Wintrust Financial Conference Call Summary Company Overview - **Company**: Wintrust Financial (NasdaqGS:WTFC) - **Founded**: 1991 - **Headquarters**: Midwest, USA - **Branches**: 210 branches across West Michigan, Northwest Indiana, Chicagoland, Southeast Wisconsin, and Florida - **Total Assets**: Approximately $71 billion - **Business Segments**: - Insurance (about one-third of business) - Commercial Real Estate (approximately 25% of loan portfolio) - Commercial and Industrial (C&I) loans (over one-third of loan portfolio) [7][13][15] Economic Outlook - **General Sentiment**: Positive outlook on the economy; loan growth is solid with a strong pipeline - **First Quarter Performance**: Typically slower due to seasonal factors; expects a heavy seasonal benefit from property and casualty business in the second quarter [13][21][26] Strategic Priorities for 2026 - **Core Business Investment**: Focus on C&I business and wealth services for owners and executives - **Efficiency Improvements**: Aiming for growth without significant increases in headcount; achieved about 10% growth in 2025 with minimal new hires [15][16][81] Loan and Deposit Growth - **Loan Growth**: Aims to match loan growth with core deposit growth; first quarter typically sees slower deposit growth due to corporate activities and tax payments [21][23] - **Deposit Pricing**: Rational deposit pricing in the Midwest; competitive rates for CDs and money market accounts [56][57] Commercial Real Estate Insights - **Portfolio Health**: Focused on multi-family and industrial sectors; minimal exposure to retail; stress testing portfolios regularly [31][33] - **Conservative Approach**: Careful client selection and conservative advance ratios [31][33] Insurance Business - **Insurance Finance**: Approximately $8-9 billion in life insurance premium finance; significant automation in property and casualty finance with many small loans [28][29] Mortgage Warehouse Business - **Performance**: Gaining market share despite a challenging mortgage environment; client selection remains crucial [38] Chicago Market Insights - **Market Position**: Chicago is a vibrant market with fewer competitors; Wintrust has a strong presence with 175 branches in the area [42][43] Macatawa Acquisition - **Integration Success**: Successful integration of Macatawa Bank; seeing positive client engagement and growth opportunities [46][48] Credit Quality and Provisions - **Credit Environment**: Strong credit quality with no systemic deterioration; low provision levels due to the nature of the loan portfolio [104][108] - **Core Provision**: Approximately 135 basis points, aligning with peer averages [109] Capital Management - **CET1 Ratio**: Currently at 10.30%, with expectations to exceed 10.5% in the second half of the year; potential for capital returns to shareholders [126][127] M&A Strategy - **Disciplined Approach**: Focus on strategic and cultural fit for any potential acquisitions; not pursuing growth for growth's sake [128] Fee-Based Revenue - **Revenue Composition**: Approximately 20% of revenue from fee-based services, including treasury services and wealth management [69] Technology and Efficiency - **AI Initiatives**: Early stages of implementing AI for operational efficiencies; focus on automating processes and enhancing client data protection [82][85] Conclusion - Wintrust Financial is positioned for steady growth with a focus on efficiency, strategic investments, and maintaining strong credit quality while navigating the challenges of the current economic landscape. The company remains committed to its core markets and is exploring opportunities for growth through disciplined M&A strategies.

Financial Data and Key Metrics Changes - The company reported earnings of $1.45 per diluted share for Q4 2025, an increase from $1.19 in the linked quarter and $1.28 in Q4 2024 [4] - Return on average assets was 1.27% and pre-provision return on average assets was 1.74% [4] - Net interest income for the quarter reached $168 million, up $10 million from the linked quarter and $22 million from Q4 2024 [4][5] - The tangible common equity to tangible assets ratio was 9.07% and return on tangible common equity was 14.02% for Q4 [6][7] - Tangible book value per share remained stable at $41.37, reflecting an 11% increase for the year [7][8] Business Line Data and Key Metrics Changes - Loan growth for the quarter was $217 million, primarily due to acquired loans from the branch acquisition [8] - Deposits grew by $1 billion in Q4, with $400 million from new and existing clients and $600 million from the branch purchase [9] - The cost of deposits decreased to 1.64%, and the level of demand deposits to total deposits improved to 33.4% [9] Market Data and Key Metrics Changes - The Southwest market showed the strongest growth, driven by quality commercial and industrial relationships [18] - Organic deposit growth for the year was 6.5% or $854 million, with non-interest-bearing deposits representing 63% of growth in Q4 [19] Company Strategy and Development Direction - The branch acquisition accelerated the company's strategy in higher growth markets [5] - The company aims to improve credit metrics and reduce non-performing assets (NPAs) to historical levels [12][23] - There is a focus on automating non-value-added tasks to enhance productivity and efficiency [12] Management's Comments on Operating Environment and Future Outlook - Clients remain optimistic about the economy, particularly in sectors related to power generation and infrastructure improvements [13][14] - The company expects to continue producing high-quality earnings and maintain a diversified, relationship-oriented model [15] Other Important Information - The company increased its dividend by $0.01 per share to $0.32 for Q4 and repurchased 67,000 shares at an average price of $52.64 [8] - The provision for credit losses increased due to net charge-offs and changes in the mix of non-performing loans [26] Q&A Session Summary Question: Timing of foreclosed properties and NPAs reduction - The company took control of six properties in mid-December and expects to see resolutions by the end of Q2 2026 [43][44] Question: Fee income and non-interest expense expectations - Fee income is expected to grow at about 5% year-over-year, with core expenses projected to grow around 5% as well [50][51] Question: Details on loans migrating to non-accrual - Two loans totaling $28 million migrated to non-accrual, with good loan-to-value ratios and active negotiations for resolution [60][61] Question: Expectations for SBA gain on sale revenue - SBA gain on sale revenue is expected to grow modestly by about 5% in 2026 [63] Question: Charge-offs and provisioning outlook - Charge-offs are expected to decrease from elevated levels as the company approaches a more normalized level [76][79]