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Wintrust Financial Corporation Reports Record Year-to-Date Net Income

Company Release - 10/17/2023 5:00 PM ET

ROSEMONT, Ill., Oct. 17, 2023 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust”, “the Company”, “we” or “our”) (Nasdaq: WTFC) announced record net income of $499.1 million or $7.71 per diluted common share for the first nine months of 2023 compared to net income of $364.9 million or $5.78 per diluted common share for the same period of 2022, an increase in diluted earnings per common share of 33%. Pre-tax, pre-provision income (non-GAAP) for the first nine months of 2023 totaled $751.3 million as compared to $536.3 million in the first nine months of 2022, an increase in pre-tax, pre-provision income of 40%.

The Company recorded quarterly net income of $164.2 million or $2.53 per diluted common share for the third quarter of 2023, an increase in diluted earnings per common share of 6% compared to the second quarter of 2023 and 14% compared to the third quarter of 2022. Pre-tax, pre-provision income (non-GAAP) totaled $244.8 million as compared to $239.9 million for the second quarter of 2023 and $206.5 million for the third quarter of 2022.

Timothy S. Crane, President and Chief Executive Officer, commented, “As demonstrated by our strong results, we followed our record first half of 2023 with continued momentum in the third quarter of 2023. We leveraged our position in the markets we serve to sustain growth in loans and deposits during the quarter.”

Additionally, Mr. Crane noted, “Our net interest margin for the quarter was within our expected range, down slightly due primarily to the impact of hedging activities. In the current interest rate environment, we expect to maintain our net interest margin within a narrow range around current levels for the remainder of 2023 and continuing into the beginning of 2024. We believe this growth and stability in net interest margin will drive strong financial performance in future quarters.”

Highlights of the third quarter of 2023:
Comparative information to the second quarter of 2023, unless otherwise noted

  • Total deposits grew by approximately $1 billion, or 9% annualized.
  • Total loans increased by approximately $423 million, or 4% annualized. Adjusting for the impact of a loan sale transaction within our property and casualty insurance premium finance receivables portfolio during the third quarter of 2023, total loans would have increased $767 million, or 7% annualized.
  • Record quarterly net interest income of $462.4 million, increasing approximately $14.8 million primarily due to strong growth in earning assets.
    • Net interest margin decreased four basis points to 3.60% (3.62% on a fully taxable-equivalent basis, non-GAAP) during the third quarter of 2023 primarily due to the negative impact of hedging activities.
  • Non-interest expense was negatively impacted by:
    • Occupancy costs of approximately $2.9 million from the impairment of two Company-owned buildings that are no longer being used.
    • Data processing costs of approximately $1.5 million from the termination of a duplicate service contract related to the acquisition of a wealth management business in 2023.
    • Other salary costs of approximately $1.6 million related to acquisition-related severance charges and other contractually due compensation costs.
  • Provision for credit losses totaled $19.9 million in the third quarter of 2023 as compared to a provision for credit losses of $28.5 million in the second quarter of 2023.
  • Net charge-offs totaled $8.1 million or eight basis points of average total loans on an annualized basis in the third quarter of 2023 as compared to $17.0 million or 17 basis points of average total loans on an annualized basis in the second quarter of 2023.

Mr. Crane commented, “By leveraging our customer relationships, market positioning, diversified products and competitive rates, we continued to generate significant deposit growth, increasing deposits approximately $1 billion, or 9% on an annualized basis, in the third quarter of 2023. Growth in retail deposits helped reduce our level of brokered deposits by approximately $392 million during the third quarter of 2023. In addition, deposit growth helped fund approximately $423 million of loan growth during the quarter. This strong loan growth was achieved despite the impact of a loan sale transaction within our property and casualty insurance premium finance receivables portfolio that reduced period-end balances at the end of the third quarter by approximately $344 million. Loan growth came primarily from draws on existing commercial real estate loan facilities as well as growth in our commercial portfolio. Additionally, despite the loan sale transaction noted above, our property and casualty insurance premium finance receivables portfolio ended the quarter relatively unchanged. We remain prudent in our review of credit prospects ensuring our loan growth stays within our conservative credit standards.”

Mr. Crane noted, “We grew our net interest income during the third quarter of 2023 by approximately $14.8 million primarily due to an increase in average earning assets of approximately $1.6 billion. Our net interest margin decreased four basis points during the third quarter, however, three basis points of the decline was due to the impact of our interest rate hedging strategies, which are designed to protect our net interest income if interest rates decline. Deposit pricing pressures moderated in the third quarter of 2023 and we expect that to continue into the fourth quarter. Assuming a similar interest rate environment, we believe our net interest margin will be relatively stable for the remainder of 2023 and entering 2024. The combination of balance sheet growth and a stable net interest margin is expected to continue to grow our net interest income.”

Commenting on credit quality, Mr. Crane stated, “Credit metrics remained strong and at historically low levels. Net charge-offs totaled $8.1 million or eight basis points of average total loans on an annualized basis in the third quarter of 2023 as compared to $17.0 million or 17 basis points of average total loans on an annualized basis in the second quarter of 2023. Non-performing loans totaled $133.1 million, or 0.32% of total loans, at the end of the third quarter of 2023 compared to $108.7 million, or 0.26% of total loans, at the end of the second quarter of 2023. Of the $24.4 million increase in non-performing loans in the third quarter of 2023, $19.6 million is related to the premium finance receivables portfolios in which we ultimately expect minimal losses. The allowance for credit losses on our core loan portfolio as of September 30, 2023 was approximately 1.51% of the outstanding balance (see Table 12 for additional information). We believe that the Company’s reserves remain appropriate and we remain diligent in our review of credit.”

Mr. Crane concluded, “I am very pleased with our results for the third quarter of 2023. Net income for the quarter was the second highest in our history, behind only the net income reported in the first quarter of 2023. Total loans as of September 30, 2023 were $739 million higher than average total loans in the third quarter of 2023, which is expected to help continue our momentum into the fourth quarter. We continue to win business and expand our franchise, keeping us well-positioned in the markets we serve. This will help grow our deposit and loan relationships, which should generate higher net revenues and earnings in the coming quarters. As a result, our capital ratios will benefit from the increased earnings.”

The graphs below illustrate certain financial highlights of the third quarter of 2023 as well as historical financial performance. See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 17 for additional information with respect to non-GAAP financial measures/ratios, including the reconciliations to the corresponding GAAP financial measures/ratios.

Graphs available at the following link:

http://ml.globenewswire.com/Resource/Download/c2b726e7-3c69-483b-b815-c3e18b1fa57f

SUMMARY OF RESULTS:

BALANCE SHEET

Total assets increased $1.3 billion in the third quarter of 2023 as compared to the second quarter of 2023. Total loans increased by $422.6 million as compared to the second quarter of 2023. The increase in loans was primarily the result of draws on existing commercial real estate loan facilities as well as growth in the commercial portfolio. Additionally, despite a loan sale transaction that reduced outstanding balances at the end of the third quarter of 2023 by $344 million, the property and casualty insurance premium finance receivables portfolio ended the quarter relatively unchanged. In the third quarter of 2023, the Company purchased securities, resulting in a $480.7 million increase in investment securities.

Total liabilities increased by $1.3 billion in the third quarter of 2023 as compared to the second quarter of 2023 primarily due to a $1.0 billion increase in total deposits. Non-interest bearing deposits as a percentage of total deposits was 23% at September 30, 2023 compared to 24% at June 30, 2023 as deposit growth came primarily from interest bearing deposit categories. Net outflows from non-interest bearing deposits stabilized during the third quarter of 2023 as average non-interest bearing deposits during the third quarter of 2023 essentially equaled the amount at the end of the second quarter of 2023 at $10.6 billion.

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

NET INTEREST INCOME

For the third quarter of 2023, net interest income totaled $462.4 million, an increase of $14.8 million as compared to the second quarter of 2023. The $14.8 million increase in net interest income in the third quarter of 2023 compared to the second quarter of 2023 was primarily due to a $1.6 billion increase in average earning assets and one additional day in the quarter.

Net interest margin was 3.60% (3.62% on a fully taxable-equivalent basis, non-GAAP) during the third quarter of 2023 compared to 3.64% (3.66% on a fully taxable-equivalent basis, non-GAAP) during the second quarter of 2023. The net interest margin decrease as compared to the second quarter of 2023 was primarily due to the negative impact of hedging activities as well as a 36 basis point increase in the rate paid on interest-bearing liabilities. This decrease was partially offset by a 27 basis point increase in yield on earning assets and a five basis point increase in the net free funds contribution. The 36 basis point increase on the rate paid on interest-bearing liabilities in the third quarter of 2023 as compared to the second quarter of 2023 was primarily due to a 41 basis point increase in the rate paid on interest-bearing deposits primarily related to the increasing rate environment. The 27 basis point increase in the yield on earning assets in the third quarter of 2023 as compared to the second quarter of 2023 was primarily due to a 28 basis point expansion on loan yields and 41 basis point increase in liquidity management asset yield.

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

ASSET QUALITY

The allowance for credit losses totaled $399.5 million as of September 30, 2023, an increase of $11.7 million as compared to $387.8 million as of June 30, 2023. A provision for credit losses totaling $19.9 million was recorded for the third quarter of 2023 as compared to $28.5 million recorded in the second quarter of 2023. For more information regarding the allowance for credit losses and provision for credit losses, see Table 11 in this report.

Management believes the allowance for credit losses is appropriate to account for expected credit losses. The Current Expected Credit Losses (“CECL”) accounting standard requires the Company to estimate expected credit losses over the life of the Company’s financial assets as of the reporting date. There can be no assurances, however, that future losses will not significantly exceed the amounts provided for, thereby affecting future results of operations. A summary of the allowance for credit losses calculated for the loan components in each portfolio as of September 30, 2023, June 30, 2023, and March 31, 2023 is shown on Table 12 of this report.

Net charge-offs totaled $8.1 million in the third quarter of 2023, as compared to $17.0 million of net charge-offs in the second quarter of 2023. The decrease in net charge-offs during the third quarter of 2023 was primarily the result of the sale to external parties of certain credits within the commercial real estate portfolio during the second quarter of 2023, which resulted in approximately $8.0 million in charge-offs. Net charge-offs as a percentage of average total loans were eight basis points in the third quarter of 2023 on an annualized basis compared to 17 basis points on an annualized basis in the second quarter of 2023. For more information regarding net charge-offs, see Table 10 in this report.

The Company’s delinquency rates remain low and manageable. For more information regarding past due loans, see Table 13 in this report. 

Non-performing assets totaled $147.2 million and comprised 0.26% of total assets as of September 30, 2023, as compared to $120.3 million as of June 30, 2023. Non-performing loans totaled $133.1 million, or 0.32% of total loans, at September 30, 2023. The increase in the third quarter was primarily due to an increase in loans 90 days or more past due but still fully collateralized within the life insurance premium finance receivables portfolio, and certain credits within the property and casualty insurance premium finance receivables portfolio becoming nonaccrual. For more information regarding non-performing assets, see Table 14 in this report.

NON-INTEREST INCOME

Wealth management revenue was relatively stable in the third quarter of 2023 as compared to the second quarter of 2023. Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors, the brokerage commissions, managed money fees and insurance product commissions at Wintrust Investments and fees from tax-deferred like-kind exchange services provided by the Chicago Deferred Exchange Company.

Mortgage banking revenue decreased by $2.6 million in the third quarter of 2023 as compared to the second quarter of 2023 primarily due to an unfavorable valuation related change in the Company’s held-for-sale portfolio of early buy-out exercised loans guaranteed by U.S. government agencies which are held at fair value. This was partially offset by increased production revenue and a more favorable adjustments to the fair value of mortgage servicing rights compared to the second quarter of 2023. The Company monitors the relationship of these assets and seeks to minimize the earnings impact of fair value changes.

The Company recognized $2.4 million in net losses on investment securities in the third quarter of 2023 as compared to nominal gains in the second quarter of 2023.

Fees from covered call options increased by $1.6 million in the third quarter of 2023 as compared to the second quarter of 2023. The Company has typically written call options with terms of less than three months against certain U.S. Treasury and agency securities held in its portfolio for liquidity and other purposes. Management has entered into these transactions with the goal of economically hedging security positions and enhancing its overall return on its investment portfolio. These option transactions are designed to mitigate overall interest rate risk and do not qualify as hedges pursuant to accounting guidance.

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

NON-INTEREST EXPENSE

Salaries and employee benefits expense increased by $7.4 million in the third quarter of 2023 as compared to the second quarter of 2023. The $7.4 million increase is primarily related to higher salary expense and incentive compensation expense due to elevated bonus accruals in the third quarter of 2023 as well as other salary costs of approximately $1.6 million related to acquisition-related severance charges and other contractually due compensation costs.

Operating lease equipment cost increased $2.2 million in the third quarter of 2023 as compared to the second quarter of 2023 primarily due to the impairment of certain assets during the period.

Occupancy expenses increased $2.1 million in the third quarter of 2023 as compared to the second quarter of 2023 primarily due to the impairment of two Company-owned buildings that are no longer being used. 

Data processing expense increased $1.0 million in the third quarter of 2023 as compared to the second quarter of 2023 primarily due to the termination of a duplicate service contract related to the acquisition of a wealth management business in 2023.

Lending expenses, net of deferred origination costs, decreased by $3.1 million as compared to the second quarter of 2023 primarily due to higher loan originations in the second quarter of 2023.

Miscellaneous expense in the third quarter of 2023 decreased by $1.0 million as compared to the second quarter of 2023. Miscellaneous expense includes ATM expenses, correspondent bank charges, directors’ fees, telephone, postage, corporate insurance, dues and subscriptions, problem loan expenses and other miscellaneous operational losses and costs.

For more information regarding non-interest expense, see Table 16 in this report.

INCOME TAXES

The Company recorded income tax expense of $60.7 million in the third quarter of 2023 compared to $56.7 million in the second quarter of 2023. The effective tax rates were 26.98% in the third quarter of 2023 compared to 26.81% in the second quarter of 2023.

BUSINESS UNIT SUMMARY

Community Banking

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

Mortgage banking revenue was $27.4 million for the third quarter of 2023, a decrease of $2.6 million as compared to the second quarter of 2023, primarily due to an unfavorable valuation related change in the Company’s held-for-sale portfolio of early buy-out exercised loans guaranteed by U.S. government agencies which are held at fair value. Service charges on deposit accounts totaled $14.2 million in the third quarter of 2023, an increase of $609,000 as compared to the second quarter of 2023, primarily due to higher fees associated with commercial account activity. The Company’s gross commercial and commercial real estate loan pipelines remained solid as of September 30, 2023 indicating momentum for expected continued loan growth in the fourth quarter of 2023.

Specialty Finance

Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries, accounts receivable financing and value-added, out-sourced administrative services and other services. Originations within the insurance premium financing receivables portfolio were $4.6 billion during the third quarter of 2023 and average balances increased by $444.0 million as compared to the second quarter of 2023. The Company’s leasing portfolio balance increased in the third quarter of 2023, with its portfolio of assets, including capital leases, loans and equipment on operating leases, totaling $3.3 billion as of September 30, 2023 as compared to $3.1 billion as of June 30, 2023. Revenues from the Company’s out-sourced administrative services business were $1.3 million in the third quarter of 2023, an increase of $17,000 from the second quarter of 2023.

Wealth Management

Through four separate subsidiaries within its wealth management unit, the Company offers a full range of wealth management services, including trust and investment services, tax-deferred like-kind exchange services, asset management, securities brokerage services and 401(k) and retirement plan services. Wealth management revenue totaled $33.5 million in the third quarter of 2023, which was relatively stable compared to the second quarter of 2023. At September 30, 2023, the Company’s wealth management subsidiaries had approximately $44.7 billion of assets under administration, which included $8.3 billion of assets owned by the Company and its subsidiary banks, representing an increase from the $44.5 billion of assets under administration at June 30, 2023.

ITEM IMPACTING COMPARATIVE FINANCIAL RESULTS

Business Combination

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

WINTRUST FINANCIAL CORPORATION

Key Operating Measures

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

              % or (1)
basis point (bp) change from
2nd Quarter
2023
  % or (1)
basis point (bp) change from
3rd Quarter
2022
    Three Months Ended  
(Dollars in thousands, except per share data)   Sep 30, 2023   Jun 30, 2023   Sep 30, 2022  
Net income   $ 164,198     $ 154,750     $ 142,961   6   %   15 %
Pre-tax income, excluding provision for credit losses (non-GAAP) (2)     244,781       239,944       206,461   2       19  
Net income per common share – Diluted     2.53       2.38       2.21   6       14  
Cash dividends declared per common share     0.40       0.40       0.34         18  
Net revenue (3)     574,836       560,567       502,930   3       14  
Net interest income     462,358       447,537       401,448   3       15  
Net interest margin     3.60 %     3.64 %     3.34 % (4 ) bps   26 bps
Net interest margin – fully taxable-equivalent (non-GAAP) (2)     3.62       3.66       3.35   (4 )     27  
Net overhead ratio (4)     1.59       1.58       1.53   1       6  
Return on average assets     1.20       1.18       1.12   2       8  
Return on average common equity     13.35       12.79       12.31   56       104  
Return on average tangible common equity (non-GAAP) (2)     15.73       15.12       14.68   61       105  
At end of period                      
Total assets   $ 55,555,246     $ 54,286,176     $ 52,382,939   9   %   6 %
Total loans (5)     41,446,032       41,023,408       38,167,613   4       9  
Total deposits     44,992,686       44,038,707       42,797,191   9       5  
Total shareholders’ equity     5,015,613       5,041,912       4,637,980   (2 )     8  
                                     

(1)   Period-end balance sheet percentage changes are annualized.
(2)   See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(3)   Net revenue is net interest income plus non-interest income.
(4)   The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s average total assets. A lower ratio indicates a higher degree of efficiency.
(5)   Excludes mortgage loans held-for-sale.

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

WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights

    Three Months Ended Nine Months Ended
(Dollars in thousands, except per share data)   Sep 30,
2023
  Jun 30,
2023
  Mar 31,
2023
  Dec 31,
2022
  Sep 30,
2022
Sep 30,
2023
  Sep 30,
2022
Selected Financial Condition Data (at end of period):      
Total assets   $ 55,555,246     $ 54,286,176     $ 52,873,511     $ 52,949,649     $ 52,382,939        
Total loans (1)     41,446,032       41,023,408       39,565,471       39,196,485       38,167,613        
Total deposits     44,992,686       44,038,707       42,718,211       42,902,544       42,797,191        
Total shareholders’ equity     5,015,613       5,041,912       5,015,506       4,796,838       4,637,980        
Selected Statements of Income Data:      
Net interest income   $ 462,358     $ 447,537     $ 457,995     $ 456,816     $ 401,448   $ 1,367,890     $ 1,038,546  
Net revenue (2)     574,836       560,567       565,764       550,655       502,930     1,701,167       1,405,760  
Net income     164,198       154,750       180,198       144,817       142,961     499,146       364,865  
Pre-tax income, excluding provision for credit losses (non-GAAP) (3)     244,781       239,944       266,595       242,819       206,461     751,320       536,325  
Net income per common share – Basic     2.57       2.41       2.84       2.27       2.24     7.82       5.86  
Net income per common share – Diluted     2.53       2.38       2.80       2.23       2.21     7.71       5.78  
Cash dividends declared per common share     0.40       0.40       0.40       0.34       0.34     1.20       1.02  
Selected Financial Ratios and Other Data:      
Performance Ratios:      
Net interest margin     3.60 %     3.64 %     3.81 %     3.71 %     3.34 %   3.68 %     2.96 %
Net interest margin – fully taxable-equivalent (non-GAAP) (3)     3.62       3.66       3.83       3.73       3.35     3.70       2.97  
Non-interest income to average assets     0.82       0.86       0.84       0.71       0.79     0.84       0.98  
Non-interest expense to average assets     2.41       2.44       2.33       2.34       2.32     2.39       2.33  
Net overhead ratio (4)     1.59       1.58       1.49       1.63       1.53     1.55       1.35  
Return on average assets     1.20       1.18       1.40       1.10       1.12     1.26       0.98  
Return on average common equity     13.35       12.79       15.67       12.72       12.31     13.91       10.96  
Return on average tangible common equity (non-GAAP) (3)     15.73       15.12       18.55       15.21       14.68     16.43       13.21  
Average total assets   $ 54,381,981     $ 52,601,953     $ 52,075,318     $ 52,087,618     $ 50,722,694   $ 53,028,199     $ 49,863,793  
Average total shareholders’ equity     5,083,883       5,044,718       4,895,271       4,710,856       4,795,387     5,008,648       4,608,399  
Average loans to average deposits ratio     92.4 %     94.3 %     93.0 %     90.5 %     88.8 %   93.2 %     86.5 %
Period-end loans to deposits ratio     92.1       93.2       92.6       91.4       89.2        
Common Share Data at end of period:      
Market price per common share   $ 75.50     $ 72.62     $ 72.95     $ 84.52     $ 81.55        
Book value per common share     75.19       75.65       75.24       72.12       69.56        
Tangible book value per common share (non-GAAP) (3)     64.07       64.50       64.22       61.00       58.42        
Common shares outstanding     61,222,058       61,197,676       61,176,415       60,794,008       60,743,335        
Other Data at end of period:      
Tier 1 leverage ratio (5)     9.2 %     9.3 %     9.1 %     8.8 %     8.8 %      
Risk-based capital ratios:                          
Tier 1 capital ratio (5)     10.2       10.1       10.1       10.0       9.9        
Common equity tier 1 capital ratio (5)     9.3       9.3       9.2       9.1       9.0        
Total capital ratio (5)     12.0       12.0       12.1       11.9       11.8        
Allowance for credit losses (6)   $ 399,531     $ 387,786     $ 376,261     $ 357,936     $ 315,338        
Allowance for loan and unfunded lending-related commitment losses to total loans     0.96 %     0.94 %     0.95 %     0.91 %     0.83 %      
Number of:                          
Bank subsidiaries     15       15       15       15       15        
Banking offices     174       175       174       174       174        
                                               

(1)   Excludes mortgage loans held-for-sale.
(2)   Net revenue is net interest income plus non-interest income.
(3)   See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(4)   The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s average total assets. A lower ratio indicates a higher degree of efficiency.
(5)   Capital ratios for current quarter-end are estimated.
(6)   The allowance for credit losses includes the allowance for loan losses, the allowance for unfunded lending-related commitments and the allowance for held-to-maturity securities losses.

WINTRUST FINANCIA L CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION

    (Unaudited)   (Unaudited)   (Unaudited)       (Unaudited)
    Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,
(In thousands)     2023       2023       2023       2022       2022  
Assets                    
Cash and due from banks   $ 418,088     $ 513,858     $ 445,928     $ 490,908     $ 489,590  
Federal funds sold and securities purchased under resale agreements     60       59       58       58       57  
Interest-bearing deposits with banks     2,448,570       2,163,708       1,563,578       1,988,719       3,968,605  
Available-for-sale securities, at fair value     3,611,835       3,492,481       3,259,845       3,243,017       2,923,653  
Held-to-maturity securities, at amortized cost     3,909,150       3,564,473       3,606,391       3,640,567       3,389,842  
Trading account securities     1,663       3,027       102       1,127       179  
Equity securities with readily determinable fair value     134,310       116,275       111,943       110,365       114,012  
Federal Home Loan Bank and Federal Reserve Bank stock     204,040       195,117       244,957       224,759       178,156  
Brokerage customer receivables     14,042       15,722       16,042       16,387       20,327  
Mortgage loans held-for-sale, at fair value     304,808       338,728       302,493       299,935       376,160  
Loans, net of unearned income     41,446,032       41,023,408       39,565,471       39,196,485       38,167,613  
Allowance for loan losses     (315,039 )     (302,499 )     (287,972 )     (270,173 )     (246,110 )
Net loans     41,130,993       40,720,909       39,277,499       38,926,312       37,921,503  
Premises, software and equipment, net     747,501       749,393       760,283       764,798       763,029  
Lease investments, net     275,152       274,351       256,301       253,928       244,822  
Accrued interest receivable and other assets     1,674,681       1,455,748       1,413,795       1,391,342       1,316,305  
Trade date securities receivable                 939,758       921,717        
Goodwill     656,109       656,674       653,587       653,524       653,079  
Other acquisition-related intangible assets     24,244       25,653       20,951       22,186       23,620  
Total assets   $ 55,555,246     $ 54,286,176     $ 52,873,511     $ 52,949,649     $ 52,382,939  
Liabilities and Shareholders’ Equity                    
Deposits:                    
Non-interest-bearing   $ 10,347,006     $ 10,604,915     $ 11,236,083     $ 12,668,160     $ 13,529,277  
Interest-bearing     34,645,680       33,433,792       31,482,128       30,234,384       29,267,914  
Total deposits     44,992,686       44,038,707       42,718,211       42,902,544       42,797,191  
Federal Home Loan Bank advances     2,326,071       2,026,071       2,316,071       2,316,071       2,316,071  
Other borrowings     643,999       665,219       583,548       596,614       447,215  
Subordinated notes     437,731       437,628       437,493       437,392       437,260  
Junior subordinated debentures     253,566       253,566       253,566       253,566       253,566  
Accrued interest payable and other liabilities     1,885,580       1,823,073       1,549,116       1,646,624       1,493,656  
Total liabilities     50,539,633       49,244,264       47,858,005       48,152,811       47,744,959  
Shareholders’ Equity:                    
Preferred stock     412,500       412,500       412,500       412,500       412,500  
Common stock     61,244       61,219       61,198       60,797       60,743  
Surplus     1,933,226       1,923,623       1,913,947       1,902,474       1,891,621  
Treasury stock     (1,966 )     (1,966 )     (1,966 )     (304 )      
Retained earnings     3,253,332       3,120,626       2,997,263       2,849,007       2,731,844  
Accumulated other comprehensive loss     (642,723 )     (474,090 )     (367,436 )     (427,636 )     (458,728 )
Total shareholders’ equity     5,015,613       5,041,912       5,015,506       4,796,838       4,637,980  
Total liabilities and shareholders’ equity   $ 55,555,246     $ 54,286,176     $ 52,873,511     $ 52,949,649     $ 52,382,939  
                                         

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATE D STATEMENTS OF INCOME (UNAUDITED)

  Three Months Ended Nine Months Ended
(Dollars in thousands, except per share data) Sep 30,
2023
  Jun 30,
2023
  Mar 31,
2023
  Dec 31,
2022
  Sep 30,
2022
Sep 30,
2023
  Sep 30,
2022
Interest income                        
Interest and fees on loans $ 666,260     $ 621,057   $ 558,692     $ 498,838     $ 402,689   $ 1,846,009     $ 1,008,888  
Mortgage loans held-for-sale   4,767       4,178     3,528       3,997       5,371     12,473       17,198  
Interest-bearing deposits with banks   26,866       16,882     13,468       20,349       15,621     57,216       23,098  
Federal funds sold and securities purchased under resale agreements   1,157       1     70       1,263       1,845     1,228       3,640  
Investment securities   59,164       51,243     59,943       53,092       38,569     170,350       107,508  
Trading account securities   6       6     14       6       7     26       16  
Federal Home Loan Bank and Federal Reserve Bank stock   3,896       3,544     3,680       2,918       2,109     11,120       5,704  
Brokerage customer receivables   284       265     295       282       267     844       646  
Total interest income   762,400       697,176     639,690       580,745       466,478     2,099,266       1,166,698  
Interest expense                        
Interest on deposits   262,783       213,495     144,802       95,447       45,916     621,080       79,755  
Interest on Federal Home Loan Bank advances   17,436       17,399     19,135       13,823       6,812     53,970       16,506  
Interest on other borrowings   9,384       8,485     7,854       5,313       4,008     25,723       8,981  
Interest on subordinated notes   5,491       5,523     5,488       5,520       5,485     16,502       16,484  
Interest on junior subordinated debentures   4,948       4,737     4,416       3,826       2,809     14,101       6,426  
Total interest expense   300,042       249,639     181,695       123,929       65,030     731,376       128,152  
Net interest income   462,358       447,537     457,995       456,816       401,448     1,367,890       1,038,546  
Provision for credit losses   19,923       28,514     23,045       47,646       6,420     71,482       30,943  
Net interest income after provision for credit losses   442,435       419,023     434,950       409,170       395,028     1,296,408       1,007,603  
Non-interest income                        
Wealth management   33,529       33,858     29,945       30,727       33,124     97,332       95,887  
Mortgage banking   27,395       29,981     18,264       17,407       27,221     75,640       137,766  
Service charges on deposit accounts   14,217       13,608     12,903       13,054       14,349     40,728       45,520  
Losses (gains) on investment securities, net   (2,357 )     0     1,398       (6,745 )     (3,103 )   (959 )     (13,682 )
Fees from covered call options   4,215       2,578     10,391       7,956       1,366     17,184       6,177  
Trading gains (losses), net   728       106     813       (306 )     (7 )   1,647       4,058  
Operating lease income, net   13,863       12,227     13,046       12,384       12,644     39,136       43,126  
Other   20,888       20,672     21,009       19,362       15,888     62,569       48,362  
Total non-interest income   112,478       113,030     107,769       93,839       101,482     333,277       367,214  
Non-interest expense                        
Salaries and employee benefits   192,338       184,923     176,781       180,331       176,095     554,042       515,776  
Software and equipment   25,951       26,205     24,697       24,699       24,126     76,853       71,186  
Operating lease equipment   12,020       9,816     9,833       10,078       9,448     31,669       27,930  
Occupancy, net   21,304       19,176     18,486       17,763       17,727     58,966       53,202  
Data processing   10,773       9,726     9,409       7,927       7,767     29,908       23,282  
Advertising and marketing   18,169       17,794     11,946       14,279       16,600     47,909       45,139  
Professional fees   8,887       8,940     8,163       9,267       7,544     25,990       23,821  
Amortization of other acquisition-related intangible assets   1,408       1,499     1,235       1,436       1,492     4,142       4,680  
FDIC insurance   9,748       9,008     8,669       6,775       7,186     27,425       21,864  
OREO expenses, net   120       118     (207 )     369       229     31       (509 )
Other   29,337       33,418     30,157       34,912       28,255     92,912       83,064  
Total non-interest expense   330,055       320,623     299,169       307,836       296,469     949,847       869,435  
Income before taxes   224,858       211,430     243,550       195,173       200,041     679,838       505,382  
Income tax expense   60,660       56,680     63,352       50,356       57,080     180,692       140,517  
Net income $ 164,198     $ 154,750   $ 180,198     $ 144,817     $ 142,961   $ 499,146     $ 364,865  
Preferred stock dividends   6,991       6,991     6,991       6,991       6,991     20,973       20,973  
Net income applicable to common shares $ 157,207     $ 147,759   $ 173,207     $ 137,826     $ 135,970   $ 478,173     $ 343,892  
Net income per common share - Basic $ 2.57     $ 2.41   $ 2.84     $ 2.27     $ 2.24   $ 7.82     $ 5.86  
Net income per common share - Diluted $ 2.53     $ 2.38   $ 2.80     $ 2.23     $ 2.21   $ 7.71     $ 5.78  
Cash dividends declared per common share $ 0.40     $ 0.40   $ 0.40     $ 0.34     $ 0.34   $ 1.20     $ 1.02  
Weighted average common shares outstanding   61,213       61,192     60,950       60,769       60,738     61,119       58,679  
Dilutive potential common shares   964       902     873       1,096       837     888       814  
Average common shares and dilutive common shares   62,177       62,094     61,823       61,865       61,575     62,007       59,493  
                                                   

TABLE 1 : LOAN PORTFOLIO MIX AND GROWTH RATES

                    % Growth From (1)
(Dollars in thousands) Sep 30,
2023
  Jun 30,
2023
  Mar 31,
2023
  Dec 31,
2022
  Sep 30,
2022
Dec 31,
2022 (2)
  Sep 30,
2022
Balance:                        
Mortgage loans held-for-sale, excluding early buy-out exercised loans guaranteed by U.S. government agencies $ 190,511   $ 235,570   $ 155,687   $ 156,297   $ 216,062 29 %   (12 )%
Mortgage loans held-for-sale, early buy-out exercised loans guaranteed by U.S. government agencies   114,297     103,158     146,806     143,638     160,098 (27 )   (29 )
Total mortgage loans held-for-sale $ 304,808   $ 338,728   $ 302,493   $ 299,935   $ 376,160 1 %   (19 )%
                         
Core loans:                        
Commercial                        
Commercial and industrial $ 5,894,732   $ 5,737,633   $ 5,855,035   $ 5,852,166   $ 5,818,959 1 %   1 %
Asset-based lending   1,396,591     1,465,848     1,482,071     1,473,344     1,545,038 (7 )   (10 )
Municipal   676,915     653,117     655,301     668,235     608,234 2     11  
Leases   2,109,628     1,925,767     1,904,137     1,840,928     1,582,359 20     33  
PPP loans   13,744     15,337     17,195     28,923     43,658 (70 )   (69 )
Commercial real estate                        
Residential construction   51,550     51,689     69,998     76,877     66,957 (44 )   (23 )
Commercial construction   1,547,322     1,409,751     1,234,762     1,102,098     1,176,407 54     32  
Land   294,901     298,996     292,293     307,955     282,147 (6 )   5  
Office   1,422,748     1,404,422     1,392,040     1,337,176     1,269,729 9     12  
Industrial   2,057,957     2,002,740     1,858,088     1,836,276     1,777,658 16     16  
Retail   1,341,451     1,304,083     1,309,680     1,304,444     1,331,316 4     1  
Multi-family   2,710,829     2,696,478     2,635,411     2,560,709     2,305,433 8     18  
Mixed use and other   1,519,422     1,440,652     1,446,806     1,425,412     1,368,537 9     11  
Home equity   343,258     336,974     337,016     332,698     328,822 4     4  
Residential real estate                        
Residential real estate loans for investment   2,538,630     2,455,392     2,309,393     2,207,595     2,086,795 20     22  
Residential mortgage loans, early buy-out eligible loans guaranteed by U.S. government agencies   97,911     117,024     119,301     80,701     57,161 29     71  
Residential mortgage loans, early buy-out exercised loans guaranteed by U.S. government agencies   71,062     70,824     76,851     84,087     91,503 (21 )   (22 )
Total core loans $ 24,088,651   $ 23,386,727   $ 22,995,378   $ 22,519,624   $ 21,740,713 9 %   11 %
                         
Niche loans:                        
Commercial                        
Franchise $ 1,074,162   $ 1,091,164   $ 1,131,913   $ 1,169,623   $ 1,118,478 (11 )%   (4 )%
Mortgage warehouse lines of credit   245,450     381,043     235,684     237,392     297,374 5     (17 )
Community Advantage - homeowners association   424,054     405,042     389,922     380,875     365,967 15     16  
Insurance agency lending   890,197     925,520     905,727     897,678     879,183 (1 )   1  
Premium Finance receivables                        
U.S. property & casualty insurance   5,815,346     5,900,228     5,043,486     5,103,820     4,983,795 19     17  
Canada property & casualty insurance   907,401     862,470     695,394     745,639     729,545 29     24  
Life insurance   7,931,808     8,039,273     8,125,802     8,090,998     8,004,856 (3 )   (1 )
Consumer and other   68,963     31,941     42,165     50,836     47,702 48     45  
Total niche loans $ 17,357,381   $ 17,636,681   $ 16,570,093   $ 16,676,861   $ 16,426,900 5 %   6 %
                         
Total loans, net of unearned income $ 41,446,032   $ 41,023,408   $ 39,565,471   $ 39,196,485   $ 38,167,613 8 %   9 %
                                       

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

TABLE 2: DEPOSIT PORTFOLIO MIX AND GROWTH RATES

                    % Growth From
(Dollars in thousands) Sep 30,
2023
  Jun 30,
2023
  Mar 31,
2023
  Dec 31,
2022
  Sep 30,
2022
Jun 30,
2023 (1)
  Sep 30,
2022
Balance:                        
Non-interest-bearing $ 10,347,006     $ 10,604,915     $ 11,236,083     $ 12,668,160     $ 13,529,277   (10 )%   (24 )%
NOW and interest-bearing demand deposits   6,006,114       5,814,836       5,576,558       5,591,986       5,676,122   13     6  
Wealth management deposits (2)   1,788,099       1,417,984       1,809,933       2,463,833       2,988,195   104     (40 )
Money market   14,478,504       14,523,124       13,552,277       12,886,795       12,538,489   (1 )   15  
Savings   5,584,294       5,321,578       5,192,108       4,556,635       3,988,790   20     40  
Time certificates of deposit   6,788,669       6,356,270       5,351,252       4,735,135       4,076,318   27     67  
Total deposits $ 44,992,686     $ 44,038,707     $ 42,718,211     $ 42,902,544     $ 42,797,191   9 %   5 %
Mix:                        
Non-interest-bearing   23 %     24 %     26 %     30 %     32 %      
NOW and interest-bearing demand deposits   13       13       13       13       13        
Wealth management deposits (2)   4       3       4       5       7        
Money market   32       33       32       30       29        
Savings   13       12       12       11       9        
Time certificates of deposit   15       15       13       11       10        
Total deposits   100 %     100 %     100 %     100 %     100 %      
                                             

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

TABLE 3 : TIME CERTIFICATES OF DEPOSIT MATURITY/RE-PRICING ANALYSIS
As of September 30, 2023

(Dollars in thousands)   Total Time
Certificates of
Deposit
  Weighted-Average
Rate of Maturing
Time Certificates
of Deposit
1-3 months   $ 987,384   3.36 %
4-6 months     1,674,674   3.47  
7-9 months     1,984,259   4.51  
10-12 months     1,382,970   4.54  
13-18 months     566,457   3.28  
19-24 months     117,916   2.54  
24+ months     75,009   1.62  
Total   $ 6,788,669   3.92 %
             

TABLE 4: QUARTERLY AVERAGE BALANCES

    Average Balance for three months ended,
    Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,
(In thousands)     2023       2023       2023       2022       2022  
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents (1)   $ 2,053,568     $ 1,454,057     $ 1,235,748     $ 2,449,889     $ 3,039,907  
Investment securities (2)     7,706,285       7,252,582       7,956,722       7,310,383       6,655,215  
FHLB and FRB stock     201,252       223,813       233,615       185,290       142,304  
Liquidity management assets (3)     9,961,105       8,930,452       9,426,085       9,945,562       9,837,426  
Other earning assets (3)(4)     17,879       17,401       18,445       18,585       21,805  
Mortgage loans held-for-sale     319,099       307,683       270,966       308,639       455,342  
Loans, net of unearned income (3)(5)     40,707,042       40,106,393       39,093,368       38,566,871       37,431,126  
Total earning assets (3)     51,005,125       49,361,929       48,808,864       48,839,657       47,745,699  
Allowance for loan and investment security losses     (319,491 )     (302,627 )     (282,704 )     (252,827 )     (260,270 )
Cash and due from banks     459,819       481,510       488,457       475,691       458,263  
Other assets     3,236,528       3,061,141       3,060,701       3,025,097       2,779,002  
Total assets   $ 54,381,981     $ 52,601,953     $ 52,075,318     $ 52,087,618     $ 50,722,694  
                     
NOW and interest-bearing demand deposits   $ 5,815,155     $ 5,540,597     $ 5,271,740     $ 5,598,291     $ 5,789,368  
Wealth management deposits     1,512,765       1,545,626       2,167,081       2,883,247       3,078,764  
Money market accounts     14,155,446       13,735,924       12,533,468       12,319,842       12,037,412  
Savings accounts     5,472,535       5,206,609       4,830,322       4,403,113       3,862,579  
Time deposits     6,495,906       5,603,024       5,041,638       4,023,232       3,675,930  
Interest-bearing deposits     33,451,807       31,631,780       29,844,249       29,227,725       28,444,053  
Federal Home Loan Bank advances     2,241,292       2,227,106       2,474,882       2,088,201       1,403,573  
Other borrowings     657,454       625,757       602,937       480,553       478,909  
Subordinated notes     437,658       437,545       437,422       437,312       437,191  
Junior subordinated debentures     253,566       253,566       253,566       253,566       253,566  
Total interest-bearing liabilities     37,041,777       35,175,754       33,613,056       32,487,357       31,017,292  
Non-interest-bearing deposits     10,612,009       10,908,022       12,171,631       13,404,036       13,731,219  
Other liabilities     1,644,312       1,473,459       1,395,360       1,485,369       1,178,796  
Equity     5,083,883       5,044,718       4,895,271       4,710,856       4,795,387  
Total liabilities and shareholders’ equity   $ 54,381,981     $ 52,601,953     $ 52,075,318     $ 52,087,618     $ 50,722,694  
                     
Net free funds/contribution (6)   $ 13,963,348     $ 14,186,175     $ 15,195,808     $ 16,352,300     $ 16,728,407  
                                         

(1)   Includes interest-bearing deposits from banks and securities purchased under resale agreements with original maturities of greater than three months. Cash equivalents include federal funds sold and securities purchased under resale agreements with original maturities of three months or less.
(2)   Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.
(3)   See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(4)   Other earning assets include brokerage customer receivables and trading account securities.
(5)   Loans, net of unearned income, include non-accrual loans.
(6)   Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.

TABLE 5 : QUARTERLY NET INTEREST INCOME

    Net Interest Income for three months ended,
    Sep 30,   Jun 30,   Mar 31,   Dec 31,   Sep 30,
(In thousands)     2023       2023       2023       2022       2022  
Interest income:                    
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents   $ 28,022     $ 16,882     $ 13,538     $ 21,612     $ 17,466  
Investment securities     59,737       51,795       60,494       53,630       39,071  
FHLB and FRB stock     3,896       3,544       3,680       2,918       2,109  
Liquidity management assets (1)     91,655       72,221       77,712       78,160       58,646  
Other earning assets (1)     291       272       313       289       275  
Mortgage loans held-for-sale     4,767       4,178       3,528       3,997       5,371  
Loans, net of unearned income (1)     668,183       622,939       560,564       500,432       403,719  
Total interest income   $ 764,896     $ 699,610     $ 642,117     $ 582,878     $ 468,011  
                     
Interest expense:                    
NOW and interest-bearing demand deposits   $ 36,001     $ 29,178     $ 18,772     $ 14,982     $ 8,041  
Wealth management deposits     9,350       9,097       12,258       14,079       11,068  
Money market accounts     124,742       106,630       68,276       45,468       18,916  
Savings accounts     31,784       25,603       15,816       8,421       2,130  
Time deposits     60,906       42,987       29,680       12,497       5,761  
Interest-bearing deposits     262,783       213,495       144,802       95,447       45,916  
Federal Home Loan Bank advances     17,436       17,399       19,135       13,823       6,812  
Other borrowings     9,384       8,485       7,854       5,313       4,008  
Subordinated notes     5,491       5,523       5,488       5,520       5,485  
Junior subordinated debentures     4,948       4,737       4,416       3,826       2,809  
Total interest expense   $ 300,042     $ 249,639     $ 181,695     $ 123,929     $ 65,030  
                     
Less:  Fully taxable-equivalent adjustment     (2,496 )     (2,434 )     (2,427 )     (2,133 )     (1,533 )
Net interest income (GAAP) (2)     462,358       447,537       457,995       456,816       401,448  
Fully taxable-equivalent adjustment     2,496       2,434       2,427       2,133       1,533  
Net interest income, fully taxable-equivalent (non-GAAP) (2)   $ 464,854     $ 449,971     $ 460,422     $ 458,949     $ 402,981  
                                         

(1)   Interest income on tax-advantaged loans, trading securities and investment securities reflects a taxable-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period.
(2)   See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.

TABLE 6 : QUARTERLY NET INTEREST MARGIN

    Net Interest Margin for three months ended,
    Sep 30,
2023
  Jun 30,
2023
  Mar 31,
2023
  Dec 31,
2022
  Sep 30,
2022
Yield earned on:                    
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents   5.41 %   4.66 %   4.44 %   3.50 %   2.28 %
Investment securities   3.08     2.86     3.08     2.91     2.33  
FHLB and FRB stock   7.68     6.35     6.39     6.25     5.88  
Liquidity management assets   3.65     3.24     3.34     3.12     2.37  
Other earning assets   6.47     6.27     6.87     6.17     5.01  
Mortgage loans held-for-sale   5.93     5.45     5.28     5.14     4.68  
Loans, net of unearned income   6.51     6.23     5.82     5.15     4.28  
Total earning assets   5.95 %   5.68 %   5.34 %   4.73 %   3.89 %
                     
Rate paid on:                    
NOW and interest-bearing demand deposits   2.46 %   2.11 %   1.44 %   1.06 %   0.55 %
Wealth management deposits   2.45     2.36     2.29     1.94     1.43  
Money market accounts   3.50     3.11     2.21     1.46     0.62  
Savings accounts   2.30     1.97     1.33     0.76     0.22  
Time deposits   3.72     3.08     2.39     1.23     0.62  
Interest-bearing deposits   3.12     2.71     1.97     1.30     0.64  
Federal Home Loan Bank advances   3.09     3.13     3.14     2.63     1.93  
Other borrowings   5.66     5.44     5.28     4.39     3.32  
Subordinated notes   4.98     5.06     5.02     5.05     5.02  
Junior subordinated debentures   7.74     7.49     6.97     5.90     4.33  
Total interest-bearing liabilities   3.21 %   2.85 %   2.19 %   1.51 %   0.83 %
                     
Interest rate spread  (1)(2)   2.74 %   2.83 %   3.15 %   3.22 %   3.06 %
Less:  Fully taxable-equivalent adjustment   (0.02 )   (0.02 )   (0.02 )   (0.02 )   (0.01 )
Net free funds/contribution (3)   0.88     0.83     0.68     0.51     0.29  
Net interest margin (GAAP) (2)   3.60 %   3.64 %   3.81 %   3.71 %   3.34 %
Fully taxable-equivalent adjustment   0.02     0.02     0.02     0.02     0.01  
Net interest margin, fully taxable-equivalent (non-GAAP) (2)   3.62 %   3.66 %   3.83 %   3.73 %   3.35 %
                               

(1)   Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(2)   See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(3)   Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.

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

  Average Balance
for nine months ended,
Interest
for nine months ended,
Yield/Rate
for nine months ended,
(Dollars in thousands) Sep 30,
2023
  Sep 30,
2022
Sep 30,
2023
  Sep 30,
2022
Sep 30,
2023
  Sep 30,
2022
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents (1) $ 1,584,120     $ 3,617,498   $ 58,443     $ 26,738   4.93 %   0.99 %
Investment securities (2)   7,637,612       6,542,077     172,025       108,947   3.01     2.23  
FHLB and FRB stock   219,442       138,405     11,120       5,704   6.77     5.51  
Liquidity management assets (3)(4) $ 9,441,174     $ 10,297,980   $ 241,588     $ 141,389   3.42 %   1.84 %
Other earning assets (3)(4)(5)   17,906       23,673     876       666   6.54     3.76  
Mortgage loans held-for-sale   299,426       559,258     12,473       17,198   5.57     4.11  
Loans, net of unearned income (3)(4)(6)   39,974,840       36,050,185     1,851,686       1,010,913   6.19     3.75  
Total earning assets (4) $ 49,733,346     $ 46,931,096   $ 2,106,623     $ 1,170,166   5.66 %   3.33 %
Allowance for loan and investment security losses   (301,742 )     (257,992 )            
Cash and due from banks   476,490       472,127              
Other assets   3,120,105       2,718,562              
Total assets $ 53,028,199     $ 49,863,793              
                   
NOW and interest-bearing demand deposits $ 5,544,488     $ 5,273,115   $ 83,949     $ 12,584   2.02 %   0.32 %
Wealth management deposits   1,739,427       2,808,709     30,705       15,671   2.36     0.75  
Money market accounts   13,480,887       12,232,024     299,649       35,123   2.97     0.38  
Savings accounts   5,172,174       3,883,092     73,203       2,813   1.89     0.10  
Time deposits   5,718,850       3,741,014     133,574       13,564   3.12     0.48  
Interest-bearing deposits $ 31,655,826     $ 27,937,954   $ 621,080     $ 79,755   2.62 %   0.38 %
Federal Home Loan Bank advances   2,313,571       1,281,273     53,970       16,506   3.12     1.72  
Other borrowings   628,915       487,595     25,723       8,981   5.47     2.46  
Subordinated notes   437,543       437,081     16,502       16,484   5.04     5.03  
Junior subordinated debentures   253,566       253,566     14,101       6,426   7.44     3.34  
Total interest-bearing liabilities $ 35,289,421     $ 30,397,469   $ 731,376     $ 128,152   2.77 %   0.56 %
Non-interest-bearing deposits   11,224,841       13,756,793              
Other liabilities   1,505,289       1,101,132              
Equity   5,008,648       4,608,399              
Total liabilities and shareholders’ equity $ 53,028,199     $ 49,863,793              
Interest rate spread (4)(7)             2.89 %   2.77 %
Less: Fully taxable-equivalent adjustment         (7,357 )     (3,468 ) (0.02 )   (0.01 )
Net free funds/contribution (8) $ 14,443,925     $ 16,533,627         0.81     0.20  
Net interest income/margin (GAAP) (4)       $ 1,367,890     $ 1,038,546   3.68 %   2.96 %
Fully taxable-equivalent adjustment         7,357       3,468   0.02     0.01  
Net interest income/margin, fully taxable-equivalent (non-GAAP) (4)       $ 1,375,247     $ 1,042,014   3.70 %   2.97 %
                               

(1)   Includes interest-bearing deposits from banks and securities purchased under resale agreements with original maturities of greater than three months. Cash equivalents include federal funds sold and securities purchased under resale agreements with original maturities of three months or less.
(2)   Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.
(3)   Interest income on tax-advantaged loans, trading securities and investment securities reflects a taxable-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period.
(4)   See Table 17: Supplemental Non-GAAP Financial Measures/Ratios for additional information on this performance measure/ratio.
(5)   Other earning assets include brokerage customer receivables and trading account securities.
(6)   Loans, net of unearned income, include non-accrual loans.
(7)   Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(8)   Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.

TABLE 8 : INTEREST RATE SENSITIVITY

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

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

Static Shock Scenario   +200 Basis
Points
  +100 Basis
Points
  -100 Basis
Points
  -200 Basis
Points
Sep 30, 2023   3.3 %   1.9 %   (2.0 )%   (5.2 )%
Jun 30, 2023   5.7     2.9     (2.9 )   (7.9 )
Mar 31, 2023   4.2     2.4     (2.4 )   (7.3 )
Dec 31, 2022   7.2     3.8     (5.0 )   (12.1 )
Sep 30, 2022   12.9     7.1     (8.7 )   (18.9 )

 

Ramp Scenario +200 Basis
Points
  +100 Basis
Points
  -100 Basis
Points
  -200 Basis
Points
Sep 30, 2023 1.7 %   1.2 %   (0.5 )%   (2.4 )%
Jun 30, 2023 2.9     1.8     (0.9 )   (3.4 )
Mar 31, 2023 3.0     1.7     (1.3 )   (3.4 )
Dec 31, 2022 5.6     3.0     (2.9 )   (6.8 )
Sep 30, 2022 6.5     3.6     (3.9 )   (8.6 )
                       

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

TABLE 9 : MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES

  Loans repricing or contractual maturity period
As of September 30, 2023 One year or
less
  From one to
five years
  From five to
fifteen years
  After fifteen
years
  Total
(In thousands)        
Commercial                  
Fixed rate $ 532,313   $ 2,805,566   $ 1,740,199   $ 19,102   $ 5,097,180
Variable rate   7,626,902     1,391             7,628,293
Total commercial $ 8,159,215   $ 2,806,957   $ 1,740,199   $ 19,102   $ 12,725,473
Commercial real estate                  
Fixed rate   637,462     2,891,879     546,918     48,296     4,124,555
Variable rate   6,813,010     7,872     743         6,821,625
Total commercial real estate $ 7,450,472   $ 2,899,751   $ 547,661   $ 48,296   $ 10,946,180
Home equity                  
Fixed rate   10,785     2,398         29     13,212
Variable rate   330,046                 330,046
Total home equity $ 340,831   $ 2,398   $   $ 29   $ 343,258
Residential real estate                  
Fixed rate   16,676     3,817     30,733     1,063,669     1,114,895
Variable rate   74,016     268,720     1,249,972         1,592,708
Total residential real estate $ 90,692   $ 272,537   $ 1,280,705   $ 1,063,669   $ 2,707,603
Premium finance receivables - property & casualty                  
Fixed rate   6,612,136     110,611             6,722,747
Variable rate                  
Total premium finance receivables - property & casualty $ 6,612,136   $ 110,611   $   $   $ 6,722,747
Premium finance receivables - life insurance                  
Fixed rate   137,889     594,399     3,978         736,266
Variable rate   7,195,542                 7,195,542
Total premium finance receivables - life insurance $ 7,333,431   $ 594,399   $ 3,978   $   $ 7,931,808
Consumer and other                  
Fixed rate   21,528     6,741     54     469     28,792
Variable rate   40,171                 40,171
Total consumer and other $ 61,699   $ 6,741   $ 54   $ 469   $ 68,963
                   
Total per category                  
Fixed rate   7,968,789     6,415,411     2,321,882     1,131,565     17,837,647
Variable rate   22,079,687     277,983     1,250,715         23,608,385
Total loans, net of unearned income $ 30,048,476   $ 6,693,394   $ 3,572,597   $ 1,131,565   $ 41,446,032
                   
Variable Rate Loan Pricing by Index:                  
SOFR tenors                 $ 12,798,760
One- year CMT                   5,998,547
Prime                   3,627,121
Ameribor tenors                   329,220
Twelve-month LIBOR                   38,888
Other U.S. Treasury tenors                   38,760
BSBY tenors