WINTRUST FINANCIAL CORP Q3 FY2024 earnings call

• Tim mentioned net income was in line with expectations, loan and deposit growth, and reduction in higher rate brokered deposits. - Dave discussed balance sheet growth, income statement results including uncommon items like nonrecurring day one provision for credit losses, mortgage servicing rights activity, and acquisition costs offset by security gains. Net interest income increased, provision for credit losses, noninterest income and expense details. - Rich talked about solid credit performance, loan growth across major portfolios, credit quality metrics, and focus on CRE portfolio with signs of stabilization.

For the third quarter, Wintrust grew loans by $2.4 billion, with $1.3 billion acquired from Macatawa Bank and $1.1 billion organically. Deposits grew by over $3.4 billion, $2.3 billion from Macatawa and $1.1 billion organically. Net income for the quarter was just over $170 million, and record net income of just under $510 million for the first three quarters. Net interest margin was 3.51%, and net interest income was a record high of $503 million, up $32 million from the second quarter. The loan-to-deposit ratio was slightly reduced to roughly 92% at quarter end. Noninterest-bearing deposits increased by approximately $708 million in the third quarter, with total noninterest-bearing balances remaining stable at 21% of total deposits.

• Margin expected to remain near current levels, with net interest income growth. - Loan growth for the fourth quarter expected to continue strong, aligned with mid to high single-digit guidance. - Capital ratios expected to increase due to strong earnings and Macatawa acquisition. - Confidence in net interest margin being in a narrow range around 3.5% in the fourth quarter and into 2025.

• Potential competitive behavior in deposit/loan pricing. - Impact of macroeconomic conditions on provisioning. - Election impact on economic factors. - Pressure on CRE portfolio from higher volumes of payoffs as borrowers seek long-term fixed rate refinancing.

Q: Can you talk a little bit more about the loan growth outlook and the drivers?

A: Richard Murphy discussed diversified asset portfolio, strong pipelines in various areas like asset-based, mortgage warehouse, core commercial loans, etc., and utilization rates.

Q: How has your deposit cost trended and how have competitors reacted?

A: Tim mentioned deposit cost beta similar on way down as up, competitors have seen rates come down to lower levels.

Q: What are your plans for potentially adding veteran bankers and leveraging the Macatawa franchise?

A: Timothy Crane said they like the existing team and will add resources as needed, seeing inbound inquiries in specialty areas.

Q: Could you remind us about the credit side, specifically charge-offs and the office slide?

A: Richard Murphy talked about charge-offs in transportation related and that increase in 30 to 89 bucket in office slide is due to working through customer conversations.

Q: On the expense run rate, any discussion about where it settles in?

A: David Stoehr mentioned adding $5 million plus or minus to the run rate for Macatawa integration and expected mid-single digit expense growth.