WTFC - Earnings call transcript Q1 2022 | Wintrust Financial Corporation

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Operator

Welcome to Wintrust Financial Corporation's First Quarter 2022 Earnings Conference Call. A review of the results will be made by Edward Wehmer, 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 reference to both the earnings press release and the earnings release 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 the 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 all 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 conference Mr. reminder, this is being Wehmer. conference over will recorded. call Edward the now turn to

Edward Wehmer

at muted good year, see $X be knew talks very may went $X It billion quarter. Management's to back the me to to of margin probably events follow have half all, questions growth not fewer case, some details the And with approximately so comments our The great income future. Tim the I'm in go benefits much. much sheet. To We really large and to in the transitory. general very $X to $X plus per and for on on million growth improved few statement don't we're that up color comment shock so per always billion are it you earnings in about each we're who days Crane Dykstra; as level quarter, it pretty prior Murphy have in as and increase call. do. like year. we I'm PPP was late so our be assets. I expected, regarding we the quarter. me It's Tim on, to going a the is some growth Welcome, customers forward. shape we both Thank but further remote, had We over billion first for big to the Rich was Dave so quarter related will some and some turn to going on end of points in then of going state quarter Rich transitory, need Boege, margin the Murphy. on little 'XX Dice XX Dykstra back out $XXX over after for inflation The the the total $X billion fourth experienced that. minus. I in liquidity appears credit. income or and a everybody, occurred to more a today; of and to quarter interest Kate Dave results, same million to to quarters. plan. always see give of sort on as million income to in expect quarter two despite basis Stoehr; Dave according compared detail All just will balance With as is the net turn who format with $X comments quarter the summary Last going approximately

of increase point at million on $XX positioned X%. rate increases. future with provide should quarter This upper annualized Loans an up net basis interest the income for end around guidance to grew at our

valuation Hard say bank better million and to or we X.XX% increases remain continue $XX for detail. or according decreased get make extremely this million $XX.X the plan. to on Keep $XX.X MSR fell I want to discuss Increase basically but part $XX extremely planning. a higher and one not but $XX a strong. to better, will OCI seen offset can't try. income the this other NPLs it They're been incredible saying in of very total quarter of to effect, low. decreases. have myself. rate credit so much very NPLs assets. comment does. important These or are worked Pipelines million we count total diversified. value our any will loans. book numbers So our NPAs Dave X.XX% do you get billion tangible NPAs million,

where pre-provision to million. grow, While Diluted million million, not -- side but growth management fourth I'm Anyhow quarter. things, with feel balance $XXX over $X.XX. revision over We Tim. sorry, our benign. are going preprovision fees I'm share, of at Tim, detail And good continue $XXX.X to right earnings sheet. Go was share to to per about we pretty now. of I'm official the million XX% it who's much going expense The pre-provision the to number pretty that, XXXX $XXX of on ahead, everything Pretax million. pretax, $XXX.X cover $XXX.XX going and margin turn per repeat

Timothy Crane

Thanks, Great. Ed.

no $XXX $XXX million and to excluding midyear. second period-end continue quarter to help the quarter the and X% and to as million are at down were end, results. they PPP, material at should over will million forgiven which average longer the they're of our $XXX In be ahead important largely addition quarter loan run balances, note roughly loans PPP loan growth, gone that by

of quarter, then transactions continued and quarter, watch levels as left Absent growth we continue to in year-end. some deposit deposit organic essentially expected. Entering those that crossed outflows, outlook. the the the given mid- second encouraged the likely growing points had the costs single expect a remains the and on mentioned the to out cases very came first basis high that low XX expectation volatility was uncertainty an reasonable and $XXX fourth most and cycle. transactions. while macroeconomic the forward, atypically year-end continued deposit funds down X of for the the to in This quarter for commercial large surrounding growth basis quarter of from Interest-bearing pipelines, quarter. Going deposit basis from handful represents was I influenced points by outflows point to in us we client by that million approximately of annualized loan related believe digits in growth large in a

competitor be track would state While municipal categories. rate see of increases of muted, that the are we sensitive most starting pricing An investment in deposits deposit example remains to deposit indices. the some

XX% the of in rates excess resulted deployed up the continues AFS investment quarter At X% Total yet liquidity basis, to strong our note, front, in with patient securities our as we that remaining excess On the book remained tangible deployed. a percentage book. during an the securities in a earnings, billion maturity. quarter. and of to for increasing, $X held deploying to in The rise with $X.X book sale, were benefit of of of $X.XX be dividends bank's the losses approximately in small net tangible on investments Of rise. is some one to On liquidity continue liquidity is half billion $X.X billion, unrealized rates bank end, resulted the approximately year-end XX% rates reduction available this rapid value. combined with

and the rates some quarter's rising rate reiterate discussed last a call. of want we As topic remain sensitivity on of what I interest, to

First, very asset-sensitive and well to remain rates. we positioned rising benefit from

of early To earlier As within shown cycle. our in the XX% we're in our a presentation year. loans reprice rate comments, reinforce Ed's mature or materials,

improvement current pretax specific generate on quarter, than will on million believe more be basis margin improved the our an basis basis call, on to by the approximately in margin. may margin, that more suggested net annualized With a increase the continue XX consensus projections, $XX interest in To we X% meet year-end. rates each in to the could X.XX% that and million points and basis, basis result much year-end. anticipated income approximately last XX We approach for point excluding a margin point $XX a earlier rate On by XX likely will X points reported approaching we target PPP. forecast the in it's

very basis. the in as On was bank's earnings growth. on supported a the remains little quarter's capital capital there risk-adjusted front, Capital appropriate the change

market past the we to from our satisfaction quarters, be momentum. highlighted our Lastly, pleased clients. bank commercial the we've Greenwich received of In by the regarding recognition continue

Power This by highest Associates bank ranked for the customer Illinois. in was quarter, satisfaction retail learned we J.D. and

that, in something hand customer proud over satisfaction, For six we've the of we're first With and or to strength our Dave. ranked speaks it franchise. I'll consecutive years, to banking of retail it second

David Dykstra

Tim. Thanks, Great.

the of noteworthy usual, interest As cover the starting I'll income. net income with categories, statement some

an million of higher-yielding in of components assets liabilities $X.X a first quarter XX prior margin. $XX.X The driven increase an the portion earning the by For in due interest due the in related earning of prior points. interest net totaled the prior million. paid due prior on two asset was in to compared deposits, as the X quarter a in of repricing overall by income first longer-term X approximately interest assets This an securities income million $XXX.X net to are income income assets, yield quarter was in as net on of interest-bearing to $X.X margin primarily the of the the increase increase the liquid time to the offset as to basis quarter, that interest-bearing decrease on for compared margin. short-term in as as the of points a investing increase basis improved the a on during basis resulted points yield 'XX increase of to improved on XXXX, the basis XXXX. combined point The interest the earning X our into quarter. first net decline million by days million less liabilities quarter rates assets fewer quarter, $X.X follows: to first The rate to paid yield the less million from and an on in management in deposits. our quarter lower paid The interest quarter the with million interest resulting the basis compared increase in $X.X is net on to X.XX%, quarter decrease prior the increasing liquidity compared X of of quarter to $XX.X increase the With another rate of the due beneficial to point in compared growth and PPP quarter improvement the decrease primarily impact

I excluding portfolio of note the the the net income points. portfolio quarter that expanded and in margin, increased two interest days also think PPP interest the basis it's XX PPP the important fewer and interest again the to impact the by net less income from despite

Rich Turning to a compared provision a quarter. in in credit was prior the provision million recorded the the $X.X of provision $XX.X a $X.X Provision and provision largely in the ago quarter driven of expense Wintrust losses for negative quarter for credit million first year migration. million, million of to quarter, losses. recorded credit by a just offset the an risk improvement and charge-offs PPP a Murphy net detail loan and including cover by growth, in during will loans loan improving few additional in approximately loan decrease excluding rating the in characteristics $XXX small minutes. portfolio quality

noninterest overall the But amount results lock for million prior the volumes portion higher was of our other revenue accounts, the first from revenue quarter income management we The loan production mortgage mortgage wealth origination managed during our operations our our X% which Management to provided but division sections. by This all, guidance XX%. asset slight with to in was approximately quarter. with and was noninterest market it level in trends there. rates, equity impacted a pricing lower in valuations decline a first the was the In the still to million volumes quarter up origination negatively to lower of rise prior subsequent prior activity along noninterest a strong that recorded quarter adjusted impact impact volume the with brokerage the $XX.X source with trading we're in time. associated less and earnings in the rates Wealth by mortgage slightly and quarter income the $XX.X compared in to banking due Consistent and Turning year. the lower million release This than saw declined section, the of home $X.X in revenue. the expense down pleased industry all on substantial

only revenue our lock actually The the company adjustment a million rates few was million XXXX origination adjustment valuation mortgage to in maintain rising an banking on of a its mortgage the related servicing purposefully positive years quarter rights. lower due rights revenue. quarter adjustment positive last of mortgage in million the compared of a to prior valuation and loan first order not volume $XX.X This quarter, to in primarily quarter. the offset origination the portfolio impact Revenue hedge our $X.X but first margin. servicing positive to by recorded a of higher in million current on servicing The provide increased the the of adjusted the compressed in production against customer built to for $XX.X portfolio However, to is economic company $XX.X up 'XX. valuation relationship

quarter. drivers the quarter though, and lower secondary the The the MSR MSR Although quarterly volumes the in well valuation was relationship benefited of origination rarely margin helped and environment. sharp marketing general production production and revenue transitions changes mortgage other that the rate during as the valuation results mortgage strong competitive margins. company quarter and point-in-time as in economy that reported and the The hedges, rapid to volumes the company impact work maintain fluctuations effective headwinds, impacted perfect of the as the volatility higher segments the increase overall were of introduced as a rates this interest pressures during on banking

with Looking pipeline market origination the in in activity similar X% stable production $XX.X we noninterest in with recorded quarter. very originations volumes the conditions, based to the the experienced margins prior was totaled $XX.X quarter forward in X.XX% and to million the first income first expect range. the relatively to which current quarter to the on mortgage second million be the quarter, the Other

Turning first total consistent were with and the totaled expenses, quarter XXXX to million quarter they of prior relatively of the in million. $XXX.X noninterest $XXX

well back $XXX.X range. current noninterest remained within the a $XXX.X quarters, In lands have expenses and very over to that six fact, looking the last band total ranging quarter million tight from million in

quarter that due current to to of has first of the by related that the I'll balance higher as increase a year. were horizon. overall employee increased managed is expenses the categories accruals So commissions million $X.X our for Salaries the growth expense control with the compensation The benefit quarter been able $X.X in the sheet programs and address. quarter million increased Despite level and incentive level. over despite the noninterest that fourth higher to showed short-term company to compensation incentive expense time significant and from compared long-term primarily consistent handful last program variance associated expenses earnings of

employee ratio, ratio in from the from improved million XX% fourth the higher The banking was which aggregate the the points fourth quarter. be X% first overhead quarter to And prior in benefit the stood loan the accruals million million to and of net in approximately credit a expense XX net the than Additionally, of first net $XX.X match change XXXX. the no and primarily which increase and was in first taxes increased reductions quarter tend by I impacted core $XX.X an interest totaled in the category $X.X improved should of the efficiency level elevated very and the revenue. in a the expense expense entertainment compared net quarter compared discussed, to quarter. X.XX% the basis than were expense of quarter, million travel decrease pipelines quarter, margin during income, costs. more and metrics. to at measure primarily Advertising growth good year. quarter. in to categories with in efficiency, just expenses. expenses fewer and a representing a The ratio, miscellaneous MSR of was million decrease first the efficiency loan approximately lower recorded fourth marketing other decrease The strong $X.X mass pretax benefited $X.X categories, PPP aided preprovision quality to of Other contribution which category of by and by strong The all related from those expenses payroll this had were $XXX,XXX operational were overhead and down million interest and an media and income quarter improving is campaign quarter which ratio in digital the decreased of In XXX(k) the on mortgage despite fundamentals of the $X.X by relates gains days XX% note, due the reduced portfolio in summary, advertising expansion down level those to

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

Richard Murphy

Thanks, Dave.

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

Slide C&I loan under on of just Equally CRE detailed finance quarters, loans which was That million loans core loans. growth. PPP saw $X.X growth we total $XX to Year-over-year, PPP, core finance continues past case loans the billion and for residential loan all growth of $XXX the saw by premium laid loan which $XXX state. the of of X up $XXX similar premium solid or up were we the net were million growth insurance $XXX and As which of specifically the included loans up showed total million; out very from XX% business million; net portfolio, both deck, perform annualized. finance X% to real acquired which and way, estate agency previously. loans the important or commercial relative This life portfolio, well were we across have quarter, million as to few initial

As we Pipelines C&I several momentum in past throughout very materialize our saw CRE this outstandings continue that earnings to quarters. during four our we quarters noted have core been prior the on past and into portfolios. see strong increased and call, solid

of of continue We about growth loan for XXXX optimistic for to be the number a reasons. remainder

you'll Life and Line netting continue from see portfolio continue several their growing to should core these detailed a pressures and credit trend continues help lines XX% warehouse solid many requesting will for that quarter, had another expansion customers strong their finance mortgage very Slide up momentum And to Slide also, continue. and trend when out it to as our be by the Also we better inflation facilities through this to This XX, Our with costs. resulted utilization, on part XX, strong quarters we strong Wintrust believe anticipate in basis. has in XX% an XXXX. QX. annualized pipelines Finance on momentum on have business been increases to XX.X% of

to can As we to may a level Ed get portfolio growth quality pointed at million uncertainty, or of A XX high loan as low levels points while we basis record sale came $XX reduction points. continue meaningful to of perspective, was detailed the loans result out, of the it And on quarter as a that where million nonperforming. XX last number sale this of better. or loan at growth. of was majority single-digit result, the of conditions were to Charge-offs the Nonperforming of be $XXX,XXX guidance half our across a of basis $XX.X again XX, macroeconomic year. credit metrics. approximately from loans, the a and much of of reaffirming continue million NPLs and seen decreased I to were From this mid- time from $XX.X part we roughly see just portfolio in are hard $X.X Slide which which heightened were performance for million, mentioned. this pose a an be

As credit we we up. my I'll That our our on wrap recover concludes to continue it and in the substandard to loans reductions from see to continue continue -- Ed comments mention as and to turn and back customers special pandemic.

Edward Wehmer

looking are the long where seeing Suffice been If correct say, prognosticators that ball terrific. it well, extremely all increases Credit a It's to forward rate guys. time. continue we're like are we to to beach stats I'm perform again. Thanks, which on positioned.

to people to We're NPAs of Inflation to one we're count Kind Pricing cull get we regard. Wintrust continue and a entire going again. for in us you right crew J.D. and year. Very Greenwich keep put demand have the your do commercial up place entire doing line though proud numbers. numbers a is that should market we're should looking winning a hard not the on in Awards to said, for going try, have read bank Power across would trust. in again, the problems. Granite that could the the going -- and but portfolio increase Murphy banking of organic our opportunities detriment, that of you anything bit second expectations us As scary with Acquisition strong to deep awards on to bit. usage to anywhere but you in the continue the side loan bodes remain equation that. continued Loan now yet This it's somewhere coming still learning us have double strong remain niche. disruption continue have better. they're for seven can board. of to them picked be award well the the through Pipelines stupid why I potential growth.

for questions. So support efforts. your all some of appreciate very you you share it's We our best much. Thank all and time

Operator

Instructions] first line from question Raymond of Long the [Operator James. Our David of comes

question, Your please.

David Long

Good morning, everyone.

Edward Wehmer

How are David. you? Hi,

David Long

use great. I little am you if be that, Thank a bit doing weather with better well. help that though, would can can Chicago, you. I here in

Edward Wehmer

How that? about weekend? this How I'll this -- well, care take is

David Long

it. Thank sounds appreciate I'd That you. spectacular.

more I question down asked about think, Dave, revenue of to keep million a bit Mortgage there? range volume, of does you you volume to be going million $XXX on a sort that lower So expenses. banking to or sort sounds period? can for the the And to does expenses, you the the coming in it's the longer in like stay that topic allow $XXX the I range little discussed and expenses ask about wanted

David Stoehr

-- as volumes will come the a good some mortgage the the keep Yes. on do down think We question. that. down, more. Well, expenses I working it's come

So positive that. that some of come is expense there out numbers

the February. of get go second tends and up do in as to effect we just to season know, that into and raises little sponsorships third bit the and marketing the As expenses community up in the you go quarters, and our sponsorships summertime into baseball go we a go tend because you T&E

come second control the So attempting mortgage down. see expenses. there the are some We're other might do to in increases quarter. think in will certainly We expenses we expenses that

just little shouldn't up extraordinarily be be increase be bump maybe it they tad But a can out in might there. we but a high. range? Possibly just just overall It bit. a that them of keep but there little might So

Edward Wehmer

you XXX have for -- look to somewhere overhead be which in we at around XXX, the the think year to whole between I right ratio to net expect about that.

quarter, around X% probably XXX, start XXX I year sorry, a be So the the to good in think rest first at should the be of we number? would

David Stoehr

we what That's Yes. think.

you we'd If just out of quarter at gained be the valuation, to the excluding took you MSR, that that and XXX rest in this look XXX range.

So we think that that's reasonable.

understand revenue You think quite we that scenario with goes too, have increase. to margin do bit, the a in up that the

So we leverage operating we growth still sheet. in and the think good that have we'll have balance

David Long

have and then rate hikes, as beach with the net you to to rate the should that of being to allow the with to that on there does add here you'd line? other that bottom interest of any all expenses bottom Will some acceleration several projects? any falls income, ball in much And line? relates see fall the are Or how almost released that hikes? Or you take it additional to

Edward Wehmer

relates it ranging inflation to right As now. wages,

deep I people mean, a market that where poached. We very plays bring would of midyear this terms because, on everybody and and speak. things being but to line. too, The able do get how our here. a will going to and people bench as again, is in disruption midyear, see lot the like we of happy that That's could think got we to. we're we've keep we of helping there good able poaching out there's have But all little to We lot increases to I going on our do to in. I of don't have there, a going out imagine bit we're lot to of a got fill a to wait usually our in happy but people.

I So would... I guess

David Stoehr

I money, our is always people thing, initiatives? year those other to mobile lot all three benefits resource into you sort that of customers just answer more the if us investments our digital technology you that technology some the other plan plan. of a And had approach rolling on plan team invest initiatives the well, time, and is up the will more we've I capacity, mean, I mean, and think a full continue make a from And our to and increase see. and pretty executing ask

our to things the have spend because plan nothing playful doing do you the you at the things margin So anyway. we maybe might if it but significant on

David Long

That’s had. guys. Got Appreciate it, your thank you. time, all I

David Stoehr

Thank you.

Operator

Thank you.

Our comes from of next question McGratty ahead. go Chris Please KBW.

Chris McGratty

Hey, good conference about question to it? benefit overall the the Maybe just as listened about I mitigate in, morning. morning Ed. some taking rate down the also get adding priced thoughts on a banks of but of some some this to Hey, rate reaping call any to profile. sensitivity we swaps rates just

Edward Wehmer

You on downside? mean the

Chris McGratty

Yes.

then the projecting Just cut. futures is to and raise to couple market cuts apparently in a we're going of years. We're going

you would of volatility. -- you a scenario just mitigate if if some So just where the wondering there's I'm

Edward Wehmer

rates us But a derivatives go have we We rates now. a put or to expensive it to little continue be some continue plan. kind comment where that and for of now. expensive the and on vulnerability to time a helpful want as anybody us to we'll And right the in go now pretty rates right when up to and bit. on evaluate right the look were else market but for that? it's will up but understand that at continue low, that down can pandemic we, finding to they're really were That's position more again, helpful We're been maybe fortunate

Timothy Crane

The about I increase We've already increases so I into no, bit talking decreases. and got a was XXXX. little market that that right. we're planned. another odd think mean we're the first Well, it's eight projects more or a into month

day, So Chris. we every look at it

David Stoehr

starting have past of sheet. I can And XX-K our to and looking interest the our in rate at overall I kind go entire put and the derivative just would prior transactions balance forward mean that sensitivity back disclosures XX-Q we of on situation Yes. and look address say, you a at

run short the a to sort you and past. of as opportunities, the in contract If sometimes done those we address cheapest have certainly the way in see that those derivative

So and those are it. you if looking keep we things we we'll do at

Chris McGratty

one Maybe Okay. more.

Your above would strong growth outlook say, has been, peers. I consistently

a peers. would you just more there shore just position just You the run some remix balance in your the proactively of balance is given the more of flexibility? and the further the concerns the optimized scenario also interested, I'm the come you than and capital sheet give to make outlook just for up where sheet even to capital economy, structure growth market the and

David Dykstra

it, The be Well, we've always trust and have in past. and very very structure like on us. the we that are debt efficient at our we capital even look efficient we preferreds talked for capital preferred old in like we structure. still We way actually leverage sub like some about having our this and to

us, go. so to where of And it's for growth do is think you sort going

your at we you if single-digit you support If And forward growth growth. can at come you look look loan up, high that this we quarter, these to area, supported mid- loan goes and profitability going rate growth. through the increases in this if stay

then, supporting and to we always yes, We've so is the would what what's do growth. growth. becomes continue supersized and If it we'll I need and be it. company, that support to growth opportunistic But see are look been earnings that. currently, to to raise the capital for look to growth do just a So think we sort just of the outlook monitor

Chris McGratty

Thanks.

Operator

you. Thank

Arfstrom of comes Capital Next RBC question from Markets. Jon

open. is line Your

Jon Arfstrom

Maybe guys. with morning, Good thanks. start Tim. Hey,

hate baked comment year-end, Your comment the the -- question margin kind your XXX what of on in rate ask are by but assumptions to commentary? that to I

Timothy Crane

XXXX. XXX from Jon. in basis points We've this point Yes, got forward

second So XX quarter XXX the in ensuing quarters. two -- and the roughly in XXX

actually to Your good it as out what as to turned as ours be. is guess

Jon Arfstrom

then take is you do that having how and you of side I of in deposit of an growth think kind the environment that loan deposit Can to environment, deposit up guess an pricing that growth? flip really growth And rates? question in guys match about without kind guys deposit

Edward Wehmer

deposit -- good rates that's to still on Well, our deposit to we side Tim then here here into into have margin attract but is the pretty Tim's up and probably plan will growth numbers. built Momentum the bring built overall when us gave on stuff side. some

bit because a We And past, basically. long name products. a market And market stuff. we're we're goes. always just cost recognition just came it the product us side. haven't how the always now away products a had to say asset had We stuff of that. time But on a grow. marketing we again lot and little in getting But I to did in far think more asset the entity see We into by will wants that far

Timothy Crane

market much We haven't seen reaction.

pretty So deposits other point, disciplined. attached sort of have seems indices everybody to at are to been than that this

Jon Arfstrom

point, kind the volumes more rate just that in mortgage higher I And mortgage. to the through how or not kind of at guys you strategy of rates? impact comes And basis Tim, room production to whether but what's mortgage a on is the the would guess, think your points through deal And on company? elephant hike XXX with of

David Stoehr

Well, bit there's on between disconnect a little a XXX the...

Jon Arfstrom

Yes, curve, I different parts the yes. know of

David Stoehr

Right.

market $XXX in or quarter but $XXX month bringing do my the XX-XX more going service in the we million well to involved the to applications million of of to our in like. We ourselves They tried and XX% is the and and still off. as the and kind people purchase. the been and and we our of retail to realtors really that's with local communities second locations so guess expect consistently be that purchase refinance fall were being out XX%, or close So positioned have per

old for still activity. mortgage And XX%, think think we first rates are the our to stop that -- going got purchase mortgages still guys us at that so we X% or X% are

more we the gain so than of think And fair share purchase our we'll market.

hurting now a can right houses the too. of inventory think we'll see. supply a volumes maintain we that bit, we and have There's still is we that that So little

I sort we think X% you pick have level on But of now, with of there volume we the up what maintain on we'll side, could think the there. was mortgages the But volume. production we purchase more who's more refinance the supply out I know, side. that right on can based even believe if

Edward Wehmer

When you'll they equity market and be home cycle go doesn't. come values rates again. even Jon, because back. go up trying all down as even, again fall rates is they -- refinance And We're equity it again, the the to once

up to expect we margin rates, mortgage positioned So that's equation. substantially side cover goes why on our lower we're the the of

It perfect make it it say other up, it's and take other always you gives up margin in market problems won't opportunities. gives go be another business the got the in the the I rates to rates down, lot mortgage it mortgages cover working plan. your to drop we gives like according you but always So go and I should of that a think in we'll

like that's So are. we structured how we're

David Stoehr

the that Ed million, look income. projections, But you we But because that production built I about think margin $XX think commissions And other But say, $XX servicing the revenue mortgage. quarter. interplay is, those line million, falling about what, million a bottom you of income -- million not $XX $XX the if to the you then and have about, to and that's talked expenses. and at now, into the right have have

mortgage be forward So should sort the volatility going by and earning environment there. rather now, a rate the the overall from low changes asset impact and the related dwarfed should of the in business of perspective, improvements base be

Jon Arfstrom

Yes, thing clearly quarter It's point. balance the but okay. helps. the good addressing this through I mortgage think a pulled That’s

it appreciate Thanks. I So guys.

David Stoehr

Thank you.

Operator

you. Thank

question next of Terry comes Our from McEvoy Stephens.

Your line open. is

Terry McEvoy

deployment then this a into securities on kind on on higher? about Jon's maybe balance just your investment the excess of are more are Maybe that thoughts I'm while holding everyone. morning, Good sheet talk sheet, about balance What future now follow-up of rates And portfolio? mortgages question. liquidity the

Richard Murphy

Yes. I little ARM. bit the can talk about a

my now. did have more We to in the this do I production last pointed in We as of some more right seeing out ARM opportunity resi. we in little a remarks, hold hold are marketplace kind quarter, more

-- see the a we the -- lot But over that had Going other areas I we would space. like resi opportunity of had forward, XX-year past more we mean is years. that will on as speaking, that and and there to for We our footprint really a people very most quarter. generally we in low a number in We've you'd there the do our in think amount national of want think similar opposed didn't substantial growth really fixed. earlier of I books years, an probably we products. hold I the second probably typically

And so didn't. we

market what arm us. So to now, production more take it's Ed's gives point, us And gives the we right that opportunity.

David Stoehr

ended fourth Yes. portfolio, billion at the the more And then quarter the guess first on we securities I versus up securities quarter. in end $X.X of the

impacted positively. put can you that, some and margin liquidity But work did those the short-term increases securities will earning that see to we on rate of the help So also the there.

maybe $X into into billion liquidity the the we'll time being, we're billion for and to of shut leg in Hopefully, bit we're not the we're a loan going be $X little now. and all runoff, we'll So put production opportunistic to dive but still cautious invest then and right excess to continue going or and deep more think. with I some that of what slowly replace up

Terry McEvoy

statement? that? could that was And follow-up Is businesses? Milwaukee? if behind Is you you question, wondering about your the release, some that what's new Chicago, then national on And as gaining in I that expand of of talked press kind a share. market Ed,

Edward Wehmer

of above. All the

continue plenty area. to think of our to market us Chicago in for in defined -- grow room I

for now. as being prepared We of X% have X%, right branches of market stands. opening a only the number it We what,

BofA them. to room now in all their they're or shaking the right plenty but here. So in for something. sure to But BMO us look and out but grow because Chase have I'm and for probably base we're hiding coming boots

can I bank We to service. we best service bar get I said, awards think capitalize in terms the the none. give we And continue on else. we as any place of

the have and high-tech in market share. our Our of growth all across really approach in products services that regard. well. continued to board, works continued But The have high-touch, works stuff we expect

expect anyhow. every We year that

make it does So, sense? any

Terry McEvoy

It color to share market hear. did. nice broad-based you. and gains. the I Thank It's Yes, appreciate it's

Operator

Thank you.

question Sandler. Race Please go from next Nathan ahead. Our comes of Piper

Nathan Race

work outflows guys. they And levels, levels commercial transitory in I Hi, more years. meaningful liquidity bearing in kind we that a of question were some of up through dynamics. of the that's the liquidity a over sheet also appreciate some couple curious Yes. A as utilization? those last only increase in or of maybe so clients perhaps of first X.X% elevated accumulated if function the balance deposit of on noninterest through it was excess maybe I quarter. somewhat the your can appreciate But some quarter. line with sifting expect

outlook in factors line maybe growth that trying to So potential single-digit for year? the utilization just increase into this high think loan about what

Edward Wehmer

Rich, you that? want handle to

Richard Murphy

Yes.

it's pointed tailwind do we in -- I a As my comments, think out that that's have. nice I

pointed what in utilization supply the out for of lines coming there. several through definitely And seeing we in raw several facilities. and expanded there last see But our muted. asset-based and looking over utilization if and We're that out of as rising that now that up. quarters are from as trending more can you're they costs, are in last also calls, customers we think line expansion more lending group at start the pandemic we cost, the -- rising in you included or customers I seeing our the work you showing just are our definitely was material release request the the seeing in look terms through line

be for good of rest the a course us. I think story over tailwind. it's real it's So the it that of nice year, is a to And the going

Timothy Crane

first opposed that the large of so really your out it. drawdown related was to of more a Nate, of the question, as to part a run handful deposit sold businesses

situation. fourth was more Although incident commercial their clearly, there liquidity watch lot our manage the clients we how but the was deposits continue a quarter isolated of and to type an of some system in

Nathan Race

to Dave, starting of of in starting Is into million XQ? rate of stepped fair down to expense kind second the $X the spoke or the the last that context quarter commission in of when think run overall expenses, the year ago just line about well for or And to about so. of we potential by point spoke mortgages a think as think in what the about the quarter a decent kind mortgage you what second within when and in about volumes choosing line a you saw decline commission you about described I gears year, pretty related so terms

David Stoehr

going from will quarter flattens it it to way be quarter if But quarter expect same. where quarter they see as and the in volumes, we reduction a see the same fourth of a bit. the a prior to that you because second don't stay origination then that first out of in the quarter, were relative stable. look think volumes if came fourth the little origination first I in the would a you're Well, decline was quarter I those and stay bit kind down they the But production because you'll if the little commissions. went at the through down the dramatic

level I the into you line second quarters. just and a see see because the where production So dynamics and in decline slight quarter then the but goes have should think commissions out the of we'll fourth in the third production to

Nathan Race

But expenses just generally compared a in your speaking, mortgage-related there is lag revenue... to

Timothy Crane

we locked don't upon the includes and close and because booked probability a revenue Yes, production number. based but net that we revenue the of --

get loans but So closed. the actually it basis through sort on of until commission the of that expense lock cash includes flow a net do We doesn't the the flow revenue. discounted

Nathan Race

Understood. Thank you, the color. I guys. appreciate all

Timothy Crane

welcome. You’re

Operator

Our next of Truist comes from Young Michael Securities. question

Your please. question,

Michael Young

into Property will & question. Hey, thanks Casualty. again rates great see of of life result book insurance choke in Does the the book, to demand taking strong in and some as reprice for areas, I some that higher the particularly that Property the to & off start LIBOR. Life Life It's book those growth rise? know either both the XX-month ever or in Casualty

Edward Wehmer

the because and you, the a might you're policies. so even you -- spread is Do rate same got on to on insurance X% So take really to, goes on policies, if of X% a policies get goes if if you that. get on second they rate follow up these they going you from a not is net of the your, insurance say, before still out policy okay. the guy me? credit a interesting, the let's my It's one credit rate crediting got on opinion, The may up

get to going and [ph]. you're X% X% Now X% or

has the there, is spread that as long to spread probably a as going expand actually actually over So contracted little time. bit they're before

attractive, more I would we make think. So this product

David Stoehr

have on finance the impact don't book all. really premium rates And at commercial an

the that's going impact more whatever in interest at premium you're premium or all. is catastrophes on really the side rates insurance insurance commercial don't but having than So whether rate

Richard Murphy

are rates And that to as have seeing out don't maybe effect there. general, Yes. the in a out, will they more that it's I life and much some side, particularly, some of customers that with in point talking rising arbitrage you tell little the you you there bit our crediting could awareness be gets change popularity squeezed of but rate more product much of if

of -- that to seen here there we're we couple very the this are. where years something through I to and that last viable that it's But rate of going is beyond the think is just think the that product, continue has over So and will it seen, on. a eye do uptick year obviously, rates course market to you've keep well markets But goes as continue rise. as an dramatic

Edward Wehmer

competition. where we might Yes, terms in see of problem a

and to market in people Some easy try jump think deal. an they share. it's They steal

it's So an not business. easy

in guys there. add wrong in will got of the have is an give IRS value expertise. a We've and places. And real them have to the of if think get it you we expertise these easy. and we to That's easy, lot that have the do You terms these structuring it's way, you jump

pretty people they we we paid to for and and We fix that's expect competition over -- the give or it. fix to would as bigger it we with two and should is knowledge us take people leave coming in and pay do. the and than right that doing but and the and are a a opposed a have to it would itself service market it be come happy should jump get that back fighting we're some So have they in, the issue I in neck. basis They real most those over be point back

business. it it So not like but seems it's easy is an It

Michael Young

cycle to out deposits I Or any earlier side. the Just later CDs in rate just lot pretty off? a more about at right deposit book? Is just to a got kind know question pricing roll on of on? another of now. there hike benefit you've lot you how kind any the through term interest that low of of those of are thinking Will give guys rolling Kind

Timothy Crane

I is guess client two -- Yes. rates. to aware retail there's I think parts usually mean I that. The pretty base of

to got got think to CD they'll And go into deposits substantially offered. lot yet market start And still the depending going you right essentially. expectations book go -- They rates, of isn't down rates for higher again, CDs in our are higher the now. futures that to rates while our we're get pretty wade know on people But a lock X% pretty to get up. to to and rates banks. much is higher you the so -- back We really there the

yet. those. getting rates for with, X% there around a And much so out we ready But we'll there's say they're people seem traction. some certainly and haven't example, be seen to you year it But watch now we'll anybody and they as take for see opportunities, don't

Michael Young

very Thanks much. Okay.

Operator

Thank you.

Hovde question Ben Gerlinger next comes Group. Our of from

open. is Your line

Ben Gerlinger

Hey morning Ed, good guys.

Edward Wehmer

are How you? morning. Good

Ben Gerlinger

operations lot inflation mom-and-pop for of am Thank really not anything of I well. a on commentary don't this the you. color extent But has does. events And day-to-day or the or that nearly the at extent I think impact great lower broader global you doing geopolitical Ukraine kind think have I always C&I, guys economic when outlook. know you David, level or their to about the that

think that of in increase loans up could outside digits anything the team? -- when the any environment? for inflations, there's think their range increasing single talent how added their combating loan to do I And just there C&I market sense or there that and is tightening clear pretty balance loans demand of today's shore mid-to-high operations that kind So about and guidance operating were that be high you or is is additional you the that the might lower-level sheets get but to potentially

Edward Wehmer

we see able producers small people through. kind inflation. right spiral That's even chain pass to deal I think The now here. The are big than are cause cycle So still is here. their supply them getting again is inflation of and is the

business We terms business, expand Rich, comment? very and getting important very of want number we're is to us and important we're Small us have very to starting more to We're in that yes, at of more one you loans Illinois in us. to that. that. looking and SBA always careful of But be to

Richard Murphy

No, you head. hit the on nail the

our that generally speaking, report they've customers would of pretty move take been along them and most those think I and and able they're to doing through pass well. them costs

healthy pretty is consumer now. the overall, right think I

And so good in that shape, across pretty look any board auto it's housing area or you demand whether or the at. is

And a finance lower customers suppliers we the lot of end our space. in supplying that are so that

speaking, I good. generally think so pretty they're feeling And

to talented us. find the I bigger express out, are battle that to number probably That's think trying where as pressure challenges the pointed -- inflation, just concern the having and people Ed wage and to one that good people.

can in to is at try want where are money we you're just a the less spaces seeing what automation. where and of focused lot think on efficiencies do with help looking They more I lot. people make spend and a now. really that's to They're

utilization And because very pretty in leasing lot it's people has But probably to period a of area, good this have get more the the ultimately, lot hard where a think talent in defined. I spend is meantime, expensive is this that get thing. activity it's and Our reported a group people for through of to line making efficient.

Edward Wehmer

They all. I now. Talent can't the mean don't in have -- Head we Georgian home at have is used a can't right like of they XXX people out. people hospitality big the work the the especially but I restaurants like. light do at company I positions opened country of -- part -- high they get the have bring of know from and a We They to fill out them. was fits there. season can't they lot in now in to people like

that. But to have of kind jazzed a that's terms inflation get it's pay in now to we of that common cycle. to see people people more the and So means which lot really of right

it getting of As curve this transitory like once now. right inverted like gets I people lot about to hard think -- year going, a think a ago, yield stop. out a was I But said, freaked I it's are

rates government if keep true. right now I not treasuries, I are think -- really think still good because buying It's their not positive costs that's artificially in so a false down those is shape.

accepted. will money right -- So is issue a see but what first you commuting more big as and Oil tell see said we there. we cost even but just are now don't do lot terms have we that to out for you the price is a but the of I'm you being issue in that is an Prices said of gives this to we it's was place stuff free. glad going live. price pay

Ben Gerlinger

of kind to a seems inflation And on have of talent, and also every speaking noteworthy then from perspective year. know same deal then talent I an vein Chicago the other

on So have guys gift keeps because mousetrap. great that giving a much simply the that's pretty you Wintrust to

compensation kind outside the terms speak Are disruption expectations lender in about how much? think too Wintrust talent resumes, So over you for just some approaching kind appropriate? then to of for to shopping when market of the looking and Wintrust to you agency, additional their adds? are of free is come guys And of and people the talent so of people

Edward Wehmer

that? to want you Rich, David, handle

Timothy Crane

home the lenders. compensation. very And and see customers. be their we're of to broader about obviously, comment, that seeing we talked that's four good related of the But continues in we've help to inflation beneficial lenders, a past, events lag. and good think care lenders to a we're the to or activities. think anything for We don't continue commercial as primary think lot atypical your concern. our We take I us do for for three disruption we us. there's time Well, And obviously

through continue we'll disruption its the benefit continues work the to market. think to I way as So

Edward Wehmer

got it's they lower We've done. the XX they year at that of want come awful analyst But comment? amount through. program they Rich, two XX, of you and every to a offer the credit come them a to go run goose. realize they seen We But away of half years, lot when back levels. After left want people money

Richard Murphy

-- is in of the I their is a market one what their our and disruption we think exactly lot would say couple I keeping -- people out over the last some job is And number of would what of brought of the more in and years. when they No, the said what out the where credit the this we of Tim so talk course systems I come of about those a unsure our cultures you culture because and fit, to that's And -- bankers happy customers say the because process in. job think, place the deliver in say banker motivation is have we that than ability bit trick we sure have just place, to make we can in been, of a that's a when the and about been anything to else. feels acquisitions there's there marketplace, way different deliver,

a happy not consistency. marketplace what of core in think, customers all. our philosophy by bankers I just keep very to, able been seen and at the that's our we've keeping just so And And we've

we've pretty well. So able our to bankers hold been fortunately, to on

Ben Gerlinger

I All appreciate guys. right. it. Thanks, That’s great.

Operator

[Operator question Casey comes Instructions] Our Please go Jefferies. Haire next ahead. from of

Casey Haire

morning, Good Thanks. guys.

to said So, I I building. strong, loan follow they're pretty up wanted on The you if the you outlook. growth sound pipeline correctly, heard

if pipeline what wondering like looks quantify Just you year-end? could versus the XXX

Richard Murphy

of just it. that it's the and into -- -- that some a the some don't other issues of out just go pipeline always timing sort we things there's took commentary We because

go We're here into We growth speaking, we it pretty it see in But the momentum is as just on seeing seeing guidance. second quarter And generally right and of increases being it asked in the or so CRE did C&I. momentum and we in that quarter in the focusing is, that good the these building to first term. We're really line really the some broad-based. seeing provide. term are we're loan again,

generally guidelines and get with the the of But we're So focus in I really speaking, to would specifics, away that. terms loan trying on beyond stick specifically. from that growth getting

Casey Haire

Fed and hikes Is basis the points the versus today? points. expect you at what XXX level XXX Fed you said forecast, of are think clarify, we you in to that the to end? year-end I expecting between just hike And at be Or XX by basis year bp now are central hikes

Timothy Crane

changes in XXX quarter second Whether XXX the in XXX and and four. or not, basis quarters points basis from here, point happens three that who knows.

David Stoehr

Right.

basis So our $XX to million increase. is that thought $XX point million on per XX

And so math you go apply scenario from pick the there. and and your

Timothy Crane

we we started as get into that to quarters, obviously, future some realize benefit. of have And will

early over But And so of rates base in again, will the change still the here. time. real we're, changing cycle

Operator

back Edward call to closing Sir? over this like for At to the I'd remarks. you. Wehmer turn time, Thank

Edward Wehmer

Murphy Thank If you, Dykstra, kind please and any everybody, Tim to other on and Dave in a for or spring appreciate not cups listening or feel again free we quarter, before, Talked support. Thank if Rich contact let's Crane. of your me you. there bring go questions, in and

Operator

call. for participating. concludes today's conference Thank This you

disconnect. You may now

Wintrust Financial (WTFC) 20 Apr 222022 Q1 Earnings call transcript