Wintrust Financial Corporation Reports Record First Quarter 2023 Net Income

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

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

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

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

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

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

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

Commenting on credit quality, Mr. Wehmer stated, “Credit metrics remain strong as non-performing assets totaled $110 million and comprised only 0.21% of total assets as of March 31, 2023, essentially unchanged from levels as of December 31, 2022. Net charge-offs totaled $5.5 million or six basis points of average total loans on an annualized basis in the first quarter of 2023 as compared to $5.1 million or five basis points of average total loans on an annualized basis in the fourth quarter of 2022. The allowance for credit losses totaled $376.3 million as of March 31, 2023, an increase of $18.4 million as compared to $357.9 million as of December 31, 2022. The allowance for credit losses on our core loan portfolio as of March 31, 2023 is approximately 1.46% of the outstanding balance. We believe that the Company’s reserves remain appropriate and we remain diligent in our review of credit.”

Mr. Wehmer concluded, “Our first quarter of 2023 results continued to demonstrate the multi-faceted nature of our business model which we believe uniquely positions us to be successful. We remain focused on growing deposits to support future asset growth. We are closely watching our expenses, striving to grow without a commensurate increase in expense. We are opportunistically evaluating the acquisition market for both banks and business lines of various sizes and are excited about our recent wealth management acquisition that closed in early April 2023. Of course, we remain diligent in our consideration of acquisition targets and intend to be prudent in our decision making, always seeking to minimize tangible book value dilution.”

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

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

SUMMARY OF RESULTS:

BALANCE SHEET

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

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

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

NET INTEREST INCOME

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

Net interest margin was 3.81% (3.83% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2023 compared to 3.71% (3.73% on a fully taxable-equivalent basis, non-GAAP) during the fourth quarter of 2022. The net interest margin increase as compared to the fourth quarter of 2022 was due to a 61 basis point increase in yield on earning assets and a 17 basis point increase in the net free funds contribution. These improvements were partially offset by a 68 basis point increase in the rate paid on interest-bearing liabilities. The 61 basis point increase in the yield on earning assets in the first quarter of 2023 as compared to the fourth quarter of 2022 was primarily due to a 67 basis point expansion on loan yields and a higher liquidity management asset yield as the Company earned higher yields on interest-bearing deposits with banks. The 68 basis point increase in the rate paid on interest-bearing liabilities in the first quarter of 2023 as compared to the fourth quarter of 2022 is primarily due to a 67 basis point increase in the rate paid on interest-bearing deposits primarily related to the increasing rate environment.

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

ASSET QUALITY

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

Management believes the allowance for credit losses is appropriate to account for expected credit losses. The Current Expected Credit Losses (“CECL”) accounting standard requires the Company to estimate expected credit losses over the life of the Company’s financial assets as of the reporting date. There can be no assurances, however, that future losses will not significantly exceed the amounts provided for, thereby affecting future results of operations. A summary of the allowance for credit losses calculated for the loan components in each portfolio as of March 31, 2023, December 31, 2022, and September 30, 2022 is shown on Table 11 of this report.

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

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

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

NON-INTEREST INCOME

Wealth management revenue decreased $782,000 in the first quarter of 2023 as compared to the fourth quarter of 2022 primarily related to lower fees associated with our tax-deferred like-kind exchange business. Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors, the brokerage commissions, managed money fees and insurance product commissions at Wintrust Investments and fees from tax-deferred like-kind exchange services provided by the Chicago Deferred Exchange Company.

Mortgage banking revenue increased by $857,000 in the first quarter of 2023 as compared to the fourth quarter of 2022 primarily due to higher production margins. The Company recorded net negative fair value adjustments of $3.0 million in the first quarter of 2023 related to fair value changes in certain mortgage assets. This included a $6.0 million decrease in the value of mortgage servicing rights related to changes in fair value model assumptions net of economic hedges and a positive $2.4 million valuation related adjustment on the Company’s held-for-sale portfolio of early buy-out exercised loans guaranteed by U.S. government agencies which are held at fair value. In addition, in miscellaneous non-interest income, the Company recorded a positive $545,000 valuation related adjustment on the Company’s held-for-investment portfolio of early buy-out exercised loans guaranteed by U.S. government agencies which are held at fair value. The Company intends to monitor the relationship of these assets and will seek to minimize the earnings impact of fair value changes in future quarters.

Net gain on investment securities totaled $1.4 million in the first quarter of 2023 related to changes in the value of equity securities as compared to net losses of $6.7 million in the fourth quarter of 2022.

Fees from covered call options increased $2.4 million in the first quarter of 2023 as compared to the fourth quarter of 2022. The Company has typically written call options with terms of less than three months against certain U.S. Treasury and agency securities held in its portfolio for liquidity and other purposes. Management has entered into these transactions with the goal of economically hedging security positions and enhancing its overall return on its investment portfolio. These option transactions are designed to mitigate overall interest rate risk and do not qualify as hedges pursuant to accounting guidance.

For more information regarding non-interest income, see Table 14 in this report.

NON-INTEREST EXPENSE

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

Advertising and marketing expenses in the first quarter of 2023 totaled $11.9 million, which is a $2.3 million decrease as compared to the fourth quarter of 2022 primarily due to a decrease in radio, digital advertising, and sport sponsorships. Marketing costs are incurred to promote the Company’s brand, commercial banking capabilities and the Company’s various products, to attract loans and deposits and to announce new branch openings as well as the expansion of the Company’s non-bank businesses. The level of marketing expenditures depends on the timing of sponsorship programs utilized which are determined based on the market area, targeted audience, competition and various other factors. Generally, these expenses are elevated in the second and third quarters of each year.

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

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

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

INCOME TAXES

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

BUSINESS UNIT SUMMARY

Community Banking

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

Mortgage banking revenue was $18.3 million for the first quarter of 2023, an increase of $857,000 as compared to the fourth quarter of 2022, primarily due to higher production margins. Service charges on deposit accounts totaled $12.9 million in the first quarter of 2023, a decrease of $151,000 as compared to the fourth quarter of 2022, primarily due to a reduction in overdraft fees. The Company’s gross commercial and commercial real estate loan pipelines remained robust as of March 31, 2023 indicating momentum for expected continued loan growth in the second quarter of 2023.

Specialty Finance

Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries, accounts receivable financing and value-added, out-sourced administrative services and other services. Originations within the insurance premium financing receivables portfolio were $3.8 billion during the first quarter of 2023 and average balances decreased by $39.1 million as compared to the fourth quarter of 2022. The Company’s leasing portfolio balance increased in the first quarter of 2023, with its portfolio of assets, including capital leases, loans and equipment on operating leases, totaling $3.1 billion as of March 31, 2023 as compared to $3.0 billion as of December 31, 2022. Revenues from the Company’s out-sourced administrative services business were $1.6 million in the first quarter of 2023, a decrease of $121,000 from the fourth quarter of 2022.

Wealth Management

Through four separate subsidiaries within its wealth management unit, the Company offers a full range of wealth management services, including trust and investment services, tax-deferred like-kind exchange services, asset management, securities brokerage services and 401(k) and retirement plan services. Wealth management revenue totaled $29.9 million in the first quarter of 2023, a decrease of $782,000 compared to the fourth quarter of 2022. The decline in wealth management revenue in the first quarter of 2023 was primarily related to lower fees associated with our tax-deferred like-kind exchange business. At March 31, 2023, the Company’s wealth management subsidiaries had approximately $35.2 billion of assets under administration, which included $7.4 billion of assets owned by the Company and its subsidiary banks, representing an increase from the $34.4 billion of assets under administration at December 31, 2022.

ITEMS IMPACTING COMPARATIVE FINANCIAL RESULTS

Common Stock Offering
In June 2022, the Company sold through a public offering a total of 3,450,000 shares of its common stock. Net proceeds to the Company totaled approximately $285.7 million, net of estimated issuance costs.

WINTRUST FINANCIAL CORPORATION
Key Operating Measures

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

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

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

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

WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights

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

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

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION

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

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

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

TABLE 1: LOAN PORTFOLIO MIX AND GROWTH RATES

															% Growth From (1)
(Dollars in thousands)	Mar 31, 2023			Dec 31, 2022			Sep 30, 2022			Jun 30, 2022			Mar 31, 2022		Dec 31, 2022 (2)			Mar 31, 2022
Balance:
Mortgage loans held-for-sale, excluding early buy-out exercised loans guaranteed by U.S. government agencies	$	155,687		$	156,297		$	216,062		$	294,688		$	296,548	(2)%			(48)%
Mortgage loans held-for-sale, early buy-out exercised loans guaranteed by U.S. government agencies		146,806			143,638			160,098			218,544			309,997	9			(53	)
Total mortgage loans held-for-sale	$	302,493		$	299,935		$	376,160		$	513,232		$	606,545	3	%		(50)%
Core loans:
Commercial
Commercial and industrial	$	5,855,035		$	5,852,166		$	5,818,959		$	5,502,584		$	5,348,266	0	%		9	%
Asset-based lending		1,482,071			1,473,344			1,545,038			1,552,033			1,365,297	2			9
Municipal		655,301			668,235			608,234			535,586			533,357	(8	)		23
Leases		1,904,137			1,840,928			1,582,359			1,592,329			1,481,368	14			29
Commercial real estate
Residential construction		69,998			76,877			66,957			55,941			57,037	(36	)		23
Commercial construction		1,234,762			1,102,098			1,176,407			1,145,602			1,055,972	49			17
Land		292,293			307,955			282,147			304,775			283,397	(21	)		3
Office		1,392,040			1,337,176			1,269,729			1,321,745			1,273,705	17			9
Industrial		1,858,088			1,836,276			1,777,658			1,746,280			1,668,516	5			11
Retail		1,309,680			1,304,444			1,331,316			1,331,059			1,395,021	2			(6	)
Multi-family		2,635,411			2,560,709			2,305,433			2,171,583			2,175,875	12			21
Mixed use and other		1,446,806			1,425,412			1,368,537			1,330,220			1,325,551	6			9
Home equity		337,016			332,698			328,822			325,826			321,435	5			5
Residential real estate
Residential real estate loans for investment		2,309,393			2,207,595			2,086,795			1,965,051			1,749,889	19			32
Residential mortgage loans, early buy-out eligible loans guaranteed by U.S. government agencies		119,301			80,701			57,161			34,764			13,520	NM			NM
Residential mortgage loans, early buy-out exercised loans guaranteed by U.S. government agencies		76,851			84,087			91,503			79,092			36,576	(35	)		NM
Total core loans	$	22,978,183		$	22,490,701		$	21,697,055		$	20,994,470		$	20,084,782	9	%		14	%
Niche loans:
Commercial
Franchise	$	1,131,913		$	1,169,623		$	1,118,478		$	1,136,929		$	1,181,761	(13)%			(4)%
Mortgage warehouse lines of credit		235,684			237,392			297,374			398,085			261,847	(3	)		(10	)
Community Advantage - homeowners association		389,922			380,875			365,967			341,095			324,383	10			20
Insurance agency lending		905,727			897,678			879,183			906,375			833,720	4			9
Premium Finance receivables
U.S. property & casualty insurance		5,043,486			5,103,820			4,983,795			4,781,042			4,271,828	(5	)		18
Canada property & casualty insurance		695,394			745,639			729,545			760,405			665,580	(27	)		4
Life insurance		8,125,802			8,090,998			8,004,856			7,608,433			7,354,163	2			10
Consumer and other		42,165			50,836			47,702			44,180			48,519	(69	)		(13	)
Total niche loans	$	16,570,093		$	16,676,861		$	16,426,900		$	15,976,544		$	14,941,801	(3)%			11	%
Commercial PPP loans:
Originated in 2020	$	7,429		$	7,898		$	8,724		$	18,547		$	40,016	(24)%			(81)%
Originated in 2021		9,766			21,025			34,934			63,542			213,948	NM			(95	)
Total commercial PPP loans	$	17,195		$	28,923		$	43,658		$	82,089		$	253,964	NM			(93)%
Total loans, net of unearned income	$	39,565,471		$	39,196,485		$	38,167,613		$	37,053,103		$	35,280,547	4	%		12	%

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

TABLE 2: DEPOSIT PORTFOLIO MIX AND GROWTH RATES

																				% Growth From
(Dollars in thousands)	Mar 31, 2023				Dec 31, 2022				Sep 30, 2022				Jun 30, 2022				Mar 31, 2022			Dec 31, 2022 (1)			Mar 31, 2022
Balance:
Non-interest-bearing	$	11,236,083			$	12,668,160			$	13,529,277			$	13,855,844			$	13,748,918		(46)%			(18	)%
NOW and interest-bearing demand deposits		5,576,558				5,591,986				5,676,122				5,918,908				5,089,724		(1	)		10
Wealth management deposits (2)		1,809,933				2,463,833				2,988,195				3,182,407				2,542,995		(108	)		(29	)
Money market		13,552,277				12,886,795				12,538,489				12,273,350				13,012,460		21			4
Savings		5,192,108				4,556,635				3,988,790				3,686,596				4,089,230		57			27
Time certificates of deposit		5,351,252				4,735,135				4,076,318				3,676,221				3,735,995		53			43
Total deposits	$	42,718,211			$	42,902,544			$	42,797,191			$	42,593,326			$	42,219,322		(2)%			1	%
Mix:
Non-interest-bearing		26	%			30	%			32	%			33	%			32	%
NOW and interest-bearing demand deposits		13				13				13				13				12
Wealth management deposits (2)		4				5				7				7				6
Money market		32				30				29				29				31
Savings		12				11				9				9				10
Time certificates of deposit		13				11				10				9				9
Total deposits		100	%			100	%			100	%			100	%			100	%

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

TABLE 3: TIME CERTIFICATES OF DEPOSIT MATURITY/RE-PRICING ANALYSIS
As of March 31, 2023

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

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

TABLE 4: QUARTERLY AVERAGE BALANCES

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

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

TABLE 5: QUARTERLY NET INTEREST INCOME

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

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

TABLE 6: QUARTERLY NET INTEREST MARGIN

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

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

TABLE 7: INTEREST RATE SENSITIVITY

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

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

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

 

Ramp Scenario	+200 Basis Points			+100 Basis Points			-100 Basis Points		-200 Basis Points
Mar 31, 2023	3.0	%		1.7	%		(1.3)%		(3.4)%
Dec 31, 2022	5.6			3.0			(2.9)		(6.8)
Sep 30, 2022	6.5			3.6			(3.9)		(8.6)
Jun 30, 2022	10.2			5.3			(6.9)		(14.3)
Mar 31, 2022	11.2			5.8			(7.1)		(12.4)

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

TABLE 8: MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES

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

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

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

Source: Bloomberg

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

		Basis Point (bp) Change in
		1-month SOFR		1-year CMT		1-month LIBOR		Prime
First Quarter 2023		44	bps	(9)	bps	47	bps	50	bps
Fourth Quarter 2022		132		68		125		125
Third Quarter 2022		135		125		135		150
Second Quarter 2022		139		117		134		125
First Quarter 2022		25		124		35		25

TABLE 9: ALLOWANCE FOR CREDIT LOSSES

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

TABLE 10: ALLOWANCE AND PROVISION FOR CREDIT LOSSES BY COMPONENT

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

TABLE 11: ALLOWANCE BY LOAN PORTFOLIO

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

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

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

TABLE 12: LOAN PORTFOLIO AGING

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

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

TABLE 13: NON-PERFORMING ASSETS⁽¹⁾

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

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

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

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

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

Other Real Estate Owned

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

TABLE 14: NON-INTEREST INCOME

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

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

TABLE 15: NON-INTEREST EXPENSE

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

NM - Not meaningful.

TABLE 16: SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES/RATIOS

The accounting and reporting policies of Wintrust conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures and ratios are used by management to evaluate and measure the Company’s performance. These include taxable-equivalent net interest income (including its individual components), taxable-equivalent net interest margin (including its individual components), the taxable-equivalent efficiency ratio, tangible common equity ratio, tangible book value per common share, return on average tangible common equity, pre-tax income, excluding provision for credit losses, and pre-tax income, excluding provision for credit losses, adjusted for changes in fair value of MSRs, net of economic hedge and early buy-out loans guaranteed by U.S. government agencies. Management believes that these measures and ratios provide users of the Company’s financial information a more meaningful view of the performance of the Company’s interest-earning assets and interest-bearing liabilities and of the Company’s operating efficiency. Other financial holding companies may define or calculate these measures and ratios differently.

Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis using tax rates effective as of the end of the period. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a fully taxable-equivalent basis is also used in the calculation of the Company’s efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses), measures how much it costs to produce one dollar of revenue. Securities gains or losses are excluded from this calculation to better match revenue from daily operations to operational expenses. Management considers the tangible common equity ratio and tangible book value per common share as useful measurements of the Company’s equity. The Company references the return on average tangible common equity as a measurement of profitability. Management considers pre-tax income, excluding provision for credit losses, and pre-tax income, excluding provision for credit losses, adjusted for changes in fair value of MSRs, net of economic hedge and early buy-out loans guaranteed by U.S. government agencies, as useful measurements of the Company’s core net income.

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

 

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

WINTRUST SUBSIDIARIES AND LOCATIONS

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

In addition to the locations noted above, the banks also operate facilities in Illinois in Addison, Algonquin, Aurora, Bloomingdale, Bolingbrook, Buffalo Grove, Burbank, Cary, Clarendon Hills, Countryside, Crete, Darien, Deerfield, Des Plaines, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Evanston, Evergreen Park, Frankfort, Geneva, Glen Ellyn, Glencoe, Glenview, Grayslake, Gurnee, Hanover Park, Highland Park, Highwood, Hoffman Estates, Homer Glen, Itasca, Joliet, Lake Bluff, Lake Villa, Lansing, Lemont, Lindenhurst, Lombard, Lynwood, Markham, Maywood, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, Norridge, Northfield, Oak Lawn, Oak Park, Orland Park, Palatine, Park Ridge, Prospect Heights, Riverside, Rockford, Rolling Meadows, Round Lake Beach, Shorewood, Skokie, South Holland, Spring Grove, Steger, Stone Park, Vernon Hills, Wauconda, Waukegan, Western Springs, Willowbrook, Wilmette, Winnetka and Wood Dale, and in Wisconsin in Burlington, Clinton, Delafield, Delavan, Elm Grove, Genoa City, Kenosha, Lake Geneva, Madison, Menomonee Falls, Milwaukee, Pewaukee, Racine, Wales, Walworth, Whitefish Bay and Wind Lake, and in Dyer, Indiana and in Naples, Florida.

Additionally, the Company operates various non-bank business units:

• FIRST Insurance Funding and Wintrust Life Finance, each a division of Lake Forest Bank & Trust Company, N.A., serve commercial and life insurance loan customers, respectively, throughout the United States.
• First Insurance Funding of Canada serves commercial insurance loan customers throughout Canada.
• Tricom, Inc. of Milwaukee provides high-yielding, short-term accounts receivable financing and value-added out-sourced administrative services, such as data processing of payrolls, billing and cash management services, to temporary staffing service clients located throughout the United States.
• Wintrust Mortgage, a division of Barrington Bank & Trust Company, N.A., engages primarily in the origination and purchase of residential mortgages for sale into the secondary market through origination offices located throughout the United States. Loans are also originated nationwide through relationships with wholesale and correspondent offices.
• Wintrust Investments, LLC is a broker-dealer providing a full range of private client and brokerage services to clients and correspondent banks located primarily in the Midwest.
• Great Lakes Advisors LLC provides money management services and advisory services to individual accounts.
• The Chicago Trust Company, N.A., a trust subsidiary, allows Wintrust to service customers’ trust and investment needs at each banking location.
• Wintrust Asset Finance offers direct leasing opportunities.
• CDEC provides Qualified Intermediary services (as defined by U.S. Treasury regulations) for taxpayers seeking to structure tax-deferred like-kind exchanges under Internal Revenue Code Section 1031.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information can be identified through the use of words such as “intend,” “plan,” “project,” “expect,” “anticipate,” “believe,” “estimate,” “contemplate,” “possible,” “will,” “may,” “should,” “would” and “could.” Forward-looking statements and information are not historical facts, are premised on many factors and assumptions, and represent only management’s expectations, estimates and projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict, and which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company’s 2022 Annual Report on Form 10-K and in any of the Company’s subsequent SEC filings. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be deemed to include, among other things, statements relating to the Company’s future financial performance, the performance of its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory developments, securities that the Company may offer from time to time, the Company’s business and growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth and plans to form additional de novo banks or branch offices, and management’s long-term performance goals, as well as statements relating to the anticipated effects on the Company’s financial condition and results of operations from expected developments or events. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:

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

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

CONFERENCE CALL, WEBCAST AND REPLAY

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

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