Release Date: July 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Wintrust Financial Corp (WTFC, Financial) reported record quarterly net income of $195.5 million, up from $189 million in the previous quarter.
- Net interest income reached a quarterly record of $547 million, driven by a $2.3 billion increase in loan growth.
- The company experienced strong deposit growth of over $2 billion, contributing to total assets growing to $69 billion.
- Credit quality remains strong, with non-performing loans and charge-offs at stable and low levels.
- The company successfully completed a $425 million preferred stock offering to redeem higher-cost preferred stock, optimizing their capital structure.
Negative Points
- Residential mortgage activity remains muted due to the current rate environment, impacting potential revenue from this segment.
- Non-interest expenses increased by $15.4 million from the prior quarter, driven by higher employee benefits and marketing expenses.
- The company faces increased competition in loan pricing, particularly in high-quality commercial real estate deals, leading to some margin compression.
- The commercial real estate non-performing loans slightly increased, although still at low levels, indicating potential risk in this segment.
- The company anticipates a higher than normal preferred dividend in the third quarter due to the timing of the Series F preferred stock issuance.
Q & A Highlights
Q: Can you provide insights on the expectations for loan growth in the third quarter, considering the strong performance in the second quarter?
A: Richard Murphy, Vice Chairman and Chief Lending Officer, mentioned that loan growth in the third quarter is expected to be in line with previous trends, particularly at the higher end of the range. David Dykstra, Vice Chairman and Chief Operating Officer, added that they anticipate mid- to high-single-digit growth based on the June 30 balance going forward for the second half of the year.
Q: Where is Wintrust finding the best opportunities for deposit growth, and can this keep pace with loan growth?
A: Timothy Crane, President and CEO, explained that deposit growth is broad-based, with significant contributions from commercial growth, which also brings in treasury management revenues. While the $2 billion deposit growth in the second quarter was strong, it should not be considered the norm going forward.
Q: How does the competitive pricing environment affect net interest income (NII) growth, and is the current growth rate sustainable?
A: David Dykstra noted that they expect mid- to high-single-digit loan growth with a relatively stable margin. The deposit pricing remains competitive, but Wintrust has been able to fund growth with deposits. Timothy Crane added that despite the $2 billion growth in deposits, costs were slightly down, indicating a stable environment.
Q: What is the outlook for the commercial real estate (CRE) office portfolio, given the slight increase in non-performing loans?
A: Richard Murphy stated that the increase in non-performing loans was due to a couple of deals, but nothing particularly large or concerning. The portfolio remains stable, and they are managing through it as usual.
Q: How is the sentiment among core commercial clients, and has it changed throughout the quarter?
A: Richard Murphy observed that while there wasn't a material change in production during the quarter, sentiment has improved. Clients are cautiously optimistic, with more confidence that the economy is stable, despite ongoing regulatory and economic uncertainties.
Q: How does Wintrust plan to manage its capital targets, especially after the recent preferred stock issuance?
A: David Dykstra explained that they expect capital to grow by about 10 basis points per quarter with mid- to high-single-digit loan growth. The CET1 ratio is considered a floor at 10%, and they aim to maintain or grow it unless a significant opportunity arises.
Q: What is the strategy for managing the margin and hedging portfolio in light of strong loan growth?
A: David Dykstra mentioned that they feel well-positioned for the next year with their current hedging portfolio. They plan to add to the later maturities opportunistically to maintain margin protection as loan growth continues.
Q: How does Wintrust view the current M&A environment, and what factors are driving potential opportunities?
A: Timothy Crane noted that M&A activity has picked up due to various factors, including succession issues and the challenges of running small banks. Wintrust remains disciplined but opportunistic, looking for cultural and market fit in potential acquisitions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
