate risk management purposes.

For more information regarding changes in the Company’s balance sheet, see Consolidated Statements of Condition and Tables 1 through 3 in this report.

NET INTEREST INCOME

For the second quarter of 2022, net interest income totaled $337.8 million, an increase of $38.5 million as compared to the first quarter of 2022. The $38.5 million increase in net interest income in the second quarter of 2022 compared to the first quarter of 2022 was primarily due to improvement in net interest margin. The Company recognized $4.5 million of PPP fee accretion in the second quarter of 2022 as compared to $6.5 million in the first quarter of 2022. As of June 30, 2022, the Company had approximately $2.1 million of net PPP loan fees that have yet to be recognized in income.

Net interest margin was 2.92% (2.93% on a fully taxable-equivalent basis, non-GAAP) during the second quarter of 2022 compared to 2.60% (2.61% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2022. The net interest margin increase as compared to the first quarter of 2022 was due to a 36 basis point increase in yield on earning assets and a three basis point increase in net free funds contribution. These improvements were partially offset by a seven basis point increase in the rate paid on interest-bearing liabilities. The 36 basis point increase in the yield on earning assets in the second quarter of 2022 as compared to the first quarter of 2022 was primarily due to a 26 basis point improvement on loan yields and a higher liquidity management asset yield as the Company earned higher yields on interest-bearing deposits with banks. The seven basis point increase in the rate paid on interest-bearing liabilities in the second quarter of 2022 as compared to the first quarter of 2022 is primarily due to a six basis point increase in the rate paid on interest-bearing deposits primarily related to the increasing rate environment.

Wintrust remains in an asset-sensitive interest rate position. Based on modeled contractual cash flows, including prepayment assumptions, approximately 80% of our current loan balances are projected to reprice or mature in the next 12 months.

For more information regarding net interest income, see Tables 4 through 8 in this report.

ASSET QUALITY

The allowance for credit losses totaled $312.2 million as of June 30, 2022, an increase of $10.9 million as compared to $301.3 million as of March 31, 2022. A provision for credit losses totaling $20.4 million was recorded for the second quarter of 2022 as compared to $4.1 million recorded in the first quarter of 2022. For more information regarding the provision for credit losses, see Table 11 in this report.

Management believes the allowance for credit losses is appropriate to account for expected credit losses. The Current Expected Credit Losses (“CECL”) accounting standard requires the Company to estimate expected credit losses over the life of the Company’s financial assets as of the reporting date. There can be no assurances, however, that future losses will not significantly exceed the amounts provided for, thereby affecting future results of operations. A summary of the allowance for credit losses calculated for the loan components in each portfolio as of June 30, 2022, March 31, 2022, and December 31, 2021 is shown on Table 12 of this report.

Net charge-offs totaled $9.5 million in the second quarter of 2022, as compared to $2.5 million of net charge-offs in the first quarter of 2022. Net charge-offs as a percentage of average total loans were reported as 11 basis points in the second quarter of 2022 on an annualized basis compared to three basis points on an annualized basis in the first quarter of 2022. 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.

The ratio of non-performing assets to total assets was 0.16% as of June 30, 2022, compared to 0.13% at March 31, 2022. Non-performing assets totaled $79.2 million at June 30, 2022, compared to $63.5 million at March 31, 2022. Non-performing loans totaled $72.4 million, or 0.20% of total loans, at June 30, 2022 compared to $57.3 million, or 0.16% of total loans, at March 31, 2022. Other real estate owned (“OREO”) totaled $6.8 million at June 30, 2022, an increase of $0.6 million compared to $6.2 million at March 31, 2022. Management is pursuing the resolution of all non-performing assets. At this time, management believes OREO is appropriately valued at the lower of carrying value or fair value less estimated costs to sell. For more information regarding non-performing assets, see Table 14 in this report.

NON-INTEREST INCOME

Wealth management revenue remained relatively unchanged at $31.4 million for both the second quarter of 2022 and first quarter of 2022. 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 $43.9 million in the second quarter of 2022 as compared to the first quarter of 2022. The Company recorded a net benefit of $445,000 related to essentially offsetting changes in the value of two mortgage assets in the second quarter of 2022. This consisted of a $9.1 million increase in the value of mortgage servicing rights related to changes in fair value model assumptions and a negative $8.7 million valuation related adjustment on the Company’s portfolio of early buy-out exercised loans guaranteed by U.S. government agencies which are held at fair value. Whereas, the change in value recorded in the first quarter of 2022 related to these two mortgage assets was a $43.4 million increase in value. Production revenue increased by $2.9 million in the second quarter of 2022 as compared to the first quarter of 2022 as production margin rebounded, increasing to 2.21% in the second quarter of 2022 as compared to 1.67% in the first quarter of 2022. Loans originated for sale were $821 million in the second quarter of 2022, a decrease of $75 million as compared to the first quarter of 2022. The percentage of origination volume from refinancing activities was 22% in the second quarter of 2022 as compared to 47% in the first quarter of 2022. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market.

During the second quarter of 2022, the fair value of the mortgage servicing rights portfolio increased primarily due to the capitalization of $11.2 million and fair value adjustment increase of $9.1 million. These increases were partially offset by a reduction in value of $6.8 million due to payoffs and paydowns of the existing portfolio.

The Company recorded $1.1 million of fees from covered call options in the second quarter of 2022 as compared to $3.7 million in the first quarter of 2022. 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 by using fees generated from these options to compensate for net interest margin compression. These option transactions are designed to mitigate overall interest rate risk and do not qualify as hedges pursuant to accounting guidance.

Trading gains totaled $176,000 in the second quarter of 2022 as compared to a gain of $3.9 million recognized in the first quarter of 2022. Trading gains in the first quarter of 2022 related primarily to a favorable market value adjustment on an interest rate cap derivative which was held as an economic hedge for potentially rising interest rates.

The Company recognized net losses on investment securities of $7.8 million in the second quarter of 2022 as compared to net losses of $2.8 million recognized in the first quarter of 2022.

Other non-interest income decreased $4.6 million in the second quarter of 2022 as compared to the first quarter of 2022 primarily due to $2.5 million of losses relating to the sale of a property no longer considered for future expansion and the anticipated sale of a former data processing facility. Other declines in the second quarter of 2022 as compared to the first quarter of 2022 include lower interest rate swap fees, market losses on BOLI investments related to non-qualified deferred compensation accounts recorded in BOLI income and less partnership investment income.

For more information regarding non-interest income, see Tables 15 and 16 in this report.

NON-INTEREST EXPENSE

Salaries and employee benefits expense decreased by $5.0 million in the second quarter of 2022 as compared to the first quarter of 2022. The $5.0 million decrease is primarily related to decreased incentive compensation expense.

Advertising and marketing expenses in the second quarter of 2022 increased by $4.7 million as compared to the first quarter of 2022 primarily related to seasonal media advertising and sponsorship costs. Marketing costs are incurred to promote the Company's brand, commercial banking capabilities and the Company's various products, to attract loans and deposits and to announce new branch openings as well as the expansion of the Company's non-bank businesses. The level of marketing expenditures depends on the timing of sponsorship programs utilized which are determined based on the market area, targeted audience, competition and various other factors.

Miscellaneous expense in the second quarter of 2022 increased by $5.2 million as compared to the first quarter of 2022. 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 17 in this report.

INCOME TAXES

The Company recorded income tax expense of $37.1 million in the second quarter of 2022 compared to $46.3 million in the first quarter of 2022. The effective tax rates were 28.21% in the second quarter of 2022 compared to 26.65% in the first quarter of 2022. The effective tax rates were partially impacted by tax effects related to share-based compensation, which fluctuate based on the Company’s stock price and timing of employee stock option exercises and vesting of other share-based awards. The Company recorded excess tax benefits of $81,000 in the second quarter of 2022, compared to excess tax benefits of $2.2 million in the first quarter of 2022 related to share-based compensation.

BUSINESS UNIT SUMMARY

Community Banking

Through its community banking unit, the Company provides banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas the Company services. In the second quarter of 2022, this unit expanded its loan portfolio. The segment’s net interest income increased in the second quarter of 2022 as compared to the first quarter of 2022 due to loan growth and an increased net interest margin.

Mortgage banking revenue was $33.3 million for the second quarter of 2022, a decrease of $43.9 million as compared to the first quarter of 2022. Service charges on deposit accounts totaled $15.9 million in the second quarter of 2022, an increase of $605,000 as compared to the first quarter of 2022 primarily due to higher fees associated with commercial account activity. The Company’s gross commercial and commercial real estate loan pipelines remained robust as of June 30, 2022 indicating momentum for continued loan growth in the third quarter of 2022.

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 $3.9 billion during the second quarter of 2022 and average balances increased by $531.9 million as compared to the first quarter of 2022. The Company’s leasing portfolio balance increased in the second quarter of 2022, with its portfolio of assets, including capital leases, loans and equipment on operating leases, totaling $2.6 billion as of June 30, 2022 as compared to $2.4 billion as of March 31, 2022. Revenues from the Company’s out-sourced administrative services business were $1.6 million in the second quarter of 2022, a decrease of $262,000 from the first quarter of 2022.

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 $31.4 million in the second quarter of 2022, relatively unchanged compared to the first quarter of 2022. At June 30, 2022, the Company’s wealth management subsidiaries had approximately $32.9 billion of assets under administration, which included $6.8 billion of assets owned by the Company and its subsidiary banks, representing a $2.9 billion decrease from the $35.8 billion of assets under administration at March 31, 2022. The decrease in assets under administration experienced in the second quarter of 2022 as compared to the first quarter of 2022 is primarily due to reduced equity and fixed income asset values.

ITEMS IMPACTING COMPARATIVE FINANCIAL RESULTS

Common Stock Offering

In June 2022, the Company sold through a public offering a total of 3,450,000 shares of its common stock. Net proceeds to the Company totaled approximately $285.7 million, net of estimated issuance costs.

Insurance Agency Loan Portfolio

On November 15, 2021, the Company completed its acquisition of certain assets from The Allstate Corporation (“Allstate”). Through this business combination, the Company acquired approximately $581.6 million of loans, net of allowance for credit losses measured on the acquisition date. The loan portfolio was comprised of approximately 1,800 loans to Allstate agents nationally. In addition to acquiring the loans, the Company became the national preferred provider of loans to Allstate agents. In connection with the loan acquisition, a team of Allstate agency lending specialists joined the Company, to augment and expand Wintrust’s existing insurance agency finance business. As the transaction was determined to be a business combination, the Company recorded goodwill of approximately $9.3 million on the purchase.

WINTRUST FINANCIAL CORPORATION

Key Operating Measures

Wintrust’s key operating measures and growth rates for the second quarter of 2022, as compared to the first quarter of 2022 (sequential quarter) and second quarter of 2021 (linked quarter), are shown in the table below:

													% or(1) basis point  (bp) change from 1st Quarter 2022				% or basis point  (bp) change from 2nd Quarter 2021
		Three Months Ended
(Dollars in thousands, except per share data)		Jun 30, 2022				Mar 31, 2022				Jun 30, 2021
Net income		$	94,513			$	127,391			$	105,109		(26	)	%		(10	)	%
Pre-tax income, excluding provision for credit losses (non-GAAP)(2)			152,078				177,786				128,851		(14	)			18
Net income per common share – diluted			1.49				2.07				1.70		(28	)			(12	)
Cash dividends declared per common share			0.34				0.34				0.31		—				10
Net revenue(3)			440,746				462,084				408,963		(5	)			8
Net interest income			337,804				299,294				279,590		13				21
Net interest margin			2.92	%			2.60	%			2.62	%	32		bps		30		bps
Net interest margin – fully taxable-equivalent (non-GAAP)(2)			2.93				2.61				2.63		32				30
Net overhead ratio(4)			1.51				1.00				1.32		51				19
Return on average assets			0.77				1.04				0.92		(27	)			(15	)
Return on average common equity			8.53				11.94				10.24		(341	)			(171	)
Return on average tangible common equity (non-GAAP)(2)			10.36				14.48				12.62		(412	)			(226	)
At end of period
Total assets		$	50,969,332			$	50,250,661			$	46,738,450		6		%		9		%
Total loans(5)			37,053,103				35,280,547				32,911,187		20				13
Total deposits			42,593,326				42,219,322				38,804,616		4				10
Total shareholders’ equity			4,727,623				4,492,256				4,339,011		21				9

 

(1)	Period-end balance sheet percentage changes are annualized.
(2)	See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 18 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 Highlights

		Three Months Ended																			Six Months Ended
(Dollars in thousands, except per share data)		Jun 30, 2022				Mar 31, 2022				Dec 31, 2021				Sep 30, 2021				Jun 30, 2021			Jun 30, 2022				Jun 30, 2021
Selected Financial Condition Data (at end of period):
Total assets		$	50,969,332			$	50,250,661			$	50,142,143			$	47,832,271			$	46,738,450
Total loans(1)			37,053,103				35,280,547				34,789,104				33,264,043				32,911,187
Total deposits			42,593,326				42,219,322				42,095,585				39,952,558				38,804,616
Total shareholders’ equity			4,727,623				4,492,256				4,498,688				4,410,317				4,339,011
Selected Statements of Income Data:
Net interest income		$	337,804			$	299,294			$	295,976			$	287,496			$	279,590		$	637,098			$	541,485
Net revenue(2)			440,746				462,084				429,743				423,970				408,963			902,830				857,364
Net income			94,513				127,391				98,757				109,137				105,109			221,904				258,257
Pre-tax income, excluding provision for credit losses (non-GAAP)(3)			152,078				177,786				146,344				141,826				128,851			329,864				290,363
Net income per common share – Basic			1.51				2.11				1.61				1.79				1.72			3.61				4.29
Net income per common share – Diluted			1.49				2.07				1.58				1.77				1.70			3.56				4.24
Cash dividends declared per common share			0.34				0.34				0.31				0.31				0.31			0.68				0.62
Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin			2.92	%			2.60	%			2.54	%			2.58	%			2.62	%		2.76	%			2.58	%
Net interest margin – fully taxable-equivalent (non-GAAP)(3)			2.93				2.61				2.55				2.59				2.63			2.77				2.59
Non-interest income to average assets			0.84				1.33				1.08				1.15				1.13			1.08				1.40
Non-interest expense to average assets			2.35				2.33				2.29				2.37				2.45			2.34				2.51
Net overhead ratio(4)			1.51				1.00				1.21				1.22				1.32			1.25				1.11
Return on average assets			0.77				1.04				0.80				0.92				0.92			0.91				1.15
Return on average common equity			8.53				11.94				9.05				10.31				10.24			10.22				12.97
Return on average tangible common equity (non-GAAP)(3)			10.36				14.48				11.04				12.62				12.62			12.40				15.99
Average total assets		$	49,353,426			$	49,501,844			$	49,118,777			$	47,192,510			$	45,946,751		$	49,427,225			$	45,470,389
Average total shareholders’ equity			4,526,110				4,500,460				4,433,953				4,343,915				4,256,778			4,513,356				4,211,088
Average loans to average deposits ratio			86.8	%			83.8	%			81.7	%			83.8	%			86.7	%		85.3	%			86.9	%
Period-end loans to deposits ratio			87.0				83.6				82.6				83.3				84.8
Common Share Data at end of period:
Market price per common share		$	80.15			$	92.93			$	90.82			$	80.37			$	75.63
Book value per common share			71.06				71.26				71.62				70.19				68.81
Tangible book value per common share (non-GAAP)(3)			59.87				59.34				59.64				58.32				56.92
Common shares outstanding			60,721,889				57,253,214				57,054,091				56,956,026				57,066,677
Other Data at end of period:
Tier 1 leverage ratio(5)			8.8	%			8.1	%			8.0	%			8.1	%			8.2	%
Risk-based capital ratios:
Tier 1 capital ratio(5)			9.9				9.6				9.6				9.9				10.1
Common equity tier 1 capital ratio(5)			9.0				8.6				8.6				8.9				9.0
Total capital ratio(5)			11.8				11.6				11.6				12.1				12.4
Allowance for credit losses(6)		$	312,192			$	301,327			$	299,731			$	296,138			$	304,121
Allowance for loan and unfunded lending-related commitment losses to total loans			0.84	%			0.85	%			0.86	%			0.89	%			0.92	%
Number of:
Bank subsidiaries			15				15				15				15				15
Banking offices			173				174				173				172				172

 

(1)	Excludes mortgage loans held-for-sale.
(2)	Net revenue is net interest income and non-interest income.
(3)	See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 18 for additional information on this performance measure/ratio.
(4)	The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s average total assets. A lower ratio indicates a higher degree of efficiency.
(5)	Capital ratios for current quarter-end are estimated.
(6)	The allowance for credit losses includes the allowance for loan losses, the allowance for unfunded lending-related commitments and the allowance for held-to-maturity securities losses.

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION

	(Unaudited)				(Unaudited)								(Unaudited)				(Unaudited)
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(In thousands)		2022				2022				2021				2021				2021
Assets
Cash and due from banks	$	498,891			$	462,516			$	411,150			$	462,244			$	434,957
Federal funds sold and securities purchased under resale agreements		475,056				700,056				700,055				55				52
Interest-bearing deposits with banks		3,266,541				4,013,597				5,372,603				5,232,315				4,707,415
Available-for-sale securities, at fair value		2,970,121				2,998,898				2,327,793				2,373,478				2,188,608
Held-to-maturity securities, at amortized cost		3,413,469				3,435,729				2,942,285				2,736,722				2,498,232
Trading account securities		1,010				852				1,061				1,103				2,667
Equity securities with readily determinable fair value		93,295				92,689				90,511				88,193				86,316
Federal Home Loan Bank and Federal Reserve Bank stock		136,138				136,163				135,378				135,408				136,625
Brokerage customer receivables		21,527				22,888				26,068				26,378				23,093
Mortgage loans held-for-sale		513,232				606,545				817,912				925,312				984,994
Loans, net of unearned income		37,053,103				35,280,547				34,789,104				33,264,043				32,911,187
Allowance for loan losses		(251,769	)			(250,539	)			(247,835	)			(248,612	)			(261,089	)
Net loans		36,801,334				35,030,008				34,541,269				33,015,431				32,650,098
Premises, software and equipment, net		762,381				761,213				766,405				748,872				752,375
Lease investments, net		223,813				240,656				242,082				243,933				219,023
Accrued interest receivable and other assets		1,112,697				1,066,750				1,084,115				1,166,917				1,185,811
Trade date securities receivable		—				—				—				—				189,851
Goodwill		654,709				655,402				655,149				645,792				646,336
Other acquisition-related intangible assets		25,118				26,699				28,307				30,118				31,997
Total assets	$	50,969,332			$	50,250,661			$	50,142,143			$	47,832,271			$	46,738,450
Liabilities and Shareholders’ Equity
Deposits:
Non-interest-bearing	$	13,855,844			$	13,748,918			$	14,179,980			$	13,255,417			$	12,796,110
Interest-bearing		28,737,482				28,470,404				27,915,605				26,697,141				26,008,506
Total deposits		42,593,326				42,219,322				42,095,585				39,952,558				38,804,616
Federal Home Loan Bank advances		1,166,071				1,241,071				1,241,071				1,241,071				1,241,071
Other borrowings		482,787				482,516				494,136				504,527				518,493
Subordinated notes		437,162				437,033				436,938				436,811				436,719
Junior subordinated debentures		253,566				253,566				253,566				253,566				253,566
Trade date securities payable		—				437				—				1,348				—
Accrued interest payable and other liabilities		1,308,797				1,124,460				1,122,159				1,032,073				1,144,974
Total liabilities		46,241,709				45,758,405				45,643,455				43,421,954				42,399,439
Shareholders’ Equity:
Preferred stock		412,500				412,500				412,500				412,500				412,500
Common stock		60,722				59,091				58,892				58,794				58,770
Surplus		1,880,913				1,698,093				1,685,572				1,674,062				1,669,002
Treasury stock		—				(109,903	)			(109,903	)			(109,903	)			(100,363	)
Retained earnings		2,616,525				2,548,474				2,447,535				2,373,447				2,288,969
Accumulated other comprehensive (loss) income		(243,037	)			(115,999	)			4,092				1,417				10,133
Total shareholders’ equity		4,727,623				4,492,256				4,498,688				4,410,317				4,339,011
Total liabilities and shareholders’ equity	$	50,969,332			$	50,250,661			$	50,142,143			$	47,832,271			$	46,738,450

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended																			Six Months Ended
(In thousands, except per share data)	Jun 30, 2022				Mar 31, 2022				Dec 31, 2021				Sep 30, 2021				Jun 30, 2021			Jun 30, 2022				Jun 30, 2021
Interest income
Interest and fees on loans	$	320,501			$	285,698			$	289,140			$	285,587			$	284,701		$	606,199			$	558,801
Mortgage loans held-for-sale		5,740				6,087				7,234				7,716				8,183			11,827				17,219
Interest-bearing deposits with banks		5,790				1,687				2,254				2,000				1,153			7,477				2,352
Federal funds sold and securities purchased under resale agreements		1,364				431				173				—				—			1,795				—
Investment securities		36,541				32,398				27,210				25,189				23,623			68,939				42,887
Trading account securities		4				5				4				3				1			9				3
Federal Home Loan Bank and Federal Reserve Bank stock		1,823				1,772				1,776				1,777				1,769			3,595				3,514
Brokerage customer receivables		205				174				188				185				149			379				272
Total interest income		371,968				328,252				327,979				322,457				319,579			700,220				625,048
Interest expense
Interest on deposits		18,985				14,854				16,572				19,305				24,298			33,839				52,242
Interest on Federal Home Loan Bank advances		4,878				4,816				4,923				4,931				4,887			9,694				9,727
Interest on other borrowings		2,734				2,239				2,250				2,501				2,568			4,973				5,177
Interest on subordinated notes		5,517				5,482				5,514				5,480				5,512			10,999				10,989
Interest on junior subordinated debentures		2,050				1,567				2,744				2,744				2,724			3,617				5,428
Total interest expense		34,164				28,958				32,003				34,961				39,989			63,122				83,563
Net interest income		337,804				299,294				295,976				287,496				279,590			637,098				541,485
Provision for credit losses		20,417				4,106				9,299				(7,916	)			(15,299	)		24,523				(60,646	)
Net interest income after provision for credit losses		317,387				295,188				286,677				295,412				294,889			612,575				602,131
Non-interest income
Wealth management		31,369				31,394				32,489				31,531				30,690			62,763				59,999
Mortgage banking		33,314				77,231				53,138				55,794				50,584			110,545				164,078
Service charges on deposit accounts		15,888				15,283				14,734				14,149				13,249			31,171				25,285
(Losses) gains on investment securities, net		(7,797	)			(2,782	)			(1,067	)			(2,431	)			1,285			(10,579	)			2,439
Fees from covered call options		1,069				3,742				1,128				1,157				1,388			4,811				1,388
Trading gains (losses), net		176				3,889				206				58				(438	)		4,065				(19	)
Operating lease income, net		15,007				15,475				14,204				12,807				12,240			30,482				26,680
Other		13,916				18,558				18,935				23,409				20,375			32,474				36,029
Total non-interest income		102,942				162,790				133,767				136,474				129,373			265,732				315,879
Non-interest expense
Salaries and employee benefits		167,326				172,355				167,131				170,912				172,817			339,681				353,626
Software and equipment		24,250				22,810				23,708				22,029				20,866			47,060				41,778
Operating lease equipment depreciation		8,774				9,708				10,147				10,013				9,949			18,482				20,720
Occupancy, net		17,651				17,824				18,343				18,158				17,687			35,475				37,683
Data processing		8,010				7,505				7,207				7,104				6,920			15,515				12,968
Advertising and marketing		16,615				11,924				13,981				13,443				11,305			28,539				19,851
Professional fees		7,876				8,401				7,551				7,052				7,304			16,277				14,891
Amortization of other acquisition-related intangible assets		1,579				1,609				1,811				1,877				2,039			3,188				4,046
FDIC insurance		6,949				7,729				7,317				6,750				6,405			14,678				12,963
OREO expense, net		294				(1,032	)			(641	)			(1,531	)			769			(738	)			518
Other		29,344				25,465				26,844				26,337				24,051			54,809				47,957
Total non-interest expense		288,668				284,298				283,399				282,144				280,112			572,966				567,001
Income before taxes		131,661				173,680				137,045				149,742				144,150			305,341				351,009
Income tax expense		37,148				46,289				38,288				40,605				39,041			83,437				92,752
Net income	$	94,513			$	127,391			$	98,757			$	109,137			$	105,109		$	221,904			$	258,257
Preferred stock dividends		6,991				6,991				6,991				6,991				6,991			13,982				13,982
Net income applicable to common shares	$	87,522			$	120,400			$	91,766			$	102,146			$	98,118		$	207,922			$	244,275
Net income per common share - Basic	$	1.51			$	2.11			$	1.61			$	1.79			$	1.72		$	3.61			$	4.29
Net income per common share - Diluted	$	1.49			$	2.07			$	1.58			$	1.77			$	1.70		$	3.56			$	4.24
Cash dividends declared per common share	$	0.34			$	0.34			$	0.31			$	0.31			$	0.31		$	0.68			$	0.62
Weighted average common shares outstanding		58,063				57,196				57,022				57,000				57,049			57,632				56,977
Dilutive potential common shares		775				862				976				753				726			823				691
Average common shares and dilutive common shares		58,838				58,058				57,998				57,753				57,775			58,455				57,668

TABLE 1: LOAN PORTFOLIO MIX AND GROWTH RATES

															% Growth From(2)
(Dollars in thousands)	Jun 30, 2022			Mar 31, 2022			Dec 31, 2021			Sep 30, 2021			Jun 30, 2021		Dec 31, 2021(1)			Jun 30, 2021
Balance:
Mortgage loans held-for-sale, excluding early buy-out exercised loans guaranteed by U.S. government agencies	$	294,688		$	296,548		$	473,102		$	570,663		$	633,006	(76)	%		(53)	%
Mortgage loans held-for-sale, early buy-out exercised loans guaranteed by U.S. government agencies		218,544			309,997			344,810			354,649			351,988	(74	)		(38	)
Total mortgage loans held-for-sale	$	513,232		$	606,545		$	817,912		$	925,312		$	984,994	(75)	%		(48)	%
Core loans:
Commercial
Commercial and industrial	$	5,502,584		$	5,348,266		$	5,346,084		$	4,953,769		$	4,650,607	6	%		18	%
Asset-based lending		1,552,033			1,365,297			1,299,869			1,066,376			892,109	39			74
Municipal		535,586			533,357			536,498			524,192			511,094	0			5
Leases		1,592,329			1,481,368			1,454,099			1,365,281			1,357,036	19			17
Commercial real estate
Residential construction		55,941			57,037			51,464			49,754			55,735	18			0
Commercial construction		1,145,602			1,055,972			1,034,988			1,038,034			1,090,447	22			5
Land		304,775			283,397			269,752			255,927			239,067	26			27
Office		1,321,745			1,273,705			1,285,686			1,269,746			1,220,658	6			8
Industrial		1,746,280			1,668,516			1,585,808			1,490,358			1,434,377	20			22
Retail		1,331,059			1,395,021			1,429,567			1,462,101			1,455,638	(14	)		(9	)
Multi-family		2,171,583			2,175,875			2,043,754			2,038,526			1,984,582	13			9
Mixed use and other		1,330,220			1,325,551			1,289,267			1,281,268			1,197,865	6			11
Home equity		325,826			321,435			335,155			347,662			369,806	(6	)		(12	)
Residential real estate
Residential real estate loans for investment		1,965,051			1,749,889			1,606,271			1,520,750			1,479,507	45			33
Residential mortgage loans, early buy-out eligible loans guaranteed by U.S. government agencies		34,764			13,520			22,707			18,847			44,333	NM			(22	)
Residential mortgage loans, early buy-out exercised loans guaranteed by U.S. government agencies		79,092			36,576			8,121			8,139			6,445	NM			NM
Total core loans	$	20,994,470		$	20,084,782		$	19,599,090		$	18,690,730		$	17,989,306	14	%		17	%
Niche loans:
Commercial
Franchise	$	1,136,929		$	1,181,761		$	1,227,234		$	1,176,569		$	1,060,468	(15)	%		7	%
Mortgage warehouse lines of credit		398,085			261,847			359,818			468,162			529,867	21			(25	)
Community Advantage - homeowners association		341,095			324,383			308,286			291,153			287,689	21			19
Insurance agency lending		906,375			833,720			813,897			260,482			273,999	23			NM
Premium Finance receivables
U.S. property & casualty insurance		4,781,042			4,271,828			4,178,474			3,921,289			3,805,504	29			26
Canada property & casualty insurance		760,405			665,580			677,013			695,688			716,367	25			6
Life insurance		7,608,433			7,354,163			7,042,810			6,655,453			6,359,556	16			20
Consumer and other		44,180			48,519			24,199			22,529			9,024	NM			NM
Total niche loans	$	15,976,544		$	14,941,801		$	14,631,731		$	13,491,325		$	13,042,474	19	%		22	%
Commercial PPP loans:
Originated in 2020	$	18,547		$	40,016		$	74,412		$	172,849		$	656,502	NM			(97)	%
Originated in 2021		63,542			213,948			483,871			909,139			1,222,905	NM			(95	)
Total commercial PPP loans	$	82,089		$	253,964		$	558,283		$	1,081,988		$	1,879,407	NM			(96)	%
Total loans, net of unearned income	$	37,053,103		$	35,280,547		$	34,789,104		$	33,264,043		$	32,911,187	13	%		13	%

 

(1)	Annualized.
(2)	NM - Not meaningful.

TABLE 2: DEPOSIT PORTFOLIO MIX AND GROWTH RATES

																				% Growth From
(Dollars in thousands)	Jun 30, 2022				Mar 31, 2022				Dec 31, 2021				Sep 30, 2021				Jun 30, 2021			Mar 31, 2022(1)			Jun 30, 2021
Balance:
Non-interest-bearing	$	13,855,844			$	13,748,918			$	14,179,980			$	13,255,417			$	12,796,110		3	%		8	%
NOW and interest-bearing demand deposits		5,918,908				5,089,724				4,646,944				4,255,940				3,933,167		65			50
Wealth management deposits(2)		3,182,407				2,542,995				2,612,759				2,300,818				2,150,851		101			48
Money market		12,273,350				13,012,460				12,840,432				12,148,541				11,784,213		(23	)		4
Savings		3,686,596				4,089,230				3,846,681				3,861,296				3,776,400		(39	)		(2	)
Time certificates of deposit		3,676,221				3,735,995				3,968,789				4,130,546				4,363,875		(6	)		(16	)
Total deposits	$	42,593,326			$	42,219,322			$	42,095,585			$	39,952,558			$	38,804,616		4	%		10	%
Mix:
Non-interest-bearing		33	%			32	%			34	%			33	%			33	%
NOW and interest-bearing demand deposits		13				12				11				11				10
Wealth management deposits(2)		7				6				6				6				5
Money market		29				31				31				30				30
Savings		9				10				9				10				10
Time certificates of deposit		9				9				9				10				12
Total deposits		100	%			100	%			100	%			100	%			100	%

 

(1)	Annualized.
(2)	Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wintrust Investments, Chicago Deferred Exchange Company, LLC (“CDEC”), trust and asset management customers of the Company.

TABLE 3: TIME CERTIFICATES OF DEPOSIT MATURITY/RE-PRICING ANALYSIS
As of June 30, 2022

(Dollars in thousands)	Total Time Certificates of Deposit			Weighted-Average Rate of Maturing Time Certificates of Deposit(1)
1-3 months	$	806,666		0.36	%
4-6 months		714,444		0.39
7-9 months		600,188		0.39
10-12 months		600,812		0.48
13-18 months		562,331		0.66
19-24 months		241,172		0.45
24+ months		150,608		1.03
Total	$	3,676,221		0.47	%

 

(1)	Weighted-average rate excludes the impact of purchase accounting fair value adjustments.

TABLE 4: QUARTERLY AVERAGE BALANCES

		Average Balance for three months ended,
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(In thousands)			2022				2022				2021				2021				2021
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents(1)		$	3,265,607			$	4,563,726			$	6,148,165			$	5,112,720			$	3,844,355
Investment securities(2)			6,589,947				6,378,022				5,317,351				5,065,593				4,771,403
FHLB and FRB stock			136,930				135,912				135,414				136,001				136,324
Liquidity management assets(3)			9,992,484				11,077,660				11,600,930				10,314,314				8,752,082
Other earning assets(3)(4)			24,059				25,192				28,298				28,238				23,354
Mortgage loans held-for-sale			560,707				664,019				827,672				871,824				991,011
Loans, net of unearned income(3)(5)			35,860,329				34,830,520				33,677,777				32,985,445				33,085,174
Total earning assets(3)			46,437,579				46,597,391				46,134,677				44,199,821				42,851,621
Allowance for loan and investment security losses			(260,547	)			(253,080	)			(254,874	)			(269,963	)			(285,686	)
Cash and due from banks			476,741				481,634				468,331				425,000				470,566
Other assets			2,699,653				2,675,899				2,770,643				2,837,652				2,910,250
Total assets		$	49,353,426			$	49,501,844			$	49,118,777			$	47,192,510			$	45,946,751
NOW and interest-bearing demand deposits		$	5,230,702			$	4,788,272			$	4,439,242			$	4,147,436			$	3,829,023
Wealth management deposits			2,835,267				2,505,800				2,646,879				2,353,721				2,226,612
Money market accounts			11,892,948				12,773,805				12,665,167				11,956,346				11,487,954
Savings accounts			3,882,856				3,904,299				3,766,037				3,851,523				3,728,271
Time deposits			3,687,778				3,861,371				4,058,282				4,236,317				4,632,796
Interest-bearing deposits			27,529,551				27,833,547				27,575,607				26,545,343				25,904,656
Federal Home Loan Bank advances			1,197,390				1,241,071				1,241,073				1,241,073				1,235,142
Other borrowings			489,779				494,267				501,933				512,785				525,924
Subordinated notes			437,084				436,966				436,861				436,746				436,644
Junior subordinated debentures			253,566				253,566				253,566				253,566				253,566
Total interest-bearing liabilities			29,907,370				30,259,417				30,009,040				28,989,513				28,355,932
Non-interest-bearing deposits			13,805,128				13,734,064				13,640,270				12,834,084				12,246,274
Other liabilities			1,114,818				1,007,903				1,035,514				1,024,998				1,087,767
Equity			4,526,110				4,500,460				4,433,953				4,343,915				4,256,778
Total liabilities and shareholders’ equity		$	49,353,426			$	49,501,844			$	49,118,777			$	47,192,510			$	45,946,751
Net free funds/contribution(6)		$	16,530,209			$	16,337,974			$	16,125,637			$	15,210,308			$	14,495,689

 

(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 “Supplemental Non-GAAP Financial Measures/Ratios” at Table 18 for additional information on this performance measure/ratio.
(4)	Other earning assets include brokerage customer receivables and trading account securities.
(5)	Loans, net of unearned income, include non-accrual loans.
(6)	Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.

TABLE 5: QUARTERLY NET INTEREST INCOME

		Net Interest Income for three months ended,
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(In thousands)			2022				2022				2021				2021				2021
Interest income:
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents		$	7,154			$	2,118			$	2,427			$	2,000			$	1,153
Investment securities			37,013				32,863				27,696				25,681				24,117
FHLB and FRB stock			1,823				1,772				1,776				1,777				1,769
Liquidity management assets(1)			45,990				36,753				31,899				29,458				27,039
Other earning assets(1)			210				181				194				188				150
Mortgage loans held-for-sale			5,740				6,087				7,234				7,716				8,183
Loans, net of unearned income(1)			321,069				286,125				289,557				285,998				285,116
Total interest income		$	373,009			$	329,146			$	328,884			$	323,360			$	320,488
Interest expense:
NOW and interest-bearing demand deposits		$	2,553			$	1,990			$	1,913			$	1,916			$	1,886
Wealth management deposits			3,685				918				1,402				1,176				958
Money market accounts			8,559				7,648				7,658				7,905				8,373
Savings accounts			347				336				345				406				402
Time deposits			3,841				3,962				5,254				7,902				12,679
Interest-bearing deposits			18,985				14,854				16,572				19,305				24,298
Federal Home Loan Bank advances			4,878				4,816				4,923				4,931				4,887
Other borrowings			2,734				2,239				2,250				2,501				2,568
Subordinated notes			5,517				5,482				5,514				5,480				5,512
Junior subordinated debentures			2,050				1,567				2,744				2,744				2,724
Total interest expense		$	34,164			$	28,958			$	32,003			$	34,961			$	39,989
Less: Fully taxable-equivalent adjustment			(1,041	)			(894	)			(905	)			(903	)			(909	)
Net interest income (GAAP)(2)			337,804				299,294				295,976				287,496				279,590
Fully taxable-equivalent adjustment			1,041				894				905				903				909
Net interest income, fully taxable-equivalent (non-GAAP)(2)		$	338,845			$	300,188			$	296,881			$	288,399			$	280,499

 

(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 “Supplemental Non-GAAP Financial Measures/Ratios” at Table 18 for additional information on this performance measure/ratio.

TABLE 6: QUARTERLY NET INTEREST MARGIN

		Net Interest Margin for three months ended,
		Jun 30, 2022			Mar 31, 2022			Dec 31, 2021			Sep 30, 2021			Jun 30, 2021
Yield earned on:
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents		0.88	%		0.19	%		0.16	%		0.16	%		0.12	%
Investment securities		2.25			2.09			2.07			2.01			2.03
FHLB and FRB stock		5.34			5.29			5.20			5.18			5.20
Liquidity management assets		1.85			1.35			1.09			1.13			1.24
Other earning assets		3.49			2.91			2.71			2.64			2.59
Mortgage loans held-for-sale		4.11			3.72			3.47			3.51			3.31
Loans, net of unearned income		3.59			3.33			3.41			3.44			3.46
Total earning assets		3.22	%		2.86	%		2.83	%		2.90	%		3.00	%
Rate paid on:
NOW and interest-bearing demand deposits		0.20	%		0.17	%		0.17	%		0.18	%		0.20	%
Wealth management deposits		0.52			0.15			0.21			0.20			0.17
Money market accounts		0.29			0.24			0.24			0.26			0.29
Savings accounts		0.04			0.03			0.04			0.04			0.04
Time deposits		0.42			0.42			0.51			0.74			1.10
Interest-bearing deposits		0.28			0.22			0.24			0.29			0.38
Federal Home Loan Bank advances		1.63			1.57			1.57			1.58			1.59
Other borrowings		2.24			1.84			1.78			1.94			1.96
Subordinated notes		5.05			5.02			5.05			5.02			5.05
Junior subordinated debentures		3.20			2.47			4.23			4.23			4.25
Total interest-bearing liabilities		0.46	%		0.39	%		0.42	%		0.48	%		0.56	%
Interest rate spread(1)(2)		2.76	%		2.47	%		2.41	%		2.42	%		2.44	%
Less: Fully taxable-equivalent adjustment		(0.01	)		(0.01	)		(0.01	)		(0.01	)		(0.01	)
Net free funds/contribution(3)		0.17			0.14			0.14			0.17			0.19
Net interest margin (GAAP)(2)		2.92	%		2.60	%		2.54	%		2.58	%		2.62	%
Fully taxable-equivalent adjustment		0.01			0.01			0.01			0.01			0.01
Net interest margin, fully taxable-equivalent (non-GAAP)(2)		2.93	%		2.61	%		2.55	%		2.59	%		2.63	%

 

(1)	Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(2)	See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 18 for additional information on this performance measure/ratio.
(3)	Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.

TABLE 7: YEAR-TO-DATE AVERAGE BALANCES, AND NET INTEREST INCOME AND MARGIN

	Average Balance for six months ended,							Interest for six months ended,							Yield/Rate for six months ended,
(Dollars in thousands)	Jun 30, 2022				Jun 30, 2021			Jun 30, 2022				Jun 30, 2021			Jun 30, 2022			Jun 30, 2021
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents(1)	$	3,911,080			$	4,036,553		$	9,272			$	2,352		0.48	%		0.12	%
Investment securities(2)		6,484,570				4,360,323			69,876				43,881		2.17			2.03
FHLB and FRB stock		136,424				136,043			3,595				3,514		5.31			5.21
Liquidity management assets(3)(4)	$	10,532,074			$	8,532,919		$	82,743			$	49,747		1.58	%		1.18	%
Other earning assets(3)(4)(5)		24,622				21,870			391				275		3.20			2.55
Mortgage loans held-for-sale		612,078				1,070,985			11,827				17,219		3.90			3.24
Loans, net of unearned income(3)(4)(6)		35,348,269				32,765,825			607,194				559,600		3.46			3.44
Total earning assets(4)	$	46,517,043			$	42,391,599		$	702,155			$	626,841		3.04	%		2.98	%
Allowance for loan and investment security losses		(256,834	)			(306,268	)
Cash and due from banks		479,174				418,777
Other assets		2,687,842				2,966,281
Total assets	$	49,427,225			$	45,470,389
NOW and interest-bearing demand deposits	$	5,010,709			$	3,761,614		$	4,543			$	3,909		0.18	%		0.21	%
Wealth management deposits		2,671,444				2,220,223			4,603				1,957		0.35			0.18
Money market accounts		12,330,943				11,284,383			16,207				16,468		0.27			0.29
Savings accounts		3,893,519				3,658,307			683				832		0.04			0.05
Time deposits		3,774,095				4,753,424			7,803				29,076		0.42			1.23
Interest-bearing deposits	$	27,680,710			$	25,677,951		$	33,839			$	52,242		0.25	%		0.41	%
Federal Home Loan Bank advances		1,219,110				1,231,806			9,694				9,727		1.60			1.59
Other borrowings		492,011				522,078			4,973				5,177		2.04			2.00
Subordinated notes		437,025				436,588			10,999				10,989		5.03			5.03
Junior subordinated debentures		253,566				253,566			3,617				5,428		2.84			4.26
Total interest-bearing liabilities	$	30,082,422			$	28,121,989		$	63,122			$	83,563		0.42	%		0.60	%
Non-interest-bearing deposits		13,769,792				12,029,936
Other liabilities		1,061,655				1,107,376
Equity		4,513,356				4,211,088
Total liabilities and shareholders’ equity	$	49,427,225			$	45,470,389
Interest rate spread(4)(7)															2.62	%		2.38	%
Less: Fully taxable-equivalent adjustment									(1,935	)			(1,793	)	(0.01	)		(0.01	)
Net free funds/contribution(8)	$	16,434,621			$	14,269,610									0.15			0.21
Net interest income/margin (GAAP)(4)								$	637,098			$	541,485		2.76	%		2.58	%
Fully taxable-equivalent adjustment									1,935				1,793		0.01			0.01
Net interest income/margin, fully taxable-equivalent (non-GAAP)(4)								$	639,033			$	543,278		2.77	%		2.59	%

 

(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 “Supplemental Non-GAAP Financial Measures/Ratios” at Table 18 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 of 100 and 200 basis points and a decrease of 100 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
Jun 30, 2022	17.0	%		9.0	%		(12.6	)	%
Mar 31, 2022	21.4			11.0			(11.3	)
Dec 31, 2021	25.3			12.4			(8.5	)
Sep 30, 2021	24.3			11.5			(7.8	)
Jun 30, 2021	24.6			11.7			(6.9	)

 

Ramp Scenario	+200 Basis Points			+100 Basis Points			-100 Basis Points
Jun 30, 2022	10.2	%		5.3	%		(6.9	)	%
Mar 31, 2022	11.2			5.8			(7.1	)
Dec 31, 2021	13.9			6.9			(5.6	)
Sep 30, 2021	10.8			5.4			(3.8	)
Jun 30, 2021	11.4			5.8			(3.3	)

TABLE 9: MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES

	Loans repricing or maturity period
As of June 30, 2022	One year or less			From one to five years			From five to fifteen years			After fifteen years			Total
(In thousands)
Commercial
Fixed rate	$	464,118		$	2,246,393		$	1,395,019		$	12,365		$	4,117,895
Fixed rate - PPP		9,032			73,057			—			—			82,089
Variable rate		7,843,285			3,783			53			—			7,847,121
Total commercial	$	8,316,435		$	2,323,233		$	1,395,072		$	12,365		$	12,047,105
Commercial real estate
Fixed rate		425,615			2,542,948			599,290			40,377			3,608,230
Variable rate		5,780,969			18,006			—			—			5,798,975
Total commercial real estate	$	6,206,584		$	2,560,954		$	599,290		$	40,377		$	9,407,205
Home equity
Fixed rate		12,945			3,571			2,124			39			18,679
Variable rate		307,147			—			—			—			307,147
Total home equity	$	320,092		$	3,571		$	2,124		$	39		$	325,826
Residential real estate
Fixed rate		15,003			4,731			31,471			984,504			1,035,709
Variable rate		62,764			206,163			774,271			—			1,043,198
Total residential real estate	$	77,767		$	210,894		$	805,742		$	984,504		$	2,078,907
Premium finance receivables - property & casualty
Fixed rate		5,380,040			161,407			—			—			5,541,447
Variable rate		—			—			—			—			—
Total premium finance receivables - property & casualty	$	5,380,040		$	161,407		$	—		$	—		$	5,541,447
Premium finance receivables - life insurance
Fixed rate		16,346			497,654			21,784			—			535,784
Variable rate		7,072,649			—			—			—			7,072,649
Total premium finance receivables - life insurance	$	7,088,995		$	497,654		$	21,784		$	—		$	7,608,433
Consumer and other
Fixed rate		10,538			5,276			97			490			16,401
Variable rate		27,779			—			—			—			27,779
Total consumer and other	$	38,317		$	5,276		$	97		$	490		$	44,180
Total per category
Fixed rate		6,324,605			5,461,980			2,049,785			1,037,775			14,874,145
Fixed rate - PPP		9,032			73,057			—			—			82,089
Variable rate		21,094,593			227,952			774,324			—			22,096,869
Total loans, net of unearned income	$	27,428,230		$	5,762,989		$	2,824,109		$	1,037,775		$	37,053,103
Variable Rate Loan Pricing by Index:
Prime													$	3,699,801
One- month LIBOR														6,534,892
Three- month LIBOR														237,028
Twelve- month LIBOR														6,747,889
U.S. Treasury tenors														130,698
SOFR tenors														3,586,073
Ameribor tenors														332,768
BSBY tenors														29,945
Other														797,775
Total variable rate													$	22,096,869

LIBOR - London Interbank Offered Rate.
SOFR - Secured Overnight Financing Rate.
Ameribor - American Interbank Offered Rate.
BSBY - Bloomberg Short Term Bank Yield Index.

Graph available at the following link: http://ml.globenewswire.com/Resource/Download/eff3a29a-8dca-4673-9a88-4d8b93f15867

As noted in the table on the previous page, the majority of the Company’s portfolio is tied to LIBOR indices which, as shown in the table above, do not mirror the same changes as the Prime rate which has historically moved when the Federal Reserve raises or lowers interest rates. Specifically, the Company has $6.5 billion of variable rate loans tied to one-month LIBOR and $6.7 billion of variable rate loans tied to twelve-month LIBOR. The above chart shows:

		Basis Point (bp) Change in
		Prime		1-month LIBOR		12-month LIBOR
Second Quarter 2022		125	bps	134	bps	152	bps
First Quarter 2022		25		35		152
Fourth Quarter 2021		0		2		34
Third Quarter 2021		0		-2		-1
Second Quarter 2021		0		-1		-3

TABLE 10: ALLOWANCE FOR CREDIT LOSSES

		Three Months Ended																			Six Months Ended
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,			Jun 30,				Jun 30,
(Dollars in thousands)			2022				2022				2021				2021				2021			2022				2021
Allowance for credit losses at beginning of period		$	301,327			$	299,731			$	296,138			$	304,121			$	321,308		$	299,731			$	379,969
Provision for credit losses			20,417				4,106				9,299				(7,916	)			(15,299	)		24,523				(60,646	)
Initial allowance for credit losses recognized on PCD assets acquired during the period(1)			—				—				470				—				—			—				—
Other adjustments			(56	)			22				5				(65	)			34			(34	)			65
Charge-offs:
Commercial			8,928				1,414				4,431				1,352				3,237			10,342				15,018
Commercial real estate			40				777				495				406				1,412			817				2,392
Home equity			192				197				135				59				142			389				142
Residential real estate			—				466				1,067				10				3			466				5
Premium finance receivables			2,903				1,678				2,314				1,390				2,077			4,581				5,316
Consumer and other			253				193				157				112				104			446				218
Total charge-offs			12,316				4,725				8,599				3,329				6,975			17,041				23,091
Recoveries:
Commercial			996				538				389				816				902			1,534				1,354
Commercial real estate			553				32				217				373				514			585				714
Home equity			123				93				461				313				328			216				429
Residential real estate			6				5				85				5				36			11				240
Premium finance receivables			1,119				1,476				1,240				1,728				3,239			2,595				5,021
Consumer and other			23				49				26				92				34			72				66
Total recoveries			2,820				2,193				2,418				3,327				5,053			5,013				7,824
Net charge-offs			(9,496	)			(2,532	)			(6,181	)			(2	)			(1,922	)		(12,028	)			(15,267	)
Allowance for credit losses at period end		$	312,192			$	301,327			$	299,731			$	296,138			$	304,121		$	312,192			$	304,121
Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average:
Commercial			0.27	%			0.03	%			0.14	%			0.02	%			0.08	%		0.15	%			0.22	%
Commercial real estate			(0.02	)			0.03				0.01				0.00				0.04			0.01				0.04
Home equity			0.09				0.13				(0.38	)			(0.28	)			(0.20	)		0.11				(0.15	)
Residential real estate			0.00				0.11				0.25				0.00				(0.01	)		0.05				(0.03	)
Premium finance receivables			0.06				0.01				0.04				(0.01	)			(0.04	)		0.03				0.01
Consumer and other			1.31				1.19				0.95				0.26				0.69			1.26	%			0.62
Total loans, net of unearned income			0.11	%			0.03	%			0.07	%			0.00	%			0.02	%		0.07	%			0.09	%
Loans at period end		$	37,053,103			$	35,280,547			$	34,789,104			$	33,264,043			$	32,911,187
Allowance for loan losses as a percentage of loans at period end			0.68	%			0.71	%			0.71	%			0.75	%			0.79	%
Allowance for loan and unfunded lending-related commitment losses as a percentage of loans at period end			0.84				0.85				0.86				0.89				0.92
Allowance for loan and unfunded lending-related commitment losses as a percentage of loans at period end, excluding PPP loans			0.84				0.86				0.88				0.92				0.98

 

(1)

The initial allowance for credit losses on purchased credit deteriorated (“PCD”) loans acquired during the period measured approximately $2.8 million, of which approximately $2.3 million was charged-off related to PCD loans that met the Company’s charge-off policy at the time of acquisition. After considering these loans that were immediately charged-off, the net impact of PCD allowance for credit losses at the acquisition date was approximately $470,000.

TABLE 11: ALLOWANCE AND PROVISION FOR CREDIT LOSSES BY COMPONENT

		Three Months Ended																			Six Months Ended
		Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,			Jun 30,			Jun 30,
(In thousands)			2022				2022				2021				2021				2021			2022			2021
Provision for loan losses		$	10,782			$	5,214			$	4,929			$	(12,410	)		$	(14,731	)	$	15,996		$	(43,082	)
Provision for unfunded lending-related commitments losses			9,711				(1,189	)			4,375				4,501				(558	)		8,522			(17,593	)
Provision for held-to-maturity securities losses			(76	)			81				(5	)			(7	)			(10	)		5			29
Provision for credit losses		$	20,417			$	4,106			$	9,299			$	(7,916	)		$	(15,299	)	$	24,523		$	(60,646	)
Allowance for loan losses		$	251,769			$	250,539			$	247,835			$	248,612			$	261,089
Allowance for unfunded lending-related commitments losses			60,340				50,629				51,818				47,443				42,942
Allowance for loan losses and unfunded lending-related commitments losses			312,109				301,168				299,653				296,055				304,031
Allowance for held-to-maturity securities losses			83				159				78				83				90
Allowance for credit losses		$	312,192			$	301,327			$	299,731			$	296,138			$	304,121

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 June 30, 2022, March 31, 2022 and December 31, 2021.

	As of Jun 30, 2022								As of Mar 31, 2022								As of Dec 31, 2021
(Dollars in thousands)	Recorded Investment			Calculated Allowance			% of its category’s balance		Recorded Investment			Calculated Allowance			% of its category’s balance		Recorded Investment			Calculated Allowance			% of its category’s balance
Commercial:
Commercial, industrial and other, excluding PPP loans	$	11,965,016		$	142,916		1.19	%	$	11,329,999		$	120,910		1.07	%	$	11,345,785		$	119,305		1.05	%
Commercial PPP loans		82,089			3		0.00			253,964			1		0.00			558,283			2		0.00
Commercial real estate:
Construction and development		1,506,318			45,522		3.02			1,396,406			34,206		2.45			1,356,204			35,206		2.60
Non-construction		7,900,887			98,210		1.24			7,838,668			110,700		1.41			7,634,082			109,377		1.43
Home equity		325,826			6,990		2.15			321,435			10,566		3.29			335,155			10,699		3.19
Residential real estate		2,078,907			10,479		0.50			1,799,985			9,429		0.52			1,637,099			8,782		0.54
Premium finance receivables
Commercial insurance loans		5,541,447			6,840		0.12			4,937,408			14,082		0.29			4,855,487			15,246		0.31
Life insurance loans		7,608,433			662		0.01			7,354,163			640		0.01			7,042,810			613		0.01
Consumer and other		44,180			487		1.10			48,519			634		1.31			24,199			423		1.75
Total loans, net of unearned income	$	37,053,103		$	312,109		0.84	%	$	35,280,547		$	301,168		0.85	%	$	34,789,104		$	299,653		0.86	%
Total loans, net of unearned income, excluding PPP loans	$	36,971,014		$	312,106		0.84	%	$	35,026,583		$	301,167		0.86	%	$	34,230,821		$	299,651		0.88	%
Total core loans(1)	$	20,994,470		$	275,188		1.31	%	$	20,084,782		$	262,447		1.31	%	$	19,599,090		$	260,511		1.33	%
Total niche loans(1)		15,976,544			36,918		0.23			14,941,801			38,720		0.26			14,631,731			39,140		0.27
Total PPP loans		82,089			3		0.00			253,964			1		0.00			558,283			2		0.00

 

(1)	See Table 1 for additional detail on core and niche loans.

TABLE 13: LOAN PORTFOLIO AGING

(In thousands)		Jun 30, 2022			Mar 31, 2022			Dec 31, 2021			Sep 30, 2021			Jun 30, 2021
Loan Balances:
Commercial
Nonaccrual		$	32,436		$	16,878		$	20,399		$	26,468		$	23,232
90+ days and still accruing			—			—			15			—			1,244
60-89 days past due			16,789			1,294			24,262			9,768			5,204
30-59 days past due			14,120			31,889			43,861			25,224			18,478
Current			11,983,760			11,533,902			11,815,531			11,126,512			11,394,118
Total commercial		$	12,047,105		$	11,583,963		$	11,904,068		$	11,187,972		$	11,442,276
Commercial real estate
Nonaccrual		$	10,718		$	12,301		$	21,746		$	23,706		$	26,035
90+ days and still accruing			—			—			—			—			—
60-89 days past due			6,771			2,648			284			5,395			4,382
30-59 days past due			34,220			30,141			40,443			79,818			19,698
Current			9,355,496			9,189,984			8,927,813			8,776,795			8,628,254
Total commercial real estate		$	9,407,205		$	9,235,074		$	8,990,286		$	8,885,714		$	8,678,369
Home equity
Nonaccrual		$	1,084		$	1,747		$	2,574		$	3,449		$	3,478
90+ days and still accruing			—			—			—			164			—
60-89 days past due			154			199			—			340			301
30-59 days past due			930			545			1,120			867			777
Current			323,658			318,944			331,461			342,842			365,250
Total home equity		$	325,826		$	321,435		$	335,155		$	347,662		$	369,806
Residential real estate
Early buy-out loans guaranteed by U.S. government agencies(1)		$	113,856		$	50,096			30,828		$	26,986		$	50,778
Nonaccrual			8,330			7,262			16,440			22,633			23,050
90+ days and still accruing			—			—			—			—			—
60-89 days past due			534			293			982			1,540			1,584
30-59 days past due			147			18,808			12,145			1,076			2,139
Current			1,956,040			1,723,526			1,576,704			1,495,501			1,452,734
Total residential real estate		$	2,078,907		$	1,799,985		$	1,637,099		$	1,547,736		$	1,530,285
Premium finance receivables
Nonaccrual		$	13,303		$	6,707		$	5,433		$	7,300		$	6,418
90+ days and still accruing			6,447			12,363			7,217			5,811			3,570
60-89 days past due			17,095			31,291			28,104			15,804			7,759
30-59 days past due			88,468			36,800			89,070			21,654			32,758
Current			13,024,567			12,204,410			11,768,473			11,221,861			10,830,922
Total premium finance receivables		$	13,149,880		$	12,291,571		$	11,898,297		$	11,272,430		$	10,881,427
Consumer and other
Nonaccrual		$	8		$	4		$	477		$	384		$	485
90+ days and still accruing			25			43			137			126			178
60-89 days past due			8			5			34			16			22
30-59 days past due			119			221			509			125			75
Current			44,020			48,246			23,042			21,878			8,264
Total consumer and other		$	44,180		$	48,519		$	24,199		$	22,529		$	9,024
Total loans, net of unearned income
Early buy-out loans guaranteed by U.S. government agencies(1)		$	113,856		$	50,096		$	30,828		$	26,986		$	50,778
Nonaccrual			65,879			44,899			67,069			83,940			82,698
90+ days and still accruing			6,472			12,406			7,369			6,101			4,992
60-89 days past due			41,351			35,730			53,666			32,863			19,252
30-59 days past due			138,004			118,404			187,148			128,764			73,925
Current			36,687,541			35,019,012			34,443,024			32,985,389			32,679,542
Total loans, net of unearned income		$	37,053,103		$	35,280,547		$	34,789,104		$	33,264,043		$	32,911,187

 

(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⁾ AND TROUBLED DEBT RESTRUCTURINGS (“TDRs”)

	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(Dollars in thousands)		2022				2022				2021				2021				2021
Loans past due greater than 90 days and still accruing(2):
Commercial	$	—			$	—			$	15			$	—			$	1,244
Commercial real estate		—				—				—				—				—
Home equity		—				—				—				164				—
Residential real estate		—				—				—				—				—
Premium finance receivables		6,447				12,363				7,217				5,811				3,570
Consumer and other		25				43				137				126				178
Total loans past due greater than 90 days and still accruing		6,472				12,406				7,369				6,101				4,992
Non-accrual loans:
Commercial		32,436				16,878				20,399				26,468				23,232
Commercial real estate		10,718				12,301				21,746				23,706				26,035
Home equity		1,084				1,747				2,574				3,449				3,478
Residential real estate		8,330				7,262				16,440				22,633				23,050
Premium finance receivables		13,303				6,707				5,433				7,300				6,418
Consumer and other		8				4				477				384				485
Total non-accrual loans		65,879				44,899				67,069				83,940				82,698
Total non-performing loans:
Commercial		32,436				16,878				20,414				26,468				24,476
Commercial real estate		10,718				12,301				21,746				23,706				26,035
Home equity		1,084				1,747				2,574				3,613				3,478
Residential real estate		8,330				7,262				16,440				22,633				23,050
Premium finance receivables		19,750				19,070				12,650				13,111				9,988
Consumer and other		33				47				614				510				663
Total non-performing loans	$	72,351			$	57,305			$	74,438			$	90,041			$	87,690
Other real estate owned		5,574				4,978				1,959				9,934				10,510
Other real estate owned - from acquisitions		1,265				1,225				2,312				3,911				5,062
Other repossessed assets		—				—				—				—				—
Total non-performing assets	$	79,190			$	63,508			$	78,709			$	103,886			$	103,262
Accruing TDRs not included within non-performing assets	$	36,184			$	35,922			$	37,486			$	38,468			$	44,019
Total non-performing loans by category as a percent of its own respective category’s period-end balance:
Commercial		0.27	%			0.15	%			0.17	%			0.24	%			0.21	%
Commercial real estate		0.11				0.13				0.24				0.27				0.30
Home equity		0.33				0.54				0.77				1.04				0.94
Residential real estate		0.40				0.40				1.00				1.46				1.51
Premium finance receivables		0.15				0.16				0.11				0.12				0.09
Consumer and other		0.07				0.10				2.54				2.26				7.35
Total loans, net of unearned income		0.20	%			0.16	%			0.21	%			0.27	%			0.27	%
Total non-performing assets as a percentage of total assets		0.16	%			0.13	%			0.16	%			0.22	%			0.22	%
Allowance for loan losses and unfunded lending-related commitments losses as a percentage of non-accrual loans		473.76	%			670.77	%			446.78	%			352.70	%			367.64	%

 

(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.
(2)	As of June 30, 2022, March 31, 2022, December 31, 2021, September 30, 2021, and June 30, 2021, approximately $541,000, $320,000, $320,000, $445,000 and $320,000, respectively, of TDRs were past due greater than 90 days and still accruing interest.

Non-performing Loans Rollforward, excluding early buy-out loans guaranteed by U.S. government agencies

	Three Months Ended																			Six Months Ended
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,			Jun 30,				Jun 30,
(In thousands)		2022				2022				2021				2021				2021			2022				2021
Balance at beginning of period	$	57,305			$	74,438			$	90,041			$	87,690			$	99,059		$	74,438			$	127,513
Additions from becoming non-performing in the respective period		22,841				4,141				6,851				9,341				12,762			26,982				22,656
Return to performing status		(1,000	)			(729	)			(6,616	)			(3,322	)			—			(1,729	)			(654	)
Payments received		(4,029	)			(20,139	)			(13,212	)			(5,568	)			(12,312	)		(24,168	)			(35,043	)
Transfer to OREO and other repossessed assets		(1,611	)			(4,377	)			(275	)			(720	)			(3,660	)		(5,988	)			(5,032	)
Charge-offs, net		(1,969	)			(2,354	)			(5,167	)			(548	)			(4,684	)		(4,323	)			(7,636	)
Net change for niche loans(1)		814				6,325				2,816				3,168				(3,475	)		7,139				(14,114	)
Balance at end of period	$	72,351			$	57,305			$	74,438			$	90,041			$	87,690		$	72,351			$	87,690

 

(1)	This includes activity for premium finance receivables and indirect consumer loans.

TDRs

	Jun 30,			Mar 31,			Dec 31,			Sep 30,			Jun 30,
(In thousands)	2022			2022			2021			2021			2021
Accruing TDRs:
Commercial	$	2,456		$	2,773		$	4,131		$	4,532		$	6,911
Commercial real estate		9,659			10,068			8,421			8,385			9,659
Residential real estate and other		24,069			23,081			24,934			25,551			27,449
Total accrual	$	36,184		$	35,922		$	37,486		$	38,468		$	44,019
Non-accrual TDRs:(1)
Commercial	$	4,786		$	4,935		$	6,746		$	3,079		$	4,104
Commercial real estate		1,955			2,050			2,050			3,239			3,434
Residential real estate and other		2,453			1,964			3,027			3,685			4,190
Total non-accrual	$	9,194		$	8,949		$	11,823		$	10,003		$	11,728
Total TDRs:
Commercial	$	7,242		$	7,708		$	10,877		$	7,611		$	11,015
Commercial real estate		11,614			12,118			10,471			11,624			13,093
Residential real estate and other		26,522			25,045			27,961			29,236			31,639
Total TDRs	$	45,378		$	44,871		$	49,309		$	48,471		$	55,747

 

(1)	Included in total non-performing loans.

Other Real Estate Owned

	Three Months Ended
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(In thousands)		2022				2022				2021				2021				2021
Balance at beginning of period	$	6,203			$	4,271			$	13,845			$	15,572			$	15,813
Disposals/resolved		(1,172	)			(2,497	)			(9,664	)			(1,949	)			(3,152	)
Transfers in at fair value, less costs to sell		2,090				4,429				275				315				3,660
Fair value adjustments		(282	)			—				(185	)			(93	)			(749	)
Balance at end of period	$	6,839			$	6,203			$	4,271			$	13,845			$	15,572
	Period End
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
Balance by Property Type:		2022				2022				2021				2021				2021
Residential real estate	$	1,630			$	1,127			$	1,310			$	1,592			$	1,952
Residential real estate development		133				—				—				934				1,030
Commercial real estate		5,076				5,076				2,961				11,319				12,590
Total	$	6,839			$	6,203			$	4,271			$	13,845			$	15,572

TABLE 15: NON-INTEREST INCOME

	Three Months Ended																				Q2 2022 compared to Q1 2022							Q2 2022 compared to Q2 2021
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,
(Dollars in thousands)		2022				2022				2021				2021				2021			$ Change				% Change			$ Change				% Change
Brokerage	$	4,272			$	4,632			$	5,292			$	5,230			$	5,148			$	(360	)		(8)	%		$	(876	)		(17)	%
Trust and asset management		27,097				26,762				27,197				26,301				25,542				335			1				1,555			6
Total wealth management		31,369				31,394				32,489				31,531				30,690				(25	)		—				679			2
Mortgage banking		33,314				77,231				53,138				55,794				50,584				(43,917	)		(57	)			(17,270	)		(34	)
Service charges on deposit accounts		15,888				15,283				14,734				14,149				13,249				605			4				2,639			20
(Losses) gains on investment securities, net		(7,797	)			(2,782	)			(1,067	)			(2,431	)			1,285				(5,015	)		NM				(9,082	)		NM
Fees from covered call options		1,069				3,742				1,128				1,157				1,388				(2,673	)		(71	)			(319	)		(23	)
Trading gains (losses), net		176				3,889				206				58				(438	)			(3,713	)		(95	)			614			NM
Operating lease income, net		15,007				15,475				14,204				12,807				12,240				(468	)		(3	)			2,767			23
Other:
Interest rate swap fees		3,300				4,569				3,526				4,868				2,820				(1,269	)		(28	)			480			17
BOLI		(884	)			48				1,192				2,154				1,342				(932	)		NM				(2,226	)		NM
Administrative services		1,591				1,853				1,846				1,359				1,228				(262	)		(14	)			363			30
Foreign currency remeasurement gains (losses)		97				11				111				77				(782	)			86			NM				879			NM
Early pay-offs of capital leases		160				265				249				209				195				(105	)		(40	)			(35	)		(18	)
Miscellaneous		9,652				11,812				12,011				14,742				15,572				(2,160	)		(18	)			(5,920	)		(38	)
Total Other		13,916				18,558				18,935				23,409				20,375				(4,642	)		(25	)			(6,459	)		(32	)
Total Non-Interest Income	$	102,942			$	162,790			$	133,767			$	136,474			$	129,373			$	(59,848	)		(37)	%		$	(26,431	)		(20)	%

NM - Not meaningful.

	Six Months Ended
	Jun 30,				Jun 30,				$				%
(Dollars in thousands)		2022				2021			Change				Change
Brokerage	$	8,904			$	10,188			$	(1,284	)		(13)	%
Trust and asset management		53,859				49,811				4,048			8
Total wealth management		62,763				59,999				2,764			5
Mortgage banking		110,545				164,078				(53,533	)		(33	)
Service charges on deposit accounts		31,171				25,285				5,886			23
(Losses) gains on investment securities, net		(10,579	)			2,439				(13,018	)		NM
Fees from covered call options		4,811				1,388				3,423			NM
Trading gains (losses), net		4,065				(19	)			4,084			NM
Operating lease income, net		30,482				26,680				3,802			14
Other:
Interest rate swap fees		7,869				5,308				2,561			48
BOLI		(836	)			2,466				(3,302	)		NM
Administrative services		3,444				2,484				960			39
Foreign currency remeasurement gains (losses)		108				(683	)			791			NM
Early pay-offs of leases		425				143				282			NM
Miscellaneous		21,464				26,311				(4,847	)		(18	)
Total Other		32,474				36,029				(3,555	)		(10	)
Total Non-Interest Income	$	265,732			$	315,879			$	(50,147	)		(16)	%

NM - Not meaningful.

TABLE 16: MORTGAGE BANKING

	Three Months Ended																			Six Months Ended
(Dollars in thousands)	Jun 30, 2022				Mar 31, 2022				Dec 31, 2021				Sep 30, 2021				Jun 30, 2021			Jun 30, 2022				Jun 30, 2021
Originations:
Retail originations	$	595,601			$	647,785			$	980,627			$	1,153,265			$	1,328,721		$	1,243,386			$	2,970,385
Veterans First originations		225,378				247,738				318,244				405,663				395,290			473,116				975,593
Total originations for sale (A)	$	820,979			$	895,523			$	1,298,871			$	1,558,928			$	1,724,011		$	1,716,502			$	3,945,978
Originations for investment		297,713				274,628				177,676				181,886				249,749			572,341				571,607
Total originations	$	1,118,692			$	1,170,151			$	1,476,547			$	1,740,814			$	1,973,760		$	2,288,843			$	4,517,585
Retail originations as percentage of originations for sale		73	%			72	%			75	%			74	%			77	%		72	%			75	%
Veterans First originations as a percentage of originations for sale		27				28				25				26				23			28				25
Purchases as a percentage of originations for sale		78	%			53	%			52	%			56	%			53	%		65	%			38	%
Refinances as a percentage of originations for sale		22				47				48				44				47			35				62
Production Margin:
Production revenue (B)(1)	$	17,511			$	14,585			$	28,182			$	39,247			$	37,531		$	32,096			$	108,813
Total originations for sale (A)	$	820,979			$	895,523			$	1,298,871			$	1,558,928			$	1,724,011		$	1,716,502			$	3,945,978
Add: Current period end mandatory interest rate lock commitments to fund originations for sale(2)		301,322				330,196				353,509				510,982				605,400			301,322				605,400
Less: Prior period end mandatory interest rate lock commitments to fund originations for sale(2)		330,196				353,509				510,982				605,400				798,534			353,509				1,072,717
Total mortgage production volume (C)	$	792,105			$	872,210			$	1,141,398			$	1,464,510			$	1,530,877		$	1,664,315			$	3,478,661
Production margin (B / C)		2.21	%			1.67	%			2.47	%			2.68	%			2.45	%		1.93	%			3.13	%
Mortgage Servicing:
Loans serviced for others (D)	$	13,643,623			$	13,426,535			$	13,126,254			$	12,720,126			$	12,307,337
MSRs, at fair value (E)		212,664				199,146				147,571				133,552				127,604
Percentage of MSRs to loans serviced for others (E / D)		1.56	%			1.48	%			1.12	%			1.05	%			1.04	%
Servicing income	$	10,979			$	10,851			$	10,766			$	10,454			$	9,830		$	21,830			$	19,466
Components of MSR:
MSR - current period capitalization	$	11,210			$	14,401			$	15,080			$	15,546			$	17,512		$	25,611			$	42,128
MSR - collection of expected cash flows - paydowns		(1,598	)			(1,215	)			(1,101	)			(1,036	)			(991	)		(2,813	)			(1,719	)
MSR - collection of expected cash flows - payoffs		(5,240	)			(4,801	)			(6,385	)			(7,558	)			(7,549	)		(10,041	)			(16,989	)
MSR - changes in fair value model assumptions		9,147				43,365				6,656				(888	)			(5,540	)		52,512				12,505
Summary of Mortgage Banking Revenue:
Production revenue(1)	$	17,511			$	14,585			$	28,182			$	39,247			$	37,531		$	32,096			$	108,813
Servicing income		10,979				10,851				10,766				10,454				9,830			21,830				19,466
MSR activity		13,519				51,750				14,250				6,064				3,432			65,269				35,925
Changes in fair value on early buy-out loans guaranteed by U.S. government agencies and other revenue		(8,695	)			45				(60	)			29				(209	)		(8,650	)			(126	)
Total mortgage banking revenue	$	33,314			$	77,231			$	53,138			$	55,794			$	50,584		$	110,545			$	164,078

 

(1)

Production revenue represents revenue earned from the origination and subsequent sale of mortgages, including gains on loans sold and fees from originations, changes in other related financial instruments carried at fair value, processing and other related activities, and excludes servicing fees, changes in the fair value of servicing rights and changes to the mortgage recourse obligation and other non-production revenue.

(2)

Certain volume adjusted for the estimated pull-through rate of the loan, which represents the Company’s best estimate of the likelihood that a committed loan will ultimately fund.

TABLE 17: NON-INTEREST EXPENSE

	Three Months Ended																		Q2 2022 compared to Q1 2022							Q2 2022 compared to Q2 2021
	Jun 30,			Mar 31,				Dec 31,				Sep 30,				Jun 30,
(Dollars in thousands)		2022			2022				2021				2021				2021		$ Change				% Change			$ Change				% Change
Salaries and employee benefits:
Salaries	$	92,414		$	92,116			$	91,612			$	88,161			$	91,089		$	298			0	%		$	1,325			1	%
Commissions and incentive compensation		46,131			51,793				49,923				57,026				53,751			(5,662	)		(11	)			(7,620	)		(14	)
Benefits		28,781			28,446				25,596				25,725				27,977			335			1				804			3
Total salaries and employee benefits		167,326			172,355				167,131				170,912				172,817			(5,029	)		(3	)			(5,491	)		(3	)
Software and equipment		24,250			22,810				23,708				22,029				20,866			1,440			6				3,384			16
Operating lease equipment depreciation		8,774			9,708				10,147				10,013				9,949			(934	)		(10	)			(1,175	)		(12	)
Occupancy, net		17,651			17,824				18,343				18,158				17,687			(173	)		(1	)			(36	)		0
Data processing		8,010			7,505				7,207				7,104				6,920			505			7				1,090			16
Advertising and marketing		16,615			11,924				13,981				13,443				11,305			4,691			39				5,310			47
Professional fees		7,876			8,401				7,551				7,052				7,304			(525	)		(6	)			572			8
Amortization of other acquisition-related intangible assets		1,579			1,609				1,811				1,877				2,039			(30	)		(2	)			(460	)		(23	)
FDIC insurance		6,949			7,729				7,317				6,750				6,405			(780	)		(10	)			544			8
OREO expense, net		294			(1,032	)			(641	)			(1,531	)			769			1,326			NM				(475	)		(62	)
Other:
Lending expenses, net of deferred originations costs		4,270			6,821				5,525				5,999				6,717			(2,551	)		(37	)			(2,447	)		(36	)
Travel and entertainment		3,897			2,676				3,782				3,668				1,918			1,221			46				1,979			NM
Miscellaneous		21,177			15,968				17,537				16,670				15,416			5,209			33				5,761			37
Total other		29,344			25,465				26,844				26,337				24,051			3,879			15				5,293			22
Total Non-Interest Expense	$	288,668		$	284,298			$	283,399			$	282,144			$	280,112		$	4,370			2	%		$	8,556			3	%

NM - Not meaningful.

		Six Months Ended
		Jun 30,				Jun 30,		$				%
(Dollars in thousands)			2022				2021	Change				Change
Salaries and employee benefits:
Salaries		$	184,530			$	182,142	$	2,388			1	%
Commissions and incentive compensation			97,924				115,118		(17,194	)		(15	)
Benefits			57,227				56,366		861			2
Total salaries and employee benefits			339,681				353,626		(13,945	)		(4	)
Software and equipment			47,060				41,778		5,282			13
Operating lease equipment depreciation			18,482				20,720		(2,238	)		(11	)
Occupancy, net			35,475				37,683		(2,208	)		(6	)
Data processing			15,515				12,968		2,547			20
Advertising and marketing			28,539				19,851		8,688			44
Professional fees			16,277				14,891		1,386			9
Amortization of other acquisition-related intangible assets			3,188				4,046		(858	)		(21	)
FDIC insurance			14,678				12,963		1,715			13
OREO expense, net			(738	)			518		(1,256	)		NM
Other:
Lending expenses, net of deferred originations costs			11,091				11,270		(179	)		(2	)
Travel and entertainment			6,573				2,598		3,975			NM
Miscellaneous			37,145				34,089		3,056			9
Total other			54,809				47,957		6,852			14
Total Non-Interest Expense		$	572,966			$	567,001	$	5,965			1	%

NM - Not meaningful.

TABLE 18: 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, pre-tax income, excluding provision for credit losses, and pre-tax income, excluding provision for credit losses, adjusted for changes in fair value of MSRs and early buy-out loans guaranteed by U.S. government agencies. 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, and pre-tax income, excluding provision for credit losses, adjusted for changes in fair value of MSRs and early buy-out loans guaranteed by U.S. government agencies, as useful measurements of the Company’s core net income.

	Three Months Ended																			Six Months Ended
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,			Jun 30,				Jun 30,
(Dollars and shares in thousands)		2022				2022				2021				2021				2021			2022				2021
Reconciliation of Non-GAAP Net Interest Margin and Efficiency Ratio:
(A) Interest Income (GAAP)	$	371,968			$	328,252			$	327,979			$	322,457			$	319,579		$	700,220			$	625,048
Taxable-equivalent adjustment:
- Loans		568				427				417				411				415			995				799
- Liquidity Management Assets		472				465				486				492				494			937				994
- Other Earning Assets		1				2				2				—				—			3				—
(B) Interest Income (non-GAAP)	$	373,009			$	329,146			$	328,884			$	323,360			$	320,488		$	702,155			$	626,841
(C) Interest Expense (GAAP)		34,164				28,958				32,003				34,961				39,989			63,122				83,563
(D) Net Interest Income (GAAP) (A minus C)	$	337,804			$	299,294			$	295,976			$	287,496			$	279,590		$	637,098			$	541,485
(E) Net Interest Income (non-GAAP) (B minus C)	$	338,845			$	300,188			$	296,881			$	288,399			$	280,499		$	639,033			$	543,278
Net interest margin (GAAP)		2.92	%			2.60	%			2.54	%			2.58	%			2.62	%		2.76	%			2.58	%
Net interest margin, fully taxable-equivalent (non-GAAP)		2.93				2.61				2.55				2.59				2.63			2.77				2.59
(F) Non-interest income	$	102,942			$	162,790			$	133,767			$	136,474			$	129,373		$	265,732			$	315,879
(G) (Losses) gains on investment securities, net		(7,797	)			(2,782	)			(1,067	)			(2,431	)			1,285			(10,579	)			2,439
(H) Non-interest expense		288,668				284,298				283,399				282,144				280,112			572,966				567,001
Efficiency ratio (H/(D+F-G))		64.36	%			61.16	%			65.78	%			66.17	%			68.71	%		62.73	%			66.32	%
Efficiency ratio (non-GAAP) (H/(E+F-G))		64.21				61.04				65.64				66.03				68.56			62.60				66.18
Reconciliation of Non-GAAP Tangible Common Equity Ratio:
Total shareholders’ equity (GAAP)	$	4,727,623			$	4,492,256			$	4,498,688			$	4,410,317			$	4,339,011
Less: Non-convertible preferred stock (GAAP)		(412,500	)			(412,500	)			(412,500	)			(412,500	)			(412,500	)
Less: Intangible assets (GAAP)		(679,827	)			(682,101	)			(683,456	)			(675,910	)			(678,333	)
(I) Total tangible common shareholders’ equity (non-GAAP)	$	3,635,296			$	3,397,655			$	3,402,732			$	3,321,907			$	3,248,178
(J) Total assets (GAAP)	$	50,969,332			$	50,250,661			$	50,142,143			$	47,832,271			$	46,738,450
Less: Intangible assets (GAAP)		(679,827	)			(682,101	)			(683,456	)			(675,910	)			(678,333	)
(K) Total tangible assets (non-GAAP)	$	50,289,505			$	49,568,560			$	49,458,687			$	47,156,361			$	46,060,117
Common equity to assets ratio (GAAP) (L/J)		8.5	%			8.1	%			8.1	%			8.4	%			8.4	%
Tangible common equity ratio (non-GAAP) (I/K)		7.2				6.9				6.9				7.0				7.1

 

	Three Months Ended																			Six Months Ended
	Jun 30,				Mar 31,				Dec 31,				Sep 30,				Jun 30,			Jun 30,				Jun 30,
(Dollars and shares in thousands)		2022				2022				2021				2021				2021			2022				2021
Reconciliation of Non-GAAP Tangible Book Value per Common Share:
Total shareholders’ equity	$	4,727,623			$	4,492,256			$	4,498,688			$	4,410,317			$	4,339,011
Less: Preferred stock		(412,500	)			(412,500	)			(412,500	)			(412,500	)			(412,500	)
(L) Total common equity	$	4,315,123			$	4,079,756			$	4,086,188			$	3,997,817			$	3,926,511
(M) Actual common shares outstanding		60,722				57,253				57,054				56,956				57,067
Book value per common share (L/M)	$	71.06			$	71.26			$	71.62			$	70.19			$	68.81
Tangible book value per common share (non-GAAP) (I/M)		59.87				59.34				59.64				58.32				56.92
Reconciliation of Non-GAAP Return on Average Tangible Common Equity:
(N) Net income applicable to common shares	$	87,522			$	120,400			$	91,766			$	102,146			$	98,118		$	207,922			$	244,275
Add: Intangible asset amortization		1,579				1,609				1,811				1,877				2,039			3,188				4,046
Less: Tax effect of intangible asset amortization		(445	)			(430	)			(505	)			(509	)			(553	)		(870	)			(1,068	)
After-tax intangible asset amortization	$	1,134			$	1,179			$	1,306			$	1,368			$	1,486		$	2,318			$	2,978
(O) Tangible net income applicable to common shares (non-GAAP)	$	88,656			$	121,579			$	93,072			$	103,514			$	99,604		$	210,240			$	247,253
Total average shareholders’ equity	$	4,526,110			$	4,500,460			$	4,433,953			$	4,343,915			$	4,256,778		$	4,513,356			$	4,211,088
Less: Average preferred stock		(412,500	)			(412,500	)			(412,500	)			(412,500	)			(412,500	)		(412,500	)			(412,500	)
(P) Total average common shareholders’ equity	$	4,113,610			$	4,087,960			$	4,021,453			$	3,931,415			$	3,844,278		$	4,100,856			$	3,798,588
Less: Average intangible assets		(681,091	)			(682,603	)			(677,470	)			(677,201	)			(679,535	)		(681,843	)			(680,166	)
(Q) Total average tangible common shareholders’ equity (non-GAAP)	$	3,432,519			$	3,405,357			$	3,343,983			$	3,254,214			$	3,164,743		$	3,419,013			$	3,118,422
Return on average common equity, annualized (N/P)		8.53	%			11.94	%			9.05	%			10.31	%			10.24	%		10.22	%			12.97	%
Return on average tangible common equity, annualized (non-GAAP) (O/Q)		10.36				14.48				11.04				12.62				12.62			12.40				15.99
Reconciliation of Non-GAAP Pre-Tax, Pre-Provision Income, Adjusted for Changes in Fair Value of MSRs and Early Buy-out Loans Guaranteed by U.S. Government Agencies:
Income before taxes	$	131,661			$	173,680			$	137,045			$	149,742			$	144,150		$	305,341			$	351,009
Add: Provision for credit losses		20,417				4,106				9,299				(7,916	)			(15,299	)		24,523				(60,646	)
Pre-tax income, excluding provision for credit losses (non-GAAP)	$	152,078			$	177,786			$	146,344			$	141,826			$	128,851		$	329,864			$	290,363
Less: Changes in fair value of MSRs and early buy-out loans guaranteed by U.S. government agencies		(445	)			(43,365	)			(6,656	)			888				5,540			(43,810	)			(12,505	)
Pre-tax income, excluding provision for credit losses, adjusted for changes in fair value of MSRs and early buy-out loans guaranteed by U.S. government agencies (non-GAAP)	$	151,633			$	134,421			$	139,688			$	142,714			$	134,391		$	286,054			$	277,858

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, Crete, Countryside, Darien, Deerfield, Des Plaines, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Evanston, Evergreen Park, Frankfort, Geneva, Glen Ellyn, Glencoe, Glenview, Gurnee, Grayslake, Hanover Park, Highland Park, Highwood, Hoffman Estates, Homer Glen, Itasca, Joliet, Lake Bluff, Lake Villa, Lansing, Lemont, Lindenhurst, Lynwood, Markham, Maywood, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, Northfield, Norridge, Oak Lawn, Oak Park, Orland Park, Palatine, Park Ridge, Prospect Heights, Riverside, Rockford, Rolling Meadows, Round Lake Beach, Shorewood, Skokie, South Holland, Spring Grove, Steger, Stone Park, Vernon Hills, Wauconda, Waukegan, Western Springs, Willowbrook, Wilmette, Winnetka and Wood Dale, and in Wisconsin in Burlington, Clinton, Delafield, Delavan, Elm Grove, Genoa City, Kenosha, Lake Geneva, Madison, Menomonee Falls, Milwaukee, Pewaukee, Racine, Wales, Walworth, Whitefish Bay and Wind Lake, and in Dyer, Indiana and in Naples, Florida.

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, such as the impacts of the COVID-19 pandemic (including the continued emergence of variant strains), and which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company’s 2021 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, and management’s long-term performance goals, as well as statements relating to the anticipated effects on financial condition and results of operations from expected developments or events, 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. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:

• 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 our operations and personnel, commercial activity and demand across our business and our customers’ businesses;
• the disruption of global, national, state and local economies associated with the COVID-19 pandemic, which could affect the Company’s liquidity and capital positions, impair the ability of our borrowers to repay outstanding loans, impair collateral values and further increase our allowance for credit losses;
• the impact of the COVID-19 pandemic on our financial results, including possible lost revenue and increased expenses (including the cost of capital), as well as possible goodwill impairment charges;
• 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, 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 (including developments and volatility arising from or related to the COVID-19 pandemic) 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 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;
• 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;
• 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;
• uncertainty about the discontinued use of LIBOR and transition to an alternative rate;
• 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, including those changes that are in response to the COVID-19 pandemic, including without limitation the Coronavirus Aid, Relief, and Economic Security Act, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act, and the rules and regulations that may be promulgated thereunder;
• 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 the COVID-19 pandemic, 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; and
• 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.

Therefore, there can be no assurances that future actual results will correspond to these forward-looking statements. The reader is cautioned not to place undue reliance on any forward-looking statement made by the Company. Any such statement speaks only as of the date the statement was made or as of such date that may be referenced within the statement. The Company undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events after the date of the press release. Persons are advised, however, to consult further disclosures management makes on related subjects in its reports filed with the Securities and Exchange Commission and in its press releases.

CONFERENCE CALL, WEBCAST AND REPLAY

The Company will hold a conference call on Thursday, July 21, 2022 at 10:00 a.m. (Central Time) regarding second quarter and year-to-date 2022 earnings results. Individuals interested in participating in the call by addressing questions to management should register for the call to receive the dial-in numbers and unique PIN at the link included within the Company’s press release dated July 6, 2022 available at the Investor Relations, Investor News and Events, Press Releases link on its website at https://www.wintrust.com. A separate simultaneous audio-only webcast link is included within the press release referenced above. Registration for and a replay of the audio-only webcast with an accompanying slide presentation will be available at https://www.wintrust.com, Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the second quarter and year-to-date 2022 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:
Edward J. Wehmer, Founder & Chief Executive Officer
David A. Dykstra, Vice Chairman & Chief Operating Officer
(847) 939-9000
Web site address: www.wintrust.com

 

FAQ

What was Wintrust Financial Corporation's net income for Q2 2022?

Wintrust Financial Corporation reported a net income of $94.5 million for Q2 2022.

How much did loans increase for Wintrust Financial in Q2 2022?

Total loans, excluding PPP loans, increased by $1.9 billion, or 22% annualized.

What was the decline in mortgage banking revenue for Wintrust in Q2 2022?

Mortgage banking revenue decreased to $33.3 million in Q2 2022 from $77.2 million in Q1 2022.

How did Wintrust Financial's net interest income change in Q2 2022?

Net interest income increased by $38.5 million in Q2 2022.

What was the provision for credit losses reported by Wintrust in Q2 2022?

The provision for credit losses totaled $20.4 million in Q2 2022.