WINTRUST FINL(WTFCP) - 2023 Q2 - Quarterly Report

Financial Performance - Wintrust recorded net income of $154.8 million for Q2 2023, a 64% increase from $94.5 million in Q2 2022[190] - Net income for Q2 2023 was $154.8 million, a 64% increase from $94.6 million in Q2 2022[210] - Return on average common equity improved to 12.79% in Q2 2023, up from 8.53% in Q2 2022, indicating enhanced profitability[196] - Return on average common equity (annualized) was 12.79% for Q2 2023, down from 15.67% in Q2 2022[210] Loan and Asset Growth - The loan portfolio increased to $41.0 billion at June 30, 2023, up from $39.2 billion at December 31, 2022, reflecting organic growth in various portfolios[191] - Total assets grew by 7% to $54.3 billion at June 30, 2023, compared to $51.0 billion at June 30, 2022[196] - Total average assets increased to $52.34 billion, reflecting a growth from $49.43 billion in the same period last year[259] - Total earning assets increased to $49,086,918 thousand in June 2023 from $46,517,043 thousand in June 2022, with a net interest margin of 5.51% compared to 3.04% in the previous year[219] Interest Income and Margin - Net interest income rose to $447.5 million in Q2 2023, a 32% increase compared to $337.8 million in Q2 2022, driven by a $4.2 billion increase in average loans[192] - Net interest income for Q2 2023 was $457.995 million, compared to $447.537 million in Q2 2022, reflecting a growth of 1.03%[210] - The net interest margin improved to 3.64% in Q2 2023, up 72 basis points from 2.92% in Q2 2022, due to higher yields on earning assets[192] - The net interest margin (GAAP) for Q2 2023 was 3.64%, down from 3.81% in Q2 2022[210] Non-Interest Income and Expenses - Non-interest income totaled $113.0 million in Q2 2023, compared to $102.9 million in Q2 2022, with no losses on investment securities in Q2 2023[193] - Non-interest income for Q2 2023 was $107.769 million, a decrease from $113.030 million in Q2 2022[210] - Non-interest expense increased by 11% to $320.6 million in Q2 2023, primarily due to higher salaries, employee benefits, and marketing expenses[194] - Total non-interest expense increased by $46.8 million, or 8%, to $619.8 million for the six months ended June 30, 2023, compared to $572.9 million in the same period of 2022[1][4] Deposits and Funding - Total deposits increased to $44.0 billion at June 30, 2023, a 3% rise from $42.6 billion at June 30, 2022[196] - Total funding at June 30, 2023, was $47.4 billion, up from $44.9 billion at June 30, 2022[247] - Brokered deposits increased to $4.1 billion, representing 9.3% of total deposits as of June 30, 2023, compared to 4.2% in the previous year[287] - The company had approximately $14.1 billion of uninsured deposits as of June 30, 2023, with $2.4 billion being fully collateralized[289] Credit Losses and Allowances - The allowance for credit losses is critical, with 82% of total assets in loan and held-to-maturity debt securities[206] - The allowance for credit losses at the end of the period was $387.4 million, compared to $312.1 million in the previous year[280] - The allowance for loan and investment security losses was $302.63 million in Q2 2023, compared to $282.70 million in Q1 2023 and $260.55 million in Q2 2022[218] - The total allowance for credit losses is based on a comprehensive analysis of the loan portfolio, considering economic and industry factors[278] Market and Economic Conditions - The company anticipates potential impacts on its financial condition from economic conditions, interest rate changes, and competitive pressures in the financial services sector[303] - The ongoing COVID-19 pandemic continues to pose risks to the company's financial results and operations[305] - Regulatory changes could impact the company's ability to market products and operate its mortgage business profitably[305] Management and Strategy - The Company is committed to maintaining capital levels above the "Well Capitalized" standards established by the Federal Reserve[299] - The Company plans to continue evaluating liquidity sources, including management of availability with the FHLB and FRB[301] - Management continues to actively monitor loan portfolios to identify problem credits in a timely manner, amid ongoing macroeconomic uncertainty[275] Risks and Challenges - The company faces risks from security breaches, including hacking and malware, which could adversely affect its operations[305] - Increased costs are anticipated due to the need to protect customers from the impact of stolen debit card information[305] - The company is at risk of losing customers due to technological changes that allow financial transactions without traditional banking[305] - The company must navigate the challenges of transitioning from LIBOR to an alternative benchmark rate for transactions[305]