Wintrust(US:WTFC)2023-01-19 20:17Financial 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]