Wintrust Financial Reports Record Third-Quarter Net Income of $239 Million

Wintrust Financial (NASDAQ: WTFC ) reported third-quarter financial results on Tuesday. The transcript from the company's third-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary Wintrust Financial Corporation reported a seventh consecutive quarter of record net income, reaching $239 million, up from $234 million in the previous quarter. The company's strategic initiatives focused on enhancing customer experience, disciplined growth, and investing for the future, including the acquisition to grow its guardianship services business, which is expected to boost wealth management revenues.

Total deposits increased by approximately $1.3 billion, with loan growth of roughly $1.1 billion, and net interest income improved by $24.2 million to $621.6 million, despite a slight decline in the net interest margin by 1 basis point to 3.51%. Noninterest income decreased slightly due to lower mortgage banking revenue and security gains, while noninterest expenses remained stable with a slight increase to $405.7 million. Loan growth was broad-based across commercial real estate, life loans, and residential mortgage loans, with total loans increasing by $4.7 billion year-over-year.

The company plans to redeem $108 million of high-rate debt in the fourth quarter, which is expected to contribute to cost savings. Management expressed confidence in continued loan and deposit growth in the mid to high single digits for the fourth quarter, with a stable net interest margin and strong capital position. Wintrust Financial outperformed the Illinois and U.S. banking industry on deposit growth, gaining market share in its core Illinois market with a 9.2% year-over-year increase.

Full Transcript OPERATOR Welcome to Wintrust Financial Corporation's third quarter and year-to-date 2026 earnings conference call. A review of the results will be made by Tim Crane, President and Chief Executive Officer; David Dykstra, Vice Chairman and Chief Operating Officer; and Richard Murphy, Vice Chairman and Chief Lending Officer. As part of their reviews, the presenters may make reference to both the earnings press release and the earnings release presentation. Following their presentations, there will be a formal question and answer session.

During the course of today's call, Wintrust management may make statements that constitute projections, expectations, beliefs, or similar forward-looking statements. Actual results could differ materially from the results anticipated or projected in any such forward-looking statements. The Company's forward-looking assumptions that could cause the actual results to differ materially from the information discussed during this call are detailed in our earnings press release and in the Company's most recent Form 10-K and any subsequent filings with the SEC. Also, our remarks may reference certain non-GAAP financial measures.

Our earnings press release and earnings release presentation include a reconciliation of each non-GAAP financial measure to the nearest comparable GAAP financial measure. As a reminder, this conference call is being recorded. I will now turn the conference over to Mr. Tim Crane.

Tim Crane (President and Chief Executive Officer) Good morning and welcome to Wintrust's third quarter 2026 earnings call. In addition to those Lateef introduced, I'm joined by Chief Financial Officer Dave Stoehr and Chief Legal Officer Kate Boge. I will begin with a brief overview of the quarter; Dave Dykstra and Rich will provide a deeper look at the key results and I'll be back to share some final thoughts before we open to your questions. In the third quarter, we recorded our seventh consecutive quarter of record net income.

Net income was $239 million, up from $234 million in the prior quarter. Net income and net interest income growth continue to be a function of a stable margin and solid core business growth. Both loans and deposits were up nicely during the quarter in line with our historical results and our expectations for the quarter. Our efficiency ratio improved and we continue to generate operating leverage as expenses remain appropriate relative to revenue growth.

To generate these results, we continue to deliver on our three key strategic priorities: to deliver an exceptional and differentiated customer experience, to pursue strategic and disciplined growth, and further build out our foundation by investing for our future. On September 1, we closed the previously announced acquisition to grow our guardianship services business. This transaction will help boost wealth management revenues and income going forward. We also opened four new branches during the quarter with two others opening this month.

They're all off to a good start in terms of deposit gathering and growing new Wintrust households. These new branches help fill in our Midwestern footprint as we continue to deliver our high-touch, high-tech approach to meeting customer banking needs. In fact, the latest FDIC deposit market share data shows that Wintrust outperformed both Illinois and the U.S. banking industry on deposit growth.

To be more specific, in our core Illinois market, Wintrust continued to gain market share, growing deposits 9.2% year over year, more than double the state's 4.4% growth rate and well above the U.S. industry average of 5.2%. We remain well positioned in Wisconsin and West Michigan as well, with plenty of growth opportunities in all of our markets. Growing core deposits remains the single most important thing we do to enhance the value of a franchise and to ensure our continued success.

Overall, I'm pleased with our results this quarter. Another consistent quarter of solid performance driving continued value for our shareholders. Let me turn it over to Dave for more on what drove our results. David Dykstra (Vice Chairman and Chief Operating Officer) Great.

Thanks, Tim. Let me start with the balance sheet. Both loans and deposits grew at an annualized rate of 8% for the third quarter relative to the prior quarter. Total deposits were up approximately $1.3 billion during the quarter, which funded solid third quarter loan growth of roughly $1.1 billion.

Yields and rates on major balance sheet categories were essentially flat with the prior quarter. We were particularly pleased that, given the strong deposit growth during the quarter, interest-bearing deposit costs were actually down one basis point, matching the one basis point decline in loan yields. I would note that period-end loans were approximately $822 million higher than average loans for the third quarter, giving us a great start to achieving a higher level of average earning assets in the final quarter of 2026. Turning to the income statement results, this was a very solid operating quarter, producing another record level of quarterly net income.

Net interest income improved by $24.2 million compared to the second quarter of 2026 to $621.6 million. The improvement in net interest income was primarily the result of an increase of $2.1 billion in average earning assets, which was offset slightly by a 1 basis point decline in the net interest margin, which was 3.51% for the third quarter. The 1 basis point decline in the net interest margin was caused by the impact of having one additional day in the quarter. Interest rate changes and business mix changes essentially netted to no impact on the margin.

The net interest margin has remained in the range of 3.50% to 3.59% during the last 11 quarters, showing the sustainability of this metric, and given our balance sheet structure and our established interest rate hedging positions, we believe that our interest rate sensitivity should continue to remain relatively neutral even with a few rate cuts in either direction. The provision for credit losses continued to remain relatively consistent with prior quarters, staying in the $20 to $30 million range for the seventh consecutive quarter, as the overall credit environment and our asset quality has remained stable.

Turning to other noninterest income and noninterest expenses, total noninterest income was $136.3 million in the third quarter, which was a decrease from the $141.3 million recorded in the prior quarter. This roughly $5 million decline was primarily a result of $1.9 million of lower mortgage banking revenue as higher rates weighed on mortgage loan originations and approximately $3.5 million less security gains and losses, as the unrealized gains in the second quarter swung around to unrealized losses in the third quarter.

As to noninterest expense categories, noninterest expenses were consistent with our expectations noted during our second quarter conference call and totaled $405.7 million in the third quarter, up $8.1 million from the prior quarter. The second quarter included a $5.2 million reversal of an accrued FDIC insurance expense related to the final accrual of the previously imposed special assessments by the FDIC. So if we adjust for that reversal, expenses were up only $2.9 million from the prior quarter and reflect smaller levels of increases in a variety of other expense categories to support the continued growth of the company.

Additionally, the net overhead and efficiency ratios have remained relatively stable through the first nine months of the year, helping the company produce solid operating leverage thus far in 2026. In summary, I'll reiterate what Tim said. This was another very solid and consistent operating quarter. The company achieved strong loan and deposit growth, a relatively stable net interest margin, another record level of net income, and a continued low level of nonperforming assets.

In addition to the operating performance, I'll add one additional comment regarding the planned use of cash in the fourth quarter. The company has already or intends to redeem seven issuances of our trust preferred securities, which are shown on our balance sheet as junior subordinated debentures. The redemptions will total approximately $108 million and will retire higher-priced floating-rate debentures that on average have a spread to 3-month SOFR of approximately 309 basis points. So some of our highest rate debt will be retired during the fourth quarter.

So with that I'll conclude my comments and turn it over to Rich to discuss credit. Richard Murphy (Vice Chairman and Chief Lending Officer) Thanks, Dave. As detailed on slide 7 of the investor presentation, third quarter loan growth was strong and broad-based. The three primary drivers were $690 million in core commercial real estate loan growth, reflecting both new lending opportunities and funding of previously committed loans, $226 million in growth in Wintrust life loans, and $153 million in residential mortgage loan growth.

Every lending segment recorded positive growth during the quarter. On a year-over-year basis, total loans increased by $4.7 billion, or 9%. Turning to credit quality, slide 15 details continued strong performance across our portfolio. Nonperforming loans decreased slightly from $179.3 million, or 0.32% of total loans, to $176.9 million, or 0.31%, and remained at very manageable levels.

Charge-offs were 15 basis points for the quarter, up slightly from the prior quarter, and continue to reflect a stable and benign credit environment. That assessment is further supported by the historical nonperforming asset trends on slide 16 and the consistent levels of special mention and substandard loans on slide 15. This quarter again demonstrates our commitment to identifying problems early and charging down loans where appropriate. Our goal, as always, is to stay ahead of potential credit challenges.

As we've noted on recent calls, we remain highly focused on our commercial real estate exposure, particularly in light of potential higher interest rates in the environment. As detailed on slide 19, this portfolio continued to perform well during the third quarter. CRE nonperforming loans declined from 12 basis points to 9 basis points. Charge-offs of 2 basis points in the second quarter shifted to 5 basis points of recoveries in the third quarter.

Overall, customers have remained resilient despite continued uncertainty around the geopolitical environment, interest rates, inflation, and the broader economy. We continue to see healthy activity across our markets and client conversations reflect cautious optimism about the business environment. These close relationships provide valuable real-time insights into changing conditions, while our disciplined risk management approach positions us well as the economic environment continues to evolve. That concludes my comments on lending and credit, and Tim, I'll turn it back to you.

Tim Crane (President and Chief Executive Officer) Great. Thank you, Rich. Just some final thoughts as we close out the year. Our targets remain unchanged for the fourth quarter based on continued positive feedback from clients, solid pipelines, and the unique market position we occupy.

We expect loan and deposit growth in the mid to high single digits. We've consistently funded our loan growth with appropriately priced deposits and we expect that to continue in the fourth quarter. The net interest margin should remain stable, plus or minus 3.5%. We believe that any further rate increases will result in loan yields and deposit costs moving roughly in concert and accordingly should not materially impact the margin.

That said, as our loan book is largely variable priced, increases in SOFR or other loan index rates in advance of a rate increase or market factors that moderate increases in deposit cost could be supportive of a slightly higher margin. Our capital position remains strong and increased during the quarter. The capital priorities we have discussed on prior calls remain unchanged. As always, our team focuses on delivering the exceptional customer service that is our key differentiator going into 2027.

We feel good about our competitive position in the market, our ability to continue to grow our business, and to deliver value for our shareholders. With that, Lateef, could you please open the line for questions? OPERATOR As a reminder, to ask a question, you will need to press star-11 on your telephone to remove yourself from the queue. You may press star-11 again.

Please stand by while we compile the Q&A roster. Our first question comes from the line of John Armstrong of RBC Capital Markets. Your line is open, John. John Armstrong (Analyst at RBC Capital Markets) Hey, good morning.

Tim Crane (President and Chief Executive Officer) Nice job. Thanks, John. John Armstrong (Analyst at RBC Capital Markets) Yep. Maybe Tim or Rich.

Let's just start with the lending pipelines. You know, Rich, anything else you can share in terms of what you're seeing in terms of the pipelines, whether they're strengthening or not, and then maybe help us understand the CRE growth a little bit more this quarter. I know you touched on it in your prepared comments, but what drove that? Richard Murphy (Vice Chairman and Chief Lending Officer) Sure, yeah, pipelines are good, John.

I mean, we've said this really for the last few calls. You know, it's, I think it's indicative of the economy that's holding together pretty well. But we continue to have a really nice position in our market, both in Chicago, but Michigan, Wisconsin all seem to be taking market share pretty nicely. And so as long as we can continue to execute on that, the pipelines are going to reflect some pretty good numbers.

So if I look down the major categories, I mean CRE shows pretty good momentum there. C&I, we've had some really nice wins here over the last couple quarters and that continues to show up in the pipeline. So, you know, again, feel pretty good about that. Now, you know, we don't know where the economy is going to go and, you know, where things will happen.

But generally speaking, as I look at the pipelines, you know, we feel good. As it relates to the CRE, I mean, CRE for the quarter is a little bit of a timing issue. If you look back at last quarter, we were just over 100 million in total funding, so if you add those two quarters together, they kind of come in right where the last four quarters are, which is right around 300 million or around 9%. And as I look at what funded during the third quarter, we had a number of larger owner-occupied and strong investor-type deals that we feel good about.

The thing about real estate too for us is that these are not transactional deals. These are very much relationship-oriented deals that, if I look at the names that we funded in the third quarter, are people that we've been doing business with for a long time. So in general it's more just, it's a timing issue more than anything else. John Armstrong (Analyst at RBC Capital Markets) Okay, thanks on that.

And then maybe Dave or Tim, appreciate the comments on the variable rate loans. It's what I thought. But the other side of it, can you just comment a little on the deposit pricing environment? You obviously had a very nice quarter on deposit costs and just maybe help us understand the drivers of the deposit growth and how you were able to hold those costs steady.

Tim Crane (President and Chief Executive Officer) Yeah, John, thanks. We do feel good about the deposit growth. Probably a little more commercial than retail, but the Chicago and both West Michigan and Milwaukee markets are largely rational. We see promotional pricing, 4 or low 4s.

We continue to win business at those levels. We started to get a little bit of a lift from the new branches we've opened. We'll get more of that in the fourth quarter and continued build-out of our commercial franchise as well. So a nice mix of deposits, many of them interest-bearing.