WINTRUST FINANCIAL CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - WINTRUST FINANCIAL CORP	a8-kq42016.htm

Exhibit 99.1

Wintrust Financial Corporation

9700 W. Higgins Road, Suite 800, Rosemont, Illinois 60018

News Release




FOR IMMEDIATE RELEASE		January 18, 2017

FOR MORE INFORMATION CONTACT:

Edward J. Wehmer, President & Chief Executive Officer

David A. Dykstra, Senior Executive Vice President & Chief Operating Officer

(847) 939-9000

Web site address: www.wintrust.com

Wintrust Financial Corporation Reports Record Fourth Quarter 2016 Net Income, an Increase of 54% Over Prior Year, and Record Full-Year 2016 Net Income of $206.9 million, an Increase of 32% Over Prior Year

ROSEMONT, ILLINOIS – Wintrust Financial Corporation (“Wintrust” or “the Company”) (Nasdaq: WTFC) announced net income of $54.6 million or $0.94 per diluted common share for the fourth quarter of 2016 compared to net income of $53.1 million or $0.92 per diluted common share for the third quarter of 2016 and $35.5 million or $0.64 per diluted common share for the fourth quarter of 2015. The Company recorded net income of $206.9 million or $3.66 per diluted common share for the year ended 2016 compared to net income of $156.7 million or $2.93 per diluted common share for the same period of 2015.

Highlights of the Fourth Quarter of 2016 *:


•	Total loans, excluding covered loans and mortgage loans held-for-sale, increased by $602 million, or 13% on an annualized basis, to $19.7 billion. Loan growth included $79 million of loans acquired in relation to the acquisition of First Community Financial Corporation ("FCFC"), which was completed in mid-November.


•	Total assets increased by $347 million and now total $25.7 billion.


•	Total deposits increased by $511 million to $21.7 billion. Non-interest bearing deposit accounts comprise 27% of total deposits.


•	Mortgage banking revenue remained strong, totaling $35.5 million during the fourth quarter, which included a $1.2 million positive fair value adjustment related to mortgage servicing rights assets. Origination volumes totaled $1.2 billion in that period.


•	Net charge-offs, excluding covered loans, decreased to $2.8 million. Net charge-offs as a percentage of average total loans, excluding covered loans, decreased to 6 bps compared to 12 bps during the third quarter.


•	Net interest income increased $6.1 million primarily as a result of earning assets growth.


•	Acquisition and non-operating compensation charges totaled $1.0 million during the quarter.


•	Recorded a $717,000 loss on extinguishment of debt as a result of the prepayment of $262 million of Federal Home Loan Bank advances.

* See "Supplemental Financial Measures/Ratios" on pages 10-11 for more information on non-GAAP measures.

Edward J. Wehmer, President and Chief Executive Officer, commented, “Wintrust reported record net income of $54.6 million for the fourth quarter 2016 and record annual net income of $206.9 million for the full year of 2016. These results were driven by our continued strong asset growth throughout 2016 while maintaining our commitment to controlling operating expenses with our net overhead ratio ending 2016 at 1.47%, which is below our previously stated goal of 1.50%. The fourth quarter of 2016 was also characterized by continued deposit growth, strong performance from our mortgage banking activities, stable credit quality metrics and the acquisition of First Community Financial Corporation."

Mr. Wehmer continued, “Excluding covered loans and mortgage loans held-for-sale, we grew our loan portfolio by $602 million during the fourth quarter, which included $79 million of loans acquired in relation to the acquisition of First Community Financial Corporation. The increased loan volumes and stable net interest margin during the quarter resulted in an increase in net interest income of $6.1 million. Our loan pipelines remain consistently strong and we are well positioned for rising interest rates in the future. Strong deposit growth continued in the fourth quarter of 2016 as deposits increased $511 million over the third quarter of 2016, which included $150 million from the acquisition of First Community Financial Corporation, with total deposits

reaching $21.7 billion as of the end of the fourth quarter. Demand deposits increased $216 million in the fourth quarter, now totaling $5.9 billion and comprising 27% of our overall deposit base."

Commenting on credit quality, Mr. Wehmer noted, “During the fourth quarter of 2016, the Company has continued its practice of timely addressing and resolving non-performing credits. Excluding covered loans, net charge-offs totaled $2.8 million in the current quarter, decreasing $2.9 million from the third quarter of 2016. Additionally, net charge-offs as a percentage of average total loans decreased to 0.06% from 0.12% in the third quarter. Total non-performing loans as a percentage of total loans, excluding covered loans, remained steady at 0.44% at the end of the year. Additionally, the allowance for loan losses as a percentage of non-performing loans, excluding covered loans, remained strong at 140%. We believe that the Company's reserves remain appropriate."

Mr. Wehmer further commented, “Mortgage banking revenue in the fourth quarter totaled $35.5 million, a slight increase of $777,000 compared to the third quarter of 2016. Revenue for the fourth quarter of 2016 was impacted by a $1.2 million positive fair value adjustment on mortgage servicing rights assets. Despite typical seasonality, our mortgage operations experienced strong origination volumes in the fourth quarter totaling $1.2 billion for the period compared to $1.3 billion during the third quarter of 2016 and $808.9 million during the fourth quarter of 2015. Given the recent rise in interest rates and typical seasonality, we expect originations to decrease in the first quarter of 2017. However, we continue to look for opportunities to further enhance the mortgage banking business both organically and through acquisitions."

Turning to the future, Mr. Wehmer stated, “The past year marked the 25th anniversary of the founding of Wintrust's first bank. Since our beginning in 1991, we have focused on serving our customers, communities, employees and shareholders, and will continue to take a steady and measured approach to achieve our main objectives of growing franchise value, increasing profitability, leveraging our expense infrastructure and increasing shareholder value. We expect our growth engine to continue its momentum into 2017 in all areas of our business. Loan growth at the end of the current quarter should add to this momentum as period-end loan balances, excluding loans held-for-sale and covered loans, exceeded the fourth quarter average balances by approximately $472 million. Additionally, investing excess liquidity held at year-end and the benefit from anticipated interest rate increases should have a positive impact on net interest margin and net interest income. Evaluating strategic acquisitions and organic branch growth will continue to be a part of our overall growth strategy with the goal of becoming Chicago’s bank and Wisconsin’s bank. Our opportunities for both internal growth and external growth remain consistently strong."

The graphs below illustrate certain highlights of the fourth quarter of 2016.

Wintrust’s key operating measures and growth rates for the fourth quarter of 2016, as compared to the sequential and linked quarters, are shown in the table below:



										% or⁽⁴⁾ basis point (bp)change from 3rd Quarter 2016			% or basis point (bp) change from 4th Quarter 2015
	Three Months Ended
(Dollars in thousands)	December 31, 2016			September 30, 2016			December 31, 2015
Net income	$	54,608		$	53,115		$	35,512		3		%	54		%
Net income per common share – diluted	$	0.94		$	0.92		$	0.64		2		%	47		%
Net revenue ⁽¹⁾	$	276,053		$	271,240		$	232,296		2		%	19		%
Net interest income	$	190,778		$	184,636		$	167,206		3		%	14		%
Net interest margin	3.21		%	3.21		%	3.26		%	—		bp	(5	)	bp
Net interest margin - fully taxable equivalent (non-GAAP) ⁽²⁾	3.23		%	3.24		%	3.29		%	(1	)	bp	(6	)	bp
Net overhead ratio ⁽³⁾	1.48		%	1.44		%	1.82		%	4		bp	(34	)	bp
Return on average assets	0.85		%	0.85		%	0.63		%	—		bp	22		bp
Return on average common equity	8.32		%	8.20		%	6.03		%	12		bp	229		bp
Return on average tangible common equity (non-GAAP) ⁽²⁾	10.68		%	10.55		%	8.12		%	13		bp	256		bp
At end of period
Total assets	$	25,668,553		$	25,321,759		$	22,909,348		5		%	12		%
Total loans, excluding loans held-for-sale, excluding covered loans	19,703,172			19,101,261			17,118,117			13		%	15		%
Total loans, including loans held-for-sale, excluding covered loans	20,121,546			19,660,895			17,506,155			9		%	15		%
Total deposits	21,658,632			21,147,655			18,639,634			10		%	16		%
Total shareholders’ equity	2,695,617			2,674,474			2,352,274			3		%	15		%


(1)	Net revenue is net interest income plus non-interest income.


(2)	See "Supplemental Financial Measures/Ratios" for additional information on this performance measure/ratio.


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


(4)	Period-end balance sheet percentage changes are annualized.

Certain returns, yields, performance ratios, or quarterly growth rates are “annualized” in this presentation to represent an annual time period. This is done for analytical purposes to better discern for decision-making purposes underlying performance trends when compared to full-year or year-over-year amounts. For example, a 5% growth rate for a quarter would represent an annualized 20% growth rate. Additional supplemental financial information showing quarterly trends can be found on the Company’s website at www.wintrust.com by choosing “Financial Reports” under the “Investor Relations” heading, and then choosing “Financial Highlights.”

WINTRUST FINANCIAL CORPORATION

Selected Financial Highlights



	Three Months Ended									Years Ended
(Dollars in thousands, except per share data)	December 31, 2016			September 30, 2016			December 31, 2015			December 31, 2016			December 31, 2015
Selected Financial Condition Data (at end of period):
Total assets	$	25,668,553		$	25,321,759		$	22,909,348
Total loans, excluding loans held-for-sale and covered loans	19,703,172			19,101,261			17,118,117
Total deposits	21,658,632			21,147,655			18,639,634
Junior subordinated debentures	253,566			253,566			268,566
Total shareholders’ equity	2,695,617			2,674,474			2,352,274
Selected Statements of Income Data:
Net interest income	$	190,778		$	184,636		$	167,206		$	722,193		$	641,529
Net revenue ⁽¹⁾	276,053			271,240			232,296			1,047,623			913,126
Net income	54,608			53,115			35,512			206,875			156,749
Net income per common share – Basic	$	0.98		$	0.96		$	0.66		$	3.83		$	3.05
Net income per common share – Diluted	$	0.94		$	0.92		$	0.64		$	3.66		$	2.93
Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin	3.21		%	3.21		%	3.26		%	3.24		%	3.34		%
Net interest margin - fully taxable equivalent (non-GAAP) ⁽²⁾	3.23		%	3.24		%	3.29		%	3.26		%	3.36		%
Non-interest income to average assets	1.32		%	1.38		%	1.16		%	1.34		%	1.29		%
Non-interest expense to average assets	2.80		%	2.82		%	2.98		%	2.81		%	2.99		%
Net overhead ratio ⁽³⁾	1.48		%	1.44		%	1.82		%	1.47		%	1.70		%
Return on average assets	0.85		%	0.85		%	0.63		%	0.85		%	0.75		%
Return on average common equity	8.32		%	8.20		%	6.03		%	8.37		%	7.15		%
Return on average tangible common equity (non-GAAP) ⁽²⁾	10.68		%	10.55		%	8.12		%	10.90		%	9.44		%
Average total assets	$	25,611,060		$	24,879,252		$	22,225,112		$	24,292,231		$	20,999,837
Average total shareholders’ equity	2,689,876			2,651,684			2,347,545			2,549,929			2,232,989
Average loans to average deposits ratio (excluding loans held-for-sale, excluding covered loans)	89.6		%	89.8		%	90.2		%	90.9		%	89.9		%
Average loans to average deposits ratio (excluding loans held-for-sale, including covered loans)	89.9		%	90.3		%	91.0		%	91.4		%	91.0		%
Common Share Data at end of period:
Market price per common share	$	72.57		$	55.57		$	48.52
Book value per common share ⁽²⁾	$	47.12		$	46.86		$	43.42
Tangible common book value per share ⁽²⁾	$	37.08		$	37.06		$	33.17
Common shares outstanding	51,880,540			51,714,683			48,383,279
Other Data at end of period:⁽⁶⁾
Leverage Ratio ⁽⁴⁾	8.9		%	9.0		%	9.1		%
Tier 1 capital to risk-weighted assets ⁽⁴⁾	9.7		%	9.8		%	10.0		%
Common equity Tier 1 capital to risk-weighted assets ⁽⁴⁾	8.6		%	8.7		%	8.4		%
Total capital to risk-weighted assets ⁽⁴⁾	11.9		%	12.1		%	12.2		%
Allowance for credit losses ⁽⁵⁾	$	123,964		$	119,341		$	106,349
Non-performing loans	87,454			83,128			84,057
Allowance for credit losses to total loans ⁽⁵⁾	0.63		%	0.62		%	0.62		%
Non-performing loans to total loans	0.44		%	0.44		%	0.49		%
Number of:
Bank subsidiaries	15			15			15
Banking offices	155			152			152


(1)	Net revenue includes net interest income and non-interest income.


(2)	See “Supplemental Financial Measures/Ratios” for additional information on this performance measure/ratio.


(3)	The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s total average assets. A lower ratio indicates a higher degree of efficiency.


(4)	Capital ratios for current quarter-end are estimated. As of January 1, 2015 capital ratios are calculated under the requirements of Basel III.


(5)	The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments, but excludes the allowance for covered loan losses.


(6)	Asset quality ratios exclude covered loans.

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CONDITION



	(Unaudited)			(Unaudited)
(In thousands)	December 31, 2016			September 30, 2016			December 31, 2015
Assets
Cash and due from banks	$	267,194		$	242,825		$	271,454
Federal funds sold and securities purchased under resale agreements	2,851			4,122			4,341
Interest bearing deposits with banks	980,457			816,104			607,782
Available-for-sale securities, at fair value	1,724,667			1,650,096			1,716,388
Held-to-maturity securities, at amortized cost	635,705			932,767			884,826
Trading account securities	1,989			1,092			448
Federal Home Loan Bank and Federal Reserve Bank stock	133,494			129,630			101,581
Brokerage customer receivables	25,181			25,511			27,631
Mortgage loans held-for-sale	418,374			559,634			388,038
Loans, net of unearned income, excluding covered loans	19,703,172			19,101,261			17,118,117
Covered loans	58,145			95,940			148,673
Total loans	19,761,317			19,197,201			17,266,790
Allowance for loan losses	(122,291		)	(117,693		)	(105,400		)
Allowance for covered loan losses	(1,322		)	(1,422		)	(3,026		)
Net loans	19,637,704			19,078,086			17,158,364
Premises and equipment, net	597,301			597,263			592,256
Lease investments, net	129,402			116,355			63,170
Accrued interest receivable and other assets	593,796			660,923			597,099
Trade date securities receivable	—			677			—
Goodwill	498,587			485,938			471,761
Other intangible assets	21,851			20,736			24,209
Total assets	$	25,668,553		$	25,321,759		$	22,909,348
Liabilities and Shareholders’ Equity
Deposits:
Non-interest bearing	$	5,927,377		$	5,711,042		$	4,836,420
Interest bearing	15,731,255			15,436,613			13,803,214
Total deposits	21,658,632			21,147,655			18,639,634
Federal Home Loan Bank advances	153,831			419,632			853,431
Other borrowings	262,486			241,366			265,785
Subordinated notes	138,971			138,943			138,861
Junior subordinated debentures	253,566			253,566			268,566
Trade date securities payable	—			—			538
Accrued interest payable and other liabilities	505,450			446,123			390,259
Total liabilities	22,972,936			22,647,285			20,557,074
Shareholders’ Equity:
Preferred stock	251,257			251,257			251,287
Common stock	51,978			51,811			48,469
Surplus	1,365,781			1,356,759			1,190,988
Treasury stock	(4,589		)	(4,522		)	(3,973		)
Retained earnings	1,096,518			1,051,748			928,211
Accumulated other comprehensive loss	(65,328		)	(32,579		)	(62,708		)
Total shareholders’ equity	2,695,617			2,674,474			2,352,274
Total liabilities and shareholders’ equity	$	25,668,553		$	25,321,759		$	22,909,348

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)



	Three Months Ended								Years Ended
(In thousands, except per share data)	December 31, 2016		September 30, 2016			December 31, 2015			December 31, 2016		December 31, 2015
Interest income
Interest and fees on loans	$	199,155	$	190,189		$	169,501		$	741,001	$	651,831
Interest bearing deposits with banks	1,541		1,156			493			4,236		1,486
Federal funds sold and securities purchased under resale agreements	1		1			—			4		4
Investment securities	12,954		15,496			16,405			62,038		61,006
Trading account securities	32		18			25			75		108
Federal Home Loan Bank and Federal Reserve Bank stock	1,144		1,094			857			4,287		3,232
Brokerage customer receivables	186		195			206			816		797
Total interest income	215,013		208,149			187,487			812,457		718,464
Interest expense
Interest on deposits	16,413		15,621			12,617			58,409		48,863
Interest on Federal Home Loan Bank advances	2,439		2,577			2,684			10,886		9,110
Interest on other borrowings	1,074		1,137			1,007			4,355		3,627
Interest on subordinated notes	1,779		1,778			1,777			7,111		7,105
Interest on junior subordinated debentures	2,530		2,400			2,196			9,503		8,230
Total interest expense	24,235		23,513			20,281			90,264		76,935
Net interest income	190,778		184,636			167,206			722,193		641,529
Provision for credit losses	7,350		9,571			9,059			34,084		32,942
Net interest income after provision for credit losses	183,428		175,065			158,147			688,109		608,587
Non-interest income
Wealth management	19,512		19,334			18,634			76,018		73,452
Mortgage banking	35,489		34,712			23,317			128,743		115,011
Service charges on deposit accounts	8,054		8,024			7,210			31,210		27,384
Gains (losses) on investment securities, net	1,575		3,305			(79		)	7,645		323
Fees from covered call options	1,476		3,633			3,629			11,470		15,364
Trading gains (losses), net	1,007		(432		)	205			91		(247		)
Operating lease income, net	5,171		4,459			1,973			16,441		2,728
Other	12,991		13,569			10,201			53,812		37,582
Total non-interest income	85,275		86,604			65,090			325,430		271,597
Non-interest expense
Salaries and employee benefits	104,735		103,718			99,780			405,158		382,080
Equipment	9,532		9,449			8,799			37,055		32,889
Operating lease equipment depreciation	4,219		3,605			1,202			13,259		1,749
Occupancy, net	14,254		12,767			13,062			50,912		48,880
Data processing	7,687		7,432			7,284			28,776		26,940
Advertising and marketing	6,691		7,365			5,373			24,776		21,924
Professional fees	5,425		5,508			4,387			20,411		18,225
Amortization of other intangible assets	1,158		1,085			1,324			4,789		4,621
FDIC insurance	4,726		3,686			3,317			16,065		12,386
OREO expense, net	1,843		1,436			2,598			5,187		4,483
Other	20,101		20,564			19,703			75,297		74,242
Total non-interest expense	180,371		176,615			166,829			681,685		628,419
Income before taxes	88,332		85,054			56,408			331,854		251,765
Income tax expense	33,724		31,939			20,896			124,979		95,016
Net income	$	54,608	$	53,115		$	35,512		$	206,875	$	156,749
Preferred stock dividends and discount accretion	3,629		3,628			3,629			14,513		10,869
Net income applicable to common shares	$	50,979	$	49,487		$	31,883		$	192,362	$	145,880
Net income per common share - Basic	$	0.98	$	0.96		$	0.66		$	3.83	$	3.05
Net income per common share - Diluted	$	0.94	$	0.92		$	0.64		$	3.66	$	2.93
Cash dividends declared per common share	$	0.12	$	0.12		$	0.11		$	0.48	$	0.44
Weighted average common shares outstanding	51,812		51,679			48,371			50,278		47,838
Dilutive potential common shares	4,152		4,047			4,005			3,994		4,099
Average common shares and dilutive common shares	55,964		55,726			52,376			54,272		51,937

EARNINGS PER SHARE

The following table shows the computation of basic and diluted earnings per share for the periods indicated:



		Three Months Ended						Years Ended
(In thousands, except per share data)		December 31, 2016		September 30, 2016		December 31, 2015		December 31, 2016		December 31, 2015
Net income		$	54,608	$	53,115	$	35,512	$	206,875	$	156,749
Less: Preferred stock dividends and discount accretion		3,629		3,628		3,629		14,513		10,869
Net income applicable to common shares—Basic	(A)	50,979		49,487		31,883		192,362		145,880
Add: Dividends on convertible preferred stock, if dilutive		1,578		1,578		1,579		6,313		6,314
Net income applicable to common shares—Diluted	(B)	52,557		51,065		33,462		198,675		152,194
Weighted average common shares outstanding	(C)	51,812		51,679		48,371		50,278		47,838
Effect of dilutive potential common shares:
Common stock equivalents		1,052		938		935		894		1,029
Convertible preferred stock, if dilutive		3,100		3,109		3,070		3,100		3,070
Weighted average common shares and effect of dilutive potential common shares	(D)	55,964		55,726		52,376		54,272		51,937
Net income per common share:
Basic	(A/C)	$	0.98	$	0.96	$	0.66	$	3.83	$	3.05
Diluted	(B/D)	$	0.94	$	0.92	$	0.64	$	3.66	$	2.93

Potentially dilutive common shares can result from stock options, restricted stock unit awards, stock warrants, the Company’s convertible preferred stock and shares to be issued under the Employee Stock Purchase Plan and the Directors Deferred Fee and Stock Plan, being treated as if they had been either exercised or issued, computed by application of the treasury stock method. While potentially dilutive common shares are typically included in the computation of diluted earnings per share, potentially dilutive common shares are excluded from this computation in periods in which the effect would reduce the loss per share or increase the income per share. For diluted earnings per share, net income applicable to common shares can be affected by the conversion of the Company’s convertible preferred stock. Where the effect of this conversion would reduce the loss per share or increase the income per share, net income applicable to common shares is not adjusted by the associated preferred dividends.

SUPPLEMENTAL FINANCIAL MEASURES/RATIOS

The accounting and reporting policies of Wintrust conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures and ratios are used by management to evaluate and measure the Company’s performance. These include taxable-equivalent net interest income (including its individual components), taxable-equivalent net interest margin (including its individual components), the taxable-equivalent efficiency ratio, tangible common equity ratio, tangible common book value per share and return on average tangible common equity. Management believes that these measures and ratios provide users of the Company’s financial information a more meaningful view of the performance of the Company's interest-earning assets and interest-bearing liabilities and of the Company’s operating efficiency. Other financial holding companies may define or calculate these measures and ratios differently.

Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent (“FTE”) basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a FTE basis is also used in the calculation of the Company’s efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses), measures how much it costs to produce one dollar of revenue. Securities gains or losses are excluded from this calculation to better match revenue from daily operations to operational expenses. Management considers the tangible common equity ratio and tangible book value per common share as useful measurements of the Company’s equity. The Company references the return on average tangible common equity as a measurement of profitability.

The following table presents 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 for the last five quarters.



	Three Months Ended															Years Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
(Dollars and shares in thousands)	2016			2016			2016			2016			2015			2016			2015
Calculation of Net Interest Margin and Efficiency Ratio
(A) Interest Income (GAAP)	$	215,013		$	208,149		$	197,064		$	192,231		$	187,487		$	812,457		$	718,464
Taxable-equivalent adjustment:
- Loans	666			584			523			509			430			2,282			1,431
- Liquidity Management Assets	815			963			932			920			866			3,630			3,221
- Other Earning Assets	17			9			8			6			13			40			57
(B) Interest Income - FTE	$	216,511		$	209,705		$	198,527		$	193,666		$	188,796		$	818,409		$	723,173
(C) Interest Expense (GAAP)	24,235			23,513			21,794			20,722			20,281			90,264			76,935
(D) Net Interest Income - FTE (B minus C)	$	192,276		$	186,192		$	176,733		$	172,944		$	168,515		$	728,145		$	646,238
(E) Net Interest Income (GAAP) (A minus C)	$	190,778		$	184,636		$	175,270		$	171,509		$	167,206		$	722,193		$	641,529
Net interest margin (GAAP-derived)	3.21		%	3.21		%	3.24		%	3.29		%	3.26		%	3.24		%	3.34		%
Net interest margin - FTE	3.23		%	3.24		%	3.27		%	3.32		%	3.29		%	3.26		%	3.36		%
(F) Non-interest income	$	85,275		$	86,604		$	84,799		$	68,752		$	65,090		$	325,430		$	271,597
(G) Gains (losses) on investment securities, net	1,575			3,305			1,440			1,325			(79		)	7,645			323
(H) Non-interest expense	180,371			176,615			170,969			153,730			166,829			681,685			628,419
Efficiency ratio (H/(E+F-G))	65.71		%	65.92		%	66.11		%	64.34		%	71.79		%	65.55		%	68.84		%
Efficiency ratio - FTE (H/(D+F-G))	65.36		%	65.54		%	65.73		%	63.96		%	71.39		%	65.18		%	68.49		%
Calculation of Tangible Common Equity ratio (at period end)
Total shareholders’ equity	$	2,695,617		$	2,674,474		$	2,623,595		$	2,418,442		$	2,352,274
(I) Less: Convertible preferred stock	(126,257		)	(126,257		)	(126,257		)	(126,257		)	(126,287		)
Less: Non-convertible preferred stock	(125,000		)	(125,000		)	(125,000		)	(125,000		)	(125,000		)
Less: Intangible assets	(520,438		)	(506,674		)	(507,916		)	(508,005		)	(495,970		)
(J) Total tangible common shareholders’ equity	$	1,923,922		$	1,916,543		$	1,864,422		$	1,659,180		$	1,605,017
Total assets	$	25,668,553		$	25,321,759		$	24,420,616		$	23,488,168		$	22,909,348
Less: Intangible assets	(520,438		)	(506,674		)	(507,916		)	(508,005		)	(495,970		)
(K) Total tangible assets	$	25,148,115		$	24,815,085		$	23,912,700		$	22,980,163		$	22,413,378
Tangible common equity ratio (J/K)	7.7		%	7.7		%	7.8		%	7.2		%	7.2		%
Tangible common equity ratio, assuming full conversion of convertible preferred stock ((J-I)/K)	8.2		%	8.2		%	8.3		%	7.8		%	7.7		%
Calculation of book value per share
Total shareholders’ equity	$	2,695,617		$	2,674,474		$	2,623,595		$	2,418,442		$	2,352,274
Less: Preferred stock	(251,257		)	(251,257		)	(251,257		)	(251,257		)	(251,287		)
(L) Total common equity	$	2,444,360		$	2,423,217		$	2,372,338		$	2,167,185		$	2,100,987
(M) Actual common shares outstanding	51,881			51,715			51,619			48,519			48,383
Book value per common share (L/M)	$	47.12		$	46.86		$	45.96		$	44.67		$	43.42
Tangible common book value per share (J/M)	$	37.08		$	37.06		$	36.12		$	34.20		$	33.17



Calculation of return on average common equity
(N) Net income applicable to common shares	50,979		49,487		46,413		45,483		31,883		192,362		145,880
Add: After-tax intangible asset amortization	716		677		781		812		834		2,986		2,879
(O) Tangible net income applicable to common shares	51,695		50,164		47,194		46,295		32,717		195,348		148,759
Total average shareholders' equity	2,689,876		2,651,684		2,465,732		2,389,770		2,347,545		2,549,929		2,232,989
Less: Average preferred stock	(251,257	)	(251,257	)	(251,257	)	(251,262	)	(251,293	)	(251,258	)	(191,416	)
(P) Total average common shareholders' equity	2,438,619		2,400,427		2,214,475		2,138,508		2,096,252		2,298,671		2,041,573
Less: Average intangible assets	(513,017	)	(508,812	)	(507,439	)	(495,594	)	(497,199	)	(506,241	)	(466,225	)
(Q) Total average tangible common shareholders’ equity	1,925,602		1,891,615		1,707,036		1,642,914		1,599,053		1,792,430		1,575,348
Return on average common equity, annualized (N/P)	8.32	%	8.20	%	8.43	%	8.55	%	6.03	%	8.37	%	7.15	%
Return on average tangible common equity, annualized (O/Q)	10.68	%	10.55	%	11.12	%	11.33	%	8.12	%	10.90	%	9.44	%

LOANS

Loan Portfolio Mix and Growth Rates



										% Growth
(Dollars in thousands)	December 31, 2016			September 30, 2016			December 31, 2015			From ⁽¹⁾ September 30, 2016		From December 31, 2015
Balance:
Commercial	$	6,005,422		$	5,951,544		$	4,713,909		4	%	27	%
Commercial real estate	6,196,087			5,908,684			5,529,289			19		12
Home equity	725,793			742,868			784,675			(9	)	(8	)
Residential real estate	705,221			663,598			607,451			25		16
Premium finance receivables - commercial	2,478,581			2,430,233			2,374,921			8		4
Premium finance receivables - life insurance	3,470,027			3,283,359			2,961,496			23		17
Consumer and other	122,041			120,975			146,376			4		(17	)
Total loans, net of unearned income, excluding covered loans	$	19,703,172		$	19,101,261		$	17,118,117		13	%	15	%
Covered loans	58,145			95,940			148,673			(157	)	(61	)
Total loans, net of unearned income	$	19,761,317		$	19,197,201		$	17,266,790		12	%	14	%
Mix:
Commercial	30		%	31		%	27		%
Commercial real estate	31			31			32
Home equity	4			4			5
Residential real estate	4			3			3
Premium finance receivables - commercial	12			13			14
Premium finance receivables - life insurance	18			17			17
Consumer and other	1			1			1
Total loans, net of unearned income, excluding covered loans	100		%	100		%	99		%
Covered loans	—			—			1
Total loans, net of unearned income	100		%	100		%	100		%


(1)	Annualized

Commercial and Commercial Real Estate Loan Portfolios




As of December 31, 2016			% of Total Balance		Nonaccrual		> 90 Days Past Due and Still Accruing		Allowance For Loan Losses Allocation

(Dollars in thousands)	Balance
Commercial:
Commercial, industrial and other	$	3,744,712	30.7	%	$	13,441	$	174	$	29,831
Franchise	869,721		7.1		—		—		4,744
Mortgage warehouse lines of credit	204,225		1.7		—		—		1,548
Asset-based lending	875,070		7.2		1,924		—		6,860
Leases	294,914		2.4		510		—		858
PCI - commercial loans ⁽¹⁾	16,780		0.1		—		1,689		652
Total commercial	$	6,005,422	49.2	%	$	15,875	$	1,863	$	44,493
Commercial Real Estate:
Construction	$	610,239	5.0	%	$	2,408	$	—	$	7,304
Land	104,801		0.9		394		—		3,679
Office	867,674		7.1		4,337		—		5,769
Industrial	770,601		6.3		7,047		—		6,660
Retail	912,593		7.5		597		—		5,948
Multi-family	807,624		6.6		643		—		8,070
Mixed use and other	1,952,175		16.0		6,498		—		13,953
PCI - commercial real estate ⁽¹⁾	170,380		1.4		—		16,188		39
Total commercial real estate	$	6,196,087	50.8	%	$	21,924	$	16,188	$	51,422
Total commercial and commercial real estate	$	12,201,509	100.0	%	$	37,799	$	18,051	$	95,915

Commercial real estate - collateral location by state:
Illinois	$	4,927,270	79.4	%
Wisconsin	646,429		10.4
Total primary markets	$	5,573,699	89.8	%
Indiana	120,999		2.0
Florida	77,528		1.3
Arizona	53,512		0.9
California	42,590		0.7
Other (no individual state greater than 0.7%)	327,759		5.3
Total	$	6,196,087	100.0	%


(1)	Purchased credit impaired ("PCI") loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.

DEPOSITS

Deposit Portfolio Mix and Growth Rates



										% Growth
(Dollars in thousands)	December 31, 2016			September 30, 2016			December 31, 2015			From ⁽¹⁾ September 30, 2016		From December 31, 2015
Balance:
Non-interest bearing	$	5,927,377		$	5,711,042		$	4,836,420		15	%	23	%
NOW and interest bearing demand deposits	2,624,442			2,552,611			2,390,217			11		10
Wealth management deposits ⁽²⁾	2,209,617			2,283,233			1,643,653			(13	)	34
Money market	4,441,811			4,421,631			4,041,300			2		10
Savings	2,180,482			1,977,661			1,723,367			41		27
Time certificates of deposit	4,274,903			4,201,477			4,004,677			7		7
Total deposits	$	21,658,632		$	21,147,655		$	18,639,634		10	%	16	%
Mix:
Non-interest bearing	27		%	27		%	26		%
NOW and interest bearing demand deposits	12			12			13
Wealth management deposits ⁽²⁾	10			11			9
Money market	21			21			22
Savings	10			9			9
Time certificates of deposit	20			20			21
Total deposits	100		%	100		%	100		%


(1)	Annualized


(2)	Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wayne Hummer Investments, trust and asset management customers of the Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts.

Time Certificates of Deposit

Maturity/Re-pricing Analysis

As of December 31, 2016



(Dollars in thousands)	CDARs & Brokered Certificates of Deposit ⁽¹⁾		MaxSafe Certificates of Deposit ⁽¹⁾		Variable Rate Certificates of Deposit ⁽²⁾		Other Fixed Rate Certificates of Deposit ⁽¹⁾		Total Time Certificates of Deposit		Weighted-Average Rate of Maturing Time Certificates of Deposit ⁽³⁾
1-3 months	$	—	$	47,173	$	135,859	$	704,448	$	887,480	0.62	%
4-6 months	43,576		35,674		—		567,313		646,563		0.70	%
7-9 months	533		23,503		—		535,359		559,395		0.81	%
10-12 months	1,252		18,696		—		690,123		710,071		0.94	%
13-18 months	4,524		12,826		—		1,006,160		1,023,510		1.11	%
19-24 months	—		8,814		—		141,364		150,178		0.96	%
24+ months	1,249		19,797		—		276,660		297,706		1.30	%
Total	$	51,134	$	166,483	$	135,859	$	3,921,427	$	4,274,903	0.89	%


(1)	This category of certificates of deposit is shown by contractual maturity date.


(2)	This category includes variable rate certificates of deposit and savings certificates with the majority repricing on at least a monthly basis.


(3)	Weighted-average rate excludes the impact of purchase accounting fair value adjustments.

NET INTEREST INCOME

The following table presents a summary of Wintrust’s average balances, net interest income and related net interest margins, calculated on a fully tax-equivalent basis, for the fourth quarter of 2016 compared to the third quarter of 2016 (sequential quarters) and fourth quarter of 2015 (linked quarters), respectively:



	Average Balance for three months ended,									Interest for three months ended,									Yield/Rate for three months ended,
(Dollars in thousands)	December 31, 2016			September 30, 2016			December 31, 2015			December 31, 2016			September 30, 2016			December 31, 2015			December 31, 2016		September 30, 2016		December 31, 2015
Liquidity management assets^(1)(2)(7)	$	3,860,616		$	3,671,577		$	3,245,393		$	16,455		$	18,710		$	18,621		1.70	%	2.03	%	2.28	%
Other earning assets^(2)(3)(7)	27,608			29,875			29,792			235			222			244			3.37		2.96		3.26
Loans, net of unearned income^(2)(4)(7)	19,711,504			19,071,621			16,889,922			198,861			189,637			168,060			4.01		3.96		3.95
Covered loans	59,827			101,570			154,846			960			1,136			1,871			6.38		4.45		4.79
Total earning assets⁽⁷⁾	$	23,659,555		$	22,874,643		$	20,319,953		$	216,511		$	209,705		$	188,796		3.64	%	3.65	%	3.69	%
Allowance for loan and covered loan losses	(122,665		)	(121,156		)	(109,448		)
Cash and due from banks	221,892			240,239			260,593
Other assets	1,852,278			1,885,526			1,754,014
Total assets	$	25,611,060		$	24,879,252		$	22,225,112

Interest-bearing deposits	$	15,567,263		$	15,117,102		$	13,606,046		$	16,413		$	15,621		$	12,617		0.42	%	0.41	%	0.37	%
Federal Home Loan Bank advances	388,780			459,198			441,669			2,439			2,577			2,684			2.50		2.23		2.41
Other borrowings	240,174			249,307			269,738			1,074			1,137			1,007			1.78		1.81		1.48
Subordinated notes	138,953			138,925			138,852			1,779			1,778			1,777			5.12		5.12		5.12
Junior subordinated debentures	253,566			253,566			268,566			2,530			2,400			2,196			3.90		3.70		3.20
Total interest-bearing liabilities	$	16,588,736		$	16,218,098		$	14,724,871		$	24,235		$	23,513		$	20,281		0.58	%	0.58	%	0.55	%
Non-interest bearing deposits	5,902,439			5,566,983			4,776,977
Other liabilities	430,009			442,487			375,719
Equity	2,689,876			2,651,684			2,347,545
Total liabilities and shareholders’ equity	$	25,611,060		$	24,879,252		$	22,225,112
Interest rate spread⁽⁵⁾⁽⁷⁾																			3.06	%	3.07	%	3.14	%
Less: Fully tax-equivalent adjustment										(1,498		)	(1,556		)	(1,309		)	(0.02	)	(0.03	)	(0.03	)
Net free funds/ contribution⁽⁶⁾	$	7,070,819		$	6,656,545		$	5,595,082											0.17		0.17		0.15
Net interest income/ margin⁽⁷⁾(GAAP)										$	190,778		$	184,636		$	167,206		3.21	%	3.21	%	3.26	%
Fully tax-equivalent adjustment										1,498			1,556			1,309			0.02		0.03		0.03
Net interest income/ margin - FTE ⁽⁷⁾										$	192,276		$	186,192		$	168,515		3.23	%	3.24	%	3.29	%


(1)	Liquidity management assets include available-for-sale and held-to-maturity securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements.


(2)	Interest income on tax-advantaged loans, trading securities and investment securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015 were $1.5 million, $1.6 million and $1.3 million, respectively.


(3)	Other earning assets include brokerage customer receivables and trading account securities.


(4)	Loans, net of unearned income, include loans held-for-sale and non-accrual loans.


(5)	Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.


(6)	Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.


(7)	See “Supplemental Financial Measures/Ratios” for additional information on this performance ratio.

For the fourth quarter of 2016, net interest income totaled $190.8 million, an increase of $6.1 million as compared to the third quarter of 2016 and an increase of $23.6 million as compared to the fourth quarter of 2015. Net interest margin was 3.21% (3.23% on a fully tax-equivalent basis) during the fourth quarter of 2016 compared to 3.21% (3.24% on a fully tax-equivalent basis) during the third quarter of 2016 and 3.26% (3.29% on a fully tax-equivalent basis) during the fourth quarter of 2015.

The following table presents a summary of Wintrust's average balances, net interest income and related interest margins, calculated on a fully tax-equivalent basis, for the year ended December 31, 2016 compared to the year ended December 31, 2015:



	Average Balance for Year Ended,						Interest for Year Ended,						Yield/Rate for Year Ended,
(Dollars in thousands)	December 31, 2016			December 31, 2015			December 31, 2016			December 31, 2015			December 31, 2016		December 31, 2015
Liquidity management assets^(1)(2)(7)	$	3,562,480		$	2,992,506		$	74,195		$	68,949		2.08	%	2.30	%
Other earning assets^(2)(3)(7)	28,992			30,161			931			962			3.21		3.19
Loans, net of unearned income^(2)(4)(7)	18,628,261			16,022,371			737,694			641,917			3.96		4.01
Covered loans	102,948			186,427			5,589			11,345			5.43		6.09
Total earning assets⁽⁷⁾	$	22,322,681		$	19,231,465		$	818,409		$	723,173		3.67	%	3.76	%
Allowance for loan and covered loan losses	(118,229		)	(103,459		)
Cash and due from banks	248,507			249,488
Other assets	1,839,272			1,622,343
Total assets	$	24,292,231		$	20,999,837

Interest-bearing deposits	$	14,620,886		$	13,271,304		$	58,409		$	48,863		0.40	%	0.37	%
Federal Home Loan Bank advances	653,529			380,936			10,886			9,110			1.67		2.39
Other borrowings	248,753			232,895			4,355			3,627			1.75		1.56
Subordinated notes	138,912			138,812			7,111			7,105			5.12		5.12
Junior subordinated debentures	254,591			258,203			9,503			8,230			3.67		3.14
Total interest-bearing liabilities	$	15,916,671		$	14,282,150		$	90,264		$	76,935		0.57	%	0.54	%
Non-interest bearing deposits	5,409,923			4,144,378
Other liabilities	415,708			340,321
Equity	2,549,929			2,232,989
Total liabilities and shareholders’ equity	$	24,292,231		$	20,999,837
Interest rate spread⁽⁵⁾⁽⁷⁾													3.10	%	3.22	%
Less: Fully tax-equivalent adjustment							(5,952		)	(4,709		)	(0.02	)	(0.02	)
Net free funds/contribution⁽⁶⁾	$	6,406,010		$	4,949,315								0.16		0.14
Net interest income/ margin⁽⁷⁾(GAAP)							$	722,193		$	641,529		3.24	%	3.34	%
Fully tax-equivalent adjustment							5,952			4,709			0.02		0.02
Net interest income/ margin - FTE ⁽⁷⁾							$	728,145		$	646,238		3.26	%	3.36	%


(1)	Liquidity management assets include available-for-sale and held-to-maturity securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements.


(2)	Interest income on tax-advantaged loans, trading securities and investment securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the years ended December 31, 2016 and 2015 were $6.0 million and $4.7 million respectively.


(3)	Other earning assets include brokerage customer receivables and trading account securities.


(4)	Loans, net of unearned income, include loans held-for-sale and non-accrual loans.


(5)	Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.


(6)	Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.


(7)	See “Supplemental Financial Measures/Ratios” for additional information on this performance ratio.

For the year ended 2016, net interest income totaled $722.2 million, an increase of $80.7 million as compared to the year ended 2015. Net interest margin was 3.24% (3.26% on a fully tax-equivalent basis) for the year ended 2016 compared to 3.34% (3.36% on a fully tax-equivalent basis) for the year ended 2015. The reduction in net interest margin compared to the year ended 2015 is primarily the result of a decline in yields on liquidity management assets and loans and an increase on the rate of interest bearing liabilities.

Interest Rate Sensitivity

As an ongoing part of its financial strategy, the Company attempts to manage the impact of fluctuations in market interest rates on net interest income. Management measures its exposure to changes in interest rates by modeling many different interest rate scenarios.

The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon assuming increases of 100 and 200 basis points and a decrease of 100 basis points. The Static Shock Scenario results incorporate actual cash flows and repricing characteristics for balance sheet instruments following an instantaneous, parallel change in market rates based upon a static (i.e. no growth or constant) balance sheet. Conversely, the Ramp Scenario results incorporate management’s projections of future volume and pricing of each of the product lines following a gradual, parallel change in market rates over twelve months. Actual results may differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies. The interest rate sensitivity for both the Static Shock and Ramp Scenario at December 31, 2016, September 30, 2016 and December 31, 2015 is as follows:




Static Shock Scenario	+200 Basis Points		+100 Basis Points		-100 Basis Points
December 31, 2016	18.5	%	9.6	%	(13.2	)%
September 30, 2016	19.6	%	10.1	%	(10.4	)%
December 31, 2015	16.1	%	8.7	%	(10.6	)%



Ramp Scenario	+200 Basis Points		+100 Basis Points		-100 Basis Points
December 31, 2016	7.6	%	4.0	%	(5.0	)%
September 30, 2016	7.8	%	3.9	%	(4.1	)%
December 31, 2015	7.3	%	3.9	%	(4.4	)%

These results indicate that the Company has positioned its balance sheet to benefit from a rise in interest rates. This analysis also indicates that the Company would benefit to a greater magnitude should a rise in interest rates be significant (i.e., 200 basis points) and immediate (Static Shock Scenario).

NON-INTEREST INCOME

The following table presents non-interest income by category for the periods presented:



	Three Months Ended
	December 31,			September 30,			December 31,			Q4 2016 compared to Q3 2016					Q4 2016 compared to Q4 2015
(Dollars in thousands)	2016			2016			2015			$ Change			% Change		$ Change			% Change
Brokerage	$	6,408		$	6,752		$	6,850		$	(344	)	(5	)%	$	(442	)	(6	)%
Trust and asset management	13,104			12,582			11,784			522			4		1,320			11
Total wealth management	19,512			19,334			18,634			178			1		878			5
Mortgage banking	35,489			34,712			23,317			777			2		12,172			52
Service charges on deposit accounts	8,054			8,024			7,210			30			—		844			12
Gains (losses) on investment securities, net	1,575			3,305			(79		)	(1,730		)	NM		1,654			NM
Fees from covered call options	1,476			3,633			3,629			(2,157		)	(59	)	(2,153		)	(59	)
Trading gains (losses), net	1,007			(432		)	205			1,439			NM		802			NM
Operating lease income, net	5,171			4,459			1,973			712			16		3,198			NM
Other:
Interest rate swap fees	2,870			2,881			2,343			(11		)	—		527			22
BOLI	981			884			1,463			97			11		(482		)	(33	)
Administrative services	1,115			1,151			1,101			(36		)	(3	)	14			1
Loss on extinguishment of debt	(717		)	—			—			(717		)	NM		(717		)	NM
Miscellaneous	8,742			8,653			5,294			89			1		3,448			65
Total Other	12,991			13,569			10,201			(578		)	(4	)	2,790			27
Total Non-Interest Income	$	85,275		$	86,604		$	65,090		$	(1,329	)	(2	)%	$	20,185		31	%

NM - Not Meaningful



	Years Ended
	December 31,		December 31,			$			%
(Dollars in thousands)	2016		2015			Change			Change
Brokerage	$	25,519	$	27,030		$	(1,511	)	(6	)%
Trust and asset management	50,499		46,422			4,077			9
Total wealth management	76,018		73,452			2,566			3
Mortgage banking	128,743		115,011			13,732			12
Service charges on deposit accounts	31,210		27,384			3,826			14
Gains on investment securities, net	7,645		323			7,322			NM
Fees from covered call options	11,470		15,364			(3,894		)	(25	)
Trading gains (losses), net	91		(247		)	338			NM
Operating lease income, net	16,441		2,728			13,713			NM
Other:
Interest rate swap fees	12,024		9,487			2,537			27
BOLI	3,594		4,622			(1,028		)	(22	)
Administrative services	4,409		4,252			157			4
Gain on extinguishment of debt	3,588		—			3,588			NM
Miscellaneous	30,197		19,221			10,976			57
Total Other	53,812		37,582			16,230			43
Total Non-Interest Income	$	325,430	$	271,597		$	53,833		20	%

NM - Not Meaningful

Notable contributions to the change in non-interest income are as follows:

The increase in wealth management revenue during the current period as compared to the third quarter of 2016 and fourth quarter of 2015 is primarily attributable to growth in assets under management due to new customers. Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors and the brokerage commissions, managed money fees and insurance product commissions at Wayne Hummer Investments.

The increase in mortgage banking revenue in the current quarter as compared to the most recent quarter resulted from a $1.2 million positive fair value adjustment on mortgage servicing rights assets ("MSRs") during the period as a result of lower projected prepayment speeds due to rising market interest rates, partially offset by lower origination volumes. Mortgage loans originated or purchased for sale decreased during the current quarter, totaling $1.2 billion in the fourth quarter of 2016 as compared to $1.3 billion in the third quarter of 2016 and $808.9 million in the fourth quarter of 2015. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market. Mortgage revenue is also impacted by changes in the fair value of MSRs as the Company does not hedge this change in fair value. The Company typically originates mortgage loans held-for-sale with associated MSRs either retained or released. The Company records MSRs at fair value on a recurring basis. The table below presents additional selected information regarding mortgage banking revenue for the respective periods.



	Three Months Ended									Years Ended
(Dollars in thousands)	December 31, 2016			September 30, 2016			December 31, 2015			December 31, 2016			December 31, 2015
Retail originations	$	1,042,145		1,138,571			$	740,510		$	4,020,788		$	3,647,018
Correspondent originations	135,726			121,007			68,366			365,551			256,759
(A) Total originations	$	1,177,871		1,259,578			$	808,876		$	4,386,339		$	3,903,777

Purchases as a percentage of originations	52		%	57		%	68		%	58		%	61		%
Refinances as a percentage of originations	48			43			32			42			39
Total	100		%	100		%	100		%	100		%	100		%

(B) Production revenue ⁽¹⁾	$	28,320		$	32,889		$	22,043		$	113,360		$	112,683
Production margin (B / A)	2.40		%	2.61		%	2.73		%	2.58		%	2.89		%

Loans serviced for others (C)	$	1,784,760		$	1,508,469		$	939,819
MSRs, at fair value (D)	19,103			13,901			9,092
Percentage of mortgage servicing rights to loans serviced for others (D/C)	1.07		%	0.92		%	0.97		%


(1)	Production revenue represents revenue earned from the origination and subsequent sale of mortgages, including gains on loans sold and fees from originations, processing and other related activities, and excludes servicing fees, changes in the fair value of servicing rights and changes to the mortgage recourse obligation.

The Company has typically written call options with terms of less than three months against certain U.S. Treasury and agency securities held in its portfolio for liquidity and other purposes. Management has effectively entered into these transactions with the goal of economically hedging security positions and enhancing its overall return on its investment portfolio by using fees generated from these options to compensate for net interest margin compression. These option transactions are designed to mitigate overall interest rate risk and do not qualify as hedges pursuant to accounting guidance. Fees from covered call options decreased in the current quarter compared to the third quarter of 2016 primarily as a result of selling call options against a smaller value of underlying securities resulting in lower premiums received by the Company. There were no outstanding call option contracts at December 31, 2016, September 30, 2016 and December 31, 2015.

The increase in operating lease income in the current quarter compared to the prior period quarters is primarily related to growth in business from the Company's leasing divisions during the fourth quarter of 2016.

The decrease in other non-interest income in the current quarter as compared to the third quarter of 2016 is primarily due to a loss on extinguishment of debt as a result of the prepayment of $262 million of Federal Home Loan Bank advances with a weighted-average interest rate of approximately 1.38%.

NON-INTEREST EXPENSE

The following table presents non-interest expense by category for the periods present:



	Three Months Ended
	December 31,		September 30,		December 31,		Q4 2016 compared to Q3 2016					Q4 2016 compared to Q4 2015
(Dollars in thousands)	2016		2016		2015		$ Change			% Change		$ Change			% Change
Salaries and employee benefits:
Salaries	$	53,108	$	54,309	$	50,982	$	(1,201	)	(2	)%	$	2,126		4	%
Commissions and incentive compensation	35,744		33,740		31,222		2,004			6		4,522			14
Benefits	15,883		15,669		17,576		214			1		(1,693		)	(10	)
Total salaries and employee benefits	104,735		103,718		99,780		1,017			1		4,955			5
Equipment	9,532		9,449		8,799		83			1		733			8
Operating lease equipment depreciation	4,219		3,605		1,202		614			17		3,017			NM
Occupancy, net	14,254		12,767		13,062		1,487			12		1,192			9
Data processing	7,687		7,432		7,284		255			3		403			6
Advertising and marketing	6,691		7,365		5,373		(674		)	(9	)	1,318			25
Professional fees	5,425		5,508		4,387		(83		)	(2	)	1,038			24
Amortization of other intangible assets	1,158		1,085		1,324		73			7		(166		)	(13	)
FDIC insurance	4,726		3,686		3,317		1,040			28		1,409			42
OREO expense, net	1,843		1,436		2,598		407			28		(755		)	(29	)
Other:
Commissions - 3rd party brokers	1,165		1,362		1,321		(197		)	(14	)	(156		)	(12	)
Postage	1,955		1,889		1,892		66			3		63			3
Miscellaneous	16,981		17,313		16,490		(332		)	(2	)	491			3
Total other	20,101		20,564		19,703		(463		)	(2	)	398			2
Total Non-Interest Expense	$	180,371	$	176,615	$	166,829	$	3,756		2	%	$	13,542		8	%

NM - Not Meaningful



	Years Ended
	December 31,		December 31,		$			%
(Dollars in thousands)	2016		2015		Change			Change
Salaries and employee benefits:
Salaries	$	210,623	$	197,475	$	13,148		7	%
Commissions and incentive compensation	128,390		120,138		8,252			7
Benefits	66,145		64,467		1,678			3
Total salaries and employee benefits	405,158		382,080		23,078			6
Equipment	37,055		32,889		4,166			13
Operating lease equipment depreciation	13,259		1,749		11,510			NM
Occupancy, net	50,912		48,880		2,032			4
Data processing	28,776		26,940		1,836			7
Advertising and marketing	24,776		21,924		2,852			13
Professional fees	20,411		18,225		2,186			12
Amortization of other intangible assets	4,789		4,621		168			4
FDIC insurance	16,065		12,386		3,679			30
OREO expense, net	5,187		4,483		704			16
Other:
Commissions - 3rd party brokers	5,161		5,474		(313		)	(6	)
Postage	7,184		7,030		154			2
Miscellaneous	62,952		61,738		1,214			2
Total other	75,297		74,242		1,055			1
Total Non-Interest Expense	$	681,685	$	628,419	$	53,266		8	%

NM - Not Meaningful

Notable contributions to the change in non-interest expense are as follows:

Salaries and employee benefits expense increased in the current quarter compared to the third quarter of 2016 primarily as a result of higher incentive compensation on variable pay based arrangements, partially offset by lower salaries. Additionally salaries and employee benefits expense included $832,000 of acquisition and non-operating compensation charges consisting primarily of a $492,000 adjustment of pension obligations assumed in previous acquisitions and $329,000 of severance charges.

Occupancy expense increased in the current quarter compared to the third quarter of 2016 due to increased net rent expense on leased properties as well as higher maintenance and repair costs. Occupancy expense includes depreciation on premises, real estate taxes, utilities and maintenance of premises, as well as net rent expense for lease premises.

Data processing expenses increased in the current quarter compared to the third quarter of 2016 primarily due to a $155,000 increase in acquisition-related charges related to recent bank acquisitions.

FDIC insurance increased in the current quarter compared to the third quarter of 2016 and fourth quarter of 2015 primarily as a result of increased assessment rates during the fourth quarter of 2016 and the change in FDIC assessment methodology.

ASSET QUALITY

Allowance for Credit Losses, excluding covered loans



	Three Months Ended									Years Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
(Dollars in thousands)	2016			2016			2015			2016			2015
Allowance for loan losses at beginning of period	$	117,693		$	114,356		$	102,996		$	105,400		$	91,705
Provision for credit losses	7,357			9,741			9,196			34,790			33,747
Other adjustments	33			(112		)	(243		)	(291		)	(737		)
Reclassification (to) from allowance for unfunded lending-related commitments	(25		)	(579		)	13			(725		)	(138		)
Charge-offs:
Commercial	3,054			3,469			1,369			7,915			4,253
Commercial real estate	375			382			2,734			1,930			6,543
Home equity	326			574			680			3,998			4,227
Residential real estate	410			134			211			1,730			2,903
Premium finance receivables - commercial	1,843			1,959			2,676			8,193			7,060
Premium finance receivables - life insurance	—			—			—			—			—
Consumer and other	205			389			179			925			521
Total charge-offs	6,213			6,907			7,849			24,691			25,507
Recoveries:
Commercial	668			176			315			1,594			1,432
Commercial real estate	1,916			364			491			2,945			2,840
Home equity	300			65			183			484			312
Residential real estate	21			61			55			225			283
Premium finance receivables - commercial	498			456			223			2,374			1,288
Premium finance receivables - life insurance	—			—			—			—			16
Consumer and other	43			72			20			186			159
Total recoveries	3,446			1,194			1,287			7,808			6,330
Net charge-offs	(2,767		)	(5,713		)	(6,562		)	(16,883		)	(19,177		)
Allowance for loan losses at period end	$	122,291		$	117,693		$	105,400		$	122,291		$	105,400
Allowance for unfunded lending-related commitments at period end	1,673			1,648			949			1,673			949
Allowance for credit losses at period end	$	123,964		$	119,341		$	106,349		$	123,964		$	106,349
Annualized net charge-offs by category as a percentage of its own respective category’s average:
Commercial	0.16		%	0.24		%	0.09		%	0.12		%	0.07		%
Commercial real estate	(0.10		)	0.00			0.16			(0.02		)	0.07
Home equity	0.01			0.27			0.25			0.46			0.52
Residential real estate	0.13			0.03			0.07			0.14			0.29
Premium finance receivables - commercial	0.22			0.24			0.41			0.24			0.24
Premium finance receivables - life insurance	0.00			0.00			0.00			0.00			0.00
Consumer and other	0.47			0.92			0.37			0.54			0.23
Total loans, net of unearned income, excluding covered loans	0.06		%	0.12		%	0.15		%	0.09		%	0.12		%
Net charge-offs as a percentage of the provision for credit losses	37.61		%	58.65		%	71.35		%	48.53		%	56.83		%
Loans at period-end, excluding covered loans	$	19,703,172		$	19,101,261		$	17,118,117
Allowance for loan losses as a percentage of loans at period end	0.62		%	0.62		%	0.62		%
Allowance for credit losses as a percentage of loans at period end	0.63		%	0.62		%	0.62		%

The allowance for credit losses, excluding the allowance for covered loan losses, is comprised of the allowance for loan losses and the allowance for unfunded lending-related commitments. The allowance for loan losses is a reserve against loan amounts that are actually funded and outstanding while the allowance for unfunded lending-related commitments (separate liability account) relates to certain amounts that Wintrust is committed to lend but for which funds have not yet been disbursed. The provision for

credit losses, excluding the provision for covered loan losses, may contain both a component related to funded loans (provision for loan losses) and a component related to lending-related commitments (provision for unfunded loan commitments and letters of credit).

Net charge-offs as a percentage of loans, excluding covered loans, for the fourth quarter of 2016 totaled 6 basis points on an annualized basis compared to 12 basis points on an annualized basis in the third quarter of 2016 and 15 basis points on an annualized basis in the fourth quarter of 2015. Net charge-offs totaled $2.8 million in the fourth quarter of 2016, a $2.9 million decrease from $5.7 million in the third quarter of 2016 and a $3.8 million decrease from $6.6 million in the fourth quarter of 2015. The provision for credit losses, excluding the provision for covered loan losses, totaled $7.4 million for the fourth quarter of 2016 compared to $9.7 million for the third quarter of 2016 and $9.2 million for the fourth quarter of 2015.

Management believes the allowance for credit losses is appropriate to provide for inherent losses in the portfolio. There can be no assurances however, that future losses will not exceed the amounts provided for, thereby affecting future results of operations. The amount of future additions to the allowance for credit losses will be dependent upon management’s assessment of the appropriateness of the allowance based on its evaluation of economic conditions, changes in real estate values, interest rates, the regulatory environment, the level of past-due and non-performing loans and other factors.

The Company also provides a provision for covered loan losses on covered loans and maintains an allowance for covered loan losses on covered loans. Please see “Covered Assets” later in this document for more detail.

The following table presents the provision for credit losses and allowance for credit losses by component for the periods presented:



	Three Months Ended									Years Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
(Dollars in thousands)	2016			2016			2015			2016			2015
Provision for loan losses	$	7,332		$	9,162		$	9,209		$	34,065		$	33,609
Provision for unfunded lending-related commitments	25			579			(13		)	725			138
Provision for covered loan losses	(7		)	(170		)	(137		)	(706		)	(805		)
Provision for credit losses	$	7,350		$	9,571		$	9,059		$	34,084		$	32,942

							Period End
							December 31,			September 30,			December 31,
							2016			2016			2015
Allowance for loan losses							$	122,291		$	117,693		$	105,400
Allowance for unfunded lending-related commitments							1,673			1,648			949
Allowance for covered loan losses							1,322			1,422			3,026
Allowance for credit losses							$	125,286		$	120,763		$	109,375

The tables below summarize the calculation of allowance for loan losses for the Company’s core loan portfolio and consumer, niche and purchased loan portfolio as of December 31, 2016 and September 30, 2016.



	As of December 31, 2016
	Recorded		Calculated		As a percentage of its own respective
(Dollars in thousands)	Investment		Allowance		category’s balance
Commercial:⁽¹⁾
Commercial and industrial	$	3,234,629	$	27,112	0.84	%
Asset-based lending	867,697		6,859		0.79
Tax exempt	327,694		2,299		0.70
Leases	294,124		858		0.29
Commercial real estate:⁽¹⁾
Residential construction	46,235		1,045		2.26
Commercial construction	563,001		6,259		1.11
Land	99,194		3,677		3.71
Office	808,322		5,757		0.71
Industrial	716,480		6,643		0.93
Retail	855,787		5,928		0.69
Multi-family	766,146		8,052		1.05
Mixed use and other	1,815,573		13,867		0.76
Home equity⁽¹⁾	649,129		11,767		1.81
Residential real estate⁽¹⁾	658,487		5,634		0.86
Total core loan portfolio	$	11,702,498	$	105,757	0.90	%
Commercial:
Franchise	$	565,588	$	4,744	0.84	%
Mortgage warehouse lines of credit	204,225		1,548		0.76
Community Advantage - homeowner associations	145,717		365		0.25
Aircraft	3,356		42		1.25
Purchased non-covered commercial loans ⁽²⁾	362,392		666		0.18
Commercial real estate:
Purchased non-covered commercial real estate ⁽²⁾	525,349		194		0.04
Purchased non-covered home equity ⁽²⁾	76,664		7		0.01
Purchased non-covered residential real estate ⁽²⁾	46,734		80		0.17
Premium finance receivables
U.S. commercial insurance loans	2,170,844		5,521		0.25
Canada commercial insurance loans ⁽²⁾	307,737		604		0.20
Life insurance loans ⁽¹⁾	3,220,370		1,500		0.05
Purchased life insurance loans ⁽²⁾	249,657		—		—
Consumer and other ⁽¹⁾	119,073		1,261		1.06
Purchased non-covered consumer and other ⁽²⁾	2,968		2		0.07
Total consumer, niche and purchased loan portfolio	$	8,000,674	$	16,534	0.21	%
Total loans, net of unearned income, excluding covered loans	$	19,703,172	$	122,291	0.62	%
Non-accretable credit discounts on purchased loans reported in accordance with ASC 310-30, excluding covered loans			$	12,324
Total allowance for loan losses and non-accretable credit discounts on purchased loans, excluding covered loans			$	134,615	0.68	%


(1)	Excludes purchased loans reported in accordance with ASC 310-20 and ASC 310-30.


(2)	Purchased loans represent loans reported in accordance with ASC 310-20 and ASC 310-30.



	As of September 30, 2016
	Recorded		Calculated		As a percentage of its own respective
(Dollars in thousands)	Investment		Allowance		category’s balance
Commercial:⁽¹⁾
Commercial and industrial	$	3,111,891	$	26,440	0.85	%
Asset-based lending	844,357		6,728		0.80
Tax exempt	316,343		2,229		0.70
Leases	299,534		893		0.30
Commercial real estate:⁽¹⁾
Residential construction	64,986		736		1.13
Commercial construction	386,275		4,042		1.05
Land	103,109		3,577		3.47
Office	834,123		6,002		0.72
Industrial	719,470		6,349		0.88
Retail	834,507		6,045		0.72
Multi-family	752,106		7,956		1.06
Mixed use and other	1,731,583		13,545		0.78
Home equity⁽¹⁾	664,811		11,678		1.76
Residential real estate⁽¹⁾	615,312		6,027		0.98
Total core loan portfolio	$	11,278,407	$	102,247	0.91	%
Commercial:
Franchise	$	334,910	$	3,357	1.00	%
Mortgage warehouse lines of credit	309,632		2,241		0.72
Community Advantage - homeowner associations	141,351		353		0.25
Aircraft	4,498		53		1.18
Purchased non-covered commercial loans ⁽²⁾	589,028		744		0.13
Commercial real estate:
Purchased non-covered commercial real estate ⁽²⁾	482,525		96		0.02
Purchased non-covered home equity ⁽²⁾	78,057		6		0.01
Purchased non-covered residential real estate ⁽²⁾	48,286		76		0.16
Premium finance receivables
U.S. commercial insurance loans	2,139,966		5,416		0.25
Canada commercial insurance loans ⁽²⁾	290,267		554		0.19
Life insurance loans ⁽¹⁾	3,020,472		1,305		0.04
Purchased life insurance loans ⁽²⁾	262,887		—		—
Consumer and other ⁽¹⁾	117,897		1,244		1.06
Purchased non-covered consumer and other ⁽²⁾	3,078		1		0.03
Total consumer, niche and purchased loan portfolio	$	7,822,854	$	15,446	0.20	%
Total loans, net of unearned income, excluding covered loans	$	19,101,261	$	117,693	0.62	%
Non-accretable credit discounts on purchased loans reported in accordance with ASC 310-30, excluding covered loans			$	20,940
Total allowance for loan losses and non-accretable credit discounts on purchased loans, excluding covered loans			$	138,633	0.72	%


(1)	Excludes purchased loans reported in accordance with ASC 310-20 and ASC 310-30.


(2)	Purchased loans represent loans reported in accordance with ASC 310-20 and ASC 310-30.

As part of the regular quarterly review performed by management to determine if the Company’s allowance for loan losses is appropriate, an analysis is prepared on the loan portfolio based upon a breakout of core loans and consumer, niche and purchased loans. A summary of the allowance for loan losses calculated for the loan components in both the core loan portfolio and the consumer, niche and purchased loan portfolio was shown on the preceding tables as of December 31, 2016 and September 30, 2016.

The increase in the allowance for loan losses to core loans in the fourth quarter of 2016 compared to the third quarter of 2016 was primarily attributable to $424.1 million core loan portfolio growth.

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date. In accordance with accounting guidance, credit deterioration on purchased loans is recorded as a credit discount at the time of purchase instead of as an increase to the allowance for loan losses. For analysis purposes, the Company has combined the non-accretable credit discounts recorded on purchased loans with the total allowance for loan losses in the previous tables to present the total credit reserves available on its loan portfolio. The total allowance for loan losses and non-accretable credit discounts on purchased loans was 0.68% of the total loan portfolio as of December 31, 2016 and 0.72% of the total loan portfolio as of September 30, 2016.

The tables below show the aging of the Company’s loan portfolio at December 31, 2016 and September 30, 2016:



			90+ days		60-89		30-59
As of December 31, 2016			and still		days past		days past
(Dollars in thousands)	Nonaccrual		accruing		due		due		Current		Total Loans
Loan Balances:
Commercial
Commercial, industrial and other	$	13,441	$	174	$	2,341	$	11,779	$	3,716,977	$	3,744,712
Franchise	—		—		—		493		869,228		869,721
Mortgage warehouse lines of credit	—		—		—		—		204,225		204,225
Asset-based lending	1,924		—		135		1,609		871,402		875,070
Leases	510		—		—		1,331		293,073		294,914
PCI - commercial ⁽¹⁾	—		1,689		100		2,428		12,563		16,780
Total commercial	15,875		1,863		2,576		17,640		5,967,468		6,005,422
Commercial real estate
Construction	2,408		—		—		1,824		606,007		610,239
Land	394		—		188		—		104,219		104,801
Office	4,337		—		4,506		1,232		857,599		867,674
Industrial	7,047		—		4,516		2,436		756,602		770,601
Retail	597		—		760		3,364		907,872		912,593
Multi-family	643		—		322		1,347		805,312		807,624
Mixed use and other	6,498		—		1,186		12,632		1,931,859		1,952,175
PCI - commercial real estate ⁽¹⁾	—		16,188		3,775		8,888		141,529		170,380
Total commercial real estate	21,924		16,188		15,253		31,723		6,110,999		6,196,087
Home equity	9,761		—		1,630		6,515		707,887		725,793
Residential real estate, including PCI	12,749		1,309		936		8,271		681,956		705,221
Premium finance receivables
Commercial insurance loans	14,709		7,962		5,646		14,580		2,435,684		2,478,581
Life insurance loans	—		3,717		17,514		16,204		3,182,935		3,220,370
PCI - life insurance loans ⁽¹⁾	—		—		—		—		249,657		249,657
Consumer and other, including PCI	439		207		100		887		120,408		122,041
Total loans, net of unearned income, excluding covered loans	$	75,457	$	31,246	$	43,655	$	95,820	$	19,456,994	$	19,703,172
Covered loans	2,121		2,492		225		1,553		51,754		58,145
Total loans, net of unearned income	$	77,578	$	33,738	$	43,880	$	97,373	$	19,508,748	$	19,761,317



As of December 31, 2016 Aging as a % of Loan Balance	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Commercial
Commercial, industrial and other	0.4	%	—	%	0.1	%	0.3	%	99.2	%	100.0	%
Franchise	—		—		—		0.1		99.9		100.0
Mortgage warehouse lines of credit	—		—		—		—		100.0		100.0
Asset-based lending	0.2		—		—		0.2		99.6		100.0
Leases	0.2		—		—		0.5		99.3		100.0
PCI - commercial⁽¹⁾	—		10.1		0.6		14.5		74.8		100.0
Total commercial	0.3		—		—		0.3		99.4		100.0
Commercial real estate
Construction	0.4		—		—		0.3		99.3		100.0
Land	0.4		—		0.2		—		99.4		100.0
Office	0.5		—		0.5		0.1		98.9		100.0
Industrial	0.9		—		0.6		0.3		98.2		100.0
Retail	0.1		—		0.1		0.4		99.4		100.0
Multi-family	0.1		—		—		0.2		99.7		100.0
Mixed use and other	0.3		—		0.1		0.6		99.0		100.0
PCI - commercial real estate ⁽¹⁾	—		9.5		2.2		5.2		83.1		100.0
Total commercial real estate	0.4		0.3		0.2		0.5		98.6		100.0
Home equity	1.3		—		0.2		0.9		97.6		100.0
Residential real estate, including PCI	1.8		0.2		0.1		1.2		96.7		100.0
Premium finance receivables
Commercial insurance loans	0.6		0.3		0.2		0.6		98.3		100.0
Life insurance loans	—		0.1		0.5		0.5		98.9		100.0
PCI - life insurance loans ⁽¹⁾	—		—		—		—		100.0		100.0
Consumer and other, including PCI	0.4		0.2		0.1		0.7		98.6		100.0
Total loans, net of unearned income, excluding covered loans	0.4	%	0.2	%	0.2	%	0.5	%	98.7	%	100.0	%
Covered loans	3.6		4.3		0.4		2.7		89.0		100.0
Total loans, net of unearned income	0.4	%	0.2	%	0.2	%	0.5	%	98.7	%	100.0	%


(1)	PCI loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.



			90+ days		60-89		30-59
As of September 30, 2016			and still		days past		days past
(Dollars in thousands)	Nonaccrual		accruing		due		due		Current		Total Loans
Loan Balances:
Commercial
Commercial, industrial and other	$	15,809	$	—	$	7,324	$	8,987	$	3,573,396	$	3,605,516
Franchise	—		—		458		1,626		872,661		874,745
Mortgage warehouse lines of credit	—		—		—		—		309,632		309,632
Asset-based lending	234		—		3,772		3,741		837,972		845,719
Leases	375		—		239		—		299,339		299,953
PCI - commercial⁽¹⁾	—		1,783		—		1,036		13,160		15,979
Total commercial	16,418		1,783		11,793		15,390		5,906,160		5,951,544
Commercial real estate
Construction	400		—		—		3,775		447,302		451,477
Land	1,208		—		787		300		105,406		107,701
Office	3,609		—		6,457		8,062		865,954		884,082
Industrial	9,967		—		940		2,961		753,636		767,504
Retail	909		—		1,340		8,723		884,369		895,341
Multi-family	90		—		3,051		2,169		789,645		794,955
Mixed use and other	6,442		—		2,157		5,184		1,837,724		1,851,507
PCI - commercial real estate ⁽¹⁾	—		21,433		1,509		4,066		129,109		156,117
Total commercial real estate	22,625		21,433		16,241		35,240		5,813,145		5,908,684
Home equity	9,309		—		1,728		3,842		727,989		742,868
Residential real estate, including PCI	12,205		1,496		2,232		1,088		646,577		663,598
Premium finance receivables
Commercial insurance loans	14,214		7,754		6,968		10,291		2,391,006		2,430,233
Life insurance loans	—		—		9,960		3,717		3,006,795		3,020,472
PCI - life insurance loans ⁽¹⁾	—		—		—		—		262,887		262,887
Consumer and other, including PCI	543		124		204		871		119,233		120,975
Total loans, net of unearned income, excluding covered loans	$	75,314	$	32,590	$	49,126	$	70,439	$	18,873,792	$	19,101,261
Covered loans	2,331		4,806		1,545		2,456		84,802		95,940
Total loans, net of unearned income	$	77,645	$	37,396	$	50,671	$	72,895	$	18,958,594	$	19,197,201



As of September 30, 2016 Aging as a % of Loan Balance:	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Commercial
Commercial, industrial and other	0.4	%	—	%	0.2	%	0.2	%	99.2	%	100.0	%
Franchise	—		—		0.1		0.2		99.7		100.0
Mortgage warehouse lines of credit	—		—		—		—		100.0		100.0
Asset-based lending	—		—		0.4		0.4		99.2		100.0
Leases	0.1		—		0.1		—		99.8		100.0
PCI - commercial⁽¹⁾	—		11.2		—		6.5		82.3		100.0
Total commercial	0.3		—		0.2		0.3		99.2		100.0
Commercial real estate
Construction	0.1		—		—		0.8		99.1		100.0
Land	1.1		—		0.7		0.3		97.9		100.0
Office	0.4		—		0.7		0.9		98.0		100.0
Industrial	1.3		—		0.1		0.4		98.2		100.0
Retail	0.1		—		0.1		1.0		98.8		100.0
Multi-family	—		—		0.4		0.3		99.3		100.0
Mixed use and other	0.3		—		0.1		0.3		99.3		100.0
PCI - commercial real estate ⁽¹⁾	—		13.7		1.0		2.6		82.7		100.0
Total commercial real estate	0.4		0.4		0.3		0.6		98.3		100.0
Home equity	1.3		—		0.2		0.5		98.0		100.0
Residential real estate, including PCI	1.8		0.2		0.3		0.2		97.5		100.0
Premium finance receivables
Commercial insurance loans	0.6		0.3		0.3		0.4		98.4		100.0
Life insurance loans	—		—		0.3		0.1		99.6		100.0
PCI - life insurance loans ⁽¹⁾	—		—		—		—		100.0		100.0
Consumer and other, including PCI	0.4		0.1		0.2		0.7		98.6		100.0
Total loans, net of unearned income, excluding covered loans	0.4	%	0.2	%	0.3	%	0.4	%	98.7	%	100.0	%
Covered loans	2.4		5.0		1.6		2.6		88.4		100.0
Total loans, net of unearned income	0.4	%	0.2	%	0.3	%	0.4	%	98.7	%	100.0	%


(1)	PCI loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.

As of December 31, 2016, $43.7 million of all loans, excluding covered loans, or 0.2%, were 60 to 89 days past due and $95.8 million, or 0.5%, were 30 to 59 days (or one payment) past due. As of September 30, 2016, $49.1 million of all loans, excluding covered loans, or 0.3%, were 60 to 89 days past due and $70.4 million, or 0.4%, were 30 to 59 days (or one payment) past due. The majority of the commercial and commercial real estate loans shown as 60 to 89 days and 30 to 59 days past due are included on the Company’s internal problem loan reporting system. Loans on this system are closely monitored by management on a monthly basis.

The Company’s home equity and residential loan portfolios continue to exhibit low delinquency ratios. Home equity loans at December 31, 2016 that are current with regard to the contractual terms of the loan agreement represent 97.6% of the total home equity portfolio. Residential real estate loans at December 31, 2016 that are current with regards to the contractual terms of the loan agreements comprise 96.7% of total residential real estate loans outstanding.

Non-performing Assets, excluding covered assets

The following table sets forth Wintrust’s non-performing assets and troubled debt restructurings ("TDRs") performing under the contractual terms of the loan agreement, excluding covered assets and non-covered PCI loans, at the dates indicated.



	December 31,			September 30,			December 31,
(Dollars in thousands)	2016			2016			2015
Loans past due greater than 90 days and still accruing⁽¹⁾:
Commercial	$	174		$	—		$	541
Commercial real estate	—			—			—
Home equity	—			—			—
Residential real estate	—			—			—
Premium finance receivables - commercial	7,962			7,754			10,294
Premium finance receivables - life insurance	3,717			—			—
Consumer and other	144			60			150
Total loans past due greater than 90 days and still accruing	11,997			7,814			10,985
Non-accrual loans⁽²⁾:
Commercial	15,875			16,418			12,712
Commercial real estate	21,924			22,625			26,645
Home equity	9,761			9,309			6,848
Residential real estate	12,749			12,205			12,043
Premium finance receivables - commercial	14,709			14,214			14,561
Premium finance receivables - life insurance	—			—			—
Consumer and other	439			543			263
Total non-accrual loans	75,457			75,314			73,072
Total non-performing loans:
Commercial	16,049			16,418			13,253
Commercial real estate	21,924			22,625			26,645
Home equity	9,761			9,309			6,848
Residential real estate	12,749			12,205			12,043
Premium finance receivables - commercial	22,671			21,968			24,855
Premium finance receivables - life insurance	3,717			—			—
Consumer and other	583			603			413
Total non-performing loans	$	87,454		$	83,128		$	84,057
Other real estate owned	17,699			19,933			26,849
Other real estate owned - from acquisitions	22,583			15,117			17,096
Other repossessed assets	581			428			174
Total non-performing assets	$	128,317		$	118,606		$	128,176
TDRs performing under the contractual terms of the loan agreement	$	29,911		$	29,440		$	42,744
Total non-performing loans by category as a percent of its own respective category’s period-end balance:
Commercial	0.27		%	0.28		%	0.28		%
Commercial real estate	0.35			0.38			0.48
Home equity	1.34			1.25			0.87
Residential real estate	1.81			1.84			1.98
Premium finance receivables - commercial	0.91			0.90			1.05
Premium finance receivables - life insurance	0.11			—			—
Consumer and other	0.48			0.50			0.28
Total loans, net of unearned income	0.44		%	0.44		%	0.49		%
Total non-performing assets as a percentage of total assets	0.50		%	0.47		%	0.56		%
Allowance for loan losses as a percentage of total non-performing loans	139.83		%	141.58		%	125.39		%


(1)	As of the dates shown, no TDRs were past due greater than 90 days and still accruing interest.


(2)	Non-accrual loans included TDRs totaling $11.8 million, $14.8 million, and $9.1 million as of December 31, 2016, September 30, 2016, and December 31, 2015, respectively.

The ratio of non-performing assets to total assets was 0.50% as of December 31, 2016, compared to 0.47% at September 30, 2016, and 0.56% at December 31, 2015. Non-performing assets, excluding covered assets and non-covered PCI loans, totaled $128.3 million at December 31, 2016, compared to $118.6 million at September 30, 2016 and $128.2 million at December 31, 2015. The increase in non-performing assets, excluding covered assets and non-covered PCI loans, compared to September 30, 2016 is primarily the result of $7.2 million of OREO acquired through acquisitions and $4.2 million of OREO from FDIC-covered transactions with expiring loss share agreements during the fourth quarter of 2016. Non-performing loans, excluding covered loans and non-covered PCI loans, totaled $87.5 million, or 0.44% of total loans, at December 31, 2016 compared to $83.1 million, or 0.44% of total loans, at September 30, 2016 and $84.1 million, or 0.49% of total loans, at December 31, 2015. OREO, excluding covered OREO, of $40.3 million at December 31, 2016 increased $5.2 million compared to $35.1 million at September 30, 2016 and decreased $3.7 million compared to $43.9 million at December 31, 2015.

Management is pursuing the resolution of all credits in this category. At this time, management believes reserves are appropriate to absorb inherent losses that are expected upon the ultimate resolution of these credits.

Nonperforming Loans Rollforward

The table below presents a summary of the changes in the balance of non-performing loans, excluding covered loans, for the periods presented:



	Three Months Ended									Years Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
(Dollars in thousands)	2016			2016			2015			2016			2015
Balance at beginning of period	$	83,128		$	88,119		$	85,976		$	84,057		$	78,677
Additions, net	10,969			9,522			5,983			43,008			48,124
Return to performing status	(150		)	(231		)	(1,152		)	(3,260		)	(3,743		)
Payments received	(6,623		)	(5,235		)	(6,387		)	(19,976		)	(22,804		)
Transfer to OREO and other repossessed assets	(878		)	(2,270		)	(1,903		)	(7,046		)	(10,581		)
Charge-offs	(3,494		)	(3,353		)	(1,882		)	(10,323		)	(10,519		)
Net change for niche loans ⁽¹⁾	4,502			(3,424		)	3,422			994			4,903
Balance at end of period	$	87,454		$	83,128		$	84,057		$	87,454		$	84,057


(1)	This includes activity for premium finance receivables and indirect consumer loans.

TDRs

The table below presents a summary of TDRs as of the respective date, presented by loan category and accrual status:



	December 31,			September 30,			December 31,
(Dollars in thousands)	2016			2016			2015
Accruing TDRs:
Commercial	$	4,643		$	2,285		$	5,613
Commercial real estate	19,993			22,261			32,777
Residential real estate and other	5,275			4,894			4,354
Total accrual	$	29,911		$	29,440		$	42,744
Non-accrual TDRs: ⁽¹⁾
Commercial	$	1,487		$	2,134		$	134
Commercial real estate	8,153			10,610			5,930
Residential real estate and other	2,157			2,092			3,045
Total non-accrual	$	11,797		$	14,836		$	9,109
Total TDRs:
Commercial	$	6,130		$	4,419		$	5,747
Commercial real estate	28,146			32,871			38,707
Residential real estate and other	7,432			6,986			7,399
Total TDRs	$	41,708		$	44,276		$	51,853
Weighted-average contractual interest rate of TDRs	4.33		%	4.33		%	4.13		%


(1)	Included in total non-performing loans.

At December 31, 2016, the Company had $41.7 million in loans modified in TDRs. The $41.7 million in TDRs represents 89 credits in which economic concessions were granted to certain borrowers to better align the terms of their loans with their current ability to pay. The balance decreased from $44.3 million representing 89 credits at September, 2016 and decreased from $51.9 million representing 102 credits at December 31, 2015.

The table below presents a summary of TDRs as of December 31, 2016 and December 31, 2015, and shows the changes in the balance during the periods presented:

Three Months Ended December 31, 2016



(Dollars in thousands)	Commercial			Commercial Real Estate			Residential Real Estate and Other			Total
Balance at beginning of period	$	4,419		$	32,871		$	6,986		$	44,276
Additions during the period	2,949			—			499			3,448
Reductions:
Charge-offs	(701		)	(13		)	—			(714		)
Transferred to OREO and other repossessed assets	—			(68		)	—			(68		)
Removal of TDR loan status ⁽¹⁾	—			(1,337		)	—			(1,337		)
Payments received, net	(537		)	(3,307		)	(53		)	(3,897		)
Balance at period end	$	6,130		$	28,146		$	7,432		$	41,708


(1)	Loan was previously classified as a troubled debt restructuring and subsequently performed in compliance with the loan’s modified terms for a period of six months (including over a calendar year-end) at a modified interest rate which represented a market rate at the time of restructuring. Per our TDR policy, the TDR classification is removed.

Three Months Ended December 31, 2015



(Dollars in thousands)	Commercial			Commercial Real Estate			Residential Real Estate and Other			Total
Balance at beginning of period	$	5,864		$	45,645		$	7,811		$	59,320
Additions during the period	—			201			—			201
Reductions:
Charge-offs	—			(1,707		)	(48		)	(1,755		)
Transferred to OREO and other repossessed assets	—			—			(135		)	(135		)
Removal of TDR loan status ⁽¹⁾	(19		)	(2,868		)	-			(2,887		)
Payments received, net	(98		)	(2,564		)	(229		)	(2,891		)
Balance at period end	$	5,747		$	38,707		$	7,399		$	51,853

Year Ended December 31, 2016



(Dollars in thousands)	Commercial			Commercial Real Estate			Residential Real Estate and Other			Total
Balance at beginning of period	$	5,747		$	38,707		$	7,399		$	51,853
Additions during the period	3,294			8,521			1,082			12,897
Reductions:
Charge-offs	(1,482		)	(1,051		)	(212		)	(2,745		)
Transferred to OREO and other repossessed assets	—			(1,433		)	(535		)	(1,968		)
Removal of TDR loan status ⁽¹⁾	—			(7,816		)	—			(7,816		)
Payments received, net	(1,429		)	(8,782		)	(302		)	(10,513		)
Balance at period end	$	6,130		$	28,146		$	7,432		$	41,708

Year Ended December 31, 2015



(Dollars in thousands)	Commercial			Commercial Real Estate			Residential Real Estate and Other			Total
Balance at beginning of period	$	7,576		$	67,623		$	7,076		$	82,275
Additions during the period	—			370			1,664			2,034
Reductions:
Charge-offs	(397		)	(1,975		)	(140		)	(2,512		)
Transferred to OREO and other repossessed assets	(562		)	(2,290		)	(414		)	(3,266		)
Removal of TDR loan status ⁽¹⁾	(490		)	(13,019		)	—			(13,509		)
Payments received, net	(380		)	(12,002		)	(787		)	(13,169		)
Balance at period end	$	5,747		$	38,707		$	7,399		$	51,853


(1)	Loan was previously classified as a troubled debt restructuring and subsequently performed in compliance with the loan’s modified terms for a period of six months (including over a calendar year-end) at a modified interest rate which represented a market rate at the time of restructuring. Per our TDR policy, the TDR classification is removed.

Each TDR was reviewed for impairment at December 31, 2016 and approximately $2.7 million of impairment was present and appropriately reserved for through the Company’s normal reserving methodology in the Company’s allowance for loan losses. For TDRs in which impairment is calculated by the present value of future cash flows, the Company records interest income representing the decrease in impairment resulting from the passage of time during the respective period, which differs from interest income from contractually required interest on these specific loans. For the three months ended December 31, 2016 and 2015, the Company recorded $98,000 and $188,000, respectively in interest income representing this decrease in impairment. For the years ended December 31, 2016 and 2015, the Company recorded $421,000 and $573,000, respectively, in interest income.

Other Real Estate Owned

The table below presents a summary of other real estate owned, excluding covered other real estate owned, as of December 31, 2016, September 30, 2016 and December 31, 2015, and shows the activity for the respective period and the balance for each property type:



	Three Months Ended
	December 31,			September 30,			December 31,
(Dollars in thousands)	2016			2016			2015
Balance at beginning of period	$	35,050		$	38,063		$	51,880
Disposals/resolved	(5,850		)	(5,967		)	(9,156		)
Transfers in at fair value, less costs to sell	667			3,958			2,345
Transfers in from covered OREO subsequent to loss share expiration	4,213			—			69
Additions from acquisition	7,230			—			—
Fair value adjustments	(1,028		)	(1,004		)	(1,193		)
Balance at end of period	$	40,282		$	35,050		$	43,945

	Period End
	December 31,			September 30,			December 31,
Balance by Property Type	2016			2016			2015
Residential real estate	$	8,063		$	9,602		$	11,322
Residential real estate development	1,349			2,114			2,914
Commercial real estate	30,870			23,334			29,709
Total	$	40,282		$	35,050		$	43,945

Covered Assets

In conjunction with FDIC-assisted transactions, the Company entered into loss share agreements with the FDIC. These agreements cover realized losses on loans, foreclosed real estate and certain other assets and require the Company to record loss share assets and liabilities that are measured separately from the loan portfolios because they are not contractually embedded in the loans and are not transferable with the loans should the Company choose to dispose of them. Fair values at the acquisition dates were estimated based on projected cash flows available for loss-share based on the credit adjustments estimated for each loan pool and the loss share percentages. The loss share assets and liabilities are also separately measured from the related loans and foreclosed real estate and recorded on the Consolidated Statements of Condition. Subsequent to the acquisition date, reimbursements received from the FDIC for actual incurred losses will reduce any loss share assets. Reductions to expected losses, to the extent such reductions to expected losses are the result of an improvement to the actual or expected cash flows from the covered assets, will also reduce any loss share asset and, if necessary, increase any loss share liability when necessary reductions exceed the current value of the loss share asset. The increases in cash flows for the purchased loans are recognized as interest income prospectively. In accordance with clawback provisions included in loss share agreements with the FDIC, the Company may be required to reimburse the FDIC when actual losses are less than certain thresholds established for each loss share agreement. The balance of these estimated reimbursements in accordance with clawback provisions and any related amortization are adjusted periodically for changes in the expected losses on covered assets. Estimated reimbursements from clawback provisions are recorded as a reduction to the loss share asset or, if necessary, an increase to the loss share liability on the Consolidated Statements of Condition. The allowance for loan losses for loans acquired in FDIC-assisted transactions is determined without giving consideration to the amounts recoverable through loss share agreements (since the loss share agreements are separately accounted for and thus presented “gross” on the balance sheet). On the Consolidated Statements of Income, the provision for credit losses is reported net of changes in the amount recoverable under the loss share agreements.

The following table provides a comparative analysis for the period end balances of covered assets and any changes in the allowance for covered loan losses. The Company expects covered assets and the allowance for covered loan losses to continue to decrease in periods without FDIC-assisted acquisitions.



	December 31,			September 30,			December 31,
(Dollars in thousands)	2016			2016			2015
Period End Balances:
Loans	$	58,145		$	95,940		$	148,673
Other real estate owned	5,302			10,399			21,383
Other assets	—			216			411
FDIC indemnification liability	(16,701		)	(17,945		)	(6,100		)
Total net covered assets	$	46,746		$	88,610		$	164,367
Allowance for Covered Loan Losses Rollforward:
Balance at beginning of quarter:	$	1,422		$	2,412		$	2,918
Allowance for covered loan losses transferred to allowance for loan losses subsequent to loss share expiration	(156		)	—			—
Provision for covered loan losses before benefit attributable to FDIC loss share agreements	(35		)	(847		)	(2,011		)
Benefit attributable to FDIC loss share agreements	153			677			1,874
Net provision for covered loan losses and transfer from allowance for covered loan losses to allowance for loan losses	(38		)	(170		)	(137		)
Increase/decrease in FDIC indemnification liability/asset	(153		)	(677		)	(1,874		)
Loans charged-off	(119		)	(918		)	(163		)
Recoveries of loans charged-off	210			775			2,282
Net recoveries (charge-offs)	91			(143		)	2,119
Balance at end of quarter	$	1,322		$	1,422		$	3,026

Changes in Accretable Yield

The excess of cash flows expected to be collected over the carrying value of loans accounted for under ASC 310-30 is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the pool of loans. The accretable yield is affected by:


•	changes in interest rate indices for variable rate loans accounted for under ASC 310-30 – expected future cash flows are based on the variable rates in effect at the time of the regular evaluations of cash flows expected to be collected;


•	changes in prepayment assumptions – prepayments affect the estimated life of loans accounted for under ASC 310-30 which may change the amount of interest income, and possibly principal, expected to be collected; and


•	changes in the expected principal and interest payments over the estimated life – updates to expected cash flows are driven by the credit outlook and actions taken with borrowers. Changes in expected future cash flows from loan modifications are included in the regular evaluations of cash flows expected to be collected.

The following table provides activity for the accretable yield of loans accounted for under ASC 310-30.



	Three Months Ended
	December 31,			December 31,
(Dollars in thousands)	2016			2015
Accretable yield, beginning balance	$	52,977		$	65,207
Acquisitions	1,380			—
Accretable yield amortized to interest income	(6,113		)	(5,756		)
Accretable yield amortized to indemnification asset/liability ⁽¹⁾	(207		)	(2,550		)
Reclassification from non-accretable difference⁽²⁾	1,634			2,236
Increases (decreases) in interest cash flows due to payments and changes in interest rates	(263		)	4,765
Accretable yield, ending balance ⁽³⁾	$	49,408		$	63,902



	Years Ended
	December 31,			December 31,
(Dollars in thousands)	2016			2015
Accretable yield, beginning balance	$	63,902		$	79,102
Acquisitions	2,462			9,993
Accretable yield amortized to interest income	(23,218		)	(24,115		)
Accretable yield amortized to indemnification asset/liability ⁽¹⁾	(5,746		)	(13,495		)
Reclassification from non-accretable difference⁽²⁾	13,733			7,390
(Decreases) increases in interest cash flows due to payments and changes in interest rates	(1,725		)	5,027
Accretable yield, ending balance ⁽³⁾	$	49,408		$	63,902

(1) Represents the portion of the current period accreted yield, resulting from lower expected losses, applied to reduce the loss share indemnification asset.

(2) Reclassification is the result of subsequent increases in expected principal cash flows.

(3) As of December 31, 2016, the Company estimates that the remaining accretable yield balance to be amortized to the indemnification asset for the bank acquisitions is $1.1 million. The remainder of the accretable yield related to bank acquisitions is expected to be amortized to interest income.

Accretion to interest income accounted for under ASC 310-30 totaled $6.1 million and $5.8 million in the fourth quarter of 2016 and 2015, respectively. For the years ended December 31, 2016 and 2015, the Company recorded accretion to interest income of $23.2 million and $24.1 million, respectively. These amounts include accretion from both covered and non-covered loans, and are included together within interest and fees on loans in the Consolidated Statements of Income.

Items Impacting Comparative Financial Results:

Acquisitions

On November 18, 2016, the Company completed its acquisition of FCFC. FCFC was the parent company of First Community Bank. Through this transaction, the Company acquired First Community Bank's two banking locations in Elgin, Illinois, approximately $185 million in assets and approximately $150 million in deposits.

On August 19, 2016, the Company, through its wholly-owned subsidiary Lake Forest Bank & Trust Company, completed its acquisition of approximately $561 million in select performing loans and related relationships from an affiliate of GE Capital Franchise Finance. The loans are to franchise operators (primarily quick service restaurant concepts) in the Midwest and in the Western portion of the United States.

On March 31, 2016, the Company completed its acquisition of Generations Bancorp. Inc. ("Generations"). Generations was the parent company of Foundations Bank ("Foundations"). Through this transaction, the Company acquired Foundations' banking location in Pewaukee, Wisconsin, approximately $131 million in assets and approximately $100 million in deposits.

On July 24, 2015, the Company completed its acquisition of Community Financial Shares, Inc ("CFIS"). CFIS was the parent company of Community Bank - Wheaton/Glen Ellyn ("CBWGE"). Through this transaction, the Company acquired CBWGE's four banking locations in Wheaton and Glen Ellyn, Illinois, approximately $351 million in assets and approximately $290 million in deposits.

On July 17, 2015, the Company completed its acquisition of Suburban Illinois Bancorp, Inc. ("Suburban"). Suburban was the parent company of Suburban Bank & Trust Company ("SBT"). Through this transaction, the Company acquired SBT's ten banking locations in Chicago and its suburbs, approximately $495 million in assets and approximately $417 million in deposits.

On July 1, 2015, the Company, through its wholly-owned subsidiary Wintrust Bank, completed its acquisition of North Bank. Through this transaction, Wintrust Bank acquired two banking locations, $118 million in assets and approximately $101 million in deposits.

On January 16, 2015, the Company completed its acquisition of Delavan Bancshares, Inc. ("Delavan"). Delavan was the parent company of Community Bank CBD. Through this transaction, Town Bank acquired four banking locations, approximately $224 million in assets and approximately $170 million in deposits.

WINTRUST SUBSIDIARIES AND LOCATIONS

Wintrust is a financial holding company whose common stock is traded on the Nasdaq Global Select Market (Nasdaq: WTFC). Its 15 community bank subsidiaries are: Lake Forest Bank & Trust Company, Hinsdale Bank & Trust Company, Wintrust Bank in Chicago, Libertyville Bank & Trust Company, Barrington Bank & Trust Company, N.A., Crystal Lake Bank & Trust Company, N.A., Northbrook Bank & Trust Company, Schaumburg Bank & Trust Company, N.A., Village Bank & Trust in Arlington Heights, Beverly Bank & Trust Company, N.A. in Chicago, Wheaton Bank & Trust Company, State Bank of The Lakes in Antioch, Old Plank Trail Community Bank, N.A. in New Lenox, St. Charles Bank & Trust Company and Town Bank in Hartland, Wisconsin.

The banks also operate facilities in Illinois in Algonquin, Aurora, Bloomingdale, Buffalo Grove, Cary, Chicago, Clarendon Hills, Crete, Deerfield, Des Plaines, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Evergreen Park, Frankfort, Geneva, Glen Ellyn, Glencoe, Glenview, Gurnee, Grayslake, Hanover Park, Highland Park, Highwood, Hoffman Estates, Island Lake, Itasca, Joliet, Lake Bluff, Lake Villa, Lansing, Lemont, Lindenhurst, Lynwood, Markham, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, North Chicago, Northfield, Norridge, Oak Lawn, Orland Park, Palatine, Park Ridge, Prospect Heights, Ravinia, Riverside, Rogers Park, Roselle, Round Lake Beach, Shorewood, Skokie, South Holland, Spring Grove, Steger, Stone Park, Vernon Hills, Wauconda, Western Springs, Willowbrook, Wilmette, Winnetka and Wood Dale and in Albany, Burlington, Clinton, Darlington, Delafield, Delavan, Elm Grove, Genoa City, Kenosha, Lake Geneva, Madison, Menomenee Falls, Milwaukee, Monroe, Pewaukee, Sharon, Wales, Walworth and Wind Lake, Wisconsin and Dyer, Indiana.

Additionally, the Company operates various non-bank business units:


•	First Insurance Funding Corporation, one of the largest insurance premium finance companies operating in the United States, serves commercial and life insurance loan customers throughout the country.


•	First Insurance Funding of Canada serves commercial insurance loan customers throughout Canada.


•	Tricom, Inc. of Milwaukee provides high-yielding, short-term accounts receivable financing and value-added out-sourced administrative services, such as data processing of payrolls, billing and cash management services, to temporary staffing service clients located throughout the United States.


•	Wintrust Mortgage, a division of Barrington Bank & Trust Company, engages primarily in the origination and purchase of residential mortgages for sale into the secondary market through origination offices located throughout the United States. Loans are also originated nationwide through relationships with wholesale and correspondent offices.


•	Wayne Hummer Investments, LLC is a broker-dealer providing a full range of private client and brokerage services to clients and correspondent banks located primarily in the Midwest.


•	Great Lakes Advisors LLC provides money management services and advisory services to individual accounts.


•	The Chicago Trust Company, a trust subsidiary, allows Wintrust to service customers’ trust and investment needs at each banking location.


•	Wintrust Asset Finance which offers direct leasing opportunities.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information can be identified through the use of words such as “intend,” “plan,” “project,” “expect,” “anticipate,” “believe,” “estimate,” “contemplate,” “possible,” “point,” “will,” “may,” “should,” “would” and “could.” Forward-looking statements and information are not historical facts, are premised on many factors and assumptions, and represent only management’s expectations, estimates and projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict, which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company’s 2015 Annual Report on Form 10-K and in any of the Company’s subsequent SEC filings. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be deemed to include, among other things, statements relating to the Company’s future financial performance, the performance of its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory developments, securities that the Company may offer from time to time, and management’s long-term performance goals, as well as statements relating to the anticipated effects on financial condition and results of operations from expected developments or events, the Company’s business and growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth and plans to form additional de novo banks or branch offices. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:


•	difficult economic conditions have adversely affected our company and the financial services industry in general and further deterioration in economic conditions may materially adversely affect our business, financial condition, results of operations and cash flows;


•	since our business is concentrated in the Chicago metropolitan and southern Wisconsin market areas, further declines in the economy of this region could adversely affect our business;


•	if our allowance for loan losses is not sufficient to absorb losses that may occur in our loan portfolio, our financial condition and liquidity could suffer;


•	a significant portion of our loan portfolio is comprised of commercial loans, the repayment of which is largely dependent upon the financial success and economic viability of the borrower;


•	a substantial portion of our loan portfolio is secured by real estate, in particular commercial real estate. Deterioration in the real estate markets could lead to additional losses, which could have a material adverse effect on our financial condition and results of operations;


•	any inaccurate assumptions in our analytical and forecasting models could cause us to miscalculate our projected revenue or losses, which could adversely affect our financial condition;


•	unanticipated changes in prevailing interest rates and the effects of changing regulation could adversely affect our net interest income, which is our largest source of income;


•	our liquidity position may be negatively impacted if economic conditions continue to suffer;


•	the financial services industry is very competitive, and if we are not able to compete effectively, we may lose market share and our business could suffer;


•	if we are unable to compete effectively, we will lose market share and income from deposits, loans and other products may be reduced. This could adversely affect our profitability and have a material adverse effect on our business, financial condition and results of operations;


•	if we are unable to continue to identify favorable acquisitions or successfully integrate our acquisitions, our growth may be limited and our results of operations could suffer;


•	our participation in FDIC-assisted acquisitions may present additional risks to our financial condition and results of operations;


•	an actual or perceived reduction in our financial strength may cause others to reduce or cease doing business with us, which could result in a decrease in our net interest income and fee revenues;


•	if our growth requires us to raise additional capital, that capital may not be available when it is needed or the cost of that capital may be very high;


•	disruption in the financial markets could result in lower fair values for our investment securities portfolio;


•	our controls and procedures may fail or be circumvented;


•	new lines of business and new products and services are essential to our ability to compete but may subject us to additional risks;


•	failures of our information technology systems may adversely affect our operations;


•	failures by or of our vendors may adversely affect our operations;


•	we issue debit cards, and debit card transactions pose a particular cybersecurity risk that is outside of our control;


•	we depend on the accuracy and completeness of information we receive about our customers and counterparties to make credit decisions;


•	if we are unable to attract and retain experienced and qualified personnel, our ability to provide high quality service will be diminished, we may lose key customer relationships, and our results of operations may suffer;


•	we are subject to environmental liability risk associated with lending activities;


•	we are subject to claims and legal actions which could negatively affect our results of operations or financial condition;

•

losses incurred in connection with actual or projected repurchases and indemnification payments related to mortgages that we have sold into the secondary market may exceed our financial statement reserves and we may be required to increase such reserves in the future. Increases to our reserves and losses incurred in connection with actual loan repurchases and indemnification payments could have a material adverse effect on our business, financial condition, results of operations or cash flows;


•	consumers may decide not to use banks to complete their financial transactions, which could adversely affect our business and results of operations;


•	we may be adversely impacted by the soundness of other financial institutions;


•	de novo operations often involve significant expenses and delayed returns and may negatively impact Wintrust's profitability;


•	we are subject to examinations and challenges by tax authorities, and changes in federal and state tax laws and changes in interpretation of existing laws can impact our financial results;


•	changes in accounting policies or accounting standards could materially adversely affect how we report our financial results and financial condition;


•	we are a bank holding company, and our sources of funds, including to pay dividends, are limited;


•	anti-takeover provisions could negatively impact our shareholders;


•	if we fail to meet our regulatory capital ratios, we may be forced to raise capital or sell assets;


•	if our credit rating is lowered, our financing costs could increase;


•	changes in the United States’ monetary policy may restrict our ability to conduct our business in a profitable manner;


•	legislative and regulatory actions taken now or in the future regarding the financial services industry may significantly increase our costs or limit our ability to conduct our business in a profitable manner;


•	uncertainty regarding future legislative and regulatory actions may be disruptive to our operations;


•	financial reform legislation and increased regulatory rigor around mortgage-related issues may reduce our ability to market our products to consumers and may limit our ability to profitably operate our mortgage business;


•	federal, state and local consumer lending laws may restrict our ability to originate certain mortgage loans or increase our risk of liability with respect to such loans and could increase our cost of doing business;


•	regulatory initiatives regarding bank capital requirements may require heightened capital;


•	our FDIC insurance premiums may increase, which could negatively impact our results of operations;


•	non-compliance with the USA PATRIOT Act, Bank Secrecy Act or other laws and regulations could result in fines or sanctions;


•	our premium finance business may involve a higher risk of delinquency or collection than our other lending operations, and could expose us to losses;


•	widespread financial difficulties or credit downgrades among commercial and life insurance providers could lessen the value of the collateral securing our premium finance loans and impair the financial condition and liquidity of FIFC and FIFC Canada;


•	regulatory changes could significantly reduce loan volume and impair the financial condition of FIFC; and


•	our wealth management business in general, and WHI's brokerage operation, in particular, exposes us to certain risks associated with the securities industry.

Therefore, there can be no assurances that future actual results will correspond to these forward-looking statements. The reader is cautioned not to place undue reliance on any forward-looking statement made by the Company. Any such statement speaks only as of the date the statement was made or as of such date that may be referenced within the statement. The Company undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events after the date of the press release. Persons are advised, however, to consult further disclosures management makes on related subjects in its reports filed with the Securities and Exchange Commission and in its press releases.

CONFERENCE CALL, WEB CAST AND REPLAY

The Company will hold a conference call at 1:00 p.m. (CT) Thursday, January 19, 2017 regarding fourth quarter and year-end 2016 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #47899456. A simultaneous audio-only web cast and replay of the conference call may be accessed via the Company’s website at (http://www.wintrust.com), Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the fourth quarter and year-end 2016 earnings press release will be available on the home page of the Company’s website at (http://www.wintrust.com) and at the Investor Relations, Investor News and Events, Press Releases link on its website.

WINTRUST FINANCIAL CORPORATION

Supplemental Financial Information

5 Quarter Trends

WINTRUST FINANCIAL CORPORATION - Supplemental Financial Information

Selected Financial Highlights - 5 Quarter Trends

(Dollars in thousands, except per share data)



	Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
	2016			2016			2016			2016			2015
Selected Financial Condition Data (at end of period):
Total assets	$	25,668,553		$	25,321,759		$	24,420,616		$	23,488,168		$	22,909,348
Total loans, excluding loans held-for-sale and covered loans	19,703,172			19,101,261			18,174,655			17,446,413			17,118,117
Total deposits	21,658,632			21,147,655			20,041,750			19,217,071			18,639,634
Junior subordinated debentures	253,566			253,566			253,566			253,566			268,566
Total shareholders’ equity	2,695,617			2,674,474			2,623,595			2,418,442			2,352,274
Selected Statements of Income Data:
Net interest income	190,778			184,636			175,270			171,509			167,206
Net revenue ⁽¹⁾	276,053			271,240			260,069			240,261			232,296
Net income	54,608			53,115			50,041			49,111			35,512
Net income per common share – Basic	$	0.98		$	0.96		$	0.94		$	0.94		$	0.66
Net income per common share – Diluted	$	0.94		$	0.92		$	0.90		$	0.90		$	0.64
Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin	3.21		%	3.21		%	3.24		%	3.29		%	3.26		%
Net interest margin - fully taxable equivalent (non-GAAP) ⁽²⁾	3.23		%	3.24		%	3.27		%	3.32		%	3.29		%
Non-interest income to average assets	1.32		%	1.38		%	1.44		%	1.21		%	1.16		%
Non-interest expense to average assets	2.80		%	2.82		%	2.89		%	2.70		%	2.98		%
Net overhead ratio ⁽³⁾	1.48		%	1.44		%	1.46		%	1.49		%	1.82		%
Return on average assets	0.85		%	0.85		%	0.85		%	0.86		%	0.63		%
Return on average common equity	8.32		%	8.20		%	8.43		%	8.55		%	6.03		%
Return on average tangible common equity (non-GAAP) ⁽²⁾	10.68		%	10.55		%	11.12		%	11.33		%	8.12		%
Average total assets	$	25,611,060		$	24,879,252		$	23,754,755		$	22,902,913		$	22,225,112
Average total shareholders’ equity	2,689,876			2,651,684			2,465,732			2,389,770			2,347,545
Average loans to average deposits ratio (excluding loans held-for-sale, excluding covered loans)	89.6		%	89.8		%	92.4		%	92.2		%	90.2		%
Average loans to average deposits ratio (excluding loans held-for-sale, including covered loans)	89.9			90.3			92.9			93.0			91.0
Common Share Data at end of period:
Market price per common share	$	72.57		$	55.57		$	51.00		$	44.34		$	48.52
Book value per common share ⁽²⁾	$	47.12		$	46.86		$	45.96		$	44.67		$	43.42
Tangible common book value per share ⁽²⁾	$	37.08		$	37.06		$	36.12		$	34.20		$	33.17
Common shares outstanding	51,880,540			51,714,683			51,619,155			48,518,998			48,383,279
Other Data at end of period:⁽⁶⁾
Leverage Ratio⁽⁴⁾	8.9		%	9.0		%	9.2		%	8.7		%	9.1		%
Tier 1 Capital to risk-weighted assets ⁽⁴⁾	9.7		%	9.8		%	10.1		%	9.6		%	10.0		%
Common equity Tier 1 capital to risk-weighted assets ⁽⁴⁾	8.6		%	8.7		%	8.9		%	8.4		%	8.4		%
Total capital to risk-weighted assets ⁽⁴⁾	11.9		%	12.1		%	12.4		%	12.1		%	12.2		%
Allowance for credit losses ⁽⁵⁾	$	123,964		$	119,341		$	115,426		$	111,201		$	106,349
Non-performing loans	87,454			83,128			88,119			89,499			84,057
Allowance for credit losses to total loans ⁽⁵⁾	0.63		%	0.62		%	0.64		%	0.64		%	0.62		%
Non-performing loans to total loans	0.44		%	0.44		%	0.48		%	0.51		%	0.49		%
Number of:
Bank subsidiaries	15			15			15			15			15
Banking offices	155			152			153			153			152


(1)	Net revenue includes net interest income and non-interest income


(2)	See “Supplemental Financial Measures/Ratios” for additional information on this performance measure/ratio.


(3)	The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s total average assets. A lower ratio indicates a higher degree of efficiency.


(4)	Capital ratios for current quarter-end are estimated. As of January 1, 2015 capital ratios are calculated under the requirements of Basel III.


(5)	The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments, but excluding the allowance for covered loan losses.


(6)	Asset quality ratios exclude covered loans.

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Consolidated Statements of Condition - 5 Quarter Trends



	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
	December 31,			September 30,			June 30,			March 31,			December 31,
(In thousands)	2016			2016			2016			2016			2015
Assets
Cash and due from banks	$	267,194		$	242,825		$	267,551		$	208,480		$	271,454
Federal funds sold and securities purchased under resale agreements	2,851			4,122			4,024			3,820			4,341
Interest bearing deposits with banks	980,457			816,104			693,269			817,013			607,782
Available-for-sale securities, at fair value	1,724,667			1,650,096			637,663			770,983			1,716,388
Held-to-maturity securities, at amortized cost	635,705			932,767			992,211			911,715			884,826
Trading account securities	1,989			1,092			3,613			2,116			448
Federal Home Loan Bank and Federal Reserve Bank stock	133,494			129,630			121,319			113,222			101,581
Brokerage customer receivables	25,181			25,511			26,866			28,266			27,631
Mortgage loans held-for-sale	418,374			559,634			554,256			314,554			388,038
Loans, net of unearned income, excluding covered loans	19,703,172			19,101,261			18,174,655			17,446,413			17,118,117
Covered loans	58,145			95,940			105,248			138,848			148,673
Total loans	19,761,317			19,197,201			18,279,903			17,585,261			17,266,790
Allowance for loan losses	(122,291		)	(117,693		)	(114,356		)	(110,171		)	(105,400		)
Allowance for covered loan losses	(1,322		)	(1,422		)	(2,412		)	(2,507		)	(3,026		)
Net loans	19,637,704			19,078,086			18,163,135			17,472,583			17,158,364
Premises and equipment, net	597,301			597,263			595,792			591,608			592,256
Lease investments, net	129,402			116,355			103,749			89,337			63,170
Accrued interest receivable and other assets	593,796			660,923			670,014			647,853			597,099
Trade date securities receivable	—			677			1,079,238			1,008,613			—
Goodwill	498,587			485,938			486,095			484,280			471,761
Other intangible assets	21,851			20,736			21,821			23,725			24,209
Total assets	$	25,668,553		$	25,321,759		$	24,420,616		$	23,488,168		$	22,909,348
Liabilities and Shareholders’ Equity
Deposits:
Non-interest bearing	$	5,927,377		$	5,711,042		$	5,367,672		$	5,205,410		$	4,836,420
Interest bearing	15,731,255			15,436,613			14,674,078			14,011,661			13,803,214
Total deposits	21,658,632			21,147,655			20,041,750			19,217,071			18,639,634
Federal Home Loan Bank advances	153,831			419,632			588,055			799,482			853,431
Other borrowings	262,486			241,366			252,611			253,126			265,785
Subordinated notes	138,971			138,943			138,915			138,888			138,861
Junior subordinated debentures	253,566			253,566			253,566			253,566			268,566
Trade date securities payable	—			—			40,000			—			538
Accrued interest payable and other liabilities	505,450			446,123			482,124			407,593			390,259
Total liabilities	22,972,936			22,647,285			21,797,021			21,069,726			20,557,074
Shareholders’ Equity:
Preferred stock	251,257			251,257			251,257			251,257			251,287
Common stock	51,978			51,811			51,708			48,608			48,469
Surplus	1,365,781			1,356,759			1,350,751			1,194,750			1,190,988
Treasury stock	(4,589		)	(4,522		)	(4,145		)	(4,145		)	(3,973		)
Retained earnings	1,096,518			1,051,748			1,008,464			967,882			928,211
Accumulated other comprehensive loss	(65,328		)	(32,579		)	(34,440		)	(39,910		)	(62,708		)
Total shareholders’ equity	2,695,617			2,674,474			2,623,595			2,418,442			2,352,274
Total liabilities and shareholders’ equity	$	25,668,553		$	25,321,759		$	24,420,616		$	23,488,168		$	22,909,348

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Consolidated Statements of Income (Unaudited) - 5 Quarter Trends



	Three Months Ended
	December 31,		September 30,			June 30,			March 31,			December 31,
(In thousands, except per share data)	2016		2016			2016			2016			2015
Interest income
Interest and fees on loans	$	199,155	$	190,189		$	178,530		$	173,127		$	169,501
Interest bearing deposits with banks	1,541		1,156			793			746			493
Federal funds sold and securities purchased under resale agreements	1		1			1			1			—
Investment securities	12,954		15,496			16,398			17,190			16,405
Trading account securities	32		18			14			11			25
Federal Home Loan Bank and Federal Reserve Bank stock	1,144		1,094			1,112			937			857
Brokerage customer receivables	186		195			216			219			206
Total interest income	215,013		208,149			197,064			192,231			187,487
Interest expense
Interest on deposits	16,413		15,621			13,594			12,781			12,617
Interest on Federal Home Loan Bank advances	2,439		2,577			2,984			2,886			2,684
Interest on other borrowings	1,074		1,137			1,086			1,058			1,007
Interest on subordinated notes	1,779		1,778			1,777			1,777			1,777
Interest on junior subordinated debentures	2,530		2,400			2,353			2,220			2,196
Total interest expense	24,235		23,513			21,794			20,722			20,281
Net interest income	190,778		184,636			175,270			171,509			167,206
Provision for credit losses	7,350		9,571			9,129			8,034			9,059
Net interest income after provision for credit losses	183,428		175,065			166,141			163,475			158,147
Non-interest income
Wealth management	19,512		19,334			18,852			18,320			18,634
Mortgage banking	35,489		34,712			36,807			21,735			23,317
Service charges on deposit accounts	8,054		8,024			7,726			7,406			7,210
Gains (losses) on investment securities, net	1,575		3,305			1,440			1,325			(79		)
Fees from covered call options	1,476		3,633			4,649			1,712			3,629
Trading gains (losses), net	1,007		(432		)	(316		)	(168		)	205
Operating lease income, net	5,171		4,459			4,005			2,806			1,973
Other	12,991		13,569			11,636			15,616			10,201
Total non-interest income	85,275		86,604			84,799			68,752			65,090
Non-interest expense
Salaries and employee benefits	104,735		103,718			100,894			95,811			99,780
Equipment	9,532		9,449			9,307			8,767			8,799
Operating lease equipment depreciation	4,219		3,605			3,385			2,050			1,202
Occupancy, net	14,254		12,767			11,943			11,948			13,062
Data processing	7,687		7,432			7,138			6,519			7,284
Advertising and marketing	6,691		7,365			6,941			3,779			5,373
Professional fees	5,425		5,508			5,419			4,059			4,387
Amortization of other intangible assets	1,158		1,085			1,248			1,298			1,324
FDIC insurance	4,726		3,686			4,040			3,613			3,317
OREO expense, net	1,843		1,436			1,348			560			2,598
Other	20,101		20,564			19,306			15,326			19,703
Total non-interest expense	180,371		176,615			170,969			153,730			166,829
Income before taxes	88,332		85,054			79,971			78,497			56,408
Income tax expense	33,724		31,939			29,930			29,386			20,896
Net income	$	54,608	$	53,115		$	50,041		$	49,111		$	35,512
Preferred stock dividends and discount accretion	3,629		3,628			3,628			3,628			3,629
Net income applicable to common shares	$	50,979	$	49,487		$	46,413		$	45,483		$	31,883
Net income per common share - Basic	$	0.98	$	0.96		$	0.94		$	0.94		$	0.66
Net income per common share - Diluted	$	0.94	$	0.92		$	0.90		$	0.90		$	0.64
Cash dividends declared per common share	$	0.12	$	0.12		$	0.12		$	0.12		$	0.11
Weighted average common shares outstanding	51,812		51,679			49,140			48,448			48,371
Dilutive potential common shares	4,152		4,047			3,965			3,820			4,005
Average common shares and dilutive common shares	55,964		55,726			53,105			52,268			52,376

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Period End Loan Balances - 5 Quarter Trends



	December 31,			September 30,			June 30,			March 31,			December 31,
(Dollars in thousands)	2016			2016			2016			2016			2015
Balance:
Commercial	$	6,005,422		$	5,951,544		$	5,144,533		$	4,890,246		$	4,713,909
Commercial real estate	6,196,087			5,908,684			5,848,334			5,737,959			5,529,289
Home equity	725,793			742,868			760,904			774,342			784,675
Residential real estate	705,221			663,598			653,664			626,043			607,451
Premium finance receivables - commercial	2,478,581			2,430,233			2,478,280			2,320,987			2,374,921
Premium finance receivables - life insurance	3,470,027			3,283,359			3,161,562			2,976,934			2,961,496
Consumer and other	122,041			120,975			127,378			119,902			146,376
Total loans, net of unearned income, excluding covered loans	$	19,703,172		$	19,101,261		$	18,174,655		$	17,446,413		$	17,118,117
Covered loans	58,145			95,940			105,248			138,848			148,673
Total loans, net of unearned income	$	19,761,317		$	19,197,201		$	18,279,903		$	17,585,261		$	17,266,790
Mix:
Commercial	30		%	31		%	28		%	28		%	27		%
Commercial real estate	31			31			31			32			32
Home equity	4			4			4			4			5
Residential real estate	4			3			4			4			3
Premium finance receivables - commercial	12			13			14			13			14
Premium finance receivables - life insurance	18			17			17			17			17
Consumer and other	1			1			1			1			1
Total loans, net of unearned income, excluding covered loans	100		%	100		%	99		%	99		%	99		%
Covered loans	—			—			1			1			1
Total loans, net of unearned income	100		%	100		%	100		%	100		%	100		%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Period End Deposits Balances - 5 Quarter Trends



	December 31,			September 30,			June 30,			March 31,			December 31,
(Dollars in thousands)	2016			2016			2016			2016			2015
Balance:
Non-interest bearing	$	5,927,377		$	5,711,042		$	5,367,672		$	5,205,410		$	4,836,420
NOW and interest bearing demand deposits	2,624,442			2,552,611			2,450,710			2,369,474			2,390,217
Wealth management deposits ⁽¹⁾	2,209,617			2,283,233			1,904,121			1,761,710			1,643,653
Money market	4,441,811			4,421,631			4,384,134			4,157,083			4,041,300
Savings	2,180,482			1,977,661			1,851,863			1,766,552			1,723,367
Time certificates of deposit	4,274,903			4,201,477			4,083,250			3,956,842			4,004,677
Total deposits	$	21,658,632		$	21,147,655		$	20,041,750		$	19,217,071		$	18,639,634
Mix:
Non-interest bearing	27		%	27		%	27		%	27		%	26		%
NOW and interest bearing demand deposits	12			12			12			12			13
Wealth management deposits ⁽¹⁾	10			11			10			9			9
Money market	21			21			22			22			22
Savings	10			9			9			9			9
Time certificates of deposit	20			20			20			21			21
Total deposits	100		%	100		%	100		%	100		%	100		%


(1)	Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wayne Hummer Investments, trust and asset management customers of the Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts of the Banks.

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Net Interest Margin (Including Call Option Income) - 5 Quarter Trends



	Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
(Dollars in thousands)	2016			2016			2016			2016			2015
Net interest income - FTE	$	192,276		$	186,192		$	176,733		$	172,944		$	168,515
Call option income	1,476			3,633			4,649			1,712			3,629
Net interest income including call option income	$	193,752		$	189,825		$	181,382		$	174,656		$	172,144
Yield on earning assets	3.64		%	3.65		%	3.67		%	3.71		%	3.69		%
Rate on interest-bearing liabilities	0.58			0.58			0.56			0.55			0.55
Rate spread	3.06		%	3.07		%	3.11		%	3.16		%	3.14		%
Less: Fully tax-equivalent adjustment	(0.02		)	(0.03		)	(0.03		)	(0.03		)	(0.03		)
Net free funds contribution	0.17			0.17			0.16			0.16			0.15
Net interest margin (GAAP-derived)	3.21		%	3.21		%	3.24		%	3.29		%	3.26		%
Fully tax-equivalent adjustment	0.02			0.03			0.03			0.03			0.03
Net interest margin - FTE	3.23		%	3.24		%	3.27		%	3.32		%	3.29		%
Call option income	0.02			0.06			0.09			0.03			0.07
Net interest margin - FTE, including call option income	3.25		%	3.30		%	3.36		%	3.35		%	3.36		%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Net Interest Margin (Including Call Option Income - YTD Trends)



	Years Ended December 31,
(Dollars in thousands)	2016			2015			2014			2013			2012
Net interest income - FTE	$	728,145		$	646,238		$	601,744		$	552,887		$	521,463
Call option income	11,470			15,364			7,859			4,773			10,476
Net interest income including call option income	$	739,615		$	661,602		$	609,603		$	557,660		$	531,939
Yield on earning assets	3.67		%	3.76		%	3.96		%	4.01		%	4.21		%
Rate on interest-bearing liabilities	0.57			0.54			0.55			0.63			0.86
Rate spread	3.10		%	3.22		%	3.41		%	3.38		%	3.35		%
Less: Fully tax-equivalent adjustment	(0.02		)	(0.02		)	(0.02		)	(0.01		)	(0.02		)
Net free funds contribution	0.16			0.14			0.12			0.12			0.14
Net interest margin (GAAP-derived)	3.24		%	3.34		%	3.51		%	3.49		%	3.47		%
Fully tax-equivalent adjustment	0.02			0.02			0.02			0.01			0.02
Net interest margin - FTE	3.26		%	3.36		%	3.53		%	3.50		%	3.49		%
Call option income	0.05			0.08			0.05			0.03			0.07
Net interest margin - FTE, including call option income	3.31		%	3.44		%	3.58		%	3.53		%	3.56		%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Quarterly Average Balances - 5 Quarter Trends



	Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
(In thousands)	2016			2016			2016			2016			2015
Liquidity management assets	$	3,860,616		$	3,671,577		$	3,413,113		$	3,300,138		$	3,245,393
Other earning assets	27,608			29,875			29,759			28,731			29,792
Loans, net of unearned income	19,711,504			19,071,621			18,204,552			17,508,593			16,889,922
Covered loans	59,827			101,570			109,533			141,351			154,846
Total earning assets	$	23,659,555		$	22,874,643		$	21,756,957		$	20,978,813		$	20,319,953
Allowance for loan and covered loan losses	(122,665		)	(121,156		)	(116,984		)	(112,028		)	(109,448		)
Cash and due from banks	221,892			240,239			272,935			259,343			260,593
Other assets	1,852,278			1,885,526			1,841,847			1,776,785			1,754,014
Total assets	$	25,611,060		$	24,879,252		$	23,754,755		$	22,902,913		$	22,225,112
Interest-bearing deposits	$	15,567,263		$	15,117,102		$	14,065,995		$	13,717,333		$	13,606,046
Federal Home Loan Bank advances	388,780			459,198			946,081			825,104			441,669
Other borrowings	240,174			249,307			248,233			257,384			269,738
Subordinated notes	138,953			138,925			138,898			138,870			138,852
Junior subordinated debentures	253,566			253,566			253,566			257,687			268,566
Total interest-bearing liabilities	$	16,588,736		$	16,218,098		$	15,652,773		$	15,196,378		$	14,724,871
Non-interest bearing deposits	5,902,439			5,566,983			5,223,384			4,939,746			4,776,977
Other liabilities	430,009			442,487			412,866			377,019			375,719
Equity	2,689,876			2,651,684			2,465,732			2,389,770			2,347,545
Total liabilities and shareholders’ equity	$	25,611,060		$	24,879,252		$	23,754,755		$	22,902,913		$	22,225,112

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Net Interest Margin - 5 Quarter Trends



	Three Months Ended
	December 31, 2016		September 30, 2016		June 30, 2016		March 31, 2016		December 31, 2015
Yield earned on:
Liquidity management assets	1.70	%	2.03	%	2.27	%	2.41	%	2.28	%
Other earning assets	3.37	%	2.96	%	3.21	%	3.31	%	3.26	%
Loans, net of unearned income	4.01	%	3.96	%	3.92	%	3.94	%	3.95	%
Covered loans	6.38	%	4.45	%	5.44	%	5.72	%	4.79	%
Total earning assets	3.64	%	3.65	%	3.67	%	3.71	%	3.69	%
Rate paid on:
Interest-bearing deposits	0.42	%	0.41	%	0.39	%	0.37	%	0.37	%
Federal Home Loan Bank advances	2.50	%	2.23	%	1.27	%	1.41	%	2.41	%
Other borrowings	1.78	%	1.81	%	1.76	%	1.65	%	1.48	%
Subordinated notes	5.12	%	5.12	%	5.12	%	5.12	%	5.12	%
Junior subordinated debentures	3.90	%	3.70	%	3.67	%	3.41	%	3.20	%
Total interest-bearing liabilities	0.58	%	0.58	%	0.56	%	0.55	%	0.55	%
Interest rate spread	3.06	%	3.07	%	3.11	%	3.16	%	3.14	%
Less: Fully tax-equivalent adjustment	(0.02	)	(0.03	)	(0.03	)	(0.03	)	(0.03	)
Net free funds/contribution	0.17		0.17		0.16		0.16		0.15
Net interest margin (GAAP)	3.21	%	3.21	%	3.24	%	3.29	%	3.26	%
Fully tax-equivalent adjustment	0.02		0.03		0.03		0.03		0.03
Net interest margin - FTE	3.23	%	3.24	%	3.27	%	3.32	%	3.29	%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Non-Interest Income - 5 Quarter Trends



	Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
(In thousands)	2016			2016			2016			2016			2015
Brokerage	$	6,408		$	6,752		$	6,302		$	6,057		$	6,850
Trust and asset management	13,104			12,582			12,550			12,263			11,784
Total wealth management	19,512			19,334			18,852			18,320			18,634
Mortgage banking	35,489			34,712			36,807			21,735			23,317
Service charges on deposit accounts	8,054			8,024			7,726			7,406			7,210
Gains (losses) on investment securities, net	1,575			3,305			1,440			1,325			(79		)
Fees from covered call options	1,476			3,633			4,649			1,712			3,629
Trading gains (losses), net	1,007			(432		)	(316		)	(168		)	205
Operating lease income, net	5,171			4,459			4,005			2,806			1,973
Other:
Interest rate swap fees	2,870			2,881			1,835			4,438			2,343
BOLI	981			884			1,257			472			1,463
Administrative services	1,115			1,151			1,074			1,069			1,101
(Loss) gain on extinguishment of debt	(717		)	—			—			4,305			—
Miscellaneous	8,742			8,653			7,470			5,332			5,294
Total other income	12,991			13,569			11,636			15,616			10,201
Total Non-Interest Income	$	85,275		$	86,604		$	84,799		$	68,752		$	65,090

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Non-Interest Expense - 5 Quarter Trends



	Three Months Ended
	December 31,		September 30,		June 30,		March 31,		December 31,
(In thousands)	2016		2016		2016		2016		2015
Salaries and employee benefits:
Salaries	$	53,108	$	54,309	$	52,924	$	50,282	$	50,982
Commissions and incentive compensation	35,744		33,740		32,531		26,375		31,222
Benefits	15,883		15,669		15,439		19,154		17,576
Total salaries and employee benefits	104,735		103,718		100,894		95,811		99,780
Equipment	9,532		9,449		9,307		8,767		8,799
Operating lease equipment depreciation	4,219		3,605		3,385		2,050		1,202
Occupancy, net	14,254		12,767		11,943		11,948		13,062
Data processing	7,687		7,432		7,138		6,519		7,284
Advertising and marketing	6,691		7,365		6,941		3,779		5,373
Professional fees	5,425		5,508		5,419		4,059		4,387
Amortization of other intangible assets	1,158		1,085		1,248		1,298		1,324
FDIC insurance	4,726		3,686		4,040		3,613		3,317
OREO expense, net	1,843		1,436		1,348		560		2,598
Other:
Commissions - 3rd party brokers	1,165		1,362		1,324		1,310		1,321
Postage	1,955		1,889		2,038		1,302		1,892
Miscellaneous	16,981		17,313		15,944		12,714		16,490
Total other expense	20,101		20,564		19,306		15,326		19,703
Total Non-Interest Expense	$	180,371	$	176,615	$	170,969	$	153,730	$	166,829

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Allowance for Credit Losses, excluding covered loans - 5 Quarter Trends



	Three Months Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
(Dollars in thousands)	2016			2016			2016			2016			2015
Allowance for loan losses at beginning of period	$	117,693		$	114,356		$	110,171		$	105,400		$	102,996
Provision for credit losses	7,357			9,741			9,269			8,423			9,196
Other adjustments	33			(112		)	(134		)	(78		)	(243		)
Reclassification (to) from allowance for unfunded lending-related commitments	(25		)	(579		)	(40		)	(81		)	13
Charge-offs:
Commercial	3,054			3,469			721			671			1,369
Commercial real estate	375			382			502			671			2,734
Home equity	326			574			2,046			1,052			680
Residential real estate	410			134			693			493			211
Premium finance receivables - commercial	1,843			1,959			1,911			2,480			2,676
Premium finance receivables - life insurance	—			—			—			—			—
Consumer and other	205			389			224			107			179
Total charge-offs	6,213			6,907			6,097			5,474			7,849
Recoveries:
Commercial	668			176			121			629			315
Commercial real estate	1,916			364			296			369			491
Home equity	300			65			71			48			183
Residential real estate	21			61			31			112			55
Premium finance receivables - commercial	498			456			633			787			223
Premium finance receivables - life insurance	—			—			—			—			—
Consumer and other	43			72			35			36			20
Total recoveries	3,446			1,194			1,187			1,981			1,287
Net charge-offs	(2,767		)	(5,713		)	(4,910		)	(3,493		)	(6,562		)
Allowance for loan losses at period end	$	122,291		$	117,693		$	114,356		$	110,171		$	105,400
Allowance for unfunded lending-related commitments at period end	1,673			1,648			1,070			1,030			949
Allowance for credit losses at period end	$	123,964		$	119,341		$	115,426		$	111,201		$	106,349
Annualized net charge-offs by category as a percentage of its own respective category’s average:
Commercial	0.16		%	0.24		%	0.05		%	0.00		%	0.09		%
Commercial real estate	(0.10		)	0.00			0.01			0.02			0.16
Home equity	0.01			0.27			1.03			0.52			0.25
Residential real estate	0.13			0.03			0.26			0.17			0.07
Premium finance receivables - commercial	0.22			0.24			0.21			0.29			0.41
Premium finance receivables - life insurance	0.00			0.00			0.00			0.00			0.00
Consumer and other	0.47			0.92			0.57			0.20			0.37
Total loans, net of unearned income, excluding covered loans	0.06		%	0.12		%	0.11		%	0.08		%	0.15		%
Net charge-offs as a percentage of the provision for credit losses	37.61		%	58.65		%	52.97		%	41.47		%	71.35		%
Loans at period-end	$	19,703,172		$	19,101,261		$	18,174,655		$	17,446,413		$	17,118,117
Allowance for loan losses as a percentage of loans at period end	0.62		%	0.62		%	0.63		%	0.63		%	0.62		%
Allowance for credit losses as a percentage of loans at period end	0.63		%	0.62		%	0.64		%	0.64		%	0.62		%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Non-Performing Assets, excluding covered assets - 5 Quarter Trends



	December 31,			September 30,			June 30,			March 31,			December 31,
(Dollars in thousands)	2016			2016			2016			2016			2015
Loans past due greater than 90 days and still accruing⁽¹⁾:
Commercial	$	174		$	—		$	235		$	338		$	541
Commercial real estate	—			—			—			1,260			—
Home equity	—			—			—			—			—
Residential real estate	—			—			—			—			—
Premium finance receivables - commercial	7,962			7,754			10,558			9,548			10,294
Premium finance receivables - life insurance	3,717			—			—			1,641			—
Consumer and other	144			60			163			180			150
Total loans past due greater than 90 days and still accruing	11,997			7,814			10,956			12,967			10,985
Non-accrual loans⁽²⁾:
Commercial	15,875			16,418			16,801			12,373			12,712
Commercial real estate	21,924			22,625			24,415			26,996			26,645
Home equity	9,761			9,309			8,562			9,365			6,848
Residential real estate	12,749			12,205			12,413			11,964			12,043
Premium finance receivables - commercial	14,709			14,214			14,497			15,350			14,561
Premium finance receivables - life insurance	—			—			—			—			—
Consumer and other	439			543			475			484			263
Total non-accrual loans	75,457			75,314			77,163			76,532			73,072
Total non-performing loans:
Commercial	16,049			16,418			17,036			12,711			13,253
Commercial real estate	21,924			22,625			24,415			28,256			26,645
Home equity	9,761			9,309			8,562			9,365			6,848
Residential real estate	12,749			12,205			12,413			11,964			12,043
Premium finance receivables - commercial	22,671			21,968			25,055			24,898			24,855
Premium finance receivables - life insurance	3,717			—			—			1,641			—
Consumer and other	583			603			638			664			413
Total non-performing loans	$	87,454		$	83,128		$	88,119		$	89,499		$	84,057
Other real estate owned	17,699			19,933			22,154			24,022			26,849
Other real estate owned - from acquisitions	22,583			15,117			15,909			16,980			17,096
Other repossessed assets	581			428			420			171			174
Total non-performing assets	$	128,317		$	118,606		$	126,602		$	130,672		$	128,176
TDRs performing under the contractual terms of the loan agreement	29,911			29,440			33,310			34,949			42,744
Total non-performing loans by category as a percent of its own respective category’s period-end balance:
Commercial	0.27		%	0.28		%	0.33		%	0.26		%	0.28		%
Commercial real estate	0.35			0.38			0.42			0.49			0.48
Home equity	1.34			1.25			1.13			1.21			0.87
Residential real estate	1.81			1.84			1.90			1.91			1.98
Premium finance receivables - commercial	0.91			0.90			1.01			1.07			1.05
Premium finance receivables - life insurance	0.11			—			—			0.06			—
Consumer and other	0.48			0.50			0.50			0.55			0.28
Total loans, net of unearned income	0.44		%	0.44		%	0.48		%	0.51		%	0.49		%
Total non-performing assets as a percentage of total assets	0.50		%	0.47		%	0.52		%	0.56		%	0.56		%
Allowance for loan losses as a percentage of total non-performing loans	139.83		%	141.58		%	129.78		%	123.10		%	125.39		%


(1)	As of the dates shown, no TDRs were past due greater than 90 days and still accruing interest.


(2)	Non-accrual loans included TDRs totaling $11.8 million, $14.8 million, $16.3 million, $17.6 million and $9.1 million as of December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016 and December 31, 2015, respectively.

WINTRUST FINANCIAL CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - January 19, 2017

Attached files