Okay, we're gonna go ahead and get started. Welcome everyone. Welcome to Raymond James's 47th Annual Institutional Investors Conference. I'm David Long, one of the bank analysts here at Raymond James, and this morning we are excited to welcome Wintrust Financial to the conference. Wintrust has become a staple at the conference. Wintrust is a $71 billion asset bank with a market cap of about $10 billion, and the stock trades under the ticker WTFC. Joining us for discussion today is President and CEO, Tim Crane. Also on site is Dave Dykstra, Chief Operating Officer and Vice Chairman. Wintrust has grown to become the largest commercial bank headquartered in Chicago, and they've done that through mostly organic growth. They have supplemented some acquisitions in there. They've done that by taking market share from a lot of their larger bank peers in the marketplace.
They've also done this while keeping credit quality pristine really throughout the history of the bank. With all that said, Tim, welcome to Orlando.
Thank you, David.
Thanks for joining us today. You know, you've been at Wintrust now almost 20 years, 6 as President, I think now coming up on three as CEO. During your time there, as I said, you've had some great growth. Maybe just reflect a bit on how the bank has been able to grow so rapidly. Let's maybe keep it to the last decade or so.
Yeah, sure. Twenty fifteen we would have been low 20s in terms of assets. I think a couple of pieces in terms of the growth. One is the strategy which has been consistent through really Wintrust's existence, which is provide better service than the big banks do and provide better capabilities than the small banks. In Chicago in particular, although we're in Southeast Wisconsin and the Grand Rapids, West Michigan area as well, there are the money center banks obviously present, and then there's Wintrust at $70 billion, and then the next largest bank is really $10 billion. We sort of have a unique position in Chicago and have for some time as there's been a fair amount of disruption to continue to win share. Again, taking great care of customers is the foundation.
We like our markets. We're a little bit curious about, you know, the movement to the Southeast and Texas and California. You know, Chicago's got a wealth of middle market companies. Our area grows, it's affluent, we like the markets. Lastly, we've been opportunistic. Whether that's been adding teams, as we've had the opportunity to do so in the insurance business, in the mortgage warehouse business, or whether it's been acquisitions, we've pursued those. We think we're pretty disciplined and pretty good at all of those things.
Good. Good. What is it that you'd say you're most proud of? Maybe it's being part of the organization and maybe the culture. You know, what is it, you know, being there.
Yeah
... for 20 years now, close to 20 years, what are you most proud of?
Yeah. Well, certainly proud to be part of an organization that's become well known in our markets as providing great service, being very consistent for our customers. But I'd stay on consistency, the consistency of performance is what I'm really proud of. At the end of each year in our fourth quarter report, we provide charts that show our 10-year progress on a number of key indicators. Whether that's net income growth, tangible book value growth, or loan and deposit type activity, we've been very, very consistent over those 10-year periods. We focus on that and talk about that with our team. If you just took tangible book value as an example, since Wintrust went public in 1996, our tangible book value has increased every year.
When we look at peers, we think there's only one or two other banks that can say that, and that's with the acquisitions that we've done along the way. Very pleased with just the performance expectations that we put on our teams and how we deliver.
Got it. You know, you've been in this seat as CEO for about three years now. Have there been any material changes in the strategy or how you're running the organization versus how former CEO Ed Wehmer did?
Yeah. Yes and no. The foundational part of the strategy hasn't changed, which is focus on customers first. The market continues to give us opportunities as big banks go up market, as there's acquisitions in the market, those kind of things. What we have done is continue to focus on operating leverage, we've looked at investments that we're making in the foundation of the company. Better capabilities, more automation, more efficiency, those types of investment we make along the way while continuing to basically deliver results. That would be the only change, and that's just more a function of what's happening in the market and the competition.
Sure. Sure. Okay. When you look out the next three to five years, what are some of your biggest goals for the next three to five years for the organization?
Well, continue to deliver the consistent performance. I mean, that. At the end of the day, our shareholders are focused on the company moving the right direction, making disciplined growth decisions. We've always been a growth bank. We wanna continue to grow the organization. Very comfortable with the bulk of our footprint being in the Midwest, with our sort of specialized businesses where we can differentiate ourselves delivered nationally or in some cases internationally. We like the insurance business very much. As you know, about a third of our balance sheet is related to insurance finance in one form or another. It's one of the reasons the credit quality is so good. If you operate a company, insurance is about the last thing you're gonna give up, lending against these insurance policies is very attractive.
It's a business that we believe has material barriers to entry that we can protect. I'd say continue to be, you know, one of, if not the leading independent player in the Midwest, and then continue to build out, you know, the niches as they make sense.
Sure. What do you expect your footprint to look like over the next five years?
Yeah. For retail banking for us is, you know, ±215 branches, Southeast Wisconsin, northern Illinois, northwest Indiana, and most recently, west Michigan with the Macatawa acquisition. I think we'll try to do concentric in terms of our physical footprints, and then, again, the niche businesses that we can differentiate ourselves nationally, you know, operate out of about another 15 offices in other states. We'll continue to do that, but there aren't great aspirations to get to Texas or California. We have 8.5%, 9% market share in Chicago, deposit market share. If we can get that number to 10% or 12%, that's very valuable. It's building the franchise.
Yep. At, like I said, $71-ish billion in assets, does $100 billion, Is that a barrier for you at this point, or how are you looking at that asset level?
Yeah. Hard to say. I think we all believe that in the coming months, we're gonna get some revision to the asset thresholds that operate, and I think the most punitive rules around exceeding $100 billion are probably going away. We're, again, building the foundation for a bigger bank. We're evolving into the capabilities that you would need, whether those are LFI type capabilities or just better management in terms of stress testing for capital and liquidity. I think we'll see in the next couple of months. We're operating, as if we're gonna continue on our growth trajectory, and if 100 billion has, you know, capabilities and rules, we'll be prepared to meet those.
Great. Just overall on the regulatory backdrop, a lot of talk of how it's gotten easier for the last little over a year, and we've got a few more years left, maybe it'll change again. For Wintrust at this point, what stands out as being... Is there anything that stands out in particular that benefits you more so than others?
We've always had terrific relationships with our regulators, and the size of acquisitions that we've done historically haven't been problematic. Even a few years back under the prior administration acquiring Macatawa Bank in West Michigan, we were approved in 49 days. That traditionally hasn't been an issue for us. We have terrific relationship with our regulators. All 16 of our independent chartered banks are regulated by the OCC. I think the freeze or the change in rules around CRA, around, you know, 1031, I mean, all of those rules either stabilizing or rolling back allows us to focus elsewhere as opposed to compliance related activities, but it's marginal at this point for us. We've just always had such a good relationship, and large acquisitions haven't been on the radar for us.
Great. What can you tell us about the Wintrust culture that allows you to continue to grow and put up such attractive growth metrics?
Yeah. It's really one of the other things that I'm proud of. We could have added that, but it's customer first. If you take good care of customers, a lot of the other things that running a business or running a line of business require fall into place. The market's given us this unique space where, you know, the bigger banks sometimes look up market, that gives us opportunities. The smaller banks can't provide the capabilities we provide, but it's very entrepreneurial. If somebody comes and says, "I wanna borrow money for a restaurant," you know, most banks don't like restaurants. We would say, we might not like restaurants, but we can find a way to lend that individual money. It's just structured differently, and it's a more focused approach on what that customer's trying to accomplish.
We take a lot of pride in the success of our customers. The great news at Macatawa, for example, which was a very nice $2 billion bank, but many of their customers were outgrowing that bank. We provide a bigger toolbox. The capabilities that we provide rival those of the biggest banks. We really have a unique model with better service and very good, if not top tier capabilities.
You mentioned Macatawa again, I'm gonna go in that direction with M&A. They were in Michigan across I know it's across the pond, if you wanna call it that. What are your aspirations from an acquisition perspective and how far would you go outside of the Chicago MSA?
Always been very disciplined, Macatawa was a terrific property. Again, prior administration from a political standpoint, great deposit base, low loan to deposit ratio, a lot of capital, 26 branches, fairly densely populated in the Holland Grand Rapids area, which is growing faster than Chicago. A lot of really terrific attributes that made that, you know, a very nice acquisition for us and is going very, very well. We'd like to do more concentric type things. We'd like to build on to markets that we understand. Again, if in the Chicago area, it's similar in West Michigan and Southeast Wisconsin, you know, we have high single digit deposit share. There's all sorts of opportunity for us.
We don't, we don't need to go to California, or we don't need to go to Florida to find opportunities. We'll continue to take share from larger banks, other banks in our markets, and we'll take very good care of those customers, and they'll be with us for a long time.
On the loan growth side, the bank has typically talked about mid to high single digit loan growth. Is that still appropriate on an organic basis as we're looking forward here?
Yes, we think so. It's a little bit uneven over the years, so there's some seasonality. You know, first quarter tends to be our lowest loan and deposit growth quarter. We still believe mid to high single digits makes sense. Pipelines are good. Everything we're seeing right now is consistent.
There's obviously a lot of noise in the, in the environment. What are the biggest risks to getting to that type of growth?
I mean, I don't know if noise is tariffs or the activities the last couple of days, the risk is really kind of irrational competition. You talked about the fact that we're very disciplined from a credit perspective, and that's an important part of our equation that we just don't compromise on. What we have seen over the last couple of years is that banks that haven't been able to grow loans will look for larger fully funded deals, and they'll do those on a transactional basis. We typically do not. We want full relationships, if only for credit reasons, but more importantly because we want the opportunity to sell them other products and services that they'll use over time. Irrational competition would be one risk.
Obviously, there are macro elements that could slow growth dramatically. That certainly could affect what we do. Again, our pipelines, which, you know, give you pretty good visibility for four to six months, look pretty good. We continue to believe that we're on the mid to high single digit track and we'll see what happens.
That type of growth would put you above that of most of your peers. How do you manage the credit side of the equation when putting up better than peer growth?
Yeah, I mean, decentralized credit, as close to the customer as we can get it, with very thorough behind-the-scene reviews to make sure that we're not missing anything. What I would tell you, though, for us, concentration is a huge issue. We spend a ton of time looking at individual concentrations in the portfolio to make sure that we're not overexposed in areas. Relative to our peers, we often screen low. For example, if you look at allowance, one, we have better credit quality, so we think lower allowance makes sense. The other thing that's important to notice is that again, a third of our book is insurance-related finance.
Whether it's financing life policies for affluent individuals or it's financing property and casualty policies for local businesses, very good credit quality, very predictable performance, very granular in terms of the loans. When you look at whether it's allowances or you look at capital, we think on a risk-adjusted basis, we're probably better positioned than most of our peers.
Great. On the deposit side of the equation, how is competition right now?
Yeah, pretty rational, I would say, in Chicago. Again, one of the things that in 2025 we were very pleased with is we assumed the third largest deposit share in Chicago behind BMO and JPMorgan. The three of us combined, you know, probably half the market, call it that. Pretty reasonable pricing, I would say. You know, without loan growth, you're not seeing huge pressure from other banks to grow deposits irrationally. I would say pretty rational at the moment. We hear that's not necessarily the case in the southeast markets and maybe some other areas, but I don't think we've seen anything problematic in Chicago yet.
Great. On the fee revenue side, you guys have a few different drivers there. Where do you see the biggest opportunity to grow the fee revenues?
Yeah. For us, 3 fee-based businesses. One is sort of the treasury services business, you know, generally described that way. As we continue to take share in the middle market, that business grows very nicely and has grown very nicely each year for the last several. That'll continue to grow. We're very excited about the wealth business. It continues to grow, not rapidly, but again, as either business owners sell or we continue to penetrate the market, we get wealth opportunities. In 2025, we completed the migration to the LPL platform, which was an important kind of piece of the equation for us to allow us to recruit more effectively and then also to offer a broader base of services. Continued optimism on the wealth side. The 3rd piece for us is mortgage.
Mortgage has kind of been bouncing along the bottom for a couple of years. You know, over the last nine months, we've seen very small windows where things got attractive and you'd get a couple of days where, you know, rates got at the right level and the business would pick up. That's a wild card for us. We know we're growing our share of the mortgage market in Chicago as the independents that did primarily refinance activity have largely gone out of business. That would be the biggest opportunity in terms of a wild card. We'll continue to grow the treasury services business really nicely in 2026.
Gotcha. On the expense side, maybe talk maybe first about operating leverage. How important is positive operating leverage for the bank?
It's really important. Increasingly, we have to invest in capabilities to stay current with the big guys, and we can't just do that as an incremental add to our expense base. We're always working to become more efficient, and we talk about taking those gains and reinvesting them in the business. I think you gave me the statistic. I didn't go back and get it, but seven of the last 10 years we've had positive operating leverage. two of the three years we didn't. We had extraordinary expenses around acquisitions. Last year we were 340 basis points different in terms of revenue growth versus expense growth.
For us, if it's sort of simplistic, mid to high single digit loan growth and, you know, our loans are 85%, 90% of our assets, with sort of mid-single digit expense growth should yield operating leverage. Our target would be to do that every year as we can. Again, save some extraordinary type circumstances, but it's very important. I think it's important to our shareholders. They recognize that we're making investments that are paying off and that we're growing a franchise in a productive way.
You know, a lot's been said about some of the bigger banks, the Wells Fargos, the JP Morgans, BofAs that have big IT expense budgets. How do you compete with them in that regard?
Well, part of it is the fact that we buy most of the basic underlying services from somebody like an FIS or from a Salesforce or an nCino or, you know, pick your kind of vendor. By and large, they do a reasonable job. What we've tended to do is surround those core services with customer interfaces that make us attractive in the market. Obviously, the numbers that JP Morgan and BofA, you know, are investing are staggering. We, with rare exceptions, typically around international type products, we haven't found ourselves to be behind or to be disadvantaged. Again, it's the rare customer that needs something that we can't provide that may choose to go elsewhere. In a lot of cases, we can partner to provide those services.
It's a focus, and managing partners is a big part of the differentiation, and I think we do a good job.
On thinking about the mid-single digit growth and expenses, what type of growth rate are you seeing in IT? How, where are you spending on AI right now?
The IT component of the expense growth would be much higher. If you took the HR side of equation, in 2025, excuse me, we grew the bank 10%- 11%. We did it essentially with flat headcount. A lot of the expense growth in 2025 went to new technology, went to becoming more efficient. If you think about merit increases being, you know, call it 3%, you know, your overall expense growth in the 4%-6% range, the rest of it would be disproportionately technology and cybersecurity would be the other kind of big piece of it. Yeah. AI, we focused on getting the governance piece first, I'd say we're in the early stages.
You know, AI has become such a broad term, you don't exactly know what it includes. We certainly do dozens of robotics-type, efficiency-type plays. We're doing all sorts of modeling in terms of what makes sense for our customers. We're pretty optimistic that it'll be a meaningful expense opportunity for us, but very likely a lot of that'll get reinvested in the business.
Right. Okay. Your net interest margin, historically, you guys have been viewed as being more asset sensitive. Here we are with a 3.50%-ish net interest margin for several quarters despite seven.
Yeah
... 725 basis point rate cuts.
I think several years, go ahead.
Yeah. What is your outlook for the NIM? Is it still the 3.50-ish? How do you guys manage that despite being what most people think of as asset sensitive?
Yeah. Yeah, 3.50% is the outlook, and we've said, you know, for probably the remainder of this year, a couple of cuts or a couple of increases probably doesn't move the margin for us. In 2020, you know, kind of during the zero rate environment, you know, our margin got into the 2.60s, which didn't feel very good. At that point, the mortgage business, which is sort of a natural hedge for us, performed very well. We still delivered record earnings. We didn't want the margin to go back, you know, sub 3% if we could avoid it. We've done a fair amount of hedging, so we've got about $6 billion worth of hedges that protect us against rates down. Those hedges cost us money for a number of years.
They're actually now in the money helping us. Our portfolio, just the mix of the balance sheet, we managed to stay pretty neutral. You know, if you take our CD book, for example, versus some of the insurance portfolios, they're actually a pretty good offset for each other. We're pretty comfortable with a margin at 350 where we can grow net income by growing the business. If we add clients and we add assets, you know, intelligently at a stable margin, we'll add net income.
Great. Anyone in the audience here, any questions for the team? All right, I'll keep going.
Keep going. Good.
You know, when you're looking out to the growth and getting that mid-single digit to high single digit loan growth, how much hiring is involved with that, and what is your appetite to add veteran bankers in the marketplace?
Yeah, some hiring, for sure. We don't spend... You know, we come to the investor conferences and some of our peers talk about, "We added, you know, three bankers in Nashville, and we added two bankers in, you know, Pennsylvania." That's just normal course of business for us. As competitors, and talented people that work at competitors find they can't take care of their clients, so it's either a throw the baby out with the bathwater approach or strategic change or an acquisition, we're a pretty attractive home for bankers that wanna take good care of their customers. We always have a good inflow of names of people that wanna come work for us. We're pretty selective about who we take, but, we added a mortgage warehouse team from Comerica two years ago.
We recently added, an insurance team that worked for a bank that was acquired that didn't think they were gonna fit in the new bank's, kinda plans. You know, these are, you know, three, five, eight people at a time, in some cases. Again, normal course of business for us. We'll continue to be opportunistic doing that. A lot of our adds, you know, to the extent we're adding people, are on the revenue side. I mean, we don't see a great need to add to the infrastructure of the bank as we get closer to scale in a number of these areas.
Sure. When you're bringing in other new bankers, do they come mostly from the larger banks, or do they come from some of the smaller banks where they can benefit from having a larger balance sheet?
Both. I probably skew toward larger banks, where, you know, somebody's told them they can't take care of their customer, or somebody's reorganized, you know, or they feel like there's not a future for them. We're very entrepreneurial and, you know, very accommodating to somebody that has clients that has been known in the market, active in the market and wants to continue. We create, we think, good, really good career opportunities for those folks.
Yeah. The Chicago MSA, how would you characterize the health of the economy?
Yeah. Despite the political headlines, some of which are real, some overblown at times, you know, whether it's crime or tax policy, you know, Chicago's a big, big market. It's a, you know, second or, depending on kinda how you're measuring, second or third-largest market in the United States. The, the surrounding area is a very large market, so we're not just Chicago proper, but the eight collar counties in Southeast Wisconsin and Northwest Indiana. I'd say it's reasonably healthy. I mean, we have transportation, we have healthcare, we have education, we've got water. Wintrust doesn't do a lot of financing in data centers, but we've got great power and water, which is pretty attractive to data centers around the Lake Michigan kinda footprint. We'll benefit from the ancillary activities that go into building those data centers. I, we think very attractive.
If we can continue to grow our share, deposit share, and we think core deposit growth is the foundation of the franchise. If we can continue to grow deposits in our, you know, three or four core markets and occupy the, you know, second, third, fourth position, extraordinarily valuable and virtually impossible to replicate.
We haven't seen commercial real estate in the headlines like we did as much as we did a few years ago. What is the background? What does the Chicago commercial real estate market look like to you?
Yeah. pretty good, actually. The downtown area is still kinda working through the office space challenges. Wintrust is not a lender to large, you know, central business district type areas. Housing underbuilt in Chicago, so multifamily is really good. Our construction projects are terrific. We see large payoffs, as others do. We actually like that. We want our customers to pay us back and get to the next project. I think we're through, you know, except on an episodic basis, I think we're through the worst of the CRE issues.
Yeah. Last chance. Anyone in the crowd? Question in the back.
You've addressed, M&A from a geographic standpoint, but what about from a size standpoint?
Yeah.
Now that you're $70-plus billion, smaller acquisitions don't really move the needle. How high might you go?
Yeah. Just if you couldn't hear that, the question was about size of acquisitions. You know, I think you're right. With exceptions, you know, deals under a couple billion dollars would be hard to move the needles, the exception being, you know, if we just got into a market that we hadn't been in with, you know, some overlap type situations, you know, being the other example, we might consider doing those. we also don't want to take the company's resources for something that's not gonna move the needle very much. we've talked about two to 10 maybe being kind of the right target zone. We certainly could do something larger. We think we bring a lot to, you know, Macatawa as an example. the bigger toolbox for them is incredibly helpful.
They had great relationships. They're in great markets. They just didn't have the capabilities to compete with larger banks. Any of those situations where we can find somebody that is well-positioned in their market but needs resources, we think we can help. You know, that said, we're gonna be pretty disciplined. We grow $1 billion-$1.5 billion a quarter on average. Again, there's some seasonality to that. To do a bank that's $1 billion, it's, you know, it's less than a quarter's worth of growth. I hope that helps a little bit.
Last question.
Sure.
Can you just talk about credit quality?
Yeah.
Recently.
Yeah.
How much of this is in the beginning of?
I'm gonna knock on our plastic, you know, podium here. It's been very good for a number of years, and, you know, all the banks have been talking about credit normalizing at some point. We just, we just don't see it yet. I mean, it continues to be very, very good. Our non-performing assets and non-performing loans have stayed in a very narrow range for several years now. Kinda got through the real estate kinda concerns on particularly office. We're not a big player, you know, in leveraged type space. We have some leverage, some sponsor finance activity, but not a lot of the 4 times, 5 times leverage type stuff that you're seeing a little bit of conversation about right now. We're very proud of how we've performed.
Charge-offs, you know, the last couple of quarters have averaged about 15 basis points, and I think we're probably thinking we'll be in that same range for the next few quarters here.
Is there any private equity exposure on this, on the balance sheet?
I didn't hear the second part of that. I heard private equity exposure.
Exposure to private equity.
A little bit, yes. We are so selective in terms of the sponsors that we do business with that we feel very comfortable, and a lot of that, for example, is capital call lines. The actual leverage lending is a very, very small part of what we do, and we do it on a very selective basis.
All right, we will conclude there. Thank you, everyone, for joining us today. Tim, this was great. Thank you so much.
Thank you, David.
If you'd like to continue the discussion, we're gonna head downstairs to Cordova 6.