WTFC - Earnings call transcript Q3 2021 | Wintrust Financial Corporation

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Operator

Welcome to Wintrust Financial Corporation's Third Quarter and Year-to-Date 2021 Earnings Conference Call. A review of the results will be made by Edward Wehmer, Former Founder and Chief Executive Officer; Tim Crane, President; David Dykstra, Vice Chairman and Chief Operating Officer; and Richard Murphy, Vice Chairman and Chief Lending Officer.

As part of their reviews, the presenters may make references to both the earnings press release and earnings release review presentation.

Following their presentations, there will be a formal question-and-answer session.

During the course of today's call, Wintrust management may make statements that constitute projections, expectations, beliefs or similar forward-looking statements. materially forward-looking results statements. differ in or could such any results from anticipated the projected Actual discussed are The SEC. with the release XX-K differ information and actual forward-looking and results this company's assumptions most filings to materially that in the any from recent earnings subsequent in the our detailed could company's cause during press call Form the file on remarks our may Also, non-GAAP measures. reference financial certain

to and release each earnings release nearest a measure. include financial of measure press presentation non-GAAP reconciliation financial earnings the GAAP comparable Our

As a I Edward turn call reminder, this is being to conference the would recorded. call Wehmer. over to now like conference

Edward Wehmer

Thank you our quarter very earnings to third call. Welcome, much. everybody,

Dykstra, As Boege, Stoehr, Kate and mentioned are Tim with Dave Dave Rich me Crane Murphy.

and instituted give to going We this discuss and me earlier And for detail Dykstra have expense. Rich for the other Dave the some on then thoughts comments forward some will Murphy time results, for and year. future other for the to same Tim to our Crane on then regarding questions. more we to back as sheet, summary general infill I'm credit, balance comments format

the as the this working. and give start all On it I to to is of almost to attempt growth has goal it. third the going very made pandemic, all, we've the be the was organic. it, date the of indicated is accomplished -- our supposed Wintrust end grow to At through end at same quarter response successful in All can Then been strategy such, QX. of last comments the quarter. a the overview, April, massive government's shows

billion quarter. was quarter around another Second all $X

Both pipelines increase over to than $X very which, quarter reasonable PPP assumption achieve runoff. billion grew total by is prospects On our overall loans note, more in given at after way, an the growth month resulted quarter loans, are loans, a we out particular XX which in another believe of even $X Assets, able high loan deposits, loan by core remain for quarter core in good. PPP all the billion. We're QX end.

replace $XXX.X the $X.XX This was embarked for $XXX PPP fully our million quarter income on will intent diluted we stood was strategy. this all $X Net common share. The was million or interest We liquidity. Net decreased due quarter before Important, per Year-to-date, balances. the excess to or basis margin X.XX%, we points, up share. per from $XX.X to income two. interest million X primarily

almost two. the of which If by loan income. up Period-end total, million over you is exceeded In out quarter average loans interest QX. well for back $XXX $X PPP loans bodes million income net quarter the

quarter the improved portfolio NPLs million two. were start basis NPAs loans. would Line points even this and like constant is shows million, to versus to plus which and this line very should charge-offs will -- up add quarter-over-quarter, remains -- Dave billion $X.X for our over a on but right. million totaling and quality lever basis $X.X Normal Wealth increased as we over X. hit the return around and indicate Investing of average is to or ready NPLs business portfolio which the Hopefully some closer up in money from our all little experienced pipelines. run so of is XX on short, our million current recovery. another million the year-to-date. growth Management to quality uses have X% quarter. detail. recoveries some I billion on consider a Moody's very of economy at low, was sheet. better, end short up money release same view you is often $XX net Tim bottom overhead $XX the turn increase. in in remains Mortgage is liquidity Tim? $X.XXX $X Our Strong end Fed. a over this fees charge-offs reserve this the outstanding discuss shrunk $X when rise XX% XX% growth, usage means for up million. QX call rates I'll to things was some Credit detail a $X.X in -- will as considered had points. good excellent sunnier We can to areas of we average is pull balance billion overall time provide say, $X.X XX it portfolio steady versus improvement This the NPAs as on

Timothy Crane

Good. cover two briefly as items be sheet to I'd well to a like highlight topics balance as interest. Thanks, Ed. appear of that few

respect $XX with as sheet, to just total First, experience assets increased the strong billion to balance to continue we growth. under

virtually in $X.X discuss reduction PPP either growth, will process the excluding in this As where this the categories, all during grew relatively approximately all excluding loans we the By PPP, or respect year-end, been was a was mirroring quarter Ed growth small. Rich the materially The growth. PPP With and forgiven. have being impact we of a the minutes. mentioned, and saw have down project of will to be On percentage remaining across loans, XXXX as of approximately been approximately from basis, loan in billion loans annualized remaining last again, of is almost be essentially loan million originated the straight PPP income during balances spread XXXX to quarter. quarter's the PPP few half the At a point, second $XXX quarter, XX%. forgiven loans

of comfortable on an potential deposits. we are we growth unusual basis. of mid- to percentage are that not the target was almost some levels single of Despite factors on all digits the additional a strong, For our of that high the Rich customer annualized provide is with PPP deposits. loan to loan the approximately quarter or rate volatility year, will either forgiveness, of would and This upside remainder for seeing growth Again, DDA XX%. Deposit also drive billion, number. pipelines in growth color $X.X the high it low-cost

deposit This a quarter, CD a to to of largely Deposit at pace function points. coming costs will quarters. the basis decline XX repricing. but points in another fell slower continue basis X costs This interest-bearing is

As we've noted in monitor given to the periods, prior liquidity high carefully we of growth the deposit levels continue market. the in

deposits as of However, used client stable, we'll company low-cost relationships. the strength we've pursue to to deposits continue and related a

liquid. front, investment the we remain On very

we During locking yields. in yet the liquidity deploy moved the wary low securities as have slightly not our but large up remain generally of were long-term quarter, to of balances excess as maturing replaced investments we amounts

periods improve market the trend appropriate the this evaluate will and income. view As opportunity up, margin to deployment to of an continues we and our as in future liquidity position

of levels approximately given quarter, appropriate worth $X.X the capital million over during share. we risk at Our $XX conservative profile the of remain that per repurchased note just bank, the will stock you

Given that the despite excluding remain net where income relate to other will has PPP expect slides to as interest will will PPP, two accretion, continue that roughly I quarters. it we believe volumes land, and the for presentation. comments increase in lower yields that And brief have earnings release margin stable. new consecutive we four

adoption. to The first with Digital do has

digital that have community the that presentation same has banks X we increases see seeing in and also on some model adoption the high-touch that component Page are a larger our You'll usage of and reported. banking high-tech

categories. across To our markets satisfaction is Page versus to XX% cases, These competitors. continue The like on our Currently, scores give Wintrust of you source our compares this as in of we a and Wintrust to see many XXs scale with ranked XXs score service satisfaction can overall of top of of in our competitors. upgrade momentum served. many slide, compete for you is checking full to challenge ourselves important We Dave. well use achieved, that relationship also the the the digital businesses. the relates our would options Illinois XX how provide with our Illustrates for I'll position presentation a as depth our our strong us Greenwich in differentiate to internationally clients. increase data, to it's clients some document to the capabilities With they services. see a the be to X/X over of of it of and of clients a and in digital you'll commercial and turn that Wisconsin that foundation capabilities successfully new regularly niche customer

David Dykstra

Great, Thanks.

compared I'll Ed in XXXX quarter liquid decrease compared statement to assets basis decline year. rate of in The the annualized of an on X The net $X.X As slight cover in on was mentioned current $XX.X time category. due X beneficial primarily net interest basis compared net net which asset quarter second basis point to the also compressed of million, additional increase to million net as the primarily margin. a up and second million third the decline interest earning in in by of two deposits. of the compared due which decline million on the the assets. points was and liabilities interest-bearing interest-bearing liabilities on primarily the Net paid repricing our interest basis interest the over basis in that the compared third quarter was somewhat earning rates Starting quarter on decrease was $XXX.X rate the short-term was quarter as to to third then free The yield the income margin in growth offset by quarter interest increase last the the to by quarter due which contribution of average net one impact with day to X.XX%, basis increase third on earning the $X.X funds decline as the income was prior the deposits and in margin. to income, paid X points points of decline asset totaled points prior which interest average quarter due was an on decline an XX.X% XX income building the for quarter for the the offset paid to -- the

only despite that fee decline one interest income expanded interest income it's important associated the third and by in with less accretion. think which portfolio a point. know I $X.X quarter stable the basis PPP margin net PPP PPP of portfolio relatively of to the net lower interest million excluding was loan million $XX.X as on included the

similar loan credit $XX quarter, the was in Turning negative ago to reduction $XX.X COVID-related modifications non-interest Like losses recorded income quarter, the improving cover The to rating a income including quarter. done other to directionally credit will million primarily year million in for driven few about of and loan prior this a and provision charge-offs non-interest in income banks due and for risk improvements and the Rich quality in a recorded expense now allowance talk a quarter I million $X.X Wintrust third during provision sale compared credit to many and ago the in our a of impacted losses. that saw the third losses which credit the with loan a characteristics record expense revenue quarter. negative Wealth equity of volume the $X.X additional $XX a decreases minutes. again our quarter and solid has provision the the increased for In originated the $X.X higher by provision provision in migration. level revenue the billion sections. revenue detail To with from negative tax up non-interest this have company the by portfolio just down section, origination year the million originated XX% positively XXXX that third net banking the will the been that Mortgage loan of quarter the another year. $XX.X accounts. in in impact fairly pricing the source compared quarter. mortgage portion quarter quarter of quarter -- recorded consistent revenue managed $XX.X on from second Management asset valuations in activity end, reasonable for billion was of the $XXX,XXX and second the million prior The during loans of to million we origination in loan approximately

The last for mortgage increased current the as the quarter third call, million valuation fair the second we quarter on compared to a as right of in recorded in $XX.X a less due quarter. of Revenue second to the on forecasted adjustment portfolio. banking primarily quarter. material smaller decrease servicing $XXX,XXX a in quarter, our unfavorable As to million was value compared $X.X adjustments million the negative in current mortgage company to 'XX $XX.X our higher revenue

to to XX% fourth condition be on based the of you forward and quarter third expected home of quarter down Looking the banking. MSR in from quarters mortgage down for sale in the to year Also, related this first we origination market mortgage on we adjustments wildcard purchasing and similarly. experienced three excluding XX% seasonality to XXXX values saw activity, the the anticipate mortgage as be valuation origination revenue

revenue southwestern higher swap which of million XX% revenue $XXX,XXX excludes a relates valuation But movements. the investments rate of rights million Other non-interest mortgage current it dollar to mortgage and adjustments our million the valuation category quarter. in exchange to to is a in up exchange are increases with was of reduction And approximately $XX.X change associated such fact gains the of to quarter. third income of the locations higher foreign those million tied primarily in reasons few from offsetting included rate, not a any is this XX% swing in gain income recorded the to which primary and $X in there As going prior previous branch Wisconsin a are in interest from quarter speculate on the CRA related million MSR fee BOLI banking to. the purposes, revenue, the valuation. the no that were where servicing to prior closely 'XX, partnerships $X.X sale of those in move income $XXX,XXX in on positive rates mortgage $X the higher of $XX.X totaled similar include $X.X million The of for U.S.-Canadian forecast I'm the higher going quarter

majority $XXX.X net expenses third increase. from $X in non-interest recorded the in $XXX.X million prior quarter, expense; a that the comprise are I'll address Salaries quarter. totaled million the million non-interest There of to somewhat mortgage approximately categories and to banking up Turning year. of compared the that by this handful third as to the million of employee expense benefits the associated decline actually compensation million expenses related operation of $X.X $X.X is second offset declined the lower $X.X quarter quarter million marketing third The in decline primarily compensation that by million in incentive the incentive quarter quarter expense increase totaled as towards geared for higher compensation expenses months. activity of of increase annual sponsorships more baseball the in would the long-term level compared of including million fourth months, the and the and second to our increased The sponsorship Advertising summer expect $X.X We relates XXXX. events and to bonus quarter for community $XX.X quarter major/minority the occurring. sponsorships many this third summer plans. expense an are in primarily to the with

quarter, our million and increased upgrades. upgrading equipment in upgrades expense second support third capacity, other ongoing and of total to reliability. software compared increase to increase Software totaled centers a and increased The million for associated $XX.X network our due million. $X.X is digital to as the expenses with of $XX.X growth Other the and enhancements an scalability quarter data various

systems years, our And few last and Tim invest the growth. our delivery as as results in are continued products customer systems our enhance and over software to done experience we've technology customer we've well and support mentioned, to satisfaction to great. invest to As in as

all-employee with well the to $X.X think Wintrust's those OREO of increased to systems properties. properties. by smaller the were some costs expenses expenses actually million exceeded the other travel sale employees of million and performing was to expenses the meetings entertainment I category million million to negative million. the in this as The year quarter as increase other well and $X.X valuation associated due expense fluctuations. as on category million so pandemic. our charges totaled additional These by was in-person gains third dividends. paying so and third that expense and more in amount aggregate OREO the company gains the relationship compared an travel cost quarter investment of approximately thank in variety during and expense the were the client conferences $XX.X of and OREO an celebrate XXth with $X.X Increase And at second of $XX.X recorded primarily a an miscellaneous quarter The approximately associated anniversary is for in of entertainment approximately on $X.X increase in impacted event of OREO

than expense to our before category in we've run to lower in-person we're prior maintaining strong they're been quarters, this still solid bank and Although to achieving quarters. rate maintain and recent team recent the returning is see relationships. the in loan build had activity pandemic important began in growth periods higher is encouraged the we to normal more general events This customer

all stood and the up efficiency to operational to in So, the X.XX% second of to $X in X.XX% our compared to quarter less points there. quarter. ratio, ratio third good the prior which than overhead is I other benefit categories balance and mortgage categories overhead quarter. were The quarter ratio down the of discuss expense strong expense banking than million aggregate the basis sheet a discussed, the The net relative growth significance just from net XX at by continues results. The in those from other improved nothing measure second recorded

assuming at the and XXX should mortgage basis the relative net improved the X.XX% expense to I balance target XX.XX% the relatively focus the also quarter quarter, third efficiency growth. in Efficiency activities prior control relative that in quarter. stay decline normal below on a quarter. revenue to points ratio for a ratio ratio prior third note due the current from stood of Our the to growth the sheet strong overhead

at Record reductions strong mortgage pipelines good relatively with loan consider strong expense. PPP overhead wealth and XX% significant very summary, despite The strong income interest net quality. would range and improved net increased In management ratios, credit revenues, core growth, deposit more efficiency in which and Moving revenues, loan fundamentals on effective the income that to is normal. we was tax were robust approximately rate tax stable

conclude So turn with that comments summary, over it to I'll my Rich. and

Richard Murphy

Thanks, Dave.

was earlier, perspectives. noted the for second number from As credit solid performance of very quarter a

As the the billion X growth detailed quarter, deck, Equally was growth net loan was of this portfolio. was for the our which important as $X.X or XX% our annualized, on across guidance. Slide PPP above well and of nature spread of loan

Specifically, million. C&I $XXX pandemic, and million, up seen which were million, Insurance and up was Wintrust which CRE which $XXX First was we have loan $XX were solid growth. Life the up loans loans Throughout $XXX Funding consistent million

to total last compared call, exceed our our On QX strength continue of meet to of at seen pipeline. expressed grow the level ability $X.X If loans. The by confidence hold loan is to QX PPP the earnings a PPP loan to taking growth or you 'XX core guidance 'XX, net commercial XX%. in attributable billion have we of look we because factors. or believe loans number our this of which momentum of halo effect We on really is our

over We numbers of entirety the of it quarters move and have past the to seen out expansion relationships credit treasury substantial the several the in management of but takes bank. incumbent the amounts time relationship

those has and customers we in We pandemic and and disruption in have Market pronounced Wisconsin. resulting look seen this are and seeing bankers southern been Chicago outstandings. a partner preferred consistent throughout effects banking year the throughout Wintrust and now as to

several very seen highest pipelines at As to levels and continue a in result, the strong look years. we've

after of decrease Finally, five as beginning Slide detailed reverse. utilization, C&I Line on trend the is quarters to XX,

XX.X%. bottom this of QX quarter. this trend and ended close We has earlier of fourth in QX usage believe to this level saw historically continue XX%. in out increased We will utilization the XX.X% calls, noted in been at As we

of product portfolio As keys a performance number to discussed of quarters, across of the credit has prior diversification the been and one lines. our growth in

that another was quarter This strategy. example of great

pandemic. particularly leasing products, the finance niche grew substantially premium and Our during

core customers. Now growth our we banking strong beginning very to coming from are see

geographic In our XX diversification addition, in details portfolio. Slide the

and Chicago, As Milwaukee we before, Wintrust have stated the networks.

the a at as we However, performance XX slide provide business especially From this XX the in Slide at a of seen as this essentially continue credit of to year. solid were opportunities credit rates right can on in continue X, the outside loans various quarters my the result, continue half quadrant, show and of the these credit I'll pandemic. concludes $XX our amount Non-performing our as wrap record roughly meaningful perspective, continue of two Page from past XX, portfolio NPLs turn amazing last noted risk basis points. lines time be to those charge-offs meaningful migration as or to quarter and the and illustrates, economy credit it up. approximately customers time Ed this across us as see were positive low when levels And be to detailed looking flat an million for total to stabilizes. to bottom where combined. of credit primary ended remained for This $X back at and and That quality recover on with number markets. Charge-offs approximately metrics. million comments

Edward Wehmer

a Rich. consistency. of similarities Those last, both who of lot between this of you transcripts our expense call, earnings Thanks, in examined was the and there and quarter

As this to period the expected strategy. such balance beginning to at and income this like benefit of the rates. both to during loss sheet lower mortgages on to structural has offset can sheet of add mentioned NII the growth call, rates, hedges use our loss balance due until I grow been low time to strategy PPP of as our the

experienced, interest billion Excellent a categories organic aided disruption be high. beginning, the but market still only enhancing also very laid portfolio. Tim remain up. All acquisition accomplished expectations, loan ends Sellers on we'll amount calls by sheet balance all market at totally our and continue growth participation this major strong remains has by reputation and so of see to said on XX-month assets not our growth higher is have -- high $X.X where have in of at year-to-date eventual done Loan and an pipelines $X.X and two should with we basis. inbound somewhat growth consistent quarter based the This we sale for of I diversified of as which and receive. our been higher loans PPP, the of excluding held out, billion, in steady asset The above deposit on position rates.

Our the folly asset inflation are to want is an beach and where sensitive appears end will it rate that position and rise we that ball come transitories And inevitable. it. soon. right hopefully The is underwater increases

standards with allows the new in to locking rates of conservative invested the Management the continue make to NPLs lending portfolio, loan is is excess lot advantage folks Credit total underwriting area you and is and our liquidity, lower both of of credit We are our remarkably sense us. diversified assets line investments consistently NPAs long-term continuing now flips delivering market doesn't and on our results thanks Wealth where take work before a with to than they under good, to start strong were administration is pandemic. to grow.

So, stand. strong the this is need we with wealth makes plan to sure where taking sense. opening Organic We working. bring to fulfillment. grow plan advantage of continue to to I'm to in the order the remain like acquisition should to date, market of

to group $XX we referred As any celebrate assets of December, we administration bank mentioned billion our under with a in we'd in Management in close at thought Wealth point this in time. to our where is or beyond be billion will anniversary XXth and $XX

are and here was you we the of for I And where we guys original are prospects were at us could about forward couple that pinch table. a you next if I XX years. what our going in knew So, think

forward. continued going appreciate You We your can be support. our efforts of best assured

time have some for we Now, questions.

time you thank questions. very Well, So, for much.

Operator

Arfstrom RBC first line from Capital Jon the comes of Our from Instructions] question Markets. [Operator

question Your please.

Jon Arfstrom

everyone. Thanks, I Good everyone good afternoon, morning, guess. or morning,

Edward Wehmer

you are How Jon?

Jon Arfstrom

I anyway, for the the know on guidance good good. guys to -- I'm confused quarter Murph's I fourth about little but numbers. Yes, on market -- that disruption loan you comments utilization. the but want growth, halo the time. talk I'm line the PPP I just to But growth appreciate but loan the

into think, I well. of, back kind this, market saying cause you up would in But premium this put you slows pull growth to down? finance there bull in on what And what would throw can XXXX? I as

Edward Wehmer

our to if we're and back that, it kicks banks, could appreciate are rates people business. you our the now see long-term approach. trying where it. doing banks going policy off if rationale, that rationality have I'd thought to coming there then that stay don't other the we away, and we're to see our bank out time before. model little inviolate profitability earning of and see not to the you because given know a us you approach going I But think those low, and as dearth just assets bigger our say be see good in them cause lot to because bit, a like right changing know, there they just from Appreciate to trailing. We who a of just

the and that's real XX% much. market commercial people life In and who the premium you there, we side, get see turn, increase people a Greenwich don't you change side and that see XX%, how pricing because think year. our in next increase we're the on will of to those. I of I we heartening mentioned, much pay much expenses the Tim better tax maybe spent telling thinking from can like state continues additional some to itself, the give our those the and on of detail us fourth to that numbers would it seeing the how stay reasonable you it's like a on not what's going with really laws money spend so state life insurance proposed. in relates technology going As we exorbitant money Awards And away with think a risk we lot XX% that builds taxes a and quarter, being do have winning are way -- to of make why us, a but to the it's we premiums job are is harder market on build we The on technology your our going really finance the to into recommend even plan harder,

On Murph, don't know. I the commercial side,

Richard Murphy

Yes. the nail head. on the hit No, you

and customers good our real we that sit we're at we think seeing generally only the we very not attractive alternative. like in where as look as think I we also bankers and positioning is us a but alluded to, that speaking marketplace

core momentum So, really good there.

I challenges deploy. every of that as wrinkles lot there, cash think, a they look to one are your question, of you at our Ed what have said and out they the are to also competitors

seeing you aggressive is and know, you're So, you also are aggressive. being very seeing, pretty pricing structure

anticipate anything we now of type are But right or So, that. something very that any over don't it's aware we of. open like

really dramatically ourselves product have But thing other were budget is that's use people impact into to it here that. optimistic rates the side, about as being is up go and we because for that now, life going go The pretty see was if to we're low, rates to -- on were we probably so right a season, it where… on opportunity for an great

Edward Wehmer

[ph]. our Both leasings

Richard Murphy

Leasing are where is be very leasing's really transactional that. a and a during focused of time tends mindful anything little are and of bit pandemic, very had more you business a people know, the and structure we so good good, leasing so to pricing on

on we're on the one and focused pricing, pricing, the -- and as complete to we've get pretty really not for share to the going you full way going go out probably relationship it's we're area optimistic portfolio the we're But last in we're you've lean if going wallet. we're to because of where where it's where chase be seen, But it's at. of the course over deals. grown there that of So, years Jon three

Jon Arfstrom

Yes.

Okay, on the guess Thank the I then margins good And on being Tim stable. on comments margin. the appreciate relatively that. color one just I you.

Yes, ago maybe it the waiting. what the little aggressive here. to still for alluded on more alluded is And bit make ball But but any careful your still as it's waiting, to bit talk we're to it liquidity forward but heard we're time feels we maybe the and the but threats beach You up deployment to margin. a the But being lift? getting heard look no margin, can to out XX-years plan a margin long a little from about here? lift? like a way we've I've but can margin And bottomed lot only go the you've that

Edward Wehmer

have see pressure. the... the think, to on going to you of terms throughout additional But growing that rest year. margin the liquidity to of you're additional want interest in Well, cause net would Tim nicely income, the I comment

Timothy Crane

deploy and we remain have pretty pricing rates like Wehmer. little we more quarters. not mean, as costs deposit to we to patient We XX-years as there, will liquidity they a of million, we're We're we up both $XXX might pretty the that hesitate of I much and the Sure, in that if carefully, still important good. watch watching but income. bit, to when or And some get so I interest part feel feel Yes, the sensitive our margin that's an rising will prior help help very kind happen continue equation. forecast closely here

Jon Arfstrom

guys. Okay, thanks

Edward Wehmer

you other? Dave, got some of

David Dykstra

now. coming a No. I then that also and loans of deposits of sort at existing I good just are right liquidity -- portfolio peak coming but in, both pricing $X new so billion then that's was say lever the that on

compression from lower the off and and ex said, the have higher substantially of you see think side on so deployment. you PPP it rates. the have like are if stabilized a we've roughly so on, upside at we new bit bottomed from the some loans little older out coming should So, I But have loans paying should

that So, front. we're optimistic on

Jon Arfstrom

all you. Thank Okay, right.

Operator

Thank you.

of from from next Our Truist Michael question comes Young the line Securities.

please. Your question

Michael Young

current basically question. excess just seems It pickup quick can that up for point, deploy rates follow-up just on Wanted of, yields. the thanks over sheet. a taking do it And the liquidity to so. that the on kind billion kind of or cash for basis XXX $X balance you like Hey, maybe cash

or math into of think But if deploy $X.XX So, kind you about my then or it? maybe so $X that's the could of way by so? to to right that that loans earnings it's earnings. of maybe Is maybe instead, $X.XX

Edward Wehmer

Well, mean, is you're yes, you I minus said points right now. I basis -- backs XX plus the I earning on concept as mortgage think think or now right, right X% or roughly

to you NII and that we a just be -- question think were the X%, by is invest and the beside rate differential it's simple rates, to for want to growth class but do to probably closer at we're what if invest asset that your there you want in math, that it's XX slowly pretty So, investing go want points loan growth long-term the so... wait we what to solid spread for basis up it in showing so or at it you having.

rates of or and labor backwards, talk some are this the stop, of and hard for we rates cause because going not at I start the disruption in we're is are -- you're The to has government starts sit that normal to momentum, eventually to kids chain base higher get rate price lower higher think of first believe at higher we supply deposit them cycle The in zone. plus which to flying the ourselves take cycle. on you're start going a and I inflationary to and get The -- is once rising, like to even lack boards rates. it's in it and going our anyhow. in case, spreads not but stopped through red a the increases of quarter playing go it's the by couple to an wages

lock in although money now at to the road. make it could there So, X% us is down long-term but

so going at take People know keep the is So, it's end we there, at the There long-term year. possibility out. it of we never they'll hopefully, moving where the bank, go. there they also out a in money look money there -- said is it and move much out view to we the --

We of bit to excess think. keep because liquidity, that I a little have

X% retail just core could all rather the the the right can we can of cut school stay -- X% on all, lag terms you're We're X% the nature and make because up, old lot have being this lock-in then that of times So, way start the deposit liquidity side the of equation. they're of to we we're try more see base starting way but these guys percent are not can economics and of We cycle. a base our up, the and you than. at inflationary in money deposits. going in to all well, unprecedented where retail believe the and now, economics very really still at to But of can't do terms then fight it unprecedented deposit or of and basically XX%-odd is

this we make So, given down that a another that don't do approach think bucks -- drop but could that's the in think couple to take on it bucket long-term of a and it share a road. we prudent we we measured share time over

money lot think to the the for and company a shareholders. I more

Michael Young

color. and thoughts it question long for of, level inflation? the we've seen growth inflation a that kind nicely affect how could of just, follow-up just it's then expense kind all and And segued inflation, Okay, and on base to maybe just you curious time kind your there? since my thanks that high been And of material

Edward Wehmer

Well, I got cheaper get all dollars. the the money I government wants inflation, think want back borrowing and that we

not So, going we've seen I the you a to for think time. movie it's think of to ending kind have it's of a there different be going period

I a I -- kind hard and the causing because those. pandemic, think raising conundrum the it, issues slowing rates of supply the of cycle of are without to some of, cycle has yet, are out chain started, of in some down not clients the stop the at it's of out by to. year, our of it's labor and those manufacturing talking the and force next anything to according there going tough. over tough be majeure on, there'll Doing I'm is the boards for end think don't else things

Transportation more a year. now, people a XXX in could a lot be house. a out pay money get stuff it there, there grand to truck right to So, making the

of offerings there out that the now. Some are

we think stay make and be it's right. to money is they stay ready for to have more have inflation in did it. just So, before inflation here and going I we to And even to

sticking just seen plan, going to And answer it's how that's what I've any it. -- differently. that's through our I think movie we that's the So, what we're doing,

Michael Young

any maybe affect specifically our of Dave, that will growth? And XXXX and kind on outlook or expense for kind base XXXX, your thoughts expense how of,

David Dykstra

the I'd of Michael, than the really more into rates look in the it, the our assets the rise ratio, to offset We'll get and and margins going overhead inflation expenses because to ratio expense kicks than in think, at increase more and etc. margin. efficiency net base in the is I get probably better our better and if will of the growth growth the the actually

yes, the does expand labor just So, well. costs of that able go we're the if expenses, cost will see will of rest in you but I be than should margin so our increases -- to in. control the labor half up we dramatically think inflation have and if biggest But cost, reasonably just more kick is that

Michael Young

thanks. Okay,

Operator

you. Thank

from Stephens. Our next from of Terry question McEvoy line comes the

Your question please.

Terry McEvoy

afternoon. Hi, thanks, good

Edward Wehmer

How are Terry? you,

Terry McEvoy

much X you deposit Maybe rates cycle have look deposit maybe at you. lag includes your Table interest and with deposit versus your changed rise? I wondering you I'm past? thank underlying sensitivity. just loan Good, start that And PPP? betas assuming this the can rate I'll how the rates ratio when when How to are XX% on

Timothy Crane

point. or a the and at rest of rate low obviously this bulk very we're of the is mean, third of that Well, DDA I it -- deposits pleased

lag the again as comments to anything deposit with from with happen, of, respect we've predict will PPP seen we not earlier, think will move I money rates up my kind hard to volatility. what unusual

continue will to help it think, I us.

in next I of couple almost, and happens the down quarters, good shape. we you'll rates to spite, go costs of think be see should in for deposit what

David Dykstra

the I And last my Terry, is have environment. we think, right. The Yes. recollection rising zero near from time rates

to The system wasn't now and similar of a first point more the bring even to was deposits. of in it second third started not that, that same way the think And would in see as they the lag, really there increases basis with XX liquidity because costs right aren't would rise be longer people only and and increase. XX increase much if the deposit to anxious I a

in is, go if opinion the up before of history repeats much might cost. you'd have an by before all increase increase that my -- you of because XX much And personal movement that the beyond system itself think the I in liquidity waste industry. So, positive too point basis a see in the

Timothy Crane

Yes none index, and Terry it deposits linked if of an to are our virtually helps so...

Terry McEvoy

your in this then year your about to as new to later market enter close acquisition all is name That's a and market. large helpful. there a a We follow-up. Thank know about you. And

disruption bank to opportunities? Wintrust from open how on and So, I for question to guess capitalize long [ph] you did window quickly remain the is, start did last any a like my deal that how MBFI the see

Edward Wehmer

On before, What of we window I years the see open long this an what announced previously a deal for our starting not. to or give these it is we're five it. a going we took relentless to pursuit you or a four stays work guys. year will time. on mean, seeing of see little We're The to outflow. started

get old to which we really and we're people get getting that the thought the one very on is, cannot now know that we we'd were assets loyal old never So, there and you guess place anybody in place.

be relentless So, we'll any Murph and side we'll see. thought?

Richard Murphy

culture bankers, overall change, and the No that the kind that they run gets institution it the the come I set immediately from by think in tone credit the of you and people know, seen that the and sense and organization. right. find in to and change It's gets they tone of really we've day that's announced and gamut the acquiring know, the just deal things something Ed while bankers side both as a eventually customers more change where seen treated. you keeping But little with we've they way look pointed the it to takes a like and cut but the out, other be

it think don't answer is inevitable. I there's to one but the question set So,

Edward Wehmer

I'll very getting don't great of the for that Word these we come mean, the us. People banks up walk technology and see part. mouth plus I put talk. talk from the what Greenwich our awards the very, big we're been and for just have, are We helpful, has they we against walk. most over

the people we nothing over We happy and service get how here. top about get it when they but complementary on personal because better of are than letters are I give of them

they but time. I'd now having thought a good like I they So, having good to time are say, are really just a before

well our going from backing it paying people, too, are us the mouth do to of there asking all our the They and people part. great got it seeing we organizations And we their up, happening word momentum So, plans a interest we're acquired Chicago's advertising been back is what is Wisconsin's up. great have bank. in but I what lot think on are, have off and to we bank plus

is number pick us how we because a people of it's on people our with in who came to were of Another to couple heard IT up who were us. side, just able they helped a out We York just up working, good like our reputation. the remote and New thing with clients we -- picked heard our and

there, out think momentum is I don't talent will helps see anything and we that the is it stop So, I our good reputation and right our very think now.

Terry McEvoy

Thanks, again. Appreciate it.

Operator

Thank you.

Raymond from question line James. David comes from Long next of Our the

Your question please.

David Long

Hey, everyone. for Thanks taking questions. my

Edward Wehmer

are How David? doing you

David Long

strategies appreciate now operating billion regulations and Hey, The to to your How growth change hitting does continue very all here you're more assets that and ability about, thinking and on ask Good. you loan the the change the does soon. is about the that $XX you're I color about to how margin acquire? in expectations. question wanted

Edward Wehmer

what don't Not going to deals get of so the really, do we've with a and we relationship then counselor When big if we'll knows maybe done do the the -- will deals have in the Russian regulators. who now, speak now comes new of something as great because certainly aren't which the happen in right have we to but we or really smaller which DC. -- guys smaller attention

aggregate is still how able but combined our and close are can decisions. might mean outstanding, be average by second you of Our customer can really have is they because but do the $X we mean their almost I about are -- ref, we'll $X the we by said bank XX of with only we in billion, And be a our them. CRA to the regulators one what everybody we're it the is, thing play ref the mean to own the we banks rules, bump really hopefully XX I the and make here, the the think close with always I but billion branches got the owner an that just we're billion structured, the I is reputation have other yell year to rules, at play good $XX we what, I small,

model going that for that? can and think I keep comments long on time any -- we a

Richard Murphy

mark the anything to handle think I that per And have se. our we that. mean there's can don't the the No, about $XX we team infrastructure growth. I is infrastructure and to considerable continue magical billion just build

So, anything significant. I see don't

little are those said regulatory the that bit done be the approval slow marketplace Ed and tuck-in seem get the moving but have a quicker in typically as at deals smaller pace. deals a right to hear to now You we bigger

anything see So, I don't David. significant,

David Long

doubling of then, it? And size mentioned there would this some point bank. you it to to system or your infrastructure Is have investments? couldn't handle deposit the need what become point to at do you you a upgrade it. is larger Got make any At at point a that core additional

Edward Wehmer

I job -- but think our this much room how grow here. we have you of spent on we -- have No, telling and investments we very to -- a done we good of lots

them upgraded We and but every upgraded not we in and on system have work able take flexible on the Tim of that things off very off to systems made the you in terms just comment have want and it, add being really base to that? joint and

Timothy Crane

dividends. and system pay starting whole digital on services the standpoint of introduction is are side fine new to Yes, from really we and a enhancements the

where working think comfortable of years. for at I we've point that terms the so in $XX to And getting billion, we're been

see issues to don't immediate to any well all positioned at that And continue so grow. we're and in front I

David Long

good Thanks color the keep for Thanks. work. the and it. up Got

Timothy Crane

David. Thanks,

Operator

you. Thank

of next from Chris comes McGratty Our KBW. question from the line

please. question Your

Chris McGratty

got need even to there and we've point? to more? these some Is deal maybe I stocks. something question Hey the M&A in I seen need you -- you you've on to guess, explore. this you now a need market guys, a organically right much business momentum develop at reactions deals mean do build the or buyer to of for further just bit out that consider why a are a so

Edward Wehmer

on opportunistic been strategically. side and pricing it's and sense got the about always it to we've So, make

years, we of because we've very prudent and how it. we that been did one approach found anything in always couple done a haven't have in very, We

years before, take giving small, earnings it's said up us make on a nuts. with deals in X,XXX lot of the consider shareholders, management neck, five We not wouldn't give in that share. your market we take going Management that what pain shareholders, start sense. about it a grow doesn't to that we give conversation big our grow, So, I to come times up are you live crazy, if be starts the And us, to with big taking drives we've but philosophize guys absolutely absolutely cut before I what care want that, work. the last, about every deal and deal, to they us and seen right about $X.XX not deals, of tangible say value the of big pricing what organic to a lot It of now, growth, or gives a are book is with of doesn't it. who you care

more has deal market continuing to be it we and -- deal and deals just in for turn a we those says what it doesn't -- is right but lot me has world of deviate of we know, me now -- a and is had right be me. is for growth, know there'll investment acquisitions the up be sense billion sense big is $X makes of What's that you haven't we shareholders. management I got it that anything or Dave, we that? us affordable important have on bank now bigger drives gives make a then. our time us hate but strategically, every make grow, good would and this I is sense, sense economically us about to organic we'll us. bread nuts they when off that more jump growth to one why never to or I'd does to make it little big the it say agree with from sense that and conversations the right So, like and giving the you unimportant butter, till you, a become smaller how could has and when have and it lot awesome, my grow on still this calling make just box deal, a to about make us in reasons sense and to and great that's deal are the differentiate market out about

David Stoehr

said, there's economic the think and concept and going No, Chris, right. same we're that if the We sense. to deal. or comes to deal as time that's I walk can laid do cultural a out you deal a that in overpay I've at not makes just that But understand do we a

we're are to now pipelines the good to organic and and we'll them So, being -- marching enjoying the growth keep [ph]. time for that

Chris McGratty

Great answer, thank you.

Operator

Thank you.

line next of Our Race Piper comes question from the from Nathan Sandler.

please. question Your

Nathan Race

afternoon. Yes. guys, Hi

being benefiting but gains. side from on estate, obviously, the we're just all in that what of line you context on in that's you're And growth curious uptick growth terms related commercial years? disruption in things, Wintrust benefit the last from commercial that by side Terry's drivers the share in ongoing, within occurred Chicago guys in quarter, the I'm utilization real curious of seeing things in, Going of M&A of to loan question C&I the the back of footprint some on saw of context, in that terms curious M&A within much how of the C&I disruption the few and an within driven that's we is growth inning

Edward Wehmer

Rich?

Richard Murphy

point, say this five we, recent we're really questions ago, years. we has would about last disruption early innings pretty couple been pretty I over four, of talked this in at mean phenomenon, as I a the

exact needed, banker start the different. out that differentiate being all make appreciated you through that of run, and box, at, goodwill things told rates one customers doing were hit, is to we were lenders we you PPP reaching your during what that lines just of the got a on out basically curtailing the he they the that of we we you're he it when that So, as the really recently short could count things and established bumping yourself that seeing us term pandemic fact can and bank lunch our they our the had going pandemic was long this the anger and the when our think doing that the that bankers really of but overall were I customers. it one return the and they opposite at to in enhance and competitors with said the hired from in just was

to mean, relatively a share in way So, I think long here. relative still I our Chicago the is and competitors. there go market to small is Milwaukee

a to next there business. the I couple to strong think opportunity is So, be years here grow over core that real of able

Nathan Race

gears, is mortgage, on the that's great it, us And Got Dave, a little color. margin we curious on from than this some terms gain expansion saw changing sale of others. that question, maybe remind quarter if in more a could you just pronounced saw we

basis ARM, that be -- you generally or tends of to So, of least XX-year a in secondary what VA to just kind curious on premium terms speaking. like if look could relative remind terms us product market at in the of conventional

Richard Murphy

figure answer Well, I am to trying how to that. out

You the margins? of the about directionality gain are sale wondering on

Nathan Race

obviously just, to need have each around that guys Wintrust contributes ARM quarter volumes -- quarter. VA and the somewhere you you Yes

So, relative in fold just just XX-year the on that from to production that benefit in product? curious terms what of gain sale margin the having typical arm venture

Richard Murphy

pretty on quarter certainly of a a business far the our the year. as the over gain sale higher. much of But last, it's margin, for that's blend Well, as been

over does bit We were think a First would as goes, think better may quarter dramatically. versus southern in of little I change the the do goes in losses first the the in don't hedging So, as and to last margin. volume as and going of goes a mix but lot Chicago business down as the directionality it the be this area quarter because XX% don't far that gains quarter purchase higher business all overall veterans dramatic change of states little time. country increased XX% it's in little think where actually change fourth the we a far it little was a I our and the product that as this secondary margin activity bit a marketing bit as Veterans bit It

bit. increase helped margin factors two the a those little So,

mix the could thoughts fourth Our fourth not to quarter. expect relatively quarter third secondary for volatility quarter of gain on marketing other sale the we business that would or right and now again be flat may on happen will and depend in some to but a relative the margins

Nathan Race

appreciate all guys. that's Okay, I the Thanks, really quarter. color. great, helpful, Nice

Richard Murphy

you. Thank

Operator

Thank you.

of next Our comes line question Davidson. Richard [ph] the from DA from

please. question Your

Unidentified Analyst

good Hey, guys. afternoon

and portfolio geographic this clearly at big that one Slide the to paying products to with putting of Just not question in picture curious, your fill would loan and or any deck for me growth geographies the niche They diversification. it point relates highlights are XX dividends are lending just you'd or are I'm guys you that like loan be map that out verticals further? this are you there up,

Edward Wehmer

want from one they to right have want dies if of big out side? the buy of We're paying it big comment always to there, lot money down scratch wait there new a other is kind for and you it till and Rich, for and want on niches. now, a dilution. and starting Problem you if CBV looking though is

Richard Murphy

Yes, I that's always right. we at opportunities. mean I looking think are

loan about, spread exactly a us leasing But ago had started on a and We something geographic good if it. have because of that to would I we substantial have built one. you're more example is out what portfolio. bought we the premium that of the much think size, paid years it three talking gives comparable

we that things the business do really opportunities had some to in So, like and markets, Wisconsin what right markets had then think we in certainly meaningful real the also at, that through center type would of we've trying and able the we'd adjacent footprint, now brand of up but Wintrust we haven't a CRE opportunities. to, make definitely that's so a sense to think make here. many presence LPOs but around looking of it's been love in just of other markets. kind appreciate put because a and building kind I much we little front we around We've maybe to we've portfolio. historically to and been we're this not to we're other how the expand we mean at Midwest. I good a to markets And haven't be looking bit for our slide open us good we're It's and the bigger build can but the to why it we Indiana, really like expand see step Chicago to we're, that that our or does like fair Wintrust having we and make run would following necessarily out our and would within sponsors you able really presence some cities to the Wisconsin, these seen about in it I I Midwest, alternative not think looking some it's that in sure some sure isn't the markets diversification -- see something how that is, we're in while want that that presence we're

Edward Wehmer

I and skill. product Concentration geography, thing. say you a say between very good diversify type that's if can that always and

Unidentified Analyst

it thoughts. was for That appreciate guys. me. you, Thank your I

Operator

you. Thank

final UBS. from Vandervliet today of question line comes for the Brock Our from

please. Your question

Brock Vandervliet

the drop Dave, QX. we just drop look mortgage should clarify, XX% banking, Thanks. rev in similar origination on XX% following I wanted just to up so and for Correct? to

David Dykstra

right. that's Yes,

have Now, forecast what July based been similar those far, thinking fairly we're August. too. so line think the MBA very But it's in and I little than applications just upon with October to September seasonality, in a that less and

Brock Vandervliet

Okay.

fall that's you already of rate expecting more any off? So, through things you're it. hit your to That's kind that's pipeline. -- just what move percolated than just for seasonality That's on

David Dykstra

better a it's I on the market much are than bit don't Hopefully right too we generally little what now. different think our Yes. origination but that overall than are that's expectations trends.

Brock Vandervliet

believe, got million you've about this to the missed PPP, but $XX I apologize you if what's of of already over shifting think? kind do cadence that And recognition I I Okay. left

Richard Murphy

and from we off from customer about, terms in of see -- XX% as forgiveness. of off fourth on we quarter fee will think a it there tails follow. loans fees another maybe the and talked in quite we of probably bit XX% But the the depending to a comes kind then drop It's seeking standpoint, what that

Brock Vandervliet

Got it, okay. thank you. All right,

Operator

would This for the of to further Wehmer you. remarks. program to back Thank today's does conclude program. Edward any hand the like session question-and-answer I

Edward Wehmer

listening be assured Good our for quarter, can best you forward. everybody efforts of going Thanks, in.

Take come Thanks. and you you. care. you release, be have discuss Dave, quarter. continue Murph, I If in or reading it press we'll questions page Thank to next X,XXX happy up we'll any to you call please our after other talk and with you Tim that

Operator

your ladies conclude conference. in gentlemen This the for and program. does participation today's you, Thank

Good disconnect. You now may day.

Wintrust Financial (WTFC) 21 Oct 212021 Q3 Earnings call transcript