Wintrust(WTFC) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net income of just over $170 million for Q3 2024 and record net income of just under$510 million for the first three quarters of the year, aligning with expectations [4] - Loans grew by $2.4 billion, with$1.3 billion acquired from Macatawa Bank and $1.1 billion in organic growth [5] - Deposits increased by over$3.4 billion, with $2.3 billion from Macatawa and$1.1 billion organically [5] - The net interest margin was stable at 3.51%, contributing to record net interest income of $503 million, up approximately$32 million from the previous quarter [7][14] Business Line Data and Key Metrics Changes - Organic loan growth was balanced across all material product categories, indicating a diverse asset-generating business [5] - Noninterest-bearing deposits increased by approximately $708 million, remaining stable at 21$113.1 million, down approximately $8 million from the prior quarter, primarily due to unfavorable mortgage servicing rights activity [16] Market Data and Key Metrics Changes - Wintrust increased its deposit share in the Chicago MSA to 7.7$243 million [22] Company Strategy and Development Direction - The company is focused on disciplined credit management and maintaining a diversified asset portfolio to mitigate risks [22][33] - Integration activities related to the Macatawa acquisition are on target, with optimism about opportunities in West Michigan [30] - The company aims to build capital steadily while managing its capital ratios effectively [52] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining a stable net interest margin and projected continued growth in net interest income [14][20] - The credit environment is stabilizing, with nonperforming loans remaining low and charge-offs decreasing [7][25] - The company is optimistic about loan growth in the fourth quarter, aligning with previous guidance of mid to high single-digit growth [22][36] Other Important Information - The company has consistently outperformed the KBW Regional Bank Index in total shareholder returns over various time periods [21] - Noninterest expenses totaled $360.7 million, up approximately$20.3 million from the second quarter, primarily due to Macatawa-related expenses [18] Q&A Session Summary Question: Can you talk more about the loan growth outlook and drivers? - Management highlighted a diversified asset portfolio as key to growth, with strong performance in various segments including C&I and CRE [31][33] Question: What is the expected provision for credit losses in the fourth quarter? - Management indicated that the provision would likely reflect mid to high single-digit growth, depending on macroeconomic conditions [36] Question: How has your deposit cost trended with the recent rate cut? - The company experienced a deposit beta in the mid-60s and anticipates similar trends on the way down, with confidence in maintaining spreads [40][41] Question: What are the plans for leveraging the Macatawa franchise? - Management expressed satisfaction with the existing team and plans to add resources as market opportunities arise [43] Question: Can you provide insights on the charge-offs in the C&I segment? - Charge-offs were primarily transportation-related, with management indicating a focus on managing these risks [46] Question: What is the expected growth in capital going forward? - The company plans to build capital steadily, with a CET1 ratio expected to reach around 10% by 2025 [52]