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 Ended | Six 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 Ended | Six 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 | | $ | 235,570 | NM | | 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 | | $ | 338,728 | 82 | % | | 22 | % |
| | | | | | | | | | | | |
Core loans: | | | | | | | | | | | | |
Commercial | | | | | | | | | | | | |
Commercial and industrial | $ | 6,226,336 | | $ | 6,105,968 | | $ | 5,804,629 | | $ | 5,894,732 | | $ | 5,737,633 | 15 | % | | 9 | % |
Asset-based lending | | 1,465,867 | | | 1,355,255 | | | 1,433,250 | | | 1,396,591 | | | 1,465,848 | 5 | | | 0 | |
Municipal | | 747,357 | | | 721,526 | | | 677,143 | | | 676,915 | | | 653,117 | 21 | | | 14 | |
Leases | | 2,439,128 | | | 2,344,295 | | | 2,208,368 | | | 2,109,628 | | | 1,925,767 | 21 | | | 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 | | | 1,409,751 | 16 | | | 32 | |
Land | | 338,831 | | | 344,149 | | | 295,462 | | | 294,901 | | | 298,996 | 30 | | | 13 | |
Office | | 1,585,312 | | | 1,566,748 | | | 1,455,417 | | | 1,422,748 | | | 1,404,422 | 18 | | | 13 | |
Industrial | | 2,307,455 | | | 2,190,200 | | | 2,135,876 | | | 2,057,957 | | | 2,002,740 | 16 | | | 15 | |
Retail | | 1,365,753 | | | 1,366,415 | | | 1,337,517 | | | 1,341,451 | | | 1,304,083 | 4 | | | 5 | |
Multi-family | | 2,988,940 | | | 2,922,432 | | | 2,815,911 | | | 2,710,829 | | | 2,696,478 | 12 | | | 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 | | | 336,974 | 7 | | | 6 | |
Residential real estate | | | | | | | | | | | | |
Residential real estate loans for investment | | 2,933,157 | | | 2,746,916 | | | 2,619,083 | | | 2,538,630 | | | 2,455,392 | 24 | | | 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 | | $ | 23,386,727 | 14 | % | | 12 | % |
| | | | | | | | | | | | |
Niche loans: | | | | | | | | | | | | |
Commercial | | | | | | | | | | | | |
Franchise | $ | 1,150,460 | | $ | 1,122,302 | | $ | 1,092,532 | | $ | 1,074,162 | | $ | 1,091,164 | 5 | % | | 5 | % |
Mortgage warehouse lines of credit | | 593,519 | | | 403,245 | | | 230,211 | | | 245,450 | | | 381,043 | 95 | | | 56 | |
Community Advantage - homeowners association | | 491,722 | | | 475,832 | | | 452,734 | | | 424,054 | | | 405,042 | 7 | | | 21 | |
Insurance agency lending | | 1,030,119 | | | 964,022 | | | 921,653 | | | 890,197 | | | 925,520 | 14 | | | 11 | |
Premium Finance receivables | | | | | | | | | | | | |
U.S. property & casualty insurance | | 6,142,654 | | | 6,113,993 | | | 5,983,103 | | | 5,815,346 | | | 5,900,228 | 1 | | | 4 | |
Canada property & casualty insurance | | 958,099 | | | 826,026 | | | 920,426 | | | 907,401 | | | 862,470 | 32 | | | 11 | |
Life insurance | | 7,962,115 | | | 7,872,033 | | | 7,877,943 | | | 7,931,808 | | | 8,039,273 | 2 | | | (1 | ) |
Consumer and other | | 87,356 | | | 51,121 | | | 60,500 | | | 68,963 | | | 31,941 | 143 | | | 173 | |
Total niche loans | $ | 18,416,044 | | $ | 17,828,574 | | $ | 17,539,102 | | $ | 17,357,381 | | $ | 17,636,681 | 7 | % | | 4 | % |
| | | | | | | | | | | | |
Total loans, net of unearned income | $ | 44,675,531 | | $ | 43,230,706 | | $ | 42,131,831 | | $ | 41,446,032 | | $ | 41,023,408 | 7 | % | | 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, 2024 | 1.5 | % | | 1.0 | % | | 0.6 | % | | (0.0) | % |
Mar 31, 2024 | 1.9 | | | 1.4 | | | 1.5 | | | 1.6 | |
Dec 31, 2023 | 2.6 | | | 1.8 | | | 0.4 | | | (0.7 | ) |
Sep 30, 2023 | 3.3 | | | 1.9 | | | (2.0 | ) | | (5.2 | ) |
Jun 30, 2023 | 5.7 | | | 2.9 | | | (2.9 | ) | | (7.9 | ) |
Ramp Scenario | +200 Basis Points | | +100 Basis Points | | -100 Basis Points | | -200 Basis Points |
Jun 30, 2024 | 1.2 | % | | 1.0 | % | | 0.9 | % | | 1.0 | % |
Mar 31, 2024 | 0.8 | | | 0.6 | | | 1.3 | | | 2.0 | |
Dec 31, 2023 | 1.6 | | | 1.2 | | | (0.3 | ) | | (1.5 | ) |
Sep 30, 2023 | 1.7 | | | 1.2 | | | (0.5 | ) | | (2.4 | ) |
Jun 30, 2023 | 2.9 | | | 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, 2024 | One 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 | | bps | 6 | | bps | 0 | bps |
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 Ended | Six 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 |   |