Wintrust Financial Corp Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Good morning. Good morning. Question for either Rich or Tim on the kind of the near term, I guess the near term loan growth expectations, I mean this quarter was stronger than I thought it would be and obviously drove some of the provisioning as well. But what kind of a pullback do you expect in the third quarter? And just there's anything else you would call out out in terms of the second quarter activity?

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Okay. Thank you on that, Rich, on the charge-off levels, I think you used the term normalization or anything you would call out in the second quarter. It looks like the commercial real estate charge-offs were a bit higher, but anything else unusual rolling around in there? And do you expect this it's hard to say a run rate, but is this more normal for you?

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Okay. Good. And I guess last one. Your philosophy at this point in time and what you're seeing is to tried to hold the reserve percentage relatively stable. Is that fair?

Question: Jon Arfstrom - RBC Capital Markets - Analyst : Thank you, guys. I appreciate it.

Question: Casey Haire - Jefferies - Analyst : Great. Thanks. Good morning, everyone. Couple of cost question to that. And then I guess first on the funding strategy, you see is obviously drove a lot of the growth this quarter. Just wondering you guys is there a year at 19% of the deposit stack? Is there a limit that, you know, was there a limit as to how you want that to go? And then what are your CD operates today?

Question: Casey Haire - Jefferies - Analyst : Okay. And then on the loan side of things. So loan yields up 10 bps to 690 bps or is the premium finance sort of the lag on that repricing? Is that now digested? And I'm just wondering, can we kind of cadence we can expect in terms of loan yield lift going forward?

Question: Casey Haire - Jefferies - Analyst : Okay. All right. Great. And just last one, sorry if I missed this, but did you guys provided them for at 630?

Question: Casey Haire - Jefferies - Analyst : Got it. Thank you.

Question: Terry McEvoy - Stephens Inc. - Analyst : Hi, good morning. Just a quick one here to start. Was there a gain in all recorded on the $700 million loan sale?

Question: Terry McEvoy - Stephens Inc. - Analyst : Thanks for that, Dave. And then within your margin outlook, could you help us maybe understand what you're assuming for interest bearing deposit costs in the second half of the year? And essentially, what's the cost to fund that loan growth? And maybe just a follow up that you've got 5 billion of CDs maturing in the back half of this year, I think was 475 rate. What are you seeing those CDs mature, they rolling into market rate products or or or somewhere else?

Question: Terry McEvoy - Stephens Inc. - Analyst : Just to interest-bearing deposit costs in the second half of this year, they were up obviously in Q2 to fund the loan growth. What do you think they will do over the next two quarters?

Question: Terry McEvoy - Stephens Inc. - Analyst : Perfect. Thanks for taking my questions.

Question: Chris McGratty - Keefe, Bruyette & Woods North America - Analyst : Great morning. Takes time, actually DNI guide the linked quarter and about a percent half. Is there is there an acceleration in the C&I growth in the back half of the year relative to this quarter? Seems given the growth that you got this quarter? Or is it mitigated by a little bit and then pressure?

Question: Chris McGratty - Keefe, Bruyette & Woods North America - Analyst : Okay. And then I guess looking at out there in the market, fairly fickle, but right now, the market's thinking we're going to get four or five cuts over the next year relative to that three, if you've talked about I know you rely less asset-sensitive and you've got how much downside of margin do you see if the curve plays out?

Question: Chris McGratty - Keefe, Bruyette & Woods North America - Analyst : Perfect. And then the tax rate looked a little high this quarter, which represents an RES?

Question: Chris McGratty - Keefe, Bruyette & Woods North America - Analyst : Got it. Thank you.

Question: Brendan Nosal - Hovde Group - Analyst : Hey, good morning. Folks have been doing well or and maybe just to start off here, could you maybe unpack the trigger points for any additional loan sales in the future? I'm guessing if there was to happen, it will probably be in a seasonally strong quarter like this one for the premium finance business yet?

Question: Brendan Nosal - Hovde Group - Analyst : Yes . And maybe one more from me. And within the wealth business, I guess, has a little surprised to see a rent and just ticked down a little bit quarter over quarter, given how strong markets were in the second quarte r. I'm just kind of curious what trends you're seeing in that business and what underlying momentum looks like? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. PRELIMINARY JULY 18, 2024 / 3:00PM, WTFC.OQ - Q2 2024 Wintrust Financial Corp Earnings Call

Question: Brendan Nosal - Hovde Group - Analyst : Fantastic. Thanks for taking the questions.

Question: Jeff Rulis - D.A. Davidson & Company - Analyst : Thanks. Good morning. Maybe just to -- hi. I think you mentioned last quarter you saw some flow some targeted opportunities in office there despite sort of the national rhetoric. And I think you mentioned sort of where, you know, higher tenanted or medical, wanted to kind of checked to see if that's still the case. Do you still see opportunities that mean that the not the non-performing loans ticked up a little bit there, but appetite for office? Just wanted to check in on how you're feeling.

Question: Jeff Rulis - D.A. Davidson & Company - Analyst : Okay. And Rich, I am sorry, the CRE. review bucket you reference, was that a maturing at a certain timeframe. Just what was that figure again or that you have?

Question: Jeff Rulis - D.A. Davidson & Company - Analyst : Sure. So that's a pretty tight timeframe. And I would imagine, as you've undergone that analysis in past quarters, that's reflective of the current rate environment. So I mean not to get, I guess, the confidence in that as you've rolled that the fact that the statistics of state similar that gives you pretty good read on credit that opens up i s that --

Question: Jeff Rulis - D.A. Davidson & Company - Analyst : Appreciate it. And one quick last one. Tim, it sounds like that Macatawa in terms of have to pretty good institutions and that timing sounds like at I guess third quarter closed. Any always could come in late, but there's no sort of community issues cropping up with that transaction a s you've heard.

Question: Jeff Rulis - D.A. Davidson & Company - Analyst : Great. I appreciate it. Thanks.

Question: David Long - Raymond James - Analyst : Good morning, everyone. Has it gone? Good. On a lot of talk about the net interest margin here and that sticking around the 350 range. As you think about Macatawa adding macro tower, how will that impact the net interest margin? And then at that part of that sort of 350 outlook for the next couple of quarters ago m aintaining that?

Question: David Long - Raymond James - Analyst : Got it. Thank you for for the color. And then the follow-up question I have relates to deposits, and there seems to be some bit of a resurgence in savings rates in the Chicago MSA, seeing some rates pretty high and guaranteed for the next six months. What are you seeing on deposit competition specifically in the Chicago market? Are you seeing a bit of an increase?

Question: David Long - Raymond James - Analyst : Got it. Thanks, guys. Appreciate you taking my questions.

Question: Nathan Race - Piper Sandler Companies - Analyst : Yes, hi, good morning. Thanks for taking the questions. Just going Sback to the margin discussion. I appreciate the commentary around you'll still be will hold around 350 even after the Fed cuts begin. And just curious within that context in terms of how much can you guys have it as it relates

Question: Nathan Race - Piper Sandler Companies - Analyst : Okay, great. Very helpful. Changing gears a little bit. We heard from another Chicagoland institution this morning that there is some increase in M&A chatter lately. I'm curious if you know, I imagine either look likely smaller deals. I imagine those are interest. Have you guys just given the size of the company today? Or are you guys are still going to retain some smaller scale acquisitions these days?

Question: Nathan Race - Piper Sandler Companies - Analyst : No, that's great color. Thanks, Tim. One last one of the gain on sale margin came down versus the 1Q to a considerable considerable degree. Any thoughts on just how the gain on sale margin may trend in the 3Q and 4Q on mortgaging.

Question: Nathan Race - Piper Sandler Companies - Analyst : Okay, great. I appreciate the color. I think that's fair.

Question: Jared Shaw - Barclays - Analyst : Morning. Most my questions are answered. But I guess as we look at as we look at capital, especially CYT. one on, what should we be thinking about it sort of a target level for that for you? Is that something that we should be expecting to serve the growing growing higher closer to peers? Very comfortable with here?

Question: Jared Shaw - Barclays - Analyst : Okay. Thanks. That's great color. And then maybe just finally, when you look at the time the charge offs on commercial real estate, what's been like the average valuation declines on CRE that you've seen, especially on the office? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. PRELIMINARY JULY 18, 2024 / 3:00PM, WTFC.OQ - Q2 2024 Wintrust Financial Corp Earnings Call

Question: Jared Shaw - Barclays - Analyst : But nothing that's causing you concern more broadly.

Question: Jared Shaw - Barclays - Analyst : Okay. Thank you.

Question: Brandon King - Truist Securities - Analyst : Hey, just a follow-up on mortgage. Could you give us what your outlook is for the back half of the year? And could you also give us some context as far as the trends you saw, particularly in the later part of the quarter?

Question: Brandon King - Truist Securities - Analyst : So with the those thoughts on inventory and issues there, would you say that no mortgage could be less sensitive to a decline in rates moving forward?

Question: Brandon King - Truist Securities - Analyst : Thanks. Any sense you can give us is it's a way that level is? Or is it kind of a moving target?

Question: Brandon King - Truist Securities - Analyst : That is very, very helpful. Thanks for taking my questions.