Wintrust Financial Corporation Reports Record First Quarter 2021 Net Income of $153.1 million
Wintrust Financial Corporation (WTFC) reported record net income of $153.1 million or $2.54 per diluted share for Q1 2021, representing a 144% increase year-over-year. Total assets rose by $601 million while total deposits increased by $780 million. The company recognized $19.2 million in PPP loan fee accretion and originated $1.3 billion in PPP loans this quarter. Non-performing loans decreased to 0.30% of total loans, indicating improved credit quality. The tangible book value per share increased to $55.42, reflecting solid growth.
- Record net income of $153.1 million for Q1 2021, a 144% year-over-year increase.
- Total assets increased by $601 million.
- Total loans, excluding PPP loans, rose by $515 million.
- Net interest income grew by $2.5 million due to increased earning asset growth and PPP loan fee accretion.
- Mortgage banking revenue rose by $26.7 million to $113.5 million.
- Non-performing loans decreased to 0.30% of total loans.
- Tangible book value per share increased to $55.42.
- Net charge-offs increased to $13.3 million, up from $10.3 million in Q4 2020.
- The company's net interest margin remained at 2.53%, down from 3.12% in Q1 2020.
ROSEMONT, Ill., April 19, 2021 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust”, “the Company”, "we" or "our") (Nasdaq: WTFC) announced record net income of
Highlights of the First Quarter of 2021:
Comparative information to the fourth quarter of 2020
- Total assets increased by
$601 million . - Total loans, excluding Paycheck Protection Program ("PPP") loans, increased by
$515 million .- Originated
$1.3 billion of PPP loans in the first quarter of 2021 which generated fees of$51.2 million , net of$1.8 million of deferred costs, to be recognized over the estimated life of the loans. - PPP loans originated in 2020 declined by
$667 million in the first quarter of 2021 primarily as a result of processing forgiveness payments. As of April 16, 2021, approximately42% of PPP loan balances originated in 2020 have been forgiven, approximately40% of balances are in the forgiveness review or submission process, and approximately18% of balances have yet to apply for forgiveness.
- Originated
- Total deposits increased by
$780 million . - Total investment securities increased by
$1.0 billion as the Company deployed a portion of its excess liquidity. - Net interest income increased by
$2.5 million primarily due to earning asset growth and increased PPP loan fee accretion, despite two less days in the first quarter of 2021. Each day has an approximately$3 million impact on net interest income.- The Company recognized
$19.2 million of PPP loan fee accretion in the first quarter of 2021 as compared to$16.8 million in the fourth quarter of 2020. As of March 31, 2021, the Company had approximately$64.6 million of net PPP loan fees that have yet to be recognized in income.
- The Company recognized
- The loans to deposits ratio ended the first quarter of 2021 at
87.6% as compared to86.5% as of December 31, 2020. Excluding PPP loans, the loans to deposits ratio ended the first quarter of 2021 at78.9% . - Mortgage banking revenue increased by
$26.7 million to$113.5 million for the first quarter of 2021 as compared to$86.8 million in the fourth quarter of 2020.- Recorded an increase in the value of mortgage servicing rights related to changes in fair value model assumptions of
$18.0 million in the first quarter of 2021 as compared to a decrease of$5.2 million in the fourth quarter of 2020.
- Recorded an increase in the value of mortgage servicing rights related to changes in fair value model assumptions of
- Recorded a negative provision for credit losses of
$45.3 million in the first quarter of 2021 as compared to$1.2 million of expense in the fourth quarter of 2020. - Recorded net charge-offs of
$13.3 million in the first quarter of 2021 as compared to net charge-offs of$10.3 million in the fourth quarter of 2020. Net charge-offs as a percentage of average total loans totaled 17 basis points in the first quarter of 2021 on an annualized basis compared to 13 basis points on an annualized basis in the fourth quarter of 2020. - The allowance for credit losses on our core loan portfolio is approximately
1.62% of the outstanding balance as of March 31, 2021, down from2.00% as of December 31, 2020. See Table 11 for more information. - Non-performing loans declined significantly and totaled
$99.1 million , or0.30% of total loans, as of March 31, 2021 as compared to$127.5 million , or0.40% of total loans, as of December 31, 2020. - The outstanding balance of COVID-19 related modified loans totaled approximately
$254 million or0.8% of total loans, excluding PPP loans, as of March 31, 2021 as compared to$345 million or1.2% as of December 31, 2020. - Tangible book value per common share (non-GAAP) increased to
$55.42 as compared to$53.23 as of December 31, 2020.
Other items of note from the first quarter of 2021
- The following items had a
$5.8 million unfavorable pre-tax income impact on the first quarter of 2021:- Recognized
$3.8 million of expense related to impairment of certain capitalized software costs based on an evaluation of remaining useful life. - Recorded an impairment charge of
$1.4 million in occupancy expense as part of an ongoing effort to optimize our branch footprint. - Recorded severance expense of
$626,000.
- Recognized
Edward J. Wehmer, Founder and Chief Executive Officer, commented, "Wintrust reported record net income of
Mr. Wehmer continued, "The Company experienced strong loan growth in the first quarter of 2021, including growth in its commercial, commercial real estate, residential real estate loans for investment and life insurance premium finance receivable portfolios. The loan growth occurred in the latter part of the quarter as total period end loans, excluding PPP loans, were
Mr. Wehmer commented, "Net interest income increased in the first quarter of 2021 primarily due to earning asset growth and increased PPP loan fee accretion. Net interest margin was unchanged as the rate on interest-bearing liabilities declined seven basis points in the first quarter of 2021 as compared to the fourth quarter of 2020 effectively offsetting a six basis point decline in the yield on total earning assets. PPP loan fee accretion increased as the Company recognized
Mr. Wehmer noted, “Our mortgage banking business reported record mortgage banking revenue of
Commenting on credit quality, Mr. Wehmer stated, "The Company recorded a negative provision for credit losses of
Mr. Wehmer continued, "We remain committed to supporting our community, including the well-being and safety of our customers and employees. We have actively participated in the latest rounds of PPP approved in 2021 and as of April 16, 2021 have processed over 7,900 applications aggregating in excess of
Mr. Wehmer concluded, "Our first quarter of 2021 results continued to demonstrate the multi-faceted nature of our business model which we believe uniquely positions us to be successful. While Wintrust and the banking industry as a whole have experienced significant net interest margin compression, we have been able to compensate for that with outstanding mortgage banking results. Additionally, we leverage a differentiated, diversified loan portfolio to outperform peers with respect to loan growth. We are focused on taking advantage of market opportunities to prudently deploy excess liquidity into earning assets including core and niche loans and investment securities while maintaining an interest rate sensitive asset portfolio. We remain diligent in our evaluation of acquisition targets and will be prudent in our decision-making, always seeking to minimize dilution. Finally, we evaluate our operating expense base on an ongoing basis to enhance future profitability."
The graphs below illustrate certain financial highlights of the first quarter of 2021 as well as historical financial performance. See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 17 for additional information with respect to non-GAAP financial measures/ratios, including the reconciliations to the corresponding GAAP financial measures/ratios.
Graphs available at the following link: http://ml.globenewswire.com/Resource/Download/4e11acd7-e400-475a-8133-4d0d52f51413
SUMMARY OF RESULTS:
BALANCE SHEET
Total asset growth of
Total liabilities increased
For more information regarding changes in the Company’s balance sheet, see Consolidated Statements of Condition and Tables 1 through 3 in this report.
NET INTEREST INCOME
For the first quarter of 2021, net interest income totaled
Net interest margin was
For more information regarding net interest income, see Tables 4 through 7 in this report.
ASSET QUALITY
The allowance for credit losses totaled
A negative provision for credit losses totaling
Management believes the allowance for credit losses is appropriate to account for expected credit losses. The Current Expected Credit Losses ("CECL") standard requires the Company to estimate expected credit losses over the life of the Company’s financial assets at a certain point in time. There can be no assurances, however, that future losses will not significantly exceed the amounts provided for, thereby affecting future results of operations. A summary of the allowance for credit losses calculated for the loan components in each portfolio as of March 31, 2021 and December 31, 2020 is shown on Table 11 of this report.
Net charge-offs totaled
As of March 31, 2021,
The Company’s home equity and residential real estate loan portfolios continue to exhibit low delinquency rates as of March 31, 2021. Home equity loans at March 31, 2021 that are current with regard to the contractual terms of the loan agreement represent
The outstanding balance of COVID-19 related modified loans totaled approximately
The ratio of non-performing assets to total assets was
NON-INTEREST INCOME
Wealth management revenue increased by
Mortgage banking revenue increased by
During the first quarter of 2021, the fair value of the mortgage servicing rights portfolio increased primarily due to the capitalization of
Operating lease income increased by
Other non-interest income decreased by
For more information regarding non-interest income, see Tables 14 and 15 in this report.
NON-INTEREST EXPENSE
Salaries and employee benefits expense increased by
Advertising and marketing expense totaled
Miscellaneous expense in the first quarter of 2021 decreased by
For more information regarding non-interest expense, see Table 16 in this report.
INCOME TAXES
The Company recorded income tax expense of
BUSINESS UNIT SUMMARY
Community Banking
Through its community banking unit, the Company provides banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas the Company services. In the first quarter of 2021, this unit expanded its loan portfolio and its deposit portfolio. In addition, the segment's net interest margin remained relatively stable in the first quarter of 2021 as compared to the fourth quarter of 2020.
Mortgage banking revenue was
Specialty Finance
Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries, accounts receivable financing and value-added, out-sourced administrative services and other services. Originations within the insurance premium financing receivables portfolio were
Wealth Management
Through four separate subsidiaries within its wealth management unit, the Company offers a full range of wealth management services, including trust and investment services, tax-deferred like-kind exchange services, asset management, securities brokerage services and 401(k) and retirement plan services. Wealth management revenue totaled
ITEMS IMPACTING COMPARATIVE FINANCIAL RESULTS
Paycheck Protection Program
On March 27, 2020, the President of the United States signed the CARES Act, which authorized the Small Business Administration ("SBA") to guarantee loans under the PPP for small businesses who met the necessary eligibility requirements in order to keep their workers on the payroll. The Company began accepting applications on April 3, 2020. From such date through March 31, 2021, the Company secured authorization from the SBA for and funded over 19,400 PPP loans with a carrying balance of approximately
WINTRUST FINANCIAL CORPORATION
Key Operating Measures
Wintrust’s key operating measures and growth rates for the first quarter of 2021, as compared to the fourth quarter of 2020 (sequential quarter) and first quarter of 2020 (linked quarter), are shown in the table below:
% or(1) basis point (bp) change from 4th Quarter 2020 | % or basis point (bp) change from 1st Quarter 2020 | ||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||
(Dollars in thousands, except per share data) | Mar 31, 2021 | Dec 31, 2020 | Mar 31, 2020 | ||||||||||||||||||
Net income | $ | 153,148 | $ | 101,204 | $ | 62,812 | 51 | % | 144 | % | |||||||||||
Pre-tax income, excluding provision for credit losses (non-GAAP) (2) | 161,512 | 135,891 | 140,044 | 19 | 15 | ||||||||||||||||
Net income per common share – diluted | 2.54 | 1.63 | 1.04 | 56 | 144 | ||||||||||||||||
Net revenue (3) | 448,401 | 417,758 | 374,685 | 7 | 20 | ||||||||||||||||
Net interest income | 261,895 | 259,397 | 261,443 | 1 | — | ||||||||||||||||
Net interest margin | 2.53 | % | 2.53 | % | 3.12 | % | — | bp | (59 | ) | bps | ||||||||||
Net interest margin - fully taxable equivalent (non-GAAP) (2) | 2.54 | 2.54 | 3.14 | — | (60 | ) | |||||||||||||||
Net overhead ratio (4) | 0.90 | 1.12 | 1.33 | (22 | ) | (43 | ) | ||||||||||||||
Return on average assets | 1.38 | 0.92 | 0.69 | 46 | 69 | ||||||||||||||||
Return on average common equity | 15.80 | 10.30 | 6.82 | 550 | 898 | ||||||||||||||||
Return on average tangible common equity (non-GAAP) (2) | 19.49 | 12.95 | 8.73 | 654 | 1,076 | ||||||||||||||||
At end of period | |||||||||||||||||||||
Total assets | $ | 45,682,202 | $ | 45,080,768 | $ | 38,799,847 | 5 | % | 18 | % | |||||||||||
Total loans (5) | 33,171,233 | 32,079,073 | 27,807,321 | 14 | 19 | ||||||||||||||||
Total deposits | 37,872,652 | 37,092,651 | 31,461,660 | 9 | 20 | ||||||||||||||||
Total shareholders’ equity | 4,252,511 | 4,115,995 | 3,700,393 | 13 | 15 |
(1) Period-end balance sheet percentage changes are annualized.
(2) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 17 for additional information on this performance measure/ratio.
(3) Net revenue is net interest income plus non-interest income.
(4) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period's average total assets. A lower ratio indicates a higher degree of efficiency.
(5) Excludes mortgage loans held-for-sale.
Certain returns, yields, performance ratios, or quarterly growth rates are “annualized” in this presentation to represent an annual time period. This is done for analytical purposes to better discern, for decision-making purposes, underlying performance trends when compared to full-year or year-over-year amounts. For example, a
WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights
Three Months Ended | ||||||||||||||||||||
(Dollars in thousands, except per share data) | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |||||||||||||||
Selected Financial Condition Data (at end of period): | ||||||||||||||||||||
Total assets | $ | 45,682,202 | $ | 45,080,768 | $ | 43,731,718 | $ | 43,540,017 | $ | 38,799,847 | ||||||||||
Total loans (1) | 33,171,233 | 32,079,073 | 32,135,555 | 31,402,903 | 27,807,321 | |||||||||||||||
Total deposits | 37,872,652 | 37,092,651 | 35,844,422 | 35,651,874 | 31,461,660 | |||||||||||||||
Junior subordinated debentures | 253,566 | 253,566 | 253,566 | 253,566 | 253,566 | |||||||||||||||
Total shareholders’ equity | 4,252,511 | 4,115,995 | 4,074,089 | 3,990,218 | 3,700,393 | |||||||||||||||
Selected Statements of Income Data: | ||||||||||||||||||||
Net interest income | $ | 261,895 | $ | 259,397 | $ | 255,936 | $ | 263,131 | $ | 261,443 | ||||||||||
Net revenue (2) | 448,401 | 417,758 | 426,529 | 425,124 | 374,685 | |||||||||||||||
Net income | 153,148 | 101,204 | 107,315 | 21,659 | 62,812 | |||||||||||||||
Pre-tax income, excluding provision for credit losses (non-GAAP) (3) | 161,512 | 135,891 | 162,310 | 165,756 | 140,044 | |||||||||||||||
Net income per common share – Basic | 2.57 | 1.64 | 1.68 | 0.34 | 1.05 | |||||||||||||||
Net income per common share – Diluted | 2.54 | 1.63 | 1.67 | 0.34 | 1.04 | |||||||||||||||
Selected Financial Ratios and Other Data: | ||||||||||||||||||||
Performance Ratios: | ||||||||||||||||||||
Net interest margin | 2.53 | % | 2.53 | % | 2.56 | % | 2.73 | % | 3.12 | % | ||||||||||
Net interest margin - fully taxable equivalent (non-GAAP) (3) | 2.54 | 2.54 | 2.57 | 2.74 | 3.14 | |||||||||||||||
Non-interest income to average assets | 1.68 | 1.44 | 1.58 | 1.55 | 1.24 | |||||||||||||||
Non-interest expense to average assets | 2.59 | 2.56 | 2.45 | 2.48 | 2.58 | |||||||||||||||
Net overhead ratio (4) | 0.90 | 1.12 | 0.87 | 0.93 | 1.33 | |||||||||||||||
Return on average assets | 1.38 | 0.92 | 0.99 | 0.21 | 0.69 | |||||||||||||||
Return on average common equity | 15.80 | 10.30 | 10.66 | 2.17 | 6.82 | |||||||||||||||
Return on average tangible common equity (non-GAAP) (3) | 19.49 | 12.95 | 13.43 | 2.95 | 8.73 | |||||||||||||||
Average total assets | $ | 44,988,733 | $ | 43,810,005 | $ | 42,962,844 | $ | 42,042,729 | $ | 36,625,490 | ||||||||||
Average total shareholders’ equity | 4,164,890 | 4,050,286 | 4,034,902 | 3,908,846 | 3,710,169 | |||||||||||||||
Average loans to average deposits ratio | 87.1 | % | 87.9 | % | 89.6 | % | 87.8 | % | 90.1 | % | ||||||||||
Period-end loans to deposits ratio | 87.6 | 86.5 | 89.7 | 88.1 | 88.4 | |||||||||||||||
Common Share Data at end of period: | ||||||||||||||||||||
Market price per common share | $ | 75.80 | $ | 61.09 | $ | 40.05 | $ | 43.62 | $ | 32.86 | ||||||||||
Book value per common share | 67.34 | 65.24 | 63.57 | 62.14 | 62.13 | |||||||||||||||
Tangible book value per common share (non-GAAP) (3) | 55.42 | 53.23 | 51.70 | 50.23 | 50.18 | |||||||||||||||
Common shares outstanding | 57,023,273 | 56,769,625 | 57,601,991 | 57,573,672 | 57,545,352 | |||||||||||||||
Other Data at end of period: | ||||||||||||||||||||
Tier 1 leverage ratio (5) | 8.2 | % | 8.1 | % | 8.2 | % | 8.1 | % | 8.5 | % | ||||||||||
Risk-based capital ratios: | ||||||||||||||||||||
Tier 1 capital ratio (5) | 10.1 | 10.0 | 10.2 | 10.1 | 9.3 | |||||||||||||||
Common equity tier 1 capital ratio(5) | 9.0 | 8.8 | 9.0 | 8.8 | 8.9 | |||||||||||||||
Total capital ratio (5) | 12.6 | 12.6 | 12.9 | 12.8 | 11.9 | |||||||||||||||
Allowance for credit losses (6) | $ | 321,308 | $ | 379,969 | $ | 388,971 | $ | 373,174 | $ | 253,482 | ||||||||||
Allowance for loan and unfunded lending-related commitment losses to total loans | 0.97 | % | 1.18 | % | 1.21 | % | 1.19 | % | 0.91 | % | ||||||||||
Number of: | ||||||||||||||||||||
Bank subsidiaries | 15 | 15 | 15 | 15 | 15 | |||||||||||||||
Banking offices | 182 | 181 | 182 | 186 | 187 |
(1) Excludes mortgage loans held-for-sale.
(2) Net revenue is net interest income and non-interest income.
(3) See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 17 for additional information on this performance measure/ratio.
(4) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s total average assets. A lower ratio indicates a higher degree of efficiency.
(5) Capital ratios for current quarter-end are estimated.
(6) The allowance for credit losses includes the allowance for loan losses, the allowance for unfunded lending-related commitments and the allowance for held-to-maturity securities losses.
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | |||||||||||||||||||||
(In thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||||||||
Assets | |||||||||||||||||||||||||
Cash and due from banks | $ | 426,325 | $ | 322,415 | $ | 308,639 | $ | 344,999 | $ | 349,118 | |||||||||||||||
Federal funds sold and securities purchased under resale agreements | 52 | 59 | 56 | 58 | 309 | ||||||||||||||||||||
Interest-bearing deposits with banks | 3,348,794 | 4,802,527 | 3,825,823 | 4,015,072 | 1,943,743 | ||||||||||||||||||||
Available-for-sale securities, at fair value | 2,430,749 | 3,055,839 | 2,946,459 | 3,194,961 | 3,570,959 | ||||||||||||||||||||
Held-to-maturity securities, at amortized cost | 2,166,419 | 579,138 | 560,267 | 728,465 | 865,376 | ||||||||||||||||||||
Trading account securities | 951 | 671 | 1,720 | 890 | 2,257 | ||||||||||||||||||||
Equity securities with readily determinable fair value | 90,338 | 90,862 | 54,398 | 52,460 | 47,310 | ||||||||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stock | 135,881 | 135,588 | 135,568 | 135,571 | 134,546 | ||||||||||||||||||||
Brokerage customer receivables | 19,056 | 17,436 | 16,818 | 14,623 | 16,293 | ||||||||||||||||||||
Mortgage loans held-for-sale | 1,260,193 | 1,272,090 | 959,671 | 833,163 | 656,934 | ||||||||||||||||||||
Loans, net of unearned income | 33,171,233 | 32,079,073 | 32,135,555 | 31,402,903 | 27,807,321 | ||||||||||||||||||||
Allowance for loan losses | (277,709 | ) | (319,374 | ) | (325,959 | ) | (313,510 | ) | (216,050 | ) | |||||||||||||||
Net loans | 32,893,524 | 31,759,699 | 31,809,596 | 31,089,393 | 27,591,271 | ||||||||||||||||||||
Premises and equipment, net | 760,522 | 768,808 | 774,288 | 769,909 | 764,583 | ||||||||||||||||||||
Lease investments, net | 238,984 | 242,434 | 230,373 | 237,040 | 207,147 | ||||||||||||||||||||
Accrued interest receivable and other assets | 1,230,362 | 1,351,455 | 1,424,728 | 1,437,832 | 1,460,168 | ||||||||||||||||||||
Trade date securities receivable | — | — | — | — | 502,207 | ||||||||||||||||||||
Goodwill | 646,017 | 645,707 | 644,644 | 644,213 | 643,441 | ||||||||||||||||||||
Other intangible assets | 34,035 | 36,040 | 38,670 | 41,368 | 44,185 | ||||||||||||||||||||
Total assets | $ | 45,682,202 | $ | 45,080,768 | $ | 43,731,718 | $ | 43,540,017 | $ | 38,799,847 | |||||||||||||||
Liabilities and Shareholders’ Equity | |||||||||||||||||||||||||
Deposits: | |||||||||||||||||||||||||
Non-interest-bearing | $ | 12,297,337 | $ | 11,748,455 | $ | 10,409,747 | $ | 10,204,791 | $ | 7,556,755 | |||||||||||||||
Interest-bearing | 25,575,315 | 25,344,196 | 25,434,675 | 25,447,083 | 23,904,905 | ||||||||||||||||||||
Total deposits | 37,872,652 | 37,092,651 | 35,844,422 | 35,651,874 | 31,461,660 | ||||||||||||||||||||
Federal Home Loan Bank advances | 1,228,436 | 1,228,429 | 1,228,422 | 1,228,416 | 1,174,894 | ||||||||||||||||||||
Other borrowings | 516,877 | 518,928 | 507,395 | 508,535 | 487,503 | ||||||||||||||||||||
Subordinated notes | 436,595 | 436,506 | 436,385 | 436,298 | 436,179 | ||||||||||||||||||||
Junior subordinated debentures | 253,566 | 253,566 | 253,566 | 253,566 | 253,566 | ||||||||||||||||||||
Trade date securities payable | 995 | 200,907 | — | — | — | ||||||||||||||||||||
Accrued interest payable and other liabilities | 1,120,570 | 1,233,786 | 1,387,439 | 1,471,110 | 1,285,652 | ||||||||||||||||||||
Total liabilities | 41,429,691 | 40,964,773 | 39,657,629 | 39,549,799 | 35,099,454 | ||||||||||||||||||||
Shareholders’ Equity: | |||||||||||||||||||||||||
Preferred stock | 412,500 | 412,500 | 412,500 | 412,500 | 125,000 | ||||||||||||||||||||
Common stock | 58,727 | 58,473 | 58,323 | 58,294 | 58,266 | ||||||||||||||||||||
Surplus | 1,663,008 | 1,649,990 | 1,647,049 | 1,643,864 | 1,652,063 | ||||||||||||||||||||
Treasury stock | (100,363 | ) | (100,363 | ) | (44,891 | ) | (44,891 | ) | (44,891 | ) | |||||||||||||||
Retained earnings | 2,208,535 | 2,080,013 | 2,001,949 | 1,921,048 | 1,917,558 | ||||||||||||||||||||
Accumulated other comprehensive income (loss) | 10,104 | 15,382 | (841 | ) | (597 | ) | (7,603 | ) | |||||||||||||||||
Total shareholders’ equity | 4,252,511 | 4,115,995 | 4,074,089 | 3,990,218 | 3,700,393 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 45,682,202 | $ | 45,080,768 | $ | 43,731,718 | $ | 43,540,017 | $ | 38,799,847 |
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended | ||||||||||||||||||||||||
(In thousands, except per share data) | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |||||||||||||||||||
Interest income | ||||||||||||||||||||||||
Interest and fees on loans | $ | 274,100 | $ | 280,185 | $ | 280,479 | $ | 294,746 | $ | 301,839 | ||||||||||||||
Mortgage loans held-for-sale | 9,036 | 6,357 | 5,791 | 4,764 | 3,165 | |||||||||||||||||||
Interest-bearing deposits with banks | 1,199 | 1,294 | 1,181 | 1,310 | 4,768 | |||||||||||||||||||
Federal funds sold and securities purchased under resale agreements | — | — | — | 16 | 86 | |||||||||||||||||||
Investment securities | 19,264 | 18,243 | 21,819 | 27,105 | 32,467 | |||||||||||||||||||
Trading account securities | 2 | 11 | 6 | 13 | 7 | |||||||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stock | 1,745 | 1,775 | 1,774 | 1,765 | 1,577 | |||||||||||||||||||
Brokerage customer receivables | 123 | 116 | 106 | 97 | 158 | |||||||||||||||||||
Total interest income | 305,469 | 307,981 | 311,156 | 329,816 | 344,067 | |||||||||||||||||||
Interest expense | ||||||||||||||||||||||||
Interest on deposits | 27,944 | 32,602 | 39,084 | 50,057 | 67,435 | |||||||||||||||||||
Interest on Federal Home Loan Bank advances | 4,840 | 4,952 | 4,947 | 4,934 | 3,360 | |||||||||||||||||||
Interest on other borrowings | 2,609 | 2,779 | 3,012 | 3,436 | 3,546 | |||||||||||||||||||
Interest on subordinated notes | 5,477 | 5,509 | 5,474 | 5,506 | 5,472 | |||||||||||||||||||
Interest on junior subordinated debentures | 2,704 | 2,742 | 2,703 | 2,752 | 2,811 | |||||||||||||||||||
Total interest expense | 43,574 | 48,584 | 55,220 | 66,685 | 82,624 | |||||||||||||||||||
Net interest income | 261,895 | 259,397 | 255,936 | 263,131 | 261,443 | |||||||||||||||||||
Provision for credit losses | (45,347 | ) | 1,180 | 25,026 | 135,053 | 52,961 | ||||||||||||||||||
Net interest income after provision for credit losses | 307,242 | 258,217 | 230,910 | 128,078 | 208,482 | |||||||||||||||||||
Non-interest income | ||||||||||||||||||||||||
Wealth management | 29,309 | 26,802 | 24,957 | 22,636 | 25,941 | |||||||||||||||||||
Mortgage banking | 113,494 | 86,819 | 108,544 | 102,324 | 48,326 | |||||||||||||||||||
Service charges on deposit accounts | 12,036 | 11,841 | 11,497 | 10,420 | 11,265 | |||||||||||||||||||
Gains (losses) on investment securities, net | 1,154 | 1,214 | 411 | 808 | (4,359 | ) | ||||||||||||||||||
Fees from covered call options | — | — | — | — | 2,292 | |||||||||||||||||||
Trading gains (losses), net | 419 | (102 | ) | 183 | (634 | ) | (451 | ) | ||||||||||||||||
Operating lease income, net | 14,440 | 12,118 | 11,717 | 11,785 | 11,984 | |||||||||||||||||||
Other | 15,654 | 19,669 | 13,284 | 14,654 | 18,244 | |||||||||||||||||||
Total non-interest income | 186,506 | 158,361 | 170,593 | 161,993 | 113,242 | |||||||||||||||||||
Non-interest expense | ||||||||||||||||||||||||
Salaries and employee benefits | 180,809 | 171,116 | 164,042 | 154,156 | 136,762 | |||||||||||||||||||
Equipment | 20,912 | 20,565 | 17,251 | 15,846 | 14,834 | |||||||||||||||||||
Operating lease equipment depreciation | 10,771 | 9,938 | 9,425 | 9,292 | 9,260 | |||||||||||||||||||
Occupancy, net | 19,996 | 19,687 | 15,830 | 16,893 | 17,547 | |||||||||||||||||||
Data processing | 6,048 | 5,728 | 5,689 | 10,406 | 8,373 | |||||||||||||||||||
Advertising and marketing | 8,546 | 9,850 | 7,880 | 7,704 | 10,862 | |||||||||||||||||||
Professional fees | 7,587 | 6,530 | 6,488 | 7,687 | 6,721 | |||||||||||||||||||
Amortization of other intangible assets | 2,007 | 2,634 | 2,701 | 2,820 | 2,863 | |||||||||||||||||||
FDIC insurance | 6,558 | 7,016 | 6,772 | 7,081 | 4,135 | |||||||||||||||||||
OREO expense, net | (251 | ) | (114 | ) | (168 | ) | 237 | (876 | ) | |||||||||||||||
Other | 23,906 | 28,917 | 28,309 | 27,246 | 24,160 | |||||||||||||||||||
Total non-interest expense | 286,889 | 281,867 | 264,219 | 259,368 | 234,641 | |||||||||||||||||||
Income before taxes | 206,859 | 134,711 | 137,284 | 30,703 | 87,083 | |||||||||||||||||||
Income tax expense | 53,711 | 33,507 | 29,969 | 9,044 | 24,271 | |||||||||||||||||||
Net income | $ | 153,148 | $ | 101,204 | $ | 107,315 | $ | 21,659 | $ | 62,812 | ||||||||||||||
Preferred stock dividends | 6,991 | 6,991 | 10,286 | 2,050 | 2,050 | |||||||||||||||||||
Net income applicable to common shares | $ | 146,157 | $ | 94,213 | $ | 97,029 | $ | 19,609 | $ | 60,762 | ||||||||||||||
Net income per common share - Basic | $ | 2.57 | $ | 1.64 | $ | 1.68 | $ | 0.34 | $ | 1.05 | ||||||||||||||
Net income per common share - Diluted | $ | 2.54 | $ | 1.63 | $ | 1.67 | $ | 0.34 | $ | 1.04 | ||||||||||||||
Cash dividends declared per common share | $ | 0.31 | $ | 0.28 | $ | 0.28 | $ | 0.28 | $ | 0.28 | ||||||||||||||
Weighted average common shares outstanding | 56,904 | 57,309 | 57,597 | 57,567 | 57,620 | |||||||||||||||||||
Dilutive potential common shares | 681 | 588 | 449 | 414 | 575 | |||||||||||||||||||
Average common shares and dilutive common shares | 57,585 | 57,897 | 58,046 | 57,981 | 58,195 |
TABLE 1: LOAN PORTFOLIO MIX AND GROWTH RATES
% Growth From | ||||||||||||||||||||||||||
(Dollars in thousands) | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2020 (1) | Mar 31, 2020 | |||||||||||||||||||
Balance: | ||||||||||||||||||||||||||
Mortgage loans held-for-sale, excluding early buy-out exercised loans guaranteed by U.S. Government Agencies | $ | 890,749 | $ | 927,307 | $ | 862,924 | $ | 814,667 | $ | 642,386 | (16 | ) | % | 39 | % | |||||||||||
Mortgage loans held-for-sale, early buy-out exercised loans guaranteed by U.S. Government Agencies | 369,444 | 344,783 | 96,747 | 18,496 | 14,548 | 29 | 2439 | |||||||||||||||||||
Total mortgage loans held-for-sale | $ | 1,260,193 | $ | 1,272,090 | $ | 959,671 | $ | 833,163 | $ | 656,934 | (4 | ) | % | 92 | % | |||||||||||
Core loans: | ||||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||||
Commercial and industrial | $ | 4,630,795 | $ | 4,675,594 | $ | 4,555,920 | $ | 4,292,032 | $ | 4,580,712 | (4 | ) | % | 1 | % | |||||||||||
Asset-based lending | 720,772 | 721,666 | 707,365 | 721,035 | 1,046,631 | (1 | ) | (31 | ) | |||||||||||||||||
Municipal | 493,417 | 474,103 | 482,567 | 519,691 | 510,711 | 17 | (3 | ) | ||||||||||||||||||
Leases | 1,290,778 | 1,288,374 | 1,215,239 | 1,179,233 | 1,044,092 | 1 | 24 | |||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||||
Residential construction | 72,058 | 89,389 | 101,187 | 131,639 | 149,623 | (79 | ) | (52 | ) | |||||||||||||||||
Commercial construction | 1,040,631 | 1,041,729 | 1,005,708 | 992,872 | 929,643 | — | 12 | |||||||||||||||||||
Land | 240,635 | 240,684 | 226,254 | 215,537 | 222,087 | — | 8 | |||||||||||||||||||
Office | 1,131,472 | 1,136,844 | 1,163,790 | 1,124,643 | 1,138,527 | (2 | ) | (1 | ) | |||||||||||||||||
Industrial | 1,152,522 | 1,129,433 | 1,117,702 | 1,062,218 | 1,095,180 | 8 | 5 | |||||||||||||||||||
Retail | 1,198,025 | 1,224,403 | 1,175,819 | 1,148,152 | 1,179,861 | (9 | ) | 2 | ||||||||||||||||||
Multi-family | 1,739,521 | 1,649,801 | 1,599,651 | 1,497,834 | 1,433,390 | 22 | 21 | |||||||||||||||||||
Mixed use and other | 1,969,915 | 1,981,849 | 2,033,031 | 2,027,850 | 2,037,220 | (2 | ) | (3 | ) | |||||||||||||||||
Home equity | 390,253 | 425,263 | 446,274 | 466,596 | 494,655 | (33 | ) | (21 | ) | |||||||||||||||||
Residential real estate | ||||||||||||||||||||||||||
Residential real estate loans for investment | 1,376,465 | 1,214,744 | 1,143,908 | 1,186,768 | 1,244,690 | 54 | 11 | |||||||||||||||||||
Residential mortgage loans, early buy-out eligible loans guaranteed by U.S. Government Agencies | 45,508 | 44,854 | 240,902 | 240,661 | 132,699 | 6 | (66 | ) | ||||||||||||||||||
Total core loans | $ | 17,492,767 | $ | 17,338,730 | $ | 17,215,317 | $ | 16,806,761 | $ | 17,239,721 | 4 | % | 1 | % | ||||||||||||
Niche loans: | ||||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||||
Franchise | $ | 1,128,493 | $ | 1,023,027 | $ | 964,150 | $ | 963,531 | $ | 994,180 | 42 | % | 14 | % | ||||||||||||
Mortgage warehouse lines of credit | 587,868 | 567,389 | 503,371 | 352,659 | 323,844 | 15 | 82 | |||||||||||||||||||
Community Advantage - homeowners association | 272,222 | 267,374 | 254,963 | 240,634 | 231,757 | 7 | 17 | |||||||||||||||||||
Insurance agency lending | 290,880 | 222,519 | 214,411 | 255,049 | 293,959 | 125 | (1 | ) | ||||||||||||||||||
Premium Finance receivables | ||||||||||||||||||||||||||
U.S. commercial insurance | 3,342,730 | 3,438,087 | 3,494,155 | 3,439,987 | 3,015,549 | (11 | ) | 11 | ||||||||||||||||||
Canada commercial insurance | 615,813 | 616,402 | 565,989 | 559,787 | 449,506 | — | 37 | |||||||||||||||||||
Life insurance | 6,111,495 | 5,857,436 | 5,488,832 | 5,400,802 | 5,221,639 | 18 | 17 | |||||||||||||||||||
Consumer and other | 35,983 | 32,188 | 55,354 | 48,325 | 37,166 | 48 | (3 | ) | ||||||||||||||||||
Total niche loans | $ | 12,385,484 | $ | 12,024,422 | $ | 11,541,225 | $ | 11,260,774 | $ | 10,567,600 | 12 | % | 17 | % | ||||||||||||
Commercial PPP loans: | ||||||||||||||||||||||||||
Originated in 2020 | $ | 2,049,342 | $ | 2,715,921 | $ | 3,379,013 | $ | 3,335,368 | $ | — | (100 | ) | % | 100 | % | |||||||||||
Originated in 2021 | 1,243,640 | — | — | — | — | 100 | 100 | |||||||||||||||||||
Total commercial PPP loans | $ | 3,292,982 | $ | 2,715,921 | $ | 3,379,013 | $ | 3,335,368 | $ | — | 86 | % | 100 | % | ||||||||||||
Total loans, net of unearned income | $ | 33,171,233 | $ | 32,079,073 | $ | 32,135,555 | $ | 31,402,903 | $ | 27,807,321 | 14 | % | 19 | % |
(1) Annualized.
TABLE 2: DEPOSIT PORTFOLIO MIX AND GROWTH RATES
% Growth From | ||||||||||||||||||||||||||
(Dollars in thousands) | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2020 (1) | Mar 31, 2020 | |||||||||||||||||||
Balance: | ||||||||||||||||||||||||||
Non-interest-bearing | $ | 12,297,337 | $ | 11,748,455 | $ | 10,409,747 | $ | 10,204,791 | $ | 7,556,755 | 19 | % | 63 | % | ||||||||||||
NOW and interest-bearing demand deposits | 3,562,312 | 3,349,021 | 3,294,071 | 3,440,348 | 3,181,159 | 26 | 12 | |||||||||||||||||||
Wealth management deposits (2) | 4,274,527 | 4,138,712 | 4,235,583 | 4,433,020 | 3,936,968 | 13 | 9 | |||||||||||||||||||
Money market | 9,236,434 | 9,348,806 | 9,423,653 | 9,288,976 | 8,114,659 | (5 | ) | 14 | ||||||||||||||||||
Savings | 3,690,892 | 3,531,029 | 3,415,073 | 3,447,352 | 3,282,340 | 18 | 12 | |||||||||||||||||||
Time certificates of deposit | 4,811,150 | 4,976,628 | 5,066,295 | 4,837,387 | 5,389,779 | (13 | ) | (11 | ) | |||||||||||||||||
Total deposits | $ | 37,872,652 | $ | 37,092,651 | $ | 35,844,422 | $ | 35,651,874 | $ | 31,461,660 | 9 | % | 20 | % | ||||||||||||
Mix: | ||||||||||||||||||||||||||
Non-interest-bearing | 32 | % | 32 | % | 29 | % | 29 | % | 24 | % | ||||||||||||||||
NOW and interest-bearing demand deposits | 9 | 9 | 9 | 10 | 10 | |||||||||||||||||||||
Wealth management deposits (2) | 11 | 11 | 12 | 12 | 13 | |||||||||||||||||||||
Money market | 25 | 25 | 26 | 25 | 26 | |||||||||||||||||||||
Savings | 10 | 10 | 10 | 10 | 10 | |||||||||||||||||||||
Time certificates of deposit | 13 | 13 | 14 | 14 | 17 | |||||||||||||||||||||
Total deposits | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
(1) Annualized.
(2) Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wintrust Investments, Chicago Deferred Exchange Company, LLC ("CDEC"), trust and asset management customers of the Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts.
TABLE 3: TIME CERTIFICATES OF DEPOSIT MATURITY/RE-PRICING ANALYSIS
As of March 31, 2021
(Dollars in thousands) | Total Time Certificates of Deposit | Weighted-Average Rate of Maturing Time Certificates of Deposit (1) | |||||
1-3 months | $ | 1,385,311 | 1.75 | % | |||
4-6 months | 993,635 | 1.50 | |||||
7-9 months | 806,574 | 1.13 | |||||
10-12 months | 662,375 | 0.64 | |||||
13-18 months | 496,540 | 0.69 | |||||
19-24 months | 217,147 | 0.92 | |||||
24+ months | 249,568 | 0.74 | |||||
Total | $ | 4,811,150 | 1.24 | % |
(1) Weighted-average rate excludes the impact of purchase accounting fair value adjustments.
TABLE 4: QUARTERLY AVERAGE BALANCES
Average Balance for three months ended, | |||||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | |||||||||||||||||||||
(In thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||||||||
Interest-bearing deposits with banks and cash equivalents (1) | $ | 4,230,886 | $ | 4,381,040 | $ | 3,411,164 | $ | 3,240,167 | $ | 1,418,809 | |||||||||||||||
Investment securities (2) | 3,944,676 | 3,534,594 | 3,789,422 | 4,309,471 | 4,780,709 | ||||||||||||||||||||
FHLB and FRB stock | 135,758 | 135,569 | 135,567 | 135,360 | 114,829 | ||||||||||||||||||||
Liquidity management assets (3) | 8,311,320 | 8,051,203 | 7,336,153 | 7,684,998 | 6,314,347 | ||||||||||||||||||||
Other earning assets (3)(4) | 20,370 | 18,716 | 16,656 | 16,917 | 19,166 | ||||||||||||||||||||
Mortgage loans held-for-sale | 1,151,848 | 893,395 | 822,908 | 705,702 | 403,262 | ||||||||||||||||||||
Loans, net of unearned income (3)(5) | 32,442,927 | 31,783,279 | 31,634,608 | 30,336,626 | 26,936,728 | ||||||||||||||||||||
Total earning assets (3) | 41,926,465 | 40,746,593 | 39,810,325 | 38,744,243 | 33,673,503 | ||||||||||||||||||||
Allowance for loan and investment security losses | (327,080 | ) | (336,139 | ) | (321,732 | ) | (222,485 | ) | (176,291 | ) | |||||||||||||||
Cash and due from banks | 366,413 | 344,536 | 345,438 | 352,423 | 321,982 | ||||||||||||||||||||
Other assets | 3,022,935 | 3,055,015 | 3,128,813 | 3,168,548 | 2,806,296 | ||||||||||||||||||||
Total assets | $ | 44,988,733 | $ | 43,810,005 | $ | 42,962,844 | $ | 42,042,729 | $ | 36,625,490 | |||||||||||||||
NOW and interest-bearing demand deposits | $ | 3,493,451 | $ | 3,320,527 | $ | 3,435,089 | $ | 3,323,124 | $ | 3,113,733 | |||||||||||||||
Wealth management deposits | 4,156,398 | 4,066,948 | 4,239,300 | 4,380,996 | 2,838,719 | ||||||||||||||||||||
Money market accounts | 9,335,920 | 9,435,344 | 9,332,668 | 8,727,966 | 7,990,775 | ||||||||||||||||||||
Savings accounts | 3,587,566 | 3,413,388 | 3,419,586 | 3,394,480 | 3,189,835 | ||||||||||||||||||||
Time deposits | 4,875,392 | 5,043,558 | 4,900,839 | 5,104,701 | 5,526,407 | ||||||||||||||||||||
Interest-bearing deposits | 25,448,727 | 25,279,765 | 25,327,482 | 24,931,267 | 22,659,469 | ||||||||||||||||||||
Federal Home Loan Bank advances | 1,228,433 | 1,228,425 | 1,228,421 | 1,214,375 | 951,613 | ||||||||||||||||||||
Other borrowings | 518,188 | 510,725 | 512,787 | 493,350 | 469,577 | ||||||||||||||||||||
Subordinated notes | 436,532 | 436,433 | 436,323 | 436,226 | 436,119 | ||||||||||||||||||||
Junior subordinated debentures | 253,566 | 253,566 | 253,566 | 253,566 | 253,566 | ||||||||||||||||||||
Total interest-bearing liabilities | 27,885,446 | 27,708,914 | 27,758,579 | 27,328,784 | 24,770,344 | ||||||||||||||||||||
Non-interest-bearing deposits | 11,811,194 | 10,874,912 | 9,988,769 | 9,607,528 | 7,235,177 | ||||||||||||||||||||
Other liabilities | 1,127,203 | 1,175,893 | 1,180,594 | 1,197,571 | 909,800 | ||||||||||||||||||||
Equity | 4,164,890 | 4,050,286 | 4,034,902 | 3,908,846 | 3,710,169 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 44,988,733 | $ | 43,810,005 | $ | 42,962,844 | $ | 42,042,729 | $ | 36,625,490 | |||||||||||||||
Net free funds/contribution (6) | $ | 14,041,019 | $ | 13,037,679 | $ | 12,051,746 | $ | 11,415,459 | $ | 8,903,159 |
(1) Includes interest-bearing deposits from banks, federal funds sold and securities purchased under resale agreements.
(2) Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.
(3) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 17 for additional information on this performance measure/ratio.
(4) Other earning assets include brokerage customer receivables and trading account securities.
(5) Loans, net of unearned income, include non-accrual loans.
(6) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.
TABLE 5: QUARTERLY NET INTEREST INCOME
Net Interest Income for three months ended, | |||||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | |||||||||||||||||||||
(In thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||||||||
Interest income: | |||||||||||||||||||||||||
Interest-bearing deposits with banks and cash equivalents | $ | 1,199 | $ | 1,294 | $ | 1,181 | $ | 1,326 | $ | 4,854 | |||||||||||||||
Investment securities | 19,764 | 18,773 | 22,365 | 27,643 | 33,018 | ||||||||||||||||||||
FHLB and FRB stock | 1,745 | 1,775 | 1,774 | 1,765 | 1,577 | ||||||||||||||||||||
Liquidity management assets (1) | 22,708 | 21,842 | 25,320 | 30,734 | 39,449 | ||||||||||||||||||||
Other earning assets (1) | 125 | 130 | 113 | 113 | 167 | ||||||||||||||||||||
Mortgage loans held-for-sale | 9,036 | 6,357 | 5,791 | 4,764 | 3,165 | ||||||||||||||||||||
Loans, net of unearned income (1) | 274,484 | 280,509 | 280,960 | 295,322 | 302,699 | ||||||||||||||||||||
Total interest income | $ | 306,353 | $ | 308,838 | $ | 312,184 | $ | 330,933 | $ | 345,480 | |||||||||||||||
Interest expense: | |||||||||||||||||||||||||
NOW and interest-bearing demand deposits | $ | 901 | $ | 1,074 | $ | 1,342 | $ | 1,561 | $ | 3,665 | |||||||||||||||
Wealth management deposits | 7,351 | 7,436 | 7,662 | 7,244 | 6,935 | ||||||||||||||||||||
Money market accounts | 2,865 | 3,740 | 7,245 | 13,140 | 22,363 | ||||||||||||||||||||
Savings accounts | 430 | 773 | 2,104 | 3,840 | 5,790 | ||||||||||||||||||||
Time deposits | 16,397 | 19,579 | 20,731 | 24,272 | 28,682 | ||||||||||||||||||||
Interest-bearing deposits | 27,944 | 32,602 | 39,084 | 50,057 | 67,435 | ||||||||||||||||||||
Federal Home Loan Bank advances | 4,840 | 4,952 | 4,947 | 4,934 | 3,360 | ||||||||||||||||||||
Other borrowings | 2,609 | 2,779 | 3,012 | 3,436 | 3,546 | ||||||||||||||||||||
Subordinated notes | 5,477 | 5,509 | 5,474 | 5,506 | 5,472 | ||||||||||||||||||||
Junior subordinated debentures | 2,704 | 2,742 | 2,703 | 2,752 | 2,811 | ||||||||||||||||||||
Total interest expense | $ | 43,574 | $ | 48,584 | $ | 55,220 | $ | 66,685 | $ | 82,624 | |||||||||||||||
Less: Fully taxable-equivalent adjustment | (884 | ) | (857 | ) | (1,028 | ) | (1,117 | ) | (1,413 | ) | |||||||||||||||
Net interest income (GAAP) (2) | 261,895 | 259,397 | 255,936 | 263,131 | 261,443 | ||||||||||||||||||||
Fully taxable-equivalent adjustment | 884 | 857 | 1,028 | 1,117 | 1,413 | ||||||||||||||||||||
Net interest income, fully taxable-equivalent (non-GAAP) (2) | $ | 262,779 | $ | 260,254 | $ | 256,964 | $ | 264,248 | $ | 262,856 |
(1) Interest income on tax-advantaged loans, trading securities and investment securities reflects a taxable-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period.
(2) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 17 for additional information on this performance measure/ratio.
TABLE 6: QUARTERLY NET INTEREST MARGIN
Net Interest Margin for three months ended, | ||||||||||||||||||||
Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||||||||||||
Yield earned on: | ||||||||||||||||||||
Interest-bearing deposits with banks and cash equivalents | 0.11 | % | 0.12 | % | 0.14 | % | 0.16 | % | 1.38 | % | ||||||||||
Investment securities | 2.03 | 2.11 | 2.35 | 2.58 | 2.78 | |||||||||||||||
FHLB and FRB stock | 5.21 | 5.21 | 5.21 | 5.24 | 5.52 | |||||||||||||||
Liquidity management assets | 1.11 | 1.08 | 1.37 | 1.61 | 2.51 | |||||||||||||||
Other earning assets | 2.50 | 2.79 | 2.71 | 2.71 | 3.50 | |||||||||||||||
Mortgage loans held-for-sale | 3.18 | 2.83 | 2.80 | 2.72 | 3.16 | |||||||||||||||
Loans, net of unearned income | 3.43 | 3.51 | 3.53 | 3.92 | 4.52 | |||||||||||||||
Total earning assets | 2.96 | % | 3.02 | % | 3.12 | % | 3.44 | % | 4.13 | % | ||||||||||
Rate paid on: | ||||||||||||||||||||
NOW and interest-bearing demand deposits | 0.10 | % | 0.13 | % | 0.16 | % | 0.19 | % | 0.47 | % | ||||||||||
Wealth management deposits | 0.72 | 0.73 | 0.72 | 0.67 | 0.98 | |||||||||||||||
Money market accounts | 0.12 | 0.16 | 0.31 | 0.61 | 1.13 | |||||||||||||||
Savings accounts | 0.05 | 0.09 | 0.24 | 0.45 | 0.73 | |||||||||||||||
Time deposits | 1.36 | 1.54 | 1.68 | 1.91 | 2.09 | |||||||||||||||
Interest-bearing deposits | 0.45 | 0.51 | 0.61 | 0.81 | 1.20 | |||||||||||||||
Federal Home Loan Bank advances | 1.60 | 1.60 | 1.60 | 1.63 | 1.42 | |||||||||||||||
Other borrowings | 2.04 | 2.16 | 2.34 | 2.80 | 3.04 | |||||||||||||||
Subordinated notes | 5.02 | 5.05 | 5.02 | 5.05 | 5.02 | |||||||||||||||
Junior subordinated debentures | 4.27 | 4.23 | 4.17 | 4.29 | 4.39 | |||||||||||||||
Total interest-bearing liabilities | 0.63 | % | 0.70 | % | 0.79 | % | 0.98 | % | 1.34 | % | ||||||||||
Interest rate spread (1)(2) | 2.33 | % | 2.32 | % | 2.33 | % | 2.46 | % | 2.79 | % | ||||||||||
Less: Fully taxable-equivalent adjustment | (0.01 | ) | (0.01 | ) | (0.01 | ) | (0.01 | ) | (0.02 | ) | ||||||||||
Net free funds/contribution (3) | 0.21 | 0.22 | 0.24 | 0.28 | 0.35 | |||||||||||||||
Net interest margin (GAAP) (2) | 2.53 | % | 2.53 | % | 2.56 | % | 2.73 | % | 3.12 | % | ||||||||||
Fully taxable-equivalent adjustment | 0.01 | 0.01 | 0.01 | 0.01 | 0.02 | |||||||||||||||
Net interest margin, fully taxable-equivalent (non-GAAP) (2) | 2.54 | % | 2.54 | % | 2.57 | % | 2.74 | % | 3.14 | % |
(1) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(2) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 17 for additional information on this performance measure/ratio.
(3) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.
TABLE 7: INTEREST RATE SENSITIVITY
As an ongoing part of its financial strategy, the Company attempts to manage the impact of fluctuations in market interest rates on net interest income. Management measures its exposure to changes in interest rates by modeling many different interest rate scenarios.
The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon assuming increases of 100 and 200 basis points and a decrease of 100 basis points. The Static Shock Scenario results incorporate actual cash flows and repricing characteristics for balance sheet instruments following an instantaneous, parallel change in market rates based upon a static (i.e. no growth or constant) balance sheet. Conversely, the Ramp Scenario results incorporate management’s projections of future volume and pricing of each of the product lines following a gradual, parallel change in market rates over twelve months. Actual results may differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies. The interest rate sensitivity for both the Static Shock and Ramp Scenario is as follows:
Static Shock Scenario | +200 Basis Points | +100 Basis Points | -100 Basis Points | |||||||
Mar 31, 2021 | 22.0 | % | 10.2 | % | (7.2 | ) | % | |||
Dec 31, 2020 | 25.0 | 11.6 | (7.9 | ) | ||||||
Sep 30, 2020 | 23.4 | 10.9 | (8.1 | ) | ||||||
Jun 30, 2020 | 25.9 | 12.6 | (8.3 | ) | ||||||
Mar 31, 2020 | 22.5 | 10.6 | (9.4 | ) |
Ramp Scenario | +200 Basis Points | +100 Basis Points | -100 Basis Points | ||||||
Mar 31, 2021 | 10.7 | % | 5.4 | % | (3.6 | ) | % | ||
Dec 31, 2020 | 11.4 | 5.7 | (3.3 | ) | |||||
Sep 30, 2020 | 10.7 | 5.2 | (3.5 | ) | |||||
Jun 30, 2020 | 13.0 | 6.7 | (3.2 | ) | |||||
Mar 31, 2020 | 7.7 | 3.7 | (3.8 | ) |
TABLE 8: MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES
Loans repricing or maturity period | |||||||||||||||
As of March 31, 2021 | One year or less | From one to five years | Over five years | ||||||||||||
(In thousands) | Total | ||||||||||||||
Commercial | |||||||||||||||
Fixed rate | $ | 310,427 | $ | 2,025,263 | $ | 784,277 | $ | 3,119,967 | |||||||
Fixed Rate - PPP | — | 3,292,982 | — | 3,292,982 | |||||||||||
Variable rate | 6,291,842 | 3,350 | 66 | 6,295,258 | |||||||||||
Total commercial | $ | 6,602,269 | $ | 5,321,595 | $ | 784,343 | $ | 12,708,207 | |||||||
Commercial real estate | |||||||||||||||
Fixed rate | 550,899 | 2,075,177 | 382,447 | 3,008,523 | |||||||||||
Variable rate | 5,505,986 | 30,270 | — | 5,536,256 | |||||||||||
Total commercial real estate | $ | 6,056,885 | $ | 2,105,447 | $ | 382,447 | $ | 8,544,779 | |||||||
Home equity | |||||||||||||||
Fixed rate | 14,653 | 8,665 | 51 | 23,369 | |||||||||||
Variable rate | 366,884 | — | — | 366,884 | |||||||||||
Total home equity | $ | 381,537 | $ | 8,665 | $ | 51 | $ | 390,253 | |||||||
Residential real estate | |||||||||||||||
Fixed rate | 23,194 | 11,244 | 617,596 | 652,034 | |||||||||||
Variable rate | 65,907 | 290,906 | 413,126 | 769,939 | |||||||||||
Total residential real estate | $ | 89,101 | $ | 302,150 | $ | 1,030,722 | $ | 1,421,973 | |||||||
Premium finance receivables - commercial | |||||||||||||||
Fixed rate | 3,851,457 | 107,086 | — | 3,958,543 | |||||||||||
Variable rate | — | — | — | — | |||||||||||
Total premium finance receivables - commercial | $ | 3,851,457 | $ | 107,086 | $ | — | $ | 3,958,543 | |||||||
Premium finance receivables - life insurance | |||||||||||||||
Fixed rate | 11,493 | 348,721 | 20,365 | 380,579 | |||||||||||
Variable rate | 5,730,916 | — | — | 5,730,916 | |||||||||||
Total premium finance receivables - life insurance | $ | 5,742,409 | $ | 348,721 | $ | 20,365 | $ | 6,111,495 | |||||||
Consumer and other | |||||||||||||||
Fixed rate | 14,753 | 4,536 | 1,154 | 20,443 | |||||||||||
Variable rate | 15,540 | — | — | 15,540 | |||||||||||
Total consumer and other | $ | 30,293 | $ | 4,536 | $ | 1,154 | $ | 35,983 | |||||||
Total per category | |||||||||||||||
Fixed rate | 4,776,876 | 4,580,692 | 1,805,890 | 11,163,458 | |||||||||||
Fixed rate - PPP | — | 3,292,982 | — | 3,292,982 | |||||||||||
Variable rate | 17,977,075 | 324,526 | 413,192 | 18,714,793 | |||||||||||
Total loans, net of unearned income | $ | 22,753,951 | $ | 8,198,200 | $ | 2,219,082 | $ | 33,171,233 | |||||||
Variable Rate Loan Pricing by Index: | |||||||||||||||
Prime | $ | 2,296,647 | |||||||||||||
One- month LIBOR | 9,493,060 | ||||||||||||||
Three- month LIBOR | 413,942 | ||||||||||||||
Twelve- month LIBOR | 6,225,191 | ||||||||||||||
Other | 285,953 | ||||||||||||||
Total variable rate | $ | 18,714,793 |
Graph available at the following link: http://ml.globenewswire.com/Resource/Download/3b1cd75f-31c0-4b3f-a1ec-b86cbbf9fddb
Source: Bloomberg
As noted in the table on the previous page, the majority of the Company’s portfolio is tied to LIBOR indices which, as shown in the table above, do not mirror the same changes as the Prime rate which has historically moved when the Federal Reserve raises or lowers interest rates. Specifically, the Company has
Basis Point (bp) Change in | |||||||
Prime | 1-month LIBOR | 12-month LIBOR | |||||
First Quarter 2021 | 0 | bp | -3 | bps | -6 | bps | |
Fourth Quarter 2020 | 0 | -1 | -2 | ||||
Third Quarter 2020 | 0 | -1 | -19 | ||||
Second Quarter 2020 | 0 | -83 | -45 | ||||
First Quarter 2020 | -150 | -77 | -100 |
TABLE 9: ALLOWANCE FOR CREDIT LOSSES
Three Months Ended | |||||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | |||||||||||||||||||||
(Dollars in thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||||||||
Allowance for credit losses at beginning of period | $ | 379,969 | $ | 388,971 | $ | 373,174 | $ | 253,482 | $ | 158,461 | |||||||||||||||
Cumulative effect adjustment from the adoption of ASU 2016-13 | — | — | — | — | 47,418 | ||||||||||||||||||||
Provision for credit losses | (45,347 | ) | 1,180 | 25,026 | 135,053 | 52,961 | |||||||||||||||||||
Other adjustments | 31 | 155 | 55 | 42 | (73 | ) | |||||||||||||||||||
Charge-offs: | |||||||||||||||||||||||||
Commercial | 11,781 | 5,184 | 5,270 | 5,686 | 2,153 | ||||||||||||||||||||
Commercial real estate | 980 | 6,637 | 1,529 | 7,224 | 570 | ||||||||||||||||||||
Home equity | — | 683 | 138 | 239 | 1,001 | ||||||||||||||||||||
Residential real estate | 2 | 114 | 83 | 293 | 401 | ||||||||||||||||||||
Premium finance receivables | 3,239 | 4,214 | 4,640 | 3,434 | 3,184 | ||||||||||||||||||||
Consumer and other | 114 | 198 | 103 | 99 | 128 | ||||||||||||||||||||
Total charge-offs | 16,116 | 17,030 | 11,763 | 16,975 | 7,437 | ||||||||||||||||||||
Recoveries: | |||||||||||||||||||||||||
Commercial | 452 | 4,168 | 428 | 112 | 384 | ||||||||||||||||||||
Commercial real estate | 200 | 904 | 175 | 493 | 263 | ||||||||||||||||||||
Home equity | 101 | 77 | 111 | 46 | 294 | ||||||||||||||||||||
Residential real estate | 204 | 69 | 25 | 30 | 60 | ||||||||||||||||||||
Premium finance receivables | 1,782 | 1,445 | 1,720 | 833 | 1,110 | ||||||||||||||||||||
Consumer and other | 32 | 30 | 20 | 58 | 41 | ||||||||||||||||||||
Total recoveries | 2,771 | 6,693 | 2,479 | 1,572 | 2,152 | ||||||||||||||||||||
Net charge-offs | (13,345 | ) | (10,337 | ) | (9,284 | ) | (15,403 | ) | (5,285 | ) | |||||||||||||||
Allowance for credit losses at period end | $ | 321,308 | $ | 379,969 | $ | 388,971 | $ | 373,174 | $ | 253,482 | |||||||||||||||
Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average: | |||||||||||||||||||||||||
Commercial | 0.37 | % | 0.03 | % | 0.16 | % | 0.20 | % | 0.08 | % | |||||||||||||||
Commercial real estate | 0.04 | 0.27 | 0.06 | 0.33 | 0.02 | ||||||||||||||||||||
Home equity | (0.10 | ) | 0.55 | 0.02 | 0.16 | 0.57 | |||||||||||||||||||
Residential real estate | (0.06 | ) | 0.02 | 0.02 | 0.09 | 0.11 | |||||||||||||||||||
Premium finance receivables | 0.06 | 0.11 | 0.12 | 0.12 | 0.10 | ||||||||||||||||||||
Consumer and other | 0.57 | 0.78 | 0.49 | 0.25 | 0.56 | ||||||||||||||||||||
Total loans, net of unearned income | 0.17 | % | 0.13 | % | 0.12 | % | 0.20 | % | 0.08 | % | |||||||||||||||
Loans at period end | $ | 33,171,233 | $ | 32,079,073 | $ | 32,135,555 | $ | 31,402,903 | $ | 27,807,321 | |||||||||||||||
Allowance for loan losses as a percentage of loans at period end | 0.84 | % | 1.00 | % | 1.01 | % | 1.00 | % | 0.78 | % | |||||||||||||||
Allowance for loan and unfunded lending-related commitment losses as a percentage of loans at period end | 0.97 | 1.18 | 1.21 | 1.19 | 0.91 | ||||||||||||||||||||
Allowance for loan and unfunded lending-related commitment losses as a percentage of loans at period end, excluding PPP loans | 1.08 | 1.29 | 1.35 | 1.33 | 0.91 |
TABLE 10: ALLOWANCE AND PROVISION FOR CREDIT LOSSES BY COMPONENT
Three Months Ended | |||||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | |||||||||||||||||||||
(In thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||||||||
Provision for loan losses | $ | (28,351 | ) | $ | 3,597 | $ | 21,678 | $ | 112,822 | $ | 50,396 | ||||||||||||||
Provision for unfunded lending-related commitments losses | (17,035 | ) | (2,413 | ) | 3,350 | 22,236 | 2,569 | ||||||||||||||||||
Provision for held-to-maturity securities losses | 39 | (4 | ) | (2 | ) | (5 | ) | (4 | ) | ||||||||||||||||
Provision for credit losses | $ | (45,347 | ) | $ | 1,180 | $ | 25,026 | $ | 135,053 | $ | 52,961 | ||||||||||||||
Allowance for loan losses | $ | 277,709 | $ | 319,374 | $ | 325,959 | $ | 313,510 | $ | 216,050 | |||||||||||||||
Allowance for unfunded lending-related commitments losses | 43,500 | 60,536 | 62,949 | 59,599 | 37,362 | ||||||||||||||||||||
Allowance for loan losses and unfunded lending-related commitments losses | 321,209 | 379,910 | 388,908 | 373,109 | 253,412 | ||||||||||||||||||||
Allowance for held-to-maturity securities losses | 99 | 59 | 63 | 65 | 70 | ||||||||||||||||||||
Allowance for credit losses | $ | 321,308 | $ | 379,969 | $ | 388,971 | $ | 373,174 | $ | 253,482 |
TABLE 11: ALLOWANCE BY LOAN PORTFOLIO
The table below summarizes the calculation of allowance for loan losses and allowance for unfunded lending-related commitments losses for the Company’s loan portfolios as well as core and niche portfolios, as of March 31, 2021 and December 31, 2020.
As of Mar 31, 2021 | As of Dec 31, 2020 | |||||||||||||||||||
(Dollars in thousands) | Recorded Investment | Calculated Allowance | % of its category’s balance | Recorded Investment | Calculated Allowance | % of its category’s balance | ||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial, industrial and other, excluding PPP loans | $ | 9,415,225 | $ | 95,637 | 1.02 | % | $ | 9,240,046 | $ | 94,210 | 1.02 | % | ||||||||
Commercial PPP loans | 3,292,982 | 3 | 0.00 | 2,715,921 | 2 | 0.00 | ||||||||||||||
Commercial real estate: | ||||||||||||||||||||
Construction and development | 1,353,324 | 45,327 | 3.35 | 1,371,802 | 78,833 | 5.75 | ||||||||||||||
Non-construction | 7,191,455 | 136,465 | 1.90 | 7,122,330 | 164,770 | 2.31 | ||||||||||||||
Home equity | 390,253 | 11,382 | 2.92 | 425,263 | 11,437 | 2.69 | ||||||||||||||
Residential real estate | 1,421,973 | 14,242 | 1.00 | 1,259,598 | 12,459 | 0.99 | ||||||||||||||
Premium finance receivables | ||||||||||||||||||||
Commercial insurance loans | 3,958,543 | 16,945 | 0.43 | 4,054,489 | 17,267 | 0.43 | ||||||||||||||
Life insurance loans | 6,111,495 | 532 | 0.01 | 5,857,436 | 510 | 0.01 | ||||||||||||||
Consumer and other | 35,983 | 676 | 1.88 | 32,188 | 422 | 1.31 | ||||||||||||||
Total loans, net of unearned income | $ | 33,171,233 | $ | 321,209 | 0.97 | % | $ | 32,079,073 | $ | 379,910 | 1.18 | % | ||||||||
Total loans, net of unearned income, excluding PPP loans | $ | 29,878,251 | $ | 321,206 | 1.08 | % | $ | 29,363,152 | $ | 379,908 | 1.29 | % | ||||||||
Total core loans (1) | $ | 17,492,767 | $ | 283,505 | 1.62 | % | $ | 17,338,730 | $ | 347,111 | 2.00 | % | ||||||||
Total niche loans (1) | 12,385,484 | 37,701 | 0.30 | 12,024,422 | 32,797 | 0.27 | ||||||||||||||
Total PPP loans | 3,292,982 | 3 | 0.00 | 2,715,921 | 2 | 0.00 | ||||||||||||||
(1) See Table 1 for additional detail on core and niche loans.
TABLE 12: LOAN PORTFOLIO AGING
(Dollars in thousands) | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |||||||||||||||
Loan Balances: | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Nonaccrual | $ | 22,459 | $ | 21,743 | $ | 42,036 | $ | 42,882 | $ | 49,916 | ||||||||||
90+ days and still accruing | — | 307 | — | 1,374 | 1,241 | |||||||||||||||
60-89 days past due | 13,292 | 6,900 | 2,168 | 8,952 | 8,873 | |||||||||||||||
30-59 days past due | 35,541 | 44,381 | 48,271 | 23,720 | 86,129 | |||||||||||||||
Current | 12,636,915 | 11,882,636 | 12,184,524 | 11,782,304 | 8,879,727 | |||||||||||||||
Total commercial | $ | 12,708,207 | $ | 11,955,967 | $ | 12,276,999 | $ | 11,859,232 | $ | 9,025,886 | ||||||||||
Commercial real estate | ||||||||||||||||||||
Nonaccrual | $ | 34,380 | $ | 46,107 | $ | 68,815 | $ | 64,557 | $ | 62,830 | ||||||||||
90+ days and still accruing | — | — | — | — | 516 | |||||||||||||||
60-89 days past due | 8,156 | 5,178 | 8,299 | 26,480 | 10,212 | |||||||||||||||
30-59 days past due | 70,168 | 32,116 | 53,462 | 75,528 | 75,068 | |||||||||||||||
Current | 8,432,075 | 8,410,731 | 8,292,566 | 8,034,180 | 8,036,905 | |||||||||||||||
Total commercial real estate | $ | 8,544,779 | $ | 8,494,132 | $ | 8,423,142 | 8,200,745 | $ | 8,185,531 | |||||||||||
Home equity | ||||||||||||||||||||
Nonaccrual | $ | 5,536 | $ | 6,529 | $ | 6,329 | $ | 7,261 | $ | 7,243 | ||||||||||
90+ days and still accruing | — | — | — | — | — | |||||||||||||||
60-89 days past due | 492 | 47 | 70 | — | 214 | |||||||||||||||
30-59 days past due | 780 | 637 | 1,148 | 1,296 | 2,096 | |||||||||||||||
Current | 383,445 | 418,050 | 438,727 | 458,039 | 485,102 | |||||||||||||||
Total home equity | $ | 390,253 | $ | 425,263 | $ | 446,274 | $ | 466,596 | $ | 494,655 | ||||||||||
Residential real estate | ||||||||||||||||||||
Nonaccrual | $ | 21,553 | $ | 26,071 | $ | 22,069 | $ | 19,529 | $ | 18,965 | ||||||||||
90+ days and still accruing | — | — | — | — | 605 | |||||||||||||||
60-89 days past due | 944 | 1,635 | 814 | 1,506 | 345 | |||||||||||||||
30-59 days past due | 13,768 | 12,584 | 2,443 | 4,400 | 28,983 | |||||||||||||||
Current | 1,385,708 | 1,219,308 | 1,359,484 | 1,401,994 | 1,328,491 | |||||||||||||||
Total residential real estate | $ | 1,421,973 | $ | 1,259,598 | $ | 1,384,810 | $ | 1,427,429 | $ | 1,377,389 | ||||||||||
Premium finance receivables | ||||||||||||||||||||
Nonaccrual | $ | 9,690 | $ | 13,264 | $ | 21,080 | $ | 16,460 | $ | 21,058 | ||||||||||
90+ days and still accruing | 4,783 | 12,792 | 12,177 | 35,638 | 16,505 | |||||||||||||||
60-89 days past due | 5,113 | 27,801 | 38,286 | 42,353 | 12,730 | |||||||||||||||
30-59 days past due | 31,373 | 49,274 | 80,732 | 61,160 | 70,185 | |||||||||||||||
Current | 10,019,079 | 9,808,794 | 9,396,701 | 9,244,965 | 8,566,216 | |||||||||||||||
Total premium finance receivables | $ | 10,070,038 | $ | 9,911,925 | $ | 9,548,976 | $ | 9,400,576 | $ | 8,686,694 | ||||||||||
Consumer and other | ||||||||||||||||||||
Nonaccrual | $ | 497 | $ | 436 | $ | 422 | $ | 427 | $ | 403 | ||||||||||
90+ days and still accruing | 161 | 264 | 175 | 156 | 78 | |||||||||||||||
60-89 days past due | 8 | 24 | 273 | 4 | 625 | |||||||||||||||
30-59 days past due | 74 | 136 | 493 | 281 | 207 | |||||||||||||||
Current | 35,243 | 31,328 | 53,991 | 47,457 | 35,853 | |||||||||||||||
Total consumer and other | $ | 35,983 | $ | 32,188 | $ | 55,354 | $ | 48,325 | $ | 37,166 | ||||||||||
Total loans, net of unearned income | ||||||||||||||||||||
Nonaccrual | $ | 94,115 | $ | 114,150 | $ | 160,751 | $ | 151,116 | $ | 160,415 | ||||||||||
90+ days and still accruing | 4,944 | 13,363 | 12,352 | 37,168 | 18,945 | |||||||||||||||
60-89 days past due | 28,005 | 41,585 | 49,910 | 79,295 | 32,999 | |||||||||||||||
30-59 days past due | 151,704 | 139,128 | 186,549 | 166,385 | 262,668 | |||||||||||||||
Current | 32,892,465 | 31,770,847 | 31,725,993 | 30,968,939 | 27,332,294 | |||||||||||||||
Total loans, net of unearned income | $ | 33,171,233 | $ | 32,079,073 | $ | 32,135,555 | $ | 31,402,903 | $ | 27,807,321 |
TABLE 13: NON-PERFORMING ASSETS AND TROUBLED DEBT RESTRUCTURINGS ("TDRs")
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | |||||||||||||||
(Dollars in thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||
Loans past due greater than 90 days and still accruing (1): | |||||||||||||||||||
Commercial | $ | — | $ | 307 | $ | — | $ | 1,374 | $ | 1,241 | |||||||||
Commercial real estate | — | — | — | — | 516 | ||||||||||||||
Home equity | — | — | — | — | — | ||||||||||||||
Residential real estate | — | — | — | — | 605 | ||||||||||||||
Premium finance receivables | 4,783 | 12,792 | 12,177 | 35,638 | 16,505 | ||||||||||||||
Consumer and other | 161 | 264 | 175 | 156 | 78 | ||||||||||||||
Total loans past due greater than 90 days and still accruing | 4,944 | 13,363 | 12,352 | 37,168 | 18,945 | ||||||||||||||
Non-accrual loans: | |||||||||||||||||||
Commercial | 22,459 | 21,743 | 42,036 | 42,882 | 49,916 | ||||||||||||||
Commercial real estate | 34,380 | 46,107 | 68,815 | 64,557 | 62,830 | ||||||||||||||
Home equity | 5,536 | 6,529 | 6,329 | 7,261 | 7,243 | ||||||||||||||
Residential real estate | 21,553 | 26,071 | 22,069 | 19,529 | 18,965 | ||||||||||||||
Premium finance receivables | 9,690 | 13,264 | 21,080 | 16,460 | 21,058 | ||||||||||||||
Consumer and other | 497 | 436 | 422 | 427 | 403 | ||||||||||||||
Total non-accrual loans | 94,115 | 114,150 | 160,751 | 151,116 | 160,415 | ||||||||||||||
Total non-performing loans: | |||||||||||||||||||
Commercial | 22,459 | 22,050 | 42,036 | 44,256 | 51,157 | ||||||||||||||
Commercial real estate | 34,380 | 46,107 | 68,815 | 64,557 | 63,346 | ||||||||||||||
Home equity | 5,536 | 6,529 | 6,329 | 7,261 | 7,243 | ||||||||||||||
Residential real estate | 21,553 | 26,071 | 22,069 | 19,529 | 19,570 | ||||||||||||||
Premium finance receivables | 14,473 | 26,056 | 33,257 | 52,098 | 37,563 | ||||||||||||||
Consumer and other | 658 | 700 | 597 | 583 | 481 | ||||||||||||||
Total non-performing loans | $ | 99,059 | $ | 127,513 | $ | 173,103 | $ | 188,284 | $ | 179,360 | |||||||||
Other real estate owned | 8,679 | 9,711 | 2,891 | 2,409 | 2,701 | ||||||||||||||
Other real estate owned - from acquisitions | 7,134 | 6,847 | 6,326 | 7,788 | 8,325 | ||||||||||||||
Other repossessed assets | — | — | — | — | — | ||||||||||||||
Total non-performing assets | $ | 114,872 | $ | 144,071 | $ | 182,320 | $ | 198,481 | $ | 190,386 | |||||||||
Accruing TDRs not included within non-performing assets | $ | 46,151 | $ | 47,023 | $ | 46,410 | $ | 48,609 | $ | 47,049 | |||||||||
Total non-performing loans by category as a percent of its own respective category’s period-end balance: | |||||||||||||||||||
Commercial | 0.18 | % | 0.18 | % | 0.34 | % | 0.37 | % | 0.57 | % | |||||||||
Commercial real estate | 0.40 | 0.54 | 0.82 | 0.79 | 0.77 | ||||||||||||||
Home equity | 1.42 | 1.54 | 1.42 | 1.56 | 1.46 | ||||||||||||||
Residential real estate | 1.52 | 2.07 | 1.59 | 1.37 | 1.42 | ||||||||||||||
Premium finance receivables | 0.14 | 0.26 | 0.35 | 0.55 | 0.43 | ||||||||||||||
Consumer and other | 1.83 | 2.17 | 1.08 | 1.21 | 1.29 | ||||||||||||||
Total loans, net of unearned income | 0.30 | % | 0.40 | % | 0.54 | % | 0.60 | % | 0.65 | % | |||||||||
Total non-performing assets as a percentage of total assets | 0.25 | % | 0.32 | % | 0.42 | % | 0.46 | % | 0.49 | % | |||||||||
Allowance for credit losses as a percentage of non-accrual loans | 341.29 | % | 332.82 | % | 241.93 | % | 246.90 | % | 157.97 | % | |||||||||
(1) As of March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020, and March 31, 2020, no TDRs were past due greater than 90 days and still accruing interest.
Non-performing Loans Rollforward
Three Months Ended | ||||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | ||||||||||||||||||||
(In thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||||||
Balance at beginning of period | $ | 127,513 | $ | 173,103 | $ | 188,284 | $ | 179,360 | $ | 117,588 | ||||||||||||||
Additions from becoming non-performing in the respective period | 9,894 | 13,224 | 19,771 | 20,803 | 32,195 | |||||||||||||||||||
Additions from the adoption of ASU 2016-13 | — | — | — | — | 37,285 | |||||||||||||||||||
Return to performing status | (654 | ) | (1,000 | ) | (6,202 | ) | (2,566 | ) | (486 | ) | ||||||||||||||
Payments received | (22,731 | ) | (30,146 | ) | (3,733 | ) | (11,201 | ) | (7,949 | ) | ||||||||||||||
Transfer to OREO and other repossessed assets | (1,372 | ) | (12,662 | ) | (598 | ) | — | (1,297 | ) | |||||||||||||||
Charge-offs | (2,952 | ) | (7,817 | ) | (6,583 | ) | (12,884 | ) | (2,551 | ) | ||||||||||||||
Net change for niche loans (1) | (10,639 | ) | (7,189 | ) | (17,836 | ) | 14,772 | 4,575 | ||||||||||||||||
Balance at end of period | $ | 99,059 | $ | 127,513 | $ | 173,103 | $ | 188,284 | $ | 179,360 |
(1) This includes activity for premium finance receivables and indirect consumer loans.
TDRs
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | |||||||||||||||
(In thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | ||||||||||||||
Accruing TDRs: | |||||||||||||||||||
Commercial | $ | 7,536 | $ | 7,699 | $ | 7,863 | $ | 5,338 | $ | 6,500 | |||||||||
Commercial real estate | 9,478 | 10,549 | 10,846 | 19,106 | 18,043 | ||||||||||||||
Residential real estate and other | 29,137 | 28,775 | 27,701 | 24,165 | 22,506 | ||||||||||||||
Total accrual | $ | 46,151 | $ | 47,023 | $ | 46,410 | $ | 48,609 | $ | 47,049 | |||||||||
Non-accrual TDRs: (1) | |||||||||||||||||||
Commercial | $ | 5,583 | $ | 10,491 | $ | 13,132 | $ | 20,788 | $ | 17,206 | |||||||||
Commercial real estate | 1,309 | 6,177 | 13,601 | 8,545 | 14,420 | ||||||||||||||
Residential real estate and other | 3,540 | 4,501 | 5,392 | 5,606 | 4,962 | ||||||||||||||
Total non-accrual | $ | 10,432 | $ | 21,169 | $ | 32,125 | $ | 34,939 | $ | 36,588 | |||||||||
Total TDRs: | |||||||||||||||||||
Commercial | $ | 13,119 | $ | 18,190 | $ | 20,995 | $ | 26,126 | $ | 23,706 | |||||||||
Commercial real estate | 10,787 | 16,726 | 24,447 | 27,651 | 32,463 | ||||||||||||||
Residential real estate and other | 32,677 | 33,276 | 33,093 | 29,771 | 27,468 | ||||||||||||||
Total TDRs | $ | 56,583 | $ | 68,192 | $ | 78,535 | $ | 83,548 | $ | 83,637 |
(1) Included in total non-performing loans.
Other Real Estate Owned
Three Months Ended | ||||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | ||||||||||||||||||||
(In thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||||||
Balance at beginning of period | $ | 16,558 | $ | 9,217 | $ | 10,197 | $ | 11,026 | $ | 15,171 | ||||||||||||||
Disposals/resolved | (2,162 | ) | (3,839 | ) | (1,532 | ) | (612 | ) | (4,793 | ) | ||||||||||||||
Transfers in at fair value, less costs to sell | 1,587 | 11,508 | 777 | — | 954 | |||||||||||||||||||
Additions from acquisition | — | — | — | — | — | |||||||||||||||||||
Fair value adjustments | (170 | ) | (328 | ) | (225 | ) | (217 | ) | (306 | ) | ||||||||||||||
Balance at end of period | $ | 15,813 | $ | 16,558 | $ | 9,217 | $ | 10,197 | $ | 11,026 | ||||||||||||||
Period End | ||||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | ||||||||||||||||||||
Balance by Property Type: | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||||||
Residential real estate | $ | 2,713 | $ | 2,324 | $ | 1,839 | $ | 1,382 | $ | 1,684 | ||||||||||||||
Residential real estate development | 1,287 | 1,691 | — | — | — | |||||||||||||||||||
Commercial real estate | 11,813 | 12,543 | 7,378 | 8,815 | 9,342 | |||||||||||||||||||
Total | $ | 15,813 | $ | 16,558 | $ | 9,217 | $ | 10,197 | $ | 11,026 |
TABLE 14: NON-INTEREST INCOME
Three Months Ended | Q1 2021 compared to Q4 2020 | Q1 2021 compared to Q1 2020 | ||||||||||||||||||||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | ||||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | $ Change | % Change | $ Change | % Change | |||||||||||||||||||||||||||||||||
Brokerage | $ | 5,040 | $ | 4,740 | $ | 4,563 | $ | 4,147 | $ | 5,281 | $ | 300 | 6 | % | $ | (241 | ) | (5 | ) | % | ||||||||||||||||||||||
Trust and asset management | 24,269 | 22,062 | 20,394 | 18,489 | 20,660 | 2,207 | 10 | 3,609 | 17 | |||||||||||||||||||||||||||||||||
Total wealth management | 29,309 | 26,802 | 24,957 | 22,636 | 25,941 | 2,507 | 9 | 3,368 | 13 | |||||||||||||||||||||||||||||||||
Mortgage banking | 113,494 | 86,819 | 108,544 | 102,324 | 48,326 | 26,675 | 31 | 65,168 | 135 | |||||||||||||||||||||||||||||||||
Service charges on deposit accounts | 12,036 | 11,841 | 11,497 | 10,420 | 11,265 | 195 | 2 | 771 | 7 | |||||||||||||||||||||||||||||||||
Gains (losses) on investment securities, net | 1,154 | 1,214 | 411 | 808 | (4,359 | ) | (60 | ) | (5 | ) | 5,513 | NM | ||||||||||||||||||||||||||||||
Fees from covered call options | — | — | — | — | 2,292 | — | NM | (2,292 | ) | (100 | ) | |||||||||||||||||||||||||||||||
Trading gains (losses), net | 419 | (102 | ) | 183 | (634 | ) | (451 | ) | 521 | NM | 870 | NM | ||||||||||||||||||||||||||||||
Operating lease income, net | 14,440 | 12,118 | 11,717 | 11,785 | 11,984 | 2,322 | 19 | 2,456 | 20 | |||||||||||||||||||||||||||||||||
Other: | ||||||||||||||||||||||||||||||||||||||||||
Interest rate swap fees | 2,488 | 4,930 | 4,029 | 5,693 | 6,066 | (2,442 | ) | (50 | ) | (3,578 | ) | (59 | ) | |||||||||||||||||||||||||||||
BOLI | 1,124 | 2,846 | 1,218 | 1,950 | (1,284 | ) | (1,722 | ) | (61 | ) | 2,408 | NM | ||||||||||||||||||||||||||||||
Administrative services | 1,256 | 1,263 | 1,077 | 933 | 1,112 | (7 | ) | (1 | ) | 144 | 13 | |||||||||||||||||||||||||||||||
Foreign currency remeasurement gains (losses) | 99 | (208 | ) | (54 | ) | (208 | ) | (151 | ) | 307 | NM | 250 | NM | |||||||||||||||||||||||||||||
Early pay-offs of capital leases | (52 | ) | 118 | 165 | 275 | 74 | (170 | ) | NM | (126 | ) | NM | ||||||||||||||||||||||||||||||
Miscellaneous | 10,739 | 10,720 | 6,849 | 6,011 | 12,427 | 19 | — | (1,688 | ) | (14 | ) | |||||||||||||||||||||||||||||||
Total Other | 15,654 | 19,669 | 13,284 | 14,654 | 18,244 | (4,015 | ) | (20 | ) | (2,590 | ) | (14 | ) | |||||||||||||||||||||||||||||
Total Non-Interest Income | $ | 186,506 | $ | 158,361 | $ | 170,593 | $ | 161,993 | $ | 113,242 | $ | 28,145 | 18 | % | $ | 73,264 | 65 | % |
NM - Not meaningful.
TABLE 15: MORTGAGE BANKING
Three Months Ended | ||||||||||||||||||||||||
(Dollars in thousands) | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |||||||||||||||||||
Originations: | ||||||||||||||||||||||||
Retail originations | $ | 1,641,664 | $ | 1,757,093 | $ | 1,590,699 | $ | 1,588,932 | $ | 773,144 | ||||||||||||||
Veterans First originations | 580,303 | 594,151 | 635,876 | 621,878 | 442,957 | |||||||||||||||||||
Total originations for sale (A) | $ | 2,221,967 | $ | 2,351,244 | $ | 2,226,575 | $ | 2,210,810 | $ | 1,216,101 | ||||||||||||||
Originations for investment | 321,858 | 192,107 | 73,711 | 56,954 | 73,727 | |||||||||||||||||||
Total originations | $ | 2,543,825 | $ | 2,543,351 | $ | 2,300,286 | $ | 2,267,764 | $ | 1,289,828 | ||||||||||||||
Purchases as a percentage of originations for sale | 27 | % | 35 | % | 41 | % | 30 | % | 37 | % | ||||||||||||||
Refinances as a percentage of originations for sale | 73 | 65 | 59 | 70 | 63 | |||||||||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||
Production Margin: | ||||||||||||||||||||||||
Production revenue (B) (1) | $ | 71,282 | $ | 70,886 | $ | 94,148 | $ | 93,433 | $ | 49,327 | ||||||||||||||
Production margin (B / A) | 3.21 | % | 3.01 | % | 4.23 | % | 4.23 | % | 4.06 | % | ||||||||||||||
Mortgage Servicing: | ||||||||||||||||||||||||
Loans serviced for others (C) | $ | 11,530,676 | $ | 10,833,135 | $ | 10,139,878 | $ | 9,188,285 | $ | 8,314,634 | ||||||||||||||
MSRs, at fair value (D) | 124,316 | 92,081 | 86,907 | 77,203 | 73,504 | |||||||||||||||||||
Percentage of MSRs to loans serviced for others (D / C) | 1.08 | % | 0.85 | % | 0.86 | % | 0.84 | % | 0.88 | % | ||||||||||||||
Servicing income | $ | 9,636 | $ | 9,829 | $ | 8,118 | $ | 6,908 | $ | 7,031 | ||||||||||||||
Components of MSR: | ||||||||||||||||||||||||
MSR - current period capitalization | $ | 24,616 | $ | 20,343 | $ | 20,936 | $ | 20,351 | $ | 9,447 | ||||||||||||||
MSR - collection of expected cash flows - paydowns | (728 | ) | (688 | ) | (590 | ) | (419 | ) | (547 | ) | ||||||||||||||
MSR - collection of expected cash flows - payoffs | (9,440 | ) | (8,335 | ) | (7,272 | ) | (8,252 | ) | (6,476 | ) | ||||||||||||||
Valuation: | ||||||||||||||||||||||||
MSR - changes in fair value model assumptions | 18,045 | (5,223 | ) | (3,002 | ) | (7,982 | ) | (14,557 | ) | |||||||||||||||
Gain on derivative contract held as an economic hedge, net | — | — | — | 589 | 4,160 | |||||||||||||||||||
MSR valuation adjustment, net of gain on derivative contract held as an economic hedge | $ | 18,045 | $ | (5,223 | ) | $ | (3,002 | ) | $ | (7,393 | ) | $ | (10,397 | ) | ||||||||||
Summary of Mortgage Banking Revenue: | ||||||||||||||||||||||||
Production revenue (1) | $ | 71,282 | $ | 70,886 | $ | 94,148 | $ | 93,433 | $ | 49,327 | ||||||||||||||
Servicing income | 9,636 | 9,829 | 8,118 | 6,908 | 7,031 | |||||||||||||||||||
MSR activity | 32,493 | 6,097 | 10,072 | 4,287 | (7,973 | ) | ||||||||||||||||||
Other | 83 | 7 | (3,794 | ) | (2,304 | ) | (59 | ) | ||||||||||||||||
Total mortgage banking revenue | $ | 113,494 | $ | 86,819 | $ | 108,544 | $ | 102,324 | $ | 48,326 |
(1) Production revenue represents revenue earned from the origination and subsequent sale of mortgages, including gains on loans sold and fees from originations, changes in derivative activity, processing and other related activities, and excludes servicing fees, changes in the fair value of servicing rights and changes to the mortgage recourse obligation and other non-production revenue.
TABLE 16: NON-INTEREST EXPENSE
Three Months Ended | Q1 2021 compared to Q4 2020 | Q1 2021 compared to Q1 2020 | |||||||||||||||||||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | |||||||||||||||||||||||||||||||||||||
(Dollars in thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | $ Change | % Change | $ Change | % Change | ||||||||||||||||||||||||||||||||
Salaries and employee benefits: | |||||||||||||||||||||||||||||||||||||||||
Salaries | $ | 91,054 | $ | 93,535 | $ | 89,849 | $ | 87,105 | $ | 81,286 | $ | (2,481 | ) | (3 | ) | % | $ | 9,768 | 12 | % | |||||||||||||||||||||
Commissions and incentive compensation | 61,367 | 52,383 | 48,475 | 46,151 | 31,575 | 8,984 | 17 | 29,792 | 94 | ||||||||||||||||||||||||||||||||
Benefits | 28,389 | 25,198 | 25,718 | 20,900 | 23,901 | 3,191 | 13 | 4,488 | 19 | ||||||||||||||||||||||||||||||||
Total salaries and employee benefits | 180,809 | 171,116 | 164,042 | 154,156 | 136,762 | 9,693 | 6 | 44,047 | 32 | ||||||||||||||||||||||||||||||||
Equipment | 20,912 | 20,565 | 17,251 | 15,846 | 14,834 | 347 | 2 | 6,078 | 41 | ||||||||||||||||||||||||||||||||
Operating lease equipment depreciation | 10,771 | 9,938 | 9,425 | 9,292 | 9,260 | 833 | 8 | 1,511 | 16 | ||||||||||||||||||||||||||||||||
Occupancy, net | 19,996 | 19,687 | 15,830 | 16,893 | 17,547 | 309 | 2 | 2,449 | 14 | ||||||||||||||||||||||||||||||||
Data processing | 6,048 | 5,728 | 5,689 | 10,406 | 8,373 | 320 | 6 | (2,325 | ) | (28 | ) | ||||||||||||||||||||||||||||||
Advertising and marketing | 8,546 | 9,850 | 7,880 | 7,704 | 10,862 | (1,304 | ) | (13 | ) | (2,316 | ) | (21 | ) | ||||||||||||||||||||||||||||
Professional fees | 7,587 | 6,530 | 6,488 | 7,687 | 6,721 | 1,057 | 16 | 866 | 13 | ||||||||||||||||||||||||||||||||
Amortization of other intangible assets | 2,007 | 2,634 | 2,701 | 2,820 | 2,863 | (627 | ) | (24 | ) | (856 | ) | (30 | ) | ||||||||||||||||||||||||||||
FDIC insurance | 6,558 | 7,016 | 6,772 | 7,081 | 4,135 | (458 | ) | (7 | ) | 2,423 | 59 | ||||||||||||||||||||||||||||||
OREO expense, net | (251 | ) | (114 | ) | (168 | ) | 237 | (876 | ) | (137 | ) | NM | 625 | (71 | ) | ||||||||||||||||||||||||||
Other: | |||||||||||||||||||||||||||||||||||||||||
Commissions - 3rd party brokers | 846 | 764 | 778 | 707 | 865 | 82 | 11 | (19 | ) | (2 | ) | ||||||||||||||||||||||||||||||
Postage | 1,743 | 1,849 | 1,529 | 1,591 | 1,949 | (106 | ) | (6 | ) | (206 | ) | (11 | ) | ||||||||||||||||||||||||||||
Miscellaneous | 21,317 | 26,304 | 26,002 | 24,948 | 21,346 | (4,987 | ) | (19 | ) | (29 | ) | — | |||||||||||||||||||||||||||||
Total other | 23,906 | 28,917 | 28,309 | 27,246 | 24,160 | (5,011 | ) | (17 | ) | (254 | ) | (1 | ) | ||||||||||||||||||||||||||||
Total Non-Interest Expense | $ | 286,889 | $ | 281,867 | $ | 264,219 | $ | 259,368 | $ | 234,641 | $ | 5,022 | 2 | % | $ | 52,248 | 22 | % |
NM - Not meaningful.
TABLE 17: SUPPLEMENTAL NON-GAAP FINANCIAL MEASURES/RATIOS
The accounting and reporting policies of Wintrust conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures and ratios are used by management to evaluate and measure the Company’s performance. These include taxable-equivalent net interest income (including its individual components), taxable-equivalent net interest margin (including its individual components), the taxable-equivalent efficiency ratio, tangible common equity ratio, tangible book value per common share, return on average tangible common equity and pre-tax income, excluding provision for credit losses. Management believes that these measures and ratios provide users of the Company’s financial information a more meaningful view of the performance of the Company's interest-earning assets and interest-bearing liabilities and of the Company’s operating efficiency. Other financial holding companies may define or calculate these measures and ratios differently.
Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis using tax rates effective as of the end of the period. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a fully taxable-equivalent basis is also used in the calculation of the Company’s efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses), measures how much it costs to produce one dollar of revenue. Securities gains or losses are excluded from this calculation to better match revenue from daily operations to operational expenses. Management considers the tangible common equity ratio and tangible book value per common share as useful measurements of the Company’s equity. The Company references the return on average tangible common equity as a measurement of profitability. Management considers pre-tax income, excluding provision for credit losses, as a useful measurement of the Company's core net income.
Three Months Ended | ||||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | ||||||||||||||||||||
(Dollars and shares in thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||||||
Reconciliation of Non-GAAP Net Interest Margin and Efficiency Ratio: | ||||||||||||||||||||||||
(A) Interest Income (GAAP) | $ | 305,469 | $ | 307,981 | $ | 311,156 | $ | 329,816 | $ | 344,067 | ||||||||||||||
Taxable-equivalent adjustment: | ||||||||||||||||||||||||
- Loans | 384 | 324 | 481 | 576 | 860 | |||||||||||||||||||
- Liquidity Management Assets | 500 | 530 | 546 | 538 | 551 | |||||||||||||||||||
- Other Earning Assets | — | 3 | 1 | 3 | 2 | |||||||||||||||||||
(B) Interest Income (non-GAAP) | $ | 306,353 | $ | 308,838 | $ | 312,184 | $ | 330,933 | $ | 345,480 | ||||||||||||||
(C) Interest Expense (GAAP) | $ | 43,574 | $ | 48,584 | $ | 55,220 | $ | 66,685 | $ | 82,624 | ||||||||||||||
(D) Net Interest Income (GAAP) (A minus C) | $ | 261,895 | $ | 259,397 | $ | 255,936 | $ | 263,131 | $ | 261,443 | ||||||||||||||
(E) Net Interest Income (non-GAAP) (B minus C) | $ | 262,779 | $ | 260,254 | $ | 256,964 | $ | 264,248 | $ | 262,856 | ||||||||||||||
Net interest margin (GAAP) | 2.53 | % | 2.53 | % | 2.56 | % | 2.73 | % | 3.12 | % | ||||||||||||||
Net interest margin, fully taxable-equivalent (non-GAAP) | 2.54 | % | 2.54 | % | 2.57 | % | 2.74 | % | 3.14 | % | ||||||||||||||
(F) Non-interest income | $ | 186,506 | $ | 158,361 | $ | 170,593 | $ | 161,993 | $ | 113,242 | ||||||||||||||
(G) Gains (losses) on investment securities, net | 1,154 | 1,214 | 411 | 808 | (4,359 | ) | ||||||||||||||||||
(H) Non-interest expense | 286,889 | 281,867 | 264,219 | 259,368 | 234,641 | |||||||||||||||||||
Efficiency ratio (H/(D+F-G)) | 64.15 | % | 67.67 | % | 62.01 | % | 61.13 | % | 61.90 | % | ||||||||||||||
Efficiency ratio (non-GAAP) (H/(E+F-G)) | 64.02 | % | 67.53 | % | 61.86 | % | 60.97 | % | 61.67 | % | ||||||||||||||
Reconciliation of Non-GAAP Tangible Common Equity Ratio: | ||||||||||||||||||||||||
Total shareholders’ equity (GAAP) | $ | 4,252,511 | $ | 4,115,995 | $ | 4,074,089 | $ | 3,990,218 | $ | 3,700,393 | ||||||||||||||
Less: Non-convertible preferred stock (GAAP) | (412,500 | ) | (412,500 | ) | (412,500 | ) | (412,500 | ) | (125,000 | ) | ||||||||||||||
Less: Intangible assets (GAAP) | (680,052 | ) | (681,747 | ) | (683,314 | ) | (685,581 | ) | (687,626 | ) | ||||||||||||||
(I) Total tangible common shareholders’ equity (non-GAAP) | $ | 3,159,959 | $ | 3,021,748 | $ | 2,978,275 | $ | 2,892,137 | $ | 2,887,767 | ||||||||||||||
(J) Total assets (GAAP) | $ | 45,682,202 | $ | 45,080,768 | $ | 43,731,718 | $ | 43,540,017 | $ | 38,799,847 | ||||||||||||||
Less: Intangible assets (GAAP) | (680,052 | ) | (681,747 | ) | (683,314 | ) | (685,581 | ) | (687,626 | ) | ||||||||||||||
(K) Total tangible assets (non-GAAP) | $ | 45,002,150 | $ | 44,399,021 | $ | 43,048,404 | $ | 42,854,436 | $ | 38,112,221 | ||||||||||||||
Common equity to assets ratio (GAAP) (L/J) | 8.4 | % | 8.2 | % | 8.4 | % | 8.2 | % | 9.2 | % | ||||||||||||||
Tangible common equity ratio (non-GAAP) (I/K) | 7.0 | % | 6.8 | % | 6.9 | % | 6.7 | % | 7.6 | % |
Three Months Ended | ||||||||||||||||||||||||
Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | ||||||||||||||||||||
(Dollars and shares in thousands) | 2021 | 2020 | 2020 | 2020 | 2020 | |||||||||||||||||||
Reconciliation of Non-GAAP Tangible Book Value per Common Share: | ||||||||||||||||||||||||
Total shareholders’ equity | $ | 4,252,511 | $ | 4,115,995 | $ | 4,074,089 | $ | 3,990,218 | $ | 3,700,393 | ||||||||||||||
Less: Preferred stock | (412,500 | ) | (412,500 | ) | (412,500 | ) | (412,500 | ) | (125,000 | ) | ||||||||||||||
(L) Total common equity | $ | 3,840,011 | $ | 3,703,495 | $ | 3,661,589 | $ | 3,577,718 | $ | 3,575,393 | ||||||||||||||
(M) Actual common shares outstanding | 57,023 | 56,770 | 57,602 | 57,574 | 57,545 | |||||||||||||||||||
Book value per common share (L/M) | $ | 67.34 | $ | 65.24 | $ | 63.57 | $ | 62.14 | $ | 62.13 | ||||||||||||||
Tangible book value per common share (non-GAAP) (I/M) | $ | 55.42 | $ | 53.23 | $ | 51.70 | $ | 50.23 | $ | 50.18 | ||||||||||||||
Reconciliation of Non-GAAP Return on Average Tangible Common Equity: | ||||||||||||||||||||||||
(N) Net income applicable to common shares | $ | 146,157 | $ | 94,213 | $ | 97,029 | $ | 19,609 | $ | 60,762 | ||||||||||||||
Add: Intangible asset amortization | 2,007 | 2,634 | 2,701 | 2,820 | 2,863 | |||||||||||||||||||
Less: Tax effect of intangible asset amortization | (522 | ) | (656 | ) | (589 | ) | (832 | ) | (799 | ) | ||||||||||||||
After-tax intangible asset amortization | 1,485 | 1,978 | 2,112 | 1,988 | 2,064 | |||||||||||||||||||
(O) Tangible net income applicable to common shares (non-GAAP) | $ | 147,642 | $ | 96,191 | $ | 99,141 | $ | 21,597 | $ | 62,826 | ||||||||||||||
Total average shareholders' equity | $ | 4,164,890 | $ | 4,050,286 | $ | 4,034,902 | $ | 3,908,846 | $ | 3,710,169 | ||||||||||||||
Less: Average preferred stock | (412,500 | ) | (412,500 | ) | (412,500 | ) | (273,489 | ) | (125,000 | ) | ||||||||||||||
(P) Total average common shareholders' equity | $ | 3,752,390 | $ | 3,637,786 | $ | 3,622,402 | $ | 3,635,357 | $ | 3,585,169 | ||||||||||||||
Less: Average intangible assets | (680,805 | ) | (682,290 | ) | (684,717 | ) | (686,526 | ) | (690,777 | ) | ||||||||||||||
(Q) Total average tangible common shareholders’ equity (non-GAAP) | $ | 3,071,585 | $ | 2,955,496 | $ | 2,937,685 | $ | 2,948,831 | $ | 2,894,392 | ||||||||||||||
Return on average common equity, annualized (N/P) | 15.80 | % | 10.30 | % | 10.66 | % | 2.17 | % | 6.82 | % | ||||||||||||||
Return on average tangible common equity, annualized (non-GAAP) (O/Q) | 19.49 | % | 12.95 | % | 13.43 | % | 2.95 | % | 8.73 | % | ||||||||||||||
Reconciliation of Non-GAAP Pre-Tax, Pre-Provision Income: | ||||||||||||||||||||||||
Income before taxes | $ | 206,859 | $ | 134,711 | $ | 137,284 | $ | 30,703 | $ | 87,083 | ||||||||||||||
Add: Provision for credit losses | (45,347 | ) | 1,180 | 25,026 | 135,053 | 52,961 | ||||||||||||||||||
Pre-tax income, excluding provision for credit losses (non-GAAP) | $ | 161,512 | $ | 135,891 | $ | 162,310 | $ | 165,756 | $ | 140,044 |
WINTRUST SUBSIDIARIES AND LOCATIONS
Wintrust is a financial holding company whose common stock is traded on the Nasdaq Global Select Market (Nasdaq: WTFC). Its 15 community bank subsidiaries are: Lake Forest Bank & Trust Company, N.A., Hinsdale Bank & Trust Company, N.A., Wintrust Bank, N.A., in Chicago, Libertyville Bank & Trust Company, N.A., Barrington Bank & Trust Company, N.A., Crystal Lake Bank & Trust Company, N.A., Northbrook Bank & Trust Company, N.A., Schaumburg Bank & Trust Company, N.A., Village Bank & Trust, N.A., in Arlington Heights, Beverly Bank & Trust Company, N.A. in Chicago, Wheaton Bank & Trust Company, N.A., State Bank of The Lakes, N.A., in Antioch, Old Plank Trail Community Bank, N.A. in New Lenox, St. Charles Bank & Trust Company, N.A. and Town Bank, N.A., in Hartland, Wisconsin.
In addition to the locations noted above, the banks also operate facilities in Illinois in Addison, Algonquin, Aurora, Bloomingdale, Bolingbrook, Buffalo Grove, Burbank, Cary, Clarendon Hills, Crete, Countryside, Darien, Deerfield, Des Plaines, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Evanston, Evergreen Park, Frankfort, Geneva, Glen Ellyn, Glencoe, Glenview, Gurnee, Grayslake, Hanover Park, Highland Park, Highwood, Hoffman Estates, Homer Glen, Itasca, Joliet, Lake Bluff, Lake Villa, Lansing, Lemont, Lindenhurst, Lynwood, Markham, Maywood, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, North Chicago, Northfield, Norridge, Oak Lawn, Oak Brook, Orland Park, Palatine, Park Ridge, Prospect Heights, Ravinia, Riverside, Rolling Meadows, Round Lake Beach, Shorewood, Skokie, South Holland, Spring Grove, Steger, Stone Park, Vernon Hills, Wauconda, Waukegan, Western Springs, Willowbrook, Wilmette, Winnetka and Wood Dale, and in Wisconsin in Albany, Burlington, Clinton, Darlington, Delafield, Delavan, Elm Grove, Genoa City, Kenosha, Lake Geneva, Madison, Menomonee Falls, Milwaukee, Monroe, Pewaukee, Racine, Sharon, Wales, Walworth and Wind Lake, and in Dyer, Indiana and in Naples, Florida.
Additionally, the Company operates various non-bank business units:
- FIRST Insurance Funding and Wintrust Life Finance, each a division of Lake Forest Bank & Trust Company, N.A., serve commercial and life insurance loan customers, respectively, throughout the United States.
- First Insurance Funding of Canada serves commercial insurance loan customers throughout Canada.
- Tricom, Inc. of Milwaukee provides high-yielding, short-term accounts receivable financing and value-added out-sourced administrative services, such as data processing of payrolls, billing and cash management services, to temporary staffing service clients located throughout the United States.
- Wintrust Mortgage, a division of Barrington Bank & Trust Company, N.A., engages primarily in the origination and purchase of residential mortgages for sale into the secondary market through origination offices located throughout the United States. Loans are also originated nationwide through relationships with wholesale and correspondent offices.
- Wintrust Investments, LLC is a broker-dealer providing a full range of private client and brokerage services to clients and correspondent banks located primarily in the Midwest.
- Great Lakes Advisors LLC provides money management services and advisory services to individual accounts.
- The Chicago Trust Company, N.A., a trust subsidiary, allows Wintrust to service customers’ trust and investment needs at each banking location.
- Wintrust Asset Finance offers direct leasing opportunities.
- CDEC provides Qualified Intermediary services (as defined by U.S. Treasury regulations) for taxpayers seeking to structure tax-deferred like-kind exchanges under Internal Revenue Code Section 1031.
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information can be identified through the use of words such as “intend,” “plan,” “project,” “expect,” “anticipate,” “believe,” “estimate,” “contemplate,” “possible,” “will,” “may,” “should,” “would” and “could.” Forward-looking statements and information are not historical facts, are premised on many factors and assumptions, and represent only management’s expectations, estimates and projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict and which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company’s 2020 Annual Report on Form 10-K and in any of the Company’s subsequent SEC filings. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be deemed to include, among other things, statements relating to the Company’s future financial performance, the performance of its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory developments, securities that the Company may offer from time to time, and management’s long-term performance goals, as well as statements relating to the anticipated effects on financial condition and results of operations from expected developments or events, the Company’s business and growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth and plans to form additional de novo banks or branch offices. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:
- the severity, magnitude and duration of the COVID-19 pandemic and the direct and indirect impact of such pandemic, as well as responses to the pandemic by the government, businesses and consumers, on our operations and personnel, commercial activity and demand across our business and our customers’ businesses;
- the disruption of global, national, state and local economies associated with the COVID-19 pandemic, which could affect the Company’s liquidity and capital positions, impair the ability of our borrowers to repay outstanding loans, impair collateral values and further increase our allowance for credit losses;
- the impact of the COVID-19 pandemic on our financial results, including possible lost revenue and increased expenses (including the cost of capital), as well as possible goodwill impairment charges;
- economic conditions that affect the economy, housing prices, the job market and other factors that may adversely affect the Company’s liquidity and the performance of its loan portfolios, particularly in the markets in which it operates;
- negative effects suffered by us or our customers resulting from changes in U.S. trade policies;
- the extent of defaults and losses on the Company’s loan portfolio, which may require further increases in its allowance for credit losses;
- estimates of fair value of certain of the Company’s assets and liabilities, which could change in value significantly from period to period;
- the financial success and economic viability of the borrowers of our commercial loans;
- commercial real estate market conditions in the Chicago metropolitan area and southern Wisconsin;
- the extent of commercial and consumer delinquencies and declines in real estate values, which may require further increases in the Company’s allowance for credit losses;
- inaccurate assumptions in our analytical and forecasting models used to manage our loan portfolio;
- changes in the level and volatility of interest rates, the capital markets and other market indices (including developments and volatility arising from or related to the COVID-19 pandemic) that may affect, among other things, the Company’s liquidity and the value of its assets and liabilities;
- a prolonged period of near zero interest rates or potentially negative interest rates, either broadly or for some types of instruments, which may affect the Company’s net interest income and net interest margin, and which could materially adversely affect the Company’s profitability;
- competitive pressures in the financial services business which may affect the pricing of the Company’s loan and deposit products as well as its services (including wealth management services), which may result in loss of market share and reduced income from deposits, loans, advisory fees and income from other products;
- failure to identify and complete favorable acquisitions in the future or unexpected difficulties or developments related to the integration of the Company’s recent or future acquisitions;
- unexpected difficulties and losses related to FDIC-assisted acquisitions;
- harm to the Company’s reputation;
- any negative perception of the Company’s financial strength;
- ability of the Company to raise additional capital on acceptable terms when needed;
- disruption in capital markets, which may lower fair values for the Company’s investment portfolio;
- ability of the Company to use technology to provide products and services that will satisfy customer demands and create efficiencies in operations and to manage risks associated therewith;
- failure or breaches of our security systems or infrastructure, or those of third parties;
- security breaches, including denial of service attacks, hacking, social engineering attacks, malware intrusion or data corruption attempts and identity theft;
- adverse effects on our information technology systems resulting from failures, human error or cyberattacks;
- adverse effects of failures by our vendors to provide agreed upon services in the manner and at the cost agreed, particularly our information technology vendors;
- increased costs as a result of protecting our customers from the impact of stolen debit card information;
- accuracy and completeness of information the Company receives about customers and counterparties to make credit decisions;
- ability of the Company to attract and retain senior management experienced in the banking and financial services industries;
- environmental liability risk associated with lending activities;
- the impact of any claims or legal actions to which the Company is subject, including any effect on our reputation;
- losses incurred in connection with repurchases and indemnification payments related to mortgages and increases in reserves associated therewith;
- the loss of customers as a result of technological changes allowing consumers to complete their financial transactions without the use of a bank;
- the soundness of other financial institutions;
- the expenses and delayed returns inherent in opening new branches and de novo banks;
- liabilities, potential customer loss or reputational harm related to closings of existing branches;
- examinations and challenges by tax authorities, and any unanticipated impact of the Tax Act;
- changes in accounting standards, rules and interpretations, and the impact on the Company’s financial statements;
- the ability of the Company to receive dividends from its subsidiaries;
- uncertainty about the discontinued use of LIBOR and transition to an alternative rate;
- a decrease in the Company’s capital ratios, including as a result of declines in the value of its loan portfolios, or otherwise;
- legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies, including those changes that are in response to the COVID-19 pandemic, including without limitation the CARES Act, the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act, and the rules and regulations that may be promulgated thereunder;
- a lowering of our credit rating;
- changes in U.S. monetary policy and changes to the Federal Reserve’s balance sheet, including changes in response to the COVID-19 pandemic or otherwise;
- regulatory restrictions upon our ability to market our products to consumers and limitations on our ability to profitably operate our mortgage business;
- increased costs of compliance, heightened regulatory capital requirements and other risks associated with changes in regulation and the regulatory environment;
- the impact of heightened capital requirements;
- increases in the Company’s FDIC insurance premiums, or the collection of special assessments by the FDIC;
- delinquencies or fraud with respect to the Company’s premium finance business;
- credit downgrades among commercial and life insurance providers that could negatively affect the value of collateral securing the Company’s premium finance loans;
- the Company’s ability to comply with covenants under its credit facility; and
- fluctuations in the stock market, which may have an adverse impact on the Company’s wealth management business and brokerage operation.
Therefore, there can be no assurances that future actual results will correspond to these forward-looking statements. The reader is cautioned not to place undue reliance on any forward-looking statement made by the Company. Any such statement speaks only as of the date the statement was made or as of such date that may be referenced within the statement. The Company undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events after the date of the press release. Persons are advised, however, to consult further disclosures management makes on related subjects in its reports filed with the Securities and Exchange Commission and in its press releases.
CONFERENCE CALL, WEBCAST AND REPLAY
The Company will hold a conference call on Tuesday, April 20, 2021 at 10:00 a.m. (Central Time) regarding first quarter 2021 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #3477928. A simultaneous audio-only webcast and replay of the conference call as well as an accompanying slide presentation may be accessed via the Company’s website at https://www.wintrust.com, Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the first quarter 2021 earnings press release will be available on the home page of the Company’s website at https://www.wintrust.com and at the Investor Relations, Investor News and Events, Press Releases link on its website.
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