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WINTRUST FINANCIAL CORP (WTFC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered record quarterly net interest income ($525.1M) on stable net interest margin (3.49% GAAP; 3.51% FTE), with balanced loan (+$1.0B) and deposit (+$1.1B) growth and improved credit ratios; diluted EPS rose to $2.63 from $2.47 in Q3 .
  • Management reiterated 2025 margin stability around ~3.50% supported by $6–7B notional hedges and expects continued net interest income growth as balance sheet expands .
  • Credit quality improved sequentially: net charge-offs fell to 13 bps annualized (from 23 bps) and NPL ratio declined to 0.36%; allowance held steady at ~$437M .
  • Guidance maintained for mid- to high single-digit loan growth; expense growth targeted mid-single digits off current run-rate; deposit betas assumed ~65–67% and DDA mix ~21–22% of total deposits .
  • Wall Street consensus estimates via S&P Global were unavailable at time of analysis; comparisons to estimates are noted accordingly (see Estimates Context).

What Went Well and What Went Wrong

What Went Well

  • Record quarterly net interest income ($525.1M) on stable NIM supported by earning asset growth (+$2.6B avg balances QoQ) .
  • Balanced growth: loans +$1.0B (8% annualized) and deposits +$1.1B (9% annualized), with DDA rising to 22% of deposits by YE and L/D ratio improved to 91.5% .
  • Credit metrics improved: net charge-offs down to 13 bps; NPLs to 0.36% of loans; CEO emphasized “overall stable credit quality” and proactive CRE portfolio management .

What Went Wrong

  • Securities losses of $2.8M and unfavorable mortgage fair-value marks (-$1.5M) offset noninterest income gains; operational mortgage banking revenue declined ~$1.0M QoQ .
  • Noninterest expense increased $7.9M QoQ (to $368.5M), largely from a full quarter of Macatawa costs (+$5.7M) and higher software spend (+$2.7M) .
  • Management flagged rising competitive loan pricing pressure (particularly in CRE), which could cap NIM upside despite a more positively sloped curve .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Net Revenue ($USD Millions)$591.8 $615.7 $638.6
Net Interest Income ($USD Millions)$470.6 $502.6 $525.1
Diluted EPS ($)$2.32 $2.47 $2.63
Net Interest Margin (GAAP, %)3.50% 3.49% 3.49%
Net Interest Margin (FTE, %)3.52% 3.51% 3.51%
Provision for Credit Losses ($USD Millions)$40.1 $22.3 $17.0
Non-Interest Income ($USD Millions)$121.1 $113.1 $113.5
Balance Sheet & MixQ2 2024Q3 2024Q4 2024
Total Assets ($USD Billions)$59.8 $63.8 $64.9
Total Loans ($USD Billions)$44.7 $47.1 $48.1
Total Deposits ($USD Billions)$48.0 $51.4 $52.5
DDA % of Total Deposits21% 21% 22%
Loans-to-Deposits (Period-End, %)93.0% 91.6% 91.5%
Credit & Efficiency KPIsQ2 2024Q3 2024Q4 2024
Net Charge-offs (Annualized, % of Avg Loans)0.28% 0.23% 0.13%
NPLs / Total Loans (%)0.39% 0.38% 0.36%
Allowance for Credit Losses ($USD Millions)$437.6 $436.2 $437.1
ROA (%)1.07% 1.11% 1.16%
ROE (%)11.61% 11.63% 11.82%
ROTCE (%) (non-GAAP)13.49% 13.92% 14.29%
Efficiency Ratio (GAAP, %)57.10% 58.88% 57.46%
Efficiency Ratio (non-GAAP, %)56.83% 58.58% 57.18%
CET1 Ratio (%)9.5% 9.8% 9.9%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest Margin (FTE)FY 2025~3.50% (Q3 outlook into Q4’24/2025) Remain ~3.50% in 2025 Maintained
Net Interest IncomeNext few quarters / FY 2025Continued growth with stable NIM Continued growth in 2025 with stable NIM and earning asset growth Maintained
Loan GrowthFY 2025Mid- to high single digits (implied run-rate) Mid- to high single digits Maintained
Expense GrowthFY 2025—Mid-single digits off current run-rate; operating leverage targeted New/Clarified
Deposit Betas (Interest-bearing)FY 2025—~65–67% beta assumption; incremental CDs ~4%, MM ~3% New/Operational assumption
DDA MixFY 2025~21% steady ~21–22% expected to continue Maintained
Hedging ProgramFY 2025–2027~$6B hedges, add forward-starting swaps $6–7B collars/swaps to protect NIM in lower-rate cycle Maintained/Expanded buckets
Cash DividendQuarterly$0.45 (Q2/Q3) $0.45 (Q4 declared) ; Board approved $0.45 (Oct 24, 2024) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4)Trend
Margin outlook & hedgingStable NIM 3.50% with neutral rate sensitivity; expanded hedges including forward-starting swaps Margin to remain ~3.50% in 2025; hedges $6–7B to cushion falling rates Stable; hedge buckets extended
Loan growth & competitionRobust loan growth Q2/Q3; noted normalization in credit and some competitive pricing emerging Mid- to high single-digit 2025 loan growth; more price sensitivity in CRE; Won’t chase uneconomic deals Competitive pressure rising
Mortgage bankingQ2/Q3 production improved; MSR valuation volatile Mortgage activity muted; rate-sensitive (pickup near ~6% mortgage rates) Rate-dependent; muted base
CRE office exposureDetailed portfolio; NPLs rose in mid-2024; granular/mostly small-balance; medical/owner-occupied 44% Portfolio steady ~$1.7B; NPLs declined; one office NPL exited Stabilizing
Deposits/DDADDA steady at ~21% in Q2/Q3; deposit growth funded loans DDA to ~22%; deposit betas ~65–67%; incremental CDs ~4% and MM ~3% Steady mix; lower cost traction
Technology investmentsOngoing IT/security upgrades Increased software spend (+$2.7M QoQ) to enhance IT/security and digital products Continued investment
M&A/ExpansionClosed Macatawa (Aug 1, 2024) expanding into West Michigan Disciplined M&A appetite; organic expansion (e.g., Rockford IL) performing well Opportunistic
Capital & preferredsRatios stable/increasing with earnings CET1 up; preferred repricing in June under evaluation; maintain leverage if market favorable Building capital; optionality

Management Commentary

  • “We are very pleased with our 2024 results, including record net income… We enter 2025 with great momentum… Net interest margin in the fourth quarter was unchanged… should allow our net interest margin to remain in the 3.50% range… Stable net interest margin coupled with continued balance sheet growth should result in further net interest income growth in 2025.” — Timothy S. Crane, CEO .
  • “Record high quarterly net interest income… $2.6 billion increase in average earning assets and a stable net interest margin contributed to the increase.” — David Dykstra, Vice Chairman & COO .
  • “Nonperforming loans as a percentage of total loans decreased slightly from 38 basis points to 36 basis points… Charge-offs… down from 23 basis points in Q3… portfolio… well diversified and very granular.” — Richard Murphy, Vice Chairman & Chief Lending Officer .
  • “Deposit betas around 65–67%… incremental interest-bearing deposits in ~4% range for CDs, ~3% for money market… supports a margin in the 3.5s.” — Timothy S. Crane, CEO .

Q&A Highlights

  • Loan growth outlook: Management maintained mid- to high single-digit growth for 2025, noting rising competition and price sensitivity in CRE; emphasized discipline not to “chase deals” .
  • Margin upside factors: Margin expected relatively stable; a positively sloped yield curve helps, but competitive pricing is a headwind; balance sheet growth should drive NII .
  • Expenses: Target mid-single-digit growth off current run-rate, with flexibility to pull levers if growth slows; continued investment in digital/IT .
  • Hedging strategy: Added ~$1B forward-starting swaps to “fill buckets” for ’26–’27 to stabilize NIM in a down-rate environment .
  • DDA trajectory: DDA increased episodically at year-end; expect absolute DDA growth to continue alongside overall deposit growth .

Estimates Context

  • Wall Street consensus estimates via S&P Global (EPS, revenue, EBITDA, target price) were unavailable at time of analysis due to system limits; therefore, no numeric comparisons to consensus are provided. Expectation resets may focus on:
    • Margin stability near ~3.50% despite falling SOFR/CMT rates (neutral posture), underpinned by hedges .
    • Lower provision trajectory with improved net charge-offs and stable NPLs, which could support EPS durability .
    • Mortgage banking remains rate sensitive; any sustained decline toward ~6% mortgage rates could lift production margins and volumes modestly .

Key Takeaways for Investors

  • Balance-sheet-driven NII growth with a neutral rate profile and hedges should support earnings resilience if rates drift lower; NIM guided ~3.50% for 2025 .
  • Sequential credit improvement (lower NCOs; NPLs down) and flat allowance point to stable asset quality into early 2025 .
  • Growth catalysts: consistent loan pipelines across C&I, leasing, mortgage warehouse, and premium finance; Macatawa footprint adds core deposits and geographic diversification .
  • Watch competitive loan pricing pressure—particularly in CRE—as a potential cap on margin upside even with a less inverted curve .
  • Operating leverage targeted: mid-single-digit expense growth off current run-rate vs mid- to high-single-digit loan growth should sustain ROTCE in mid-teens .
  • DDA mix (~21–22%) and lower deposit costs (MM/CDs in low-3%/4% ranges) indicate favorable funding dynamics vs peers reliant on higher-cost deposits .
  • Capital ratios trending up; upcoming preferred reset offers capital structure optionality; dividends maintained at $0.45/share .