Wintrust Financial Corporation Reports Second Quarter 2021 Net Income of $105.1 million and Year-To-Date Net Income of $258.3 million

ROSEMONT, Ill., July 19, 2021 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation ("Wintrust", "the Company", "we" or "our") (Nasdaq: WTFC) announced net income of $105.1 million or $1.70 per diluted common share for the second quarter of 2021, a decrease in diluted earnings per common share of 33% compared to the first quarter of 2021 and an increase of 400% compared to the second quarter of 2020. The Company recorded net income of $258.3 million or $4.24 per diluted common share for the first six months of 2021 compared to net income of $84.5 million or $1.38 per diluted common share for the same period of 2020.

Highlights of the Second Quarter of 2021:
Comparative information to the first quarter of 2021

  • Total loans, excluding Paycheck Protection Program ("PPP") loans, increased by $1.2 billion or 15%, on an annualized basis.
    • Core loans increased by $497 million and niche loans increased by $657 million primarily due to growth in the commercial insurance premium finance receivable portfolio. See Table 1 for more information.
  • PPP loans declined by $1.4 billion in the second quarter of 2021 primarily as a result of processing forgiveness payments on PPP loan balances originated in 2020. As of June 30, 2021, approximately 81% of PPP loan balances originated in 2020 have been forgiven, approximately 12% of balances are in the forgiveness review or submission process, and approximately 7% of balances have not applied for forgiveness.
  • Total assets increased by $1.1 billion.
  • Total deposits increased by $932 million, including a $499 million increase in non-interest bearing deposits.
  • Net interest income increased by $17.7 million primarily due to earning asset growth and increased PPP loan fee accretion.
    • In the second quarter of 2021, average loans and average investment securities increased by $642 million and $827 million, respectively, as compared to first quarter of 2021.
    • The Company recognized $25.2 million of PPP loan fee accretion in the second quarter of 2021 as compared to $19.2 million in the first quarter of 2021.
  • Net interest margin increased by nine basis points primarily due to increased PPP loan fee accretion and a seven basis point decline on the rate paid on interest bearing deposits.
  • Mortgage banking revenue decreased to $50.6 million for the second quarter of 2021 as compared to $113.5 million in the first quarter of 2021.
  • Recorded a negative provision for credit losses of $15.3 million in the second quarter of 2021 as compared to a negative provision for credit losses of $45.3 million in the first quarter of 2021.
  • Recorded net charge-offs of $1.9 million in the second quarter of 2021 as compared to net charge-offs of $13.3 million in the first quarter of 2021. Net charge-offs as a percentage of average total loans totaled two basis points in the second quarter of 2021 on an annualized basis as compared to 17 basis points on an annualized basis in the first quarter of 2021.
  • The allowance for credit losses on our core loan portfolio is approximately 1.49% of the outstanding balance as of June 30, 2021, down from 1.62% as of March 31, 2021. See Table 12 for more information. The allowance for credit losses to nonaccrual loans increased to 367.6% at June 30, 2021 compared to 341.3% as of March 31, 2021.
  • Non-performing loans declined to $87.7 million, or 0.27% of total loans, as of June 30, 2021 as compared to $99.1 million, or 0.30% of total loans, as of March 31, 2021.
  • Tangible book value per common share (non-GAAP) increased to $56.92 as compared to $55.42 as of March 31, 2021. See Table 18 for reconciliation of non-GAAP measures.
  • Closed on the previously announced sale of three branches in southwestern Wisconsin including $77 million of deposits, resulting in a net gain of $4.0 million recorded in other non-interest income.

Edward J. Wehmer, Founder and Chief Executive Officer, commented, "Wintrust reported net income of $105.1 million for the second quarter of 2021, down from $153.1 million in the first quarter of 2021. On a year-to-date basis, net income totaled $258.3 million for the first six months of 2021, up from $84.5 million in the first six months of 2020, a 206% increase. Additionally, the Company continues to grow as total assets of $46.7 billion as of June 30, 2021 increased by $1.1 billion as compared to March 31, 2021 and increased by $3.2 billion as compared to June 30, 2020. The second quarter of 2021 was characterized by strong organic loan growth, increased net interest income, a decline in mortgage banking revenue, a release of reserves as our credit quality and macroeconomic forecasts improved and a continued focus to increase franchise value in our market area."

Mr. Wehmer continued, "The Company experienced loan growth, excluding PPP loans, of $1.2 billion or 15%, on an annualized basis in the second quarter of 2021, including growth in its commercial, commercial real estate, residential real estate loans for investment, commercial insurance premium finance receivable and life insurance premium receivable portfolios. The loan growth was driven significantly by $563 million of growth in the commercial insurance premium finance receivable portfolio in part due to favorable market conditions for that portfolio. We are experiencing historically low commercial line of credit utilization and believe that a reversion to normal levels, coupled with robust loan pipelines, will materialize in future loan growth. Total deposits increased by $932 million as compared to the first quarter of 2021 including an increase in non-interest bearing deposits which now comprise 33% of total deposits. We continue to emphasize growing our franchise, including gathering low cost deposits, which we believe will drive value in the long term. Our loans to deposits ratio ended the quarter at 84.8% and we believe that we have sufficient liquidity to meet customer loan demand."

Mr. Wehmer commented, "Net interest income increased in the second quarter of 2021 primarily due to earning asset growth and increased PPP loan fee accretion. The Company recognized $25.2 million of PPP loan fee accretion in the second quarter of 2021 as compared to $19.2 million in the first quarter of 2021. Net interest margin improved by nine basis points in the second quarter of 2021 as compared to the first quarter of 2021 primarily due to increased PPP loan fee accretion and a seven basis point decline on the rate paid on interest bearing deposits. We continue to maintain excess liquidity and believe that deploying such liquidity could potentially increase our net interest margin. However, given the decline in long-term interest rates in the second quarter of 2021, we did not materially increase our investment portfolio due to the lack of adequate market returns."

Mr. Wehmer noted, “We recorded mortgage banking revenue of $50.6 million in the second quarter of 2021 as compared to $113.5 million in the first quarter of 2021. Loan volumes originated for sale in the second quarter of 2021 were $1.7 billion, down from $2.2 billion in the first quarter of 2021. Production margin in the second quarter of 2021 was impacted by lower gain on sale margins and a decline in the mortgage originations pipeline. Additionally, the Company recorded a $5.5 million decrease in the value of mortgage servicing rights related to changes in fair value model assumptions as compared to an $18.0 million increase recognized in the first quarter of 2021. We believe the third quarter of 2021 will provide another strong quarter for mortgage banking originations."

Commenting on credit quality, Mr. Wehmer stated, "The Company recorded a negative provision for credit losses of $15.3 million in the second quarter of 2021 related to both improving credit quality and macroeconomic forecasts. The level of non-performing loans decreased by $11.4 million primarily due to non-performing loan payments received during the quarter. Additionally, net charge-offs were limited totaling $1.9 million in the second quarter of 2021 as compared to $13.3 million in the first quarter of 2021. The allowance for credit losses on our core loan portfolio as of June 30, 2021 is approximately 1.49% 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 second quarter of 2021 results continued to demonstrate the multi-faceted nature of our business model which we believe uniquely positions us to be successful. We expect to leverage our differentiated, diversified loan portfolio to outperform peers with respect to loan growth which should allow us to expand net interest income. We are focused on taking advantage of market opportunities to prudently deploy excess liquidity into earning assets including core and niche loans and investment securities while maintaining an interest rate sensitive asset portfolio. We are opportunistically evaluating the acquisition market which has been active for both banks and business lines of various sizes. Of course, we remain diligent in our consideration of acquisition targets and will be prudent in our decision-making, always seeking to minimize dilution. Finally, we evaluate our operating expense base on an ongoing basis to enhance future profitability."

The graphs below illustrate certain financial highlights of the second quarter of 2021 as well as historical financial performance. See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 18 for additional information with respect to non-GAAP financial measures/ratios, including the reconciliations to the corresponding GAAP financial measures/ratios.

Graphs available at the following link: http://ml.globenewswire.com/Resource/Download/595e1742-6ae7-4c87-8c43-4cf31dd4b13e

SUMMARY OF RESULTS:

BALANCE SHEET

Total asset growth of $1.1 billion in the second quarter of 2021 was primarily comprised of a $1.4 billion increase in interest bearing deposits with banks, a $1.2 billion increase in total loans, excluding PPP loans, and an $86 million increase in investment securities. These increases were partially offset by a $1.4 billion decrease in PPP loans and a $275 million decrease in mortgage loans held-for-sale. Total loans, excluding PPP loans, increased by $1.2 billion primarily due to growth in the commercial, commercial real estate, residential real estate loans for investment, commercial insurance premium finance receivable and life insurance premium receivable portfolios. The Company believes that the $4.7 billion of interest-bearing deposits with banks held as of June 30, 2021 provides sufficient liquidity to operate its business plan.

Total liabilities increased $970 million in the second quarter of 2021 resulting primarily from a $932 million increase in total deposits. The increase in deposits was primarily due to a $607 million increase in money market deposits and a $499 million increase in non-interest bearing deposits. The Company’s loans to deposits ratio ended the quarter at 84.8%. Management believes in substantially funding the Company’s balance sheet with core deposits and utilizes brokered or wholesale funding sources as appropriate to manage its liquidity position as well as for interest rate risk management purposes.

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

NET INTEREST INCOME

For the second quarter of 2021, net interest income totaled $279.6 million, an increase of $17.7 million as compared to the first quarter of 2021 and an increase of $16.5 million as compared to the second quarter of 2020. The $17.7 million increase in net interest income in the second quarter of 2021 compared to the first quarter of 2021 was primarily due to earning asset growth and increased PPP loan fee accretion. The Company recognized $25.2 million of PPP loan fee accretion in the second quarter of 2021 as compared to $19.2 million in the first quarter of 2021. As of June 30, 2021, the Company had approximately $42.3 million of net PPP loan fees that have yet to be recognized in income, with approximately $24.0 million projected to be recognized in income in the second half of 2021. Such projection is based on current level yield assumptions primarily driven by the estimated timing of expected cash flow receipts related to forgiveness.

Net interest margin was 2.62% (2.63% on a fully taxable-equivalent basis, non-GAAP) during the second quarter of 2021 compared to 2.53% (2.54% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2021 and down from 2.73% (2.74% on a fully taxable-equivalent basis, non-GAAP) during the second quarter of 2020. The net interest margin increase as compared to the prior quarter was primarily due to the seven basis point decrease in the rate paid on interest-bearing liabilities and a four basis point increase in the yield on earning assets partially offset by a two basis point decrease in the net free funds contribution. The decrease in the rate paid on interest-bearing liabilities in the second quarter of 2021 as compared to the prior quarter is primarily due to a seven basis point decrease in the rate paid on interest-bearing deposits primarily due to lower repricing of time deposits. The four basis point increase in the yield on earning assets in the second quarter of 2021 as compared to the first quarter of 2021 was primarily due to a 13 basis point increase in yield on liquidity management assets as a result of purchases of investment securities toward the end of the first quarter of 2021 and a three basis point increase in yield earned on loans.

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

ASSET QUALITY

The allowance for credit losses totaled $304.1 million as of June 30, 2021, a decrease of $17.2 million as compared to $321.3 million as of March 31, 2021. The allowance for credit losses decreased primarily due to improvements in the macroeconomic forecast in addition to improvement in portfolio characteristics throughout the quarter. Notably, there was a decrease in the allowance for credit losses in the Commercial Real Estate portfolio primarily driven by improvement in the forecasts of the Commercial Real Estate Price Index and Baa Corporate Credit Spreads. Other key drivers of allowance for credit losses changes include, but are not limited to, decreases in COVID-19 related loan modifications and positive loan risk rating migrations.

A negative provision for credit losses totaling $15.3 million was recorded for the second quarter of 2021 compared to a negative provision of $45.3 million for the first quarter of 2021 and $135.1 million of expense for the second quarter of 2020. For more information regarding the provision for credit losses, see Table 11 in this report.

Management believes the allowance for credit losses is appropriate to account for expected credit losses. The Current Expected Credit Losses ("CECL") standard requires the Company to estimate expected credit losses over the life of the Company’s financial assets at a certain point in time. There can be no assurances, however, that future losses will not significantly exceed the amounts provided for, thereby affecting future results of operations. A summary of the allowance for credit losses calculated for the loan components in each portfolio as of June 30, 2021, March 31, 2021, and December 31, 2020 is shown on Table 12 of this report.

Net charge-offs totaled $1.9 million in the second quarter of 2021, an $11.4 million decrease from $13.3 million in the first quarter of 2021 and a $13.5 million decrease from $15.4 million in the second quarter of 2020. Net charge-offs as a percentage of average total loans totaled two basis points in the second quarter of 2021 on an annualized basis compared to 17 basis points on an annualized basis in the first quarter of 2021 and 20 basis points on an annualized basis in the second quarter of 2020. For more information regarding net charge-offs, see Table 10 in this report.

As of June 30, 2021, $19.3 million of all loans, or 0.1%, were 60 to 89 days past due and $73.9 million, or 0.2%, were 30 to 59 days (or one payment) past due. As of March 31, 2021, $28.0 million of all loans, or 0.1%, were 60 to 89 days past due and $151.7 million, or 0.5%, were 30 to 59 days (or one payment) past due. Many of the commercial and commercial real-estate loans shown as 60 to 89 days and 30 to 59 days past due are included on the Company’s internal problem loan reporting system. Loans on this system are closely monitored by management on a monthly basis.

The Company’s home equity and residential real estate loan portfolios continue to exhibit low delinquency rates as of June 30, 2021. Home equity loans at June 30, 2021 that are current with regard to the contractual terms of the loan agreement represent 98.8% of the total home equity portfolio. Residential real estate loans at June 30, 2021 that are current with regards to the contractual terms of the loan agreements comprised 98.3% of total residential real estate loans outstanding. For more information regarding past due loans, see Table 13 in this report. 

The outstanding balance of COVID-19 related modified loans totaled approximately $146 million or 0.5% of total loans, excluding PPP loans as of June 30, 2021 as compared to $254 million or 0.8% as of March 31, 2021. The most significant proportion of outstanding modifications changed terms to interest-only payments.

The ratio of non-performing assets to total assets was 0.22% as of June 30, 2021, compared to 0.25% at March 31, 2021, and 0.46% at June 30, 2020. Non-performing assets totaled $103.3 million at June 30, 2021, compared to $114.9 million at March 31, 2021 and $198.5 million at June 30, 2020. Non-performing loans totaled $87.7 million, or 0.27% of total loans, at June 30, 2021 compared to $99.1 million, or 0.30% of total loans, at March 31, 2021 and $188.3 million, or 0.60% of total loans, at June 30, 2020. The decrease in non-performing loans as of June 30, 2021 as compared to March 31, 2021 is primarily due to payments throughout the quarter. OREO totaled $15.6 million at June 30, 2021, a decrease of $241,000 compared to $15.8 million at March 31, 2021 and an increase of $5.4 million compared to $10.2 million at June 30, 2020. Management is pursuing the resolution of all non-performing assets. At this time, management believes OREO is appropriately valued at the lower of carrying value or fair value less estimated costs to sell. For more information regarding non-performing assets, see Table 14 in this report.

NON-INTEREST INCOME

Wealth management revenue increased by $1.4 million during the second quarter of 2021 as compared to the first quarter of 2021 primarily due to increased trust and asset management fees. Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors, the brokerage commissions, managed money fees and insurance product commissions at Wintrust Investments and fees from tax-deferred like-kind exchange services provided by the Chicago Deferred Exchange Company.

Mortgage banking revenue decreased by $62.9 million in the second quarter of 2021 as compared to the first quarter of 2021, primarily due to a $33.8 million decrease in production revenue from lower originations for sale and lower gain on sale margins and a $5.5 million unfavorable mortgage servicing rights portfolio fair value adjustment as compared to an $18.0 million increase recognized in the prior quarter related to changes in fair value model assumptions. Loans originated for sale were $1.7 billion in the second quarter of 2021, a decrease of $498.0 million as compared to the first quarter of 2021. The percentage of origination volume from refinancing activities was 47% in the second quarter of 2021 as compared to 73% in the first quarter of 2021. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market.

During the second quarter of 2021, the fair value of the mortgage servicing rights portfolio increased primarily due to the capitalization of $17.5 million of servicing rights partially offset by a reduction in value of $8.5 million due to payoffs and paydowns of the existing portfolio and a fair value adjustment decrease of $5.5 million. No economic hedges were outstanding relative to the mortgage servicing rights portfolio during the first or second quarter of 2021.

Operating lease income decreased by $2.2 million in the second quarter of 2021 as compared to the first quarter of 2021. The decrease is primarily due to a $1.5 million gain recognized on sale of lease assets in the first quarter of 2021.

Other non-interest income increased by $4.7 million in the second quarter of 2021 as compared to the first quarter of 2021 primarily due to a $4.0 million net gain recorded on the previously announced sale of three branches in southwestern Wisconsin.

For more information regarding non-interest income, see Tables 15 and 16 in this report.

NON-INTEREST EXPENSE

Salaries and employee benefits expense decreased by $8.0 million in the second quarter of 2021 as compared to the first quarter of 2021. The $8.0 million decrease is comprised of a decrease of $7.6 million in commissions and incentive compensation and a decrease of $412,000 in employee benefits expense. Salaries expense was effectively unchanged from the first quarter of 2021 to the second quarter of 2021. The decrease in commissions and incentive compensation is primarily due to lower commissions related to a decline in total mortgage originations for sale and investment.

Advertising and marketing expense totaled $11.3 million in the second quarter of 2021, an increase of $2.8 million as compared to the first quarter of 2021. The increase in the second quarter relates primarily to increased sponsorship activity for the summer months. Marketing costs are incurred to promote the Company’s brand, commercial banking capabilities and various products, to attract loans and deposits and to announce new branch openings as well as the expansion of the Company’s non-bank businesses. The level of marketing expenditures depends on the timing of sponsorship programs utilized which are determined based on the market area, targeted audience, competition and various other factors.

Miscellaneous expense in the second quarter of 2021 decreased by $55,000 as compared to the first quarter of 2021. The second quarter of 2021 included a $1.4 million reversal of contingent consideration expense related to the previous acquisition of mortgage operations as compared to a $937,000 reversal of contingent consideration expense in the first quarter of 2021. The liability for contingent consideration expense related to the previous acquisition of mortgage operations is based upon forward looking mortgage origination volumes and the estimated profitability of that operation. Should those assumptions change going forward, the liability may need to be increased or decreased. The contractual period covering contingent consideration ends in January 2023 and the final two years of the contract contemplate a lower ratio of contingent consideration relative to financial performance. Miscellaneous expense also includes ATM expenses, correspondent bank charges, directors fees, telephone, travel and entertainment, corporate insurance, dues and subscriptions, problem loan expenses and lending origination costs that are not deferred.

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

INCOME TAXES

The Company recorded income tax expense of $39.0 million in the second quarter of 2021 compared to $53.7 million in the first quarter of 2021 and $9.0 million in the second quarter of 2020. The effective tax rates were 27.08% in the second quarter of 2021 compared to 25.97% in the first quarter of 2021 and 29.46% in the second quarter of 2020.

The slightly higher effective tax rate in the second quarter of 2021 as compared to the first quarter of 2021 was primarily due to the recognition of excess tax benefits on stock compensation in the first quarter, and the higher effective rate in the second quarter of 2020 as compared to the 2021 periods was primarily a result of a significantly reduced amount of pretax income in the period.

BUSINESS UNIT SUMMARY

Community Banking

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

Mortgage banking revenue was $50.6 million for the second quarter of 2021, a decrease of $62.9 million as compared to the first quarter of 2021 primarily due to a $33.8 million decrease in production revenue resulting from lower originations for sale and lower gain on sale margins and a $5.5 million decrease in the value of mortgage servicing rights related to changes in fair value model assumptions as compared to an $18.0 million favorable fair value adjustment in the prior quarter related to changes in fair value model assumptions. Service charges on deposit accounts totaled $13.2 million in the second quarter of 2021, an increase of $1.2 million as compared to the first quarter of 2021 primarily due to higher account analysis fees. The Company’s gross commercial and commercial real estate loan pipelines remained strong as of June 30, 2021. Before the impact of scheduled payments and prepayments, gross commercial and commercial real estate loan pipelines were estimated to be approximately $1.2 billion to $1.3 billion at June 30, 2021. When adjusted for the probability of closing, the pipelines were estimated to be approximately $700 million to $800 million at June 30, 2021.

Specialty Finance

Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries, accounts receivable financing and value-added, out-sourced administrative services and other services. Originations within the insurance premium financing receivables portfolio were $3.4 billion during the second quarter of 2021 and average balances increased by $472.8 million as compared to the first quarter of 2021. The increase in average balances in the insurance premium finance receivables portfolios more than offset the related margin compression, attributed to lower market rates of interest, resulting in a $3.0 million increase in interest income. The Company’s leasing business remained effectively unchanged from the first quarter of 2021 to the second quarter of 2021, with its portfolio of assets, including capital leases, loans and equipment on operating leases, at $2.2 billion at the end of the second quarter of 2021. Revenues from the Company’s out-sourced administrative services business were $1.2 million in the second quarter of 2021, essentially unchanged from the first quarter of 2021.

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 $30.7 million in the second quarter of 2021, an increase of $1.4 million compared to the first quarter of 2021. Increases in asset management fees were primarily due to favorable equity market performance during the second quarter of 2021. At June 30, 2021, the Company’s wealth management subsidiaries had approximately $34.2 billion of assets under administration, which included $4.7 billion of assets owned by the Company and its subsidiary banks, representing a $2.0 billion increase from the $32.2 billion of assets under administration at March 31, 2021.

WINTRUST FINANCIAL CORPORATION 
Key Operating Measures

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

       % or(1)
basis point (bp)
change from
1st Quarter
2021
 % or
basis point 
(bp)
change from
2nd Quarter
2020
  Three Months Ended 
(Dollars in thousands, except per share data) Jun 30, 2021 Mar 31, 2021 Jun 30, 2020 
Net income $105,109   $153,148  $21,659 (31) % 385  %
Pre-tax income, excluding provision for credit losses (non-GAAP) (2) 128,851   161,512  165,756 (20)   (22)  
Net income per common share – diluted 1.70   2.54  0.34 (33)   400   
Net revenue (3) 408,963   448,401  425,124 (9)   (4)  
Net interest income 279,590   261,895  263,131 7    6   
Net interest margin 2.62 % 2.53% 2.73%9  bps (11) bps
Net interest margin - fully taxable equivalent (non-GAAP) (2) 2.63   2.54  2.74 9    (11)  
Net overhead ratio (4) 1.32   0.90  0.93 42    39   
Return on average assets 0.92   1.38  0.21 (46)   71   
Return on average common equity 10.24   15.80  2.17 (556)   807   
Return on average tangible common equity (non-GAAP) (2) 12.62   19.49  2.95 (687)   967   
At end of period           
Total assets $46,738,450 $45,682,202 $43,540,0179  % 7  %
Total loans (5) 32,911,187 33,171,233 31,402,903(3)   5   
Total deposits 38,804,616 37,872,652 35,651,87410    9   
Total shareholders’ equity 4,339,011 4,252,511 3,990,2188    9   

(1) Period-end balance sheet percentage changes are annualized. 
(2) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 18 for additional information on this performance measure/ratio.
(3) Net revenue is net interest income plus non-interest income.
(4) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s average total assets. A lower ratio indicates a higher degree of efficiency.
(5) Excludes mortgage loans held-for-sale.

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


WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights

  Three Months EndedSix Months Ended
(Dollars in thousands, except per share data) Jun 30,
2021
 Mar 31,
2021
 Dec 31,
2020
 Sep 30,
2020
 Jun 30,
2020
Jun 30,
2021
 Jun 30,
2020
Selected Financial Condition Data (at end of period):   
Total assets $46,738,450  $45,682,202  $45,080,768  $43,731,718 $43,540,017    
Total loans (1)  32,911,187   33,171,233   32,079,073  32,135,555  31,402,903    
Total deposits  38,804,616   37,872,652   37,092,651  35,844,422  35,651,874    
Junior subordinated debentures  253,566   253,566   253,566  253,566  253,566    
Total shareholders’ equity  4,339,011   4,252,511   4,115,995  4,074,089  3,990,218    
Selected Statements of Income Data:   
Net interest income $279,590  $261,895  $259,397  $255,936  $263,131 $541,485  $524,574 
Net revenue (2) 408,963  448,401  417,758  426,529  425,124 857,364  799,809 
Net income 105,109  153,148  101,204  107,315  21,659 258,257  84,471 
Pre-tax income, excluding provision for credit losses (non-GAAP) (3) 128,851  161,512  135,891  162,310  165,756 290,363  305,800 
Net income per common share – Basic 1.72  2.57  1.64  1.68  0.34 4.29  1.40 
Net income per common share – Diluted 1.70  2.54  1.63  1.67  0.34 4.24  1.38 
Selected Financial Ratios and Other Data:   
Performance Ratios:   
Net interest margin 2.62% 2.53% 2.53% 2.56% 2.73%2.58% 2.91%
Net interest margin - fully taxable equivalent (non-GAAP) (3) 2.63  2.54  2.54  2.57  2.74 2.59  2.93 
Non-interest income to average assets 1.13  1.68  1.44  1.58  1.55 1.40  1.41 
Non-interest expense to average assets 2.45  2.59  2.56  2.45  2.48 2.51  2.53 
Net overhead ratio (4) 1.32  0.90  1.12  0.87  0.93 1.11  1.12 
Return on average assets 0.92  1.38  0.92  0.99  0.21 1.15  0.43 
Return on average common equity 10.24  15.80  10.30  10.66  2.17 12.97  4.48 
Return on average tangible common equity (non-GAAP) (3) 12.62  19.49  12.95  13.43  2.95 15.99  5.81 
Average total assets $45,946,751  $44,988,733  $43,810,005  $42,962,844  $42,042,729 $45,470,389  $39,334,109 
Average total shareholders’ equity  4,256,778   4,164,890   4,050,286   4,034,902   3,908,846 4,211,088  3,809,508 
Average loans to average deposits ratio 86.7% 87.1% 87.9% 89.6% 87.8%86.9% 88.9%
Period-end loans to deposits ratio 84.8  87.6  86.5  89.7  88.1    
Common Share Data at end of period:   
Market price per common share $75.63  $75.80  $61.09  $40.05  $43.62    
Book value per common share 68.81  67.34  65.24  63.57  62.14    
Tangible book value per common share (non-GAAP) (3) 56.92  55.42  53.23  51.70  50.23    
Common shares outstanding  57,066,677   57,023,273   56,769,625   57,601,991   57,573,672    
Other Data at end of period:   
Tier 1 leverage ratio (5) 8.2% 8.2% 8.1% 8.2% 8.1%   
Risk-based capital ratios:             
Tier 1 capital ratio (5) 10.1  10.2  10.0  10.2  10.1    
Common equity tier 1 capital ratio(5) 8.9  9.0  8.8  9.0  8.8    
Total capital ratio (5) 12.3  12.6  12.6  12.9  12.8    
Allowance for credit losses (6) $304,121  $321,308  $379,969  $388,971  $373,174    
Allowance for loan and unfunded lending-related commitment losses to total loans 0.92% 0.97% 1.18% 1.21% 1.19%   
Number of:             
Bank subsidiaries 15  15  15  15  15    
Banking offices 172  182  181  182  186    

(1) Excludes mortgage loans held-for-sale. 
(2) Net revenue is net interest income and non-interest income. 
(3) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 18 for additional information on this performance measure/ratio. 
(4) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s total average assets. A lower ratio indicates a higher degree of efficiency. 
(5) Capital ratios for current quarter-end are estimated. 
(6) The allowance for credit losses includes the allowance for loan losses, the allowance for unfunded lending-related commitments and the allowance for held-to-maturity securities losses.


WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION

  (Unaudited) (Unaudited)   (Unaudited) (Unaudited)
  Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(In thousands) 2021 2021 2020 2020 2020
Assets          
Cash and due from banks $434,957   $426,325   $322,415   $308,639   $344,999  
Federal funds sold and securities purchased under resale agreements 52   52   59   56   58  
Interest-bearing deposits with banks 4,707,415   3,348,794   4,802,527   3,825,823   4,015,072  
Available-for-sale securities, at fair value 2,188,608   2,430,749   3,055,839   2,946,459   3,194,961  
Held-to-maturity securities, at amortized cost 2,498,232   2,166,419   579,138   560,267   728,465  
Trading account securities 2,667   951   671   1,720   890  
Equity securities with readily determinable fair value 86,316   90,338   90,862   54,398   52,460  
Federal Home Loan Bank and Federal Reserve Bank stock 136,625   135,881   135,588   135,568   135,571  
Brokerage customer receivables 23,093   19,056   17,436   16,818   14,623  
Mortgage loans held-for-sale 984,994   1,260,193   1,272,090   959,671   833,163  
Loans, net of unearned income 32,911,187   33,171,233   32,079,073   32,135,555   31,402,903  
Allowance for loan losses (261,089)  (277,709)  (319,374)  (325,959)  (313,510) 
Net loans 32,650,098   32,893,524   31,759,699   31,809,596   31,089,393  
Premises and equipment, net 752,375   760,522   768,808   774,288   769,909  
Lease investments, net 219,023   238,984   242,434   230,373   237,040  
Accrued interest receivable and other assets 1,185,811   1,230,362   1,351,455   1,424,728   1,437,832  
Trade date securities receivable 189,851              
Goodwill 646,336   646,017   645,707   644,644   644,213  
Other intangible assets 31,997   34,035   36,040   38,670   41,368  
Total assets $46,738,450   $45,682,202   $45,080,768   $43,731,718   $43,540,017  
Liabilities and Shareholders’ Equity          
Deposits:          
Non-interest-bearing $12,796,110   $12,297,337   $11,748,455   $10,409,747   $10,204,791  
Interest-bearing 26,008,506   25,575,315   25,344,196   25,434,675   25,447,083  
Total deposits 38,804,616   37,872,652   37,092,651   35,844,422   35,651,874  
Federal Home Loan Bank advances 1,241,071   1,228,436   1,228,429   1,228,422   1,228,416  
Other borrowings 518,493   516,877   518,928   507,395   508,535  
Subordinated notes 436,719   436,595   436,506   436,385   436,298  
Junior subordinated debentures 253,566   253,566   253,566   253,566   253,566  
Trade date securities payable    995   200,907        
Accrued interest payable and other liabilities 1,144,974   1,120,570   1,233,786   1,387,439   1,471,110  
Total liabilities 42,399,439   41,429,691   40,964,773   39,657,629   39,549,799  
Shareholders’ Equity:          
Preferred stock 412,500   412,500   412,500   412,500   412,500  
Common stock 58,770   58,727   58,473   58,323   58,294  
Surplus 1,669,002   1,663,008   1,649,990   1,647,049   1,643,864  
Treasury stock (100,363)  (100,363)  (100,363)  (44,891)  (44,891) 
Retained earnings 2,288,969   2,208,535   2,080,013   2,001,949   1,921,048  
Accumulated other comprehensive income (loss) 10,133   10,104   15,382   (841)  (597) 
Total shareholders’ equity 4,339,011   4,252,511   4,115,995   4,074,089   3,990,218  
Total liabilities and shareholders’ equity $46,738,450   $45,682,202   $45,080,768   $43,731,718   $43,540,017  


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

 Three Months EndedSix Months Ended
(In thousands, except per share data)Jun 30,
2021
 Mar 31,
2021
 Dec 31,
2020
 Sep 30,
2020
 Jun 30,
2020
Jun 30,
2021
 Jun 30,
2020
Interest income            
Interest and fees on loans$284,701   $274,100   $280,185   $280,479   $294,746  $558,801   $596,585  
Mortgage loans held-for-sale8,183   9,036   6,357   5,791   4,764  17,219   7,929  
Interest-bearing deposits with banks1,153   1,199   1,294   1,181   1,310  2,352   6,078  
Federal funds sold and securities purchased under resale agreements            16     102  
Investment securities23,623   19,264   18,243   21,819   27,105  42,887   59,572  
Trading account securities1   2   11   6   13  3   20  
Federal Home Loan Bank and Federal Reserve Bank stock1,769   1,745   1,775   1,774   1,765  3,514   3,342  
Brokerage customer receivables149   123   116   106   97  272   255  
Total interest income319,579   305,469   307,981   311,156   329,816  625,048   673,883  
Interest expense            
Interest on deposits24,298   27,944   32,602   39,084   50,057  52,242   117,492  
Interest on Federal Home Loan Bank advances4,887   4,840   4,952   4,947   4,934  9,727   8,294  
Interest on other borrowings2,568   2,609   2,779   3,012   3,436  5,177   6,982  
Interest on subordinated notes5,512   5,477   5,509   5,474   5,506  10,989   10,978  
Interest on junior subordinated debentures2,724   2,704   2,742   2,703   2,752  5,428   5,563  
Total interest expense39,989   43,574   48,584   55,220   66,685  83,563   149,309  
Net interest income279,590   261,895   259,397   255,936   263,131  541,485   524,574  
Provision for credit losses(15,299)  (45,347)  1,180   25,026   135,053  (60,646)  188,014  
Net interest income after provision for credit losses294,889   307,242   258,217   230,910   128,078  602,131   336,560  
Non-interest income            
Wealth management30,690   29,309   26,802   24,957   22,636  59,999   48,577  
Mortgage banking50,584   113,494   86,819   108,544   102,324  164,078   150,650  
Service charges on deposit accounts13,249   12,036   11,841   11,497   10,420  25,285   21,685  
Gains (losses) on investment securities, net1,285   1,154   1,214   411   808  2,439   (3,551) 
Fees from covered call options1,388              1,388   2,292  
Trading (losses) gains, net(438)  419   (102)  183   (634) (19)  (1,085) 
Operating lease income, net12,240   14,440   12,118   11,717   11,785  26,680   23,769  
Other20,375   15,654   19,669   13,284   14,654  36,029   32,898  
Total non-interest income129,373   186,506   158,361   170,593   161,993  315,879   275,235  
Non-interest expense            
Salaries and employee benefits172,817   180,809   171,116   164,042   154,156  353,626   290,918  
Equipment20,866   20,912   20,565   17,251   15,846  41,778   30,680  
Operating lease equipment depreciation9,949   10,771   9,938   9,425   9,292  20,720   18,552  
Occupancy, net17,687   19,996   19,687   15,830   16,893  37,683   34,440  
Data processing6,920   6,048   5,728   5,689   10,406  12,968   18,779  
Advertising and marketing11,305   8,546   9,850   7,880   7,704  19,851   18,566  
Professional fees7,304   7,587   6,530   6,488   7,687  14,891   14,408  
Amortization of other intangible assets2,039   2,007   2,634   2,701   2,820  4,046   5,683  
FDIC insurance6,405   6,558   7,016   6,772   7,081  12,963   11,216  
OREO expense, net769   (251)  (114)  (168)  237  518   (639) 
Other24,051   23,906   28,917   28,309   27,246  47,957   51,406  
Total non-interest expense280,112   286,889   281,867   264,219   259,368  567,001   494,009  
Income before taxes144,150   206,859   134,711   137,284   30,703  351,009   117,786  
Income tax expense39,041   53,711   33,507   29,969   9,044  92,752   33,315  
Net income$105,109   $153,148   $101,204   $107,315   $21,659  $258,257   $84,471  
Preferred stock dividends6,991   6,991   6,991   10,286   2,050  13,982   4,100  
Net income applicable to common shares$98,118   $146,157   $94,213   $97,029   $19,609  $244,275   $80,371  
Net income per common share - Basic$1.72   $2.57   $1.64   $1.68   $0.34  $4.29   $1.40  
Net income per common share - Diluted$1.70   $2.54   $1.63   $1.67   $0.34  $4.24   $1.38  
Cash dividends declared per common share$0.31   $0.31   $0.28   $0.28   $0.28  $0.62   $0.56  
Weighted average common shares outstanding 57,049    56,904    57,309    57,597    57,567   56,977    57,593  
Dilutive potential common shares726   681   588   449   414  691   481  
Average common shares and dilutive common shares57,775   57,585   57,897   58,046   57,981  57,668   58,074  



TABLE 1: LOAN PORTFOLIO MIX AND GROWTH RATES

          % Growth From (2)
(Dollars in thousands)Jun 30,
2021
 Mar 31,
2021
 Dec 31,
2020
 Sep 30,
2020
 Jun 30,
2020
Dec 31,
2020 (1)
 Jun 30,
2020
Balance:            
Mortgage loans held-for-sale, excluding early buy-out exercised loans guaranteed by U.S. Government Agencies$633,006  $890,749  $927,307  $862,924  $814,667 (64)% (22)%
Mortgage loans held-for-sale, early buy-out exercised loans guaranteed by U.S. Government Agencies351,988  369,444  344,783  96,747  18,496 4   1803  
Total mortgage loans held-for-sale$984,994  $1,260,193  $1,272,090  $959,671  $833,163 (46)% 18 %
             
Core loans:            
Commercial            
Commercial and industrial$4,650,607  $4,630,795  $4,675,594  $4,555,920  $4,292,032 (1)% 8 %
Asset-based lending892,109  720,772  721,666  707,365  721,035 48   24  
Municipal511,094  493,417  474,103  482,567  519,691 16   (2) 
Leases1,357,036  1,290,778  1,288,374  1,215,239  1,179,233 11   15  
Commercial real estate            
Residential construction55,735  72,058  89,389  101,187  131,639 (76)  (58) 
Commercial construction1,090,447  1,040,631  1,041,729  1,005,708  992,872 9   10  
Land239,067  240,635  240,684  226,254  215,537 (1)  11  
Office1,098,386  1,131,472  1,136,844  1,163,790  1,124,643 (7)  (2) 
Industrial1,263,614  1,152,522  1,129,433  1,117,702  1,062,218 24   19  
Retail1,217,540  1,198,025  1,224,403  1,175,819  1,148,152 (1)  6  
Multi-family1,805,118  1,739,521  1,649,801  1,599,651  1,497,834 19   21  
Mixed use and other1,908,462  1,969,915  1,981,849  2,033,031  2,027,850 (7)  (6) 
Home equity369,806  390,253  425,263  446,274  466,596 (26)  (21) 
Residential real estate            
Residential real estate loans for investment1,485,952  1,376,465  1,214,744  1,143,908  1,186,768 45   25  
Residential mortgage loans, early buy-out eligible loans guaranteed by U.S. Government Agencies44,333  45,508  44,854  240,902  240,661 (2)  (82) 
Total core loans$17,989,306  $17,492,767  $17,338,730  $17,215,317  $16,806,761 8 % 7 %
             
Niche loans:            
Commercial            
Franchise$1,060,468  $1,128,493  $1,023,027  $964,150  $963,531 7 % 10 %
Mortgage warehouse lines of credit529,867  587,868  567,389  503,371  352,659 (13)  50  
Community Advantage - homeowners association287,689  272,222  267,374  254,963  240,634 15   20  
Insurance agency lending273,999  290,880  222,519  214,411  255,049 47   7  
Premium Finance receivables            
U.S. commercial insurance3,805,504  3,342,730  3,438,087  3,494,155  3,439,987 22   11  
Canada commercial insurance716,367  615,813  616,402  565,989  559,787 33   28  
Life insurance6,359,556  6,111,495  5,857,436  5,488,832  5,400,802 17   18  
Consumer and other9,024  35,983  32,188  55,354  48,325 (145)  (81) 
Total niche loans$13,042,474  $12,385,484  $12,024,422  $11,541,225  $11,260,774 17 % 16 %
             
Commercial PPP loans:            
Originated in 2020$656,502  $2,049,342  $2,715,921  $3,379,013  $3,335,368 NM   (80)%
Originated in 20211,222,905  1,243,640       100   100  
Total commercial PPP loans$1,879,407  $3,292,982  $2,715,921  $3,379,013  $3,335,368 (62)% (44)%
             
Total loans, net of unearned income$32,911,187  $33,171,233  $32,079,073  $32,135,555  $31,402,903 5 % 5 %

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


TABLE 2: DEPOSIT PORTFOLIO MIX AND GROWTH RATES

               % Growth From
(Dollars in thousands)Jun 30,
2021
  Mar 31,
2021
  Dec 31,
2020
  Sep 30,
2020
  Jun 30,
2020
Dec 31,
2020 (1)
 Jun 30,
2020
Balance:                
Non-interest-bearing$12,796,110  $12,297,337  $11,748,455  $10,409,747  $
10,204,791 18 % 25 %
NOW and interest-bearing demand deposits3,625,538  3,562,312  3,349,021  3,294,071   3,440,348 17   5  
Wealth management deposits (2)4,399,303  4,274,527  4,138,712  4,235,583   4,433,020 13   (1) 
Money market9,843,390  9,236,434  9,348,806  9,423,653   9,288,976 11   6  
Savings3,776,400  3,690,892  3,531,029  3,415,073   3,447,352 14   10  
Time certificates of deposit4,363,875  4,811,150  4,976,628  5,066,295   4,837,387 (25)  (10) 
Total deposits$38,804,616  $37,872,652  $37,092,651  $35,844,422  $
35,651,874 9 % 9 %
Mix:                 
Non-interest-bearing33% 32% 32% 29%  29
%   
NOW and interest-bearing demand deposits9  9  9  9   10    
Wealth management deposits (2)11
  11  11  12   12    
Money market25
  25  25  26   25    
Savings10
  10  10  10   10    
Time certificates of deposit12
  13  13  14   14    
Total deposits100
% 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 and brokerage customers from unaffiliated companies which have been placed into deposit accounts.


TABLE 3: TIME CERTIFICATES OF DEPOSIT MATURITY/RE-PRICING ANALYSIS
As of June 30, 2021

(Dollars in thousands) Total Time
Certificates of
Deposit
 Weighted-Average
Rate of Maturing
Time Certificates
of Deposit (1)
1-3 months $1,049,387  1.40%
4-6 months 844,945  1.08 
7-9 months 726,341  0.60 
10-12 months 566,664  0.43 
13-18 months 601,524  0.59 
19-24 months 274,328  0.62 
24+ months 300,686  0.63 
Total $4,363,875  0.87%

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


TABLE 4: QUARTERLY AVERAGE BALANCES

  Average Balance for three months ended,
  Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(In thousands) 2021 2021 2020 2020 2020
Interest-bearing deposits with banks and cash equivalents (1) $3,844,355   $4,230,886   $4,381,040   $3,411,164   $3,240,167  
Investment securities (2) 4,771,403   3,944,676   3,534,594   3,789,422   4,309,471  
FHLB and FRB stock 136,324   135,758   135,569   135,567   135,360  
Liquidity management assets (3) 8,752,082   8,311,320   8,051,203   7,336,153   7,684,998  
Other earning assets (3)(4) 23,354   20,370   18,716   16,656   16,917  
Mortgage loans held-for-sale 991,011   1,151,848   893,395   822,908   705,702  
Loans, net of unearned income (3)(5) 33,085,174   32,442,927   31,783,279   31,634,608   30,336,626  
Total earning assets (3) 42,851,621   41,926,465   40,746,593   39,810,325   38,744,243  
Allowance for loan and investment security losses (285,686)  (327,080)  (336,139)  (321,732)  (222,485) 
Cash and due from banks 470,566   366,413   344,536   345,438   352,423  
Other assets 2,910,250   3,022,935   3,055,015   3,128,813   3,168,548  
Total assets $45,946,751   $44,988,733   $43,810,005   $42,962,844   $42,042,729  
           
NOW and interest-bearing demand deposits $3,626,424   $3,493,451   $3,320,527   $3,435,089   $3,323,124  
Wealth management deposits 4,369,998   4,156,398   4,066,948   4,239,300   4,380,996  
Money market accounts 9,547,167   9,335,920   9,435,344   9,332,668   8,727,966  
Savings accounts 3,728,271   3,587,566   3,413,388   3,419,586   3,394,480  
Time deposits 4,632,796   4,875,392   5,043,558   4,900,839   5,104,701  
Interest-bearing deposits 25,904,656   25,448,727   25,279,765   25,327,482   24,931,267  
Federal Home Loan Bank advances 1,235,142   1,228,433   1,228,425   1,228,421   1,214,375  
Other borrowings 525,924   518,188   510,725   512,787   493,350  
Subordinated notes 436,644   436,532   436,433   436,323   436,226  
Junior subordinated debentures 253,566   253,566   253,566   253,566   253,566  
Total interest-bearing liabilities 28,355,932   27,885,446   27,708,914   27,758,579   27,328,784  
Non-interest-bearing deposits 12,246,274   11,811,194   10,874,912   9,988,769   9,607,528  
Other liabilities 1,087,767   1,127,203   1,175,893   1,180,594   1,197,571  
Equity 4,256,778   4,164,890   4,050,286   4,034,902   3,908,846  
Total liabilities and shareholders’ equity $45,946,751   $44,988,733   $43,810,005   $42,962,844   $42,042,729  
           
Net free funds/contribution (6) $14,495,689   $14,041,019   $13,037,679   $12,051,746   $11,415,459  

(1) Includes interest-bearing deposits from banks, federal funds sold and securities purchased under resale agreements. 
(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 "Supplemental Non-GAAP Financial Measures/Ratios" at Table 18 for additional information on this performance measure/ratio. 
(4) Other earning assets include brokerage customer receivables and trading account securities. 
(5) Loans, net of unearned income, include non-accrual loans. 
(6) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.


TABLE 5: QUARTERLY NET INTEREST INCOME

  Net Interest Income for three months ended,
  Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(In thousands) 2021 2021 2020 2020 2020
Interest income:          
Interest-bearing deposits with banks and cash equivalents $1,153   $1,199   $1,294   $1,181   $1,326  
Investment securities 24,117   19,764   18,773   22,365   27,643  
FHLB and FRB stock 1,769   1,745   1,775   1,774   1,765  
Liquidity management assets (1) 27,039   22,708   21,842   25,320   30,734  
Other earning assets (1) 150   125   130   113   113  
Mortgage loans held-for-sale 8,183   9,036   6,357   5,791   4,764  
Loans, net of unearned income (1) 285,116   274,484   280,509   280,960   295,322  
Total interest income $320,488   $306,353   $308,838   $312,184   $330,933  
           
Interest expense:          
NOW and interest-bearing demand deposits $736   $901   $1,074   $1,342   $1,561  
Wealth management deposits 7,686   7,351   7,436   7,662   7,244  
Money market accounts 2,795   2,865   3,740   7,245   13,140  
Savings accounts 402   430   773   2,104   3,840  
Time deposits 12,679   16,397   19,579   20,731   24,272  
Interest-bearing deposits 24,298   27,944   32,602   39,084   50,057  
Federal Home Loan Bank advances 4,887   4,840   4,952   4,947   4,934  
Other borrowings 2,568   2,609   2,779   3,012   3,436  
Subordinated notes 5,512   5,477   5,509   5,474   5,506  
Junior subordinated debentures 2,724   2,704   2,742   2,703   2,752  
Total interest expense $39,989   $43,574   $48,584   $55,220   $66,685  
           
Less:  Fully taxable-equivalent adjustment (909)  (884)  (857)  (1,028)  (1,117) 
Net interest income (GAAP) (2)  279,590   261,895   259,397   255,936   263,131  
Fully taxable-equivalent adjustment 909   884   857   1,028   1,117  
Net interest income, fully taxable-equivalent (non-GAAP) (2)  $280,499   $262,779   $260,254   $256,964   $264,248  

(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 "Supplemental Non-GAAP Financial Measures/Ratios" at Table 18 for additional information on this performance measure/ratio.


TABLE 6: QUARTERLY NET INTEREST MARGIN

  Net Interest Margin for three months ended,
  Jun 30,
2021
 Mar 31,
2021
 Dec 31,
2020
 Sep 30,
2020
 Jun 30,
2020
Yield earned on:          
Interest-bearing deposits with banks and cash equivalents 0.12 % 0.11 % 0.12 % 0.14 % 0.16 %
Investment securities 2.03   2.03   2.11   2.35   2.58  
FHLB and FRB stock 5.20   5.21   5.21   5.21   5.24  
Liquidity management assets 1.24   1.11   1.08   1.37   1.61  
Other earning assets 2.59   2.50   2.79   2.71   2.71  
Mortgage loans held-for-sale 3.31   3.18   2.83   2.80   2.72  
Loans, net of unearned income 3.46   3.43   3.51   3.53   3.92  
Total earning assets 3.00 % 2.96 % 3.02 % 3.12 % 3.44 %
           
Rate paid on:          
NOW and interest-bearing demand deposits 0.08 % 0.10 % 0.13 % 0.16 % 0.19 %
Wealth management deposits 0.71   0.72   0.73   0.72   0.67  
Money market accounts 0.12   0.12   0.16   0.31   0.61  
Savings accounts 0.04   0.05   0.09   0.24   0.45  
Time deposits 1.10   1.36   1.54   1.68   1.91  
Interest-bearing deposits 0.38   0.45   0.51   0.61   0.81  
Federal Home Loan Bank advances 1.59   1.60   1.60   1.60   1.63  
Other borrowings 1.96   2.04   2.16   2.34   2.80  
Subordinated notes 5.05   5.02   5.05   5.02   5.05  
Junior subordinated debentures 4.25   4.27   4.23   4.17   4.29  
Total interest-bearing liabilities 0.56 % 0.63 % 0.70 % 0.79 % 0.98 %
           
Interest rate spread  (1)(2) 2.44 % 2.33 % 2.32 % 2.33 % 2.46 %
Less: Fully taxable-equivalent adjustment (0.01)  (0.01)  (0.01)  (0.01)  (0.01) 
Net free funds/contribution (3) 0.19   0.21   0.22   0.24   0.28  
Net interest margin (GAAP) (2) 2.62 % 2.53 % 2.53 % 2.56 % 2.73 %
Fully taxable-equivalent adjustment 0.01   0.01   0.01   0.01   0.01  
Net interest margin, fully taxable-equivalent (non-GAAP) (2) 2.63 % 2.54 % 2.54 % 2.57 % 2.74 %

(1) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities. 
(2) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 18 for additional information on this performance measure/ratio.
(3) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.


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

 Average Balance
for six months ended,
Interest
for six months ended,
Yield/Rate
for six months ended,
(Dollars in thousands)Jun 30,
2021
 Jun 30,
2020
Jun 30,
2021
 Jun 30,
2020
Jun 30,
2021
 Jun 30,
2020
Interest-bearing deposits with banks and cash equivalents (1)$4,036,553   $2,329,488  $2,352   $6,180  0.12 % 0.53 %
Investment securities (2)4,360,323   4,545,090  43,881   60,661  2.03   2.68  
FHLB and FRB stock136,043   125,094  3,514   3,342  5.21   5.37  
Liquidity management assets (3)(4)$8,532,919   $6,999,672  $49,747   $70,183  1.18 % 2.02 %
Other earning assets (3)(4)(5)21,870   18,041  275   280  2.55   3.13  
Mortgage loans held-for-sale1,070,985   554,482  17,219   7,929  3.24   2.88  
Loans, net of unearned income (3)(4)(6)32,765,825   28,636,678  559,600   598,021  3.44   4.20  
Total earning assets (4)$42,391,599   $36,208,873  $626,841   $676,413  2.98 % 3.76 %
Allowance for loan and investment security losses(306,268)  (199,388)       
Cash and due from banks418,777   337,202        
Other assets2,966,281   2,987,422        
Total assets$45,470,389   $39,334,109        
          
NOW and interest-bearing demand deposits$3,560,305   $3,218,429  $1,637   $5,227  0.09 % 0.33 %
Wealth management deposits4,263,788   3,609,857  15,037   14,179  0.71   0.79  
Money market accounts9,442,127   8,359,370  5,660   35,503  0.12   0.85  
Savings accounts3,658,307   3,292,158  832   9,630  0.05   0.59  
Time deposits4,753,424   5,315,554  29,076   52,953  1.23   2.00  
Interest-bearing deposits$25,677,951   $23,795,368  $52,242   $117,492  0.41 % 0.99 %
Federal Home Loan Bank advances1,231,806   1,082,994  9,727   8,294  1.59   1.54  
Other borrowings522,078   481,463  5,177   6,982  2.00   2.92  
Subordinated notes436,588   436,173  10,989   10,978  5.03   5.03  
Junior subordinated debentures253,566   253,566  5,428   5,563  4.26   4.34  
Total interest-bearing liabilities$28,121,989   $26,049,564  $83,563   $149,309  0.60 % 1.15 %
Non-interest-bearing deposits12,029,936   8,421,353        
Other liabilities1,107,376   1,053,684        
Equity4,211,088   3,809,508        
Total liabilities and shareholders’ equity$45,470,389   $39,334,109        
Interest rate spread (4)(7)      2.38 % 2.61 %
Less: Fully taxable-equivalent adjustment   (1,793)  (2,530) (0.01)  (0.02) 
Net free funds/contribution (8)$14,269,610   $10,159,309     0.21   0.32  
Net interest income/ margin (GAAP) (4)   $541,485   $524,574  2.58 % 2.91 %
Fully taxable-equivalent adjustment   1,793    2,530  0.01   0.02  
Net interest income/ margin, fully taxable-equivalent (non-GAAP) (4)    $543,278   $527,104  2.59 % 2.93 %

(1) Includes interest-bearing deposits from banks, federal funds sold and securities purchased under resale agreements. 
(2) Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.
(3) Interest income on tax-advantaged loans, trading securities and investment securities reflects a taxable-equivalent adjustment based on a marginal federal corporate tax rate in effect as of the applicable period.
(4) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 18 for additional information on this performance ratio.
(5) Other earning assets include brokerage customer receivables and trading account securities.
(6) Loans, net of unearned income, include non-accrual loans.
(7) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(8) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.


TABLE 8: INTEREST RATE SENSITIVITY

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

The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon assuming increases of 100 and 200 basis points and a decrease of 100 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
Jun 30, 2021 24.6% 11.7% (6.9)%
Mar 31, 2021 22.0  10.2  (7.2) 
Dec 31, 2020 25.0  11.6  (7.9) 
Sep 30, 2020 23.4  10.9  (8.1) 
Jun 30, 2020 25.9  12.6  (8.3) 


Ramp Scenario+200
Basis
Points
 +100
Basis
Points
 -100
Basis
Points
Jun 30, 202111.4% 5.8% (3.3)%
Mar 31, 202110.7  5.4  (3.6) 
Dec 31, 202011.4  5.7  (3.3) 
Sep 30, 202010.7  5.2  (3.5) 
Jun 30, 202013.0  6.7  (3.2) 


TABLE 9: MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES

 Loans repricing or maturity period  
As of June 30, 2021One year or less From one to five years Over five years  
(In thousands)   Total
Commercial       
Fixed rate$1,018,304  $1,378,744  $796,227  $3,193,275 
Fixed Rate - PPP  1,879,407    1,879,407 
Variable rate6,365,838  3,694  62  6,369,594 
Total commercial$7,384,142  $3,261,845  $796,289  $11,442,276 
Commercial real estate       
Fixed rate509,777  2,127,633  437,944  3,075,354 
Variable rate5,578,790  24,225    5,603,015 
Total commercial real estate$6,088,567  $2,151,858  $437,944  $8,678,369 
Home equity       
Fixed rate14,613  7,095  47  21,755 
Variable rate348,051      348,051 
Total home equity$362,664  $7,095  $47  $369,806 
Residential real estate       
Fixed rate20,305  10,381  777,239  807,925 
Variable rate60,029  273,717  388,614  722,360 
Total residential real estate$80,334  $284,098  $1,165,853  $1,530,285 
Premium finance receivables - commercial       
Fixed rate4,398,271  123,600    4,521,871 
Variable rate       
Total premium finance receivables - commercial$4,398,271  $123,600  $  $4,521,871 
Premium finance receivables - life insurance       
Fixed rate10,030  374,736  20,394  405,160 
Variable rate5,954,396      5,954,396 
Total premium finance receivables - life insurance$5,964,426  $374,736  $20,394  $6,359,556 
Consumer and other       
Fixed rate2,269  1,748  388  4,405 
Variable rate4,619      4,619 
Total consumer and other$6,888  $1,748  $388  $9,024 
        
Total per category       
Fixed rate5,973,569  4,023,937  2,032,239  12,029,745 
Fixed rate - PPP  1,879,407    1,879,407 
Variable rate18,311,723  301,636  388,676  19,002,035 
Total loans, net of unearned income$24,285,292  $6,204,980  $2,420,915  $32,911,187 
        
Variable Rate Loan Pricing by Index:       
Prime      $2,573,945 
One- month LIBOR      9,384,417 
Three- month LIBOR      374,067 
Twelve- month LIBOR      6,359,426 
Other      310,180 
Total variable rate      $19,002,035 

Graph available at the following link: http://ml.globenewswire.com/Resource/Download/b101ee1f-e849-457d-b671-498c22ffc552

Source: Bloomberg

As noted in the table on the previous page, the majority of the Company’s portfolio is tied to 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 $9.4 billion of variable rate loans tied to one-month LIBOR and $6.4 billion of variable rate loans tied to twelve-month LIBOR. The above chart shows:

  Basis Point (bp) Change in
  Prime 1-month
LIBOR
 12-month
LIBOR
 
Second Quarter 2021 0bps-1bps-3bps
First Quarter 2021 0 -3 -6 
Fourth Quarter 2020 0 -1 -2 
Third Quarter 2020 0 -1 -19 
Second Quarter 2020 0 -83 -45 


TABLE 10: ALLOWANCE FOR CREDIT LOSSES

  Three Months EndedSix Months Ended
  Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,Jun 30, Jun 30,
(Dollars in thousands) 2021 2021 2020 2020 20202021 2020
Allowance for credit losses at beginning of period $321,308   $379,969   $388,971   $373,174   $253,482  $379,969    $158,461  
Cumulative effect adjustment from the adoption of ASU 2016-13               —    47,418  
Provision for credit losses (15,299)  (45,347)  1,180   25,026   135,053  (60,646)  188,014  
Other adjustments 34   31   155   55   42  65    (31) 
Charge-offs:             
Commercial 3,237   11,781   5,184   5,270   5,686  15,018    7,839  
Commercial real estate 1,412   980   6,637   1,529   7,224  2,392    7,794  
Home equity 142      683   138   239  142    1,240  
Residential real estate 3   2   114   83   293     694  
Premium finance receivables 2,077   3,239   4,214   4,640   3,434  5,316    6,618  
Consumer and other 104   114   198   103   99  218    227  
Total charge-offs 6,975   16,116   17,030   11,763   16,975  23,091    24,412  
Recoveries:             
Commercial 902   452   4,168   428   112  1,354    496  
Commercial real estate 514   200   904   175   493  714    756  
Home equity 328   101   77   111   46  429    340  
Residential real estate 36   204   69   25   30  240    90  
Premium finance receivables 3,239   1,782   1,445   1,720   833  5,021    1,943  
Consumer and other 34   32   30   20   58  66    99  
Total recoveries 5,053   2,771   6,693   2,479   1,572  7,824    3,724  
Net charge-offs (1,922)  (13,345)  (10,337)  (9,284)  (15,403) (15,267)  (20,688) 
Allowance for credit losses at period end $304,121   $321,308   $379,969   $388,971   $373,174  $304,121    $373,174  
              
Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average:   
Commercial 0.08 % 0.37 % 0.03 % 0.16 % 0.20 %0.22  % 0.15 %
Commercial real estate 0.04   0.04   0.27   0.06   0.33  0.04    0.17  
Home equity (0.20)  (0.10)  0.55   0.02   0.16  (0.15)  0.37  
Residential real estate (0.01)  (0.06)  0.02   0.02   0.09  (0.03)  0.10  
Premium finance receivables (0.04)  0.06   0.11   0.12   0.12  0.01    0.11  
Consumer and other 0.69   0.57   0.78   0.49   0.25  0.62    0.39  
Total loans, net of unearned income 0.02 % 0.17 % 0.13 % 0.12 % 0.20 %0.09  % 0.15 %
              
Loans at period end $32,911,187   $33,171,233   $32,079,073   $32,135,555   $31,402,903     
Allowance for loan losses as a percentage of loans at period end 0.79 % 0.84 % 1.00 % 1.01 % 1.00 %   
Allowance for loan and unfunded lending-related commitment losses as a percentage of loans at period end 0.92   0.97   1.18   1.21   1.19     
Allowance for loan and unfunded lending-related commitment losses as a percentage of loans at period end, excluding PPP loans 0.98   1.08   1.29   1.35   1.33     


TABLE 11: ALLOWANCE AND PROVISION FOR CREDIT LOSSES BY COMPONENT

  Three Months EndedSix Months Ended
  Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,Jun 30, Jun 30,
(In thousands) 2021 2021 2020 2020 20202021 2020
Provision for loan losses $(14,731)  $(28,351)  $3,597   $21,678   $112,822  $(43,082)  $163,218  
Provision for unfunded lending-related commitments losses (558)  (17,035)  (2,413)  3,350   22,236  (17,593)  24,805  
Provision for held-to-maturity securities losses (10)  39   (4)  (2)  (5) 29   (9) 
Provision for credit losses $(15,299)  $(45,347)  $1,180   $25,026   $135,053  $(60,646)  $188,014  
              
Allowance for loan losses $261,089   $277,709   $319,374   $325,959   $313,510     
Allowance for unfunded lending-related commitments losses 42,942   43,500   60,536   62,949   59,599     
Allowance for loan losses and unfunded lending-related commitments losses 304,031   321,209   379,910   388,908   373,109     
Allowance for held-to-maturity securities losses 90   99   59   63   65     
Allowance for credit losses $304,121   $321,308   $379,969   $388,971   $373,174     


TABLE 12: 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 June 30, 2021, March 31, 2021, and December 31, 2020.

 As of Jun 30, 2021As of Mar 31, 2021 As of Dec 31, 2020
(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$9,562,869  $98,505  1.03%$9,415,225  $95,637  1.02% $9,240,046  $94,210  1.02%
Commercial PPP loans1,879,407  2  0.00 3,292,982  3  0.00  2,715,921  2  0.00 
Commercial real estate:                
Construction and development1,385,249  38,550  2.78 1,353,324  45,327  3.35  1,371,802  78,833  5.75 
Non-construction7,293,120  119,972  1.65 7,191,455  136,465  1.90  7,122,330  164,770  2.31 
Home equity369,806  11,207  3.03 390,253  11,382  2.92  425,263  11,437  2.69 
Residential real estate1,530,285  15,684  1.02 1,421,973  14,242  1.00  1,259,598  12,459  0.99 
Premium finance receivables                
Commercial insurance loans4,521,871  19,346  0.43 3,958,543  16,945  0.43  4,054,489  17,267  0.43 
Life insurance loans6,359,556  553  0.01 6,111,495  532  0.01  5,857,436  510  0.01 
Consumer and other9,024  212  2.35 35,983  676  1.88  32,188  422  1.31 
Total loans, net of unearned income$32,911,187  $304,031  0.92%$33,171,233  $321,209  0.97% $32,079,073  $379,910  1.18%
Total loans, net of unearned income, excluding PPP loans$31,031,780  $304,029  0.98%$29,878,251  $321,206  1.08% $29,363,152  $379,908  1.29%
                 
Total core loans (1)$17,989,306  $267,999  1.49%$17,492,767  $283,505  1.62% $17,338,730  $347,111  2.00%
Total niche loans (1)13,042,474  36,030  0.28 12,385,484  37,701  0.30  12,024,422  32,797  0.27 
Total PPP loans1,879,407  2  0.00 3,292,982  3  0.00  2,715,921  2  0.00 
                 

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


TABLE 13: LOAN PORTFOLIO AGING

(Dollars in thousands) Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020
Loan Balances:          
Commercial          
Nonaccrual $23,232  $22,459  $21,743  $42,036  $42,882 
90+ days and still accruing 1,244    307    1,374 
60-89 days past due 5,204  13,292  6,900  2,168  8,952 
30-59 days past due 18,478  35,541  44,381  48,271  23,720 
Current 11,394,118  12,636,915  11,882,636  12,184,524  11,782,304 
Total commercial $11,442,276  $12,708,207  $11,955,967  $12,276,999  $11,859,232 
Commercial real estate          
Nonaccrual $26,035  $34,380  $46,107  $68,815  $64,557 
90+ days and still accruing          
60-89 days past due 4,382  8,156  5,178  8,299  26,480 
30-59 days past due 19,698  70,168  32,116  53,462  75,528 
Current 8,628,254  8,432,075  8,410,731  8,292,566  8,034,180 
Total commercial real estate $8,678,369  $8,544,779  $8,494,132  8,423,142  $8,200,745 
Home equity          
Nonaccrual $3,478  $5,536  $6,529  $6,329  $7,261 
90+ days and still accruing          
60-89 days past due 301  492  47  70   
30-59 days past due 777  780  637  1,148  1,296 
Current 365,250  383,445  418,050  438,727  458,039 
Total home equity $369,806  $390,253  $425,263  $446,274  $466,596 
Residential real estate          
Nonaccrual $23,050  $21,553  $26,071  $22,069  $19,529 
90+ days and still accruing          
60-89 days past due 1,584  944  1,635  814  1,506 
30-59 days past due 2,139  13,768  12,584  2,443  4,400 
Current 1,503,512  1,385,708  1,219,308  1,359,484  1,401,994 
Total residential real estate $1,530,285  $1,421,973  $1,259,598  $1,384,810  $1,427,429 
Premium finance receivables          
Nonaccrual $6,418  $9,690  $13,264  $21,080  $16,460 
90+ days and still accruing 3,570  4,783  12,792  12,177  35,638 
60-89 days past due 7,759  5,113  27,801  38,286  42,353 
30-59 days past due 32,758  31,373  49,274  80,732  61,160 
Current 10,830,922  10,019,079  9,808,794  9,396,701  9,244,965 
Total premium finance receivables $10,881,427  $10,070,038  $9,911,925  $9,548,976  $9,400,576 
Consumer and other          
Nonaccrual $485  $497  $436  $422  $427 
90+ days and still accruing 178  161  264  175  156 
60-89 days past due 22  8  24  273  4 
30-59 days past due 75  74  136  493  281 
Current 8,264  35,243  31,328  53,991  47,457 
Total consumer and other $9,024  $35,983  $32,188  $55,354  $48,325 
Total loans, net of unearned income          
Nonaccrual $82,698  $94,115  $114,150  $160,751  $151,116 
90+ days and still accruing 4,992  4,944  13,363  12,352  37,168 
60-89 days past due 19,252  28,005  41,585  49,910  79,295 
30-59 days past due 73,925  151,704  139,128  186,549  166,385 
Current 32,730,320  32,892,465  31,770,847  31,725,993  30,968,939 
Total loans, net of unearned income $32,911,187  $33,171,233  $32,079,073  $32,135,555  $31,402,903 


TABLE 14: NON-PERFORMING ASSETS AND TROUBLED DEBT RESTRUCTURINGS ("TDRs")

 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(Dollars in thousands)2021 2021 2020 2020 2020
Loans past due greater than 90 days and still accruing (1):         
Commercial$1,244  $  $307  $  $1,374 
Commercial real estate         
Home equity         
Residential real estate         
Premium finance receivables3,570  4,783  12,792  12,177  35,638 
Consumer and other178  161  264  175  156 
Total loans past due greater than 90 days and still accruing4,992  4,944  13,363  12,352  37,168 
Non-accrual loans:         
Commercial23,232  22,459  21,743  42,036  42,882 
Commercial real estate26,035  34,380  46,107  68,815  64,557 
Home equity3,478  5,536  6,529  6,329  7,261 
Residential real estate23,050  21,553  26,071  22,069  19,529 
Premium finance receivables6,418  9,690  13,264  21,080  16,460 
Consumer and other485  497  436  422  427 
Total non-accrual loans82,698  94,115  114,150  160,751  151,116 
Total non-performing loans:         
Commercial24,476  22,459  22,050  42,036  44,256 
Commercial real estate26,035  34,380  46,107  68,815  64,557 
Home equity3,478  5,536  6,529  6,329  7,261 
Residential real estate23,050  21,553  26,071  22,069  19,529 
Premium finance receivables9,988  14,473  26,056  33,257  52,098 
Consumer and other663  658  700  597  583 
Total non-performing loans$87,690  $99,059  $127,513  $173,103  $188,284 
Other real estate owned10,510  8,679  9,711  2,891  2,409 
Other real estate owned - from acquisitions5,062  7,134  6,847  6,326  7,788 
Other repossessed assets         
Total non-performing assets$103,262  $114,872  $144,071  $182,320  $198,481 
Accruing TDRs not included within non-performing assets$44,019  $46,151  $47,023  $46,410  $48,609 
Total non-performing loans by category as a percent of its own respective category’s period-end balance:         
Commercial0.21% 0.18% 0.18% 0.34% 0.37%
Commercial real estate0.30  0.40  0.54  0.82  0.79 
Home equity0.94  1.42  1.54  1.42  1.56 
Residential real estate1.51  1.52  2.07  1.59  1.37 
Premium finance receivables0.09  0.14  0.26  0.35  0.55 
Consumer and other7.35  1.83  2.17  1.08  1.21 
Total loans, net of unearned income0.27% 0.30% 0.40% 0.54% 0.60%
Total non-performing assets as a percentage of total assets0.22% 0.25% 0.32% 0.42% 0.46%
Allowance for credit losses as a percentage of non-accrual loans367.64% 341.29% 332.82% 241.93% 246.90%
          

(1) As of June 30, 2021, $320,000 of TDRs were past due greater than 90 days and still accruing interest compared to none in March 31, 2021, December 31, 2020, September 30, 2020, and June 30, 2020.


Non-performing Loans Rollforward

 Three Months EndedSix Months Ended
 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,Jun 30, Jun 30,
(In thousands)2021 2021 2020 2020 20202021 2020
             
Balance at beginning of period$99,059   $127,513   $173,103   $188,284   $179,360  $127,513   $117,588  
Additions from becoming non-performing in the respective period12,762   9,894   13,224   19,771   20,803  22,656   52,998  
Additions from the adoption of ASU 2016-13—               —    37,285  
Return to performing status—    (654)  (1,000)  (6,202)  (2,566) (654)  (3,052) 
Payments received(12,312)  (22,731)  (30,146)  (3,733)  (11,201) (35,043)  (19,150) 
Transfer to OREO and other repossessed assets(3,660)  (1,372)  (12,662)  (598)    (5,032)  (1,297) 
Charge-offs, net(4,684)  (2,952)  (7,817)  (6,583)  (12,884) (7,636)  (15,435) 
Net change for niche loans (1)(3,475)  (10,639)  (7,189)  (17,836)  14,772  (14,114)  19,347  
Balance at end of period$87,690   $99,059   $127,513   $173,103   $188,284  $87,690   $188,284  

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


TDRs

 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(In thousands)2021 2021 2020 2020 2020
Accruing TDRs:         
Commercial$6,911  $7,536  $7,699  $7,863  $5,338 
Commercial real estate9,659  9,478  10,549  10,846  19,106 
Residential real estate and other27,449  29,137  28,775  27,701  24,165 
Total accrual$44,019  $46,151  $47,023  $46,410  $48,609 
Non-accrual TDRs: (1)         
Commercial$4,104  $5,583  $10,491  $13,132  $20,788 
Commercial real estate3,434  1,309  6,177  13,601  8,545 
Residential real estate and other4,190  3,540  4,501  5,392  5,606 
Total non-accrual$11,728  $10,432  $21,169  $32,125  $34,939 
Total TDRs:         
Commercial$11,015  $13,119  $18,190  $20,995  $26,126 
Commercial real estate13,093  10,787  16,726  24,447  27,651 
Residential real estate and other31,639  32,677  33,276  33,093  29,771 
Total TDRs$55,747  $56,583  $68,192  $78,535  $83,548 

(1)     Included in total non-performing loans.


Other Real Estate Owned

 Three Months Ended
 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
(In thousands)2021 2021 2020 2020 2020
Balance at beginning of period$15,813   $16,558   $9,217   $10,197   $11,026  
Disposals/resolved(3,152)  (2,162)  (3,839)  (1,532)  (612) 
Transfers in at fair value, less costs to sell3,660   1,587   11,508   777     
Additions from acquisition              
Fair value adjustments(749)  (170)  (328)  (225)  (217) 
Balance at end of period$15,572   $15,813   $16,558   $9,217   $10,197  
          
 Period End
 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
Balance by Property Type:2021 2021 2020 2020 2020
Residential real estate$1,952   $2,713   $2,324   $1,839   $1,382  
Residential real estate development1,030   1,287   1,691        
Commercial real estate12,590   11,813   12,543   7,378   8,815  
Total$15,572   $15,813   $16,558   $9,217   $10,197  


TABLE 15: NON-INTEREST INCOME

 Three Months Ended Q2 2021 compared to
Q1 2021
 Q2 2021 compared to
Q2 2020
 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,  
(Dollars in thousands)2021 2021 2020 2020 2020 $ Change % Change $ Change % Change
Brokerage$5,148   $5,040   $4,740   $4,563   $4,147   $108   2 % $1,001   24 %
Trust and asset management25,542   24,269   22,062   20,394   18,489   1,273   5   7,053   38  
Total wealth management30,690   29,309   26,802   24,957   22,636   1,381   5   8,054   36  
Mortgage banking50,584   113,494   86,819   108,544   102,324   (62,910)  (55)  (51,740)  (51) 
Service charges on deposit accounts13,249   12,036   11,841   11,497   10,420   1,213   10   2,829   27  
Gains on investment securities, net1,285   1,154   1,214   411   808   131   11   477   59  
Fees from covered call options1,388               1,388   NM   1,388   NM  
Trading (losses) gains, net(438)  419   (102)  183   (634)  (857)  NM   196   (31) 
Operating lease income, net12,240   14,440   12,118   11,717   11,785   (2,200)  (15)  455   4  
Other:                 
Interest rate swap fees2,820   2,488   4,930   4,029   5,693   332   13   (2,873)  (50) 
BOLI1,342   1,124   2,846   1,218   1,950   218   19   (608)  (31) 
Administrative services1,228   1,256   1,263   1,077   933   (28)  (2)  295   32  
Foreign currency remeasurement (losses) gains(782)  99   (208)  (54)  (208)  (881)  NM   (574)  NM  
Early pay-offs of capital leases195   (52)  118   165   275   247   NM   (80)  (29) 
Miscellaneous15,572   10,739   10,720   6,849   6,011   4,833   45   9,561   NM  
Total Other20,375   15,654   19,669   13,284   14,654   4,721   30   5,721   39  
Total Non-Interest Income$129,373   $186,506   $158,361   $170,593   $161,993   $(57,133)  (31)% $(32,620)  (20)%

NM - Not meaningful.


 Six Months Ended    
 Jun 30, Jun 30, $ %
(Dollars in thousands)2021 2020 Change Change
Brokerage$10,188   $9,428   $760   8 %
Trust and asset management49,811   39,149   10,662   27  
Total wealth management59,999   48,577   11,422   24  
Mortgage banking164,078   150,650   13,428   9  
Service charges on deposit accounts25,285   21,685   3,600   17  
Gains (losses) on investment securities, net2,439   (3,551)  5,990   NM  
Fees from covered call options1,388   2,292   (904)  (39) 
Trading losses, net(19)  (1,085)  1,066   (98) 
Operating lease income, net26,680   23,769   2,911   12  
Other:       
Interest rate swap fees5,308   11,759   (6,451)  (55) 
BOLI2,466   666   1,800   NM  
Administrative services2,484   2,045   439   21  
Foreign currency remeasurement loss(683)  (359)  (324)  90  
Early pay-offs of leases143   349   (206)  (59) 
Miscellaneous26,311   18,438   7,873   43  
Total Other36,029   32,898   3,131   10  
Total Non-Interest Income$315,879   $275,235   $40,644   15 %

NM - Not meaningful.


TABLE 16: MORTGAGE BANKING

 Three Months EndedSix Months Ended
(Dollars in thousands)Jun 30,
2021
 Mar 31,
2021
 Dec 31,
2020
 Sep 30,
2020
 Jun 30,
2020
Jun 30,
2021
 Jun 30,
2020
Originations:            
Retail originations$1,328,721   $1,641,664   $1,757,093   $1,590,699   $1,588,932  $2,970,385   $2,362,076  
Veterans First originations395,290   580,303   594,151   635,876   621,878  975,593   1,064,835  
Total originations for sale (A)$1,724,011   $2,221,967   $2,351,244   $2,226,575   $2,210,810  $3,945,978   $3,426,911  
Originations for investment249,749   321,858   192,107   73,711   56,954  571,607   130,681  
Total originations$1,973,760   $2,543,825   $2,543,351   $2,300,286   $2,267,764  $4,517,585   $3,557,592  
             
Retail originations as percentage of originations for sale77 % 74 % 75 % 71 % 72 %75 % 69 %
Veterans First originations as a percentage of originations for sale23   26   25   29   28  25   31  
             
Purchases as a percentage of originations for sale53 % 27 % 35 % 41 % 30 %38 % 32 %
Refinances as a percentage of originations for sale47   73   65   59   70  62   68  
             
Production Margin:            
Production revenue (B) (1)$37,531   $71,282   $70,886   $94,148   $93,433  $108,813   $142,760  
Production margin (B / A)2.18 % 3.21 % 3.01 % 4.23 % 4.23 %2.76 % 4.17 %
             
Mortgage Servicing:            
Loans serviced for others (C)$12,307,337   $11,530,676   $10,833,135   $10,139,878   $9,188,285     
MSRs, at fair value (D) 127,604    124,316    92,081    86,907    77,203     
Percentage of MSRs to loans serviced for others (D / C)1.04 % 1.08 % 0.85 % 0.86 % 0.84 %   
Servicing income$9,830   $9,636   $9,829   $8,118   $6,908  $19,466   $13,939  
             
Components of MSR:            
MSR - current period capitalization$17,512   $24,616   $20,343   $20,936   $20,351  $42,128   $29,798  
MSR - collection of expected cash flows - paydowns(991)  (728)  (688)  (590)  (419) (1,719)  (966) 
MSR - collection of expected cash flows - payoffs(7,549)  (9,440)  (8,335)  (7,272)  (8,252) (16,989)  (14,728) 
Valuation:            
MSR - changes in fair value model assumptions(5,540)  18,045   (5,223)  (3,002)  (7,982) 12,505   (22,539) 
Gain on derivative contract held as an economic hedge, net            589     4,749  
MSR valuation adjustment, net of gain on derivative contract held as an economic hedge$(5,540)  $18,045   $(5,223)  $(3,002)  $(7,393) $12,505   $(17,790) 
             
Summary of Mortgage Banking Revenue:            
Production revenue (1)$37,531   $71,282   $70,886   $94,148   $93,433  $108,813   $142,760  
Servicing income9,830   9,636   9,829   8,118   6,908  19,466   13,939  
MSR activity3,432   32,493   6,097   10,072   4,287  35,925   (3,686) 
Other(209)  83   7   (3,794)  (2,304) (126)  (2,363) 
Total mortgage banking revenue$50,584   $113,494   $86,819   $108,544   $102,324  $164,078   $150,650  

(1)     Production revenue represents revenue earned from the origination and subsequent sale of mortgages, including gains on loans sold and fees from originations, changes in other related financial instruments carried at fair value, processing and other related activities, and excludes servicing fees, changes in the fair value of servicing rights and changes to the mortgage recourse obligation and other non-production revenue.


TABLE 17: NON-INTEREST EXPENSE

 Three Months Ended Q2 2021 compared to
Q1 2020
 Q2 2021 compared to
Q2 2020
 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,  
(Dollars in thousands)2021 2021 2020 2020 2020 $ Change % Change $ Change % Change
Salaries and employee benefits:                 
Salaries$91,089  $91,053   $93,535   $89,849   $87,105  $36   0 % $3,984   5 %
Commissions and incentive compensation53,751  61,367   52,383   48,475   46,151  (7,616)  (12)  7,600   16  
Benefits27,977  28,389   25,198   25,718   20,900  (412)  (1)  7,077   34  
Total salaries and employee benefits172,817  180,809   171,116   164,042   154,156  (7,992)  (4)  18,661   12  
Equipment20,866  20,912   20,565   17,251   15,846  (46)  0   5,020   32  
Operating lease equipment depreciation9,949  10,771   9,938   9,425   9,292  (822)  (8)  657   7  
Occupancy, net17,687  19,996   19,687   15,830   16,893  (2,309)  (12)  794   5  
Data processing6,920  6,048   5,728   5,689   10,406  872   14   (3,486)  (33) 
Advertising and marketing11,305  8,546   9,850   7,880   7,704  2,759   32   3,601   47  
Professional fees7,304  7,587   6,530   6,488   7,687  (283)  (4)  (383)  (5) 
Amortization of other intangible assets2,039  2,007   2,634   2,701   2,820  32   2   (781)  (28) 
FDIC insurance6,405  6,558   7,016   6,772   7,081  (153)  (2)  (676)  (10) 
OREO expense, net769  (251)  (114)  (168)  237  1,020   NM   532   NM  
Other:                 
Commissions - 3rd party brokers889  846   764   778   707  43   5   182   26  
Postage1,900  1,743   1,849   1,529   1,591  157   9   309   19  
Miscellaneous21,262  21,317   26,304   26,002   24,948  (55)  0   (3,686)  (15) 
Total other24,051  23,906   28,917   28,309   27,246  145   1   (3,195)  (12) 
Total Non-Interest Expense$280,112  $286,889   $281,867   $264,219   $259,368  $(6,777)  (2)% $20,744   8 %

NM - Not meaningful.


  Six Months Ended   
  Jun 30, Jun 30,$ %
(Dollars in thousands) 2021 2020Change Change
Salaries and employee benefits:       
Salaries $182,142  $168,391  $13,751   8 %
Commissions and incentive compensation 115,118  77,726  37,392   48  
Benefits 56,366  44,801  11,565   26  
Total salaries and employee benefits 353,626  290,918  62,708   22  
Equipment 41,778  30,680  11,098   36  
Operating lease equipment depreciation 20,720  18,552  2,168   12  
Occupancy, net 37,683  34,440  3,243   9  
Data processing 12,968  18,779  (5,811)  (31) 
Advertising and marketing 19,851  18,566  1,285   7  
Professional fees 14,891  14,408  483   3  
Amortization of other intangible assets 4,046  5,683  (1,637)  (29) 
FDIC insurance 12,963  11,216  1,747   16  
OREO expense, net 518  (639) 1,157   NM  
Other:       
Commissions - 3rd party brokers 1,735  1,572  163   10  
Postage 3,643  3,540  103   3  
Miscellaneous 42,579  46,294  (3,715)  (8) 
Total other 47,957  51,406  (3,449)  (7) 
Total Non-Interest Expense $567,001  $494,009  $72,992   15 %

NM - Not meaningful.


TABLE 18: 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 and pre-tax income, excluding provision for credit losses. 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, as a useful measurement of the Company’s core net income.


 Three Months EndedSix Months Ended
 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,Jun 30, Jun 30,
(Dollars and shares in thousands)2021  2021  2020  2020  2020 2021 2020
Reconciliation of Non-GAAP Net Interest Margin and Efficiency Ratio:   
(A) Interest Income (GAAP)$319,579  $305,469  $307,981  $311,156  $329,816 $625,048  $673,883  
Taxable-equivalent adjustment:            
- Loans415  384  324  481  576 799  1,436  
- Liquidity Management Assets494  500  530  546  538 994  1,089  
- Other Earning Assets    3  1  3   5  
(B) Interest Income (non-GAAP)$320,488  $306,353  $308,838  $312,184  $330,933 $626,841  $676,413  
(C) Interest Expense (GAAP)39,989  43,574  48,584  55,220  66,685 83,563  149,309  
(D) Net Interest Income (GAAP) (A minus C)$279,590  $261,895  $259,397  $255,936  $263,131 $541,485  $524,574  
(E) Net Interest Income (non-GAAP) (B minus C)$280,499  $262,779  $260,254  $256,964  $264,248 $543,278  $527,104  
Net interest margin (GAAP)2.62% 2.53% 2.53% 2.56% 2.73%2.58% 2.91 %
Net interest margin, fully taxable-equivalent (non-GAAP)2.63  2.54  2.54  2.57  2.74 2.59  2.93  
(F) Non-interest income$129,373  $186,506  $158,361  $170,593  $161,993 $315,879  $275,235  
(G) Gains on investment securities, net1,285  1,154  1,214  411  808 2,439  (3,551) 
(H) Non-interest expense280,112  286,889  281,867  264,219  259,368 567,001  494,009  
Efficiency ratio (H/(D+F-G))68.71% 64.15% 67.67% 62.01% 61.13%66.32% 61.49 %
Efficiency ratio (non-GAAP) (H/(E+F-G))68.56  64.02  67.53  61.86  60.97 66.18  61.30  
             
Reconciliation of Non-GAAP Tangible Common Equity Ratio:   
Total shareholders’ equity (GAAP)$4,339,011  $4,252,511  $4,115,995  $4,074,089  $3,990,218    
Less: Non-convertible preferred stock (GAAP) (412,500)
  (412,500)  (412,500)  (412,500)  (412,500)   
Less: Intangible assets (GAAP) (678,333)
  (680,052)  (681,747)  (683,314)  (685,581)   
(I) Total tangible common shareholders’ equity (non-GAAP)$3,248,178  $3,159,959  $3,021,748  $2,978,275  $2,892,137    
(J) Total assets (GAAP)$46,738,450  $45,682,202  $45,080,768  $43,731,718  $43,540,017    
Less: Intangible assets (GAAP) (678,333)
  (680,052)  (681,747)  (683,314)  (685,581)   
(K) Total tangible assets (non-GAAP)$46,060,117  $45,002,150  $44,399,021  $43,048,404  $42,854,436    
Common equity to assets ratio (GAAP) (L/J)8.4% 8.4% 8.2% 8.4% 8.2%   
Tangible common equity ratio (non-GAAP) (I/K)7.1  7.0  6.8  6.9  6.7    


 Three Months EndedSix Months Ended
 Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,Jun 30, Jun 30,
(Dollars and shares in thousands)2021 2021 2020 2020 20202021 2020
Reconciliation of Non-GAAP Tangible Book Value per Common Share:   
Total shareholders’ equity$4,339,011   $4,252,511   $4,115,995   $4,074,089   $3,990,218     
Less: Preferred stock(412,500)  (412,500)  (412,500)  (412,500)  (412,500)    
(L) Total common equity$3,926,511   $3,840,011   $3,703,495   $3,661,589   $3,577,718     
(M) Actual common shares outstanding57,067   57,023   56,770   57,602   57,574     
Book value per common share (L/M)$68.81   $67.34   $65.24   $63.57   $62.14     
Tangible book value per common share (non-GAAP) (I/M)56.92   $55.42   53.23   51.70   50.23     
             
Reconciliation of Non-GAAP Return on Average Tangible Common Equity:   
(N) Net income applicable to common shares$98,118   $146,157   $94,213   $97,029   $19,609  $244,275   $80,371  
Add: Intangible asset amortization2,039   2,007   2,634   2,701   2,820  4,046   5,683  
Less: Tax effect of intangible asset amortization(553)  (522)  (656)  (589)  (832) (1,068)  (1,608) 
After-tax intangible asset amortization$1,486   $1,485   $1,978   $2,112   $1,988  $2,978   $4,075  
(O) Tangible net income applicable to common shares (non-GAAP)$99,604   $147,642   $96,191   $99,141   $21,597  $247,253   $84,446  
Total average shareholders’ equity$4,256,778   $4,164,890   $4,050,286   $4,034,902   $3,908,846  $4,211,088   $3,809,508  
Less: Average preferred stock(412,500)  (412,500)  (412,500)  (412,500)  (273,489) (412,500)  (199,245) 
(P) Total average common shareholders’ equity$3,844,278   $3,752,390   $3,637,786   $3,622,402   $3,635,357  $3,798,588   $3,610,263  
Less: Average intangible assets(679,535)  (680,805)  (682,290)  (684,717)  (686,526) (680,166)  (688,652) 
(Q) Total average tangible common shareholders’ equity (non-GAAP)$3,164,743   $3,071,585   $2,955,496   $2,937,685   $2,948,831  $3,118,422   $2,921,611  
Return on average common equity, annualized (N/P)10.24 % 15.80 % 10.30 % 10.66 % 2.17 %12.97 % 4.48 %
Return on average tangible common equity, annualized (non-GAAP) (O/Q)12.62   19.49   12.95   13.43   2.95  15.99   5.81  
             
Reconciliation of Non-GAAP Pre-Tax, Pre-Provision Income:     
Income before taxes$144,150   $206,859   $134,711   $137,284   $30,703  $351,009   $117,786  
Add: Provision for credit losses(15,299)  (45,347)  1,180   25,026   135,053  (60,646)  188,014  
Pre-tax income, excluding provision for credit losses (non-GAAP)$128,851   $161,512   $135,891   $162,310   $165,756  $290,363   $305,800  


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, Crete, Countryside, Darien, Deerfield, Des Plaines, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Evanston, Evergreen Park, Frankfort, Geneva, Glen Ellyn, Glencoe, Glenview, Gurnee, Grayslake, Hanover Park, Highland Park, Highwood, Hoffman Estates, Homer Glen, Itasca, Joliet, Lake Bluff, Lake Villa, Lansing, Lemont, Lindenhurst, Lynwood, Markham, Maywood, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, Northfield, Norridge, Oak Lawn, Orland Park, Palatine, Park Ridge, Prospect Heights, Riverside, 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 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 2020 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, and management’s long-term performance goals, as well as statements relating to the anticipated effects on financial condition and results of operations from expected developments or events, 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. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:

  • the severity, magnitude and duration of the COVID-19 pandemic, including the 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 our operations and personnel, commercial activity and demand across our business and our customers’ businesses;
  • the disruption of global, national, state and local economies associated with the COVID-19 pandemic, which could affect the Company’s liquidity and capital positions, impair the ability of our borrowers to repay outstanding loans, impair collateral values and further increase our allowance for credit losses;
  • the impact of the COVID-19 pandemic on our financial results, including possible lost revenue and increased expenses (including the cost of capital), as well as possible goodwill impairment charges;
  • economic conditions 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, 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 (including developments and volatility arising from or related to the COVID-19 pandemic) that may affect, among other things, the Company’s liquidity and the value of its assets and liabilities;
  • a prolonged period of near zero interest rates or potentially negative 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 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;
  • 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;
  • uncertainty about the discontinued use of LIBOR and transition to an alternative rate;
  • 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, including those changes that are in response to the COVID-19 pandemic, including without limitation the CARES Act, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act, and the rules and regulations that may be promulgated thereunder;
  • 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 the COVID-19 pandemic 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; and
  • fluctuations in the stock market, which may have an adverse impact on the Company’s wealth management business and brokerage operation.

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 Tuesday, July 20, 2021 at 11:00 a.m. (Central Time) regarding second quarter 2021 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #8765066. A simultaneous audio-only webcast and replay of the conference call as well as an accompanying slide presentation may be accessed via the Company’s website at https://www.wintrust.com, Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the second quarter 2021 earnings press release will 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


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