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8-K - 8-K - WINTRUST FINANCIAL CORPa8-kq12018.htm


Exhibit 99.1
Wintrust Financial Corporation
9700 W. Higgins Road, Suite 800, Rosemont, Illinois 60018
News Release
 
 
 
FOR IMMEDIATE RELEASE
  
April 16, 2018
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 First Quarter 2018 Net Income, an Increase of 40% Over Prior Year

ROSEMONT, ILLINOIS – Wintrust Financial Corporation (“Wintrust” or “the Company”) (Nasdaq: WTFC) announced net income of $82.0 million or $1.40 per diluted common share for the first quarter of 2018 compared to net income of $68.8 million or $1.17 per diluted common share for the fourth quarter of 2017 and $58.4 million or $1.00 per diluted common share for the first quarter of 2017.

Highlights of the First Quarter of 2018 *:
    
Total assets increased by $541 million from the prior quarter and now total $28.5 billion.
Total loans increased by $421 million from the prior quarter.
Net interest margin increased primarily as a result of higher earning asset yields due to rising interest rates in the market. This increase as well as $586 million of growth in average earning assets since the fourth quarter of 2017 drove a $6.0 million increase in net interest income over the prior quarter.
Return on average assets increased to 1.20% from 1.00% in the prior quarter. Return on average common equity increased to 11.29% from 9.39% in the prior quarter.
Decrease in effective tax rate to 24.14% from 28.19% in the fourth quarter of 2017, which was impacted by the enactment of the Tax Cuts and Jobs Act on December 22, 2017 ("Tax Reform") and $2.6 million of excess tax benefits related to income taxes attributed to share-based compensation.
Allowance for loan losses as a percentage of total non-performing loans remained strong at 156%.
Net charge-offs increased to $6.7 million from $3.7 million in the fourth quarter of 2017. Annualized net charge-offs as a percentage of average total loans remained at historically low levels at 12 basis points for the current quarter.
Losses from the sale and negative fair value adjustments realized on other real estate owned increased by $2.7 million during the quarter as a result of our continued monitoring and workout efforts.
Mortgage banking revenue increased to $31.0 million, which was positively impacted by a $4.1 million positive fair value adjustment related to mortgage servicing rights assets compared to a $46,000 positive fair value adjustment in the fourth quarter of 2017. The previously announced acquisition of iFreedom Direct Corporation DBA Veterans First Mortgage ("Veterans First") was completed, which positively impacted mortgage banking revenue by $5.9 million from approximately half a quarter of origination activity during the period after the pipeline was initially established, offset by $5.9 million in expenses from nearly the entire quarter. Additionally, associated with the Veterans First acquisition, $13.8 million of mortgage servicing rights assets were acquired.

* 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 for the ninth consecutive quarter. These results reflected the steady strength of our internal growth engine at Wintrust as we grew assets by $541 million. The first quarter of 2018 was also characterized by the increased net interest margin as we continued to benefit from rising interest rates, reduced operating costs, steady credit quality metrics and the completion of the acquisition of Veterans First."
    
Mr. Wehmer continued, "We grew our loan portfolio by $421 million during the first quarter of 2018, which was driven by strong growth in the commercial loan portfolio. The improvement in net interest margin during the period was primarily

1



attributable to rising interest rates in the market. We remain well positioned for expected rising rates in the future. The increased loan volume and continued improvement in net interest margin along with the continued momentum from loan growth at the very end of 2017 resulted in an increase in net interest income of $6.0 million in the first quarter of 2018, despite two less days in the quarter. Our loan pipelines remain consistently strong."

Commenting on credit quality, Mr. Wehmer noted, "Credit quality metrics remained strong during the first quarter of 2018 and the Company continued its practice of addressing and resolving non-performing credits in a timely fashion. Total non-performing assets decreased $4.6 million during the first quarter of 2018 resulting in non-performing assets as a percentage of total assets dropping from 0.47% to 0.44% during the period. Total non-performing loans decreased slightly in the first quarter of 2018 and now total $89.7 million, or 0.41% of total loans. As a percentage of non-performing loans, the allowance for loan losses remained strong at 156%. Other real estate owned decreased $4.0 million to $36.6 million during the first quarter of 2018 as a result of our continued monitoring and workout efforts. Net charge-offs totaled $6.7 million in the current quarter, increasing $3.0 million from the fourth quarter of 2017. This increase was driven primarily by $4.3 million of net charge-offs within the commercial insurance premium finance receivables portfolio. Despite this increase during the current period, annualized net charge-offs as a percentage of total loans ended the first quarter of 2018 at 0.12%, which remains at historically low levels. We believe that the Company's reserves remain appropriate."

Mr. Wehmer further commented, "Mortgage banking revenue in the first quarter of 2018 totaled $31.0 million, an increase of $3.5 million compared to the fourth quarter of 2017 and an increase of $9.0 million compared to the first quarter of 2017. The increase in mortgage banking revenue for the first quarter of 2018 compared to the fourth quarter of 2017 was impacted by the acquisition of Veterans First, which contributed approximately $5.9 million during its first partial quarter of being a part of Wintrust. Veterans First will continue to assist us in growing our mortgage banking business with opportunities to expand in both size and delivery channels. Mortgage loan origination volumes in the first quarter of 2018 declined to $779 million from $879 million in the fourth quarter of 2017 as a result of the recent rise in interest rates and typical seasonality in January and February within our primary markets. Home purchases activity represented 73% of the volume for the first quarter of 2018 compared to 67% in the fourth quarter of 2017. Our mortgage pipeline remains strong. 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, "We expect our growth engine to continue its momentum from the first quarter into the remainder of 2018. Wintrust continues to take a steady and measured approach to achieving our main objectives of growing franchise value, increasing profitability, leveraging our expense infrastructure to achieve our goal of a net overhead ratio below 1.50% by the end of 2018 and continuing to increase shareholder value. Loan growth at the end of the first quarter of 2018 should add to this momentum as period-end loan balances exceeded the first quarter average balance by $351 million. We remain well-positioned for a rising interest rate environment in the future, which, coupled with this loan growth, should continue to grow net interest income. Additionally, Tax Reform is expected to help fuel our growth and increase profitability as we continue through 2018. As previously noted, we expect our effective income tax rate for the full year of 2018 to be approximately 26%-27%, excluding any impact of excess tax benefits associated with share-based compensation. Evaluating strategic acquisitions and organic branch growth will also be a part of our overall growth strategy with the goal of becoming Chicago’s bank and Wisconsin’s bank. To that end, the Company opened one new branch location in the heart of Wrigleyville in Chicago during April and anticipates opening four or five additional branches in Illinois and Wisconsin during the second and third quarters of 2018. Our opportunities for both internal growth and external growth remain consistently strong."


2



The graphs below illustrate certain highlights of the first quarter of 2018.

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4





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Wintrust’s key operating measures and growth rates for the first quarter of 2018, as compared to the sequential and linked quarters, are shown in the table below:
 
 
 
 
 
 
 
 
% or(4)
basis point  (bp) change from
4th Quarter
2017
 
% or
basis point  (bp)
change from
1st Quarter
2017
  
 
Three Months Ended
 
 
(Dollars in thousands)
 
March 31,
2018
 
December 31,
2017
 
March 31,
2017
 
 
Net income
 
$
81,981

 
$
68,781

 
$
58,378

 
19

 
40

Net income per common share – diluted
 
$
1.40

 
$
1.17

 
$
1.00

 
20

 
40

Net revenue (1)
 
$
310,761

 
$
300,137

 
$
261,345

 
4

 
19

Net interest income
 
$
225,082

 
$
219,099

 
$
192,580

 
3

 
17

Net interest margin
 
3.54
%
 
3.45
%
 
3.36
%
 
9

bp 
 
18

bp 
Net interest margin - fully taxable equivalent (non-GAAP) (2)
 
3.56
%
 
3.49
%
 
3.39
%
 
7

bp
 
17

bp
Net overhead ratio (3)
 
1.58
%
 
1.69
%
 
1.60
%
 
(11
)
bp 
 
(2
)
bp 
Return on average assets
 
1.20
%
 
1.00
%
 
0.94
%
 
20

bp 
 
26

bp 
Return on average common equity
 
11.29
%
 
9.39
%
 
8.93
%
 
190

bp 
 
236

bp 
Return on average tangible common equity (non-GAAP) (2)
 
14.02
%
 
11.65
%
 
11.44
%
 
237

bp
 
258

bp
At end of period
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
28,456,772

 
$
27,915,970

 
$
25,778,893

 
8

 
10

Total loans, excluding covered loans
 
22,062,134

 
21,640,797

 
19,931,058

 
8

 
11

Total deposits
 
23,279,327

 
23,183,347

 
21,730,441

 
2

 
7

Total shareholders’ equity
 
3,031,250

 
2,976,939

 
2,764,983

 
7

 
10

 
(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.”



6



WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights
 
 
Three Months Ended
(Dollars in thousands, except per share data)
 
March 31,
2018
 
December 31,
2017
 
March 31,
2017
Selected Financial Condition Data (at end of period):
 
 
 
 
 
 
Total assets
 
$
28,456,772

 
$
27,915,970

 
$
25,778,893

Total loans, excluding covered loans
 
22,062,134

 
21,640,797

 
19,931,058

Total deposits
 
23,279,327

 
23,183,347

 
21,730,441

Junior subordinated debentures
 
253,566

 
253,566

 
253,566

Total shareholders’ equity
 
3,031,250

 
2,976,939

 
2,764,983

Selected Statements of Income Data:
 
 
 
 
 
 
Net interest income
 
$
225,082

 
$
219,099

 
$
192,580

Net revenue (1)
 
310,761

 
300,137

 
261,345

Net income
 
81,981

 
68,781

 
58,378

Net income per common share – Basic
 
$
1.42

 
$
1.19

 
$
1.05

Net income per common share – Diluted
 
$
1.40

 
$
1.17

 
$
1.00

Selected Financial Ratios and Other Data:
 
 
 
 
 
 
Performance Ratios:
 
 
 
 
 
 
Net interest margin
 
3.54
%
 
3.45
%
 
3.36
%
Net interest margin - fully taxable equivalent (non-GAAP) (2)
 
3.56
%
 
3.49
%
 
3.39
%
Non-interest income to average assets
 
1.25
%
 
1.18
%
 
1.11
%
Non-interest expense to average assets
 
2.83
%
 
2.87
%
 
2.70
%
Net overhead ratio (3)
 
1.58
%
 
1.69
%
 
1.60
%
Return on average assets
 
1.20
%
 
1.00
%
 
0.94
%
Return on average common equity
 
11.29
%
 
9.39
%
 
8.93
%
Return on average tangible common equity (non-GAAP) (2)
 
14.02
%
 
11.65
%
 
11.44
%
Average total assets
 
$
27,809,597

 
$
27,179,484

 
$
25,207,348

Average total shareholders’ equity
 
2,995,592

 
2,942,999

 
2,739,050

Average loans to average deposits ratio (excluding covered loans)
 
95.2
%
 
92.3
%
 
92.5
%
Common Share Data at end of period:
 
 
 
 
 
 
Market price per common share
 
$
86.05

 
$
82.37

 
$
69.12

Book value per common share (2)
 
$
51.66

 
$
50.96

 
$
47.88

Tangible common book value per share (2)
 
$
42.17

 
$
41.68

 
$
37.97

Common shares outstanding
 
56,256,498

 
55,965,207

 
52,503,663

Other Data at end of period:(6)
 
 
 
 
 
 
Leverage Ratio (4)
 
9.4
%
 
9.3
%
 
9.3
%
Tier 1 capital to risk-weighted assets (4)
 
10.0
%
 
9.9
%
 
10.0
%
Common equity Tier 1 capital to risk-weighted assets (4)
 
9.5
%
 
9.4
%
 
8.9
%
Total capital to risk-weighted assets (4)
 
12.1
%
 
12.0
%
 
12.2
%
Allowance for credit losses (5)
 
$
140,746

 
$
139,174

 
$
127,630

Non-performing loans
 
89,690

 
90,162

 
78,979

Allowance for credit losses to total loans (5)
 
0.64
%
 
0.64
%
 
0.64
%
Non-performing loans to total loans
 
0.41
%
 
0.42
%
 
0.40
%
Number of:
 
 
 
 
 
 
Bank subsidiaries
 
15

 
15

 
15

Banking offices
 
157

 
157

 
155

 
(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.
(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.

7



WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
 
 
 
(Unaudited)
 
 
 
(Unaudited)
(In thousands)
 
March 31,
2018
 
December 31,
2017
 
March 31,
2017
Assets
 
 
 
 
 
 
Cash and due from banks
 
$
231,407

 
$
277,534

 
$
214,102

Federal funds sold and securities purchased under resale agreements
 
57

 
57

 
3,046

Interest bearing deposits with banks
 
980,380

 
1,063,242

 
1,007,468

Available-for-sale securities, at fair value
 
1,895,688

 
1,803,666

 
1,803,733

Held-to-maturity securities, at amortized cost
 
892,937

 
826,449

 
667,764

Trading account securities
 
1,682

 
995

 
714

Equity securities with readily determinable fair value
 
37,832

 

 

Federal Home Loan Bank and Federal Reserve Bank stock
 
104,956

 
89,989

 
78,904

Brokerage customer receivables
 
24,531

 
26,431

 
23,171

Mortgage loans held-for-sale
 
411,505

 
313,592

 
288,964

Loans, net of unearned income, excluding covered loans
 
22,062,134

 
21,640,797

 
19,931,058

Covered loans
 

 

 
52,359

Total loans
 
22,062,134

 
21,640,797

 
19,983,417

Allowance for loan losses
 
(139,503
)
 
(137,905
)
 
(125,819
)
Allowance for covered loan losses
 

 

 
(1,319
)
Net loans
 
21,922,631

 
21,502,892

 
19,856,279

Premises and equipment, net
 
626,687

 
621,895

 
598,746

Lease investments, net
 
190,775

 
212,335

 
155,233

Accrued interest receivable and other assets
 
601,794

 
567,374

 
560,741

Trade date securities receivable
 

 
90,014

 

Goodwill
 
511,497

 
501,884

 
499,341

Other intangible assets
 
22,413

 
17,621

 
20,687

Total assets
 
$
28,456,772

 
$
27,915,970

 
$
25,778,893

Liabilities and Shareholders’ Equity
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
Non-interest bearing
 
$
6,612,319

 
$
6,792,497

 
$
5,790,579

Interest bearing
 
16,667,008

 
16,390,850

 
15,939,862

 Total deposits
 
23,279,327

 
23,183,347

 
21,730,441

Federal Home Loan Bank advances
 
915,000

 
559,663

 
227,585

Other borrowings
 
247,092

 
266,123

 
238,787

Subordinated notes
 
139,111

 
139,088

 
138,993

Junior subordinated debentures
 
253,566

 
253,566

 
253,566

Accrued interest payable and other liabilities
 
591,426

 
537,244

 
424,538

Total liabilities
 
25,425,522

 
24,939,031

 
23,013,910

Shareholders’ Equity:
 
 
 
 
 
 
Preferred stock
 
125,000

 
125,000

 
251,257

Common stock
 
56,364

 
56,068

 
52,605

Surplus
 
1,540,673

 
1,529,035

 
1,381,886

Treasury stock
 
(5,355
)
 
(4,986
)
 
(4,884
)
Retained earnings
 
1,387,663

 
1,313,657

 
1,143,943

Accumulated other comprehensive loss
 
(73,095
)
 
(41,835
)
 
(59,824
)
Total shareholders’ equity
 
3,031,250

 
2,976,939

 
2,764,983

Total liabilities and shareholders’ equity
 
$
28,456,772

 
$
27,915,970

 
$
25,778,893



8



WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

  
Three Months Ended
(In thousands, except per share data)
March 31,
2018
 
December 31,
2017
 
March 31,
2017
Interest income
 
 
 
 
 
Interest and fees on loans
234,994

 
226,447

 
196,916

        Mortgage loans held-for-sale
2,818

 
3,291

 
2,398

Interest bearing deposits with banks
2,796

 
2,723

 
1,623

Federal funds sold and securities purchased under resale agreements

 

 
1

Investment securities
19,128

 
18,160

 
13,573

Trading account securities
14

 
2

 
11

Federal Home Loan Bank and Federal Reserve Bank stock
1,298

 
1,067

 
1,070

Brokerage customer receivables
157

 
150

 
167

Total interest income
261,205

 
251,840

 
215,759

Interest expense
 
 
 
 
 
Interest on deposits
26,549

 
24,930

 
16,270

Interest on Federal Home Loan Bank advances
3,639

 
2,124

 
1,590

Interest on other borrowings
1,699

 
1,600

 
1,139

Interest on subordinated notes
1,773

 
1,786

 
1,772

Interest on junior subordinated debentures
2,463

 
2,301

 
2,408

Total interest expense
36,123

 
32,741

 
23,179

Net interest income
225,082

 
219,099

 
192,580

Provision for credit losses
8,346

 
7,772

 
5,209

Net interest income after provision for credit losses
216,736

 
211,327

 
187,371

Non-interest income
 
 
 
 
 
Wealth management
22,986

 
21,910

 
20,148

Mortgage banking
30,960

 
27,411

 
21,938

Service charges on deposit accounts
8,857

 
8,907

 
8,265

(Losses) gains on investment securities, net
(351
)
 
14

 
(55
)
Fees from covered call options
1,597

 
1,610

 
759

Trading gains (losses), net
103

 
24

 
(320
)
Operating lease income, net
9,691

 
8,598

 
5,782

Other
11,836

 
12,564

 
12,248

Total non-interest income
85,679

 
81,038

 
68,765

Non-interest expense
 
 
 
 
 
Salaries and employee benefits
112,436

 
118,009

 
99,316

Equipment
10,072

 
9,500

 
9,002

Operating lease equipment depreciation
6,533

 
7,015

 
4,636

Occupancy, net
13,767

 
14,154

 
13,101

Data processing
8,493

 
7,915

 
7,925

Advertising and marketing
8,824

 
7,382

 
5,150

Professional fees
6,649

 
8,879

 
4,660

Amortization of other intangible assets
1,004

 
1,028

 
1,164

FDIC insurance
4,362

 
4,324

 
4,156

OREO expense, net
2,926

 
599

 
1,665

Other
19,283

 
17,775

 
17,343

Total non-interest expense
194,349

 
196,580

 
168,118

Income before taxes
108,066

 
95,785

 
88,018

Income tax expense
26,085

 
27,004

 
29,640

Net income
$
81,981

 
$
68,781

 
$
58,378

Preferred stock dividends
2,050

 
2,050

 
3,628

Net income applicable to common shares
$
79,931

 
$
66,731

 
$
54,750

Net income per common share - Basic
$
1.42

 
$
1.19

 
$
1.05

Net income per common share - Diluted
$
1.40

 
$
1.17

 
$
1.00

Cash dividends declared per common share
$
0.19

 
$
0.14

 
$
0.14

Weighted average common shares outstanding
56,137

 
55,924

 
52,267

Dilutive potential common shares
888

 
1,010

 
4,160

Average common shares and dilutive common shares
57,025

 
56,934

 
56,427


9



EARNINGS PER SHARE

The following table shows the computation of basic and diluted earnings per share for the periods indicated:
 
 
 
Three Months Ended
(In thousands, except per share data)
 
 
March 31,
2018
 
December 31,
2017
 
March 31,
2017
Net income
 
 
$
81,981

 
$
68,781

 
$
58,378

Less: Preferred stock dividends
 
 
2,050

 
2,050

 
3,628

Net income applicable to common shares—Basic
(A)
 
79,931

 
66,731

 
54,750

Add: Dividends on convertible preferred stock, if dilutive
 
 

 

 
1,578

Net income applicable to common shares—Diluted
(B)
 
79,931

 
66,731

 
56,328

Weighted average common shares outstanding
(C)
 
56,137

 
55,924

 
52,267

Effect of dilutive potential common shares:
 
 
 
 
 
 
 
Common stock equivalents
 
 
888

 
1,010

 
1,060

Convertible preferred stock, if dilutive
 
 

 

 
3,100

Weighted average common shares and effect of dilutive potential common shares
(D)
 
57,025

 
56,934

 
56,427

Net income per common share:
 
 
 
 
 
 
 
Basic
(A/C)
 
$
1.42

 
$
1.19

 
$
1.05

Diluted
(B/D)
 
$
1.40

 
$
1.17

 
$
1.00


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 for a period, net income applicable to common shares is not adjusted by the associated preferred dividends. On April 25, 2017, 2,073 shares of the Series C Preferred Stock were converted at the option of the respective holder into 51,244 shares of the Company's common stock, pursuant to the terms of the Series C Preferred Stock. On April 27, 2017, the Company caused a mandatory conversion of its outstanding 124,184 shares of Series C Preferred Stock into 3,069,828 shares of the Company's common stock at a conversion rate of 24.72 shares of common stock per share of Series C Preferred Stock. Cash was paid in lieu of fractional shares for an amount considered insignificant.

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 using tax rates effective as of the end of the period. 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.


10



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
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
(Dollars and shares in thousands)
2018
 
2017
 
2017
 
2017
 
2017
Calculation of Net Interest Margin and Efficiency Ratio
 
 
 
 
 
 
 
 
 
(A) Interest Income (GAAP)
$
261,205

 
$
251,840

 
$
247,688

 
$
231,181

 
$
215,759

Taxable-equivalent adjustment:
 
 
 
 
 
 
 
 
 
 - Loans
670

 
1,106

 
1,033

 
831

 
790

 - Liquidity Management Assets
531

 
1,019

 
921

 
866

 
907

 - Other Earning Assets
3

 
2

 
5

 
2

 
5

(B) Interest Income - FTE
$
262,409

 
$
253,967

 
$
249,647

 
$
232,880

 
$
217,461

(C) Interest Expense (GAAP)
36,123

 
32,741

 
31,700

 
26,772

 
23,179

(D) Net Interest Income - FTE (B minus C)
$
226,286

 
$
221,226

 
$
217,947

 
$
206,108

 
$
194,282

(E) Net Interest Income (GAAP) (A minus C)
$
225,082

 
$
219,099

 
$
215,988

 
$
204,409

 
$
192,580

Net interest margin (GAAP-derived)
3.54
%
 
3.45
%
 
3.43
%
 
3.41
%
 
3.36
%
Net interest margin - FTE
3.56
%
 
3.49
%
 
3.46
%
 
3.43
%
 
3.39
%
(F) Non-interest income
$
85,679

 
$
81,038

 
$
79,731

 
$
89,972

 
$
68,765

(G) Gains (losses) on investment securities, net
(351
)
 
14

 
39

 
47

 
(55
)
(H) Non-interest expense
194,349

 
196,580

 
183,575

 
183,544

 
168,118

Efficiency ratio (H/(E+F-G))
62.47
%
 
65.50
%
 
62.09
%
 
62.36
%
 
64.31
%
Efficiency ratio - FTE (H/(D+F-G))
62.23
%
 
65.04
%
 
61.68
%
 
62.00
%
 
63.90
%
Calculation of Tangible Common Equity ratio (at period end)
 
 
 
 
 
 
 
 
 
Total shareholders’ equity
$
3,031,250

 
$
2,976,939

 
$
2,908,925

 
$
2,839,458

 
$
2,764,983

(I) Less: Convertible preferred stock

 

 

 

 
(126,257
)
Less: Non-convertible preferred stock
(125,000
)
 
(125,000
)
 
(125,000
)
 
(125,000
)
 
(125,000
)
Less: Intangible assets
(533,910
)
 
(519,505
)
 
(520,672
)
 
(519,806
)
 
(520,028
)
(J) Total tangible common shareholders’ equity
$
2,372,340

 
$
2,332,434

 
$
2,263,253

 
$
2,194,652

 
$
1,993,698

Total assets
$
28,456,772

 
$
27,915,970

 
$
27,358,162

 
$
26,929,265

 
$
25,778,893

Less: Intangible assets
(533,910
)
 
(519,505
)
 
(520,672
)
 
(519,806
)
 
(520,028
)
(K) Total tangible assets
$
27,922,862

 
$
27,396,465

 
$
26,837,490

 
$
26,409,459

 
$
25,258,865

Tangible common equity ratio (J/K)
8.5
%
 
8.5
%
 
8.4
%
 
8.3
%
 
7.9
%
Tangible common equity ratio, assuming full conversion of convertible preferred stock ((J-I)/K)
8.5
%
 
8.5
%
 
8.4
%
 
8.3
%
 
8.4
%
Calculation of book value per share
 
 
 
 
 
 
 
 
 
Total shareholders’ equity
$
3,031,250

 
$
2,976,939

 
$
2,908,925

 
$
2,839,458

 
$
2,764,983

Less: Preferred stock
(125,000
)
 
(125,000
)
 
(125,000
)
 
(125,000
)
 
(251,257
)
(L) Total common equity
$
2,906,250

 
$
2,851,939

 
$
2,783,925

 
$
2,714,458

 
$
2,513,726

(M) Actual common shares outstanding
56,256

 
55,965

 
55,838

 
55,700

 
52,504

Book value per common share (L/M)
$
51.66

 
$
50.96

 
$
49.86

 
$
48.73

 
$
47.88

Tangible common book value per share (J/M)
$
42.17

 
$
41.68

 
$
40.53

 
$
39.40

 
$
37.97

Calculation of return on average common equity
 
 
 
 
 
 
 
 
 
(N) Net income applicable to common shares
$
79,931

 
$
66,731

 
$
63,576

 
$
62,847

 
$
54,750

Add: After-tax intangible asset amortization
761

 
738

 
672

 
726

 
771

(O) Tangible net income applicable to common shares
$
80,692

 
$
67,469

 
$
64,248

 
$
63,573

 
$
55,521

Total average shareholders' equity
$
2,995,592

 
$
2,942,999

 
$
2,882,682

 
$
2,800,905

 
$
2,739,050

Less: Average preferred stock
(125,000
)
 
(125,000
)
 
(125,000
)
 
(161,028
)
 
(251,257
)
(P) Total average common shareholders' equity
$
2,870,592

 
$
2,817,999

 
$
2,757,682

 
$
2,639,877

 
$
2,487,793

Less: Average intangible assets
(536,676
)
 
(519,626
)
 
(520,333
)
 
(519,340
)
 
(520,346
)
(Q) Total average tangible common shareholders’ equity
$
2,333,916

 
$
2,298,373

 
$
2,237,349

 
$
2,120,537

 
$
1,967,447

Return on average common equity, annualized (N/P)
11.29
%
 
9.39
%
 
9.15
%
 
9.55
%
 
8.93
%
Return on average tangible common equity, annualized (O/Q)
14.02
%
 
11.65
%
 
11.39
%
 
12.02
%
 
11.44
%

11



BUSINESS UNIT SUMMARY

Community Banking

Through its community banking unit, the Company provides banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas the Company services. In the first quarter of 2018, revenue within this unit was primarily driven by increased net interest income due to a higher net interest margin and increased earning assets. The net interest margin increased in the first quarter of 2018 compared to the fourth quarter of 2017 primarily as a result of higher yields on the commercial and commercial real estate loan portfolios (excluding lease loans) and the liquidity management assets portfolio, partially offset by higher rates on interest-bearing liabilities. Mortgage banking revenue increased by $3.5 million from $27.4 million for the fourth quarter of 2017 to $31.0 million for the first quarter of 2018. The higher revenue was primarily due to increased revenue from the Veterans First acquisition of $5.9 million and a $4.1 million positive fair value adjustment related to mortgage servicing rights assets compared to a $46,000 positive fair value adjustment in the fourth quarter of 2017. The increase in revenue was partially offset as origination volume was lower during the current period, decreasing to $778.9 million from $879.4 million in the fourth quarter of 2017, as a result of typical seasonality in our primary markets. Home purchases represented 73% of loan origination volume for the first quarter of 2018. The Company's gross commercial and commercial real estate loan pipelines remain strong. Before the impact of scheduled payments and prepayments, at March 31, 2018, gross commercial and commercial real estate loan pipelines totaled $1.1 billion, or $688.4 million when adjusted for the probability of closing, compared to $974.4 million, or $630.2 million when adjusted for the probability of closing, at December 31, 2017.

Specialty Finance

Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries and accounts receivable financing, value-added, out-sourced administrative services, and other services. In the first quarter of 2018, the specialty finance unit experienced higher revenue as a result of increased volumes and higher yields within its insurance premium financing receivables portfolio. Originations of $1.8 billion during the first quarter of 2018 resulted in a $188.3 million increase in average balances. The increase in average balances along with higher yields on these loans resulted in a $2.7 million increase in interest income attributed to this portfolio. The Company's leasing business remained steady during the first quarter of 2018, with its portfolio of assets, including capital leases, loans and equipment on operating leases, totaling $986.7 million at the end of the first quarter of 2018. Revenues from the Company's out-sourced administrative services business remained steady, totaling approximately $1.1 million in the first quarter of 2018 and fourth quarter of 2017.

Wealth Management

Through its wealth management unit, the Company offers a full range of wealth management services through three separate subsidiaries: trust and investment services, asset management, securities brokerage services and 401(k) and retirement plan services. At March 31, 2018, the Company’s wealth management subsidiaries had approximately $24.3 billion of assets under administration, which includes $2.9 billion of assets owned by the Company and its subsidiary banks, representing a $347.1 million decrease from the $24.6 billion of assets under administration at December 31, 2017. This decrease in assets under administration was primarily driven by market depreciation.

12



LOANS

Loan Portfolio Mix and Growth Rates
 
 
 
 
 
 
 
 
 
% Growth
(Dollars in thousands)
 
March 31,
2018
 
December 31,
2017
 
March 31,
2017
 
From (1)
December 31,
2017
 
From
March 31,
2017
Balance:
 
 
 
 
 
 
 
 
 
 
Commercial
 
$
7,060,871

 
$
6,787,677

 
$
6,081,489

 
16
 %
 
16
 %
Commercial real estate
 
6,633,520

 
6,580,618

 
6,261,682

 
3

 
6

Home equity
 
626,547

 
663,045

 
708,258

 
(22
)
 
(12
)
Residential real estate
 
869,104

 
832,120

 
720,608

 
18

 
21

Premium finance receivables - commercial
 
2,576,150

 
2,634,565

 
2,446,946

 
(9
)
 
5

Premium finance receivables - life insurance
 
4,189,961

 
4,035,059

 
3,593,563

 
16

 
17

Consumer and other
 
105,981

 
107,713

 
118,512

 
(7
)
 
(11
)
Total loans, net of unearned income, excluding covered loans
 
$
22,062,134

 
$
21,640,797

 
$
19,931,058

 
8
 %
 
11
 %
Covered loans
 

 

 
52,359

 

 
(100
)
Total loans, net of unearned income
 
$
22,062,134

 
$
21,640,797

 
$
19,983,417

 
8
 %
 
10
 %
Mix:
 
 
 
 
 
 
 
 
 
 
Commercial
 
32
%
 
31
%
 
30
%
 
 
 
 
Commercial real estate
 
30

 
30

 
31

 
 
 
 
Home equity
 
3

 
3

 
4

 
 
 
 
Residential real estate
 
4

 
4

 
4

 
 
 
 
Premium finance receivables - commercial
 
12

 
12

 
12

 
 
 
 
Premium finance receivables - life insurance
 
19

 
19

 
18

 
 
 
 
Consumer and other
 

 
1

 
1

 
 
 
 
Total loans, net of unearned income, excluding covered loans
 
100
%
 
100
%
 
100
%
 
 
 
 
Covered loans
 

 

 

 
 
 
 
Total loans, net of unearned income
 
100
%
 
100
%
 
100
%
 
 
 
 
 
(1)
Annualized
















13



Commercial and Commercial Real Estate Loan Portfolios
 
 
As of March 31, 2018
 
 
 
 
% 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
 
$
4,560,880

 
33.4
%
 
$
10,051

 
$

 
$
39,182

Franchise
 
935,358

 
6.8

 
2,401

 

 
7,116

Mortgage warehouse lines of credit
 
163,470

 
1.2

 

 

 
1,297

Asset-based lending
 
977,735

 
7.1

 
1,194

 

 
8,316

Leases
 
414,198

 
3.0

 
361

 

 
1,222

PCI - commercial loans (1)
 
9,230

 
0.1

 

 
856

 
503

Total commercial
 
$
7,060,871

 
51.6
%
 
$
14,007

 
$
856

 
$
57,636

Commercial Real Estate:
 
 
 
 
 
 
 
 
 
 
Construction
 
$
815,636

 
6.0
%
 
$
3,139

 
$

 
$
9,596

Land
 
122,690

 
0.9

 
182

 

 
3,990

Office
 
891,071

 
6.5

 
474

 

 
5,800

Industrial
 
906,144

 
6.6

 
1,427

 

 
5,899

Retail
 
895,622

 
6.5

 
12,274

 

 
8,135

Multi-family
 
931,355

 
6.8

 
19

 

 
9,613

Mixed use and other
 
1,955,456

 
14.3

 
4,310

 

 
14,377

PCI - commercial real estate (1)
 
115,546

 
0.8

 

 
3,107

 
71

Total commercial real estate
 
$
6,633,520

 
48.4
%
 
$
21,825

 
$
3,107

 
$
57,481

Total commercial and commercial real estate
 
$
13,694,391

 
100.0
%
 
$
35,832

 
$
3,963

 
$
115,117

 
 
 
 
 
 
 
 
 
 
 
Commercial real estate - collateral location by state:
 
 
 
 
 
 
 
 
 
 
Illinois
 
$
5,199,090

 
78.4
%
 
 
 
 
 
 
Wisconsin
 
706,076

 
10.6

 
 
 
 
 
 
Total primary markets
 
$
5,905,166

 
89.0
%
 
 
 
 
 
 
Indiana
 
138,999

 
2.1

 
 
 
 
 
 
Florida
 
57,260

 
0.9

 
 
 
 
 
 
Arizona
 
55,914

 
0.8

 
 
 
 
 
 
Michigan
 
46,230

 
0.7

 
 
 
 
 
 
California
 
67,922

 
1.0

 
 
 
 
 
 
Other (no individual state greater than 0.6%)
 
362,029

 
5.5

 
 
 
 
 
 
Total
 
$
6,633,520

 
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.




14



DEPOSITS

Deposit Portfolio Mix and Growth Rates

  
 
 
 
 
 
 
 
% Growth
(Dollars in thousands)
 
March 31,
2018
 
December 31,
2017
 
March 31,
2017
 
From (1)
December 31,
2017
 
From
March 31,
2017
Balance:
 
 
 
 
 
 
 
 
 
 
Non-interest bearing
 
$
6,612,319

 
$
6,792,497

 
$
5,790,579

 
(11
)%
 
14
 %
NOW and interest bearing demand deposits
 
2,315,122

 
2,315,055

 
2,484,676

 

 
(7
)
Wealth management deposits (2)
 
2,495,134

 
2,323,699

 
2,390,464

 
30

 
4

Money market
 
4,617,122

 
4,515,353

 
4,555,752

 
9

 
1

Savings
 
2,901,504

 
2,829,373

 
2,287,958

 
10

 
27

Time certificates of deposit
 
4,338,126

 
4,407,370

 
4,221,012

 
(6
)
 
3

Total deposits
 
$
23,279,327

 
$
23,183,347

 
$
21,730,441

 
2
 %
 
7
 %
Mix:
 

 
 
 
 
 
 
 
 
Non-interest bearing
 
28
%
 
29
%
 
27
%
 
 
 
 
NOW and interest bearing demand deposits
 
10

 
10

 
11

 
 
 
 
Wealth management deposits (2)
 
11

 
10

 
11

 
 
 
 
Money market
 
20

 
20

 
21

 
 
 
 
Savings
 
12

 
12

 
11

 
 
 
 
Time certificates of deposit
 
19

 
19

 
19

 
 
 
 
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 March 31, 2018
(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
 
$
59,651

 
$
30,577

 
$
120,910

 
$
843,754

 
$
1,054,892

 
0.98
%
4-6 months
 

 
26,741

 

 
658,681

 
685,422

 
1.04
%
7-9 months
 

 
16,099

 

 
600,322

 
616,421

 
1.15
%
10-12 months
 

 
13,506

 

 
649,139

 
662,645

 
1.31
%
13-18 months
 
249

 
19,470

 

 
727,824

 
747,543

 
1.41
%
19-24 months
 

 
15,095

 

 
272,301

 
287,396

 
1.66
%
24+ months
 
1,000

 
8,663

 

 
274,144

 
283,807

 
1.64
%
Total
 
$
60,900

 
$
130,151

 
$
120,910

 
$
4,026,165

 
$
4,338,126

 
1.23
%
 
(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.



15



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 first quarter of 2018 compared to the fourth quarter of 2017 (sequential quarters) and first quarter of 2017 (linked quarters), respectively:
 
Average Balance for three months ended,
 
Interest for three months ended,
 
Yield/Rate for three months ended,
(Dollars in thousands)
March 31,
2018
 
December 31,
2017
 
March 31,
2017
 
March 31,
2018
 
December 31,
2017
 
March 31,
2017
 
March 31,
2018
 
December 31,
2017
 
March 31,
2017
Interest-bearing deposits with banks and cash equivalents(1)
$
749,973

 
$
914,319

 
$
780,752

 
$
2,796

 
$
2,723

 
$
1,624

 
1.51
 %
 
1.18
 %
 
0.84
 %
Investment securities(2)
2,892,617

 
2,736,253

 
2,395,625

 
19,659

 
19,179

 
14,480

 
2.76

 
2.78

 
2.45

FHLB and FRB stock
105,414

 
82,092

 
94,090

 
1,298

 
1,067

 
1,070

 
4.99
 %
 
5.15

 
4.61

Liquidity management assets(3)(8)
$
3,748,004

 
$
3,732,664

 
$
3,270,467

 
$
23,753

 
$
22,969

 
$
17,174

 
2.57
 %
 
2.44
 %
 
2.13
 %
Other earning assets(3)(4)(8)
27,571

 
26,955

 
25,236

 
174

 
154

 
183

 
2.56

 
2.27

 
2.95

Mortgage loans held-for-sale
281,181

 
335,385

 
268,834

 
2,818

 
3,291

 
2,398

 
4.06

 
3.89

 
3.62

Loans, net of unearned
income(3)(5)(8)
21,711,342

 
21,080,984

 
19,654,772

 
235,664

 
227,467

 
196,788

 
4.40

 
4.28

 
4.06

Covered loans

 
6,025

 
56,872

 

 
86

 
918

 

 
5.66

 
6.55

Total earning assets(8)
$
25,768,098

 
$
25,182,013

 
$
23,276,181

 
$
262,409

 
$
253,967

 
$
217,461

 
4.13
 %
 
4.00
 %
 
3.79
 %
Allowance for loan and covered loan losses
(143,108
)
 
(138,584
)
 
(127,425
)
 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
254,489

 
244,097

 
229,588

 
 
 
 
 
 
 
 
 
 
 
 
Other assets
1,930,118

 
1,891,958

 
1,829,004

 
 
 
 
 
 
 
 
 
 
 
 
Total assets
$
27,809,597

 
$
27,179,484

 
$
25,207,348

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
NOW and interest bearing demand deposits
$
2,255,692

 
$
2,284,576

 
$
2,512,598

 
$
1,386

 
$
1,407

 
$
1,093

 
0.25
 %
 
0.24
 %
 
0.18
 %
Wealth management deposits
2,250,139

 
2,005,197

 
2,082,285

 
5,441

 
4,059

 
2,313

 
0.98

 
0.80

 
0.45

Money market accounts
4,520,620

 
4,611,515

 
4,407,901

 
4,667

 
4,154

 
2,221

 
0.42

 
0.36

 
0.20

Savings accounts
2,813,772

 
2,741,621

 
2,227,024

 
2,732

 
2,716

 
1,329

 
0.39

 
0.39

 
0.24

Time deposits
4,322,111

 
4,581,464

 
4,236,862

 
12,323

 
12,594

 
9,314

 
1.16

 
1.09

 
0.89

Interest-bearing deposits
$
16,162,334

 
$
16,224,373

 
$
15,466,670

 
$
26,549

 
$
24,930

 
$
16,270

 
0.67
 %
 
0.61
 %
 
0.43
 %
Federal Home Loan Bank advances
872,811

 
324,748

 
181,338

 
3,639

 
2,124

 
1,590

 
1.69

 
2.59

 
3.55

Other borrowings
263,125

 
255,972

 
255,012

 
1,699

 
1,600

 
1,139

 
2.62

 
2.48

 
1.81

Subordinated notes
139,094

 
139,065

 
138,980

 
1,773

 
1,786

 
1,772

 
5.10

 
5.14

 
5.10

Junior subordinated debentures
253,566

 
253,566

 
253,566

 
2,463

 
2,301

 
2,408

 
3.89

 
3.55

 
3.80

Total interest-bearing liabilities
$
17,690,930

 
$
17,197,724

 
$
16,295,566

 
$
36,123

 
$
32,741

 
$
23,179

 
0.83
 %
 
0.75
 %
 
0.58
 %
Non-interest bearing deposits
6,639,845

 
6,605,553

 
5,787,034

 
 
 
 
 
 
 
 
 
 
 
 
Other liabilities
483,230

 
433,208

 
385,698

 
 
 
 
 
 
 
 
 
 
 
 
Equity
2,995,592

 
2,942,999

 
2,739,050

 
 
 
 
 
 
 
 
 
 
 
 
Total liabilities and shareholders’ equity
$
27,809,597

 
$
27,179,484

 
$
25,207,348

 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread(6)(8)
 
 
 
 
 
 
 
 
 
 
 
 
3.30
 %
 
3.25
 %
 
3.21
 %
Less: Fully tax-equivalent adjustment
 
 
 
 
 
 
(1,204
)
 
(2,127
)
 
(1,702
)
 
(0.02
)
 
(0.04
)
 
(0.03
)
Net free funds/contribution(7)
$
8,077,168

 
$
7,984,289

 
$
6,980,615

 
 
 
 
 
 
 
0.26

 
0.24

 
0.18

Net interest income/ margin(8) (GAAP)
 
 
 
 
 
 
$
225,082

 
$
219,099

 
$
192,580

 
3.54
 %
 
3.45
 %
 
3.36
 %
Fully tax-equivalent adjustment
 
 
 
 
 
 
1,204

 
2,127

 
1,702

 
0.02

 
0.04

 
0.03

Net interest income/ margin - FTE (8)
 
 
 
 
 
 
$
226,286

 
$
221,226

 
$
194,282

 
3.56
 %
 
3.49
 %
 
3.39
 %
(1)
Includes interest-bearing deposits from banks, federal funds sold and securities purchased under resale agreements.
(2)
Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.
(3)
Interest income on tax-advantaged loans, trading securities and investment securities reflects a tax-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period. The total adjustments for the three months ended March 31, 2018, December 31, 2017 and March 31, 2017 were $1.2 million, $2.1 million and $1.7 million, respectively.
(4)
Other earning assets include brokerage customer receivables and trading account securities.
(5)
Loans, net of unearned income, include non-accrual loans.
(6)
Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(7)
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.
(8)
See “Supplemental Financial Measures/Ratios” for additional information on this performance ratio.


16



For the first quarter of 2018, net interest income totaled $225.1 million, an increase of $6.0 million as compared to the fourth quarter of 2017 and an increase of $32.5 million as compared to the first quarter of 2017. Net interest margin was 3.54% (3.56% on a fully tax-equivalent basis) during the first quarter of 2018 compared to 3.45% (3.49% on a fully tax-equivalent basis) during the fourth quarter of 2017 and 3.36% (3.39% on a fully tax-equivalent basis) during the first quarter of 2017. The $6.0 million increase in net interest income in the first quarter of 2018 compared to the fourth quarter of 2017 was attributable to a $5.2 million increase from higher levels of earning assets and a $5.7 million increase from rising rates, partially offset by a $4.9 million decrease due to two less days in the quarter.

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 March 31, 2018December 31, 2017 and March 31, 2017 is as follows:

 
 
 
 
 
 
Static Shock Scenario
 
+200
Basis
Points
 
+100
Basis
Points
 
-100
Basis
Points
March 31, 2018
 
18.8
%
 
9.7
%
 
(11.6
)%
December 31, 2017
 
17.7
%
 
9.0
%
 
(11.8
)%
March 31, 2017
 
17.7
%
 
9.3
%
 
(13.2
)%

Ramp Scenario
+200
Basis
Points
 
+100
Basis
Points
 
-100
Basis
Points
March 31, 2018
9.0
%
 
4.6
%
 
(4.8
)%
December 31, 2017
8.9
%
 
4.6
%
 
(5.1
)%
March 31, 2017
7.3
%
 
3.9
%
 
(4.8
)%

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).


17



Maturities and Sensitivities of Loans to Changes in Interest Rates

The following table classifies the loan portfolio at March 31, 2018 by date at which the loans reprice or mature, and the type of rate exposure:
As of March 31, 2018
One year or less
 
From one to five years
 
Over five years
 
 
(Dollars in thousands)
 
 
 
Total
Commercial
 
 
 
 
 
 
 
Fixed rate
$
155,596

 
$
927,376

 
$
562,064

 
$
1,645,036

Variable rate
5,409,222

 
6,613

 

 
5,415,835

Total commercial
$
5,564,818

 
$
933,989

 
$
562,064

 
$
7,060,871

Commercial real estate
 
 
 
 
 
 
 
Fixed rate
409,640

 
1,750,632

 
275,186

 
2,435,458

Variable rate
4,170,629

 
27,279

 
154

 
4,198,062

Total commercial real estate
$
4,580,269

 
$
1,777,911

 
$
275,340

 
$
6,633,520

Home equity
 
 
 
 
 
 
 
Fixed rate
11,561

 
4,733

 
43,465

 
59,759

Variable rate
566,788

 

 

 
566,788

Total home equity
$
578,349

 
$
4,733

 
$
43,465

 
$
626,547

Residential real estate
 
 
 
 
 
 
 
Fixed rate
82,686

 
30,356

 
154,028

 
267,070

Variable rate
65,171

 
221,227

 
315,636

 
602,034

Total residential real estate
$
147,857

 
$
251,583

 
$
469,664

 
$
869,104

Premium finance receivables - commercial
 
 
 
 
 
 
 
Fixed rate
2,499,041

 
77,109

 

 
2,576,150

Variable rate

 

 

 

Total premium finance receivables - commercial
$
2,499,041

 
$
77,109

 
$

 
$
2,576,150

Premium finance receivables - life insurance
 
 
 
 
 
 
 
Fixed rate
13,330

 
2,856

 
2,154

 
18,340

Variable rate
4,171,621

 

 

 
4,171,621

Total premium finance receivables - life insurance
$
4,184,951

 
$
2,856

 
$
2,154

 
$
4,189,961

Consumer and other
 
 
 
 
 
 
 
Fixed rate
53,926

 
12,582

 
2,337

 
68,845

Variable rate
37,118

 
18

 

 
37,136

Total consumer and other
$
91,044

 
$
12,600

 
$
2,337

 
$
105,981

Total per category
 
 
 
 
 
 
 
Fixed rate
3,225,780

 
2,805,644

 
1,039,234

 
7,070,658

Variable rate
14,420,549

 
255,137

 
315,790

 
14,991,476

Total loans, net of unearned income
$
17,646,329

 
$
3,060,781

 
$
1,355,024

 
$
22,062,134

Variable Rate Loan Pricing by Index:
 
 
 
 
 
 
 
Prime
$
2,685,331

 
 
 
 
 
 
One- month LIBOR
7,433,808

 
 
 
 
 
 
Three- month LIBOR
406,365

 
 
 
 
 
 
Twelve- month LIBOR
4,225,145

 
 
 
 
 
 
Other
240,827

 
 
 
 
 
 
Total variable rate
$
14,991,476

 
 
 
 
 
 




18



liborchart33118nobarsa01.jpg
Source: Bloomberg

As noted in the table on the previous page, the majority of the Company’s portfolio is tied to LIBOR indices which, as shown in the table above, do not mirror the same increases as the Prime rate when the Federal Reserve raises interest rates.  Specifically, the Company has $7.4 billion of variable rate loans tied to one-month LIBOR and $4.2 billion of variable rate loans tied to twelve-month LIBOR. The above chart shows:

 
 
Changes in
 
 
Prime
 
1-month
LIBOR
 
12-month
LIBOR
Second Quarter 2017
 
+25 bps
 
+24 bps
 
-6 bps
Third Quarter 2017
 
0 bps
 
+1 bps
 
+4 bps
Fourth Quarter 2017
 
+25 bps
 
+33 bps
 
+33 bps
First Quarter 2018
 
+25 bps
 
+32 bps
 
+55 bps


19



NON-INTEREST INCOME

The following table presents non-interest income by category for the periods presented:
 
 
Three Months Ended
 
 
 
 
 
 
 
 
 
 
March 31,

December 31,

March 31,

Q1 2018 compared to
Q4 2017

Q1 2018 compared to
Q1 2017
(Dollars in thousands)
 
2018
 
2017
 
2017
 
$ Change
 
% Change
 
$ Change
 
% Change
Brokerage
 
$
6,031

 
$
6,067

 
$
6,220

 
$
(36
)
 
(1
)%
 
$
(189
)
 
(3
)%
Trust and asset management
 
16,955

 
15,843

 
13,928

 
1,112

 
7

 
3,027

 
22

Total wealth management
 
22,986

 
21,910

 
20,148

 
1,076

 
5

 
2,838

 
14

Mortgage banking
 
30,960

 
27,411

 
21,938

 
3,549

 
13

 
9,022

 
41

Service charges on deposit accounts
 
8,857

 
8,907

 
8,265

 
(50
)
 
(1
)
 
592

 
7

(Losses) gains on investment securities, net
 
(351
)
 
14

 
(55
)
 
(365
)
 
NM

 
(296
)
 
NM

Fees from covered call options
 
1,597

 
1,610

 
759

 
(13
)
 
(1
)
 
838

 
NM

Trading gains (losses), net
 
103

 
24

 
(320
)
 
79

 
NM

 
423

 
NM

Operating lease income, net
 
9,691

 
8,598

 
5,782

 
1,093

 
13

 
3,909

 
68

Other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate swap fees
 
2,237

 
1,963

 
1,433

 
274

 
14

 
804

 
56

BOLI
 
714

 
754

 
985

 
(40
)
 
(5
)
 
(271
)
 
(28
)
Administrative services
 
1,061

 
1,103

 
1,024

 
(42
)
 
(4
)
 
37

 
4

Early pay-offs of capital leases
 
33

 
7

 
1,211

 
26

 
NM

 
(1,178
)
 
(97
)
Miscellaneous
 
7,791

 
8,737

 
7,595

 
(946
)
 
(11
)
 
196

 
3

Total Other
 
11,836

 
12,564

 
12,248

 
(728
)
 
(6
)
 
(412
)
 
(3
)
Total Non-Interest Income
 
$
85,679

 
$
81,038

 
$
68,765

 
$
4,641

 
6
 %
 
$
16,914

 
25
 %
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 fourth quarter of 2017 and first quarter of 2017 is primarily attributable to market appreciation at the beginning of the quarter related to managed money accounts with fees based on assets under management at the beginning of the quarterly term. 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.


20



The increase in mortgage banking revenue in the current quarter as compared to the fourth quarter of 2017 resulted primarily from increased revenue of $5.9 million from the Veterans First acquisition and a $4.1 million positive fair value adjustment related to mortgage servicing rights assets compared to a $46,000 positive fair value adjustment in the fourth quarter of 2017, partially offset by lower origination volumes in the current quarter. Mortgage loans originated or purchased for sale totaled $778.9 million in the first quarter of 2018 as compared to $879.4 million in the fourth quarter of 2017 and $722.5 million in the first quarter of 2017. 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 mortgage servicing rights as the Company does not hedge this change in fair value. The Company typically originates mortgage loans held-for-sale with associated mortgage servicing rights ("MSRs") retained or released. Additionally, through the acquisition of Veterans First, the Company acquired approximately $13.8 million of MSRs in the first quarter of 2018. 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
(Dollars in thousands)
 
March 31,
2018
 
December 31,
2017
 
March 31,
2017
Originations:
 
 
 
 
 
 
Retail originations
 
$
539,911

 
744,496

 
$
624,971

Correspondent originations
 
126,464

 
134,904

 
97,496

Veterans First originations
 
112,477

 

 

Total originations (A)
 
$
778,852

 
879,400

 
$
722,467

 
 
 
 
 
 
 
Purchases as a percentage of originations
 
73
%
 
67
%
 
66
%
Refinances as a percentage of originations
 
27

 
33

 
34

Total
 
100
%
 
100
%
 
100
%
 
 
 
 
 
 
 
Production Margin:
 
 
 
 
 
 
Production revenue (B) (1)
 
$
20,526

 
$
20,603

 
$
17,677

Production margin (B / A)
 
2.64
%
 
2.34
%
 
2.45
%
 
 
 
 
 
 
 
Mortgage Servicing:
 
 
 
 
 
 
Loans serviced for others (C)
 
$
4,795,335

 
$
2,929,133

 
$
1,972,592

MSRs, at fair value (D)
 
54,572

 
33,676

 
21,596

Percentage of MSRs to loans serviced for others (D / C)
 
1.14
%
 
1.15
%
 
1.09
%
 
 
 
 
 
 
 
Components of Mortgage Banking Revenue:
 
 
 
 
 
 
Production revenue
 
$
20,526

 
$
20,603

 
$
17,677

MSR capitalization, net of payoffs and paydowns
 
2,957

 
4,216

 
2,337

MSR fair value adjustments
 
4,133

 
46

 
156

Servicing income
 
2,905

 
1,942

 
1,316

Other
 
439

 
604

 
452

Total mortgage banking revenue
 
$
30,960

 
$
27,411

 
$
21,938

(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 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 remained relatively stable in the first quarter of 2018. There were no outstanding call option contracts at March 31, 2018, December 31, 2017 or March 31, 2017.

The increase in operating lease income in the current quarter compared to the fourth quarter of 2017 is primarily related to a $1.1 million gain realized from the sale of certain equipment held on operating leases.

21



NON-INTEREST EXPENSE

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

 
 
Three Months Ended
 
 
 
 
 
 
 
 
 
 
March 31,
 
December 31,
 
March 31,
 
Q1 2018 compared to
Q4 2017
 
Q1 2018 compared to
Q1 2017
(Dollars in thousands)
 
2018
 
2017
 
2017
 
$ Change
 
% Change
 
$ Change
 
% Change
Salaries and employee benefits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Salaries
 
$
61,986

 
$
58,239

 
$
55,008

 
$
3,747

 
6
 %
 
$
6,978

 
13
 %
Commissions and incentive compensation
 
31,949

 
40,723

 
26,643

 
(8,774
)
 
(22
)
 
5,306

 
20

Benefits
 
18,501

 
19,047

 
17,665

 
(546
)
 
(3
)
 
836

 
5

Total salaries and employee benefits
 
112,436

 
118,009

 
99,316

 
(5,573
)
 
(5
)
 
13,120

 
13

Equipment
 
10,072

 
9,500

 
9,002

 
572

 
6

 
1,070

 
12

Operating lease equipment depreciation
 
6,533

 
7,015

 
4,636

 
(482
)
 
(7
)
 
1,897

 
41

Occupancy, net
 
13,767

 
14,154

 
13,101

 
(387
)
 
(3
)
 
666

 
5

Data processing
 
8,493

 
7,915

 
7,925

 
578

 
7

 
568

 
7

Advertising and marketing
 
8,824

 
7,382

 
5,150

 
1,442

 
20

 
3,674

 
71

Professional fees
 
6,649

 
8,879

 
4,660

 
(2,230
)
 
(25
)
 
1,989

 
43

Amortization of other intangible assets
 
1,004

 
1,028

 
1,164

 
(24
)
 
(2
)
 
(160
)
 
(14
)
FDIC insurance
 
4,362

 
4,324

 
4,156

 
38

 
1

 
206

 
5

OREO expense, net
 
2,926

 
599

 
1,665

 
2,327

 
NM

 
1,261

 
76

Other:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commissions - 3rd party brokers
 
1,252

 
1,057

 
1,098

 
195

 
18

 
154

 
14

Postage
 
1,866

 
1,427

 
1,442

 
439

 
31

 
424

 
29

Miscellaneous
 
16,165

 
15,291

 
14,803

 
874

 
6

 
1,362

 
9

Total other
 
19,283

 
17,775

 
17,343

 
1,508

 
8

 
1,940

 
11

Total Non-Interest Expense
 
$
194,349

 
$
196,580

 
$
168,118

 
$
(2,231
)
 
(1
)%
 
$
26,231

 
16
 %
NM - Not meaningful

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

Salaries and employee benefits expense decreased in the current quarter compared to the fourth quarter of 2017 primarily as a result of lower commissions and incentive compensation, partially offset by higher salaries in the current quarter. The decrease in commissions and incentive compensation was the result of an increase in bonus and long-term performance-based incentive compensation recognized in the fourth quarter of 2017 due to higher current and projected earnings as impacted by the higher rate environment, lower taxes and balance sheet growth at that time as well as an increase in salaries and employee benefits (primarily health plan related). Additionally, salaries and employee benefits expense in the fourth quarter of 2017 included $1.2 million of additional expense related to pension obligations assumed in previous acquisitions. These decreases were partially offset by a $3.7 million increase in salaries primarily due to $2.4 million of additional salaries from the Veterans First acquisition as well as increases from merit-based salary increases for current employees effective in February and an increase of the minimum wage for eligible hourly employees effective in March.

The increase in advertising and marketing expenses during the current quarter compared to the fourth quarter of 2017 and the first quarter of 2017 is primarily related to higher expenses for community advertisements and sponsorships as well as mass media. Marketing costs are incurred to promote the Company's brand, commercial banking capabilities, the Company's various products, to attract loans and deposits and to announce new branch openings as well as the expansion of the Company's non-bank businesses. The level of marketing expenditures depends on the timing of sponsorship programs and type of marketing programs utilized which are determined based on the market area, targeted audience, competition and various other factors.

The decrease in professional fees during the current quarter compared to the fourth quarter of 2017 is primarily related to lower consulting fees related to continued investments in various areas of the Company including technology and an enhanced digital customer experience. Professional fees include legal, audit and tax fees, external loan review costs, consulting arrangements and normal regulatory exam assessments.

The increase in OREO expense in the current quarter compared to the fourth quarter of 2017 was primarily the result of negative valuation adjustments and realized losses on the sale of certain OREO properties as a result of our continuing efforts to address

22



and resolve non-performing assets in a timely fashion. OREO expenses include all costs associated with obtaining, maintaining and selling other real estate owned properties as well as valuation adjustments.

INCOME TAXES

The Company recorded income tax expense of $26.1 million in the first quarter of 2018 compared to $27.0 million in the fourth quarter of 2017 and $29.6 million in the first quarter of 2017. The effective tax rates were 24.14% in the first quarter of 2018, 28.19% in the fourth quarter of 2017 and 33.67% in the first quarter of 2017. The lower effective tax rate for the first quarter of 2018 was primarily due to reduction of the federal corporate tax rate as a result of Tax Reform and recording $2.6 million of excess tax benefits related to income taxes attributed to share-based compensation. Excess tax benefits are expected to be higher in the first quarter when the majority of the Company's share-based awards vest, and will fluctuate throughout the year based on the Company's stock price and timing of employee stock option exercises and vesting of other share-based awards.


23



ASSET QUALITY

Allowance for Credit Losses, excluding covered loans
 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
March 31,
(Dollars in thousands)
 
2018
 
2017
 
2017
Allowance for loan losses at beginning of period
 
$
137,905

 
$
133,119

 
$
122,291

Provision for credit losses
 
8,346

 
7,772

 
5,316

Other adjustments (1)
 
(40
)
 
698

 
(56
)
Reclassification (to) from allowance for unfunded lending-related commitments
 
26

 
7

 
(138
)
Charge-offs:
 
 
 
 
 
 
Commercial
 
2,687

 
1,340

 
641

Commercial real estate
 
813

 
1,001

 
261

Home equity
 
357

 
728

 
625

Residential real estate
 
571

 
542

 
329

Premium finance receivables - commercial
 
4,721

 
2,314

 
1,427

Premium finance receivables - life insurance
 

 

 

Consumer and other
 
129

 
207

 
134

Total charge-offs
 
9,278

 
6,132

 
3,417

Recoveries:
 
 
 
 
 
 
Commercial
 
262

 
235

 
273

Commercial real estate
 
1,687

 
1,037

 
554

Home equity
 
123

 
359

 
65

Residential real estate
 
40

 
165

 
178

Premium finance receivables - commercial
 
385

 
613

 
612

Premium finance receivables - life insurance
 

 

 

Consumer and other
 
47

 
32

 
141

Total recoveries
 
2,544

 
2,441

 
1,823

Net charge-offs
 
(6,734
)
 
(3,691
)
 
(1,594
)
Allowance for loan losses at period end
 
$
139,503

 
$
137,905

 
$
125,819

Allowance for unfunded lending-related commitments at period end
 
1,243

 
1,269

 
1,811

Allowance for credit losses at period end
 
$
140,746

 
$
139,174

 
$
127,630

Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average:
 
 
 
 
 
 
Commercial
 
0.14
 %
 
0.07
%
 
0.03
 %
Commercial real estate
 
(0.05
)
 
0.00

 
(0.02
)
Home equity
 
0.15

 
0.22

 
0.32

Residential real estate
 
0.19

 
0.13

 
0.06

Premium finance receivables - commercial
 
0.68

 
0.26

 
0.13

Premium finance receivables - life insurance
 
0.00

 
0.00

 
0.00

Consumer and other
 
0.26

 
0.52

 
(0.02
)
Total loans, net of unearned income, excluding covered loans
 
0.12
 %
 
0.07
%
 
0.03
 %
Net charge-offs as a percentage of the provision for credit losses
 
80.69
 %
 
47.49
%
 
29.98
 %
Loans at period-end, excluding covered loans
 
$
22,062,134

 
$
21,640,797

 
$
19,931,058

Allowance for loan losses as a percentage of loans at period end
 
0.63
 %
 
0.64
%
 
0.63
 %
Allowance for credit losses as a percentage of loans at period end
 
0.64
 %
 
0.64
%
 
0.64
 %
(1)
Includes $742,000 of allowance for covered loan losses reclassified as a result of the termination of all existing loss share agreements with the FDIC during the fourth quarter of 2017.

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

24



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 first quarter of 2018 totaled 12 basis points on an annualized basis compared to seven basis points on an annualized basis in the fourth quarter of 2017 and three basis points on an annualized basis in the first quarter of 2017. Net charge-offs totaled $6.7 million in the first quarter of 2018, a $3.0 million increase from $3.7 million in the fourth quarter of 2017 and a $5.1 million increase from $1.6 million in the first quarter of 2017. The increase in the first quarter of 2018 compared to both comparative periods is primarily the result of increased net charge-offs within the commercial insurance premium finance receivables portfolio. The provision for credit losses, excluding the provision for covered loan losses, totaled $8.3 million for the first quarter of 2018 compared to $7.8 million for the fourth quarter of 2017 and $5.3 million for the first quarter of 2017.

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 provided a provision for covered loan losses on covered loans when applicable.

The following table presents the provision for credit losses and allowance for credit losses by component for the periods presented, including covered loans:
 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
March 31,
(Dollars in thousands)
 
2018
 
2017
 
2017
Provision for loan losses
 
$
8,372

 
$
7,779

 
$
5,178

Provision for unfunded lending-related commitments
 
(26
)
 
(7
)
 
138

Provision for covered loan losses
 

 

 
(107
)
Provision for credit losses
 
$
8,346

 
$
7,772

 
$
5,209

 
 
 
 
 
 
 
 
 
Period End
 
 
March 31,
 
December 31,
 
March 31,
 
 
2018
 
2017
 
2017
Allowance for loan losses
 
$
139,503

 
$
137,905

 
$
125,819

Allowance for unfunded lending-related commitments
 
1,243

 
1,269

 
1,811

Allowance for covered loan losses
 

 

 
1,319

Allowance for credit losses
 
$
140,746

 
$
139,174

 
$
128,949





25



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, excluding covered loans, as of March 31, 2018 and December 31, 2017.
 
 
 
As of March 31, 2018
 
 
Recorded
 
Calculated
 
As a percentage
of its own respective
(Dollars in thousands)
 
Investment
 
Allowance
 
category’s balance
Commercial:(1)
 
 
 
 
 
 
Commercial and industrial
 
$
3,989,211

 
$
36,092

 
0.90
%
Asset-based lending
 
977,063

 
8,315

 
0.85

Tax exempt
 
380,264

 
2,602

 
0.68

Leases
 
412,786

 
1,222

 
0.30

Commercial real estate:(1)
 
 
 
 
 
 
Residential construction
 
44,328

 
860

 
1.94

Commercial construction
 
769,330

 
8,723

 
1.13

Land
 
121,005

 
3,988

 
3.30

Office
 
853,839

 
5,795

 
0.68

Industrial
 
872,761

 
5,895

 
0.68

Retail
 
861,249

 
8,101

 
0.94

Multi-family
 
903,778

 
9,599

 
1.06

Mixed use and other
 
1,866,691

 
14,319

 
0.77

Home equity(1)
 
571,925

 
9,719

 
1.70

Residential real estate(1)
 
823,322

 
6,073

 
0.74

Total core loan portfolio
 
$
13,447,552

 
$
121,303

 
0.90
%
Commercial:
 
 
 
 
 
 
Franchise
 
$
852,166

 
$
7,032

 
0.83
%
Mortgage warehouse lines of credit
 
163,470

 
1,297

 
0.79

Community Advantage - homeowner associations
 
168,656

 
422

 
0.25

Aircraft
 
2,904

 
42

 
1.45

Purchased non-covered commercial loans (2)
 
114,351

 
612

 
0.54

Commercial real estate:
 
 
 
 
 
 
Purchased non-covered commercial real estate (2)
 
340,539

 
201

 
0.06

Purchased non-covered home equity (2)
 
54,622

 
141

 
0.26

Purchased non-covered residential real estate (2)
 
45,782

 
205

 
0.45

Premium finance receivables
 
 
 
 
 
 
U.S. commercial insurance loans
 
2,263,019

 
5,415

 
0.24

Canada commercial insurance loans (2)
 
313,131

 
491

 
0.16

Life insurance loans (1)
 
4,002,726

 
1,427

 
0.04

Purchased life insurance loans (2)
 
187,235

 

 

Consumer and other (1)
 
103,312

 
911

 
0.88

Purchased non-covered consumer and other (2)
 
2,669

 
4

 
0.15

Total consumer, niche and purchased loan portfolio
 
$
8,614,582

 
$
18,200

 
0.21
%
Total loans, net of unearned income, excluding covered loans
 
$
22,062,134

 
$
139,503

 
0.63
%
 
(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.


26



 
 
As of December 31, 2017
 
 
Recorded
 
Calculated
 
As a percentage
of its own respective
(Dollars in thousands)
 
Investment
 
Allowance
 
category’s balance
Commercial:(1)
 
 
 
 
 
 
Commercial and industrial
 
$
3,771,593

 
$
36,812

 
0.98
%
Asset-based lending
 
979,526

 
8,236

 
0.84

Tax exempt
 
380,523

 
2,600

 
0.68

Leases
 
411,721

 
1,242

 
0.30

Commercial real estate:(1)
 
 
 
 
 
 
Residential construction
 
47,241

 
889

 
1.88

Commercial construction
 
697,404

 
7,839

 
1.12

Land
 
124,740

 
3,835

 
3.07

Office
 
854,882

 
5,731

 
0.67

Industrial
 
846,191

 
5,762

 
0.68

Retail
 
915,769

 
7,353

 
0.80

Multi-family
 
885,905

 
9,495

 
1.07

Mixed use and other
 
1,835,612

 
13,814

 
0.75

Home equity(1)
 
602,175

 
10,319

 
1.71

Residential real estate(1)
 
783,842

 
6,447

 
0.82

Total core loan portfolio
 
$
13,137,124

 
$
120,374

 
0.92
%
Commercial:
 
 
 
 
 
 
Franchise
 
$
741,965

 
$
6,367

 
0.86
%
Mortgage warehouse lines of credit
 
194,524

 
1,454

 
0.75

Community Advantage - homeowner associations
 
164,837

 
412

 
0.25

Aircraft
 
2,984

 
42

 
1.41

Purchased non-covered commercial loans (2)
 
140,004

 
646

 
0.46

Commercial real estate:
 
 
 
 
 
 
Purchased non-covered commercial real estate (2)
 
372,874

 
509

 
0.14

Purchased non-covered home equity (2)
 
60,870

 
174

 
0.29

Purchased non-covered residential real estate (2)
 
48,278

 
241

 
0.50

Premium finance receivables
 
 
 
 
 
 
U.S. commercial insurance loans
 
2,315,644

 
4,872

 
0.21

Canada commercial insurance loans (2)
 
318,921

 
484

 
0.15

Life insurance loans (1)
 
3,835,790

 
1,490

 
0.04

Purchased life insurance loans (2)
 
199,269

 

 

Consumer and other (1)
 
104,204

 
836

 
0.80

Purchased non-covered consumer and other (2)
 
3,509

 
4

 
0.11

Total consumer, niche and purchased loan portfolio
 
$
8,503,673

 
$
17,531

 
0.21
%
Total loans, net of unearned income, excluding covered loans
 
$
21,640,797

 
$
137,905

 
0.64
%

(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.


27



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 March 31, 2018 and December 31, 2017.

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.

In addition to the $139.5 million of allowance for loan losses, there is $4.0 million of non-accretable credit discount on purchased loans reported in accordance with ASC 310-30 that is available to absorb credit losses.

The tables below show the aging of the Company’s loan portfolio at March 31, 2018 and December 31, 2017:
 
 
 
 
90+ days
 
60-89
 
30-59
 
 
 
 
As of March 31, 2018
 
 
 
and still
 
days past
 
days past
 
 
 
 
(Dollars in thousands)
 
Nonaccrual
 
accruing
 
due
 
due
 
Current
 
Total Loans
Loan Balances:
 
 
 
 
 
 
 
 
 
 
 
 
Commercial (1)
 
$
14,007

 
$
856

 
$
771

 
$
54,233

 
$
6,991,004

 
$
7,060,871

Commercial real estate (1)
 
21,825

 
3,107

 
3,563

 
58,469

 
6,546,556

 
6,633,520

Home equity
 
9,828

 

 
1,505

 
4,033

 
611,181

 
626,547

Residential real estate (1)
 
17,214

 
1,437

 
229

 
8,808

 
841,416

 
869,104

Premium finance receivables - commercial
 
17,342

 
8,547

 
6,543

 
17,756

 
2,525,962

 
2,576,150

Premium finance receivables - life insurance (1)
 

 

 
5,125

 
11,420

 
4,173,416

 
4,189,961

Consumer and other (1)
 
720

 
269

 
216

 
291

 
104,485

 
105,981

Total loans, net of unearned income
 
$
80,936

 
$
14,216

 
$
17,952

 
$
155,010

 
$
21,794,020

 
$
22,062,134

As of March 31, 2018
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 (1)
 
0.2
%
 
%
 
%
 
0.8
%
 
99.0
%
 
100.0
%
Commercial real estate (1)
 
0.3

 

 
0.1

 
0.9

 
98.7

 
100.0

Home equity
 
1.6

 

 
0.2

 
0.6

 
97.6

 
100.0

Residential real estate (1)
 
2.0

 
0.2

 

 
1.0

 
96.8

 
100.0

Premium finance receivables - commercial
 
0.7

 
0.3

 
0.3

 
0.7

 
98.0

 
100.0

Premium finance receivables - life insurance (1)
 

 

 
0.1

 
0.3

 
99.6

 
100.0

Consumer and other (1)
 
0.7

 
0.3

 
0.2

 
0.3

 
98.5

 
100.0

Total loans, net of unearned income
 
0.4
%
 
0.1
%
 
0.1
%
 
0.7
%
 
98.7
%
 
100.0
%
(1)
Including PCI loans. 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.


28



 
 
 
 
90+ days
 
60-89
 
30-59
 
 
 
 
As of December 31, 2017
 
 
 
and still
 
days past
 
days past
 
 
 
 
(Dollars in thousands)
 
Nonaccrual
 
accruing
 
due
 
due
 
Current
 
Total Loans
Loan Balances:
 
 
 
 
 
 
 
 
 
 
 
 
Commercial (1)
 
$
15,696

 
$
877

 
$
4,218

 
$
29,407

 
$
6,737,479

 
$
6,787,677

Commercial real estate (1)
 
22,048

 
7,135

 
4,346

 
29,326

 
6,517,763

 
6,580,618

Home equity
 
8,978

 

 
518

 
4,634

 
648,915

 
663,045

Residential real estate (1)
 
17,977

 
5,304

 
1,303

 
8,378

 
799,158

 
832,120

Premium finance receivables - commercial
 
12,163

 
9,242

 
17,796

 
15,849

 
2,579,515

 
2,634,565

Premium finance receivables - life insurance (1)
 

 

 
4,837

 
10,017

 
4,020,205

 
4,035,059

Consumer and other (1)
 
740

 
101

 
242

 
727

 
105,903

 
107,713

Total loans, net of unearned income
 
$
77,602

 
$
22,659

 
$
33,260

 
$
98,338

 
$
21,408,938

 
$
21,640,797

As of December 31, 2017
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 (1)
 
0.2
%
 
%
 
0.1
%
 
0.4
%
 
99.3
%
 
100.0
%
Commercial real estate (1)
 
0.3

 
0.1

 
0.1

 
0.4

 
99.1

 
100.0

Home equity
 
1.4

 

 
0.1

 
0.7

 
97.8

 
100.0

Residential real estate (1)
 
2.2

 
0.6

 
0.2

 
1.0

 
96.0

 
100.0

Premium finance receivables - commercial
 
0.5

 
0.4

 
0.7

 
0.6

 
97.8

 
100.0

Premium finance receivables - life insurance (1)
 

 

 
0.1

 
0.2

 
99.7

 
100.0

Consumer and other (1)
 
0.7

 
0.1

 
0.2

 
0.7

 
98.3

 
100.0

Total loans, net of unearned income
 
0.4
%
 
0.1
%
 
0.2
%
 
0.5
%
 
98.8
%
 
100.0
%
(1)
Including PCI loans. 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 March 31, 2018, $18.0 million of all loans, or 0.1%, were 60 to 89 days past due and $155.0 million, or 0.7%, were 30 to 59 days (or one payment) past due. As of December 31, 2017, $33.3 million of all loans, or 0.2%, were 60 to 89 days past due and $98.3 million, or 0.5%, 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 March 31, 2018 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 March 31, 2018 that are current with regards to the contractual terms of the loan agreements comprise 96.8% of total residential real estate loans outstanding.


29



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.
 
 
March 31,
 
December 31,
 
March 31,
(Dollars in thousands)
 
2018
 
2017 (3)
 
2017
Loans past due greater than 90 days and still accruing(1):
 
 
 
 
 
 
Commercial
 
$

 
$

 
$
100

Commercial real estate
 

 

 

Home equity
 

 

 

Residential real estate
 

 
3,278

 

Premium finance receivables - commercial
 
8,547

 
9,242

 
4,991

Premium finance receivables - life insurance
 

 

 
2,024

Consumer and other
 
207

 
40

 
104

Total loans past due greater than 90 days and still accruing
 
8,754

 
12,560

 
7,219

Non-accrual loans(2):
 
 
 
 
 
 
Commercial
 
14,007

 
15,696

 
14,307

Commercial real estate
 
21,825

 
22,048

 
20,809

Home equity
 
9,828

 
8,978

 
11,722

Residential real estate
 
17,214

 
17,977

 
11,943

Premium finance receivables - commercial
 
17,342

 
12,163

 
12,629

Premium finance receivables - life insurance
 

 

 

Consumer and other
 
720

 
740

 
350

Total non-accrual loans
 
80,936

 
77,602

 
71,760

Total non-performing loans:
 
 
 
 
 
 
Commercial
 
14,007

 
15,696

 
14,407

Commercial real estate
 
21,825

 
22,048

 
20,809

Home equity
 
9,828

 
8,978

 
11,722

Residential real estate
 
17,214

 
21,255

 
11,943

Premium finance receivables - commercial
 
25,889

 
21,405

 
17,620

Premium finance receivables - life insurance
 

 

 
2,024

Consumer and other
 
927

 
780

 
454

Total non-performing loans
 
$
89,690

 
$
90,162

 
$
78,979

Other real estate owned
 
18,481

 
20,244

 
17,090

Other real estate owned - from acquisitions
 
18,117

 
20,402

 
22,774

Other repossessed assets
 
113

 
153

 
544

Total non-performing assets
 
$
126,401

 
$
130,961

 
$
119,387

TDRs performing under the contractual terms of the loan agreement
 
$
39,562

 
$
39,683

 
$
28,392

Total non-performing loans by category as a percent of its own respective category’s period-end balance:
 
 
 
 
 
 
Commercial
 
0.20
%
 
0.23
%
 
0.24
%
Commercial real estate
 
0.33

 
0.34

 
0.33

Home equity
 
1.57

 
1.35

 
1.66

Residential real estate
 
1.98

 
2.55

 
1.66

Premium finance receivables - commercial
 
1.00

 
0.81

 
0.72

Premium finance receivables - life insurance
 

 

 
0.06

Consumer and other
 
0.87

 
0.72

 
0.38

Total loans, net of unearned income
 
0.41
%
 
0.42
%
 
0.40
%
Total non-performing assets as a percentage of total assets
 
0.44
%
 
0.47
%
 
0.46
%
Allowance for loan losses as a percentage of total non-performing loans
 
155.54
%
 
152.95
%
 
159.31
%
(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 $8.1 million, $10.1 million and $11.3 million as of March 31, 2018, December 31, 2017 and March 31, 2017, respectively.
(3)
Includes $2.6 million of non-performing loans and $2.9 million of other real estate owned reclassified from covered assets as a result of the termination of all existing loss share agreements with the FDIC during the fourth quarter of 2017.

30




The ratio of non-performing assets to total assets was 0.44% as of March 31, 2018, compared to 0.47% at December 31, 2017, and 0.46% at March 31, 2017. Non-performing assets, excluding covered assets and non-covered PCI loans, totaled $126.4 million at March 31, 2018, compared to $131.0 million at December 31, 2017 and $119.4 million at March 31, 2017. Non-performing loans, excluding covered loans and non-covered PCI loans, totaled $89.7 million, or 0.41% of total loans, at March 31, 2018 compared to $90.2 million, or 0.42% of total loans, at December 31, 2017 and $79.0 million, or 0.40% of total loans, at March 31, 2017. OREO, excluding covered OREO, of $36.6 million at March 31, 2018 decreased $4.0 million compared to $40.6 million at December 31, 2017 and decreased $3.3 million compared to $39.9 million at March 31, 2017. The decrease in the first quarter of 2018 was partly due to negative fair value adjustments realized on certain properties as a result of our continued monitoring and workout efforts.

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 and non-covered PCI loans, for the periods presented:
 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
March 31,
(Dollars in thousands)
 
2018
 
2017
 
2017
Balance at beginning of period
 
$
90,162

 
$
77,983

 
$
87,454

Additions, net, from non-covered portfolio
 
6,608

 
25,619

 
8,609

Additions, net, from covered non-performing loans subsequent to loss share expiration
 

 
2,572

 

Return to performing status
 
(3,753
)
 
(426
)
 
(1,592
)
Payments received
 
(2,569
)
 
(4,271
)
 
(5,614
)
Transfer to OREO and other repossessed assets
 
(1,981
)
 
(3,960
)
 
(1,661
)
Charge-offs
 
(3,555
)
 
(2,443
)
 
(1,280
)
Net change for niche loans (1)
 
4,778

 
(4,912
)
 
(6,937
)
Balance at end of period
 
$
89,690

 
$
90,162

 
$
78,979

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


31



TDRs

The table below presents a summary of TDRs as of the respective date, presented by loan category and accrual status:
 
 
 
March 31,
 
December 31,
 
March 31,
(Dollars in thousands)
 
2018
 
2017
 
2017
Accruing TDRs:
 
 
 
 
 
 
Commercial
 
$
19,803

 
$
19,917

 
$
4,607

Commercial real estate
 
16,087

 
16,160

 
18,923

Residential real estate and other
 
3,672

 
3,606

 
4,862

Total accrual
 
$
39,562

 
$
39,683

 
$
28,392

Non-accrual TDRs: (1)
 
 
 
 
 
 
Commercial
 
$
1,741

 
$
4,000

 
$
1,424

Commercial real estate
 
1,304

 
1,340

 
7,338

Residential real estate and other
 
5,069

 
4,763

 
2,515

Total non-accrual
 
$
8,114

 
$
10,103

 
$
11,277

Total TDRs:
 
 
 
 
 
 
Commercial
 
$
21,544

 
$
23,917

 
$
6,031

Commercial real estate
 
17,391

 
17,500

 
26,261

Residential real estate and other
 
8,741

 
8,369

 
7,377

Total TDRs
 
$
47,676

 
$
49,786

 
$
39,669

Weighted-average contractual interest rate of TDRs
 
4.84
%
 
4.40
%
 
4.37
%
(1)
Included in total non-performing loans.

Other Real Estate Owned

The table below presents a summary of other real estate owned, excluding covered other real estate owned, as of March 31, 2018, December 31, 2017 and March 31, 2017, and shows the activity for the respective period and the balance for each property type:
 
 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
March 31,
(Dollars in thousands)
 
2018
 
2017
 
2017
Balance at beginning of period
 
$
40,646

 
$
37,378

 
$
40,282

Disposals/resolved
 
(3,679
)
 
(6,107
)
 
(2,644
)
Transfers in at fair value, less costs to sell
 
1,789

 
6,733

 
2,268

Transfers in from covered OREO subsequent to loss share expiration
 

 
2,851

 
760

Fair value adjustments
 
(2,158
)
 
(209
)
 
(802
)
Balance at end of period
 
$
36,598

 
$
40,646

 
$
39,864

 
 
 
 
 
 
 
 
 
Period End
 
 
March 31,
 
December 31,
 
March 31,
Balance by Property Type
 
2018
 
2017
 
2017
Residential real estate
 
$
6,407

 
$
7,515

 
$
7,597

Residential real estate development
 
2,229

 
2,221

 
1,240

Commercial real estate
 
27,962

 
30,910

 
31,027

Total
 
$
36,598

 
$
40,646

 
$
39,864



32



Items Impacting Comparative Financial Results:

Acquisitions

On January 4, 2018, the Company acquired certain assets and assumed certain liabilities of the mortgage banking business of Veterans First, in a business combination. The Company also acquired mortgage servicing rights assets from Veterans First on approximately 10,000 loans, totaling an estimated $1.7 billion in unpaid principal balance. Veterans First is a consumer direct lender with three offices, operating two in Salt Lake City and one in San Diego, and originated in excess of $800 million in loans in 2017.

On February 14, 2017, the Company acquired certain assets and assumed certain liabilities of the mortgage banking business of American Homestead Mortgage, LLC ("AHM"), in a business combination. AHM is located in Montana's Flathead Valley and originated approximately $55 million of residential mortgage loans in 2016.

Termination of Loss Share Agreements

On October 16, 2017, the Company entered in agreements with the FDIC that terminated all existing loss share agreements with the FDIC. The loss share agreements were related to the Company’s acquisition of assets and assumption of liabilities of eight failed banks through FDIC assisted transactions in 2010, 2011 and 2012.

Under terms of the agreements, the Company made a net payment of $15.2 million to the FDIC as consideration for the early termination of the loss share agreements. The Company recorded a pre-tax gain of approximately $0.4 million in the fourth quarter of 2017 to write off the remaining loss share asset, relieve the claw-back liability and recognize the payment to the FDIC.

Approximately $0.2 million of the remaining net indemnification liabilities that were scheduled to be amortized against future earnings did not occur for the remainder of the fourth quarter of 2017. Additionally, $0.8 million, $0.8 million and $0.7 million each year in 2018, 2019 and 2020, respectively, of previously scheduled amortization will not occur.

The termination of the FDIC loss share agreements has no effect on yields of the loans that were previously covered under these agreements. Subsequent to this transaction, the Company is solely responsible for all future charge-offs, recoveries, gains, losses and expenses related to the previously covered assets as the FDIC will no longer share in those amounts.



33



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, N.A., 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, 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, Rolling Meadows, 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, Menomonee 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, a division of Lake Forest Bank & Trust Company, N.A., and Wintrust Life Finance, a division of Lake Forest Bank & Trust Company, N.A., serve commercial and life insurance loan customers, respectively, throughout the United States.
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, N.A., 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 2017 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:

negative economic conditions that adversely affect the economy, housing prices, the job market and other factors that may

34



affect the Company’s liquidity and the performance of its loan portfolios, particularly in the markets in which it operates;
the extent of defaults and losses on the Company’s loan portfolio, which may require further increases in its allowance for credit losses;
estimates of fair value of certain of the Company’s assets and liabilities, which could change in value significantly from period to period;
the financial success and economic viability of the borrowers of our commercial loans;
commercial real estate market conditions in the Chicago metropolitan area and southern Wisconsin;
the extent of commercial and consumer delinquencies and declines in real estate values, which may require further increases in the Company’s allowance for loan and lease losses;
inaccurate assumptions in our analytical and forecasting models used to manage our loan portfolio;
changes in the level and volatility of interest rates, the capital markets and other market indices that may affect, among other things, the Company’s liquidity and the value of its assets and liabilities;
competitive pressures in the financial services business which may affect the pricing of the Company’s loan and deposit products as well as its services (including wealth management services), which may result in loss of market share and reduced income from deposits, loans, advisory fees and income from other products;
failure to identify and complete favorable acquisitions in the future or unexpected difficulties or developments related to the integration of the Company’s recent or future acquisitions;
unexpected difficulties and losses related to FDIC-assisted acquisitions;
harm to the Company’s reputation;
any negative perception of the Company’s financial strength;
ability of the Company to raise additional capital on acceptable terms when needed;
disruption in capital markets, which may lower fair values for the Company’s investment portfolio;
ability of the Company to use technology to provide products and services that will satisfy customer demands and create efficiencies in operations and to manage risks associated therewith;
failure or breaches of our security systems or infrastructure, or those of third parties;
security breaches, including denial of service attacks, hacking, social engineering attacks, malware intrusion or data corruption attempts and identity theft;
adverse effects on our information technology systems resulting from failures, human error or cyberattacks;
adverse effects of failures by our vendors to provide agreed upon services in the manner and at the cost agreed, particularly our information technology vendors;
increased costs as a result of protecting our customers from the impact of stolen debit card information;
accuracy and completeness of information the Company receives about customers and counterparties to make credit decisions;
ability of the Company to attract and retain senior management experienced in the banking and financial services industries;
environmental liability risk associated with lending activities;
the impact of any claims or legal actions to which the Company is subject, including any effect on our reputation;
losses incurred in connection with repurchases and indemnification payments related to mortgages and increases in reserves associated therewith;
the loss of customers as a result of technological changes allowing consumers to complete their financial transactions without the use of a bank;
the soundness of other financial institutions;
the expenses and delayed returns inherent in opening new branches and de novo banks;
examinations and challenges by tax authorities, and any unanticipated impact of the Tax Act;
changes in accounting standards, rules and interpretations such as the new CECL standard, and the impact on the Company’s financial statements;
the ability of the Company to receive dividends from its subsidiaries;
uncertainty about the future of LIBOR;
a decrease in the Company’s capital ratios, including as a result of declines in the value of its loan portfolios, or otherwise;
legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies;
a lowering of our credit rating;
changes in U.S. monetary policy and changes to the Federal Reserve’s balance sheet as a result of the end of its program of quantitative easing or otherwise;
restrictions upon our ability to market our products to consumers and limitations on our ability to profitably operate our mortgage business resulting from the Dodd-Frank Act;
increased costs of compliance, heightened regulatory capital requirements and other risks associated with changes in regulation and the regulatory environment;
the impact of heightened capital requirements;
increases in the Company’s FDIC insurance premiums, or the collection of special assessments by the FDIC;
delinquencies or fraud with respect to the Company’s premium finance business;

35



credit downgrades among commercial and life insurance providers that could negatively affect the value of collateral securing the Company’s premium finance loans;
the Company’s ability to comply with covenants under its credit facility; and
fluctuations in the stock market, which may have an adverse impact on the Company’s wealth management business and brokerage operation.

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. (Central Time) on Tuesday, April 17, 2018 regarding first quarter 2018 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #5398424. 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 first quarter 2018 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.


36



























WINTRUST FINANCIAL CORPORATION
Supplemental Financial Information
5 Quarter Trends

37



WINTRUST FINANCIAL CORPORATION - Supplemental Financial Information
Selected Financial Highlights - 5 Quarter Trends
(Dollars in thousands, except per share data)
 
 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
 
2018
 
2017
 
2017
 
2017
 
2017
Selected Financial Condition Data (at end of period):
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
28,456,772

 
$
27,915,970

 
$
27,358,162

 
$
26,929,265

 
$
25,778,893

Total loans, excluding covered loans
 
22,062,134

 
21,640,797

 
20,912,781

 
20,743,332

 
19,931,058

Total deposits
 
23,279,327

 
23,183,347

 
22,895,063

 
22,605,692

 
21,730,441

Junior subordinated debentures
 
253,566

 
253,566

 
253,566

 
253,566

 
253,566

Total shareholders’ equity
 
3,031,250

 
2,976,939

 
2,908,925

 
2,839,458

 
2,764,983

Selected Statements of Income Data:
 
 
 
 
 
 
 
 
 
 
Net interest income
 
225,082

 
219,099

 
215,988

 
204,409

 
192,580

Net revenue (1)
 
310,761

 
300,137

 
295,719

 
294,381

 
261,345

Net income
 
81,981

 
68,781

 
65,626

 
64,897

 
58,378

Net income per common share – Basic
 
$
1.42

 
$
1.19

 
$
1.14

 
$
1.15

 
$
1.05

Net income per common share – Diluted
 
$
1.40

 
$
1.17

 
$
1.12

 
$
1.11

 
$
1.00

Selected Financial Ratios and Other Data:
 
 
 
 
 
 
 
 
 
 
Performance Ratios:
 
 
 
 
 
 
 
 
 
 
Net interest margin
 
3.54
%
 
3.45
%
 
3.43
%
 
3.41
%
 
3.36
%
Net interest margin - fully taxable equivalent (non-GAAP) (2)
 
3.56
%
 
3.49
%
 
3.46
%
 
3.43
%
 
3.39
%
Non-interest income to average assets
 
1.25
%
 
1.18
%
 
1.17
%
 
1.39
%
 
1.11
%
Non-interest expense to average assets
 
2.83
%
 
2.87
%
 
2.70
%
 
2.83
%
 
2.70
%
Net overhead ratio (3)
 
1.58
%
 
1.69
%
 
1.53
%
 
1.44
%
 
1.60
%
Return on average assets
 
1.20
%
 
1.00
%
 
0.96
%
 
1.00
%
 
0.94
%
Return on average common equity
 
11.29
%
 
9.39
%
 
9.15
%
 
9.55
%
 
8.93
%
Return on average tangible common equity (non-GAAP) (2)
 
14.02
%
 
11.65
%
 
11.39
%
 
12.02
%
 
11.44
%
Average total assets
 
$
27,809,597

 
$
27,179,484

 
$
27,012,295

 
$
26,050,949

 
$
25,207,348

Average total shareholders’ equity
 
2,995,592

 
2,942,999

 
2,882,682

 
2,800,905

 
2,739,050

Average loans to average deposits ratio (excluding covered loans)
 
95.2
%
 
92.3
%
 
91.8
%
 
94.1
%
 
92.5
%
Common Share Data at end of period:
 
 
 
 
 
 
 
 
 
 
Market price per common share
 
$
86.05

 
$
82.37

 
$
78.31

 
$
76.44

 
$
69.12

Book value per common share (2)
 
$
51.66

 
$
50.96

 
$
49.86

 
$
48.73

 
$
47.88

Tangible common book value per share (2)
 
$
42.17

 
$
41.68

 
$
40.53

 
$
39.40

 
$
37.97

Common shares outstanding
 
56,256,498

 
55,965,207

 
55,838,063

 
55,699,927

 
52,503,663

Other Data at end of period:(6)
 
 
 
 
 
 
 
 
 
 
Leverage Ratio(4)
 
9.4
%
 
9.3
%
 
9.2
%
 
9.2
%
 
9.3
%
Tier 1 Capital to risk-weighted assets (4)
 
10.0
%
 
9.9
%
 
10.0
%
 
9.8
%
 
10.0
%
Common equity Tier 1 capital to risk-weighted assets (4)
 
9.5
%
 
9.4
%
 
9.5
%
 
9.3
%
 
8.9
%
Total capital to risk-weighted assets (4)
 
12.1
%
 
12.0
%
 
12.2
%
 
12.0
%
 
12.2
%
Allowance for credit losses (5)
 
$
140,746

 
$
139,174

 
$
134,395

 
$
131,296

 
$
127,630

Non-performing loans
 
89,690

 
90,162

 
77,983

 
69,050

 
78,979

Allowance for credit losses to total loans (5)
 
0.64
%
 
0.64
%
 
0.64
%
 
0.63
%
 
0.64
%
Non-performing loans to total loans
 
0.41
%
 
0.42
%
 
0.37
%
 
0.33
%
 
0.40
%
Number of:
 
 
 
 
 
 
 
 
 
 
Bank subsidiaries
 
15

 
15

 
15

 
15

 
15

Banking offices
 
157

 
157

 
156

 
153

 
155

(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.
(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.

38



WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Condition - 5 Quarter Trends
 
 
(Unaudited)
 
 
 
(Unaudited)
 
(Unaudited)
 
(Unaudited)
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
(In thousands)
 
2018
 
2017
 
2017
 
2017
 
2017
Assets
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
 
$
231,407

 
$
277,534

 
$
251,896

 
$
296,105

 
$
214,102

Federal funds sold and securities purchased under resale agreements
 
57

 
57

 
56

 
56

 
3,046

Interest bearing deposits with banks
 
980,380

 
1,063,242

 
1,218,728

 
1,011,635

 
1,007,468

Available-for-sale securities, at fair value
 
1,895,688

 
1,803,666

 
1,665,903

 
1,649,636

 
1,803,733

Held-to-maturity securities, at amortized cost
 
892,937

 
826,449

 
819,340

 
793,376

 
667,764

Trading account securities
 
1,682

 
995

 
643

 
1,987

 
714

Equity securities with readily determinable fair value
 
37,832

 

 

 

 

Federal Home Loan Bank and Federal Reserve Bank stock
 
104,956

 
89,989

 
87,192

 
80,812

 
78,904

Brokerage customer receivables
 
24,531

 
26,431

 
23,631

 
23,281

 
23,171

Mortgage loans held-for-sale
 
411,505

 
313,592

 
370,282

 
382,837

 
288,964

Loans, net of unearned income, excluding covered loans
 
22,062,134

 
21,640,797

 
20,912,781

 
20,743,332

 
19,931,058

Covered loans
 

 

 
46,601

 
50,119

 
52,359

Total loans
 
22,062,134

 
21,640,797

 
20,959,382

 
20,793,451

 
19,983,417

Allowance for loan losses
 
(139,503
)
 
(137,905
)
 
(133,119
)
 
(129,591
)
 
(125,819
)
Allowance for covered loan losses
 

 

 
(758
)
 
(1,074
)
 
(1,319
)
Net loans
 
21,922,631

 
21,502,892

 
20,825,505

 
20,662,786

 
19,856,279

Premises and equipment, net
 
626,687

 
621,895

 
609,978

 
605,211

 
598,746

Lease investments, net
 
190,775

 
212,335

 
193,828

 
191,248

 
155,233

Accrued interest receivable and other assets
 
601,794

 
567,374

 
580,612

 
577,359

 
560,741

Trade date securities receivable
 

 
90,014

 
189,896

 
133,130

 

Goodwill
 
511,497

 
501,884

 
502,021

 
500,260

 
499,341

Other intangible assets
 
22,413

 
17,621

 
18,651

 
19,546

 
20,687

Total assets
 
$
28,456,772

 
$
27,915,970

 
$
27,358,162

 
$
26,929,265

 
$
25,778,893

Liabilities and Shareholders’ Equity
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
Non-interest bearing
 
$
6,612,319

 
$
6,792,497

 
$
6,502,409

 
$
6,294,052

 
$
5,790,579

Interest bearing
 
16,667,008

 
16,390,850

 
16,392,654

 
16,311,640

 
15,939,862

Total deposits
 
23,279,327

 
23,183,347

 
22,895,063

 
22,605,692

 
21,730,441

Federal Home Loan Bank advances
 
915,000

 
559,663

 
468,962

 
318,270

 
227,585

Other borrowings
 
247,092

 
266,123

 
251,680

 
277,710

 
238,787

Subordinated notes
 
139,111

 
139,088

 
139,052

 
139,029

 
138,993

Junior subordinated debentures
 
253,566

 
253,566

 
253,566

 
253,566

 
253,566

Trade date securities payable
 

 

 
880

 
5,151

 

Accrued interest payable and other liabilities
 
591,426

 
537,244

 
440,034

 
490,389

 
424,538

Total liabilities
 
25,425,522

 
24,939,031

 
24,449,237

 
24,089,807

 
23,013,910

Shareholders’ Equity:
 
 
 
 
 
 
 
 
 
 
Preferred stock
 
125,000

 
125,000

 
125,000

 
125,000

 
251,257

Common stock
 
56,364

 
56,068

 
55,940

 
55,802

 
52,605

Surplus
 
1,540,673

 
1,529,035

 
1,519,596

 
1,511,080

 
1,381,886

Treasury stock
 
(5,355
)
 
(4,986
)
 
(4,884
)
 
(4,884
)
 
(4,884
)
Retained earnings
 
1,387,663

 
1,313,657

 
1,254,759

 
1,198,997

 
1,143,943

Accumulated other comprehensive loss
 
(73,095
)
 
(41,835
)
 
(41,486
)
 
(46,537
)
 
(59,824
)
Total shareholders’ equity
 
3,031,250

 
2,976,939

 
2,908,925

 
2,839,458

 
2,764,983

Total liabilities and shareholders’ equity
 
$
28,456,772

 
$
27,915,970

 
$
27,358,162

 
$
26,929,265

 
$
25,778,893


39



WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Income (Unaudited) - 5 Quarter Trends

 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
(In thousands, except per share data)
 
2018
 
2017
 
2017
 
2017
 
2017
Interest income
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
 
234,994

 
226,447

 
223,897

 
209,289

 
196,916

         Mortgage loans held-for-sale
 
2,818

 
3,291

 
3,223

 
3,420

 
2,398

Interest bearing deposits with banks
 
2,796

 
2,723

 
3,272

 
1,634

 
1,623

Federal funds sold and securities purchased under resale agreements
 

 

 

 
1

 
1

Investment securities
 
19,128

 
18,160

 
16,058

 
15,524

 
13,573

Trading account securities
 
14

 
2

 
8

 
4

 
11

Federal Home Loan Bank and Federal Reserve Bank stock
 
1,298

 
1,067

 
1,080

 
1,153

 
1,070

Brokerage customer receivables
 
157

 
150

 
150

 
156

 
167

Total interest income
 
261,205

 
251,840

 
247,688

 
231,181

 
215,759

Interest expense
 
 
 
 
 
 
 
 
 
 
Interest on deposits
 
26,549

 
24,930

 
23,655

 
18,471

 
16,270

Interest on Federal Home Loan Bank advances
 
3,639

 
2,124

 
2,151

 
2,933

 
1,590

Interest on other borrowings
 
1,699

 
1,600

 
1,482

 
1,149

 
1,139

Interest on subordinated notes
 
1,773

 
1,786

 
1,772

 
1,786

 
1,772

Interest on junior subordinated debentures
 
2,463

 
2,301

 
2,640

 
2,433

 
2,408

Total interest expense
 
36,123

 
32,741

 
31,700

 
26,772

 
23,179

Net interest income
 
225,082

 
219,099

 
215,988

 
204,409

 
192,580

Provision for credit losses
 
8,346

 
7,772

 
7,896

 
8,891

 
5,209

Net interest income after provision for credit losses
 
216,736

 
211,327

 
208,092

 
195,518

 
187,371

Non-interest income
 
 
 
 
 
 
 
 
 
 
Wealth management
 
22,986

 
21,910

 
19,803

 
19,905

 
20,148

Mortgage banking
 
30,960

 
27,411

 
28,184

 
35,939

 
21,938

Service charges on deposit accounts
 
8,857

 
8,907

 
8,645

 
8,696

 
8,265

(Losses) gains on investment securities, net
 
(351
)
 
14

 
39

 
47

 
(55
)
Fees from covered call options
 
1,597

 
1,610

 
1,143

 
890

 
759

Trading gains (losses), net
 
103

 
24

 
(129
)
 
(420
)
 
(320
)
Operating lease income, net
 
9,691

 
8,598

 
8,461

 
6,805

 
5,782

Other
 
11,836

 
12,564

 
13,585

 
18,110

 
12,248

Total non-interest income
 
85,679

 
81,038

 
79,731

 
89,972

 
68,765

Non-interest expense
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
112,436

 
118,009

 
106,251

 
106,502

 
99,316

Equipment
 
10,072

 
9,500

 
9,947

 
9,909

 
9,002

Operating lease equipment depreciation
 
6,533

 
7,015

 
6,794

 
5,662

 
4,636

Occupancy, net
 
13,767

 
14,154

 
13,079

 
12,586

 
13,101

Data processing
 
8,493

 
7,915

 
7,851

 
7,804

 
7,925

Advertising and marketing
 
8,824

 
7,382

 
9,572

 
8,726

 
5,150

Professional fees
 
6,649

 
8,879

 
6,786

 
7,510

 
4,660

Amortization of other intangible assets
 
1,004

 
1,028

 
1,068

 
1,141

 
1,164

FDIC insurance
 
4,362

 
4,324

 
3,877

 
3,874

 
4,156

OREO expense, net
 
2,926

 
599

 
590

 
739

 
1,665

Other
 
19,283

 
17,775

 
17,760

 
19,091

 
17,343

Total non-interest expense
 
194,349

 
196,580

 
183,575

 
183,544

 
168,118

Income before taxes
 
108,066

 
95,785

 
104,248

 
101,946

 
88,018

Income tax expense
 
26,085

 
27,004

 
38,622

 
37,049

 
29,640

Net income
 
$
81,981

 
$
68,781

 
$
65,626

 
$
64,897

 
$
58,378

Preferred stock dividends
 
2,050

 
2,050

 
2,050

 
2,050

 
3,628

Net income applicable to common shares
 
$
79,931

 
$
66,731

 
$
63,576

 
$
62,847

 
$
54,750

Net income per common share - Basic
 
$
1.42

 
$
1.19

 
$
1.14

 
$
1.15

 
$
1.05

Net income per common share - Diluted
 
$
1.40

 
$
1.17

 
$
1.12

 
$
1.11

 
$
1.00

Cash dividends declared per common share
 
$
0.19

 
$
0.14

 
$
0.14

 
$
0.14

 
$
0.14

Weighted average common shares outstanding
 
56,137

 
55,924

 
55,796

 
54,775

 
52,267

Dilutive potential common shares
 
888

 
1,010

 
966

 
1,812

 
4,160

Average common shares and dilutive common shares
 
57,025

 
56,934

 
56,762

 
56,587

 
56,427


40



WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Period End Loan Balances - 5 Quarter Trends 
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
(Dollars in thousands)
 
2018
 
2017
 
2017
 
2017
 
2017
Balance:
 
 
 
 
 
 
 
 
 
 
Commercial
 
$
7,060,871

 
$
6,787,677

 
$
6,456,034

 
$
6,406,289

 
$
6,081,489

Commercial real estate
 
6,633,520

 
6,580,618

 
6,400,781

 
6,402,494

 
6,261,682

Home equity
 
626,547

 
663,045

 
672,969

 
689,483

 
708,258

Residential real estate
 
869,104

 
832,120

 
789,499

 
762,810

 
720,608

Premium finance receivables - commercial
 
2,576,150

 
2,634,565

 
2,664,912

 
2,648,386

 
2,446,946

Premium finance receivables - life insurance
 
4,189,961

 
4,035,059

 
3,795,474

 
3,719,043

 
3,593,563

Consumer and other
 
105,981

 
107,713

 
133,112

 
114,827

 
118,512

Total loans, net of unearned income, excluding covered loans
 
$
22,062,134

 
$
21,640,797

 
$
20,912,781

 
$
20,743,332

 
$
19,931,058

Covered loans
 

 

 
46,601

 
50,119

 
52,359

Total loans, net of unearned income
 
$
22,062,134

 
$
21,640,797

 
$
20,959,382

 
$
20,793,451

 
$
19,983,417

Mix:
 
 
 
 
 
 
 
 
 
 
Commercial
 
32
%
 
31
%
 
31
%
 
31
%
 
30
%
Commercial real estate
 
30

 
30

 
31

 
31

 
31

Home equity
 
3

 
3

 
3

 
3

 
4

Residential real estate
 
4

 
4

 
3

 
3

 
4

Premium finance receivables - commercial
 
12

 
12

 
13

 
13

 
12

Premium finance receivables - life insurance
 
19

 
19

 
18

 
18

 
18

Consumer and other
 

 
1

 
1

 
1

 
1

Total loans, net of unearned income, excluding covered loans
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
Covered loans
 

 

 

 

 

Total loans, net of unearned income
 
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 


WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Period End Deposits Balances - 5 Quarter Trends
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
(Dollars in thousands)
 
2018
 
2017
 
2017
 
2017
 
2017
Balance:
 
 
 
 
 
 
 
 
 
 
Non-interest bearing
 
$
6,612,319

 
$
6,792,497

 
$
6,502,409

 
$
6,294,052

 
$
5,790,579

NOW and interest bearing demand deposits
 
2,315,122

 
2,315,055

 
2,273,025

 
2,459,238

 
2,484,676

Wealth management deposits (1)
 
2,495,134

 
2,323,699

 
2,171,758

 
2,464,162

 
2,390,464

Money market
 
4,617,122

 
4,515,353

 
4,607,995

 
4,449,385

 
4,555,752

Savings
 
2,901,504

 
2,829,373

 
2,673,201

 
2,419,463

 
2,287,958

Time certificates of deposit
 
4,338,126

 
4,407,370

 
4,666,675

 
4,519,392

 
4,221,012

Total deposits
 
$
23,279,327

 
$
23,183,347

 
$
22,895,063

 
$
22,605,692

 
$
21,730,441

Mix:
 
 
 
 
 
 
 
 
 
 
Non-interest bearing
 
28
%
 
29
%
 
28
%
 
28
%
 
27
%
NOW and interest bearing demand deposits
 
10

 
10

 
10

 
11

 
11

Wealth management deposits (1)
 
11

 
10

 
10

 
11

 
11

Money market
 
20

 
20

 
20

 
19

 
21

Savings
 
12

 
12

 
12

 
11

 
11

Time certificates of deposit
 
19

 
19

 
20

 
20

 
19

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.

41



WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin (Including Call Option Income) - 5 Quarter Trends
 
 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
(Dollars in thousands)
 
2018
 
2017
 
2017
 
2017
 
2017
Net interest income - FTE
 
$
226,286

 
$
221,226

 
$
217,947

 
$
206,108

 
$
194,282

Call option income
 
1,597

 
1,610

 
1,143

 
890

 
759

Net interest income including call option income
 
$
227,883

 
$
222,836

 
$
219,090

 
$
206,998

 
$
195,041

Yield on earning assets
 
4.13
 %
 
4.00
 %
 
3.96
 %
 
3.88
 %
 
3.79
 %
Rate on interest-bearing liabilities
 
0.83

 
0.75

 
0.73

 
0.63

 
0.58

Rate spread
 
3.30
 %
 
3.25
 %
 
3.23
 %
 
3.25
 %
 
3.21
 %
Less: Fully tax-equivalent adjustment
 
(0.02
)
 
(0.04
)
 
(0.03
)
 
(0.02
)
 
(0.03
)
Net free funds contribution
 
0.26

 
0.24

 
0.23

 
0.18

 
0.18

Net interest margin (GAAP-derived)
 
3.54
 %
 
3.45
 %
 
3.43
 %
 
3.41
 %
 
3.36
 %
Fully tax-equivalent adjustment
 
0.02

 
0.04

 
0.03

 
0.02

 
0.03

Net interest margin - FTE
 
3.56
 %
 
3.49
 %
 
3.46
 %
 
3.43
 %
 
3.39
 %
Call option income
 
0.03

 
0.03

 
0.02

 
0.01

 
0.01

Net interest margin - FTE, including call option income
 
3.59
 %
 
3.52
 %
 
3.48
 %
 
3.44
 %
 
3.40
 %
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin (Including Call Option Income - YTD Trends)
 
 
 
Three Months Ended
March 31,
 
Years Ended
December 31,
(Dollars in thousands)
 
2018
 
2017
 
2016
 
2015
 
2014
Net interest income - FTE
 
$
226,286

 
$
839,563

 
$
728,145

 
$
646,238

 
$
601,744

Call option income
 
1,597

 
4,402

 
11,470

 
15,364

 
7,859

Net interest income including call option income
 
$
227,883

 
$
843,965

 
$
739,615

 
$
661,602

 
$
609,603

Yield on earning assets
 
4.13
 %
 
3.91
 %
 
3.67
 %
 
3.76
 %
 
3.96
 %
Rate on interest-bearing liabilities
 
0.83

 
0.67

 
0.57

 
0.54

 
0.55

Rate spread
 
3.30
 %
 
3.24
 %
 
3.10
 %
 
3.22
 %
 
3.41
 %
Less: Fully tax-equivalent adjustment
 
(0.02
)
 
(0.03
)
 
(0.02
)
 
(0.02
)
 
(0.02
)
Net free funds contribution
 
0.26

 
0.20

 
0.16

 
0.14

 
0.12

Net interest margin (GAAP-derived)
 
3.54
 %
 
3.41
 %
 
3.24
 %
 
3.34
 %
 
3.51
 %
Fully tax-equivalent adjustment
 
0.02

 
0.03

 
0.02

 
0.02

 
0.02

Net interest margin - FTE
 
3.56
 %
 
3.44
 %
 
3.26
 %
 
3.36
 %
 
3.53
 %
Call option income
 
0.03

 
0.02

 
0.05

 
0.08

 
0.05

Net interest margin - FTE, including call option income
 
3.59
 %
 
3.46
 %
 
3.31
 %
 
3.44
 %
 
3.58
 %

42



WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Quarterly Average Balances - 5 Quarter Trends
 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
(In thousands)
 
2018
 
2017
 
2017
 
2017
 
2017
Interest-bearing deposits with banks and cash equivalents
 
$
749,973

 
$
914,319

 
$
1,003,572

 
$
722,349

 
$
780,752

Investment securities
 
2,892,617

 
2,736,253

 
2,652,119

 
2,572,619

 
2,395,625

FHLB and FRB stock
 
105,414

 
82,092

 
81,928

 
99,438

 
94,090

Liquidity management assets
 
$
3,748,004

 
$
3,732,664

 
$
3,737,619

 
$
3,394,406

 
$
3,270,467

Other earning assets
 
27,571

 
26,955

 
25,844

 
25,749

 
25,236

Mortgage loans held-for-sale
 
281,181

 
335,385

 
336,604

 
334,843

 
268,834

Loans, net of unearned income
 
21,711,342

 
21,080,984

 
20,858,618

 
20,264,875

 
19,654,772

Covered loans
 

 
6,025

 
48,415

 
51,823

 
56,872

Total earning assets
 
$
25,768,098

 
$
25,182,013

 
$
25,007,100

 
$
24,071,696

 
$
23,276,181

Allowance for loan and covered loan losses
 
(143,108
)
 
(138,584
)
 
(135,519
)
 
(132,053
)
 
(127,425
)
Cash and due from banks
 
254,489

 
244,097

 
242,186

 
242,495

 
229,588

Other assets
 
1,930,118

 
1,891,958

 
1,898,528

 
1,868,811

 
1,829,004

Total assets
 
$
27,809,597

 
$
27,179,484

 
$
27,012,295

 
$
26,050,949

 
$
25,207,348

NOW and interest bearing demand deposits
 
$
2,255,692

 
$
2,284,576

 
$
2,344,848

 
$
2,470,130

 
$
2,512,598

Wealth management deposits
 
2,250,139

 
2,005,197

 
2,320,674

 
2,091,251

 
2,082,285

Money market accounts
 
4,520,620

 
4,611,515

 
4,471,342

 
4,435,670

 
4,407,901

Savings accounts
 
2,813,772

 
2,741,621

 
2,581,946

 
2,329,195

 
2,227,024

Time deposits
 
4,322,111

 
4,581,464

 
4,573,081

 
4,295,428

 
4,236,862

Interest-bearing deposits
 
$
16,162,334

 
$
16,224,373

 
$
16,291,891

 
$
15,621,674

 
$
15,466,670

Federal Home Loan Bank advances
 
872,811

 
324,748

 
324,996

 
689,600

 
181,338

Other borrowings
 
263,125

 
255,972

 
268,850

 
240,547

 
255,012

Subordinated notes
 
139,094

 
139,065

 
139,035

 
139,007

 
138,980

Junior subordinated debentures
 
253,566

 
253,566

 
253,566

 
253,566

 
253,566

Total interest-bearing liabilities
 
$
17,690,930

 
$
17,197,724

 
$
17,278,338

 
$
16,944,394

 
$
16,295,566

Non-interest bearing deposits
 
6,639,845

 
6,605,553

 
6,419,326

 
5,904,679

 
5,787,034

Other liabilities
 
483,230

 
433,208

 
431,949

 
400,971

 
385,698

Equity
 
2,995,592

 
2,942,999

 
2,882,682

 
2,800,905

 
2,739,050

Total liabilities and shareholders’ equity
 
$
27,809,597

 
$
27,179,484

 
$
27,012,295

 
$
26,050,949

 
$
25,207,348


WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin - 5 Quarter Trends
 
 
Three Months Ended
 
 
March 31,
2018
 
December 31,
2017
 
September 30,
2017
 
June 30,
2017
 
March 31,
2017
Yield earned on:
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits with banks and cash equivalents
 
1.51
 %
 
1.18
 %
 
1.29
 %
 
0.91
 %
 
0.84
 %
Investment securities
 
2.76

 
2.78

 
2.54

 
2.55

 
2.45

FHLB and FRB stock
 
4.99

 
5.15

 
5.23

 
4.66

 
4.61

Liquidity management assets
 
2.57
 %
 
2.44
 %
 
2.26
 %
 
2.27
 %
 
2.13
 %
Other earning assets
 
2.56

 
2.27

 
2.49

 
2.53

 
2.95

Mortgage loans held-for-sale
 
4.06

 
3.89

 
3.80

 
4.10

 
3.62

Loans, net of unearned income
 
4.40

 
4.28

 
4.27

 
4.15

 
4.06

Covered loans
 

 
5.66

 
4.91

 
5.01

 
6.55

Total earning assets
 
4.13
 %
 
4.00
 %
 
3.96
 %
 
3.88
 %
 
3.79
 %
Rate paid on:
 
 
 
 
 
 
 
 
 
 
NOW and interest bearing demand deposits
 
0.25
 %
 
0.24
 %
 
0.22
 %
 
0.20
 %
 
0.18
 %
Wealth management deposits
 
0.98

 
0.80

 
0.81

 
0.55

 
0.45

Money market accounts
 
0.42

 
0.36

 
0.31

 
0.24

 
0.20

Savings accounts
 
0.39

 
0.39

 
0.33

 
0.26

 
0.24

Time deposits
 
1.16

 
1.09

 
1.04

 
0.95

 
0.89

Interest-bearing deposits
 
0.67
 %
 
0.61
 %
 
0.58
 %
 
0.47
 %
 
0.43
 %
Federal Home Loan Bank advances
 
1.69

 
2.59

 
2.63

 
1.71

 
3.55

Other borrowings
 
2.62

 
2.48

 
2.19

 
1.92

 
1.81

Subordinated notes
 
5.10

 
5.14

 
5.10

 
5.14

 
5.10

Junior subordinated debentures
 
3.89

 
3.55

 
4.07

 
3.80

 
3.80

Total interest-bearing liabilities
 
0.83
 %
 
0.75
 %
 
0.73
 %
 
0.63
 %
 
0.58
 %
Interest rate spread
 
3.30
 %
 
3.25
 %
 
3.23
 %
 
3.25
 %
 
3.21
 %
Less: Fully tax-equivalent adjustment
 
(0.02
)
 
(0.04
)
 
(0.03
)
 
(0.02
)
 
(0.03
)
Net free funds/contribution
 
0.26

 
0.24

 
0.23

 
0.18

 
0.18

Net interest margin (GAAP)
 
3.54
 %
 
3.45
 %
 
3.43
 %
 
3.41
 %
 
3.36
 %
Fully tax-equivalent adjustment
 
0.02

 
0.04

 
0.03

 
0.02

 
0.03

Net interest margin - FTE
 
3.56
 %
 
3.49
 %
 
3.46
 %
 
3.43
 %
 
3.39
 %

43



WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Non-Interest Income - 5 Quarter Trends
 
 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
(In thousands)
 
2018
 
2017
 
2017
 
2017
 
2017
Brokerage
 
$
6,031

 
$
6,067

 
$
5,127

 
$
5,449

 
$
6,220

Trust and asset management
 
16,955

 
15,843

 
14,676

 
14,456

 
13,928

Total wealth management
 
22,986

 
21,910

 
19,803

 
19,905

 
20,148

Mortgage banking
 
30,960

 
27,411

 
28,184

 
35,939

 
21,938

Service charges on deposit accounts
 
8,857

 
8,907

 
8,645

 
8,696

 
8,265

(Losses) gains on investment securities, net
 
(351
)
 
14

 
39

 
47

 
(55
)
Fees from covered call options
 
1,597

 
1,610

 
1,143

 
890

 
759

Trading gains (losses), net
 
103

 
24

 
(129
)
 
(420
)
 
(320
)
Operating lease income, net
 
9,691

 
8,598

 
8,461

 
6,805

 
5,782

Other:
 
 
 
 
 
 
 
 
 
 
Interest rate swap fees
 
2,237

 
1,963

 
1,762

 
2,221

 
1,433

BOLI
 
714

 
754

 
897

 
888

 
985

Administrative services
 
1,061

 
1,103

 
1,052

 
986

 
1,024

Early pay-offs of capital leases
 
33

 
7

 

 
10

 
1,211

Miscellaneous
 
7,791

 
8,737

 
9,874

 
14,005

 
7,595

Total other income
 
11,836

 
12,564

 
13,585

 
18,110

 
12,248

Total Non-Interest Income
 
$
85,679

 
$
81,038

 
$
79,731

 
$
89,972

 
$
68,765

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Non-Interest Expense - 5 Quarter Trends
 
 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
(In thousands)
 
2018
 
2017
 
2017
 
2017
 
2017
Salaries and employee benefits:
 
 
 
 
 
 
 
 
 
 
Salaries
 
$
61,986

 
$
58,239

 
$
57,689

 
$
55,215

 
$
55,008

Commissions and incentive compensation
 
31,949

 
40,723

 
32,095

 
34,050

 
26,643

Benefits
 
18,501

 
19,047

 
16,467

 
17,237

 
17,665

Total salaries and employee benefits
 
112,436

 
118,009

 
106,251

 
106,502

 
99,316

Equipment
 
10,072

 
9,500

 
9,947

 
9,909

 
9,002

Operating lease equipment depreciation
 
6,533

 
7,015

 
6,794

 
5,662

 
4,636

Occupancy, net
 
13,767

 
14,154

 
13,079

 
12,586

 
13,101

Data processing
 
8,493

 
7,915

 
7,851

 
7,804

 
7,925

Advertising and marketing
 
8,824

 
7,382

 
9,572

 
8,726

 
5,150

Professional fees
 
6,649

 
8,879

 
6,786

 
7,510

 
4,660

Amortization of other intangible assets
 
1,004

 
1,028

 
1,068

 
1,141

 
1,164

FDIC insurance
 
4,362

 
4,324

 
3,877

 
3,874

 
4,156

OREO expense, net
 
2,926

 
599

 
590

 
739

 
1,665

Other:
 
 
 
 
 
 
 
 
 
 
Commissions - 3rd party brokers
 
1,252

 
1,057

 
990

 
1,033

 
1,098

Postage
 
1,866

 
1,427

 
1,814

 
2,080

 
1,442

Miscellaneous
 
16,165

 
15,291

 
14,956

 
15,978

 
14,803

Total other expense
 
19,283

 
17,775

 
17,760

 
19,091

 
17,343

Total Non-Interest Expense
 
$
194,349

 
$
196,580

 
$
183,575

 
$
183,544

 
$
168,118


44



WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Allowance for Credit Losses, excluding covered loans - 5 Quarter Trends
 
 
Three Months Ended
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
(Dollars in thousands)
 
2018
 
2017
 
2017
 
2017
 
2017
Allowance for loan losses at beginning of period
 
$
137,905

 
$
133,119

 
$
129,591

 
$
125,819

 
$
122,291

Provision for credit losses
 
8,346

 
7,772

 
7,942

 
8,952

 
5,316

Other adjustments (1)
 
(40
)
 
698

 
(39
)
 
(30
)
 
(56
)
Reclassification (to) from allowance for unfunded lending-related commitments
 
26

 
7

 
94

 
106

 
(138
)
Charge-offs:
 

 

 

 

 

Commercial
 
2,687

 
1,340

 
2,265

 
913

 
641

Commercial real estate
 
813

 
1,001

 
989

 
1,985

 
261

Home equity
 
357

 
728

 
968

 
1,631

 
625

Residential real estate
 
571

 
542

 
267

 
146

 
329

Premium finance receivables - commercial
 
4,721

 
2,314

 
1,716

 
1,878

 
1,427

Premium finance receivables - life insurance
 

 

 

 

 

Consumer and other
 
129

 
207

 
213

 
175

 
134

Total charge-offs
 
9,278

 
6,132

 
6,418

 
6,728

 
3,417

Recoveries:
 
 
 
 
 
 
 
 
 
 
Commercial
 
262

 
235

 
801

 
561

 
273

Commercial real estate
 
1,687

 
1,037

 
323

 
276

 
554

Home equity
 
123

 
359

 
178

 
144

 
65

Residential real estate
 
40

 
165

 
55

 
54

 
178

Premium finance receivables - commercial
 
385

 
613

 
499

 
404

 
612

Premium finance receivables - life insurance
 

 

 

 

 

  Consumer and other
 
47

 
32

 
93

 
33

 
141

Total recoveries
 
2,544

 
2,441

 
1,949

 
1,472

 
1,823

Net charge-offs
 
(6,734
)
 
(3,691
)
 
(4,469
)
 
(5,256
)
 
(1,594
)
Allowance for loan losses at period end
 
$
139,503

 
$
137,905

 
$
133,119

 
$
129,591

 
$
125,819

Allowance for unfunded lending-related commitments at period end
 
1,243

 
1,269

 
1,276

 
1,705

 
1,811

Allowance for credit losses at period end
 
$
140,746

 
$
139,174

 
$
134,395

 
$
131,296

 
$
127,630

Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average:
 
 
 
 
 
 
 
 
 
 
Commercial
 
0.14
 %
 
0.07
%
 
0.09
%
 
0.02
%
 
0.03
 %
Commercial real estate
 
(0.05
)
 
0.00

 
0.04

 
0.11

 
(0.02
)
Home equity
 
0.15

 
0.22

 
0.46

 
0.85

 
0.32

Residential real estate
 
0.19

 
0.13

 
0.08

 
0.03

 
0.06

Premium finance receivables - commercial
 
0.68

 
0.26

 
0.18

 
0.23

 
0.13

Premium finance receivables - life insurance
 
0.00

 
0.00

 
0.00

 
0.00

 
0.00

Consumer and other
 
0.26

 
0.52

 
0.37

 
0.45

 
(0.02
)
Total loans, net of unearned income, excluding covered loans
 
0.12
 %
 
0.07
%
 
0.08
%
 
0.10
%
 
0.03
 %
Net charge-offs as a percentage of the provision for credit losses
 
80.69
 %
 
47.49
%
 
56.27
%
 
58.71
%
 
29.98
 %
Loans at period-end
 
$
22,062,134

 
$
21,640,797

 
$
20,912,781

 
$
20,743,332

 
$
19,931,058

Allowance for loan losses as a percentage of loans at period end
 
0.63
 %
 
0.64
%
 
0.64
%
 
0.62
%
 
0.63
 %
Allowance for credit losses as a percentage of loans at period end
 
0.64
 %
 
0.64
%
 
0.64
%
 
0.63
%
 
0.64
 %
(1)
Includes $742,000 of allowance for covered loan losses reclassified as a result of the termination of all existing loss share agreements with the FDIC during the fourth quarter of 2017.

45



WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Non-Performing Assets, excluding covered assets - 5 Quarter Trends
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
(Dollars in thousands)
2018
 
2017 (3)
 
2017
 
2017
 
2017
Loans past due greater than 90 days and still accruing(1):
 
 
 
 
 
 
 
 
 
Commercial
$

 
$

 
$

 
$

 
$
100

Commercial real estate

 

 

 

 

Home equity

 

 

 

 

Residential real estate

 
3,278

 

 
179

 

Premium finance receivables - commercial
8,547

 
9,242

 
9,584

 
5,922

 
4,991

Premium finance receivables - life insurance

 

 
6,740

 
1,046

 
2,024

Consumer and other
207

 
40

 
159

 
63

 
104

Total loans past due greater than 90 days and still accruing
8,754

 
12,560

 
16,483

 
7,210

 
7,219

Non-accrual loans(2):
 
 
 
 
 
 
 
 
 
Commercial
14,007

 
15,696

 
13,931

 
10,191

 
14,307

Commercial real estate
21,825

 
22,048

 
14,878

 
16,980

 
20,809

Home equity
9,828

 
8,978

 
7,581

 
9,482

 
11,722

Residential real estate
17,214

 
17,977

 
14,743

 
14,292

 
11,943

Premium finance receivables - commercial
17,342

 
12,163

 
9,827

 
10,456

 
12,629

Premium finance receivables - life insurance

 

 

 

 

Consumer and other
720

 
740

 
540

 
439

 
350

Total non-accrual loans
80,936

 
77,602

 
61,500

 
61,840

 
71,760

Total non-performing loans:
 
 
 
 
 
 
 
 
 
Commercial
14,007

 
15,696

 
13,931

 
10,191

 
14,407

Commercial real estate
21,825

 
22,048

 
14,878

 
16,980

 
20,809

Home equity
9,828

 
8,978

 
7,581

 
9,482

 
11,722

Residential real estate
17,214

 
21,255

 
14,743

 
14,471

 
11,943

Premium finance receivables - commercial
25,889

 
21,405

 
19,411

 
16,378

 
17,620

Premium finance receivables - life insurance

 

 
6,740

 
1,046

 
2,024

Consumer and other
927

 
780

 
699

 
502

 
454

Total non-performing loans
$
89,690

 
$
90,162

 
$
77,983

 
$
69,050

 
$
78,979

Other real estate owned
18,481

 
20,244

 
17,312

 
16,853

 
17,090

Other real estate owned - from acquisitions
18,117

 
20,402

 
20,066

 
22,508

 
22,774

Other repossessed assets
113

 
153

 
301

 
532

 
544

Total non-performing assets
$
126,401

 
$
130,961

 
$
115,662

 
$
108,943

 
$
119,387

TDRs performing under the contractual terms of the loan agreement
$
39,562

 
$
39,683

 
$
26,972

 
$
28,008

 
$
28,392

Total non-performing loans by category as a percent of its own respective category’s period-end balance:
 
 
 
 
 
 
 
 
 
Commercial
0.20
%
 
0.23
%
 
0.22
%
 
0.16
%
 
0.24
%
Commercial real estate
0.33

 
0.34

 
0.23

 
0.27

 
0.33

Home equity
1.57

 
1.35

 
1.13

 
1.38

 
1.66

Residential real estate
1.98

 
2.55

 
1.87

 
1.90

 
1.66

Premium finance receivables - commercial
1.00

 
0.81

 
0.73

 
0.62

 
0.72

Premium finance receivables - life insurance

 

 
0.18

 
0.03

 
0.06

Consumer and other
0.87

 
0.72

 
0.53

 
0.44

 
0.38

Total loans, net of unearned income
0.41
%
 
0.42
%
 
0.37
%
 
0.33
%
 
0.40
%
Total non-performing assets as a percentage of total assets
0.44
%
 
0.47
%
 
0.42
%
 
0.40
%
 
0.46
%
Allowance for loan losses as a percentage of total non-performing loans
155.54
%
 
152.95
%
 
170.70
%
 
187.68
%
 
159.31
%

(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 $8.1 million, $10.1 million, $6.2 million, $5.1 million and $11.3 million as of March 31, 2018, December 31, 2017, September 30, 2017, June 30, 2017 and March 31, 2017, respectively.
(3)
Includes $2.6 million of non-performing loans and $2.9 million of other real estate owned reclassified from covered assets as a result of the termination of all existing loss share agreements with the FDIC during the fourth quarter of 2017.



46