Wintrust Financial : 2021 Shareholder Letter

WELCOME TO WINTRUST FINANCIAL CORPORATION'S

2021 ANNUAL SHAREHOLDERS' LETTER.

CHICAGO'S BANK® WISCONSIN'S BANK®

2021 SHAREHOLDERS' LETTER

FINANCIAL HIGHLIGHTS

2021 marked Wintrust's 30th year of operation and 25th consecutive year of profitability. Following are some of the key financial metrics for the year.

TOTAL ASSETS

TOTAL DEPOSITS

TOTAL LOANS1

PRE-TAX INCOME Excluding Provision for Credit Losses (Non-GAAP)2

700

600

500

400

300

200

100

002021

2017

2018

2019 2020

2017

2018 2019

2020

2021

NET INCOMETOTAL SHAREHOLDERS' EQUITY

NET INTEREST MARGIN

NET CHARGE-OFFS3

• 1 Excluding loans held-for-sale.

• 2 See Appendix, "Non-GAAP Financial Measures/Ratios," for a reconciliation of certain non-GAAP performance measures and ratios used by the Company to evaluate and measure the Company's performance to the most directly comparable GAAP financial measures.

• 3 As a % of average loans, excluding covered loans.

Dollars in thousands except per share data. Years ended December 31,

2021

2020

2019

2018

2017

SELECTED FINANCIAL CONDITION DATA (AT END OF YEAR)

Total assets

Total loans

(excluding loans held-for-sale)

Total deposits

Junior subordinated debentures Total shareholders' equity

SELECTED STATEMENTS OF INCOME DATA

Net interest income

Net revenue1

Net income

Pre-tax income, excluding provision for credit losses

(non-GAAP)2

Net income per common share-basic

Net income per common share-diluted

SELECTED FINANCIAL RATIOS AND OTHER DATA

PERFORMANCE RATIOS

Net interest margin

Net interest margin-fully taxable equivalent (non-GAAP)2

Non-interest income to average assets

Non-interest expense to average assets

Net overhead ratio3

Return on average assets

Return on average common equity

Return on average tangible common equity (non-GAAP)2

Average total assets

Average total shareholders' equity

Average loans to average deposits ratio

COMMON SHARE DATA AT END OF YEAR

Market price per common share

Book value per common share2

Tangible book value per common share (non-GAAP)2

Common shares outstanding

OTHER DATA AT END OF YEAR

Tier 1 leverage ratio

Tier 1 capital ratio

Common Equity Tier 1 capital ratio

Total capital ratio

Allowance for credit losses4

Allowance for loan and unfunded lending-related

commitment losses to total loans

Non-performing loans

Non-performing loans to total loans NUMBER OF

Bank subsidiaries Banking offices

• 1. Net revenue includes net interest income and non-interest income.

• 2. See Appendix, "Non-GAAP Financial Measures/Ratios," for a reconciliation of certain non-GAAP performance measures and ratios used by the Company to evaluate and measure the Company's performance to the most directly comparable GAAP financial measures.

• 3. The net overhead ratio is calculated by netting total non-interest expense and total non-interest income and dividing by that period's total average assets. A lower ratio indicates a higher degree of efficiency.

• 4. The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments. Effective January 1, 2020, the allowance for credit losses also includes the allowance for investment securities as a result of the adoption of Accounting Standard Update ("ASU") 2016-13, Financial Instruments - Credit Losses.

LETTER FROM CEO: TAKING A LOOK AROUND

Depending on your point of view, the 30th anniversary is the pearl or diamond anniversary. Symbolizing everything from purity, honesty, and wisdom to durability and strength, the 30th anniversary symbols seem an appropriate fit for us and are why we're employing a slightly different format for our Shareholders' Letter this year.

I'm often asked for my thoughts on the local market, economy, and industry trends. We're going to lead off this year's Letter with some of those thoughts - some of what we've seen over the last 30 years and what we see coming.

Those of you who know me understand that I am student of history and a fan of the occasional cliché. As we started the preparation for this year's letter, two thoughts immediately entered my mind:

• • The classic proverb "The more things change, the more they remain the same."

• • And the Winston Churchill observation "The farther backward you can look, the farther forward you can see."

The last two years brought us a global pandemic, national protests, deep political and social divisions, market and economic volatility, and massive government financial intervention. This year has compounded those issues with inflation rates not seen since the 1970s, coupled with a war in Central Europe. We do live in interesting times. We hopethat by the time you read this letter, we're all looking at the prospect of consistent recovery and peace.

LAST ONE STANDING

Regardless of the current macroeconomic issues, a common theme for the last 10 to 15 years has been the consolidation within the banking and broader financial services industry. Here in our market, the story has been pretty consistent with consolidation on two levels - large, out-of-market banks buying middle-market banks in order to enter or attempt to become dominant in a market, and middle-market and smaller banks buying up small, local community banks.

Let's start with the first one, as it seems to capture most people's attention. Chicago has always been a great banking town. Even with the big banks' entrance and growth in the market, strong, local, mid-market banks have always thrived. Back in the day, it was LaSalle, American National, and First Chicago. More recently, it has beenWintrust, MB Financial, The Private Bank, and First Midwest.

What we've found is that our local consumer and business customers want a strong, capable, local bank that also offers all of the services and technology of a big bank. As many of our peer banks have been acquired, new opportunities have been created for us to strengthen our position as THE local bank. Whether or not those acquisitions actually perform as intended for the acquiring banks, we leave to the acquirers, their boards, and their shareholders to determine. For us, those acquisitions have always brought the opportunity to serve new clients, often adding displaced staff who bring their customers with them. Being the last local bank of scale standing in this market is a unique and beneficial position to be in, as seen in our numbers. Over the last five years, we've seen an annual growth rate of 14% in assets.

The acquisition of community banks has been a constant for much of the last two decades. The number of existing commercial bank charters across the country has dropped from 8,080 in 2001 to 4,231 in 2021. Of course, more than 500 of these banks did not make it through the financial crisis of 2008-2010. However, the consolidation before and since has continued unabated, with the number of charters in Illinois and Wisconsin dropping from 973 in 2001 to 495 at the end of 2021. This leaves a growing

hole in the market for a community focused financial institution, like Wintrust, to fill.

Over the last five years, we've seen an annual growth rate of 14% in assets.

We expect this consolidation will continue for one main reason - it is very difficult for a small bank to compete in today's environment, especially in a major market. The costs of maintaining a viable community bank are just too high and make it nearly impossible to earn a sustainable financial return while delivering the care clients expect. Increased regulatory scrutiny, the cost of fraud prevention, information security, andtechnology are a few of the headaches and headwinds for smaller banks. The rapid pace of technological change and the average customer's reliance and insistence on financial technology products will continue to make it difficult for smaller banks to add and retain customers. An over-reliance on commercial real estate lending and a lack of sophisticated treasury management tools or commercial underwriting capabilities severely limits the growth potential of these banks.

In short, they just can't keep up. Many survived the financial crisis just over a decade ago and simply don't have the resources to meaningfully invest in growth or product development. The prospect of being acquired is often the one thing that preserves the investment of their shareholders.

Historically, Wintrust has been one of the more active acquirers in our footprint, although with few transactions of late. We've always taken what the marketgives us, but on our terms. We simply won't overpay. So, as the recent price expectations of sellers have not aligned with ours, we're back to opening new locations and entering new markets. We've recently added new locations in Rockford, Oak Park, Elmhurst, and Lombard, with more locations to come.

STILL CRAZY AFTER ALL THESE YEARS

With apologies to Paul Simon, that particular song title applies to Wintrust. When we first opened our doors thirty years ago, we had a few core tenets in mind:

• • Be a growth company, but in a controlled fashion.

• • Have the same or better products as the big banks, but have the best service.

• • Maintain solid credit discipline.

• • Always take care of our customers,