WINTRUST FINL(WTFCP) - 2023 Q1 - Quarterly Report

Financial Performance - The Company recorded net income of $180.2 million for Q1 2023, a 41% increase from $127.4 million in Q1 2022[177] - Net interest income rose to $458.0 million in Q1 2023, up 53% from $299.3 million in Q1 2022, driven by a $4.3 billion increase in average loans[179] - Non-interest income decreased to $107.8 million in Q1 2023, down 34% from $162.8 million in Q1 2022, primarily due to lower mortgage banking revenues[180] - Non-interest expense totaled $299.2 million in Q1 2023, a 5% increase from $284.3 million in Q1 2022, mainly due to higher salaries and miscellaneous expenses[181] - The net interest margin improved to 3.81% in Q1 2023, up 121 basis points from 2.60% in Q1 2022, attributed to higher yields on earning assets[179] - Return on average common equity rose to 15.67% in Q1 2023, compared to 11.94% in Q1 2022, indicating improved profitability[183] - Diluted earnings per share for Q1 2023 were $2.80, up from $2.07 in Q1 2022[196] - The increase in net income was primarily due to higher net interest income, partially offset by lower mortgage banking revenue[197] Loan and Asset Growth - Total loans increased to $39.6 billion at March 31, 2023, compared to $35.3 billion at March 31, 2022, reflecting organic growth in various portfolios[178] - Total assets increased by 5% to $52.87 billion at March 31, 2023, compared to $50.25 billion at March 31, 2022[183] - Total average loans increased to $39,093,368 thousand, representing 80% of total average earning assets, compared to 79% in the previous quarter[227] - The commercial and commercial real estate loan categories comprised 58% of the average loan portfolio in Q1 2023, up from 57% in Q4 2022[230] Credit Losses and Allowances - The allowance for credit losses is a critical accounting estimate, with loan and held-to-maturity debt securities portfolios representing 82% of total assets[191] - The allowance for credit losses at the end of the period was $375.8 million, an increase from $301.2 million at the end of the same period last year, reflecting a well-diversified and secured loan portfolio[255] - The net charge-offs for the quarter were $5.5 million, compared to $2.5 million in the same quarter last year, indicating a rise in credit losses[255] - The allowance for loan losses as a percentage of loans at period end was 0.73%, slightly up from 0.71% the previous year[255] Deposits and Liquidity - Total deposits increased slightly to $42.72 billion at March 31, 2023, from $42.22 billion at March 31, 2022[183] - The Company maintained a strong liquidity position, benefiting from a solid deposit base and access to various funding sources[182] - Brokered deposits increased to $4.0 billion, representing 9.4% of total deposits as of March 31, 2023, compared to 6.0% the previous year[262] - The company had approximately $14.8 billion of uninsured deposits, with $1.8 billion being fully collateralized[264] Regulatory and Operational Risks - The Company faces risks from security breaches, including denial of service attacks and hacking, which could adversely affect its operations[278] - Regulatory changes could impact the Company's ability to market its products and operate profitably in the mortgage business[278] - The Company must navigate challenges related to compliance costs and heightened regulatory capital requirements[278] - The impact of the COVID-19 pandemic continues to affect the Company's financial results and operations[278] Strategic Initiatives - Forward-looking statements indicate potential growth strategies, including future acquisitions and the formation of additional de novo banks or branch offices[276] - The Company is focused on transitioning away from LIBOR to an alternative benchmark rate for future transactions[278] - The Company continues to evaluate liquidity sources, including management of availability with the FHLB and FRB, to ensure sufficient funds for operations[274]