Wintrust Financial Corporation Reports Record First Quarter 2024 Net Income


ROSEMONT, Ill., April 17, 2024 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust”, “the Company”, “we” or “our”) (Nasdaq: WTFC) announced record quarterly net income of $187.3 million or $2.89 per diluted common share for the first quarter of 2024, an increase in diluted earnings per common share of 55% compared to the fourth quarter of 2023. Pre-tax, pre-provision income (non-GAAP) totaled a record $271.6 million, up 30% as compared to $208.2 million in the fourth quarter of 2023.

Timothy S. Crane, President and Chief Executive Officer, commented, “Following record net income in 2023, we continued our momentum with strong results to start 2024. We leveraged our balanced, multi-faceted business model and position as Chicago’s and Wisconsin’s bank to grow deposits and loans while maintaining our consistent credit standards coupled with expense management.”

Additionally, Mr. Crane noted, “The first quarter exhibited funding strong loan growth with competitively-priced deposits in accordance with the increased loan demand. Increasing our long-term franchise value and net interest income remains our focus as we consider opportunities in the markets we serve.”

Highlights of the first quarter of 2024:
Comparative information to the fourth quarter of 2023, unless otherwise noted

  • Total loans increased by approximately $1.1 billion, or 10% annualized.
  • Total deposits increased by approximately $1.1 billion, or 9% annualized.
  • Total assets increased by $1.3 billion, or 9% annualized.
  • Net interest margin decreased by five basis points to 3.57% (3.59% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2024.
    • Net interest income decreased to $464.2 million in the first quarter of 2024 compared to $470.0 million in the fourth quarter of 2023, primarily due to one less day in the first quarter of 2024.
  • Non-interest income was impacted by the following:
    • Gains of approximately $20.0 million from the sale of the Company’s Retirement Benefits Advisors (“RBA”) division. This gain was partially offset by additional commissions and incentive compensation totaling $701,000 related to the sale transaction.
    • Favorable net valuation adjustments related to certain mortgage assets totaled $2.3 million in the first quarter of 2024 compared to unfavorable net valuation adjustments of $9.7 million in the fourth quarter of 2023.
  • Non-interest expense was negatively impacted by an accrual of $5.2 million for estimated amounts owed as a result of the FDIC special assessment on uninsured deposits in response to certain bank failures occurring in 2023. This is in addition to the related $34.4 million accrued in the fourth quarter of 2023 for the estimate of such FDIC special assessments.
  • Provision for credit losses totaled $21.7 million in the first quarter of 2024 as compared to a provision for credit losses of $42.9 million in the fourth quarter of 2023.
  • Net charge-offs totaled $21.8 million, or 21 basis points of average total loans on an annualized basis, in the first quarter of 2024 as compared to $14.9 million, or 14 basis points of average total loans on an annualized basis in the fourth quarter of 2023.

Mr. Crane noted, “Our net interest margin for the first quarter stayed within our expected range, decreasing by five basis points compared to the fourth quarter of 2023. The decrease in net interest margin was due primarily to certain seasonal declines in non-interest bearing deposit balances, deposit migration to interest-bearing products and competitive deposit pricing to fund quality loan growth. Loan growth during the first quarter totaled $1.1 billion, or 10% on an annualized basis. We are pleased with our diversified loan growth in the first quarter with strong loan origination activity in commercial and residential real estate portfolios, as well as growth in commercial real estate driven primarily by draws on existing loan facilities. Deposit growth in the first quarter of 2024 was utilized to fund our robust loan growth as deposits increased by approximately $1.1 billion, or 9% on an annualized basis. We continue to leverage our customer relationships and market positioning to generate deposits and build long term franchise value. Non-interest bearing deposits decreased due to seasonality during the first quarter while also experiencing some migration to interest-bearing products. Despite the slightly lower net interest income during the current period, we generated record quarterly net revenue through our diversified sources of revenue, including our mortgage banking and wealth management businesses.”

Commenting on credit quality, Mr. Crane stated, “Credit metrics have remained steady, aligning with historical averages. Net charge-offs totaled $21.8 million, or 21 basis points of average total loans on an annualized basis, in the first quarter of 2024 as compared to $14.9 million, or 14 basis points of average total loans on an annualized basis, in the fourth quarter of 2023. Approximately $11.9 million of charge-offs in the current quarter were previously reserved for in the fourth quarter of 2023 Non-performing loans totaled $148.4 million, or 0.34% of total loans, at the end of the first quarter of 2024 compared to $139.0 million, or 0.33% of total loans, at the end of the fourth quarter of 2023. We continue to conservatively and proactively review credit and maintain our consistently strong credit standards. The allowance for credit losses on our core loan portfolio as of March 31, 2024 was approximately 1.51% of the outstanding balance (see Table 11 for additional information). We believe that the Company’s reserves remain appropriate and we remain diligent in our review of credit.”

Mr. Crane added, “Late loan growth in the first quarter creates positive revenue momentum moving forward as period-end loan balances exceeded averages. We continue to see good opportunities in the markets we serve and feel well positioned to grow deposit and loan relationships in future quarters. Our focus remains on winning business and maximizing long term franchise value.”

In summary, Mr. Crane noted, “The quarter was strong, momentum remains good and we are excited about the agreement reached to acquire Macatawa Bank Corporation in Michigan (announced April 15, 2024). The ability to expand with a high quality bank with a strong low-cost core deposit base, excess liquidity, exceptional asset quality and a committed management team is a terrific fit for Wintrust.”

The graphs below illustrate certain financial highlights of the first quarter of 2024 as well as historical financial performance. See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 16 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/813fc027-da7e-4253-a341-e3d12f08e2d6

SUMMARY OF RESULTS:

BALANCE SHEET

Total assets increased $1.3 billion in the first quarter of 2024 as compared to the fourth quarter of 2023. Total loans increased by $1.1 billion as compared to the fourth quarter of 2023. The increase in loans was the result of diversified loan growth primarily across the commercial and residential real estate portfolios coupled with draws on existing commercial real-estate loan facilities.

Total liabilities increased by $1.3 billion in the first quarter of 2024 as compared to the fourth quarter of 2023 primarily due to a $1.1 billion increase in total deposits. Non-interest bearing deposits as a percentage of total deposits was 21% at March 31, 2024 compared to 23% at December 31, 2023. The Company's loans to deposits ratio ended the quarter at 93.1%.

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

NET INTEREST INCOME

For the first quarter of 2024, net interest income totaled $464.2 million, a decrease of $5.8 million as compared to the fourth quarter of 2023. The $5.8 million decrease in net interest income in the first quarter of 2024 compared to the fourth quarter of 2023 was primarily due to one less day during the period as well as a five basis point decrease in the net interest margin, partially offset by a $755.8 million increase in average earning assets.

Net interest margin was 3.57% (3.59% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2024 compared to 3.62% (3.64% on a fully taxable-equivalent basis, non-GAAP) during the fourth quarter of 2023. The net interest margin decrease as compared to the fourth quarter of 2023 was primarily due to a 15 basis point increase in the rate paid on interest-bearing liabilities. This decrease was partially offset by a nine basis point increase in yield on earning assets and a one basis point increase in the net free funds contribution. The 15 basis point increase on the rate paid on interest-bearing liabilities in the first quarter of 2024 as compared to the fourth quarter of 2023 was primarily due to a 16 basis point increase in the rate paid on interest-bearing deposits. The nine basis point increase in the yield on earning assets in the first quarter of 2024 as compared to the fourth quarter of 2023 was primarily due to an 11 basis point expansion on loan yields.

For more information regarding net interest income, see Table 4 through Table 7 in this report.

ASSET QUALITY

The allowance for credit losses totaled $427.5 million as of March 31, 2024, relatively unchanged compared to $427.6 million as of December 31, 2023. A provision for credit losses totaling $21.7 million was recorded for the first quarter of 2024 as compared to $42.9 million recorded in the fourth quarter of 2023. For more information regarding the allowance for credit losses and provision for credit losses, see Table 10 in this report.

Management believes the allowance for credit losses is appropriate to account for expected credit losses. The Current Expected Credit Losses 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 March 31, 2024, December 31, 2023, and September 30, 2023 is shown on Table 11 of this report.

Net charge-offs totaled $21.8 million in the first quarter of 2024, as compared to $14.9 million of net charge-offs in the fourth quarter of 2023. The increase in net charge-offs during the first quarter of 2024 was primarily the result of increased net charge-offs within the commercial portfolio. Net charge-offs as a percentage of average total loans were 21 basis points in the first quarter of 2024 on an annualized basis compared to 14 basis points on an annualized basis in the fourth quarter of 2023. For more information regarding net charge-offs, see Table 9 in this report.

The Company’s delinquency rates remain low and manageable. For more information regarding past due loans, see Table 12 in this report.

Non-performing assets totaled $162.9 million and comprised 0.28% of total assets as of March 31, 2024, as compared to $152.3 million as of December 31, 2023. Non-performing loans totaled $148.4 million, or 0.34% of total loans, at March 31, 2024. The increase in the first quarter of 2024 was primarily due to an increase in certain credits within the commercial real estate portfolio becoming nonaccrual as well as increases within the property and casualty insurance premium finance receivables portfolio, partially offset by a decrease within the commercial portfolio. For more information regarding non-performing assets, see Table 13 in this report.

Though these credit metrics increased during the period, net charge-offs as a percentage of average total loans and non-performing loans as a percentage of total loans remained at historically low levels in the first quarter of 2024.

NON-INTEREST INCOME

Wealth management revenue increased by $1.5 million in the first quarter of 2024 as compared to the fourth quarter of 2023 primarily due to increased asset management fees from higher assets under management during the period. Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors, the brokerage commissions, managed money fees and insurance product commissions at Wintrust Investments and fees from tax-deferred like-kind exchange services provided by the Chicago Deferred Exchange Company.

Mortgage banking revenue increased by $20.2 million in the first quarter of 2024 as compared to the fourth quarter of 2023 primarily due to a $5.0 million favorable valuation adjustment to the fair value of mortgage servicing rights, net of servicing hedge, in the first quarter of 2024 compared to a $16.1 million unfavorable adjustment in the fourth quarter of 2023, as well as $6.6 million higher in production revenue. This was partially offset by an unfavorable adjustment to the Company’s held-for-sale portfolio of early buy-out exercised loans guaranteed by U.S. government agencies, which are held at fair value, of $2.2 million in the first quarter of 2024 compared to a $4.9 million favorable adjustment in the fourth quarter of 2023. The Company monitors the relationship of these assets and seeks to minimize the earnings impact of fair value changes.

The Company recognized $1.3 million in net gains on investment securities in the first quarter of 2024 as compared to $2.5 million in net gains in the fourth quarter of 2023. The change from period to period was primarily the result of lower unrealized gains on the Company’s equity investment securities with a readily determinable fair value, partially offset by higher realized gains from the liquidation of an equity investment security without a readily determinable fair value in the first quarter of 2024.

Fluctuations in trading gains and losses in the first quarter of 2024 compared to the fourth quarter of 2023 were primarily the result of fair value adjustments related to interest rate derivatives not designated as hedges.

Other income increased by $17.6 million in the first quarter of 2024 compared to the fourth quarter of 2023 primarily due to a $20.0 million gain recognized related to the sale of the Company’s RBA division within its wealth management business. This was partially offset by an unfavorable adjustment to the Company’s held-for-investment portfolio of early buy-out exercised loans guaranteed by U.S. government agencies, which are held at fair value, of $2.1 million when compared to the fourth quarter of 2023, as well as lower interest rate swap fees and unfavorable foreign currency remeasurement adjustments.

For more information regarding non-interest income, see Table 14 in this report.

NON-INTEREST EXPENSE

Salaries and employee benefits expense increased by $1.2 million in the first quarter of 2024 as compared to the fourth quarter of 2023. The $1.2 million increase is primarily related to higher commissions from increased mortgage production as well as commissions related to the sale of the Company’s RBA division within its wealth management business in the first quarter of 2024. This was partially offset by lower employee benefits as employee insurance decreased in the first quarter of 2024.

Advertising and marketing expenses in the first quarter of 2024 totaled $13.0 million, which is a $4.1 million decrease as compared to the fourth quarter of 2023 primarily due to a decrease in digital advertising and sponsorships.

FDIC insurance, including amounts accrued for estimated special assessments, decreased $29.1 million in the first quarter of 2024 as compared to the fourth quarter of 2023. This was primarily the result of a lower accrual recognized in the first quarter of 2024 for estimated amounts owed as a result of the FDIC special assessment on uninsured deposits in response to certain bank failures occurring in 2023. The Company recognized $5.2 million in the first quarter of 2024 for such special assessment compared to $34.4 million in the fourth quarter of 2023.

The Company recorded OREO expense of $392,000 in the first quarter of 2024, compared to net OREO income of $1.6 million in the fourth quarter of 2023 related to realized gains on sales of OREO.

For more information regarding non-interest expense, see Table 15 in this report.

INCOME TAXES

The Company recorded income tax expense of $62.7 million in the first quarter of 2024 compared to $41.8 million in the fourth quarter of 2023. The effective tax rates were 25.07% in the first quarter of 2024 compared to 25.27% in the fourth quarter of 2023. The effective tax rates were partially impacted by the tax effects related to share-based compensation which fluctuate based on the Company’s stock price and timing of employee stock option exercises and vesting of other share-based awards. The Company recorded net excess tax benefits of $4.4 million in the first quarter of 2024, compared to net excess tax benefits of $53,000 in the fourth quarter of 2023 related to share-based compensation. The effective tax rates were also partially impacted due to an overall lower level of pre-tax net income in the comparable periods, primarily due to the accrual for the estimated amount owed as a result of the FDIC special assessment on uninsured deposits. The Company recorded an estimated FDIC special assessment accrual of $5.2 million in the first quarter of 2024, compared to a $34.4 million accrual in the fourth quarter of 2023.

BUSINESS UNIT SUMMARY

Community Banking

Through its community banking unit, the Company provides banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas the Company services. In the first quarter of 2024, the community banking unit expanded its commercial, commercial real estate and residential real estate loan portfolios.

Mortgage banking revenue was $27.7 million for the first quarter of 2024, an increase of $20.2 million as compared to the fourth quarter of 2023, primarily due to a $5.0 million favorable valuation adjustment to the fair value of mortgage servicing rights, net of servicing hedge, in the first quarter of 2024 compared to a $16.1 million unfavorable adjustment in the fourth quarter of 2023, as well as $6.6 million higher in production revenue. This was partially offset by an unfavorable adjustment to the Company’s held-for-sale portfolio of early buy-out exercised loans guaranteed by U.S. government agencies, which are held at fair value, of $2.2 million in the first quarter of 2024 compared to a $4.9 million favorable adjustment in the fourth quarter of 2023. Service charges on deposit accounts totaled $14.8 million in the first quarter of 2024, which was relatively stable compared to the fourth quarter of 2023. The Company’s gross commercial and commercial real estate loan pipelines remained solid as of March 31, 2024 indicating momentum for expected continued loan growth in the second quarter of 2024.

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 portfolios were $4.6 billion during the first quarter of 2024 and average balances increased by $12.5 million as compared to the fourth quarter of 2023. The Company’s leasing portfolio balance increased in the first quarter of 2024, with its portfolio of assets, including capital leases, loans and equipment on operating leases, totaling $3.6 billion as of March 31, 2024 as compared to $3.4 billion as of December 31, 2023. Revenues from the Company’s out-sourced administrative services business were $1.2 million in the first quarter of 2024, which was relatively stable compared to the fourth quarter of 2023.

Wealth Management

Through four separate subsidiaries within its wealth management unit, the Company offers a full range of wealth management services, including trust and investment services, tax-deferred like-kind exchange services, asset management, and securities brokerage services. See “Items Impacting Comparative Results,” regarding the sale of the RBA division during the first quarter of 2024. Wealth management revenue totaled $34.8 million in the first quarter of 2024, increasing $1.5 million in the first quarter of 2024 as compared to the fourth quarter of 2023 primarily due to increased asset management fees from higher assets under management during the period. At March 31, 2024, the Company’s wealth management subsidiaries had approximately $48.7 billion of assets under administration, which included $8.8 billion of assets owned by the Company and its subsidiary banks, representing an increase from the $47.1 billion of assets under administration at December 31, 2023.

ITEMS IMPACTING COMPARATIVE FINANCIAL RESULTS

Division Sale

In the first quarter of 2024, the Company sold its RBA division and recorded a gain of approximately $20.0 million in other non-interest income from the sale.

Business Combination

On April 3, 2023, the Company completed its acquisition of Rothschild & Co Asset Management US Inc. and Rothschild & Co Risk Based Investments LLC from Rothschild & Co North America Inc. As the transaction was determined to be a business combination, the Company recorded goodwill of approximately $2.6 million on the purchase.

WINTRUST FINANCIAL CORPORATION

Key Operating Measures

Wintrust’s key operating measures and growth rates for the first quarter of 2024, as compared to the fourth quarter of 2023 (sequential quarter) and first quarter of 2023 (linked quarter), are shown in the table below:

       % or (1)
basis point (bp) change from
4th Quarter
2023
 % or
basis point (bp) change from
1st Quarter
2023
  Three Months Ended 
(Dollars in thousands, except per share data) Mar 31, 2024 Dec 31, 2023 Mar 31, 2023 
Net income $187,294  $123,480  $180,198 52 % 4 %
Pre-tax income, excluding provision for credit losses (non-GAAP) (2)  271,629   208,151   266,595 30   2  
Net income per common share – Diluted  2.89   1.87   2.80 55   3  
Cash dividends declared per common share  0.45   0.40   0.40 13   13  
Net revenue (3)  604,774   570,803   565,764 6   7  
Net interest income  464,194   469,974   457,995 (1)  1  
Net interest margin  3.57%  3.62%  3.81%(5)bps (24)bps
Net interest margin – fully taxable-equivalent (non-GAAP) (2)  3.59   3.64   3.83 (5)  (24) 
Net overhead ratio (4)  1.39   1.89   1.49 (50)  (10) 
Return on average assets  1.35   0.89   1.40 46   (5) 
Return on average common equity  14.42   9.93   15.67 449   (125) 
Return on average tangible common equity (non-GAAP) (2)  16.75   11.73   18.55 502   (180) 
At end of period           
Total assets $57,576,933  $56,259,934  $52,873,511 9 % 9 %
Total loans (5)  43,230,706   42,131,831   39,565,471 10   9  
Total deposits  46,448,858   45,397,170   42,718,211 9   9  
Total shareholders’ equity  5,436,400   5,399,526   5,015,506 3   8  

(1) Period-end balance sheet percentage changes are annualized.

(2) See Table 16: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(3) Net revenue is net interest income plus non-interest income.
(4) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s average total assets. A lower ratio indicates a higher degree of efficiency.
(5) Excludes mortgage loans held-for-sale.

Certain returns, yields, performance ratios, or quarterly growth rates are “annualized” in this presentation to represent an annual time period. This is done for analytical purposes to better discern, for decision-making purposes, underlying performance trends when compared to full-year or year-over-year amounts. For example, a 5% growth rate for a quarter would represent an annualized 20% growth rate. Additional supplemental financial information showing quarterly trends can be found on the Company’s website at www.wintrust.com by choosing “Financial Reports” under the “Investor Relations” heading, and then choosing “Financial Highlights.”

WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights

  Three Months Ended
(Dollars in thousands, except per share data) Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023
Selected Financial Condition Data (at end of period):
Total assets $57,576,933  $56,259,934  $55,555,246  $54,286,176  $52,873,511 
Total loans (1)  43,230,706   42,131,831   41,446,032   41,023,408   39,565,471 
Total deposits  46,448,858   45,397,170   44,992,686   44,038,707   42,718,211 
Total shareholders’ equity  5,436,400   5,399,526   5,015,613   5,041,912   5,015,506 
Selected Statements of Income Data:          
Net interest income $464,194  $469,974  $462,358  $447,537  $457,995 
Net revenue (2)  604,774   570,803   574,836   560,567   565,764 
Net income  187,294   123,480   164,198   154,750   180,198 
Pre-tax income, excluding provision for credit losses (non-GAAP) (3)  271,629   208,151   244,781   239,944   266,595 
Net income per common share – Basic  2.93   1.90   2.57   2.41   2.84 
Net income per common share – Diluted  2.89   1.87   2.53   2.38   2.80 
Cash dividends declared per common share  0.45   0.40   0.40   0.40   0.40 
Selected Financial Ratios and Other Data:          
Performance Ratios:          
Net interest margin  3.57%  3.62%  3.60%  3.64%  3.81%
Net interest margin – fully taxable-equivalent (non-GAAP) (3)  3.59   3.64   3.62   3.66   3.83 
Non-interest income to average assets  1.02   0.73   0.82   0.86   0.84 
Non-interest expense to average assets  2.41   2.62   2.41   2.44   2.33 
Net overhead ratio (4)  1.39   1.89   1.59   1.58   1.49 
Return on average assets  1.35   0.89   1.20   1.18   1.40 
Return on average common equity  14.42   9.93   13.35   12.79   15.67 
Return on average tangible common equity (non-GAAP) (3)  16.75   11.73   15.73   15.12   18.55 
Average total assets $55,602,695  $55,017,075  $54,381,981  $52,601,953  $52,075,318 
Average total shareholders’ equity  5,440,457   5,066,196   5,083,883   5,044,718   4,895,271 
Average loans to average deposits ratio  94.5%  92.9%  92.4%  94.3%  93.0%
Period-end loans to deposits ratio  93.1   92.8   92.1   93.2   92.6 
Common Share Data at end of period:          
Market price per common share $104.39  $92.75  $75.50  $72.62  $72.95 
Book value per common share  81.38   81.43   75.19   75.65   75.24 
Tangible book value per common share (non-GAAP) (3)  70.40   70.33   64.07   64.50   64.22 
Common shares outstanding  61,736,715   61,243,626   61,222,058   61,197,676   61,176,415 
Other Data at end of period:          
Common equity to assets ratio  8.7%  8.9%  8.3%  8.5%  8.7%
Tangible common equity ratio (non-GAAP) (3)  7.6   7.7   7.1   7.4   7.5 
Tier 1 leverage ratio (5)  9.5   9.3   9.2   9.3   9.1 
Risk-based capital ratios:          
Tier 1 capital ratio (5)  10.3   10.3   10.2   10.1   10.1 
Common equity tier 1 capital ratio (5)  9.5   9.4   9.3   9.3   9.2 
Total capital ratio (5)  12.2   12.1   12.0   12.0   12.1 
Allowance for credit losses (6) $427,504  $427,612  $399,531  $387,786  $376,261 
Allowance for loan and unfunded lending-related commitment losses to total loans  0.99%  1.01%  0.96%  0.94%  0.95%
Number of:          
Bank subsidiaries  15   15   15   15   15 
Banking offices  176   174   174   175   174 

(1) Excludes mortgage loans held-for-sale.
(2) Net revenue is net interest income plus non-interest income.
(3) See Table 16: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(4) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s average total assets. A lower ratio indicates a higher degree of efficiency.
(5) Capital ratios for current quarter-end are estimated.
(6) The allowance for credit losses includes the allowance for loan losses, the allowance for unfunded lending-related commitments and the allowance for held-to-maturity securities losses.

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION

  (Unaudited)   (Unaudited) (Unaudited) (Unaudited)
  Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
(In thousands)  2024   2023   2023   2023   2023 
Assets          
Cash and due from banks $379,825  $423,404  $418,088  $513,858  $445,928 
Federal funds sold and securities purchased under resale agreements  61   60   60   59   58 
Interest-bearing deposits with banks  2,131,077   2,084,323   2,448,570   2,163,708   1,563,578 
Available-for-sale securities, at fair value  4,387,598   3,502,915   3,611,835   3,492,481   3,259,845 
Held-to-maturity securities, at amortized cost  3,810,015   3,856,916   3,909,150   3,564,473   3,606,391 
Trading account securities  2,184   4,707   1,663   3,027   102 
Equity securities with readily determinable fair value  119,777   139,268   134,310   116,275   111,943 
Federal Home Loan Bank and Federal Reserve Bank stock  224,657   205,003   204,040   195,117   244,957 
Brokerage customer receivables  13,382   10,592   14,042   15,722   16,042 
Mortgage loans held-for-sale, at fair value  339,884   292,722   304,808   338,728   302,493 
Loans, net of unearned income  43,230,706   42,131,831   41,446,032   41,023,408   39,565,471 
Allowance for loan losses  (348,612)  (344,235)  (315,039)  (302,499)  (287,972)
Net loans  42,882,094   41,787,596   41,130,993   40,720,909   39,277,499 
Premises, software and equipment, net  744,769   748,966   747,501   749,393   760,283 
Lease investments, net  283,557   281,280   275,152   274,351   256,301 
Accrued interest receivable and other assets  1,580,142   1,551,899   1,674,681   1,455,748   1,413,795 
Trade date securities receivable     690,722         939,758 
Goodwill  656,181   656,672   656,109   656,674   653,587 
Other acquisition-related intangible assets  21,730   22,889   24,244   25,653   20,951 
Total assets $57,576,933  $56,259,934  $55,555,246  $54,286,176  $52,873,511 
Liabilities and Shareholders’ Equity          
Deposits:          
Non-interest-bearing $9,908,183  $10,420,401  $10,347,006  $10,604,915  $11,236,083 
Interest-bearing  36,540,675   34,976,769   34,645,680   33,433,792   31,482,128 
Total deposits  46,448,858   45,397,170   44,992,686   44,038,707   42,718,211 
Federal Home Loan Bank advances  2,676,751   2,326,071   2,326,071   2,026,071   2,316,071 
Other borrowings  575,408   645,813   643,999   665,219   583,548 
Subordinated notes  437,965   437,866   437,731   437,628   437,493 
Junior subordinated debentures  253,566   253,566   253,566   253,566   253,566 
Accrued interest payable and other liabilities  1,747,985   1,799,922   1,885,580   1,823,073   1,549,116 
Total liabilities  52,140,533   50,860,408   50,539,633   49,244,264   47,858,005 
Shareholders’ Equity:          
Preferred stock  412,500   412,500   412,500   412,500   412,500 
Common stock  61,798   61,269   61,244   61,219   61,198 
Surplus  1,954,532   1,943,806   1,933,226   1,923,623   1,913,947 
Treasury stock  (5,757)  (2,217)  (1,966)  (1,966)  (1,966)
Retained earnings  3,498,475   3,345,399   3,253,332   3,120,626   2,997,263 
Accumulated other comprehensive loss  (485,148)  (361,231)  (642,723)  (474,090)  (367,436)
Total shareholders’ equity  5,436,400   5,399,526   5,015,613   5,041,912   5,015,506 
Total liabilities and shareholders’ equity $57,576,933  $56,259,934  $55,555,246  $54,286,176  $52,873,511 

 

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

 Three Months Ended
(Dollars in thousands, except per share data)Mar 31,
2024
 Dec 31,
2023
 Sep 30,
2023
 Jun 30,
2023
 Mar 31,
2023
Interest income         
Interest and fees on loans$710,341  $694,943  $666,260  $621,057  $558,692 
Mortgage loans held-for-sale 4,146   4,318   4,767   4,178   3,528 
Interest-bearing deposits with banks 16,658   21,762   26,866   16,882   13,468 
Federal funds sold and securities purchased under resale agreements 19   578   1,157   1   70 
Investment securities 69,678   68,237   59,164   51,243   59,943 
Trading account securities 18   15   6   6   14 
Federal Home Loan Bank and Federal Reserve Bank stock 4,478   3,792   3,896   3,544   3,680 
Brokerage customer receivables 175   203   284   265   295 
Total interest income 805,513   793,848   762,400   697,176   639,690 
Interest expense         
Interest on deposits 299,532   285,390   262,783   213,495   144,802 
Interest on Federal Home Loan Bank advances 22,048   18,316   17,436   17,399   19,135 
Interest on other borrowings 9,248   9,557   9,384   8,485   7,854 
Interest on subordinated notes 5,487   5,522   5,491   5,523   5,488 
Interest on junior subordinated debentures 5,004   5,089   4,948   4,737   4,416 
Total interest expense 341,319   323,874   300,042   249,639   181,695 
Net interest income 464,194   469,974   462,358   447,537   457,995 
Provision for credit losses 21,673   42,908   19,923   28,514   23,045 
Net interest income after provision for credit losses 442,521   427,066   442,435   419,023   434,950 
Non-interest income         
Wealth management 34,815   33,275   33,529   33,858   29,945 
Mortgage banking 27,663   7,433   27,395   29,981   18,264 
Service charges on deposit accounts 14,811   14,522   14,217   13,608   12,903 
Gains (losses) on investment securities, net 1,326   2,484   (2,357)  0   1,398 
Fees from covered call options 4,847   4,679   4,215   2,578   10,391 
Trading gains (losses), net 677   (505)  728   106   813 
Operating lease income, net 14,110   14,162   13,863   12,227   13,046 
Other 42,331   24,779   20,888   20,672   21,009 
Total non-interest income 140,580   100,829   112,478   113,030   107,769 
Non-interest expense         
Salaries and employee benefits 195,173   193,971   192,338   184,923   176,781 
Software and equipment 27,731   27,779   25,951   26,205   24,697 
Operating lease equipment 10,683   10,694   12,020   9,816   9,833 
Occupancy, net 19,086   18,102   21,304   19,176   18,486 
Data processing 9,292   8,892   10,773   9,726   9,409 
Advertising and marketing 13,040   17,166   18,169   17,794   11,946 
Professional fees 9,553   8,768   8,887   8,940   8,163 
Amortization of other acquisition-related intangible assets 1,158   1,356   1,408   1,499   1,235 
FDIC insurance 14,537   43,677   9,748   9,008   8,669 
OREO expenses, net 392   (1,559)  120   118   (207)
Other 32,500   33,806   29,337   33,418   30,157 
Total non-interest expense 333,145   362,652   330,055   320,623   299,169 
Income before taxes 249,956   165,243   224,858   211,430   243,550 
Income tax expense 62,662   41,763   60,660   56,680   63,352 
Net income$187,294  $123,480  $164,198  $154,750  $180,198 
Preferred stock dividends 6,991   6,991   6,991   6,991   6,991 
Net income applicable to common shares$180,303  $116,489  $157,207  $147,759  $173,207 
Net income per common share - Basic$2.93  $1.90  $2.57  $2.41  $2.84 
Net income per common share - Diluted$2.89  $1.87  $2.53  $2.38  $2.80 
Cash dividends declared per common share$0.45  $0.40  $0.40  $0.40  $0.40 
Weighted average common shares outstanding 61,481   61,236   61,213   61,192   60,950 
Dilutive potential common shares 928   1,166   964   902   873 
Average common shares and dilutive common shares 62,409   62,402   62,177   62,094   61,823 

 

TABLE 1: LOAN PORTFOLIO MIX AND GROWTH RATES

          % Growth From
(Dollars in thousands)Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30,
2023
 Mar 31, 2023Dec 31, 2023 (1) Mar 31, 2023
Balance:            
Mortgage loans held-for-sale, excluding early buy-out exercised loans guaranteed by U.S. government agencies$193,064 $155,529 $190,511 $235,570 $155,68797% 24%
Mortgage loans held-for-sale, early buy-out exercised loans guaranteed by U.S. government agencies 146,820  137,193  114,297  103,158  146,80628  0 
Total mortgage loans held-for-sale$339,884 $292,722 $304,808 $338,728 $302,49365% 12%
             
Core loans:            
Commercial            
Commercial and industrial$6,105,968 $5,804,629 $5,894,732 $5,737,633 $5,855,03521% 4%
Asset-based lending 1,355,255  1,433,250  1,396,591  1,465,848  1,482,071(22) (9)
Municipal 721,526  677,143  676,915  653,117  655,30126  10 
Leases 2,344,295  2,208,368  2,109,628  1,925,767  1,904,13725  23 
PPP loans 11,036  11,533  13,744  15,337  17,195(17) (36)
Commercial real estate            
Residential construction 57,558  58,642  51,550  51,689  69,998(7) (18)
Commercial construction 1,748,607  1,729,937  1,547,322  1,409,751  1,234,7624  42 
Land 344,149  295,462  294,901  298,996  292,29366  18 
Office 1,566,748  1,455,417  1,422,748  1,404,422  1,392,04031  13 
Industrial 2,190,200  2,135,876  2,057,957  2,002,740  1,858,08810  18 
Retail 1,366,415  1,337,517  1,341,451  1,304,083  1,309,6809  4 
Multi-family 2,922,432  2,815,911  2,710,829  2,696,478  2,635,41115  11 
Mixed use and other 1,437,328  1,515,402  1,519,422  1,440,652  1,446,806(21) (1)
Home equity 340,349  343,976  343,258  336,974  337,016(4) 1 
Residential real estate            
Residential real estate loans for investment 2,746,916  2,619,083  2,538,630  2,455,392  2,309,39320  19 
Residential mortgage loans, early buy-out eligible loans guaranteed by U.S. government agencies 90,911  92,780  97,911  117,024  119,301(8) (24)
Residential mortgage loans, early buy-out exercised loans guaranteed by U.S. government agencies 52,439  57,803  71,062  70,824  76,851(37) (32)
Total core loans$25,402,132 $24,592,729 $24,088,651 $23,386,727 $22,995,37813% 10%
             
Niche loans:            
Commercial            
Franchise$1,122,302 $1,092,532 $1,074,162 $1,091,164 $1,131,91311% (1)%
Mortgage warehouse lines of credit 403,245  230,211  245,450  381,043  235,684302  71 
Community Advantage - homeowners association 475,832  452,734  424,054  405,042  389,92221  22 
Insurance agency lending 964,022  921,653  890,197  925,520  905,72718  6 
Premium Finance receivables            
U.S. property & casualty insurance 6,113,993  5,983,103  5,815,346  5,900,228  5,043,4869  21 
Canada property & casualty insurance 826,026  920,426  907,401  862,470  695,394(41) 19 
Life insurance 7,872,033  7,877,943  7,931,808  8,039,273  8,125,8020  (3)
Consumer and other 51,121  60,500  68,963  31,941  42,165(62) 21 
Total niche loans$17,828,574 $17,539,102 $17,357,381 $17,636,681 $16,570,0937% 8%
             
Total loans, net of unearned income$43,230,706 $42,131,831 $41,446,032 $41,023,408 $39,565,47110% 9%

(1) Annualized.

TABLE 2: DEPOSIT PORTFOLIO MIX AND GROWTH RATES

          % Growth From
(Dollars in thousands)Mar 31,
2024
 Dec 31,
2023
 Sep 30,
2023
 Jun 30,
2023
 Mar 31,
2023
Dec 31,
2023 (1)
 Mar 31, 2023
Balance:            
Non-interest-bearing$9,908,183  $10,420,401  $10,347,006  $10,604,915  $11,236,083 (20)% (12)%
NOW and interest-bearing demand deposits 5,720,947   5,797,649   6,006,114   5,814,836   5,576,558 (5) 3 
Wealth management deposits (2) 1,347,817   1,614,499   1,788,099   1,417,984   1,809,933 (66) (26)
Money market 15,617,717   15,149,215   14,478,504   14,523,124   13,552,277 12  15 
Savings 5,959,774   5,790,334   5,584,294   5,321,578   5,192,108 12  15 
Time certificates of deposit 7,894,420   6,625,072   6,788,669   6,356,270   5,351,252 77  48 
Total deposits$46,448,858  $45,397,170  $44,992,686  $44,038,707  $42,718,211 9% 9%
Mix:            
Non-interest-bearing 21%  23%  23%  24%  26%   
NOW and interest-bearing demand deposits 12   13   13   13   13    
Wealth management deposits (2) 3   4   4   3   4    
Money market 34   33   32   33   32    
Savings 13   13   13   12   12    
Time certificates of deposit 17   14   15   15   13    
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”), and trust and asset management customers of the Company.

TABLE 3: TIME CERTIFICATES OF DEPOSIT MATURITY/RE-PRICING ANALYSIS
As of March 31, 2024

(Dollars in thousands) Total Time
Certificates of
Deposit
 Weighted-Average
Rate of Maturing
Time Certificates
of Deposit
1-3 months $2,250,084  4.53%
4-6 months  2,431,414  4.76 
7-9 months  1,658,270  4.32 
10-12 months  991,137  4.06 
13-18 months  438,441  3.71 
19-24 months  55,853  2.50 
24+ months  69,221  1.78 
Total $7,894,420  4.42%

 

TABLE 4: QUARTERLY AVERAGE BALANCES

  Average Balance for three months ended,
  Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
(In thousands)  2024   2023   2023   2023   2023 
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents (1) $1,254,332  $1,682,176  $2,053,568  $1,454,057  $1,235,748 
Investment securities (2)  8,349,796   7,971,068   7,706,285   7,252,582   7,956,722 
FHLB and FRB stock  230,648   204,593   201,252   223,813   233,615 
Liquidity management assets (3)  9,834,776   9,857,837   9,961,105   8,930,452   9,426,085 
Other earning assets (3)(4)  15,081   14,821   17,879   17,401   18,445 
Mortgage loans held-for-sale  290,275   279,569   319,099   307,683   270,966 
Loans, net of unearned income (3)(5)  42,129,893   41,361,952   40,707,042   40,106,393   39,093,368 
Total earning assets (3)  52,270,025   51,514,179   51,005,125   49,361,929   48,808,864 
Allowance for loan and investment security losses  (361,734)  (329,441)  (319,491)  (302,627)  (282,704)
Cash and due from banks  450,267   443,989   459,819   481,510   488,457 
Other assets  3,244,137   3,388,348   3,236,528   3,061,141   3,060,701 
Total assets $55,602,695  $55,017,075  $54,381,981  $52,601,953  $52,075,318 
           
NOW and interest-bearing demand deposits $5,680,265  $5,868,976  $5,815,155  $5,540,597  $5,271,740 
Wealth management deposits  1,510,203   1,704,099   1,512,765   1,545,626   2,167,081 
Money market accounts  14,474,492   14,212,320   14,155,446   13,735,924   12,533,468 
Savings accounts  5,792,118   5,676,155   5,472,535   5,206,609   4,830,322 
Time deposits  7,148,456   6,645,980   6,495,906   5,603,024   5,041,638 
Interest-bearing deposits  34,605,534   34,107,530   33,451,807   31,631,780   29,844,249 
Federal Home Loan Bank advances  2,728,849   2,326,073   2,241,292   2,227,106   2,474,882 
Other borrowings  627,711   633,673   657,454   625,757   602,937 
Subordinated notes  437,893   437,785   437,658   437,545   437,422 
Junior subordinated debentures  253,566   253,566   253,566   253,566   253,566 
Total interest-bearing liabilities  38,653,553   37,758,627   37,041,777   35,175,754   33,613,056 
Non-interest-bearing deposits  9,972,646   10,406,585   10,612,009   10,908,022   12,171,631 
Other liabilities  1,536,039   1,785,667   1,644,312   1,473,459   1,395,360 
Equity  5,440,457   5,066,196   5,083,883   5,044,718   4,895,271 
Total liabilities and shareholders’ equity $55,602,695  $55,017,075  $54,381,981  $52,601,953  $52,075,318 
           
Net free funds/contribution (6) $13,616,472  $13,755,552  $13,963,348  $14,186,175  $15,195,808 

(1) Includes interest-bearing deposits from banks and securities purchased under resale agreements with original maturities of greater than three months. Cash equivalents include federal funds sold and securities purchased under resale agreements with original maturities of three months or less.
(2) Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.
(3) See Table 16: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(4) Other earning assets include brokerage customer receivables and trading account securities.
(5) Loans, net of unearned income, include non-accrual loans.
(6) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.

TABLE 5: QUARTERLY NET INTEREST INCOME

  Net Interest Income for three months ended,
  Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
(In thousands)  2024   2023   2023   2023   2023 
Interest income:          
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents $16,677  $22,340  $28,022  $16,882  $13,538 
Investment securities  70,228   68,812   59,737   51,795   60,494 
FHLB and FRB stock  4,478   3,792   3,896   3,544   3,680 
Liquidity management assets (1)  91,383   94,944   91,655   72,221   77,712 
Other earning assets (1)  198   222   291   272   313 
Mortgage loans held-for-sale  4,146   4,318   4,767   4,178   3,528 
Loans, net of unearned income (1)  712,587   697,093   668,183   622,939   560,564 
Total interest income $808,314  $796,577  $764,896  $699,610  $642,117 
           
Interest expense:          
NOW and interest-bearing demand deposits $34,896  $38,124  $36,001  $29,178  $18,772 
Wealth management deposits  10,461   12,076   9,350   9,097   12,258 
Money market accounts  137,984   130,252   124,742   106,630   68,276 
Savings accounts  39,071   36,463   31,784   25,603   15,816 
Time deposits  77,120   68,475   60,906   42,987   29,680 
Interest-bearing deposits  299,532   285,390   262,783   213,495   144,802 
Federal Home Loan Bank advances  22,048   18,316   17,436   17,399   19,135 
Other borrowings  9,248   9,557   9,384   8,485   7,854 
Subordinated notes  5,487   5,522   5,491   5,523   5,488 
Junior subordinated debentures  5,004   5,089   4,948   4,737   4,416 
Total interest expense $341,319  $323,874  $300,042  $249,639  $181,695 
           
Less: Fully taxable-equivalent adjustment  (2,801)  (2,729)  (2,496)  (2,434)  (2,427)
Net interest income (GAAP) (2)   464,194   469,974   462,358   447,537   457,995 
Fully taxable-equivalent adjustment  2,801   2,729   2,496   2,434   2,427 
Net interest income, fully taxable-equivalent (non-GAAP) (2)  $466,995  $472,703  $464,854  $449,971  $460,422 

(1) Interest income on tax-advantaged loans, trading securities and investment securities reflects a taxable-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period.
(2) See Table 16: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.

TABLE 6: QUARTERLY NET INTEREST MARGIN

  Net Interest Margin for three months ended,
  Mar 31, 2024 Dec 31, 2023 Sep 30,
2023
 Jun 30, 2023 Mar 31,
2023
Yield earned on:          
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents 5.35% 5.27% 5.41% 4.66% 4.44%
Investment securities 3.38  3.42  3.08  2.86  3.08 
FHLB and FRB stock 7.81  7.35  7.68  6.35  6.39 
Liquidity management assets 3.74  3.82  3.65  3.24  3.34 
Other earning assets 5.25  5.92  6.47  6.27  6.87 
Mortgage loans held-for-sale 5.74  6.13  5.93  5.45  5.28 
Loans, net of unearned income 6.80  6.69  6.51  6.23  5.82 
Total earning assets 6.22% 6.13% 5.95% 5.68% 5.34%
           
Rate paid on:          
NOW and interest-bearing demand deposits 2.47% 2.58% 2.46% 2.11% 1.44%
Wealth management deposits 2.79  2.81  2.45  2.36  2.29 
Money market accounts 3.83  3.64  3.50  3.11  2.21 
Savings accounts 2.71  2.55  2.30  1.97  1.33 
Time deposits 4.34  4.09  3.72  3.08  2.39 
Interest-bearing deposits 3.48  3.32  3.12  2.71  1.97 
Federal Home Loan Bank advances 3.25  3.12  3.09  3.13  3.14 
Other borrowings 5.92  5.98  5.66  5.44  5.28 
Subordinated notes 5.04  5.00  4.98  5.06  5.02 
Junior subordinated debentures 7.94  7.96  7.74  7.49  6.97 
Total interest-bearing liabilities 3.55% 3.40% 3.21% 2.85% 2.19%
           
Interest rate spread (1)(2) 2.67% 2.73% 2.74% 2.83% 3.15%
Less: Fully taxable-equivalent adjustment (0.02) (0.02) (0.02) (0.02) (0.02)
Net free funds/contribution (3) 0.92  0.91  0.88  0.83  0.68 
Net interest margin (GAAP) (2) 3.57% 3.62% 3.60% 3.64% 3.81%
Fully taxable-equivalent adjustment 0.02  0.02  0.02  0.02  0.02 
Net interest margin, fully taxable-equivalent (non-GAAP) (2) 3.59% 3.64% 3.62% 3.66% 3.83%

(1) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(2) See Table 16: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(3) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.

TABLE 7: INTEREST RATE SENSITIVITY

As an ongoing part of its financial strategy, the Company attempts to manage the impact of fluctuations in market interest rates on net interest income. Management measures its exposure to changes in interest rates by modeling many different interest rate scenarios.

The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon assuming increases and decreases of 100 and 200 basis points. The Static Shock Scenario results incorporate actual cash flows and repricing characteristics for balance sheet instruments following an instantaneous, parallel change in market rates based upon a static (i.e. no growth or constant) balance sheet. Conversely, the Ramp Scenario results incorporate management’s projections of future volume and pricing of each of the product lines following a gradual, parallel change in market rates over twelve months. Actual results may differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies. The interest rate sensitivity for both the Static Shock and Ramp Scenario is as follows:

Static Shock Scenario +200 Basis Points +100 Basis Points -100 Basis Points -200 Basis Points
Mar 31, 2024 1.9% 1.4% 1.5% 1.6%
Dec 31, 2023 2.6  1.8  0.4  (0.7)
Sep 30, 2023 3.3  1.9  (2.0) (5.2)
Jun 30, 2023 5.7  2.9  (2.9) (7.9)
Mar 31, 2023 4.2  2.4  (2.4) (7.3)

 

Ramp Scenario+200 Basis Points +100 Basis Points -100 Basis Points -200 Basis Points
Mar 31, 20240.8% 0.6% 1.3% 2.0%
Dec 31, 20231.6  1.2  (0.3) (1.5)
Sep 30, 20231.7  1.2  (0.5) (2.4)
Jun 30, 20232.9  1.8  (0.9) (3.4)
Mar 31, 20233.0  1.7  (1.3) (3.4)

As shown above, the magnitude of potential changes in net interest income in various interest rate scenarios has continued to diminish. Given the recent unprecedented rise in interest rates, the Company has made a conscious effort to reposition its exposure to changing interest rates given the uncertainty of the future interest rate environment. To this end, management has executed various derivative instruments including collars and receive fixed swaps to hedge variable rate loan exposures and originated a higher percentage of its loan originations in longer term fixed rate loans. The Company will continue to monitor current and projected interest rates and may execute additional derivatives to mitigate potential fluctuations in the net interest margin in future years.

TABLE 8: MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES

 Loans repricing or contractual maturity period
As of March 31, 2024One year or
less
 From one to
five years
 From five to fifteen years After fifteen years Total
(In thousands)    
Commercial         
Fixed rate$446,377  $3,035,619  $1,778,737  $38,598  $5,299,331 
Variable rate 8,202,814   1,336         8,204,150 
Total commercial$8,649,191  $3,036,955  $1,778,737  $38,598  $13,503,481 
Commercial real estate         
Fixed rate 507,960   2,472,599   364,499   53,492   3,398,550 
Variable rate 8,218,443   16,406   38      8,234,887 
Total commercial real estate$8,726,403  $2,489,005  $364,537  $53,492  $11,633,437 
Home equity         
Fixed rate 9,684   3,551      26   13,261 
Variable rate 327,088            327,088 
Total home equity$336,772  $3,551  $  $26  $340,349 
Residential real estate         
Fixed rate 19,856   3,515   30,517   1,045,088   1,098,976 
Variable rate 79,739   315,526   1,396,025      1,791,290 
Total residential real estate$99,595  $319,041  $1,426,542  $1,045,088  $2,890,266 
Premium finance receivables - property & casualty         
Fixed rate 6,827,182   112,837         6,940,019 
Variable rate              
Total premium finance receivables - property & casualty$6,827,182  $112,837  $  $  $6,940,019 
Premium finance receivables - life insurance         
Fixed rate 4,452   594,634   4,000   6,991   610,077 
Variable rate 7,261,956            7,261,956 
Total premium finance receivables - life insurance$7,266,408  $594,634  $4,000  $6,991  $7,872,033 
Consumer and other         
Fixed rate 4,139   5,683   9   460   10,291 
Variable rate 40,830            40,830 
Total consumer and other$44,969  $5,683  $9  $460  $51,121 
          
Total per category         
Fixed rate 7,819,650   6,228,438   2,177,762   1,144,655   17,370,505 
Variable rate 24,130,870   333,268   1,396,063      25,860,201 
Total loans, net of unearned income$31,950,520  $6,561,706  $3,573,825  $1,144,655  $43,230,706 
          
Variable Rate Loan Pricing by Index:         
SOFR tenors        $14,880,310 
One- year CMT         6,112,917 
Prime         3,341,033 
Fed Funds         1,039,799 
Ameribor tenors         284,141 
Other U.S. Treasury tenors         124,941 
Other         77,060 
Total variable rate        $25,860,201 

SOFR - Secured Overnight Financing Rate.
CMT - Constant Maturity Treasury Rate.
Ameribor - American Interbank Offered Rate.

Graph available at the following link:
http://ml.globenewswire.com/Resource/Download/d1a58f1e-d3c0-4ab2-ba56-53947fd2c22b

Source: Bloomberg

As noted in the table on the previous page, the majority of the Company’s portfolio is tied to SOFR and CMT indices which, as shown in the table above, do not mirror the same changes as the Prime rate which has historically moved when the Federal Reserve raises or lowers interest rates. Specifically, the Company has variable rate loans of $11.6 billion tied to one-month SOFR and $6.1 billion tied to one-year CMT. The above chart shows:

  Basis Point (bp) Change in
  1-month
SOFR
 One- year CMT Prime 
First Quarter 2024 (2)bps24 bps0bps
Fourth Quarter 2023 3  (67) 0 
Third Quarter 2023 18  6  25 
Second Quarter 2023 34  76  25 
First Quarter 2023 44  (9) 50 

 

TABLE 9: ALLOWANCE FOR CREDIT LOSSES

  Three Months Ended
  Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
(Dollars in thousands)  2024   2023   2023   2023   2023 
Allowance for credit losses at beginning of period $427,612  $399,531  $387,786  $376,261  $357,936 
Cumulative effect adjustment from the adoption of ASU 2022-02              741 
Provision for credit losses  21,673   42,908   19,923   28,514   23,045 
Other adjustments  (31)  62   (60)  41   4 
Charge-offs:          
Commercial  11,215   5,114   2,427   5,629   2,543 
Commercial real estate  5,469   5,386   1,713   8,124   5 
Home equity  74      227       
Residential real estate  38   114   78       
Premium finance receivables - property & casualty  6,938   6,706   5,830   4,519   4,629 
Premium finance receivables - life insurance        18   134   21 
Consumer and other  107   148   184   110   153 
Total charge-offs  23,841   17,468   10,477   18,516   7,351 
Recoveries:          
Commercial  479   592   1,162   505   392 
Commercial real estate  31   92   243   25   100 
Home equity  29   34   33   37   35 
Residential real estate  2   10   1   6   4 
Premium finance receivables - property & casualty  1,519   1,820   906   890   1,314 
Premium finance receivables - life insurance  8   7         9 
Consumer and other  23   24   14   23   32 
Total recoveries  2,091   2,579   2,359   1,486   1,886 
Net charge-offs  (21,750)  (14,889)  (8,118)  (17,030)  (5,465)
Allowance for credit losses at period end $427,504  $427,612  $399,531  $387,786  $376,261 
           
Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average:
Commercial  0.33%  0.14%  0.04%  0.16%  0.07%
Commercial real estate  0.19   0.19   0.05   0.31   0.00 
Home equity  0.05   (0.04)  0.23   (0.04)  (0.04)
Residential real estate  0.01   0.02   0.01   0.00   0.00 
Premium finance receivables - property & casualty  0.32   0.29   0.29   0.24   0.23 
Premium finance receivables - life insurance  (0.00)  (0.00)  0.00   0.01   0.00 
Consumer and other  0.42   0.58   0.65   0.45   0.74 
Total loans, net of unearned income  0.21%  0.14%  0.08%  0.17%  0.06%
           
Loans at period end $43,230,706  $42,131,831  $41,446,032  $41,023,408  $39,565,471 
Allowance for loan losses as a percentage of loans at period end  0.81%  0.82%  0.76%  0.74%  0.73%
Allowance for loan and unfunded lending-related commitment losses as a percentage of loans at period end  0.99   1.01   0.96   0.94   0.95 

 

TABLE 10: ALLOWANCE AND PROVISION FOR CREDIT LOSSES BY COMPONENT

  Three Months Ended
  Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
(In thousands)  2024   2023   2023   2023   2023 
Provision for loan losses $26,159  $44,023  $20,717  $31,516  $22,520 
Provision for unfunded lending-related commitments losses  (4,468)  (1,081)  (769)  (2,945)  550 
Provision for held-to-maturity securities losses  (18)  (34)  (25)  (57)  (25)
Provision for credit losses $21,673  $42,908  $19,923  $28,514  $23,045 
           
Allowance for loan losses $348,612  $344,235  $315,039  $302,499  $287,972 
Allowance for unfunded lending-related commitments losses  78,563   83,030   84,111   84,881   87,826 
Allowance for loan losses and unfunded lending-related commitments losses  427,175   427,265   399,150   387,380   375,798 
Allowance for held-to-maturity securities losses  329   347   381   406   463 
Allowance for credit losses $427,504  $427,612  $399,531  $387,786  $376,261 

 

TABLE 11: 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 March 31, 2024, December 31, 2023 and September 30, 2023.

 As of Mar 31, 2024As of Dec 31, 2023As of Sep 30, 2023
(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$13,503,481 $166,518 1.23%$12,832,053 $169,604 1.32%$12,725,473 $151,488 1.19%
Commercial real estate:               
Construction and development 2,150,314  96,052 4.47  2,084,041  94,081 4.51  1,893,773  90,622 4.79 
Non-construction 9,483,123  130,000 1.37  9,260,123  129,772 1.40  9,052,407  125,096 1.38 
Home equity 340,349  7,191 2.11  343,976  7,116 2.07  343,258  7,080 2.06 
Residential real estate 2,890,266  13,701 0.47  2,769,666  13,133 0.47  2,707,603  12,659 0.47 
Premium finance receivables               
Property and casualty insurance 6,940,019  12,645 0.18  6,903,529  12,384 0.18  6,722,747  11,132 0.17 
Life insurance 7,872,033  685 0.01  7,877,943  685 0.01  7,931,808  688 0.01 
Consumer and other 51,121  383 0.75  60,500  490 0.81  68,963  385 0.56 
Total loans, net of unearned income$43,230,706 $427,175 0.99%$42,131,831 $427,265 1.01%$41,446,032 $399,150 0.96%
                
Total core loans (1)$25,402,132 $382,372 1.51%$24,592,729 $380,847 1.55%$24,088,651 $363,873 1.51%
Total niche loans (1) 17,828,574  44,803 0.25  17,539,102  46,418 0.26  17,357,381  35,277 0.20 
                

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

TABLE 12: LOAN PORTFOLIO AGING

(In thousands) Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023
Loan Balances:          
Commercial          
Nonaccrual $31,740  $38,940  $43,569  $40,460  $47,950 
90+ days and still accruing  27   98   200   573    
60-89 days past due  30,248   19,488   22,889   22,808   10,755 
30-59 days past due  77,715   85,743   35,681   48,970   95,593 
Current  13,363,751   12,687,784   12,623,134   12,487,660   12,422,687 
Total commercial $13,503,481  $12,832,053  $12,725,473  $12,600,471  $12,576,985 
Commercial real estate          
Nonaccrual $39,262  $35,459  $17,043  $18,483  $11,196 
90+ days and still accruing        1,092       
60-89 days past due  16,713   8,515   7,395   1,054   20,539 
30-59 days past due  32,998   20,634   60,984   14,218   72,680 
Current  11,544,464   11,279,556   10,859,666   10,575,056   10,134,663 
Total commercial real estate $11,633,437  $11,344,164  $10,946,180  $10,608,811  $10,239,078 
Home equity          
Nonaccrual $838  $1,341  $1,363  $1,361  $1,190 
90+ days and still accruing           110    
60-89 days past due  212   62   219   316   116 
30-59 days past due  1,617   2,263   1,668   601   1,118 
Current  337,682   340,310   340,008   334,586   334,592 
Total home equity $340,349  $343,976  $343,258  $336,974  $337,016 
Residential real estate          
Early buy-out loans guaranteed by U.S. government agencies (1) $143,350  $150,583  $168,973  $187,848  $196,152 
Nonaccrual  17,901   15,391   16,103   13,652