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8-K - FORM 8-K - WINTRUST FINANCIAL CORP | c60971e8vk.htm |
Exhibit 99.1
Wintrust Financial Corporation
727 North Bank Lane, Lake Forest, Illinois 60045
727 North Bank Lane, Lake Forest, Illinois 60045
News Release
FOR IMMEDIATE RELEASE
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October 27, 2010 | |
FOR MORE INFORMATION CONTACT: |
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Edward J. Wehmer, President & Chief Executive Officer |
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David A. Dykstra, Senior Executive Vice President & Chief Operating Officer |
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(847) 615-4096 |
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Web site address: www.wintrust.com |
WINTRUST FINANCIAL CORPORATION REPORTS THIRD QUARTER 2010
NET INCOME OF $20.1 MILLION OR $0.47 PER DILUTED COMMON SHARE
NET INCOME OF $20.1 MILLION OR $0.47 PER DILUTED COMMON SHARE
LAKE FOREST, ILLINOISWintrust Financial Corporation (Wintrust or the Company) (Nasdaq
WTFC) announced net income of $20.1 million or $0.47 per diluted common share for the quarter ended
September 30, 2010, an increase of $0.22, or 88%, compared to $13.0 million, or $0.25 per diluted
common share, recorded in the second quarter of 2010.
The Companys total assets of $14.1 billion at September 30, 2010 increased $392 million from
June 30, 2010 and $2.0 billion from September 30, 2009. Total deposits as of September 30, 2010
were $11.0 billion, an increase of $337 million from June 30, 2010 (including $119 million in
additional deposits for the third quarter of 2010 related to an FDIC-assisted transaction) and $1.1
billion from September 30, 2009. Total loans, including loans held for sale and excluding covered
loans, were $9.8 billion as of September 30, 2010, an increase of $219 million over the $9.6
billion balance as of June 30, 2010 and an increase of $1.3 billion over September 30, 2009.
Edward J. Wehmer, President and Chief Executive Officer, commented We are pleased to report
net income of $20.1 million for the third quarter of 2010. Core pre-tax earnings have increased
28% in the past twelve months, to $47.6 million in the third quarter of 2010 from $37.1 million in
the third quarter of 2009.
Current market conditions are providing us with opportunities to grow our core deposit
franchises. During the third quarter, the Company grew total deposits by $337 million, which
included $119 million from the FDIC-assisted purchase of Ravenswood Bank in August. The
accumulation of excess liquidity management assets on the Companys balance sheet from solid
deposit growth has negatively impacted our net interest margin on a short-term basis until
appropriate risk-adjusted returns for liquidity can be found.
Mr. Wehmer noted, The Companys net interest margin for the quarter declined to 3.22% from
3.43% in the second quarter of 2010. This 21 basis point decline in margin was caused by:
| 14 basis point reduction due to the combination of higher levels of liquidity management assets and lower yields on liquidity management assets | ||
| 10 basis point reduction due to $3.2 million less accretion on the purchased life insurance premium finance portfolio due to a slower rate of prepayments | ||
| Nine basis point reduction attributable to the sale of certain collateralized mortgage obligations | ||
| 11 basis point improvement from continued lower re-pricing of retail certificates of deposit | ||
| One basis point improvement due to higher contribution from net free funds |
Meaningful expansion of the Companys net interest margin remains a function of continued loan
growth, continued re-pricing of maturing certificates of deposit and stabilizing levels of
liquidity management assets and yields on those assets.
Commenting on credit, excluding the impact of the covered loans acquired in the FDIC-assisted
transactions, Mr. Wehmer said, The Company continues to aggressively identify potential
non-performing credits and take actions on existing non-performing credits. Both total
non-performing loans and total non-performing loans as a percent of total loans decreased during
the third quarter. Additionally, non-performing assets, which includes other real-estate owned
(OREO), declined $11 million since June 30, 2010. During the third quarter, the Company recorded
a provision for credit losses of $25.5 million and net charge-offs of $21.4 million, the lowest
levels since the second quarter of 2009. Our allowance for loan losses increased to $110.4 million
or 1.17% of total loans.
Mr. Wehmer also noted, We are very pleased with our complementary core banking businesses as
well. Mortgage banking recorded total revenue of $20.1 million in the third quarter of 2010, up
163% from the previous quarter. Current mortgage rates available indicate an elevated level of
originations and revenue will be recorded in the fourth quarter. Mortgage put-backs on previously
originated products have abated and are currently appropriately reserved. The Company has actively
worked to reach global settlements with investors.
Summarizing new initiatives in the quarter, Mr. Wehmer concluded by noting, Late in the third
quarter we began a re-branding campaign of our wealth management line of business. All wealth
management services are now marketed under the Wintrust Wealth Management name. Our broker
dealer will continue to serve its customers using the well-recognized Wayne Hummer Investments brand. Trust services will now be marketed
under The Chicago Trust Company brand name while asset management services will now be marketed
using the Wintrust Capital Management brand name. Our Wintrust Commercial Banking office opened
and continues to develop its presence in the Chicago middle market place.
2
In closing, Mr. Wehmer added, During the third quarter of 2010 we completed our third
FDIC-assisted transaction by acquiring certain assets and liabilities of the banking operations of
Ravenswood Bank. We will continue to be actively involved in the FDIC-assisted transaction process
in desirable markets using a disciplined financial approach. We will also continue to evaluate
non-FDIC-assisted transactions as well as opportunities in our other lines of business following a
similarly disciplined approach.
See Acquisitions and Securitizations later in this document for additional explanations of
loan balance changes between comparable periods. The Companys loan portfolio is diversified among
a wide variety of loan types. Please see the tables included in the remainder of this document for
additional disclosures regarding the components of the commercial and commercial real estate
portfolio, the allowance for credit losses, loan portfolio aging statistics and purchased loans
subject to loss sharing agreements with the FDIC, which we refer to as covered loans.
3
Wintrusts key operating measures and growth rates for the third quarter of 2010 as compared
to the sequential and linked quarters are shown in the table below:
% or (4) | % or | |||||||||||||||||||
basis point (bp) | basis point (bp) | |||||||||||||||||||
change | change | |||||||||||||||||||
Three Months Ended | from | from | ||||||||||||||||||
September 30, | June 30, | September 30, | 2nd Quarter | 3rd Quarter | ||||||||||||||||
2010 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||
Net income |
$ | 20,098 | $ | 13,009 | $ | 31,995 | 54 | % | (37 | )% | ||||||||||
Net income per common share diluted |
$ | 0.47 | $ | 0.25 | $ | 1.07 | 88 | % | (56 | )% | ||||||||||
Core pre-tax earnings (2) |
$ | 47,572 | $ | 47,649 | $ | 37,137 | | % | 28 | % | ||||||||||
Net revenue (1) |
$ | 157,636 | $ | 154,750 | $ | 238,343 | 2 | % | (34 | )% | ||||||||||
Net interest income |
$ | 102,980 | $ | 104,314 | $ | 87,663 | (1 | )% | 17 | % | ||||||||||
Net interest margin (2) |
3.22 | % | 3.43 | % | 3.25 | % | (21 | )bp | (3 | )bp | ||||||||||
Net overhead ratio (3) |
1.28 | % | 1.26 | % | (1.95 | )% | 2 | bp | 323 | bp | ||||||||||
Return on average assets |
0.57 | % | 0.39 | % | 1.08 | % | 18 | bp | (51 | )bp | ||||||||||
Return on average common equity |
5.44 | % | 2.98 | % | 13.79 | % | 246 | bp | (835 | )bp | ||||||||||
At end of period |
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Total assets |
$ | 14,100,368 | $ | 13,708,560 | $ | 12,136,021 | 12 | % | 16 | % | ||||||||||
Total loans, excluding covered loans |
$ | 9,461,155 | $ | 9,324,163 | $ | 8,275,257 | 6 | % | 14 | % | ||||||||||
Total loans, including loans held-for-sale, excluding covered loans |
$ | 9,781,595 | $ | 9,562,144 | $ | 8,468,512 | 9 | % | 16 | % | ||||||||||
Total deposits |
$ | 10,962,239 | $ | 10,624,742 | $ | 9,847,163 | 13 | % | 11 | % | ||||||||||
Total shareholders equity |
$ | 1,398,912 | $ | 1,384,736 | $ | 1,106,082 | 4 | % | 26 | % |
(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 periods 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 Companys web site at
www.wintrust.com by choosing Financial Reports
under the Investor Relations heading, and then choosing Supplemental Financial Info.
4
Items Impacting Comparative Financial Results: Acquisitions, Securitization and
Stock Offerings/Regulatory Capital
Acquisitions
On August 17, 2010, the Company announced that its wholly-owned subsidiary bank, Wheaton
Bank & Trust Company (Wheaton) signed a Branch Purchase and Assumption Agreement whereby it
agreed to acquire a branch of First National Bank of Brookfield that is located in Naperville,
Illinois. The transaction closed on October 22, 2010 and the acquired operations will operate as
Naperville Bank & Trust. Through this transaction, subject to final adjustments, Wheaton Bank &
Trust Company acquired approximately $23 million of deposits, approximately $11 million of
performing loans, the property, bank facility and various other assets.
On August 6, 2010, the Company announced that its wholly-owned subsidiary bank, Northbrook
Bank & Trust Company (Northbrook), in an FDIC-assisted transaction, had acquired certain assets
and liabilities and the banking operations of Ravenswood Bank (Ravenswood). Ravenswood operated
one location in Chicago, Illinois and one in Mount Prospect, Illinois.
On April 23, 2010, the Company announced that Northbrook and Wheaton, in two FDIC-assisted
transactions, had acquired certain assets and liabilities and the banking operations of Lincoln
Park Savings Bank (Lincoln Park) and Wheatland Bank (Wheatland), respectively. Lincoln Park
operated four locations in Chicago, Illinois. Wheatland had one location in Naperville, Illinois.
In summary in the FDIC-assisted transactions:
| Northbrook assumed approximately $120 million of the outstanding deposits and approximately $188 million of assets of Ravenswood, prior to purchase accounting adjustments. | ||
| Northbrook assumed approximately $160 million of the outstanding deposits and approximately $170 million of assets of Lincoln Park, prior to purchase accounting adjustments. | ||
| Wheaton assumed approximately $400 million of the outstanding deposits and approximately $370 million of assets of Wheatland, prior to purchase accounting adjustments. |
These purchases were accounted for as business combinations as required by Accounting
Standards Codification (ASC) 805, Business Combinations (ASC 805), which became effective for the
Company beginning on January 1, 2009. Under ASC 805 a gain is recorded equal to the amount by which
the fair value of net assets purchased exceeded the purchase price. The Company recognized a gain
of $6.6 million in the third quarter of 2010 on the Ravenswood acquisition. The Company recognized gains of $22.3 million and $4.2 million
in the second
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quarter of 2010 on the Wheatland and Lincoln Park acquisitions, respectively. These
gains are shown as a gain on bargain purchases, which is a component of non-interest income, on the
Companys statements of income.
Loans comprise the majority of the assets acquired in the three FDIC-assisted transactions
above and are subject to loss sharing agreements with the FDIC where the FDIC has agreed to
reimburse the Company for 80% of losses incurred on the purchased loans. We refer to the loans
subject to these loss-sharing agreements as covered loans. Covered assets include covered loans,
covered OREO and certain other covered assets. The agreements with the FDIC require that the
Company follow certain servicing procedures or risk losing FDIC reimbursement of covered asset
losses.
On July 28, 2009, the Company announced that its indirect, wholly-owned subsidiary, First
Insurance Funding Corp. (FIFC) completed the purchase of a majority of the U.S. life insurance
premium finance assets of A.I. Credit Corp. and A.I. Credit Consumer Discount Company (the
seller), subsidiaries of American International Group, Inc. In doing so, FIFC acquired one of the
largest life insurance premium finance portfolios in the industry, as well as certain other assets
related to the life insurance premium finance business and assumed certain related liabilities. An
aggregate unpaid principal balance of $949.3 million was purchased for $685.3 million in cash.
In connection with the purchase of the life insurance premium finance business, the Company
recognized a $10.9 million gain in the first quarter of 2010, a $43.0 million gain in the fourth
quarter of 2009 and a $113.1 million
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gain in the third quarter of 2009. As of March 31, 2010, the
full amount of bargain purchase gain was recognized into income. The following table presents a
summary of the discount components for the life insurance premium finance portfolio purchase as of
September 30, 2010 and shows the changes in the balances from December 31, 2009:
Purchased Loan Portfolio
Summary of Acquisition
Summary of Acquisition
Credit | ||||||||
discounts - | ||||||||
non- | ||||||||
Accretable | accretable | |||||||
(Dollars in thousands) | discounts | discounts - | ||||||
Balances at December 31, 2009 |
$ | 65,026 | $ | 37,323 | ||||
- Accretion (effective yield method) |
(5,418 | ) | | |||||
- Accretion
recognized as accounts prepay |
(1,427 | ) | (2,289 | ) | ||||
- Discount used for loans written off |
(144 | ) | (1,044 | ) | ||||
Balances at March 31, 2010 |
$ | 58,037 | $ | 33,990 | ||||
- Accretion (effective yield method) |
(4,810 | ) | | |||||
- Accretion
recognized as accounts prepay |
(3,434 | ) | (3,418 | ) | ||||
- Reclassification from
nonaccretable to accretable |
1,986 | (1,986 | ) | |||||
- Discount used for loans written off |
| (369 | ) | |||||
Balances at June 30, 2010 |
$ | 51,779 | $ | 28,217 | ||||
- Accretion (effective yield method) |
(5,139 | ) | | |||||
- Accretion
recognized as accounts prepay |
(1,672 | ) | (1,680 | ) | ||||
- Reclassification to accretable
from nonaccretable |
(52 | ) | 52 | |||||
- Discount used for loans written off |
| (190 | ) | |||||
Balances at September 30, 2010 |
$ | 44,916 | $ | 26,399 | ||||
On April 20, 2009, Wintrust Capital Management (formerly known as Wayne Hummer Asset
Management Company) completed its purchase and assumption of certain assets and liabilities of
Advanced Investment Partners, LLC (AIP). AIP is an investment management firm specializing in
the active management of domestic equity investment strategies. The impact related to the AIP
transaction is included in Wintrusts consolidated financial results only since the effective date
of acquisition.
Securitization
Sale of Loans
On September 11, 2009, Wintrusts indirect, wholly-owned subsidiary, FIFC Premium Funding I,
LLC (the Issuer), sold $600,000,000 aggregate principal amount of its Series 2009-A Premium
Finance Asset Backed Notes, Class A (the Notes). The Notes were issued in a securitization
transaction sponsored by First Insurance Funding Corp. At the time of closing, the securitization
was an off-balance sheet financing transaction for the Company.
The Notes bear interest at an annual rate equal to one-month LIBOR plus 1.45% and have an
expected average term of 2.93 years; provided, however, that the entire unpaid balance of the Notes
shall be due and payable in full on February 17, 2014. At the time of issuance, the Notes were
eligible collateral under the Federal Reserve Bank of New Yorks Term Asset-Backed Securities Loan
Facility (TALF). The Issuers obligations under the
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Notes are secured by revolving loans made to
buyers of property and casualty insurance policies to finance the related premiums payable by the
buyers to the insurance companies for the policies. The premium finance loans will be transferred
from time to time by FIFC to FIFC Funding I, LLC (the Depositor) and by the Depositor to the
Issuer.
Change in Accounting Treatment
At September 30, 2009, prior to the existence of the securitization facility, all premium
finance loans held by the Company were reflected as loans on its balance sheet. At December 31,
2009, with the securitization facility in place, approximately $594 million of commercial premium
finance loans were held in the securitization facility and were not reflected on the Companys
balance sheet. In accordance with newly applicable accounting guidance, and as anticipated by the
Company, effective January 1, 2010 the securitization facility was recorded on the balance sheet of
the Company as a secured borrowing. As a result of this new guidance, the Companys balance sheet
since January 1, 2010 reflects all loans outstanding in the securitization facility, the $600
million of secured borrowing notes issued to the securitization investors and cash in the
securitization facility.
Stock Offerings/Regulatory Capital
On March 9, 2010, the Company announced the closing of its public offering of 5.8 million
shares of common stock at $33.25 per share. The Company received net proceeds of approximately
$182.9 million, after deducting underwriting discounts and commissions and estimated offering
expenses. On March 16, 2010, the Companys underwriters, who were granted a 30-day option to
purchase up to an additional 870,000 shares at a public offering price of $33.25 per share to cover
over-allotments, fully exercised this option for additional net
proceeds of approximately $27.5 million, after deducting underwriting discounts and
commissions and estimated offering expenses. In total, the Company sold 6.67 million shares for
net proceeds of approximately $210.3 million.
As of September 30, 2010, the Companys estimated capital ratios were 14.1% for total
risk-based capital, 12.7% for tier 1 risk-based capital and 10.0% for leverage, well above the well
capitalized guidelines. Additionally, the Companys tangible common equity ratio was 5.9% at
September 30, 2010.
Financial Performance Overview Third Quarter of 2010
For the third quarter of 2010, net interest income totaled $103.0 million, an increase of
$15.3 million as compared to the third quarter of 2009 and a decrease of $1.3 million as compared
to the second quarter of 2010. Average earning assets for the third quarter of 2010 increased by
$2.0 billion compared to the third quarter of 2009.
8
Earning asset growth over the past 12 months
was primarily a result of the $938 million increase in average loans and $725 million increase in
liquidity management assets. The acquisition of a life insurance premium finance portfolio and
subsequent growth in this product accounted for $714 million of the total loan growth over the past
12 months, while the three FDIC-assisted acquisitions accounted for $326 million of average covered
loan growth. The average earning asset growth of $2.0 billion over the past 12 months was funded
by a $647 million increase in the average balances of savings, NOW, MMA and Wealth Management
deposits, an increase in the average balance of net free funds of $416 million, an increase in the
average balance of retail certificates of deposit of $354 million, an increase of $600 million due
to the secured borrowing notes to the securitization investors and an increase in the average
balance of brokered certificates of deposit of $23 million, offset by a decrease in the average
balance of other wholesale borrowings of $42 million. The net interest margin for the third
quarter of 2010 was 3.22%, compared to 3.25% in the third quarter of 2009 and 3.43% in the second
quarter of 2010. The decline in net interest margin in the third quarter of 2010 compared to the
second quarter of 2010 was primarily caused by $3.2 million less accretion on the purchased life
insurance portfolio as less prepayments occurred (reduced net interest margin by 10 basis points),
higher balances and lower yields on liquidity management assets (reduced net interest margin by 14
basis points), the negative impact of selling certain collateralized mortgage obligations (reduced
net interest margin by nine basis points), offset by lower costs for interest-bearing deposits
(increased net interest margin by 11 basis points) and higher contribution from net free funds
(increased net interest margin by 1 basis point). The decrease in net interest margin in the third quarter of 2010 compared to the third quarter of 2009
resulted from the yield on earning assets decreasing 65 basis points and the yield on
interest-bearing liabilities decreasing 63 basis points.
Non-interest income totaled $54.7 million in the third quarter of 2010, decreasing $96.0
million, or 64%, compared to the third quarter of 2009 and increasing $4.2 million, or 8%, compared
to the second quarter of 2010. The decrease compared to the prior year was primarily attributable
to the bargain purchase gain related to the life insurance premium finance loan acquisition in the
third quarter of 2009 and lower trading gains, partially offset by an increase in mortgage banking
revenue and gains on available-for-sale securities. Mortgage banking revenue increased $7.8 million
when compared to the third quarter of 2009 as loans originated and sold to the secondary market
were $1.1 billion in the third quarter of 2010 compared to $960 million in the third quarter of
2009 and $732 million in the second quarter of 2010. Higher originations and sales to the
secondary market in the third quarter of 2010 as compared to the third quarter of 2009 directly
increased gains recognized on these sales. However, changes in the fair market value of mortgage
servicing rights, valuation fluctuations of mortgage banking derivatives and fair
9
value accounting
for certain residential mortgage loans held for sale lowered mortgage banking revenue in the
current quarter. Additionally, expenses recognized for the estimated liability associated with
mortgage loans previously sold with recourse to the secondary market decreased in the third quarter
of 2010 compared to the second quarter of 2010 as fewer investors, representing fewer loans,
requested the Company to indemnify them against losses on loans or to repurchase loans which the
investors believe do not comply with applicable representations. The Company recognized $1.4
million of expense in the third quarter of 2010, a decrease of $3.3 million compared to the second
quarter of 2010, and an increase of $1.4 million compared to the third quarter of 2009. Also, net
gains on available-for-sale securities increased $9.6 million in the third quarter of 2010 compared
to the prior year quarter, primarily related to the sale of certain collateralized mortgage
obligations. Trading income decreased by $5.5 million in the third quarter of 2010 when compared to
the third quarter of 2009 primarily due to realizing larger market value increases in the prior
year on certain collateralized mortgage obligations held in trading.
Early in July we liquidated approximately $160 million of collateralized mortgage obligations
that were acquired in the first quarter of 2009, recognizing a $7.7 million gain on
available-for-sale securities in the third quarter. The Company recorded $31.7 million of trading
gains on the trading component of these securities over the previous six quarters, which had an
initial investment of approximately $0.5 million. The available-for-sale component of these
securities yielded approximately 9% in the previous quarter. The absence of these securities
from our portfolio in the third quarter negatively impacted our net interest margin by nine
basis points and restrained the growth of our core pre-tax earnings compared to the second quarter.
Non-interest expense totaled $99.7 million in the third quarter of 2010, increasing $7.2
million, or 8%, compared to the third quarter of 2009 and increasing $7.1 million compared to the
second quarter of 2010. The increase compared to the third quarter of 2009 was primarily
attributable to a $8.9 million increase in salaries and employee benefits. The increase in
salaries and employee benefits was attributable to a $5.5 million increase in bonus and commissions
as variable pay based revenue increased (mortgage banking and wealth management), a $2.3 million
increase in salaries caused by the additional employees from the three FDIC-assisted transactions
and larger staffing related to Company growth, and $1.1 million increase from employee benefits
(primarily health plan related). Additionally, professional fees increased $466,000, primarily
related to increased legal costs related to non-performing assets and recent bank acquisitions, and
miscellaneous expenses increased $1.3 million. These increases were partially offset by a $5.5
million decrease in expenses related to other real estate owned, or OREO.
10
Financial Performance Overview First Nine Months of 2010
The net interest margin for the first nine months of 2010 was 3.34%, compared to 2.98% in
the first nine months of 2009. The increase in the net interest margin in the first nine months of
2010 when compared to the first nine months of 2009 is primarily attributable to the acquisition of
the life insurance premium finance portfolio and lower costs of interest-bearing deposits. The
yield on loans increased 8 basis points, however, the yield on total earning assets decreased by 32
basis points as the yield on liquidity management assets declined by 148 basis points, while the
rate paid on total interest-bearing deposits decreased by 78 basis points compared to the first
nine months of 2009. Average earning assets for the first nine months of 2010 increased by $2.0
billion compared to the first nine months of 2009. Earning asset growth for the first nine months
of 2010 compared to the same period in 2009 was primarily a result of the $1.1 billion increase in
average loans, a $669 million increase in liquidity management assets and $178 million of covered
loans. The acquisition of a life insurance premium finance portfolio and subsequent growth in this
product accounted for $996 million of the total loan growth for the first nine months of 2010
compared to the same period in 2009. The average earning asset growth of $2.0 billion was funded
by a $739 million increase in the average balances of savings, NOW, MMA and Wealth Management
deposits, an increase in the average balance of net free funds of $326 million, an increase in the
average balance of retail certificates of deposit of $356 million, an increase of $600 million due
to the secured borrowing notes to the securitization investors and an increase in the average
balance of brokered certificates of deposit of $46 million, offset by a decrease in the average
balance of other wholesale borrowings of $65 million.
Non-interest income totaled $147.7 million in the first nine months of 2010, decreasing $84.9
million, or 36%, compared to the first nine months of 2009. The decrease was primarily
attributable to the inclusion of the $113.1 million of bargain purchase gains recorded relating to
life insurance premium finance loan acquisition in the third quarter of 2009. In comparison,
during the first nine months of 2010, the Company recorded bargain purchase gains of $44.0 million
as described earlier under Acquisitions. Wealth management revenue contributed a $6.5 million
increase in non-interest income as improvements in the equity markets overall has led to a 32%
increase in wealth management revenue compared to the first nine months of 2009. Mortgage banking
revenue decreased $13.3 million when compared to the first nine months of 2009. Changes in the
fair market value of mortgage servicing rights, valuation fluctuations of mortgage banking
derivatives and fair value accounting for certain residential mortgage loans held for sale lowered
mortgage banking revenue in the first nine months of 2010. Additionally, expenses recognized for
the estimated liability associated with mortgage loans previously sold with recourse to the
11
secondary market were higher in the current year due to investors pushing back claims to the
originators of loans in default. The Company recognized $9.6 million of expense in the first nine
months of 2010 compared to no additional expense in the same period in the prior year. Also, net
gains on available-for-sale securities increased $10.6 million in the current year, primarily
related to the sale of certain collateralized mortgage obligations. Trading income decreased by
$18.1 million in the current year primarily due to realizing larger market value increases in the
prior year on certain collateralized mortgage obligations held in trading.
Non-interest expense totaled $276.3 million in the first nine months of 2010, increasing $22.6
million, or 9%, compared to the first nine months of 2009. The increase compared to the first nine
months of 2009 was primarily attributable to a $17.8 million increase in salaries and employee
benefits. The increase in salaries and employee benefits was attributable to a $7.9 million
increase in salaries caused by the additional employees from the three FDIC-assisted transactions
and larger staffing as the Company grows, a $6.3 million increase in bonus and commissions as
variable pay based revenue increased (mortgage banking and wealth management), and $3.6 million
increase from employee benefits (primarily health plan and payroll taxes). Additionally,
professional fees increased $1.8 million primarily related to increased legal costs related to
non-performing assets and recent bank acquisitions, and miscellaneous expenses increased $4.1
million. These increases were partially offset by a $1.7 million decrease in expenses related to
OREO and a decrease of $3.0 million in FDIC insurance expenses as the FDIC imposed an industry-wide
special assessment on financial institutions in the prior year second quarter.
Financial Performance Overview Credit Quality
Non-performing loans, excluding covered loans, totaled $134.3 million, or 1.42% of total
loans, at September 30, 2010, compared to $135.4 million, or 1.45% of total loans, at June 30, 2010
and $231.7 million, or 2.80% of total loans, at September 30, 2009. OREO, excluding covered OREO,
of $76.7 million at September 30, 2010 decreased $9.8 million compared to June 30, 2010 and
increased $36.0 million compared to September 30, 2009.
Since the latter half of 2009, management has focused on significantly lowering the Companys
level of non-performing loans. This was accomplished through a focus on gaining control or
obtaining possession of collateral from borrowers whose loans were in non-accrual status. Progress towards this goal
enabled a number of these
12
properties to be transferred to OREO. The properties the Company obtains
via foreclosure or via deed in lieu of foreclosure are aggressively marketed for sale.
Additionally, beginning in the fourth quarter of 2009, management has worked with financially
distressed borrowers to restructure current loans. These actions help distressed borrowers
maintain their homes or businesses and keep these loans in an accruing status for the Company. As
of September 30, 2010, a total of $93.7 million of outstanding loan balances qualified as
restructured loans, with $74.0 million of these modified loans in an accruing status.
The provision for credit losses totaled $25.5 million for the third quarter of 2010 compared
to $41.3 million for the second quarter of 2010 and $91.2 million in the third quarter of 2009.
Net charge-offs as a percentage of loans, excluding covered loans, for the third quarter of 2010
totaled 89 basis points on an annualized basis compared to 365 basis points on an annualized basis
in the third quarter of 2009 and 163 basis points on an annualized basis in the second quarter of
2010. In the second quarter of 2010, a fraud perpetrated against a number of premium finance
companies in the industry, including the property and casualty division of our premium financing
subsidiary, increased both our net charge-offs and our provision for loan losses by $15.7 million.
The allowance for credit losses at September 30, 2010 totaled $112.8 million, or 1.19% of
total loans, excluding covered loans, compared to $108.7 million, or 1.17% of total loans, at June
30, 2010 and $98.2 million, or 1.19% of total loans, at September 30, 2009.
13
WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights
Selected Financial Highlights
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Selected Financial Condition Data (at end of period): |
||||||||||||||||
Total assets |
$ | 14,100,368 | $ | 12,136,021 | ||||||||||||
Total loans, excluding covered loans |
9,461,155 | 8,275,257 | ||||||||||||||
Total deposits |
10,962,239 | 9,847,163 | ||||||||||||||
Junior subordinated debentures |
249,493 | 249,493 | ||||||||||||||
Total shareholders equity |
1,398,912 | 1,106,082 | ||||||||||||||
Selected Statements of Income Data: |
||||||||||||||||
Net interest income |
$ | 102,980 | $ | 87,663 | $ | 303,159 | $ | 224,942 | ||||||||
Net revenue (1) |
157,636 | 238,343 | 450,859 | 457,501 | ||||||||||||
Core pre-tax earnings (2) |
47,572 | 37,137 | 137,287 | 81,996 | ||||||||||||
Net income |
20,098 | 31,995 | 49,125 | 44,902 | ||||||||||||
Net income per common share Basic |
$ | 0.49 | $ | 1.14 | $ | 1.17 | $ | 1.26 | ||||||||
Net income per common share Diluted |
$ | 0.47 | $ | 1.07 | $ | 1.12 | $ | 1.25 | ||||||||
Selected Financial Ratios and Other Data: |
||||||||||||||||
Performance Ratios: |
||||||||||||||||
Net interest margin (2) |
3.22 | % | 3.25 | % | 3.34 | % | 2.98 | % | ||||||||
Non-interest income to average assets |
1.56 | % | 5.07 | % | 1.48 | % | 2.79 | % | ||||||||
Non-interest expense to average assets |
2.85 | % | 3.11 | % | 2.77 | % | 3.04 | % | ||||||||
Net overhead ratio (3) |
1.28 | % | (1.95 | )% | 1.29 | % | 0.25 | % | ||||||||
Efficiency ratio (2) (4) |
67.01 | % | 38.69 | % | 62.45 | % | 55.15 | % | ||||||||
Return on average assets |
0.57 | % | 1.08 | % | 0.49 | % | 0.54 | % | ||||||||
Return on average common equity |
5.44 | % | 13.79 | % | 4.43 | % | 5.16 | % | ||||||||
Average total assets |
$ | 14,015,757 | $ | 11,797,520 | $ | 13,322,460 | $ | 11,154,193 | ||||||||
Average total shareholders equity |
1,391,507 | 1,070,095 | 1,320,611 | 1,066,447 | ||||||||||||
Average loans to average deposits ratio (excluding covered loans) |
88.7 | % | 90.5 | % | 91.0 | % | 91.9 | % | ||||||||
Average loans to average deposits ratio (including covered loans) |
91.7 | % | 90.5 | % | 92.8 | % | 91.9 | % | ||||||||
Common Share Data at end of period: |
||||||||||||||||
Market price per common share |
$ | 32.41 | $ | 27.96 | ||||||||||||
Book value per common share |
$ | 35.70 | $ | 34.10 | ||||||||||||
Common shares outstanding |
31,143,740 | 24,103,068 | ||||||||||||||
Other Data at end of period:(9) |
||||||||||||||||
Leverage Ratio (5) |
10.0 | % | 9.3 | % | ||||||||||||
Tier 1 capital to risk-weighted assets (5) |
12.7 | % | 10.8 | % | ||||||||||||
Total capital to risk-weighted assets (5) |
14.1 | % | 12.3 | % | ||||||||||||
Tangible common equity ratio (TCE) (8) |
5.9 | % | 4.5 | % | ||||||||||||
Allowance for credit losses (6) |
$ | 112,807 | $ | 98,225 | ||||||||||||
Credit discounts on purchased premium finance receivables life insurance (7) |
$ | 26,399 | $ | 36,195 | ||||||||||||
Non-performing loans |
$ | 134,323 | $ | 231,659 | ||||||||||||
Allowance for credit losses to total loans (6) |
1.19 | % | 1.19 | % | ||||||||||||
Non-performing loans to total loans |
1.42 | % | 2.80 | % | ||||||||||||
Number of: |
||||||||||||||||
Bank subsidiaries |
15 | 15 | ||||||||||||||
Non-bank subsidiaries |
8 | 8 | ||||||||||||||
Banking offices |
85 | 78 | ||||||||||||||
(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 periods total average assets. A lower ratio indicates a higher degree of efficiency. | |
(4) | The efficiency ratio is calculated by dividing total non-interest expense by tax-equivalent net revenue (less securities gains or losses). A lower ratio indicates more efficient revenue generation. | |
(5) | Capital ratios for current quarter-end are estimated. | |
(6) | The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments. | |
(7) | Represents the credit discounts on purchased life insurance premium finance loans. | |
(8) | Total shareholders equity minus preferred stock and total intangible assets divided by total assets minus total intangible assets. | |
(9) | Asset quality ratios exclude covered loans. |
14
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited) | (Unaudited) | |||||||||||
September 30, | December 31, | September 30, | ||||||||||
(In thousands) | 2010 | 2009 | 2009 | |||||||||
Assets |
||||||||||||
Cash and due from banks |
$ | 155,067 | $ | 135,133 | $ | 128,898 | ||||||
Federal funds sold and securities purchased under resale agreements |
88,913 | 23,483 | 22,863 | |||||||||
Interest-bearing deposits with other banks |
1,224,584 | 1,025,663 | 1,168,362 | |||||||||
Available-for-sale securities, at fair value |
1,324,179 | 1,255,066 | 1,362,359 | |||||||||
Trading account securities |
4,935 | 33,774 | 29,204 | |||||||||
Brokerage customer receivables |
25,442 | 20,871 | 19,441 | |||||||||
Federal Home Loan Bank and Federal Reserve Bank stock, at cost |
80,445 | 73,749 | 71,889 | |||||||||
Loans held-for-sale |
320,440 | 275,715 | 193,255 | |||||||||
Loans, net of unearned income, excluding covered loans |
9,461,155 | 8,411,771 | 8,275,257 | |||||||||
Covered loans |
353,840 | | | |||||||||
Total loans |
9,814,995 | 8,411,771 | 8,275,257 | |||||||||
Less: Allowance for loan losses |
110,432 | 98,277 | 95,096 | |||||||||
Net loans |
9,704,563 | 8,313,494 | 8,180,161 | |||||||||
Premises and equipment, net |
353,445 | 350,345 | 352,890 | |||||||||
FDIC indemnification asset |
161,640 | | | |||||||||
Accrued interest receivable and other assets |
365,496 | 416,678 | 315,806 | |||||||||
Goodwill |
278,025 | 278,025 | 276,525 | |||||||||
Other intangible assets |
13,194 | 13,624 | 14,368 | |||||||||
Total assets |
$ | 14,100,368 | $ | 12,215,620 | $ | 12,136,021 | ||||||
Liabilities and Shareholders Equity |
||||||||||||
Deposits: |
||||||||||||
Non-interest bearing |
$ | 1,042,730 | $ | 864,306 | $ | 841,668 | ||||||
Interest bearing |
9,919,509 | 9,052,768 | 9,005,495 | |||||||||
Total deposits |
10,962,239 | 9,917,074 | 9,847,163 | |||||||||
Notes payable |
1,000 | 1,000 | 1,000 | |||||||||
Federal Home Loan Bank advances |
414,832 | 430,987 | 433,983 | |||||||||
Other borrowings |
241,522 | 247,437 | 252,071 | |||||||||
Secured borrowings owed to securitization investors |
600,000 | | | |||||||||
Subordinated notes |
55,000 | 60,000 | 65,000 | |||||||||
Junior subordinated debentures |
249,493 | 249,493 | 249,493 | |||||||||
Trade date securities payable |
2,045 | | | |||||||||
Accrued interest payable and other liabilities |
175,325 | 170,990 | 181,229 | |||||||||
Total liabilities |
12,701,456 | 11,076,981 | 11,029,939 | |||||||||
Shareholders Equity: |
||||||||||||
Preferred stock |
287,234 | 284,824 | 284,061 | |||||||||
Common stock |
31,145 | 27,079 | 26,965 | |||||||||
Surplus |
682,318 | 589,939 | 580,988 | |||||||||
Treasury stock |
(51 | ) | (122,733 | ) | (122,437 | ) | ||||||
Retained earnings |
394,323 | 366,152 | 342,873 | |||||||||
Accumulated other comprehensive income (loss) |
3,943 | (6,622 | ) | (6,368 | ) | |||||||
Total shareholders equity |
1,398,912 | 1,138,639 | 1,106,082 | |||||||||
Total liabilities and shareholders equity |
$ | 14,100,368 | $ | 12,215,620 | $ | 12,136,021 | ||||||
15
WINTRUST
FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(In thousands, except per share data) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Interest income |
||||||||||||||||
Interest and fees on loans |
$ | 137,902 | $ | 126,448 | $ | 403,244 | $ | 343,637 | ||||||||
Interest bearing deposits with banks |
1,339 | 778 | 3,828 | 2,205 | ||||||||||||
Federal funds sold and securities purchased under resale agreements |
35 | 106 | 118 | 233 | ||||||||||||
Securities |
7,438 | 13,677 | 29,668 | 42,977 | ||||||||||||
Trading account securities |
19 | 7 | 383 | 86 | ||||||||||||
Brokerage customer receivables |
180 | 132 | 484 | 372 | ||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stock |
488 | 429 | 1,419 | 1,275 | ||||||||||||
Total interest income |
147,401 | 141,577 | 439,144 | 390,785 | ||||||||||||
Interest expense |
||||||||||||||||
Interest on deposits |
31,088 | 42,806 | 95,926 | 132,261 | ||||||||||||
Interest on Federal Home Loan Bank advances |
4,042 | 4,536 | 12,482 | 13,492 | ||||||||||||
Interest on notes payable and other borrowings |
1,411 | 1,779 | 4,312 | 5,401 | ||||||||||||
Interest on secured borrowings owed to securitization investors |
3,167 | | 9,276 | | ||||||||||||
Interest on subordinated notes |
265 | 333 | 762 | 1,341 | ||||||||||||
Interest on junior subordinated debentures |
4,448 | 4,460 | 13,227 | 13,348 | ||||||||||||
Total interest expense |
44,421 | 53,914 | 135,985 | 165,843 | ||||||||||||
Net interest income |
102,980 | 87,663 | 303,159 | 224,942 | ||||||||||||
Provision for credit losses |
25,528 | 91,193 | 95,870 | 129,329 | ||||||||||||
Net interest income after provision for credit losses |
77,452 | (3,530 | ) | 207,289 | 95,613 | |||||||||||
Non-interest income |
||||||||||||||||
Wealth management |
8,973 | 7,501 | 26,833 | 20,310 | ||||||||||||
Mortgage banking |
20,980 | 13,204 | 38,693 | 52,032 | ||||||||||||
Service charges on deposit accounts |
3,384 | 3,447 | 10,087 | 9,600 | ||||||||||||
Gain on sales of commercial premium finance receivables |
| 3,629 | | 4,147 | ||||||||||||
Gains (losses) on available-for-sale securities, net |
9,235 | (412 | ) | 9,673 | (910 | ) | ||||||||||
Gain on bargain purchases |
6,593 | 113,062 | 43,981 | 113,062 | ||||||||||||
Trading gains (losses) |
712 | 6,236 | 5,147 | 23,254 | ||||||||||||
Other |
4,779 | 4,013 | 13,286 | 11,064 | ||||||||||||
Total non-interest income |
54,656 | 150,680 | 147,700 | 232,559 | ||||||||||||
Non-interest expense |
||||||||||||||||
Salaries and employee benefits |
57,014 | 48,088 | 156,735 | 138,923 | ||||||||||||
Equipment |
4,203 | 4,069 | 12,144 | 12,022 | ||||||||||||
Occupancy, net |
6,254 | 5,884 | 18,517 | 17,682 | ||||||||||||
Data processing |
3,891 | 3,226 | 10,967 | 9,578 | ||||||||||||
Advertising and marketing |
1,650 | 1,488 | 4,434 | 4,003 | ||||||||||||
Professional fees |
4,555 | 4,089 | 11,619 | 9,843 | ||||||||||||
Amortization of other intangible assets |
701 | 677 | 2,020 | 2,040 | ||||||||||||
FDIC insurance |
4,642 | 4,334 | 13,456 | 16,468 | ||||||||||||
OREO expenses, net |
4,767 | 10,243 | 11,948 | 13,671 | ||||||||||||
Other |
12,046 | 10,465 | 34,484 | 29,540 | ||||||||||||
Total non-interest expense |
99,723 | 92,563 | 276,324 | 253,770 | ||||||||||||
Income before taxes |
32,385 | 54,587 | 78,665 | 74,402 | ||||||||||||
Income tax expense |
12,287 | 22,592 | 29,540 | 29,500 | ||||||||||||
Net income |
$ | 20,098 | $ | 31,995 | $ | 49,125 | $ | 44,902 | ||||||||
Preferred stock dividends and discount accretion |
$ | 4,943 | $ | 4,668 | $ | 14,830 | $ | 14,668 | ||||||||
Net income applicable to common shares |
$ | 15,155 | $ | 27,327 | $ | 34,295 | $ | 30,234 | ||||||||
Net income per common share Basic |
$ | 0.49 | $ | 1.14 | $ | 1.17 | $ | 1.26 | ||||||||
Net income per common share Diluted |
$ | 0.47 | $ | 1.07 | $ | 1.12 | $ | 1.25 | ||||||||
Cash dividends declared per common share |
$ | 0.09 | $ | 0.09 | $ | 0.18 | $ | 0.27 | ||||||||
Weighted average common shares outstanding |
31,117 | 24,052 | 29,396 | 23,958 | ||||||||||||
Dilutive potential common shares |
988 | 2,493 | 1,132 | 323 | ||||||||||||
Average common shares and dilutive common shares |
32,105 | 26,545 | 30,528 | 24,281 | ||||||||||||
16
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 Companys performance. These include taxable-equivalent net interest income (including
its individual components), net interest margin (including its individual components), the
efficiency ratio, tangible common equity and core pre-tax earnings. Management believes that these
measures and ratios provide users of the Companys financial information a more meaningful view of
the performance of the interest-earning assets and interest-bearing liabilities and of the
Companys operating efficiency. Other financial holding companies may define or calculate these
measures and ratios differently.
Management reviews yields on certain asset categories and the net interest margin of the Company
and its banking subsidiaries on a fully taxable-equivalent (FTE) basis. In this non-GAAP
presentation, net interest income is adjusted to reflect tax-exempt interest income on an
equivalent before-tax basis. This measure ensures comparability of net interest income arising
from both taxable and tax-exempt sources. Net interest income on a FTE basis is also used in the
calculation of the Companys 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. Core pre-tax earnings is adjusted to exclude the provision for credit losses and certain
significant items.
A reconciliation of certain non-GAAP performance measures and ratios used by the Company to
evaluate and measure the Companys performance to the most directly comparable GAAP financial
measures is shown below:
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | |||||||||||||||||||||||
(Dollars in thousands) | 2010 | 2010 | 2010 | 2009 | 2009 | 2010 | 2009 | |||||||||||||||||||||
(A) Interest Income (GAAP) |
$ | 147,401 | $ | 149,248 | $ | 142,496 | $ | 136,829 | $ | 141,577 | $ | 439,144 | $ | 390,785 | ||||||||||||||
Taxable-equivalent adjustment: |
||||||||||||||||||||||||||||
- Loans |
85 | 90 | 80 | 99 | 93 | 254 | 360 | |||||||||||||||||||||
- Liquidity management assets |
324 | 366 | 361 | 406 | 413 | 1,051 | 1,314 | |||||||||||||||||||||
- Other earning assets |
7 | 5 | 5 | 9 | 9 | 16 | 30 | |||||||||||||||||||||
Interest Income FTE |
$ | 147,817 | $ | 149,709 | $ | 142,942 | $ | 137,343 | $ | 142,092 | $ | 440,465 | $ | 392,489 | ||||||||||||||
(B) Interest Expense (GAAP) |
$ | 44,421 | $ | 44,934 | $ | 46,631 | $ | 49,895 | $ | 53,914 | $ | 135,985 | $ | 165,843 | ||||||||||||||
Net interest income FTE |
103,396 | 104,775 | 96,311 | 87,448 | 88,178 | 304,480 | 226,646 | |||||||||||||||||||||
(C) Net Interest Income (GAAP) (A minus B) |
$ | 102,980 | $ | 104,314 | $ | 95,865 | $ | 86,934 | $ | 87,663 | $ | 303,159 | $ | 224,942 | ||||||||||||||
(D) Net interest margin (GAAP) |
3.20 | % | 3.42 | % | 3.36 | % | 3.08 | % | 3.23 | % | 3.32 | % | 2.95 | % | ||||||||||||||
Net interest margin FTE |
3.22 | % | 3.43 | % | 3.38 | % | 3.10 | % | 3.25 | % | 3.34 | % | 2.98 | % | ||||||||||||||
(E) Efficiency ratio (GAAP) |
67.20 | % | 59.90 | % | 60.79 | % | 52.70 | % | 38.77 | % | 62.63 | % | 55.36 | % | ||||||||||||||
Efficiency ratio FTE |
67.01 | % | 59.72 | % | 60.59 | % | 52.54 | % | 38.69 | % | 62.45 | % | 55.15 | % | ||||||||||||||
Calculation of Tangible Common Equity ratio
(at period end) |
||||||||||||||||||||||||||||
Total shareholders equity |
$ | 1,398,912 | $ | 1,384,736 | $ | 1,364,832 | $ | 1,138,639 | $ | 1,106,082 | ||||||||||||||||||
Less: Preferred stock |
(287,234 | ) | (286,460 | ) | (285,642 | ) | (284,824 | ) | (284,061 | ) | ||||||||||||||||||
Less: Intangible assets |
(291,219 | ) | (291,300 | ) | (291,003 | ) | (291,649 | ) | (290,893 | ) | ||||||||||||||||||
(F) Total tangible shareholders equity |
$ | 820,459 | $ | 806,976 | $ | 788,187 | $ | 562,166 | $ | 531,128 | ||||||||||||||||||
Total assets |
$ | 14,100,368 | $ | 13,708,560 | $ | 12,839,978 | $ | 12,215,620 | $ | 12,136,021 | ||||||||||||||||||
Less: Intangible assets |
(291,219 | ) | (291,300 | ) | (291,003 | ) | (291,649 | ) | (290,893 | ) | ||||||||||||||||||
(G) Total tangible assets |
$ | 13,809,149 | $ | 13,417,260 | $ | 12,548,975 | $ | 11,923,971 | $ | 11,845,128 | ||||||||||||||||||
Tangible common equity ratio (F/G) |
5.9 | % | 6.0 | % | 6.3 | % | 4.7 | % | 4.5 | % | ||||||||||||||||||
Income before taxes |
$ | 32,385 | $ | 20,790 | $ | 25,490 | $ | 43,102 | $ | 54,587 | $ | 78,665 | $ | 74,402 | ||||||||||||||
Add: Provision for credit losses |
25,528 | 41,297 | 29,044 | 38,603 | 91,193 | 95,870 | 129,329 | |||||||||||||||||||||
Add: OREO expenses, net |
4,767 | 5,843 | 1,337 | 5,293 | 10,243 | 11,948 | 13,671 | |||||||||||||||||||||
Add: Recourse obligation on loans previously sold |
1,432 | 4,721 | 3,452 | 937 | | 9,605 | | |||||||||||||||||||||
Less: Gain on bargain purchases |
(6,593 | ) | (26,494 | ) | (10,894 | ) | (42,951 | ) | (113,062 | ) | (43,981 | ) | (113,062 | ) | ||||||||||||||
Less: Trading (gains) losses |
(712 | ) | 1,538 | (5,973 | ) | (4,437 | ) | (6,236 | ) | (5,147 | ) | (23,254 | ) | |||||||||||||||
Less: (Gains) losses on available-for-sale
securities, net |
(9,235 | ) | (46 | ) | (392 | ) | (642 | ) | 412 | (9,673 | ) | 910 | ||||||||||||||||
Core pre-tax earnings |
$ | 47,572 | $ | 47,649 | $ | 42,064 | $ | 39,905 | $ | 37,137 | $ | 137,287 | $ | 81,996 | ||||||||||||||
17
LOANS
Loan Portfolio Mix and Growth Rates | % Growth | |||||||||||||||||||
From (1) | From | |||||||||||||||||||
September 30, | December 31, | September 30, | December 31, | September 30, | ||||||||||||||||
(Dollars in thousands) | 2010 | 2009 | 2009 | 2009 | 2009 | |||||||||||||||
Balance: |
||||||||||||||||||||
Commercial |
$ | 1,952,791 | $ | 1,743,208 | $ | 1,643,721 | 16 | % | 19 | % | ||||||||||
Commercial real estate |
3,331,498 | 3,296,698 | 3,392,138 | 1 | (2 | ) | ||||||||||||||
Home equity |
919,824 | 930,482 | 928,548 | (2 | ) | (1 | ) | |||||||||||||
Residential real-estate |
342,009 | 306,296 | 281,151 | 16 | 22 | |||||||||||||||
Premium finance receivables commercial |
1,323,934 | 730,144 | 752,032 | 109 | 76 | |||||||||||||||
Premium finance receivables life insurance |
1,434,994 | 1,197,893 | 1,045,653 | 26 | 37 | |||||||||||||||
Indirect consumer (2) |
56,575 | 98,134 | 115,528 | (57 | ) | (51 | ) | |||||||||||||
Consumer and other |
99,530 | 108,916 | 116,486 | (12 | ) | (15 | ) | |||||||||||||
Total loans, net of
unearned income,
excluding covered loans |
$ | 9,461,155 | $ | 8,411,771 | $ | 8,275,257 | 17 | % | 14 | % | ||||||||||
Covered loans |
353,840 | $ | | | 100 | 100 | ||||||||||||||
Total loans, net of
unearned income |
$ | 9,814,995 | $ | 8,411,771 | $ | 8,275,257 | 22 | % | 19 | % | ||||||||||
Mix: |
||||||||||||||||||||
Commercial |
20 | % | 21 | % | 20 | % | ||||||||||||||
Commercial real estate |
34 | 39 | 41 | |||||||||||||||||
Home equity |
9 | 11 | 11 | |||||||||||||||||
Residential real-estate |
3 | 4 | 4 | |||||||||||||||||
Premium finance receivables commercial |
13 | 9 | 9 | |||||||||||||||||
Premium finance receivables life insurance |
15 | 14 | 13 | |||||||||||||||||
Indirect consumer (2) |
1 | 1 | 1 | |||||||||||||||||
Consumer and other |
1 | 1 | 1 | |||||||||||||||||
Total loans, net of
unearned income,
excluding covered loans |
96 | % | 100 | % | 100 | % | ||||||||||||||
Covered loans |
4 | $ | | | ||||||||||||||||
Total loans, net of
unearned income |
100 | % | 100 | % | 100 | % | ||||||||||||||
(1) | Annualized | |
(2) | Includes autos, boats, snowmobiles and other indirect consumer loans. |
18
Commercial
and Real-Estate Loans, excluding covered loans |
> 90 Days | Allowance | ||||||||||||||||||
As
of September 30, 2010 |
% of | Past Due | For Loan | |||||||||||||||||
Total | and Still | Losses | ||||||||||||||||||
(Dollars in thousands) | Balance | Loans | Nonaccrual | Accruing | Allocation | |||||||||||||||
Commercial: |
||||||||||||||||||||
Commercial and industrial |
$ | 1,540,584 | 16.3 | % | $ | 18,779 | $ | | $ | 28,165 | ||||||||||
Franchise |
115,380 | 1.2 | | | 1,238 | |||||||||||||||
Mortgage warehouse lines of credit |
158,597 | 1.7 | | | 1,631 | |||||||||||||||
Community Advantage homeowner associations |
66,484 | 0.7 | | | 177 | |||||||||||||||
Aircraft |
36,522 | 0.4 | | | 363 | |||||||||||||||
Other |
35,224 | 0.3 | 665 | | 432 | |||||||||||||||
Total commercial |
$ | 1,952,791 | 20.6 | % | $ | 19,444 | $ | | $ | 32,006 | ||||||||||
Commercial Real-Estate: |
||||||||||||||||||||
Residential construction |
$ | 102,911 | 1.1 | % | $ | 4,921 | $ | | $ | 2,764 | ||||||||||
Commercial construction |
179,667 | 1.9 | 11,230 | | 4,097 | |||||||||||||||
Land |
263,363 | 2.8 | 27,134 | | 11,342 | |||||||||||||||
Office |
537,868 | 5.6 | 5,745 | | 7,231 | |||||||||||||||
Industrial |
472,556 | 5.0 | 3,565 | | 5,264 | |||||||||||||||
Retail |
492,633 | 5.2 | 2,084 | | 6,732 | |||||||||||||||
Multi-family |
279,127 | 3.0 | 9,339 | | 4,283 | |||||||||||||||
Mixed use and other |
1,003,373 | 10.6 | 19,322 | | 14,818 | |||||||||||||||
Total commercial real-estate |
$ | 3,331,498 | 35.2 | % | $ | 83,340 | $ | | $ | 56,531 | ||||||||||
Total commercial and commercial
real-estate |
$ | 5,284,289 | 55.8 | % | $ | 102,784 | $ | | $ | 88,537 | ||||||||||
Commercial real-estate collateral location by state: |
||||||||||||||||||||
Illinois |
$ | 2,692,839 | 80.8 | % | ||||||||||||||||
Wisconsin |
363,498 | 10.9 | ||||||||||||||||||
Total primary markets |
$ | 3,056,337 | 91.7 | % | ||||||||||||||||
Florida |
69,204 | 2.1 | ||||||||||||||||||
Arizona |
43,294 | 1.3 | ||||||||||||||||||
Indiana |
42,990 | 1.3 | ||||||||||||||||||
Other (no individual state greater than 0.7%) |
119,673 | 3.6 | ||||||||||||||||||
Total |
$ | 3,331,498 | 100.0 | % | ||||||||||||||||
19
DEPOSITS
Deposit
Portfolio Mix and Growth Rates |
% Growth | |||||||||||||||||||
From (1) | From | |||||||||||||||||||
September 30, | December 31, | September 30, | December 31, | September 30, | ||||||||||||||||
(Dollars in thousands) | 2010 | 2009 | 2009 | 2009 | 2009 | |||||||||||||||
Balance: |
||||||||||||||||||||
Non-interest bearing |
$ | 1,042,730 | $ | 864,306 | $ | 841,668 | 28 | % | 24 | % | ||||||||||
NOW |
1,551,749 | 1,415,856 | 1,245,689 | 13 | 25 | |||||||||||||||
Wealth Management deposits (2) |
710,435 | 971,113 | 935,740 | (36 | ) | (24 | ) | |||||||||||||
Money Market |
1,746,168 | 1,534,632 | 1,468,228 | 18 | 19 | |||||||||||||||
Savings |
713,823 | 561,916 | 513,239 | 36 | 39 | |||||||||||||||
Time certificates of deposit |
5,197,334 | 4,569,251 | 4,842,599 | 18 | 7 | |||||||||||||||
Total deposits |
$ | 10,962,239 | $ | 9,917,074 | $ | 9,847,163 | 14 | % | 11 | % | ||||||||||
Mix: |
||||||||||||||||||||
Non-interest bearing |
10 | % | 9 | % | 9 | % | ||||||||||||||
NOW |
14 | 14 | 13 | |||||||||||||||||
Wealth Management deposits (2) |
6 | 10 | 9 | |||||||||||||||||
Money Market |
16 | 15 | 15 | |||||||||||||||||
Savings |
7 | 6 | 5 | |||||||||||||||||
Time certificates of deposit |
47 | 46 | 49 | |||||||||||||||||
Total deposits |
100 | % | 100 | % | 100 | % | ||||||||||||||
(1) | Annualized | |
(2) | Represents deposit balances of the Companys subsidiary banks from brokerage customers of Wayne Hummer Investments, trust and asset management customers of The Chicago Trust Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts of the Banks. |
Deposit Maturity Analysis |
Weighted- | |||||||||||||||||||||||
As
of September 30, 2010 |
Non- | Average | ||||||||||||||||||||||
Interest | Savings | Rate of | ||||||||||||||||||||||
Bearing | and | Time | Maturing Time | |||||||||||||||||||||
and | Money | Wealth | Certificates | Total | Certificates | |||||||||||||||||||
(Dollars in thousands) | NOW (1) | Market (1) | Mgt (1) (2) | of Deposit | Deposits | of Deposit | ||||||||||||||||||
1-3 months |
$ | 2,594,479 | $ | 2,459,991 | $ | 710,435 | $ | 1,211,805 | $ | 6,976,710 | 1.55 | % | ||||||||||||
4-6 months |
829,519 | 829,519 | 1.57 | |||||||||||||||||||||
7-9 months |
674,904 | 674,904 | 1.84 | |||||||||||||||||||||
10-12 months |
548,572 | 548,572 | 1.60 | |||||||||||||||||||||
13-18 months |
661,811 | 661,811 | 1.84 | |||||||||||||||||||||
19-24 months |
513,866 | 513,866 | 1.88 | |||||||||||||||||||||
24+ months |
756,857 | 756,857 | 2.40 | |||||||||||||||||||||
Total deposits |
$ | 2,594,479 | $ | 2,459,991 | $ | 710,435 | $ | 5,197,334 | $ | 10,962,239 | 1.79 | % | ||||||||||||
(1) | Balances of non-contractual maturity deposits are shown as maturing in the earliest time frame. These deposits do not have contractual maturities and re-price in varying degrees to changes in interest rates. | |
(2) | Wealth management deposit balances from unaffiliated companies are shown maturing in the period in which the current contractual obligation to hold these funds matures. |
20
NET INTEREST INCOME
The following table presents a summary of Wintrusts average balances, net interest income and
related net interest margins, calculated on a fully tax-equivalent basis, for the third quarter of
2010 compared to the third quarter of 2009 (linked quarters):
For the Three Months Ended | For the Three Months Ended | |||||||||||||||||||||||
September 30, 2010 | September 30, 2009 | |||||||||||||||||||||||
(Dollars in thousands) | Average | Interest | Rate | Average | Interest | Rate | ||||||||||||||||||
Liquidity management assets (1) (2) (7) |
$ | 2,802,964 | $ | 9,625 | 1.36 | % | $ | 2,078,330 | $ | 15,403 | 2.94 | % | ||||||||||||
Other earning assets (2) (3) (7) |
34,263 | 205 | 2.37 | 24,874 | 148 | 2.36 | ||||||||||||||||||
Loans, net of unearned income (2) (4) (7) |
9,603,561 | 134,016 | 5.54 | 8,665,281 | 126,541 | 5.79 | ||||||||||||||||||
Covered loans |
325,751 | 3,971 | 4.84 | | | | ||||||||||||||||||
Total earning assets (7) |
$ | 12,766,539 | $ | 147,817 | 4.59 | % | $ | 10,768,485 | $ | 142,092 | 5.24 | % | ||||||||||||
Allowance for loan losses |
(113,631 | ) | (85,300 | ) | ||||||||||||||||||||
Cash and due from banks |
154,078 | 109,645 | ||||||||||||||||||||||
Other assets |
1,208,771 | 1,004,690 | ||||||||||||||||||||||
Total assets |
$ | 14,015,757 | $ | 11,797,520 | ||||||||||||||||||||
Interest-bearing deposits |
$ | 9,823,525 | $ | 31,088 | 1.26 | % | $ | 8,799,578 | $ | 42,806 | 1.93 | % | ||||||||||||
Federal Home Loan Bank advances |
414,789 | 4,042 | 3.87 | 434,134 | 4,536 | 4.14 | ||||||||||||||||||
Notes payable and other borrowings |
232,991 | 1,411 | 2.40 | 245,352 | 1,779 | 2.88 | ||||||||||||||||||
Secured borrowings owed to securitization investors |
600,000 | 3,167 | 2.09 | | | | ||||||||||||||||||
Subordinated notes |
55,000 | 265 | 1.89 | 65,000 | 333 | 2.01 | ||||||||||||||||||
Junior subordinated notes |
249,493 | 4,448 | 6.98 | 249,493 | 4,460 | 6.99 | ||||||||||||||||||
Total interest-bearing liabilities |
$ | 11,375,798 | $ | 44,421 | 1.55 | % | $ | 9,793,557 | $ | 53,914 | 2.18 | % | ||||||||||||
Non-interest bearing liabilities |
1,005,170 | 775,202 | ||||||||||||||||||||||
Other liabilities |
243,282 | 158,666 | ||||||||||||||||||||||
Equity |
1,391,507 | 1,070,095 | ||||||||||||||||||||||
Total liabilities and shareholders equity |
$ | 14,015,757 | $ | 11,797,520 | ||||||||||||||||||||
Interest rate spread (5) (7) |
3.04 | % | 3.06 | % | ||||||||||||||||||||
Net free funds/contribution (6) |
$ | 1,390,741 | 0.18 | % | $ | 974,928 | 0.19 | % | ||||||||||||||||
Net interest income/Net interest margin (7) |
$ | 103,396 | 3.22 | % | $ | 88,178 | 3.25 | % | ||||||||||||||||
(1) | Liquidity management assets include available-for-sale securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements. | |
(2) | Interest income on tax-advantaged loans, trading securities and securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the three months ended September 30, 2010 and 2009 were $416,000 and $515,000, respectively. | |
(3) | Other earning assets include brokerage customer receivables and trading account securities. | |
(4) | Loans, net of unearned income, include loans held-for-sale and non-accrual loans. | |
(5) | Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities. | |
(6) | Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities. | |
(7) | See Supplemental Financial Measures/Ratios for additional information on this performance ratio. |
The higher level of net interest income recorded in the third quarter of 2010 compared to the
third quarter of 2009 was primarily attributable to the impact of the presence of the life
insurance premium finance assets acquired in the second half of 2009 and lower retail deposit costs
during the third quarter of 2010. Approximately $714 million of the increase in average total
loans is attributable to life insurance premium finance loans including those purchased in the
transaction or originated by the Company.
In the third quarter of 2010, the yield on earning assets decreased 65 basis points as the yield on
liquidity management assets declined by 158 basis points and the rate on interest-bearing
liabilities decreased 63 basis points compared to the third quarter of 2009. Retail deposit
re-pricing opportunities over the past 12 months, due to a sustained low interest rate environment
and more stable financial markets, contributed to the majority of this decreased cost. The rate
paid on interest-bearing deposits decreased 67 basis points when compared to the third quarter of
2009.
21
The following table presents a summary of Wintrusts average balances, net interest income and
related net interest margins, calculated on a fully tax-equivalent basis, for the third quarter of
2010 compared to the second quarter of 2010 (sequential quarters):
For the Three Months Ended | For the Three Months Ended | |||||||||||||||||||||||
September 30, 2010 | June 30, 2010 | |||||||||||||||||||||||
(Dollars in thousands) | Average | Interest | Rate | Average | Interest | Rate | ||||||||||||||||||
Liquidity
management assets (1) (2) (7) |
$ | 2,802,964 | $ | 9,625 | 1.36 | % | $ | 2,613,179 | $ | 13,305 | 2.04 | % | ||||||||||||
Other
earning assets (2) (3) (7) |
34,263 | 205 | 2.37 | 62,874 | 515 | 3.28 | ||||||||||||||||||
Loans, net
of unearned income (2) (4) (7) |
9,603,561 | 134,016 | 5.54 | 9,356,033 | 133,207 | 5.71 | ||||||||||||||||||
Covered loans |
325,751 | 3,971 | 4.84 | 210,030 | 2,682 | 5.12 | ||||||||||||||||||
Total
earning assets (7) |
$ | 12,766,539 | $ | 147,817 | 4.59 | % | $ | 12,242,116 | $ | 149,709 | 4.91 | % | ||||||||||||
Allowance for loan losses |
(113,631 | ) | (108,764 | ) | ||||||||||||||||||||
Cash and due from banks |
154,078 | 137,531 | ||||||||||||||||||||||
Other assets |
1,208,771 | 1,119,654 | ||||||||||||||||||||||
Total assets |
$ | 14,015,757 | $ | 13,390,537 | ||||||||||||||||||||
Interest-bearing deposits |
$ | 9,823,525 | $ | 31,088 | 1.26 | % | $ | 9,348,541 | $ | 31,626 | 1.36 | % | ||||||||||||
Federal Home Loan Bank advances |
414,789 | 4,042 | 3.87 | 417,835 | 4,094 | 3.93 | ||||||||||||||||||
Notes payable and other borrowings |
232,991 | 1,411 | 2.40 | 217,751 | 1,439 | 2.65 | ||||||||||||||||||
Secured borrowings owed to securitization investors |
600,000 | 3,167 | 2.09 | 600,000 | 3,115 | 2.08 | ||||||||||||||||||
Subordinated notes |
55,000 | 265 | 1.89 | 57,198 | 256 | 1.77 | ||||||||||||||||||
Junior subordinated notes |
249,493 | 4,448 | 6.98 | 249,493 | 4,404 | 6.98 | ||||||||||||||||||
Total interest-bearing liabilities |
$ | 11,375,798 | $ | 44,421 | 1.55 | % | $ | 10,890,818 | $ | 44,934 | 1.65 | % | ||||||||||||
Non-interest bearing liabilites |
1,005,170 | 932,046 | ||||||||||||||||||||||
Other liabilities |
243,282 | 195,984 | ||||||||||||||||||||||
Equity |
1,391,507 | 1,371,689 | ||||||||||||||||||||||
Total liabilities and shareholders equity |
$ | 14,015,757 | $ | 13,390,537 | ||||||||||||||||||||
Interest
rate spread (5) (7) |
3.04 | % | 3.26 | % | ||||||||||||||||||||
Net free
funds/contribution (6) |
$ | 1,390,741 | 0.18 | % | $ | 1,351,298 | 0.17 | % | ||||||||||||||||
Net interest
income/Net interest margin (7) |
$ | 103,396 | 3.22 | % | $ | 104,775 | 3.43 | % | ||||||||||||||||
(1) | Liquidity management assets include available-for-sale securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements. | |
(2) | Interest income on tax-advantaged loans, trading securities and securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the three months ended September 30, 2010 was $416,000 and for the three months ended June 30, 2010 was $461,000. | |
(3) | Other earning assets include brokerage customer receivables and trading account securities. | |
(4) | Loans, net of unearned income, include loans held-for-sale and non-accrual loans. | |
(5) | Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities. | |
(6) | Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities. | |
(7) | See Supplemental Financial Measures/Ratios for additional information on this performance ratio. |
The decline in net interest margin in the third quarter of 2010 compared to the second quarter
of 2010 was primarily caused by $3.2 million less accretion on the purchased life insurance premium
finance portfolio as less prepayments occurred (reduced net interest margin by 10 basis points),
higher balances and lower yields on liquidity management assets (reduced net interest margin by 14
basis points), the negative impact of selling certain collateralized mortgage obligations (reduced
net interest margin by nine basis points), offset by lower costs for interest-bearing deposits
(increased net interest margin by 11 basis points) and higher contribution from net free funds
(increased net interest margin by 1 basis point). The decline in the yield on loans is primarily
attributable to reduced accretion on the purchased life insurance premium finance portfolio.
22
The following table presents a summary of Wintrusts average balances, net interest income and
related net interest margins, calculated on a fully tax-equivalent basis, for the nine months ended
September 30, 2010 compared to the nine months ended September 30, 2009:
For the Nine Months Ended | For the Nine Months Ended | |||||||||||||||||||||||
September 30, 2010 | September 30, 2009 | |||||||||||||||||||||||
(Dollars in thousands) | Average | Interest | Rate | Average | Interest | Rate | ||||||||||||||||||
Liquidity management assets (1) (2) (7) |
$ | 2,592,751 | $ | 36,084 | 1.86 | % | $ | 1,923,869 | $ | 48,004 | 3.34 | % | ||||||||||||
Other earning assets (2) (3) (7) |
50,192 | 883 | 2.35 | 23,242 | 488 | 2.81 | ||||||||||||||||||
Loans, net of unearned income (2) (4) (7) |
9,371,291 | 396,845 | 5.66 | 8,244,336 | 343,997 | 5.58 | ||||||||||||||||||
Covered loans |
178,492 | 6,653 | 4.98 | | | | ||||||||||||||||||
Total earning assets (7) |
$ | 12,192,726 | $ | 440,465 | 4.83 | % | $ | 10,191,447 | $ | 392,489 | 5.15 | % | ||||||||||||
Allowance for loan losses |
(109,982 | ) | (76,886 | ) | ||||||||||||||||||||
Cash and due from banks |
135,476 | 103,164 | ||||||||||||||||||||||
Other assets |
1,104,240 | 936,468 | ||||||||||||||||||||||
Total assets |
$ | 13,322,460 | $ | 11,154,193 | ||||||||||||||||||||
Interest-bearing deposits |
$ | 9,358,313 | $ | 95,926 | 1.37 | % | $ | 8,217,631 | $ | 132,261 | 2.15 | % | ||||||||||||
Federal Home Loan Bank advances |
420,554 | 12,482 | 3.97 | 435,359 | 13,492 | 4.14 | ||||||||||||||||||
Notes payable and other borrowings |
225,579 | 4,312 | 2.56 | 266,264 | 5,401 | 2.71 | ||||||||||||||||||
Secured borrowings owed to securitization investors |
600,000 | 9,276 | 2.07 | | | |||||||||||||||||||
Subordinated notes |
57,381 | 762 | 1.75 | 67,198 | 1,341 | 2.63 | ||||||||||||||||||
Junior subordinated notes |
249,493 | 13,227 | 6.99 | 249,498 | 13,348 | 7.05 | ||||||||||||||||||
Total interest-bearing liabilities |
$ | 10,911,320 | $ | 135,985 | 1.66 | % | $ | 9,235,950 | $ | 165,843 | 2.40 | % | ||||||||||||
Non-interest bearing liabilities |
934,734 | 754,666 | ||||||||||||||||||||||
Other liabilities |
155,795 | 97,130 | ||||||||||||||||||||||
Equity |
1,320,611 | 1,066,447 | ||||||||||||||||||||||
Total liabilities and shareholders equity |
$ | 13,322,460 | $ | 11,154,193 | ||||||||||||||||||||
Interest rate spread (5) (7) |
3.17 | % | 2.75 | % | ||||||||||||||||||||
Net free funds/contribution (6) |
$ | 1,281,406 | 0.17 | % | $ | 955,497 | 0.23 | % | ||||||||||||||||
Net interest income/Net interest margin (7) |
$ | 304,480 | 3.34 | % | $ | 226,646 | 2.98 | % | ||||||||||||||||
(1) | Liquidity management assets include available-for-sale securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements. | |
(2) | Interest income on tax-advantaged loans, trading securities and securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the nine months ended September 30, 2010 and 2009 were $1.3 million and $1.7 million, respectively. | |
(3) | Other earning assets include brokerage customer receivables and trading account securities. | |
(4) | Loans, net of unearned income, include loans held-for-sale and non-accrual loans. | |
(5) | Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities. | |
(6) | Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities. | |
(7) | See Supplemental Financial Measures/Ratios for additional information on this performance ratio. |
23
NON-INTEREST INCOME
For the third quarter of 2010, non-interest income totaled $54.7 million, a decrease of $96.0
million, or 64%, compared to the third quarter of 2009. The decrease was primarily attributable to
the bargain purchase gain related to the life insurance premium finance loan acquisition in the
third quarter of 2009 and lower trading gains, partially offset by an increase in mortgage banking
revenue and gains on available-for-sale securities.
The following table presents non-interest income by category for the periods presented:
Three Months Ended | ||||||||||||||||
September 30 | $ | % | ||||||||||||||
(Dollars in thousands) | 2010 | 2009 | Change | Change | ||||||||||||
Brokerage |
$ | 5,806 | $ | 4,593 | $ | 1,213 | 26 | |||||||||
Trust and asset management |
3,167 | 2,908 | 259 | 9 | ||||||||||||
Total wealth management |
8,973 | 7,501 | 1,472 | 20 | ||||||||||||
Mortgage banking |
20,980 | 13,204 | 7,776 | 59 | ||||||||||||
Service charges on deposit accounts |
3,384 | 3,447 | (63 | ) | (2 | ) | ||||||||||
Gains on sales of premium finance receivables |
| 3,629 | (3,629 | ) | (100 | ) | ||||||||||
Gains (losses) on available-for-sale securities |
9,235 | (412 | ) | 9,647 | NM | |||||||||||
Gain on bargain purchases |
6,593 | 113,062 | (106,469 | ) | (94 | ) | ||||||||||
Trading gains |
712 | 6,236 | (5,524 | ) | (89 | ) | ||||||||||
Other: |
||||||||||||||||
Fees from covered call options |
703 | | 703 | 100 | ||||||||||||
Bank Owned Life Insurance |
552 | 552 | | | ||||||||||||
Administrative services |
744 | 527 | 217 | 41 | ||||||||||||
Miscellaneous |
2,780 | 2,934 | (154 | ) | (5 | ) | ||||||||||
Total Other |
4,779 | 4,013 | 766 | 19 | ||||||||||||
Total Non-Interest Income |
$ | 54,656 | $ | 150,680 | $ | (96,024 | ) | (64 | ) | |||||||
Nine Months Ended | ||||||||||||||||
September 30 | $ | % | ||||||||||||||
(Dollars in thousands) | 2010 | 2009 | Change | Change | ||||||||||||
Brokerage |
$ | 17,072 | $ | 12,693 | $ | 4,379 | 34 | |||||||||
Trust and asset management |
9,761 | 7,617 | 2,144 | 28 | ||||||||||||
Total wealth management |
26,833 | 20,310 | 6,523 | 32 | ||||||||||||
Mortgage banking |
38,693 | 52,032 | (13,339 | ) | (26 | ) | ||||||||||
Service charges on deposit accounts |
10,087 | 9,600 | 487 | 5 | ||||||||||||
Gains on sales of premium finance receivables |
| 4,147 | (4,147 | ) | (100 | ) | ||||||||||
Gains (losses) on available-for-sale securities |
9,673 | (910 | ) | 10,583 | NM | |||||||||||
Gain on bargain purchases |
43,981 | 113,062 | (69,081 | ) | (61 | ) | ||||||||||
Trading gains |
5,147 | 23,254 | (18,107 | ) | (78 | ) | ||||||||||
Other: |
||||||||||||||||
Fees from covered call options |
1,162 | 1,998 | (836 | ) | (42 | ) | ||||||||||
Bank Owned Life Insurance |
1,593 | 1,403 | 190 | 14 | ||||||||||||
Administrative services |
2,034 | 1,463 | 571 | 39 | ||||||||||||
Miscellaneous |
8,497 | 6,200 | 2,297 | 37 | ||||||||||||
Total Other |
13,286 | 11,064 | 2,222 | 20 | ||||||||||||
Total Non-Interest Income |
$ | 147,700 | $ | 232,559 | $ | (84,859 | ) | (36 | ) | |||||||
NM = Not Meaningful
24
Wealth management revenue is comprised of the trust and asset management revenue of The Chicago
Trust Company and the asset management fees, brokerage commissions, trading commissions and
insurance product commissions at Wayne Hummer Investments and Wintrust Capital Management. Wealth
management revenue totaled $9.0 million in the third quarter of 2010 and $7.5 million in the third
quarter of 2009. Increased asset valuations due to equity market improvements have helped revenue
growth from trust and asset management activities. Additionally, the improvement in the equity
markets overall have led to the increase of the brokerage component of wealth management revenue as
customer trading activity has increased.
Mortgage banking revenue includes revenue from activities related to originating, selling and
servicing residential real estate loans for the secondary market. For the quarter ended September
30, 2010, this revenue source totaled $21.0 million, an increase of $7.8 million when compared to
the third quarter of 2009. Mortgages originated and sold totaled $1.1 billion in the third quarter
of 2010 compared to $732 million in the second quarter of 2010 and $960 million in the third
quarter of 2009. The increase in mortgage banking revenue in the third quarter of 2010 as compared
to the third quarter of 2009 resulted primarily from an increase in gains on sales of loans, which
was driven by higher origination volumes and better pricing realized as a result of the Company
utilizing mandatory execution of forward commitments with investors in 2010. The increase in gains
on sales was partially offset by changes in the fair market value of mortgage servicing rights,
valuation fluctuations of mortgage banking derivatives and fair value accounting for certain
residential mortgage loans held for sale and an increase in loss indemnification claims by
purchasers of the Companys loans. The Company enters into residential mortgage loan sale
agreements with investors in the normal course of business. These agreements provide recourse to
investors through certain representations concerning credit information, loan documentation,
collateral and insurability. Investors request the Company to indemnify them against losses on
certain loans or to repurchase loans which the investors believe do not comply with applicable
representations. An increase in requests for loss indemnification can negatively impact mortgage
banking revenue as additional recourse expense. Fewer requests from investors for loss
indemnification occurred in the current quarter as compared to the second quarter of 2010. The
Company recognized $1.4 million of expense in the third quarter of 2010, a decrease of $3.3 million
compared to the second quarter of 2010 and has recognized $9.6 million on a year-to-date basis in
2010. This liability on loans expected to be repurchased from loans sold to investors is based on
trends in repurchase and indemnification requests, actual loss experience, known and inherent risks
in the loan, and current economic conditions.
A summary of the mortgage banking revenue components is shown below:
Mortgage banking revenue
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(Dollars in thousands) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Mortgage loans originated and sold |
$ | 1,076,736 | $ | 960,218 | $ | 2,495,880 | $ | 3,713,883 | ||||||||
Mortgage loans serviced |
$ | 787,923 | $ | 715,351 | ||||||||||||
Fair value of mortgage servicing rights (MSRs) |
$ | 5,179 | $ | 6,030 | ||||||||||||
MSRs as a percentage of loans serviced |
0.66 | % | 0.84 | % | ||||||||||||
Mortgage banking revenue: |
||||||||||||||||
Gain on sales of loans |
$ | 28,096 | $ | 13,957 | $ | 59,287 | $ | 54,187 | ||||||||
Derivative/fair value, net |
(4,212 | ) | 86 | (7,200 | ) | (98 | ) | |||||||||
Mortgage servicing rights |
(1,472 | ) | (839 | ) | (3,789 | ) | (2,057 | ) | ||||||||
Recourse obligation on loans previously sold |
(1,432 | ) | | (9,605 | ) | | ||||||||||
Total mortgage banking revenue |
$ | 20,980 | $ | 13,204 | $ | 38,693 | $ | 52,032 | ||||||||
Gain on sales of loans as a percentage of loans sold (1)
|
2.22 | % | 1.46 | % | 2.09 | % | 1.46 | % |
(1) | Includes derivative/fair value, net |
All mortgage loan servicing by the Company is performed by four of its subsidiary banks.
Mortgage servicing rights are carried on the balance sheet at fair value. All loans originated and
sold into the secondary market by its mortgage subsidiary Wintrust Mortgage Company have been sold
with mortgage servicing rights released (sold to the investors).
25
Service charges on deposit accounts totaled $3.4 million for the third quarter of 2010, a decrease
of $63,000, or 2%, when compared to the same quarter of 2009. The majority of deposit service
charges relates to customary fees on overdrawn accounts and returned items. The level of service
charges received is substantially below peer group levels, as management believes in the philosophy
of providing high quality service without encumbering that service with numerous activity charges.
As a result of the new accounting requirements beginning January 1, 2010 that now require loans
sold and transferred into the securitization facility be accounted for as secured borrowings with
the securitization investors, the Company no longer recognizes gains on sales of premium finance
receivables (see Securitization Sale of Loans).
The Company recognized $9.2 million of net gains on available-for-sale securities in the third
quarter of 2010 compared to a net loss of $412,000 in the prior year quarter. The net gains in the
third quarter of 2010 were primarily related to the sale of certain collateralized mortgage
obligations.
The gain on bargain purchase of $6.6 million recognized in the third quarter of 2010 relates to the
FDIC-assisted bank acquisition of Ravenswood during the period. The gain on bargain purchase of
$113.1 million in the third quarter of 2009 related to the life insurance premium finance loan
acquisition. See Acquisitions for a discussion of these transactions.
Trading gains of $712,000 were recognized by the Company in the third quarter of 2010 compared to
gains of $6.2 million in the third quarter of 2009. Lower trading gains in 2010 resulted primarily
from realizing larger market value increases in the prior year on certain collateralized mortgage
obligations held in trading.
Other non-interest income for the third quarter of 2010 totaled $4.8 million, compared to $4.0
million in the third quarter of 2009. Fees from certain covered call option transactions increased
by $703,000 in the third quarter of 2010 as compared to the same period in the prior year.
Historically, compression in the net interest margin was effectively offset, as has consistently
been the case, by the Companys covered call strategy. In the third quarter of 2010 management
chose to engage in limited covered call option activity. An illustration of the past effectiveness
of this strategy is shown in the Supplemental Financial Information section (see page titled Net
Interest Margin (Including Call Option Income)).
26
NON-INTEREST EXPENSE
Non-interest expense for the third quarter of 2010 totaled $99.7 million and increased
approximately $7.2 million, or 8%, compared to the third quarter 2009.
The following table presents non-interest expense by category for the periods presented:
Three Months Ended | ||||||||||||||||
September 30 | $ | % | ||||||||||||||
(Dollars in thousands) | 2010 | 2009 | Change | Change | ||||||||||||
Salaries and employee benefits: |
||||||||||||||||
Salaries |
$ | 30,537 | $ | 28,189 | 2,348 | 8 | ||||||||||
Commissions and bonus |
17,366 | 11,887 | 5,479 | 46 | ||||||||||||
Benefits |
9,111 | 8,012 | 1,099 | 14 | ||||||||||||
Total salaries and employee benefits |
57,014 | 48,088 | 8,926 | 19 | ||||||||||||
Equipment |
4,203 | 4,069 | 134 | 3 | ||||||||||||
Occupancy, net |
6,254 | 5,884 | 370 | 6 | ||||||||||||
Data processing |
3,891 | 3,226 | 665 | 21 | ||||||||||||
Advertising and marketing |
1,650 | 1,488 | 162 | 11 | ||||||||||||
Professional fees |
4,555 | 4,089 | 466 | 11 | ||||||||||||
Amortization of other intangible assets |
701 | 677 | 24 | 4 | ||||||||||||
FDIC insurance |
4,642 | 4,334 | 308 | 7 | ||||||||||||
OREO expenses, net |
4,767 | 10,243 | (5,476 | ) | (53 | ) | ||||||||||
Other: |
||||||||||||||||
Commissions - 3rd party brokers |
979 | 843 | 136 | 16 | ||||||||||||
Postage |
1,254 | 1,139 | 115 | 10 | ||||||||||||
Stationery and supplies |
812 | 769 | 43 | 6 | ||||||||||||
Miscellaneous |
9,001 | 7,714 | 1,287 | 17 | ||||||||||||
Total other |
12,046 | 10,465 | 1,581 | 15 | ||||||||||||
Total Non-Interest Expense |
$ | 99,723 | $ | 92,563 | $ | 7,160 | 8 | |||||||||
Nine Months Ended | ||||||||||||||||
September 30 | $ | % | ||||||||||||||
(Dollars in thousands) | 2010 | 2009 | Change | Change | ||||||||||||
Salaries and employee benefits: |
||||||||||||||||
Salaries |
$ | 88,334 | $ | 80,421 | 7,913 | 10 | ||||||||||
Commissions and bonus |
40,064 | 33,751 | 6,313 | 19 | ||||||||||||
Benefits |
28,337 | 24,751 | 3,586 | 14 | ||||||||||||
Total salaries and employee benefits |
156,735 | 138,923 | 17,812 | 13 | ||||||||||||
Equipment |
12,144 | 12,022 | 122 | 1 | ||||||||||||
Occupancy, net |
18,517 | 17,682 | 835 | 5 | ||||||||||||
Data processing |
10,967 | 9,578 | 1,389 | 15 | ||||||||||||
Advertising and marketing |
4,434 | 4,003 | 431 | 11 | ||||||||||||
Professional fees |
11,619 | 9,843 | 1,776 | 18 | ||||||||||||
Amortization of other intangible assets |
2,020 | 2,040 | (20 | ) | (1 | ) | ||||||||||
FDIC insurance |
13,456 | 16,468 | (3,012 | ) | (18 | ) | ||||||||||
OREO expenses, net |
11,948 | 13,671 | (1,723 | ) | (13 | ) | ||||||||||
Other: |
||||||||||||||||
Commissions - 3rd party brokers |
3,037 | 2,338 | 699 | 30 | ||||||||||||
Postage |
3,593 | 3,466 | 127 | 4 | ||||||||||||
Stationery and supplies |
2,305 | 2,330 | (25 | ) | (1 | ) | ||||||||||
Miscellaneous |
25,549 | 21,406 | 4,143 | 19 | ||||||||||||
Total other |
34,484 | 29,540 | 4,944 | 17 | ||||||||||||
Total Non-Interest Expense |
$ | 276,324 | $ | 253,770 | $ | 22,554 | 9 | |||||||||
27
Salaries and employee benefits comprised 57% of total non-interest expense in the third
quarter of 2010 and 52% in the third quarter of 2009. Salaries and employee benefits expense
increased $8.9 million, or 19%, in the third quarter of 2010 compared to the third quarter of 2009
primarily as a result of a $5.5 million increase in bonus and commissions as variable pay based
revenue increased (mortgage banking and wealth management), a $2.3 million increase in salaries
caused by the additional employees from the three FDIC-assisted transactions and larger staffing as
the Company grows and a $1.1 million increase from employee benefits (primarily health plan
related).
Professional fees include legal, audit and tax fees, external loan review costs and normal
regulatory exam assessments. Professional fees for the third quarter of 2010 were $4.6 million, an
increase of $466,000, or 11%, compared to the same period in 2009. These increases are primarily a
result of increased legal costs related to non-performing assets and recent bank acquisitions.
FDIC insurance totaled $4.6 million in the third quarter of 2010, an increase of $308,000 compared
to $4.3 million in the third quarter of 2009. The increase in FDIC insurance expense is primarily
the result of the higher level of deposits at the Companys banks.
OREO expenses include all costs related with obtaining, maintaining and selling of other real
estate owned properties. This expense totaled $4.8 million in the third quarter of 2010, a
decrease of $5.5 million compared to $10.2 million in the third quarter of 2009. The decrease in
OREO expenses primarily related to lower valuation adjustments of properties held in OREO in the
third quarter of 2010 as compared to third quarter of 2009.
Miscellaneous expense includes ATM expenses, correspondent bank charges, directors fees,
telephone, travel and entertainment, corporate insurance, dues and subscriptions, problem loan
expenses and lending origination costs that are not deferred. Miscellaneous expenses in the third
quarter of 2010 increased $1.3 million, or 17%, compared to the same period in the prior year. The
increase in the third quarter of 2010 compared to the same period in the prior year is primarily
attributable to the general growth in the Companys business.
28
ASSET QUALITY
Allowance for Credit Losses
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(Dollars in thousands) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Allowance for loan losses at beginning of period |
$ | 106,547 | $ | 85,113 | $ | 98,277 | $ | 69,767 | ||||||||
Provision for credit losses |
25,528 | 91,193 | 95,870 | 129,329 | ||||||||||||
Other adjustments |
| | 1,943 | | ||||||||||||
Reclassification to allowance for unfunded
lending-related commitments |
(206 | ) | (1,543 | ) | 478 | (1,543 | ) | |||||||||
Charge-offs: |
||||||||||||||||
Commercial |
3,076 | 16,685 | 12,532 | 26,128 | ||||||||||||
Commercial real estate |
15,727 | 57,928 | 48,281 | 66,220 | ||||||||||||
Home equity |
1,234 | 1,727 | 4,604 | 3,034 | ||||||||||||
Residential real estate |
116 | 422 | 832 | 682 | ||||||||||||
Premium finance receivables commercial |
1,505 | 2,478 | 21,186 | 5,622 | ||||||||||||
Premium finance receivables life insurance |
79 | | 79 | | ||||||||||||
Indirect consumer |
198 | 588 | 728 | 1,421 | ||||||||||||
Consumer and other |
288 | 244 | 576 | 495 | ||||||||||||
Total charge-offs |
22,223 | 80,072 | 88,818 | 103,602 | ||||||||||||
Recoveries: |
||||||||||||||||
Commercial |
286 | 104 | 873 | 214 | ||||||||||||
Commercial real estate |
197 | 35 | 856 | 240 | ||||||||||||
Home equity |
8 | 1 | 22 | 3 | ||||||||||||
Residential real estate |
3 | | 10 | | ||||||||||||
Premium finance receivables commercial |
220 | 161 | 637 | 457 | ||||||||||||
Premium finance receivables life insurance |
| | | | ||||||||||||
Indirect consumer |
29 | 62 | 160 | 135 | ||||||||||||
Consumer and other |
43 | 42 | 124 | 96 | ||||||||||||
Total recoveries |
786 | 405 | 2,682 | 1,145 | ||||||||||||
Net charge-offs, excluding covered loans |
(21,437 | ) | (79,667 | ) | (86,136 | ) | (102,457 | ) | ||||||||
Covered loans |
| | | | ||||||||||||
Net charge-offs |
(21,437 | ) | (79,667 | ) | (86,136 | ) | (102,457 | ) | ||||||||
Allowance for loan losses at period end |
$ | 110,432 | $ | 95,096 | $ | 110,432 | $ | 95,096 | ||||||||
Allowance for unfunded lending-related
commitments at period end |
$ | 2,375 | $ | 3,129 | $ | 2,375 | $ | 3,129 | ||||||||
Allowance for credit losses at period end |
$ | 112,807 | $ | 98,225 | $ | 112,807 | $ | 98,225 | ||||||||
Annualized net charge-offs by category as a
percentage of its own respective categorys
average: |
||||||||||||||||
Commercial |
0.60 | % | 4.01 | % | 0.88 | % | 2.23 | % | ||||||||
Commercial real estate |
1.84 | % | 6.69 | 1.90 | 2.59 | |||||||||||
Home equity |
0.53 | 0.75 | 0.66 | 0.44 | ||||||||||||
Residential real estate |
0.07 | 0.33 | 0.20 | 0.19 | ||||||||||||
Premium finance receivables commercial |
0.39 | 0.74 | 2.12 | 0.54 | ||||||||||||
Premium finance receivables life insurance |
0.02 | | 0.01 | | ||||||||||||
Indirect consumer |
1.08 | 1.67 | 0.99 | 1.19 | ||||||||||||
Consumer and other |
1.01 | 0.71 | 0.57 | 0.38 | ||||||||||||
Total loans, net of unearned income, excluding covered loans |
0.89 | % | 3.65 | % | 1.23 | % | 1.66 | % | ||||||||
Covered loans |
| | | | ||||||||||||
Total loans, net of unearned income |
0.86 | % | 3.65 | % | 1.20 | % | 1.66 | % | ||||||||
Net charge-offs as a percentage of the
provision for credit losses |
83.97 | % | 87.36 | % | 89.85 | % | 79.22 | % | ||||||||
Excluding covered loans: |
||||||||||||||||
Loans at period-end |
$ | 9,461,155 | $ | 8,275,257 | ||||||||||||
Allowance for loan losses as
a percentage of loans at
period end |
1.17 | % | 1.15 | % | ||||||||||||
Allowance for credit losses
as a percentage of loans at
period end |
1.19 | % | 1.19 | % | ||||||||||||
Including covered loans: |
||||||||||||||||
Loans at period-end |
$ | 9,814,995 | $ | 8,275,257 | ||||||||||||
Allowance for loan losses as
a percentage of loans at
period end |
1.13 | % | 1.15 | % | ||||||||||||
Allowance for credit losses
as a percentage of loans at
period end |
1.15 | % | 1.19 | % |
29
The allowance for credit 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 relates to certain amounts that Wintrust is committed to lend but for
which funds have not yet been disbursed. The allowance for unfunded lending-related commitments
(separate liability account) represents the portion of the provision for credit losses that was
associated with unfunded lending-related commitments. The provision for credit losses may contain
both a component related to funded loans (provision for loan losses) and a component related to
lending-related commitments (provision for unfunded loan commitments and letters of credit). Total
credit-related reserves include the credit discounts on the purchased life insurance premium
finance receivables which are netted with the loan balance. Additionally, on January 1, 2010, in
conjunction with recording the securitization facility on its balance sheet, the Company
established an allowance for loan losses totaling $1.9 million. This addition to the allowance for
loan losses is shown as an other adjustment to the allowance for loan losses. As of September 30,
2010, there was no allowance for loan losses for covered loans.
The provision for credit losses totaled $25.5 million for the third quarter of 2010, $41.3 million
in the second quarter of 2010 and $91.2 million for the third quarter of 2009. For the quarter
ended September 30, 2010, net charge-offs, excluding covered loans, totaled $21.4 million compared
to $37.9 million in the second quarter of 2010 and $79.7 million recorded in the third quarter of
2009. In the second quarter of 2010, a fraud perpetrated against a number of premium finance
companies in the industry, including the property and casualty division of our premium financing
subsidiary, increased both our net charge-offs and our provision for loan losses by $15.7 million.
On a ratio basis, annualized net charge-offs as a percentage of average loans, excluding covered
loans, were 0.89% in the third quarter of 2010, 1.63% in the second quarter of 2010, and 3.65% in
the third quarter of 2009. Beginning in the third and fourth quarters of 2009, the Company
committed to resolving problem credits as quickly as possible. Actions taken during this time
increased OREO, net charge-offs and the provision for loan losses expenses required to maintain an
appropriate level of reserves. The third quarter of 2010 amounts recorded for both net charge-offs
and provision for credit losses reflect a continuation of the Companys commitment to maintain a
low level of non-performing assets.
Management believes the allowance for loan 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 loan losses will be dependent upon managements 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 increase from the end of the prior quarter reflects the continued economic
weaknesses in the Companys markets and is the result of an individual review of a significant
number of individual credits as well as the overall risk factors impacting certain types of
credits, specifically credits with residential development collateral valuation exposure.
30
The table below shows the aging of the Companys loan portfolio at September 30, 2010:
As of September 30, 2010
90+ days | 60-89 | 30-59 | ||||||||||||||||||||||
and still | days past | days past | ||||||||||||||||||||||
(Dollars in thousands) | Nonaccrual | accruing | due | due | Current | Total Loans | ||||||||||||||||||
Loan Balances: |
||||||||||||||||||||||||
Commercial |
$ | 19,444 | $ | | $ | 5,797 | $ | 16,790 | $ | 1,910,760 | $ | 1,952,791 | ||||||||||||
Commercial real-estate: |
| |||||||||||||||||||||||
Residential construction |
4,921 | | 3,029 | 3,942 | 91,019 | 102,911 | ||||||||||||||||||
Commercial construction |
11,230 | | 1,665 | 947 | 165,825 | 179,667 | ||||||||||||||||||
Land |
27,134 | | 13,033 | 3,971 | 219,225 | 263,363 | ||||||||||||||||||
Office |
5,745 | | 4,186 | 1,467 | 526,470 | 537,868 | ||||||||||||||||||
Industrial |
3,565 | | 1,014 | 6,658 | 461,319 | 472,556 | ||||||||||||||||||
Retail |
2,084 | | 4,254 | 5,079 | 481,216 | 492,633 | ||||||||||||||||||
Multi-family |
9,339 | | 8,023 | 1,966 | 259,799 | 279,127 | ||||||||||||||||||
Mixed use and other |
19,322 | | 7,373 | 6,916 | 969,762 | 1,003,373 | ||||||||||||||||||
Total commercial real-estate |
83,340 | | 42,577 | 30,946 | 3,174,635 | 3,331,498 | ||||||||||||||||||
Total commercial and commercial real-estate |
102,784 | | 48,374 | 47,736 | 5,085,395 | 5,284,289 | ||||||||||||||||||
Home equity |
6,144 | | 2,215 | 6,596 | 904,869 | 919,824 | ||||||||||||||||||
Residential real estate |
6,644 | | 718 | 1,765 | 332,882 | 342,009 | ||||||||||||||||||
Premium finance receivables commercial |
9,082 | 6,853 | 6,723 | 13,409 | 1,287,867 | 1,323,934 | ||||||||||||||||||
Premium finance receivables life insurance |
222 | 1,222 | 6,244 | 13,567 | 1,413,739 | 1,434,994 | ||||||||||||||||||
Indirect consumer |
446 | 355 | 210 | 1,420 | 54,144 | 56,575 | ||||||||||||||||||
Consumer and other |
569 | 2 | 356 | 565 | 98,038 | 99,530 | ||||||||||||||||||
Total loans, net of unearned income, excluding covered loans |
$ | 125,891 | $ | 8,432 | $ | 64,840 | $ | 85,058 | $ | 9,176,934 | $ | 9,461,155 | ||||||||||||
Covered loans (1) |
138,953 | 8,021 | 9,820 | 3,078 | 193,968 | 353,840 | ||||||||||||||||||
Total loans, net of unearned income |
$ | 264,844 | $ | 16,453 | $ | 74,660 | $ | 88,136 | $ | 9,370,902 | $ | 9,814,995 | ||||||||||||
Aging as a % of Loan Balance: |
||||||||||||||||||||||||
Commercial |
1.0 | % | | % | 0.3 | % | 0.9 | % | 97.8 | % | 100.0 | % | ||||||||||||
Commercial real-estate: |
||||||||||||||||||||||||
Residential construction |
4.8 | | 2.9 | 3.8 | 88.5 | 100.0 | ||||||||||||||||||
Commercial construction |
6.3 | | 0.9 | 0.5 | 92.3 | 100.0 | ||||||||||||||||||
Land |
10.3 | | 5.0 | 1.5 | 83.2 | 100.0 | ||||||||||||||||||
Office |
1.1 | | 0.8 | 0.3 | 97.8 | 100.0 | ||||||||||||||||||
Industrial |
0.8 | | 0.2 | 1.4 | 97.6 | 100.0 | ||||||||||||||||||
Retail |
0.4 | | 0.9 | 1.0 | 97.7 | 100.0 | ||||||||||||||||||
Multi-family |
3.3 | | 2.9 | 0.7 | 93.1 | 100.0 | ||||||||||||||||||
Mixed use and other |
1.9 | | 0.7 | 0.7 | 96.7 | 100.0 | ||||||||||||||||||
Total commercial real-estate |
2.5 | | 1.3 | 0.9 | 95.3 | 100.0 | ||||||||||||||||||
Total commercial and commercial real-estate |
2.0 | | 0.9 | 0.9 | 96.2 | 100.0 | ||||||||||||||||||
Home equity |
0.7 | | 0.2 | 0.7 | 98.4 | 100.0 | ||||||||||||||||||
Residential real estate |
1.9 | | 0.2 | 0.6 | 97.3 | 100.0 | ||||||||||||||||||
Premium finance receivables commercial |
0.7 | 0.5 | 0.5 | 1.0 | 97.3 | 100.0 | ||||||||||||||||||
Premium finance receivables life insurance |
0.0 | 0.1 | 0.4 | 1.0 | 98.5 | 100.0 | ||||||||||||||||||
Indirect consumer |
0.8 | 0.6 | 0.4 | 2.5 | 95.7 | 100.0 | ||||||||||||||||||
Consumer and other |
0.6 | 0.0 | 0.3 | 0.6 | 98.5 | 100.0 | ||||||||||||||||||
Total loans, net of unearned income, excluding covered loans |
1.3 | % | 0.1 | % | 0.7 | % | 0.9 | % | 97.0 | % | 100.0 | % | ||||||||||||
Covered loans (1) |
39.3 | 2.2 | 2.8 | 0.9 | 54.8 | 100.0 | ||||||||||||||||||
Total loans, net of unearned income |
2.7 | % | 0.2 | % | 0.7 | 0.9 | 95.5 | % | 100.0 | % | ||||||||||||||
(1) | Covered loans are subject to a loss sharing agreement with the FDIC whereby the Company is indemnified against the majority of any losses incurred related to these loans. |
As of September 30, 2010, only $64.8 million of all loans, excluding covered loans, or 0.7%,
were 60 to 89 days past due and $85.1 million, or 0.9%, were 30 to 59 days (or one payment) past
due. As of June 30, 2010, only $50.3 million of all loans, excluding covered loans, or 0.5%, were
60 to 89 days past due and only $75.2 million, or 0.8%, 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 Companys internal problem loan reporting system. Loans on
this system are closely monitored by management on a monthly basis.
31
The Companys home equity and residential loan portfolios continue to exhibit low delinquency
ratios. Home equity loans at September 30, 2010 that are current with regard to the contractual
terms of the loan agreement represent 98.4% of the total home equity portfolio. Residential real
estate loans at September 30, 2010 that are current with regards to the contractual terms of the
loan agreements comprise 97.3% of total residential real estate loans outstanding.
The table below shows the aging of the Companys loan portfolio at June 30, 2010:
As of June 30, 2010
90+ days | 60-89 | 30-59 | ||||||||||||||||||||||
and still | days past | days past | ||||||||||||||||||||||
(Dollars in thousands) | Nonaccrual | accruing | due | due | Current | Total Loans | ||||||||||||||||||
Loan Balances: |
||||||||||||||||||||||||
Commercial |
$ | 17,741 | $ | 99 | $ | 8,550 | $ | 5,781 | $ | 1,795,447 | $ | 1,827,618 | ||||||||||||
Commercial real-estate: |
||||||||||||||||||||||||
Residential construction |
15,468 | | 6,166 | 3,035 | 104,793 | 129,462 | ||||||||||||||||||
Commercial construction |
6,140 | | | 2,117 | 179,919 | 188,176 | ||||||||||||||||||
Land |
21,699 | | 5,313 | 8,721 | 233,823 | 269,556 | ||||||||||||||||||
Office |
2,991 | 1,194 | 193 | 8,423 | 522,740 | 535,541 | ||||||||||||||||||
Industrial |
5,540 | | 5,612 | 3,530 | 458,033 | 472,715 | ||||||||||||||||||
Retail |
5,174 | | 1,906 | 4,712 | 472,745 | 484,537 | ||||||||||||||||||
Multi-family |
11,074 | | 421 | 1,498 | 263,888 | 276,881 | ||||||||||||||||||
Mixed use and other |
14,898 | 1,054 | 11,156 | 10,476 | 953,371 | 990,955 | ||||||||||||||||||
Total commercial real-estate |
82,984 | 2,248 | 30,767 | 42,512 | 3,189,312 | 3,347,823 | ||||||||||||||||||
Total commercial and commercial real-estate |
100,725 | 2,347 | 39,317 | 48,293 | 4,984,759 | 5,175,441 | ||||||||||||||||||
Home equity |
7,149 | | 1,063 | 4,253 | 909,840 | 922,305 | ||||||||||||||||||
Residential real estate |
4,436 | | 1,379 | 2,489 | 324,369 | 332,673 | ||||||||||||||||||
Premium finance receivables commercial |
11,389 | 6,350 | 3,938 | 9,944 | 1,315,364 | 1,346,985 | ||||||||||||||||||
Premium finance receivables life insurance |
| 1,923 | 3,960 | 7,712 | 1,365,062 | 1,378,657 | ||||||||||||||||||
Indirect consumer |
438 | 579 | 204 | 1,453 | 66,337 | 69,011 | ||||||||||||||||||
Consumer and other |
62 | 3 | 438 | 1,021 | 97,567 | 99,091 | ||||||||||||||||||
Total loans, net of unearned income, excluding covered loans |
$ | 124,199 | $ | 11,202 | $ | 50,299 | $ | 75,165 | $ | 9,063,298 | $ | 9,324,163 | ||||||||||||
Covered loans
(1) |
$ | 104,606 | $ | 2 | $ | 9,881 | $ | 9,039 | $ | 152,035 | $ | 275,563 | ||||||||||||
Total loans, net of unearned income |
$ | 228,805 | $ | 11,204 | $ | 60,180 | $ | 84,204 | $ | 9,215,333 | $ | 9,599,726 | ||||||||||||
Aging as a % of Loan Balance: |
||||||||||||||||||||||||
Commercial |
1.0 | % | | % | 0.5 | % | 0.3 | % | 98.2 | % | 100.0 | % | ||||||||||||
Commercial real-estate: |
||||||||||||||||||||||||
Residential construction |
11.9 | | 4.8 | 2.3 | 81.0 | 100.0 | ||||||||||||||||||
Commercial construction |
3.3 | | | 1.1 | 95.6 | 100.0 | ||||||||||||||||||
Land |
8.0 | | 2.0 | 3.2 | 86.8 | 100.0 | ||||||||||||||||||
Office |
0.6 | 0.2 | | 1.6 | 97.6 | 100.0 | ||||||||||||||||||
Industrial |
1.2 | | 1.2 | 0.7 | 96.9 | 100.0 | ||||||||||||||||||
Retail |
1.1 | | 0.4 | 1.0 | 97.5 | 100.0 | ||||||||||||||||||
Multi-family |
4.0 | | 0.2 | 0.5 | 95.3 | 100.0 | ||||||||||||||||||
Mixed use and other |
1.5 | 0.1 | 1.1 | 1.1 | 96.2 | 100.0 | ||||||||||||||||||
Total commercial real-estate |
2.5 | 0.1 | 0.9 | 1.3 | 95.2 | 100.0 | ||||||||||||||||||
Total commercial and commercial real-estate |
1.9 | | 0.8 | 0.9 | 96.4 | 100.0 | ||||||||||||||||||
Home equity |
0.8 | | 0.1 | 0.5 | 98.6 | 100.0 | ||||||||||||||||||
Residential real estate |
1.3 | | 0.4 | 0.7 | 97.6 | 100.0 | ||||||||||||||||||
Premium finance receivables commercial |
0.8 | 0.5 | 0.3 | 0.7 | 97.7 | 100.0 | ||||||||||||||||||
Premium finance receivables life insurance |
| 0.1 | 0.3 | 0.6 | 99.0 | 100.0 | ||||||||||||||||||
Indirect consumer |
0.6 | 0.8 | 0.3 | 2.1 | 96.2 | 100.0 | ||||||||||||||||||
Consumer and other |
0.1 | | 0.4 | 1.0 | 98.5 | 100.0 | ||||||||||||||||||
Total loans, net of unearned income, excluding covered loans |
1.3 | % | 0.1 | % | 0.5 | % | 0.8 | % | 97.3 | % | 100.0 | % | ||||||||||||
Covered loans (1) |
38.0 | | 3.6 | 3.3 | 55.1 | 100.0 | ||||||||||||||||||
Total loans, net of unearned income |
2.4 | % | 0.1 | % | 0.6 | % | 0.9 | % | 96.0 | % | 100.0 | % | ||||||||||||
(1) | Covered loans are subject to a loss sharing agreement with the FDIC whereby the Company is indemnified against the majority of any losses incurred related to these loans. |
32
The ratio of non-performing commercial premium finance receivables fluctuates throughout the
year due to the nature and timing of canceled account collections from insurance carriers. Due to
the nature of collateral for commercial premium finance receivables, it customarily takes 60-150
days to convert the collateral into cash. Accordingly, the level of non-performing commercial
premium finance receivables is not necessarily indicative of the loss inherent in the portfolio.
In the event of default, Wintrust has the power to cancel the insurance policy and collect the
unearned portion of the premium from the insurance carrier. In the event of cancellation, the cash
returned in payment of the unearned premium by the insurer should generally be sufficient to cover
the receivable balance, the interest and other charges due. Due to notification requirements and
processing time by most insurance carriers, many receivables will become delinquent beyond 90 days
while the insurer is processing the return of the unearned premium. Management continues to accrue
interest until maturity as the unearned premium is ordinarily sufficient to pay-off the outstanding
balance and contractual interest due.
33
Non-performing Loans, excluding covered loans
The following table sets forth Wintrusts non-performing loans, excluding covered loans, at the
dates indicated.
September 30, | June 30, | December 31, | September 30, | |||||||||||||
(Dollars in thousands) | 2010 | 2010 | 2009 | 2009 | ||||||||||||
Loans past due greater than 90 days and still accruing: |
||||||||||||||||
Commercial |
$ | | $ | 99 | $ | 561 | $ | 758 | ||||||||
Commercial real-estate |
| 2,248 | | 22,619 | ||||||||||||
Home equity |
| | | 100 | ||||||||||||
Residential real-estate |
| | 412 | 1,172 | ||||||||||||
Premium finance receivables commercial |
6,853 | 6,350 | 6,271 | 11,714 | ||||||||||||
Premium finance receivables life insurance |
1,222 | 1,923 | | | ||||||||||||
Indirect consumer |
355 | 579 | 461 | 549 | ||||||||||||
Consumer and other |
2 | 3 | 95 | 25 | ||||||||||||
Total past due greater than 90 days and still accruing |
8,432 | 11,202 | 7,800 | 36,937 | ||||||||||||
Non-accrual loans: |
||||||||||||||||
Commercial |
19,444 | 17,741 | 16,509 | 19,035 | ||||||||||||
Commercial real-estate |
83,340 | 82,984 | 80,639 | 147,691 | ||||||||||||
Home equity |
6,144 | 7,149 | 8,883 | 6,808 | ||||||||||||
Residential real-estate |
6,644 | 4,436 | 3,779 | 4,077 | ||||||||||||
Premium finance receivables commercial |
9,082 | 11,389 | 11,878 | 16,093 | ||||||||||||
Premium finance receivables life insurance |
222 | | 704 | | ||||||||||||
Indirect consumer |
446 | 438 | 995 | 736 | ||||||||||||
Consumer and other |
569 | 62 | 617 | 282 | ||||||||||||
Total non-accrual |
125,891 | 124,199 | 124,004 | 194,722 | ||||||||||||
Total non-performing loans: |
||||||||||||||||
Commercial |
19,444 | 17,840 | 17,070 | 19,793 | ||||||||||||
Commercial real-estate |
83,340 | 85,232 | 80,639 | 170,310 | ||||||||||||
Home equity |
6,144 | 7,149 | 8,883 | 6,908 | ||||||||||||
Residential real-estate |
6,644 | 4,436 | 4,191 | 5,249 | ||||||||||||
Premium finance receivables commercial |
15,935 | 17,739 | 18,149 | 27,807 | ||||||||||||
Premium finance receivables life insurance |
1,444 | 1,923 | 704 | | ||||||||||||
Indirect consumer |
801 | 1,017 | 1,456 | 1,285 | ||||||||||||
Consumer and other |
571 | 65 | 712 | 307 | ||||||||||||
Total non-performing |
$ | 134,323 | $ | 135,401 | $ | 131,804 | $ | 231,659 | ||||||||
Total non-performing loans by category as a percent of
its own respective categorys period-end balance: |
||||||||||||||||
Commercial |
1.00 | % | 0.98 | % | 0.98 | % | 1.20 | % | ||||||||
Commercial real-estate |
2.50 | 2.55 | 2.45 | 5.02 | ||||||||||||
Home equity |
0.67 | 0.78 | 0.95 | 0.74 | ||||||||||||
Residential real-estate |
1.94 | 1.33 | 1.37 | 1.87 | ||||||||||||
Premium finance receivables commercial |
1.20 | 1.32 | 2.49 | 3.70 | ||||||||||||
Premium finance receivables life insurance |
0.10 | 0.14 | 0.06 | | ||||||||||||
Indirect consumer |
1.42 | 1.47 | 1.48 | 1.11 | ||||||||||||
Consumer and other |
0.57 | 0.07 | 0.65 | 0.26 | ||||||||||||
Total loans, net of unearned income |
1.42 | % | 1.45 | % | 1.57 | % | 2.80 | % | ||||||||
Allowance for loan losses as a percentage
total non-performing loans |
82.21 | % | 78.69 | % | 74.56 | % | 41.05 | % | ||||||||
Non-performing Commercial and Commercial Real Estate
The commercial non-performing loan category totaled $19.4 million as of September 30, 2010 compared
to $17.8 million as of June 30, 2010 and $19.8 million as of September 30, 2009. The commercial
real estate non-performing loan category totaled $83.3 million as of September 30, 2010 compared to
$85.2 million as of June 30, 2010 and $170.3 million as of September 30, 2009.
Management is pursuing the resolution of all credits in this category. At this time, management
believes reserves are appropriate to absorb inherent losses that may occur upon the ultimate
resolution of these credits.
34
Non-performing Residential Real Estate and Home Equity
Non-performing home equity and residential real estate loans totaled $12.8 million as of September
30, 2010. The balance increased $631,000 from September 30, 2009 and $1.1 million from June 30,
2010. The September 30, 2010 non-performing balance is comprised of $6.7 million of residential
real estate (23 individual credits) and $6.1 million of home equity loans (26 individual credits).
On average, this is approximately three non-performing residential real estate loans and home
equity loans per chartered bank within the Company. The Company believes control and collection of
these loans is very manageable. At this time, management believes reserves are adequate to absorb
inherent losses that may occur upon the ultimate resolution of these credits.
Non-performing Commercial Premium Finance Receivables
The table below presents the level of non-performing property and casualty premium finance
receivables as of September 30, 2010 and 2009, and the amount of net charge-offs for the quarters
then ended.
September 30, | September 30, | |||||||
(Dollars in thousands) | 2010 | 2009 | ||||||
Non-performing premium finance receivables commercial |
$ | 15,935 | $ | 27,807 | ||||
- as a percent of premium finance receivables commercial outstanding |
1.20 | % | 3.70 | % | ||||
Net charge-offs of premium finance receivables commercial |
$ | 1,285 | $ | 2,317 | ||||
- annualized as a percent of average premium finance receivables -
commercial |
0.39 | % | 0.74 | % |
Fluctuations in this category may occur due to timing and nature of account collections from
insurance carriers. The Companys underwriting standards, regardless of the condition of the
economy, have remained consistent. We anticipate that net charge-offs and non-performing asset
levels in the near term will continue to be at levels that are within acceptable operating ranges
for this category of loans. Management is comfortable with administering the collections at this
level of non-performing property and casualty premium finance receivables and believes reserves are
adequate to absorb inherent losses that may occur upon the ultimate resolution of these credits.
In the second quarter of 2010, a fraud perpetrated against a number of premium finance companies in
the industry, including the property and casualty division of our premium financing subsidiary,
increased both our net charge-offs and our provision for loan losses by $15.7 million. Excluding
the effect of this fraud, net charge-offs of premium finance receivables would have been $1.8
million for the second quarter of 2010, or 0.56% of average premium finance receivables on an
annualized basis.
Nonperforming Loans Rollforward
The table below presents a summary of non-performing loans, excluding covered loans, as of
September 30, 2010 and shows the changes in the balance from June 30, 2010:
Non-performing | ||||
(Dollars in thousands) | Loans | |||
Balance at June 30, 2010 |
$ | 135,401 | ||
Additions, net |
40,539 | |||
Payments received |
(17,179 | ) | ||
Transfer to OREO |
(10,011 | ) | ||
Charge-offs |
(12,212 | ) | ||
Net change for niche loans (1) |
(2,215 | ) | ||
Balance at September 30, 2010 |
$ | 134,323 | ||
(1) | This includes activity for premium finance receivables, mortgages held for investment by Wintrust Mortgage and indirect consumer loans. |
35
Restructured Loans
The table below presents a summary of restructured loans for the respective period, presented by
loan category and accrual status:
September 30, | June 30, | September 30, | ||||||||||
(Dollars in thousands) | 2010 | 2010 | 2009 | |||||||||
Accruing: |
||||||||||||
Commercial |
$ | 7,690 | $ | 5,110 | $ | | ||||||
Commercial real estate |
65,149 | 46,052 | | |||||||||
Residential real estate |
1,121 | 2,591 | | |||||||||
Total accrual |
$ | 73,960 | $ | 53,753 | $ | | ||||||
Non-accrual: (1) |
||||||||||||
Commercial |
$ | 3,959 | $ | 3,865 | $ | | ||||||
Commercial real estate |
13,812 | 6,827 | | |||||||||
Residential real estate |
1,935 | 238 | | |||||||||
Total non-accrual |
$ | 19,706 | $ | 10,930 | $ | | ||||||
Total restructured loans: |
||||||||||||
Commercial |
$ | 11,649 | $ | 8,975 | $ | | ||||||
Commercial real estate |
78,961 | 52,879 | | |||||||||
Residential real estate |
3,056 | 2,829 | | |||||||||
Total restructured loans |
$ | 93,666 | $ | 64,683 | $ | | ||||||
(1) | Included in total non-performing loans. |
At September 30, 2010, the Company had $93.7 million in loans with modified terms. The $93.7
million in modified loans represents 115 credit relationships in which economic concessions were
granted to financially distressed borrowers to better align the terms of their loans with their
current ability to pay. These actions were taken on a case-by-case basis working with financially
distressed borrowers to find a concession that would assist them in retaining their businesses or
their homes and attempt to keep these loans in an accruing status for the Company.
Subsequent to its restructuring, any restructured loan with a below market rate concession that
becomes nonaccrual will remain classified by the Company as a restructured loan for its duration
and will be included in the Companys non-performing loans. Each restructured loan was reviewed
for collateral impairment at September 30, 2010 and approximately $8.7 million of collateral
impairment was present and appropriately reserved for through the Companys normal reserving
methodology in the Companys allowance for loan losses. Additionally, none of these loans at
September 30, 2010 had impairment based on the present value of expected cash flows, thus there was
no impact on interest income.
36
Other Real Estate Owned
The table below presents a summary of other real estate owned, excluding covered other real estate
owned, as of September 30, 2010 and shows the activity for the respective period and the balance
for each property type:
Three Months Ended | ||||||||||||
September 30, | June 30, | September 30, | ||||||||||
(Dollars in thousands) | 2010 | 2010 | 2009 | |||||||||
Balance at beginning of period |
$ | 86,420 | $ | 89,009 | $ | 41,438 | ||||||
Disposals/resolved |
(15,463 | ) | (15,201 | ) | (10,408 | ) | ||||||
Transfers in at fair value, less costs to sell |
8,303 | 16,348 | 17,136 | |||||||||
Fair value adjustments |
(2,606 | ) | (3,736 | ) | (7,527 | ) | ||||||
Balance at end of period |
$ | 76,654 | $ | 86,420 | $ | 40,639 | ||||||
Period End | ||||||||||||
September 30, | June 30, | September 30, | ||||||||||
Balance by Property Type | 2010 | 2010 | 2009 | |||||||||
Residential real estate |
$ | 8,778 | $ | 5,457 | $ | 8,013 | ||||||
Residential real estate development |
22,600 | 27,161 | 23,834 | |||||||||
Commercial real estate |
45,276 | 53,802 | 8,792 | |||||||||
Total |
$ | 76,654 | $ | 86,420 | $ | 40,639 | ||||||
37
WINTRUST SUBSIDIARIES AND LOCATIONS
Wintrust is a financial holding company whose common stock is traded on the Nasdaq Global Select
Market (Nasdaq: WTFC). Its 15 community bank subsidiaries are: Lake Forest Bank & Trust Company,
Hinsdale Bank & Trust Company, North Shore Community Bank & Trust Company in Wilmette, Libertyville
Bank & Trust Company, Barrington Bank & Trust Company, Crystal Lake Bank & Trust Company,
Northbrook Bank & Trust Company, Advantage National Bank in Elk Grove Village, Village Bank & Trust
in Arlington Heights, Beverly Bank & Trust Company 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, Bloomingdale, Buffalo Grove, Cary, Chicago, Clarendon Hills, Deerfield, Downers
Grove, Frankfort, Geneva, Glencoe, Glen Ellyn, Gurnee, Grayslake, Highland Park, Highwood, Hoffman
Estates, Island Lake, Lake Bluff, Lake Villa, Lincoln Park, Lindenhurst, McHenry, Mokena, Mount
Prospect, Mundelein, Naperville, North Chicago, Northfield, Palatine, Prospect Heights, Ravenswood,
Ravinia, Riverside, Roselle, Sauganash, Skokie, Spring Grove, Vernon Hills, Wauconda, Western
Springs, Willowbrook and Winnetka, and in Delafield, Elm Grove, Madison, Wales, Wisconsin.
Additionally, the Company operates various non-bank subsidiaries. First Insurance Funding
Corporation, one of the largest insurance premium finance companies operating in the United States,
serves commercial and life insurance loan customers throughout the country. 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 Corporation engages primarily in the origination and purchase of residential
mortgages for sale into the thirdary 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. Wintrust Capital Management provides money management services and advisory services to
individual accounts. Advanced Investment Partners, LLC is an investment management firm
specializing in the active management of domestic equity investment strategies. The Chicago Trust
Company, a trust subsidiary, allows Wintrust to service customers trust and investment needs at
each banking location. Wintrust Information Technology Services Company provides information
technology support, item capture and statement preparation services to the Wintrust subsidiaries.
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 managements
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 Companys 2009 Annual Report on Form 10-K and in any of the
Companys 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 Companys 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
managements 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
Companys 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 affect the Companys liquidity and the performance of its loan portfolios, particularly in the markets in which it operates; |
38
| the extent of defaults and losses on the Companys loan portfolio, which may require further increases in its allowance for credit losses; |
| estimates of fair value of certain of the Companys assets and liabilities, which could change in value significantly from period to period; |
| changes in the level and volatility of interest rates, the capital markets and other market indices that may affect, among other things, the Companys liquidity and the value of its assets and liabilities; |
| a decrease in the Companys regulatory capital ratios, including as a result of further declines in the value of its loan portfolios, or otherwise; |
| effects resulting from the Companys participation in the Capital Purchase Program, including restrictions on dividends and executive compensation practices, as well as any future restrictions that may become applicable to the Company; |
| legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies; |
| increases in the Companys FDIC insurance premiums, or the collection of special assessments by the FDIC; |
| competitive pressures in the financial services business which may affect the pricing of the Companys loan and deposit products as well as its services (including wealth management services); |
| delinquencies or fraud with respect to the Companys premium finance business; |
| the Companys ability to comply with covenants under its securitization facility and credit facility; |
| credit downgrades among commercial and life insurance providers that could negatively affect the value of collateral securing the Companys premium finance loans; |
| any negative perception of the Companys reputation or financial strength; |
| the loss of customers as a result of technological changes allowing consumers to complete their financial transactions without the use of a bank; |
| the ability of the Company to attract and retain senior management experienced in the banking and financial services industries; |
| failure to identify and complete favorable acquisitions in the future, or unexpected difficulties or developments related to the integration of recent acquisitions, including with respect to any FDIC-assisted acquisitions; |
| unexpected difficulties or unanticipated developments related to the Companys strategy of de novo bank formations and openings, which typically require over 13 months of operations before becoming profitable due to the impact of organizational and overhead expenses, the startup phase of generating deposits and the time lag typically involved in redeploying deposits into attractively priced loans and other higher yielding earning assets; |
| changes in accounting standards, rules and interpretations and the impact on the Corporations financial statements; |
| significant litigation involving the Company; and |
| the ability of the Company to receive dividends from its subsidiaries. |
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 or on behalf of Wintrust. 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 release revisions to these forward-looking statements or
reflect events or circumstances after the date of this press release. Persons are advised,
however, to consult further disclosures management makes on related subjects in its reports filed
with the Securities and Exchange Commission and in its press releases.
CONFERENCE CALL, WEB CAST AND REPLAY
The Company will hold a conference call at 1:00 p.m. (CT) Wednesday, October 27, 2010 regarding
third quarter 2010 results. Individuals interested in listening should call (800) 514-8478 and
enter Conference ID #16430168. A simultaneous audio-only web cast and replay of the conference
call may be accessed via the Companys web site at (http://www.wintrust.com), Investor News and
Events, Presentations & Conference Calls. The text of the third quarter 2010 earnings press release
will be available on the home page of the Companys website at (http://www.wintrust.com) and at the
Investor News and Events, Press Releases link on its website.
# # #
39
WINTRUST FINANCIAL CORPORATION
Supplemental Financial Information
5 Quarter Trends
40
WINTRUST FINANCIAL CORPORATION Supplemental Financial Information
Selected Financial Highlights 5 Quarter Trends
Selected Financial Highlights 5 Quarter Trends
Three Months Ended | ||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(Dollars in thousands, except per share data) | 2010 | 2010 | 2010 | 2009 | 2009 | |||||||||||||||
Selected Financial Condition Data (at end of period): |
||||||||||||||||||||
Total assets |
$ | 14,100,368 | $ | 13,708,560 | $ | 12,839,978 | $ | 12,215,620 | $ | 12,136,021 | ||||||||||
Total loans, excluding covered loans |
9,461,155 | 9,324,163 | 9,070,562 | 8,411,771 | 8,275,257 | |||||||||||||||
Total deposits |
10,962,239 | 10,624,742 | 9,724,870 | 9,917,074 | 9,847,163 | |||||||||||||||
Junior subordinated debentures |
249,493 | 249,493 | 249,493 | 249,493 | 249,493 | |||||||||||||||
Total shareholders equity |
1,398,912 | 1,384,736 | 1,364,832 | 1,138,639 | 1,106,082 | |||||||||||||||
Selected Statements of Income Data: |
||||||||||||||||||||
Net interest income |
102,980 | 104,314 | 95,865 | 86,934 | 87,663 | |||||||||||||||
Net revenue (1) |
157,636 | 154,750 | 138,472 | 172,022 | 238,343 | |||||||||||||||
Core pre-tax earnings (2) |
47,572 | 47,649 | 42,064 | 39,905 | 37,137 | |||||||||||||||
Net income |
20,098 | 13,009 | 16,017 | 28,167 | 31,995 | |||||||||||||||
Net income per common share Basic |
$ | 0.49 | $ | 0.26 | $ | 0.43 | $ | 0.96 | $ | 1.14 | ||||||||||
Net income per common share Diluted |
$ | 0.47 | $ | 0.25 | $ | 0.41 | $ | 0.90 | $ | 1.07 | ||||||||||
Selected Financial Ratios and Other Data: |
||||||||||||||||||||
Performance Ratios: |
||||||||||||||||||||
Net interest margin (2) |
3.22 | % | 3.43 | % | 3.38 | % | 3.10 | % | 3.25 | % | ||||||||||
Non-interest income to average assets |
1.56 | % | 1.51 | % | 1.37 | % | 2.77 | % | 5.07 | % | ||||||||||
Non-interest expense to average assets |
2.85 | % | 2.78 | % | 2.70 | % | 2.94 | % | 3.11 | % | ||||||||||
Net overhead ratio (3) |
1.28 | % | 1.26 | % | 1.33 | % | 0.17 | % | (1.95) | % | ||||||||||
Efficiency ratio (2) (4) |
67.01 | % | 59.72 | % | 60.59 | % | 52.54 | % | 38.69 | % | ||||||||||
Return on average assets |
0.57 | % | 0.39 | % | 0.52 | % | 0.92 | % | 1.08 | % | ||||||||||
Return on average common equity |
5.44 | % | 2.98 | % | 4.93 | % | 10.97 | % | 13.79 | % | ||||||||||
Average total assets |
$ | 14,015,757 | $ | 13,390,537 | $ | 12,590,817 | $ | 12,189,096 | $ | 11,797,520 | ||||||||||
Average total shareholders equity |
1,391,507 | 1,371,689 | 1,196,191 | 1,126,594 | 1,070,095 | |||||||||||||||
Average loans to average deposits ratio |
88.7 | % | 91.0 | % | 94.6 | % | 86.9 | % | 90.5 | % | ||||||||||
Average loans to average deposits ratio (including
covered loans) |
91.7 | 93.0 | 94.6 | 86.9 | 90.5 | |||||||||||||||
Common Share Data at end of period: |
||||||||||||||||||||
Market price per common share |
$ | 32.41 | $ | 33.34 | $ | 37.21 | $ | 30.79 | $ | 27.96 | ||||||||||
Book value per common share |
$ | 35.70 | $ | 35.33 | $ | 34.76 | $ | 35.27 | $ | 34.10 | ||||||||||
Common shares outstanding |
31,143,740 | 31,084,298 | 31,044,449 | 24,206,819 | 24,103,068 | |||||||||||||||
Other Data at end of period:(9) |
||||||||||||||||||||
Leverage Ratio (5) |
10.0 | % | 10.2 | % | 10.8 | % | 9.3 | % | 9.3 | % | ||||||||||
Tier 1 Capital to risk-weighted assets (5) |
12.7 | % | 13.0 | % | 13.4 | % | 11.0 | % | 10.8 | % | ||||||||||
Total capital to risk-weighted assets (5) |
14.1 | % | 14.3 | % | 14.9 | % | 12.4 | % | 12.3 | % | ||||||||||
Tangible Common Equity ratio (TCE) (8) |
5.9 | % | 6.0 | % | 6.3 | % | 4.7 | % | 4.5 | % | ||||||||||
Allowance for credit losses (6) |
$ | 112,807 | $ | 108,716 | $ | 106,050 | $ | 101,831 | $ | 98,225 | ||||||||||
Credit
discounts on purchased premium finance receivables life insurance (7) |
26,399 | 28,216 | 33,990 | 37,323 | 36,195 | |||||||||||||||
Non-performing loans |
134,323 | 135,401 | 140,960 | 131,804 | 231,659 | |||||||||||||||
Allowance for credit losses to total loans (6) |
1.19 | % | 1.17 | % | 1.17 | % | 1.21 | % | 1.19 | % | ||||||||||
Non-performing loans to total loans |
1.42 | % | 1.45 | % | 1.55 | % | 1.57 | % | 2.80 | % | ||||||||||
Number of: |
||||||||||||||||||||
Bank subsidiaries |
15 | 15 | 15 | 15 | 15 | |||||||||||||||
Non-bank subsidiaries |
8 | 8 | 8 | 8 | 8 | |||||||||||||||
Banking offices |
85 | 85 | 78 | 78 | 78 | |||||||||||||||
(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 periods total average assets. A lower ratio indicates a higher degree of efficiency. | |
(4) | The efficiency ratio is calculated by dividing total non-interest expense by tax-equivalent net revenue (less securities gains or losses). A lower ratio indicates more efficient revenue generation. | |
(5) | Capital ratios for current quarter-end are estimated. | |
(6) | The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments. | |
(7) | Represents the credit discounts on purchased life insurance premium finance loans. | |
(8) | Total shareholders equity minus preferred stock and total intangible assets divided by total assets minus total intangible assets | |
(9) | Asset quality ratios exclude covered loans. |
41
WINTRUST FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Condition 5 Quarter Trends
Consolidated Statements of Condition 5 Quarter Trends
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(In thousands) | 2010 | 2010 | 2010 | 2009 | 2009 | |||||||||||||||
Assets |
||||||||||||||||||||
Cash and due from banks |
$ | 155,067 | $ | 123,712 | $ | 106,501 | $ | 135,133 | $ | 128,898 | ||||||||||
Federal funds sold and securities purchased under resale agreements |
88,913 | 28,664 | 15,393 | 23,483 | 22,863 | |||||||||||||||
Interest-bearing deposits with other banks |
1,224,584 | 1,110,123 | 1,222,323 | 1,025,663 | 1,168,362 | |||||||||||||||
Available-for-sale securities, at fair value |
1,324,179 | 1,418,035 | 1,205,919 | 1,255,066 | 1,362,359 | |||||||||||||||
Trading account securities |
4,935 | 38,261 | 39,938 | 33,774 | 29,204 | |||||||||||||||
Brokerage customer receivables |
25,442 | 24,291 | 20,978 | 20,871 | 19,441 | |||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stock, at cost |
80,445 | 79,300 | 74,001 | 73,749 | 71,889 | |||||||||||||||
Loans held-for-sale |
320,440 | 237,981 | 156,049 | 275,715 | 193,255 | |||||||||||||||
Loans, net of unearned income, excluding covered loans |
9,461,155 | 9,324,163 | 9,070,562 | 8,411,771 | 8,275,257 | |||||||||||||||
Covered loans |
353,840 | 275,563 | | | | |||||||||||||||
Total loans |
9,814,995 | 9,599,726 | 9,070,562 | 8,411,771 | 8,275,257 | |||||||||||||||
Less: Allowance for loan losses |
110,432 | 106,547 | 102,397 | 98,277 | 95,096 | |||||||||||||||
Net loans |
9,704,563 | 9,493,179 | 8,968,165 | 8,313,494 | 8,180,161 | |||||||||||||||
Premises and equipment, net |
353,445 | 346,806 | 348,182 | 350,345 | 352,890 | |||||||||||||||
FDIC indemnification asset |
161,640 | 114,102 | | | | |||||||||||||||
Accrued interest receivable and other assets |
365,496 | 374,172 | 363,676 | 416,678 | 315,806 | |||||||||||||||
Trade date securities receivable |
| 28,634 | 27,850 | | | |||||||||||||||
Goodwill |
278,025 | 278,025 | 278,025 | 278,025 | 276,525 | |||||||||||||||
Other intangible assets |
13,194 | 13,275 | 12,978 | 13,624 | 14,368 | |||||||||||||||
Total assets |
$ | 14,100,368 | $ | 13,708,560 | $ | 12,839,978 | $ | 12,215,620 | $ | 12,136,021 | ||||||||||
Liabilities and Shareholders Equity |
||||||||||||||||||||
Deposits: |
||||||||||||||||||||
Non-interest bearing |
$ | 1,042,730 | $ | 953,814 | $ | 871,830 | $ | 864,306 | $ | 841,668 | ||||||||||
Interest bearing |
9,919,509 | 9,670,928 | 8,853,040 | 9,052,768 | 9,005,495 | |||||||||||||||
Total deposits |
10,962,239 | 10,624,742 | 9,724,870 | 9,917,074 | 9,847,163 | |||||||||||||||
Notes payable |
1,000 | 1,000 | 1,000 | 1,000 | 1,000 | |||||||||||||||
Federal Home Loan Bank advances |
414,832 | 415,571 | 421,775 | 430,987 | 433,983 | |||||||||||||||
Other borrowings |
241,522 | 218,424 | 218,079 | 247,437 | 252,071 | |||||||||||||||
Secured borrowings owed to securitization investors |
600,000 | 600,000 | 600,000 | | | |||||||||||||||
Subordinated notes |
55,000 | 55,000 | 60,000 | 60,000 | 65,000 | |||||||||||||||
Junior subordinated debentures |
249,493 | 249,493 | 249,493 | 249,493 | 249,493 | |||||||||||||||
Trade date securities payable |
2,045 | 200 | 62,017 | | | |||||||||||||||
Accrued interest payable and other liabilities |
175,325 | 159,394 | 137,912 | 170,990 | 181,229 | |||||||||||||||
Total liabilities |
12,701,456 | 12,323,824 | 11,475,146 | 11,076,981 | 11,029,939 | |||||||||||||||
Shareholders Equity: |
||||||||||||||||||||
Preferred stock |
287,234 | 286,460 | 285,642 | 284,824 | 284,061 | |||||||||||||||
Common stock |
31,145 | 31,084 | 31,044 | 27,079 | 26,965 | |||||||||||||||
Surplus |
682,318 | 680,261 | 677,090 | 589,939 | 580,988 | |||||||||||||||
Treasury stock |
(51 | ) | (4 | ) | | (122,733 | ) | (122,437 | ) | |||||||||||
Retained earnings |
394,323 | 381,969 | 373,903 | 366,152 | 342,873 | |||||||||||||||
Accumulated other comprehensive income (loss) |
3,943 | 4,966 | (2,847 | ) | (6,622 | ) | (6,368 | ) | ||||||||||||
Total shareholders equity |
1,398,912 | 1,384,736 | 1,364,832 | 1,138,639 | 1,106,082 | |||||||||||||||
Total liabilities and shareholders equity |
$14,100,368 | $ | 13,708,560 | $ | 12,839,978 | $ | 12,215,620 | $ | 12,136,021 | |||||||||||
42
WINTRUST FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Income (Unaudited) 5 Quarter Trends
Consolidated Statements of Income (Unaudited) 5 Quarter Trends
Three Months Ended | ||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(In thousands, except per share data) | 2010 | 2010 | 2010 | 2009 | 2009 | |||||||||||||||
Interest income |
||||||||||||||||||||
Interest and fees on loans |
$ | 137,902 | $ | 135,800 | $ | 129,542 | $ | 122,140 | $ | 126,448 | ||||||||||
Interest bearing deposits with banks |
1,339 | 1,215 | 1,274 | 1,369 | 778 | |||||||||||||||
Federal funds sold and securities purchased under resale
agreements |
35 | 34 | 49 | 38 | 106 | |||||||||||||||
Securities |
7,438 | 11,218 | 11,012 | 12,672 | 13,677 | |||||||||||||||
Trading account securities |
19 | 343 | 21 | 20 | 7 | |||||||||||||||
Brokerage customer receivables |
180 | 166 | 139 | 143 | 132 | |||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stock |
488 | 472 | 459 | 447 | 429 | |||||||||||||||
Total interest income |
147,401 | 149,248 | 142,496 | 136,829 | 141,577 | |||||||||||||||
Interest expense |
||||||||||||||||||||
Interest on deposits |
31,088 | 31,626 | 33,212 | 38,998 | 42,806 | |||||||||||||||
Interest on Federal Home Loan Bank advances |
4,042 | 4,094 | 4,346 | 4,510 | 4,536 | |||||||||||||||
Interest on notes payable and other borrowings |
1,411 | 1,439 | 1,462 | 1,663 | 1,779 | |||||||||||||||
Interest on secured borrowings owed to securitization
investors |
3,167 | 3,115 | 2,995 | | | |||||||||||||||
Interest on subordinated notes |
265 | 256 | 241 | 286 | 333 | |||||||||||||||
Interest on junior subordinated debentures |
4,448 | 4,404 | 4,375 | 4,438 | 4,460 | |||||||||||||||
Total interest expense |
44,421 | 44,934 | 46,631 | 49,895 | 53,914 | |||||||||||||||
Net interest income |
102,980 | 104,314 | 95,865 | 86,934 | 87,663 | |||||||||||||||
Provision for credit losses |
25,528 | 41,297 | 29,044 | 38,603 | 91,193 | |||||||||||||||
Net interest income after provision for credit losses |
77,452 | 63,017 | 66,821 | 48,331 | (3,530 | ) | ||||||||||||||
Non-interest income |
||||||||||||||||||||
Wealth management |
8,973 | 9,193 | 8,667 | 8,047 | 7,501 | |||||||||||||||
Mortgage banking |
20,980 | 7,985 | 9,727 | 16,495 | 13,204 | |||||||||||||||
Service charges on deposit accounts |
3,384 | 3,371 | 3,332 | 3,437 | 3,447 | |||||||||||||||
Gain on sales of commercial premium finance receivables |
| | | 4,429 | 3,629 | |||||||||||||||
Gains (losses) on available-for-sale securities, net |
9,235 | 46 | 392 | 642 | (412 | ) | ||||||||||||||
Gain on bargain purchases |
6,593 | 26,494 | 10,894 | 42,951 | 113,062 | |||||||||||||||
Trading gains (losses) |
712 | (1,538 | ) | 5,973 | 4,437 | 6,236 | ||||||||||||||
Other |
4,779 | 4,885 | 3,622 | 4,650 | 4,013 | |||||||||||||||
Total non-interest income |
54,656 | 50,436 | 42,607 | 85,088 | 150,680 | |||||||||||||||
Non-interest expense |
||||||||||||||||||||
Salaries and employee benefits |
57,014 | 50,649 | 49,072 | 47,955 | 48,088 | |||||||||||||||
Equipment |
4,203 | 4,046 | 3,896 | 4,097 | 4,069 | |||||||||||||||
Occupancy, net |
6,254 | 6,033 | 6,230 | 6,124 | 5,884 | |||||||||||||||
Data processing |
3,891 | 3,669 | 3,407 | 3,404 | 3,226 | |||||||||||||||
Advertising and marketing |
1,650 | 1,470 | 1,314 | 1,366 | 1,488 | |||||||||||||||
Professional fees |
4,555 | 3,957 | 3,107 | 3,556 | 4,089 | |||||||||||||||
Amortization of other intangible assets |
701 | 674 | 645 | 744 | 677 | |||||||||||||||
FDIC insurance |
4,642 | 5,005 | 3,809 | 4,731 | 4,334 | |||||||||||||||
OREO expenses, net |
4,767 | 5,843 | 1,337 | 5,293 | 10,243 | |||||||||||||||
Other |
12,046 | 11,317 | 11,121 | 13,047 | 10,465 | |||||||||||||||
Total non-interest expense |
99,723 | 92,663 | 83,938 | 90,317 | 92,563 | |||||||||||||||
Income before taxes |
32,385 | 20,790 | 25,490 | 43,102 | 54,587 | |||||||||||||||
Income tax expense |
12,287 | 7,781 | 9,473 | 14,935 | 22,592 | |||||||||||||||
Net income |
$ | 20,098 | $ | 13,009 | $ | 16,017 | $ | 28,167 | $ | 31,995 | ||||||||||
Preferred stock dividends and discount accretion |
$ | 4,943 | $ | 4,943 | $ | 4,943 | $ | 4,888 | $ | 4,668 | ||||||||||
Net income applicable to common shares |
$ | 15,155 | $ | 8,066 | $ | 11,074 | $ | 23,279 | $ | 27,327 | ||||||||||
Net income per common share Basic |
$ | 0.49 | $ | 0.26 | $ | 0.43 | $ | 0.96 | $ | 1.14 | ||||||||||
Net income per common share Diluted |
$ | 0.47 | $ | 0.25 | $ | 0.41 | $ | 0.90 | $ | 1.07 | ||||||||||
Cash dividends declared per common share |
$ | 0.09 | $ | | $ | 0.09 | $ | | $ | | ||||||||||
Weighted average common shares outstanding |
31,117 | 31,074 | 25,942 | 24,166 | 24,052 | |||||||||||||||
Dilutive potential common shares |
988 | 1,267 | 1,139 | 2,845 | 2,493 | |||||||||||||||
Average common shares and dilutive common shares |
32,105 | 32,341 | 27,081 | 27,011 | 26,545 | |||||||||||||||
43
WINTRUST FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION
Period End Loan Balances 5 Quarter Trends
Period End Loan Balances 5 Quarter Trends
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(Dollars in thousands) | 2010 | 2010 | 2010 | 2009 | 2009 | |||||||||||||||
Balance: |
||||||||||||||||||||
Commercial |
$ | 1,952,791 | $ | 1,827,618 | $ | 1,749,895 | $ | 1,743,208 | $ | 1,643,721 | ||||||||||
Commercial real estate |
3,331,498 | 3,347,823 | 3,333,157 | 3,296,698 | 3,392,138 | |||||||||||||||
Home equity |
919,824 | 922,305 | 924,993 | 930,482 | 928,548 | |||||||||||||||
Residential real-estate |
342,009 | 332,673 | 322,984 | 306,296 | 281,151 | |||||||||||||||
Premium finance receivables commercial |
1,323,934 | 1,346,985 | 1,317,822 | 730,144 | 752,032 | |||||||||||||||
Premium finance receivables life insurance |
1,434,994 | 1,378,657 | 1,233,573 | 1,197,893 | 1,045,653 | |||||||||||||||
Indirect consumer (1) |
56,575 | 69,011 | 83,136 | 98,134 | 115,528 | |||||||||||||||
Consumer and other |
99,530 | 99,091 | 105,002 | 108,916 | 116,486 | |||||||||||||||
Total loans, net of
unearned income,
excluding covered loans |
$ | 9,461,155 | $ | 9,324,163 | $ | 9,070,562 | $ | 8,411,771 | $ | 8,275,257 | ||||||||||
Covered loans |
$ | 353,840 | $ | 275,563 | $ | | $ | | $ | | ||||||||||
Total loans, net of
unearned income |
$ | 9,814,995 | $ | 9,599,726 | $ | 9,070,562 | $ | 8,411,771 | $ | 8,275,257 | ||||||||||
Mix: |
||||||||||||||||||||
Commercial |
20 | % | 19 | % | 19 | % | 21 | % | 20 | % | ||||||||||
Commercial real estate |
34 | 35 | 37 | 39 | 41 | |||||||||||||||
Home equity |
9 | 10 | 10 | 11 | 11 | |||||||||||||||
Residential real-estate |
3 | 3 | 4 | 4 | 4 | |||||||||||||||
Premium finance receivables commercial |
13 | 14 | 14 | 9 | 9 | |||||||||||||||
Premium finance receivables life insurance |
15 | 14 | 14 | 14 | 13 | |||||||||||||||
Indirect consumer (1) |
1 | 1 | 1 | 1 | 1 | |||||||||||||||
Consumer and other |
1 | 1 | 1 | 1 | 1 | |||||||||||||||
Total loans, net of
unearned income,
excluding covered loans |
96 | % | 97 | % | 100 | % | 100 | % | 100 | % | ||||||||||
Covered loans |
4 | 3 | | | | |||||||||||||||
Total loans, net of
unearned income |
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||
(1) | Includes autos, boats, snowmobiles and other indirect consumer loans. |
WINTRUST FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION
Period End Deposits Balances 5 Quarter Trends
Period End Deposits Balances 5 Quarter Trends
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(Dollars in thousands) | 2010 | 2010 | 2010 | 2009 | 2009 | |||||||||||||||
Balance: |
||||||||||||||||||||
Non-interest bearing |
$ | 1,042,730 | $ | 953,814 | $ | 871,830 | $ | 864,306 | $ | 841,668 | ||||||||||
NOW |
1,551,749 | 1,560,733 | 1,448,857 | 1,415,856 | 1,245,689 | |||||||||||||||
Wealth Management deposits (1) |
710,435 | 694,830 | 690,919 | 971,113 | 935,740 | |||||||||||||||
Money Market |
1,746,168 | 1,722,729 | 1,586,830 | 1,534,632 | 1,468,228 | |||||||||||||||
Savings |
713,823 | 594,753 | 558,770 | 561,916 | 513,239 | |||||||||||||||
Time certificates of deposit |
5,197,334 | 5,097,883 | 4,567,664 | 4,569,251 | 4,842,599 | |||||||||||||||
Total deposits |
$ | 10,962,239 | $ | 10,624,742 | $ | 9,724,870 | $ | 9,917,074 | $ | 9,847,163 | ||||||||||
Mix: |
||||||||||||||||||||
Non-interest bearing |
10 | % | 9 | % | 9 | % | 9 | % | 9 | % | ||||||||||
NOW |
14 | 15 | 15 | 14 | 13 | |||||||||||||||
Wealth Management deposits (1) |
6 | 6 | 7 | 10 | 9 | |||||||||||||||
Money Market |
16 | 16 | 16 | 15 | 15 | |||||||||||||||
Savings |
7 | 6 | 6 | 6 | 5 | |||||||||||||||
Time certificates of deposit |
47 | 48 | 47 | 46 | 49 | |||||||||||||||
Total deposits |
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||
(1) | Represents deposit balances of the Companys subsidiary banks from brokerage customers of Wayne Hummer Investments, trust and asset management customes of The Chicago Trust Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts of the Banks. |
44
WINTRUST FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin (Including Call Option Income) 5 Quarter Trends
Net Interest Margin (Including Call Option Income) 5 Quarter Trends
Three Months Ended | ||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(Dollars in thousands) | 2010 | 2010 | 2010 | 2009 | 2009 | |||||||||||||||
Net interest income |
$ | 103,396 | $ | 104,775 | $ | 96,311 | $ | 87,448 | $ | 88,178 | ||||||||||
Call option income |
703 | 169 | 289 | | | |||||||||||||||
Net interest income including call
option income |
$ | 104,099 | $ | 104,944 | $ | 96,600 | $ | 87,448 | $ | 88,178 | ||||||||||
Yield on earning assets |
4.59 | % | 4.91 | % | 5.01 | % | 4.87 | % | 5.24 | % | ||||||||||
Rate on interest-bearing liabilities |
1.55 | 1.65 | 1.82 | 1.98 | 2.18 | |||||||||||||||
Rate spread |
3.04 | % | 3.26 | % | 3.19 | % | 2.89 | % | 3.06 | % | ||||||||||
Net free funds contribution |
0.18 | 0.17 | 0.19 | 0.21 | 0.19 | |||||||||||||||
Net interest margin |
3.22 | 3.43 | 3.38 | 3.10 | 3.25 | |||||||||||||||
Call option income |
0.02 | 0.01 | 0.01 | | | |||||||||||||||
Net interest margin including call
option income |
3.24 | % | 3.44 | % | 3.39 | % | 3.10 | % | 3.25 | % | ||||||||||
WINTRUST FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin (Including Call Option Income YTD Trends
Net Interest Margin (Including Call Option Income YTD Trends
Nine Months | ||||||||||||||||||||
Ended | Years Ended | |||||||||||||||||||
September 30, | December 31, | |||||||||||||||||||
(Dollars in thousands) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||
Net interest income |
$ | 304,481 | $ | 314,096 | $ | 247,054 | $ | 264,777 | $ | 250,507 | ||||||||||
Call option income |
1,162 | 1,998 | 29,024 | 2,628 | 3,157 | |||||||||||||||
Net interest income including call
option income |
$ | 305,643 | $ | 316,094 | $ | 276,078 | $ | 267,405 | $ | 253,664 | ||||||||||
Yield on earning assets |
4.83 | % | 5.07 | % | 5.88 | % | 7.21 | % | 6.91 | % | ||||||||||
Rate on interest-bearing liabilities |
1.66 | 2.29 | 3.31 | 4.39 | 4.11 | |||||||||||||||
Rate spread |
3.17 | % | 2.78 | % | 2.57 | % | 2.82 | % | 2.80 | % | ||||||||||
Net free funds contribution |
0.17 | 0.23 | 0.24 | 0.29 | 0.30 | |||||||||||||||
Net interest margin |
3.34 | 3.01 | 2.81 | 3.11 | 3.10 | |||||||||||||||
Call option income |
0.01 | 0.02 | 0.33 | 0.03 | 0.04 | |||||||||||||||
Net interest margin including call
option income |
3.35 | % | 3.03 | % | 3.14 | % | 3.14 | % | 3.14 | % | ||||||||||
45
WINTRUST FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION
Quarterly Average Balances 5 Quarter Trends
Quarterly Average Balances 5 Quarter Trends
Three Months Ended | ||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(In thousands) | 2010 | 2010 | 2010 | 2009 | 2009 | |||||||||||||||
Liquidity management assets |
$ | 2,802,964 | $ | 2,613,179 | $ | 2,384,122 | $ | 2,569,584 | $ | 2,078,330 | ||||||||||
Other earning assets |
34,263 | 62,874 | 26,269 | 26,167 | 24,874 | |||||||||||||||
Loans, net of unearned income |
9,603,561 | 9,356,033 | 9,150,078 | 8,604,006 | 8,665,281 | |||||||||||||||
Covered loans |
325,751 | 210,030 | | | | |||||||||||||||
Total earning assets |
$ | 12,766,539 | $ | 12,242,116 | $ | 11,560,469 | $ | 11,199,757 | $ | 10,768,485 | ||||||||||
Allowance for loan losses |
(113,631 | ) | (108,764 | ) | (107,257 | ) | (97,269 | ) | (85,300 | ) | ||||||||||
Cash and due from banks |
154,078 | 137,531 | 113,514 | 124,219 | 109,645 | |||||||||||||||
Other assets |
1,208,771 | 1,119,654 | 1,024,091 | 962,389 | 1,004,690 | |||||||||||||||
Total assets |
$ | 14,015,757 | $ | 13,390,537 | $ | 12,590,817 | $ | 12,189,096 | $ | 11,797,520 | ||||||||||
Interest-bearing deposits |
$ | 9,823,525 | $ | 9,348,541 | $ | 8,818,012 | $ | 9,016,863 | $ | 8,799,578 | ||||||||||
Federal Home Loan Bank advances |
414,789 | 417,835 | 429,195 | 432,028 | 434,134 | |||||||||||||||
Notes payable and other borrowings |
232,991 | 217,751 | 225,919 | 234,754 | 245,352 | |||||||||||||||
Secured borrowings owed to securitization investors |
600,000 | 600,000 | 600,000 | | | |||||||||||||||
Subordinated notes |
55,000 | 57,198 | 60,000 | 63,261 | 65,000 | |||||||||||||||
Junior subordinated notes |
249,493 | 249,493 | 249,493 | 249,493 | 249,493 | |||||||||||||||
Total interest-bearing liabilities |
$ | 11,375,798 | $ | 10,890,818 | $ | 10,382,619 | $ | 9,996,399 | $ | 9,793,557 | ||||||||||
Non-interest bearing liabilities |
1,005,170 | 932,046 | 858,875 | 886,988 | 775,202 | |||||||||||||||
Other liabilities |
243,282 | 195,984 | 153,132 | 179,115 | 158,666 | |||||||||||||||
Equity |
1,391,507 | 1,371,689 | 1,196,191 | 1,126,594 | 1,070,095 | |||||||||||||||
Total liabilities and shareholders equity |
$ | 14,015,757 | $ | 13,390,537 | $ | 12,590,817 | $ | 12,189,096 | $ | 11,797,520 | ||||||||||
WINTRUST FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin 5 Quarter Trends
Net Interest Margin 5 Quarter Trends
Three Months Ended | ||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
2010 | 2010 | 2010 | 2009 | 2009 | ||||||||||||||||
Yield earned on: |
||||||||||||||||||||
Liquidity management assets |
1.36 | % | 2.04 | % | 2.24 | % | 2.31 | % | 2.94 | % | ||||||||||
Other earning assets |
2.37 | 3.28 | 2.53 | 2.59 | 2.36 | |||||||||||||||
Loans, net of unearned income |
5.54 | 5.71 | 5.75 | 5.64 | 5.79 | |||||||||||||||
Covered loans |
4.84 | 5.12 | | | | |||||||||||||||
4.59 | % | 4.91 | % | 5.01 | % | 4.87 | % | 5.24 | % | |||||||||||
Rate paid on: |
||||||||||||||||||||
Interest-bearing deposits |
1.26 | % | 1.36 | % | 1.53 | % | 1.72 | % | 1.93 | % | ||||||||||
Federal Home Loan Bank advances |
3.87 | 3.93 | 4.11 | 4.14 | 4.14 | |||||||||||||||
Notes payable and other borrowings |
2.40 | 2.65 | 2.63 | 2.81 | 2.88 | |||||||||||||||
Secured borrowings owed to securitization investors |
2.09 | 2.08 | 2.02 | | | |||||||||||||||
Subordinated notes |
1.89 | 1.77 | 1.60 | 1.77 | 2.01 | |||||||||||||||
Junior subordinated notes |
6.98 | 6.98 | 7.01 | 6.96 | 6.99 | |||||||||||||||
1.55 | % | 1.65 | % | 1.82 | % | 1.98 | % | 2.18 | % | |||||||||||
Interest rate spread |
3.04 | % | 3.26 | % | 3.19 | % | 2.89 | % | 3.06 | % | ||||||||||
Net free funds/contribution |
0.18 | % | 0.17 | % | 0.19 | % | 0.21 | % | 0.19 | % | ||||||||||
Net interest income/Net interest margin |
3.22 | % | 3.43 | % | 3.38 | % | 3.10 | % | 3.25 | % | ||||||||||
46
WINTRUST FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION
Non-Interest Income 5 Quarter Trends
Non-Interest Income 5 Quarter Trends
Three Months Ended | ||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(In thousands) | 2010 | 2010 | 2010 | 2009 | 2009 | |||||||||||||||
Brokerage |
$ | 5,806 | $ | 5,712 | $ | 5,554 | $ | 5,034 | $ | 4,593 | ||||||||||
Trust and asset management |
3,167 | 3,481 | 3,113 | 3,013 | 2,908 | |||||||||||||||
Total wealth management |
8,973 | 9,193 | 8,667 | 8,047 | 7,501 | |||||||||||||||
Mortgage banking |
20,980 | 7,985 | 9,727 | 16,495 | 13,204 | |||||||||||||||
Service charges on deposit accounts |
3,384 | 3,371 | 3,332 | 3,437 | 3,447 | |||||||||||||||
Gains on sales of premium finance receivables |
| | | 4,429 | 3,629 | |||||||||||||||
Gains (losses) on available-for-sale securities |
9,235 | 46 | 392 | 642 | (412 | ) | ||||||||||||||
Gain on bargain purchases |
6,593 | 26,494 | 10,894 | 42,951 | 113,062 | |||||||||||||||
Trading gains (losses) |
712 | (1,538 | ) | 5,973 | 4,437 | 6,236 | ||||||||||||||
Other: |
||||||||||||||||||||
Fees from covered call options |
703 | 169 | 289 | | | |||||||||||||||
Bank Owned Life Insurance |
552 | 418 | 623 | 642 | 552 | |||||||||||||||
Administrative services |
744 | 708 | 582 | 511 | 527 | |||||||||||||||
Miscellaneous |
2,780 | 3,590 | 2,128 | 3,497 | 2,934 | |||||||||||||||
Total other income |
4,779 | 4,885 | 3,622 | 4,650 | 4,013 | |||||||||||||||
Total Non-Interest Income |
$ | 54,656 | $ | 50,436 | $ | 42,607 | $ | 85,088 | $ | 150,680 | ||||||||||
WINTRUST FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION
Non-Interest Expense 5 Quarter Trends
Non-Interest Expense 5 Quarter Trends
Three Months Ended | ||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(In thousands) | 2010 | 2010 | 2010 | 2009 | 2009 | |||||||||||||||
Salaries and employee benefits: |
||||||||||||||||||||
Salaries |
$ | 30,537 | $ | 28,714 | $ | 29,083 | $ | 28,426 | $ | 28,189 | ||||||||||
Commissions and bonus |
17,366 | 12,967 | 9,731 | 11,752 | 11,887 | |||||||||||||||
Benefits |
9,111 | 8,968 | 10,258 | 7,777 | 8,012 | |||||||||||||||
Total salaries and employee benefits |
57,014 | 50,649 | 49,072 | 47,955 | 48,088 | |||||||||||||||
Equipment |
4,203 | 4,046 | 3,896 | 4,097 | 4,069 | |||||||||||||||
Occupancy, net |
6,254 | 6,033 | 6,230 | 6,124 | 5,884 | |||||||||||||||
Data processing |
3,891 | 3,669 | 3,407 | 3,404 | 3,226 | |||||||||||||||
Advertising and marketing |
1,650 | 1,470 | 1,314 | 1,366 | 1,488 | |||||||||||||||
Professional fees |
4,555 | 3,957 | 3,107 | 3,556 | 4,089 | |||||||||||||||
Amortization of other intangibles |
701 | 674 | 645 | 744 | 677 | |||||||||||||||
FDIC insurance |
4,642 | 5,005 | 3,809 | 4,731 | 4,334 | |||||||||||||||
OREO expenses, net |
4,767 | 5,843 | 1,337 | 5,293 | 10,243 | |||||||||||||||
Other: |
||||||||||||||||||||
Commissions - 3rd party brokers |
979 | 1,097 | 962 | 757 | 843 | |||||||||||||||
Postage |
1,254 | 1,229 | 1,110 | 1,367 | 1,139 | |||||||||||||||
Stationery and supplies |
812 | 761 | 732 | 859 | 769 | |||||||||||||||
Miscellaneous |
9,001 | 8,230 | 8,317 | 10,064 | 7,714 | |||||||||||||||
Total other expense |
12,046 | 11,317 | 11,121 | 13,047 | 10,465 | |||||||||||||||
Total Non-Interest Expense |
$ | 99,723 | $ | 92,663 | $ | 83,938 | $ | 90,317 | $ | 92,563 | ||||||||||
47
WINTRUST FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION
Allowance for Credit Losses 5 Quarter Trends
Allowance for Credit Losses 5 Quarter Trends
Three Months Ended | ||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||||||||||||
(Dollars in thousands) | 2010 | 2010 | 2010 | 2009 | 2009 | |||||||||||||||
Allowance for loan losses at beginning of period |
$ | 106,547 | $ | 102,397 | $ | 98,277 | $ | 95,096 | $ | 85,113 | ||||||||||
Provision for credit losses |
25,528 | 41,297 | 29,044 | 38,603 | 91,193 | |||||||||||||||
Other adjustments |
| | 1,943 | | | |||||||||||||||
Reclassification (to)/from allowance for unfunded
lending-related commitments |
(206 | ) | 785 | (99 | ) | (494 | ) | (1,543 | ) | |||||||||||
Charge-offs: |
||||||||||||||||||||
Commercial |
3,076 | 4,781 | 4,675 | 8,894 | 16,685 | |||||||||||||||
Commercial real estate |
15,727 | 12,311 | 20,244 | 22,894 | 57,928 | |||||||||||||||
Home equity |
1,234 | 3,089 | 281 | 1,572 | 1,727 | |||||||||||||||
Residential real estate |
116 | 310 | 406 | 385 | 422 | |||||||||||||||
Premium finance receivables commercial |
1,505 | 17,747 | 1,933 | 2,532 | 2,478 | |||||||||||||||
Premium finance receivables life insurance |
79 | | | | | |||||||||||||||
Indirect consumer |
198 | 256 | 274 | 427 | 588 | |||||||||||||||
Consumer and other |
288 | 109 | 179 | 148 | 244 | |||||||||||||||
Total charge-offs |
22,223 | 38,603 | 27,992 | 36,852 | 80,072 | |||||||||||||||
Recoveries: |
||||||||||||||||||||
Commercial |
286 | 143 | 443 | 237 | 104 | |||||||||||||||
Commercial real estate |
197 | 218 | 442 | 552 | 35 | |||||||||||||||
Home equity |
8 | 6 | 8 | 812 | 1 | |||||||||||||||
Residential real estate |
3 | 2 | 5 | | | |||||||||||||||
Premium finance receivables commercial |
220 | 188 | 229 | 194 | 161 | |||||||||||||||
Premium finance receivables life insurance |
| | | | | |||||||||||||||
Indirect consumer |
29 | 81 | 50 | 44 | 62 | |||||||||||||||
Consumer and other |
43 | 33 | 47 | 85 | 42 | |||||||||||||||
Total recoveries |
786 | 671 | 1,224 | 1,924 | 405 | |||||||||||||||
Net charge-offs, excluding covered loans |
(21,437 | ) | (37,932 | ) | (26,768 | ) | (34,928 | ) | (79,667 | ) | ||||||||||
Covered loans |
| | | | | |||||||||||||||
Net charge-offs |
(21,437 | ) | (37,932 | ) | (26,768 | ) | (34,928 | ) | (79,667 | ) | ||||||||||
Allowance for loan losses at period end |
$ | 110,432 | $ | 106,547 | $ | 102,397 | $ | 98,277 | $ | 95,096 | ||||||||||
Allowance for unfunded lending-related
commitments at period end |
$ | 2,375 | $ | 2,169 | $ | 3,653 | $ | 3,554 | $ | 3,129 | ||||||||||
Allowance for credit losses at period end |
$ | 112,807 | $ | 108,716 | $ | 106,050 | $ | 101,831 | $ | 98,225 | ||||||||||
Annualized net charge-offs by category as a
percentage of its own respective categorys
average: |
||||||||||||||||||||
Commercial |
0.60 | % | 1.04 | % | 1.02 | % | 2.04 | % | 4.01 | % | ||||||||||
Commercial real estate |
1.84 | 1.45 | 2.42 | 2.62 | 6.69 | |||||||||||||||
Home equity |
0.53 | 1.34 | 0.12 | 0.32 | 0.75 | |||||||||||||||
Residential real estate |
0.07 | 0.23 | 0.32 | 0.28 | 0.33 | |||||||||||||||
Premium finance receivables commercial |
0.39 | 5.46 | 0.54 | 1.38 | 0.74 | |||||||||||||||
Premium finance receivables life insurance |
0.02 | | | | | |||||||||||||||
Indirect consumer |
1.08 | 0.92 | 1.00 | 1.43 | 1.67 | |||||||||||||||
Consumer and other |
1.01 | 0.27 | 0.48 | 0.22 | 0.71 | |||||||||||||||
Total loans, net of unearned income, excluding covered loans |
0.89 | % | 1.63 | % | 1.19 | % | 1.61 | % | 3.65 | % | ||||||||||
Covered loans |
| | | | | |||||||||||||||
Total loans, net of unearned income |
0.86 | % | 1.59 | % | 1.19 | % | 1.61 | % | 3.65 | % | ||||||||||
Net charge-offs as a percentage of the
provision for credit losses |
83.97 | % | 91.85 | % | 92.48 | % | 90.48 | % | 87.36 | % | ||||||||||
Excluding covered loans: |
||||||||||||||||||||
Loans at period-end |
$ | 9,461,155 | $ | 9,324,163 | $ | 9,070,562 | $ | 8,411,771 | $ | 8,275,257 | ||||||||||
Allowance for loan
losses as a percentage
of loans at period end |
1.17 | % | 1.14 | % | 1.13 | % | 1.17 | % | 1.15 | % | ||||||||||
Allowance for credit
losses as a percentage
of loans at period end |
1.19 | % | 1.17 | % | 1.17 | % | 1.21 | % | 1.19 | % | ||||||||||
Including covered loans: |
||||||||||||||||||||
Loans at period-end |
$ | 9,814,995 | $ | 9,599,726 | $ | 9,070,562 | $ | 8,411,771 | $ | 8,275,257 | ||||||||||
Allowance for loan
losses as a percentage
of loans at period
end |
1.13 | % | 1.11 | % | 1.13 | % | 1.17 | % | 1.15 | % | ||||||||||
Allowance for credit
losses as a percentage
of loans at period end |
1.15 | % | 1.13 | % | 1.17 | % | 1.21 | % | 1.19 | % |
48
WINTRUST FINANCIAL CORPORATION SUPPLEMENTAL FINANCIAL INFORMATION
Non-Performing Loans, excluding covered loans 5 Quarter Trends
Non-Performing Loans, excluding covered loans 5 Quarter Trends
September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||
(Dollars in thousands) | 2010 | 2010 | 2010 | 2009 | 2009 | ||||||||||||||||
Loans past due greater than 90 days and still accruing: |
|||||||||||||||||||||
Commercial |
$ | | $ | 99 | $ | | $ | 561 | $ | 758 | |||||||||||
Commercial real-estate |
| 2,248 | 1,195 | | 22,619 | ||||||||||||||||
Home equity |
| | 21 | | 100 | ||||||||||||||||
Residential real-estate |
| | | 412 | 1,172 | ||||||||||||||||
Premium finance receivables commercial |
6,853 | 6,350 | 7,479 | 6,271 | 11,714 | ||||||||||||||||
Premium finance receivables life insurance |
1,222 | 1,923 | 5,450 | | | ||||||||||||||||
Indirect consumer |
355 | 579 | 665 | 461 | 549 | ||||||||||||||||
Consumer and other |
2 | 3 | 20 | 95 | 25 | ||||||||||||||||
Total past due greater than 90 days and still accruing |
8,432 | 11,202 | 14,830 | 7,800 | 36,937 | ||||||||||||||||
Non-accrual loans: |
|||||||||||||||||||||
Commercial |
19,444 | 17,741 | 15,331 | 16,509 | 19,035 | ||||||||||||||||
Commercial real-estate |
83,340 | 82,984 | 82,389 | 80,639 | 147,691 | ||||||||||||||||
Home equity |
6,144 | 7,149 | 7,730 | 8,883 | 6,808 | ||||||||||||||||
Residential real-estate |
6,644 | 4,436 | 5,460 | 3,779 | 4,077 | ||||||||||||||||
Premium finance receivables commercial |
9,082 | 11,389 | 14,106 | 11,878 | 16,093 | ||||||||||||||||
Premium finance receivables life insurance |
222 | | 73 | 704 | | ||||||||||||||||
Indirect consumer |
446 | 438 | 615 | 995 | 736 | ||||||||||||||||
Consumer and other |
569 | 62 | 426 | 617 | 282 | ||||||||||||||||
Total non-accrual |
125,891 | 124,199 | 126,130 | 124,004 | 194,722 | ||||||||||||||||
Total non-performing loans: |
|||||||||||||||||||||
Commercial |
19,444 | 17,840 | 15,331 | 17,070 | 19,793 | ||||||||||||||||
Commercial real-estate |
83,340 | 85,232 | 83,584 | 80,639 | 170,310 | ||||||||||||||||
Home equity |
6,144 | 7,149 | 7,751 | 8,883 | 6,908 | ||||||||||||||||
Residential real-estate |
6,644 | 4,436 | 5,460 | 4,191 | 5,249 | ||||||||||||||||
Premium finance receivables commercial |
15,935 | 17,739 | 21,585 | 18,149 | 27,807 | ||||||||||||||||
Premium finance receivables life insurance |
1,444 | 1,923 | 5,523 | 704 | | ||||||||||||||||
Indirect consumer |
801 | 1,017 | 1,280 | 1,456 | 1,285 | ||||||||||||||||
Consumer and other |
571 | 65 | 446 | 712 | 307 | ||||||||||||||||
Total non-performing |
$ | 134,323 | $ | 135,401 | $ | 140,960 | $ | 131,804 | $ | 231,659 | |||||||||||
Total non-performing loans by category as a percent of
its own respective categorys period-end balance: |
|||||||||||||||||||||
Commercial |
1.00 | % | 0.98 | % | 0.88 | % | 0.98 | % | 1.20 | % | |||||||||||
Commercial real-estate |
2.50 | 2.55 | 2.51 | 2.45 | 5.02 | ||||||||||||||||
Home equity |
0.67 | 0.78 | 0.84 | 0.95 | 0.74 | ||||||||||||||||
Residential real-estate |
1.94 | 1.33 | 1.69 | 1.37 | 1.87 | ||||||||||||||||
Premium finance receivables commercial |
1.20 | 1.32 | 1.64 | 2.49 | 3.70 | ||||||||||||||||
Premium finance receivables life insurance |
0.10 | 0.14 | 0.45 | 0.06 | | ||||||||||||||||
Indirect consumer |
1.42 | 1.47 | 1.54 | 1.48 | 1.11 | ||||||||||||||||
Consumer and other |
0.57 | 0.07 | 0.42 | 0.65 | 0.26 | ||||||||||||||||
Total loans |
1.42 | % | 1.45 | % | 1.55 | % | 1.57 | % | 2.80 | % | |||||||||||
Allowance for loan losses as a percentage
total non-performing loans |
82.21 | % | 78.69 | % | 72.64 | % | 74.56 | % | 41.05 | % | |||||||||||
49