Wintrust Financial Corporation

Welcome to WinTrust Financial Corporation's second 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. 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 call over to Mr. Tim Crane.

Good morning, everybody, and welcome to Wintrust's second quarter 2026 earnings call. In addition to those that Lateef introduced, I'm joined by our Chief Financial Officer, Dave Stoehr, and Chief Legal Officer, Kate Boege. As we do every quarter, I'll provide a brief overview of the quarter. Dave Dykstra will discuss key financial results. Rich will review loan activity and credit quality. And I'll be back to share some final thoughts before we open up to your questions. As a reminder, we're focused on three key strategic priorities to drive financial results and build shareholder value. delivering an exceptional and differentiated customer experience, generating strategic and disciplined growth, and continuing to build on our foundation by investing for the future. Delivering on these priorities, we reported very strong loan and deposit growth, a net interest margin in line with expectations, well-managed expenses, and stable credit quality. All of this produced our sixth consecutive record quarter of net income. Second quarter net income was $233.7 million, up from just over $227 million in the first quarter. Year to date, net income was $461 million, up 20% from the same period last year. Net interest income, the biggest driver of our revenue growth, was up 13% quarter over quarter on an annualized basis. Our growth this quarter was all organic. One client, one relationship at a time. We continue to deliver our differentiated value proposition to gain market share by adding new households and deepening relationships with existing clients. I'm particularly pleased with the strong operating leverage we delivered in the first two quarters of the year. Not only are we growing revenue nicely, we are also managing expenses to ensure we can continue to invest in the tools, capabilities and the people that lead to stronger Client Relationships. On our last call, we shared plans to open branches between now and the end of the year. Our newest location, Chicago's Lakeview neighborhood and in the Illinois towns of Montgomery and Elk Grove Village, will open in the coming weeks, with several others to follow later in the quarter, including three in northwest Indiana. In all cases, we look to open branches either as fill-ins within an existing footprint or in new communities that are a strategic fit for our community banking model. Additionally, on July 6th, we announced an important investment in our wealth management business with the intent to purchase the guardianship services business from Northern Trust. This is a good bolt-on acquisition to a business we know well and will cement our position as a leading provider of guardianship services in the Chicago area. We expect that transaction will close later this year. Finally, we continue to make enhancements to our digital banking experience with new features and functionality coming in the third quarter that will make it easier for consumers and businesses alike to manage their relationship online. These investments are part of our effort to build for our future so that we can continue to deliver the exceptional experience our customers and the market expect from us. All in all, a very strong, straightforward quarter with the consistent performance you have seen from us for many quarters. Now let me return things over to Dave to give a little bit more detail on the results.

Great. Thanks, Tim. Let me start with the balance sheet. Specifically, deposit growth was approximately $2.2 billion of growth during the quarter, representing a 15% increase over the prior quarter on an annualized basis. This strong deposit growth funded continued solid second quarter loan growth of approximately $1.6 billion, representing 12% growth on an annualized basis. Yields and rates in major balance sheet categories were slightly lower, with loan yields moving down seven basis points from the prior quarter to 6.07%. This was primarily due to back book repricing of the commercial insurance premium finance portfolio and slight spread compression due to competitive market pressures. Interest-bearing deposits, which were up substantially, were flat to the prior quarter at 2.74%. I would note that the period end loans were approximately $1.2 billion higher than the average loans for the second quarter, giving us a great start to achieving higher level of average earning assets in the third quarter of 2026. Turning to the income statement results, this was, again, a very solid operating quarter, producing another record level of quarterly net income. Net interest income improved $18.3 million compared to the first quarter of 2026. The benefit to net interest income from an increase of $2.1 billion in average earning assets was offset by a four basis point decline in the net interest margin. The net interest margin was negatively impacted by one basis point due to one additional day in the quarter, two basis points related to the back book reprice of the premium finance portfolio, and one basis point related to other items including mix and spread compression that I discussed. The result was a margin of 3.52% for the second quarter of 2026 and has ranged from 3.50 to 3.59 during the last 10 quarters, showing the sustained stability of this metric. The provision for credit losses continued to remain consistent with prior quarters, staying in the $20 to $30 million range for the sixth consecutive quarter as the overall credit environment under asset quality has remained stable. Regarding the non-interest income and non-interest expense sections, non-interest income totaled $141.3 million in the second quarter, which was an increase from the $134.1 million recorded in the prior quarter. The roughly $7 million increase was primarily the result of a $4 million improvement in mortgage banking revenue as the spring buying season provided a modest amount of increased purchase volume and related revenues. Another contributing factor to the increase in this category is that the company recorded approximately $2 million of higher BOLI income, which was primarily related to higher earnings on BOLI investments that support certain deferred compensation plan benefits. And I'll note that this $2 million increase in BOLI income had a similar offsetting increase in compensation expense during the quarter. So as a result, non-interest income and non-interest expense were both equally elevated for the quarter by almost $2 million. The company also recorded approximately $1.8 million more security gains in the second quarter compared to the first quarter. The impact of the increases just noted, mortgage banking, BOLI, and security gain revenue, was about $8 million. These items tend to have some volatility related to market conditions and may or may not occur in the third quarter. In fact, we currently expect mortgage revenues to fall back into the low $20 million range as a home buying seasonality subsides. Nine interest expenses totaled $397.5 million in the second quarter, up from the $382.6 million recorded in the prior quarter. The primary reasons for the increase, other than to support the exceptional growth, were salary and employee benefits expense increased by approximately $5.6 million as compared to the first quarter, due primarily to the second quarter having a full effect of annual merit increases that were effective February 1st, increased commissions that support the higher mortgage production, and $2 million impact from the bully-related deferred comp expense I just discussed. Advertising and marketing expenses increased by $7.2 million in the second quarter when compared to the prior quarter. As we've discussed many times in the past, this category of expenses tends to be higher in the second and the third quarters of the year due to expenditures related to various sports sponsorships and other summertime sponsorships and others. Offsetting the aforementioned increases was a reversal of the accrued FDIC assessment expense of $5.2 million related to the final true-up of the special assessment previously imposed by the FDIC to pay for the two bank failures that occurred in 2023. The quarterly net overhead ratio improved slightly over the prior quarter, helping the company produce solid operating leverage During the second quarter and for the first half of 2026. In summary, I'll reiterate that this was a very solid quarter and first half of the year. The company accomplished exceptional loan and deposit growth, relatively stable net interest margin, another record level of net income, sustained growth and tangible value per share, and a continued low level of non-performing assets. So with that, I'll conclude my comments and turn it over to Rich to discuss credits.