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

Company Release - 7/17/2024 4:15 PM ET

ROSEMONT, Ill., July 17, 2024 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust”, “the Company”, “we” or “our”) (Nasdaq: WTFC) announced record net income of $339.7 million or $5.21 per diluted common share for the first six months of 2024 compared to net income of $334.9 million or $5.18 per diluted common share for the same period of 2023. Pre-tax, pre-provision income (non-GAAP) for the first six months of 2024 totaled a record $523.0 million, compared to $506.5 million in the first six months of 2023.

The Company recorded quarterly net income of $152.4 million or $2.32 per diluted common share for the second quarter of 2024 compared to net income of $187.3 million or $2.89 per diluted common share for the first quarter of 2024. Pre-tax, pre-provision income (non-GAAP) totaled $251.4 million as compared to $271.6 million for the first quarter of 2024, with the majority of the decrease attributable to the net gain of $19.3 million on the sale of the Company's Retirement Benefit Advisors ("RBA") division in the first quarter of 2024.

Timothy S. Crane, President and Chief Executive Officer, commented, “We are pleased with our record net income for the first half of 2024 and record quarterly net interest income. Robust loan and deposit growth coupled with a stabilizing margin drove our strong second quarter results. Pre-tax, pre-provision income (non-GAAP) also set the Company’s record for the first half of 2024 and we believe we are well-positioned for strong financial performance as we continue our momentum into the second half of the year.”

Additionally, Mr. Crane noted, “Net interest margin in the second quarter was within our expected range, decreasing seven basis points as compared to the first quarter of 2024. We expect the combination of a stable net interest margin and balance sheet growth to result in continued net interest income growth over the next few quarters. Focusing on growth of net interest income, disciplined expense control and maintaining our consistent credit standards should lead to increasing our long-term franchise value.”

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

  • Total loans increased by approximately $1.4 billion, or 13% annualized. Adjusting for the impact of a loan sale transaction of property and casualty insurance premium finance receivables during the second quarter of 2024, total loans would have increased $2.1 billion, or 20% annualized.
  • Total deposits increased by approximately $1.6 billion, or 14% annualized.
  • Total assets increased by $2.2 billion, or 15% annualized.
  • Net interest margin decreased by seven basis points to 3.50% (3.52% on a fully taxable-equivalent basis, non-GAAP) during the second quarter of 2024.
    • Net interest income increased to $470.6 million in the second quarter of 2024 compared to $464.2 million in the first quarter of 2024, primarily due to average earning asset growth.
  • Non-interest income was impacted by the following:
    • Net losses on investment securities totaled $4.3 million in the second quarter of 2024 related to changes in the value of equity securities as compared to net gains of $1.3 million in the first quarter of 2024.
    • Favorable net valuation adjustments related to certain mortgage assets totaled $1.4 million in the second quarter of 2024 compared to favorable net valuation adjustments of $2.4 million in the first quarter of 2024.
  • Non-interest expense was impacted by the following:
    • Occupancy expenses of $1.9 million in the second quarter of 2024 related to an unrealized loss associated with the anticipated sale of a branch facility.
    • Approximately $532,000 of professional fees related to the pending acquisition of Macatawa Bank Corporation in the second quarter of 2024 as compared to approximately $392,000 recorded in the first quarter of 2024.
  • Provision for credit losses totaled $40.1 million in the second quarter of 2024 as compared to a provision for credit losses of $21.7 million in the first quarter of 2024.

Mr. Crane noted, “Net loan growth during the second quarter totaled $1.4 billion, or 13% on an annualized basis. We are pleased with our diversified loan growth across all major loan types. We were able to achieve this growth net of our election to sell property and casualty insurance premium finance receivables that reduced total outstanding loans at the end of the second quarter by approximately $698 million. Deposit growth in the second quarter of 2024 was utilized to fund our robust loan growth as deposits increased by approximately $1.6 billion, or 14% on an annualized basis. Non-interest bearing deposits remained 21% of total deposits at the end of the second quarter of 2024 and increased $123.3 million compared to the first quarter of 2024. We continue to leverage our customer relationships and market positioning to generate deposits, grow loans and build long term franchise value. Despite the slightly lower net interest margin during the current period, we generated record quarterly net interest income as we continued to grow earning assets.”

Commenting on credit quality, Mr. Crane stated, “As anticipated, we are observing some gradual normalization in our credit metrics. Net charge-offs totaled $30.0 million, or 28 basis points of average total loans on an annualized basis, in the second quarter of 2024 and were spread primarily across the commercial, commercial real estate and property and casualty premium finance receivables portfolios. This compared to net charge-offs totaling $21.8 million, or 21 basis points of average total loans on an annualized basis, in the first quarter of 2024. Non-performing loans totaled $174.3 million, or 0.39% of total loans, at the end of the second quarter of 2024 compared to $148.4 million, or 0.34% of total loans, at the end of the first quarter of 2024. Levels of loans classified as special mention and substandard remained consistent with levels reported at the end of the first quarter of 2024. We continue to be conservative and proactive in reviewing credit and maintaining our consistently strong credit standards. The allowance for credit losses on our core loan portfolio as of June 30, 2024 was approximately 1.52% of the outstanding balance, an increase of one basis point compared to March 31, 2024 (see Table 11 for additional information). We believe that the Company’s reserves remain appropriate and we remain diligent in our review of credit.”

In summary, Mr. Crane noted, “We are very pleased with our record start to the year. Momentum continues as our substantial loan growth in the second quarter creates positive revenue momentum moving forward as period-end loan balances exceeded averages. Regulatory approval of our previously announced acquisition of Macatawa Bank Corporation in Michigan was received June 17, 2024. Completion of the acquisition remains subject to approval by Macatawa’s shareholders at a meeting to be held on July 31, 2024, as well as the satisfaction of the other customary closing conditions set forth in the merger agreement. We remain excited for the opportunity to expand into Michigan with Macatawa’s committed management team and reputable bank exhibiting excess liquidity, pristine asset quality and low-cost core deposits.”

The graphs below illustrate certain financial highlights of the second quarter of 2024 as well as historical financial performance. See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 18 for additional information with respect to non-GAAP financial measures/ratios, including the reconciliations to the corresponding GAAP financial measures/ratios.

Graphs available at the following link: http://ml.globenewswire.com/Resource/Download/49b05914-dbe5-4a50-923d-ed93ccdfb379

SUMMARY OF RESULTS:

BALANCE SHEET

Total assets increased $2.2 billion in the second quarter of 2024 as compared to the first quarter of 2024. Total loans increased by $1.4 billion as compared to the first quarter of 2024. The increase in loans was diversified across nearly all loan portfolios. Adjusting for the impact of a loan sale transaction of property and casualty insurance premium finance receivables during the second quarter of 2024, total loans would have increased $2.1 billion, or 20% annualized.

Total liabilities increased by $2.1 billion in the second quarter of 2024 as compared to the first quarter of 2024 primarily due to a $1.6 billion increase in total deposits. Non-interest bearing deposits as a percentage of total deposits was 21% at both June 30, 2024 and March 31, 2024. The Company's loans to deposits ratio ended the quarter at 93.0%.

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 second quarter of 2024, net interest income totaled $470.6 million, an increase of $6.4 million as compared to the first quarter of 2024. The $6.4 million increase in net interest income in the second quarter of 2024 compared to the first quarter of 2024 was primarily due to a $1.9 billion increase in average earning assets partially offset by a seven basis point decrease in the net interest margin.

Net interest margin was 3.50% (3.52% on a fully taxable-equivalent basis, non-GAAP) during the second quarter of 2024 compared to 3.57% (3.59% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2024. The net interest margin decrease as compared to the first quarter of 2024 was primarily due to a 21 basis point increase in the rate paid on interest-bearing liabilities. This decrease was partially offset by a 12 basis point increase in yield on earning assets and a two basis point increase in the net free funds contribution. The 21 basis point increase on the rate paid on interest-bearing liabilities in the second quarter of 2024 as compared to the first quarter of 2024 was primarily due to a 25 basis point increase in the rate paid on interest-bearing deposits. The 12 basis point increase in the yield on earning assets in the second quarter of 2024 as compared to the first quarter of 2024 was primarily due to a 10 basis point expansion on loan yields and 11 basis point increase in yield on liquidity management assets.

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

ASSET QUALITY

The allowance for credit losses totaled $437.6 million as of June 30, 2024, an increase of $10.1 million compared to $427.5 million as of March 31, 2024. A provision for credit losses totaling $40.1 million was recorded for the second quarter of 2024 as compared to $21.7 million recorded in the first quarter of 2024. 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 accounting standard requires the Company to estimate expected credit losses over the life of the Company’s financial assets as of the reporting date. There can be no assurances, however, that future losses will not significantly exceed the amounts provided for, thereby affecting future results of operations. A summary of the allowance for credit losses calculated for the loan components in each portfolio as of June 30, 2024, March 31, 2024, and December 31, 2023 is shown on Table 12 of this report.

Net charge-offs totaled $30.0 million in the second quarter of 2024, as compared to $21.8 million of net charge-offs in the first quarter of 2024. Net charge-offs as a percentage of average total loans were 28 basis points in the second quarter of 2024 on an annualized basis compared to 21 basis points on an annualized basis in the first quarter of 2024. 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 $194.0 million and comprised 0.32% of total assets as of June 30, 2024, as compared to $162.9 million, or 0.28% of total assets, as of March 31, 2024. Non-performing loans totaled $174.3 million and comprised 0.39% of total loans at June 30, 2024, as compared to $148.4 million and 0.34% of total loans at March 31, 2024. The increase in the second quarter of 2024 was primarily due to an increase in certain credits within the commercial and commercial real estate portfolios becoming nonaccrual. For more information regarding non-performing assets, see Table 14 in this report.

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

NON-INTEREST INCOME

Wealth management revenue was relatively stable in the second quarter of 2024 as compared to the first quarter of 2024. 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 $1.5 million in the second quarter of 2024 as compared to the first quarter of 2024 primarily due to $1.6 million higher production revenue from increased mortgage production as well as a favorable adjustment to the Company’s held-for-sale portfolio of early buy-out exercised loans guaranteed by U.S. government agencies, which are held at fair value, of $642,000 in the second quarter of 2024 compared to a $2.2 million unfavorable adjustment in the first quarter of 2024. This was partially offset by a $105,000 favorable valuation adjustment to the fair value of mortgage servicing rights, net of servicing hedge, in the second quarter of 2024 compared to a $5.0 million favorable adjustment in the first quarter of 2024. The Company monitors the relationship of these assets and seeks to minimize the earnings impact of fair value changes. For more information regarding mortgage banking revenue, see Table 16 in this report.

The Company recognized $4.3 million in net losses on investment securities in the second quarter of 2024 as compared to $1.3 million in net gains in the first quarter of 2024. The change from period to period was primarily the result of higher losses on the Company’s equity investment securities in the second quarter of 2024.

Fees from covered call options decreased by $2.8 million in the second quarter of 2024 as compared to the first quarter of 2024. 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.

Other income decreased by $13.0 million in the second quarter of 2024 compared to the first quarter of 2024 primarily due to a $20.0 million gain related to the sale of the RBA division within the wealth management business recognized in the first quarter of 2024. This was partially offset by a favorable adjustment to the Company’s held-for-investment portfolio of early buy-out exercised loans guaranteed by U.S. government agencies, which are held at fair value, of $1.0 million when compared to the first quarter of 2024, as well as less unfavorable foreign currency remeasurement adjustments when compared to the first quarter of 2024 and realized gains from the sale of certain loans during the second quarter of 2024.

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

NON-INTEREST EXPENSE

Salaries and employee benefits expense increased by $3.4 million in the second quarter of 2024 as compared to the first quarter of 2024. The $3.4 million increase is primarily related to higher incentive compensation expense due to elevated commissions from increased mortgage production as well as higher salaries due to a full quarter of the Company’s annual merit increase.

Advertising and marketing expenses in the second quarter of 2024 totaled $17.4 million, which is a $4.4 million increase as compared to the first quarter of 2024, primarily due to an increase in seasonal sports sponsorship costs. Marketing costs are incurred to promote the Company’s brand, commercial banking capabilities and the Company’s various products, to attract loans and deposits and to announce new branch openings as well as the expansion of the Company’s non-bank businesses. The level of marketing expenditures depends on the timing of sponsorship programs utilized which are determined based on the market area, targeted audience, competition and various other factors. Generally, these expenses are elevated in the second and third quarters of each year.

FDIC insurance, including amounts accrued for estimated special assessments, decreased $4.1 million in the second quarter of 2024 as compared to the first quarter of 2024. This was primarily the result of a $5.2 million accrual recognized in the first quarter of 2024 for estimated amounts owed as a result of the FDIC special assessment on uninsured deposits in response to certain bank failures occurring in 2023. The Company recognized no such special assessment in the second quarter of 2024.

For more information regarding non-interest expense, see Table 17 in this report.

INCOME TAXES

The Company recorded income tax expense of $59.0 million in the second quarter of 2024 compared to $62.7 million in the first quarter of 2024. The effective tax rates were 27.90% in the second quarter of 2024 compared to 25.07% in the first quarter of 2024. The effective tax rates were partially impacted by the tax effects related to share-based compensation which fluctuate based on the Company’s stock price and timing of employee stock option exercises and vesting of other share-based awards. The Company recorded net excess tax benefits of $16,000 in the second quarter of 2024, compared to net excess tax benefits of $4.4 million in the first quarter of 2024 related to share-based compensation.

BUSINESS UNIT SUMMARY

Community Banking

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

Mortgage banking revenue was $29.1 million for the second quarter of 2024, an increase of $1.5 million as compared to the first quarter of 2024, primarily due to $1.6 million higher production revenue from increased mortgage production as well as a favorable adjustment to the Company’s held-for-sale portfolio of early buy-out exercised loans guaranteed by U.S. government agencies, which are held at fair value, of $642,000 in the second quarter of 2024 compared to a $2.2 million unfavorable adjustment in the first quarter of 2024. This was partially offset by a $105,000 favorable valuation adjustment to the fair value of mortgage servicing rights, net of servicing hedge, in the second quarter of 2024 compared to a $5.0 million favorable adjustment in the first quarter of 2024. Service charges on deposit accounts totaled $15.5 million in the second quarter of 2024, which was relatively stable compared to the first quarter of 2024. The Company’s gross commercial and commercial real estate loan pipelines remained solid as of June 30, 2024 indicating momentum for expected continued loan growth in the third quarter of 2024.

Specialty Finance

Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries, accounts receivable financing and value-added, out-sourced administrative services and other services. Originations within the insurance premium financing receivables portfolios were $5.5 billion during the second quarter of 2024. Average balances increased by $392.2 million, net of a loan sale transaction of property and casualty insurance premium finance receivables during the second quarter of 2024, as compared to the first quarter of 2024. The Company’s leasing portfolio balance increased in the second quarter of 2024, with its portfolio of assets, including capital leases, loans and equipment on operating leases, totaling $3.7 billion as of June 30, 2024 as compared to $3.6 billion as of March 31, 2024. Revenues from the Company’s out-sourced administrative services business were $1.3 million in the second quarter of 2024, which was relatively stable compared to the first quarter of 2024.

Wealth Management

Through four separate subsidiaries within its wealth management unit, the Company offers a full range of wealth management services, including trust and investment services, tax-deferred like-kind exchange services, asset management, and securities brokerage services. See “Items Impacting Comparative Results,” regarding the sale of the RBA division during the first quarter of 2024. Wealth management revenue totaled $35.4 million in the second quarter of 2024, relatively stable as compared to the first quarter of 2024. At June 30, 2024, the Company’s wealth management subsidiaries had approximately $48.2 billion of assets under administration, which included $8.8 billion of assets owned by the Company and its subsidiary banks.

ITEMS IMPACTING COMPARATIVE FINANCIAL RESULTS

Division Sale

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

Business Combination

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

WINTRUST FINANCIAL CORPORATION

Key Operating Measures

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

       % or (1)
basis point  (bp) change from
1st Quarter
2024
 % or
basis point  (bp) change from
2nd Quarter
2023
  Three Months Ended 
(Dollars in thousands, except per share data) Jun 30, 2024 Mar 31, 2024 Jun 30, 2023 
Net income $152,388  $187,294  $154,750 (19)% (2)%
Pre-tax income, excluding provision for credit losses (non-GAAP) (2)  251,404   271,629   239,944 (7)  5  
Net income per common share – Diluted  2.32   2.89   2.38 (20)  (3) 
Cash dividends declared per common share  0.45   0.45   0.40    13  
Net revenue (3)  591,757   604,774   560,567 (2)  6  
Net interest income  470,610   464,194   447,537 1   5  
Net interest margin  3.50%  3.57%  3.64%(7)bps (14)bps
Net interest margin – fully taxable-equivalent (non-GAAP) (2)  3.52   3.59   3.66 (7)  (14) 
Net overhead ratio (4)  1.53   1.39   1.58 14   (5) 
Return on average assets  1.07   1.35   1.18 (28)  (11) 
Return on average common equity  11.61   14.42   12.79 (281)  (118) 
Return on average tangible common equity (non-GAAP) (2)  13.49   16.75   15.12 (326)  (163) 
At end of period           
Total assets $59,781,516  $57,576,933  $54,286,176 15 % 10 %
Total loans (5)  44,675,531   43,230,706   41,023,408 13   9  
Total deposits  48,049,026   46,448,858   44,038,707 14   9  
Total shareholders’ equity  5,536,628   5,436,400   5,041,912 7   10  

(1) Period-end balance sheet percentage changes are annualized.
(2) See Table 18: 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 EndedSix Months Ended
(Dollars in thousands, except per share data) Jun 30,
2024
 Mar 31,
2024
 Dec 31,
2023
 Sep 30,
2023
 Jun 30,
2023
Jun 30,
2024
 Jun 30,
2023
Selected Financial Condition Data (at end of period):   
Total assets $59,781,516  $57,576,933  $56,259,934  $55,555,246  $54,286,176    
Total loans (1)  44,675,531   43,230,706   42,131,831   41,446,032   41,023,408    
Total deposits  48,049,026   46,448,858   45,397,170   44,992,686   44,038,707    
Total shareholders’ equity  5,536,628   5,436,400   5,399,526   5,015,613   5,041,912    
Selected Statements of Income Data:             
Net interest income $470,610  $464,194  $469,974  $462,358  $447,537 $934,804  $905,532 
Net revenue (2)  591,757   604,774   570,803   574,836   560,567  1,196,531   1,126,331 
Net income  152,388   187,294   123,480   164,198   154,750  339,682   334,948 
Pre-tax income, excluding provision for credit losses (non-GAAP) (3)  251,404   271,629   208,151   244,781   239,944  523,033   506,539 
Net income per common share – Basic  2.35   2.93   1.90   2.57   2.41  5.28   5.26 
Net income per common share – Diluted  2.32   2.89   1.87   2.53   2.38  5.21   5.18 
Cash dividends declared per common share  0.45   0.45   0.40   0.40   0.40  0.90   0.80 
Selected Financial Ratios and Other Data:             
Performance Ratios:             
Net interest margin  3.50%  3.57%  3.62%  3.60%  3.64% 3.53%  3.72%
Net interest margin – fully taxable-equivalent (non-GAAP) (3)  3.52   3.59   3.64   3.62   3.66  3.56   3.74 
Non-interest income to average assets  0.85   1.02   0.73   0.82   0.86  0.93   0.85 
Non-interest expense to average assets  2.38   2.41   2.62   2.41   2.44  2.40   2.39 
Net overhead ratio (4)  1.53   1.39   1.89   1.59   1.58  1.46   1.54 
Return on average assets  1.07   1.35   0.89   1.20   1.18  1.21   1.29 
Return on average common equity  11.61   14.42   9.93   13.35   12.79  13.01   14.20 
Return on average tangible common equity (non-GAAP) (3)  13.49   16.75   11.73   15.73   15.12  15.12   16.79 
Average total assets $57,493,184  $55,602,695  $55,017,075  $54,381,981  $52,601,953 $56,547,939  $52,340,090 
Average total shareholders’ equity  5,450,173   5,440,457   5,066,196   5,083,883   5,044,718  5,445,315   4,970,407 
Average loans to average deposits ratio  95.1%  94.5%  92.9%  92.4%  94.3% 94.8%  93.7%
Period-end loans to deposits ratio  93.0   93.1   92.8   92.1   93.2    
Common Share Data at end of period:             
Market price per common share $98.56  $104.39  $92.75  $75.50  $72.62    
Book value per common share  82.97   81.38   81.43   75.19   75.65    
Tangible book value per common share (non-GAAP) (3)  72.01   70.40   70.33   64.07   64.50    
Common shares outstanding  61,760,139   61,736,715   61,243,626   61,222,058   61,197,676    
Other Data at end of period:             
Common equity to assets ratio  8.6%  8.7%  8.9%  8.3%  8.5%   
Tangible common equity ratio (non-GAAP) (3)  7.5   7.6   7.7   7.1   7.4    
Tier 1 leverage ratio (5)  9.3   9.4   9.3   9.2   9.3    
Risk-based capital ratios:             
Tier 1 capital ratio (5)  10.2   10.3   10.3   10.2   10.1    
Common equity tier 1 capital ratio (5)  9.5   9.5   9.4   9.3   9.3    
Total capital ratio (5)  12.0   12.2   12.1   12.0   12.0    
Allowance for credit losses (6) $437,560  $427,504  $427,612  $399,531  $387,786    
Allowance for loan and unfunded lending-related commitment losses to total loans  0.98%  0.99%  1.01%  0.96%  0.94%   
Number of:             
Bank subsidiaries  15   15   15   15   15    
Banking offices  177   176   174   174   175    

(1) Excludes mortgage loans held-for-sale.
(2) Net revenue is net interest income plus non-interest income.
(3) See Table 18: 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)
  Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(In thousands)  2024   2024   2023   2023   2023 
Assets          
Cash and due from banks $415,462  $379,825  $423,404  $418,088  $513,858 
Federal funds sold and securities purchased under resale agreements  62   61   60   60   59 
Interest-bearing deposits with banks  2,824,314   2,131,077   2,084,323   2,448,570   2,163,708 
Available-for-sale securities, at fair value  4,329,957   4,387,598   3,502,915   3,611,835   3,492,481 
Held-to-maturity securities, at amortized cost  3,755,924   3,810,015   3,856,916   3,909,150   3,564,473 
Trading account securities  4,134   2,184   4,707   1,663   3,027 
Equity securities with readily determinable fair value  112,173   119,777   139,268   134,310   116,275 
Federal Home Loan Bank and Federal Reserve Bank stock  256,495   224,657   205,003   204,040   195,117 
Brokerage customer receivables  13,682   13,382   10,592   14,042   15,722 
Mortgage loans held-for-sale, at fair value  411,851   339,884   292,722   304,808   338,728 
Loans, net of unearned income  44,675,531   43,230,706   42,131,831   41,446,032   41,023,408 
Allowance for loan losses  (363,719)  (348,612)  (344,235)  (315,039)  (302,499)
Net loans  44,311,812   42,882,094   41,787,596   41,130,993   40,720,909 
Premises, software and equipment, net  722,295   744,769   748,966   747,501   749,393 
Lease investments, net  275,459   283,557   281,280   275,152   274,351 
Accrued interest receivable and other assets  1,671,334   1,580,142   1,551,899   1,674,681   1,455,748 
Trade date securities receivable        690,722       
Goodwill  655,955   656,181   656,672   656,109   656,674 
Other acquisition-related intangible assets  20,607   21,730   22,889   24,244   25,653 
Total assets $59,781,516  $57,576,933  $56,259,934  $55,555,246  $54,286,176 
Liabilities and Shareholders’ Equity          
Deposits:          
Non-interest-bearing $10,031,440  $9,908,183  $10,420,401  $10,347,006  $10,604,915 
Interest-bearing  38,017,586   36,540,675   34,976,769   34,645,680   33,433,792 
Total deposits  48,049,026   46,448,858   45,397,170   44,992,686   44,038,707 
Federal Home Loan Bank advances  3,176,309   2,676,751   2,326,071   2,326,071   2,026,071 
Other borrowings  606,579   575,408   645,813   643,999   665,219 
Subordinated notes  298,113   437,965   437,866   437,731   437,628 
Junior subordinated debentures  253,566   253,566   253,566   253,566   253,566 
Accrued interest payable and other liabilities  1,861,295   1,747,985   1,799,922   1,885,580   1,823,073 
Total liabilities  54,244,888   52,140,533   50,860,408   50,539,633   49,244,264 
Shareholders’ Equity:          
Preferred stock  412,500   412,500   412,500   412,500   412,500 
Common stock  61,825   61,798   61,269   61,244   61,219 
Surplus  1,964,645   1,954,532   1,943,806   1,933,226   1,923,623 
Treasury stock  (5,760)  (5,757)  (2,217)  (1,966)  (1,966)
Retained earnings  3,615,616   3,498,475   3,345,399   3,253,332   3,120,626 
Accumulated other comprehensive loss  (512,198)  (485,148)  (361,231)  (642,723)  (474,090)
Total shareholders’ equity  5,536,628   5,436,400   5,399,526   5,015,613   5,041,912 
Total liabilities and shareholders’ equity $59,781,516  $57,576,933  $56,259,934  $55,555,246  $54,286,176 


WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 Three Months EndedSix Months Ended
(Dollars in thousands, except per share data)Jun 30,
2024
 Mar 31,
2024
 Dec 31,
2023
 Sep 30,
2023
 Jun 30,
2023
Jun 30,
2024
 Jun 30,
2023
Interest income            
Interest and fees on loans$749,812  $710,341 $694,943  $666,260  $621,057$1,460,153  $1,179,749 
Mortgage loans held-for-sale 5,434   4,146  4,318   4,767   4,178 9,580   7,706 
Interest-bearing deposits with banks 19,731   16,658  21,762   26,866   16,882 36,389   30,350 
Federal funds sold and securities purchased under resale agreements 17   19  578   1,157   1 36   71 
Investment securities 69,779   69,678  68,237   59,164   51,243 139,457   111,186 
Trading account securities 13   18  15   6   6 31   20 
Federal Home Loan Bank and Federal Reserve Bank stock 4,974   4,478  3,792   3,896   3,544 9,452   7,224 
Brokerage customer receivables 219   175  203   284   265 394   560 
Total interest income 849,979   805,513  793,848   762,400   697,176 1,655,492   1,336,866 
Interest expense            
Interest on deposits 335,703   299,532  285,390   262,783   213,495 635,235   358,297 
Interest on Federal Home Loan Bank advances 24,797   22,048  18,316   17,436   17,399 46,845   36,534 
Interest on other borrowings 8,700   9,248  9,557   9,384   8,485 17,948   16,339 
Interest on subordinated notes 5,185   5,487  5,522   5,491   5,523 10,672   11,011 
Interest on junior subordinated debentures 4,984   5,004  5,089   4,948   4,737 9,988   9,153 
Total interest expense 379,369   341,319  323,874   300,042   249,639 720,688   431,334 
Net interest income 470,610   464,194  469,974   462,358   447,537 934,804   905,532 
Provision for credit losses 40,061   21,673  42,908   19,923   28,514 61,734   51,559 
Net interest income after provision for credit losses 430,549   442,521  427,066   442,435   419,023 873,070   853,973 
Non-interest income            
Wealth management 35,413   34,815  33,275   33,529   33,858 70,228   63,803 
Mortgage banking 29,124   27,663  7,433   27,395   29,981 56,787   48,245 
Service charges on deposit accounts 15,546   14,811  14,522   14,217   13,608 30,357   26,511 
(Losses) gains on investment securities, net (4,282)  1,326  2,484   (2,357)  0 (2,956)  1,398 
Fees from covered call options 2,056   4,847  4,679   4,215   2,578 6,903   12,969 
Trading gains (losses), net 70   677  (505)  728   106 747   919 
Operating lease income, net 13,938   14,110  14,162   13,863   12,227 28,048   25,273 
Other 29,282   42,331  24,779   20,888   20,672 71,613   41,681 
Total non-interest income 121,147   140,580  100,829   112,478   113,030 261,727   220,799 
Non-interest expense            
Salaries and employee benefits 198,541   195,173  193,971   192,338   184,923 393,714   361,704 
Software and equipment 29,231   27,731  27,779   25,951   26,205 56,962   50,902 
Operating lease equipment 10,834   10,683  10,694   12,020   9,816 21,517   19,649 
Occupancy, net 19,585   19,086  18,102   21,304   19,176 38,671   37,662 
Data processing 9,503   9,292  8,892   10,773   9,726 18,795   19,135 
Advertising and marketing 17,436   13,040  17,166   18,169   17,794 30,476   29,740 
Professional fees 9,967   9,553  8,768   8,887   8,940 19,520   17,103 
Amortization of other acquisition-related intangible assets 1,122   1,158  1,356   1,408   1,499 2,280   2,734 
FDIC insurance 10,429   14,537  43,677   9,748   9,008 24,966   17,677 
OREO expenses, net (259)  392  (1,559)  120   118 133   (89)
Other 33,964   32,500  33,806   29,337   33,418 66,464   63,575 
Total non-interest expense 340,353   333,145  362,652   330,055   320,623 673,498   619,792 
Income before taxes 211,343   249,956  165,243   224,858   211,430 461,299   454,980 
Income tax expense 58,955   62,662  41,763   60,660   56,680 121,617   120,032 
Net income$152,388  $187,294 $123,480  $164,198  $154,750$339,682  $334,948 
Preferred stock dividends 6,991   6,991  6,991   6,991   6,991 13,982   13,982 
Net income applicable to common shares$145,397  $180,303 $116,489  $157,207  $147,759$325,700  $320,966 
Net income per common share - Basic$2.35  $2.93 $1.90  $2.57  $2.41$5.28  $5.26 
Net income per common share - Diluted$2.32  $2.89 $1.87  $2.53  $2.38$5.21  $5.18 
Cash dividends declared per common share$0.45  $0.45 $0.40  $0.40  $0.40$0.90  $0.80 
Weighted average common shares outstanding 61,839   61,481  61,236   61,213   61,192 61,660   61,072 
Dilutive potential common shares 926   928  1,166   964   902 901   933 
Average common shares and dilutive common shares 62,765   62,409  62,402   62,177   62,094 62,561   62,005 


TABLE 1
: LOAN PORTFOLIO MIX AND GROWTH RATES

          % Growth From
(Dollars in thousands)Jun 30,
2024
 Mar 31,
2024
 Dec 31,
2023
 Sep 30,
2023
 Jun 30,
2023
Dec 31,
2023 (1)
 Jun 30,
2023
Balance:            
Mortgage loans held-for-sale, excluding early buy-out exercised loans guaranteed by U.S. government agencies$281,103 $193,064 $155,529 $190,511 $235,570NM 19%
Mortgage loans held-for-sale, early buy-out exercised loans guaranteed by U.S. government agencies 130,748  146,820  137,193  114,297  103,158(9) 27 
Total mortgage loans held-for-sale$411,851 $339,884 $292,722 $304,808 $338,72882% 22%
             
Core loans:            
Commercial            
Commercial and industrial$6,226,336 $6,105,968 $5,804,629 $5,894,732 $5,737,63315% 9%
Asset-based lending 1,465,867  1,355,255  1,433,250  1,396,591  1,465,8485  0 
Municipal 747,357  721,526  677,143  676,915  653,11721  14 
Leases 2,439,128  2,344,295  2,208,368  2,109,628  1,925,76721  27 
PPP loans 9,954  11,036  11,533  13,744  15,337(20) (35)
Commercial real estate            
Residential construction 55,019  57,558  58,642  51,550  51,689(12) 6 
Commercial construction 1,866,701  1,748,607  1,729,937  1,547,322  1,409,75116  32 
Land 338,831  344,149  295,462  294,901  298,99630  13 
Office 1,585,312  1,566,748  1,455,417  1,422,748  1,404,42218  13 
Industrial 2,307,455  2,190,200  2,135,876  2,057,957  2,002,74016  15 
Retail 1,365,753  1,366,415  1,337,517  1,341,451  1,304,0834  5 
Multi-family 2,988,940  2,922,432  2,815,911  2,710,829  2,696,47812  11 
Mixed use and other 1,439,186  1,437,328  1,515,402  1,519,422  1,440,652(10) (0)
Home equity 356,313  340,349  343,976  343,258  336,9747  6 
Residential real estate            
Residential real estate loans for investment 2,933,157  2,746,916  2,619,083  2,538,630  2,455,39224  19 
Residential mortgage loans, early buy-out eligible loans guaranteed by U.S. government agencies 88,503  90,911  92,780  97,911  117,024(9) (24)
Residential mortgage loans, early buy-out exercised loans guaranteed by U.S. government agencies 45,675  52,439  57,803  71,062  70,824(42) (36)
Total core loans$26,259,487 $25,402,132 $24,592,729 $24,088,651 $23,386,72714% 12%
             
Niche loans:            
Commercial            
Franchise$1,150,460 $1,122,302 $1,092,532 $1,074,162 $1,091,1645% 5%
Mortgage warehouse lines of credit 593,519  403,245  230,211  245,450  381,04395  56 
Community Advantage - homeowners association 491,722  475,832  452,734  424,054  405,0427  21 
Insurance agency lending 1,030,119  964,022  921,653  890,197  925,52014  11 
Premium Finance receivables            
U.S. property & casualty insurance 6,142,654  6,113,993  5,983,103  5,815,346  5,900,2281  4 
Canada property & casualty insurance 958,099  826,026  920,426  907,401  862,47032  11 
Life insurance 7,962,115  7,872,033  7,877,943  7,931,808  8,039,2732  (1)
Consumer and other 87,356  51,121  60,500  68,963  31,941143  173 
Total niche loans$18,416,044 $17,828,574 $17,539,102 $17,357,381 $17,636,6817% 4%
             
Total loans, net of unearned income$44,675,531 $43,230,706 $42,131,831 $41,446,032 $41,023,4087% 9%

(1) Annualized.

TABLE 2: DEPOSIT PORTFOLIO MIX AND GROWTH RATES

          % Growth From
(Dollars in thousands)Jun 30,
2024
 Mar 31,
2024
 Dec 31,
2023
 Sep 30,
2023
 Jun 30,
2023
Mar 31,
2024 (1)
 Jun 30, 2023
Balance:            
Non-interest-bearing$10,031,440  $9,908,183  $10,420,401  $10,347,006  $10,604,915 5% (5)%
NOW and interest-bearing demand deposits 5,053,909   5,720,947   5,797,649   6,006,114   5,814,836 (47) (13)
Wealth management deposits (2) 1,490,711   1,347,817   1,614,499   1,788,099   1,417,984 43  5 
Money market 16,320,017   15,617,717   15,149,215   14,478,504   14,523,124 18  12 
Savings 5,882,179   5,959,774   5,790,334   5,584,294   5,321,578 (5) 11 
Time certificates of deposit 9,270,770   7,894,420   6,625,072   6,788,669   6,356,270 70  46 
Total deposits$48,049,026  $46,448,858  $45,397,170  $44,992,686  $44,038,707 14% 9%
Mix:            
Non-interest-bearing 21%  21%  23%  23%  24%   
NOW and interest-bearing demand deposits 11   12   13   13   13    
Wealth management deposits (2) 3   3   4   4   3    
Money market 34   34   33   32   33    
Savings 12   13   13   13   12    
Time certificates of deposit 19   17   14   15   15    
Total deposits 100%  100%  100%  100%  100%   

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

TABLE 3: TIME CERTIFICATES OF DEPOSIT MATURITY/RE-PRICING ANALYSIS
As of June 30, 2024

(Dollars in thousands) Total Time
Certificates of
Deposit
 Weighted-Average
Rate of Maturing
Time Certificates
of Deposit
1-3 months $2,680,761 4.75%
4-6 months  2,863,328 4.74 
7-9 months  2,309,917 4.36 
10-12 months  1,073,537 4.25 
13-18 months  215,181 3.50 
19-24 months  67,172 2.52 
24+ months  60,874 1.90 
Total $9,270,770 4.53%


TABLE 4
: QUARTERLY AVERAGE BALANCES

  Average Balance for three months ended,
  Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(In thousands)  2024   2024   2023   2023   2023 
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents (1) $1,485,481  $1,254,332  $1,682,176  $2,053,568  $1,454,057 
Investment securities (2)  8,203,764   8,349,796   7,971,068   7,706,285   7,252,582 
FHLB and FRB stock  253,614   230,648   204,593   201,252   223,813 
Liquidity management assets (3)  9,942,859   9,834,776   9,857,837   9,961,105   8,930,452 
Other earning assets (3)(4)  15,257   15,081   14,821   17,879   17,401 
Mortgage loans held-for-sale  347,236   290,275   279,569   319,099   307,683 
Loans, net of unearned income (3)(5)  43,819,354   42,129,893   41,361,952   40,707,042   40,106,393 
Total earning assets (3)  54,124,706   52,270,025   51,514,179   51,005,125   49,361,929 
Allowance for loan and investment security losses  (360,504)  (361,734)  (329,441)  (319,491)  (302,627)
Cash and due from banks  434,916   450,267   443,989   459,819   481,510 
Other assets  3,294,066   3,244,137   3,388,348   3,236,528   3,061,141 
Total assets $57,493,184  $55,602,695  $55,017,075  $54,381,981  $52,601,953 
           
NOW and interest-bearing demand deposits $4,985,306  $5,680,265  $5,868,976  $5,815,155  $5,540,597 
Wealth management deposits  1,531,865   1,510,203   1,704,099   1,512,765   1,545,626 
Money market accounts  15,272,126   14,474,492   14,212,320   14,155,446   13,735,924 
Savings accounts  5,878,844   5,792,118   5,676,155   5,472,535   5,206,609 
Time deposits  8,546,172   7,148,456   6,645,980   6,495,906   5,603,024 
Interest-bearing deposits  36,214,313   34,605,534   34,107,530   33,451,807   31,631,780 
Federal Home Loan Bank advances  3,096,920   2,728,849   2,326,073   2,241,292   2,227,106 
Other borrowings  587,262   627,711   633,673   657,454   625,757 
Subordinated notes  410,331   437,893   437,785   437,658   437,545 
Junior subordinated debentures  253,566   253,566   253,566   253,566   253,566 
Total interest-bearing liabilities  40,562,392   38,653,553   37,758,627   37,041,777   35,175,754 
Non-interest-bearing deposits  9,879,134   9,972,646   10,406,585   10,612,009   10,908,022 
Other liabilities  1,601,485   1,536,039   1,785,667   1,644,312   1,473,459 
Equity  5,450,173   5,440,457   5,066,196   5,083,883   5,044,718 
Total liabilities and shareholders’ equity $57,493,184  $55,602,695  $55,017,075  $54,381,981  $52,601,953 
           
Net free funds/contribution (6) $13,562,314  $13,616,472  $13,755,552  $13,963,348  $14,186,175 

(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 18: 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,
  Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(In thousands)  2024   2024   2023   2023   2023 
Interest income:          
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents $19,748  $16,677  $22,340  $28,022  $16,882 
Investment securities  70,346   70,228   68,812   59,737   51,795 
FHLB and FRB stock  4,974   4,478   3,792   3,896   3,544 
Liquidity management assets (1)  95,068   91,383   94,944   91,655   72,221 
Other earning assets (1)  235   198   222   291   272 
Mortgage loans held-for-sale  5,434   4,146   4,318   4,767   4,178 
Loans, net of unearned income (1)  752,117   712,587   697,093   668,183   622,939 
Total interest income $852,854  $808,314  $796,577  $764,896  $699,610 
           
Interest expense:          
NOW and interest-bearing demand deposits $32,719  $34,896  $38,124  $36,001  $29,178 
Wealth management deposits  10,294   10,461   12,076   9,350   9,097 
Money market accounts  155,100   137,984   130,252   124,742   106,630 
Savings accounts  41,063   39,071   36,463   31,784   25,603 
Time deposits  96,527   77,120   68,475   60,906   42,987 
Interest-bearing deposits  335,703   299,532   285,390   262,783   213,495 
Federal Home Loan Bank advances  24,797   22,048   18,316   17,436   17,399 
Other borrowings  8,700   9,248   9,557   9,384   8,485 
Subordinated notes  5,185   5,487   5,522   5,491   5,523 
Junior subordinated debentures  4,984   5,004   5,089   4,948   4,737 
Total interest expense $379,369  $341,319  $323,874  $300,042  $249,639 
           
Less: Fully taxable-equivalent adjustment  (2,875)  (2,801)  (2,729)  (2,496)  (2,434)
Net interest income (GAAP) (2)   470,610   464,194   469,974   462,358   447,537 
Fully taxable-equivalent adjustment  2,875   2,801   2,729   2,496   2,434 
Net interest income, fully taxable-equivalent (non-GAAP) (2)  $473,485  $466,995  $472,703  $464,854  $449,971 

(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 18: 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,
  Jun 30,
2024
 Mar 31,
2024
 Dec 31,
2023
 Sep 30,
2023
 Jun 30,
2023
Yield earned on:          
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents 5.35% 5.35% 5.27% 5.41% 4.66%
Investment securities 3.45  3.38  3.42  3.08  2.86 
FHLB and FRB stock 7.89  7.81  7.35  7.68  6.35 
Liquidity management assets 3.85  3.74  3.82  3.65  3.24 
Other earning assets 6.23  5.25  5.92  6.47  6.27 
Mortgage loans held-for-sale 6.29  5.74  6.13  5.93  5.45 
Loans, net of unearned income 6.90  6.80  6.69  6.51  6.23 
Total earning assets 6.34% 6.22% 6.13% 5.95% 5.68%
           
Rate paid on:          
NOW and interest-bearing demand deposits 2.64% 2.47% 2.58% 2.46% 2.11%
Wealth management deposits 2.70  2.79  2.81  2.45  2.36 
Money market accounts 4.08  3.83  3.64  3.50  3.11 
Savings accounts 2.81  2.71  2.55  2.30  1.97 
Time deposits 4.54  4.34  4.09  3.72  3.08 
Interest-bearing deposits 3.73  3.48  3.32  3.12  2.71 
Federal Home Loan Bank advances 3.22  3.25  3.12  3.09  3.13 
Other borrowings 5.96  5.92  5.98  5.66  5.44 
Subordinated notes 5.08  5.04  5.00  4.98  5.06 
Junior subordinated debentures 7.91  7.94  7.96  7.74  7.49 
Total interest-bearing liabilities 3.76% 3.55% 3.40% 3.21% 2.85%
           
Interest rate spread (1)(2) 2.58% 2.67% 2.73% 2.74% 2.83%
Less: Fully taxable-equivalent adjustment (0.02) (0.02) (0.02) (0.02) (0.02)
Net free funds/contribution (3) 0.94  0.92  0.91  0.88  0.83 
Net interest margin (GAAP) (2) 3.50% 3.57% 3.62% 3.60% 3.64%
Fully taxable-equivalent adjustment 0.02  0.02  0.02  0.02  0.02 
Net interest margin, fully taxable-equivalent (non-GAAP) (2) 3.52% 3.59% 3.64% 3.62% 3.66%

(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 18: 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 six months ended,
Interest
for six months ended,
Yield/Rate
for six months ended,
(Dollars in thousands)Jun 30,
2024
 Jun 30,
2023
Jun 30,
2024
 Jun 30,
2023
Jun 30,
2024
 Jun 30,
2023
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents (1)$1,369,906  $1,345,506 $36,425  $30,421 5.35% 4.56%
Investment securities (2) 8,276,780   7,602,707  140,574   112,288 3.42  2.98 
FHLB and FRB stock 242,131   228,687  9,452   7,224 7.85  6.37 
Liquidity management assets (3)(4)$9,888,817  $9,176,900 $186,451  $149,933 3.79% 3.29%
Other earning assets (3)(4)(5) 15,169   17,920  433   585 5.74  6.58 
Mortgage loans held-for-sale 318,756   289,426  9,580   7,706 6.04  5.37 
Loans, net of unearned income (3)(4)(6) 42,974,623   39,602,672  1,464,704   1,183,503 6.85  6.03 
Total earning assets (4)$53,197,365  $49,086,918 $1,661,168  $1,341,727 6.28% 5.51%
Allowance for loan and investment security losses (361,119)  (292,721)      
Cash and due from banks 442,591   484,964       
Other assets 3,269,102   3,060,929       
Total assets$56,547,939  $52,340,090       
          
NOW and interest-bearing demand deposits$5,332,786  $5,406,911 $67,615  $47,949 2.55% 1.79%
Wealth management deposits 1,521,034   1,854,637  20,755   21,355 2.74  2.32 
Money market accounts 14,873,309   13,138,018  293,084   174,907 3.96  2.68 
Savings accounts 5,835,481   5,019,505  80,134   41,419 2.76  1.66 
Time deposits 7,847,314   5,323,882  173,647   72,667 4.45  2.75 
Interest-bearing deposits$35,409,924  $30,742,953 $635,235  $358,297 3.61% 2.35%
Federal Home Loan Bank advances 2,912,884   2,350,309  46,845   36,534 3.23  3.13 
Other borrowings 607,487   614,410  17,948   16,338 5.94  5.36 
Subordinated notes 424,112   437,484  10,672   11,011 5.06  5.08 
Junior subordinated debentures 253,566   253,566  9,988   9,154 7.92  7.28 
Total interest-bearing liabilities$39,607,973  $34,398,722 $720,688  $431,334 3.66% 2.53%
Non-interest-bearing deposits 9,925,890   11,536,336       
Other liabilities 1,568,761   1,434,625       
Equity 5,445,315   4,970,407       
Total liabilities and shareholders’ equity$56,547,939  $52,340,090       
Interest rate spread (4)(7)      2.62% 2.98%
Less: Fully taxable-equivalent adjustment    (5,676)  (4,861)(0.03) (0.02)
Net free funds/contribution (8)$13,589,392  $14,688,196    0.94  0.76 
Net interest income/margin (GAAP) (4)   $934,804  $905,532 3.53% 3.72%
Fully taxable-equivalent adjustment    5,676   4,861 0.03  0.02 
Net interest income/margin, fully taxable-equivalent (non-GAAP) (4)    $940,480  $910,393 3.56% 3.74%

(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 18: 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
Jun 30, 20241.5% 1.0% 0.6% (0.0)%
Mar 31, 20241.9  1.4  1.5  1.6 
Dec 31, 20232.6  1.8  0.4  (0.7)
Sep 30, 20233.3  1.9  (2.0) (5.2)
Jun 30, 20235.7  2.9  (2.9) (7.9)

 

Ramp Scenario+200 Basis Points +100 Basis Points -100 Basis Points -200 Basis Points
Jun 30, 20241.2% 1.0% 0.9% 1.0%
Mar 31, 20240.8  0.6  1.3  2.0 
Dec 31, 20231.6  1.2  (0.3) (1.5)
Sep 30, 20231.7  1.2  (0.5) (2.4)
Jun 30, 20232.9  1.8  (0.9) (3.4)


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

TABLE 9: MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES

 Loans repricing or contractual maturity period
As of June 30, 2024One year or
less
 From one to
five years
 From five to fifteen years After fifteen years Total
(In thousands)    
Commercial         
Fixed rate$477,277 $3,103,539 $1,833,528 $42,066 $5,456,410
Variable rate 8,696,826  1,226      8,698,052
Total commercial$9,174,103 $3,104,765 $1,833,528 $42,066 $14,154,462
Commercial real estate         
Fixed rate$528,051 $2,517,267 $352,478 $55,075 $3,452,871
Variable rate 8,480,512  13,745  69    8,494,326
Total commercial real estate$9,008,563 $2,531,012 $352,547 $55,075 $11,947,197
Home equity         
Fixed rate$9,862 $3,413 $ $24 $13,299
Variable rate 343,014        343,014
Total home equity$352,876 $3,413 $ $24 $356,313
Residential real estate         
Fixed rate$20,300 $3,124 $29,630 $1,036,012 $1,089,066
Variable rate 77,249  385,872  1,515,148    1,978,269
Total residential real estate$97,549 $388,996 $1,544,778 $1,036,012 $3,067,335
Premium finance receivables - property & casualty         
Fixed rate$7,015,748 $85,005 $ $ $7,100,753
Variable rate         
Total premium finance receivables - property & casualty$7,015,748 $85,005 $ $ $7,100,753
Premium finance receivables - life insurance         
Fixed rate$71,207 $543,433 $4,000 $6,991 $625,631
Variable rate 7,336,484        7,336,484
Total premium finance receivables - life insurance$7,407,691 $543,433 $4,000 $6,991 $7,962,115
Consumer and other         
Fixed rate$33,887 $5,452 $9 $455 $39,803
Variable rate 47,553        47,553
Total consumer and other$81,440 $5,452 $9 $455 $87,356
          
Total per category         
Fixed rate$8,156,332 $6,261,233 $2,219,645 $1,140,623 $17,777,833
Variable rate 24,981,638  400,843  1,515,217    26,897,698
Total loans, net of unearned income$33,137,970 $6,662,076 $3,734,862 $1,140,623 $44,675,531
          
Variable Rate Loan Pricing by Index:         
SOFR tenors        $15,744,528
One- year CMT         6,176,495
Prime         3,474,480
Fed Funds         997,252
Ameribor tenors         241,682
Other U.S. Treasury tenors         124,349
Other         138,912
Total variable rate        $26,897,698

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

Graphs available at the following link: http://ml.globenewswire.com/Resource/Download/b3dd9b46-22f1-4593-9230-4325cca825e0

Source: Bloomberg

As noted in the table on the previous page, the majority of the Company’s portfolio is tied to SOFR and CMT indices which, as shown in the table above, do not mirror the same changes as the Prime rate which has historically moved when the Federal Reserve raises or lowers interest rates. Specifically, the Company has variable rate loans of $12.5 billion tied to one-month SOFR and $6.2 billion tied to one-year CMT. The above chart shows:

  Basis Point (bp) Change in
  1-month
SOFR
 One- year CMT Prime 
Second Quarter 2024 1 bps6 bps0bps
First Quarter 2024 (2) 24  0 
Fourth Quarter 2023 3  (67) 0 
Third Quarter 2023 18  6  25 
Second Quarter 2023 34  76  25 


TABLE 10
: ALLOWANCE FOR CREDIT LOSSES

  Three Months EndedSix Months Ended
  Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,Jun 30, Jun 30,
(Dollars in thousands)  2024   2024   2023   2023   2023  2024   2023 
Allowance for credit losses at beginning of period $427,504  $427,612  $399,531  $387,786  $376,261 $427,612  $357,936 
Cumulative effect adjustment from the adoption of ASU 2022-02                   741 
Provision for credit losses  40,061   21,673   42,908   19,923   28,514  61,734   51,559 
Other adjustments  (19)  (31)  62   (60)  41  (50)  45 
Charge-offs:             
Commercial  9,584   11,215   5,114   2,427   5,629  20,799   8,172 
Commercial real estate  15,526   5,469   5,386   1,713   8,124  20,995   8,129 
Home equity     74      227