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Wintrust Financial Corporation Reports Fourth Quarter and Full Year 2022 Results
Источник: Nasdaq GlobeNewswire / 18 янв 2023 15:56:00 America/Chicago
ROSEMONT, Ill., Jan. 18, 2023 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust”, “the Company”, “we” or “our”) (Nasdaq: WTFC) announced net income of $144.8 million or $2.23 per diluted common share for the fourth quarter of 2022, an increase in diluted earnings per common share of 1% compared to the third quarter of 2022. The Company had record annual net income of $509.7 million or $8.02 per diluted common share for the year ended December 31, 2022 as compared to net income of $466.2 million or $7.58 per diluted common share for the same period of 2021. Pre-tax, pre-provision income (non-GAAP) totaled a record $779.1 million for the year ended December 31, 2022, up 35% as compared to $578.5 million for the same period of 2021.
Edward J. Wehmer, Founder and Chief Executive Officer, commented, “Wintrust finished the year with great momentum as our fourth quarter results were highlighted by strong net income and record quarterly pre-tax, pre-provision income. Net interest income and net interest margin expanded meaningfully and our loan portfolio continued to grow while exhibiting low levels of net charge-offs. The fourth quarter caps an extraordinary year for Wintrust, and we believe that we are well-positioned to reach even higher levels of financial performance in 2023."
Highlights of the fourth quarter of 2022:
Comparative information to the third quarter of 2022, unless otherwise noted- Net interest income increased by $55.4 million or 14% as compared to the third quarter of 2022 primarily due to improvement in net interest margin and loan growth.
- Net interest margin, on a GAAP basis, increased by 37 basis points to 3.71% for the fourth quarter of 2022 as the upward repricing of earning assets outpaced increases in deposit costs. Net interest margin, on a fully taxable equivalent basis (non-GAAP) increased by 38 basis points to 3.73%.
- Total loans increased by $1.0 billion, or 11% on an annualized basis. In addition, total loans as of December 31, 2022 were $630 million higher than average total loans in the fourth quarter of 2022 which is expected to benefit future quarters.
- Total assets increased by $567 million totaling $52.9 billion as of December 31, 2022 and total deposits increased by $105 million.
- Recorded a provision for credit losses of $47.6 million in the fourth quarter of 2022 primarily related to a moderate deterioration in macroeconomic factors coupled with strong loan growth. This compares to a provision for credit losses of $6.4 million in the third quarter of 2022.
- Net charge-offs totaled $5.1 million or five basis points of average total loans on an annualized basis in the fourth quarter of 2022 as compared to $3.2 million or three basis points of average total loans on an annualized basis in the third quarter of 2022.
- Non-performing loans were essentially unchanged at 0.26% of total loans, as of December 31, 2022. See “Asset Quality” section for more information.
- Book value per common share increased by $2.56 to $72.12 as of December 31, 2022. Tangible book value per common share (non-GAAP) increased to $61.00 as of December 31, 2022 as compared to $58.42 as of September 30, 2022.
Other items of note from the fourth quarter of 2022
- Net losses on investment securities totaled $6.7 million in the fourth quarter of 2022 related to changes in the value of equity securities as compared to net losses of $3.1 million in the third quarter of 2022.
- The effective tax rate decreased as the Company recorded an approximately $1.7 million benefit to income tax expense related to earnings at its Canadian subsidiary. See “Income Taxes” section for more information.
- Recorded $838,000 in occupancy expense related to an unrealized loss associated with the anticipated sale of a branch facility.
- Recorded $846,000 in operating lease equipment expense related to the impairment of an operating lease asset.
- The Company recorded net negative fair value adjustments of $702,000 in the fourth quarter of 2022 related to fair value changes in certain mortgage assets, see “Non-Interest Income” section for more information.
Mr. Wehmer continued, "The Company experienced robust loan growth as loans increased by $1.0 billion, or 11% on an annualized basis, in the fourth quarter of 2022. The loan growth was spread across all of our material loan portfolios as we experienced growth in commercial, commercial real estate, commercial insurance premium finance receivables and life insurance premium finance receivables. We remain prudent in our review of credit prospects ensuring our loan growth stays within our conservative credit standards. Loan growth in the fourth quarter of 2022 outpaced deposit growth which resulted in our loans to deposits ratio ending the quarter at 91.4%. Strategically growing deposits is among our most important objectives in 2023 and we believe we are well positioned to accomplish that without compromising our net interest margin guidance."
Mr. Wehmer commented, "Net interest income increased by $55.4 million in the fourth quarter of 2022 primarily due to improvement in net interest margin as well as an increase in earning assets. Net interest margin, on a fully taxable equivalent basis (non-GAAP), increased by 38 basis points as the upward repricing of earning assets outpaced deposit rate changes. We expect that trend to continue and believe, subject to no material change in the consensus projection of interest rates as of this release date, that our net interest margin should approach 4.00% during the first quarter of 2023. While Wintrust benefited significantly from being asset sensitive to interest rates in 2022, we acknowledge the uncertainty in projected interest rates and are repositioning our balance sheet to reduce our interest rate sensitivity. We expect to continue this strategy, including the use of derivative instruments, in order to mitigate potential negative impacts to our net interest margin in a declining interest rate environment.”
Commenting on credit quality, Mr. Wehmer stated, "The allowance for credit losses totaled $357.9 million as of December 31, 2022, an increase of $42.6 million as compared to $315.3 million as of September 30, 2022. The $42.6 million increase in reserves consisted of a $32.2 million increase related to a moderate deterioration in macroeconomic factors and a $10.4 million increase related to portfolio changes in the fourth quarter of 2022. Meanwhile, credit metrics related to current loan performance remained relatively stable. Non-performing loans totaled $100.7 million and comprised only 0.26% of total loans as of December 31, 2022, essentially unchanged from levels as of September 30, 2022. Net charge-offs totaled $5.1 million or five basis points of average total loans on an annualized basis in the fourth quarter of 2022 as compared to $3.2 million or three basis points of average total loans on an annualized basis in the third quarter of 2022. The allowance for credit losses on our core loan portfolio as of December 31, 2022 is approximately 1.42% 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 fourth 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 remain an asset driven organization, focused on prudently growing our loan portfolio. We are confident we can raise funding to support asset growth and drive further net interest income expansion. We are closely watching our expenses and believe our efficiency ratio will continue to improve. We are opportunistically evaluating the acquisition market for both banks and business lines of various sizes and are excited about our recently announced and pending wealth management acquisition. Of course, we remain diligent in our consideration of acquisition targets and intend to be prudent in our decision making, always seeking to minimize tangible book value dilution. We are very proud that Wintrust’s tangible book value per common share has increased every year since we became a public company in 1996 and you can be assured of our best efforts to maintain that trend in 2023 and beyond.”
The graphs below illustrate certain financial highlights of the fourth quarter of 2022 as well as historical financial performance. See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 17 for additional information with respect to non-GAAP financial measures/ratios, including the reconciliations to the corresponding GAAP financial measures/ratios.
Graphs available at the following link:
http://ml.globenewswire.com/Resource/Download/b70f58b8-5524-4ca3-8936-f89104accc4aSUMMARY OF RESULTS:
BALANCE SHEET
Total loans increased by $1.0 billion as core loans increased by $794 million and niche loans increased by $250 million as compared to the third quarter of 2022. See Table 1 for more information. During the fourth quarter of 2022, the Company increased its investment portfolio by approximately $1.5 billion. However, certain securities were called by option holders on December 31, 2022 which resulted in the recognition of a trade date receivable of $922 million as of December 31, 2022. In January 2023, the Company reinvested the trade date receivable proceeds by purchasing a similar amount of investment securities.
Total liabilities increased $408 million in the fourth quarter of 2022 as compared to the third quarter of 2022 resulting primarily from a $136 million increase in notes payable and a $105 million increase in total deposits. The Company's loans to deposits ratio ended the quarter at 91.4%. 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 Table 1 through Table 3 in this report.
NET INTEREST INCOME
For the fourth quarter of 2022, net interest income totaled $456.8 million, an increase of $55.4 million as compared to the third quarter of 2022. The $55.4 million increase in net interest income in the fourth quarter of 2022 compared to the third quarter of 2022 was primarily due to robust loan growth and continued expansion of net interest margin.
Net interest margin was 3.71% (3.73% on a fully taxable-equivalent basis, non-GAAP) during the fourth quarter of 2022 compared to 3.34% (3.35% on a fully taxable-equivalent basis, non-GAAP) during the third quarter of 2022. The net interest margin increase as compared to the third quarter of 2022 was due to an 84 basis point increase in yield on earning assets and a 22 basis point increase in the net free funds contribution. These improvements were partially offset by a 68 basis point increase in the rate paid on interest-bearing liabilities. The 84 basis point increase in the yield on earning assets in the fourth quarter of 2022 as compared to the third quarter of 2022 was primarily due to an 87 basis point expansion on loan yields and a higher liquidity management asset yield as the Company earned higher yields on interest-bearing deposits with banks and added investment securities at higher current market rates. The 68 basis point increase in the rate paid on interest-bearing liabilities in the fourth quarter of 2022 as compared to the third quarter of 2022 is primarily due to a 66 basis point increase in the rate paid on interest-bearing deposits primarily related to the increasing rate environment.
For more information regarding net interest income, see Table 4 through Table 8 in this report.
ASSET QUALITY
The allowance for credit losses totaled $357.9 million as of December 31, 2022, an increase of $42.6 million as compared to $315.3 million as of September 30, 2022. The $42.6 million increase in reserves consisted of a $32.2 million increase related to a moderate deterioration in macroeconomic factors and a $10.4 million increase related to portfolio changes in the fourth quarter of 2022. A provision for credit losses totaling $47.6 million was recorded for the fourth quarter of 2022 as compared to $6.4 million recorded in the third 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 December 31, 2022, September 30, 2022, and June 30, 2022 is shown on Table 12 of this report.
Net charge-offs totaled $5.1 million in the fourth quarter of 2022, as compared to $3.2 million of net charge-offs in the third quarter of 2022. Net charge-offs as a percentage of average total loans were reported as five basis points in the fourth quarter of 2022 on an annualized basis compared to three basis points on an annualized basis in the third 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 0.21% as of December 31, 2022, compared to 0.20% at September 30, 2022. Non-performing assets totaled $110.6 million at December 31, 2022, compared to $104.3 million at September 30, 2022. Non-performing loans remained relatively flat totaling $100.7 million, or 0.26% of total loans, at December 31, 2022 compared to $97.6 million, or 0.26% of total loans, at September 30, 2022. For more information regarding non-performing assets, see Table 14 in this report.
NON-INTEREST INCOME
Wealth management revenue decreased $2.4 million in the fourth quarter of 2022 as compared to the third quarter of 2022 primarily related to lower fees associated with our tax-deferred like-kind exchange business. Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors, the brokerage commissions, managed money fees and insurance product commissions at Wintrust Investments and fees from tax-deferred like-kind exchange services provided by the Chicago Deferred Exchange Company.
Mortgage banking revenue decreased by $9.8 million in the fourth quarter of 2022 as compared to the third quarter of 2022 primarily due to lower production revenue as a result of declining mortgage origination volume in the recent rising rate environment as well as lower production margins. The Company recorded net negative fair value adjustments of $702,000 in the fourth quarter of 2022 related to fair value changes in certain mortgage assets. This included a $2.1 million decrease in the value of mortgage servicing rights related to changes in fair value model assumptions net of economic hedges and a positive $1.4 million valuation related adjustment on the Company’s held-for-sale portfolio of early buy-out exercised loans guaranteed by U.S. government agencies which are held at fair value. The Company intends to monitor the relationship of these assets and will seek to minimize the earnings impact of fair value changes in future quarters.
Net losses on investment securities totaled $6.7 million in the fourth quarter of 2022 related to changes in the value of equity securities as compared to net losses of $3.1 million in the third quarter of 2022.
Fees from covered call options increased $6.6 million in the fourth quarter of 2022 as compared to the third 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. These option transactions are designed to mitigate overall interest rate risk and do not qualify as hedges pursuant to accounting guidance.
For more information regarding non-interest income, see Table 15 in this report.
NON-INTEREST EXPENSE
Salaries and employee benefits expense increased by $4.2 million in the fourth quarter of 2022 as compared to the third quarter of 2022. The $4.2 million increase is primarily related to higher incentive compensation expense related to the Company's strong 2022 financial performance, increased employee insurance costs and higher levels of deferred compensation expense, partially offset by lower commissions expense primarily related to lower mortgage production volume.
Advertising and marketing expenses in the fourth quarter of 2022 totaled $14.3 million, which is a $2.3 million decrease as compared to the third quarter of 2022 primarily due to a decrease in sports sponsorships. 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 increased by $4.8 million in the fourth quarter of 2022 as compared to the third quarter of 2022 which includes a $1.1 million increase in charitable donations. In addition, miscellaneous expense includes ATM expenses, correspondent bank charges, directors fees, telephone, postage, corporate insurance, dues and subscriptions, problem loan expenses and other miscellaneous operational losses and costs.
For more information regarding non-interest expense, see Table 16 in this report.
INCOME TAXES
The Company recorded income tax expense of $50.4 million in the fourth quarter of 2022 compared to $57.1 million in the third quarter of 2022. The effective tax rates were 25.80% in the fourth quarter of 2022 compared to 28.53% in the third quarter of 2022. Primarily as a result of fluctuations in currency rates, in the fourth quarter of 2022, the Company reversed approximately $1.7 million of the $2.0 million of tax expense related to GILTI (“Global Intangible Low-taxed Income”) recorded in the third quarter of 2022. The GILTI tax is a U.S. minimum tax on global profits.
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 fourth quarter of 2022, this unit expanded its loan portfolio. The segment’s net interest income increased in the fourth quarter of 2022 as compared to the third quarter of 2022 due to loan growth and an increased net interest margin.
Mortgage banking revenue was $17.4 million for the fourth quarter of 2022, a decrease of $9.8 million as compared to the third quarter of 2022, primarily due to lower production revenue as a result of declining mortgage origination volume in the current rising rate environment as well as lower production margins. Service charges on deposit accounts totaled $13.1 million in the fourth quarter of 2022, a decrease of $1.3 million as compared to the third quarter of 2022 primarily due to lower fees associated with commercial account activity. The Company’s gross commercial and commercial real estate loan pipelines remained robust as of December 31, 2022 indicating momentum for expected continued loan growth in the first quarter of 2023.
Specialty Finance
Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries, accounts receivable financing and value-added, out-sourced administrative services and other services. Originations within the insurance premium financing receivables portfolio were $4.0 billion during the fourth quarter of 2022 and average balances increased by $396.1 million as compared to the third quarter of 2022. The Company’s leasing portfolio balance increased in the fourth quarter of 2022, with its portfolio of assets, including capital leases, loans and equipment on operating leases, totaling $3.0 billion as of December 31, 2022 as compared to $2.7 billion as of September 30, 2022. Revenues from the Company’s out-sourced administrative services business were $1.7 million in the fourth quarter of 2022, an increase of $203,000 from the third 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 $30.7 million in the fourth quarter of 2022, a decrease of $2.4 million compared to the third quarter of 2022. The decline in wealth management revenue in the fourth quarter of 2022 was primarily related to lower fees associated with our tax-deferred like-kind exchange business. At December 31, 2022, the Company’s wealth management subsidiaries had approximately $34.4 billion of assets under administration, which included $7.4 billion of assets owned by the Company and its subsidiary banks, representing an increase from the $32.8 billion of assets under administration at September 30, 2022.
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 MeasuresWintrust’s key operating measures and growth rates for the fourth quarter of 2022, as compared to the third quarter of 2022 (sequential quarter) and fourth quarter of 2021 (linked quarter), are shown in the table below:
% or(1)
basis point
(bp) change
from
3rd Quarter
2022% or
basis point
(bp) change
from
4th Quarter
2021Three Months Ended (Dollars in thousands, except per share data) Dec 31, 2022 Sep 30, 2022 Dec 31, 2021 Net income $ 144,817 $ 142,961 $ 98,757 1 % 47 % Pre-tax income, excluding provision for credit losses (non-GAAP)(2) 242,819 206,461 146,344 18 66 Net income per common share – diluted 2.23 2.21 1.58 1 41 Cash dividends declared per common share 0.34 0.34 0.31 — 10 Net revenue(3) 550,655 502,930 429,743 9 28 Net interest income 456,816 401,448 295,976 14 54 Net interest margin 3.71 % 3.34 % 2.54 % 37 bps 117 bps Net interest margin – fully taxable-equivalent (non-GAAP)(2) 3.73 3.35 2.55 38 118 Net overhead ratio(4) 1.63 1.53 1.21 10 42 Return on average assets 1.10 1.12 0.80 (2 ) 30 Return on average common equity 12.72 12.31 9.05 41 367 Return on average tangible common equity (non-GAAP)(2) 15.21 14.68 11.04 53 417 At end of period Total assets $ 52,949,649 $ 52,382,939 $ 50,142,143 4 % 6 % Total loans(5) 39,196,485 38,167,613 34,789,104 11 13 Total deposits 42,902,544 42,797,191 42,095,585 1 2 Total shareholders’ equity 4,796,838 4,637,980 4,498,688 14 7 (1) Period-end balance sheet percentage changes are annualized.
(2) See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(3) Net revenue is net interest income plus non-interest income.
(4) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s average total assets. A lower ratio indicates a higher degree of efficiency.
(5) Excludes mortgage loans held-for-sale.Certain returns, yields, performance ratios, or quarterly growth rates are “annualized” in this presentation to represent an annual time period. This is done for analytical purposes to better discern, for decision-making purposes, underlying performance trends when compared to full-year or year-over-year amounts. For example, a 5% growth rate for a quarter would represent an annualized 20% growth rate. Additional supplemental financial information showing quarterly trends can be found on the Company’s website at www.wintrust.com by choosing “Financial Reports” under the “Investor Relations” heading, and then choosing “Financial Highlights.”
WINTRUST FINANCIAL CORPORATION
Selected Financial HighlightsThree Months Ended Years Ended (Dollars in thousands, except per share data) Dec 31,
2022Sep 30,
2022Jun 30,
2022Mar 31,
2022Dec 31,
2021Dec 31,
2022Dec 31,
2021Selected Financial Condition Data (at end of period): Total assets $ 52,949,649 $ 52,382,939 $ 50,969,332 $ 50,250,661 $ 50,142,143 Total loans(1) 39,196,485 38,167,613 37,053,103 35,280,547 34,789,104 Total deposits 42,902,544 42,797,191 42,593,326 42,219,322 42,095,585 Total shareholders’ equity 4,796,838 4,637,980 4,727,623 4,492,256 4,498,688 Selected Statements of Income Data: Net interest income $ 456,816 $ 401,448 $ 337,804 $ 299,294 $ 295,976 $ 1,495,362 $ 1,124,957 Net revenue(2) 550,655 502,930 440,746 462,084 429,743 1,956,415 1,711,077 Net income 144,817 142,961 94,513 127,391 98,757 509,682 466,151 Pre-tax income, excluding provision for credit losses (non-GAAP)(3) 242,819 206,461 152,078 177,786 146,344 779,144 578,533 Net income per common share – Basic 2.27 2.24 1.51 2.11 1.61 8.14 7.69 Net income per common share – Diluted 2.23 2.21 1.49 2.07 1.58 8.02 7.58 Cash dividends declared per common share 0.34 0.34 0.34 0.34 0.31 1.36 1.24 Selected Financial Ratios and Other Data: Performance Ratios: Net interest margin 3.71 % 3.34 % 2.92 % 2.60 % 2.54 % 3.15 % 2.57 % Net interest margin – fully taxable-equivalent (non-GAAP)(3) 3.73 3.35 2.93 2.61 2.55 3.17 2.58 Non-interest income to average assets 0.71 0.79 0.84 1.33 1.08 0.91 1.25 Non-interest expense to average assets 2.34 2.32 2.35 2.33 2.29 2.33 2.42 Net overhead ratio(4) 1.63 1.53 1.51 1.00 1.21 1.42 1.17 Return on average assets 1.10 1.12 0.77 1.04 0.80 1.01 1.00 Return on average common equity 12.72 12.31 8.53 11.94 9.05 11.41 11.27 Return on average tangible common equity (non-GAAP)(3) 15.21 14.68 10.36 14.48 11.04 13.73 13.83 Average total assets $ 52,087,618 $ 50,722,694 $ 49,353,426 $ 49,501,844 $ 49,118,777 $ 50,424,319 $ 46,824,051 Average total shareholders’ equity 4,710,856 4,795,387 4,526,110 4,500,460 4,433,953 4,634,224 4,300,742 Average loans to average deposits ratio 90.5 % 88.8 % 86.8 % 83.8 % 81.7 % 87.5 % 84.7 % Period-end loans to deposits ratio 91.4 89.2 87.0 83.6 82.6 Common Share Data at end of period: Market price per common share $ 84.52 $ 81.55 $ 80.15 $ 92.93 $ 90.82 Book value per common share 72.12 69.56 71.06 71.26 71.62 Tangible book value per common share (non-GAAP)(3) 61.00 58.42 59.87 59.34 59.64 Common shares outstanding 60,794,008 60,743,335 60,721,889 57,253,214 57,054,091 Other Data at end of period: Tier 1 leverage ratio(5) 8.8 % 8.8 % 8.8 % 8.1 % 8.0 % Risk-based capital ratios: Tier 1 capital ratio(5) 10.0 9.9 9.9 9.6 9.6 Common equity tier 1 capital ratio(5) 9.1 9.0 9.0 8.6 8.6 Total capital ratio(5) 11.9 11.8 11.9 11.6 11.6 Allowance for credit losses(6) $ 357,936 $ 315,338 $ 312,192 $ 301,327 $ 299,731 Allowance for loan and unfunded lending-related commitment losses to total loans 0.91 % 0.83 % 0.84 % 0.85 % 0.86 % Number of: Bank subsidiaries 15 15 15 15 15 Banking offices 174 174 173 174 173 (1) Excludes mortgage loans held-for-sale.
(2) Net revenue is net interest income and non-interest income.
(3) See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(4) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s average total assets. A lower ratio indicates a higher degree of efficiency.
(5) Capital ratios for current quarter-end are estimated.
(6) The allowance for credit losses includes the allowance for loan losses, the allowance for unfunded lending-related commitments and the allowance for held-to-maturity securities losses.WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION(Unaudited) (Unaudited) (Unaudited) (Unaudited) Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, (In thousands) 2022 2022 2022 2022 2021 Assets Cash and due from banks $ 490,908 $ 489,590 $ 498,891 $ 462,516 $ 411,150 Federal funds sold and securities purchased under resale agreements 58 57 475,056 700,056 700,055 Interest-bearing deposits with banks 1,988,719 3,968,605 3,266,541 4,013,597 5,372,603 Available-for-sale securities, at fair value 3,243,017 2,923,653 2,970,121 2,998,898 2,327,793 Held-to-maturity securities, at amortized cost 3,640,567 3,389,842 3,413,469 3,435,729 2,942,285 Trading account securities 1,127 179 1,010 852 1,061 Equity securities with readily determinable fair value 110,365 114,012 93,295 92,689 90,511 Federal Home Loan Bank and Federal Reserve Bank stock 224,759 178,156 136,138 136,163 135,378 Brokerage customer receivables 16,387 20,327 21,527 22,888 26,068 Mortgage loans held-for-sale 299,935 376,160 513,232 606,545 817,912 Loans, net of unearned income 39,196,485 38,167,613 37,053,103 35,280,547 34,789,104 Allowance for loan losses (270,173 ) (246,110 ) (251,769 ) (250,539 ) (247,835 ) Net loans 38,926,312 37,921,503 36,801,334 35,030,008 34,541,269 Premises, software and equipment, net 764,798 763,029 762,381 761,213 766,405 Lease investments, net 253,928 244,822 223,813 240,656 242,082 Accrued interest receivable and other assets 1,391,342 1,316,305 1,112,697 1,066,750 1,084,115 Trade date securities receivable 921,717 — — — — Goodwill 653,524 653,079 654,709 655,402 655,149 Other acquisition-related intangible assets 22,186 23,620 25,118 26,699 28,307 Total assets $ 52,949,649 $ 52,382,939 $ 50,969,332 $ 50,250,661 $ 50,142,143 Liabilities and Shareholders’ Equity Deposits: Non-interest-bearing $ 12,668,160 $ 13,529,277 $ 13,855,844 $ 13,748,918 $ 14,179,980 Interest-bearing 30,234,384 29,267,914 28,737,482 28,470,404 27,915,605 Total deposits 42,902,544 42,797,191 42,593,326 42,219,322 42,095,585 Federal Home Loan Bank advances 2,316,071 2,316,071 1,166,071 1,241,071 1,241,071 Other borrowings 596,614 447,215 482,787 482,516 494,136 Subordinated notes 437,392 437,260 437,162 437,033 436,938 Junior subordinated debentures 253,566 253,566 253,566 253,566 253,566 Trade date securities payable — — — 437 — Accrued interest payable and other liabilities 1,646,624 1,493,656 1,308,797 1,124,460 1,122,159 Total liabilities 48,152,811 47,744,959 46,241,709 45,758,405 45,643,455 Shareholders’ Equity: Preferred stock 412,500 412,500 412,500 412,500 412,500 Common stock 60,797 60,743 60,722 59,091 58,892 Surplus 1,902,474 1,891,621 1,880,913 1,698,093 1,685,572 Treasury stock (304 ) — — (109,903 ) (109,903 ) Retained earnings 2,849,007 2,731,844 2,616,525 2,548,474 2,447,535 Accumulated other comprehensive (loss) income (427,636 ) (458,728 ) (243,037 ) (115,999 ) 4,092 Total shareholders’ equity 4,796,838 4,637,980 4,727,623 4,492,256 4,498,688 Total liabilities and shareholders’ equity $ 52,949,649 $ 52,382,939 $ 50,969,332 $ 50,250,661 $ 50,142,143 WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)Three Months Ended Years Ended (In thousands, except per share data) Dec 31,
2022Sep 30,
2022Jun 30,
2022Mar 31,
2022Dec 31,
2021Dec 31,
2022Dec 31,
2021Interest income Interest and fees on loans $ 498,838 $ 402,689 $ 320,501 $ 285,698 $ 289,140 $ 1,507,726 $ 1,133,528 Mortgage loans held-for-sale 3,997 5,371 5,740 6,087 7,234 21,195 32,169 Interest-bearing deposits with banks 20,349 15,621 5,790 1,687 2,254 43,447 6,606 Federal funds sold and securities purchased under resale agreements 1,263 1,845 1,364 431 173 4,903 173 Investment securities 53,092 38,569 36,541 32,398 27,210 160,600 95,286 Trading account securities 6 7 4 5 4 22 10 Federal Home Loan Bank and Federal Reserve Bank stock 2,918 2,109 1,823 1,772 1,776 8,622 7,067 Brokerage customer receivables 282 267 205 174 188 928 645 Total interest income 580,745 466,478 371,968 328,252 327,979 1,747,443 1,275,484 Interest expense Interest on deposits 95,447 45,916 18,985 14,854 16,572 175,202 88,119 Interest on Federal Home Loan Bank advances 13,823 6,812 4,878 4,816 4,923 30,329 19,581 Interest on other borrowings 5,313 4,008 2,734 2,239 2,250 14,294 9,928 Interest on subordinated notes 5,520 5,485 5,517 5,482 5,514 22,004 21,983 Interest on junior subordinated debentures 3,826 2,809 2,050 1,567 2,744 10,252 10,916 Total interest expense 123,929 65,030 34,164 28,958 32,003 252,081 150,527 Net interest income 456,816 401,448 337,804 299,294 295,976 1,495,362 1,124,957 Provision for credit losses 47,646 6,420 20,417 4,106 9,299 78,589 (59,263 ) Net interest income after provision for credit losses 409,170 395,028 317,387 295,188 286,677 1,416,773 1,184,220 Non-interest income Wealth management 30,727 33,124 31,369 31,394 32,489 126,614 124,019 Mortgage banking 17,407 27,221 33,314 77,231 53,138 155,173 273,010 Service charges on deposit accounts 13,054 14,349 15,888 15,283 14,734 58,574 54,168 Losses on investment securities, net (6,745 ) (3,103 ) (7,797 ) (2,782 ) (1,067 ) (20,427 ) (1,059 ) Fees from covered call options 7,956 1,366 1,069 3,742 1,128 14,133 3,673 Trading (losses) gains, net (306 ) (7 ) 176 3,889 206 3,752 245 Operating lease income, net 12,384 12,644 15,007 15,475 14,204 55,510 53,691 Other 19,362 15,888 13,916 18,558 18,935 67,724 78,373 Total non-interest income 93,839 101,482 102,942 162,790 133,767 461,053 586,120 Non-interest expense Salaries and employee benefits 180,331 176,095 167,326 172,355 167,131 696,107 691,669 Software and equipment 24,699 24,126 24,250 22,810 23,708 95,885 87,515 Operating lease equipment 10,078 9,448 8,774 9,708 10,147 38,008 40,880 Occupancy, net 17,763 17,727 17,651 17,824 18,343 70,965 74,184 Data processing 7,927 7,767 8,010 7,505 7,207 31,209 27,279 Advertising and marketing 14,279 16,600 16,615 11,924 13,981 59,418 47,275 Professional fees 9,267 7,544 7,876 8,401 7,551 33,088 29,494 Amortization of other acquisition-related intangible assets 1,436 1,492 1,579 1,609 1,811 6,116 7,734 FDIC insurance 6,775 7,186 6,949 7,729 7,317 28,639 27,030 OREO expense, net 369 229 294 (1,032 ) (641 ) (140 ) (1,654 ) Other 34,912 28,255 29,344 25,465 26,844 117,976 101,138 Total non-interest expense 307,836 296,469 288,668 284,298 283,399 1,177,271 1,132,544 Income before taxes 195,173 200,041 131,661 173,680 137,045 700,555 637,796 Income tax expense 50,356 57,080 37,148 46,289 38,288 190,873 171,645 Net income $ 144,817 $ 142,961 $ 94,513 $ 127,391 $ 98,757 $ 509,682 $ 466,151 Preferred stock dividends 6,991 6,991 6,991 6,991 6,991 27,964 27,964 Net income applicable to common shares $ 137,826 $ 135,970 $ 87,522 $ 120,400 $ 91,766 $ 481,718 $ 438,187 Net income per common share - Basic $ 2.27 $ 2.24 $ 1.51 $ 2.11 $ 1.61 $ 8.14 $ 7.69 Net income per common share - Diluted $ 2.23 $ 2.21 $ 1.49 $ 2.07 $ 1.58 $ 8.02 $ 7.58 Cash dividends declared per common share $ 0.34 $ 0.34 $ 0.34 $ 0.34 $ 0.31 $ 1.36 $ 1.24 Weighted average common shares outstanding 60,769 60,738 58,063 57,196 57,022 59,205 56,994 Dilutive potential common shares 1,096 837 775 862 976 886 792 Average common shares and dilutive common shares 61,865 61,575 58,838 58,058 57,998 60,091 57,786 TABLE 1: LOAN PORTFOLIO MIX AND GROWTH RATES
% Growth From(1) (Dollars in thousands) Dec 31,
2022Sep 30,
2022Jun 30,
2022Mar 31,
2022Dec 31,
2021Sep 30,
2022(2)Dec 31,
2021Balance: Mortgage loans held-for-sale, excluding early buy-out exercised loans guaranteed by U.S. government agencies $ 156,297 $ 216,062 $ 294,688 $ 296,548 $ 473,102 NM (67 )% Mortgage loans held-for-sale, early buy-out exercised loans guaranteed by U.S. government agencies 143,638 160,098 218,544 309,997 344,810 (41 ) (58 ) Total mortgage loans held-for-sale $ 299,935 $ 376,160 $ 513,232 $ 606,545 $ 817,912 (80 )% (63 )% Core loans: Commercial Commercial and industrial $ 5,852,166 $ 5,818,959 $ 5,502,584 $ 5,348,266 $ 5,346,084 2 % 9 % Asset-based lending 1,473,344 1,545,038 1,552,033 1,365,297 1,299,869 (18 ) 13 Municipal 668,235 608,234 535,586 533,357 536,498 39 25 Leases 1,840,928 1,582,359 1,592,329 1,481,368 1,454,099 65 27 Commercial real estate Residential construction 76,877 66,957 55,941 57,037 51,464 59 49 Commercial construction 1,102,098 1,176,407 1,145,602 1,055,972 1,034,988 (25 ) 6 Land 307,955 282,147 304,775 283,397 269,752 36 14 Office 1,337,176 1,269,729 1,321,745 1,273,705 1,285,686 21 4 Industrial 1,836,276 1,777,658 1,746,280 1,668,516 1,585,808 13 16 Retail 1,304,444 1,331,316 1,331,059 1,395,021 1,429,567 (8 ) (9 ) Multi-family 2,560,709 2,305,433 2,171,583 2,175,875 2,043,754 44 25 Mixed use and other 1,425,412 1,368,537 1,330,220 1,325,551 1,289,267 16 11 Home equity 332,698 328,822 325,826 321,435 335,155 5 (1 ) Residential real estate Residential real estate loans for investment 2,207,595 2,086,795 1,965,051 1,749,889 1,606,271 23 37 Residential mortgage loans, early buy-out eligible loans guaranteed by U.S. government agencies 80,701 57,161 34,764 13,520 22,707 NM NM Residential mortgage loans, early buy-out exercised loans guaranteed by U.S. government agencies 84,087 91,503 79,092 36,576 8,121 (32 ) NM Total core loans $ 22,490,701 $ 21,697,055 $ 20,994,470 $ 20,084,782 $ 19,599,090 15 % 15 % Niche loans: Commercial Franchise $ 1,169,623 $ 1,118,478 $ 1,136,929 $ 1,181,761 $ 1,227,234 18 % (5 )% Mortgage warehouse lines of credit 237,392 297,374 398,085 261,847 359,818 (80 ) (34 ) Community Advantage - homeowners association 380,875 365,967 341,095 324,383 308,286 16 24 Insurance agency lending 897,678 879,183 906,375 833,720 813,897 8 10 Premium Finance receivables U.S. property & casualty insurance 5,103,820 4,983,795 4,781,042 4,271,828 4,178,474 10 22 Canada property & casualty insurance 745,639 729,545 760,405 665,580 677,013 9 10 Life insurance 8,090,998 8,004,856 7,608,433 7,354,163 7,042,810 4 15 Consumer and other 50,836 47,702 44,180 48,519 24,199 26 NM Total niche loans $ 16,676,861 $ 16,426,900 $ 15,976,544 $ 14,941,801 $ 14,631,731 6 % 14 % Commercial PPP loans: Originated in 2020 $ 7,898 $ 8,724 $ 18,547 $ 40,016 $ 74,412 (38 )% (89 )% Originated in 2021 21,025 34,934 63,542 213,948 483,871 NM (96 ) Total commercial PPP loans $ 28,923 $ 43,658 $ 82,089 $ 253,964 $ 558,283 NM (95 )% Total loans, net of unearned income $ 39,196,485 $ 38,167,613 $ 37,053,103 $ 35,280,547 $ 34,789,104 11 % 13 % (1) NM - Not meaningful.
(2) AnnualizedTABLE 2: DEPOSIT PORTFOLIO MIX AND GROWTH RATES
% Growth From (Dollars in thousands) Dec 31,
2022Sep 30,
2022Jun 30,
2022Mar 31,
2022Dec 31,
2021Sep 30,
2022(1)Dec 31,
2021Balance: Non-interest-bearing $ 12,668,160 $ 13,529,277 $ 13,855,844 $ 13,748,918 $ 14,179,980 (25 )% (11 )% NOW and interest-bearing demand deposits 5,591,986 5,676,122 5,918,908 5,089,724 4,646,944 (6 ) 20 Wealth management deposits(2) 2,463,833 2,988,195 3,182,407 2,542,995 2,612,759 (70 ) (6 ) Money market 12,886,795 12,538,489 12,273,350 13,012,460 12,840,432 11 — Savings 4,556,635 3,988,790 3,686,596 4,089,230 3,846,681 56 18 Time certificates of deposit 4,735,135 4,076,318 3,676,221 3,735,995 3,968,789 64 19 Total deposits $ 42,902,544 $ 42,797,191 $ 42,593,326 $ 42,219,322 $ 42,095,585 1 % 2 % Mix: Non-interest-bearing 30 % 32 % 33 % 32 % 34 % NOW and interest-bearing demand deposits 13 13 13 12 11 Wealth management deposits(2) 5 7 7 6 6 Money market 30 29 29 31 31 Savings 11 9 9 10 9 Time certificates of deposit 11 10 9 9 9 Total deposits 100 % 100 % 100 % 100 % 100 % (1) Annualized.
(2) Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wintrust Investments, Chicago Deferred Exchange Company, LLC (“CDEC”), trust and asset management customers of the Company.TABLE 3: TIME CERTIFICATES OF DEPOSIT MATURITY/RE-PRICING ANALYSIS
As of December 31, 2022(Dollars in thousands) Total Time
Certificates of
DepositWeighted-Average
Rate of Maturing
Time Certificates
of Deposit(1)1-3 months $ 988,118 2.04 % 4-6 months 929,448 1.89 7-9 months 815,885 1.56 10-12 months 894,365 2.06 13-18 months 654,059 2.32 19-24 months 233,827 2.03 24+ months 219,433 2.20 Total $ 4,735,135 1.98 % (1) Weighted-average rate excludes the impact of purchase accounting fair value adjustments.
TABLE 4: QUARTERLY AVERAGE BALANCES
Average Balance for three months ended, Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, (In thousands) 2022 2022 2022 2022 2021 Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents(1) $ 2,449,889 $ 3,039,907 $ 3,265,607 $ 4,563,726 $ 6,148,165 Investment securities(2) 7,310,383 6,655,215 6,589,947 6,378,022 5,317,351 FHLB and FRB stock 185,290 142,304 136,930 135,912 135,414 Liquidity management assets(3) 9,945,562 9,837,426 9,992,484 11,077,660 11,600,930 Other earning assets(3)(4) 18,585 21,805 24,059 25,192 28,298 Mortgage loans held-for-sale 308,639 455,342 560,707 664,019 827,672 Loans, net of unearned income(3)(5) 38,566,871 37,431,126 35,860,329 34,830,520 33,677,777 Total earning assets(3) 48,839,657 47,745,699 46,437,579 46,597,391 46,134,677 Allowance for loan and investment security losses (252,827 ) (260,270 ) (260,547 ) (253,080 ) (254,874 ) Cash and due from banks 475,691 458,263 476,741 481,634 468,331 Other assets 3,025,097 2,779,002 2,699,653 2,675,899 2,770,643 Total assets $ 52,087,618 $ 50,722,694 $ 49,353,426 $ 49,501,844 $ 49,118,777 NOW and interest-bearing demand deposits $ 5,598,291 $ 5,789,368 $ 5,230,702 $ 4,788,272 $ 4,439,242 Wealth management deposits 2,883,247 3,078,764 2,835,267 2,505,800 2,646,879 Money market accounts 12,319,842 12,037,412 11,892,948 12,773,805 12,665,167 Savings accounts 4,403,113 3,862,579 3,882,856 3,904,299 3,766,037 Time deposits 4,023,232 3,675,930 3,687,778 3,861,371 4,058,282 Interest-bearing deposits 29,227,725 28,444,053 27,529,551 27,833,547 27,575,607 Federal Home Loan Bank advances 2,088,201 1,403,573 1,197,390 1,241,071 1,241,073 Other borrowings 480,553 478,909 489,779 494,267 501,933 Subordinated notes 437,312 437,191 437,084 436,966 436,861 Junior subordinated debentures 253,566 253,566 253,566 253,566 253,566 Total interest-bearing liabilities 32,487,357 31,017,292 29,907,370 30,259,417 30,009,040 Non-interest-bearing deposits 13,404,036 13,731,219 13,805,128 13,734,064 13,640,270 Other liabilities 1,485,369 1,178,796 1,114,818 1,007,903 1,035,514 Equity 4,710,856 4,795,387 4,526,110 4,500,460 4,433,953 Total liabilities and shareholders’ equity $ 52,087,618 $ 50,722,694 $ 49,353,426 $ 49,501,844 $ 49,118,777 Net free funds/contribution(6) $ 16,352,300 $ 16,728,407 $ 16,530,209 $ 16,337,974 $ 16,125,637 (1) Includes interest-bearing deposits from banks and securities purchased under resale agreements with original maturities of greater than three months. Cash equivalents include federal funds sold and securities purchased under resale agreements with original maturities of three months or less.
(2) Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.
(3) See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(4) Other earning assets include brokerage customer receivables and trading account securities.
(5) Loans, net of unearned income, include non-accrual loans.
(6) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.TABLE 5: QUARTERLY NET INTEREST INCOME
Net Interest Income for three months ended, Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, (In thousands) 2022 2022 2022 2022 2021 Interest income: Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents $ 21,612 $ 17,466 $ 7,154 $ 2,118 $ 2,427 Investment securities 53,630 39,071 37,013 32,863 27,696 FHLB and FRB stock 2,918 2,109 1,823 1,772 1,776 Liquidity management assets(1) 78,160 58,646 45,990 36,753 31,899 Other earning assets(1) 289 275 210 181 194 Mortgage loans held-for-sale 3,997 5,371 5,740 6,087 7,234 Loans, net of unearned income(1) 500,432 403,719 321,069 286,125 289,557 Total interest income $ 582,878 $ 468,011 $ 373,009 $ 329,146 $ 328,884 Interest expense: NOW and interest-bearing demand deposits $ 14,982 $ 8,041 $ 2,553 $ 1,990 $ 1,913 Wealth management deposits 14,079 11,068 3,685 918 1,402 Money market accounts 45,468 18,916 8,559 7,648 7,658 Savings accounts 8,421 2,130 347 336 345 Time deposits 12,497 5,761 3,841 3,962 5,254 Interest-bearing deposits 95,447 45,916 18,985 14,854 16,572 Federal Home Loan Bank advances 13,823 6,812 4,878 4,816 4,923 Other borrowings 5,313 4,008 2,734 2,239 2,250 Subordinated notes 5,520 5,485 5,517 5,482 5,514 Junior subordinated debentures 3,826 2,809 2,050 1,567 2,744 Total interest expense $ 123,929 $ 65,030 $ 34,164 $ 28,958 $ 32,003 Less: Fully taxable-equivalent adjustment (2,133 ) (1,533 ) (1,041 ) (894 ) (905 ) Net interest income (GAAP)(2) 456,816 401,448 337,804 299,294 295,976 Fully taxable-equivalent adjustment 2,133 1,533 1,041 894 905 Net interest income, fully taxable-equivalent (non-GAAP)(2) $ 458,949 $ 402,981 $ 338,845 $ 300,188 $ 296,881 (1) Interest income on tax-advantaged loans, trading securities and investment securities reflects a taxable-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period.
(2) See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.TABLE 6: QUARTERLY NET INTEREST MARGIN
Net Interest Margin for three months ended, Dec 31,
2022Sep 30,
2022Jun 30,
2022Mar 31,
2022Dec 31,
2021Yield earned on: Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents 3.50 % 2.28 % 0.88 % 0.19 % 0.16 % Investment securities 2.91 2.33 2.25 2.09 2.07 FHLB and FRB stock 6.25 5.88 5.34 5.29 5.20 Liquidity management assets 3.12 2.37 1.85 1.35 1.09 Other earning assets 6.17 5.01 3.49 2.91 2.71 Mortgage loans held-for-sale 5.14 4.68 4.11 3.72 3.47 Loans, net of unearned income 5.15 4.28 3.59 3.33 3.41 Total earning assets 4.73 % 3.89 % 3.22 % 2.86 % 2.83 % Rate paid on: NOW and interest-bearing demand deposits 1.06 % 0.55 % 0.20 % 0.17 % 0.17 % Wealth management deposits 1.94 1.43 0.52 0.15 0.21 Money market accounts 1.46 0.62 0.29 0.24 0.24 Savings accounts 0.76 0.22 0.04 0.03 0.04 Time deposits 1.23 0.62 0.42 0.42 0.51 Interest-bearing deposits 1.30 0.64 0.28 0.22 0.24 Federal Home Loan Bank advances 2.63 1.93 1.63 1.57 1.57 Other borrowings 4.39 3.32 2.24 1.84 1.78 Subordinated notes 5.05 5.02 5.05 5.02 5.05 Junior subordinated debentures 5.90 4.33 3.20 2.47 4.23 Total interest-bearing liabilities 1.51 % 0.83 % 0.46 % 0.39 % 0.42 % Interest rate spread(1)(2) 3.22 % 3.06 % 2.76 % 2.47 % 2.41 % Less: Fully taxable-equivalent adjustment (0.02 ) (0.01 ) (0.01 ) (0.01 ) (0.01 ) Net free funds/contribution(3) 0.51 0.29 0.17 0.14 0.14 Net interest margin (GAAP)(2) 3.71 % 3.34 % 2.92 % 2.60 % 2.54 % Fully taxable-equivalent adjustment 0.02 0.01 0.01 0.01 0.01 Net interest margin, fully taxable-equivalent (non-GAAP)(2) 3.73 % 3.35 % 2.93 % 2.61 % 2.55 % (1) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(2) See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(3) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.TABLE 7: YEAR-TO-DATE AVERAGE BALANCES, AND NET INTEREST INCOME AND MARGIN
Average Balance
fortwelve months ended,Interest
fortwelve months ended,Yield/Rate
fortwelve months ended,(Dollars in thousands) Dec 31,
2022Dec 31,
2021Dec 31,
2022Dec 31,
2021Dec 31,
2022Dec 31,
2021Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents(1) $ 3,323,196 $ 4,840,048 $ 48,350 $ 6,779 1.45 % 0.14 % Investment securities(2) 6,735,732 4,779,313 162,577 97,258 2.41 2.03 FHLB and FRB stock 150,223 135,873 8,622 7,067 5.74 5.20 Liquidity management assets(3)(4) $ 10,209,151 $ 9,755,234 $ 219,549 $ 111,104 2.15 % 1.14 % Other earning assets(3)(4)(5) 22,391 25,096 955 657 4.27 2.62 Mortgage loans held-for-sale 496,088 959,457 21,195 32,169 4.27 3.35 Loans, net of unearned income(3)(4)(6) 36,684,528 33,051,043 1,511,345 1,135,155 4.12 3.43 Total earning assets(4) $ 47,412,158 $ 43,790,830 $ 1,753,044 $ 1,279,085 3.70 % 2.92 % Allowance for loan and investment security losses (256,690 ) (284,163 ) Cash and due from banks 473,025 432,836 Other assets 2,795,826 2,884,548 Total assets $ 50,424,319 $ 46,824,051 NOW and interest-bearing demand deposits $ 5,355,077 $ 4,029,662 $ 27,566 $ 7,739 0.51 % 0.19 % Wealth management deposits 2,827,497 2,361,412 29,750 4,534 1.05 0.19 Money market accounts 12,254,159 11,801,788 80,591 32,031 0.66 0.27 Savings accounts 4,014,166 3,734,162 11,234 1,583 0.28 0.04 Time deposits 3,812,148 4,447,871 26,061 42,232 0.68 0.95 Interest-bearing deposits $ 28,263,047 $ 26,374,895 $ 175,202 $ 88,119 0.62 % 0.33 % Federal Home Loan Bank advances 1,484,663 1,236,478 30,329 19,581 2.04 1.58 Other borrowings 485,820 514,657 14,294 9,928 2.94 1.93 Subordinated notes 437,139 436,697 22,004 21,983 5.03 5.03 Junior subordinated debentures 253,566 253,566 10,252 10,916 4.10 4.25 Total interest-bearing liabilities $ 30,924,235 $ 28,816,293 $ 252,081 $ 150,527 0.81 % 0.52 % Non-interest-bearing deposits 13,667,879 12,638,518 Other liabilities 1,197,981 1,068,498 Equity 4,634,224 4,300,742 Total liabilities and shareholders’ equity $ 50,424,319 $ 46,824,051 Interest rate spread(4)(7) 2.89 % 2.40 % Less: Fully taxable-equivalent adjustment (5,601 ) (3,601 ) (0.02 ) (0.01 ) Net free funds/contribution(8) $ 16,487,923 $ 14,974,537 0.28 0.18 Net interest income/margin (GAAP)(4) $ 1,495,362 $ 1,124,957 3.15 % 2.57 % Fully taxable-equivalent adjustment 5,601 3,601 0.02 0.01 Net interest income/margin, fully taxable-equivalent (non-GAAP)(4) $ 1,500,963 $ 1,128,558 3.17 % 2.58 % (1) Includes interest-bearing deposits from banks and securities purchased under resale agreements with original maturities of greater than three months. Cash equivalents include federal funds sold and securities purchased under resale agreements with original maturities of three months or less.
(2) Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.
(3) Interest income on tax-advantaged loans, trading securities and investment securities reflects a taxable-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period.
(4) See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(5) Other earning assets include brokerage customer receivables and trading account securities.
(6) Loans, net of unearned income, include non-accrual loans.
(7) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(8) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.TABLE 8: INTEREST RATE SENSITIVITY
As an ongoing part of its financial strategy, the Company attempts to manage the impact of fluctuations in market interest rates on net interest income. Management measures its exposure to changes in interest rates by modeling many different interest rate scenarios.
The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon assuming increases and decreases of 100 and 200 basis points. The Static Shock Scenario results incorporate actual cash flows and repricing characteristics for balance sheet instruments following an instantaneous, parallel change in market rates based upon a static (i.e. no growth or constant) balance sheet. Conversely, the Ramp Scenario results incorporate management’s projections of future volume and pricing of each of the product lines following a gradual, parallel change in market rates over twelve months. Actual results may differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies. The interest rate sensitivity for both the Static Shock and Ramp Scenario is as follows:
Static Shock Scenario +200 Basis
Points+100 Basis
Points-100 Basis
Points-200 Basis
PointsDec 31, 2022 7.2 % 3.8 % (5.0 )% (12.1 )% Sep 30, 2022 12.9 7.1 (8.7 ) (18.9 ) Jun 30, 2022 17.0 9.0 (12.6 ) (23.8 ) Mar 31, 2022 21.4 11.0 (11.3 ) (18.7 ) Dec 31, 2021 25.3 12.4 (8.5 ) (15.8 ) Ramp Scenario +200 Basis
Points+100 Basis
Points-100 Basis
Points-200 Basis
PointsDec 31, 2022 5.6 % 3.0 % (2.9 )% (6.8 )% Sep 30, 2022 6.5 3.6 (3.9 ) (8.6 ) Jun 30, 2022 10.2 5.3 (6.9 ) (14.3 ) Mar 31, 2022 11.2 5.8 (7.1 ) (12.4 ) Dec 31, 2021 13.9 6.9 (5.6 ) (10.8 ) As shown above, the magnitude of potential changes in net interest income in various interest rate scenarios has continued to diminish. Given the recent unprecedented rise in interest rates, the Company has made a conscious effort to reposition its exposure to changing interest rates given the uncertainty of the future interest rate environment. To this end, management has executed various derivative instruments including collars and receive fixed swaps to hedge variable rate loan exposures and originated a higher percentage of its loan originations in longer term fixed rate loans. The Company will continue to monitor current and projected interest rates and expects to execute additional derivatives to mitigate potential fluctuations in the net interest margin in future years.
TABLE 9: MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES
Loans repricing or maturity period As of December 31, 2022 One year or
lessFrom one to
five yearsFrom five to
fifteen yearsAfter fifteen
yearsTotal (In thousands) Commercial Fixed rate $ 555,594 $ 2,534,527 $ 1,592,024 $ 12,925 $ 4,695,070 Variable rate 7,852,693 1,352 49 — 7,854,094 Total commercial $ 8,408,287 $ 2,535,879 $ 1,592,073 $ 12,925 $ 12,549,164 Commercial real estate Fixed rate 430,152 2,744,033 607,770 46,352 3,828,307 Variable rate 6,102,383 20,257 — — 6,122,640 Total commercial real estate $ 6,532,535 $ 2,764,290 $ 607,770 $ 46,352 $ 9,950,947 Home equity Fixed rate 11,960 3,185 — 144 15,289 Variable rate 317,409 — — — 317,409 Total home equity $ 329,369 $ 3,185 $ — $ 144 $ 332,698 Residential real estate Fixed rate 20,048 3,960 30,245 1,032,018 1,086,271 Variable rate 63,242 238,405 984,465 — 1,286,112 Total residential real estate $ 83,290 $ 242,365 $ 1,014,710 $ 1,032,018 $ 2,372,383 Premium finance receivables - property & casualty Fixed rate 5,695,585 153,874 — — 5,849,459 Variable rate — — — — — Total premium finance receivables - property & casualty $ 5,695,585 $ 153,874 $ — $ — $ 5,849,459 Premium finance receivables - life insurance Fixed rate 91,363 470,117 22,185 — 583,665 Variable rate 7,507,333 — — — 7,507,333 Total premium finance receivables - life insurance $ 7,598,696 $ 470,117 $ 22,185 $ — $ 8,090,998 Consumer and other Fixed rate 12,335 5,032 11 482 17,860 Variable rate 32,976 — — — 32,976 Total consumer and other $ 45,311 $ 5,032 $ 11 $ 482 $ 50,836 Total per category Fixed rate 6,817,037 5,914,728 2,252,235 1,091,921 16,075,921 Variable rate 21,876,036 260,014 984,514 — 23,120,564 Total loans, net of unearned income $ 28,693,073 $ 6,174,742 $ 3,236,749 $ 1,091,921 $ 39,196,485 Variable Rate Loan Pricing by Index: Prime $ 3,850,970 One- month LIBOR 3,349,999 Three- month LIBOR 122,551 Twelve- month LIBOR 3,582,952 One- year CMT 3,812,549 Other U.S. Treasury tenors 84,837 SOFR tenors 7,670,959 Ameribor tenors 336,618 BSBY tenors 39,185 Other 269,944 Total variable rate $ 23,120,564 LIBOR - London Interbank Offered Rate.
CMT - Constant Maturity Treasury 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/af5c30bf-cfcb-48dd-a1d5-f5753b798a27Source: Bloomberg
As noted in the table on the previous page, the majority of the Company’s portfolio is tied to LIBOR and SOFR 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 $3.3 billion tied to one-month LIBOR, $3.6 billion tied to twelve-month LIBOR and $6.6 billion tied to one-month SOFR. The above chart shows:
Basis Point (bp) Change in Prime 1-month
LIBOR12-month
LIBOR1-month
SOFRFourth Quarter 2022 125 bps 125 bps 70 bps 132 bps Third Quarter 2022 150 135 116 135 Second Quarter 2022 125 134 152 139 First Quarter 2022 25 35 152 25 Fourth Quarter 2021 0 2 34 -1 TABLE 10: ALLOWANCE FOR CREDIT LOSSES
Three Months Ended Years Ended Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31, (Dollars in thousands) 2022 2022 2022 2022 2021 2022 2021 Allowance for credit losses at beginning of period $ 315,338 $ 312,192 $ 301,327 $ 299,731 $ 296,138 $ 299,731 $ 379,969 Provision for credit losses 47,646 6,420 20,417 4,106 9,299 78,589 (59,263 ) Initial allowance for credit losses recognized on PCD assets acquired during the period(1) — — — — 470 — 470 Other adjustments 31 (105 ) (56 ) 22 5 (108 ) 5 Charge-offs: Commercial 3,019 780 8,928 1,414 4,431 14,141 20,801 Commercial real estate 538 24 40 777 495 1,379 3,293 Home equity — 43 192 197 135 432 336 Residential real estate — 5 — 466 1,067 471 1,082 Premium finance receivables - property & casualty 3,629 6,037 2,903 1,671 2,314 14,240 9,020 Premium finance receivables - life insurance 28 — — 7 — 35 — Consumer and other — 635 253 193 157 1,081 487 Total charge-offs 7,214 7,524 12,316 4,725 8,599 31,779 35,019 Recoveries: Commercial 691 2,523 996 538 389 4,748 2,559 Commercial real estate 61 55 553 32 217 701 1,304 Home equity 65 38 123 93 461 319 1,203 Residential real estate 6 60 6 5 85 77 330 Premium finance receivables - property & casualty 1,279 1,648 1,119 1,476 1,240 5,522 7,989 Premium finance receivables - life insurance — — — — — — — Consumer and other 33 31 23 49 26 136 184 Total recoveries 2,135 4,355 2,820 2,193 2,418 11,503 13,569 Net charge-offs (5,079 ) (3,169 ) (9,496 ) (2,532 ) (6,181 ) (20,276 ) (21,450 ) Allowance for credit losses at period end $ 357,936 $ 315,338 $ 312,192 $ 301,327 $ 299,731 $ 357,936 $ 299,731 Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average: Commercial 0.08 % (0.06) % 0.27 % 0.03 % 0.14 % 0.08 % 0.16 % Commercial real estate 0.02 0.00 (0.02 ) 0.03 0.01 0.01 0.02 Home equity (0.08 ) 0.01 0.09 0.13 (0.38 ) 0.03 (0.23 ) Residential real estate 0.00 (0.01 ) 0.00 0.11 0.25 0.02 0.05 Premium finance receivables - property & casualty 0.16 0.30 0.14 0.02 0.09 0.16 0.02 Premium finance receivables - life insurance 0.00 — — 0.00 — 0.00 — Consumer and other (0.16 ) 4.02 1.31 1.19 0.95 1.22 0.66 Total loans, net of unearned income 0.05 % 0.03 % 0.11 % 0.03 % 0.07 % 0.06 % 0.06 % Loans at period end $ 39,196,485 $ 38,167,613 $ 37,053,103 $ 35,280,547 $ 34,789,104 Allowance for loan losses as a percentage of loans at period end 0.69 % 0.64 % 0.68 % 0.71 % 0.71 % Allowance for loan and unfunded lending-related commitment losses as a percentage of loans at period end 0.91 0.83 0.84 0.85 0.86 (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 Years Ended Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31, (In thousands) 2022 2022 2022 2022 2021 2022 2021 Provision for loan losses $ 29,110 $ (2,385 ) $ 10,782 $ 5,214 $ 4,929 $ 42,721 $ (50,563 ) Provision for unfunded lending-related commitments losses 18,358 8,578 9,711 (1,189 ) 4,375 35,458 (8,717 ) Provision for held-to-maturity securities losses 178 227 (76 ) 81 (5 ) 410 17 Provision for credit losses $ 47,646 $ 6,420 $ 20,417 $ 4,106 $ 9,299 $ 78,589 $ (59,263 ) Allowance for loan losses $ 270,173 $ 246,110 $ 251,769 $ 250,539 $ 247,835 Allowance for unfunded lending-related commitments losses 87,275 68,918 60,340 50,629 51,818 Allowance for loan losses and unfunded lending-related commitments losses 357,448 315,028 312,109 301,168 299,653 Allowance for held-to-maturity securities losses 488 310 83 159 78 Allowance for credit losses $ 357,936 $ 315,338 $ 312,192 $ 301,327 $ 299,731 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 December 31, 2022, September 30, 2022 and June 30, 2022.
As of Dec 31, 2022 As of Sep 30, 2022 As of Jun 30, 2022 (Dollars in thousands) Recorded
InvestmentCalculated
Allowance% of its
category’s
balanceRecorded
InvestmentCalculated
Allowance% of its
category’s
balanceRecorded
InvestmentCalculated
Allowance% of its
category’s
balanceCommercial: Commercial, industrial and other, excluding PPP loans $ 12,520,241 $ 142,769 1.14 % $ 12,215,592 $ 135,315 1.11 % $ 11,965,016 $ 142,916 1.19 % Commercial PPP loans 28,923 0 0.00 43,658 1 0.00 82,089 3 0.00 Commercial real estate: Construction and development 1,486,930 75,907 5.10 1,525,511 51,389 3.37 1,506,318 45,522 3.02 Non-construction 8,464,017 108,445 1.28 8,052,673 99,329 1.23 7,900,887 98,210 1.24 Home equity 332,698 7,573 2.28 328,822 7,055 2.15 325,826 6,990 2.15 Residential real estate 2,372,383 11,585 0.49 2,235,459 11,023 0.49 2,078,907 10,479 0.50 Premium finance receivables Commercial insurance loans 5,849,459 9,967 0.17 5,713,340 9,736 0.17 5,541,447 6,840 0.12 Life insurance loans 8,090,998 704 0.01 8,004,856 696 0.01 7,608,433 662 0.01 Consumer and other 50,836 498 0.98 47,702 484 1.01 44,180 487 1.10 Total loans, net of unearned income $ 39,196,485 $ 357,448 0.91 % $ 38,167,613 $ 315,028 0.83 % $ 37,053,103 $ 312,109 0.84 % Total loans, net of unearned income, excluding PPP loans $ 39,167,562 $ 357,448 0.91 % $ 38,123,955 $ 315,027 0.83 % $ 36,971,014 $ 312,106 0.84 % Total core loans(1) $ 22,490,701 $ 320,403 1.42 % $ 21,697,055 $ 273,947 1.26 % $ 20,994,470 $ 275,188 1.31 % Total niche loans(1) 16,676,861 37,045 0.22 16,426,900 41,080 0.25 15,976,544 36,918 0.23 Total PPP loans 28,923 0 0.00 43,658 1 0.00 82,089 3 0.00 (1) See Table 1 for additional detail on core and niche loans.
TABLE 13: LOAN PORTFOLIO AGING
(In thousands) Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Loan Balances: Commercial Nonaccrual $ 35,579 $ 44,293 $ 32,436 $ 16,878 $ 20,399 90+ days and still accruing 462 237 — — 15 60-89 days past due 21,128 24,641 16,789 1,294 24,262 30-59 days past due 56,696 34,917 14,120 31,889 43,861 Current 12,435,299 12,155,162 11,983,760 11,533,902 11,815,531 Total commercial $ 12,549,164 $ 12,259,250 $ 12,047,105 $ 11,583,963 $ 11,904,068 Commercial real estate Nonaccrual $ 6,387 $ 10,477 $ 10,718 $ 12,301 $ 21,746 90+ days and still accruing — — — — — 60-89 days past due 2,244 6,041 6,771 2,648 284 30-59 days past due 30,675 29,971 34,220 30,141 40,443 Current 9,911,641 9,531,695 9,355,496 9,189,984 8,927,813 Total commercial real estate $ 9,950,947 $ 9,578,184 $ 9,407,205 $ 9,235,074 $ 8,990,286 Home equity Nonaccrual $ 1,487 $ 1,320 $ 1,084 $ 1,747 $ 2,574 90+ days and still accruing — — — — — 60-89 days past due — 125 154 199 — 30-59 days past due 2,152 848 930 545 1,120 Current 329,059 326,529 323,658 318,944 331,461 Total home equity $ 332,698 $ 328,822 $ 325,826 $ 321,435 $ 335,155 Residential real estate Early buy-out loans guaranteed by U.S. government agencies(1) $ 164,788 $ 148,664 113,856 $ 50,096 $ 30,828 Nonaccrual 10,171 9,787 8,330 7,262 16,440 90+ days and still accruing — — — — — 60-89 days past due 4,364 2,149 534 293 982 30-59 days past due 9,982 15 147 18,808 12,145 Current 2,183,078 2,074,844 1,956,040 1,723,526 1,576,704 Total residential real estate $ 2,372,383 $ 2,235,459 $ 2,078,907 $ 1,799,985 $ 1,637,099 Premium finance receivables - property & casualty Nonaccrual $ 13,470 $ 13,026 $ 13,303 $ 6,707 $ 5,433 90+ days and still accruing 15,841 16,624 6,447 12,363 7,210 60-89 days past due 14,926 15,301 15,299 8,890 15,490 30-59 days past due 40,557 21,128 23,313 21,278 22,419 Current 5,764,665 5,647,261 5,483,085 4,888,170 4,804,935 Total Premium finance receivables - property & casualty $ 5,849,459 $ 5,713,340 $ 5,541,447 $ 4,937,408 $ 4,855,487 Premium finance receivables - life insurance Nonaccrual $ — $ — $ — $ — $ — 90+ days and still accruing 17,245 1,831 — — 7 60-89 days past due 5,260 13,628 1,796 22,401 12,614 30-59 days past due 68,725 44,954 65,155 15,522 66,651 Current 7,999,768 7,944,443 7,541,482 7,316,240 6,963,538 Total Premium finance receivables - life insurance $ 8,090,998 $ 8,004,856 $ 7,608,433 $ 7,354,163 $ 7,042,810 Consumer and other Nonaccrual $ 6 $ 7 $ 8 $ 4 $ 477 90+ days and still accruing 49 31 25 43 137 60-89 days past due 18 26 8 5 34 30-59 days past due 224 343 119 221 509 Current 50,539 47,295 44,020 48,246 23,042 Total consumer and other $ 50,836 $ 47,702 $ 44,180 $ 48,519 $ 24,199 Total loans, net of unearned income Early buy-out loans guaranteed by U.S. government agencies(1) $ 164,788 $ 148,664 $ 113,856 $ 50,096 $ 30,828 Nonaccrual 67,100 78,910 65,879 44,899 67,069 90+ days and still accruing 33,597 18,723 6,472 12,406 7,369 60-89 days past due 47,940 61,911 41,351 35,730 53,666 30-59 days past due 209,011 132,176 138,004 118,404 187,148 Current 38,674,049 37,727,229 36,687,541 35,019,012 34,443,024 Total loans, net of unearned income $ 39,196,485 $ 38,167,613 $ 37,053,103 $ 35,280,547 $ 34,789,104 (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”)
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, (Dollars in thousands) 2022 2022 2022 2022 2021 Loans past due greater than 90 days and still accruing(2): Commercial $ 462 $ 237 $ — $ — $ 15 Commercial real estate — — — — — Home equity — — — — — Residential real estate — — — — — Premium finance receivables - property & casualty 15,841 16,624 6,447 12,363 7,210 Premium finance receivables - life insurance 17,245 1,831 — — 7 Consumer and other 49 31 25 43 137 Total loans past due greater than 90 days and still accruing 33,597 18,723 6,472 12,406 7,369 Non-accrual loans: Commercial 35,579 44,293 32,436 16,878 20,399 Commercial real estate 6,387 10,477 10,718 12,301 21,746 Home equity 1,487 1,320 1,084 1,747 2,574 Residential real estate 10,171 9,787 8,330 7,262 16,440 Premium finance receivables - property & casualty 13,470 13,026 13,303 6,707 5,433 Premium finance receivables - life insurance — — — — — Consumer and other 6 7 8 4 477 Total non-accrual loans 67,100 78,910 65,879 44,899 67,069 Total non-performing loans: Commercial 36,041 44,530 32,436 16,878 20,414 Commercial real estate 6,387 10,477 10,718 12,301 21,746 Home equity 1,487 1,320 1,084 1,747 2,574 Residential real estate 10,171 9,787 8,330 7,262 16,440 Premium finance receivables - property & casualty 29,311 29,650 19,750 19,070 12,643 Premium finance receivables - life insurance 17,245 1,831 — — 7 Consumer and other 55 38 33 47 614 Total non-performing loans $ 100,697 $ 97,633 $ 72,351 $ 57,305 $ 74,438 Other real estate owned 8,589 5,376 5,574 4,978 1,959 Other real estate owned - from acquisitions 1,311 1,311 1,265 1,225 2,312 Other repossessed assets — — — — — Total non-performing assets $ 110,597 $ 104,320 $ 79,190 $ 63,508 $ 78,709 Accruing TDRs not included within non-performing assets $ 36,620 $ 34,238 $ 36,184 $ 35,922 $ 37,486 Total non-performing loans by category as a percent of its own respective category’s period-end balance: Commercial 0.29 % 0.36 % 0.27 % 0.15 % 0.17 % Commercial real estate 0.06 0.11 0.11 0.13 0.24 Home equity 0.45 0.40 0.33 0.54 0.77 Residential real estate 0.43 0.44 0.40 0.40 1.00 Premium finance receivables - property & casualty 0.50 0.52 0.36 0.39 0.26 Premium finance receivables - life insurance 0.21 0.02 — — 0.00 Consumer and other 0.11 0.08 0.07 0.10 2.54 Total loans, net of unearned income 0.26 % 0.26 % 0.20 % 0.16 % 0.21 % Total non-performing assets as a percentage of total assets 0.21 % 0.20 % 0.16 % 0.13 % 0.16 % Allowance for loan losses and unfunded lending-related commitments losses as a percentage of non-accrual loans 532.71 % 399.22 % 473.76 % 670.77 % 446.78 % (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 December 31, 2022, no TDRs were past due greater than 90 days and still accruing. As of September 30, 2022, June 30, 2022, March 31, 2022, and December 31, 2021, approximately $1.1 million,$541,000, $320,000 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 Years Ended Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31, (In thousands) 2022 2022 2022 2022 2021 2022 2021 Balance at beginning of period $ 97,633 $ 72,351 $ 57,305 $ 74,438 $ 90,041 $ 74,438 $ 127,513 Additions from becoming non-performing in the respective period 10,027 35,234 22,841 4,141 6,851 72,243 38,848 Return to performing status (1,167 ) (154 ) (1,000 ) (729 ) (6,616 ) (3,050 ) (10,592 ) Payments received (16,351 ) (20,417 ) (4,029 ) (20,139 ) (13,212 ) (60,936 ) (53,823 ) Transfer to OREO and other repossessed assets (3,365 ) (185 ) (1,611 ) (4,377 ) (275 ) (9,538 ) (6,027 ) Charge-offs, net (1,363 ) (341 ) (1,969 ) (2,354 ) (5,167 ) (6,027 ) (13,351 ) Net change for niche loans(1) 15,283 11,145 814 6,325 2,816 33,567 (8,130 ) Balance at end of period $ 100,697 $ 97,633 $ 72,351 $ 57,305 $ 74,438 $ 100,697 $ 74,438 (1) Includes activity for premium finance receivables and indirect consumer loans.
TDRs
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, (In thousands) 2022 2022 2022 2022 2021 Accruing TDRs: Commercial $ 2,462 $ 2,254 $ 2,456 $ 2,773 $ 4,131 Commercial real estate 15,048 8,967 9,659 10,068 8,421 Residential real estate and other 19,110 23,017 24,069 23,081 24,934 Total accrual $ 36,620 $ 34,238 $ 36,184 $ 35,922 $ 37,486 Non-accrual TDRs:(1) Commercial $ 345 $ 4,599 $ 4,786 $ 4,935 $ 6,746 Commercial real estate 1,823 1,880 1,955 2,050 2,050 Residential real estate and other 2,311 2,516 2,453 1,964 3,027 Total non-accrual $ 4,479 $ 8,995 $ 9,194 $ 8,949 $ 11,823 Total TDRs: Commercial $ 2,807 $ 6,853 $ 7,242 $ 7,708 $ 10,877 Commercial real estate 16,871 10,847 11,614 12,118 10,471 Residential real estate and other 21,421 25,533 26,522 25,045 27,961 Total TDRs $ 41,099 $ 43,233 $ 45,378 $ 44,871 $ 49,309 (1) Included in total non-performing loans.
Other Real Estate Owned
Three Months Ended Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, (In thousands) 2022 2022 2022 2022 2021 Balance at beginning of period $ 6,687 $ 6,839 $ 6,203 $ 4,271 $ 13,845 Disposals/resolved (152 ) (133 ) (1,172 ) (2,497 ) (9,664 ) Transfers in at fair value, less costs to sell 3,365 134 2,090 4,429 275 Fair value adjustments — (153 ) (282 ) — (185 ) Balance at end of period $ 9,900 $ 6,687 $ 6,839 $ 6,203 $ 4,271 Period End Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Balance by Property Type: 2022 2022 2022 2022 2021 Residential real estate $ 1,585 $ 1,585 $ 1,630 $ 1,127 $ 1,310 Residential real estate development — — 133 — — Commercial real estate 8,315 5,102 5,076 5,076 2,961 Total $ 9,900 $ 6,687 $ 6,839 $ 6,203 $ 4,271 TABLE 15: NON-INTEREST INCOME
Three Months Ended Q4 2022 compared to
Q3 2022Q4 2022 compared to
Q4 2021Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, (Dollars in thousands) 2022 2022 2022 2022 2021 $ Change % Change $ Change % Change Brokerage $ 4,177 $ 4,587 $ 4,272 $ 4,632 $ 5,292 $ (410 ) (9 )% $ (1,115 ) (21 )% Trust and asset management 26,550 28,537 27,097 26,762 27,197 (1,987 ) (7 ) (647 ) (2 ) Total wealth management 30,727 33,124 31,369 31,394 32,489 (2,397 ) (7 ) (1,762 ) (5 ) Mortgage banking 17,407 27,221 33,314 77,231 53,138 (9,814 ) (36 ) (35,731 ) (67 ) Service charges on deposit accounts 13,054 14,349 15,888 15,283 14,734 (1,295 ) (9 ) (1,680 ) (11 ) Losses on investment securities, net (6,745 ) (3,103 ) (7,797 ) (2,782 ) (1,067 ) (3,642 ) NM (5,678 ) NM Fees from covered call options 7,956 1,366 1,069 3,742 1,128 6,590 NM 6,828 NM Trading (losses) gains, net (306 ) (7 ) 176 3,889 206 (299 ) NM (512 ) NM Operating lease income, net 12,384 12,644 15,007 15,475 14,204 (260 ) (2 ) (1,820 ) (13 ) Other: Interest rate swap fees 2,319 1,997 3,300 4,569 3,526 322 16 (1,207 ) (34 ) BOLI 1,394 248 (884 ) 48 1,192 1,146 NM 202 17 Administrative services 1,736 1,533 1,591 1,853 1,846 203 13 (110 ) (6 ) Foreign currency remeasurement gains (losses) 277 (93 ) 97 11 111 370 NM 166 NM Early pay-offs of capital leases 131 138 160 265 249 (7 ) (5 ) (118 ) (47 ) Miscellaneous 13,505 12,065 9,652 11,812 12,011 1,440 12 1,494 12 Total Other 19,362 15,888 13,916 18,558 18,935 3,474 22 427 2 Total Non-Interest Income $ 93,839 $ 101,482 $ 102,942 $ 162,790 $ 133,767 $ (7,643 ) (8 )% $ (39,928 ) (30 )% NM - Not meaningful.
BOLI - Bank-owned life insurance.Years Ended Dec 31, Dec 31, $ % (Dollars in thousands) 2022 2021 Change Change Brokerage $ 17,668 $ 20,710 $ (3,042 ) (15 )% Trust and asset management 108,946 103,309 5,637 5 Total wealth management 126,614 124,019 2,595 2 Mortgage banking 155,173 273,010 (117,837 ) (43 ) Service charges on deposit accounts 58,574 54,168 4,406 8 Losses on investment securities, net (20,427 ) (1,059 ) (19,368 ) NM Fees from covered call options 14,133 3,673 10,460 NM Trading gains, net 3,752 245 3,507 NM Operating lease income, net 55,510 53,691 1,819 3 Other: Interest rate swap fees 12,185 13,702 (1,517 ) (11 ) BOLI 806 5,812 (5,006 ) (86 ) Administrative services 6,713 5,689 1,024 18 Foreign currency remeasurement gains (losses) 292 (495 ) 787 NM Early pay-offs of leases 694 601 93 15 Miscellaneous 47,034 53,064 (6,030 ) (11 ) Total Other 67,724 78,373 (10,649 ) (14 ) Total Non-Interest Income $ 461,053 $ 586,120 $ (125,067 ) (21 )% NM - Not meaningful.
BOLI - Bank-owned life insurance.TABLE 16: NON-INTEREST EXPENSE
Three Months Ended Q4 2022 compared to
Q3 2022Q4 2022 compared to
Q4 2021Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, (Dollars in thousands) 2022 2022 2022 2022 2021 $ Change % Change $ Change % Change Salaries and employee benefits: Salaries $ 100,232 $ 97,419 $ 92,414 $ 92,116 $ 91,612 $ 2,813 3 % $ 8,620 9 % Commissions and incentive compensation 49,546 50,403 46,131 51,793 49,923 (857 ) (2 ) (377 ) (1 ) Benefits 30,553 28,273 28,781 28,446 25,596 2,280 8 4,957 19 Total salaries and employee benefits 180,331 176,095 167,326 172,355 167,131 4,236 2 13,200 8 Software and equipment 24,699 24,126 24,250 22,810 23,708 573 2 991 4 Operating lease equipment 10,078 9,448 8,774 9,708 10,147 630 7 (69 ) (1 ) Occupancy, net 17,763 17,727 17,651 17,824 18,343 36 0 (580 ) (3 ) Data processing 7,927 7,767 8,010 7,505 7,207 160 2 720 10 Advertising and marketing 14,279 16,600 16,615 11,924 13,981 (2,321 ) (14 ) 298 2 Professional fees 9,267 7,544 7,876 8,401 7,551 1,723 23 1,716 23 Amortization of other acquisition-related intangible assets 1,436 1,492 1,579 1,609 1,811 (56 ) (4 ) (375 ) (21 ) FDIC insurance 6,775 7,186 6,949 7,729 7,317 (411 ) (6 ) (542 ) (7 ) OREO expense, net 369 229 294 (1,032 ) (641 ) 140 61 1,010 NM Other: Lending expenses, net of deferred origination costs 4,951 4,533 4,270 6,821 5,525 418 9 (574 ) (10 ) Travel and entertainment 5,681 4,252 3,897 2,676 3,782 1,429 34 1,899 50 Miscellaneous 24,280 19,470 21,177 15,968 17,537 4,810 25 6,743 38 Total other 34,912 28,255 29,344 25,465 26,844 6,657 24 8,068 30 Total Non-Interest Expense $ 307,836 $ 296,469 $ 288,668 $ 284,298 $ 283,399 $ 11,367 4 % $ 24,437 9 % NM - Not meaningful.
Years Ended Dec 31, Dec 31, $ % (Dollars in thousands) 2022 2021 Change Change Salaries and employee benefits: Salaries $ 382,181 $ 361,915 $ 20,266 6 % Commissions and incentive compensation 197,873 222,067 (24,194 ) (11 ) Benefits 116,053 107,687 8,366 8 Total salaries and employee benefits 696,107 691,669 4,438 1 Software and equipment 95,885 87,515 8,370 10 Operating lease equipment 38,008 40,880 (2,872 ) (7 ) Occupancy, net 70,965 74,184 (3,219 ) (4 ) Data processing 31,209 27,279 3,930 14 Advertising and marketing 59,418 47,275 12,143 26 Professional fees 33,088 29,494 3,594 12 Amortization of other acquisition-related intangible assets 6,116 7,734 (1,618 ) (21 ) FDIC insurance 28,639 27,030 1,609 6 OREO expense, net (140 ) (1,654 ) 1,514 (92 ) Other: Lending expenses, net of deferred origination costs 20,575 22,794 (2,219 ) (10 ) Travel and entertainment 16,506 10,048 6,458 64 Miscellaneous 80,895 68,296 12,599 18 Total other 117,976 101,138 16,838 17 Total Non-Interest Expense $ 1,177,271 $ 1,132,544 $ 44,727 4 % TABLE 17: SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES/RATIOS
The accounting and reporting policies of Wintrust conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures and ratios are used by management to evaluate and measure the Company’s performance. These include taxable-equivalent net interest income (including its individual components), taxable-equivalent net interest margin (including its individual components), the taxable-equivalent efficiency ratio, tangible common equity ratio, tangible book value per common share, return on average tangible common equity, 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, net of economic hedge 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, net of economic hedge and early buy-out loans guaranteed by U.S. government agencies, as useful measurements of the Company’s core net income.
Three Months Ended Years Ended Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31, (Dollars and shares in thousands) 2022 2022 2022 2022 2021 2022 2021 Reconciliation of Non-GAAP Net Interest Margin and Efficiency Ratio: (A) Interest Income (GAAP) $ 580,745 $ 466,478 $ 371,968 $ 328,252 $ 327,979 $ 1,747,443 $ 1,275,484 Taxable-equivalent adjustment: - Loans 1,594 1,030 568 427 417 3,619 1,627 - Liquidity Management Assets 538 502 472 465 486 1,977 1,972 - Other Earning Assets 1 1 1 2 2 5 2 (B) Interest Income (non-GAAP) $ 582,878 $ 468,011 $ 373,009 $ 329,146 $ 328,884 $ 1,753,044 $ 1,279,085 (C) Interest Expense (GAAP) 123,929 65,030 34,164 28,958 32,003 252,081 150,527 (D) Net Interest Income (GAAP) (A minus C) $ 456,816 $ 401,448 $ 337,804 $ 299,294 $ 295,976 $ 1,495,362 $ 1,124,957 (E) Net Interest Income (non-GAAP) (B minus C) $ 458,949 $ 402,981 $ 338,845 $ 300,188 $ 296,881 $ 1,500,963 $ 1,128,558 Net interest margin (GAAP) 3.71 % 3.34 % 2.92 % 2.60 % 2.54 % 3.15 % 2.57 % Net interest margin, fully taxable-equivalent (non-GAAP) 3.73 3.35 2.93 2.61 2.55 3.17 2.58 (F) Non-interest income $ 93,839 $ 101,482 $ 102,942 $ 162,790 $ 133,767 $ 461,053 $ 586,120 (G) Losses on investment securities, net (6,745 ) (3,103 ) (7,797 ) (2,782 ) (1,067 ) (20,427 ) (1,059 ) (H) Non-interest expense 307,836 296,469 288,668 284,298 283,399 1,177,271 1,132,544 Efficiency ratio (H/(D+F-G)) 55.23 % 58.59 % 64.36 % 61.16 % 65.78 % 59.55 % 66.15 % Efficiency ratio (non-GAAP) (H/(E+F-G)) 55.02 58.41 64.21 61.04 65.64 59.38 66.01 Reconciliation of Non-GAAP Tangible Common Equity Ratio: Total shareholders’ equity (GAAP) $ 4,796,838 $ 4,637,980 $ 4,727,623 $ 4,492,256 $ 4,498,688 Less: Non-convertible preferred stock (GAAP) (412,500 ) (412,500 ) (412,500 ) (412,500 ) (412,500 ) Less: Intangible assets (GAAP) (675,710 ) (676,699 ) (679,827 ) (682,101 ) (683,456 ) (I) Total tangible common shareholders’ equity (non-GAAP) $ 3,708,628 $ 3,548,781 $ 3,635,296 $ 3,397,655 $ 3,402,732 (J) Total assets (GAAP) $ 52,949,649 $ 52,382,939 $ 50,969,332 $ 50,250,661 $ 50,142,143 Less: Intangible assets (GAAP) (675,710 ) (676,699 ) (679,827 ) (682,101 ) (683,456 ) (K) Total tangible assets (non-GAAP) $ 52,273,939 $ 51,706,240 $ 50,289,505 $ 49,568,560 $ 49,458,687 Common equity to assets ratio (GAAP) (L/J) 8.3 % 8.1 % 8.5 % 8.1 % 8.1 % Tangible common equity ratio (non-GAAP) (I/K) 7.1 6.9 7.2 6.9 6.9 Three Months Ended Years Ended Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, Dec 31, Dec 31, (Dollars and shares in thousands) 2022 2022 2022 2022 2021 2022 2021 Reconciliation of Non-GAAP Tangible Book Value per Common Share: Total shareholders’ equity $ 4,796,838 $ 4,637,980 $ 4,727,623 $ 4,492,256 $ 4,498,688 Less: Preferred stock (412,500 ) (412,500 ) (412,500 ) (412,500 ) (412,500 ) (L) Total common equity $ 4,384,338 $ 4,225,480 $ 4,315,123 $ 4,079,756 $ 4,086,188 (M) Actual common shares outstanding 60,794 60,743 60,722 57,253 57,054 Book value per common share (L/M) $ 72.12 $ 69.56 $ 71.06 $ 71.26 $ 71.62 Tangible book value per common share (non-GAAP) (I/M) 61.00 58.42 59.87 59.34 59.64 Reconciliation of Non-GAAP Return on Average Tangible Common Equity: (N) Net income applicable to common shares $ 137,826 $ 135,970 $ 87,522 $ 120,400 $ 91,766 $ 481,718 $ 438,187 Add: Intangible asset amortization 1,436 1,492 1,579 1,609 1,811 6,116 7,734 Less: Tax effect of intangible asset amortization (370 ) (425 ) (445 ) (430 ) (505 ) (1,664 ) (2,080 ) After-tax intangible asset amortization $ 1,066 $ 1,067 $ 1,134 $ 1,179 $ 1,306 $ 4,452 $ 5,654 (O) Tangible net income applicable to common shares (non-GAAP) $ 138,892 $ 137,037 $ 88,656 $ 121,579 $ 93,072 $ 486,170 $ 443,841 Total average shareholders’ equity $ 4,710,856 $ 4,795,387 $ 4,526,110 $ 4,500,460 $ 4,433,953 $ 4,634,224 $ 4,300,742 Less: Average preferred stock (412,500 ) (412,500 ) (412,500 ) (412,500 ) (412,500 ) (412,500 ) (412,500 ) (P) Total average common shareholders’ equity $ 4,298,356 $ 4,382,887 $ 4,113,610 $ 4,087,960 $ 4,021,453 $ 4,221,724 $ 3,888,242 Less: Average intangible assets (676,371 ) (678,953 ) (681,091 ) (682,603 ) (677,470 ) (679,735 ) (678,739 ) (Q) Total average tangible common shareholders’ equity (non-GAAP) $ 3,621,985 $ 3,703,934 $ 3,432,519 $ 3,405,357 $ 3,343,983 $ 3,541,989 $ 3,209,503 Return on average common equity, annualized (N/P) 12.72 % 12.31 % 8.53 % 11.94 % 9.05 % 11.41 % 11.27 % Return on average tangible common equity, annualized (non-GAAP) (O/Q) 15.21 14.68 10.36 14.48 11.04 13.73 13.83 Reconciliation of Non-GAAP Pre-Tax, Pre-Provision Income, Adjusted for Changes in Fair Value of MSRs, net of economic hedge and Early Buy-out Loans Guaranteed by U.S. Government Agencies: Income before taxes $ 195,173 $ 200,041 $ 131,661 $ 173,680 $ 137,045 $ 700,555 $ 637,796 Add: Provision for credit losses 47,646 6,420 20,417 4,106 9,299 78,589 (59,263 ) Pre-tax income, excluding provision for credit losses (non-GAAP) $ 242,819 $ 206,461 $ 152,078 $ 177,786 $ 146,344 $ 779,144 $ 578,533 Less: Changes in fair value of MSRs, net of economic hedge and early buy-out loans guaranteed by U.S. government agencies 702 2,472 (445 ) (43,365 ) (6,656 ) (40,636 ) (18,273 ) Pre-tax income, excluding provision for credit losses, adjusted for changes in fair value of MSRs, net of economic hedge and early buy-out loans guaranteed by U.S. government agencies (non-GAAP) $ 243,521 $ 208,933 $ 151,633 $ 134,421 $ 139,688 $ 738,508 $ 560,260 Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2020 2019 2018 2017 2016 2015 2014 2013 2012 Reconciliation of Non-GAAP Tangible Book Value per Common Share: Total shareholders’ equity $ 4,115,995 $ 3,691,250 $ 3,267,570 $ 2,976,939 $ 2,695,617 $ 2,352,274 $ 2,069,822 $ 1,900,589 $ 1,804,705 Less: Non-convertible preferred stock (GAAP) (412,500 ) (125,000 ) (125,000 ) (125,000 ) (251,257 ) (251,287 ) (126,467 ) (126,477 ) (176,406 ) (R) Less: Intangible assets (GAAP) (681,747 ) (692,277 ) (622,565 ) (519,505 ) (520,438 ) (495,970 ) (424,445 ) (393,760 ) (366,348 ) (I) Total tangible common shareholders’ equity (non-GAAP) $ 3,021,748 $ 2,873,973 $ 2,520,005 $ 2,332,434 $ 1,923,922 $ 1,605,017 $ 1,518,910 $ 1,380,352 $ 1,261,951 Actual common shares outstanding 56,770 57,822 56,408 55,965 51,881 48,383 46,805 46,117 36,858 Add: Tangible equity unit conversion shares — — — — — — — — 6,241 (M) Common shares used for book value calculation 56,770 57,822 56,408 55,965 51,881 48,383 46,805 46,117 43,099 Book value per common share ((I-R)/M) $ 65.24 $ 61.68 $ 55.71 $ 50.96 $ 47.11 $ 43.42 $ 41.52 $ 38.47 $ 37.78 Tangible book value per common share (non-GAAP) (I/M) 53.23 49.70 44.67 41.68 37.08 33.17 32.45 29.93 29.28 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, Lombard, 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 the economy, our financial results, operations and personnel, commercial activity and demand across our business and our customers’ businesses;
- 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;
- the ability of the Company to successfully discontinue use of LIBOR and transition to an alternative rate for current and future transactions;
- a decrease in the Company’s capital ratios, including as a result of declines in the value of its loan portfolios, or otherwise;
- legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies, 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, January 19, 2023 at 10:00 a.m. (CST) regarding fourth quarter and full year 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 December 22, 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 fourth quarter and full year 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
- Net interest income increased by $55.4 million or 14% as compared to the third quarter of 2022 primarily due to improvement in net interest margin and loan growth.