Wintrust Financial Corporation ($WTFC)

Welcome to Wintrust Financial Corporation's First Quarter 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 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. Actual results could differ materially from the results anticipated or projected in any such 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. 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, and thank you for joining us for Wintrust's First Quarter 2026 Earnings Call. In addition to the introductions that Latif made, I'm joined by our Chief Financial Officer, Dave Stoehr, our Chief Legal Officer, Kate Boege. We'll follow our usual format this morning. I'll begin with a few highlights. Dave Dykstra will review the financial results. Rich will share some thoughts on loan activity and credit quality. And I'll be back with some closing thoughts, including a look at expectations for the second quarter and generally for the remainder of the year. As always, we'll be happy to take your questions. Before we begin, I would like to bring your attention to some changes to the presentation document that accompanies the release of our results. We've modified the design, making some updates to how we present the data based on valuable feedback we've received from many of you. We hope you find the format helpful and informative as we continue to try and provide clear information that highlights our strong market position and our disciplined operating approach. Looking at the first quarter 2026 results, I'm very pleased that we delivered a fifth consecutive quarter of record net income. Overall, it was a very solid and straightforward quarter. We continue to focus on our strategic priorities of providing an exceptional customer experience, delivering disciplined and strategic growth across our businesses with a focus on prudent risk management and investing to build upon our foundation to drive a successful future. That said, despite 2 fewer days in the quarter, we achieved net income of $227 million, up from $223 million last quarter and $189 million in the first quarter of 2025. While Dave and Rich will provide more detail, in summary, net interest income, net interest margin and both loan and deposit growth were in line with our expectations. We delivered solid growth in noninterest income, led by our Wealth Management business. Expenses were well managed and credit quality remained stable. I would highlight that all of our growth is organic. We continue to see good new customer acquisition and market momentum as our clients appreciate our differentiated approach and relentless focus on customer service. In fact, during the quarter, we were recognized once again by J.D. Power for Illinois banking services and by Coalition Greenwich with multiple awards for our commercial middle market banking services. These awards are evidence of our continued success in delivering for our clients in ways that many of our competitors cannot. Overall, a solid quarter. Let me turn it over to Dave.

Great. Thanks, Tim. Let me start with the balance sheet. Specifically, deposit growth was right at $1.2 billion during the quarter, representing an 8% increase over the prior quarter on an annualized basis. This deposit growth helped to fund continued solid first quarter loan growth of approximately $1 billion, representing a 7% growth rate on an annualized basis. Yields and rates on the major balance sheet categories were slightly lower because of the recent market declines in short-term interest rates with loan yields moving down 13 basis points in the first quarter from the prior quarter while interest-bearing deposit costs declined 16 basis points from the prior quarter, thus resulting in a slightly improved growth spread. I'd like to note that loan growth during the quarter was heavily back-end loaded and accordingly, period-end loans are approximately $1.2 billion higher than average loans for the first quarter. That's giving us a great start on achieving higher average earning assets in the second quarter of 2026. Turning to the income statement. This was a very solid operating quarter producing record levels of quarterly net income. Net interest income declined slightly compared to the fourth quarter of 2025. The benefit to net interest income from an increase of $555 million in average earning asset growth and a 2 basis point increase in the net interest margin was almost enough to offset having 2 fewer days in the quarter. The net interest margin was 3.56% for the first quarter and the 2 fewer days in the quarter positively impacted net interest margin by 2 basis points. The net interest margin has ranged from 3.50% to 3.59% during the last 9 quarters, exhibiting sustained stability of our net interest margin. The provision for credit losses was relatively consistent with prior quarters remaining in the $20 million to $30 million range experienced in all the quarterly periods of 2025 as the overall credit environment, our asset quality has remained stable as we enter 2026. Regarding other noninterest income and noninterest expense sections. Total noninterest income amounted to $134.1 million in the first quarter which was an increase from the $130.4 million recorded in the prior quarter. The increase was primarily a result of strong wealth management and operating lease revenues. Mortgage banking activity continued to be subdued and production-related volumes and revenue were essentially unchanged from the prior quarter. As to noninterest expense categories, total noninterest expenses were $382.6 million in the first quarter, which was slightly lower than the $384.5 million recorded in the prior quarter. Increases in salaries and employee benefits were primarily due to annual merit increases that were offset by lower OREO expenses, travel and entertainment and various other small expense decreases. Overall, expenses were very well controlled Additionally, both the quarterly net overhead ratio and efficiency ratio improved slightly relative to the prior quarter. In summary, I'll reiterate this was a very solid quarter. The company accomplished good loan and deposit growth, a stable net interest margin a record level of net income, sustained growth in tangible book value per share and a continued low level of nonperforming assets. So with that, I'll conclude my comments and turn it over to Rich Murphy to discuss credit.

Thanks, Dave. As detailed on Slide 6 of the investor presentation, the solid loan growth of approximately $966 million or 7% on an annualized basis, was broad-based. Commercial loans grew by $719 million, including growth in mortgage warehouse of approximately $286 million. Commercial real estate loans grew by $222 million. The Wintrust Life Finance team continued to build their portfolio by $173 million, and our residential mortgage group also had a very solid quarter. From a credit quality perspective, as detailed on Slide 14, we continue to see strong credit performance across the portfolio. This can be seen in a number of metrics. Nonperforming loans decreased slightly from $185.8 million or 0.35% of total loans to 182.8% -- $182.8 million or 34% of total loans and remain at very manageable levels. Charge-offs for the quarter were 14 basis points, down from 17 basis points in the prior quarter. We believe that the level of NPLs and charge-offs in the first quarter reflect a stable credit environment as evidenced by the chart of historical nonperforming asset levels on Slide 15 and the consistent level of our special mention and substandard loans on Slide 14. This quarter is another example of our commitment to identify problems early and charging them down where appropriate. Our goal is always is to stay ahead of any credit challenges. Turning to Slide 21. I want to briefly highlight our exposure to nondepository financial institutions, which totals approximately $3.2 billion or about 6% of our overall loan portfolio. Importantly, the majority of this exposure is in areas where we have long-standing experience and strong performance. Of our $3.2 billion exposure, approximately $1.8 billion is tied to our mortgage warehouse business. a line of business we've been into for over 30 years with deep client relationships, robust operating systems and well-established risk management practices. In addition, about $341 million consists of capital call facilities which are structured with strong underlying investor support and have historically demonstrated very favorable credit characteristics. The balance of the portfolio is broadly diversified across a granular group of relationships with leasing companies, captive finance companies associated with commercial borrowers, insurance carriers and broker-dealers. Overall, we view this portfolio is well diversified and aligned with our disciplined approach to specialty finance focused on areas where we have expertise, strong structures and a track record of consistent performance. Also, as noted in the last few earnings calls, we continue to be highly focused on our exposure to commercial real estate loans, which comprise roughly 1/4 of our total loan portfolio. As detailed on Slide 18, we continue to see signs of stabilization during the first quarter as CRE NPLs remained at very low levels, decreasing from 0.18% to 0.12%. The and CRE charge-offs continue to remain at historically low levels. On Slide 24, we continue to provide enhanced detail on our CRE office exposure. Currently, this portfolio remains steady at $1.7 billion or 11.7% of our total CRE portfolio and only 3.1% of our total loan portfolio. We monitor this portfolio very closely, and we will continue to perform deep dive analysis on a quarterly basis. The most recent deep dive analysis showed very consistent results when compared to prior quarters. Finally, as we have discussed on previous calls, our team stayed very close contact with our customers, and those conversations continue to reflect measured optimism around the business climate. That concludes my comments on credit, and I'll turn it back to Tim.

Great. Thank you, Rich. At the beginning of the call, I briefly mentioned our 3 strategic priorities: delivering an exceptional customer service generating disciplined and strategic growth across our businesses with prudent risk management, and I would add through all market cycles and investing in our foundation and the future of our bank. I want to spend just 1 minute on the first one. Whether high tech or high touch, we offer a more personalized level of service than our larger bank or money center bank competitors. And relative to our smaller competitors, we offer more tools and sophistication to meet their needs. As a result, we occupy a unique and advantaged position in what we believe to be attractive markets and in attractive businesses. In the second half of the year, we will open several branches to continue to expand market share and to build franchise value in key communities. We'll also supplement that with combined continued investment in the digital capabilities that provide flexibility and convenience for our customers. For us, it's all about the customer, and this unwavering focus is largely what has led to the consistent results we have delivered. So what does this mean for the second quarter and to a degree for the remainder of the year? We expect outsized loan growth in the second quarter largely from our property and casualty premium finance business, which is seasonally very strong in Q2. Longer term, our pipelines are solid, and we expect to deliver mid- to high single-digit loan growth for the remainder of the year. Combined with the stable margin Dave mentioned earlier at around 3.5%, we expect solid net interest income growth in the coming quarters. As always, we will work hard to fund our loan growth with a similar level of deposit growth, expanding our base of deposit clients and building franchise value. Expenses will be seasonally higher in Q2 as a result of a full quarter of annual salary increases, increased marketing expense, and you can expect a normalized tax rate for the remainder of the year. That said, we expect overall expenses will be well managed in line with our revenue growth and will result in operating leverage for the year. With respect to capital, we have reviewed the new proposal. With the proposed standardized approach, we estimate an approximate 6% to 7% reduction in risk-weighted assets or said differently about a 60 to 70 basis point improvement in CET1, if adopted in their present form. We're evaluating the Urba approach, which is a bit more involved and requires some assumptions at this point. If it turns out to be more beneficial, it would likely be a result of the treatment on investment-grade loans and some of the retail activity. Overall, we feel good about our momentum and believe we are well positioned for the remainder of 2026. One final note. I'd like to take a moment to thank 2 of our long-standing board members who will conclude their service at our annual meeting next month. Pat Hackett joined our board in 2008 and has served as Chairman of the Board for the past 9 years, and Bill Doyle, who joined the Board in 2017. Both Pat and Bill have provided invaluable guidance over the years, and we are grateful for all they have done to help us deliver value for our shareholders. I also want to congratulate Brian Kenney who is expected to succeed Pat as Chairman pending his reelection at the upcoming annual meeting. We are very fortunate to have an engaged and thoughtful group of directors. Their perspective and insights are helpful to me and our entire management team and are certainly a big part of our success. With that, Latif, we're happy to take questions.

[Operator Instructions] Our first question comes from the line of Jon Arfstrom of RBC Capital Markets.

Maybe Rich or Tim, a question for you on the perm loan growth that you talked about the period end being higher than average. Anything you would call out in terms of the trends from early in the quarter versus the period end strength? And then any impacts you've seen at all from some of the macro uncertainty in terms of the pipelines?

No. We had some payoffs at the first part of the year that kind of subdued some of that growth. I mean it was just kind of timing, nothing more than that. Good momentum really through the quarter. We did have some strong warehouse line growth right at the end of the quarter that helped as well. But I wouldn't say anything really atypical that I would point to just kind of timing on prepayments and some end of quarter warehouse line growth. And as it relates to overall sentiment out there, I think that we still feel pretty good. The customers we talk to, I'd say, feel that the economy, certainly in the Midwest still feels pretty good. As Tim pointed this out, we're having our pipelines in the C&I space right now are probably as good as they've ever been. Part of that is because of some of that optimism. Part of it is just because where we sit relative to the competition in Chicago. So right now, it feels like we're in a pretty good spot there.

Okay. Good. And then maybe for you, Dave, on mortgage, it's probably the quarter to ask about mortgage given some of the typical seasonalities, but I think it was a little better than I expected. And just curious what kind of an outlook you have for the typical seasonal increase in volumes? And then, I guess, warehouse balances as well, some of the puts and takes.

Yes. I guess I'd say it was a little bit better first quarter than maybe we'd expect, as you said, because during part of the quarter, rates got down below 6% for just a little bit of time. So there was a period there where applications did pick up. But then rates pop back up and really applications came down to sort of scraping the bottom again. So I think for 3 years now, I said I've been hopeful about a good spring buying season, and we are hopeful again this year. But given our rates that we aren't seeing a huge pickup yet. But hopefully, as we get into the spring season here, that does pick up. But again, I think we think that rates have to get down around 6% or below for there to be any meaningful pickup. So barring that, I think we probably stick with our revenue in the $20 million to $30 million range as we've been fairly consistently for a number of quarters here. And if you remember, half of that is servicing income. So mortgage warehouse. Again, I think that's going to just be dependent upon rates. If we see the rate tenure come down and mortgage rates get close to 6%, and I think we do pretty well in that regard. If they stay up in the mid-6s as far as mortgage rates go, it's probably again subdued on that front also.

Yes. I would only add on the mortgage warehouse. Our growth is a little larger there than it is mortgage in general because we've taken share from some of our competitors and continue to do a nice job of adding very high-quality mortgage originators generally on the larger side.

Our next question comes from the line of Nathan Race of Piper Sandler.

Tim, going back to your comments around the insurance refinance portfolio and the outsized growth that you expect here in 2Q as we've discussed in the past. I mean, overall loan growth was, I think, 19% in the quarter annualized in the second quarter of last year led by the P&C portfolio. I guess I'm just curious, are you seeing any softening in volumes just given what's going on in the P&C market these days and also kind of what you're seeing within pricing as well within that book.

Yes. And Rich can help me here. But we don't have as much tailwind as we've had from premium growth in prior years. I think premiums are pretty flat to maybe up slightly as opposed to up quite a bit in prior periods. So that will play a little bit of a role. But we continue to grow units, which is encouraging for the growth of our business. I think pricing is fairly rational in that market. As we've talked about in the past, a lot of these are smaller loans where clients, frankly, are just managing their cash flow. And so small differences in rate tend not to move that very much. And so we continue to expect a good second quarter from a volume standpoint and pricing is rational.

Yes. The only thing I would add is we've made a significant investment in the technology associated with that business. And I think that, as Tim pointed out, the volume that you see is reflective of that. I think that for our customers, they really do see us as the go-to provider in that space. And so we're just going to continue to do that. The overall market can move up or down. Our job is just to provide -- be the premier provider in that space, and it continues to as Tim pointed out, show in the numbers.

Okay. Great. That's helpful. And then a question for Dave. Maybe -- curious if you can help us just in terms of kind of a guidepost in terms of a starting point for expenses in light of the seasonality and the full quarter impact of the increases that you mentioned within the comp line for the second quarter? And if you're still kind of thinking about annualizing the 4Q expense number from last year and layer on some mid-single-digit growth to get to the full year number for 2026?

Yes. The first quarter tends to be a low expense core. I think the last 3 years now, we've seen it actually dip a little bit from the fourth quarter. So that trend is consistent with what we've seen in the last couple of years. And I'd say our outlook is still -- I guess the way I'll frame it is mid-single-digit year-over-year expense growth. which means, as you know, we generally have a pickup in the second quarter and the third quarter because of the advertising and marketing spend that we have for baseball sponsorships and summertime sponsorships and the like. And we also generally have a little bit higher base salaries because we get a full quarter of the base salary increases going into effect February 1 versus 2 months. And then TME is generally seasonally low in the first quarter, so you'd expect a little increase there. So I would say, if you looked at the increases from the prior few years' quarters and looked at that directionally, I think you can look at that as a guide to what to expect as far as overall expense growth going into the second quarter here. But overall, we still expect sort of mid-single-digit year-over-year expense growth of '26 versus '25.

Okay. Great. If I could just sneak one last one in on the margin. It seems like you guys have kind of outperformed kind of the expectations within the last couple of quarters and imagine with some of the swaps and colleges have rolling off this year, there may not be a need or an appetite to replace some of those. So I'm just curious, they're kind of thinking about kind of can the margin grind higher, you think from here as long as the Fed remains on pause, particularly with some of the hedges rolling off and just given the more rational deposit pricing competition in Chicago these days and I imagine new loan production is probably accretive to the portfolio yield of, call it, 6.14% come out of the quarter.

Yes, I think our view on it is, like we said before, we think we're fairly neutral on the margin now, even if rates go up 1x or 2x or down 1x or 2x, we really feel we're fairly neutral. You'll notice in the deck, we added 3 new swaps during the quarter with swap rates ranging in the mid-3 range happened to the 360s. So they're actually very close to what the 1-month of is right now. So we continue to replace the swaps out into the future. because we do think that managing the margin to try to stay neutral in the 350s range is still prudent. So we believe we'll stay there. We actually think probably loans are coming on in the low 6% range and deposits will be relatively flat, too. So we just -- we think we sort of hold the yields and the rates right now and hold the margin relatively flat in the 350s range going forward. And remember, this quarter had 2 basis points of benefit from the day count. So you'll get 1 of those back next quarter because you have 1 more day in the quarter. But very neutral, very flat, and we're trying to maintain that.

Understood. And just to clarify, Dave, you mentioned kind of incremental deposit growth these days is kind of neutral to your all-in and interest-bearing deposit costs. Is that what you're alluding to?

Yes. I would think that the loan rates and the deposit rates will be relatively consistent next quarter, barring some move by the Fed in our market rates.

Our next question comes from the line of Janet Lee of TD Cowen.

So not only is your period-end loans, almost $1.2 billion above your average for the quarter, but your period-end noninterest-bearing deposits is also $1.1 billion above the average. I would assume a lot of that is you're just taking market share with your service as a differentiator, but I wanted to see if there's any adjustments that should be happening in the second quarter? Or is that a good run rate heading into the second quarter?

Yes. Janet, a couple of things there. One, you're correct. We think we continue to win business in the market and grow our deposit base. End of year is a little bit lumpy with respect to noninterest-bearing deposits. And I think the better way to look at that is probably to look at the average noninterest-bearing deposits over the period. It will continue to move around a little bit. But we had a very nice quarter end and continue to look to build the deposit franchise at the bank.

Got it. And for -- so your net interest margin in the 3.5 handle for the rest of the 3 quarters in 2026. Your second quarter NII should be it should benefit a lot from that strength and period-end balances. It seems to me that double-digit kind of NII growth in 2026 is not unrealistic. Am I -- is there anything that I'm missing here? And would you still be looking for that mid-single-digit kind of growth in expense if that were to be the case? How should we think about the level of PL that you want to achieve for the year?

Yes. Well, I don't -- if we have a stronger loan growth, for instance, I don't think we're going to have a significant increase in our expenses. I think we have an infrastructure that can handle that. And you're right that the second quarter will be a very strong quarter because of the seasonality of the premium finance loans. Generally, that's sort of plus or minus $1 billion in the second quarter, we would expect just the premium finance to be that way. So -- and we do expect a very strong second quarter, which should be at above obviously, the -- our range. But looking on 2 more quarters beyond that, given the volatile interest rate environment, I think we still stay in that mid- to high single-digit year expectations. It's impossible that the economy keeps plugging along really great, and we do better than expected, possibly. But we've always consistently thought the pipelines in the business plan would produce at least mid- to high single-digit loan growth. And we think for the year, that's probably still something we'll be with, although given the results so far, you'd probably be at the higher end of that range.

Our next question comes from the line of David Chiaverini of Jefferies.

I wanted to drill into deposit competition. We're hearing some mixed messages from one of the larger regional banks in the Midwest and saying competition is fairly intense in the Midwest. Is this impacting Wintrust much?

I'd say it's still actually fairly reasonable in Chicago. As you know, we have a strong market share in kind of 3 markets: Southeastern Wisconsin, Northern Illinois, Chicago area and Grand Rapids. Pretty rational pricing, promotional CDs kind of at the 4% range, promotional money market in the low 3s. I don't think we're seeing anything atypical at this point, but we appreciate that certainly other markets and maybe some of the Midwest markets are a little frothy, but it feels okay to us.

Great. And then shifting over to -- you touched on expenses earlier just in terms of positive operating leverage. I think you've spoken previously about 20 basis points or so for this year. Is that still the expectation? Or could we do a little bit better?

Well, we obviously had a strong first quarter and to some of the other questions we've answered here, expect a good second quarter. We'll have to see. We continue to invest in the business. We want to make sure that we're positioning the bank for growth going forward. But to your point, the 200 basis points isn't out of the question and we would obviously work harder to improve on that.

Our next question comes from the line of Brandon Rud of Stephens Inc.

I guess a few of my questions have been already answered. If I could ask one on credit. I know the special mention increased about 20% during the quarter. And if I connect the dots with the allowance by loan portfolios, it looks like a stem from the commercial portfolio. Is that accurate? And if not, could you maybe go into that increase a bit?

Yes, it is accurate. I mean it's in the commercial portfolio. It's hard when you look at those numbers because we're at such low levels that periodic increases draw attention like this does we try to be very active in our loan ratings and when there are customers that have a little bit of a miss on a quarter, we will make that adjustment. But I don't think there's anything systemic here. I think it's really just kind of one-off situations in a couple of different customers, really no, I'd say, consistency in terms of industry or anything like that. So I think it's really just more coincidental. We would anticipate that it will probably hang around this level here for the next few quarters as far as we can see. Customers generally are operating reasonable results so far. So nothing that I would read into it.

Got it. Okay. If I could ask on fees, the step-up in the operating lease income. I think if I look back historically, it's not abnormal to see 1 or 2 quarters where it steps up and then goes back down again. So on a go-forward basis, should we look at that as more of like a $15 million -- $16 million run rate? Or is this $19 million really the new rate going forward? .

It's probably somewhere between the $16 million and the $19 million. Occasionally, you get some gains on some sale of equipment during the quarter. But that's normal course of business. We get those each quarter. So it's just sort of what's the size of each of those. But probably somewhere in between there. would be a good bet. But it's not all the question I could be $19 million again next quarter, but there are just some residual gains that come into the portfolio off and on. and they have been on a recurring basis is just -- you can't always judge the size of them each quarter.

Our next question comes from the line of Jeff Rulis of D.A. Davidson.

Just sticking on the fee income conversation, the wealth management side, really pretty impressive and wanted to reorient with your thoughts on kind of year-over-year growth? Or how you see that line item at $42 million is pretty strong. Just the outlook you see from here for this year.

Yes. Good question, Jeff. On the wealth side, a really nice quarter and a business we like and 1 that we're growing steadily. There is an element to the strong growth this quarter that's seasonal and accounts for little bit more revenue than we would expect in coming quarters. But overall, good news and good momentum for us in that business. Kind of to Dave's answer to the prior question, I would look for something in between kind of the fourth quarter and the first quarter as a better number going forward.

Okay. I appreciate it. And then maybe just checking in on the maybe the M&A conversations on, as you guys target smaller institutions, just trying to get a sense for the appetite and the level of conversations on that front.

Yes. I would say not much change since we last spoke, obviously, some high-level conversations, but I'd characterize some of that as more exploration than anything else. And no change to our posture. We consider ourselves a disciplined and skilled acquirer, we'll look at opportunities and believe we're well positioned to take advantage of them if they present themselves, but it'd be based on a good strategic fit, good cultural fit, and we'll see how things play out here, but well equipped to be opportunistic if the opportunities arise.

Our next question comes from the line of Ben Gerlinger of Citi.

I was wondering if we could talk about the branch build-out in your prepared remarks. I think you said 7%. Were these Chicago and then for [indiscernible], I'm assuming that's in the expense guide you provided?

Yes, Ben, I should [indiscernible]. I said several, not 7. But there -- in each of our 3 markets, we actually have new branch activity for the second half of the year. These are, in some cases, markets -- submarkets that we're not in, in other cases, opportunistic to kind of build as the populations move in these various areas. But nice opportunities for us, and they'll just help us to continue to build out the franchise and the deposit base of the company. And it would be included in our expense forecast that we just talked about.

Got you. Okay. That's helpful. And then with these kind of new branches, should we expect any sort of kind of intentional marketing potentially like over market rate? I know you guys are usually the price setter because you're growing faster. But is there anything that we should maybe expect in terms of like just spinning up deposits faster given that branches take roughly 3 to 4 years to breakeven.

Well, yes would be the answer to that question. I mean when we enter new markets, we would want to be aggressive, and we would want to build the size of those branches quickly. I don't think on an overall basis, it's going to change much trajectory of the financials. So I don't think you're going to see something that is easily recognizable, but we will try to be very aggressive in the markets we enter.

Our next question comes from the line of Jared Shaw of Barclays.

Just, I guess, listening to the optimism around loan growth and the ability for more of a stable margin, I don't know, I guess it feels like mid- to high single-digit revenue growth feels pretty conservative just given some of those tailwinds? Is that the right way to think about it, that maybe there's a little bit of conservatism built in on economic uncertainty? Or as we get through second quarter and some of the benefits from the premium finance growth that maybe third and fourth quarter tail off a little bit.

Yes. I don't know what I would add to what we've already said. I mean, we have visibility to what we think is a very good start to the second quarter and then, obviously, the seasonal P&C business. pipelines look good for the second half of the year. So to Dave's point earlier, if that continues, we might be on the high end. We're certainly working to be on the high end, but just don't know what's going on sort of in the market right now with some of the geopolitical stuff. And to Rich's point, our clients are still cautiously optimistic, but you get out much more than the 6 months or so and the visibility gets a little less clear.

Okay. And then on capital, I appreciate the comments on sort of the M&A side, but how should we think about capital continuing to grow from here? And if there isn't a deal, is there a limit to how high you want to see that go in the near to midterm?

Yes, sure. So we ended the quarter, CET1 at 10.4%, with substantial growth in the second quarter. That number probably won't move much. And if we do really well, it might actually move down a little bit. But we would expect to grow CET1, the remainder of the year at mid- to high single-digit loan growth. once we sort of cross 10.5% or so and depending what happens with these proposals, we'll evaluate appropriate capital levels and make some decisions. But our approach is probably still ordered in the same fashion, organic growth. If we happen to find an appropriate acquisition, there may be a need for capital there. And then as most of you know, we have an authorization in place for stock buybacks. And certainly, if we ended up with a lot more capital, we could consider that as an alternative. So I hope that helps.

Our next question comes from the line of Brian Foran of Truist.

Maybe actually piggybacking off that, if no M&A emerges scenario with some activity happening in and around some markets you touch, are there any opportunities you're watching for team hires de novo market expansion, opportunists to client acquisitions, any benefit from M&A happening around you right now?

Well, let me try to take pieces of that. We certainly would always look for talented people that we could hire that tends to happen when somebody gets frustrated with their ability to take care of customers at their financial institution. And we've had some success in that area. We typically don't highlight it on these calls. The de novo expansion, we're certainly excited about a number of these communities that will enter are very attractive and we believe represent good opportunities. And on the M&A front, it happens, when it happens. We'll continue to talk to institutions, we think, would be a cultural and strategic fit. But again, I would say more exploration at this point than a serious conversation. That obviously can change, but that'd be candid right now.

Okay. And then on the expenses, I've gotten tripped up on this before. So just to clarify, the mid-single digits is off the fourth quarter annualized base, not the full year 2025.

Yes. I think the way to just simplify this is full year 2025, the full year 2026 mid-single digits.

Our next question comes from the line of Christopher McGratty of KBW.

Tim or Dave, on the capital, we've heard from some of your peers like the rating agencies are obviously 1 of the constituents you have to be mindful of as you consider the Basel III opportunities. How important is the TCE ratio over the next couple of years, I had one bank said at 8% is kind of a fine line. But any thoughts on balancing the ratios would be great.

Yes. Well, the rating agencies, I think, acknowledge that our capital levels are sufficient given our risk profile. I think most of them understand 1/3 of our portfolio is in premium finance, which is low risk and life which is fortunately, for us, been 0 basis points of loss over the year. So from a risk-adjusted perspective, I think our capital is more than sufficient. And I think the rating agencies understand that. So we're very comfortable with where we're at right now. Our ratings have stayed stable and our capital has been growing. So even if we did a buyback and brought that down a little bit, I think we have room there. So we're comfortable with our capital levels, and we're comfortable with how the rating agencies look at it right now.

And then as a follow-up, within the NII expectations, what's your mix assumption? I mean, DDA has grown on an unpaid basis pretty solidly in the last 6 months. Interested in kind of the seasonal patterns there and also just what's in your expectations going forward?

Yes. Well, as Tim said, I think the better way to look at DDA because sometimes the quarter ends and year-end, there's fluctuations in the DDA. I'd look at the average demand deposits. But I would suspect that the mix of the balance sheet would stay relatively the same as we have good growth quarters. We tend to add more interest-bearing deposits and noninterest-bearing deposits but the absolute dollar amount of DDA should stay relatively consistent on an average basis and then grow as we bring more customers and -- but other than that growth in interest-bearing being a little bit faster than noninterest-bearing just because we need to do so to support the loan growth. I wouldn't expect big changes in the deposit mix.

I would now like to turn the conference back to Tim Crane for closing remarks. Sir?

Latif, thank you. Again, a good start to the year. We feel good about the outlook for 2026, and that's really a tribute to the great team we have at Wintrust. They are very focused on our strategic priorities. I want to thank them for all they do for the customers and the communities in which we operate and most importantly, for our shareholders. So with that, Latif, thank you, and hope everybody has a nice day.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.