Wintrust turned a profit of $105.1 million in the second quarter, down from $153.1 million in the first quarter of last year.
But the Rosemont-based bank, which has branches in Dyer, Lansing and across the south suburbs, had made $258.3 million in the first six months of 2021, up 206% from $84.5 million in the first half of 2020. Wintrust grew its assets by $1.1 billion in the second quarter to $46.7 billion.
"The second quarter of 2021 was characterized by strong organic loan growth, increased net interest income, a decline in mortgage banking revenue, a release of reserves as our credit quality and macroeconomic forecasts improved and a continued focus to increase franchise value in our market area," Wintrust CEO Edward Wehmer said. "The company experienced loan growth, excluding PPP loans, of $1.2 billion or 15%, on an annualized basis in the second quarter of 2021, including growth in its commercial, commercial real estate, residential real estate loans for investment, commercial insurance premium finance receivable and life insurance premium receivable portfolios. The loan growth was driven significantly by $563 million of growth in the commercial insurance premium finance receivable portfolio in part due to favorable market conditions for that portfolio. We are experiencing historically low commercial line of credit utilization and believe that a reversion to normal levels, coupled with robust loan pipelines, will materialize in future loan growth."
Deposits grew by $932 million in the second quarter. Non-interest-bearing deposits grew and now compose 33% of the bank's total deposits.
"We continue to emphasize growing our franchise, including gathering low-cost deposits, which we believe will drive value in the long term. Our loans to deposits ratio ended the quarter at 84.8% and we believe that we have sufficient liquidity to meet customer loan demand," Wehmer said.
During the second quarter, Wintrust increased core loans by $497 million and niche loans by $657 million, largely due to growth in commercial insurance premium finance receivables. Paycheck Protection Loans fell by $1.4 billion in the second quarter as the bank processed forgiveness payments. About 81% of PPP loans made in 2020 have been forgiven with another 12% in review.
Only about 7% of PPP loan recipients have not yet applied for forgiveness.
"Net interest income increased in the second quarter of 2021 primarily due to earning asset growth and increased PPP loan fee accretion. The company recognized $25.2 million of PPP loan fee accretion in the second quarter of 2021 as compared to $19.2 million in the first quarter of 2021," Wehmer said. "Net interest margin improved by nine basis points in the second quarter of 2021 as compared to the first quarter of 2021 primarily due to increased PPP loan fee accretion and a seven basis point decline on the rate paid on interest-bearing deposits. We continue to maintain excess liquidity and believe that deploying such liquidity could potentially increase our net interest margin. However, given the decline in long-term interest rates in the second quarter of 2021, we did not materially increase our investment portfolio due to the lack of adequate market returns."
The bank brought in $50.6 million in mortgage banking revenue in the second quarter, down from $113.5 million in the first quarter. The bank originated $1.7 billion in loan volumes in the second quarter and believes the third quarter will be strong for mortgage banking originations.
"Our second quarter of 2021 results continued to demonstrate the multi-faceted nature of our business model which we believe uniquely positions us to be successful. We expect to leverage our differentiated, diversified loan portfolio to outperform peers with respect to loan growth which should allow us to expand net interest income," Wehmer said. "We are focused on taking advantage of market opportunities to prudently deploy excess liquidity into earning assets including core and niche loans and investment securities while maintaining an interest rate sensitive asset portfolio. We are opportunistically evaluating the acquisition market which has been active for both banks and business lines of various sizes. Of course, we remain diligent in our consideration of acquisition targets and will be prudent in our decision-making, always seeking to minimize dilution. Finally, we evaluate our operating expense base on an ongoing basis to enhance future profitability."