WTFC - Wintrust Financial Corporation Reports Record First Quarter 2021 Net Income of $153.1 million

ROSEMONT, Ill., April 19, 2021 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust”, “the Company”, "we" or "our") (Nasdaq: WTFC) announced record net income of $153.1 million or $2.54 per diluted common share for the first quarter of 2021, an increase in diluted earnings per common share of 56% compared to the fourth quarter of 2020 and an increase of 144% compared to the first quarter of 2020.

Highlights of the First Quarter of 2021:
Comparative information to the fourth quarter of 2020

• Total assets increased by $601 million.
• Total loans, excluding Paycheck Protection Program ("PPP") loans, increased by $515 million.
  • Originated $1.3 billion of PPP loans in the first quarter of 2021 which generated fees of $51.2 million, net of $1.8 million of deferred costs, to be recognized over the estimated life of the loans.
  • PPP loans originated in 2020 declined by $667 million in the first quarter of 2021 primarily as a result of processing forgiveness payments. As of April 16, 2021, approximately 42% of PPP loan balances originated in 2020 have been forgiven, approximately 40% of balances are in the forgiveness review or submission process, and approximately 18% of balances have yet to apply for forgiveness.
• Total deposits increased by $780 million.
• Total investment securities increased by $1.0 billion as the Company deployed a portion of its excess liquidity.
• Net interest income increased by $2.5 million primarily due to earning asset growth and increased PPP loan fee accretion, despite two less days in the first quarter of 2021. Each day has an approximately $3 million impact on net interest income.
  • The Company recognized $19.2 million of PPP loan fee accretion in the first quarter of 2021 as compared to $16.8 million in the fourth quarter of 2020. As of March 31, 2021, the Company had approximately $64.6 million of net PPP loan fees that have yet to be recognized in income.
• The loans to deposits ratio ended the first quarter of 2021 at 87.6% as compared to 86.5% as of December 31, 2020. Excluding PPP loans, the loans to deposits ratio ended the first quarter of 2021 at 78.9%.
• Mortgage banking revenue increased by $26.7 million to $113.5 million for the first quarter of 2021 as compared to $86.8 million in the fourth quarter of 2020.
  • Recorded an increase in the value of mortgage servicing rights related to changes in fair value model assumptions of $18.0 million in the first quarter of 2021 as compared to a decrease of $5.2 million in the fourth quarter of 2020.
• Recorded a negative provision for credit losses of $45.3 million in the first quarter of 2021 as compared to $1.2 million of expense in the fourth quarter of 2020.
• Recorded net charge-offs of $13.3 million in the first quarter of 2021 as compared to net charge-offs of $10.3 million in the fourth quarter of 2020. Net charge-offs as a percentage of average total loans totaled 17 basis points in the first quarter of 2021 on an annualized basis compared to 13 basis points on an annualized basis in the fourth quarter of 2020.
• The allowance for credit losses on our core loan portfolio is approximately 1.62% of the outstanding balance as of March 31, 2021, down from 2.00% as of December 31, 2020. See Table 11 for more information.
• Non-performing loans declined significantly and totaled $99.1 million, or 0.30% of total loans, as of March 31, 2021 as compared to $127.5 million, or 0.40% of total loans, as of December 31, 2020.
• The outstanding balance of COVID-19 related modified loans totaled approximately $254 million or 0.8% of total loans, excluding PPP loans, as of March 31, 2021 as compared to $345 million or 1.2% as of December 31, 2020.
• Tangible book value per common share (non-GAAP) increased to $55.42 as compared to $53.23 as of December 31, 2020.

Other items of note from the first quarter of 2021

• The following items had a $5.8 million unfavorable pre-tax income impact on the first quarter of 2021:
  • Recognized $3.8 million of expense related to impairment of certain capitalized software costs based on an evaluation of remaining useful life.
  • Recorded an impairment charge of $1.4 million in occupancy expense as part of an ongoing effort to optimize our branch footprint.
  • Recorded severance expense of $626,000.

Edward J. Wehmer, Founder and Chief Executive Officer, commented, "Wintrust reported record net income of $153.1 million for the first quarter of 2021, up from $101.2 million in the fourth quarter of 2020. Pre-tax income, excluding provision for credit losses (non-GAAP) increased by 19% to $161.5 million for the first quarter of 2021 as compared to $135.9 million in the fourth quarter of 2020. The first quarter of 2021 was characterized by strong loan growth, increased net interest income, record mortgage banking revenue, a release of reserves as our credit quality and macroeconomic forecasts improved and a continued focus to increase franchise value in our market area."

Mr. Wehmer continued, "The Company experienced strong loan growth in the first quarter of 2021, including growth in its commercial, commercial real estate, residential real estate loans for investment and life insurance premium finance receivable portfolios. The loan growth occurred in the latter part of the quarter as total period end loans, excluding PPP loans, were $523 million higher than average total loans, excluding PPP loans, in the first quarter of 2021. Our loan pipelines remain strong and we expect to leverage our various core and niche portfolios to continue to grow loans. Total deposits increased by $780 million as compared to the fourth quarter of 2020 primarily due to an increase in non-interest bearing deposits related to PPP loan origination. We continue to emphasize growing our franchise, including gathering low cost deposits, which we believe will drive value in the long term. Our loans to deposits ratio ended the quarter at 87.6% and we believe that we have sufficient liquidity to meet customer loan demand."

Mr. Wehmer commented, "Net interest income increased in the first quarter of 2021 primarily due to earning asset growth and increased PPP loan fee accretion. Net interest margin was unchanged as the rate on interest-bearing liabilities declined seven basis points in the first quarter of 2021 as compared to the fourth quarter of 2020 effectively offsetting a six basis point decline in the yield on total earning assets. PPP loan fee accretion increased as the Company recognized $19.2 million of PPP loan fee accretion in the first quarter of 2021 as compared to $16.8 million in the fourth quarter of 2020. Additionally, we deployed a portion of excess liquidity during the first quarter of 2021 to purchase investment securities increasing our period end total securities by $1.0 billion as compared to December 31, 2020. The majority of the security purchases were in the latter part of the quarter after long term interest rates had increased. As a result, period end investment securities were $743 million higher than average investment securities in the first quarter of 2021 which is expected to favorably impact net interest margin in future quarters. We continue to maintain excess liquidity and believe that deploying such liquidity could potentially increase our net interest margin."

Mr. Wehmer noted, “Our mortgage banking business reported record mortgage banking revenue of $113.5 million in the first quarter of 2021. Loan volumes originated for sale in the first quarter of 2021 were $2.2 billion, down slightly from $2.4 billion in the fourth quarter of 2020. The Company allocated a greater portion of its mortgage originations for investment to benefit future quarters. Additionally, the Company recorded an $18.0 million increase in the value of mortgage servicing rights related to changes in fair value model assumptions. The strong quarter of mortgage performance contributed to reporting a 0.90% net overhead ratio for the first quarter of 2021. We believe the second quarter of 2021 will provide another strong quarter for mortgage banking production as an influx in seasonal purchase demand is expected to help offset an expected decline in refinance activity."

Commenting on credit quality, Mr. Wehmer stated, "The Company recorded a negative provision for credit losses of $45.3 million related to both improving credit quality and macroeconomic forecasts. The level of non-performing loans decreased by $28.5 million primarily due to non-performing loan pay-offs. Additionally, net charge-offs remained relatively low totaling $13.3 million in the first quarter of 2021 as compared to $10.3 million in the fourth quarter of 2020. The allowance for credit losses on our core loan portfolio as of March 31, 2021 is approximately 1.62% of the outstanding balance. We believe that the Company’s reserves remain appropriate and we remain diligent in our review of credit."

Mr. Wehmer continued, "We remain committed to supporting our community, including the well-being and safety of our customers and employees. We have actively participated in the latest rounds of PPP approved in 2021 and as of April 16, 2021 have processed over 7,900 applications aggregating in excess of $1.3 billion of loans. We are carefully monitoring the COVID-19 pandemic including its potential impact on the economy, our customers and our business. We remain focused on navigating the current environment by actively monitoring and managing our credit portfolio."

Mr. Wehmer concluded, "Our first quarter of 2021 results continued to demonstrate the multi-faceted nature of our business model which we believe uniquely positions us to be successful. While Wintrust and the banking industry as a whole have experienced significant net interest margin compression, we have been able to compensate for that with outstanding mortgage banking results. Additionally, we leverage a differentiated, diversified loan portfolio to outperform peers with respect to loan growth. We are focused on taking advantage of market opportunities to prudently deploy excess liquidity into earning assets including core and niche loans and investment securities while maintaining an interest rate sensitive asset portfolio. We remain diligent in our evaluation of acquisition targets and will be prudent in our decision-making, always seeking to minimize dilution. Finally, we evaluate our operating expense base on an ongoing basis to enhance future profitability."

The graphs below illustrate certain financial highlights of the first quarter of 2021 as well as historical financial performance. See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 17 for additional information with respect to non-GAAP financial measures/ratios, including the reconciliations to the corresponding GAAP financial measures/ratios.

Graphs available at the following link: http://ml.globenewswire.com/Resource/Download/4e11acd7-e400-475a-8133-4d0d52f51413

SUMMARY OF RESULTS:

BALANCE SHEET

Total asset growth of $601 million in the first quarter of 2021 was primarily comprised of a $1.1 billion increase in loans and a $1.0 billion increase in investment securities, partially offset by a $1.5 billion decrease in interest-bearing deposits with banks. Total investment securities increased by $1.0 billion as the Company deployed a portion of its excess liquidity as market returns improved due to the change in long-term interest rates. Total loans, excluding PPP loans, increased by $515 million primarily due to growth in the commercial, commercial real estate, residential real estate loans for investment and life insurance premium finance receivable portfolios. The Company believes that the $3.3 billion of interest-bearing deposits with banks held as of March 31, 2021 provides sufficient liquidity to operate its business plan.

Total liabilities increased $465 million in the first quarter of 2021 resulting primarily from a $780 million increase in total deposits, partially offset by a $200 million decrease in trade date securities payable. The increase in deposits was primarily due to a $549 million increase in non-interest-bearing deposits primarily related to PPP loans originated in 2021. The Company's loans to deposits ratio ended the quarter at 87.6%. Management believes in substantially funding the Company's balance sheet with core deposits and utilizes brokered or wholesale funding sources as appropriate to manage its liquidity position as well as for interest rate risk management purposes.

For more information regarding changes in the Company’s balance sheet, see Consolidated Statements of Condition and Tables 1 through 3 in this report.

NET INTEREST INCOME

For the first quarter of 2021, net interest income totaled $261.9 million, an increase of $2.5 million as compared to the fourth quarter of 2020 and an increase of $452,000 as compared to the first quarter of 2020. The $2.5 million increase in net interest income in the first quarter of 2021 compared to the fourth quarter of 2020 was primarily due to earning asset growth and increased PPP loan fee accretion, despite two less days in the first quarter of 2021.

Net interest margin was 2.53% (2.54% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2021 unchanged from 2.53% (2.54% on a fully taxable-equivalent basis, non-GAAP) during the fourth quarter of 2020 and down from 3.12% (3.14% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2020.  The net interest margin was unchanged from the prior quarter due to the six basis point decline in the yield on earning assets and one basis point decrease in the net free funds contribution being offset by a seven basis point decrease in the rate paid on interest-bearing liabilities. The six basis point decline in the yield on earning assets in the first quarter of 2021 as compared to the fourth quarter of 2020 was primarily due to an eight basis point decline in yield earned on loans partially offset by a three basis point increase in yield on liquidity management assets. The decrease in the rate paid on interest-bearing liabilities in the first quarter of 2021 as compared to the prior quarter is primarily due to a six basis point decrease in the rate paid on interest-bearing deposits primarily due to lower repricing of time deposits.

For more information regarding net interest income, see Tables 4 through 7 in this report.

ASSET QUALITY

The allowance for credit losses totaled $321.3 million as of March 31, 2021, a decrease of $58.7 million as compared to $380.0 million as of December 31, 2020. The allowance for credit losses decreased primarily due to improvements in the macroeconomic forecast in addition to improvement in portfolio characteristics throughout the quarter. Notably, there was a decrease in the allowance for credit losses in the Commercial Real Estate portfolio primarily driven by improvement in the Commercial Real Estate Price Index and Baa Corporate Credit Spreads forecasts. Other key drivers of allowance for credit losses changes include, but are not limited to, decreases in COVID-19 related loan modifications and loan risk rating migration.

A negative provision for credit losses totaling $45.3 million was recorded for the first quarter of 2021 compared to $1.2 million of expense for the fourth quarter of 2020 and $53.0 million of expense for the first quarter of 2020. For more information regarding the provision for credit losses, see Table 10 in this report.

Management believes the allowance for credit losses is appropriate to account for expected credit losses. The Current Expected Credit Losses ("CECL") standard requires the Company to estimate expected credit losses over the life of the Company’s financial assets at a certain point in time. There can be no assurances, however, that future losses will not significantly exceed the amounts provided for, thereby affecting future results of operations. A summary of the allowance for credit losses calculated for the loan components in each portfolio as of March 31, 2021 and December 31, 2020 is shown on Table 11 of this report.

Net charge-offs totaled $13.3 million in the first quarter of 2021, a $3.0 million increase from $10.3 million in the fourth quarter of 2020 and a $8.0 million increase from $5.3 million in the first quarter of 2020. Net charge-offs as a percentage of average total loans totaled 17 basis points in the first quarter of 2021 on an annualized basis compared to 13 basis points on an annualized basis in the fourth quarter of 2020 and eight basis points on an annualized basis in the first quarter of 2020. For more information regarding net charge-offs, see Table 9 in this report.

As of March 31, 2021, $28.0 million of all loans, or 0.1%, were 60 to 89 days past due and $151.7 million, or 0.5%, were 30 to 59 days (or one payment) past due. As of December 31, 2020, $41.6 million of all loans, or 0.1%, were 60 to 89 days past due and $139.1 million, or 0.4%, were 30 to 59 days (or one payment) past due. Many of the commercial and commercial real-estate loans shown as 60 to 89 days and 30 to 59 days past due are included on the Company’s internal problem loan reporting system. Loans on this system are closely monitored by management on a monthly basis.

The Company’s home equity and residential real estate loan portfolios continue to exhibit low delinquency rates as of March 31, 2021. Home equity loans at March 31, 2021 that are current with regard to the contractual terms of the loan agreement represent 98.3% of the total home equity portfolio. Residential real estate loans at March 31, 2021 that are current with regards to the contractual terms of the loan agreements comprised 97.4% of total residential real estate loans outstanding. For more information regarding past due loans, see Table 12 in this report.

The outstanding balance of COVID-19 related modified loans totaled approximately $254 million or 0.8% of total loans, excluding PPP loans as of March 31, 2021 as compared to $345 million or 1.2% as of December 31, 2020. The most significant proportion of outstanding modifications changed terms to interest-only payments.

The ratio of non-performing assets to total assets was 0.25% as of March 31, 2021, compared to 0.32% at December 31, 2020, and 0.49% at March 31, 2020. Non-performing assets totaled $114.9 million at March 31, 2021, compared to $144.1 million at December 31, 2020 and $190.4 million at March 31, 2020. Non-performing loans totaled $99.1 million, or 0.30% of total loans, at March 31, 2021 compared to $127.5 million, or 0.40% of total loans, at December 31, 2020 and $179.4 million, or 0.65% of total loans, at March 31, 2020. The decrease in non-performing loans as of March 31, 2021 as compared to December 31, 2020 is primarily due to payments throughout the quarter. A significant portion of these payments were attributed to refinance activity with some payments resulting from the sale of underlying collateral. Reductions in non-performing loans were also accomplished through note sales and movement to other real estate owned ("OREO"). OREO totaled $15.8 million at March 31, 2021, a decrease of $745,000 compared to $16.6 million at December 31, 2020 and an increase of $4.8 million compared to $11.0 million at March 31, 2020. Management is pursuing the resolution of all non-performing assets. At this time, management believes OREO is appropriately valued at the lower of carrying value or fair value less estimated costs to sell. For more information regarding non-performing assets, see Table 13 in this report.

NON-INTEREST INCOME

Wealth management revenue increased by $2.5 million during the first quarter of 2021 as compared to the fourth quarter of 2020 primarily due to increased trust and asset management fees and brokerage commissions. Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors, the brokerage commissions, managed money fees and insurance product commissions at Wintrust Investments and fees from tax-deferred like-kind exchange services provided by the Chicago Deferred Exchange Company.

Mortgage banking revenue increased by $26.7 million in the first quarter of 2021 as compared to the fourth quarter of 2020, primarily due to an $18.0 million favorable mortgage servicing rights portfolio fair value adjustment as compared to a $5.2 million decrease recognized in the prior quarter related to changes in fair value model assumptions. Loans originated for sale were $2.2 billion in the first quarter of 2021, a decrease of $129.3 million as compared to the fourth quarter of 2020. The percentage of origination volume from refinancing activities was 73% in the first quarter of 2021 as compared to 65% in the fourth quarter of 2020. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market.

During the first quarter of 2021, the fair value of the mortgage servicing rights portfolio increased primarily due to the capitalization of $24.6 million of servicing rights and a fair value adjustment increase of $18.0 million partially offset by a reduction in value of $10.2 million due to payoffs and paydowns of the existing portfolio. No economic hedges were outstanding relative to the mortgage servicing rights portfolio during the fourth quarter of 2020 or first quarter of 2021.

Operating lease income increased by $2.3 million in the first quarter of 2021 as compared to the fourth quarter of 2020.  The increase is primarily due to a $1.5 million gain recognized on sale of lease assets in the first quarter of 2021.

Other non-interest income decreased by $4.0 million in the first quarter of 2021 as compared to the fourth quarter of 2020 primarily due to decreased interest rate swap fees and bank owned life insurance ("BOLI") revenue.

For more information regarding non-interest income, see Tables 14 and 15 in this report.

NON-INTEREST EXPENSE

Salaries and employee benefits expense increased by $9.7 million in the first quarter of 2021 as compared to the fourth quarter of 2020. The $9.7 million increase is comprised of an increase of $9.0 million in commissions and incentive compensation and an increase of $3.2 million in employee benefits expense, partially offset by a decrease of $2.5 million in salaries expense. The increase in commissions and incentive compensation is primarily due to higher expenses associated with the Company's long term incentive program and higher commissions related to its mortgage and wealth management businesses. The increase in employee benefits is primarily related to higher employee payroll taxes.

Advertising and marketing expense totaled $8.5 million in the first quarter of 2021, a decrease of $1.3 million as compared to the fourth quarter of 2020. The decrease in the first quarter relates primarily to decreased digital advertising campaigns and printing costs. Marketing costs are incurred to promote the Company's brand, commercial banking capabilities and various products, to attract loans and deposits and to announce new branch openings as well as the expansion of the Company's non-bank businesses. The level of marketing expenditures depends on the timing of sponsorship programs utilized which are determined based on the market area, targeted audience, competition and various other factors.

Miscellaneous expense in the first quarter of 2021 decreased by $5.0 million as compared to the fourth quarter of 2020. The first quarter of 2021 included a $937,000 reversal of contingent consideration expense related to the previous acquisition of mortgage operations as compared to $6.6 million of expense in the fourth quarter of 2020. The liability for contingent consideration expense related to the previous acquisition of mortgage operations is based upon forward looking mortgage origination volumes and the estimated profitability of that operation. Should those assumptions change going forward, the liability may need to be increased or decreased. The contractual period covering contingent consideration ends in January 2023 and the final two years of the contract contemplate a lower ratio of contingent consideration relative to financial performance. As a result, the Company does not expect to have material adjustments to the contingent consideration liability in future periods. The Company also recognized $3.8 million of expense related to impairment of certain capitalized software costs based on an evaluation of remaining useful life.  Miscellaneous expense also includes ATM expenses, correspondent bank charges, directors fees, telephone, travel and entertainment, corporate insurance, dues and subscriptions, problem loan expenses and lending origination costs that are not deferred.

For more information regarding non-interest expense, see Table 16 in this report.

INCOME TAXES

The Company recorded income tax expense of $53.7 million in the first quarter of 2021 compared to $33.5 million in the fourth quarter of 2020 and $24.3 million in the first quarter of 2020. The effective tax rates were 25.97% in the first quarter of 2021 compared to 24.87% in the fourth quarter of 2020 and 27.87% in the first quarter of 2020.

BUSINESS UNIT SUMMARY

Community Banking

Through its community banking unit, the Company provides banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas the Company services. In the first quarter of 2021, this unit expanded its loan portfolio and its deposit portfolio. In addition, the segment's net interest margin remained relatively stable in the first quarter of 2021 as compared to the fourth quarter of 2020.

Mortgage banking revenue was $113.5 million for the first quarter of 2021, an increase of $26.7 million as compared to the fourth quarter of 2020 primarily due to an $18.0 million favorable mortgage servicing rights portfolio fair value adjustment as compared to a $5.2 million decrease recognized in the prior quarter related to changes in fair value model assumptions. Service charges on deposit accounts totaled $12.0 million in the first quarter of 2021, an increase of $195,000 as compared to the fourth quarter of 2020 primarily due to higher account analysis fees. The Company's gross commercial and commercial real estate loan pipelines remained strong as of March 31, 2021. Before the impact of scheduled payments and prepayments, gross commercial and commercial real estate loan pipelines were estimated to be approximately $1.3 billion to $1.5 billion at March 31, 2021. When adjusted for the probability of closing, the pipelines were estimated to be approximately $800 million to $900 million at March 31, 2021.

Specialty Finance

Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries, accounts receivable financing and value-added, out-sourced administrative services and other services. Originations within the insurance premium financing receivables portfolio were $2.8 billion during the first quarter of 2021 and average balances increased by $263.7 million as compared to the fourth quarter of 2020. The increase in average balances was more than offset by margin compression in this portfolio resulting in a $5.0 million decrease in interest income attributed to the lower market rates of interest associated with the insurance premium finance receivables portfolio. The Company's leasing business grew during the first quarter of 2021, with its portfolio of assets, including capital leases, loans and equipment on operating leases, increasing by $106.6 million to $2.2 billion at the end of the first quarter of 2021. Revenues from the Company's out-sourced administrative services business were $1.3 million in the first quarter of 2021, essentially unchanged from the fourth quarter of 2020.

Wealth Management

Through four separate subsidiaries within its wealth management unit, the Company offers a full range of wealth management services, including trust and investment services, tax-deferred like-kind exchange services, asset management, securities brokerage services and 401(k) and retirement plan services. Wealth management revenue totaled $29.3 million in the first quarter of 2021, an increase of $2.5 million compared to the fourth quarter of 2020. Increases in asset management fees were primarily due to favorable equity market performance during the first quarter of 2021. At March 31, 2021, the Company’s wealth management subsidiaries had approximately $32.2 billion of assets under administration, which included $4.2 billion of assets owned by the Company and its subsidiary banks, representing a $2.1 billion increase from the $30.1 billion of assets under administration at December 31, 2020.

ITEMS IMPACTING COMPARATIVE FINANCIAL RESULTS

Paycheck Protection Program

On March 27, 2020, the President of the United States signed the CARES Act, which authorized the Small Business Administration ("SBA") to guarantee loans under the PPP for small businesses who met the necessary eligibility requirements in order to keep their workers on the payroll. The Company began accepting applications on April 3, 2020. From such date through March 31, 2021, the Company secured authorization from the SBA for and funded over 19,400 PPP loans with a carrying balance of approximately $4.8 billion. As of March 31, 2021, the carrying balance of such loans was reduced to approximately $3.3 billion primarily resulting from forgiveness by the SBA.

WINTRUST FINANCIAL CORPORATION
Key Operating Measures

Wintrust’s key operating measures and growth rates for the first quarter of 2021, as compared to the fourth quarter of 2020 (sequential quarter) and first quarter of 2020 (linked quarter), are shown in the table below:

(1) Period-end balance sheet percentage changes are annualized.
(2) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 17 for additional information on this performance measure/ratio.
(3) Net revenue is net interest income plus non-interest income.
(4) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period's average total assets. A lower ratio indicates a higher degree of efficiency.
(5) Excludes mortgage loans held-for-sale.

Certain returns, yields, performance ratios, or quarterly growth rates are “annualized” in this presentation to represent an annual time period. This is done for analytical purposes to better discern, for decision-making purposes, underlying performance trends when compared to full-year or year-over-year amounts. For example, a 5% growth rate for a quarter would represent an annualized 20% growth rate. Additional supplemental financial information showing quarterly trends can be found on the Company’s website at www.wintrust.com by choosing “Financial Reports” under the “Investor Relations” heading, and then choosing “Financial Highlights.”

WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights

(1) Excludes mortgage loans held-for-sale.
(2) Net revenue is net interest income and non-interest income.
(3) See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 17 for additional information on this performance measure/ratio.
(4) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s total average assets. A lower ratio indicates a higher degree of efficiency.
(5) Capital ratios for current quarter-end are estimated.
(6) The allowance for credit losses includes the allowance for loan losses, the allowance for unfunded lending-related commitments and the allowance for held-to-maturity securities losses.

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

TABLE 1: LOAN PORTFOLIO MIX AND GROWTH RATES

(1) Annualized.

TABLE 2: DEPOSIT PORTFOLIO MIX AND GROWTH RATES

(1) Annualized.
(2) Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wintrust Investments, Chicago Deferred Exchange Company, LLC ("CDEC"), trust and asset management customers of the Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts.

TABLE 3: TIME CERTIFICATES OF DEPOSIT MATURITY/RE-PRICING ANALYSIS
As of March 31, 2021

(1) Weighted-average rate excludes the impact of purchase accounting fair value adjustments.

TABLE 4: QUARTERLY AVERAGE BALANCES

(1) Includes interest-bearing deposits from banks, federal funds sold and securities purchased under resale agreements.
(2) Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.
(3) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 17 for additional information on this performance measure/ratio.
(4) Other earning assets include brokerage customer receivables and trading account securities.
(5) Loans, net of unearned income, include non-accrual loans.
(6) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.

TABLE 5: QUARTERLY NET INTEREST INCOME

(1) Interest income on tax-advantaged loans, trading securities and investment securities reflects a taxable-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period.
(2) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 17 for additional information on this performance measure/ratio.

TABLE 6: QUARTERLY NET INTEREST MARGIN

(1) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(2) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 17 for additional information on this performance measure/ratio.
(3) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.

TABLE 7: INTEREST RATE SENSITIVITY

As an ongoing part of its financial strategy, the Company attempts to manage the impact of fluctuations in market interest rates on net interest income. Management measures its exposure to changes in interest rates by modeling many different interest rate scenarios.

The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon assuming increases of 100 and 200 basis points and a decrease of 100 basis points. The Static Shock Scenario results incorporate actual cash flows and repricing characteristics for balance sheet instruments following an instantaneous, parallel change in market rates based upon a static (i.e. no growth or constant) balance sheet. Conversely, the Ramp Scenario results incorporate management’s projections of future volume and pricing of each of the product lines following a gradual, parallel change in market rates over twelve months.  Actual results may differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies. The interest rate sensitivity for both the Static Shock and Ramp Scenario is as follows:

TABLE 8: MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES

Graph available at the following link: http://ml.globenewswire.com/Resource/Download/3b1cd75f-31c0-4b3f-a1ec-b86cbbf9fddb

Source: Bloomberg

As noted in the table on the previous page, the majority of the Company’s portfolio is tied to LIBOR indices which, as shown in the table above, do not mirror the same changes as the Prime rate which has historically moved when the Federal Reserve raises or lowers interest rates.  Specifically, the Company has $9.5 billion of variable rate loans tied to one-month LIBOR and $6.2 billion of variable rate loans tied to twelve-month LIBOR. The above chart shows:

TABLE 9: ALLOWANCE FOR CREDIT LOSSES

TABLE 10: ALLOWANCE AND PROVISION FOR CREDIT LOSSES BY COMPONENT

TABLE 11: ALLOWANCE BY LOAN PORTFOLIO

The table below summarizes the calculation of allowance for loan losses and allowance for unfunded lending-related commitments losses for the Company’s loan portfolios as well as core and niche portfolios, as of March 31, 2021 and December 31, 2020.

(1) See Table 1 for additional detail on core and niche loans.

TABLE 12: LOAN PORTFOLIO AGING

TABLE 13: NON-PERFORMING ASSETS AND TROUBLED DEBT RESTRUCTURINGS ("TDRs")

(1) As of March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020, and March 31, 2020, no TDRs were past due greater than 90 days and still accruing interest.

Non-performing Loans Rollforward

(1) This includes activity for premium finance receivables and indirect consumer loans.

TDRs

(1) Included in total non-performing loans.

Other Real Estate Owned

TABLE 14: NON-INTEREST INCOME

NM - Not meaningful.

TABLE 15: MORTGAGE BANKING

(1) Production revenue represents revenue earned from the origination and subsequent sale of mortgages, including gains on loans sold and fees from originations, changes in derivative activity, processing and other related activities, and excludes servicing fees, changes in the fair value of servicing rights and changes to the mortgage recourse obligation and other non-production revenue.

TABLE 16: NON-INTEREST EXPENSE

NM - Not meaningful.

TABLE 17: SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES/RATIOS

The accounting and reporting policies of Wintrust conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures and ratios are used by management to evaluate and measure the Company’s performance. These include taxable-equivalent net interest income (including its individual components), taxable-equivalent net interest margin (including its individual components), the taxable-equivalent efficiency ratio, tangible common equity ratio, tangible book value per common share, return on average tangible common equity and pre-tax income, excluding provision for credit losses. Management believes that these measures and ratios provide users of the Company’s financial information a more meaningful view of the performance of the Company's interest-earning assets and interest-bearing liabilities and of the Company’s operating efficiency. Other financial holding companies may define or calculate these measures and ratios differently.

Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis using tax rates effective as of the end of the period. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a fully taxable-equivalent basis is also used in the calculation of the Company’s efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses), measures how much it costs to produce one dollar of revenue. Securities gains or losses are excluded from this calculation to better match revenue from daily operations to operational expenses. Management considers the tangible common equity ratio and tangible book value per common share as useful measurements of the Company’s equity.  The Company references the return on average tangible common equity as a measurement of profitability. Management considers pre-tax income, excluding provision for credit losses, as a useful measurement of the Company's core net income.

WINTRUST SUBSIDIARIES AND LOCATIONS

Wintrust is a financial holding company whose common stock is traded on the Nasdaq Global Select Market (Nasdaq: WTFC). Its 15 community bank subsidiaries are: Lake Forest Bank & Trust Company, N.A., Hinsdale Bank & Trust Company, N.A., Wintrust Bank, N.A., in Chicago, Libertyville Bank & Trust Company, N.A., Barrington Bank & Trust Company, N.A., Crystal Lake Bank & Trust Company, N.A., Northbrook Bank & Trust Company, N.A., Schaumburg Bank & Trust Company, N.A., Village Bank & Trust, N.A., in Arlington Heights, Beverly Bank & Trust Company, N.A. in Chicago, Wheaton Bank & Trust Company, N.A., State Bank of The Lakes, N.A., in Antioch, Old Plank Trail Community Bank, N.A. in New Lenox, St. Charles Bank & Trust Company, N.A. and Town Bank, N.A., in Hartland, Wisconsin.

In addition to the locations noted above, the banks also operate facilities in Illinois in Addison, Algonquin, Aurora, Bloomingdale, Bolingbrook, Buffalo Grove, Burbank, Cary, Clarendon Hills, Crete, Countryside, Darien, Deerfield, Des Plaines, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Evanston, Evergreen Park, Frankfort, Geneva, Glen Ellyn, Glencoe, Glenview, Gurnee, Grayslake, Hanover Park, Highland Park, Highwood, Hoffman Estates, Homer Glen, Itasca, Joliet, Lake Bluff, Lake Villa, Lansing, Lemont, Lindenhurst, Lynwood, Markham, Maywood, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, North Chicago, Northfield, Norridge, Oak Lawn, Oak Brook, Orland Park, Palatine, Park Ridge, Prospect Heights, Ravinia, Riverside, Rolling Meadows, Round Lake Beach, Shorewood, Skokie, South Holland, Spring Grove, Steger, Stone Park, Vernon Hills, Wauconda, Waukegan, Western Springs, Willowbrook, Wilmette, Winnetka and Wood Dale, and in Wisconsin in Albany, Burlington, Clinton, Darlington, Delafield, Delavan, Elm Grove, Genoa City, Kenosha, Lake Geneva, Madison, Menomonee Falls, Milwaukee, Monroe, Pewaukee, Racine, Sharon, Wales, Walworth and Wind Lake, and in Dyer, Indiana and in Naples, Florida.

Additionally, the Company operates various non-bank business units:

• FIRST Insurance Funding and Wintrust Life Finance, each a division of Lake Forest Bank & Trust Company, N.A., serve commercial and life insurance loan customers, respectively, throughout the United States.
• First Insurance Funding of Canada serves commercial insurance loan customers throughout Canada.
• Tricom, Inc. of Milwaukee provides high-yielding, short-term accounts receivable financing and value-added out-sourced administrative services, such as data processing of payrolls, billing and cash management services, to temporary staffing service clients located throughout the United States.
• Wintrust Mortgage, a division of Barrington Bank & Trust Company, N.A., engages primarily in the origination and purchase of residential mortgages for sale into the secondary market through origination offices located throughout the United States. Loans are also originated nationwide through relationships with wholesale and correspondent offices.
• Wintrust Investments, LLC is a broker-dealer providing a full range of private client and brokerage services to clients and correspondent banks located primarily in the Midwest.
• Great Lakes Advisors LLC provides money management services and advisory services to individual accounts.
• The Chicago Trust Company, N.A., a trust subsidiary, allows Wintrust to service customers’ trust and investment needs at each banking location.
• Wintrust Asset Finance offers direct leasing opportunities.
• CDEC provides Qualified Intermediary services (as defined by U.S. Treasury regulations) for taxpayers seeking to structure tax-deferred like-kind exchanges under Internal Revenue Code Section 1031.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information can be identified through the use of words such as “intend,” “plan,” “project,” “expect,” “anticipate,” “believe,” “estimate,” “contemplate,” “possible,” “will,” “may,” “should,” “would” and “could.” Forward-looking statements and information are not historical facts, are premised on many factors and assumptions, and represent only management’s expectations, estimates and projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict and which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company’s 2020 Annual Report on Form 10-K and in any of the Company’s subsequent SEC filings. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be deemed to include, among other things, statements relating to the Company’s future financial performance, the performance of its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory developments, securities that the Company may offer from time to time, and management’s long-term performance goals, as well as statements relating to the anticipated effects on financial condition and results of operations from expected developments or events, the Company’s business and growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth and plans to form additional de novo banks or branch offices. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:

• the severity, magnitude and duration of the COVID-19 pandemic and the direct and indirect impact of such pandemic, as well as responses to the pandemic by the government, businesses and consumers, on our operations and personnel, commercial activity and demand across our business and our customers’ businesses;
• the disruption of global, national, state and local economies associated with the COVID-19 pandemic, which could affect the Company’s liquidity and capital positions, impair the ability of our borrowers to repay outstanding loans, impair collateral values and further increase our allowance for credit losses;
• the impact of the COVID-19 pandemic on our financial results, including possible lost revenue and increased expenses (including the cost of capital), as well as possible goodwill impairment charges;
• economic conditions that affect the economy, housing prices, the job market and other factors that may adversely affect the Company’s liquidity and the performance of its loan portfolios, particularly in the markets in which it operates;
• negative effects suffered by us or our customers resulting from changes in U.S. trade policies;
• the extent of defaults and losses on the Company’s loan portfolio, which may require further increases in its allowance for credit losses;
• estimates of fair value of certain of the Company’s assets and liabilities, which could change in value significantly from period to period;
• the financial success and economic viability of the borrowers of our commercial loans;
• commercial real estate market conditions in the Chicago metropolitan area and southern Wisconsin;
• the extent of commercial and consumer delinquencies and declines in real estate values, which may require further increases in the Company’s allowance for credit losses;
• inaccurate assumptions in our analytical and forecasting models used to manage our loan portfolio;
• changes in the level and volatility of interest rates, the capital markets and other market indices (including developments and volatility arising from or related to the COVID-19 pandemic) that may affect, among other things, the Company’s liquidity and the value of its assets and liabilities;
• a prolonged period of near zero interest rates or potentially negative interest rates, either broadly or for some types of instruments, which may affect the Company’s net interest income and net interest margin, and which could materially adversely affect the Company’s profitability;
• competitive pressures in the financial services business which may affect the pricing of the Company’s loan and deposit products as well as its services (including wealth management services), which may result in loss of market share and reduced income from deposits, loans, advisory fees and income from other products;
• failure to identify and complete favorable acquisitions in the future or unexpected difficulties or developments related to the integration of the Company’s recent or future acquisitions;
• unexpected difficulties and losses related to FDIC-assisted acquisitions;
• harm to the Company’s reputation;
• any negative perception of the Company’s financial strength;
• ability of the Company to raise additional capital on acceptable terms when needed;
• disruption in capital markets, which may lower fair values for the Company’s investment portfolio;
• ability of the Company to use technology to provide products and services that will satisfy customer demands and create efficiencies in operations and to manage risks associated therewith;
• failure or breaches of our security systems or infrastructure, or those of third parties;
• security breaches, including denial of service attacks, hacking, social engineering attacks, malware intrusion or data corruption attempts and identity theft;
• adverse effects on our information technology systems resulting from failures, human error or cyberattacks;
• adverse effects of failures by our vendors to provide agreed upon services in the manner and at the cost agreed, particularly our information technology vendors;
• increased costs as a result of protecting our customers from the impact of stolen debit card information;
• accuracy and completeness of information the Company receives about customers and counterparties to make credit decisions;
• ability of the Company to attract and retain senior management experienced in the banking and financial services industries;
• environmental liability risk associated with lending activities;
• the impact of any claims or legal actions to which the Company is subject, including any effect on our reputation;
• losses incurred in connection with repurchases and indemnification payments related to mortgages and increases in reserves associated therewith;
• the loss of customers as a result of technological changes allowing consumers to complete their financial transactions without the use of a bank;
• the soundness of other financial institutions;
• the expenses and delayed returns inherent in opening new branches and de novo banks;
• liabilities, potential customer loss or reputational harm related to closings of existing branches;
• examinations and challenges by tax authorities, and any unanticipated impact of the Tax Act;
• changes in accounting standards, rules and interpretations, and the impact on the Company’s financial statements;
• the ability of the Company to receive dividends from its subsidiaries;
• uncertainty about the discontinued use of LIBOR and transition to an alternative rate;
• a decrease in the Company’s capital ratios, including as a result of declines in the value of its loan portfolios, or otherwise;
• legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies, including those changes that are in response to the COVID-19 pandemic, including without limitation the CARES Act, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act, and the rules and regulations that may be promulgated thereunder;
• a lowering of our credit rating;
• changes in U.S. monetary policy and changes to the Federal Reserve’s balance sheet, including changes in response to the COVID-19 pandemic or otherwise;
• regulatory restrictions upon our ability to market our products to consumers and limitations on our ability to profitably operate our mortgage business;
• increased costs of compliance, heightened regulatory capital requirements and other risks associated with changes in regulation and the regulatory environment;
• the impact of heightened capital requirements;
• increases in the Company’s FDIC insurance premiums, or the collection of special assessments by the FDIC;
• delinquencies or fraud with respect to the Company’s premium finance business;
• credit downgrades among commercial and life insurance providers that could negatively affect the value of collateral securing the Company’s premium finance loans;
• the Company’s ability to comply with covenants under its credit facility; and
• fluctuations in the stock market, which may have an adverse impact on the Company’s wealth management business and brokerage operation.

Therefore, there can be no assurances that future actual results will correspond to these forward-looking statements. The reader is cautioned not to place undue reliance on any forward-looking statement made by the Company. Any such statement speaks only as of the date the statement was made or as of such date that may be referenced within the statement. The Company undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events after the date of the press release. Persons are advised, however, to consult further disclosures management makes on related subjects in its reports filed with the Securities and Exchange Commission and in its press releases.

CONFERENCE CALL, WEBCAST AND REPLAY

The Company will hold a conference call on Tuesday, April 20, 2021 at 10:00 a.m. (Central Time) regarding first quarter 2021 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #3477928. A simultaneous audio-only webcast and replay of the conference call as well as an accompanying slide presentation may be accessed via the Company’s website at https://www.wintrust.com , Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the first quarter 2021 earnings press release will be available on the home page of the Company’s website at https://www.wintrust.com and at the Investor Relations, Investor News and Events, Press Releases link on its website.

FOR MORE INFORMATION CONTACT:Edward J. Wehmer, Founder & Chief Executive OfficerDavid A. Dykstra, Vice Chairman & Chief Operating Officer(847) 939-9000Web site address: www.wintrust.com