Wintrust Financial Corporation Reports Record First Quarter 2021 Net Income of $153.1 million

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·38 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

ROSEMONT, Ill., April 19, 2021 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust”, “the Company”, "we" or "our") (Nasdaq: WTFC) announced record net income of $153.1 million or $2.54 per diluted common share for the first quarter of 2021, an increase in diluted earnings per common share of 56% compared to the fourth quarter of 2020 and an increase of 144% compared to the first quarter of 2020.

Highlights of the First Quarter of 2021:
Comparative information to the fourth quarter of 2020

  • Total assets increased by $601 million.

  • Total loans, excluding Paycheck Protection Program ("PPP") loans, increased by $515 million.

    • Originated $1.3 billion of PPP loans in the first quarter of 2021 which generated fees of $51.2 million, net of $1.8 million of deferred costs, to be recognized over the estimated life of the loans.

    • PPP loans originated in 2020 declined by $667 million in the first quarter of 2021 primarily as a result of processing forgiveness payments. As of April 16, 2021, approximately 42% of PPP loan balances originated in 2020 have been forgiven, approximately 40% of balances are in the forgiveness review or submission process, and approximately 18% of balances have yet to apply for forgiveness.

  • Total deposits increased by $780 million.

  • Total investment securities increased by $1.0 billion as the Company deployed a portion of its excess liquidity.

  • Net interest income increased by $2.5 million primarily due to earning asset growth and increased PPP loan fee accretion, despite two less days in the first quarter of 2021. Each day has an approximately $3 million impact on net interest income.

    • The Company recognized $19.2 million of PPP loan fee accretion in the first quarter of 2021 as compared to $16.8 million in the fourth quarter of 2020. As of March 31, 2021, the Company had approximately $64.6 million of net PPP loan fees that have yet to be recognized in income.

  • The loans to deposits ratio ended the first quarter of 2021 at 87.6% as compared to 86.5% as of December 31, 2020. Excluding PPP loans, the loans to deposits ratio ended the first quarter of 2021 at 78.9%.

  • Mortgage banking revenue increased by $26.7 million to $113.5 million for the first quarter of 2021 as compared to $86.8 million in the fourth quarter of 2020.

    • Recorded an increase in the value of mortgage servicing rights related to changes in fair value model assumptions of $18.0 million in the first quarter of 2021 as compared to a decrease of $5.2 million in the fourth quarter of 2020.

  • Recorded a negative provision for credit losses of $45.3 million in the first quarter of 2021 as compared to $1.2 million of expense in the fourth quarter of 2020.

  • Recorded net charge-offs of $13.3 million in the first quarter of 2021 as compared to net charge-offs of $10.3 million in the fourth quarter of 2020. Net charge-offs as a percentage of average total loans totaled 17 basis points in the first quarter of 2021 on an annualized basis compared to 13 basis points on an annualized basis in the fourth quarter of 2020.

  • The allowance for credit losses on our core loan portfolio is approximately 1.62% of the outstanding balance as of March 31, 2021, down from 2.00% as of December 31, 2020. See Table 11 for more information.

  • Non-performing loans declined significantly and totaled $99.1 million, or 0.30% of total loans, as of March 31, 2021 as compared to $127.5 million, or 0.40% of total loans, as of December 31, 2020.

  • The outstanding balance of COVID-19 related modified loans totaled approximately $254 million or 0.8% of total loans, excluding PPP loans, as of March 31, 2021 as compared to $345 million or 1.2% as of December 31, 2020.

  • Tangible book value per common share (non-GAAP) increased to $55.42 as compared to $53.23 as of December 31, 2020.

Other items of note from the first quarter of 2021

  • The following items had a $5.8 million unfavorable pre-tax income impact on the first quarter of 2021:

    • Recognized $3.8 million of expense related to impairment of certain capitalized software costs based on an evaluation of remaining useful life.

    • Recorded an impairment charge of $1.4 million in occupancy expense as part of an ongoing effort to optimize our branch footprint.

    • Recorded severance expense of $626,000.

Edward J. Wehmer, Founder and Chief Executive Officer, commented, "Wintrust reported record net income of $153.1 million for the first quarter of 2021, up from $101.2 million in the fourth quarter of 2020. Pre-tax income, excluding provision for credit losses (non-GAAP) increased by 19% to $161.5 million for the first quarter of 2021 as compared to $135.9 million in the fourth quarter of 2020. The first quarter of 2021 was characterized by strong loan growth, increased net interest income, record mortgage banking revenue, a release of reserves as our credit quality and macroeconomic forecasts improved and a continued focus to increase franchise value in our market area."

Mr. Wehmer continued, "The Company experienced strong loan growth in the first quarter of 2021, including growth in its commercial, commercial real estate, residential real estate loans for investment and life insurance premium finance receivable portfolios. The loan growth occurred in the latter part of the quarter as total period end loans, excluding PPP loans, were $523 million higher than average total loans, excluding PPP loans, in the first quarter of 2021. Our loan pipelines remain strong and we expect to leverage our various core and niche portfolios to continue to grow loans. Total deposits increased by $780 million as compared to the fourth quarter of 2020 primarily due to an increase in non-interest bearing deposits related to PPP loan origination. We continue to emphasize growing our franchise, including gathering low cost deposits, which we believe will drive value in the long term. Our loans to deposits ratio ended the quarter at 87.6% and we believe that we have sufficient liquidity to meet customer loan demand."

Mr. Wehmer commented, "Net interest income increased in the first quarter of 2021 primarily due to earning asset growth and increased PPP loan fee accretion. Net interest margin was unchanged as the rate on interest-bearing liabilities declined seven basis points in the first quarter of 2021 as compared to the fourth quarter of 2020 effectively offsetting a six basis point decline in the yield on total earning assets. PPP loan fee accretion increased as the Company recognized $19.2 million of PPP loan fee accretion in the first quarter of 2021 as compared to $16.8 million in the fourth quarter of 2020. Additionally, we deployed a portion of excess liquidity during the first quarter of 2021 to purchase investment securities increasing our period end total securities by $1.0 billion as compared to December 31, 2020. The majority of the security purchases were in the latter part of the quarter after long term interest rates had increased. As a result, period end investment securities were $743 million higher than average investment securities in the first quarter of 2021 which is expected to favorably impact net interest margin in future quarters. We continue to maintain excess liquidity and believe that deploying such liquidity could potentially increase our net interest margin."

Mr. Wehmer noted, “Our mortgage banking business reported record mortgage banking revenue of $113.5 million in the first quarter of 2021. Loan volumes originated for sale in the first quarter of 2021 were $2.2 billion, down slightly from $2.4 billion in the fourth quarter of 2020. The Company allocated a greater portion of its mortgage originations for investment to benefit future quarters. Additionally, the Company recorded an $18.0 million increase in the value of mortgage servicing rights related to changes in fair value model assumptions. The strong quarter of mortgage performance contributed to reporting a 0.90% net overhead ratio for the first quarter of 2021. We believe the second quarter of 2021 will provide another strong quarter for mortgage banking production as an influx in seasonal purchase demand is expected to help offset an expected decline in refinance activity."

Commenting on credit quality, Mr. Wehmer stated, "The Company recorded a negative provision for credit losses of $45.3 million related to both improving credit quality and macroeconomic forecasts. The level of non-performing loans decreased by $28.5 million primarily due to non-performing loan pay-offs. Additionally, net charge-offs remained relatively low totaling $13.3 million in the first quarter of 2021 as compared to $10.3 million in the fourth quarter of 2020. The allowance for credit losses on our core loan portfolio as of March 31, 2021 is approximately 1.62% of the outstanding balance. We believe that the Company’s reserves remain appropriate and we remain diligent in our review of credit."

Mr. Wehmer continued, "We remain committed to supporting our community, including the well-being and safety of our customers and employees. We have actively participated in the latest rounds of PPP approved in 2021 and as of April 16, 2021 have processed over 7,900 applications aggregating in excess of $1.3 billion of loans. We are carefully monitoring the COVID-19 pandemic including its potential impact on the economy, our customers and our business. We remain focused on navigating the current environment by actively monitoring and managing our credit portfolio."

Mr. Wehmer concluded, "Our first quarter of 2021 results continued to demonstrate the multi-faceted nature of our business model which we believe uniquely positions us to be successful. While Wintrust and the banking industry as a whole have experienced significant net interest margin compression, we have been able to compensate for that with outstanding mortgage banking results. Additionally, we leverage a differentiated, diversified loan portfolio to outperform peers with respect to loan growth. We are focused on taking advantage of market opportunities to prudently deploy excess liquidity into earning assets including core and niche loans and investment securities while maintaining an interest rate sensitive asset portfolio. We remain diligent in our evaluation of acquisition targets and will be prudent in our decision-making, always seeking to minimize dilution. Finally, we evaluate our operating expense base on an ongoing basis to enhance future profitability."

The graphs below illustrate certain financial highlights of the first quarter of 2021 as well as historical financial performance. See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 17 for additional information with respect to non-GAAP financial measures/ratios, including the reconciliations to the corresponding GAAP financial measures/ratios.

Graphs available at the following link: http://ml.globenewswire.com/Resource/Download/4e11acd7-e400-475a-8133-4d0d52f51413

SUMMARY OF RESULTS:

BALANCE SHEET

Total asset growth of $601 million in the first quarter of 2021 was primarily comprised of a $1.1 billion increase in loans and a $1.0 billion increase in investment securities, partially offset by a $1.5 billion decrease in interest-bearing deposits with banks. Total investment securities increased by $1.0 billion as the Company deployed a portion of its excess liquidity as market returns improved due to the change in long-term interest rates. Total loans, excluding PPP loans, increased by $515 million primarily due to growth in the commercial, commercial real estate, residential real estate loans for investment and life insurance premium finance receivable portfolios. The Company believes that the $3.3 billion of interest-bearing deposits with banks held as of March 31, 2021 provides sufficient liquidity to operate its business plan.

Total liabilities increased $465 million in the first quarter of 2021 resulting primarily from a $780 million increase in total deposits, partially offset by a $200 million decrease in trade date securities payable. The increase in deposits was primarily due to a $549 million increase in non-interest-bearing deposits primarily related to PPP loans originated in 2021. The Company's loans to deposits ratio ended the quarter at 87.6%. Management believes in substantially funding the Company's balance sheet with core deposits and utilizes brokered or wholesale funding sources as appropriate to manage its liquidity position as well as for interest rate risk management purposes.

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

NET INTEREST INCOME

For the first quarter of 2021, net interest income totaled $261.9 million, an increase of $2.5 million as compared to the fourth quarter of 2020 and an increase of $452,000 as compared to the first quarter of 2020. The $2.5 million increase in net interest income in the first quarter of 2021 compared to the fourth quarter of 2020 was primarily due to earning asset growth and increased PPP loan fee accretion, despite two less days in the first quarter of 2021.

Net interest margin was 2.53% (2.54% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2021 unchanged from 2.53% (2.54% on a fully taxable-equivalent basis, non-GAAP) during the fourth quarter of 2020 and down from 3.12% (3.14% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2020. The net interest margin was unchanged from the prior quarter due to the six basis point decline in the yield on earning assets and one basis point decrease in the net free funds contribution being offset by a seven basis point decrease in the rate paid on interest-bearing liabilities. The six basis point decline in the yield on earning assets in the first quarter of 2021 as compared to the fourth quarter of 2020 was primarily due to an eight basis point decline in yield earned on loans partially offset by a three basis point increase in yield on liquidity management assets. The decrease in the rate paid on interest-bearing liabilities in the first quarter of 2021 as compared to the prior quarter is primarily due to a six basis point decrease in the rate paid on interest-bearing deposits primarily due to lower repricing of time deposits.

For more information regarding net interest income, see Tables 4 through 7 in this report.

ASSET QUALITY

The allowance for credit losses totaled $321.3 million as of March 31, 2021, a decrease of $58.7 million as compared to $380.0 million as of December 31, 2020. The allowance for credit losses decreased primarily due to improvements in the macroeconomic forecast in addition to improvement in portfolio characteristics throughout the quarter. Notably, there was a decrease in the allowance for credit losses in the Commercial Real Estate portfolio primarily driven by improvement in the Commercial Real Estate Price Index and Baa Corporate Credit Spreads forecasts. Other key drivers of allowance for credit losses changes include, but are not limited to, decreases in COVID-19 related loan modifications and loan risk rating migration.

A negative provision for credit losses totaling $45.3 million was recorded for the first quarter of 2021 compared to $1.2 million of expense for the fourth quarter of 2020 and $53.0 million of expense for the first quarter of 2020. For more information regarding the provision for credit losses, see Table 10 in this report.

Management believes the allowance for credit losses is appropriate to account for expected credit losses. The Current Expected Credit Losses ("CECL") standard requires the Company to estimate expected credit losses over the life of the Company’s financial assets at a certain point in time. There can be no assurances, however, that future losses will not significantly exceed the amounts provided for, thereby affecting future results of operations. A summary of the allowance for credit losses calculated for the loan components in each portfolio as of March 31, 2021 and December 31, 2020 is shown on Table 11 of this report.

Net charge-offs totaled $13.3 million in the first quarter of 2021, a $3.0 million increase from $10.3 million in the fourth quarter of 2020 and a $8.0 million increase from $5.3 million in the first quarter of 2020. Net charge-offs as a percentage of average total loans totaled 17 basis points in the first quarter of 2021 on an annualized basis compared to 13 basis points on an annualized basis in the fourth quarter of 2020 and eight basis points on an annualized basis in the first quarter of 2020. For more information regarding net charge-offs, see Table 9 in this report.

As of March 31, 2021, $28.0 million of all loans, or 0.1%, were 60 to 89 days past due and $151.7 million, or 0.5%, were 30 to 59 days (or one payment) past due. As of December 31, 2020, $41.6 million of all loans, or 0.1%, were 60 to 89 days past due and $139.1 million, or 0.4%, were 30 to 59 days (or one payment) past due. Many of the commercial and commercial real-estate loans shown as 60 to 89 days and 30 to 59 days past due are included on the Company’s internal problem loan reporting system. Loans on this system are closely monitored by management on a monthly basis.

The Company’s home equity and residential real estate loan portfolios continue to exhibit low delinquency rates as of March 31, 2021. Home equity loans at March 31, 2021 that are current with regard to the contractual terms of the loan agreement represent 98.3% of the total home equity portfolio. Residential real estate loans at March 31, 2021 that are current with regards to the contractual terms of the loan agreements comprised 97.4% of total residential real estate loans outstanding. For more information regarding past due loans, see Table 12 in this report.

The outstanding balance of COVID-19 related modified loans totaled approximately $254 million or 0.8% of total loans, excluding PPP loans as of March 31, 2021 as compared to $345 million or 1.2% as of December 31, 2020. The most significant proportion of outstanding modifications changed terms to interest-only payments.

The ratio of non-performing assets to total assets was 0.25% as of March 31, 2021, compared to 0.32% at December 31, 2020, and 0.49% at March 31, 2020. Non-performing assets totaled $114.9 million at March 31, 2021, compared to $144.1 million at December 31, 2020 and $190.4 million at March 31, 2020. Non-performing loans totaled $99.1 million, or 0.30% of total loans, at March 31, 2021 compared to $127.5 million, or 0.40% of total loans, at December 31, 2020 and $179.4 million, or 0.65% of total loans, at March 31, 2020. The decrease in non-performing loans as of March 31, 2021 as compared to December 31, 2020 is primarily due to payments throughout the quarter. A significant portion of these payments were attributed to refinance activity with some payments resulting from the sale of underlying collateral. Reductions in non-performing loans were also accomplished through note sales and movement to other real estate owned ("OREO"). OREO totaled $15.8 million at March 31, 2021, a decrease of $745,000 compared to $16.6 million at December 31, 2020 and an increase of $4.8 million compared to $11.0 million at March 31, 2020. Management is pursuing the resolution of all non-performing assets. At this time, management believes OREO is appropriately valued at the lower of carrying value or fair value less estimated costs to sell. For more information regarding non-performing assets, see Table 13 in this report.

NON-INTEREST INCOME

Wealth management revenue increased by $2.5 million during the first quarter of 2021 as compared to the fourth quarter of 2020 primarily due to increased trust and asset management fees and brokerage commissions. 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 $26.7 million in the first quarter of 2021 as compared to the fourth quarter of 2020, primarily due to an $18.0 million favorable mortgage servicing rights portfolio fair value adjustment as compared to a $5.2 million decrease recognized in the prior quarter related to changes in fair value model assumptions. Loans originated for sale were $2.2 billion in the first quarter of 2021, a decrease of $129.3 million as compared to the fourth quarter of 2020. The percentage of origination volume from refinancing activities was 73% in the first quarter of 2021 as compared to 65% in the fourth quarter of 2020. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market.

During the first quarter of 2021, the fair value of the mortgage servicing rights portfolio increased primarily due to the capitalization of $24.6 million of servicing rights and a fair value adjustment increase of $18.0 million partially offset by a reduction in value of $10.2 million due to payoffs and paydowns of the existing portfolio. No economic hedges were outstanding relative to the mortgage servicing rights portfolio during the fourth quarter of 2020 or first quarter of 2021.

Operating lease income increased by $2.3 million in the first quarter of 2021 as compared to the fourth quarter of 2020. The increase is primarily due to a $1.5 million gain recognized on sale of lease assets in the first quarter of 2021.

Other non-interest income decreased by $4.0 million in the first quarter of 2021 as compared to the fourth quarter of 2020 primarily due to decreased interest rate swap fees and bank owned life insurance ("BOLI") revenue.

For more information regarding non-interest income, see Tables 14 and 15 in this report.

NON-INTEREST EXPENSE

Salaries and employee benefits expense increased by $9.7 million in the first quarter of 2021 as compared to the fourth quarter of 2020. The $9.7 million increase is comprised of an increase of $9.0 million in commissions and incentive compensation and an increase of $3.2 million in employee benefits expense, partially offset by a decrease of $2.5 million in salaries expense. The increase in commissions and incentive compensation is primarily due to higher expenses associated with the Company's long term incentive program and higher commissions related to its mortgage and wealth management businesses. The increase in employee benefits is primarily related to higher employee payroll taxes.

Advertising and marketing expense totaled $8.5 million in the first quarter of 2021, a decrease of $1.3 million as compared to the fourth quarter of 2020. The decrease in the first quarter relates primarily to decreased digital advertising campaigns and printing costs. Marketing costs are incurred to promote the Company's brand, commercial banking capabilities and various products, to attract loans and deposits and to announce new branch openings as well as the expansion of the Company's non-bank businesses. The level of marketing expenditures depends on the timing of sponsorship programs utilized which are determined based on the market area, targeted audience, competition and various other factors.

Miscellaneous expense in the first quarter of 2021 decreased by $5.0 million as compared to the fourth quarter of 2020. The first quarter of 2021 included a $937,000 reversal of contingent consideration expense related to the previous acquisition of mortgage operations as compared to $6.6 million of expense in the fourth quarter of 2020. The liability for contingent consideration expense related to the previous acquisition of mortgage operations is based upon forward looking mortgage origination volumes and the estimated profitability of that operation. Should those assumptions change going forward, the liability may need to be increased or decreased. The contractual period covering contingent consideration ends in January 2023 and the final two years of the contract contemplate a lower ratio of contingent consideration relative to financial performance. As a result, the Company does not expect to have material adjustments to the contingent consideration liability in future periods. The Company also recognized $3.8 million of expense related to impairment of certain capitalized software costs based on an evaluation of remaining useful life. Miscellaneous expense also includes ATM expenses, correspondent bank charges, directors fees, telephone, travel and entertainment, corporate insurance, dues and subscriptions, problem loan expenses and lending origination costs that are not deferred.

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

INCOME TAXES

The Company recorded income tax expense of $53.7 million in the first quarter of 2021 compared to $33.5 million in the fourth quarter of 2020 and $24.3 million in the first quarter of 2020. The effective tax rates were 25.97% in the first quarter of 2021 compared to 24.87% in the fourth quarter of 2020 and 27.87% in the first quarter of 2020.

BUSINESS UNIT SUMMARY

Community Banking

Through its community banking unit, the Company provides banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas the Company services. In the first quarter of 2021, this unit expanded its loan portfolio and its deposit portfolio. In addition, the segment's net interest margin remained relatively stable in the first quarter of 2021 as compared to the fourth quarter of 2020.

Mortgage banking revenue was $113.5 million for the first quarter of 2021, an increase of $26.7 million as compared to the fourth quarter of 2020 primarily due to an $18.0 million favorable mortgage servicing rights portfolio fair value adjustment as compared to a $5.2 million decrease recognized in the prior quarter related to changes in fair value model assumptions. Service charges on deposit accounts totaled $12.0 million in the first quarter of 2021, an increase of $195,000 as compared to the fourth quarter of 2020 primarily due to higher account analysis fees. The Company's gross commercial and commercial real estate loan pipelines remained strong as of March 31, 2021. Before the impact of scheduled payments and prepayments, gross commercial and commercial real estate loan pipelines were estimated to be approximately $1.3 billion to $1.5 billion at March 31, 2021. When adjusted for the probability of closing, the pipelines were estimated to be approximately $800 million to $900 million at March 31, 2021.

Specialty Finance

Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries, accounts receivable financing and value-added, out-sourced administrative services and other services. Originations within the insurance premium financing receivables portfolio were $2.8 billion during the first quarter of 2021 and average balances increased by $263.7 million as compared to the fourth quarter of 2020. The increase in average balances was more than offset by margin compression in this portfolio resulting in a $5.0 million decrease in interest income attributed to the lower market rates of interest associated with the insurance premium finance receivables portfolio. The Company's leasing business grew during the first quarter of 2021, with its portfolio of assets, including capital leases, loans and equipment on operating leases, increasing by $106.6 million to $2.2 billion at the end of the first quarter of 2021. Revenues from the Company's out-sourced administrative services business were $1.3 million in the first quarter of 2021, essentially unchanged from the fourth quarter of 2020.

Wealth Management

Through four separate subsidiaries within its wealth management unit, the Company offers a full range of wealth management services, including trust and investment services, tax-deferred like-kind exchange services, asset management, securities brokerage services and 401(k) and retirement plan services. Wealth management revenue totaled $29.3 million in the first quarter of 2021, an increase of $2.5 million compared to the fourth quarter of 2020. Increases in asset management fees were primarily due to favorable equity market performance during the first quarter of 2021. At March 31, 2021, the Company’s wealth management subsidiaries had approximately $32.2 billion of assets under administration, which included $4.2 billion of assets owned by the Company and its subsidiary banks, representing a $2.1 billion increase from the $30.1 billion of assets under administration at December 31, 2020.

ITEMS IMPACTING COMPARATIVE FINANCIAL RESULTS

Paycheck Protection Program

On March 27, 2020, the President of the United States signed the CARES Act, which authorized the Small Business Administration ("SBA") to guarantee loans under the PPP for small businesses who met the necessary eligibility requirements in order to keep their workers on the payroll. The Company began accepting applications on April 3, 2020. From such date through March 31, 2021, the Company secured authorization from the SBA for and funded over 19,400 PPP loans with a carrying balance of approximately $4.8 billion. As of March 31, 2021, the carrying balance of such loans was reduced to approximately $3.3 billion primarily resulting from forgiveness by the SBA.

WINTRUST FINANCIAL CORPORATION
Key Operating Measures

Wintrust’s key operating measures and growth rates for the first quarter of 2021, as compared to the fourth quarter of 2020 (sequential quarter) and first quarter of 2020 (linked quarter), are shown in the table below:

% or(1)
basis point (bp)
change from
4th Quarter
2020

% or
basis point (bp)
change from
1st Quarter
2020

Three Months Ended

(Dollars in thousands, except per share data)

Mar 31, 2021

Dec 31, 2020

Mar 31, 2020

Net income

$

153,148

$

101,204

$

62,812

51

%

144

%

Pre-tax income, excluding provision for credit losses (non-GAAP) (2)

161,512

135,891

140,044

19

15

Net income per common share – diluted

2.54

1.63

1.04

56

144

Net revenue (3)

448,401

417,758

374,685

7

20

Net interest income

261,895

259,397

261,443

1

Net interest margin

2.53

%

2.53

%

3.12

%

bp

(59

)

bps

Net interest margin - fully taxable equivalent (non-GAAP) (2)

2.54

2.54

3.14

(60

)

Net overhead ratio (4)

0.90

1.12

1.33

(22

)

(43

)

Return on average assets

1.38

0.92

0.69

46

69

Return on average common equity

15.80

10.30

6.82

550

898

Return on average tangible common equity (non-GAAP) (2)

19.49

12.95

8.73

654

1,076

At end of period

Total assets

$

45,682,202

$

45,080,768

$

38,799,847

5

%

18

%

Total loans (5)

33,171,233

32,079,073

27,807,321

14

19

Total deposits

37,872,652

37,092,651

31,461,660

9

20

Total shareholders’ equity

4,252,511

4,115,995

3,700,393

13

15

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

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


WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights

Three Months Ended

(Dollars in thousands, except per share data)

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Jun 30,
2020

Mar 31,
2020

Selected Financial Condition Data (at end of period):

Total assets

$

45,682,202

$

45,080,768

$

43,731,718

$

43,540,017

$

38,799,847

Total loans (1)

33,171,233

32,079,073

32,135,555

31,402,903

27,807,321

Total deposits

37,872,652

37,092,651

35,844,422

35,651,874

31,461,660

Junior subordinated debentures

253,566

253,566

253,566

253,566

253,566

Total shareholders’ equity

4,252,511

4,115,995

4,074,089

3,990,218

3,700,393

Selected Statements of Income Data:

Net interest income

$

261,895

$

259,397

$

255,936

$

263,131

$

261,443

Net revenue (2)

448,401

417,758

426,529

425,124

374,685

Net income

153,148

101,204

107,315

21,659

62,812

Pre-tax income, excluding provision for credit losses (non-GAAP) (3)

161,512

135,891

162,310

165,756

140,044

Net income per common share – Basic

2.57

1.64

1.68

0.34

1.05

Net income per common share – Diluted

2.54

1.63

1.67

0.34

1.04

Selected Financial Ratios and Other Data:

Performance Ratios:

Net interest margin

2.53

%

2.53

%

2.56

%

2.73

%

3.12

%

Net interest margin - fully taxable equivalent (non-GAAP) (3)

2.54

2.54

2.57

2.74

3.14

Non-interest income to average assets

1.68

1.44

1.58

1.55

1.24

Non-interest expense to average assets

2.59

2.56

2.45

2.48

2.58

Net overhead ratio (4)

0.90

1.12

0.87

0.93

1.33

Return on average assets

1.38

0.92

0.99

0.21

0.69

Return on average common equity

15.80

10.30

10.66

2.17

6.82

Return on average tangible common equity (non-GAAP) (3)

19.49

12.95

13.43

2.95

8.73

Average total assets

$

44,988,733

$

43,810,005

$

42,962,844

$

42,042,729

$

36,625,490

Average total shareholders’ equity

4,164,890

4,050,286

4,034,902

3,908,846

3,710,169

Average loans to average deposits ratio

87.1

%

87.9

%

89.6

%

87.8

%

90.1

%

Period-end loans to deposits ratio

87.6

86.5

89.7

88.1

88.4

Common Share Data at end of period:

Market price per common share

$

75.80

$

61.09

$

40.05

$

43.62

$

32.86

Book value per common share

67.34

65.24

63.57

62.14

62.13

Tangible book value per common share (non-GAAP) (3)

55.42

53.23

51.70

50.23

50.18

Common shares outstanding

57,023,273

56,769,625

57,601,991

57,573,672

57,545,352

Other Data at end of period:

Tier 1 leverage ratio (5)

8.2

%

8.1

%

8.2

%

8.1

%

8.5

%

Risk-based capital ratios:

Tier 1 capital ratio (5)

10.1

10.0

10.2

10.1

9.3

Common equity tier 1 capital ratio(5)

9.0

8.8

9.0

8.8

8.9

Total capital ratio (5)

12.6

12.6

12.9

12.8

11.9

Allowance for credit losses (6)

$

321,308

$

379,969

$

388,971

$

373,174

$

253,482

Allowance for loan and unfunded lending-related commitment losses to total loans

0.97

%

1.18

%

1.21

%

1.19

%

0.91

%

Number of:

Bank subsidiaries

15

15

15

15

15

Banking offices

182

181

182

186

187

(1) Excludes mortgage loans held-for-sale.
(2) Net revenue is net interest income and non-interest income.
(3) See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 17 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 total average assets. A lower ratio indicates a higher degree of efficiency.
(5) Capital ratios for current quarter-end are estimated.
(6) The allowance for credit losses includes the allowance for loan losses, the allowance for unfunded lending-related commitments and the allowance for held-to-maturity securities losses.


WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Mar 31,

Dec 31,

Sep 30,

Jun 30,

Mar 31,

(In thousands)

2021

2020

2020

2020

2020

Assets

Cash and due from banks

$

426,325

$

322,415

$

308,639

$

344,999

$

349,118

Federal funds sold and securities purchased under resale agreements

52

59

56

58

309

Interest-bearing deposits with banks

3,348,794

4,802,527

3,825,823

4,015,072

1,943,743

Available-for-sale securities, at fair value

2,430,749

3,055,839

2,946,459

3,194,961

3,570,959

Held-to-maturity securities, at amortized cost

2,166,419

579,138

560,267

728,465

865,376

Trading account securities

951

671

1,720

890

2,257

Equity securities with readily determinable fair value

90,338

90,862

54,398

52,460

47,310

Federal Home Loan Bank and Federal Reserve Bank stock

135,881

135,588

135,568

135,571

134,546

Brokerage customer receivables

19,056

17,436

16,818

14,623

16,293

Mortgage loans held-for-sale

1,260,193

1,272,090

959,671

833,163

656,934

Loans, net of unearned income

33,171,233

32,079,073

32,135,555

31,402,903

27,807,321

Allowance for loan losses

(277,709

)

(319,374

)

(325,959

)

(313,510

)

(216,050

)

Net loans

32,893,524

31,759,699

31,809,596

31,089,393

27,591,271

Premises and equipment, net

760,522

768,808

774,288

769,909

764,583

Lease investments, net

238,984

242,434

230,373

237,040

207,147

Accrued interest receivable and other assets

1,230,362

1,351,455

1,424,728

1,437,832

1,460,168

Trade date securities receivable

502,207

Goodwill

646,017

645,707

644,644

644,213

643,441

Other intangible assets

34,035

36,040

38,670

41,368

44,185

Total assets

$

45,682,202

$

45,080,768

$

43,731,718

$

43,540,017

$

38,799,847

Liabilities and Shareholders’ Equity

Deposits:

Non-interest-bearing

$

12,297,337

$

11,748,455

$

10,409,747

$

10,204,791

$

7,556,755

Interest-bearing

25,575,315

25,344,196

25,434,675

25,447,083

23,904,905

Total deposits

37,872,652

37,092,651

35,844,422

35,651,874

31,461,660

Federal Home Loan Bank advances

1,228,436

1,228,429

1,228,422

1,228,416

1,174,894

Other borrowings

516,877

518,928

507,395

508,535

487,503

Subordinated notes

436,595

436,506

436,385

436,298

436,179

Junior subordinated debentures

253,566

253,566

253,566

253,566

253,566

Trade date securities payable

995

200,907

Accrued interest payable and other liabilities

1,120,570

1,233,786

1,387,439

1,471,110

1,285,652

Total liabilities

41,429,691

40,964,773

39,657,629

39,549,799

35,099,454

Shareholders’ Equity:

Preferred stock

412,500

412,500

412,500

412,500

125,000

Common stock

58,727

58,473

58,323

58,294

58,266

Surplus

1,663,008

1,649,990

1,647,049

1,643,864

1,652,063

Treasury stock

(100,363

)

(100,363

)

(44,891

)

(44,891

)

(44,891

)

Retained earnings

2,208,535

2,080,013

2,001,949

1,921,048

1,917,558

Accumulated other comprehensive income (loss)

10,104

15,382

(841

)

(597

)

(7,603

)

Total shareholders’ equity

4,252,511

4,115,995

4,074,089

3,990,218

3,700,393

Total liabilities and shareholders’ equity

$

45,682,202

$

45,080,768

$

43,731,718

$

43,540,017

$

38,799,847


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

Three Months Ended

(In thousands, except per share data)

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Jun 30,
2020

Mar 31,
2020

Interest income

Interest and fees on loans

$

274,100

$

280,185

$

280,479

$

294,746

$

301,839

Mortgage loans held-for-sale

9,036

6,357

5,791

4,764

3,165

Interest-bearing deposits with banks

1,199

1,294

1,181

1,310

4,768

Federal funds sold and securities purchased under resale agreements

16

86

Investment securities

19,264

18,243

21,819

27,105

32,467

Trading account securities

2

11

6

13

7

Federal Home Loan Bank and Federal Reserve Bank stock

1,745

1,775

1,774

1,765

1,577

Brokerage customer receivables

123

116

106

97

158

Total interest income

305,469

307,981

311,156

329,816

344,067

Interest expense

Interest on deposits

27,944

32,602

39,084

50,057

67,435

Interest on Federal Home Loan Bank advances

4,840

4,952

4,947

4,934

3,360

Interest on other borrowings

2,609

2,779

3,012

3,436

3,546

Interest on subordinated notes

5,477

5,509

5,474

5,506

5,472

Interest on junior subordinated debentures

2,704

2,742

2,703

2,752

2,811

Total interest expense

43,574

48,584

55,220

66,685

82,624

Net interest income

261,895

259,397

255,936

263,131

261,443

Provision for credit losses

(45,347

)

1,180

25,026

135,053

52,961

Net interest income after provision for credit losses

307,242

258,217

230,910

128,078

208,482

Non-interest income

Wealth management

29,309

26,802

24,957

22,636

25,941

Mortgage banking

113,494

86,819

108,544

102,324

48,326

Service charges on deposit accounts

12,036

11,841

11,497

10,420

11,265

Gains (losses) on investment securities, net

1,154

1,214

411

808

(4,359

)

Fees from covered call options

2,292

Trading gains (losses), net

419

(102

)

183

(634

)

(451

)

Operating lease income, net

14,440

12,118

11,717

11,785

11,984

Other

15,654

19,669

13,284

14,654

18,244

Total non-interest income

186,506

158,361

170,593

161,993

113,242

Non-interest expense

Salaries and employee benefits

180,809

171,116

164,042

154,156

136,762

Equipment

20,912

20,565

17,251

15,846

14,834

Operating lease equipment depreciation

10,771

9,938

9,425

9,292

9,260

Occupancy, net

19,996

19,687

15,830

16,893

17,547

Data processing

6,048

5,728

5,689

10,406

8,373

Advertising and marketing

8,546

9,850

7,880

7,704

10,862

Professional fees

7,587

6,530

6,488

7,687

6,721

Amortization of other intangible assets

2,007

2,634

2,701

2,820

2,863

FDIC insurance

6,558

7,016

6,772

7,081

4,135

OREO expense, net

(251

)

(114

)

(168

)

237

(876

)

Other

23,906

28,917

28,309

27,246

24,160

Total non-interest expense

286,889

281,867

264,219

259,368

234,641

Income before taxes

206,859

134,711

137,284

30,703

87,083

Income tax expense

53,711

33,507

29,969

9,044

24,271

Net income

$

153,148

$

101,204

$

107,315

$

21,659

$

62,812

Preferred stock dividends

6,991

6,991

10,286

2,050

2,050

Net income applicable to common shares

$

146,157

$

94,213

$

97,029

$

19,609

$

60,762

Net income per common share - Basic

$

2.57

$

1.64

$

1.68

$

0.34

$

1.05

Net income per common share - Diluted

$

2.54

$

1.63

$

1.67

$

0.34

$

1.04

Cash dividends declared per common share

$

0.31

$

0.28

$

0.28

$

0.28

$

0.28

Weighted average common shares outstanding

56,904

57,309

57,597

57,567

57,620

Dilutive potential common shares

681

588

449

414

575

Average common shares and dilutive common shares

57,585

57,897

58,046

57,981

58,195


TABLE 1: LOAN PORTFOLIO MIX AND GROWTH RATES

% Growth From

(Dollars in thousands)

Mar 31,
2021

Dec 31,
2020

Sep 30,
2020

Jun 30,
2020

Mar 31,
2020

Dec 31,
2020 (1)

Mar 31,
2020

Balance:

Mortgage loans held-for-sale, excluding early buy-out exercised loans guaranteed by U.S. Government Agencies

$

890,749

$

927,307

$

862,924

$

814,667

$

642,386

(16

)

%

39

%

Mortgage loans held-for-sale, early buy-out exercised loans guaranteed by U.S. Government Agencies

369,444

344,783

96,747