Wintrust(US:WTFC)2021-10-21 00:37Financial Data and Key Metrics Changes - The income for Q3 2021 was $109 million or $1.77 per diluted common share, with year-to-date income at $367.4 million or $6 per share [7] - Net interest margin decreased by 4 basis points to 2.59%, primarily due to excess liquidity [7] - Net interest income increased by $19.7 million from Q2 2021, totaling $287.5 million for Q3 2021, which is an increase of $31.5 million compared to Q3 2020 [17][18] Business Line Data and Key Metrics Changes - Core loan growth resulted in an overall increase in total loans for the quarter, with loans excluding PPP growing by $1.2 billion, reflecting an annualized growth rate of approximately 15% [10][33] - Wealth Management revenue increased to a record level of $31.5 million in Q3 2021, up 26% from $25 million in the same quarter last year [20] - Mortgage banking revenue increased to $55.8 million in Q3 2021, up from $50.6 million in Q2 2021, despite a decrease in loan origination volume [21] Market Data and Key Metrics Changes - Deposit growth for the quarter was strong at $1.1 billion, with an annualized growth rate of approximately 12% [11] - The company reported a stable credit quality with non-performing loans (NPLs) remaining flat at approximately $90 million or 27 basis points [36] Company Strategy and Development Direction - The company aims to grow through organic means, with a focus on maintaining strong loan pipelines and capitalizing on market disruptions [6][40] - The strategy includes enhancing digital capabilities to compete effectively against larger banks, with two-thirds of checking clients regularly using digital services [13][14] - The company is positioned to take advantage of rising interest rates and is cautious about locking in low long-term yields with excess liquidity [12][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to continue loan growth, citing strong pipelines and market demand [34] - The company anticipates that inflation will persist, impacting both expenses and growth, but expects margin expansion to offset increased costs [62] - Management noted that credit quality remains strong, with low charge-offs and improved loan portfolio characteristics [36][19] Other Important Information - The company repurchased approximately $9.5 million worth of stock at just over $71 per share during the quarter [12] - The net overhead ratio improved to 1.22%, down from 1.32% in the previous quarter, indicating enhanced operational efficiency [29] Q&A Session Summary Question: Loan growth expectations and potential slowdowns - Management indicated that low rates could lead to aggressive pricing from competitors, which might impact growth, but currently sees strong demand and momentum [45][46] Question: Margin stability and potential threats - Management acknowledged that additional liquidity could pressure margins but expects net interest income to grow due to strong loan growth [52][54] Question: Excess liquidity deployment - Management discussed the potential earnings impact of deploying excess liquidity into loans versus cash, emphasizing a cautious long-term approach [59][60] Question: Inflation impact on expenses - Management believes that if inflation rises, margin expansion will likely offset increased expenses, particularly in labor costs [63] Question: Impact of market acquisitions on operations - Management noted that disruptions from market acquisitions can last for an extended period, providing opportunities for growth [71][72]