• Wintrust Financial Corporation Reports Record First Quarter 2023 Net Income

    Source: Nasdaq GlobeNewswire / 19 Apr 2023 17:00:40   America/New_York

    ROSEMONT, Ill., April 19, 2023 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust”, “the Company”, “we” or “our”) (Nasdaq: WTFC) announced record quarterly net income of $180.2 million or $2.80 per diluted common share for the first quarter of 2023, an increase in diluted earnings per common share of 26% compared to the fourth quarter of 2022. Pre-tax, pre-provision income (non-GAAP) totaled a record $266.6 million as compared to $242.8 million for the fourth quarter of 2022.

    Edward J. Wehmer, Founder and Chief Executive Officer, commented, “Wintrust successfully navigated the first quarter with limited disruption thanks to our strong deposit franchise and balanced business model. Total deposits remained stable in the first quarter as the diversity of our deposit base showed its resilience in a volatile market. Credit metrics remained very strong with non-performing assets unchanged from the prior quarter, remaining at historic lows. Finally, the Company’s net interest margin increased during the quarter contributing to record quarterly net income.”

    Highlights of the first quarter of 2023:
    Comparative information to the fourth quarter of 2022, unless otherwise noted

    • Total deposits remained relatively stable decreasing by $184 million or 0.4%.
    • Total loans increased by $369 million. In addition, total loans as of March 31, 2023 were $472 million higher than average total loans in the first quarter of 2023 which is expected to benefit future quarters.
    • Total assets were relatively unchanged declining by $76 million.
    • Net interest income increased by $1.2 million as compared to the fourth quarter of 2022 primarily due to improvement in net interest margin, partially offset by the impact of two fewer days in the quarter.
      • Net interest margin increased by 10 basis points to 3.81% (3.83% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2023 as the upward repricing of earnings assets outpaced increases in total funding cost.
    • Recorded a provision for credit losses of $23.0 million in the first quarter of 2023 as compared to a provision for credit losses of $47.6 million in the fourth quarter of 2022.
    • The allowance for credit losses on our core loan portfolio as of March 31, 2023 is approximately 1.46% of the outstanding balance. See Table 11 for more information.
    • Net charge-offs totaled $5.5 million or six basis points of average total loans on an annualized basis in the first quarter of 2023 as compared to $5.1 million or five basis points of average total loans on an annualized basis in the fourth quarter of 2022.
    • Non-performing assets were unchanged at 0.21% of total assets.
    • The Company recorded a net negative fair value adjustment of $3.0 million in the first quarter of 2023 as compared to a $702,000 net negative fair value adjustment in the fourth quarter of 2022 related to fair value changes in certain mortgage assets, see “Non-Interest Income” section for more information.
    • The total risk-based capital ratio improved to 12.1% as of March 31, 2023 as compared to 11.9% as of December 31, 2022 due to strong earnings.
    • Book value per common share increased by $3.12 to $75.24 as of March 31, 2023. Tangible book value per common share (non-GAAP) increased to $64.22 as of March 31, 2023 as compared to $61.00 as of December 31, 2022.

    Mr. Wehmer continued, “Our well-established position as Chicago’s and Wisconsin’s bank proved its value as our deposit base was steady in the first quarter of 2023. Wintrust has a granular consumer and business deposit portfolio and does not have any material, at-risk deposit concentrations. In addition, we experienced growth in consumer deposits in the first quarter of 2023. Expanding our retail deposit market share and footprint remains among our top objectives. We expect to leverage our distinguished customer service, competitive rate offerings and diversified products including MaxSafe® to grow deposits in future quarters.”

    Mr. Wehmer noted, “Maintaining sufficient liquidity is a fundamental part of our operation and we plan to continue to operate prudently. During the lower interest rate environment, Wintrust was measured in deploying excess liquidity into investment securities opting to both maintain interest rate sensitivity and ensure adequate liquidity for potential loan growth. As a result, if either a regulatory rule change caused Wintrust to recognize unrealized losses on our available-for-sale and held-to-maturity portfolios as a reduction to regulatory capital or if we fully liquidated our investment portfolio, our regulatory capital ratios would still be expected to exceed the well-capitalized thresholds.”

    Mr. Wehmer commented, “Net interest margin increased by 10 basis points in the first quarter of 2023 as compared to the fourth quarter of 2022. The Company continued its efforts to moderate its interest rate sensitivity in the first quarter of 2023 by hedging its variable rate loan portfolio with receive-fixed interest rate swap derivatives. Due to prevailing interest rates and the inversion of the yield curve, hedging activities had a seven basis point negative impact on the first quarter net interest margin. However, these derivatives will benefit the Company if interest rates fall materially. Our net interest margin finished lower at quarter end and was approximately 3.70% due to an acceleration in deposit pricing, an unfavorable shift in deposit mix and the impact of hedging activity. We believe that we can hold the net interest margin around this level for the next two quarters as we expect further upward repricing in our premium finance receivables to generally offset additional deposit pricing pressure.”

    Commenting on credit quality, Mr. Wehmer stated, “Credit metrics remain strong as non-performing assets totaled $110 million and comprised only 0.21% of total assets as of March 31, 2023, essentially unchanged from levels as of December 31, 2022. Net charge-offs totaled $5.5 million or six basis points of average total loans on an annualized basis in the first quarter of 2023 as compared to $5.1 million or five basis points of average total loans on an annualized basis in the fourth quarter of 2022. The allowance for credit losses totaled $376.3 million as of March 31, 2023, an increase of $18.4 million as compared to $357.9 million as of December 31, 2022. The allowance for credit losses on our core loan portfolio as of March 31, 2023 is approximately 1.46% 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 first quarter of 2023 results continued to demonstrate the multi-faceted nature of our business model which we believe uniquely positions us to be successful. We remain focused on growing deposits to support future asset growth. We are closely watching our expenses, striving to grow without a commensurate increase in expense. We are opportunistically evaluating the acquisition market for both banks and business lines of various sizes and are excited about our recent wealth management acquisition that closed in early April 2023. 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.”

    The graphs below illustrate certain financial highlights of the first quarter of 2023 as well as historical financial performance. See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 16 for additional information with respect to non-GAAP financial measures/ratios, including the reconciliations to the corresponding GAAP financial measures/ratios.

    Graphs available at the following link: http://ml.globenewswire.com/Resource/Download/3118e7fe-b104-49b4-96de-9b527f49673b

    SUMMARY OF RESULTS:

    BALANCE SHEET

    Total assets remained relatively unchanged from December 31, 2022 to March 31, 2023. Total loans increased by $369 million as compared to the fourth quarter of 2022 primarily due to growth in the commercial and residential real estate loan portfolios. Certain securities were called by option holders on March 31, 2023 which resulted in the recognition of a trade date receivable of $940 million as of March 31, 2023. In April 2023, the Company received proceeds related to the called securities which increased interest bearing cash on the balance sheet.

    Total liabilities decreased by $295 million in the first quarter of 2023 as compared to the fourth quarter of 2022 primarily due to a $184 million decrease in total deposits. During the quarter, the Company experienced a change in the mix of deposits as non-interest bearing deposits migrated to interest bearing products. This included a notable migration to products offering enhanced FDIC insurance coverage such as the Company’s MaxSafe® product balances which increased by $1.1 billion as well as fully-insured reciprocal products which increased by $258 million. The majority of the Company’s deposits are insured as approximately 70% of the total deposit balance is either fully FDIC-insured or fully collateralized as of March 31, 2023.

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

    NET INTEREST INCOME

    For the first quarter of 2023, net interest income totaled $458.0 million, an increase of $1.2 million as compared to the fourth quarter of 2022. The $1.2 million increase in net interest income in the first quarter of 2023 compared to the fourth quarter of 2022 was primarily due to net interest margin improvement partially offset by the impact of having two fewer days in the quarter.

    Net interest margin was 3.81% (3.83% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2023 compared to 3.71% (3.73% on a fully taxable-equivalent basis, non-GAAP) during the fourth quarter of 2022. The net interest margin increase as compared to the fourth quarter of 2022 was due to a 61 basis point increase in yield on earning assets and a 17 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 61 basis point increase in the yield on earning assets in the first quarter of 2023 as compared to the fourth quarter of 2022 was primarily due to a 67 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. The 68 basis point increase in the rate paid on interest-bearing liabilities in the first quarter of 2023 as compared to the fourth quarter of 2022 is primarily due to a 67 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 7 in this report.

    ASSET QUALITY

    The allowance for credit losses totaled $376.3 million as of March 31, 2023, an increase of $18.4 million as compared to $357.9 million as of December 31, 2022. A provision for credit losses totaling $23.0 million was recorded for the first quarter of 2023 as compared to $47.6 million recorded in the fourth quarter of 2022. For more information regarding the provision for credit losses, see Table 10 in this report.

    Management believes the allowance for credit losses is appropriate to account for expected credit losses. The Current Expected Credit Losses (“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 March 31, 2023, December 31, 2022, and September 30, 2022 is shown on Table 11 of this report.

    Net charge-offs totaled $5.5 million in the first quarter of 2023, as compared to $5.1 million of net charge-offs in the fourth quarter of 2022. Net charge-offs as a percentage of average total loans were reported as six basis points in the first quarter of 2023 on an annualized basis compared to five basis points on an annualized basis in the fourth quarter of 2022. For more information regarding net charge-offs, see Table 9 in this report.

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

    Non-performing assets totaled $110 million and comprised only 0.21% of total assets as of March 31, 2023, essentially unchanged from levels as of December 31, 2022. Non-performing loans also remained flat totaling $101 million, or 0.25% of total loans, at March 31, 2023. For more information regarding non-performing assets, see Table 13 in this report.

    NON-INTEREST INCOME

    Wealth management revenue decreased $782,000 in the first quarter of 2023 as compared to the fourth 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 increased by $857,000 in the first quarter of 2023 as compared to the fourth quarter of 2022 primarily due to higher production margins. The Company recorded net negative fair value adjustments of $3.0 million in the first quarter of 2023 related to fair value changes in certain mortgage assets. This included a $6.0 million decrease in the value of mortgage servicing rights related to changes in fair value model assumptions net of economic hedges and a positive $2.4 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. In addition, in miscellaneous non-interest income, the Company recorded a positive $545,000 valuation related adjustment on the Company’s held-for-investment portfolio of early buy-out exercised loans guaranteed by U.S. government agencies which are held at fair value. 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 gain on investment securities totaled $1.4 million in the first quarter of 2023 related to changes in the value of equity securities as compared to net losses of $6.7 million in the fourth quarter of 2022.

    Fees from covered call options increased $2.4 million in the first quarter of 2023 as compared to the fourth 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 14 in this report.

    NON-INTEREST EXPENSE

    Salaries and employee benefits expense decreased by $3.6 million in the first quarter of 2023 as compared to the fourth quarter of 2022. The $3.6 million decrease is primarily related to lower incentive compensation expense due to elevated bonus accruals in the fourth quarter of 2022. This was partially offset by increased base salaries primarily related to annual merit increases as well as approximately $1.0 million of severance expense primarily related to mortgage staffing reductions.

    Advertising and marketing expenses in the first quarter of 2023 totaled $11.9 million, which is a $2.3 million decrease as compared to the fourth quarter of 2022 primarily due to a decrease in radio, digital advertising, and sport 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. Generally, these expenses are elevated in the second and third quarters of each year.

    Lending expenses, net of deferred origination costs decreased by $3.2 million as compared to the fourth quarter of 2022 primarily due to decreased loan originations in the first quarter of 2023.

    FDIC insurance expense increased by $1.9 million in the first quarter of 2023 as compared to the fourth quarter of 2022 due to an increase in the assessment rate that was effective January 1, 2023.

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

    INCOME TAXES

    The Company recorded income tax expense of $63.4 million in the first quarter of 2023 compared to $50.4 million in the fourth quarter of 2022. The effective tax rates were 26.01% in the first quarter of 2023 compared to 25.80% in the fourth quarter of 2022. Primarily as a result of fluctuations in currency rates in the fourth quarter of 2022, the Company’s effective tax rate was impacted by a $1.7 million tax benefit related to a reduction in the Global Intangible Low-taxed Income tax. The effective tax rates were also partially impacted by the tax effects related to share-based compensation which fluctuate based on the Company’s stock price and timing of employee stock option exercises and vesting of other share-based awards. The Company recorded excess tax benefits of $2.8 million in the first quarter of 2023, compared to excess tax benefits of $437,000 in the fourth quarter of 2022 related to share-based compensation.

    BUSINESS UNIT SUMMARY

    Community Banking

    Through its community banking unit, the Company provides banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas the Company services. In the first quarter of 2023, this unit expanded its commercial real estate and residential real estate loan portfolios and grew consumer deposits.

    Mortgage banking revenue was $18.3 million for the first quarter of 2023, an increase of $857,000 as compared to the fourth quarter of 2022, primarily due to higher production margins. Service charges on deposit accounts totaled $12.9 million in the first quarter of 2023, a decrease of $151,000 as compared to the fourth quarter of 2022, primarily due to a reduction in overdraft fees. The Company’s gross commercial and commercial real estate loan pipelines remained robust as of March 31, 2023 indicating momentum for expected continued loan growth in the second 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 $3.8 billion during the first quarter of 2023 and average balances decreased by $39.1 million as compared to the fourth quarter of 2022. The Company’s leasing portfolio balance increased in the first quarter of 2023, with its portfolio of assets, including capital leases, loans and equipment on operating leases, totaling $3.1 billion as of March 31, 2023 as compared to $3.0 billion as of December 31, 2022. Revenues from the Company’s out-sourced administrative services business were $1.6 million in the first quarter of 2023, a decrease of $121,000 from the fourth 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 $29.9 million in the first quarter of 2023, a decrease of $782,000 compared to the fourth quarter of 2022. The decline in wealth management revenue in the first quarter of 2023 was primarily related to lower fees associated with our tax-deferred like-kind exchange business. At March 31, 2023, the Company’s wealth management subsidiaries had approximately $35.2 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 $34.4 billion of assets under administration at December 31, 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.

    WINTRUST FINANCIAL CORPORATION
    Key Operating Measures

    Wintrust’s key operating measures and growth rates for the first quarter of 2023, as compared to the fourth quarter of 2022 (sequential quarter) and first quarter of 2022 (linked quarter), are shown in the table below:

           % or (1)
    basis point
    (bp) change from

    4th Quarter
    2022
     % or
    basis point
    (bp) change from

    1st Quarter
    2022
      Three Months Ended 
    (Dollars in thousands, except per share data) Mar 31, 2023 Dec 31, 2022 Mar 31, 2022 
    Net income $180,198  $144,817  $127,391 24 % 41  %
    Pre-tax income, excluding provision for credit losses (non-GAAP) (2)  266,595   242,819   177,786 10   50 
    Net income per common share – diluted  2.80   2.23   2.07 26   35 
    Cash dividends declared per common share  0.40   0.34   0.34 18   18 
    Net revenue (3)  565,764   550,655   462,084 3   22 
    Net interest income  457,995   456,816   299,294 0   53 
    Net interest margin  3.81 %  3.71 %  2.60 %10 bps 121  bps
    Net interest margin – fully taxable-equivalent (non-GAAP) (2)  3.83   3.73   2.61 10   122 
    Net overhead ratio (4)  1.49   1.63   1.00 (14)  49 
    Return on average assets  1.40   1.10   1.04 30   36 
    Return on average common equity  15.67   12.72   11.94 295   373 
    Return on average tangible common equity (non-GAAP) (2)  18.55   15.21   14.48 334   407 
    At end of period           
    Total assets $52,873,511  $52,949,649  $50,250,661 (1)% 5 %
    Total loans (5)  39,565,471   39,196,485   35,280,547 4   12 
    Total deposits  42,718,211   42,902,544   42,219,322 (2)  1 
    Total shareholders’ equity  5,015,506   4,796,838   4,492,256 18   12 

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

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

    WINTRUST FINANCIAL CORPORATION
    Selected Financial Highlights

      Three Months Ended
    (Dollars in thousands, except per share data) Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022
    Selected Financial Condition Data (at end of period):
    Total assets $52,873,511  $52,949,649  $52,382,939  $50,969,332  $50,250,661 
    Total loans (1)  39,565,471   39,196,485   38,167,613   37,053,103   35,280,547 
    Total deposits  42,718,211   42,902,544   42,797,191   42,593,326   42,219,322 
    Total shareholders’ equity  5,015,506   4,796,838   4,637,980   4,727,623   4,492,256 
    Selected Statements of Income Data:
    Net interest income $457,995  $456,816  $401,448  $337,804  $299,294 
    Net revenue (2)  565,764   550,655   502,930   440,746   462,084 
    Net income  180,198   144,817   142,961   94,513   127,391 
    Pre-tax income, excluding provision for credit losses (non-GAAP) (3)  266,595   242,819   206,461   152,078   177,786 
    Net income per common share – Basic  2.84   2.27   2.24   1.51   2.11 
    Net income per common share – Diluted  2.80   2.23   2.21   1.49   2.07 
    Cash dividends declared per common share  0.40   0.34   0.34   0.34   0.34 
    Selected Financial Ratios and Other Data:
    Performance Ratios:
    Net interest margin  3.81%  3.71%  3.34%  2.92%  2.60%
    Net interest margin – fully taxable-equivalent (non-GAAP) (3)  3.83   3.73   3.35   2.93   2.61 
    Non-interest income to average assets  0.84   0.71   0.79   0.84   1.33 
    Non-interest expense to average assets  2.33   2.34   2.32   2.35   2.33 
    Net overhead ratio (4)  1.49   1.63   1.53   1.51   1.00 
    Return on average assets  1.40   1.10   1.12   0.77   1.04 
    Return on average common equity  15.67   12.72   12.31   8.53   11.94 
    Return on average tangible common equity (non-GAAP) (3)  18.55   15.21   14.68   10.36   14.48 
    Average total assets $52,075,318  $52,087,618  $50,722,694  $49,353,426  $49,501,844 
    Average total shareholders’ equity  4,895,271   4,710,856   4,795,387   4,526,110   4,500,460 
    Average loans to average deposits ratio  93.0 %  90.5 %  88.8 %  86.8 %  83.8 %
    Period-end loans to deposits ratio  92.6   91.4   89.2   87.0   83.6 
    Common Share Data at end of period:
    Market price per common share $72.95  $84.52  $81.55  $80.15  $92.93 
    Book value per common share  75.24   72.12   69.56   71.06   71.26 
    Tangible book value per common share (non-GAAP) (3)  64.22   61.00   58.42   59.87   59.34 
    Common shares outstanding  61,176,415   60,794,008   60,743,335   60,721,889   57,253,214 
    Other Data at end of period:
    Tier 1 leverage ratio (5)  9.1 %  8.8 %  8.8 %  8.8 %  8.1 %
    Risk-based capital ratios:          
    Tier 1 capital ratio (5)  10.1   10.0   9.9   9.9   9.6 
    Common equity tier 1 capital ratio (5)  9.2   9.1   9.0   9.0   8.6 
    Total capital ratio (5)  12.1   11.9   11.8   11.9   11.6 
    Allowance for credit losses (6) $376,261  $357,936  $315,338  $312,192  $301,327 
    Allowance for loan and unfunded lending-related commitment losses to total loans  0.95 %  0.91 %  0.83 %  0.84 %  0.85 %
    Number of:          
    Bank subsidiaries  15   15   15   15   15 
    Banking offices  174   174   174   173   174 

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

    WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CONDITION

      (Unaudited)   (Unaudited) (Unaudited) (Unaudited)
      Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
    (In thousands)  2023   2022   2022   2022   2022 
    Assets          
    Cash and due from banks $445,928  $490,908  $489,590  $498,891  $462,516 
    Federal funds sold and securities purchased under resale agreements  58   58   57   475,056   700,056 
    Interest-bearing deposits with banks  1,563,578   1,988,719   3,968,605   3,266,541   4,013,597 
    Available-for-sale securities, at fair value  3,259,845   3,243,017   2,923,653   2,970,121   2,998,898 
    Held-to-maturity securities, at amortized cost  3,606,391   3,640,567   3,389,842   3,413,469   3,435,729 
    Trading account securities  102   1,127   179   1,010   852 
    Equity securities with readily determinable fair value  111,943   110,365   114,012   93,295   92,689 
    Federal Home Loan Bank and Federal Reserve Bank stock  244,957   224,759   178,156   136,138   136,163 
    Brokerage customer receivables  16,042   16,387   20,327   21,527   22,888 
    Mortgage loans held-for-sale, at fair value  302,493   299,935   376,160   513,232   606,545 
    Loans, net of unearned income  39,565,471   39,196,485   38,167,613   37,053,103   35,280,547 
    Allowance for loan losses  (287,972)  (270,173)  (246,110)  (251,769)  (250,539)
    Net loans  39,277,499   38,926,312   37,921,503   36,801,334   35,030,008 
    Premises, software and equipment, net  760,283   764,798   763,029   762,381   761,213 
    Lease investments, net  256,301   253,928   244,822   223,813   240,656 
    Accrued interest receivable and other assets  1,413,795   1,391,342   1,316,305   1,112,697   1,066,750 
    Trade date securities receivable  939,758   921,717          
    Goodwill  653,587   653,524   653,079   654,709   655,402 
    Other acquisition-related intangible assets  20,951   22,186   23,620   25,118   26,699 
    Total assets $52,873,511  $52,949,649  $52,382,939  $50,969,332  $50,250,661 
    Liabilities and Shareholders’ Equity          
    Deposits:          
    Non-interest-bearing $11,236,083  $12,668,160  $13,529,277  $13,855,844  $13,748,918 
    Interest-bearing  31,482,128   30,234,384   29,267,914   28,737,482   28,470,404 
    Total deposits  42,718,211   42,902,544   42,797,191   42,593,326   42,219,322 
    Federal Home Loan Bank advances  2,316,071   2,316,071   2,316,071   1,166,071   1,241,071 
    Other borrowings  583,548   596,614   447,215   482,787   482,516 
    Subordinated notes  437,493   437,392   437,260   437,162   437,033 
    Junior subordinated debentures  253,566   253,566   253,566   253,566   253,566 
    Trade date securities payable              437 
    Accrued interest payable and other liabilities  1,549,116   1,646,624   1,493,656   1,308,797   1,124,460 
    Total liabilities  47,858,005   48,152,811   47,744,959   46,241,709   45,758,405 
    Shareholders’ Equity:          
    Preferred stock  412,500   412,500   412,500   412,500   412,500 
    Common stock  61,198   60,797   60,743   60,722   59,091 
    Surplus  1,913,947   1,902,474   1,891,621   1,880,913   1,698,093 
    Treasury stock  (1,966)  (304)        (109,903)
    Retained earnings  2,997,263   2,849,007   2,731,844   2,616,525   2,548,474 
    Accumulated other comprehensive loss  (367,436)  (427,636)  (458,728)  (243,037)  (115,999)
    Total shareholders’ equity  5,015,506   4,796,838   4,637,980   4,727,623   4,492,256 
    Total liabilities and shareholders’ equity $52,873,511  $52,949,649  $52,382,939  $50,969,332  $50,250,661 

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

     Three Months Ended
    (In thousands, except per share data)Mar 31,
    2023
     Dec 31,
    2022
     Sep 30,
    2022
     Jun 30,
    2022
     Mar 31,
    2022
    Interest income         
    Interest and fees on loans$558,692  $498,838  $402,689  $320,501  $285,698 
    Mortgage loans held-for-sale 3,528   3,997   5,371   5,740   6,087 
    Interest-bearing deposits with banks 13,468   20,349   15,621   5,790   1,687 
    Federal funds sold and securities purchased under resale agreements 70   1,263   1,845   1,364   431 
    Investment securities 59,943   53,092   38,569   36,541   32,398 
    Trading account securities 14   6   7   4   5 
    Federal Home Loan Bank and Federal Reserve Bank stock 3,680   2,918   2,109   1,823   1,772 
    Brokerage customer receivables 295   282   267   205   174 
    Total interest income 639,690   580,745   466,478   371,968   328,252 
    Interest expense         
    Interest on deposits 144,802   95,447   45,916   18,985   14,854 
    Interest on Federal Home Loan Bank advances 19,135   13,823   6,812   4,878   4,816 
    Interest on other borrowings 7,854   5,313   4,008   2,734   2,239 
    Interest on subordinated notes 5,488   5,520   5,485   5,517   5,482 
    Interest on junior subordinated debentures 4,416   3,826   2,809   2,050   1,567 
    Total interest expense 181,695   123,929   65,030   34,164   28,958 
    Net interest income 457,995   456,816   401,448   337,804   299,294 
    Provision for credit losses 23,045   47,646   6,420   20,417   4,106 
    Net interest income after provision for credit losses 434,950   409,170   395,028   317,387   295,188 
    Non-interest income         
    Wealth management 29,945   30,727   33,124   31,369   31,394 
    Mortgage banking 18,264   17,407   27,221   33,314   77,231 
    Service charges on deposit accounts 12,903   13,054   14,349   15,888   15,283 
    Gains (losses) on investment securities, net 1,398   (6,745)  (3,103)  (7,797)  (2,782)
    Fees from covered call options 10,391   7,956   1,366   1,069   3,742 
    Trading gains (losses), net 813   (306)  (7)  176   3,889 
    Operating lease income, net 13,046   12,384   12,644   15,007   15,475 
    Other 21,009   19,362   15,888   13,916   18,558 
    Total non-interest income 107,769   93,839   101,482   102,942   162,790 
    Non-interest expense         
    Salaries and employee benefits 176,781   180,331   176,095   167,326   172,355 
    Software and equipment 24,697   24,699   24,126   24,250   22,810 
    Operating lease equipment 9,833   10,078   9,448   8,774   9,708 
    Occupancy, net 18,486   17,763   17,727   17,651   17,824 
    Data processing 9,409   7,927   7,767   8,010   7,505 
    Advertising and marketing 11,946   14,279   16,600   16,615   11,924 
    Professional fees 8,163   9,267   7,544   7,876   8,401 
    Amortization of other acquisition-related intangible assets 1,235   1,436   1,492   1,579   1,609 
    FDIC insurance 8,669   6,775   7,186   6,949   7,729 
    OREO expenses, net (207)  369   229   294   (1,032)
    Other 30,157   34,912   28,255   29,344   25,465 
    Total non-interest expense 299,169   307,836   296,469   288,668   284,298 
    Income before taxes 243,550   195,173   200,041   131,661   173,680 
    Income tax expense 63,352   50,356   57,080   37,148   46,289 
    Net income$180,198  $144,817  $142,961  $94,513  $127,391 
    Preferred stock dividends 6,991   6,991   6,991   6,991   6,991 
    Net income applicable to common shares$173,207  $137,826  $135,970  $87,522  $120,400 
    Net income per common share - Basic$2.84  $2.27  $2.24  $1.51  $2.11 
    Net income per common share - Diluted$2.80  $2.23  $2.21  $1.49  $2.07 
    Cash dividends declared per common share$0.40  $0.34  $0.34  $0.34  $0.34 
    Weighted average common shares outstanding 60,950   60,769   60,738   58,063   57,196 
    Dilutive potential common shares 873   1,096   837   775   862 
    Average common shares and dilutive common shares 61,823   61,865   61,575   58,838   58,058 

    TABLE 1: LOAN PORTFOLIO MIX AND GROWTH RATES

              % Growth From (1)
    (Dollars in thousands)Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30,
    2022
     Mar 31, 2022Dec 31, 2022 (2) Mar 31, 2022
    Balance:            
    Mortgage loans held-for-sale, excluding early buy-out exercised loans guaranteed by U.S. government agencies$155,687 $156,297 $216,062 $294,688 $296,548(2)% (48)%
    Mortgage loans held-for-sale, early buy-out exercised loans guaranteed by U.S. government agencies 146,806  143,638  160,098  218,544  309,9979  (53)
    Total mortgage loans held-for-sale$302,493 $299,935 $376,160 $513,232 $606,5453% (50)%
                 
    Core loans:            
    Commercial            
    Commercial and industrial$5,855,035 $5,852,166 $5,818,959 $5,502,584 $5,348,2660% 9%
    Asset-based lending 1,482,071  1,473,344  1,545,038  1,552,033  1,365,2972  9 
    Municipal 655,301  668,235  608,234  535,586  533,357(8) 23 
    Leases 1,904,137  1,840,928  1,582,359  1,592,329  1,481,36814  29 
    Commercial real estate            
    Residential construction 69,998  76,877  66,957  55,941  57,037(36) 23 
    Commercial construction 1,234,762  1,102,098  1,176,407  1,145,602  1,055,97249  17 
    Land 292,293  307,955  282,147  304,775  283,397(21) 3 
    Office 1,392,040  1,337,176  1,269,729  1,321,745  1,273,70517  9 
    Industrial 1,858,088  1,836,276  1,777,658  1,746,280  1,668,5165  11 
    Retail 1,309,680  1,304,444  1,331,316  1,331,059  1,395,0212  (6)
    Multi-family 2,635,411  2,560,709  2,305,433  2,171,583  2,175,87512  21 
    Mixed use and other 1,446,806  1,425,412  1,368,537  1,330,220  1,325,5516  9 
    Home equity 337,016  332,698  328,822  325,826  321,4355  5 
    Residential real estate            
    Residential real estate loans for investment 2,309,393  2,207,595  2,086,795  1,965,051  1,749,88919  32 
    Residential mortgage loans, early buy-out eligible loans guaranteed by U.S. government agencies 119,301  80,701  57,161  34,764  13,520NM NM
    Residential mortgage loans, early buy-out exercised loans guaranteed by U.S. government agencies 76,851  84,087  91,503  79,092  36,576(35) NM
    Total core loans$22,978,183 $22,490,701 $21,697,055 $20,994,470 $20,084,7829% 14%
                 
    Niche loans:            
    Commercial            
    Franchise$1,131,913 $1,169,623 $1,118,478 $1,136,929 $1,181,761(13)% (4)%
    Mortgage warehouse lines of credit 235,684  237,392  297,374  398,085  261,847(3) (10)
    Community Advantage - homeowners association 389,922  380,875  365,967  341,095  324,38310  20 
    Insurance agency lending 905,727  897,678  879,183  906,375  833,7204  9 
    Premium Finance receivables            
    U.S. property & casualty insurance 5,043,486  5,103,820  4,983,795  4,781,042  4,271,828(5) 18 
    Canada property & casualty insurance 695,394  745,639  729,545  760,405  665,580(27) 4 
    Life insurance 8,125,802  8,090,998  8,004,856  7,608,433  7,354,1632  10 
    Consumer and other 42,165  50,836  47,702  44,180  48,519(69) (13)
    Total niche loans$16,570,093 $16,676,861 $16,426,900 $15,976,544 $14,941,801(3)% 11%
                 
    Commercial PPP loans:            
    Originated in 2020$7,429 $7,898 $8,724 $18,547 $40,016(24)% (81)%
    Originated in 2021 9,766  21,025  34,934  63,542  213,948NM (95)
    Total commercial PPP loans$17,195 $28,923 $43,658 $82,089 $253,964NM (93)%
                 
    Total loans, net of unearned income$39,565,471 $39,196,485 $38,167,613 $37,053,103 $35,280,5474% 12%

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

    TABLE 2: DEPOSIT PORTFOLIO MIX AND GROWTH RATES

              % Growth From
    (Dollars in thousands)Mar 31,
    2023
     Dec 31,
    2022
     Sep 30,
    2022
     Jun 30,
    2022
     Mar 31,
    2022
    Dec 31,
    2022 (1)
     Mar 31,
    2022
    Balance:            
    Non-interest-bearing$11,236,083  $12,668,160  $13,529,277  $13,855,844  $13,748,918 (46)% (18)%
    NOW and interest-bearing demand deposits 5,576,558   5,591,986   5,676,122   5,918,908   5,089,724 (1) 10 
    Wealth management deposits (2) 1,809,933   2,463,833   2,988,195   3,182,407   2,542,995 (108) (29)
    Money market 13,552,277   12,886,795   12,538,489   12,273,350   13,012,460 21  4 
    Savings 5,192,108   4,556,635   3,988,790   3,686,596   4,089,230 57  27 
    Time certificates of deposit 5,351,252   4,735,135   4,076,318   3,676,221   3,735,995 53  43 
    Total deposits$42,718,211  $42,902,544  $42,797,191  $42,593,326  $42,219,322 (2)% 1%
    Mix:            
    Non-interest-bearing 26%  30%  32%  33%  32%   
    NOW and interest-bearing demand deposits 13   13   13   13   12    
    Wealth management deposits (2) 4   5   7   7   6    
    Money market 32   30   29   29   31    
    Savings 12   11   9   9   10    
    Time certificates of deposit 13   11   10   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 March 31, 2023

    (Dollars in thousands) Total Time
    Certificates of
    Deposit
     Weighted-Average
    Rate of Maturing
    Time Certificates
    of Deposit (1)
    1-3 months $1,318,052 2.93%
    4-6 months  1,081,367 2.42 
    7-9 months  922,367 2.24 
    10-12 months  885,299 3.11 
    13-18 months  655,805 3.12 
    19-24 months  348,591 2.77 
    24+ months  139,771 2.14 
    Total $5,351,252 2.73%

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

    TABLE 4: QUARTERLY AVERAGE BALANCES

      Average Balance for three months ended,
      Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
    (In thousands)  2023   2022   2022   2022   2022 
    Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents (1) $1,235,748  $2,449,889  $3,039,907  $3,265,607  $4,563,726 
    Investment securities (2)  7,956,722   7,310,383   6,655,215   6,589,947   6,378,022 
    FHLB and FRB stock  233,615   185,290   142,304   136,930   135,912 
    Liquidity management assets (3)  9,426,085   9,945,562   9,837,426   9,992,484   11,077,660 
    Other earning assets (3)(4)  18,445   18,585   21,805   24,059   25,192 
    Mortgage loans held-for-sale  270,966   308,639   455,342   560,707   664,019 
    Loans, net of unearned income (3)(5)  39,093,368   38,566,871   37,431,126   35,860,329   34,830,520 
    Total earning assets (3)  48,808,864   48,839,657   47,745,699   46,437,579   46,597,391 
    Allowance for loan and investment security losses  (282,704)  (252,827)  (260,270)  (260,547)  (253,080)
    Cash and due from banks  488,457   475,691   458,263   476,741   481,634 
    Other assets  3,060,701   3,025,097   2,779,002   2,699,653   2,675,899 
    Total assets $52,075,318  $52,087,618  $50,722,694  $49,353,426  $49,501,844 
               
    NOW and interest-bearing demand deposits $5,271,740  $5,598,291  $5,789,368  $5,230,702  $4,788,272 
    Wealth management deposits  2,167,081   2,883,247   3,078,764   2,835,267   2,505,800 
    Money market accounts  12,533,468   12,319,842   12,037,412   11,892,948   12,773,805 
    Savings accounts  4,830,322   4,403,113   3,862,579   3,882,856   3,904,299 
    Time deposits  5,041,638   4,023,232   3,675,930   3,687,778   3,861,371 
    Interest-bearing deposits  29,844,249   29,227,725   28,444,053   27,529,551   27,833,547 
    Federal Home Loan Bank advances  2,474,882   2,088,201   1,403,573   1,197,390   1,241,071 
    Other borrowings  602,937   480,553   478,909   489,779   494,267 
    Subordinated notes  437,422   437,312   437,191   437,084   436,966 
    Junior subordinated debentures  253,566   253,566   253,566   253,566   253,566 
    Total interest-bearing liabilities  33,613,056   32,487,357   31,017,292   29,907,370   30,259,417 
    Non-interest-bearing deposits  12,171,631   13,404,036   13,731,219   13,805,128   13,734,064 
    Other liabilities  1,395,360   1,485,369   1,178,796   1,114,818   1,007,903 
    Equity  4,895,271   4,710,856   4,795,387   4,526,110   4,500,460 
    Total liabilities and shareholders’ equity $52,075,318  $52,087,618  $50,722,694  $49,353,426  $49,501,844 
               
    Net free funds/contribution (6) $15,195,808  $16,352,300  $16,728,407  $16,530,209  $16,337,974 

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

    TABLE 5: QUARTERLY NET INTEREST INCOME

      Net Interest Income for three months ended,
      Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
    (In thousands)  2023   2022   2022   2022   2022 
    Interest income:          
    Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents $13,538  $21,612  $17,466  $7,154  $2,118 
    Investment securities  60,494   53,630   39,071   37,013   32,863 
    FHLB and FRB stock  3,680   2,918   2,109   1,823   1,772 
    Liquidity management assets (1)  77,712   78,160   58,646   45,990   36,753 
    Other earning assets (1)  313   289   275   210   181 
    Mortgage loans held-for-sale  3,528   3,997   5,371   5,740   6,087 
    Loans, net of unearned income (1)  560,564   500,432   403,719   321,069   286,125 
    Total interest income $642,117  $582,878  $468,011  $373,009  $329,146 
               
    Interest expense:          
    NOW and interest-bearing demand deposits $18,772  $14,982  $8,041  $2,553  $1,990 
    Wealth management deposits  12,258   14,079   11,068   3,685   918 
    Money market accounts  68,276   45,468   18,916   8,559   7,648 
    Savings accounts  15,816   8,421   2,130   347   336 
    Time deposits  29,680   12,497   5,761   3,841   3,962 
    Interest-bearing deposits  144,802   95,447   45,916   18,985   14,854 
    Federal Home Loan Bank advances  19,135   13,823   6,812   4,878   4,816 
    Other borrowings  7,854   5,313   4,008   2,734   2,239 
    Subordinated notes  5,488   5,520   5,485   5,517   5,482 
    Junior subordinated debentures  4,416   3,826   2,809   2,050   1,567 
    Total interest expense $181,695  $123,929  $65,030  $34,164  $28,958 
               
    Less: Fully taxable-equivalent adjustment  (2,427)  (2,133)  (1,533)  (1,041)  (894)
    Net interest income (GAAP) (2)   457,995   456,816   401,448   337,804   299,294 
    Fully taxable-equivalent adjustment  2,427   2,133   1,533   1,041   894 
    Net interest income, fully taxable-equivalent (non-GAAP) (2)  $460,422  $458,949  $402,981  $338,845  $300,188 

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

    TABLE 6: QUARTERLY NET INTEREST MARGIN

      Net Interest Margin for three months ended,
      Mar 31,
    2023
     Dec 31,
    2022
     Sep 30,
    2022
     Jun 30,
    2022
     Mar 31,
    2022
    Yield earned on:          
    Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents 4.44% 3.50% 2.28% 0.88% 0.19%
    Investment securities 3.08  2.91  2.33  2.25  2.09 
    FHLB and FRB stock 6.39  6.25  5.88  5.34  5.29 
    Liquidity management assets 3.34  3.12  2.37  1.85  1.35 
    Other earning assets 6.87  6.17  5.01  3.49  2.91 
    Mortgage loans held-for-sale 5.28  5.14  4.68  4.11  3.72 
    Loans, net of unearned income 5.82  5.15  4.28  3.59  3.33 
    Total earning assets 5.34% 4.73% 3.89% 3.22% 2.86%
               
    Rate paid on:          
    NOW and interest-bearing demand deposits 1.44% 1.06% 0.55% 0.20% 0.17%
    Wealth management deposits 2.29  1.94  1.43  0.52  0.15 
    Money market accounts 2.21  1.46  0.62  0.29  0.24 
    Savings accounts 1.33  0.76  0.22  0.04  0.03 
    Time deposits 2.39  1.23  0.62  0.42  0.42 
    Interest-bearing deposits 1.97  1.30  0.64  0.28  0.22 
    Federal Home Loan Bank advances 3.14  2.63  1.93  1.63  1.57 
    Other borrowings 5.28  4.39  3.32  2.24  1.84 
    Subordinated notes 5.02  5.05  5.02  5.05  5.02 
    Junior subordinated debentures 6.97  5.90  4.33  3.20  2.47 
    Total interest-bearing liabilities 2.19% 1.51% 0.83% 0.46% 0.39%
               
    Interest rate spread (1)(2) 3.15% 3.22% 3.06% 2.76% 2.47%
    Less: Fully taxable-equivalent adjustment (0.02) (0.02) (0.01) (0.01) (0.01)
    Net free funds/contribution (3) 0.68  0.51  0.29  0.17  0.14 
    Net interest margin (GAAP) (2) 3.81% 3.71% 3.34% 2.92% 2.60%
    Fully taxable-equivalent adjustment 0.02  0.02  0.01  0.01  0.01 
    Net interest margin, fully taxable-equivalent (non-GAAP) (2) 3.83% 3.73% 3.35% 2.93% 2.61%

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

    TABLE 7: INTEREST RATE SENSITIVITY

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

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

    Static Shock Scenario +200 Basis
    Points
     +100 Basis
    Points
     -100 Basis
    Points
     -200 Basis
    Points
    Mar 31, 2023 4.2% 2.4% (2.4)% (7.3)%
    Dec 31, 2022 7.2  3.8  (5.0)    (12.1)   
    Sep 30, 2022 12.9  7.1  (8.7)    (18.9)   
    Jun 30, 2022 17.0  9.0  (12.6)    (23.8)   
    Mar 31, 2022 21.4  11.0  (11.3)    (18.7)   

     

    Ramp Scenario+200 Basis
    Points
     +100 Basis
    Points
     -100 Basis
    Points
     -200 Basis
    Points
    Mar 31, 20233.0% 1.7% (1.3)% (3.4)%
    Dec 31, 20225.6  3.0  (2.9)    (6.8)   
    Sep 30, 20226.5  3.6  (3.9)    (8.6)   
    Jun 30, 202210.2  5.3  (6.9)    (14.3)   
    Mar 31, 202211.2  5.8  (7.1)    (12.4)   

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

    TABLE 8: MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES

     Loans repricing or maturity period
    As of March 31, 2023One year or
    less
     From one to
    five years
     From five to
    fifteen years
     After fifteen
    years
     Total
    (In thousands)    
    Commercial         
    Fixed rate$499,853 $2,594,118 $1,608,735 $14,047 $4,716,753
    Variable rate 7,858,277  1,955      7,860,232
    Total commercial$8,358,130 $2,596,073 $1,608,735 $14,047 $12,576,985
    Commercial real estate         
    Fixed rate 534,274  2,777,288  616,509  52,951  3,981,022
    Variable rate 6,249,717  8,299  40    6,258,056
    Total commercial real estate$6,783,991 $2,785,587 $616,549 $52,951 $10,239,078
    Home equity         
    Fixed rate 11,913  2,931    33  14,877
    Variable rate 322,138    1    322,139
    Total home equity$334,051 $2,931 $1 $33 $337,016
    Residential real estate         
    Fixed rate 16,639  3,889  30,584  1,078,608  1,129,720
    Variable rate 69,098  245,174  1,061,553    1,375,825
    Total residential real estate$85,737 $249,063 $1,092,137 $1,078,608 $2,505,545
    Premium finance receivables - property & casualty         
    Fixed rate 5,619,254  119,626      5,738,880
    Variable rate         
    Total premium finance receivables - property & casualty$5,619,254 $119,626 $ $ $5,738,880
    Premium finance receivables - life insurance         
    Fixed rate 106,992  534,387  22,836    664,215
    Variable rate 7,461,587        7,461,587
    Total premium finance receivables - life insurance$7,568,579 $534,387 $22,836 $ $8,125,802
    Consumer and other         
    Fixed rate 5,507  5,263  51  477  11,298
    Variable rate 30,867        30,867
    Total consumer and other$36,374 $5,263 $51 $477 $42,165
              
    Total per category         
    Fixed rate 6,794,432  6,037,502  2,278,715  1,146,116  16,256,765
    Variable rate 21,991,684  255,428  1,061,594    23,308,706
    Total loans, net of unearned income$28,786,116 $6,292,930 $3,340,309 $1,146,116 $39,565,471
              
    Variable Rate Loan Pricing by Index:         
    SOFR tenors        $9,065,867
    One- year CMT         5,008,849
    One- month LIBOR         2,490,152
    Three- month LIBOR         80,560
    Twelve- month LIBOR         2,342,910
    Prime         3,640,088
    Ameribor tenors         341,332
    Other U.S. Treasury tenors         74,865
    BSBY tenors         52,235
    Other         211,848
    Total variable rate        $23,308,706

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

    Graph is available at the following link: http://ml.globenewswire.com/Resource/Download/789b6d50-5c97-4b6c-9ec2-c89f893645fe

    Source: Bloomberg

    As noted in the table on the previous page, the majority of the Company’s portfolio is tied to SOFR, CMT and LIBOR indices which, as shown in the table above, do not mirror the same changes as the Prime rate which has historically moved when the Federal Reserve raises or lowers interest rates. Specifically, the Company has variable rate loans of $7.8 billion tied to one-month SOFR, $5.0 billion tied to one-year CMT and $2.5 billion tied to one-month LIBOR. The above chart shows:

      Basis Point (bp) Change in
      1-month
    SOFR
     1-year
    CMT
     1-month
    LIBOR
     Prime 
    First Quarter 2023 44  bps(9)  bps47  bps50  bps
    Fourth Quarter 2022 132 68 125 125 
    Third Quarter 2022 135 125 135 150 
    Second Quarter 2022 139 117 134 125 
    First Quarter 2022 25 124 35 25 

    TABLE 9: ALLOWANCE FOR CREDIT LOSSES

      Three Months Ended
      Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
    (Dollars in thousands)  2023   2022   2022   2022   2022 
    Allowance for credit losses at beginning of period $357,936  $315,338  $312,192  $301,327  $299,731 
    Cumulative effect adjustment from the adoption of ASU 2022-02  741             
    Provision for credit losses  23,045   47,646   6,420   20,417   4,106 
    Other adjustments  4   31   (105)  (56)  22 
    Charge-offs:          
    Commercial  2,543   3,019   780   8,928   1,414 
    Commercial real estate  5   538   24   40   777 
    Home equity        43   192   197 
    Residential real estate        5      466 
    Premium finance receivables - property & casualty  4,629   3,629   6,037   2,903   1,671 
    Premium finance receivables - life insurance  21   28         7 
    Consumer and other  153      635   253   193 
    Total charge-offs  7,351   7,214   7,524   12,316   4,725 
    Recoveries:          
    Commercial  392   691   2,523   996   538 
    Commercial real estate  100   61   55   553   32 
    Home equity  35   65   38   123   93 
    Residential real estate  4   6   60   6   5 
    Premium finance receivables - property & casualty  1,314   1,279   1,648   1,119   1,476 
    Premium finance receivables - life insurance  9             
    Consumer and other  32   33   31   23   49 
    Total recoveries  1,886   2,135   4,355   2,820   2,193 
    Net charge-offs  (5,465)  (5,079)  (3,169)  (9,496)  (2,532)
    Allowance for credit losses at period end $376,261  $357,936  $315,338  $312,192  $301,327 
               
    Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average:
    Commercial  0.07%  0.08%  (0.06)%  0.27%  0.03%
    Commercial real estate  0.00   0.02   0.00   (0.02)  0.03 
    Home equity  (0.04)  (0.08)  0.01   0.09   0.13 
    Residential real estate  0.00   0.00   (0.01)  0.00   0.11 
    Premium finance receivables - property & casualty  0.23   0.16   0.30   0.14   0.02 
    Premium finance receivables - life insurance  0.00   0.00         0.00 
    Consumer and other  0.74   (0.16)  4.02   1.31   1.19 
    Total loans, net of unearned income  0.06%  0.05%  0.03%  0.11%  0.03%
               
    Loans at period end $39,565,471  $39,196,485  $38,167,613  $37,053,103  $35,280,547 
    Allowance for loan losses as a percentage of loans at period end  0.73%  0.69%  0.64%  0.68%  0.71%
    Allowance for loan and unfunded lending-related commitment losses as a percentage of loans at period end  0.95   0.91   0.83   0.84   0.85 

    TABLE 10: ALLOWANCE AND PROVISION FOR CREDIT LOSSES BY COMPONENT

      Three Months Ended
      Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
    (In thousands)  2023   2022  2022   2022   2022 
    Provision for loan losses $22,520  $29,110 $(2,385) $10,782  $5,214 
    Provision for unfunded lending-related commitments losses  550   18,358  8,578   9,711   (1,189)
    Provision for held-to-maturity securities losses  (25)  178  227   (76)  81 
    Provision for credit losses $23,045  $47,646 $6,420  $20,417  $4,106 
               
    Allowance for loan losses $287,972  $270,173 $246,110  $251,769  $250,539 
    Allowance for unfunded lending-related commitments losses  87,826   87,275  68,918   60,340   50,629 
    Allowance for loan losses and unfunded lending-related commitments losses  375,798   357,448  315,028   312,109   301,168 
    Allowance for held-to-maturity securities losses  463   488  310   83   159 
    Allowance for credit losses $376,261  $357,936 $315,338  $312,192  $301,327 

    TABLE 11: ALLOWANCE BY LOAN PORTFOLIO

    The table below summarizes the calculation of allowance for loan losses and allowance for unfunded lending-related commitments losses for the Company’s loan portfolios as well as core and niche portfolios, as of March 31, 2023, December 31, 2022 and September 30, 2022.

     As of Mar 31, 2023As of Dec 31, 2022As of Sep 30, 2022
    (Dollars in thousands)Recorded
    Investment
     Calculated
    Allowance
     % of its
    category’s
    balance
    Recorded
    Investment
     Calculated
    Allowance
     % of its
    category’s
    balance
    Recorded
    Investment
     Calculated
    Allowance
     % of its
    category’s
    balance
    Commercial:               
    Commercial, industrial and other, excluding PPP loans$12,559,790 $149,501 1.19%$12,520,241 $142,769 1.14%$12,215,592 $135,315 1.11%
    Commercial PPP loans 17,195     28,923     43,658  1 0.00 
    Commercial real estate:               
    Construction and development 1,597,053  75,069 4.70  1,486,930  75,907 5.10  1,525,511  51,389 3.37 
    Non-construction 8,642,025  119,711 1.39  8,464,017  108,445 1.28  8,052,673  99,329 1.23 
    Home equity 337,016  7,728 2.29  332,698  7,573 2.28  328,822  7,055 2.15 
    Residential real estate 2,505,545  11,434 0.46  2,372,383  11,585 0.49  2,235,459  11,023 0.49 
    Premium finance receivables               
    Commercial insurance loans 5,738,880  11,248 0.20  5,849,459  9,967 0.17  5,713,340  9,736 0.17 
    Life insurance loans 8,125,802  707 0.01  8,090,998  704 0.01  8,004,856  696 0.01 
    Consumer and other 42,165  400 0.95  50,836  498 0.98  47,702  484 1.01 
    Total loans, net of unearned income$39,565,471 $375,798 0.95%$39,196,485 $357,448 0.91%$38,167,613 $315,028 0.83%
    Total loans, net of unearned income, excluding PPP loans$39,548,276 $375,798 0.95%$39,167,562 $357,448 0.91%$38,123,955 $315,027 0.83%
                    
    Total core loans (1)$22,978,183 $334,910 1.46%$22,490,701 $320,403 1.42%$21,697,055 $273,947 1.26%
    Total niche loans (1) 16,570,093  40,888 0.25  16,676,861  37,045 0.22  16,426,900  41,080 0.25 
    Total PPP loans 17,195     28,923     43,658  1 0.00 
                    

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

    TABLE 12: LOAN PORTFOLIO AGING

    (In thousands) Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022
    Loan Balances:          
    Commercial          
    Nonaccrual $47,950 $35,579 $44,293 $32,436 $16,878
    90+ days and still accruing    462  237    
    60-89 days past due  10,755  21,128  24,641  16,789  1,294
    30-59 days past due  95,593  56,696  34,917  14,120  31,889
    Current  12,422,687  12,435,299  12,155,162  11,983,760  11,533,902
    Total commercial $12,576,985 $12,549,164 $12,259,250 $12,047,105 $11,583,963
    Commercial real estate          
    Nonaccrual $11,196 $6,387 $10,477 $10,718 $12,301
    90+ days and still accruing          
    60-89 days past due  20,539  2,244  6,041  6,771  2,648
    30-59 days past due  72,680  30,675  29,971  34,220  30,141
    Current  10,134,663  9,911,641  9,531,695  9,355,496  9,189,984
    Total commercial real estate $10,239,078 $9,950,947 $9,578,184 $9,407,205 $9,235,074
    Home equity          
    Nonaccrual $1,190 $1,487 $1,320 $1,084 $1,747
    90+ days and still accruing          
    60-89 days past due  116    125  154  199
    30-59 days past due  1,118  2,152  848  930  545
    Current  334,592  329,059  326,529  323,658  318,944
    Total home equity $337,016 $332,698 $328,822 $325,826 $321,435
    Residential real estate          
    Early buy-out loans guaranteed by U.S. government agencies (1) $196,152 $164,788 $148,664 $113,856 $50,096
    Nonaccrual  11,333  10,171  9,787  8,330  7,262
    90+ days and still accruing  104        
    60-89 days past due  74  4,364  2,149  534  293
    30-59 days past due  19,183  9,982  15  147  18,808
    Current  2,278,699  2,183,078  2,074,844  1,956,040  1,723,526
    Total residential real estate $2,505,545 $2,372,383 $2,235,459 $2,078,907 $1,799,985
    Premium finance receivables - property & casualty          
    Nonaccrual $18,543 $13,470 $13,026 $13,303 $6,707
    90+ days and still accruing  9,215  15,841  16,624  6,447  12,363
    60-89 days past due  14,287  14,926  15,301  15,299  8,890
    30-59 days past due  32,545  40,557  21,128  23,313  21,278
    Current  5,664,290  5,764,665  5,647,261  5,483,085  4,888,170
    Total Premium finance receivables - property & casualty $5,738,880 $5,849,459 $5,713,340 $5,541,447 $4,937,408
    Premium finance receivables - life insurance          
    Nonaccrual $ $ $ $ $
    90+ days and still accruing  1,066  17,245  1,831    
    60-89 days past due  21,552  5,260  13,628  1,796  22,401
    30-59 days past due  52,975  68,725  44,954  65,155  15,522
    Current  8,050,209  7,999,768  7,944,443  7,541,482  7,316,240
    Total Premium finance receivables - life insurance $8,125,802 $8,090,998 $8,004,856 $7,608,433 $7,354,163
    Consumer and other          
    Nonaccrual $6 $6 $7 $8 $4
    90+ days and still accruing  87  49  31  25  43
    60-89 days past due  10  18  26  8  5
    30-59 days past due  379  224  343  119  221
    Current  41,683  50,539  47,295  44,020  48,246
    Total consumer and other $42,165 $50,836 $47,702 $44,180 $48,519
    Total loans, net of unearned income          
    Early buy-out loans guaranteed by U.S. government agencies (1) $196,152 $164,788 $148,664 $113,856 $50,096
    Nonaccrual  90,218  67,100  78,910  65,879  44,899
    90+ days and still accruing  10,472  33,597  18,723  6,472  12,406
    60-89 days past due  67,333  47,940  61,911  41,351  35,730
    30-59 days past due  274,473  209,011  132,176  138,004  118,404
    Current  38,926,823  38,674,049  37,727,229  36,687,541  35,019,012
    Total loans, net of unearned income $39,565,471 $39,196,485 $38,167,613 $37,053,103 $35,280,547

    (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 13: NON-PERFORMING ASSETS(1)

     Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
    (Dollars in thousands) 2023   2022   2022   2022   2022 
    Loans past due greater than 90 days and still accruing:         
    Commercial$  $462  $237  $  $ 
    Commercial real estate              
    Home equity              
    Residential real estate 104             
    Premium finance receivables - property & casualty 9,215   15,841   16,624   6,447   12,363 
    Premium finance receivables - life insurance 1,066   17,245   1,831       
    Consumer and other 87   49   31   25   43 
    Total loans past due greater than 90 days and still accruing 10,472   33,597   18,723   6,472   12,406 
    Non-accrual loans:         
    Commercial 47,950   35,579   44,293   32,436   16,878 
    Commercial real estate 11,196   6,387   10,477   10,718   12,301 
    Home equity 1,190   1,487   1,320   1,084   1,747 
    Residential real estate 11,333   10,171   9,787   8,330   7,262 
    Premium finance receivables - property & casualty 18,543   13,470   13,026   13,303   6,707 
    Premium finance receivables - life insurance              
    Consumer and other 6   6   7   8   4 
    Total non-accrual loans 90,218   67,100   78,910   65,879   44,899 
    Total non-performing loans:         
    Commercial 47,950   36,041   44,530   32,436   16,878 
    Commercial real estate 11,196   6,387   10,477   10,718   12,301 
    Home equity 1,190   1,487   1,320   1,084   1,747 
    Residential real estate 11,437   10,171   9,787   8,330   7,262 
    Premium finance receivables - property & casualty 27,758   29,311   29,650   19,750   19,070 
    Premium finance receivables - life insurance 1,066   17,245   1,831       
    Consumer and other 93   55   38   33   47 
    Total non-performing loans$100,690  $100,697  $97,633  $72,351  $57,305 
    Other real estate owned 8,050   8,589   5,376   5,574   4,978 
    Other real estate owned - from acquisitions 1,311   1,311   1,311   1,265   1,225 
    Other repossessed assets              
    Total non-performing assets$110,051  $110,597  $104,320  $79,190  $63,508 
    Total non-performing loans by category as a percent of its own respective category’s period-end balance:         
    Commercial 0.38%  0.29%  0.36%  0.27%  0.15%
    Commercial real estate 0.11   0.06   0.11   0.11   0.13 
    Home equity 0.35   0.45   0.40   0.33   0.54 
    Residential real estate 0.46   0.43   0.44   0.40   0.40 
    Premium finance receivables - property & casualty 0.48   0.50   0.52   0.36   0.39 
    Premium finance receivables - life insurance 0.01   0.21   0.02       
    Consumer and other 0.22   0.11   0.08   0.07   0.10 
    Total loans, net of unearned income 0.25%  0.26%  0.26%  0.20%  0.16%
    Total non-performing assets as a percentage of total assets 0.21%  0.21%  0.20%  0.16%  0.13%
    Allowance for loan losses and unfunded lending-related commitments losses as a percentage of non-accrual loans 416.54%  532.71%  399.22%  473.76%  670.77%
              

    (1)   Excludes early buy-out loans guaranteed by U.S. government agencies. Early buy-out loans are insured or guaranteed by the Federal Housing Administration or the U.S. Department of Veterans Affairs, subject to indemnifications and insurance limits for certain loans.

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

     Three Months Ended
     Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
    (In thousands) 2023   2022   2022   2022   2022 
              
    Balance at beginning of period$100,697  $97,633  $72,351  $57,305  $74,438 
    Additions from becoming non-performing in the respective period 24,455   10,027   35,234   22,841   4,141 
    Return to performing status (480)  (1,167)  (154)  (1,000)  (729)
    Payments received (5,261)  (16,351)  (20,417)  (4,029)  (20,139)
    Transfer to OREO and other repossessed assets    (3,365)  (185)  (1,611)  (4,377)
    Charge-offs, net (1,159)  (1,363)  (341)  (1,969)  (2,354)
    Net change for niche loans (1) (17,562)  15,283   11,145   814   6,325 
    Balance at end of period$100,690  $100,697  $97,633  $72,351  $57,305 

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

    Other Real Estate Owned

     Three Months Ended
     Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
    (In thousands) 2023   2022   2022   2022   2022 
    Balance at beginning of period$9,900  $6,687  $6,839  $6,203  $4,271 
    Disposals/resolved (435)  (152)  (133)  (1,172)  (2,497)
    Transfers in at fair value, less costs to sell    3,365   134   2,090   4,429 
    Fair value adjustments (104)     (153)  (282)   
    Balance at end of period$9,361  $9,900  $6,687  $6,839  $6,203 
              
     Period End
     Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
    Balance by Property Type: 2023   2022   2022   2022   2022 
    Residential real estate$1,051  $1,585  $1,585  $1,630  $1,127 
    Residential real estate development          133    
    Commercial real estate 8,310   8,315   5,102   5,076   5,076 
    Total$9,361  $9,900  $6,687  $6,839  $6,203 

    TABLE 14: NON-INTEREST INCOME

     Three Months Ended Q1 2023 compared to
    Q4 2022
     Q1 2023 compared to
    Q1 2022
     Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,  
    (Dollars in thousands) 2023   2022   2022   2022   2022  $ Change % Change $ Change % Change
    Brokerage$4,533  $4,177  $4,587  $4,272  $4,632  $356  9% $(99) (2)%
    Trust and asset management 25,412   26,550   28,537   27,097   26,762   (1,138) (4)  (1,350) (5)
    Total wealth management 29,945   30,727   33,124   31,369   31,394   (782) (3)  (1,449) (5)
    Mortgage banking 18,264   17,407   27,221   33,314   77,231   857  5   (58,967) (76)
    Service charges on deposit accounts 12,903   13,054   14,349   15,888   15,283   (151) (1)  (2,380) (16)
    Gains (losses) on investment securities, net 1,398   (6,745)  (3,103)  (7,797)  (2,782)  8,143  NM  4,180  NM
    Fees from covered call options 10,391   7,956   1,366   1,069   3,742   2,435  31   6,649  NM
    Trading gains (losses), net 813   (306)  (7)  176   3,889   1,119  NM  (3,076) (79)
    Operating lease income, net 13,046   12,384   12,644   15,007   15,475   662  5   (2,429) (16)
    Other:                 
    Interest rate swap fees 2,606   2,319   1,997   3,300   4,569   287  12   (1,963) (43)
    BOLI 1,351   1,394   248   (884)  48   (43) (3)  1,303  NM
    Administrative services 1,615   1,736   1,533   1,591   1,853   (121) (7)  (238) (13)
    Foreign currency remeasurement (losses) gains (188)  277   (93)  97   11   (465) NM  (199) NM
    Early pay-offs of capital leases 365   131   138   160   265   234  NM  100  38 
    Miscellaneous 15,260   13,505   12,065   9,652   11,812   1,755  13   3,448  29 
    Total Other 21,009   19,362   15,888   13,916   18,558   1,647  9   2,451  13 
    Total Non-Interest Income$107,769  $93,839  $101,482  $102,942  $162,790  $13,930  15% $(55,021) (34)%

    NM - Not meaningful.
    BOLI - Bank-owned life insurance.

    TABLE 15: NON-INTEREST EXPENSE

     Three Months Ended Q1 2023 compared to
    Q4 2022
     Q1 2023 compared to
    Q1 2022
     Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,  
    (Dollars in thousands) 2023   2022  2022  2022  2022  $ Change % Change $ Change % Change
    Salaries and employee benefits:                 
    Salaries$108,354  $100,232 $97,419 $92,414 $92,116  $8,122  8% $16,238  18%
    Commissions and incentive compensation 39,799   49,546  50,403  46,131  51,793   (9,747) (20)  (11,994) (23)
    Benefits 28,628   30,553  28,273  28,781  28,446   (1,925) (6)  182  1 
    Total salaries and employee benefits 176,781   180,331  176,095  167,326  172,355   (3,550) (2)  4,426  3 
    Software and equipment 24,697   24,699  24,126  24,250  22,810   (2) 0   1,887  8 
    Operating lease equipment 9,833   10,078  9,448  8,774  9,708   (245) (2)  125  1 
    Occupancy, net 18,486   17,763  17,727  17,651  17,824   723  4   662  4 
    Data processing 9,409   7,927  7,767  8,010  7,505   1,482  19   1,904  25 
    Advertising and marketing 11,946   14,279  16,600  16,615  11,924   (2,333) (16)  22  0 
    Professional fees 8,163   9,267  7,544  7,876  8,401   (1,104) (12)  (238) (3)
    Amortization of other acquisition-related intangible assets 1,235   1,436  1,492  1,579  1,609   (201) (14)  (374) (23)
    FDIC insurance 8,669   6,775  7,186  6,949  7,729   1,894  28   940  12 
    OREO expense, net (207)  369  229  294  (1,032)  (576) NM  825  (80)
    Other:                 
    Lending expenses, net of deferred origination costs 1,764   4,951  4,533  4,270  6,821   (3,187) (64)  (5,057) (74)
    Travel and entertainment 4,590   5,681  4,252  3,897  2,676   (1,091) (19)  1,914  72 
    Miscellaneous 23,803   24,280  19,470  21,177  15,968   (477) (2)  7,835  49 
    Total other 30,157   34,912  28,255  29,344  25,465   (4,755) (14)  4,692  18 
    Total Non-Interest Expense$299,169  $307,836 $296,469 $288,668 $284,298  $(8,667) (3)% $14,871  5%

    NM - Not meaningful.

    TABLE 16: 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
     Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
    (Dollars and shares in thousands) 2023   2022   2022   2022   2022 
    Reconciliation of Non-GAAP Net Interest Margin and Efficiency Ratio:
    (A) Interest Income (GAAP)$639,690  $580,745  $466,478  $371,968  $328,252 
    Taxable-equivalent adjustment:         
    - Loans 1,872   1,594   1,030   568   427 
    - Liquidity Management Assets 551   538   502   472   465 
    - Other Earning Assets 4   1   1   1   2 
    (B) Interest Income (non-GAAP)$642,117  $582,878  $468,011  $373,009  $329,146 
    (C) Interest Expense (GAAP) 181,695   123,929   65,030   34,164   28,958 
    (D) Net Interest Income (GAAP) (A minus C)$457,995  $456,816  $401,448  $337,804  $299,294 
    (E) Net Interest Income (non-GAAP) (B minus C)$460,422  $458,949  $402,981  $338,845  $300,188 
    Net interest margin (GAAP) 3.81%  3.71%  3.34%  2.92%  2.60%
    Net interest margin, fully taxable-equivalent (non-GAAP) 3.83   3.73   3.35   2.93   2.61 
    (F) Non-interest income$107,769  $93,839  $101,482  $102,942  $162,790 
    (G) Gains (losses) on investment securities, net 1,398   (6,745)  (3,103)  (7,797)  (2,782)
    (H) Non-interest expense 299,169   307,836   296,469   288,668   284,298 
    Efficiency ratio (H/(D+F-G)) 53.01%  55.23%  58.59%  64.36%  61.16%
    Efficiency ratio (non-GAAP) (H/(E+F-G)) 52.78   55.02   58.41   64.21   61.04 
     Three Months Ended
     Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
    (Dollars and shares in thousands) 2023   2022   2022   2022   2022 
    Reconciliation of Non-GAAP Tangible Common Equity Ratio:
    Total shareholders’ equity (GAAP)$5,015,506  $4,796,838  $4,637,980  $4,727,623  $4,492,256 
    Less: Non-convertible preferred stock (GAAP) (412,500)  (412,500)  (412,500)  (412,500)  (412,500)
    Less: Intangible assets (GAAP) (674,538)  (675,710)  (676,699)  (679,827)  (682,101)
    (I) Total tangible common shareholders’ equity (non-GAAP)$3,928,468  $3,708,628  $3,548,781  $3,635,296  $3,397,655 
    (J) Total assets (GAAP)$52,873,511  $52,949,649  $52,382,939  $50,969,332  $50,250,661 
    Less: Intangible assets (GAAP) (674,538)  (675,710)  (676,699)  (679,827)  (682,101)
    (K) Total tangible assets (non-GAAP)$52,198,973  $52,273,939  $51,706,240  $50,289,505  $49,568,560 
    Common equity to assets ratio (GAAP) (L/J) 8.7%  8.3%  8.1%  8.5%  8.1%
    Tangible common equity ratio (non-GAAP) (I/K) 7.5   7.1   6.9   7.2   6.9 

     

              
    Reconciliation of Non-GAAP Tangible Book Value per Common Share:
    Total shareholders’ equity$5,015,506  $4,796,838  $4,637,980  $4,727,623  $4,492,256 
    Less: Preferred stock (412,500)  (412,500)  (412,500)  (412,500)  (412,500)
    (L) Total common equity$4,603,006  $4,384,338  $4,225,480  $4,315,123  $4,079,756 
    (M) Actual common shares outstanding 61,176   60,794   60,743   60,722   57,253 
    Book value per common share (L/M)$75.24  $72.12  $69.56  $71.06  $71.26 
    Tangible book value per common share (non-GAAP) (I/M) 64.22   61.00   58.42   59.87   59.34 
              
    Reconciliation of Non-GAAP Return on Average Tangible Common Equity:
    (N) Net income applicable to common shares$173,207  $137,826  $135,970  $87,522  $120,400 
    Add: Intangible asset amortization 1,235   1,436   1,492   1,579   1,609 
    Less: Tax effect of intangible asset amortization (321)  (370)  (425)  (445)  (430)
    After-tax intangible asset amortization$914  $1,066  $1,067  $1,134  $1,179 
    (O) Tangible net income applicable to common shares (non-GAAP)$174,121  $138,892  $137,037  $88,656  $121,579 
    Total average shareholders’ equity$4,895,271  $4,710,856  $4,795,387  $4,526,110  $4,500,460 
    Less: Average preferred stock (412,500)  (412,500)  (412,500)  (412,500)  (412,500)
    (P) Total average common shareholders’ equity$4,482,771  $4,298,356  $4,382,887  $4,113,610  $4,087,960 
    Less: Average intangible assets (675,247)  (676,371)  (678,953)  (681,091)  (682,603)
    (Q) Total average tangible common shareholders’ equity (non-GAAP)$3,807,524  $3,621,985  $3,703,934  $3,432,519  $3,405,357 
    Return on average common equity, annualized (N/P) 15.67%  12.72%  12.31%  8.53%  11.94%
    Return on average tangible common equity, annualized (non-GAAP) (O/Q) 18.55   15.21   14.68   10.36   14.48 
              
    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$243,550  $195,173  $200,041  $131,661  $173,680 
    Add: Provision for credit losses 23,045   47,646   6,420   20,417   4,106 
    Pre-tax income, excluding provision for credit losses (non-GAAP)$266,595  $242,819  $206,461  $152,078  $177,786 
    Changes in fair value of MSRs, net of economic hedge and early buy-out loans guaranteed by U.S. government agencies 3,047   702   2,472   (445)  (43,365)
    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)$269,642  $243,521  $208,933  $151,633  $134,421 

    WINTRUST SUBSIDIARIES AND LOCATIONS

    Wintrust is a financial holding company whose common stock is traded on the Nasdaq Global Select Market (Nasdaq: WTFC). Its 15 community bank subsidiaries are: Lake Forest Bank & Trust Company, N.A., Hinsdale Bank & Trust Company, N.A., Wintrust Bank, N.A., in Chicago, Libertyville Bank & Trust Company, N.A., Barrington Bank & Trust Company, N.A., Crystal Lake Bank & Trust Company, N.A., Northbrook Bank & Trust Company, N.A., Schaumburg Bank & Trust Company, N.A., Village Bank & Trust, N.A., in Arlington Heights, Beverly Bank & Trust Company, N.A. in Chicago, Wheaton Bank & Trust Company, N.A., State Bank of The Lakes, N.A., in Antioch, Old Plank Trail Community Bank, N.A., in New Lenox, St. Charles Bank & Trust Company, N.A. and Town Bank, N.A., in Hartland, Wisconsin.

    In addition to the locations noted above, the banks also operate facilities in Illinois in Addison, Algonquin, Aurora, Bloomingdale, Bolingbrook, Buffalo Grove, Burbank, Cary, Clarendon Hills, Countryside, Crete, Darien, Deerfield, Des Plaines, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Evanston, Evergreen Park, Frankfort, Geneva, Glen Ellyn, Glencoe, Glenview, Grayslake, Gurnee, Hanover Park, Highland Park, Highwood, Hoffman Estates, Homer Glen, Itasca, Joliet, Lake Bluff, Lake Villa, Lansing, Lemont, Lindenhurst, Lombard, Lynwood, Markham, Maywood, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, Norridge, Northfield, Oak Lawn, Oak Park, Orland Park, Palatine, Park Ridge, Prospect Heights, Riverside, Rockford, Rolling Meadows, Round Lake Beach, Shorewood, Skokie, 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, and which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company’s 2022 Annual Report on Form 10-K and in any of the Company’s subsequent SEC filings. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be deemed to include, among other things, statements relating to the Company’s future financial performance, the performance of its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory developments, securities that the Company may offer from time to time, the Company’s business and growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth and plans to form additional de novo banks or branch offices, and management’s long-term performance goals, as well as statements relating to the anticipated effects on the Company’s financial condition and results of operations from expected developments or events. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:

    • economic conditions and events that affect the economy, housing prices, the job market and other factors that may adversely affect the Company’s liquidity and the performance of its loan portfolios, including an actual or threatened U.S. government debt default or rating downgrade, particularly in the markets in which it operates;
    • negative effects suffered by us or our customers resulting from changes in U.S. trade policies;
    • the extent of defaults and losses on the Company’s loan portfolio, which may require further increases in its allowance for credit losses;
    • estimates of fair value of certain of the Company’s assets and liabilities, which could change in value significantly from period to period;
    • the financial success and economic viability of the borrowers of our commercial loans;
    • commercial real estate market conditions in the Chicago metropolitan area and southern Wisconsin;
    • the extent of commercial and consumer delinquencies and declines in real estate values, which may require further increases in the Company’s allowance for credit losses;
    • inaccurate assumptions in our analytical and forecasting models used to manage our loan portfolio;
    • changes in the level and volatility of interest rates, the capital markets and other market indices that may affect, among other things, the Company’s liquidity and the value of its assets and liabilities;
    • the interest rate environment, including a prolonged period of low interest rates or rising interest rates, either broadly or for some types of instruments, which may affect the Company’s net interest income and net interest margin, and which could materially adversely affect the Company’s profitability;
    • competitive pressures in the financial services business which may affect the pricing of the Company’s loan and deposit products as well as its services (including wealth management services), which may result in loss of market share and reduced income from deposits, loans, advisory fees and income from other products;
    • failure to identify and complete favorable acquisitions in the future or unexpected difficulties or developments related to the integration of the Company’s recent or future acquisitions;
    • unexpected difficulties and losses related to FDIC-assisted acquisitions;
    • harm to the Company’s reputation;
    • any negative perception of the Company’s financial strength;
    • ability of the Company to raise additional capital on acceptable terms when needed;
    • disruption in capital markets, which may lower fair values for the Company’s investment portfolio;
    • ability of the Company to use technology to provide products and services that will satisfy customer demands and create efficiencies in operations and to manage risks associated therewith;
    • failure or breaches of our security systems or infrastructure, or those of third parties;
    • security breaches, including denial of service attacks, hacking, social engineering attacks, malware intrusion and similar events or data corruption attempts and identity theft;
    • adverse effects on our information technology systems resulting from failures, human error or cyberattacks (including ransomware);
    • adverse effects of failures by our vendors to provide agreed upon services in the manner and at the cost agreed, particularly our information technology vendors;
    • increased costs as a result of protecting our customers from the impact of stolen debit card information;
    • accuracy and completeness of information the Company receives about customers and counterparties to make credit decisions;
    • ability of the Company to attract and retain senior management experienced in the banking and financial services industries, and ability of the Company to effectively manage the planned transition of the chief executive officer role;
    • environmental liability risk associated with lending activities;
    • the impact of any claims or legal actions to which the Company is subject, including any effect on our reputation;
    • losses incurred in connection with repurchases and indemnification payments related to mortgages and increases in reserves associated therewith;
    • the loss of customers as a result of technological changes allowing consumers to complete their financial transactions without the use of a bank;
    • the soundness of other financial institutions;
    • the expenses and delayed returns inherent in opening new branches and de novo banks;
    • liabilities, potential customer loss or reputational harm related to closings of existing branches;
    • examinations and challenges by tax authorities, and any unanticipated impact of the Tax Act;
    • changes in accounting standards, rules and interpretations, and the impact on the Company’s financial statements;
    • the ability of the Company to receive dividends from its subsidiaries;
    • the ability of the Company to successfully discontinue use of LIBOR and transition to an alternative benchmark rate for current and future transactions;
    • a decrease in the Company’s capital ratios, including as a result of declines in the value of its loan portfolios, or otherwise;
    • legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies;
    • changes in laws, regulations, rules, standards and contractual obligations regarding data privacy and cybersecurity;
    • a lowering of our credit rating;
    • changes in U.S. monetary policy and changes to the Federal Reserve’s balance sheet, including changes in response to persistent inflation or otherwise;
    • regulatory restrictions upon our ability to market our products to consumers and limitations on our ability to profitably operate our mortgage business;
    • increased costs of compliance, heightened regulatory capital requirements and other risks associated with changes in regulation and the regulatory environment;
    • the impact of heightened capital requirements;
    • increases in the Company’s FDIC insurance premiums, or the collection of special assessments by the FDIC;
    • delinquencies or fraud with respect to the Company’s premium finance business;
    • credit downgrades among commercial and life insurance providers that could negatively affect the value of collateral securing the Company’s premium finance loans;
    • the Company’s ability to comply with covenants under its credit facility;
    • fluctuations in the stock market, which may have an adverse impact on the Company’s wealth management business and brokerage operation;
    • widespread outages of operational, communication, or other systems, whether internal or provided by third parties, natural or other disasters (including acts of terrorism, armed hostilities and pandemics), and the effects of climate change could have an adverse effect on the Company’s financial condition and results of operations, lead to material disruption of the Company’s operations or the ability or willingness of clients to access the Company’s products and services; and
    • the severity, magnitude and duration of the COVID-19 pandemic, including the continued emergence of variant strains, and the direct and indirect impact of such pandemic, as well as responses to the pandemic by the government, businesses and consumers, on the economy, our financial results, operations and personnel, commercial activity and demand across our business and our customers’ businesses.

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

    CONFERENCE CALL, WEBCAST AND REPLAY

    The Company will hold a conference call on Thursday, April 20, 2023 at 10:00 a.m. (CDT) regarding first quarter 2023 earnings results. Individuals interested in participating in the call by addressing questions to management should register for the call to receive the dial-in numbers and unique PIN at the link included within the Company’s press release dated March 31, 2023 available at the Investor Relations, Investor News and Events, Press Releases link on its website at https://www.wintrust.com. A separate simultaneous audio-only webcast link is included within the press release referenced above. Registration for and a replay of the audio-only webcast with an accompanying slide presentation will be available at https://www.wintrust.com, Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the first quarter 2023 earnings press release will also be available on the home page of the Company’s website at https://www.wintrust.com and at the Investor Relations, Investor News and Events, Press Releases link on its website.

    FOR MORE INFORMATION CONTACT:
    Edward J. Wehmer, Founder & Chief Executive Officer
    David A. Dykstra, Vice Chairman & Chief Operating Officer
    (847) 939-9000
    Web site address: www.wintrust.com


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