Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________________ FORM 10-Q _________________________________________ ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☐ For the transition period from to Commission File Number 001-35077 ___________________________ ...

Wintrust Financial Corporation (NASDAQ:WTFC) Q3 2023 Earnings Call Transcript October 18, 2023 11:00 AM ET Company Participants Tim Crane - President and Chief Executive Officer David Dykstra - Vice Chairman and Chief Operating Officer Richard Murphy - Vice Chairman and Chief Lending Officer Conference Call Participants Jon Arfstrom - RBC Capital Markets Chris McGratty - KBW Terry McEvoy - Stephens Inc. David Long - Raymond James Casey Haire - Jefferies Jeff Rulis - D.A. Davidson Brody Preston - UBS Operato ...

☐ Table of Contents For the transition period from to UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________________ FORM 10-Q _________________________________________ ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Indicate by check mark whether the registrant (1) has filed all r ...

Wintrust Financial Corporation (NASDAQ:WTFC) Q2 2023 Earnings Conference Call July 20, 2023 10:00 AM ET Company Participants Timothy Crane - President and Chief Executive Officer David Alan Dykstra - Vice Chairman and Chief Operating Officer Richard Murphy - Vice Chairman and Chief Lending Officer Conference Call Participants Jon Arfstrom - RBC Capital Markets David Long - Raymond James Terry McEvoy - Stephens Inc. Ben Gerlinger - Hovde Group Christopher McGratty - Keefe, Bruyette & Woods, Inc. Brody Presto ...

Wintrust Financial Corporation Earnings Release Presentation Q2 2023 WINTRUST Forward Looking Statements 22 PENDING 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, ar ...

PART I — FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) Presents Wintrust Financial Corporation's unaudited consolidated financial statements for Q1 2023, detailing financial condition, income, and accounting policies Consolidated Statement of Condition Highlights (Unaudited) | (In thousands) | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$52,873,511** | **$52,949,649** | | Net Loans | $39,277,499 | $38,926,312 | | Total Deposits | $42,718,211 | $42,902,544 | | **Total Liabilities** | **$47,858,005** | **$48,152,811** | | **Total Shareholders' Equity** | **$5,015,506** | **$4,796,838** | Consolidated Statement of Income Highlights (Unaudited) | (In thousands, except per share data) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net Interest Income | $457,995 | $299,294 | | Provision for Credit Losses | $23,045 | $4,106 | | **Net Income** | **$180,198** | **$127,391** | | Net Income Applicable to Common Shares | $173,207 | $120,400 | | **Net Income per Common Share—Diluted** | **$2.80** | **$2.07** | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Detailed notes explain the company's accounting policies, financial statement components, and recent accounting developments including ASU 2022-02 adoption - The company adopted ASU 2022-02, eliminating separate guidance for Troubled Debt Restructurings (TDRs), resulting in a cumulative-effect adjustment of **$741,000** to the allowance for loan losses, recorded as a direct adjustment to retained earnings[20](index=20&type=chunk) Investment Securities Summary (March 31, 2023) | (In thousands) | Amortized Cost | Fair Value | | :--- | :--- | :--- | | **Available-for-sale securities** | **$3,739,980** | **$3,259,845** | | Mortgage-backed securities | $3,395,928 | $2,935,974 | | **Held-to-maturity securities** | **$3,606,854** | **$2,976,198** | | Mortgage-backed securities | $3,034,465 | $2,479,816 | Loan Portfolio Composition | (In thousands) | March 31, 2023 | March 31, 2022 | | :--- | :--- | :--- | | Commercial | $12,576,985 | $11,583,963 | | Commercial real estate | $10,239,078 | $9,235,074 | | Premium finance receivables | $13,864,682 | $12,291,571 | | Residential real estate | $2,505,545 | $1,799,985 | | **Total loans, net of unearned income** | **$39,565,471** | **$35,280,547** | Allowance for Credit Losses Activity (Q1 2023 vs Q1 2022) | (In thousands) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Beginning Balance | $357,448 | $299,653 | | Provision for credit losses | $23,070 | $4,025 | | Net charge-offs | ($5,465) | ($2,532) | | **Ending Balance** | **$375,798** | **$301,168** | - On April 3, 2023, the Company completed its acquisition of Rothschild & Co Asset Management US Inc. and Rothschild & Co Risk Based Investments LLC, which were merged into its subsidiary, Great Lakes Advisors, LLC[174](index=174&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=51&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2023 financial performance, highlighting record net income, net interest income growth, and analyses of key financial metrics - Q1 2023 net income reached a record **$180.2 million**, a **41%** increase from **$127.4 million** in Q1 2022, driven by a **53%** year-over-year increase in net interest income to **$458.0 million** and a higher net interest margin of **3.81%** (up from **2.60%** year-over-year)[179](index=179&type=chunk)[181](index=181&type=chunk)[198](index=198&type=chunk) - Non-interest income decreased by **34%** to **$107.8 million** in Q1 2023 from **$162.8 million** in Q1 2022, primarily due to a **$59.0 million** (**76%**) decline in mortgage banking revenue as rising interest rates reduced origination volumes[182](index=182&type=chunk)[209](index=209&type=chunk)[212](index=212&type=chunk) - Total loans grew **12%** year-over-year to **$39.6 billion** at March 31, 2023, driven by organic growth in commercial, commercial real estate, and life insurance premium finance portfolios[180](index=180&type=chunk) - Credit quality remains strong, with total non-performing loans (excluding government-guaranteed loans) at **0.25%** of total loans; the allowance for credit losses to total loans increased to **0.95%** at March 31, 2023, from **0.85%** a year prior, reflecting loan growth and macroeconomic forecasts[253](index=253&type=chunk)[260](index=260&type=chunk) - As of March 31, 2023, the company had approximately **$13.0 billion** of uninsured and uncollateralized deposits, representing about **30%** of total deposits, with total liquidity sources of **$10.9 billion** covering approximately **84%** of these deposits[270](index=270&type=chunk)[271](index=271&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=77&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details the company's market risk management, focusing on interest rate risk and using simulation analysis to model its impact on net interest income - The company manages interest rate risk by balancing risk, credit, liquidity, and yield, with policies monitored by management and overseen by the Board's Risk Management Committee[286](index=286&type=chunk) Net Interest Income Sensitivity Analysis (Static Shock Scenario) | Change in Interest Rates | % Change in Net Interest Income (as of Mar 31, 2023) | % Change in Net Interest Income (as of Mar 31, 2022) | | :--- | :--- | :--- | | +200 Basis Points | +4.2% | +21.4% | | +100 Basis Points | +2.4% | +11.0% | | -100 Basis Points | -2.4% | -11.3% | | -200 Basis Points | -7.3% | -18.7% | - The company has actively reduced its exposure to interest rate fluctuations by executing derivative instruments and originating more longer-term fixed-rate loans[292](index=292&type=chunk) [Controls and Procedures](index=78&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Confirms the effectiveness of the company's disclosure controls and procedures as of March 31, 2023, with no material changes to internal controls - The CEO and CFO concluded that the Company's disclosure controls and procedures are effective in all material respects as of the end of the reporting period[295](index=295&type=chunk) - No material changes occurred in the Company's internal control over financial reporting during the quarter[296](index=296&type=chunk) PART II — OTHER INFORMATION [Legal Proceedings](index=79&type=section&id=ITEM%201.%20Legal%20Proceedings) Discloses several pending legal actions against the company, including ERISA, PAGA, and fair lending class actions, not expected to materially affect financial condition - The company faces an ERISA class action lawsuit filed in July 2022, alleging breach of fiduciary duty related to 401(k) plan fund selection, which Wintrust believes is meritless[299](index=299&type=chunk) - A former employee filed a California PAGA suit in May 2022, alleging wage and hour violations, which the company disputes and has moved to compel arbitration[300](index=300&type=chunk) - A putative class action was filed in May 2022, alleging Wintrust Mortgage discriminated against Black/African American borrowers, which the company disputes and has moved to dismiss[301](index=301&type=chunk) - Management believes the eventual outcome of all pending legal actions will not materially adversely affect the company's operations or financial condition[303](index=303&type=chunk) [Risk Factors](index=80&type=section&id=ITEM%201A.%20Risk%20Factors) Indicates no material changes to the risk factors previously disclosed in the company's 2022 Annual Report on Form 10-K - No material changes occurred from the risk factors set forth in the 2022 Form 10-K[304](index=304&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=80&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) States that no purchases of the company's common stock were made by or on behalf of the company during Q1 2023 - The Company made no purchases of its own common shares during the three months ended March 31, 2023[305](index=305&type=chunk) [Other Information](index=80&type=section&id=ITEM%205.%20Other%20Information) Reports Jeffrey D. Hahnfeld's promotion to EVP, Controller and Chief Accounting Officer, and the Series D Preferred Stock's benchmark change from LIBOR to SOFR - Effective May 5, 2023, Jeffrey D. Hahnfeld was promoted to Executive Vice President, Controller and Chief Accounting Officer, becoming the company's principal accounting officer[307](index=307&type=chunk) - On May 5, 2023, the company filed a Restated Certificate of Designations for its Series D Preferred Stock, replacing the three-month LIBOR benchmark with Three-Month CME Term SOFR plus a tenor spread adjustment of **0.26161%** for dividend calculations during the floating rate period beginning July 15, 2025[310](index=310&type=chunk)[312](index=312&type=chunk)[313](index=313&type=chunk) [Exhibits](index=81&type=section&id=ITEM%206.%20Exhibits) Provides a list of all exhibits filed with the Form 10-Q report, including the Restated Certificate of Designations for Series D Preferred Stock, amended employment agreements, and SOX certifications - The report includes several key exhibits, such as the Restated Certificate of Designations for Series D Preferred Stock and amended employment agreements for key executives[316](index=316&type=chunk)

Wintrust Financial Corporation (NASDAQ:WTFC) Q1 2023 Earnings Conference Call April 20, 2023 11:00 AM ET Company Participants Edward Wehmer - Founder and CEO Tim Crane - President David Dykstra - Vice Chairman and COO Richard Murphy - Vice Chairman and CLO David Stoehr - Chief Financial Officer Kate Boege - General Counsel Conference Call Participants David Long - Raymond James Christopher McGratty - KBW Casey Haire - Jefferies Nathan Race - Piper Sandler Brody Preston - UBS Jeff Rulis - D.A. Davidson Ben G ...

PART I [ITEM 1. BUSINESS](index=4&type=section&id=ITEM%201.%20BUSINESS) Wintrust Financial Corporation is a financial holding company providing community-oriented banking, specialty finance, and wealth management services primarily in the Chicago metropolitan area, southern Wisconsin, and northwest Indiana - Wintrust Financial Corporation, incorporated in 1992, is a financial holding company with approximately **$52.9 billion in total assets** as of December 31, 2022[12](index=12&type=chunk) - The company provides community-oriented, personal and commercial banking services, residential mortgage origination, specialty finance services (insurance premium finance, lease financing, accounts receivable financing), and wealth management services[12](index=12&type=chunk) - Operations are divided into three primary segments: community banking, specialty finance, and wealth management, managed separately due to differing products, services, marketing strategies, customer bases, and regulatory environments[13](index=13&type=chunk) Community Banking Segment Financials | Metric | 2022 (Millions) | 2021 (Millions) | 2020 (Millions) | | :----- | :-------------- | :-------------- | :-------------- | | Net Revenues | $1,500 | $1,300 | $1,300 | | Net Income | $349 | $319 | $164 | | Total Assets | $41,400 | $40,300 | $36,800 | Specialty Finance Segment Financials | Metric | 2022 (Millions) | 2021 (Millions) | 2020 (Millions) | | :----- | :-------------- | :-------------- | :-------------- | | Net Revenues | $344 | $294 | $263 | | Net Income | $121 | $109 | $100 | | Total Assets | $9,800 | $8,400 | $7,000 | Wealth Management Segment Financials | Metric | 2022 (Millions) | 2021 (Millions) | 2020 (Millions) | | :----- | :-------------- | :-------------- | :-------------- | | Net Revenues | $163 | $161 | $134 | | Net Income | $39 | $38 | $29 | | Total Assets | $1,800 | $1,500 | $1,300 | | Assets Under Administration | $34,400 | N/A | N/A | - The company's strategy includes leveraging its loan pipeline, diversifying its loan portfolio, managing interest costs, using call option contracts for hedging, completing strategic acquisitions, focusing on cost control, and expanding Wintrust Asset Finance[38](index=38&type=chunk)[44](index=44&type=chunk) - Wintrust is heavily regulated by federal and state agencies, including the Federal Reserve, OCC, SEC, FINRA, and FDIC, with increasing scrutiny on capital requirements, consumer protection, AML, and data privacy[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) Company Regulatory Capital Ratios (as of December 31, 2022) | Ratio | Minimum Regulatory Capital Ratio (%) | Minimum Ratio + Capital Conservation Buffer (%) | Well-Capitalized Minimum for the Company (%) | The Company (Actual) (%) | | :-------------------------------- | :------------------------------- | :---------------------------------------- | :--------------------------------------- | :------------------- | | Common Equity Tier 1 Capital Ratio | 4.50 | 7.00 | N/A | 9.1 | | Tier 1 Capital Ratio | 6.00 | 8.50 | 6.00 | 10.0 | | Total Capital Ratio | 8.00 | 10.50 | 10.00 | 11.9 | | Tier 1 Leverage Ratio | 4.00 | N/A | N/A | 8.8 | - As of December 31, 2022, Wintrust employed **5,275 full-time equivalent employees**; in 2022, **53% of new hires were female** and **42% were racial or ethnic minorities**, with turnover approximately **25%**[123](index=123&type=chunk)[124](index=124&type=chunk) - The company is committed to diversity and inclusion, with women representing **57% of the workforce** and racially/ethnically diverse individuals representing **32%**, implementing advocate-protégé partnerships, Business Resource Groups (BRGs), and a 360° Inclusivity Model[126](index=126&type=chunk) - Wintrust focuses on mitigating environmental impact, assessing climate-related risks, and supporting climate solutions, managing **$157 million in climate-focused portfolios** as of December 31, 2022[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) [ITEM 1A. Risk Factors](index=27&type=section&id=ITEM%201A.%20Risk%20Factors) Wintrust faces principal risks from economic downturns, intense competition, regulatory changes, potential loan losses, and operational vulnerabilities - Economic risks include deterioration in general business conditions, interest rate volatility, inflation, and specific economic declines in the Chicago metropolitan and southern Wisconsin market areas where the business is concentrated[137](index=137&type=chunk)[147](index=147&type=chunk)[151](index=151&type=chunk) - Competition risks stem from a highly competitive financial services industry, including larger institutions and FinTech companies, and potential damage to reputation from various sources, including ESG concerns[138](index=138&type=chunk)[157](index=157&type=chunk)[159](index=159&type=chunk)[161](index=161&type=chunk) - Growth and acquisition risks involve challenges in identifying and integrating acquisitions, potential dilution of shareholder value, and significant expenses and delayed returns from de novo operations[139](index=139&type=chunk)[165](index=165&type=chunk)[167](index=167&type=chunk)[171](index=171&type=chunk) - Legal and regulatory risks include failure to meet capital ratios, changes in monetary policy, increased compliance costs from legislative and regulatory actions (e.g., Dodd-Frank Act, CFPB rules), data privacy and cybersecurity laws, and potential fines for non-compliance with AML programs[140](index=140&type=chunk)[172](index=172&type=chunk)[174](index=174&type=chunk)[178](index=178&type=chunk)[182](index=182&type=chunk)[189](index=189&type=chunk) - Lending operation risks include the sufficiency of the allowance for credit losses, litigation related to the SBA Paycheck Protection Program (PPP), dependence on commercial loan repayment, and a substantial portion of the loan portfolio being secured by real estate[141](index=141&type=chunk)[196](index=196&type=chunk)[200](index=200&type=chunk)[202](index=202&type=chunk)[204](index=204&type=chunk) - Niche business risks, particularly in premium finance, involve higher delinquency/collection risks, susceptibility to third-party fraud, and vulnerability to financial difficulties or credit downgrades among insurance providers[142](index=142&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[215](index=215&type=chunk) - Financial strength and liquidity risks include adverse effects from changes in interest rates, potential negative impacts on liquidity from economic conditions, and increased financing costs if credit ratings are lowered[143](index=143&type=chunk)[217](index=217&type=chunk)[222](index=222&type=chunk)[224](index=224&type=chunk) - General operational risks encompass failures or breaches of internal controls and security systems (including cyber-attacks), reliance on third-party vendors, accuracy of customer information, ability to attract and retain qualified personnel, and extraordinary events like natural disasters or acts of war[144](index=144&type=chunk)[239](index=239&type=chunk)[243](index=243&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk)[256](index=256&type=chunk) [ITEM 1B. Unresolved Staff Comments](index=48&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[260](index=260&type=chunk) [ITEM 2. Properties](index=49&type=section&id=ITEM%202.%20Properties) Wintrust Financial Corporation's executive offices are located in Rosemont, Illinois, with additional corporate and retail spaces in downtown Chicago and Milwaukee - The Company's executive offices are located in Rosemont, Illinois, with additional corporate offices in downtown Chicago and Milwaukee[262](index=262&type=chunk) - Wintrust operates **174 banking facilities**, predominantly owned, in the Chicago metropolitan area, southern Wisconsin, northwest Indiana, and one in Naples, Florida[262](index=262&type=chunk) - Wintrust Mortgage has **42 leased retail mortgage offices** in 10 states, concentrated in Chicago, Minneapolis, Salt Lake City, and Los Angeles metropolitan areas[262](index=262&type=chunk) - Wealth management subsidiaries have leased locations in downtown Chicago, Appleton (Wisconsin), and Tampa (Florida), plus offices at several banks[263](index=263&type=chunk) - Specialty finance entities (FIRST Insurance Funding, Wintrust Life Finance, FIFC Canada, Wintrust Asset Finance, Tricom) operate from owned and leased locations in Illinois, New Jersey, New York, California, Wisconsin, and Canada[263](index=263&type=chunk) [ITEM 3. Legal Proceedings](index=49&type=section&id=ITEM%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note (20) 'Commitments and Contingencies' in Item 8 of this Annual Report on Form 10-K - Information on legal proceedings is set forth in Part II, Item 8, Financial Statements and Supplementary Data, under Note (20) 'Commitments and Contingencies'[264](index=264&type=chunk) [ITEM 4. Mine Safety Disclosures](index=49&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Wintrust Financial Corporation - This item is not applicable[265](index=265&type=chunk) PART II [ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=50&type=section&id=ITEM%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Wintrust's common stock trades on NASDAQ (WTFC), with **1,678 shareholders** as of February 2023, and the Board approved a **$0.40 quarterly cash dividend** - Wintrust Financial Corporation's common stock is traded on The NASDAQ Global Select Market under the symbol **WTFC**[267](index=267&type=chunk) Cumulative Shareholder Return (2017-2022) | Year | Wintrust Financial Corporation | NASDAQ — Total US | NASDAQ — Bank Index | | :--- | :----------------------------- | :---------------- | :------------------ | | 2017 | 100.00 | 100.00 | 100.00 | | 2018 | 81.44 | 94.56 | 83.60 | | 2019 | 88.09 | 124.03 | 114.68 | | 2020 | 77.73 | 150.41 | 100.00 | | 2021 | 117.45 | 189.36 | 137.32 | | 2022 | 110.94 | 152.00 | 113.60 | - As of February 9, 2023, there were approximately **1,678 shareholders of record** of the Company's common stock[271](index=271&type=chunk) Cash Dividends Paid per Common Share | Record Date | Payable Date | Dividend per Share ($) | | :-------------- | :-------------- | :--------------------- | | November 10, 2022 | November 25, 2022 | $0.34 | | August 11, 2022 | August 25, 2022 | $0.34 | | May 12, 2022 | May 26, 2022 | $0.34 | | February 10, 2022 | February 24, 2022 | $0.34 | | November 11, 2021 | November 26, 2021 | $0.31 | | August 5, 2021 | August 19, 2021 | $0.31 | | May 6, 2021 | May 20, 2021 | $0.31 | | February 11, 2021 | February 25, 2021 | $0.31 | - On January 26, 2023, the Board approved a quarterly cash dividend of **$0.40 per share**, paid on February 23, 2023[273](index=273&type=chunk) - The company's ability to pay dividends depends on dividends received from its subsidiaries, which totaled **$52.0 million in 2022**, **$145.0 million in 2021**, and **$253.0 million in 2020**[274](index=274&type=chunk) - No purchases of the Company's common shares were made under the authorized repurchase program during the twelve months ended December 31, 2022[276](index=276&type=chunk) [ITEM 6. [Reserved]](index=51&type=section&id=ITEM%206.%20%5BReserved%5D) This item is reserved and contains no information [ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=ITEM%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes Wintrust's financial performance, showing **increased net income** from earning asset growth and net interest margin expansion, offset by higher credit loss provisions Key Profitability and Balance Sheet Measures | Metric | 2022 (Thousands) | 2021 (Thousands) | 2020 (Thousands) | 2021 to 2022 Change (%) | 2020 to 2021 Change (%) | | :------------------------------------------ | :--------------- | :--------------- | :--------------- | :---------------------- | :---------------------- | | Net income | $509,682 | $466,151 | $292,990 | 9 | 59 | | Net income per common share — Diluted | $8.02 | $7.58 | $4.68 | 6 | 62 | | Net revenue | $1,956,415 | $1,711,077 | $1,644,096 | 14 | 4 | | Net interest income | $1,495,362 | $1,124,957 | $1,039,907 | 33 | 8 | | Net interest margin | 3.15 % | 2.57 % | 2.72 % | 58 bp | (15) bp | | Return on average assets | 1.01 | 1.00 | 0.71 | 1 | 29 | | Total assets | $52,949,649 | $50,142,143 | $45,080,768 | 6 | 11 | | Total loans, excluding loans held-for-sale | $39,196,485 | $34,789,104 | $32,079,073 | 13 | 8 | | Total deposits | $42,902,544 | $42,095,585 | $37,092,651 | 2 | 13 | | Allowance for loan and unfunded lending-related commitment losses to total loans | 0.91 % | 0.86 % | 1.18 % | 5 bp | (32) bp | | Non-performing loans to total loans | 0.26 | 0.21 | 0.40 | 5 | (19) | - Net income increased by **$43.5 million** in 2022, primarily due to a **$370.4 million (33%) increase in net interest income**, driven by growth in earning assets and a **58 basis point increase in net interest margin**[285](index=285&type=chunk)[287](index=287&type=chunk)[342](index=342&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) - The loan portfolio grew from **$34.8 billion** at December 31, 2021, to **$39.2 billion** at December 31, 2022, with significant growth in commercial, industrial, commercial real estate, and premium finance receivables[286](index=286&type=chunk) - Non-interest income decreased by **$125.1 million (21%)** in 2022, mainly due to lower mortgage banking revenues from reduced originations and production margins, and net losses on investment securities[288](index=288&type=chunk)[343](index=343&type=chunk)[360](index=360&type=chunk) - Non-interest expense increased by **$44.7 million (4%)** in 2022, driven by higher software and equipment expenses and increased advertising and marketing costs[289](index=289&type=chunk)[373](index=373&type=chunk)[374](index=374&type=chunk)[375](index=375&type=chunk) - The provision for credit losses increased to **$78.6 million** in 2022 (from a negative provision of **$59.3 million in 2021**), primarily due to deteriorating macroeconomic forecasts and loan portfolio growth[285](index=285&type=chunk)[301](index=301&type=chunk)[342](index=342&type=chunk) - The allowance for loan and unfunded lending-related commitment losses increased by **$57.8 million (19%)** to **$357.4 million** at December 31, 2022[301](index=301&type=chunk) - Total non-performing loans increased to **$100.7 million (0.26% of total loans)** at December 31, 2022, from **$74.4 million (0.21%)** at December 31, 2021[148](index=148&type=chunk)[306](index=306&type=chunk)[426](index=426&type=chunk) - The company's liquidity position is supported by a strong deposit base, liquid short-term investments, and access to external funding sources, with **$2.5 billion in overnight liquid funds** at December 31, 2022[290](index=290&type=chunk) - The company's critical accounting estimates include the allowance for credit losses, estimations of fair value, impairment testing of goodwill, valuation and accounting for derivative instruments, and income taxes[326](index=326&type=chunk) Sensitivity Analysis for Allowance for Credit Losses (Baa Credit Spread) | Baa Credit Spread | Commercial (Impact to estimate) | Commercial Real Estate: Construction (Impact to estimate) | Commercial Real Estate: Non-Construction (Impact to estimate) | | :---------------- | :------------------------------ | :-------------------------------------------------------- | :------------------------------------------------------------ | | Narrows | Decreases by 10%-15% | Decreases by 15%-20% | Decreases by 4%-5% | | Widens | Increases by 15%-20% | Increases by 15%-20% | Increases by 4%-5% | Sensitivity Analysis for Allowance for Credit Losses (CRE Price Index) | CRE Price Index | Commercial Real Estate: Construction (Impact to estimate) | Commercial Real Estate: Non-Construction (Impact to estimate) | | :-------------- | :-------------------------------------------------------- | :------------------------------------------------------------ | | Increases | Decreases by 30%-35% | Decreases by 25%-30% | | Decreases | Increases by 130%-135% | Increases by 40%-45% | [Operating Summary](index=52&type=section&id=OPERATING%20SUMMARY) Wintrust's operating summary shows **net income increased by 9%** in 2022, driven by a **33% rise in net interest income** and a **58 basis point net interest margin expansion** Key Profitability and Balance Sheet Measures | Metric | 2022 (Thousands) | 2021 (Thousands) | 2020 (Thousands) | 2021 to 2022 Change (%) | 2020 to 2021 Change (%) | | :------------------------------------------ | :--------------- | :--------------- | :--------------- | :---------------------- | :---------------------- | | Net income | $509,682 | $466,151 | $292,990 | 9 | 59 | | Pre-tax income, excluding provision for credit losses (non-GAAP) | $779,144 | $578,533 | $604,001 | 35 | (4) | | Net income per common share — Diluted | $8.02 | $7.58 | $4.68 | 6 | 62 | | Net revenue | $1,956,415 | $1,711,077 | $1,644,096 | 14 | 4 | | Net interest income | $1,495,362 | $1,124,957 | $1,039,907 | 33 | 8 | | Net interest margin | 3.15 % | 2.57 % | 2.72 % | 58 bp | (15) bp | | Return on average assets | 1.01 | 1.00 | 0.71 | 1 | 29 | | Total assets | $52,949,649 | $50,142,143 | $45,080,768 | 6 | 11 | | Total loans, excluding loans held-for-sale | $39,196,485 | $34,789,104 | $32,079,073 | 13 | 8 | | Total deposits | $42,902,544 | $42,095,585 | $37,092,651 | 2 | 13 | | Allowance for loan and unfunded lending-related commitment losses to total loans | 0.91 % | 0.86 % | 1.18 % | 5 bp | (32) bp | | Non-performing loans to total loans | 0.26 | 0.21 | 0.40 | 5 | (19) | [Non-GAAP Financial Measures/Ratios](index=53&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES%2FRATIOS) This section explains Wintrust's non-GAAP financial measures, including taxable-equivalent net interest income and efficiency ratio, used to evaluate performance and operating efficiency - Wintrust uses non-GAAP measures like taxable-equivalent net interest income, efficiency ratio, tangible common equity ratio, and return on average tangible common equity to evaluate performance[282](index=282&type=chunk) - Taxable-equivalent net interest income adjusts for tax-exempt interest income to ensure comparability across taxable and tax-exempt sources[283](index=283&type=chunk) - The efficiency ratio measures how much it costs to produce one dollar of revenue, calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses)[283](index=283&type=chunk) Reconciliation of Non-GAAP Performance Measures | Metric | 2022 (Thousands) | 2021 (Thousands) | 2020 (Thousands) | | :------------------------------------------ | :--------------- | :--------------- | :--------------- | | Net Interest Income, fully taxable-equivalent (non-GAAP) | $1,500,963 | $1,128,558 | $1,044,322 | | Net interest margin, fully taxable-equivalent (non-GAAP) | 3.17 % | 2.58 % | 2.73 % | | Efficiency ratio (non-GAAP) | 59.38 % | 66.01 % | 63.02 % | | Total tangible common shareholders' equity (non-GAAP) | $3,708,628 | $3,402,732 | $3,021,748 | | Tangible common equity ratio (non-GAAP) | 7.1 % | 6.9 % | 6.8 % | | Tangible book value per common share (non-GAAP) | $61.00 | $59.64 | $53.23 | | Return on average tangible common equity (non-GAAP) | 13.73 % | 13.83 % | 9.54 % | | Pre-tax income, excluding provision for credit losses (non-GAAP) | $779,144 | $578,533 | $604,001 | [Overview and Strategy](index=55&type=section&id=OVERVIEW%20AND%20STRATEGY) Wintrust's 2022 net income rose to **$509.7 million**, driven by increased net interest income and margin, despite higher credit loss provisions and reduced mortgage banking revenue - Net income for 2022 was **$509.7 million**, up from **$466.2 million in 2021**, primarily due to increased net interest income and margin, partially offset by higher provision for credit losses and lower mortgage banking revenue[285](index=285&type=chunk) - The loan portfolio increased from **$34.8 billion to $39.2 billion** in 2022, driven by growth in commercial, industrial, commercial real estate, and premium finance receivables[286](index=286&type=chunk) - Net interest income rose to **$1.5 billion in 2022** (from **$1.1 billion in 2021**), with net interest margin increasing to **3.15% (3.17% FTE)** due to higher earning asset yields and a shift in asset mix[287](index=287&type=chunk)[293](index=293&type=chunk) - Non-interest income decreased by **21% in 2022**, mainly due to a decline in mortgage banking revenues (originations for sale fell from **$6.8 billion in 2021 to $2.8 billion in 2022**) and net losses on investment securities[288](index=288&type=chunk)[297](index=297&type=chunk) - The provision for credit losses increased to **$78.6 million in 2022**, primarily due to a deterioration in forecasted macroeconomic conditions and loan portfolio growth[301](index=301&type=chunk) - Wintrust maintains adequate liquidity through its strong deposit base, liquid short-term investments, and access to external funding sources[290](index=290&type=chunk) - The company utilizes strategies such as writing call options on investment securities (**$14.1 million in fees in 2022**) and 'back to back' interest rate derivative transactions to manage interest rate risk and enhance returns[295](index=295&type=chunk)[296](index=296&type=chunk) - In June 2022, the Company completed a public offering of **3,450,000 shares of common stock**, generating approximately **$285.7 million in net proceeds**[323](index=323&type=chunk) - In November 2021, Wintrust acquired certain assets from The Allstate Corporation, including approximately **$581.6 million in loans** to Allstate agents, and became the national preferred provider of loans to Allstate agents, recording **$9.3 million in goodwill**[324](index=324&type=chunk) [Summary of Critical Accounting Estimates](index=61&type=section&id=SUMMARY%20OF%20CRITICAL%20ACCOUNTING%20ESTIMATES) Wintrust's financial statements rely on critical accounting estimates, including the allowance for credit losses (ACL), fair value estimations, goodwill impairment, derivative valuations, and income taxes - Critical accounting estimates include the allowance for credit losses, estimations of fair value, impairment testing of goodwill, valuation and accounting for derivative instruments, and income taxes[326](index=326&type=chunk) - The allowance for credit losses (ACL) is a critical estimate, requiring significant judgment on expected credit losses over the life of financial assets, considering historical losses, current economic conditions, and reasonable and supportable macroeconomic forecasts[327](index=327&type=chunk) Impact to Estimated ACL from Changes in Key Macroeconomic Variables | Macroeconomic Variable | Impact to estimated allowance for credit losses from an increased or higher input value | | :--------------------- | :---------------------------------------------------------------------------------- | | Baa Credit Spread | Increases | | CRE Price Index | Decreases | - Fair value estimations for assets like trading securities, available-for-sale debt securities, and mortgage servicing rights (MSRs) are crucial, with significant judgment required for unobservable market data inputs[331](index=331&type=chunk)[332](index=332&type=chunk) - Goodwill impairment testing is performed annually, using qualitative or quantitative approaches, and involves subjective judgments about future cash flows, discount rates, stock price, and business climate[333](index=333&type=chunk)[335](index=335&type=chunk) - Accounting for derivative instruments depends on their designation as accounting hedges, requiring assumptions about effectiveness and timing of forecasted transactions[338](index=338&type=chunk) - Income tax estimates involve complex judgments about applying tax laws, regulations, and case law, with potential for adjustments upon audit or reinterpretation[339](index=339&type=chunk) [Consolidated Results of Operations](index=64&type=section&id=CONSOLIDATED%20RESULTS%20OF%20OPERATIONS) Wintrust's 2022 net income increased to **$509.7 million**, driven by a **33% rise in net interest income** and a **58 basis point net interest margin expansion** Net Income and EPS (2020-2022) | Metric | 2022 (Millions) | 2021 (Millions) | 2020 (Millions) | | :----- | :-------------- | :-------------- | :-------------- | | Net Income | $509.7 | $466.2 | $293.0 | | Diluted EPS | $8.02 | $7.58 | $4.68 | Net Interest Income (2020-2022) | Metric | 2022 (Millions) | 2021 (Millions) | 2020 (Millions) | Change YoY (%) | | :----- | :-------------- | :-------------- | :-------------- | :------------- | | Net Interest Income | $1,500 | $1,120 | $1,040 | 33 | - Average earning assets increased by **$3.6 billion (8%)** in 2022, with average loans increasing by **$3.6 billion (11%)**[346](index=346&type=chunk) Average Yields and Rates (2020-2022) | Metric | 2022 (%) | 2021 (%) | 2020 (%) | 2022 Change (bp) | 2021 Change (bp) | | :----- | :------- | :------- | :------- | :--------------- | :--------------- | | Average yield on loans | 4.12 | 3.43 | 3.84 | 69 | (41) | | Average yield on liquidity management assets | 2.15 | 1.14 | 1.60 | 101 | (46) | | Average rate paid on interest-bearing deposits | 0.62 | 0.33 | 0.77 | 29 | (44) | | Net interest margin | 3.15 | 2.57 | 2.72 | 58 | (15) | Non-Interest Income by Category (2020-2022) | Category | 2022 (Thousands) | 2021 (Thousands) | 2020 (Thousands) | 2022 vs 2021 Change (%) | | :-------------------------- | :--------------- | :--------------- | :--------------- | :---------------------- | | Total wealth management | $126,614 | $124,019 | $100,336 | 2 | | Mortgage banking | $155,173 | $273,010 | $346,013 | (43) | | Service charges on deposit accounts | $58,574 | $54,168 | $45,023 | 8 | | Losses on investment securities, net | $(20,427) | $(1,059) | $(1,926) | NM | | Fees from covered call options | $14,133 | $3,673 | $2,292 | NM | | Total Non-Interest Income | $461,053 | $586,120 | $604,189 | (21) | - Mortgage originations for sale decreased from **$6.8 billion in 2021 to $2.8 billion in 2022**, with refinancing activity dropping from **55% to 29%** of originations due to rising interest rates[297](index=297&type=chunk)[360](index=360&type=chunk) Non-Interest Expense by Category (2020-2022) | Category | 2022 (Thousands) | 2021 (Thousands) | 2020 (Thousands) | 2022 vs 2021 Change (%) | | :-------------------------- | :--------------- | :--------------- | :--------------- | :---------------------- | | Total salaries and employee benefits | $696,107 | $691,669 | $626,076 | 1 | | Software and equipment | $95,885 | $87,515 | $68,496 | 10 | | Advertising and marketing | $59,418 | $47,275 | $36,296 | 26 | | Total Non-Interest Expense | $1,177,271 | $1,132,544 | $1,040,095 | 4 | - Income tax expense was **$190.9 million in 2022**, with an effective tax rate of **27.2%**, slightly higher than **26.9% in 2021** due to reduced federal tax credits[376](index=376&type=chunk) [Operating Segment Results](index=72&type=section&id=Operating%20Segment%20Results) In 2022, Community Banking's net interest income rose **36% to $1.2 billion**, Specialty Finance's increased **25%**, and Wealth Management reported **$38.3 million in net interest income** Operating Segment Net Income (2020-2022) | Segment | 2022 (Millions) | 2021 (Millions) | 2020 (Millions) | | :---------------- | :-------------- | :-------------- | :-------------- | | Community Banking | $349.3 | $319.1 | $163.6 | | Specialty Finance | $120.9 | $109.2 | $100.3 | | Wealth Management | $39.4 | $37.9 | $29.0 | | Consolidated | $509.7 | $466.2 | $293.0 | - Community Banking net interest income increased by **$311.7 million (36%)** in 2022, but provision for credit losses rose to **$74.2 million** (from a negative **$60.3 million in 2021**) due to macroeconomic forecast deterioration and loan growth[378](index=378&type=chunk) - Specialty Finance net interest income increased by **$48.7 million (25%)** in 2022, driven by loan growth and increased interest rates on premium finance receivables[379](index=379&type=chunk) - In 2022, commercial premium finance, life insurance premium finance, leasing, and accounts receivable finance operations accounted for **42%, 30%, 24%, and 4%** of specialty finance total revenues, respectively[379](index=379&type=chunk) - Wealth Management net interest income is primarily an allocation from community banking on customer deposit balances, which averaged **$2.8 billion in 2022**[380](index=380&type=chunk) [Analysis of Financial Condition](index=73&type=section&id=Analysis%20of%20Financial%20Condition) Wintrust's total assets grew **6% to $52.9 billion** at year-end 2022, with average earning assets increasing **8%**, and the investment securities portfolio experiencing significant unrealized losses - Total assets increased by **$2.8 billion (6%)** to **$52.9 billion** at December 31, 2022[381](index=381&type=chunk) - Average total earning assets increased by **$3.6 billion (8%)** in 2022, comprising **94%** of average total assets[383](index=383&type=chunk) Composition of Average Earning Assets (2020-2022) | Category | 2022 Balance (Thousands) | 2022 Percent (%) | 2021 Balance (Thousands) | 2021 Percent (%) | 2020 Balance (Thousands) | 2020 Percent (%) | | :-------------------------- | :----------------------- | :--------------- | :----------------------- | :--------------- | :----------------------- | :--------------- | | Mortgage loans held-for-sale | $496,088 | 1 | $959,457 | 2 | $707,147 | 2 | | Total loans, net of unearned income | $36,684,528 | 77 | $33,051,043 | 75 | $30,181,204 | 79 | | Liquidity management assets | $10,209,151 | 22 | $9,755,234 | 23 | $7,348,571 | 19 | | Total average earning assets | $47,412,158 | 100 | $43,790,830 | 100 | $38,254,785 | 100 | - Average mortgage loans held-for-sale decreased to **$496.1 million in 2022** from **$959.5 million in 2021**, due to lower originations and reclassification of certain loans[384](index=384&type=chunk) - Average total loans, net of unearned income, increased by **$3.6 billion (11%)** to **$36.7 billion** in 2022, with significant growth in commercial and commercial real estate loans[385](index=385&type=chunk)[386](index=386&type=chunk) - Average premium finance receivables increased by **$2.3 billion (21%)** to **$13.0 billion** in 2022, accounting for **35%** of average total loans[389](index=389&type=chunk) Investment Securities Portfolio (Fair Value, December 31, 2022 vs 2021) | Category | 2022 Fair Value (Thousands) | 2021 Fair Value (Thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | | Available-for-sale securities | $3,243,017 | $2,327,793 | | Held-to-maturity securities | $2,949,821 | $2,900,694 | | Equity securities with readily determinable fair value | $110,365 | $90,511 | - Available-for-sale securities had gross unrealized losses of **$527.1 million** at December 31, 2022, primarily in mortgage-backed securities, due to increased market interest rates[599](index=599&type=chunk)[605](index=605&type=chunk) [Loan Portfolio and Asset Quality](index=78&type=section&id=Loan%20Portfolio%20and%20Asset%20Quality) Wintrust's total loan portfolio reached **$39.2 billion** at year-end 2022, with the allowance for credit losses increasing to **$357.4 million** and non-performing loans rising Loan Portfolio Composition (December 31, 2022 vs 2021) | Category | 2022 Amount (Thousands) | 2022 % of Total | 2021 Amount (Thousands) | 2021 % of Total | | :-------------------------------- | :---------------------- | :-------------- | :---------------------- | :-------------- | | Commercial | $12,549,164 | 32 | $11,904,068 | 34 | | Commercial real estate | $9,950,947 | 25 | $8,990,286 | 26 | | Residential real estate | $2,372,383 | 6 | $1,637,099 | 5 | | Premium finance receivables—property & casualty | $5,849,459 | 15 | $4,855,487 | 14 | | Premium finance receivables—life insurance | $8,090,998 | 21 | $7,042,810 | 20 | | Total loans, net of unearned income | $39,196,485 | 100 | $34,789,104 | 100 | - Commercial and commercial real estate loans combined represent **57%** of the total loan portfolio at December 31, 2022[400](index=400&type=chunk) - The allowance for credit losses for the commercial loan portfolio increased to **$142.8 million** at December 31, 2022, from **$119.3 million in 2021**, driven by portfolio growth and deteriorating macroeconomic conditions (Baa credit spread)[400](index=400&type=chunk) - The allowance for credit losses for the commercial real estate portfolio increased to **$184.4 million** at December 31, 2022, from **$144.6 million in 2021**, due to portfolio growth and the impact of the Commercial Real Estate Price Index[402](index=402&type=chunk) Non-Performing Loans and Assets (2018-2022) | Metric | 2022 (Thousands) | 2021 (Thousands) | 2020 (Thousands) | 2019 (Thousands) | 2018 (Thousands) | | :------------------------------------------ | :--------------- | :--------------- | :--------------- | :--------------- | :--------------- | | Total non-performing loans | $100,697 | $74,438 | $127,513 | $117,588 | $113,234 | | Total non-performing assets | $110,597 | $78,709 | $144,071 | $132,763 | $138,334 | | Accruing TDRs not included within non-performing assets | $36,620 | $37,486 | $47,023 | $36,725 | $33,281 | | Total non-performing loans as a percentage of total loans | 0.26 % | 0.21 % | 0.40 % | 0.44 % | 0.48 % | | Total non-performing assets as a percentage of total assets | 0.21 % | 0.16 % | 0.32 % | 0.36 % | 0.44 % | - Troubled Debt Restructurings (TDRs) totaled **$41.1 million (191 credits)** at December 31, 2022, down from **$49.3 million (247 credits) in 2021**, with concessions including interest rate reductions and maturity extensions[458](index=458&type=chunk)[459](index=459&type=chunk)[462](index=462&type=chunk) Allowance for Credit Losses by Loan Portfolio (December 31, 2022 vs 2021) | Loan Portfolio | 2022 Amount (Thousands) | 2022 % of Total Loans | 2021 Amount (Thousands) | 2021 % of Total Loans | | :-------------------------------- | :---------------------- | :-------------------- | :---------------------- | :-------------------- | | Commercial | $142,769 | 32 | $119,307 | 34 | | Commercial real-estate | $184,352 | 25 | $144,583 | 26 | | Home equity | $7,573 | 1 | $10,699 | 1 | | Residential real-estate | $11,585 | 6 | $8,782 | 5 | | Premium finance receivables—property & casualty | $9,967 | 15 | $15,246 | 14 | | Premium finance receivables—life insurance | $704 | 21 | $613 | 20 | | Consumer and other | $498 | 0 | $423 | 0 | | Total allowance for credit losses | $357,448 | 100 | $299,653 | 100 | - Total deposits increased by **$807.0 million (2%)** to **$42.9 billion** at December 31, 2022, with average non-interest-bearing deposits increasing by **$1.0 billion (8%)**[467](index=467&type=chunk)[468](index=468&type=chunk) Average Deposits by Product Category (2020-2022) | Category | 2022 Balance (Thousands) | 2022 Percent (%) | 2021 Balance (Thousands) | 2021 Percent (%) | 2020 Balance (Thousands) | 2020 Percent (%) | | :-------------------------- | :----------------------- | :--------------- | :----------------------- | :--------------- | :----------------------- | :--------------- | | Non-interest bearing deposits | $13,667,879 | 32 | $12,638,518 | 33 | $9,432,090 | 27 | | NOW and interest-bearing demand deposits | $5,355,077 | 13 | $4,029,662 | 10 | $3,662,772 | 11 | | Wealth management deposits | $2,827,497 | 7 | $2,361,412 | 6 | $2,001,716 | 6 | | Money market accounts | $12,254,159 | 29 | $11,801,788 | 30 | $10,391,529 | 31 | | Savings accounts | $4,014,166 | 10 | $3,734,162 | 10 | $3,354,662 | 10 | | Time certificates of deposit | $3,812,148 | 9 | $4,447,871 | 11 | $5,142,938 | 15 | | Total average deposits | $41,930,926 | 100 | $39,013,413 | 100 | $33,985,707 | 100 | - FHLB advances increased to **$2.3 billion** at December 31, 2022, from **$1.2 billion in 2021**, serving as a source of fixed-rate funds[472](index=472&type=chunk)[614](index=614&type=chunk) - Total shareholders' equity increased by **$298.2 million** to **$4.8 billion** at December 31, 2022, primarily due to net income and a common stock offering, partially offset by net unrealized losses on investment securities[480](index=480&type=chunk) [ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk](index=100&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Wintrust manages market risks, primarily interest rate risk, through asset-liability strategies and derivative instruments, monitoring net interest income via simulation analyses - Wintrust manages interest rate risk, which arises from differences in maturity or re-pricing periods of interest-earning assets, interest-bearing liabilities, and derivative financial instruments[511](index=511&type=chunk) - The company monitors net interest margin and performs simulation analyses (Static Shock and Ramp Scenarios) to identify potential adverse changes in net interest income due to interest rate fluctuations[511](index=511&type=chunk)[514](index=514&type=chunk) Interest Rate Sensitivity Scenarios (Percentage Change in Net Interest Income) | Scenario | +200 Basis Points (%) | +100 Basis Points (%) | -100 Basis Points (%) | -200 Basis Points (%) | | :------------------ | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Static Shock (Dec 31, 2022) | 7.2 | 3.8 | (5.0) | (12.1) | | Static Shock (Dec 31, 2021) | 25.3 | 12.4 | (8.5) | (15.8) | | Ramp (Dec 31, 2022) | 5.6 | 3.0 | (2.9) | (6.8) | | Ramp (Dec 31, 2021) | 13.9 | 6.9 | (5.6) | (10.8) | - Derivative financial instruments, such as interest rate swaps and covered call options, are used to manage interest rate risk and enhance returns on the investment portfolio[514](index=514&type=chunk)[515](index=515&type=chunk) - Changes in the rate of inflation are not expected to have a material impact on the financial condition of the bank, as its assets and liabilities are primarily monetary[509](index=509&type=chunk) [ITEM 8. Financial Statements and Supplementary Data](index=102&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Wintrust's audited consolidated financial statements for 2020-2022, with an unqualified auditor's opinion, highlighting **$509.7 million net income** and **$52.9 billion total assets** - Ernst & Young LLP issued an unqualified opinion on Wintrust's consolidated financial statements for the period ended December 31, 2022, and on the effectiveness of internal control over financial reporting[517](index=517&type=chunk)[518](index=518&type=chunk)[856](index=856&type=chunk)[857](index=857&type=chunk) - A critical audit matter identified was the Allowance for Credit Losses (ACL) due to the complexity of models and significant judgment in economic forecasts, which the auditor addressed by evaluating controls, testing models with specialists, and assessing economic forecast factors[521](index=521&type=chunk)[522](index=522&type=chunk)[523](index=523&type=chunk)[524](index=524&type=chunk)[525](index=525&type=chunk) Consolidated Statements of Condition (December 31, 2022 vs 2021) | Metric | 2022 (Thousands) | 2021 (Thousands) | | :------------------------------------------ | :--------------- | :--------------- | | Total Assets | $52,949,649 | $50,142,143 | | Net Loans | $38,926,312 | $34,541,269 | | Total Deposits | $42,902,544 | $42,095,585 | | Total Liabilities | $48,152,811 | $45,643,455 | | Total Shareholders' Equity | $4,796,838 | $4,498,688 | Consolidated Statements of Income (Years Ended December 31, 2022, 2021, 2020) | Metric | 2022 (Thousands) | 2021 (Thousands) | 2020 (Thousands) | | :------------------------------------------ | :--------------- | :--------------- | :--------------- | | Total Interest Income | $1,747,443 | $1,275,484 | $1,293,020 | | Total Interest Expense | $252,081 | $150,527 | $253,113 | | Net Interest Income | $1,495,362 | $1,124,957 | $1,039,907 | | Provision for Credit Losses | $78,589 | $(59,263) | $214,220 | | Total Non-Interest Income | $461,053 | $586,120 | $604,189 | | Total Non-Interest Expense | $1,177,271 | $1,132,544 | $1,040,095 | | Income Before Taxes | $700,555 | $637,796 | $389,781 | | Net Income | $509,682 | $466,151 | $292,990 | | Net Income per Common Share—Diluted | $8.02 | $7.58 | $4.68 | Consolidated Statements of Cash Flows (Years Ended December 31, 2022, 2021, 2020) | Activity | 2022 (Thousands) | 2021 (Thousands) | 2020 (Thousands) | | :------------------------------------------ | :--------------- | :--------------- | :--------------- | | Net Cash Provided by (Used for) Operating Activities | $1,375,000 | $1,130,872 | $(518,465) | | Net Cash Used for Investing Activities | $(3,490,769) | $(5,928,859) | $(7,182,424) | | Net Cash Provided by Financing Activities | $2,195,530 | $4,886,718 | $7,736,887 | | Net Increase in Cash and Cash Equivalents | $79,761 | $88,731 | $35,998 | - The company adopted ASU No. 2020-06 (Convertible Instruments), ASU No. 2021-04 (Equity-Classified Written Call Options), ASU No. 2021-05 (Leases with Variable Lease Payments), and ASU No. 2021-10 (Government Assistance) as of January 1, 2022, with no material impact on financial statements[587](index=587&type=chunk)[588](index=588&type=chunk)[589](index=589&type=chunk)[590](index=590&type=chunk) - The company continues to monitor the impact of Reference Rate Reform (LIBOR transition) and has discontinued the use of USD LIBOR in new contracts, with remaining USD LIBOR tenors ceasing publication after June 30, 2023[591](index=591&type=chunk)[592](index=592&type=chunk) - New accounting pronouncements for future adoption include ASU No. 2021-08 (Business Combinations), ASU No. 2022-01 (Fair Value Hedging - Portfolio Layer Method), ASU No. 2022-02 (Troubled Debt Restructurings and Vintage Disclosures), and ASU No. 2022-03 (Fair Value Measurement - Equity Securities with Contractual Sale Restrictions), none of which are expected to have a material impact[594](index=594&type=chunk)[595](index=595&type=chunk)[596](index=596&type=chunk)[597](index=597&type=chunk) - The Inflation Reduction Act of 2022 imposes a new **1% excise tax** on stock repurchases after December 31, 2022, which is not expected to have a material impact on the company's financial statements[598](index=598&type=chunk) Investment Securities Gross Unrealized Losses (December 31, 2022) | Category | Fair Value (Thousands) | Unrealized Losses (Thousands) | | :-------------------------- | :--------------------- | :---------------------------- | | Available-for-sale securities | $3,102,599 | $(527,128) | | Held-to-maturity securities | $2,949,821 | $(691,711) | - The company does not consider available-for-sale securities with unrealized losses at December 31, 2022, to be experiencing credit losses, as it does not intend to sell them and expects recovery of amortized cost[605](index=605&type=chunk) - The allowance for credit losses (ACL) for loans and unfunded commitments increased to **$357.4 million** at December 31, 2022, from **$299.7 million in 2021**, primarily due to changes in macroeconomic forecasts and loan growth[646](index=646&type=chunk)[651](index=651&type=chunk) - TDRs totaled **$41.1 million (191 credits)** at December 31, 2022, down from **$49.3 million (247 credits) in 2021**, with concessions including interest rate reductions and maturity extensions[653](index=653&type=chunk)[662](index=662&type=chunk) - Total deposits were **$42.9 billion** at December 31, 2022, with non-interest-bearing deposits comprising **30%** of the total[677](index=677&type=chunk) - FHLB advances increased to **$2.3 billion** at December 31, 2022, from **$1.2 billion in 2021**, collateralized by qualifying loans and securities[679](index=679&type=chunk) - The company's **$200.0 million term loan facility** and **$100.0 million revolving credit facility** (Amended and Restated Credit Agreement) are secured by pledges of equity interest in bank subsidiaries[686](index=686&type=chunk)[688](index=688&type=chunk) - Junior subordinated debentures totaled **$253.6 million** at December 31, 2022, with variable interest rates based on three-month LIBOR, transitioning to CME Term SOFR after June 30, 2023[699](index=699&type=chunk)[701](index=701&type=chunk) Company Regulatory Capital Ratios (December 31, 2022 vs 2021) | Ratio | 2022 (%) | 2021 (%) | | :-------------------------------- | :------- | :------- | | Total capital to risk weighted assets | 11.9 | 11.6 | | Tier 1 capital to risk weighted assets | 10.0 | 9.6 | | Common Equity Tier 1 capital to risk weighted assets | 9.1 | 8.6 | | Tier 1 Leverage Ratio | 8.8 | 8.0 | - All of Wintrust's banks were categorized as 'well-capitalized' at December 31, 2022, exceeding minimum regulatory capital requirements[753](index=753&type=chunk)[754](index=754&type=chunk)[755](index=755&type=chunk) - The company had **$344.4 million in standby and commercial letters of credit** and **$181.0 million in commitments to fund residential mortgage loans** at December 31, 2022[758](index=758&type=chunk)[759](index=759&type=chunk) - The liability for estimated losses on mortgage loan repurchase and indemnification claims was **$624,000** at December 31, 2022, down from **$675,000 in 2021**[762](index=762&type=chunk) - Wintrust is involved in several legal matters, including a California PAGA suit, a Fair Lending matter, and an ERISA class action, all of which management believes are legally and factually meritless or lack sufficient information to estimate potential liability[767](index=767&type=chunk)[768](index=768&type=chunk)[769](index=769&type=chunk)[771](index=771&type=chunk) Fair Value of Derivative Financial Instruments (December 31, 2022 vs 2021) | Category | 2022 Derivative Assets (Thousands) | 2022 Derivative Liabilities (Thousands) | 2021 Derivative Assets (Thousands) | 2021 Derivative Liabilities (Thousands) | | :------------------------------------------ | :------------------------------- | :------------------------------------ | :------------------------------- | :------------------------------------ | | Derivatives designated as hedging instruments | $16,768 | $58,198 | $48,783 | $16,242 | | Derivatives not designated as hedging instruments | $280,080 | $279,880 | $116,225 | $106,758 | | Total Derivatives | $296,848 | $338,078 | $165,008 | $123,000 | - The company uses interest rate collars as cash flow hedges for variable rate loans, with **$3.0 billion in notional amount outstanding** at December 31, 2022[778](index=778&type=chunk)[779](index=779&type=chunk) - Wintrust uses Level 3 fair value measurements for municipal securities, certain mortgage loans held-for-sale, loans held-for-investment, MSRs, and certain derivative assets, relying on unobservable inputs like equivalent ratings, discount rates, credit discounts, prepayment rates, and pull-through rates[804](index=804&type=chunk)[806](index=806&type=chunk)[807](index=807&type=chunk)[808](index=808&type=chunk)[810](index=810&type=chunk)[821](index=821&type=chunk) Earnings Per Share (2020-2022) | Metric | 2022 ($) | 2021 ($) | 2020 ($) | | :------------------------------------------ | :------- | :------- | :------- | | Net income applicable to common shares (Thousands) | $481,718 | $438,187 | $271,613 | | Weighted average common shares outstanding (Thousands) | 59,205 | 56,994 | 57,523 | | Net income per common share—Basic | $8.14 | $7.69 | $4.72 | | Net income per common share—Diluted | $8.02 | $7.58 | $4.68 | [ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=186&type=section&id=ITEM%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) Wintrust Financial Corporation reported no changes in or disagreements with its independent accountants during the two most recent fiscal years or any subsequent interim period - The Company made no changes in and had no disagreements with its independent accountants during the two most recent fiscal years or any subsequent interim period[848](index=848&type=chunk) [ITEM 9A. Controls and Procedures](index=186&type=section&id=ITEM%209A.%20Controls%20and%20Procedures) Wintrust's management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes - As of December 31, 2022, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective[849](index=849&type=chunk) - There were no changes in the Company's internal control over financial reporting during the quarter ended December 31, 2022, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[850](index=850&type=chunk) - Management assessed the Company's internal control over financial reporting as effective as of December 31, 2022, based on the COSO Criteria[853](index=853&type=chunk) - Ernst & Young LLP issued an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2022[853](index=853&type=chunk)[856](index=856&type=chunk) [ITEM 9B. Other Information](index=189&type=section&id=ITEM%209B.%20Other%20Information) This item states that there is no other information to report - There is no other information to report[864](index=864&type=chunk) [ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=189&type=section&id=ITEM%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to Wintrust Financial Corporation - This item is not applicable[865](index=865&type=chunk) PART III [ITEM 10. Directors, Executive Officers and Corporate Governance](index=189&type=section&id=ITEM%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the Proxy Statement, with a Corporate Code of Ethics in place - Information on directors, executive officers, and corporate governance is incorporated by reference from the Proxy Statement for the Annual Meeting of Shareholders on May 25, 2023[866](index=866&type=chunk) - The Company has a Corporate Code of Ethics, compliant with SEC rules and NASDAQ standards, applicable to all directors, officers, and employees, and available on its website[867](index=867&type=chunk) [ITEM 11. Executive Compensation](index=189&type=section&id=ITEM%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the Company's Proxy Statement for its Annual Meeting of Shareholders to be held on May 25, 2023 - Information on executive compensation is incorporated by reference from the Proxy Statement[868](index=868&type=chunk) [ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=190&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and equity compensation plans is incorporated by reference from the Proxy Statement, detailing securities authorized for issuance - Information on security ownership of certain beneficial owners and management is incorporated by reference from the Proxy Statement[870](index=870&type=chunk) Equity Compensation Plan Information (December 31, 2022) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) ($) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | :------------------------------------------ | :------------------------------------------------------------------------------ | :---------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------------------------------------------------ | | Equity compensation plans approved by security holders | 1,464,594 | $1.51 | 2,256,438 | | Equity compensation plans not approved by security holders | — | — | — | | Total | 1,464,594 | $1.51 | 2,256,438 | [ITEM 13. Certain Relationships and Related Transactions, and Director Independence](index=190&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the Company's Proxy Statement - Information on certain relationships and related transactions, and director independence is incorporated by reference from the Proxy Statement[873](index=873&type=chunk) [ITEM 14. Principal Accountant Fees and Services](index=190&type=section&id=ITEM%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the Company's Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the Proxy Statement[874](index=874&type=chunk) PART IV [ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES](index=191&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists the financial statements and schedules filed as part of the Annual Report on Form 10-K, including consolidated statements and a comprehensive list of exhibits - The Annual Report includes Consolidated Statements of Condition, Income, Comprehensive Income, Changes in Shareholders' Equity, and Cash Flows, along with Notes to Consolidated Financial Statements and the Report of Independent Registered Public Accounting Firm[877](index=877&type=chunk) - Financial statement schedules have been omitted as they are not applicable or the required information is shown in the Consolidated Financial Statements or notes[877](index=877&type=chunk) - A comprehensive list of exhibits is provided, including organizational documents (Articles of Incorporation, By-laws), debt instruments (Subordinated Indentures, Depositary Agreement), credit agreements (Amended and Restated Credit Agreement, Receivables Purchase Agreement), and various stock incentive and employee benefit plans[878](index=878&type=chunk)[879](index=879&type=chunk)[880](index=880&type=chunk)[881](index=881&type=chunk)[8

Financial Data and Key Metrics Changes - The company reported earnings of $509 million for the year, up almost 10% from the previous year, with earnings per share of $8.02 compared to $7.58 the previous year [8][10] - Pre-tax pre-provision income reached a record of $780 million, up from $579 million year-over-year, with a margin of 3.73% for the fourth quarter [9][10] - Return on assets was around 1% for the year and 1.10% for the quarter, with current equity at 12.72%, up 41 basis points for the year [10] Business Line Data and Key Metrics Changes - Loan growth for the fourth quarter was approximately $1 billion, representing an 11% annualized growth, with significant contributions from commercial real estate and commercial loans [15][52] - Wealth management revenue decreased by $2.4 million from the prior quarter, primarily due to lower fees from tax-deferred exchanges [38] - Mortgage banking revenue declined by $9.8 million due to lower loan origination volumes and production margins [39] Market Data and Key Metrics Changes - Deposit growth for the quarter was approximately $105 million, although the cost of deposits is rising, making deposit gathering more challenging [19][20] - The securities book increased by $1.5 billion in the quarter, reflecting attractive yields and opportunities for reasonable long-term returns [22] - The company anticipates that the interest-bearing deposit beta will be approximately 40% to 45% over the full cycle of interest rate changes [21] Company Strategy and Development Direction - The company aims to maintain a strong margin and is positioned to benefit from rising interest rates, with expectations to approach a 4% margin in the near future [25][69] - The management is focused on organic growth and acquisitions, with a specific mention of the acquisition of Rothschild American business expected to close in the first or second quarter [71] - The company is actively managing its balance sheet to hedge against interest rate fluctuations while maintaining credit discipline [26][69] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's credit performance, noting stable non-performing loans and a solid credit quality across the portfolio [58] - The company is prepared for potential economic downturns but believes its diversified portfolio will allow for continued growth [57] - Management highlighted the importance of liquidity and the need to monitor deposit costs closely, especially in light of recent market disruptions [98] Other Important Information - The efficiency ratio improved to 55% for the fourth quarter from 58% in the third quarter, indicating better expense management relative to revenue growth [51] - The company recorded net losses on investment securities of approximately $6.7 million during the fourth quarter, reflecting market conditions affecting the securities portfolio [41] Q&A Session Summary Question: Provision for credit losses and future expectations - Management clarified that the provision for credit losses is primarily a function of macroeconomic forecasts and not indicative of current credit issues [76][78] Question: Margin outlook with potential Fed rate increases - Management indicated that the margin could approach 4% and may exceed that if rates continue to rise, but it will depend on the pace of rate changes and competitive pressures [80][85] Question: Deposit flows and mix shifts - Management noted that deposit activity has been lumpy but remains disciplined in pricing, with expectations to maintain deposit growth despite market challenges [90][92] Question: Cash levels relative to deposits - Management expressed comfort with current cash levels and emphasized the importance of liquidity in their strategy [94][96] Question: Efficiency ratio improvements - Management expects the efficiency ratio to improve further, targeting a drift down closer to 50% while managing expenses effectively [104][106]

Wintrust Financial Corporation Earnings Release Presentation Q4 2022 WINTRUST Forward-Looking Statements PENDING 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 p ...